HomeStreet (HMST) Q3 2024 earnings summary

Executive summary

• Reported a net loss of $7.3 million ($0.39/share) for Q3 2024, up from $6.2 million in Q2 2024; core net loss was $6 million ($0.32/share); nine-month net loss totaled $21.0 million.

• Net interest margin declined to 1.33% from 1.37% sequentially, with net interest income and noninterest income both down; tangible book value per share increased to $28.13.

• Regulatory approvals for the merger with FirstSun were not obtained, introducing uncertainty; alternative strategic transactions and a major multifamily loan sale are under consideration.

• Sale of $800 million in multifamily loans completed, with proceeds used to pay off higher-cost wholesale funding.

• Headcount reduced through attrition, with FTEs at 809–819 in September 2024.

Financial highlights

• Net interest income for Q3 2024 was $28.6 million, down from $38.9 million in Q3 2023; noninterest income was $11.1 million, up from $10.5 million in Q3 2023.

• Noninterest expense was $49.2 million, with an efficiency ratio of 118.7%.

• Book value per share at $28.55; tangible book value per share at $28.13 as of September 30, 2024.

• Loans to deposit ratio at 113.5%; nonperforming assets to total assets at 0.47%.

• Allowance for credit losses to total loans at 0.53%; no provision for credit losses in Q3 or Q2 2024.

Outlook and guidance

• Management expects funding costs to decrease and net interest margin to improve in Q4 2024 and beyond, aided by lower short-term rates.

• Sale of multifamily loans expected to accelerate return to profitability, improve liquidity, and reduce commercial real estate concentration.

• No additional capital needed to support the loan sale; no quarterly dividends planned for 2024.

• Loan balances expected to remain stable in 2024; net interest margin anticipated to be lower than 2023 but may improve with declining funding costs.