• Net Loss: $123.3 million or $6.54 per share in Q4 2024.
• Core Net Loss: $5.1 million or $0.27 per share, excluding certain impacts.
• Net Interest Income: Increased by $1 million from Q3 2024.
• Net Interest Margin: Increased from 1.33% to 1.38% in Q4 2024.
• Deferred Tax Asset Valuation Allowance: $53.3 million recorded as income tax expense.
• Noninterest Expenses: Decreased by $5.2 million in Q4 2024.
• Nonperforming Assets to Total Assets Ratio: 71 basis points as of December 31, 2024.
• Total Loans Delinquent Over 30 Days Ratio: 106 basis points as of December 31, 2024.
• Tangible Book Value Per Share: Decreased to $20.67 as of year-end 2024.
• Cash and Securities Balances: $1.5 billion, 18% of total assets as of year-end 2024.
• Loan-to-Deposit Ratio: Declined to 97.4% as of year-end 2024.
• Uninsured Deposits: 9% of total deposits.

• Warning! GuruFocus has detected 5 Warning Signs with HMST.

Release Date: January 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• HomeStreet Inc (NASDAQ:HMST) improved its liquidity position and reduced its loan-to-deposit ratio by selling $990 million of multifamily loans.
• The company anticipates returning to profitability in the first half of the year due to balance sheet repositioning and effective noninterest expense management.
• Net interest income increased by $1 million in the fourth quarter due to an improved net interest margin.
• HomeStreet Inc (NASDAQ:HMST) has a low level of uninsured deposits, which remain at 9% of total deposits, indicating depositor loyalty.
• The company has significant contingent funding availability, equal to 80% of total deposits, enhancing its financial stability.

Negative Points

• HomeStreet Inc (NASDAQ:HMST) reported a significant net loss of $123.3 million in the fourth quarter, largely due to a pretax loss on the sale of multifamily loans and a deferred tax asset valuation allowance.
• The company's tangible book value per share decreased to $20.67 as of year-end, impacted by the loss on the loan sale and increasing interest rates.
• Nonperforming assets and loans delinquent over 30 days increased, partly due to the sale of multifamily loans and a downgraded syndicated commercial loan.
• Noninterest income decreased in the fourth quarter, primarily due to the $88.8 million loss on the sale of multifamily loans.
• HomeStreet Inc (NASDAQ:HMST) faces challenges from the current interest rate environment and ongoing deposit competition from other banks.

Q & A Highlights

Q: What is the expected trajectory for the net interest margin (NIM) following the recent loan sale, and is there a breakeven level targeted for profitability in the first half of the year? A: John Michel, CFO, stated that while there isn't a specific targeted NIM number, the loan sale is expected to positively impact earnings immediately in the first quarter and going forward. Mark Mason, CEO, added that loan repricing will also contribute to this improvement.

Q: Are additional rate cuts necessary to achieve profitability in the first half of the year? A: Mark Mason, CEO, confirmed that additional rate cuts are not needed to reach profitability in the first half of the year.

Q: Are there any other strategic initiatives required to return to profitability and grow from there? A: Mark Mason, CEO, mentioned that the strategy is straightforward, focusing on working with commercial real estate borrowers for loan repricing. The current Federal Reserve's stance on slowing rate decreases is aiding this process.

Q: What is the current spot rate on deposits after paying down brokered CDs in January? A: John Michel, CFO, reported that as of December 31, the spot rate for all deposits was 2.65%, and excluding brokered deposits, it was 2.39%. The company plans to pay off more brokered deposits, moving closer to the 2.39% rate.

Q: Can you provide an update on potential conversations with buyers or strategic alternatives? A: Mark Mason, CEO, stated that the Board of Directors is continuously reviewing strategic alternatives, but no specific details were provided at this time.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.