HomeStreet 8K Reports Year End and Fourth Quarter 2021 Results | HMST 24 Jan 22

HomeStreet Reports Year End and Fourth Quarter 2021 Results

Fourth Quarter 2021

Fully diluted EPS $1.43

ROAE: 16.1%

ROATE: 17.0%

ROAA: 1.59%

Full Year 2021

Fully diluted EPS $5.46

ROAE: 15.9%

ROATE: 16.8%

ROAA: 1.58%

SEATTLE – January 24, 2022 – (BUSINESS WIRE) – HomeStreet, Inc. (Nasdaq:HMST) (including its consolidated subsidiaries, the "Company" or "HomeStreet"), the parent company of HomeStreet Bank, today announced the financial results for the quarter and year ended December 31, 2021. As we present non-GAAP measures in this release, the reader should refer to the non-GAAP reconciliations set forth below under the section “Non-GAAP Financial Measures.”

“In 2021, which was our 100th anniversary, HomeStreet reported earnings in excess of $100 million for the first time ever. Our record earnings of $115 million were driven by record loan originations, strong core deposit growth and the benefits of our past efficiency and profitability improvement initiatives” said Mark K. Mason, HomeStreet’s Chairman of the Board, President, and Chief Executive Officer. “Portfolio loan originations totaled $3.3 billion in 2021 and noninterest-bearing deposits increased 21%. As reflected in our stable efficiency ratio year over year, we believe the strategic changes we implemented in prior years, including the restructuring of our single family mortgage business, have provided meaningful operating leverage and more consistent and less volatile earnings. We anticipate continuing improvements as our operating leverage should provide us the opportunity to grow revenues without commensurate additions to personnel or other operating expenses. Finally, I want to thank all of our employees for their great work this year which has allowed HomeStreet to be so successful in spite of the ongoing challenges of the pandemic.”


Fourth Quarter Operating Results						Fourth quarter 2021 compared to third quarter 2021 •Net income: $29.4 million compared to $27.2 million •Earnings per fully diluted share: $1.43 compared to $1.31 •Net interest margin: 3.34% compared to 3.42% •Return on Average Equity ('ROAE"): 16.1% compared to 14.8% •Return on Average Tangible Equity ("ROATE"): 17.0% compared to 15.6% •Return on average assets ("ROAA"): 1.59% compared to 1.48% •Efficiency ratio: 62.2% compared to 62.8%




Full Year Operating Results						2021 compared to 2020 •Net income: $115.4 million compared to $80.0 million •Core net income: $115.4 million compared to $88.8 million •Earnings per fully diluted share: $5.46 compared to $3.47 •Core earnings per fully diluted share: $5.46 compared to $3.85 •Net interest margin: 3.38% compared to 3.13% •ROAE: 15.9% compared to 11.3% •ROATE: 16.8% compared to 12.1% •Core ROATE: 16.8% compared to 13.4% •ROAA: 1.58% compared to 1.10% •Core ROAA: 1.58% compared to 1.23% •Efficiency Ratio: 61.9% compared to 61.4%




Financial Position						Fourth quarter 2021 compared to third quarter 2021 •Loan portfolio originations: $795 million in the fourth quarter •Single family loans held for sale originations: $361 million, a 13% decrease •Commercial and consumer noninterest-bearing deposits decreased 5% •Period ending cost of deposits: 0.15%, unchanged •Tangible book value per share: $34.04 compared to $33.18
						2021 Activity •Loan portfolio originations: $3.3 billion •Single family loans held for sale originations: $2.0 billion •Commercial and consumer noninterest-bearing deposits increased 21% •Tangible book value per share increased from $31.42 to $34.04

“Loan origination levels remained strong with $795 million of loan originations in the current quarter and $3.3 billion in 2021,” added Mr. Mason. “Excluding the impact of the Paycheck Protection Program ("PPP") loans, and despite continuing high levels of prepayments, our loans held for investment grew 11% during 2021. During the fourth quarter, we completed a $244 million sale of permanent multifamily loans, realizing a net gain of 2.73%. Total deposits increased by 6% during 2021 and noninterest bearing deposits increased to 26% of total deposits. We recognized $6 million and $15 million of recoveries of pandemic related allowance for credit losses in the fourth quarter and in 2021, respectively. As we continue to have more clarity of the minimal impact COVID is having on our loan portfolio, and with projected improvements in our economies and anticipated changes in the composition of our loan portfolio, we expect to recover additional amounts of our allowance for credit losses in future periods.”


Other						•Completed $100 million subordinated notes offering in January 2022 •Repurchased a total of 374,320 shares of our common stock at an average price of $51.17 per share during the fourth quarter •Repurchased 1,873,294 shares at an average price of $44.92 per share during 2021, representing 8.6% of the outstanding shares at December 31, 2020 •Declared and paid a cash dividend of $0.25 per share in the fourth quarter

Mr. Mason concluded “With the completion of our $100 million subordinated notes offering in January 2022, we accessed lower cost capital to expand our share repurchase program and support our future growth. Relative to the outstanding stock at the beginning of each period, we have repurchased 12%, 9% and 9% of our outstanding common stock in 2019, 2020 and 2021, respectively. We anticipate continuing to efficiently retain capital for growth while returning excess capital to shareholders."

Conference Call

HomeStreet, Inc. (Nasdaq:HMST), the parent company of HomeStreet Bank, will conduct a quarterly earnings conference call on Tuesday, January 25, 2022 at 1:00 p.m. ET. Mark K. Mason, CEO and President, and John M. Michel, CFO, will discuss fourth quarter and year to date 2021 results and provide an update on recent events. A question and answer session will follow the presentation. Shareholders, analysts and other interested parties may register in advance at http://dpregister.com/sreg/10162678/f0537aee8a or may join the call by dialing 1-877-508-9589 (1-855-669-9657 in Canada and 1-412-317-1075 internationally) shortly before 1:00 p.m. ET.

A rebroadcast will be available approximately one hour after the conference call by dialing 1-877-344-7529 and entering passcode 10162678.

About HomeStreet

HomeStreet, Inc. (Nasdaq:HMST) is a diversified financial services company headquartered in Seattle, Washington, serving consumers and businesses in the Western United States and Hawaii. The Company is principally engaged in real estate lending, including mortgage banking activities, and commercial and consumer banking. Its principal subsidiaries are HomeStreet Bank and HomeStreet Capital Corporation. HomeStreet Bank is the winner of the 2022 "Best Small Bank" in Washington Newsweek magazine award. Certain information about our business can be found on our investor relations web site, located at http://ir.homestreet.com. HomeStreet Bank is a member of the FDIC and is an Equal Housing Lender.


Contact:						Executive Vice President and Chief Financial Officer
						HomeStreet, Inc.
						John Michel (206) 515-2291
						john.michel@homestreet.com
						http://ir.homestreet.com

HomeStreet, Inc. and Subsidiaries

Summary Financial Data


	Quarter Ended															Year Ended
(in thousands, except per share data and FTE data)	December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020			December 31, 2021			December 31, 2020

Select Income Statement Data:
Net interest income	$	57,084		$	57,484		$	57,972		$	54,517		$	56,048		$	227,057		$	208,662
Provision for credit losses	(6,000)			(5,000)			(4,000)			—			—			(15,000)			20,469
Noninterest income	28,620			24,298			28,224			38,833			43,977			119,975			149,364
Noninterest expense	53,971			51,949			52,815			56,608			64,770			215,343			235,663


Income:
Before income taxes	37,733			34,833			37,381			36,742			35,255			146,689			101,894
Total	29,432			27,170			29,157			29,663			27,598			115,422			79,990
Net income per share - diluted	1.43			1.31			1.37			1.35			1.25			5.46			3.47
Core net income: (1)
Total	29,432			27,170			29,157			29,663			32,384			115,422			88,842
Net income per share - diluted	1.43			1.31			1.37			1.35			1.47			5.46			3.85




Selected Performance Ratios:
Return on average equity - annualized	16.1		%	14.8		%	16.3		%	16.4		%	15.3		%	15.9		%	11.3		%
Return on average tangible equity - annualized: (1)
Net income	17.0		%	15.6		%	17.2		%	17.3		%	16.2		%	16.8		%	12.1		%
Core (1)	17.0		%	15.6		%	17.2		%	17.3		%	19.0		%	16.8		%	13.4		%
Return on average assets - annualized:
Net income	1.59		%	1.48		%	1.59		%	1.65		%	1.47		%	1.58		%	1.10		%
Core (1)	1.59		%	1.48		%	1.59		%	1.65		%	1.73		%	1.58		%	1.23		%

Efficiency ratio (1)	62.2		%	62.8		%	62.8		%	60.0		%	56.1		%	61.9		%	61.4		%
Net interest margin	3.34		%	3.42		%	3.45		%	3.29		%	3.26		%	3.38		%	3.13		%

Other data:
Full-time equivalent employees ("FTE")	970			983			997			1,013			1,013			991			1,003

HomeStreet, Inc. and Subsidiaries

Summary Financial Data (continued)


	As of:
(in thousands, except share and per share data)	December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020

Selected Balance Sheet Data:
Loans held for sale	$	176,131		$	395,112		$	225,241		$	390,223		$	361,932
Loans held for investment, net	5,495,726			5,299,741			5,332,626			5,227,727			5,179,886
Allowance for credit losses ("ACL")	47,123			54,516			59,897			64,047			64,294
Investment securities	1,006,691			983,038			1,007,658			1,049,105			1,076,364
Total assets	7,204,091			7,372,451			7,167,951			7,265,191			7,237,091
Deposits	6,146,509			6,359,660			6,086,527			6,131,233			5,821,559
Borrowings	41,000			—			50,000			84,500			322,800
Long-term debt	126,026			125,979			125,932			125,885			125,838
Total shareholders' equity	715,339			710,376			708,731			701,463			717,750
Other Data:
Book value per share	$	35.61		$	34.74		$	34.09		$	32.84		$	32.93
Tangible book value per share (1)	$	34.04		$	33.18		$	32.53		$	31.31		$	31.42
Equity to assets	9.9		%	9.6		%	9.9		%	9.7		%	9.9		%
Tangible common equity to tangible assets (1)	9.5		%	9.2		%	9.5		%	9.2		%	9.5		%
Shares outstanding at end of period	20,085,336			20,446,648			20,791,659			21,360,514			21,796,904
Loans to deposit ratio	93.0		%	90.4		%	92.3		%	92.7		%	96.3		%
Credit Quality:
ACL to total loans (2)	0.88		%	1.06		%	1.18		%	1.34		%	1.33		%
ACL to nonaccrual loans	386.2		%	307.8		%	287.5		%	297.3		%	310.3		%
Nonaccrual loans to total loans	0.22		%	0.33		%	0.39		%	0.41		%	0.40		%
Nonperforming assets to total assets	0.18		%	0.26		%	0.31		%	0.32		%	0.31		%
Nonperforming assets	$	12,936		$	19,196		$	22,319		$	23,025		$	22,097
Regulatory Capital Ratios:
Bank
Tier 1 leverage ratio	10.11		%	10.17		%	9.95		%	10.01		%	9.79		%
Total risk-based capital	13.77		%	13.71		%	14.36		%	14.84		%	14.76		%
Company
Tier 1 leverage ratio	9.94		%	10.00		%	9.78		%	9.83		%	9.65		%
Total risk-based capital	12.66		%	13.01		%	13.59		%	14.05		%	14.00		%

(1)For additional information on these non-GAAP financial measures and for corresponding reconciliations to GAAP financial measures, see Non-GAAP Financial Measures in this earnings release.

(2)The reserve rate is calculated excluding balances related to loans that are insured by the FHA or guaranteed by the VA or SBA, including Paycheck Protection Program ("PPP") loan balances.

HomeStreet, Inc. and Subsidiaries

Consolidated Balance Sheets


(in thousands, except share data)	December 31, 2021		December 31, 2020

ASSETS
Cash and cash equivalents	$	65,214	$	58,049

Investment securities	1,006,691		1,076,364
Loans held for sale	176,131		361,932
Loans held for investment, (net of allowance for credit losses of $47,123 and $64,294)	5,495,726		5,179,886
Mortgage servicing rights	100,999		85,740
Premises and equipment, net	58,154		65,102
Other real estate owned	735		1,375
Goodwill and other intangibles	31,709		32,880
Other assets	268,732		375,763
Total assets	$	7,204,091	$	7,237,091
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits	$	6,146,509	$	5,821,559
Borrowings	41,000		322,800
Long-term debt	126,026		125,838
Accounts payable and other liabilities	175,217		249,144
Total liabilities	6,488,752		6,519,341
Shareholders' equity:
Common stock, no par value; 160,000,000 shares authorized
20,085,336 and 21,796,904 shares issued and outstanding	249,856		278,505
Retained earnings	444,343		403,888
Accumulated other comprehensive income	21,140		35,357
Total shareholders' equity	715,339		717,750
Total liabilities and shareholders' equity	$	7,204,091	$	7,237,091

HomeStreet, Inc. and Subsidiaries

Consolidated Income Statements


	Quarter Ended December 31,				Year Ended December 31,
(in thousands, except share and per share data)	2021		2020		2021		2020
Interest income:
Loans	$	55,403	$	56,724	$	222,166	$	228,999
Investment securities	5,469		5,733		21,560		21,786
Cash, Fed Funds and other	97		267		569		1,227
Total interest income	60,969		62,724		244,295		252,012
Interest expense:
Deposits	2,481		4,853		11,411		33,797
Borrowings	1,404		1,823		5,827		9,553
Total interest expense	3,885		6,676		17,238		43,350
Net interest income	57,084		56,048		227,057		208,662
Provision for credit losses	(6,000)		—		(15,000)		20,469
Net interest income after provision for credit losses	63,084		56,048		242,057		188,193
Noninterest income:
Net gain on loan origination and sale activities	20,079		36,866		92,318		122,564
Loan servicing income	2,540		2,570		7,233		9,491

Deposit fees	2,156		1,858		8,068		7,083

Other	3,845		2,683		12,356		10,226
Total noninterest income	28,620		43,977		119,975		149,364
Noninterest expense:
Compensation and benefits	30,627		35,397		132,015		136,826
Information services	7,278		7,674		27,913		30,004
Occupancy	5,662		12,241		23,832		35,323
General, administrative and other	10,404		9,458		31,583		33,510

Total noninterest expense	53,971		64,770		215,343		235,663
Income before income taxes	37,733		35,255		146,689		101,894
Income tax expense	8,301		7,657		31,267		21,904
Net income	$	29,432	$	27,598	$	115,422	$	79,990

Net income per share:
Basic	$	1.45	$	1.27	$	5.53	$	3.50
Diluted	$	1.43	$	1.25	$	5.46	$	3.47
Weighted average shares outstanding:
Basic	20,251,824		21,798,545		20,885,509		22,867,268
Diluted	20,522,475		22,103,902		21,143,414		23,076,822

HomeStreet, Inc. and Subsidiaries

Five Quarter Consolidated Income Statements





	Quarter Ended
(in thousands, except share and per share data)	December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020
Interest income:
Loans	$	55,403	$	56,117	$	57,078	$	53,568	$	56,724
Investment securities	5,469		5,130		5,010		5,951		5,733
Cash, Fed Funds and other	97		141		159		172		267
Total interest income	60,969		61,388		62,247		59,691		62,724
Interest expense:
Deposits	2,481		2,507		2,773		3,650		4,853
Borrowings	1,404		1,397		1,502		1,524		1,823
Total interest expense	3,885		3,904		4,275		5,174		6,676
Net interest income	57,084		57,484		57,972		54,517		56,048
Provision for credit losses	(6,000)		(5,000)		(4,000)		—		—
Net interest income after provision for credit losses	63,084		62,484		61,972		54,517		56,048
Noninterest income:
Net gain on loan origination and sale activities	20,079		17,509		21,271		33,459		36,866
Loan servicing income	2,540		2,014		1,931		748		2,570
Deposit fees	2,156		2,091		1,997		1,824		1,858
Other	3,845		2,684		3,025		2,802		2,683
Total noninterest income	28,620		24,298		28,224		38,833		43,977
Noninterest expense:
Compensation and benefits	30,627		31,175		34,378		35,835		35,397
Information services	7,278		6,902		6,949		6,784		7,674
Occupancy	5,662		5,705		5,973		6,492		12,241
General, administrative and other	10,404		8,167		5,515		7,497		9,458
Total noninterest expense	53,971		51,949		52,815		56,608		64,770
Income before income taxes	37,733		34,833		37,381		36,742		35,255
Income tax expense	8,301		7,663		8,224		7,079		7,657
Net income	$	29,432	$	27,170	$	29,157	$	29,663	$	27,598

Net income per share:
Basic	$	1.45	$	1.32	$	1.38	$	1.37	$	1.27
Diluted	$	1.43	$	1.31	$	1.37	$	1.35	$	1.25
Weighted average shares outstanding:
Basic	20,251,824		20,613,290		21,057,473		21,637,671		21,798,545
Diluted	20,522,475		20,819,601		21,287,974		21,961,828		22,103,902

HomeStreet, Inc. and Subsidiaries

Average Balances, Yields (Taxable-equivalent basis) and Rates


(in thousands, except yield/rate)	Quarter Ended December 31,						Year Ended December 31,
Average Balances:	2021			2020			2021			2020
Investment securities	$	990,273		$	1,098,367		$	1,020,530		$	1,086,415
Loans	5,767,597			5,705,512			5,653,930			5,544,847
Total interest earning assets	6,840,317			6,877,872			6,770,763			6,694,705
Deposits: Interest-bearing	4,591,239			4,491,440			4,570,811			4,343,339
Deposits: Non-interest-bearing	1,728,558			1,421,182			1,596,653			1,276,780
Borrowings	25,711			471,175			109,513			604,278
Long-term debt	125,995			125,807			125,925			125,737
Total interest-bearing liabilities	4,742,945			5,088,422			4,806,249			5,073,354

Average Yield/Rate:
Investment securities	2.50		%	2.35		%	2.38		%	2.26		%
Loans	3.79		%	3.93		%	3.91		%	4.10		%
Total interest earning assets	3.57		%	3.65		%	3.63		%	3.78		%
Deposits: Interest-bearing	0.21		%	0.43		%	0.25		%	0.78		%
Total deposits	0.16		%	0.33		%	0.18		%	0.60		%
Borrowings	0.73		%	0.35		%	0.36		%	0.62		%
Long-term debt	4.29		%	4.35		%	4.30		%	4.58		%
Total interest-bearing liabilities	0.33		%	0.52		%	0.36		%	0.85		%
Net interest rate spread	3.24		%	3.13		%	3.27		%	2.93		%
Net interest margin	3.34		%	3.26		%	3.38		%	3.13		%


(in thousands, except yield/rate)	Quarter Ended
Average Balances:	December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020
Investment securities	$	990,273		$	994,593		$	1,032,995		$	1,065,423		$	1,098,367
Loans	5,767,597			5,577,149			5,664,187			5,605,868			5,705,512
Total interest earning assets	6,840,317			6,719,258			6,783,707			6,739,335			6,877,872
Deposits: Interest-bearing	4,591,239			4,525,730			4,577,504			4,589,126			4,491,440
Deposits: Noninterest-bearing	1,728,558			1,679,086			1,541,317			1,433,765			1,421,182
Borrowings	25,711			32,167			179,543			203,621			471,175
Long-term debt	125,995			125,948			125,901			125,854			125,807
Total interest-bearing liabilities	4,742,945			4,683,845			4,882,948			4,918,601			5,088,422

Average Yield/Rate:
Investment securities	2.50		%	2.34		%	2.20		%	2.47		%	2.35		%
Loans	3.79		%	3.98		%	4.02		%	3.85		%	3.93		%
Total interest earning assets	3.57		%	3.65		%	3.70		%	3.60		%	3.65		%
Deposits: Interest-bearing	0.21		%	0.22		%	0.24		%	0.32		%	0.43		%
Total deposits	0.16		%	0.16		%	0.18		%	0.25		%	0.33		%
Borrowings	0.73		%	0.54		%	0.31		%	0.32		%	0.35		%
Long-term debt	4.29		%	4.28		%	4.31		%	4.33		%	4.35		%
Total interest-bearing liabilities	0.33		%	0.33		%	0.35		%	0.42		%	0.52		%
Net interest rate spread	3.24		%	3.32		%	3.35		%	3.18		%	3.13		%
Net interest margin	3.34		%	3.42		%	3.45		%	3.29		%	3.26		%

Results of Operations

Non-core Amounts

During the quarter and year ended December 31, 2020 non-core items included $6.1 million and $11.8 million, respectively, of charges related to our efficiency improvement initiatives including the restructuring of our facilities. We had no similar charges in 2021.

Fourth Quarter of 2021 Compared to the Third Quarter of 2021

Our net income and income before taxes were $29.4 million and $37.7 million, respectively, in the fourth quarter of 2021, as compared to $27.2 million and $34.8 million, respectively, in the third quarter of 2021. The $2.9 million increase in income before taxes was due to a higher recovery of our allowance for credit losses and higher noninterest income, which was partially offset by lower net interest income and higher noninterest expenses.

Our effective tax rate was 22.0% in the fourth quarter of 2021 as compared to 22.0% in third quarter of 2021 and a statutory rate of 23.3%. Our effective tax rate was lower than our statutory rate due to the benefits of tax advantaged investments.

Net interest income was lower in the fourth quarter of 2021 as compared to the third quarter of 2021 primarily due to a $2.1 million decrease in interest income derived from Paycheck Protection Program (“PPP”) loans which was substantially offset by higher levels of non-PPP loans. Excluding the impact of PPP loans, our net interest margin in the fourth quarter of 2021 was consistent with our net interest margin in the third quarter of 2021.

As a result of the continued favorable performance of our loan portfolio, a stable low level of nonperforming assets and an improved outlook of the estimated impact of COVID-19 on our loan portfolio, we recorded a $6 million recovery of our allowance for credit losses in the fourth quarter of 2021, as compared to a $5 million recovery of our allowance for credit losses in the third quarter of 2021.

The increase in noninterest income in the fourth quarter of 2021 as compared to the third quarter of 2021 was primarily due to a $2.6 million increase in gain on loan origination and sale activities and an increase in other income. The increase in gain on loan origination and sale activities was primarily due to the gain realized from a sale of $244 million in multifamily permanent loans in the fourth quarter of 2021, which was partially offset by a $3.7 million decrease in gain on loan origination and sale activities due to lower volume of single family rate locks. The increase in other income includes a $0.6 million gain on sale of other real estate owned ("OREO").

The $2.0 million increase in noninterest expense in the fourth quarter of 2021 as compared to the third quarter of 2021 was primarily due to higher general, administrative and other costs partially offset by lower compensation and benefits costs. The lower level of compensation and benefit costs reflect a $1.0 million reversal of previously accrued medical benefits related to the positive experience in our self-insured medical program. Legal costs, which are included in general, administrative and other costs, were $2.5 million higher in the fourth quarter of 2021 as compared to the third quarter of 2021 due to nonrecurring costs expended on litigation activities and legal matters.

2021 Compared to 2020

Our net income and income before taxes were $115.4 million and $146.7 million, respectively, in 2021, as compared to $80.0 million and $101.9 million, respectively, in 2020. The $44.8 million increase in income before taxes was due to higher net interest income, a lower provision for credit losses and lower noninterest expense, partially offset by lower noninterest income.

Our effective tax rate during 2021 was 21.3% as compared to 21.5% in 2020 and a statutory rate of 23.5%. Our effective tax rate was lower than our statutory rate due primarily to the benefits of tax advantaged investments.

Net interest income was higher in 2021 as compared to 2020 primarily due to an increase in our net interest margin from 3.13% in the 2020 to 3.38% in 2021. The increase in our net interest margin was due to a 34 basis point increase in our net interest rate spread as decreases in the rates paid on interest bearing liabilities were greater than the decreases in yields on our interest earning assets. The 15 basis point decrease in yield on interest earning assets was due to the origination of loans and purchases of securities at current market rates which were below our portfolio rates, the repricing down of variable rate loans and the prepayment and paydown of higher yielding loans and investments in our portfolios. Our cost of interest-bearing liabilities decreased from 0.85% in 2020 to 0.36% in 2021 due to a decrease in market interest rates which allowed us to reprice our deposits and borrowings at lower rates.

As a result of the favorable performance of our loan portfolio, a stable low level of nonperforming assets and an improved outlook of the estimated impact of COVID-19 on our loan portfolio, we recorded a $15 million recovery of our allowance for credit losses in 2021. Due to adverse economic conditions related to the COVID-19 pandemic, in 2020 we recorded a $20.5 million provision for credit losses as an estimate of the potential adverse impact of those conditions on our loan portfolio.

The decrease in noninterest income for 2021 as compared to 2020 was due to decreases in gain on loan origination and sale activities and loan servicing income, which was partially offset by higher deposit fees and higher other income. The $30.2 million decrease in gain on loan origination and sale activities was due to a $33.9 million decrease in single family gain on loan origination and sale activities which was partially offset by a $3.7 million increase in commercial real estate (“CRE”) and commercial gain on loan origination and sale activities. The decrease in single family gain on loan origination and sale activities was due primarily to a 30% decrease in rate locks. The increase in CRE and commercial gain on loan origination and sale activities was due to a 17% increase in the realized gain on sale which was partially offset by a 15% decrease in the volume of loans sold. The $2.3 million decrease in loan servicing income was due to a $5.5 million decrease in single family servicing income which was partially offset by a $3.2 million increase in commercial loan servicing income. The decrease in single family servicing income was due primarily to a decline in the servicing portfolio balance due to high levels of prepayments and a $1.7 million decrease in risk management results. The increase in commercial loan servicing income was primarily due to higher levels of prepayment fees. The higher deposit fees were due to higher demand deposit balances and increased customer activity levels. The $2.1 million increase in other income was due to higher income from investments and a gain on sale of OREO realized in 2021.

The $20.3 million decrease in noninterest expense in 2021 as compared to 2020 was due to lower compensation and benefit costs, information services expense, occupancy expense and general, administrative and other expenses. The $4.8 million decrease in compensation and benefits expense is primarily due to lower levels of staffing. The $2.1 million decrease in information services costs is primarily due to lower core processing costs related to a renegotiation of our contract which became effective at the beginning of 2021. The occupancy expenses in 2020 included $10.2 million of impairments related to ongoing restructuring of our facilities and staffing, with no similar charges in 2021. The remaining decrease in occupancy costs relates to a reduction in leased space. The decrease in general, administrative and other costs was due to charges

related to our efficiency improvement initiatives incurred in 2020 and lower FDIC fees, which were partially offset by higher marketing costs in 2021.

Financial Position

During 2021, total assets decreased by $33 million due to decreases in investment securities and other assets, partially offset by a $316 million increase in loans held for investment. Loans held for investment increased due to $3.3 billion of originations, which were partially offset by prepayments and scheduled payments of $2.6 billion and transfer of loans to loans held for sale of $393 million. The $282 million decrease in borrowings reflects the reduced need of wholesale funding resulting from a $325 million increase in deposits. The growth in deposits was due to new customers and increases in existing customer balances.

Loans Held for Investment


(in thousands)	December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020

Commercial real estate loans
Non-owner occupied commercial real estate	$	705,359	$	754,031	$	761,754	$	766,002	$	829,538
Multifamily	2,415,359		2,090,156		1,966,995		1,521,349		1,428,092
Construction/land development	496,144		514,322		484,282		532,202		553,695
Total commercial real estate loans	3,616,862		3,358,509		3,213,031		2,819,553		2,811,325
Commercial and industrial loans
Owner occupied commercial real estate	457,706		450,350		457,504		473,273		467,256
Commercial business	401,872		435,756		575,122		757,231		645,723
Total commercial and industrial loans	859,578		886,106		1,032,626		1,230,504		1,112,979
Consumer loans
Single family (1)	763,331		793,927		812,287		875,417		915,123
Home equity and other	303,078		315,715		334,579		366,300		404,753
Total consumer loans	1,066,409		1,109,642		1,146,866		1,241,717		1,319,876
Total	5,542,849		5,354,257		5,392,523		5,291,774		5,244,180
Allowance for credit losses	(47,123)		(54,516)		(59,897)		(64,047)		(64,294)
Net	$	5,495,726	$	5,299,741	$	5,332,626	$	5,227,727	$	5,179,886

(1)Includes $7.3 million, $4.5 million, $5.2 million, $4.3 million and $7.1 million of single family loans that are carried at fair value at December 31, 2021, September 30, 2021, June 30, 2021, March 31, 2021 and December 31, 2020, respectively.

Loan Roll-forward


(in thousands)	December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020

Loans - beginning balance	$	5,354,257	$	5,392,523	$	5,291,774	$	5,244,180	$	5,294,369
Originations and advances	794,869		804,307		911,630		768,787		734,029
Transfers (to) from loans held for sale	(2,034)		(261,697)		1,394		(130,218)		(157,315)
Payoffs, paydowns and other	(602,613)		(580,754)		(812,261)		(590,897)		(626,436)
Charge-offs and transfers to OREO	(1,630)		(122)		(14)		(78)		(467)
Loans - ending balance	$	5,542,849	$	5,354,257	$	5,392,523	$	5,291,774	$	5,244,180

Loan Originations and Advances


(in thousands)	December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020

Commercial real estate loans
Non-owner occupied commercial real estate	$	33,390	$	30,065	$	14,308	$	8,404	$	18,233
Multifamily	395,365		408,353		513,620		282,795		353,802
Construction/land development	180,083		191,774		183,571		165,631		171,822
Total commercial real estate loans	608,838		630,192		711,499		456,830		543,857
Commercial and industrial loans
Owner occupied commercial real estate	27,323		11,879		8,709		33,155		20,968
Commercial business	49,580		38,157		83,053		163,525		41,357
Total commercial and industrial loans	76,903		50,036		91,762		196,680		62,325
Consumer loans
Single family	73,035		93,602		78,182		95,544		103,016
Home equity and other	36,093		30,477		30,187		19,733		24,831
Total consumer loans	109,128		124,079		108,369		115,277		127,847
Total	$	794,869	$	804,307	$	911,630	$	768,787	$	734,029

Credit Quality

As of December 31, 2021, our ratio of nonperforming assets to total assets remained low at 0.18%, while our ratio of total loans delinquent over 30 days to total loans was 0.38%.

Delinquencies


	Past Due and Still Accruing
(in thousands)	30-59 days			60-89 days			90 days or more (1)			Nonaccrual			Total past due and nonaccrual (2)			Current			Total loans

December 31, 2021
Total loans held for investment	$	1,208		$	894		$	6,717		$	12,201		$	21,020		$	5,521,829		$	5,542,849
%	0.02		%	0.02		%	0.12		%	0.22		%	0.38		%	99.62		%	100.00		%

September 30, 2021
Total loans held for investment	$	1,554		$	1,202		$	8,361		$	17,712		$	28,829		$	5,325,428		$	5,354,257
%	0.03		%	0.02		%	0.16		%	0.33		%	0.54		%	99.46		%	100.00		%

(1) FHA-insured and VA-guaranteed single family loans that are 90 days or more past due are maintained on accrual status if they are determined to have little to no risk of loss.

(2) Includes loans whose repayments are insured by the FHA or guaranteed by the VA or SBA of $8.4 million and $10.8 million at December 31, 2021 and September 30, 2021, respectively.

Allowance for Credit Losses (roll-forward)


	Quarter Ended
(in thousands)	December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020

Allowance for credit losses
Beginning balance	$	54,516	$	59,897	$	64,047	$	64,294	$	64,892
Provision for credit losses	(5,952)		(5,348)		(4,145)		(371)		210
Recoveries (charge-offs), net	(1,441)		(33)		(5)		124		(808)

Ending balance	$	47,123	$	54,516	$	59,897	$	64,047	$	64,294

Allowance for unfunded commitments:
Beginning balance	$	2,452	$	2,104	$	1,959	$	1,588	$	1,798
Provision for credit losses	(48)		348		145		371		(210)


Ending balance	$	2,404	$	2,452	$	2,104	$	1,959	$	1,588

Provision for credit losses:
Allowance for credit losses - loans	$	(5,952)	$	(5,348)	$	(4,145)	$	(371)	$	210
Allowance for unfunded commitments	(48)		348		145		371		(210)
Total	$	(6,000)	$	(5,000)	$	(4,000)	$	—	$	—

Allocation of Allowance for Credit Losses by Product Type


(in thousands)	December 31, 2021				September 30, 2021				December 31, 2020
Allowance for credit losses	Balance		Rate (1)		Balance		Rate (1)		Balance		Rate (1)

Non-owner occupied commercial real estate	$	7,509	1.06	%	$	9,636	1.28	%	$	8,845	1.07	%
Multifamily	5,854		0.24	%	5,457		0.26	%	6,072		0.43	%
Construction/land development
Multifamily construction	507		1.34	%	1,044		2.08	%	4,903		4.25	%
Commercial real estate construction	150		1.06	%	351		1.96	%	1,670		6.12	%
Single family construction	6,411		2.16	%	6,291		2.07	%	5,130		1.98	%
Single family construction to perm	1,055		0.71	%	1,062		0.74	%	1,315		0.87	%
Total commercial real estate loans	21,486		0.59	%	23,841		0.71	%	27,935		0.99	%
Owner occupied commercial real estate	5,006		1.10	%	5,285		1.18	%	4,994		1.08	%
Commercial business	12,273		3.39	%	14,473		4.08	%	17,043		4.72	%
Total commercial and industrial	17,279		2.11	%	19,758		2.46	%	22,037		2.67	%
Single family	4,394		0.68	%	5,757		0.85	%	6,906		0.85	%
Home equity and other	3,964		1.31	%	5,160		1.63	%	7,416		1.83	%
Total consumer	8,358		0.88	%	10,917		1.10	%	14,322		1.18	%
Total	$	47,123	0.88	%	$	54,516	1.06	%	$	64,294	1.33	%

(1) The ACL rate is calculated excluding balances related to loans that are insured by the FHA or guaranteed by the VA or SBA, including PPP loans.

Production Volumes for Sale to the Secondary Market


	Quarter Ended										Year Ended
(in thousands)	December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		December 31, 2021		December 31, 2020

Loan originations
Single family loans	$	360,503	$	414,102	$	562,804	$	623,889	$	628,762	$	1,961,298	$	2,079,094
Commercial and industrial and CRE loans	105,163		34,464		42,435		113,304		162,898		295,366		414,550
Loans sold
Single family loans	377,399		469,090		627,282		573,040		592,661		2,046,811		1,985,944
Commercial and industrial and CRE loans (1)	307,430		69,810		138,421		257,717		406,717		773,378		908,776
Net gain on loan origination and sale activities
Single family loans	10,578		14,249		15,836		26,187		27,044		66,850		100,795
Commercial and industrial and CRE loans (1)	9,501		3,260		5,435		7,272		9,822		25,468		21,769
Total	$	20,079	$	17,509	$	21,271	$	33,459	$	36,866	$	92,318	$	122,564

(1) May include loans originated as held for investment.

Loan Servicing Income


	Quarter Ended										Year Ended
(in thousands)	December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		December 31, 2021		December 31, 2020

Single family servicing income, net:
Servicing fees and other	$	3,870	$	3,878	$	3,975	$	3,935	$	4,120	$	15,658	$	17,477
Changes - amortization (1)	(4,216)		(4,579)		(5,181)		(5,693)		(5,508)		(19,669)		(17,754)
Net	(346)		(701)		(1,206)		(1,758)		(1,388)		(4,011)		(277)
Risk management, single family MSRs:
Changes in fair value due to assumptions (2)	193		747		(5,024)		11,463		2,015		7,379		(19,955)
Net gain (loss) from derivatives hedging	(378)		(293)		5,024		(12,591)		(1,328)		(8,238)		20,820
Subtotal	(185)		454		—		(1,128)		687		(859)		865
Single family servicing income (loss)	(531)		(247)		(1,206)		(2,886)		(701)		(4,870)		588
Commercial loan servicing income:
Servicing fees and other	5,417		4,019		5,270		4,978		4,844		19,684		14,560
Amortization of capitalized MSRs	(2,346)		(1,758)		(2,133)		(1,344)		(1,573)		(7,581)		(5,657)
Total	3,071		2,261		3,137		3,634		3,271		12,103		8,903
Total loan servicing income (loss)	$	2,540	$	2,014	$	1,931	$	748	$	2,570	$	7,233	$	9,491

(1)Represents changes due to collection/realization of expected cash flows and curtailments.

(2)Principally reflects changes in model assumptions, including prepayment speed assumptions, which are primarily affected by changes in mortgage interest rates.

Capitalized Mortgage Servicing Rights ("MSRs")


	Quarter Ended
(in thousands)	December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020




Single Family MSRs
Beginning balance	$	61,206		$	59,872		$	62,352		$	49,966		$	47,018
Additions and amortization:
Originations	4,401			5,166			7,725			6,616			6,482

Changes - amortization (1)	(4,216)			(4,579)			(5,181)			(5,693)			(5,508)
Net additions and amortization	185			587			2,544			923			974
Change in fair value due to assumptions (2)	193			747			(5,024)			11,463			1,974
Ending balance	$	61,584		$	61,206		$	59,872		$	62,352		$	49,966
Ratio to related loans serviced for others	1.11		%	1.09		%	1.05		%	1.10		%	0.85		%




Multifamily and SBA MSRs
Beginning balance	$	39,625		$	39,113		$	39,626		$	35,774		31,806
Originations	2,136			2,270			1,620			5,196			5,458
Amortization	(2,346)			(1,758)			(2,133)			(1,344)			(1,490)
Ending balance	$	39,415		$	39,625		$	39,113		$	39,626		$	35,774
Ratio to related loans serviced for others	1.94		%	1.92		%	1.92		%	2.02		%	1.99		%

(1) Represents changes due to collection/realization of expected cash flows and curtailments.

(2) Principally reflects changes in model assumptions, including prepayment speed assumptions, which are primarily affected by changes in mortgage interest rates.

Deposits


(in thousands)	December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020

Deposits by Product:
Noninterest-bearing accounts - checking and savings	$	1,433,566		$	1,479,491		$	1,316,698		$	1,190,953		$	1,092,735
Interest-bearing transaction and savings deposits:
Interest-bearing demand deposit accounts	513,810			555,716			557,677			557,900			484,265
Statement savings accounts	302,389			305,395			293,563			287,028			264,024
Money market accounts	2,806,313			2,796,524			2,650,564			2,665,875			2,596,453
Total interest-bearing transaction and savings deposits	3,622,512			3,657,635			3,501,804			3,510,803			3,344,742
Total transaction and savings deposits	5,056,078			5,137,126			4,818,502			4,701,756			4,437,477
Certificates of deposit	906,928			995,475			1,022,967			1,178,714			1,139,807
Noninterest-bearing accounts - other	183,503			227,059			245,058			250,763			244,275
Total deposits	$	6,146,509		$	6,359,660		$	6,086,527		$	6,131,233		$	5,821,559

Percent of total deposits:
Noninterest-bearing accounts - checking and savings	23.3		%	23.3		%	21.6		%	19.4		%	18.8		%
Interest-bearing transaction and savings deposits:
Interest-bearing demand deposit accounts	8.4		%	8.7		%	9.2		%	9.1		%	8.3		%
Statement savings accounts	4.9		%	4.8		%	4.8		%	4.7		%	4.5		%
Money market accounts	45.7		%	44.0		%	43.5		%	43.5		%	44.6		%
Total interest-bearing transaction and savings deposits	59.0		%	57.5		%	57.5		%	57.3		%	57.4		%
Total transaction and savings deposits	82.3		%	80.8		%	79.1		%	76.7		%	76.2		%
Certificates of deposit	14.8		%	15.7		%	16.8		%	19.2		%	19.6		%
Noninterest-bearing accounts - other	2.9		%	3.5		%	4.1		%	4.1		%	4.2		%
Total deposits	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%

HomeStreet, Inc. and Subsidiaries

Non-GAAP Financial Measures

To supplement our unaudited condensed consolidated financial statements presented in accordance with GAAP, we use certain non-GAAP measures of financial performance.

In this press release, we use the following non-GAAP measures: (i) tangible common equity and tangible assets as we believe this information is consistent with the treatment by bank regulatory agencies, which excluded intangible assets from the calculation of capital ratios; (ii) core earnings which exclude certain charges primarily related to our discontinued operations and restructuring activities as we believe this measure is a better comparison to be used for projecting future results; and (iii) an efficiency ratio which is the ratio of noninterest expenses to the sum of net interest income and noninterest income, excluding certain items of income or expense and excluding taxes incurred and payable to the state of Washington as such taxes are not classified as income taxes and we believe including them in noninterest expenses impacts the comparability of our results to those companies whose operations are in states where assessed taxes on business are classified as income taxes.

These supplemental performance measures may vary from, and may not be comparable to, similarly titled measures provided by other companies in our industry. Non-GAAP financial measures are not in accordance with, or an alternative for, GAAP. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. A non-GAAP financial measure may also be a financial metric that is not required by GAAP or other applicable requirements.

We believe that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding our performance by providing additional information used by management that is not otherwise required by GAAP or other applicable requirements. Our management uses, and believes that investors benefit from referring to, these non-GAAP financial measures in assessing our operating results and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate a comparison of our performance to prior periods. We believe these measures are frequently used by securities analysts, investors and other parties in the evaluation of companies in our industry. Rather, these non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures prepared in accordance with GAAP. In the information below, we have provided reconciliations of, where applicable, the most comparable GAAP financial measures to the non-GAAP measures used in this press release, or a reconciliation of the non-GAAP calculation of the financial measure.

HomeStreet, Inc. and Subsidiaries

Non-GAAP Financial Measures

Reconciliations of non-GAAP results of operations to the nearest comparable GAAP measures:


	As of or for the Quarter Ended															Year Ended
(in thousands, except share and per share data)	December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020			December 31, 2021			December 31, 2020

Tangible book value per share
Shareholders' equity	$	715,339		$	710,376		$	708,731		$	701,463		$	717,750		$	715,339		$	717,750
Less: Goodwill and other intangibles	(31,709)			(32,002)			(32,295)			(32,587)			(32,880)			(31,709)			(32,880)
Tangible shareholders' equity	$	683,630		$	678,374		$	676,436		$	668,876		$	684,870		$	683,630		$	684,870

Common shares outstanding	20,085,336			20,446,648			20,791,659			21,360,514			21,796,904			20,085,336			21,796,904

Computed amount	$	34.04		$	33.18		$	32.53		$	31.31		$	31.42		$	34.04		$	31.42

Tangible common equity to tangible assets
Tangible shareholders' equity (per above)	$	683,630		$	678,374		$	676,436		$	668,876		$	684,870		$	683,630		$	684,870
Tangible assets
Total assets	$	7,204,091		$	7,372,451		$	7,167,951		$	7,265,191		$	7,237,091		$	7,204,091		$	7,237,091
Less: Goodwill and other intangibles	(31,709)			(32,002)			(32,295)			(32,587)			(32,880)			(31,709)			(32,880)
Net	$	7,172,382		$	7,340,449		$	7,135,656		$	7,232,604		$	7,204,211		$	7,172,382		$	7,204,211

Ratio	9.5		%	9.2		%	9.5		%	9.2		%	9.5		%	9.5		%	9.5		%

Core net income
Net income	$	29,432		$	27,170		$	29,157		$	29,663		$	27,598		$	115,422		$	79,990
Adjustments (tax effected)
Restructuring related charges	—			—			—			—			4,786			—			9,298
Contingent payout	—			—			—			—			—			—			(446)
Total	$	29,432		$	27,170		$	29,157		$	29,663		$	32,384		$	115,422		$	88,842

Return on average tangible equity (annualized)
Average shareholders' equity	$	726,014		$	726,823		$	718,838		$	731,719		$	717,666		$	725,802		$	706,160
Less: Average goodwill and other intangibles	(31,901)			(32,195)			(32,487)			(32,777)			(33,103)			(32,337)			(33,613)
Average tangible equity	$	694,113		$	694,628		$	686,351		$	698,942		$	684,563		$	693,465		$	672,547

Net income	$	29,432		$	27,170		$	29,157		$	29,663		$	27,598		$	115,422		$	79,990
Adjustments (tax effected)
Amortization of core deposit intangibles	229			229			229			236			267			923			1,082
Tangible income applicable to shareholders	$	29,661		$	27,399		$	29,386		$	29,899		$	27,865		$	116,345		$	81,072

Ratio	17.0		%	15.6		%	17.2		%	17.3		%	16.2		%	16.8		%	12.1		%


	As of or for the Quarter Ended															Year Ended
(in thousands, except share and per share data)	December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020			December 31, 2021			December 31, 2020
Return on average tangible equity (annualized) - Core
Average tangible equity (per above)	$	694,113		$	694,628		$	686,351		$	698,942		$	684,563		$	693,465		$	672,547

Core net income (per above)	29,432			27,170			29,157			29,663			32,384			115,422			88,842
Adjustments (tax effected)
Amortization of core deposit intangibles	229			229			229			236			267			923			1,082
Tangible core income applicable to shareholders	$	29,661		$	27,399		$	29,386		$	29,899		$	32,651		$	116,345		$	89,924

Ratio	17.0		%	15.6		%	17.2		%	17.3		%	19.0		%	16.8		%	13.4		%

Return on average assets (annualized) - Core
Average assets	$	7,356,957		$	7,264,933		$	7,342,275		$	7,310,408		$	7,463,702		$	7,318,505		$	7,250,634
Core net income (per above)	29,432			27,170			29,157			29,663			32,384			115,422			88,842

Ratio	1.59		%	1.48		%	1.59		%	1.65		%	1.73		%	1.58		%	1.23		%

Efficiency ratio
Noninterest expense
Total	$	53,971		$	51,949		$	52,815		$	56,608		$	64,770		$	215,343		$	235,663
Adjustments:
Restructuring related charges	—			—			—			—			(6,112)			—			(11,837)
Legal fees recovery	—			—			1,900			—			—			1,900			—
Prepayment fee on FHLB advances	—			—			—			—			(1,492)			—			(1,492)
State of Washington taxes	(664)			(578)			(602)			(579)			(1,056)			(2,423)			(2,920)
Adjusted total	$	53,307		$	51,371		$	54,113		$	56,029		$	56,110		$	214,820		$	219,414

Total revenues
Net interest income	$	57,084		$	57,484		$	57,972		$	54,517		$	56,048		227,057			208,662
Noninterest income	28,620			24,298			28,224			38,833			43,977			119,975			149,364
Adjustments:
Contingent payout	—			—			—			—			—			—			(566)
Adjusted total	$	85,704		$	81,782		$	86,196		$	93,350		$	100,025		$	347,032		$	357,460

Ratio	62.2		%	62.8		%	62.8		%	60.0		%	56.1		%	61.9		%	61.4		%

Core diluted earnings per share
Core net income (per above)	$	29,432		$	27,170		$	29,157		$	29,663		$	32,384		$	115,422		$	88,842
Fully diluted shares	20,522,475			20,819,601			21,287,974			21,961,828			22,103,902			21,143,414			23,076,822

Ratio	$	1.43		$	1.31		$	1.37		$	1.35		$	1.47		$	5.46		$	3.85









Effective tax rate used in computations above	22.0		%	22.0		%	22.0		%	19.3		%	21.7		%	21.3		%	21.5		%

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Generally, forward-looking statements include the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “goal,” “upcoming,” “outlook,” “guidance” or the negation thereof, or similar expressions. In addition, all statements that address and/or include beliefs, assumptions, estimates, projections and expectations of our future performance, financial condition, long-term value creation, capital management, reduction in volatility, reliability of earnings, provisions and allowances for credit losses, cost reduction initiatives, performance of our continued operations relative to our past operations, and restructuring activities are forward-looking statements within the meaning of the Reform Act. Forward-looking statements involve inherent risks, uncertainties and other factors, many of which are difficult to predict and are generally beyond management’s control. Forward-looking statements are based on the Company’s expectations at the time such statements are made and speak only as of the date made. The Company does not assume any obligation or undertake to update any forward-looking statements after the date of this release as a result of new information, future events or developments, except as required by federal securities or other applicable laws, although the Company may do so from time to time. The Company does not endorse any projections regarding future performance that may be made by third parties. For all forward-looking statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Reform Act.

We caution readers that actual results may differ materially from those expressed in or implied by the Company’s forward-looking statements. Rather, more important factors could affect the Company’s future results, including but not limited to the following: (1) the continued impact of COVID-19 on the U.S. and global economies, including business disruptions, reductions in employment and an increase in business failures, specifically among our clients; (2) the continued impact of COVID-19 on our employees and our ability to provide services to our customers and respond to their needs as more cases of COVID-19 may arise in our primary markets; (3) the timing and occurrence or non-occurrence of events may be subject to circumstances beyond our control; (4) there may be increases in competitive pressure among financial institutions or from non-financial institutions; (5) changes in the interest rate environment may reduce interest margins; (6) changes in deposit flows, loan demand or real estate values may adversely affect the business of our primary subsidiary, the Bank, through which substantially all of our operations are carried out; (7) our ability to control operating costs and expenses; (8) our credit quality and the effect of credit quality on our credit losses expense and allowance for credit losses; (9) the adequacy of our allowance for credit losses; (10) changes in accounting principles, policies or guidelines may cause our financial condition to be perceived differently; (11) legislative or regulatory changes that may adversely affect our business or financial condition, including, without limitation, changes in corporate and/or individual income tax laws and policies, changes in privacy laws, and changes in regulatory capital or other rules, and the availability of resources to address or respond to such changes; (12) general economic conditions, either nationally or locally in some or all areas in which we conduct business, or conditions in the securities markets or banking industry, may be less favorable than what we currently anticipate; (13) challenges our customers may face in meeting current underwriting standards may adversely impact all or a substantial portion of the value of our rate-lock loan activity we recognize; (14) technological changes may be more difficult or expensive than what we anticipate; (15) a failure in or breach of our operational or security systems or information technology infrastructure, or those of our third-party providers and vendors, including due to cyber-attacks; (16) success or consummation of new business initiatives may be more difficult or expensive than what we anticipate; (17) our ability to grow efficiently both organically and through acquisitions and to manage our growth and integration costs; (18) our ability to attract and retain key members of our senior management team; (19) staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our work force and potential associated charges; (20) litigation or other matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than what we anticipate; and (21) our ability to obtain regulatory approvals or non-objection to take various capital actions, including the payment of dividends by us or the Bank, or repurchases of our common stock. A discussion of the factors, risks and uncertainties that could affect our financial results, business goals and operational and financial objectives cited in this release, other releases, public statements and/or filings with the Securities and Exchange Commission (“SEC”) is also contained in the “Risk Factors” sections of the Company’s Forms 10-K and 10-Q. We strongly recommend readers review those disclosures in conjunction with the discussions herein.

All future written and oral forward-looking statements attributable to the Company or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements contained or referred to above. New risks and uncertainties arise from time to time, and factors that the Company currently deems immaterial may become material, and it is impossible for the Company to predict these events or how they may affect the Company.

HomeStreet (HMST) 8-KHomeStreet Reports Year End and Fourth Quarter 2021 Results