Document

"Our results for the third quarter reflect our diversified business model, the benefits of our conservative credit culture and our continuing focus on operating efficiency,” stated Mark Mason, HomeStreet’s Chairman, Chief Executive Officer and President. “Expected decreases in our single family mortgage revenues due to declining refinancing activity were mitigated by decreases in our noninterest expenses. As anticipated, our single family mortgage banking revenue has declined to near normal levels with refinancing activity still slightly elevated. For the second consecutive quarter our mortgage banking revenue comprised only 17% of total revenue and less than 8% of our net income. Additionally, while we continued to benefit from the Paycheck Protection Program (“PPP”) loan forgiveness, our underlying net interest margin has remained stable. Going forward, we expect strong loan production will drive loan portfolio growth and increasing levels of net interest income and we anticipate increasing revenues to largely fall to the bottom line as a result of the operating leverage we have created through our recent efficiency improvement initiatives.”

“Loan origination levels remained strong with $804 million of originations in the current quarter,” added Mr. Mason. “Excluding the impact of the PPP loans, and despite continuing high levels of prepayments, our total loans grew at an annualized rate of 19% during the third quarter and 9% during the first nine months of 2021. Last quarter we disclosed that we were evaluating the use of securitizations as a tool to enable us to originate multifamily permanent loans to our full potential, uncap individual borrower lending limits, improve our capital efficiency and retain the servicing on these loans and that we planned on completing our first securitization this year. While we

continue to evaluate the use of securitizations, we have instead agreed to execute a whole loan sale in the fourth quarter due to extremely favorable prices available in the secondary market today. In addition, total deposits increased by 4% during the third quarter and noninterest bearing deposits increased to 27% of total deposits. During the third quarter, we recognized a $5 million recovery of pandemic related allowance for credit losses. 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, we expect to recover additional amounts of our allowance for credit losses in future periods.”

HomeStreet, Inc. (Nasdaq:HMST), the parent company of HomeStreet Bank, will conduct a quarterly earnings conference call on Tuesday, October 26, 2021 at 1:00 p.m. ET. Mark K. Mason, CEO and President, and John M. Michel, CFO, will discuss third quarter 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/10160178/ed40d1ac7a 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.

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. 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 an Equal Housing Lender.


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

Select Income Statement Data:
Net interest income	$	57,484		$	57,972		$	54,517		$	56,048		$	55,684
Provision for credit losses	(5,000)			(4,000)			—			—			—
Noninterest income	24,298			28,224			38,833			43,977			36,155
Noninterest expense	51,949			52,815			56,608			64,770			58,057


Income:
Before income taxes	34,833			37,381			36,742			35,255			33,782
Total	27,170			29,157			29,663			27,598			26,349
Net income per share - diluted	1.31			1.37			1.35			1.25			1.15
Core net income: (1)
Total	27,170			29,157			29,663			32,384			28,187
Net income per share - diluted	1.31			1.37			1.35			1.47			1.23




Selected Performance Ratios:
Return on average equity - annualized	14.8		%	16.3		%	16.4		%	15.3		%	14.6		%
Return on average tangible equity - annualized: (1)
Net income	15.6		%	17.2		%	17.3		%	16.2		%	15.5		%
Core (1)	15.6		%	17.2		%	17.3		%	19.0		%	16.6		%
Return on average assets - annualized:
Net income	1.48		%	1.59		%	1.65		%	1.47		%	1.40		%
Core (1)	1.48		%	1.59		%	1.65		%	1.73		%	1.50		%

Efficiency ratio (1)	62.8		%	62.8		%	60.0		%	56.1		%	59.9		%
Net interest margin	3.42		%	3.45		%	3.29		%	3.26		%	3.20		%

Other data:
Full-time equivalent employees ("FTE")	983			997			1,013			1,013			999


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

Selected Balance Sheet Data:
Loans held for sale	$	395,112		$	225,241		$	390,223		$	361,932		$	421,737
Loans held for investment, net	5,299,741			5,332,626			5,227,727			5,179,886			5,229,477
Allowance for credit losses ("ACL")	54,516			59,897			64,047			64,294			64,892
Investment securities	983,038			1,007,658			1,049,105			1,076,364			1,111,468
Total assets	7,372,451			7,167,951			7,265,191			7,237,091			7,409,641
Deposits	6,359,660			6,086,527			6,131,233			5,821,559			5,815,690
Borrowings	—			50,000			84,500			322,800			514,590
Long-term debt	125,979			125,932			125,885			125,838			125,791
Total shareholders' equity	710,376			708,731			701,463			717,750			696,306
Other Data:
Book value per share	$	34.74		$	34.09		$	32.84		$	32.93		$	31.66
Tangible book value per share (1)	$	33.18		$	32.53		$	31.31		$	31.42		$	30.15
Equity to assets	9.6		%	9.9		%	9.7		%	9.9		%	9.4		%
Tangible common equity to tangible assets (1)	9.2		%	9.5		%	9.2		%	9.5		%	9.0		%
Shares outstanding at end of period	20,446,648			20,791,659			21,360,514			21,796,904			21,994,204
Loans to deposit ratio	90.4		%	92.3		%	92.7		%	96.3		%	98.3		%
Credit Quality:
ACL to total loans (2)	1.06		%	1.18		%	1.34		%	1.33		%	1.33		%
ACL to nonaccrual loans	307.8		%	287.5		%	297.3		%	310.3		%	307.2		%
Nonaccrual loans to total loans	0.33		%	0.39		%	0.41		%	0.40		%	0.40		%
Nonperforming assets to total assets	0.26		%	0.31		%	0.32		%	0.31		%	0.30		%
Nonperforming assets	$	19,196		$	22,319		$	23,025		$	22,097		$	22,084
Regulatory Capital Ratios:
Bank
Tier 1 leverage ratio	10.17		%	9.95		%	10.01		%	9.79		%	9.40		%
Total risk-based capital	13.71		%	14.36		%	14.84		%	14.76		%	13.95		%
Company
Tier 1 leverage ratio	10.00		%	9.78		%	9.83		%	9.65		%	9.34		%
Total risk-based capital	13.01		%	13.59		%	14.05		%	14.00		%	13.33		%


(in thousands, except share data)	September 30, 2021		December 31, 2020

ASSETS
Cash and cash equivalents	$	218,662	$	58,049

Investment securities	983,038		1,076,364
Loans held for sale	395,112		361,932
Loans held for investment, (net of allowance for credit losses of $54,516 and $64,294)	5,299,741		5,179,886
Mortgage servicing rights	100,831		85,740
Premises and equipment, net	58,449		65,102
Other real estate owned	1,484		1,375
Goodwill and other intangibles	32,002		32,880
Other assets	283,132		375,763
Total assets	$	7,372,451	$	7,237,091
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits	$	6,359,660	$	5,821,559
Borrowings	—		322,800
Long-term debt	125,979		125,838
Accounts payable and other liabilities	176,436		249,144
Total liabilities	6,662,075		6,519,341
Shareholders' equity:
Common stock, no par value; 160,000,000 shares authorized
20,446,648 and 21,796,904 shares issued and outstanding	256,081		278,505
Retained earnings	432,202		403,888
Accumulated other comprehensive income	22,093		35,357
Total shareholders' equity	710,376		717,750
Total liabilities and shareholders' equity	$	7,372,451	$	7,237,091


	Quarter Ended September 30,				Nine Months Ended September 30,
(in thousands, except share and per share data)	2021		2020		2021		2020
Interest income:
Loans	$	56,117	$	57,538	$	166,763	$	172,275
Investment securities	5,130		5,667		16,091		16,053
Cash, Fed Funds and other	141		532		472		960
Total interest income	61,388		63,737		183,326		189,288
Interest expense:
Deposits	2,507		5,986		8,930		28,944
Borrowings	1,397		2,067		4,423		7,730
Total interest expense	3,904		8,053		13,353		36,674
Net interest income	57,484		55,684		169,973		152,614
Provision for credit losses	(5,000)		—		(9,000)		20,469
Net interest income after provision for credit losses	62,484		55,684		178,973		132,145
Noninterest income:
Net gain on loan origination and sale activities	17,509		33,130		72,239		85,698
Loan servicing income (loss)	2,014		(1,582)		4,693		6,921

Deposit fees	2,091		1,769		5,912		5,225

Other	2,684		2,838		8,511		7,543
Total noninterest income	24,298		36,155		91,355		105,387
Noninterest expense:
Compensation and benefits	31,175		34,570		101,388		101,429
Information services	6,902		7,401		20,635		22,330
Occupancy	5,705		8,354		18,170		23,082
General, administrative and other	8,167		7,732		21,179		24,052

Total noninterest expense	51,949		58,057		161,372		170,893
Income before income taxes	34,833		33,782		108,956		66,639
Income tax expense	7,663		7,433		22,966		14,247
Net income	$	27,170	$	26,349	$	85,990	$	52,392

Net income per share:
Basic	$	1.32	$	1.16	$	4.08	$	2.26
Diluted	$	1.31	$	1.15	$	4.03	$	2.24
Weighted average shares outstanding:
Basic	20,613,290		22,665,069		21,099,059		23,226,109
Diluted	20,819,601		22,877,226		21,352,715		23,403,729





	Quarter Ended
(in thousands, except share and per share data)	September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020
Interest income:
Loans	$	56,117	$	57,078	$	53,568	$	56,724	$	57,538
Investment securities	5,130		5,010		5,951		5,733		5,667
Cash, Fed Funds and other	141		159		172		267		532
Total interest income	61,388		62,247		59,691		62,724		63,737
Interest expense:
Deposits	2,507		2,773		3,650		4,853		5,986
Borrowings	1,397		1,502		1,524		1,823		2,067
Total interest expense	3,904		4,275		5,174		6,676		8,053
Net interest income	57,484		57,972		54,517		56,048		55,684
Provision for credit losses	(5,000)		(4,000)		—		—		—
Net interest income after provision for credit losses	62,484		61,972		54,517		56,048		55,684
Noninterest income:
Net gain on loan origination and sale activities	17,509		21,271		33,459		36,866		33,130
Loan servicing income (loss)	2,014		1,931		748		2,570		(1,582)
Deposit fees	2,091		1,997		1,824		1,858		1,769
Other	2,684		3,025		2,802		2,683		2,838
Total noninterest income	24,298		28,224		38,833		43,977		36,155
Noninterest expense:
Compensation and benefits	31,175		34,378		35,835		35,397		34,570
Information services	6,902		6,949		6,784		7,674		7,401
Occupancy	5,705		5,973		6,492		12,241		8,354
General, administrative and other	8,167		5,515		7,497		9,458		7,732
Total noninterest expense	51,949		52,815		56,608		64,770		58,057
Income before income taxes	34,833		37,381		36,742		35,255		33,782
Income tax expense	7,663		8,224		7,079		7,657		7,433
Net income	$	27,170	$	29,157	$	29,663	$	27,598	$	26,349

Net income per share:
Basic	$	1.32	$	1.38	$	1.37	$	1.27	$	1.16
Diluted	$	1.31	$	1.37	$	1.35	$	1.25	$	1.15
Weighted average shares outstanding:
Basic	20,613,290		21,057,473		21,637,671		21,798,545		22,665,069
Diluted	20,819,601		21,287,974		21,961,828		22,103,902		22,877,226


(in thousands, except yield/rate)	Quarter Ended September 30,						Nine Months Ended September 30,
Average Balances:	2021			2020			2021			2020
Investment securities	$	994,593		$	1,149,196		$	1,030,726		$	1,082,402
Loans	5,577,149			5,745,653			5,615,624			5,490,900
Total interest earning assets	6,719,258			6,972,626			6,747,322			6,633,203
Deposits: Interest-bearing	4,525,730			4,326,808			4,563,927			4,293,745
Deposits: Non-interest-bearing	1,679,086			1,398,640			1,552,201			1,228,295
Borrowings	32,167			735,493			137,754			648,836
Long-term debt	125,948			125,760			125,902			125,713
Total interest-bearing liabilities	4,683,845			5,188,061			4,827,583			5,068,294

Average Yield/Rate:
Investment securities	2.34		%	2.23		%	2.34		%	2.22		%
Loans	3.98		%	3.96		%	3.95		%	4.16		%
Total interest earning assets	3.65		%	3.66		%	3.65		%	3.82		%
Deposits: Interest-bearing	0.22		%	0.55		%	0.26		%	0.90		%
Total deposits	0.16		%	0.42		%	0.20		%	0.70		%
Borrowings	0.54		%	0.35		%	0.33		%	0.64		%
Long-term debt	4.28		%	4.38		%	4.31		%	4.66		%
Total interest-bearing liabilities	0.33		%	0.62		%	0.37		%	0.96		%
Net interest rate spread	3.32		%	3.04		%	3.28		%	2.86		%
Net interest margin	3.42		%	3.20		%	3.39		%	3.09		%


(in thousands, except yield/rate)	Quarter Ended
Average Balances:	September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020
Investment securities	$	994,593		$	1,032,995		$	1,065,423		$	1,098,367		$	1,149,196
Loans	5,577,149			5,664,187			5,605,868			5,705,512			5,745,653
Total interest earning assets	6,719,258			6,783,707			6,739,335			6,877,872			6,972,626
Deposits: Interest-bearing	4,525,730			4,577,504			4,589,126			4,491,440			4,326,808
Deposits: Noninterest-bearing	1,679,086			1,541,317			1,433,765			1,421,182			1,398,640
Borrowings	32,167			179,543			203,621			471,175			735,493
Long-term debt	125,948			125,901			125,854			125,807			125,760
Total interest-bearing liabilities	4,683,845			4,882,948			4,918,601			5,088,422			5,188,061

Average Yield/Rate:
Investment securities	2.34		%	2.20		%	2.47		%	2.35		%	2.23		%
Loans	3.98		%	4.02		%	3.85		%	3.93		%	3.96		%
Total interest earning assets	3.65		%	3.70		%	3.60		%	3.65		%	3.66		%
Deposits: Interest-bearing	0.22		%	0.24		%	0.32		%	0.43		%	0.55		%
Total deposits	0.16		%	0.18		%	0.25		%	0.33		%	0.42		%
Borrowings	0.54		%	0.31		%	0.32		%	0.35		%	0.35		%
Long-term debt	4.28		%	4.31		%	4.33		%	4.35		%	4.38		%
Total interest-bearing liabilities	0.33		%	0.35		%	0.42		%	0.52		%	0.62		%
Net interest rate spread	3.32		%	3.35		%	3.18		%	3.13		%	3.04		%
Net interest margin	3.42		%	3.45		%	3.29		%	3.26		%	3.20		%

The $0.9 million decrease in noninterest expense in the third quarter of 2021 as compared to the second quarter of 2021 was primarily due to lower compensation and benefits costs partially offset by higher general, administrative and other costs. The reduction in compensation and benefit costs was due to reductions in commission expense related to lower levels of loans closed for our single family mortgage operations and lower benefit costs due to third quarter seasonality. General, administrative and other costs increased due to a $1.9 million reimbursement of legal costs received from our insurance carrier in the second quarter of 2021 and higher marketing costs.

Net interest income was higher in the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 due to a $114 million increase in interest earning assets and an increase in our net interest margin from 3.09% in the nine months ended September 30, 2020 to 3.39% in the nine months ended September 30, 2021. The increase in interest earning assets was due to an increase in total loans. The increase in our net interest margin was due to a 42 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 17 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 0.96% in the nine months ended September 30, 2020 to 0.37% in the nine months ended September 30, 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 $9 million recovery of our allowance for credit losses in the nine months ended September 30, 2021. Due to adverse economic conditions related to the COVID-19 pandemic, in the nine months ended September 30, 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.

$17.5 million decrease in single family gain on loan origination and sale activities which was partially offset by a $4.0 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 22% decrease in rate locks. The increase in CRE and commercial gain on loan origination and sale activities was due to a 44% increase in the realized gain on sale which was partially offset by a 7% decrease in the volume of loans sold. The $2.2 million decrease in loan servicing income was due to a $5.6 million decrease in single family servicing income which was partially offset by a $3.4 million increase in commercial loan servicing income. The decrease in single family servicing income was due primarily to increased amortization of single family MSRs due to higher levels of prepayments and a $0.9 million decrease in risk management results. The increase in commercial loan servicing income was primarily due to higher levels of prepayment fees.

million decrease in occupancy expenses was primarily due to $4.4 million of impairments related to ongoing restructuring of our facilities recognized in the nine months ended September 30, 2020, with no similar charges in 2021. The $2.9 million decrease in general, administrative and other costs is due to a $1.9 million reimbursement of legal costs received from our insurance carrier in the second quarter of 2021 and $1.0 million of charges incurred in 2020 related to our efficiency improvement initiatives, which were partially offset by a $0.6 million increase in marketing costs.

During the nine months ended September 30, 2021, total assets increased by $135 million due to a $120 million increase in loans held for investment and a $161 million increase in cash, partially offset by decreases in investments and other assets. Loans held for investment increased due to $2.5 billion of originations, which were partially offset by prepayments and scheduled payments of $2.0 billion and transfer of loans to loans held for sale of $391 million. Total liabilities increased primarily due to a $538 million increase in deposits, partially offset by a $323 million decrease in borrowings. The decrease in borrowings reflect the reduced need of wholesale funding resulting from the increase in deposits. The growth in deposits was due to new customers and increases in existing customer balances.


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

Commercial real estate loans
Non-owner occupied commercial real estate	$	754,031	$	761,754	$	766,002	$	829,538	$	847,079
Multifamily	2,090,156		1,966,995		1,521,349		1,428,092		1,327,156
Construction/land development	514,322		484,282		532,202		553,695		590,707
Total commercial real estate loans	3,358,509		3,213,031		2,819,553		2,811,325		2,764,942
Commercial and industrial loans
Owner occupied commercial real estate	450,350		457,504		473,273		467,256		462,613
Commercial business	435,756		575,122		757,231		645,723		683,917
Total commercial and industrial loans	886,106		1,032,626		1,230,504		1,112,979		1,146,530
Consumer loans
Single family (1)	793,927		812,287		875,417		915,123		936,774
Home equity and other	315,715		334,579		366,300		404,753		446,123
Total consumer loans	1,109,642		1,146,866		1,241,717		1,319,876		1,382,897
Total	5,354,257		5,392,523		5,291,774		5,244,180		5,294,369
Allowance for credit losses	(54,516)		(59,897)		(64,047)		(64,294)		(64,892)
Net	$	5,299,741	$	5,332,626	$	5,227,727	$	5,179,886	$	5,229,477


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

Loans - beginning balance	$	5,392,523	$	5,291,774	$	5,244,180	$	5,294,369	$	5,432,278
Originations and advances	804,307		911,630		768,787		734,029		612,091
Transfers (to) from loans held for sale	(261,697)		1,394		(130,218)		(157,315)		(295,868)
Payoffs, paydowns and other	(580,754)		(812,261)		(590,897)		(626,436)		(453,657)
Charge-offs and transfers to OREO	(122)		(14)		(78)		(467)		(475)
Loans - ending balance	$	5,354,257	$	5,392,523	$	5,291,774	$	5,244,180	$	5,294,369


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

Commercial real estate loans
Non-owner occupied commercial real estate	$	30,065	$	14,308	$	8,404	$	18,233	$	23,183
Multifamily	408,353		513,620		282,795		353,802		272,460
Construction/land development	191,774		183,571		165,631		171,822		153,222
Total commercial real estate loans	630,192		711,499		456,830		543,857		448,865
Commercial and industrial loans
Owner occupied commercial real estate	11,879		8,709		33,155		20,968		15,192
Commercial business	38,157		83,053		163,525		41,357		34,956
Total commercial and industrial loans	50,036		91,762		196,680		62,325		50,148
Consumer loans
Single family	93,602		78,182		95,544		103,016		83,805
Home equity and other	30,477		30,187		19,733		24,831		29,273
Total consumer loans	124,079		108,369		115,277		127,847		113,078
Total	$	804,307	$	911,630	$	768,787	$	734,029	$	612,091


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

Allowance for credit losses
Beginning balance	$	59,897	$	64,047	$	64,294	$	64,892	$	65,000
Provision for credit losses	(5,348)		(4,145)		(371)		210		273
Recoveries (charge-offs), net	(33)		(5)		124		(808)		(381)

Ending balance	$	54,516	$	59,897	$	64,047	$	64,294	$	64,892

Allowance for unfunded commitments:
Beginning balance	$	2,104	$	1,959	$	1,588	$	1,798	$	2,071
Provision for credit losses	348		145		371		(210)		(273)


Ending balance	$	2,452	$	2,104	$	1,959	$	1,588	$	1,798

Provision for credit losses:
Allowance for credit losses - loans	$	(5,348)	$	(4,145)	$	(371)	$	210	$	273
Allowance for unfunded commitments	348		145		371		(210)		(273)
Total	$	(5,000)	$	(4,000)	$	—	$	—	$	—


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

Non-owner occupied commercial real estate	$	9,636	1.28	%	$	9,077	1.19	%	$	8,845	1.07	%
Multifamily	5,457		0.26	%	7,245		0.37	%	6,072		0.43	%
Construction/land development
Multifamily construction	1,044		2.08	%	500		1.15	%	4,903		4.25	%
Commercial real estate construction	351		1.96	%	2,022		6.75	%	1,670		6.12	%
Single family construction	6,291		2.07	%	5,653		2.05	%	5,130		1.98	%
Single family construction to perm	1,062		0.74	%	1,047		0.78	%	1,315		0.87	%
Total commercial real estate loans	23,841		0.71	%	25,544		0.80	%	27,935		0.99	%
Owner occupied commercial real estate	5,285		1.18	%	5,518		1.21	%	4,994		1.08	%
Commercial business	14,473		4.08	%	15,874		4.36	%	17,043		4.72	%
Total commercial and industrial	19,758		2.46	%	21,392		2.61	%	22,037		2.67	%
Single family	5,757		0.85	%	7,163		1.02	%	6,906		0.85	%
Home equity and other	5,160		1.63	%	5,798		1.74	%	7,416		1.83	%
Total consumer	10,917		1.10	%	12,961		1.25	%	14,322		1.18	%
Total	$	54,516	1.06	%	$	59,897	1.18	%	$	64,294	1.33	%


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

Loan originations
Single family loans	$	414,102	$	562,804	$	623,889	$	628,762	$	573,065
Commercial and industrial and CRE loans	34,464		42,435		113,304		162,898		116,496
Loans sold
Single family loans	469,090		627,282		573,040		592,661		686,280
Commercial and industrial and CRE loans (1)	69,810		138,421		257,717		406,717		170,980
Net gain on loan origination and sale activities
Single family loans	14,249		15,836		26,187		27,044		27,632
Commercial and industrial and CRE loans (1)	3,260		5,435		7,272		9,822		5,498
Total	$	17,509	$	21,271	$	33,459	$	36,866	$	33,130


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

Single family servicing income, net:
Servicing fees and other	$	3,878	$	3,975	$	3,935	$	4,120	$	4,124
Changes - amortization (1)	(4,579)		(5,181)		(5,693)		(5,508)		(4,401)
Net	(701)		(1,206)		(1,758)		(1,388)		(277)
Risk management, single family MSRs:
Changes in fair value due to assumptions (2)	747		(5,024)		11,463		2,015		(2,960)
Net gain (loss) from derivatives hedging	(293)		5,024		(12,591)		(1,328)		(91)
Subtotal	454		—		(1,128)		687		(3,051)
Single family servicing income (loss)	(247)		(1,206)		(2,886)		(701)		(3,328)
Commercial loan servicing income:
Servicing fees and other	4,019		5,270		4,978		4,844		3,096
Amortization of capitalized MSRs	(1,758)		(2,133)		(1,344)		(1,573)		(1,350)
Total	2,261		3,137		3,634		3,271		1,746
Total loan servicing income (loss)	$	2,014	$	1,931	$	748	$	2,570	$	(1,582)


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




Single Family MSRs
Beginning balance	$	59,872		$	62,352		$	49,966		$	47,018		$	47,804
Additions and amortization:
Originations	5,166			7,725			6,616			6,482			6,569

Changes - amortization (1)	(4,579)			(5,181)			(5,693)			(5,508)			(4,401)
Net additions and amortization	587			2,544			923			974			2,168
Change in fair value due to assumptions (2)	747			(5,024)			11,463			1,974			(2,954)
Ending balance	$	61,206		$	59,872		$	62,352		$	49,966		$	47,018
Ratio to related loans serviced for others	1.09		%	1.05		%	1.10		%	0.85		%	0.76		%




Multifamily and SBA MSRs
Beginning balance	$	39,113		$	39,626		$	35,774		$	31,806		30,583
Originations	2,270			1,620			5,196			5,458			2,524
Amortization	(1,758)			(2,133)			(1,344)			(1,490)			(1,301)
Ending balance	$	39,625		$	39,113		$	39,626		$	35,774		$	31,806
Ratio to related loans serviced for others	1.92		%	1.92		%	2.02		%	1.99		%	1.93		%


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

Deposits by Product:
Noninterest-bearing accounts - checking and savings	$	1,479,491		$	1,316,698		$	1,190,953		$	1,092,735		$	1,022,786
Interest-bearing transaction and savings deposits:
Interest-bearing demand deposit accounts	555,716			557,677			557,900			484,265			545,890
Statement savings accounts due on demand	305,395			293,563			287,028			264,024			258,727
Money market accounts due on demand	2,796,524			2,650,564			2,665,875			2,596,453			2,512,440
Total interest-bearing transaction and savings deposits	3,657,635			3,501,804			3,510,803			3,344,742			3,317,057
Total transaction and savings deposits	5,137,126			4,818,502			4,701,756			4,437,477			4,339,843
Certificates of deposit	995,475			1,022,967			1,178,714			1,139,807			1,174,839
Noninterest-bearing accounts - other	227,059			245,058			250,763			244,275			301,008
Total deposits	$	6,359,660		$	6,086,527		$	6,131,233		$	5,821,559		$	5,815,690

Percent of total deposits:
Noninterest-bearing accounts - checking and savings	23.3		%	21.6		%	19.4		%	18.8		%	17.6		%
Interest-bearing transaction and savings deposits:
Interest-bearing demand deposit accounts	8.7		%	9.2		%	9.1		%	8.3		%	9.4		%
Statement savings accounts, due on demand	4.8		%	4.8		%	4.7		%	4.5		%	4.4		%
Money market accounts, due on demand	44.0		%	43.5		%	43.5		%	44.6		%	43.2		%
Total interest-bearing transaction and savings deposits	57.5		%	57.5		%	57.3		%	57.4		%	57.0		%
Total transaction and savings deposits	80.8		%	79.1		%	76.7		%	76.2		%	74.6		%
Certificates of deposit	15.7		%	16.8		%	19.2		%	19.6		%	20.2		%
Noninterest-bearing accounts - other	3.5		%	4.1		%	4.1		%	4.2		%	5.2		%
Total deposits	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%

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

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 interested parties in the evaluation of companies in our industry. However, 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 a reconciliation 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.

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.


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

Tangible book value per share
Shareholders' equity	$	710,376		$	708,731		$	701,463		$	717,750		$	696,306
Less: Goodwill and other intangibles	(32,002)			(32,295)			(32,587)			(32,880)			(33,222)
Tangible shareholders' equity	$	678,374		$	676,436		$	668,876		$	684,870		$	663,084

Common shares outstanding	20,446,648			20,791,659			21,360,514			21,796,904			21,994,204

Computed amount	$	33.18		$	32.53		$	31.31		$	31.42		$	30.15

Tangible common equity to tangible assets
Tangible shareholders' equity (per above)	$	678,374		$	676,436		$	668,876		$	684,870		$	663,084
Tangible assets
Total assets	$	7,372,451		$	7,167,951		$	7,265,191		$	7,237,091		$	7,409,641
Less: Goodwill and other intangibles	(32,002)			(32,295)			(32,587)			(32,880)			(33,222)
Net	$	7,340,449		$	7,135,656		$	7,232,604		$	7,204,211		$	7,376,419

Ratio	9.2		%	9.5		%	9.2		%	9.5		%	9.0		%

Core net income
Net income	$	27,170		$	29,157		$	29,663		$	27,598		$	26,349
Adjustments (tax effected)
Restructuring related charges	—			—			—			4,786			1,838

Total	$	27,170		$	29,157		$	29,663		$	32,384		$	28,187

Return on average tangible equity (annualized)
Average shareholders' equity	$	726,823		$	718,838		$	731,719		$	717,666		$	716,899
Less: Average goodwill and other intangibles	(32,195)			(32,487)			(32,777)			(33,103)			(33,447)
Average tangible equity	$	694,628		$	686,351		$	698,942		$	684,563		$	683,452

Net income	$	27,170		$	29,157		$	29,663		$	27,598		$	26,349
Adjustments (tax effected)
Amortization of core deposit intangibles	229			229			236			267			266
Tangible income applicable to shareholders	$	27,399		$	29,386		$	29,899		$	27,865		$	26,615

Ratio	15.6		%	17.2		%	17.3		%	16.2		%	15.5		%

Return on average tangible equity (annualized) - Core
Average tangible equity (per above)	$	694,628		$	686,351		$	698,942		$	684,563		$	683,452

Core net income (per above)	$	27,170		$	29,157		$	29,663		$	32,384		$	28,187
Adjustments (tax effected)
Amortization of core deposit intangibles	229			229			236			267			266
Tangible core income applicable to shareholders	$	27,399		$	29,386		$	29,899		$	32,651		$	28,453

Ratio	15.6		%	17.2		%	17.3		%	19.0		%	16.6		%


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

Return on average assets (annualized) - Core
Average assets	$	7,264,933		$	7,342,275		$	7,310,408		$	7,463,702		$	7,499,809
Core net income (per above)	27,170			29,157			29,663			32,384			28,187

Ratio	1.48		%	1.59		%	1.65		%	1.73		%	1.50		%

Efficiency ratio
Noninterest expense
Total	$	51,949		$	52,815		$	56,608		$	64,770		$	58,057
Adjustments:
Restructuring related charges	—			—			—			(6,112)			(2,357)
Legal fees recovery	—			1,900			—			—			—
Prepayment fee on FHLB advances	—			—			—			(1,492)			—
State of Washington taxes	(578)			(602)			(579)			(1,056)			(677)
Adjusted total	$	51,371		$	54,113		$	56,029		$	56,110		$	55,023

Total revenues
Net interest income	$	57,484		$	57,972		$	54,517		$	56,048		$	55,684
Noninterest income	24,298			28,224			38,833			43,977			36,155


Adjusted total	$	81,782		$	86,196		$	93,350		$	100,025		$	91,839

Ratio	62.8		%	62.8		%	60.0		%	56.1		%	59.9		%

Core diluted earnings per share
Core net income (per above)	$	27,170		$	29,157		$	29,663		$	32,384		$	28,187
Fully diluted shares	20,819,601			21,287,974			21,961,828			22,103,902			22,877,226

Ratio	$	1.31		$	1.37		$	1.35		$	1.47		$	1.23







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

This press release contains forward-looking statements concerning HomeStreet, Inc. (and any consolidated subsidiaries of HomeStreet, Inc.) and its operations, performance and financial condition, as well as plans and expectations for future actions and events. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements are based on many beliefs, assumptions, estimates and expectations of our future performance, taking into account information currently available to us, and include our expectations about future performance and 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. When used in this press release, the words "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "potential," "should," "will" and "would" and similar expressions (including the negative of these terms) may help identify forward-looking statements. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond management's control. Forward-looking statements speak only as of the date made, and we do not undertake to update them to reflect changes or events that occur after that date.

We caution readers that actual results may differ materially from those expressed in, or implied or projected by, such forward-looking statements. Among other things, we face limitations and risks associated with the ongoing impacts of COVID-19 and the extent to which it has impacted and will continue to impact our communities, business, operations and performance, which could have a negative impact on our credit portfolio, borrowers, and share price; challenges to our ability to efficiently expand our banking operations, meet our growth targets, maintain our competitive position, generate positive net income and cash flow and return capital to our shareholders; the possibility that the results of our efficiency improvement initiatives and recent restructuring may fall short of our financial and operational expectations; adverse impacts to our business of reducing the size of our operations; changes in general political and economic conditions that impact our markets and our business; actions by our regulators that affect monetary and fiscal policy; regulatory and legislative actions that may increase capital requirements or otherwise constrain our ability to do business; our ability to maintain electronic and physical security of our customer data and our information systems; our ability to maintain compliance with current and evolving laws and regulations; our ability to attract and retain key personnel; employee litigation risk arising from current or past operations including but not limited to various restructuring activities undertaken by the Bank in recent years; our ability to make accurate estimates of the value of our non-cash assets and liabilities; our ability to operate our business efficiently in a time of lower revenues and increases in the competition in our industry and across our markets; increases in competition; unfavorable changes in general economic conditions; the ability of our customers to meet their debt obligations; consumer confidence and spending habits either nationally or in the regional and local market areas in which we do business; and the extent of our success in resolving problem assets. In addition, we may not recognize all or a substantial portion of the value of our rate-lock loan activity due to challenges our customers may face in meeting current underwriting standards. A discussion of the factors that may pose a risk to the achievement of our business goals and our operational and financial objectives is contained in our Annual Report on Form 10-K for the year ended December 31, 2020 and other reports filed with the Securities and Exchange Commission. We strongly recommend readers review those disclosures in conjunction with the discussions herein.


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


	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

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		%

June 30, 2021
Total loans held for investment	$	1,467		$	803		$	9,731		$	20,835		$	32,836		$	5,359,687		$	5,392,523
%	0.03		%	0.01		%	0.18		%	0.39		%	0.61		%	99.39		%	100.00		%


Operating Results						Third quarter compared to second quarter 2021 •Net income: $27.2 million compared with $29.2 million •Earnings per fully diluted share: $1.31 compared to $1.37 •Net interest margin: 3.42%, compared to 3.45% •ROE: 14.8% compared to 16.3% •ROTCE: 15.6% compared to 17.2% •Return on average assets: 1.48% compared to 1.59% •Efficiency ratio: 62.8% unchanged




Financial Position						Third quarter compared to second quarter 2021 •Loan portfolio originations: $804 million •Single family loans held for sale originations: $414 million, a 26% decrease •Commercial and consumer noninterest-bearing deposits increased 9% •Period ending cost of deposits: 0.15%, compared to 0.16% •Book value per share: $34.74, compared to $34.09 •Tangible book value per share: $33.18, compared to $32.53


Other						•Repurchased a total of 372,622 shares of our common stock at an average price of $40.26 per share during the third quarter •Declared and paid a cash dividend of $0.25 per share in the quarter