HomeStreet (NASDAQ:HMST) Bank's Q3 2023 earnings report indicates a decrease in net income from $0.17 per share in Q2 to $0.12 per share, as revealed by CEO Mark Mason and CFO John Michel during the analyst earnings call on Tuesday. The decrease was primarily attributed to the adverse impacts of increased interest rates and a higher proportion of costlier borrowings.
The bank's net interest income also fell by $4.6 million, with the net interest margin reducing from 1.93% to 1.74%. This reduction was primarily due to a 25 basis point increase in the cost of interest-bearing liabilities. Despite this, non-interest income remained consistent with Q2, owing to low levels of single-family mortgage banking originations.
In response to these challenges, HomeStreet has implemented several measures including cutting staff to minimum levels needed for current business volumes, raising new deposits through promotional products, and focusing new loan origination activity primarily on floating rate products such as commercial loans and residential construction loans.
Furthermore, non-interest expenses saw a significant decrease in Q3 compared to Q2, dropping by $41.7 million largely due to a $39.9 million goodwill impairment charge. As of September 30, 2023, the company's common equity Tier 1 and total risk-based capital ratios stood at 9.55% and 12.7% respectively, indicating a significant improvement during the year.
The bank's officials highlighted the Safe Harbor statements as a caution against predictive statements about future performance. Attendees were directed to the detailed earnings release and investor presentation filed under SEC Form 8-K on their website, and informed of the availability of a recording and transcript of the call.
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