HomeStreet, Inc. (NASDAQ:HMST) Q1 2018 Earnings Conference Call - Final Transcript

Apr 24, 2018 • 01:00 pm ET

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HomeStreet, Inc. (NASDAQ:HMST) Q1 2018 Earnings Conference Call - Final Transcript

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Presentation
Executive
Mark Mason

$1.8 billion and $1.9 billion in the second and third quarters of this year, respectively. We anticipate mortgage held for sale closing volumes of $1.9 billion for both the second and third quarters.

For the full year of 2018, we now anticipate single-family mortgage loan lock and forward sale commitments to total $6.7 billion and loan closing volume to total $6.9 billion. Additionally, we expect our mortgage composite profit margin to decline to a range of between 305 and 315 basis points during 2018. The decrease in our composite profit margin guidance reflects lower government and purchase mortgage originations as well as the current competitive environment.

All of these issues have the potential to change positively in the near term. For example, as recently as January of this year, our composite profit margin was substantially higher than the average for the quarter. These mortgage loan volume and composite margin guidance estimates assume the continuance of current challenges of low new and resale home inventory and competitive pressure on profit margins. We do expect the seasonal increase in volume during the mid-year home-buying season, but at lower levels than previously anticipated.

In our commercial and consumer banking segment, we anticipate higher levels of commercial real estate loan sales during the remainder of the year, which will impact our average quarterly net loan growth. We continue to expect our 2018 quarterly loan portfolio growth to average between 2% and 4% for the remainder of the year. Reflecting the continued flattening of the yield curve and asset changes in market rates and loan prepayment speeds, we expect our consolidated net interest margin to increase in the second quarter to a range of 3.25% to 3.35% and continue up to a range of 3.35% to 3.45% by the fourth quarter. During the second quarter, we expect our total non-interest expense to increase, given the seasonally higher closed mortgage loan expectations. However, non-interest expenses in our commercial and consumer banking segment are expected to increase between 2% and 3% over the remainder of this year.

Notwithstanding the increase in non-interest expense in the commercial and consumer banking segment, we expect segment revenues to grow at more than twice the rate of this expense growth. For the remainder of 2018, we expect total non-interest expenses to grow between 1% and 2%. The growth rate of our total non-interest expenses will vary somewhat quarter-over-quarter, driven by seasonality and cyclicality in our closed mortgage loan volume.

This concludes our prepared comments. Thank you for your attention today. Mark and I would be happy to answer any questions you have at this time.