HomeStreet scales down mortgage originations, takes 1Q profit loss
In a long-term attempt to stabilize its earnings from the cyclical nature of home loans, HomeStreet took a loss in the opening quarter of 2019.
The company reported a $1.7 million net loss in the first quarter, compared to $5.9 million in profit the year before and a $15.2 million gain the quarter earlier. By diluted share, the company lost $0.06 in the first quarter, down from a $0.22 gain the year before and $0.56 per share from the prior quarter.
The company's trim down added up to a $9.6 million loss on exit. While the near-term deficit isn't ideal, the MSR sale provides regulatory capital relief supporting a share repurchase program for up to $75 million of common stock.
"Our exit of the home loan center-based mortgage origination and related mortgage servicing business will significantly reduce the size and scope of HomeStreet's single-family mortgage banking business and substantially mitigate the impact of this cyclical and volatile earnings stream," Mark Mason, HomeStreet's chairman of the board, president and CEO, said in a press release.
"Our remaining single-family mortgage origination and servicing business will be much smaller, integrated with our regional commercial and consumer banking business, and will be reported within continuing operations. Going forward, originations will be sourced through our bank locations, online, and affinity relationships. We thank those employees who are part of these transactions for their tireless efforts and contributions to our success," Mason continued.