HomeStreet to cut jobs as mortgage business sputters
HomeStreet in Seattle is cutting more costs after posting another loss in its mortgage segment.
The $6.9 billion-asset company said in a press release Monday that it will eliminate 86 positions, including 37 jobs in its mortgage business. The other cuts will involve personnel in its commercial and consumer business lines and corporate support.
The moves, which represent about 4% of the workforce, should save HomeStreet $12.4 million annually.
HomeStreet had already taken an ax to its mortgage operations, cutting 60 positions in the business last year. It also closed or reduced space in nine lending centers. Overall, employment is down about 8% from a year earlier.
HomeStreet’s mortgage business is being hurt by higher interest rates, which have reduced demand for refinancing, Mark Mason, the company's chairman, president and CEO, said in the release.
HomeStreet's mortgage banking segment reported a $4.3 million loss in the first quarter.
“The first quarter ... was one of meeting challenges,” Mason said in the release. “The limited supply of new and resale housing has become acute and is beginning to be felt nationwide, the yield curve has flattened considerably to near historic lows, and the capital markets experienced periods of extreme volatility during the quarter.”
A focus on mortgage and acquisitions has drawn the ire of Blue Lion Capital, which owns about 6% of HomeStreet's stock. HomeStreet has bought four banks since late 2013.
Blue Lion had planned to nominate two candidates for HomeStreet’s board and submit a proposal to separate the chairman and CEO roles. HomeStreet invalidated the investor's paperwork in a decision that a court recently upheld.
The investor continues to push for change, and urged shareholders last week to vote against two of HomeStreet’s director nominees. It also encouraged shareholders to vote against a nonbinding advisory proposal on executive compensation.
Blue Lion also took aim at the cost-cutting effort, calling it "belated and miniature" in a press release Tuesday.
"That plan barely moves the needle," Blue Lion claimed. "HomeStreet would need to reduce the annualized expenses in its commercial bank alone by at least $25 million to bring its efficiency ratio in line with peers."
HomeStreet reported that its first-quarter profit fell 34% from a year earlier, to $5.9 million, with the mortgage segment weighing down the results.