HomeStreet (HMST) recorded a first-quarter 2014 net income of $2.3 million, or 15 cents per share, compared to a net loss of $861 thousand, or 6 cents per share, for the fourth quarter of 2013.
This is down from a net income of $10.9 million, or 74 cents per share, for the first quarter of 2013.
The mortgage-banking segment posted a net loss of $1 million, compared to net loss of $1.1 million in the fourth quarter of 2013 and net income of $13.8 million in the first quarter of 2013.
Furthermore, single-family mortgage closed loan volume dipped to $675.8 million, a 12.6% drop from the fourth quarter of 2013 and a 43.3% decline from the first quarter of 2013.
But despite the company being challenged by a lower-than-anticipated loan volume, it anticipates a return to mortgage origination profitability in the second quarter and beyond.
“While first-quarter lending volume was also less than we had anticipated, loan application and interest rate lock volume has increased steadily since February as a result of traditional home buying seasonality and the ramp-up of loan volume from the hiring of additional loan originators,” CEO Mark Mason said.
In addition, the company took the opportunity to restructure its loans held for investment portfolio and in March decided to sell approximately $300 million of single-family mortgages at an attractive price.
“This action enables us to meet our loan portfolio diversification goals and provides the company additional lending liquidity to support our loan portfolio growth targets. As a consequence of the decision to sell these loans, we recorded a $1.5 million release of loan loss reserves in the quarter,” Mason said.