Executive Summary

Q1 2025 reported net loss improved sharply to $4.5M (−$0.24 diluted EPS) from Q4 2024’s $123.3M (−$6.54), and narrowed versus Q1 2024’s $7.5M (−$0.40), driven by higher net interest income and noninterest income; core net loss was $2.9M (−$0.15) .
Net interest margin expanded to 1.82%, up 44 bps q/q and 38 bps y/y, reflecting sale of lower-yielding multifamily loans and reduction of higher-cost borrowings/brokered CDs; efficiency ratio improved to 102.9% from 115.6% q/q .
Deposits excluding brokered rose $131M in Q1, while brokered CDs fell $454M; loans held for investment declined $169M, strengthening liquidity and funding mix; uninsured deposits were 9% of total ($542M) .
Management reiterated expectation to return to profitability during 2025, noting no income tax expense expected for “the next few years” due to the deferred tax asset valuation allowance recorded in Q4 2024 .
Strategic catalyst: announced merger with Mechanics Bank (expected close Q3 2025), creating a combined $23B-asset West Coast bank and renaming HomeStreet to Mechanics Bancorp, with legacy Mechanics shareholders owning ~91.7% post-close .

What Went Well and What Went Wrong

What Went Well

Net interest margin inflected higher to 1.82% (from 1.38% in Q4), aided by selling $990M of lower-yielding multifamily loans and paying down higher-cost borrowings and brokered CDs; “Our net interest margin… increased significantly due to the impact of the fourth quarter loan sale…” — Mark Mason .
Core loss narrowed to $2.9M from $5.1M q/q; core noninterest expense remained stable at $46.7M amid FTE reductions and disciplined OpEx management .
Funding quality improved: non-brokered deposits +$131M q/q; brokered CDs −$454M; uninsured deposits remained low at 9% of total ($542M) .

What Went Wrong

GAAP noninterest expenses rose to $49.1M (+$5.2M q/q) due to $2.1M merger-related costs and the absence of Q4 merger expense recoveries; occupancy fell, but comp/benefits rose with 2025 wage/benefit increases .
Provision for credit losses of $1.0M in Q1 driven by $3.3M higher specific reserves for a syndicated commercial loan; NPA and delinquency ratios ticked up modestly with lower LHFI balances .
Credit concentration in CRE remains material despite portfolio runoff; multifamily LHFI still $2.93B, and C&I/commercial totals $0.64B, with allowance coverage modest (ACL/LHFI 0.66%) .

Financial Results

Metric	Q1 2024	Q3 2024	Q4 2024	Q1 2025
Net interest income ($USD Millions)	$32.151	$28.619	$29.616	$33.221
Noninterest income ($USD Millions)	$9.454	$11.058	$(78.124)	$12.136
Total revenues (Adjusted) ($USD Millions)	$41.605	$39.677	$40.310	$45.357
Net income (loss) ($USD Millions)	$(7.497)	$(7.282)	$(123.327)	$(4.465)
Diluted EPS ($USD)	$(0.40)	$(0.39)	$(6.54)	$(0.24)
Net interest margin (%)	1.44%	1.33%	1.38%	1.82%
Efficiency ratio (%)	118.0%	118.7%	115.6%	102.9%

Note: S&P Global consensus estimates for Q1 2025 were unavailable at the time of this report.

Segment/Balance Mix – Deposits by Product ($USD Millions)

Product	Q1 2024	Q3 2024	Q4 2024	Q1 2025
Noninterest-bearing demand	$1,311.559	$1,253.582	$1,195.781	$1,276.133
Interest-bearing demand	$330.301	$315.711	$323.112	$327.400
Savings	$256.383	$239.060	$229.659	$233.240
Money market	$1,536.341	$1,445.639	$1,396.697	$1,437.024
Certificates of deposit (Brokered)	$921.103	$741.051	$751.406	$297.717
Certificates of deposit (Other)	$2,135.415	$2,440.361	$2,516.366	$2,518.981
Total deposits	$6,491.102	$6,435.404	$6,413.021	$6,090.495

KPIs and Risk Metrics

KPI	Q3 2024	Q4 2024	Q1 2025
Uninsured deposits ($) and % of total	$509M; 8%	$581M; 9%	$542M; 9%
Loans-to-deposit ratio (Bank)	113.5%	97.4%	99.9%
Nonperforming assets / total assets	0.47%	0.71%	0.75%
Delinquencies (past due + nonaccrual)	0.69%	1.06%	1.09%
ACL / total loans	0.53%	0.63%	0.66%
Book value per share ($)	$28.55	$21.05	$21.18
Tangible book value per share ($)	$28.13	$20.67	$20.83
Borrowings ($USD Millions)	$1,896	$1,000	$1,000
FTE	819	792	766

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Profitability timing	FY 2025	“Expect to return to profitability in first half of 2025” (post-loan sale)	“Anticipate a return to profitability during 2025; Bank posted $1.1M net income in Q1”	Maintained; Bank achieved
Net interest margin trajectory	FY 2025	NIM expected to increase in coming quarters	NIM rose to 1.82% in Q1; expects continuous earnings growth	Positive realization
Income tax expense	Near term	Expect no tax expense given DTA valuation allowance	Do not expect to recognize tax expense for “the next few years”	Maintained
Funding mix (brokered CDs)	2025	Pay down brokered CDs with sale proceeds	Brokered CDs −$454M q/q; non-brokered deposits +$131M	Improved mix
Strategic direction (M&A)	2024–2025	Board evaluating strategic alternatives	Merger with Mechanics Bank announced; expected close Q3 2025	New transaction

Earnings Call Themes & Trends

Topic	Q3 2024 (Previous Mentions)	Q4 2024 (Previous Mentions)	Q1 2025 (Current Period)	Trend
Strategic plan / loan sale	Focus on lowering funding costs; stable NIM later in quarter	Sold $990M multifamily loans; repositioned balance sheet	Benefits realized in NIM and earnings trajectory	Improving
NIM & funding costs	NIM 1.33%; expected to increase with lower rates	NIM 1.38%; deposit spot rate 2.65% (ex-brokered 2.39%)	NIM 1.82%; further reductions in term deposit rates expected	Upward
Deposits (brokered vs core)	Non-brokered deposits grew; brokered sizable	Plan to pay off brokered CDs	Non-brokered +$131M; brokered CDs −$454M	Mix improving
Credit quality / specific reserves	Low delinquencies; modest ACL	Nonperformer syndication noted; NPA ratio up with sale base effect	+$3.3M specific reserves; NPA/TA 0.75%	Slight pressure
Expense management / FTE	Noninterest expense −3.5% q/q; FTE down	FTE fell to 792; expenses lowered	Core OpEx stable; FTE 766; GAAP OpEx impacted by merger costs	Stable to lower core
M&A / strategic alternatives	FirstSun merger pending	Board evaluating options; Q&A on potential buyers	Mechanics Bank merger announced; Q3 2025 close target	Transitioned
DTA / tax	ETR benefits; goodwill impairment effects in 2023	$53.3M DTA allowance; expect no tax expense near-term	No tax expense expected for next few years	Sustained

Management Commentary

“As a result of the implementation of our new strategic plan, we anticipate a return to profitability during 2025… our interest margin improved from 1.38% in Q4 2024 to 1.82% in Q1 2025.” — Mark Mason, CEO .
“Importantly, the Bank… realized $1.1 million in net income in the first quarter of 2025, achieving our strategic goal of returning the Bank to profitability.” — Mark Mason .
“Our core noninterest expenses remained stable as seasonal increases in compensation costs were offset by continuing decreases in our full time equivalent employees.” — Mark Mason .
“Excluding brokered deposits, total deposits increased by $131 million… Uninsured deposits were $542 million, or 9% of total deposits.” .
On NIM driver: “The increase… was due primarily to a 32 bp decrease in rates paid on interest-bearing liabilities and a 12 bp increase in the yield on interest earning assets… primarily due to the sale of $990 million of lower yielding multifamily loans…” .

Q&A Highlights

Note: A Q1 2025 earnings call transcript was not available. Below are highlights from the most recent call (Q4 2024).

NIM trajectory and breakeven: Management expects profitability without needing further rate cuts; NIM benefits from loan sale and repricing .
Deposit costs: Spot deposit rate was 2.65%; excluding brokered deposits 2.39%, with ongoing brokered paydowns to lower cost base .
Credit discussion: Syndicated commercial loan exposure “a little south of $200M”; specific reserves increased subsequently in Q1 .
DTA portability: DTA is usable; embedded in tangible fair value per share calculation (Section 382 limitations acknowledged) .
Originate-to-sale appetite: Management is engaged with secondary market buyers; flow programs under discussion (contingent on demand) .
Expense levers: Further cuts limited; modest reductions possible in FDIC insurance and occupancy as leases expire; merit increases budgeted ~3% .

Estimates Context

Wall Street consensus (S&P Global/Capital IQ) for Q1 2025 EPS and revenue was unavailable at the time of this analysis; no comparison to estimates can be provided.
The company’s internal performance versus prior quarter/year has been detailed above using primary filings .

Key Takeaways for Investors

The margin inflection is real: NIM rose to 1.82% on asset mix improvements and lower funding costs, supporting sequential earnings recovery despite credit provisioning .
Core operations stabilizing: Core loss narrowed to $2.9M on higher net interest and noninterest income with stable core expenses; GAAP OpEx was elevated by $2.1M merger costs .
Funding quality improved: Non-brokered deposits grew $131M and brokered CDs fell $454M, reducing rate-sensitive funding and improving liquidity/funding resilience .
Credit watchpoint: Specific reserves increased $3.3M for a syndicated commercial loan; NPA/TA rose modestly; ACL/LHFI at 0.66% remains a focus amid CRE exposures .
Tax shield: No income tax expense expected for “the next few years” due to the Q4 DTA valuation allowance, providing near-term P&L tailwind to earnings translation .
Strategic optionality: Mechanics Bank merger is a near-term structural catalyst (expected Q3 2025 close), potentially re-rating funding profile, scale, and expense base for the combined company .
Near-term trading lens: Continued NIM expansion, deposit mix improvement, and merger milestones are primary stock catalysts; monitor any updates on credit developments and integration conditions .

HomeStreet, Inc. (HMST)·Q1 2025 Earnings Summary