New mortgage business improved at HomeStreet Inc. and appears to be headed even higher thanks to a new emphasis on purchase production. But despite increased originations and an expanding servicing portfolio, mortgage earnings were weaker.
The Seattle-based company said in its second-quarter earnings report that it closed $1.307 billion in single-family loans.
Business was better than during the first quarter, when $1.192 in home loans were originated.
Mortgage production also picked up from the same quarter in 2012, when HomeStreet funded $1.069 billion.
“During the quarter, mortgage profit margins declined as lenders competed for loans in a market with sharply declining refinancing loan volume,” HomeStreet Chief Executive Officer Mark K. Mason said in the report. “Anticipating these changes, we continue to focus on retail purchase mortgage origination and expansion of our market and market share through hiring high volume purchase focused mortgage originators.
“As a result, HomeStreet is now the number one-ranked originator of purchase mortgages by volume in the Puget Sound area, our core market.”
HomeStreet reported that single-family mortgage interest rate lock commitments climbed to $1.423 billion in the latest period from $1.036 billion in the first quarter — pointing to potentially more originations in the third quarter. The shift in focus to purchase production and an expansion in mortgage staffing were credited for the increase.
The portfolio of residential loans serviced for others was $10.405 billion, growing from $9.701 billion as of March 31. The servicing portfolio was only $7.469 billion as of June 30, 2012.
HomeStreet owned $0.905 billion in residential loans as of June 30, increasing its residential investment portfolio from $0.863 billion at the end of May. The total was $0.685 billion as of the same date last year.
The most recent total included $0.772 billion in single-family loans and $0.132 billion in home-equity loans.
HomeStreet reported $0.015 billion in multifamily originations, dropping from the first quarter’s $0.049 billion and $0.036 billion reported for the second-quarter 2012.
Commercial real estate loans serviced for others amounted to $0.771 billion, off from $0.790 billion at the end of the prior period. A year prior, the total was $0.829 billion
Commercial real estate loans on the balance sheet totaled $0.470 billion, inching up from $0.453 billion three months earlier and $0.501 billion a year earlier. The most-recent total reflected $0.382 billion in commercial mortgages, $0.026 billion in multifamily mortgages and $0.061 billion in construction-and-land-development loans.
Net income before taxes from the mortgage banking segment fell to $17 million from $21 million and tumbled from $30 million in the second-quarter 2012.
Pretax income from the bank-holding company came in at $18 million, up from $16 million during the prior period but deteriorating from $23 million in the same period in the prior year.
Company-wide headcount increased to 1,309 full-time equivalent employees as of the end of last month from 1,218 people on board at the end of March. There were just 913 employees one year earlier.
