An update from CEO Bruce Williams

May 15, 2009

Dear Friend of HomeStreet Bank,

There is no doubt we are living in challenging times.  The recession has affected virtually all businesses, including banks, and HomeStreet is no exception.

This month HomeStreet Bank entered into a formal consent agreement with the Federal Deposit Insurance Corporation (FDIC) and the Washington State Department of Financial Institutions.  Our holding company, HomeStreet, Inc., also entered into a consent agreement with its regulator, the Office of Thrift Supervision (OTS).  These regulatory agreements are the result of the impact of the recession and housing markets upon many of our real estate customers, which in turn has affected our loan portfolio.

We have agreed with our regulators to make certain changes in operations, many of which were actually made prior to the signing of the agreement, and we are working diligently on the others.  In addition, although HomeStreet's capital ratios already exceed those required by the regulators for "well capitalized" institutions, we have agreed to increase our capital levels further so that we are better positioned in these uncertain economic times. 

The agreement with our regulators has no impact on the safety of deposits.  HomeStreet Bank is FDIC-insured, and deposits are fully insured up to the FDIC limits, including unlimited insurance on NOW accounts and non-interest bearing checking accounts.  

Even during these difficult times, we have some good news to report.  We've made a record breaking number of home loans since the start of the year, and quality mortgage lending continues to be a significant strength.  We've also seen more deposit customers coming to HomeStreet than ever before, in search of great customer service and a local bank.  We continue to be active supporters of our communities and on May 7 received the Healthy Community Corporate Champion for Basic Needs award for our support of affordable housing. 

It will take time for the economy to recover, but like all previous recessions, it will. Family- and employee-owned HomeStreet Bank is still the same company, guided by the same values that have served customers and communities with integrity for nearly 90 years.  We have been through hard times in the past, including the Great Depression, and we believe we are doing everything necessary to ensure our future success.  

My HomeStreet partners and I look forward to continuing to serve an active role in our communities along with meeting the banking and lending needs of our many customers.  Please feel free to drop me a note any time. 

Sincerely,

Bruce W. Williams
Chairman and CEO

Questions on our Regulatory Agreement

Press Release: HomeStreet Bank Reaches Agreement with Federal and State Regulators