Questions & Answers on HomeStreet Bank
Q&As on management transition
Q&As on regulatory agreement
Q&As on Management Transition
October 2009
What does the change in CEO mean to the future of the bank?
HomeStreet Bank is and remains a family- and employee-owned bank with a strong focus on customers and communities. In fact, non-family members have led the company at other times in our long history. The Williams family, as major shareholders, will continue to be very involved in the bank, with family members serving on the HomeStreet Bank and HomeStreet, Inc. boards of directors. The changes we are making are being done in order to strengthen the company so that we can continue to meet the needs of our customers and our communities, as we have done for the past 88 years.
The Williams family has been involved in HomeStreet Bank since its beginning. Will this new CEO have my interests and needs in mind?
As major shareholders, the Williams family continues to be very involved in the bank, with family members serving on the HomeStreet Bank and HomeStreet, Inc. boards of directors. Our new CEO, Mark Mason, greatly appreciates the things that make HomeStreet unique, including our history, our reputation and, most of all, our longstanding focus on our customers and our communities. He looks forward to working with the rest of the team at HomeStreet Bank to assure that HomeStreet customers continue to be the focus of our organization.
Is my money safe?
HomeStreet Bank is an FDIC-insured bank, and deposits are insured through the FDIC. Earlier this year, the FDIC increased deposit insurance to $250,000 per depositor through the end of 2013. HomeStreet also participates in the FDIC's Transaction Account Guarantee Program, wherein all non interest-bearing accounts and interest-bearing transaction accounts earning half a percent or less are full guaranteed by the FDIC for the entire amount, regardless of account balances.
Is the bank financially strong?
Like many banks in the Pacific Northwest, we continue to be challenged by the current housing market and the economy in general. The most significant impact has been deterioration of the quality of our residential construction and land development loan portfolio. We have taken rigorous steps to address this, but it will likely impact our financial performance for the rest of 2009. We are fortunate to have a very robust home mortgage origination business, which is doing extremely well in this low interest rate environment and generates revenues that help offset loan losses, and we are also fortunate to have strong liquidity. Our efforts to raise capital are intended to strengthen the bank.
What are HomeStreet’s long-term prospects?
We have just begun our 88th year in business and have been through other significant ups and downs before, including the Great Depression. Our new CEO, Mark Mason, is a great match for HomeStreet. He has a record of success in leading other financial institutions of a similar size, and we look forward to his leadership as he helps to address our challenges and strengthen our company.
Q&As on our Regulatory Agreement
May 2009
I heard that HomeStreet has a Cease and Desist Order – what does that mean?
A Cease and Desist order is a legal document wherein a regulator and a bank agree on specific changes to be made to strengthen the bank. These agreements typically outline a number of goals, action steps and timelines. The "cease and desist" name does not mean a bank is to cease operations. HomeStreet has a very good relationship with the FDIC and our other regulators, and we voluntarily entered into this agreement. Our agreement provides for certain changes in operational policies, for reduction of problem loans and for increased capital levels to enhance the bank’s ability to weather the current economic downturn. Such agreements have become much more common in the current environment, and many banks across the country are operating under such regulatory orders.
How did HomeStreet get into this situation?
Many banks in the Pacific Northwest, including HomeStreet, are challenged by the decline in the housing market brought on by the recession. HomeStreet has provided real estate construction financing since the 1920s, and it has always been an area of strength for us. At the same time, it has always been subject to market cycles. Even the strongest builders and developers and most sound projects are being stressed in this recession. This, in turn, affects us. Virtually all banks with any significant involvement in real estate construction financing are experiencing similar challenges.
Does the Cease & Desist Agreement affect the safety of my deposits?
Absolutely not. HomeStreet is an FDIC-insured bank, and your deposits are insured up to the full extent of FDIC coverage. This is completely unaffected by the Agreement.
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