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HMST HomeStreet

Participants
Mark Mason Chairman, President & Chief Executive Officer
John Michel Chief Financial Officer
Steve Moss B. Riley FBR
Jackie Bohlen KBW
Matthew Clark Piper Sandler
Jeff Rulis D.A. Davidson
Tim Coffey Janney
Call transcript
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Operator

Good day, and welcome to the HomeStreet First Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, today's event is being recorded. I would now like to turn the conference over to Mark Mason, Chairman, President and CEO. sir. ahead, go Please

Mark Mason

you call. us thank quarter our XXXX earnings for and for joining first Hello

begin, like presentation we and under release the Before the I'd on are and detailed that SEC Events website an earnings available our News on accompanying at X-K & investor Form were our with to filed yesterday remind ir.homestreet.com you link.

call about the address today, will be that the same risk following In the to predictive forward-looking call. the financial reflect disclosed public other call factors investor yesterday's These during may statements subject statements statements addition, Harbor available our and are we this our a our included in make certain in current our company's transcript likely performance of and recording Safe earnings expectations note our filings. made the and that and are Please that release, at results. views deck

referred be available earnings our to on call non-GAAP reconciliations our website. can on and measures release today Additionally, our to investor in found deck

Officer, forward. then of is briefly results financial Joining me give our discuss outlook Chief and will John John like our going and update our our Michel. operations an to results John? I'd today Financial

John Michel

in thank you income of first $XX you, Mark. Good income fourth compares core net joining or of This the to share morning, quarter everyone of $X.XX us. million In million Thank $X.XX the XXXX, $XX for and XXXX. quarter was net our per per share. or

Our annualized quarter the first was XX.X%. return tangible for on common equity

efficiency assets -- our me. X.XX% excuse was was Our on ratio average annualized return And XX%.

exercise vesting the advantage investments for the resulting of XX.X% stock benefited and from quarter. tax tax benefits in rate from effective of Our awards excess tax or the quarter

are quarters effective remaining to of approximately For of an we XX%. the realize XXXX, tax rate expecting

X.XX% interest-earning a was XXXX our of level to of fourth X.XX%, While interest than the in quarter assets. lower lower increased of due -- net to XXXX first income interest the margin our net quarter

X increased primarily $XXX primarily lower and margin of quarter included of loans. originations interest million, focus margin of on loan due deposit actual quarter loans of net loans, rates. the originating of the million PPP multifamily SBA's Because the loans sale the the XXXX our benefits round of forgiveness approximately levels Loan two of Due the in portfolio and to of balances was PPP the points. was PPP increased loans. lower on due which level forgiveness, net minimal. $XXX basis Our a of was totaled to first lower in interest the impact the balances PPP on prepayments of assets to of The interest-earning in our decrease

our March As remaining from deferred million round for loans. XXXX loans XX, of and first PPP second amount $X.X $X.X was million of PPP $X.X round of our of fees the million,

of the of our of no a losses and of of credit quarter level or quarter As favorable first performance was non-performing assets, XXXX. loan provision in the result portfolio recorded fourth low a the XXXX stable for

in forbearance total assets points. $XX in decreased XX and Our CRE to assets ratio of loans XX remained as at Outstanding commercial XX, our non-performing basis to low loans March and XXXX. of portfolios million

costs Fannie and compared million in taken to due the in of risk first expense $X.X fourth $X.X to compared XXXX primarily charges primarily total to loan occupancy and in to mortgage information as contract. loans. primarily rights. our in lower prepayment fees Our Mae fourth XXXX processing reduction lower servicing system costs The due servicing of of of sold, decrease XXXX, in on A of steady income X.XX%. to non-interest rental incurred remained decrease quarter of first in results quarter core sales quarter due volumes XXXX ACL net million related of ratio in the decrease first was renegotiating gain and loans to of XXXX restructuring at quarter the family including to management the origination the DUS to loan fourth lower was servicing in multifamily space as for loans quarter single quarter unfavorable was due The the activity

and Mark. quarter X% will dividend the XXXX, paid price first share. During I $X.XX over $XX.XX of our outstanding stock per a now average the repurchased of call at of we common of per an to and share turn declared

Mark Mason

first all year. Thanks, lines strong quarter the reflected start performance underlying to a John. of great our of XXXX making first quarter HomeStreet's earnings across business, the during our

net our result quarter, a first improvements the in increased margin ongoing of as interest During funding costs.

experienced benefit high and of helped by single-family last quarter since most PPP year. during volume pandemic profitability communities to our the at quarter. customers continue sold originating from on we volume profit In and of during loans second million we our risk $XXX levels loan have mortgage loans and the continued the the loan high particular, at banking We and margins

non-interest meaningful and higher our Additionally, reductions improvement. general focus as result And prepayments, loan of levels our information we and expenses services, of and in the occupancy on quarter. for reflected in a ongoing reduction cost despite expenses the grew other profitability quarter our portfolio administrative and

forbearance. levels on loan of levels well and problem Our borrowers to assets of continues low portfolio perform with low

provision As for the period. current loan we not any did losses John mentioned, record in

the members which the are current meaningful we business provide opportunities. parts business to the am problem the quality easing activity. perhaps return normalization we should allowance particularly for forward markets country. our results, I going beginning our operating operated the as low of well many and sustained for markets and our as next credit The the at growth with level for economic restrictions communities many and since first quarter bodes our normalized have economic economic us activity early strong pleased to pandemic quarter. restrictions do in under and pace with levels create stimulus the since vaccinated in some of loans Government which of to becoming other need outlook the our of may However, compared of positive of our the losses of a given recovery and release economies and of markets,

Given capital quarter continue through during diversified position, the growth higher positioned while to efficiently, quarter. our XX% We growth financial Based dividends well of our and excess lines repurchases. capital dividend, benefit strong the for capital and are and outlook, I we to common the management, on our stock plan paid which prior our to we our was cash positive shareholders a retaining share returning believe to and than business, $XX of results recovery. risk strong from markets disciplined million repurchased financial manage

margin the forgiveness short-term interest to rates and expand expect interest low rates deposits remain that loans. continue for Reserve downward PPP the and somewhat the foreseeable modestly Looking Federal reprice moved will of indicating our we future fees having forward, higher, with with from to as we long-term recognize non-interest deferred

normalization difficult in robust long-term mortgage would XXXX. well since on business, remains we we and increase be steam single-family mortgage of levels profitability the Accordingly, compensation a the expect, we gained normal might this banking sales and rates single-family The environment. interest to throughout expense return to is of that as affect reducing quarter activities commission-based banking lower forecast. however As considered pace in lower early first what anticipate as more as origination gain we which enjoyed volume the to beginning our have

XX points scalable seen On profitability the the year. move of the high declined our For in yields Where call planned volume recently last XX-year for is example, rates from remainder solutions. late of treasury basis technology off have interim here nearly you banking the but guess, this in have discussed and we continued more March. X.XX% normalization over of quarter, we single-family investment mortgage anyone's with our

and will lower offset of benefit somewhat the quarter, launching by Some to the the projects, more so cost expenses pandemic. normalized emerge of of of from commencing these be levels compensation expenses other are projects we these this as returning and the from marketing cost

an that year expenses volume levels, XX% low range and While of lower decline ratio on non-interest this is in our years. low anticipate and in half efficiency related we and in in profitability banking level to expenses the result near second term. upward to which the likely marketing result efficiency falling operating mortgage to the the believe total technology future in will in pressure resuming decline additional expenses expected compensation and in mortgage We

and forward, on increasing plan our given this we portfolio. sale commercial do feel can Going our demand for We our we fundamentals for in real and loan originations, markets. strong both estate the

discussed. types. net from interest lending time, Over growth which lower production I income, is CRA non-interest property Our net this most in mortgage decrease that, of the offsetting primarily in increase should we just the loan higher business expected income income, and CRA support permanent banking originate multifamily

repeat will in As the such, on last and my from our I subject quarter. unforeseen economy comments changes business, to

improvements leverage that normal, in additions operating our made allow investments have As profitability the we other to may volatility turn forward, show earnings and going the to have a the meaningful to earnings, to our of the family some and from normalization grow year-over-year efficiency provided have in quarter-to-quarter operating markets single or to degree year, believe the personnel, of return opportunity opportunity without we us next market. expenses. while and and with the And grow the earnings per revenue standpoint, past us we continue mortgage share will

subject and efficiency profitability the over last going result may Additionally, operating of produce years, tangible our our have at peers on we as which changes and overall our consistently the significant business, or assets of on we a unforeseen to annual adverse the business, two economic common conditions, the equity believe returns in diversification improvements and can more and above forward. impact in

close concludes face any I operating I in thank courage this attention these and prepared that, your and the communities remarks again and time. and Directors of management, comments communicate John unprecedented their – be want Thank serving the happy behalf customers, our As challenges questions answer and this our for my for you once to results. dedication our of our I to prepared you of and would delivering With in company employees Board on at outstanding senior have today.

Operator

Thank you, sir.

question the Instructions] B. first Today's We Moss FBR. Riley question-and-answer will now go begin Steve Please [Operator of from comes ahead. session.

Steve Moss

Hi. Good morning.

Mark Mason

Steve. Hey,

John Michel

morning. Good

Steve Moss

Just Mark, loan here pricing? where loan how demand growth the curious, kind going you also, you're forward. just maybe improving about loan thinking the here. is at on of just start hinted aggregate And in pipeline

Mark Mason

still of know to loan related just but slow expectations. across of is to loans, for demand We been there, loan expecting the it's by We're think, recently in continuing signing growth, high single-digit our loan prior levels percentage overall. starting comments. a I That's quarter that single-digit total multifamily lines also expectation that year – But all demand with is prepayment consistent is very prepayment subject business. we growth prepayments. to high loan this our little of and hope. The not We've But activity.

a it's of to So John, rates? to speak you prepayments. outrunning want matter effectively do

John Michel

Sure.

and of still Xs. then we're the the and of terms side those. rates Xs construction single the portfolio in CRE low-to-mid commercial in terms in high is Xs, In the both commercial, low in And the family is on

Steve Moss

Okay. costs. That's cost terms in helpful. And down step on good the then of side in funding terms just another of

Just funding kind your How of much could curious here? as lower for forward going costs to go? expectations they

Mark Mason

expected in Well, my mentioned almost decline. in the costs, as level. not rates comments, absurdly low borrowing recently have And was to to at continue still continue think That market We wholly I I funds. again, reflected our currently rollovers. We priced down money funding quarter. we CD are

John Michel

continues of helps And deposits to obviously, which our increase, also. non-interest-bearing overall our component cost

Mark Mason

basis expectations, numeric of single-digit couple John, terms quarters. over of in the think, I still lower next So points,

John Michel

couple a quarters. Yes. Yes, of

Steve Moss

just Okay. and up buyback here And That's terms the in of going here. buyback. the then with Capital capital helpful. even

terms per expect million of in that we Just should kind see same to quarter $XX to of of as more repurchase? curious the

Mark Mason

that's To I'll say, avoid front my running Board, yes, our expectation.

has on decisions. gotten a making timing reset little those Our

people We week I about had earlier announcing back we which have most to appreciate. been, earnings gone than a think

However, release end at precedes meeting Board now our our date of earnings each quarter. the date

consider repurchases. our And be Thursday will of course, stock main so further important questions dividend, to the Board and of declaring

decision I can say discussing to their it. be as run So, we'll not simply front

Steve Moss

you Okay. much, John. quarter. Thank Nice Mark Great. very and

Mark Mason

Steve. Thanks,

John Michel

Steve. you, Thank

Operator

Please from today go question with next Jackie Bohlen our And ahead. KBW.

Jackie Bohlen

Hi. Good morning.

Mark Mason

Good Jackie. morning,

John Michel

Good morning, Jackie.

Jackie Bohlen

the deployment. a to get accelerates moving there's And as forgiveness funds But understand hopefully wanted year? you'll with process here liquidity loans of just I how of this a pieces thinking PPP with this. you're about from some start I lot deploying

Mark Mason

return is do we borrowings. and lots our longer-term, Plenty and capital. thing still continue have balance of growth anticipating. to of liquidity the fund first down program of the sheet to capital lots efficient shareholders pay Well, that currently we're we But to

return but appropriate capital So going through not excess share excess ratios, try grow I sufficient playbook dividends forward really changed. of and think to repurchases. that and hasn't to Retain capital to hopefully our for levels opportunities

Jackie Bohlen

are did sorry how about thinking Mark, John, you cut I -- off? And you Okay.

John Michel

all. Not at No. No.

Jackie Bohlen

potential acquisitions you Mark, how days? thinking are about these

Mark Mason

M&A Well, branches a Obviously, be anything M&A couple company at we What the high we've list a a looking density. on deal is yet. think, improving couple considering individual more I deposit, took small opportunities acquisitions. things bank good to whole started our that well. efficiency haven't have might we greater done focus of always or ranging began from We that's whether though, our just And order create at done on branch are help deposits acquisitions But we at over again. in years we -- of looking we look timely years of that recently question. of off we've franchises last that to feel we did And and profitability. really

or efficiency or top list. our in consolidation our those create smaller are of the complementary markets greater at institutions of Some financial

Jackie Bohlen

you that to thinking than about do of -- you parts the with. more any? I'm in how if there I play wondering a focused are you're of looking there Or are that just have others? And any are -- broad terms know geography priorities you're footprint you on

Mark Mason

focus to greater create primary in is density our Our markets.

pioneer to obviously Greater currently we're Puget Greater our other focus going is. Sound, than where other not or So California. any locations Southern where unlikely Islands we're to branched. the Portland, branch We're to and regions currently new Hawaiian That's

Jackie Bohlen

slides you deck. I helpful in the to just Thank That's Okay. really the you. And thank new for a say update. want

they think you XX helpful and Thank the slides XX. were They quarter. for those. for really were I understanding

John Michel

You Gerhard pushed He can it. that. thank for

Mark Mason

Exactly. Yeah.

Operator

our Piper Matthew And next Clark Sandler go comes question today from with ahead. [ph]. Please

Matthew Clark

guys. Hi,

Mark Mason

Matt. Hey,

John Michel

Hey, Matt.

Matthew Clark

margins, of sale magnitude? gone the on linked I basis on for gain industry year-over-year gain How about and you percentage CRE what are SFR seeing. most a of think up has which margins on year order starting is quarter sale Maybe between on thinking the against just

Mark Mason

normalization lot a That's timing what know uncertain. that will question. right? a great the yet, talked And pretty I the market, a mortgage of I quite my look the of don't trend mean, in like there's is the that but about we and comments bit

But March of single profitability margins that expectation kind quarter indication you I family going okay with and So gave follows long-term margins I is we've are normalize. family happened think margins in the our to expectation XX-year in of think the that my will about the the if are somewhat Those in us particular, we're up seen to single right? that what's first volatile, slightly kind mean, April. rates course, where be declined normalize this in it of year. margins starting right? what is happens

got had origination first to on agencies If inflation with so year. help The pretty to do were and happen have DUS that. though competitively big Commercial lower out Freddie similarly market to we're Fannie bit begun Mac Something that soften a their Fannie right? new Typically, it quarter been the for rates almost has levels and the had little quarter. But of Mae needed of the lowest sales. volatile and could believing and they Fannie by limits to seasonal kind close first originations which currently of generally in They sales. the normalize end tough the they elongate long-term that products, trend. down was of originations were always market estate already is may experience quarter the will change Mae expecting it begins normalization for quarter Also and quarter this real many going a marching they that quarter-over-quarter. fully now see you not orders Mae again somewhat pipelines right that to planning we're the for margins the

the that to Fannie of of expect and portion improve. remainder over our change the business We the to Mae year

turn sales Additionally, to have that my would that our we we positive that pace sure on and into on in for will comments, about rates, mean that's great extent I and loan I'm originate working hope earlier margins. the a are multifamily markets impact subject we -- increase that well the originations to we are as to falling so dependent the year. margins not rate mean of wholly loans though. margins the perm

in now. trying we're be trend course, different to a Of right

improvement in unclear, going here from if And so CRE we're to margins. deterioration or see sales

Matthew Clark

Okay. last X.X be. $X.X guess year did loan And But then stepping guess -- and thinking to CRE? amount the it this what able loans in year, on will be you and billion of just of in CRE. year billion how SFR$XXX sold $X.XX single sell sales up about family I in you're be you for this million will commercial loans are you SFR resi might I

Mark Mason

sell. normalization, business. balance We not lower our of CRE We're on going Commercial right? course, that's levels volume second the somewhat I sales will loans be prepayment loaded. expecting last to We're sheet. to are depends single-family be DUS to obviously, a The portfolio may will to that of on comments generally year – X%, maybe change grow directions. similar thinking we and sure be better real slightly up. that's year. it of whether quality Originations But the for three hold subject Well happen the probably Mae, we're Fannie last over quarters trying yet. general, both similar maybe originations speeds. that year. We year that XX%, to In than estate, half next in total lower, will in lot could that's easily same think So slightly in a

so sell. amount loans what of are considering still those might we And we

good prepayments. to upon it similar less last or year depending be experience We sales you with I folks be for that a exceed might our think might if number. plan might

Matthew Clark

consider might release the have to add expense just year? as of or on no variable – anything you about mortgage how expense. order is, to idea half half, that variable non-interest rate is there component there then in guess the second terms going down, coming of run slows to the second knowing on to us not and what related of potentially come Is Okay. but magnitude in able the I sale. The having down volume be think and a the in normalizes comp we help And

Mark Mason

variable points component. has to number basis that XXX XXX Historically, from points ranged XXX of to basis

John Michel

we commissions is rate you base the Yes. And that we at that. have pay as on kind a of Matthew, have, flat that, just of have here of lower loan look a commissions, higher it, you fixed the basically you and rate problems then a if are a level And one of giving I'm our paid to them. compensation may top level they of officers

So a straight... not it's

Mark Mason

Yes. commission tiered officer's upon each individual the And structure is structure also a based loan volume.

in comp volume say And can creates greater much that right? have you and rate, basis in everything, change it's so big expense, you you volume XX go if decline follow So points to basis on decline from a a XX me? because let's points

Matthew Clark

Yes.

Okay.

couple and quarter interest net just what the to loan income then this And book? balance Okay. housecleaning contribution the items. PPP last end-of-period in PPP

John Michel

Yes.

So in numbers fees. have we million of that said we terms and of about deferred $X the basically

end anticipate So through of kind of or from the PPP, the through perspective year recognizing this of through forgiveness either we amortization. the that

plus a But have. probably quarter So some then that round we of of because couple of quarter. to you fourth the forgiven be quarter. quarters first first And forgiven round dollars we the couple that's evenly in would figure that the of is second next going and of per that normal third million to the will – the quarters, number, second benefit probably in three the amortization throughout be the expect

Mark Mason

last on quarter? this Impact margin

John Michel

of didn't points last quarter was I it two we basis think – going to the down get that, you're forgiveness. because because

We a expect to quarters. the have positive over benefit three that next

Matthew Clark

then the And loan in the PPP Okay. balance end-of-period, book?

John Michel

$XXX number to it's I of I front $XXX have million. million believe – me that think and I don't roughly right about in but

Matthew Clark

you. Thank Okay.

Operator

from go question comes ahead. our Rulis next today And Davidson. with D.A. Jeff Please

Jeff Rulis

savings drift well. the have renegotiation to that's for kind I variable more wanted mortgage I -- if the and of of the expense follow-up slowing. the wanted structural you of morning. coming of that were guess, you anything kind out We'll line? on note cost is Good the identified largely variable Mark, that decline. have there to just pretty some the But, – captured with quarters ago? I been structural contract to the covered just occupancy to the expense. – Thanks.

Mark Mason

we in being consequence up or the reduced fourth sublease of take great Jeff, we as those have to rates. you process sublease for we've change the space were the we trying our the to sure because on and still prospect a we from of we're the And allow many sublease potentially activity people what I we catching of as in price sublease it said a a market, sure been work is will lot that inventory recognize. the and -- asking in further as of up I know, a quickly Not quarters some of frankly. do. more pretty there's how have to where in Having that, of out consequence a But took in mean occupancy figure had reductions, we worse here to that pandemic. the charges than I'm has guess, Seattle, we've coming and caught leader, quarter, of

so there's future potentially there. And activity

There'll be operations FTE or some group there. going group. of in what which and personnel process operations of mean, redundant deposit operations But I to with deposit activities, are groups work efficiency. a in had really continue a our example, historically yet. we're And those And to a don't deposit here here. duplicative. that. separate and few know, of that's as separate you're on not commercial produce consolidating the I an done consolidating sure the have We process ever We retail we're

you'll revenue to actually tracking don't You little. We're we've FTE our see more, really may but adding without from meaningfully And adding that story news a been an we right? us. you've It's a So, operating going FTE volatility, can total. a our leverage grow that notice, if decreased best FTE be for couple here we few the that that's really out. -- think we to

Jeff Rulis

Yes.

mentioned, like commercial-oriented some comment where efficiency business the kind it really over the of shift That's offset is kind from your of say? the comments But Is of there. general technology, I and here, picture some lie you So, is to spend that time. that more guess Mark. that safe sounds big there's terms improvement in of to --

Mark Mason

That's fair. have, And disclosures and less businesses typically, easier customers, in, we right, larger infrastructure already complete that expensive to grow revenue.

Jeff Rulis

Yes.

Okay. didn't took comments but from And actual was PPP forgiveness I John, your said I you get balance, an minimal.

guess, mean round the ahead. Your pretty -- does of balances remaining that a have modest? two -- Do your, in I go and what's activity PPP was separate you

John Michel

two, round it's In very XX The -- originate under the not million loans. but May. on had $XXX have at amount We're PPP March continuing some, program to through a we Yes. we this large going costs probably is is be and mostly through forgiveness and both quarter the and year then amortization That through the related in expectation-- forgiveness, to about the recognized of that, will $X million. deferred fourth

Mark Mason

For X. Round

John Michel

Round for X. Yes,

For Round in to balances. that. front fees we still have have deferred about I X of about $XXX believe in but and right $X I million you, have don't the related million we it's

of amortized And next will couple expect so some will we accelerated forgiveness. be to which over those -- and which the be and some quarters recognize of of

Jeff Rulis

That’s helpful. Thank you.

Operator

next Tim from And comes today Coffey Janney. question ahead. Please our at go

Tim Coffey

Thank morning Good gentlemen. you.

Mark Mason

Tim. Hey

John Michel

Tim. Hey

Tim Coffey

gain looking number is see locks just next of rate year a of could we the piece kind single family sale ago? lower gain sale possible at it at where in look in the kind we quarter, quarter into if first so on a second versus on residential quarter, Mark for Hey.

John Michel

ago? Year

Mark Mason

year is exactly What ago--

John Michel

X XX?

Mark Mason

that's think XQ. so lower see I talking a you'll he's absolute. -- No, percentage don't than margin --

John Michel

Or XQ?

Mark Mason

XQ. Or

Tim Coffey

right? they year, than quarter at last lower on last I'm I of first of this quarter the were gain think looking the of just were $XX.X million. year was year. locks than XQ for sale rate first

John Michel

the -- because month. of Right. out. one on flew impact there dropped March through They was that the roof in just Because rates just

Mark Mason

margin margin the XXX the mean profit was XQ had, last it points. the basis highest almost we've was year I basis XXX right? points over

to that We see are going not again.

Tim Coffey

expected. it's been Yes,

John Michel

What about next quarter?

Mark Mason

XQ. For

Tim Coffey

What about the dollar?

Mark Mason

a million, locks right? was of Volume over $XXX little

John Michel

had-- Which what we is

Mark Mason

is Which interesting That's question. an about this quarter.

be the and inventory. That's comping to a experiencing We're in It part down based It in. month obviously I'm that or XX% experiencing of yes, now. of least what consequence be willingness the extremely I possible. last three, price And home nation may about that's leading terms seeing season. reasons appreciation. kind price we're be more. Obviously, was only pandemic low Seattle of seen think, it's what the months kind between or buying levels it's one think home price upon higher are one, we somewhere is XX% or numbers. in than my It appreciation I think that. could people's Part houses. I quite -- unwillingness a strange three have home two, could of numbers the we're you've hedging the in of in also things -- of people But comments of we're through at thinking. the their

improving. seeing that are inventories We starting to thaw

of see make purchase the quite the as to could way hard quarter. solid it's transactions. third a not But here sit we a we on So, surge in predictions greater in

Tim Coffey

total done you say No, where do transforming being And great little be Okay. a fair. then the a that's like the bit, you'd that sale on to And gain look bank stock. fair. you revenues able forward of have cost That's ratio of like a job trimming kind and as revenues? to targeted back you've buy to

Mark Mason

Offsetting XX%, completely you'll target, lending home right? unexpected intentionally, year, very was we retained. $X business that that's when because business the $X.X going a This centers. supposed as moving We sized, now originate mortgage in we the normalized to family billion of when Tim loans $XXX sold business is right, effectiveness size or in group think per to increase I our we about originate We of that remember million of production stand-alone to reduced normalize believe we the -- of it by single billion was network a the more.

somewhat is better. of composition the it the So business sized for we

will we gain more Now news, to it's of more little has to the on the growth But profitable that's in outgrown the good be So than that comments right? in over contribution more, to time. going to like decline substantially billion. add that's that news, a going remainder This bad of look sale normalize should revenue terms we continuing $X.X normalized because by expected. in mix commercial businesses, the of upon production this it's at our right? year's… of percent But terms Based year of it mean I production and be

John Michel

the first $XXX We quarter. in already did million

Mark Mason

million. we're $XXX probably I well… did mean, already headed something We toward

John Michel

$X Roughly billion.

Mark Mason

maybe billion or minus. to extra we're plus $X right? year. going still Who knows Roughly this revenue have So

So I percentages grow normalized to decline the and know and know, of I'd over our work what of the by the normalized expectation that's size margin hold do that wherever normalize But we to volume. if today time is on would don't remainder that businesses. out I have going the production

So se. I have don't per target percentage that

Tim Coffey

no, Yeah. I understand. I No, understand.

John Michel

hot because The turn to it coming be business just to away one in before happens aspect is really to revenue it market. into a it not and it's really this having hard

these on is capital leverage from we're forever benefiting we're perspective, our the levels this in So continue of that high and to of going to creating, terms activity. to not go extra knowing trying

Mark Mason

Yeah.

buy it's increase back to return normal been fabulous, to it's us but it's It's us going dividend to soon. right? to right? been great, It's stock, allowed here So more and allowed our

Tim Coffey

while the for there might related your is ratio several than your The real quality just commercial my time same the the credit -- deferrals been to then might outlook dollar saying it's at that looking allowance And loans. COVID -- allowance strongly have last the -- going question just reserve down, come at and the amount forward. you're decision suggest growing Okay. throughout but on Is estate simpler improving months it quarters? nothing flat been the yet last

Mark Mason

It's probably a more beyond that. but not little complicated much

XXX to lowest word be levels, loans If from larger our banking. composition the of levels be will know below rates loans, among multifamily look ACL basis for XXXX, that that And you normalize, loss probably I may permanent you type the ACL types, the of you'll lower that their if at And originations, January different -- think any tend I have So multifamily normalized a what about forward at ACL ACL meaningfully as think of we our asset or lot even about ACLs an in to X, companies are that look asset at than points. that was if will use level us going adopted right? is see that, pre-pandemic a you today, multifamily

John Michel

XX was basis points. It

Mark Mason

XX. No, it like was more

John Michel

was think, I it XX.

Mark Mason

XX, XX. Yes.

John Michel

Yes.

Mark Mason

levels And don't So carry our that start, have our that's right? asset the other any and types which ACL points increased pandemic a below, items, basis to excluding see we impacts. think you're lower. where higher risk those the right? line So return expectations needs, and Because construction generally going we than levels other believe of think ACL, to XX

portfolio, headed general comments the which means, all of in we're sort changes impacts. to argue our Maybe to we be that. of out, expectation, ACL sure the that's But absent able we balances. today So post where have not per should for going say years to as multifamily And out, I'm know, of some if believe. when composition the right? our pandemic I'm listen to if higher don't That's you lower I quarters

Tim Coffey

Thanks, super was That Mark. Great. a That was answer. it. helpful Okay.

Mark Mason

You bet.

Operator

Clark [Operator go a Instructions] follow-up today Sandler. question Our is Piper with from next Matthew -- Please

Matthew Clark

Hey.

earlier. I you on with after. what, had I’ll follow-up my blanked I know it You completely question.

that. about Sorry

Mark Mason

Okay.

Operator

management concludes final back and session. gentlemen, I'd ladies question-and-answer And to any conference like for remarks. the this team over to turn the the

Mark Mason

something by the I'd mortgage We the the will that Thank the want we've we market the prepared mortgage earnings mitigate at of our had comments. for impact just close I've sure of on with revenue, the improved discussions expectations I performance. about that touched make that forward going cycle obscure said I normalization believe of our impact on reiterating end about Great. don't you. like to the by loss margins, my of don't banking your improved what high to, to you quarter. cyclically consistently on produce quarter-to-quarter or efficiency earnings next annualized attendance Anyway, we we today. on with through appreciate returns I returns basis want assets forward And competitive and and growth, peers. very that our our an on decline go talking share my and may equity our discussion on to such statement seasonally, we Look attention, will changes expectations. your per that on or tangible obscure will that our to not

Operator

thank attending today's all you for presentation. concludes call. This We conference today's sir. you, Thank

and now may have You a your disconnect lines day. wonderful