HomeStreet restructures mortgage banking segment
Due to reduced expectations for single family loan origination volume in the Mortgage Banking segment, HomeStreet announced a restructuring of that segment. The restructuring of the Mortgage Banking segment included a reduction in force of 60 full time equivalent employees, substantially all of which was completed in the Q3, resulting in pre-tax severance costs of approximately $245,000, all of which was taken in Q3. In addition, net voluntary attrition since the beginning of the Q2 of 2017 has totaled 32 full time equivalent employees. Including the previously reported reduction in force of 41 full time equivalent employees that occurred during Q2 of 2017, the mortgage banking segment will have reduced full time equivalent employees by 133 by the end of the Q4 for an expected annual pre-tax expense savings going forward of approximately $9.4M. These reductions are concentrated in operations and support functions and represent a 9% decline in total full time equivalent employees in the mortgage banking segment since March 31 and a 17.8% decline in operations roles in this segment. Additionally,the company closed two single family lending offices, consolidated three additional offices into nearby offices, and reduced leased space in three other offices. One additional single family lending office will be closed during the Q4; this closure is expected to have a non-material impact on Q4 financial performance. The changes to these eight office locations resulted in one-time pre-tax charges of approximately $3M but are expected to result in annual pre-tax occupancy expense savings going forward of approximately $1M. Lastly, the company streamlined the single family lending senior leadership organization, resulting in the elimination of two regional manager positions. From this the company incurred additional pre-tax severance costs of approximately $300,000, and expect annual pre-tax expense savings going forward of approximately $1.2M. HomeStreet also modified certain compensation plans resulting in expected annual pre-tax expense savings going forward of approximately $1.7M.