HomeStreet, Inc. Reports Fourth Quarter and Year-End 2013 Results

HomeStreet, Inc. (NASDAQ:HMST) (the “Company” or “HomeStreet”), the parent company of HomeStreet Bank (the “Bank”), today announced a net loss of $861 thousand, or $(0.06) per diluted share for the fourth quarter of 2013. Excluding acquisition-related expenses of $4.1 million, net income for the quarter was $1.8 million,(1) or $0.12(1) per diluted share, compared to net income of $2.0 million,(1) or $0.13(1) per share, for the third quarter of 2013 and $21.5 million, or $1.46 per share, for the fourth quarter of 2012. For the full year 2013, net income was $23.8 million, or $1.61 per share. Excluding acquisition-related expenses of $4.5 million, net income for 2013 was $26.8 million,(1) or $1.81(1) per diluted share, compared to $82.1 million, or $5.98 per share for 2012.

• Consolidated results:
  • Fourth quarter 2013
    • HomeStreet successfully closed the acquisitions of Fortune Bank and Yakima National Bank during the fourth quarter of 2013. Additionally, the acquisition of two retail deposit branches from AmericanWest Bank was completed during the quarter. Through these acquisitions, the Company acquired $208.7 million of portfolio loans and $260.8 million of deposits.
    • The Company recorded $4.1 million of acquisition-related expenses during the quarter ended December 31, 2013 and $4.5 million of acquisition-related expenses during the year ended December 31, 2013.
    • Net interest margin of 3.34% compared to 3.41% in the third quarter of 2013.
    • Loans held for investment of $1.87 billion at December 31, 2013 increased $362.5 million, or 24.0%, from September 30, 2013.
    • Classified assets and nonperforming assets ended the quarter at 1.65% and 1.26% of total assets, respectively, down from 1.90% and 1.37% of total assets at September 30, 2013.
    • In response to lower than anticipated loan volume in the commercial lending units and falling loan volume in existing mortgage markets, the Company reduced under-performing production personnel and mortgage operations and fulfillment personnel in existing markets. Also in the quarter, the Company added personnel from acquired banks and increased mortgage production and fulfillment personnel in new markets, primarily in California. During the fourth quarter, we hired, or added through acquisition, 216 employees, which was partially offset by the departure of 111 employees.
  • Year-ended 2013
    • Net interest margin of 3.17%, up from 2.89% for 2012.
    • The Company's annual effective income tax rate for the year was 31.6% compared to 20.8% for 2012. The prior year effective income tax rate reflects the benefit of the full reversal of deferred tax asset valuation allowances.
• Fourth quarter segment results:
  • Commercial and Consumer Banking - loan and deposit growth from strong originations and acquisitions
    • Commercial and Consumer Banking segment net income of $244 thousand. Excluding acquisition-related expenses, net income of $2.9 million,(1) down $1.2 million from the third quarter of 2013.
    • Loans held for investment of $1.87 billion at December 31, 2013 increased $362.5 million, or 24.0%, from September 30, 2013. Excluding the impact of loans added from acquisitions, loans held for investment increased over 11% in the quarter. New loan commitments totaled $378.8 million, up 56.2% from $242.5 million in the third quarter of 2013.
    • Total deposits of $2.20 billion increased 5.0% from September 30, 2013, primarily due to the addition of $260.8 million of deposits from acquisitions.
    • Classified assets and nonperforming assets ended the quarter at 1.65% and 1.26% of total assets, respectively, down from 1.90% and 1.37% of total assets at September 30, 2013.
  • Mortgage Banking - reduced loan production volume due to lower refinance volume, expected seasonality and a lack of housing inventory
    • Mortgage Banking segment net loss of $1.1 million, compared to net loss of $2.1 million in the third quarter of 2013 and net income of $25.8 million in the fourth quarter of 2012.
    • Single family mortgage interest rate lock commitments of $662.0 million, down 15.8% from the third quarter of 2013 and down 47.2% from the fourth quarter of 2012.
    • Single family mortgage closed loan production of $773.1 million, down 34.9% from the third quarter of 2013 and down 49.1% from the fourth quarter of 2012.
    • Net gain on single family mortgage origination and sale activities of $23.3 million, down 25.7% from the third quarter of 2013 and down 65.3% from the fourth quarter of 2012.
    • The portfolio of single family loans serviced for others increased to $11.80 billion at quarter end, up 4.5% from $11.29 billion at September 30, 2013 and up 32.97% from $8.87 billion at December 31, 2012.
    • Single family mortgage servicing income of $7.4 million, up from $3.7 million in the third quarter of 2013 and up from $287 thousand in the fourth quarter of 2012.
    • HomeStreet regained its overall ranking as the number two originator by volume of refinance and purchase mortgages in the Pacific Northwest (Washington, Oregon and Idaho), based on the combined results of HomeStreet originations and loans originated through an affiliated business arrangement known as WMS Series LLC.
• Other highlights:
  • On January 23, 2014, HomeStreet, Inc.'s board of directors approved a special cash dividend of $0.11 per common share, payable on February 24, 2014 to shareholders of record as of the close of business on February 3, 2014.

"As we execute our strategy to diversify our earnings by expanding our commercial and consumer banking business, we continue to be frustrated by falling mortgage lending volumes driven by macroeconomic forces, volume changes and continuing low levels of new and resale homes. Our strategy of continuing to grow our mortgage banking market share in new and existing markets while reducing operations staff in response to lower mortgage volume levels have not been able to fully offset these forces,” said CEO Mark K. Mason. “On a positive note, lower interest rates in October and early November spurred additional mortgage refinance activity compared to earlier months. Despite the challenging market, we continue to be successful in growing our mortgage originator ranks with top-level people and we expanded our market share, regaining our number two ranking overall for refinance and purchase mortgage loans in the Pacific Northwest.

“We made substantial progress in the fourth quarter toward our goal of business diversification. We increased our loans held for investment by 24 percent over the quarter, and of that amount, over 11 percent came from organic loan growth, primarily in multifamily, construction and C&I lending. We successfully closed three high quality bank and deposit branch acquisitions, adding six retail deposit branches and teams of seasoned commercial lenders and customer service personnel. Additionally, we recently announced our entry into the California market as a diversified commercial real estate lender.”

Consolidated Results of Operations

Net Interest Income

Net interest income in the fourth quarter of 2013 was $21.4 million, up $1.0 million, or 4.8%, from the third quarter of 2013 and up $4.8 million, or 28.9%, from the fourth quarter of 2012. In the fourth quarter of 2013, net interest margin, on a tax equivalent basis, was 3.34% compared to 3.41% in the third quarter of 2013, and 3.06% in the fourth quarter of 2012. The decline in the net interest margin from the third quarter of 2013 primarily reflects a lower yield on investment securities due to premium amortization caused primarily by higher than expected prepayments.

Improvement in our net interest margin from the fourth quarter of 2012 resulted primarily from a 42 basis point decline in average interest-bearing cost of funds, due in part to the re-pricing of maturing time deposits.

Total average interest-earning assets increased from the three and twelve months ended December 31, 2012 primarily as a result of growth in portfolio loans, both from originations and from acquisitions, and in the investment securities portfolio, partially offset by a decrease in loans held for sale. The increase in average balances of portfolio loans primarily reflects year-over-year growth in loan production volume from all commercial and consumer business lines. Total average interest-bearing deposit balances increased from the prior periods primarily due to acquisition-related growth in transaction and savings deposits, partially offset by a decline in higher-cost retail certificates of deposit.

Noninterest Income

Noninterest income in the fourth quarter of 2013 was $36.1 million, down $2.1 million, or 5.5%, from $38.2 million in the third quarter of 2013 and down $35.9 million, or 49.9%, from $71.9 million in the fourth quarter of 2012. The decrease from the prior quarter was primarily driven by lower mortgage loan origination and sale revenue, due in part to expected seasonality and continuing low levels of new and resale housing inventory that has led to substantially lower loan origination volume. The decrease from the fourth quarter of 2012 was primarily due to the significant reduction in mortgage refinance volumes driven by higher mortgage interest rates in 2013.

Partially offsetting the decrease in noninterest income during the fourth quarter of 2013 was a $3.8 million increase in mortgage servicing income from the third quarter of 2013, primarily driven by higher mortgage servicing rights ("MSR") values net of risk management results and increased servicing fees collected in the quarter on the Company's single family mortgage servicing. Higher MSR values were the result of lower expected prepayments. Additionally, gain on sale of investment securities increased $2.0 million from the third quarter of 2013, as the Company decreased the overall size of its securities portfolio to provide liquidity for the growth in lending volumes.

Noninterest Expense

Noninterest expense for the fourth quarter of 2013 was $58.9 million compared to $58.1 million in the third quarter of 2013. Excluding acquisition-related expenses, noninterest expense was $54.8 million(1) in the fourth quarter of 2013, a decrease of $2.9 million, or 5.0%, from $57.7 million(1) in the third quarter of 2013, and a decrease of $1.2 million, or 2.1%, from $56.0 million in the fourth quarter of 2012. The decreases from both periods are primarily due to a decrease in mortgage origination commissions and incentives, partially offset by increased salary and related costs and general and administrative expenses, including marketing expenses. During the quarter, the Company added seven home loan centers, related to increased expansion in California. At December 31, 2013, our full-time equivalent employees had increased 5.3% from September 30, 2013 and our retail deposit branch system increased 32% to 30 branches.

Income Taxes

The Company's income tax benefit was $553 thousand for the quarter. The Company's annual effective income tax rate was 31.6% as compared to 20.8% for 2012. The prior year effective income tax rate reflects the benefit of the full reversal of deferred tax asset valuation allowances.

Business Segments

Commercial and Consumer Banking Segment

Commercial and Consumer Banking segment net income in the fourth quarter of 2013 was $244 thousand, compared to $3.8 million in the third quarter of 2013. Excluding acquisition-related expenses of $4.1 million, net income was $2.9 million(1) in the fourth quarter of 2013, compared to net income of $4.1 million(1) in the third quarter of 2013 and a net loss of $4.4 million in the fourth quarter of 2012. The variance in net income from the third quarter of 2013 was primarily due to the third quarter reversal of loan loss provision of $1.5 million. For the full year 2013, Commercial and Consumer Banking had net income of $2.6 million. Excluding acquisition-related expenses of $4.5 million, net income was $5.6 million(1) for 2013, improving from a net loss of $14.5 million for the full year 2012.

Loans Held for Investment

Loans held for investment, net, were $1.87 billion at December 31, 2013, an increase of $362.5 million, or 24.0%, from September 30, 2013 and an increase of $563.7 million, or 43.1%, from December 31, 2012. Additions to the loan portfolio from acquisitions were $208.7 million. New loan commitments totaled $378.8 million for the fourth quarter of 2013, up 56.2% from $242.5 million in the third quarter of 2013.

Asset Quality

Classified assets of $50.6 million, or 1.65% of total assets at December 31, 2013, decreased by $3.8 million, or 6.9%, from $54.4 million, or 1.90% of total assets, at September 30, 2013. Nonperforming assets (NPAs) were $38.6 million, or 1.26% of total assets at December 31, 2013, as compared to $39.0 million, or 1.37% of total assets at September 30, 2013.

Nonaccrual loans of $25.7 million, or 1.36% of total loans at December 31, 2013, decreased from $26.8 million, or 1.74% of total loans at September 30, 2013. OREO balances were $12.9 million at December 31, 2013, an increase of 5% from $12.3 million at September 30, 2013. Delinquent loans of $84.3 million, or 4.44% of total loans at December 31, 2013, decreased from $86.7 million, or 5.64% of total loans at September 30, 2013. Excluding FHA-insured and Department of Veterans' Affairs (VA)-guaranteed single family mortgage loans, delinquent loans were $29.5 million, or 1.63% of total non-FHA/VA loans at December 31, 2013, as compared to $31.3 million, or 2.16% of total non-FHA/VA loans at September 30, 2013. Included in nonaccrual loans at December 31, 2013 are $6.5 million of acquisition-related loans that are guaranteed by the Small Business Administration ("SBA").

The allowance for credit losses was $24.1 million at December 31, 2013 compared to $24.9 million at September 30, 2013. The allowance for loan losses as a percentage of total loans was 1.26% at December 31, 2013. Excluding acquired loans, the allowance for loan losses as a percentage of total loans was 1.40% of total loans compared to 1.61% of total loans at September 30, 2013. Due to improving credit trends, we recorded no provision for credit losses in the fourth quarter of 2013, compared to a reversal of provision of $1.5 million in the third quarter of 2013 and provision of $4.0 million recorded in the fourth quarter of 2012. Net charge-offs in the fourth quarter of 2013 totaled $805 thousand, down from net charge-offs of $1.5 million in the third quarter of 2013 and $3.9 million in the fourth quarter of 2012. Of the $805 thousand in net charge-offs during the quarter, $392 thousand had been specifically reserved as of September 30, 2013.

Deposits

Deposit balances were $2.20 billion at December 31, 2013 as compared to $2.10 billion at September 30, 2013 and $1.98 billion at December 31, 2012. Transaction and savings deposits increased $109.0 million, or 7.7%, from September 30, 2013, while certificates of deposit increased $54.2 million, or 11.8%, from the prior quarter, mostly the result of our fourth quarter acquisitions which added six retail deposit branches to our network.

Mortgage Banking Segment

Mortgage Banking segment net loss was $1.1 million for the fourth quarter of 2013, driven primarily by a significant decline in interest rate lock commitment volume, compared to net loss of $2.1 million for the third quarter of 2013 and net income of $25.8 million for the fourth quarter of 2012. For the full year 2013, Mortgage Banking net income was $21.2 million, a decrease of 78.1% from $96.6 million in 2012.

Mortgage Origination for Sale

Single family mortgage interest rate lock commitments, net of estimated fallout, totaled $662.0 million in the fourth quarter of 2013, a decrease of $124.1 million, or 15.8%, from $786.1 million in the third quarter of 2013 and down $592.9 million, or 47.2%, from the fourth quarter of 2012. The decrease in interest rate lock commitments in the fourth quarter of 2013 compared to the third quarter of 2013 was primarily the result of a decline in mortgage refinance volume and the expected seasonality of the mortgage loan business as well as continuing low levels of new and resale housing inventory. The decrease from the fourth quarter of 2012 primarily reflects the drop in refinance volume following the rise in mortgage interest rates beginning in June 2013, partially offset by increased loan volume from the expansion of our mortgage production offices and a 35% increase in mortgage production personnel year over year.

Single family closed loan volume designated for sale was $773.1 million in the fourth quarter of 2013, down $413.9 million, or 34.9%, from $1.19 billion in the third quarter of 2013 and down $745.8 million, or 49.1%, from $1.52 billion in the fourth quarter of 2012. At December 31, 2013, the combined pipeline of interest rate lock commitments, net of estimated fallout, and mortgage loans held for sale was $476.0 million, compared to $631.1 million at September 30, 2013.

Net gain on single family mortgage loan origination and sale activities in the fourth quarter of 2013 was $23.3 million, a decrease of $8.1 million, or 25.7%, from the third quarter of 2013 and a decrease of $43.9 million, or 65.3%, from the fourth quarter of 2012. The decrease from the prior quarter is primarily the result of the 15.8% decrease in interest rate lock commitments. The decrease from the fourth quarter of 2012 was primarily due to a decrease in refinance mortgage volume, partially offset by the increase in mortgage production offices and personnel in 2013.

Due to differences in the timing of revenue recognition between components of the gain on loan origination and sale activities, the Company analyzes the profitability of these activities using a 'Composite Margin,' which is comprised of the ratios of the components to their respective populations of interest rate lock commitments and closed loans. The Composite Margin for the fourth quarter of 2013 was 350 basis points, down from 375 basis points in the third quarter of 2013.

Mortgage Servicing

Single family mortgage servicing income of $7.4 million in the fourth quarter of 2013 increased $3.8 million, or 103.3%, from the third quarter of 2013 and increased $7.1 million from $287 thousand in the fourth quarter of 2012. The increase from the third quarter of 2013 was primarily driven by higher MSR values net of risk management results due to lower expected prepayments and increased servicing fees collected in the quarter on the Company's single family mortgage servicing.

Single family mortgage servicing fees collected in the fourth quarter of 2013 increased $698 thousand, or 8.6%, from the third quarter of 2013 and $2.1 million, or 32.1%, from the fourth quarter of 2012 resulting from growth in the portfolio of single family loans serviced for others. The portfolio of single family loans serviced for others increased to $11.80 billion at year-end compared to $11.29 billion at September 30, 2013.

Noninterest Expense

Mortgage Banking segment noninterest expense of $38.0 million decreased $6.3 million, or 14.1%, from the third quarter of 2013. This decrease was primarily attributable to lower commission and incentive expense as closed loan volumes declined 34.9% from the third quarter of 2013. Partially offsetting this decrease was an increase in salaries and related expenses resulting from the net addition of 28 mortgage originators during the quarter.

Capital

Regulatory capital ratios for the Bank are as follows:

(1) Regulatory capital ratios at December 31, 2013 are preliminary.

The decline in the Bank's capital ratios was primarily attributable to the fourth quarter acquisitions of Fortune Bank and Yakima National Bank, which created $12.6 million of intangible assets not includable in regulatory capital and resulted in an increase in average and risk-weighted assets as well as the consolidated net loss for the quarter.

Special Cash Dividend Declaration

As we announced on January 24, 2014, HomeStreet, Inc.'s board of directors approved a special cash dividend of $0.11 per common share, payable on February 24, 2014 to shareholders of record as of the close of business on February 3, 2014.

(1) The press release contains certain non-GAAP financial disclosures for consolidated net income excluding acquisition-related expenses, diluted earnings per share, excluding acquisition-related expenses, and Commercial and Consumer Banking segment net income, excluding acquisition-related expenses. The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company's operational performance and to enhance investors' overall understanding of such financial performance. For corresponding reconciliations to GAAP financial measures, see Non-GAAP Financial Measures beginning on page 30 of this earnings release.

Conference Call

HomeStreet, Inc. will conduct a quarterly earnings conference call on Tuesday, January 28, 2014 at 1:00 p.m. EST. The Company will discuss fourth quarter 2013 results and provide an update on recent activities. A question and answer session will follow the presentation. Shareholders, analysts and other interested parties may join the call by dialing 1-888-317-6016 shortly before 1:00 p.m. EST. A rebroadcast will be available approximately one hour after the conference call by dialing 1-877-344-7529 and entering passcode 10037782.

About HomeStreet, Inc.

HomeStreet, Inc. (NASDAQ:HMST) is a diversified financial services company headquartered in Seattle, Washington, and the holding company for HomeStreet Bank, a Washington state-chartered, FDIC-insured savings bank. HomeStreet Bank offers Commercial and Consumer banking, investment and insurance products and services in Washington, Oregon and Hawaii. HomeStreet Bank conducts lending activities in Washington, Oregon, Hawaii, Idaho, California, Arizona, Utah and Alaska. For more information, visit http://ir.homestreet.com. Information contained in or linked from our website is not incorporated into, and does not form a part of, this release.

Forward-Looking Statements

This press release contains forward-looking statements concerning HomeStreet, Inc. and HomeStreet Bank and their operations, performance, financial conditions and likelihood of success. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements are based on many beliefs, assumptions, estimates and expectations of our future performance, taking into account information currently available to us, and include statements about the competitiveness of the banking industry. When used in this press release, the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “should,” “will” and “would” and similar expressions (including the negative of these terms) may help identify forward-looking statements. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. Forward-looking statements speak only as of the date made, and we do not undertake to update them to reflect changes or events that occur after that date.

We caution readers that a number of factors could cause actual results to differ materially from those expressed in, implied or projected by, such forward-looking statements. Among other things, our ability to expand our banking operations geographically and across market sectors, grow our franchise and capitalize on market opportunities, and generate positive net income and cash flow, may be limited due to future risks and uncertainties including, but not limited to, changes in general economic conditions that impact our markets and our business, actions by the Federal Reserve affecting monetary and fiscal policy, regulatory and legislative actions that may constrain our ability to do business, significant increases in the competition we face in our industry and market and the extent of our success in problem asset resolution efforts. We may not immediately realize the benefits expected from our recently completed bank and branch acquisitions and may incur unexpected costs in integrating these acquisitions into our operations. In addition, we may not recognize all or a substantial portion of the value of our rate-lock loan activity due to challenges our customers may face in meeting current underwriting standards, a decrease in interest rates, an increase in competition for such loans, unfavorable changes in general economic conditions, including housing prices, the job market, consumer confidence and spending habits either nationally or in the regional and local market areas in which the Company does business and legislative or regulatory actions or reform (including, without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act). Further, our ability to pay cash dividends in the future is dependent upon a variety of factors, including our net income, liquidity, capital resources, regulatory and financial condition, and our compliance with the terms of our trust preferred securities and applicable banking laws and regulations. A discussion of the factors that we recognize to pose risk to the achievement of our business goals and our operational and financial objectives is contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012. These factors are updated from time to time in our filings with the Securities and Exchange Commission, and readers of this release are cautioned to review those disclosures in conjunction with the discussions herein.

Information contained herein, other than information at December 31, 2012 and for the twelve months then ended, is unaudited. All financial data should be read in conjunction with the notes to the consolidated financial statements of HomeStreet, Inc., and subsidiaries as of and for the fiscal year ended December 31, 2012, as contained in the Company's Annual Report on Form 10-K for such fiscal year.

(1) Share and per share data shown after giving effect to the 2-for-1 forward stock splits effective March 6, 2012 and November 5, 2012.

(2) Tangible equity ratios and tangible book value per share of common stock are non-GAAP financial measures. Other companies may define or calculate these measures differently. Tangible book value is calculated by dividing shareholders' common equity less average goodwill and intangible assets, net (excluding MSRs) by the number of common shares outstanding. The return on average tangible common shareholders' equity is calculated by dividing net earnings available to common shareholders (annualized) by average shareholders' common equity less average goodwill and intangible assets, net (excluding MSRs). For additional information on these ratios and for corresponding reconciliations to GAAP financial measures, see Non-GAAP Financial Measures in this earnings release.

(3) Net earnings available to common shareholders (annualized) divided by average common shareholders’ equity.

(4) Net interest income divided by total average interest-earning assets on a tax equivalent basis.

(5) Net interest margin for the first quarter of 2013 included $1.4 million in interest expense related to the correction of the cumulative effect of an error in prior years, resulting from the under accrual of interest due on the TruPS for which the Company had deferred the payment of interest. Excluding the impact of the prior period interest expense correction, the net interest margin was 3.06% for the quarter ended March 31, 2013 and 3.23% for the year ended December 31, 2013.

(6) Noninterest expense divided by total net revenue (net interest income and noninterest income).

(7) Includes acquired loans. Excluding acquired loans, allowance for loan losses/total loans is 1.40% at December 31, 2013.

(8) Generally, loans are placed on nonaccrual status when they are 90 or more days past due.

(9) Includes $6.5 million of nonperforming loans at December 31, 2013 that are guaranteed by the SBA.

(10) Regulatory capital ratios at December 31, 2013 are preliminary.

(1) The average balances of nonaccrual assets and related income, if any, are included in their respective categories.

(2) Includes loan balances that have been foreclosed and are now reclassified to other real estate owned.

(3) Includes taxable-equivalent adjustments primarily related to tax-exempt income on certain loans and securities of $589 thousand and $528 thousand for the quarters ended December 31, 2013 and December 31, 2012, respectively. The estimated federal statutory tax rate was 35% for the periods presented.

(1) The average balances of nonaccrual assets and related income, if any, are included in their respective categories.

(2) Includes loan balances that have been foreclosed and are now reclassified to other real estate owned.

(3) Net interest margin for the first quarter of 2013 included $1.4 million in interest expense related to the correction of the cumulative effect of an error in prior years, resulting from the under accrual of interest due on the TruPS for which the Company had deferred the payment of interest. Excluding the impact of the prior period interest expense correction, the net interest margin was 3.23% for the twelve months ended December 31, 2013.

(4) Includes taxable-equivalent adjustments primarily related to tax-exempt income on certain loans and securities of $2.3 million and $1.8 million for the twelve months ended December 31, 2013 and December 31, 2012, respectively. The estimated federal statutory tax rate was 35% for the periods presented.

(1) Pre-tax pre-provision profit is total net revenue (net interest income and noninterest income) less noninterest expense. The Company believes that this financial measure is useful in assessing the ability of a lending institution to generate income in excess of its provision for loan losses.

(2) Noninterest expense divided by total net revenue (net interest income and noninterest income).

(1) Represents the ratio of MSR carrying value to related loans serviced for others divided by the weighted-average servicing fee for loans serviced for others.