Item 1. Business
ITEM 1. BUSINESS
Unless we state otherwise or the context otherwise requires, references in this Annual Report on Form 10-K to "we," "our," and “us” refer to HomeStreet, Inc., a Washington corporation, ("HomeStreet," or the "Company,") and its consolidated subsidiaries, HomeStreet Bank (the "Bank") and HomeStreet Capital Corporation ("Capital").
Overview
We are a diversified financial services company with offices in Washington, Oregon, California, Hawaii, Arizona, Utah and Idaho serving customers throughout the western United States. We were founded in 1921 and are headquartered in Seattle, Washington. We provide commercial banking products and services to small and medium sized businesses, real estate investors and professional firms and consumer banking products and services to individuals. As of December 31, 2021, we had $7.2 billion of total assets, $5.7 billion of loans and $6.1 billion of deposits.
With the exception of the updates provided below, the information required under Part I. Item 1. – “Business” is incorporated by reference to Part I, Item 1, "Business" in our Annual Report on Form 10-K for the year ended December 31, 2020.
Human Capital Management
Employee Headcount
As of December 31, 2021, the Company employed 984 employees across our geographic footprint, including 934 employees classified as full-time employees and 50 employees classified as part-time. Our employee turnover rate was 24% during the year ended December 31, 2021, with a voluntary turnover rate of 21%.
Company Culture
As a financial institution, HomeStreet Bank occupies a position of trust in the community, among its customers and employees, and with its regulators. We have earned that trust by developing a reputation for fairness, honesty, integrity and community service- since the Company’s inception in 1921. Our reputation is directly tied to the individual decisions, actions, and sense of business ethics of each and every one of our employees. We believe a high level of trust gives us a competitive advantage in an environment that is increasingly sensitive to business ethics. It is our belief that employees and customers are attracted to work for, and do business with, a company that prides itself on maintaining the highest ethical standards. For all of these reasons, a commitment to fairness, honesty, integrity and community service are core values of the Company.
As part of this commitment to our core values, HomeStreet holds regular meetings of a diverse group of employees who make up our Culture Committee. That Committee has identified five key values built on specific behaviors that bring our values to life: a focus on customers, collaboration as one team, delivering excellence, embodying a spirit to serve the communities that we are in, and being engaged in our work in a manner that can be described as “all in." In 2021, the Culture Committee launched an employee sentiment survey and developed tools to allow for all employees to take advantage of mentorship through a new mentor-mentee program. Further, the Committee launched a program to support employee resource groups.
Diversity, Equity and Inclusion
HomeStreet is an equal opportunity employer committed to a diverse workplace with employees from a wide range of backgrounds. We recognize that diverse organizations are more likely to have employees with increased job satisfaction, higher levels of trust and greater engagement, which in turn translates to a greater capacity for customer service. We focus on recruiting, retaining and promoting employees from diverse backgrounds and who are representative of the people in our communities. By doing so, we believe we are better able to serve our customers and understand their financial needs and goals.
We have a Diversity Committee made up of employees from a variety of ethnic backgrounds, job functions, and titles to identify ways to increase and promote opportunities for all employees within the Company. This Committee works with management to identify and promote practices that will help us achieve these diversity goals. We also promote policies and practices to combat harassment, discrimination, retaliation, or disrespectful or other unprofessional conduct based on an individual’s identity, including sex, gender, sexual orientation, race, religion, color, ancestry, physical disability, mental disability, age, marital status and more.
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Compensation of Employees
As part of our goal of providing high-quality banking and financial services to our customers while creating a positive impact in the local communities in which we do business, we designed our compensation program with the intention of attracting and retaining highly qualified employees. We use a mix of base salary, cash-based short-term incentive plans and defined contributions to the 401(k) plans for participating employees to incentivize our employees classified as exempt employees, and provide equity-based long-term incentive compensation for members of the management team who are senior vice president and above. Employee performance is considered, evaluated and discussed through quarterly performance check-ins between manager and direct report, while those employees eligible for short-term annual incentives also have an annual performance review. Our non-exempt employees are paid hourly wages with benefits of working overtime along with defined contributions to the 401(k) plan for participating employees.
We have a variety of group benefit programs designed to provide our employees with health and wellness benefits, financial benefits in the event of planned or unplanned expenses, or losses relating to illness, disability or death; programs and benefits to help plan for retirement; and programs to deal with job-related or personal problems.
Employee Training and Development
As part of our employee development program, we provide a variety of training and educational opportunities to help our employees stay current on regulatory compliance issues and develop their professional skills. We use an online learning management system to create, assign, and track compliance and professional development learning programs across many topical areas such as banking, mortgage and regulatory education, technology training, public speaking and proactive communication, development of strong customer relationship and customer service skills.
Employee Safety; Response to COVID-19
Employee safety is a priority, and we promote workplace safety in many ways. Early in the pandemic, we designed and adopted HomeStreet’s Social Distancing Policy and COVID-19 Sanitation Measures which were based on US Department of Labor Occupational Safety and Health Administration Guidance on Preparing Workplaces for COVID-19, the Center for Disease Control ("CDC") guidance, the President’s Coronavirus Guidelines for America and orders and guidance from state and local authorities. The Department of Homeland Security has designated the financial services sector as a Critical Infrastructure Sector, and, as a bank, HomeStreet continued to carry out its responsibilities and provide financial services to our customers and communities. In doing so, we have made the safety of our employees, customers and communities where we serve, one of our key priorities. Our policy applies to all HomeStreet locations in the several states where we do business.
The COVID-19 pandemic threat continued throughout 2021 while federal, state and local governments implemented or attempted to implement manifold policy changes around indoor, outdoor, and workplace safety. We enhanced protections for our employees in the form of masks, gloves, deep cleanings, paid COVID time off, and at-home COVID test kits, as we continued to encourage employees to stay home when not feeling well. We also continued to facilitate work from home capabilities for a large portion of our workforce and supported a hybrid or fully-remote working model for those whose jobs were not dependent on being customer-facing. We continued the use of barriers and specialized safety protocols to limit exposure for our employees who work face-to-face with customers. To encourage and then monitor the variable around vaccination and booster shot status, we implemented a tracking process within our Human Resources Information System to enable employees to voluntarily enter their status. HomeStreet offered wellness credits as an incentive to vaccinate and achieved a vaccination status of greater than 80%. Our crisis management team continued to meet regularly to discuss changes to and maintain ongoing specialized safety standards and protocols as part of our social distancing and a phased return to work plan.
Employee Community Involvement
HomeStreet is committed to our communities, and as part of that commitment we support the active involvement of our employees in supporting their communities. Employees are given time off to volunteer for community organizations, and where employees make a substantial commitment of time to a particular organization, HomeStreet offers an additional financial contribution to those organizations in recognition of the commitment of our employees. We also create active partnerships with hundreds of local organizations, and our employees provide leadership, educational support, hands-on service, expertise, and financial support to those organizations. We focus primarily on organizations within the scope of the Community Reinvestment Act ("CRA") – those that provide support for housing, basic needs, and economic development for those of low and moderate
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income. Our senior management also helps to educate our employees on the importance of our community responsibility focus and strategies.
Environmental, Social and Governance Matters
In 2021, we amended the charter of the Human Resources and Corporate Governance Committee (the “HRCG Committee”) of the Board to include within the HRCG Committee’s purpose, duties and responsibilities oversight of our environmental, social and governance (“ESG”) programs, policies and practices. The HRCG Committee’s specific duties and responsibilities in this regard include monitoring and evaluating the Company’s programs, policies and practices relating to ESG issues and making recommendations to the Board of Directors regarding the Company’s overall strategy with respect to ESG matters. In addition, in 2021, we established an ESG Management Steering Committee comprised of senior management members and included ESG as part of our strategic planning process. The purpose of the ESG Management Steering Committee is to assist the HRCG Committee in fulfilling its oversight responsibilities with respect to ESG matters.
Locations
We operate 60 full service bank branches in Washington, in Northern and Southern California, in the Portland, Oregon area and in Hawaii, as well as five primary stand-alone commercial lending centers located in Central Washington, Oregon, Southern California, Idaho and Utah.
Where You Can Obtain Additional Information
We file annual, quarterly, current and other reports with the Securities and Exchange Commission (the "SEC"). We make available free of charge on or through our website http://www.homestreet.com all of these reports (and all amendments thereto), as soon as reasonably practicable after we file these materials with the SEC. Please note that the contents of our website do not constitute a part of our reports, and those contents are not incorporated by reference into this Form 10-K or any of our other securities filings. The SEC’s website, www.sec.gov, contains reports, proxy and information statements, and other information that we file or furnish electronically with the SEC.
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