10-K/A: HomeStreet Inc. Files Amendment No. 1 to 2023 Annual Report on Form 10-K/A

HomeStreet Inc. has filed an amendment to its 2023 annual report to include previously omitted information regarding directors, executive compensation, and corporate governance.

Summary

• HomeStreet Inc. filed Amendment No. 1 to its Annual Report on Form 10-K for the year ended December 31, 2023.
• The amendment includes information required by Items 10 through 14 of Part III of Form 10-K, which were initially omitted.
• The company's proxy statement will not be filed within the required 120-day deadline, necessitating this amendment.
• The amendment restates Items 10, 11, 12, 13, 14, 15 and 16 of Part III and Part IV of the original Form 10-K.
• The document includes certifications from the CEO and CFO as required by the Sarbanes-Oxley Act of 2002.
• The Board of Directors consists of eight members, with all but the CEO considered independent.
• The document details the qualifications and skills of each board member.
• The company has a code of ethics and a whistleblower policy.
• The board has a commitment to diversity, with 38% of directors identifying as women.
• The document outlines the board's leadership structure, including the role of the Lead Independent Director.
• The board oversees risk management through various committees.
• The company published its inaugural ESG report in April 2023.
• The document details the compensation of non-employee directors, including retainers and stock awards.
• The document outlines the executive compensation program, including base salaries, annual cash incentives, and long-term incentives.
• The document includes details of the 2023 annual incentive plan results and payouts.
• The document includes details of the long-term incentive awards, including RSUs and PSUs.
• The document includes details of potential payments upon termination or change in control.
• The document includes details of the company's stock ownership guidelines for directors.
• The document includes details of the company's insider trading policy.
• The document includes details of the company's recoupment of incentive compensation policy.
• The document includes details of the company's hedging policy.
• The document includes details of the company's health and welfare benefits.
• The document includes details of the company's 401(k) savings plan.
• The document includes details of the company's perquisites and other personal benefits.
• The document includes details of the company's executive employment agreements and change in control agreements.
• The document includes details of the company's equity compensation plan information.
• The document includes details of the company's principal shareholders.
• The document includes details of the company's related party transactions.
• The document includes details of the company's principal accountant fees and services.
• The document includes details of the company's exhibits and financial statement schedules.

Sentiment

Score: 5

Explanation: The document is primarily factual and descriptive, with some negative aspects related to performance and delays. The overall sentiment is neutral to slightly negative due to the missed performance targets and the need for an amendment.

Positives

• The company has a strong focus on compliance and ethical standards.
• The board is actively engaged in designing, monitoring, and enforcing compliance with high governance standards.
• The company has a whistleblower policy to protect those who report misconduct.
• The board has a commitment to diversity in the director nomination process.
• The company has a formal onboarding and orientation process for new directors.
• The company has a Lead Independent Director to facilitate discussion and coordinate the views of independent directors.
• The board oversees risk management through various committees.
• The company published its inaugural ESG report in April 2023.
• The company has a compensation recovery policy to recoup incentive compensation in certain situations.
• The company has a 401(k) savings plan for employees.

Negatives

• The company's proxy statement will not be filed within the required 120-day deadline.
• The company's 2014 Equity Incentive Plan expired on March 12, 2024.
• The company's 2023 performance against corporate financial goals was below target.
• The company's 2021-2023 PSUs were not earned due to performance results.
• The company had some delinquent Section 16(a) reports due to third party system difficulties.

Risks

• The company faces risks related to cybersecurity and information security.
• The company faces risks related to its compensation plans and programs.
• The company faces risks related to its nominating and corporate governance functions.
• The company faces risks related to its financial reporting process.
• The company faces risks related to its internal accounting controls.
• The company faces risks related to its compliance with regulations.
• The company faces risks related to its credit, interest rate, liquidity, and price.
• The company faces risks related to its operational and reputational risks.
• The company faces risks related to its strategic plan.
• The company faces risks related to its human capital management.

Future Outlook

The document does not contain specific forward-looking statements or guidance, but it does reference the company's 2023-2025 strategic plan.

Management Comments

• Mr. Mason was selected to serve as a director because of his position as our CEO and his significant experience as an executive officer, director of and consultant to other banks and mortgage companies, his credit and lending experience, finance and accounting education and experience and his relationships in the banking industry and the capital markets.
• Mr. Boggs was selected to serve as a director because of his significant accounting and financial experience, his accounting credentials and degree and his experience as a designated financial expert on audit committees.
• Ms. Cavanaugh was selected to serve as a director because of her executive management, human capital management, business and financial experience and her background as an expert in the financial services industry.
• Mr. Green was selected to serve because of his background as an audit partner for companies in the financial institutions industry, expertise in commercial banking, professional qualifications, financial literacy and his qualification as an audit committee financial expert.
• Ms. Harrell was selected to serve as director because of her experience in the areas of marketing, sales, strategy, communications, community service and diversity, social responsibility, sustainability, public affairs and corporate citizenship, in addition to her extensive background in executive management.
• Mr. Mitchell was selected to serve as a director based on his knowledge of the banking industry, experience as a chief executive officer and director of a bank, and expertise in commercial banking.
• Ms. Pellegrino was selected to serve as a director because of her executive leadership, management, risk management and business experience in the financial services industry.
• Mr. Tompkins was selected to serve as a director because of his executive leadership experience and his experience, including as a director, of companies in the financial services industry.

Industry Context

This amendment is a routine filing for a public company, ensuring compliance with SEC regulations. The detailed information on corporate governance, executive compensation, and risk management is typical for financial institutions and reflects the regulatory scrutiny they face. The inclusion of ESG oversight also aligns with current industry trends.

Comparison to Industry Standards

• The board composition, with a majority of independent directors, aligns with Nasdaq corporate governance standards, similar to other publicly traded financial institutions such as Bank of America and JPMorgan Chase.
• The detailed disclosure of executive compensation, including base salaries, incentives, and equity awards, is consistent with the reporting practices of peer companies like Umpqua Holdings Corporation and First Republic Bank (prior to its acquisition).
• The company's risk management framework, with oversight by various board committees, is a standard practice in the banking industry, comparable to the risk management structures of regional banks like KeyCorp and Regions Financial.
• The inclusion of an ESG report and oversight by the N&G Committee reflects a growing trend in the financial industry, similar to the ESG initiatives of larger banks like Citigroup and Wells Fargo.
• The company's stock ownership guidelines for directors are a common practice to align director interests with those of shareholders, similar to the guidelines of other financial institutions like M&T Bank and PNC Financial Services.

Related Party Transactions

• HomeStreet Bank makes loans to directors, executive officers, principal shareholders, and their related interests in the ordinary course of business, subject to Regulation O.
• HomeStreet Bank offers reduced closing costs to certain employees under the Home Loans to Employees, Officers, & Directors program.

Stakeholder Impact

• Shareholders are provided with detailed information about the company's governance, compensation, and financial performance.
• Employees are provided with information about their compensation and benefits.
• Customers are not directly impacted by this document.
• Suppliers are not directly impacted by this document.
• Creditors are not directly impacted by this document.

Next Steps

• The company will file its proxy statement at a later date.
• The company will continue to implement its 2023-2025 strategic plan.
• The company will continue to monitor and manage its risks.
• The company will continue to develop its ESG strategy.

Key Dates

Keywords

corporate governance, executive compensation, board of directors, risk management, financial reporting, incentive compensation, stock ownership, audit committee, ESG, cybersecurity