Latest / Bloomberg Intelligence / HomeStreet's Mason: Bank To Remain Independent For Now (Audio)

Transcript

HomeStreet's Mason: Bank To Remain Independent For Now (Audio) · Bloomberg Intelligence

• 0:04
  Speaker 1: Broadcasting live to New York, Bloomberg eleventh, RYO to Washington,
• 0:08
  Speaker 1: d C. Bloomberg to Boston, Bloomberg twelve hundred to San Francisco,
• 0:13
  Speaker 1: Bloomberg nine to the countries, Exam Channel one and around
• 0:18
  Speaker 1: the globe the Bloomberg Radio plus aapp and Bloomberg dot Com.
• 0:22
  Speaker 1: This is taking stock. I'm caffeine. He's along with Pim Fox,
• 0:26
  Speaker 1: Volkswagen is making a shift to electric cars and robot
• 0:29
  Speaker 1: robotaxis is a big strategy overhaul to try to move
• 0:34
  Speaker 1: away from all the issues and emerged during their diesel
• 0:37
  Speaker 1: cheating scandal. PIM. Yes, the company wants to launch thirty
• 0:42
  Speaker 1: all electric models. They're trying to reposition themselves as a
• 0:45
  Speaker 1: leader in green transport. We're gonna give you more details,
• 0:49
  Speaker 1: but right now, let's go to Charlie Colder in the
• 0:50
  Speaker 1: Bloomberg newsroom for details on business news. And I think
• 0:53
  Speaker 1: it very much, PIM. Thank you Kathleen Green on the screen.
• 0:55
  Speaker 1: At least for the down now up nine points to
• 0:58
  Speaker 1: seventeen thousand, six hundred ninety. That is a gain of
• 1:01
  Speaker 1: three tents of one percent. SMP five hundred index has
• 1:04
  Speaker 1: been fluctuating after we're erasing most of the day's losses
• 1:08
  Speaker 1: amid shifting views on whether Britain will remain in the
• 1:11
  Speaker 1: European Union, while lingering global growth concerns remain a drag
• 1:15
  Speaker 1: on sentiment. The SMP five hundred index down half a
• 1:19
  Speaker 1: point now, neztack down eleven, a drop of two tents
• 1:23
  Speaker 1: of one percent, the tenure up one thirty second, with
• 1:25
  Speaker 1: the yield of one point five six percent, Gold up
• 1:28
  Speaker 1: to forty bence to twelve ninety one, a gain of
• 1:31
  Speaker 1: two tenths of one percent, and crude is down a
• 1:34
  Speaker 1: dollar seventy barrel forty six thirty right now, a drop
• 1:38
  Speaker 1: there of three and a half percent. So the June
• 1:41
  Speaker 1: FED meeting is behind us. Where does that leave the
• 1:43
  Speaker 1: Federal Reserve now? Dean Mackie is chief economist at point
• 1:47
  Speaker 1: seventy two Asset Management. Certainly their tone may shift again.
• 1:52
  Speaker 1: We saw that just in the last three months. For example,
• 1:54
  Speaker 1: the Fed wanted to get those rate hike expectations up.
• 1:57
  Speaker 1: They talked hawkishly for a while, and then abruptly that shifted.
• 2:01
  Speaker 1: So certainly we couldn't go through one of those many
• 2:03
  Speaker 1: cycles again, I think. To get there, though, we'd need
• 2:06
  Speaker 1: the data to turn firmer on the labor market. American
• 2:09
  Speaker 1: Airlines Group tumbling to its lowest in more than a
• 2:11
  Speaker 1: year after an analyst cut its stock rating and trimmed
• 2:15
  Speaker 1: earnings estimates for the industry, citing recent terrorist attacks, higher
• 2:20
  Speaker 1: fuel prices, and the coming UK vote on leaving the
• 2:23
  Speaker 1: European Union. Shares of American Airlines Group trading LAURA now
• 2:27
  Speaker 1: by four pot two percent, down a dollar twenty seven
• 2:30
  Speaker 1: to twenty nine dollars and twenty two cents again, recapping
• 2:34
  Speaker 1: SMP LAURA by two tenths of one percent. Now, let's
• 2:38
  Speaker 1: take a look at some of the other stories making
• 2:41
  Speaker 1: news from around the world on Bloomberg Radio. Thank you
• 2:45
  Speaker 1: Charlie from the Bloomberg News Room. I'm rainy in a
• 2:47
  Speaker 1: cent cio. This news update is brought to you by
• 2:49
  Speaker 1: Jaguar Manhattan. Visit Jaguar Manhattan today, where New York goes
• 2:53
  Speaker 1: for luxury, conveniently located at fifty four and eleventh Avenue
• 2:57
  Speaker 1: and online at Jaguar Manhattan dot com. Aguar Manhattan is
• 3:01
  Speaker 1: at your service. A British lawmaker has been shot and
• 3:04
  Speaker 1: killed today in her district in Northern England. Temporary Chief
• 3:08
  Speaker 1: Constable West Yorkshire police d Collins says a suspect is
• 3:12
  Speaker 1: in custody. A man was arrested nearby by local uniform
• 3:15
  Speaker 1: police officers. Weapons including a firearm, have also been recovered.
• 3:21
  Speaker 1: The attack on Joe Cox has prompted both sides to
• 3:24
  Speaker 1: suspend campaigning today in the battle over whether Britain should
• 3:27
  Speaker 1: end its membership in the European Union. It's an important
• 3:30
  Speaker 1: find in the crash of an egypt airplane. Bloomberg's Michael
• 3:33
  Speaker 1: Barr has more. The cockpit voice recorder of an Egypt
• 3:37
  Speaker 1: airplane that crashed last month has been found and pulled
• 3:40
  Speaker 1: out of the Mediterranean Sea. Egypt air Flight eight oh
• 3:44
  Speaker 1: four was heading from Paris to Cairo when it plunged
• 3:46
  Speaker 1: into the sea. All sixty six people on board were killed.
• 3:50
  Speaker 1: The data recorder could provide the tails as to what
• 3:53
  Speaker 1: brought down the airbs Are Egypt Investigation Committee says the
• 3:57
  Speaker 1: soul called black box, has been damaged, but the memory unit,
• 4:01
  Speaker 1: which is the most important in the recorder, is intact.
• 4:05
  Speaker 1: Michael Barr Bloomberg Radio and Police Commissioner Bill Bratton says
• 4:09
  Speaker 1: there have been a number of threats made against gay
• 4:11
  Speaker 1: bars and nightclubs in the city, but none appears to
• 4:14
  Speaker 1: be credible. Bratton says, whoever made the threats in the
• 4:17
  Speaker 1: wake of the Orlando nightclub shootings are quote cowards. Global
• 4:21
  Speaker 1: News twenty four hours a day, powered by our journalists
• 4:24
  Speaker 1: in more than one under fifty news bureaus around the world.
• 4:26
  Speaker 1: From the Bloomberg News Room, I'm Rainey in essentio Charlie,
• 4:30
  Speaker 1: and we thank you and again recapping gold is trading
• 4:33
  Speaker 1: higher at twelve ninety Papa dollar raighty now a gain
• 4:36
  Speaker 1: of point one percent, the taw A forty six a
• 4:39
  Speaker 1: gain of three tenths of one percent, SMP fluctuating. It
• 4:42
  Speaker 1: is now down by half a point. I'm Charlie pelletton.
• 4:45
  Speaker 1: That's a Bloomberg business flash. This is taking stock with
• 4:51
  Speaker 1: Kathleen Hayes and Pim Fox on Bloomberg Radio. According to
• 4:56
  Speaker 1: the Federal Deposit Insurance Corporation, there are more than sixt
• 5:00
  Speaker 1: at f d I c ensured commercial banks in the
• 5:02
  Speaker 1: United States, but not all banks are created equal. Here
• 5:07
  Speaker 1: to tell us more about the banking industry and about
• 5:10
  Speaker 1: Home Street Bank in particular, is the chairman, the president,
• 5:12
  Speaker 1: and the chief executive of Home Street Bank. Mark Masony
• 5:16
  Speaker 1: joins us from Seattle. Mark, thank you very much for
• 5:18
  Speaker 1: being with us. Thank you for having me today. Now
• 5:21
  Speaker 1: I understand, of course that you are based on Union
• 5:23
  Speaker 1: Street in Seattle, but you've got an expansion story to tell.
• 5:26
  Speaker 1: Give people a little detail about the bank and about
• 5:30
  Speaker 1: your strategy. Well thanks, it's uh. It is an old
• 5:33
  Speaker 1: institution where our nineties six year this year, and I've
• 5:37
  Speaker 1: been with the bank almost seven years. When I got here,
• 5:40
  Speaker 1: we were operating in thirty locations, twenty of which were
• 5:44
  Speaker 1: typical bank branches. Today we have over a hundred and
• 5:47
  Speaker 1: twenty locations and almost fifty depository locations. We've grown a
• 5:52
  Speaker 1: whole bunch since our I p O in early two
• 5:54
  Speaker 1: thousand and twelve. Well Mark, in interest of full disclosure,
• 5:58
  Speaker 1: I grew up Olympia, Washington, so um, I always love
• 6:01
  Speaker 1: to hear about a Seattle business and a Seattle bank.
• 6:05
  Speaker 1: How is business for you right now? What are the
• 6:07
  Speaker 1: forces that are that are helping you grow and expand?
• 6:10
  Speaker 1: Is it? Is it all regionals? It's just finding the
• 6:12
  Speaker 1: right markets. Do these big picture questions and issues like
• 6:15
  Speaker 1: oh my gosh, I guess the Fed's gonna barely raise
• 6:17
  Speaker 1: interest rates, so not no big increase easily for interest
• 6:21
  Speaker 1: margins for the bank. Do you worry about Brexit? How
• 6:23
  Speaker 1: does it how does it all come together for you? Well,
• 6:26
  Speaker 1: we're fortunate in that we operate in some of the
• 6:28
  Speaker 1: best markets in the United States today. We have a
• 6:31
  Speaker 1: traditional region here in the Pacific Northwest and in the
• 6:34
  Speaker 1: Hawaiian Islands, and recently we've expanded down through southern, Northern
• 6:39
  Speaker 1: and southern California. So these markets today are characterized by
• 6:43
  Speaker 1: much higher levels of employment growth, house housing appreciation, and
• 6:49
  Speaker 1: lowering levels of unemployment. So we are operating in a
• 6:52
  Speaker 1: better environment than generally the rest of the nation. The
• 6:56
  Speaker 1: big issues though, of interest rates and um worries about
• 7:00
  Speaker 1: the health of the economy affect all of us, and
• 7:03
  Speaker 1: interest rate changes today have generally not been favorable for banks.
• 7:08
  Speaker 1: Banks have largely been expecting rates to rise over the
• 7:11
  Speaker 1: last several years. They have not occurred, and the most
• 7:15
  Speaker 1: recent changes have really hurt bank margins as the the
• 7:20
  Speaker 1: yield curve is actually flattened, and that hurts bank margins.
• 7:24
  Speaker 1: It increases short term costs of deposits and and wholesale funding,
• 7:31
  Speaker 1: and yet we don't get much additional yield. In our case,
• 7:35
  Speaker 1: as a very large mortgage lender and a large consumer
• 7:38
  Speaker 1: bank as well as a commercial bank. It's ironically good
• 7:41
  Speaker 1: for us. The ten year treasury is at least as
• 7:45
  Speaker 1: of yesterday, back below one point six percent. That's very
• 7:49
  Speaker 1: good for home um values and horm of home affordability
• 7:54
  Speaker 1: and home refinancing, and so we expect this year to
• 7:57
  Speaker 1: maybe be the largest mortgage origination year since two thousand
• 8:01
  Speaker 1: and twelve. Mark Wayson, I was looking at your website
• 8:05
  Speaker 1: and there's a twenty four month bump rate certificate of
• 8:08
  Speaker 1: deposit paying one point three the thirty year fixed rate mortgage.
• 8:13
  Speaker 1: How I understand this is an average, so it may
• 8:16
  Speaker 1: not apply specifically to your audience in the Pacific Northwest
• 8:20
  Speaker 1: is about three point six. It's awful difficult to pay
• 8:24
  Speaker 1: employees on that two point three percent margin. And that
• 8:29
  Speaker 1: would be true if we held most of our mortgages.
• 8:32
  Speaker 1: But we are mostly a conventional, conforming in government mortgage originator,
• 8:37
  Speaker 1: and we sell the lion's share of our mortgages to
• 8:41
  Speaker 1: the agency's Fannie May, Freddie Mack and Jenny May for
• 8:44
  Speaker 1: f h A n v A loans, and we retain
• 8:46
  Speaker 1: the servicing and we retain our customers, and so most
• 8:50
  Speaker 1: of the loans on our balance sheet are consumer loans
• 8:54
  Speaker 1: of home equity, lines of credit, and other consumer loans,
• 8:57
  Speaker 1: and the rest are mostly commercial loans with better heels.
• 9:01
  Speaker 1: So what is your growth prospect? I mean, are you
• 9:05
  Speaker 1: how how far can you take this? And? Uh, do
• 9:09
  Speaker 1: you see the what are the forces that will drive that?
• 9:11
  Speaker 1: Is it financing remaining cheap? Is that you getting better
• 9:14
  Speaker 1: the competition? Would you like to be acquired by a
• 9:17
  Speaker 1: banker institution? Well, at this point we've been the acquirer
• 9:20
  Speaker 1: or um since two thousand and thirteen. We've acquired four
• 9:24
  Speaker 1: smaller financial institutions too, up in Washington and two in
• 9:28
  Speaker 1: southern California. And we're growing organically at a very fast pace,
• 9:33
  Speaker 1: somewhere between four and six percent per quarter. So along
• 9:37
  Speaker 1: with selective acquisitions, we've been growing assets almost thirty percent
• 9:42
  Speaker 1: a year of the past three years, and we intend
• 9:45
  Speaker 1: to do that for the foreseeable future as we expand
• 9:49
  Speaker 1: not only in our existing traditional market here in the
• 9:52
  Speaker 1: Pacific Northwest, but to a greater extent in California and
• 9:55
  Speaker 1: in the major markets in the other Western states. And
• 9:58
  Speaker 1: so we think that our strategy has a long way
• 10:01
  Speaker 1: to run. Um. I think it's true though that you know,
• 10:04
  Speaker 1: we never know in today's world how long will remain
• 10:07
  Speaker 1: independent because, as you mentioned earlier, there's only banks in
• 10:12
  Speaker 1: the United States today, that's down from ten thousand only
• 10:15
  Speaker 1: ten years ago, and the course of bank consolidation is
• 10:19
  Speaker 1: going to continue for a while. In our case, we
• 10:22
  Speaker 1: will probably be independent for some period of time as
• 10:25
  Speaker 1: we execute on our growth strategy. Well, good luck with that,
• 10:28
  Speaker 1: Mark Mason. You're in a very hot market now. Seattle
• 10:30
  Speaker 1: is on fire. Just a real estate prices in King County.
• 10:35
  Speaker 1: Mark Mason, Chairman, President and CEO of Home Street Bank
• 10:38
  Speaker 1: based in Seattle, Washington, making a major expansion across the
• 10:43
  Speaker 1: entire Western United States. I'm Kathleen Hayes along with Pim Fox.
• 10:49
  Speaker 1: We're going to be taking a look at so many
• 10:50
  Speaker 1: things today in the show, the Fed, the Brexit, the
• 10:53
  Speaker 1: US economy, and so much more. Taking Stock on Bloomberg Radio.
• 11:01
  Speaker 1: Coming up on taking Stock, Doctor Philip Frosty is the
• 11:05
  Speaker 1: chairman and the chief executive of Opgo Health. Find out
• 11:09
  Speaker 1: about medical diagnostics, pharmaceuticals, and biotechnology. That's next