Home loans lifted HomeStreet Bank (HMST) in Seattle in the third quarter.
Earnings rose 40%, to $21.3 million, from a year earlier, the $2.5 billion-asset company said Monday.
HomeStreet recorded net interest income of $16.2 million, up 36% from the third quarter of 2011. The increase resulted primarily from mortgage lending, which rose 21% to $602 million from a year earlier.
Net interest margin increased 70 basis points, to 3.08%, as a result of new lending and an expected decrease in the cost of deposits, the company said.
Noninterest income rose 84% to $68.1 million from a year earlier, reflecting an increase in mortgage loan production volume and secondary-market profit margins. Noninterest expense rose 41%, to $45.8 million. The company recorded an efficiency ratio of 54.2%, down from 66% in the third quarter of 2011.
Chargeoffs fell 34%, to $5 million, from a year earlier.
"Our record earnings in the third quarter were driven primarily by strong mortgage banking activity," Mark Mason, HomeStreet's chief executive, said in a news release. "We continue to realize the benefits in origination volume and market share from our continued focus on recruiting top production and support personnel in our markets."
HomeStreet said its board approved a split of the company's common stock that would double the number of outstanding shares, to 14.4 million, on Nov. 5.
HomeStreet operated from May 2009 until March under an order from regulators that directed the company to reduce problem loans and bolster capital ratios. The company, which has reported profits each quarter since the third quarter of 2011, raised $96 million in an initial public offering in February.