Good afternoon, and welcome to the HomeStreet’s Q3 Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions) After today’s presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Mr. Mark Mason, President and CEO of HomeStreet. Mr. Mason, please go ahead.

Thank you. Hello and thank you all for joining us for our third quarter earnings call. Before we begin, I’d like to remind you that our third quarter earnings release was furnished yesterday with the SEC on Form 8-K and is available on our website at ir.homestreet.com. In addition, a recording will be available at the same address approximately one hour later today. On this call, we will make some forward-looking statements. Any statement that isn’t a description of historical fact is probably forward-looking and these statements are subject to many risks and uncertainties. Our actual performance may fall short of our expectations or we make take actions different from those we currently anticipate. Factors that may cause actual results to differ from expectations or that may cause us to deviate from our current plans are detailed in our SEC filings, including our Quarterly Report on Form 10-Q for the second quarter and our Annual Report on 10-K for 2012 as well as our various other SEC reports. Additionally, information on any Non-GAAP financial measures referenced in today’s call, including a reconciliation of those measures to GAAP measures may be found in our SEC filings and in the earnings release available on our website. Today, I’d like to share a few thoughts about current market conditions, speak about our strategy, and highlight key financial results. Please refer to our earnings release for a more detailed discussion of our financial condition and results of operations. The mortgage market is far different today than it was a year ago. While this is not surprising or unexpected, the magnitude and the speed of the change has been significant. According to a recent MBA mortgage finance forecast, 30-year fixed mortgage rates rose from a historic low of 3.35% in May to 4.6% in the…

Thank you. We will now begin the question-and-answer session. (Operator Instructions) At this time, we will pause momentarily to assemble our roster. The first question is from Paul Miller with FBR. Please go ahead. Paul Miller – FBR Capital Markets: Hi, thanks a lot. Thanks. Hi Mark, can you talk a little bit about your commercial loan growth. You’ve bought a lot of commercial teams on board. You’ve got some pretty solid commercial growth there. Can you talk a little bit about what do you – where do you see that going and how competitive is that market still?

I assume you’re primarily talking about the C&I business. Paul Miller – FBR Capital Markets: Yes.

That market is incredibly competitive in part, because there is no real new loan growth, so all of the business surrounds, each of us trying to take each other’s customers. Ultimately, that becomes a competition of rates and terms. Most of the banks to-date, give generally good service to their customers. As a community bank, we try to highlight local service and local decision making, but of course we have a lot of local competitors as well. Fortunately, with the addition of the teams from Fortune Bank and the Yakima National Bank, we add well established teams with well-established customer bases to our group. And that in addition to the people we’ve added over the last year, we think we’re going to do better than most. Having said that, it is a business that is unfortunately too competitive on the types of things that hurt our business; the terms, the credit quality of loans and rates which compress our margin. As excited we are about this, we think that it’s going to be a slower growth business than we might hope. More exciting today in terms of near-term prospects on origination, our commercial real estate residential construction. As you saw in the quarter, the biggest numbers at least changed in origination numbers were in those business lines. We have a very fine residential construction group that has been a core business of this company for a long period of time. Obviously it was part of the challenge during the recession, but today the terms on those loans, the credit quality and the strength of the developers that survived through the market, much superior to pre-recession standards. And our ability to bank larger, more liquid and better capitalized developers is even better than it has been. So we’re looking forward to…

We think we’re going to exceed the peer growth as a consequence of all the investments we’ve made. We’re just now starting to get traction in some of these businesses. And this quarter’s growth of course excludes the impact of our acquisitions. So as I mentioned in my comments, we’re looking to grow earning the assets. I quoted a 6% to 8% range. Obviously, we feel we can exceed that if we’re giving that kind of guidance. And well my guidance is through the end of next year, I would expect that to continue for some reasonable period beyond that. Paul Miller – FBR Capital Markets: And then you mentioned earlier in the call that, how much rates rose in the third quarter. Where currently a raise in the Washington area and have you seen materially impact in refis and how is that – and what about the purchases. Is it still lack of supply holding that back?

Since rates peaked in the second quarter, they rallied somewhat. The Federal Reserve’s decision not to start taper the partial government shutdown, you all are students of the interest rate economy today. Rates have moderated. We’ve seen the 10-year rate move back down to just over 2.5%. Accordingly, mortgage rates have dropped as well, and they are today in the 4.875% to 4.375% range for a 1.30 year convention mortgage. So they’ve come down a little bit, that has helped the refinance market. More recently, our application volume has – on refinances, has risen somewhat such that refinances make up about 25% to 30% of our current application volume, up from about 20% in the prior quarter. Paul Miller – FBR Capital Markets: Okay. Thanks a lot.

Our next question is from Tim Coffey with FIG Partners. Go ahead please. Tim Coffey – FIG Partners: Good morning, gentlemen.

Good morning, Tim. Tim Coffey – FIG Partners: So can you give us an idea of how much your deposit growth in the quarter came from your recent hires in the commercial banking side of business?

I don’t have a specific number. I would say that we’ve gone comprehensive benefit from all the things we’ve been doing. Remember, we’ve opened a number of new retail deposit branches in new markets, they are contributors. Our new commercial customers have been fairly significant contributors. I think that our product strategy and our most recent marketing, has helped us. Those of you not around market may not know that in the second quarter, we became the bank sponsor of the Seattle Seahawks and Sounders, that has gotten us a great deal of local [indiscernible], and has helped our name recognition and customer acquisition on the consumer side. And so I think all of those things have contributed to the growth in deposits. Tim Coffey – FIG Partners: Okay. And I am assuming that most of that – if you’re looking from a geographical standpoint, a lot out will come out from a future stand market?

Yes, that’s correct. That’s correct. Though I will share with you Hawaii continues to be a strong deposit gathering market. We have some specific savings products in Hawaii. We have one saving account that is specific in limited Hawaiian markets that we have – Darrell, what do we raised there so far?

In the last quarter, we raised about $35 million in that one…

That one market in that one product.

In that one saving account, that’s the [indiscernible] account. Tim Coffey – FIG Partners: Okay. To go forward and just talking the strategy that can be, I don’t know yourself you saw in interest bearing deposits and terms type deposits?

Well, we hope that our business lending and all the work we’ve done in building a state of the art cash management and treasury services team is going to bring us greater levels of outright business deposits without lending, all right? I mean there are banking customers who don’t borrow today. And some very fine companies that have a positive cash flow and don’t need us to lend to them. And we have spent a fair amount of money and we’ve hired a lot of great people to address that more technical market from a service standpoint. One of the bright spots for the folks from Yakima National Bank and Fortune Bank that they saw in joining us was the very sophisticated treasury and cash management services that we were able to provide and the support. Tim Coffey – FIG Partners: Okay, thanks. So would it be your expectations in terms of the deposit growth that – growth still into this quarter, [indiscernible] we have this quarter would be a bonus, not an expectation?

We expect to grow deposits similarly going forward. Some portion of that we believe we’re going to have to raise through time deposits, just conservatively when we plan. It is the not the worst situation right now, lengthening our liabilities a little. It helps our weight-risk profile. Obviously, we would primarily like to do that through retail customers, core customers that also bring that operating accounts and fuller relationships at the margin we can do it in the wholesale market a little bit cheaper. And we’ll probably end up utilizing all of that. Tim Coffey – FIG Partners: Okay. And then the imbalances that you talked about between the net locked loans and the closed loans in the quarter, you said that – you didn’t expect that we see a significant in the fourth quarter. Just going forward, do you mean that you see that trend reversing or moderated?

Well, I won’t tell until this time next quarter. I guess the central part of my comment is whether it’s positive or negative; I don’t think it’s going to have a material impact on the results. It could actually go the other way next quarter. And if you think about the number of people we’re hiring, and them ramping up their respective pipelines, we will overcome declining industry volume, simply by acquisition of personnel. And so that should ultimately lead to on average higher lock volume than closing volume. Now that assumes everything else is static which of course it never really is. Tim Coffey – FIG Partners: All right. Okay. And just your outlook on M&A. Where do you see your local market, obviously there has been a whole lot of activity in the last couple of months, can you give any thoughts on that?

Well it’s all frustrating in that the most recent transactions have largely been negotiated on a one-to-one basis, between sellers and preferred buyers. And while we’ve had a similar transaction, it’s all frustrating if you’re an outsider. And if you might have had a more competitive valuation on the building transaction and not really be allowed to participate until after transaction is been executed and now you have to overcome of those who you would break up here [ph]. So I think there are good transactions from the buyer and seller standpoint. I am not critical of what they are doing. From our standpoint, we would like to be considered. And we’ve tried to make that clear to everyone involved in that marketplace. And hopefully going forward, we’ll have more opportunity. I think it’s a great time. I think that at least in Pacific Northwest, folks who have access to capital and growing businesses are active acquirers, and many of these smaller institutions who’ve had to struggle without really access to capital are showing to consider partnering with other institutions for all the right reasons. And so it’s good to see that more transactions occurring, I’d like to see it more liquid market. Tim Coffey – FIG Partners: All right, thank you. That is all my questions.

Thanks very much, Tim.

(Operator Instructions) Our next question is from Ryan Zacharia with JAM. Go ahead please. Ryan Zacharia – Jacobs Asset Management: Thanks for taking my questions. So if I understand your growth targets including the announced acquisitions, it implies that earning assets may end 2014 of like $3.5 billion, does that sound right?

That’s entirely possible. Ryan Zacharia – Jacobs Asset Management: Okay. And what do you…

Because I see an extrapolation of those numbers, yes. Ryan Zacharia – Jacobs Asset Management: Yes. And what do you think is a good efficiency ratio for the core banking segment for 2014 within the context of those targets if you achieve those goals?

Understanding that it’s a number that’s going to be improving over the year, right? Ryan Zacharia – Jacobs Asset Management: Yes.

It’s not very attractive today. And as your earnings assets grow, of course then earning [ph] improves substantially. I am not going to be that impressed with it for the year. I mean it could be in the 75% to 80% range, but I would expect by the fourth quarter, that number – of 2014, that number is substantially better, and something that would be at the lower end of that range. Ryan Zacharia – Jacobs Asset Management: Okay. And then just from the second quarter presentation, you’ve put forth kind of a slide that you had in there for a number of times now, mortgage volumes, not expectations but overlaid versus kind of MBA assumptions and that had kind of $5.5 billion of funds in retail for sale mortgage production volume. I just want to know how you think about that number kind of 90 days later.

I don’t feel substantially different today. That scenario when I forecast, as I remind my attorneys, it is based upon on extrapolation of planned hiring and a production level per producer. And I still feel like that is an achievable number based upon our plans on the current market metrics of loans per loan officer, assuming that continuing hiring scenario. I would hope that’s a little conservative. And remember that’s direct originations too, right? That excludes the production we buy from our affiliate Windermere Mortgage Services. Ryan Zacharia – Jacobs Asset Management: Right. And that’s what I was going to ask just, what was the number this quarter?

Good question. Where is the Windermere number? Hold me a minute. So closed loans Windermere was $167 million, plus they added $25 million of our portfolio production as well. Ryan Zacharia – Jacobs Asset Management: Are you seeing a bit pickup in ARM production and are you putting portfolio in more of that stuff. Do you think that that’s kind of burgeoning opportunity?

Yes. And yes, in fact the growth primarily on the non-conforming or jumbo side, in ARM production is a little larger. And as a consequence, we are beginning to pool more loans and become somewhat more competitive on our rates. And we’ll likely sell more production on accrual basis to non-agency investors and that’s a program we’re just starting and we think that’s a significant opportunity today. Ryan Zacharia – Jacobs Asset Management: Okay, great. Thanks a lot guys.

Thanks. I appreciate it.

The next question is from Tim O’Brien with Sandler O’Neill & Partners. Go ahead please. Tim O’Brien – Sandler O’Neill & Partners: Good morning, Mark.

Good morning, Tim. How are you? Tim O’Brien – Sandler O’Neill & Partners: Fine. Thanks. Just one quick question, you might have touched on this. How many folks did you add with the rollout of those new Southern California centers?

Good question. Because it’s sort of work in process, right, we hired an initial group including the branch managers, and then we have a target over time that we would like to grow each of the branches to. So the initial hiring in Northern California was about 30 to 35 folks, same in Southern California roughly. Overtime, each of those areas should grow to – should be in excess, well in excess of double that number just in those branches. And those will not be the only branches we opened in California. Tim O’Brien – Sandler O’Neill & Partners: It makes sense. And where the hires in Sou Cal [ph] tied to the MetLife business back in the day?

The Northern California group was. There are a few people in the Southern California group, but mostly they are originators from other lenders. I will share with you that each of the groups, Northern and Southern California currently work for one lender. The Northern California group came from one lender. The Southern California group came from another different lender. Tim O’Brien – Sandler O’Neill & Partners: And as far as progress in Northern California that you talked about kind of hiring, did you make many additional hires this quarter, up North?

A few. Again, right, so each of the plans we have an initial set of folks. And then we have follow-on hiring that’s planned. I don’t know the exact number. The pace of that is really over the next couple of quarters to complete filling those offices in each case. Tim O’Brien – Sandler O’Neill & Partners: Yes. All right, thanks for answering my questions.

Also soon we’re going to be opening where you are, in San Francisco. Tim O’Brien – Sandler O’Neill & Partners: Great. Good luck.

Thank you.

(Operator Instructions) Showing no further questions in the queue, this concludes our question-and-answer session. I would like to turn the conference back over to Mr. Mark Mason for any closing remarks.

Thank you again for joining us on our call today. We appreciate your patience, and as always, your great questions. Look forward to talking to you next quarter. Thank you, operator.

Thank you. And the conference is now concluded. Thank you for attending today’s presentation. And please disconnect your lines.