Bold Deal HomeStreet to Sell $990 Million in Multi-Family Loans to Bank of America
HomeStreet, Inc. (Nasdaq: HMST), the parent company of HomeStreet Bank, has disclosed a strategic agreement with Bank of America to sell $990 million in multifamily commercial real estate loans. The sale, structured on a servicing-retained basis, will take place at 92% of the loans’ principal balance, inclusive of the value of retained servicing. The transaction is expected to finalize before December 31, 2024, marking a pivotal step in HomeStreet’s efforts to reshape its business trajectory.
A New Chapter in Strategic Growth
“This agreement represents the beginning of a significant strategic transformation for HomeStreet Bank,” remarked Mark Mason, Chairman, President, and CEO. “Completing the $990 million loan sale is a cornerstone of our plan to return to profitability on a consolidated basis early next year.” Mason highlighted that the sale price reflects the current interest rate environment, with the loans being sold largely characterized by lower yields and longer durations relative to the rest of the portfolio.
The proceeds from the transaction are earmarked for paying down higher-cost liabilities, including Federal Home Loan Bank (FHLB) advances and brokered deposits, both of which bear interest rates considerably higher than HomeStreet’s core deposits.
Strategic Implications
HomeStreet views this transaction as the foundation of a broader strategy aimed at enhancing operational efficiency, reducing risk exposure, and bolstering profitability. By divesting loans with extended durations and lower returns, the bank aims to optimize its balance sheet and better align its resources with core banking activities.
Key Expected Benefits Include:
- Financial Streamlining: The loan sale will enable HomeStreet to reduce interest expenses by substituting higher-cost debt with proceeds from the sale.
- Portfolio Optimization: Divesting these loans allows the bank to focus on higher-margin lending opportunities that align with its long-term objectives.
- Profitability Improvement: The move is expected to restore profitability by early 2025, driven by reduced liabilities and improved financial flexibility.
About HomeStreet, Inc.
HomeStreet, Inc., headquartered in Seattle, Washington, is a diversified financial services company serving customers across the Western United States Bold Deal and Hawaii. With expertise in real estate lending, mortgage banking, and commercial and consumer banking, the company’s primary subsidiary, HomeStreet Bank, is a member of the FDIC and an Equal Housing Lender. Additional details about HomeStreet’s business activities can be found on its investor relations website.
Forward-Looking Statements
This announcement includes forward-looking statements under the Private Securities Litigation Reform Act of 1995. These statements, such as the anticipated completion Bold Deal of the loan sale, Bold Deal its impact on HomeStreet’s financial condition, and the planned use of proceeds, are subject to various risks and uncertainties.
Factors influencing these forward-looking statements include:
- Completion and closing of the loan sale transaction.
- Efficacy in deploying proceeds to reduce higher-cost liabilities.
- Market and economic conditions, including interest rate fluctuations and real estate trends.
- Regulatory and compliance considerations during the transaction process.
HomeStreet emphasizes that actual outcomes may differ from the projections outlined, urging stakeholders to review risk factors in the company’s filings with the SEC.
The agreement with Bank of America represents a critical step Bold Deal forward for HomeStreet, positioning the company for renewed financial stability and strategic growth. By addressing high-cost liabilities and focusing on a more efficient portfolio, HomeStreet aims to achieve its profitability goals while maintaining its commitment to serving customers and stakeholders.
This transaction underscores HomeStreet’s adaptability in navigating challenging economic environments and its commitment to long-term success in the evolving financial landscape.
About HomeStreet, Inc.
HomeStreet, Inc. (Nasdaq:HMST) is a diversified financial services company headquartered in Seattle, Washington, serving consumers and businesses in the Western United States and Hawaii. The Company is principally engaged in real estate lending, including mortgage banking activities, Bold Deal and commercial Bold Deal and consumer banking. Its principal subsidiary is HomeStreet Bank. Certain information about our business can be found on our investor relations web site, located at http://ir.homestreet.com. HomeStreet Bank is a member of the FDIC and an Equal Housing Lender.
