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HomeStreet Bank (Nasdaq:HMST) has announced an agreement to sell $990 million of multifamily commercial real estate loans to Bank of America. The transaction, expected to close before December 31, 2024, will be executed on a servicing retained basis at 92% of the loans' principal balance. The sale is part of a new strategic plan aimed at returning the company to profitability in early 2025. The proceeds will be used to pay down Federal Home Loan Bank advances and brokered deposits, which currently carry higher interest rates than core deposits.
HomeStreet Bank (Nasdaq:HMST) ha annunciato un accordo per vendere 990 milioni di dollari di prestiti commerciali multifamiliari a Bank of America. La transazione, prevista per essere completata entro il 31 dicembre 2024, sarà eseguita mantenendo il servizio al 92% del saldo principale dei prestiti. La vendita fa parte di un nuovo piano strategico volto a riportare l'azienda alla redditività all'inizio del 2025. I proventi saranno utilizzati per ridurre gli avance della Federal Home Loan Bank e i depositi brokerati, che attualmente hanno tassi di interesse più elevati rispetto ai depositi core.
HomeStreet Bank (Nasdaq:HMST) ha anunciado un acuerdo para vender 990 millones de dólares en préstamos comerciales multifamiliares a Bank of America. Se espera que la transacción se cierre antes del 31 de diciembre de 2024 y se ejecutará bajo un régimen de servicios retenidos al 92% del saldo principal de los préstamos. La venta forma parte de un nuevo plan estratégico destinado a devolver a la empresa a la rentabilidad a principios de 2025. Los ingresos se utilizarán para pagar los anticipos del Federal Home Loan Bank y los depósitos intermediados, que actualmente tienen tasas de interés más altas que los depósitos principales.
홈스트리트 뱅크 (Nasdaq:HMST)가 9억 9천만 달러의 다가구 상업용 부동산 대출을 뱅크 오브 아메리카에 판매하기로 합의했다고 발표했습니다. 이 거래는 2024년 12월 31일 이전에 마감될 것으로 예상되며, 대출의 원금 잔액의 92%에 해당하는 서비스를 유지하면서 실행될 것입니다. 이 매각은 2025년 초에 회사의 수익성을 회복하기 위한 새로운 전략적 계획의 일환입니다. 수익금은 현재 주요 예금보다 높은 금리를 부과하는 연방 주택 대출 은행의 진 advances과 중개 예금을 갚는 데 사용될 것입니다.
HomeStreet Bank (Nasdaq:HMST) a annoncé un accord pour vendre 990 millions de dollars de prêts immobiliers commerciaux multifamiliaux à Bank of America. La transaction, prévue pour être conclue avant le 31 décembre 2024, sera effectuée sur une base de service conservée à 92% du montant principal des prêts. Cette vente fait partie d'un nouveau plan stratégique visant à ramener l'entreprise à la rentabilité début 2025. Les revenus seront utilisés pour rembourser les avances de la Federal Home Loan Bank et les dépôts intermédiaires, qui portent actuellement des taux d'intérêt plus élevés que les dépôts de base.
HomeStreet Bank (Nasdaq:HMST) hat eine Vereinbarung bekannt gegeben, um 990 Millionen Dollar an gewerblichen Immobilienkrediten für Mehrfamilienhäuser an Bank of America zu verkaufen. Die Transaktion, die voraussichtlich vor dem 31. Dezember 2024 abgeschlossen wird, erfolgt auf einer Dienstleistungsbasis, wobei 92% des Kreditsaldos erhalten bleiben. Der Verkauf ist Teil eines neuen strategischen Plans, der darauf abzielt, das Unternehmen bis Anfang 2025 wieder profitabel zu machen. Die Einnahmen werden verwendet, um Kreditaufnahmen der Federal Home Loan Bank und vermittelte Einlagen zu tilgen, die derzeit höhere Zinssätze als Haupteinlagen aufweisen.
Positive
Retention of loan servicing rights maintains a revenue stream
Strategic move to reduce high-cost funding sources
Part of a broader plan targeting return to profitability
Negative
Sale price at 8% discount to principal balance indicates loss on sale
Selling lower-yielding assets suggests pressure on net interest margin
Reflects challenging interest rate environment impact on loan portfolio
Insights
This $990 million multifamily loan sale to Bank of America represents a strategic move to improve HomeStreet's balance sheet and profitability. The 92% sale price, while reflecting a discount due to the current high-rate environment, is strategically sound as it allows HMST to offload lower-yielding, longer-duration assets. The proceeds will be used to reduce high-cost funding sources (FHLB advances and brokered deposits), which should improve net interest margin. This transaction signals a major restructuring effort to address profitability challenges in a high-rate environment. The retained servicing rights will continue to generate fee income, partially offsetting the sale discount. For a bank with a market cap of just $203 million, this transaction represents a significant portfolio restructuring that could materially impact future earnings.
The strategic implications of this loan sale are substantial. Retaining servicing rights while divesting the actual loans allows HomeStreet to maintain client relationships and fee income streams while improving its interest rate risk profile. The 8% discount on the sale price is actually reasonable given current market conditions and the lower-yielding nature of these legacy loans. By using proceeds to reduce wholesale funding, which typically carries rates 200-300 basis points higher than core deposits, HomeStreet can potentially achieve immediate cost savings. This balance sheet restructuring could improve the bank's regulatory capital ratios and provide more flexibility for future growth initiatives. The timing of the sale, set to close by year-end 2024, gives the bank adequate time for proper execution while providing near-term visibility on the strategic transformation.
SEATTLE--(BUSINESS WIRE)--
HomeStreet, Inc. (Nasdaq:HMST), the parent company of HomeStreet Bank (the “Bank”), today announced that the Bank entered into an agreement to sell to Bank of America, on a servicing retained basis, $990 million of multifamily commercial real estate loans, at a price, including the value of the retained servicing, of 92% of the principal balance of the loans. This loan sale is expected to close before December 31, 2024.
“Entering into this agreement and completing the sale of $990 million of multifamily loans is the first step in implementing a new strategic plan which we expect to result in a return to profitability for the Bank and on a consolidated basis early next year,” said Mark Mason, Chairman of the Board, President, and Chief Executive Officer. “The pricing of the loan sale reflects the current interest rate environment and that the loans being sold are primarily lower yielding loans with longer duration than the overall portfolio. The proceeds from the loan sale will be used to pay down FHLB advances and brokered deposits which carry substantially higher interest rates than our core deposits."
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, and commercial 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.
Forward-Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Generally, forward-looking statements include the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “goal,” “upcoming,” “outlook,” “guidance” or "project" or the negation thereof, or similar expressions, including statements relating to the pending loan sale transaction, its expected impact on the Bank and the Company and the use of proceeds from the transaction. In addition, all statements in this release that address and/or include beliefs, assumptions, estimates, projections and expectations of our future performance and financial condition are forward-looking statements within the meaning of the Reform Act. Forward-looking statements involve inherent risks, uncertainties and other factors, many of which are difficult to predict and are generally beyond management’s control. Forward-looking statements are based on the Company’s expectations at the time such statements are made and speak only as of the date made. The Company does not assume any obligation or undertake to update any forward-looking statements after the date of this release as a result of new information, future events or developments, except as required by federal securities or other applicable laws, although the Company may do so from time to time. For all forward-looking statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Reform Act.
We caution readers that actual results may differ materially from those expressed in or implied by the Company’s forward-looking statements. Rather, more important factors could affect the Company’s future results, including but not limited to the following: (1) our ability to close and consummate the reported loan sale transaction of approximately $990 million; (2) our ability to service the sold loans; (3) our ability to pay off more expensive debt that we hold; (4) changes in the U.S. and global economies, including business disruptions, reductions in employment, inflationary pressures and an increase in business failures, specifically among our customers; (5) changes in the interest rate environment; (6) changes in deposit flows, loan demand or real estate values may adversely affect the business of our primary subsidiary, HomeStreet Bank (the “Bank”), through which substantially all of our operations are carried out; (7) there may be increases in competitive pressure among financial institutions or from non-financial institutions; (8) our ability to attract and retain key members of our senior management team; (9) the timing and occurrence or non-occurrence of events may be subject to circumstances beyond our control; (10) our ability to control operating costs and expenses; (11) our credit quality and the effect of credit quality on our credit losses expense and allowance for credit losses; (12) the adequacy of our allowance for credit losses; (13) changes in accounting principles, policies or guidelines may cause our financial condition to be perceived or interpreted differently; (14) legislative or regulatory changes that may adversely affect our business or financial condition, including, without limitation, changes in corporate and/or individual income tax laws and policies, changes in privacy laws, and changes in regulatory capital or other rules, and the availability of resources to address or respond to such changes; (15) general economic conditions, either nationally or locally in some or all areas in which we conduct business, or conditions in the securities markets or banking industry, may be less favorable than what we currently anticipate; (16) challenges our customers may face in meeting current underwriting standards may adversely impact all or a substantial portion of the value of our rate-lock loan activity we recognize; (17) technological changes may be more difficult or expensive than what we anticipate; (18) a failure in or breach of our operational or security systems or information technology infrastructure, or those of our third-party providers and vendors, including due to cyber-attacks; (19) success or consummation of new business initiatives may be more difficult or expensive than what we anticipate; (20) our ability to grow efficiently both organically and through acquisitions and to manage our growth costs; (21) staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our work force and potential associated charges; (22) litigation, investigations or other matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than what we anticipate; and (23) our ability to obtain regulatory approvals or non-objection to take various capital actions, including the payment of dividends by us or the Bank, or repurchases of our common stock. A discussion of the factors, risks and uncertainties that could affect our financial results, business goals and operational and financial objectives cited in this release, other releases, public statements and/or filings with the Securities and Exchange Commission (“SEC”) is also contained in the “Risk Factors” sections of the Company's Forms 10-K and 10-Q and in our Current Reports on Form 8-K we file with the SEC. We strongly recommend readers review those disclosures in conjunction with the discussions herein.
All future written and oral forward-looking statements attributable to the Company or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements contained or referred to above. New risks and uncertainties arise from time to time, and factors that the Company currently deems immaterial may become material, and it is impossible for the Company to predict these events or how they may affect the Company.