HomeStreet Stock Rises On Agreement To Sell $990M Multifamily Loans To Bank Of America

CEO Mark Mason said this is the first step in implementing a new strategic plan that is expected to bring in a return to profitability for the bank on a consolidated basis early next year.

Shares of HomeStreet Inc (HMST) rose over 2% on Friday after the parent company of HomeStreet Bank announced that the lender has entered into an agreement to sell $990 million worth of multi-family real estate loans to Bank of America (BAC).

HomeStreet said the sale happened 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 the end of 2024.

CEO Mark Mason said this is the first step in implementing a new strategic plan expected to bring in a return to profitability for the bank on a consolidated basis early next year.

“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,” he added.

On Friday, retail sentiment surrounding Bank of America stock was trending in the ‘bullish’ territory (55/100) from ‘bearish’ a day ago.

Recently, Wedbush raised the firm's price target on HomeStreet to $15 from $12, while keeping an ‘Outperform’ rating on the shares, according to TheFly.

The brokerage noted that HomeStreet's planned sale of its multifamily loans could be executed at a better pricing than assumed.

Interestingly, HomeStreet shares have gained over 10% since the beginning of the year, while Bank of America shares have risen over 30% in the period.

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