HomeStreet Bank sells $990 million in multifamily loans to BofA to boost profitability

From Investing.com: 2024-12-27 11:10:36

HomeStreet Bank is selling nearly $990 million of its multifamily commercial real estate loans to Bank of America to return to profitability and reduce costly funding sources. BofA will pay about $906 million for the loans, reflecting the current interest rate environment. Shares of HomeStreet Bank jumped nearly 6% in early trading after the deal. CEO Mark Mason said the sale is the first step in a new strategic plan to achieve profitability early next year.

The deal marks a major milestone for HomeStreet as it aims to recover from four consecutive quarters of adjusted losses. Proceeds from the sale will be used to repay debt taken from the Federal Home Loan Bank and pay down costly brokered deposits. Commercial real estate loans, especially those tied to multifamily properties, have been a key concern for regional banks, but major banks like BofA have been able to navigate the turmoil better due to higher capital levels and smaller exposure to CRE loans.

Pressure on commercial real estate loans is expected to ease as the Federal Reserve cuts interest rates. The sale is expected to close before Dec. 31, with HomeStreet continuing to service the loans after the sale. The deal may allay investor concerns after regulators halted HomeStreet’s proposed merger with FirstSun Capital Bancorp.



Read more at Investing.com: HomeStreet Bank offloads $990 million multifamily loans to BofA in profit push By Reuters