The Seattle-based parent company of HomeStreet Bank agreed to sell $990 million in multifamily commercial real estate loans to Bank of America.
The price, including the value of the retained servicing, is 92% of the principal balance of the loans, and the loan sale is expected to close before Tuesday (Dec. 31), HomeStreet said in a Friday (Dec. 27) press release.
“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,” Mark Mason, chairman of the board, president and CEO of HomeStreet, said in the release. “The proceeds from the loan sale will be used to pay down [Federal Home Loan Bank (FHLB)] advances and brokered deposits which carry substantially higher interest rates than our core deposits.”
HomeStreet has been pressured for some time by paying more for deposits while earning less on its investments, Bloomberg reported Friday. The bank reported a net loss of $7.28 million in the third quarter, its fourth consecutive quarter in which it reported losses.
Mason said in the Friday press release: “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.”
HomeStreet said in October that its planned merger with FirstSun Capital Bancorp failed to obtain necessary regulatory approvals and that FirstSun and its subsidiary, Sunflower Bank, were asked to withdraw their merger applications.
The bank added that it and FirstSun were discussing an alternative regulatory structure for the merger as well as the terms on which they would terminate the merger agreement if no alternative structure were feasible.
HomeStreet and FirstSun had announced their planned merger in January, saying that the merger would create a bank with combined assets of about $17 billion and operations in “the nation’s best markets” in the Southwest and West Coast.