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1. Company Snapshot

1.a. Company Description

HomeStreet, Inc.operates as the bank holding company for HomeStreet Bank that provides commercial, mortgage, and consumer/retail banking services primarily in the Western United States.The company offers personal and business checking, savings accounts, interest-bearing negotiable order of withdrawal accounts, money market accounts, and time certificates of deposit; credit cards; insurance; and treasury management products and services.


Its loan products include commercial business and agriculture loans, single family residential mortgages, consumer loans, commercial loans secured by residential and commercial real estate, and construction loans for residential and commercial real estate development, as well as consumer installment loans and permanent loans on commercial real estate and single-family residences.In addition, the company offers its products and services through bank branches, loan production offices, and ATMs, as well as through online, mobile, and telephone banking.As of December 31, 2021, it operated 60 full-service bank branches located in Washington state, Northern and Southern California, the Portland, Oregon, and Hawaii; and five primary stand-alone commercial lending centers in Central Washington, Oregon, Southern California, Idaho, and Utah.


HomeStreet, Inc.serves small and medium sized businesses, real estate investors, professional firms, and individuals.The company was formerly known as Continental Mortgage and Loan Company.


HomeStreet, Inc.was incorporated in 1921 and is headquartered in Seattle, Washington.

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1.b. Last Insights on HMST

HomeStreet, Inc.'s recent performance was driven by its strategic merger with Mechanics Bank, which values the company at $300 million. The all-stock deal is expected to enhance the company's resilience and support profitability, despite a year-over-year decline in net interest income. HomeStreet's strong capital adequacy ratios and undervalued stock price present a compelling buy opportunity with significant upside potential. The company's loan portfolio repositioning efforts are also expected to drive growth and sustainability.

1.c. Company Highlights

2. HomeStreet Bank's 4Q 2024 Earnings Report: A Mixed Bag

HomeStreet Bank reported a net loss of $123.3 million or $6.54 per share for the fourth quarter of 2024, compared to a net loss of $7.3 million or $0.39 per share in the third quarter. On a core basis, excluding the impact of the loss on the sale of multifamily loans, the deferred tax asset valuation allowance, and merger-related expenses, the net loss was $5.1 million or $0.27 per share. Net interest income increased by $1 million from the third quarter due to an 11 basis point decrease in the rates paid on interest-bearing liabilities.

Publication Date: Feb -14

📋 Highlights
  • Net Loss and Core Earnings: The company reported a net loss of $123.3 million or $6.54 per share, but on a core basis, excluding one-time items, the net loss was $5.1 million or $0.27 per share.
  • Loan Sale and Liquidity: The sale of $990 million of multifamily loans improved the company's liquidity position, increased available contingent funding, and reduced commercial real estate concentrations.
  • Tangible Book Value and Fair Value: The company's tangible book value per share decreased to $20.67, and the estimated tangible fair value per share decreased to $12.41, but the company believes its core deposit franchise is substantial and not captured in the estimated tangible fair value per share.
  • Net Interest Margin and Profitability: The company expects the net interest margin to be positively impacted by the loan sale and loan repricing, and does not need additional rate cuts to achieve profitability in the first half of the year.
  • Strategic Alternatives and Review: The Board of Directors is dedicated to continuing to evaluate all strategic alternatives to maximize shareholder value, and the company is working proactively with commercial real estate borrowers to rewrite loans or sell them before repricing dates.

Strategic Plan and Liquidity Position

The company's new strategic plan, which included the sale of $990 million of multifamily loans, improved the company's liquidity position, increased available contingent funding, and reduced commercial real estate concentrations. According to Mark K. Mason, the company has taken significant steps to endure the period, improve future earnings, and preserve the value of its business.

Valuation Metrics

The company's tangible book value per share decreased to $20.67 as of year-end, and the estimated tangible fair value per share decreased to $12.41. However, the company believes its core deposit franchise is substantial and was not captured in the estimated tangible fair value per share. The company's accumulated other comprehensive income balance, a component of shareholders' equity, was a negative $87 million, representing a $4.62 reduction in tangible book value per share but not a permanent impairment in the value of equity.

Outlook and Strategic Alternatives

Analyst estimates next year's revenue growth at 8.24%. With a price-to-sales ratio of 0.57 and an enterprise value over EBITDA of -1.31, the market seems to be pricing in a significant turnaround in the company's fortunes. However, with a return on equity of -29.12% and a net debt to EBITDA ratio of 14.38, there is still much work to be done to restore the company's financial health.

3. NewsRoom

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Mechanics Bank Completes Strategic Merger with HomeStreet, Inc.

Sep -02

Source: businesswire.com

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Mechanics Bank and HomeStreet, Inc. Receive Regulatory Approvals for Pending Strategic Merger

Aug -19

Source: businesswire.com

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HomeStreet (HMST) Q2 Earnings: How Key Metrics Compare to Wall Street Estimates

Jul -29

Source: zacks.com

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HomeStreet (HMST) Reports Q2 Loss, Tops Revenue Estimates

Jul -28

Source: zacks.com

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HomeStreet Posts Q2 Loss as Revenue Up

Jul -28

Source: fool.com

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HomeStreet Reports Second Quarter 2025 Results

Jul -28

Source: businesswire.com

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HomeStreet (HMST) Q1 Earnings: Taking a Look at Key Metrics Versus Estimates

Apr -29

Source: zacks.com

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HomeStreet (HMST) Reports Q1 Loss, Tops Revenue Estimates

Apr -28

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.50%)

6. Segments

Commercial, Mortgage, and Consumer/Retail Banking

Expected Growth: 5.5%

HomeStreet's diversified banking segments, including Commercial Banking, Mortgage Banking, and Consumer/Retail Banking, are poised for growth driven by increasing demand for business and personal banking services, low interest rates, and a strong housing market.

7. Detailed Products

Mortgage Lending

HomeStreet, Inc. offers a wide range of mortgage lending products, including conventional, FHA, VA, and jumbo loans, to help individuals and families achieve their dream of homeownership.

Commercial Lending

HomeStreet, Inc. provides commercial lending services to businesses, including commercial real estate loans, construction loans, and lines of credit, to help them grow and succeed.

Retail Banking

HomeStreet, Inc. offers a range of retail banking services, including checking and savings accounts, credit cards, and online banking, to help individuals and families manage their finances.

Private Banking

HomeStreet, Inc. provides private banking services to high net worth individuals, including wealth management, investment services, and customized banking solutions.

8. HomeStreet, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

HomeStreet, Inc. operates in the mortgage banking industry, which has a moderate threat of substitutes. While there are alternative financial institutions that offer mortgage services, HomeStreet's specialized mortgage banking services and strong brand recognition mitigate the threat of substitutes.

Bargaining Power Of Customers

HomeStreet, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's strong brand reputation and specialized mortgage banking services reduce the likelihood of customers switching to competitors.

Bargaining Power Of Suppliers

HomeStreet, Inc. relies on a network of suppliers, including mortgage loan originators and financial institutions. While the company has some bargaining power due to its size and reputation, suppliers still have some negotiating power, particularly in times of high demand.

Threat Of New Entrants

The mortgage banking industry has significant barriers to entry, including regulatory requirements and capital requirements. Additionally, HomeStreet, Inc.'s strong brand reputation and established relationships with customers and suppliers make it difficult for new entrants to gain traction.

Intensity Of Rivalry

The mortgage banking industry is highly competitive, with many established players competing for market share. HomeStreet, Inc. faces intense competition from other mortgage banks and financial institutions, which can lead to pricing pressure and reduced market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 78.55%
Debt Cost 10.69%
Equity Weight 21.45%
Equity Cost 10.69%
WACC 10.69%
Leverage 366.17%

11. Quality Control: HomeStreet, Inc. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Guaranty Bancshares

A-Score: 7.2/10

Value: 4.9

Growth: 5.6

Quality: 7.8

Yield: 8.0

Momentum: 9.5

Volatility: 7.3

1-Year Total Return ->

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Stock-Card
Ames National

A-Score: 6.9/10

Value: 7.2

Growth: 3.6

Quality: 6.2

Yield: 8.0

Momentum: 7.5

Volatility: 8.7

1-Year Total Return ->

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Stock-Card
West Bank

A-Score: 6.5/10

Value: 6.8

Growth: 4.8

Quality: 6.8

Yield: 8.0

Momentum: 6.0

Volatility: 6.7

1-Year Total Return ->

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Stock-Card
FirstBank

A-Score: 6.2/10

Value: 6.4

Growth: 6.7

Quality: 5.9

Yield: 4.0

Momentum: 6.0

Volatility: 8.3

1-Year Total Return ->

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Stock-Card
MainStreet Bancshares

A-Score: 5.7/10

Value: 7.6

Growth: 4.2

Quality: 4.3

Yield: 3.0

Momentum: 7.5

Volatility: 7.3

1-Year Total Return ->

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Stock-Card
HomeStreet

A-Score: 4.6/10

Value: 9.4

Growth: 1.9

Quality: 3.8

Yield: 3.0

Momentum: 4.0

Volatility: 5.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

13.87$

Current Price

13.87$

Potential

-0.00%

Expected Cash-Flows