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Homestreet Inc. (HMST)
NASDAQ:HMST
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HomeStreet
(NASDAQ:HMST)
55Neutral
Positive Factors
Investment Potential
HomeStreet is trading at a significant discount to peers and its tangible book value per share, both on a GAAP and fair value basis.
Mergers and Acquisitions
The reverse merger with Mechanics Bank creates a highly profitable and diversified lender with branches in every major West Coast market.
Shareholder Returns
The combined company expects to return 90% of earnings to shareholders in the form of cash dividends.
Negative Factors
Earnings Performance
HomeStreet's earnings power is relatively weak compared to other mid-cap bank peers, which may impact investor perception.
Merger Uncertainty
HMST reported a challenging quarter, and to make matters worse, its merger with FirstSun could be on the brink of being terminated.
Stock Rating
Analysts have downgraded the stock rating to neutral, indicating uncertainty in the near term.
HomeStreet (HMST) vs. S&P 500 (SPY)
Market Cap
$200.09M
Dividend Yield0.98%
Average Volume (3M)253.50K
Price to Earnings (P/E)―
Beta (1Y)1.55
Revenue Growth-18.33%
EPS Growth-422.59%
CountryUS
Employees740
SectorFinancial
Sector Strength83
IndustryBanks - Regional
Share Statistics
EPS (TTM)-7.65
Shares Outstanding18,920,809
10 Day Avg. Volume522,251
30 Day Avg. Volume253,499
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)2.31
Price to Cash Flow (P/CF)39.00
P/FCF Ratio0.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$13.33Price Target Upside25.99% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
HomeStreet Business Overview & Revenue Model
Company DescriptionHomeStreet, 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.
How the Company Makes MoneyHomeStreet makes money primarily through interest income generated from its loan portfolio, which includes residential mortgages, commercial real estate loans, and other consumer lending. The company also earns revenue from fees charged for originating loans, servicing mortgages, and providing other banking services. Deposit accounts, such as checking and savings accounts, provide a stable source of funding for the company, enabling it to lend money and earn interest. Additionally, HomeStreet may engage in investment activities and strategic partnerships to diversify its income streams and enhance profitability.
HomeStreet Financial Statement Overview
Summary
HomeStreet's financial performance is under pressure due to significant net losses and volatile revenue growth. The balance sheet shows high leverage, although there is some reduction in debt. Cash flow issues persist, reflecting potential financial instability.Income Statement
HomeStreet shows a significant decline in net profit margin, with substantial losses in recent years. Revenue growth has been volatile, with a notable increase in 2024, but profitability metrics like EBIT and EBITDA margins are concerning, reflecting operational challenges.45
Neutral
Balance Sheet
The balance sheet exhibits a relatively high debt-to-equity ratio, but there is an improvement with reduced debt in 2024. The equity ratio remains stable, albeit on the lower side, suggesting moderate financial leverage. Stability is a concern, with a consistent decrease in stockholders' equity.60
Neutral
Cash Flow
Operating cash flow has been inconsistent, with free cash flow showing a downward trend, particularly in 2024. The operating cash flow to net income ratio suggests challenges in converting profits to cash, exacerbating liquidity concerns.50
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 402.57M | 178.77M | 254.90M | 319.12M | 328.02M | Gross Profit |
| 402.57M | 178.77M | 254.90M | 319.12M | 328.02M | EBIT |
| 365.37M | -41.36M | 155.64M | 146.69M | 101.89M | EBITDA |
| 0.00 | 0.00 | 103.02M | 165.35M | 118.36M | Net Income Common Stockholders |
| -144.34M | -27.51M | 66.54M | 115.42M | 79.99M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 1.46B | 209.26M | 72.83M | 65.21M | 58.05M | Total Assets |
| 8.12B | 9.39B | 9.36B | 7.20B | 7.24B | Total Debt |
| 225.13M | 1.97B | 2.26B | 167.03M | 448.64M | Net Debt |
| -181.47M | 1.75B | 2.18B | 101.81M | 390.59M | Total Liabilities |
| 7.73B | 8.85B | 8.80B | 6.49B | 6.52B | Stockholders Equity |
| 397.00M | 538.39M | 562.15M | 715.34M | 717.75M |
| Cash Flow | Free Cash Flow | |||
| -46.41M | 4.21M | 211.54M | 170.09M | -28.84M | Operating Cash Flow |
| -45.92M | 8.02M | 218.33M | 173.03M | -25.55M | Investing Cash Flow |
| 206.00K | 484.05M | -2.65B | -125.64M | -232.62M | Financing Cash Flow |
| -1.10B | -349.24M | 2.44B | -40.23M | 258.34M |
HomeStreet Technical Analysis
Positive
10.58
Price Trends
10.00
Positive
10.50
Positive
12.17
Negative
Market Momentum
0.35
Positive
52.64
Neutral
17.39
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HMST, the sentiment is Positive. The current price of 10.58 is above the 20-day moving average (MA) of 10.35, above the 50-day MA of 10.00, and below the 200-day MA of 12.17, indicating a neutral trend. The MACD of 0.35 indicates Positive momentum. The RSI at 52.64 is Neutral, neither overbought nor oversold. The STOCH value of 17.39 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HMST.
HomeStreet Risk Analysis
HomeStreet disclosed 25 risk factors in its most recent earnings report. HomeStreet reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
HomeStreet Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
67 Neutral | $200.57M | 7.94 | 14.28% | 2.19% | 2.83% | -19.38% | |
64 Neutral | $199.95M | 7.97 | 6.77% | 1.04% | 27.55% | 200.97% | |
63 Neutral | $13.51B | 9.48 | 9.36% | 4.87% | 16.09% | -8.30% | |
63 Neutral | $204.57M | 11.93 | 7.17% | 1.74% | 31.17% | 231.96% | |
62 Neutral | $195.05M | 8.21 | 11.53% | 3.07% | 9.39% | -6.09% | |
55 Neutral | $200.09M | ― | -30.86% | 0.98% | -18.33% | -422.59% | |
49 Neutral | $196.30M | ― | -2.01% | 5.04% | 8.69% | 38.76% |
* Financial Sector Average
Performance Comparison
HMST
HomeStreet
10.61
-1.89
-15.12%
OVLY
Oak Valley Bancorp [Ca]
23.52
0.86
3.80%
FRST
Primis Financial
8.06
-2.17
-21.21%
CHMG
Chemung Financial
41.29
2.91
7.58%
INBK
First Internet Bancorp
22.62
-8.19
-26.58%
JMSB
John Marshall Bancorp
14.19
-1.10
-7.19%
HomeStreet Earnings Call Summary
Earnings Call Date: Jan 27, 2025 | % Change Since: 1.44% | Next Earnings Date: Apr 28, 2025
Earnings Call Sentiment Negative
The earnings call reveals significant financial challenges faced by HomeStreet Bank, including a major net loss and increased nonperforming assets. However, there are positive strategic steps being taken, such as improving liquidity and reducing noninterest expenses, with an expectation of returning to profitability in the near future.Highlights
Decrease in Noninterest Expenses
Noninterest expenses were $5.2 million lower in the fourth quarter of 2024 due to a decrease in compensation benefits and administrative expenses.
Improved Liquidity Position
Following the sale of $990 million in multifamily loans, the bank improved its liquidity position, increasing cash and securities balances to $1.5 billion, which is 18% of total assets.
Continued Loan Repricing and Profitability Expectations
The bank anticipates returning to profitability in the first half of the next year due to loan repricing, reduction in borrowings, and expected reductions in short-term interest rates.
Strong Deposit Loyalty
Despite various challenges, the bank maintained a high roll rate on certificates of deposit and reported low levels of uninsured deposits at 9%.
Lowlights
Significant Net Loss
The bank reported a net loss of $123.3 million for the fourth quarter of 2024, a significant increase from the $7.3 million loss in the previous quarter.
Multifamily Loan Sale Loss
The bank incurred an $88.8 million loss on the sale of multifamily loans, which contributed significantly to the overall financial loss.
Deferred Tax Asset Valuation Allowance
A $53.3 million deferred tax asset valuation allowance was recorded, negatively impacting the reported income tax expense.
Increase in Nonperforming Assets
Nonperforming assets to total assets ratio increased, partly due to the sale of multifamily loans and a downgraded syndicated commercial loan.
Company Guidance
In the fourth quarter of 2024, HomeStreet Bank reported a significant net loss of $123.3 million, equivalent to $6.54 per share, compared to a net loss of $7.3 million or $0.39 per share in the previous quarter. This loss was primarily driven by an $88.8 million pretax loss on the sale of $990 million in multifamily loans, alongside a $53.3 million deferred tax asset valuation allowance. However, on a core basis, excluding these impacts and merger-related expenses, the net loss was reduced to $5.1 million or $0.27 per share. The bank's net interest income increased by $1 million due to a rise in the net interest margin from 1.33% to 1.38%, despite a decrease in noninterest income. The ratio of nonperforming assets to total assets increased to 71 basis points, and loans delinquent over 30 days rose to 106 basis points. HomeStreet Bank's restructuring efforts, including the loan sale, improved liquidity and lowered the loan-to-deposit ratio to 97.4%, with expectations of a return to profitability in the first half of 2025.HomeStreet Corporate Events
M&A Transactions
HomeStreet Announces Merger with Mechanics Bank
Neutral
Apr 3, 2025
On March 28, 2025, HomeStreet, Inc. and Mechanics Bank entered into a merger agreement for an all-stock business combination, with HomeStreet Bank merging into Mechanics Bank, which will become a wholly-owned subsidiary of HomeStreet. The merger, unanimously approved by both boards, will result in HomeStreet being renamed Mechanics Bancorp and remaining publicly traded. The merger agreement outlines the exchange ratios for both voting and non-voting common stock and includes provisions for governance, equity awards, and termination rights. The merger is subject to shareholder and regulatory approvals, with a termination fee of $10 million payable by HomeStreet under certain conditions. Additionally, a consulting agreement with HomeStreet’s CEO, Mark Mason, will take effect post-merger, and certain executives are expected to terminate their employment following the merger.
M&A TransactionsBusiness Operations and Strategy
HomeStreet Announces Merger with Mechanics Bank
Neutral
Mar 31, 2025
On March 31, 2025, HomeStreet, Inc. and Mechanics Bank announced a merger agreement, dated March 28, 2025, where HomeStreet Bank will merge into Mechanics Bank, making it a wholly-owned subsidiary of HomeStreet. The transaction is anticipated to close in the third quarter of 2025, pending regulatory and shareholder approvals. This merger is expected to strengthen HomeStreet’s market position on the West Coast, although it carries risks such as potential legal proceedings, integration challenges, and market condition impacts that could affect the anticipated benefits.
Business Operations and StrategyFinancial Disclosures
HomeStreet Reports Q4 Loss, Sells Multifamily Loans
Negative
Jan 27, 2025
On January 27, 2025, HomeStreet, Inc. reported a net loss of $123.3 million for the fourth quarter of 2024, alongside strategic efforts to improve profitability through the sale of $990 million in multifamily loans. This action, along with expected decreases in interest rates, is anticipated to enhance liquidity and accelerate the company’s return to profitability in 2025.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.