Homestreet Inc (Nasdaq:HMST) announced it's quarterly earnings. The company, who recently made a decision sell most of its residential mortgage business to Penny Mac, New Residential Mortgage and Homebridge Financial Services, had a net loss ( on both continued and discontinued operations) of $1.7M in Q1 2019 versus net income of $15.2M in Q4 2018. Net income from continuing operations for the first quarter of 2019 was $5.1 million compared with $12.5 million for the fourth quarter of 2018 and net income from continuing operations of $1.8 million for the first quarter of 2018. Costs related to the selling of the Bank’s home loan center-based single family mortgage origination and servicing business and the related reduction in personnel added $9.6M to this quarter’s loss.
“During the past several months we have made significant progress toward achieving our long-term strategic goals,” said Mark K. Mason, HomeStreet's Chairman of the Board, President, and Chief Executive Officer. “We are executing a series of transactions that, when completed, will redefine our business. We executed an agreement to sell substantially all of our home loan centers and we sold $14.26 billion unpaid principal balance of related single family mortgage servicing rights. Negotiating and concurrently executing these transactions has been challenging, and I wish to thank our staff, partners, and advisors for their hard work.
“Our exit of the home loan center-based mortgage origination and related mortgage servicing business will significantly reduce the size and scope of HomeStreet’s single family mortgage banking business and substantially mitigate the impact of this cyclical and volatile earnings stream. Our remaining single family mortgage origination and servicing business will be much smaller, integrated with our regional commercial and consumer banking business, and will be reported within continuing operations. Going forward, originations will be sourced through our bank locations, online, and affinity relationships. We thank those employees who are part of these transactions for their tireless efforts and contributions to our success.
As for the multifamily lending business, at least one bidder is interested. Adam Sasouness, Managing Principal of Dwight Capital, sent a note to Homestreets Board of Directors saying “ I am writing on behalf of Dwight Capital to express our interest in acquiring a subset of HomeStreet’s multifamily mortgage lending business, which would consist of the Fannie Mae DUS lending operations and related mortgage servicing rights, at a premium to its fair market value.
Dwight is a private lender with a national footprint and with offices in New York City, Cleveland, St. Petersburg, and Washington, D.C. Dwight has consistently been a top-5 multifamily HUD lender by both transactions and dollar amount. Dwight also maintains mortgage servicing rights in excess of $3.25 billion”.
