Homebridge Financial Services Inc. will acquire up to 50 of HomeStreet Bank’s satellite and fulfillment offices and can hire the employees.
Homebridge has agreed to a purchase price of the net book value of the acquired assets plus a premium, as well as the assumption of certain home-loan center and fulfillment office lease obligations.
In the event Homebridge achieves a loan originations threshold for the 12 months following the transaction, HomeStreet will be paid an additional $1 million. The acquisition is subject to employee and branch-office state licensing requirements and closing conditions. The deal is expected to close in the second quarter of 2019.
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HomeStreet has sold $9.9 billion of single-family mortgage servicing rights in securities guaranteed by Fannie Mae and Freddie Mac to New Residential Mortgage LLC. Also, HomeStreet sold mortgage servicing rights related to single-family mortgage loans pooled in Ginnie Mae mortgage backed securities with aggregate unpaid principal balances of around $4.4 billion to PennyMac Loan Services LLC. These sales represent almost 71 percent of HomeStreet’s mortgage servicing rights portfolio as of Dec. 3, 2018.
“The sale of the home loan center-based mortgage origination business and related servicing rights will reduce the size and scope of HomeStreet’s single family mortgage operation,” said Mark K. Mason, chairman, president, and CEO of HomeStreet. “These transactions align with our long-term strategic goal of reducing our reliance on this cyclical and volatile earnings stream and increasing our reliance on the more stable earnings from our commercial and consumer banking business.” The physical transfer of servicing will be completed by August 2019. In the interim, HomeStreet will service the loans.
In connection with these transactions, HomeStreet’s board has approved a plan under which mortgage banking will no longer be a reportable segment of its financial statements. The bank expects to incur pre-tax charges of $5.4 million to $6.7 million for severance and related benefit costs, $11.1 million to $13.5 million in asset and technology related charges, and $3 million to $4 million of other charges. All told, charges are estimated to be between $19.5 million and $24.2 million.
The board has approved a share repurchase program for up to $75 million, or 10.5 percent, of the outstanding stock based on the closing price of the stock as of April 3, 2019.
