FBR analyst Paul Miller in a note to clients on Dec. 5 wrote, "we remain positive on the shares and believe a current valuation just above existing [tangible book value] of $18.57 provides meaningful upside opportunity."
Miller's note followed a presentation by HomeStreet at an FBR conference, where HomeStreet projected that gain-on-sale margins would stabilize following the fourth quarter of 2013. HomeStreet also said most of its expansion was in new markets in California.
HomeStreet on Nov. 1 completed two small acquisiitnos the acquisitions of Fortune Bank of Seattle and Yakima Bank of Yakima, Wash.
HomeStreet is seeking to grow its commercial lending business to provide about 40% of its revenue within the next few years, with the split between mortgage and commercial eventually being equal.
In a previous note in October following HomeStreet's announcement of its third-quarter results, Miller wrote, "Overall, we believe that if HomeStreet can build its balance sheet, successfully diversify its revenue stream, and maintain strong returns, shares should garner a higher multiple from investors."
The following chart shows the performance of HomeStreet's stock over the past 12 months, against the KBW Bank Index:
HMST data by YCharts