HomeStreet in Seattle has responded to a shareholder complaint that it is growing too fast.
Blue Lion Capital in Dallas recently asserted in a letter to Mark Mason, HomeStreet’s chairman and CEO, that the $6.8 billion-asset company was underperforming because of its mortgage expansion and recent bank acquisitions. The group, which own 5.6% of HomeStreet’s stock, also requested a meeting to discuss joining the company’s board.
Mason on Monday defended his team’s actions, stating that HomeStreet, which was “on the brink of collapse” in 2009, isn't underperforming. He wrote in the letter to shareholders that he will be meeting with Charles Griege Jr., one of Blue Lion’s managing partners, in December.
“Since then, we have significantly improved our position, producing extraordinary growth and diversification,” he wrote in a letter to shareholders. “We are in a strong position today because we implemented a strategy that has allowed us to significantly — yet carefully — grow and diversify our business.”
Mason wrote that HomeStreet’s mortgage business has “generated significant capital,” which has allowed the management team to rebuild the company’s commercial banking business. He added that mortgage banking earnings, which accounted for all of HomeStreet's net income in 2012, have fallen to about 11% so far this year.
Addressing Griege’s concerns about HomeStreet’s far-flung operations, Mason noted that the company has operated in Hawaii for three decades.
“The more recent decision to expand geographically was made in order to improve diversification, gain access to markets that can support outsized growth and compete with other Pacific Northwest banks, which have also recently expanded into California,” Mason added.