The $77.6 million HomeStreet Inc. expects to raise in its initial public offering would go a long way toward improving its capital levels but not far enough to satisfy a regulatory order.
After twice postponing its IPO due to concerns about market conditions, the Seattle-based thrift finally tested the markets Friday when it began selling 1.8 million shares at $44 each. The offering is expected to close Wednesday.
Earlier this month the lender began laying the ground work to hire dozens of former loan officers who were recently laid off by MetLife Home Loans. It total, it expects to hire north of 160 workers.
HomeStreet and its bank subsidiary are both under regulatory orders to raise capital after suffering steep losses on real estate loans. The $2.5 billion-asset company had initially planned to offer up to 7.8 million shares at $24 per share, but eventually scaled back the offering due to market uncertainty.
This is the first time a bank has recapitalized through an IPO in recent memory.
But HomeStreet Bank is under a regulatory order to maintain a Tier 1 leverage ratio of at least 10%. At Jan. 31, that ratio was 6.5%, HomeStreet said in a Securities and Exchange filing Tuesday.
The company expects proceeds from the IPO to boost the bank subsidiary's Tier 1 leverage ratio to increase to 8.5% -- not high enough for it to fully comply with the order. The company said in Tuesday's SEC filing that it is hoping regulators will modify the order and lower the target ratio to 8.5%.
