HomeStreet Bank’s parent company responded Monday to a sharp blast from a major shareholder by politely inviting the investor to its next board meeting.
HomeStreet Bank’s parent company responded Monday to a sharp blast from a major shareholder by politely inviting the investor to its next board meeting.
HomeStreet CEO Mark Mason also told shareholders that “we disagree with the conclusions” that Blue Lion Capital Management principal Charles Griege laid out in the harshly worded Nov. 20 letter announcing he’d raised his firm’s stake in HomeStreet Inc. to nearly 5.8 percent.
In a shareholders letter accompanying a fact sheet, Mason marshaled his own set of numbers to argue that since the banking company’s initial public offering in 2012 it has “successfully converted a highly troubled thrift into a regional community bank” and “substantially increased shareholder value.”
Griege, who says his firm is the second-largest actively managed institutional investor in HomeStreet, last week demanded a board seat to help rectify what he contends are “poor returns, bloated cost structure and inefficient operations” at the bank.
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HomeStreet went public in early 2012 at $12 (adjusted for subsequent splits), and the stock doubled that year.
Since that IPO, Mason wrote, “Our stock price has increased 172 percent.”
Griege, however, noted that when measured from the start of 2013, HomeStreet shares have gained just 21 percent, while other banks and the broader market have soared.
The two have different takes on many other aspects of the bank’s performance as well.
For instance, Griege argued that “the most significant mistake made by you and the board was the decision to aggressively expand and grow the mortgage division.”
Mason countered that mortgage banking “has served as the foundation of the business since 1921,” and has generated the funds to expand its diversification into greater commercial and consumer lending. He also pointed out that reliance on earnings from mortgage banking has fallen sharply last year and this year.
The company’s acquisitions of two California-based banks since 2015, criticized by Griege as overreaching, were also undertaken to diversify HomeStreet geographically, Mason wrote.