Highlights 15 Reasons a Refreshed Board is Needed at HomeStreet
Urges Shareholders to Vote the BLUE Proxy Card to Elect Mr. Charles W. Griege and Mr. Ronald K. Tanemura and FOR Blue Lion's Proposal to Separate the Roles of Chairman and CEO
DALLAS, May 29, 2019 /PRNewswire/ -- Blue Lion Capital ("Blue Lion"), a Dallas-based investment firm, which beneficially owns approximately 6.5% of the outstanding shares of common stock of HomeStreet, Inc. ("HomeStreet" or the "Company") (HMST), announced that it has issued a presentation to HomeStreet's shareholders.
Blue Lion encourages its fellow shareholders to review the presentation, its proxy materials, and its shareholder letters, all of which are available at www.FixHMST.com.
In the 76-page presentation, Blue Lion details 15 important reasons why it believes shareholders should support the election of two new directors to HomeStreet's Board of Directors (the "Board") at HomeStreet's upcoming Annual Meeting of Shareholders scheduled for June 20, 2019.
Blue Lion's reasons for shareholders to vote the BLUE proxy card to refresh the Board include:
- HomeStreet has significantly underperformed all of its peers and the KBW Regional Banking Index on Total Shareholder Return (TSR) on a one-, three-, and five-year basis.
- The Board was slow to exit its underperforming mortgage business and only did so after our prodding (for which HomeStreet repeatedly criticized us) and after costing the bank tens of millions in avoidable losses.
- We believe the market continues to lack confidence in management, which is clearly reflected by the Company's anemic tangible book value multiple.
- HomeStreet's operating performance is among the worst of any bank in the U.S. judging by nearly all of the most relevant financial metrics.
- Since 2013, the Company has spent $360 million on CapEx and acquisitions without generating a reasonable return on its investments. The destructive use of capital helps to explain why HomeStreet's Return on Average Assets (ROAA) is a fraction of its peers.
- HomeStreet's management compensation plans are flawed by design—rewarding growth rather than profitability.
- Management has missed its earnings guidance for years, which has resulted in analysts' estimates consistently declining over time.
- The Company sold stock in a secondary offering just 30 days before lowering guidance by 84%, costing investors millions.
- The Company failed to include the SEC-mandated 5-year performance chart in its 10-K and instead substituted a non-compliant 4-year chart, seemingly in an effort to convince shareholders that performance has been acceptable.
- There have been numerous significant corporate governance failures at HomeStreet, including the Board's recent misleading response to an indication of interest by Dwight Capital to purchase HomeStreet's underutilized Fannie Mae DUS license.
- We believe the Board has attempted to thwart shareholders' rights through its dogged advocacy with regulators, entrenching Bylaw amendments and use of the corporate machinery to deny legitimate attempts to improve HomeStreet's governance.
- HomeStreet appears to have substantial cultural issues that have caused employees to complain and leave the Company.
- HomeStreet has experienced an extraordinarily high level of management turnover, including five CFOs in the past seven years.
- The SEC determined that HomeStreet had used improper accounting and attempted to interfere with the SEC's investigation by chasing down the whistleblower and discouraging cooperation. Yet, no one on the Board or in management was held accountable.
- HomeStreet has not disclosed to shareholders numerous loans to entities controlled by HomeStreet directors.
For the these reasons, Blue Lion believes that HomeStreet requires a refreshed Board with the right balance of operating skills, capital markets expertise, relevant industry experience and a commitment to sound corporate governance practices.
Charles W. Griege, Jr, Managing Partner of Blue Lion, said, "HomeStreet's Board of Directors remains a close-knit group of individuals, many of whom have worked with the CEO since the 1990s. In the face of such underperformance and disdain for corporate governance, we believe shareholders should send a clear message to the Board by electing directors who bring new ideas and fresh perspectives."
Blue Lion Capital's presentation concludes by highlighting the value both of its director nominees can bring to the HomeStreet Board and recommends shareholders vote for Mr. Charles Griege and Mr. Ronald Tanemura. The full biographies of Blue Lion's nominees are included in the presentation and can be reviewed at www.FixHMST.com.
Roaring Blue Lion Capital Management, L.P., Blue Lion Opportunity Master Fund, L.P., BLOF II LP, Charles W. Griege, Jr. (collectively, "Blue Lion") and Ronald K. Tanemura (together with Blue Lion, the "Participants") have filed with the Securities and Exchange Commission (the "SEC") a definitive proxy statement and accompanying form of proxy to be used in connection with the solicitation of proxies from shareholders of HomeStreet, Inc. (the "Company"). All shareholders of the Company are advised to read the definitive proxy statement and other documents related to the solicitation of proxies by the Participants, as they contain important information, including additional information related to the Participants. The definitive proxy statement and an accompanying proxy card is being furnished to some or all of the Company's shareholders and is, along with other relevant documents, available at no charge on the SEC website at http://www.sec.gov/ or from the Participants' proxy solicitor, Morrow Sodali, LLC.
Information about the Participants and a description of their direct or indirect interests by security holdings is contained in the definitive proxy statement on Schedule 14A filed by Blue Lion with the SEC on May 16, 2019. This document is available free of charge from the sources indicated above.
Morrow Sodali, LLC
Mike Verrechia / Bill Dooley
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