An irate investor has raised the stakes at HomeStreet in Seattle.
Blue Lion Capital, which has complained for months about the $6.8 billion-asset company's growth strategy, disclosed in a regulatory filing Monday that it is proposing to separate the bank’s chairman and CEO roles. The firm also disclosed the names of two candidates it wants to place on HomeStreet’s board.
Blue Lion Capital has been critical of HomeStreet’s focus on bank acquisitions and mortgages. In January, HomeStreet rejected a request for a board seat from Charles Griege Jr., Blue Lion’s managing partner.
"We have always believed that HomeStreet has tremendous potential to generate significant value for shareholders and the communities it serves,” Griege said in Monday's filing. “Unfortunately, numerous strategic missteps, inadequate corporate stewardship, and poor financial performance have eroded shareholder confidence, destroyed shareholder value and hurt the bank's ability to serve its customers."
Blue Lion’s nominees are Ronald Tanemura, a former partner at Goldman Sachs, and Paul Miller, an equity analyst, private investor and former bank examiner. The investor argued that, absent improved board oversight, HomeStreet’s poor performance will continue.
"Unfortunately, our desire to reach an amicable resolution that is in the best interests of all HomeStreet shareholders has not been embraced equally by the company," Griege said.
"We believe that the board bears ultimate responsibility for the bank's long-running underperformance," Griege added. "In our opinion, the board, as currently composed, is either unable or unwilling to take the meaningful corrective actions necessary to implement a cost-conscious and thoughtful competitive strategy."
In addition to the nominees, Blue Lion plans to propose binding changes to HomeStreet’s bylaws to separate the CEO and chairman roles and to hold annual elections for all directors.
“One-year director terms increase the board's accountability to shareholders,” the filing said.
HomeStreet confirmed in a press release Monday that Blue Lion had submitted a notice of intent to present proposals and nominate two candidates at the company’s shareholder meeting, adding that its board will review the notice.
"The notice has no impact on the normal course of operations of HomeStreet," the company said.
HomeStreet also said its board had considered Blue Lion’s request to add Griege to its board, but decided that adding him would go against shareholder interests.
HomeStreet, which added long-time shareholder Mark Patterson to its board in January, is searching for another director who would meet its diversity goals.
“We are always open to hearing from our shareholders and considering ideas that may drive shareholder value creation, meaningfully enhance our governance or improve the services we deliver to customers,” Mark Mason, HomeStreet's chairman, president and CEO, said in the release.
“With that goal in mind, our senior management team spoke to Blue Lion on numerous occasions as part of our engagement and investor outreach efforts, and invited ... Griege to present his ideas to the full board," Mason added. "While it is unfortunate that Blue Lion has chosen to initiate a proxy contest instead of working together to exchange ideas towards maximizing shareholder value, our board remains open to discussions and will continue to act in the best interests of all shareholders.”