A big investor in HomeStreet wants the Seattle company to tap the brakes on expansion.

Blue Lion Capital in Dallas, which has a 5.6% stake in the $6.8 billion-asset HomeStreet, also requested a meeting to discuss joining the company’s board.

“I am writing this letter reluctantly but feel I have no choice,” Charles Griege Jr., a managing partner at Blue Lion, said in Nov. 20 correspondence to Mark Mason, HomeStreet’s CEO. “Over the last several years, we believe [HomeStreet] has made some poor decisions that have negatively affected the performance of the company and how it is perceived by the investment community.”

Blue Lion’s biggest issue is HomeStreet’s decision to keep expanding its mortgage division. The group is also upset with high expenses and recent acquisitions that have added markets outside of Washington and Oregon.

“Rather than focus its efforts on building the commercial bank in its core markets, you and the board chose to grow via acquisition, de novo branch openings and de novo lending center openings in new geographies,” Griege said in his letter to Mason.

“Today, in addition to its core markets of Washington and Oregon, [HomeStreet] has operations in Idaho, Hawaii, California, Arizona, Utah, Colorado and Texas,” Griege added. “As your fourth largest shareholder, I hereby request that any and all acquisitions currently being considered by the board be stopped at this time. There’s a fairly straightforward rule of thumb: you don’t solve problems by making them bigger.”

HomeStreet’s recent acquisitions include Simplicity Bancorp and Orange County Business Bank in Southern California.

Blue Lion wants HomeStreet to prioritize commercial lending over mortgage banking in order to “benefit from rising rates,” the letter said. The group said it could become more active if its requests are ignored, possibly setting the stage for a proxy battle next year.

A call to HomeStreet was not immediately returned.

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