Company Overview
| Company Name |
HOMESTREET, INC. |
| Company Address |
2000 TWO UNION SQUARE
601 UNION STREET, STE. 2000
SEATTLE, WA 98101 |
| Company Phone |
206-623-3050 |
| Company Website |
www.homestreet.com |
| CEO |
Mark K. Mason |
| Employees (as of 9/30/2011) |
617 |
| State of Inc |
WA |
| Fiscal Year End |
12/31 |
| Status |
Priced (2/10/2012) |
| Proposed Symbol |
HMST |
| Exchange |
Nasdaq National Market |
| Share Price |
$44.00 |
| Shares Offered |
1,896,442 |
| Offer Amount |
$83,443,448.00 |
| Total Expenses |
-- |
| Shares Over Alloted |
0 |
| Shareholder Shares Offered |
-- |
| Shares Outstanding |
3,584,578 |
| Lockup Period (days) |
180 |
| Lockup Expiration |
8/8/2012 |
| Quiet Period Expiration |
3/21/2012 |
| CIK |
0001518715 |
We estimate that the aggregate net proceeds that we will receive in this
offering will be approximately $75.2 million, based upon the sale of 1,896,442
shares of our common stock by us in this offering at $44.00 per share, after
deducting the underwriter’s discounts and commissions and estimated offering
expenses payable by us. This estimated amount of net proceeds assumes that
the underwriters’ over-allotment option is not exercised. If the
over-allotment option is exercised in full, our net proceeds are expected to
increase by approximately $11.7 million.
We intend to contribute approximately $ 44.0 million of aggregate net proceeds
from this offering to the Bank as equity capital. While this capital
contribution will not be sufficient to allow the Bank to comply with the
minimum capital ratio requirements of the Bank Order, it will improve our
capital position and bring the Bank closer to compliance with these
requirements. However, we believe that following the contribution to the
Bank of at least $44.0 million in capital from this offering and subject to
the successful completion of an on-site examination of the Bank by our primary
regulators confirming our condition, we will qualify for replacement of the
Bank Order with another form of enforcement agreement between the Bank and
our regulators which we expect would include provisions for maintenance of
at least an 8.5% Tier 1 capital ratio and continued improvement in the Bank’s
asset quality. We expect that we will continue to face significant
restrictions on our operations under both the Bank Order and any other
enforcement agreement that replaces the Bank Order.
We anticipate that a contribution of approximately $44.0 million of the
aggregate net proceeds from this offering, together with the Bank’s
preliminary earnings for January and expected earnings in February, will be
adequate to bring the Bank’s Tier 1 capital ratio to no less than 8.5%.
However, if management determines that a greater or lesser amount would be
necessary to reach that targeted capital ratio taking into account, among
other things, changes in the average assets and variations in the Bank’s net
income that may affect our regulatory capital ratios, we may adjust the actual
amount of the contribution, up to the aggregate net proceeds.
The remaining proceeds will be used by HomeStreet, Inc., for general corporate
purposes.
The amount and timing of the actual use of proceeds described above may vary
significantly and depend on a number of factors.
We face intense competition in originating loans and in attracting deposits
within our targeted geographic market. We compete by consistently delivering
high quality, personal service to our customers that results in a high level
of customer satisfaction.
We attract our deposits through our branch office system. Competition for
those deposits is principally from other savings institutions, commercial
banks and credit unions located in the same community, as well as mutual
funds and other alternative investments. We are facing increasing competition
for deposits and other financial products from non-bank institutions such as
brokerage firms and insurance companies in such areas as short-term money
market funds, mutual funds and annuities. Our key competitors within our
largest market area, the Seattle-Tacoma-Bellevue MSA, include Bank of America,
Wells Fargo Bank, US Bank, JPMorgan Chase & Co. (as the successor to
Washington Mutual Bank) and Key Bank. These competitors controlled
approximately 69.2% of the deposit market share with $48.6 billion of the
$70.3 billion total deposits in the Seattle MSA as of June 30, 2011.
Our competition for loans comes principally from banks with a nationwide
presence along with mortgage bankers, commercial banks, thrift institutions,
credit unions and finance companies. Our market area has a high concentration
of financial institutions, many of which are branches of large money center
and regional banks that have resulted from the consolidation of the banking
industry in Washington and other western states. These include such large
national lenders as Bank of America, JPMorgan Chase & Co., U.S. Bancorp,
Wells Fargo and others in our market area that have greater resources than we
do and compete with us for banking business in our targeted market area.
Among the advantages of some of these institutions are their ability to make
larger loans, finance extensive advertising campaigns, access lower cost
funding sources and allocate investment assets to regions of highest yield
and demand. Despite these advantages, we believe we can compete with larger
financial institutions by offering a value proposition based on outstanding
customer service, strong values and integrity, real estate expertise, local
knowledge and faster decision-making and a commitment to the communities we
serve.
Company Description
We are a 90-year-old diversified financial services company headquartered in
Seattle, Washington, that has grown from a small mortgage bank to a
full-service community bank serving consumers and businesses in the
Pacific Northwest and Hawaii. In 1986 we established the Bank to fund
our lending
activities and to offer a broader range of products and services.
Our banking strategy has allowed us to expand our lending activities while
building stable core deposits and a more diversified core customer base that
offers better cross-selling opportunities. The Bank has the oldest continuous
relationship of all Fannie Mae seller servicers in the nation, having been
the second company approved by Fannie Mae at its founding in 1938.
Our primary subsidiaries are HomeStreet Bank and HomeStreet Capital
Corporation. HomeStreet Bank is a Washington state-chartered savings bank
that provides deposit and investment products and cash management services.
The Bank also provides loans for single family homes, commercial real estate,
construction, land development and commercial businesses. HomeStreet Capital
Corporation, a Washington corporation, originates, sells and services
multifamily mortgage loans under the Fannie Mae Delegated Underwriting and
Servicing TM Program (“DUS”) in conjunction with HomeStreet Bank. We also
provide insurance products and services for consumers and businesses as
HomeStreet Insurance and loans for single family homes through a joint
venture, Windermere Mortgage Services Series LLC (“WMS”). At September
30, 2011, we had total assets of $2.32 billion, net loans held for investment
of $1.36 billion, deposits of $2.06 billion, and shareholders’ equity of
$80.3 million. At December 31, 2010, we had total assets of $2.49 billion,
net loans held for investment of $1.54 billion, deposits of $2.13 billion
and shareholders’ equity of $58.8 million. We recognized net income of $15.3
million for the third quarter of 2011, as compared to net income of $1.3
million for the second quarter of 2011 and a net loss of $5.4 million for
the third quarter of 2010.
---
As of January 31, 2012, we had a network of 20 bank branches and nine
stand-alone lending centers located in the Puget Sound, Olympia, Vancouver
and Spokane regions of Washington, the Portland and Salem regions of Oregon,
and the Hawaiian Islands of Oahu, Maui and Hawaii. As a result of our
expansion of our single family lending business, we expect to open
approximately 11 additional stand-alone lending centers in Washington
and Idaho in the first half of 2012. Our bank branches have average
deposits per branch of $102.8 million as of September 30, 2011. WMS provides
point-of-sale loan origination services through 42 Windermere Real Estate
offices in Washington and Oregon.
We operate four primary lines of business: Community Banking, Single Family
Lending, Income Property Lending and Residential Construction Lending.
Community Banking . We provide diversified financial products and services
to our consumer and business customers, including deposit products, investment
products, insurance products, cash management services and consumer and
business loans.
Single Family Lending . We originate, sell and service residential mortgage
loans both directly and through our relationship with WMS. We also originate
and service loans for our portfolio on a selective basis.
Income Property Lending . We originate commercial real estate loans with a
focus on multifamily lending through Fannie Mae’s DUS program. These loans
are sold to or securitized by Fannie Mae, and we generally retain the right
to service them. We also originate commercial real estate construction, land,
bridge and permanent loans for our own portfolio.
Residential Construction Lending . We originate residential construction and
land development loans primarily for our own portfolio.
------
Our principal executive offices are located at 601 Union Street, Suite 2000,
Seattle, WA 98101. Our telephone number is (206) 623-3050. Our Internet address
is www.homestreet.com.
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