HomeStreet Sends Letter to Shareholders

HomeStreet is Executing a Strategic Plan Focused on Improving
Efficiency and Profitability While Becoming a Leading West Coast
Regional Bank

Company is Focused on Closing the Announced Sale of its Home Loan
Center-Based Mortgage Origination Business and Related MSRs to Reduce
the Size and Impact of its Mortgage Banking Business

HomeStreet’s Board is Composed of Highly-Qualified Directors Who are
Proven Leaders with Expertise Across Key Areas Critical to the Company’s

Building on Engagement with Shareholders Following the 2018 Annual
Meeting, HomeStreet has Taken Concrete Actions to Respond to Investor
Feedback, Improve Corporate Governance and Drive Value Creation

Roaring Blue Lion Has Declined to Engage Constructively and Remains
Resolute in Pursuing a Disruptive and Costly Contested Election Based on
False and Misleading Arguments

HomeStreet Urges Shareholders to Vote on the WHITE
Proxy Card to Protect the Company’s Ability to Continue Executing its
Strategic Plan and Drive Shareholder Value

SEATTLE–(BUSINESS WIRE)–The Board of Directors of HomeStreet, Inc. (Nasdaq: HMST) (the “Company”
or “HomeStreet”), the parent company of HomeStreet Bank, today sent a
letter to shareholders in connection with the Company’s upcoming 2019
Annual Meeting of Shareholders (the “2019 Annual Meeting”), which is
scheduled to be held on June 20, 2019.

The full text of the letter follows:

May 16, 2019

Dear Fellow Shareholders,

As we approach the 2019 Annual Meeting, you will face an important
choice that could impact the future of HomeStreet and the value of your
investment in the Company: supporting HomeStreet’s highly-qualified and
proven director nominees, including CEO and Chairman Mark Mason, or
voting for two dissident candidates put forward by activist hedge fund
Roaring Blue Lion Capital Management, L.P. (“Roaring Blue Lion”).

Since the 2018 Annual Meeting of Shareholders (the “2018 Annual
Meeting”), we have engaged extensively with our shareholders and have
worked to translate their feedback into positive and constructive
action. We have also reoriented our strategy and are executing against a
plan to drive near- and long-term value creation. As you consider the
decision before you, it is important to carefully review the following

HomeStreet’s Strategy Has Created and Continues
to Create Value for Shareholders

HomeStreet is executing a plan focused on improving efficiency and
profitability while becoming a leading West Coast regional bank – and we
are seeing results.

  • HomeStreet has outperformed the KBW Regional Banking Index in 2019 –
    the Company’s share price increased 36% year-to-date, significantly
    above the 14% increase in the KBW Regional Banking Index.
  • As of 5/14/19, HomeStreet’s share price has increased by 168% since
    our IPO in 2012, outperforming the 120% increase in the KBW Regional
    Banking Index over the same time period.

The components of our strategic plan include:

Focus on Commercial & Consumer Banking

  • Growing and diversifying our commercial loan portfolio with a focus on
    expanding commercial and industrial (“C&I”) lending
  • Growing core deposits to improve deposit mix and support asset growth
  • Improving operating efficiency over the long term
  • Expanding product offerings and improving technology as a fast-follower
  • Growing market share in our highly attractive West Coast metropolitan

Exiting our Large-Scale Home Loan Center-Based Mortgage Banking

  • Selling the majority of our stand-alone home loan centers and a
    substantial portion of our related mortgage servicing rights (“MSRs”)
  • As part of our corporate wide efficiency improvement initiative,
    substantially reducing corporate overhead formerly required for the
    mortgage banking business

We have made significant progress to date:

In the years since our IPO the Company has continuously grown the
key metrics that drive value.

  • Total assets have grown from $2.3 billion to $7.2 billion, an 18%
    compound annual growth rate (“CAGR”) (as of March 31, 2019).
  • Tangible equity has increased from $191.2 million to $717.2 million, a
    21% CAGR (as of March 31, 2019).
  • Our loans held for investment have grown from $1.3 billion to $5.3
    billion, a 22% CAGR (as of March 31, 2019).
  • Our deposit base has grown from $2.0 billion to $5.2 billion, a 15%
    CAGR (as of March 31, 2019).
  • Our retail branch footprint has expanded from 20 to 63 branches (as of
    March 31, 2019).
  • We were ranked the 4th largest bank headquartered in
    Washington State by assets (as of December 31, 2018).
  • Placed 80th on Fortune Magazine’s 2017 “100 Fastest Growing
    Companies” list.

We have invested significantly in our commercial banking segment
to diversify our net income, and we have built a powerful Commercial and
Consumer Banking platform in highly attractive markets.

  • The former Commercial and Consumer Banking segment reported record net
    income of $56.8 million for 2018, increasing 35% from $42.1 million in
    2017, driven by organic loan growth and improved operating efficiency.
  • Return on average tangible shareholders’ equity (excluding Income Tax
    Reform-related expenses and acquisition related items) increased from
    9.2% in 2017 to 9.9% in 2018.
  • In the first quarter of 2019, deposits increased by nearly 6% since
    December 31, 2018 and nearly 7% since March 31, 2018, while loans held
    for investment grew by 5% since December 31, 2018 and 12%
    year-over-year as of March 31, 2018.

HomeStreet is Significantly Reducing the Size
of its Mortgage Banking Business

We are focused on executing the Home Loan Center-Based Mortgage
Origination Business and MSR Sale and concentrating on the Commercial
and Consumer Banking Business.

  • On April 4, 2019 HomeStreet announced that HomeStreet Bank (the
    “Bank”) executed a definitive agreement providing for Homebridge
    Financial Services, Inc. (“Homebridge”) to acquire substantially all
    of our stand-alone production and fulfillment offices related to our
    home loan center-based mortgage origination business, and the transfer
    of related employees to the buyer.
  • In March 2019 we sold approximately 71% of our portfolio of
    single-family mortgage servicing rights as of December 31, 2018.
  • These actions followed extensive deliberations by the Board and
    thorough analysis of current and future market conditions.
  • Going forward, this sale will allow us to focus on growing and
    diversifying our Commercial and Consumer Banking business.
  • We will continue to offer mortgages through bank locations, online and
    affinity arrangements, but the scale of this product line will be
    substantially smaller, focused on our retail deposit network and
    regional markets – and most importantly, positioned for ongoing

Our Shareholders Have Spoken – We Have Listened
and Acted

HomeStreet is always open to engaging with our shareholders and
considering ideas that may drive shareholder value creation – and,
following the 2018 Annual Meeting, the Board has been working to ensure
that shareholders have a direct line of communication with their

  • In the fall of 2018, we reached out to more than half of our
    shareholder base and offered to have them speak with multiple
    independent directors, as well as senior management, in order to fully
    understand those investors’ perspectives and views of the 2018 Annual
    Meeting and our governance structures and practices going forward.
  • These conversations included discussions about results of operations,
    the business strategy of the Company, corporate governance policies,
    compensation practices and long-term incentives, and our Board
    composition, diversity and refreshment.
  • We also engaged with two proxy advisory firms, ISS and Glass Lewis, to
    discuss HomeStreet’s governance practices, shareholder rights and
    access, as well as Board composition and refreshment, and to provide
    feedback on our conversations with our institutional shareholders.

We have not just listened – we have acted.

  • We appointed a new Lead Independent Director, Donald R. Voss, in July
    2018. Mr. Voss has served on our Board since March 2015 and has
    extensive experience in the banking industry.
  • We updated our Bylaws in July 2018 to define the role and
    responsibilities of our Lead Independent Director’s duties and to
    clarify that shareholders do not require “cause” to remove directors.
    We also updated our corporate governance principles, including to add
    an annual review of the Lead Independent Director and combined
    Chairman / CEO role.
  • We elected to submit the following corporate governance proposals at
    the 2019 Annual Meeting:

    • Amend our Articles of Incorporation to declassify the Board and
      provide for the annual election of directors;
    • Ratify the amendment to our Bylaws to make Washington State the
      exclusive forum for shareholder actions against the Company; and
    • Amend our Articles of Incorporation to remove all supermajority
      shareholder vote requirements in our Articles of Incorporation.
  • In April 2019, the Board approved a $75 million share repurchase
    program, which represents approximately 10.5% of the Company’s
    outstanding common stock based on the closing price of the stock as of
    April 3, 2019. This announcement underscored the confidence in
    HomeStreet’s future performance and long-term value creation for all

A Strong Board Focused on Shareholder Value

HomeStreet’s Board is comprised of highly-qualified directors who are
proven leaders with diverse expertise across the key areas we believe
are critical to the success of the Company.

  • The Board regularly reviews its composition to make sure we have the
    right people in place to exercise effective independent oversight and
    make the best decisions for our shareholders.
  • Based on feedback from shareholders, in 2017 we explicitly adopted
    principles to consider gender and ethnic diversity in the boardroom to
    ensure we are mindful of considering the broadest possible pool of
  • As an example of the excellent talent added to the Board recently, we
    appointed two new directors in 2018:

    • Mark Patterson, appointed in January 2018, was previously managing
      director and equity analyst at NWQ Investment Management, one of
      our largest shareholders and a significant investor at the time of
      our IPO. He possesses significant experience as an institutional
      investor and in the financial services industry. He is also a
      substantial individual shareholder of HomeStreet.
    • Sandra Cavanaugh, appointed in May 2018, was previously CEO and
      President of U.S. Private Client Services at Russell Investments
      and possesses deep experience in the banking and financial
      institutions sectors, specifically in asset management and
      financial product creation and distribution.
  • Our evaluation of directors and Board composition is an ongoing
    process. As our business needs evolve, so will our Board. Going
    forward, we may search for candidates with proficiency in areas such
    as IT, cybersecurity and large bank expertise as we continue to grow.

Our directors up for re-election at the 2019 Annual Meeting are
integral members of our Board.

  • Mark K. Mason, our Chairman and CEO, is a proven leader with
    significant experience as an executive officer, director and
    consultant to banks and mortgage companies. His expertise in banking
    and real estate operations, lending and finance is directly relevant
    to HomeStreet’s business. Additionally, he has a successful record of
    creating shareholder value, turning around troubled financial
    institutions, creating and executing growth and diversification
    strategies, raising capital – including two highly successful initial
    public offerings, addressing portfolio and operational challenges and
    effectively working with boards, investors and regulators.

    • Since becoming CEO of HomeStreet in February of 2010, Mr. Mason

      • Led the turnaround of HomeStreet following the recession,
        recapitalizing the bank through an initial public offering and
        returning it to profitability.
      • Grew HomeStreet at the top of peer rates while avoiding credit
        and operational problems.
      • Utilized our single-family mortgage banking business to fund
        losses incurred in addressing the cleanup of our loan
      • Successfully created and executed a growth and diversification
        strategy away from single-family mortgage banking while
        converting the institution from a thrift to a full-service
        commercial bank.
      • Reduced nonperforming assets from peak of 16% of assets to a
        low of 0.15%.
      • Improved our net interest margin from 0.87% to a peak of 3.53%.
      • Established new and/or substantially grew lines of business:
        commercial lending and cash management, small balance
        commercial real estate lending, residential construction
        lending and consumer products.
  • Donald R. Voss, Lead Independent Director, has extensive
    large-scale commercial banking experience focused on lending, credit,
    cash management and retail banking. Mr. Voss served as an Executive
    Vice President at First Interstate Bank (US Banking division) which
    was acquired by Wells Fargo Bank. Mr. Voss was also the Chairman of
    the Board of a public bank, the sale of which he oversaw, that was
    acquired by HomeStreet.

    • Additional notable leadership experience includes:

      • Elected to the Board of Simplicity Bank and the Board of its
        parent company, Simplicity Bancorp (“Simplicity”), in December
        2011 and elected Chairman of each Board in October 2013.

        • Serving as a member of the Audit Committee and the
          Executive Committee at Simplicity, providing leadership in
          all aspects of corporate governance.
        • Working principally with the Chief Executive Officer,
          participated in, contributed to, helped guide, and oversaw
          a thorough and disciplined Board-directed evaluation of
          the Bank’s strategic options. This evaluation culminated
          in an agreement to merge into HomeStreet Bank in a
          transaction valued at $133 million as of the September 29,
          2014 announcement date.
      • Appointed in late 2006 to complete the term of a Councilmember
        of the City of La Cañada Flintridge, California and was
        elected to the California State Assembly, and began a
        four-year term in this elected at-large position in early
        2007. Mr. Voss was involved in all aspects of City governance.
  • Sandra A. Cavanaugh, appointed in May 2018, has deep experience
    in the banking and financial institutions industries, specifically in
    asset management and financial product creation and distribution. She
    previously served as chief executive officer and president of U.S.
    Private Client Services at Russell Investments. Ms. Cavanaugh has a
    proven track record of developing, launching, or turning around large,
    complex businesses, and product portfolios to produce long-term,
    sustainable profitability.

    • Notable leadership experience includes:

      • Oversaw Russell Investments’ $45 billion mutual fund business
        in U.S. with full P&L responsibility, including sales,
        marketing, product management, consulting, incentives,
        operations, finance, compliance and strategic planning.
      • Led Russell Private Client Services through an ownership
        transition requiring extensive coordination and collaboration
        with Board of Trustees, legal and compliance team and
      • Redesigned Washington Mutual/JP Morgan Chase’s sales
        structure, go-to-market strategy and service culture across
        2,200 branches, 22,000 employees and $120 billion in assets.

We Believe that Roaring Blue Lion’s
Candidates Lack Meaningful Bank Management or Operational Experience

Despite the Board’s repeated attempts to engage with Roaring Blue
Lion in productive discussions, its principal, Charles W. Griege, Jr.,
remains resolute in pursuing a disruptive and costly contested election.

Based on its initial assessment, the Board does not recommend that
shareholders vote for the election of Roaring Blue Lion’s nominees –
Ronald K. Tanemura and Charles W. Griege, Jr. – as we believe that their
election would not be in the best interests of all shareholders.

  • The Board has previously and thoroughly considered the request of Mr.
    Griege to be appointed as a director at the Company’s 2018 Annual
  • When Mr. Griege first sought to be appointed to the Board back in
    2017, the Human Resources and Corporate Governance Committee of the
    Board (the “HRCG Committee”), along with the Lead Independent Director
    of the Board, interviewed Mr. Griege for several hours.
  • Following an interview and an extensive review of his background,
    experience and qualifications, the HRCG Committee concluded in January
    2018 that appointing Mr. Griege to the Board would not be in the best
    interests of all shareholders, as Mr. Griege’s professional experience
    is that of an investment analyst or trader running a hedge fund
    focused on short-term gains. No subsequent developments have changed
    the Board’s determination.
  • In our view, Ronald Tanemura would not add necessary bank management
    or operational experience or perspective to our Board and replacing
    directors in key leadership positions would hinder the Company’s
    ability to execute on its strategy.
  • We believe the apparent inability of Roaring Blue Lion to attract
    director candidates with meaningful bank management or operational
    experience suggests that experienced bank industry leaders do not
    support Roaring Blue Lion’s criticisms of the Company.

Roaring Blue Lion Appears to Have an Extremely
Checkered Track Record

We believe Roaring Blue Lion has misrepresented the facts and
continues to try to blame the Company for its mistakes.

  • The accusation that we are using “corporate machinery” to
    disenfranchise Roaring Blue Lion is false, and Roaring Blue Lion
    admitted as much to the investors in its fund
    . In our view, these
    inflammatory claims are simply a ploy to attract support in another
    proxy contest.

    • In a letter to its own investors in August 2018, Roaring Blue Lion
      admitted that the reason its director nominations were rejected
      last year was due to errors made by [Roaring Blue Lion’s]
      – yet they are now trying to publicly blame
      HomeStreet for its missteps and inexperience.
    • Similarly, Roaring Blue Lion blamed its prior law firm for failing
      to file the legally required notice with the regulators. In its
      investor letter from August 2018, Roaring Blue Lion explained this
      misstep by stating: “Unfortunately, [Roaring Blue Lion’s prior
      law firm] committed another error in not contacting the Washington
      State Department of Financial Institutions (“DFI”) to get approval
      for the proxy solicitation.
  • We believe Roaring Blue Lion’s pattern of behavior over the past
    two years – from its deficient director nomination notice and lack of
    compliance with Washington state law in 2018 to its current
    interactions with Washington State regulators – raises real concerns
    about Mr. Griege’s and the fund’s ability to follow basic legal rules
    and procedures

    • Roaring Blue Lion continued last year’s proxy contest against
      HomeStreet without providing a notice to the DFI, even after they
      were specifically advised about the rules by the regulator. They
      continued to solicit and accept proxies from our shareholders even
      after learning that its proxies would likely be invalid, thereby
      disenfranchising shareholders – and then attempted to blame the
      Company for its own missteps.
    • Concerningly, Roaring Blue Lion has failed to disclose this
      material risk to investors again this year. Roaring Blue Lion has
      filed a notice with the DFI in connection with the 2019 Annual
      Meeting that is currently pending. It cannot legally vote proxies
      for 25% or more of the shares until the DFI approves its request
      or the statutory comment period has passed. These regulatory
      requirements are outside of the Company’s control.
  • Contrary to what Roaring Blue Lion argues, HomeStreet has not
    experienced high executive turnover in the Commercial/SBA lending

    • Two senior officers departed in 2018 – this does not constitute
      high turnover.
    • Further, Mr. Griege alleges that at least one of these officers
      was terminated for cause. This is false.
    • One of the individuals retired at the end of 2018 at age 72 and
      the other departure was due to the elimination of a position in
      the summer of 2018 as part of a reorganization to improve
      operating efficiency. Neither of these individuals left because of
      the allegations made by Mr. Griege.

Our Board has a clear strategy for HomeStreet and the experience and
expertise to execute it. The Company’s highly-qualified nominees, Sandra
A. Cavanaugh, Mark K. Mason and Donald R. Voss, are key members of our
leadership team, have a strong track record of enhancing shareholder
value and a deep understanding of HomeStreet’s business. We ask for your
support as we continue to execute on our strategy to drive shareholder
value creation at HomeStreet.

Support continued value creation at HomeStreet and vote for the
Company’s nominees on the WHITE
proxy card today.


The Board of Directors of HomeStreet, Inc.

About HomeStreet, Inc.

HomeStreet, Inc. (Nasdaq: HMST) is a diversified financial services
company headquartered in Seattle, Washington, serving consumers and
businesses in the Western United States and Hawaii through its various
operating subsidiaries. The company’s primary business following the
completion of these transactions will be community banking, including:
commercial real estate lending, commercial lending, residential
construction lending, single family residential lending for portfolio,
retail banking, private banking, investment, and insurance services. Its
principal subsidiaries are HomeStreet Bank and HomeStreet Capital
Corporation. Certain information about our business can be found on our
investor relations web site, located at

Important Additional Information and Where to
Find It

The Company has filed a definitive proxy statement on Schedule 14A and
accompanying WHITE proxy card with
the Securities and Exchange Commission (the “SEC”) in connection with
the solicitation of proxies for its 2019 Annual Meeting of Shareholders.
copy of the proxy statement and accompanying WHITE
proxy card, any amendments or supplements to the proxy statement and
other documents that the Company files with the SEC from the SEC’s
website at
or the Company’s website at
as soon as reasonably practicable after such materials are
electronically filed with, or furnished to, the SEC.

Forward-Looking Statements

This release, as well as other information provided from time to time by
HomeStreet or its employees, may contain forward-looking statements that
involve risks and uncertainties that could cause actual results to
differ materially from those anticipated in the forward-looking
statements. Forward-looking statements give the Company’s current
beliefs, expectations and intentions regarding future events. You can
identify forward-looking statements by the fact that they do not relate
strictly to historical or current facts. These statements may include
words such as “anticipate,” “believe,” “could,” “estimate,” “expect,”
“intend,” “may,” “plan,” “potential,” “should,” “will” and “would” and
similar expressions (including the negative of these terms). These
forward-looking statements involve risks, uncertainties (some of which
are beyond the Company’s control) and assumptions.


Investor Relations:
Gerhard Erdelji, 206-515-4039
Partners LLC
Bruce H. Goldfarb/Pat McHugh, (877)566-1922

Media Relations:
Sloane & Company
Dan Zacchei/Joe
Germani, 212-486-9500

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