Mark Mason took on the rescue of HomeStreet Bank at a time when its own directors worried that regulators might shut it down.

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In mid-2009, HomeStreet Bank appeared headed for oblivion. Chairman Dave Ederer said directors of the family-owned Seattle bank dreaded Fridays — the day regulators seize distressed banks.

“Every Friday afternoon, we would all be on pins and needles. … That went on for months and months and months.”

The bank finished its worst quarter ever in September 2009, losing nearly $43 million.

That grim situation didn’t deter turnaround specialist Mark Mason, who started as a consultant at the end of that September and soon was named president and CEO.

Mason said he handled the rescue by honestly communicating with regulators and bank directors about problems as they emerged.

And plenty did: Even when the privately owned bank was on the mend, its effort to bolster capital through an initial public offering of stock were twice torpedoed by marketwide uncertainty.

“It was incredibly disappointing, given the amount of effort and cost to get to that point,” Mason said.

Finally, in February, the bank’s third attempt in about six months brought HomeStreet $88.7 million.

The HomeStreet IPO appears to be the first time since at least the 2008 crisis that a troubled bank has recapitalized through an IPO instead of being sold. According to Trepp, a provider of bank ratings, about half the banks that were under regulatory restrictions as of May 2009 — when HomeStreet was ordered to improve its finances and management — have since failed or been acquired.

Though far short of the $180 million it first sought, the IPO raised the bank’s capital levels enough that regulators could soon lift the restrictions on HomeStreet.

“We’re excited to be back as a full-service bank,” Mason said. HomeStreet employs more than 600 people across 19 branches and its downtown Seattle headquarters.

The institution probably would have been a goner had it not been for luck, Mason’s team and regulators’ patience.

“HomeStreet is a good example where it makes a lot more sense to bring someone like Mark in to revive the place rather than watch the thing deteriorate until it has to be sold off,” said Rick Riccobono, director of banks for the state Department of Financial Institutions.

In late 2009, when Riccobono was head of the Federal Home Loan Bank of Seattle, and himself dealing with orders from regulators, he received a small package from Mason’s office — a red refrigerator magnet with a phrase the British coined as they endured World War II: “Keep Calm and Carry On.”

“I have to tell you, that’s Mason,” Riccobono said. “He takes this stuff all in stride.”

Special niche

Turning around struggling firms has become a specialty for Mason, 52.

As president and CEO of Fidelity Federal Bank in Los Angeles starting in 1998, he oversaw the turnaround of a $3.7 billion bank.

Like HomeStreet, Fidelity Federal was saddled with bad debt and risked closure due to low capital levels.

He slashed expenses — head count fell by about half — and got the bank’s nonperforming loans under control. He sold the credit-card operations that had pushed the bank to the brink.

“It’s like triage,” Mason said. “You have to quickly assess the most critical needs, address them and move on.”

By late 2002, Mason negotiated Fidelity Federal’s sale to a larger banking company.

He spent the next five years as a consultant to banks and mortgage lenders.

HomeStreet’s Ederer said that after regulators placed the bank under an enforcement order in 2008, there were many sleepless nights.

But when the board met Mason, Ederer said, they felt confident. “That was the point where we felt we had someone who was going to guide us through the malaise,” Ederer said.

Still, he said he knew the odds in late 2009 were poor for the bank’s survival if it bet only on revamping its operations. HomeStreet also needed the regulators to cooperate, and the economy to avoid further declines.

“Two wasn’t enough. We needed all three,” he said.

Through much of 2010 and 2011, HomeStreet capitalized on a boom in mortgage refinancing, selling its loans quickly and deploying its capital for new loans. Last year, it earned a profit of about $17.6 million.

HomeStreet scooped up business as the nation’s biggest lenders pulled back on new mortgages to limit their exposure, said Trepp analyst Matthew Anderson. Plus, the state’s economy has improved rapidly.

“It’s always better to be lucky than smart and unlucky,” said Anderson.

HomeStreet had a decidedly unlucky path to the capital markets, though.

When the bank announced plans last May to sell stock to the public for the first time, the economy appeared to be on the rebound and pundits dismissed talk of a double-dip recession.

Over 2 ½ weeks, Mason flew across the country on a roadshow for the IPO, shaking hands with institutional investors, going from New York and Los Angeles to Milwaukee and Dayton, Ohio.

HomeStreet had planned to complete its IPO in early August. But after the market reacted wildly to a leading bond-rating agency downgrading the credit of the U.S. government, it postponed the offering.

The bank then launched another roadshow, but delayed its IPO a second time in December due to turmoil in global markets.

Mason said he had to persuade the board to try a third time so soon again.

“The right time”

“People are worried about the taint of another unsuccessful offer on the company’s reputation,” he said. “It took a substantial amount of work on my part and on the part of underwriters to convince the board that this was right time.”

FBR Capital Markets, HomeStreet’s underwriter, presold two-thirds of the shares and offered to buy $5 million worth of the bank’s stock — more than it was being paid for the IPO.

“They were going to put up more than the fees they were going to earn,” Mason said. “It was a big credibility issue for them as well.”

In early February, an opening appeared as market volatility was low.

It turned out there were four times as many orders for shares than shares available. HomeStreet’s difficult quest for capital was over.

The turnaround, said Mason, was “so all consuming. … I have not played golf in three years now.”

The bank’s chief financial officer, part of the turnaround team, recently announced his departure. But Mason plans to stay until he retires, he said.

Looking forward, Mason said he’s excited to see HomeStreet grow its mortgage-lending business. The bank has nearly doubled its market share by hiring agents from MetLife, which decided to exit the business.

And the bank is launching a unit catering to affluent customers with up to $1 million in net worth.

Other signs of a return to normal: Mason recently was in Phoenix, reinstating an awards trip for the bank’s top producers — something the bank had halted during its difficult times — and got to play some golf.

He recently joined a golf club, too, and has plans for a family vacation.

There’s a new pressure, of course, as CEO of a publicly traded company. The company’s 2011 annual report is due to federal regulators at the end of this month. The first-quarter report is due in April. And he’s the chief financial officer until he hires a new one.

“These jobs require commitment and focus,” he said. “If you don’t love doing it, you can’t do it.”

Sanjay Bhatt: 206-464-3103 or