Our effective income tax rate in the first quarter of 2012 differs from the Federal statutory tax rate of 35% due to state income taxes on income in Oregon and Hawaii, tax exempt interest income and a reduction of the Company’s valuation allowance with respect to its deferred tax assets. The reduction of the valuation allowance was due to the Company’s pretax earnings in the first quarter as well as a change in the Company’s ability to utilize certain deferred tax liabilities in the realization of its deferred tax assets. As of March 31, 2012, the valuation allowance was $7.7 million.
As a consequence of our recent initial public offering, we believe the Company has experienced a change of control within the meaning of Section 382 of the Internal Revenue Code of 1986, as amended. Section 382 substantially limits the ability of a corporate taxpayer to use realized built-in losses and net operating loss carryforwards incurred prior to the change of control against income earned after a change of control. Based on our current analysis of the impact of the change of control on our ability to utilize our net deferred tax assets existing as of the change of control date, we do not anticipate that the change of control has resulted in a material loss of deferred tax benefits.
CapitalOn February 15, 2012, the Company completed its initial public offering of 4,361,816 shares of common stock for an initial offering price of $22.00 per share, yielding net proceeds to HomeStreet of $88.7 million. On February 24, 2012, $55.0 million of this amount was contributed to the Bank.
|Mar. 31,||Dec. 31,|
|Regulatory capital ratios for the Bank:|
|Total risk-based capital (to risk-weighted assets)||15.5%||11.2%|
|Tier 1 risk-based capital (to risk-weighted assets)||14.2%||9.9%|
|Tier 1 leverage capital (to average assets)||9.3%||6.0%|