Increased costs from growth through acquisition could exceed the income growth anticipated from these opportunities, especially in the short term as these acquisitions are integrated into our business;

Increased costs for controls over data confidentiality, integrity, and availability due to growth or to strengthen the security profile of our computer systems and computer networks;

Changes in government-sponsored enterprises and their ability to insure or to buy our loans in the secondary market may result in significant changes in our ability to recognize income on sale of our loans to third parties;

Competition in the mortgage market industry may drive down the interest rates we are able to offer on our mortgages, which will negatively impact our net interest income;

Changes in the cost structures and fees of government-sponsored enterprises to whom we sell many of these loans may compress our margins and reduce our net income and profitability; and

Our hedging strategies to offset risks related to interest rate changes may not prove to be successful and may result in unanticipated losses for the Company.

These and other factors may limit our ability to generate revenue in excess of our costs, which in turn may result in a lower rate of profitability or even substantial losses for the Company.

Federal, state and local consumer protection laws may restrict our ability to offer and/ or increase our risk of liability with respect to certain products and services and could increase our cost of doing business.

Federal, state and local laws have been adopted that are intended to eliminate certain practices considered “predatory” or “unfair and deceptive”. These laws prohibit practices such as steering borrowers away from more affordable products, failing to disclose key features, limitations, or costs related to products and services, selling unnecessary insurance to borrowers, repeatedly refinancing loans, imposing excessive fees for overdrafts, and making loans without a reasonable expectation that the borrowers will be able to repay the loans irrespective of the value of the underlying property. It is our policy not to make predatory loans or engage in deceptive practices, but these laws and regulations create the potential for liability with respect to our lending, servicing, loan investment and deposit taking activities. As a company with a significant mortgage banking operation, we also, inherently, have a significant amount of risk of noncompliance with fair lending laws and regulations. These laws and regulations are complex and require vigilance to ensure that policies and practices do not create disparate impact on our customers or that our employees do not engage in overt discriminatory practices. Noncompliance can result in significant regulatory actions including, but not limited to, sanctions, fines or referrals to the Department of Justice. As we offer products and services to customers in additional states, we may become subject to additional state and local laws designed to protect consumers. The additional laws and regulations may increase our cost of doing business, and ultimately may prevent us from making certain loans, offering certain products, and may cause us to reduce the average percentage rate or the points and fees on loans and other products and services that we do provide.

The significant concentration of real estate secured loans in our portfolio has had and may continue to have a negative impact on our asset quality and profitability.

Substantially all of our loans are secured by real property. Our real estate secured lending is generally sensitive to national, regional and local economic conditions, making loss levels difficult to predict. Declines in real estate sales and prices, significant increases in interest rates, and a degeneration in prevailing economic conditions may result in higher than expected loan delinquencies, foreclosures, problem loans, OREO, net charge-offs and provisions for credit and OREO losses. Although real estate prices are stable in the markets in which we operate, if market values decline, the collateral for our loans may

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provide less security and our ability to recover the principal, interest and costs due on defaulted loans by selling the underlying real estate will be diminished, leaving us more likely to suffer additional losses on defaulted loans. Such declines may have a greater effect on our earnings and capital than on the earnings and capital of financial institutions whose loan portfolios are more geographically diversified.

Worsening conditions in the real estate market and higher than normal delinquency and default rates on loans could cause other adverse consequences for us, including:

The reduction of cash flows and capital resources, as we are required to make cash advances to meet contractual obligations to investors, process foreclosures, and maintain, repair and market foreclosed properties;

Declining mortgage servicing fee revenues because we recognize these revenues only upon collection;

Increasing loan servicing costs;

Declining fair value on our mortgage servicing rights; and

Declining fair values and liquidity of securities held in our investment portfolio that are collateralized by mortgage obligations.

Our allowance for loan losses may prove inadequate or we may be negatively affected by credit risk exposures. Future additions to our allowance for loan losses will reduce our earnings.

Our business depends on the creditworthiness of our customers. As with most financial institutions, we maintain an allowance for loan losses to provide for defaults and nonperformance, which represents management's best estimate of probable incurred losses inherent in the loan portfolio. Management's estimate is the result of our continuing evaluation of specific credit risks and loan loss experience, current loan portfolio quality, present economic, political and regulatory conditions, industry concentrations and other factors that may indicate future loan losses. The determination of the appropriate level of the allowance for loan losses inherently involves a high degree of subjectivity and judgment and requires us to make estimates of current credit risks and future trends, all of which may undergo material changes. Generally, our nonperforming loans and OREO reflect operating difficulties of individual borrowers and weaknesses in the economies of the markets we serve. This allowance may not be adequate to cover actual losses, and future provisions for losses could materially and adversely affect our financial condition, results of operations and cash flows.

In addition, as a result of our acquisitions of Simplicity Bank on March 1, 2015 and Fortune Bank, Yakima National Bank and two branches of AmericanWest Bank in the second half of 2013, we have added the loans previously held by the acquired companies or related to the acquired branches to our books. ~~The pending acquisition of Simplicity and any~~Any future acquisitions we may make will have a similar result. Although we review loan quality as part of our due diligence in considering any acquisition, the addition of such loans may increase our credit risk exposure, requiring an increase in our allowance for loan losses or we may experience adverse effects to our financial condition, results of operations and cash flows stemming from losses on those additional loans.

Our real estate lending also exposes us to environmental liabilities.

In the course of our business, it is necessary to foreclose and take title to real estate, which could subject us to environmental liabilities with respect to these properties. Hazardous substances or waste, contaminants, pollutants or sources thereof may be discovered on properties during our ownership or after a sale to a third party. We could be held liable to a governmental entity or to third parties for property damage, personal injury, investigation and clean-up costs incurred by these parties in connection with environmental contamination, or may be required to investigate or clean up hazardous or toxic substances or chemical releases at such properties. The costs associated with investigation or remediation activities could be substantial and could substantially exceed the value of the real property. In addition, as the owner or former owner of a contaminated site, we may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from the property. We may be unable to recover costs from any third party. These occurrences may materially reduce the value of the affected property, and we may find it difficult or impossible to use or sell the property prior to or following any environmental remediation. If we ever become subject to significant environmental liabilities, our business, financial condition and results of operations could be materially and adversely affected.

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A failure in or breach of our security systems or infrastructure, or those of our third party vendors and other service providers, resulting from cyber-attacks, could disrupt our businesses, result in the disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs and cause losses.

Information security risks for financial institutions have generally increased in recent years in part because of the proliferation of new technologies, the use of the Internet and telecommunications technologies to conduct financial transactions, and the increased sophistication and activities of organized crime, hackers, terrorists, activists, and other external parties. Those parties also may attempt to fraudulently induce employees, customers, or other users of our systems to disclose confidential information in order to gain access to our data or that of our customers. Our operations rely on the secure processing, transmission and storage of confidential information in our computer systems and networks, either managed directly by us or through our data processing vendors. In addition, to access our products and services, our customers may use personal

smartphones, tablet PCs, and other mobile devices that are beyond our control systems. Although we believe we have robust information security procedures and controls, we are heavily reliant on our third party vendors, and our vendors’ or our own technologies, systems, networks and our customers' devices may become the target of cyber-attacks, computer viruses, malicious code, unauthorized access, hackers or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of Company or our customers' confidential, proprietary and other information, or otherwise disrupt the Company's or its customers' or other third parties' business operations.

Third parties with which we do business or that facilitate our business activities, including exchanges, clearing houses, financial intermediaries or vendors that provide services or security solutions for our operations, could also be sources of operational and information security risk to us, including from breakdowns or failures of their own systems or capacity constraints. In addition, some of our primary third party service providers may be subject to enhanced regulatory scrutiny due to regulatory findings during examinations of such service provider(s) conducted by federal regulators. While we have and will subject such vendor(s) to higher scrutiny and monitor any corrective measures that the vendor(s) are taking or would undertake, we are not able to fully mitigate any risk which could result from a breach or other operational failure caused by this, or any other vendor’s breach.

To date we are not aware of any material losses relating to cyber-attacks or other information security breaches, but there can be no assurance that we will not suffer such attacks and losses in the future. Our risk and exposure to these matters remains heightened because of, among other things, the evolving nature of these threats, our plans to continue to implement our Internet banking and mobile banking channel, our expanding operations and the outsourcing of a significant portion of our business operations. As a result, cybersecurity and the continued development and enhancement of our controls, processes and practices designed to protect customer information, our systems, computers, software, data and networks from attack, damage or unauthorized access remain a priority for the Company. As cyber threats continue to evolve, we may be required to expend significant additional resources to insure, to continue to modify or enhance our protective measures or to investigate and remediate important information security vulnerabilities, however, our measures may be insufficient to prevent physical .and electronic break-ins, denial of service and other cyber-attacks or security breaches.

Disruptions or failures in the physical infrastructure or operating systems that support our businesses and customers, or cyber-attacks or security breaches of the networks, systems or devices that our customers use to access our products and services could result in customer attrition, financial losses, the inability of our customers to transact business with us, violations of applicable privacy and other laws, regulatory fines, penalties or intervention, additional regulatory scrutiny, reputational damage, litigation, reimbursement or other compensation costs, and/or additional compliance costs, any of which could materially and adversely affect our results of operations or financial condition.

The network and computer systems on which we depend could fail or experience security breaches.

Our computer systems could be vulnerable to unforeseen problems. Because we conduct a part of our business over the Internet and outsource several critical functions to third parties, operations will depend on our ability, as well as the ability of third-party service providers, to protect computer systems and network infrastructure against damage from fire, power loss, telecommunications failure, physical break-ins or similar catastrophic events. Any damage or failure that causes interruptions in operations may compromise our ability to perform critical functions in a timely manner and could have a material adverse effect on our business, financial condition and results of operations as well as our reputation and customer or vendor relationships.

In addition, a significant barrier to online financial transactions is the secure transmission of confidential information over public networks. Our Internet banking system relies on encryption and authentication technology to provide the security and authentication necessary to effect secure transmission of confidential information. Advances in computer capabilities, new discoveries in the field of cryptography or other developments could result in a compromise or breach of the algorithms our

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third-party service providers use to protect customer transaction data. If any such compromise of security were to occur, it could have a material adverse effect on our business, financial condition and results of operations.

The failure to protect our customers’ confidential information and privacy could adversely affect our business.

We are subject to state and federal privacy regulations and confidentiality obligations that, among other things restrict the use and dissemination of, and access to, the information that we produce, store or maintain in the course of our business. We also have contractual obligations to protect certain confidential information we obtain from our existing vendors and customers. These obligations generally include protecting such confidential information in the same manner and to the same extent as we protect our own confidential information, and in some instances may impose indemnity obligations on us relating to unlawful or unauthorized disclosure of any such information.

~~100~~

The actions we may take in order to promote compliance with these obligations vary by business segment and may change over time, but may include, among other things:

~~training~~Training and educating our employees and independent contractors regarding our obligations relating to confidential information;

~~monitoring~~Monitoring changes in state or federal privacy and compliance requirements;

~~drafting~~Drafting and enforcing appropriate contractual provisions into any contract that raises proprietary and confidentiality issues;

~~maintaining~~Maintaining secure storage facilities and protocols for tangible records;

~~physically~~Physically and technologically securing access to electronic information;

Performing vulnerability scanning and penetration testing of our computer systems and computer networks to identify potential weaknesses and to develop mitigating controls; and

inIn the event of a security breach, providing credit monitoring or other services to affected customers.

If we do not properly comply with privacy regulations and protect confidential information, we could experience adverse consequences, including regulatory sanctions, penalties or fines, ~~increase~~increased compliance costs, litigation and damage to our reputation, which in turn could result in decreased revenues and loss of customers, all of which would have a material adverse effect on our business, financial condition and results of operations.

Our operations could be interrupted if our third-party service and technology providers experience difficulty, terminate their services or fail to comply with banking ~~regulations~~regulations.

We depend, and will continue to depend, to a significant extent, on a number of relationships with third-party service and technology providers. Specifically, we receive core systems processing, essential web hosting and other Internet systems and deposit and other processing services from third-party service providers. If these third-party service providers, or if any parties to whom our third party service providers have subcontracted services, experience difficulties or terminate their services and we are unable to replace them with other service providers, our operations could be interrupted and our operating expenses may be materially increased. If an interruption were to continue for a significant period of time, our business financial condition and results of operations could be materially adversely affected. Additionally, if our third-party service and technology providers, including our mortgage loan origination technology provider, fail to update their systems or services in a timely manner to reflect new or changing regulation, our ability to meet regulatory requirements may be impacted and may expose us to heightened regulatory scrutiny and the potential for payment of monetary penalties.

We continually encounter technological change, and we may have fewer resources than many of our competitors to continue to invest in technological improvements.

The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs. Our future success will depend, in part, upon our ability to address the needs of our clients by using technology to provide products and services that will satisfy client demands for convenience, as well as to create additional efficiencies in our operations. Many national vendors provide turn-key services to community banks, such as Internet banking and remote deposit capture that allow smaller banks to compete with institutions that have substantially greater resources to invest in technological improvements. We may not be able, however, to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers.

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We may be required to recognize impairment with respect to investment securities, including the FHLB stock we hold.

Our securities portfolio currently includes securities with unrecognized losses. We may continue to observe declines in the fair market value of these securities. We evaluate the securities portfolio for any other than temporary impairment each reporting period. In addition, as a condition of membership in the ~~FHLB,~~Federal Home Loan Bank of Des Moines (the “FHLB”), we are required to purchase and hold a certain amount of FHLB stock. Our stock purchase requirement is based, in part, upon the outstanding principal balance of advances from the FHLB. Our FHLB stock is carried at cost and is subject to recoverability testing under applicable accounting standards. Future negative changes to the financial condition of the FHLB may require us to recognize an impairment charge with respect to such holdings. ~~The FHLB is currently subject to a Consent Order issued by its primary regulator,~~See “Regulation and Supervision” in Item 1 of our Form 10-K for the ~~Federal Housing Finance Agency.~~year ended December 31, 2014 filed with the SEC on March 25, 2015.

A change in federal monetary policy could adversely impact our mortgage banking revenues.

The Federal Reserve is responsible for regulating the supply of money in the United States, and as a result its monetary policies strongly influence our costs of funds for lending and investing as well as the rate of return we are able to earn on those loans and investments, both of which impact our net interest income and net interest margin. The Federal Reserve Board's interest rate policies can also materially affect the value of financial instruments we hold, including debt securities and mortgage servicing rights, or MSRs. These monetary policies can also negatively impact our borrowers, which in turn may increase the risk that they will be unable to pay their loans according to the terms or be unable to pay their loans at all. We have no control

~~101~~

over the monetary policies of the Federal Reserve Board and cannot predict when changes are expected or what the magnitude of such changes may be.

AsFor example, as a result of the Federal Reserve Board's concerns regarding continued slow economic growth, the Federal Reserve Board, in 2008 implemented its standing monetary policy known as “quantitative easing,” a program involving the purchase of mortgage backed securities and United States Treasury securities, the volume of which ~~has been~~was aligned with specific economic targets or measures intended to bolster the U.S. economy. AsAlthough the Federal Reserve Board ~~through the Federal Open Market Committee (the “Committee”), monitors economic performance, the volume of the~~has ended quantitative easing, it still holds the securities purchased during the program ~~continues to be incrementally reduced. The Committee has stated~~and, if economic conditions worsened, could revive that if incoming information broadly supports the Committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the Committee will likely reduce the pace of asset purchases in further measured steps at future meetings. However, asset purchases are not on a preset course, and the Committee's decisions about their pace will remain contingent on the Committee's outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases.program.

Because a substantial portion of our revenues and our net income historically have been, and in the foreseeable future are expected to be, derived from gain on the origination and sale of mortgage loans and on the continuing servicing of those loans, the Federal Reserve Board's monetary policies may have had ~~and for so long as the program continues, may continue to have,~~ the effect of supporting higher revenues than might otherwise be available. ~~Contrarily, a reduction in or termination of this policy, absent a significant~~If the rebound in employment and real wages ~~would likely reduce~~is not adequate to offset the termination of the program, or if the Federal Reserve begins selling off the securities it has accumulated, we may see a reduction in mortgage originations throughout the United States, ~~including ours. Continued reduction or termination of the quantitative easing program~~and may ~~likely further raise~~see a corresponding rise in interest rates, which could reduce our mortgage origination revenues and in turn have a material adverse impact upon our business.

A substantial portion of our revenue is derived from residential mortgage lending which is a market sector that experiences significant volatility.

A substantial portion of our consolidated net revenues (net interest income plus noninterest income) are derived from originating and selling residential mortgages. Residential mortgage lending in general has experienced substantial volatility in recent periods. An increase in interest rates in the second quarter of 2013 resulted in a significant adverse impact on our business and financial results due primarily to a related decrease in volume of loan originations, especially refinancings. The Federal Reserve has indicated that interest rates may rise again as early as June 2015. Any ~~future additional~~such increase in interest rates may ~~further~~ materially and adversely affect our future loan origination volume, margins, and the value of the collateral securing our outstanding loans, may increase rates of borrower default, and may otherwise adversely affect our business. Additionally, in recent periods we have experienced very low levels of homes available for sale in many of the markets in which we operate. The lack of housing inventory has had a downward impact on the volume of mortgage loans that we originate. Further, it has resulted in elevated costs, as a significant amount of loan processing and underwriting that we perform are to qualifying borrowers for mortgage loan transactions that never materialize. The lack of inventory of homes for sale may continue to have an adverse impact on mortgage loan volumes into the foreseeable future.

We may incur losses due to changes in prepayment rates.

Our mortgage servicing rights carry interest rate risk because the total amount of servicing fees earned, as well as changes in fair-market value, fluctuate based on expected loan prepayments (affecting the expected average life of a portfolio of residential mortgage servicing rights). The rate of prepayment of residential mortgage loans may be influenced by changing national and regional economic trends, such as recessions or depressed real estate markets, as well as the difference between interest rates on

104

existing residential mortgage loans relative to prevailing residential mortgage rates. Changes in prepayment rates are therefore difficult for us to predict. An increase in the general level of interest rates may adversely affect the ability of some borrowers to pay the interest and principal of their obligations. During periods of declining interest rates, many residential borrowers refinance their mortgage loans. The loan administration fee income (related to the residential mortgage loan servicing rights corresponding to a mortgage loan) decreases as mortgage loans are prepaid. Consequently, the fair value of portfolios of residential mortgage loan servicing rights tend to decrease during periods of declining interest rates, because greater prepayments can be expected and, as a result, the amount of loan administration income received also decreases.

We may incur significant losses as a result of ineffective hedging of interest rate risk related to our loans sold with a reservation of servicing rights.

Both the value our single family mortgage servicing rights, or MSRs, and the value of our single family loans held for sale changes with fluctuations in interest rates, among other things, reflecting the changing expectations of mortgage prepayment activity. To mitigate potential losses of fair value of single family loans held for sale and MSRs related to changes in interest rates, we actively hedge this risk with financial derivative instruments. Hedging is a complex process, requiring sophisticated

~~102~~

models, experienced and skilled personnel and continual monitoring. Changes in the value of our hedging instruments may not correlate with changes in the value of our single family loans held for sale and MSRs, and we could incur a net valuation loss as a result of our hedging activities. Following the expansion of our single family mortgage operations in early 2012 through the addition of a significant number of single family mortgage origination personnel, the volume of our single family loans held for sale and MSRs has increased. The increase in volume in turn increases our exposure to the risks associated with the impact of interest rate fluctuations on single family loans held for sale and MSRs.

Changes in fee structures by third party loan purchasers and mortgage insurers may decrease our loan production volume and the margin we can recognize on conforming home loans, and may adversely impact our results of operations.

Certain third party loan purchasers revised their fee structures in the third quarter of 2013 and increased the costs of doing business with them. For example, certain purchasers of conforming loans, including Fannie Mae and Freddie Mac, raised costs of guarantee fees and other required fees and payments. These changes increased the cost of mortgages to consumers and the cost of selling conforming loans to third party loan purchasers which in turn decreased our margin and negatively impacted our profitability. Additionally, the FHA raised costs for premiums and extended the period for which private mortgage insurance is required on a loan purchased by them. Additional changes in the future from third party loan purchasers may have a negative impact on our ability to originate loans to be sold because of the increased costs of such loans and may decrease our profitability with respect to loans held for sale. In addition, any significant adverse change in the level of activity in the secondary market or the underwriting criteria of these third party loan purchasers could negatively impact our results of business, operations and cash flows.

If we breach any of the representations or warranties we make to a purchaser or securitizer of our mortgage loans or MSRs, we may be liable to the purchaser or securitizer for certain costs and damages.

When we sell or securitize mortgage loans in the ordinary course of business, we are required to make certain representations and warranties to the purchaser about the mortgage loans and the manner in which they were originated. Our agreements require us to repurchase mortgage loans if we have breached any of these representations or warranties, in which case we may be required to repurchase such loan and record a loss upon repurchase and/or bear any subsequent loss on the loan. We may not have any remedies available to us against a third party for such losses, or the remedies available to us may not be as broad as the remedies available to the purchaser of the mortgage loan against us. In addition, if there are remedies against a third party available to us, we face further risk that such third party may not have the financial capacity to perform remedies that otherwise may be available to us. Therefore, if a purchaser enforces remedies against us, we may not be able to recover our losses from a third party and may be required to bear the full amount of the related loss.

In addition, in connection with the sale of a significant amount of our MSRs to SunTrust Mortgage, Inc., we agreed to indemnify SunTrust Mortgage, Inc. for prepayment of a certain amount of those loans. In the event the holders of such loans prepay the loans, we may be required to reimburse SunTrust Mortgage, Inc. for a certain portion of the anticipated MSR value of that loan.

If repurchase and indemnity demands increase on loans or MSRs that we sell from our portfolios, our liquidity, results of operations and financial condition will be adversely affected.

If we breach any representations or warranties or fail to follow guidelines when originating a FHA/HUD-insured loan or a VA-guaranteed loan, we may lose the insurance or guarantee on the loan and suffer losses, pay penalties, and/or be subjected to litigation from the federal government.

We originate and purchase, sell and thereafter service single family loans that are insured by FHA/HUD or guaranteed by the VA. We certify to the FHA/HUD and the VA that the loans meet their requirements and guidelines. The FHA/HUD and VA audit loans that are insured or guaranteed under their programs, including audits of our processes and procedures as well as

105

individual loan documentation. Violations of guidelines can result in monetary penalties or require us to provide indemnifications against loss or loans declared ineligible for their programs. In the past, monetary penalties and losses from indemnifications have not created material losses to the Bank. As a result of the housing crisis, the FHA/HUD has stepped up enforcement initiatives. In addition to regular FHA/HUD audits, HUD's Inspector General has become active in enforcing FHA regulations with respect to individual loans and has partnered with the Department of Justice ("DOJ") in filing lawsuits against lenders for systemic violations. The penalties resulting from such lawsuits can be much more severe, since systemic violations can be applied to groups of loans and penalties may be subject to treble damages. The DOJ has used the Federal False Claims Act and other federal laws and regulations in prosecuting these lawsuits. Because of our significant origination of FHA/HUD insured and VA guaranteed loans, if the DOJ were to find potential violations by the Bank, we could be subject to material

~~103~~

monetary penalties and/or losses, and may even be subject to lawsuits alleging systemic violations which could result in treble damages.

We may face risk of loss if we purchase loans from a seller that fails to satisfy its indemnification obligations.

We generally receive representations and warranties from the originators and sellers from whom we purchase loans and servicing rights such that if a loan defaults and there has been a breach of such representations and warranties, we may be able to pursue a remedy against the seller of the loan for the unpaid principal and interest on the defaulted loan. However, if the originator and/or seller breach such representations and warranties and does not have the financial capacity to pay the related damages, we may be subject to the risk of loss for such loan as the originator or seller may not be able to pay such damages or repurchase loans when called upon by us to do so. Currently, we only purchase loans from WMS Series LLC, an affiliated business arrangement with certain Windermere real estate brokerage franchise owners.

Some provisions of our articles of incorporation and bylaws and certain provisions of Washington law may deter takeover attempts, which may limit the opportunity of our shareholders to sell their shares at a favorable price.

Some provisions of our articles of incorporation and bylaws may have the effect of deterring or delaying attempts by our shareholders to remove or replace management, to commence proxy contests, or to effect changes in control. These provisions include:

aA classified board of directors so that only approximately one third of our board of directors is elected each year;

~~elimination~~Elimination of cumulative voting in the election of directors;

~~procedures~~Procedures for advance notification of shareholder nominations and proposals;

~~the~~The ability of our board of directors to amend our bylaws without shareholder approval; and

~~the~~The ability of our board of directors to issue shares of preferred stock without shareholder approval upon the terms and conditions and with the rights, privileges and preferences as the board of directors may determine.

In addition, as a Washington corporation, we are subject to Washington law which imposes restrictions on some transactions between a corporation and certain significant shareholders. These provisions, alone or together, could have the effect of deterring or delaying changes in incumbent management, proxy contests or changes in control.

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ITEM 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~Not applicable.~~a) Sale of Unregistered Securities. On March 1, 2015, we issued 7,180,005 shares of our common stock to the shareholders of Simplicity Bancorp, Inc. (“Simplicity”) in connection with the merger of Simplicity with and into HomeStreet. The shares were issued on a 1-to-1 basis in exchange for Simplicity common stock, par value $0.01, outstanding as of the time of the Simplicity merger, all of which were cancelled in the merger. These shares were issued in reliance on an exemption under Section 3(a)(10) of the Securities Act of 1933, as amended (the “Securities Act”), and therefore were not registered under the Securities Act. The deemed per share closing price of $17.53 was determined by averaging the closing price of HomeStreet common stock for the 10 trading days prior to but not including the 5^th business day before the closing date.



ITEM 3	DEFAULTS UPON SENIOR SECURITIES

Not applicable.



ITEM 4	MINE SAFETY DISCLOSURE

Not applicable.



ITEM 5	OTHER INFORMATION

Not applicable.

~~104~~107



ITEM 6	EXHIBITS

EXHIBIT INDEX



Exhibit
Number		Description

~~2.1~~10.1		Employment Agreement ~~and Plan of Merger~~ between HomeStreet, Inc., HomeStreet Bank and ~~Simplicity Bancorp, Inc.~~Melba Bartels dated ~~as of September 27, 2014.~~ ⁽¹⁾ August 3, 2015

~~31.1~~31		Certification of ~~Chief~~Principal Executive and Acting Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.⁽²⁾

~~31.2~~		~~Certification of Chief Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~⁽²⁾

32		Certification of Periodic Financial Report by ~~Principal~~Chief Executive ~~Officer~~ and ~~Principal Accounting~~Acting Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. § 1350.⁽³⁾⁽¹⁾

101.INS		XBRL Instance Document^(4)(5)(2)(3)

101.SCH		XBRL Taxonomy Extension Schema Document⁽⁴⁾⁽²⁾

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document⁽⁴⁾⁽²⁾

101.DEF		XBRL Taxonomy Extension Label Linkbase Document⁽⁴⁾⁽²⁾

101.LAB		XBRL Taxonomy Extension Presentation Linkbase Document⁽⁴⁾⁽²⁾

101.PRE		XBRL Taxonomy Extension Definitions Linkbase Document⁽⁴⁾⁽²⁾


(1)	~~Previously filed as an exhibit to the registrant's Current Report on Form 8-K dated September 29, 2014.~~


~~(2)~~	~~Filed herewith.~~


~~(3)~~	This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.


~~(4)~~(2)	As provided in Rule 406T of Regulation S-T, this information shall not be deemed “filed” for purposes of Section 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934 or otherwise subject to liability under those sections.

~~(5)~~(3)

Pursuant to Rule 405 of Regulation S-T, includes the following financial information included in the Firm’s Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2014~~2015, formatted in XBRL (eXtensible Business Reporting Language) interactive data files: (i) the Consolidated Statements of Operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2014~~2015 and ~~2013~~2014, (ii) the Consolidated Statements of Financial Condition as of ~~September~~June 30, ~~2014~~2015, and December 31, ~~2013~~2014, (iii) the Consolidated Statements of Stockholders’ Equity and Comprehensive Income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2014~~2015 and ~~2013~~2014, (iv) the Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 30, ~~2014~~2015 and ~~2013~~2014, and (v) the Notes to Consolidated Financial Statements.

~~105~~108

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Seattle, State of Washington, on ~~November 12, 2014~~August 6, 2015.



	HomeStreet, Inc.

	By:	/s/ Mark K. Mason
		Mark K. Mason
		President, ~~and~~ Chief Executive Officer and Acting Chief Financial Officer



	~~HomeStreet, Inc.~~

	~~By:~~	~~/s/ Cory D. Stewart~~
		~~Cory D. Stewart~~
		~~Executive Vice President and~~ ~~Chief Accounting Officer~~

~~106~~109



Washington		91-0186600
(State or other jurisdiction of incorporation)		(IRS Employer Identification No.)



Large Accelerated Filer	o	Accelerated Filer	x

Non-accelerated Filer	o	Smaller Reporting Company	o



PART I – FINANCIAL INFORMATION

ITEM 1	FINANCIAL STATEMENTS

Consolidated Statements of Financial Condition (Unaudited) at ~~September~~June 30, ~~2014~~2015 and December 31, ~~2013~~2014		4

Interim Consolidated Statements of Operations (Unaudited) for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2014~~2015 and ~~2013~~2014		5

Interim Consolidated Statements of Comprehensive Income (Unaudited) for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2014~~2015 and ~~2013~~2014		6

Interim Consolidated Statements of Shareholders’ Equity (Unaudited) for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2014~~2015 and ~~2013~~2014		7

Interim Consolidated Statements of Cash Flows (Unaudited) for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2014~~2015 and ~~2013~~2014		8

Notes to Interim Consolidated Financial Statements (Unaudited)

Note 1 – Summary of Significant Accounting Policies		10

Note 2 – ~~Investment Securities~~Business Combinations		1211

Note 3 – ~~Loans and Credit Quality~~Investment Securities		1514

Note 4 – ~~Deposits~~Loans and Credit Quality		3017

Note 5 – ~~Derivatives and Hedging Activities~~		32

~~Note 6 – Mortgage Banking Operations~~Deposits		34

Note 76 – ~~Commitments, Guarantees,~~Derivatives and ~~Contingencies~~Hedging Activities		3835

Note 7 – Mortgage Banking Operations		37

Note 8 – ~~Fair Value Measurement~~Commitments, Guarantees and Contingencies		4041

Note 9 – ~~Earnings Per Share~~Fair Value Measurement		4843

Note 10 – ~~Share-based Compensation Plans~~Earnings Per Share		52

Note 11 – Business Segments		5052

Note 12 – Subsequent Events		5254

ITEM 2	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements		5355

Summary Financial Data		5557

Management’s Overview of Financial Performance		5860

Critical Accounting Policies and Estimates		6163

Results of Operations		6264

Review of Financial Condition		7072

Business Segments		7374

Off-Balance Sheet Arrangements		7879

Enterprise Risk Management		7879

Credit Risk Management		79

Liquidity and Capital Management		8485

Accounting Developments		8788




ITEM 3	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	8889

ITEM 4	CONTROLS AND PROCEDURES	8891

PART II – OTHER INFORMATION

ITEM 1	LEGAL PROCEEDINGS	9092

ITEM 1A	RISK FACTORS	9092

ITEM 6	EXHIBITS	~~105~~108

SIGNATURES		~~106~~109


(in thousands, except share data)	September 30, 2014			December 31, 2013			June 30, 2015			December 31, 2014

ASSETS
Cash and cash equivalents (including interest-bearing instruments of $16,044 and $9,436)	$	34,687		$	33,908
Investment securities (includes $432,096 and $481,683 carried at fair value)	449,948			498,816
Loans held for sale (includes $614,876 and $279,385 carried at fair value)	698,111			279,941
Loans held for investment (net of allowance for loan losses of $21,847 and $23,908)	1,964,762			1,871,813
Mortgage servicing rights (includes $115,477 and $153,128 carried at fair value)	124,593			162,463
Cash and cash equivalents (including interest-earning instruments of $33,787 and $10,271)							$	46,197		$	30,502
Investment securities (includes $482,832 and $427,326 carried at fair value)							509,545			455,332
Loans held for sale (includes $955,726 and $610,350 carried at fair value)							972,183			621,235
Loans held for investment (net of allowance for loan losses of $25,777 and $22,021; includes $38,224 and $0 carried at fair value)							2,900,675			2,099,129
Mortgage servicing rights (includes $140,588 and $112,439 carried at fair value)							153,237			123,324
Other real estate owned	10,478			12,911			11,428			9,448
Federal Home Loan Bank stock, at cost	34,271			35,288			40,742			33,915
Premises and equipment, net	44,476			36,612			58,111			45,251
Goodwill	11,945			12,063			11,945			11,945
Other assets	101,385			122,239			162,185			105,009
Total assets	$	3,474,656		$	3,066,054		$	4,866,248		$	3,535,090
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits	$	2,425,458		$	2,210,821		$	3,322,653		$	2,445,430
Federal Home Loan Bank advances	598,590			446,590			922,832			597,590
Securities sold under agreements to repurchase	14,225			—
Federal funds purchased and securities sold under agreements to repurchase							—			50,000
Accounts payable and other liabilities	79,958			77,906			111,180			77,975
Long-term debt	61,857			64,811			61,857			61,857
Total liabilities	3,180,088			2,800,128			4,418,522			3,232,852
Commitments and contingencies (Note 8)
Shareholders’ equity:
Preferred stock, no par value, authorized 10,000 shares, issued and outstanding, 0 shares and 0 shares	—			—			—			—
Common stock, no par value, authorized 160,000,000, issued and outstanding, 14,852,971 shares and 14,799,991 shares	511			511
Common stock, no par value, authorized 160,000,000, issued and outstanding, 22,065,249 shares and 14,856,611 shares							511			511
Additional paid-in capital	96,650			94,474			221,551			96,615
Retained earnings	197,945			182,935			226,246			203,566
Accumulated other comprehensive income	(538		)	(11,994		)	(582		)	1,546
Total shareholders' equity	294,568			265,926			447,726			302,238
Total liabilities and shareholders' equity	$	3,474,656		$	3,066,054		$	4,866,248		$	3,535,090


	Three Months Ended September 30,						Nine Months Ended September 30,					Three Months Ended June 30,						Six Months Ended June 30,
(in thousands, except share data)	2014			2013			2014			2013		2015			2014			2015			2014

Interest income:
Loans	$	25,763		$	19,425		$	71,865		$	54,920	$	38,944		$	23,419		$	70,591		$	46,102
Investment securities	2,565			3,895			8,199			9,552		3,278			2,664			5,672			5,634
Other	150			28			449			82		218			142			423			299
	28,478			23,348			80,513			64,554		42,440			26,225			76,686			52,035
Interest expense:
Deposits	2,364			2,222			7,080			8,078		3,005			2,356			5,587			4,716
Federal Home Loan Bank advances	509			434			1,366			1,113		906			444			1,518			857
Securities sold under agreements to repurchase	6			—			7			11
Federal funds purchased and securities sold under agreements to repurchase												3			1			8			1
Long-term debt	271			274			851			2,274		272			265			537			580
Other	20			6			42			16		24			12			72			22
	3,170			2,936			9,346			11,492		4,210			3,078			7,722			6,176
Net interest income	25,308			20,412			71,167			53,062		38,230			23,147			68,964			45,859
Provision (reversal of provision) for credit losses	—			(1,500		)	(1,500		)	900		500			—			3,500			(1,500		)
Net interest income after provision for credit losses	25,308			21,912			72,667			52,162		37,730			23,147			65,464			47,359
Noninterest income:
Net gain on mortgage loan origination and sale activities	37,642			33,491			104,946			139,870		69,974			41,794			131,861			67,304
Mortgage servicing income	6,155			4,011			24,284			9,265		1,831			10,184			6,128			18,129
(Loss) income from WMS Series LLC	(122		)	(550		)	(69		)	1,063
Income from WMS Series LLC												484			246			1,048			53
Gain (loss) on debt extinguishment	2			—			(573		)	—		—			11			—			(575		)
Depositor and other retail banking fees	944			791			2,676			2,273		1,399			917			2,538			1,732
Insurance agency commissions	256			242			892			612		291			232			706			636
Gain (loss) on sale of investment securities available for sale (includes unrealized gain (loss) reclassified from accumulated other comprehensive income of $480 and $(184) for the three months ended September 30, 2014 and 2013, and $1,173 and $6 for the nine months ended September 30, 2014 and 2013, respectively)	480			(184		)	1,173			6
Gain (loss) on sale of investment securities available for sale (includes unrealized gain (loss) reclassified from accumulated other comprehensive income of $0 and $(20) for the three months ended June 30, 2015 and 2014, and $0 and $693 for the six months ended June 30, 2015 and 2014, respectively)												—			(20		)	—			693
Bargain purchase gain												(79		)	—			6,549			—
Other	456			373			841			1,584		(913		)	286			(470		)	385
	45,813			38,174			134,170			154,673		72,987			53,650			148,360			88,357
Noninterest expense:
Salaries and related costs	42,604			39,689			118,681			113,330		61,654			40,606			119,247			76,077
General and administrative	10,326			9,234			31,593			30,434		14,502			11,145			27,663			21,267
Legal	630			844			1,571			2,054		577			542			1,044			941
Consulting	628			884			2,182			2,343		813			603			6,378			1,554
Federal Deposit Insurance Corporation assessments	682			227			1,874			937		861			572			1,386			1,192
Occupancy	4,935			3,484			14,042			9,667		6,107			4,675			11,947			9,107
Information services	4,220			3,552			13,597			10,122		7,714			4,862			13,834			9,377
Net cost of operation and sale of other real estate owned	133			202			(320		)	1,740
Net cost (income) from operation and sale of other real estate owned												107			(34		)	318			(453		)
	64,158			58,116			183,220			170,627		92,335			62,971			181,817			119,062
Income before income taxes	6,963			1,970			23,617			36,208		18,382			13,826			32,007			16,654
Income tax expense (includes reclassification adjustments of $168 and $(64) for the three months ended September 30, 2014 and 2013, and $411 and $2 for the nine months ended September 30, 2014 and 2013, respectively)	1,988			308			6,979			11,538
Income tax expense (includes reclassification adjustments of $0 and $(7) for the three months ended June 30, 2015 and 2014, and $0 and $243 for the six months ended June 30, 2015 and 2014, respectively)												6,006			4,464			9,327			4,991
NET INCOME	$	4,975		$	1,662		$	16,638		$	24,670	$	12,376		$	9,362		$	22,680		$	11,663
Basic income per share	$	0.34		$	0.12		$	1.12		$	1.72	$	0.56		$	0.63		$	1.16		$	0.79
Diluted income per share	$	0.33		$	0.11		$	1.11		$	1.67	$	0.56		$	0.63		$	1.14		$	0.78
Dividends paid on common stock per share												$	—		$	—		$	—		$	0.11
Basic weighted average number of shares outstanding	14,805,780			14,388,559			14,797,019			14,374,943		22,028,539			14,800,853			19,593,421			14,792,638
Diluted weighted average number of shares outstanding	14,968,238			14,790,671			14,957,034			14,793,427		22,292,734			14,954,998			19,823,905			14,956,079



	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2014			2013			2014			2013

Net income	$	4,975		$	1,662		$	16,638		$	24,670
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on investment securities available for sale:
Unrealized holding gain (loss) arising during the period, net of tax expense (benefit) of $501 and $(362) for the three months ended September 30, 2014 and 2013, and $6,579 and $(9,845) for the nine months ended September 30, 2014 and 2013, respectively	930			(673		)	12,218			(18,283		)
Reclassification adjustment for net gains included in net income, net of tax expense (benefit) of $168 and $(64) for the three months ended September 30, 2014 and 2013, and $411 and $2 for the nine months ended September 30, 2014 and 2013, respectively	(312		)	120			(762		)	(4		)
Other comprehensive income (loss)	618			(553		)	11,456			(18,287		)
Comprehensive income (loss)	$	5,593		$	1,109		$	28,094		$	6,383


(in thousands, except share data)	Number of shares	Common stock		Additional paid-in capital		Retained earnings			Accumulated other comprehensive income (loss)			Total			Number of shares	Common stock		Additional paid-in capital		Retained earnings			Accumulated other comprehensive income (loss)			Total

Balance, January 1, 2013	14,382,638	$	511	$	90,189	$	163,872		$	9,190		$	263,762
Net income	—	—		—		24,670			—			24,670
Dividends ($0.11 per share)	—	—		—		(3,163		)	—			(3,163		)
Share-based compensation expense	—	—		1,098		—			—			1,098
Common stock issued	39,716	—		128		—			—			128
Other comprehensive loss	—	—		—		—			(18,287		)	(18,287		)
Balance, September 30, 2013	14,422,354	$	511	$	91,415	$	185,379		$	(9,097	)	$	268,208

Balance, January 1, 2014	14,799,991	$	511	$	94,474	$	182,935		$	(11,994	)	$	265,926		14,799,991	$	511	$	94,474	$	182,935		$	(11,994	)	$	265,926
Net income	—	—		—		16,638			—			16,638			—	—		—		11,663			—			11,663
Dividends ($0.11 per share)	—	—		—		(1,628		)	—			(1,628		)	—	—		—		(1,626		)	—			(1,626		)
Share-based compensation expense	—	—		1,867		—			—			1,867			—	—		1,199		—			—			1,199
Common stock issued	52,980	—		309		—			—			309			49,701	—		250		—			—			250
Other comprehensive income	—	—		—		—			11,456			11,456			—	—		—		—			10,837			10,837
Balance, September 30, 2014	14,852,971	$	511	$	96,650	$	197,945		$	(538	)	$	294,568
Balance, June 30, 2014															14,849,692	$	511	$	95,923	$	192,972		$	(1,157	)	$	288,249

Balance, January 1, 2015															14,856,611	$	511	$	96,615	$	203,566		$	1,546		$	302,238
Net income															—	—		—		22,680			—			22,680
Share-based compensation expense															—	—		598		—			—			598
Common stock issued															7,208,638	—		124,338		—			—			124,338
Other comprehensive loss															—	—		—		—			(2,128		)	(2,128		)
Balance, June 30, 2015															22,065,249	$	511	$	221,551	$	226,246		$	(582	)	$	447,726



(in thousands)	March 1, 2015

Fair value consideration paid to Simplicity shareholders:
Cash paid (79,399 stock options, consideration based on intrinsic value at a calculated price of $17.53)		$	471
Fair value of common shares issued (7,180,005 shares at $17.30 per share)		124,214
Total purchase price		$	124,685
Fair value of assets acquired:
Cash and cash equivalents	112,667
Investment securities	26,845
Acquired loans	664,148
Mortgage servicing rights	980
Federal Home Loan Bank stock	5,520
Premises and equipment	2,966
Bank-owned life insurance	14,501
Core deposit intangibles	7,450
Accounts receivable and other assets	15,073
Total assets acquired	850,150

Fair value of liabilities assumed:
Deposits	651,202
Federal Home Loan Bank advances	65,855
Accounts payable and accrued expenses	1,859
Total liabilities assumed	718,916
Net assets acquired		$	131,234
Preliminary bargain purchase (gain)		$	(6,549	)



	Six Months Ended June 30, 2015			Year Ended December 31, 2014
(in thousands)	Six Months Ended June 30, 2015			Year Ended December 31, 2014

Noninterest expense
Salaries and related costs	$	7,676		$	23
General and administrative	1,249			179
Legal	351			245
Consulting	5,751			388
Occupancy	383			4
Information services	(37		)	50
Total noninterest expense	$	15,373		$	889


	At September 30, 2014									At June 30, 2015
(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value		Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value

Mortgage-backed securities:
Residential	$	112,131	$	374	$	(1,668	)	$	110,837	$	109,169	$	525	$	(1,067	)	$	108,627
Commercial	13,119		452		—			13,571		12,857		495		—			13,352
Municipal bonds	120,799		2,713		(470		)	123,042		136,182		2,241		(1,174		)	137,249
Collateralized mortgage obligations:
Residential	56,359		130		(1,601		)	54,888		81,857		115		(1,360		)	80,612
Commercial	16,047		—		(415		)	15,632		19,428		27		(184		)	19,271
Corporate debt securities	74,166		50		(2,104		)	72,112		84,920		130		(2,352		)	82,698
U.S. Treasury securities	41,971		43		—			42,014		40,986		37		—			41,023
	$	434,592	$	3,762	$	(6,258	)	$	432,096	$	485,399	$	3,570	$	(6,137	)	$	482,832


	At December 31, 2013									At December 31, 2014
(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value		Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value

Mortgage-backed securities:
Residential	$	137,602	$	187	$	(3,879	)	$	133,910	$	107,624	$	509	$	(853	)	$	107,280
Commercial	13,391		45		(3		)	13,433		13,030		641		—			13,671
Municipal bonds	136,937		185		(6,272		)	130,850		119,744		2,847		(257		)	122,334
Collateralized mortgage obligations:
Residential	93,112		85		(2,870		)	90,327		44,254		161		(1,249		)	43,166
Commercial	17,333		—		(488		)	16,845		20,775		—		(289		)	20,486
Corporate debt securities	75,542		—		(6,676		)	68,866		80,214		296		(1,110		)	79,400
U.S. Treasury securities	27,478		1		(27		)	27,452		40,976		13		—			40,989
	$	501,395	$	503	$	(20,215	)	$	481,683	$	426,617	$	4,467	$	(3,758	)	$	427,326


	At September 30, 2014															At June 30, 2015
	Less than 12 months					12 months or more					Total					Less than 12 months					12 months or more					Total
(in thousands)	Gross unrealized losses			Fair value		Gross unrealized losses			Fair value		Gross unrealized losses			Fair value		Gross unrealized losses			Fair value		Gross unrealized losses			Fair value		Gross unrealized losses			Fair value

Mortgage-backed securities:
Residential	$	(40	)	$	11,758	$	(1,628	)	$	69,570	$	(1,668	)	$	81,328	$	(332	)	$	41,498	$	(735	)	$	22,440	$	(1,067	)	$	63,938
Municipal bonds	(13		)	3,612		(457		)	29,295		(470		)	32,907		(943		)	53,882		(231		)	5,752		(1,174		)	59,634
Collateralized mortgage obligations:
Residential	(249		)	8,802		(1,352		)	31,346		(1,601		)	40,148		(471		)	33,973		(889		)	28,540		(1,360		)	62,513
Commercial	—			—		(415		)	15,633		(415		)	15,633		(89		)	9,748		(95		)	4,729		(184		)	14,477
Corporate debt securities	(281		)	17,145		(1,823		)	45,573		(2,104		)	62,718		(1,191		)	40,833		(1,161		)	28,261		(2,352		)	69,094
	$	(583	)	$	41,317	$	(5,675	)	$	191,417	$	(6,258	)	$	232,734	$	(3,026	)	$	179,934	$	(3,111	)	$	89,722	$	(6,137	)	$	269,656


	At September 30, 2014																				At June 30, 2015
	Within one year				After one year through five years				After five years through ten years				After ten years				Total				Within one year				After one year through five years				After five years through ten years				After ten years				Total
(in thousands)	Fair Value		Weighted Average Yield		Fair Value		Weighted Average Yield		Fair Value		Weighted Average Yield		Fair Value		Weighted Average Yield		Fair Value		Weighted Average Yield		Fair Value		Weighted Average Yield		Fair Value		Weighted Average Yield		Fair Value		Weighted Average Yield		Fair Value		Weighted Average Yield		Fair Value		Weighted Average Yield

Mortgage-backed securities:
Residential	$	—	—	%	$	—	—	%	$	7,466	1.73	%	$	103,371	1.81	%	$	110,837	1.80	%	$	—	—	%	$	5	0.42	%	$	7,171	1.96	%	$	101,450	1.93	%	$	108,626	1.93	%
Commercial	—		—		—		—		—		—		13,571		4.63		13,571		4.63		—		—		—		—		—		—		13,353		4.86		13,353		4.86
Municipal bonds	—		—		45		3.43		22,642		3.54		100,355		4.25		123,042		4.12		—		—		4,199		3.65		22,075		3.50		110,975		4.20		137,249		4.07
Collateralized mortgage obligations:
Residential	—		—		—		—		—		—		54,887		2.07		54,887		2.07		—		—		—		—		173		0.90		80,439		1.70		80,612		1.70
Commercial	—		—		—		—		9,692		1.93		5,940		1.37		15,632		1.72		—		—		—		—		9,748		1.95		9,523		1.69		19,271		1.82
Corporate debt securities	—		—		—		—		40,854		3.25		31,259		3.64		72,113		3.42		—		—		11,050		2.45		41,325		3.22		30,323		3.64		82,698		3.28
U.S. Treasury securities	2,002		0.25		40,012		0.35		—		—		—		—		42,014		0.34		41,023		0.35		—		—		—		—		—		—		41,023		0.35
Total available for sale	$	2,002	0.25	%	$	40,057	0.35	%	$	80,654	3.03	%	$	309,383	2.93	%	$	432,096	2.70	%	$	41,023	0.35	%	$	15,254	2.77	%	$	80,492	3.03	%	$	346,063	2.85	%	$	482,832	2.67	%


(in thousands)	At September 30, 2014			At December 31, 2013			At June 30, 2015				At December 31, 2014

Consumer loans
Single family	$	788,232		$	904,913		$	1,182,542		⁽¹⁾	$	896,665
Home equity	138,276			135,650
Home equity and other							216,635				135,598
	926,508			1,040,563			1,399,177				1,032,263
Commercial loans
Commercial real estate	530,335			477,642			547,571				523,464
Multifamily	62,498			79,216			366,187				55,088
Construction/land development	297,790			130,465			454,817				367,934
Commercial business	173,226			171,054			166,216				147,449
	1,063,849			858,377			1,534,791				1,093,935
	1,990,357			1,898,940			2,933,968				2,126,198
Net deferred loan fees and discounts	(3,748		)	(3,219		)
Net deferred loan fees, costs and discounts							(7,516		)		(5,048		)
	1,986,609			1,895,721			2,926,452				2,121,150
Allowance for loan losses	(21,847		)	(23,908		)	(25,777		)		(22,021		)
	$	1,964,762		$	1,871,813		$	2,900,675			$	2,099,129


	Three Months Ended September 30, 2014												Three Months Ended June 30, 2015
(in thousands)	Beginning balance		Charge-offs			Recoveries		(Reversal of) Provision			Ending balance		Beginning balance		Charge-offs			Recoveries		(Reversal of) Provision			Ending balance

Consumer loans
Single family	$	9,111	$	(226	)	$	65	$	(72	)	$	8,878	$	9,959	$	—		$	181	$	(1,143	)	$	8,997
Home equity	3,517		(135		)	94		87			3,563
Home equity and other													3,331		(119		)	57		613			3,882
	12,628		(361		)	159		15			12,441		13,290		(119		)	238		(530		)	12,879
Commercial loans
Commercial real estate	4,063		—			275		(357		)	3,981		4,551		—			37		458			5,046
Multifamily	887		—			—		(174		)	713		661		—			—		119			780
Construction/land development	2,418		—			123		146			2,687		5,003		—			85		855			5,943
Commercial business	2,172		(304		)	51		370			2,289		2,123		(9		)	88		(402		)	1,800
	9,540		(304		)	449		(15		)	9,670		12,338		(9		)	210		1,030			13,569
Total allowance for credit losses	$	22,168	$	(665	)	$	608	$	—		$	22,111	$	25,628	$	(128	)	$	448	$	500		$	26,448


	Three Months Ended September 30, 2013												Three Months Ended June 30, 2014
(in thousands)	Beginning balance		Charge-offs			Recoveries		(Reversal of) Provision			Ending balance		Beginning balance		Charge-offs			Recoveries		(Reversal of) Provision			Ending balance

Consumer loans
Single family	$	13,810	$	(606	)	$	179	$	(1,251	)	$	12,132	$	9,406	$	(172	)	$	25	$	(148	)	$	9,111
Home equity	4,879		(377		)	273		(139		)	4,636
Home equity and other													3,882		(136		)	236		(465		)	3,517
	18,689		(983		)	452		(1,390		)	16,768		13,288		(308		)	261		(613		)	12,628
Commercial loans
Commercial real estate	5,723		(1,306		)	—		51			4,468		4,309		(23		)	100		(323		)	4,063
Multifamily	690		—			—		80			770		965		—			—		(78		)	887
Construction/land development	1,185		—			348		(141		)	1,392		2,003		—			46		369			2,418
Commercial business	1,571		—			25		(100		)	1,496		1,752		(288		)	63		645			2,172
	9,169		(1,306		)	373		(110		)	8,126		9,029		(311		)	209		613			9,540
Total allowance for credit losses	$	27,858	$	(2,289	)	$	825	$	(1,500	)	$	24,894	$	22,317	$	(619	)	$	470	$	—		$	22,168



	Six Months Ended June 30, 2015
(in thousands)	Beginning balance		Charge-offs			Recoveries		(Reversal of) Provision			Ending balance

Consumer loans
Single family	$	9,447	$	—		$	246	$	(696	)	$	8,997
Home equity and other	3,322		(201		)	141		620			3,882
	12,769		(201		)	387		(76		)	12,879
Commercial loans
Commercial real estate	3,846		(16		)	37		1,179			5,046
Multifamily	673		—			—		107			780
Construction/land development	3,818		—			99		2,026			5,943
Commercial business	1,418		(9		)	127		264			1,800
	9,755		(25		)	263		3,576			13,569
Total allowance for credit losses	$	22,524	$	(226	)	$	650	$	3,500		$	26,448



	Six Months Ended June 30, 2014
(in thousands)	Beginning balance		Charge-offs			Recoveries		(Reversal of) Provision			Ending balance

Consumer loans
Single family	$	11,990	$	(283	)	$	41	$	(2,637	)	$	9,111
Home equity and other	3,987		(559		)	326		(237		)	3,517
	15,977		(842		)	367		(2,874		)	12,628
Commercial loans
Commercial real estate	4,012		(23		)	156		(82		)	4,063
Multifamily	942		—			—		(55		)	887
Construction/land development	1,414		—			62		942			2,418
Commercial business	1,744		(288		)	147		569			2,172
	8,112		(311		)	365		1,374			9,540
Total allowance for credit losses	$	24,089	$	(1,153	)	$	732	$	(1,500	)	$	22,168


(1)	Includes $38.2 million of loans where a fair value option election was made at the time of origination and, therefore, are carried at fair value with changes recognized in the consolidated statements of operations.



	Nine Months Ended September 30, 2014
(in thousands)	Beginning balance		Charge-offs			Recoveries		(Reversal of) Provision			Ending balance

Consumer loans
Single family	$	11,990	$	(509	)	$	106	$	(2,709	)	$	8,878
Home equity	3,987		(694		)	420		(150		)	3,563
	15,977		(1,203		)	526		(2,859		)	12,441
Commercial loans
Commercial real estate	4,012		(23		)	431		(439		)	3,981
Multifamily	942		—			—		(229		)	713
Construction/land development	1,414		—			185		1,088			2,687
Commercial business	1,744		(592		)	198		939			2,289
	8,112		(615		)	814		1,359			9,670
Total allowance for credit losses	$	24,089	$	(1,818	)	$	1,340	$	(1,500	)	$	22,111



	Nine Months Ended September 30, 2013
(in thousands)	Beginning balance		Charge-offs			Recoveries		(Reversal of) Provision			Ending balance

Consumer loans
Single family	$	13,388	$	(2,468	)	$	425	$	787		$	12,132
Home equity	4,648		(1,515		)	526		977			4,636
	18,036		(3,983		)	951		1,764			16,768
Commercial loans
Commercial real estate	5,312		(1,449		)	—		605			4,468
Multifamily	622		—			—		148			770
Construction/land development	1,580		(148		)	699		(739		)	1,392
Commercial business	2,201		—			173		(878		)	1,496
	9,715		(1,597		)	872		(864		)	8,126
Total allowance for credit losses	$	27,751	$	(5,580	)	$	1,823	$	900		$	24,894


(1)	Comprised of single family loans where a fair value option election was made at the time of origination and, therefore, are carried at fair value with changes recognized in the consolidated statements of operations.


(1)	Includes partial charge-offs and nonaccrual interest ~~paid.~~paid and purchase discounts and premiums.


(2)	Unpaid principal balance does not include partial charge-offs, purchase discounts and premiums or nonaccrual interest paid. Related allowance is calculated on net book balances not unpaid principal balances.


(3)	Includes ~~$70.0~~$75.7 million in performing troubled debt restructurings ("TDRs").


(3)	Includes $~~70.3~~73.6 million in single family performing TDRs.


~~(1)~~	~~FHA-insured and VA-guaranteed single family loans that are 90 days or more past due are maintained on accrual status if they are determined to have little to no risk of loss.~~


(1)	Includes $38.2 million of loans at June 30, 2015 where a fair value option election was made at the time of origination and, therefore, are carried at fair value with changes recognized in the consolidated statements of operations.


(2)	FHA-insured and VA-guaranteed single family loans that are 90 days or more past due are maintained on accrual status if they are determined to have little to no risk of loss.



	At September 30, 2014
(in thousands)	Accrual		Nonaccrual			Total

Consumer loans
Single family	$	779,882	$	8,350		$	788,232
Home equity	136,576		1,700			138,276
	916,458		10,050			926,508
Commercial loans
Commercial real estate	523,277		7,058			530,335
Multifamily	62,498		—			62,498
Construction/land development	297,790		—			297,790
Commercial business	170,428		2,798			173,226
	1,053,993		9,856		⁽¹⁾	1,063,849
	$	1,970,451	$	19,906		$	1,990,357


~~(1)~~	~~Includes $6.3 million of nonperforming loans at September 30, 2014 that are guaranteed by the Small Business Administration ("SBA").~~


(1)	Includes ~~$6.5~~$38.2 million of ~~nonperforming~~ loans at ~~December 31, 2013 that~~June 30, 2015 where a fair value option election was made at the time of origination and, therefore, are ~~guaranteed by~~carried at fair value with changes recognized in the ~~SBA.~~consolidated statements of operations.


(2)	Included in this balance are $8.5 million of acquired nonperforming loans.



	Three Months Ended September 30, 2014
(dollars in thousands)	Concession type	Number of loan modifications	Recorded investment		Related charge- offs

Consumer loans
Single family
	Interest rate reduction	18	$	3,268	$	—
	Payment restructure	8	1,626		—
Home equity
	Interest rate reduction	1	220		—
Total consumer
	Interest rate reduction	19	3,488		—
	Payment restructure	8	1,626		—
		27	5,114		—

Commercial loans
Commercial real estate
	Interest rate reduction	1	1,181		—
	Payment restructure	—	—		—
Commercial business
	Forgiveness of principal	1	391		266
Total commercial
	Interest rate reduction	1	1,181		—
	Payment restructure	—	—		—
	Forgiveness of principal	1	391		266
		2	1,572		266
Total loans
	Interest rate reduction	20	4,669		—
	Payment restructure	8	1,626		—
	Forgiveness of principal	1	391		266
		29	$	6,686	$	266


	At September 30, 2014								At June 30, 2015
	Notional amount		Fair value derivatives						Notional amount		Fair value derivatives
(in thousands)			Asset			Liability					Asset			Liability

Forward sale commitments	$	1,140,752	$	1,309		$	(3,950	)	$	2,110,586	$	9,785		$	(3,190	)
Interest rate swaptions	40,000		23			—			20,000		31			—
Interest rate lock commitments	457,381		14,074			(7		)	806,471		24,004			(517		)
Interest rate swaps	514,604		3,499			(4,166		)	717,200		1,504			(12,877		)
Total derivatives before netting	$	2,152,737	18,905			(8,123		)	$	3,654,257	35,324			(16,584		)
Netting adjustments			(3,745		)	3,745					(8,019		)	8,019
Carrying value on consolidated statements of financial condition			$	15,160		$	(4,378	)			$	27,305		$	(8,565	)


(1)	Comprised of interest rate lock commitments ("IRLCs") and forward contracts used as an economic hedge of IRLCs and single family mortgage loans held for sale.


(2)	Comprised of interest rate swaps, interest rate swaptions and forward contracts used as an economic hedge of single family MSRs.


~~(1)~~	The Company transferred $310.5 million of loans from the held for investment portfolio into loans held for sale in March of this year and subsequently sold $266.8 million of these loans. At June 30, 2014, the Company had transferred $17.1 million of these loans back to the held for investment portfolio.