UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________

FORM 10-Q

________________________________

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, ~~2023~~2024

☐ Transition Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the transition period from _____ to _____

Commission file number: 001-35424

________________________________

HOMESTREET, INC.

(Exact Name of Registrant as Specified in its Charter)

91-0186600


Washington						91-0186600
(State of Incorporation)						(I.R.S. Employer Identification Number)
601 Union Street, Suite 2000
Seattle, Washington 98101						98101
(Address of principal executive offices)						(Zip Code)

(206) 623-3050

(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	HMST	Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act:

Large Accelerated Filer

☐

Accelerated Filer

☒

Non-accelerated Filer

☐

Smaller Reporting Company

☐

☒

Emerging ~~growth~~Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

The number of outstanding shares of the registrant's common stock as of May ~~5, 2023~~2, 2024 was ~~18,774,649.~~18,857,566.


PART I – FINANCIAL INFORMATION

ITEM 1	FINANCIAL STATEMENTS

Consolidated Balance Sheets at March 31, ~~2023~~2024 and December 31, ~~2022~~2023		3
Consolidated Income Statements for the Quarters Ended March 31, ~~2023~~2024 and ~~2022~~2023		4
Consolidated Statements of Comprehensive Income (Loss) for the Quarters Ended March 31, ~~2023~~2024 and ~~2022~~2023		5
Consolidated Statements of Shareholders’ Equity for the Quarters Ended March 31, ~~2023~~2024 and ~~2022~~2023		6
Consolidated Statements of Cash Flows for the ~~Quarter~~s Quarters Ended March 31, ~~2023~~2024 and ~~2022~~2023		7
Notes to Consolidated Financial Statements		9
ITEM 2	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	3841
ITEM 3	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	5657

ITEM 4	CONTROLS AND PROCEDURES	5960
PART II – OTHER INFORMATION
ITEM 1	LEGAL PROCEEDINGS	5960
ITEM 1A	RISK FACTORS	6061
ITEM 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	6163
ITEM 3	DEFAULTS UPON SENIOR SECURITIES	6163
ITEM 4	MINE SAFETY DISCLOSURES	6163
ITEM 5	OTHER INFORMATION	6163
ITEM 6	EXHIBITS	6264
SIGNATURES		6365

Unless we state otherwise or the content otherwise requires, references in this Form 10-Q to "HomeStreet," "we," "our," "us" or the "Company" refer collectively to HomeStreet, Inc., a Washington corporation, HomeStreet Bank ("Bank") and other direct and indirect subsidiaries of HomeStreet, Inc.

PART I


ITEM 1 FINANCIAL STATEMENTS

HOMESTREET, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


			March 31, 2023		December 31, 2022
		March 31, 2024
		March 31, 2024
		March 31, 2024						December 31, 2023
(in thousands, except share data)	(in thousands, except share data)		(Unaudited)

ASSETS	ASSETS

ASSETS

ASSETS
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents	Cash and cash equivalents		$	377,031	$	72,828
Investment securities	Investment securities		1,477,004		1,400,212
Loans held for sale ("LHFS")	Loans held for sale ("LHFS")		24,253		17,327
Loans held for investment ("LHFI") (net of allowance for credit losses of $41,500 and $41,500)			7,444,882		7,384,820
Loans held for investment ("LHFI") (net of allowance for credit losses of $39,677 and $40,500)
Mortgage servicing rights ("MSRs")	Mortgage servicing rights ("MSRs")		109,540		111,873
Premises and equipment, net	Premises and equipment, net		55,333		51,172
Other real estate owned ("OREO")	Other real estate owned ("OREO")		1,839		1,839
Goodwill and other intangible assets			51,862		29,980
Intangible assets
Other assets	Other assets		317,145		294,709
Total assets	Total assets		$	9,858,889	$	9,364,760
LIABILITIES AND SHAREHOLDERS' EQUITY	LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:	Liabilities:
Liabilities:
Liabilities:
Deposits
Deposits
Deposits	Deposits		$	7,056,603	$	7,451,919
Borrowings	Borrowings		1,878,000		1,016,000
Long-term debt	Long-term debt		224,492		224,404
Accounts payable and other liabilities	Accounts payable and other liabilities		124,800		110,290
Total liabilities	Total liabilities		9,283,895		8,802,613
Commitments and contingencies	Commitments and contingencies						Commitments and contingencies
Shareholders' equity:	Shareholders' equity:
Common stock, no par value, authorized 160,000,000 shares; issued and outstanding, 18,767,811 shares and 18,730,380 shares			227,293		226,592
Common stock, no par value, authorized 160,000,000 shares; issued and outstanding, 18,857,566 shares and 18,810,055 shares
Common stock, no par value, authorized 160,000,000 shares; issued and outstanding, 18,857,566 shares and 18,810,055 shares
Common stock, no par value, authorized 160,000,000 shares; issued and outstanding, 18,857,566 shares and 18,810,055 shares
Retained earnings	Retained earnings		433,459		435,085
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)		(85,758)		(99,530)
Total shareholders' equity	Total shareholders' equity		574,994		562,147
Total liabilities and shareholders' equity	Total liabilities and shareholders' equity		$	9,858,889	$	9,364,760

See accompanying notes to consolidated financial statements

HOMESTREET, INC. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS

(Unaudited)

Quarter Ended March 31,

(in thousands, except share and per share data)

2023

2022

(in thousands, except share and per share data)

Interest income:

Loans

82,538

52,954

Loans

Investment securities

12,763

5,966

Cash, Fed Funds and other

1,750

108

Cash, Fed Funds and other

Total interest income

97,051

59,028

Interest expense:

Deposits

29,370

2,284

Borrowings

18,305

2,198

Borrowings

Total interest expense

47,675

4,482

Net interest income

49,376

54,546

Net interest income

Provision for credit losses

593

(9,000)

Net interest income after provision for credit losses

48,783

63,546

Net interest income after provision for credit losses

Noninterest income:

Net gain on loan origination and sale activities

2,410

8,274

Net gain on loan origination and sale activities

Loan servicing income

3,039

3,304

Deposit fees

2,658

2,075

Deposit fees

Other

2,083

1,905

Total noninterest income

10,190

15,558

Total noninterest income

Noninterest expense:

Compensation and benefits

29,253

32,031

Compensation and benefits

Information services

7,145

7,062

Occupancy

5,738

6,365

Occupancy

General, administrative and other

10,355

9,015

General, administrative and other

Total noninterest expense

52,491

54,473

Income before income taxes

6,482

24,631

Income tax expense

1,424

4,680

Net income

5,058

19,951

Net income per share:

Total noninterest expense

Income (loss) before income taxes

Income tax (benefit) expense

Net income (loss)

Net income (loss) per share:

Basic

0.27

1.02

Diluted

0.27

1.01

Diluted

Weighted average shares outstanding:

Basic

18,755,453

19,585,753

Basic

Diluted

18,771,899

19,791,913

Diluted

See accompanying notes to consolidated financial statements

HOMESTREET, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

Quarter Ended March 31,

(in thousands)

2023

2022

(in thousands)

Net income

5,058

19,951

Net income (loss)

Other comprehensive income (loss):

Unrealized gain (loss) on investment securities available for sale ("AFS")

17,375

(68,187)

Unrealized gain (loss) on investment securities available for sale ("AFS")

Reclassification for net (gains) losses included in income

(3)

(71)

Other comprehensive income (loss) before tax

17,372

(68,258)

Other comprehensive income (loss) before tax

Income tax impact of:

Unrealized gain (loss) on investment securities AFS

3,601

(16,172)

Unrealized gain (loss) on investment securities AFS

Reclassification for net (gains) losses included in income

(1)

(17)

Total

3,600

(16,189)

Total

Other comprehensive income (loss)

13,772

(52,069)

Total comprehensive income (loss)

18,830

(32,118)

Total comprehensive income (loss)

See accompanying notes to consolidated financial statements

HOMESTREET, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)


(in thousands, except share data)	(in thousands, except share data)	Number of shares	Common stock		Retained earnings		Accumulated other comprehensive income (loss)		Total shareholders' equity
(in thousands, except share data)
(in thousands, except share data)

For the quarter ended March 31, 2022
Balance, December 31, 2021		20,085,336	$	249,856	$	444,343	$	21,140	$	715,339
For the quarter ended March 31, 2023

For the quarter ended March 31, 2023

For the quarter ended March 31, 2023
Balance, December 31, 2022
Balance, December 31, 2022
Balance, December 31, 2022
Net income
Net income
Net income	Net income	—	—		19,951		—		19,951
Share-based compensation expense	Share-based compensation expense	—	1,076		—		—		1,076
Share-based compensation expense
Share-based compensation expense
Common stock issued - Stock grants
Common stock issued - Stock grants
Common stock issued - Stock grants	Common stock issued - Stock grants	104,840	—		—		—		—

Other comprehensive income (loss)		—	—		—		(52,069)		(52,069)
Other comprehensive income

Other comprehensive income

Other comprehensive income
Dividends declared on common stock ($0.35 per share)
Dividends declared on common stock ($0.35 per share)
Dividends declared on common stock ($0.35 per share)	Dividends declared on common stock ($0.35 per share)	—	—		(7,164)		—		(7,164)
Common stock repurchased	Common stock repurchased	(1,489,640)	(27,214)		(48,688)		—		(75,902)
Common stock repurchased
Common stock repurchased

Balance, March 31, 2022		18,700,536	$	223,718	$	408,442	$	(30,929)	$	601,231
Balance, March 31, 2023

Balance, March 31, 2023

Balance, March 31, 2023

For the quarter ended March 31, 2023
Balance, December 31, 2022		18,730,380	$	226,592	$	435,085	$	(99,530)	$	562,147
Net income		—	—		5,058		—		5,058
Share-based compensation expense		—	1,016		—		—		1,016
Common stock issued - Stock grants		50,426	—		—		—		—
Other comprehensive income (loss)		—	—		—		13,772		13,772
Dividends declared on common stock ($0.35 per share)		—	—		(6,684)		—		(6,684)
Common stock repurchased		(12,995)	(315)		—		—		(315)

Balance, March 31, 2023		18,767,811	$	227,293	$	433,459	$	(85,758)	$	574,994
For the quarter ended March 31, 2024

For the quarter ended March 31, 2024

For the quarter ended March 31, 2024
Balance, December 31, 2023
Balance, December 31, 2023
Balance, December 31, 2023
Net income (loss)
Net income (loss)
Net income (loss)
Share-based compensation expense
Share-based compensation expense
Share-based compensation expense
Common stock issued - Stock grants
Common stock issued - Stock grants
Common stock issued - Stock grants
Other comprehensive income (loss)
Other comprehensive income (loss)
Other comprehensive income (loss)

Common stock repurchased

Common stock repurchased

Common stock repurchased

Balance, March 31, 2024

Balance, March 31, 2024

Balance, March 31, 2024

See accompanying notes to consolidated financial statements

HOMESTREET, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Quarter Ended March 31,

(in thousands)

2023

2022

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

5,058

19,951

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Provision for credit losses

593

(9,000)

Depreciation and amortization, premises and equipment

1,879

2,593

Depreciation and amortization, premises and equipment

Amortization of premiums and discounts: investment securities, deposits, debt

999

Operating leases: excess of payments over amortization

(860)

(1,096)

Operating leases: excess of payments over amortization

Amortization of finance leases

126

143

Amortization of core deposit intangibles

588

245

Amortization of core deposit intangibles

Amortization of deferred loan fees and costs

(189)

(322)

Amortization of deferred loan fees and costs

Share-based compensation expense

1,016

1,076

Deferred income tax expense (benefit)

(4,034)

5,363

Deferred income tax (benefit) expense

Origination of LHFS

(78,908)

(252,102)

Proceeds from sale of LHFS

72,566

372,464

Proceeds from sale of LHFS

Net fair value adjustment and gain on sale of LHFS

(584)

3,348

Net fair value adjustment and gain on sale of LHFS

Origination of MSRs

(756)

(5,492)

Change in fair value of MSRs

1,995

(6,878)

Change in fair value of MSRs

Amortization of servicing rights

1,554

1,712

Net change in trading securities

(43,045)

(19,313)

(Increase) decrease in other assets

2,824

5,972

Net change in trading securities

Increase in other assets

Increase (decrease) in accounts payable and other liabilities

(11,462)

4,226

Net cash provided by (used in) operating activities

(51,590)

123,889

Increase (decrease) in accounts payable and other liabilities

Net cash used in operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of investment securities

(53,232)

(161,016)

Purchase of investment securities

Proceeds from sale of investment securities

4,693

962

Principal payments on investment securities

32,445

34,129

Proceeds from sale of OREO

—

952

Principal payments on investment securities

Net increase in LHFI

(39,408)

(328,288)

Purchase of premises and equipment

(855)

(1,444)

Purchase of premises and equipment

Net cash received from acquisition of branches

349,111

—

Proceeds from sale of Federal Home Loan Bank stock

34,840

16,003

Proceeds from sale of Federal Home Loan Bank stock

Purchases of Federal Home Loan Bank stock

(58,726)

(25,238)

Net cash provided by (used in) investing activities

268,868

(463,940)

Purchases of Federal Home Loan Bank stock

Net cash provided by investing activities

Quarter Ended March 31,

(in thousands)

Quarter Ended March 31,

(in thousands)

2023

2022

CASH FLOWS FROM FINANCING ACTIVITIES:

(Decrease) increase in deposits, net

(768,262)

100,973

CASH FLOWS FROM FINANCING ACTIVITIES:

Decrease in deposits, net

Changes in short-term borrowings, net

562,000

232,000

Proceeds from other long-term borrowings

300,000

—

Proceeds from other long-term borrowings

Proceeds from debt issuance, net

—

98,035

Proceeds from other long-term borrowings

Repayment of other long-term borrowings

Repayment of finance lease principal

(129)

(145)

Repurchases of common stock

—

(75,000)

Repayment of finance lease principal

Dividends paid on common stock

(6,684)

(7,164)

Net cash provided by financing activities

86,925

348,699

Net increase (decrease) in cash and cash equivalents

304,203

8,648

Net cash provided by financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents, beginning of year

72,828

65,214

Cash and cash equivalents, end of period

377,031

73,862

Cash and cash equivalents, end of period

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest

47,775

2,691

Federal and state income taxes

—

Federal and state income taxes

Non-cash activities:

Increase in lease assets and lease liabilities

1,031

2,053

Increase in lease assets and lease liabilities

Loans transferred from LHFI to LHFS, net

—

6,731

Loans transferred from LHFI to LHFS, net

Ginnie Mae loans recognized with the right to repurchase, net

Ginnie Mae loans derecognized with the right to repurchase, net

1,235

2,402

Ginnie Mae loans derecognized with the right to repurchase, net

Repurchase of common stock-award shares

315

902

Acquisition:

Loans acquired

20,803

—

Premises and equipment and other assets

5,819

—

Premises and equipment and other assets

Liabilities assumed

373,547

—

Goodwill and other intangibles

22,470

—

Goodwill and other intangibles

See accompanying notes to consolidated financial statements

HomeStreet, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 1–SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

HomeStreet, Inc., a State of Washington corporation organized in 1921 (the "Corporation"), is a Washington-based diversified financial services holding company whose operations are primarily conducted through its wholly owned subsidiaries (collectively the "Company") HomeStreet Statutory Trusts and HomeStreet Bank (the "Bank"), and the Bank's subsidiaries, Continental Escrow Company, HomeStreet Foundation, HS Properties, Inc., HS Evergreen Corporate Center LLC, and Union Street Holdings LLC. The Company is principally engaged in commercial banking, mortgage banking and consumer/retail banking activities serving customers primarily in the Western United States.

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation. The Company allocates resources and assesses financial performance on a consolidated basis and therefore has one reporting segment. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Actual results could differ significantly from those estimates. Certain amounts in the financial statements from prior periods have been reclassified to conform to the current financial statement presentation.

These unaudited interim financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the periods presented. These adjustments are of a normal recurring nature, unless otherwise disclosed in this Quarterly Report on Form 10-Q. The results of operations in the interim financial statements do not necessarily indicate the results that may be expected for the full year. The interim financial information should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023 ("~~2022~~2023 Annual Report on Form 10-K"), filed with the U.S. Securities and Exchange Commission ("SEC").

Branch Acquisition

On February 10, 2023, the Company completed its acquisition of three branches in southern California, whereby we assumed approximately ~~$373~~$376 million in deposits and purchased approximately $21 million in loans. The application of the acquisition method of accounting resulted in recording goodwill of $12 million and a core deposit intangible of $11 million.

Recent Accounting Developments

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2020-04, Reference Rate Reform (Topic 848). This ASU provides optional expedients and exceptions for contracts, hedging relationships, and other transactions that reference London Interbank Offered Rate ("LIBOR") rates expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU 2021-01, "Reference Rate Reform (Topic 848)," which clarifies certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting applied to derivatives that are affected by the transition to alternative rates. In December 2022, the FASB issued ASU No. 2022-06, "Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848," which defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. The adoption of these ASUs is not expected to have a material impact on the Company’s financial position or results of operations.

In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments-Credit Losses (Topic 326). The amendments in this ASU eliminate the accounting guidance for Troubled Debt Restructuring ("TDRs") by creditors, while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower experiences financial difficulty. In addition, the amendments require that an entity disclose current period gross charge-offs by year of origination in a vintage table. We prospectively adopted the portion of ASU No. 2022-02 with respect to amendments about TDRs and related disclosure enhancements as of January 1, 2022. This adoption did not have a material impact on the Company’s financial position or results of operations. We prospectively adopted the vintage table disclosure requirement of ASU 2022-02 on January 1, 2023, which did not have a material impact on the Company's financial position or results of operations.

In March 2023, the FASB issued ASU 2023-02, “Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method.” ASU 2023-02 permits reporting entities to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. ASU 2023-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2023. We adopted ASU 2023-02 isand it did not ~~expected to~~ have a material impact on the Company’s ~~consolidated~~ financial ~~statements.~~position or results of operations.

In October 2023, the FASB issued ASU 2023-06, "Disclosure Improvements - Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative." The amendments in ASU 2023-06 modify the disclosure or presentation requirements of a variety of Topics in the Codification, with the intention of clarifying or improving them and align the requirements in the codification with the SEC's regulations (and will be removed from the SEC regulations). ASU 2023-06 should be adopted prospectively and the effective date varies and is determined for each individual disclosure based on the effective date of the SEC's removal of the related disclosure. ASU 2023-06 will not have an impact on the Company's financial position or results of operation as it is disclosure only.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands disclosures about a public entity’s reportable segments and requires more enhanced information about a reportable segment’s expenses, interim segment profit or loss, and how a public entity’s chief operating decision maker uses reported segment profit or loss information in assessing segment performance and allocating resources. The update will be effective for annual periods beginning after December 15, 2023. ASU 2023-07 will not have an impact on the Company's financial position or results of operation as it impacts disclosures only. We are assessing the impact on our disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. The update will be effective for annual periods beginning after December 15, 2024. ASU 2023-09 will not have an impact on the Company's financial position or results of operation as it impacts disclosures only. We are assessing the impact on our disclosures.

NOTE 2–INVESTMENT SECURITIES:

The following table sets forth certain information regarding the amortized cost basis and fair values of our investment securities AFS and held-to-maturity ("HTM"):


		At March 31, 2023
	At March 31, 2024													At March 31, 2024
(in thousands)	(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value		(in thousands)	Amortized cost	Gross unrealized gains	Gross unrealized losses		Fair value

AFS	AFS
AFS
AFS
Mortgage backed securities ("MBS"):	Mortgage backed securities ("MBS"):
Mortgage backed securities ("MBS"):
Mortgage backed securities ("MBS"):
Residential
Residential
Residential	Residential	$	209,773	$	62	$	(9,177)	$	200,658
Commercial	Commercial	62,567		—		(8,337)		54,230
Collateralized mortgage obligations ("CMOs"):	Collateralized mortgage obligations ("CMOs"):
Residential
Residential
Residential	Residential	587,455		56		(34,277)		553,234
Commercial	Commercial	76,777		—		(6,000)		70,777
Municipal bonds	Municipal bonds	462,261		294		(48,897)		413,658
Corporate debt securities	Corporate debt securities	45,835		—		(4,533)		41,302
U.S. Treasury securities	U.S. Treasury securities	22,920		—		(2,601)		20,319
Agency debentures	Agency debentures	58,539		—		(180)		58,359
Total	Total	$	1,526,127	$	412	$	(114,002)	$	1,412,537

HTM	HTM

Municipal bonds	Municipal bonds	$	2,423	$	—	$	(36)	$	2,387

Municipal bonds

Municipal bonds


		At December 31, 2022
	At December 31, 2023													At December 31, 2023
(in thousands)	(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value		(in thousands)	Amortized cost	Gross unrealized gains	Gross unrealized losses		Fair value

AFS	AFS
AFS
AFS
MBS:	MBS:
MBS:
MBS:
Residential
Residential
Residential	Residential	$	207,445	$	—	$	(10,183)	$	197,262
Commercial	Commercial	65,411		—		(9,362)		56,049
CMOs:	CMOs:
Residential
Residential
Residential	Residential	592,449		12		(39,422)		553,039
Commercial	Commercial	77,909		—		(7,390)		70,519
Municipal bonds	Municipal bonds	469,346		41		(57,839)		411,548
Corporate debt securities	Corporate debt securities	46,672		74		(3,801)		42,945
U.S. Treasury securities	U.S. Treasury securities	23,005		—		(3,071)		19,934
Agency debentures	Agency debentures	27,499		8		(29)		27,478
Total	Total	$	1,509,736	$	135	$	(131,097)	$	1,378,774

HTM	HTM
Municipal bonds	Municipal bonds	$	2,441	$	—	$	(56)	$	2,385
Municipal bonds
Municipal bonds

At March 31, ~~2023,~~2024, and December 31, ~~2022,~~2023, the Company held ~~$62~~$28 million and ~~$19~~$25 million, respectively, of trading securities, consisting of US Treasury notes used as economic hedges of our single family mortgage servicing rights, which are carried at

fair value and included aswith investment securities on the balance sheet. For the quarters ended March 31, 2024 and 2023, ~~and 2022,~~ net ~~gains~~losses of $0.6 million and net ~~losses~~gains of ~~$0.7~~$0.6 million on trading securities, respectively, were recorded in servicing income.

MBS and CMOs represent securities issued or guaranteed by government sponsored enterprises ("GSEs"). Most of the MBS and CMO securities in our investment portfolio are guaranteed by Fannie Mae, Ginnie Mae or Freddie Mac. Municipal bonds are comprised of general obligation bonds (i.e., backed by the general credit of the issuer) and revenue bonds (i.e., backed by either collateral or revenues from the specific project being financed) issued by various municipal corporations. As of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, substantially all securities held, including municipal bonds and corporate debt securities, were rated investment grade based upon nationally recognized statistical rating organizations where available and, where not available, based upon internal ratings.

Investment securities AFS that were in an unrealized loss position are presented in the following tables based on the length of time the individual securities have been in an unrealized loss position:


		At March 31, 2023
	At March 31, 2024																				At March 31, 2024
		Less than 12 months				12 months or more				Total					Less than 12 months		12 months or more			Total
(in thousands)	(in thousands)	Gross unrealized losses		Fair value		Gross unrealized losses		Fair value		Gross unrealized losses		Fair value		(in thousands)	Gross unrealized losses	Fair value		Gross unrealized losses	Fair value			Gross unrealized losses	Fair value

AFS	AFS
AFS
AFS
MBS:	MBS:
MBS:
MBS:
Residential
Residential
Residential	Residential	$	(6,312)	$	168,313	$	(2,865)	$	22,732	$	(9,177)	$	191,045
Commercial	Commercial	(194)		3,226		(8,143)		50,990		(8,337)		54,216
CMOs:	CMOs:
Residential
Residential
Residential	Residential	(8,414)		342,128		(25,863)		184,686		(34,277)		526,814
Commercial	Commercial	(146)		9,071		(5,854)		61,707		(6,000)		70,778
Municipal bonds	Municipal bonds	(1,825)		52,931		(47,072)		326,987		(48,897)		379,918
Corporate debt securities	Corporate debt securities	(1,550)		27,813		(2,983)		13,489		(4,533)		41,302
U.S. Treasury securities	U.S. Treasury securities	—		—		(2,601)		20,319		(2,601)		20,319
Agency debentures	Agency debentures	(180)		58,359		—		—		(180)		58,359
Total	Total	$	(18,621)	$	661,841	$	(95,381)	$	680,910	$	(114,002)	$	1,342,751
HTM	HTM
Municipal bonds	Municipal bonds	$	(36)	$	2,387	$	—	$	—	$	(36)	$	2,387
Municipal bonds
Municipal bonds


		At December 31, 2022
	At December 31, 2023																				At December 31, 2023
		Less than 12 months				12 months or more				Total					Less than 12 months		12 months or more			Total
(in thousands)	(in thousands)	Gross unrealized losses		Fair value		Gross unrealized losses		Fair value		Gross unrealized losses		Fair value		(in thousands)	Gross unrealized losses	Fair value		Gross unrealized losses	Fair value			Gross unrealized losses	Fair value

AFS	AFS
AFS
AFS
MBS:	MBS:
MBS:
MBS:
Residential
Residential
Residential	Residential	$	(8,845)	$	191,398	$	(1,338)	$	5,763	$	(10,183)	$	197,161
Commercial	Commercial	(5,729)		41,416		(3,633)		14,619		(9,362)		56,035
CMOs:	CMOs:
Residential
Residential
Residential	Residential	(27,789)		498,333		(11,633)		45,689		(39,422)		544,022
Commercial	Commercial	(4,787)		56,671		(2,603)		13,848		(7,390)		70,519
Municipal bonds	Municipal bonds	(44,513)		350,918		(13,326)		46,377		(57,839)		397,295
Corporate debt securities	Corporate debt securities	(3,801)		32,871		—		—		(3,801)		32,871
U.S. Treasury securities	U.S. Treasury securities	—		—		(3,071)		19,934		(3,071)		19,934
Agency debentures	Agency debentures	(29)		15,970		—		—		(29)		15,970
Total	Total	$	(95,493)	$	1,187,577	$	(35,604)	$	146,230	$	(131,097)	$	1,333,807
HTM	HTM
Municipal bonds	Municipal bonds	$	(56)	$	2,385	$	—	$	—	$	(56)	$	2,385
Municipal bonds
Municipal bonds

The Company has evaluated AFS securities ~~that are~~ in an unrealized loss position and has determined ~~that~~ the decline in value is temporary and is related to the change in market interest rates since purchase. The decline in value is not related to any issuer- or industry-specific credit event. The Company has not identified any expected credit losses on its debt securities as of March 31, ~~2023~~2024 or December 31, ~~2022.~~2023. The Company bases this conclusion in part on its periodic review of the credit ratings of the AFS securities or reviews of the financial condition of the issuers. In addition, as of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, the Company had not made a decision to sell any of its debt securities held, nor did the Company consider it more likely than not that it would be required to sell such securities before recovery of their amortized cost basis.

The following tables present the fair value of investment securities AFS and HTM by contractual maturity along with the associated contractual yield:


		At March 31, 2023																					At March 31, 2024
		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
(dollars in thousands)	(dollars 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		(dollars 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

AFS
AFS
AFS	AFS
Municipal bonds	Municipal bonds	$	—	—	%	$	3,763	2.02	%	$	52,312	3.13	%	$	357,583	2.73	%	$	413,658	2.78	%	Municipal bonds	$	—	—		—		%			$	5,847	1.84		1.84		%			$	64,423	3.24			3.24	%			$	327,830		3.00			3.00	%			$	398,100	3.02			3.02	%
Corporate debt securities	Corporate debt securities	4,500		3.49	%	9,989		5.99	%	26,813		4.12	%	—		—	%	41,302		4.47	%	Corporate debt securities	—		—		—		%			13,867		4.87		4.87		%			21,285		4.07			4.07	%			—			—			—	%			35,152		4.38			4.38	%
U.S. Treasury securities	U.S. Treasury securities	—		—	%	—		—	%	20,319		1.14	%	—		—	%	20,319		1.14	%	U.S. Treasury securities	—		—		—		%			19,896		1.13		1.13		%			—		—			—	%			—			—			—	%			19,896		1.13			1.13	%
Agency debentures	Agency debentures	15,472		4.74	%	42,887		5.12	%	—		—	%	—		—	%	58,359		5.02	%	Agency debentures	16,962		5.00		5.00		%			25,933		5.26		5.26		%			7,398		2.13			2.13	%			3,144			2.14			2.14	%			53,437		4.56			4.56	%
Total	Total	$	19,972	4.45	%	$	56,639	5.05	%	$	99,444	3.00	%	$	357,583	2.73	%	$	533,638	3.07	%	Total	$	16,962	5.00		5.00		%			$	65,543	3.62		3.62		%			$	93,106	3.34			3.34	%			$	330,974		2.99			2.99	%			$	506,585	3.20			3.20	%

HTM	HTM
HTM
HTM
Municipal bonds	Municipal bonds	$	—	—	%	$	2,387	1.84	%	$	—	—	%	$	—	—	%	$	2,387	1.84	%
Municipal bonds
Municipal bonds																							$	—		—		%			$	2,305			2.28	%			$	—				—	%			$	—					—	%			$	2,305				2.28	%


		At December 31, 2022																						At December 31, 2023
		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
(dollars in thousands)	(dollars 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		(dollars 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

AFS	AFS
AFS
AFS
Municipal bonds
Municipal bonds
Municipal bonds	Municipal bonds	$	—	—	%	$	3,644	1.96	%	$	38,977	3.04	%	$	368,927	2.83	%	$	411,548	2.84	%	$	—			—		—		%				$	5,856			1.84		1.84	%			$	60,775			3.36			3.36		%			$	338,243			3.01				3.01	%				$	404,874			3.04				3.04	%
Corporate debt securities	Corporate debt securities	—		—	%	15,342		5.13	%	27,603		4.25	%	—		—	%	42,945		4.54	%	Corporate debt securities		4,425			3.53			3.53		%				12,714			4.95		4.95		%			21,408			3.89				3.89	%				—				—			—	%					38,547			4.21				4.21	%
U.S. Treasury securities	U.S. Treasury securities	—		—	%	—		—	%	19,934		1.11	%	—		—	%	19,934		1.11	%	U.S. Treasury securities		—			—			—		%				20,184			1.14		1.14		%			—			—				—	%				—				—			—	%					20,184			1.14				1.14	%
Agency debentures	Agency debentures	10,485		4.74	%	16,993		4.94	%	—		—	%	—		—	%	27,478		4.86	%	Agency debentures		16,977			4.93			4.93		%				30,925			5.20		5.20		%			7,758			2.15				2.15	%				3,245				2.17			2.17	%					58,905			4.51				4.51	%
Total	Total	$	10,485	4.74	%	$	35,979	4.69	%	$	86,514	2.97	%	$	368,927	2.83	%	$	501,905	3.01	%	Total		$	21,402		4.64			4.64		%				$	69,679		3.64		3.64		%			$	89,941		3.40				3.40	%				$	341,488			3.00			3.00	%					$	522,510		3.21				3.21	%

HTM	HTM
HTM
HTM

Municipal bonds	Municipal bonds	$	—	—	%	$	2,385	2.04	%	$	—	—	%	$	—	—	%	$	2,385	2.04	%

Municipal bonds

Municipal bonds																								$	—				—		%				$	2,331				2.29	%			$	—					—		%			$	—							—	%			$	2,331							2.29	%

The weighted-average yield is computed using the contractual coupon of each security weighted based on the fair value of each security. Taxable-equivalent amounts are used where applicable. MBS and CMOs are excluded from the tables above because such securities are not due on a single maturity date. The weighted average yield of MBS and CMOs as of March 31, ~~2023~~2024 and December 31, ~~2022~~2023 was ~~3.15%~~3.09% and ~~3.08%~~3.21%, respectively.

Sales of AFS investment securities were as follows:

Quarter Ended March 31,

(in thousands)

2023

2022

Proceeds

4,693

962

Proceeds

Gross gains

Gross losses

—

Gross losses

The following table summarizes the carrying value of securities pledged as collateral to secure public deposits, borrowings and other purposes as permitted or required by law:

(in thousands)

At March 31, 2023

At December 31, 2022

(in thousands)

At March 31, 2024

At December 31, 2023

Federal Reserve Bank to secure borrowings

315,244

—

Federal Reserve Bank to secure borrowings

Washington, Oregon and California to secure public deposits

203,201

212,806

Other securities pledged

1,519

2,011

Other securities pledged

Total securities pledged as collateral

519,964

214,817

The Company assesses the creditworthiness of the counterparties that hold the pledged collateral and has determined that these arrangements have little credit risk.

Tax-exempt interest income on investment securities was $2.8 million ~~and $2.7 million~~ for each of the quarters ended March 31, ~~2023~~2024 and ~~2022, respectively.~~2023.

NOTE 3-LOANS AND CREDIT QUALITY:

The Company's LHFI is divided into two portfolio segments, commercial loans and consumer loans. Within each portfolio segment, the Company monitors and assesses credit risk based on the risk characteristics of each of the following loan classes: non-owner occupied commercial real estate ("CRE"), multifamily, construction and land development, owner occupied CRE and commercial business loans within the commercial loan portfolio segment and single family and home equity and other loans within the consumer loan portfolio segment. LHFI consists of the following:

(in thousands)

At March 31, 2023

At December 31, 2022

(in thousands)

At March 31, 2024

At December 31, 2023

CRE

Non-owner occupied CRE

652,284

658,085

Multifamily

3,975,654

3,975,754

Construction/land development

607,559

627,663

Total

5,235,497

5,261,502

Commercial and industrial loans

Owner occupied CRE

438,147

443,363

Owner occupied CRE

Commercial business

392,837

359,747

Total

830,984

803,110

Consumer loans

Single family

1,057,579

1,009,001

Home equity and other

362,322

352,707

Total (1)

1,419,901

1,361,708

Total LHFI

7,486,382

7,426,320

Allowance for credit losses ("ACL")

(41,500)

Total LHFI less ACL

7,444,882

7,384,820

(1) Includes ~~$5.2 million and $5.9~~$1.3 million at both March 31, ~~2023~~2024 and December 31, ~~2022, respectively,~~2023, of loans where a fair value option election was made at the time of origination and, therefore, are carried at fair value with changes in fair value recognized in the consolidated income statements.

Loans totaling ~~$5.7 billion and $5.2~~$5.1 billion at both March 31, ~~2023~~2024 and December 31, ~~2022, respectively,~~2023, were pledged to secure borrowings from the Federal Home Loan Bank ("FHLB") and loans totaling ~~$562 million~~$1.4 billion and ~~$497 million~~$1.2 billion at March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, respectively, were pledged to secure borrowings from the Federal Reserve Bank of San Francisco ("FRBSF").

Credit Risk Concentrations

LHFI are primarily secured by real estate located in the Pacific Northwest, California and Hawaii. At March 31, 2024, and December 31, 2023 single family ~~and multifamily~~ loans in the state of Washington ~~and California,~~ represented ~~10% and 36%~~11% of the total LHFI ~~portfolio, respectively.~~portfolio. At March 31, 2024 and December 31, ~~2022,~~2023, multifamily loans in the state of California represented 36% of the total LHFI portfolio.

Credit Quality

Management considers the level of ACL to be appropriate to cover credit losses expected over the life of the loans for the LHFI portfolio. The cumulative loss rate used as the basis for the estimate of credit losses is comprised of the Bank’s historical loss experience and eight qualitative factors for current and forecasted periods.

~~During the first quarter~~As of ~~2023,~~March 31, 2024, the historical expected loss rates ~~increased from~~decreased when compared to December 31, ~~2022~~2023 due to product mix risk composition changes. During the first quarter of ~~2023,~~2024 the qualitative factors decreased due to ~~the continued favorable performance of our loan portfolio. As of March 31, 2023, the Bank expects deterioration in~~economic conditions and improved single-family collateral ~~values and economic conditions~~forecasts offset slightly by deteriorated commercial collateral conditions. Additionally, over the two-year forecast period in the markets in which it ~~operates.~~operates, the Bank expects neutral economic forecasts, offset slightly by near-term deterioration in commercial collateral forecasts.

In addition to the ACL for LHFI, the Company maintains a separate allowance for unfunded loan commitments which is included in accounts payable and other liabilities on our consolidated balance sheets. The allowance for unfunded commitments was ~~$2.2~~$1.6 million and $1.8 million at ~~both~~ March 31, ~~2023~~2024 and December 31, ~~2022.~~2023, respectively.

The Bank has elected to exclude accrued interest receivable from the evaluation of the ACL. Accrued interest on LHFI was ~~$27.6~~$29.2 million and ~~$26.9~~$28.9 million at March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, respectively, and was reported in other assets in the consolidated balance sheets.

Activity in the ACL for LHFI and the allowance for unfunded commitments was as follows:

Quarter Ended March 31,

(in thousands)

2023

2022

(in thousands)

Beginning balance

41,500

47,123

Provision for credit losses

589

(9,223)

Provision for credit losses

Net (charge-offs) recoveries

(589)

Net (charge-offs) recoveries

Ending balance

41,500

37,944

Allowance for unfunded commitments:

Beginning balance

2,197

2,404

Provision for credit losses

223

Provision for credit losses

Ending balance

2,201

2,627

Provision for credit losses:

Allowance for credit losses - loans

589

(9,223)

Allowance for unfunded commitments

223

Allowance for unfunded commitments

Total

593

(9,000)

Total

Activity in the ACL for LHFI by loan portfolio and loan sub-class was as follows:


	Quarter Ended March 31, 2024
(in thousands)	Beginning balance		Charge-offs		Recoveries		Provision		Ending balance

CRE
Non-owner occupied CRE	$	2,610	$	—	$	—	$	(479)	$	2,131
Multifamily	13,093		—		—		5,854		18,947
Construction/land development
Multifamily construction	3,983		—		—		(2,362)		1,621
CRE construction	189		—		—		(1)		188
Single family construction	7,365		—		—		(1,787)		5,578
Single family construction to permanent	672		—		—		(237)		435
Total	27,912		—		—		988		28,900
Commercial and industrial loans
Owner occupied CRE	899		—		—		(63)		836
Commercial business	2,950		(1,081)		1		776		2,646
Total	3,849		(1,081)		1		713		3,482
Consumer loans
Single family	5,287		—		2		(1,016)		4,273
Home equity and other	3,452		(24)		37		(443)		3,022
Total	8,739		(24)		39		(1,459)		7,295
Total ACL	$	40,500	$	(1,105)	$	40	$	242	$	39,677


	Quarter Ended March 31, 2023
(in thousands)	Beginning balance		Charge-offs		Recoveries		Provision		Ending balance

CRE
Non-owner occupied CRE	$	2,102	$	—	$	—	$	506	$	2,608
Multifamily	10,974		—		—		(1,187)		9,787
Construction/land development
Multifamily construction	998		—		—		347		1,345
CRE construction	196		—		—		8		204
Single family construction	12,418		—		—		107		12,525
Single family construction to permanent	1,171		—		—		40		1,211
Total	27,859		—		—		(179)		27,680
Commercial and industrial loans
Owner occupied CRE	1,030		—		—		(120)		910
Commercial business	3,247		(633)		24		778		3,416
Total	4,277		(633)		24		658		4,326
Consumer loans
Single family	5,610		—		15		179		5,804
Home equity and other	3,754		(50)		55		(69)		3,690
Total	9,364		(50)		70		110		9,494
Total ACL	$	41,500	$	(683)	$	94	$	589	$	41,500

Quarter Ended March 31, 2022
(in thousands) Beginning balance Charge-offs Recoveries Provision
Ending balance
CRE
Non-owner occupied CRE $ 7,509 $ — $ — $ (5,215) $ 2,294
Multifamily 5,854 — — 2,573 8,427
Construction/land development
Multifamily construction 507 — — (51) 456
CRE construction 150 — — 34 184
Single family construction 6,411 — — 1,324 7,735
Single family construction to permanent 1,055 — — (65) 990
Total 21,486 — — (1,400) 20,086
Commercial and industrial loans
Owner occupied CRE 5,006 — — (1,470) 3,536
Commercial business 12,273 (11) 24 (5,376) 6,910
Total 17,279 (11) 24 (6,846) 10,446
Consumer loans
Single family 4,394 — 4 (636) 3,762
Home equity and other 3,964 (33) 60 (341) 3,650
Total 8,358 (33) 64 (977) 7,412
Total ACL $ 47,123 $ (44) $ 88 $ (9,223) $ 37,944

The following table presents a vintage analysis of the commercial portfolio segment by loan sub-class and risk rating or delinquency status.


		At March 31, 2023
	At March 31, 2024																										At March 31, 2024
(in thousands)	(in thousands)	2023		2022		2021		2020		2019		2018 and prior		Revolving		Revolving-term		Total		(in thousands)	2024	2023	2022	2021	2020	2019 and prior		Revolving	Revolving-term	Total
COMMERCIAL PORTFOLIO	COMMERCIAL PORTFOLIO
Non-owner occupied CRE	Non-owner occupied CRE
Non-owner occupied CRE
Non-owner occupied CRE
Pass
Pass
Pass	Pass	$	1,542	$	68,246	$	68,280	$	41,870	$	138,583	$	302,871	$	1,122	$	—	$	622,514
Special Mention	Special Mention	—		—		—		—		—		29,332		—		—		29,332
Substandard	Substandard	—		—		—		—		438		—		—		—		438
Total	Total	1,542		68,246		68,280		41,870		139,021		332,203		1,122		—		652,284
Multifamily	Multifamily
Pass	Pass	15,923		1,826,992		1,159,589		522,497		238,448		197,486		—		—		3,960,935
Pass
Pass
Special Mention	Special Mention	—		—		—		4,892		2,366		7,461		—		—		14,719
Substandard	Substandard	—		—		—		—		—		—		—		—		—
Total	Total	15,923		1,826,992		1,159,589		527,389		240,814		204,947		—		—		3,975,654
Multifamily construction	Multifamily construction
Pass
Pass
Pass	Pass	(222)		23,795		71,396		14,164		—		—		—		—		109,133
Special Mention	Special Mention	—		—		—		—		—		—		—		—		—
Substandard	Substandard	—		—		—		—		—		—		—		—		—
Total	Total	(222)		23,795		71,396		14,164		—		—		—		—		109,133
CRE construction	CRE construction
Pass	Pass	—		1,713		14,416		3,958		—		—		—		—		20,087
Pass
Pass
Special Mention	Special Mention	—		—		—		—		—		—		—		—		—
Substandard	Substandard	—		—		—		—		—		—		—		—		—
Total	Total	—		1,713		14,416		3,958		—		—		—		—		20,087
Single family construction	Single family construction
Pass
Pass
Pass	Pass	22,174		140,812		30,374		10,748		—		74		117,718		—		321,900
Special Mention	Special Mention	—		—		—		—		—		—		—		—		—
Substandard	Substandard	—		—		5,732		—		—		—		—		—		5,732
Total	Total	22,174		140,812		36,106		10,748		—		74		117,718		—		327,632
Single family construction to permanent	Single family construction to permanent
Current	Current	3,874		84,818		54,059		5,253		2,186		517		—		—		150,707
Current
Current
Past due:	Past due:
30-59 days
30-59 days
30-59 days	30-59 days	—		—		—		—		—		—		—		—		—
60-89 days	60-89 days	—		—		—		—		—		—		—		—		—
90+ days	90+ days	—		—		—		—		—		—		—		—		—
Total	Total	3,874		84,818		54,059		5,253		2,186		517		—		—		150,707
Owner occupied CRE	Owner occupied CRE
Pass	Pass	3,908		69,709		51,178		42,620		70,651		176,851		2		1,085		416,004
Pass
Pass
Special Mention	Special Mention	—		1,506		737		—		—		12,915		—		—		15,158
Substandard	Substandard	—		—		—		—		—		6,985		—		—		6,985
Total	Total	3,908		71,215		51,915		42,620		70,651		196,751		2		1,085		438,147
Commercial business	Commercial business
Pass	Pass	15,698		53,476		38,338		45,115		17,838		30,257		152,482		1,743		354,947
Pass
Pass
Special Mention	Special Mention	—		11,612		3,650		—		3,765		3,093		1,935		190		24,245
Substandard	Substandard	—		—		996		2,551		3,955		4,589		1,462		92		13,645
Total	Total	15,698		65,088		42,984		47,666		25,558		37,939		155,879		2,025		392,837
Total commercial portfolio	Total commercial portfolio	$	62,897	$	2,282,679	$	1,498,745	$	693,668	$	478,230	$	772,431	$	274,721	$	3,110	$	6,066,481

The following table presents a vintage analysis of the consumer portfolio segment by loan sub-class and delinquency status:


		At March 31, 2023
	At March 31, 2024																										At March 31, 2024
(in thousands)	(in thousands)	2023		2022		2021		2020		2019		2018 and prior		Revolving		Revolving-term		Total		(in thousands)	2024	2023	2022	2021	2020	2019 and prior		Revolving	Revolving-term	Total

CONSUMER PORTFOLIO	CONSUMER PORTFOLIO
CONSUMER PORTFOLIO
CONSUMER PORTFOLIO
Single family
Single family
Single family	Single family
Current	Current	$	7,309	$	283,042	$	283,329	$	156,430	$	48,645	$	272,582	$	—	$	—	$	1,051,337
Current
Current
Past due:	Past due:
30-59 days
30-59 days
30-59 days	30-59 days	—		—		—		—		545		2,020		—		—		2,565
60-89 days	60-89 days	—		—		—		—		—		539		—		—		539
90+ days	90+ days	—		—		—		—		290		2,848		—		—		3,138
Total	Total	7,309		283,042		283,329		156,430		49,480		277,989		—		—		1,057,579
Home equity and other	Home equity and other
Current	Current	542		3,693		601		197		114		1,788		346,770		7,379		361,084
Current
Current
Past due:	Past due:
30-59 days
30-59 days
30-59 days	30-59 days	—		10		—		—		—		—		620		58		688
60-89 days	60-89 days	—		28		7		—		—		—		53		8		96
90+ days	90+ days	—		32		—		—		—		25		387		10		454
Total	Total	542		3,763		608		197		114		1,813		347,830		7,455		362,322
Total consumer portfolio (1)	Total consumer portfolio (1)	$	7,851	$	286,805	$	283,937	$	156,627	$	49,594	$	279,802	$	347,830	$	7,455	$	1,419,901
Total LHFI	Total LHFI	$	70,748	$	2,569,484	$	1,782,682	$	850,295	$	527,824	$	1,052,233	$	622,551	$	10,565	$	7,486,382

(1) Includes ~~$5.2~~$1.3 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 in fair value recognized in the consolidated income statements.

The following table presents a vintage analysis of the commercial portfolio segment by loan sub-class and risk rating or delinquency status:


		At December 31, 2022
	At December 31, 2023																										At December 31, 2023
(in thousands)	(in thousands)	2022		2021		2020		2019		2018		2017 and prior		Revolving		Revolving-term		Total		(in thousands)	2023	2022	2021	2020	2019	2018 and prior		Revolving	Revolving-term	Total
COMMERCIAL PORTFOLIO	COMMERCIAL PORTFOLIO
Non-owner occupied CRE	Non-owner occupied CRE
Non-owner occupied CRE
Non-owner occupied CRE
Pass
Pass
Pass	Pass	$	68,301	$	68,356	$	42,181	$	139,760	$	87,197	$	242,544	$	2,016	$	786	$	651,141
Special Mention	Special Mention	—		—		—		—		2,702		4,242		—		—		6,944
Substandard	Substandard	—		—		—		—		—		—		—		—		—
Total	Total	68,301		68,356		42,181		139,760		89,899		246,786		2,016		786		658,085
Multifamily	Multifamily
Pass	Pass	1,828,568		1,165,434		528,077		221,974		59,340		140,126		—		—		3,943,519
Pass
Pass
Special Mention	Special Mention	—		—		4,893		19,834		—		7,508		—		—		32,235
Substandard	Substandard	—		—		—		—		—		—		—		—		—
Total	Total	1,828,568		1,165,434		532,970		241,808		59,340		147,634		—		—		3,975,754
Multifamily construction	Multifamily construction
Pass
Pass
Pass	Pass	18,110		63,394		13,613		—		—		—		—		—		95,117
Special Mention	Special Mention	—		—		—		—		—		—		—		—		—
Substandard	Substandard	—		—		—		—		—		—		—		—		—
Total	Total	18,110		63,394		13,613		—		—		—		—		—		95,117
CRE construction	CRE construction
Pass	Pass	341		14,348		3,960		—		—		305		—		—		18,954
Pass
Pass
Special Mention	Special Mention	—		—		—		—		—		—		—		—		—
Substandard	Substandard	—		—		—		—		—		—		—		—		—
Total	Total	341		14,348		3,960		—		—		305		—		—		18,954
Single family construction	Single family construction
Pass
Pass
Pass	Pass	149,133		50,936		24,807		519		—		74		123,303		—		348,772
Special Mention	Special Mention	—		—		—		—		—		—		—		—		—
Substandard	Substandard	—		6,782		—		—		—		—		—		—		6,782
Total	Total	149,133		57,718		24,807		519		—		74		123,303		—		355,554
Single family construction to permanent	Single family construction to permanent
Current	Current	66,034		76,814		11,128		3,268		794		—		—		—		158,038
Current
Current
Past due:	Past due:
30-59 days
30-59 days
30-59 days	30-59 days	—		—		—		—		—		—		—		—		—
60-89 days	60-89 days	—		—		—		—		—		—		—		—		—
90+ days	90+ days	—		—		—		—		—		—		—		—		—
Total	Total	66,034		76,814		11,128		3,268		794		—		—		—		158,038
Owner occupied CRE	Owner occupied CRE
Pass	Pass	70,192		51,919		44,778		71,652		36,457		139,691		3		1,104		415,796
Pass
Pass
Special Mention	Special Mention	—		743		—		—		6,179		13,485		—		—		20,407
Substandard	Substandard	—		—		—		—		2,149		5,011		—		—		7,160
Total	Total	70,192		52,662		44,778		71,652		44,785		158,187		3		1,104		443,363
Commercial business	Commercial business
Pass	Pass	65,566		42,921		45,940		18,594		13,548		18,779		130,427		2,041		337,816
Pass
Pass
Special Mention	Special Mention	—		612		—		3,577		9		3,444		403		—		8,045
Substandard	Substandard	—		338		2,638		4,449		2,591		2,206		1,563		101		13,886
Total	Total	65,566		43,871		48,578		26,620		16,148		24,429		132,393		2,142		359,747
Total commercial portfolio	Total commercial portfolio	$	2,266,245	$	1,542,597	$	722,015	$	483,627	$	210,966	$	577,415	$	257,715	$	4,032	$	6,064,612

The following table presents a vintage analysis of the consumer portfolio segment by loan sub-class and delinquency status:


		At December 31, 2022
	At December 31, 2023																										At December 31, 2023
(in thousands)	(in thousands)	2022		2021		2020		2019		2018		2017 and prior		Revolving		Revolving-term		Total		(in thousands)	2023	2022	2021	2020	2019	2018 and prior		Revolving	Revolving-term	Total

CONSUMER PORTFOLIO	CONSUMER PORTFOLIO
CONSUMER PORTFOLIO
CONSUMER PORTFOLIO
Single family
Single family
Single family	Single family
Current	Current	$	273,786	$	253,937	$	152,773	$	49,302	$	43,511	$	231,277	$	—	$	—	$	1,004,586
Current
Current
Past due:	Past due:
30-59 days
30-59 days
30-59 days	30-59 days	—		—		—		—		340		2,113		—		—		2,453
60-89 days	60-89 days	—		—		—		—		—		258		—		—		258
90+ days	90+ days	—		—		—		290		273		1,141		—		—		1,704
Total	Total	273,786		253,937		152,773		49,592		44,124		234,789		—		—		1,009,001
Home equity and other	Home equity and other
Current	Current	4,156		692		220		150		72		1,593		340,567		4,017		351,467
Current
Current
Past due:	Past due:
30-59 days
30-59 days
30-59 days	30-59 days	—		6		—		—		—		9		446		—		461
60-89 days	60-89 days	6		24		—		—		—		48		517		—		595
90+ days	90+ days	—		—		—		—		—		151		33		—		184
Total	Total	4,162		722		220		150		72		1,801		341,563		4,017		352,707
Total consumer portfolio (1)	Total consumer portfolio (1)	$	277,948	$	254,659	$	152,993	$	49,742	$	44,196	$	236,590	$	341,563	$	4,017	$	1,361,708
Total LHFI	Total LHFI	$	2,544,193	$	1,797,256	$	875,008	$	533,369	$	255,162	$	814,005	$	599,278	$	8,049	$	7,426,320

(1) Includes ~~$5.9~~$1.3 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 in fair value recognized in the consolidated income statements.

The following ~~table presents~~tables present a vintage analysis of the commercial and consumer portfolio segment by loan sub-class and gross charge-offs:


		At March 31, 2023
	At March 31, 2024																										At March 31, 2024
(in thousands)	(in thousands)	2023		2022		2021		2020		2019		2018 and prior		Revolving		Revolving-term		Total		(in thousands)	2024	2023	2022	2021	2020	2019 and prior		Revolving	Revolving-term	Total

COMMERCIAL PORTFOLIO
COMMERCIAL PORTFOLIO
COMMERCIAL PORTFOLIO	COMMERCIAL PORTFOLIO

Commercial business	Commercial business

Commercial business

Commercial business
Gross charge-offs
Gross charge-offs
Gross charge-offs	Gross charge-offs	$	—	$	—	$	(174)	$	—	$	(459)	$	—	$	—	$	—	$	(633)

CONSUMER PORTFOLIO
CONSUMER PORTFOLIO
CONSUMER PORTFOLIO	CONSUMER PORTFOLIO

Home equity and other	Home equity and other

Home equity and other

Home equity and other
Gross charge-offs
Gross charge-offs
Gross charge-offs	Gross charge-offs	—		(6)		(13)		—		—		—		(31)		—		(50)

Total LHFI	Total LHFI	$	—	$	(6)	$	(187)	$	—	$	(459)	$	—	$	(31)	$	—	$	(683)
Total LHFI
Total LHFI


	December 31, 2023
(in thousands)	2023		2022		2021		2020		2019		2018 and prior		Revolving		Revolving-term		Total

COMMERCIAL PORTFOLIO














Commercial business
Gross charge-offs	$	—	$	—	$	(184)	$	—	$	(1,136)	$	295	$	13	$	(50)	$	(1,062)

CONSUMER PORTFOLIO


Home equity and other
Gross charge-offs	—		(106)		(22)		—		—		(4)		(187)		—		(319)

Total LHFI	$	—	$	(106)	$	(206)	$	—	$	(1,136)	$	291	$	(174)	$	(50)	$	(1,381)

Collateral Dependent Loans

The following table presents the amortized cost basis of collateral-dependent loans by loan sub-class and collateral type:

At March 31, 2024

(in thousands)

CRE

Non-owner occupied CRE

Multifamily

Construction/land development

Multifamily construction

CRE construction

At March 31, 2023

(in thousands)

Land

1-4 Family

Non-residential real estate

Other non-real estate

Total

Commercial and industrial loans

Commercial business

Commercial and industrial loans

Owner occupied CRE

972

—

2,696

—

3,668

Commercial business

3,178

562

777

4,518

Total

973

3,178

3,258

777

8,186

Total

Consumer loans

Single family

—

847

—

847

Total

—

847

—

847

Total

Total collateral-dependent loans

973

4,025

3,258

777

9,033

Total collateral-dependent loans

At December 31, 2022

At December 31, 2023

(in thousands)

Land

1-4 Family

Non-residential real estate

Other non-real estate

Total

(in thousands)

1-4 Family

Multifamily

Non-residential real estate

Other non-real estate

Total

CRE

Non-owner occupied CRE

Construction/land development

CRE construction

Total

Commercial and industrial loans

Owner occupied CRE

1,111

—

1,410

—

2,521

Commercial business

3,186

562

—

3,810

Commercial business

Total

Consumer loans

Single family

Total

Total collateral-dependent loans

1,173

3,186

1,972

—

6,331

Nonaccrual and Past Due Loans

The following table presents nonaccrual status for loans:


	At March 31, 2024													At March 31, 2024		At December 31, 2023
(in thousands)											(in thousands)	Nonaccrual with no related ACL	Total Nonaccrual		Nonaccrual with no related ACL		Total Nonaccrual

CRE
CRE
CRE
Non-owner occupied CRE
Non-owner occupied CRE
Non-owner occupied CRE
Multifamily
Construction/land development
Multifamily construction
Multifamily construction
Multifamily construction
CRE construction

		At March 31, 2023					At December 31, 2022
(in thousands)			Nonaccrual with no related ACL		Total Nonaccrual		Nonaccrual with no related ACL		Total Nonaccrual
Total

Total

Total
Commercial and industrial loans	Commercial and industrial loans
Owner occupied CRE
Owner occupied CRE
Owner occupied CRE	Owner occupied CRE		$	3,668	$	3,668	$	2,521	$	2,521
Commercial business	Commercial business		4,518		4,518		785		4,269
Total	Total		8,186		8,186		3,306		6,790
Consumer loans	Consumer loans
Single family	Single family		1,071		3,999		332		2,584
Single family
Single family
Home equity and other	Home equity and other		3		862		3		681
Total	Total		1,074		4,861		335		3,265
Total nonaccrual loans	Total nonaccrual loans		$	9,260	$	13,047	$	3,641	$	10,055

The following tables present an aging analysis of past due loans by loan portfolio segment and loan sub-class:
At March 31, 2023
Past Due and Still Accruing
(in thousands) 30-59 days 60-89 days 90 days or
more Nonaccrual
Total past
due and nonaccrual (1)
Current Total
loans
CRE
Non-owner occupied CRE $ — $ — $ — $ — $ — $ 652,284 $ 652,284
Multifamily — — — — — 3,975,654 3,975,654
Construction/land development
Multifamily construction — — — — — 109,133 109,133
CRE construction — — — — — 20,087 20,087
Single family construction — — 5,732 — 5,732 321,900 327,632
Single family construction to permanent — — — — — 150,707 150,707
Total — — 5,732 — 5,732 5,229,765 5,235,497
Commercial and industrial loans
Owner occupied CRE — — — 3,668 3,668 434,479 438,147
Commercial business 50 — — 4,518 4,568 388,269 392,837
Total 50 — — 8,186 8,236 822,748 830,984
Consumer loans
Single family 4,105 1,856 5,527 (2) 3,999 15,487 1,042,092 1,057,579
Home equity and other 689 43 — 862 1,594 360,728 362,322
Total 4,794 1,899 5,527 4,861 17,081 1,402,820 1,419,901 (3)
Total loans $ 4,844 $ 1,899 $ 11,259 $ 13,047 $ 31,049 $ 7,455,333 $ 7,486,382
% 0.06 % 0.03 % 0.15 % 0.17 % 0.41 % 99.59 % 100.00 %


		At December 31, 2022
		Past Due and Still Accruing
	At March 31, 2024
		Past Due and Still Accruing
		Past Due and Still Accruing
		Past Due and Still Accruing
(in thousands)
(in thousands)
(in thousands)	(in thousands)	30-59 days			60-89 days			90 days or more				Nonaccrual			Total past due and nonaccrual (1)			Current			Total loans

CRE	CRE

CRE

CRE
Non-owner occupied CRE
Non-owner occupied CRE
Non-owner occupied CRE	Non-owner occupied CRE	$	—		$	—		$	—			$	—		$	—		$	658,085		$	658,085
Multifamily	Multifamily	—			—			—				—			—			3,975,754			3,975,754
Multifamily
Multifamily
Construction/land development
Construction/land development
Construction/land development	Construction/land development
Multifamily construction	Multifamily construction	—			—			—				—			—			95,117			95,117
Multifamily construction
Multifamily construction
CRE construction
CRE construction
CRE construction	CRE construction	—			—			—				—			—			18,954			18,954
Single family construction	Single family construction	—			—			—				—			—			355,554			355,554
Single family construction
Single family construction
Single family construction to permanent
Single family construction to permanent
Single family construction to permanent	Single family construction to permanent	—			—			—				—			—			158,038			158,038
Total	Total	—			—			—				—			—			5,261,502			5,261,502
Total
Total
Commercial and industrial loans
Commercial and industrial loans
Commercial and industrial loans	Commercial and industrial loans
Owner occupied CRE	Owner occupied CRE	—			—			—				2,521			2,521			440,842			443,363
Owner occupied CRE
Owner occupied CRE
Commercial business
Commercial business
Commercial business	Commercial business	—			—			—				4,269			4,269			355,478			359,747
Total	Total	—			—			—				6,790			6,790			796,320			803,110
Total
Total
Consumer loans
Consumer loans
Consumer loans	Consumer loans
Single family	Single family	4,556			1,724			4,372			(2)	2,584			13,236			995,765			1,009,001
Single family
Single family
Home equity and other	Home equity and other	267			296			—				681			1,244			351,463			352,707
Home equity and other
Home equity and other
Total
Total
Total	Total	4,823			2,020			4,372				3,265			14,480			1,347,228			1,361,708			(3)	5,349	2,630	2,630	3,794	3,794	4,245	4,245	16,018	16,018	1,521,072	1,521,072	1,537,090	1,537,090	(3)	(3)
Total loans	Total loans	$	4,823		$	2,020		$	4,372			$	10,055		$	21,270		$	7,405,050		$	7,426,320
%	%	0.06		%	0.03		%	0.06		%		0.14		%	0.29		%	99.71		%	100.00		%
%
%


	At December 31, 2023
	Past Due and Still Accruing
(in thousands)	30-59 days			60-89 days			90 days or more				Nonaccrual			Total past due and nonaccrual (1)			Current			Total loans

CRE
Non-owner occupied CRE	$	—		$	—		$	—			$	16,803		$	16,803		$	625,082		$	641,885
Multifamily	—			1,915			—				—			1,915			3,938,274			3,940,189
Construction/land development
Multifamily construction	—			—			—				—			—			168,049			168,049
CRE construction	—			—			—				3,821			3,821			14,692			18,513
Single family construction	—			—			—				—			—			274,050			274,050
Single family construction to permanent	—			—			—				—			—			105,304			105,304
Total	—			1,915			—				20,624			22,539			5,125,451			5,147,990
Commercial and industrial loans
Owner occupied CRE	—			—			—				706			706			390,579			391,285
Commercial business	—			—			—				13,686			13,686			345,363			359,049
Total	—			—			—				14,392			14,392			735,942			750,334
Consumer loans
Single family	5,174			1,993			4,261			(2)	2,650			14,078			1,126,201			1,140,279
Home equity and other	974			225			—				1,310			2,509			381,792			384,301
Total	6,148			2,218			4,261				3,960			16,587			1,507,993			1,524,580			(3)
Total loans	$	6,148		$	4,133		$	4,261			$	38,976		$	53,518		$	7,369,386		$	7,422,904
%	0.08		%	0.05		%	0.06		%		0.53		%	0.72		%	99.28		%	100.00		%

(1) Includes loans whose repayments are insured by the FHA or guaranteed by the VA or Small Business Administration ~~"SBA"~~("SBA") of ~~$12.3~~$11.9 million and ~~$10.6~~$12.4 million at March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, respectively.

(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.

(3) Includes ~~$5.2 million and $5.9~~$1.3 million of loans at both March 31, ~~2023~~2024 and December 31, ~~2022, respectively,~~2023, where a fair value option election was made at the time of origination and, therefore, are carried at fair value with changes in fair value recognized in our consolidated income statements.

Loan Modifications

The Company provides modifications to borrowers experiencing financial difficulty ("~~MFDB"~~MBFD"), which may include delays in payment of amounts due, extension of the terms of the notes or reduction in the interest rates on the notes. In certain instances, the Company may grant more than one type of modification. The granting of modifications infor the quarters ended March 31, ~~2023~~2024 and ~~2022~~2023 did not have a material impact on the ACL. The following tables provide information related to loans modified ~~during~~for the quarters ended March 31, ~~2023~~2024 and ~~2022~~2023 to borrowers experiencing financial difficulty, disaggregated by class of financing receivable and type of concession granted:

Significant Payment Delay
Quarter Ended March 31, 2023 Quarter Ended March 31, 2022
(in thousands, except percentage) Amortized Cost Basis at Period End % of Total Class of Financing Receivable Amortized Cost Basis at Period End % of Total Class of Financing Receivable
Single family $ — — % $ 153 0.02 %


	~~Term Extension~~
	~~Quarter Ended March 31, 2023~~				~~Quarter Ended March 31, 2022~~
~~(in thousands, except percentage)~~	~~Amortized Cost Basis at Period End~~		~~% of Total Class of Financing Receivable~~		~~Amortized Cost Basis at Period End~~		~~% of Total Class of Financing Receivable~~

~~Single family~~	$	—	—	%	$	37	—	%

Interest Rate Reduction and Term Extension
Quarter Ended March 31, 2023 Quarter Ended March 31, 2022
(in thousands, except percentage) Amortized Cost Basis at Period End % of Total Class of Financing Receivable Amortized Cost Basis at Period End % of Total Class of Financing Receivable
Single family $ — — % $ 1,110 0.15 %

Significant Payment Delay and Term Extension
Quarter Ended March 31, 2023 Quarter Ended March 31, 2022
(in thousands, except percentage) Amortized Cost Basis at Period End % of Total Class of Financing Receivable Amortized Cost Basis at Period End % of Total Class of Financing Receivable
Single family $ 179 0.02 % $ 6,397 0.84 %
Home equity and other — — % 52 0.02 %

Interest Rate Reduction, Significant Payment Delay and Term Extension
Quarter Ended March 31, 2023 Quarter Ended March 31, 2022
(in thousands, except percentage) Amortized Cost Basis at Period End % of Total Class of Financing Receivable Amortized Cost Basis at Period End % of Total Class of Financing Receivable
Single family $ — — % $ 5,762 0.76 %


	Significant Payment Delay
	Quarter Ended March 31,
	2024				2023
(in thousands, except percentages)	Amortized Cost Basis at Period End		% of Total Class of Financing Receivable		Amortized Cost Basis at Period End		% of Total Class of Financing Receivable
Commercial business	$	103	0.03	%	$	—	—	%


	Term Extension
	Quarter Ended March 31,
	2024				2023
(in thousands, except percentages)	Amortized Cost Basis at Period End		% of Total Class of Financing Receivable		Amortized Cost Basis at Period End		% of Total Class of Financing Receivable
Non-owner occupied CRE	$	560	0.09	%	$	—	—	%

Commercial business	3,555		0.92	%	—		—	%


	Significant Payment Delay and Term Extension
	Quarter Ended March 31,
	2024				2023
(in thousands, except percentages)	Amortized Cost Basis at Period End		% of Total Class of Financing Receivable		Amortized Cost Basis at Period End		% of Total Class of Financing Receivable


Single family	$	1,156	0.10	%	$	179	0.02	%

The following table describes the financial effect of the modifications made to borrowers experiencing financial difficulty:

~~Interest Rate Reduction~~

~~Quarter Ended March 31, 2023~~

~~Quarter Ended March 31, 2022~~

~~Single family~~

—

~~Reduced weighted-average contractual interest rate from 4.28% to 3.25%.~~

~~Significant Payment Delay~~

~~Quarter Ended March 31, 2023~~

~~Quarter Ended March 31, 2022~~

~~Single Family~~

~~Provided payment deferrals to borrowers. A weighted average 2.6% of loan balances were capitalized and added to the remaining term of the loan.~~

~~Provided payment deferrals to borrowers. A weighted average 0.3% of loan balances were capitalized and added to the remaining term of the loan.~~

~~Home equity and other~~

—

~~Provided payment deferrals to borrowers. A weighted average 6.3% of loan balances were capitalized and added to the remaining term of the loan.~~

~~Term Extension~~

~~Quarter Ended March 31, 2023~~

~~Quarter Ended March 31, 2022~~

~~Single family~~

~~Added a weighted average 14.2 years to the life of loans, which reduced the monthly payment amounts to the borrowers.~~

~~Added a weighted average 3.2 years to the life of loans, which reduced the monthly payment amounts to the borrowers.~~

~~Home equity and other~~

—

~~Added a weighted average 16.1 years to the life of loans, which reduced the monthly payment amounts to the borrowers.~~

Significant Payment Delay

Quarter Ended March 31,

2024

2023

Commercial business

The weighted average duration of loan payments deferred is 2.8 years.

—

Single Family

Provided payment deferrals to borrowers. A weighted average 2.5% of loan balances were capitalized and added to the remaining term of the loan.

Provided payment deferrals to borrowers. A weighted average 2.6% of loan balances were capitalized and added to the remaining term of the loan.

Term Extension

Quarter Ended March 31,

2024

2023

Non-owner occupied CRE

Added a weighted average 0.25 years to the life of loans, which reduced the monthly payment amounts to the borrowers.

—

Commercial business

Added a weighted average 0.4 years to the life of loans, which reduced the monthly payment amounts to the borrowers.

—

Single family

Added a weighted average 1.9 years to the life of loans, which reduced the monthly payment amounts to the borrowers.

Added a weighted average 14.2 years to the life of loans, which reduced the monthly payment amounts to the borrowers.

Upon determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.

The following table depicts the payment status of loans that were ~~MFDBs~~classified as MBFDs on or after January 1, 2023 through December 31, 2023:


	Payment Status (Amortized Cost Basis) at March 31, 2024
(in thousands)	Current		30-89 Days Past Due		90+ Days Past Due

Non-owner occupied CRE	$	16,240	$	—	$	—
Construction/land development	3,824		—		—
Commercial business	8,663		—		—
Single family	2,367		1,109		342

Total	$	31,094	$	1,109	$	342

The following table depicts the payment status of loans that were classified as MBFDs on or after January 1, 2022 through December 31, 2022:


	Payment Status (Amortized Cost Basis) at March 31, 2023
(in thousands)	Current		30-89 Days Past Due		90+ Days Past Due



Commercial business	$	1,355	$	—	$	—
Single family	19,006		1,746		1,627
Home equity and other	119		—		—
Total	$	20,480	$	1,746	$	1,627

The following ~~tables provide~~table provides the amortized cost basis as of March 31, 2024 of MBFDs on or after January 1, 2023 through December 31, 2023 and subsequently had a payment default:



	Amortized Cost Basis of Modified Loans That Subsequently Defaulted
	Quarter Ended March 31, 2024
(in thousands)	Significant Payment Delay		Term Extension		Interest Rate Reduction and Term Extension		Significant Payment Delay and Term Extension		Interest Rate Reduction, Significant Payment Delay and Term Extension
Non-owner occupied CRE	$	—	$	—	$	—	$	16,240	$	—
Construction/land development	—		—		—		3,824		—
Commercial business	—		4,420		—		—		—
Single family	241		—		—		351		—

Total	$	241	$	4,420	$	—	$	20,415	$	—

The following table provides the amortized cost basis as of March 31, 2023 of ~~MFDBs~~MBFDs on or after January 1, 2022 through December 31, 2022 and subsequently had a payment default:

Amortized Cost Basis of Modified Loans That Subsequently Defaulted Quarter Ended March 31, 2023
(in thousands) Significant Payment Delay Term Extension Interest Rate Reduction and Term Extension Significant Payment Delay and Term Extension Interest Rate Reduction, Significant Payment Delay and Term Extension
Single family $ — $ — $ — $ 2,030 $ 623


	Amortized Cost Basis of Modified Loans That Subsequently Defaulted
	Quarter Ended March 31, 2023
(in thousands)	Significant Payment Delay		Term Extension		Interest Rate Reduction and Term Extension		Significant Payment Delay and Term Extension		Interest Rate Reduction, Significant Payment Delay and Term Extension

Single family	$	—	$	—	$	—	$	2,030	$	623

2425

NOTE 4–DEPOSITS:

Deposit balances, including their weighted average rates, were as follows:


		At March 31, 2023				At December 31, 2022
	At March 31, 2024																	At March 31, 2024								At December 31, 2023
(dollars in thousands)	(dollars in thousands)	Amount		Weighted Average Rate		Amount		Weighted Average Rate		(dollars in thousands)	Amount					Weighted Average Rate					Amount						Weighted Average Rate

Noninterest-bearing demand deposits	Noninterest-bearing demand deposits	$	1,479,428	—	%	$	1,399,912	—	%
Noninterest-bearing demand deposits
Noninterest-bearing demand deposits											$	1,311,559				—		%			$	1,306,503					—	%
Interest bearing:	Interest bearing:
Interest-bearing demand deposits
Interest-bearing demand deposits
Interest-bearing demand deposits	Interest-bearing demand deposits	496,504		0.34	%	466,490		0.10	%	330,301			0.23		0.23		%			344,748				0.25			0.25	%
Savings	Savings	323,373		0.06	%	258,977		0.06	%	Savings	256,383			0.06			0.06		%			261,508			0.06			0.06	%
Money market	Money market	2,097,055		1.52	%	2,383,209		1.22	%	Money market	1,536,341			1.67			1.67		%			1,622,665			1.79			1.79	%
Certificates of deposit	Certificates of deposit	2,660,243		3.49	%	2,943,331		3.07	%
Brokered deposits
Brokered deposits
Brokered deposits											921,103					5.36		%			1,218,008						5.36	%
Other										Other	2,135,415					4.32		%			2,009,946						3.95	%
Total interest bearing deposits	Total interest bearing deposits	5,577,175		2.28	%	6,052,007		1.98	%	Total interest bearing deposits	5,179,543			3.25			3.25		%			5,456,875			3.19			3.19	%
Total deposits	Total deposits	$	7,056,603	1.79	%	$	7,451,919	1.61	%	Total deposits	$	6,491,102		2.59			2.59		%			$	6,763,378		2.58			2.58	%

There were $256 million and $255 million in public funds included in deposits at March 31, 2024 and December 31, 2023, respectively.

Certificates of deposit outstanding mature as follows:


(in thousands)	March 31, ~~2023~~2024

Within one year	$	~~2,143,208~~2,782,594
One to two years	~~489,105~~260,104
Two to three years	~~15,066~~5,025
Three to four years	~~5,202~~7,262
Four to five years	~~7,500~~1,418
Thereafter	~~162~~115
Total	$	~~2,660,243~~3,056,518

The aggregate amount of certificate of deposits in denominations of more than the FDIC limit of $250 thousand at March 31, ~~2023~~2024 and December 31, ~~2022~~2023 were ~~$186~~$277 million and ~~$189~~$194 million, ~~respectively. There were $885 million and $1.4 billion of brokered deposits at March 31, 2023 and December 31, 2022,~~ respectively.

NOTE 5–DERIVATIVES AND HEDGING ACTIVITIES:

To reduce the risk of significant interest rate fluctuations on the value of certain assets and liabilities, such as single family mortgage LHFS and MSRs, the Company utilizes derivatives as economic hedges. The notional amounts and fair values for derivatives, all of which are economic hedges are included in other assets or accounts payable and other liabilities on the consolidated balance sheet, consist of the following:

At March 31, 2023
Notional amount Fair value derivatives
(in thousands) Asset Liability
Forward sale commitments $ 89,850 $ 229 $ (326)
Interest rate lock commitments 37,557 398 (36)
Interest rate swaps 239,558 10,704 (10,705)
Futures 7,400 34 —
Options 58,000 503 —
Total derivatives before netting $ 432,365 11,868 (11,067)
Netting adjustment/Cash collateral (1)
(10,801) (239)
Carrying value on consolidated balance sheet $ 1,067 $ (11,306)

2526


		At December 31, 2022
		Notional amount		Fair value derivatives
	At March 31, 2024											At March 31, 2024
	Notional amount								Notional amount		Fair value derivatives
(in thousands)	(in thousands)			Asset		Liability		(in thousands)		Asset			Liability

Forward sale commitments	Forward sale commitments	$	51,252	$	293	$	(151)
Forward sale commitments
Forward sale commitments

Interest rate lock commitments
Interest rate lock commitments
Interest rate lock commitments	Interest rate lock commitments	17,463		141		(36)
Interest rate swaps	Interest rate swaps	236,533		13,093		(13,093)
Futures	Futures	23,000		18		—
Options	Options	$	14,000	218		—
Total derivatives before netting	Total derivatives before netting	$	342,248	$	13,763	$	(13,280)
Netting adjustment/Cash collateral (1)	Netting adjustment/Cash collateral (1)			(12,870)		101
Carrying value on consolidated balance sheet	Carrying value on consolidated balance sheet			$	893	$	(13,179)


	At December 31, 2023
	Notional amount		Fair value derivatives
(in thousands)			Asset		Liability

Forward sale commitments	$	87,509	$	151	$	(288)
Interest rate lock commitments	21,790		411		—
Interest rate swaps	235,521		10,489		(10,492)
Futures	12,200		—		(3)
Options	9,300		132		—
Total derivatives before netting	$	366,320	$	11,183	$	(10,783)
Netting adjustment/Cash collateral (1)			(10,119)		195
Carrying value on consolidated balance sheet			$	1,064	$	(10,588)

(1) Includes net cash collateral received of ~~$11.0~~$11.9 million and ~~$12.8~~$9.9 million at March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, respectively.

The following table presents gross fair value and net carrying value information for derivative instruments:

(in thousands)

Gross fair value

Netting adjustments/ Cash collateral (1)

Carrying value

At March 31, 2023

At March 31, 2024

Derivative assets

11,868

(10,801)

1,067

Derivative liabilities

(11,067)

(239)

(11,306)

At December 31, 2022

Derivative liabilities

At December 31, 2023

Derivative assets

13,763

(12,870)

893

Derivative liabilities

(13,280)

101

(13,179)

Derivative liabilities

(1) Includes net cash collateral received of ~~$11.0~~$11.9 million and ~~received of $12.8~~$9.9 million at March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, respectively.

The collateral used under the Company's master netting agreements is typically cash, but securities may be used under agreements with certain counterparties. Receivables related to cash collateral that has been paid to counterparties are included in other assets. Payables related to cash collateral that has been received from counterparties are included in accounts payable and other liabilities. Interest is owed on amounts received from counterparties and we earn interest on cash paid to counterparties. Any securities pledged to counterparties as collateral remain on the consolidated balance sheets. At March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, the Company had liabilities of ~~$11.0~~$11.9 million and ~~$12.8~~$10.1 million, respectively, in cash collateral received from counterparties and receivables of ~~$0.03 million~~$44 thousand and ~~$0.03 million,~~$218 thousand, respectively, in cash collateral paid to counterparties.

The following table presents the net gain (loss) recognized on economic hedge derivatives, within the respective line items in the consolidated income statements for the periods indicated:

Quarter Ended March 31,

(in thousands)

2023

2022

(in thousands)

Recognized in noninterest income:

Net gain (loss) on loan origination and sale activities (1)

4,613

Net gain (loss) on loan origination and sale activities (1)

Loan servicing income (loss) (2)

(730)

(9,439)

Other (3)

(1)

159

Other (3)

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

(2)Comprised of ~~interest rate swaps, interest rate swaptions,~~ futures, US Treasury options and forward contracts used as economic hedges of single family MSRs.

(3)Impact of interest rate swap agreements executed with commercial banking customers and broker dealer counterparties.

The notional amount of open interest rate swap agreements executed with commercial banking customers and broker dealer counterparties at March 31, ~~2023~~2024 and December 31, ~~2022~~2023 were ~~$240~~$233 million and ~~$237~~$236 million, respectively.

NOTE 6–MORTGAGE BANKING OPERATIONS:

LHFS consisted of the following:


(in thousands)	(in thousands)	At March 31, 2023		At December 31, 2022		(in thousands)	At March 31, 2024	At December 31, 2023

Single family	Single family	$	22,690	$	14,075
Single family
Single family
CRE, multifamily and SBA	CRE, multifamily and SBA	1,563		3,252
Total	Total	$	24,253	$	17,327

Loans sold consisted of the following for the periods indicated:




		Quarter Ended March 31,
(in thousands)	(in thousands)	2023		2022
(in thousands)
(in thousands)

Single family

Single family

Single family	Single family	$	63,473	$	323,070
CRE, multifamily and SBA	CRE, multifamily and SBA	8,750		49,137
CRE, multifamily and SBA
CRE, multifamily and SBA
Total	Total	$	72,223	$	372,207
Total
Total

Gain on loan origination and sale activities, including the effects of derivative risk management instruments, consisted of the following:




		Quarter Ended March 31,
(in thousands)	(in thousands)	2023		2022
(in thousands)
(in thousands)

Single family

Single family

Single family	Single family	$	2,218	$	6,169
CRE, multifamily and SBA	CRE, multifamily and SBA	192		2,105
CRE, multifamily and SBA
CRE, multifamily and SBA
Total	Total	$	2,410	$	8,274
Total
Total

The Company's portfolio of loans serviced for others is primarily comprised of loans held in U.S. government and agency MBS issued by Fannie Mae, Freddie Mac and Ginnie Mae. The unpaid principal balance of loans serviced for others is as follows:


(in thousands)	(in thousands)	At March 31, 2023		At December 31, 2022		(in thousands)	At March 31, 2024	At December 31, 2023

Single family	Single family	$	5,424,909	$	5,436,899
Single family
Single family
CRE, multifamily and SBA	CRE, multifamily and SBA	1,917,154		1,938,484
Total	Total	$	7,342,063	$	7,375,383

~~The Company has made representations and warranties that the loans sold meet certain requirements. The Company may be~~

~~required to repurchase mortgage loans or indemnify loan purchasers due to defects in the origination process of the loan, such~~

~~as documentation errors, underwriting errors and judgments, appraisal errors, early payment defaults and fraud.~~

The following is a summary of changes in the Company's liability for estimated single-family mortgage repurchase losses:




		Quarter Ended March 31,
(in thousands)	(in thousands)	2023		2022
(in thousands)
(in thousands)

Balance, beginning of period

Balance, beginning of period

Balance, beginning of period	Balance, beginning of period	$	2,232	$	1,312
Additions, net of adjustments (1)	Additions, net of adjustments (1)	(143)		358
Additions, net of adjustments (1)
Additions, net of adjustments (1)
Realized (losses) recoveries, net (2)
Realized (losses) recoveries, net (2)
Realized (losses) recoveries, net (2)	Realized (losses) recoveries, net (2)	(300)		(32)
Balance, end of period	Balance, end of period	$	1,789	$	1,638
Balance, end of period
Balance, end of period

(1) Includes additions for new loan sales and changes in estimated probable future repurchase losses on previously sold loans.

(2) Includes principal losses and accrued interest on repurchased loans, "make-whole" settlements, settlements with claimants and certain related expenses.

The Company has agreements with certain investors to advance scheduled principal and interest amounts on delinquent loans. Advances are also made to fund the foreclosure and collection costs of delinquent loans prior to the recovery of reimbursable

amounts from investors or borrowers. Advances of ~~$2.8~~$3.1 million and ~~$1.6~~$2.9 million were recorded in other assets as of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, respectively.

When the Company has the unilateral right to repurchase Ginnie Mae pool loans it has previously sold (generally loans that are more than 90 days past due), the Company records the balance of the loans as other assets and other liabilities. At March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, delinquent or defaulted mortgage loans currently in Ginnie Mae pools that the Company has recognized on its consolidated balance sheets totaled ~~$5.7~~$5.9 million and ~~$6.9~~$5.6 million, respectively.

Revenue from mortgage servicing, including the effects of derivative risk management instruments, consisted of the following:

Quarter Ended March 31,

(in thousands)

2023

2022

(in thousands)

Servicing income, net:

Servicing fees and other

6,669

8,321

Servicing fees and other

Amortization of single family MSRs (1)

(1,684)

(3,425)

Amortization of multifamily and SBA MSRs

(1,554)

(1,712)

Amortization of multifamily and SBA MSRs

Total

3,431

3,184

Risk management, single family MSRs:

Changes in fair value of MSRs due to assumptions (2)

(311)

10,303

Net gain (loss) from economic hedging

(81)

(10,183)

Changes in fair value of MSRs due to assumptions (2)

Net gain (loss) from economic hedging (3)

Total

(392)

120

Loan servicing income

3,039

3,304

Loan servicing income

(1) Represents changes due to collection/realization of expected cash flows and curtailments.

(2) Principally reflects changes in model assumptions, including prepayment speed assumptions, which are primarily affected by changes in mortgage interest rates.

(3) The interest income from US Treasury notes securities used for hedging purposes, which is included in interest income on the consolidated income statements, was $0.3 million and $0.4 million for the quarters ended March 31, 2024 and 2023, respectively.

The changes in single family MSRs measured at fair value are as follows:

Quarter Ended March 31,

(in thousands)

2023

2022

Beginning balance

76,617

61,584

Beginning balance

Additions and amortization:

Originations

619

3,916

Originations

Purchases

460

—

Amortization (1)

(1,684)

(3,425)

Amortization (1)

Net additions and amortization

(605)

491

Changes in fair value assumptions (2)

(311)

10,303

Changes in fair value assumptions (2)

Ending balance

75,701

72,378

Ending balance

(1) Represents changes due to collection/realization of expected cash flows and curtailments.

(2) Principally reflects changes in model assumptions, including prepayment speed assumptions, which are primarily affected by changes in mortgage interest rates.

Key economic assumptions used in measuring the initial fair value of capitalized single family MSRs were as follows:

Quarter Ended March 31,

(rates per annum) (1)

2023

2022

Constant prepayment rate ("CPR") (2)

11.20

9.38

Constant prepayment rate ("CPR") (2)

Discount rate

9.94

8.34

Discount rate

(1) Based on a weighted average.

(2) Represents an expected lifetime average CPR used in the model.

2830

For single family MSRs, we use a discounted cash flow valuation technique which utilizes CPRs and discount rates as significant unobservable inputs as noted in the table below:


	At March 31, 2024											At March 31, 2024				At December 31, 2023
	Range of Inputs									Range of Inputs			Average (1)		Range of Inputs				Average (1)
		At March 31, 2023			At December 31, 2022
		Range of Inputs	Average (1)		Range of Inputs	Average (1)

CPRs		6.34% - 30.01%	6.69	%	6.01% - 11.10%	8.19	%
CPRs (2)
CPRs (2)
CPRs (2)									6.20% - 33.00%		6.60	%		6.80% - 32.50%			7.00	%
Discount Rates	Discount Rates	9.33% - 14.95%	10.07	%	9.74% - 16.88%	10.66	%	Discount Rates	10.00% - 16.00%		10.64	%		10.00% - 17.00%			10.00	%

(1) Weighted averages of all the inputs within the range.

(2) Represents the expected lifetime average CPR used in the model.

To compute hypothetical sensitivities of the value of our single family MSRs to immediate adverse changes in key assumptions, we computed the impact of changes to CPRs and in discount rates as outlined below:


(dollars in thousands)	At March 31, ~~2023~~2024

Fair value of single family MSR	$	~~75,701~~74,056
Expected weighted-average life (in years)	~~8.40~~8.49
CPR
Impact on fair value of 25 basis points adverse change in interest rates	$	~~(941)~~(621)
Impact on fair value of 50 basis points adverse change in interest rates	$	~~(2,148)~~(1,344)
Discount rate
Impact on fair value of 100 basis points increase	$	~~(2,000)~~(1,952)
Impact on fair value of 200 basis points increase	$	~~(4,984)~~(4,627)

The changes in multifamily and SBA MSRs measured at the lower of amortized cost or fair value were as follows:

Quarter Ended March 31,

(in thousands)

2023

2022

Beginning balance

35,256

39,415

Beginning balance

Originations

137

1,576

Amortization

(1,554)

(1,712)

Amortization

Ending balance

33,839

39,279

Ending balance

Key economic assumptions used in measuring the initial fair value of capitalized multifamily MSRs were as follows:


	Quarter Ended March 31,
(rates per annum) (1)	2024		2023


Discount rate	13.00	%	13.00	%

(1)Based on a weighted average.

For multifamily MSRs, we use a discounted cash flow valuation technique which utilizes CPRs and discount rates as significant unobservable inputs as noted in the table below. Multifamily DUS loans typically contain yield maintenance features that significantly reduce loan prepayments, driving a CPR of zero.


	At March 31, 2024			At December 31, 2023

	Range of Inputs	Average (1)		Range of Inputs	Average (1)

Discount Rates	13.00% - 13.00%	13.00	%	13.00% - 13.00%	13.00	%

(1) Weighted averages of all the inputs within the range.

NOTE 7–GUARANTEES AND MORTGAGE REPURCHASE LIABILITY:

In the ordinary course of business, the Company sells loans through the Fannie Mae Multifamily Delegated Underwriting and Servicing Program ("DUS"®) that are subject to a credit loss sharing arrangement. The Company services the loans for Fannie Mae and shares in the risk of loss with Fannie Mae under the terms of the DUS contracts. Under the DUS program, the Company and Fannie Mae share losses on a pro rata basis, where the Company is responsible for losses incurred up to one-third of the principal balance on each loan with two-thirds of the loss covered by Fannie Mae. For loans that have been sold through this program, a liability is recorded for this loss sharing arrangement under the accounting guidance for guarantees. ~~As of~~At both March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, the total unpaid principal balance of loans sold under this program was $1.8 billion. The Company's reserve liability related to this arrangement totaled ~~$0.6~~$0.4 million and $0.5 million at ~~both~~ March 31, ~~2023~~2024 and December 31, ~~2022.~~2023, respectively. There were no actual losses incurred under this arrangement during the quarters ended March 31, ~~2023~~2024 and ~~2022.~~2023.

In the ordinary course of business, the Company sells residential mortgage loans to GSEs and other entities. Under the terms of these sales agreements, the Company has made representations and warranties that the loans sold meet certain requirements. The Company may be required to repurchase mortgage loans or indemnify loan purchasers due to defects in the origination process of the loan, such as documentation errors, underwriting errors and judgments, early payment defaults and fraud. The total unpaid principal balance of loans sold on a servicing-retained basis that were subject to the terms and conditions of these representations and warranties totaled ~~$5.4~~$5.3 billion ~~at both~~as of March 31, ~~2023~~2024 and December 31, ~~2022.~~2023. At March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, the Company had recorded a mortgage repurchase liability for loans sold on a servicing-retained and

servicing-released basis, included in accounts payable and other liabilities on the consolidated balance sheets, of ~~$1.8~~$1.3 million and ~~$2.2~~$1.5 million, respectively.

NOTE 8–EARNINGS PER SHARE:

The following table summarizes the calculation of earnings per share:

Quarter Ended March 31,

(in thousands, except share and per share data)

2023

2022

(in thousands, except share and per share data)

Net income

5,058

19,951

Net income (loss)

Weighted average shares:

Basic weighted-average number of common shares outstanding

18,755,453

19,585,753

Basic weighted-average number of common shares outstanding

Dilutive effect of outstanding common stock equivalents

16,446

206,160

Diluted weighted-average number of common shares outstanding

18,771,899

19,791,913

Net income per share:

Diluted weighted-average number of common shares outstanding

Net income (loss) per share:

Basic earnings per share

0.27

1.02

Diluted earnings per share

0.27

1.01

Basic earnings per share

Diluted earnings per share (1)

(1) Excluded from the computation of diluted earnings per share (due to their antidilutive effect) for the ~~quarter~~quarters ended March 31, ~~2023~~2024 and ~~2022~~2023 were certain unvested RSUs and PSUs. ~~Based on~~On a weighted average basis, ~~251,821~~561,610 and ~~13,040~~251,821 unvested stock units convertible into shares of common stock were excluded ~~for the quarters ended~~at March 31, ~~2023~~2024 and ~~2022,~~2023, respectively, because their effect would have been anti-dilutive.

NOTE 9–FAIR VALUE MEASUREMENT:

The term "fair value" is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The Company's approach is to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements.

Fair Value Hierarchy

A three-level valuation hierarchy has been established under ASC 820 for disclosure of fair value measurements. The valuation hierarchy is based on the observability of inputs to the valuation of an asset or liability as of the measurement date. A financial instrument’s categorization within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels are defined as follows:

• Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. An active market for the asset or liability is a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

• Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. This includes quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability for substantially the full term of the financial instrument.

• Level 3 – Unobservable inputs for the asset or liability. These inputs reflect the Company's assumptions of what market participants would use in pricing the asset or liability.

The Company's policy regarding transfers between levels of the fair value hierarchy is that all transfers are assumed to occur at the end of the reporting period.

Estimation of Fair Value

Fair value is based on quoted market prices, when available. In cases where a quoted price for an asset or liability is not available, the Company uses valuation models to estimate fair value. These models incorporate inputs such as forward yield curves, loan prepayment assumptions, expected loss assumptions, market volatilities and pricing spreads utilizing market-based inputs where readily available. The Company believes its valuation methods are appropriate and consistent with those that would be used by other market participants. However, imprecision in estimating unobservable inputs and other factors may result in these fair value measurements not reflecting the amount realized in an actual sale or transfer of the asset or liability in a current market exchange.

The following table summarizes the fair value measurement methodologies, including significant inputs and assumptions and classification of the Company's assets and liabilities valued at fair value on a recurring basis.

Asset/Liability class

Valuation methodology, inputs and assumptions

Classification

Investment securities

Trading securities

Fair Value is based on quoted prices in an active market.

Level 1 recurring fair value measurement.

Investment securities AFS

Observable market prices of identical or similar securities are used where available.

Level 2 recurring fair value measurement.

If market prices are not readily available, value is based on discounted cash flows using the following significant inputs:

• Expected prepayment speeds

• Estimated credit losses

• Market liquidity adjustments

Level 3 recurring fair value measurement.

LHFS

Single family loans, excluding loans transferred from held for investment

Fair value is based on observable market data, including:

• Quoted market prices, where available

• Dealer quotes for similar loans

• Forward sale commitments

Level 2 recurring fair value measurement.

When not derived from observable market inputs, fair value is based on discounted cash flows, which considers the following inputs:

• Benchmark yield curve

• Estimated discount spread to the benchmark yield curve

• Expected prepayment speeds

Estimated fair value classified as Level 3.

Mortgage servicing rights

Single family MSRs

For information on how the Company measures the fair value of its single family MSRs, including key economic assumptions and the sensitivity of fair value to changes in those assumptions, see Note 6, Mortgage Banking Operations.

Level 3 recurring fair value measurement.

Derivatives

Futures and Options

Fair value is based on closing exchange prices.

Level 1 recurring fair value measurement.

Forward sale commitments Interest rate swaps

Fair value is based on quoted prices for identical or similar instruments, when available. When quoted prices are not available, fair value is based on internally developed modeling techniques, which require the use of multiple observable market inputs including:

• Forward interest rates
• Interest rate volatilities

Level 2 recurring fair value measurement.

IRLC

The fair value considers several factors including:

• Fair value of the underlying loan based on quoted prices in the secondary market, when available.

• Value of servicing

• Fall-out factor

Level 3 recurring fair value measurement.

3134

The following tables presents the levels of the fair value hierarchy for the Company's assets and liabilities measured at fair value on a recurring basis:


		At March 31, 2023
	At March 31, 2024													At March 31, 2024
(in thousands)	(in thousands)	Fair Value		Level 1		Level 2		Level 3		(in thousands)	Fair Value	Level 1	Level 2		Level 3

Assets:	Assets:
Assets:
Assets:
Trading securities - U.S. Treasury securities
Trading securities - U.S. Treasury securities
Trading securities - U.S. Treasury securities	Trading securities - U.S. Treasury securities	$	62,044	$	62,044	$	—	$	—
Investment securities AFS	Investment securities AFS
Mortgage backed securities:	Mortgage backed securities:
Mortgage backed securities:
Mortgage backed securities:
Residential
Residential
Residential	Residential	200,658		—		198,694		1,964
Commercial	Commercial	54,230		—		54,230		—
Collateralized mortgage obligations:	Collateralized mortgage obligations:
Residential
Residential
Residential	Residential	553,234		—		553,234		—
Commercial	Commercial	70,777		—		70,777		—
Municipal bonds	Municipal bonds	413,658		—		413,658		—
Corporate debt securities	Corporate debt securities	41,302		—		41,236		66
U.S. Treasury securities	U.S. Treasury securities	20,319		—		20,319		—
Agency debentures	Agency debentures	58,359		—		58,359		—
Single family LHFS	Single family LHFS	22,690		—		22,690		—
Single family LHFI	Single family LHFI	5,231		—		—		5,231
Single family mortgage servicing rights	Single family mortgage servicing rights	75,701		—		—		75,701
Derivatives	Derivatives
Futures		34		34		—		—

Forward sale commitments

Forward sale commitments

Forward sale commitments	Forward sale commitments	229		—		229		—
Options	Options	503		503		—		—
Interest rate lock commitments	Interest rate lock commitments	398		—		—		398
Interest rate swaps	Interest rate swaps	10,704		—		10,704		—
Total assets	Total assets	$	1,590,071	$	62,581	$	1,444,130	$	83,360
Liabilities:	Liabilities:
Derivatives	Derivatives
Derivatives
Derivatives

Forward sale commitments

Forward sale commitments

Forward sale commitments	Forward sale commitments	$	326	$	—	$	326	$	—

Interest rate lock commitments	Interest rate lock commitments	36		—		—		36
Interest rate lock commitments
Interest rate lock commitments
Interest rate swaps	Interest rate swaps	10,705		—		10,705		—
Total liabilities	Total liabilities	$	11,067	$	—	$	11,031	$	36

3235


		At December 31, 2022
	At December 31, 2023													At December 31, 2023
(in thousands)	(in thousands)	Fair Value		Level 1		Level 2		Level 3		(in thousands)	Fair Value	Level 1	Level 2		Level 3

Assets:	Assets:
Assets:
Assets:
Trading securities - U.S. Treasury securities
Trading securities - U.S. Treasury securities
Trading securities - U.S. Treasury securities	Trading securities - U.S. Treasury securities	$	18,997	$	18,997	$	—	$	—
Investment securities AFS	Investment securities AFS
Mortgage backed securities:	Mortgage backed securities:
Mortgage backed securities:
Mortgage backed securities:
Residential
Residential
Residential	Residential	197,262		—		195,321		1,941
Commercial	Commercial	56,049		—		56,049		—
Collateralized mortgage obligations:	Collateralized mortgage obligations:
Residential
Residential
Residential	Residential	553,039		—		553,039		—
Commercial	Commercial	70,519		—		70,519		—
Municipal bonds	Municipal bonds	411,548		—		411,548		—
Corporate debt securities	Corporate debt securities	42,945		—		42,877		68
U.S. Treasury securities	U.S. Treasury securities	19,934		—		19,934		—
Agency debentures	Agency debentures	27,478		—		27,478		—
Single family LHFS	Single family LHFS	14,075		—		14,075		—
Single family LHFI	Single family LHFI	5,868		—		—		5,868
Single family mortgage servicing rights	Single family mortgage servicing rights	76,617		—		—		76,617
Derivatives	Derivatives
Futures		18		18		—		—
Options		218		218		—

Forward sale commitments	Forward sale commitments	293		—		293		—

Forward sale commitments

Forward sale commitments
Options										Options	132	132	—

Interest rate lock commitments
Interest rate lock commitments
Interest rate lock commitments	Interest rate lock commitments	141		—		—		141
Interest rate swaps	Interest rate swaps	13,093		—		13,093		—
Total assets	Total assets	$	1,508,094	$	19,233	$	1,404,226	$	84,635
Liabilities:	Liabilities:
Derivatives	Derivatives

Derivatives
Derivatives
Futures
Futures
Futures
Forward sale commitments	Forward sale commitments	$	151	$	—	$	151	$	—

Interest rate lock commitments		36		—		—		36

Interest rate swaps

Interest rate swaps

Interest rate swaps	Interest rate swaps	13,093		—		13,093		—
Total liabilities	Total liabilities	$	13,280	$	—	$	13,244	$	36

There were no transfers between levels of the fair value hierarchy during the quarters ended March 31, ~~2023~~2024 and ~~2022.~~2023.

Level 3 Recurring Fair Value Measurements

The Company's ~~level~~Level 3 recurring fair value measurements consist of investment securities AFS, single family MSRs, single family LHFI where fair value option was elected, certain single family LHFS and interest rate lock commitments, which are accounted for as derivatives. For information regarding fair value changes and activity for single family MSRs during the quarters ended March 31, ~~2023~~2024 and ~~2022,~~2023, see Note 6, Mortgage Banking Operations of this Quarterly Report on Form 10-Q.

The fair value of IRLCs considers several factors, including the fair value in the secondary market of the underlying loan resulting from the exercise of the commitment, the expected net future cash flows related to the associated servicing of the loan (referred to as the value of servicing) and the probability that the commitment will not be converted into a funded loan (referred to as a fall-out factor). The fair value of IRLCs on LHFS, while based on interest rates observable in the market, is highly dependent on the ultimate closing of the loans. The significance of the fall-out factor to the fair value measurement of an individual IRLC is generally highest at the time that the rate lock is initiated and declines as closing procedures are performed and the underlying loan gets closer to funding. The fall-out factor applied is based on historical experience. The value of servicing is impacted by a variety of factors, including prepayment assumptions, discount rates, delinquency rates, contractually specified servicing fees, servicing costs and underlying portfolio characteristics. Because these inputs are not observable in market trades, the fall-out factor and value of servicing are considered to be ~~level~~Level 3 inputs. The fair value of IRLCs decreases in

value upon an increase in the fall-out factor and increases in value upon an increase in the value of servicing. Changes in the fall-out factor and value of servicing do not increase or decrease based on movements in other significant unobservable inputs.

The Company recognizes unrealized gains and losses from the time that an IRLC is initiated until the gain or loss is realized at the time the loan closes, which generally occurs within 30-90 days. For IRLCs that fall out, any unrealized gain or loss is reversed, which generally occurs at the end of the commitment period. The gains and losses recognized on IRLC derivatives generally correlates to volume of single family interest rate lock commitments made during the reporting period (after adjusting for estimated fallout) while the amount of unrealized gains and losses realized at settlement generally correlates to the volume of single family closed loans during the reporting period.

The Company uses the discounted cash flow model to estimate the fair value of certain loans that have been transferred from held for sale to held for investment and single family LHFS when the fair value of the loans is not derived using observable market inputs. The key assumption in the valuation model is the implied spread to benchmark interest rate curve. The implied spread is not directly observable in the market and is derived from third party pricing which is based on market information from comparable loan pools. The fair value estimate of single family loans that have been transferred from held for sale to held for investment are sensitive to changes in the benchmark interest rate which might result in a significantly higher or lower fair value measurement.

The Company transferred certain loans from held for sale to held for investment. These loans were originated as held for sale loans where the Company had elected fair value option. The Company determined these loans to be level 3 recurring assets as the valuation technique included a significant unobservable input. The total amount of held for investment loans where fair value option election was made was ~~$5.2 million and $5.9~~$1.3 million at both March 31, ~~2023~~2024 and December 31, ~~2022, respectively.~~2023.

The following information presents significant Level 3 unobservable inputs used to measure fair value of certain assets:


(dollars in thousands)	(dollars in thousands)	Fair Value		Valuation Technique		Significant Unobservable Input	Low	High	Weighted Average
(dollars in thousands)
(dollars in thousands)												Fair Value			Valuation Technique		Significant Unobservable Input		Low		High				Weighted Average

March 31, 2023
March 31, 2024
March 31, 2024
March 31, 2024
Investment securities AFS
Investment securities AFS
Investment securities AFS	Investment securities AFS	$	2,030	Income approach		Implied spread to benchmark interest rate curve	2.00%	2.00%	2.00%	$	1,791		Income approach		Income approach		Implied spread to benchmark interest rate curve							2.25%
Single family LHFI	Single family LHFI	5,231		Income approach		Implied spread to benchmark interest rate curve	3.18%	5.44%	4.02%	Single family LHFI		1,285		Income approach		Income approach		Implied spread to benchmark interest rate curve		3.97%			5.36%				4.44%
Interest rate lock commitments, net	Interest rate lock commitments, net	362		Income approach		Fall-out factor	0.07%	22.60%	9.07%	Interest rate lock commitments, net		336		Income approach		Income approach		Fall-out factor		0.07%			30.20%				8.48%
						Value of servicing	0.59%	1.19%	0.88%
December 31, 2022
					Value of servicing																	Value of servicing				0.15%		0.93%	0.62%
December 31, 2023
Investment securities AFS
Investment securities AFS
Investment securities AFS	Investment securities AFS	$	2,009	Income approach		Implied spread to benchmark interest rate curve	2.00%	2.00%	2.00%	$	1,860		Income approach		Income approach		Implied spread to benchmark interest rate curve							2.25%
Single family LHFI	Single family LHFI	5,868		Income approach		Implied spread to benchmark interest rate curve	2.87%	5.15%	4.14%	Single family LHFI		1,280		Income approach		Income approach		Implied spread to benchmark interest rate curve		3.30%			5.04%				3.94%
Interest rate lock commitments, net	Interest rate lock commitments, net	105		Income approach		Fall-out factor	0.10%	17.50%	6.43%	Interest rate lock commitments, net		411		Income approach		Income approach		Fall-out factor		0.81%			41.64%				10.54%
						Value of servicing	0.54%	1.11%	0.95%
					Value of servicing																	Value of servicing				0.32%		0.80%	0.57%

We had no LHFS where the fair value was not derived with significant observable inputs at March 31, ~~2023~~2024 and December 31, ~~2022.~~2023.

The following table presents fair value changes and activity for certain Level 3 assets for the periods indicated:


(in thousands)	(in thousands)	Beginning balance		Additions		Transfers		Payoffs/Sales		Change in mark to market (1)		Ending balance
(in thousands)
(in thousands)														Beginning balance	Additions	Transfers	Payoffs/Sales	Change in mark to market (1)	Ending balance

Quarter Ended March 31, 2024
Quarter Ended March 31, 2024
Quarter Ended March 31, 2024
Investment securities AFS
Investment securities AFS
Investment securities AFS
Single family LHFI
Quarter Ended March 31, 2023	Quarter Ended March 31, 2023
Investment securities AFS	Investment securities AFS	$	2,009	$	—	$	—	$	(48)	$	69	$	2,030
Single family LHFI		5,868		—		—		(682)		45		5,231
Quarter Ended March 31, 2022
Investment securities AFS
Investment securities AFS	Investment securities AFS	$	2,482	$	—	$	—	$	(48)	$	(127)	$	2,307
Single family LHFI	Single family LHFI	7,287		—		—		—		(306)		6,981

(1) Changes in fair value for single LHFI are recorded in other noninterest income on the consolidated income statements.

The following table presents fair value changes and activity for Level 3 interest rate lock commitments:

Quarter Ended March 31,

(in thousands)

2023

2022

Beginning balance, net

105

2,484

Beginning balance, net

Total realized/unrealized gains (losses)

919

(2,177)

Settlements

(662)

(229)

Settlements

Ending balance, net

362

Ending balance, net

Nonrecurring Fair Value Measurements

Certain assets held by the Company are not included in the tables above, but are measured at fair value on a periodic basis. These assets include certain LHFI and OREO that are carried at the lower of cost or fair value of the underlying collateral, less the estimated costs to sell. The estimated fair values of real estate collateral are generally based on internal evaluations and appraisals of such collateral, which use the market approach and income approach methodologies. We have omitted disclosure related to quantitative inputs given the insignificance of assets measured on a nonrecurring basis.

The fair value of commercial properties is generally based on third-party appraisals that consider recent sales of comparable properties, including their income-generating characteristics, adjusted (generally based on unobservable inputs) to reflect the general assumptions that a market participant would make when analyzing the property for purchase. The Company uses a fair value of collateral technique to apply adjustments to the appraisal value of certain commercial LHFI that are collateralized by real estate.

The Company uses a fair value of collateral technique to apply adjustments to the stated value of certain commercial LHFI that are not collateralized by real estate and to the appraisal value of OREO.

Residential properties are generally based on unadjusted third-party appraisals. Factors considered in determining the fair value include geographic sales trends, the value of comparable surrounding properties as well as the condition of the property.

These adjustments include management assumptions that are based on the type of collateral dependent loan and may increase or decrease an appraised value. Management adjustments vary significantly depending on the location, physical characteristics and income producing potential of each individual property. The quality and volume of market information available at the time of the appraisal can vary from period-to-period and cause significant changes to the nature and magnitude of the unobservable inputs used. Given these variations, changes in these unobservable inputs are generally not a reliable indicator for how fair value will increase or decrease from period to period.

The following table presents assets classified as Level 3 that had changes in their recorded fair value for the periods indicated and what we still held at the end of the respective reporting period:

(in thousands)

Fair Value

Total Gains (Losses)

(in thousands)

Fair Value

Total Gains (Losses)

At or for the Quarter Ended March 31, 2024

LHFI (1)

At or for the Quarter Ended March 31, 2023

LHFI (1)

3,793

(159)

At or for the Quarter Ended March 31, 2022

LHFI (1)

904

LHFI (1)

(1) Represents the carrying value of loans for which adjustments are based on the fair value of the collateral.

Fair Value of Financial Instruments

The following presents the carrying value, estimated fair value and the levels of the fair value hierarchy for the Company's financial instruments other than assets and liabilities measured at fair value on a recurring basis:

At March 31, 2023
(in thousands) Carrying
Value Fair
Value Level 1 Level 2 Level 3
Assets:
Cash and cash equivalents $ 377,031 $ 377,031 $ 377,031 $ — $ —
Investment securities HTM 2,423 2,387 — 2,387 —
LHFI 7,439,651 7,150,665 — — 7,150,665
LHFS – multifamily and other 1,563 1,563 — 1,563 —
Mortgage servicing rights – multifamily and SBA 33,839 38,629 — — 38,629
Federal Home Loan Bank stock 73,191 73,191 — 73,191 —
Other assets - GNMA EBO loans 5,682 5,682 — — 5,682
Liabilities:
Certificates of deposit $ 2,660,243 $ 2,634,872 $ — $ 2,634,872 $ —
Borrowings 1,878,000 1,881,721 1,881,721
Long-term debt 224,492 200,770 — 200,770 —


	At March 31, 2024
(in thousands)	Carrying Value		Fair Value		Level 1		Level 2		Level 3

Assets:
Cash and cash equivalents	$	320,327	$	320,327	$	320,327	$	—	$	—
Investment securities HTM	2,354		2,305		—		2,305		—
LHFI	7,403,767		6,970,457		—		—		6,970,457

LHFS – multifamily and other	2,079		2,079		—		2,079		—
Mortgage servicing rights – multifamily and SBA	28,863		34,303		—		—		34,303
Federal Home Loan Bank stock	73,722		73,722		—		73,722		—
Other assets - GNMA EBO loans	5,940		5,940		—		—		5,940
Liabilities:
Certificates of deposit	$	3,056,518	$	3,046,367	$	—	$	3,046,367	$	—



Borrowings	2,094,000		2,089,853				2,089,853
Long-term debt	224,857		175,314		—		175,314		—


		At December 31, 2022											At December 31, 2023
(in thousands)	(in thousands)	Carrying Value		Fair Value		Level 1		Level 2		Level 3		(in thousands)	Carrying Value	Fair Value	Level 1	Level 2	Level 3

Assets:	Assets:
Assets:
Assets:
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents	Cash and cash equivalents	$	72,828	$	72,828	$	72,828	$	—	$	—
Investment securities HTM	Investment securities HTM	2,441		2,385		—		2,385		—
LHFI	LHFI	7,378,952		6,988,363		—		—		6,988,363

LHFS – multifamily and other
LHFS – multifamily and other
LHFS – multifamily and other	LHFS – multifamily and other	3,252		3,291		—		3,291		—
Mortgage servicing rights – multifamily and SBA	Mortgage servicing rights – multifamily and SBA	35,256		39,792		—		—		39,792
Federal Home Loan Bank stock	Federal Home Loan Bank stock	49,305		49,305		—		49,305		—
Other assets-GNMA EBO loans	Other assets-GNMA EBO loans	6,918		6,918		—		—		6,918
Liabilities:	Liabilities:
Certificates of deposit	Certificates of deposit	$	2,943,331	$	2,910,301	$	—	$	2,910,301	$	—
Certificates of deposit
Certificates of deposit
Borrowings	Borrowings	1,016,000		1,014,973		—		1,014,973		—
Long-term debt	Long-term debt	224,404		202,338		—		202,338		—

Fair Value Option

Single family loans held for sale accounted under the fair value option are measured initially at fair value with subsequent changes in fair value recognized in earnings. Gains and losses from such changes in fair value are recognized in net gain on mortgage loan origination and sale activities within noninterest income. The change in fair value of loans held for sale is

primarily driven by changes in interest rates subsequent to loan funding and changes in fair value of the related servicing asset, resulting in ~~revaluations~~revaluation adjustments to the recorded fair value. The use of the fair value option allows the change in the fair value of loans to more effectively offset the change in fair value of derivative instruments that are used as economic hedges of loans held for sale.

The following table presents the difference between the aggregate fair value and the aggregate unpaid principal balance of loans held for sale accounted for under the fair value option:

At March 31, 2023

At December 31, 2022

At March 31, 2024

At December 31, 2023

(in thousands)

Fair Value

Aggregate Unpaid Principal Balance

Fair Value Less Aggregated Unpaid Principal Balance

Fair Value

Aggregate Unpaid Principal Balance

Fair Value Less Aggregated Unpaid Principal Balance

(in thousands)

Fair Value

Aggregate Unpaid Principal Balance

Fair Value Less Aggregated Unpaid Principal Balance

Fair Value

Aggregate Unpaid Principal Balance

Fair Value Less Aggregated Unpaid Principal Balance

Single family LHFS

22,690

22,243

447

14,075

13,914

161

Single family LHFS

NOTE 10–~~BORROWINGS:~~

During the first quarter of 2023, the Company borrowed $300 million from the Federal Reserve Bank (“FRB”) under the Bank Term Funding Program (“BTFP”). The BTFP offers up to one year fixed-rate term borrowings that are prepayable without penalty.COMMITMENTS AND CONTINGENCIES:

~~The balances, maturity and rate~~As of ~~the outstanding borrowings from~~March 31, 2024, HomeStreet was obligated on a $135 million letter of credit to the FHLB ~~and the FRB BTFP were~~which is being used as ~~follows at March 31, 2023:~~

(dollars in thousands) Amount Weighted Average Rate
Within one year $ 878,000 4.84 %
One to three years 450,000 4.56 %
Three through five years 550,000 4.35 %
Total $ 1,878,000 4.63 %

collateral for public fund deposits.

NOTE 11–SUBSEQUENT EVENTS:

On April ~~24, 2023,~~30, 2024, the ~~Board authorized~~Company entered into Amendment No. 1 to the previously announced definitive merger agreement with FirstSun Capital Bancorp (“FirstSun”), the holding company of Sunflower Bank, N.A ("Sunflower Bank"), and Dynamis Subsidiary, Inc., whereby, under the merger agreement, as amended, the Company and the Bank will merge with and into FirstSun and Sunflower Bank, respectively (collectively, the "Merger"). Subject to terms and conditions of the merger agreement, as amended, the companies will combine in an all-stock transaction in which HomeStreet shareholders will receive 0.3867 of a ~~dividend~~share of ~~$0.10 per~~FirstSun common stock for each share ~~payable on May 24, 2023~~of HomeStreet common stock. The parties to the Merger expect to complete the Merger in late 2024, subject to the satisfaction of closing conditions, including receipt of customary required regulatory approvals, the approval of the merger agreement by HomeStreet shareholders and satisfaction or waiver of ~~record on May 10, 2023.~~

other closing conditions.

3740

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

Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Consolidated Financial Statements and Notes presented elsewhere in this report and in HomeStreet, Inc.'s ~~2022~~ Annual Report on Form ~~10-K.~~10-K for the year ended December 31, 2023 ("2023Annual Report on Form 10-K").

FORWARD-LOOKING STATEMENTS

~~Statements contained in this~~This Quarterly Report on Form 10-Q that are not historical facts or that discuss our expectations, beliefs or views regarding our future operations or future financial performance, or financial or other trends in our business or in the markets in which we operate, long-term value creation, capital management, reduction in volatility, reliability of earnings, net interest margins, provisions and allowances for credit losses, cost reduction initiatives, and restructuring activities constitutecontains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of ~~1995.~~

~~Many~~1995 (the “Reform Act”). Generally, forward-looking statements ~~can be identified as using~~include the words ~~such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "potential," "should," "will"~~“anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “should,” “will,” and ~~"would"~~“would” and similar expressions (or the negative of these terms). Forward-looking statements in this Form 10-Q also include statements regarding the expected timing to close the proposed merger of HomeStreet into FirstSun Capital Bancorp (“FirstSun”) and HomeStreet Bank into Sunflower Bank, N.A., a subsidiary of FirstSun (collectively, the “Merger”) and expectations regarding dividend payments in 2024. Such statements involve inherent risks, uncertainties and ~~uncertainties,~~other factors, many of which are difficult to predict and are generally beyond ~~the~~ control of the Company and are subject to risks and uncertainties, including, but not limited to, those discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and the risks and uncertainties discussed below and elsewhere in this Quarterly Report on Form 10-Q that could cause actual results to differ significantly from those projected.

~~Although we believe that expectations reflected in the forward-looking~~HomeStreet Inc. (the "Company"). Forward-looking statements are ~~reasonable, we cannot guarantee~~based on the Company’s expectations at the time such statements are made and speak only as of the date made, they are not guarantees of future ~~results, levels of activity, performance~~performance. The Company does not assume any obligation or ~~achievements. We~~ undertake ~~no obligation, and expressly disclaim any such obligation~~ to update ~~or clarify~~ any ~~of the~~ forward-looking statements after the date of this ~~Quarterly Report on Form 10-Q to reflect changed assumptions, the occurrence~~report as a result of ~~anticipated or unanticipated events,~~ new information, future events or ~~changes to future results over time or otherwise,~~developments, except as required by ~~law. Readers are cautioned~~federal securities or other applicable laws, although the Company may do so from time to time. The Company does not ~~to place undue reliance on these~~endorse any projections regarding future performance that may be made by third parties. For all forward-looking statements, ~~which apply only~~the Company claims the protection of the safe harbor for forward-looking statements contained in the Reform Act.

We caution readers that actual results may differ materially from those expressed in or implied by the Company’s forward-looking statements. Rather, more important factors could affect the Company’s future results, including but not limited to the following:(1) our ability to successfully consummate the proposed Merger with FirstSun; (2) the ability of HomeStreet to obtain the necessary approval by shareholders with respect to the Merger; (3) the ability of HomeStreet and FirstSun to obtain required regulatory and governmental approvals of the Merger when expected or at all (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the Merger); (4) the failure to satisfy the closing conditions in the definitive Agreement and Plan of Merger (the “Merger Agreement”), dated as of January 16, 2024, as amended on April 30, 2024, by and between HomeStreet and FirstSun, or any unexpected delay in closing the ~~date~~Merger; (5) the ability to achieve expected cost savings, synergies and other financial benefits from the Merger within the expected time frames and costs or difficulties relating to integration matters being greater than expected; (6) the diversion of ~~this Quarterly~~management time from core banking functions due to Merger-related issues; (7) potential difficulty in maintaining relationships with customers, associates or business partners as a result of the announced Merger; (8) the ability of FirstSun to consummate their investment agreements to obtain the necessary capital to support the Merger; (9) the occurrence of any event, change or circumstance that could give rise to the right of one or both parties to terminate the Merger Agreement; (10) the outcome of any legal proceedings that have been or may be instituted against FirstSun or HomeStreet; (11) changes in the U.S. and global economies, including business disruptions, reductions in employment, inflationary pressures and an increase in business failures, specifically among our customers; (12) changes in the interest rate environment may reduce interest margins; (13) changes in deposit flows, loan demand or real estate values may adversely affect the business of our primary subsidiary, HomeStreet Bank (the “Bank”), through which substantially all of our operations are carried out; (14) there may be increases in competitive pressure among financial institutions or from non-financial institutions; (15) our ability to attract and retain key members of our senior management team; (16) the timing and occurrence or non-occurrence of events may be subject to circumstances beyond our control; (17) our ability to control operating costs and expenses; (18) our credit quality and the effect of credit quality on our credit losses expense and allowance for credit losses; (19) the adequacy of our allowance for credit losses; (20) changes in accounting principles, policies or guidelines may cause our financial condition to be perceived or interpreted differently; (21) legislative or regulatory changes that may adversely affect our business or financial condition, including, without limitation, changes in corporate and/or individual income tax laws and policies, changes in privacy laws, and changes in regulatory capital or other rules, and the availability of resources to address or respond to such changes; (22) general economic conditions, either nationally or locally in some or all areas in which we conduct business, or conditions in the securities markets or banking industry, may be less favorable than what we currently anticipate; (23) challenges our customers may face in meeting current underwriting standards may adversely impact all or a substantial portion of the value of our rate-lock loan activity we recognize; (24) technological changes may be more difficult or expensive than what we anticipate; (25) a failure in or breach of our operational or security systems or information technology infrastructure, or those of our third-party providers and vendors, including due to cyber-attacks; (26) success or consummation of new business initiatives may be more difficult or expensive than what we anticipate; (27) our ability to grow efficiently both organically and through acquisitions and to manage our growth and integration costs; (28) staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our work force and potential associated charges; (29) litigation, investigations or other matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-

occurrence of events longer than what we anticipate; and (30) our ability to obtain regulatory approvals or non-objection to take various capital actions, including the payment of dividends by us or the Bank, or repurchases of our common stock. A discussion of the factors, risks and uncertainties that could affect our financial results, business goals and operational and financial objectives discussed in our 2023 annual report on Form 10-K or in our releases, public statements and/or filings with the Securities and Exchange Commission (“SEC”) is also contained in the “Risk Factors” section of our 2023 Annual Report on Form ~~10-Q.~~10-K. We strongly recommend readers review those disclosures in conjunction with the discussions herein.

~~Except as otherwise noted, references~~All future written and oral forward-looking statements attributable to ~~"we," "our," "us"~~the Company or ~~"the Company" refer~~any person acting on its behalf are expressly qualified in their entirety by the cautionary statements contained or referred to ~~HomeStreet, Inc.~~above. New risks and ~~its subsidiaries~~uncertainties arise from time to time, and factors that ~~are consolidated~~the Company currently deems immaterial may become material, and it is impossible for ~~financial reporting purposes. Statements of knowledge, intention~~the Company to predict these events or ~~belief reflect those characteristics of our executive management team based on current facts and circumstances.~~how they may affect the Company.

You may review a copy of this Quarterly Report on Form 10-Q, including exhibits and any schedule filed therewith on the SEC's website (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding registrants, such as HomeStreet, Inc., that file electronically with the SEC. Copies of our Securities Exchange Act reports are also available from our investor relations website, http://ir.homestreet.com. Information contained in or linked from our websites is not incorporated into and does not constitute a part of this report.

Critical Accounting Estimates

We have identified two estimates as being critical because they require management to make particularly difficult, subjective, and/or complex judgments about matters that are inherently uncertain and because of the likelihood that materially different amounts would be reported under different conditions or using different assumptions. These policies relate to the allowance for credit losses (“ACL”) and the valuation of single family mortgage servicing rights (“MSRs"). ~~Additionally, we identified goodwill as a critical accounting matter in light of recent trends in bank valuations.~~

The ACL is calculated based on quantitative and qualitative factors to estimate credit losses over the life of the loan. The inputs used to determine quantitative factors include estimates based on historical experience of probability of default and ~~losses~~loss given default. Inputs used to determine qualitative factors include changes in current portfolio characteristics and operating environments such as current and forecasted unemployment rates, capitalization rates used to value properties securing loans, rental rates and single family pricing indexes. Qualitative factors may also include adjustments to address matters not contemplated by the model and assumptions used to determine qualitative factors. Although we believe that our methodology for determining an appropriate level for the ACL adequately addresses the various components that could potentially result in credit losses, the processes and their elements include features that may be susceptible to significant change. Any unfavorable differences between the actual outcome of credit-related events and our estimates could require an additional provision for credit losses. For example, if the projected unemployment rate was downgraded one grade for all periods, the amount of the ACL at March 31, ~~2023~~2024 would increase by approximately $8 million. This sensitivity analysis is hypothetical and has been provided only to indicate the potential impact that changes in assumptions may have on the ACL estimate.

The valuation of MSRs is based on various assumptions which are set forth in Note 6–Mortgage Banking Operations of the financial statements. Note 6 also provides sensitivity analysis based on the assumptions used. The sensitivity analyses are hypothetical and have been provided to indicate the potential impact that changes in assumptions may have on the estimate of the fair value of MSRs.

The Company has goodwill on its books related to acquisitions it has completed, including the acquisition of the three southern California branches in the first quarter of 2023. Our goodwill is evaluated for impairment on an annual basis or more frequently if events or circumstances indicate that a potential impairment exists. Such evaluation may be based on a variety of factors, including the quoted price of our common stock, market prices of common stock of other banking organizations, common stock trading multiples and discounted cash flows analyses. Future evaluations of goodwill may result in impairment and ensuing write-downs, which could have an adverse effect on our financial condition, results of operations and capital position.

3941

Summary Financial Data

Quarter Ended

(in thousands, except per share data and FTE data)

March 31, 2023

December 31, 2022

March 31, 2022

(in thousands, except per share data and FTE data)

Select Income Statement data:

Net interest income

49,376

55,687

54,546

Net interest income

Provision for credit losses

593

3,798

(9,000)

Noninterest income

10,190

9,677

15,558

Noninterest income

Noninterest expense

52,491

50,420

54,473

Net income:

Before income taxes

6,482

11,146

24,631

Noninterest expense

Income (loss) before income taxes

Net income (loss)

Net income (loss) per fully diluted share

Core net income (loss): (1)

Total

5,058

8,501

19,951

Net income per share - diluted

0.27

0.45

1.01

Total

Core net income (loss) per fully diluted share

Select Performance Ratios:

Return on average equity - annualized

3.5

6.0

11.6

Return on average equity - annualized

Return on average tangible equity - annualized (1)

4.1

6.4

12.2

Return on average assets - annualized

0.22

0.36

1.10

Return on average assets - annualized

Net income (loss)

Core (1)

Efficiency ratio (1)

87.2

76.2

77.0

Net interest margin

2.23

2.53

3.29

Net interest margin

Other data

Full time equivalent employees

920

913

962

Full time equivalent employees

(1)~~Return~~Core net income (loss), core net income (loss) per fully diluted share, return on average tangible equity, core return on average assets and the efficiency ratio are non-GAAP financial measures. measures. For a reconciliation of ~~return on average tangible equity~~these measures to the nearest comparable GAAP financial measure ~~and~~or the computation of the ~~efficiency ratio,~~measure see “Non-GAAP Financial Measures” elsewhere in this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

4042


		As of								As of
(in thousands, except share and per share data)	(in thousands, except share and per share data)	March 31, 2023			December 31, 2022			(in thousands, except share and per share data)		March 31, 2024			December 31, 2023

Selected Balance Sheet Data	Selected Balance Sheet Data
Selected Balance Sheet Data
Selected Balance Sheet Data
Loans held for sale
Loans held for sale
Loans held for sale	Loans held for sale	$	24,253		$	17,327
Loans held for investment, net	Loans held for investment, net	7,444,882			7,384,820
ACL	ACL	41,500			41,500
Investment securities	Investment securities	1,477,004			1,400,212
Total assets	Total assets	9,858,889			9,364,760
Deposits	Deposits	7,056,603			7,451,919
Borrowings	Borrowings	1,878,000			1,016,000
Long-term debt	Long-term debt	224,492			224,404
Total shareholders' equity	Total shareholders' equity	574,994			562,147
Other data:	Other data:
Book value per share	Book value per share	$	30.64		$	30.01
Book value per share
Book value per share
Tangible book value per share (1)	Tangible book value per share (1)	$	27.87		$	28.41
Total equity to total assets	Total equity to total assets	5.8		%	6.0		%	Total equity to total assets		5.6	%		5.7	%
Tangible common equity to tangible assets (1)	Tangible common equity to tangible assets (1)	5.3		%	5.7		%	Tangible common equity to tangible assets (1)		5.5	%		5.6	%
Shares outstanding at period end		18,767,811			18,730,380
Loans to deposit ratio		106.4		%	99.9		%
Shares outstanding at end of period
Loans to deposit ratio (Bank)								Loans to deposit ratio (Bank)		114.3	%		109.4	%

Credit Quality:	Credit Quality:
Credit Quality:
Credit Quality:
ACL to total loans (2)
ACL to total loans (2)
ACL to total loans (2)	ACL to total loans (2)	0.56		%	0.57		%		0.54	%		0.55	%
ACL to nonaccrual loans	ACL to nonaccrual loans	318.1		%	412.7		%	ACL to nonaccrual loans		80.2	%		103.9	%
Nonaccrual loans to total loans	Nonaccrual loans to total loans	0.17		%	0.14		%	Nonaccrual loans to total loans		0.66	%		0.53	%
Nonperforming assets to total assets	Nonperforming assets to total assets	0.15		%	0.13		%	Nonperforming assets to total assets		0.56	%		0.45	%
Nonperforming assets	Nonperforming assets	$	14,886		$	11,893
Regulatory Capital Ratios:	Regulatory Capital Ratios:
Bank	Bank
Tier 1 leverage ratio		8.47		%	8.63		%
Bank
Bank
Tier 1 leverage
Tier 1 leverage
Tier 1 leverage										8.34	%		8.50	%
Total risk-based capital	Total risk-based capital	12.37		%	12.59		%	Total risk-based capital		13.34	%		13.49	%
Common equity Tier 1 capital								Common equity Tier 1 capital		12.67	%		12.79	%
Company	Company
Tier 1 leverage ratio		6.92		%	7.25		%
Tier 1 leverage
Tier 1 leverage
Tier 1 leverage										6.90	%		7.04	%
Total risk-based capital	Total risk-based capital	11.16		%	11.53		%	Total risk-based capital		12.70	%		12.84	%
Common equity Tier 1 capital								Common equity Tier 1 capital		9.55	%		9.66	%

(1)Tangible book value per share and tangible common equity to tangible assets are non-GAAP financial measures. For a reconciliation of this measure to the nearest comparable GAAP financial measure, see “Non-GAAP Financial Measures” elsewhere in this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(2) This ratio excludes balances insured by the FHA or guaranteed by the VA or SBA.

4143

Current Developments

~~Our financial results continue~~Proposed Merger Transaction

On January 16, 2024, the Company entered into a definitive merger agreement (as amended on April 30, 2024, the “merger agreement”) with FirstSun, the holding company of Sunflower Bank and Dynamis Subsidiary, Inc., whereby, under the merger agreement, the Company and the Bank will merge with and into FirstSun and Sunflower Bank, respectively. The agreement was amended on April 30, 2024, and subject to ~~be adversely impacted~~the terms and conditions of the merger agreement, the companies will combine in an all-stock transaction in which HomeStreet shareholders will receive 0.3867 of a share of FirstSun common stock for each share of HomeStreet common stock. The parties to the Merger expect to complete the Merger in late 2024, subject to the satisfaction of closing conditions, including receipt of customary required regulatory approvals, the approval of the merger agreement by ~~increases in short-term interest rates. We have continued to raise new deposits through promotional certificates~~HomeStreet shareholders and satisfaction or waiver of ~~deposit~~other closing conditions.

Economic and have reduced new loan originations. Additionally, we have focused our new loan origination activity primarily on floating rate products such as commercial loans, residential construction loans and home equity loans.Market Conditions

Our ~~net~~financial results have been adversely impacted by the historically significant increase in short-term interest ~~margin decreased~~rates by the Federal Reserve during 2022 and 2023. This dramatic increase in ~~the first quarter due~~rates resulted in significant reductions in loan demand, particularly in single family mortgage. Accordingly, our gain on loan sales activities declined significantly and are expected to ~~decreases~~remain at low levels in ~~lower cost transaction and savings~~2024. Additionally, our interest sensitive deposits ~~and overall higher funding costs. We expect continued decreases in lower cost deposit accounts~~declined as ~~these accounts migrate~~customers moved funds to higher yielding ~~alternatives, including~~products both at our Bank and at other financial institutions and brokerage firms. We have taken a number of steps to reduce the pressure on our funding base, including: (i) significantly reducing our level of loan originations; and (ii) introducing promotional ~~accounts offered~~priced deposit products which allow us to attract and retain deposits without repricing our existing interest-bearing deposit base. Inflationary pressures have adversely impacted our operations by ~~us. We~~increasing our costs, primarily compensation costs which we expect to ~~replace this migration with~~be higher ~~cost promotional deposit accounts or wholesale funding alternatives. As~~in 2024.

Due to the impacts of the significant increases in short term rates by the Federal Reserve in 2023, and as a result of our actions taken to address the impact of these increases, we ~~anticipate these funding cost pressures~~expect the balance of our loans held for investment to ~~continue in the near term, we expect~~stay relatively stable during 2024 and our net interest margin to ~~decline for the remainder of~~be lower in 2024 as compared to 2023.

On February 10, 2023, we closed our purchase of three branches in southern California, whereby we acquired $373 million in deposits and $21 million in loans and recorded $11 million of core deposit intangibles and $12 million of goodwill. The deposit balances in these branches at the end of March 2023 totaled $322 million.

Management's Overview of the First Quarter ~~2023~~2024 Financial Performance

First Quarter of ~~2023~~2024 Compared to the Fourth Quarter of ~~2022~~2023

General: Our net ~~income~~loss and loss before income ~~before~~ taxes were ~~$5.1~~$(7.5) million and ~~$6.5~~$(10.6) million, respectively, in the first quarter of ~~2023,~~2024, as compared to ~~$8.5~~$(3.4) million and ~~$11.1~~$(4.0) million, respectively, in the fourth quarter of ~~2022.~~2023. The ~~$4.7~~$6.5 million ~~decrease~~increase in loss before income ~~before~~ taxes was due to lower net interest income, lower noninterest income and ~~higher~~an increase in noninterest expense which was partially offset by a lower provision for credit ~~losses and higher noninterest income.~~losses.

Income Taxes: ~~Our effective~~The income tax ~~rate was 22.0%~~benefit realized in the first quarter of ~~2023~~2024 resulted in an effective tax rate of 29.0% as compared to ~~23.7%~~an effective tax rate of 14.8% in the fourth quarter of ~~2022 and a statutory rate of 24.4%.~~2023. Our effective tax ~~rates were lower than our statutory~~ rate ~~due primarily to the benefits of tax advantaged investments. Additionally, because the benefits of our tax advantaged investments were larger in relation to our income before taxes~~ in the first quarter of ~~2023 as compared~~2024 was higher than our statutory rate of 24.6% due to the impact of tax advantaged investments which creates a higher benefit due to our loss. Our effective tax rate of 14.8% in the fourth quarter of ~~2022, our effective~~2023 was significantly impacted by the goodwill impairment charge taken in 2023, a portion of which was not deductible for tax ~~rate~~purposes, the effect of which was ~~lower in the first quarter~~partially offset by benefits of ~~2023.~~

tax advantaged investments.

4244

Net Interest Income: The following tables set forth, for the periods indicated, information regarding (i) the total dollar amount of interest income from interest-earning assets and the resultant average yields on those assets; (ii) the total dollar amount of interest expense and the average rate of interest on our interest-bearing liabilities; (iii) net interest income; (iv) net interest rate spread; and (v) net interest margin:


		Quarter Ended
	Quarter Ended																																				Quarter Ended
		March 31, 2023						December 31, 2022								March 31, 2024													December 31, 2023
(in thousands)	(in thousands)	Average Balance		Interest		Average Yield/Cost		Average Balance		Interest		Average Yield/Cost		(in thousands)		Average Balance					Interest					Average Yield/Cost							Average Balance					Interest			Average Yield/Cost

Assets:	Assets:
Assets:
Assets:
Interest-earning assets:	Interest-earning assets:
Interest-earning assets:
Interest-earning assets:
Loans (1)
Loans (1)
Loans (1)	Loans (1)	$	7,471,456	$	82,790	4.44	%	$	7,368,097	$	81,007	4.32	%	$	7,460,650		$		$	86,427			4.60		4.60		%					$	7,465,375		$		$	87,193	4.60		4.60	%
Investment securities (1)	Investment securities (1)	1,452,137		13,733		3.78	%	1,362,861		12,597		3.70	%	Investment securities (1)		1,239,093		11,627				11,627		3.75				3.75		%				1,278,344		12,591			12,591	3.94			3.94	%
FHLB Stock, Fed Funds and other	FHLB Stock, Fed Funds and other	126,891		1,750		5.59	%	159,263		1,967		4.88	%	FHLB Stock, Fed Funds and other		388,462		5,571				5,571		5.76				5.76		%				179,619		2,603			2,603	5.72			5.72	%
Total interest-earning assets	Total interest-earning assets	9,050,484		98,273		4.35	%	8,890,221		95,571		4.24	%	Total interest-earning assets		9,088,205		103,625				103,625		4.54				4.54		%				8,923,338		102,387			102,387	4.52			4.52	%
Noninterest-earning assets	Noninterest-earning assets	480,221						458,175
Total assets	Total assets	$	9,530,705					$	9,348,396
Total assets
Total assets
Liabilities and shareholders' equity:
Liabilities and shareholders' equity:
Liabilities and shareholders' equity:	Liabilities and shareholders' equity:
Interest-bearing deposits: (2)	Interest-bearing deposits: (2)
Interest-bearing deposits: (2)
Interest-bearing deposits: (2)
Demand deposits
Demand deposits
Demand deposits	Demand deposits	$	430,268	$	299	0.28	%	$	475,336	$	238	0.20	%	$	324,210		$		$	170			0.21		0.21		%					$	341,697		$		$	185	0.22		0.22	%
Money market and savings	Money market and savings	2,555,512		7,353		1.16	%	2,740,808		6,832		0.98	%	Money market and savings		1,840,023		7,380				7,380		1.60				1.60		%				1,981,308		7,797			7,797	1.55			1.55	%
Certificates of deposit	Certificates of deposit	2,715,921		21,718		3.24	%	2,010,895		11,445		2.26	%	Certificates of deposit		3,068,404		35,057				35,057		4.60				4.60		%				2,864,237		31,335			31,335	4.34			4.34	%
Total	Total	5,701,701		29,370		2.09	%	5,227,039		18,515		1.40	%	Total		5,232,637		42,607				42,607		3.27				3.27		%				5,187,242		39,317			39,317	3.00			3.00	%
Borrowings:	Borrowings:
Borrowings	Borrowings	1,342,347		15,340		4.57	%	1,717,042		17,163		3.93	%
Borrowings
Borrowings																2,074,527					24,676					4.73		%					1,975,536					23,845			4.74	%
Long-term debt	Long-term debt	224,435		2,965		5.28	%	224,345		2,801		4.96	%	Long-term debt		224,812		3,107				3,107		5.51				5.51		%				224,722		3,128			3,128	5.52			5.52	%
Total interest-bearing liabilities	Total interest-bearing liabilities	7,268,483		47,675		2.64	%	7,168,426		38,479		2.12	%	Total interest-bearing liabilities		7,531,976		70,390				70,390		3.74				3.74		%				7,387,500		66,290			66,290	3.55			3.55	%
Noninterest-bearing liabilities:	Noninterest-bearing liabilities:
Demand deposits (2)	Demand deposits (2)	1,511,437						1,510,744
Demand deposits (2)
Demand deposits (2)
Other liabilities
Other liabilities
Other liabilities	Other liabilities	172,252						103,276
Total liabilities	Total liabilities	8,952,172						8,782,446
Total liabilities
Total liabilities
Shareholders' equity
Shareholders' equity
Shareholders' equity	Shareholders' equity	578,533						565,950
Total liabilities and shareholders' equity	Total liabilities and shareholders' equity	$	9,530,705					$	9,348,396
Total liabilities and shareholders' equity
Total liabilities and shareholders' equity
Net interest income
Net interest income
Net interest income	Net interest income			$	50,598					$	57,092
Net interest rate spread	Net interest rate spread					1.71	%					2.12	%
Net interest rate spread
Net interest rate spread																															0.80	%													0.98	%
Net interest margin	Net interest margin					2.23	%					2.53	%	Net interest margin																	1.44	%													1.59	%

(1) Includes taxable-equivalent adjustments primarily related to tax-exempt income on certain loans and securities of ~~$1.2 million and $1.4~~$1.1 million for ~~the quarter~~both quarters ended March 31, ~~2023~~2024 and December 31, ~~2022, respectively.~~2023. The estimated federal statutory tax rate was 21% for the periods presented.

(2) Cost of all deposits, including noninterest-bearing demand deposits was ~~1.65%~~2.61% and ~~1.09%~~2.39% for the ~~quarter~~quarters ended March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, respectively.

~~Net~~Our net interest income ~~was $6.3 million lower~~ in the first quarter of ~~2023 as compared to~~2024 was $2.8 million lower than the fourth quarter of ~~2022 primarily~~2023 due to a decrease in our net interest margin from ~~2.53%~~1.59% to ~~2.23%~~1.44%. The decrease in our net interest margin was due to a 5219 basis point increase in the cost of interest-bearing liabilities which was ~~partially offset by~~due primarily to a 1122 basis point increase in the ~~yield on interest-earning assets. Yields on interest-earning assets increased as the yields on loan originations during the first quarter were higher than the rates~~cost of ~~our existing portfolio of loans and yields on adjustable rate loans increased due to increases in the indexes on which their pricing is based.~~deposits. The increase in the rates paid on ~~our interest-bearing liabilities~~deposits was due to the migration of noninterest-bearing and lower cost interest-bearing accounts to higher cost certificates of deposit ~~costs~~ and higher borrowing costs. Our cost of borrowings increased 64 basis points during the first quarter and our cost of deposits increased 56 basis points. The increases in yields on interest-earning assets and the rates paid on interest-bearing liabilities were due to the significant increases inmoney market ~~interest rates during 2022 and the first quarter of 2023.~~accounts.

Provision for Credit Losses: ~~A $0.6 million~~There was no provision for credit losses ~~was recorded~~recognized during the first quarter of ~~2023~~2024 as compared to a ~~$3.8~~$0.4 million provision for credit losses in the fourth quarter of 2022. The provision for the first quarter of 2023 was to offset the net charge-offs realized as the overall LHFI portfolio balances only increased $60 million. The provision in the fourth quarter of ~~2022 was due to~~2023. These low levels of provisions for credit losses reflect the ~~growth~~stable balance of our loan portfolio, a minimal level of identified credit issues in our loan portfolio and ~~a $2.2 million increase in our collateral qualitative factor related to projected declines~~the lack of significant expected credit issues arising in future ~~home prices.~~periods.

Noninterest Income consisted of the following:

Quarter Ended

(in thousands)

March 31, 2023

December 31, 2022

(in thousands)

Noninterest income

Gain on loan origination and sale activities (1)

Single family

2,218

1,158

CRE, multifamily and SBA

192

330

CRE, multifamily and SBA

Loan servicing income

3,039

2,682

Deposit fees

2,658

2,359

Deposit fees

Other

2,083

3,148

Total noninterest income

10,190

9,677

Total noninterest income

(1) May include loans originated as held for investment.

Loan servicing income, a component of noninterest income, consisted of the following:

Quarter Ended

(in thousands)

March 31, 2023

December 31, 2022

(in thousands)

Single family servicing income, net

Servicing fees and other

3,923

3,928

Servicing fees and other

Changes - amortization (1)

(1,684)

(1,899)

Net

2,239

2,029

Net

Risk management, single family MSRs:

Changes in fair value due to assumptions (2)

(311)

124

Net gain (loss) from economic hedging

(81)

(309)

Changes in fair value due to assumptions (2)

Net gain (loss) from economic hedging (3)

Subtotal

(392)

(185)

Single Family servicing income (loss)

1,847

1,844

Subtotal

Single Family servicing income

Commercial loan servicing income:

Servicing fees and other

2,746

2,653

Servicing fees and other

Amortization of capitalized MSRs

(1,554)

(1,815)

Total

1,192

838

Total

Total loan servicing income

3,039

2,682

Total loan servicing income

(1)Represents changes due to collection/realization of expected cash flows and curtailments.

(2)Principally reflects changes in model assumptions, including prepayment speed assumptions, which are primarily affected by changes in mortgage interest rates.

(3)The interest income from US Treasury notes securities used for hedging purposes, which is included in interest income on the consolidated income statements, was $0.3 million for both the quarters ended March 31, 2024 and December 31, 2023.

~~The increase in noninterest~~Noninterest income in the first quarter of ~~2023 as compared to~~2024 decreased from the fourth quarter of ~~2022 was~~2023 primarily ~~due to a $1.1 million increase in single family lending gain on sale activities~~ due to higher levels of ~~originations~~income realized in the fourth quarter of ~~loans held for sale.~~2023 from our investments in small business investment companies.

Noninterest Expense consisted of the following:

Quarter Ended

(in thousands)

March 31, 2023

December 31, 2022

(in thousands)

Noninterest expense

Compensation and benefits

29,253

25,970

Compensation and benefits

Information services

7,145

8,101

Occupancy

5,738

6,213

Occupancy

General, administrative and other

10,355

10,136

General, administrative and other

Total noninterest expense

52,491

50,420

Total noninterest expense

The ~~$2.1 million~~ increase in noninterest ~~expense~~expenses in the first quarter of ~~2023~~2024, as compared to the fourth quarter of ~~2022~~2023 was primarily due to seasonally higher compensation ~~and benefit~~ costs ~~partially offset by lower information services costs. The higher level of compensation and benefit costs was due to seasonally higher benefits costs, primarily employer taxes and 401(k) matches,~~ and a ~~reduction~~$1.1 million increase in deferred costs due to lower levels of loan production. The benefits of lower levels of staffing in our loan origination operations in the first quarter were offset by the impact of raises given during the first quarter and the employees added from the acquisition of the three branches in southern California. Information service costs decreased primarily due to the higher fourth quarter 2022 costs associated with replacement and maintenance of our automated teller machines.merger related expenses.

First Quarter of ~~2023~~2024 Compared to First Quarter of ~~2022~~2023

General: Our net income (loss) and income (loss) before income taxes were $(7.5) million and $(10.6) million, respectively, in the first quarter of 2024, as compared to $5.1 million and $6.5 million, respectively, in the first quarter of ~~2023,~~2023. Our core net income (loss) and core income (loss) before income taxes in the first quarter of 2024, which excludes the impact of merger related expenses, was $(5.5) million and $(8.0) million, as compared to ~~$20.0~~$5.1 million and ~~$24.6~~$6.5 million, respectively, in the first quarter of ~~2022.~~2023. The ~~$18.1~~$14.4 million decrease in core income before taxes was primarily due to a lower net interest income, partially offset by a lower provision for credit ~~losses and lower noninterest income, partially offset by lower noninterest expense.~~losses.

Income Taxes: The income tax benefit realized in the first quarter of 2024 resulted in an effective tax rate of 29.0% which was higher than our statutory rate of 24.6% due to the impact of tax advantaged investments which creates a higher benefit to our loss. Our effective tax rate ~~during~~in the first quarter of 2023 ~~was~~of 22.0% ~~as compared to 19.0% in the first quarter of 2022 and our statutory rate of 24.4%. Our effective tax rates were~~was lower than ~~our~~the statutory rate due to the benefits of tax advantaged investments. The first quarter of 2022 also benefited from reductions in taxes on income related to excess tax benefits resulting from the vesting of stock awards during the period. No such benefits were realized in the first quarter of 2023.


		Quarter Ended March 31,
	Quarter Ended March 31,																																				Quarter Ended March 31,
		2023						2022								2024													2023
(in thousands)	(in thousands)	Average Balance		Interest		Average Yield/Cost		Average Balance		Interest		Average Yield/Cost		(in thousands)		Average Balance					Interest					Average Yield/Cost							Average Balance					Interest			Average Yield/Cost

Assets:	Assets:
Assets:
Assets:
Interest-earning assets:	Interest-earning assets:
Interest-earning assets:
Interest-earning assets:
Loans (1)
Loans (1)
Loans (1)	Loans (1)	$	7,471,456	$	82,790	4.44	%	$	5,691,316	$	53,135	3.74	%	$	7,460,650		$		$	86,427			4.60		4.60		%					$	7,471,456		$		$	82,790	4.44		4.44	%
Investment securities (1)	Investment securities (1)	1,452,137		13,733		3.78	%	1,028,971		6,886		2.68	%	Investment securities (1)		1,239,093		11,627				11,627		3.75				3.75		%				1,452,137		13,733			13,733	3.78			3.78	%
FHLB Stock, Fed Funds and other	FHLB Stock, Fed Funds and other	126,891		1,750		5.59	%	65,918		108		0.65	%	FHLB Stock, Fed Funds and other		388,462		5,571				5,571		5.76				5.76		%				126,891		1,750			1,750	5.59			5.59	%
Total interest-earning assets	Total interest-earning assets	9,050,484		98,273		4.35	%	6,786,205		60,129		3.55	%	Total interest-earning assets		9,088,205		103,625				103,625		4.54				4.54		%				9,050,484		98,273			98,273	4.35			4.35	%
Noninterest-earning assets	Noninterest-earning assets	480,221						577,384
Total assets	Total assets	$	9,530,705					$	7,363,589
Total assets
Total assets
Interest-bearing liabilities:
Interest-bearing liabilities:
Interest-bearing liabilities:	Interest-bearing liabilities:
Interest-bearing deposits: (2)	Interest-bearing deposits: (2)
Interest-bearing deposits: (2)
Interest-bearing deposits: (2)
Demand deposits
Demand deposits
Demand deposits	Demand deposits	$	430,268	$	299	0.28	%	$	525,608	$	143	0.11	%	$	324,210		$		$	170			0.21		0.21		%					$	430,268		$		$	299	0.28		0.28	%
Money market and savings	Money market and savings	2,555,512		7,353		1.16	%	3,101,343		1,121		0.15	%	Money market and savings		1,840,023		7,380				7,380		1.60				1.60		%				2,555,512		7,353			7,353	1.16			1.16	%
Certificates of deposit	Certificates of deposit	2,715,921		21,718		3.24	%	886,662		1,020		0.47	%	Certificates of deposit		3,068,404		35,057				35,057		4.60				4.60		%				2,715,921		21,718			21,718	3.24			3.24	%
Total	Total	5,701,701		29,370		2.09	%	4,513,613		2,284		0.21	%	Total		5,232,637		42,607				42,607		3.27				3.27		%				5,701,701		29,370			29,370	2.09			2.09	%
Borrowings:	Borrowings:
Borrowings	Borrowings	1,342,347		15,340		4.57	%	64,557		91		0.56	%
Borrowings
Borrowings																2,074,527					24,676					4.73		%					1,342,347					15,340			4.57	%
Long-term debt	Long-term debt	224,435		2,965		5.28	%	204,553		2,107		4.12	%	Long-term debt		224,812		3,107				3,107		5.51				5.51		%				224,435		2,965			2,965	5.28			5.28	%
Total interest-bearing liabilities	Total interest-bearing liabilities	7,268,483		47,675		2.64	%	4,782,723		4,482		0.38	%	Total interest-bearing liabilities		7,531,976		70,390				70,390		3.74				3.74		%				7,268,483		47,675			47,675	2.64			2.64	%
Noninterest-bearing liabilities:	Noninterest-bearing liabilities:
Demand deposits (2)	Demand deposits (2)	1,511,437						1,744,220
Demand deposits (2)
Demand deposits (2)
Other liabilities
Other liabilities
Other liabilities	Other liabilities	172,252						138,048
Total liabilities	Total liabilities	8,952,172						6,664,991
Total liabilities
Total liabilities
Shareholders' equity
Shareholders' equity
Shareholders' equity	Shareholders' equity	578,533						698,598
Total liabilities and shareholders' equity	Total liabilities and shareholders' equity	$	9,530,705					$	7,363,589
Total liabilities and shareholders' equity
Total liabilities and shareholders' equity
Net interest income
Net interest income
Net interest income	Net interest income			$	50,598					$	55,647
Net interest spread	Net interest spread					1.71	%					3.17	%
Net interest spread
Net interest spread																															0.80	%													1.71	%
Net interest margin	Net interest margin					2.23	%					3.29	%	Net interest margin																	1.44	%													2.23	%

(1) Includes taxable-equivalent adjustments primarily related to tax-exempt income on certain loans and securities of ~~$1.2~~$1.1 million and ~~$1.1~~$1.2 million for the quarters ended March 31, ~~2023~~2024 and ~~2022,~~2023, respectively. The estimated federal statutory tax rate was 21% for the periods presented.

(2) Cost of deposits including noninterest-bearing deposits, was ~~1.65%~~2.61% and ~~0.15%~~1.65% for the quarters ended March 31, 2024 and 2023, ~~and 2022,~~ respectively.

Net interest income in the first quarter of ~~2023~~2024 decreased ~~$5.2~~$17.2 million as compared to the first quarter of ~~2022~~2023 due primarily to a decrease in our net interest ~~margin partially offset by increases in the average balance of interest earning assets. The increase in interest-earning assets was due to loan originations and purchases of investment securities.~~margin. Our net interest margin decreased from ~~3.29% in the first quarter of 2022 to~~ 2.23% in the first quarter of 2023 to 1.44% in the first quarter of 2024 due to a ~~226~~110 basis point increase in the rates paid on interest-bearing liabilities which was partially offset by ~~an 80~~a 19 basis point increase in the yield on interest earning assets. Yields on interest-earning assets increased as ~~the yields on loan originations during the last 15 months were higher than the rates of our existing portfolio of loans and~~ yields on adjustable rate loans increased due to increases in the indexes on which their pricing is based. The higher yields on our investment securities were primarily due to adjustments to yields realized from longer estimated lives of certain securities and the yields of securities purchased during the past year being higher than the yields on our existing portfolio. The increase in the rates paid on our interest-bearing liabilities was due to ~~higher deposit costs, higher borrowing costs and~~ an increase in the proportion of higher cost borrowings ~~used as our sources~~and a decrease in the proportion of ~~funding.~~noninterest-bearing deposits to the total balance of interest-bearing liabilities and higher deposit costs and higher borrowing costs. The increases in the rates paid on deposits were due to ~~the significant increase~~increases in market interest rates over the prior ~~year. Our average borrowings increased by $1.3 billion~~year and the migration of noninterest-bearing and lower cost interest-bearing accounts to ~~fund the growth~~higher cost certificates of ~~our loan portfolio~~deposit and ~~investment securities. Our cost of borrowings increased from 56 basis points during the first quarter of 2022 to 457 basis points during the first quarter of 2023 due to the significant increase in~~money market ~~interest rates during the last 15 months.~~accounts.

Provision for Credit Losses: ~~A $0.6 million~~There was no provision for credit losses ~~was recorded~~recognized during the first quarter of ~~2023~~2024 as compared to a ~~$9.0~~$0.6 million ~~recovery of our allowance for credit losses~~provision in the first quarter of ~~2022. The provision~~2023. These low levels of provisions for credit losses inreflect the first quarter of 2023 was to offset the net charge-offs realized during the quarter. The recovery of our allowance for credit losses in first quarter of 2022 was the result of the favorable performancestable balance of our loan portfolio, a ~~stable low~~minimal level of ~~nonperforming assets and an improved outlook of the estimated impact of COVID-19 on~~identified credit issues in our loan ~~portfolio.~~portfolio and the lack of significant expected credit issues arising in future periods.

Noninterest Income consisted of the following:

Quarter Ended March 31,

(in thousands)

2023

2022

(in thousands)

Noninterest income

Gain on loan origination and sale activities (1)

Single family

2,218

6,169

Commercial

192

2,105

Single family

CRE, multifamily and SBA

Loan servicing income

3,039

3,304

Deposit fees

2,658

2,075

Deposit fees

Other

2,083

1,905

Total noninterest income

10,190

15,558

Total noninterest income

(1) May include loans originated as held for investment.

Loan servicing income, a component of noninterest income, consisted of the following:




		Quarter Ended March 31,						Quarter Ended March 31,
(in thousands)	(in thousands)		2023		2022		(in thousands)		2024	2023

Single family servicing income, net	Single family servicing income, net
Single family servicing income, net
Single family servicing income, net
Servicing fees and other
Servicing fees and other
Servicing fees and other	Servicing fees and other		$	3,923	$	3,871
Changes - amortization (1)	Changes - amortization (1)		(1,684)		(3,425)
Net	Net		2,239		446
Risk management, single family MSRs:	Risk management, single family MSRs:
Changes in fair value due to assumptions (2)	Changes in fair value due to assumptions (2)		(311)		10,303
Net gain (loss) from economic hedging			(81)		(10,183)
Changes in fair value due to assumptions (2)
Changes in fair value due to assumptions (2)
Net gain (loss) from economic hedging (3)
Subtotal	Subtotal		(392)		120
Single Family servicing income (loss)			1,847		566
Single Family servicing income

Commercial loan servicing income:	Commercial loan servicing income:
Commercial loan servicing income:
Commercial loan servicing income:
Servicing fees and other
Servicing fees and other
Servicing fees and other	Servicing fees and other		2,746		4,450
Amortization of capitalized MSRs	Amortization of capitalized MSRs		(1,554)		(1,712)
Total	Total		1,192		2,738
Total loan servicing income	Total loan servicing income		$	3,039	$	3,304

(1)Represents changes due to collection/realization of expected cash flows and curtailments.

(2)Principally reflects changes in model assumptions, including prepayment speed assumptions, which are primarily affected by changes in mortgage interest rates.

(3)

The ~~decrease~~interest income from US Treasury notes securities used for hedging purposes, which is included in ~~noninterest~~interest income on the consolidated income statements, was $0.3 million and $0.4 million for the ~~first quarter of~~quarters ended March 31, 2024 and 2023, as compared to the first quarter of 2022 was due to a decrease in gain on loan origination and sale activities, which was partially offset by higher deposit fees. The $5.9 million decrease in gain on loan origination and sale activities was due to a $4.0 million decrease in single family gain on loan origination and sale activities and a $1.9 million decrease in commercial real estate and commercial gain on loan origination and sale activities. The decrease in single family gain on loan origination and sale activities was due to a decrease in rate lock volume as a result of the effects of increasing mortgage interest rates. The decrease in commercial real estate and commercial gain on loan origination and sale activities was primarily due to an 82% decrease in the volume of loans sold as a result of increasing interest rates. The $0.6 million increase in deposit fee income was primarily due to higher early withdrawals fees.respectively.

Noninterest Expense consisted of the following:

Quarter Ended March 31,

(in thousands)

2023

2022

(in thousands)

Noninterest expense

Compensation and benefits

29,253

32,031

Compensation and benefits

Information services

7,145

7,062

Occupancy

5,738

6,365

Occupancy

General, administrative and other

10,355

9,015

General, administrative and other

Total noninterest expense

52,491

54,473

Total noninterest expense

The ~~$2.0~~$0.3 million decrease in noninterest ~~expense~~expenses in the first quarter of ~~2023~~2024 as compared to the first quarter of ~~2022~~2023 was primarily due to lower compensation and benefit costs, partially offset by ~~increases in~~higher general, administrative and other ~~expenses.~~costs. The ~~$2.8 million~~ decrease in compensation and benefit costs was primarily due to ~~reduced commission expense on lower loan origination volumes in our single family mortgage operations,~~ lower staffing levels, ~~and lower bonus expense,~~ which ~~were~~was partially offset by wage increases given in the first quarter of 2024. FTEs decreased from 920 at the quarter ended March 31, 2023 ~~and a reduction in deferred costs due~~compared to ~~lower levels of loan production.~~858 at the quarter ended March 31, 2024. The increase in general, administrative and other costs was primarily due to ~~higher FDIC fees due to our larger asset base and core deposit intangible amortization associated with the three acquired branches, which were partially offset by a reduction~~$2.6 million in ~~legal fees due to charges~~merger related ~~to nonrecurring costs expended on litigation activities and legal matters in the first quarter of 2022.~~costs.

4849

Financial Condition

During the first quarter of 2023, we completed the purchase of three branches in southern California whereby we acquired $373 million of deposits, $21 million of loans, $5 million of fixed assets and $324 million of cash, and recorded $11 million of core deposit intangibles and $12 million of goodwill.

~~Excluding the impact of the acquisition noted above, during the first quarter of 2023,~~2024, our total assets increased ~~$121~~$63 million due primarily to a ~~$304~~$105 million increase in cash, ~~$39 million increase in loans held for investment and~~partially offset by a ~~$77 million increase~~decrease in investment securities. Loans held for investment increased due to $325 million of originations, which were partially offset by prepayments and scheduled payments of $285 million. Excluding the impact of the acquisition noted above, duringDuring the first quarter of ~~2023~~2024 total liabilities increased ~~$108~~$74 million due to an increase in borrowings, partially offset by a decrease in deposits. The ~~$862~~$272 million ~~increase~~decrease in deposits was primarily due to a $297 million decrease in brokered certificates of deposit. The $349 million of additional borrowings ~~was~~were used to replace ~~higher-cost~~maturing brokered deposits and increase our on-balance sheet liquidity. The decrease in deposits was due to a $561 million decrease in brokered certificates of deposit and a $345 million decrease in non-certificates of deposit balances which were partially offset by a $253 million increase in certificates of deposit balances related to our promotional products.cash balances.

Credit Risk Management

During the first quarter of 2024, our ratios of nonperforming assets to total assets and total loans delinquent over 30 days, including nonaccrual loans, increased but remained at low levels. As of March 31, ~~2023,~~2024, our ratio of nonperforming assets to total assets ~~remained low at 0.15%~~was 0.56%, while our ratio of total loans delinquent over 30 days, including nonaccrual loans, to total loans was ~~0.41%~~0.82%. The Company recorded a $0.6 million provision for credit losses for the first quarter of 2023 which offset the net charge-offs realized as the overall LHFI portfolio balances only increased $60 million. Our overall ratio of ACL to LHFI decreased slightly to 0.56% at March 31, 2023 from 0.57% at December 31, 2022.

Management considers the current level of the ACL to be appropriate to cover estimated lifetime losses within our LHFI portfolio. The following table presents the ACL by product type:


		At March 31, 2023				At December 31, 2022						At March 31, 2024									At December 31, 2023
(in thousands)	(in thousands)	Amount		Rate (1)		Amount		Rate (1)		(in thousands)		Amount					Rate (1)						Amount					Rate (1)

CRE	CRE
CRE
CRE
Non-owner occupied CRE
Non-owner occupied CRE
Non-owner occupied CRE	Non-owner occupied CRE	$	2,608	0.40	%	$	2,102	0.32	%	$	2,131			0.34		0.34		%				$	2,610			0.41		0.41	%
Multifamily	Multifamily	9,787		0.25	%	10,974		0.28	%	Multifamily		18,947			0.48			0.48		%				13,093			0.33		0.33	%
Construction/land development	Construction/land development
Multifamily construction
Multifamily construction
Multifamily construction	Multifamily construction	1,345		1.23	%	998		1.05	%	1,621				0.84		0.84		%				3,983				2.37		2.37	%
CRE construction	CRE construction	204		1.02	%	196		1.03	%	CRE construction		188			1.02			1.02		%				189			1.02		1.02	%
Single family construction	Single family construction	12,525		3.82	%	12,418		3.51	%	Single family construction		5,578			2.00			2.00		%				7,365			2.69		2.69	%
Single family construction to permanent	Single family construction to permanent	1,211		0.80	%	1,171		0.74	%	Single family construction to permanent		435			0.51			0.51		%				672			0.64		0.64	%
Total	Total	27,680		0.53	%	27,859		0.53	%	Total		28,900			0.56			0.56		%				27,912			0.54		0.54	%
Commercial and industrial loans	Commercial and industrial loans
Owner occupied CRE	Owner occupied CRE	910		0.21	%	1,030		0.23	%
Owner occupied CRE
Owner occupied CRE												836					0.22		%				899					0.23	%
Commercial business	Commercial business	3,416		0.88	%	3,247		0.91	%	Commercial business		2,646			0.69			0.69		%				2,950			0.83		0.83	%
Total	Total	4,326		0.52	%	4,277		0.54	%	Total		3,482			0.46			0.46		%				3,849			0.52		0.52	%
Consumer loans	Consumer loans
Single family	Single family	5,804		0.61	%	5,610		0.62	%
Single family
Single family												4,273					0.40		%				5,287					0.51	%
Home equity and other	Home equity and other	3,690		1.02	%	3,754		1.06	%	Home equity and other		3,022			0.78			0.78		%				3,452			0.90		0.90	%
Total	Total	9,494		0.72	%	9,364		0.74	%	Total		7,295			0.51			0.51		%				8,739			0.61		0.61	%
Total ACL	Total ACL	$	41,500	0.56	%	$	41,500	0.57	%	Total ACL		$	39,677		0.54			0.54		%				$	40,500		0.55		0.55	%

(1) The ACL rate is calculated excluding balances related to loans that are insured by the FHA or guaranteed by the VA or SBA.

Liquidity and Sources of Funds

Liquidity risk management is primarily intended to ensure we are able to maintain sources of cash to adequately fund operations and meet our obligations, including demands from depositors, draws on lines of credit and paying any creditors, on a timely and cost-effective basis, in various market conditions. Our liquidity profile is influenced by changes in market conditions, the composition of the balance sheet and risk tolerance levels. The Company has established liquidity guidelines and operating plans that detail the sources and uses of cash and liquidity.

The Company's primary sources of liquidity include deposits, loan payments and investment securities payments, both principal and interest, borrowings, and proceeds from the sale of loans and investment securities. Borrowings include advances from the FHLB, federal funds purchased, borrowings from the Bank Term Funding Program and ~~borrowing~~borrowings from other financial institutions. Additionally, the Company may sell stock or issue long-term debt to raise funds. While scheduled principal

repayments on loans and investment securities are a relatively predictable source of funds, deposit inflows and outflows and prepayments of loans and investment securities are greatly influenced by interest rates, economic conditions and competition.

The Company’s contractual cash flow obligations include the maturity of certificates of deposit, short-term and long-term borrowings, interest on certificates of deposit and borrowings, operating leases and fees for information technology related services and professional services. Obligations for certificates of deposit and short-term borrowings are typically satisfied through the renewal of these instruments or the generation of new deposits or use of available short-term borrowings. Interest payments and obligations related to leases and services are typically met by cash generated from our operations. The Company has ~~$64~~$65 million of Senior Notes which mature in 2026 which it expects to pay off from available cash or from the issuance of new debt.

At March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, the Bank had available borrowing capacity of ~~$2.1~~$1.6 billion and ~~$2.6~~$2.1 billion, respectively, from the FHLB, and ~~$397~~$853 million and ~~$340~~$710 million, respectively, from the FRBSF and ~~$1.2~~$1.1 billion, in both periods, under borrowing lines established with other financial institutions.

Cash Flows

For the quarter ended March 31, ~~2023,~~2024, cash and cash equivalents increased by ~~$304~~$105 million compared to an increase of $9$304 million during the quarter ended March 31, ~~2022 which reflected a decision to keep a higher level of on-balance sheet cash at the end of the first quarter of~~ 2023. ~~We expect to reduce our cash holdings by approximately $300 million during the second quarter, as we no longer consider it necessary to retain such high levels of cash on the balance sheet.~~ As excess liquidity can reduce the Company’s earnings and returns, the Company manages its cash positions to minimize the level of excess liquidity and does not attempt to maximize the level of cash and cash equivalents. The following discussion highlights the major activities and transactions that affected our cash flows during these periods.

Cash flows from operating activities

The Company's operating assets and liabilities are used to support our lending activities, including the origination and sale of mortgage loans. For the quarter ended March 31, 2024, net cash of $7.8 million was used in operating activities, as cash generated from operations was offset by cash used to fund LHFS in excess of proceeds from the sale of loans and increases in other assets. For the quarter ended March 31, 2023, net cash of $52 million was used in operating activities, primarily from cash proceeds from the purchase of trading securities and cash used to fund LHFS exceeding proceeds from the sale of loans. For the quarter ended March 31, 2022, net cash of $124 million was provided by operating activities, primarily from cash proceeds from the sale of loans exceeding cash used to fund LHFS. We believe that cash flows from operations, available cash balances and our ability to generate cash through short-term debt borrowings are sufficient to fund our operating liquidity needs. We are currently not aware of any trends or demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in our liquidity increasing or decreasing in any material way that will impact our capital needs during or beyond the next 12 months.

Cash flows from investing activities

The Company's investing activities primarily include AFS investment securities and loans originated as held for investment. For the quarter ended March 31, 2024, net cash of $36 million was provided by investing activities primarily from principal repayments on AFS securities, partially offset by the origination of LHFI net of principal repayments and net FHLB stock purchases. For the quarter ended March 31, 2023, net cash of $269 million was provided by investing activities primarily from net cash acquired from an acquisition partially offset by the origination of LHFI net of principal repayments and the purchase of AFS investment securities and net FHLB stock purchases. For the quarter ended March 31, 2022, net cash of $464 million was used in investing activities primarily from the origination of LHFI net of principal repayments and the purchase of AFS investment securities.

Cash flows from financing activities

The Company's financing activities are primarily related to deposits and net proceeds from borrowings. For the quarter ended March 31, 2024, net cash of $76 million was provided by financing activities, primarily due to by an increase in short-term and long-term borrowings, partially offset by decreases in deposits. For the quarter ended March 31, 2023, net cash of $87 million was provided by financing activities, primarily due to an increase in short-term and long-term borrowings partially offset by a decrease in deposits and dividends paid on our common stock. For the quarter ended March 31, 2022, net cash of $349 million was provided by financing activities, primarily due to growth in deposits, an increase in short-term borrowings and proceeds from the issuance of the subordinated notes, partially offset by repurchases of and dividends paid on our common stock.

Off-Balance Sheet Arrangements

In the normal course of business, we are a party to financial instruments that carry off-balance sheet risk. These financial instruments (which include commitments to originate loans and commitments to purchase loans) include potential credit risk in excess of the amount recognized in the accompanying consolidated financial statements. These transactions are designed to (1) meet the financial needs of our customers, (2) manage our credit, market or liquidity risks, (3) diversify our funding sources and/or (4) optimize capital.

These commitments include the following:


(in thousands)	(in thousands)	At March 31, 2023		At December 31, 2022		(in thousands)	At March 31, 2024	At December 31, 2023

Unused consumer portfolio lines	Unused consumer portfolio lines	$	553,289	$	531,784
Unused consumer portfolio lines
Unused consumer portfolio lines
Commercial portfolio lines (1)	Commercial portfolio lines (1)	785,618		788,108
Commitments to fund loans	Commitments to fund loans	9,323		46,067
Total	Total	$	1,348,230	$	1,365,959

(1) Within the commercial portfolio, undistributed construction loan proceeds, where the Company has an obligation to advance funds for construction

progress payments were ~~$512~~$414 million and ~~$525~~$403 million at March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, respectively.

Capital Resources and Dividend Policy

The capital rules applicable to United States based bank holding companies and federally insured depository institutions (“Capital Rules”) require the Company (on a consolidated basis) and the Bank (on a stand-alone basis) to meet specific capital adequacy requirements that, for the most part, involve quantitative measures, primarily in terms of the ratios of their capital to their assets, liabilities, and certain off-balance sheet items, calculated under regulatory accounting practices. In addition, prompt corrective action regulations place a federally insured depository institution, such as the Bank, into one of five capital categories on the basis of its capital ratios: (i) well capitalized; (ii) adequately capitalized; (iii) undercapitalized; (iv) significantly undercapitalized; or (v) critically undercapitalized. A depository institution’s primary federal regulatory agency may determine that, based on certain qualitative assessments, the depository institution should be assigned to a lower capital category than the one indicated by its capital ratios. At each successive lower capital category, a depository institution is subject to greater operating restrictions and increased regulatory supervision by its federal bank regulatory agency.

The following table sets forth the capital and capital ratios of HomeStreet Inc. (on a consolidated basis) and HomeStreet Bank as compared to the respective regulatory requirements applicable to them:


	At March 31, 2024
	Actual				For Minimum Capital Adequacy Purposes				To Be Categorized As "Well Capitalized"
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio

HomeStreet, Inc.
Tier 1 leverage capital (to average assets)	$	669,490	6.90	%	$	388,113	4.0	%	NA		NA
Common equity Tier 1 capital (to risk-weighted assets)	609,490		9.55	%	287,337		4.5	%	NA		NA
Tier 1 risk-based capital (to risk-weighted assets)	669,490		10.48	%	383,116		6.0	%	NA		NA
Total risk-based capital (to risk-weighted assets)	810,910		12.70	%	510,822		8.0	%	NA		NA
HomeStreet Bank
Tier 1 leverage capital (to average assets)	$	808,549	8.34	%	$	387,900	4.0	%	$	484,875	5.0	%
Common equity Tier 1 capital (to risk-weighted assets)	808,549		12.67	%	287,224		4.5	%	414,880		6.5	%
Tier 1 risk-based capital (to risk-weighted assets)	808,549		12.67	%	382,966		6.0	%	510,621		8.0	%
Total risk-based capital (to risk-weighted assets)	851,564		13.34	%	510,621		8.0	%	638,276		10.0	%

At March 31, 2023
Actual For Minimum Capital
Adequacy Purposes To Be Categorized As
"Well Capitalized"
(dollars in thousands) Amount Ratio Amount Ratio Amount Ratio
HomeStreet, Inc.
Tier 1 leverage capital (to average assets) $ 670,326 6.92 % $ 387,579 4.0 % NA NA
Common equity Tier 1 capital (to risk-weighted assets) 610,326 8.36 % 328,508 4.5 % NA NA
Tier 1 risk-based capital (to risk-weighted assets) 670,326 9.18 % 438,011 6.0 % NA NA
Total risk-based capital (to risk-weighted assets) 814,598 11.16 % 584,015 8.0 % NA NA
HomeStreet Bank
Tier 1 leverage capital (to average assets) $ 818,536 8.47 % $ 386,600 4.0 % $ 483,250 5.0 %
Common equity Tier 1 capital (to risk-weighted assets) 818,536 11.71 % 314,473 4.5 % 454,238 6.5 %
Tier 1 risk-based capital (to risk-weighted assets) 818,536 11.71 % 419,297 6.0 % 559,063 8.0 %
Total risk-based capital (to risk-weighted assets) 864,577 12.37 % 559,063 8.0 % 698,828 10.0 %


		At December 31, 2022
		Actual				For Minimum Capital Adequacy Purposes				To Be Categorized As "Well Capitalized"
	At December 31, 2023																																	At December 31, 2023
	Actual																						Actual							For Minimum Capital Adequacy Purposes								To Be Categorized As "Well Capitalized"
(dollars in thousands)	(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio		(dollars in thousands)		Amount					Ratio					Amount					Ratio				Amount						Ratio

HomeStreet, Inc.	HomeStreet, Inc.
HomeStreet, Inc.
HomeStreet, Inc.
Tier 1 leverage capital (to average assets)
Tier 1 leverage capital (to average assets)
Tier 1 leverage capital (to average assets)	Tier 1 leverage capital (to average assets)	$	693,112	7.25	%	$	382,467	4.0	%	NA		NA		$	675,440			7.04		7.04		%			$	383,696		4.0			4.0	%							NA
Common equity Tier 1 capital (to risk-weighted assets)	Common equity Tier 1 capital (to risk-weighted assets)	633,112		8.72	%	326,876		4.5	%	NA		NA		Common equity Tier 1 capital (to risk-weighted assets)		615,440			9.66			9.66		%			286,709		4.5			4.5	%							NA
Tier 1 risk-based capital (to risk-weighted assets)	Tier 1 risk-based capital (to risk-weighted assets)	693,112		9.54	%	435,834		6.0	%	NA		NA		Tier 1 risk-based capital (to risk-weighted assets)		675,440			10.60			10.60		%			382,279		6.0			6.0	%							NA
Total risk-based capital (to risk-weighted assets)	Total risk-based capital (to risk-weighted assets)	837,828		11.53	%	581,112		8.0	%	NA		NA		Total risk-based capital (to risk-weighted assets)		818,075			12.84			12.84		%			509,705		8.0			8.0	%							NA
HomeStreet Bank	HomeStreet Bank
Tier 1 leverage capital (to average assets)	Tier 1 leverage capital (to average assets)	$	822,891	8.63	%	$	381,506	4.0	%	$	476,883	5.0	%
Tier 1 leverage capital (to average assets)
Tier 1 leverage capital (to average assets)																$	814,719				8.50		%			$	383,482				4.0	%			$	479,352					5.0	%
Common equity Tier 1 capital (to risk-weighted assets)	Common equity Tier 1 capital (to risk-weighted assets)	822,891		11.92	%	310,582		4.5	%	448,618		6.5	%	Common equity Tier 1 capital (to risk-weighted assets)		814,719			12.79			12.79		%			286,569		4.5			4.5	%				413,933		6.5				6.5	%
Tier 1 risk-based capital (to risk-weighted assets)	Tier 1 risk-based capital (to risk-weighted assets)	822,891		11.92	%	414,109		6.0	%	552,146		8.0	%	Tier 1 risk-based capital (to risk-weighted assets)		814,719			12.79			12.79		%			382,092		6.0			6.0	%				509,456		8.0				8.0	%
Total risk-based capital (to risk-weighted assets)	Total risk-based capital (to risk-weighted assets)	868,993		12.59	%	552,146		8.0	%	690,182		10.0	%	Total risk-based capital (to risk-weighted assets)		858,992			13.49			13.49		%			509,456		8.0			8.0	%				636,820		10.0				10.0	%

As of the dates set forth in the above table, the Company exceeded the minimum required capital ratios applicable to it and the Bank’s capital ratios exceeded the minimums necessary to qualify as a well-capitalized depository institution under the prompt corrective action regulations. In addition to the minimum capital ratios, both HomeStreet Inc. and HomeStreet Bank are required to maintain a capital conservation buffer consisting of additional Common Equity Tier 1 Capital of more than 2.5% above the required minimum levels in order to avoid limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses. The required ratios for capital adequacy set forth in the above table do not include the Capital Rules’ additional capital conservation buffer, though ~~each of~~both the Company and Bank maintained capital ratios necessary to satisfy the capital conservation buffer requirements as of the dates indicated. At March 31, ~~2023,~~2024, capital conservation buffers for the Company and the Bank were ~~3.16%~~4.48% and ~~4.37%~~5.34%, respectively.

The Company ~~paid a quarterly cash dividend of $0.35 per common share in the first quarter of 2023 and on April 24, 2023, we declared~~did not declare a cash dividend ~~of $0.10 per common share payable on May 24, 2023 to shareholders of record as of~~in the ~~close of business on May 10, 2023. It is our current intention to continue~~quarter and currently does not plan to pay any quarterly dividends ~~however, the~~in 2024. The amount and declaration of future cash dividends are subject to approval by our Board of Directors and certain statutory requirements and regulatory restrictions.

We had no material commitments for capital expenditures as of March 31, 2023. However, we intend to take advantage of opportunities that may arise in the future to grow our businesses, which may include opening additional offices or acquiring complementary businesses that we believe will provide us with attractive risk-adjusted returns. As a result, we may seek to obtain additional borrowings and to sell additional shares of our common stock to raise funds which we might need for these purposes. There is no assurance, however, that, if required, we will succeed in obtaining additional borrowings or selling additional shares of our common stock on terms that are acceptable to us, if at all, as this will depend on market conditions and other factors outside of our control, as well as our future results of operations.2024.

Non-GAAP Financial Measures

To supplement our unaudited condensed consolidated financial statements presented in accordance with GAAP, we use certain use certain non-GAAP measures of financial performance. In this ~~Quarterly Report on~~ Form 10-Q, we use the following non-GAAP measures: (i) tangible common equity and tangible assets as we believe this information is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of capital ratios; (ii) core income and ~~(ii)~~effective tax rate on core income before taxes, which excludes goodwill impairment charges and merger related expenses and the related tax impact as we believe this measure is a better comparison to be used for projecting future results and (iii) an efficiency ratio which is the ratio of noninterest expense to the sum of net interest income and noninterest income, excluding certain items of income or expense and excluding taxes incurred and payable to the state of Washington as such taxes are not classified as income taxes and we believe including them in noninterest expense impacts the comparability of our results to those companies whose operations are in states where assessed taxes on business are classified as income taxes.

These supplemental performance measures may vary from, and may not be comparable to, similarly titled measures provided by other companies in our industry. Non-GAAP financial measures are not in accordance with, or an alternative for, GAAP. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. A non-GAAP financial measure may also be a financial metric that is not required by GAAP or other applicable requirements.

We believe that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding our performance by providing additional information used by management that is not otherwise required by GAAP or other applicable requirements. Our management uses, and believes that investors benefit from referring to, these non-GAAP financial measures in assessing our operating results and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate a comparison of our performance to prior periods. We believe these measures are frequently used by securities analysts, investors and other parties in the evaluation of companies in our industry. These non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures prepared in accordance with GAAP. In the information below, we have provided reconciliations of, where applicable, the most comparable GAAP financial measures to the non-GAAP measures used in this ~~Quarterly Report,~~quarterly report, or ~~the~~a calculation of the non-GAAP financial ~~measures.~~measure.

Reconciliations of non-GAAP results of operations to the nearest comparable GAAP measures:
For the quarter ended
(in thousands, except ratio and rate) March 31, 2023 December 31, 2022 March 31, 2022
Return on average tangible equity (annualized)
Average shareholders' equity $ 578,533 $ 565,950 $ 698,598
Less: Average goodwill and other intangibles (30,969) (30,133) (31,624)
Average tangible equity $ 547,564 $ 535,817 $ 666,974
Net income $ 5,058 $ 8,501 $ 19,951
Adjustments (tax effected)
Amortization on core deposit intangibles 459 183 191
Tangible income applicable to shareholders $ 5,517 $ 8,684 $ 20,142
Ratio 4.1 % 6.4 % 12.2 %
Efficiency ratio
Noninterest expense
Total $ 52,491 $ 50,420 $ 54,473
Adjustments:
State of Washington taxes (555) (597) (506)
Adjusted total $ 51,936 $ 49,823 $ 53,967
Total revenues
Net interest income $ 49,376 $ 55,687 $ 54,546
Noninterest income 10,190 9,677 15,558
Total $ 59,566 $ 65,364 $ 70,104
Ratio 87.2 % 76.2 % 77.0 %
Effective tax rate used in computations above 22.0 % 22.0 % 22.0 %

As of
(in thousands, except share data) March 31, 2023 December 31, 2022
Tangible book value per share
Shareholders' equity $ 574,994 $ 562,147
Less: goodwill and other intangibles (51,862) (29,980)
Tangible shareholder's equity $ 523,132 $ 532,167
Common shares outstanding 18,767,811 18,730,380
Computed amount $ 27.87 $ 28.41
Tangible common equity to tangible assets
Tangible shareholder's equity (per above) $ 523,132 $ 532,167
Tangible assets
Total assets $ 9,858,889 $ 9,364,760
Less: Goodwill and other intangibles (51,862) (29,980)
Net $ 9,807,027 $ 9,334,780
Ratio 5.3 % 5.7 %


	For the Quarter Ended
(in thousands, except ratio, rate and share data)	March 31, 2024			December 31, 2023			March 31, 2023

Core net income (loss)
Net income (loss)	$	(7,497)		$	(3,419)		$	5,058
Adjustments (tax effected)
Merger related expenses	2,028			1,170			—

Total	$	(5,469)		$	(2,249)		$	5,058
Core net income (loss) per fully diluted share
Fully diluted shares	18,856,870			18,807,965			18,771,899
Computed amount	$	(0.29)		$	(0.12)		$	0.27

Return on average tangible equity (annualized)
Average shareholders' equity	$	537,627		$	513,758		$	578,533
Less: Average goodwill and other intangibles	(9,403)			(10,149)			(30,969)
Average tangible equity	$	528,224		$	503,609		$	547,564

Core net income (loss) (per above)	$	(5,469)		$	(2,249)		$	5,058
Adjustments (tax effected)
Amortization on core deposit intangibles	488			615			459
Tangible income (loss) applicable to shareholders	$	(4,981)		$	(1,634)		$	5,517
Ratio	(3.8)		%	(1.3)		%	4.1		%

Efficiency ratio
Noninterest expense
Total	$	52,164		$	49,511		$	52,491
Adjustments:
Merger related expenses	(2,600)			(1,500)			—

State of Washington taxes	(452)			659			(555)
Adjusted total	$	49,112		$	48,670		$	51,936

Total revenues
Net interest income	$	32,151		$	34,989		$	49,376
Noninterest income	9,454			10,956			10,190

Total	$	41,605		$	45,945		$	59,566

Ratio	118.0		%	105.9		%	87.2		%

Return on Average assets (annualized) - Core
Average Assets	$	9,502,189		$	9,351,866		$	9,530,705
Core net income (loss) - per above	(5,469)			(2,249)			5,058
Ratio	(0.23)		%	(0.10)		%	0.22		%

Effective tax rate used in computations above	22.0		%	22.0		%	22.0		%


	As of
(in thousands, except ratio, rate and share data)	March 31, 2024			December 31, 2023

Tangible book value per share
Shareholders' equity	$	527,333		$	538,387
Less: intangible assets	(9,016)			(9,641)
Tangible shareholder's equity	$	518,317		$	528,746

Common shares outstanding	18,857,566			18,810,055
Computed amount	$	27.49		$	28.11

Tangible common equity to tangible assets
Tangible shareholder's equity (per above)	$	518,317		$	528,746
Tangible assets
Total assets	$	9,455,182		$	9,392,450
Less: intangible assets	(9,016)			(9,641)
Net	$	9,446,166		$	9,382,809

Ratio	5.5		%	5.6		%


ITEM 3			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk Management

Market risk is defined as the sensitivity of income, fair value measurements and capital to changes in interest rates, foreign currency exchange rates, commodity prices and other relevant market rates or prices. The primary market risks that we are exposed to are price and interest rate risks. Price risk is defined as the risk to current or anticipated earnings or capital arising from changes in the value of either assets or liabilities that are entered into as part of distributing or managing risk. Interest rate risk is defined as risk to current or anticipated earnings or capital arising from movements in interest rates.

For the Company, price and interest rate risks arise from the financial instruments and positions we hold. This includes loans, MSRs, investment securities, deposits, borrowings, long-term debt and derivative financial instruments. Due to the nature of our current operations, we are not subject to foreign currency exchange or commodity price risk. Our real estate loan portfolio is subject to risks associated with the local economies of our various markets, in particular, the regional economy of the western United States, including Hawaii.

The spread between the yield on interest-earning assets and the cost of interest-bearing liabilities and the relative dollar amounts of these assets and liabilities are the principal items affecting net interest income. Changes in net interest rates (interest rate risk) are influenced to a significant degree by the repricing characteristics of assets and liabilities (timing risk), the relationship between various rates (basis risk), customer options (option risk) and changes in the shape of the yield curve (time-sensitive risk). We manage the available-for-sale investment securities portfolio while maintaining a balance between risk and return. The Company's funding strategy is to grow ~~core~~ deposits while we efficiently supplement using wholesale borrowings.

We estimate the sensitivity of our net interest income to changes in market interest rates using an interest rate simulation model that includes assumptions related to the level of balance sheet growth, deposit repricing characteristics and the rate of prepayments for multiple interest rate change scenarios. Interest rate sensitivity depends on certain repricing characteristics in our interest-earnings assets and interest-bearing liabilities, including the maturity structure of assets and liabilities and their repricing characteristics during the periods of changes in market interest rates. Effective interest rate risk management seeks to ensure both assets and liabilities respond to changes in interest rates within an acceptable timeframe, minimizing the impact of interest rate changes on net interest income and capital. Interest rate sensitivity is measured as the difference between the volume of assets and liabilities, at a point in time, ~~that~~which are subject to repricing at various time horizons, known as interest rate sensitivity gaps.

5657

The following table presents sensitivity gaps for these different intervals:


		At March 31, 2023																										At March 31, 2024
(in thousands)	(in thousands)	3 Mos. or Less			More Than 3 Mos. to 6 Mos.			More Than 6 Mos. to 12 Mos.			More Than 12 Mos. to 3 Yrs.			More Than 3 Yrs. to 5 Yrs.			More Than 5 to 15 Yrs.			More Than 15 Yrs.			Non-Rate- Sensitive		Total		(in thousands)	3 Mos. or Less	More Than 3 Mos. to 6 Mos.	More Than 6 Mos. to 12 Mos.	More Than 12 Mos. to 3 Yrs.	More Than 3 Yrs. to 5 Yrs.	More Than 5 to 15 Yrs.	More Than 15 Yrs.	Non-Rate- Sensitive	Total

Interest-earning assets:	Interest-earning assets:
Interest-earning assets:
Interest-earning assets:
Cash & cash equivalents
Cash & cash equivalents
Cash & cash equivalents	Cash & cash equivalents	$	377,031		$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	377,031
FHLB Stock	FHLB Stock	23,191			—			—			18,000			22,000			—			10,000			—		73,191
Investment securities (1)	Investment securities (1)	222,768			152,983			148,663			180,614			162,795			542,377			66,804			—		1,477,004
LHFS	LHFS	24,253			—			—			—			—			—			—			—		24,253
LHFI (1)	LHFI (1)	1,304,359			411,023			483,234			1,730,019			1,927,421			1,606,739			23,587			—		7,486,382
Total	Total	1,951,602			564,006			631,897			1,928,633			2,112,216			2,149,116			100,391			—		9,437,861
Non-interest-earning assets	Non-interest-earning assets	—			—			—			—			—			—			—			421,028		421,028
Total assets	Total assets	$	1,951,602		$	564,006		$	631,897		$	1,928,633		$	2,112,216		$	2,149,116		$	100,391		$	421,028	$	9,858,889
Interest-bearing liabilities:	Interest-bearing liabilities:
Demand deposit accounts (2)	Demand deposit accounts (2)	$	496,504		$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	496,504
Demand deposit accounts (2)
Demand deposit accounts (2)
Savings accounts (2)	Savings accounts (2)	323,373			—			—			—			—			—			—			—		323,373
Money market accounts (2)	Money market accounts (2)	2,097,055			—			—			—			—			—			—			—		2,097,055
Certificates of deposit	Certificates of deposit	698,182			609,844			835,182			504,171			12,702			156			6			—		2,660,243

FHLB advances
FHLB advances
FHLB advances	FHLB advances	578,000			—			—			450,000			550,000			—			—			—		1,578,000
FRB borrowings	FRB borrowings	—			—			300,000			—			—			—			—			—		300,000
Long-term debt (3)	Long-term debt (3)	61,261			—			—			—			163,231			—			—			—		224,492
Total	Total	4,254,375			609,844			1,135,182			954,171			725,933			156			6			—		7,679,667
Non-interest bearing liabilities	Non-interest bearing liabilities	—			—			—			—			—			—			—			1,604,228		1,604,228

Shareholders' Equity	Shareholders' Equity	—			—			—			—			—			—			—			574,994		574,994
Shareholders' Equity
Shareholders' Equity
Total liabilities and shareholders' equity	Total liabilities and shareholders' equity	$	4,254,375		$	609,844		$	1,135,182		$	954,171		$	725,933		$	156		$	6		$	2,179,222	$	9,858,889
Interest sensitivity gap	Interest sensitivity gap	$	(2,302,773)		$	(45,838)		$	(503,285)		$	974,462		$	1,386,283		$	2,148,960		$	100,385
Cumulative interest sensitivity gap	Cumulative interest sensitivity gap
Cumulative interest sensitivity gap
Cumulative interest sensitivity gap
Total
Total
Total	Total	$	(2,302,773)		$	(2,348,611)		$	(2,851,896)		$	(1,877,434)		$	(491,151)		$	1,657,809		$	1,758,194
As a % of total assets	As a % of total assets	(23)		%	(24)		%	(29)		%	(19)		%	(5)		%	17		%	18		%
As a % of total assets
As a % of total assets
As a % of cumulative interest-bearing liabilities	As a % of cumulative interest-bearing liabilities	46		%	52		%	52		%	73		%	94		%	122		%	123		%
As a % of cumulative interest-bearing liabilities
As a % of cumulative interest-bearing liabilities

(1)Based on contractual maturities, repricing dates and forecasted principal payments assuming normal amortization and, where applicable, prepayments.

(2)Assumes 100% of interest-bearing non-maturity deposits are subject to repricing in three months or less.

(3)Based on contractual maturity.

As of March 31, ~~2023,~~2024, the Company is considered liability-sensitive as exhibited by the gap table. ~~Our~~To reduce our net interest income sensitivity ~~analysis results are basically neutral due in part to the steps~~ the Company has taken actions to extend the duration of its liabilities, both through increased levels of term certificates of deposit and the utilization of fixed-rate term borrowings.

Changes in the mix of interest-earning assets or interest-bearing liabilities can either increase or decrease the net interest margin, without affecting interest rate sensitivity. In addition, the interest rate spread between an earning asset and its funding liability can vary significantly, while the timing of repricing for both the asset and the liability remains the same, thereby impacting net interest income. This characteristic is referred to as basis risk. Varying interest rate environments can create unexpected changes in

5758

prepayment levels of assets and liabilities that are not reflected in the interest rate sensitivity analysis. These prepayments may have a significant impact on our net interest margin. Because of these factors, an interest sensitivity gap analysis may not provide an accurate assessment of our actual exposure to changes in interest rates.

The estimated impact on our net interest income over a time horizon of one year and the change in net portfolio value as of March 31, ~~2023~~2024 and December 31, ~~2022~~2023 are provided in the table below. For the scenarios shown, the interest rate simulation assumes an instantaneous and sustained shift in market interest rates and no change in the composition or size of the balance sheet.


		At March 31, 2023				At December 31, 2022					At March 31, 2024				At December 31, 2023
Change in Interest Rates (basis points) (1)	Change in Interest Rates (basis points) (1)	Percentage Change								Change in Interest Rates (basis points) (1)	Percentage Change
		Net Interest Income (2)		Net Portfolio Value (3)		Net Interest Income (2)		Net Portfolio Value (3)			Net Interest Income (2)		Net Portfolio Value (3)			Net Interest Income (2)		Net Portfolio Value (3)

+300	+300	1.1	%	(32.5)	%	(3.8)	%	(36.3)	%
+300
+300											(16.5)	%	(25.1)	%		(15.4)	%	(23.8)	%
+200	+200	1.5	%	(20.8)	%	(1.7)	%	(24.1)	%	+200	(10.1)	%	(14.7)	%		(9.4)	%	(13.9)	%
+100	+100	1.1	%	(10.4)	%	(0.7)	%	(12.1)	%	+100	(4.5)	%	(6.2)	%		(4.2)	%	(5.9)	%
-100	-100	(1.3)	%	7.8	%	0.5	%	10.3	%	-100	3.8	%	2.6	%		3.5	%	1.9	%
-200	-200	(3.1)	%	13.8	%	0.2	%	18.1	%	-200	7.2	%	1.6	%		6.6	%	1.0	%
-300	-300	(5.0)	%	16.1	%	(0.5)	%	22.9	%	-300	11.0	%	(3.0)	%		10.9	%	(6.7)	%

(1)For purposes of our model, we assume interest rates will not go below zero. This "floor" limits the effect of a potential negative interest rate shock in a low rate environment.

(2)This percentage change represents the impact to net interest income for a one-year period, assuming there is no change in the structure of the balance sheet.

(3)This percentage change represents the impact to the net present value of equity, assuming there is no change in the structure of the balance sheet.

The changes in interest rate sensitivity between December 31, ~~2022~~2023 and March 31, ~~2023~~2024 reflected the impact of higher market interest rates, a ~~flatter~~flat to inverted yield curve and changes to overall balance sheet composition. Some of the assumptions made in the simulation model may not materialize and unanticipated events and circumstances will occur. We do not allow for negative rate assumptions in our model, but actual results in extreme interest rate decline scenarios may result in negative rate assumptions which may cause the modeling results to be inherently unreliable. In addition, the simulation model does not take into account any future actions that we could undertake to mitigate an adverse impact due to changes in interest rates from those expected, in the actual level of market interest rates or competitive influences on our deposits.

Current Banking Environment

Industry events, including bank failures, have led to uncertainty and concerns regarding the liquidity positions of the banking sector. These failures underscore the importance of maintaining access to diverse sources of funding. Market conditions and external factors may unpredictably impact the competitive landscape for deposits in the banking industry. Additionally, the ~~rising~~higher interest rate environment has increased competition for liquidity and the premium at which liquidity is available to meet funding needs. Reliance on secondary funding sources could increase the Company's overall cost of funding and reduce net interest income. As of March 31, ~~2023,~~2024, the Company had available contingent liquidity of ~~$5.8~~$5.1 billion which is equal to ~~82%~~78% of its total deposits and the level of uninsured deposits was ~~only 14%~~8% of total deposits. The Company believes it has sufficient liquidity to meet its current needs.

5859

ITEM 4CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company carried out an evaluation, with the participation of our management and under the supervision of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined under Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, ~~2023.~~2024.

Changes in Internal Control over Financial Reporting

As required by Rule 13a-15(d), our management, including our Chief Executive Officer and Chief Financial Officer, also conducted an evaluation of our internal control over financial reporting to determine whether any changes occurred during the quarter ended March 31, ~~2023~~2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There were no changes to our internal control over financial reporting that occurred during the quarter ended March 31, ~~2023~~2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1LEGAL PROCEEDINGS

Because the nature of our business involves, among other things, the collection of numerous accounts, the validity of liens and compliance with various state and federal laws, we are subject to various legal proceedings in the ordinary course of our business related to foreclosures, bankruptcies, condemnation and quiet title actions and alleged statutory and regulatory violations. We are also subject to legal proceedings in the ordinary course of business related to employment and other consumer matters. We do not expect that these proceedings, either individually or taken as a whole, will have a material adverse effect on our business, financial position or our results of operations. There are currently no matters that, in the opinion of management, would have a material adverse effect on our consolidated balance sheet, results of operations or liquidity, or for which there would be a reasonable possibility of such a loss based on information known at this time.

On April 11, 2024, a putative shareholder of the Company filed a complaint related to the pending Merger transaction in the U.S. District Court for the Southern District of New York (the “Complaint”). The action is captioned as Marsha Ederer v. HomeStreet, Inc. et al., No. 24-cv-02748. The Complaint named as defendants the Company and the Company’s Board of Directors. The Complaint alleges, among other things, that the proxy statement/prospectus filed with the SEC on March 8, 2024 in connection with the Merger was materially incomplete and misleading. This, according to the Complaint, violated Section 14(a) of the Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 14a-9 promulgated thereunder and Section 20(a) of the Exchange Act. The Complaint seeks, among other things: (i) an injunction enjoining the Merger, (ii) rescission or rescissory damages in the event the Merger contemplated by the Merger Agreement is consummated, (iii) direction that defendants cause a revised proxy statement/prospectus to be disseminated, (iv) costs of the action, including plaintiffs’ attorneys’ fees and experts’ fees, and (v) other relief the court may deem just and proper. The Complaint remains pending, but no defendant in the case has been served, and the plaintiff has taken no steps to pursue the litigation.

Additional lawsuits arising out of the Merger may be filed in the future. There can be no assurance that any of the defendants will be successful in the outcome of any pending or any potential future lawsuits. HomeStreet believes that the Complaint is without merit and intends to defend vigorously against the Complaint.

ITEM 1ARISK FACTORS

Refer to Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023 for a discussion of factors that could materially and adversely affect our business, financial condition, liquidity, results of operations and capital position. There have been no material changes in our risk factors from those described in our 2023 Annual Report on Form 10-K, other than the updates to the risk factor set forth below.

Regulatory approvals may not be received, have taken longer than expected, or may impose conditions that are not presently anticipated or that could have an adverse effect on the combined company following the Merger.

Before the Merger may be completed, various consents, approvals, waiver or non-objections must be obtained from state and federal governmental authorities, including the Federal Reserve Board, the Texas Department of Banking and the Director of the State of Washington Department of Financial Institutions. Satisfying the requirements of these governmental authorities have delayed and may further delay the completion of the Merger, or one or more of these approvals may not be obtained at all. In addition, these governmental authorities may include conditions or restrictions on the completion of the Merger, or require changes to the terms of the Merger. Under the Merger Agreement, the parties are not obligated to complete the Merger should any required regulatory approval contain any condition or restriction that would reasonably be expected to have a “material adverse effect” (as defined in the Merger Agreement) on the surviving entity in the Merger and its subsidiaries, taken as a whole, after giving effect to the Merger and the related merger of HomeStreet Bank into a wholly owned subsidiary of FirstSun.

Because the market price of FirstSun common stock will fluctuate, the Company’s shareholders cannot be certain of the market value of the Merger consideration they will receive.

In the Merger, each share of Company common stock that is issued and outstanding immediately prior to the effective time of the Merger (except for certain excluded shares) will be converted into 0.3867 of a share of FirstSun common stock. This exchange ratio is fixed and will not be adjusted for changes in the market price of either FirstSun common stock or Company common stock. Stock price changes may result from a variety of factors, including general market and economic conditions, changes in FirstSun’s and the Company’s businesses, operations and prospects, volatility in the prices of securities in global financial markets, including market prices for the common stock of other banking companies, and changes in laws and regulations, many of which are beyond FirstSun’s and the Company’s control. The value that the Company’s shareholders will receive upon the closing of the Merger will depend on the market price of FirstSun common stock at the closing of the Merger, which is currently traded only on the OTC Bulletin Board but is expected to be approved for listing on the Nasdaq Stock Market prior to the effective time of the Merger. Accordingly, at the time of the shareholder meeting of the Company to vote on the Merger Agreement, shareholders may not know the market value of the consideration that they will receive upon completion of the Merger.

Issuance of shares of FirstSun common stock in connection with the Merger may adversely affect the market price of FirstSun common stock.

In connection with the payment of the merger consideration, FirstSun will issue shares of FirstSun common stock to the Company’s shareholders. In addition, FirstSun will issue up to approximately 4.8 million shares of its common stock to certain investors in exchange for up to $155 million concurrently with the closing of the Merger. The issuance of these new shares of FirstSun common stock may result in fluctuations in the market price of FirstSun common stock, including a stock price decrease.

In connection with the Merger, FirstSun will assume the Company’s outstanding debt obligations under its indentures and issue subordinated debt, and the combined company’s level of indebtedness following the completion of the Merger could adversely affect the combined company’s ability to raise additional capital and to meet its obligations under its existing indebtedness.

In connection with the Merger, FirstSun will assume the Company’s outstanding debt obligations under the Company’s indentures. In addition, FirstSun is expected to issue prior to or as of the closing of the Merger at least $48.5 million of subordinated debt. FirstSun’s existing debt, together with any future incurrence of additional indebtedness, and the assumption of the Company’s outstanding indebtedness and issuance of subordinated debt in connection with the Merger, could have important consequences for the combined company’s creditors and the combined company’s stockholders. For example, it could:

•limit the combined company’s ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes;

•restrict the combined company from making strategic acquisitions or cause the combined company to make non-strategic divestitures;

•restrict the combined company from paying dividends to its stockholders;

•increase the combined company’s vulnerability to general economic and industry conditions; and

•require a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on the combined company’s indebtedness, thereby reducing the combined company’s ability to use cash flows to fund its operations, capital expenditures and future business opportunities.

The Merger Agreement limits the Company’s ability to pursue alternatives to the Merger and may discourage other companies from trying to acquire the Company.

The Merger Agreement contains “no shop” covenants that restrict each of FirstSun’s and the Company’s ability to, directly or indirectly, among other things, initiate, solicit, knowingly encourage or knowingly facilitate, inquiries or proposals with respect to, or, subject to certain exceptions generally related to the exercise of fiduciary duties by FirstSun’s and the Company’s respective board of directors, engage in any negotiations concerning, or provide any confidential or non-public information or data relating to, any acquisition proposal. These provisions, which include a $10 million termination fee payable by the Company under certain circumstances (which may be reduced to $2.6 million if the Company or FirstSun terminates the Merger Agreement after the Company receives a competing proposal that constitutes a superior proposal under the Merger Agreement prior to 11:59 p.m. New York time on May 30, 2024), may discourage a potential third-party acquirer that might have an interest in acquiring all or a significant part of the Company from considering or proposing that acquisition.

Holders of Company common stock will have reduced ownership and voting interest in the combined company after the consummation of the Merger and have less influence over management and the policies of the combined company.

Shareholders of FirstSun and the Company currently have the right to vote in the election of the board of directors and on other matters affecting FirstSun and the Company, respectively. Assuming the Merger is completed, each Company shareholder (subject to certain exceptions) will become a holder of common stock of the combined company, together with existing FirstSun stockholders. The Company shareholders will then own approximately 19% of the combined company (after taking into account up to approximately 4.8 million shares to be issued to such equity investors concurrently with the closing of the Merger). Because of this, the Company’s shareholders in the aggregate will have less influence on the management and policies of the combined company than they now have on the management and policies of the Company.

Shareholder litigation could prevent or delay the completion of the Merger or otherwise negatively impact the business and operations of FirstSun and the Company.

On April 11, 2024, a putative shareholder of the Company filed a complaint against the Company and the Company’s Board of Directors in the U.S. District Court for the Southern District of New York (the “Complaint”), alleging, among other things, that the proxy statement/prospectus filed with the SEC on March 8, 2024 in connection with the Merger was materially incomplete and misleading. The Complaint seeks remedies, including an injunction enjoining the Merger and rescission or rescissory damages in the event the Merger contemplated by the Merger Agreement is consummated. Additional lawsuits may be filed in the future.

One of the conditions to the closing is that there must be no order, injunction or decree issued by any court or governmental entity of competent jurisdiction or other legal restraint preventing the consummation of the Merger or any of the other transactions contemplated by the Merger Agreement. If any plaintiff were successful in obtaining an injunction prohibiting FirstSun or the Company from completing the Merger or any of the other transactions contemplated by the Merger Agreement, then such injunction may delay or prevent the effectiveness of the Merger and could result in significant costs to FirstSun or the Company, including any cost associated with the indemnification of directors and officers of each company. FirstSun and the Company may incur additional costs in connection with the defense or settlement of any stockholder or shareholder lawsuits filed in connection with the Merger. Such litigation could have an adverse effect on the financial condition and results of operations of FirstSun and the Company and could prevent or delay the completion of the Merger.

6062

ITEM 2UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Sales of Unregistered Securities

There were no sales of unregistered securities during the first quarter of ~~2023.~~2024.

ITEM 3DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5OTHER INFORMATION

~~Not applicable.~~During the quarter ended March 31, 2024, none of our directors or officers informed us of the adoption or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408.

6163

ITEM 6EXHIBITS

EXHIBIT INDEX


Exhibit Number						Description

~~10.1~~2.1						~~Executive Employment~~ Agreement ~~between~~and Plan of Merger, dated as of January 16, 2024, by and among HomeStreet, Inc., ~~HomeStreet Bank~~FirstSun Capital Bancorp and ~~Godfrey~~ Dynamis Subsidiary, Inc. (incorporated by reference to Exhibit 2.1 to HomeSt B. r ~~Evans, dated~~eet, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January ~~25, 2018~~19, 2024)
~~10.2~~2.2						Amendment No. 1 to ~~Executive Employment~~the Agreement ~~between~~and Plan of Merger, dated as of April 30,2024, by and among HomeStreet, Inc., ~~HomeStreet Bank~~FirstSun Capital Bancorp and ~~Godfrey~~ B. ~~Evans, dated July 29, 2020~~
~~10.3~~						~~Second Amendment~~Dynamis Subsidiary, Inc. (incorporated by reference to ~~Executive Employment Agreement between~~Exhibit 2.1 to HomeStreet, Inc.~~, HomeStreet Bank~~’s Current Report on Form 8-K filed with the Securities and ~~Godfrey~~ B. ~~Evans, dated December~~ 13 ~~, 2022~~Exchange Commission on April 30, 2024)
31.1						Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.
31.2						Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.
32 (1)						Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith.
101 INS						Inline XBRL Instance Document
101.SCH						Inline XBRL Taxonomy Extension Schema Document
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF						Inline XBRL Taxonomy Extension Label Linkbase Document
101.LAB						Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.PRE						Inline XBRL Taxonomy Extension Definitions Linkbase Document
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


(1)			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.

6264

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 May ~~10, 2023.~~8, 2024.


			HomeStreet, Inc.

			By:			/s/ Mark K. Mason
						Mark K. Mason
						President and Chief Executive Officer
						(Principal Executive Officer)


			HomeStreet, Inc.

			By:			/s/ John M. Michel
						John M. Michel
						Executive Vice President and Chief Financial Officer
						(Principal Financial Officer)


	For the quarter ended
(in thousands, except ratio and rate)	March 31, 2023			December 31, 2022			March 31, 2022

Return on average tangible equity (annualized)
Average shareholders' equity	$	578,533		$	565,950		$	698,598
Less: Average goodwill and other intangibles	(30,969)			(30,133)			(31,624)
Average tangible equity	$	547,564		$	535,817		$	666,974

Net income	$	5,058		$	8,501		$	19,951
Adjustments (tax effected)
Amortization on core deposit intangibles	459			183			191
Tangible income applicable to shareholders	$	5,517		$	8,684		$	20,142
Ratio	4.1		%	6.4		%	12.2		%

Efficiency ratio
Noninterest expense
Total	$	52,491		$	50,420		$	54,473
Adjustments:

State of Washington taxes	(555)			(597)			(506)
Adjusted total	$	51,936		$	49,823		$	53,967

Total revenues
Net interest income	$	49,376		$	55,687		$	54,546
Noninterest income	10,190			9,677			15,558

Total	$	59,566		$	65,364		$	70,104

Ratio	87.2		%	76.2		%	77.0		%

Effective tax rate used in computations above	22.0		%	22.0		%	22.0		%