What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-04 compared with 2023-05-10 · 280 added, 144 removed, 1056 unchanged (29% of the section changed)

3 unchanged sentences

CONSOLIDATED BALANCE SHEETS

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

(in thousands, except share data) (Unaudited)

10 unchanged sentences

Other real estate owned ("OREO") 1,697 1,839

Goodwill and other intangible assets 51,862 29,980

Goodwill and other intangibles 11,217 29,980

Other assets 327,933 294,709

19 unchanged sentences

CONSOLIDATED INCOME STATEMENTS

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

(in thousands, except share and per share data) 2023 2022 2023 2022

9 unchanged sentences

Total interest expense

57,231 7,635 104,906 12,117

Net interest income

15 unchanged sentences

General, administrative and other 9,875 6,768 20,230 15,783

Goodwill impairment charge 39,857 — 39,857 —

Total noninterest expense

90,781 50,637 143,272 105,110

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:

Income (loss) before income taxes ( 36,625 ) 22,432 ( 30,143 ) 47,063

Income tax expense (benefit) ( 5,183 ) 4,711 ( 3,759 ) 9,391

Net income (loss) $ ( 31,442 ) $ 17,721 $ ( 26,384 ) $ 37,672

Net income (loss) per share:

Basic $ ( 1.67 ) $ 0.95 $ ( 1.41 ) $ 1.97

( 1.67 ) 0.94 ( 1.41 ) 1.95

Weighted average shares outstanding:

5 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

(in thousands) 2023 2022 2023 2022

Net income $ 5,058 $ 19,951

Net income (loss) $ ( 31,442 ) $ 17,721 $ ( 26,384 ) $ 37,672

Other comprehensive income (loss):

6 unchanged sentences

— — ( 1 ) ( 17 )

( 5,313 ) ( 10,211 ) ( 1,713 ) ( 26,400 )

Other comprehensive income (loss) ( 15,011 ) ( 32,334 ) ( 1,239 ) ( 84,403 )

9 unchanged sentences

income (loss) Total shareholders' equity

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 June 30, 2022

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

Net income — — 17,721 — 17,721

6 unchanged sentences

( 9,125 ) ( 163 ) ( 276 ) — ( 439 )

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

For the quarter ended March 31, 2023

Balance, June 30, 2022 18,712,789 $ 224,776 $ 419,254 $ ( 63,263 ) $ 580,767

For the six months ended June 30, 2022

Balance, December 31, 2021 20,085,336 $ 249,856 $ 444,343 $ 21,140 $ 715,339

7 unchanged sentences

( 1,498,765 ) ( 27,377 ) ( 48,964 ) — ( 76,341 )

Balance, June 30, 2022 18,712,789 $ 224,776 $ 419,254 $ ( 63,263 ) $ 580,767

For the quarter ended June 30, 2023

Balance, March 31, 2023 18,767,811 $ 227,293 $ 433,459 $ ( 85,758 ) $ 574,994

Net income (loss) — — ( 31,442 ) — ( 31,442 )

Share-based compensation expense — 968 — — 968

Common stock issued - Stock grants 8,885 — — — —

Other comprehensive income (loss) — — — ( 15,011 ) ( 15,011 )

Dividends declared on common stock ($ 0.10 per share)

— — ( 1,885 ) — ( 1,885 )

Common stock repurchased

( 99 ) ( 1 ) — — ( 1 )

Balance, June 30, 2023 18,776,597 $ 228,260 $ 400,132 $ ( 100,769 ) $ 527,623

For the six months ended June 30, 2023

Balance, December 31, 2022 18,730,380 $ 226,592 $ 435,085 $ ( 99,530 ) $ 562,147

Net income (loss) — — ( 26,384 ) — ( 26,384 )

Share-based compensation expense

— 1,984 — — 1,984

Common stock issued - Stock grants 59,311 — — — —

Other comprehensive income (loss) — — — ( 1,239 ) ( 1,239 )

Dividends declared on common stock ($ 0.45 per share)

— — ( 8,569 ) — ( 8,569 )

Common stock repurchased

( 13,094 ) ( 316 ) — — ( 316 )

Balance, June 30, 2023 18,776,597 $ 228,260 $ 400,132 $ ( 100,769 ) $ 527,623

See accompanying notes to consolidated financial statements

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Quarter Ended March 31,

Six Months Ended June 30,

(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:

Net income (loss) $ ( 26,384 ) $ 37,672

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

Goodwill impairment charge 39,857 —

Provision for credit losses 224 ( 9,000 )

8 unchanged sentences

Share-based compensation expense 1,984 2,297

Deferred income tax expense (benefit) ( 4,034 ) 5,363

Deferred income tax expense 5,261 6,991

Origination of LHFS ( 180,373 ) ( 476,350 )

15 unchanged sentences

Proceeds from sale of OREO 274 952

Net increase in LHFI

( 39,408 ) ( 328,288 )

Net decrease (increase) in LHFI 7,885 ( 1,226,169 )

Purchase of premises and equipment ( 2,033 ) ( 2,014 )

3 unchanged sentences

Net cash provided by (used in) investing activities 342,502 ( 1,574,720 )

Quarter Ended March 31,

Six Months Ended June 30,

(in thousands) 2023 2022

3 unchanged sentences

Proceeds from other long-term borrowings 745,000 —

Repayment of other long-term borrowings ( 100,000 ) —

Proceeds from debt issuance, net — 98,036

2 unchanged sentences

Dividends paid on common stock ( 8,569 ) ( 13,797 )

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 (used in) financing activities ( 211,259 ) 1,439,652

Net increase in cash and cash equivalents 100,273 10,063

Cash and cash equivalents, beginning of year 72,828 65,214

6 unchanged sentences

Increase in lease assets and lease liabilities 1,413 3,858

LHFI foreclosed and transferred to OREO — 1,018

Loans transferred from LHFI to LHFS, net 2,973 7,834

27 unchanged sentences

The application of the acquisition method of accounting resulted in recording goodwill of $ 12 million and a core deposit intangible of $ 11 million.

Goodwill is recorded upon completion of a business combination as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date.

Goodwill has been determined to have an indefinite useful life and is not amortized, but tested for impairment at least annually or more frequently if events and circumstances occur that indicate it is more likely than not the fair value of the reporting unit is less than its carrying value necessitating an impairment test.

The Company performs its annual impairment testing on August 31 each year, or sooner if a triggering event occurs.

Triggering events include, among other factors, declines in historical or projected revenue, operating income or cash flows, and sustained declines in the Company’s stock price or market capitalization, considered both in absolute terms and relative to peers.

As a result of sustained decreases in the Company’s stock price and associated market value during the second quarter of 2023, the Company conducted an impairment analysis of its goodwill as of June 30, 2023.

We applied an income-based valuation approach using the Company’s strategic forecast, general market growth assumptions and other market-based inputs, which determined, that goodwill was impaired as the indicated enterprise fair value of the Company was lower than the book value of equity as of the measurement date.

As a result, we recorded an impairment charge of our entire goodwill balance of $ 39.9 million as the deficit of enterprise fair value to book value of equity exceeded the amount of goodwill on the balance sheet.

This was a non-cash charge to earnings and had no impact on tangible or regulatory capital, cash flows or our liquidity position.

The following table presents the changes in the carrying amount of goodwill in 2023:

(in thousands)

Balance, December 31, 2022 $ 27,900

Additions - branch acquisition in February 2023 11,957

Goodwill impairment charge ( 39,857 )

Balance June 30, 2023 $ —

Recent Accounting Developments

6 unchanged sentences

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.

The adoption of these ASUs did not have a material impact on the Company’s financial position or results of operations.

In March 2022, the FASB issued ASU No.

4 unchanged sentences

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.

We prospectively adopted the vintage table disclosure requirement of ASU 2022-02 on January 1, 2023.

The adoption of ASU 2022-02 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):

1 unchanged sentence

ASU 2023-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2023.

ASU 2023-02 is not expected to have a material impact on the Company’s consolidated financial statements.

ASU 2023-02 is not expected to have a material impact on the Company’s financial position or results of operations.

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 June 30, 2023

(in thousands) Amortized

24 unchanged sentences

$ 2,441 $ — $ ( 56 ) $ 2,385

At March 31, 2023, and December 31, 2022, the Company held $ 62 million and $ 19 million, respectively, of trading securities, consisting of US Treasury notes used as economic hedges of our mortgage servicing rights, which are carried at fair value and included as investment securities on the balance sheet.

For the quarters ended March 31, 2023 and 2022, net gains of $ 0.6 million and net losses of $ 0.7 million on trading securities, respectively, were recorded in servicing income.

At June 30, 2023, and December 31, 2022, the Company held $ 40 million and $ 19 million, respectively, of trading securities, consisting of US Treasury notes used as economic hedges of our mortgage servicing rights, which are carried at fair value and included with investment securities on the balance sheet.

For the quarters ended June 30, 2023 and 2022, net losses of $ 1.1 million and $ 3.1 million on trading securities, respectively, and for the six months ended June 30, 2023 and 2022, net losses of $ 0.4 million and $ 3.9 million on trading securities, respectively, were recorded in servicing income.

MBS and CMOs represent securities issued 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 and December 31, 2022, 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.

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 June 30, 2023 and December 31, 2022, 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 June 30, 2023

Less than 12 months 12 months or more Total

25 unchanged sentences

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 or December 31, 2022.

In addition, as of March 31, 2023 and December 31, 2022, 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 Company has not identified any expected credit losses on its debt securities as of June 30,

2023 or December 31, 2022.

In addition, as of June 30, 2023 and December 31, 2022, 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 June 30, 2023

Within one year After one year

38 unchanged sentences

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 and December 31, 2022 was 3.15 % and 3.08 %, respectively.

The weighted average yield of MBS and CMOs as of June 30, 2023 and December 31, 2022 was 3.12 % and 3.08 %, respectively.

Sales of AFS investment securities were as follows:

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

(in thousands) 2023 2022 2023 2022

3 unchanged sentences

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 June 30, 2023 At December 31, 2022

Federal Reserve Bank to secure borrowings $ 644,636 $ —

3 unchanged sentences

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 the quarters ended March 31, 2023 and 2022, respectively .

Tax-exempt interest income on investment securities was $ 2.8 million and $ 3.1 million for the quarters ended June 30, 2023 and 2022, respectively and $ 5.6 million and $ 5.8 million for the six months ended June 30, 2023 and 2022, respectively.

NOTE 3- LOANS AND CREDIT QUALITY:

3 unchanged sentences

LHFI consists of the following:

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

(in thousands) At June 30, 2023 At December 31, 2022

Non-owner occupied CRE $ 650,710 $ 658,085

14 unchanged sentences

$ 7,395,151 $ 7,384,820

(1) Includes $ 5.2 million and $ 5.9 million at March 31, 2023 and December 31, 2022, respectively, 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 billion at March 31, 2023 and December 31, 2022, respectively, were pledged to secure borrowings from the Federal Home Loan Bank ("FHLB") and loans totaling $ 562 million and $ 497 million at March 31, 2023 and December 31, 2022, respectively, were pledged to secure borrowings from the Federal Reserve Bank of San Francisco ("FRBSF").

(1) Includes $ 1.3 million and $ 5.9 million at June 30, 2023 and December 31, 2022, respectively, 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 $ 5.8 billion and $ 5.2 billion at June 30, 2023 and December 31, 2022, respectively, were pledged to secure borrowings from the Federal Home Loan Bank ("FHLB") and loans totaling $ 589 million and $ 497 million at June 30, 2023 and December 31, 2022, 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, 2023, single family and multifamily loans in the state of Washington and California, represented 10 % and 36 % of the total LHFI portfolio, respectively.

At June 30, 2023, single family and multifamily loans in the state of Washington and California, represented 10 % and 36 % of the total LHFI portfolio, respectively.

At December 31, 2022, multifamily loans in the state of California represented 36 % of the total LHFI portfolio.

2 unchanged sentences

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 of 2023, the historical expected loss rates increased from December 31, 2022 due to product mix risk composition changes.

During the first quarter of 2023, the qualitative factors decreased due to the continued favorable performance of our loan portfolio.

As of March 31, 2023, the Bank expects deterioration in collateral values and economic conditions over the two-year forecast period in the markets in which it operates.

As of June 30, 2023, the historical expected loss rates decreased when compared to December 31, 2022 due to product mix risk composition changes.

During the second quarter of 2023, the qualitative factors decreased due to the continued favorable performance of our loan portfolio.

As of June 30, 2023, the Bank expects deterioration in collateral values and economic conditions over the two-year forecast period in the markets in which it operates.

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 million at both March 31, 2023 and December 31, 2022.

The allowance for unfunded commitments was $ 1.7 million and $ 2.2 million at June 30, 2023 and December 31, 2022, respectively.

The Bank has elected to exclude accrued interest receivable from the evaluation of the ACL.

Accrued interest on LHFI was $ 27.6 million and $ 26.9 million at March 31, 2023 and December 31, 2022, respectively, and was reported in other assets in the consolidated balance sheets.

Accrued interest on LHFI was $ 27.0 million and $ 26.9 million at June 30, 2023 and December 31, 2022, 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,

Quarter Ended June 30, Six Months Ended June 30,

(in thousands) 2023 2022 2023 2022

13 unchanged sentences

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

Quarter Ended March 31, 2023

Quarter Ended June 30, 2023

(in thousands) Beginning balance Charge-offs Recoveries Provision Ending balance

16 unchanged sentences

Total ACL $ 41,500 $ ( 256 ) $ 145 $ 111 $ 41,500

Quarter Ended March 31, 2022

Quarter Ended June 30, 2022

(in thousands) Beginning balance Charge-offs Recoveries Provision

17 unchanged sentences

Total ACL $ 37,944 $ ( 682 ) $ 309 $ ( 216 ) $ 37,355

Six Months Ended June 30, 2023

(in thousands) Beginning balance Charge-offs Recoveries Provision Ending

Non-owner occupied CRE $ 2,102 $ — $ — $ 140 $ 2,242

Multifamily 10,974 — — ( 1,279 ) 9,695

Construction/land development

Multifamily construction 998 — — 568 1,566

CRE construction 196 — — ( 27 ) 169

Single family construction 12,418 — — ( 1,351 ) 11,067

Single family construction to permanent 1,171 — — 250 1,421

Total 27,859 — — ( 1,699 ) 26,160

Commercial and industrial loans

Owner occupied CRE 1,030 — — ( 100 ) 930

Commercial business 3,247 ( 799 ) 48 1,341 3,837

Total 4,277 ( 799 ) 48 1,241 4,767

Consumer loans

Single family 5,610 — 17 990 6,617

Home equity and other 3,754 ( 140 ) 174 168 3,956

Total 9,364 ( 140 ) 191 1,158 10,573

Total ACL $ 41,500 $ ( 939 ) $ 239 $ 700 $ 41,500

Six Months Ended June 30, 2022

(in thousands) Beginning balance Charge-offs Recoveries Provision Ending

Non-owner occupied CRE $ 7,509 $ — $ — $ ( 5,329 ) $ 2,180

Multifamily 5,854 — — 4,220 10,074

Construction/land development

Multifamily construction 507 — — 59 566

CRE construction 150 — — 35 185

Single family construction 6,411 — — 4,276 10,687

Single family construction to permanent 1,055 — — 104 1,159

Total 21,486 — — 3,365 24,851

Commercial and industrial loans

Owner occupied CRE 5,006 — — ( 3,914 ) 1,092

Commercial business 12,273 ( 660 ) 69 ( 8,104 ) 3,578

Total 17,279 ( 660 ) 69 ( 12,018 ) 4,670

Consumer loans

Single family 4,394 — 140 ( 507 ) 4,027

Home equity and other 3,964 ( 66 ) 188 ( 279 ) 3,807

Total 8,358 ( 66 ) 328 ( 786 ) 7,834

Total ACL $ 47,123 $ ( 726 ) $ 397 $ ( 9,439 ) $ 37,355

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 June 30, 2023

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

43 unchanged sentences

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

At March 31, 2023

At June 30, 2023

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

82 unchanged sentences

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

At March 31, 2023

For the Six Months Ended June 30, 2023

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

8 unchanged sentences

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

At March 31, 2023

At June 30, 2023

(in thousands) Land 1-4 Family Non-residential real estate Other non-real estate Total

Commercial real estate loans

Non-owner occupied commercial real estate

$ — $ — $ 16,800 $ — $ 16,800

Construction/land development

Commercial real estate construction

3,960 — — — 3,960

Total 3,960 — 16,800 — 20,760

Commercial and industrial loans

17 unchanged sentences

The following table presents nonaccrual status for loans:

At March 31, 2023 At December 31, 2022

At June 30, 2023 At December 31, 2022

(in thousands) Nonaccrual with no related ACL Total Nonaccrual Nonaccrual with no related ACL Total Nonaccrual

Commercial real estate loans

Non-owner occupied commercial real estate

$ 16,800 $ 16,800 $ — $ —

Construction/land development

Commercial real estate construction

3,960 3,960 — —

Total 20,760 20,760 — —

Commercial and industrial loans

9 unchanged sentences

The following tables present an aging analysis of past due loans by loan portfolio segment and loan sub-class:

At March 31, 2023

At June 30, 2023

Past Due and Still Accruing

47 unchanged sentences

% 0.06 % 0.03 % 0.06 % 0.14 % 0.29 % 99.71 % 100.00 %

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

(1) Includes loans whose repayments are insured by the FHA or guaranteed by the VA or Small Business Administration ("SBA") of $ 11.3 million and $ 10.6 million at June 30, 2023 and December 31, 2022, 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 million of loans at March 31, 2023 and December 31, 2022, respectively, 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.

(3) Includes $ 1.3 million and $ 5.9 million of loans at June 30, 2023 and December 31, 2022, respectively, 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"), 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.

The Company provides modifications to borrowers experiencing financial difficulty ("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 in the quarters ended March 31, 2023 and 2022 did not have a material impact on the ACL.

The following tables provide information related to loans modified during the quarters ended March 31, 2023 and 2022 to borrowers experiencing financial difficulty, disaggregated by class of financing receivable and type of concession granted:

The granting of modifications in the quarters and six months ended June 30, 2023 and 2022 did not have a material impact on the ACL.

The following tables provide information related to loans modified during the quarters and six months ended June 30, 2023 and 2022 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

Quarter Ended June 30, Six Months Ended June 30,

2023 2022 2023 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 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 $ — — % $ 340 0.04 % $ — — % $ 340 0.04 %

Home equity and other — — % — — % — — % 70 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

Quarter Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Commercial business $ 4,734 1.27 % $ 1,578 0.40 % $ 4,734 1.27 % $ 1,578 0.40 %

Single family — — % 236 0.03 % — — % 272 0.03 %

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

Quarter Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Single family $ — — % $ — — % $ — — % $ 823 0.10 %

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

Quarter Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Single family $ 942 0.09 % $ 4,048 0.49 % $ 1,120 0.10 % $ 10,084 1.23 %

1 unchanged sentence

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

Quarter Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Single family $ 192 0.02 % $ 2,775 0.34 % $ 192 0.02 % $ 6,898 0.84 %

1 unchanged sentence

Interest Rate Reduction

Quarter Ended March 31, 2023 Quarter Ended March 31, 2022

Quarter Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Single family Reduced weighted-average contractual interest rate from 5.25 % to 5.00 %.

Reduced weighted-average contractual interest rate from 4.79 % to 3.56 %.

Reduced weighted-average contractual interest rate from 5.25 % to 5.00 %.

Reduced weighted-average contractual interest rate from 4.35 % to 3.36 %.

Significant Payment Delay

Quarter Ended March 31, 2023 Quarter Ended March 31, 2022

Quarter Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Single Family Provided payment deferrals to borrowers.

2 unchanged sentences

A weighted average 0.51 % of loan balances were capitalized and added to the remaining term of the loan.

Provided payment deferrals to borrowers.

A weighted average 0.52 % of loan balances were capitalized and added to the remaining term of the loan.

Provided payment deferrals to borrowers.

A weighted average 0.20 % of loan balances were capitalized and added to the remaining term of the loan.

Home equity and other — — — Provided payment deferrals to borrowers.

1 unchanged sentence

Term Extension

Quarter Ended March 31, 2023 Quarter Ended March 31, 2022

Quarter Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Commercial business Added a weighted average 0.3 years to the life of loans, which reduced the monthly payment amounts to the borrowers.

Added a weighted average 0.8 years to the life of loans, which reduced the monthly payment amounts to the borrowers.

Added a weighted average 0.3 years to the life of loans, which reduced the monthly payment amounts to the borrowers.

Added a weighted average 0.8 years to the life of loans, which reduced the monthly payment amounts to the borrowers.

Single family Added a weighted average 2.9 years to the life of loans, which reduced the monthly payment amounts to the borrowers.

Added a weighted average 6.4 years to the life of loans, which reduced the monthly payment amounts to the borrowers.

Added a weighted average 5.9 years to the life of loans, which reduced the monthly payment amounts to the borrowers.

Added a weighted average 4.5 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.

1 unchanged sentence

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 on or after January 1, 2022 through December 31, 2022:

Payment Status (Amortized Cost Basis) at March 31, 2023

The following table depicts the payment status of loans that were classified as MBFDs on or after April 1, 2022 through March 31, 2023:

Payment Status (Amortized Cost Basis) at June 30, 2023

(in thousands) Current 30-89 Days Past Due 90+ Days Past Due

1 unchanged sentence

Single family 9,930 920 608

Home equity and other 119 — —

Total $ 14,664 $ 920 $ 608

The following tables provide the amortized cost basis as of March 31, 2023 of MFDBs 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

The following tables provide the amortized cost basis as of June 30, 2023 of MBFDs on or after April 1, 2022 through March 31, 2023 and subsequently had a payment default:

Amortized Cost Basis of Modified Loans That Subsequently Defaulted

Quarter Ended June 30, 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 $ — $ — $ — $ 215 $ 469

Amortized Cost Basis of Modified Loans That Subsequently Defaulted

Six Months Ended June 30, 2023

Single family $ — $ — $ — $ 2,245 $ 1,092

NOTE 4– DEPOSITS:

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

At March 31, 2023 At December 31, 2022

At June 30, 2023 At December 31, 2022

(dollars in thousands) Amount Weighted Average Rate Amount Weighted Average Rate

8 unchanged sentences

Certificates of deposit outstanding mature as follows:

(in thousands) March 31, 2023

(in thousands) June 30, 2023

Within one year $ 2,551,582

5 unchanged sentences

Total $ 2,725,148

The aggregate amount of certificate of deposits in denominations of more than the FDIC limit of $250 thousand at March 31, 2023 and December 31, 2022 were $ 186 million and $ 189 million, respectively.

There were $ 885 million and $ 1.4 billion of brokered deposits at March 31, 2023 and December 31, 2022, respectively.

The aggregate amount of certificate of deposits in denominations of more than the FDIC limit of $250 thousand at June 30, 2023 and December 31, 2022 were $ 177 million and $ 189 million, respectively.

There were $ 761 million and $ 1.4 billion of brokered deposits at June 30, 2023 and December 31, 2022, respectively.

NOTE 5– DERIVATIVES AND HEDGING ACTIVITIES:

1 unchanged sentence

The notional amounts and fair values for derivatives, which are included in other assets or accounts payable and other liabilities on the consolidated balance sheet, consist of the following:

At March 31, 2023

At June 30, 2023

Notional amount Fair value derivatives

21 unchanged sentences

Carrying value on consolidated balance sheet $ 893 $ ( 13,179 )

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

(1) Includes net cash collateral received of $ 13.0 million and $ 12.8 million at June 30, 2023 and December 31, 2022, respectively.

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

1 unchanged sentence

Carrying value

At March 31, 2023

At June 30, 2023

Derivative assets $ 13,843 $ ( 13,088 ) $ 755

3 unchanged sentences

Derivative liabilities ( 13,280 ) 101 ( 13,179 )

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

(1) Includes net cash collateral received of $ 13.0 million and $ 12.8 million at June 30, 2023 and December 31, 2022, respectively.

The collateral used under the Company's master netting agreements is typically cash, but securities may be used under agreements with certain counterparties.

3 unchanged sentences

Any securities pledged to counterparties as collateral remain on the consolidated balance sheets.

At March 31, 2023 and December 31, 2022, the Company had liabilities of $ 11.0 million and $ 12.8 million, respectively, in cash collateral received from counterparties and receivables of $ 0.03 million and $ 0.03 million, respectively, in cash collateral paid to counterparties.

At June 30, 2023 and December 31, 2022, the Company had liabilities of $ 13.0 million and $ 12.8 million, respectively, in cash collateral received from counterparties and receivables of $ 0.01 million and $ 0.03 million, 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,

Quarter Ended June 30, Six Months Ended June 30,

(in thousands) 2023 2022 2023 2022

1 unchanged sentence

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

$ 189 $ 2,650 $ 267 $ 7,263

Loan servicing income (loss) (2)

( 498 ) ( 2,190 ) ( 1,228 ) ( 11,629 )

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

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

— 1 ( 1 ) 160

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

(2) Comprised of 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 and December 31, 2022 were $ 240 million and $ 237 million, respectively.

The notional amount of open interest rate swap agreements executed with commercial banking customers and broker dealer counterparties at June 30, 2023 and December 31, 2022 were $ 244 million and $ 237 million, respectively.

NOTE 6– MORTGAGE BANKING OPERATIONS:

LHFS consisted of the following:

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

(in thousands) At June 30, 2023 At December 31, 2022

Single family $ 30,384 $ 14,075

2 unchanged sentences

Loans sold consisted of the following for the periods indicated:

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

(in thousands) 2023 2022 2023 2022

3 unchanged sentences

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

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

(in thousands) 2023 2022 2023 2022

5 unchanged sentences

The unpaid principal balance of loans serviced for others is as follows:

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

(in thousands) At June 30, 2023 At December 31, 2022

Single family $ 5,386,147 $ 5,436,899

1 unchanged sentence

Total $ 7,295,326 $ 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,

Quarter Ended June 30, Six Months Ended June 30,

(in thousands) 2023 2022 2023 2022

1 unchanged sentence

Additions, net of adjustments (1)

32 133 ( 111 ) 491

Realized (losses) recoveries, net (2)

4 unchanged sentences

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 million and $ 1.6 million were recorded in other assets as of March 31, 2023 and December 31, 2022, respectively.

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 $ 3.1 million and $ 1.6 million were recorded in other assets as of June 30, 2023 and December 31, 2022, 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 and December 31, 2022, delinquent or defaulted mortgage loans currently in Ginnie Mae pools that the Company has recognized on its consolidated balance sheets totaled $ 5.7 million and $ 6.9 million, respectively.

At June 30, 2023 and December 31, 2022, delinquent or defaulted mortgage loans currently in Ginnie Mae pools that the Company has recognized on its consolidated balance sheets totaled $ 4.8 million and $ 6.9 million, respectively.

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

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

(in thousands) 2023 2022 2023 2022

4 unchanged sentences

Amortization of multifamily and SBA MSRs ( 1,435 ) ( 2,337 ) ( 2,989 ) ( 4,049 )

3,531 4,655 6,962 7,839

Risk management, single family MSRs:

2 unchanged sentences

Net gain (loss) from economic hedging ( 1,592 ) ( 5,317 ) ( 1,673 ) ( 15,500 )

( 272 ) ( 994 ) ( 664 ) ( 874 )

Loan servicing income $ 3,259 $ 3,661 $ 6,298 $ 6,965

2 unchanged sentences

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

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

(in thousands) 2023 2022 2023 2022

1 unchanged sentence

Additions and amortization:

919 2,295 1,538 6,211

Amortization (1)

1 unchanged sentence

Net additions and amortization

( 707 ) ( 220 ) ( 1,312 ) 271

Changes in fair value assumptions (2)

4 unchanged sentences

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

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

(rates per annum) (1)

2023 2022 2023 2022

Constant prepayment rate ("CPR") (2)

4 unchanged sentences

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, 2023 At December 31, 2022

At June 30, 2023 At December 31, 2022

Range of Inputs Average (1)

6 unchanged sentences

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

(dollars in thousands) At June 30, 2023

Fair value of single family MSR $ 76,314

6 unchanged sentences

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

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

(in thousands) 2023 2022 2023 2022

8 unchanged sentences

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 March 31, 2023 and December 31, 2022, 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 million at both March 31, 2023 and December 31, 2022.

There were no actual losses incurred under this arrangement during the quarters ended March 31, 2023 and 2022.

As of June 30, 2023 and December 31, 2022, 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 $ 0.5 million and $ 0.6 million at June 30, 2023 and December 31, 2022, respectively.

There were no actual losses incurred under this arrangement during the quarters and six months ended June 30, 2023 and 2022.

In the ordinary course of business, the Company sells residential mortgage loans to GSEs and other entities.

1 unchanged sentence

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 billion at both March 31, 2023 and December 31, 2022.

At March 31, 2023 and December 31, 2022, 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 million and $ 2.2 million, respectively.

At June 30, 2023 and

December 31, 2022, 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 $ 1.7 million and $ 2.2 million, respectively.

NOTE 8– EARNINGS PER SHARE:

The following table summarizes the calculation of earnings per share:

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

(in thousands, except share and per share data) 2023 2022 2023 2022

Net income $ 5,058 $ 19,951

Net income (loss) $ ( 31,442 ) $ 17,721 $ ( 26,384 ) $ 37,672

Weighted average shares:

3 unchanged sentences

Diluted weighted-average number of common shares outstanding 18,775,022 18,834,443 18,765,292 19,310,750

Net income per share:

Net income (loss) per share:

Basic earnings per share $ ( 1.67 ) $ 0.95 $ ( 1.41 ) $ 1.97

Diluted earnings per share (1)

(1) Excluded from the computation of diluted earnings per share (due to their antidilutive effect) for the quarter ended March 31, 2023 and 2022 were certain unvested RSUs and PSUs.

Based on a weighted average basis, 251,821 and 13,040 unvested stock units convertible into shares of common stock were excluded for the quarters ended March 31, 2023 and 2022, respectively, because their effect would have been anti-dilutive.

( 1.67 ) 0.94 ( 1.41 ) 1.95

(1) Excluded from the computation of diluted earnings per share (due to their antidilutive effect) for the quarters and six months ended June 30, 2023 and 2022 were certain unvested RSUs and PSUs.

On a weighted average basis, 248,840 and 71,216 unvested stock units convertible into shares of common stock were excluded at June 30, 2023 and 2022, respectively, because their effect would have been anti-dilutive.

NOTE 9– FAIR VALUE MEASUREMENT:

58 unchanged sentences

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 June 30, 2023

(in thousands) Fair Value Level 1 Level 2 Level 3

53 unchanged sentences

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 and 2022.

There were no transfers between levels of the fair value hierarchy during the quarters and six months ended June 30, 2023 and 2022.

Level 3 Recurring Fair Value Measurements

The Company's 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 and 2022, see Note 6, Mortgage Banking Operations of this Quarterly Report on Form 10-Q.

For information regarding fair value changes and activity for single family MSRs during the quarters and six months ended June 30, 2023 and 2022, 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).

3 unchanged sentences

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 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.

Because these inputs are not observable in

market trades, the fall-out factor and value of servicing are considered to be 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.

9 unchanged sentences

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 million at March 31, 2023 and December 31, 2022, respectively.

The total amount of held for investment loans where fair value option election was made was $ 1.3 million and $ 5.9 million at June 30, 2023 and December 31, 2022, respectively.

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

2 unchanged sentences

Input Low High Weighted Average

March 31, 2023

June 30, 2023

Investment securities AFS $ 1,913 Income approach Implied spread to benchmark interest rate curve

9 unchanged sentences

Value of servicing 0.54 % 1.11 % 0.95 %

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

We had no LHFS where the fair value was not derived with significant observable inputs at June 30, 2023 and December 31, 2022.

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

1 unchanged sentence

Ending balance

Quarter Ended March 31, 2023

Quarter Ended June 30, 2023

Investment securities AFS $ 2,030 $ — $ — $ ( 48 ) $ ( 69 ) $ 1,913

Single family LHFI 5,231 — — ( 3,925 ) ( 37 ) 1,269

Quarter Ended March 31, 2022

Quarter Ended June 30, 2022

Investment securities AFS $ 2,307 $ — $ — $ ( 49 ) $ ( 98 ) $ 2,160

Single family LHFI 6,981 — — — ( 473 ) 6,508

Six Months Ended June 30, 2023

Investment securities AFS $ 2,009 $ — $ — $ ( 96 ) $ — $ 1,913

Single family LHFI 5,868 — — ( 4,607 ) 8 1,269

Six Months Ended June 30, 2022

Investment securities AFS $ 2,482 $ — $ — $ ( 97 ) $ ( 225 ) $ 2,160

Single family LHFI 7,287 — — — ( 779 ) 6,508

(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,

Quarter Ended June 30, Six Months Ended June 30,

(in thousands) 2023 2022 2023 2022

19 unchanged sentences

(in thousands) Fair Value Total Gains (Losses)

At or for the Quarter Ended March 31, 2023

At or for the Quarter Ended June 30, 2023

$ 4,214 $ ( 811 )

At or for the Quarter Ended March 31, 2022

At or for the Six Months Ended June 30, 2023

$ 4,214 $ ( 970 )

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

1 unchanged sentence

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

At June 30, 2023

(in thousands) Carrying

27 unchanged sentences

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 adjustments to the recorded fair value.

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 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 June 30, 2023 At December 31, 2022

(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

1 unchanged sentence

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”).

During the first six months of 2023, the Company borrowed $ 745 million and repaid $ 100 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.

The balances, maturity and rate of the outstanding borrowings from the FHLB and the FRB BTFP were as follows at March 31, 2023:

The balances, maturity and rate of the outstanding borrowings from the FHLB and the FRB BTFP were as follows at June 30, 2023:

(dollars in thousands) Amount Weighted Average Rate

3 unchanged sentences

Total $ 1,972,000 4.66 %

NOTE 11– COMMITMENTS AND CONTINGENCIES:

As of June 30, 2023, HomeStreet was obligated on $ 146 million of letters of credit to the FHLB which are being used as collateral for public fund deposits.

NOTE 12– SUBSEQUENT EVENTS:

On April 24, 2023, the Board authorized a dividend of $ 0.10 per share, payable on May 24, 2023 to shareholders of record on May 10, 2023.

On July 27, 2023, the Board authorized a dividend of $ 0.10 per share, payable on August 23, 2023 to shareholders of record on August 9, 2023.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements