What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-03-07 compared with 2024-03-06 · 222 added, 259 removed, 1832 unchanged (21% of the section changed)

4 unchanged sentences

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheet of HomeStreet, Inc.

and Subsidiaries (the "Company") as of December 31, 2023, the related consolidated statements of income, comprehensive income (loss), shareholders’ equity, and cash flows for the period ended December 31, 2023, and the related notes (collectively referred to as the "financial statements").

We have audited the accompanying consolidated balance sheets of HomeStreet, Inc.

and the Subsidiaries (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income (loss), shareholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements").

We also have audited the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework:

(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework:

2 unchanged sentences

The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

Our responsibility is to express an opinion on the Company’s financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audit of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

1 unchanged sentence

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

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Historical credit loss experience provides the basis for the estimation of expected credit losses.

As of December 31, 2023, the Company’s consolidated allowance for credit losses on loans was $40,500,000 and reversal of provision for credit losses on loans was $441,000 for the year then ended.

As of December 31, 2024, the Company’s consolidated allowance for credit losses on loans was $38,743,000 and there was no provision for credit losses on loans for the year then ended.

The Company's ACL model uses statistical analysis to determine life of loan default rates for the quantitative component and analyzes qualitative factors (“Q-Factors”) that assess the current loan portfolio and forecasted economic environment.

18 unchanged sentences

We identified the auditing of the projected prepayment speed and discount rate assumptions used in the single family MSRs valuation as a critical audit matter because of the significant judgment applied by management in evaluating these assumptions.

In addition, auditing the Company’s single family MSRs valuation required a high degree of auditor judgment and an increased extent of effort, including the need to involve third party fair value specialists to evaluate the reasonableness of management’s assumptions related to the selection of projected prepayment speeds and discount rates used in the valuation of the single family MSRs.

In addition, auditing the Company’s single family MSRs valuation required a high degree of auditor judgment and an increased

extent of effort, including the need to involve third party fair value specialists to evaluate the reasonableness of management’s assumptions related to the selection of projected prepayment speeds and discount rates used in the valuation of the single family MSRs.

The primary audit procedures we performed to address this critical audit matter included the following:

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March 7, 2025

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of HomeStreet, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of HomeStreet, Inc.

and subsidiaries (the "Company") as of December 31, 2022, the related consolidated income statements, statements of comprehensive income (loss), shareholders' equity, and cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

Seattle, Washington

March 3, 2023

We began serving as the Company’s auditor in 2013.

In 2023, we became the predecessor auditor.

HOMESTREET, INC.

11 unchanged sentences

Other real estate owned ("OREO") 2,820 3,667

Goodwill and other intangible assets 9,641 29,980

Intangible assets 7,141 9,641

Other assets 290,099 325,351

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Net interest income after provision for credit losses 120,087 167,194

Noninterest income:

Net gain on loan origination and sale activities 9,346 17,701 92,318

Noninterest income (loss):

Net gain (loss) on loan origination and sale activities ( 76,890 ) 9,346

Loan servicing income 12,497 12,648

1 unchanged sentence

Other 11,170 9,779

Total noninterest income 41,921 51,570 119,975

Total noninterest income (loss) ( 44,385 ) 41,921

Noninterest expense:

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

Net income — — 115,422 — 115,422

Share-based compensation expense — 3,398 — — 3,398

Common stock issued - Option exercise;

stock grants 260,267 2,418 — — 2,418

Other comprehensive income (loss) — — — ( 14,217 ) ( 14,217 )

Dividends declared ($ 1.00 per share)

— — ( 21,338 ) — ( 21,338 )

Common stock repurchased ( 1,971,835 ) ( 34,465 ) ( 53,629 ) — ( 88,094 )

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

Net income — — 66,540 — 66,540

Net income (loss) — — ( 27,508 ) — ( 27,508 )

Share-based compensation expense — 3,613 — — 3,613

Common stock issued - Stock grants 92,769 — — — —

Other comprehensive income (loss) — — — ( 120,670 ) ( 120,670 )

Other comprehensive income — — — 12,671 12,671

Dividends declared ($ 0.65 per share)

1 unchanged sentence

Common stock repurchased (1)

( 13,094 ) ( 316 ) — — ( 316 )

Balance, December 31, 2023 18,810,055 229,889 395,357 ( 86,859 ) 538,387

3 unchanged sentences

Other comprehensive income (loss) — — — ( 342 ) ( 342 )

Dividends declared ($ 0.65 per share)

— — ( 12,220 ) — ( 12,220 )

Common stock repurchased (1)

( 12,973 ) ( 134 ) — — ( 134 )

Balance, December 31, 2024 18,857,565 $ 233,185 $ 251,013 $ ( 87,201 ) $ 396,997

1) These amounts represent shares withheld from stock grants to pay for individual employee taxes on their stock grants.

See accompanying notes to consolidated financial statements.

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Net income (loss) $ ( 144,344 ) $ ( 27,508 )

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

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

Goodwill impairment charge — 39,857

Provision for credit losses — ( 441 )

Loss on sale of $ 990 million of multifamily loans

Depreciation and amortization, premises and equipment 6,580 7,146

7 unchanged sentences

Share-based compensation expense 3,430 3,613

Lease abandonment costs 1,064 —

Deferred income tax (benefit) expense

17,943 ( 9,129 )

Loss on debt extinguishment 452 —

Origination of LHFS ( 517,998 ) ( 362,453 )

2 unchanged sentences

Origination of MSRs ( 5,599 ) ( 3,645 )

Net gain on sale of loans originated as LHFI — ( 88 ) ( 11,377 )

Change in fair value of MSRs 4,757 5,964

1 unchanged sentence

Net fair value adjustment, gain on sale and provision for losses on other real estate owned 180 ( 975 )

Gain on sale of branches — ( 4,270 ) —

Net change in trading securities ( 5,695 ) ( 18,989 ) —

(Increase) decrease in other assets ( 44,386 ) 17,797 ( 5,796 )

Increase in accounts payable and other liabilities 37,698 6,551 5,027

Net cash provided by operating activities 8,024 218,328 173,035

Net decrease (increase) in trading securities

( 10,046 ) ( 5,695 )

Decrease (increase) in other assets

10,862 ( 44,386 )

Increase (decrease) in accounts payable and other liabilities

( 27,907 ) 37,698

Net cash provided by (used in) operating activities ( 45,921 ) 8,024

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of investment securities

( 53,232 ) ( 759,501 ) ( 179,398 )

Proceeds from sale of investment securities — 4,693

1 unchanged sentence

Proceeds from sale of OREO 126 2,972

Proceeds from sale of loans originated as LHFI — 4,613 504,584

Net cash distributed in sale of branches — ( 138,756 ) —

Net decrease (increase) in LHFI 18,958 ( 1,940,489 ) ( 683,822 )

Proceeds from sale of $ 990 million of multifamily loans

Net decrease in LHFI, excluding sale of $ 990 million of multifamily loans

194,086 18,958

Purchases of premises and equipment ( 490 ) ( 3,811 )

2 unchanged sentences

Purchases of Federal Home Loan Bank stock ( 300,496 ) ( 228,802 )

Net cash provided by (used in) investing activities 484,048 ( 2,654,148 ) ( 125,638 )

Net cash provided by investing activities 1,333,520 484,048

Years Ended December 31,

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CASH FLOWS FROM FINANCING ACTIVITIES:

Increase (decrease) in deposits, net $ ( 1,065,463 ) $ 1,472,834 $ 347,867

Decrease in deposits, net $ ( 351,043 ) $ ( 1,065,463 )

Changes in short-term borrowings, net ( 100,000 ) 84,000

1 unchanged sentence

Repayment of other long-term borrowings ( 1,155,452 ) ( 535,000 )

Proceeds from debt issuance, net — 98,036 —

Repayment of finance lease principal ( 168 ) ( 456 )

Repurchases of common stock — ( 75,000 ) ( 84,154 )

Proceeds from exercise of stock options — — 263

Dividends paid on common stock — ( 12,317 )

Net cash (used in) provided by financing activities

( 349,236 ) 2,443,434 ( 40,232 )

Net cash used in financing activities ( 1,096,663 ) ( 349,236 )

Net increase in cash and cash equivalents 190,936 142,836

4 unchanged sentences

Interest $ 298,498 $ 217,132

Federal and state income taxes ( 5,287 ) 5,201 34,429

Federal and state income taxes (net refunds)

( 637 ) ( 5,287 )

Non-cash activities:

2 unchanged sentences

Ginnie Mae loans derecognized with the right to repurchase, net 506 1,301

New investments in LIHTC partnerships 15,000 — 15,000

New investments in low income housing tax credit partnerships ("LIHTC")

LIHTC amortization

Repurchase of common stock - award shares 134 316

8 unchanged sentences

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.

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, 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 Bank, the Company’s principal operating subsidiary, is engaged in commercial banking, mortgage banking and consumer/retail banking activities.

The Bank was incorporated in the State of Washington in 1986, and, as a state-chartered non-member commercial bank, is subject to examination by the State of Washington Department of Financial Institutions and the Federal Deposit Insurance Corporation ("FDIC").

The Bank, the Company’s principal operating subsidiary, was incorporated in the State of Washington in 1986, and, as a state-chartered non-member commercial bank, is subject to examination by the State of Washington Department of Financial Institutions and the Federal Deposit Insurance Corporation ("FDIC").

Basis of Presentation

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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 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.

Our chief operating decision maker (“CODM”), the Chief Executive Officer, manages the Company’s business activities as one single operating and reportable segment at the consolidated level.

Accordingly, our CODM uses consolidated net income to measure segment profit or loss, allocate resources and assess performance.

Further, the CODM reviews and utilizes net interest income, noninterest income and noninterest expenses (compensation and benefits, information services, occupancy and general, administrative and other) at the consolidated level to manage the Company’s operations.

Reclassifications

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Purchase premiums or discounts related to mortgage-backed securities are amortized or accreted using projected prepayment speeds.

Gains and losses on the sale of AFS securities are recorded on the trade date and are determined using the specific identification method.

Gains and losses on the sale of AFS and trading securities are recorded on the trade date and are determined using the specific identification method.

Trading securities, consisting of US Treasury notes, are used as economic hedges of our mortgage servicing rights, which are carried at fair value and included as investment securities on the balance sheet.

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When qualitative factors indicate that a credit loss may exist, the Company compares the present value of cash flows expected to be collected from the security with the amortized cost basis of the security.

The Company recognizes an allowance for credit loss ("ACL") if a loss is considered to exist, measured as the difference between the present value of expected cash flows and the amortized cost basis of the security, limited by the amount that the security’s fair value is less than its amortized cost basis.

The Company recognizes an allowance for credit loss ("ACL") if a loss is determined to exist, measured as the difference between the present value of expected cash flows and the amortized cost basis of the security, limited by the amount that the security’s fair value is less than its amortized cost basis.

The Company does not believe any of these securities that were in an unrealized loss position at December 31, 2024 or 2023 have a credit loss impairment.

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FHLB stock is carried at cost and periodically evaluated for impairment based on ultimate recovery of par value.

Both cash and stock dividends are recorded as a component of interest income.

Cash dividends accrued on FHLB stock are recorded as a component of interest income.

Loans originated for sale in the secondary market or designated for whole loan sales are classified as LHFS.

5 unchanged sentences

Related gains and losses are recognized in net gain on mortgage loan origination and sale activities.

Direct loan origination costs and fees for multifamily and SBA loans classified as held for sale are deferred at origination and recognized in earnings at the time of sale.

Direct loan origination costs and fees for multifamily and SBA loans classified as held for sale are deferred at origination and recognized in gain on sale in earnings at the time of sale.

LHFI are reported at the principal amount outstanding, net of cumulative charge-offs, interest applied to principal (for loans accounted for using the cost recovery method), unamortized net deferred loan origination fees and costs and unamortized premiums or discounts on purchased loans.

When a loan is designated as held for investment, the intent is to hold these loans for the foreseeable future or until maturity or pay-off.

If subsequent changes occur as part of the balance sheet management process, the Company may change its intent to hold these loans.

Once a determination has been made to sell such loans, they are transferred to LHFS and carried at the lower of amortized cost or fair value.

If subsequent changes occur as part of the balance sheet management process, the Company may decide to sell loans classified as LHFI.

Any such loans held for an extended period before they are sold are transferred to LHFS and carried at the lower of amortized cost or fair value.

Interest on loans is recognized at the contractual rate of interest and is only accrued if deemed collectible.

Deferred fees and costs and premiums and discounts are amortized over the contractual terms of the underlying loans using the constant effective yield (the interest method) or straight-line method.

Deferred fees and costs and premiums and discounts are amortized over the contractual terms of the underlying loans using the interest method or straight-line method.

Nonaccrual Loans

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Under the cost recovery method, all cash collected is applied first to reduce the outstanding principal balance.

A loan may be returned to accrual status if all delinquent principal and interest payments are brought current and the collectability of the remaining principal and interest payments in accordance with the loan agreement is reasonably assured.

Generally, a loan may be returned to accrual status if all delinquent principal and interest payments are brought current and the collectability of the remaining principal and interest payments in accordance with the loan agreement is reasonably assured.

Loans whose repayments are insured by the Federal Housing Administration ("FHA"), guaranteed by the Department of Veterans' Affairs ("VA") or Ginnie Mae ("GNMA") are maintained on accrual status even if 90 days or more past due.

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Credit Loss Measurement

The ACL level is influenced by current conditions related to loan volumes, loan asset quality ratings ("AQR") migration or delinquency status, historic loss experience and other conditions influencing loss expectations, such as reasonable and supportable forecasts of economic conditions.

The ACL level is influenced by current conditions related to loan volumes, loan asset quality ratings ("AQR") migration or delinquency status, historical loss experience and other conditions influencing loss expectations, such as reasonable and supportable forecasts of economic conditions.

The methodology for estimating the amount of expected credit losses has two basic components:

first, a pooled component for estimated expected credit losses for pools of loans that share similar risk characteristics and second an asset-specific component involving individual loans that do not share risk characteristics with other loans and the measurement of expected credit losses for such individual loans.

The Company's ACL model methodology is to build a reserve rate using historical life of loan default rates combined with assessments of current loan portfolio information and current and forecasted economic environment and business cycle information.

The model uses statistical analysis to determine the life of loan default rates for the quantitative component and analyzes qualitative factors (Q-Factors) that assess the current loan portfolio conditions and forecasted economic environment and collateral values.

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The ACL on unfunded loan commitments is based on an estimate of unfunded commitment utilization over the life of the loan, applying the EL rate to the estimated utilization balance as of the reporting period end date.

Q-factors are not included in the calculation of expected credit losses for off-balance sheet credit exposures.

Other Real Estate Owned

9 unchanged sentences

Subsequent fair value measurements of MSRs are determined by considering the present value of estimated future net servicing cash flows.

Changes in the fair value of MSRs result from changes in (1) model inputs and assumptions and (2) modeled

amortization, representing the collection and realization of expected cash flows and curtailments over time.

The significant model inputs used to measure the fair value of MSRs include assumptions regarding market interest rates, projected prepayment speeds, discount rates, estimated costs of servicing and other income and additional expenses associated with the collection of delinquent loans.

Mortgage servicing assets for multifamily and SBA MSRs are evaluated periodically for impairment based upon the fair value of the MSRs as compared to amortized cost.

Changes in the fair value of MSRs result from changes in (1) model inputs and assumptions and (2) modeled amortization, representing the collection and realization of expected cash flows and curtailments over time.

The significant

model inputs used to measure the fair value of MSRs include assumptions regarding market interest rates, projected prepayment speeds, discount rates, estimated costs of servicing and other income and additional expenses associated with the collection of delinquent loans.

Multifamily and SBA MSRs are evaluated periodically for impairment based upon the fair value of the MSRs as compared to amortized cost.

Impairment is determined by comparing the fair value of the portfolio based on predominant risk characteristic loan type, to amortized cost.

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The Company's performance obligation for these fees is generally satisfied, and the related revenue recognized over the period in which the service is provided.

Commission Income (in Other Income)

Commission Income (in Other Noninterest Income)

Commission income primarily consists of revenue received on insurance policies.

The Company's performance obligation for commissions is generally satisfied, and the related revenue generally recognized over the course of the policy.

Credit Card Fees (in Other Income)

Credit Card Fees (in Other Noninterest Income)

The Company offers credit cards to its customers through a third party and earns a fee on each transaction and a fee for each new account activation on a net basis.

22 unchanged sentences

Lease expense for our financing leases is comprised of the amortization of the right-of-use asset and interest expense recognized based on the effective interest method.

We use the long-lived assets impairment guidance under ASC Topic 360-10-35, "Property, Plant and Equipment," to determine whether an ROU asset is impaired, and if impaired, the amount of loss to recognize.

We use the long-lived assets impairment accounting guidance to determine whether an ROU asset is impaired, and if impaired, the amount of loss to recognize.

Long-lived assets are tested for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.

3 unchanged sentences

Branch Acquisition

On February 10, 2023, the Company completed its acquisition of three branches in southern California, whereby we assumed approximately $ 376 million in deposits and purchased approximately $ 21 million in loans.

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

On February 10, 2023, the Company completed its acquisition of three branches in southern California, whereby we assumed $ 376 million in deposits and purchased $ 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.

Goodwill and Other Intangible Assets

1 unchanged sentence

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.

The Company performs its annual impairment testing in the third quarter of 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.

6 unchanged sentences

Balance, December 31, 2022 $ 27,900

Additions - branch acquisition in February 2023 11,957

Additions - branch acquisition

Goodwill impairment charge ( 39,857 )

Balance December 31, 2023 $ —

Intangible assets with definite useful lives, such as core deposit intangible assets arising from bank acquisitions, are amortized over their estimated useful lives.

Intangible assets with definite useful lives, such as core deposit intangible assets arising from bank and branch acquisitions, are amortized over their estimated useful lives.

Securities Sold Under Agreements to Repurchase

5 unchanged sentences

The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date.

We are subject to federal income tax and also state income taxes in a number of different states.

We are subject to federal income tax and also state and local income taxes in a number of different jurisdictions.

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur.

1 unchanged sentence

For tax positions not meeting the "more likely than not" test, no tax benefit is recorded.

The Company recognizes interest and penalties related to income tax matters in income tax expense.

The Company recognizes interest and penalties related to income tax matters in general, administrative and other expense.

Derivatives and Hedging Activities

12 unchanged sentences

If a derivative designated as a cash flow hedge is terminated or ceases to be highly effective, the gain or loss in other comprehensive income (loss) is amortized to earnings over the period the forecasted hedged transactions impact earnings.

If a hedged forecasted transaction is no longer probable, hedge accounting is ceased and any gain or loss included in other

comprehensive income (loss) is reported in earnings immediately, unless the forecasted transaction is at least reasonably possible of occurring, whereby the amounts remain within other comprehensive income (loss).

hedged forecasted transaction is no longer probable, hedge accounting is ceased and any gain or loss included in other comprehensive income (loss) is reported in earnings immediately, unless the forecasted transaction is at least reasonably possible of occurring, whereby the amounts remain within other comprehensive income (loss).

Derivative instruments expose us to credit risk in the event of nonperformance by counterparties.

31 unchanged sentences

The Company expenses marketing costs, including advertising, in the period incurred.

We incurred $ 4.2 million, $ 6.2 million and $ 4.1 million in marketing costs during 2023, 2022 and 2021, respectively.

We incurred $ 3.0 million and $ 4.2 million in marketing costs during 2024 and 2023, respectively.

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 did not 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.

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 financial 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).

We adopted ASU 2023-02 in 2024 and it did not have a material impact on the Company’s financial 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 aligning 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.

We are assessing the impact of ASU 2023-06 and believe it will not have an impact on the Company's financial position or results of operation as it impacts disclosures 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 (fiscal 2024).

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.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024 and should be applied retrospectively.

We adopted ASU 2023-07 in 2024 and it did not have an impact on the Company's financial position or results of operation as it impacts disclosures only.

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.

Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation table and taxes paid both in the U.S.

and foreign jurisdictions.

The update will be effective for annual periods beginning after December 15, 2024 (fiscal 2025).

ASU 2023-09 will not have an impact on the Company's financial position or results of operation as it impacts disclosures only.

The update will be effective for annual periods beginning after December 15, 2024.

The adoption of 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.

In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.” ASU 2024-03 requires public companies to disclose, in the notes to the financial statements, specific information about certain costs and expenses at each interim and annual reporting period.

This includes disclosing amounts related to employee compensation, depreciation, and intangible asset amortization.

In addition, public companies will need to provide qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively.

ASU 2024-03 is effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Implementation of ASU 2024-03 may be applied prospectively or retrospectively.

The adoption of ASU

2024-03 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:

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At December 31, 2024 and 2023, the Company held $ 35 million and $ 25 million, respectively, of trading securities consisting of U.S.

Treasury notes used as economic hedges of our single family mortgage servicing rights, which are carried at fair value and

included with investment securities on the balance sheet.

Treasury notes used as economic hedges of our single family mortgage servicing rights, which are carried at fair value and included with investment securities on the balance sheet.

For 2024 and 2023, net losses of $ 1.7 million and $ 0.5 million on trading securities, respectively, were recorded in servicing income.

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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 organizations.

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 organizations.

As of December 31, 2024 and 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.

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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 December 31, 2023 and 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.

In addition, as of December 31, 2024 and 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.

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(in thousands) 2024 2023

Federal Reserve Bank to secure borrowings $ 647,104 $ —

Federal Reserve Bank to secure existing or potential borrowings

$ 906,475 $ 647,104

Washington, Oregon and California State to secure public deposits 195,212 10,654

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Total securities pledged as collateral $ 1,103,021 $ 659,198

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 $ 11.3 million, $ 11.9 million and $ 10.2 million for 2023, 2022 and 2021, respectively.

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

Tax-exempt interest income on investment securities was $ 11.1 million and $ 11.3 million for 2024 and 2023, respectively.

NOTE 3- LOANS AND CREDIT QUALITY:

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$ 6,193,053 $ 7,382,404

(1) Includes $ 1.3 million and $ 5.9 million at December 31, 2023 and 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 recognized in the consolidated income statements.

Loans totaling $ 5.1 billion and $ 5.2 billion at December 31, 2023 and 2022, respectively, were pledged to secure borrowings from the FHLB and loans totaling $ 1.2 billion and $ 497 million at December 31, 2023 and 2022, respectively, were pledged to secure borrowings from the FRBSF.

(1) Includes $ 1.3 million at December 31, 2024 and 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 recognized in the consolidated income statements.

Loans totaling $ 4.0 billion and $ 5.1 billion at December 31, 2024 and 2023, respectively, were pledged to secure existing or potential borrowings from the FHLB and loans totaling $ 1.4 billion and $ 1.2 billion at December 31, 2024 and 2023, respectively, were pledged to secure existing or potential borrowings from the FRBSF.

It is the Company's policy to make loans to officers, directors and their associates in the ordinary course of business on substantially the same terms as those prevailing at the time for comparable transactions with other persons.

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Concentrations of credit risk arise when a number of customers are engaged in similar business activities or activities in the same geographic region, or when they have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions.

LHFI are primarily secured by real estate located in the Pacific Northwest, California and Hawaii.

At December 31, 2023 single family loans in the state of Washington represented 11 % of the total LHFI portfolio.

At December 31, 2023 and 2022, multifamily loans in the state of California represented 36 % of the total LHFI portfolio.

LHFI are primarily secured by real estate located in the Pacific Northwest and California.

At December 31, 2024 and 2023, single family loans in the state of Washington represented 13 % and 11 % of the total LHFI portfolio, respectively.

At December 31, 2024 and 2023, multifamily loans in the state of California represented 30 % and 36 % of the total LHFI portfolio, respectively.

Credit Quality

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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.

As of December 31, 2023, the historical expected loss rates decreased when compared to December 31, 2022.

During 2023, expected loss rates decreased primarily due to product mix and risk level composition changes, and the qualitative factors increased due to deteriorated single family and commercial collateral conditions and commercial collateral forecasts offset by economic conditions performing better than expected and improved economic and single-family collateral forecasts.

As of December 31, 2023, the Bank expects improvement in commercial collateral values and deterioration in single family collateral values over the two-year forecast period in the markets in which it operates.

Additionally, over the two-year forecast period in the markets in which it operates, the Bank expects neutral economic forecasts, offset slightly by near-term deterioration in economic 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.

As of December 31, 2024, the historical expected loss rates increased when compared to December 31, 2023.

During 2024, expected loss rates increased primarily due to product mix and risk level composition changes and specific reserves on commercial loans, which were partially offset by a reduction in loan balances resulting from our $990 million loan sale.

As of December 31, 2024, the Bank expects slight near-term deterioration in commercial collateral values offset by improvement in commercial and single family collateral values in later periods of the two-year forecast period in the markets in which it operates.

Additionally, over the near term and two-year forecast period in the markets in which it operates, the Bank expects neutral economic conditions.

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 $ 1.1 million and $ 1.8 million at December 31, 2024 and 2023, respectively.

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Total ACL $ 41,500 $ ( 1,381 ) $ 448 $ ( 67 ) $ 40,500

Year Ended December 31, 2021

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

Non-owner occupied CRE $ 8,845 $ — $ — $ ( 1,336 ) $ 7,509

Multifamily 6,072 — — ( 218 ) 5,854

Construction/land development

Multifamily construction 4,903 — — ( 4,396 ) 507

CRE construction 1,670 — — ( 1,520 ) 150

Single family construction 5,130 — — 1,281 6,411

Single family construction to permanent 1,315 — — ( 260 ) 1,055

Total 27,935 — — ( 6,449 ) 21,486

Commercial and industrial loans

Owner occupied CRE 4,994 — — 12 5,006

Commercial business 17,043 ( 1,739 ) 146 ( 3,177 ) 12,273

Total 22,037 ( 1,739 ) 146 ( 3,165 ) 17,279

Consumer loans

Single family 6,906 ( 127 ) 291 ( 2,676 ) 4,394

Home equity and other 7,416 ( 483 ) 557 ( 3,526 ) 3,964

Total 14,322 ( 610 ) 848 ( 6,202 ) 8,358

Total ACL $ 64,294 $ ( 2,349 ) $ 994 $ ( 15,816 ) $ 47,123

Credit Quality Indicators

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These loans meet the regulatory definition of "Loss." A closed-end homogeneous loan not secured by real estate is risk rated 10 when past due 120 cumulative days or more from the contractual due date.

Closed-end homogenous loans secured by real estate and all open-end homogenous loans are risk rated 10 when past due 180 cumulative days or more from the contractual due date.

Closed-end homogenous loans secured by real estate and all open-end homogenous loans are risk rated 10 when past due 180 cumulative days or more

from the contractual due date.

These loans, or the portion of these loans classified as loss, are generally charged-off in the month in which the applicable past due period elapses.

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Total LHFI $ — $ ( 24 ) $ ( 292 ) $ ( 474 ) $ ( 1,077 ) $ ( 1,098 ) $ ( 176 ) $ — $ ( 3,141 )

At 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

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At December 31, 2024

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

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

Non-owner occupied CRE

$ — $ — $ — $ 16,230 $ — $ 16,230

— — 1,915 — — 1,915

Construction/land development

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Commercial and industrial loans

Owner occupied CRE — — — 205 — 205

Commercial business

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— 832 — — — 832

— 773 — — 773

Total collateral-dependent loans $ 8,241 $ 3,759 $ 1,915 $ 16,435 $ 3,269 $ 33,619

At December 31, 2023

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

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

Non-owner occupied CRE

$ 573 $ 16,230 $ — $ 16,803

Construction/land development

CRE construction

— 3,821 — 3,821

573 20,051 — 20,624

Commercial and industrial loans

Owner occupied CRE $ 1,111 $ — $ 1,410 $ — $ 2,521

Commercial business 2,788 5,471 4,587 12,846

Total 2,788 5,471 4,587 12,846

Consumer loans

Single family

Total collateral-dependent loans $ 4,134 $ 25,522 $ 4,587 $ 34,243

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Non-owner occupied CRE $ 16,230 $ 16,230 $ 16,803 $ 16,803

$ 16,803 $ 16,803 $ — $ —

Multifamily 1,915 1,915 — —

Construction/land development

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(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 $ 1.3 million and $ 5.9 million of loans at December 31, 2023 and 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 of loans at December 31, 2024 and 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

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The granting of modifications for the years ended December 31, 2024 and 2023 did not have a material impact on the ACL.

The following tables provide information related to MBFDs for t he years ended December 31, 2023 and 2022 disaggregated by class of financing receivable and type of concession granted:

The following tables provide information related to MBFDs for years ended December 31, 2024 and 2023 disaggregated by class of financing receivable and type of concession granted:

Significant Payment Delay

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(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

Multifamily $ 1,915 0.06 % $ — — %

Commercial business 1,446 0.46 % 839 0.23 %

Single family 85 0.01 % 1,082 0.09 %

Home equity and other — — % 69 0.02 %

Term Extension

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Commercial business $ 4,420 1.42 % $ — — %

Interest Rate Reduction and Term Extension

Years Ended December 31,

(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 $ — — % $ 814 0.08 %

Significant Payment Delay and Term Extension

Year Ended December 31,

Years Ended December 31,

(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

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Construction/land development — — % 3,821 0.68 %

Owner occupied CRE 254 0.07 % — — %

Commercial business 410 0.13 % — — %

Single family 3,668 0.33 % 2,526 0.22 %

Home equity and other — — % 51 0.01 %

Interest Rate Reduction, Significant Payment Delay and Term Extension

1 unchanged sentence

(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

Construction/land development $ 3,821 0.81 % $ — — %

Single family — — % 191 0.02 %

The following table describes the financial effect of the MBFDs:

The following tables describes the financial effect of the MBFDs:

Interest Rate Reduction

Years Ended December 31,

Commercial business — Reduced weighted-average contractual interest rate from 5.72 % to 4.00 %.

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

Construction/land development Reduced weighted-average contractual interest rate from 7.75 % to 5.00 %.

Commercial business

Reduced weighted-average contractual interest rate from 7.75 % to 5.00 %.

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

Significant Payment Delay

Years Ended December 31,

Non-owner occupied CRE The weighted average amortization period of the loans were extended 3.7 years.

Construction/land development The weighted average amortization period of the loans were extended 2.7 years.

Non-owner occupied CRE The weighted average duration of loan payments deferred is 0.8 years.

The weighted average duration of loan payments deferred is 3.7 years.

Multifamily The weighted average duration of loan payments deferred is 1.5 years.

Construction/land development The weighted average duration of loan payments deferred is 0.6 years.

The weighted average duration of loan payments deferred is 2.7 years.

Owner occupied CRE The weighted average duration of loan payments deferred is 3.0 years.

Commercial business

The weighted average amortization period of the loans were extended 5.2 years.

The weighted average duration of loan payments deferred is 0.6 years.

The weighted average duration of loan payments deferred is 5.2 years.

Single family Provided payment deferrals to borrowers.

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A weighted average 0.37 % 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 3.47 % of loan balances were capitalized and added to the remaining term of the loan.

Term Extension

Years Ended December 31,

Non-owner occupied CRE The weighted average duration of loan payments deferred is 2.1 years.

Construction/land development The weighted average duration of loan payments deferred is 1.6 years.

Non-owner occupied CRE 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 2.1 years to the life of loans, which reduced the monthly payment amounts to the borrowers.

Construction/land development Added a weighted average 0.6 years to the life of loans, which reduced the monthly payment amounts to the borrowers.

Added a weighted average 1.6 years to the life of loans, which reduced the monthly payment amounts to the borrowers.

Owner occupied CRE Added a weighted average 3.0 years to the life of loans, which reduced the monthly payment amounts to the borrowers.

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

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Added a weighted average 4.9 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.

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.

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

Non-owner occupied CRE $ 16,230 $ — $ —

Construction/land development 3,821 — —

Multifamily $ — $ — $ 1,915

Commercial business 1,157 — 1,150

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Total $ 2,847 $ — $ 3,940

The following table depicts the payment status of loans that were modified to borrowers experiencing financial difficulties on or after January 1, 2022, the date we adopted ASU 2022-02 through September 30, 2022:

The following table depicts the payment status of loans that were modified to borrowers experiencing financial difficulties on or after October 1, 2022 through September 30, 2023:

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

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

Non-owner occupied CRE $ 16,230 $ — $ —

Construction/land development 3,821 — —

Commercial business 8,873 976 —

Single family 2,627 1,285 324

Home equity and other 120 — —

Total $ 31,551 $ 2,261 $ 324

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

The following tables provide the amortized cost basis as of December 31, 2024 of MBFDs, on or after October 1, 2023 through September 30, 2024 and that subsequently had a payment default:

Amortized Cost Basis of Modified Loans That Subsequently Defaulted Year Ended December 31, 2024

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Total $ 238 $ 1,150 $ — $ 637 $ —

The following tables provide the amortized cost basis as of December 31, 2022 of MBFDs, on or after January 1, 2022, the date we adopted ASU 2022-02 through September 30, 2022 and subsequently had a payment default:

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

Amortized Cost Basis of Modified Loans That Subsequently Defaulted Year Ended December 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

Commercial business $ — $ 976 $ — $ — $ —

Single family — — — 1,354 —

Total $ — $ 976 $ — $ 1,354 $ —

NOTE 4– PREMISES AND EQUIPMENT, NET:

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Certificates of deposit

Brokered deposits 751,406 4.61 % 1,218,008 5.36 %

Other 2,516,366 4.37 % 2,009,946 3.95 %

Total interest bearing deposits 5,217,240 3.31 % 5,456,875 3.19 %

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Four to five years 1,517

Thereafter 102

Total $ 3,267,772

The aggregate amount of time deposits in denominations of more than the FDIC limit of $250,000 at December 31, 2024 and 2023 was $ 265 million and $ 194 million, respectively.

There were $ 1.2 billion and $ 1.4 billion of brokered deposits at December 31, 2023 and 2022, respectively.

NOTE 6– BORROWINGS:

During 2023, the Company borrowed $ 1.2 billion and repaid $ 535 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.

At December 31, 2023 the Company had $ 645 million outstanding under the BTFP.

The Company regularly borrows funds through advances from the Des Moines FHLB.

During 2024 and 2023, the Company borrowed funds from the Federal Reserve Bank ("FRB") under the Bank Term Funding Program ("BTFP") which was phased out in 2024.

At December 31, 2023 the Company had $ 645 million outstanding under the FRB BTFP.

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

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Total $ 1,000,000 4.44 % $ 1,745,000 4.58 %

At December 31, 2023 and 2022 the Bank had available borrowing capacity of $ 2.1 billion and $ 2.6 billion respectively, from the FHLB,and $ 710 million and $ 340 million, respectively from the FRBSF.

At December 31, 2024 and 2023 the Bank had available borrowing capacity of $ 1.3 billion and $ 2.1 billion, respectively, from the FHLB, and $ 1.6 billion and $ 710 million, respectively, from the FRBSF.

The Bank is a member of the AFX, through which it may either borrow or lend funds on an overnight or short-term basis with a group of pre-approved commercial banks.

The availability of funds changes daily.

As of December 31, 2023, the were no balances outstanding.

The availability of funds changes daily and as of December 31, 2024 and 2023 , there were no balances outstanding.

As of December 31, 2024 and 2023, the Company held $ 50.7 million and $ 55.3 million, respectively, of FHLB stock.

NOTE 7– LONG-TERM DEBT:

At December 31, 2023 and 2022, the Company had outstanding $ 98 million of subordinated notes (the “Notes”) which have a face amount of $ 100 million, have a maturity date of January 30, 2032 and bear interest at a rate of 3.5 % per annum until January 30, 2027.

At December 31, 2024 and 2023, the Company had outstanding $ 99 million and $ 98 million respectively, of subordinated notes (the “Notes”) which have a face amount of $ 100 million, have a maturity date of January 30, 2032 and bear interest at a rate of 3.5 % per annum until January 30, 2027.

From January 30, 2027, until the maturity date or the date of earlier redemption, the Notes will bear interest equal to the three-month term Secured Overnight Financing Rate ("SOFR") plus 215 basis points.

At December 31, 2023 and 2022, the Company had outstanding $ 65 million and $ 64 million, respectively of Senior Notes which have a face amount of $ 65 million, have a maturity date of June 1, 2026 and bear interest at a rate of 6.50 % per annum.

At December 31, 2024 and 2023, the Company had outstanding $ 65 million of Senior Notes which have a face amount of $ 65 million, have a maturity date of June 1, 2026 and bear interest at a rate of 6.50 % per annum.

The Company issued trust preferred securities ("TRUPS") during the period from 2005 through 2007, resulting in a debt balance of $ 62 million outstanding at December 31, 2024 and 2023.

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

$ 804 $ 8,587 $ ( 6,057 )

Loan servicing income (loss) (2)

( 1,230 ) ( 1,255 )

( 3 ) 160 386

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

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CRE, multifamily and SBA (1)

1,103,742 26,839

Total $ 1,508,694 $ 362,590

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

(1) 2024 amounts include the sale of $ 990 million of multifamily loans in the fourth quarter.

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

Years Ended December 31,

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CRE, multifamily and SBA (1)

( 86,463 ) 846

Total $ ( 76,890 ) $ 9,346

(1) 2024 amounts include loss of $ 88.8 million on the sale of $ 990 million of multifamily loans in the fourth quarter.

The Company's portfolio of loans serviced for others is primarily comprised of loans held in U.S.

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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 $ 5.2 billion and $ 5.3 billion as of December 31, 2024 and 2023, respectively.

The following is a summary of changes in the Company's mortgage repurchase liability for single family loans sold on a servicing-retained and servicing-released basis included in accounts payable and other liabilities on the consolidated balance sheet for the periods indicated:

The following is a summary of changes in the Company's mortgage repurchase liability for single family loans sold on a servicing-retained basis included in accounts payable and other liabilities on the consolidated balance sheet for the periods indicated:

Years Ended December 31,

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

414 16,739 7,379

Net gain (loss) from economic hedging (3)

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Additions and amortization:

3,136 8,245 23,908

Amortization (1)

3 unchanged sentences

Changes in fair value assumptions (2)

414 16,739 7,379

Ending balance $ 72,901 $ 74,249

4 unchanged sentences

(rates per annum) (1)

2023 2022 2021

Constant prepayment rate ("CPR") (2)

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( 5,612 ) ( 5,778 )

( 5,778 ) ( 7,692 ) ( 7,581 )

Ending balance $ 26,565 $ 29,987

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(rates per annum) (1)

2023 2022 2021

Discount rate 13.10 % 13.00 %

(1) Based on a weighted average.

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

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:

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At December 31, 2024 and 2023 we had $ 9.9 million and $ 10.7 million, respectively, of future commitments to invest in these enterprises.

As of December 31, 2023, HomeStreet was obligated on a $ 135 million letter of credit to the FHLB which is being used as collateral for public fund deposits.

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.

4 unchanged sentences

The Company's reserve liability related to this arrangement totaled $ 0.7 million and $ 0.5 million at December 31, 2024 and 2023, respectively.

There were no actual losses incurred under this arrangement during 2023, 2022 or 2021.

There were no actual losses incurred under this arrangement during 2024 and 2023.

Contingencies

7 unchanged sentences

(in thousands) 2024 2023

Current expense

Current expense (benefit)

Federal $ 6,731 $ 2,900

State and local ( 841 ) 980

Deferred (benefit) expense

Deferred expense (benefit)

Federal ( 30,836 ) ( 7,407 )

1 unchanged sentence

Total ( 29,478 ) ( 5,249 )

Income tax (benefit) expense differed from amounts computed at the federal income tax statutory rate as follows:

Years Ended December 31,

Deferred tax assets valuation allowance

Income tax expense (benefit)

$ 23,832 $ ( 5,249 )

(in thousands, except rate) Rate Amount Rate Amount Rate Amount

Income tax expense (benefit) differed from amounts computed at the federal income tax statutory rate as follows:

Years Ended December 31,

(in thousands, except rate) Rate Amount Rate Amount

Income (loss) before income taxes $ ( 120,512 ) $ ( 32,757 )

8 unchanged sentences

Total 24.46 % ( 29,478 ) 16.02 % ( 5,249 )

Change in valuation allowance

$ 23,832 $ ( 5,249 )

The following is a summary of the Company's deferred tax assets and liabilities:

4 unchanged sentences

Unrealized loss on investments AFS 28,343 28,571

LIHTC tax credits carryforwards

Net operating loss carryforwards

6 unchanged sentences

Loan valuation 240 274

Premises and equipment

Other 457 401

5 unchanged sentences

Premises and equipment — ( 364 )

Intangibles — ( 694 )

Other — ( 14 )

Total ( 37,472 ) ( 40,441 )

Net deferred tax asset (liability) 53,310 18,170

Valuation allowance ( 53,310 ) —

Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to fully utilize the existing deferred tax assets.

As of December 31, 2023, management determined that sufficient evidence exists to support the future utilization of all of the Company's deferred tax assets.

The Company has state net operating loss carryforwards of $ 4.4 million and $ 7.5 million as of December 31, 2023 and 2022, respectively, that will expire at various dates from 2024 to 2036.

As of December 31, 2024, management determined that sufficient

evidence did not exist to support the future utilization of all of the Company's deferred tax assets.

As a result the Company recorded a $ 53.3 million deferred tax assets valuation allowance.

During 2024, the Company created federal and state net operating loss carryforwards of $ 111.9 million and $ 111.0 million, respectively.

The federal net operating loss carryforwards do not expire while the state net operating loss carryforwards generally expire in 2044.

The Company’s LIHTC tax credits carryforwards expire in 2043 $ 0.4 million and 2044 $ 5.3 million.

The Company has state net operating loss carryforwards related to acquisitions in prior years of $ 4.3 million and $ 4.4 million as of December 31, 2024 and 2023, respectively, that will expire at various dates from 2025 to 2036.

Utilization of net operating loss carryforwards is subject to an annual limitation due to the "change in ownership" provisions of the Internal Revenue Code of 1986, as amended.

14 unchanged sentences

Participants receive a vested employer matching contribution equal to 100 % of the first 3.0 % and 50 % of the next 2.0 % of eligible compensation deferred by the participant.

Employer contributions of $ 3.4 million, $ 4.0 million and $ 3.9 million were incurred in 2023, 2022, and 2021, respectively.

Employer contributions of $ 3.2 million and $ 3.4 million were incurred in 2024 and 2023, respectively.

NOTE 13– FAIR VALUE MEASUREMENT:

73 unchanged sentences

Single family mortgage servicing rights 72,901 — — 72,901

Futures 1 1 — —

Forward sale commitments 237 — 237 —

3 unchanged sentences

Total assets $ 1,159,871 $ 34,750 $ 1,049,060 $ 76,061

Futures $ 3 $ 3 $ — $ —

Forward sale commitments $ 402 $ — $ 402 $ —

Interest rate lock commitments 49 — — 49

Interest rate swaps 10,250 — 10,250 —

18 unchanged sentences

Single family mortgage servicing rights 74,249 — — 74,249

Futures 18 18 — —

Options 218 218 — —

Forward sale commitments 151 — 151 —

Options 132 132 — —

Interest rate lock commitments 411 — — 411

1 unchanged sentence

Total assets $ 1,375,458 $ 24,830 $ 1,272,828 $ 77,800

Futures $ 3 $ 3 $ — $ —

Forward sale commitments 288 — 288 —

Interest rate lock commitments 36 — — 36

Interest rate swaps 10,492 — 10,492 —

10 unchanged sentences

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.

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 $ 1.3 million and $ 5.9 million at December 31, 2023 and 2022, respectively.

The total amount of held for investment loans where fair value option election was made was $ 1.3 million at December 31, 2024 and 2023.

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

59 unchanged sentences

LHFI 6,191,766 5,864,426 — — 5,864,426

LHFS – multifamily and other 6,788 6,871 — 6,871 —

Mortgage servicing rights – multifamily and SBA 26,565 32,361 — — 32,361

43 unchanged sentences

HomeStreet, Inc.

Tier 1 leverage capital (to average assets) $ 675,440 7.04 % $ 383,696 4.0 % NA NA

Tier 1 leverage capital (to average assets) (1)

$ 537,057 5.77 % $ 372,319 4.0 % NA NA

Common equity tier 1 capital (to risk-weighted assets) 477,057 8.62 % 249,109 4.5 % NA NA

3 unchanged sentences

Tier 1 leverage capital (to average assets)

$ 678,869 7.30 % $ 372,132 4.0 % $ 465,165 5.0 %

Common equity tier 1 capital (to risk-weighted assets) 678,869 12.27 % 249,000 4.5 % 359,667 6.5 %

36 unchanged sentences

Dilutive effect of outstanding common stock equivalents (1)

— 110,004 257,905

Diluted weighted-average number of common shares outstanding 18,857,392 18,783,005

3 unchanged sentences

(1) Excluded from the computation of diluted earnings per share (due to their antidilutive effect) for the years ended December 31, 2024 and 2023 were certain unvested RSUs and PSUs.

The aggregate number of common stock unvested restricted shares, which could potentially be dilutive in future periods, was 217,153 , 176,259 and zero at December 31, 2023, 2022 and 2021, respectively.

The aggregate number of common stock unvested restricted shares, which could potentially be dilutive in future periods, was 540,354 and 217,153 at December 31, 2024 and 2023, respectively.

NOTE 16– LEASES:

We have operating and finance leases for certain office space and finance leases for certain equipment.

Our leases have remaining lease terms of up to 12 years.

These leases have remaining lease terms of up to 11 years.

The Company, as sublessor, subleases certain office and retail space in which the terms of any significant subleases end by 2027.

Under all of our executed sublease arrangements, the sublessees are obligated to pay the Company sublease payments of $ 3.3 million in 2024, $ 2.8 million in 2025, $ 2.9 million in 2026, $ 2.7 million in 2027 and $ 0.1 million in 2028.

Under all of our executed sublease arrangements, the sublessees are obligated to pay the Company sublease payments of $ 2.8 million in 2025, $ 2.9 million in 2026, $ 2.7 million in 2027, $ 69 thousand in 2028 and $ 29 thousand in 2029.

In 2024 we incurred $ 2.0 million in impairment charges due primarily to an updated estimate of the cost impact of a leased space for which the sublease was not extended and expired in 2024.

The components of lease expense were as follows:

4 unchanged sentences

Amortization of right-of-use assets

425 580 1,066

Interest on lease liabilities

10 unchanged sentences

Financing cash flows from finance leases

456 589 1,070

Right-of-use assets obtained

1 unchanged sentence

Finance leases — 385

Other changes in right-of-use assets (1)

Operating leases $ — $ — $ ( 460 )

Finance leases — — ( 2 )

Supplemental information related to leases was as follows:

27 unchanged sentences

In May 2014, the shareholders approved the Company's 2014 Equity Incentive Plan (the "2014 EIP Plan") that provided for the grant of stock options, shares of restricted stock, RSUs, PSUs, stock bonus awards, stock appreciation rights, performance share awards and performance compensation awards and unrestricted stock (collectively, "Equity Incentive Awards") to the Company’s executive officers, other key employees and directors.

This plan was amended in May 2017 and allows the grant of up to 1,875,000 shares of the Company’s common stock.

For 2023, 2022, and 2021, the Company recognized stock-based compensation cost of $ 3.1 million, $ 3.3 million and $ 2.9 million, respectively.

This plan was amended in May 2017 and allowed the grant of up to 1,875,000 shares of the Company’s common stock.

For 2024 and 2023, the Company recognized stock-based compensation cost of $ 3.3 million and $ 3.1 million, respectively.

In March 2024, this plan expired, therefore we are no longer granting shares from this plan, or any other plan.

RSUs generally vest over a three year period with the fair market value of the awards determined at the grant date based on the Company's stock price.

11 unchanged sentences

The assumptions used in the Monte Carlo simulations used to determine fair market value of the PSUs granted in 2024 and 2023 are set forth in the table below:

2023 2022 2021

Volatility of common stock 58.1 % 42.7 %

2 unchanged sentences

Risk-free interest rate 4.0 % 4.2 %

Expected term in years 3 years 3 years 3 years

Expected term in years 3 years 3 years

NOTE 18– PARENT COMPANY FINANCIAL STATEMENTS (UNAUDITED):

43 unchanged sentences

Investments in subsidiaries 3 —

Net cash provided by (used in) investing activities 210 ( 51,169 ) 2,012

Net cash provided by investing activities

Cash flows from financing activities:

Repurchases of common stock — —

Proceeds from exercise of stock options — — 263

Proceeds from issuance of long-term debt

1 unchanged sentence

Net cash used in financing activities — ( 12,317 )

Net increase (decrease) in cash and cash equivalents 15,737 ( 6,952 ) ( 7,265 )

Net increase in cash and cash equivalents

Cash and cash equivalents, beginning of year 21,541 5,804

Cash and cash equivalents, end of year $ 22,855 $ 21,541

NOTE 19– SUBSEQUENT EVENTS:

On January 16, 2024, the Company entered into a definitive merger agreement with FirstSun Capital Bancorp (“FirstSun”), the holding company of Sunflower Bank, whereby the Company and the Bank will merge with and into FirstSun and Sunflower Bank, respectively.

Per the agreement, the companies will combine in an all-stock transaction in which HomeStreet shareholders will receive 0.4345 of a share of FirstSun common stock for each share of HomeStreet common stock.

This merger is expected to close in the middle of 2024.

ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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-K

Item 8. Financial Statements and Supplementary Data