MCHB 10-Q Quarterly Report June 30, 2025

HOMESTREET, INC.

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hmst-20250630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________

FORM 10-Q

________________________________

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

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2025

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

of the Securities Exchange Act of 1934

For the transition period from _____ to _____

Commission file number: 001-35424

________________________________

HOMESTREET, INC.

(Exact Name of Registrant as Specified in its Charter)

91-0186600


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

( 206 ) 623-3050

(Registrant's Telephone Number, Including Area Code)

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


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

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

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

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

Large Accelerated Filer

☐

Accelerated Filer

☒

Non-accelerated Filer

☐

Smaller Reporting Company

☒

Emerging Growth Company

☐

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

☐

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

Yes ☐ No ☒

The number of outstanding shares of the registrant's common stock as of August 4, 2025 was 18,920,808 .


PART I – FINANCIAL INFORMATION

ITEM 1	FINANCIAL STATEMENTS

Consolidated Balance Sheets at June 30 , 2025 and December 31, 2024		3
Consolidated Income Statements for the Quarters and Si x Months Ended June 30 , 2025 and 2024		4
Consolidated Statements of Comprehensive Income (Loss) for the Quarters and Six Mo nths Ended June 30 , 2025 and 2024		5
Consolidated Statements of Shareholders’ Equity for the Quarters an d Six Month s Ended June 30 , 2025 and 2024		6
Consolidated Statements of Cash Flows for the Six Month s Ended June 30 , 2025 and 2024		7
Notes to Consolidated Financial Statements		9
ITEM 2	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	44
ITEM 3	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	61

ITEM 4	CONTROLS AND PROCEDURES	64
PART II – OTHER INFORMATION
ITEM 1	LEGAL PROCEEDINGS	64
ITEM 1A	RISK FACTORS	65
ITEM 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	66
ITEM 3	DEFAULTS UPON SENIOR SECURITIES	66
ITEM 4	MINE SAFETY DISCLOSURES	66
ITEM 5	OTHER INFORMATION	66
ITEM 6	EXHIBITS	67
SIGNATURES		68

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

PART I


ITEM 1 FINANCIAL STATEMENTS

HOMESTREET, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS



	June 30, 2025		December 31, 2024
(in thousands, except share data)	(Unaudited)

ASSETS
Cash and cash equivalents	$	201,080	$	406,600
Investment securities	1,030,981		1,057,006
Loans held for sale ("LHFS")	48,783		20,312
Loans held for investment ("LHFI") (net of allowance for credit losses of $ 45,806 and $ 38,743 )	5,887,333		6,193,053
Mortgage servicing rights ("MSRs")	100,493		99,466
Premises and equipment, net	44,348		47,201
Other real estate owned ("OREO")	2,820		2,820
Intangible assets	6,184		7,141
Other assets	287,301		290,099
Total assets	$	7,609,323	$	8,123,698
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits	$	5,857,284	$	6,413,021
Borrowings	1,040,000		1,000,000
Long-term debt	225,316		225,131
Accounts payable and other liabilities	83,742		88,549
Total liabilities	7,206,342		7,726,701
Commitments and contingencies
Shareholders' equity:
Common stock, no par value, authorized 160,000,000 shares; issued and outstanding, 18,920,808 shares and 18,857,565 shares	234,026		233,185
Retained earnings	242,136		251,013
Accumulated other comprehensive income (loss)	( 73,181 )		( 87,201 )
Total shareholders' equity	402,981		396,997
Total liabilities and shareholders' equity	$	7,609,323	$	8,123,698

See accompanying notes to consolidated financial statements

HOMESTREET, INC. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS

(Unaudited)


	Quarter Ended June 30,				Six Months Ended June 30,
(in thousands, except share and per share data)	2025		2024		2025		2024

Interest income:
Loans	$	71,811	$	87,323	$	145,235	$	173,579
Investment securities	8,596		10,160		17,246		20,874
Cash, Fed Funds and other	2,635		3,640		6,326		9,211
Total interest income	83,042		101,123		168,807		203,664
Interest expense:
Deposits	34,514		43,535		72,751		86,142
Borrowings	14,658		27,887		28,965		55,670
Total interest expense	49,172		71,422		101,716		141,812
Net interest income	33,870		29,701		67,091		61,852
Provision for credit losses	6,000		—		7,000		—
Net interest income after provision for credit losses	27,870		29,701		60,091		61,852
Noninterest income:
Net gain on loan origination and sale activities	3,235		3,036		6,451		5,342
Loan servicing income	7,550		3,410		12,408		6,442
Deposit fees	2,116		2,209		4,187		4,450
Other	2,199		4,572		4,190		6,447
Total noninterest income	15,100		13,227		27,236		22,681
Noninterest expense:
Compensation and benefits	26,014		27,616		52,323		55,627
Information services	7,441		7,580		15,026		14,922
Occupancy	4,868		5,130		9,739		10,564
General, administrative and other	9,428		10,605		19,771		21,982

Total noninterest expense	47,751		50,931		96,859		103,095
Income (loss) before income taxes	( 4,781 )		( 8,003 )		( 9,532 )		( 18,562 )
Income tax (benefit) expense	( 369 )		( 1,765 )		( 655 )		( 4,827 )
Net income (loss)	$	( 4,412 )	$	( 6,238 )	$	( 8,877 )	$	( 13,735 )

Net income (loss) per share:
Basic	$	( 0.23 )	$	( 0.33 )	$	( 0.47 )	$	( 0.73 )
Diluted	( 0.23 )		( 0.33 )		( 0.47 )		( 0.73 )
Weighted average shares outstanding:
Basic	18,920,808		18,857,566		18,920,808		18,857,218
Diluted	18,920,808		18,857,566		18,920,808		18,857,218

See accompanying notes to consolidated financial statements

HOMESTREET, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)


	Quarter Ended June 30,				Six Months Ended June 30,
(in thousands)	2025		2024		2025		2024

Net income (loss)	$	( 4,412 )	$	( 6,238 )	$	( 8,877 )	$	( 13,735 )
Other comprehensive income (loss):
Unrealized gain (loss) on investment securities available for sale ("AFS")	6,403		( 2,505 )		14,696		( 8,264 )

Other comprehensive income (loss) before tax	6,403		( 2,505 )		14,696		( 8,264 )
Income tax impact of:
Unrealized gain (loss) on investment securities AFS	1,237		( 620 )		3,271		( 1,897 )

Total	1,237		( 620 )		3,271		( 1,897 )
Unrealized disparate impact of deferred tax assets valuation allowance - AOCI	868		—		2,595		—
Other comprehensive income (loss)	6,034		( 1,885 )		14,020		( 6,367 )
Total comprehensive income (loss)	$	1,622	$	( 8,123 )	$	5,143	$	( 20,102 )

See accompanying notes to consolidated financial statements

HOMESTREET, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)


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

For the quarter ended June 30, 2024
Balance, March 31, 2024	18,857,565	$	230,814	$	387,860	$	( 91,341 )	$	527,333
Net income (loss)	—	—		( 6,238 )		—		( 6,238 )
Share-based compensation expense	—	907		—		—		907

Other comprehensive income (loss)	—	—		—		( 1,885 )		( 1,885 )



Balance, June 30, 2024	18,857,565	$	231,721	$	381,622	$	( 93,226 )	$	520,117

For the six months ended June 30, 2024
Balance, December 31, 2023	18,810,055	$	229,889	$	395,357	$	( 86,859 )	$	538,387
Net income (loss)	—	—		( 13,735 )		—		( 13,735 )
Share-based compensation expense	—	1,966		—		—		1,966
Common stock issued - Stock grants	60,483	—		—		—		—
Other comprehensive income (loss)	—	—		—		( 6,367 )		( 6,367 )

Common stock repurchased	( 12,973 )	( 134 )		—		—		( 134 )

Balance, June 30, 2024	18,857,565	$	231,721	$	381,622	$	( 93,226 )	$	520,117

For the quarter ended June 30, 2025
Balance, March 31, 2025	18,920,808	$	233,418	$	246,548	$	( 79,215 )	$	400,751
Net income (loss)	—	—		( 4,412 )		—		( 4,412 )
Share-based compensation expense	—	608		—		—		608

Other comprehensive income	—	—		—		6,034		6,034



Balance, June 30, 2025	18,920,808	$	234,026	$	242,136	$	( 73,181 )	$	402,981

For the six months ended June 30, 2025
Balance, December 31, 2024	18,857,565	$	233,185	$	251,013	$	( 87,201 )	$	396,997
Net income (loss)	—	—		( 8,877 )		—		( 8,877 )
Share-based compensation expense	—	1,200		—		—		1,200
Common stock issued - Stock grants	94,688	—		—		—		—

Other comprehensive income (loss)	—	—		—		14,020		14,020

Common stock repurchased	( 31,445 )	( 359 )		—		—		( 359 )
Balance, June 30, 2025	18,920,808	$	234,026	$	242,136	$	( 73,181 )	$	402,981

See accompanying notes to consolidated financial statements

HOMESTREET, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
(in thousands)	2025		2024

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	( 8,877 )	$	( 13,735 )
Adjustments to reconcile net income (loss) to net cash used in operating activities:

Provision for credit losses	7,000		—

Depreciation and amortization, premises and equipment	2,994		3,339
Amortization of premiums and discounts: investment securities, deposits, debt	1,061		1,104
Operating leases: excess of payments over amortization	( 1,460 )		( 1,627 )
Amortization of finance leases	43		99
Amortization of core deposit intangibles	957		1,250
Amortization of deferred loan fees and costs	( 845 )		( 238 )
Share-based compensation expense	1,200		1,966



Deferred income tax (benefit) expense	( 676 )		( 7,662 )

Origination of LHFS	( 280,713 )		( 199,488 )
Proceeds from sale of LHFS	255,810		191,557
Net fair value adjustment and gain on sale of LHFS	( 2,030 )		( 1,440 )
Origination of MSRs	( 2,372 )		( 1,927 )

Change in fair value of MSRs	( 1,464 )		1,994
Amortization of servicing rights	2,809		2,861






Net decrease (increase) in trading securities	( 5,869 )		( 1,404 )
Decrease (increase) in other assets	7,346		( 8,341 )
Increase (decrease) in accounts payable and other liabilities	( 7,204 )		2,096
Net cash used in operating activities	( 32,290 )		( 29,596 )
CASH FLOWS FROM INVESTING ACTIVITIES:


Principal payments on investment securities	45,791		110,008
Proceeds from sale of OREO	—		126







Net (increase) decrease in LHFI	298,019		41,689

Purchases of premises and equipment	( 149 )		( 6,347 )

Proceeds from sale of Federal Home Loan Bank stock	55,343		111,965
Purchases of Federal Home Loan Bank stock	( 56,385 )		( 134,397 )
Net cash provided by investing activities	342,619		123,044


	Six Months Ended June 30,
(in thousands)	2025		2024
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in deposits, net	( 555,813 )		( 231,287 )

Changes in short-term borrowings, net	40,000		276,000


Proceeds from other long-term borrowings	—		585,000
Repayment of other long-term borrowings	—		( 720,000 )




Repayment of finance lease principal	( 36 )		( 94 )



Net cash used in financing activities	( 515,849 )		( 90,381 )
Net increase (decrease) in cash and cash equivalents	( 205,520 )		3,067

Cash and cash equivalents, beginning of year	406,600		215,664


Cash and cash equivalents, end of period	$	201,080	$	218,731


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid (refunds received) during the period for:
Interest	$	103,693	$	152,038
Federal and state income taxes	( 4,509 )		( 676 )
Non-cash activities:
Increase in lease assets and lease liabilities	3,027		1,833


Loans transferred from LHFI to LHFS, net	1,538		793

Ginnie Mae loans recognized with the right to repurchase, net	3,521		130


Repurchase of common stock-award shares	359		134

See accompanying notes to consolidated financial statements

HomeStreet, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 1– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

HomeStreet, Inc., a State of Washington corporation organized in 1921 (the "Corporation"), is a Washington-based diversified financial services holding company whose operations are primarily conducted through its wholly owned subsidiaries (collectively the "Company") HomeStreet Statutory Trusts and HomeStreet Bank (the "Bank"), and the Bank's subsidiaries, Continental Escrow Company, 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 in the Western United States.

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

These unaudited interim financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the periods presented. These adjustments are of a normal recurring nature, unless otherwise disclosed in this Quarterly Report on Form 10-Q. The results of operations in the interim financial statements do not necessarily indicate the results that may be expected for the full year. The interim financial information should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024 ("2024 Annual Report on Form 10-K"), filed with the U.S. Securities and Exchange Commission ("SEC").

Segments

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.

Recent Developments

On March 28, 2025, the Company entered into a definitive merger agreement with Mechanics Bank, whereby the Company and the Bank will merge with and into Mechanics Bank. This merger is expected to close in the third quarter of 2025.

Recent Accounting Developments

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. 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 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 taxes paid both in the U.S. and foreign jurisdictions. 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:

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 June 30, 2025
(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value

AFS
Mortgage backed securities ("MBS"):
Residential	$	164,411	$	201	$	( 4,652 )	$	159,960
Commercial	54,248		—		( 5,405 )		48,843
Collateralized mortgage obligations ("CMOs"):
Residential	325,145		44		( 24,475 )		300,714
Commercial	56,190		—		( 3,945 )		52,245
Municipal bonds	426,258		107		( 54,783 )		371,582
Corporate debt securities	31,121		—		( 5,575 )		25,546
U.S. Treasury securities	22,129		—		( 1,631 )		20,498
Agency debentures	9,448		—		( 735 )		8,713
Total	$	1,088,950	$	352	$	( 101,201 )	$	988,101
HTM




Municipal bonds	$	2,265	$	—	$	( 12 )	$	2,253


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

AFS
MBS:
Residential	$	174,887	$	229	$	( 7,654 )	$	167,462
Commercial	54,620		—		( 6,978 )		47,642
CMOs:
Residential	349,348		36		( 31,940 )		317,444
Commercial	59,725		14		( 4,794 )		54,945
Municipal bonds	433,162		95		( 54,998 )		378,259
Corporate debt securities	31,136		—		( 6,192 )		24,944
U.S. Treasury securities	22,306		—		( 2,319 )		19,987
Agency debentures	10,320		—		( 1,044 )		9,276
Total	$	1,135,504	$	374	$	( 115,919 )	$	1,019,959
HTM
Municipal bonds	$	2,301	$	—	$	( 28 )	$	2,273

At June 30, 2025, and December 31, 2024, the Company held $ 41 million and $ 35 million, respectively, of trading securities, consisting of US Treasury notes used as economic hedges of our single family mortgage servicing rights, which are carried at fair value and included within investment securities on the balance sheet. For the quarters ended June 30, 2025 and 2024, the Company had net gains of $ 0.2 million and net losses of $ 0.3 million on trading securities, respectively, and for the six months ended June 30, 2025 and 2024, the Company had net gains of $ 1.0 million and net losses of $ 0.9 million on trading securities, respectively, which were recorded in servicing income.

MBS and CMOs represent securities issued or guaranteed by government sponsored enterprises ("GSEs"). Most of the MBS and CMO securities in our investment portfolio are guaranteed by Fannie Mae, Ginnie Mae or Freddie Mac. Municipal bonds are comprised of general obligation bonds (i.e., backed by the general credit of the issuer) and revenue bonds (i.e., backed by either collateral or revenues from the specific project being financed) issued by various municipal corporations. As of June 30, 2025 and December 31, 2024, 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 June 30, 2025
	Less than 12 months				12 months or more				Total
(in thousands)	Gross unrealized losses		Fair value		Gross unrealized losses		Fair value		Gross unrealized losses		Fair value

AFS
MBS:
Residential	$	( 2 )	$	526	$	( 4,650 )	$	151,754	$	( 4,652 )	$	152,280
Commercial	—		—		( 5,405 )		48,843		( 5,405 )		48,843
CMOs:
Residential	( 13 )		11,685		( 24,462 )		268,109		( 24,475 )		279,794
Commercial	( 1 )		3,067		( 3,944 )		49,178		( 3,945 )		52,245
Municipal bonds	( 349 )		15,285		( 54,434 )		343,646		( 54,783 )		358,931
Corporate debt securities	—		—		( 5,575 )		25,546		( 5,575 )		25,546
U.S. Treasury securities	—		—		( 1,631 )		20,498		( 1,631 )		20,498
Agency debentures	—		—		( 735 )		8,713		( 735 )		8,713
Total	$	( 365 )	$	30,563	$	( 100,836 )	$	916,287	$	( 101,201 )	$	946,850
HTM
Municipal bonds	$	—	$	—	$	( 12 )	$	2,253	$	( 12 )	$	2,253


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

AFS
MBS:
Residential	$	( 2 )	$	532	$	( 7,652 )	$	158,044	$	( 7,654 )	$	158,576
Commercial	—		—		( 6,978 )		47,642		( 6,978 )		47,642
CMOs:
Residential	( 78 )		7,481		( 31,862 )		293,297		( 31,940 )		300,778
Commercial	—		—		( 4,794 )		51,834		( 4,794 )		51,834
Municipal bonds	( 810 )		28,361		( 54,188 )		340,571		( 54,998 )		368,932
Corporate debt securities	—		—		( 6,192 )		24,944		( 6,192 )		24,944
U.S. Treasury securities	—		—		( 2,319 )		19,987		( 2,319 )		19,987
Agency debentures	—		—		( 1,044 )		9,276		( 1,044 )		9,276
Total	$	( 890 )	$	36,374	$	( 115,029 )	$	945,595	$	( 115,919 )	$	981,969
HTM
Municipal bonds	$	—	$	—	$	( 28 )	$	2,273	$	( 28 )	$	2,273

The Company has evaluated AFS securities in an unrealized loss position and has determined the decline in value is temporary and is related to the change in market interest rates since purchase. The decline in value is not related to any issuer- or industry-specific credit event. The Company has not identified any expected credit losses on its debt securities as of June 30, 2025 or December 31, 2024. 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 June 30, 2025 and December 31, 2024, 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 June 30, 2025
	Within one year				After one year through five years				After five years through ten years				After ten years				Total
(dollars in thousands)	Fair Value		Weighted Average Yield		Fair Value		Weighted Average Yield		Fair Value		Weighted Average Yield		Fair Value		Weighted Average Yield		Fair Value		Weighted Average Yield

AFS
Municipal bonds	$	—	—	%	$	39,308	3.54	%	$	55,342	2.99	%	$	276,932	2.89	%	$	371,582	2.97	%
Corporate debt securities	—		—	%	2,327		1.74	%	23,219		4.44	%	—		—	%	25,546		4.20	%
U.S. Treasury securities	—		—	%	20,498		1.19	%	—		—	%	—		—	%	20,498		1.19	%
Agency debentures	—		—	%	1,587		2.17	%	4,031		2.22	%	3,095		2.21	%	8,713		2.21	%
Total	$	—	—	%	$	63,720	2.69	%	$	82,592	3.36	%	$	280,027	2.88	%	$	426,339	2.95	%

HTM
Municipal bonds	2,253		2.31	%	$	—	—	%	$	—	—	%	$	—	—	%	$	2,253	2.31	%


	At December 31, 2024
	Within one year				After one year through five years				After five years through ten years				After ten years				Total
(dollars in thousands)	Fair Value		Weighted Average Yield		Fair Value		Weighted Average Yield		Fair Value		Weighted Average Yield		Fair Value		Weighted Average Yield		Fair Value		Weighted Average Yield

AFS
Municipal bonds	$	—	—	%	$	15,531	3.88	%	$	70,678	2.92	%	$	292,050	2.93	%	$	378,259	2.97	%
Corporate debt securities	—		—	%	2,735		2.08	%	22,209		4.27	%	—		—	%	$	24,944	4.03	%
U.S. Treasury securities	—		—	%	19,987		1.15	%	—		—	%	—		—	%	$	19,987	1.15	%
Agency debentures	—		—	%	1,770		2.13	%	4,442		2.17	%	3,064		2.14	%	$	9,276	2.15	%
Total	$	—	—	%	$	40,023	2.32	%	$	97,329	3.19	%	$	295,114	2.92	%	$	432,466	2.93	%

HTM




Municipal bonds	$	2,273	2.29	%	$	—	—	%	$	—	—	%	$	—	—	%	$	2,273	2.29	%

The weighted-average yield is computed using the contractual coupon of each security weighted based on the fair value of each security. Taxable-equivalent amounts are used where applicable. MBS and CMOs are excluded from the tables above because such securities are not due on a single maturity date. The weighted average yield of MBS and CMOs as of June 30, 2025 and December 31, 2024 was 3.01 %.

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 June 30, 2025		At December 31, 2024


Federal Reserve Bank to secure borrowings	$	864,307	$	906,475
Washington, Oregon and California to secure public deposits	195,385		195,212

Other securities pledged	1,278		1,334
Total securities pledged as collateral	$	1,060,970	$	1,103,021

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 $ 2.6 million and $ 2.8 million for quarters ended June 30, 2025 and 2024, and $ 5.3 million and $ 5.6 million for the six months ended June 30, 2025 and 2024, respectively.

NOTE 3- LOANS AND CREDIT QUALITY:

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


(in thousands)	At June 30, 2025		At December 31, 2024

CRE
Non-owner occupied CRE	$	508,781	$	570,750
Multifamily	2,895,342		2,992,675
Construction/land development	425,718		472,740
Total	3,829,841		4,036,165
Commercial and industrial loans
Owner occupied CRE	324,299		361,997
Commercial business	285,612		312,004
Total	609,911		674,001
Consumer loans
Single family	1,060,566		1,109,095
Home equity and other	432,821		412,535
Total (1)	1,493,387		1,521,630
Total LHFI	5,933,139		6,231,796
Allowance for credit losses ("ACL")	( 45,806 )		( 38,743 )
Total LHFI less ACL	$	5,887,333	$	6,193,053

(1) Includes $ 1.0 million and $ 1.3 million of loans at June 30, 2025 and December 31, 2024, 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 the consolidated income statements.

Loans totaling $ 3.2 billion and $ 4.0 billion at June 30, 2025 and December 31, 2024, respectively, were pledged to secure borrowings from the Federal Home Loan Bank ("FHLB") and loans totaling $ 1.9 billion and $ 1.4 billion at June 30, 2025 and December 31, 2024, 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 June 30, 2025, and December 31, 2024 single family loans in the state of Washington represented 13 % of the total LHFI portfolio. At June 30, 2025 and December 31, 2024, multifamily loans in California represented 30 % of the total LHFI portfolio.

Credit Quality

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

As of June 30, 2025, the historical expected loss rates increased when compared to December 31, 2024 due to adverse risk migration. During the six months ended June 30, 2025, the qualitative factors decreased primarily due to improved collateral conditions. Additionally, over the two-year forecast period in the markets in which it operates, the Bank expects neutral economic forecasts and neutral to improving collateral forecasts.

In addition to the ACL for LHFI, the Company maintains a separate allowance for unfunded loan commitments which is included in accounts payable and other liabilities on our consolidated balance sheets. The allowance for unfunded commitments was $ 1.1 million at both June 30, 2025 and December 31, 2024.

The Bank has elected to exclude accrued interest receivable from the evaluation of the ACL. Accrued interest on LHFI was $ 23.5 million and $ 25.1 million at June 30, 2025 and December 31, 2024, 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 June 30,				Six Months Ended June 30,
(in thousands)	2025		2024		2025		2024

Beginning balance	$	39,634	$	39,677	$	38,743	$	40,500
Provision for credit losses	6,160		128		7,048		370
Net (charge-offs) recoveries	12		( 64 )		15		( 1,129 )
Ending balance	$	45,806	$	39,741	$	45,806	$	39,741

Allowance for unfunded commitments:
Beginning balance	$	1,258	$	1,581	$	1,146	$	1,823
Provision for credit losses	( 160 )		( 128 )		( 48 )		( 370 )
Ending balance	$	1,098	$	1,453	$	1,098	$	1,453

Provision for credit losses:
Allowance for credit losses - loans	$	6,160	$	128	$	7,048	$	370
Allowance for unfunded commitments	( 160 )		( 128 )		( 48 )		( 370 )
Total	$	6,000	$	—	$	7,000	$	—

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


	Quarter Ended June 30, 2025
(in thousands)	Beginning balance		Charge-offs		Recoveries		Provision		Ending balance

CRE
Non-owner occupied CRE	$	1,658	$	—	$	—	$	133	$	1,791
Multifamily	13,287		—		—		5,661		18,948
Construction/land development
Multifamily construction	468		—		—		691		1,159
CRE construction	73		—		—		( 2 )		71
Single family construction	5,704		—		—		( 504 )		5,200
Single family construction to permanent	140		—		—		10		150
Total	21,330		—		—		5,989		27,319
Commercial and industrial loans
Owner occupied CRE	598		—		—		12		610
Commercial business	10,648		( 20 )		25		497		11,150
Total	11,246		( 20 )		25		509		11,760
Consumer loans
Single family	3,702		—		1		( 101 )		3,602
Home equity and other	3,356		( 27 )		33		( 237 )		3,125
Total	7,058		( 27 )		34		( 338 )		6,727
Total ACL	$	39,634	$	( 47 )	$	59	$	6,160	$	45,806


	Quarter Ended June 30, 2024
(in thousands)	Beginning balance		Charge-offs			Recoveries			Provision			Ending balance

CRE
Non-owner occupied CRE	$	2,131	$	—		$	—		$	( 354 )		$	1,777
Multifamily	18,947		—			—			( 1,877 )			17,070
Construction/land development
Multifamily construction	1,621		—			—			350			1,971
CRE construction	188		—			—			( 153 )			35
Single family construction	5,578		—			—			( 133 )			5,445
Single family construction to permanent	435		—			—			( 135 )			300
Total	28,900		—			—			( 2,302 )			26,598
Commercial and industrial loans
Owner occupied CRE	836		—			—			( 105 )			731
Commercial business	2,646		( 39 )			39			2,949			5,595
Total	3,482		( 39 )		—	39		—	2,844		—	6,326
Consumer loans
Single family	4,273		—			1			( 430 )			3,844
Home equity and other	3,022		( 87 )			22			16			2,973
Total	7,295		( 87 )			23			( 414 )			6,817
Total ACL	$	39,677	$	( 126 )		$	62		$	128		$	39,741


	Six Months Ended June 30, 2025
(in thousands)	Beginning balance		Charge-offs		Recoveries		Provision		Ending balance

CRE
Non-owner occupied CRE	$	1,739	$	—	$	—	$	52	$	1,791
Multifamily	14,909		—		—		4,039		18,948
Construction/land development
Multifamily construction	849		—		—		310		1,159
CRE construction	66		—		—		5		71
Single family construction	6,737		—		—		( 1,537 )		5,200
Single family construction to permanent	184		—		—		( 34 )		150
Total	24,484		—		—		2,835		27,319
Commercial and industrial loans
Owner occupied CRE	576		—		—		34		610
Commercial business	6,886		( 41 )		50		4,255		11,150
Total	7,462		( 41 )		50		4,289		11,760
Consumer loans
Single family	3,610		—		3		( 11 )		3,602
Home equity and other	3,187		( 67 )		70		( 65 )		3,125
Total	6,797		( 67 )		73		( 76 )		6,727
Total ACL	$	38,743	$	( 108 )	$	123	$	7,048	$	45,806


	Six Months Ended June 30, 2024
(in thousands)	Beginning balance		Charge-offs		Recoveries		Provision		Ending balance

CRE
Non-owner occupied CRE	$	2,610	$	—	$	—	$	( 833 )	$	1,777
Multifamily	13,093		—		—		3,977		17,070
Construction/land development
Multifamily construction	3,983		—		—		( 2,012 )		1,971
CRE construction	189		—		—		( 154 )		35
Single family construction	7,365		—		—		( 1,920 )		5,445
Single family construction to permanent	672		—		—		( 372 )		300
Total	27,912		—		—		( 1,314 )		26,598
Commercial and industrial loans
Owner occupied CRE	899		—		—		( 168 )		731
Commercial business	2,950		( 1,120 )		40		3,725		5,595
Total	3,849		( 1,120 )		40		3,557		6,326
Consumer loans
Single family	5,287		—		3		( 1,446 )		3,844
Home equity and other	3,452		( 111 )		59		( 427 )		2,973
Total	8,739		( 111 )		62		( 1,873 )		6,817
Total ACL	$	40,500	$	( 1,231 )	$	102	$	370	$	39,741

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


	At June 30, 2025
(in thousands)	2025		2024		2023		2022		2021		2020 and prior		Revolving		Revolving-term		Total

COMMERCIAL PORTFOLIO
Non-owner occupied CRE
Pass	$	3,958	$	—	$	1,411	$	69,104	$	70,716	$	325,125	$	( 30 )	$	—	$	470,284
Special Mention	—		—		—		—		—		22,483		—		—		22,483
Substandard	—		—		—		—		—		16,014		—		—		16,014
Total	3,958		—		1,411		69,104		70,716		363,622		( 30 )		—		508,781
Multifamily
Pass	6,748		—		76,265		1,506,962		614,383		417,712		—		—		2,622,070
Special Mention	—		—		15,571		50,387		28,052		61,785		—		—		155,795
Substandard	—		—		14,504		75,040		1,989		25,944		—		—		117,477
Total	6,748		—		106,340		1,632,389		644,424		505,441		—		—		2,895,342
Multifamily construction
Pass	—		—		34,709		—		—		—		—		—		34,709
Special Mention	—		—		—		10,460		—		—		—		—		10,460
Substandard	—		—		—		—		—		—		—		—		—
Total	—		—		34,709		10,460		—		—		—		—		45,169
CRE construction
Pass	—		737		7,465		—		—		—		—		—		8,202
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		3,771		—		—		3,771
Total	—		737		7,465		—		—		3,771		—		—		11,973
Single family construction
Pass	52,198		86,539		4,487		253		1,489		67		189,625		—		334,658
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Total	52,198		86,539		4,487		253		1,489		67		189,625		—		334,658
Single family construction to permanent
Current	1,805		8,318		3,835		12,694		6,667		599		—		—		33,918
Past due:
30-59 days	—		—		—		—		—		—		—		—		—
60-89 days	—		—		—		—		—		—		—		—		—
90+ days	—		—		—		—		—		—		—		—		—
Total	1,805		8,318		3,835		12,694		6,667		599		—		—		33,918
Owner occupied CRE
Pass	1,746		3,938		8,882		56,735		33,754		177,364		—		—		282,419
Special Mention	—		—		—		6,053		4,442		28,230		—		—		38,725
Substandard	—		—		—		320		1,577		1,258		—		—		3,155
Total	1,746		3,938		8,882		63,108		39,773		206,852		—		—		324,299
Commercial business
Pass	484		25,311		14,305		18,507		18,593		41,806		120,928		797		240,731
Special Mention	—		364		93		1,035		1,733		2,359		996		—		6,580
Substandard	—		729		361		23,059		—		11,374		2,778		—		38,301
Total	484		26,404		14,759		42,601		20,326		55,539		124,702		797		285,612
Total commercial portfolio	$	66,939	$	125,936	$	181,888	$	1,830,609	$	783,395	$	1,135,891	$	314,297	$	797	$	4,439,752

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


	At June 30, 2025
(in thousands)	2025		2024		2023		2022		2021		2020 and prior		Revolving		Revolving-term		Total

CONSUMER PORTFOLIO
Single family
Current	$	571	$	91	$	29,553	$	370,811	$	296,464	$	357,673	$	—	$	—	$	1,055,163
Past due:
30-59 days	—		—		414		791		—		1,266		—		—		2,471
60-89 days	—		—		—		—		—		—		—		—		—
90+ days	—		—		—		452		103		2,377		—		—		2,932
Total	571		91		29,967		372,054		296,567		361,316		—		—		1,060,566
Home equity and other
Current	967		851		735		1,133		84		1,781		420,778		4,614		430,943
Past due:
30-59 days	—		3		1		—		—		38		418		60		520
60-89 days	—		5		—		—		—		—		305		—		310
90+ days	—		2		—		—		—		5		1,041		—		1,048
Total	967		861		736		1,133		84		1,824		422,542		4,674		432,821
Total consumer portfolio (1)	$	1,538	$	952	$	30,703	$	373,187	$	296,651	$	363,140	$	422,542	$	4,674	$	1,493,387
Total LHFI	$	68,477	$	126,888	$	212,591	$	2,203,796	$	1,080,046	$	1,499,031	$	736,839	$	5,471	$	5,933,139

(1) Includes $ 1.0 million of loans where a fair value option election was made at the time of origination and, therefore, are carried at fair value with changes in fair value recognized in the consolidated income statements.

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


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

COMMERCIAL PORTFOLIO
Non-owner occupied CRE
Pass	$	—	$	1,441	$	70,128	$	71,493	$	39,885	$	347,058	$	( 36 )	$	—	$	529,969
Special Mention	—		—		—		—		—		24,551		—		—		24,551
Substandard	—		—		—		—		—		16,230		—		—		16,230
Total	—		1,441		70,128		71,493		39,885		387,839		( 36 )		—		570,750
Multifamily
Pass	1,650		106,415		1,538,855		643,044		257,110		255,643		—		—		2,802,717
Special Mention	—		—		66,217		4,789		73,308		23,835		—		—		168,149
Substandard	—		—		15,602		—		—		6,207		—		—		21,809
Total	1,650		106,415		1,620,674		647,833		330,418		285,685		—		—		2,992,675
Multifamily construction
Pass	—		31,349		67,557		—		—		—		—		—		98,906
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Total	—		31,349		67,557		—		—		—		—		—		98,906
CRE construction
Pass	19		7,198		—		—		—		—		—		—		7,217
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		3,821		—		—		—		3,821
Total	19		7,198		—		—		3,821		—		—		—		11,038
Single family construction
Pass	121,305		22,412		5,346		7,252		—		69		164,442		—		320,826
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Total	121,305		22,412		5,346		7,252		—		69		164,442		—		320,826
Single family construction to permanent
Current	6,153		9,719		17,598		7,977		523		—		—		—		41,970
Past due:
30-59 days	—		—		—		—		—		—		—		—		—
60-89 days	—		—		—		—		—		—		—		—		—
90+ days	—		—		—		—		—		—		—		—		—
Total	6,153		9,719		17,598		7,977		523		—		—		—		41,970
Owner occupied CRE
Pass	5,431		10,501		58,423		33,371		41,533		168,082		3		43		317,387
Special Mention	—		1,789		6,129		7,602		317		26,203		—		—		42,040
Substandard	—		—		331		—		—		2,239		—		—		2,570
Total	5,431		12,290		64,883		40,973		41,850		196,524		3		43		361,997
Commercial business
Pass	26,706		15,721		36,209		20,347		28,207		28,836		123,003		700		279,729
Special Mention	—		—		959		2,380		638		615		386		—		4,978
Substandard	243		406		11,885		—		7,192		4,628		2,920		23		27,297
Total	26,949		16,127		49,053		22,727		36,037		34,079		126,309		723		312,004
Total commercial portfolio	$	161,507	$	206,951	$	1,895,239	$	798,255	$	452,534	$	904,196	$	290,718	$	766	$	4,710,166

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


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

CONSUMER PORTFOLIO
Single family
Current	$	566	$	30,940	$	378,613	$	303,920	$	139,159	$	251,322	$	—	$	—	$	1,104,520
Past due:
30-59 days	—		—		452		—		—		1,673		—		—		2,125
60-89 days	—		—		—		—		—		440		—		—		440
90+ days	—		—		—		—		—		2,010		—		—		2,010
Total	566		30,940		379,065		303,920		139,159		255,445		—		—		1,109,095
Home equity and other
Current	1,606		936		1,528		126		85		1,932		399,531		4,449		410,193
Past due:
30-59 days	25		4		1		—		—		—		474		62		566
60-89 days	—		3		4		—		—		—		626		—		633
90+ days	—		—		—		—		—		10		1,127		6		1,143
Total	1,631		943		1,533		126		85		1,942		401,758		4,517		412,535
Total consumer portfolio (1)	$	2,197	$	31,883	$	380,598	$	304,046	$	139,244	$	257,387	$	401,758	$	4,517	$	1,521,630
Total LHFI	$	163,704	$	238,834	$	2,275,837	$	1,102,301	$	591,778	$	1,161,583	$	692,476	$	5,283	$	6,231,796

(1) Includes $ 1.3 million of loans where a fair value option election was made at the time of origination and, therefore, are carried at fair value with changes in fair value recognized in the consolidated income statements.

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


	At June 30, 2025
(in thousands)	2025		2024		2023		2022		2021		2020 and prior		Revolving		Revolving-term		Total

COMMERCIAL PORTFOLIO














Commercial business
Gross charge-offs	$	—	$	—	$	—	$	( 21 )	$	—	$	( 20 )	$	—	$	—	$	( 41 )

CONSUMER PORTFOLIO


Home equity and other
Gross charge-offs	—		( 7 )		( 3 )		—		—		( 1 )		( 56 )		—		( 67 )

Total LHFI	$	—	$	( 7 )	$	( 3 )	$	( 21 )	$	—	$	( 21 )	$	( 56 )	$	—	$	( 108 )


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

COMMERCIAL PORTFOLIO














Commercial business
Gross charge-offs	$	—	$	—	$	( 276 )	$	( 473 )	$	( 1,077 )	$	( 1,098 )	$	( 39 )	$	—	$	( 2,963 )

CONSUMER PORTFOLIO


Home equity and other
Gross charge-offs	—		( 24 )		( 16 )		( 1 )		—		—		( 137 )		—		( 178 )

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

Collateral Dependent Loans

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


	At June 30, 2025
(in thousands)	Land		1-4 Family		Multifamily		Non-residential real estate		Other non-real estate		Total

CRE
Non-owner occupied CRE	$	—	$	—	$	—	$	16,014	$	—	$	16,014
Multifamily	—		—		1,915		—		—		1,915
Construction/land development

CRE construction	3,771		—		—		—		—		3,771


Total	3,771		—		1,915		16,014		—		21,700
Commercial and industrial loans

Commercial business	4,362		2,882		—		—		2,529		9,773

Consumer loans
Single family	—		832		—		—		—		832

Total collateral-dependent loans	$	8,133	$	3,714	$	1,915	$	16,014	$	2,529	$	32,305


	At December 31, 2024
(in thousands)	Land		1-4 Family		Multifamily		Non-residential real estate		Other non-real estate		Total

CRE
Non-owner occupied CRE	$	—	$	—	$	—	$	16,230	$	—	$	16,230
Multifamily	—		—		1,915		—		—		1,915
Construction/land development
CRE construction	3,821		—		—		—		—		3,821
Total	3,821		—		1,915		16,230		—		21,966
Commercial and industrial loans
Owner occupied CRE	—		—		—		205		—		205
Commercial business	4,420		2,927		—		—		3,269		10,616
Total	4,420		2,927		—		205		3,269		10,821
Consumer loans
Single family	—		832		—		—		—		832
Total collateral-dependent loans	$	8,241	$	3,759	$	1,915	$	16,435	$	3,269	$	33,619

Nonaccrual and Past Due Loans

The following table presents nonaccrual status for loans:


	At June 30, 2025				At December 31, 2024
(in thousands)	Nonaccrual with no related ACL		Total Nonaccrual		Nonaccrual with no related ACL		Total Nonaccrual

CRE
Non-owner occupied CRE	$	16,014	$	16,014	$	16,230	$	16,230
Multifamily	1,915		1,915		1,915		1,915
Construction/land development

CRE construction	3,771		3,771		3,821		3,821


Total	21,700		21,700		21,966		21,966
Commercial and industrial loans
Owner occupied CRE	905		905		1,161		1,161
Commercial business	9,250		25,214		8,509		25,740
Total	10,155		26,119		9,670		26,901
Consumer loans
Single family	832		3,850		1,106		2,990
Home equity and other	—		3,563		—		3,137
Total	832		7,413		1,106		6,127
Total nonaccrual loans	$	32,687	$	55,232	$	32,742	$	54,994

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


	At June 30, 2025
	Past Due and Still Accruing
(in thousands)	30-59 days			60-89 days			90 days or more				Nonaccrual			Total past due and nonaccrual (1)			Current			Total loans

CRE
Non-owner occupied CRE	$	—		$	—		$	—			$	16,014		$	16,014		$	492,767		$	508,781
Multifamily	—			—			—				1,915			1,915			2,893,427			2,895,342
Construction/land development
Multifamily construction	—			—			—				—			—			45,169			45,169
CRE construction	—			—			—				3,771			3,771			8,202			11,973
Single family construction	—			—			—				—			—			334,658			334,658
Single family construction to permanent	—			—			—				—			—			33,918			33,918
Total	—			—			—				21,700			21,700			3,808,141			3,829,841
Commercial and industrial loans
Owner occupied CRE	254			—			—				905			1,159			323,140			324,299
Commercial business	26			—			—				25,214			25,240			260,372			285,612
Total	280			—			—				26,119			26,399			583,512			609,911
Consumer loans
Single family	4,060			2,085			3,737			(2)	3,850			13,732			1,046,834			1,060,566
Home equity and other	260			29			—				3,563			3,852			428,969			432,821
Total	4,320			2,114			3,737				7,413			17,584			1,475,803			1,493,387			(3)
Total loans	$	4,600		$	2,114		$	3,737			$	55,232		$	65,683		$	5,867,456		$	5,933,139
%	0.08		%	0.04		%	0.06		%		0.93		%	1.11		%	98.89		%	100.00		%


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

CRE
Non-owner occupied CRE	$	—		$	—		$	—			$	16,230		$	16,230		$	554,520		$	570,750
Multifamily	—			—			—				1,915			1,915			2,990,760			2,992,675
Construction/land development
Multifamily construction	—			—			—				—			—			98,906			98,906
CRE construction	—			—			—				3,821			3,821			7,217			11,038
Single family construction	—			—			—				—			—			320,826			320,826
Single family construction to permanent	—			—			—				—			—			41,970			41,970
Total	—			—			—				21,966			21,966			4,014,199			4,036,165
Commercial and industrial loans
Owner occupied CRE	—			—			—				1,161			1,161			360,836			361,997
Commercial business	—			—			—				25,740			25,740			286,264			312,004
Total	—			—			—				26,901			26,901			647,100			674,001
Consumer loans
Single family	4,601			1,096			4,354			(2)	2,990			13,041			1,096,054			1,109,095
Home equity and other	344			631			—				3,137			4,112			408,423			412,535
Total	4,945			1,727			4,354				6,127			17,153			1,504,477			1,521,630			(3)
Total loans	$	4,945		$	1,727		$	4,354			$	54,994		$	66,020		$	6,165,776		$	6,231,796
%	0.08		%	0.03		%	0.07		%		0.88		%	1.06		%	98.94		%	100.00		%

(1) Includes loans whose repayments are insured by the FHA or guaranteed by the VA or Small Business Administration ("SBA") of $ 11.4 million and $ 11.3 million at June 30, 2025 and December 31, 2024, 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 $ 1.0 million and $ 1.3 million of loans at June 30, 2025 and December 31, 2024, 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 ("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 for the quarters and six months ended June 30, 2025 and 2024 did not have a material impact on the ACL. The following tables provide information related to loans modified for the quarters and six months ended June 30, 2025 and 2024 to borrowers experiencing financial difficulty, disaggregated by class of financing receivable and type of concession granted:


	Significant Payment Delay
	Quarter Ended June 30,								Six Months Ended June 30,
	2025				2024				2025				2024
(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		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	0.07	%	$	—	—	%	$	1,915	0.07	%	$	—	—	%
Commercial business	—		—	%	—		—	%	—		—	%	97		0.03	%


	Term Extension
	Quarter Ended June 30,								Six Months Ended June 30,
	2025				2024				2025				2024
(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		Amortized Cost Basis at Period End		% of Total Class of Financing Receivable		Amortized Cost Basis at Period End		% of Total Class of Financing Receivable



Commercial business	$	996	0.35	%	$	—	—	%	$	996	0.35	%	$	3,455	0.92	%


	Significant Payment Delay and Term Extension
	Quarter Ended June 30,								Six Months Ended June 30,
	2025				2024				2025				2024
(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		Amortized Cost Basis at Period End		% of Total Class of Financing Receivable		Amortized Cost Basis at Period End		% of Total Class of Financing Receivable



Commercial business	$	729	0.26	%	$	—	—	%	$	1,840	0.64	%	$	—	—	%
Single family	318		0.03	%	804		0.07	%	590		0.06	%	1,177		0.03	%

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

Significant Payment Delay

Quarter Ended June 30,

Six Months Ended June 30,

2025

2024

2025

2024

Multifamily

The weighted average duration of loan payments deferred is 0.3 years

—

The weighted average duration of loan payments deferred is 2.0 years

—

Commercial business

The weighted average duration of loan payments deferred is 1.8 years

—

The weighted average duration of loan payments deferred is 3.8 years.

The weighted average duration of loan payments deferred is 2.8 years

Single Family

Provided payment deferrals to borrowers. A weighted average 2.34 % of loan balances were capitalized and added to the remaining term of the loan.

Provided payment deferrals to borrowers. A weighted average 1.06 % of loan balances were capitalized and added to the remaining term of the loan.

Provided payment deferrals to borrowers. A weighted average 1.67 % of loan balances were capitalized and added to the remaining term of the loan.

Provided payment deferrals to borrowers. A weighted average 1.00 % of loan balances were capitalized and added to the remaining term of the loan.

Term Extension

Quarter Ended June 30,

Six Months Ended June 30,

2025

2024

2025

2024

Commercial business

Added a weighted average 1.1 years to the life of loans, which reduced the monthly payment amounts to the borrowers.

—

Added a weighted average 2.4 years to the life of loans, which reduced the monthly payment amounts to the borrowers.

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

Single family

Added a weighted average 5.6 years to the life of loans, which reduced the monthly payment amounts to the borrowers.

Added a weighted average 2.8 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 3.0 years to the life of loans, which reduced the monthly payment amounts to the borrowers.

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

The following table depicts the payment status of loans that were classified as MBFDs on or after April 1, 2024 through March 31, 2025:


	Payment Status (Amortized Cost Basis) at June 30, 2025
(in thousands)	Current		30-89 Days Past Due		90+ Days Past Due

Non-owner occupied CRE	$	18,447	$	—	$	—
Multifamily	—		—		1,915
Construction/land development	—		—		3,771
Owner occupied CRE	254		—		—
Commercial business	2,852		—		4,362
Single family	2,585		176		418

Total	$	24,138	$	176	$	10,466

The following table depicts the payment status of loans that were classified as MBFDs on or after April 1, 2023 through March 31, 2024:


	Payment Status (Amortized Cost Basis) at June 30, 2024
(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	1,597		2,708		4,420
Single family	1,155		833		1,417

Total	$	2,752	$	3,541	$	25,888

The following table provides the amortized cost basis as of June 30, 2025 of MBFDs on or after April 1, 2024 through March 31, 2025 and subsequently had a payment default:


	Amortized Cost Basis of Modified Loans That Subsequently Defaulted
	Quarter Ended June 30, 2025
(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



Owner occupied CRE	$	—	$	—	$	—	$	254	$	—

Single family	—		—		—		203		—

Total	$	—	$	—	$	—	$	457	$	—

The following table provides the amortized cost basis as of June 30, 2024 of MBFDs on or after April 1, 2023 through March 31, 2024 and subsequently had a payment default:


	Amortized Cost Basis of Modified Loans That Subsequently Defaulted
	Quarter Ended June 30, 2024
(in thousands)	Significant Payment Delay		Term Extension		Interest Rate Reduction and Term Extension		Significant Payment Delay and Term Extension		Interest Rate Reduction, Significant Payment Delay and Term Extension





Commercial business	$	—	$	2,708	$	—	$	—	$	—
Single family	833		—		—		—		—

Total	$	833	$	2,708	$	—	$	—	$	—

The following table provides the amortized cost basis as of June 30, 2025 of MBFDs on or after April 1, 2024 through March 31, 2025 and subsequently had a payment default:


	Amortized Cost Basis of Modified Loans That Subsequently Defaulted
	Six Months Ended June 30, 2025
(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



Owner occupied CRE	$	—	$	—	$	—	$	254	$	—

Single family	—		—		—		378		—

Total	$	—	$	—	$	—	$	632	$	—

The following table provides the amortized cost basis as of June 30, 2024 of MBFDs on or after April 1, 2023 through March 31, 2024 and subsequently had a payment default:


	Amortized Cost Basis of Modified Loans That Subsequently Defaulted
	Six Months Ended June 30, 2024
(in thousands)	Significant Payment Delay		Term Extension		Interest Rate Reduction and Term Extension		Significant Payment Delay and Term Extension		Interest Rate Reduction, Significant Payment Delay and Term Extension

Non-owner occupied CRE	$	—	$	—	$	—	$	16,240	$	—

Construction/land development	—		—		—		3,824		—

Commercial business	—		7,128		—		—		—
Single family	1,074		—		—		351		—

Total	$	1,074	$	7,128	$	—	$	20,415	$	—

NOTE 4– DEPOSITS:

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


	At June 30, 2025				At December 31, 2024
(dollars in thousands)	Amount		Weighted Average Rate		Amount		Weighted Average Rate

Noninterest-bearing demand deposits	$	1,203,680	—	%	$	1,195,781	—	%
Interest bearing:
Interest-bearing demand deposits	322,151		0.17	%	323,112		0.35	%
Savings	233,074		0.06	%	229,659		0.06	%
Money market	1,363,793		1.95	%	1,396,697		1.72	%
Certificates of deposit
Brokered deposits	210,067		4.24	%	751,406		4.61	%
Other	2,524,519		3.91	%	2,516,366		4.37	%
Total interest bearing deposits	4,653,604		2.88	%	5,217,240		3.31	%
Total deposits	$	5,857,284	2.30	%	$	6,413,021	2.65	%

There were $ 319 million and $ 315 million in public funds included in deposits at June 30, 2025 and December 31, 2024, respectively.

Certificates of deposit outstanding mature as follows:


(in thousands)	June 30, 2025

Within one year	$	2,719,131
One to two years	12,117
Two to three years	1,273
Three to four years	868
Four to five years	1,197
Thereafter	—
Total	$	2,734,586

The aggregate amount of certificate of deposits in denominations of more than the FDIC limit of $250 thousand at June 30, 2025 and December 31, 2024 were $ 277 million and $ 265 million, respectively.

NOTE 5– DERIVATIVES AND HEDGING ACTIVITIES:

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


	At June 30, 2025
	Notional amount		Fair value derivatives
(in thousands)			Asset		Liability

Forward sale commitments	$	149,516	$	426	$	( 657 )

Interest rate lock commitments	39,722		918		( 2 )
Interest rate swaps	204,450		6,583		( 6,583 )


Total derivatives before netting	$	393,688	7,927		( 7,242 )
Netting adjustment/Cash collateral (1)			( 6,932 )		230
Carrying value on consolidated balance sheet			$	995	$	( 7,012 )


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

Forward sale commitments	$	87,912	$	237	$	( 402 )
Interest rate lock commitments	16,757		175		( 49 )
Interest rate swaps	222,917		10,250		( 10,250 )
Futures	5,200		1		—
Options	5,800		3		—
Total derivatives before netting	$	338,586	10,666		( 10,701 )
Netting adjustment/Cash collateral (1)			( 10,388 )		219
Carrying value on consolidated balance sheet			$	278	$	( 10,482 )

(1) Includes net cash collateral received of $ 6.7 million and $ 10.2 million at June 30, 2025 and December 31, 2024, respectively.

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


(in thousands)	Gross fair value		Netting adjustments/ Cash collateral (1)		Carrying value





At June 30, 2025
Derivative assets	$	7,927	$	( 6,932 )	$	995
Derivative liabilities	( 7,242 )		230		( 7,012 )
At December 31, 2024
Derivative assets	$	10,666	$	( 10,388 )	$	278
Derivative liabilities	( 10,701 )		219		( 10,482 )

(1) Includes net cash collateral received of $ 6.7 million and $ 10.2 million at June 30, 2025 and December 31, 2024, respectively.

The collateral used under the Company's master netting agreements is typically cash, but securities may be used under agreements with certain counterparties. Receivables related to cash collateral that has been paid to counterparties are included in other assets. Payables related to cash collateral that has been received from counterparties are included in accounts payable and other liabilities. Interest is owed on amounts received from counterparties and we earn interest on cash paid to counterparties. Any securities pledged to counterparties as collateral remain on the consolidated balance sheets. At June 30, 2025 and December 31, 2024, the Company had liabilities of $ 6.9 million and $ 10.4 million, respectively, in cash collateral received from counterparties and receivables of $ 0.2 million and $ 0.2 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 June 30,				Six Months Ended June 30,
(in thousands)	2025		2024		2025		2024

Recognized in noninterest income:
Net gain (loss) on loan origination and sale activities (1)	$	285	$	226	$	346	$	312
Loan servicing income (loss) (2)	( 272 )		( 225 )		( 81 )		( 725 )
Other (3)	—		—		—		3

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

(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 interest income from US Treasury notes securities used for hedging purposes, which is included in interest income on the consolidated income statements, were $ 0.5 million and $ 0.3 million for quarters ended June 30, 2025 and 2024, respectively and were $ 0.9 million and $ 0.6 million for the six months ended June 30, 2025 and 2024, respectively.

The notional amount of open interest rate swap agreements executed with commercial banking customers and broker dealer counterparties at June 30, 2025 and December 31, 2024 were $ 204 million and $ 223 million, respectively.

NOTE 6– MORTGAGE BANKING OPERATIONS:

LHFS consisted of the following:


(in thousands)	At June 30, 2025		At December 31, 2024

Single family	$	29,999	$	20,312
CRE, multifamily and SBA	18,784		—
Total	$	48,783	$	20,312

Loans sold consisted of the following for the periods indicated:


	Quarter Ended June 30,				Six Months Ended June 30,
(in thousands)	2025		2024		2025		2024

Single family	$	105,197	$	98,081	$	187,594	$	168,460
CRE, multifamily and SBA	12,894		13,539		67,089		21,735
Total	$	118,091	$	111,620	$	254,683	$	190,195

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


	Quarter Ended June 30,				Six Months Ended June 30,
(in thousands)	2025		2024		2025		2024

Single family	$	3,182	$	2,718	$	5,465	$	4,704
CRE, multifamily and SBA	53		318		986		638
Total	$	3,235	$	3,036	$	6,451	$	5,342

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


(in thousands)	At June 30, 2025		At December 31, 2024

Single family	$	5,107,214	$	5,179,373
CRE, multifamily and SBA	1,912,416		1,918,172
Total	$	7,019,630	$	7,097,545

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


	Quarter Ended June 30,				Six Months Ended June 30,
(in thousands)	2025		2024		2025		2024

Balance, beginning of period	$	999	$	1,317	$	1,032	$	1,481
Additions, net of adjustments (1)	( 223 )		( 20 )		( 326 )		( 148 )
Realized (losses) recoveries, net (2)	( 28 )		( 95 )		42		( 131 )
Balance, end of period	$	748	$	1,202	$	748	$	1,202

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

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

The Company has agreements with certain investors to advance scheduled principal and interest amounts on delinquent loans. Advances are also made to fund the foreclosure and collection costs of delinquent loans prior to the recovery of reimbursable amounts from investors or borrowers. Advances of $ 1.6 million were recorded in other assets as of both June 30, 2025 and December 31, 2024.

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 June 30, 2025 and December 31, 2024, delinquent or defaulted mortgage loans currently in Ginnie Mae pools that the Company has recognized on its consolidated balance sheets totaled $ 8.6 million and $ 5.1 million, respectively.

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


	Quarter Ended June 30,				Six Months Ended June 30,
(in thousands)	2025		2024		2025		2024

Servicing income, net:
Servicing fees and other	$	6,348	$	6,562	$	12,855	$	12,916
Amortization of single family MSRs (1)	( 1,598 )		( 1,713 )		( 3,180 )		( 3,141 )
Amortization of multifamily and SBA MSRs	( 1,455 )		( 1,459 )		( 2,809 )		( 2,861 )
Total	3,295		3,390		6,866		6,914
Risk management, single family MSRs:
Changes in fair value of MSRs due to assumptions (2)	4,373		529		4,644		1,147
Net gain (loss) from economic hedging (3)	( 118 )		( 509 )		898		( 1,619 )
Total	4,255		20		5,542		( 472 )
Loan servicing income	$	7,550	$	3,410	$	12,408	$	6,442

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

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

(3) The interest income from US Treasury notes securities used for hedging purposes, which is included in interest income on the consolidated income statements, was $ 0.5 million and $ 0.3 million for quarters ended June 30, 2025 and 2024, respectively, and $ 0.9 million and $ 0.6 million for the six months ended June 30, 2025 and 2024, respectively.

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


	Quarter Ended June 30,				Six Months Ended June 30,
(in thousands)	2025		2024		2025		2024

Beginning balance	$	72,285	$	74,056	$	72,901	$	74,249
Additions and amortization:
Originations	931		853		1,626		1,470

Amortization (1)	( 1,598 )		( 1,713 )		( 3,180 )		( 3,141 )
Net additions and amortization	( 667 )		( 860 )		( 1,554 )		( 1,671 )
Changes in fair value assumptions (2)	4,373		529		4,644		1,147
Ending balance	$	75,991	$	73,725	$	75,991	$	73,725

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

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

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


	Quarter Ended June 30,				Six Months Ended June 30,
(rates per annum) (1)	2025		2024		2025		2024

Constant prepayment rate ("CPR") (2)	19.24	%	17.46	%	18.67	%	18.28	%
Discount rate	11.28	%	10.45	%	10.77	%	10.33	%

(1) Based on a weighted average.

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

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 June 30, 2025			At December 31, 2024
	Range of Inputs	Average (1)		Range of Inputs	Average (1)

CPRs (2)	5.05 % - 12.13 %	6.82	%	6.00 % - 13.50 %	6.60	%
Discount Rates	8.69 % - 15.85 %	9.13	%	10.00 % - 17.00 %	11.00	%

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

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

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


(dollars in thousands)	At June 30, 2025

Fair value of single family MSR	$	75,991
Expected weighted-average life (in years)	8.24
CPR
Impact on fair value of 25 basis points adverse change in interest rates	$	( 1,005 )
Impact on fair value of 50 basis points adverse change in interest rates	$	( 2,092 )
Discount rate
Impact on fair value of 100 basis points increase	$	( 2,838 )
Impact on fair value of 200 basis points increase	$	( 5,642 )

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


	Quarter Ended June 30,				Six Months Ended June 30,
(in thousands)	2025		2024		2025		2024

Beginning balance	$	25,674	$	28,863	$	26,565	$	29,987
Originations	283		179		746		457
Amortization	( 1,455 )		( 1,459 )		( 2,809 )		( 2,861 )
Ending balance	$	24,502	$	27,583	$	24,502	$	27,583

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


	Quarter Ended June 30,				Six Months Ended June 30,
(rates per annum) (1)	2025		2024		2025		2024


Discount rate	13.10	%	13.00	%	13.10	%	13.00	%

(1) Based on a weighted average.

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


	At June 30, 2025			At December 31, 2024

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


Discount Rates	13.00 % - 15.00 %	13.10	%	13.00 % - 15.00 %	13.10	%

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

NOTE 7– GUARANTEES AND MORTGAGE REPURCHASE LIABILITY:

In the ordinary course of business, the Company sells loans through the Fannie Mae Multifamily Delegated Underwriting and Servicing Program ("DUS"®) that are subject to a credit loss sharing arrangement. The Company services the loans for Fannie Mae and shares in the risk of loss with Fannie Mae under the terms of the DUS contracts. Under the DUS program, the Company and Fannie Mae share losses on a pro rata basis, where the Company is responsible for losses incurred up to one-third of the principal balance on each loan with two-thirds of the loss covered by Fannie Mae. For loans that have been sold through this program, a liability is recorded for this loss sharing arrangement under the accounting guidance for guarantees. At June 30, 2025 and December 31, 2024, 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 $ 0.9 million and $ 0.7 million at June 30, 2025 and December 31, 2024, respectively. There were no actual losses incurred under this arrangement during the quarters and six months ended June 30, 2025 and 2024.

In the ordinary course of business, the Company sells residential mortgage loans to GSEs and other entities. Under the terms of these sales agreements, the Company has made representations and warranties that the loans sold meet certain requirements. The Company may be required to repurchase mortgage loans or indemnify loan purchasers due to defects in the origination process of the loan, such as documentation errors, underwriting errors and judgments, early payment defaults and fraud. The total unpaid principal balance of loans sold on a servicing-retained basis that were subject to the terms and conditions of these representations and warranties totaled $ 5.1 billion and $ 5.2 billion as of June 30, 2025 and December 31, 2024, respectively.

At June 30, 2025 and December 31, 2024, 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 $ 0.7 million and $ 1.0 million, respectively.

NOTE 8– EARNINGS PER SHARE:

The following table summarizes the calculation of earnings (loss) per share:


	Quarter Ended June 30,				Six Months Ended June 30,
(in thousands, except share and per share data)	2025		2024		2025		2024

Net income (loss)	$	( 4,412 )	$	( 6,238 )	$	( 8,877 )	$	( 13,735 )

Weighted average shares:
Basic weighted-average number of common shares outstanding	18,920,808		18,857,566		18,920,808		18,857,218
Dilutive effect of outstanding common stock equivalents	—		—		—		—
Diluted weighted-average number of common shares outstanding	18,920,808		18,857,566		18,920,808		18,857,218
Net income (loss) per share:
Basic earnings per share	$	( 0.23 )	$	( 0.33 )	$	( 0.47 )	$	( 0.73 )
Diluted earnings per share (1)	( 0.23 )		( 0.33 )		( 0.47 )		( 0.73 )

(1) Excluded from the computation of diluted earnings per share (due to their antidilutive effect) for the quarters and six months ended June 30, 2025 and 2024 were certain unvested RSUs and PSUs. On a weighted average basis 395,023 and 559,921 unvested stock units convertible into shares of common stock were excluded at June 30, 2025 and 2024, respectively, because their effect would have been anti-dilutive.

NOTE 9– FAIR VALUE MEASUREMENT:

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

Fair Value Hierarchy

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

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

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

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

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

Estimation of Fair Value

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

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

Asset/Liability class

Valuation methodology, inputs and assumptions

Classification

Investment securities

Trading securities

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

Level 1 recurring fair value measurement.

Investment securities AFS

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

Level 2 recurring fair value measurement.

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

• Expected prepayment speeds

• Estimated credit losses

• Market liquidity adjustments

Level 3 recurring fair value measurement.

LHFS

Single family loans, excluding loans transferred from held for investment

Fair value is based on observable market data, including:

• Quoted market prices, where available

• Dealer quotes for similar loans

• Forward sale commitments

Level 2 recurring fair value measurement.

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

• Benchmark yield curve

• Estimated discount spread to the benchmark yield curve

• Expected prepayment speeds

Estimated fair value classified as Level 3.

Mortgage servicing rights

Single family MSRs

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

Level 3 recurring fair value measurement.

Derivatives

Futures and Options

Fair value is based on closing exchange prices.

Level 1 recurring fair value measurement.

Forward sale commitments Interest rate swaps

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

• Forward interest rates
• Interest rate volatilities

Level 2 recurring fair value measurement.

IRLC

The fair value considers several factors including:

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

• Value of servicing

• Fall-out factor

Level 3 recurring fair value measurement.

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 June 30, 2025
(in thousands)	Fair Value		Level 1		Level 2		Level 3

Assets:
Trading securities - U.S. Treasury securities	$	40,615	$	40,615	$	—	$	—
Investment securities AFS
Mortgage backed securities:
Residential	159,960		—		158,293		1,667
Commercial	48,843		—		48,843		—
Collateralized mortgage obligations:
Residential	300,714		—		300,714		—
Commercial	52,245		—		52,245		—
Municipal bonds	371,582		—		371,582		—
Corporate debt securities	25,546		—		25,546		—
U.S. Treasury securities	20,498		—		20,498		—
Agency debentures	8,713		—		8,713		—
Single family LHFS	29,999		—		29,999		—
Single family LHFI	959		—		—		959
Single family mortgage servicing rights	75,991		—		—		75,991
Derivatives

Forward sale commitments	426		—		426		—

Interest rate lock commitments	918		—		—		918
Interest rate swaps	6,583		—		6,583		—
Total assets	$	1,143,592	$	40,615	$	1,023,442	$	79,535
Liabilities:
Derivatives

Forward sale commitments	$	657	$	—	$	657	$	—

Interest rate lock commitments	2		—		—		2
Interest rate swaps	6,583		—		6,583		—
Total liabilities	$	7,242	$	—	$	7,240	$	2


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

Assets:
Trading securities - U.S. Treasury securities	$	34,746	$	34,746	$	—	$	—
Investment securities AFS
Mortgage backed securities:
Residential	167,462		—		165,764		1,698
Commercial	47,642		—		47,642		—
Collateralized mortgage obligations:
Residential	317,444		—		317,444		—
Commercial	54,945		—		54,945		—
Municipal bonds	378,259		—		378,259		—
Corporate debt securities	24,944		—		24,944		—
U.S. Treasury securities	19,987		—		19,987		—
Agency debentures	9,276		—		9,276		—
Single family LHFS	20,312		—		20,312		—
Single family LHFI	1,287		—		—		1,287
Single family mortgage servicing rights	72,901		—		—		72,901
Derivatives
Futures	1		1		—		—
Forward sale commitments	237		—		237		—
Options	3		3		—

Interest rate lock commitments	175		—		—		175
Interest rate swaps	10,250		—		10,250		—
Total assets	$	1,159,871	$	34,750	$	1,049,060	$	76,061
Liabilities:
Derivatives

Forward sale commitments	$	402	$	—	$	402	$	—

Interest rate lock commitments	49		—		—		49
Interest rate swaps	10,250		—		10,250		—
Total liabilities	$	10,701	$	—	$	10,652	$	49

There were no transfers between levels of the fair value hierarchy during the quarters and six months ended June 30, 2025 and 2024.

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 quarter ended and six months ended June 30, 2025 and 2024, see Note 6, Mortgage Banking Operations of this Quarterly Report on Form 10-Q.

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

market trades, the fall-out factor and value of servicing are considered to be Level 3 inputs. The fair value of IRLCs decreases in value upon an increase in the fall-out factor and increases in value upon an increase in the value of servicing. Changes in the fall-out factor and value of servicing do not increase or decrease based on movements in other significant unobservable inputs.

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

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

The Company transferred certain loans from held for sale to held for investment. These loans were originated as held for sale loans where the Company had elected fair value option. The Company determined these loans to be level 3 recurring assets as the valuation technique included a significant unobservable input. The total amount of held for investment loans where fair value option election was made was $ 1.0 million and $ 1.3 million at June 30, 2025 and December 31, 2024, respectively.

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



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

June 30, 2025
Investment securities AFS	$	1,667	Income approach	Implied spread to benchmark interest rate curve	2.25 %	2.25 %	2.25 %
Single family LHFI	959		Income approach	Implied spread to benchmark interest rate curve	3.17 %	3.65 %	3.23 %
Interest rate lock commitments, net	916		Income approach	Fall-out factor	0.70 %	22.84 %	11.84 %
				Value of servicing	0.76 %	1.41 %	1.05 %

December 31, 2024
Investment securities AFS	$	1,698	Income approach	Implied spread to benchmark interest rate curve	2.25 %	2.25 %	2.25 %
Single family LHFI	1,287		Income approach	Implied spread to benchmark interest rate curve	2.94 %	5.56 %	3.69 %
Interest rate lock commitments, net	126		Income approach	Fall-out factor	0.83 %	29.13 %	9.28 %
				Value of servicing	0.78 %	2.15 %	1.37 %

We had no LHFS where the fair value was not derived with significant observable inputs at June 30, 2025 and December 31, 2024.

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



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

Quarter Ended June 30, 2025
Investment securities AFS	$	1,699	$	—	$	—	$	( 50 )	$	18	$	1,667

Single family LHFI	1,248		—		—		( 282 )		( 7 )		959
Quarter Ended June 30, 2024
Investment securities AFS	$	1,791	$	—	$	—	$	( 50 )	$	28	$	1,769
Single family LHFI	1,285		—		—		—		1		1,286
Six Months Ended June 30, 2025
Investment securities AFS	$	1,698	$	—	$	—	$	( 100 )	$	69	$	1,667
Single family LHFI	1,287		—		( 50 )		( 282 )		4		959
Six Months Ended June 30, 2024
Investment securities AFS	$	1,860	$	—	$	—	$	( 100 )	$	9	$	1,769
Single family LHFI	1,280		—		—		—		6		1,286

(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 June 30,				Six Months Ended June 30,
(in thousands)	2025		2024		2025		2024

Beginning balance, net	$	556	$	336	$	126	$	411
Total realized/unrealized gains	2,026		1,172		3,873		1,589
Settlements	( 1,666 )		( 1,025 )		( 3,083 )		( 1,517 )
Ending balance, net	$	916	$	483	$	916	$	483

Nonrecurring Fair Value Measurements

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

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

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

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

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

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


(in thousands)	Fair Value (1)		Total Gains (Losses)

At or for the Quarter Ended June 30, 2025
LHFI	$	1,380	$	5
At or for the Quarter Ended June 30, 2024
LHFI	$	3,131	$	( 2,692 )
At or for the Six Months Ended June 30, 2025
LHFI	$	1,380	$	26
At or for the Six Months Ended June 30, 2024
LHFI	$	3,131	$	( 2,743 )

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

Fair Value of Financial Instruments

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


	At June 30, 2025
(in thousands)	Carrying Value		Fair Value		Level 1		Level 2		Level 3

Assets:
Cash and cash equivalents	$	201,080	$	201,080	$	201,080	$	—	$	—
Investment securities HTM	2,265		2,253		—		2,253		—
LHFI	5,886,374		5,663,119		—		—		5,663,119

LHFS – multifamily and other	18,784		18,795		—		18,795		—
Mortgage servicing rights – multifamily and SBA	24,502		30,339		—		—		30,339
Federal Home Loan Bank stock	51,718		51,718		—		51,718		—
Other assets - GNMA EBO loans	8,632		8,632		—		—		8,632
Liabilities:
Certificates of deposit	$	2,734,586	$	2,729,172	$	—	$	2,729,172	$	—



Borrowings	1,040,000		1,045,449		—		1,045,449		—
Long-term debt	225,316		191,710		—		191,710		—


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

Assets:
Cash and cash equivalents	$	406,600	$	406,600	$	406,600	$	—	$	—
Investment securities HTM	2,301		2,273		—		2,273		—
LHFI	6,191,766		5,864,426		—		—		5,864,426


Mortgage servicing rights – multifamily and SBA	26,565		32,361		—		—		32,361
Federal Home Loan Bank stock	50,676		50,676		—		50,676		—
Other assets-GNMA EBO loans	5,111		5,111		—		—		5,111
Liabilities:
Certificates of deposit	$	3,267,772	$	3,262,350	$	—	$	3,262,350	$	—
Borrowings	1,000,000		1,001,873		—		1,001,873		—
Long-term debt	225,131		184,124		—		184,124		—

Fair Value Option

Single family loans held for sale accounted under the fair value option are measured initially at fair value with subsequent changes in fair value recognized in earnings. Gains and losses from such changes in fair value are recognized in net gain on mortgage loan origination and sale activities within noninterest income. The change in fair value of loans held for sale is primarily driven by changes in interest rates subsequent to loan funding and changes in fair value of the related servicing asset, resulting in revaluation adjustments to the recorded fair value. The use of the fair value option allows the change in the fair value of loans to more effectively offset the change in fair value of derivative instruments that are used as economic hedges of loans held for sale.

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


	At June 30, 2025						At December 31, 2024
(in thousands)	Fair Value		Aggregate Unpaid Principal Balance		Fair Value Less Aggregated Unpaid Principal Balance		Fair Value		Aggregate Unpaid Principal Balance		Fair Value Less Aggregated Unpaid Principal Balance

Single family LHFS	$	29,999	$	29,256	$	743	$	20,312	$	20,137	$	175

NOTE 10–LOW INCOME HOUSING TAX CREDIT (" LIHTC") INVESTMENTS:

The Company has LIHTC investments that are designed to promote qualified affordable housing programs and generate a return primarily through the realization of federal tax credits. The Company accounts for these investments by amortizing the cost of tax credit investments over the life of the investment using a proportional amortization method. The current balances of these investments, which are included in other assets in the consolidated balance sheets, were $ 34.5 million and $ 37.3 million as of June 30, 2025 and December 31, 2024, respectively.

The following table presents other information related to the Company’s LIHTC investments for the periods indicated:


	Quarter Ended June 30,				Six Months Ended June 30,
(in thousands)	2025		2024		2025		2024

Tax credits and other tax benefits recognized	$	1,126	$	1,019	$	2,823	$	2,687
LIHTC amortization expense	1,405		1,367		2,810		2,734

NOTE 11– SUBSEQUENT EVENTS:

On July 16, 2025, the Company entered into an agreement to sell its Government National Mortgage Association (“Ginnie Mae”) mortgage servicing portfolio to an entity experienced in servicing loans, including Ginnie Mae loans. The principal balance of the loans in the Ginnie Mae servicing portfolio sold under the purchase agreement was $ 797 million and the value of the related mortgage servicing rights was $ 15.7 million on June 30, 2025. The sale closed on August 1, 2025 and no gain or loss was recognized.

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

Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Consolidated Financial Statements and Notes presented elsewhere in this report and in HomeStreet, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2024 ("2024 Annual Report on Form 10-K").

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Generally, forward-looking statements include the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “should,” “will,” and “would” and similar expressions (or the negative of these terms) and include statements relating to achievement of earnings growth, profitability and timing of such achievement, timing for the closing of the pending Merger ("defined below"), expectations with respect to income tax expense and reductions in short-term interest rates and their impact on the Company.

Forward-looking statements in this Form 10-Q are based on the Company’s expectations at the time such statements are made and speak only as of the date made. The Company does not assume any obligation or undertake to update any forward-looking statements after the date of this Form 10-Q as a result of new information, future events or developments, except as required by federal securities or other applicable laws, although the Company may do so from time to time. The Company does not endorse any projections regarding future performance that may be made by third parties. For all forward-looking statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Reform Act.

We caution readers that actual results may differ materially from those expressed in or implied by the Company’s forward-looking statements. Rather, more important factors could affect the Company’s future results, including but not limited to the following: (1) our ability to successfully consummate the pending merger (the "Merger") with Mechanics Bank ("Mechanics"), (2) the ability of HomeStreet and Mechanics to obtain required governmental approvals of the Merger, (3) the failure to satisfy the closing conditions in the definitive Agreement and Plan of Merger, dated as of March 28, 2025 (the “Merger Agreement”), or any unexpected delay in closing the Merger, (4) the ability to achieve expected cost savings, synergies and other financial benefits from the Merger within the expected time frames and costs or difficulties relating to integration matters being greater than expected, (5) the diversion of management time from core banking functions due to Merger-related issues; (6) potential difficulty in maintaining relationships with customers, associates or business partners as a result of the announced Merger; (7) changes in the interest rate environment and in expectation of reduction in short-term interest rates; (8) changes in the U.S. and global economies, including business disruptions, reductions in employment, inflationary pressures and an increase in business failures, specifically among our customers, and global trade disputes, including the imposition of tariffs by the U.S. and countermeasures by foreign governments; (9) our ability to control operating costs and expenses; (10) our ability to attract and retain key members of our senior management team; (11) changes in deposit flows, loan demand or real estate values may adversely affect our business; (12) there may be increases in competitive pressure among financial institutions or from non-financial institutions; (13) our ability to obtain regulatory approvals or non-objection to take various capital actions, including the payment of dividends by us or the Bank; (14) the timing and occurrence or non-occurrence of events may be subject to circumstances beyond our control; (15) our credit quality and the effect of credit quality on our credit losses expense and allowance for credit losses and impact the adequacy of our allowance for credit losses; (16) changes in accounting principles, policies or guidelines may cause our financial condition to be perceived or interpreted differently; (17) legislative or regulatory changes that may adversely affect our business or financial condition, including, without limitation, changes in corporate and/or individual income tax laws and policies, changes in privacy laws, and changes in regulatory capital or other rules, and the availability of resources to address or respond to such changes; (18) general economic conditions, either nationally or locally in some or all areas in which we conduct business, or conditions in the securities markets or banking industry, may be less favorable than what we currently anticipate; (19) challenges our customers may face in meeting current underwriting standards may adversely impact all or a substantial portion of our rate-lock loan activity we recognize; (20) technological changes may be more difficult or more expensive than what we anticipate; (21) a failure in or breach of our operational or security systems or information technology infrastructure, or those of our third-party providers and vendors, including due to cyber-attacks; (22) success or consummation of new business initiatives may be more difficult or expensive than what we anticipate; (23) staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our work force and potential associated charges; and (24) litigation, investigations or other matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than what we anticipate. A discussion of the factors, risks and uncertainties that could affect our financial results, business goals and operational and financial objectives cited in this release, other releases, public statements and/or filings with the Securities and Exchange Commission (“SEC”) is also contained in the “Risk Factors” sections of the Company's Forms 10-K and 10-Q and in our Current Reports on Form 8-K we file with the SEC. We strongly recommend readers review those disclosures in conjunction with the discussions herein.

All future written and oral forward-looking statements attributable to the Company or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements contained or referred to above. New risks and uncertainties arise from time to time, and factors that the Company currently deems immaterial may become material, and it is impossible for the Company to predict these events or how they may affect the Company.

Critical Accounting Estimates

The following discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements and the notes thereto, which have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") and accounting practices in the banking industry. Certain of those accounting policies are considered critical accounting policies because they require us to make estimates and assumptions regarding circumstances or trends that could materially affect the value of those assets, such as economic conditions or trends that could impact our ability to fully collect our loans or ultimately realize the carrying value of certain of our other assets. Those estimates and assumptions are made based on current information available to us regarding those economic conditions or trends or other circumstances. If changes were to occur in the events, trends or other circumstances on which our estimates or assumptions were based, these changes could have a material adverse effect on the carrying value of assets and liabilities and on our results of operations. We have identified two policies and estimates as being critical because they require management to make particularly difficult, subjective, and/or complex judgments about matters that are inherently uncertain and because of the likelihood that materially different amounts would be reported under different conditions or using different assumptions. These policies relate to the allowance for credit losses ("ACL") and the valuation of residential mortgage servicing rights ("MSRs").

The ACL is calculated based on quantitative and qualitative factors to estimate credit losses over the life of a loan. The inputs used to determine quantitative factors include estimates based on historical experience of probability of default and loss given default. Inputs used to determine qualitative factors include changes in current portfolio characteristics and operating environments such as current and forecasted unemployment rates, capitalization rates used to value properties securing loans, rental rates and single family pricing indexes. Qualitative factors may also include adjustments to address matters not contemplated by the model we use and to assumptions used to determine qualitative factors. Although we believe that our methodology for determining an appropriate level for the ACL adequately addresses the various components that could potentially result in credit losses, the processes and their elements include features that may be susceptible to significant change. Any unfavorable differences between the actual outcome of credit-related events and our estimates could require an additional provision for credit losses. For example, if the projected unemployment rate was downgraded one grade for all periods, the amount of the ACL at June 30, 2025 would increase by approximately $6 million. This sensitivity analysis is hypothetical and has been provided only to indicate the potential impact that changes in assumptions may have on the ACL estimate.

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

Summary Financial Data


	Quarter Ended						Six Months Ended June 30,
(dollars in thousands)	June 30, 2025			March 31, 2025				2025			2024

Select Income Statement data:
Net interest income	$	33,870		$	33,221			$	67,091		$	61,852
Provision for credit losses	6,000			1,000				7,000			—
Noninterest income (loss)	15,100			12,136				27,236			22,681
Noninterest expense	47,751			49,108				96,859			103,095
Net income (loss):
Before income tax (benefit) expense	(4,781)			(4,751)				(9,532)			(18,562)
Total	(4,412)			(4,465)				(8,877)			(13,735)
Net income (loss) per fully diluted share	(0.23)			(0.24)				(0.47)			(0.73)
Core net income (loss): (1)
Total	(3,050)			(2,866)				(5,916)			(9,810)
Core net income (loss) per fully diluted share	(0.16)			(0.15)				(0.31)			(0.52)
Select Performance Ratios:
Return on average equity - annualized
Net income (loss)	(4.4)		%	(4.5)		%		(4.4)		%	(5.2)		%
Core (1)	(3.0)		%	(2.9)		%		(3.0)		%	(3.7)		%
Return on average tangible equity - annualized (1)
Net income (loss)	(4.1)		%	(4.2)		%		(4.1)		%	(4.9)		%
Core (1)	(2.7)		%	(2.5)		%		(2.6)		%	(3.4)		%
Return on average assets - annualized
Net income (loss)	(0.23)		%	(0.23)		%		(0.23)		%	(0.29)		%
Core (1)	(0.16)		%	(0.15)		%		(0.15)		%	(0.21)		%
Efficiency ratio (1)	93.2		%	102.9		%		97.8		%	114.9		%
Net interest margin	1.90		%	1.82		%		1.86		%	1.40		%
Other data
Full time equivalent employees	750			766				758			849

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


	As of
(dollars in thousands)	June 30, 2025			December 31, 2024

Selected Balance Sheet Data
Loans held for sale	$	48,783		$	20,312
Loans held for investment, net	5,887,333			6,193,053
ACL	45,806			38,743
Investment securities	1,030,981			1,057,006
Total assets	7,609,323			8,123,698
Deposits	5,857,284			6,413,021
Borrowings	1,040,000			1,000,000
Long-term debt	225,316			225,131
Total shareholders' equity	402,981			396,997
Other data:
Book value per share	$	21.30		$	21.05
Tangible book value per share (1)	$	20.97		$	20.67
Total equity to total assets	5.3		%	4.9		%
Tangible common equity to tangible assets (1)	5.2		%	4.8		%
Shares outstanding at end of period	18,920,808			18,857,565
Loans to deposit ratio (Bank)	101.1		%	96.8		%

Credit Quality:
Delinquencies (2)	1.11		%	1.06		%
ACL to total loans (3)	0.78		%	0.63		%
ACL to nonaccrual loans	82.9		%	70.4		%
Nonaccrual loans to total loans	0.93		%	0.88		%
Nonperforming assets to total assets	0.76		%	0.71		%
Nonperforming assets	$	58,052		$	57,814
Regulatory Capital Ratios:
Bank
Tier 1 leverage	8.74		%	7.30		%
Total risk-based capital	13.66		%	13.02		%
Common equity Tier 1 capital	12.76		%	12.27		%
Company
Tier 1 leverage	6.78		%	5.77		%
Total risk-based capital	12.65		%	12.23		%
Common equity Tier 1 capital	8.78		%	8.62		%

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

(2) Total past due and nonaccrual loans as a percentage of total loans held for investment.

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

Current Developments

Recent Developments

On March 28, 2025, the Company entered into a definitive Agreement and Plan of Merger with Mechanics Bank, whereby, subject to regulatory and certain shareholder approvals the Bank will merge with and into Mechanics Bank as a subsidiary of the Company (the “Merger”). The Company will amend its articles of incorporation to issue shares to the Mechanics shareholders in exchange for 100% of Mechanics stock such that when the Merger closes the Mechanics shareholders will own approximately 91.7% of the combined company and HomeStreet shareholders will own approximately 8.3% of the combined company. Upon the closing of the Merger the Company’s name will change to Mechanics Bancorp. The Merger is expected to close in the third quarter of 2025, subject to regulatory approval.

On July 16, 2025, the Company entered into an agreement to sell its Government National Mortgage Association (“Ginnie Mae”) mortgage servicing portfolio to an entity experienced in servicing loans, including Ginnie Mae loans. The principal balance of the loans in the Ginnie Mae servicing portfolio sold under the purchase agreement was $797 million and the value of the related mortgage servicing rights was $15.7 million on June 30, 2025. The sale closed on August 1, 2025 and no gain or loss was recognized.

Economic and Market Conditions

The current level of interest rates continues to adversely impact our results of operations as our overall cost of funds are high in relation to the yield on our earning assets, resulting in a low net interest margin. With the decrease in short term interest rates in the latter part of 2024, our cost of funds have stabilized and started to decrease. As a result of the fourth quarter 2024 loan sale, we improved our net interest margin by selling lower yielding loans and paying off higher cost wholesale funding. Given the scheduled repricing of our multifamily and other commercial real estate loans, future anticipated reductions in borrowings, the expectation of further reductions in short-term interest rates by the Federal Reserve and continued effective non-interest expense management, we anticipate a return to earnings in 2025 and then earnings for the foreseeable future.

Management's Overview of the Second Quarter 2025 Financial Performance

Second Quarter of 2025 Compared to the First Quarter of 2025

Non-core amounts: F or the second quarter and first quarter of 2025 non-core items include $1.7 million and $2.1 million of merger related expenses, respectively.

General: Our net loss and loss before income taxes were $4.4 million and $4.8 million, respectively, in the second quarter of 2025, as compared to $4.5 million and $4.8 million, respectively, in the first quarter of 2025. Our core net loss and core loss before income taxes, which excludes merger related expenses, were $3.1 million and $3.0 million, respectively, in the second quarter of 2025, as compared to $2.9 million and $2.7 million, respectively, in the first quarter of 2025. The increase in core loss before income taxes was primarily due to an increase in the provision for credit losses, partially offset by increases in net interest income and noninterest income and lower noninterest expenses.

Income Taxes: Due to our cumulative losses over the three year period ended December 31, 2024, accounting rules required us to provide a valuation allowance for the balance of our deferred tax assets in the fourth quarter of 2024. As a result, we do not expect to recognize income tax expense until the deferred tax assets valuation allowance no longer exists. The $0.4 million and $0.3 million of income tax benefit recognized in the second and first quarters of 2025, respectively, primarily relate to the reversal of the disparate tax effects on our accumulated other comprehensive income ("AOCI") resulting from recording a valuation allowance for the deferred tax assets related to the AOCI in the fourth quarter of 2024.

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


	Quarter Ended
	June 30, 2025						March 31, 2025
(dollars in thousands)	Average Balance		Interest		Average Yield/Cost		Average Balance		Interest		Average Yield/Cost

Assets:
Interest-earning assets:
Loans (1)	$	6,035,713	$	71,963	4.74	%	$	6,198,659	$	73,587	4.76	%
Investment securities (1)	1,043,212		9,447		3.62	%	1,055,336		9,509		3.60	%
FHLB Stock, Fed Funds and other	193,546		2,635		5.41	%	242,687		3,691		6.20	%
Total interest-earning assets	7,272,471		84,045		4.60	%	7,496,682		86,787		4.65	%
Noninterest-earning assets	371,885						374,252
Total assets	$	7,644,356					$	7,870,934
Liabilities and shareholders' equity:
Interest-bearing deposits: (2)
Demand deposits	$	318,120	$	303	0.38	%	$	312,762	$	287	0.37	%
Money market and savings	1,610,297		6,881		1.70	%	1,645,604		6,874		1.68	%
Certificates of deposit	2,716,464		27,330		4.04	%	2,919,241		31,076		4.32	%
Total	4,644,881		34,514		2.98	%	4,877,607		38,237		3.18	%
Borrowings:
Borrowings	1,031,292		11,712		4.49	%	1,011,111		11,364		4.50	%
Long-term debt	225,270		2,946		5.21	%	225,178		2,943		5.23	%
Total interest-bearing liabilities	5,901,443		49,172		3.33	%	6,113,896		52,544		3.47	%
Noninterest-bearing liabilities:
Demand deposits (2)	1,253,539						1,265,701
Other liabilities	85,745						86,537
Total liabilities	7,240,727						7,466,134
Shareholders' equity	403,629						404,800
Total liabilities and shareholders' equity	$	7,644,356					$	7,870,934
Net interest income			$	34,873					$	34,243
Net interest rate spread					1.27	%					1.18	%
Net interest margin					1.90	%					1.82	%

(1) Includes taxable-equivalent adjustments primarily related to tax-exempt income on certain loans and securities of $1.0 million for both quarters ended June 30, 2025 and March 31, 2025. The estimated federal statutory tax rate was 21% for the periods presented.

(2) Cost of all deposits, including noninterest-bearing demand deposits was 2.34% and 2.52% for the quarters ended June 30, 2025 and March 31, 2025, respectively.

Our net interest income in the second quarter of 2025 was $0.6 million higher than the first quarter of 2025 due to an increase in our net interest margin from 1.82% to 1.90%. The increase in the net interest margin was due primarily to a 14 basis point decrease in the rates paid on interest-bearing liabilities, partially offset by a 5 basis point decrease in the yield on interest earning assets. The decrease in rates on interest bearing liabilities are primarily due to a decrease in rates paid on certificates of deposits resulting from decreases in market interest rates. The decrease in the yield on interest earning assets is primarily due to a decrease in yields on Fed Funds due to decreases in short term market rates.

Provision for Credit Losses: The $6.0 million provision for credit losses in the second quarter of 2025 was primarily due to the impact of adverse credit migration of certain multifamily loans. The $1.0 million provision for credit losses in the first quarter of 2025 was primarily due to a $3.3 million increase in specific reserves which was partially offset by lower general reserves resulting in part from lower loan balances.

Noninterest income (loss) consisted of the following:


	Quarter Ended
(in thousands)	June 30, 2025		March 31, 2025

Noninterest income (loss)
Gain (loss) on loan origination and sale activities (1)
Single family	$	3,182	$	2,283
CRE, multifamily and SBA	53		933
Loan servicing income	7,550		4,858
Deposit fees	2,116		2,071
Other	2,199		1,991
Total noninterest income (loss)	$	15,100	$	12,136

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

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


	Quarter Ended
(in thousands)	June 30, 2025		March 31, 2025

Single family servicing income, net
Servicing fees and other	$	3,684	$	3,725
Changes - amortization (1)	(1,598)		(1,582)
Net	2,086		2,143
Risk management, single family MSRs:
Changes in fair value due to assumptions (2)	4,373		271
Net gain (loss) from economic hedging (3)	(118)		1,016
Subtotal	4,255		1,287
Single Family servicing income	6,341		3,430

Commercial loan servicing income:
Servicing fees and other	2,664		2,782
Amortization of capitalized MSRs	(1,455)		(1,354)
Total	1,209		1,428
Total loan servicing income	$	7,550	$	4,858

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

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

(3) The interest income from US Treasury notes securities used for hedging purposes, which is included in interest income on the consolidated income statements, was $0.5 million and $0.4 million for the quarters ended June 30, 2025 and March 31, 2025, respectively.

Noninterest income in the second quarter of 2025 increased from the first quarter of 2025 primarily due to an increase in loan servicing income due to a $4.4 million increase in the value of our single family mortgage servicing rights resulting from higher market valuations of these assets.

Noninterest Expense consisted of the following:


	Quarter Ended
(in thousands)	June 30, 2025		March 31, 2025

Noninterest expense
Compensation and benefits	$	26,014	$	26,309
Information services	7,441		7,585
Occupancy	4,868		4,871
General, administrative and other	9,428		10,343

Total noninterest expense	$	47,751	$	49,108

Noninterest expenses were $1.4 million lower in the second quarter of 2025 due primarily to a $0.9 million decrease in general, administrative and other expenses which reflects the efforts made to eliminate or defer nonessential expenses.

Six Months Ended of June 30, 2025 Compared to Six Months Ended of June 30, 2024

Non-core amounts: For the six months ended June 30, 2025, non-core items include $3.8 million of merger related expenses. During the six months ended June 30, 2024, non-core items include $5.0 million of merger related expenses.

General: Our net loss and loss before income taxes were $8.9 million and $9.5 million, respectively, in the six months ended June 30, 2025, as compared to $13.7 million and $18.6 million, respectively, in the six months ended June 30, 2024. Our core net loss and core loss before income taxes, which exclude the impact of merger related expenses, were $5.9 million and $5.7 million in the six months ended June 30, 2025, as compared to $9.8 million and $13.5 million in the six months ended June 30, 2024. The $7.8 million decrease in core loss before income taxes was primarily due to higher net interest income and noninterest income and lower noninterest expenses, partially offset by an increase in the provision for credit losses.

Income Taxes: Due to our cumulative losses over the three year period ended December 31, 2024, accounting rules required us to provide a valuation allowance for the balance of our deferred tax assets in the fourth quarter of 2024. As a result, we do not expect to recognize tax expense until the deferred tax assets valuation allowance no longer exists. The $0.7 million income tax benefit recognized in the six months ended June 30, 2025 primarily relates to the reversal of the disparate tax effects on our AOCI resulting from recording a valuation allowance for the deferred tax assets related to AOCI in the fourth quarter of 2024. Our effective tax rate in the six months ended June 30, 2024 of 26.0% was higher than our statutory rate of 24.6% due to the impact of tax advantaged investments which creates a higher benefit due to our taxable loss.


	Six Months Ended June 30,
	2025						2024
(dollars in thousands)	Average Balance		Interest		Average Yield/Cost		Average Balance		Interest		Average Yield/Cost

Assets:
Interest-earning assets:
Loans (1)	$	6,116,736	$	145,550	4.75	%	$	7,457,798	$	173,918	4.63	%
Investment securities (1)	1,049,240		18,956		3.61	%	1,201,618		22,692		3.78	%
FHLB Stock, Fed Funds and other	217,981		6,326		5.85	%	313,903		9,211		5.87	%
Total interest-earning assets	7,383,957		170,832		4.62	%	8,973,319		205,821		4.56	%
Noninterest-earning assets	373,062						413,841
Total assets	$	7,757,019					$	9,387,160
Interest-bearing liabilities:
Interest-bearing deposits: (2)
Demand deposits	$	315,456	$	590	0.38	%	$	320,076	$	354	0.22	%
Money market and savings	1,627,853		13,755		1.69	%	1,810,725		14,896		1.64	%
Certificates of deposit	2,817,292		58,406		4.18	%	3,046,659		70,892		4.68	%
Total	4,760,601		72,751		3.08	%	5,177,460		86,142		3.34	%
Borrowings:
Borrowings	1,021,258		23,076		4.49	%	2,049,971		49,462		4.79	%
Long-term debt	225,224		5,889		5.22	%	224,858		6,208		5.50	%
Total interest-bearing liabilities	6,007,083		101,716		3.40	%	7,452,289		141,812		3.81	%
Noninterest-bearing liabilities:
Demand deposits (2)	1,259,586						1,300,878
Other liabilities	86,139						103,727
Total liabilities	7,352,808						8,856,894
Shareholders' equity	404,211						530,266
Total liabilities and shareholders' equity	$	7,757,019					$	9,387,160
Net interest income			$	69,116					$	64,009
Net interest spread					1.22	%					0.76	%
Net interest margin					1.86	%					1.40	%

(1) Includes taxable-equivalent adjustments primarily related to tax-exempt income on certain loans and securities of $2.0 million and $2.2 million for the six months ended June 30, 2025 and 2024, respectively. The estimated federal statutory tax rate was 21% for the periods presented.

(2) Cost of deposits including noninterest-bearing deposits, was 2.43% and 2.67% for the six months ended June 30, 2025 and 2024, respectively.

Net interest income in the six months ended June 30, 2025 increased $5.2 million as compared to the six months ended June 30, 2024 due primarily to an increase in net interest margin from 1.40% in the six months ended June 30, 2024 to 1.86% in the six months ended June 30, 2025. The increase in net interest margin is due to a 41 basis point decrease in the rates paid on interest-bearing liabilities and a 6 basis point increase in the yield on interest earning assets. The increase in yield on interest earning assets was primarily due to the sale of $990 million of lower yielding multifamily loans at the end of the fourth quarter of 2024. The decrease in rates on interest bearing liabilities are primarily due to our paydown at the end of 2024 and beginning of 2025 of higher cost borrowings and brokered certificates of deposit with proceeds from the sale of multifamily loans.

Provision for Credit Losses: The $7.0 million provision for credit losses recognized during the six months ended June 30, 2025 was primarily due to the impact of adverse credit migration in certain multifamily loans and a $3.3 million increase in specific reserves which was partially offset by lower general reserves resulting in part from lower loan balances. There was no provision for credit losses during the six months ended June 30, 2024, which reflected the stable balance of our loan portfolio, a minimal level of identified credit issues in our loan portfolio and the lack of significant expected credit issues arising in future periods.

Noninterest Income consisted of the following:


	Six Months Ended June 30,
(in thousands)	2025	2024

Noninterest income
Gain on loan origination and sale activities (1)
Single family		$	5,465	$	4,704
CRE, multifamily and SBA		986		638
Loan servicing income		12,408		6,442
Deposit fees		4,187		4,450
Other		4,190		6,447
Total noninterest income		$	27,236	$	22,681

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

Noninterest income in the six months ended June 30, 2025 increased from the six months ended June 30, 2024 primarily due to a $1.1 million increase in gain on loan sales and a $6.0 million increase in loan servicing income, partially offset by a $2.3 million decrease in other noninterest income. The gain on loan sales increased primarily due to an increase in CRE loan sales volume. The increase in loan servicing income is primarily due to a $5.9 million increase in the value of our single family mortgage servicing rights resulting from higher market valuations of these assets. The decrease in other noninterest income is primarily due to higher levels of income realized from our investments in small business investment companies in the first six months of 2024.

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


	Six Months Ended June 30,
(in thousands)		2025		2024

Single family servicing income, net
Servicing fees and other		$	7,409	$	7,590
Changes - amortization (1)		(3,180)		(3,141)
Net		4,229		4,449
Risk management, single family MSRs:
Changes in fair value due to assumptions (2)		4,644		1,147
Net gain (loss) from economic hedging (3)		898		(1,619)
Subtotal		5,542		(472)
Single Family servicing income		9,771		3,977

Commercial loan servicing income:
Servicing fees and other		5,446		5,326
Amortization of capitalized MSRs		(2,809)		(2,861)
Total		2,637		2,465
Total loan servicing income		$	12,408	$	6,442

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

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

(3) The interest income from US Treasury notes securities used for hedging purposes, which is included in interest income on the consolidated income statements, was $0.9 million and $0.6 million for the six months ended June 30, 2025 and 2024, respectively.

Noninterest Expense consisted of the following:


	Six Months Ended June 30,
(in thousands)	2025	2024

Noninterest expense
Compensation and benefits		$	52,323	$	55,627
Information services		15,026		14,922
Occupancy		9,739		10,564
General, administrative and other		19,771		21,982

Total noninterest expense		$	96,859	$	103,095

The $6.2 million decrease in noninterest expense in the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 was primarily due to $3.3 million lower compensation and benefit costs, $0.8 million lower occupancy costs and $2.2 million lower general and administrative costs. The decrease in compensation and benefit costs was primarily due to an 11% decrease in FTE and lower medical costs, which was partially offset by wage increases given in the first quarter of 2025. The decrease in occupancy costs is primarily due to reductions in leased space from branch closures in 2024. The decrease in general and administrative costs was due to lower merger related expenses and reductions in other costs which reflect the efforts made to eliminate or defer nonessential expenses.

Financial Condition

During the six months ended June 30, 2025, our total assets decreased $514 million due primarily to a $306 million decrease in loans held for investment and a $206 million decrease in cash. In the six months ended June 30, 2025, total liabilities decreased $520 million due to a $556 million decrease in deposits. The decrease in deposits was primarily due to a $541 million decrease in brokered certificates of deposits.

Credit Risk Management

During the second quarter of 2025, our ratios of nonperforming assets to total assets and total loans delinquent over 30 days, including nonaccrual loans, remained at low levels. As of June 30, 2025, our ratio of nonperforming assets to total assets was 0.76% as compared to 0.71% at December 31, 2024, and our ratio of total loans delinquent over 30 days, including nonaccrual loans, to total loans was 1.11% as compared to 1.06% at December 31, 2024. The total balance of past due and nonaccrual loans decreased slightly during the second quarter.

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


	At June 30, 2025				At December 31, 2024
(dollars in thousands)	Amount		Rate (1)		Amount		Rate (1)

CRE
Non-owner occupied CRE	$	1,791	0.35	%	$	1,739	0.30	%
Multifamily	18,948		0.65	%	14,909		0.50	%
Construction/land development
Multifamily construction	1,159		2.57	%	849		0.86	%
CRE construction	71		0.59	%	66		0.60	%
Single family construction	5,200		1.55	%	6,737		2.10	%
Single family construction to permanent	150		0.44	%	184		0.44	%
Total	27,319		0.71	%	24,484		0.61	%
Commercial and industrial loans
Owner occupied CRE	610		0.19	%	576		0.16	%
Commercial business	11,150		3.96	%	6,886		2.23	%
Total	11,760		1.94	%	7,462		1.12	%
Consumer loans
Single family	3,602		0.37	%	3,610		0.35	%
Home equity and other	3,125		0.72	%	3,187		0.77	%
Total	6,727		0.48	%	6,797		0.47	%
Total ACL	$	45,806	0.78	%	$	38,743	0.63	%

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

Liquidity and Sources of Funds

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

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

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

The Company’s contractual cash flow obligations include the maturity of certificates of deposit, short-term and long-term borrowings, interest on certificates of deposit and borrowings, operating leases and fees for information technology related services and professional services. Obligations for certificates of deposit and short-term borrowings are typically satisfied through the renewal of these instruments or the generation of new deposits or use of available short-term borrowings. Interest payments and obligations related to leases and services are typically met by cash generated from our operations. The Company does not have any obligation to repay long-term debt within the next three years other than $65 million in principal amount of Senior Notes maturing on June 1, 2026. The Company intends to repay the Senior Notes with dividends made to the Company from the Bank or from funds received through the issuance of new debt or sales of stock.

At June 30, 2025 and December 31, 2024, the Bank had available borrowing capacity of $910 million and $1.3 billion, respectively, from the FHLB, and $2.0 billion and $1.6 billion, respectively, from the FRBSF and $899 million and $1.0 billion under borrowing lines established with other financial institutions.

We believe that our current unrestricted cash and cash equivalents, cash flows from operations and borrowing capacity will be sufficient to meet our liquidity needs for at least the next 12 months. We are currently not aware of any other trends or demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in our liquidity increasing or decreasing in any material way that will impact our liquidity needs during or beyond the next 12 months.

Cash Flows

For the six months ended June 30, 2025, cash and cash equivalents decreased by $206 million compared to an increase of $3 million during the six months ended June 30, 2024. As excess liquidity can reduce the Company’s earnings and returns, the Company manages its cash positions to minimize the level of excess liquidity and does not attempt to maximize the level of cash and cash equivalents. The following discussion highlights the major activities and transactions that affected our cash flows during these periods.

Cash flows from operating activities

The Company's operating assets and liabilities are used to support our lending activities, including the origination and sale of mortgage loans. For the six months ended June 30, 2025, net cash of $32 million was used in operating activities, as cash generated from operations was offset by cash used to fund LHFS in excess of proceeds from the sale of loans and increases in trading securities. For the six months ended June 30, 2024, net cash of $30 million was used in operating activities, as cash generated from operations was offset by cash used to fund LHFS in excess of proceeds from the sale of loans and increases in other assets

Cash flows from investing activities

The Company's investing activities primarily include AFS investment securities and loans originated as held for investment. For the six months ended June 30, 2025, net cash of $343 million was provided by investing activities primarily from principal repayments on AFS securities and by LHFI principal repayments, net of originations. For the six months ended June 30, 2024, net cash of $123 million was provided by investing activities primarily from principal repayments on AFS securities and by LHFI principal repayments, net of originations, partially offset by net FHLB stock purchases.

Cash flows from financing activities

The Company's financing activities are primarily related to deposits and proceeds from borrowings. For the six months ended June 30, 2025, net cash of $516 million was used in financing activities, primarily due to a decrease in brokered certificates of deposit. For the six months ended June 30, 2024, net cash of $90 million was used in financing activities, primarily due to a decrease in deposits, partially offset by an increase in borrowings.

Off-Balance Sheet Arrangements

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

These commitments include the following:


(in thousands)	At June 30, 2025		At December 31, 2024

Unused consumer portfolio lines	$	631,903	$	609,930
Commercial portfolio lines (1)	502,069		523,415
Commitments to fund loans	13,575		56,417
Total	$	1,147,547	$	1,189,762

(1) Within the commercial portfolio lines, undistributed construction loan proceeds, where the Company has an obligation to advance funds for construction progress payments were $302 million and $306 million at June 30, 2025 and December 31, 2024, respectively.

Capital Resources and Dividend Policy

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

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


	At June 30, 2025
	Actual				For Minimum Capital Adequacy Purposes				To Be Categorized As "Well Capitalized"
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio

HomeStreet, Inc.
Tier 1 leverage capital (to average assets)	$	529,978	6.78	%	$	312,736	4.0	%	NA		NA
Common equity Tier 1 capital (to risk-weighted assets)	469,978		8.78	%	240,987		4.5	%	NA		NA
Tier 1 risk-based capital (to risk-weighted assets)	529,978		9.90	%	321,316		6.0	%	NA		NA
Total risk-based capital (to risk-weighted assets)	677,183		12.65	%	428,421		8.0	%	NA		NA
HomeStreet Bank
Tier 1 leverage capital (to average assets)	$	682,744	8.74	%	$	312,548	4.0	%	$	390,685	5.0	%
Common equity Tier 1 capital (to risk-weighted assets)	682,744		12.76	%	240,866		4.5	%	347,917		6.5	%
Tier 1 risk-based capital (to risk-weighted assets)	682,744		12.76	%	321,154		6.0	%	428,206		8.0	%
Total risk-based capital (to risk-weighted assets)	731,318		13.66	%	428,206		8.0	%	535,257		10.0	%


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

HomeStreet, Inc.
Tier 1 leverage capital (to average assets)	$	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
Tier 1 risk-based capital (to risk-weighted assets)	537,057		9.70	%	332,145		6.0	%	NA		NA
Total risk-based capital (to risk-weighted assets)	677,225		12.23	%	442,860		8.0	%	NA		NA
HomeStreet Bank
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	%
Tier 1 risk-based capital (to risk-weighted assets)	678,869		12.27	%	332,001		6.0	%	442,667		8.0	%
Total risk-based capital (to risk-weighted assets)	720,498		13.02	%	442,667		8.0	%	553,334		10.0	%

As of the dates set forth in the above table, the Company exceeded the minimum required capital ratios applicable to it and the Bank’s capital ratios exceeded the minimums necessary to qualify as a well-capitalized depository institution under the prompt corrective action regulations. In addition to the minimum capital ratios, both HomeStreet Inc. and HomeStreet Bank are required to maintain a capital conservation buffer consisting of additional Common Equity Tier 1 Capital of more than 2.5% above the required minimum levels in order to avoid limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses. The required ratios for capital adequacy set forth in the above table do not include the Capital Rules’ additional capital conservation buffer, though both the Company and Bank maintained capital ratios necessary to satisfy the capital conservation buffer requirements as of the dates indicated. At June 30, 2025, capital conservation buffers for the Company and the Bank were 3.90% and 5.66%, respectively.

The Company did not declare a cash dividend in the quarter and currently does not plan to pay any quarterly dividends in 2025. The amount and declaration of future cash dividends are subject to approval by our Board of Directors and certain statutory requirements and regulatory restrictions.

We had no material commitments for capital expenditures as of June 30, 2025.

Non-GAAP Financial Measures

To supplement our unaudited condensed consolidated financial statements presented in accordance with GAAP, we use certain use certain non-GAAP measures of financial performance.

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

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

We believe that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding our performance by providing additional information used by management that is not otherwise required by GAAP or other applicable requirements. Our management uses, and believes that investors benefit from referring to, these non-GAAP financial measures in assessing our operating results and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate a comparison of our performance to prior periods. We believe these measures are frequently used by securities analysts, investors and other parties in the evaluation of companies in our industry. These non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures prepared in accordance with GAAP. In the information below, we have provided reconciliations of, where applicable, the most comparable GAAP financial measures to the non-GAAP measures used in this Form 10-Q, or a computation of the measure.

Reconciliations of non-GAAP results of operations to the nearest comparable GAAP measures or the computation of the measure:


	For the Quarter Ended						Six Months Ended June 30,
(in thousands, except ratio, rate and share data)	June 30, 2025			March 31, 2025			2025			2024

Core net income (loss)
Net income (loss)	$	(4,412)		$	(4,465)		$	(8,877)		$	(13,735)
Adjustments (tax effected)

Merger related expenses (recoveries)	1,362			1,599			2,961			3,925



Total	$	(3,050)		$	(2,866)		$	(5,916)		$	(9,810)
Core net income (loss) per fully diluted share
Fully diluted shares	18,920,808			18,920,808			18,920,808			18,857,218
Computed amount	$	(0.16)		$	(0.15)		$	(0.31)		$	(0.52)


Return on average tangible equity (annualized)
Average shareholders' equity	$	403,629		$	404,800		$	404,211		$	530,266
Less: Average intangibles	(6,494)			(6,976)			(6,734)			(9,099)
Average tangible equity	397,135			397,824			397,477			521,167

Net income (loss)	$	(4,412)		$	(4,465)		$	(8,877)		$	(13,735)
Adjustments (tax effected)
Amortization of core deposit intangibles	373			374			747			975
Tangible income applicable to shareholders	$	(4,039)		$	(4,091)		$	(8,130)		$	(12,760)

Ratio	(4.1)		%	(4.2)		%	(4.1)		%	(4.9)		%

Return on average tangible equity (annualized) - Core
Average tangible equity	$	397,135		$	397,824		$	397,477		$	521,167
Core net income (loss) (per above)	(3,050)			(2,866)			(5,916)			(9,810)
Adjustments (tax effected)
Amortization on core deposit intangibles	373			374			747			975
Tangible income (loss) applicable to shareholders	$	(2,677)		$	(2,492)		$	(5,169)		$	(8,835)

Ratio	(2.7)		%	(2.5)		%	(2.6)		%	(3.4)		%

Return on average equity (annualized) - Core
Average shareholders' equity (per above)	$	403,629		$	404,800		$	404,211		$	530,266
Core net income (loss) (per above)	(3,050)			(2,866)			(5,916)			(9,810)

Ratio	(3.0)		%	(2.9)		%	(3.0)		%	(3.7)		%

Efficiency ratio
Noninterest expense
Total	$	47,751		$	49,108		$	96,859		$	103,095
Adjustments:
Merger related expenses or recoveries	(1,746)			(2,050)			(3,796)			(5,032)


State of Washington taxes	(382)			(386)			(768)			(915)
Core noninterest expense	$	45,623		$	46,672		$	92,295		$	97,148

Total revenues
Net interest income	$	33,870		$	33,221		$	67,091		$	61,852
Noninterest income	15,100			12,136			27,236			22,681

Total	$	48,970		$	45,357		$	94,327		$	84,533

Ratio	93.2		%	102.9		%	97.8		%	114.9		%


	For the Quarter Ended						Six Months Ended June 30,
(in thousands, except ratio, rate and share data)	June 30, 2025			March 31, 2025			2025			2024

Return on Average assets (annualized) - Core
Average Assets	$	7,644,356		$	7,870,934		$	7,757,019		$	9,387,160
Core net income (loss) - per above	(3,050)			(2,866)			(5,916)			(9,810)

Ratio	(0.16)		%	(0.15)		%	(0.15)		%	(0.21)		%

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


	As of
(in thousands, except ratio, rate and share data)	June 30, 2025			December 31, 2024

Tangible book value per share
Shareholders' equity	$	402,981		$	396,997
Less: Intangible assets	(6,184)			(7,141)
Tangible shareholder's equity	$	396,797		$	389,856

Common shares outstanding	18,920,808			18,857,565

Computed amount	$	20.97		$	20.67

Tangible common equity to tangible assets
Tangible shareholder's equity (per above)	$	396,797		$	389,856
Tangible assets
Total assets	$	7,609,323		$	8,123,698
Less: Intangible assets (per above)	(6,184)			(7,141)
Net	$	7,603,139		$	8,116,557

Ratio	5.2		%	4.8		%


ITEM 3			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk Management

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

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

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

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

The following table presents sensitivity gaps for these different intervals:


	At June 30, 2025
(in thousands)	3 Mos. or Less			More Than 3 Mos. to 6 Mos.			More Than 6 Mos. to 12 Mos.			More Than 12 Mos. to 3 Yrs.			More Than 3 Yrs. to 5 Yrs.			More Than 5 to 15 Yrs.			More Than 15 Yrs.			Non-Rate- Sensitive		Total

Interest-earning assets:
Cash & cash equivalents	$	201,080		$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	201,080
FHLB Stock	$	46,845		—			—			—			—			—			4,873			—		51,718
Investment securities (1)	109,651			123,985			46,619			104,537			164,556			468,385			13,248			—		1,030,981
LHFS	48,783			—			—			—			—			—			—			—		48,783
LHFI (1)	1,271,940			384,963			583,649			1,732,806			1,189,329			703,155			67,297			—		5,933,139
Total	1,678,299			508,948			630,268			1,837,343			1,353,885			1,171,540			85,418			—		7,265,701
Non-interest-earning assets	—			—			—			—			—			—			—			343,622		343,622
Total assets	$	1,678,299		$	508,948		$	630,268		$	1,837,343		$	1,353,885		$	1,171,540		$	85,418		$	343,622	$	7,609,323
Interest-bearing liabilities:
Demand deposit accounts (2)	$	322,151		$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	322,151
Savings accounts (2)	233,074			—			—			—			—			—			—			—		233,074
Money market accounts (2 )	1,363,793			—			—			—			—			—			—			—		1,363,793
Certificates of deposit	1,336,586			998,283			384,262			13,390			2,065			—			—			—		2,734,586

FHLB advances	40,000			450,000			—			550,000			—			—			—			—		1,040,000
FRB borrowings	—			—			—			—			—			—			—			—		—
Long-term debt (3)	60,488			—			64,828			100,000			—			—			—			—		225,316
Total	3,356,092			1,448,283			449,090			663,390			2,065			—			—			—		5,918,920
Non-interest bearing liabilities	—			—			—			—			—			—			—			1,287,422		1,287,422
Shareholders' Equity	—			—			—			—			—			—			—			402,981		402,981
Total liabilities and shareholders' equity	$	3,356,092		$	1,448,283		$	449,090		$	663,390		$	2,065		$	—		$	—		$	1,690,403	$	7,609,323
Interest sensitivity gap	$	(1,677,793)		$	(939,336)		$	181,178		$	1,173,953		$	1,351,821		$	1,171,540		$	85,417
Cumulative interest sensitivity gap
Total	$	(1,677,793)		$	(2,617,129)		$	(2,435,951)		$	(1,261,998)		$	89,823		$	1,261,363		$	1,346,780
As a % of total assets	(22)		%	(34)		%	(32)		%	(17)		%	1		%	17		%	18		%
As a % of cumulative interest-bearing liabilities	50		%	46		%	54		%	79		%	102		%	121		%	123		%

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

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

(3) Based on contractual maturity.

As of June 30, 2025, the Company is considered liability sensitive as exhibited by the gap table above and our net interest income sensitivity analysis.

Changes in the mix of interest-earning assets or interest-bearing liabilities can either increase or decrease the net interest margin, without affecting interest rate sensitivity. In addition, the interest rate spread between an earning asset and its funding liability can vary significantly, while the timing of repricing for both the asset and the liability remains the same, thereby impacting net interest income. This characteristic is referred to as basis risk. Varying interest rate environments can create unexpected changes in prepayment levels of assets and liabilities that are not reflected in the interest rate sensitivity analysis. These prepayments may have a

significant impact on our net interest margin. Because of these factors, an interest sensitivity gap analysis may not provide an accurate assessment of our actual exposure to changes in interest rates.

The estimated impact on our net interest income over a time horizon of one year and the change in net portfolio value as of June 30, 2025 and December 31, 2024 are provided in the table below. For the scenarios shown, the interest rate simulation assumes an instantaneous and parallel shift in market interest rates and no change in the composition or size of the balance sheet.


	At June 30, 2025				At December 31, 2024
Change in Interest Rates (basis points) (1)	Percentage Change
	Net Interest Income (2)		Net Portfolio Value (3)		Net Interest Income (2)		Net Portfolio Value (3)

+300	(10.6)	%	(16.1)	%	(4.0)	%	(14.5)	%
+200	(6.6)	%	(8.5)	%	(1.5)	%	(6.6)	%
+100	(3.1)	%	(4.5)	%	(0.5)	%	(2.6)	%
-100	2.6	%	(1.5)	%	0.3	%	(0.2)	%
-200	5.4	%	(4.2)	%	0.1	%	(3.8)	%
-300	11.4	%	(8.5)	%	—	%	(12.3)	%

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

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

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

The changes in interest rate sensitivity between December 31, 2024 and June 30, 2025 reflected the impact of lower market interest rates, a steepened yield curve and changes to overall balance sheet composition. Some of the assumptions made in the simulation model may not materialize and unanticipated events and circumstances will occur. In addition, the simulation model does not take into account any future actions that we could undertake to mitigate an adverse impact due to changes in interest rates from those expected, in the actual level of market interest rates or competitive influences on our deposits.

Current Banking Environment

Market conditions and external factors may unpredictably impact the competitive landscape for deposits in the banking industry. Additionally, the higher interest rate environment has increased competition for liquidity and the premium at which liquidity is available to meet funding needs. Reliance on secondary funding sources could increase the Company's overall cost of funding and reduce net interest income. As of June 30, 2025, the Company had available contingent liquidity of $5.4 billion which is equal to 92% of its total deposits and the level of uninsured deposits was 9% of total deposits. The Company believes it has sufficient liquidity to meet its current needs.

ITEM 4 CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company carried out an evaluation, with the participation of our management and under the supervision of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined under Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2025.

Changes in Internal Control over Financial Reporting

As required by Rule 13a-15(d), our management, including our Chief Executive Officer and Chief Financial Officer, also conducted an evaluation of our internal control over financial reporting to determine whether any changes occurred during the quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There were no changes to our internal control over financial reporting that occurred during the quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1 LEGAL PROCEEDINGS

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

ITEM 1A RISK FACTORS

Refer to Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 and the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 for a discussion of factors that could materially and adversely affect our business, financial condition, liquidity, results of operations and capital position. There have been no material changes in our risk factors from those described in our 2024 Annual Report on Form 10-K and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025.

ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Sales of Unregistered Securities

There were no sales of unregistered securities during the second quarter of 2025.

ITEM 3 DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4 MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5 OTHER INFORMATION

During the quarter ended June 30, 2025, none of our directors or officers informed us of the adoption or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408.

ITEM 6 EXHIBITS

EXHIBIT INDEX


Exhibit Number						Description

2.1*						Agreement and Plan of Merger, dated as of March 28, 2025, by and among Mechanics Bank, HomeStreet, Inc. and HomeStreet Bank (incorporated by reference to Exhibit 2.1 to HomeStreet, Inc.’s Current Report on Form 8-K filed on April 3, 2025).
4.1						Registration Rights Agreement, dated as of March 28, 2025, by and among HomeStreet, Inc., Mechanics Bank and the other parties thereto (incorporated by reference to Exhibit 4.1 to HomeStreet, Inc.’s Current Report on Form 8-K filed on April 3, 2025).
10.1						Voting and Support Agreement, dated as of March 28, 2025, by and among HomeStreet, Inc., EB Acquisition Company LLC, EB Acquisition Company II LLC, Ford Financial Fund II, L.P. and Ford Financial Fund III, L.P. (incorporated by reference to Exhibit 10.1 to HomeStreet, Inc.’s Current Report on Form 8-K filed on April 3, 2025).
10.2						Voting and Support Agreement, dated as of March 28, 2025, by and between HomeStreet, Inc. and Rabobank International Holding B.V. (incorporated by reference to Exhibit 10.2. to HomeStreet, Inc.’s Current Report on Form 8-K filed on April 3, 2025).
10.3						Consulting Agreement, dated as of March 28, 2025, by and amo ng HomeStreet, Inc., Mechanics Bank and Ma rk Mason (in corporated by reference to Exhibit 10.3 to HomeStreet, Inc .'s Current Report on Form 8 -K filed on April 3, 2025).
31.1						Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.
31.2						Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.
32 (1)						Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith.
101 INS						Inline XBRL Instance Document
101.SCH						Inline XBRL Taxonomy Extension Schema Document
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF						Inline XBRL Taxonomy Extension Label Linkbase Document
101.LAB						Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.PRE						Inline XBRL Taxonomy Extension Definitions Linkbase Document
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


*			Pursuant to Item 601(a)(5) of Regulation S-K, certain schedules and similar attachments have been omitted. The registrant hereby agrees to furnish a copy of any omitted schedule or similar attachment to the SEC upon request.
(1)			This exhibit shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Seattle, State of Washington, on August 6, 2025.


			HomeStreet, Inc.

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


			HomeStreet, Inc.

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

TABLE OF CONTENTS

Part I Item 1 Financial Statements Note 1 Summary Of Significant Accounting Policies:Note 2 Investment Securities:Note 3-loans and Credit Quality:Note 4 Deposits:Note 5 Derivatives and Hedging Activities:Note 6 Mortgage Banking Operations:Note 7 Guarantees and Mortgage Repurchase Liability:Note 8 Earnings Per Share:Note 9 Fair Value Measurement:Note 10 Low Income Housing Tax Credit ("lihtc") Investments:Note 11 Subsequent Events:Item 2 Management's Discussion and Analysis Of Financial Condition and Results Of Operations Item 3quantitative and Qualitative Disclosures About Market Risk Item 4controls and Procedures Part II - Other Information Item 1legal Proceedings Item 1arisk Factors Item 2unregistered Sales Of Equity Securities and Use Of Proceeds Item 3defaults Upon Senior Securities Item 4mine Safety Disclosures Item 5other Information Item 6exhibits

Exhibits

2.1* Agreement and Plan of Merger, dated as of March 28, 2025, by and among Mechanics Bank, HomeStreet, Inc. and HomeStreet Bank (incorporated by reference to Exhibit 2.1 to HomeStreet, Inc.s Current Report on Form 8-K filed onApril3, 2025). 4.1 Registration Rights Agreement, dated as of March 28, 2025, by and among HomeStreet, Inc., Mechanics Bank and the other parties thereto (incorporated by reference to Exhibit 4.1 to HomeStreet, Inc.s Current Report on Form 8-K filed onApril3, 2025). 10.1 Voting and Support Agreement, dated as of March 28, 2025, by and among HomeStreet, Inc., EB Acquisition Company LLC, EB Acquisition Company II LLC, Ford Financial Fund II, L.P. and Ford Financial Fund III, L.P. (incorporated by reference to Exhibit 10.1 to HomeStreet, Inc.s Current Report on Form 8-K filed onApril3, 2025). 10.2 Voting and Support Agreement, dated as of March 28, 2025, by and between HomeStreet, Inc. and Rabobank International Holding B.V. (incorporated by reference to Exhibit 10.2. to HomeStreet, Inc.s Current Report on Form 8-K filed onApril3, 2025). 10.3 ConsultingAgreement, dated as of March 28, 2025, by and among HomeStreet, Inc., Mechanics Bank and Mark Mason (incorporated by reference to Exhibit 10.3 to HomeStreet, Inc.'s Current Report on Form 8-K filed on April 3, 2025). 31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith. 31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith. 32(1) Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith.

MCHB 10-Q Quarter ended June 30, 2025

Exhibits