[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This part details the company's financial statements, management's discussion and analysis, market risk disclosures, and internal controls for the quarter ended March 31, 2025 [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited consolidated financial statements of HomeStreet, Inc. and its subsidiaries for the quarter ended March 31, 2025, along with detailed notes on significant accounting policies and financial instruments [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets%20at%20March%2031%2C%202025%20and%20December%2031%2C%202024) This section provides a snapshot of the company's assets, liabilities, and shareholders' equity at March 31, 2025, and December 31, 2024 | (in thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total assets | $7,803,631 | $8,123,698 | | Total liabilities | $7,402,880 | $7,726,701 | | Total shareholders' equity | $400,751 | $396,997 | | Cash and cash equivalents | $252,162 | $406,600 | | Loans held for investment (net) | $6,023,582 | $6,193,053 | | Deposits | $6,090,495 | $6,413,021 | - Total assets decreased by approximately **$320 million**, primarily driven by a decrease in cash and cash equivalents and loans held for investment. Total liabilities also decreased, mainly due to a reduction in deposits. Shareholders' equity saw a slight increase[8](index=8&type=chunk) [Consolidated Income Statements](index=5&type=section&id=Consolidated%20Income%20Statements%20for%20the%20Quarters%20Ended%20March%2031%2C%202025%20and%202024) This section details the company's revenues, expenses, and net income (loss) for the quarters ended March 31, 2025, and 2024 | (in thousands, except share and per share data) | Quarter Ended March 31, 2025 | Quarter Ended March 31, 2024 | | :--- | :--- | :--- | | Net interest income | $33,221 | $32,151 | | Provision for credit losses | $1,000 | — | | Total noninterest income | $12,136 | $9,454 | | Total noninterest expense | $49,108 | $52,164 | | Net income (loss) | $(4,465) | $(7,497) | | Basic net income (loss) per share | $(0.24) | $(0.40) | - The company reported a **reduced net loss** in Q1 2025 compared to Q1 2024, driven by **higher net interest income**, **increased noninterest income**, and **lower noninterest expenses**, despite a provision for credit losses in Q1 2025[10](index=10&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)%20for%20the%20Quarters%20Ended%20March%2031%2C%202025%20and%202024) This section presents the net income (loss) and other comprehensive income (loss) components for the quarters ended March 31, 2025, and 2024 | (in thousands) | Quarter Ended March 31, 2025 | Quarter Ended March 31, 2024 | | :--- | :--- | :--- | | Net income (loss) | $(4,465) | $(7,497) | | Unrealized gain (loss) on investment securities AFS | $8,293 | $(5,759) | | Total comprehensive income (loss) | $3,521 | $(11,979) | - Total comprehensive income significantly improved from a **loss of $11,979 thousand** in Q1 2024 to a **gain of $3,521 thousand** in Q1 2025, primarily due to an unrealized gain on available-for-sale investment securities in the current quarter compared to a loss in the prior year[12](index=12&type=chunk) [Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity%20for%20the%20Quarters%20Ended%20March%2031%2C%202025%20and%202024) This section outlines changes in shareholders' equity, including net income (loss) and other comprehensive income, for the quarters ended March 31, 2025, and 2024 | (in thousands, except share data) | Balance, December 31, 2024 | Balance, March 31, 2025 | | :--- | :--- | :--- | | Total shareholders' equity | $396,997 | $400,751 | | Net income (loss) | $(4,465) | | | Other comprehensive income | $7,986 | | - Shareholders' equity increased from **$396,997 thousand** at December 31, 2024, to **$400,751 thousand** at March 31, 2025, primarily driven by other comprehensive income, offsetting the net loss[14](index=14&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Quarters%20Ended%20March%2031%2C%202025%20and%202024) This section details the cash inflows and outflows from operating, investing, and financing activities for the quarters ended March 31, 2025, and 2024 | (in thousands) | Quarter Ended March 31, 2025 | Quarter Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(22,502) | $(7,845) | | Net cash provided by investing activities | $190,696 | $36,042 | | Net cash used in financing activities | $(322,632) | $76,466 | | Net increase (decrease) in cash and cash equivalents | $(154,438) | $104,663 | | Cash and cash equivalents, end of period | $252,162 | $320,327 | - Cash and cash equivalents decreased significantly in Q1 2025, primarily due to substantial cash used in financing activities (decrease in deposits) and increased cash used in operating activities, despite a large increase in cash provided by investing activities[16](index=16&type=chunk)[17](index=17&type=chunk) [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed disclosures on significant accounting policies, investment securities, loans, deposits, derivatives, and other financial information - The notes provide detailed disclosures on the company's financial position and performance, including a significant merger agreement with Mechanics Bank expected to close in Q3 2025, and critical accounting estimates for Allowance for Credit Losses (ACL) and Mortgage Servicing Rights (MSRs)[22](index=22&type=chunk)[124](index=124&type=chunk) - The company's chief operating decision maker manages the business as a single operating and reportable segment, using consolidated net income to measure performance and allocate resources[21](index=21&type=chunk) - Recent accounting developments (ASU 2023-06, 2023-09, 2024-03) are expected to impact disclosures only, not financial position or results of operations[23](index=23&type=chunk)[24](index=24&type=chunk)[26](index=26&type=chunk) [NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=10&type=section&id=NOTE%201%E2%80%93SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the company's business operations, segment reporting, and the significant merger agreement with Mechanics Bank - HomeStreet, Inc. is a diversified financial services holding company primarily engaged in commercial banking, mortgage banking, and consumer/retail banking activities serving customers in the Western United States[18](index=18&type=chunk) - The Company's Chief Executive Officer manages business activities as one single operating and reportable segment at the consolidated level[21](index=21&type=chunk) - On March 28, 2025, the Company entered into a definitive merger agreement with Mechanics Bank, with the merger expected to close in the third quarter of 2025[22](index=22&type=chunk) [NOTE 2 – INVESTMENT SECURITIES](index=12&type=section&id=NOTE%202%E2%80%93INVESTMENT%20SECURITIES) This note details the company's investment securities portfolio, including available-for-sale and held-to-maturity classifications, and fair value measurements | (in thousands) | At March 31, 2025 | At December 31, 2024 | | :--- | :--- | :--- | | Total AFS Fair Value | $1,006,727 | $1,019,959 | | Total AFS Gross Unrealized Losses | $(107,591) | $(115,919) | | Total HTM Fair Value | $2,266 | $2,273 | - The Company held **$46 million** and **$35 million** of trading securities at March 31, 2025, and December 31, 2024, respectively, used as economic hedges of single family mortgage servicing rights[28](index=28&type=chunk) - The Company determined that the decline in value of AFS securities in an unrealized loss position is temporary and related to changes in market interest rates, not credit events, and does not expect to sell such securities before recovery of their amortized cost basis[31](index=31&type=chunk) [NOTE 3 – LOANS AND CREDIT QUALITY](index=16&type=section&id=NOTE%203-LOANS%20AND%20CREDIT%20QUALITY) This note provides information on loans held for investment, allowance for credit losses, and concentrations of credit risk | (in thousands) | At March 31, 2025 | At December 31, 2024 | | :--- | :--- | :--- | | Total LHFI | $6,063,216 | $6,231,796 | | Allowance for credit losses ("ACL") | $(39,634) | $(38,743) | | Total LHFI less ACL | $6,023,582 | $6,193,053 | - LHFI decreased by approximately **$168 million** from December 31, 2024, to March 31, 2025. The ACL increased by **$891 thousand** during Q1 2025, with a provision for credit losses of **$1,000 thousand**[36](index=36&type=chunk)[42](index=42&type=chunk) - Credit risk concentrations are primarily in real estate located in the Pacific Northwest, California, and Hawaii, with multifamily loans in California representing **30% of the total LHFI portfolio**[38](index=38&type=chunk) [NOTE 4 – DEPOSITS](index=29&type=section&id=NOTE%204%E2%80%93DEPOSITS) This note presents a breakdown of the company's deposit liabilities, including noninterest-bearing and brokered deposits, and their weighted average rates | (dollars in thousands) | At March 31, 2025 | At December 31, 2024 | | :--- | :--- | :--- | | Total deposits | $6,090,495 | $6,413,021 | | Weighted Average Rate (Total Deposits) | 2.42 % | 2.65 % | | Noninterest-bearing demand deposits | $1,276,133 | $1,195,781 | | Brokered deposits | $297,717 | $751,406 | - Total deposits decreased by **$322,526 thousand**, primarily due to a significant reduction in brokered deposits, while noninterest-bearing demand deposits increased. The weighted average rate on total deposits decreased[62](index=62&type=chunk) [NOTE 5 – DERIVATIVES AND HEDGING ACTIVITIES](index=30&type=section&id=NOTE%205%E2%80%93DERIVATIVES%20AND%20HEDGING%20ACTIVITIES) This note describes the company's use of derivative instruments for economic hedging to mitigate interest rate risk on assets and liabilities | (in thousands) | At March 31, 2025 | At December 31, 2024 | | :--- | :--- | :--- | | Total Derivatives Before Netting (Notional amount) | $323,955 | $338,586 | | Total Derivatives Before Netting (Asset Fair Value) | $8,918 | $10,666 | | Total Derivatives Before Netting (Liability Fair Value) | $(8,486) | $(10,701) | - The Company utilizes derivatives as economic hedges 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[64](index=64&type=chunk) - Net gain on loan origination and sale activities from derivatives was **$61 thousand** in Q1 2025, while loan servicing income from economic hedging was a **gain of $191 thousand**[67](index=67&type=chunk) [NOTE 6 – MORTGAGE BANKING OPERATIONS](index=31&type=section&id=NOTE%206%E2%80%93MORTGAGE%20BANKING%20OPERATIONS) This note details the company's mortgage banking activities, including loans held for sale, gain on loan origination, and mortgage servicing rights | (in thousands) | At March 31, 2025 | At December 31, 2024 | | :--- | :--- | :--- | | Total LHFS | $34,734 | $20,312 | | Total Gain on Loan Origination and Sale Activities (Q1 2025 vs Q1 2024) | $3,216 | $2,306 | | Total Loan Servicing Income (Q1 2025 vs Q1 2024) | $4,858 | $3,032 | - The unpaid principal balance of loans serviced for others was **$7,066,771 thousand** at March 31, 2025, a slight decrease from **$7,097,545 thousand** at December 31, 2024[71](index=71&type=chunk) - Single family MSRs measured at fair value were **$72,285 thousand** at March 31, 2025, with a positive change in fair value assumptions of **$271 thousand** in Q1 2025[77](index=77&type=chunk) [NOTE 7 – GUARANTEES AND MORTGAGE REPURCHASE LIABILITY](index=35&type=section&id=NOTE%207%E2%80%93GUARANTEES%20AND%20MORTGAGE%20REPURCHASE%20LIABILITY) This note outlines the company's contingent liabilities related to credit loss sharing arrangements and mortgage repurchase obligations - The Company has a credit loss sharing arrangement under the Fannie Mae Multifamily Delegated Underwriting and Servicing Program, with a reserve liability of **$0.6 million** at March 31, 2025[84](index=84&type=chunk) - A mortgage repurchase liability of **$1.0 million** was recorded at March 31, 2025, for loans sold on a servicing-retained and servicing-released basis, subject to representations and warranties[86](index=86&type=chunk) [NOTE 8 – EARNINGS PER SHARE](index=35&type=section&id=NOTE%208%E2%80%93EARNINGS%20PER%20SHARE) This note provides the calculation of basic and diluted earnings per share for the quarters ended March 31, 2025, and 2024 | (in thousands, except share and per share data) | Quarter Ended March 31, 2025 | Quarter Ended March 31, 2024 | | :--- | :--- | :--- | | Net income (loss) | $(4,465) | $(7,497) | | Basic earnings per share | $(0.24) | $(0.40) | | Diluted earnings per share | $(0.24) | $(0.40) | | Weighted average shares outstanding | 18,920,808 | 18,856,870 | - The net loss per share improved from **$(0.40)** in Q1 2024 to **$(0.24)** in Q1 2025[87](index=87&type=chunk) [NOTE 9 – FAIR VALUE MEASUREMENT](index=36&type=section&id=NOTE%209%E2%80%93FAIR%20VALUE%20MEASUREMENT) This note explains the company's fair value hierarchy and provides a breakdown of assets and liabilities measured at fair value - The Company categorizes fair value measurements into a three-level hierarchy based on the observability of inputs: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk) | (in thousands) | Fair Value (Mar 31, 2025) | Level 1 | Level 2 | Level 3 | | :--- | :--- | :--- | :--- | :--- | | Total Assets at Fair Value | $1,157,398 | $46,319 | $1,035,291 | $75,788 | | Trading securities - U.S. Treasury securities | $46,308 | $46,308 | — | — | | Investment securities AFS | $1,013,735 | — | $1,035,291 | $1,699 | | Single family LHFI | $1,248 | — | — | $1,248 | | Single family mortgage servicing rights | $72,285 | — | — | $72,285 | | Interest rate lock commitments | $556 | — | — | $556 | - Level 3 fair value measurements, which rely on unobservable inputs, include single family MSRs, single family LHFI, and interest rate lock commitments, with key assumptions like implied spread to benchmark interest rate curve, fall-out factor, and value of servicing[98](index=98&type=chunk)[99](index=99&type=chunk)[104](index=104&type=chunk) [NOTE 10 – LIHTC INVESTMENTS](index=43&type=section&id=NOTE%2010%E2%80%93LIHTC%20INVESTMENTS) This note describes the company's investments in Low-Income Housing Tax Credits and their impact on tax credits and amortization expense | (in thousands) | Quarter Ended March 31, 2025 | Quarter Ended March 31, 2024 | | :--- | :--- | :--- | | Tax credits and other tax benefits recognized | $1,697 | $1,668 | | LIHTC amortization expense | $1,405 | $1,367 | - The Company's LIHTC investments, designed to promote qualified affordable housing programs and generate federal tax credits, had a balance of **$35.9 million** as of March 31, 2025[116](index=116&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=44&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the company's financial condition and results of operations, highlighting key performance drivers and critical accounting estimates [Forward-Looking Statements](index=44&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section cautions readers about forward-looking statements, emphasizing inherent risks and uncertainties, particularly regarding the pending merger - The report contains forward-looking statements subject to various risks, including the successful consummation of the pending merger with Mechanics Bank, changes in the interest rate environment, and the ability to obtain required governmental approvals[119](index=119&type=chunk)[121](index=121&type=chunk) - The Company cautions that actual results may differ materially from those expressed or implied by forward-looking statements and does not assume any obligation to update them, except as required by law[121](index=121&type=chunk)[122](index=122&type=chunk) [Critical Accounting Estimates](index=45&type=section&id=Critical%20Accounting%20Estimates) This section highlights key accounting policies, such as Allowance for Credit Losses and Mortgage Servicing Rights valuation, requiring significant management judgment - Critical accounting policies include the Allowance for Credit Losses (ACL) and the valuation of residential Mortgage Servicing Rights (MSRs), which require management to make difficult, subjective, and complex judgments[124](index=124&type=chunk) - A hypothetical downgrade of the projected unemployment rate by one grade for all periods would increase the ACL at March 31, 2025, by approximately **$6 million**, indicating sensitivity to economic forecasts[125](index=125&type=chunk) [Summary Financial Data](index=46&type=section&id=Summary%20Financial%20Data) This section presents a concise overview of key financial metrics, including net interest income, net income (loss), and net interest margin, for recent quarters | (dollars in thousands) | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net interest income | $33,221 | $29,616 | $32,151 | | Net income (loss) | $(4,465) | $(123,327) | $(7,497) | | Net interest margin | 1.82 % | 1.38 % | 1.44 % | | Total assets (period end) | $7,803,631 | $8,123,698 | | | Deposits (period end) | $6,090,495 | $6,413,021 | | | ACL to total loans | 0.66 % | 0.63 % | | - The company's net loss significantly improved from Q4 2024 to Q1 2025, and net interest margin increased to **1.82%**. Total assets and deposits decreased quarter-over-quarter[128](index=128&type=chunk)[130](index=130&type=chunk) [Current Developments](index=48&type=section&id=Current%20Developments) This section discusses the definitive merger agreement with Mechanics Bank and the company's expectations for future earnings growth - The Company entered into a definitive merger agreement with Mechanics Bank on March 28, 2025, expected to close in the third quarter of 2025, with Mechanics Bank shareholders owning approximately **91.7%** of the combined company[133](index=133&type=chunk) - The Company anticipates growth in earnings for the foreseeable future due to stabilized and decreasing cost of funds, scheduled repricing of multifamily and other commercial real estate loans, expected reductions in borrowings, and effective non-interest expense management[134](index=134&type=chunk) [Management's Overview of the First Quarter 2025 Financial Performance](index=48&type=section&id=Management's%20Overview%20of%20the%20First%20Quarter%202025%20Financial%20Performance) This section provides management's analysis of the company's financial performance for Q1 2025, comparing it to prior quarters [Q1 2025 vs. Q4 2024 Performance](index=48&type=section&id=First%20Quarter%20of%202025%20Compared%20to%20the%20Fourth%20Quarter%20of%202024) This section compares the company's financial performance in the first quarter of 2025 against the fourth quarter of 2024, highlighting improvements in net loss and net interest margin - Net loss improved significantly to **$4.5 million** in Q1 2025 from **$123.3 million** in Q4 2024, primarily due to the absence of the **$88.8 million** loss on multifamily loan sales and a **$53.3 million** deferred tax asset valuation allowance recognized in Q4 2024[135](index=135&type=chunk)[136](index=136&type=chunk) - Core net loss decreased to **$2.9 million** in Q1 2025 from **$5.1 million** in Q4 2024, driven by increased net interest income and noninterest income, partially offset by higher provision for credit losses and noninterest expense[136](index=136&type=chunk) - Net interest income increased by **$3.6 million**, and net interest margin rose from **1.38% to 1.82%**, mainly due to a **32 basis point decrease** in interest-bearing liability rates and a **12 basis point increase** in interest-earning asset yields, following the sale of lower-yielding multifamily loans[140](index=140&type=chunk) [Q1 2025 vs. Q1 2024 Performance](index=51&type=section&id=First%20Quarter%20of%202025%20Compared%20to%20First%20Quarter%20of%202024) This section compares the company's financial performance in the first quarter of 2025 against the first quarter of 2024, noting improvements in net loss and noninterest income - Net loss improved to **$4.5 million** in Q1 2025 from **$7.5 million** in Q1 2024, and core net loss decreased to **$2.9 million** from **$5.5 million**, driven by higher net interest income, increased noninterest income, and lower noninterest expenses[149](index=149&type=chunk) - Net interest income increased by **$1.1 million**, and net interest margin rose from **1.44% to 1.82%**, due to a **27 basis point decrease** in interest-bearing liability rates and an **11 basis point increase** in interest-earning asset yields[153](index=153&type=chunk) - Noninterest income increased by **$2.7 million**, primarily from a **$0.9 million increase** in gain on loan sales (due to higher CRE loan sales volume) and a **$1.8 million increase** in loan servicing income (due to increased value of single-family MSRs)[156](index=156&type=chunk) [Financial Condition](index=55&type=section&id=Financial%20Condition) This section reviews the company's balance sheet changes, including decreases in total assets, loans, cash, and deposits - Total assets decreased by **$320 million** in Q1 2025, primarily due to a **$169 million decrease** in loans held for investment and a **$154 million decrease** in cash[161](index=161&type=chunk) - Total liabilities decreased by **$324 million**, mainly driven by a **$323 million decrease** in deposits, specifically a **$454 million decrease** in brokered certificates of deposit, partially offset by a **$131 million increase** in non-brokered deposits[161](index=161&type=chunk) [Credit Risk Management](index=55&type=section&id=Credit%20Risk%20Management) This section discusses trends in nonperforming assets, loan delinquencies, and the allowance for credit losses, indicating slight increases in credit risk metrics - The ratio of nonperforming assets to total assets increased slightly to **0.75%** at March 31, 2025, from **0.71%** at December 31, 2024[162](index=162&type=chunk) - The ratio of total loans delinquent over 30 days, including nonaccrual loans, to total loans increased slightly to **1.09%** at March 31, 2025, from **1.06%** at December 31, 2024[162](index=162&type=chunk) | (dollars in thousands) | At March 31, 2025 | At December 31, 2024 | | :--- | :--- | :--- | | Total ACL | $39,634 | $38,743 | | Total ACL Rate | 0.66 % | 0.63 % | | Commercial business ACL Rate | 3.61 % | 2.23 % | [Liquidity and Sources of Funds](index=55&type=section&id=Liquidity%20and%20Sources%20of%20Funds) This section outlines the company's liquidity sources, available borrowing capacity, and management's assessment of future liquidity sufficiency - The Company's primary sources of liquidity include deposits, loan payments, investment securities payments, and borrowings from the FHLB, Federal Reserve, and other financial institutions[165](index=165&type=chunk) - At March 31, 2025, the Bank had available borrowing capacity of **$1.0 billion** from the FHLB, **$2.0 billion** from the FRBSF, and **$949 million** under borrowing lines with other financial institutions[168](index=168&type=chunk) - The Company believes its current unrestricted cash and cash equivalents, cash flows from operations, and borrowing capacity will be sufficient to meet its liquidity needs for at least the next 12 months[169](index=169&type=chunk) [Cash Flows](index=56&type=section&id=Cash%20Flows) This section analyzes the company's cash flow activities from operations, investing, and financing, highlighting a significant decrease in cash and cash equivalents - Cash and cash equivalents decreased by **$154 million** for the quarter ended March 31, 2025, compared to an increase of **$105 million** during the quarter ended March 31, 2024[170](index=170&type=chunk) - Net cash used in operating activities was **$23 million** in Q1 2025, primarily due to cash used to fund LHFS in excess of proceeds from sales and increases in trading securities[171](index=171&type=chunk) - Net cash provided by investing activities was **$191 million** in Q1 2025, primarily from principal repayments on AFS securities and LHFI[172](index=172&type=chunk) - Net cash used in financing activities was **$323 million** in Q1 2025, primarily due to a decrease in brokered certificates of deposit[173](index=173&type=chunk) [Off-Balance Sheet Arrangements](index=57&type=section&id=Off-Balance%20Sheet%20Arrangements) This section details the company's off-balance sheet commitments, including loan origination and purchase commitments, totaling over $1.2 billion | (in thousands) | At March 31, 2025 | At December 31, 2024 | | :--- | :--- | :--- | | Total Commitments | $1,207,452 | $1,189,762 | | Unused consumer portfolio lines | $627,326 | $609,930 | | Commercial portfolio lines | $548,536 | $523,415 | - The Company is a party to financial instruments that carry off-balance sheet risk, including commitments to originate and purchase loans, totaling over **$1.2 billion** at March 31, 2025[174](index=174&type=chunk)[175](index=175&type=chunk) [Capital Resources and Dividend Policy](index=57&type=section&id=Capital%20Resources%20and%20Dividend%20Policy) This section reports the company's capital ratios, confirming its 'well capitalized' status, and outlines its current dividend policy | (dollars in thousands) | HomeStreet, Inc. (Actual Ratio) | HomeStreet Bank (Actual Ratio) | | :--- | :--- | :--- | | Tier 1 leverage capital | 6.62 % | 8.46 % | | Common equity Tier 1 capital | 8.76 % | 12.61 % | | Tier 1 risk-based capital | 9.87 % | 12.61 % | | Total risk-based capital | 12.48 % | 13.40 % | - Both HomeStreet, Inc. and HomeStreet Bank exceeded all minimum required capital ratios and qualified as a "**well capitalized**" depository institution under prompt corrective action regulations as of March 31, 2025[177](index=177&type=chunk)[178](index=178&type=chunk) - The Company did not declare a cash dividend in the quarter ended March 31, 2025, and currently does not plan to pay any quarterly dividends in 2025[179](index=179&type=chunk) [Non-GAAP Financial Measures](index=59&type=section&id=Non-GAAP%20Financial%20Measures) This section presents non-GAAP financial measures, such as core net income and tangible book value, used by management to assess performance - The Company uses non-GAAP measures such as tangible common equity, core net income (loss), core noninterest expenses, and efficiency ratio to supplement GAAP financial statements, believing they provide meaningful supplemental information for assessing performance and future projections[183](index=183&type=chunk)[185](index=185&type=chunk) | (in thousands) | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net income (loss) | $(4,465) | $(123,327) | $(7,497) | | Core net income (loss) | $(2,866) | $(5,140) | $(5,469) | | (in thousands, except ratio, rate and share data) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Book value per share | $21.18 | $21.05 | | Tangible book value per share | $20.83 | $20.67 | [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=62&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section discusses the company's exposure to market risks, primarily price and interest rate risks, arising from its financial instruments [Market Risk Management](index=62&type=section&id=Market%20Risk%20Management) This section details the company's approach to managing market risks, particularly interest rate risk, using simulation models and sensitivity analysis - The Company's primary market risks are price and interest rate risks, arising from financial instruments such as loans, MSRs, investment securities, deposits, and borrowings[190](index=190&type=chunk)[191](index=191&type=chunk) - Interest rate risk is managed using an interest rate simulation model that includes assumptions related to balance sheet growth, deposit repricing characteristics, and prepayment rates for multiple interest rate change scenarios[193](index=193&type=chunk) | Change in Interest Rates (basis points) | Net Interest Income Change (1-year) | Net Portfolio Value Change | | :--- | :--- | :--- | | +300 | (6.8)% | (11.1)% | | +200 | (3.9)% | (4.9)% | | +100 | (1.7)% | (2.3)% | | -100 | 1.4 % | (0.2)% | | -200 | 2.5 % | (2.8)% | | -300 | 7.3 % | (6.4)% | - As of March 31, 2025, the Company is considered **liability sensitive**, as exhibited by the gap table and net interest income sensitivity analysis[196](index=196&type=chunk) [Current Banking Environment](index=64&type=section&id=Current%20Banking%20Environment) This section addresses the impact of the higher interest rate environment on liquidity and funding costs, confirming sufficient contingent liquidity - The higher interest rate environment has increased competition for liquidity, which could increase the Company's overall cost of funding and reduce net interest income[203](index=203&type=chunk) - As of March 31, 2025, the Company had available contingent liquidity of **$5.5 billion**, equal to **91%** of its total deposits, with uninsured deposits at **9%** of total deposits, indicating sufficient liquidity[203](index=203&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=65&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes in internal control over financial reporting during the first quarter of 2025 [Evaluation of Disclosure Controls and Procedures](index=65&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section states that the company's CEO and CFO concluded the disclosure controls and procedures were effective as of March 31, 2025 - The Company's Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of March 31, 2025[204](index=204&type=chunk) [Changes in Internal Control over Financial Reporting](index=65&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports that no material changes occurred in internal control over financial reporting during the first quarter of 2025 - No changes to internal control over financial reporting occurred during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[206](index=206&type=chunk) [PART II – OTHER INFORMATION](index=65&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This part covers legal proceedings, updated risk factors related to the pending merger, and other required disclosures [ITEM 1. LEGAL PROCEEDINGS](index=65&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is subject to various legal proceedings in the ordinary course of business but does not expect them to have a material adverse effect on its financial position, results of operations, or liquidity - The Company is subject to various legal proceedings in the ordinary course of its business, including matters related to foreclosures, bankruptcies, and employment[208](index=208&type=chunk) - Management does not expect these proceedings, individually or as a whole, to have a material adverse effect on the Company's business, financial position, or results of operations[208](index=208&type=chunk) [ITEM 1A. RISK FACTORS](index=66&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section updates the risk factors from the previous annual report, focusing specifically on new risks related to the pending merger with Mechanics Bank, including potential business disruptions, regulatory approval delays, integration challenges, and consequences of merger failure [Risks Related to the Merger](index=66&type=section&id=Risks%20Related%20to%20the%20Merger) This section details potential risks associated with the pending merger, including business disruptions, regulatory delays, integration challenges, and financial consequences of failure - The pendency of the merger could cause disruptions and uncertainty, affecting relationships with customers, suppliers, and employees, and diverting significant management resources, potentially harming business operations and financial condition[210](index=210&type=chunk) - Regulatory approvals for the merger may be delayed, not obtained, or impose conditions that could adversely affect the combined company or lead to the delay or abandonment of the merger[213](index=213&type=chunk)[214](index=214&type=chunk) - Failure to complete the merger could negatively impact the Company through adverse market reactions, litigation, and a potential **$10 million termination fee** payable to Mechanics Bank under certain circumstances[219](index=219&type=chunk) - Combining the Company and Mechanics Bank may be more difficult, costly, or time-consuming than expected, potentially failing to realize anticipated cost savings and benefits, and could result in the loss of key employees[216](index=216&type=chunk)[218](index=218&type=chunk) - The issuance of approximately **202 million shares** of common stock to Mechanics Bank shareholders will substantially reduce the ownership and voting interest of current HomeStreet shareholders (estimated **8.3% economic**, **8.7% voting power**) in the combined company[223](index=223&type=chunk)[228](index=228&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=70&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section confirms that there were no sales of unregistered equity securities during the first quarter of 2025 - There were no sales of unregistered securities during the first quarter of 2025[231](index=231&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=70&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This item is not applicable to the company for the reporting period - This item is not applicable[232](index=232&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=70&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company for the reporting period - This item is not applicable[233](index=233&type=chunk) [ITEM 5. OTHER INFORMATION](index=70&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No directors or officers reported adopting or terminating Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended March 31, 2025 - During the quarter ended March 31, 2025, none of the Company's directors or officers informed the Company of the adoption or termination of a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement"[234](index=234&type=chunk) [ITEM 6. EXHIBITS](index=71&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed with the Form 10-Q, including certifications, XBRL documents, and other required filings - The exhibit index includes certifications from the CEO and CFO, various Inline XBRL documents (Instance, Schema, Calculation, Label, Presentation, Definitions Linkbase), and the Cover Page Interactive Data File[235](index=235&type=chunk) [SIGNATURES](index=72&type=section&id=SIGNATURES) The report is duly signed on behalf of HomeStreet, Inc. by its President and Chief Executive Officer, Mark K. Mason, and Executive Vice President and Chief Financial Officer, John M. Michel, on May 8, 2025 - The report was signed on behalf of HomeStreet, Inc. by Mark K. Mason, President and Chief Executive Officer, and John M. Michel, Executive Vice President and Chief Financial Officer, on May 8, 2025[240](index=240&type=chunk)[241](index=241&type=chunk)

Financial Performance - HomeStreet (HMST) reported revenue of $45.36 million for the quarter ended March 2025, marking a year-over-year increase of 9% [1] - The EPS for the same period was -$0.15, an improvement from -$0.29 a year ago [1] - The reported revenue exceeded the Zacks Consensus Estimate of $44.39 million, resulting in a surprise of +2.19% [1] - The company experienced an EPS surprise of -114.29%, with the consensus EPS estimate being -$0.07 [1] Key Metrics - Net Interest Margin was reported at 1.8%, slightly below the estimated 1.9% [4] - Efficiency Ratio was 102.9%, higher than the estimated 101.2% [4] - Net Interest Income was $33.22 million, compared to the average estimate of $35.94 million [4] - Net gain on loan origination and sale activities was $3.22 million, exceeding the estimated $2.09 million [4] - Total noninterest income reached $12.14 million, significantly above the average estimate of $9.36 million [4] Stock Performance - HomeStreet shares have returned +20.1% over the past month, contrasting with the Zacks S&P 500 composite's -4.3% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Company Performance - HomeStreet reported a quarterly loss of $0.15 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.07, representing an earnings surprise of -114.29% [1] - The company posted revenues of $45.36 million for the quarter ended March 2025, exceeding the Zacks Consensus Estimate by 2.19% and showing an increase from $41.61 million year-over-year [2] - Over the last four quarters, HomeStreet has surpassed consensus EPS estimates only once [2] Stock Outlook - HomeStreet shares have declined approximately 2.2% since the beginning of the year, while the S&P 500 has decreased by 6.1% [3] - The current consensus EPS estimate for the upcoming quarter is $0.07 on revenues of $46.33 million, and for the current fiscal year, it is $0.30 on revenues of $187.43 million [7] Industry Context - The Financial - Savings and Loan industry, to which HomeStreet belongs, is currently ranked in the top 28% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8]

Financial Performance - HomeStreet reported a core net loss of $2.9 million in Q1 2025, a 44% improvement from the $5.1 million loss in Q4 2024[2] - Net income for the quarter was a loss of $4,465 thousand, an improvement from a loss of $7,497 thousand in the prior year quarter[11] - Core net loss in Q1 2025 was $2.9 million, compared to a core net loss of $5.5 million in Q1 2024, indicating improved performance[23] - Core net loss for the quarter ended March 31, 2025, was $(4,465), compared to a net loss of $(123,327) for December 31, 2024[51] - Core net income per fully diluted share for March 31, 2025, was $(0.15), compared to $(0.27) for December 31, 2024[51] Revenue and Income - Total revenues for the quarter ended March 31, 2025, were $45,357,000, an increase from $40,310,000 in the previous quarter[52] - Net interest income increased to $33,221 thousand for the quarter ended March 31, 2025, compared to $32,151 thousand for the same period in 2024, reflecting a growth of 3.3%[11] - Noninterest income rose to $12,136 thousand, up 28.4% from $9,454 thousand in the prior year quarter[11] - Noninterest income in Q1 2025 rose due to the absence of an $88.8 million loss on the sale of multifamily loans recorded in Q4 2024[19] - Noninterest income showed a significant loss of $78,124,000 in the previous quarter, contrasting with a gain of $12,136,000 in the current quarter[52] Assets and Liabilities - Total assets decreased to $7,803,631 thousand as of March 31, 2025, down from $8,123,698 thousand at December 31, 2024, representing a decline of approximately 3.9%[10] - Loans held for investment decreased to $6,023,582 thousand, down 2.7% from $6,193,053 thousand at the end of 2024[10] - Total deposits, excluding brokered deposits, rose by $131 million during Q1 2025[3] - Total deposits as of March 31, 2025, were $6,090,495, a decrease of 5.0% from $6,413,021 on December 31, 2024[46] - The loans to deposit ratio increased to 99.9% as of March 31, 2025, compared to 97.4% at December 31, 2024[10] Credit Losses and Allowances - The provision for credit losses was $1,000 thousand, compared to no provision in the same quarter last year[11] - The allowance for credit losses (ACL) was $39,634 thousand, slightly up from $38,743 thousand at the end of 2024[10] - The provision for credit losses in Q1 2025 was $1.0 million, reflecting a $3.3 million increase in specific reserves[18] - The total allowance for credit losses across all categories was $1,000,000 for Q1 2025, reflecting a provision for credit losses of $1,000,000[38] Efficiency and Ratios - The efficiency ratio improved to 102.9% in Q1 2025 from 115.6% in Q4 2024[2] - The efficiency ratio, which measures noninterest expense to the sum of net interest income and noninterest income, was impacted by unusual items, affecting comparability with other companies[50] - The average yield on loans was 4.76% in Q1 2025, compared to 4.62% in Q4 2024[13] Deposits and Funding - Uninsured deposits accounted for $542 million, or 9% of total deposits[3] - Noninterest-bearing demand deposits increased to $1,276,133, representing 21.0% of total deposits, up from 18.6% in the previous quarter[46] - Total interest-bearing deposits decreased to $4,814,362, accounting for 79.0% of total deposits, down from 81.4% in the previous quarter[46] - Brokered deposits decreased significantly to $297,717 from $751,406 in the previous quarter, reflecting a 60.4% decline[46] Strategic Outlook - The company anticipates continuous growth in earnings due to strategic repricing of loans and effective expense management[2] - The company plans to continue focusing on core noninterest expenses and improving operational efficiency in future periods[50] - The company is in the process of merging with Mechanics Bank, which is expected to yield cost savings and synergies[54] - The company anticipates challenges in achieving expected cost savings and maintaining customer relationships due to the merger[54]

Core Insights - Banks are increasingly learning to position themselves against macroeconomic volatility to enhance financial stability and operational sustainability [1] Group 1: Industry Overview - Banks are often the first to feel the impact of macroeconomic volatility, making them vulnerable to uncertainties and recessions [1] - Despite the challenges, many banks are adapting their strategies to mitigate risks associated with economic fluctuations [1] Group 2: Investment Trends - The logistics sector has seen significant interest from investors, with a focus on diversification across various industries and market cap sizes [1] - The popularity of insurance companies in the Philippines has influenced investment strategies, leading to a broader portfolio approach [1] - The US market has become a target for investment, with a growing number of investors exploring opportunities in US banks, hotels, shipping, and logistics companies [1]

Group 1 - HomeStreet (HMST) shares increased by 26.2% to close at $11.74, following a notable trading volume, contrasting with a 7.4% loss over the past four weeks [1] - HomeStreet and Mechanics Bank announced an all-stock business combination, with Mechanics Bank shareholders receiving HomeStreet common stock [2] - The merger will enhance Mechanics Bank's presence on the West Coast, resulting in a combined entity with 168 branches and $23 billion in assets, expected to close in Q3 2025 [3] Group 2 - HomeStreet is projected to report a quarterly loss of $0.07 per share, reflecting a year-over-year increase of 75.9%, with revenues anticipated at $45.59 million, up 9.6% from the previous year [3] - The consensus EPS estimate for HomeStreet has remained unchanged over the last 30 days, indicating that stock price movements may not sustain without earnings estimate revisions [5] - HomeStreet holds a Zacks Rank of 3 (Hold), while Berkshire Hills Bancorp (BHLB), another company in the same industry, has a Zacks Rank of 2 (Buy) [5][6]

Group 1 - Monteverde & Associates PC has recovered millions of dollars for shareholders and is recognized as a Top 50 Firm in the 2024 ISS Securities Class Action Services Report [1] - The firm is investigating HomeStreet, Inc. regarding its proposed merger with Mechanics Bank, where HomeStreet shareholders are expected to own approximately 8.3% of the combined company [1] Group 2 - Monteverde & Associates PC is a national class action securities firm with a successful track record in trial and appellate courts, including the U.S. Supreme Court [2]

Core Viewpoint - Rowley Law PLLC is investigating potential securities law violations related to the proposed acquisition of HomeStreet, Inc. by Mechanics Bank, which is valued at approximately $300 million and expected to close in Q3 2025 [1]. Group 1: Acquisition Details - HomeStreet stockholders will own approximately 8.3% of the combined company post-acquisition [1]. - The transaction is valued at approximately $300 million [1]. Group 2: Legal Investigation - Rowley Law PLLC is conducting an investigation into potential securities law violations by HomeStreet, Inc. and its board of directors regarding the acquisition [1]. - Shareholders of HomeStreet, Inc. can obtain additional information about the investigation through Rowley Law PLLC [2].

Financial Performance - As of December 31, 2024, HomeStreet, Inc. had total assets of $8.1 billion, loans of $6.2 billion, and deposits of $6.4 billion[18]. - In 2023, the company's mortgage origination volume decreased by 42% compared to 2022, primarily due to significant increases in interest rates[54]. - The company reported a net loss of $144,344,000 for 2024, compared to a net loss of $27,508,000 in 2023[117]. - The net interest income for 2024 was $120,087,000, a decrease from $166,753,000 in 2023[117]. - The efficiency ratio increased to 116.0% in 2024, compared to 95.6% in 2023[117]. - Total revenues decreased to $164,520 thousand in 2024 from $208,674 thousand in 2023, representing a decline of approximately 21.1%[178]. - The company incurred a loss on the sale of multifamily loans amounting to $88,818 thousand in 2024[178]. - The core net loss for 2024 was $20.9 million, down from core net income of $8.3 million in 2023, indicating a deterioration in core profitability[121]. - Noninterest income for 2024 was a loss of $44,385 thousand, compared to a gain of $41,921 thousand in 2023, reflecting a substantial decline in noninterest revenue[130]. - The company's retained earnings decreased from $395,357,000 in 2023 to $251,013,000 in 2024, a decline of about 36.4%[209]. Asset and Liability Management - Total assets decreased from $9,392,450 thousand in 2023 to $8,123,698 thousand in 2024, a decline of approximately 13.5%[118]. - The company's total liabilities decreased from $8,854,063,000 in 2023 to $7,726,701,000 in 2024, a reduction of approximately 12.7%[209]. - The loans to deposits ratio improved from 109.4% in 2023 to 97.4% in 2024, indicating better liquidity management[118]. - The fair value of investment securities available for sale decreased from $1,251,199,000 in 2023 to $1,019,959,000 in 2024[137]. - Cash and cash equivalents increased by $190.9 million in 2024, compared to an increase of $142.8 million in 2023[162]. Credit Quality and Loss Provisions - The allowance for credit losses (ACL) to total loans increased from 0.55% in 2023 to 0.63% in 2024, suggesting a higher provision for potential loan losses[118]. - The ratio of nonperforming assets to total assets increased to 0.71% as of December 31, 2024, up from 0.45% in 2023[151]. - The total loans delinquent over 30 days rose to 1.06% in 2024 from 0.72% in 2023[151]. - The company's allowance for credit losses (ACL) as of December 31, 2024, was $38.743 million, with a rate of 0.63%, compared to $40.500 million and a rate of 0.55% as of December 31, 2023[157]. Employee and Operational Metrics - The company employed 787 employees, with a turnover rate of 21% for the year ended December 31, 2024[23]. - The company experienced a 9% decrease in full-time equivalent (FTE) employees, contributing to lower compensation and benefit costs[135]. - The company has adopted an information security program approved by its board to address cybersecurity risks[21]. - The company’s operational systems are vulnerable to unforeseen problems, including natural disasters and infrastructure damage, which could disrupt critical functions and increase operational costs[76]. Regulatory and Compliance Issues - The company is subject to extensive regulations, which can increase compliance costs and expose it to significant penalties for noncompliance[62]. - The company has limited ability to pay dividends from the Bank due to regulatory restrictions and capital requirements[56]. - Federal and state regulations may restrict the bank's ability to pay dividends, which could affect the company's capacity to service its debt obligations[83]. - The company is exposed to significant legal claims and regulatory actions, which could result in substantial uninsured liabilities and reputational harm[66]. Market and Economic Conditions - The company faces competitive pressures from banks, credit unions, and technology-driven financial service providers, which may impact future earnings and growth[46]. - Changes in interest rates significantly affect the company's profitability, impacting the difference between interest earned on loans and interest paid on deposits[40]. - Adverse economic conditions, including inflation, could negatively impact borrowers' ability to repay loans, affecting the company's financial condition[44]. - The company faces potential negative impacts on its financial condition and operations due to public health crises, which may lead to increased unemployment and financial hardship for customers in affected industries[70]. Technology and Cybersecurity - The company is exposed to cybersecurity risks that could result in financial losses, operational disruptions, and reputational damage due to the evolving nature of cyber threats[72]. - The company has implemented various cybersecurity processes and controls to manage risks and improve its incident response plan, although challenges remain in fully mitigating these risks[92]. - The company may face difficulties in raising debt or capital to pay off its HomeStreet Notes upon maturity, especially in constrained capital markets[87]. Future Outlook and Strategy - In Q4 2024, the company sold $990 million of multifamily loans, repositioning its balance sheet and aiming for profitability in H1 2025[110]. - The company plans to provide forbearance and assistance to customers affected by wildfires in Southern California, with no expected losses due to full insurance coverage[112]. - The company has a dividend policy but does not intend to pay dividends in 2025, with reassessment occurring quarterly[105].

Financial Data and Key Metrics Changes - In Q4 2024, the company reported a net loss of $123.3 million or $6.54 per share, compared to a net loss of $7.3 million or $0.39 per share in Q3 2024 [7] - The core net loss, excluding certain impacts, was $5.1 million or $0.27 per share, an improvement from a net loss of $6 million or $0.32 per share in Q3 2024 [8] - Net interest income increased by $1 million from Q3 2024, with a net interest margin rising from 1.33% to 1.38% [11] Business Line Data and Key Metrics Changes - Noninterest income decreased primarily due to an $88.8 million loss on the sale of multifamily loans [14] - Noninterest expenses were $5.2 million lower in Q4 2024, driven by a decrease in compensation benefits and general administrative expenses [15] Market Data and Key Metrics Changes - The ratio of nonperforming assets to total assets was 71 basis points, and total loans delinquent over 30 days was 106 basis points as of December 31, 2024 [14] - The company experienced a $15 million increase in nonaccrual loans during Q4, primarily related to a syndicated commercial loan [14] Company Strategy and Development Direction - Following the termination of a merger, the company adopted a new strategic plan, including the sale of $990 million in multifamily loans to improve liquidity and reduce commercial real estate concentrations [19][20] - The company anticipates returning to profitability in the first half of 2025, driven by loan repricing and effective noninterest expense management [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to profitability early in the year, contingent on stable credit conditions and economic factors [22][31] - The company noted that deposits have shown resilience despite external pressures, maintaining a low level of uninsured deposits at 9% of total deposits [23] Other Important Information - The tangible book value per share decreased to $20.67 as of year-end, impacted by the loss on the loan sale and tax implications [25] - The company has significant exposure to commercial real estate in areas affected by wildfires but expects no losses due to full insurance coverage [27][28] Q&A Session Summary Question: What is the expected NIM trajectory for the first half of the year? - Management does not have a specific target but expects a positive impact on earnings from the loan sale and repricing [36][40] Question: What is the current spot rate on deposits? - As of December 31, the spot rate for all deposits was 2.65%, with expectations to reduce broker deposits further [48] Question: What is the appetite for more originate-to-sale business? - The company has a large appetite but is cautious due to current market conditions and borrower activity [72] Question: Are there more opportunities to reduce noninterest expenses? - Management indicated limited opportunities remain for further reductions, with a focus on maintaining critical positions [75][78]