HomeStreet(HMST) - 2025 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION 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 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 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] Consolidated Income Statements 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] Consolidated Statements of Comprehensive Income (Loss) 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] Consolidated Statements of Shareholders' Equity 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] Consolidated Statements of Cash Flows 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][17] Notes to Consolidated Financial Statements 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][124] - 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] - Recent accounting developments (ASU 2023-06, 2023-09, 2024-03) are expected to impact disclosures only, not financial position or results of operations[23][24][26] NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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] - The Company's Chief Executive Officer manages business activities as one single operating and reportable segment at the consolidated level[21] - 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] NOTE 2 – INVESTMENT SECURITIES 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] - 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] NOTE 3 – LOANS AND CREDIT QUALITY 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][42] - 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] NOTE 4 – DEPOSITS 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] NOTE 5 – DERIVATIVES AND HEDGING ACTIVITIES 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] - 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] NOTE 6 – MORTGAGE BANKING OPERATIONS 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] - 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] NOTE 7 – GUARANTEES AND MORTGAGE REPURCHASE LIABILITY 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] - 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] NOTE 8 – EARNINGS PER SHARE 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] NOTE 9 – FAIR VALUE MEASUREMENT 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][90][91] | (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][99][104] NOTE 10 – LIHTC INVESTMENTS 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] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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 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][121] - 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][122] Critical Accounting Estimates 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] - 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] Summary Financial Data 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][130] Current Developments 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] - 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] Management's Overview of the First Quarter 2025 Financial Performance 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 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][136] - 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] - 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] Q1 2025 vs. Q1 2024 Performance 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] - 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] - 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] Financial Condition 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] - 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] Credit Risk Management 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] - 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] | (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 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] - 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] - 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] Cash Flows 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] - 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] - Net cash provided by investing activities was $191 million in Q1 2025, primarily from principal repayments on AFS securities and LHFI[172] - Net cash used in financing activities was $323 million in Q1 2025, primarily due to a decrease in brokered certificates of deposit[173] Off-Balance Sheet Arrangements 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][175] Capital Resources and Dividend Policy 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][178] - 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] Non-GAAP Financial Measures 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][185] | (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 This section discusses the company's exposure to market risks, primarily price and interest rate risks, arising from its financial instruments Market Risk Management 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][191] - 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] | 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] Current Banking Environment 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] - 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] ITEM 4. CONTROLS AND PROCEDURES 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 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] Changes in Internal Control over Financial Reporting 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] PART II – OTHER INFORMATION This part covers legal proceedings, updated risk factors related to the pending merger, and other required disclosures ITEM 1. LEGAL PROCEEDINGS 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] - 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] ITEM 1A. RISK FACTORS 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 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] - 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][214] - 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] - 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][218] - 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][228] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 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] ITEM 3. DEFAULTS UPON SENIOR SECURITIES This item is not applicable to the company for the reporting period - This item is not applicable[232] ITEM 4. MINE SAFETY DISCLOSURES This item is not applicable to the company for the reporting period - This item is not applicable[233] ITEM 5. OTHER INFORMATION 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] ITEM 6. EXHIBITS 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] 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][241]