~~Policies and regulations enacted by CFPB may negatively impact our residential mortgage loan business and compliance risk.~~

108

Our consumer business, including our mortgage, credit card, and other consumer lending and non-lending businesses, may be adversely affected by the policies enacted or regulations adopted by the Consumer Financial Protection Bureau (CFPB) which under the Dodd-Frank Act has broad rulemaking authority over consumer financial products and services. For example, in January 2014 new federal regulations promulgated by the CFPB took effect which impact how we originate and service residential mortgage loans. Those regulations, among other things, require mortgage lenders to assess and document a borrower’s ability to repay their mortgage loan. The regulations provide borrowers the ability to challenge foreclosures and sue for damages based on allegations that the lender failed to meet the standard for determining the borrower’s ability to repay their loan. While the regulations include presumptions in favor of the lender based on certain loan underwriting criteria, it is uncertain how these presumptions will be construed and applied by courts in the event of litigation. The ultimate impact of these new regulations on the lender’s enforcement of its loan documents in the event of a loan default, and the cost and expense of doing so, is uncertain, but may be significant. In addition, the secondary market demand for loans that do not fall within the presumptively safest category of a “qualified mortgage” as defined by the CFPB is uncertain. The 2014 regulations also require changes to certain loan servicing procedures and practices, which has resulted in increased foreclosure costs and longer foreclosure timelines in the event of loan default, and failure to comply with the new servicing rules may result in additional litigation and compliance risk.

On October 3, 2015, the CFPB's Final Integrated Disclosure Rule, commonly known as TRID, became effective. Among other things, TRID requires lenders to combine the initial Good Faith Estimate and Initial Truth in Lending (“TIL”) disclosures into a single new Loan Estimate disclosure and the HUD-1 and Final TIL disclosures into a single new Closing Disclosure. The definition of an application and timing requirements has changed, and a new Closing Disclosure waiting period has been added. These changes, along with other changes required by TRID, require significant systems modifications, process and procedures changes and training and we have incurred and will continue to incur additional personnel costs in the near future related to compliance with TRID. Failure to comply with these new requirements may result in regulatory penalties for disclosure violations under the Real Estate Settlement Procedures Act (“RESPA”) and the Truth In Lending Act (“TILA”), and private right of action under TILA, and may impact our ability to sell or the price we receive for certain loans.

In addition, the CFPB recently adopted additional rules under the Home Mortgage Disclosure Act (“HMDA”) that are intended to improve information reported about the residential mortgage market and increase disclosure about consumer access to mortgage credit. The updates to the HMDA increase the types of dwelling-secured loans that will be subject to the disclosure requirements of the rule and expand the categories of information that financial institutions such as the Bank will be required to report with respect to such loans and such borrowers, including potentially sensitive customer information. Most of the rule's provisions will become effective January 1, 2018. These changes may increase our compliance costs due to the anticipated need for additional resources to meet the enhanced disclosure requirements, including additional personnel and training costs as well as informational systems to allow the Bank to properly capture and report the additional mandated information. The volume of new data that will be required to be reported under the updated rules will also cause the Bank to face an increased risk of errors in the information. More importantly, because of the sensitive nature of some of the additional customer information to be included in such reports, the Bank may face a higher potential for a security breach resulting in the disclosure of sensitive customer information in the event the HMDA reporting files were obtained by an unauthorized party.

While the full impact of CFPB's activities on our business is still unknown, we anticipate that the rule change under the HMDA and other CFPB actions that may follow could increase our compliance costs and require changes in our business practices as a result of new regulations and requirements and could limit the products and services we are able to provide to customers.

Any restructuring or replacement of Fannie Mae and Freddie Mac and changes in existing government-sponsored and federal mortgage programs could adversely affect our business.

We originate and purchase, sell and thereafter service single family and multifamily mortgages under the Fannie Mae, and to a lesser extent, the Freddie Mac single family purchase programs and the Fannie Mae multifamily DUS^® program. In 2008, Fannie Mae and Freddie Mac were placed into conservatorship, and since then Congress, various executive branch agencies and certain large private investors in Fannie Mae and Freddie Mac have offered a wide range of proposals aimed at restructuring these agencies.

We cannot be certain ifwhether or ~~when~~how Fannie Mae and Freddie Mac ultimately will be restructured or ~~wound down,~~replaced, if or when additional reform of the housing finance market will be implemented or what the future role of the U.S. government will be in the mortgage market, and, accordingly, we will not be able to determine the impact that any such reform may have on us until a definitive reform plan is adopted. However, any restructuring or replacement of Fannie Mae and Freddie Mac that restricts the

current loan purchase programs of those entities may have a material adverse effect on our business and results of operations. Moreover, we have recorded on our balance sheet an intangible asset (mortgage servicing rights, or MSRs) relating to our right to service single and multifamily loans sold to Fannie Mae and Freddie Mac. ~~That MSR asset was~~We valued these MSRs at ~~$167.5~~$236.6 million at ~~September~~June 30, ~~2016.~~2017. Changes in the policies and operations of Fannie Mae and Freddie Mac or any replacement for or successor to those entities that adversely affect our single family residential loan and DUS^® mortgage servicing assets may require us to record impairment charges to the value of these assets, and significant impairment charges could be material and adversely affect our business.

In addition, our ability to generate income through mortgage sales to institutional investors depends in part on programs sponsored by Fannie Mae, Freddie Mac and Ginnie Mae, which facilitate the issuance of mortgage-backed securities in the secondary market. Any ~~discontinuation of,~~significant revision or ~~significant~~ reduction in the operation of those programs could have a material adverse effect on our loan origination and mortgage sales as well as our results of operations. Also, any significant adverse change in the level of activity in the secondary market or the underwriting criteria of these entities could negatively impact our results of business, operations and cash flows.

Changes in accounting standards may require us to increase our Allowance for Loan Losses and could materially impact our financial statements.

From time to time, the Financial Accounting Standards Board (the “FASB”) and the SEC change the financial accounting and reporting standards that govern the preparation of our financial statements. These changes can materially impact how we record and report our financial condition and results of operations. For example, in June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses(Topic 326) which changes, among other things, the way companies must record expected credit losses on financial instruments that are not accounted for at fair value through net income, including loans held for investment, available for sale and held-to-maturity debt securities, trade and other receivables, net investment in leases and other commitments to extend credit held by a reporting entity at each reporting date, and require that financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis and eliminate the probable initial recognition in current GAAP and reflect the current estimate of all expected credit losses based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets.

For purchased financial assets with a more-than-insignificant amount of credit deterioration since origination (“PCD assets”) that are measured at amortized cost, an allowance for expected credit losses will be recorded as an adjustment to the cost basis of the asset. Subsequent changes in estimated cash flows would be recorded as an adjustment to the allowance and through the statement of income. Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses rather than as a direct write-down to the security's cost basis. The amendments in this ASU will be effective for us beginning on January 1, 2020. For most debt securities, the transition approach requires a cumulative-effect adjustment to the statement of financial position as of the beginning of the first reporting period the guidance is effective. For other-than-temporarily impaired debt securities and PCD assets, the guidance will be applied prospectively. We are currently evaluating the provisions of this ASU to determine the impact and developing appropriate systems to prepare for compliance with this new standard, however, we expect the new standard could have a material impact on the Company's consolidated financial statements.

HomeStreet, Inc. primarily relies on dividends from the Bank, which may be limited by applicable laws and regulations.

HomeStreet, Inc. is a separate legal entity from the Bank, and although we may receive some dividends from HomeStreet Capital Corporation, the primary source of our funds from which we service our debt, pay any dividends that we may declare to

109

our shareholders and otherwise satisfy our obligations is dividends from the Bank. The availability of dividends from the Bank is limited by various statutes and regulations, as well as by our policy of retaining a significant portion of our earnings to support the Bank's operations. New capital rules impose more stringent capital requirements to maintain “well capitalized” status which may additionally impact the Bank’s ability to pay dividends to the Company. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Capital Management” as well as “Regulation and Supervision of HomeStreet Bank - Capital and Prompt Corrective Action Requirements” in ~~Item 1 of~~our Annual Report on Form 10-K for the ~~Company's 2015 Form 10-K.~~year ended December 31, 2016, which was filed with the Securities and Exchange Commission on March 9, 2017. If the Bank cannot pay dividends to us, we may be limited in our ability to service our debts, fund the Company's operations and acquisition plans and pay dividends to the Company's shareholders. While the Company has ~~made~~paid special ~~dividend distributions to its public shareholders~~dividends in some prior quarters, ~~the Company has~~we have not adopted a dividend policy and ~~the~~our board of directors has ~~determined that it was in the best interests of the shareholders not~~elected to retain capital for growth rather than to declare a dividend ~~to be paid for each of the last seven quarters.~~in recent years. As such, ~~our~~we have not declared dividends ~~are not regular~~in any recent quarters, and ~~are~~the potential of future dividends is subject ~~to restriction due~~ to cash flow limitations, capital requirements, capital and strategic needs ~~of the business or~~and other factors.

~~Changes in accounting standards could materially impact our financial statements.~~

On June 16, 2016, the FASB issued amendments to its guidance on financial instruments and credit losses. Among other things, the amendments change the way companies must record expected credit losses on financial instruments that are not accounted for at fair value through net income, including loans held for investment, held-to-maturity debt securities, trade and other receivables, net investment in leases and other commitments to extend credit held by a reporting entity at each reporting date, and require that financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis and eliminate the probable initial recognition in current GAAP and reflect the current estimate of all expected credit losses based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets.

These amendments are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Although we are currently evaluating the impact of these changes, we anticipate that this accounting change could have a material impact on the Company’s consolidated financial statements.

The financial services industry is highly competitive.

We face pricing competition for loans and deposits. We also face competition with respect to customer convenience, product lines, accessibility of service and service capabilities. Our most direct competition comes from other banks, credit unions, mortgage companies and savings institutions, but more recently has also come from financial technology (or "fintech") companies that rely on technology to provide financial services. The significant competition in attracting and retaining deposits and making loans as well as in providing other financial services throughout our market area may impact future earnings and growth. Our success depends, in part, on the ability to adapt products and services to evolving industry standards and provide

consistent customer service while keeping costs in line. There is increasing pressure to provide products and services at lower prices, which can reduce net interest income and non-interest income from fee-based products and services. New technology-driven products and services are often introduced and adopted, including innovative ways that customers can make payments, access products and manage accounts. We could be required to make substantial capital expenditures to modify or adapt existing products and services or develop new products and services. We may not be successful in introducing new products and services or those new products may not achieve market acceptance. We could lose business, be forced to price products and services on less advantageous terms to retain or attract clients, or be subject to cost increases if we do not effectively develop and implement new technology. In addition, advances in technology such as telephone, text, and on-line banking; e-commerce; and self-service automatic teller machines and other equipment, as well as changing customer preferences to access our products and services through digital channels, could decrease the value of our branch network and other assets. As a result of these competitive pressures, our business, financial condition or results of operations may be adversely affected.

We will be subject to heightened regulatory requirements if we exceed $10 billion in assets.

We anticipate that our total assets could exceed $10 billion in the next several years, based on our historic organic and acquisition growth rates. The Dodd-Frank Act and its implementing regulations impose various additional requirements on bank holding companies with $10 billion or more in total assets, including compliance with portions of the Federal Reserve’s enhanced prudential oversight requirements and annual stress testing requirements. In addition, banks with $10 billion or more in total assets are primarily examined by the CFPB with respect to various federal consumer financial protection laws and regulations. Currently, our bank is subject to regulations adopted by the CFPB, but the FDIC is primarily responsible for examining our bank’s compliance with consumer protection laws and those CFPB regulations. As a relatively new agency with evolving regulations and practices, there is uncertainty as to how the CFPB’s examination and regulatory authority might impact our business.

To ensure compliance with these heightened requirements when effective, our regulators may require us to fully comply with these requirements or take actions to prepare for compliance even before our or the Bank’s total assets equal or exceed $10 billion. In fact, we have already begun implementing measures to allow us to prepare for the heightened compliance that we expect will be required if we exceed $10 billion in assets, including hiring additional compliance personnel and designing and implementing additional compliance systems and internal controls. We may incur significant expenses in connection with these activities, any of which could have a material adverse effect on our business, financial condition or results of operations. We expect to incur these compliance-related costs even if they are not yet fully required, and may incur them even if we do not ultimately reach $10 billion in asset at the rate we expect or at all. We may also face heightened scrutiny by our regulators as we begin to implement these new compliance measures and grow toward the $10 billion asset threshold, and our regulators may consider our preparation for compliance with these regulatory requirements when examining our operations generally or considering any request for regulatory approval we may make, even requests for approvals on unrelated matters. In addition, compliance with the annual stress testing requirements, part of which must be publicly disclosed, may also be misinterpreted by the market generally or our customers and, as a result, may adversely affect our stock price or our ability to retain our customers or effectively compete for new business opportunities.

110

Risks Related to Information Systems and Security

A failure in or breach of our security systems or infrastructure, including breaches resulting from cyber-attacks, could disrupt our businesses, result in the disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs and cause losses.

Information security risks for financial institutions have ~~generally~~ increased in recent years in part because of the proliferation of new technologies, the use of the Internet and telecommunications technologies to conduct financial transactions, and the increased sophistication and activities of organized crime, hackers, terrorists, activists, and other external parties. Those parties also may attempt to fraudulently induce employees, customers, or other users of our systems to disclose confidential information in order to gain access to our data or that of our customers. Our operations rely on the secure processing, transmission and storage of confidential information in our computer systems and networks, either managed directly by us or through our data processing vendors. In addition, to access our products and services, our customers may use personal computers, smartphones, tablet PCs, and other mobile devices that are beyond our control systems. Although we believe we have robust information security procedures and controls, we are heavily reliant on our third party vendors, technologies, systems, networks and our customers' devices all of which may become the target of cyber-attacks, computer viruses, malicious code, unauthorized access, hackers or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss, theft or destruction of ~~Company or~~ our ~~customers'~~ confidential, proprietary and other information or ~~otherwise~~that of our customers, or disrupt ~~the Company's~~our operations or ~~its customers'~~those of our customers or ~~other~~ third ~~parties' business operations.~~parties.

To date we are not aware of any material losses relating to cyber-attacks or other information security breaches, but there can be no assurance that we will not suffer such attacks, breaches and losses in the future. Our risk and exposure to these matters remains heightened because of, among other things, the evolving nature of these threats, our plans to continue to implement our Internet banking and mobile banking channel, our expanding operations and the outsourcing of a significant portion of our business operations. As a result, the continued development and enhancement of our information security controls, processes and practices designed to protect customer information, our systems, computers, software, data and networks from attack, damage or unauthorized access remain a priority for ~~the Company.~~our management. As cyber threats continue to evolve, we may be required to expend significant additional resources to insure, modify or enhance our protective measures or to investigate and remediate important information security vulnerabilities or exposures; however, our measures may be insufficient to prevent physical and electronic break-ins, denial of service and other cyber-attacks or security breaches.

We maintain insurance coverage related to business interruptions and breaches of our security systems. However, disruptions or failures in the physical infrastructure or operating systems that support our businesses and customers, or cyber-attacks or security breaches of the networks, systems or devices that our customers use to access our products and services could result in customer attrition, uninsured financial losses, the inability of our customers to transact business with us, violations of applicable privacy and other laws, regulatory fines, penalties or intervention, additional regulatory scrutiny, reputational damage, litigation, reimbursement or other compensation costs, and/or additional compliance costs, any of which could materially and adversely affect our results of operations or financial condition.

We rely on third party vendors and other service providers for certain critical business activities, which creates additional operational and information security risks for us.

Third parties with which we do business or that facilitate our business activities, including exchanges, clearing houses, financial intermediaries or vendors that provide services or security solutions for our operations, could also be sources of operational and information security risk to us, including from breakdowns or failures of their own systems or capacity constraints. Specifically, we receive core systems processing, essential web hosting and other Internet systems and deposit and other processing services from third-party service providers. Such third parties may also be target of cyber-attacks, computer viruses, malicious code, unauthorized access, hackers or information security breaches that could compromise the confidential or proprietary information of HomeStreet and our customers. To date none of our third party vendors or service providers ~~have~~has notified us of any security breach in their systems.

In addition, if any third-party service providers experience difficulties or terminate their services and we are unable to replace them with other service providers, our operations could be interrupted and our operating expenses may be materially increased. If an interruption were to continue for a significant period of time, our business financial condition and results of operations could be materially adversely affected.

111

Some of our primary third party service providers are subject to examination by banking regulators and may be subject to enhanced regulatory scrutiny due to regulatory findings during examinations of such service providers conducted by federal regulators. While we subject such vendors to higher scrutiny and monitor any corrective measures that the vendors are taking or would undertake, we ~~are not able to~~cannot fully anticipate and mitigate all ~~risk which~~risks that could result from a breach or other operational failure of a vendor’s system.

Others provide technology that we use in our own regulatory compliance, including our mortgage loan origination technology. If those providers fail to update their systems or services in a timely manner to reflect new or changing regulations, or if our personnel operate these systems in a non-compliant manner, our ability to meet regulatory requirements may be impacted and may expose us to heightened regulatory scrutiny and the potential for payment of monetary penalties.

In addition, in order to safeguard our online financial transactions, we must provide secure transmission of confidential information over public networks. Our Internet banking system relies on third party encryption and authentication technologies necessary to provide secure transmission of confidential information. Advances in computer capabilities, new discoveries in the field of ~~cryptography~~cryptology or other developments could result in a compromise or breach of the algorithms our third-party service providers use to protect customer data. If any such compromise of security were to occur, it could have a material adverse effect on our business, financial condition and results of operations.

The failure to protect our customers’ confidential information and privacy could adversely affect our business.

We are subject to ~~state~~federal and ~~federal~~state privacy regulations and confidentiality obligations that, among other things restrict the use and dissemination of, and access to, ~~the~~certain information that we produce, store or maintain in the course of our business. We also have contractual obligations to protect certain confidential information we obtain from our existing vendors and customers. These obligations generally include protecting such confidential information in the same manner and to the same extent as we protect our own confidential information, and in some instances may impose indemnity obligations on us relating to unlawful or unauthorized disclosure of any such information.

~~The actions we may take in order to promote compliance with these obligations vary by business segment and may change over time, but may include, among other things:~~

~~Training and educating our employees and independent contractors regarding our obligations relating to confidential information;~~

~~Monitoring changes in state or federal privacy and compliance requirements;~~

~~Drafting and enforcing appropriate contractual provisions into any contract that raises proprietary and confidentiality issues;~~

~~Maintaining secure storage facilities and protocols for tangible records;~~

~~Physically and technologically securing access to electronic information; and~~

~~Performing vulnerability scanning and penetration testing of our computer systems and computer networks to identify potential weaknesses and to develop mitigating controls.~~

If we do not properly comply with privacy regulations and contractual obligations that require us to protect confidential information, or if we experience a security breach or network compromise, we could experience adverse consequences, including regulatory sanctions, penalties or fines, increased compliance costs, remedial costs such as providing credit monitoring or other services to affected customers, litigation and damage to our reputation, which in turn could result in decreased revenues and loss of customers, all of which would have a material adverse effect on our business, financial condition and results of operations.

The network and computer systems on which we depend could fail for reasons not related to security breaches.

Our computer systems could be vulnerable to unforeseen problems other than a cyber-attack or other security breach. Because we conduct a part of our business over the Internet and outsource several critical functions to third parties, operations will depend on our ability, as well as the ability of third-party service providers, to protect computer systems and network infrastructure against damage from fire, power loss, telecommunications failure, physical break-ins or similar catastrophic events. Any damage or failure that causes interruptions in operations may compromise our ability to perform critical functions in a timely manner (or may give rise to perceptions of such compromise) and could have a material adverse effect on our business, financial condition and results of operations as well as our reputation and customer or vendor relationships.

We continually encounter technological change, and we may have fewer resources than many of our competitors ~~to continue~~ to invest in technological improvements.

The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs. Our future success will depend, in part, upon our ability to address the needs of our clients by using technology to provide products and services that will satisfy client demands for convenience, as well as to create additional efficiencies in our operations. Many national vendors provide turn-key services to community banks, such as Internet banking and remote deposit capture that allow smaller banks to compete with institutions that have substantially greater resources to invest in technological improvements. We may not be able, however, to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers.

112

Anti-Takeover Risk

Some provisions of our articles of incorporation and bylaws and certain provisions of Washington law may deter takeover attempts, which may limit the opportunity of our shareholders to sell their shares at a favorable price.

Some provisions of our articles of incorporation and bylaws may have the effect of deterring or delaying attempts by our shareholders to remove or replace management, to commence proxy contests, or to effect changes in control. These provisions include:

A classified board of directors so that only approximately one third of our board of directors is elected each year;

Elimination of cumulative voting in the election of directors;

Procedures for advance notification of shareholder nominations and proposals;

The ability of our board of directors to amend our bylaws without shareholder approval; and

The ability of our board of directors to issue shares of preferred stock without shareholder approval upon the terms and conditions and with the rights, privileges and preferences as the board of directors may determine.

In addition, as a Washington corporation, we are subject to Washington law which imposes restrictions on ~~some~~business combinations and similar transactions between a corporation and certain significant shareholders. These provisions, alone or together, could have the effect of deterring or delaying changes in incumbent management, proxy contests or changes in control. These restrictions may limit a shareholder’s ability to benefit from a change-in-control transaction that might otherwise result in a premium unless such a transaction is favored by our board of directors.

113


ITEM 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not applicable.


ITEM 3	DEFAULTS UPON SENIOR SECURITIES

Not applicable.


ITEM 4	MINE SAFETY DISCLOSURES

Not applicable.


ITEM 5	OTHER INFORMATION

Not applicable.

114


ITEM 6	EXHIBITS

EXHIBIT INDEX



Exhibit Number		Description

12.1		Ratio of Earnings to Fixed Charges

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⁽²⁾⁽³⁾		XBRL Instance Document

101.SCH ⁽²⁾		XBRL Taxonomy Extension Schema Document

101.CAL ⁽²⁾		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF ⁽²⁾		XBRL Taxonomy Extension Label Linkbase Document

101.LAB ⁽²⁾		XBRL Taxonomy Extension Presentation Linkbase Document

101.PRE ⁽²⁾		XBRL Taxonomy Extension Definitions Linkbase Document



(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.

(2)	As provided in Rule 406T of Regulation S-T, this information shall not be deemed “filed” for purposes of Section 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934 or otherwise subject to liability under those sections.

(3)	Pursuant to Rule 405 of Regulation S-T, includes the following financial information included in the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2016,~~2017, formatted in XBRL (eXtensible Business Reporting Language) interactive data files: (i) the Consolidated Statements of Operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, (ii) the Consolidated Statements of Financial Condition as of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, (iii) the Consolidated Statements of Shareholders’ Equity for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, and Statements of Comprehensive Income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, (iv) the Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, and (v) the Notes to Consolidated Financial Statements.

115

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 ~~November 8, 2016~~August 4, 2017.



	HomeStreet, Inc.

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



	HomeStreet, Inc.

	By:	/s/ ~~Melba A. Bartels~~Mark R. Ruh
		~~Melba A. Bartels~~Mark R. Ruh
		Interim Chief Financial Officer, Senior ~~Executive~~ Vice President, ~~and~~Corporate Development & Strategic Investments ~~Chief Financial Officer~~

~~114~~116



Washington		91-0186600
(State or other jurisdiction of incorporation)		(IRS Employer Identification No.)



Large Accelerated Filer	o	Accelerated Filer	x

Non-accelerated Filer	o	Smaller Reporting Company	o

Emerging growth Company	x

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 12(a) of the Exchange Act.			x



PART I – FINANCIAL INFORMATION

ITEM 1	FINANCIAL STATEMENTS

Consolidated Statements of Financial Condition (Unaudited) at ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016		4

Interim Consolidated Statements of Operations (Unaudited) for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016		5

Interim Consolidated Statements of Comprehensive Income (Unaudited) for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016		6

Interim Consolidated Statements of Shareholders’ Equity (Unaudited) for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016		7

Interim Consolidated Statements of Cash Flows (Unaudited) for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016		8

Notes to Interim Consolidated Financial Statements (Unaudited)

Note 1 – Summary of Significant Accounting Policies		10

Note 2 – Business Combinations		12

Note 3 – Investment Securities		1513

Note 4 – Loans and Credit Quality		1918

Note 5 – Deposits		34

Note 6 ~~– Long-Term Debt~~		35

~~Note 7~~ – Derivatives and Hedging Activities		3635

Note 87 – Mortgage Banking Operations		3837

Note 98 – Commitments, Guarantees and Contingencies		4342

Note 109 – Fair Value Measurement		4443

Note 1110 – Earnings Per Share		54

Note 1211 – Business Segments		5554

Note 1312 – Accumulated Other Comprehensive Income		5756

Note 1413 – Subsequent Events		57

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

Forward-Looking Statements		58

Summary Financial Data		59

Management’s Overview of Financial Performance		62

Critical Accounting Policies and Estimates		6465

Results of Operations		66

Review of Financial Condition		7374

Business Segments		7677

Off-Balance Sheet Arrangements		8182

Enterprise Risk Management		8182

Credit Risk Management		82

Liquidity and Capital ~~Management~~Resources		87

Accounting Developments		91




ITEM 3	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	92

ITEM 4	CONTROLS AND PROCEDURES	95

PART II – OTHER INFORMATION

ITEM 1	LEGAL PROCEEDINGS	95

ITEM 1A	RISK FACTORS	96

ITEM 6	EXHIBITS	~~113~~115

SIGNATURES		~~114~~116


(in thousands, except share data)	September 30, 2016		December 31, 2015			June 30, 2017			December 31, 2016

ASSETS
Cash and cash equivalents (including interest-earning instruments of $8,580 and $2,079)	$	55,998	$	32,684
Investment securities (includes $949,075 and $541,151 carried at fair value)	991,325		572,164
Loans held for sale (includes $834,144 and $632,273 carried at fair value)	893,513		650,163
Loans held for investment (net of allowance for loan losses of $33,975 and $29,278; includes $20,547, and $21,544 carried at fair value)	3,764,178		3,192,720
Mortgage servicing rights (includes $149,910 and $156,604 carried at fair value)	167,501		171,255
Cash and cash equivalents (including interest-earning instruments of $23,107 and $34,615)						$	54,447		$	53,932
Investment securities (includes $884,266 and $993,990 carried at fair value)						936,522			1,043,851
Loans held for sale (includes $680,959 and $656,334 carried at fair value)						784,556			714,559
Loans held for investment (net of allowance for loan losses of $36,136 and $34,001; includes $5,134 and $17,988 carried at fair value)						4,156,424			3,819,027
Mortgage servicing rights (includes $236,621 and $226,113 carried at fair value)						258,222			245,860
Other real estate owned	6,440		7,531			4,597			5,243
Federal Home Loan Bank stock, at cost	39,783		44,342			41,769			40,347
Premises and equipment, net	72,951		63,738			101,797			77,636
Goodwill	19,900		11,521			22,175			22,175
Other assets	215,012		148,377			226,048			221,070
Total assets	$	6,226,601	$	4,894,495		$	6,586,557		$	6,243,700
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits	$	4,504,560	$	3,231,953		$	4,747,771		$	4,429,701
Federal Home Loan Bank advances	858,923		1,018,159			867,290			868,379
Accounts payable and other liabilities	151,968		117,251			190,421			191,189
Long-term debt	125,122		61,857			125,234			125,147
Total liabilities	5,640,573		4,429,220			5,930,716			5,614,416
Commitments and contingencies (Note 9)
Commitments and contingencies (Note 8)
Shareholders’ equity:
Preferred stock, no par value, authorized 10,000 shares, issued and outstanding, 0 shares and 0 shares	—		—			—			—
Common stock, no par value, authorized 160,000,000, issued and outstanding, 24,833,008 shares and 22,076,534 shares	511		511
Common stock, no par value, authorized 160,000,000 shares, issued and outstanding, 26,874,871 shares and 26,800,183 shares						511			511
Additional paid-in capital	276,844		222,328			337,515			336,149
Retained earnings	300,742		244,885			323,228			303,036
Accumulated other comprehensive income (loss)	7,931		(2,449		)
Accumulated other comprehensive loss						(5,413		)	(10,412		)
Total shareholders' equity	586,028		465,275			655,841			629,284
Total liabilities and shareholders' equity	$	6,226,601	$	4,894,495		$	6,586,557		$	6,243,700


	Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,					Six Months Ended June 30,
(in thousands, except share data)	2016		2015		2016		2015			2017			2016		2017			2016

Interest income:
Loans	$	49,752	$	41,012	$	139,748	$	111,603		$	51,198		$	47,262	$	100,704		$	89,996
Investment securities	5,476		2,754		12,531		8,426			5,419			4,002		11,051			7,055
Other	102		224		396		647			125			27		261			294
	55,330		43,990		152,675		120,676			56,742			51,291		112,016			97,345
Interest expense:
Deposits	5,362		3,069		13,380		8,656			5,867			4,449		11,490			8,018
Federal Home Loan Bank advances	1,605		958		4,486		2,476			2,368			1,462		4,769			2,881
Federal funds purchased and securities sold under agreements to repurchase	2		—		2		8			5			—		5			—
Long-term debt	1,440		278		2,574		815			1,514			823		2,993			1,134
Other	119		51		258		123			120			75		240			139
	8,528		4,356		20,700		12,078			9,874			6,809		19,497			12,172
Net interest income	46,802		39,634		131,975		108,598			46,868			44,482		92,519			85,173
Provision for credit losses	1,250		700		3,750		4,200			500			1,100		500			2,500
Net interest income after provision for credit losses	45,552		38,934		128,225		104,398			46,368			43,382		92,019			82,673
Noninterest income:
Net gain on mortgage loan origination and sale activities	92,600		57,885		239,493		189,746
Mortgage servicing income	14,544		4,768		35,855		10,896
Net gain on loan origination and sale activities										65,908			85,630		126,189			146,893
Loan servicing income										8,764			12,703		18,003			20,735
Income from WMS Series LLC	1,174		380		2,474		1,428			406			1,164		591			1,300
Depositor and other retail banking fees	1,744		1,701		4,991		4,239			1,811			1,652		3,467			3,247
Insurance agency commissions	441		477		1,205		1,183			501			370		897			764
Gain on sale of investment securities available for sale	48		1,002		145		1,002			551			62		557			97
Bargain purchase gain	—		796		—		7,345
Other	1,194		459		1,766		(11		)	3,067			895		5,765			1,148
	111,745		67,468		285,929		215,828			81,008			102,476		155,469			174,184
Noninterest expense:
Salaries and related costs	79,164		60,991		221,615		180,238			76,390			75,167		147,698			142,451
General and administrative	14,949		14,342		47,210		41,122			15,872			16,739		33,000			32,261
Amortization of core deposit intangibles	579		527		1,636		1,410			493			525		1,007			1,057
Legal	639		868		1,687		1,912			150			605		310			1,048
Consulting	1,390		166		4,239		6,544			771			1,177		1,829			2,849
Federal Deposit Insurance Corporation assessments	919		504		2,419		1,890			697			784		1,521			1,500
Occupancy	7,740		6,077		22,408		18,024			8,880			7,513		17,089			14,668
Information services	7,876		8,159		23,857		21,993			8,172			8,447		15,820			15,981
Net cost from operation and sale of other real estate owned	1,143		392		1,712		710
Net (benefit) cost from operation and sale of other real estate owned										(181		)	74		(156		)	569
	114,399		92,026		326,783		273,843			111,244			111,031		218,118			212,384
Income before income taxes	42,898		14,376		87,371		46,383			16,132			34,827		29,370			44,473
Income tax expense	15,197		4,415		31,514		13,742			4,923			13,078		9,178			16,317
NET INCOME	$	27,701	$	9,961	$	55,857	$	32,641		$	11,209		$	21,749	$	20,192		$	28,156

Basic income per share	$	1.12	$	0.45	$	2.29	$	1.60		$	0.42		$	0.88	$	0.75		$	1.16
Diluted income per share	$	1.11	$	0.45	$	2.27	$	1.58		$	0.41		$	0.87	$	0.75		$	1.15
Basic weighted average number of shares outstanding	24,811,169		22,035,317		24,398,683		20,407,386			26,866,230			24,708,375		26,843,813			24,192,441
Diluted weighted average number of shares outstanding	24,996,747		22,291,810		24,595,348		20,646,540			27,084,608			24,911,919		27,071,028			24,394,648



	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2016			2015			2016			2015

Net income	$	27,701		$	9,961		$	55,857		$	32,641
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on investment securities available for sale:
Unrealized holding (loss) gain arising during the period, net of tax (benefit) expense of $(962) and $1,576 for the three months ended September 30, 2016 and 2015, and $5,640 and $430 for the nine months ended September 30, 2016 and 2015, respectively	(1,786		)	2,926			10,474			798
Reclassification adjustment for net gains included in net income, net of tax expense of $17 and $351 for the three months ended September 30, 2016 and 2015, and $51 and $351 for the nine months ended September 30, 2016 and 2015, respectively	(31		)	(651		)	(94		)	(651		)
Other comprehensive (loss) income	(1,817		)	2,275			10,380			147
Comprehensive income	$	25,884		$	12,236		$	66,237		$	32,788


(in thousands, except share data)	Number of shares	Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive income (loss)			Total		Number of shares	Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive income (loss)			Total

Balance, January 1, 2015	14,856,611	$	511	$	96,615	$	203,566	$	1,546		$	302,238
Net income	—	—		—		32,641		—			32,641
Share-based compensation expense	—	—		986		—		—			986
Common stock issued	7,205,091	—		124,446		—		—			124,446
Other comprehensive income	—	—		—		—		147			147
Balance, September 30, 2015	22,061,702	$	511	$	222,047	$	236,207	$	1,693		$	460,458

Balance, January 1, 2016	22,076,534	$	511	$	222,328	$	244,885	$	(2,449	)	$	465,275	22,076,534	$	511	$	222,328	$	244,885	$	(2,449	)	$	465,275
Net income	—	—		—		55,857		—			55,857		—	—		—		28,156		—			28,156
Share-based compensation expense	—	—		1,278		—		—			1,278		—	—		827		—		—			827
Common stock issued	2,756,474	—		53,238		—		—			53,238		2,744,815	—		53,148		—		—			53,148
Other comprehensive income	—	—		—		—		10,380			10,380		—	—		—		—		12,197			12,197
Balance, September 30, 2016	24,833,008	$	511	$	276,844	$	300,742	$	7,931		$	586,028
Balance, June 30, 2016													24,821,349	$	511	$	276,303	$	273,041	$	9,748		$	559,603

Balance, January 1, 2017													26,800,183	$	511	$	336,149	$	303,036	$	(10,412	)	$	629,284
Net income													—	—		—		20,192		—			20,192
Share-based compensation expense													—	—		1,211		—		—			1,211
Common stock issued													74,688	—		155		—		—			155
Other comprehensive income													—	—		—		—		4,999			4,999
Balance, June 30, 2017													26,874,871	$	511	$	337,515	$	323,228	$	(5,413	)	$	655,841



(in thousands)	March 1, 2015

Fair value consideration paid to Simplicity shareholders:
Cash paid (79,399 stock options, consideration based on intrinsic value at a calculated price of $17.53)		$	471
Fair value of common shares issued (7,180,005 shares at $17.30 per share)		124,214
Total purchase price		$	124,685
Fair value of assets acquired:
Cash and cash equivalents	112,667
Investment securities	26,845
Acquired loans	664,148
Mortgage servicing rights	980
Federal Home Loan Bank stock	5,520
Premises and equipment	2,966
Bank-owned life insurance	14,501
Core deposit intangibles	7,450
Accounts receivable and other assets	15,869
Total assets acquired	850,946

Fair value of liabilities assumed:
Deposits	651,202
Federal Home Loan Bank advances	65,855
Accounts payable and accrued expenses	1,859
Total liabilities assumed	718,916
Net assets acquired		$	132,030
Bargain purchase (gain)		$	(7,345	)



	Nine Months Ended
(in thousands)	September 30, 2015

Noninterest expense
Salaries and related costs	$	7,669
General and administrative	1,256
Legal	530
Consulting	5,539
Occupancy	335
Information services	481
Total noninterest expense	$	15,810


	At September 30, 2016									At June 30, 2017
(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value		Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value

AVAILABLE FOR SALE
Mortgage-backed securities:
Residential	$	151,521	$	993	$	(278	)	$	152,236	$	154,145	$	1	$	(3,211	)	$	150,935
Commercial	26,898		333		(23		)	27,208		23,592		22		(233		)	23,381
Municipal bonds	348,181		7,582		(419		)	355,344		373,336		3,334		(3,941		)	372,729
Collateralized mortgage obligations:
Residential	182,631		906		(704		)	182,833		187,351		273		(2,929		)	184,695
Commercial	118,589		1,775		(105		)	120,259		76,961		75		(806		)	76,230
Corporate debt securities	83,026		2,511		(346		)	85,191		30,839		61		(682		)	30,218
U.S. Treasury securities	26,003		1		—			26,004		10,890		—		(150		)	10,740
Agency										35,457		—		(119		)	35,338
	$	936,849	$	14,101	$	(1,875	)	$	949,075	$	892,571	$	3,766	$	(12,071	)	$	884,266

HELD TO MATURITY
Mortgage-backed securities:
Residential										$	13,104	$	73	$	(68	)	$	13,109
Commercial										16,127		137		(10		)	16,254
Collateralized mortgage obligations										3,500		—		—			3,500
Municipal bonds										19,425		315		(152		)	19,588
Corporate debt securities										100		—		—			100
										$	52,256	$	525	$	(230	)	$	52,551


	At December 31, 2015									At December 31, 2016
(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value		Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value

AVAILABLE FOR SALE
Mortgage-backed securities:
Residential	$	69,342	$	19	$	(1,260	)	$	68,101	$	181,158	$	31	$	(4,115	)	$	177,074
Commercial	18,142		14		(305		)	17,851		25,896		13		(373		)	25,536
Municipal bonds	168,722		3,460		(313		)	171,869		473,153		1,333		(6,813		)	467,673
Collateralized mortgage obligations:
Residential	86,167		32		(1,702		)	84,497		194,982		32		(3,813		)	191,201
Commercial	80,190		43		(1,100		)	79,133		71,870		29		(1,135		)	70,764
Corporate debt securities	81,280		125		(2,669		)	78,736		52,045		110		(1,033		)	51,122
U.S. Treasury securities	41,047		—		(83		)	40,964		10,882		—		(262		)	10,620
	$	544,890	$	3,693	$	(7,432	)	$	541,151	$	1,009,986	$	1,548	$	(17,544	)	$	993,990

HELD TO MATURITY
Mortgage-backed securities:
Residential										$	13,844	$	71	$	(90	)	$	13,825
Commercial										16,303		70		(64		)	16,309
Municipal bonds										19,612		99		(459		)	19,252
Corporate debt securities										102		—		—			102
										$	49,861	$	240	$	(613	)	$	49,488


	At September 30, 2016															At June 30, 2017
	Less than 12 months					12 months or more					Total					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		Gross unrealized losses			Fair value		Gross unrealized losses			Fair value		Gross unrealized losses			Fair value

AVAILABLE FOR SALE
Mortgage-backed securities:
Residential	$	(66	)	$	28,439	$	(212	)	$	10,282	$	(278	)	$	38,721	$	(2,952	)	$	132,749	$	(259	)	$	10,212	$	(3,211	)	$	142,961
Commercial	(23		)	3,041		—			—		(23		)	3,041		(233		)	21,660		—			—		(233		)	21,660
Municipal bonds	(420		)	64,081		—			—		(420		)	64,081		(3,805		)	199,291		(136		)	8,661		(3,941		)	207,952
Collateralized mortgage obligations:
Residential	(340		)	77,897		(364		)	9,666		(704		)	87,563		(1,855		)	129,559		(1,074		)	23,623		(2,929		)	153,182
Commercial	(44		)	11,125		(61		)	6,059		(105		)	17,184		(545		)	57,142		(261		)	9,124		(806		)	66,266
Corporate debt securities	(30		)	1,615		(315		)	11,163		(345		)	12,778		(282		)	14,807		(400		)	7,137		(682		)	21,944
U.S. Treasury securities	—			1,000		—			—		—			1,000		(150		)	10,740		—			—		(150		)	10,740
Agency																(119		)	35,338		—			$	—	(119		)	35,338
	$	(923	)	$	187,198	$	(952	)	$	37,170	$	(1,875	)	$	224,368	$	(9,941	)	$	601,286	$	(2,130	)	$	58,757	$	(12,071	)	$	660,043

HELD TO MATURITY
Mortgage-backed securities:
Residential																$	(68	)	$	6,360	$	—		$	—	$	(68	)	$	6,360
Commercial																(10		)	4,533		—			—		(10		)	4,533
Municipal bonds																(152		)	10,690		—			—		(152		)	10,690
																$	(230	)	$	21,583	$	—		$	—	$	(230	)	$	21,583


	At September 30, 2016																				At June 30, 2017
	Within one year				After one year through five years				After five years through ten years				After ten years				Total				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		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

AVAILABLE FOR SALE
Mortgage-backed securities:
Residential	$	—	—	%	$	2	0.31	%	$	4,065	1.71	%	$	148,169	1.86	%	$	152,236	1.86	%	$	1	0.28	%	$	—	—	%	$	1,663	1.53	%	$	149,271	1.89	%	$	150,935	1.88	%
Commercial	—		—		22,349		2.14		4,859		2.39		—		—		27,208		2.18		—		—		18,763		2.08		4,618		2.04		—		—		23,381		2.07
Municipal bonds	1,712		3.95		17,030		2.97		46,779		3.04		289,823		3.78		355,344		3.65		508		3.96		21,843		3.15		39,867		3.07		310,511		3.76		372,729		3.65
Collateralized mortgage obligations:
Residential	—		—		—		—		2,291		1.32		180,542		1.84		182,833		1.84		—		—		—		—		507		1.24		184,188		1.98		184,695		1.98
Commercial	—		—		22,472		2.00		53,350		2.49		44,437		1.97		120,259		2.21		—		—		10,671		1.91		14,938		2.88		50,621		2.02		76,230		2.17
Agency																					—		—		5,072		1.90		30,266		2.24		—		—		35,338		2.20
Corporate debt securities	—		—		19,567		2.97		33,473		3.71		32,151		3.98		85,191		3.64		—		—		7,884		2.74		8,622		3.37		13,712		3.47		30,218		3.25
U.S. Treasury securities	26,004		0.37		—		—		—		—		—		—		26,004		0.37		999		0.64		—		—		9,741		1.78		—		—		10,740		1.68
Total available for sale	$	27,716	0.59	%	$	81,420	2.47	%	$	144,817	2.91	%	$	695,122	2.75	%	$	949,075	2.69	%	$	1,508	1.75	%	$	64,233	2.48	%	$	110,222	2.65	%	$	708,303	2.78	%	$	884,266	2.74	%

HELD TO MATURITY
Mortgage-backed securities:
Residential																					$	—	—	%	$	—	—	%	$	—	—	%	$	13,109	2.96	%	$	13,109	2.95	%
Commercial																					—		—		4,533		2.04		11,721		2.69		—		—		16,254		2.50
Collateralized mortgage obligations																					—		—		—		—		—		—		3,500		1.75		3,500		1.75
Municipal bonds																					—		—		1,167		2.92		5,435		2.79		12,986		3.40		19,588		3.20
Corporate debt securities																					—		—		—		—		—		—		100		6.00		100		6.00
Total held to maturity																					$	—	—	%	$	5,700	2.21	%	$	17,156	2.72	%	$	29,695	3.01	%	$	52,551	2.83	%


(in thousands)	At September 30, 2016		At June 30, 2017

Federal Home Loan Bank to secure borrowings	$	92,313	$	203,377
Washington and California State to secure public deposits	30,877		32,495
Securities pledged to secure derivatives in a liability position	25,003		6,757
Other securities pledged	9,193		7,273
Total securities pledged as collateral	$	157,386	$	249,902


(in thousands)	At September 30, 2016			At December 31, 2015			At June 30, 2017			At December 31, 2016

Consumer loans
Single family⁽¹⁾	$	1,186,476		$	1,203,180		$	1,148,229		$	1,083,822
Home equity and other	338,155			256,373			414,506			359,874
	1,524,631			1,459,553			1,562,735			1,443,696
Commercial loans
Commercial real estate	810,346			600,703			942,122			871,563
Multifamily	562,272			426,557			780,602			674,219
Construction/land development	661,813			583,160			648,672			636,320
Commercial business	237,117			154,262			248,908			223,653
	2,271,548			1,764,682			2,620,304			2,405,755
	3,796,179			3,224,235			4,183,039			3,849,451
Net deferred loan fees and costs	1,974			(2,237		)	9,521			3,577
	3,798,153			3,221,998			4,192,560			3,853,028
Allowance for loan losses	(33,975		)	(29,278		)	(36,136		)	(34,001		)
	$	3,764,178		$	3,192,720		$	4,156,424		$	3,819,027


	Three Months Ended September 30, 2016												Three Months Ended June 30, 2017
(in thousands)	Beginning balance		Charge-offs			Recoveries		(Reversal of) Provision			Ending balance		Beginning balance		Charge-offs			Recoveries		(Reversal of) Provision			Ending balance

Consumer loans
Single family	$	8,294	$	(42	)	$	1	$	995		$	9,248	$	7,954	$	(2	)	$	683	$	(347	)	$	8,288
Home equity and other	5,400		(356		)	192		512			5,748		6,546		(186		)	67		429			6,856
	13,694		(398		)	193		1,507			14,996		14,500		(188		)	750		82			15,144
Commercial loans
Commercial real estate	6,045		—			—		80			6,125		7,036		—			—		419			7,455
Multifamily	2,048		—			—		49			2,097		3,793		—			—		266			4,059
Construction/land development	9,369		—			176		(524		)	9,021		8,069		—			214		(57		)	8,226
Commercial business	2,845		—			11		138			2,994		2,644		(16		)	168		(210		)	2,586
	20,307		—			187		(257		)	20,237		21,542		(16		)	382		418			22,326
Total allowance for credit losses	$	34,001	$	(398	)	$	380	$	1,250		$	35,233	$	36,042	$	(204	)	$	1,132	$	500		$	37,470


	Three Months Ended September 30, 2015												Three Months Ended June 30, 2016
(in thousands)	Beginning balance		Charge-offs			Recoveries		(Reversal of) Provision			Ending balance		Beginning balance		Charge-offs			Recoveries		(Reversal of) Provision			Ending balance

Consumer loans
Single family	$	8,997	$	(232	)	$	250	$	(298	)	$	8,717	$	9,026	$	—		$	2	$	(734	)	$	8,294
Home equity and other	3,882		(255		)	84		541			4,252		4,852		(204		)	87		665			5,400
	12,879		(487		)	334		243			12,969		13,878		(204		)	89		(69		)	13,694
Commercial loans
Commercial real estate	5,046		—			—		(355		)	4,691		5,175		—			—		870			6,045
Multifamily	780		(150		)	—		153			783		1,832		—			—		216			2,048
Construction/land development	5,943		—			1,033		435			7,411		9,286		—			573		(490		)	9,369
Commercial business	1,800		(14		)	23		224			2,033		2,252		—			20		573			2,845
	13,569		(164		)	1,056		457			14,918		18,545		—			593		1,169			20,307
Total allowance for credit losses	$	26,448	$	(651	)	$	1,390	$	700		$	27,887	$	32,423	$	(204	)	$	682	$	1,100		$	34,001


	Nine Months Ended September 30, 2016												Six Months Ended June 30, 2017
(in thousands)	Beginning balance		Charge-offs			Recoveries		(Reversal of) Provision			Ending balance		Beginning balance		Charge-offs			Recoveries		(Reversal of) Provision			Ending balance

Consumer loans
Single family	$	8,942	$	(74	)	$	87	$	293		$	9,248	$	8,196	$	(2	)	$	1,016	$	(922	)	$	8,288
Home equity and other	4,620		(654		)	530		1,252			5,748		6,153		(511		)	353		861			6,856
	13,562		(728		)	617		1,545			14,996		14,349		(513		)	1,369		(61		)	15,144
Commercial loans
Commercial real estate	4,847		—			—		1,278			6,125		6,680		—			—		775			7,455
Multifamily	1,194		—			—		903			2,097		3,086		—			—		973			4,059
Construction/land development	9,271		(42		)	959		(1,167		)	9,021		8,553		—			434		(761		)	8,226
Commercial business	1,785		(26		)	44		1,191			2,994		2,596		(16		)	432		(426		)	2,586
	17,097		(68		)	1,003		2,205			20,237		20,915		(16		)	866		561			22,326
Total allowance for credit losses	$	30,659	$	(796	)	$	1,620	$	3,750		$	35,233	$	35,264	$	(529	)	$	2,235	$	500		$	37,470


(1)	Includes ~~$20.5~~$5.1 million and ~~$21.5~~$18.0 million at ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively, of loans where a fair value option election was made at the time of origination and, therefore, are carried at fair value with changes recognized in the consolidated statements of operations.


	Nine Months Ended September 30, 2015												Six Months Ended June 30, 2016
(in thousands)	Beginning balance		Charge-offs			Recoveries		(Reversal of) Provision			Ending balance		Beginning balance		Charge-offs			Recoveries		(Reversal of) Provision			Ending balance

Consumer loans
Single family	$	9,447	$	(232	)	$	496	$	(994	)	$	8,717	$	8,942	$	(32	)	$	86	$	(702	)	$	8,294
Home equity and other	3,322		(456		)	225		1,161			4,252		4,620		(298		)	338		740			5,400
	12,769		(688		)	721		167			12,969		13,562		(330		)	424		38			13,694
Commercial loans
Commercial real estate	3,846		(16		)	37		824			4,691		4,847		—			—		1,198			6,045
Multifamily	673		(150		)	—		260			783		1,194		—			—		854			2,048
Construction/land development	3,818		—			1,132		2,461			7,411		9,271		(42		)	783		(643		)	9,369
Commercial business	1,418		(23		)	150		488			2,033		1,785		(26		)	33		1,053			2,845
	9,755		(189		)	1,319		4,033			14,918		17,097		(68		)	816		2,462			20,307
Total allowance for credit losses	$	22,524	$	(877	)	$	2,040	$	4,200		$	27,887	$	30,659	$	(398	)	$	1,240	$	2,500		$	34,001


(1)	Comprised of single family loans where a fair value option election was made at the time of origination and, therefore, are carried at fair value with changes recognized in the consolidated statements of operations.


(1)	Includes partial charge-offs and nonaccrual interest paid and purchase discounts and premiums.


(2)	Unpaid principal balance does not include partial charge-offs, purchase discounts and premiums or nonaccrual interest paid. Related allowance is calculated on net book balances not unpaid principal balances.


(3)	Includes $77.5 million in single family performing ~~TDRs.~~trouble debt restructurings "TDRs".


(3)	Includes $~~74.7~~73.1 million in single family performing TDRs.


(1)	Includes ~~$20.5~~$5.1 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 recognized in the consolidated statements of operations.


(1)	Includes ~~$21.5~~$18.0 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 recognized in the consolidated statements of operations.


(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.~~loss and are a subset of the 90 days or more past due balance.



	HomeStreet Statutory
(in thousands)	I	II	III	IV

Date issued	June 2005	September 2005	February 2006	March 2007
Amount	$5,155	$20,619	$20,619	$15,464
Interest rate	3 MO LIBOR + 1.70%	3 MO LIBOR + 1.50%	3 MO LIBOR + 1.37%	3 MO LIBOR + 1.68%
Maturity date	June 2035	December 2035	March 2036	June 2037
Call option⁽¹⁾	5 years	5 years	5 years	5 years



	At September 30, 2016
	Notional amount		Fair value derivatives
(in thousands)			Asset		Liability

Forward sale commitments	$	3,902,372	$	3,612	$	(11,681	)
Interest rate swaptions	120,000		57		—
Interest rate lock and purchase loan commitments	1,334,615		45,403		(43		)
Interest rate swaps	2,134,050		43,500		(13,667		)
Total derivatives before netting	$	7,491,037	92,572		(25,391		)
Netting adjustment/Cash collateral ⁽¹⁾			10,991		23,799
Carrying value on consolidated statements of financial condition			$	103,563	$	(1,592	)


(1)	Includes cash collateral of ~~$34.8~~$38.2 millionat June 30, 2017as part of netting adjustments which primarily consists of collateral transferred by the Company at the initiation of derivative transactions and held by the counterparty as security.


(1)	Includes cash collateral of $48.0 million ~~and~~ ~~$14.4 million~~ at ~~September 30, 2016~~ ~~and~~ December 31, ~~2015 respectively,~~2016 as part of netting adjustments which primarily consists of collateral transferred by the Company at the initiation of derivative transactions and held by the counterparty as security.


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


(2)	Comprised of interest rate swaps, interest rate swaptions and forward contracts used as an economic hedge of single family MSRs.


(1)	Fannie Mae Multifamily Delegated Underwriting and Servicing Program (“DUS"^®) is a registered trademark of Fannie Mae.


(2)	Includes multifamily and commercial loans originated from sources other than DUS^®.


(1)	Comprised of gains and losses on interest rate lock and purchase loan commitments (which considers the value of servicing), single family loans held for sale, forward sale commitments used to economically hedge secondary market activities, and changes in the Company's repurchase liability for loans that have been sold.


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