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 | o | ||||
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. | o |
PART I – FINANCIAL INFORMATION | ||
ITEM 1 | FINANCIAL STATEMENTS | |
ITEM 2 | ||
ITEM 3 | ||
ITEM 4 | ||
ITEM 1 | ||
ITEM 1A | ||
ITEM 2 | ||
ITEM 3 | ||
ITEM 4 | ||
ITEM 5 | ||
ITEM 6 | ||
ITEM 1 FINANCIAL STATEMENTS |
(in thousands, except share data) | September 30, 2018 | December 31, 2017 | ||||||
ASSETS | ||||||||
Cash and cash equivalents (including interest-earning instruments of $35,763 and $30,268) | $ | 59,006 | $ | 72,718 | ||||
Investment securities (includes $831,102 and $846,268 carried at fair value) | 903,685 | 904,304 | ||||||
Loans held for sale (includes $350,948 and $577,313 carried at fair value) | 404,440 | 610,902 | ||||||
Loans held for investment (net of allowance for loan losses of $40,438 and $37,847; includes $4,089 and $5,477 carried at fair value) | 5,026,301 | 4,506,466 | ||||||
Mortgage servicing rights (includes $263,622 and $258,560 carried at fair value) | 291,759 | 284,653 | ||||||
Other real estate owned | 751 | 664 | ||||||
Federal Home Loan Bank stock, at cost | 40,732 | 46,639 | ||||||
Premises and equipment, net | 95,737 | 104,654 | ||||||
Goodwill | 22,564 | 22,564 | ||||||
Other assets | 184,107 | 188,477 | ||||||
Total assets | $ | 7,029,082 | $ | 6,742,041 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Liabilities: | ||||||||
Deposits | $ | 5,155,042 | $ | 4,760,952 | ||||
Federal Home Loan Bank advances | 816,591 | 979,201 | ||||||
Accounts payable and other liabilities | 162,252 | 172,234 | ||||||
Federal funds purchased and securities sold under agreements to repurchase | 55,000 | — | ||||||
Long-term debt | 125,415 | 125,274 | ||||||
Total liabilities | 6,314,300 | 6,037,661 | ||||||
Commitments and contingencies (Note 7) | ||||||||
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 shares, issued and outstanding, 26,989,742 shares and 26,888,288 shares | 511 | 511 | ||||||
Additional paid-in capital | 341,606 | 339,009 | ||||||
Retained earnings | 396,782 | 371,982 | ||||||
Accumulated other comprehensive loss | (24,117 | ) | (7,122 | ) | ||||
Total shareholders' equity | 714,782 | 704,380 | ||||||
Total liabilities and shareholders' equity | $ | 7,029,082 | $ | 6,742,041 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands, except share data) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Interest income: | |||||||||||||||
Loans | $ | 63,905 | $ | 56,547 | $ | 181,250 | $ | 157,251 | |||||||
Investment securities | 5,580 | 5,264 | 16,666 | 16,315 | |||||||||||
Other | 188 | 170 | 620 | 431 | |||||||||||
69,673 | 61,981 | 198,536 | 173,997 | ||||||||||||
Interest expense: | |||||||||||||||
Deposits | 11,286 | 6,020 | 28,636 | 17,510 | |||||||||||
Federal Home Loan Bank advances | 4,720 | 3,405 | 13,138 | 8,174 | |||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 83 | — | 139 | 5 | |||||||||||
Long-term debt | 1,695 | 1,520 | 4,941 | 4,513 | |||||||||||
Other | 245 | 196 | 575 | 436 | |||||||||||
18,029 | 11,141 | 47,429 | 30,638 | ||||||||||||
Net interest income | 51,644 | 50,840 | 151,107 | 143,359 | |||||||||||
Provision for credit losses | 750 | 250 | 2,500 | 750 | |||||||||||
Net interest income after provision for credit losses | 50,894 | 50,590 | 148,607 | 142,609 | |||||||||||
Noninterest income: | |||||||||||||||
Net gain on loan origination and sale activities | 44,571 | 71,010 | 149,939 | 197,199 | |||||||||||
Loan servicing income | 7,828 | 8,282 | 22,434 | 26,285 | |||||||||||
Income from WMS Series LLC | 4 | 166 | 315 | 757 | |||||||||||
Depositor and other retail banking fees | 2,038 | 1,839 | 5,936 | 5,306 | |||||||||||
Insurance agency commissions | 588 | 535 | 1,658 | 1,432 | |||||||||||
(Loss) gain on sale of investment securities available for sale, net | (4 | ) | 331 | 234 | 888 | ||||||||||
Other | 3,083 | 1,721 | 7,812 | 7,486 | |||||||||||
58,108 | 83,884 | 188,328 | 239,353 | ||||||||||||
Noninterest expense: | |||||||||||||||
Salaries and related costs | 60,335 | 75,374 | 196,153 | 223,072 | |||||||||||
General and administrative | 14,009 | 16,147 | 43,300 | 49,147 | |||||||||||
Amortization of core deposit intangibles | 406 | 470 | 1,219 | 1,477 | |||||||||||
Legal | 1,111 | 352 | 2,680 | 662 | |||||||||||
Consulting | 539 | 914 | 2,174 | 2,743 | |||||||||||
Federal Deposit Insurance Corporation assessments | 942 | 791 | 2,950 | 2,312 | |||||||||||
Occupancy | 8,442 | 12,391 | 31,575 | 29,480 | |||||||||||
Information services | 8,809 | 8,760 | 25,967 | 24,580 | |||||||||||
Net cost (benefit) from operation and sale of other real estate owned | 2 | (502 | ) | (89 | ) | (658 | ) | ||||||||
94,595 | 114,697 | 305,929 | 332,815 | ||||||||||||
Income before income taxes | 14,407 | 19,777 | 31,006 | 49,147 | |||||||||||
Income tax expense | 2,572 | 5,938 | 6,206 | 15,116 | |||||||||||
NET INCOME | $ | 11,835 | $ | 13,839 | $ | 24,800 | $ | 34,031 | |||||||
Basic income per share | $ | 0.44 | $ | 0.51 | $ | 0.92 | $ | 1.27 | |||||||
Diluted income per share | $ | 0.44 | $ | 0.51 | $ | 0.91 | $ | 1.26 | |||||||
Basic weighted average number of shares outstanding | 26,985,425 | 26,883,392 | 26,963,260 | 26,857,006 | |||||||||||
Diluted weighted average number of shares outstanding | 27,181,688 | 27,089,040 | 27,165,672 | 27,077,032 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Net income | $ | 11,835 | $ | 13,839 | $ | 24,800 | $ | 34,031 | |||||||
Other comprehensive (loss) income, 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 $(1,169) and $665 for the three months ended September 30, 2018 and 2017, and $(4,469), and $3,552 for the nine months ended September 30, 2018 and 2017, respectively | (4,399 | ) | 1,236 | (16,811 | ) | 6,597 | |||||||||
Reclassification adjustment for net losses (gains) included in net income, net of tax (benefit) expense of zero and $116 for the three months ended September 30, 2018 and 2017, and $49 and $311 for the nine months ended September 30, 2018 and 2017, respectively | 4 | (215 | ) | (184 | ) | (577 | ) | ||||||||
Other comprehensive (loss) income | (4,395 | ) | 1,021 | (16,995 | ) | 6,020 | |||||||||
Comprehensive income | $ | 7,440 | $ | 14,860 | $ | 7,805 | $ | 40,051 |
(in thousands, except share data) | Number of shares | Common stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive income (loss) | Total | ||||||||||||||||
Balance, January 1, 2017 | 26,800,183 | $ | 511 | $ | 336,149 | $ | 303,036 | $ | (10,412 | ) | $ | 629,284 | ||||||||||
Net income | — | — | — | 34,031 | — | 34,031 | ||||||||||||||||
Share-based compensation expense | — | — | 1,884 | — | — | 1,884 | ||||||||||||||||
Common stock issued | 84,219 | — | 250 | — | — | 250 | ||||||||||||||||
Other comprehensive income | — | — | — | — | 6,020 | 6,020 | ||||||||||||||||
Balance, September 30, 2017 | 26,884,402 | $ | 511 | $ | 338,283 | $ | 337,067 | $ | (4,392 | ) | $ | 671,469 | ||||||||||
Balance, January 1, 2018 | 26,888,288 | $ | 511 | $ | 339,009 | $ | 371,982 | $ | (7,122 | ) | $ | 704,380 | ||||||||||
Net income | — | — | — | 24,800 | — | 24,800 | ||||||||||||||||
Share-based compensation expense | — | — | 2,236 | — | — | 2,236 | ||||||||||||||||
Common stock issued | 101,454 | — | 361 | — | — | 361 | ||||||||||||||||
Other comprehensive loss | — | — | — | — | (16,995 | ) | (16,995 | ) | ||||||||||||||
Balance, September 30, 2018 | 26,989,742 | $ | 511 | $ | 341,606 | $ | 396,782 | $ | (24,117 | ) | $ | 714,782 |
Nine Months Ended September 30, | |||||||
(in thousands) | 2018 | 2017 | |||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 24,800 | $ | 34,031 | |||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||
Depreciation, amortization and accretion | 18,671 | 16,765 | |||||
Provision for credit losses | 2,500 | 750 | |||||
Net fair value adjustment and gain on sale of loans held for sale | (71,098 | ) | (170,209 | ) | |||
Fair value adjustment of loans held for investment | 35 | (1,056 | ) | ||||
Origination of mortgage servicing rights | (50,551 | ) | (56,067 | ) | |||
Change in fair value of mortgage servicing rights | (28,243 | ) | 31,916 | ||||
Net gain on sale of investment securities | (234 | ) | (888 | ) | |||
Net gain on sale of loans originated as held for investment | (169 | ) | (2,161 | ) | |||
Net fair value adjustment, gain on sale and provision for losses on other real estate owned | (92 | ) | (504 | ) | |||
Loss on disposal of fixed assets | 303 | 157 | |||||
Loss on lease abandonment | 6,073 | 4,450 | |||||
Net deferred income tax expense | 4,372 | 11,513 | |||||
Share-based compensation expense | 2,528 | 2,129 | |||||
Origination of loans held for sale | (4,850,098 | ) | (5,789,638 | ) | |||
Proceeds from sale of loans originated as held for sale | 5,175,266 | 5,889,561 | |||||
Changes in operating assets and liabilities: | |||||||
Decrease in accounts receivable and other assets | 4,986 | 11,660 | |||||
Decrease in accounts payable and other liabilities | (10,250 | ) | (13,769 | ) | |||
Net cash provided by (used in) operating activities | 228,799 | (31,360 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchase of investment securities | (147,134 | ) | (296,843 | ) | |||
Proceeds from sale of investment securities | 38,465 | 342,461 | |||||
Principal repayments and maturities of investment securities | 82,432 | 81,156 | |||||
Proceeds from sale of other real estate owned | 460 | 3,211 | |||||
Proceeds from sale of loans originated as held for investment | 319,004 | 140,642 | |||||
Proceeds from sale of mortgage servicing rights | 65,318 | — | |||||
Mortgage servicing rights purchased from others | — | (565 | ) | ||||
Capital expenditures related to other real estate owned | — | (57 | ) | ||||
Origination of loans held for investment and principal repayments, net | (887,449 | ) | (695,199 | ) | |||
Proceeds from sale of property and equipment | 467 | — | |||||
Purchase of property and equipment | (7,056 | ) | (35,771 | ) | |||
Net cash acquired from acquisitions | — | 19,285 | |||||
Net cash used in investing activities | (535,493 | ) | (441,680 | ) |
Nine Months Ended September 30, | |||||||
(in thousands) | 2018 | 2017 | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Increase in deposits, net | $ | 393,916 | $ | 219,332 | |||
Proceeds from Federal Home Loan Bank advances | 9,077,500 | 7,557,200 | |||||
Repayment of Federal Home Loan Bank advances | (9,240,000 | ) | (7,290,200 | ) | |||
Proceeds from federal funds purchased and securities sold under agreements to repurchase | 1,733,700 | 351,618 | |||||
Repayment of federal funds purchased and securities sold under agreements to repurchase | (1,678,700 | ) | (351,618 | ) | |||
Proceeds from line of credit draws | 30,000 | — | |||||
Repayment of line of credit draws | (30,000 | ) | |||||
Proceeds from Federal Home Loan Bank stock repurchase | 151,771 | 131,603 | |||||
Purchase of Federal Home Loan Bank stock | (145,864 | ) | (143,742 | ) | |||
Proceeds from stock issuance, net | 69 | 11 | |||||
Payments from equity raise | — | (46 | ) | ||||
Net cash provided by financing activities | 292,392 | 474,158 | |||||
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (14,302 | ) | 1,118 | ||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH: | |||||||
Cash, cash equivalents and restricted cash, beginning of year | 73,909 | 56,378 | |||||
Cash, cash equivalents and restricted cash, end of period | 59,607 | 57,496 | |||||
Less restricted cash included in other assets | (601 | ) | (2,446 | ) | |||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 59,006 | $ | 55,050 | |||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||||||
Cash paid during the period for: | |||||||
Interest paid | $ | 47,007 | $ | 29,347 | |||
Federal and state income taxes refunded, net | 193 | 23,382 | |||||
Non-cash activities: | |||||||
Loans held for investment foreclosed and transferred to other real estate owned | 455 | 1,125 | |||||
Loans transferred from held for investment to held for sale | 423,504 | 246,664 | |||||
Loans transferred from held for sale to held for investment | 57,061 | 41,686 | |||||
Ginnie Mae loans recognized with the right to repurchase, net | 415 | 493 | |||||
Receivable from sale of mortgage servicing rights | 3,414 | — |
At September 30, 2018 | |||||||||||||||
(in thousands) | Amortized cost | Gross unrealized gains | Gross unrealized losses | Fair value | |||||||||||
AVAILABLE FOR SALE | |||||||||||||||
Mortgage-backed securities: | |||||||||||||||
Residential | $ | 116,523 | $ | — | $ | (6,229 | ) | $ | 110,294 | ||||||
Commercial | 35,351 | — | (1,052 | ) | 34,299 | ||||||||||
Municipal bonds | 384,230 | 513 | (12,161 | ) | 372,582 | ||||||||||
Collateralized mortgage obligations: | |||||||||||||||
Residential | 167,393 | — | (8,097 | ) | 159,296 | ||||||||||
Commercial | 116,671 | 30 | (3,316 | ) | 113,385 | ||||||||||
Corporate debt securities | 22,308 | 2 | (1,051 | ) | 21,259 | ||||||||||
U.S. Treasury securities | 11,207 | — | (537 | ) | 10,670 | ||||||||||
Agency debentures | 9,872 | — | (555 | ) | 9,317 | ||||||||||
$ | 863,555 | $ | 545 | $ | (32,998 | ) | $ | 831,102 | |||||||
HELD TO MATURITY | |||||||||||||||
Mortgage-backed securities: | |||||||||||||||
Residential | $ | 11,337 | $ | — | $ | (379 | ) | $ | 10,958 | ||||||
Commercial | 17,387 | — | (553 | ) | 16,834 | ||||||||||
Collateralized mortgage obligations | 16,472 | 6 | (109 | ) | 16,369 | ||||||||||
Municipal bonds | 27,294 | 108 | (601 | ) | 26,801 | ||||||||||
Corporate debt securities | 94 | — | — | 94 | |||||||||||
$ | 72,584 | $ | 114 | $ | (1,642 | ) | $ | 71,056 |
At December 31, 2017 | |||||||||||||||
(in thousands) | Amortized cost | Gross unrealized gains | Gross unrealized losses | Fair value | |||||||||||
AVAILABLE FOR SALE | |||||||||||||||
Mortgage-backed securities: | |||||||||||||||
Residential | $ | 133,654 | $ | 4 | $ | (3,568 | ) | $ | 130,090 | ||||||
Commercial | 24,024 | 8 | (338 | ) | 23,694 | ||||||||||
Municipal bonds | 389,117 | 2,978 | (3,643 | ) | 388,452 | ||||||||||
Collateralized mortgage obligations: | |||||||||||||||
Residential | 164,502 | 3 | (4,081 | ) | 160,424 | ||||||||||
Commercial | 100,001 | 9 | (1,441 | ) | 98,569 | ||||||||||
Corporate debt securities | 25,146 | 67 | (476 | ) | 24,737 | ||||||||||
U.S. Treasury securities | 10,899 | — | (247 | ) | 10,652 | ||||||||||
Agency debentures | 9,861 | — | (211 | ) | 9,650 | ||||||||||
$ | 857,204 | $ | 3,069 | $ | (14,005 | ) | $ | 846,268 | |||||||
HELD TO MATURITY | |||||||||||||||
Mortgage-backed securities: | |||||||||||||||
Residential | $ | 12,062 | $ | 35 | $ | (99 | ) | $ | 11,998 | ||||||
Commercial | 21,015 | 75 | (161 | ) | 20,929 | ||||||||||
Collateralized mortgage obligations | 3,439 | — | — | 3,439 | |||||||||||
Municipal bonds | 21,423 | 339 | (97 | ) | 21,665 | ||||||||||
Corporate debt securities | 97 | — | — | 97 | |||||||||||
$ | 58,036 | $ | 449 | $ | (357 | ) | $ | 58,128 |
At September 30, 2018 | |||||||||||||||||||||||
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 | |||||||||||||||||
AVAILABLE FOR SALE | |||||||||||||||||||||||
Mortgage-backed securities: | |||||||||||||||||||||||
Residential | $ | (151 | ) | $ | 4,665 | $ | (6,078 | ) | $ | 105,148 | $ | (6,229 | ) | $ | 109,813 | ||||||||
Commercial | (517 | ) | 21,504 | (535 | ) | 12,795 | (1,052 | ) | 34,299 | ||||||||||||||
Municipal bonds | (4,309 | ) | 175,456 | (7,852 | ) | 162,506 | (12,161 | ) | 337,962 | ||||||||||||||
Collateralized mortgage obligations: | |||||||||||||||||||||||
Residential | (1,228 | ) | 49,619 | (6,869 | ) | 109,677 | (8,097 | ) | 159,296 | ||||||||||||||
Commercial | (1,488 | ) | 58,535 | (1,828 | ) | 44,308 | (3,316 | ) | 102,843 | ||||||||||||||
Corporate debt securities | (162 | ) | 8,637 | (889 | ) | 12,394 | (1,051 | ) | 21,031 | ||||||||||||||
U.S. Treasury securities | — | — | (537 | ) | 9,374 | (537 | ) | 9,374 | |||||||||||||||
Agency debentures | — | — | (555 | ) | 9,317 | (555 | ) | 9,317 | |||||||||||||||
$ | (7,855 | ) | $ | 318,416 | $ | (25,143 | ) | $ | 465,519 | $ | (32,998 | ) | $ | 783,935 | |||||||||
HELD TO MATURITY | |||||||||||||||||||||||
Mortgage-backed securities: | |||||||||||||||||||||||
Residential | $ | (135 | ) | $ | 4,591 | $ | (244 | ) | $ | 4,066 | $ | (379 | ) | $ | 8,657 | ||||||||
Commercial | (168 | ) | 7,740 | (385 | ) | 9,095 | (553 | ) | 16,835 | ||||||||||||||
Collateralized mortgage obligations | (109 | ) | 12,954 | — | — | (109 | ) | 12,954 | |||||||||||||||
Municipal bonds | (297 | ) | 11,468 | (304 | ) | 9,079 | (601 | ) | 20,547 | ||||||||||||||
$ | (709 | ) | $ | 36,753 | $ | (933 | ) | $ | 22,240 | $ | (1,642 | ) | $ | 58,993 |
At December 31, 2017 | |||||||||||||||||||||||
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 | |||||||||||||||||
AVAILABLE FOR SALE | |||||||||||||||||||||||
Mortgage-backed securities: | |||||||||||||||||||||||
Residential | $ | (182 | ) | $ | 18,020 | $ | (3,386 | ) | $ | 110,878 | $ | (3,568 | ) | $ | 128,898 | ||||||||
Commercial | (113 | ) | 15,265 | (225 | ) | 6,748 | (338 | ) | 22,013 | ||||||||||||||
Municipal bonds | (760 | ) | 105,415 | (2,883 | ) | 134,103 | (3,643 | ) | 239,518 | ||||||||||||||
Collateralized mortgage obligations: | |||||||||||||||||||||||
Residential | (612 | ) | 53,721 | (3,469 | ) | 104,555 | (4,081 | ) | 158,276 | ||||||||||||||
Commercial | (538 | ) | 57,236 | (903 | ) | 35,225 | (1,441 | ) | 92,461 | ||||||||||||||
Corporate debt securities | (15 | ) | 5,272 | (461 | ) | 13,365 | (476 | ) | 18,637 | ||||||||||||||
U.S. Treasury securities | (3 | ) | 997 | (244 | ) | 9,655 | (247 | ) | 10,652 | ||||||||||||||
Agency debentures | (211 | ) | 9,650 | $ | — | — | (211 | ) | 9,650 | ||||||||||||||
$ | (2,434 | ) | $ | 265,576 | $ | (11,571 | ) | $ | 414,529 | $ | (14,005 | ) | $ | 680,105 | |||||||||
HELD TO MATURITY | |||||||||||||||||||||||
Mortgage-backed securities: | |||||||||||||||||||||||
Residential | $ | (13 | ) | $ | 2,662 | $ | (86 | ) | $ | 4,452 | $ | (99 | ) | $ | 7,114 | ||||||||
Commercial | (161 | ) | 15,900 | — | — | (161 | ) | 15,900 | |||||||||||||||
Collateralized mortgage obligations | — | 3,439 | — | — | — | 3,439 | |||||||||||||||||
Municipal bonds | (3 | ) | 2,185 | (94 | ) | 9,465 | (97 | ) | 11,650 | ||||||||||||||
$ | (177 | ) | $ | 24,186 | $ | (180 | ) | $ | 13,917 | $ | (357 | ) | $ | 38,103 |
At September 30, 2018 | ||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||
AVAILABLE FOR SALE | ||||||||||||||||||||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||||||||||||
Residential | $ | — | — | % | $ | — | — | % | $ | 7,333 | 1.60 | % | $ | 102,961 | 2.05 | % | $ | 110,294 | 2.02 | % | ||||||||||||||
Commercial | — | — | 12,759 | 2.14 | 17,984 | 2.86 | 3,556 | 2.84 | 34,299 | 2.59 | ||||||||||||||||||||||||
Municipal bonds | 1,195 | 2.50 | 13,264 | 2.25 | 33,448 | 2.77 | 324,675 | 3.36 | 372,582 | 3.27 | ||||||||||||||||||||||||
Collateralized mortgage obligations: | ||||||||||||||||||||||||||||||||||
Residential | — | — | — | — | — | — | 159,296 | 2.30 | 159,296 | 2.30 | ||||||||||||||||||||||||
Commercial | — | — | 9,203 | 2.30 | 24,511 | 2.78 | 79,671 | 2.32 | 113,385 | 2.41 | ||||||||||||||||||||||||
Agency debentures | — | — | — | — | 9,317 | 2.18 | — | — | 9,317 | 2.18 | ||||||||||||||||||||||||
Corporate debt securities | 1,006 | 2.11 | 3,982 | 2.97 | 13,801 | 3.34 | 2,470 | 3.68 | 21,259 | 3.26 | ||||||||||||||||||||||||
U.S. Treasury securities | — | — | 1,295 | 2.80 | 9,375 | 1.17 | — | — | 10,670 | 1.84 | ||||||||||||||||||||||||
Total available for sale | $ | 2,201 | 2.32 | % | $ | 40,503 | 2.23 | % | $ | 115,769 | 2.64 | % | $ | 672,629 | 2.78 | % | $ | 831,102 | 2.73 | % | ||||||||||||||
HELD TO MATURITY | ||||||||||||||||||||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||||||||||||
Residential | $ | — | — | % | $ | — | — | % | $ | — | — | % | $ | 10,958 | 2.84 | % | $ | 10,958 | 2.84 | % | ||||||||||||||
Commercial | — | — | 10,177 | 2.43 | 6,657 | 2.58 | — | — | 16,834 | 2.49 | ||||||||||||||||||||||||
Collateralized mortgage obligations | — | — | 8,030 | 3.57 | — | — | 8,339 | 2.78 | 16,369 | 3.17 | ||||||||||||||||||||||||
Municipal bonds | — | — | 1,785 | 2.83 | 5,572 | 2.24 | 19,444 | 3.20 | 26,801 | 2.97 | ||||||||||||||||||||||||
Corporate debt securities | — | — | — | — | — | — | 94 | 6.00 | 94 | 6.00 | ||||||||||||||||||||||||
Total held to maturity | $ | — | — | % | $ | 19,992 | 2.92 | % | $ | 12,229 | 2.43 | % | $ | 38,835 | 3.02 | % | $ | 71,056 | 2.88 | % |
At December 31, 2017 | ||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||
AVAILABLE FOR SALE | ||||||||||||||||||||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||||||||||||
Residential | $ | — | — | % | $ | — | — | % | $ | 8,914 | 1.63 | % | $ | 121,176 | 1.97 | % | $ | 130,090 | 1.94 | % | ||||||||||||||
Commercial | — | — | 15,356 | 2.07 | 4,558 | 2.03 | 3,780 | 2.98 | 23,694 | 2.21 | ||||||||||||||||||||||||
Municipal bonds | 641 | 2.64 | 24,456 | 3.10 | 39,883 | 3.25 | 323,472 | 3.81 | 388,452 | 3.71 | ||||||||||||||||||||||||
Collateralized mortgage obligations: | ||||||||||||||||||||||||||||||||||
Residential | — | — | — | — | — | — | 160,424 | 2.10 | 160,424 | 2.10 | ||||||||||||||||||||||||
Commercial | — | — | 12,550 | 2.09 | 21,837 | 2.38 | 64,182 | 2.13 | 98,569 | 2.18 | ||||||||||||||||||||||||
Agency debentures | — | — | — | — | 9,650 | 2.26 | — | — | 9,650 | 2.26 | ||||||||||||||||||||||||
Corporate debt securities | 1,048 | 2.11 | 6,527 | 2.80 | 11,033 | 3.49 | 6,129 | 3.57 | 24,737 | 3.27 | ||||||||||||||||||||||||
U.S. Treasury securities | 997 | 1.22 | — | — | 9,655 | 1.76 | — | — | 10,652 | 1.71 | ||||||||||||||||||||||||
Total available for sale | $ | 2,686 | 1.90 | % | $ | 58,889 | 2.58 | % | $ | 105,530 | 2.67 | % | $ | 679,163 | 2.90 | % | $ | 846,268 | 2.85 | % | ||||||||||||||
HELD TO MATURITY | ||||||||||||||||||||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||||||||||||
Residential | $ | — | — | % | $ | — | — | % | $ | — | — | % | $ | 11,998 | 2.93 | % | $ | 11,998 | 2.93 | % | ||||||||||||||
Commercial | — | — | 6,577 | 2.15 | 14,352 | 2.71 | — | — | 20,929 | 2.53 | ||||||||||||||||||||||||
Collateralized mortgage obligations | — | — | — | — | — | — | 3,439 | 1.90 | 3,439 | 1.90 | ||||||||||||||||||||||||
Municipal bonds | — | — | 1,846 | 3.35 | 4,630 | 2.57 | 15,189 | 3.50 | 21,665 | 3.28 | ||||||||||||||||||||||||
Corporate debt securities | — | — | — | — | — | — | 97 | 6.00 | 97 | 6.00 | ||||||||||||||||||||||||
Total held to maturity | $ | — | — | % | $ | 8,423 | 2.41 | % | $ | 18,982 | 2.68 | % | $ | 30,723 | 3.10 | % | $ | 58,128 | 2.86 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Proceeds | $ | 16,233 | $ | 27,827 | $ | 38,465 | $ | 342,461 | |||||||
Gross gains | 39 | 331 | 300 | 907 | |||||||||||
Gross losses | (43 | ) | — | (66 | ) | (19 | ) |
(in thousands) | At September 30, 2018 | At December 31, 2017 | |||||
Federal Home Loan Bank to secure borrowings | $ | 100,857 | $ | 425,866 | |||
Washington and California State to secure public deposits | 128,533 | 118,828 | |||||
Securities pledged to secure derivatives in a liability position | 14,585 | 7,308 | |||||
Other securities pledged | 3,904 | 6,089 | |||||
Total securities pledged as collateral | $ | 247,879 | $ | 558,091 |
(in thousands) | At September 30, 2018 | At December 31, 2017 | |||||
Consumer loans | |||||||
Single family(1) | $ | 1,418,140 | $ | 1,381,366 | |||
Home equity and other | 540,960 | 453,489 | |||||
Total consumer loans | 1,959,100 | 1,834,855 | |||||
Commercial real estate loans | |||||||
Non-owner occupied commercial real estate | 667,429 | 622,782 | |||||
Multifamily | 893,105 | 728,037 | |||||
Construction/land development | 790,622 | 687,631 | |||||
Total commercial real estate loans | 2,351,156 | 2,038,450 | |||||
Commercial and industrial loans | |||||||
Owner occupied commercial real estate | 420,724 | 391,613 | |||||
Commercial business | 314,852 | 264,709 | |||||
Total commercial and industrial loans | 735,576 | 656,322 | |||||
Loans held for investment before deferred fees, costs and allowance | 5,045,832 | 4,529,627 | |||||
Net deferred loan fees and costs | 20,907 | 14,686 | |||||
5,066,739 | 4,544,313 | ||||||
Allowance for loan losses | (40,438 | ) | (37,847 | ) | |||
Total loans held for investment | $ | 5,026,301 | $ | 4,506,466 |
(1) | Includes $4.1 million and $5.5 million at September 30, 2018 and December 31, 2017, 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. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Allowance for credit losses (roll-forward): | |||||||||||||||
Beginning balance | $ | 40,982 | $ | 37,470 | $ | 39,116 | $ | 35,264 | |||||||
Provision for credit losses | 750 | 250 | 2,500 | 750 | |||||||||||
Recoveries (charge-offs), net | 122 | 475 | 238 | 2,181 | |||||||||||
Ending balance | $ | 41,854 | $ | 38,195 | $ | 41,854 | $ | 38,195 |
Three Months Ended September 30, 2018 | |||||||||||||||||||
(in thousands) | Beginning balance | Charge-offs | Recoveries | (Reversal of) Provision | Ending balance | ||||||||||||||
Consumer loans | |||||||||||||||||||
Single family | $ | 8,594 | $ | (43 | ) | $ | 2 | $ | (46 | ) | $ | 8,507 | |||||||
Home equity and other | 7,346 | (107 | ) | 102 | 205 | 7,546 | |||||||||||||
Total consumer loans | 15,940 | (150 | ) | 104 | 159 | 16,053 | |||||||||||||
Commercial real estate loans | |||||||||||||||||||
Non-owner occupied commercial real estate | 4,764 | — | — | 249 | 5,013 | ||||||||||||||
Multifamily | 5,017 | — | — | 608 | 5,625 | ||||||||||||||
Construction/land development | 9,205 | — | 170 | (94 | ) | 9,281 | |||||||||||||
Total commercial real estate loans | 18,986 | — | 170 | 763 | 19,919 | ||||||||||||||
Commercial and industrial loans | |||||||||||||||||||
Owner occupied commercial real estate | 3,032 | — | — | 111 | 3,143 | ||||||||||||||
Commercial business | 3,024 | (10 | ) | 8 | (283 | ) | 2,739 | ||||||||||||
Total commercial and industrial loans | 6,056 | (10 | ) | 8 | (172 | ) | 5,882 | ||||||||||||
Total allowance for credit losses | $ | 40,982 | $ | (160 | ) | $ | 282 | $ | 750 | $ | 41,854 |
Three Months Ended September 30, 2017 | |||||||||||||||||||
(in thousands) | Beginning balance | Charge-offs | Recoveries | (Reversal of) Provision | Ending balance | ||||||||||||||
Consumer loans | |||||||||||||||||||
Single family | $ | 8,288 | $ | — | $ | 2 | $ | 791 | $ | 9,081 | |||||||||
Home equity and other | 6,856 | (72 | ) | 428 | (219 | ) | 6,993 | ||||||||||||
Total consumer loans | 15,144 | (72 | ) | 430 | 572 | 16,074 | |||||||||||||
Commercial real estate loans | |||||||||||||||||||
Non-owner occupied commercial real estate | 4,916 | — | — | 147 | 5,063 | ||||||||||||||
Multifamily | 4,059 | — | — | (3 | ) | 4,056 | |||||||||||||
Construction/land development | 8,226 | — | 172 | (451 | ) | 7,947 | |||||||||||||
Total commercial real estate loans | 17,201 | — | 172 | (307 | ) | 17,066 | |||||||||||||
Commercial and industrial loans | |||||||||||||||||||
Owner occupied commercial real estate | 2,539 | — | — | (101 | ) | 2,438 | |||||||||||||
Commercial business | 2,586 | (201 | ) | 146 | 86 | 2,617 | |||||||||||||
Total commercial and industrial loans | 5,125 | (201 | ) | 146 | (15 | ) | 5,055 | ||||||||||||
Total allowance for credit losses | $ | 37,470 | $ | (273 | ) | $ | 748 | $ | 250 | $ | 38,195 |
Nine Months Ended September 30, 2018 | |||||||||||||||||||
(in thousands) | Beginning balance | Charge-offs | Recoveries | (Reversal of) Provision | Ending balance | ||||||||||||||
Consumer loans | |||||||||||||||||||
Single family | $ | 9,412 | $ | (43 | ) | $ | 284 | $ | (1,146 | ) | $ | 8,507 | |||||||
Home equity and other | 7,081 | (349 | ) | 325 | 489 | 7,546 | |||||||||||||
16,493 | (392 | ) | 609 | (657 | ) | 16,053 | |||||||||||||
Commercial real estate loans | |||||||||||||||||||
Non-owner occupied commercial real estate | 4,755 | — | — | 258 | 5,013 | ||||||||||||||
Multifamily | 3,895 | — | — | 1,730 | 5,625 | ||||||||||||||
Construction/land development | 8,677 | — | 513 | 91 | 9,281 | ||||||||||||||
Total commercial real estate loans | 17,327 | — | 513 | 2,079 | 19,919 | ||||||||||||||
Commercial and industrial loans | |||||||||||||||||||
Owner occupied commercial real estate | 2,960 | — | — | 183 | 3,143 | ||||||||||||||
Commercial business | 2,336 | (663 | ) | 171 | 895 | 2,739 | |||||||||||||
Total commercial and industrial loans | 5,296 | (663 | ) | 171 | 1,078 | 5,882 | |||||||||||||
Total allowance for credit losses | $ | 39,116 | $ | (1,055 | ) | $ | 1,293 | $ | 2,500 | $ | 41,854 |
Nine Months Ended September 30, 2017 | |||||||||||||||||||
(in thousands) | Beginning balance | Charge-offs | Recoveries | (Reversal of) Provision | Ending balance | ||||||||||||||
Consumer loans | |||||||||||||||||||
Single family | $ | 8,196 | $ | (2 | ) | $ | 1,018 | $ | (131 | ) | $ | 9,081 | |||||||
Home equity and other | 6,153 | (583 | ) | 781 | 642 | 6,993 | |||||||||||||
14,349 | (585 | ) | 1,799 | 511 | 16,074 | ||||||||||||||
Commercial real estate loans | |||||||||||||||||||
Non-owner occupied commercial real estate | 4,481 | — | — | 582 | 5,063 | ||||||||||||||
Multifamily | 3,086 | — | — | 970 | 4,056 | ||||||||||||||
Construction/land development | 8,553 | — | 606 | (1,212 | ) | 7,947 | |||||||||||||
Total commercial real estate loans | 16,120 | — | 606 | 340 | 17,066 | ||||||||||||||
Commercial and industrial loans | |||||||||||||||||||
Owner occupied commercial real estate | 2,199 | — | — | 239 | 2,438 | ||||||||||||||
Commercial business | 2,596 | (217 | ) | 578 | (340 | ) | 2,617 | ||||||||||||
4,795 | (217 | ) | 578 | (101 | ) | 5,055 | |||||||||||||
Total allowance for credit losses | $ | 35,264 | $ | (802 | ) | $ | 2,983 | $ | 750 | $ | 38,195 |
At September 30, 2018 | ||||||||||||||||||||||||
(in thousands) | Allowance: collectively evaluated for impairment | Allowance: individually evaluated for impairment | Total | Loans: collectively evaluated for impairment | Loans: individually evaluated for impairment | Total | ||||||||||||||||||
Consumer loans | ||||||||||||||||||||||||
Single family | $ | 8,431 | $ | 76 | $ | 8,507 | $ | 1,348,103 | $ | 65,961 | $ | 1,414,064 | ||||||||||||
Home equity and other | 7,503 | 43 | 7,546 | 539,695 | 1,252 | 540,947 | ||||||||||||||||||
Total consumer loans | 15,934 | 119 | 16,053 | 1,887,798 | 67,213 | 1,955,011 | ||||||||||||||||||
Commercial loans | ||||||||||||||||||||||||
Non-owner occupied commercial real estate | 5,013 | — | 5,013 | 667,429 | — | 667,429 | ||||||||||||||||||
Multifamily | 5,625 | — | 5,625 | 892,610 | 495 | 893,105 | ||||||||||||||||||
Construction/land development | 9,281 | — | 9,281 | 789,932 | 690 | 790,622 | ||||||||||||||||||
Total commercial real estate loans | 19,919 | — | 19,919 | 2,349,971 | 1,185 | 2,351,156 | ||||||||||||||||||
Commercial and industrial loans | ||||||||||||||||||||||||
Owner occupied commercial real estate | 3,143 | — | 3,143 | 419,485 | 1,239 | 420,724 | ||||||||||||||||||
Commercial business | 2,544 | 195 | 2,739 | 313,088 | 1,764 | 314,852 | ||||||||||||||||||
Total commercial and industrial loans | 5,687 | 195 | 5,882 | 732,573 | 3,003 | 735,576 | ||||||||||||||||||
Total loans evaluated for impairment | 41,540 | 314 | 41,854 | 4,970,342 | 71,401 | 5,041,743 | ||||||||||||||||||
Loans held for investment carried at fair value | — | — | — | — | — | 4,089 | (1) | |||||||||||||||||
Total loans held for investment | $ | 41,540 | $ | 314 | $ | 41,854 | $ | 4,970,342 | $ | 71,401 | $ | 5,045,832 |
At December 31, 2017 | ||||||||||||||||||||||||
(in thousands) | Allowance: collectively evaluated for impairment | Allowance: individually evaluated for impairment | Total | Loans: collectively evaluated for impairment | Loans: individually evaluated for impairment | Total | ||||||||||||||||||
Consumer loans | ||||||||||||||||||||||||
Single family | $ | 9,188 | $ | 224 | $ | 9,412 | $ | 1,300,939 | $ | 74,967 | $ | 1,375,906 | ||||||||||||
Home equity and other | 7,036 | 45 | 7,081 | 452,182 | 1,290 | 453,472 | ||||||||||||||||||
Total consumer loans | 16,224 | 269 | 16,493 | 1,753,121 | 76,257 | 1,829,378 | ||||||||||||||||||
Commercial real estate loans | ||||||||||||||||||||||||
Non-owner occupied commercial real estate | 4,755 | — | 4,755 | 622,782 | — | 622,782 | ||||||||||||||||||
Multifamily | 3,895 | — | 3,895 | 727,228 | 809 | 728,037 | ||||||||||||||||||
Construction/land development | 8,677 | — | 8,677 | 687,177 | 454 | 687,631 | ||||||||||||||||||
Total commercial real estate loans | 17,327 | — | 17,327 | 2,037,187 | 1,263 | 2,038,450 | ||||||||||||||||||
Commercial and industrial loans | ||||||||||||||||||||||||
Owner occupied commercial real estate | 2,960 | — | 2,960 | 388,624 | 2,989 | 391,613 | ||||||||||||||||||
Commercial business | 2,316 | 20 | 2,336 | 261,603 | 3,106 | 264,709 | ||||||||||||||||||
Total commercial and industrial loans | 5,276 | 20 | 5,296 | 650,227 | 6,095 | 656,322 | ||||||||||||||||||
Total loans evaluated for impairment | 38,827 | 289 | 39,116 | 4,440,535 | 83,615 | 4,524,150 | ||||||||||||||||||
Loans held for investment carried at fair value | — | — | — | 5,246 | 231 | 5,477 | (1) | |||||||||||||||||
Total loans held for investment | $ | 38,827 | $ | 289 | $ | 39,116 | $ | 4,445,781 | $ | 83,846 | $ | 4,529,627 |
(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. |
At September 30, 2018 | |||||||||||
(in thousands) | Recorded investment (1) | Unpaid principal balance (2) | Related allowance | ||||||||
With no related allowance recorded: | |||||||||||
Consumer loans | |||||||||||
Single family | $ | 64,399 | $ | 65,190 | $ | — | |||||
Home equity and other | 754 | 779 | — | ||||||||
Total consumer loans | 65,153 | 65,969 | — | ||||||||
Commercial real estate loans | |||||||||||
Multifamily | 495 | 495 | — | ||||||||
Construction/land development | 690 | 690 | — | ||||||||
Total commercial real estate loans | 1,185 | 1,185 | — | ||||||||
Commercial and industrial loans | |||||||||||
Owner occupied commercial real estate | 1,239 | 1,555 | — | ||||||||
Commercial business | 1,534 | 2,172 | — | ||||||||
Total commercial and industrial loans | 2,773 | 3,727 | — | ||||||||
$ | 69,111 | $ | 70,881 | $ | — | ||||||
With an allowance recorded: | |||||||||||
Consumer loans | |||||||||||
Single family | $ | 1,562 | $ | 1,630 | $ | 76 | |||||
Home equity and other | 498 | 498 | 43 | ||||||||
Total consumer loans | 2,060 | 2,128 | 119 | ||||||||
Commercial and industrial loans | |||||||||||
Commercial business | 230 | 920 | 195 | ||||||||
Total commercial and industrial loans | 230 | 920 | 195 | ||||||||
$ | 2,290 | $ | 3,048 | $ | 314 | ||||||
Total: | |||||||||||
Consumer loans | |||||||||||
Single family(3) | $ | 65,961 | $ | 66,820 | $ | 76 | |||||
Home equity and other | 1,252 | 1,277 | 43 | ||||||||
Total consumer loans | 67,213 | 68,097 | 119 | ||||||||
Commercial real estate loans | |||||||||||
Multifamily | 495 | 495 | — | ||||||||
Construction/land development | 690 | 690 | — | ||||||||
Total commercial and industrial loans | 1,185 | 1,185 | — | ||||||||
Commercial and industrial loans | |||||||||||
Owner occupied commercial real estate | 1,239 | 1,555 | — | ||||||||
Commercial business | 1,764 | 3,092 | 195 | ||||||||
Total commercial and industrial loans | 3,003 | 4,647 | 195 | ||||||||
Total impaired loans | $ | 71,401 | $ | 73,929 | $ | 314 |
(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 $64.2 million in single family performing trouble debt restructurings ("TDRs"). |
At December 31, 2017 | |||||||||||
(in thousands) | Recorded investment (1) | Unpaid principal balance (2) | Related allowance | ||||||||
With no related allowance recorded: | |||||||||||
Consumer loans | |||||||||||
Single family | $ | 71,264 | (4) | $ | 72,424 | $ | — | ||||
Home equity and other | 782 | 807 | — | ||||||||
Total consumer loans | 72,046 | 73,231 | — | ||||||||
Commercial real estate loans | |||||||||||
Multifamily | 809 | 837 | — | ||||||||
Construction/land development | 454 | 454 | — | ||||||||
Total commercial real estate loans | 1,263 | 1,291 | — | ||||||||
Commercial and industrial loans | |||||||||||
Owner occupied commercial real estate | 2,989 | 3,288 | — | ||||||||
Commercial business | 2,398 | 3,094 | — | ||||||||
Total commercial and industrial loans | 5,387 | 6,382 | — | ||||||||
$ | 78,696 | $ | 80,904 | $ | — | ||||||
With an allowance recorded: | |||||||||||
Consumer loans | |||||||||||
Single family | $ | 3,934 | $ | 4,025 | $ | 224 | |||||
Home equity and other | 508 | 508 | 45 | ||||||||
Total consumer loans | 4,442 | 4,533 | 269 | ||||||||
Commercial and industrial loans | |||||||||||
Commercial business | 708 | 755 | 20 | ||||||||
Total commercial and industrial loans | 708 | 755 | 20 | ||||||||
$ | 5,150 | $ | 5,288 | $ | 289 | ||||||
Total: | |||||||||||
Consumer loans | |||||||||||
Single family(3) | $ | 75,198 | $ | 76,449 | $ | 224 | |||||
Home equity and other | 1,290 | 1,315 | 45 | ||||||||
Total consumer loans | 76,488 | 77,764 | 269 | ||||||||
Commercial real estate loans | |||||||||||
Multifamily | 809 | 837 | — | ||||||||
Construction/land development | 454 | 454 | — | ||||||||
Total commercial real estate loans | 1,263 | 1,291 | — | ||||||||
Commercial and industrial loans | |||||||||||
Owner occupied commercial real estate | 2,989 | 3,288 | — | ||||||||
Commercial business | 3,106 | 3,849 | 20 | ||||||||
Total commercial and industrial loans | 6,095 | 7,137 | 20 | ||||||||
Total impaired loans | $ | 83,846 | $ | 86,192 | $ | 289 |
(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 $69.6 million in single family performing TDRs. |
(4) | Includes $231 thousand of fair value option loans. |
Three Months Ended September 30, 2018 | Three Months Ended September 30, 2017 | ||||||||||||||
(in thousands) | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | |||||||||||
Consumer loans | |||||||||||||||
Single family | $ | 66,754 | $ | 653 | $ | 81,770 | $ | 738 | |||||||
Home equity and other | 1,256 | 20 | 1,501 | 19 | |||||||||||
Total consumer loans | 68,010 | 673 | 83,271 | 757 | |||||||||||
Commercial real estate loans | |||||||||||||||
Non-owner occupied commercial real estate | — | — | 584 | — | |||||||||||
Multifamily | 640 | 6 | 825 | 6 | |||||||||||
Construction/land development | 677 | 6 | 1,015 | 21 | |||||||||||
Total commercial real estate loans | 1,317 | 12 | 2,424 | 27 | |||||||||||
Commercial and industrial loans | |||||||||||||||
Owner occupied commercial real estate | 1,250 | 19 | 2,376 | 33 | |||||||||||
Commercial business | 1,895 | 28 | 2,045 | 30 | |||||||||||
Total commercial and industrial loans | 3,145 | 47 | 4,421 | 63 | |||||||||||
$ | 72,472 | $ | 732 | $ | 90,116 | $ | 847 |
Nine Months Ended September 30, 2018 | Nine Months Ended September 30, 2017 | ||||||||||||||
(in thousands) | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | |||||||||||
Consumer loans | |||||||||||||||
Single family | $ | 69,384 | $ | 1,963 | $ | 81,889 | $ | 2,278 | |||||||
Home equity and other | 1,267 | 58 | 1,475 | 62 | |||||||||||
Total consumer loans | 70,651 | 2,021 | 83,364 | 2,340 | |||||||||||
Commercial real estate loans | |||||||||||||||
Non-owner occupied commercial real estate | — | — | 904 | — | |||||||||||
Multifamily | 722 | 18 | 833 | 18 | |||||||||||
Construction/land development | 600 | 17 | 1,277 | 68 | |||||||||||
Total commercial real estate loans | 1,322 | 35 | 3,014 | 86 | |||||||||||
Commercial and industrial loans | |||||||||||||||
Owner occupied commercial real estate | 2,085 | 74 | 2,542 | 129 | |||||||||||
Commercial business | 2,420 | 94 | 2,579 | 113 | |||||||||||
Total commercial and industrial loans | 4,505 | 168 | 5,121 | 242 | |||||||||||
$ | 76,478 | $ | 2,224 | $ | 91,499 | $ | 2,668 |
• | The borrower may be experiencing declining operating trends, strained cash flows or less-than anticipated financial performance. Cash flow should still be adequate to cover debt service, and the negative trends should be identified as being of a short-term or temporary nature. |
• | The borrower may have experienced a minor, unexpected covenant violation. |
• | The borrower may be experiencing tight working capital or have a cash cushion deficiency. |
• | A loan may also be a watch if financial information is late, there is a documentation deficiency, the borrower has experienced unexpected management turnover, or if it faces industry issues that, when combined with performance factors create uncertainty in its future ability to perform. |
• | Delinquent payments, increasing and material overdraft activity, request for bulge and/or out-of-formula advances may be an indicator of inadequate working capital and may suggest a lower rating. |
• | Failure of the intended repayment source to materialize as expected, or renewal of a loan (other than cash/marketable security secured or lines of credit) without reduction are possible indicators of a watch or worse risk rating. |
• | Performance is poor or significantly less than expected. There may be a temporary debt-servicing deficiency or inadequate working capital as evidenced by a cash cushion deficiency, but not to the extent that repayment is compromised. Material violation of financial covenants is common. |
• | Loans with unresolved material issues that significantly cloud the debt service outlook, even though a debt servicing deficiency does not currently exist. |
• | Modest underperformance or deviation from plan for real estate loans where absorption of rental/sales units is necessary to properly service the debt as structured. Depth of support for interest carry provided by owner/guarantors may mitigate and provide for improved rating. |
• | This rating may be assigned when a loan officer is unable to supervise the credit properly, or when there is an inadequate loan agreement, an inability to control collateral, failure to obtain proper documentation, or any other deviation from prudent lending practices. |
• | Unlike a substandard credit, there should be a reasonable expectation that these temporary issues will be corrected within the normal course of business, rather than through liquidation of assets, and in a reasonable period of time. |
• | Cash flow deficiencies or trends are of a magnitude to jeopardize current and future payments with no immediate relief. A loss is not presently expected, however the outlook is sufficiently uncertain to preclude ruling out the possibility. |
• | The borrower has been unable to adjust to prolonged and unfavorable industry or economic trends. |
• | Material underperformance or deviation from plan for real estate loans where absorption of rental/sales units is necessary to properly service the debt and risk is not mitigated by willingness and capacity of owner/guarantor to support interest payments. |
• | Management character or honesty has become suspect. This includes instances where the borrower has become uncooperative. |
• | Due to unprofitable or unsuccessful business operations, some form of restructuring of the business, including liquidation of assets, has become the primary source of loan repayment. Cash flow has deteriorated, or been diverted, to the point that sale of collateral is now the Company’s primary source of repayment (unless this was the original source of repayment). If the collateral is under the Company’s control and is cash or other liquid, highly marketable securities and properly margined, then a more appropriate rating might be special mention or watch. |
• | The borrower is involved in bankruptcy proceedings where collateral liquidation values are expected to fully protect the Company against loss. |
• | There is material, uncorrectable faulty documentation or materially suspect financial information. |
At September 30, 2018 | |||||||||||||||||||
(in thousands) | Pass | Watch | Special mention | Substandard | Total | ||||||||||||||
Consumer loans | |||||||||||||||||||
Single family | $ | 1,396,810 | (1) | $ | 4,468 | $ | 10,026 | $ | 6,836 | $ | 1,418,140 | ||||||||
Home equity and other | 539,215 | 194 | 391 | 1,160 | 540,960 | ||||||||||||||
1,936,025 | 4,662 | 10,417 | 7,996 | 1,959,100 | |||||||||||||||
Commercial real estate loans | |||||||||||||||||||
Non-owner occupied commercial real estate | 655,767 | 3,152 | 7,700 | 810 | 667,429 | ||||||||||||||
Multifamily | 888,968 | 3,642 | 495 | — | 893,105 | ||||||||||||||
Construction/land development | 762,298 | 16,547 | 6,960 | 4,817 | 790,622 | ||||||||||||||
2,307,033 | 23,341 | 15,155 | 5,627 | 2,351,156 | |||||||||||||||
Commercial and industrial loans | |||||||||||||||||||
Owner occupied commercial real estate | 386,458 | 20,240 | 13,178 | 848 | 420,724 | ||||||||||||||
Commercial business | 282,798 | 14,643 | 16,308 | 1,103 | 314,852 | ||||||||||||||
669,256 | 34,883 | 29,486 | 1,951 | 735,576 | |||||||||||||||
$ | 4,912,314 | $ | 62,886 | $ | 55,058 | $ | 15,574 | $ | 5,045,832 |
(1) | Includes $4.1 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. |
At December 31, 2017 | |||||||||||||||||||
(in thousands) | Pass | Watch | Special mention | Substandard | Total | ||||||||||||||
Consumer loans | |||||||||||||||||||
Single family | $ | 1,355,965 | (1) | $ | 2,982 | $ | 11,328 | $ | 11,091 | $ | 1,381,366 | ||||||||
Home equity and other | 451,194 | 143 | 751 | 1,401 | 453,489 | ||||||||||||||
1,807,159 | 3,125 | 12,079 | 12,492 | 1,834,855 | |||||||||||||||
Commercial real estate loans | |||||||||||||||||||
Non-owner occupied commercial real estate | 613,181 | 8,801 | — | 800 | 622,782 | ||||||||||||||
Multifamily | 693,190 | 34,038 | 507 | 302 | 728,037 | ||||||||||||||
Construction/land development | 664,025 | 22,062 | 1,466 | 78 | 687,631 | ||||||||||||||
1,970,396 | 64,901 | 1,973 | 1,180 | 2,038,450 | |||||||||||||||
Commercial and industrial loans | |||||||||||||||||||
Owner occupied commercial real estate | 361,429 | 20,949 | 6,399 | 2,836 | 391,613 | ||||||||||||||
Commercial business | 220,461 | 39,588 | 1,959 | 2,701 | 264,709 | ||||||||||||||
581,890 | 60,537 | 8,358 | 5,537 | 656,322 | |||||||||||||||
$ | 4,359,445 | $ | 128,563 | $ | 22,410 | $ | 19,209 | $ | 4,529,627 |
(1) | Includes $5.5 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. |
At September 30, 2018 | ||||||||||||||||||||||||||||
(in thousands) | 30-59 days past due | 60-89 days past due | 90 days or more past due | Total past due | Current | Total loans | 90 days or more past due and accruing | |||||||||||||||||||||
Consumer loans | ||||||||||||||||||||||||||||
Single family | $ | 9,155 | $ | 6,919 | $ | 45,997 | $ | 62,071 | $ | 1,356,069 | (1) | $ | 1,418,140 | $ | 39,161 | (2) | ||||||||||||
Home equity and other | 494 | 90 | 1,160 | 1,744 | 539,216 | 540,960 | — | |||||||||||||||||||||
9,649 | 7,009 | 47,157 | 63,815 | 1,895,285 | 1,959,100 | 39,161 | ||||||||||||||||||||||
Commercial real estate loans | ||||||||||||||||||||||||||||
Non-owner occupied commercial real estate | — | — | — | — | 667,429 | 667,429 | — | |||||||||||||||||||||
Multifamily | — | — | — | — | 893,105 | 893,105 | — | |||||||||||||||||||||
Construction/land development | — | — | 74 | 74 | 790,548 | 790,622 | — | |||||||||||||||||||||
— | — | 74 | 74 | 2,351,082 | 2,351,156 | — | ||||||||||||||||||||||
Commercial and industrial loans | ||||||||||||||||||||||||||||
Owner occupied commercial real estate | — | — | 384 | 384 | 420,340 | 420,724 | — | |||||||||||||||||||||
Commercial business | — | — | 1,184 | 1,184 | 313,668 | 314,852 | — | |||||||||||||||||||||
— | — | 1,568 | 1,568 | 734,008 | 735,576 | — | ||||||||||||||||||||||
$ | 9,649 | $ | 7,009 | $ | 48,799 | $ | 65,457 | $ | 4,980,375 | $ | 5,045,832 | $ | 39,161 |
At December 31, 2017 | ||||||||||||||||||||||||||||
(in thousands) | 30-59 days past due | 60-89 days past due | 90 days or more past due | Total past due | Current | Total loans | 90 days or more past due and accruing | |||||||||||||||||||||
Consumer loans | ||||||||||||||||||||||||||||
Single family | $ | 10,493 | $ | 4,437 | $ | 48,262 | $ | 63,192 | $ | 1,318,174 | (1) | $ | 1,381,366 | $ | 37,171 | (2) | ||||||||||||
Home equity and other | 750 | 20 | 1,404 | 2,174 | 451,315 | 453,489 | — | |||||||||||||||||||||
11,243 | 4,457 | 49,666 | 65,366 | 1,769,489 | 1,834,855 | 37,171 | ||||||||||||||||||||||
Commercial real estate loans | ||||||||||||||||||||||||||||
Non-owner occupied commercial real estate | — | — | — | — | 622,782 | 622,782 | — | |||||||||||||||||||||
Multifamily | — | — | 302 | 302 | 727,735 | 728,037 | — | |||||||||||||||||||||
Construction/land development | 641 | — | 78 | 719 | 686,912 | 687,631 | — | |||||||||||||||||||||
641 | — | 380 | 1,021 | 2,037,429 | 2,038,450 | — | ||||||||||||||||||||||
Commercial and industrial loans | ||||||||||||||||||||||||||||
Owner occupied commercial real estate | — | — | 640 | 640 | 390,973 | 391,613 | — | |||||||||||||||||||||
Commercial business | 377 | — | 1,526 | 1,903 | 262,806 | 264,709 | — | |||||||||||||||||||||
377 | — | 2,166 | 2,543 | 653,779 | 656,322 | — | ||||||||||||||||||||||
$ | 12,261 | $ | 4,457 | $ | 52,212 | $ | 68,930 | $ | 4,460,697 | $ | 4,529,627 | $ | 37,171 |
(1) | Includes $4.1 million and $5.5 million of loans at September 30, 2018 and December 31, 2017, respectively, where a fair value option election was made at the time of origination and, therefore, are carried at fair value with changes recognized in our 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. |
At September 30, 2018 | |||||||||||
(in thousands) | Accrual | Nonaccrual | Total | ||||||||
Consumer loans | |||||||||||
Single family | $ | 1,411,304 | (1) | $ | 6,836 | $ | 1,418,140 | ||||
Home equity and other | 539,800 | 1,160 | 540,960 | ||||||||
1,951,104 | 7,996 | 1,959,100 | |||||||||
Commercial real estate loans | |||||||||||
Non-owner occupied commercial real estate | 667,429 | — | 667,429 | ||||||||
Multifamily | 893,105 | — | 893,105 | ||||||||
Construction/land development | 790,548 | 74 | 790,622 | ||||||||
2,351,082 | 74 | 2,351,156 | |||||||||
Commercial and industrial loans | |||||||||||
Owner occupied commercial real estate | 420,340 | 384 | 420,724 | ||||||||
Commercial business | 313,668 | 1,184 | 314,852 | ||||||||
734,008 | 1,568 | 735,576 | |||||||||
$ | 5,036,194 | $ | 9,638 | $ | 5,045,832 |
At December 31, 2017 | |||||||||||
(in thousands) | Accrual | Nonaccrual | Total | ||||||||
Consumer loans | |||||||||||
Single family | $ | 1,370,275 | (1) | $ | 11,091 | $ | 1,381,366 | ||||
Home equity and other | 452,085 | 1,404 | 453,489 | ||||||||
1,822,360 | 12,495 | 1,834,855 | |||||||||
Commercial real estate loans | |||||||||||
Non-owner occupied commercial real estate | 622,782 | — | 622,782 | ||||||||
Multifamily | 727,735 | 302 | 728,037 | ||||||||
Construction/land development | 687,553 | 78 | 687,631 | ||||||||
2,038,070 | 380 | 2,038,450 | |||||||||
Commercial and industrial loans | |||||||||||
Owner occupied commercial real estate | 390,973 | 640 | 391,613 | ||||||||
Commercial business | 263,183 | 1,526 | 264,709 | ||||||||
654,156 | 2,166 | 656,322 | |||||||||
$ | 4,514,586 | $ | 15,041 | $ | 4,529,627 |
(1) | Includes $4.1 million and $5.5 million of loans at September 30, 2018 and December 31, 2017, 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. |
Three Months Ended September 30, 2018 | ||||||||||||
(dollars in thousands) | Concession type | Number of loan modifications | Recorded investment | Related charge- offs | ||||||||
Consumer loans | ||||||||||||
Single family | ||||||||||||
Interest rate reduction | 2 | $ | 374 | $ | — | |||||||
Payment restructure | 42 | 8,854 | — | |||||||||
Total consumer | ||||||||||||
Interest rate reduction | 2 | 374 | — | |||||||||
Payment restructure | 42 | 8,854 | — | |||||||||
44 | 9,228 | — | ||||||||||
Total loans | ||||||||||||
Interest rate reduction | 2 | 374 | — | |||||||||
Payment restructure | 42 | 8,854 | — | |||||||||
44 | $ | 9,228 | $ | — |
Three Months Ended September 30, 2017 | ||||||||||||
(dollars in thousands) | Concession type | Number of loan modifications | Recorded investment | Related charge- offs | ||||||||
Consumer loans | ||||||||||||
Single family | ||||||||||||
Interest rate reduction | 9 | $ | 1,914 | $ | — | |||||||
Payment restructure | 29 | 5,911 | — | |||||||||
Total consumer | ||||||||||||
Interest rate reduction | 9 | 1,914 | — | |||||||||
Payment restructure | 29 | 5,911 | — | |||||||||
38 | 7,825 | — | ||||||||||
Total loans | ||||||||||||
Interest rate reduction | 9 | 1,914 | — | |||||||||
Payment restructure | 29 | 5,911 | — | |||||||||
38 | $ | 7,825 | $ | — |
Nine Months Ended September 30, 2018 | ||||||||||||
(dollars in thousands) | Concession type | Number of loan modifications | Recorded investment | Related charge- offs | ||||||||
Consumer loans | ||||||||||||
Single family | ||||||||||||
Interest rate reduction | 15 | $ | 2,836 | $ | — | |||||||
Payment restructure | 106 | 22,784 | — | |||||||||
Total consumer | ||||||||||||
Interest rate reduction | 15 | 2,836 | — | |||||||||
Payment restructure | 106 | 22,784 | — | |||||||||
121 | 25,620 | — | ||||||||||
Commercial real estate loans | ||||||||||||
Commercial and industrial loans | ||||||||||||
Commercial business | ||||||||||||
Payment restructure | 2 | 267 | — | |||||||||
Total commercial and industrial | ||||||||||||
Payment restructure | 2 | 267 | — | |||||||||
2 | 267 | — | ||||||||||
Total loans | ||||||||||||
Interest rate reduction | 15 | 2,836 | — | |||||||||
Payment restructure | 108 | 23,051 | — | |||||||||
123 | $ | 25,887 | $ | — |
Nine Months Ended September 30, 2017 | ||||||||||||
(dollars in thousands) | Concession type | Number of loan modifications | Recorded investment | Related charge- offs | ||||||||
Consumer loans | ||||||||||||
Single family | ||||||||||||
Interest rate reduction | 48 | $ | 8,834 | $ | — | |||||||
Payment restructure | 71 | 14,803 | — | |||||||||
Home equity and other | ||||||||||||
Payment restructure | 2 | 351 | — | |||||||||
Total consumer | ||||||||||||
Interest rate reduction | 48 | 8,834 | — | |||||||||
Payment restructure | 73 | 15,154 | — | |||||||||
121 | 23,988 | — | ||||||||||
Commercial real estate loans | ||||||||||||
Construction/land development | ||||||||||||
Payment restructure | 1 | 436 | — | |||||||||
Total commercial real estate | 1 | 436 | — | |||||||||
Commercial and industrial loans | ||||||||||||
Commercial business | ||||||||||||
Payment restructure | 1 | 18 | — | |||||||||
Total commercial and industrial | ||||||||||||
Payment restructure | 1 | 18 | — | |||||||||
Total loans | ||||||||||||
Interest rate reduction | 48 | 8,834 | — | |||||||||
Payment restructure | 75 | 15,608 | — | |||||||||
123 | $ | 24,442 | $ | — |
Three Months Ended September 30, | |||||||||||||
2018 | 2017 | ||||||||||||
(dollars in thousands) | Number of loan relationships that re-defaulted | Recorded investment | Number of loan relationships that re-defaulted | Recorded investment | |||||||||
Consumer loans | |||||||||||||
Single family | 6 | $ | 988 | 8 | $ | 1,743 |
Nine Months Ended September 30, | |||||||||||||
2018 | 2017 | ||||||||||||
(dollars in thousands) | Number of loan relationships that re-defaulted | Recorded investment | Number of loan relationships that re-defaulted | Recorded investment | |||||||||
Consumer loans | |||||||||||||
Single family | 18 | $ | 3,267 | 16 | $ | 3,395 |
(in thousands) | At September 30, 2018 | At December 31, 2017 | |||||
Noninterest-bearing accounts | $ | 983,761 | $ | 980,902 | |||
NOW accounts, 0.00% to 1.00% at September 30, 2018 and 0.00% to 1.98% at December 31, 2017 | 442,158 | 461,349 | |||||
Statement savings accounts, due on demand, 0.05% to 1.13% at September 30, 2018 and December 31, 2017 | 272,949 | 293,858 | |||||
Money market accounts, due on demand, 0.00% to 2.18% at September 30, 2018 and 0.00% to 1.80% at December 31, 2017 | 1,907,782 | 1,834,154 | |||||
Certificates of deposit, 0.10% to 3.80% at September 30, 2018 and 0.05% to 3.80% at December 31, 2017 | 1,548,392 | 1,190,689 | |||||
$ | 5,155,042 | $ | 4,760,952 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
NOW accounts | $ | 416 | $ | 500 | $ | 1,286 | $ | 1,480 | |||||||
Statement savings accounts | 197 | 256 | 643 | 761 | |||||||||||
Money market accounts | 4,481 | 2,089 | 12,003 | 6,254 | |||||||||||
Certificates of deposit | 6,192 | 3,175 | 14,704 | 9,015 | |||||||||||
$ | 11,286 | $ | 6,020 | $ | 28,636 | $ | 17,510 |
(in thousands) | At September 30, 2018 | ||
Within one year | $ | 1,226,457 | |
One to two years | 256,183 | ||
Two to three years | 35,158 | ||
Three to four years | 13,164 | ||
Four to five years | 17,184 | ||
Thereafter | 246 | ||
$ | 1,548,392 |
At September 30, 2018 | |||||||||||
Notional amount | Fair value derivatives | ||||||||||
(in thousands) | Asset | Liability | |||||||||
Forward sale commitments | $ | 1,227,392 | $ | 3,335 | $ | (1,238 | ) | ||||
Interest rate swaptions | 30,000 | 253 | — | ||||||||
Interest rate lock and purchase loan commitments | 434,127 | 10,482 | (85 | ) | |||||||
Interest rate swaps | 1,261,050 | 9,912 | (39,342 | ) | |||||||
Eurodollar futures | 4,695,000 | — | (167 | ) | |||||||
Total derivatives before netting | $ | 7,647,569 | 23,982 | (40,832 | ) | ||||||
Netting adjustment/Cash collateral (1) | (8,699 | ) | 36,339 | ||||||||
Carrying value on consolidated statements of financial condition | $ | 15,283 | $ | (4,493 | ) |
(1) | Includes cash collateral of $27.6 million at September 30, 2018 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. |
At December 31, 2017 | |||||||||||
Notional amount | Fair value derivatives | ||||||||||
(in thousands) | Asset | Liability | |||||||||
Forward sale commitments | $ | 1,687,658 | $ | 1,311 | $ | (1,445 | ) | ||||
Interest rate swaptions | 120,000 | — | — | ||||||||
Interest rate lock and purchase loan commitments | 472,733 | 12,950 | (25 | ) | |||||||
Interest rate swaps | 1,869,000 | 12,171 | (23,654 | ) | |||||||
Eurodollar futures | 3,287,000 | — | (101 | ) | |||||||
Total derivatives before netting | $ | 7,436,391 | 26,432 | (25,225 | ) | ||||||
Netting adjustment/Cash collateral (1) | (6,646 | ) | 23,505 | ||||||||
Carrying value on consolidated statements of financial condition | $ | 19,786 | $ | (1,720 | ) |
(1) | Includes cash collateral of $16.9 million at December 31, 2017 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. |
At September 30, 2018 | |||||||||||||||||||
(in thousands) | Gross fair value | Netting adjustments/ Cash collateral(1) | Carrying value | Securities not offset in consolidated balance sheet (disclosure-only netting) | Net amount | ||||||||||||||
Derivative assets | $ | 23,982 | $ | (8,699 | ) | $ | 15,283 | $ | — | $ | 15,283 | ||||||||
Derivative liabilities | (40,832 | ) | 36,339 | (4,493 | ) | 4,471 | (22 | ) |
At December 31, 2017 | |||||||||||||||||||
(in thousands) | Gross fair value | Netting adjustments/ Cash collateral(1) | Carrying value | Securities not offset in consolidated balance sheet (disclosure-only netting) | Net amount | ||||||||||||||
Derivative assets | $ | 26,432 | $ | (6,646 | ) | $ | 19,786 | $ | — | $ | 19,786 | ||||||||
Derivative liabilities | (25,225 | ) | 23,505 | (1,720 | ) | 1,213 | (507 | ) |
(1) | Includes cash collateral of $27.6 million and $16.9 million at September 30, 2018 and December 31, 2017, respectively, as part of the netting adjustments which primarily consists of collateral transferred by the Company at the initiation of derivative transactions and held by the counterparty as security. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Recognized in noninterest income: | |||||||||||||||
Net (loss) gain on loan origination and sale activities (1) | $ | (4,760 | ) | $ | (9,180 | ) | $ | 12,322 | $ | (20,788 | ) | ||||
Loan servicing (loss) income (2) | (9,446 | ) | 2,807 | (52,611 | ) | 12,060 | |||||||||
$ | (14,206 | ) | $ | (6,373 | ) | $ | (40,289 | ) | $ | (8,728 | ) |
(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, Eurodollar futures and forward contracts used as an economic hedge of single family MSRs. |
(in thousands) | At September 30, 2018 | At December 31, 2017 | |||||
Single family | $ | 350,949 | $ | 577,313 | |||
Multifamily DUS® (1) | 5,176 | 29,651 | |||||
Small Business Administration ("SBA") | 9,618 | 3,938 | |||||
CRE-Non-DUS® (1)(2) | 38,697 | — | |||||
Total loans held for sale | $ | 404,440 | $ | 610,902 |
(1) | Fannie Mae Multifamily Delegated Underwriting and Servicing Program (“DUS"®) is a registered trademark of Fannie Mae. |
(2) | Loans originated as Held for Investment. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||||
Single family | $ | 1,724,697 | (1 | ) | $ | 1,956,129 | $ | 5,043,769 | (1 | ) | $ | 5,504,366 | |||||
Multifamily DUS® (2) | 93,281 | 102,075 | 180,878 | 214,236 | |||||||||||||
SBA | 3,025 | 11,318 | 10,339 | 22,485 | |||||||||||||
CRE-Non-DUS® (2) | 61,562 | 114,175 | 176,212 | 140,889 | |||||||||||||
Total loans sold | $ | 1,882,565 | $ | 2,183,697 | $ | 5,411,198 | $ | 5,881,976 |
(1) | Includes proceeds of $34.5 million and $173.1 million in single family loans originated as held for investment during the three and nine months ended September 30, 2018. |
(2) | Fannie Mae Multifamily DUS® is a registered trademark of Fannie Mae. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Single family: | |||||||||||||||
Servicing value and secondary market gains(1) | 34,945 | $ | 56,657 | 124,554 | $ | 164,548 | |||||||||
Loan origination and funding fees | 5,433 | 7,356 | 17,036 | 19,960 | |||||||||||
Total single family | 40,378 | 64,013 | 141,590 | 184,508 | |||||||||||
Multifamily DUS® | 3,104 | 4,152 | 5,863 | 8,785 | |||||||||||
SBA | 99 | 1,056 | 696 | 1,974 | |||||||||||
CRE-Non-DUS® (2) | 990 | 1,789 | 1,790 | 1,932 | |||||||||||
Total gain on loan origination and sale activities | $ | 44,571 | $ | 71,010 | $ | 149,939 | $ | 197,199 |
(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. |
(2) | Loan originated as held for investment. |
(in thousands) | At September 30, 2018 | At December 31, 2017 | |||||
Single family | |||||||
U.S. government and agency | $ | 19,211,119 | $ | 22,123,710 | |||
Other | 593,144 | 507,437 | |||||
19,804,263 | 22,631,147 | ||||||
Commercial | |||||||
Multifamily DUS® | 1,442,727 | 1,311,399 | |||||
Other | 83,308 | 79,797 | |||||
1,526,035 | 1,391,196 | ||||||
Total loans serviced for others | $ | 21,330,298 | $ | 24,022,343 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Balance, beginning of period | $ | 2,504 | $ | 2,990 | $ | 3,015 | $ | 3,382 | |||||||
Additions (reductions), net of adjustments(1) | 643 | (338 | ) | 1,248 | (370 | ) | |||||||||
Realized losses (2) | (273 | ) | (148 | ) | (1,389 | ) | (508 | ) | |||||||
Balance, end of period | $ | 2,874 | $ | 2,504 | $ | 2,874 | $ | 2,504 |
(1) | Includes additions for new loan sales and changes in estimated probable future repurchase losses on previously sold loans. |
(2) | Includes principal losses and accrued interest on repurchased loans, “make-whole” settlements, settlements with claimants and certain related expense. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Servicing income, net: | |||||||||||||||
Servicing fees and other | $ | 15,046 | $ | 16,480 | $ | 51,882 | $ | 48,636 | |||||||
Changes in fair value of single family MSRs due to modeled amortization (1) | (8,300 | ) | (9,167 | ) | (26,570 | ) | (26,596 | ) | |||||||
Amortization of multifamily and SBA MSRs | (1,034 | ) | (811 | ) | (3,147 | ) | (2,503 | ) | |||||||
5,712 | 6,502 | 22,165 | 19,537 | ||||||||||||
Risk management, single family MSRs: | |||||||||||||||
Changes in fair value of MSRs due to changes in market inputs and/or model updates (2) | 11,562 | (1,027 | ) | 52,880 | (3) | (5,312 | ) | ||||||||
Net (loss) gain from derivatives economically hedging MSR | (9,446 | ) | 2,807 | (52,611 | ) | 12,060 | |||||||||
2,116 | 1,780 | 269 | 6,748 | ||||||||||||
Loan servicing income | $ | 7,828 | $ | 8,282 | $ | 22,434 | $ | 26,285 |
(1) | Represents changes due to collection/realization of expected cash flows and curtailments. |
(2) | Principally reflects changes in market inputs, which include current market interest rates and prepayment model updates, both of which affect future prepayment speed and cash flow projections. |
(3) | Includes pre-tax income of $573 thousand, net of brokerage fees and prepayment reserves, resulting from the sale of single family MSRs during the quarter ended June 30, 2018. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
(rates per annum) (1) | 2018 | 2017 | 2018 | 2017 | |||||||
Constant prepayment rate ("CPR") (2) | 17.19 | % | 13.24 | % | 15.54 | % | 13.34 | % | |||
Discount rate (3) | 10.29 | % | 10.28 | % | 10.27 | % | 10.29 | % |
(1) | Weighted average rates for sales during the period for sales of loans with similar characteristics. |
(2) | Represents the expected lifetime average. |
(3) | Discount rate is a rate based on market observations. |
(dollars in thousands) | At September 30, 2018 | ||
Fair value of single family MSR | $ | 263,622 | |
Expected weighted-average life (in years) | 6.81 | ||
Constant prepayment rate (1) | 10.71 | % | |
Impact on fair value of 25 basis points adverse change in interest rates | $ | (12,801 | ) |
Impact on fair value of 50 basis points adverse change in interest rates | $ | (27,461 | ) |
Discount rate | 10.40 | % | |
Impact on fair value of 100 basis points increase | $ | (9,811 | ) |
Impact on fair value of 200 basis points increase | $ | (18,936 | ) |
(1) | Represents the expected lifetime average. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Beginning balance | $ | 245,744 | $ | 236,621 | $ | 258,560 | $ | 226,113 | ||||||||
Additions and amortization: | ||||||||||||||||
Originations | 14,525 | 17,679 | 45,551 | 49,345 | ||||||||||||
Purchases | — | — | — | 565 | ||||||||||||
Sale of single family MSRs | (12 | ) | — | (66,901 | ) | — | ||||||||||
Changes due to modeled amortization(1) | (8,300 | ) | (9,167 | ) | (26,570 | ) | (26,596 | ) | ||||||||
Net additions and amortization | 6,213 | 8,512 | (47,920 | ) | 23,314 | |||||||||||
Changes in fair value of MSRs due to changes in market inputs and/or model updates (2) | 11,665 | (1,027 | ) | 52,982 | (3 | ) | (5,321 | ) | ||||||||
Ending balance | $ | 263,622 | $ | 244,106 | $ | 263,622 | $ | 244,106 |
(1) | Represents changes due to collection/realization of expected cash flows and curtailments. |
(2) | Principally reflects changes in market inputs, which include current market interest rates and prepayment model updates, both of which affect future prepayment speed and cash flow projections. |
(3) | Includes pre-tax income of $573 thousand, net of brokerage fees and prepayment reserves, resulting from the sale of single family MSRs during the second quarter of 2018. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Beginning balance | $ | 26,460 | $ | 21,600 | $ | 26,093 | $ | 19,747 | |||||||
Origination | 2,657 | 3,177 | 5,000 | 6,722 | |||||||||||
Amortization | (981 | ) | (811 | ) | (2,957 | ) | (2,503 | ) | |||||||
Ending balance | $ | 28,136 | $ | 23,966 | $ | 28,136 | $ | 23,966 |
(in thousands) | At September 30, 2018 | ||
Remainder of 2018 | $ | 978 | |
2019 | 3,861 | ||
2020 | 3,792 | ||
2021 | 3,592 | ||
2022 | 3,282 | ||
2023 and thereafter | 12,631 | ||
Carrying value of multifamily MSR | $ | 28,136 |
Asset/Liability class | Valuation methodology, inputs and assumptions | Classification | ||
Cash and cash equivalents | Carrying value is a reasonable estimate of fair value based on the short-term nature of the instruments. | Estimated fair value classified as Level 1. | ||
Investment securities | ||||
Investment securities available for sale | Observable market prices of identical or similar securities are used where available. If market prices are not readily available, value is based on discounted cash flows using the following significant inputs: • Expected prepayment speeds • Estimated credit losses • Market liquidity adjustments | Level 2 recurring fair value measurement. | ||
Investment securities held to maturity | Observable market prices of identical or similar securities are used where available. If market prices are not readily available, value is based on discounted cash flows using the following significant inputs: • Expected prepayment speeds • Estimated credit losses • Market liquidity adjustments | Carried at amortized cost. Estimated fair value classified as Level 2. | ||
Loans held for sale | ||||
Single family loans, excluding loans transferred from held for investment | Fair value is based on observable market data, including: • Quoted market prices, where available • Dealer quotes for similar loans • Forward sale commitments | Level 2 recurring fair value measurement. | ||
When not derived from observable market inputs, fair value is based on discounted cash flows, which considers the following inputs: • Current lending rates for new loans • Expected prepayment speeds • Estimated credit losses • Market liquidity adjustments | Estimated fair value classified as Level 3. | |||
Loans originated as held for investment and transferred to held for sale | Fair value is based on discounted cash flows, which considers the following inputs: • Current lending rates for new loans • Expected prepayment speeds • Estimated credit losses • Market liquidity adjustments | Carried at lower of amortized cost or fair value. Estimated fair value classified as Level 3. | ||
Multifamily loans (DUS®) and other | The sale price is set at the time the loan commitment is made, and as such, subsequent changes in market conditions have a very limited effect, if any, on the value of these loans carried on the consolidated statements of financial condition, which are typically sold within 30 days of origination. | Carried at lower of amortized cost or fair value. Estimated fair value classified as Level 2. |
Asset/Liability class | Valuation methodology, inputs and assumptions | Classification | ||
Loans held for investment | ||||
Loans held for investment, excluding collateral dependent loans and loans transferred from held for sale | Fair value is based on discounted cash flows, which considers the following inputs: • Exit price • Expected prepayment speeds • Estimated credit losses • Market liquidity adjustments | For the carrying value of loans see Note 1–Summary of Significant Accounting Policies of the 2017 Annual Report on Form 10-K. Estimated fair value classified as Level 3. | ||
Loans held for investment, collateral dependent | Fair value is based on appraised value of collateral, which considers sales comparison and income approach methodologies. Adjustments are made for various factors, which may include: • Adjustments for variations in specific property qualities such as location, physical dissimilarities, market conditions at the time of sale, income producing characteristics and other factors • Adjustments to obtain “upon completion” and “upon stabilization” values (e.g., property hold discounts where the highest and best use would require development of a property over time) • Bulk discounts applied for sales costs, holding costs and profit for tract development and certain other properties | Carried at lower of amortized cost or fair value of collateral, less the estimated cost to sell. Classified as a Level 3 nonrecurring fair value measurement in periods where carrying value is adjusted to reflect the fair value of collateral. | ||
Loans held for investment transferred from loans held for sale | Fair value is based on discounted cash flows, which considers the following inputs: • Exit price • Expected prepayment speeds • Estimated credit losses • Market liquidity adjustments | Level 3 recurring fair value measurement. | ||
Mortgage servicing rights | ||||
Single family MSRs | For information on how the Company measures the fair value of its single family MSRs, including key economic assumptions and the sensitivity of fair value to changes in those assumptions, see Note 6, Mortgage Banking Operations. | Level 3 recurring fair value measurement. | ||
Multifamily and SBA MSRs | Fair value is based on discounted estimated future servicing fees and other revenue, less estimated costs to service the loans. | Carried at lower of amortized cost or fair value. Estimated fair value classified as Level 3. | ||
Derivatives | ||||
Eurodollar futures | Fair value is based on closing exchange prices. | Level 1 recurring fair value measurement. | ||
Interest rate swaps Interest rate swaptions Forward sale commitments | Fair value is based on quoted prices for identical or similar instruments, when available. When quoted prices are not available, fair value is based on internally developed modeling techniques, which require the use of multiple observable market inputs including: • Forward interest rates • Interest rate volatilities | Level 2 recurring fair value measurement. |
Asset/Liability class | Valuation methodology, inputs and assumptions | Classification | ||
Interest rate lock and purchase loan commitments | The fair value considers several factors including: • Fair value of the underlying loan based on quoted prices in the secondary market, when available. • Value of servicing • Fall-out factor | Level 3 recurring fair value measurement. | ||
Other real estate owned (“OREO”) | Fair value is based on appraised value of collateral, less the estimated cost to sell. See discussion of "loans held for investment, collateral dependent" above for further information on appraisals. | Carried at lower of amortized cost or fair value of collateral (Level 3), less the estimated cost to sell. | ||
Federal Home Loan Bank stock | Carrying value approximates fair value as FHLB stock can only be purchased or redeemed at par value. | Carried at par value. Estimated fair value classified as Level 2. | ||
Deposits | ||||
Time deposits | Fair value is estimated using discounted cash flows based on market rates currently offered for deposits of similar remaining time to maturity. | Carried at historical cost. Estimated fair value classified as Level 2. | ||
Federal Home Loan Bank advances | Fair value is estimated using discounted cash flows based on rates currently available for advances with similar terms and remaining time to maturity. | Carried at historical cost. Estimated fair value classified as Level 2. | ||
Federal funds purchased and securities sold under agreements to repurchase | Carrying value is a reasonable estimate of fair value based on the short-term nature of the instruments. | Estimated fair value classified as Level 1. | ||
Other borrowings (Line of Credit) | Carrying value is a reasonable estimate of fair value based on the short-term nature of the instruments. | Estimated fair value classified as Level 1. | ||
Long-term debt | Fair value is estimated using discounted cash flows based on current lending rates for similar long-term debt instruments with similar terms and remaining time to maturity. | Carried at historical cost. Estimated fair value classified as Level 2. |
(in thousands) | Fair Value at September 30, 2018 | Level 1 | Level 2 | Level 3 | |||||||||||
Assets: | |||||||||||||||
Investment securities available for sale | |||||||||||||||
Mortgage backed securities: | |||||||||||||||
Residential | $ | 110,294 | $ | — | $ | 110,294 | $ | — | |||||||
Commercial | 34,299 | — | 34,299 | — | |||||||||||
Municipal bonds | 372,582 | — | 372,582 | — | |||||||||||
Collateralized mortgage obligations: | |||||||||||||||
Residential | 159,295 | — | 159,295 | — | |||||||||||
Commercial | 113,385 | — | 113,385 | — | |||||||||||
Corporate debt securities | 21,259 | — | 21,259 | — | |||||||||||
U.S. Treasury securities | 10,670 | — | 10,670 | — | |||||||||||
Agency debentures | 9,317 | — | 9,317 | — | |||||||||||
Single family mortgage servicing rights | 263,622 | — | — | $ | 263,622 | ||||||||||
Single family loans held for sale | 350,948 | — | 349,155 | 1,793 | |||||||||||
Single family loans held for investment | 4,089 | — | — | 4,089 | |||||||||||
Derivatives | |||||||||||||||
Forward sale commitments | 3,335 | — | 3,335 | — | |||||||||||
Interest rate swaptions | 253 | — | 253 | — | |||||||||||
Interest rate lock and purchase loan commitments | 10,482 | — | — | 10,482 | |||||||||||
Interest rate swaps | 9,912 | — | 9,912 | — | |||||||||||
Total assets | $ | 1,473,742 | $ | — | $ | 1,193,756 | $ | 279,986 | |||||||
Liabilities: | |||||||||||||||
Derivatives | |||||||||||||||
Eurodollar futures | $ | 167 | $ | 167 | $ | — | $ | — | |||||||
Forward sale commitments | 1,238 | $ | — | $ | 1,238 | $ | — | ||||||||
Interest rate lock and purchase loan commitments | 85 | — | — | 85 | |||||||||||
Interest rate swaps | 39,342 | — | 39,342 | — | |||||||||||
Total liabilities | $ | 40,832 | $ | 167 | $ | 40,580 | $ | 85 |
(in thousands) | Fair Value at December 31, 2017 | Level 1 | Level 2 | Level 3 | |||||||||||
Assets: | |||||||||||||||
Investment securities available for sale | |||||||||||||||
Mortgage backed securities: | |||||||||||||||
Residential | $ | 130,090 | $ | — | $ | 130,090 | $ | — | |||||||
Commercial | 23,694 | — | 23,694 | — | |||||||||||
Municipal bonds | 388,452 | — | 388,452 | — | |||||||||||
Collateralized mortgage obligations: | |||||||||||||||
Residential | 160,424 | — | 160,424 | — | |||||||||||
Commercial | 98,569 | — | 98,569 | — | |||||||||||
Corporate debt securities | 24,737 | — | 24,737 | — | |||||||||||
U.S. Treasury securities | 10,652 | — | 10,652 | — | |||||||||||
Agency debentures | 9,650 | — | 9,650 | — | |||||||||||
Single family mortgage servicing rights | 258,560 | — | — | 258,560 | |||||||||||
Single family loans held for sale | 577,313 | — | 575,977 | 1,336 | |||||||||||
Single family loans held for investment | 5,477 | — | — | 5,477 | |||||||||||
Derivatives | |||||||||||||||
Forward sale commitments | 1,311 | — | 1,311 | — | |||||||||||
Interest rate lock and purchase loan commitments | 12,950 | — | — | 12,950 | |||||||||||
Interest rate swaps | 12,172 | — | 12,172 | — | |||||||||||
Total assets | $ | 1,714,051 | $ | — | $ | 1,435,728 | $ | 278,323 | |||||||
Liabilities: | |||||||||||||||
Derivatives | |||||||||||||||
Eurodollar futures | $ | 101 | $ | 101 | $ | — | $ | — | |||||||
Forward sale commitments | 1,445 | — | 1,445 | — | |||||||||||
Interest rate lock and purchase loan commitments | 25 | — | — | 25 | |||||||||||
Interest rate swaps | 23,654 | — | 23,654 | — | |||||||||||
Total liabilities | $ | 25,225 | $ | 101 | $ | 25,099 | $ | 25 |
(dollars in thousands) | At September 30, 2018 | ||||||||||||
Fair Value | Valuation Technique | Significant Unobservable Input | Low | High | Weighted Average | ||||||||
Loans held for investment, fair value option | $ | 4,089 | Income approach | Implied spread to benchmark interest rate curve | 3.41% | 5.22% | 4.00% |
(dollars in thousands) | At December 31, 2017 | ||||||||||||
Fair Value | Valuation Technique | Significant Unobservable Input | Low | High | Weighted Average | ||||||||
Loans held for investment, fair value option | $ | 5,477 | Income approach | Implied spread to benchmark interest rate curve | 3.61% | 4.96% | 4.10% |
(dollars in thousands) | At September 30, 2018 | ||||||||||||
Fair Value | Valuation Technique | Significant Unobservable Input | Low | High | Weighted Average | ||||||||
Loans held for sale, fair value option | $ | 1,793 | Income approach | Implied spread to benchmark interest rate curve | 4.61% | 5.26% | 4.76% | ||||||
Market price movement from comparable bond | (0.61)% | (0.51)% | (0.56)% |
(dollars in thousands) | At December 31, 2017 | ||||||||||||
Fair Value | Valuation Technique | Significant Unobservable Input | Low | High | Weighted Average | ||||||||
Loans held for sale, fair value option | $ | 1,336 | Income approach | Implied spread to benchmark interest rate curve | 3.93% | 3.93% | 3.93% | ||||||
Market price movement from comparable bond | (0.38)% | (0.10)% | (0.24)% |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Beginning balance, net | $ | 16,866 | $ | 22,283 | $ | 12,925 | $ | 19,219 | |||||||
Total realized/unrealized gains | 26,527 | 36,779 | 77,607 | 106,365 | |||||||||||
Settlements | (32,996 | ) | (38,060 | ) | (80,135 | ) | (104,582 | ) | |||||||
Ending balance, net | $ | 10,397 | $ | 21,002 | $ | 10,397 | $ | 21,002 |
Three Months Ended September 30, 2018 | ||||||||||||||||||||||||
Beginning balance | Additions | Transfers | Payoffs/Sales | Change in mark to market | Ending balance | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Loans held for sale | $ | 1,823 | $ | — | $ | — | $ | — | $ | (30 | ) | $ | 1,793 | |||||||||||
Loans held for investment | 4,178 | — | — | (2 | ) | (86 | ) | 4,090 |
Three Months Ended September 30, 2017 | ||||||||||||||||||||||||
Beginning balance | Additions | Transfers | Payoffs/Sales | Change in mark to market | Ending balance | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Loans held for sale | $ | 29,259 | $ | 93 | $ | (303 | ) | $ | (28,913 | ) | $ | (45 | ) | $ | 91 | |||||||||
Loans held for investment | 5,134 | 127 | 303 | — | (18 | ) | 5,546 |
Nine Months Ended September 30, 2018 | ||||||||||||||||||||||||
Beginning balance | Additions | Transfers | Payoffs/Sales | Change in mark to market | Ending balance | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Loans held for sale | $ | 1,336 | $ | 2,601 | $ | — | $ | (1,998 | ) | $ | (146 | ) | $ | 1,793 | ||||||||||
Loans held for investment | 5,477 | — | — | (1,116 | ) | (271 | ) | 4,090 |
Nine Months Ended September 30, 2017 | ||||||||||||||||||||||||
Beginning balance | Additions | Transfers | Payoffs/Sales | Change in mark to market | Ending balance | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Loans held for sale | $ | 41,810 | $ | 3,088 | $ | 12,797 | $ | (58,396 | ) | $ | 792 | $ | 91 | |||||||||||
Loans held for investment | 17,988 | 127 | (12,272 | ) | (480 | ) | 183 | 5,546 |
(dollars in thousands) | At September 30, 2018 | ||||||||||||
Fair Value | Valuation Technique | Significant Unobservable Input | Low | High | Weighted Average | ||||||||
Interest rate lock and purchase loan commitments, net | $ | 10,397 | Income approach | Fall-out factor | 0.40% | 59.54% | 19.66% | ||||||
Value of servicing | 0.70% | 1.79% | 1.13% |
(dollars in thousands) | At December 31, 2017 | ||||||||||||
Fair Value | Valuation Technique | Significant Unobservable Input | Low | High | Weighted Average | ||||||||
Interest rate lock and purchase loan commitments, net | $ | 12,925 | Income approach | Fall-out factor | 0.00% | 58.38% | 12.05% | ||||||
Value of servicing | 0.69% | 1.73% | 1.09% |
At or for the Three Months Ended September 30, 2018 | |||||||||||||||||||
(in thousands) | Fair Value of Assets Held at September 30, 2018 | Level 1 | Level 2 | Level 3 | Total Gains (Losses) | ||||||||||||||
Loans held for investment(1) | $ | 1,213 | $ | — | $ | — | $ | 1,213 | $ | (68 | ) |
At or for the Three Months Ended September 30, 2017 | |||||||||||||||||||
(in thousands) | Fair Value of Assets Held at September 30, 2017 | Level 1 | Level 2 | Level 3 | Total Gains (Losses) | ||||||||||||||
Loans held for investment(1) | $ | 2,286 | $ | — | $ | — | $ | 2,286 | $ | (467 | ) | ||||||||
Other real estate owned(2) | 5,521 | — | — | 5,521 | (33 | ) | |||||||||||||
Total | $ | 7,807 | $ | — | $ | — | $ | 7,807 | $ | (500 | ) |
At or for the Nine Months Ended September 30, 2018 | |||||||||||||||||||
(in thousands) | Fair Value of Assets Held at September 30, 2018 | Level 1 | Level 2 | Level 3 | Total Gains (Losses) | ||||||||||||||
Loans held for investment(1) | $ | 1,213 | $ | — | $ | — | $ | 1,213 | $ | (212 | ) |
At or for the Nine Months Ended September 30, 2017 | |||||||||||||||||||
(in thousands) | Fair Value of Assets Held at September 30, 2017 | Level 1 | Level 2 | Level 3 | Total Gains (Losses) | ||||||||||||||
Loans held for investment(1) | $ | 2,286 | $ | — | $ | — | $ | 2,286 | $ | (348 | ) | ||||||||
Other real estate owned(2) | 5,521 | — | — | 5,521 | (33 | ) | |||||||||||||
Total | $ | 7,807 | $ | — | $ | — | $ | 7,807 | $ | (381 | ) |
(1) | Represents the carrying value of loans for which adjustments are based on the fair value of the collateral. |
(2) | Represents other real estate owned where an updated fair value of collateral is used to adjust the carrying amount subsequent to the initial classification as other real estate owned. |
At September 30, 2018 | |||||||||||||||||||
(in thousands) | Carrying Value | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||
Assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 59,006 | $ | 59,006 | $ | 59,006 | $ | — | $ | — | |||||||||
Investment securities held to maturity | 72,584 | 71,059 | — | 71,059 | — | ||||||||||||||
Loans held for investment | 5,022,212 | 4,978,257 | — | — | 4,978,257 | ||||||||||||||
Loans held for sale – transferred from held for investment | 38,697 | 38,697 | — | — | 38,697 | ||||||||||||||
Loans held for sale – multifamily and other | 14,746 | 14,746 | — | 14,746 | — | ||||||||||||||
Mortgage servicing rights – multifamily | 28,137 | 30,819 | — | — | 30,819 | ||||||||||||||
Federal Home Loan Bank stock | 40,732 | 40,732 | — | 40,732 | — | ||||||||||||||
Liabilities: | |||||||||||||||||||
Time deposits | $ | 1,547,913 | $ | 1,540,839 | $ | — | $ | 1,540,839 | $ | — | |||||||||
Federal Home Loan Bank advances | 816,591 | 818,273 | — | 818,273 | — | ||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 55,000 | 55,048 | 55,048 | — | — | ||||||||||||||
Long-term debt | 125,415 | 98,050 | — | 98,050 | — |
At December 31, 2017 | |||||||||||||||||||
(in thousands) | Carrying Value | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||
Assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 72,718 | $ | 72,718 | $ | 72,718 | $ | — | $ | — | |||||||||
Investment securities held to maturity | 58,036 | 58,128 | — | 58,128 | — | ||||||||||||||
Loans held for investment | 4,500,989 | 4,497,884 | — | — | 4,497,884 | ||||||||||||||
Loans held for sale – multifamily and other | 33,589 | 33,589 | — | 33,589 | — | ||||||||||||||
Mortgage servicing rights – multifamily | 26,093 | 28,362 | — | — | 28,362 | ||||||||||||||
Federal Home Loan Bank stock | 46,639 | 46,639 | — | 46,639 | — | ||||||||||||||
Liabilities: | |||||||||||||||||||
Time deposits (1) | $ | 1,190,689 | $ | 1,186,126 | $ | — | $ | 1,186,126 | $ | — | |||||||||
Federal Home Loan Bank advances | 979,201 | 981,441 | — | 981,441 | — | ||||||||||||||
Long-term debt | 125,274 | 108,530 | — | 108,530 | — |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands, except share and per share data) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Net income | $ | 11,835 | $ | 13,839 | $ | 24,800 | $ | 34,031 | |||||||
Weighted average shares: | |||||||||||||||
Basic weighted-average number of common shares outstanding | 26,985,425 | 26,883,392 | 26,963,260 | 26,857,006 | |||||||||||
Dilutive effect of outstanding common stock equivalents (1) | 196,263 | 205,648 | 202,412 | 220,026 | |||||||||||
Diluted weighted-average number of common stock outstanding | 27,181,688 | 27,089,040 | 27,165,672 | 27,077,032 | |||||||||||
Earnings per share: | |||||||||||||||
Basic earnings per share | $ | 0.44 | $ | 0.51 | $ | 0.92 | $ | 1.27 | |||||||
Diluted earnings per share | $ | 0.44 | $ | 0.51 | $ | 0.91 | $ | 1.26 |
(1) | Excluded from the computation of diluted earnings per share (due to their antidilutive effect) for the three and nine months ended September 30, 2018 and 2017 were certain stock options and unvested restricted stock issued to key senior management personnel and directors of the Company. The aggregate number of common stock equivalents related to such options and unvested restricted shares, which could potentially be dilutive in future periods, was zero at September 30, 2018 and 912 at September 30, 2017. |
At or for the Three Months Ended September 30, 2018 | |||||||||||
(in thousands) | Mortgage Banking | Commercial and Consumer Banking | Total | ||||||||
Condensed income statement: | |||||||||||
Net interest income (1) | $ | 3,783 | $ | 47,861 | $ | 51,644 | |||||
Provision for credit losses | — | 750 | 750 | ||||||||
Noninterest income | 47,457 | 10,651 | 58,108 | ||||||||
Noninterest expense | 56,782 | 37,813 | 94,595 | ||||||||
(Loss) income before income taxes | (5,542 | ) | 19,949 | 14,407 | |||||||
Income tax (benefit) expense | (810 | ) | 3,382 | 2,572 | |||||||
Net (loss) income | $ | (4,732 | ) | $ | 16,567 | $ | 11,835 | ||||
Total assets | $ | 641,960 | $ | 6,387,122 | $ | 7,029,082 |
At or for the Three Months Ended September 30, 2017 | |||||||||||
(in thousands) | Mortgage Banking | Commercial and Consumer Banking | Total | ||||||||
Condensed income statement: | |||||||||||
Net interest income (1) | $ | 5,526 | $ | 45,314 | $ | 50,840 | |||||
Provision for credit losses | — | 250 | 250 | ||||||||
Noninterest income | 71,922 | 11,962 | 83,884 | ||||||||
Noninterest expense | 77,537 | 37,160 | 114,697 | ||||||||
(Loss) income before income taxes | (89 | ) | 19,866 | 19,777 | |||||||
Income tax expense | 34 | 5,904 | 5,938 | ||||||||
Net (loss) income | $ | (123 | ) | $ | 13,962 | $ | 13,839 | ||||
Total assets | $ | 1,032,510 | $ | 5,763,836 | $ | 6,796,346 |
At or for the Nine Months Ended September 30, 2018 | |||||||||||
(in thousands) | Mortgage Banking | Commercial and Consumer Banking | Total | ||||||||
Condensed income statement: | |||||||||||
Net interest income (1) | $ | 10,053 | $ | 141,054 | $ | 151,107 | |||||
Provision for credit losses | — | 2,500 | 2,500 | ||||||||
Noninterest income | 162,177 | 26,151 | 188,328 | ||||||||
Noninterest expense | 190,560 | 115,369 | 305,929 | ||||||||
(Loss) income before income taxes | (18,330 | ) | 49,336 | 31,006 | |||||||
Income tax (benefit) expense | (4,456 | ) | 10,662 | 6,206 | |||||||
Net (loss) income | $ | (13,874 | ) | $ | 38,674 | $ | 24,800 | ||||
Total assets | $ | 641,960 | $ | 6,387,122 | $ | 7,029,082 |
At or for the Nine Months Ended September 30, 2017 | |||||||||||
(in thousands) | Mortgage Banking | Commercial and Consumer Banking | Total | ||||||||
Condensed income statement: | |||||||||||
Net interest income (1) | $ | 14,693 | $ | 128,666 | $ | 143,359 | |||||
Provision for credit losses | — | 750 | 750 | ||||||||
Noninterest income | 209,690 | 29,663 | 239,353 | ||||||||
Noninterest expense | 222,554 | 110,261 | 332,815 | ||||||||
Income before income taxes | 1,829 | 47,318 | 49,147 | ||||||||
Income tax expense | 498 | 14,618 | 15,116 | ||||||||
Net income | $ | 1,331 | $ | 32,700 | $ | 34,031 | |||||
Total assets | $ | 1,032,510 | $ | 5,763,836 | $ | 6,796,346 |
(1) | Net interest income is the aggregation of interest earned on assets, interest expense charged by treasury to fund the assets, interest paid on liabilities, and interest income provided by treasury for investing the liabilities. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Beginning balance | $ | (19,722 | ) | $ | (5,413 | ) | $ | (7,122 | ) | $ | (10,412 | ) | |||
Other comprehensive (loss) income before reclassifications | (4,399 | ) | 1,236 | (16,811 | ) | 6,597 | |||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | 4 | (215 | ) | (184 | ) | (577 | ) | ||||||||
Net current-period other comprehensive (loss) income | (4,395 | ) | 1,021 | (16,995 | ) | 6,020 | |||||||||
Ending balance | $ | (24,117 | ) | $ | (4,392 | ) | $ | (24,117 | ) | $ | (4,392 | ) |
Affected Line Item in the Consolidated Statements of Operations | Amount Reclassified from Accumulated Other Comprehensive Income (Loss) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
(Loss) gain on sale of investment securities available for sale | $ | (4 | ) | $ | 331 | $ | 234 | $ | 888 | |||||||
Income tax (benefit) expense | — | 116 | 50 | 311 | ||||||||||||
Total, net of tax | $ | (4 | ) | $ | 215 | $ | 184 | $ | 577 |
2018 | 2017 | |||||||||||||||||||||||
At and for the three months ended September 30 | Facilities-related costs | Personnel-related costs | Total | Facilities-related costs | Personnel-related costs | Total | ||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Beginning balance | $ | 4,209 | $ | 439 | $ | 4,648 | $ | — | $ | 71 | $ | 71 | ||||||||||||
Restructuring costs | 456 | 15 | 471 | 3,332 | 545 | 3,877 | ||||||||||||||||||
Costs paid or otherwise settled | (1,409 | ) | (400 | ) | (1,809 | ) | (1,279 | ) | (180 | ) | (1,459 | ) | ||||||||||||
Ending balance | $ | 3,256 | $ | 54 | $ | 3,310 | $ | 2,053 | $ | 436 | $ | 2,489 |
2018 | 2017 | |||||||||||||||||||||||
At and for the nine months ended September 30 | Facilities-related costs | Personnel-related costs | Total | Facilities-related costs | Personnel-related costs | Total | ||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Beginning balance | $ | 1,386 | $ | — | $ | 1,386 | $ | — | $ | — | $ | — | ||||||||||||
Restructuring costs | 6,619 | 454 | 7,073 | 3,332 | 649 | 3,981 | ||||||||||||||||||
Costs paid or otherwise settled | (4,749 | ) | (400 | ) | (5,149 | ) | (1,279 | ) | (213 | ) | (1,492 | ) | ||||||||||||
Ending balance | $ | 3,256 | $ | 54 | $ | 3,310 | $ | 2,053 | $ | 436 | $ | 2,489 |
ITEM 2 | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
At or for the Three Months Ended | At or for the Nine Months Ended | ||||||||||||||||||||||||||
(dollars in thousands, except share data) | Sept. 30, 2018 | June 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sept. 30, 2017 | Sept. 30, 2018 | Sept. 30, 2017 | ||||||||||||||||||||
Income statement data (for the period ended): | |||||||||||||||||||||||||||
Net interest income | $ | 51,644 | $ | 51,003 | $ | 48,460 | $ | 51,079 | $ | 50,840 | $ | 151,107 | $ | 143,359 | |||||||||||||
Provision for credit losses | 750 | 1,000 | 750 | — | 250 | 2,500 | 750 | ||||||||||||||||||||
Noninterest income | 58,108 | 69,389 | 60,831 | 72,801 | 83,884 | 188,328 | 239,353 | ||||||||||||||||||||
Noninterest expense | 94,595 | 110,565 | 100,769 | 106,838 | 114,697 | 305,929 | 332,815 | ||||||||||||||||||||
Income before income taxes | 14,407 | 8,827 | 7,772 | 17,042 | 19,777 | 31,006 | 49,147 | ||||||||||||||||||||
Income tax expense (benefit) | 2,572 | 1,728 | 1,906 | (17,873 | ) | 5,938 | 6,206 | 15,116 | |||||||||||||||||||
Net income | $ | 11,835 | $ | 7,099 | $ | 5,866 | $ | 34,915 | $ | 13,839 | $ | 24,800 | $ | 34,031 | |||||||||||||
Basic income per common share | $ | 0.44 | $ | 0.26 | $ | 0.22 | $ | 1.30 | $ | 0.51 | $ | 0.92 | $ | 1.27 | |||||||||||||
Diluted income per common share | $ | 0.44 | $ | 0.26 | $ | 0.22 | $ | 1.29 | $ | 0.51 | $ | 0.91 | $ | 1.26 | |||||||||||||
Common shares outstanding | 26,989,742 | 26,978,229 | 26,972,074 | 26,888,288 | 26,884,402 | 26,989,742 | 26,884,402 | ||||||||||||||||||||
Weighted average number of shares outstanding: | |||||||||||||||||||||||||||
Basic | 26,985,425 | 26,976,892 | 26,927,464 | 26,887,611 | 26,883,392 | 26,963,260 | 26,857,006 | ||||||||||||||||||||
Diluted | 27,181,688 | 27,156,329 | 27,159,000 | 27,136,977 | 27,089,040 | 27,165,672 | 27,077,032 | ||||||||||||||||||||
Shareholders' equity per share | $ | 26.48 | $ | 26.19 | $ | 25.99 | $ | 26.20 | $ | 24.98 | $ | 26.48 | $ | 24.98 | |||||||||||||
Financial position (at period end): | |||||||||||||||||||||||||||
Cash and cash equivalents | $ | 59,006 | $ | 176,218 | $ | 66,289 | $ | 72,718 | $ | 55,050 | $ | 59,006 | $ | 55,050 | |||||||||||||
Investment securities | 903,685 | 907,457 | 915,483 | 904,304 | 919,459 | 903,685 | 919,459 | ||||||||||||||||||||
Loans held for sale | 404,440 | 568,514 | 500,533 | 610,902 | 851,126 | 404,440 | 851,126 | ||||||||||||||||||||
Loans held for investment, net | 5,026,301 | 4,883,310 | 4,758,261 | 4,506,466 | 4,313,225 | 5,026,301 | 4,313,225 | ||||||||||||||||||||
Loan servicing rights | 291,759 | 272,205 | 320,105 | 284,653 | 268,072 | 291,759 | 268,072 | ||||||||||||||||||||
Other real estate owned | 751 | 752 | 297 | 664 | 3,704 | 751 | 3,704 | ||||||||||||||||||||
Total assets | 7,029,082 | 7,163,877 | 6,924,056 | 6,742,041 | 6,796,346 | 7,029,082 | 6,796,346 | ||||||||||||||||||||
Deposits | 5,155,042 | 5,120,285 | 5,048,996 | 4,760,952 | 4,670,486 | 5,155,042 | 4,670,486 | ||||||||||||||||||||
Federal Home Loan Bank advances | 816,591 | 1,008,613 | 851,657 | 979,201 | 1,135,245 | 816,591 | 1,135,245 | ||||||||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 55,000 | — | 25,000 | — | — | 55,000 | — | ||||||||||||||||||||
Shareholders' equity | $ | 714,782 | $ | 706,459 | $ | 700,963 | $ | 704,380 | $ | 671,469 | $ | 714,782 | $ | 671,469 | |||||||||||||
Financial position (averages): | |||||||||||||||||||||||||||
Investment securities | $ | 915,439 | $ | 911,678 | $ | 915,562 | $ | 929,995 | $ | 925,545 | $ | 916,685 | $ | 1,055,281 | |||||||||||||
Loans held for investment | 4,945,065 | 4,836,644 | 4,641,980 | 4,429,777 | 4,242,795 | 4,809,007 | 4,093,588 | ||||||||||||||||||||
Total interest-earning assets | 6,457,129 | 6,369,673 | 6,093,430 | 6,269,600 | 6,098,054 | 6,310,127 | 5,907,168 | ||||||||||||||||||||
Total interest-bearing deposits | 4,110,179 | 4,046,297 | 3,834,191 | 3,581,911 | 3,622,606 | 3,997,900 | 3,590,741 | ||||||||||||||||||||
Federal Home Loan Bank advances | 838,569 | 943,539 | 858,451 | 1,264,893 | 1,034,634 | 880,114 | 961,070 | ||||||||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 15,192 | 5,253 | 7,333 | 8,828 | 272 | 9,288 | 2,015 | ||||||||||||||||||||
Total interest-bearing liabilities | 5,094,216 | 5,121,085 | 4,825,265 | 4,980,926 | 4,783,142 | 5,014,507 | 4,679,288 | ||||||||||||||||||||
Shareholders’ equity | $ | 760,446 | $ | 751,593 | $ | 717,742 | $ | 701,849 | $ | 683,186 | $ | 743,417 | $ | 667,124 |
At or for the Three Months Ended | At or for the Nine Months Ended | ||||||||||||||||||||||||||
(dollars in thousands, except share data) | Sept. 30, 2018 | June 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sept. 30, 2017 | Sept. 30, 2018 | Sept. 30, 2017 | ||||||||||||||||||||
Financial performance: | |||||||||||||||||||||||||||
Return on average shareholders' equity (1) | 6.23 | % | 3.78 | % | 3.27 | % | 19.90 | % | 8.10 | % | 4.45 | % | 6.80 | % | |||||||||||||
Return on average assets | 0.66 | % | 0.40 | % | 0.35 | % | 2.03 | % | 0.83 | % | 0.47 | % | 0.70 | % | |||||||||||||
Net interest margin (2) | 3.20 | % | 3.25 | % | 3.25 | % | 3.33 | % | 3.40 | % | 3.22 | % | 3.31 | % | |||||||||||||
Efficiency ratio (3) | 86.19 | % | 91.84 | % | 92.20 | % | 86.24 | % | 85.13 | % | 90.13 | % | 86.96 | % | |||||||||||||
Asset quality: | |||||||||||||||||||||||||||
Allowance for credit losses | $ | 41,854 | $ | 40,982 | $ | 40,446 | $ | 39,116 | $ | 38,195 | $ | 41,854 | $ | 38,195 | |||||||||||||
Allowance for loan losses/total loans (4) | 0.80 | % | 0.80 | % | 0.81 | % | 0.83 | % | 0.85 | % | 0.80 | % | 0.85 | % | |||||||||||||
Allowance for loan losses/nonaccrual loans | 419.57 | % | 409.97 | % | 359.32 | % | 251.63 | % | 245.02 | % | 419.57 | % | 245.02 | % | |||||||||||||
Total nonaccrual loans (5)(6) | $ | 9,638 | $ | 9,630 | $ | 10,879 | $ | 15,041 | $ | 15,123 | $ | 9,638 | $ | 15,123 | |||||||||||||
Nonaccrual loans/total loans | 0.19 | % | 0.20 | % | 0.23 | % | 0.33 | % | 0.35 | % | 0.19 | % | 0.35 | % | |||||||||||||
Other real estate owned | $ | 751 | $ | 751 | $ | 297 | $ | 664 | $ | 3,704 | $ | 751 | $ | 3,704 | |||||||||||||
Total nonperforming assets (6) | $ | 10,389 | $ | 10,381 | $ | 11,176 | $ | 15,705 | $ | 18,827 | $ | 10,389 | $ | 18,827 | |||||||||||||
Nonperforming assets/total assets | 0.15 | % | 0.14 | % | 0.16 | % | 0.23 | % | 0.28 | % | 0.15 | % | 0.28 | % | |||||||||||||
Net (recoveries) charge-offs | $ | (122 | ) | $ | 464 | $ | (580 | ) | $ | (921 | ) | $ | (475 | ) | $ | (238 | ) | $ | (2,181 | ) | |||||||
Regulatory capital ratios for the Bank: | |||||||||||||||||||||||||||
Tier 1 leverage capital (to average assets) | 9.70 | % | 9.72 | % | 9.58 | % | 9.67 | % | 9.86 | % | 9.70 | % | 9.86 | % | |||||||||||||
Common equity tier 1 risk-based capital (to risk-weighted assets) | 13.26 | % | 12.69 | % | 12.30 | % | 13.22 | % | 12.88 | % | 13.26 | % | 12.88 | % | |||||||||||||
Tier 1 risk-based capital (to risk-weighted assets) | 13.26 | % | 12.69 | % | 12.30 | % | 13.22 | % | 12.88 | % | 13.26 | % | 12.88 | % | |||||||||||||
Total risk-based capital (to risk-weighted assets) | 14.15 | % | 13.52 | % | 13.09 | % | 14.02 | % | 13.65 | % | 14.15 | % | 13.65 | % | |||||||||||||
Regulatory capital ratios for the Company: | |||||||||||||||||||||||||||
Tier 1 leverage capital (to average assets) | 9.17 | % | 9.18 | % | 9.08 | % | 9.12 | % | 9.33 | % | 9.17 | % | 9.33 | % | |||||||||||||
Tier 1 common equity risk-based capital (to risk-weighted assets) | 10.84 | % | 10.48 | % | 9.26 | % | 9.86 | % | 9.77 | % | 10.84 | % | 9.77 | % | |||||||||||||
Tier 1 risk-based capital (to risk-weighted assets) | 11.94 | % | 11.56 | % | 10.28 | % | 10.92 | % | 10.81 | % | 11.94 | % | 10.81 | % | |||||||||||||
Total risk-based capital (to risk-weighted assets) | 12.82 | % | 12.38 | % | 10.97 | % | 11.61 | % | 11.48 | % | 12.82 | % | 11.48 | % |
(1) | Net earnings available to common shareholders divided by average shareholders’ equity. |
(2) | Net interest income divided by total average interest-earning assets on a tax equivalent basis. |
(3) | Noninterest expense divided by total revenue (net interest income and noninterest income). |
(4) | Includes loans acquired with bank acquisitions. Excluding acquired loans, allowance for loan losses /total loans was 0.84%, 0.85%, 0.87%, 0.90% and 0.93% at September 30, 2018, June 30, 2018, March 31, 2018, December 31, 2017 and September 30, 2017, respectively. |
(5) | Generally, loans are placed on nonaccrual status when they are 90 or more days past due, unless payment is insured by the FHA or guaranteed by the VA. |
(6) | Includes $1.4 million, $1.4 million, $1.7 million, $1.9 million and $1.4 million of nonperforming loans guaranteed by the SBA at September 30, 2018, June 30, 2018, March 31, 2018, December 31, 2017 and September 30, 2017, respectively. |
At or for the Three Months Ended | |||||||||||||||||||
(in thousands) | Sept. 30, 2018 | June 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sept. 30, 2017 | ||||||||||||||
SUPPLEMENTAL DATA: | |||||||||||||||||||
Loans serviced for others: | |||||||||||||||||||
Single family | $ | 19,804,263 | $ | 19,073,176 | $ | 23,219,576 | $ | 22,631,147 | $ | 21,892,253 | |||||||||
Multifamily DUS® (1) | 1,442,727 | 1,357,929 | 1,323,937 | 1,311,399 | 1,213,459 | ||||||||||||||
Other | 83,308 | 82,083 | 81,436 | 79,797 | 78,674 | ||||||||||||||
Total loans serviced for others | $ | 21,330,298 | $ | 20,513,188 | $ | 24,624,949 | $ | 24,022,343 | $ | 23,184,386 |
1 DUS® is a registered trademark of Fannie Mae | 66 |
At or for the Three Months Ended September 30, | Percent Change | At or for the Nine Months Ended September 30, | Percent Change | ||||||||||||||||||
(in thousands, except per share data and ratios) | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||
Selected statement of operations data | |||||||||||||||||||||
Total net revenue (1) | $ | 109,752 | $ | 134,724 | (19 | )% | $ | 339,435 | $ | 382,712 | (11 | )% | |||||||||
Total noninterest expense | 94,595 | 114,697 | (18 | )% | 305,929 | 332,815 | (8 | )% | |||||||||||||
Provision for credit losses | 750 | 250 | 200 | % | 2,500 | 750 | 233 | % | |||||||||||||
Income tax expense | 2,572 | 5,938 | (57 | )% | 6,206 | 15,116 | (59 | )% | |||||||||||||
Net income | $ | 11,835 | $ | 13,839 | (14 | )% | $ | 24,800 | $ | 34,031 | (27 | )% | |||||||||
Financial performance | |||||||||||||||||||||
Diluted income per share | $ | 0.44 | $ | 0.51 | $ | 0.91 | $ | 1.26 | |||||||||||||
Return on average common shareholders’ equity | 6.23 | % | 8.10 | % | 4.45 | % | 6.80 | % | |||||||||||||
Return on average assets | 0.66 | % | 0.83 | % | 0.47 | % | 0.70 | % | |||||||||||||
Net interest margin | 3.20 | % | 3.40 | % | 3.22 | % | 3.31 | % |
(1) | Total net revenue is net interest income and noninterest income. |
At September 30, 2018 | ||||||
HomeStreet, Inc. | HomeStreet Bank | |||||
Ratio | Ratio | |||||
Tier 1 leverage capital (to average assets) | 9.17 | % | 9.70 | % | ||
Common equity Tier 1 risk-based capital (to risk-weighted assets) | 10.84 | % | 13.26 | % | ||
Tier 1 risk-based capital (to risk-weighted assets) | 11.94 | % | 13.26 | % | ||
Total risk-based capital (to risk-weighted assets) | 12.82 | % | 14.15 | % |
At December 31, 2017 | ||||||
HomeStreet, Inc. | HomeStreet Bank | |||||
Ratio | Ratio | |||||
Tier 1 leverage capital (to average assets) | 9.12 | % | 9.67 | % | ||
Common equity Tier 1 risk-based capital (to risk-weighted assets) | 9.86 | % | 13.22 | % | ||
Tier 1 risk-based capital (to risk-weighted assets) | 10.92 | % | 13.22 | % | ||
Total risk-based capital (to risk-weighted assets) | 11.61 | % | 14.02 | % |
• | Allowance for Loan and Lease Losses |
• | Fair Value of Financial Instruments |
• | Single Family Mortgage Servicing Rights ("MSRs") |
• | Other Real Estate Owned ("OREO") |
• | Income Taxes |
• | Business Combinations |
Three Months Ended September 30, | |||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||
(in thousands) | Average Balance | Interest | Average Yield/Cost | Average Balance | Interest | Average Yield/Cost | |||||||||||||||
Assets: | |||||||||||||||||||||
Interest-earning assets: (1) | |||||||||||||||||||||
Cash and cash equivalents | $ | 66,127 | $ | 188 | 1.13 | % | $ | 88,699 | $ | 171 | 0.76 | % | |||||||||
Investment securities | 915,439 | 6,072 | 2.65 | % | 925,545 | 6,286 | 2.72 | % | |||||||||||||
Loans held for sale | 530,498 | 6,267 | 4.73 | % | 841,015 | 8,586 | 4.08 | % | |||||||||||||
Loans held for investment | 4,945,065 | 57,859 | 4.61 | % | 4,242,795 | 48,168 | 4.50 | % | |||||||||||||
Total interest-earning assets | 6,457,129 | 70,386 | 4.31 | % | 6,098,054 | 63,211 | 4.12 | % | |||||||||||||
Noninterest-earning assets (2) | 662,784 | 597,876 | |||||||||||||||||||
Total assets | $ | 7,119,913 | $ | 6,695,930 | |||||||||||||||||
Liabilities and shareholders’ equity: | |||||||||||||||||||||
Deposits: | |||||||||||||||||||||
Interest-bearing demand accounts | $ | 427,777 | $ | 416 | 0.39 | % | $ | 489,743 | $ | 500 | 0.40 | % | |||||||||
Savings accounts | 279,325 | 198 | 0.28 | % | 310,242 | 259 | 0.33 | % | |||||||||||||
Money market accounts | 1,919,412 | 4,481 | 0.92 | % | 1,588,366 | 2,072 | 0.52 | % | |||||||||||||
Certificate accounts | 1,483,665 | 6,382 | 1.71 | % | 1,234,255 | 3,381 | 1.09 | % | |||||||||||||
Total interest-bearing deposits | 4,110,179 | 11,477 | 1.11 | % | 3,622,606 | 6,212 | 0.68 | % | |||||||||||||
Federal Home Loan Bank advances | 838,569 | 4,719 | 2.20 | % | 1,034,634 | 3,404 | 1.31 | % | |||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 15,192 | 83 | 2.13 | % | 272 | 1 | 1.37 | % | |||||||||||||
Other borrowings | 4,892 | 54 | 4.34 | % | 380 | 3 | 3.52 | % | |||||||||||||
Long-term debt | 125,384 | 1,695 | 5.37 | % | 125,250 | 1,521 | 4.82 | % | |||||||||||||
Total interest-bearing liabilities | 5,094,216 | 18,028 | 1.40 | % | 4,783,142 | 11,141 | 0.92 | % | |||||||||||||
Noninterest-bearing liabilities | 1,265,251 | 1,229,602 | |||||||||||||||||||
Total liabilities | 6,359,467 | 6,012,744 | |||||||||||||||||||
Shareholders’ equity | 760,446 | 683,186 | |||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 7,119,913 | $ | 6,695,930 | |||||||||||||||||
Net interest income (3) | $ | 52,358 | $ | 52,070 | |||||||||||||||||
Net interest spread | 2.91 | % | 3.20 | % | |||||||||||||||||
Impact of noninterest-bearing sources | 0.29 | % | 0.20 | % | |||||||||||||||||
Net interest margin | 3.20 | % | 3.40 | % |
(1) | The average balances of nonaccrual assets and related income, if any, are included in their respective categories. |
(2) | Includes loan balances that have been foreclosed and are now reclassified to OREO. |
(3) | Includes taxable-equivalent adjustments primarily related to tax-exempt income on certain loans and securities of $714 thousand and $1.2 million for the quarter ended September 30, 2018 and 2017, respectively. The estimated federal statutory tax rate was 21% and 35%, respectively, for the periods presented. |
Nine Months Ended September 30, | |||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||
(in thousands) | Average Balance | Interest | Average Yield/Cost | Average Balance | Interest | Average Yield/Cost | |||||||||||||||
Assets: | |||||||||||||||||||||
Interest-earning assets: (1) | |||||||||||||||||||||
Cash and cash equivalents | $ | 77,228 | $ | 620 | 1.07 | % | $ | 89,047 | $ | 432 | 0.65 | % | |||||||||
Investment securities | 916,685 | 18,187 | 2.65 | % | 1,055,281 | 19,350 | 2.46 | % | |||||||||||||
Loans held for sale | 507,207 | 17,000 | 4.47 | % | 669,252 | 20,259 | 4.04 | % | |||||||||||||
Loans held for investment | 4,809,007 | 164,855 | 4.54 | % | 4,093,588 | 137,355 | 4.46 | % | |||||||||||||
Total interest-earning assets | 6,310,127 | 200,662 | 4.22 | % | 5,907,168 | 177,396 | 4.00 | % | |||||||||||||
Noninterest-earning assets (2) | 674,909 | 582,480 | |||||||||||||||||||
Total assets | $ | 6,985,036 | $ | 6,489,648 | |||||||||||||||||
Liabilities and shareholders’ equity: | |||||||||||||||||||||
Deposits: | |||||||||||||||||||||
Interest-bearing demand accounts | $ | 438,039 | $ | 1,286 | 0.39 | % | $ | 478,589 | $ | 1,480 | 0.41 | % | |||||||||
Savings accounts | 288,146 | 645 | 0.30 | % | 308,156 | 767 | 0.33 | % | |||||||||||||
Money market accounts | 1,902,466 | 11,992 | 0.84 | % | 1,576,459 | 6,200 | 0.52 | % | |||||||||||||
Certificate accounts | 1,369,249 | 15,225 | 1.49 | % | 1,227,537 | 9,484 | 1.03 | % | |||||||||||||
Total interest-bearing deposits | 3,997,900 | 29,148 | 0.97 | % | 3,590,741 | 17,931 | 0.67 | % | |||||||||||||
Federal Home Loan Bank advances | 880,114 | 13,138 | 1.97 | % | 961,070 | 8,174 | 1.13 | % | |||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 9,288 | 139 | 1.97 | % | 2,015 | 17 | 1.14 | % | |||||||||||||
Other borrowings | 1,868 | 62 | 4.34 | % | 256 | 3 | 1.19 | % | |||||||||||||
Long-term debt | 125,337 | 4,941 | 5.24 | % | 125,206 | 4,513 | 4.80 | % | |||||||||||||
Total interest-bearing liabilities | 5,014,507 | 47,428 | 1.26 | % | 4,679,288 | 30,638 | 0.87 | % | |||||||||||||
Noninterest-bearing liabilities | 1,227,112 | 1,143,236 | |||||||||||||||||||
Total liabilities | 6,241,619 | 5,822,524 | |||||||||||||||||||
Shareholders’ equity | 743,417 | 667,124 | |||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 6,985,036 | $ | 6,489,648 | |||||||||||||||||
Net interest income (3) | $ | 153,234 | $ | 146,758 | |||||||||||||||||
Net interest spread | 2.97 | % | 3.13 | % | |||||||||||||||||
Impact of noninterest-bearing sources | 0.25 | % | 0.18 | % | |||||||||||||||||
Net interest margin | 3.22 | % | 3.31 | % |
(1) | The average balances of nonaccrual assets and related income, if any, are included in their respective categories. |
(2) | Includes loan balances that have been foreclosed and are now reclassified to OREO. |
(3) | Includes taxable-equivalent adjustments primarily related to tax-exempt income on certain loans and securities of $2.1 million and $3.4 million for the nine months ended September 30, 2018 and 2017 respectively. The estimated federal statutory tax rate was 21% and 35%, respectively, for the periods presented. |
Three Months Ended September 30, | Dollar Change | Percent Change | Nine Months Ended September 30, | Dollar Change | Percent Change | ||||||||||||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||
Noninterest income | |||||||||||||||||||||||||||||
Gain on loan origination and sale activities (1) | $ | 44,571 | $ | 71,010 | $ | (26,439 | ) | (37 | )% | $ | 149,939 | $ | 197,199 | $ | (47,260 | ) | (24 | )% | |||||||||||
Loan servicing income | 7,828 | 8,282 | (454 | ) | (5 | ) | 22,434 | 26,285 | (3,851 | ) | (15 | ) | |||||||||||||||||
Income from WMS Series LLC | 4 | 166 | (162 | ) | (98 | ) | 315 | 757 | (442 | ) | (58 | ) | |||||||||||||||||
Depositor and other retail banking fees | 2,038 | 1,839 | 199 | 11 | 5,936 | 5,306 | 630 | 12 | |||||||||||||||||||||
Insurance agency commissions | 588 | 535 | 53 | 10 | 1,658 | 1,432 | 226 | 16 | |||||||||||||||||||||
(Loss) gain on sale of investment securities available for sale | (4 | ) | 331 | (335 | ) | (101 | ) | 234 | 888 | (654 | ) | (74 | ) | ||||||||||||||||
Other | 3,083 | 1,721 | 1,362 | 79 | 7,812 | 7,486 | 326 | 4 | |||||||||||||||||||||
Total noninterest income | $ | 58,108 | $ | 83,884 | $ | (25,776 | ) | (31 | )% | $ | 188,328 | $ | 239,353 | $ | (51,025 | ) | (21 | )% |
(1) | Single family, multifamily and other commercial loan banking activities. |
Three Months Ended September 30, | Dollar Change | Percent Change | Nine Months Ended September 30, | Dollar Change | Percent Change | ||||||||||||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||
Single family held for sale: | |||||||||||||||||||||||||||||
Servicing value and secondary market gains(1) | $ | 34,945 | $ | 56,657 | $ | (21,712 | ) | (38 | )% | $ | 124,554 | $ | 164,548 | $ | (39,994 | ) | (24 | )% | |||||||||||
Loan origination and administrative fees | 5,433 | 7,356 | (1,923 | ) | (26 | ) | 17,036 | 19,960 | (2,924 | ) | (15 | ) | |||||||||||||||||
Total gain on single family held for sale | 40,378 | 64,013 | (23,635 | ) | (37 | ) | 141,590 | 184,508 | (42,918 | ) | (23 | ) | |||||||||||||||||
Multifamily DUS® | 3,104 | 4,152 | (1,048 | ) | (25 | ) | 5,863 | 8,785 | (2,922 | ) | (33 | ) | |||||||||||||||||
SBA | 99 | 1,056 | (957 | ) | (91 | ) | 696 | 1,974 | (1,278 | ) | (65 | ) | |||||||||||||||||
CRE Non-DUS® | 990 | 1,789 | (799 | ) | (45 | ) | 1,790 | 1,932 | (142 | ) | (7 | ) | |||||||||||||||||
Single Family | (43 | ) | — | (43 | ) | NM | (132 | ) | — | (132 | ) | NM | |||||||||||||||||
Gain on loan origination and sale activities | $ | 44,528 | $ | 71,010 | $ | (26,482 | ) | (37 | )% | $ | 149,807 | $ | 197,199 | $ | (47,392 | ) | (24 | )% | |||||||||||
NM = not meaningful |
(1) | Comprised of gains and losses on interest rate lock 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. |
Three Months Ended September 30, | Dollar Change | Percent Change | Nine Months Ended September 30, | Dollar Change | Percent Change | ||||||||||||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||
Single family mortgage interest rate lock commitments | $ | 1,283,028 | $ | 1,872,645 | $ | (589,617 | ) | (31 | )% | $ | 4,534,751 | $ | 5,445,694 | $ | (910,943 | ) | (17 | )% | |||||||||||
Single family mortgage closed loan volume (1) | 1,535,032 | 2,034,715 | (499,683 | ) | (25 | )% | 4,727,317 | 5,666,895 | (939,578 | ) | (17 | )% |
(1) | Includes loans originated by WMS Series LLC and purchased by HomeStreet Bank. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Effect of changes to the mortgage repurchase liability recorded in gain on loan origination and sale activities: | |||||||||||||||
New loan sales (1) | $ | 298 | $ | 625 | $ | 853 | $ | 1,984 | |||||||
Other changes in estimated repurchase losses (2) | 345 | (963 | ) | 395 | (2,354 | ) | |||||||||
$ | 643 | $ | (338 | ) | $ | 1,248 | $ | (370 | ) |
(1) | Represents the estimated fair value of the repurchase or indemnity obligation recognized as a reduction of proceeds on new loan sales. |
(2) | Represents changes in estimated probable future repurchase losses on previously sold loans. |
Three Months Ended September 30, | Dollar Change | Percent Change | Nine Months Ended September 30, | Dollar Change | Percent Change | ||||||||||||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||
Servicing income, net: | |||||||||||||||||||||||||||||
Servicing fees and other | $ | 15,046 | $ | 16,480 | $ | (1,434 | ) | (9 | )% | $ | 51,882 | $ | 48,636 | $ | 3,246 | 7 | % | ||||||||||||
Changes in fair value of single family MSRs due to amortization (1) | (8,300 | ) | (9,167 | ) | 867 | (9 | ) | (26,570 | ) | (26,596 | ) | 26 | — | ||||||||||||||||
Amortization of multifamily and SBA MSRs | (1,034 | ) | (811 | ) | (223 | ) | 27 | (3,147 | ) | (2,503 | ) | (644 | ) | 26 | |||||||||||||||
5,712 | 6,502 | (790 | ) | (12 | ) | 22,165 | 19,537 | 2,628 | 13 | ||||||||||||||||||||
Risk management: | |||||||||||||||||||||||||||||
Changes in fair value of MSRs due to changes in model inputs and/or assumptions (2) | 11,562 | (1,027 | ) | 12,589 | NM | 52,880 | (3) | (5,312 | ) | 58,192 | NM | ||||||||||||||||||
Net (loss) gain from derivatives economically hedging MSRs | (9,446 | ) | 2,807 | (12,253 | ) | (437 | ) | (52,611 | ) | 12,060 | (64,671 | ) | (536 | ) | |||||||||||||||
2,116 | 1,780 | 336 | 19 | 269 | 6,748 | (6,479 | ) | (96 | ) | ||||||||||||||||||||
Loan servicing income | $ | 7,828 | $ | 8,282 | $ | (454 | ) | (5 | )% | $ | 22,434 | $ | 26,285 | $ | (3,851 | ) | (15 | )% | |||||||||||
NM = not meaningful |
(1) | Represents changes due to collection/realization of expected cash flows and curtailments. |
(2) | Principally reflects changes in market inputs, which include current market interest rates and prepayment model updates, both of which |
(3) | Includes pre-tax income of $573 thousand, net of transaction costs and prepayment reserves, resulting from the sale of single family MSRs during the nine months ended September 30, 2018. |
Three Months Ended September 30, | Dollar Change | Percent Change | Nine Months Ended September 30, | Dollar Change | Percent Change | ||||||||||||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||
Fees: | |||||||||||||||||||||||||||||
Monthly maintenance and deposit-related fees | $ | 873 | $ | 781 | $ | 92 | 12 | % | $ | 2,471 | $ | 2,241 | $ | 230 | 10 | % | |||||||||||||
Debit Card/ATM fees | 1,094 | 995 | 99 | 10 | 3,260 | 2,905 | 355 | 12 | |||||||||||||||||||||
Other fees | 71 | 63 | 8 | 13 | 205 | 160 | 45 | 28 | |||||||||||||||||||||
Total depositor and other retail banking fees | $ | 2,038 | $ | 1,839 | $ | 199 | 11 | % | $ | 5,936 | $ | 5,306 | $ | 630 | 12 | % |
Three Months Ended September 30, | Dollar Change | Percent Change | Nine Months Ended September 30, | Dollar Change | Percent Change | ||||||||||||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||
Noninterest expense | |||||||||||||||||||||||||||||
Salaries and related costs | $ | 60,335 | $ | 75,374 | $ | (15,039 | ) | (20 | )% | $ | 196,153 | $ | 223,072 | $ | (26,919 | ) | (12 | )% | |||||||||||
General and administrative | 14,009 | 16,147 | (2,138 | ) | (13 | ) | 43,300 | 49,147 | (5,847 | ) | (12 | ) | |||||||||||||||||
Amortization of core deposit intangibles | 406 | 470 | (64 | ) | (14 | ) | 1,219 | 1,477 | (258 | ) | (17 | ) | |||||||||||||||||
Legal | 1,111 | 352 | 759 | 216 | 2,680 | 662 | 2,018 | 305 | |||||||||||||||||||||
Consulting | 539 | 914 | (375 | ) | (41 | ) | 2,174 | 2,743 | (569 | ) | (21 | ) | |||||||||||||||||
Federal Deposit Insurance Corporation assessments | 942 | 791 | 151 | 19 | 2,950 | 2,312 | 638 | 28 | |||||||||||||||||||||
Occupancy (1) | 8,442 | 12,391 | (3,949 | ) | (32 | ) | 31,575 | 29,480 | 2,095 | 7 | |||||||||||||||||||
Information services | 8,809 | 8,760 | 49 | 1 | 25,967 | 24,580 | 1,387 | 6 | |||||||||||||||||||||
Net cost (benefit) of operation and sale of other real estate owned | 2 | (502 | ) | 504 | (100 | ) | (89 | ) | (658 | ) | 569 | (86 | ) | ||||||||||||||||
Total noninterest expense | $ | 94,595 | $ | 114,697 | $ | (20,102 | ) | (18 | )% | $ | 305,929 | $ | 332,815 | $ | (26,886 | ) | (8 | )% |
(1) | Includes pre-tax charges (recoveries) related to the Mortgage Banking restructuring activity of approximately $508 thousand, $3.3 million, $6.7 million and $3.3 million for the three months ended September 30, 2018and 2017 and for the nine months ended September 30, 2018 and 2017, respectively. |
At September 30, 2018 | At December 31, 2017 | ||||||||||||
(in thousands) | Fair Value | Percent | Fair Value | Percent | |||||||||
Investment securities available for sale: | |||||||||||||
Mortgage-backed securities: | |||||||||||||
Residential | $ | 110,294 | 13 | % | $ | 130,090 | 15 | % | |||||
Commercial | 34,299 | 4 | 23,694 | 3 | |||||||||
Municipal bonds | 372,582 | 45 | 388,452 | 46 | |||||||||
Collateralized mortgage obligations: | |||||||||||||
Residential | 159,295 | 19 | 160,424 | 19 | |||||||||
Commercial | 113,385 | 14 | 98,569 | 12 | |||||||||
Corporate debt securities | 21,260 | 3 | 24,737 | 3 | |||||||||
U.S. Treasury securities | 10,670 | 1 | 10,652 | 1 | |||||||||
Agency debentures | 9,317 | 1 | 9,650 | 1 | |||||||||
Total investment securities available for sale | $ | 831,102 | 100 | % | $ | 846,268 | 100 | % |
At September 30, 2018 | At December 31, 2017 | ||||||||||||
(in thousands) | Amount | Percent | Amount | Percent | |||||||||
Consumer loans: | |||||||||||||
Single family (1) | $ | 1,418,140 | 28 | % | $ | 1,381,366 | 30 | % | |||||
Home equity and other | 540,960 | 11 | 453,489 | 10 | |||||||||
1,959,100 | 39 | 1,834,855 | 40 | ||||||||||
Commercial real estate loans: | |||||||||||||
Non-owner occupied commercial real estate | 667,429 | 13 | 622,782 | 14 | |||||||||
Multifamily | 893,105 | 18 | 728,037 | 16 | |||||||||
Construction/ land development | 790,622 | 16 | 687,631 | 15 | |||||||||
2,351,156 | 47 | 2,038,450 | 45 | ||||||||||
Commercial and industrial loans: | |||||||||||||
Owner occupied commercial real estate | 420,724 | 8 | 391,613 | 9 | |||||||||
Commercial business | 314,852 | 6 | 264,709 | 6 | |||||||||
735,576 | 14 | 656,322 | 15 | ||||||||||
Total loans before allowance, net deferred loan fees and costs | 5,045,832 | 100 | % | 4,529,627 | 100 | % | |||||||
Net deferred loan fees and costs | 20,907 | 14,686 | |||||||||||
5,066,739 | 4,544,313 | ||||||||||||
Allowance for loan losses | (40,438 | ) | (37,847 | ) | |||||||||
$ | 5,026,301 | $ | 4,506,466 |
(1) | Includes $4.1 million and $5.5 million at September 30, 2018 and December 31, 2017, 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 in value recognized in the consolidated statements of operations. |
(in thousands) | At September 30, 2018 | At December 31, 2017 | ||||||||||||
Amount | Percent | Amount | Percent | |||||||||||
Noninterest-bearing accounts - checking and savings | $ | 608,839 | 12 | % | $ | 579,504 | 12 | % | ||||||
Interest-bearing transaction and savings deposits: | ||||||||||||||
NOW accounts | 442,158 | 9 | 461,349 | 10 | ||||||||||
Statement savings accounts due on demand | 272,949 | 5 | 293,858 | 6 | ||||||||||
Money market accounts due on demand | 1,907,782 | 37 | 1,834,154 | 39 | ||||||||||
Total interest-bearing transaction and savings deposits | 2,622,889 | 51 | 2,589,361 | 55 | ||||||||||
Total transaction and savings deposits | 3,231,728 | 63 | 3,168,865 | 67 | ||||||||||
Certificates of deposit | 1,548,392 | 30 | 1,190,689 | 25 | ||||||||||
Noninterest-bearing accounts - other | 374,922 | 7 | 401,398 | 8 | ||||||||||
Total deposits | $ | 5,155,042 | 100 | % | $ | 4,760,952 | 100 | % |
At or For the Three Months Ended September 30, | At or For the Nine Months Ended September 30, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Return on assets (1) | 0.66 | % | 0.83 | % | 0.47 | % | 0.70 | % | |||
Return on equity (2) | 6.23 | % | 8.10 | % | 4.45 | % | 6.80 | % | |||
Equity to assets ratio (3) | 10.68 | % | 10.20 | % | 10.64 | % | 10.28 | % |
(1) | Net income divided by average total assets. |
(2) | Net earnings available to common shareholders divided by average common shareholders’ equity. |
(3) | Average equity divided by average total assets. |
Three Months Ended September 30, | Dollar Change | Percent Change | Nine Months Ended September 30, | Dollar Change | Percent Change | ||||||||||||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||
Net interest income | $ | 47,861 | $ | 45,314 | $ | 2,547 | 6 | % | $ | 141,054 | $ | 128,666 | $ | 12,388 | 10 | % | |||||||||||||
Provision for credit losses | 750 | 250 | 500 | 200 | 2,500 | 750 | 1,750 | 233 | |||||||||||||||||||||
Noninterest income | 10,651 | 11,962 | (1,311 | ) | (11 | ) | 26,151 | 29,663 | (3,512 | ) | (12 | ) | |||||||||||||||||
Noninterest expense | 37,813 | 37,160 | 653 | 2 | 115,369 | 110,261 | 5,108 | 5 | |||||||||||||||||||||
Income before income tax expense | 19,949 | 19,866 | 83 | — | 49,336 | 47,318 | 2,018 | 4 | |||||||||||||||||||||
Income tax expense | 3,382 | 5,904 | (2,522 | ) | (43 | ) | 10,662 | 14,618 | (3,956 | ) | (27 | ) | |||||||||||||||||
Net income | $ | 16,567 | $ | 13,962 | $ | 2,605 | 19 | % | $ | 38,674 | $ | 32,700 | $ | 5,974 | 18 | % | |||||||||||||
Total assets | $ | 6,387,122 | $ | 5,763,836 | $ | 623,286 | 11 | % | $ | 6,387,122 | $ | 5,763,836 | $ | 623,286 | 11 | % | |||||||||||||
Efficiency ratio (1) | 64.62 | % | 64.88 | % | 69.00 | % | 69.64 | % | |||||||||||||||||||||
Full-time equivalent employees (ending) | 930 | 977 | 930 | 977 | |||||||||||||||||||||||||
Production volumes for sale to the secondary market: | |||||||||||||||||||||||||||||
Loan originations | |||||||||||||||||||||||||||||
Multifamily DUS® (2) | $ | 62,717 | $ | 109,994 | $ | (47,277 | ) | (43 | )% | $ | 156,220 | $ | 225,889 | $ | (69,669 | ) | (31 | )% | |||||||||||
SBA | 9,560 | 18,734 | (9,174 | ) | (49 | )% | 18,503 | 31,658 | (13,155 | ) | (42 | )% | |||||||||||||||||
Loans sold | |||||||||||||||||||||||||||||
Multifamily DUS® (2) | $ | 93,281 | $ | 102,075 | $ | (8,794 | ) | (9 | )% | $ | 180,878 | $ | 214,236 | $ | (33,358 | ) | (16 | )% | |||||||||||
SBA | 3,025 | 11,318 | (8,293 | ) | (73 | )% | 10,339 | 22,485 | (12,146 | ) | (54 | )% | |||||||||||||||||
CRE Non-DUS (3) | 61,562 | 114,175 | (52,613 | ) | (46 | )% | 176,212 | 140,889 | 35,323 | 25 | % | ||||||||||||||||||
Single Family (3) | 34,520 | — | 34,520 | NM | 173,123 | — | 173,123 | NM | |||||||||||||||||||||
Net gain on loan origination and sale activities: | |||||||||||||||||||||||||||||
Multifamily DUS®(2) | 3,104 | 4,152 | (1,048 | ) | (25 | )% | 5,863 | 8,785 | (2,922 | ) | (33 | )% | |||||||||||||||||
SBA | 99 | 1,056 | (957 | ) | (91 | )% | 696 | 1,974 | (1,278 | ) | (65 | )% | |||||||||||||||||
CRE Non-DUS (3) | 990 | 1,789 | (799 | ) | (45 | )% | 1,790 | 1,932 | (142 | ) | (7 | )% | |||||||||||||||||
Single Family (3) | (43 | ) | — | (43 | ) | NM | (132 | ) | — | (132 | ) | NM | |||||||||||||||||
$ | 4,150 | $ | 6,997 | $ | (2,847 | ) | (41 | )% | $ | 8,217 | $ | 12,691 | $ | (4,474 | ) | (35 | )% | ||||||||||||
NM = not meaningful |
At September 30, 2018 | At December 31, 2017 | ||||||
(in thousands) | |||||||
Commercial | |||||||
Multifamily DUS® | $ | 1,442,727 | $ | 1,311,399 | |||
Other | 83,308 | 79,797 | |||||
Total commercial loans serviced for others | $ | 1,526,035 | $ | 1,391,196 |
Three Months Ended September 30, | Dollar Change | Percent Change | Nine Months Ended September 30, | Dollar Change | Percent Change | ||||||||||||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||
Servicing income, net: | |||||||||||||||||||||||||||||
Servicing fees and other | $ | 1,988 | $ | 1,690 | $ | 298 | 18 | % | $ | 5,946 | $ | 5,182 | $ | 764 | 15 | % | |||||||||||||
Amortization of multifamily and SBA MSRs | (1,034 | ) | (811 | ) | (223 | ) | (27 | ) | (3,147 | ) | (2,503 | ) | (644 | ) | (26 | ) | |||||||||||||
Commercial mortgage servicing income | $ | 954 | $ | 879 | $ | 75 | 9 | % | $ | 2,799 | $ | 2,679 | $ | 120 | 4 | % |
Three Months Ended September 30, | Dollar Change | Percent Change | Nine Months Ended September 30, | Dollar Change | Percent Change | ||||||||||||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||
Net interest income | $ | 3,783 | $ | 5,526 | $ | (1,743 | ) | (32 | )% | $ | 10,053 | $ | 14,693 | $ | (4,640 | ) | (32 | )% | |||||||||||
Noninterest income | 47,457 | 71,922 | (24,465 | ) | (34 | ) | 162,177 | 209,690 | (47,513 | ) | (23 | ) | |||||||||||||||||
Noninterest expense | 56,782 | 77,537 | (20,755 | ) | (27 | ) | 190,560 | 222,554 | (31,994 | ) | (14 | ) | |||||||||||||||||
(Loss) income before income taxes | (5,542 | ) | (89 | ) | (5,453 | ) | 6,127 | (18,330 | ) | 1,829 | (20,159 | ) | (1,102 | ) | |||||||||||||||
Income tax (benefit) expense | (810 | ) | 34 | (844 | ) | (2,482 | ) | (4,456 | ) | 498 | (4,954 | ) | (995 | ) | |||||||||||||||
Net (loss) income | $ | (4,732 | ) | $ | (123 | ) | $ | (4,609 | ) | 3,747 | % | $ | (13,874 | ) | $ | 1,331 | $ | (15,205 | ) | (1,142 | )% | ||||||||
Total assets | $ | 641,960 | $ | 1,032,510 | $ | (390,550 | ) | (38 | )% | $ | 641,960 | $ | 1,032,510 | $ | (390,550 | ) | (38 | )% | |||||||||||
Efficiency ratio (1) | 110.82 | % | 100.11 | % | 110.64 | % | 99.18 | % | |||||||||||||||||||||
Full-time equivalent employees (ending) | 1,123 | 1,486 | 1,123 | 1,486 | |||||||||||||||||||||||||
Production volumes for sale to the secondary market: | |||||||||||||||||||||||||||||
Single family mortgage interest rate lock commitments | $ | 1,283,028 | $ | 1,872,645 | $ | (589,617 | ) | (31 | )% | $ | 4,534,751 | $ | 5,445,694 | $ | (910,943 | ) | (17 | )% | |||||||||||
Single family mortgage closed loan volume (2)(3) | $ | 1,535,032 | $ | 2,034,715 | $ | (499,683 | ) | (25 | )% | $ | 4,727,317 | $ | 5,666,895 | $ | (939,578 | ) | (17 | )% | |||||||||||
Single family mortgage loans sold(3) | $ | 1,724,697 | $ | 1,956,129 | $ | (231,432 | ) | (12 | )% | $ | 5,043,769 | $ | 5,504,366 | $ | (460,597 | ) | (8 | )% |
(1) | Noninterest expense divided by total net revenue (net interest income and noninterest income). |
(2) | Includes loans originated by WMS Series LLC and purchased by HomeStreet Bank and brokered loans where HomeStreet receives fee income but does not fund the loan on its balance sheet or sell it into the secondary market. |
(3) | Represents single family mortgage production volume designated for sale to the secondary market during each respective period. |
Three Months Ended September 30, | Dollar Change | Percent Change | Nine Months Ended September 30, | Dollar Change | Percent Change | ||||||||||||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||
Single family: (1) | |||||||||||||||||||||||||||||
Servicing value and secondary market gains(2) | $ | 34,945 | $ | 56,657 | $ | (21,712 | ) | (38 | )% | $ | 124,554 | $ | 164,548 | $ | (39,994 | ) | (24 | )% | |||||||||||
Loan origination fees | 5,433 | 7,356 | (1,923 | ) | (26 | ) | 17,036 | 19,960 | (2,924 | ) | (15 | ) | |||||||||||||||||
Total mortgage banking gain on loan origination and sale activities(1) | $ | 40,378 | $ | 64,013 | $ | (23,635 | ) | (37 | )% | $ | 141,590 | $ | 184,508 | $ | (42,918 | ) | (23 | )% |
(1) | Excludes inter-segment activities. |
(2) | Comprised of gains and losses on interest rate lock commitments (which considers the value of servicing), single family loans held for sale, forward sale commitments used to economically hedge secondary market activities, and the estimated fair value of the repurchase or indemnity obligation recognized on new loan sales. |
Three Months Ended September 30, | Dollar Change | Percent Change | Nine Months Ended September 30, | Dollar Change | Percent Change | |||||||||||||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||||
Servicing income, net: | ||||||||||||||||||||||||||||||
Servicing fees and other | $ | 13,058 | $ | 14,790 | $ | (1,732 | ) | (12 | )% | $ | 45,936 | $ | 43,454 | $ | 2,482 | 6 | % | |||||||||||||
Changes in fair value of MSRs due to amortization (1) | (8,300 | ) | (9,167 | ) | 867 | 9 | (26,570 | ) | (26,596 | ) | 26 | NM | ||||||||||||||||||
4,758 | 5,623 | (865 | ) | (15 | ) | 19,366 | 16,858 | 2,508 | 15 | |||||||||||||||||||||
Risk management: | ||||||||||||||||||||||||||||||
Changes in fair value of MSRs due to changes in market inputs and/or model updates (2) | 11,562 | (1,027 | ) | 12,589 | 1,226 | 52,880 | (3 | ) | (5,312 | ) | 58,192 | NM | ||||||||||||||||||
Net (loss) gain from derivatives economically hedging MSRs | (9,446 | ) | 2,807 | (12,253 | ) | (437 | ) | (52,611 | ) | 12,060 | (64,671 | ) | (536 | ) | ||||||||||||||||
2,116 | 1,780 | 336 | 19 | 269 | 6,748 | (6,479 | ) | (96 | ) | |||||||||||||||||||||
Mortgage Banking servicing income | $ | 6,874 | $ | 7,403 | $ | (529 | ) | (7 | )% | $ | 19,635 | $ | 23,606 | $ | (3,971 | ) | (17 | )% | ||||||||||||
NM = not meaningful |
(1) | Represents changes due to collection/realization of expected cash flows and curtailments. |
(2) | Principally reflects changes in model assumptions, including prepayment speed assumptions, which are primarily affected by changes in mortgage interest rates. |
(3) | Included pre-tax income of $573 thousand, net of transaction costs and prepayment reserves, resulting from the second quarter 2018 sale of single family MSRs. |
(in thousands) | At September 30, 2018 | At December 31, 2017 | |||||
Single family | |||||||
U.S. government and agency | $ | 19,211,119 | $ | 22,123,710 | |||
Other | 593,144 | 507,437 | |||||
Total single family loans serviced for others | $ | 19,804,263 | $ | 22,631,147 |
At September 30, 2018 | |||||||||||
(in thousands) | Recorded Investment | Unpaid Principal Balance (2) | Related Allowance | ||||||||
Impaired loans: | |||||||||||
Loans with no related allowance recorded | $ | 69,111 | $ | 70,881 | $ | — | |||||
Loans with an allowance recorded | 2,290 | 3,048 | 314 | ||||||||
Total | $ | 71,401 | (1) | $ | 73,929 | $ | 314 | ||||
At December 31, 2017 | |||||||||||
(in thousands) | Recorded Investment | Unpaid Principal Balance (2) | Related Allowance | ||||||||
Impaired loans: | |||||||||||
Loans with no related allowance recorded | $ | 78,696 | (3) | $ | 80,904 | $ | — | ||||
Loans with an allowance recorded | 5,150 | 5,288 | 289 | ||||||||
Total | $ | 83,846 | (1) | $ | 86,192 | $ | 289 |
(1) | Includes $64.2 million and $69.6 million in single family performing troubled debt restructurings ("TDRs") at September 30, 2018 and December 31, 2017, respectively. |
(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 $231 thousand of fair value option loans. |
At September 30, 2018 | At December 31, 2017 | ||||||||||||||||||
(in thousands) | Amount | Percent of Allowance to Total Allowance | Loan Category as a % of Total Loans (1) | Amount | Percent of Allowance to Total Allowance | Loan Category as a % of Total Loans (1) | |||||||||||||
Consumer loans | |||||||||||||||||||
Single family | $ | 8,507 | 20.3 | % | 28.0 | % | $ | 9,412 | 24.1 | % | 30.4 | % | |||||||
Home equity and other | 7,546 | 18.0 | 10.7 | 7,081 | 18.1 | 10.0 | |||||||||||||
16,053 | 38.3 | 38.7 | 16,493 | 42.2 | 40.4 | ||||||||||||||
Commercial real estate loans | |||||||||||||||||||
Non-owner occupied commercial real estate | 5,013 | 12.0 | 13.2 | 4,755 | 12.1 | 13.8 | |||||||||||||
Multifamily | 5,625 | 13.4 | 17.7 | 3,895 | 10.0 | 16.1 | |||||||||||||
Construction/land development | 9,281 | 22.2 | 15.7 | 8,677 | 22.2 | 15.2 | |||||||||||||
19,919 | 47.6 | 46.6 | 17,327 | 44.3 | 45.1 | ||||||||||||||
Commercial and industrial loans | |||||||||||||||||||
Owner occupied commercial real estate | 3,143 | 7.5 | 8.4 | 2,960 | 7.5 | 8.7 | |||||||||||||
Commercial business | 2,739 | 6.6 | 6.3 | 2,336 | 6.0 | 5.9 | |||||||||||||
5,882 | 14.1 | 14.7 | 5,296 | 13.5 | 14.5 | ||||||||||||||
Total allowance for credit losses | $ | 41,854 | 100.0 | % | 100.0 | % | $ | 39,116 | 100.0 | % | 100.0 | % |
(1) | Excludes loans held for investment balances that are carried at fair value. |
At September 30, 2018 | |||||||||||
(in thousands) | Accrual | Nonaccrual | Total | ||||||||
Consumer | |||||||||||
Single family (1) | $ | 64,194 | $ | 1,768 | $ | 65,962 | |||||
Home equity and other | 1,252 | — | 1,252 | ||||||||
65,446 | 1,768 | 67,214 | |||||||||
Commercial real estate loans | |||||||||||
Multifamily | 495 | — | 495 | ||||||||
Construction/land development | 690 | — | 690 | ||||||||
1,185 | — | 1,185 | |||||||||
Commercial and industrial loans | |||||||||||
Owner occupied commercial real estate | 855 | — | 855 | ||||||||
Commercial business | 114 | 230 | 344 | ||||||||
969 | 230 | 1,199 | |||||||||
$ | 67,600 | $ | 1,998 | $ | 69,598 |
(1) | Includes loan balances insured by the FHA or guaranteed by the VA of $49.3 million at September 30, 2018. |
At December 31, 2017 | |||||||||||
(in thousands) | Accrual | Nonaccrual | Total | ||||||||
Consumer | |||||||||||
Single family (1) | $ | 69,555 | $ | 2,451 | $ | 72,006 | |||||
Home equity and other | 1,254 | 36 | 1,290 | ||||||||
70,809 | 2,487 | 73,296 | |||||||||
Commercial real estate loans | |||||||||||
Multifamily | 507 | — | 507 | ||||||||
Construction/land development | 454 | — | 454 | ||||||||
961 | — | 961 | |||||||||
Commercial and industrial loans | |||||||||||
Owner occupied commercial real estate | 876 | — | 876 | ||||||||
Commercial business | 377 | 62 | 439 | ||||||||
1,253 | 62 | 1,315 | |||||||||
$ | 73,023 | $ | 2,549 | $ | 75,572 |
(1) | Includes loan balances insured by the FHA or guaranteed by the VA of $46.7 million at December 31, 2017. |
At September 30, 2018 | |||||||||||||||||||||||
(in thousands) | 30-59 Days Past Due | 60-89 Days Past Due | Nonaccrual | 90 Days or More Past Due and Accruing | Total Past Due Loans | Other Real Estate Owned | |||||||||||||||||
Consumer loans | |||||||||||||||||||||||
Single family | $ | 9,155 | $ | 6,919 | $ | 6,836 | $ | 39,161 | (1) | $ | 62,071 | $ | 751 | ||||||||||
Home equity and other | 494 | 90 | 1,160 | — | 1,744 | — | |||||||||||||||||
9,649 | 7,009 | 7,996 | 39,161 | 63,815 | 751 | ||||||||||||||||||
Commercial real estate loans | |||||||||||||||||||||||
Construction/land development | — | — | 74 | — | 74 | — | |||||||||||||||||
— | — | 74 | — | 74 | — | ||||||||||||||||||
Commercial and industrial loans | |||||||||||||||||||||||
Owner-occupied commercial real estate | — | — | 384 | — | 384 | — | |||||||||||||||||
Commercial business | — | — | 1,184 | — | 1,184 | — | |||||||||||||||||
— | — | 1,568 | — | 1,568 | — | ||||||||||||||||||
Total | $ | 9,649 | $ | 7,009 | $ | 9,638 | $ | 39,161 | $ | 65,457 | $ | 751 |
(1) | 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. At September 30, 2018, these past due loans totaled $39.2 million. |
At December 31, 2017 | |||||||||||||||||||||||
(in thousands) | 30-59 Days Past Due | 60-89 Days Past Due | Nonaccrual | 90 Days or More Past Due and Accruing | Total Past Due Loans | Other Real Estate Owned | |||||||||||||||||
Consumer loans | |||||||||||||||||||||||
Single family | $ | 10,493 | $ | 4,437 | $ | 11,091 | $ | 37,171 | (1) | $ | 63,192 | $ | 664 | ||||||||||
Home equity and other | 750 | 20 | 1,404 | — | 2,174 | — | |||||||||||||||||
11,243 | 4,457 | 12,495 | 37,171 | 65,366 | 664 | ||||||||||||||||||
Commercial real estate loans | |||||||||||||||||||||||
Multifamily | — | — | 302 | — | 302 | — | |||||||||||||||||
Construction/land development | 641 | — | 78 | — | 719 | — | |||||||||||||||||
641 | — | 380 | — | 1,021 | — | ||||||||||||||||||
Commercial and industrial loans | |||||||||||||||||||||||
Owner occupied commercial real estate | — | — | 640 | — | 640 | — | |||||||||||||||||
Commercial business | 377 | — | 1,526 | — | 1,903 | — | |||||||||||||||||
377 | — | 2,166 | — | 2,543 | — | ||||||||||||||||||
Total | $ | 12,261 | $ | 4,457 | $ | 15,041 | $ | 37,171 | $ | 68,930 | $ | 664 |
(1) | 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. At December 31, 2017, these past due loans totaled $37.2 million. |
• | MSRs (net of deferred tax) in excess of 10% of Tier 1 capital before threshold based deductions must be deducted from common equity. The disallowable portion of MSRs will be phased in incrementally (40% in 2015; 60% in 2016; 80% in 2017 and beyond). |
• | In addition, the combined balance of MSRs and deferred tax assets is limited to approximately 15% of the Bank’s and the Company’s common equity Tier 1 capital. These combined assets must be deducted from common equity to the extent that they exceed the 15% threshold. |
• | Any portion of the Bank’s and the Company’s MSRs that are not deducted from the calculation of common equity Tier 1 is subject to a 100% risk weight. |
At September 30, 2018 | |||||||||||||||||||||
HomeStreet Bank | Actual | For Minimum Capital Adequacy Purposes | To Be Categorized As “Well Capitalized” Under Prompt Corrective Action Provisions | ||||||||||||||||||
(in thousands) | Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||
Tier 1 leverage capital (to average assets) | $ | 672,843 | 9.70 | % | $ | 277,494 | 4.0 | % | $ | 346,867 | 5.0 | % | |||||||||
Common equity Tier 1 risk-based capital (to risk-weighted assets) | 672,843 | 13.26 | % | 228,277 | 4.5 | % | 329,733 | 6.5 | % | ||||||||||||
Tier 1 risk-based capital (to risk-weighted assets) | 672,843 | 13.26 | % | 304,369 | 6.0 | % | 405,825 | 8.0 | % | ||||||||||||
Total risk-based capital (to risk-weighted assets) | $ | 717,570 | 14.15 | % | $ | 405,825 | 8.0 | % | $ | 507,282 | 10.0 | % |
At September 30, 2018 | |||||||||||||||||||||
HomeStreet, Inc. | Actual | For Minimum Capital Adequacy Purposes | To Be Categorized As “Well Capitalized” Under Prompt Corrective Action Provisions | ||||||||||||||||||
(in thousands) | Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||
Tier 1 leverage capital (to average assets) | $ | 640,615 | 9.17 | % | $ | 279,430 | 4.0 | % | $ | 349,287 | 5.0 | % | |||||||||
Common equity Tier 1 risk-based capital (to risk-weighted assets) | 581,165 | 10.84 | % | 241,347 | 4.5 | % | 348,612 | 6.5 | % | ||||||||||||
Tier 1 risk-based capital (to risk-weighted assets) | 640,614 | 11.94 | % | 321,796 | 6.0 | % | 429,061 | 8.0 | % | ||||||||||||
Total risk-based capital (to risk-weighted assets) | $ | 687,651 | 12.82 | % | $ | 429,061 | 8.0 | % | $ | 536,326 | 10.0 | % |
At December 31, 2017 | |||||||||||||||||||||
HomeStreet Bank | Actual | For Minimum Capital Adequacy Purposes | To Be Categorized As “Well Capitalized” Under Prompt Corrective Action Provisions | ||||||||||||||||||
(in thousands) | Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||
Tier 1 leverage capital (to average assets) | $ | 649,864 | 9.67 | % | $ | 268,708 | 4.0 | % | $ | 335,885 | 5.0 | % | |||||||||
Common equity Tier 1 risk-based capital (to risk-weighted assets) | 649,864 | 13.22 | % | 221,201 | 4.5 | % | 319,512 | 6.5 | % | ||||||||||||
Tier 1 risk-based capital (to risk-weighted assets) | 649,864 | 13.22 | % | 294,935 | 6.0 | % | 393,246 | 8.0 | % | ||||||||||||
Total risk-based capital (to risk-weighted assets) | $ | 688,981 | 14.02 | % | $ | 393,246 | 8.0 | % | $ | 491,558 | 10.0 | % |
At December 31, 2017 | |||||||||||||||||||||
HomeStreet, Inc. | Actual | For Minimum Capital Adequacy Purposes | To Be Categorized As “Well Capitalized” Under Prompt Corrective Action Provisions | ||||||||||||||||||
(in thousands) | Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||
Tier 1 leverage capital (to average assets) | $ | 614,624 | 9.12 | % | $ | 269,534 | 4.0 | % | $ | 336,918 | 5.0 | % | |||||||||
Common equity Tier 1 risk-based capital (to risk-weighted assets) | 555,120 | 9.86 | % | 253,293 | 4.5 | % | 365,868 | 6.5 | % | ||||||||||||
Tier 1 risk-based capital (to risk-weighted assets) | 614,624 | 10.92 | % | 337,724 | 6.0 | % | 450,299 | 8.0 | % | ||||||||||||
Total risk-based capital (to risk-weighted assets) | $ | 653,741 | 11.61 | % | $ | 450,299 | 8.0 | % | $ | 562,873 | 10.0 | % |
ITEM 3 | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
• | understanding the nature and level of the Company's interest rate risk and interest rate sensitivity; |
• | assessing how that risk fits within our overall business strategies; |
• | ensuring an appropriate level of rigor and sophistication in the risk management process for the overall level of risk; |
• | complying with and reviewing the asset/liability management policy; and |
• | formulating and implementing strategies to improve balance sheet mix and earnings. |
September 30, 2018 | |||||||||||||||||||||||||||||||
(dollars in thousands) | 3 Mos. or Less | More Than 3 Mos. to 6 Mos. | More Than 6 Mos. to 12 Mos. | More Than 12 Mos. to 3 Yrs. | More Than 3 Yrs. to 5 Yrs. | More Than 5 Yrs. | Non-Rate- Sensitive | Total | |||||||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||||||||||||
Cash & cash equivalents | $ | 59,006 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 59,006 | |||||||||||||||
FHLB Stock | — | — | — | — | — | 40,732 | — | 40,732 | |||||||||||||||||||||||
Investment securities(1) | 72,181 | 26,118 | 41,220 | 173,377 | 120,748 | 470,040 | — | 903,684 | |||||||||||||||||||||||
Mortgage loans held for sale (3) | 404,440 | — | — | — | — | — | — | 404,440 | |||||||||||||||||||||||
Loans held for investment(1) | 1,461,311 | 246,241 | 517,525 | 1,043,915 | 906,495 | 850,814 | — | 5,026,301 | |||||||||||||||||||||||
Total interest-earning assets | 1,996,938 | 272,359 | 558,745 | 1,217,292 | 1,027,243 | 1,361,586 | — | 6,434,163 | |||||||||||||||||||||||
Non-interest-earning assets | — | — | — | — | — | — | 594,918 | 594,918 | |||||||||||||||||||||||
Total assets | $ | 1,996,938 | $ | 272,359 | $ | 558,745 | $ | 1,217,292 | $ | 1,027,243 | $ | 1,361,586 | $ | 594,918 | $ | 7,029,081 | |||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||||||||||
NOW accounts(2) | $ | 442,158 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 442,158 | |||||||||||||||
Statement savings accounts(2) | 272,949 | — | — | — | — | — | — | 272,949 | |||||||||||||||||||||||
Money market accounts(2) | 1,907,782 | — | — | — | — | — | — | 1,907,782 | |||||||||||||||||||||||
Certificates of deposit | 578,587 | 465,771 | 204,672 | 269,083 | 30,279 | — | — | 1,548,392 | |||||||||||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 55,000 | — | — | — | — | — | — | 55,000 | |||||||||||||||||||||||
FHLB advances | 801,001 | — | 10,000 | — | — | 5,590 | — | 816,591 | |||||||||||||||||||||||
Other borrowings | — | — | |||||||||||||||||||||||||||||
Long-term debt | 60,415 | — | — | — | — | 65,000 | — | 125,415 | |||||||||||||||||||||||
Total interest-bearing liabilities | 4,117,892 | 465,771 | 214,672 | 269,083 | 30,279 | 70,590 | — | 5,168,287 | |||||||||||||||||||||||
Non-interest bearing liabilities | — | — | — | — | — | — | 1,146,013 | 1,146,013 | |||||||||||||||||||||||
Equity | — | — | — | — | — | — | 714,782 | 714,782 | |||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 4,117,892 | $ | 465,771 | $ | 214,672 | $ | 269,083 | $ | 30,279 | $ | 70,590 | $ | 1,860,795 | $ | 7,029,082 | |||||||||||||||
Interest sensitivity gap | (2,120,954 | ) | (193,412 | ) | 344,073 | 948,209 | 996,964 | 1,290,996 | |||||||||||||||||||||||
Cumulative interest sensitivity gap | $ | (2,120,954 | ) | $ | (2,314,366 | ) | $ | (1,970,293 | ) | $ | (1,022,084 | ) | $ | (25,120 | ) | $ | 1,265,876 | ||||||||||||||
Cumulative interest sensitivity gap as a percentage of total assets | (30 | )% | (33 | )% | (28 | )% | (15 | )% | — | % | 18 | % | |||||||||||||||||||
Cumulative interest-earning assets as a percentage of cumulative interest-bearing liabilities | 48 | % | 50 | % | 59 | % | 80 | % | 100 | % | 124 | % |
(1) | Based on contractual maturities, repricing dates and forecasted principal payments assuming normal amortization and, where applicable, prepayments. |
(2) | Assumes 100% of interest-bearing non-maturity deposits are subject to repricing in three months or less. |
(3) | Based on our intent to sell. |
September 30, 2018 | December 31, 2017 | |||||||||||
Change in Interest Rates (basis points) (1) | Percentage Change | |||||||||||
Net Interest Income (2) | Net Portfolio Value (3) | Net Interest Income (2) | Net Portfolio Value (3) | |||||||||
+200 | (6.1 | )% | (15.6 | )% | (0.5 | )% | (8.2 | )% | ||||
+100 | (3.1 | ) | (8.3 | ) | (0.2 | ) | (4.2 | ) | ||||
-100 | 4.4 | 1.2 | 1.9 | (0.9 | ) | |||||||
-200 | 9.1 | % | (2.2 | )% | 2.3 | % | (4.8 | )% |
(1) | For purposes of our model, we assume interest rates will not go below zero. This "floor" limits the effect of a potential negative interest rate shock in a low rate environment like the one we are currently experiencing. |
(2) | This percentage change represents the impact to net interest income for a one-year period, assuming there is no change in the structure of the balance sheet. |
(3) | This percentage change represents the impact to the net present value of equity, assuming there is no change in the structure of the balance sheet. |
ITEM 4 | CONTROLS AND PROCEDURES |
ITEM 1 | LEGAL PROCEEDINGS |
ITEM 1A | RISK FACTORS |
• | Volatility in interest rates may limit our ability to make loans, decrease our net interest income and noninterest income, create disparity between actual and expected closed loan volumes based on historical fallout rates, reduce demand for loans, diminish the value of our loan servicing rights, affect the value of our hedging instruments, increase the cost of deposits and otherwise negatively impact our financial situation; |
• | Competition in the mortgage market industry may drive down the interest rates we are able to offer on our mortgages and reduce our profit margins on mortgage loan products, which would negatively impact our net interest income; |
• | Volatility in mortgage markets, which is driven by factors outside of our control such as interest rate changes, imbalances in housing supply and demand and general economic conditions, may negatively impact our ability to originate loans and change the fair value of our existing loans and servicing rights; |
• | Our hedging strategies to offset risks related to interest rate changes may not be successful and may result in unanticipated losses for the Company; |
• | Changes in regulations or in regulators' interpretations of existing regulations may negatively impact the Company or the Bank and may limit our ability to offer certain products or services, increase our costs of compliance or restrict our growth initiatives, branch expansion and acquisition activities; |
• | Increased costs for controls over data confidentiality, integrity, and availability due to growth or as may be necessary to strengthen the security profile of our computer systems and computer networks may have a negative impact on our net income; |
• | Changes in the cost structures and fees of government-sponsored enterprises to whom we sell many of these loans may compress our margins and reduce our net income and profitability; and |
• | Increased costs from growth through acquisition could exceed the income growth anticipated from these opportunities, especially in the short term as these acquisitions are integrated into our business; |
• | Activist investors may attempt to effect changes in the Company’s strategic direction and how the Company is governed, or to acquire control over the Company. In particular, the above mentioned activist investor has suggested changes to our business that conflict with our strategic direction and could cause uncertainty among employees, customers, investors and other constituencies about the strategic direction of our business. |
• | While the Company welcomes the opinions of all shareholders, responding to proxy contests and related actions by activist investors could be costly and time-consuming, disrupt our operations, and divert the attention of our Board of Directors and senior management and employees away from their regular duties and the pursuit of business opportunities. In addition, there may be litigation in connection with a proxy contest, which would serve as a further distraction to our Board of Directors, senior management and employees and could require the Company to incur significant additional costs. |
• | Perceived uncertainties as to our future direction as a result of potential changes to the composition of the Board of Directors may lead to the perception of a change in the strategic direction of the business, instability or lack of continuity which may be exploited by our competitors; may cause concern to our existing or potential customers and employees; may result in the loss of potential business opportunities; and may make it more difficult to attract and retain qualified personnel and business partners. |
• | Proxy contests and related actions by activist investors could cause significant fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business. |
• | Reduced cash flows and capital resources, as we are required to make cash advances to meet contractual obligations to investors, process foreclosures, and maintain, repair and market foreclosed properties; |
• | Declining mortgage servicing fee revenues because we recognize these revenues only upon collection; |
• | Increasing mortgage servicing costs; |
• | Declining fair value on our mortgage servicing rights; and |
• | Declining fair values and liquidity of securities held in our investment portfolio that are collateralized by mortgage obligations. |
• | Variances in our operating results; |
• | Disparity between our operating results and the operating results of our competitors; |
• | Changes in analyst’s estimates of our earnings results and future performance, or variances between our actual performance and that forecast by analysts; |
• | News releases or other announcements of material events relating to the Company, including but not limited to mergers, acquisitions, expansion plans, restructuring activities or other strategic developments; |
• | Statements made by activist investors criticizing our strategy, our management team or our Board of Directors; |
• | Future securities offerings by us of debt or equity securities; |
• | Addition or departure of key personnel; |
• | Market-wide events that may be seen by the market as impacting the Company; |
• | The presence or absence of short-selling of our common stock; |
• | General financial conditions of the country or the regions in which we operate; |
• | Trends in real estate in our primary markets; or |
• | Trends relating to the economic markets generally. |
• | 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. |
ITEM 2 | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
ITEM 3 | DEFAULTS UPON SENIOR SECURITIES |
ITEM 4 | MINE SAFETY DISCLOSURES |
ITEM 5 | OTHER INFORMATION |
ITEM 6 | EXHIBITS |
Exhibit Number | Description | |
31.1 | ||
31.2 | ||
32(1) | ||
101.INS(2) | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Label Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Presentation Linkbase Document | |
101.PRE | 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) | 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 30, 2018 formatted in XBRL (eXtensible Business Reporting Language) interactive data files: (i) the Consolidated Statements of Operations (unaudited) for the three and nine months ended September 30, 2018 and 2017, (ii) the Consolidated Statements of Financial Condition (unaudited) as of September 30, 2018 and December 31, 2017, (iii) the Consolidated Statements of Shareholders' Equity for the nine months ended September 30, 2018 and 2017, and Statements of Comprehensive Income (unaudited) for the three and nine months ended September 30, 2018 and 2017, (iv) the Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2018 and 2017, and (v) the Notes to Consolidated Financial Statements (unaudited). |
HomeStreet, Inc. | ||
By: | /s/ Mark K. Mason | |
Mark K. Mason | ||
President and Chief Executive Officer | ||
(Principal Executive Officer) |
HomeStreet, Inc. | ||
By: | /s/ Mark R. Ruh | |
Mark R. Ruh | ||
Executive Vice President and Chief Financial Officer | ||
(Principal Financial Officer) |
1. | I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2018 of HomeStreet, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Dated: | November 2, 2018 | By: | /s/ Mark K. Mason |
Mark K. Mason | |||
President and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form10-Q for the quarter ended September 30, 2018 of HomeStreet, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Dated: | November 2, 2018 | By: | /s/ Mark R. Ruh |
Mark R. Ruh | |||
Executive Vice President, Chief Financial Officer and Principal Accounting Officer | |||
1. | The Quarterly Report on Form 10-Q for the period ended September 30, 2018 (the "Report") of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: | November 2, 2018 | By: | /s/ Mark K. Mason |
Mark K. Mason | |||
President and Chief Executive Officer |
1. | The Quarterly Report on Form 10-Q for the period ended September 30, 2018 (the "Report") of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: | November 2, 2018 | By: | /s/ Mark R. Ruh |
Mark R. Ruh | |||
Executive Vice President, Chief Financial Officer and Principal Accounting Officer | |||
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Oct. 31, 2018 |
|
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Entity Registrant Name | HOMESTREET, INC. | |
Entity Common Stock, Shares Outstanding | 26,991,909.6 | |
Entity Central Index Key | 0001518715 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Emerging Growth Company | false | |
Entity Small Business | false |
Consolidated Statements of Financial Condition (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Interest-earning instruments | $ 35,763 | $ 30,268 |
Investment securities held at fair value | 831,102 | 846,268 |
Fair value of loans held for sale | 350,948 | 577,313 |
Allowance for losses on loans held for investment | 40,438 | 37,847 |
Fair value of loans held for investment | 4,089 | 5,477 |
Fair value of single family MSR | $ 263,622 | $ 258,560 |
Preferred stock, par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, shares authorized | 10,000 | 10,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized | 160,000,000 | 160,000,000 |
Common stock, shares issued | 26,989,742 | 26,888,288 |
Common stock, shares outstanding | 26,989,742 | 26,888,288 |
Interim Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Tax expense (benefit) on unrealized holding gain (loss) on securities | $ (1,169) | $ 665 | $ (4,469) | $ 3,552 |
Tax expense (benefit) on reclassification adjustment for net gain on securities included in net income | $ 0 | $ 116 | $ 49 | $ 311 |
Summary of Significant Accounting Policies |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: HomeStreet, Inc. and its wholly owned subsidiaries (the "Company") is a diversified financial services company serving customers primarily on the West Coast of the United States, including Hawaii. The Company is principally engaged in commercial banking, mortgage banking, and consumer/retail banking activities. The Company's consolidated financial statements include the accounts of HomeStreet, Inc. and its wholly owned subsidiaries, HomeStreet Capital Corporation, HomeStreet Statutory Trusts and HomeStreet Bank (the "Bank"), and the Bank’s subsidiaries, HomeStreet/WMS, Inc., HomeStreet Reinsurance, Ltd., Continental Escrow Company, HomeStreet Foundation, HS Properties, Inc., HS Evergreen Corporate Center LLC, Union Street Holdings LLC, HS Cascadia Holdings LLC and YNB Real Estate LLC. HomeStreet Bank was formed in 1986 and is a state-chartered commercial bank. The Company’s accounting and financial reporting policies conform to accounting principles generally accepted in the United States of America ("U.S. GAAP"). Inter-company balances and transactions have been eliminated in consolidation. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and revenues and expenses during the reporting periods and related disclosures. Some of these estimates require application of management's most difficult, subjective or complex judgments and result in amounts that are inherently uncertain and may change in future periods. Management has made significant estimates in several areas, including the fair value of assets acquired and liabilities assumed in business combinations, allowance for credit losses (Note 3, Loans and Credit Quality), valuation of residential mortgage servicing rights and loans held for sale (Note 6, Mortgage Banking Operations), valuation of certain loans held for investment (Note 3, Loans and Credit Quality), valuation of investment securities (Note 2, Investment Securities), and valuation of derivatives (Note 5, Derivatives and Hedging Activities). We have reclassified certain prior period amounts to conform to the current period presentation. These reclassifications are immaterial and have no effect on net income, comprehensive income, cash flows, total assets or total shareholder's equity as previously reported. These unaudited interim financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results of the periods presented. These adjustments are of a normal recurring nature, unless otherwise disclosed in this Form 10-Q. The results of operations in the interim financial statements do not necessarily indicate the results that may be expected for the full year. The interim financial information should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission ("2017 Annual Report on Form 10-K"). Recent Accounting Developments In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. This ASU adds, eliminates, and modifies certain disclosure requirements for fair value measurements. Among the changes, entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASU No. 2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019; early adoption is permitted. Entities are also allowed to elect early adoption of the eliminated or modified disclosure requirements and delay adoption of the added disclosure requirements until their effective date. As ASU No. 2018-13 only revises disclosure requirements, it will not have a material impact on the Company’s Consolidated Financial Statements. In July 2018, the FASB issued ASU No. 2018-11, “Leases (Topic 842) - Targeted Improvements” to provide entities with relief from the costs of implementing certain aspects of the new leasing standard, ASU No. 2016-02. Specifically, under the amendments in ASU 2018-11: (1) entities may elect not to recast the comparative periods presented when transitioning to the new leasing standard, and (2) lessors may elect to not separate non-lease components from leases when certain conditions are met. The amendments have the same effective date as ASU 2016-02 (January 1, 2019 for the Company). The Company expects to elect both transition options. ASU 2018-11 is not expected to have a material impact on the Company’s Consolidated Financial Statements. In February 2018, the FASB issued ASU No.2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, or ASU 2018-02. The amendments in this update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act ("Tax Act"). The update does not have any impact on the underlying ASC 740 guidance that requires the effect of a change in tax law be included in income from continuing operations. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted and should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Act is recognized. The Company is currently evaluating the provisions of this guidance to determine the potential impact the new standard will have on the Company's consolidated financial statements. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, or ASU 2017-12. This standard better aligns an entity's risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. To meet that objective, the amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedge instruments and the hedged item in the financial statements. Adoption for this ASU is required for fiscal years and interim periods beginning after December 15, 2018 and early adoption is permitted. The Company is currently evaluating the provisions of this guidance to determine the potential impact the new standard will have on the Company's consolidated financial statements. In March 2017, the FASB issued ASU No. 2017-08, Receivables - Nonrefundable Fees and other Costs (Subtopic 320-20): Premium Amortization on Purchased Callable Debt Securities, or ASU 2017-08. This standard shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date to more closely align interest income recorded on bonds held at a premium with the economics of the underlying instrument. Adoption of ASU 2017-08 is required for fiscal years and interim periods within those fiscal years, beginning after December, 15, 2018, early adoption is permitted. The Company has determined the provisions of this guidance will not have a material impact on the Company's consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, or ASU 2017-04, which eliminates Step 2 from the goodwill impairment test. ASU 2017-04 also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. Adoption of ASU 2017-04 is required for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019 with early adoption permitted for annual or interim goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect the adoption of ASU 2017-04 to have a material impact on its consolidated financial statements. In June 2016, FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments. Current U.S. GAAP requires an “incurred loss” methodology for recognizing credit losses that delay recognition until it is probable a loss has been incurred. The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendment affects loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial asset not excluded from the scope that has the contractual right to receive cash. The amendments in this ASU replace the incurred loss impairment model in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendments in this ASU require a financial asset (or group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. The measurement of expected credit losses will be based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The amendments in this ASU broaden the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually. The use of forecasted information incorporates more timely information in the estimate of expected credit loss, which will be more decision useful to users of the financial statements. The amendments in this ASU will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is still evaluating the effects this ASU will have on the Company’s consolidated financial statements. The Company has formed an internal committee to oversee the project. Upon adoption, the Company expects a change in the processes and procedures to calculate the allowance for loan losses, including changes in assumptions and estimates to consider expected credit losses over the life of the loan versus the current accounting practice that utilizes the incurred loss model. The new guidance may result in an increase in the allowance for loan losses; however, management is still assessing the magnitude of the increase and its impact on the Company's consolidated financial statements. In addition, the current accounting policy and procedures for other-than-temporary impairment on investment securities classified as available for sale will be replaced with an allowance approach. The Company has begun developing and implementing processes to address the provisions of this ASU. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Under the new guidance, lessees will be required to recognize the following for all leases 1) a lease liability, which is the present value of a lessee’s obligation to make lease payments, and 2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. All entities will classify leases to determine how to recognize lease-related revenue and expense. Quantitative and qualitative disclosures will be required by lessees and lessors to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The intention is to require enough information to supplement the amounts recorded in the financial statements so that users can understand more about the nature of an entity’s leasing activities. ASU No. 2016-02 is effective for interim and annual reporting periods beginning after December 15, 2018. All entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. As the Company expects to elect the transition option provided in ASU No. 2018-11 (see above), the modified retrospective approach will be applied on January 1, 2019 (as opposed to January 1, 2017). The Company also expects to elect certain relief options offered in ASU 2016-02 including the package of practical expedients, and the option not to recognize right-of-use assets and lease liabilities that arise from short-term leases (i.e., leases with original terms of twelve months or less). The Company will likely elect the hindsight practical expedient, which allows entities to reassess their assumptions used when determining lease term and impairment of right-of-use assets. The Company has facility and equipment lease agreements which are currently being accounted for as operating leases and therefore not being recognized on the Company’s consolidated statement of condition. The Company expects the new guidance will require these lease agreements to be recognized on the consolidated statements of condition as a right-of-use asset and a corresponding lease liability. Therefore, the Company’s preliminary evaluation indicates the provisions of ASU No. 2016-02 are expected to impact the Company’s consolidated statements of financial condition, along with the Company’s regulatory capital ratios. However, the Company does not expect the new guidance to have a material impact on the Company’s consolidated statements of income. The Company is nearing completion of its effort to compile a complete inventory of arrangements containing a lease and accumulating the lease data necessary to apply the amended guidance. In addition, the Company is implementing new software to aid in the transition. The current estimated impact of implementing this ASU at January 1, 2019 is an increase in right-of-use assets ranging between $150.0 million to $175.0 million and an associated increase in lease liabilities on our consolidated statement of financial condition. This estimate is subject to revision as we approach the implementation date of January 1, 2019. |
Investment Securities |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENT SECURITIES | INVESTMENT SECURITIES: The following table sets forth certain information regarding the amortized cost and fair values of our investment securities available for sale and held to maturity.
Mortgage-backed securities ("MBS") and collateralized mortgage obligations ("CMO") represent securities issued by government sponsored enterprises ("GSEs"). Each of the MBS and CMO securities in our investment portfolio are guaranteed by Federal National Mortgage Association ("Fannie Mae"), Government National Mortgage Association ("Ginnie Mae") or Federal Home Loan Mortgage Corporation ("Freddie Mac"). Municipal bonds are comprised of general obligation bonds (i.e., backed by the general credit of the issuer) and revenue bonds (i.e., backed by revenues from the specific project being financed) issued by various municipal corporations. As of September 30, 2018 and December 31, 2017, all securities held, including municipal bonds and corporate debt securities, were rated investment grade, based upon external ratings where available and, where not available, based upon internal ratings which correspond to ratings as defined by Standard and Poor’s Rating Services (“S&P”) or Moody’s Investors Services (“Moody’s”). As of September 30, 2018 and December 31, 2017, substantially all securities held had ratings available by external ratings agencies. Investment securities available for sale and held to maturity that were in an unrealized loss position are presented in the following tables based on the length of time the individual securities have been in an unrealized loss position.
The Company has evaluated securities available for sale that are in an unrealized loss position and has determined that the decline in value is temporary and is related to the change in market interest rates since purchase. The decline in value is not related to any issuer- or industry-specific credit event. The Company has not identified any expected credit losses on its debt securities as of September 30, 2018 and December 31, 2017. In addition, as of September 30, 2018 and December 31, 2017, the Company had not made a decision to sell any of its debt securities held, nor did the Company consider it more likely than not that it would be required to sell such securities before recovery of their amortized cost basis. The following tables present the fair value of investment securities available for sale and held to maturity by contractual maturity along with the associated contractual yield for the periods indicated below. Contractual maturities for mortgage-backed securities and collateralized mortgage obligations as presented exclude the effect of expected prepayments. Expected maturities will differ from contractual maturities because borrowers may have the right to prepay obligations before the underlying mortgages mature. The weighted-average yield is computed using the contractual coupon of each security weighted based on the fair value of each security and does not include adjustments to a tax equivalent basis.
Sales of investment securities available for sale were as follows.
The following table summarizes the carrying value of securities pledged as collateral to secure borrowings, public deposits and other purposes as permitted or required by law:
The Company assesses the creditworthiness of the counterparties that hold the pledged collateral and has determined that these arrangements have little risk. There were no securities pledged under repurchase agreements at September 30, 2018 and December 31, 2017. Tax-exempt interest income on securities totaled $2.0 million and $2.0 million for the three months ended September 30, 2018 and 2017, respectively, and $6.2 million and $6.9 million for the nine months ended September 30, 2018 and 2017, respectively, was recorded in the Company's consolidated statements of operations. |
Loans and Credit Quality |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS AND CREDIT QUALITY | LOANS AND CREDIT QUALITY: For a detailed discussion of loans and credit quality, including accounting policies and the methodology used to estimate the allowance for credit losses, see Note 1, Summary of Significant Accounting Policies, and Note 5, Loans and Credit Quality, within our 2017 Annual Report on Form 10-K. The Company's portfolio of loans held for investment is divided into two portfolio segments, consumer loans and commercial loans, which are the same segments used to determine the allowance for loan losses. Within each portfolio segment, the Company monitors and assesses credit risk based on the risk characteristics of each of the following loan classes: single family and home equity and other loans within the consumer loan portfolio segment and non-owner occupied commercial real estate, multifamily, construction/land development and owner occupied commercial real estate and commercial business loans within the commercial loan portfolio segment. Loans held for investment consist of the following:
Loans in the amount of $2.29 billion and $1.81 billion at September 30, 2018 and December 31, 2017, respectively, were pledged to secure borrowings from the Federal Home Loan Bank ("FHLB") as part of our liquidity management strategy. Additionally, loans totaling $515.4 million and $663.8 million at September 30, 2018 and December 31, 2017, respectively, were pledged to secure borrowings from the Federal Reserve Bank. The FHLB and Federal Reserve Bank do not have the right to sell or re-pledge these loans. Credit Risk Concentrations Concentrations of credit risk arise when a number of customers are engaged in similar business activities or activities in the same geographic region, or when they have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions. Loans held for investment are primarily secured by real estate located in the Pacific Northwest, California and Hawaii. At September 30, 2018, we had concentrations representing 10% or more of the total portfolio by state and property type for the single family loan class within the states of Washington and California, which represented 13.4% and 10.4% of the total portfolio, respectively. In addition, at September 30, 2018, we had concentrations representing 10% or more of the total portfolio by state and property type for the multifamily loan class within the state of California, which represented 10.6% of the total portfolio. At December 31, 2017, we had concentrations representing 10% or more of the total portfolio by state and property type for the single family loan class within the states of Washington and California, which represented 15.0% and 10.9% of the total portfolio, respectively. Credit Quality Management considers the level of allowance for loan losses to be appropriate to cover credit losses inherent within the loans held for investment portfolio as of September 30, 2018. In addition to the allowance for loan losses, the Company maintains a separate allowance for losses related to unfunded loan commitments, and this amount is included in accounts payable and other liabilities on our consolidated statements of financial condition. Collectively, these allowances are referred to as the allowance for credit losses. The allowance for unfunded commitments was $1.4 million at September 30, 2018, compared to $1.1 million at September 30, 2017. For further information on the policies that govern the determination of the allowance for loan losses levels, see Note 1, Summary of Significant Accounting Policies, within our 2017 Annual Report on Form 10-K. Activity in the allowance for credit losses was as follows.
Activity in the allowance for credit losses by loan portfolio and loan class was as follows.
The following tables disaggregate our allowance for credit losses and recorded investment in loans by impairment methodology.
Impaired Loans The following tables present impaired loans by loan portfolio segment and loan class.
The following tables provide the average recorded investment and interest income recognized on impaired loans by portfolio segment and class.
Credit Quality Indicators Management regularly reviews loans in the portfolio to assess credit quality indicators and to determine appropriate loan classification and grading in accordance with applicable bank regulations. The Company's risk rating methodology assigns risk ratings ranging from 1 to 10, where a higher rating represents higher risk. The Company differentiates its lending portfolios into homogeneous loans and non-homogeneous loans. The 10 risk rating categories can be generally described by the following groupings for non-homogeneous loans: Pass. We have five pass risk ratings which represent a level of credit quality that ranges from no well-defined deficiency or weakness to some noted weakness, however the risk of default on any loan classified as pass is expected to be remote. The five pass risk ratings are described below: Minimal Risk. A minimal risk loan, risk rated 1-Exceptional, is to a borrower of the highest quality. The borrower has an unquestioned ability to produce consistent profits and service all obligations and can absorb severe market disturbances with little or no difficulty. Low Risk. A low risk loan, risk rated 2-Superior, is similar in characteristics to a minimal risk loan. Balance sheet and operations are slightly more prone to fluctuations within the business cycle; however, debt capacity and debt service coverage remains strong. The borrower will have a strong demonstrated ability to produce profits and absorb market disturbances. Modest Risk. A modest risk loan, risk rated 3-Excellent, is a desirable loan with excellent sources of repayment and no currently identifiable risk associated with collection. The borrower exhibits a very strong capacity to repay the loan in accordance with the repayment agreement. The borrower may be susceptible to economic cycles, but will have cash reserves to weather these cycles. Average Risk. An average risk loan, risk rated 4-Good, is an attractive loan with sound sources of repayment and no material collection or repayment weakness evident. The borrower has an acceptable capacity to pay in accordance with the agreement. The borrower is susceptible to economic cycles and more efficient competition, but should have modest reserves sufficient to survive all but the most severe downturns or major setbacks. Acceptable Risk. An acceptable risk loan, risk rated 5-Acceptable, is a loan with lower than average, but still acceptable credit risk. These borrowers may have higher leverage, less certain but viable repayment sources, have limited financial reserves and may possess weaknesses that can be adequately mitigated through collateral, structural or credit enhancement. The borrower is susceptible to economic cycles and is less resilient to negative market forces or financial events. Reserves may be insufficient to survive a modest downturn. Watch. A watch loan, risk rated 6-Watch, is still pass-rated, but represents the lowest level of acceptable risk due to an emerging risk element or declining performance trend. Watch ratings are expected to be temporary, with issues resolved or manifested to the extent that a higher or lower rating would be appropriate. The borrower should have a plausible plan, with reasonable certainty of success, to correct the problems in a short period of time. Borrowers rated watch are characterized by elements of uncertainty, such as:
Special Mention. A special mention loan, risk rated 7-Special Mention, has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loans or the institution's credit position at some future date. Loans in this category contain unfavorable characteristics and are generally undesirable. They are currently protected but are potentially weak and constitute an undue and unwarranted credit risk, but not to the point of a substandard classification. A special mention loan has potential weaknesses, which if not checked or corrected, weaken the loan or inadequately protect the Company’s position at some future date. Such weaknesses include:
Substandard. A substandard loan, risk rated 8-Substandard, is inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged, if any. Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the loan. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard loans, does not have to exist in individual loans classified substandard. Loans are classified as substandard when they have unsatisfactory characteristics causing unacceptable levels of risk. A substandard loan normally has one or more well-defined weaknesses that could jeopardize repayment of the loan. The likely need to liquidate assets to correct the problem, rather than repayment from successful operations, is the key distinction between special mention and substandard. The following are examples of well-defined weaknesses:
Doubtful. Loans classified as doubtful, risk rated 9-Doubtful, have all the weaknesses inherent in one classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors, which may work towards strengthening the loan, classification as a loss (and immediate charge-off) is deferred until more exact status may be determined. Pending factors include proposed merger, acquisition, liquidation procedures, capital injection, and perfection of liens on additional collateral and refinancing plans. In certain circumstances, a doubtful rating will be temporary, while the Company is awaiting an updated collateral valuation. In these cases, once the collateral is valued and appropriate margin applied, the remaining uncollateralized portion will be charged-off. The remaining balance, properly margined, may then be upgraded to substandard, however must remain on non-accrual. Loss. Loans classified as loss, risk rated 10-Loss, are considered uncollectible and of such little value that the continuance as an active Company asset is not warranted. This rating does not mean that the loan has no recovery or salvage value, but rather that the loan should be charged-off now, even though partial or full recovery may be possible in the future. Impaired. Loans are classified as impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal and interest when due, in accordance with the terms of the original loan agreement, without unreasonable delay. This includes all loans classified as nonaccrual and troubled debt restructurings. Impaired loans are risk rated for internal and regulatory rating purposes, but presented separately for clarification. Homogeneous loans maintain their original risk rating until they are greater than 30 days past due, and risk rating reclassification is based primarily on the past due status of the loan. The risk rating categories can be generally described by the following groupings for commercial and commercial real estate homogeneous loans: Watch. A homogeneous watch loan, risk rated 6, is 30-59 days past due from the required payment date at month-end. Special Mention. A homogeneous special mention loan, risk rated 7, is 60-89 days past due from the required payment date at month-end. Substandard. A homogeneous substandard loan, risk rated 8, is 90 days or more past due from the required payment date at month-end. Loss. A homogeneous loss loan is risk rated 10 when the loss has been confirmed and charged off through the Bank’s commercial special assets collection process. The risk rating categories can be generally described by the following groupings for residential and home equity and other homogeneous loans: Watch. A homogeneous retail watch loan, risk rated 6, is 60-89 days past due from the required payment date at month-end. Substandard. A homogeneous retail substandard loan, risk rated 8, is 90-179 days past due from the required payment date at month-end. Loss. A homogeneous retail loss loan is risk rated 10 when it becomes past due 180 cumulative days from the contractual due date. These loans are generally charged-off in the month in which the 180 day period elapses. Residential and home equity loans modified in a troubled debt restructure are not considered homogeneous. The risk rating classification for such loans are based on the non-homogeneous definitions noted above. The following tables summarize designated loan grades by loan portfolio segment and loan class.
As of September 30, 2018 and December 31, 2017, none of the Company's loans were rated Doubtful or Loss. For a detailed discussion on credit quality, see Note 5, Loans and Credit Quality, within our 2017 Annual Report on Form 10-K. Nonaccrual and Past Due Loans Loans are placed on nonaccrual status when the full and timely collection of principal and interest is doubtful, generally when the loan becomes 90 days or more past due for principal or interest payment or if part of the principal balance has been charged off. Loans whose repayments are insured by the Federal Housing Administration ("FHA") or guaranteed by the Veterans Administration ("VA") are generally maintained on accrual status even if 90 days or more past due. The following tables present an aging analysis of past due loans by loan portfolio segment and loan class.
The following tables present performing and nonperforming loan balances by loan portfolio segment and loan class.
The following tables present information about TDR activity during the periods presented.
The following table presents loans that were modified as TDRs within the previous 12 months and subsequently re-defaulted during the three and nine months ended September 30, 2018 and 2017, respectively. A TDR loan is considered re-defaulted when it becomes doubtful that the objectives of the modifications will be met, generally when a consumer loan TDR becomes 60 days or more past due on principal or interest payments or when a commercial loan TDR becomes 90 days or more past due on principal or interest payments.
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Deposits |
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Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEPOSITS | DEPOSITS: Deposit balances, including stated rates, were as follows.
Interest expense on deposits was as follows.
The weighted-average interest rates on certificates of deposit were 1.71% and 1.12% at September 30, 2018 and December 31, 2017, respectively. Certificates of deposit outstanding mature as follows.
The aggregate amount of time deposits in denominations of more than $250 thousand at September 30, 2018 and December 31, 2017 were $85.2 million and $88.8 million, respectively. There were $759.7 million and $345.5 million of brokered deposits at September 30, 2018 and December 31, 2017, respectively. |
Derivatives and Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVES AND HEDGING ACTIVITIES | DERIVATIVES AND HEDGING ACTIVITIES: To reduce the risk of significant interest rate fluctuations on the value of certain assets and liabilities, such as certain mortgage loans held for sale or mortgage servicing rights ("MSRs"), the Company utilizes derivatives, such as forward sale commitments, futures, option contracts, interest rate swaps and interest rate swaptions as risk management instruments in its hedging strategy. Derivative transactions are measured in terms of notional amount, which is not recorded in the consolidated statements of financial condition. The notional amount is generally not exchanged and is used as the basis for interest and other contractual payments. We held no derivatives designated as a fair value, cash flow or foreign currency hedge instrument at September 30, 2018 or December 31, 2017. Derivatives are reported at their respective fair values in the other assets or accounts payable and other liabilities line items on the consolidated statements of financial condition, with changes in fair value reflected in current period earnings. As permitted under U.S. GAAP, the Company nets derivative assets and liabilities when a legally enforceable master netting agreement exists between the Company and the derivative counterparty, which are documented under industry standard master agreements and credit support annexes. The Company's master netting agreements provide that following an uncured payment default or other event of default, the non-defaulting party may promptly terminate all transactions between the parties and determine a net amount due to be paid to, or by, the defaulting party. An event of default may also occur under a credit support annex if a party fails to make a collateral delivery (which remains uncured following applicable notice and grace periods). The Company's right of offset requires that master netting agreements are legally enforceable and that the exercise of rights by the non-defaulting party under these agreements will not be stayed or avoided under applicable law upon an event of default, including bankruptcy, insolvency or similar proceeding. The collateral used under the Company's master netting agreements is typically cash, but securities may be used under agreements with certain counterparties. Receivables related to cash collateral that has been paid to counterparties is included in other assets on the Company's consolidated statements of financial condition. Any securities pledged to counterparties as collateral remain on the consolidated statements of financial condition. Refer to Note 2, Investment Securities, for further information on securities collateral pledged. At September 30, 2018 and December 31, 2017, the Company did not hold any collateral received from counterparties under derivative transactions. For further information on the policies that govern derivative and hedging activities, see Note 1, Summary of Significant Accounting Policies, and Note 11, Derivatives and Hedging Activities, within our 2017 Annual Report on Form 10-K. The notional amounts and fair values for derivatives consist of the following.
The following tables present gross and net information about derivative instruments.
The following table presents the net gain (loss) recognized on derivatives, including economic hedge derivatives, within the respective line items in the statement of operations for the periods indicated.
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Mortgage Banking Operations |
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Mortgage Banking [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MORTGAGE BANKING OPERATIONS | MORTGAGE BANKING OPERATIONS: Loans held for sale consisted of the following.
Loans sold proceeds consisted of the following.
Gain on loan origination and sale activities, including the effects of derivative risk management instruments, consisted of the following.
The Company’s portfolio of loans serviced for others is primarily comprised of loans held in U.S. government and agency MBS issued by Fannie Mae, Freddie Mac and Ginnie Mae. Loans serviced for others are not included in the consolidated statements of financial condition as they are not assets of the Company. The composition of loans serviced for others that contribute to loan servicing income is presented below at the unpaid principal balance.
The Company has made representations and warranties that the loans sold meet certain requirements. The Company may be required to repurchase mortgage loans or indemnify loan purchasers due to defects in the origination process of the loan, such as documentation errors, underwriting errors and judgments, appraisal errors, early payment defaults and fraud. For further information on the Company's mortgage repurchase liability, see Note 7, Commitments, Guarantees and Contingencies, of this Quarterly Report on Form 10-Q. The following is a summary of changes in the Company's liability for estimated mortgage repurchase losses.
The Company has agreements with certain investors to advance scheduled principal and interest amounts on delinquent loans. Advances are also made to fund the foreclosure and collection costs of delinquent loans prior to the recovery of reimbursable amounts from investors or borrowers. Advances of $3.3 million and $5.3 million were recorded in other assets as of September 30, 2018 and December 31, 2017, respectively. When the Company has the unilateral right to repurchase Ginnie Mae pool loans it has previously sold (generally loans that are more than 90 days past due), the Company records the loan on its consolidated statement of financial condition. At September 30, 2018 and December 31, 2017, delinquent or defaulted mortgage loans currently in Ginnie Mae pools that the Company has recognized on its consolidated statements of financial condition totaled $39.8 million and $39.3 million, respectively, with a corresponding amount recorded within accounts payable and other liabilities on the consolidated statements of financial condition. The recognition of previously sold loans does not impact the accounting for the previously recognized MSRs. Revenue from mortgage servicing, including the effects of derivative risk management instruments, consisted of the following.
All MSRs are initially measured and recorded at fair value at the time loans are sold. Single family MSRs are subsequently carried at fair value with changes in fair value reflected in earnings in the periods in which the changes occur, while multifamily and SBA MSRs are subsequently carried at the lower of amortized cost or fair value. The fair value of MSRs is determined based on the price that would be received to sell the MSRs in an orderly transaction between market participants at the measurement date. The Company determines fair value using a valuation model that calculates the net present value of estimated future cash flows. Estimates of future cash flows include contractual servicing fees, ancillary income and costs of servicing, the timing of which are impacted by assumptions, primarily expected prepayment speeds and discount rates, which relate to the underlying performance of the loans. The initial fair value measurement of MSRs is adjusted up or down depending on whether the underlying loan pool interest rate is at a premium, discount or par. Key economic assumptions used in measuring the initial fair value of capitalized single family MSRs were as follows.
Key economic assumptions and the sensitivity of the current fair value for single family MSRs to immediate adverse changes in those assumptions were as follows.
These sensitivities are hypothetical and subject to key assumptions of the underlying valuation model. As the table above demonstrates, the Company’s methodology for estimating the fair value of MSRs is highly sensitive to changes in key assumptions. For example, actual prepayment experience may differ and any difference may have a material effect on MSR fair value. Changes in fair value resulting from changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table, the effect of a variation in a particular assumption on the fair value of the MSRs is calculated without changing any other assumption; in reality, changes in one factor may be associated with changes in another (for example, decreases in market interest rates may provide an incentive to refinance; however, this may also indicate a slowing economy and an increase in the unemployment rate, which reduces the number of borrowers who qualify for refinancing), which may magnify or counteract the sensitivities. Thus, any measurement of MSR fair value is limited by the conditions existing and assumptions made as of a particular point in time. Those assumptions may not be appropriate if they are applied to a different point in time. On June 29, 2018, the Company successfully closed the sale of the rights to service $4.90 billion in total unpaid principal balance of single family mortgage loans serviced for Fannie Mae, representing 21.1% of HomeStreet’s total single family mortgage loans serviced for others portfolio as of March 31, 2018. The sale resulted in a $573 thousand pre-tax increase in mortgage servicing income during the quarter. The Company finalized the servicing transfer for these loans in Q3 2018. The changes in single family MSRs measured at fair value are as follows.
MSRs resulting from the sale of multifamily loans are recorded at fair value and subsequently carried at the lower of amortized cost or fair value. Multifamily MSRs are amortized in proportion to, and over, the estimated period the net servicing income will be collected. The changes in multifamily MSRs measured at the lower of amortized cost or fair value were as follows.
At September 30, 2018, the expected weighted-average remaining life of the Company’s multifamily MSRs was 7.33 years. Projected amortization expense for the gross carrying value of multifamily MSRs is estimated as follows.
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Commitments, Guarantees and Contingencies |
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Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS, GUARANTEES AND CONTINGENCIES | COMMITMENTS, GUARANTEES AND CONTINGENCIES: Commitments Commitments to extend credit are agreements to lend to customers in accordance with predetermined contractual provisions. These commitments may be for specific periods or contain termination clauses and may require the payment of a fee by the borrower. The total amount of unused commitments does not necessarily represent future credit exposure or cash requirements in that commitments may expire without being drawn upon. The Company makes certain unfunded loan commitments as part of its lending activities that have not been recognized in the Company’s financial statements. These include commitments to extend credit made as part of the Company's lending activities on loans the Company intends to hold in its loans held for investment portfolio. The aggregate amount of these unrecognized unfunded loan commitments existing at September 30, 2018 and December 31, 2017 was $39.3 million and $56.9 million, respectively. In the ordinary course of business, the Company extends secured and unsecured open-end loans to meet the financing needs of its customers. Undistributed construction loan commitments, where the Company has an obligation to advance funds for construction progress payments, were $638.8 million and $706.7 million at September 30, 2018 and December 31, 2017, respectively. Unused home equity and commercial banking funding lines totaled $610.4 million and $456.1 million at September 30, 2018 and December 31, 2017, respectively. The Company has recorded an allowance for credit losses on loan commitments, included in accounts payable and other liabilities on the consolidated statements of financial condition, of $1.4 million and $1.3 million at September 30, 2018 and December 31, 2017, respectively. Guarantees In the ordinary course of business, the Company sells and services loans through the Fannie Mae Multifamily DUS® program and shares in the risk of loss with Fannie Mae under the terms of the DUS® contracts (pari passu loss sharing agreement). Under such agreements, the Company and Fannie Mae share losses on a pro rata basis, where the Company is responsible for losses incurred up to one-third of principal balance on each loan and with two-thirds of the loss covered by Fannie Mae. For loans that have been sold through this program, a liability is recorded for this loss sharing arrangement under the accounting guidance for guarantees. As of September 30, 2018 and December 31, 2017, the total unpaid principal balance of loans sold under this program was $1.44 billion and $1.31 billion, respectively. The Company’s reserve liability related to this arrangement totaled $2.3 million and $2.0 million at September 30, 2018 and December 31, 2017, respectively. There were no actual losses incurred under this arrangement during the three and nine months ended September 30, 2018 and 2017. Mortgage repurchase liability In the ordinary course of business, the Company sells residential mortgage loans to GSEs and other entities. In addition, the Company pools FHA-insured and VA-guaranteed mortgage loans into Ginnie Mae guaranteed mortgage-backed securities and pools conventional loans into Fannie Mae and Freddie Mac guaranteed mortgage-backed securities. The Company has made representations and warranties that the loans sold meet certain requirements. The Company may be required to repurchase mortgage loans, or indemnify loan purchasers, or FHA or VA due to defects in the origination process of the loan, such as documentation errors, underwriting errors and judgments, early payment defaults and fraud. These obligations expose the Company to mark-to-market and credit losses on the repurchased mortgage loans after accounting for any mortgage insurance that we may receive. Generally, the maximum amount of future payments the Company would be required to make for breaches of these representations and warranties would be equal to the unpaid principal balance of such loans that are deemed to have defects that were sold to purchasers plus, in certain circumstances, accrued and unpaid interest on such loans and certain expenses. The Company does not typically receive repurchase requests from the FHA or VA. As an originator of FHA-insured or VA-guaranteed loans, the Company is responsible for obtaining the insurance with the FHA or the guarantee with the VA. If loans are later found not to meet the requirements of the FHA or VA, through required internal quality control reviews or through agency audits, the Company may be required to indemnify the FHA or VA against losses. The loans remain in Ginnie Mae pools unless and until they are repurchased by the Company. In general, once an FHA or VA loan becomes 90 days past due, the Company repurchases the FHA or VA residential mortgage loan to minimize the cost of interest advances on the loan. If the loan is cured through borrower efforts or through loss mitigation activities, the loan may be resold into a Ginnie Mae pool. The Company's liability for mortgage loan repurchase losses incorporates probable losses associated with such indemnification. The total unpaid principal balance of loans sold on a servicing-retained basis that were subject to the terms and conditions of these representations and warranties totaled $19.89 billion and $22.71 billion as of September 30, 2018 and December 31, 2017, respectively. At September 30, 2018 and December 31, 2017, the Company had recorded a mortgage repurchase liability for loans sold on a servicing-retained and servicing-released basis, included in accounts payable and other liabilities on the consolidated statements of financial condition, of $2.9 million and $3.0 million, respectively. Contingencies In the normal course of business, the Company may have various legal claims and other similar contingent matters outstanding for which a loss may be realized. For these claims, the Company establishes a liability for contingent losses when it is probable that a loss has been incurred and the amount of loss can be reasonably estimated. For claims determined to be reasonably possible but not probable of resulting in a loss, there may be a range of possible losses in excess of the established liability. At September 30, 2018, we reviewed our legal claims and determined that there were no material claims that were considered to be probable or reasonably possible of resulting in a material loss. As a result, the Company did not have any material amounts reserved for legal claims as of September 30, 2018. |
Fair Value Measurement |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENT | FAIR VALUE MEASUREMENT: For a further discussion of fair value measurements, including information regarding the Company’s valuation methodologies and the fair value hierarchy, see Note 17, Fair Value Measurement within our 2017 Annual Report on Form 10-K. Valuation Processes The Company has various processes and controls in place to ensure that fair value measurements are reasonably estimated. The Finance Committee of the Board provides oversight and approves the Company’s Asset/Liability Management Policy ("ALMP"). The Company's ALMP governs, among other things, the application and control of the valuation models used to measure fair value. On a quarterly basis, the Company’s Asset/Liability Management Committee ("ALCO") and the Finance Committee of the Board review significant modeling variables used to measure the fair value of the Company’s financial instruments, including the significant inputs used in the valuation of single family MSRs. Additionally, ALCO periodically obtains an independent review of the MSR valuation process and procedures, including a review of the model architecture and the valuation assumptions. The Company obtains an MSR valuation from an independent valuation firm monthly to assist with the validation of the fair value estimate and the reasonableness of the assumptions used in measuring fair value. The Company’s real estate valuations are overseen by the Company’s appraisal department. The appraisal department maintains the Company’s appraisal policy and recommends changes to the policy subject to approval by the Company’s Loan Committee and the Credit Committee of the Board. The Company’s appraisals are prepared by independent third-party appraisers and the Company’s internal appraisers. Single family appraisals are generally reviewed by the Company’s single family loan underwriters. Single family appraisals with unusual, higher risk or complex characteristics, as well as commercial real estate appraisals, are reviewed by the Company’s appraisal department. We obtain pricing from third party service providers for determining the fair value of a substantial portion of our investment securities available for sale. We have processes in place to evaluate such third party pricing services to ensure information obtained and valuation techniques used are appropriate. For fair value measurements obtained from third party services, we monitor and review the results to ensure the values are reasonable and in line with market experience for similar classes of securities. While the inputs used by the pricing vendor in determining fair value are not provided, and therefore unavailable for our review, we do perform certain procedures to validate the values received, including comparisons to other sources of valuation (if available), comparisons to other independent market data and a variance analysis of prices by Company personnel that are not responsible for the performance of the investment securities. Estimation of Fair Value Fair value is based on quoted market prices, when available. In cases where a quoted price for an asset or liability is not available, the Company uses valuation models to estimate fair value. These models incorporate inputs such as forward yield curves, loan prepayment assumptions, expected loss assumptions, market volatilities, and pricing spreads utilizing market-based inputs where readily available. The Company believes its valuation methods are appropriate and consistent with those that would be used by other market participants. However, imprecision in estimating unobservable inputs and other factors may result in these fair value measurements not reflecting the amount realized in an actual sale or transfer of the asset or liability in a current market exchange. The following table summarizes the fair value measurement methodologies, including significant inputs and assumptions, and classification of the Company’s assets and liabilities.
The following table presents the levels of the fair value hierarchy for the Company’s assets and liabilities measured at fair value on a recurring basis.
There were no transfers between levels of the fair value hierarchy during the three and nine months ended September 30, 2018 and 2017. Level 3 Recurring Fair Value Measurements The Company's Level 3 recurring fair value measurements consist of single family MSRs, single family loans held for investment where fair value option was elected, certain single family loans held for sale, and interest rate lock and purchase loan commitments, which are accounted for as derivatives. For information regarding fair value changes and activity for single family MSRs during the three and nine months ended September 30, 2018 and 2017, see Note 6, Mortgage Banking Operations of this Form 10-Q. The Company transferred certain loans from held for sale to held for investment. These loans were originated as held for sale loans where the Company had elected fair value option. The Company determined these loans to be level 3 recurring assets as the valuation technique included a significant unobservable input. The total amount of held for investment loans where fair value option election was made was $4.1 million at September 30, 2018. The following information presents significant Level 3 unobservable inputs used to measure fair value of single family loans held for investment where fair value option was elected.
The following information presents significant Level 3 unobservable inputs used to measure fair value of certain single family loans held for sale where fair value option was elected.
The following table presents fair value changes and activity for Level 3 interest rate lock and purchase loan commitments.
The following tables present fair value changes and activity for Level 3 loans held for sale and loans held for investment.
The following information presents significant Level 3 unobservable inputs used to measure fair value of interest rate lock and purchase loan commitments.
Nonrecurring Fair Value Measurements Certain assets held by the Company are not included in the tables above, but are measured at fair value on a nonrecurring basis. These assets include certain loans held for investment and other real estate owned that are carried at the lower of cost or fair value of the underlying collateral, less the estimated cost to sell. The estimated fair values of real estate collateral are generally based on internal evaluations and appraisals of such collateral, which use the market approach and income approach methodologies. All impaired loans are subject to an internal evaluation completed quarterly by management as part of the allowance process. The fair value of commercial properties are generally based on third-party appraisals that consider recent sales of comparable properties, including their income-generating characteristics, adjusted (generally based on unobservable inputs) to reflect the general assumptions that a market participant would make when analyzing the property for purchase. The Company uses a fair value of collateral technique to apply adjustments to the appraisal value of certain commercial loans held for investment that are collateralized by real estate. During the nine months ended September 30, 2018, the Company recorded an adjustment of 8.0% to the appraisal values of certain commercial loans held for investment that are collateralized by real estate and recorded 7% adjustments during the three months ended September 30, 2018. During the three and nine months ended September 30, 2017, the Company recorded adjustments ranging from 7.10% to 100% of the appraisal values of certain commercial loans held for investment that are collateralized by real estate. The Company uses a fair value of collateral technique to apply adjustments to the stated value of certain commercial loans held for investment that are not collateralized by real estate. During the three months ended September 30, 2018 the Company applied a stated value adjustment of 30.0%. During the nine months ended September 30, 2018, the Company applied a range of stated value adjustments of 25.0% to 100.0%, with a weighted average of 56.0%. During the three months ended September 30, 2017, the Company applied a range of stated value adjustments of 42.2% to 100.0%, with a weighted average of 54.8%. During the nine months ended September 30, 2017, the Company applied a range of stated value adjustments of 0.0% to 100.0%, with a weighted average of 44.8%. During the three and nine months ended September 30, 2018 and 2017, the Company did not apply any adjustment to the appraisal value of OREO. Residential properties are generally based on unadjusted third-party appraisals. Factors considered in determining the fair value include geographic sales trends, the value of comparable surrounding properties as well as the condition of the property. These adjustments include management assumptions that are based on the type of collateral dependent loan and may increase or decrease an appraised value. Management adjustments vary significantly depending on the location, physical characteristics and income producing potential of each individual property. The quality and volume of market information available at the time of the appraisal can vary from period-to-period and cause significant changes to the nature and magnitude of the unobservable inputs used. Given these variations, changes in these unobservable inputs are generally not a reliable indicator for how fair value will increase or decrease from period to period. The following tables present assets that had changes in their recorded fair value during the three and nine months ended September 30, 2018 and 2017 and assets held at the end of the respective reporting period.
Fair Value of Financial Instruments The following presents the carrying value, estimated fair value and the levels of the fair value hierarchy for the Company’s financial instruments other than assets and liabilities measured at fair value on a recurring basis.
(1) Prior year presentation has changed due to the January 1, 2018 adoption of ASU 2016-01. |
Earnings Per Share |
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EARNINGS PER SHARE | EARNINGS PER SHARE: The following table summarizes the calculation of earnings per share.
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Business Segments |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BUSINESS SEGMENTS | BUSINESS SEGMENTS: The Company's business segments are determined based on the products and services provided, as well as the nature of the related business activities and reflect the manner in which financial information is currently evaluated by management. The Company organizes the segments into two lines of business: Commercial and Consumer Banking segment and Mortgage Banking segment. A description of the Company's business segments and the products and services that they provide is as follows. Commercial and Consumer Banking provides diversified financial products and services to our commercial and consumer customers through bank branches, ATMs, and online, mobile and telephone banking. These products and services include deposit products; residential, consumer, business and agricultural portfolio loans; non-deposit investment products; insurance products, and cash management services. We originate construction loans, bridge loans and permanent loans for our portfolio primarily on single family residences, and on office, retail, industrial and multifamily properties. We originate multifamily real estate loans through our Fannie Mae DUS® business, and after origination those loans are sold to or securitized by Fannie Mae, while the Company generally retains the servicing rights. In addition, through the HomeStreet Commercial Capital division of HomeStreet Bank, we originate permanent commercial real estate loans primarily up to $15 million in size, a portion of which we intend to pool and sell into the secondary market. As a part of the Commercial Lending division, we also have a team that specializes in SBA lending. This segment also reflects the results for the management of the Company's portfolio of investment securities. Mortgage Banking originates single family residential mortgage loans for sale in the secondary markets and performs mortgage servicing on a substantial portion of such loans. The majority of our mortgage loans are sold to or securitized by Fannie Mae, Freddie Mac or Ginnie Mae, while we retain the right to service these loans. We have become a rated originator and servicer of jumbo loans, allowing us to sell these loans to other securitizers. Additionally, we purchase loans from WMS Series LLC through a correspondent arrangement with that company. We also sell loans on a servicing-released and servicing-retained basis to securitizers and correspondent lenders. A small percentage of our loans are brokered to other lenders. On occasion, we may sell a portion of our MSR portfolio. We manage the loan funding and the interest rate risk associated with the secondary market loan sales and the retained single family mortgage servicing rights within this business segment. Financial highlights by operating segment were as follows.
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Accumulated Other Comprehensive Income (Loss) |
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Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): The following table shows changes in accumulated other comprehensive income (loss) from unrealized gain (loss) on available-for-sale securities, net of tax.
The following table shows the affected line items in the consolidated statements of operations from reclassifications of unrealized gain (loss) on available-for-sale securities from accumulated other comprehensive income (loss).
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Revenue |
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Sep. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | REVENUE: On January 1, 2018, the Company adopted ASU No. 2014-09 Revenue from Contracts with Customers ("Topic 606"). We elected to implement Topic 606 using the modified retrospective application, with the cumulative effect recorded as an adjustment to retained earnings at January 31, 2018. Due to immateriality, we had no cumulative effect to record. Since net interest income on financial assets and liabilities is excluded from this guidance, a significant majority of our revenues are not subject to the new guidance. Our revenue streams that fall within the scope of Topic 606 are presented within noninterest income and are, in general, recognized as revenue as we satisfy our obligation to the customer. Most of the Company's contracts that fall within the scope of this guidance are contracts with customers that are cancelable by either party without penalty and are short-termed in nature. These revenues include depositor and other retail and business banking fees, commission income, credit card fees and sales of other real estate owned. For the nine months ended September 30, 2018, in scope revenue streams were approximately 2.3% of our total revenues. As this standard is immaterial to our consolidated financial statements, the Company has omitted certain disclosures in ASU 2014-09, including the disaggregation of revenue table. In-scope noninterest revenue streams are discussed below. Depositor and other retail and business banking fees Depositor and other retail banking fees consist of monthly service fees, check orders, and other deposit account related fees. The Company’s performance obligation for these fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided. Commission Income Commission income primarily consists of revenue received on insurance policies and monthly investment management fees earned where the Company has acted as an intermediary between customers and the insurance carriers or investment advisers. Under Topic 606, the commissions received at the inception of the policy should be deferred and recognized over the course of the policy. The company’s performance obligation for commissions is generally satisfied, and the related revenue generally recognized, over the course of the policy or over the period in which the services are provided, generally monthly. Credit Card Fees The Company offers credit cards to its customers through a third party and earns a fee on each transaction and a fee for each new account activation on a net basis. Revenue is recognized on a one-month lag when cash is received for these fees which does not vary materially from recognizing revenue over the period the services are performed. Sale of Real Estate Owned A gain or loss, the difference between the cost basis of the property and its sale price, on other real estate owned is recognized when the performance obligation is met, which is at the time the property title is transferred to the buyer. |
Restructuring |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RESTRUCTURING | RESTRUCTURING: In 2017, we completed restructuring plans in the Company's Mortgage Banking segment to reduce operating costs and improve efficiency. In June 2018, the Company implemented another restructuring plan in the Mortgage Banking segment to further reduce operating costs and improve profitability. In the third quarter of 2018, we recorded additional $471 thousand in restructuring charges related to this event. Restructuring charges consist of facility-related costs and severance costs and are included in the occupancy and the salaries and related costs line items on our consolidated statement of operations for the applicable period. The following tables summarize the restructuring charges, the restructuring costs paid or settled during the first three and nine months of 2018 and the Company's net remaining liability balance at September 30, 2018 and 2017.
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Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS: The Company has evaluated subsequent events through the time of filing this Quarterly Report on Form 10-Q and has concluded that there are no significant events that occurred subsequent to the balance sheet date but prior to the filing of this report that would have a material impact on the consolidated financial statements. |
Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | The Company’s accounting and financial reporting policies conform to accounting principles generally accepted in the United States of America ("U.S. GAAP"). Inter-company balances and transactions have been eliminated in consolidation. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and revenues and expenses during the reporting periods and related disclosures. Some of these estimates require application of management's most difficult, subjective or complex judgments and result in amounts that are inherently uncertain and may change in future periods. |
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Recent Accounting Developments | Recent Accounting Developments In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. This ASU adds, eliminates, and modifies certain disclosure requirements for fair value measurements. Among the changes, entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASU No. 2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019; early adoption is permitted. Entities are also allowed to elect early adoption of the eliminated or modified disclosure requirements and delay adoption of the added disclosure requirements until their effective date. As ASU No. 2018-13 only revises disclosure requirements, it will not have a material impact on the Company’s Consolidated Financial Statements. In July 2018, the FASB issued ASU No. 2018-11, “Leases (Topic 842) - Targeted Improvements” to provide entities with relief from the costs of implementing certain aspects of the new leasing standard, ASU No. 2016-02. Specifically, under the amendments in ASU 2018-11: (1) entities may elect not to recast the comparative periods presented when transitioning to the new leasing standard, and (2) lessors may elect to not separate non-lease components from leases when certain conditions are met. The amendments have the same effective date as ASU 2016-02 (January 1, 2019 for the Company). The Company expects to elect both transition options. ASU 2018-11 is not expected to have a material impact on the Company’s Consolidated Financial Statements. In February 2018, the FASB issued ASU No.2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, or ASU 2018-02. The amendments in this update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act ("Tax Act"). The update does not have any impact on the underlying ASC 740 guidance that requires the effect of a change in tax law be included in income from continuing operations. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted and should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Act is recognized. The Company is currently evaluating the provisions of this guidance to determine the potential impact the new standard will have on the Company's consolidated financial statements. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, or ASU 2017-12. This standard better aligns an entity's risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. To meet that objective, the amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedge instruments and the hedged item in the financial statements. Adoption for this ASU is required for fiscal years and interim periods beginning after December 15, 2018 and early adoption is permitted. The Company is currently evaluating the provisions of this guidance to determine the potential impact the new standard will have on the Company's consolidated financial statements. In March 2017, the FASB issued ASU No. 2017-08, Receivables - Nonrefundable Fees and other Costs (Subtopic 320-20): Premium Amortization on Purchased Callable Debt Securities, or ASU 2017-08. This standard shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date to more closely align interest income recorded on bonds held at a premium with the economics of the underlying instrument. Adoption of ASU 2017-08 is required for fiscal years and interim periods within those fiscal years, beginning after December, 15, 2018, early adoption is permitted. The Company has determined the provisions of this guidance will not have a material impact on the Company's consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, or ASU 2017-04, which eliminates Step 2 from the goodwill impairment test. ASU 2017-04 also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. Adoption of ASU 2017-04 is required for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019 with early adoption permitted for annual or interim goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect the adoption of ASU 2017-04 to have a material impact on its consolidated financial statements. In June 2016, FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments. Current U.S. GAAP requires an “incurred loss” methodology for recognizing credit losses that delay recognition until it is probable a loss has been incurred. The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendment affects loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial asset not excluded from the scope that has the contractual right to receive cash. The amendments in this ASU replace the incurred loss impairment model in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendments in this ASU require a financial asset (or group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. The measurement of expected credit losses will be based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The amendments in this ASU broaden the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually. The use of forecasted information incorporates more timely information in the estimate of expected credit loss, which will be more decision useful to users of the financial statements. The amendments in this ASU will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is still evaluating the effects this ASU will have on the Company’s consolidated financial statements. The Company has formed an internal committee to oversee the project. Upon adoption, the Company expects a change in the processes and procedures to calculate the allowance for loan losses, including changes in assumptions and estimates to consider expected credit losses over the life of the loan versus the current accounting practice that utilizes the incurred loss model. The new guidance may result in an increase in the allowance for loan losses; however, management is still assessing the magnitude of the increase and its impact on the Company's consolidated financial statements. In addition, the current accounting policy and procedures for other-than-temporary impairment on investment securities classified as available for sale will be replaced with an allowance approach. The Company has begun developing and implementing processes to address the provisions of this ASU. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Under the new guidance, lessees will be required to recognize the following for all leases 1) a lease liability, which is the present value of a lessee’s obligation to make lease payments, and 2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. All entities will classify leases to determine how to recognize lease-related revenue and expense. Quantitative and qualitative disclosures will be required by lessees and lessors to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The intention is to require enough information to supplement the amounts recorded in the financial statements so that users can understand more about the nature of an entity’s leasing activities. ASU No. 2016-02 is effective for interim and annual reporting periods beginning after December 15, 2018. All entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. As the Company expects to elect the transition option provided in ASU No. 2018-11 (see above), the modified retrospective approach will be applied on January 1, 2019 (as opposed to January 1, 2017). The Company also expects to elect certain relief options offered in ASU 2016-02 including the package of practical expedients, and the option not to recognize right-of-use assets and lease liabilities that arise from short-term leases (i.e., leases with original terms of twelve months or less). The Company will likely elect the hindsight practical expedient, which allows entities to reassess their assumptions used when determining lease term and impairment of right-of-use assets. The Company has facility and equipment lease agreements which are currently being accounted for as operating leases and therefore not being recognized on the Company’s consolidated statement of condition. The Company expects the new guidance will require these lease agreements to be recognized on the consolidated statements of condition as a right-of-use asset and a corresponding lease liability. Therefore, the Company’s preliminary evaluation indicates the provisions of ASU No. 2016-02 are expected to impact the Company’s consolidated statements of financial condition, along with the Company’s regulatory capital ratios. However, the Company does not expect the new guidance to have a material impact on the Company’s consolidated statements of income. The Company is nearing completion of its effort to compile a complete inventory of arrangements containing a lease and accumulating the lease data necessary to apply the amended guidance. In addition, the Company is implementing new software to aid in the transition. The current estimated impact of implementing this ASU at January 1, 2019 is an increase in right-of-use assets ranging between $150.0 million to $175.0 million and an associated increase in lease liabilities on our consolidated statement of financial condition. This estimate is subject to revision as we approach the implementation date of January 1, 2019. |
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Loans and Leases Receivable | The Company's portfolio of loans held for investment is divided into two portfolio segments, consumer loans and commercial loans, which are the same segments used to determine the allowance for loan losses. Within each portfolio segment, the Company monitors and assesses credit risk based on the risk characteristics of each of the following loan classes: single family and home equity and other loans within the consumer loan portfolio segment and non-owner occupied commercial real estate, multifamily, construction/land development and owner occupied commercial real estate and commercial business loans within the commercial loan portfolio segment. |
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Allowance for Loan and Lease Losses | Management considers the level of allowance for loan losses to be appropriate to cover credit losses inherent within the loans held for investment portfolio as of September 30, 2018. In addition to the allowance for loan losses, the Company maintains a separate allowance for losses related to unfunded loan commitments, and this amount is included in accounts payable and other liabilities on our consolidated statements of financial condition. Collectively, these allowances are referred to as the allowance for credit losses. |
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Derivatives and Hedging Activities | To reduce the risk of significant interest rate fluctuations on the value of certain assets and liabilities, such as certain mortgage loans held for sale or mortgage servicing rights ("MSRs"), the Company utilizes derivatives, such as forward sale commitments, futures, option contracts, interest rate swaps and interest rate swaptions as risk management instruments in its hedging strategy. Derivative transactions are measured in terms of notional amount, which is not recorded in the consolidated statements of financial condition. The notional amount is generally not exchanged and is used as the basis for interest and other contractual payments. We held no derivatives designated as a fair value, cash flow or foreign currency hedge instrument at September 30, 2018 or December 31, 2017. Derivatives are reported at their respective fair values in the other assets or accounts payable and other liabilities line items on the consolidated statements of financial condition, with changes in fair value reflected in current period earnings. As permitted under U.S. GAAP, the Company nets derivative assets and liabilities when a legally enforceable master netting agreement exists between the Company and the derivative counterparty, which are documented under industry standard master agreements and credit support annexes. The Company's master netting agreements provide that following an uncured payment default or other event of default, the non-defaulting party may promptly terminate all transactions between the parties and determine a net amount due to be paid to, or by, the defaulting party. An event of default may also occur under a credit support annex if a party fails to make a collateral delivery (which remains uncured following applicable notice and grace periods). The Company's right of offset requires that master netting agreements are legally enforceable and that the exercise of rights by the non-defaulting party under these agreements will not be stayed or avoided under applicable law upon an event of default, including bankruptcy, insolvency or similar proceeding. The collateral used under the Company's master netting agreements is typically cash, but securities may be used under agreements with certain counterparties. Receivables related to cash collateral that has been paid to counterparties is included in other assets on the Company's consolidated statements of financial condition. Any securities pledged to counterparties as collateral remain on the consolidated statements of financial condition. Refer to Note 2, Investment Securities, for further information on securities collateral pledged. |
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Mortgage Banking Operations | All MSRs are initially measured and recorded at fair value at the time loans are sold. Single family MSRs are subsequently carried at fair value with changes in fair value reflected in earnings in the periods in which the changes occur, while multifamily and SBA MSRs are subsequently carried at the lower of amortized cost or fair value. The fair value of MSRs is determined based on the price that would be received to sell the MSRs in an orderly transaction between market participants at the measurement date. The Company determines fair value using a valuation model that calculates the net present value of estimated future cash flows. Estimates of future cash flows include contractual servicing fees, ancillary income and costs of servicing, the timing of which are impacted by assumptions, primarily expected prepayment speeds and discount rates, which relate to the underlying performance of the loans. |
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Fair Value Measurement | Valuation Processes The Company has various processes and controls in place to ensure that fair value measurements are reasonably estimated. The Finance Committee of the Board provides oversight and approves the Company’s Asset/Liability Management Policy ("ALMP"). The Company's ALMP governs, among other things, the application and control of the valuation models used to measure fair value. On a quarterly basis, the Company’s Asset/Liability Management Committee ("ALCO") and the Finance Committee of the Board review significant modeling variables used to measure the fair value of the Company’s financial instruments, including the significant inputs used in the valuation of single family MSRs. Additionally, ALCO periodically obtains an independent review of the MSR valuation process and procedures, including a review of the model architecture and the valuation assumptions. The Company obtains an MSR valuation from an independent valuation firm monthly to assist with the validation of the fair value estimate and the reasonableness of the assumptions used in measuring fair value. The Company’s real estate valuations are overseen by the Company’s appraisal department. The appraisal department maintains the Company’s appraisal policy and recommends changes to the policy subject to approval by the Company’s Loan Committee and the Credit Committee of the Board. The Company’s appraisals are prepared by independent third-party appraisers and the Company’s internal appraisers. Single family appraisals are generally reviewed by the Company’s single family loan underwriters. Single family appraisals with unusual, higher risk or complex characteristics, as well as commercial real estate appraisals, are reviewed by the Company’s appraisal department. We obtain pricing from third party service providers for determining the fair value of a substantial portion of our investment securities available for sale. We have processes in place to evaluate such third party pricing services to ensure information obtained and valuation techniques used are appropriate. For fair value measurements obtained from third party services, we monitor and review the results to ensure the values are reasonable and in line with market experience for similar classes of securities. While the inputs used by the pricing vendor in determining fair value are not provided, and therefore unavailable for our review, we do perform certain procedures to validate the values received, including comparisons to other sources of valuation (if available), comparisons to other independent market data and a variance analysis of prices by Company personnel that are not responsible for the performance of the investment securities. Estimation of Fair Value Fair value is based on quoted market prices, when available. In cases where a quoted price for an asset or liability is not available, the Company uses valuation models to estimate fair value. These models incorporate inputs such as forward yield curves, loan prepayment assumptions, expected loss assumptions, market volatilities, and pricing spreads utilizing market-based inputs where readily available. The Company believes its valuation methods are appropriate and consistent with those that would be used by other market participants. However, imprecision in estimating unobservable inputs and other factors may result in these fair value measurements not reflecting the amount realized in an actual sale or transfer of the asset or liability in a current market exchange. The following table summarizes the fair value measurement methodologies, including significant inputs and assumptions, and classification of the Company’s assets and liabilities.
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Revenue | Depositor and other retail and business banking fees Depositor and other retail banking fees consist of monthly service fees, check orders, and other deposit account related fees. The Company’s performance obligation for these fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided. Commission Income Commission income primarily consists of revenue received on insurance policies and monthly investment management fees earned where the Company has acted as an intermediary between customers and the insurance carriers or investment advisers. Under Topic 606, the commissions received at the inception of the policy should be deferred and recognized over the course of the policy. The company’s performance obligation for commissions is generally satisfied, and the related revenue generally recognized, over the course of the policy or over the period in which the services are provided, generally monthly. Credit Card Fees The Company offers credit cards to its customers through a third party and earns a fee on each transaction and a fee for each new account activation on a net basis. Revenue is recognized on a one-month lag when cash is received for these fees which does not vary materially from recognizing revenue over the period the services are performed. Sale of Real Estate Owned A gain or loss, the difference between the cost basis of the property and its sale price, on other real estate owned is recognized when the performance obligation is met, which is at the time the property title is transferred to the buyer. |
Investment Securities (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized cost and fair value of investment securities available for sale | The following table sets forth certain information regarding the amortized cost and fair values of our investment securities available for sale and held to maturity.
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Amortized cost and fair value of held-to-maturity securities | The following table sets forth certain information regarding the amortized cost and fair values of our investment securities available for sale and held to maturity.
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Investment securities in an unrealized loss position | Investment securities available for sale and held to maturity that were in an unrealized loss position are presented in the following tables based on the length of time the individual securities have been in an unrealized loss position.
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Computation of weighted average yield using coupon on the fair value | The following tables present the fair value of investment securities available for sale and held to maturity by contractual maturity along with the associated contractual yield for the periods indicated below. Contractual maturities for mortgage-backed securities and collateralized mortgage obligations as presented exclude the effect of expected prepayments. Expected maturities will differ from contractual maturities because borrowers may have the right to prepay obligations before the underlying mortgages mature. The weighted-average yield is computed using the contractual coupon of each security weighted based on the fair value of each security and does not include adjustments to a tax equivalent basis.
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Sales of investment securities available for sale | Sales of investment securities available for sale were as follows.
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Carrying value of securities pledged as collateral | The following table summarizes the carrying value of securities pledged as collateral to secure borrowings, public deposits and other purposes as permitted or required by law:
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Loans and Credit Quality (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans held for investment | Loans held for investment consist of the following:
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Activity in allowance for credit losses | Activity in the allowance for credit losses was as follows.
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Allowance for credit losses by loan portfolio segment and loan class | Activity in the allowance for credit losses by loan portfolio and loan class was as follows.
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Recorded investment in loans by Impairment Methodology | The following tables disaggregate our allowance for credit losses and recorded investment in loans by impairment methodology.
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Impaired loans by loan portfolio segment and loan class | The following tables present impaired loans by loan portfolio segment and loan class.
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Average recorded investment in impaired loans | The following tables provide the average recorded investment and interest income recognized on impaired loans by portfolio segment and class.
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Designated loan grades by loan portfolio segment and loan class | The following tables summarize designated loan grades by loan portfolio segment and loan class.
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Past due loans by portfolio segment and loan class | The following tables present an aging analysis of past due loans by loan portfolio segment and loan class.
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Performing and non-performing loan balances by portfolio segment and loan class | The following tables present performing and nonperforming loan balances by loan portfolio segment and loan class.
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TDR activity by loan portfolio segment and loan class | The following tables present information about TDR activity during the periods presented.
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TDR balances that subsequently re-defaulted | The following table presents loans that were modified as TDRs within the previous 12 months and subsequently re-defaulted during the three and nine months ended September 30, 2018 and 2017, respectively. A TDR loan is considered re-defaulted when it becomes doubtful that the objectives of the modifications will be met, generally when a consumer loan TDR becomes 60 days or more past due on principal or interest payments or when a commercial loan TDR becomes 90 days or more past due on principal or interest payments.
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Deposits (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposit balances, including stated rates | Deposit balances, including stated rates, were as follows.
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Interest expense on deposits | Interest expense on deposits was as follows.
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Certificates of deposit outstanding | Certificates of deposit outstanding mature as follows.
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Derivatives and Hedging Activities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notional amount and fair value for derivatives | The notional amounts and fair values for derivatives consist of the following.
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Fair value, concentration of risk | The following tables present gross and net information about derivative instruments.
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Net gains (losses) recognized on economic hedge derivatives | The following table presents the net gain (loss) recognized on derivatives, including economic hedge derivatives, within the respective line items in the statement of operations for the periods indicated.
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Mortgage Banking Operations (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage Banking [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage loans on real estate, by loan | Loans held for sale consisted of the following.
Loans sold proceeds consisted of the following.
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Net gain on loan origination and sale activity | Gain on loan origination and sale activities, including the effects of derivative risk management instruments, consisted of the following.
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Company's portfolio of loans serviced for others | The composition of loans serviced for others that contribute to loan servicing income is presented below at the unpaid principal balance.
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Mortgage repurchase losses | The following is a summary of changes in the Company's liability for estimated mortgage repurchase losses.
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Revenue from mortgage servicing, including the effects of derivative risk management instruments | Revenue from mortgage servicing, including the effects of derivative risk management instruments, consisted of the following.
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Key economic assumptions used in measuring initial FV of capitalized single family MSRs | Key economic assumptions used in measuring the initial fair value of capitalized single family MSRs were as follows.
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Schedule of sensitivity analysis of fair value, transferor's interests in transferred financial assets | Key economic assumptions and the sensitivity of the current fair value for single family MSRs to immediate adverse changes in those assumptions were as follows.
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Changes in single family MSRs measured at fair value | The changes in single family MSRs measured at fair value are as follows.
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Changes in multifamily MSRs measured at the lower of amortized cost or fair value | The changes in multifamily MSRs measured at the lower of amortized cost or fair value were as follows.
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Projected amortization expense for the gross carrying value of multifamily MSRs | At September 30, 2018, the expected weighted-average remaining life of the Company’s multifamily MSRs was 7.33 years. Projected amortization expense for the gross carrying value of multifamily MSRs is estimated as follows.
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Fair Value Measurement (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value measurement methodologies | The following table summarizes the fair value measurement methodologies, including significant inputs and assumptions, and classification of the Company’s assets and liabilities.
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Schedule of fair value hierarchy measurement | The following table presents the levels of the fair value hierarchy for the Company’s assets and liabilities measured at fair value on a recurring basis.
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Schedule of inputs used to measure fair value | The following information presents significant Level 3 unobservable inputs used to measure fair value of interest rate lock and purchase loan commitments.
The following information presents significant Level 3 unobservable inputs used to measure fair value of single family loans held for investment where fair value option was elected.
The following information presents significant Level 3 unobservable inputs used to measure fair value of certain single family loans held for sale where fair value option was elected.
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Schedule of fair value changes and activity for Level 3 | The following table presents fair value changes and activity for Level 3 interest rate lock and purchase loan commitments.
The following tables present fair value changes and activity for Level 3 loans held for sale and loans held for investment.
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Schedule of assets that had changes in their recorded fair value | The following tables present assets that had changes in their recorded fair value during the three and nine months ended September 30, 2018 and 2017 and assets held at the end of the respective reporting period.
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Schedule of the fair value hierarchy | The following presents the carrying value, estimated fair value and the levels of the fair value hierarchy for the Company’s financial instruments other than assets and liabilities measured at fair value on a recurring basis.
(1) Prior year presentation has changed due to the January 1, 2018 adoption of ASU 2016-01. |
Earnings Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of earnings per share, basic and diluted | The following table summarizes the calculation of earnings per share.
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Business Segments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed income statement | Financial highlights by operating segment were as follows.
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Accumulated Other Comprehensive Income (Loss) (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accumulated other comprehensive income (loss) | The following table shows changes in accumulated other comprehensive income (loss) from unrealized gain (loss) on available-for-sale securities, net of tax.
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Reclassification out of accumulated other comprehensive income (loss) | The following table shows the affected line items in the consolidated statements of operations from reclassifications of unrealized gain (loss) on available-for-sale securities from accumulated other comprehensive income (loss).
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Restructuring (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring reserve rollforward | The following tables summarize the restructuring charges, the restructuring costs paid or settled during the first three and nine months of 2018 and the Company's net remaining liability balance at September 30, 2018 and 2017.
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Summary of Significant Accounting Policies - Narrative (Details) - ASU 2016-02 [Member] - Forecast [Member] $ in Millions |
Jan. 01, 2019
USD ($)
|
---|---|
Minimum [Member] | |
Lessee, Lease, Description [Line Items] | |
Right of use assets on operating lease | $ 150.0 |
Operating lease liability | 150.0 |
Maximum [Member] | |
Lessee, Lease, Description [Line Items] | |
Right of use assets on operating lease | 175.0 |
Operating lease liability | $ 175.0 |
Investment Securities - Realized Gain/Loss on Investment (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Investments, Debt and Equity Securities [Abstract] | ||||
Proceeds | $ 16,233 | $ 27,827 | $ 38,465 | $ 342,461 |
Gross gains | 39 | 331 | 300 | 907 |
Gross losses | $ (43) | $ 0 | $ (66) | $ (19) |
Investment Securities - Pledged to Secure Borrowings And Public Deposits (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Federal Home Loan Bank to secure borrowings | $ 100,857 | $ 425,866 |
Washington and California State to secure public deposits | 128,533 | 118,828 |
Securities pledged to secure derivatives in a liability position | 14,585 | 7,308 |
Other securities pledged | 3,904 | 6,089 |
Total securities pledged as collateral | $ 247,879 | $ 558,091 |
Investment Securities - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Investments, Debt and Equity Securities [Abstract] | |||||
Security pledged under repurchase agreement | $ 0 | $ 0 | $ 0 | ||
Tax exempt interest income on available-for-sale securities | $ 2,000,000 | $ 2,000,000 | $ 6,200,000 | $ 6,900,000 |
Loans and Credit Quality - Narrative (Details) $ in Millions |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2018
USD ($)
segment
|
Dec. 31, 2017
USD ($)
|
Sep. 30, 2017
USD ($)
|
|
Financing Receivable, Impaired [Line Items] | |||
Number of portfolio segments | segment | 2 | ||
Concentration percentage | 10.00% | 10.00% | |
Allowance for unfunded commitments | $ 1.4 | $ 1.3 | $ 1.1 |
Washington | Single family [Member] | |||
Financing Receivable, Impaired [Line Items] | |||
Percentage of loan portfolio | 13.40% | 15.00% | |
California | Single family [Member] | |||
Financing Receivable, Impaired [Line Items] | |||
Percentage of loan portfolio | 10.40% | 10.90% | |
California | Multifamily [Member] | |||
Financing Receivable, Impaired [Line Items] | |||
Percentage of loan portfolio | 10.60% | ||
Federal Home Loan Bank Advances [Member] | |||
Financing Receivable, Impaired [Line Items] | |||
Loans pledged as collateral | $ 2,290.0 | $ 1,810.0 | |
Federal Reserve Bank Advances [Member] | |||
Financing Receivable, Impaired [Line Items] | |||
Loans pledged as collateral | $ 515.4 | $ 663.8 |
Loans and Credit Quality - Allowance for Credit Losses (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Allowance for Doubtful Accounts Receivable [Roll Forward] | ||||
Beginning Balance | $ 40,982 | $ 37,470 | $ 39,116 | $ 35,264 |
Provision for credit losses | 750 | 250 | 2,500 | 750 |
Recoveries (charge-offs), net | 122 | 475 | 238 | 2,181 |
Ending Balance | $ 41,854 | $ 38,195 | $ 41,854 | $ 38,195 |
Loans and Credit Quality - TDR Re-defaults (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018
USD ($)
loan
|
Sep. 30, 2017
USD ($)
loan
|
Sep. 30, 2018
USD ($)
loan
|
Sep. 30, 2017
USD ($)
loan
|
|
Financing Receivable, Modifications [Line Items] | ||||
Number of days past due for consumer loans TDR to be re-default | 60 days | |||
Number of days past due for commercial loans TDR to be re-default | 90 days | |||
Consumer loans [Member] | Single family [Member] | ||||
TDR balances which have subsequently re-defaulted | ||||
Number of TDR loan relationships that re-defaulted | loan | 6 | 8 | 18 | 16 |
Recorded investment | $ | $ 988 | $ 1,743 | $ 3,267 | $ 3,395 |
Deposits - Schedule of Interest expense on Deposits (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Interest expense on deposits | ||||
NOW accounts | $ 416 | $ 500 | $ 1,286 | $ 1,480 |
Statement savings accounts | 197 | 256 | 643 | 761 |
Money market accounts | 4,481 | 2,089 | 12,003 | 6,254 |
Certificates of deposit | 6,192 | 3,175 | 14,704 | 9,015 |
Interest expense on deposits, Total | $ 11,286 | $ 6,020 | $ 28,636 | $ 17,510 |
Deposits - Schedule of Deposits Maturity (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Certificates of deposit outstanding | ||
Within one year | $ 1,226,457 | |
One to two years | 256,183 | |
Two to three years | 35,158 | |
Three to four years | 13,164 | |
Four to five years | 17,184 | |
Thereafter | 246 | |
Total | $ 1,548,392 | $ 1,190,689 |
Deposits - Narrative (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Banking and Thrift [Abstract] | ||
Weighted-average interest rate on certificates of deposit (as a percent) | 1.71% | 1.12% |
Time Deposits, at or Above FDIC Insurance Limit | $ 85.2 | $ 88.8 |
Brokered deposits | $ 759.7 | $ 345.5 |
Derivatives and Hedging Activities - Narrative (Details) - USD ($) |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Derivatives designated as a hedging instrument | $ 0 | $ 0 |
Derivatives and Hedging Activities - Master Netting Agreements (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Derivative [Line Items] | ||
Gross fair value, Derivative assets | $ 23,982 | $ 26,432 |
Netting adjustments, Derivative assets | (8,699) | (6,646) |
Derivative assets | 15,283 | 19,786 |
Securities pledged, Derivative assets | 0 | 0 |
Net amount - Derivative assets | 15,283 | 19,786 |
Derivatives before netting, Derivative Liabilities | (40,832) | (25,225) |
Netting adjustments, Derivative liabilities | 36,339 | 23,505 |
Derivative liabilities | (4,493) | (1,720) |
Securities pledged, Derivative liabilities | 4,471 | 1,213 |
Net amount, Derivative liabilities | (22) | (507) |
Concentration of credit risk, master netting arrangements [Member] | ||
Derivative [Line Items] | ||
Cash collateral, as part of netting adjustment | $ 27,600 | $ 16,900 |
Derivatives and Hedging Activities - Gain (Loss) Recognized in Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Loans [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Net gain (loss) recognized on derivatives, including economic hedge | $ (4,760) | $ (9,180) | $ 12,322 | $ (20,788) |
Servicing contracts [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Net gain (loss) recognized on derivatives, including economic hedge | (9,446) | 2,807 | (52,611) | 12,060 |
Mortgages [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Net gain (loss) recognized on derivatives, including economic hedge | $ (14,206) | $ (6,373) | $ (40,289) | $ (8,728) |
Mortgage Banking Operations - Loans Held for Sale (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans held for sale | $ 404,440 | $ 610,902 |
Single family [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans held for sale | 350,949 | 577,313 |
Multifamily DUS [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans held for sale | 5,176 | 29,651 |
Small business administration (SBA) [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans held for sale | 9,618 | 3,938 |
CRE-Non-DUS [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans held for sale | $ 38,697 | $ 0 |
Mortgage Banking Operations - Loans Sold (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Loans sold | $ 1,882,565 | $ 2,183,697 | $ 5,411,198 | $ 5,881,976 |
Proceeds from sale of loans originated as held for investment | 319,004 | 140,642 | ||
Single family [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Loans sold | 1,724,697 | 1,956,129 | 5,043,769 | 5,504,366 |
Proceeds from sale of loans originated as held for investment | 34,500 | 173,100 | ||
Multifamily DUS [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Loans sold | 93,281 | 102,075 | 180,878 | 214,236 |
SBA [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Loans sold | 3,025 | 11,318 | 10,339 | 22,485 |
CRE-Non-DUS [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Loans sold | $ 61,562 | $ 114,175 | $ 176,212 | $ 140,889 |
Mortgage Banking Operations - Mortgage Repurchase Liability (Details) - Representations and warranties reserve for loan receivables [Member] - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Mortgage Repurchase Losses [Roll Forward] | ||||
Balance, beginning of period | $ 2,504 | $ 2,990 | $ 3,015 | $ 3,382 |
Additions (reductions), net of adjustments | 643 | (338) | 1,248 | (370) |
Realized losses | (273) | (148) | (1,389) | (508) |
Balance, end of period | $ 2,874 | $ 2,504 | $ 2,874 | $ 2,504 |
Mortgage Banking Operations - Key Economic Assumptions (Details) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Constant prepayment rate [Member] | ||||
Fair Value Measurement Inputs and Valuation Techniques | ||||
Discount rate | 17.19% | 13.24% | 15.54% | 13.34% |
Discount rate [Member] | ||||
Fair Value Measurement Inputs and Valuation Techniques | ||||
Discount rate | 10.29% | 10.28% | 10.27% | 10.29% |
Mortgage Banking Operations - Sensitivity Analysis (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Key economic assumptions and the sensitivity of the current fair value for single family MSRs | ||
Fair value of single family MSR | $ 263,622 | $ 258,560 |
Expected weighted-average life | 6 years 9 months 22 days | |
Constant prepayment rate (as a percent) | 10.71% | |
Impact on fair value of 25 basis points adverse change in interest rates | $ (12,801) | |
Impact on fair value of 50 basis points adverse change in interest rates | $ (27,461) | |
Discount rate (as a percent) | 10.40% | |
Impact on fair value of 100 basis points increase | $ (9,811) | |
Impact on fair value of 200 basis points increase | $ (18,936) |
Mortgage Banking Operations - Multifamily MSR Roll Forward (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Servicing Asset at Amortized Value, Balance [Roll Forward] | ||||
Beginning balance | $ 26,460 | $ 21,600 | $ 26,093 | $ 19,747 |
Origination | 2,657 | 3,177 | 5,000 | 6,722 |
Amortization | (981) | (811) | (2,957) | (2,503) |
Ending balance | $ 28,136 | $ 23,966 | $ 28,136 | $ 23,966 |
Mortgage Banking Operations - MSR Projected Amortization (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|---|---|---|---|
Projected Amortization Expense [Abstract] | ||||||
Remainder of 2018 | $ 978 | |||||
2019 | 3,861 | |||||
2020 | 3,792 | |||||
2021 | 3,592 | |||||
2022 | 3,282 | |||||
2023 and thereafter | 12,631 | |||||
Carrying value of multifamily MSR | 28,136 | $ 26,460 | $ 26,093 | $ 23,966 | $ 21,600 | $ 19,747 |
Multifamily originations [Member] | ||||||
Projected Amortization Expense [Abstract] | ||||||
Carrying value of multifamily MSR | $ 28,136 |
Fair Value Measurement - Schedule of Fair Value Changes and Activity for Level 3 (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Loans held for sale [Member] | ||||
Fair Value Changes and Activity for Level 3 [Roll Forward] | ||||
Beginning balance | $ 1,823 | $ 29,259 | $ 1,336 | $ 41,810 |
Additions | 0 | 93 | 2,601 | 3,088 |
Transfers | 0 | (303) | 0 | 12,797 |
Settlements | 0 | (28,913) | (1,998) | (58,396) |
Realized/unrealized gains (losses) | (30) | (45) | (146) | 792 |
Ending balance | 1,793 | 91 | 1,793 | 91 |
Loans held for investment [Member] | ||||
Fair Value Changes and Activity for Level 3 [Roll Forward] | ||||
Beginning balance | 4,178 | 5,134 | 5,477 | 17,988 |
Additions | 0 | 127 | 0 | 127 |
Transfers | 0 | 303 | 0 | (12,272) |
Settlements | (2) | 0 | (1,116) | (480) |
Realized/unrealized gains (losses) | (86) | (18) | (271) | 183 |
Ending balance | 4,090 | 5,546 | 4,090 | 5,546 |
Interest rate lock and purchase loan commitments [Member] | ||||
Fair Value Changes and Activity for Level 3 [Roll Forward] | ||||
Beginning balance | 16,866 | 22,283 | 12,925 | 19,219 |
Settlements | (32,996) | (38,060) | (80,135) | (104,582) |
Realized/unrealized gains (losses) | 26,527 | 36,779 | 77,607 | 106,365 |
Ending balance | $ 10,397 | $ 21,002 | $ 10,397 | $ 21,002 |
Earnings Per Share - Schedule of EPS Calculation (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Earnings Per Share [Abstract] | ||||
Net income | $ 11,835 | $ 13,839 | $ 24,800 | $ 34,031 |
Weighted average shares: | ||||
Basic weighted average number of shares outstanding (in shares) | 26,985,425 | 26,883,392 | 26,963,260 | 26,857,006 |
Dilutive effect of outstanding common stock equivalents (in shares) | 196,263 | 205,648 | 202,412 | 220,026 |
Diluted weighted-average number of shares outstanding (in shares) | 27,181,688 | 27,089,040 | 27,165,672 | 27,077,032 |
Earnings per share: | ||||
Basic earnings per share (in dollars per share) | $ 0.44 | $ 0.51 | $ 0.92 | $ 1.27 |
Diluted income per share (in dollars per share) | $ 0.44 | $ 0.51 | $ 0.91 | $ 1.26 |
Aggregate number of common stock equivalents and unvested restricted stock (in shares) | 0 | 912 |
Business Segments (Details) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2017
USD ($)
|
Sep. 30, 2018
USD ($)
segment
|
Sep. 30, 2017
USD ($)
|
Dec. 31, 2017
USD ($)
|
|
Segment Reporting Information [Line Items] | |||||
Number of operating segments | segment | 2 | ||||
Condensed income statement: | |||||
Net interest income | $ 51,644,000 | $ 50,840,000 | $ 151,107,000 | $ 143,359,000 | |
Provision for credit losses | 750,000 | 250,000 | 2,500,000 | 750,000 | |
Noninterest Income | 58,108,000 | 83,884,000 | 188,328,000 | 239,353,000 | |
Noninterest expense | 94,595,000 | 114,697,000 | 305,929,000 | 332,815,000 | |
Income before income taxes | 14,407,000 | 19,777,000 | 31,006,000 | 49,147,000 | |
Income tax (benefit) expense | 2,572,000 | 5,938,000 | 6,206,000 | 15,116,000 | |
NET INCOME | 11,835,000 | 13,839,000 | 24,800,000 | 34,031,000 | |
Total assets | 7,029,082,000 | 6,796,346,000 | 7,029,082,000 | 6,796,346,000 | $ 6,742,041,000 |
Commercial and Consumer Banking [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Maximum amount of commercial real estate loans the company would originate | 15,000,000 | 15,000,000 | |||
Condensed income statement: | |||||
Net interest income | 47,861,000 | 45,314,000 | 141,054,000 | 128,666,000 | |
Provision for credit losses | 750,000 | 250,000 | 2,500,000 | 750,000 | |
Noninterest Income | 10,651,000 | 11,962,000 | 26,151,000 | 29,663,000 | |
Noninterest expense | 37,813,000 | 37,160,000 | 115,369,000 | 110,261,000 | |
Income before income taxes | 19,949,000 | 19,866,000 | 49,336,000 | 47,318,000 | |
Income tax (benefit) expense | 3,382,000 | 5,904,000 | 10,662,000 | 14,618,000 | |
NET INCOME | 16,567,000 | 13,962,000 | 38,674,000 | 32,700,000 | |
Total assets | 6,387,122,000 | 5,763,836,000 | 6,387,122,000 | 5,763,836,000 | |
Mortgage Banking [Member] | |||||
Condensed income statement: | |||||
Net interest income | 3,783,000 | 5,526,000 | 10,053,000 | 14,693,000 | |
Provision for credit losses | 0 | 0 | 0 | 0 | |
Noninterest Income | 47,457,000 | 71,922,000 | 162,177,000 | 209,690,000 | |
Noninterest expense | 56,782,000 | 77,537,000 | 190,560,000 | 222,554,000 | |
Income before income taxes | (5,542,000) | (89,000) | (18,330,000) | 1,829,000 | |
Income tax (benefit) expense | (810,000) | 34,000 | (4,456,000) | 498,000 | |
NET INCOME | (4,732,000) | (123,000) | (13,874,000) | 1,331,000 | |
Total assets | $ 641,960,000 | $ 1,032,510,000 | $ 641,960,000 | $ 1,032,510,000 |
Accumulated Other Comprehensive Income (Loss) - Schedule of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | $ 704,380 | $ 629,284 | ||
Amounts reclassified from accumulated other comprehensive income (loss) | $ 4 | $ (215) | (184) | (577) |
Other comprehensive (loss) income | (4,395) | 1,021 | (16,995) | 6,020 |
Ending balance | 714,782 | 671,469 | 714,782 | 671,469 |
Accumulated Other Comprehensive Income (Loss) [Member] | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | (19,722) | (5,413) | (7,122) | (10,412) |
Other comprehensive (loss) income before reclassifications | (4,399) | 1,236 | (16,811) | 6,597 |
Amounts reclassified from accumulated other comprehensive income (loss) | 4 | (215) | (184) | (577) |
Other comprehensive (loss) income | (4,395) | 1,021 | (16,995) | 6,020 |
Ending balance | $ (24,117) | $ (4,392) | $ (24,117) | $ (4,392) |
Accumulated Other Comprehensive Income (Loss) - Reclassification out of Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||||
(Loss) gain on sale of investment securities available for sale | $ (4) | $ 331 | $ 234 | $ 888 |
Income tax (benefit) expense | 2,572 | 5,938 | 6,206 | 15,116 |
Total, net of tax | (4) | 215 | 184 | 577 |
Gains and Losses on Available-for-Sale Securities [Member] | Reclassification out of Accumulated Other Comprehensive Income (Loss) [Member] | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||||
(Loss) gain on sale of investment securities available for sale | (4) | 331 | 234 | 888 |
Income tax (benefit) expense | $ 0 | $ 116 | $ 50 | $ 311 |
Revenue (Details) |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Percentage of revenue streams in scope with ASU 2014-09 | 2.30% |
Restructuring - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Restructuring and Related Activities [Abstract] | ||||
Restructuring charges | $ 471 | $ 3,877 | $ 7,073 | $ 3,981 |
Restructuring - Restructuring Reserve Rollforward (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Restructuring Reserve [Roll Forward] | ||||
Beginning balance | $ 4,648 | $ 71 | $ 1,386 | $ 0 |
Restructuring charges (recoveries) | 471 | 3,877 | 7,073 | 3,981 |
Costs paid or otherwise settled | (1,809) | (1,459) | (5,149) | (1,492) |
Ending balance | 3,310 | 2,489 | 3,310 | 2,489 |
Facility related costs [Member] | ||||
Restructuring Reserve [Roll Forward] | ||||
Beginning balance | 4,209 | 0 | 1,386 | 0 |
Restructuring charges (recoveries) | 456 | 3,332 | 6,619 | 3,332 |
Costs paid or otherwise settled | (1,409) | (1,279) | (4,749) | (1,279) |
Ending balance | 3,256 | 2,053 | 3,256 | 2,053 |
Personnel related costs [Member] | ||||
Restructuring Reserve [Roll Forward] | ||||
Beginning balance | 439 | 71 | 0 | 0 |
Restructuring charges (recoveries) | 15 | 545 | 454 | 649 |
Costs paid or otherwise settled | (400) | (180) | (400) | (213) |
Ending balance | $ 54 | $ 436 | $ 54 | $ 436 |
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