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What changed in NORTHPOINTE BANCSHARES INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of NORTHPOINTE BANCSHARES INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+412 added−373 removedSource: 10-K (2026-03-27) vs 10-K (2025-03-28)

Top changes in NORTHPOINTE BANCSHARES INC's 2025 10-K

412 paragraphs added · 373 removed · 283 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

75 edited+19 added−12 removed161 unchanged
Biggest changeWe believe our long-term experience in CRE lending, underwriting policies, internal controls, and other policies currently in place, as well as our loan and credit monitoring and administration procedures, are generally appropriate in managing our concentrations as required under the Guidance. 10 Table of Contents Community Reinvestment Act The Bank is subject to the provisions of the CRA, which imposes a continuing and affirmative obligation, consistent with safe and sound operation, to help meet the credit needs of entire communities where the bank accepts deposits, including low- and moderate-income neighborhoods.
Biggest changeCommunity Reinvestment Act The Bank is subject to the provisions of the CRA, which imposes a continuing and affirmative obligation, consistent with safe and sound operation, to help meet the credit needs of entire communities where the bank accepts deposits, including low- and moderate-income neighborhoods. The FDIC’s assessment of the Bank’s CRA record is made available to the public.
(a) Residential Lending — Our residential lending division provides a comprehensive range of financing options for home purchases and refinancing, serving borrowers nationwide through two main channels: Consumer Direct and Traditional Retail. These channels combine the convenience of online, self-service platforms with the personalized service of traditional, referral-based interactions.
Our residential lending division provides a comprehensive range of financing options for home purchases and refinancing, serving borrowers nationwide through two main channels: Consumer Direct and Traditional Retail. These channels combine the convenience of online, self-service platforms with the personalized service of traditional, referral-based interactions.
In particular, our Compensation Committee, in conjunction with our President and Chief Executive Officer and other members of our management, as appropriate, reviews our incentive compensation arrangements to ensure these programs are consistent with applicable laws and regulations, including safety and soundness requirements, and do not encourage imprudent or excessive risk-taking by our employees.
In particular, our Compensation Committee, in conjunction with our President and our Chief Executive Officer and other members of our management, as appropriate, reviews our incentive compensation arrangements to ensure these programs are consistent with applicable laws and regulations, including safety and soundness requirements, and do not encourage imprudent or excessive risk-taking by our employees.
All of the Mortgage Loans Originated by our Bank Are Subject to the “Know Before You Owe” TRID Disclosures All of our mortgage loans are subject to the CFPB’s Know Before You Owe TRID rule, which became effective for mortgage loans whose applications were received on or after October 3, 2015.
Substantially all of the Mortgage Loans Originated by our Bank Are Subject to the “Know Before You Owe” TRID Disclosures Substantially all of our mortgage loans are subject to the CFPB’s Know Before You Owe TRID rule, which became effective for mortgage loans whose applications were received on or after October 3, 2015.
The Bank must comply with many federal laws including: 11 Table of Contents • the Truth in Lending Act (“TILA”) and Regulation Z promulgated thereunder, which (among other things) require specific disclosures to the borrowers regarding the terms of the mortgage loans and inclusion of certain terms in an originator’s underwriting guidelines; • the Consumer Financial Protection Act, enacted as part of the Dodd-Frank Act, which (among other things) created the CFPB and gave it broad rulemaking, supervisory and enforcement jurisdiction over mortgage lenders and servicers, and proscribes any unfair, deceptive or abusive acts or practices in connection with any consumer financial product or services; • the Equal Credit Opportunity Act and Regulation B promulgated thereunder, which (among other things) prohibit discrimination on the basis of age, race, color, sex, religion, marital status, national origin, receipt of public assistance or the exercise of any right under the Consumer Credit Protection Act, in the extension of credit; and • the Fair Credit Reporting Act, as amended by the Fair and Accurate Transactions Act, which (among other things) regulates the use and reporting of information related to the borrower’s credit experience.
The Bank must comply with many federal laws including: • the Truth in Lending Act (“TILA”) and Regulation Z promulgated thereunder, which (among other things) require specific disclosures to the borrowers regarding the terms of the mortgage loans and inclusion of certain terms in an originator’s underwriting guidelines; • the Consumer Financial Protection Act, enacted as part of the Dodd-Frank Act, which (among other things) created the CFPB and gave it broad rulemaking, supervisory and enforcement jurisdiction over mortgage lenders and servicers, and proscribes any unfair, deceptive or abusive acts or practices in connection with any consumer financial product or services; • the Equal Credit Opportunity Act and Regulation B promulgated thereunder, which (among other things) prohibit discrimination on the basis of age, race, color, sex, religion, marital status, national origin, receipt of public assistance or the exercise of any right under the Consumer Credit Protection Act, in the extension of credit; and • the Fair Credit Reporting Act, as amended by the Fair and Accurate Transactions Act, which (among other things) regulates the use and reporting of information related to the borrower’s credit experience.
Loans and other extensions of credit from the Bank to the Company or any affiliate generally are required to be secured by eligible collateral in specified amounts. In addition, any transaction between the Bank and the Company or any affiliate are required to be on an arm’s length basis.
Loans and other extensions of credit from the Bank to the Company or any affiliate generally are required to be secured by eligible collateral in specified amounts. In addition, any transaction between the Bank and the Company or any affiliate is required to be on an arm’s length basis.
Business Segments We offer financial products and services through our two primary business segments, Mortgage Purchase Program and Retail Banking. Mortgage Purchase Program (“MPP”) — Through our Mortgage Purchase Program business (which we refer to as Mortgage Purchase Program, or “MPP”), we provide independent mortgage banking platforms nationwide with an alternative to traditional mortgage warehouse lending.
Business Segments We offer financial products and services through our two primary business segments, Mortgage Purchase Program and Retail Banking. Mortgage Purchase Program (“MPP”). Through our Mortgage Purchase Program business (which we refer to as “MPP”), we provide independent mortgage banking platforms nationwide with an alternative to traditional mortgage warehouse lending.
The California Homeowner Bill of Rights The California Homeowner Bill of Rights, which became effective on January 1, 2013 and was amended effective January 1, 2019, among other measures (i) prohibits “dual track” foreclosures (servicers will be required to halt the foreclosure process while any modification is being considered), (ii) creates a single point of contact for homeowners while negotiating a loan modification, (iii) expands upon notice requirements to a borrower before taking action on a loan modification application or 12 Table of Contents pursuing foreclosure and (iv) allows for injunctions against foreclosure until violations are corrected and permits civil penalties (including monetary damages) against servicers that file multiple inaccurate mortgage documents or otherwise violate California law.
The California Homeowner Bill of Rights The California Homeowner Bill of Rights, which became effective on January 1, 2013 and was amended effective January 1, 2019, among other measures (i) prohibits “dual track” foreclosures (servicers will be required to halt the foreclosure process while any modification is being considered), (ii) creates a single point of contact for homeowners while negotiating a loan modification, (iii) expands upon notice requirements to a borrower before taking action on a loan modification application or pursuing foreclosure and (iv) allows for injunctions against foreclosure until violations are corrected and permits civil penalties (including monetary damages) against servicers that file multiple inaccurate mortgage documents or otherwise violate California law.
(b) Digital Deposit Banking — Our automated account opening, direct to customer deposit platform and product suite provide our depositors with effective, competitive, modern digital banking services and provide us with reliable access to deposit funding. We offer and utilize the full spectrum of deposit products, including noninterest- bearing accounts, savings, money-market demand accounts; but we focus upon term CDs.
Our automated account opening, direct to customer deposit platform and product suite provide our depositors with effective, competitive, modern digital banking services and provide us with reliable access to deposit funding. We offer and utilize the full spectrum of deposit products, including noninterest- bearing accounts, savings, money-market demand accounts; but we typically focus upon term CDs.
As a general matter, the Federal Reserve has indicated that the board of directors of a bank holding company should consult with the Federal Reserve and eliminate, defer, or significantly reduce the bank holding company’s dividends if: • its net income available to stockholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends; • its prospective rate of earnings retention is not consistent with its capital needs and overall current and prospective financial condition; or • it will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios.
As a general matter, the Federal Reserve has indicated that the board of directors of a bank holding company should consult with the Federal Reserve and eliminate, defer, or significantly reduce the bank holding company’s dividends if: • its net income available to stockholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends; 13 Table of Contents • its prospective rate of earnings retention is not consistent with its capital needs and overall current and prospective financial condition; or • it will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios.
Under this authority, our regulators can require us or our subsidiaries to enter into informal or formal supervisory agreements, including board resolutions, memoranda of understanding, written agreements, and consent or cease and desist orders pursuant to which we would be required to take identified corrective actions to address cited concerns and to refrain from taking certain actions.
Under this authority, our regulators can require us or our subsidiary to enter into informal or formal supervisory agreements, including board resolutions, memoranda of understanding, written agreements, and consent or cease and desist orders pursuant to which we would be required to take identified corrective actions to address cited concerns and to refrain from taking certain actions.
Our delivery systems are primarily digital and are available to clients nationwide; and we provide our staff with loan production offices across 23 cities in 15 states and support them through our centralized operating center in Grand Rapids, Michigan. Our nationwide presence has enabled us to have clients in all 50 states and the District of Columbia.
Our delivery systems are primarily digital and are available to clients nationwide; and we provide our staff with loan production offices across 25 cities in 15 states and support them through our centralized operating center in Grand Rapids, Michigan. Our nationwide presence has enabled us to have clients in all 50 states and the District of Columbia.
These actions resulted in long-term cost reductions that outpaced revenue reduction which, in combination with increased yields on assets, delivered strong performance metrics and substantial growth in profitability for 2024 compared to 2023. These strategic actions are consistent with our rate, liquidity and credit risk strategies.
These actions resulted in long-term cost reductions that outpaced revenue reduction which, in combination with increased yields on assets, delivered strong performance metrics and substantial growth in profitability for 2025 compared to 2024. These strategic actions are consistent with our rate, liquidity and credit risk strategies.
As of December 31, 2024, the Company’s and the Bank’s regulatory capital ratios were above the applicable well-capitalized standards and met the capital conservation buffer. Based on current estimates, we believe that the Company and the Bank will continue to exceed all applicable well-capitalized regulatory capital requirements and the capital conservation buffer in 2025.
As of December 31, 2025, the Company’s and the Bank’s regulatory capital ratios were above the applicable well-capitalized standards and met the capital conservation buffer. Based on current estimates, we believe that the Company and the Bank will continue to exceed all applicable well-capitalized regulatory capital requirements and the capital conservation buffer in 2026.
The servicing standards outlined in the settlement agreement include (i) preventing mortgage servicers from engaging in robo-signing and other improper foreclosure practices, (ii) requiring servicers to offer loss mitigation alternatives to borrowers before pursuing foreclosure, (iii) increasing the transparency of the loss mitigation process, (iv) imposing timelines for servicers to respond to borrowers and (v) restricting the practice of “dual tracking,” where foreclosure is initiated despite the borrower’s engagement in a loss mitigation process.
The servicing standards outlined in the settlement agreement include (i) preventing mortgage servicers from engaging in robo-signing and other improper foreclosure practices, (ii) requiring servicers to offer loss mitigation alternatives to borrowers before pursuing foreclosure, (iii) increasing the transparency of the 19 Table of Contents loss mitigation process, (iv) imposing timelines for servicers to respond to borrowers and (v) restricting the practice of “dual tracking,” where foreclosure is initiated despite the borrower’s engagement in a loss mitigation process.
Revised QM Rules On December 10, 2020, the CFPB, issued the revised qualified mortgage rules (the “QM Rules”) that replaced Appendix Q and the strict 43.0% debt-to-income ratio (“DTI”) underwriting threshold with a priced-based “Qualified Mortgage Loan” definition.
Revised QM Rules On December 10, 2020, the CFPB, issued the revised qualified mortgage rules (the “QM Rules”) that replaced Appendix Q and the strict 43.0% debt-to-income ratio (“DTI”) underwriting threshold with a price-based “Qualified Mortgage Loan” definition.
On the same day, the CFPB also issued a final “Seasoned QM” rulemaking that creates a pathway to “safe harbor” Qualified Mortgage (“QM”) status for performing non-QM and “rebuttable presumption” QM first lien loans that meet certain performance criteria portfolio requirements over a seasoning period of at least 36 months and that satisfy certain product restrictions, points and fees limits, and underwriting requirements prior to consummation.
On the same day, the CFPB also issued a final “Seasoned QM” rulemaking that creates a pathway to “safe harbor” QM status for performing non-QM and “rebuttable presumption” QM first lien loans that meet certain performance criteria portfolio requirements over a seasoning period of at least 36 months and that satisfy certain product restrictions, points and fees limits, and underwriting requirements prior to consummation.
Item 1. Business As used in this report, the terms “we”, “us”, “our”, “Northpointe”, and “Company” mean Northpointe Bancshares, Inc. and its subsidiaries, unless the context indicates another meaning. The term “Bank” means Northpointe Bank. Our Business Company Overview Northpointe Bancshares, Inc.
Item 1. Business As used in this report, the terms “we”, “us”, “our”, “Northpointe”, and “Company” mean Northpointe Bancshares, Inc. and its subsidiary, unless the context indicates another meaning. The term “Bank” means Northpointe Bank. Our Business Company Overview Northpointe Bancshares, Inc.
In addition, the Federal Deposit Insurance Act provides that, in the event of the liquidation or other resolution of an insured depository institution, the claims of depositors of the institution, including the claims of the FDIC as subrogee of insured depositors, and certain claims for administrative expenses of the FDIC as a receiver, will have priority over other general unsecured claims against the institution, including those of the parent bank holding company.
In addition, the Federal Deposit Insurance Act provides that, in the event of the liquidation or other resolution of an insured depository institution, the claims of depositors of the institution, 14 Table of Contents including the claims of the FDIC as subrogee of insured depositors, and certain claims for administrative expenses of the FDIC as a receiver, will have priority over other general unsecured claims against the institution, including those of the parent bank holding company.
Other states may require our Bank to obtain mortgage or servicer licenses in their respective jurisdictions. Loan Originator Compensation On January 20, 2013, the CFPB issued a final rule under the Truth in Lending Act (Regulation Z) which imposed several requirements and restrictions on the compensation of mortgage loan originators.
Other states may require our Bank to obtain mortgage or servicer licenses in their respective jurisdictions. 17 Table of Contents Loan Originator Compensation On January 20, 2013, the CFPB issued a final rule under the Truth in Lending Act (Regulation Z) which imposed several requirements and restrictions on the compensation of mortgage loan originators.
The purpose of the TRID rule was to reconcile overlapping disclosure obligations under TILA and RESPA and to provide for integrated closing disclosure and loan estimate forms that would satisfy those requirements under both TILA and RESPA. Regular instances of potential non-compliance with the TRID rule have been reported in the marketplace since it became effective.
The purpose of the TRID rule was to reconcile overlapping disclosure obligations under TILA and RESPA and to provide for integrated closing disclosure and loan estimate forms that would satisfy those requirements under both TILA and RESPA. 18 Table of Contents Regular instances of potential non-compliance with the TRID rule have been reported in the marketplace since it became effective.
The Fair and Accurate Credit Transactions Act, which amended the Fair Credit Reporting Act, permits states to enact identity theft laws that are not inconsistent with the conduct required by the provisions of that Act. Clients must be notified when unauthorized disclosure involves sensitive client information that may be misused.
The Fair and Accurate Credit Transactions Act, which amended the 20 Table of Contents Fair Credit Reporting Act, permits states to enact identity theft laws that are not inconsistent with the conduct required by the provisions of that Act. Clients must be notified when unauthorized disclosure involves sensitive client information that may be misused.
Our MPP facilities provide a key source of liquidity to the residential mortgage marketplace. 1 Table of Contents Retail Banking — Our Retail Banking business includes residential lending, digital deposit banking and loan servicing.
Our MPP facilities provide a key source of liquidity to the residential mortgage marketplace. 6 Table of Contents Retail Banking. Our Retail Banking business includes residential lending, digital deposit banking and loan servicing. (a) Residential Lending.
In addition to our principal executive office, we operate loan production offices across 23 cities in 15 states that are supported through our centralized operating center in Grand Rapids, Michigan.
In addition to our principal executive office, we operate loan production offices across 25 cities in 15 states that are supported through our centralized operating center in Grand Rapids, Michigan.
We expect this trend of state-level activity in those areas to continue and are continually monitoring developments in the states in which our clients are located. 16 Table of Contents
We expect this trend of state-level activity in those areas to continue and are continually monitoring developments in the states in which our clients are located. 21 Table of Contents
As a direct seller/servicer to Fannie Mae, Freddie Mac, and Ginnie Mae, we ensure competitive rates and efficient processing. With a focus on speed, quality, and client satisfaction, we leverage our customized technology in our underwriting process, leading to faster decisions and document delivery.
As a direct seller/servicer to Fannie Mae, Freddie Mac, Ginnie Mae and other end investors, we ensure competitive rates and efficient processing. With a focus on speed, quality, and client satisfaction, we leverage our customized technology in our underwriting process, leading to faster decisions and document delivery.
Also available on the Company's website are its Code of Business Conduct and Ethics, Corporate Governance Guidelines, the charter of each active committee of the Board of Directors, and other materials outlining the Company's corporate governance practices. 4 Table of Contents SUPERVISION AND REGULATION We are extensively regulated under federal and state law.
Also available on the Company's website are its Code of Business Conduct and Ethics, Corporate Governance Guidelines, the charter of each active committee of the Board of Directors, and other materials outlining the Company's corporate governance practices. SUPERVISION AND REGULATION We are extensively regulated under federal and state law.
As of December 31, 2024, these rules have not been implemented, although the SEC did adopt final rules implementing the clawback provisions of the Dodd-Frank Act in 2022.
As of December 31, 2025, these rules have not been implemented, although the SEC did adopt final rules implementing the clawback provisions of the Dodd-Frank Act in 2022.
Our senior management is also responsible for creating and recommending to our board of directors for approval appropriate risk appetite metrics reflecting the aggregate 3 Table of Contents levels and types of risk we are willing to accept in connection with the operation of our business and pursuit of our business objectives.
Our senior management is also responsible for creating and recommending to our board of directors for approval appropriate risk appetite metrics reflecting the aggregate levels and types of risk we are willing to accept in connection with the operation of our business and pursuit of our business objectives.
The Guidance is triggered when CRE loan concentrations exceed either: • total reported loans for construction, land development, and other land of 100% or more of a bank’s total risk-based capital; or • total reported loans secured by multifamily and nonfarm nonresidential properties and loans for construction, land development, and other land of 300% or more of a bank’s total risk-based capital.
The Guidance is triggered when CRE loan concentrations exceed either: 15 Table of Contents • total reported loans for construction, land development, and other land of 100% or more of a bank’s total risk-based capital; or • total reported loans secured by multifamily and nonfarm nonresidential properties and loans for construction, land development, and other land of 300% or more of a bank’s total risk-based capital.
Through our point of sale platform, borrowers can easily apply for loans, upload documents, speak with loan officers, track progress, and make payments — all from one secure, user-friendly interface. Northpointe offers a broad spectrum of loan programs, including conventional, government, and non-QM loans, catering to a wide variety of borrowers’ needs.
Through our point of sale platform, borrowers can easily apply for loans, upload documents, speak with loan officers, track progress, and make payments — all from one secure, user-friendly interface. Northpointe offers a broad spectrum of loan programs, including conventional, government, and non-Qualified Mortgage (“QM”) loans, catering to a wide variety of borrowers’ needs.
A depository institution's holding company must guarantee any required capital restoration plan up to an amount equal to the lesser of 5% of the depository institution's assets at the time it becomes undercapitalized or the amount of the capital deficiency when the institution fails to comply with the plan.
A depository institution's holding company must guarantee any required capital restoration plan up to an amount equal to the lesser of 5% of the depository institution's assets at 12 Table of Contents the time it becomes undercapitalized or the amount of the capital deficiency when the institution fails to comply with the plan.
We 6 Table of Contents and the Bank have undertaken efforts to ensure that our incentive compensation plans do not encourage inappropriate risks, consistent with three key principles - that incentive compensation arrangements should appropriately balance risk and financial rewards, be compatible with effective controls and risk management, and be supported by strong corporate governance.
We and the Bank have undertaken efforts to ensure that our incentive compensation plans do not encourage inappropriate risks, consistent with three key principles - that incentive compensation arrangements should appropriately balance risk and financial rewards, be compatible with effective controls and risk management, and be supported by strong corporate governance.
The term “source of financial strength” means the ability of a company, such as us, that directly or indirectly owns or controls an insured depository institution, such as the Bank, to provide financial assistance to such insured depository institution in the 5 Table of Contents event of financial distress.
The term “source of financial strength” means the ability of a company, such as us, that directly or indirectly owns or controls an insured depository institution, such as the Bank, to provide financial assistance to such insured depository institution in the event of financial distress.
We believe our processes have allowed us to improve upon traditional mortgage offering with products advancements such as: Lock & Shop, Temporary Buydown, TrueApproval, Delayed Financing, and Rate Refresh along with Jumbo, Renovation, traditional HELOC, VA Loans and our first-lien home equity loans.
We believe our processes have allowed us to improve upon traditional mortgage offering with products advancements such as: Lock & Shop, Temporary Buydown, TrueApproval, Delayed Financing, and Rate Refresh along with Jumbo, Renovation, traditional HELOC, VA Loans and our first-lien home equity loans. (b) Digital Deposit Banking.
The Federal Reserve may disapprove such a purchase or redemption if it determines that the proposal would constitute an unsafe and unsound practice, or would violate any law, regulation, Federal Reserve order or directive, or any condition imposed by, or written agreement with, the Federal Reserve.
The Federal Reserve may disapprove such a purchase or redemption if it determines that the proposal would constitute an unsafe and unsound practice, or would violate any law, regulation, Federal Reserve order or 11 Table of Contents directive, or any condition imposed by, or written agreement with, the Federal Reserve.
The federal banking agencies have adopted regulations and Interagency Guidelines Establishing Standards for Safety 9 Table of Contents and Soundness to implement these required standards. These guidelines set forth the safety and soundness standards used to identify and address problems at insured depository institutions before capital becomes impaired.
The federal banking agencies have adopted regulations and Interagency Guidelines Establishing Standards for Safety and Soundness to implement these required standards. These guidelines set forth the safety and soundness standards used to identify and address problems at insured depository institutions before capital becomes impaired.
The risk retention requirement generally is 5.0%, but the statute and its implementing regulations, exempt certain transactions from the requirement. The CFPB’s rules have impacted our operations, and have resulted in higher compliance costs for the Bank.
The risk retention requirement generally is 5.0%, but the statute and its implementing 16 Table of Contents regulations, exempt certain transactions from the requirement. The CFPB’s rules have impacted our operations, and have resulted in higher compliance costs for the Bank.
Human Capital To facilitate talent attraction and retention, we strive to create an inclusive, safe and healthy workplace with opportunities for our employees to grow and develop in their careers, supported by strong compensation, benefits and health and welfare programs. Employee Profile As of December 31, 2024, we had 491 full-time employees and 9 part-time employees.
Human Capital To facilitate talent attraction and retention, we strive to create an inclusive, safe and healthy workplace with opportunities for our employees to grow and develop in their careers, supported by strong compensation, benefits and health and welfare programs. Employee Profile As of December 31, 2025, we had 483 full-time employees and 8 part-time employees.
Beyond term and rate, we successfully compete with other digital- only banks by offering a simple online account opening experience, friendly features such as ATM fee rebates, no/low overdraft fees and a dynamic mobile banking solution. In addition to retail deposits, we offer commercial deposits which are primarily noninterest bearing custodial deposits related to our loan servicing business.
We successfully compete with other digital-only banks by offering a simple online account opening experience, friendly features such as ATM fee rebates, no/low overdraft fees and a dynamic mobile banking solution. In addition to retail deposits, we offer commercial deposits which are primarily noninterest bearing custodial deposits related to our loan servicing business or deposits from our MPP clients.
The Bank may only declare dividends on its common stock out of net income on hand, after deducting losses and bad debts, and provided the bank will have a surplus of 20.0% or more of its capital after payment of the proposed dividend.
Under Michigan law, banks may not declare dividends out of capital or surplus. The Bank may only declare dividends on its common stock out of net income on hand, after deducting losses and bad debts, and provided the bank will have a surplus of 20.0% or more of its capital after payment of the proposed dividend.
Our digitized loan origination processes give borrowers and origination professionals easy access to our proprietary Apps and POS support features to quickly, intelligently, and securely gather personal and loan information. Borrowers also have access to account advisors to help borrowers on their journey when they need human assistance.
Our digitized loan origination processes give borrowers and origination professionals easy access to our proprietary application and point-of-sale support features to quickly, intelligently, and securely gather personal and loan information. Borrowers also have access to account advisors to help borrowers on their journey when they need human assistance.
The rule focuses on debt collection communications and gives consumers more control over how often and through what means debt collectors can communicate with them regarding their debts. The rule also clarifies how the protections of the Fair Debt Collection Practices Act, which was passed in 1977, apply to newer communication technologies, such as email and text messages.
The Debt Collection Rule focuses on debt collection communications and gives consumers more control over how often and through what means debt collectors can communicate with them regarding their debts. The Debt Collection Rule also clarifies how the protections of the FDCPA apply to newer communication technologies, such as email and text messages.
Recently, several states have adopted regulations requiring certain financial institutions to implement cybersecurity programs and providing detailed requirements with respect to these programs, including data encryption requirements. Many states have also recently implemented or modified their data breach notification and data privacy requirements.
State regulators have also been increasingly active in implementing privacy and cybersecurity standards and regulations. Recently, several states have adopted regulations requiring certain financial institutions to implement cybersecurity programs and providing detailed requirements with respect to these programs, including data encryption requirements. Many states have also recently implemented or modified their data breach notification and data privacy requirements.
The second rule also prohibits debt collectors from suing or threatening to sue consumers on time barred debt. Additionally, the second rule requires debt collectors to take specific steps to disclose the existence of a debt to consumers before reporting information about the debt to a consumer reporting agency. Both rules took effect on November 30, 2021.
Additionally, the second rule requires debt collectors to take specific steps to disclose the existence of a debt to consumers before reporting information about the debt to a consumer reporting agency. Both rules took effect on November 30, 2021.
On October 24, 2023, the Office of the Comptroller of the Currency (“OCC”), Federal Reserve, and FDIC issued a final rule to modernize their respective CRA regulations. The revised rules substantially alter the methodology for assessing compliance with the CRA, with material aspects taking effect January 1, 2026 and revised data reporting requirements taking effect January 1, 2027.
In 2023, the Federal Reserve, OCC and FDIC issued a final rule to modernize their respective CRA regulations. The revised rules would substantially alter the methodology for assessing compliance with the CRA, with material aspects taking effect January 1, 2026 and revised data reporting requirements taking effect January 1, 2027.
On November 18, 2021, the federal banking agencies issued a new rule effective in 2022 that requires banks to notify their primary federal regulator within 36 hours of a “computer-security incident” that rises to the level of a “notification incident.” The federal banking regulators regularly issue guidance regarding cybersecurity intended to enhance cyber risk management standards among financial institutions.
The federal banking agencies require banks to notify their primary federal regulator within 36 hours of a “computer-security incident” that rises to the level of a “notification incident.” The federal banking regulators regularly issue guidance regarding cybersecurity intended to enhance cyber risk management standards among financial institutions.
Federal CRA regulations require, among other things, that evidence of discrimination against applicants on a prohibited basis and illegal or abusive lending practices be considered in the CRA evaluation. The Bank has a rating of “Satisfactory” in its most recent CRA evaluation.
CRA agreements with private parties must be disclosed and annual CRA reports must be made to the FDIC. Federal CRA regulations require, among other things, that evidence of discrimination against applicants on a prohibited basis and illegal or abusive lending practices be considered in the CRA evaluation. The Bank has a rating of “Satisfactory” in its most recent CRA evaluation.
The final rule also contains provisions on disputes, and record retention, among other topics. The rule took effect on November 21, 2020. The CFPB issued a second debt collection final rule focused on consumer disclosures in December 2020. The second rule, issued in December 2020, clarifies disclosures debt collectors must provide to consumers at the beginning of collection communications.
The Debt Collection Rule also contains provisions on disputes, and record retention, among other topics. The rule took effect on November 21, 2020. The CFPB issued a second debt collection final rule focused on consumer disclosures in December 2020.
Critical to the success of our servicing platform is being an approved seller/servicer for the largest government-related mortgage agencies (FNMA, FNMA, FHLMC, FHLB) as well as being rated by a third-party rating agency (Fitch) as a qualified servicer for investor-owned securitizations and other non-agency products.
Critical to the success of our servicing platform is being an approved seller/servicer for the largest government-related mortgage agencies (Federal National Mortgage Association “FNMA”, Federal Home Loan Mortgage Corporation “FHLMC”, Federal Home Loan Bank “FHLB”) as well as being rated by a third-party rating agency (Fitch) as a qualified servicer for investor-owned securitizations and other non-agency products.
A financial institution is also expected to develop appropriate processes to enable recovery of data and business operations if a critical service provider of the institution falls victim to this type of cyber-attack.
A financial institution is also expected to develop appropriate processes to enable recovery of data and business operations if a critical service provider of the institution falls victim to this type of cyber-attack. Our information security protocols are designed in part to adhere to the requirements of this guidance.
Our senior management is responsible for implementing our risk management processes, including by assessing and managing the risks we face, including strategic, operational, regulatory, investment and execution risks, on a day-to-day basis, and reporting to our board of directors regarding our risk management processes.
The Corporate Governance and Nominating Committee of our board of directors oversees risks associated with the independence of our board of directors and potential conflicts of interest. 8 Table of Contents Our senior management is responsible for implementing our risk management processes, including by assessing and managing the risks we face, including strategic, operational, regulatory, investment and execution risks, on a day-to-day basis, and reporting to our board of directors regarding our risk management processes.
Banking regulators will consider compliance with the USA PATRIOT Act’s money laundering provisions in acting upon merger and acquisition proposals. Bank regulators routinely examine institutions for compliance with these obligations and have been active in imposing cease and desist and other regulatory orders and civil money penalties against institutions found to be violating these obligations.
Bank regulators routinely examine institutions for compliance with these obligations and have been active in imposing cease and desist and other regulatory orders and civil money penalties against institutions found to be violating these obligations.
On October 30, 2020, the CFPB issued a final rule to restate and clarify prohibitions on harassment and abuse, false or misleading representations, and unfair practices by debt collectors when collecting consumer debt.
CFPB Debt Collection Rules On October 30, 2020, the CFPB issued a final rule to amend Regulation F, which implements the fair Debt Collection Practices Act (“FDCPA”), passed in 1977, to restate and clarify prohibitions on harassment and abuse, false or misleading representations, and unfair practices by debt collectors when collecting consumer debt (the “Debt Collection Rule”).
We compete with other nondepository financial institutions and community banks, thrifts and credit unions. In addition, we compete with large banks and other financial intermediaries, such as consumer finance companies, mortgage banking companies, and online banks.
In 7 Table of Contents addition, we compete with large banks and other financial intermediaries, such as consumer finance companies, mortgage banking companies, and online banks.
The CFPB Servicing Rules therefore could result in increased delays in foreclosure or the inability to foreclose, which could in turn result in delays in payments on, or losses in respect of, the mortgage loans originated by our Bank. 14 Table of Contents On August 4, 2016, the CFPB announced amendments to certain of the CFPB Servicing Rules (“2016 Final Servicing Rule Amendments”) relating to force-placed insurance notices, delinquency and early intervention, loss mitigation, periodic monthly statements, and successors-in-interest to borrowers that could further impact servicing and delay foreclosures.
On August 4, 2016, the CFPB announced amendments to certain of the CFPB Servicing Rules (“2016 Final Servicing Rule Amendments”) relating to force-placed insurance notices, delinquency and early intervention, loss mitigation, periodic monthly statements, and successors-in-interest to borrowers that could further impact servicing and delay foreclosures.
Our digital platform (supported by one central branch) offers very competitive rates that allow us to attract deposits at an attractive all-in cost to us.
Our digital platform (supported by one central branch) offers very competitive rates (typically priced in the top 25 of average nationwide industry deposit rates for similar maturities) that allow us to attract deposits at an attractive all-in cost to us.
Payment of Dividends We are a legal entity separate and distinct from the Bank and our other subsidiaries. The primary sources of funds for our payment of dividends to our stockholders are cash on hand and dividends from the Bank and our non-bank subsidiaries.
Payment of Dividends We are a legal entity separate and distinct from the Bank. The primary sources of funds for our payment of dividends to our stockholders are cash on hand and dividends from the Bank. Various federal and state statutory provisions and regulations limit the amount of dividends that the Bank may pay.
Supervision and regulation of banks, their holding companies, and affiliates is intended primarily for the protection of depositors and clients, the DIFS of the FDIC, and the U.S. banking and financial system rather than holders of our securities. Regulation of the Company We are registered as a bank holding company with the Federal Reserve under the BHC Act.
Supervision and regulation of banks, their holding companies, and affiliates is intended primarily for the protection of depositors and clients, the Deposit Insurance Fund (“DIF”) of the FDIC, and the U.S. banking and financial system rather than holders of our securities.
Under certain circumstances, these agencies may enforce remedies directly against officers, directors, employees, and other parties participating in the affairs of a bank or bank holding company.
Violations of laws and regulations, or other unsafe and unsound practices, may result in regulatory agencies imposing fines or penalties, cease and desist orders, or taking other enforcement actions. Under certain circumstances, these agencies may enforce remedies directly against officers, directors, employees, and other parties participating in the affairs of a bank or bank holding company.
We estimate our annual assessment rate to be 13 basis points in 2025.
Based on current information and assumptions, we estimate our annual assessment rate to be 13 basis points in 2026.
Further, for certain mortgage loans, while not changed by TRID requirements, TILA’s right of rescission may be extended to three years from consummation if there are errors in certain “material disclosures” such as the required disclosures of finance charges and payment schedule, which are contained within the TRID closing disclosure. 13 Table of Contents Risks Associated with Ability to Repay Laws TILA provides that subsequent purchasers of mortgage loans originated in violation of certain requirements specified in TILA that require lenders to consider consumers’ “ability to repay” before extending them credit may have liability for such violations.
Further, for certain mortgage loans, while not changed by TRID requirements, TILA’s right of rescission may be extended to three years from consummation if there are errors in certain “material disclosures” such as the required disclosures of finance charges and payment schedule, which are contained within the TRID closing disclosure.
In addition to salaries, these programs include annual bonus opportunities, a 401(k) plan with an employer matching contribution, healthcare and insurance benefits, flexible spending accounts, paid time off and family leave and an employee assistance program. Restricted stock awards are also available to certain employees.
Our compensation programs are designed to be market-competitive and performance-based, while remaining consistent with applicable laws, regulations and safety and soundness considerations. In addition to salaries, these programs include annual bonus opportunities, a 401(k) plan with an employer matching contribution, healthcare and insurance benefits, flexible spending accounts, paid time off and family leave and an employee assistance program.
We completed an initial public offering of our common stock in February 2025 as an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (“the JOBS Act”). Our common stock is listed on the New York Stock Exchange under the symbol “NPB”.
(“the Company”) is a bank holding company headquartered in Grand Rapids, Michigan and registered under the Bank Holding Company Act of 1956. The Company completed an initial public offering of common stock in February 2025 as an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (“the JOBS Act”).
FinCEN has adopted rules that require financial institutions to obtain beneficial ownership information with respect to legal entities with which such institutions conduct business, subject to certain exclusions and exemptions. Bank regulators are focusing their examinations on anti-money laundering compliance, and we continue to monitor and augment, where necessary, our anti-money laundering compliance programs.
FinCEN has adopted rules that require financial institutions to obtain beneficial ownership information with respect to legal entities with which such institutions conduct business, subject to certain exclusions and exemptions.
Public Information Persons interested in obtaining information on the Company may read and copy any materials that we file with the U.S. Securities and Exchange Commission ("SEC"). The Commission maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.
The Commission maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.
Additional information about restrictions on payment of dividends by the Bank may be found in Item 8 of this report in Notes 1 and 17 to the Consolidated Financial Statements. 8 Table of Contents Regulation of the Bank The Bank is subject to comprehensive supervision and regulation by the FDIC, and is subject to its regulatory reporting requirements, as well as supervision and regulation by the DIFS.
Additional information about restrictions on payment of dividends by the Bank may be found in Item 8 of this report in the Notes to the Consolidated Financial Statements.
(“the Company”) is a bank holding company headquartered in Grand Rapids, Michigan and registered under the Bank Holding Company Act of 1956. Our Bank was founded in 1999 as a focused mortgage portfolio lender primarily operating in the midwestern states of Michigan, Ohio and Indiana.
Our common stock is listed on the New York Stock Exchange under the symbol “NPB”. Our Bank was founded in 1999 as a focused mortgage portfolio lender primarily operating in the midwestern states of Michigan, Ohio and Indiana.
Our nationwide presence has enabled us to have clients in all 50 states and the District of Columbia. Competition We compete in a number of areas, including deposit banking, residential mortgage lending and servicing, and mortgage warehouse lending. These industries are highly competitive, and our Bank faces strong direct competition for loans and deposits.
Competition We compete in a number of areas, including deposit banking, residential mortgage lending and servicing, and mortgage warehouse lending. These industries are highly competitive, and our Bank faces strong direct competition for loans and deposits. We compete with other nondepository financial institutions and community banks, thrifts and credit unions.
Activity Limitations Bank holding companies are generally restricted to engaging in the business of banking, managing or controlling banks and certain other activities determined by the Federal Reserve to be closely related to banking.
The terms of any such action could have a material negative effect on our business, reputation, operating flexibility, financial condition, and the value of our common stock and preferred stock. 10 Table of Contents Activity Limitations Bank holding companies are generally restricted to engaging in the business of banking, managing or controlling banks and certain other activities determined by the Federal Reserve to be closely related to banking.
To be well-capitalized, the Bank must maintain at least the following capital ratios: • 6.5% CET1 to risk-weighted assets; • 8.0% Tier 1 capital to risk-weighted assets; • 10.0% Total capital to risk-weighted assets; and • 5.0% leverage ratio. 7 Table of Contents The Federal Reserve has not yet revised the well-capitalized standard for bank holding companies to reflect the higher capital requirements imposed under the current capital rules applicable to banks.
To be well-capitalized, the Bank must maintain at least the following capital ratios: • 6.5% CET1 to risk-weighted assets; • 8.0% Tier 1 capital to risk-weighted assets; • 10.0% Total capital to risk-weighted assets; and • 5.0% leverage ratio.
As such, we are subject to comprehensive supervision and regulation by the Federal Reserve and are subject to its regulatory reporting requirements. Federal law subjects bank holding companies, such as the Company, to restrictions on the types of activities in which they may engage, and to a range of supervisory requirements.
Regulation of the Company We are registered as a bank holding company with the Federal Reserve under the BHC Act. As such, we are subject to comprehensive supervision and regulation by the Federal Reserve and are subject to its regulatory reporting requirements.
Learning and Development We invest in the growth and development of our employees by providing a multi-dimensional approach to learning that empowers, intellectually grows, and professionally develops our colleagues. In particular, we facilitate the educational and professional development of our employees through support to attend conferences and obtain degrees, licenses and certifications while employed by us.
Restricted stock awards are also available to certain employees. Learning and Development We invest in the growth and development of our employees by providing a multi-dimensional approach to learning that empowers, intellectually grows, and professionally develops our colleagues.
Corporate Information Our principal executive offices are located at 3333 Deposit Drive Northeast, Grand Rapids, Michigan 49546, and our telephone number at that address is (616) 940-9400. Our website address is www.northpointe.com . The information contained on our website is not a part of, or incorporated by reference into this Form 10-K.
In particular, we facilitate the educational and professional development of our employees through support to attend conferences and obtain degrees, licenses and certifications while employed by us. Corporate Information Our principal executive offices are located at 3333 Deposit Drive Northeast, Grand Rapids, Michigan 49546, and our telephone number at that address is (616) 940-9400. Our website address is www.northpointe.com .
Market Area While our headquarters is located in Grand Rapids, Michigan, our market area is nationwide. Our delivery systems are primarily digital and are available to clients nationwide; and we provide our staff with loan production offices across 23 cities 2 Table of Contents in 15 states and support them through our centralized operating center in Grand Rapids, Michigan.
Market Area While our headquarters is located in Grand Rapids, Michigan, our market area is nationwide. Our delivery systems are primarily digital, enabling clients across all 50 states and the District of Columbia to access our mortgage and deposit products.
Removed
As of December 31, 2024, we had $5.22 billion in assets, $4.64 billion in gross loans, including held for investment (“HFI”) and held for sale (“HFS”), $3.42 billion of deposits and $462.5 million of stockholders’ equity.
Added
Today, we are the largest bank headquartered in the state of Michigan, one of the largest providers of mortgage warehouse financing, and one of the only mortgage-focused banks in the country.
Removed
We have originated more than $190 billion in home loan financings over the last 10 years, making us one of the largest mortgage-focused banks in the United States.
Added
In addition to our digital platform, we operate loan production offices in 25 cities across 15 states, which support our lending activities and are backed by our centralized operating center in Grand Rapids. This structure allows us to efficiently serve a geographically diverse customer base and participate broadly in the national residential mortgage market.
Removed
Historically, the majority of our time deposits were term CDs that were structured with intermediate (close to one year) maturities and priced at rates that are in the top 25 of average nationwide industry deposit rates for similar maturities.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

84 edited+28 added−38 removed277 unchanged
Biggest changeIf our ability to sell or securitize mortgage loans is impaired, whether as a result of regulatory action or otherwise, the volume of mortgage loans that we are able to originate will be reduced 17 Table of Contents • We are subject to certain operational risks, including, but not limited to, customer or employee fraud and data processing system failures and errors • We qualify as an “emerging growth company” and have elected to take advantage of the scaled disclosures and other relief under the JOBS Act, and may take advantage of some or all of the reduced regulatory and reporting requirements that will be available to us under the JOBS Act • Litigation and regulatory actions, including possible enforcement actions, could subject us to significant fines, penalties, judgments or other requirements resulting in increased expenses or restrictions on our business activities • Severe weather, natural disasters, pandemics, acts of war or terrorism or other external events could significantly impact our business Risks related to our industry and regulation • Our industry is highly regulated, and the regulatory framework, together with any future legislative or regulatory changes, may have a materially adverse effect on our operations • Federal and state regulators periodically examine our business and may require us to remediate adverse examination findings or may take enforcement action against us • We are subject to stringent capital requirements, which could have an adverse effect on our operations • We are subject to numerous laws designed to protect consumers, including the CRA and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions • We are a bank holding company and are dependent upon our Bank for cash flow, and our Bank’s ability to make cash distributions is restricted • The Federal Reserve may require us to commit capital resources to support our Bank Risks related to our common stock • No public market exists for our common stock, and one may not develop • Future sales of our common stock could depress the market price of our common stock • As of December 31, 2024, approximately 32.9% of our voting and non-voting common stock is owned by certain institutional holders, and future sales by these institutional holders may adversely affect the prevailing market price of our common stock • Our stock price may be volatile, and you could lose part or all of your investment as a result • We may not pay dividends on our common stock in the future, and our ability to pay dividends is subject to certain restrictions • The holders of our debt obligations and preferred stock will have priority over our common stock with respect to payment in the event of liquidation, dissolution or winding up and with respect to the payment of interest and dividends • Michigan law and the provisions of our Amended and Restated Articles of Incorporation and Amended and Restated Bylaws may have an anti-takeover effect, and there are substantial regulatory limitations on changes of control of bank holding companies • An investment in our common stock is not an insured deposit Risks Related to Our Business Decreased residential mortgage origination, competition, and changes in interest rates may adversely affect our profitability.
Biggest changeIf our ability to sell or securitize mortgage loans is impaired, whether as a result of regulatory action or otherwise, the volume of mortgage loans that we are able to originate will be reduced 22 Table of Contents • We are subject to certain operational risks, including, but not limited to, customer or employee fraud and data processing system failures and errors • Litigation and regulatory actions, including possible enforcement actions, could subject us to significant fines, penalties, judgments or other requirements resulting in increased expenses or restrictions on our business activities • Severe weather, natural disasters, pandemics, acts of war or terrorism or other external events could significantly impact our business Risks related to our industry and regulation • Our industry is highly regulated, and the regulatory framework, together with any future legislative or regulatory changes, may have a materially adverse effect on our operations • Federal and state regulators periodically examine our business and may require us to remediate adverse examination findings or may take enforcement action against us • We are subject to stringent capital requirements, which could have an adverse effect on our operations • We are subject to numerous laws designed to protect consumers, including the CRA and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions • We are a bank holding company and are dependent upon our Bank for cash flow, and our Bank’s ability to make cash distributions is restricted • The Federal Reserve may require us to commit capital resources to support our Bank Risks related to our common stock • There is a limited trading market in our common stock, which will hinder your ability to sell our common stock and may lower the market price of the stock • Our stock price may be volatile, and you could lose part or all of your investment as a result • We may not pay dividends on our common stock in the future, and our ability to pay dividends is subject to certain restrictions • The holders of our debt obligations and preferred stock will have priority over our common stock with respect to payment in the event of liquidation, dissolution or winding up and with respect to the payment of interest and dividends • Michigan law and the provisions of our Amended and Restated Articles of Incorporation and Amended and Restated Bylaws may have an anti-takeover effect, and there are substantial regulatory limitations on changes of control of bank holding companies • An investment in our common stock is not an insured deposit • We qualify as an “emerging growth company” and we cannot be certain whether the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
Risks related to our business • Decreased residential mortgage origination, competition, and changes in interest rates may adversely affect our profitability • Our mortgage banking profitability could significantly decline if we are not able to originate and resell a high volume of mortgage loans • A decline in our MPP business could have a significant impact on our results of operations • Because a significant portion of our loan portfolio is comprised of real estate loans, negative changes in the economy affecting real estate values and liquidity could impair the value of collateral securing our real estate loans and result in loan and other losses • A decline in general business and economic conditions and any regulatory responses to such conditions could have a material adverse effect on our business, financial position, results of operations and growth prospects • Liquidity risks could affect operations and jeopardize our business, financial condition, and results of operations, and deposits, many of which are brokered deposits, are our primary source of funding • Fluctuations in interest rates may reduce net interest income and otherwise negatively impact our financial condition and results of operations • If we do not effectively manage our credit risk, we may experience increased levels of delinquencies, nonperforming loans and charge-offs, which could require increases in our allowance for credit losses • We may be required to repurchase or substitute mortgage loans or mortgage servicing rights (“MSRs”) that we have sold, or indemnify purchasers of our mortgage loans or MSRs • We engage in lending secured by real estate and may be forced to foreclose on the collateral and own the underlying real estate, subjecting us to the costs and potential risks associated with the ownership of real property, or consumer protection initiatives or changes in state or federal law may substantially raise the cost of foreclosure or prevent us from foreclosing at all • Our allowance for credit losses may prove to be insufficient to absorb actual losses in our loan portfolio • Technology disruptions or failures, including a failure in our operational or security systems or infrastructure, or those of third parties with whom we do business, could disrupt our business, cause legal or reputational harm and adversely impact our financial condition and results of operations • Cyberattacks and other data and security breaches could result in serious harm to our reputation and adversely affect our business • We may not be able to make technological improvements as quickly as demanded by our customers, which could harm our ability to attract customers and adversely affect our financial condition, results of operations, and liquidity • We depend on our ability to sell loans in the secondary market to a limited number of investors and to the GSEs, and to securitize our loans into MBS through the GSEs.
Risks related to our business • Decreased residential mortgage origination, increased competition, and changes in interest rates may adversely affect our profitability • Our mortgage banking profitability could significantly decline if we are not able to originate and resell a high volume of mortgage loans • A decline in our MPP business could have a significant impact on our results of operations • Because a significant portion of our loan portfolio is comprised of real estate loans, negative changes in the economy affecting real estate values and liquidity could impair the value of collateral securing our real estate loans and result in loan and other losses • A decline in general business and economic conditions and any regulatory responses to such conditions could have a material adverse effect on our business, financial position, results of operations and growth prospects • Liquidity risks could affect operations and jeopardize our business, financial condition, and results of operations, and deposits, many of which are brokered deposits, are our primary source of funding • Fluctuations in interest rates may reduce net interest income and otherwise negatively impact our financial condition and results of operations • If we do not effectively manage our credit risk, we may experience increased levels of delinquencies, nonperforming loans and charge-offs, which could require increases in our allowance for credit losses • We may be required to repurchase or substitute mortgage loans or mortgage servicing rights (“MSRs”) that we have sold, or indemnify purchasers of our mortgage loans or MSRs • We engage in lending secured by real estate and may be forced to foreclose on the collateral and own the underlying real estate, subjecting us to the costs and potential risks associated with the ownership of real property, or consumer protection initiatives or changes in state or federal law may substantially raise the cost of foreclosure or prevent us from foreclosing at all • Our allowance for credit losses may prove to be insufficient to absorb actual losses in our loan portfolio • Technology disruptions or failures, including a failure in our operational or security systems or infrastructure, or those of third parties with whom we do business, could disrupt our business, cause legal or reputational harm and adversely impact our financial condition and results of operations • Cyberattacks and other data and security breaches could result in serious harm to our reputation and adversely affect our business • We may not be able to make technological improvements as quickly as demanded by our customers, which could harm our ability to attract customers and adversely affect our financial condition, results of operations, and liquidity • We depend on our ability to sell loans in the secondary market to a limited number of investors and to the GSEs, and to securitize our loans into MBS through the GSEs.
AI models, particularly generative AI models, may produce output or take action that is incorrect, that reflects biases included in the data on which they are trained, that results in the release of private, confidential, or proprietary information, that infringes on the intellectual property rights of others, or that is otherwise harmful.
AI models, particularly generative AI models, may produce output or take action that is incorrect, that reflects biases included in the data on which they are trained, that results in the release of private, confidential, or proprietary information, which infringes on the intellectual property rights of others, or that is otherwise harmful.
Thus, any borrowing by a BHC for the purpose of making a capital injection to a subsidiary bank may become more difficult and expensive relative to other corporate borrowings. We face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations.
Thus, any borrowing by a BHC for the purpose of making a capital injection to a subsidiary bank may become more difficult and expensive relative to other corporate borrowings. We face the risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations.
Our future acquisition activities could be material to our business and involve a number of risks, including the following: • intense competition from other banking organizations and other acquirers for potential merger candidates; • market pricing for desirable acquisitions resulting in returns that are less attractive than we have traditionally sought to achieve; • incurring time and expense associated with identifying and evaluating potential acquisitions and negotiating potential transactions, resulting in our attention being diverted from the operation of our existing business; • using inaccurate estimates and judgments to evaluate credit, operations, management and market risks with respect to the target institution or assets; • potential exposure to unknown or contingent liabilities of banks and businesses we acquire, including consumer compliance issues; • the time and expense required to integrate the operations and personnel of the combined businesses; • experiencing higher operating expenses relative to operating income from the new operations; • losing key employees and customers; • reputational issues if the target’s management does not align with our culture and values; 30 Table of Contents • significant problems relating to the conversion of the financial and customer data of the target; • integration of acquired customers into our financial and customer product systems; • risks of impairment to goodwill; or • regulatory timeframes for review of applications may limit the number and frequency of transactions we may be able to consummate.
Our future acquisition activities could be material to our business and involve a number of risks, including the following: • intense competition from other banking organizations and other acquirers for potential merger candidates; • market pricing for desirable acquisitions resulting in returns that are less attractive than we have traditionally sought to achieve; 35 Table of Contents • incurring time and expense associated with identifying and evaluating potential acquisitions and negotiating potential transactions, resulting in our attention being diverted from the operation of our existing business; • using inaccurate estimates and judgments to evaluate credit, operations, management and market risks with respect to the target institution or assets; • potential exposure to unknown or contingent liabilities of banks and businesses we acquire, including consumer compliance issues; • the time and expense required to integrate the operations and personnel of the combined businesses; • experiencing higher operating expenses relative to operating income from the new operations; • losing key employees and customers; • reputational issues if the target’s management does not align with our culture and values; • significant problems relating to the conversion of the financial and customer data of the target; • integration of acquired customers into our financial and customer product systems; • risks of impairment to goodwill; or • regulatory timeframes for review of applications may limit the number and frequency of transactions we may be able to consummate.
Our stock price may fluctuate widely in response to a variety of factors including the risk factors described herein and, among other things: • actual or anticipated variations in quarterly or annual operating results, financial conditions or credit quality; • changes in business or economic conditions; • changes in accounting standards, policies, guidance, interpretations or principles; • changes in recommendations or research reports about us or the financial services industry in general published by securities analysts; • the failure of securities analysts to cover, or to continue to cover, us after this offering; • changes in financial estimates or publication of research reports and recommendations by financial analysts or actions taken by rating agencies with respect to us or other financial institutions; • news reports relating to trends, concerns and other issues in the financial services industry; • reports related to the impact of natural or manmade disasters in our market; • perceptions in the marketplace regarding us and or our competitors; • sudden increases in the demand for our common stock, including as a result of any “short squeezes;” • significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving us or our competitors; • additional investments from third parties; • additions or departures of key personnel; • future sales or issuance of additional shares of common stock; • fluctuations in the stock price and operating results of our competitors; • changes or proposed changes in laws or regulations, or differing interpretations thereof affecting our business, or enforcement of these laws or regulations; • new technology used, or services offered, by competitors; • additional investments from third parties; or • geopolitical conditions such as acts or threats of terrorism, pandemics or military conflicts.
Our stock price may fluctuate widely in response to a variety of factors including the risk factors described herein and, among other things: • actual or anticipated variations in quarterly or annual operating results, financial conditions or credit quality; • changes in business or economic conditions; • changes in accounting standards, policies, guidance, interpretations or principles; • changes in recommendations or research reports about us or the financial services industry in general published by securities analysts; • the failure of securities analysts to cover, or to continue to cover, us after this offering; • changes in financial estimates or publication of research reports and recommendations by financial analysts or actions taken by rating agencies with respect to us or other financial institutions; • news reports relating to trends, concerns and other issues in the financial services industry; • reports related to the impact of natural or manmade disasters in our market; • perceptions in the marketplace regarding us and or our competitors; • sudden increases in the demand for our common stock, including as a result of any “short squeezes;” • significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving us or our competitors; • additional investments from third parties; • additions or departures of key personnel; • future sales or issuance of additional shares of common stock; • fluctuations in the stock price and operating results of our competitors; 42 Table of Contents • changes or proposed changes in laws or regulations, or differing interpretations thereof affecting our business, or enforcement of these laws or regulations; • new technology used, or services offered, by competitors; • additional investments from third parties; or • geopolitical conditions such as acts or threats of terrorism, pandemics or military conflicts.
In addition, these agencies have the power to take enforcement action against us to enjoin “unsafe or unsound” practices, to require affirmative action to correct any conditions resulting from any violation of law or regulation or unsafe or unsound practice, to issue an administrative order that can be judicially enforced, to direct an increase in our capital, to direct the sale of subsidiaries or other assets, to limit dividends and distributions, to restrict our growth, to assess civil money penalties against us or our officers or directors, to remove officers and directors and, if it is concluded that such conditions cannot be corrected or there is imminent risk of loss to depositors, to terminate our deposit insurance and place our Bank into receivership or conservatorship.
In addition, these agencies have the power to take enforcement action against us to enjoin “unsafe or unsound” practices, to require affirmative action to correct any conditions resulting from any violation of law or regulation or unsafe or unsound practice, to issue an administrative order that can be judicially enforced, to direct an increase in our capital, to direct the sale of our subsidiary or other assets, to limit dividends and distributions, to restrict our growth, to assess civil money penalties against us or our officers or directors, to remove officers and directors and, if it is concluded that such conditions cannot be corrected or there is imminent risk of loss to depositors, to terminate our deposit insurance and place our Bank into receivership or conservatorship.
Those parties may also attempt to fraudulently induce team members, vendors’ clients and loan applicants or other users of our systems to disclose sensitive information in order to gain access to our data or that of our team members, clients and loan applicants.
Those parties may also attempt to fraudulently induce team members, vendors, vendors’ clients and loan applicants or other users of our systems to disclose sensitive information in order to gain access to our data or that of our team members, vendors, clients and loan applicants.
We, our clients and loan applicants, regulators and other third parties have been subject to, and are likely to continue to be the target of, cyberattacks.
We, our clients and loan applicants, regulators, vendors and other third parties have been subject to, and are likely to continue to be the target of, cyberattacks.
If our efforts to remediate an identified material weakness are not successful, or if other material weaknesses or other significant control deficiencies occur, our ability to accurately and timely report our financial results could be impaired, 32 Table of Contents which could result in late filings of our annual and quarterly reports under the Exchange Act as a public company, additional restatements of our consolidated financial statements, a decline in our stock price, suspension or delisting of our common stock from the NYSE, and have an adverse effect on our business, financial condition and results of operations.
If our efforts to remediate an identified material weakness are not successful, or if other material weaknesses or other significant control deficiencies occur, our ability to accurately and timely report our financial results could be impaired, which could result in late filings of our annual and quarterly reports under the Exchange Act as a public company, additional restatements of our consolidated financial statements, a decline in our stock price, suspension or delisting of our common stock from the NYSE, and have an adverse effect on our business, financial condition and results of operations.
Additionally, any failure by us to file our periodic reports with the SEC in a timely manner could harm our reputation and cause our investors and potential investors to lose confidence in us, and restrict trading in, and reduce the market price of, our common stock, and potentially our ability to access the capital markets. Item 1B.
Additionally, any failure by us to file our periodic reports with the SEC in a timely manner could harm our reputation and cause our investors and potential investors to lose confidence in us, and restrict trading in, and reduce the market price of, our common stock, and potentially our ability to access the capital markets.
The developments and use of artificial intelligent (AI) presents risks and challenges that may adversely impact our business. The Company or its third-party (or fourth party) vendors, clients or counterparties may develop or incorporate AI technology in certain business processes, services, or products. The development and use of AI presents a number of risks and challenges to the Company’s business.
The developments and use of artificial intelligence (AI) presents risks and challenges that may adversely impact our business. The Company or its third-party (or fourth party) vendors, clients or counterparties may develop or incorporate AI technology in certain business processes, services, or products. The development and use of AI presents a number of risks and challenges to the Company’s business.
Fair value determinations require many assumptions and complex analyses, especially to the extent there are not active markets for identical assets. For example, we generally estimate the fair value of loans held for sale based on quoted market prices for securities backed by similar types of loans.
Fair value determinations require many assumptions and complex analyses, especially to the extent there are no active markets for identical assets. For example, we generally estimate the fair value of loans held for sale based on quoted market prices for securities backed by similar types of loans.
At December 31, 2024, approximately 99% of our loan portfolio was comprised of loans with real estate as a primary or secondary component of collateral. As a result, adverse developments affecting real estate values in our market areas could increase the credit risk associated with our real estate loan portfolio.
At December 31, 2025, approximately 99% of our loan portfolio was comprised of loans with real estate as a primary or secondary component of collateral. As a result, adverse developments affecting real estate values in our market areas could increase the credit risk associated with our real estate loan portfolio.
Further, the Company may rely on AI models developed by third parties, and, to that extent, would be dependent in part on the manner in which those third parties develop and train their models, including risks arising from the inclusion of any unauthorized material in the training data for their models and the effectiveness of the steps these third parties have taken to limit the risks associated with the output of their models, matters over which the Company may have limited visibility.
Further, the Company may rely on AI models developed by third parties, and, to that extent, would be dependent in part on the manner in which those third parties develop and train their models, including risks arising from the inclusion of any unauthorized material in the 31 Table of Contents training data for their models and the effectiveness of the steps these third parties have taken to limit the risks associated with the output of their models, matters over which the Company may have limited visibility.
However, the loss of any of our other key personnel could have an adverse impact on our business and growth because of their skills, years of industry experience, and knowledge of our market areas, our failure to develop and implement a viable succession plan, the difficulty of 29 Table of Contents finding qualified replacement personnel, or any difficulties associated with transitioning of responsibilities to any new members of the executive management team.
However, the loss of any of our other key personnel could have an adverse impact on our business and growth because of their skills, years of industry experience, and knowledge of our market areas, our failure to develop and implement a viable succession plan, the difficulty of finding qualified replacement personnel, or any difficulties associated with transitioning of responsibilities to any new members of the executive management team.
If personal, confidential or proprietary information of customers or others were to be mishandled or misused (in situations where, for example, such information was erroneously provided to parties who are not permitted to have the information, or where such information was intercepted or otherwise compromised by third parties), we could be exposed to litigation or regulatory sanctions under privacy and data protection laws and regulations.
If personal, confidential or proprietary information of customers or others were to be mishandled or misused (in situations where, for example, such information was erroneously provided to parties who are not 40 Table of Contents permitted to have the information, or where such information was intercepted or otherwise compromised by third parties), we could be exposed to litigation or regulatory sanctions under privacy and data protection laws and regulations.
In addition, the fair value of IRLCs are measured based upon the difference between the current fair value of similar loans (as determined generally for mortgages held for sale) and the price at which we have committed to originate the loans, subject to the anticipated loan financing probability, or pull-through factor (which is both significant and highly subjective).
In addition, the fair 33 Table of Contents value of IRLCs are measured based upon the difference between the current fair value of similar loans (as determined generally for mortgages held for sale) and the price at which we have committed to originate the loans, subject to the anticipated loan financing probability, or pull-through factor (which is both significant and highly subjective).
Any publicized security problems affecting our businesses and/or those of such third parties may 25 Table of Contents negatively impact the market perception of our products and discourage clients from doing business with us. These risks may increase in the future as we continue to increase our reliance on the internet and use of web-based product offerings.
Any publicized security problems affecting our businesses and/or those of such third parties may negatively impact the market perception of our products and discourage clients from doing business with us. These risks may increase in the future as we continue to increase our reliance on the internet and use of web-based product offerings.
Failure to maintain capital to meet current or future regulatory requirements could have an adverse effect on our business, financial condition and results of operations. 34 Table of Contents We are subject to numerous laws designed to protect consumers, including the CRA and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions.
Failure to maintain capital to meet current or future regulatory requirements could have an adverse effect on our business, financial condition and results of operations. We are subject to numerous laws designed to protect consumers, including the CRA and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions.
Based on our regulators’ assessment of the quality of our assets, operations, lending practices, investment practices, capital structure or 33 Table of Contents other aspects of our business, we may be required to take additional charges or undertake, or refrain from taking, actions that could have an adverse effect on our business, financial condition and results of operations.
Based on our regulators’ assessment of the quality of our assets, operations, lending practices, investment practices, capital structure or other aspects of our business, we may be required to take additional charges or undertake, or refrain from taking, actions that could have an adverse effect on our business, financial condition and results of operations.
These laws and regulations increase the scope, complexity and cost of corporate governance, reporting and disclosure practices over those 40 Table of Contents of non-public or non-reporting companies. Despite our conducting business in a highly regulated environment, these laws and regulations have different requirements for compliance than we have experienced prior to becoming a public company.
These laws and regulations increase the scope, complexity and cost of corporate governance, reporting and disclosure practices over those of non-public or non-reporting companies. Despite our conducting business in a highly regulated environment, these laws and regulations have different requirements for compliance than we have experienced prior to becoming a public company.
Our failure to comply with any applicable laws or regulations, or regulatory policies and interpretations of such laws and regulations, could result in sanctions by regulatory agencies, civil money penalties or damage to our reputation, all of which could have an adverse effect on our business, financial condition and results of operations.
Our failure to comply with any applicable laws or regulations, or regulatory policies and interpretations of such laws and 38 Table of Contents regulations, could result in sanctions by regulatory agencies, civil money penalties or damage to our reputation, all of which could have an adverse effect on our business, financial condition and results of operations.
The banking and mortgage origination businesses are highly competitive, and we experience competition in our market from many other financial institutions. Our operations consist of offering banking and residential mortgage services as well as 18 Table of Contents warehouse alternative mortgage financing through our MPP business.
The banking and mortgage origination businesses are highly competitive, and we experience competition in our market from many other financial institutions. Our operations consist of offering banking and residential mortgage services as well as warehouse alternative mortgage financing through our MPP business.
As a result, the outcome of legal and regulatory actions could have an adverse effect on our business, results of operations and results of operations. 31 Table of Contents Severe weather, natural disasters, pandemics, acts of war or terrorism or other external events could significantly impact our business.
As a result, the outcome of legal and regulatory actions could have an adverse effect on our business, results of operations and results of operations. Severe weather, natural disasters, pandemics, acts of war or terrorism or other external events could significantly impact our business.
Michigan corporate law and provisions of our Amended and Restated Articles of Incorporation and our Amended and Restated Bylaws could make it more difficult for a third party to acquire us, even if doing so would be perceived to be beneficial by our stockholders.
Michigan corporate law and provisions of our Amended and Restated Articles of Incorporation and our Amended and Restated Bylaws could make it more difficult for a third party to acquire us, even if doing so would be perceived to be 43 Table of Contents beneficial by our stockholders.
If debt securities in an unrealized loss position are sold, such losses become realized and will reduce our regulatory capital ratios. 21 Table of Contents If interest rates decline for a prolonged period we could experience net interest margin compression as our interest earning assets could reprice downward while our interest-bearing liability rates could fail to decline in tandem.
If debt securities in an unrealized loss position are sold, such losses become realized and will reduce our regulatory capital ratios. If interest rates decline for a prolonged period we could experience net interest margin compression as our interest earning assets could reprice downward while our interest-bearing liability rates could fail to decline in tandem.
In deciding whether to extend credit, we may rely upon our customers’ representations that their financial statements conform to GAAP and present fairly, in all material respects, the financial condition, results of operations and cash flows of the customer.
In deciding whether to extend credit, we may rely upon our customers’ representations that their financial statements conform to GAAP and present fairly, in all material respects, the financial condition, results of operations and cash 28 Table of Contents flows of the customer.
Our access to funding 20 Table of Contents sources in amounts adequate to finance or capitalize our activities or on terms that are acceptable to us could be impaired by factors that affect us directly or the financial services industry or economy in general, such as disruptions in the financial markets or negative views and expectations about the prospects for the financial services industry.
Our access to funding sources in amounts adequate to finance or capitalize our activities or on terms that are acceptable to us could be impaired by factors that affect us directly or the financial services industry or economy in general, such as disruptions in the financial markets or negative views and expectations about the prospects for the financial services industry.
As of December 31, 2024, we accrued $2.6 million in expenses in connection with our reserve for repurchase and indemnification obligations. Actual repurchase and indemnification obligations could materially exceed the reserves we have recorded in our financial statements. Any significant repurchases, substitutions, indemnifications or premium recapture could be detrimental to our business.
As of December 31, 2025, we accrued $2.1 million in expenses in connection with our reserve for repurchase and indemnification obligations. Actual repurchase and indemnification obligations could materially exceed the reserves we have recorded in our financial statements. Any significant repurchases, substitutions, indemnifications or premium recapture could be detrimental to our business.
If a mortgage originator that participates in the MPP defaults on its obligations to us, we have recourse against both the mortgage originator and any unsold loans on our facility originated by the mortgage originator, but it is still possible that we may not be made whole.
If a mortgage originator that participates in the MPP defaults on its obligations to us, we have recourse against both the mortgage originator and any unsold loans on our facility originated by the mortgage originator, but it is still possible that we may not be made 24 Table of Contents whole.
Furthermore, our Bank is not obligated to pay dividends to us, and 35 Table of Contents any dividends paid to us would depend on the earnings or financial condition of our Bank, various business considerations and applicable law and regulation.
Furthermore, our Bank is not obligated to pay dividends to us, and any dividends paid to us would depend on the earnings or financial condition of our Bank, various business considerations and applicable law and regulation.
Additionally, as a BHC, we are dependent on dividends from our subsidiaries as our primary source of income. Our subsidiaries are subject to certain legal and regulatory limitations on their ability to pay us dividends.
Additionally, as a BHC, we are dependent on dividends from our subsidiary as our primary source of income. Our subsidiary is subject to certain legal and regulatory limitations on their ability to pay us dividends.
The unrealized losses resulting from holding these securities would be recognized in other comprehensive income (loss) and reduce total stockholders’ equity. Unrealized losses do not negatively impact our regulatory capital ratios; however, tangible common equity and the associated ratios would be reduced.
The unrealized losses resulting from holding these securities would be recognized in other comprehensive income (loss) and reduce total stockholders’ equity. Unrealized losses do not negatively impact our regulatory capital ratios; however, tangible common equity and the associated ratios would 26 Table of Contents be reduced.
In addition, we had $44.6 million in accruing loans that were 31 – 89 days delinquent as of December 31, 2024. We may be required to repurchase or substitute mortgage loans or mortgage servicing rights (“MSRs”) that we have sold, or indemnify purchasers of our mortgage loans or MSRs.
In addition, we had $44.3 million in accruing loans that were 31 – 89 days delinquent as of December 31, 2025. We may be required to repurchase or substitute mortgage loans or mortgage servicing rights (“MSRs”) that we have sold, or indemnify purchasers of our mortgage loans or MSRs.
Any reduction or limitation on our subsidiaries abilities to pay us dividends could have a material adverse effect on our liquidity and in particular, affect our ability to repay our borrowings.
Any reduction or limitation on our subsidiary’s ability to pay us dividends could have a material adverse effect on our liquidity and in particular, affect our ability to repay our borrowings.
An institution’s failure to exceed the capital conservation buffer with common equity Tier 1 capital would result in limitations on an institution’s ability to make capital distributions and discretionary bonus payments.
An institution’s failure to exceed the capital conservation buffer with common equity Tier 1 capital would result in limitations 39 Table of Contents on an institution’s ability to make capital distributions and discretionary bonus payments.
We may be required to expend significant capital and other resources to protect against and remedy any potential or existing security incidents and their consequences.
We may be required to expend significant capital and other resources to protect against and remedy any potential or existing 30 Table of Contents security incidents and their consequences.
In deciding whether to extend credit or enter into other transactions with customers and counterparties, we may rely on information furnished to us by or on behalf of customers and counterparties, including financial statements and other financial information. We also may rely on representations of customers and counterparties as to the accuracy and completeness of that information.
We depend on the accuracy and completeness of information provided by customers and counterparties. In deciding whether to extend credit or enter into other transactions with customers and counterparties, we may rely on information furnished to us by or on behalf of customers and counterparties, including financial statements and other financial information.
Additional liquidity is provided by brokered deposits and our ability to borrow from the FHLB. As of December 31, 2024, brokered deposits were approximately $1.82 billion, or 53.1% of our total deposits. Brokered deposits may be more rate sensitive than other sources of funding.
Additional liquidity is provided by brokered deposits and our ability to borrow from the FHLB. As of December 31, 2025, brokered deposits were approximately $2.64 billion, or 54.1% of our total deposits. Brokered deposits may be more rate sensitive than other sources of funding.
If some investors find the Company’s common stock less attractive as a result of these choices, there may be a less active trading market for the Company’s common stock, and the Company’s stock price may be more volatile.
If some investors find the Company’s common stock less attractive as a result of these choices, there may be a less active trading market for the Company’s common stock, and the Company’s stock price may be more volatile. Item 1B. Unresolved Staff Comments None
As of December 31, 2024, we had outstanding an aggregate of $43.9 million of subordinated notes, net of debt issuance costs, and we had outstanding an aggregate $103.6 million of non-cumulative perpetual preferred stock. We could incur such debt obligations or issue preferred stock in the future to raise additional capital.
As of December 31, 2025, we had an outstanding aggregate of $96.9 million of subordinated notes, net of debt issuance costs, and we had an outstanding aggregate $25.0 million of non-cumulative perpetual preferred stock. We could incur such debt obligations or issue preferred stock in the future to raise additional capital.
Our bank regulatory agencies will periodically review our allowance for credit losses and the value attributed to nonaccrual loans or to real estate acquired through foreclosure and may require us to adjust our determination of the value for these items.
Our bank regulatory agencies will periodically review our allowance for credit losses and the value attributed to nonaccrual loans or to real estate acquired through foreclosure and may require us to adjust our determination of the value for these items. These adjustments may adversely affect our business, financial condition and results of operations.
To the extent that happens, we could need to reduce our origination volume. Delays in the sale of mortgage loans also increases our exposure to market risks, which could adversely affect our profitability on sales of loans. Any such delays or failure to sell loans could be detrimental to our business.
To the extent that happens, we could need to reduce our origination volume. Delays in the sale of mortgage loans also increases our exposure to market risks, which could adversely affect our profitability on sales of loans.
We currently operate a residential mortgage origination, MPP facility, and servicing business. Changes in interest rates and pricing decisions by our competitors may adversely affect demand for our mortgage loan products, the revenue realized on the sale of loans, revenues received from servicing such loans and the valuation of our mortgage servicing rights.
Changes in interest rates and pricing decisions by our competitors may adversely affect demand for our mortgage loan products, the revenue realized on the sale of loans, revenues received from servicing such loans and the valuation of our mortgage servicing rights.
As of December 31, 2024, our nonperforming loans (which consist of nonaccrual loans and loans past due 90 days or more and still accruing interest, including loans reported at fair value) totaled $79.0 million, or 1.70% of total loans, and our nonperforming assets (which include nonperforming loans and other real estate owned at December 31, 2024) totaled $82.0 million, or 1.57% of total assets.
As of December 31, 2025, our nonperforming loans (which consist of nonaccrual loans and loans past due 90 days or more and still accruing interest, including loans reported at fair value) totaled $91.0 million, or 1.44% of total loans, and our nonperforming assets (which include nonperforming loans and other real estate owned at December 31, 2025) totaled $92.7 million, or 1.32% of total assets.
If we are unable to attract and retain customers in our mortgage origination, MPP, and banking businesses, we may be unable to continue to grow our business, and our financial condition and results of operations may be adversely affected.
Ultimately, we may not be able to compete successfully against current and future competitors. If we are unable to attract and retain customers in our mortgage origination, MPP, and banking businesses, we may be unable to continue to grow our business, and our financial condition and results of operations may be adversely affected.
The techniques used to obtain unauthorized, improper or illegal access to our systems and those of our third-party vendors, our data, our team members’, clients’ and loan applicants’ data or to disable, degrade or sabotage service are constantly evolving, and have become increasingly complex and sophisticated.
The techniques used to obtain unauthorized, improper or illegal access to our systems and those of our third-party vendors, our data, our team members’, clients’ and loan applicants’ data or to disable, degrade or sabotage service are constantly evolving, and have become increasingly complex and sophisticated, including but not limited to artificial intelligence, which may be used by threat actors to perpetuate cyberattacks.
In addition, Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised financial accounting standards. The Company has elected to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
In addition, Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised financial accounting standards.
Before investing in shares of the Company's common stock you should consider the limited trading market for our common stock and be financially prepared and able to hold your shares for an indefinite period. Future sales of our common stock could depress the market price of our common stock.
Before investing in shares of the Company's common stock you should consider the limited trading market for our common stock and be financially prepared and able to hold your shares for an indefinite period. Our stock price may be volatile, and you could lose part or all of your investment as a result.
As of December 31, 2024, our allowance for credit losses as a percentage of total loans HFI was 0.25% and as a percentage of total nonaccrual loans was 26.4%.
As of December 31, 2025, our allowance for credit losses as a percentage of total loans HFI was 0.17% and as a percentage of total nonaccrual loans was 18.5%.
Further, MSRs do not trade in an active market with readily observable prices and therefore, their fair value is determined using a valuation model that calculates the present value of estimated net future cash flows, using estimates of prepayment speeds, discount rate, cost to service, float earnings, contractual servicing fee income and ancillary income, and late fees. 28 Table of Contents If our estimates of fair value prove to be incorrect, we may be required to write down the value of such assets, which could adversely affect our financial condition and results of operations.
Further, MSRs do not trade in an active market with readily observable prices and therefore, their fair value is determined using a valuation model that calculates the present value of estimated net future cash flows, using estimates of prepayment speeds, discount rate, cost to service, float earnings, contractual servicing fee income and ancillary income, and late fees.
Additionally, we face growing competition from online businesses with few or no physical locations, including online banks, lenders and consumer lending platforms. Increased competition in our markets may result in reduced loans, deposits and fees, as well as reduced net interest margin and profitability. Ultimately, we may not be able to compete successfully against current and future competitors.
Additionally, we face growing competition from online businesses with few or no physical locations, including online banks, lenders and consumer lending platforms. 23 Table of Contents Increased competition in our markets may result in pricing pressure, reduced loans, deposits and fees, as well as reduced net interest margin and profitability.
If we are unable to successfully remediate future material weaknesses in our internal control over financial reporting, the accuracy and timing of our financial reporting may be adversely affected.
If we have deficiencies in our disclosure controls and procedures or internal control over financial reporting, such deficiencies may adversely affect us. 37 Table of Contents If we are unable to successfully remediate future material weaknesses in our internal control over financial reporting, the accuracy and timing of our financial reporting may be adversely affected.
For example, as interest rates rise, the value of existing mortgage assets falls. 27 Table of Contents We employ various economic hedging strategies to mitigate the interest rate and the anticipated loan financing probability or “pull-through risk” inherent in such mortgage assets.
We employ various economic hedging strategies to mitigate the interest rate and the anticipated loan financing probability or “pull-through risk” inherent in such mortgage assets.
In addition, we are a BHC, and our ability to declare and pay dividends is dependent on federal regulatory considerations, including the guidelines of the Federal Reserve regarding capital adequacy and dividends.
Our board of directors may, in its sole discretion, change the amount or frequency of dividends or discontinue the payment of dividends entirely. In addition, we are a BHC, and our ability to declare and pay dividends is dependent on federal regulatory considerations, including the guidelines of the Federal Reserve regarding capital adequacy and dividends.
If we obtain securities or industry analyst coverage and if one or more of the analysts who covers us downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price would likely decline. 39 Table of Contents If we fail to meet the expectations of analysts for our operating results, our stock price would likely decline.
If no securities or industry analysts commence coverage of our company, the trading price for our stock would be negatively impacted. If we obtain securities or industry analyst coverage and if one or more of the analysts who covers us downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price would likely decline.
In September 2008, Fannie Mae and Freddie Mac were placed into conservatorship by the U.S. government. The federal government has for many years considered proposals to reform Fannie Mae and Freddie Mac, but the results of any such reform, and their impact on us, are difficult to predict. To date, no reform proposal has been enacted.
The federal government has for many years considered proposals to reform Fannie Mae and Freddie Mac, but the results of any such reform, and their impact on us, are difficult to predict. To date, no reform proposal has been enacted. A decline in our MPP business could have a significant impact on our results of operations.
Our independent registered public accounting firm has not performed an evaluation of our internal control over financial reporting during any period in accordance with the provisions of the Sarbanes-Oxley Act.
We cannot assure you that we have identified all of our existing material weaknesses, or that we will not, in the future, have additional material weaknesses. Our independent registered public accounting firm has not performed an evaluation of our internal control over financial reporting during any period in accordance with the provisions of the Sarbanes-Oxley Act.
We are, and intend in the future to continue, investing significant resources in developing new tools, features, services, products and other offerings. New initiatives are inherently risky, as each involves unproven business strategies and new products and services with which we have limited or no prior development or operating experience.
New initiatives are inherently risky, as each involves unproven business strategies and new products and services with which we have limited or no prior development or operating experience.
A decline in our MPP business could have a significant impact on our results of operations. Our MPP business accounted for 23.3% of our total revenues for the year ended December 31, 2024. All our MPP clients are residential mortgage originators who are subject to many of the same risks that affect our mortgage origination business.
Our MPP business accounted for 30.4% of our total revenues for the year ended December 31, 2025. All our MPP clients are residential mortgage originators who are subject to many of the same risks that affect our mortgage origination business.
If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline. We may not pay dividends on our common stock in the future, and our ability to pay dividends is subject to certain restrictions.
If we fail to meet the expectations of analysts for our operating results, our stock price would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline.
We are currently rated by Fitch as a primary servicer. If we were to lose our servicer rating, our reputation would be adversely affected. Additionally, losing our servicer rating would inhibit us from servicing securitized mortgage loans, which would result in a decrease in our mortgage servicing revenue.
If we were to lose our servicer rating, our reputation would be adversely affected. Additionally, losing our servicer rating would inhibit us from servicing securitized mortgage loans, which would result in a decrease in our mortgage servicing revenue. Our allowance for credit losses may prove to be insufficient to absorb actual losses in our loan portfolio.
We may not be successful in overcoming these risks or any other problems encountered in connection with pending or potential acquisitions, and any acquisition we may consider will be subject to prior regulatory approval.
Integration risks may be exacerbated by differences in business practices, risk management approaches, regulatory compliance cultures or operating systems between us and an acquired institution. We may not be successful in overcoming these risks or any other problems encountered in connection with pending or potential acquisitions, and any acquisition we may consider will be subject to prior regulatory approval.
Despite devoting significant time and resources to ensure the integrity of our information technology systems, we have not always been able to, and may not be able to in the future, anticipate or implement effective preventive measures against all security incidents or unauthorized access of our information technology systems or the information technology systems of third-party vendors that receive, process, retain and transmit electronic information on our behalf. 24 Table of Contents Security incidents, acts of vandalism, natural disasters, fire, power loss, telecommunication failures, team member misconduct, human error and developments in computer intrusion capabilities could result in a compromise or breach of the technology that we or our third-party vendors use to collect, process, retain, transmit and protect the personal information and transaction data of our team members, clients and loan applicants.
Security incidents, acts of vandalism, natural disasters, fire, power loss, telecommunication failures, team member misconduct, human error and developments in computer intrusion capabilities could result in a compromise of the technology that we or our third-party vendors use to collect, process, retain, transmit and protect the personal information and transaction data of our team members, clients and loan applicants.
We must also successfully implement improvements to, or integrate, our management information and control systems, procedures and processes in an efficient and timely manner and identify deficiencies in existing systems and controls.
Our ability to execute our strategy may be constrained by regulatory requirements, capital and liquidity considerations, technology limitations, or changes in market conditions. We must also successfully implement improvements to, or integrate, our management information and control systems, procedures and processes in an efficient and timely manner and identify deficiencies in existing systems and controls.
We are highly dependent on our management team, and the loss of our senior executive officers or other key employees could harm our ability to implement our strategic plan, impair our relationships with customers and adversely affect our business, results of operations and growth prospects.
Our failure to sustain our historical rate of growth, adequately manage the factors that have contributed to our growth or successfully enter new markets could have an adverse effect on our earnings and profitability and, therefore on our business, financial condition and results of operations. 34 Table of Contents We are highly dependent on our management team, and the loss of our senior executive officers or other key employees could harm our ability to implement our strategic plan, impair our relationships with customers and adversely affect our business, results of operations and growth prospects.
We engage in lending secured by real estate and may be forced to foreclose on the collateral and own the underlying real estate, subjecting us to the costs and potential risks associated with the ownership of real property, or consumer protection 22 Table of Contents initiatives or changes in state or federal law may substantially raise the cost of foreclosure or prevent us from foreclosing at all.
As a result, we are exposed to counterparty risk in the event of non-performance by counterparties to our various contracts, including, without limitation, as a result of the rejection of an agreement or transaction in bankruptcy proceedings, which could result in substantial losses for which we may not have insurance coverage. 27 Table of Contents We engage in lending secured by real estate and may be forced to foreclose on the collateral and own the underlying real estate, subjecting us to the costs and potential risks associated with the ownership of real property, or consumer protection initiatives or changes in state or federal law may substantially raise the cost of foreclosure or prevent us from foreclosing at all.
We may not be able to effectively implement new technology- driven products and services as quickly as competitors or be successful in marketing these products and services to our clients.
We may not be able to effectively implement new technology- driven products and services as quickly as competitors or be successful in marketing these products and services to our clients. Rapid technological change may require significant and ongoing investment, and delays, cost overruns or unsuccessful implementations could adversely affect our competitive position.
Any future increases or special assessments could reduce our profitability and could have an adverse effect on our business, financial condition and results of operations. 36 Table of Contents The Company is an “emerging growth company” under the JOBS Act, and the Company cannot be certain whether the reduced disclosure requirements applicable to emerging growth companies will make the Company’s common stock less attractive to investors.
The Company is an “emerging growth company” under the JOBS Act, and the Company cannot be certain whether the reduced disclosure requirements applicable to emerging growth companies will make the Company’s common stock less attractive to investors.
Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have significant reputational consequences for us. Any of these circumstances could have an adverse effect on our business, financial condition and results of operations. Our Bank’s FDIC deposit insurance premiums and assessments may increase.
Any of these circumstances could have an adverse effect on our business, financial condition and results of operations. 41 Table of Contents Our Bank’s FDIC deposit insurance premiums and assessments may increase.
Holders of our common stock are entitled to receive only such dividends as our board of directors may declare out of funds legally available for such payments. Our board of directors may, in its sole discretion, change the amount or frequency of dividends or discontinue the payment of dividends entirely.
We may not pay dividends on our common stock in the future, and our ability to pay dividends is subject to certain restrictions. Holders of our common stock are entitled to receive only such dividends as our board of directors may declare out of funds legally available for such payments.
Any of these risks could expose the Company to liability or adverse legal or regulatory consequences and harm the Company’s reputation and the public perception of its business or the effectiveness of its security measures. 26 Table of Contents We are, and intend to continue, developing new products and services, and our failure to accurately predict their demand or growth could have an adverse effect on our business.
Any of these risks could expose the Company to liability or adverse legal or regulatory consequences and harm the Company’s reputation and the public perception of its business or the effectiveness of its security measures.
The Company cannot predict whether investors will find its common stock less attractive as a result of the Company taking advantage of these exemptions.
The Company has elected to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. 44 Table of Contents The Company cannot predict whether investors will find its common stock less attractive as a result of the Company taking advantage of these exemptions.
Additionally, if GSEs who purchase loans from our MPP clients develop real-time funding products for mortgage originators, our MPP clients’ need for funding facilities such as our MPP facilities would be reduced. 19 Table of Contents The mortgage originators that participate in the MPP may also have fewer resources to weather adverse business developments, which may impair their ability to continue as going concerns and originate new mortgage loans.
The mortgage originators that participate in the MPP may also have fewer resources to weather adverse business developments, which may impair their ability to continue as going concerns and originate new mortgage loans.
We also may rely on customer representations and certifications, or other audit or accountants’ reports, with respect to the business and financial condition of our clients. Our financial condition, results of operations, financial reporting and reputation could be negatively affected if we rely on materially misleading, false, inaccurate or fraudulent information.
Our internal controls, policies and procedures may not be sufficient to identify all inaccuracies or misrepresentations in the information on which we rely. Our financial condition, results of operations, financial reporting and reputation could be negatively affected if we rely on materially misleading, false, inaccurate or fraudulent information.
Additionally, as an emerging growth company we intend to take advantage of extended transition periods for complying with new or revised accounting standards affecting public companies. Litigation and regulatory actions, including possible enforcement actions, could subject us to significant fines, penalties, judgments or other requirements resulting in increased expenses or restrictions on our business activities.
Litigation and regulatory actions, including possible enforcement actions, could subject us to significant fines, penalties, judgments or other requirements resulting in increased expenses or restrictions on our business activities.
In addition, such events could affect the stability of our deposit base, impair the value of collateral securing loans, cause significant property damage, result in loss of revenue or cause us to incur additional expenses. The occurrence of any of these events in the future could have a material adverse effect on our business, financial condition or results of operations.
In addition, such events could affect the stability of our deposit base, impair the value of collateral securing loans, cause significant property damage, result in loss of revenue or cause us to incur additional expenses. These events could also disrupt our operations, workforce, technology systems, third-party service providers or customers, and may limit our ability to deliver products and services.
Our hedging strategies may not be successful in mitigating our risks associated with changes in interest rates. Our profitability is directly affected by changes in interest rates. The market value of closed loans held for sale and interest rate locks generally change along with interest rates. The value of such assets moves opposite of interest rate changes.
The market value of closed loans held for sale and interest rate locks generally change along with interest rates. The value of such assets moves opposite of interest rate changes. For example, as interest rates rise, the value of existing mortgage assets falls.
Such declines and losses could have a material adverse impact on our business, results of operations and growth prospects. In addition, if hazardous or toxic substances are found on properties pledged as collateral, the value of the real estate could be impaired.
In addition, if hazardous or toxic substances are found on properties pledged as collateral, the value of the real estate could be impaired. If we foreclose on and and take title to such properties, we may be liable for remediation costs, as well as for personal injury and property damage.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changePotential cybersecurity incidents are reviewed by the Chief Information Security Officer and the Information Technology Steering Committee. The evaluation of reported events by the committee includes reporting of any mitigation or remediation determined necessary to address the threat posed by the reported event.
Biggest changePotential cybersecurity incidents are reviewed and evaluated by the CISO and the CSOC. The evaluation includes reporting to the CSOC of any mitigation or remediation determined necessary to address the threat posed by the reported event.
The information security program, led by our Chief Information Security Officer and our Chief Information Officer, evaluates internal and external cybersecurity threat factors according to a written policy statement approved by the Board periodically. We maintain processes to evaluate third parties whose information systems support our critical operations.
The information security program, led by our Chief Information Security Officer, evaluates internal and external cybersecurity threat factors according to a written policy statement approved by the Board periodically. We maintain processes to evaluate third parties whose information systems support our critical operations.
The Audit Committee receives, and reviews reports on our risk management processes, which include assessments of management’s cybersecurity threats and incident management functions.
The Audit Committee receives and reviews reports on our risk management processes, which include management’s assessments of cybersecurity threats and incident management functions.
The Board of Directors receives periodic training related to cyber security and is responsible for approval and oversight of management’s policies governing information system security and cybersecurity threats and incidents, as well as oversight of management’s approach to secure our information systems. The Board of Directors delegates the primary oversight of risk management to the Bank’s Audit Committee.
The Board of Directors receives periodic training related to cybersecurity and is responsible for approval and oversight of management’s policies governing information system security and cybersecurity threats and incidents, as well as oversight of management’s approach to secure our information systems. The Board of Directors delegates the primary oversight of risk management to the Audit Committee of the Board.
This Committee is responsible for updates which summarize cybersecurity threats and incident monitoring activity, along with details of remediation to address threats and incidents. The summary considers both internal as well as external threat events and outlines management’s approach to enable the timely identification and notice of a material incident, should one occur, without unreasonable delay.
This Committee is responsible for updates which summarize cybersecurity threats and incident monitoring activity, along with details of remediation to address threats and incidents. The updates consider both internal as well as external threat events and outlines management’s approach to enable the timely identification and notice of a material incident, should one occur, without unreasonable delay.
We also engage external independent parties to perform independent audit engagements, as well as other assessments of our information security and third-party risk management program and information systems.
We also engage external independent parties to perform independent audit engagements, as well as other assessments of our information security and third-party risk management programs and information systems.
The information security program performs periodic risk assessments of our information systems and cybersecurity threats using industry standard methodologies based on FFIEC Cybersecurity Assessment Tool (CAT), as well as regulatory guidance issued by the Federal Financial Institutions Examination Council (FFIEC) and state and federal regulators, including the Federal Deposit Insurance Corporation and the Michigan Department of Insurance and Financial Services.
The information security program performs periodic risk assessments of our information systems and cybersecurity threats using industry standard methodologies based on NIST Cybersecurity Framework, as well as regulatory guidance issued by the Federal Financial Institutions Examination Council (FFIEC) and state and federal regulators, including the Federal Deposit Insurance Corporation and the Michigan Department of Insurance and Financial Services.
The committee receives periodic reporting of certain cybersecurity risks from the Chief Information Security Officer, including reports related to social engineering, effectiveness of cyber security training, as well as vulnerability and penetration assessments performed on the Company’s information systems by internal and by external parties and audit reports of information systems and cybersecurity threat and incident monitoring.
The Audit Committee receives periodic reporting of cybersecurity-related items from the Chief Information Security Officer (“CISO”), including reports related to social engineering, the effectiveness of cybersecurity training, vulnerability and penetration assessments performed on the Company’s information systems by internal and by external parties, audit reports of information systems and cybersecurity threat and incident monitoring.
If any event rose to the level of a material incident, management maintains an incident response plan to mitigate the impact, maintain business continuity and provide for internal and external communication, including required notifications.
If any cybersecurity event rose to the level of a material cybersecurity incident, management maintains an incident response plan leveraging a cross-functional team to mitigate the impact, maintain business continuity and provide for internal and external communication, including potentially required notifications.
The third-party risk management program evaluates cybersecurity risks and information systems of third parties at onboarding and on an ongoing basis.
The third-party risk management programs evaluate cybersecurity risks and information systems of third parties at onboarding and on an ongoing basis.
Processes include evaluating reports and/or performing assessments of a third party’s information systems leveraging cybersecurity frameworks such as International Organization for Standardization (ISO) ISO 27001, Cybersecurity Framework (CSF) published by the US National Institute of Standards and Technology, as well as evaluating reports issued by a third party’s auditors developed under the attestation standards issued by the American Institute of Certified Public Accountants (AICPA).
Processes include evaluating reports and/or performing assessments of a third party’s information systems leveraging cybersecurity frameworks such as Cybersecurity Framework (CSF) and NIST 800-53 published by the US National Institute of Standards and Technology, as well as evaluating reports issued by a third party’s auditors developed under the attestation standards issued by the American Institute of Certified Public Accountants (AICPA).
While we have experienced, and expect to continue to experience, 41 Table of Contents cybersecurity threats, we have not experienced a material cybersecurity incident in the two-year period ended December 31, 2024.
While we have experienced, and expect to continue to experience, cybersecurity threats, we have not experienced a material cybersecurity incident in the two-year period ended December 31, 2025.
Our Chief Information Security Officer has over 25 years of relevant experience and formal training in the areas of cybersecurity, risk management, and data privacy in the financial services industry. The Chief Information Security Officer holds a Master of Science in Computer Information Systems and appropriate professional certifications.
Our CISO has over 25 years of relevant experience and formal training in the areas of cybersecurity, risk management, and data privacy in the financial services industry. Our CISO holds a Masters of Science in Computer Information Systems and has obtained numerous professional certifications.
Please see Part I, Item 1A Risk Factors for further discussion of the risks associated with an interruption or breach in our information systems or infrastructure. Cybersecurity Governance An Information Technology Steering Committee was established to assist Management and the Board of Directors in the oversight and risk management of information security.
Please see Part I, Item 1A Risk Factors for further discussion of the risks associated with an interruption or breach in our information systems or infrastructure. 45 Table of Contents Cybersecurity Governance A management-level Cyber Security Oversight Council (“CSOC”) assists management and the Board of Directors in the oversight and risk management of information security.
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Our Chief Information Officer has over 20 years of executive level technology leadership experience in the financial services industry.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe believe that our properties are in good condition and are suitable and adequate to our needs.
Biggest changeWe believe that our properties are in good condition and are suitable and adequate to our needs. Item 3. Legal Proceedings We are subject to various legal actions that arise from time to time in the ordinary course of business.
Item 2. Properties Our principal executive office is located at 3333 Deposit Drive Northeast, Grand Rapids, Michigan 49546 and our telephone number at that address is (616) 940-9400. In addition to our principal executive office, we operate loan production offices across 23 cities in 15 states that are supported through our centralized operating center in Grand Rapids, Michigan.
Item 2. Properties Our principal executive office is located at 3333 Deposit Drive Northeast, Grand Rapids, Michigan 49546 and our telephone number at that address is (616) 940-9400. In addition to our principal executive office, we operate loan production offices across 25 cities in 15 states that are supported through our centralized operating center in Grand Rapids, Michigan.
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While the ultimate outcome of pending procedures cannot be predicted with certainty, at this time management does not expect that any such proceedings, either individually or in the aggregate, would have a material adverse effect on our consolidated financial position or results of operations.
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However, one or more unfavorable outcomes in any legal action against us could have a material adverse effect for the period in which they are resolved. In addition, regardless of their merits or their ultimate outcomes, such matters are costly, divert management’s attention and may materially adversely affect our reputation, even if resolved in our favor.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Item 3. Legal Proceedings We are subject to various legal actions that arise from time to time in the ordinary course of business.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk Market risk represents the risk of loss due to changes in market values of assets and liabilities. We incur market risk in the normal course of business through exposures to market interest rates, equity prices, and credit spreads. We have identified interest rate risk as our primary source of market risk.
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While the ultimate outcome of pending procedures cannot be predicted with certainty, at this time management does not expect that any such proceedings, either individually or in the aggregate, would have a material adverse effect on our consolidated financial position or results of operations.
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Our primary business activities include gathering retail deposits, non-brokered rateboard time deposits, brokered CDs, and funding from the FHLB and other smaller facilities, which are used to invest in cash and loans.
Removed
However, one or more unfavorable outcomes in any legal action against us could have a material adverse effect for the period in which they are resolved.
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These activities involve interest rate risk, which arises from factors such as timing and volume differences in the repricing of our rate-sensitive assets and liabilities, changes in credit spreads, fluctuations in the general level of market interest rates, and shifts in the shape and level of market yield curves.
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In addition, regardless of their merits or their ultimate outcomes, such matters are costly, divert management’s attention and may materially adversely affect our reputation, even if resolved in our favor. 42 Table of Contents Item 4. Mine Safety Disclosures Not applicable. 43 Table of Contents Part II
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Changes in interest rates can affect our current and prospective earnings, through volatility in our net interest income and the level of other interest rate-sensitive revenues and operating expenses. Interest rate fluctuations can also influence the underlying economic value of our assets, liabilities and off-balance sheet items.
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This is driven by the fact that the present values of future cash flows, and potentially the cash flows themselves, may change when interest rates materially move up or down depending on the economic environment. Interest rate risk is generally considered a significant market risk for financial institutions.
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The Bank’s Asset Liability Committee (“ALCO”) establishes broad policy limits with respect to interest rate risk. We have established a system for monitoring our net interest rate sensitivity positions. Our ALCO meets monthly to monitor the level of interest rate risk sensitivity to ensure compliance with the risk and policy limits.
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Effective management of interest rate risk begins with understanding the dynamic characteristics of assets and liabilities and determining the appropriate interest rate risk posture given business forecasts, management objectives, market expectations, and policy constraints. However, it is important to note that despite these measures, significant changes in interest rates could potentially impact our earnings, liquidity and capital positions.
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An asset sensitive position refers to a balance sheet position in which an increase in short-term interest rates is expected to generate higher net interest income, as rates earned on our interest-earning assets would reprice upward more quickly than rates paid on our interest-bearing liabilities, thus expanding our net interest margin.
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Conversely, a liability sensitive position refers to a balance sheet position in which an increase in short-term interest rates is expected to generate lower net interest income, as rates paid on our interest- bearing liabilities would reprice upward more quickly than rates earned on our interest-earning assets, thus compressing our net interest margin.
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We use interest rate risk models and rate shock simulations to assess the interest rate risk (“IRR”) sensitivity of net interest income and the economic value of equity (“EVE”) over a variety of parallel and non-parallel rate scenarios.
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A number of assumptions are used to calculate the impact of interest rate fluctuations on our net interest income, including asset prepayment speeds, non-maturity deposit price sensitivity, and decay rates. Due to the inherent use of estimates and assumptions in the model, our actual results may, and most likely will, differ from our simulated results.
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Any key model or input changes are reported to ALCO monthly. Management engages a third-party to review its IRR assumptions on an annual basis. Key findings are presented to ALCO. The interest rate sensitivity analyses discussed below are hypothetical in nature and are not intended to predict actual results.
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Potential changes to our net interest income in hypothetical rising and declining rate scenarios are calculated at December 31, 2025 and December 31, 2024 and are presented in the table below: (Shock in basis points) Net Interest Income Sensitivity 12 Month Projection -200 -100 +100 +200 December 31, 2025 -7.71 % -3.80 % 4.03 % 8.13 % December 31, 2024 -8.91 % -4.35 % 5.24 % 10.36 % 73 Table of Contents We also model the impact of interest rate changes on our EVE.
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We base the modeling of EVE on interest rate shocks as shocks are considered more appropriate for EVE, which accelerates future interest rate risk into current capital via a present value calculation of all future cash flows from our Bank’s existing inventory of assets and liabilities.
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The results from our EVE modeling reflect only assets and liabilities that exist on our balance sheet in that period, and do not incorporate the large increases to noninterest income we generate when industry residential loan originations are significantly higher.
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The results of the model are presented in the table below: (Shock in basis points) Economic Value of Equity Sensitivity -200 -100 +100 +200 December 31, 2025 -0.90 % 0.06 % -0.32 % -0.87 % December 31, 2024 2.13 % 2.53 % -1.88 % -4.30 % 74 Table of Contents

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeEquity Compensation Plan Information Please see Item 12 of this Annual Report for information with respect to shares of common stock that are authorized for issuance under the Company’s equity compensation plans as of December 31, 2024. Such information is incorporated herein by reference. Issuer Purchases of Equity Securities None. Item 6. [ Reserved ] 44 Table of Contents
Biggest changeInformation on restrictions on payments of dividends by us may be found in Item 1 of this report under the heading “Supervision and Regulation” and is incorporated by reference herein. 47 Table of Contents Equity Compensation Plan Information Please see Item 12 of this Annual Report for information with respect to shares of common stock that are authorized for issuance under the Company’s equity compensation plans as of December 31, 2025.
The comparisons in this table are set forth in response to Securities and Exchange Commission (SEC) disclosure requirements and therefore are not intended to forecast or be indicative of future performance of the common stock. Dividends We have no obligation to pay dividends and we may change our dividend policy at any time without notice to our stockholders.
The comparisons in this table are set forth in response to Securities and Exchange Commission (“SEC”) disclosure requirements and therefore are not intended to forecast or be indicative of future performance of the common stock. Dividends We have no obligation to pay dividends and we may change our dividend policy at any time without giving notice to our stockholders.
The following graph shows the cumulative total stockholder return (including the reinvestment of dividends) on an investment in the Company’s common stock compared to the Russell 2000 Index and the KBW Regional Banking Index.
The following graph shows the cumulative total stockholder return (including the reinvestment of dividends) on an investment in Northpointe Bancshares, Inc.’s common stock compared to the Russell 2000 Index and the KBW Regional Banking Index.
The comparison assumes a $100 investment on February 17, 2025 at the initial price of $14.50 set in the Company’s initial public offering and through March 18, 2025 (30 days).
The comparison assumes a $100 investment on February 17, 2025 at the initial price of $14.50 set in the Company’s initial public offering and through December 31, 2025.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Beginning February 14, 2025, our common stock was quoted on the New York Stock Exchange under the symbol NPB. On March 28, 2025, there were approximately 87 owners of record of our common stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the New York Stock Exchange under the symbol “NPB”. Our common stock began trading on the New York Stock Exchange on February 14, 2025.
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Information on restrictions on payments of dividends by us may be found in Item 1 of this report under the heading “Supervision and Regulation” and is here incorporated by reference.
Added
At the close of business on March 27, 2026, the number of shares outstanding was 34,494,116. There were approximately 46 owners of record of our common stock on that date.
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Such information is incorporated herein by reference. Issuer Purchases of Equity Securities The following table provides information regarding the Company’s purchase of its own common stock during the fourth quarter of 2025. The Company has no publicly announced repurchase plans or programs. The Company did not sell any unregistered securities during the three years ended December 31, 2025.
Added
Purchases of Equity Securities Period (a) Total Number of Shares Purchased (b) Average Price Paid Per Share (c) Total number of shares (or units) purchased as part of publicly announced plans or programs (d ) Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs (dollars in 000s) October 1 - October 31, 2025 — $ — — $ — November 1 - November 30, 2025 — — — — December 1 - December 31, 2025 — — — — Total for Fourth Quarter ended December 31, 2025 — $ — — $ —

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

103 edited+61 added−34 removed39 unchanged
Biggest changeOur capital ratios and the capital ratios of our Bank at December 31, 2024 exceeded all applicable minimum capital requirements and the regulatory standards for our Bank to be “well- capitalized.” Highlights of 2024 Financial Results (compared to 2023) Our net income for the year ended December 31, 2024 compared to December 31, 2023 demonstrates our success in strategic repositioning over the past several years. • Net income available to common stockholders for 2024 was $47.2 million, an increase of $23.1 million, nearly double our net income of $24.1 million in 2023. • Despite lower residential mortgage originations over the same period, net income available to common stockholders increased by 95.6% compared to year-end 2023, attributable to higher net interest income and lower noninterest expense, which more than offset the decrease in noninterest income. • We did not incur any material one-time costs associated with strategic repositioning in 2024. • Net interest income before provision increased by $13.0 million in 2024 compared to 2023, reflecting strong growth in MPP and AIO loans and a 4 basis point improvement in net interest margin. • Noninterest expense decreased by $38.5 million, or 25.1%, in 2024, compared to 2023, primarily driven by lower variable compensation and our proactive measures to manage mortgage-related back-office expenses. • We continued to thoughtfully change the mix of our HFI loan portfolio. • MPP loans increased to 36.8% of total gross loans at December 31, 2024, from 27.7% at December 31, 2023. • Residential mortgage loans decreased to 41.9% of total gross loans at December 31, 2024 from 45.1% at December 31, 2023. • AIO Loans were 13.2% of total gross loans at December 31, 2024, up from 12.2% at December 31, 2023. • MPP facilities increased by $564.0 million, or 49.2%, at December 31, 2024 compared to December 31, 2023, reflecting strong new customer acquisition and market share gains, as well as a slight increase in overall industry mortgage originations. • Liquidity remained stable, with total cash and cash equivalents of $376.3 million at December 31, 2024, compared to $351.9 million at December 31, 2023. • As of December 31, 2024, our capital ratios were above all regulatory requirements to be considered well-capitalized. 48 Table of Contents Results of Operations Net Interest Income The following table presents average balance sheet information, interest income, interest expense and the corresponding average yield earned and rates paid for the years ended December 31, 2024 and 2023: (Dollars in thousands) For the Years Ended December 31, 2024 2023 Average Balance Interest Inc/Exp Average Yield/Rate Average Balance Interest Inc/Exp Average Yield/Rate Interest-Earning Assets Loans (1)(2) $ 4,427,420 $ 285,490 6.45 % $ 3,932,840 $ 237,396 6.04 % Securities, AFS (3) 9,819 637 6.49 % 16,117 923 5.73 % Securities, FHLB Stock 69,243 6,399 9.24 % 71,627 4,191 5.85 % Interest Bearing Deposits 476,288 25,006 5.25 % 482,246 24,872 5.16 % Total Earning Assets 4,982,770 317,532 6.37 % 4,502,830 267,382 5.94 % Noninterest Earning Assets (4) 138,653 200,113 Total Assets $ 5,121,423 $ 4,702,943 Interest-Bearing Liabilities Deposits: Transaction Accounts $ 412,396 $ 19,911 4.83 % $ 233,199 $ 11,974 5.13 % Money Market & Savings 380,131 16,691 4.39 % 434,395 15,705 3.62 % Time 2,221,123 114,523 5.16 % 2,044,351 96,226 4.71 % Total Interest-bearing deposits 3,013,650 151,125 5.01 % 2,711,945 123,905 4.57 % Sub Debt 41,557 3,886 9.35 % 53,418 4,562 8.54 % Borrowings 1,310,330 48,306 3.69 % 1,157,969 37,696 3.26 % Total Interest-bearing liabilities 4,365,537 203,317 4.66 % 3,923,332 166,163 4.24 % Noninterest-bearing liabilities Noninterest-bearing deposits 250,135 286,569 Other noninterest-bearing liabilities 54,130 65,392 Total noninterest-bearing liabilities 304,265 351,961 Equity 451,621 427,650 $ 5,121,423 $ 4,702,943 Net Interest Spread (5) 1.72 % 1.70 % Net Interest Margin (6) $ 114,215 2.29 % $ 101,219 2.25 % ____________________ (1) Loan balance includes loans held for investment and held for sale.
Biggest changeOur capital ratios and the capital ratios of our Bank at December 31, 2025 exceeded all applicable minimum capital requirements and the regulatory standards for our Bank to be “well- capitalized.” 52 Table of Contents Highlights for 2025 • Net income available to common stockholders for the year ended December 31, 2025 was $71.6 million, an increase of $24.5 million, or 51.9%, from $47.2 million for the year ended December 31, 2024. • Earnings per diluted common share increased to $2.11 for 2025, compared to $1.83 for 2024. • Net interest income before provision for the year ended December 31, 2025 increased by $36.5 million compared to the year ended December 31, 2024, reflecting $1.17 billion increase in average interest-earning assets and a 16 basis point improvement in net interest margin. • Noninterest expense for the year ended December 31, 2025 increased by $14.6 million compared to the year ended December 31, 2024, primarily driven by higher incentive compensation expense reflecting the improvement in financial performance. • Demonstrated strong balance sheet growth. • MPP facilities increased by $1.71 billion at December 31, 2025 compared to December 31, 2024. • AIO loans increased by $120.5 million at December 31, 2025 compared to December 31, 2024. • Total deposits increased by $1.45 billion at December 31, 2025 compared to December 31, 2024, and include growth in the Company’s diversified digital deposit banking platform including two new deposit relationships added during 2025, along with growth in brokered CDs. • Liquidity remained stable, with total cash and cash equivalents of $496.5 million at December 31, 2025, up $120.2 million, or 31.9% compared to $376.3 million at December 31, 2024. • As of December 31, 2025, our capital ratios were above all regulatory requirements to be considered well-capitalized. 53 Table of Contents Results of Operations Net Interest Income The following table presents average balance sheet information, interest income, interest expense and the corresponding average yield earned and rates paid for the years ended December 31, 2025 and 2024: (Dollars in thousands) For the Years Ended December 31, 2025 2024 Average Balance Interest Inc/Exp Average Yield/Rate Average Balance Interest Inc/Exp Average Yield/Rate Interest-Earning Assets Loans (1)(2) $ 5,554,219 $ 351,238 6.32 % $ 4,427,420 $ 285,490 6.45 % Securities, AFS (3) 8,250 463 5.61 % 9,819 637 6.49 % Securities, FHLB Stock 74,510 6,513 8.74 % 69,243 6,399 9.24 % Interest bearing deposits 513,213 21,990 4.28 % 476,288 25,006 5.25 % Total earning assets 6,150,192 380,204 6.18 % 4,982,770 317,532 6.37 % Noninterest earning assets (4) 108,067 138,653 Total assets $ 6,258,259 $ 5,121,423 Interest-Bearing Liabilities Deposits: Transaction Accounts $ 865,349 $ 37,551 4.34 % $ 412,396 $ 19,911 4.83 % Money market & savings 379,012 14,358 3.79 % 380,131 16,691 4.39 % Time 2,856,257 124,830 4.37 % 2,221,123 114,523 5.16 % Total interest-bearing deposits 4,100,618 176,739 4.31 % 3,013,650 151,125 5.01 % Sub debt 33,497 3,138 9.37 % 41,557 3,886 9.35 % Borrowings 1,250,919 49,588 3.96 % 1,310,330 48,306 3.69 % Total interest-bearing liabilities 5,385,034 229,465 4.26 % 4,365,537 203,317 4.66 % Noninterest-bearing liabilities Noninterest-bearing deposits 234,109 250,135 Other noninterest-bearing liabilities 43,233 54,130 Total noninterest-bearing liabilities 277,342 304,265 Equity 595,883 451,621 $ 6,258,259 $ 5,121,423 Net interest spread (5) 1.92 % 1.72 % Net interest margin (6) $ 150,739 2.45 % $ 114,215 2.29 % ____________________ (1) Loan balance includes loans HFI and held for sale.
(3) Average yield based on carrying value and there are no tax-exempt securities in the portfolio. (4) Noninterest-earning assets includes the allowance for credit losses. (5) Net interest spread is the average yield on total interest-earning assets minus the average rate on total interest-bearing liabilities. (6) Net interest margin is net interest income divided by total interest-earning assets.
(3) Average yield based on carrying value and there are no tax-exempt securities in the portfolio. (4) Noninterest-earning assets includes the allowance for credit losses. (5) Net interest spread is the average yield on total interest-earning assets minus the average rate on total interest-bearing liabilities. (6) Net interest margin is net interest income divided by total average interest-earning assets.
The provision for credit losses is impacted by inherent risk characteristics in our loan portfolio, the level of nonperforming loans and net charge-offs, both current and historic, recent historical and projected future economic conditions, loan growth, the direction of the change in collateral values, and the level of actual net charge-offs incurred.
The provision (benefit) for credit losses is impacted by inherent risk characteristics in our loan portfolio, the level of nonperforming loans and net charge-offs, both current and historic, recent historical and projected future economic conditions, loan growth, the direction of the change in collateral values, and the level of actual net charge-offs incurred.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Introduction The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.
As discussed in Note 22 of our Consolidated Financial Statements, our reportable segments have been determined based on management’s focus and internal reporting structure. The MPP segment provides collateralized mortgage purchase facilities to independent mortgage bankers nationwide. The Retail Banking segment provides a vast array of financial products and services to consumers nationwide.
As discussed in Note 21 of our Consolidated Financial Statements, our reportable segments have been determined based on management’s focus and internal reporting structure. The MPP segment provides collateralized mortgage purchase facilities to independent mortgage bankers nationwide. The Retail Banking segment provides a vast array of financial products and services to consumers nationwide.
The amount of our net income is affected by overall loan demand, economic conditions, the slope of the yield curve, and changes in the absolute level of interest rates, the amounts and composition of our loan portfolio and interest-bearing liabilities. For 2024 and 2023, net interest income accounted for more than half of our total revenue.
The amount of our net interest income is affected by overall loan demand, economic conditions, the slope of the yield curve, and changes in the absolute level of interest rates, the amounts and composition of our loan portfolio and interest-bearing liabilities. For 2025 and 2024, net interest income accounted for more than half of our total revenue.
These assumptions are particularly subjective and can have a material effect on the estimated LRA balance and income. We believe the assumptions that we utilize in estimating fair value are reasonable based upon accepted industry practices and represent neither the most conservative or aggressive assumptions.
These assumptions are particularly subjective and can have a material effect on the estimated LRA balance and income. We believe the assumptions that we utilize in estimating fair value are reasonable based upon accepted industry practices and represent neither the most conservative nor aggressive assumptions.
Application of these principles requires management to make estimates, assumptions and complex judgements that affect amounts presented in our consolidated financial statements. These estimates, assumptions and judgements are based on information available as of the date of the financial statements; accordingly, as this information changes, the consolidated financial statements could reflect different estimates, assumptions, and judgements.
Application of these principles requires management to make estimates, assumptions and complex judgments that affect amounts presented in our consolidated financial statements. These estimates, assumptions and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, the consolidated financial statements could reflect different estimates, assumptions, and judgments.
To mitigate interest rate risk, most of the loans we choose to hold in our portfolio are floating rate loans. The majority of our residential mortgage loans at December 31, 2024 are first liens. AIO loans are floating rate, first mortgage revolving equity loans that include a checking account linked to the revolving equity loan.
To mitigate interest rate risk, most of the loans we choose to hold in our portfolio are floating rate loans. The majority of our residential mortgage loans at December 31, 2025 are first liens. AIO loans are floating rate, first mortgage revolving equity loans that include a checking account linked to the revolving equity loan.
All other noninterest income revenues are reflected in Retail Banking. (2) Includes data processing, professional services, office supplies and other miscellaneous expenses. (3) Reflects corporate overhead expense allocations used by both business segments; primarily consisting of corporate admin, finance, technology, human resources, risk, marketing and occupancy related allocations.
All other components of noninterest income are reflected in Retail Banking. (2) Includes data processing, professional services, office supplies and other miscellaneous expenses. (3) Reflects corporate overhead expense allocations used by both business segments; primarily consisting of corporate admin, finance, technology, human resources, risk, marketing, wire services and occupancy related allocations.
As a residential real estate mortgage-focused bank, our efficiency ratio will typically be higher than other non-mortgage focused banks and will tend to decrease significantly with any meaningful increase in industry mortgage originations. The efficiency ratio represents non-interest expense divided by the sum of net interest income and noninterest income.
As a residential real estate mortgage-focused bank, our efficiency ratio will typically be higher than other non-mortgage focused banks and will tend to decrease significantly with any meaningful increase in industry 51 Table of Contents mortgage originations. The efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income.
We also have a smaller portfolio of construction loans, home equity lines of credit, and commercial loans, which combined represented less than 4% of the overall loan portfolio as of December 31, 2024.
We also have a smaller portfolio of construction loans, home equity lines of credit, and commercial loans, which combined represented less than 4% of the overall loan portfolio as of December 31, 2025.
Contractual Maturities and Rate Structures of Loan Portfolio The following table sets forth the contractual maturities and rate structures at December 31, 2024 and 2023: Contractual Loan Maturities as of December 31, 2024 Due in 1 Year or less Due after 1 Year through 5 years Due after 5 Years through 15 years Due after 15 years Total (Dollars in thousands) Fixed Rate Adjustable Rate Fixed Rate Adjustable Rate Fixed Rate Adjustable Rate Fixed Rate Adjustable Rate Residential Construction $ 12,401 $ — $ — $ — $ — $ — $ 38,013 $ 994 $ 51,408 All-in-One (AIO)(1) — — — — — — — 612,080 612,080 Other Consumer / Home Equity(1) — — — — — 70 — 97,188 97,258 Residential Mortgage(2) 393 333 347 553 15,655 14,142 363,450 1,553,302 1,948,175 Commercial — 7,303 120 234 115 82 159 — 8,013 MPP — 1,710,820 — — — — — — 1,710,820 Total Loans Held for Investment: 12,794 1,718,456 467 787 15,770 14,294 401,622 2,263,564 4,427,754 Retail Loans Held for Sale: — — — — — — 210,766 6,307 217,073 Total Gross Loans (HFI and HFS) $ 12,794 $ 1,718,456 $ 467 $ 787 $ 15,770 $ 14,294 $ 612,388 $ 2,269,871 $ 4,644,827 _____________________ (1) AIO and Other Consumer / Home Equity are aggregated into Home equity lines of credit loans within the tables in our consolidated financial statements.
Contractual Loan Maturities as of December 31, 2024 Due in 1 Year or less Due after 1 Year through 5 years Due after 5 Years through 15 years Due after 15 years Total (Dollars in thousands) Fixed Rate Adjustable Rate Fixed Rate Adjustable Rate Fixed Rate Adjustable Rate Fixed Rate Adjustable Rate Residential Construction $ 12,401 $ — $ — $ — $ — $ — $ 38,013 $ 994 $ 51,408 All-in-One (AIO)(1) — — — — — — — 612,080 $ 612,080 Other consumer / home equity(1) — — — — — 70 — 97,188 97,258 Residential mortgage(2) 393 333 347 553 15,655 14,142 363,450 1,553,302 1,948,175 Commercial — 7,303 120 234 115 82 159 — 8,013 MPP — 1,710,820 — — — — — — 1,710,820 Total loans HFI 12,794 1,718,456 467 787 15,770 14,294 401,622 2,263,564 4,427,754 Retail loans held for sale — — — — — — 210,766 6,307 217,073 Total gross loans (HFI and HFS) $ 12,794 $ 1,718,456 $ 467 $ 787 $ 15,770 $ 14,294 $ 612,388 $ 2,269,871 $ 4,644,827 _____________________ (1) AIO and Other Consumer / Home Equity are aggregated into Home equity lines of credit loans within the tables in our consolidated financial statements.
Provision for Credit Losses The provision for credit losses represents a charge to earnings necessary to establish an allowance for credit losses that, in management’s evaluation, is adequate to provide coverage for all expected future credit losses.
Provision (Benefit) for Credit Losses The provision (benefit) for credit losses represents a charge (gain) to earnings necessary to establish an allowance for credit losses that, in management’s evaluation, is adequate to provide coverage for all expected future credit losses.
In management’s opinion, changes in interest rates affect the financial condition of a financial institution to a far greater degree than changes in the inflation rate. While interest rates are greatly influenced by changes in the inflation rate, they do not necessarily change at the same rate or in the same magnitude as the inflation rate.
In management’s opinion, changes in interest rates affect the financial condition of a financial institution to a far greater degree 70 Table of Contents than changes in the inflation rate. While interest rates are greatly influenced by changes in the inflation rate, they do not necessarily change at the same rate or in the same magnitude as the inflation rate.
We have one bank branch located in Grand Rapids, Michigan and loan production offices located in 23 cities in 15 states across the country, which are supported by our centralized operations and back-office support teams based in Grand Rapids, Michigan.
We have one bank branch located in Grand Rapids, Michigan and physical loan production offices located in 25 cities in 15 states across the country, which are supported by our centralized operations and back-office support teams based in Grand Rapids, Michigan.
Under capital adequacy guidelines and the regulatory framework for prompt corrective action, our Bank must meet specific capital guidelines that involve quantitative measures of our assets, liabilities and off-balance sheet items as calculated under regulatory accounting policies.
Under capital adequacy guidelines and the regulatory framework for prompt corrective action, our Bank must meet specific capital guidelines that involve quantitative measures of our assets, liabilities and off-balance sheet items as calculated under regulatory accounting 71 Table of Contents policies.
The increase was primarily due to growth in our MPP business over this period. Our MPP facilities are floating rate and generally have terms of 30 days or less given that is the time period that a funded mortgage stays in our mortgage banking clients facility prior to the sale of the mortgage in the secondary market.
This increase was driven primarily by the strong growth in our MPP business over the period. Our MPP facilities are floating rate and generally have terms of 30 days or less given that is the time period that a funded mortgage stays in our mortgage banking clients facility prior to the sale of the mortgage in the secondary market.
A large component of our expense base is mortgage- related commissions, which are variable in nature and increase or decrease in line with residential mortgage originations. We also proactively manage our production-related back-office expenses and will right size those expenses based on the anticipated level of production.
A significant component of our expense base is mortgage- related commissions, which are variable in nature and increase or decrease in line with residential mortgage originations. We also proactively manage our production-related back-office expenses and will right size those expenses where possible based on the anticipated level of production.
Nonaccrual loans are included in total loan balances and no adjustment has been made for these loans in the yield calculation. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs. (2) Loan fees of $303,000 and $241,000 for 2024 and 2023, respectively, are included in interest income.
Nonaccrual loans are included in total loan balances and no adjustment has been made for these loans in the yield calculation. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs. (2) Net loan fees of $144,000 and $303,000 for 2025 and 2024, respectively, are included in interest income.
Both residential mortgage loan origination channels are supported by our proprietary POS digital platform that streamlines the loan application and closing processes. Our consumer direct and traditional retail channels primarily originate mortgage loans which are saleable through an end investor.
Both residential mortgage loan origination channels are supported by our proprietary point-of-service digital platform that streamlines the loan application and closing processes. Our consumer direct and traditional retail channels primarily originate mortgage loans which are saleable through an end investor.
Our liquidity position benefits significantly from the fact that approximately one-third of the loan portfolio is in MPP, in which loans typically have a dwell time on the client’s facility for less than 30 days after the loan is funded, and which we have the unilateral right not to fund.
Our liquidity position benefits significantly from the fact that over half of the loan portfolio is in MPP, in which loans typically have a dwell time on the client’s facility for less than 30 days after the loan is funded, and which we have the unilateral right not to fund.
Noninterest income is a key contributor to our net income and is expected to account for more than half of our revenue in market conditions when industry residential mortgage loan origination volumes are significantly higher, such as in 2020 and 2021.
Noninterest income is a key contributor to our net income and is expected to account for more than half of our revenue in market conditions when industry residential mortgage loan origination volumes are significantly higher.
Management estimates the allowance by using relevant available information from internal and external sources related to historical loss experience, current borrower risk characteristics, current economic conditions, reasonable and supportable forecasts, and other relevant factors.
Management estimates the allowance by using relevant available information from internal and external sources related to historical loss experience, current borrower risk characteristics, current economic conditions, reasonable and supportable 66 Table of Contents forecasts, and other relevant factors.
We executed another early payoff of $102.5 million in FHLB advances in January 2025, recognizing a gain of $2.0 million. These extinguishments were funded through our receipt of new contractual interest bearing deposits with a similar duration.
We executed another early payoff of $102.5 million in FHLB advances in the first quarter of 2025, recognizing a gain of $2.0 million. Both of these extinguishments were funded through our receipt of new contractual interest bearing deposits with a similar duration.
The following table presents the carrying value of our investment portfolio as of the dates indicated: (Dollars in thousands) December 31, 2024 December 31, 2023 Carrying Value % of Total Carrying Value % of Total Available for sale securities: Corporate Debt $ 8,576 100.0 % $ 14,727 100.0 % Total available for sale securities 8,576 100.0 % 14,727 100.0 % Total investment securities $ 8,576 100.0 % $ 14,727 100.0 % 61 Table of Contents The following table presents the par value of our debt securities by their stated maturities, as well as the weighted average yields for each maturity range as of the dates indicated: December 31, 2024 Due in 1 Year or Less Due after 1 Year through 5 Years Due after 5 Years through 10 Years Due after 10 Years Total Par Value Weighted Avg Yield (1) Par Value Weighted Avg Yield (1) Par Value Weighted Avg Yield (1) Par Value Weighted Avg Yield (1) Par Value Weighted Avg Yield (1) Available for sale securities: Corporate Debt — — — — $ 9,000 6.63 % — — $ 9,000 6.63 % Total available for sale securities — — — — 9,000 6.63 % — — 9,000 6.63 % Total investment securities — — — — $ 9,000 6.63 % — — $ 9,000 6.63 % December 31, 2023 Due in 1 Year or Less Due after 1 Year through 5 Years Due after 5 Years through 10 Years Due after 10 Years Total Par Value Weighted Avg Yield (1) Par Value Weighted Avg Yield (1) Par Value Weighted Avg Yield (1) Par Value Weighted Avg Yield (1) Par Value Weighted Avg Yield (1) Available for sale securities: Corporate Debt — — $ 5,000 6.00 % $ 5,000 6.00 % $ 5,500 5.40 % $ 15,500 5.79 % Total available for sale securities — — 5,000 6.00 % 5,000 6.00 % 5,500 5.40 % 15,500 5.79 % Total investment securities — — $ 5,000 6.00 % $ 5,000 6.00 % $ 5,500 5.40 % $ 15,500 5.79 % ______________________ (1) Weighted-average yields on investment securities are computed based on par value and exclude any premiums or discounts recorded.
The following table presents the carrying value of our investment portfolio as of the dates indicated: (Dollars in thousands) December 31, 2025 December 31, 2024 Carrying Value % of Total Carrying Value % of Total Available for sale securities: Corporate debt $ 4,738 100.0 % $ 8,576 100.0 % Total available for sale securities 4,738 100.0 % 8,576 100.0 % Total investment securities $ 4,738 100.0 % $ 8,576 100.0 % 67 Table of Contents The following table presents the par value of our debt securities by their stated maturities, as well as the weighted average yields for each maturity range as of the dates indicated: December 31, 2025 Due in 1 Year or Less Due after 1 Year through 5 Years Due after 5 Years through 10 Years Due after 10 Years Total Par Value Weighted Avg Yield (1) Par Value Weighted Avg Yield (1) Par Value Weighted Avg Yield (1) Par Value Weighted Avg Yield (1) Par Value Weighted Avg Yield (1) Available for sale securities: Corporate debt — — — — $ 5,000 4.00 % — — $ 5,000 4.00 % Total available for sale securities — — — — 5,000 4.00 % — — 5,000 4.00 % Total investment securities — — — — $ 5,000 4.00 % — — $ 5,000 4.00 % December 31, 2024 Due in 1 Year or Less Due after 1 Year through 5 Years Due after 5 Years through 10 Years Due after 10 Years Total Par Value Weighted Avg Yield (1) Par Value Weighted Avg Yield (1) Par Value Weighted Avg Yield (1) Par Value Weighted Avg Yield (1) Par Value Weighted Avg Yield (1) Available for sale securities: Corporate debt — — $ — — % $ 9,000 6.63 % $ — — % $ 9,000 6.63 % Total available for sale securities — — — — % 9,000 6.63 % — — % 9,000 6.63 % Total investment securities — — $ — — % $ 9,000 6.63 % $ — — % $ 9,000 6.63 % ______________________ (1) Weighted-average yields on investment securities are computed based on par value and exclude any premiums or discounts recorded.
Very few of our loans have intermediate contractual maturities of between one and fifteen years. As of December 31, 2024, 62.1% of total loans had contractual maturities of longer than 15 years, compared to 70.3% at December 31, 2023.
Very few of our loans have intermediate contractual maturities of between one and fifteen years. As of December 31, 2025, 45.1% of total loans had contractual maturities of longer than 15 years, compared to 62.1% at December 31, 2024.
This loan growth was primarily attributable to the strong growth in MPP, which grew by 49.2% since December 31, 2023, reflecting the strength of scalable technology, long-standing strong relationships built by account executives since inception, as well as our ability to capitalize on recent market disruption within the business line.
This loan growth was primarily attributable to the strong growth in MPP balances, which increased by 100.2% from December 31, 2024, reflecting the strength of scalable technology, long-standing strong relationships built by account executives since inception, as well as our ability to capitalize on recent market disruption within the business line.
There are no tax-exempt securities in the portfolio. Deposits Deposits are the primary source of funding our business operations. As of December 31, 2024, total deposits were $3.42 billion compared to $2.93 billion at December 31, 2023.
There are no tax-exempt securities in the portfolio. Deposits Deposits are the primary source of funding our business operations. At December 31, 2025, total deposits were $4.87 billion, compared to $3.42 billion at December 31, 2024.
Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. As of December 31, 2024, 37.3% of our total loan portfolio had a contractual maturity of less than one year, up from 28.8% at December 31, 2023.
Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. 63 Table of Contents At December 31, 2025, 54.4% of our total loan portfolio had a contractual maturity of less than one year, up from 37.3% at December 31, 2024.
At December 31, 2024, our total FHLB borrowings were $1.26 billion, up $16.3 million from $1.28 billion at December 31, 2023. At December 31, 2024, we had $1.10 billion in additional borrowing capacity at the FHLB. During the fourth quarter of 2024, we paid off a $50.0 million FHLB advance, recognizing a $1.7 million gain on debt extinguishment.
At December 31, 2025, our total FHLB borrowings were $1.42 billion, up $163.8 million from $1.26 billion at December 31, 2024. At December 31, 2025, we had $1.52 billion in additional borrowing capacity at the FHLB. During the fourth quarter of 2024, we paid off a $50.0 million FHLB advance, recognizing a $1.7 million gain on debt extinguishment.
Residential real estate loans classified as non-performing are generally loans on nonaccrual status. C) Pass . Commercial credits not covered by the definitions below are pass credits, which are not considered to be adversely rated. D) Special Mention (Watch) . Loans classified as special mention, or watch credits, have a potential weakness or weaknesses that deserves management’s close attention.
Commercial credits not covered by the definitions below are pass credits, which are not considered to be adversely rated. D) Special Mention (Watch) . Loans classified as special mention, or watch credits, have a potential weakness or weaknesses that deserves management’s close attention.
Interest rates are highly sensitive to many factors that are beyond the control of the Company, including changes in the expected rate of inflation, the influence of general and local economic conditions and the monetary and fiscal policies of the United States government, its agencies and various other governmental regulatory authorities, among other things, as further discussed in the next section. 64 Table of Contents Liquidity Liquidity refers to our capacity to meet our cash obligations at a reasonable cost.
Interest rates are highly sensitive to many factors that are beyond the control of the Company, including changes in the expected rate of inflation, the influence of general and local economic conditions and the monetary and fiscal policies of the United States government, its agencies and various other governmental regulatory authorities, among other things, as further discussed in the next section.
The primary effect of inflation on the operations of the Company is reflected in increased operating costs, and the Company has experienced material effects of inflation during the last four fiscal years due to the government's monetary policies and the current economic climate.
Changes in the relative value of money due to inflation or recession are generally not considered. The primary effect of inflation on the operations of the Company is reflected in increased operating costs, and the Company has experienced material effects of inflation during the last four fiscal years due to the government's monetary policies and the current economic climate.
Our residential lending business provides a comprehensive range of financing options nationwide through two main channels: consumer direct and traditional retail. These channels combine the convenience of on-line, self-service platforms with the personalized service of an experienced residential mortgage loan officer.
Our residential lending business provides a comprehensive range of financing options nationwide through two main channels: consumer direct and traditional retail. We are a nationwide mortgage lender, with 122 mortgage originators across 25 states. These channels combine the convenience of online, self-service platforms with the personalized service of an experienced residential mortgage loan officer.
As of December 31, 2024, our total loans net of allowance for credit losses including loans held for sale was $4.63 billion compared to $4.12 billion on December 31, 2023.
At December 31, 2025, our total loans net of allowance for credit losses including loans held for sale was $6.32 billion compared to $4.63 billion on December 31, 2024.
Allowance for Credit Losses and Net Charge-Offs The allowance for credit losses is established through a provision for credit losses charged to operations. Loans are charged against the allowance for credit losses when management believes that the collectability of the principal is unlikely. Subsequent recoveries of previously charged off amounts, if any, are credited to the allowance for credit losses.
Loans are charged against the allowance for credit losses when management believes that the collectability of the principal is unlikely. Subsequent recoveries of previously charged off amounts, if any, are credited to the allowance for credit losses.
The effect of rate changes is calculated by multiplying the change in average rate by the previous period’s volume. The change in interest due to both rate and volume has been allocated to rate and volume changes in proportion to the relationship of the absolute dollar amounts of the changes in each.
The change in interest due to both rate and volume has been allocated to rate and volume changes in proportion to the relationship of the absolute dollar amounts of the changes in each.
As evidence of our strong underwriting and diligent risk controls, our largest loan category, residential mortgages, has experienced very low net 55 Table of Contents charge-offs throughout our history, and our second largest loan category, MPP, has not experienced any charge-offs since we began this lending program in 2010.
At December 31, 2025, our loans HFI portfolio represented 95.1% of our gross loans. As evidence of our strong underwriting and diligent risk controls, our largest loan category, MPP, has not experienced any charge-offs since we began this lending program in 2010 and our second largest loan category, residential mortgages, has experienced very low net charge-offs throughout our history.
We maintain appropriate funding capacity through our diversified and nimble funding structure, which includes a scalable digital banking platform, non-brokered rate board time deposits, brokered CDs, and access to funding from the FHLB and other smaller facilities.
We maintain appropriate funding capacity through our diversified and nimble funding structure, which includes a scalable digital banking platform, non-brokered rate board time deposits, brokered CDs, and access to funding from the FHLB and other smaller facilities. The FDIC evaluates the liquidity of our Bank on a stand-alone basis pursuant to applicable guidance and policies.
Typically, the possibility of loss is extremely high. The losses on these loans are deferred until all pending factors have been addressed. Our classified assets are described in more detail in Note 3 of the Notes to Consolidated Financial Statements.
Typically, the possibility of loss is extremely high. The losses on these loans are deferred until all pending factors have been addressed. Our classified assets are described in more detail in Note 3 of the Notes to Consolidated Financial Statements. Allowance for Credit Losses and Net Charge-Offs The ACL is established through a provision for credit losses charged to operations.
The process for estimating credit losses incorporates methodologies and procedures specific to the residential and 60 Table of Contents commercial loan portfolios, each of which has unique risk characteristics. Our allowance for credit losses methodology is described in more detail in Note 2 of the Notes to Consolidated Financial Statements.
The process for estimating credit losses incorporates methodologies and procedures specific to the residential and commercial loan portfolios, each of which has unique risk characteristics. Our ACL methodology is described in more detail in Note 1 of the Notes to Consolidated Financial Statements. Our ACL, and associated percentage of total loans, reflect the relative credit risk of our loan portfolio.
During periods when market conditions are such that industry residential loan originations are significantly higher, such as in 2020 and 2021, it is expected that noninterest income will grow substantially, driven primarily by gain on sale of mortgage loans, resulting in net interest income dropping to under half of total revenue. 46 Table of Contents Noninterest Income Noninterest income consists of service charges on deposits and related fees, loan servicing fees, MPP related fees, and net gains on the sale of loans.
During periods when market conditions are such that industry residential loan originations are significantly higher, it is expected that noninterest income will grow substantially, driven primarily by gain on sale of mortgage loans, resulting in net interest income dropping to under half of total revenue.
The FDIC evaluates the liquidity of our Bank on a stand-alone basis pursuant to applicable guidance and policies. 47 Table of Contents Capital We manage our capital by tracking the level and quality of capital with consideration given to our overall financial condition, our asset quality, our level of allowance for credit losses, our geographic and industry concentrations, and other risk factors in our balance sheet, including interest rate sensitivity and off-balance-sheet commitments.
Capital We manage our capital by tracking the level and quality of capital with consideration given to our overall financial condition, our asset quality, our level of allowance for credit losses, our geographic and industry concentrations, and other risk factors in our balance sheet, including interest rate sensitivity and off-balance-sheet commitments.
The two outstanding subordinated notes totaling $35.0 million at December 31, 2023 qualified as Tier 2 capital at our Bank entity. 63 Table of Contents At December 31, 2024, and 2023 we had $5.0 million in subordinated debentures issued through trusts due on March 17, 2034, but callable on March 17, 2025, which qualified as Tier 1 capital at our Bank entity.
At December 31, 2025, and 2024 we had $5.0 million in subordinated debentures issued through trusts due on March 17, 2034, but callable on March 17, 2025, which qualifies as Tier 1 capital at our Bank entity.
The following tables provide a summary of our outstanding subordinated notes and subordinated debentures issued through trusts for the periods indicated: Subordinated Notes and Subordinated Debentures issued through Trusts as of December 31, 2024 (Dollars in thousands) Issuance Date Amount of Notes Current Coupon Next Call Date Maturity Date Subordinated Notes: Fixed to Floating due 2028 (NPB) September 28, 2018 $ 15,000 8.718% (3 mo SOFR + 4.03)% January 1, 2025 October 1, 2028 Fixed to Floating due 2034 (NPBI) August 22, 2024 25,000 9.00% (fixed) September 1, 2029 September 1, 2034 Subordinated Debentures Issued Through Trusts: Trust Preferred due 2034 (NPBI) March 17, 2004 5,000 7.74% (3 mo SOFR + 2.79)% March 17, 2025 March 17, 2034 45,000 Unamortized Issuance Costs (1,103) $ 43,897 Subordinated Notes and Subordinated Debentures issued through Trusts as of December 31, 2023 (Dollars in thousands) Issuance Date Amount of Notes Current Coupon Next Call Date Maturity Date Subordinated Notes: Fixed to Floating due 2028 (NPB) September 28, 2018 $ 15,000 9.29% (3 mo SOFR + 4.03)% January 1, 2024 October 1, 2028 Fixed to Floating due 2029 (NPBI) September 19, 2019 20,000 6.00% (fixed) September 30, 2024 September 30, 2029 Subordinated Debentures Issued Through Trusts: Trust Preferred due 2034 (NPBI) March 17, 2004 5,000 8.38% (3 mo SOFR + 2.79)% March 15, 2024 March 17, 2034 40,000 Unamortized Issuance Costs (632) $ 39,368 Impact of Inflation and Changing Prices The Company’s financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States (GAAP).
The following tables provide a summary of our outstanding subordinated notes and subordinated debentures issued through trusts for the periods indicated: Subordinated Notes and Subordinated Debentures issued through Trusts at December 31, 2025 (Dollars in thousands) Issuance Date Amount of Notes Current Coupon Next Call Date Maturity Date Subordinated notes: Fixed to floating due 2034 August 22, 2024 $ 25,000 9.00% (fixed) September 1, 2029 September 1, 2034 Fixed to floating due 2035 December 9, 2025 70,000 7.50% (fixed) December 15, 2030 December 15, 2035 Subordinated debentures issued through trusts: Trust preferred due 2034 March 17, 2004 5,000 6.70% (3 mo SOFR + 2.79)% March 17, 2026 March 17, 2034 100,000 Unamortized issuance costs (3,085) $ 96,915 Subordinated Notes and Subordinated Debentures issued through Trusts at December 31, 2024 (Dollars in thousands) Issuance Date Amount of Notes Current Coupon Next Call Date Maturity Date Subordinated notes: Fixed to floating due 2028 (issued at Bank) September 28, 2018 $ 15,000 8.718% (3 mo SOFR + 4.03)% January 1, 2025 October 1, 2028 Fixed to floating due 2034 August 22, 2024 25,000 9.00% (fixed) September 1, 2029 September 1, 2034 Subordinated debentures issued through trusts: Trust preferred due 2034 March 17, 2004 5,000 7.74% (3 mo SOFR + 2.79)% March 17, 2025 March 17, 2034 45,000 Unamortized issuance costs (1,103) $ 43,897 Impact of Inflation and Changing Prices The Company’s financial statements included herein have been prepared in accordance with GAAP which presently requires the Company to measure financial position and operating results primarily in terms of historic dollars.
These include funding mismatches, market constraints in accessing sources of funds and the ability to convert assets into cash. Changes in economic conditions or exposure to credit, market, operational, legal and reputational risks also could affect our Bank’s liquidity risk profile and are considered in the assessment of liquidity management.
Changes in economic conditions or exposure to credit, market, operational, legal and reputational risks also could affect our Bank’s liquidity risk profile and are considered in the assessment of liquidity management.
Our accounting and reporting policies are in accordance with accounting principles generally accepted in the United States of America and conform to general practices within the banking industry.
Our accounting and reporting policies are in accordance with GAAP and conform to general practices within the banking industry.
The fair value of our mortgage loan servicing rights has been determined based on a valuation model used by an independent third party.
The fair value of our MSRs are determined based on a valuation model used by an independent third party.
As of December 31, 2024, we and our Bank exceeded all applicable minimum regulatory capital requirements, including the capital conservation buffer applicable to our Bank, and our Bank qualified as “well-capitalized” for purposes of the FDIC’s prompt corrective action regulations. 65 Table of Contents The following table presents our regulatory capital ratios as of the dates presented, as well as the regulatory capital ratios that are required by FDIC regulations for our Bank to maintain “well-capitalized” status: Regulatory Capital Ratios Actual Required for Capital Adequacy Purposes Required to be Well Capitalized Under PCA (Dollars in thousands) Amount Ratio Amount Ratio Amount Ratio Northpointe Bancshares Inc.
The following table presents our regulatory capital ratios as of the dates presented, as well as the regulatory capital ratios that are required by FDIC regulations for our Bank to maintain “well-capitalized” status: Regulatory Capital Ratios Actual Required for Capital Adequacy Purposes Required to be Well Capitalized Under PCA (Dollars in thousands) Amount Ratio Amount Ratio Amount Ratio Northpointe Bancshares Inc.
Through our wholly-owned subsidiary, Northpointe Bank, we focus on providing independent mortgage banking platforms nationwide with an alternative to traditional mortgage warehouse lending (we refer to this business as our Mortgage Purchase Program, or “MPP”, as well as residential mortgage and digital banking services to retail customers nationwide.
Through our wholly-owned subsidiary, Northpointe Bank (the “Bank”), we focus on (1) providing a best-in-class platform for independent mortgage bankers nationwide to utilize as an alternative to traditional mortgage warehouse lending (we refer to this business as our Mortgage Purchase Program, or “MPP”) and (2) offering attractive products and services to our residential mortgage and digital banking retail customers.
Loan Portfolio The following table presents the balance and associated percentage of each major loan type within our portfolio, including net deferred fees and costs, as of the dates indicated: (Dollars in thousands) December 31, 2024 December 31, 2023 Amount % of Total Gross Loans Amount % of Total Gross Loans Residential: Construction $ 51,408 1.1 % $ 141,326 3.4 % All-in-One (AIO) (1) 612,080 13.2 % 506,035 12.2 % Other Consumer / Home Equity (1) 97,258 2.1 % 106,650 2.6 % Residential Mortgage (2) 1,948,175 41.9 % 1,862,325 45.1 % Commercial 8,013 0.2 % 18,037 0.4 % MPP 1,710,820 36.8 % 1,146,826 27.7 % Total Loans Held for Investment 4,427,754 95.3 % 3,781,199 91.5 % Loans Held for Sale 217,073 4.7 % 352,443 8.5 % Total Gross Loans (HFI and HFS) $ 4,644,827 100.0 % $ 4,133,642 100.0 % _____________________ (1) AIO and Other Consumer / Home Equity are aggregated into Home equity lines of credit loans within the tables in our consolidated financial statements.
Loan Portfolio The following table presents the balance and associated percentage of each major loan type within our portfolio, including net deferred fees and costs, as of the dates indicated: (Dollars in thousands) December 31, 2025 December 31, 2024 Amount % of Total Gross Loans Amount % of Total Gross Loans Residential: Construction $ 17,430 0.3 % $ 51,408 1.1 % All-in-One (AIO) (1) 732,583 11.6 % 612,080 13.2 % Other consumer / home equity (1) 55,550 0.9 % 97,258 2.1 % Residential mortgage (2) 1,775,507 28.0 % 1,948,175 41.9 % Commercial 15,521 0.2 % 8,013 0.2 % MPP 3,424,936 54.1 % 1,710,820 36.8 % Total loans HFI 6,021,527 95.1 % 4,427,754 95.3 % Loans held for sale 309,213 4.9 % 217,073 4.7 % Total gross loans (HFI and HFS) $ 6,330,740 100.0 % $ 4,644,827 100.0 % (1) AIO and Other Consumer / Home Equity are aggregated into Home equity lines of credit loans within the tables in our consolidated financial statements.
For our two largest categories of long duration loans as of December 31, 2024, 80.5% of residential mortgage and 100% of our AIO Loans were floating rate. 57 Table of Contents Nonperforming Assets The following table provides details of our nonperforming and restructured assets as of the dates presented and certain other related information: (Dollars in thousands) December 31, 2024 December 31, 2023 Nonaccrual Loans(1): Commercial 118 — Construction 1,921 2,201 Land Development 2,312 2,201 Home Equity Lines of Credit 10,807 3,597 First Lien Mortgage 25,706 12,501 First Lien Mortgage Wholly or Partially Guaranteed by the U.S Government 32,159 12,525 Junior Lien Mortgage 1,532 726 MPP — — 74,555 33,751 Loans Past Due 90 Days or More and Still Accruing(1): Commercial — — Construction — — Land Development — — Home Equity Lines of Credit 200 497 First Lien Mortgage 3,823 2,785 First Lien Mortgage Wholly or Partially Guaranteed by the U.S Government 346 25,171 Junior Lien Mortgage 30 — MPP — — 4,399 28,453 Total Nonperforming Loans 78,954 62,204 Other Real Estate Owned 3,030 24 Total Nonperforming Assets $ 81,984 $ 62,228 Nonaccrual Loans to Total Loans 1.61 % 0.82 % Nonperforming Loans to Total Loans 1.70 % 1.50 % Nonperforming Assets to Total Assets 1.57 % 1.31 % Allowance for Credit Losses to Nonaccrual Loans 15.01 % 36.43 % Ratios Excluding Loans Wholly or Partially Guaranteed by the U.S Government Nonaccrual Loans to Total Loans 0.91 % 0.51 % Nonperforming Loans to Total Loans 1.00 % 0.60 % Nonperforming Assets to Total Assets 0.95 % 0.52 % Allowance for Credit Losses to Nonaccrual Loans 26.39 % 57.92 % _____________________ (1) Includes loans which are reported at fair value (see Note 18 of our consolidated financial statements).
Nonperforming Assets The following table provides details of our nonperforming and restructured assets as of the dates presented and certain other related information: (Dollars in thousands) December 31, 2025 December 31, 2024 Nonaccrual loans (1) : Commercial $ 243 $ 118 Construction 1,176 1,921 Land development 4,573 2,312 Home equity lines of credit 13,784 10,807 First lien mortgage 34,974 25,706 First lien mortgage wholly or partially guaranteed by the U.S Government 25,708 32,159 Junior lien mortgage 1,556 1,532 MPP — — 82,014 74,555 Loans past due 90 days or more and still accruing (1) : Commercial — — Construction 1,329 — Land development — — Home equity lines of credit 588 200 First lien mortgage 4,480 3,823 First lien mortgage wholly or partially guaranteed by the U.S Government 2,554 346 Junior lien mortgage — 30 MPP — — 8,951 4,399 Total nonperforming loans 90,965 78,954 Other real estate owned 1,720 3,030 Total nonperforming assets $ 92,685 $ 81,984 Nonaccrual loans to total loans 1.30 % 1.61 % Nonperforming loans to total loans 1.44 % 1.70 % Nonperforming assets to total assets 1.32 % 1.57 % Allowance for credit losses to nonaccrual loans 12.72 % 15.01 % Ratios excluding loans wholly or partially guaranteed by the U.S Government Nonaccrual loans to total loans 0.89 % 0.91 % Nonperforming loans to total loans 0.99 % 1.00 % Nonperforming assets to total assets 0.92 % 0.95 % Allowance for credit losses to nonaccrual loans 18.53 % 26.39 % _____________________ (1) Includes loans which are reported at fair value (see Note 18 of our consolidated financial statements). 64 Table of Contents At December 31, 2025, nonperforming assets were $92.7 million, compared to $82.0 million at December 31, 2024.
As a result, we expect to incur additional costs associated with operating as a public company. We expect that these costs will include additional personnel, legal, consulting, regulatory, insurance, accounting, investor relations and other expenses that we did not incur as a private company.
While we expect certain public company costs to moderate over time as we scale and gain operating efficiencies, we expect that these costs will continue to be elevated from additional personnel, legal, consulting, regulatory, insurance, accounting, investor relations and other expenses that we did not incur as a private company.
Additionally, as discussed above, our MPP portfolio makes up an increasing portion of our total loan portfolio and we have yet to experience any loss on that portfolio, so the allowance allocations are minimal for the residential mortgage portfolio. We also have purchased mortgage insurance on certain high loan to value loans, further minimizing our loss potential on those loans.
This nuance is also evidenced by the low level of charge-offs we have incurred. Additionally, as discussed above, our MPP portfolio makes up an increasing portion of our total loan portfolio and we have yet to experience any loss on that portfolio, so the allowance allocations are minimal for the residential mortgage portfolio.
It is extremely difficult to precisely measure the amount of expected credit losses in our loan portfolio. We use a rigorous process to attempt to accurately quantify the necessary ACL and related provision for credit losses, but there can be no assurance that our modeling process will successfully identify all of the expected credit losses in our loan portfolio.
We use a rigorous process to attempt to estimate the necessary ACL and related provision for credit losses, but there can be no assurance that our modeling process will successfully identify all of the expected credit losses in our loan portfolio. The assumptions around establishing reasonable and supportable economic forecasts are particularly subjective.
Mortgage servicing rights were most typically created on mortgages that were originated by the Company but sold to third parties. Additionally, a small portion of our mortgage servicing rights were acquired from other mortgage originators. The mortgage servicing asset represents future cash flows the Company expects to receive from the mortgage for which it has the contractual right to service.
Mortgage Servicing Rights MSRs are the contractual agreement to service existing mortgage loans held by other investors. MSRs were most typically created on mortgages that were originated by the Company but sold to third parties. Additionally, a small portion of our MSRs were acquired from other mortgage originators.
Our cash obligations require us to have cash flow that is adequate to fund loan growth and maintain on-balance sheet liquidity while meeting present and future obligations of deposit withdrawals, borrowing maturities and other contractual cash obligations. In managing our cash flows, management regularly confronts situations that can give rise to increased liquidity risk.
Liquidity Liquidity refers to our capacity to meet our cash obligations at a reasonable cost. Our cash obligations require us to have cash flow that is adequate to fund loan growth and maintain on-balance sheet liquidity while meeting present and future obligations of deposit withdrawals, borrowing maturities and other contractual cash obligations.
The following table shows the portion of time deposits that are uninsured, by remaining time until maturity, at December 31, 2024: (Dollars in thousands) December 31, 2024 3 months or less $ 1,150 Over 3 through 6 months 2,741 Over 6 through 12 months 7,659 Over 12 months 22,442 Total: $ 33,992 Borrowings Another key source of funding for the Company are collateralized borrowings from the FHLB.
The following table shows the portion of time deposits that are uninsured, by remaining time until maturity, at December 31, 2025: (Dollars in thousands) December 31, 2025 3 months or less $ 35,585 Over 3 through 6 months 20,699 Over 6 through 12 months 26,604 Over 12 months 8,214 Total: $ 91,102 Borrowings Another key source of funding for us are collateralized borrowings from the FHLB.
Our provision for credit losses reflects both our held for investment loan portfolio and the unfunded commitments on that 50 Table of Contents portfolio. The provision for credit losses related to loans was an expense of $881,000 for 2024, reflecting net charge-offs of $2.0 million and an ending allowance for credit losses of $11.2 million.
For the year ended 55 Table of Contents December 31, 2024, the provision for credit losses related to loans was an expense of $881,000, reflecting $2.0 million in net charge-offs and an ending allowance for credit losses of $11.2 million.
If the LRA has not been depleted by losses, funds are returned to the Company over time, beginning after five years and continuing through 25 years. We carry the asset at estimated fair value. Fair value is determined using an income approach with various assumptions including expected cash flows, market discount rates, prepayment speeds, and other factors.
If the LRA has not been depleted by losses, funds are returned to the Company over time, beginning after five years and continuing through 25 years. We carry the asset at estimated fair value.
At December 31, 2024, approximately 41% of our nonperforming loans have a form of government guarantee. The Company uses a risk grading system for our loans to aid us in evaluating the overall credit of our loan portfolio and assessing the adequacy of our allowance for credit losses.
The Company uses a risk grading system for our loans to aid us in evaluating the overall credit of our loan portfolio and assessing the adequacy of our allowance for credit losses. All loans are categorized into a risk category at the time of origination.
Our provision for credit losses reflect risks in the HFI loan portfolio, which is comprised predominately of collateralized single-family mortgage loans, with very low historical loss experience. In 2024, our total provision for credit losses was a benefit of $328,000 compared to a total benefit of $1.5 million in 2023.
Our provision (benefit) for credit losses reflect risks in the HFI loan portfolio, which is comprised predominately of collateralized single-family mortgage loans, with very low historical loss experience. Our provision (benefit) for credit losses reflects both our loans HFI portfolio and the unfunded commitments on that portfolio.
The following table summarizes our deposit composition by average deposits and average rates paid for the periods indicated: (Dollars in thousands) December 31, 2024 December 31, 2023 Average Amount Weighted Avg Rate Paid Percent of Total Deposits Average Amount Weighted Avg Rate Paid Percent of Total Deposits Noninterest bearing demand $ 250,135 0.00 % 8 % $ 286,569 0.00 % 10 % Interest bearing demand 412,396 4.83 % 13 % 233,199 5.13 % 8 % Savings & money market 380,131 4.39 % 12 % 434,395 3.62 % 14 % Time 2,221,123 5.16 % 68 % 2,044,351 4.71 % 68 % Total deposits $ 3,263,785 4.63 % 100 % $ 2,998,514 4.13 % 100 % 62 Table of Contents The following tables set forth the maturity of time deposits for the periods indicated (dollars in thousands): December 31, 2024 Three Months or Less Three to Six Months Six to Twelve Months After Twelve Months Total Brokered CDs $ 1,731,707 $ — $ — $ 87,330 $ 1,819,037 All other CDs 69,327 60,775 151,851 87,979 369,932 Total Time deposits $ 1,801,034 $ 60,775 $ 151,851 $ 175,309 $ 2,188,969 December 31, 2023 Three Months or Less Three to Six Months Six to Twelve Months After Twelve Months Total Brokered CDs $ 1,381,776 $ — $ — $ 87,330 $ 1,469,106 All other CDs 84,987 17,964 71,341 60,477 234,769 Total Time deposits $ 1,466,763 $ 17,964 $ 71,341 $ 147,807 $ 1,703,875 Total uninsured deposits were $309.9 million at December 31, 2024 and $269.7 million at December 31, 2023.
The following table summarizes our deposit composition by average deposits and average rates paid for the periods indicated: For the Year Ended For the Year Ended (Dollars in thousands) December 31, 2025 December 31, 2024 Average Amount Weighted Avg Rate Paid Percent of Total Deposits Average Amount Weighted Avg Rate Paid Percent of Total Deposits Noninterest bearing demand $ 234,109 0.00 % 5 % $ 250,135 0.00 % 8 % Interest bearing demand 865,349 4.34 % 20 % 412,396 4.83 % 12 % Savings & money market 379,012 3.79 % 9 % 380,131 4.39 % 12 % Time 2,856,257 4.37 % 66 % 2,221,123 5.16 % 68 % Total deposits $ 4,334,727 4.08 % 100 % $ 3,263,785 4.63 % 100 % 68 Table of Contents The following tables set forth the maturity of time deposits for the periods indicated (dollars in thousands): December 31, 2025 Three Months or Less Three to Six Months Six to Twelve Months After Twelve Months Total Brokered CDs $ 2,299,112 $ 250,000 $ 50,000 $ 37,330 $ 2,636,442 All other CDs 110,431 73,964 114,696 70,571 369,662 Total time deposits $ 2,409,543 $ 323,964 $ 164,696 $ 107,901 $ 3,006,104 December 31, 2024 Three Months or Less Three to Six Months Six to Twelve Months After Twelve Months Total Brokered CDs $ 1,731,707 $ — $ — $ 87,330 $ 1,819,037 All other CDs 69,327 60,775 151,851 87,979 369,932 Total time deposits $ 1,801,034 $ 60,775 $ 151,851 $ 175,309 $ 2,188,969 Total uninsured deposits were $379.0 million at December 31, 2025 and $309.9 million at December 31, 2024.
Income tax expense Total income tax expense was $17.7 million for 2024, compared to $10.9 million for 2023. The effective tax rate was 24.31% for 2024 compared to 24.45% for 2023. Operating Segment Analysis We have two reporting segments, Retail Banking and MPP.
The effective tax rate was 24.44% for or the year ended December 31, 2025 compared to 24.31% for or the year ended December 31, 2024. Operating Segment Analysis We have two reporting segments, Retail Banking and MPP.
The following tables present the major components of our loan servicing fees and net gain on sale of loans for the years ended December 31, 2024 and 2023: (Dollars in thousands) Loan Servicing Fees For the years ended $ Increase (Decrease) 2024 2023 Fees on servicing $ 12,183 $ 24,321 $ (12,138) Change in fair value of MSRs (1) (3,307) (14,017) 10,710 $ 8,876 $ 10,304 $ (1,428) (1) - Includes change in fair value and paid in full MSRs.
The following tables present the major components of our loan servicing fees and net gain on sale of loans for the years ended December 31, 2025 and 2024: (Dollars in thousands) Loan Servicing Fees For the Years Ended December 31, $ Increase (Decrease) % Change 2025 2024 Fees on servicing $ 7,739 $ 12,277 $ (4,538) (37.0) % Change in fair value of MSRs (1) (3,020) (3,401) 381 (11.2) % $ 4,719 $ 8,876 $ (4,157) (46.8) % (1) Includes change in fair value and paid in full MSRs.
We have elected to take advantage of the scaled disclosures and other relief under the JOBS Act, and we may take advantage of some or all of the reduced regulatory and reporting requirements that will be available to us under the JOBS Act, so long as we qualify as an emerging growth company.
We have elected to take advantage of the scaled disclosures and other relief under the JOBS Act, and we may take advantage of some or all of the reduced regulatory and reporting requirements that will be available to us under the JOBS Act, so long as we qualify as an emerging growth company. 50 Table of Contents Recent Developments On December 9, 2025, we issued $70.0 million in aggregate principal amount of our 7.50% Fixed-to-Floating Rate Subordinated Notes due 2035.
The associated fair value of the assets and proceeds from the sale was $81.9 million. Investment Portfolio The Company has historically maintained a very small debt securities portfolio relative to other banking institutions preferring to invest in highly liquid loans or hold its liquidity in cash or cash equivalents.
Investment Portfolio The Company has historically maintained a very small debt securities portfolio relative to other banking institutions, as our strategy remains to invest in highly liquid loans or hold liquidity in cash or cash equivalents.
Given these risk characteristics, and the stark contrast to other financial institutions with a commercial heavy loan portfolio, our allowance and associated ratios will be much lower than those of bank peers with similar asset size. This nuance is also evidenced by the low level of charge-offs we have incurred.
These include the seasoning of the portfolio, LTV, FICO score, debt to income ratio (“DTI”) and collateral coverage. Given these risk characteristics, and the stark contrast to other financial institutions with a commercial heavy loan portfolio, our allowance and associated ratios will be much lower than those of bank peers with similar asset size.
While the entire allowance for credit losses is available to absorb losses from all loans, the following table represents management’s allocation of our allowance for credit losses by loan category, and the percentage of allowance for credit losses in each category, for the periods indicated: 59 Table of Contents (Dollars in thousands) December 31, 2024 December 31, 2023 Dollars % of Total Dollars % of Total Collectively Allocated for Impairment: Commercial $ 33 0.3 % $ 52 0.4 % Construction 390 3.5 % 488 4.0 % Land Development 976 8.7 % 1,607 13.1 % Home Equity Lines of Credit 1,920 17.2 % 2,039 16.6 % First Lien Mortgage 4,514 40.3 % 5,246 42.7 % Junior Lien Mortgage 1,672 14.9 % 2,211 18.0 % MPP 684 6.1 % 458 3.7 % 10,189 91.1 % 12,101 98.4 % Individually Allocated for Impairment 995 8.9 % 150 1.2 % Unallocated 6 0.1 % 44 0.4 % 1,001 8.9 % 194 1.6 % Total Allowance for Credit Losses $ 11,190 100.0 % $ 12,295 100.0 % The following table provides an analysis of the activity in our allowance for the periods indicated: (Dollars in thousands) For the Years Ended December 31, 2024 December 31, 2023 Activity % of Average Loans Held for Investment Activity % of Average Loans Held for Investment Loans held for investment $ 4,427,754 $ 3,781,199 Beginning allowance for credit losses 12,295 6,365 Net (charge-offs) recoveries: Commercial 129 5.68 % 20 1.07 % Construction (532) -0.53 % (482) -0.23 % Land Development — 0.00 % — 0.00 % Home Equity Lines of Credit (1,208) -0.27 % (183) -0.04 % First Lien Mortgage (75) 0.00 % (121) -0.01 % Junior Lien Mortgage (300) -0.47 % (42) -0.05 % MPP — 0.00 % — 0.00 % Total net (charge-offs) recoveries (1,986) (808) Provision for credit losses 881 (2,569) Impact of Adopting ASC 326 — 9,307 Ending allowance for credit losses $ 11,190 $ 12,295 Allowance for credit losses to loans held for investment 0.25 % 0.33 % Net charge-offs (recoveries) to Average Loans 0.04 % 0.02 % The allowance for credit losses was 0.25% of total loans as of December 31, 2024 compared to 0.33% as of December 31, 2023.
While the entire ACL is available to absorb losses from all loans, the following table represents management’s allocation of our allowance for credit losses by loan category, and the percentage of allowance for credit losses in each category, for the periods indicated: 65 Table of Contents (Dollars in thousands) December 31, 2025 December 31, 2024 Dollars % of Total Dollars % of Total Collectively evaluated for impairment: Commercial $ 61 0.6 % $ 32 0.3 % Construction 668 6.4 % 390 3.5 % Land development 1,386 13.3 % 976 8.7 % Home equity lines of credit 1,978 19.0 % 1,920 17.2 % First lien mortgage 3,048 29.2 % 4,515 40.3 % Junior lien mortgage 1,608 15.4 % 1,672 14.9 % MPP 1,370 13.1 % 684 6.1 % 10,119 97.0 % 10,189 91.1 % Individually evaluated for impairment 311 3.0 % 995 8.9 % Unallocated 5 — % 6 0.1 % 316 3.0 % 1,001 8.9 % Total allowance for credit losses $ 10,435 100.0 % $ 11,190 100.0 % The following table provides an analysis of the activity in our allowance for the periods indicated: For the Year Ended December 31, 2025 December 31, 2024 Activity % of Average Loans HFI Activity % of Average Loans HFI Loans HFI $ 6,021,527 $ 4,427,754 Loans HFI (excluding fair value loans) $ 5,842,949 $ 4,254,794 Beginning allowance for credit losses 11,190 12,295 Net charge-offs (recoveries): Commercial (8) -0.22 % (129) -5.68 % Construction 125 0.34 % 532 0.53 % Land development 160 0.11 % — 0.28 % Home equity lines of credit 669 0.09 % 1,208 0.27 % First lien mortgage 1,798 0.10 % 75 0.00 % Junior lien mortgage 164 0.22 % 300 0.47 % MPP — 0.00 % — 0.00 % Total net charge-offs (recoveries) 2,908 1,986 Provision for credit losses 2,153 881 Ending allowance for credit losses $ 10,435 $ 11,190 Allowance for credit losses to loans HFI 0.17 % 0.25 % Allowance for credit losses to loans HFI (excluding fair value loans) 0.18 % 0.26 % Net charge-offs (recoveries) to average loans 0.05 % 0.04 % The allowance for credit losses was 0.17% of total loans as of December 31, 2025 compared to 0.25% as of December 31, 2024.
The following table shows the effect that these factors had on the interest earned from our interest-earning assets and interest incurred on our interest-bearing liabilities. The effect of changes in volume is determined by multiplying the change in volume by the current period’s average rate.
Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest rates. The following table shows the 54 Table of Contents effect that these factors had on the interest earned from our interest-earning assets and interest incurred on our interest-bearing liabilities.
As of December 31, 2024 Total capital to RWA $509,591 12.09 % $337,246 8.00 % N/A N/A Tier 1 capital to RWA $469,977 11.15 % $252,935 6.00 % N/A N/A Common Equity Tier 1 to RWA $361,404 8.57 % $189,701 4.50 % N/A N/A Tier 1 capital to average assets (leverage) $469,977 8.77 % $214,421 4.00 % N/A N/A As of December 31, 2023 Total capital to RWA $476,512 11.43 % $333,528 8.00 % N/A N/A Tier 1 capital to RWA $438,611 10.52 % $250,147 6.00 % N/A N/A Common Equity Tier 1 to RWA $317,454 7.61 % $187,611 4.50 % N/A N/A Tier 1 capital to average assets (leverage) $438,611 9.19 % $190,958 4.00 % N/A N/A Northpointe Bank As of December 31, 2024 Total capital to RWA $502,996 11.93 % $337,242 8.00 % $421,553 10.00 % Tier 1 capital to RWA $487,519 11.56 % $252,932 6.00 % $337,242 8.00 % Common Equity Tier 1 to RWA $487,519 11.56 % $189,699 4.50 % $274,010 6.50 % Tier 1 capital to average assets (leverage) $487,519 9.09 % $214,419 4.00 % $268,024 5.00 % As of December 31, 2023 Total capital to RWA $469,422 11.26 % $333,528 8.00 % $416,909 10.00 % Tier 1 capital to RWA $451,147 10.82 % $250,145 6.00 % $333,528 8.00 % Common Equity Tier 1 to RWA $451,147 10.82 % $187,609 4.50 % $270,991 6.50 % Tier 1 capital to average assets (leverage) $451,147 9.45 % $190,969 4.00 % $238,712 5.00 % Off-balance Sheet Arrangements In the normal course of business, we enter into lending commitments that are not on our consolidated balance sheet.
As of December 31, 2025 Total capital to RWA $678,300 11.47 % $473,290 8.00 % N/A N/A Tier 1 capital to RWA 574,967 9.72 % 354,968 6.00 % N/A N/A Common Equity Tier 1 to RWA 544,988 9.21 % 266,226 4.50 % N/A N/A Tier 1 capital to average assets (leverage) 574,967 8.24 % 279,168 4.00 % N/A N/A As of December 31, 2024 Total capital to RWA 509,591 12.09 % 337,246 8.00 % N/A N/A Tier 1 capital to RWA 469,977 11.15 % 252,935 6.00 % N/A N/A Common Equity Tier 1 to RWA 361,404 8.57 % 189,701 4.50 % N/A N/A Tier 1 capital to average assets (leverage) 469,977 8.77 % 214,421 4.00 % N/A N/A Northpointe Bank As of December 31, 2025 Total capital to RWA 671,588 11.35 % 473,268 8.00 % $591,585 10.00 % Tier 1 capital to RWA 663,255 11.21 % 354,951 6.00 % 473,268 8.00 % Common Equity Tier 1 to RWA 663,255 11.21 % 266,213 4.50 % 384,530 6.50 % Tier 1 capital to average assets (leverage) 663,255 9.50 % 279,158 4.00 % 348,947 5.00 % As of December 31, 2024 Total capital to RWA 502,996 11.93 % 337,246 8.00 % 421,553 10.00 % Tier 1 capital to RWA 487,519 11.56 % 252,932 6.00 % 337,242 8.00 % Common Equity Tier 1 to RWA 487,519 11.56 % 189,699 4.50 % 274,010 6.50 % Tier 1 capital to average assets (leverage) 487,519 9.09 % 214,419 4.00 % 268,024 5.00 % Off-balance Sheet Arrangements In the normal course of business, we enter into lending commitments that are not on our consolidated balance sheet.
The following table is a summary of our outstanding FHLB Advances for the periods indicated: (Dollars in thousands) December 31, 2024 December 31, 2023 Period ending balance $ 1,258,750 $ 1,275,000 Average balance during period 1,300,488 1,150,342 Maximum outstanding at any month end 1,371,422 1,275,000 Weighted average rate paid 3.82 % 3.36 % Subordinated Debentures and Subordinated Debentures Issued through Trusts At December 31, 2024, we had $40.0 million in outstanding subordinated debenture notes.
The following table is a summary of our outstanding FHLB Advances for the periods indicated: (Dollars in thousands) December 31, 2025 December 31, 2024 Period ending balance $ 1,422,500 $ 1,258,750 Average balance during period 1,238,417 1,300,488 Maximum outstanding at any month end 1,422,500 1,371,422 Weighted average rate paid 3.91 % 3.82 % We also have a $20.0 million unsecured line of credit with another financial institution that we utilize for holding company liquidity needs.
Furthermore, changes in management structure or allocation methodologies and procedures may result in future changes to previously reported operating segment financial information. 53 Table of Contents The following tables present our reported segment results for the years ended December 31, 2024 and 2023: (Dollars in thousands) As of or for the Year Ended December 31, 2024 2023 Retail Banking MPP Total Retail Banking MPP Total Interest Income $ 204,087 $ 113,445 $ 317,532 $ 190,645 $ 76,737 $ 267,382 Interest Expense (203,317) — (203,317) (166,163) — (166,163) Funds Transfer Pricing 75,188 (75,188) — 49,497 (49,497) — Net Interest Income 75,958 38,257 114,215 73,979 27,240 101,219 Provision (benefit) for credit losses (548) 220 (328) (1,627) 142 (1,485) Net Income after provision 76,506 38,037 114,543 75,606 27,098 102,704 Noninterest Income (1) 67,505 5,418 72,923 91,483 3,584 95,067 Salaries and employee benefits (72,348) (5,443) (77,791) (99,838) (4,449) (104,287) Occupancy and equipment (4,367) (87) (4,454) (6,853) (71) (6,924) Other noninterest expense (2) (31,796) (549) (32,345) (41,446) (427) (41,873) Noninterest expense (108,511) (6,079) (114,590) (148,137) (4,947) (153,084) Expense Allocation (3) 3,419 (3,419) — 2,648 (2,648) — Net Income before Taxes 38,919 33,957 72,876 21,600 23,087 44,687 Income Tax Expense (9,679) (8,038) (17,717) (5,281) (5,644) (10,925) Net Income before preferred dividends $ 29,240 $ 25,919 $ 55,159 $ 16,319 $ 17,443 $ 33,762 Average Balance Sheet Assets $ 3,703,012 $ 1,418,411 $ 5,121,423 $ 3,725,065 $ 977,873 $ 4,702,938 Period Ending Assets $ 3,513,191 $ 1,710,820 $ 5,224,011 $ 3,611,652 $ 1,146,826 $ 4,758,478 (1) Noninterest income for MPP only includes MPP related fees.
Furthermore, changes in management structure or allocation methodologies and procedures may result in future changes to previously reported operating segment financial information. 59 Table of Contents The following tables present our reported segment results for the years ended December 31, 2025 and 2024: (Dollars in thousands) As of or for the Year Ended December 31, 2025 2024 Retail Banking MPP Total Retail Banking MPP Total Interest income $ 190,974 $ 189,230 $ 380,204 $ 204,087 $ 113,445 $ 317,532 Interest expense (229,465) — (229,465) (203,317) — (203,317) Funds transfer pricing 121,657 (121,657) — 75,188 (75,188) — Net interest income 83,166 67,573 150,739 75,958 38,257 114,215 Provision (benefit) for credit losses 1,412 686 2,098 (548) 220 (328) Net income after provision 81,754 66,887 148,641 76,506 38,037 114,543 Noninterest income (1) 84,958 6,022 90,980 67,505 5,418 72,923 Salaries and employee benefits (82,055) (8,116) (90,171) (72,348) (5,443) (77,791) Occupancy and equipment (3,374) (75) (3,449) (4,367) (87) (4,454) Other noninterest expense (2) (34,932) (676) (35,608) (31,796) (549) (32,345) Noninterest expense (120,361) (8,867) (129,228) (108,511) (6,079) (114,590) Expense allocation (3) 5,294 (5,294) — 3,419 (3,419) — Net income before taxes 51,645 58,748 110,393 38,919 33,957 72,876 Income tax expense (12,626) (14,358) (26,984) (9,679) (8,038) (17,717) Net income before preferred dividends $ 39,019 $ 44,390 $ 83,409 $ 29,240 $ 25,919 $ 55,159 Average balance sheet assets $ 3,579,184 $ 2,679,075 $ 6,258,259 $ 3,703,012 $ 1,418,411 $ 5,121,423 Period end assets $ 3,597,890 $ 3,424,935 $ 7,022,825 $ 3,513,191 $ 1,710,820 $ 5,224,011 (1) Noninterest income for MPP only includes MPP related fees.
These notes were issued to investors in two separate private placements, one in 2018 and one in 2024. The two outstanding subordinated notes totaling $40.0 million qualified as Tier 2 capital at our Bank entity. At December 31, 2023, we had $35.0 million in outstanding subordinated debenture notes.
Subordinated Debentures and Subordinated Debentures Issued through Trusts At December 31, 2025, we had $95.0 million in outstanding subordinated debenture notes. These notes were issued to investors in two separate private placements, one in 2024 and one in late 2025.
Accounting and reporting policies for the allowance for credit losses (“ACL”), lender risk account and capitalized mortgage loan servicing rights are deemed critical since they involve the use of estimates and require significant management judgments. Application of assumptions different than those that we have used could result in material changes in our financial position or results of operations.
Accounting and reporting policies for the allowance for credit losses (“ACL”), the lender risk account (“LRA”) for loans we have sold to the Federal Home Loan Bank of Indianapolis (“FHLB”), and the capitalized mortgage loan servicing rights (“MSR”) are deemed critical since they involve the use of estimates and require significant management judgments.
Nonperforming assets as a percent of total assets was 1.57% at December 31, 2024 compared to 1.31% at December 31, 2023. 58 Table of Contents Excluding the portion of our loans that are wholly or partially guaranteed by the U.S. Government, nonperforming assets to total assets increased to 0.95% at December 31, 2024, compared to 0.52% at December 31, 2023.
Nonperforming assets as a percent of total assets decreased to 1.32% at December 31, 2025 compared to 1.57% at December 31, 2024, reflecting the growth in our MPP portfolio which does not have any non-performing assets. Excluding the portion of our loans that are wholly or partially guaranteed by the U.S.
Our principal operating expense, aside from interest expense, consists of salaries and employee benefits, including commissions paid to loan originators, occupancy and equipment costs, data processing expense, professional fees, and provisions for credit losses. Our income is affected by regulatory, economic, and competitive factors that influence interest rates, residential loan demand and deposits costs.
Key components of noninterest income include gains from the sale loans, loan servicing fees, MPP fees, service charges from our deposit services, and other fees. Our principal operating expense, aside from interest expense, consists of salaries and employee benefits, including commissions paid to loan originators, occupancy and equipment costs, data processing expense, professional fees, and provisions for credit losses.
Over the past several years, we have continued to invest in growth strategies and resources, including personnel, technology and infrastructure. We believe we are well positioned to continue our growth trajectory without meaningful additions to our current cost structure. Public Company Costs We completed our initial public offering in February 2025.
Over the past several years, and most notably since becoming a public company, we have made investments in people and technology to continue our growth strategy, and to bolster our risk management functions including cybersecurity. We believe we are well positioned to continue our growth trajectory without meaningful additions to our current cost structure.
We believe the assumptions that we utilize in our valuation are reasonable based upon accepted industry practices for valuing mortgage loan servicing rights and represent neither the most conservative or aggressive assumptions. See also Note 2, Note 5 and Note 18 for further discussion of MSR activity and fair value estimation.
These assumptions are particularly subjective and can have a material effect on the estimated MSR balances and income. We believe the assumptions that we utilize in our valuation are reasonable based upon accepted industry practices for valuing mortgage loan servicing rights and represent neither the most conservative nor aggressive assumptions.

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