NORTHPOINTE BANCSHARES INC
For the period ended Jun 30, 2025. Filed Aug 13, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 13, 2025
NPB$15.76-0.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-15.
0001628280-25-025977
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-13.
0001336706-25-000004
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 134 previous paragraphs and 160 current paragraphs.
84 unchanged; 43 reworded; 21 added; 7 removed; 0 previous and 12 current paragraphs rearranged.
Tables are not compared: 26 previous and 35 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (21)
Current report
Introduction
Current report
Recent Developments
Current report
On July 4, 2025, “An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14,” more commonly referred to as the “One Big Beautiful Bill Act” (OBBBA) was signed into law. OBBBA enacted broad changes to the domestic and international taxation arena by extending many expiring Tax Cuts and Jobs Act tax provisions among other individual and business tax relief measures, along with funding national defense and border security, cutting certain federal spending programs, phasing out certain renewable energy credits created by the Inflation Reduction Act, and raising the national debt ceiling, among other things. Management is currently evaluating the potential impacts of the provisions of the OBBBA to the Company, however, based on information available to date, we do not anticipate the OBBBA will have a material impact on the Company’s consolidated financial position or results of operations, absent any further changes in law.
Current report
•Noninterest expense was $31.7 million for the three months ended June 30, 2025, an increase of $3.9 million from the three months ended June 30, 2024, driven primarily by higher salaries and benefits, largely attributable to bonus and incentive compensation and mortgage-related variable compensation, partially offset by lower expenses across several other categories.
Current report
•Loans held for investment (“HFI”) portfolio was $5.50 billion at June 30, 2025, an increase of $1.07 billion from December 31, 2024, reflecting increases of $1.18 billion in MPP balances and $50.7 million in AIO loans over the period.
Current report
(2)Net loan fees of $70,000 and $134,000 for the six months ended June 30, 2025 and 2024, respectively, are included in interest income.
Current report
For the three months ended June 30, 2025, net interest income was $36.5 million, an increase of $7.9 million, or 27.7%, from $28.6 million for the same period in 2024. This increase was driven primarily by a 21.7% increase in earning assets and an 11 basis point improvement in net interest margin.
Current report
The increase in average interest-earning assets in both the three and six month periods of 2025, as compared to the same periods in 2024, reflect the strong growth within the MPP and AIO portfolios, partially offset by the continued run-off from the remainder of the loans HFI portfolio.
Current report
Net interest margin was 2.44% for the three months ended June 30, 2025, an increase of 11 basis points from 2.33% for the three months ended June 30, 2024. Net interest margin was 2.40% for the six months ended June 30, 2025, an increase of 5 bps from 2.35% for the six months ended June 30, 2025.
Current report
The increase in net interest margin in both the three and six month periods of 2025, as compared to the same periods in 2024, was driven primarily by a decrease in the average rate paid on interest-bearing liabilities, which was partially offset by a smaller decrease in the average yield earned on interest-earning assets, both attributable to decreases in the federal funds rate. The net interest margin also continued to benefit from an improvement in the mix of interest-earning assets, with virtually all of the growth in loans coming from MPP and AIO, both of which carry higher average yields than the rest of the loan portfolio.
Current report
Provision for Credit Losses and Unfunded Commitments
Current report
For the three months ended June 30, 2025, the total provision for credit losses was $583,000, as compared to $298,000 for the same period in 2024. The provision for credit losses related to loans was an expense of $548,000 for the three months ended
Current report
The provision for unfunded loan commitments was a benefit of $55,000 for the six months ended June 30, 2025, as compared to a benefit of $788,000 for the six months ended June 30, 2024. The benefits in both the periods reflects lower levels of unfunded commitments driven primarily by continued run-off in the construction loan portfolio.
Current report
For the three months ended June 30, 2025, net gain on sale of loans increased by $5.6 million, as compared to the same period in 2024. This was driven primarily by an increase in the fair value of loans of $4.0 million, which included a $1.4 million increase related to an agreement entered into at the end of the second quarter of 2025 to sell $40.3 million in unpaid principal balance of home equity (non AIO) loans, along with higher gains on the sales of loans resulting from increased saleable mortgage volume over the same period.
Current report
For the six months ended June 30, 2025, salaries and employee benefits increased by $4.6 million, as compared to the same period in 2024. Of this increase, $3.2 million was from higher bonus and incentive compensation expense, attributable to the improvement in financial performance and restricted stock expense, $1.3 million was from higher variable commission compensation associated with higher mortgage volume and $749,000 was from higher employee benefits expense. Partially offsetting this was a decrease in base salaries and other compensation of $838,000 largely attributable to the Company’s strategic initiative to private label outsource its non-specialized mortgage servicing.
Current report
For the three months ended June 30, 2025, occupancy and equipment expense decreased by $228,000, as compared to the same period in 2024. For the six months ended June 30, 2025, occupancy and equipment expense decreased by $552,000, as compared to the same period in 2024. The decrease in occupancy and equipment expense in both the three and six month periods of 2025, as compared to the same periods in 2024, was driven primarily by lower building lease expense.
Current report
For the three months ended June 30, 2025, professional fees increased by $711,000, as compared to same period in 2024, and increased by $820,000 for the six months ended June 30, 2025, as compared to the same period in 2024. The increase in professional fees in both the three and six month periods of 2025, as compared to the same periods in 2024, was driven primarily by higher public company compliance costs.
Current report
For the three months ended June 30, 2025, other expenses increased by $1.7 million, as compared to the same period in 2024. For the six months ended June 30, 2025, other expenses increased by $1.3 million, as compared to the same period in 2024. Other expenses include several categories of expenses including sub-servicing expense, marketing, loan collection, credit reporting fees, loan repurchase reserve and other variable expenses tied to mortgage volume. The largest driver of the increase in other expenses in both the three and six month periods of 2025, as compared to the same periods in 2024, was from higher sub-servicer expenses resulting from the Company’s strategic initiative to private label outsource its non-specialized mortgage servicing. This incremental sub-servicer expense was more than offset by the savings in salaries and benefits expense achieved as a result of the strategic initiative. The remainder of the increase in other expenses in both the three and six month periods of 2025, as compared to the same periods in 2024, was driven primarily by lower levels of loan repurchase reserve net benefit, partially offset by lower expenses across a number of categories.
Current report
We had a loan repurchase reserve net benefit of $98,000 in the three months ended June 30, 2025 compared to a net benefit of $1.1 million for the same period in 2024. For the six months ended June 30, 2025, we had a loan repurchase reserve net benefit of $165,000 compared to a net benefit of $2.0 million for the same period in 2024.
Current report
Preferred Stock Dividends
Current report
For the three months ended June 30, 2025, our preferred stock dividend expense was $2.3 million, as compared to $1.8 million for the same period in 2024. For the six months ended June 30, 2025, our preferred stock dividend expense was $4.5 million, as compared to $4.3 million for the same period in 2024. Preferred stock dividend expense for the three and six month periods ended June 30, 2025 include an additional special one-time dividend of $2.50 per share paid on June 30, 2025 on the Company’s 8.25% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series A (“Series A”), and the Company’s 7.25% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series B (“Series B”). This dividend was paid in connection with amendments made to the Company’s Series A and Series B preferred stock to extend the registration rights agreements deadlines to January 2, 2026 for Series A and to January 2, 2027 for Series B. Preferred stock dividend expense for the three and six month periods ended June 30, 2024 include a gain related to the repurchase of $5 million in preferred stock.
Removed paragraphs (7)
Previous report
•Noninterest expense was $29.4 million for the three months ended March 31, 2025, an increase of $1.4 million from the three months ended March 31 2024, driven primarily by higher compensation expense attributable to higher bonus and incentive compensation attributable to our IPO and improvement in net income in the first quarter of 2025, partially offset by decreases in other expense categories from our proactive measures to manage mortgage-related back-office expenses.
Previous report
•Loans held for investment (“HFI”) were $5.15 billion at March 31, 2025, an increase of $719.4 million from March 31, 2024, reflecting increases of $757.4 million in MPP balances and $31.1 million in AIO loans. Both of these increases reflect strong new customer acquisition and market share gains, as well as a slight increase in overall industry mortgage originations.
Previous report
Average interest-earning assets were $5.24 billion at March 31 2025, an increase of $641.3 million from $4.60 billion at March 31, 2024, reflecting strong growth in loans, particularly MPP and AIO.
Previous report
Net interest margin was 2.35% for the three months ended March 31, 2025, a decrease of 3 bps from 2.38% for the three months ended March 31, 2024. This decrease was driven primarily by average yields on interest earning assets decreasing by slightly more than our decrease in cost of funds, as well as a change in the mix of interest-earning assets. For the three months ended March 31, 2025, the yield on interest earning assets decreased by 22 bps from same period in 2024 and the rate on interest-bearing liabilities decreased by 21 bps from the same period in 2024, both reflecting a reduction in the federal funds rate.
Previous report
The yield and volume table above shows that the $3.2 million increase in net interest income for the three months ended March 31 2025 compared to the same period in 2024 was due to a $3.4 million benefit from increased earnings asset volume partially offset by a $177,000 decrease in net interest margin as the decrease in yields on assets was more than the decrease in the cost of funds. The primary driver of our growth in net interest income in the first quarter of 2025 was our loan portfolio. Total interest income on our loan portfolio grew $7.2 million in the three months ended March 31, 2025 compared to the same period in 2024, with $8.8 million coming from growth in average portfolio balances partially offset by a reduction of $1.6 million from lower loan portfolio yields. Offsetting this interest income growth was higher funding costs, among most funding sources, primarily volume related. Total funding costs increased by $3.4 million in the three months ended March 31, 2025 compared to the same period in 2024, with $6.0 million of the increase in interest expense coming from higher average balances, partially offset by $2.7 million from lower funding rates.
Previous report
Provision for Credit Losses
Previous report
For the three months ended March 31, 2025, other expenses decreased by $407,000 compared to the same period in 2024. Other expenses include several categories of expenses which are typically more tied to mortgage volume, including marketing and credit reporting fees and the loan repurchase reserve expense.
Reworded paragraphs (43)
Previous wording
The purpose of this discussion and analysis is to focus on significant changes in the financial condition of Northpointe Bancshares, Inc. and our wholly owned subsidiary, Northpointe Bank, from December 31, 2024 through March 31, 2025 and on our results of operations for the three months ended March 31, 2025 and 2024. 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 Quarterly Report on Form 10-Q. This discussion and analysis contains forward-looking statements that involve risk, uncertainties and assumptions. Certain risks, uncertainties and other factors, including but not limited to those set forth under “Cautionary Note Regarding Forward-Looking Statements,” “Risk Factors,” and elsewhere in this Quarterly Report on Form 10-Q, may cause actual results to differ materially from those projected in the forward looking statements. We assume no obligation to update any of these forward-looking statements.
Current wording
The following section presents additional information and highlights significant changes in the financial condition of Northpointe Bancshares, Inc. (the “Company”) and our wholly owned subsidiary, Northpointe Bank (the “Bank”), from December 31, 2024 through June 30, 2025, and on our results of operations for the three and six months ended June 30, 2025 and 2024. 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 Quarterly Report on Form 10-Q. This discussion and analysis contains forward-looking statements that involve risk, uncertainties and assumptions. Certain risks, uncertainties and other factors, including but not limited to those set forth under “Cautionary Note Regarding Forward-Looking Statements,” “Risk Factors,” and elsewhere in this Quarterly Report on Form 10-Q, may cause actual results to differ materially from those projected in the forward looking statements. We assume no obligation to update any of these forward-looking statements.
Previous wording
The Company is a bank holding company that is headquartered in Grand Rapids, Michigan. 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. 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. 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. In addition, our traditional retail channel selectively originates first-lien home equity lines which are tied seamlessly to a demand deposit sweep account (we refer to the loans we originate as “All-in-One” or “AIO” loans). 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.
Current wording
Headquartered in Grand Rapids, Michigan, we are a bank holding company that focuses 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. Our residential lending business provides a comprehensive range of financing options nationwide through two main channels: consumer direct and traditional retail. We have a total of 130 mortgage originators across 27 states. These channels combine the convenience of online, self-service platforms with the personalized service of an experienced residential mortgage loan officer. 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. In addition, our traditional retail channel selectively originates first-lien home equity lines which are tied seamlessly to a demand deposit sweep account (we refer to the loans we originate as “All-in-One” or “AIO” loans). We have one bank branch located in Grand Rapids, Michigan and physical 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.
Previous wording
Highlights of the First Quarter of 2025
Current wording
Highlights of the Second Quarter of 2025
Previous wording
•Net income available to common stockholders was $15.0 million for the three months ended March 31, 2025, an increase of $5.2 million, or 52.9%, from $9.8 million for the three months ended March 31, 2024.
Current wording
•Net income available to common stockholders was $18.0 million for the three months ended June 30, 2025, an increase of $6.7 million, or 58.6%, from $11.4 million for the three months ended June 30, 2024.
Previous wording
•Earnings per diluted common share was $0.49 for the three months ended March 31, 2025, as compared to $0.38 for the three months ended March 31, 2024.
Current wording
•Earnings per diluted common share was $0.51 for the three months ended June 30, 2025, as compared to $0.44 for the three months ended June 30, 2024.
Previous wording
•Net interest income before provision for credit losses was $30.4 million for the three months ended March 31, 2025, an increase of $3.2 million from the three months ended March 31, 2024, reflecting strong growth in MPP and AIO loans and a 3 basis point decrease in net interest margin.
Current wording
•Net interest income before provision for credit losses was $36.5 million for the three months ended June 30, 2025, an increase of $7.9 million from the three months ended June 30, 2024, reflecting strong growth in MPP and AIO loans and an 11 basis point increase in net interest margin.
Previous wording
•Noninterest income was $22.9 million for the three months ended March 31, 2025, an increase of $6.2 million from the three months ended March 31, 2024, driven primarily by higher gain on sale of loans, partially offset by lower loan servicing fees.
Current wording
•Noninterest income was $22.4 million for the three months ended June 30, 2025, an increase of $5.5 million from the three months ended June 30, 2024, driven primarily by higher gain on sale of loans and other noninterest income, partially offset by lower loan servicing fees.
Previous wording
•MPP loans increased to 46.1% of total gross loans at March 31, 2025 from 36.8% at December 31, 2024, and residential mortgage loans decreased to 35.5% of total gross loans at March 31, 2025 from 41.9% at December 31, 2024.
Current wording
•MPP loans increased to 49.6% of total gross loans at June 30, 2025 from 36.8% at December 31, 2024, and residential mortgage loans decreased to 31.9% of total gross loans at June 30, 2025 from 41.9% at December 31, 2024.
Previous wording
•Liquidity remained stable, with total cash and cash equivalents of $321.5 million at March 31, 2025 as compared to $376.3 million at December 31, 2024.
Current wording
•Liquidity remained stable, and total cash and cash equivalents increased to $415.7 million at June 30, 2025, as compared to $376.3 million at December 31, 2024.
Previous wording
(2)Loan fees of $40,000 and $72,000 for the three months ended March 31, 2025 and 2024, respectively, are included in interest income.
Current wording
(2)Net loan fees of $30,000 and $62,000 for the three months ended June 30, 2025 and 2024, respectively, are included in interest income.
Previous wording
For the three months ended March 31, 2025, net interest income increased to $30.4 million, an increase of $3.2 million, or 11.7%, from $27.2 million for the same period in 2024. This increase was driven primarily by a 13.9% increase in earning assets, partially offset by lower net interest margin.
Current wording
For the six months ended June 30, 2025, net interest income increased to $66.9 million, an increase of $11.1 million, or 19.9%, from $55.8 million for the same period in 2024. This increase was driven primarily by an 18.0% increase in earning assets and a 5 basis point improvement in net interest margin.
Previous wording
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. 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. Our provision for credit losses reflects risks in the HFI loan portfolio, which is comprised predominately of collateralized single-family mortgage loans, with very low historical loss experience.
Current wording
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. 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, loan mix, the direction of the change in collateral values, and the level of actual net charge-offs incurred. Our provision for credit losses reflects risks in the loans HFI portfolio, which is comprised predominately of collateralized single-family mortgage loans, with very low historical loss experience. Our provision for credit losses reflects both our loans HFI portfolio and the unfunded commitments on that portfolio.
Previous wording
For the three months ended March 31, 2025, our total provision for credit losses was $1.3 million, compared to a total benefit of $357,000 for the same period in 2024. Our provision for credit losses reflects both our held for investment loan portfolio and the unfunded commitments on that portfolio. The increase in provision for credit losses for the three months ended March 31 2025 compared to the same period in 2024, was driven primarily by continued growth in the portfolio, reserve increases on individually evaluated loans, credit migration trends, and changes in the economic forecasts used in the credit models. The provision for credit losses related to loans was an expense of $1.4 million for the three months ended March 31, 2025, reflecting net charge-offs of $259,000 and an ending allowance for credit losses of $12.3 million. For the three months ended March 31, 2024, the provision for credit losses related to loans was an expense of $331,000, reflecting $9,000 in net recoveries and an ending allowance for credit losses of $12.6 million. Provision for credit losses also includes provision for unfunded loan commitments on the Consolidated Statements of Income. We recorded a provision for unfunded loan commitments benefit of $90,000 for the three months ended March 31, 2025 and a benefit of $688,000 for the three months ended March 31, 2024, which impacted the change in allowance for each period. The benefit in both these periods reflect lower levels of unfunded commitments driven primarily by continued run-off in the construction loan portfolio.
Current wording
For the six months ended June 30, 2025, the total provision for credit losses was $1.9 million, as compared to a benefit of $60,000 for the same period in 2024. The provision for credit losses related to loans was $1.9 million for the six months ended June 30, 2025, reflecting net charge-offs of $747,000 and an ending allowance for credit losses of $12.4 million. For the six months ended June 30, 2024, the provision for credit losses related to loans was $728,000, reflecting $733,000 in net charge-offs and an ending allowance for credit losses of $12.3 million. The increase in provision for credit losses for the six months ended June 30, 2025, as compared to the same period in 2024, reflects continued continued growth in the MPP portfolio, credit migration trends, and changes in the economic forecasts used in the credit models, partially offset by lower net charge-offs.
Previous wording
The following table presents the major components of our noninterest income for the three months ended March 31, 2025 and 2024:
Current wording
The following table presents the major components of our noninterest income for the three and six month periods ended June 30, 2025 and 2024:
Previous wording
For the three months ended March 31, 2025, noninterest income was $22.9 million, an increase of $6.2 million compared to the same period in 2024, driven primarily by higher net gains on sales of loans and other noninterest income, partially offset by lower loan servicing fees and deposit service charges.
Current wording
For the three months ended June 30, 2025, noninterest income was $22.4 million, an increase of $5.5 million compared to the same period in 2024, driven primarily by higher net gains on sales of loans and other noninterest income, partially offset by lower loan servicing fees. For the six months ended June 30, 2025, noninterest income was $45.3 million, an increase of $11.8 million compared to the same period in 2024, driven primarily by higher net gains on sales of loans and other noninterest income, partially offset by lower loan servicing fees.
Previous wording
The following tables present the major components of our loan servicing fees and net gain on sale of loans for the three months ended March 31, 2025 and 2024:
Current wording
The following tables present the major components of our loan servicing fees and net gain on sale of loans for the three and six month periods ended June 30, 2025 and 2024:
Previous wording
For the three months ended March 31, 2025, loan servicing fees decreased by $2.9 million compared to the same period in 2024, due largely to a $80.8 million bulk sale of MSRs completed in the first quarter of 2024 as we made the strategic decision to scale back that part of our business.
Current wording
For the three months ended June 30, 2025, loan servicing fees decreased by $872,000 compared to the same period in 2024. For the six months ended June 30, 2025, loan servicing fees decreased by $3.7 million compared to the same period in 2024. The decrease in loan servicing fees in both the three and six month periods of 2025, as compared to the same periods in 2024, was driven primarily by lower revenues associated with a large bulk sale of serviced loans in the first quarter of 2024, as we made the strategic decision to scale back that part of our business. The decreases in each respective period was partially offset by an increase in the fair value of the MSR.
Previous wording
For the three months ended March 31, 2025, MPP fees increased by $196,000 compared to the same period in 2024, driven primarily by an increase in overall volume of the MPP program.
Current wording
For the three months ended June 30, 2025, MPP fees increased by $14,000, as compared to the same period in 2024. For the six months ended June 30, 2025, MPP fees increased by $211,000 compared to the same period in 2024. The increase in MPP fees in both the three and six month periods of 2025, as compared to the same periods in 2024, was driven primarily by an increase in overall volume of the MPP program.
Previous wording
For the three months ended March 31, 2025, gain on sale of loans increased by $7.2 million compared to the same period in 2024. This was driven primarily by an increase in the fair value of loans of $5.9 million, which was attributable to lower market interest rates, along with smaller increases from capitalized MSRs and gain on sale of loans, net, over the same period.
Current wording
For the six months ended June 30, 2025, gain on sale of loans increased by $12.9 million, as compared to the same period in 2024. This was driven primarily by an increase in the fair value of loans of $9.9 million, which was attributable to lower market interest rates, higher gains on sale of loans, and the $1.4 million increase in fair value from the home equity (non AIO) loan sale agreement.
Previous wording
For the three months ended March 31, 2025, other noninterest income increased by $2.0 million compared to the same period in 2024. For the three months ended March 31, 2025, we recognized a $2.0 million gain on debt extinguishment of $102.5 million in FHLB advances, and we did not have any such debt extinguishment gain or loss for the same period in 2024.
Current wording
For the three months ended June 30, 2025, other noninterest income increased by $1.0 million, as compared to the same period in 2024. Included in other noninterest income for the three month period ended June 30, 2024 was a loss of $1.1 million on the sale of MSRs. We did not have any such losses in the 2025 period. For the six months ended June 30, 2025, other noninterest income increased by $3.0 million compared to the same period in 2024. For the six months ended June 30, 2025, we recognized a $2.0 million gain on debt extinguishment of $102.5 million in FHLB advances, and we did not have any such debt extinguishment gain or loss for the same period in 2024. Additionally, in the six months ended June 30, 2024 we recognized the loss of $1.1 million on the sale of MSRs. We had no such loss in the 2025 period.
Previous wording
The following table presents the major components of our noninterest expense for the three months ended March 31, 2025 and 2024:
Current wording
The following tables present the major components of our noninterest expense for the three and six month periods ended June 30, 2025 and 2024:
Previous wording
For the three months ended March 31, 2025, noninterest expense was $29.4 million, an increase of $1.4 million, compared to the same period in 2024. Salaries and employee benefits expense represent the largest component of our noninterest expense, which are broken out in the below table for the three months ended March 31, 2025 and 2024:
Current wording
For the three months ended June 30, 2025, noninterest expense was $31.7 million, an increase of $3.9 million, compared to the same period in 2024. For the six months ended June 30, 2025, noninterest expense was $61.1 million, an increase of $5.3 million, compared to the same period in 2024. Salaries and employee benefits expense represent the largest component of our noninterest expense, which are broken out in the below tables for the three and six month periods ended June 30, 2025 and 2024:
Previous wording
For the three months ended March 31, 2025, salaries and employee benefits increased by $2.4 million compared to the same period in 2024. Of this increase, $1.9 million was from higher bonus and incentive compensation expense, attributable to our initial public offering and the improvement in net income, along with a $742,000 increase in employee benefit expense from higher payroll tax expenses and an increase of $193,000 in variable commission compensation associated with mortgage volume. Partially offsetting this was a decrease in base salaries and other compensation of $466,000 as we continued to proactively manage staffing levels to align with lower mortgage loan production volume. Our average full time equivalent employees (FTE) was 491 for the three months ended March 31, 2025, compared to 610 for the three months ended March 31, 2024.
Current wording
For the three months ended June 30, 2025, salaries and employee benefits increased by $2.2 million, as compared to the same period in 2024. Of this increase, $1.3 million was from higher bonus and incentive compensation expense, attributable to the improvement in financial performance and restricted stock expense, and an increase of $1.1 million in variable commission compensation associated with higher mortgage volume. Partially offsetting this was a decrease in base salaries and other compensation of $371,000 largely attributable to the Company’s strategic initiative to private label outsource its non-specialized mortgage servicing.
Previous wording
For the three months ended March 31, 2025, occupancy and equipment expense decreased by $323,000 compared to the same period in 2024, driven primarily by lower building lease expense. For the three months ended March 31, 2025, data processing fees decreased by $391,000 compared to the same period in 2024, which was consistent with lower mortgage volume as much of our data processing costs are unit based. For the three months ended March 31, 2025, professional fees increased by $109,000 compared to same period in 2024, largely due to higher expenses associated with being a public company.
Current wording
For the three months ended June 30, 2025, data processing fees decreased by $186,000, as compared to the same period in 2024. For the six months ended June 30, 2025, data processing fees decreased by $578,000, as compared to the same period in 2024. These decreases from 2024 are consistent with our outsourcing of mortgage servicing as much of our data processing costs are unit based so lower volume results in lower data processing costs.
Previous wording
For the three months ended March 31, 2025, total income tax expense was $5.3 million compared to $4.0 million for the same period in 2024. The effective tax rate was 23.67% for the three months ended March 31, 2025 compared to 24.45% for the same period in 2024.
Current wording
For the three months ended June 30, 2025, total income tax expense was $6.3 million, as compared to $4.2 million for the same period in 2024. For the six months ended June 30, 2025, total income tax expense was $11.7 million, as compared to $8.1 million for the same period in 2024. The effective tax rate was 23.67% for the both the three and six months ended June 30, 2025, as compared to 24.03% and 24.24%, respectively, for the same periods in 2024.
Previous wording
The following table presents our reported segment results for the three months ended March 31, 2025 and 2024:
Current wording
The following tables presents our reported segment results for the three and six month periods ended June 30, 2025 and 2024:
Previous wording
For the three months ended March 31, 2025, our MPP segment reported net income before preferred dividends of $6.8 million, an increase of $2.0 million, or 41.6%, over the $4.8 million reported for the same period in 2024. This increase was driven primarily by a 59.6% increase in average balances which drove higher net interest income and fees. The increase in average balances reflects strong loan growth from new customer acquisition and market share gains.
Current wording
For the three months ended June 30, 2025, our MPP segment reported net income before preferred dividends of $9.9 million, an increase of $4.0 million, or 68.8%, over the $5.9 million reported for the same period in 2024. This increase was driven primarily by an 86.1% increase in average balances which drove higher net interest income and fees. For the six months ended June 30, 2025, our MPP segment reported net income before preferred dividends of $16.7 million, an increase of $6.0 million, or 56.5%, over the $10.7 million reported for the same period in 2024. This increase was driven primarily by a 74.4% increase in average balances which drove higher net interest income and fees. The increase in average balances in both periods reflects strong loan growth from new customer acquisition and market share gains.
Previous wording
For the three months ended March 31, 2025, our Retail Banking segment reported net income before preferred dividends of $10.4 million, an increase of $3.0 million, or 40.3%, over the $7.4 million reported for the same period in 2024. This increase was driven primarily by lower noninterest expense, which outpaced the decrease in noninterest income and net interest income. The decrease in noninterest expense reflects lower variable mortgage commissions and proactive expense management across the channel.
Current wording
For the three months ended June 30, 2025, our Retail Banking segment reported net income before preferred dividends of $10.4 million, an increase of $3.1 million, or 41.9%, over the $7.4 million reported for the same period in 2024. For the six months ended June 30, 2025, our Retail Banking segment reported net income before preferred dividends of $20.8 million, an increase of $6.1 million, or 41.2%, over the $14.8 million reported for the same period in 2024. These increases were driven primarily by higher interest income and noninterest income, which outpaced the increase in noninterest expense. The increase in noninterest expense reflects higher variable mortgage commissions and higher professional fees and overhead associated with being a public company.
Previous wording
Total assets were $5.86 billion at March 31, 2025 as compared to $5.22 billion at December 31, 2024. This $635.6 million increase in total assets was driven primarily by higher balances of net loans and loans held for sale, partially offset by lower cash and cash equivalents.
Current wording
Total assets were $6.43 billion at June 30, 2025, as compared to $5.22 billion at December 31, 2024. This $1.21 billion increase in total assets was driven primarily by higher balances of net loans (particularly MPP loans) and loans held for sale, along with higher cash and cash equivalents.
Previous wording
Our loan portfolio includes both loans held for investment and loans held for sale. Our loans held for investment portfolio comprises over 96% of our total gross loans.
Current wording
Our loan portfolio includes both loans held for investment and loans held for sale. Our loans held for investment portfolio comprises over 94% of our total gross loans.
Previous wording
We also have a smaller portfolio of construction loans, home equity lines of credit, and commercial loans, which combined represented less than 3% of the overall loan portfolio as of March 31, 2025.
Current wording
We also have a smaller portfolio of construction loans, home equity lines of credit, and commercial loans, which combined represented less than 2% of the overall loan portfolio as of June 30, 2025.
Previous wording
At March 31, 2025, our total loans net of allowance for credit losses including loans held for sale was $5.34 billion, as compared to $4.64 billion on December 31, 2024. This increase of $710.0 million over the prior quarter was driven primarily by the strong growth in MPP and AIO balances, which increased by $757.4 million and $31.1 million, respectively. Growing the MPP business remains one of our top strategic priorities, and reflects the strength of our scalable technology, long-standing strong relationships, as well as our ability to capitalize on recent market disruption within the business line. We also remain focused on prudently growing the portfolio of first-lien home equity lines, which includes AIO loans.
Current wording
At June 30, 2025, our total loans net of allowance for credit losses including loans held for sale was $5.82 billion, as compared to $4.64 billion on December 31, 2024. This increase of $1.18 billion since year end 2024 was driven primarily by the strong growth in MPP and AIO balances, which increased by $1.18 billion and $50.7 million, respectively. Growing the MPP business remains one of our top strategic priorities, and reflects the strength of our scalable technology, long-standing strong relationships, as well as our ability to capitalize on recent market disruption within the business line. We also remain focused on prudently growing the portfolio of first-lien home equity lines, which includes AIO loans.
Previous wording
As of March 31, 2025, residential mortgage comprised 35.5% of our total loan portfolio compared to 46.1% for MPP and 12.0% for AIO loans. As of December 31, 2024, residential mortgage comprised 41.9% of our total loan portfolio compared to 36.8% for MPP and 13.2% for AIO loans. The reduction in residential mortgages reflects normal amortization and pay-offs, as we are not strategically growing this portfolio.
Current wording
As of June 30, 2025, residential mortgage comprised 31.9% of our total loan portfolio compared to 49.6% for MPP and 11.4% for AIO loans. As of December 31, 2024, residential mortgage comprised 41.9% of our total loan portfolio compared to 36.8% for MPP and 13.2% for AIO loans. The reduction in residential mortgages reflects normal amortization and pay-offs, as we are not strategically growing this portfolio.
Previous wording
As of March 31, 2025, 46.3% of our total loan portfolio had a contractual maturity of less than one year, up from 37.3% at December 31, 2024. 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. Very few of our loans have intermediate contractual maturities of between one and fifteen years. As of March 31, 2025, 53.1% of total loans had contractual maturities of longer than 15 years, compared to 62.1% at December 31, 2024. For our two largest categories of long duration loans as of March 31, 2025, 77.7% of residential mortgage and 100% of our AIO Loans were floating rate.
Current wording
As of June 30, 2025, 49.7% of our total loan portfolio had a contractual maturity of less than one year, up from 37.3% at December 31, 2024. 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 client’s facility prior to the sale of the mortgage in the secondary market. Very few of our loans have intermediate contractual maturities of between one and fifteen years. As of June 30, 2025, 49.8% of total loans had contractual maturities of longer than 15 years, compared to 62.1% at December 31, 2024. For our two largest categories of long duration loans as of June 30, 2025, 76.4% of residential mortgage and 100% of our AIO Loans were floating rate.
Previous wording
At March 31, 2025, nonperforming assets were $87.8 million compared to $82.0 million at December 31, 2024. The increase in nonperforming assets was driven primarily by normal aging within the loans held for investment portfolio. A substantial portion of the linked quarter increase in non-performing loans related to the Company's transfer of servicing to a scaled sub-servicer. The majority of these loans have already, or are expected to, pay in full or become current. Nonperforming assets as a percent of total assets was 1.50% at March 31, 2025 compared to 1.57% at December 31, 2024.
Current wording
At June 30, 2025, nonperforming assets were $87.1 million compared to $82.0 million at December 31, 2024. Nonperforming assets as a percent of total assets was 1.35% at June 30, 2025 compared to 1.57% at December 31, 2024.
Previous wording
A substantial portion of the Company's non-performing loans are wholly or partially guaranteed by the U.S. Government, so asset quality metrics within this Quarterly Report on Form 10-Q are shown with and without these guaranteed loans. Excluding the portion of our loans that are wholly or partially guaranteed by the U.S. Government, nonperforming assets to total assets increased to 0.99% at March 31, 2025, compared to 0.95% at December 31, 2024. At March 31, 2025, approximately 35% of our nonperforming loans have a form of government guarantee.
Current wording
A substantial portion of the Company's non-performing loans are wholly or partially guaranteed by the U.S. Government, so asset quality metrics within this Quarterly Report on Form 10-Q are shown with and without these guaranteed loans. Excluding the portion of our loans that are wholly or partially guaranteed by the U.S. Government, nonperforming assets to total assets decreased to 0.91% at June 30, 2025, compared to 0.95% at December 31, 2024. At June 30, 2025, approximately 33% of our nonperforming loans have a form of government guarantee.
Previous wording
The allowance for credit losses was 0.24% of total loans at March 31, 2025 as compared to 0.32% as of December 31, 2024. 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. The allowance is measured on a collective or pool basis when similar risk characteristics exist or on an individual basis when loans have unique risk characteristics which differentiate them from other loans within the loan segment. 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 allowance for credit losses methodology isdescribed in more detail in Notes 1 and 3 of the Notes to Consolidated Financial Statements.
Current wording
The allowance for credit losses was 0.23% of total loans at June 30, 2025, as compared to 0.25% as of December 31, 2024. 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. The allowance is measured on a collective or pool basis when similar risk characteristics exist or on an individual basis when loans have unique risk characteristics which differentiate them from other loans within the loan segment. 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 allowance for credit losses methodology isdescribed in more detail in Notes 1 and 3 of the Notes to Consolidated Financial Statements.
Previous wording
Our allowance for credit losses, and associated percentage of total loans, reflect the relative credit risk of our loan portfolio. 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. This nuance is also evidenced by the low level of charge-offs we have historically 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. We also have purchased mortgage insurance on certain high loan to value loans, further minimizing our loss potential on those loans. Since 2019, our cumulative charge-offs, net of recoveries, totaled $3.1 million. Our annualized net charge-off rate was 0.02% for the three months ended March 31, 2025 and we had net recoveries for the three months ended March 31, 2024.
Current wording
Our allowance for credit losses, and associated percentage of total loans, reflect the relative credit risk of our loan portfolio. 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. This nuance is also evidenced by the low level of charge-offs we have historically 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. We also have purchased mortgage insurance on certain high loan to value loans, further minimizing our loss potential on those loans. Our annualized net charge-off rate was 0.04% for the three months ended June 30, 2025 and 0.03% for the six months ended June 30, 2025, as compared to 0.07% and 0.03%, respectively, for the same periods in 2024.
Previous wording
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. At March 31, 2025, debt securities totaled $8.6 million, or 0.15%, of total assets compared to $8.6 million, or 0.16%, at December 31, 2024.
Current wording
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. At June 30, 2025, debt securities totaled $8.8 million, or 0.14%, of total assets compared to $8.6 million, or 0.16%, at December 31, 2024. The increase in balance from year end 2024 was due to an increase in the fair value of the securities held.
Previous wording
Deposits are the primary source of funding our business operations. At March 31, 2025, total deposits were $3.82 billion compared to $3.42 billion at December 31, 2024. This $400.1 million increase in deposits from the prior quarter was driven primarily by higher brokered CDs, along with increases in the Company's diversified digital deposit banking platform including non-interest bearing demand, interest-bearing demand, retail CDs and rateboard CDs.
Current wording
Deposits are the primary source of funding for our business operations. At June 30, 2025, total deposits were $4.47 billion, as compared to $3.42 billion at December 31, 2024. This $1.05 billion increase in deposits since year end 2024 was driven primarily by higher brokered CDs, along with increases in the Company's diversified digital deposit banking platform including non-interest bearing demand, interest-bearing demand, retail CDs and rateboard CDs.
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Current report — wording carried from elsewhere
The following table presents average balance sheet information, interest income, interest expense and the corresponding average yield earned and rates paid for the six months ended June 30, 2025 and 2024:
Current report — wording carried from elsewhere
(1)Loan balance includes loans held for investment and held for sale. 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.
Current report — wording carried from elsewhere
(3)Average yield based on carrying value and there are no tax-exempt securities in the portfolio.
Current report — wording carried from elsewhere
(4)Noninterest earning assets includes the allowance for credit losses.
Current report — wording carried from elsewhere
(5)Net interest spread is the average yield on total interest-earning assets minus the average rate on total interest-bearing liabilities.
Current report — wording carried from elsewhere
(6)Net interest margin is annualized net interest income divided by total average interest-earning assets.
Current report — wording carried from elsewhere
June 30, 2025, reflecting net charge-offs of $488,000 and an ending allowance for credit losses of $12.4 million. For the three months ended June 30, 2024, the provision for credit losses related to loans was an expense of $397,000, reflecting $742,000 in net charge-offs and an ending allowance for credit losses of $12.3 million. The increase in provision for credit losses for the three months ended June 30, 2025, as compared to the same period in 2024, was driven primarily by continued growth in the MPP portfolio, credit migration trends, and changes in the economic forecasts used in the credit models, partially offset by lower net charge-offs.
Current report — wording carried from elsewhere
The provision for unfunded loan commitments was $35,000 for the three months ended June 30, 2025, as compared to a benefit of $99,000 for the three months ended June 30, 2024. The benefit in the 2024 period reflects lower levels of unfunded commitments driven primarily by continued run-off in the construction loan portfolio.
Current report — wording carried from elsewhere
(1) - Includes the change in fair value of interest rate locks, loans held for sale, and held for investment.
Current report — wording carried from elsewhere
(2) - Includes (a) net gain on sale of loans, (b) loan origination fees, points and costs, (c) provision from investor reserves, (d) gain or loss from forward commitments from hedging, and (e) fair value of LRA.
Current report — wording carried from elsewhere
(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.
Current report — wording carried from elsewhere
(1)Weighted-average yields on investment securities are computed based on par value and exclude any premiums or discounts recorded. There are no tax-exempt securities in the portfolio.