What changed in this filing

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Item 1A. Risk Factors

2026-03-27 compared with 2025-03-28 · 85 added, 106 removed, 570 unchanged (25% of the section changed)

9 unchanged sentences

Risks related to our business

• Decreased residential mortgage origination, competition, and changes in interest rates may adversely affect our profitability

• 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

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• 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

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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

• 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

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• 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

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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.

Our operations consist of offering banking and residential mortgage services as well as warehouse alternative mortgage financing through our MPP business.

Many of our competitors offer the same, or a wider variety of, banking and related financial services within our market areas.

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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.

Increased competition in our markets may result in pricing pressure, 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.

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Further, the criteria for loans to be accepted under such programs may be changed from time to time by the sponsoring entity, which could result in a lower volume of corresponding loan originations.

Changes in program eligibility requirements, pricing, capital standards, or other policies imposed by the GSEs or their regulator could reduce liquidity in the secondary market or adversely affect the profitability of our mortgage banking activities.

The profitability of participating in specific programs may vary depending on a number of factors, including our administrative costs of originating qualifying loans and our costs of meeting such criteria.

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Because the largest participants in the secondary market are Fannie Mae and Freddie Mac, GSEs whose activities are governed by federal law, any future changes in laws that significantly affect the activity of these GSEs could, in turn, adversely affect our operations..

In September 2008, Fannie Mae and Freddie Mac were placed into conservatorship by the U.S.

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.

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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.

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.

Additionally, in periods of market stress, the value or liquidity of mortgage loans securing our MPP facilities may decline, which could increase the risk of loss and limit our ability to recover amounts owed to us.

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.

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Such declines and losses could have a material adverse impact on our business, results of operations and growth prospects.

Declines in real estate values affecting particular property types or borrower segments in which we have concentrations could disproportionately increase credit risk in our loan portfolio.

In addition, if hazardous or toxic substances are found on properties pledged as collateral, the value of the real estate could be impaired.

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Environmental laws may also require us to incur substantial expenses to address unknown liabilities and may materially reduce the affected property’s value or limit our ability to use or sell the affected property.

These risks may exist even if we did not originate the loan, were unaware of the environmental condition at origination, or otherwise complied with applicable environmental laws.

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.

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We also may borrow from third-party lenders from time to time.

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.

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.

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.

Our ability to access

borrowings, including from the FHLB, may be limited by the amount, type and market value of eligible collateral, which could decline during periods of market stress.

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.

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.

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.

Any decline in available funding, including a decrease in brokered deposits, could adversely impact our ability to continue to implement our strategic plan, including our ability to originate loans, fund MPP commitments, meet our expenses, declare and pay dividends to our stockholders or to fulfill obligations such as repaying our borrowings or meeting deposit withdrawal demands, any of which could have a material adverse impact on our liquidity, business, financial condition and results of operations.

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We frequently sell participations in MPP facilities to third parties in order to manage concentration risk and provide an additional source of funding.

Third-party participants are generally not obligated to maintain or renew their participation interests, and their decisions may be based on factors unrelated to our credit performance or the performance of the underlying MPP facilities.

If we are not able to maintain and attract such third parties to participate in these transactions or if any existing third parties terminate their participations in existing MPP facilities, then we could face loan concentration issues and capital constraints as we seek to provide alternative funding for the affected MPP facilities.

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Unrealized losses do not negatively impact our regulatory capital ratios;

however, tangible common equity and the associated ratios would be reduced.

however, tangible common equity and the associated ratios would

If debt securities in an unrealized loss position are sold, such losses become realized and will reduce our regulatory capital ratios.

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Any significant repurchases, substitutions, indemnifications or premium recapture could be detrimental to our business.

Additionally, in periods of market stress or heightened regulator or investor scrutiny, purchasers may be more likely to assert repurchase, indemnification or premium recapture claims.

Additionally, we may not be able to recover amounts from some third parties from whom we may seek indemnification or against whom we may assert a loan repurchase demand in connection with a breach of a representation or warranty due to financial difficulties or otherwise.

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.

initiatives or changes in state or federal law may substantially raise the cost of foreclosure or prevent us from foreclosing at all.

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.

Since we originate loans secured by real estate, we may have to foreclose on the collateral property to protect our investment and may thereafter own and operate such property, in which case we would be exposed to the risks inherent in the ownership of real estate.

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We are currently rated by Fitch as a primary servicer.

Servicer ratings are based on rating agency criteria and ongoing assessments of operational performance, compliance, financial condition and risk management practices, and may be revised, suspended or withdrawn at any time based on factors that may be outside of our control.

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.

The Current Expected Credit Loss accounting standard could add volatility to our allowance for credit losses and may have a material adverse effect on our financial condition and results of operations.

Effective January 1, 2023, we adopted the Financial Accounting Standards Board ("the FASB") Account Standards Update 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments, commonly referred to as "CECL".

CECL changed the allowance for credit losses methodology from an incurred loss impairment methodology to an expected loss methodology, which is more dependent on future economic forecasts, assumptions and models than previous accounting standards and could result in increases in, and add volatility to, our allowance for credit losses and future provisions for credit losses.

These forecasts, assumptions and models are inherently uncertain and are based upon management's reasonable judgment in light of information currently available.

Our allowance for credit losses may prove to be insufficient to absorb actual losses in our loan portfolio.

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We also may rely on representations of customers and counterparties as to the accuracy and completeness of that information.

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.

flows of the customer.

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.

Customers, counterparties or third parties may intentionally provide misleading, incomplete or fraudulent information, and we may not detect all such inaccuracies despite our underwriting, verification and risk management procedures.

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.

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If our reputation is negatively affected, by the actions of our employees or otherwise, our business and, therefore, our operating results and the value of our stock may be materially adversely affected.

Our reputation could also be harmed by events beyond our control, including regulatory actions, litigation, servicing disruptions, cybersecurity incidents, counterparty misconduct or negative publicity, even if the underlying allegations are unfounded.

Adverse publicity or negative perceptions can spread rapidly and may have a disproportionate impact on our business regardless of the ultimate outcome.

Damage to our reputation could adversely affect our ability to attract and retain customers, counterparties, employees, funding sources and investors, and could increase regulatory scrutiny and compliance costs.

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.

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In the ordinary course of our business, we receive, process, retain and transmit proprietary information and sensitive or confidential data, including the public and non-public personal information of our team members, clients and loan applicants.

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.

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.

and transmit electronic information on our behalf.

Our incident response, business continuity and recovery plans may not be effective in preventing or mitigating all cybersecurity incidents or their impacts.

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.

Similar events outside of our control can also affect the demands we and our third-party vendors may make to respond to any security incidents or similar disruptive events.

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Such controls have not always detected, and may in the future fail to prevent or detect, unauthorized access to our team member, client and loan applicant information.

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.

Furthermore, such techniques change frequently and are often not recognized or detected until after they have been launched, and therefore, we may be unable to anticipate these techniques and may not become aware in a timely manner of such a security incident, which could exacerbate any damage we experience.

Cyber security attacks can originate from a wide variety of sources, including third parties such as criminal threat actors, persons involved with organized crime or associated with external service providers, or foreign state or foreign state-supported actors.

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.

Cybersecurity risks for lenders have significantly increased in recent years, in part, because of the proliferation of new technologies, the use of the internet and telecommunications technologies to conduct financial transactions, and the increased sophistication and activities of criminal threat actors, organized crime, terrorists, and other external parties, including foreign state actors.

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.

These cyberattacks could include computer viruses, malicious or destructive code, phishing attacks, brute force attacks, denial of service, improper access by team members or third-party vendors, exploiting software vulnerabilities (including “zero-day attacks”), ransomware or other malware, supply chain attacks, or other security incidents that have or could in the future result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of confidential, proprietary and other information of ours, our team members, our clients and loan applicants or of third parties, or otherwise materially disrupt our or our clients’ and loan applicants’ or other third parties’ network access or business operations.

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In such an instance, we may also be subject to regulatory action, increased regulatory scrutiny, investigation, or liability to a governmental authority for fines or penalties (which may not be covered by our insurance), associated with a lapse in the integrity and security of our team members’, clients’ and loan applicants’ information.

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

security incidents and their consequences.

In addition, our remediation efforts may not be successful and we may not have adequate insurance to cover these losses

Security incidents could also significantly damage our reputation with existing and prospective clients and third parties with whom we do business.

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.

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.

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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.

Failure to successfully keep pace with technological change affecting the financial services industry could harm our ability to attract customers and adversely affect our financial condition, results of operations, and liquidity.

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Any loss of the right to use any of the software or services could result in decreased functionality of our products until equivalent technology is either developed by us or, if available from another provider, is identified, obtained and integrated, which could adversely affect our business.

We may be dependent on a limited number of third-party providers for certain critical services, and replacing such providers may be costly, time-consuming or impracticable in the short term.

In addition, any errors or defects in or failures of the software or services we rely on, whether maintained by us or by third parties, could result in errors or defects in our products or cause our products to fail, which could adversely affect our business and be costly to correct.

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Any failure to do so could adversely affect our ability to deliver effective products to our clients and loan applicants and adversely affect our business.

The developments and use of artificial intelligent (AI) presents risks and challenges that may adversely impact our 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.

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These evolving laws and regulations could require changes in the Company’s implementation of AI technology and increase the Company’s compliance costs and the risk of non-compliance.

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.

In addition, the complexity of many AI models makes it difficult to understand why they are generating particular outputs.

This limited transparency increases the challenges associated with assessing the proper operation of AI models, understanding and monitoring the capabilities of the AI models, reducing erroneous output, eliminating bias, and complying with regulations that require documentation or explanation of the basis on which decisions are made.

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.

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.

Any failure by us or our third-party providers to appropriately govern, monitor or control the use of AI could expose the Company to liability, regulatory action or reputational harm.

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.

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Our critical accounting policies, which are included in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, describe those significant accounting policies and methods used in the preparation of our consolidated financial statements that we consider “critical” because they require judgments, assumptions and estimates that materially affect our consolidated financial statements and related disclosures.

Many of these judgments and estimates involve complex methodologies and are sensitive to changes in economic conditions, interest rates and market assumptions.

As a result, if future events or regulatory views concerning such analysis differ significantly from the judgments, assumptions and estimates in our critical accounting policies, those events or assumptions could have a material impact on our consolidated financial statements and related disclosures, in each case resulting in our needing to revise or restate prior period financial statements, cause damage to our reputation and the price of our common stock, and adversely affect our business, financial condition and results of operations.

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We measure the fair value of our mortgage loans held for sale, derivatives, interest rate lock commitments (“IRLCs”) and MSRs on a recurring basis and we measure the fair value of other assets, such as certain mortgage loans HFI, certain impaired loans and other real estate owned, on a nonrecurring basis.

Fair value determinations require many assumptions and complex analyses, especially to the extent there are not active markets for identical assets.

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.

If quoted market prices are not available, fair value is estimated based on other relevant factors, including dealer price quotations and prices available for similar instruments, to approximate the amounts that would be received from a third party.

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

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).

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.

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Sustainable growth requires that we manage our risks by following prudent loan underwriting standards, balancing loan and deposit growth without materially increasing interest rate risk or compressing our net interest margin, maintaining more than adequate capital at all times, managing a growing number of customer relationships, scaling technology platforms, hiring and retaining qualified employees and successfully implementing our strategic initiatives.

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.

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As part of such succession planning, other executives and high performing individuals have been identified and are provided certain training in order to be prepared to assume particular management roles and responsibilities in the event of the departure of a member of our executive management team.

finding qualified replacement personnel, or any difficulties associated with transitioning of responsibilities to any new members of the executive management team.

While we engage in succession planning, there can be no assurance that such planning will be effective or that suitable replacements will be available on a timely basis.

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.

While our mortgage originators and loan officers are generally subject to non-solicitation provisions as part of their employment, our ability to enforce such agreements may not fully mitigate the injury to our business from the breach of such agreements, as such employees could leave us and immediately begin soliciting our customers.

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Depending on the condition of any institution or assets or liabilities that we may acquire, that acquisition may, at least in the near term, adversely affect our capital and earnings and, if not successfully integrated with our organization, may continue to have such effects over a longer period.

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.

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In some cases, we could be required to apply a new or revised standard retrospectively, or apply an existing standard differently, also retrospectively, in each case resulting in our needing to revise or restate prior period financial statements.

The adoption of new accounting standards may also require changes to our systems, processes or internal

controls and may divert management time and resources.

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.

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Any such legal or regulatory actions may subject us to substantial compensatory or punitive damages, significant fines, penalties, obligations to change our business practices or other requirements resulting in increased expenses, diminished income and damage to our reputation.

Regulatory actions or enforcement proceedings could also restrict our ability to engage in certain business activities, pursue acquisitions, pay dividends or grow our business.

Our involvement in any such matters, whether tangential or otherwise and even if the matters are ultimately determined in our favor, could also cause significant harm to our reputation and divert management attention from the operation of our business.

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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.

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.

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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.

In preparing and reviewing our consolidated financial statements as of and for the nine months ended September 30, 2024, and 2023, and in connection with our restatement of previously issued consolidated financial statements for the years ended December 31, 2023 and 2022, we and our independent registered public accounting firm identified a material weakness in our internal control over financial reporting.

The material weakness identified reflected an incorrect classification of revenue from the capitalization of MSRs within noninterest income.

As a result, there were adjustments required in connection with preparing our consolidated financial statements for the nine months ended September 30, 2024, and 2023, and a restatement was required for our consolidated financial statements for the years ended 2023 and 2022.

In response to this identified material weakness, we reclassified such related revenue under net gain on the sale of loans held for sale, previously classified under loan servicing fees.

We updated our general ledger account line assignment to reflect gains from establishment of mortgage servicing rights as part of gain on sale of loans rather than loan servicing income.

Our December 31, 2024 consolidated statements of income reflect this proper classification and we have concluded the material weakness is resolved at December 31, 2024.

However, 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.

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.

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Additionally, we cannot assure you that we will be able to remediate any existing or future material weakness in a timely manner or at all.

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.

Our business is susceptible to fraud.

The Company’s business exposes it to fraud risk from loan and deposit customers, the parties they do business with, as well as from employees, contractors and vendors.

Fraud risks include, among other things, identity theft, account takeover, wire fraud, payment fraud, social engineering schemes, and other forms of financial crime, which are increasingly sophisticated and difficult to detect.

The Company relies on financial and other data from new and existing customers which could turn out to be fraudulent when accepting such customers, executing their financial transactions and making and purchasing loans and other financial assets.

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Compliance with current and potential regulation, as well as supervisory scrutiny by our regulators, may significantly increase our costs, impede the efficiency of our internal business processes, require us to increase our regulatory capital, and limit our ability to pursue business opportunities in an efficient manner by requiring us to expend significant time, effort and resources to ensure compliance and respond to any regulatory inquiries or investigations.

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

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.

Applicable laws, regulations, interpretations, enforcement policies and accounting principles have been subject to significant changes in recent years, and may be subject to significant future changes.

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Furthermore, the regulatory agencies have broad discretion in their interpretation of laws and regulations and their assessment of the quality of our loan portfolio, securities portfolio and other assets.

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.

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.

Monetary policies and regulations of the Federal Reserve could have an adverse effect on our business, financial condition and results of operations.

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These actions may include requiring us to remediate any such adverse examination findings.

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.

Any regulatory enforcement action against us could have an adverse effect on our business, financial condition and results of operations.

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The capital rules require bank holding companies and banks to maintain a common equity Tier 1 capital to risk-weighted assets ratio of at least 7.0% (a minimum of 4.5% plus a capital conservation buffer of 2.5%), a Tier 1 capital to risk-weighted assets ratio of at least 8.5% (a minimum of 6.0% plus a capital conservation buffer of 2.5%), a total capital to risk-weighted assets ratio of at least 10.5% (a minimum of 8% plus a capital conservation buffer of 2.5%), and a leverage ratio of Tier 1 capital to total consolidated assets of at least 4.0%.

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

on an institution’s ability to make capital distributions and discretionary bonus payments.

In addition, for an insured depository institution to be “well-capitalized” under the banking agencies’ prompt corrective action framework, it must have a common equity Tier 1 capital ratio of at least 6.5%, Tier 1 capital ratio of at least 8.0%, a total capital ratio of at least 10.0%, and a leverage ratio of at least 5.0%, and must not be subject to any written agreement, order or capital directive, or prompt corrective action directive issued by its primary federal or state banking regulator to meet and maintain a specific capital level for any capital measure.

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Furthermore, we may not be able to ensure that customers and other third parties have appropriate controls in place to protect the confidentiality of the information that they exchange with us, particularly where such information is transmitted by electronic means.

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.

We may also have limited ability to control or monitor how third-party service providers safeguard information once it is shared with them.

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.

Concerns regarding the effectiveness of our measures to safeguard PII, or even the perception that such measures are inadequate, could cause us to lose customers or potential customers and thereby reduce our revenues.

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Our principal source of funds to pay distributions on our common stock and service any of our obligations, other than further issuances of securities, is dividends received from our Bank.

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.

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.

As is generally the case for banking institutions, the profitability of our Bank is subject to the fluctuating cost and availability of money, changes in interest rates and economic conditions in general.

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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.

We face the risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations.

The Bank Secrecy Act of 1970 (the “BSA”), the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “Patriot Act”), and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and to file reports such as suspicious activity reports and currency transaction reports.

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If our program is deemed deficient, we could be subject to liability, including fines, civil money penalties and other regulatory actions, which may include restrictions on our business operations and our ability to pay dividends, restrictions on mergers and acquisitions activity, restrictions on expansion, and restrictions on entering new business lines.

Regulatory expectations regarding BSA/AML and sanctions compliance continue to evolve, and increased transaction volumes, new products, digital delivery channels or reliance on third-party service providers may increase compliance risk.

Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have significant reputational consequences for us.

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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.

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 Jumpstart Our Business Startups Act (the “JOBS Act”), and is, therefore, permitted to, and intends to, take advantage of certain exemptions from certain disclosure requirements.

For so long as the Company remains an “emerging growth company,” the Company may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, reduced disclosure obligations regarding executive compensation in the Company’s periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on certain executive compensation matters, such as “say on pay” and “say on frequency.” As a result, the Company’s stockholders may not have access to certain information that they may deem important.

Although the Company intends to rely on the exemptions provided in the JOBS Act, the exact implications of the JOBS Act for the Company are still subject to interpretations and guidance by the SEC and other regulatory agencies.

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.

The Company cannot predict whether investors will find its common stock less attractive as a result of the Company taking advantage of these exemptions.

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.

Risks Related an Investment in Our Common Stock

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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.

As of February 18, 2025, there were 34,304,560 issued and outstanding shares of our common stock, which are freely transferable without restriction or further registration under the Securities Act.

We, our executive officers, directors and certain of our holders of our outstanding shares of common stock holding, in the aggregate, 5,491,660 shares of our common stock as of October 31, 2024 (representing approximately 21.4% of our outstanding common stock as of such date), have agreed not to sell any shares of our common stock for a period of 180 days from the date of our initial public offering, subject to certain exceptions.

Following the expiration of this lock-up period, all of these shares will be eligible for resale under Rule 144 of the Securities Act, subject to any remaining holding period requirements and, if applicable, volume limitations.

Actual or anticipated issuances or sales of substantial amounts of our common stock following our initial offering could cause the market price of our common stock to decline significantly and make it more difficult for us to sell equity or equity-related securities in the future at a time and on favorable terms, or at all.

We may issue all of these shares without any action or approval by our stockholders, and these shares, once issued (including upon exercise of outstanding options), will be available for sale into the public market, subject to the restrictions described in this report, if applicable, for affiliate holders.

The market price for our common stock may decline significantly when the restrictions on resale by our existing stockholders lapse.

A decline in the price of our common stock might impede our ability to raise capital through the issuance of additional common stock or other equity securities.

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.

On May 30, 2019, we sold 1,841,780 shares of our voting common stock and 3,972,180 shares of our non- voting common stock to Castle Creek Capital Partners VII, LP (“Castle Creek VII”).

Additionally, on December 24, 2019 we sold 2,600,000 shares of our non-voting common stock to Castle Creek Capital Partners VI, LP (“Castle Creek VI,” and together with Castle Creek VII, “Castle Creek”).

The non-voting common stock is non-voting in the hands of any holder of 9.9% or more of our voting common stock.

Upon the sale or transfer of the non-voting stock in connection with a widely-distributed public offering or to an underwriter for purposes of a widely-distributed public offering, such transferred shares automatically will become an identical number of shares of voting common stock, as provided in our Amended and Restated Articles of Incorporation.

As of March 21, 2025, Castle Creek continued to own 6,298,979 shares of common stock and non-voting common stock, representing approximately 18.36% of our issued and outstanding voting and non-voting common stock as of such date.

In connection with the transactions above, we entered into a Registration Rights with each of Castle Creek VII and Castle Creek VI (the “Registration Rights Agreements”).

The Registration Rights Agreements provide for demand and piggyback registration rights.

Pursuant to its demand registration rights, after May 30, 2024 and December 24, 2024, respectively, Castle Creek had the right to require the Company to file a registration statement with the SEC so that Castle Creek may resell its shares of common stock.

If the Company files a registration statement for a primary or secondary offer of its securities (other than a registration statement related to equity compensation plans or mergers and acquisitions), the Registration Rights Agreements require the Company to notify Castle Creek, who may elect to have its securities included in such registration statement for resale.

In accordance with the Registration Rights Agreements, Castle Creek VII and Castle Creek VI acted as selling stockholders in our initial public offering and offered shares of common stock.

To the extent that Castle Creek will continue to hold shares of common stock, it is possible that the Company may be required to register for resale shares of common stock of Castle Creek, and such resale could have adverse effect on volatility and the market value of the Company’s common stock then outstanding.

Such resales could also make it more difficult for the Company and its stockholders to sell common stock.

We have existing investors that own a significant amount of our common stock whose individual interests may differ from yours.

A significant percentage of our common stock is currently held by Castle Creek.

As of March 21, 2025, Castle Creek owned approximately 18.36%, of our outstanding shares of common stock.

In addition to the registration rights described above, we have agreed to nominate one person designated by Castle Creek to our board of directors, subject to satisfaction of the legal and governance requirements regarding service as a member of our board of directors and to the reasonable approval of the Company, and to the board of directors of Northpointe Bank.

We have also agreed that we will recommend to our stockholders that the Castle Creek representative is elected to our board of directors at all of the Company’s meetings of stockholder as which members of the board of directors are to be elected.

In addition, subject to limited exceptions, we have agreed that, if at any time Castle Creek does not have a representative on our board of directors, to invite one person designated by Castle Creek to attend all meetings of our board of directors and all meetings of the board of directors of Northpointe Bank.

These board representation and board observation rights will continue with respect to Castle Creek for so long as Castle Creek, together with its affiliates, continues to hold 4.9% or more of our issued and outstanding voting common stock.

If Castle Creek ceases to hold the required ownership percentage, Castle Creek will no longer have any further board representation rights, and Castle Creek will use all reasonable best efforts to cause its board representative to promptly resign from our board of directors and from the board of directors of Northpointe Bank.

Currently, John M.

Eggemeyer III serves on our board of directors as the representative of Castle Creek.

We have also agreed that, for so long as Castle Creek holds 4.9% or more of the voting common stock of the Company, Castle Creek will generally have the right to purchase its pro rata share of any securities that we may issue in the future.

Such rights do not apply to certain transactions such as a mergers or issuances pursuant to an equity incentive plan approved by the board of directors (subject to certain limitations).

Castle Creek also has certain indemnification, and information and access rights.

Castle Creek will continue to have a significant level of influence over us because of Castle Creek’s common stock ownership and its board representation and observer rights.

For example, Castle Creek will have a greater ability than our other shareholders to influence the election of directors and the potential outcome of other matters submitted to a vote of our shareholders, including mergers and other acquisition transactions, amendments to our Amended and Restated Articles of Incorporation and Amended and Restated Bylaws, and other extraordinary corporate matters.

The interests of Castle Creek could conflict with the interests of our other shareholders, and any future transfer by these investors of their shares of common stock to other investors who have different business objectives could adversely affect our business, results of operations, financial condition, prospects or the market value of our common stock.

Our stock price may be volatile, and you could lose part or all of your investment as a result.

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• geopolitical conditions such as acts or threats of terrorism, pandemics or military conflicts.

Our stock price may also be affected by factors unrelated to our operating performance, including general market volatility, investor sentiment, interest rate changes or macroeconomic trends.

In particular, the realization of any of the risks described in this section could have an adverse effect on the market price of our common stock and cause the value of your investment to decline.

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In any liquidation, dissolution or winding up of the Company, our common stock would rank below all claims of debt holders against us as well as any preferred stock that has been issued.

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.

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.

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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.

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.

beneficial by our stockholders.

Furthermore, with certain limited exceptions, federal regulations prohibit a person or company or a group of persons deemed to be “acting in concert” from, directly or indirectly, acquiring 10% or more (5% or more if the acquirer is a BHC) of any class of our voting stock or obtaining the ability to control in any manner the election of a majority of our directors or otherwise direct the management or policies of our Company without prior notice or application to and the approval of the Federal Reserve.

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We will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act and applicable securities rules and regulations.

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.

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.

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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 Company has elected to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

The Company cannot predict whether investors will find its common stock less attractive as a result of the Company taking advantage of these exemptions.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors