Safe and Sound

Northpointe Bank

Grand Rapids, MI
5
Star Rating
Northpointe Bank is a Grand Rapids, MI-based, FDIC-insured bank started in 1999. Regulatory filings show the bank having equity of $63.0 million on assets of $694.0 million, as of June 30, 2017.

Thanks to the work of 389 full-time employees, the bank has amassed loans and leases worth $588.3 million, including real estate loans of $450.5 million. U.S. bank customers currently have $544.7 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Northpointe Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank faired on the three key criteria Bankrate used to evaluate American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a useful measurement of a bank's financial resilience. It acts as a cushion against losses and as protection for depositors when a bank is experiencing economic trouble. When looking at safety and soundness, the higher the capital, the better.
Northpointe Bank finished below the national average of 13.38 on our test to measure capital adequacy, receiving a score of 6 out of a possible 30 points.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. Northpointe Bank's Tier 1 capital ratio was 10.46 percent, above the 6 percent level considered adequate by regulators, but under the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to stand up to economic challenges.

Overall, Northpointe Bank held equity amounting to 9.08 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

In this test, Bankrate tries to determine the effect of problem assets, such as unpaid mortgages, on the bank's loan loss reserves and overall capitalization.

Having large numbers of these types of assets could eventually force a bank to use capital to absorb losses, cutting down on its equity cushion. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, resulting in reduced earnings and potentially more risk of a future failure.

On Bankrate's asset quality test, Northpointe Bank scored 40 out of a possible 40 points, exceeding the national average of 37.62 points.

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of June 30, 2017, 0.37 percent of Northpointe Bank's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.04 percent.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the that reserve's size to the total amount of at-risk loans can be a handy indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Northpointe Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. A bank can retain its earnings, boosting its capital cushion, or put them to work addressing problematic loans, potentially making the bank more resilient in times of trouble. Conversely, losses reduce a bank's ability to do those things.

Northpointe Bank scored 26 out of a possible 30 on Bankrate's test of earnings, beating out the national average of 16.52.

One widely used measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by total equity. Northpointe Bank's most recent annualized quarterly return on equity was 17.26 percent, above the national average of 9.28 percent.

The bank recorded net income of $5.2 million on total equity of $63.0 million for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 1.67 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.14 percent.

WHAT IS SAFE & SOUND?

Bankrate.com's Safe & Sound Ratings provide a star rating system to evaluate the current financial status of financial institutions. The information gathered about banks, credit unions and thrifts is updated as set forth in the Terms of Use of Safe & Sound Ratings and Reports. The Safe & Sound Ratings information is grouped by categories of banks, thrifts and credit unions.

Scoring methodology

Bankrate.com evaluates the financial condition of institutions and assigns a one- to five-star rating for each with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more stars. The majority of institutions fall into the three- to four-star range. An institution with an "NR" rating may be too new to rate or may have limited the publicly available information in their regulatory filings. The "NR" is not an indication of financial strength or weakness. The Safe & Sound rating is believed to be reliable, but the information is not guaranteed. In addition, events since the information was collected may have altered the institution's financial condition.