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    NPB
    Earnings call· Jun 2026(Q2 FY26)

    NORTHPOINTE BANCSHARES INC NPB

    Jul 22, 2026 Source

    Executive summary

    Northpointe Bancshares Q2 FY26 — Strong Loan and Deposit Growth Amidst Competitive Pressures

    Northpointe Bancshares delivered strong Q2 FY26 results, marked by significant growth in loans and deposits and improved capital efficiency. Despite competitive pressures impacting net interest margin and mortgage origination volumes, the company continues to execute on strategic priorities, leveraging its MPP business and expanding funding relationships. Management remains confident in its ability to navigate various rate environments and capitalize on future opportunities.

    Highlights

    5

    • Diluted earnings per share increased by 21% on a year-to-date basis.

    • Tangible book value grew by over $2.25 per share.

    • New loans and deposits each grew by 17% over the last 12 months.

    • Wholesale funding ratio lowered from 71% to 63% over the last 12 months.

    • MPP balances increased by $1 billion or 36% from the second quarter of last year to $3.9 billion.

    Concerns

    3

    • Net interest margin decreased by 9 basis points QoQ to 2.33% due to tighter MPP yields and competitive pricing.

    • Mortgage origination saleable volume decreased to $572.5 million from $626.6 million in the prior quarter.

    • Overall competitive pressures in the mortgage warehouse business leading to tighter spreads.

    Guidance & targets

    11
    CategoryTargetConfidence
    Net Interest Margin (NIM)
    2.3% to 2.4%
    high materiality
    High
    MPP Balances
    $4.1 billion to $4.3 billion
    high materiality
    High
    Participated Out MPP Balances
    $300 million to $500 million
    medium materiality
    High
    AIO Balances
    increase between $900 million and $1.0 billion
    medium materiality
    High
    Non-MPP and Non-AIO Loan Portfolio
    decline to between $1.9 billion and $2.1 billion
    medium materiality
    High
    Total Provision Expense
    $2 million and $3 million
    medium materiality
    Medium
    Total Saleable Mortgage Originations
    $2.2 billion to $2.4 billion
    high materiality
    High
    All-in Margins on Mortgage Originations
    2.75% to 3.25%
    high materiality
    High
    MPP Fees
    $9 million and $11 million
    medium materiality
    High
    Loan Servicing Fees
    $9 million and $11 million
    medium materiality
    High
    Total Noninterest Expense
    $138 million to $142 million
    high materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    MPP Business
    Strong growth in balances and capacity, but yields impacted by competitive pricing and tighter spreads. Total loans funded through the channel were $12.8 billion for the quarter, up from $11.2 billion in the prior quarter and $9 billion from Q2 2025.
    Period ending balances: $3.9 billionAverage balances increase: $477.5 million QoQNew clients added: 11Additional capacity from new clients: $380 millionExisting clients facility size increase: $265 millionOverall utilization of existing clients: 61% (up from 57% QoQ)Participated out balances: $489.0 million (up from $412.7 million QoQ)Average NPP yields: 6.35%Fee adjusted yields: 6.59%
    		—36%——
    Residential Lending
    Shift from refinance to purchase volume, with traditional retail channel gaining share. Focused on increasing productivity and attracting talent.
    Mortgages closed: $670.6 million (down from $693.7 million QoQ)Saleable volume: $572.5 million (down from $626.6 million QoQ)Refinance activity as % of saleable volume: 27% (down from 59% QoQ)Purchase volume increase: 61% QoQTraditional retail channel share of salable originations: 81% (up from 61% QoQ)Consumer direct channel share of salable originations: 19% (down from 39% QoQ)Sold on service release basis: 61% of total salable mortgages (down from 68% QoQ)New mortgage professionals hired: 4
    		————
    Digital Deposit Banking
    Deposit growth primarily driven by broker deposits, but also successful in adding core funding partners to bolster core deposits and lower wholesale funding ratio.
    Total deposits: $5.2 billionNoninterest-bearing demand deposits increase: 30% YoYInterest-bearing demand deposits increase: 81% YoYSavings and money market deposits increase: 45% YoY
    		————
    Specialty Mortgage Servicing
    Portfolio growth and increased loan servicing fees, focusing on first lien home equity lines tied to demand deposit sweep accounts (AIO loans).
    Loan servicing fees (excluding MSR fair value changes): $2.4 million (up QoQ)Loans serviced for others: 16,200Total UPB serviced for others: $5.5 billion
    		—35%——

    Operational metrics

    14
    Diluted EPS
    $1.22up 21% YoY
    YTD FY26

    Year-to-date diluted earnings per share.

    Return on average assets
    1.18%
    Q2 FY26

    Company-wide return on average assets.

    Tangible book value per share increase
    15%annualized over prior quarter
    Q2 FY26

    Factoring in the impact of dividends paid.

    Total loans funded through MPP
    $12.8 billionup from $11.2 billion in prior quarter and $9 billion from Q2 FY25
    Q2 FY26

    Refers to the volume of loans funded through the Mortgage Purchase Program channel.

    Cost of funds
    4.01%flat QoQ
    Q2 FY26

    Company-wide cost of funds.

    FDIC insurance cost improvement
    15 to 20 bps
    ongoing

    Expected improvement related to lower wholesale funding ratio.

    Net income to common stockholders
    $21.3 million
    Q2 FY26

    Net income for the second quarter.

    Average interest-earning assets increase
    $389.5 millionQoQ
    Q2 FY26

    Increase in average interest-earning assets from the prior quarter.

    Yield on average interest-earning assets decrease
    8 bpsQoQ
    Q2 FY26

    Primarily driven by a decrease in loan yields, mainly from tighter yields on MPP facilities.

    Net gain on sale of loans (excluding fair value items)
    $16.4 milliondown from $17.8 million QoQ
    Q2 FY26

    Excludes $0.7 million increase in fair value of loans held for investment and lender risk account with FHLB.

    Noninterest expense increase
    $0.8 millionQoQ
    Q2 FY26

    Driven primarily by higher salaries and benefits related to variable compensation on mortgage production.

    Total assets
    $7.5 billion
    Q2 FY26

    Total assets at June 30, 2026, based on growth in MPP and AIO balances.

    Wholesale funding ratio
    63.09%up slightly QoQ
    Q2 FY26

    Wholesale funding ratio at June 30, 2026.

    Effective tax rate
    24.72%flat QoQ
    Q2 FY26

    Effective tax rate for the second quarter.

    Industry KPIs

    12
    MetricValueDetails
    Loans$3.9 billionUSD
    Deposits$5.2 billionUSD
    Rotce ROE14.69%%
    Cet1 ratio—
    Capital returns—
    Fee income lines$9 million to $11 millionUSD
    Allowance reserves—
    Net interest income$1.1 millionUSD
    Net interest margin2.33%%
    Net charge offs npls$528,000USD
    Total operating expenses$138 million to $142 millionUSD
    Provision for credit losses$210,000USD

    Risks & headwinds

    4
    Competitive pressures in mortgage warehouse businessCurrent quarter, expected to persist

    NPP yields down 24 basis points from the prior quarter

    Mitigation: Expanding partner financial institutions for participation program, optimizing revenue streams, maintaining strong tech stack and funding.

    Capital constraints limiting period-ending MPP growthCurrent, ongoing

    period-ending growth... was a little softer than last quarter. That's really driven on our capital constraints

    Mitigation: Utilizing participation program to grow business beyond own balance sheet, leveraging retained earnings for capital generation.

    Potential for changes in Fed funds rate movementsRemainder of 2026

    assuming that we do not see any additional Fed funds rate movements in the remainder of the year

    Mitigation: Management states they can 'operate in any interest rate environment' and are 'well positioned to quickly capitalize on additional mortgage volume should rates decrease.'

    Industry-wide lower mortgage volumesCurrent

    competitive pressures from a limited, I should say, not expanding volumes in the space

    Mitigation: Focusing on increasing mortgage origination productivity, attracting high-quality lenders, investing in technology and people, remaining nimble in managing overhead.

    What to watch in Q3 FY26

    5

    Net Interest Margin trajectory

    next quarter
    Current2.33% in Q2 FY26
    Targetwithin 2.3% to 2.4% for full year 2026

    Why it matters

    NIM is a key profitability driver for banks, and competitive pressures impacted it this quarter, making its trajectory crucial.

    I'm expecting a net interest margin range of 2.3% to 2.4% for full year 2026.

    Q&A highlights

    6

    Discuss the Q2 NIM dynamics, specifically lower MPP yields and competitive pressures. Are these competitive pressures persistent, and are new competitors entering the warehouse business?

    Management explained that cost of funds was flat, AIO yields increased, but MPP yields were down due to increased competition and higher capacity among warehouse clients. They noted that while margins were impacted, they remain above industry averages, and growth continues despite the tightening.

    “I don't know that it was a change in anything we did, just increased competitive pressures throughout the industry. Warehouse clients typically have a lot of capacity right now.”

    asked by Crispin Love · answered by Bradley Howes

    2 min read5 chapters

    Detailed Narrative

    01

    MPP Business Expansion

    The Mortgage Purchase Program (MPP) saw significant growth, with balances reaching $3.9 billion, up 36% year-over-year. The company added 11 new clients, contributing $380 million in capacity, and increased facility sizes for 6 existing clients by $265 million. Utilization of existing clients also rose to 61% from 57% in the prior quarter, demonstrating strong demand and effective management of the program.

    02

    Residential Lending Performance

    Residential lending closed $670.6 million in mortgages, a slight decrease from the prior quarter. Saleable volume was $572.5 million, with refinance activity dropping to 27% from 59% QoQ, while purchase volume increased by 61%. The traditional retail channel accounted for 81% of salable originations, up from 61% in Q1 FY26.

    03

    Deposit Growth and Funding Strategy

    Total deposits reached $5.2 billion, primarily driven by broker deposits. Over the past year, the company successfully added new funding partner relationships, leading to a 30% increase in noninterest-bearing demand deposits, an 81% increase in interest-bearing demand deposits, and a 45% increase in savings and money market deposits compared to Q2 FY25. The wholesale funding ratio improved from 71% to 63% over the last 12 months.

    04

    Asset Quality and Provisioning

    Net charge-offs were $528,000, representing an annualized net charge-off ratio of 3 basis points, well below historical averages. Credit quality remains stable with no systemic borrower issues, and nonperforming assets decreased. The total provision expense for the quarter was $210,000, with full-year guidance set at $2 million to $3 million, primarily for charge-off replenishment and growth in MPP and AIO loans.

    05

    Capital Management and Future Growth

    Northpointe continues to leverage additional capital generated through retained earnings to grow MPP and AIO loan balances. The company is exploring opportunities to purchase investment tax credits to lower its effective tax rate for 2026, with more details expected next quarter. Management emphasized maintaining strong regulatory capital ratios to support continued balance sheet expansion.

    AI-generated summary of the company’s earnings call. Not investment advice.