Executive Summary

EPS of $0.51 rose 4.1% q/q and 15.9% y/y; Operating Revenue of $58.4M exceeded S&P Global consensus ($56.7M) and EPS slightly topped consensus ($0.505). Values retrieved from S&P Global.*
Net interest margin expanded 9 bps q/q to 2.44% while the efficiency ratio improved to 53.80%, reflecting operating leverage from MPP and AIO mix shifts .
MPP delivered record volume: $9.00B loans funded; period-end MPP balances climbed to $2.89B, with deposit growth primarily via brokered CDs; management expects ~$250M custodial deposits in Q3 to lower wholesale funding reliance .
Asset quality remained solid: net charge-offs at 4 bps annualized; NPAs decreased sequentially on an excluding-guaranteed basis; allowance stable at 0.23% of loans .
Catalysts: raised MPP balance outlook for Q3/Q4, maintained NIM guidance with lower-end bias, and increased full-year non-interest expense guidance (reflecting higher variable comp tied to strong activity) .

What Went Well and What Went Wrong

What Went Well

Record MPP performance and capacity expansion: “We funded over $9 billion in loans…highest quarterly level ever,” with average balances +$759M q/q and period-end +$423M (69% annualized) .
Margin and operating efficiency improved: NIM rose to 2.44% (+9 bps q/q), efficiency ratio improved to 53.80% from 55.15% q/q as mix shifted toward higher-yielding MPP/AIO and funding costs eased .
Mortgage banking strength: Net gain on sale of loans rose to $19.4M (vs. $18.6M Q1; $13.7M Q2’24) driven by higher saleable locks/originations and favorable fair value marks; CEO emphasized “robust growth” in MPP and retail origination momentum .

What Went Wrong

Non-interest income down q/q due to absence of prior quarter’s $2.0M FHLB extinguishment gain; loan servicing fees also below Q2’24 given prior MSR sale .
Non-interest expense up $2.4M q/q (salaries/benefits and professional fees), reflecting variable mortgage compensation and public company costs .
Higher wholesale funding dependency: wholesale funding ratio rose to 70.71% (66.59% in Q1), with brokered CDs the primary funding source for MPP growth; management seeks to offset with custodial deposits .

Financial Results

EPS and Operating Revenue vs Prior Periods and Estimates

Metric	Q2 2024	Q1 2025	Q2 2025	Consensus (Q2 2025)
Diluted EPS ($)	0.44	0.49	0.51	0.505*
Operating Revenue ($USD 000s)	45,204 (28,299 + 16,905)	51,967 (29,094 + 22,873)	58,375 (35,937 + 22,438)	56,679*

Notes: Operating Revenue defined here as Net Interest Income after provision + Total Non-Interest Income (bank convention for “operating revenue”). Values retrieved from S&P Global for consensus and actual line items where noted.*

Margins and Returns

Metric	Q2 2024	Q1 2025	Q2 2025
Net Interest Margin (%)	2.33	2.35	2.44
Efficiency Ratio (%)	61.10	55.15	53.80
ROA (annualized, %)	1.05	1.31	1.34
ROE (annualized, %)	11.97	13.17	13.60

Non-Interest Income Breakdown

Metric ($USD 000s)	Q2 2024	Q1 2025	Q2 2025
MPP fees	1,341	1,141	1,355
Loan servicing fees	2,397	995	1,525
Net gain on sale of loans	13,714	18,587	19,351
Other non-interest income	(1,063)	1,970	(32)
Total non-interest income	16,905	22,873	22,438

KPIs and Balance Sheet Highlights

Metric	Q2 2024	Q1 2025	Q2 2025
Residential mortgage originations ($000s)	551,771	485,505	665,515
Rate lock commitments ($000s)	707,104	729,436	753,317
Applications ($000s)	982,501	1,073,737	1,096,299
MPP total loans funded ($000s)	6,136,819	6,744,117	9,009,750
Total deposits ($000s)	3,296,944	3,822,622	4,474,071
Wholesale funding ratio (%)	70.04	66.59	70.71
NCOs ($000s)	742	260	488
ACL / Loans (%)	0.28	0.24	0.23

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Interest Margin (%)	FY2025	2.45–2.55	2.45–2.55 (likely lower end)	Maintained; lower-end bias
MPP loan balances ($B)	Q3 2025	End-2025: 3.1–3.3	Q3: 3.1–3.3; Q4: 3.3–3.5	Raised (timing/level)
AIO loan balances (%)	FY2025	+12–15% from Q1-end	+7–11% from 6/30 base	Methodology adjusted; range modestly lower vs new base
Saleable mortgage originations ($B)	FY2025	2.1–2.3	2.1–2.3 (towards lower end)	Maintained; tilt lower
All-in sales margin (bps)	FY2025	275–325	275–325 (towards upper end)	Maintained; tilt higher
MPP fees ($M)	FY2025	Increase with balances	5–6	Quantified (upgraded specificity)
Non-interest expense ($M)	FY2025	Q2/Q3 +$1–2M above Q1; Q4 back to Q1 run-rate	128–132 (higher vs prior)	Raised
Effective tax rate (%)	FY2025	~23.67	23.67 (unchanged)	Maintained
Dividend ($/share)	Q2 2025	—	$0.025 declared; payable Aug 4, 2025	Announced

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q2 2025)	Trend
Proprietary tech stack & scalability	Emphasized MPP tech and nationwide onboarding; added originators; outsourcing servicing to scaled sub-servicer	Reinforced “state-of-the-art” stack; MPP scalability; servicing outsourcing completed and savings realized	Strengthening execution
Deposits & funding strategy	Digital direct platform; granular retail balances (~$39K avg); brokered CDs fund growth	Brokered CDs drove deposit growth; $250M custodial deposits coming to lower wholesale funding ratio	Mix improvement expected
Tariffs/macro sensitivity	Watch list in guidance; low impact to originations; pipelines strong	Macro forecast headwinds in provision drivers; operationally steady demand	Vigilant but steady
Competition in warehouse/MMP	Growth via sales team, tech, client service; no major consolidation impact	Continued market share gains via differentiated focus	Competitive edge intact
Fair value marks sensitivity	Q1: FV gains on HFI/LRA with rate moves	Q2: FV impacts persist; watch mortgage rate indices (e.g., FNMA 30Y)	Rate-linked variability
Asset quality/credit	Low NCOs; delinquency uptick tied to servicing transfer; strong CECL rigor	NCOs 4 bps; NPAs broadly stable; ACL 0.23%	Stable/benign

Management Commentary

“We funded over $9 billion in loans during the quarter…highest quarterly level ever,” highlighting MPP scale and momentum; average and period-end balances significantly increased .
“We recently completed an agreement to bring in approximately $250 million in new Custodial Deposits…help bolster our core deposits and reduce reliance on wholesale funding,” aligning funding mix to strategy .
CFO on NIM: “2.44%…expect us to stay in 2.45–2.55% for FY25, likely lower end” due to slightly lower MPP yields, higher brokered CD costs, and lower non-interest-bearing balances; mix shift to MPP/AIO supports margin .
CFO on guidance: MPP balances guided higher (Q3/Q4 targets), AIO maintained (new base); full-year non-interest expense raised to $128–$132M .

Q&A Highlights

MPP trajectory and capacity: Growth fueled by capital from IPO, increased client facilities, and new clients; management expects continued strength through H2 .
NIM cadence: To reach guidance, needs sequential improvement; brokered CD costs improving; more MPP/AIO mix should lift margin despite caution to lower-end of range .
Custodial deposits: Negotiated directly; slightly better than brokered rates; reduces wholesale concentration and FDIC premiums; more relationships pursued .
Competition: Northpointe’s focus, tech, and client-centric approach differentiate; no notable competitor consolidation impact currently .
Fair value marks: Watch mortgage rate indices (e.g., conventional 30-year) to gauge FV swings quarter-to-quarter .

Estimates Context

Metric	Actual (Q2 2025)	Consensus (Q2 2025)	Surprise
Diluted EPS ($)	0.51*	0.505*	+0.005 (beat)*
Operating Revenue ($USD 000s)	58,375*	56,679*	+1,696 (beat)*

Values retrieved from S&P Global.* Management’s mix and volume drivers (higher MPP balances and improved NIM; stronger gain-on-sale) underpin the revenue upside; EPS tracked the revenue beat despite higher opex .

Key Takeaways for Investors

MPP is the growth engine: period-end balances at $2.89B and raised Q3/Q4 targets point to sustained balance and NII expansion; monitor deposit mix normalization via custodial inflows .
Margin path: NIM likely at lower-end of 2.45–2.55% near-term, but improving asset mix (MPP/AIO) should support sequential gains; brokered CD pricing trends are a swing factor .
Mortgage banking earnings durability: Gain-on-sale and lock volumes strengthened; margins guided toward upper end; fair value marks remain rate-sensitive—watch mortgage rates .
Opex higher with activity and public company costs: FY non-interest expense raised to $128–$132M; upside revenue offsets helped efficiency ratio improve to 53.8% .
Credit remains a strength: NCOs at 4 bps; ACL/loans 0.23%; NPAs manageable (ex-guaranteed); portfolio mostly residential real estate with high FICO/LTV metrics .
Funding strategy evolution: Brokered CDs funded Q2 growth; custodial deposits to reduce wholesale ratio in Q3; digital platform provides diversified, granular retail balances .
Near-term trading: Bias to positive on raised MPP outlook and revenue beat; watch rate moves for FV impacts and brokered funding costs; Q3 custodial deposits are a potential sentiment tailwind .

Citations: . Values retrieved from S&P Global.*

NORTHPOINTE BANCSHARES INC (NPB)·Q2 2025 Earnings Summary