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NORTHPOINTE BANCSHARES INC (NPB)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered solid growth: net income to common rose to $20.1MM ($0.57 diluted EPS) from $18.0MM ($0.51) in Q2; ROAA held at 1.34%, NIM expanded 3 bps to 2.47%, and efficiency improved to 53.38% .
  • Results modestly beat Wall Street: EPS came in $0.01 above consensus ($0.57 actual vs $0.56 est*) and revenue was ~$0.5MM above consensus ($63.5MM actual vs $62.9MM est*), supported by stronger net interest income and fair‑value gains within loan sale activity *.
  • Mortgage Purchase Program (MPP) was the key engine: balances ended at $3.36B (+$473MM q/q), loans funded hit a record $9.8B, and AIO balances grew $38.8MM (23% annualized) .
  • Deposits increased $296MM q/q, with interest‑bearing demand up ~$306.9MM on new custodial deposits; wholesale funding ratio improved to 67.6% (from 70.7%) .
  • Near‑term catalysts: planned call of ~$77MM Series A preferred (anticipated by YE’25, with ~$3.2MM issuance cost expensed in Q4) and guided 2026 NIM trending to the high end of 2.45–2.55% as mix shifts toward higher‑yield MPP/AIO .

Values for estimates marked with * are retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • “Exceptional performance in our Mortgage Purchase Program business… funding $9.8 billion in total loans during the third quarter” and ending balances up $1.7B y/y; management emphasized a robust pipeline and added 12 participation partners to support growth .
  • Core deposit momentum: “interest‑bearing demand deposits increased by over $300 million from the prior quarter as we completed an initiative to bring in valuable new custodial deposits” .
  • Operating leverage improved: net interest income before provision rose $3.8MM q/q (NIM +3 bps) while the efficiency ratio improved to 53.38% versus 53.80% in Q2 .

What Went Wrong

  • Credit cost ticked up: total provision (loans + unfunded) increased to $828k (vs $583k in Q2) with net charge‑offs up to $977k, largely tied to two larger mortgage loans; still just 7 bps annualized of average loans .
  • Non‑interest expense rose $2.6MM q/q, driven by salaries/benefits (including $935k legacy stock appreciation rights expense from stock price increase) and higher FDIC premiums .
  • MSR fair value drag: loan servicing fees included a ($910k) MSR fair‑value decrease; servicing revenue ex‑fair‑value was $2.0MM, but fair‑value volatility remains a headwind .

Financial Results

Selected P&L and Ratios

MetricQ3 2024Q2 2025Q3 2025
Net Income to Common ($MM)$17.099 $18.048 $20.132
Diluted EPS ($)$0.67 $0.51 $0.57
Net Interest Income Before Provision ($MM)$28.403 $36.520 $40.331
Total Non-Interest Income ($MM)$25.758 $22.438 $24.029
Efficiency Ratio (%)54.23% 53.80% 53.38%
Return on Avg Assets (%)1.41% 1.34% 1.34%
Net Interest Margin (%)2.20% 2.44% 2.47%

Revenue vs. Estimates (S&P Global)

MetricQ3 2024Q2 2025Q3 2025
Revenue Estimate ($MM)*—56.679*62.929*
Revenue Actual ($MM)*53.983*58.375*63.532*

Values retrieved from S&P Global.

EPS vs. Estimates (S&P Global)

MetricQ3 2024Q2 2025Q3 2025
EPS Estimate ($)*—0.505*0.56*
EPS Actual ($)*—0.51*0.57*
EPS – # of Estimates*—2*3*
Revenue – # of Estimates*—2*2*

Values retrieved from S&P Global.

Segment/KPI Snapshot

KPIQ3 2024Q2 2025Q3 2025
MPP End Balances ($MM)$1,671.829 $2,891.668 $3,364.886
MPP Loans Funded ($MM)$6,559.838 $9,009.750 $9,822.322
AIO End Balances ($MM)$581.728 $662.829 $701.580
Residential Mortgage Originations ($MM)$583.471 $665.515 $636.600
Rate Lock Commitments ($MM)$797.052 $753.317 $823.261
Applications ($MM)$1,157.023 $1,096.299 $1,113.569
Interest-Bearing Demand Deposits ($MM)$383.517 $749.479 $1,056.372
Total Deposits ($MM)$3,531.878 $4,474.071 $4,769.639
Wholesale Funding Ratio (%)74.00% 70.71% 67.58%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest Margin (NIM)FY 2025—2.45–2.55%; “lower end” for 2025 Introduced
Net Interest Margin (NIM)FY 2026—2.45–2.55%; “higher end” for 2026 Introduced
MPP Period-End Balances ($)YE 2025—+$50–$100MM further increase from Q3 level Introduced
MPP Period-End Balances ($)YE 2026—$4.1–$4.3B; plus $300–$500MM average participations Introduced
AIO Period-End Balances ($)YE 2025—$740–$760MM Raised (per mgmt)
AIO Period-End Balances ($)YE 2026—$900MM–$1.0B Introduced
Saleable Mortgage Originations ($)FY 2025—$2.1–$2.3B; margins 2.75–3.25% Maintained
Saleable Mortgage Originations ($)FY 2026—$2.2–$2.4B; margins 2.75–3.25% (mid/lower end) Introduced
MPP Fees ($)FY 2025—$5–$6MM Maintained
MPP Fees ($)FY 2026—$9–$11MM Introduced
Loan Servicing Fees ($)FY 2026—$9–$11MM Introduced
Total Non-Interest Expense ($)FY 2026—$140–$144MM Introduced
Capital ActionQ4 2025—Anticipated call of ~$77MM Series A preferred; replace largely with sub debt; ~$3.2MM issuance costs to expense in Q4 Announced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
MPP Growth and ParticipationsQ1: MPP balances +$757MM q/q; funded $6.7B; avg fee‑adj yield ~7.40% . Q2: balances +$423.5MM q/q; funded $9.0B; avg fee‑adj yield ~7.28% .Balances +$473.2MM q/q; funded $9.8B; fee‑adj yield ~7.30%; 12 participation partners .Strengthening; scaling with partners.
Deposits and Funding MixQ1: deposit +$400MM; brokered CDs drove growth; wholesale 66.6% . Q2: deposit +$651MM; brokered CDs; wholesale 70.7% .+$296MM deposits; interest‑bearing demand +$306.9MM via custodial; wholesale 67.6% .Improving core mix; wholesale reliance easing.
NIM TrajectoryQ1 NIM 2.35%; improvement from Q4 . Q2 NIM 2.44% (+9 bps) .NIM 2.47% (+3 bps); guide 2025 low end, 2026 high end of 2.45–2.55% .Gradual expansion as mix shifts.
Asset QualityQ1: net charge‑offs 2 bps annualized; NPA ~1.50% . Q2: net charge‑offs 4 bps; NPA 1.35% .Net charge‑offs 7 bps; delinquent loans down $4.6MM; ACL 0.21% of loans; substantial guarantees .Stable with isolated losses; metrics improving ex‑guaranteed.
Servicing/MSR Fair ValueQ1: MSR FV negative ($707k); fees $995k . Q2: MSR FV negative ($302k); fees $1.5MM .MSR FV negative ($910k); fees $1.1MM; ex‑FV fees $2.0MM .Volatile with rates; underlying fees growing.
Capital Stack Optimization—Plan to call Series A preferred by YE’25; replace with sub debt; EPS accretive, cost savings .New initiative; enhances earnings/capital flexibility.

Management Commentary

  • CEO: “The momentum that we have built across our business lines drove strong financial performance… highlighted by another quarter of very robust growth in our Mortgage Purchase Program… We funded $9.8 billion in loans… highest quarterly level ever” .
  • CEO: “We benefited from a new core custodial deposit relationship… approximately a $300 million increase in interest‑bearing demand deposits… we will continue to explore new opportunities to grow our non‑brokered deposit base” .
  • President: “Participations remain an important component… allowing us to manage the balance sheet and expand net interest margin while driving higher fee income. We continue to generate very strong returns on the MPP business” .
  • CFO: “Our net interest margin was 2.47%… expect 2.45–2.55% for 2025 (lower end) and 2026 (higher end)… driven by mix improvement and expected Fed cuts” .
  • CFO: “We anticipate calling [Series A preferred] prior to year‑end… replace a significant portion with subordinated debt… significant annual cost savings and accretive to EPS… ~$3.2MM unamortized issuance costs to be expensed in Q4” .

Q&A Highlights

  • NIM outlook: Asset/liability repricing mostly within 30 days; modest short‑term headwind from rate cuts, but mix shift toward MPP/AIO supports trending to top end of 2.45–2.55% range in 2026 .
  • Residential volumes: September refinance locks ~50% of volume; closed refi up ~67% m/m; AIO demand resilient even if rates decline modestly .
  • Servicing portfolio: UPB on loans serviced for others up ~$500MM, driven by sub‑servicing expansion and retention of some MSRs .
  • Deposits: Q3 custodial onboarding was outsized; future custodial adds likely smaller; ongoing focus on non‑brokered funding sources .
  • Expenses: Q4 2025 total non‑interest expense expected similar to Q3; FY 2026 guided to $140–$144MM, driven by higher volumes/variable comp and public company build‑out .

Estimates Context

  • EPS modest beat: $0.57 actual vs $0.56 est*; prior quarter $0.51 actual vs $0.505 est*; three EPS estimates in Q3 *.
  • Revenue beat: $63.532MM actual vs $62.929MM est* (Q2: $58.375MM actual vs $56.679MM est*), consistent with stronger net interest income and fair‑value‑aided loan sale gains *.
  • Forward adjustments: Guidance suggests 2026 NIM trending higher within 2.45–2.55%, MPP/AIO balance growth, and higher MPP/servicing fees, partially offset by potential compression in gain‑on‑sale margins amid competitive pricing .

Values retrieved from S&P Global.

Key Takeaways for Investors

  • MPP remains the primary growth driver; balances and funded volumes indicate durable scale, with participations providing balance‑sheet flexibility and fee income uplift .
  • Core deposit strategy is working: custodial deposits reduced wholesale dependency and supported NIM stability; further non‑brokered growth is a strategic priority .
  • Expect NIM to gradually expand into 2026 as lower‑yield legacy mortgages run off and higher‑yield MPP/AIO dominate the mix, even with modest rate‑cut headwinds .
  • Watch servicing/MSR fair‑value volatility; underlying servicing fees are trending up, but MSR fair‑value remains rate‑sensitive .
  • Near‑term event: preferred call and sub debt issuance—EPS accretive over time, but Q4 will absorb ~$3.2MM one‑time issuance cost expense .
  • Expense discipline critical into 2026 amid higher variable comp tied to volume; management guides FY 2026 non‑interest expense to $140–$144MM .
  • Trading lens: catalysts include preferred call execution, sustained MPP volume/participations, deposit mix improvements, and delivery against NIM guidance; risks include MSR fair‑value swings and competitive margin pressure in mortgage gain‑on‑sale .