Northpointe Bancshares, Inc. Reports Third Quarter 2025 Results

Northpointe Bancshares, Inc. (NYSE:NPB) ("Northpointe" or the "Company"), holding company for Northpointe Bank, today reported net income to common stockholders of $20.1 million, or $0.57 per diluted share, for the third quarter of 2025. This compares to $18.0 million, or $0.51 per diluted share, for the second quarter of 2025, and $17.1 million, or $0.67 per diluted share, for the third quarter of 2024. The decrease in earnings per diluted share from the prior year quarter reflects additional common shares issued from the initial public offering completed on February 13, 2025.

"The momentum we are building across our business lines resulted in strong financial performance in the third quarter, highlighted by strong balance sheet growth and an improvement in net income from the prior quarter and year," remarked Chuck Williams, Chairman and Chief Executive Officer. "We've continued to experience exceptional performance in our Mortgage Purchase Program business, increasing balances by $1.7 billion over the prior year level and funding $9.8 billion in total loans during the third quarter. In the residential lending channel, both mortgage locks and applications increased from the prior quarter, and all-in-one loan balances increased by 23% annualized. On the funding side, 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 during the third quarter."

Third Quarter 2025 Highlights

• Net income to common stockholders of $20.1 million, up $2.1 million from the prior quarter.
• Delivered improved financial performance from the prior quarter, including:
  • Return on average equity of 14.23%, compared to 13.60% in the prior quarter.
  • Return on average tangible common equity of 15.41%, compared to 14.49% in the prior quarter (see non-GAAP reconciliation).
  • Return on average assets of 1.34%, flat from the prior quarter.
  • Efficiency ratio of 53.38%, compared to 53.80% in the prior quarter.
• Net interest income after provision increased by $3.6 million from the prior quarter, reflecting strong growth in average interest-earning assets and expansion in net interest margin, partially offset by an increase in the provision for credit losses.
• Non-interest income increased by $1.6 million from the prior quarter driven primarily by increases in the fair value of loans held for investment and lender risk account ("LRA") attributable to changes in market interest rates.
• Non-interest expense increased by $2.6 million from the prior quarter driven primarily by higher salaries and benefits, including a $935,000 increase in expense related to a legacy stock appreciation rights plan resulting from the increase in stock price, as well as higher other taxes and insurance expense related to FDIC insurance premiums.
• Loans held for investment increased by $470.4 million, or 34% annualized, from the prior quarter, reflecting strong growth in Mortgage Purchase Program ("MPP") and first-lien home equity lines which are tied seamlessly to a demand deposit sweep account (the Company commonly refers to these loans as "All-in-One" or "AIO" loans) balances.
• Total deposits increased by $295.6 million from the prior quarter driven primarily by new custodial account balances onboarded during the third quarter of 2025.
• Wholesale funding ratio improved to 67.58% from 70.71% in the prior quarter.
• Total delinquent loans (including non-performing loans and loans past due 31 to 89 days) decreased by $4.6 million from the prior quarter.
• The Company's Board of Directors declared a regular quarterly cash dividend of $0.025 per share, payable on November 3, 2025 to shareholders of record as of October 15, 2025.

Net Interest Income

Net interest income before provision was $40.3 million for the third quarter of 2025, an increase of $3.8 million compared to the second quarter of 2025. The linked quarter increase reflects a 3 basis point improvement in net interest margin and a $465.6 million increase in average interest-earning assets. As compared to the third quarter of 2024, net interest income before provision increased by $11.9 million, driven primarily by a 27 basis point improvement in net interest margin and a $1.33 billion increase in average interest-earning assets.

Net interest margin was 2.47% for the third quarter of 2025, an increase of 3 basis points compared to 2.44% in the second quarter of 2025. This increase was driven primarily by an improvement in loan yields and the mix of interest-earning assets, along with flat overall funding costs. As compared to the third quarter of 2024, net interest margin increased by 27 bps, as the decrease in the yield earned on interest-earning assets was outpaced by a larger decrease in the rate paid on interest-bearing liabilities.

Average interest-earning assets increased by $465.6 million from June 30, 2025 and by $1.33 billion compared to September 30, 2024. The increases from both comparable periods reflect the strong growth in MPP and AIO balances, partially offset by continued run-off in the remainder of the loan portfolio.

Provision for Credit Losses

The Company recorded a total provision for credit losses (including provisions for loans and unfunded commitments) of $828,000 in the third quarter of 2025, compared to $583,000 in the second quarter of 2025 and $178,000 in the third quarter of 2024. The Company's quarterly provision for credit losses reflects loan charge-offs, along with factors such as loan growth, portfolio mix, reserves on individually evaluated loans, credit migration trends, and changes in the economic forecasts used in the credit models. The increases from both comparable periods were driven primarily by higher loan charge-offs, largely attributable to two larger mortgage loans.

Non-interest Income

Non-interest income was $24.0 million for the third quarter of 2025, an increase of $1.6 million compared to the second quarter of 2025 and a decrease of $1.7 million compared to the third quarter of 2024.

MPP fees were $1.5 million for the third quarter of 2025, an increase of $102,000 compared to the second quarter of 2025 and a decrease of $81,000 compared to the third quarter of 2024. The linked quarter increase reflects higher levels of funded loans in the MPP business and the decrease from prior year quarter reflects lower levels of participations.

Loan servicing fees were $1.1 million for the third quarter of 2025, a decrease of $408,000 compared to the second quarter of 2025 and an increase of $1.4 million compared to the third quarter of 2024. Both the linked quarter increase and decrease from prior year quarter were driven primarily by changes in the fair value of mortgage servicing rights ("MSRs") primarily attributable to the movement in market interest rates during the respective periods.

Net gain on sale of loans was $21.0 million for the third quarter of 2025, compared to $19.4 million for the second quarter of 2025 and $24.6 million for the third quarter of 2024. Net gain on sale of loans includes the capitalization of new MSRs, gains or losses on the sale of portfolio loans, changes in fair value of loans, and gains on the sale of loans.

The net gain on sale of loans for the third quarter of 2025 included an increase of $2.2 million from the combined change in fair value of loans held for investment and LRA, both attributable to changes in market interest rates, and a $1.2 million gain on the sale of portfolio loans. Excluding these items (see Net Gain on Sale of Loans table below for a reconciliation), net gain on sale of loans was $17.5 million, flat on a comparative basis from the second quarter of 2025 and up from $14.8 million on a comparative basis in the third quarter of 2024. The increase from the prior year quarter was driven primarily by higher saleable residential mortgage rate lock commitments and originations.

Other non-interest income was $285,000 for the third quarter of 2025, compared to a loss of $32,000 for the second quarter of 2025 and a loss of $445,000 for the third quarter of 2024. The Company recognized net gains on sale of other real estate owned of $282,000 in the third quarter of 2025 compared to net losses of $30,000 in the second quarter of 2025 and net losses of $180,000 in the third quarter of 2024. Other non-interest income in the third quarter of 2024 also included $312,000 in losses on lease termination and sale of assets.

Non-interest Expense

Non-interest expense was $34.4 million for the third quarter of 2025, an increase of $2.6 million compared to the second quarter of 2025 and an increase of $5.0 million compared to the third quarter of 2024.

Salaries and benefits expense was $24.3 million for the third quarter of 2025, an increase of $2.1 million compared to the second quarter of 2025. This increase was driven primarily by bonus and incentive compensation, which increased by $1.9 million, and included a $935,000 increase in expense related to a legacy stock appreciation rights plan resulting from the increase in stock price, along with higher incentive compensation from the improvement in business activity over the same period. As compared to the third quarter of 2024, salaries and benefits expense increased by $3.6 million, driven primarily by higher bonus and incentive compensation (up $1.7 million), reflecting higher expense related to the legacy stock appreciation rights plan and additional restricted stock expense from the initial public offering, as well as higher variable compensation on mortgage production (up $946,000).

Professional fees decreased by $92,000 on a linked quarter basis, and increased by $561,000 compared to the third quarter of 2024. The increase compared to the prior year quarter was driven primarily by higher ongoing customary public company compliance costs.

Other taxes and insurance increased by $808,000 on a linked quarter basis, and by $396,000 compared to the third quarter of 2024. The increase for both compared periods was driven primarily by higher FDIC assessment expense resulting from the growth in assets and continued utilization of capital.

All other categories of non-interest expense decreased by $182,000 on a linked quarter basis and increased by $474,000 compared to the third quarter of 2024. The linked quarter decrease was driven primarily by lower servicing expenses related to additional fees incurred during the prior quarter. As compared to the third quarter of 2024, the increase was driven primarily by additional expenses associated with the Company's private label outsourcing of its non-specialized mortgage servicing to a scaled sub-servicer.

Taxes

Income tax expense for the third quarter of 2025 was $7.0 million, compared to $6.3 million for the second quarter of 2025 and $5.9 million for the third quarter of 2024. The Company's effective tax rate was 24.00% for the third quarter of 2025, compared to 23.67% for the second quarter of 2025 and 24.02% for the third quarter of 2024.

Balance Sheet Highlights

Total assets were $6.84 billion at September 30, 2025, representing an increase of $408.7 million compared to June 30, 2025 and an increase of $1.45 billion compared to September 30, 2024. The increase in total assets at September 30, 2025, compared to both June 30, 2025 and September 30, 2024, was driven primarily by an increase in total loans, particularly growth in MPP and AIO balances.

Gross loans held for investment were $5.97 billion at September 30, 2025, an increase of $470.4 million, or 34% annualized, compared to June 30, 2025 and an increase of $1.56 billion, or 35%, compared to September 30, 2024. The linked quarter increase in gross loans held for investment was driven primarily by growth in MPP balances, which were up 65% annualized and growth in AIO loans, which were up 23% annualized. These increases were partially offset by a decrease of $41.5 million in the remainder of the loans held for investment portfolio. Loans held for sale totaled $259.8 million at September 30, 2025, compared to $331.2 million at June 30, 2025 and $345.0 million at September 30, 2024, and reflect the timing of closing saleable residential mortgage originations and any portfolio loan sales (which are temporarily moved to held for sale) completed during the quarter.

The Company continues to focus on growing its two main loan portfolios, AIO and MPP. Outside of these two portfolios, no other significant loans are being added to the loans held for investment portfolio. At September 30, 2025, virtually all of the loan portfolio was comprised of loans collateralized by residential property.

Total deposits were $4.77 billion at September 30, 2025, an increase of $295.6 million, or 26% annualized, compared to June 30, 2025 and an increase of $1.24 billion, or 35%, compared to September 30, 2024. The linked quarter increase was driven primarily by higher interest-bearing demand deposits as the Company completed its initiative to bring in a new custodial account relationship during the third quarter. As compared to September 30, 2024, the increase reflected a higher level of brokered CDs, along with increases in the Company's diversified digital deposit banking platform including non-interest bearing demand, interest-bearing demand, retail CDs and rateboard CDs, including the new custodial account relationship.

Total borrowings were $1.37 billion at September 30, 2025, an increase of $94.1 million compared to June 30, 2025 and an increase of $60.3 million compared to September 30, 2024. The increase for both compared periods was driven primarily by utilization of the Company's short-term line of credit borrowing facilities.

Asset Quality

The Company's allowance for credit losses was $12.3 million at September 30, 2025, $12.4 million at June 30, 2025 and $12.2 million at September 30, 2024. The allowance for credit losses represented 0.21% of loans held for investment at September 30, 2025, 0.23% of loans held for investment at June 30, 2025 and 0.28% of loans held for investment at September 30, 2024.

Net charge-offs were $977,000, or 7 basis points annualized as a percentage of average loans, for the third quarter of 2025. This compares to $488,000, or 4 basis points annualized as a percentage of average loans, for the second quarter of 2025, and $554,000, or 5 basis points annualized as a percentage of average loans, for the third quarter of 2024.

A substantial portion of the Company's non-performing loans are wholly or partially guaranteed by the U.S. Government, so asset quality metrics within this earnings release are shown with and without these guaranteed loans. Non-performing assets were $85.2 million at September 30, 2025 ($57.7 million excluding guaranteed loans), $87.1 million at June 30, 2025 ($58.5 million excluding guaranteed loans) and $81.9 million at September 30, 2024 ($44.7 million excluding guaranteed loans). Non-performing assets represented 1.25% of total assets at September 30, 2025 (0.85% excluding guaranteed loans), 1.35% at June 30, 2025 (0.91% excluding guaranteed loans) and 1.52% at September 30, 2024 (0.84% excluding guaranteed loans).

Capital

At September 30, 2025, the estimated capital levels for the Company and its subsidiary bank, Northpointe Bank (the "Bank"), remained well in excess of the minimum amounts needed for capital adequacy purposes and the Bank's capital levels met the necessary requirements to be considered "well-capitalized". The regulatory capital ratios as of September 30, 2025 are estimates, pending completion and filing of the Bank's regulatory reports.

Earnings Presentation and Conference Call

Northpointe will host its third quarter of 2025 earnings conference call on October 22, 2025 at 10:00 a.m. E.T. During the call, management will discuss the third quarter of 2025 financial results and provide an update on recent activities. There will be a live question-and-answer session following the presentation. It is recommended you join 10 minutes prior to the start time. Participants may access the live conference call by dialing 1-877-413-2414 and requesting "Northpointe Bancshares, Inc. Conference Call". The conference call will also be webcast live at ir.northpointe.com. An audio archive will be available on the website following the call.

Forward Looking Statements

Statements in this earnings release regarding future events and our expectations and beliefs about our future financial performance and financial condition, as well as trends in our business and markets, constitute "forward-looking statements" within the meaning of, and subject to the protections of, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not historical in nature and may be identified by references to a future period or periods by the use of the words "believe," "expect," "anticipate," "intend," "plan," "estimate," "project," "outlook," or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could," or "may." The forward-looking statements in this earnings release should not be relied on because they are based on current information and on assumptions that we make about future events and circumstances that are subject to a number of known and unknown risks and uncertainties that are often difficult to predict and beyond our control. As a result of those risks and uncertainties, and other factors, our actual financial results in the future could differ, possibly materially, from those expressed in or implied by the forward-looking statements contained in this earnings release and could cause us to make changes to our future plans. Factors that might cause such differences include, but are not limited to: the impact of current and future economic conditions, particularly those affecting the financial services industry, including the effects of declines in the real estate market, tariffs or trade wars (including reduced consumer spending, lower economic growth or recession, reduced demand for U.S. exports, disruptions to supply chains, and decreased demand for other banking products and services), high unemployment rates, inflationary pressures, increasing insurance costs, elevated interest rates, including the impact of changes in interest rates on our financial projections, models and guidance and slowdowns in economic growth, as well as the financial stress on borrowers as a result of the foregoing; uncertain duration of trade conflicts; potential impacts of adverse developments in the banking and mortgage industries, including impacts on deposits, liquidity and the regulatory rules and regulations; risks arising from media coverage of the banking and mortgage industries; risks arising from perceived instability in the banking and mortgage sectors; changes in the interest rate environment, including changes to the federal funds rate, which could have an adverse effect on the Company's profitability; changes in prices, values and sales volumes of residential real estate; developments in our mortgage banking business, including loan modifications, general demand, and the effects of judicial or regulatory requirements or guidance; competition in our markets that may result in increased funding costs or reduced earning assets yields, thus reducing margins and net interest income; legislation or regulatory changes which could adversely affect the ability of the consolidated Company to conduct business combinations or new operations; changes in tax laws; significant turbulence or a disruption in the capital or financial markets and the effect of a fall in stock market prices on our investment securities; the ability to keep pace with technological changes, including changes regarding maintaining cybersecurity and the impact of generative artificial intelligence; increased competition in the financial services industry, particularly from regional and national institutions; the impact of a failure in, or breach of, the Company's operational or security systems or infrastructure, or those of third parties with whom the Company does business, including as a result of cyber-attacks or an increase in the incidence or severity of fraud, illegal payments, security breaches or other illegal acts impacting the Company or the Company's customers; the effects of war or other conflicts; the impact of action or inaction by the federal government, including as a result of any prolonged government shutdown; and adverse results from current or future litigation, regulatory examinations or other legal and/or regulatory actions, including as a result of the Company's participation in and execution of government programs.

Therefore, the Company can give no assurance that the results contemplated in the forward-looking statements will be realized. Additional information regarding these and other risks and uncertainties to which our business and future financial performance are subject is contained in the sections titled "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" in the Company's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q on file with the U.S. Securities and Exchange Commission (the "SEC"), and in other documents that we file with the SEC from time to time, which are available on the SEC's website, http://www.sec.gov. Due to these and other possible uncertainties and risks, readers are cautioned not to place undue reliance on the forward-looking statements contained in this earnings release or to make predictions based solely on historical financial performance. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. All forward-looking statements, express or implied, included in this earnings release are qualified in their entirety by this cautionary statement.

About Northpointe

Headquartered in Grand Rapids, Michigan, Northpointe Bancshares, Inc. is the holding company of Northpointe Bank, a client-focused company that provides home loans and retail banking products to communities across the nation. Our mission is to be the best bank in America by bringing value and innovation to the people we serve. To learn more visit www.northpointe.com.