Northpointe Bancshares Q1 Earnings Call Highlights
by Amy Steele · The Cerbat GemNorthpointe Bancshares (NYSE:NPB) reported first-quarter 2026 results that management characterized as a strong start to the year, citing profitability, mortgage-related growth, and improving asset quality despite macroeconomic uncertainty.
Quarterly performance and profitability
Founder, Chairman, and CEO Charles Williams said the company earned $0.62 per diluted share in the quarter, generating a 1.28% return on average assets and a 15.71% return on average tangible common equity. Williams added that, after factoring in dividends paid, tangible book value per share increased by over 16% annualized from the prior period.
Executive Vice President and CFO Brad Howes reported net income to common stockholders of $21.7 million, matching the $0.62 per diluted share figure discussed by Williams. Howes said net interest income declined $2.21 million from the prior quarter as net interest margin fell nine basis points, partially offset by $47.6 million of growth in average interest-earning assets.
Howes attributed pressure on earning-asset yields primarily to lower loan yields, noting that many Mortgage Purchase Program (MPP) facilities are tied to SOFR, which was down almost 40 basis points on average versus the prior quarter. He also said the company’s cost of funds decreased 13 basis points, reflecting a 25 basis point federal funds rate cut in December 2025.
Mortgage Purchase Program growth remains a key driver
Management repeatedly pointed to the MPP business as a key contributor to performance. Williams said MPP balances ended the quarter at $3.9 billion, representing 51% annualized growth over the prior period, and that total loans funded through the channel were $11.2 billion during the quarter. He compared that with $6.7 billion in loans funded in the first quarter of 2025, and highlighted that March funding of $4.6 billion was the highest monthly volume on record.
President Kevin Comps said period-ending MPP balances increased $435.7 million from the prior quarter, while average balances rose $59.3 million, with most of the balance growth occurring later in the quarter. At March 31, the company had $412.7 million of MPP balances participated out to partner banks, down slightly from Dec. 31.
Comps detailed the quarter’s MPP capacity additions:
- Eight new clients added, totaling $205 million in additional capacity
- Facility size increases for 11 existing clients, totaling $465 million in additional capacity
- Average utilization of existing clients was 57%
He said average MPP yields were 6.59%, with fee-adjusted yields at 6.82%. The average yield declined 39 basis points from the prior quarter, which Comps said was consistent with the decline in SOFR.
During the Q&A, Comps told Piper Sandler’s Crispin Love that growth drivers included continued facility expansions among existing clients, a pipeline of potential new clients, and a seasonal expectation of increased mortgage activity during the summer buying season. He also noted that the pace of adding new clients may moderate versus the period following the IPO, when the company had a large backlog of prospective clients coming onboard.
Residential lending activity, deposits, and servicing
Within retail banking, Comps said the company closed $693.7 million in mortgages during the first quarter, down from $762.0 million in the prior quarter. Saleable volume was $626.6 million, with 39% in the consumer direct channel and 61% in traditional retail. By comparison, fourth-quarter 2025 saleable volume was $671.3 million, with 35% consumer direct and 65% traditional retail.
Refinance activity represented 59% of total saleable volume in the quarter, up from 51% in the fourth quarter of 2025. Comps said modest declines in mortgage rates in both quarters spurred additional refinancing, adding that a 25–50 basis point rate decline can drive incremental refinance activity. He also reported that mortgage rate lock commitments increased 12% from the prior quarter, driven by refinancing, while purchase activity was down modestly.
Comps said the company sold approximately 68% of its saleable mortgages servicing-released during the quarter, down from 79% in the prior quarter. He added that Northpointe hired seven new mortgage professionals in two new markets during the first quarter.
On deposits, Comps said the company ended the quarter with $5.0 billion in total deposits, up from the prior quarter. He attributed most of the increase to seasonality in custodial deposit balances and higher levels of brokered network deposits, which he said carried more attractive rates than brokered CDs. In response to Brean Capital’s Christopher Marinac, Comps added that the All-in-One (AIO) product’s checking-account sweep structure was not a driver of the reduction in the wholesale funding ratio, pointing instead to seasonal swings in custodial funds tied to mortgage servicing-related activity.
In mortgage servicing, Comps said the company earned $2.2 million in loan servicing fees in the first quarter excluding changes in the fair value of mortgage servicing rights (MSRs), flat from the prior quarter. Including loans outsourced to a sub-servicer, the company serviced 15,900 loans for others with $5.2 billion of unpaid principal balance as of quarter-end.
Asset quality trends and balance sheet positioning
Comps said asset quality metrics improved during the quarter and that the company was not seeing systemic credit quality issues across portfolios. Net charge-offs were $266,000, down from $1.2 million in the prior quarter, representing an annualized net charge-off ratio of two basis points to average loans. Total non-performing assets fell $2.0 million from the prior quarter, and loans 31 to 89 days past due declined $6.5 million.
Comps also emphasized that at March 31, MPP represented 58% of all loans and that the company continued to see “pristine credit quality” in that portfolio. He said virtually all loans are backed by residential real estate, and cited residential mortgage portfolio characteristics including an average FICO of 752, average LTV of 72% (including mortgage insurance), and average debt-to-income ratio of 35%.
Howes reported a $445,000 benefit for credit losses in the first quarter and updated his expectation for full-year 2026 total provision expense to $2 million to $3 million, driven by replenishment of net charge-offs and growth in MPP and AIO loans.
On the balance sheet, Howes said total assets increased to $7.4 billion at March 31, reflecting strong MPP growth. The wholesale funding ratio was 62.94%, down from 64.60% in the prior quarter due to deposit growth.
Updated guidance and capital actions
Howes said he was lowering the company’s expected 2026 net interest margin range slightly to 2.35% to 2.50%, based on an assumption that SOFR and funding costs remain near current levels and that there are no additional Fed funds rate cuts in 2026. In response to Piper Sandler’s Love, Howes said anticipated improvement in margins over the remaining quarters is expected to come primarily from a better loan mix as MPP and AIO grow while legacy lower-yielding assets run off.
Howes reaffirmed loan growth expectations, including MPP balances reaching $4.1 billion to $4.3 billion by year-end 2026, with $300 million to $500 million participated out on average over the year. He also reiterated expectations for period-ending AIO balances to grow to $900 million to $1.0 billion by year-end, while the remainder of the loan portfolio (excluding MPP and AIO) is expected to decline to $1.9 billion to $2.1 billion.
For mortgage banking, Howes forecast total saleable mortgage originations of $2.2 billion to $2.4 billion in 2026 with all-in margins of 2.75% to 3.25%. In response to KBW’s Damon DelMonte, Howes said first-quarter margins were closer to the bottom end of that range, citing competitive pressure in conforming mortgages and more entrants in the non-QM space.
Howes also guided to full-year 2026 MPP fees of $9 million to $11 million, and said he expects loan servicing revenue (excluding MSR fair value changes) to increase through the year, with full-year revenue between $9 million and $11 million. Non-interest expense rose $658,000 from the prior quarter, driven primarily by salaries and benefits tied to bonus and incentive compensation. For the full year, Howes maintained non-interest expense guidance of $138 million to $142 million.
On capital, Howes said the company completed a private placement of $20 million of fixed-to-floating rate subordinated notes. He said the additional capital provides flexibility if growth exceeds expectations and in connection with $25 million of Series B preferred stock that management anticipates calling prior to year-end. In response to DelMonte, Howes said the company believes it can call the preferred with existing resources and that the sub debt issuance was intended to support growth flexibility and reduce reliance on potentially variable market conditions later in the year.
Howes reported the effective tax rate was 24.72% in the first quarter, reflecting additional income tax expense related to non-deductible tax rules for publicly traded companies, and said he expects the 2026 run rate to be in line with that.
About Northpointe Bancshares (NYSE:NPB)
Northpointe Bancshares, Inc is the bank holding company for Northpointe Bank, an FDIC-insured community bank based in Michigan. The company offers a full range of commercial and consumer banking solutions, serving retail, small business and corporate clients through both a physical branch network and digital platforms.
Northpointe Bank’s product suite includes interest-bearing checking and savings accounts, money market and certificate of deposit offerings, as well as residential mortgage lending, home equity financing and unsecured consumer loans.