NORTHPOINTE BANCSHARES INC Q1 FY2026 earnings call

• 2026 started well despite macroeconomic uncertainty, business model remains resilient.
• First quarter earned 62 cents per diluted share, return on average assets 1.28%, return on average tangible common equity 15.71%, tangible book value per share increased by over 16% annualized.
• MPP business had strong growth, with balances, loan funding, and new clients and existing client facility increases.
• Retail banking had residential lending, digital deposit banking, and specialty mortgage servicing updates on volumes, activity, and fees.
• Asset quality improved with net charge-offs down, non-performing assets and early-stage delinquent loans decreased, and pristine credit quality in MPP portfolio.

MPP business: Ended the quarter with MPP balances at 3.9 billion, an annualized growth rate of 51% over the prior period. Total loans funded through the channel was 11.2 billion for the quarter, with 4.6 billion funded in March, the highest volume month on record. Retail banking: Residential lending closed 693.7 million in mortgages in the first quarter, saleable volume was 6.266 billion, refinance activity made up 59% of the total saleable volume, mortgage rate lock commitments increased by 12% over the prior quarter, sold approximately 68% of the saleable mortgages serviced released. Digital deposit banking: Ended the fourth quarter with 5.1 billion in total deposits, majority growth driven by custodial deposit balances seasonality and brokered network deposits. Specialty mortgage servicing: Earned 2.2 million in loan servicing fees for Q1, flat from the prior quarter, serviced 15,900 loans for others with a total UPV of 5.2 billion.

• Net interest margin expected to be in 235 - 250 range for 2026, assuming continued improvement in loan mix and SOFR/funding costs at current levels.
• MPP balances expected to increase to between 4.1 and 4.3 billion by year end 2026, with 300 - 500 million on average participated out.
• AIO balances expected to increase to between 900 million and 1.0 billion by year end 2026.
• Rest of loan portfolio excluding MPP and AIO expected to decrease to between 1.9 and 2.1 billion by year end 2026.
• Total provision expense expected to be between 2 and 3 million for 2026.
• Total saleable mortgage originations forecasted to be 2.2 to 2.4 billion for 2026 with all-in margins of 2.75% to 3.25%.
• MPP fees expected to range between 9 and 11 million for 2026.
• Full year revenue from loan servicing fees expected between 9 and 11 million.
• Total non-interest expense expected to be in the range of 138 to 142 million for 2026.

• Macroscopic economic uncertainty may impact income.
• Interest rate volatility may affect asset values.

Q: Just on the net interest margin trajectory, did you reaffirm the guide and discuss the ramp throughout the remaining quarters?

A: Brad said guidance is based on rates not changing significantly, benefit from remaining quarters comes from continued improvement in loan mix as MPP and AIO loans grow and legacy assets run off.

Q: Did you reaffirm the 4.1 to 4.3 billion guide for MPP balances and discuss drivers and sustainability?

A: Kevin said growth includes existing clients expanding facilities, pipeline of potential clients, new clients added in Q1, pace may decelerate but growth continues.

Q: On capital and the $25 million of preferred to be called, is it doable with cash on hand?

A: Kevin said believe can do it now with models, part of purpose of sub-debt offering for flexibility in growth.

Q: On mortgage banking gain on sale this quarter, what was the margin?

A: Brad said margin was closer to the bottom end of the 2.75% - 3.25% range this quarter due to competitive pressures on conforming business.

Q: On wholesale funding ratio and digital channel customers' behavior, etc.

A: Kevin said wholesale funding ratio reduction mainly from custodial funds seasonality; Brad said digital channel customers behaved well with cost of deposits down; Kevin said growth of balance sheet's pledgeable assets gives liquidity and doesn't constrain growth mainly based on capital ratios.