Northpointe Bancshares, Inc. (NPB) Earnings

Management highlights

- Overall Financial and Strategic Progress * Over the past 12 months, diluted year-to-date EPS increased 21%, tangible book value per share grew by over $2.25, new loans and deposits each grew 17%, and the wholesale funding ratio fell from 71% to 63% by adding new non-brokered funding sources * Q2 2026 GAAP net income to common stockholders was $21.3 million ($0.60 diluted EPS), with year-to-date 2026 diluted EPS of $1.22. Q2 return on average assets was 1.18% and return on average tangible common equity was 14.69% * Tangible book value per share increased 15% annualized quarter-over-quarter, and asset quality remains very strong: net charge-offs were $528,000 (3 basis points annualized ratio to average loans, well below long-term historical averages) with no systemic borrower issues across portfolios - MPP Business Growth and Strategy * MPP has been the largest catalyst of strong financial performance, with strong sustained demand and a healthy pipeline * The firm expanded its MPP participation program to partner financial institutions to manage balance sheet capacity within existing capital frameworks while optimizing revenue; 11 new partners/clients were added in Q2, with a strong pipeline of additional interested partners * As of Q2 end, $489.0 million in MPP balances had been participated out to partners, up from $412.7 million at the end of Q1 2026 - Retail Lending Strategy * The firm continues investing in technology and talent to grow residential originations, improve productivity, and remain profitable through all interest rate cycles * Four new experienced mortgage professionals were hired in existing markets in Q2 to drive growth; the firm is positioned to capture additional volume quickly if interest rates decline * Purchase mortgage activity grew 61% quarter-over-quarter, with a higher mix of higher-margin traditional retail originations in Q2 - Balance Sheet and Funding Strategy * The firm continues to prioritize growing non-brokered core deposits to reduce the wholesale funding ratio, which lowers FDIC insurance premiums; new funding partner relationships have been added successfully over the past year * Total assets grew to $7.5 billion as of Q2 end 2026, driven by MPP and AIO loan growth; the wholesale funding ratio was 63.09% as of Q2 end

Guidance

- Full-year 2026 net interest margin is guided to a range of 2.3% to 2.4%, maintained from prior guidance, with the forecast assuming no additional federal funds rate movements and funding costs remaining near current levels - Loan growth guidance is unchanged from the prior quarter: period-ending MPP balances are expected to reach $4.1 billion to $4.3 billion by year-end 2026, with an average of $300 million to $500 million participated out throughout the year; period-ending AIO balances are expected to increase by $900 million to $1.0 billion by year-end; the remainder of the loan portfolio is expected to decline to $1.9 billion to $2.1 billion by year-end - Full-year 2026 total provision expense is guided to a range of $2 million to $3 million; current trends point to provision expense landing near the bottom of the range, as credit quality remains stable with no material issues observed to date - Full-year 2026 saleable mortgage origination guidance is maintained at $2.2 billion to $2.4 billion, with all-in origination margins held at 2.75% to 3.25%, matching prior guidance; Q2 2026 margins landed in the mid-to-upper end of the guided range - Full-year 2026 MPP fee revenue is guided to $9 million to $11 million; full-year loan servicing fee revenue (excluding MSR fair value changes) is guided to $9 million to $11 million, with the quarterly run rate expected to continue increasing through the end of the year - Full-year 2026 non-interest expense guidance is maintained at $138 million to $142 million, unchanged from prior guidance

Segment performance

1. Mortgage Purchase Program (MPP): Ending Q2 2026 balances stood at $3.9 billion, a 36% increase year-over-year and a $77.3 million increase quarter-over-quarter. Average balances rose $477.5 million quarter-over-quarter, driving higher interest income. The segment added 11 new clients ($380 million in additional capacity) and expanded capacity for 6 existing clients ($265 million in additional capacity), with utilization increasing to 61% from 57% quarter-over-quarter. Average MPP yields were 6.35% (fee-adjusted 6.59%), down 24 basis points from the prior quarter due to lower SOFR and tighter spreads. MPP contributes the majority of the firm's loan growth and is a top financial performance catalyst. 2. Retail Banking: - Residential Lending: Closed $670.6 million in mortgages in Q2 2026, down slightly from $693.7 million in the prior quarter. Saleable volume was $572.5 million, down from $626.6 million quarter-over-quarter, as refinance share dropped to 27% from 59% while purchase volume rose 61% quarter-over-quarter. 81% of saleable originations came from the traditional retail channel, up from 61% in the prior quarter. This segment contributed 100% of the firm's third-party mortgage origination volume. - Digital Deposit Banking: Ended Q2 2026 with $5.2 billion in total deposits, with growth driven primarily by broker deposits. Year-over-year, non-interest-bearing demand deposits grew 30%, interest-bearing demand deposits grew 81%, and savings/money market deposits grew 45%. The segment contributes core deposit funding for loan growth. - Specialty Mortgage Servicing: The servicing portfolio grew 35% year-over-year. Excluding MSR fair value changes, the segment earned $2.4 million in loan servicing fees in Q2 2026, up from the prior quarter. As of Q2 2026, the segment services 16,200 loans with a total unpaid principal balance of $5.5 billion (including subserviced loans).

Risks & headwinds

- Increased competitive pressure in the MPP/warehouse lending space, with new entrants and existing competitors pushing for tighter spreads, particularly for larger lower-risk clients, which compressed MPP yields by 24 basis points in Q2 2026; management expects competitive pressure to persist in the second half of 2026 - Capital constraints limit period-ending MPP balance growth, as it has been five to six quarters since the firm last raised capital - Mortgage origination volumes and refinance activity are sensitive to interest rate movements; elevated rates have reduced refinance activity in Q2 2026 - Provision expense for full-year 2026 could shift from the guided range due to unforeseen changes in home prices, credit migration, economic forecasts, or credit model adjustments - Wholesale funding costs have risen back to recent levels after an early 2026 decline, and new non-brokered funding sources can carry higher costs than brokered funding, partially offsetting FDIC insurance savings - Geopolitical and macroeconomic risks could impact consumer spending, credit quality, and loan demand, despite current stable conditions

Analyst Q&A

• Q: What drove the Q2 2026 net interest margin decline, will competitive pressure on MPP yields persist, and are new competitors entering the warehouse lending space? /

  A: The primary driver of margin compression was lower MPP yields from increased industry-wide competitive pressure, while cost of funds remained flat overall and AIO yields (tied to CMT) increased slightly. Management notes competitive pressure will likely persist, but this dynamic was already baked into full-year margin guidance. Increased competition stems from new entrants targeting a largely stagnant overall market volume while Northport continues to grow substantially; MPP margins still remain above industry averages, and overall MPP growth and operating metrics remain strong.

• Q: What will be the main source of future MPP growth: new clients or expansion at existing clients, and how does capital constraint impact growth? /

  A: Period-ending MPP growth is softer sequentially in Q2 due to intentional capital constraint management, five to six quarters removed from the firm's last capital raise. While existing clients are still expanding capacity, the strongest pipeline of growth currently comes from new clients. The MPP participation program with partner institutions provides extra capacity to grow beyond the firm's own balance sheet limit, allowing continued growth while optimizing capital allocation.

• Q: What is the current Q2 2026 mortgage origination margin, and is full-year guidance still on track? /

  A: Q2 2026 origination margins landed in the mid-to-upper end of the 2.75% to 3.25% full-year guided range. Margins are supported by higher-margin non-QM and small-balance loan originations, and strong execution from the firm's capital markets team. Full-year guidance remains unchanged, assuming no major shifts in mortgage rates or the number of originators on staff.

• Q: Does a lower wholesale funding ratio improve FDIC costs and net margin, and will core deposit growth continue? /

  A: A lower wholesale funding ratio delivers a clear 15 to 20 basis point improvement in FDIC insurance costs, which flows through directly to P&L as lower non-interest expense. New non-brokered core deposits typically have similar or slightly higher funding costs than brokered deposits, so margin benefit is limited, but the FDIC savings offset any incremental funding cost increase. Management continues to actively pursue new core deposit funding relationships to hit long-term targets.