Northpointe Profit Falls to $13.9 Million on Valuation Losses, Fraud
Key Facts
Northpointe Bancshares reported profit available to common shareholders fell to $13.9 million in the third quarter of 2026, as interest rate-related valuation losses and external deposit fraud weighed on results. Diluted earnings per share were $0.39, according to the company's statement released after the market closed on October 20. The company had reported profit available to common shareholders of $21.3 million in the second quarter of the same year. Profit in the corresponding period of 2025 was about $20.1 million, marking a decline on both a quarterly and annual basis. According to Investing.com, analysts had estimated earnings of $0.60 per share and revenue of $64.03 million.
The company attributed some of the pressure on its results to higher interest rates and their effect on the valuation of assets tied to its mortgage business. The combined fair value of loans held for investment and the lender risk account declined by $9.3 million during the quarter, according to the earnings statement. Meanwhile, the value of mortgage servicing rights rose by $5.0 million, partially offsetting the valuation losses. Alongside these fair-value changes, the bank incurred an operating loss of $3.1 million from external deposit fraud. The company said it had notified its insurers of the incident to seek reimbursement for the loss recorded during the period.
In its interest business, net interest income before provisions totaled $43.7 million in the third quarter, according to Northpointe's statement. The net interest margin was 2.32% during the same period. The company said higher deposit costs weighed on the margin, putting pressure on this part of its banking business. In mortgage finance, mortgage purchase program balances rose by $262.7 million from the previous quarter. Growth in program balances coincided with a decline in reported profit, which was also affected by valuation changes and the fraud-related operating loss.
In a shift in its mortgage origination business, the company announced it had signed a letter of intent to sell channels within that business to CMG Financial and its affiliates. The channels covered by the proposed sale include distributed retail and direct-to-consumer mortgage origination. Northpointe described the document in its statement as a "nonbinding letter of intent," making it a preliminary step toward a sale. Northpointe Bancshares is a bank holding company based in Grand Rapids, Michigan, in the United States. The company operates primarily through Northpointe Bank, its wholly owned subsidiary, according to its business description.
In trading before the earnings announcement, NPB shares closed at $15.78 in the October 20 session, according to EL7 data. The stock had closed at $15.32 in the October 19 session, putting its next close above the previous session's level. The earnings announcement came after trading ended on October 20, in line with the bank's scheduled disclosure time. On dividends, the board announced an increase in the quarterly cash dividend to $0.03 per common share. The previous quarterly cash dividend was $0.025 per share, according to the company's dividend increase statement.
The bank scheduled its earnings call with investors for October 21, 2026, starting at 10:00 a.m. U.S. Eastern Time. As its next operational step, Northpointe estimates restructuring costs associated with the announced changes at between $6 million and $7 million. The company expects to record most of these costs in the following quarter, according to its earnings statement. The announced quarterly cash dividend is scheduled to be paid on November 4, 2026. Shareholders of record on October 15, 2026, are eligible for the dividend, according to the board's statement.