Greetings. Welcome to Northpointe Bancshares, Inc. Third Quarter 2025 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Brad Howes, CFO. Thank you. You may begin.

Thank you. Good morning, and welcome to Northpointe's Third Quarter 2025 Earnings Call. My name is Brad Howes, and I'm the Chief Financial Officer. With me today are Chuck Williams, our Chairman and CEO; and Kevin Comps, our President. Additional earnings materials, including the presentation slides that we will refer to on today's call, are available on Northpointe's Investor Relations website, ir.northpointe.com. As a reminder, during today's call, we may make forward-looking statements, which are subject to risks and uncertainties and are intended to be covered by the safe harbor provisions of federal securities law. For a list of factors that may cause actual results to differ materially from expectations, please refer to the disclosures contained within our SEC filings. We will also reference non-GAAP financial measures and encourage you to review the non-GAAP reconciliations provided in both our earnings release and presentation slides. The agenda for today's call will include prepared remarks, followed by a question-and-answer session and then closing remarks. With that, I'll turn the call over to Chuck.

Thank you, Brad. Good morning, everyone, and thank you for joining. Before I begin, I'd like to thank our Northpointe team for their incredible dedication and for their unwavering commitment to our clients and customers. The momentum that we have built across our business lines drove strong financial performance in the third quarter. That was highlighted by another quarter of very robust growth in our mortgage purchase program or MPP channel, which is our distinctive alternative to the traditional mortgage warehouse lending model. We also experienced solid performance in our residential lending channel, including increased mortgage block and application activity and a 23% annualized growth in our all-in-one loan portfolio. On the funding side, we benefited from a new core custodial deposit relationship that we announced to you at the last earnings call that drove approximately $300 million increase in interest-bearing demand deposits from the prior quarter, helping to bolster our core deposits. We continue to explore new opportunities to grow our non-brokered deposit base. This remains one of the bank's most important strategic priorities. Before I turn the call over to Kevin and Brad to dive into the details, I'd like to take a moment and share some highlights of our financial and operating performance. On Slide 4, we lay out our performance for the third quarter of 2025. For the quarter, we earned $20.1 million or $0.57 per diluted share. As you can see, we had a very strong performance ratios in the third quarter, highlighted by a 1.34% return on assets and 15.41% return on average tangible common equity. Let me start with an update on MPP. We saw another quarter of exceptional performance in the MPP business, ending the quarter at $3.4 billion in balances. This represents a balanced growth of $473 million from the prior…

Thanks, Chuck, and good morning, everyone. On Slide 5, we highlight our MPP business, which is our version of mortgage warehouse lending. We utilize our proprietary state-of-the-art technology stack to offer a purchase program to mortgage bankers nationwide. As Chuck highlighted, we experienced tremendous success in that business, carrying the strong momentum we've built from the third quarter. Period ending balances increased by $473.2 million or 65% annualized and average balances increased by over $400 million from the prior quarter. Let me break that down this quarter's growth a bit further. First, we increased facility size for 6 existing clients, which totaled $225 million in additional capacity. Second, there were 9 new clients brought in, which totaled $345 million in additional capacity. And third, the overall utilization of our existing clients remained strong. During the third quarter, we had average MPP participations of $8.7 million. As we've reiterated on prior calls, participations remain an important component of our overall strategy, allowing us to manage the balance sheet and expand net interest margin while driving higher fee income. We continue to generate very strong returns on the MPP business with average yields of 7.10% during the quarter. If you include fees, these yields increased to 7.30%. These are both up from the prior quarter levels of 7.07% and 7.23%, respectively. About 40% of the MPP portfolio reprices immediately and the remainder reprices on the 15th of each month. The 25-basis-point Fed funds rate decrease took place on September 17, so we will not see the complete impact on yields until the fourth quarter. Now turning to Retail Banking on Slide 6. I'd like to highlight the results of the 3 main businesses within that segment. Starting with Residential Lending, which includes both our traditional retail and our consumer direct channels, we…

Thanks, Kevin. One important note, as I go through today's slide presentation, I will be incorporating the remaining quarter of 2025 and full year 2026 guidance into my commentary. I'll begin on Slide 8. As a reminder, our non-GAAP reconciliation on Slide 14 provides details of the calculations and a reconciliation to the comparable GAAP measure for all our non-GAAP metrics. Net interest income increased by $3.8 million over the prior quarter. This reflected the growth in average balances, along with a 3-basis point improvement in net interest margin from the prior quarter. Our yield on interest-earning assets benefited from the continued improvement in the mix of loans within the held-for-investment portfolio, up 2 basis points from the prior quarter. We continue to experience strong growth in MPP and AIO loans, both of which carry higher average yields than the remainder of the loan portfolio. Our cost of funds was flat from the prior quarter. The slight decrease in our cost of interest-bearing deposits was offset by a slight increase in the cost of borrowings for the quarter. I'd expect to see more of an impact from the 25-basis-point Fed funds rate decrease in the fourth quarter, which happened on September 17. Our net interest margin was 2.47% for the third quarter. I'd expect us to stay in the 2.45% to 2.55% range for the full year 2025, but at the lower end of the range. For the full year 2026, I'm expecting the same 2.45% to 2.55% range, but that we would come in towards the higher end of that range. My guidance assumes continued improvement in the mix of loans within the HFI portfolio as well as 4 25 basis point Fed funds rate cuts in 2026, 1 per quarter. Average interest-earning assets increased by $465.6 million from…

[Operator Instructions] Our first question is from Crispin Love with Piper Sandler.

Just drilling a little bit deeper on the NIM trajectory. I heard you on the guide for '25 and '26, the 2.45% to 2.55% level, low end and then high end. But when you look near term and into the beginning of 2026, can you talk a little bit about how you would expect the NIM to trend off of the 2.47% level in 3Q, just as you think about it big picture, given the repricing dynamics and then expected Fed rate cuts?

Sure. So based on what we've seen, I kind of outlined the September rate cut, we're still looking at the impact of that, which we'll see in the fourth quarter. I'll reiterate, we are mostly asset neutral as most of our assets and liabilities reprice within 30 days. There is a little bit of a negative effect in the short term from I would say, a 25-basis point rate cut, but it's nothing significant. So my guidance as we look from the margin from today out into 2026, I think we'll see continued improvement in the mix based on the fact that loans in our legacy portfolio or our first mortgages have lower average yields between 4% or 5%. As those roll off, we replace them with loans that are yielding today 7% or so of MPP or AIO. So we have a continued improvement in the mix that will trend out throughout the course of 2026. So we see kind of small improvements to get us to the average of 245 to 255 but sort of at the top end of the range. When we see the rate cuts, there's always a lag on MPP loans as those don't reprice predominantly until the 15th. So we were able to pick up a little bit of benefit from margin on that. I think those are kind of the puts and takes into the guidance in 2026.

Great. I appreciate the color there. And then just with the recent move in mortgage rates, can you just discuss what you're seeing in the residential lending channel with volumes? And then what you might expect to see in the AIO product if mortgage rates continue to come down, how those volumes could trend just with that product all floating rate and the rate sensitivities there?

Sure. So I can start with how the lower rates are impacting our refinance production. So in September, we saw almost a 67% increase in closed refinance volume versus the prior month alone. And then September locks were 50% refi, which is more than double the prior month's level. And then specifically on AIO, the rate environment can affect AIO production, but the right borrowers, as we talked about previously as far as who that product is really geared towards, will still be drawn towards that product regardless of a small decrease in the rate environment.

And Crispin, if I could just add something on the 2026 forecast. So when I gave you the saleable mortgage origination volume and the balance sheet growth, those were all predicated on 4 short-term rate increases or decreases, I should say. But that mortgage rates don't come down very significantly, I think 30 to 40 basis points, which would be consistent with any of the industry expectations as we sit today.

[Operator Instructions] Our next question is from Damon DelMonte with KBW.

So just first question on the servicing portfolio. It looks like the UPB on loans serviced for others was up around $500 million this quarter. Any color on kind of what drove the increase?

So yes, we continue to ramp up our subservicing of the AIO-like products for various end investors. So we actually have added some additional new end investors with similar products over the last quarter. So we continue to ramp up that product specifically. And then we continue to retain some of our MSRs as we sell our own production into the market. So we'll slowly continue to build that, as Brad mentioned in his forecast.

Got it. And then with regards to the outlook for -- on deposit growth and adding more custodial accounts, obviously, a very sizable one came on in the third quarter. Do you think future relationships that you add would be of similar size? Or is this kind of a larger one that was out there and they'll be on a much smaller scale going forward?

Yes, Damon. So that was probably an outsized one to start with, but we definitely continue to look for additional sources of non-brokered funding, both with custodial and noncustodial sources of non-brokered funds.

Okay. Great. And then just lastly, on the expense guide, Brad, can you just go over your commentary on that? I didn't quite get all that.

Sure. So for the last quarter, for the fourth quarter this year, I'd expect our expense guidance to be similar to the third quarter level for total noninterest expense. For 2026, my guidance is $140 million to $144 million for the full year. The key drivers are going to be, I'd say, higher mortgage volume, you're going to have higher variable comp on that business with the increase that we projected in saleable mortgage originations and AIO growth. We have improvement in business activity, which drives higher bonus and incentive comp. We always have a cost of living adjustment, which occurs March, April from annual merits. And then we have just continued to build out and strengthen our team and continue to develop our status as a public company and making sure our risk management practices are solid.

This will conclude our question-and-answer session. I would like to turn the floor back over to Chuck Williams for closing remarks.

I want to thank everybody for joining today's call. Our results this quarter demonstrate the momentum we've gained as we continue to execute on our strategic plan. We remain nimble and opportunistic, focusing on delivering strong growth and long-term shareholder value while remaining diligent in our overall risk management. We appreciate all the trust and support for Northpointe. And with that, everyone, have a great day. Thanks again.

Thank you. This will conclude today's conference. You may disconnect at this time. Thank you for your participation.