NPB

Northpointe is a Grand Rapids bank whose real business is not branches (it has one) but a nationwide Mortgage Purchase Program — warehouse-style funding for independent mortgage bankers — plus consumer-direct and retail residential origination through 122 originators across 25 states. On the numbers this has been a standout: net income compounded from $33.8M (FY2023) to $55.2M (FY2024) to $83.4M (FY2025), a +51.2% YoY jump, on total assets up +34.4% to $7.02B, with a 14.7% ROE and operating cash flow up +123.6% to $44.3M. At $18.95 the stock trades at 9.0x FY diluted EPS of $2.11 and roughly 1.15x its $569M of equity — a genuinely modest multiple for a franchise generating mid-teens returns and growing this fast. Note too that diluted EPS rose only +15.3% versus the +51.2% net-income surge: that gap reflects the higher weighted-average share count from the February 2025 NYSE IPO (shares outstanding are essentially flat at 34.5M), so on today's share base the run-rate earnings power is arguably understated by the reported EPS — reinforcing the cheapness case rather than undercutting it.

The catch is quality and durability of those earnings, and the MD&A says so plainly. Management flags that results are driven by net interest income plus fee income — gain on sale of loans, MPP fees, servicing — and lists its own known trends: 'changes in residential mortgage origination volumes, interest rate levels and volatility, competition for deposits.' It explicitly warns that 'sustained changes in interest rates may affect net interest margin, mortgage refinancing activity, gain on sale revenue, customer deposit behavior, and the valuation of mortgage servicing rights.' In other words, the same rate/housing tailwind that produced a +51% earnings year can reverse; a mortgage-concentrated bank is far more cyclical than a diversified commercial lender, and the ACL, the FHLB lender risk account, and MSR marks are all named as critical, judgment-heavy estimates that can swing the P&L.