The $91 million Northpointe Bancshares Inc. netted in a private stock placement will help support further growth through mid-decade.
Grand Rapids-based Northpointe had a record year in 2020 and roughly doubled the amount of mortgages written annually in a typical year as low interest rates drove home sales and refinancings. Primarily a mortgage lender, Northpointe Bank wrote “just shy” of $15 billion in mortgages in 2020, roughly split between home purchases and homeowners that refinanced existing mortgages, said President and CEO Charles Williams.
Northpointe’s assets have grown in recent years from about $700 million to nearly $3.5 billion, Williams said.
“We’ve had tremendous growth over the last couple of years,” said Williams, calling 2020 a “banner year because of the low interest rate environment.”
The capital raised through the private share placement with institutional investors that closed at the end of December should take Northpointe through 2025, Williams said.
“We were in the right place at the right time in 2020, and we think that that’s going to continue for the foreseeable future,” he said. “Business has been very robust and the capital raise is going to allow us to be able to continue that for years to come.”
Piper Sandler & Co. and Performance Trust Capital Partners LLC served as placement agents for Northpointe Bank.
Northpointe, which last raised capital in 2019 through a $25 million private placement, has about 55 loan production offices in 24 states, plus a single full-service bank office in Grand Rapids, with a total workforce of about 1,100 people.
Northpointe Bancshares in 2018 acquired Home Point Financial in Ann Arbor, a subsidiary of Home Point Capital LP. The deal included acquiring mortgage offices that were primarily in Ohio, New Jersey, Pennsylvania, Rhode Island and Connecticut and extended Northpointe Bank’s residential lending business into the northeastern U.S. The bank today writes mortgages in all 50 states, Williams said.
Should the right opportunity arise that makes sense and with “quality” mortgage lenders, Northpointe would consider opening additional offices, although new locations are not in the bank’s plans, he said.
“The plan is to continue measured, quality growth,” Williams said. “Quality is far more important to us than quantity.”
Outlooks project the housing market across the U.S. to remain strong through 2021 and interest rates to stay low, driving business for mortgage lenders such as Northpointe.
Realtor.com predicts existing home sales in the U.S. to grow 7 percent this year and single-family housing increasing 9 percent. Mortgage rates will average 3.2 percent through 2021, according to a housing forecast Realtor.com issued in early December. The average price of a new home should increase 5.7 percent in 2021, after rising 7 percent in 2020.
In the Grand Rapids-area housing market, Realtor.com predicts existing home sales to grow 9 percent this year and prices to increase 3.6 percent over 2020.
Colliers International noted in a recent real estate outlook that residential was among the market sectors that was successful through the pandemic. The Grand Rapids-area housing market should remain tight through 2021.
“Locally, a lot of the easy, low-hanging fruit from a development side has been picked through already. We have some struggles ahead of us in delivering enough housing,” Matt Jones, an associate vice president at Colliers’ West Michigan office, said during a virtual forecast event last month.
Comerica Inc.’s most recent U.S. economic outlook issued Jan. 11 projects an 8.7-percent increase in housing starts in 2021 and for the sales of existing single-family homes to grow more than 18 percent to 6 million. Interest rates for 30-year, fixed-rate mortgages should average 2.68 percent in 2021, according to Comerica’s forecast.
The National Association of Realtors forecasts home prices to increase 8 percent nationwide and 30-year mortgage rates to average 3 percent this year and 3.25 percent in 2022.