NorthPoint (NPB) 2026年第3四半期決算説明会：住宅ローン事業撤退、MPPの成長、2027年ガイダンス

主要ハイライト

• NorthPointの2026年第3四半期の純利益は1,390万ドル（希薄化後1株当たり0.39ドル）となり、2026年第2四半期の2,130万ドル（同0.60ドル）から減少した。
• 同社は、分散型リテールおよび消費者向け直接住宅ローン組成部門の売却に関して、CMG Financialとその関連会社との間で法的拘束力のない意向書（LOI）を締結した。経営陣は本取引が2026年第4四半期に完了すると見込んでいる。
• 第3四半期の業績には、金利感応度の高い3つの資産における合計430万ドルの公正価値下落と、一部の外部預金詐欺案件に関連する310万ドルの営業損失が含まれている。
• 期末の住宅ローン購入プログラム（MPP）残高は前四半期比で2億6,270万ドル増加した。経営陣はMPP残高について、2026年末に41億〜43億ドル、2027年末に47億〜50億ドルになると予想している。
• 第3四半期の純金利マージン（NIM）は2.32%であった。経営陣は2026年通期の見通しを2.3%〜2.4%に維持し、2027年には2.4%〜2.6%へ改善すると見込んでいる。
• 住宅ローン組成部門からの撤退により、年換算で5,000万〜5,500万ドルの経費削減が見込まれる。経営陣は、このコスト削減が伴う収益減少を上回り、純利益にプラスの影響をもたらすと述べている。

主要財務データ

事業および業績の動向

住宅ローン組成事業からの戦略的撤退

NorthPointは、現在の経済的・営業的圧力、住宅ローン販売チャネルの変化、同チャネルの固定インフラを支えるには取引量が不足していることが、売却提案に至った要因であると述べた。本契約は主に住宅ローンチームの売却と移行を対象としており、ローン、サービシング権、その他の主要資産は含まれていない。

同社はリソースをMPP、特定金融（スペシャルティ・ファイナンス）、リレーションシップ型預金、ポートフォリオ資産の組成、および特定サービシングへと振り向ける予定である。売却益収入は2026年第4四半期に大幅に減少する見込みで、2027年にはほぼ消失する見通しである。

住宅ローン購入プログラム（MPP）

平均MPP残高は前四半期比で2億3,720万ドル増加し、四半期の受取利息をさらに370万ドル押し上げた。NorthPointは1億8,500万ドルの枠を持つ新規顧客4社を追加し、既存顧客3社の与信枠を合計1億ドル拡大した。既存顧客の利用率は平均58%となった。

2026年9月30日時点で、NorthPointがパートナー銀行に提携参画（パーティシペーション）させたMPP残高は3億6,830万ドルとなり、6月30日時点の4億8,900万ドルから減少した。経営陣は平均利回りの低下について、特に大手の住宅ローン組成会社間での価格競争が一因であるとしている。なお、MPPの与信枠は1か月遅れて金利改定が行われる。

預金および特定サービシング

当四半期末の預金残高は2億1,040万ドル増の54億ドルとなった。無利息預金および利息付要求払い預金が増加したが、これはカストディ預金残高における通常の季節性を一部反映している。同社は、ブローカー預金や連邦住宅ローン銀行（FHLB）からの資金調達を優先し、定期預金、貯蓄預金、マネーマーケット預金の残高の一部を意図的に減少させた。

NorthPointは、サブサービサーが処理するローンを含め、未払い元本残高60億ドルに上る他社向け住宅ローン17,400件のサービシング業務を行った。住宅ローン組成部門からの撤退に伴い、自社バランスシート向けに新規の住宅ローン・サービシング権（MSR）を資本化することはなくなるが、特定サービシングの提携関係の推進は継続する。

ポートフォリオ資産の組成

NorthPointは9月30日、経過年数の長い（シーズンド）オールインワン（AIO）ローン8,540万ドル分を購入し、純バランスシート計上額は6,990万ドルとなった。これらのローンは2005年から2008年にかけて組成されたものである。経営陣によると、借入比率（LTV）が非常に低く、信用リスクは限定的である。平均表面利率（クーポン）は約5%だが、毎月の予想ディスカウント償却（アクレーション）を含めると約7.5%に上昇する。

経営陣は、住宅ローン業界における既存のネットワークや、選択的なローン・ポートフォリオの購入を通じて、追加のポートフォリオ資産を調達する計画である。

業績見通し（ガイダンス）

2026年の費用見通しには、売却提案に伴う再編費用（主退職金等の人件費）の見積もり600万〜700万ドル、および約80万ドルの減損損失が含まれている。経営陣は主に手数料、給与、福利厚生費から、年換算で5,000万〜5,500万ドルの費用削減を見込んでいる。

2027年のマージン見通しは、投資目的保有ローンのポートフォリオ構成の継続的改善、預金構成に大きな変更がないこと、および2027年序盤における25ベーシスポイント（bp）の追加利上げ1回を前提としている。

リスクと注目領域

• 売却は法的拘束力のない意向書段階にとどまるが、経営陣は2026年第4四半期での完了を予想している。
• 住宅ローン金利の上昇に伴い、住宅ローンの組成額、金利ロック、申込件数が減少したほか、シェア争いの激化により売却益マージンが縮小した。
• 平均預金コストの上昇が第3四半期のマージンを圧迫した一方、9月の利上げによるメリットは実施タイミングやMPP与信枠における1か月間の改定遅延により限定的となった。
• 外部の単発的な預金詐欺案件により、310万ドルの営業損失が発生した。連邦捜査局（FBI）を含む法執行機関が捜査を行っており、保険金の請求手続が進行中である。
• 不調資産（NPA）は890万ドル増加したが、経営陣はこの増加額の半数以上が重大な損失は見込まれない借入人2件によるものだと述べている。
• 2027年の引当金見通しには、信用格付けの推移（クレジット・マイグレーション）、経済予測の変更、または信用リスクモデルの更なる更新による潜在的影響は含まれていない。

アナリスト質疑応答のハイライト

経営陣は、見込まれるコスト削減額が喪失する収益を上回るため、住宅ローン組成事業からの撤退は長期的な利益改善につながると述べた。借り換え需要が回復した場合でも、NorthPointが分散型リテール住宅ローン組成事業に再参入することは現時点では想定していない。

同社は、売却目的保有ローンポートフォリオの縮小に伴い解放される資本を、MPPやその他のポートフォリオ資産へ再配分する方針である。経営陣は、当該ポートフォリオが2026年末までにわずかな規模になると予想している。

NorthPointは現時点で自社株買い計画を有していないが、ブラッドリー・ハウス最高財務責任者（CFO）は策定を進めており、今後数週間以内に詳細を発表できる見込みだと述べた。ただし経営陣は、利用可能な資本の大部分を事業成長に充てる方針である。

経営陣は2026年第4四半期について、税額控除の追加購入とその他の税務項目、およびその購入規模次第で、実効税率が約22%〜23%に抑えられる可能性があると指摘した。

決算説明会文字起こし全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Thank you. Welcome to the NorthPoint Earnings Conference Call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. Questions may be placed in the question queue at any time by pressing star 1 on your telephone keypad. As a reminder, this conference is being recorded. If anyone should require operator assistance, please press star 0 on your telephone keypad. It's now my pleasure to turn the call over to Brad Howes, CFO. Please go ahead, sir.

Bradley Howes

Good morning and welcome to NorthPoint's third quarter 2026 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 NorthPoint's Investor Relations website, ir.northpoint.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 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.

Bradley Howes

I'll turn the call over to Chuck.

Charles Williams

Thank you, Brad. Good morning, everyone, and thank you for joining. This quarter was an important one for NorthPoint and marks a significant step in the continued evolution of our business model. Last night we announced that we are entering into a non-binding letter of intent with CMG Financial and its affiliates to sell the distributed retail and consumer direct mortgage origination channels. This decision was not a reflection of the management or supporting teams in the residential lending division, which has helped contribute to NorthPoint's success over the years, but with today's economic and operating headwinds, and with the continued evolution of mortgage distribution channels, we have reached an inflection point that no longer made the business channel viable. Because of this, management and the board have made the difficult strategic decision to sell the channels. This allows us to refocus our strategic priorities towards businesses where we believe NorthPoint has the strongest competitive advantage and the greatest opportunity to create sustained long-term growth and sustainable franchise value for all stakeholders.

We have built a unique national platform that combines specialty finance and relationship-based banking across a broad mortgage ecosystem. As we evaluated the opportunities available across the franchise, it became increasingly clear that our greatest opportunities lie in expanding our MPP and specialty finance capabilities, client relationships, growing relationship-based deposits, and generating attractive portfolio assets in a more efficient manner. Importantly, we remain committed to the mortgage banking industry and we will continue to be a growth-oriented and customer-centric banking franchise, serving clients and communities across our national footprint. While the mortgage industry remains very challenging, we continue to take market share and demonstrate strong growth in our Mortgage Purchase Program or MPP business. We've increased total MPP balances by $2.5 billion from the end of 2024, and we believe our program remains an attractive alternative to traditional warehouse lending. I will cover the financial projections on this transaction and the current period results in more detail.

For the third quarter, we earned $13.9 million or $0.39 per diluted share. We have three significant fair value assets, which in aggregate move up or down based on a movement in long-term interest rates. Our results this quarter included a combined decrease in fair value of $4.3 million for those three assets based on the significant rate movements during the quarter. In addition, we had a $3.1 million operational loss related to an isolated external deposit fraud incident within our retail banking center, which we promptly addressed through strengthening procedures and additional controls. As we look ahead, our vision is clear. NorthPoint's future is centered on MPP specialty finance through strategic asset generation, relationship-driven banking, and deposit growth and specialty servicing. As we focus resources on the businesses where we are most differentiated, we believe we can expand client relationships and generate a more robust and stable earnings profile.

I'd like to turn the call over to Kevin to provide more details on our business lines.

Kevin Comps

Thanks, Chuck, and good morning, everyone. Let's start with the MPP business on slide 7. Compared to the prior quarter, period-ending MPP balances increased by $262.7 million and average balances increased by $237.2 million, resulting in $3.7 million quarterly increase in interest income within the channel. Let me break down the third quarter 2026 growth a bit further. First, we brought in four new clients, which totaled $185 million in additional capacity. Second, we increased facility size for three existing clients, which totaled $100 million in additional capacity. And third, the overall utilization of our existing clients remained strong, averaging 58% in the third quarter.

As discussed on prior calls, our MPP balances are net of any balances that we have participated of. At September 30, 2026, we have participated $368.3 million to our partner banks, which is down from $489.0 million at June 30, 2026. As we continue to optimize the balance sheet within our existing capital framework, average MPP yields were 6.27% and fee-adjusted yields were 6.49% during the third quarter of 2026. The quarterly decrease in average yield continues to reflect competitive pricing within the industry, especially with larger mortgage originators. Also, keep in mind that our yields in our MPP business reprice at a 1-month lag, so the benefit from the increase in SOFR is not reflected in our third quarter results. Turning now to retail banking, on slide 8, I'd like to highlight the results of the businesses within that segment. With the increase in mortgage rates, total residential mortgage originations decreased by 26% from the prior quarter level, and we saw a similar decline in locks and application volume. Gain on sale margins are also tightening given the competition for volume across the industry.

In the middle of slide 8, we look at our digital deposit banking channel, where we feature our direct-to-customer platform and competitive product suite. We ended the third quarter with $5.4 billion in total deposits, an increase of $210.4 million from the prior quarter. The record of these deposits is detailed in the appendix on slide 14. During the quarter, we saw a nice increase in non-interest-bearing demand deposits along with higher interest-bearing demand deposits driven by normal seasonality in our custodial deposit balances. These were partially offset by lower time and savings and money market deposits as we intentionally let some balances run down in favor of more attractive brokered and FHLB funding sources. Over the last year and a half, we've been successful in adding new funding partner relationships to help bolster core deposits and fund our planned growth. We have similar smaller relationships in the pipeline and will continue to look for more of these types of omnibus accounts.

On the right side of slide 8, we highlight our specialty mortgage servicing channel, where we focus on servicing first lien home equity lines tied seamlessly to demand deposit sweep accounts, including what we commonly refer to as AIO loans. Excluding the adjustment for the change in fair value of MSRs, we earned $2.6 million in loan servicing fees for Q3, up from the prior quarter. Including loans we outsourced to a subservicer, we serviced 17,400 loans for others with a total UPB of $6.0 billion as of the third quarter 2026, both up from the prior quarter level. With the planned sale of our residential lending mortgage origination channels, we will no longer be capitalizing new MSRs for our own balance sheet. We've had success adding new specialty servicing relationships and increased their portfolio over the past year, and that will remain our strategic focus. Turning lastly to asset quality on slide 9, net charge off decreased slightly to $429,000 in the third quarter of 2026. This represents an annualized net charge off ratio to average loan of 2 basis points, remaining well below long-term historical averages.

Non-performing assets increased by $8.9 million from the prior quarter, of which over half was from two borrowers, which we do not expect to incur any material losses on. Early-stage delinquent loans improved, with loans past due 31 to 89 days, down $5.7 million from the prior quarter level. I'd now like to turn the call over to Brad to cover the financials. All right. Thanks, Kevin.

Bradley Howes

I'd like to make two important points today before I begin. First, as I go through today's slide presentation, I will be incorporating full year 2026 and 2027 guidance into my commentary. And second, my guidance for both 2026 and 2027 includes the projected financial impact of the proposed sale of the distributed retail and consumer direct mortgage origination channels. The arrangement is primarily for the sale and transition of those teams and does not involve the sale or transfer of loans, servicing rights, or other material assets. I'll start with the income statement on slide 10. For the third quarter of 2026, we had net income to common stockholders of $13.9 million or $0.39 per diluted share. This compares to $21.3 million or $0.60 per diluted share for the second quarter of 2026. Our results in the third quarter included two notable items Chuck discussed, which had total pre-tax negative impact of $6.75 million. Net interest income increased by $1.2 million from the prior quarter, reflecting an increase in average interest earning assets of $157 million and a 1 basis point decrease in net interest margin. The linked quarter decrease in margin was primarily driven by higher average deposit costs, partially offset by higher average yields on loans, and an improvement in the funding mix. The 25 basis point increase in the federal funds rate occurred in mid-September, so we only received a limited yield benefit in the third quarter. Our two growth portfolios, MPP and AIO, both reprice on the short end of the yield curve.

However, MPP facilities do so on a 1-month lag, as Kevin highlighted. Brokered CD rates tend to reprice in advance of potential rate movements, which is what we saw this quarter. So we experience higher funding costs with limited yield benefit from the Federal Reserve rate increase. Since any additional rate changes, I'd expect to see a larger portion of the net interest margin benefit in the fourth quarter. Our third quarter net interest margin was 2.32%, and year-to-date, 2026, was 2.36%. I expect full year 2026 net interest margin to remain in the range of 2.3% to 2.4%, no change from my prior guidance. For full year 2027, I expect net interest margin to improve to between 2.4% and 2.6%. Guidance assumes continued improvement in the mix of loans within the held for investment portfolio and no significant changes to the current mix of deposits.

I also assume one additional 25 basis point Fed funds rate increase early in 2027. Turning to the loan portfolio, average interest earning assets increased nicely over the prior quarter level. That was driven by continued success and growth in MPP facilities, along with the purchase of $85.4 million in seasoned AIO loans which closed on September 30, 2026. We purchased these loans at a discount, resulting in net balances of $69.9 million on balance sheet. Loans were originated between 2005 and 2008, so they carry very low LTVs and extremely limited credit risk. Average coupon yield is around 5%, but when you factor in the baseline expected monthly discount accretion, that yield increases to around 7.5%. With the sale of the mortgage origination channels, we now shift our focus on generating attractive portfolio assets through existing client relationships and select opportunistic purchases.

The AIO pool is a great example of this. By shifting away from heavy fixed cost infrastructure, we believe we can generate loans with similar yields and credit risk at a lower overall cost. For 2026 loan guidance, I'd expect MPP balances to remain in the range of $4.1 billion to $4.3 billion by year end, although at the higher end of the range, as we have additional capital to leverage with the loans held for sale portfolio winding down. I'd also expect period-ending AIO and other consumer loan balances to remain in the range of $900 million to $1.0 billion by year-end. I'd expect the remainder of the loan portfolio to continue to decrease in the range of $1.7 billion to $1.8 billion by year end. This category includes loans held for sale balances, which should be insignificant by end of year.

For 2027 loan growth guidance, I'd expect MPP balances in the range of $4.7 billion to $5.0 billion by year end. This estimate is net of any balances we participate out, which remains an important part of our overall balance sheet and capital optimization strategy. I'd expect period-ending AIO and other consumer loan balances in the range of $1.3 billion to $1.5 billion by year-end. And I'd expect the remainder of the loan portfolio to continue to decrease through normal amortization in the range of $1.5 billion to $1.7 billion by year-end. Kevin provided details on our asset quality trends this quarter, which remained stable. We had total provision expense of $845,000 in the third quarter. This reflected net charge-offs of $429,000 and an increase in the allowance for credit losses, which was primarily attributable to higher forecasted loss rates resulting from an update to the credit models, partially offset by lower allowance from an improvement in qualitative factors. I'd expect total provision expense in the range of $1.1 million to $2 million for 2026.

For 2027, I'd expect total provision expense in the range of $5 million to $6 million, reflecting additional provisions related to stronger AIO and consumer loan growth. Additional provision expense or benefit related to credit migration trends, changes in the economic forecast, or other changes to the credit models are not part of my guidance. Non-interest income decreased by $9.6 million from the prior quarter and includes the impact from our three fair value assets. On the top of slide 15, we break out those three assets and their associated quarterly increases or decreases in fair value. As a reminder, these tend to move up or down with interest rates and are not part of my revenue guidance each quarter. On the bottom of slide 15 and in our earnings release tables, we provide further details on the components of our net gain on sale of loans. As you can see from the chart, third quarter net gain on the sale of loans included a $7.7 million decrease in fair value of the loans held for investment, and a $1.6 million decrease in fair value on the lender risk account with the Federal Home Loan Bank.

Excluding these items, net gain on the sale of loans would have been $11.5 million, which is down from $16.4 million on a comparable basis in the prior quarter. The decrease was driven primarily by lower saleable mortgage origination volume during the quarter. With the sale of the mortgage origination channels, there would be significantly lower gain on sale revenue in the fourth quarter of 2026 and virtually no revenue in 2027. I'd expect MPP fees in the range of $8 million to $9 million for the full year 2026. This is down slightly from prior guidance as we plan to add more balance sheet in the fourth quarter, resulting in lower participation balances and associated fees. For 2027, I'd expect MPP fees in the range of $8 million to $10 million for the full year. Excluding MSR fair value changes, loan servicing fees were $2.6 million for the quarter, up from the prior quarter. I'd expect loan servicing fees in the range of $9 million to $11 million for 2026, decreasing to $8 million to $10 million in 2027.

Non-interest expense was up $0.8 million from the prior quarter. Third quarter 2026 expense included $3.2 million related to the deposit fraud in our retail banking center. This was partially offset by lower salaries and benefits, primarily from lower variable compensation on mortgage production, along with lower bonus and incentive compensation. For full year 2026, I'd expect total non-interest expense in the range of $140 million to $146 million. This includes the projected $6 million to $7 million in restructuring charges related to the sale of the mortgage origination channels, permanently comprised of severance and other employee related expenses, along with an impairment charge of approximately $800,000 on the remaining intangible asset associated with the previous mortgage team acquisition. I project these restructuring charges will be partially offset by lower variable mortgage commission and bonus and incentive compensation expense. Turning to the expense guidance for 2027, we expect to complete the proposed transaction with CMG during the fourth quarter of 2026 and anticipate meaningful reductions to the expense base and approved operating leverage going forward.

I'd expect annualized expense savings in the range of $50 million to $55 million, with the bulk of which comprised of commissions, salaries, and benefits. The remainder would be made up of occupancy, technology, professional fees, marketing, and other expenses. For full year 2027, I'd expect total non-interest expense in the range of $80 million to $95 million, a significant decrease from 2026 levels, as we realized the majority of the expected expense savings from the sale of the mortgage origination channels. Turning to the balance sheet on slide 11, total assets increased to $7.7 billion at September 30, 2026, based on the growth in MPP and AIO balances during the quarter. Our wholesale funding ratio was 63.94% at September 30, 2026, up slightly from the prior quarter. We expect deposits to grow through a combination of brokered CDs, retail deposits, and other sources of non-brokered deposits where possible. Our effective tax rate was 24.43% for the third quarter of 2026, down from the prior quarter level.

During the quarter, we purchased $7.6 million in investment tax credits, which helped reduce our overall effective rate by roughly $600,000 in the quarter. That was mostly offset by higher estimated state taxes. We plan to buy additional tax credits in the fourth quarter of 2026 and in 2027, which should help lower the overall effective tax rate in both periods. Lastly, on slide 12, we outline our regulatory capital ratios, which are estimates pending completion of regulatory reports. The Board of Directors increased the regular quarterly cash dividend to $0.03 per share from $0.025 per share in the prior quarter. Looking forward, we have a significant opportunity to add new assets at a very attractive point in the yield curve. I'd expect we will continue to leverage any additional capital generated through retained earnings to grow our held for investment loan portfolio.

With that, we're happy to now take questions. Kevin, please open the line for Q&A.

Operator

Certainly. We will now be conducting a question and answer session. If you'd like to be placed into question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star 1. One moment please while we poll for questions. Our first question today is coming from Crispin Love from Piper Sandler. Your line is now live.

質疑応答

Crispin Love

Thank you. Good morning, everyone. First, Chuck, I hear you on focusing on other areas where you have competitive advantages, but just on the consumer mortgage sale, can you share why you believe right now is the right time to sell the business? It could be at the trough or near the trough of the mortgage environment, and also just what you gain from selling today.

Charles Williams

Yeah, I can answer that. This is Chuck. It's hard to predict whether we're in the trough or not. We've been at this business since the end of COVID, which some could argue has been in a trough for 4 years. And our team has been incredibly efficient over the last 4 years in making, you know, the business work in a very tough environment. And in the third quarter of this year, again, as I said in my opening statement, it's just an inflection point to where the volumes could no longer carry the infrastructure overhead. And I've said on many calls that we've been tremendously efficient, you know, over the last 4 years in, um, you know, the unit remaining profitable. But we, you know, could no longer see a path forward for the profitability on the base level overhead that it takes to run an efficient distributed retail operation.

Crispin Love

No, that's helpful. So do you think this is going to have a positive long-term impact to the earnings power of the full company from the sale?

Bradley Howes

Hey, Crispin, this is Brad. Yes, when you run the numbers that I just provided on my guidance, you know, we do believe there's a positive financial benefit. You know, we have the, you know, we kind of talk through the revenue items that will go away as well as the expense savings and the expense savings, you know, will be greater than the revenue losses. So that will result in a net overall P&L benefit. And as Chuck mentioned, you know, refocusing capital and resources on other divisions that are, really have the scale and leverage go a long way, I think longer term in generating additional, shareholder value and capital and earnings.

Crispin Love

Okay, great. Appreciate that, Brad. And then just one quick one for me. On the deposit fraud, can you share how many customers were impacted here and just confidence in getting that $3 million plus back?

Kevin Comps

Yes, this is Kevin. Um, we can't say too much on this topic, Crispin. We do have law enforcement involved, including the FBI, researching this. Um, and we also have a pending insurance claim. So we really can't say more than what we put in our release and said during our prepared remarks.

Crispin Love

Okay, I get that. I appreciate you taking the questions. Thank you.

Kevin Comps

Thanks, Crispin.

Operator

Thank you. Next question is coming from Damon DelMonte from KBW. Your line is now live.

Damon Del Monte

Hey, good morning guys. Thanks for taking my questions. Just hoping to kind of pull out a little bit more, follow around some of the strategic efforts to replace the lost income kind of over time. Sounds like, you know, you feel good about the MPP kind of line of sight going forward and that continuing to grow. Kind of curious on the AIO loans. I think those are generated from the retail division. And I know you did a purchase this quarter. So does that, like, book of business grow more from opportunistic purchases or does that, you know, is that something that you can still originate from the ongoing operations?

Bradley Howes

Yes, thanks Damon. This is Brad. So what I'd say, you know, we step back. We have, you know, the lost volume of the AIO business, which did generate from our retail channel to replace. We've also got, you know, capital associated with the loans held for sale portfolio. So our goal for 2026 and what is included in my prepared remarks and guidance is that we will replace both of those and potentially more. We're still very bullish on the asset class. I think the question really gets to the point of where are we going to source these.

And I point back to my remarks. We have relationships with a lot of mortgage lenders through our existing pipeline and MPP and relationships we've built through the years of being in the mortgage business. We've got a big Rolodex of investors, you know, places where we could source assets and I think it'll turn to, you know, our focus will be on exactly what you mentioned, you know, sourcing deals through existing client relationships. Um, as well as opportunistic acquisitions of loans or portfolios like you saw with the AIO purchase that we did. So it'll be through a combination of both of them. And we believe, you know, over time, this is a very cost-effective way to source very similar credit risk and yield profile. And, you know, again, low interest rate risk assets, similar to the way we do it today.

Damon Del Monte

Got it. That's helpful. Thank you. And then you kind of touched on capital associated with the held for sale portfolio. You maybe just give us a broader thought on capital management. I mean, is the excess capital going to continue to be allocated to supporting the MPP business or kind of, you know, would you consider doing a buyback kind of given where valuation is on the stock below tangible book value? Kind of curious on your thoughts around that. Yes.

Bradley Howes

Yes, I'll take this, Damon. This is Brad. So, you know, we look at all potential uses of capital when we evaluate these kinds of decisions. We have growth, you know, dividends and repurchases. And what I point out is our projections and where we sit today, we leverage most of that capital for growth. We don't have a ton of excess capital we're sitting on, but we do run internal models and we look at what's the best use of the overall capital and depending on where we trade, you know, with the stock as a percentage of a tangible book, the model could suggest, you know, or the other is is the route to go. So we evaluate all those. And what I'll tell you is that we are, we do not have a share repurchase plan today, but we are in the process of putting one together and we look forward to sharing more information on that over the next couple of weeks.

Damon Del Monte

The coming periods. Great. Okay. Uh, helpful. And then I guess the last question, um, you guys, you noted that you guys did, um, uh, purchase some, um, some tax credits this quarter, and it sounds like you might be doing more of that in the fourth quarter and in '27. Uh, just wondering if we get a little guidance on what you think, uh, reasonable effective tax rate would be as we look out in the coming quarters.

Bradley Howes

Yes, so I'll take that one, Damon, again, Brad. We did purchase $7.6 million this quarter, which I commented in my remarks, helped lower the overall effective rate. The value of that was about $600,000 that got offset by some increases in state taxes as we finished returns for last year. Going forward, I'd say I would expect in the fourth quarter we'll look at similar level if not more of tax credits and I, you know, I don't believe there should be any material offsets to that so I don't have an exact guidance for you, but if you look at the number we did in the third quarter and you take that and apply a little bit of an additional purchase on there, you know, that should get you to kind of a 22%, 23% effective tax rate, I think that's what we can provide today. And as we look out into next year, you know, we'll evaluate, you know, the potential earnings that we have in 2027, along with, you know, any possible carrybacks that we want to do and I'll provide more guidance on that I think in the coming quarters but we'll continue to do this and we find it a, you know, it's a very efficient use of liquidity there's no capital use and something we'll continue to look at.

Damon Del Monte

Great. Appreciate you taking and answering my questions. Thank you.

Bradley Howes

Thanks, Damon.

Operator

Thank you. As a reminder, that's star 1 to be placed into question queue. Our next question is coming from Christopher Marinac from Breen Capital. Your line is now live.

Christopher Marinac

Hey, thanks. Good morning. Just want to continue the capital question one more round. Um, what does capital look like at the end of, um, fourth quarter with the transaction, um, completed and I presume that you'll still incrementally grow just because of retained earnings as well.

Bradley Howes

Correct. Yes, we'll continue to grow through retained earnings. Really the only capital impact from the transaction that we discussed would be the wind down of the loans held for sale portfolio, which is sitting, you know, somewhere in the couple hundred million dollar range that'll wind down relatively over the quarter as we stop taking locks, uh, you know, midway through, um, I expect it to be insignificant at year end so we would generate, uh, that additional capital that we plan to leverage through, could be any part of our balance sheet, but we do plan to redeploy that capital into MPP or other existing assets that we can grow by year end.

Christopher Marinac

So if we use the capital ratios that are in the slides as a guidepost, can you run the business at a lower capital ratio because the risk is changing and because you're changing the structure of the company? Is that something that you're considering or kind of what should we think about that?

Bradley Howes

So I'd say we reevaluate our capital plan every year. That will be something we look at, whether it translates to additional, it's not a very risky measure, the loans held for sale book probably was a very small piece of the overall balance sheet, so I don't expect any material changes to what capital levels we can operate at. I'd expect us to continue to operate at similar levels to where you see us at today. There's not a ton of additional room. We leverage most of the capital that we have allocated to growth, and that's what I'd expect.

Christopher Marinac

2026 and then 2027 next year. Okay, great. That's helpful. Thank you for that. And then just back to the fraud issue. When you take this one, one issue out, how often do you have small operational losses that are small frauds that you just deal with it under normal course of business and kind of, is that number changing as we go forward? Yes.

Kevin Comps

Yes, so the industry always has some small level of operational losses. It's been insignificant historically, and I would expect it to be insignificant going forward. It's a simple answer.

Christopher Marinac

Okay, very well. And would you imagine that we'll get clarification on your insurance carriers in a couple quarters or would it take longer than that, do you think?

Kevin Comps

I can't anticipate the timeline there, but I would think it's reasonable to say we'd have that within a couple quarters.

Christopher Marinac

Great. And then back to selling the production arms, if we look out a couple of years and interest rates are different and perhaps the refinance opportunities come back, do you revisit this decision at a future date? And just curious from a strategic standpoint, would you circle back once again?

Charles Williams

Yes, one can never say never, but the plan would be, I mean, this has been a very, very thought has gone into this but it, we're, we're looking at turning our capital efforts and everything into a growing model. And that is in the MPP specialty servicing areas where we traditionally have, were growth areas for us. So, I would say that we wouldn't anticipate being in distributed retail in the future.

Christopher Marinac

Great, Chuck. Thank you for that. I appreciate it. And thanks for hosting us this morning.

Charles Williams

Thanks, Chris.

Operator

We've reached the end of our question and answer session. Ladies and gentlemen, that does conclude today's teleconference and webcast. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.

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