Northrim BanCorp Earnings Increase to $12.2 Million, or $1.94 Per Diluted Share, in First Quarter 2021
Northrim BanCorp (NASDAQ:NRIM) reported record earnings for Q1 2021 with a net income of $12.2 million or $1.94 per diluted share, marking a 21% increase from the previous quarter. This growth was supported by robust Home Mortgage Lending and the Small Business Administration's PPP loans, totaling $204 million this quarter. Notably, the provision for credit losses was a benefit of $1.5 million, reflecting improved economic conditions. Total deposits surged 47% year-over-year, reaching $2.05 billion. The company's return on average assets (ROAA) was 2.25% with a return on average equity (ROAE) of 21.40%.
- Net income increased to $12.2 million, up 21% from the previous quarter.
- Total deposits rose 47% year-over-year to $2.05 billion.
- Benefit to provision for credit losses of $1.5 million indicates improved economic conditions.
- ROAA at 2.25% and ROAE at 21.40% are significantly above peer averages.
- Net interest margin (NIMTE) decreased to 3.92%, down from 4.37% a year ago.
- Nonperforming loans increased to $13.0 million compared to $10.0 million in the previous quarter.
ANCHORAGE, Alaska, April 26, 2021 (GLOBE NEWSWIRE) -- Northrim BanCorp, Inc. (NASDAQ:NRIM) (“Northrim” or the "Company") today reported net income of
Continued high levels of production in the Home Mortgage Lending segment, continued loan and core deposit growth, and fee and interest income from the Small Business Administration's ("SBA") Paycheck Protection Program ("PPP") loans contributed to profitability for the quarter. Also benefiting first quarter results was a
“Northrim’s record first quarter results were fueled by strong production in mortgage banking operations and the continued success of our outreach to new and existing customers, as we all navigate through the economic impact of the pandemic,” said Joe Schierhorn, President and CEO. “Over the past year we have been active participants in the SBA’s PPP lending programs, helping our new and existing business customers sustain their business operations. Under the initial program, we helped approximately 2,900 businesses receive
COVID-19 Issues:
- Industry Exposure: Northrim has identified various industries that may be adversely impacted by the COVID-19 pandemic and the significant decline in oil prices that occurred in 2020. Though the industries affected may change through the progression of the pandemic, the following sectors for which Northrim has exposure, as a percent of the total loan portfolio excluding SBA PPP loans as of March 31, 2021, are: Healthcare (
8% ), Tourism (7% ), Oil and Gas (6% ), Aviation (non-tourism) (5% ), Accommodations (3% ), Retail (3% ) and Restaurants (3% ).
- Customer Accommodations: The Company has implemented assistance to help its customers experiencing financial challenges as a result of COVID-19 in addition to participation in PPP lending. These accommodations include interest only and deferral options on loan payments, as well as the waiver of various fees related to loans, deposits and other services. The number of loans with modifications has decreased significantly since June 30, 2020, with approximately
98% of the modifications at March 31, 2021, representing 5 relationships. The total outstanding principal balance of loan modifications due to the impacts of COVID-19 as of March 31, 2021, December 31, 2020, September 30, 2020, and June 30, 2020 were as follows:
| Loan Modifications due to COVID-19 as of March 31, 2021 | |||||||||
| (Dollars in thousands) | Interest Only | Full Payment Deferral | Total | ||||||
| Portfolio loans | $ | 65,201 | $ | 23,096 | $ | 88,297 | |||
| Number of modifications | 21 | 9 | 30 | ||||||
| Loan Modifications due to COVID-19 as of December 31, 2020 | |||||||||
| (Dollars in thousands) | Interest Only | Full Payment Deferral | Total | ||||||
| Portfolio loans | $ | 43,379 | $ | 22,165 | $ | 65,544 | |||
| Number of modifications | 23 | 11 | 34 | ||||||
| Loan Modifications due to COVID-19 as of September 30, 2020 | |||||||||
| (Dollars in thousands) | Interest Only | Full Payment Deferral | Total | ||||||
| Portfolio loans | $ | 46,056 | $ | 74,337 | $ | 120,393 | |||
| Number of modifications | 16 | 59 | 75 | ||||||
| Loan Modifications due to COVID-19 as of June 30, 2020 | |||||||||
| (Dollars in thousands) | Interest Only | Full Payment Deferral | Total | ||||||
| Portfolio loans | $ | 64,298 | $ | 293,224 | $ | 357,522 | |||
| Number of modifications | 76 | 403 | 479 | ||||||
Consumer loans represent less than
- Provision for Credit Losses: Northrim booked a benefit for credit loss provisions of
$1.5 million for the quarter ended March 31, 2021. This compares to a benefit for credit loss provisions of$599,000 during the previous quarter and a$2.1 million provision for credit losses in the first quarter a year ago. The provision for the current quarter was recorded using the CECL methodology and reflects expected lifetime credit losses on loans and off-balance sheet unfunded loan commitments. The decrease in the provision for credit loss in the first quarter of 2021 is primarily the result of the improvement in economic assumptions used to estimate lifetime credit losses, which was only partially offset by an increase in the provision for unfunded commitments resulting from an increase in unfunded commitments.
- Credit Quality: Net adversely classified loans improved slightly to
$16.9 million at March 31, 2021, compared to$17.4 million in the first quarter a year ago. Net loan recoveries were$44,000 in the first quarter of 2021, compared to net loan charge offs of$131,000 in the first quarter of 2020.
- Branch Operations: No branch operations are limited as a result of COVID-19, while a number of customer and employee safety measures continue to be implemented.
- Growth and Paycheck Protection Program:
- Over the last twelve months, Northrim funded a total of 5,025 PPP loans totaling
$579.6 million to both existing and new customers. Of this amount, 2,125 loans totaling$204.0 million were originated during the first quarter of 2021 through the second round of PPP funding. - As of March 31, 2021, the second round of PPP resulted in 459 new customers totaling
$21.3 million in PPP loans, no non-PPP loans, and$10.4 million in new deposit balances. - PPP round one and two has resulted in 1,844 new customers, with non-PPP loan balances of
$26.6 million and deposit balances of$97.4 million as of March 31, 2021. - Management estimates that we funded approximately
27% of the number and34% of the value of all Alaska PPP second round loans for the quarter ending March 31, 2021. - As of March 31, 2021, Northrim customers had received forgiveness through the SBA on 1,704 PPP loans totaling
$170.1 million , of which 1,167 PPP loans totaling$105 million were forgiven in the first quarter of 2021. - The Company initially utilized the Federal Reserve Bank's Paycheck Protection Program Liquidity Facility to fund PPP loans, but paid back those funds in full during the second quarter of 2020 and has since funded the SBA PPP loans through core deposits and maturity of long-term investments.
- Over the last twelve months, Northrim funded a total of 5,025 PPP loans totaling
- Capital Management: At March 31, 2021, the Company’s tangible common equity to tangible assets* ratio was
9.22% and the capital of Northrim Bank (the "Bank") was well in excess of all regulatory requirements. During the first quarter of 2021, the Company repurchased 61,399 shares of common stock at an average price of$36.02 .
First Quarter 2021 Highlights:
- For the first quarter of 2021, total revenue increased
60% to$35.4 million , compared to$22.1 million in the first quarter of 2020, and decreased compared to$37.0 million in the fourth quarter of 2020.- Community Banking provided
59% of total revenues and61% of earnings in the first quarter of 2021. - Home Mortgage Lending provided
41% of total revenue and39% of earnings in the first quarter of 2021.
- Community Banking provided
- Net interest income in the first quarter of 2021 was
$19.5 million , up1% from$19.2 million in the preceding quarter and up24% from$15.7 million in the first quarter a year ago. - Net interest margin on a tax equivalent basis (“NIMTE”)* was
3.92% in the first quarter of 2021, a 4-basis point contraction compared to the preceding quarter, and a 45-basis point contraction compared to the first quarter a year ago. - Return on average assets ("ROAA") was
2.25% and return on average equity ("ROAE") was21.40% for the first quarter of 2021 compared to ROAA of0.25% and ROAE of2.00% for the first quarter of 2020. - Net loans increased
45% to$1.53 billion at March 31, 2021, compared to$1.06 billion at March 31, 2020, and increased8% compared to$1.42 billion at December 31, 2020. - Total deposits increased
47% to$2.05 billion at March 31, 2021, compared to$1.40 billion at March 31, 2020, and increased12% compared to$1.82 billion at December 31, 2020. - The Company's wholly owned subsidiary, Residential Mortgage, LLC, generated a
$133 million increase in production during the quarter ended March 31, 2021, as compared to the same period in 2020. - The mortgage servicing right asset increased by
$439,000 for the quarter ended March 31, 2021, compared to a decrease of$629,000 for the preceding quarter and a decrease of$267,000 for the first quarter a year ago. The increase in the first quarter of 2021 is the result of the value of newly originated servicing rights exceeding the value of servicing rights that were removed from the balance sheet as those loans were paid off.
| Financial Highlights | Three Months Ended | ||||||||||||||
| (Dollars in thousands, except per share data) | March 31, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | ||||||||||
| Total assets | $ | 2,351,243 | $ | 2,121,798 | $ | 2,097,738 | $ | 2,016,705 | $ | 1,691,262 | |||||
| Total portfolio loans | $ | 1,548,924 | $ | 1,444,050 | $ | 1,492,720 | $ | 1,433,201 | $ | 1,081,873 | |||||
| Average portfolio loans | $ | 1,492,906 | $ | 1,489,029 | $ | 1,465,839 | $ | 1,342,717 | $ | 1,059,023 | |||||
| Total deposits | $ | 2,051,317 | $ | 1,824,981 | $ | 1,806,133 | $ | 1,737,359 | $ | 1,395,492 | |||||
| Average deposits | $ | 1,894,868 | $ | 1,820,251 | $ | 1,750,167 | $ | 1,620,008 | $ | 1,359,206 | |||||
| Total shareholders' equity | $ | 231,452 | $ | 221,575 | $ | 214,616 | $ | 206,923 | $ | 197,723 | |||||
| Net income | $ | 12,181 | $ | 10,100 | $ | 11,855 | $ | 9,900 | $ | 1,033 | |||||
| Diluted earnings per share | $ | 1.94 | $ | 1.59 | $ | 1.84 | $ | 1.52 | $ | 0.16 | |||||
| Return on average assets | 2.25 | % | 1.90 | % | 2.31 | % | 2.04 | % | 0.25 | % | |||||
| Return on average shareholders' equity | 21.40 | % | 18.22 | % | 22.10 | % | 19.44 | % | 2.00 | % | |||||
| NIM | 3.90 | % | 3.94 | % | 3.90 | % | 3.98 | % | 4.32 | % | |||||
| NIMTE* | 3.92 | % | 3.96 | % | 3.93 | % | 4.02 | % | 4.37 | % | |||||
| Efficiency ratio | 60.24 | % | 65.31 | % | 58.85 | % | 64.76 | % | 84.87 | % | |||||
| Total shareholders' equity/total assets | 9.84 | % | 10.44 | % | 10.23 | % | 10.26 | % | 11.69 | % | |||||
| Tangible common equity/tangible assets* | 9.22 | % | 9.76 | % | 9.54 | % | 9.54 | % | 10.84 | % | |||||
| Book value per share | $ | 37.29 | $ | 35.45 | $ | 34.18 | $ | 32.49 | $ | 31.06 | |||||
| Tangible book value per share* | $ | 34.71 | $ | 32.88 | $ | 31.62 | $ | 29.97 | $ | 28.53 | |||||
| Dividends per share | $ | 0.37 | $ | 0.35 | $ | 0.35 | $ | 0.34 | $ | 0.34 | |||||
* References to NIMTE, tangible book value per share, and tangible common equity and tangible assets (all of which exclude intangible assets) represent non-GAAP financial measures. Management has presented these non-GAAP measurements in this earnings release, because it believes these measures are useful to investors. See the end of this release for reconciliations of these non-GAAP financial measures to GAAP financial measures.
Alaska Economic Update
(Note: sources for information included in this section are included on page 13.)
2020 was a challenging year for the global economy as health policies led to significant disruption in normal business activity. Mark Edwards, EVP Chief Credit Officer and Bank Economist summarized the impacts on Alaska, “it is counter-intuitive to have a year where payroll jobs declined by
February 2021 employment data from the Alaska Department of Labor ("DOL") shows a
Alaska’s real gross state product (“GSP”) was
Alaska’s seasonally adjusted personal income for 2020 was
Per capita income in the U.S. was
Alaska North Slope (“ANS”) crude oil had monthly average prices in 2018 and 2019 ranging from
Alaska’s crude oil production averaged 485,300 barrels per day (“bpd”) in fiscal year (“FY”) 2020, which ended in June. This was a decrease of
Alaska’s home mortgage delinquency and foreclosure levels continue to be better than most of the nation. According to the Mortgage Bankers Association, Alaska’s foreclosure rate was
The Mortgage Bankers Association survey reported that the percentage of delinquent mortgage loans at the end of 2020 in Alaska was
Mr. Edwards commented, “many people across the country took advantage of mortgage forbearance plans available from lenders to delay payments or pay interest only on their homes. Until they catch up on past due payments these loans will appear delinquent because they are still behind according to the original terms of the mortgage.”
According to the Alaska Multiple Listing Services ("MLS"), the average sales price of a single family home in Anchorage rose
The number of units sold in Anchorage was up significantly in 2020 by
We believe that the low interest rate environment has been a major factor. According to the Federal Reserve Bank of St. Louis, the average 30 year fixed rate mortgage in the U.S. hit all-time record lows last year. Rates began 2020 at
Northrim Bank sponsors the Alaskanomics blog to provide news, analysis, and commentary on Alaska’s economy. Join the conversation at Alaskanomics.com, or for more information on the Alaska economy, visit: www.northrim.com and click on the “Business Banking” link and then click “Learn.” Information from our website is not incorporated into, and does not form, a part of this earnings release.
Review of Income Statement
Consolidated Income Statement
In the first quarter of 2021, Northrim generated a ROAA of
Net Interest Income/Net Interest Margin
Net interest income increased
NIMTE* was
_______________
1As of December 31, 2020, the SNL Small Cap US Bank Index tracked 117 banks with total common market capitalization between
The yield on interest earning assets in the first quarter of 2021 was
Provision for Credit Losses
Northrim recorded a benefit to the provision for credit losses of
Nonperforming loans, net of government guarantees, increased during the quarter to
Other Operating Income
In addition to home mortgage lending, Northrim has interests in other businesses that complement its core community banking activities, including purchased receivables financing and wealth management. Other operating income contributed
Other notable changes during the quarter include changes in the fair value mark-to-market of the marketable equity securities portfolio, which decreased other income by
Other Operating Expenses
Operating expenses were
Income Tax Provision
In the first quarter of 2021, Northrim recorded
Community Banking
“We have always considered our Alaskan communities to be our primary focus, and while growing, we never lost sight of our mission to serve the people and businesses within the communities we support,” said Schierhorn. “We opened our second Fairbanks branch during the first quarter of 2021 and in March of 2020 we opened a loan production office in Kodiak. We will continue to look for ways to expand our branch network and support our customers and communities.”
Net interest income in the Community Banking segment totaled
Other operating income in the Community Banking segment was down for the first quarter 2021 compared to the preceding quarter and was up compared to the first quarter of the prior year. The primary change from the preceding quarter related to the change in fair value mark-to-market of the marketable equity securities portfolio, which decreased other income by
Other operating expense in the Community Banking segment for the first quarter of 2021 decreased
The following table provides highlights of the Community Banking segment of Northrim:
| Three Months Ended | |||||||||||||||
| (Dollars in thousands, except per share data) | March 31, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | ||||||||||
| Net interest income | $ | 18,734 | $ | 18,349 | $ | 17,388 | $ | 16,649 | $ | 15,261 | |||||
| Provision (benefit) for credit losses | (1,488 | ) | (599 | ) | 567 | 404 | 2,060 | ||||||||
| Other operating income | 2,274 | 2,921 | 3,696 | 2,308 | 1,768 | ||||||||||
| Other operating expense | 13,664 | 15,536 | 14,353 | 14,113 | 13,612 | ||||||||||
| Income before provision for income taxes | 8,832 | 6,333 | 6,164 | 4,440 | 1,357 | ||||||||||
| Provision (benefit) for income taxes | 1,452 | 1,303 | 1,249 | (124 | ) | 266 | |||||||||
| Net income | $ | 7,380 | $ | 5,030 | $ | 4,915 | $ | 4,564 | $ | 1,091 | |||||
| Weighted average shares outstanding, diluted | 6,277,177 | 6,324,461 | 6,413,221 | 6,440,898 | 6,560,593 | ||||||||||
| Diluted earnings per share | $ | 1.18 | $ | 0.79 | $ | 0.76 | $ | 0.70 | $ | 0.17 | |||||
Home Mortgage Lending
“The increased activity in the mortgage market has continued through the first quarter of 2021, with the low interest rate environment fueling robust refinance activity and home purchases activity,” said Ballard.
During the first quarter of 2021, mortgage loan volume was
Loan fundings decreased during the first quarter of 2021 as compared to the preceding quarter, but increased year-over-year driven by both increased refinance activity and new home purchase activity. This was partially offset by the net change in fair value of mortgage servicing rights, which decreased mortgage banking income by
“Our mortgage servicing business, which we initiated to service loans primarily for the Alaska Housing Finance Corporation, was essentially unchanged during the quarter, as new loans were off-set by loan payoffs,” said Ballard. As of March 31, 2021, Northrim serviced 2,821 loans in its
Total mortgage servicing income fluctuates based on the number of mortgage servicing rights originated during the period and changes in the fair value of those servicing rights. The fair value of mortgage servicing rights is driven by interest rate volatility and the number of serviced mortgages that pay off during the period as well as fluctuations in estimated prepayment speeds based on published industry metrics. The change in the fair value of mortgage servicing rights was a decrease of
The following table provides highlights of the Home Mortgage Lending segment of Northrim:
| Three Months Ended | |||||||||||||||
| (Dollars in thousands, except per share data) | March 31, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | ||||||||||
| Mortgage commitments | $ | 181,417 | $ | 150,276 | $ | 257,304 | $ | 206,274 | $ | 197,892 | |||||
| Mortgage loans funded for sale | $ | 300,963 | $ | 381,942 | $ | 364,159 | $ | 381,086 | $ | 168,224 | |||||
| Mortgage loan refinances to total fundings | 60 | % | 48 | % | 39 | % | 65 | % | 46 | % | |||||
| Mortgage loans serviced for others | $ | 682,827 | $ | 683,117 | $ | 655,733 | $ | 655,183 | $ | 678,096 | |||||
| Net realized gains on mortgage loans sold | $ | 11,795 | $ | 15,557 | $ | 14,736 | $ | 11,322 | $ | 4,643 | |||||
| Change in fair value of mortgage loan commitments, net | 98 | (2,724 | ) | 1,943 | 3,579 | (545 | ) | ||||||||
| Total production revenue | 11,893 | 12,833 | 16,679 | 14,901 | 4,098 | ||||||||||
| Mortgage servicing revenue | 2,152 | 2,510 | 2,044 | 1,633 | 1,327 | ||||||||||
| Change in fair value of mortgage servicing rights: | |||||||||||||||
| Due to changes in model inputs of assumptions1 | (180 | ) | (410 | ) | (699 | ) | (891 | ) | (701 | ) | |||||
| Other2 | (829 | ) | (783 | ) | (806 | ) | (1,037 | ) | (229 | ) | |||||
| Total mortgage servicing revenue, net | 1,143 | 1,317 | 539 | (295 | ) | 397 | |||||||||
| Other mortgage banking revenue | 586 | 661 | 714 | 621 | 170 | ||||||||||
| Total mortgage banking income | $ | 13,622 | $ | 14,811 | $ | 17,932 | $ | 15,227 | $ | 4,665 | |||||
| Net interest income | $ | 759 | $ | 875 | $ | 906 | $ | 808 | $ | 429 | |||||
| Mortgage banking income | 13,622 | 14,811 | 17,932 | 15,227 | 4,665 | ||||||||||
| Other operating expense | 7,663 | 8,611 | 9,153 | 8,561 | 5,175 | ||||||||||
| Income (loss) before provision for income taxes | 6,718 | 7,075 | 9,685 | 7,474 | (81 | ) | |||||||||
| Provision (benefit) for income taxes | 1,917 | 2,005 | 2,745 | 2,138 | (23 | ) | |||||||||
| Net income (loss) | $ | 4,801 | $ | 5,070 | $ | 6,940 | $ | 5,336 | $ | (58 | ) | ||||
| Weighted average shares outstanding, diluted | 6,277,177 | 6,324,461 | 6,413,221 | 6,440,898 | 6,560,593 | ||||||||||
| Diluted earnings (loss) per share | $ | 0.76 | $ | 0.80 | $ | 1.08 | $ | 0.82 | $ | (0.01 | ) | ||||
1Principally reflects changes in discount rates and prepayment speed assumptions, which are primarily affected by changes in interest rates.
2Represents changes due to collection/realization of expected cash flows over time.
Balance Sheet Review
Northrim’s total assets increased to
Average interest-earning assets were
Average investment securities increased to
“Much of the loan production during the past four quarters resulted from new customers we obtained through the PPP process,” said Ballard. At March 31, 2021, commercial loans represented
Alaskans continue to account for substantially all of Northrim’s deposit base, which is primarily made up of low-cost transaction accounts. At March 31, 2021, balances in transaction accounts represented
“We continue to attract new customers through our outreach in the community and with new relationships we established from PPP lending. The investments in our people and products and services, especially with regard to treasury management, have allowed us to attract a broader customer base,” said Michael Martin, the Bank's Chief Operating Officer and General Counsel. “As a result, our lenders, retail bankers and commercial cash managers are doing an excellent job of capturing new market share.”
Shareholders’ equity was
Asset Quality
“Credit quality metrics remain solid, with classified loans decreasing compared to a year ago. We had a
Nonperforming assets ("NPAs") net of government guarantees were
Net adversely classified loans were
Performing restructured loans that were not included in nonaccrual loans at March 31, 2021, net of government guarantees were
Excluding SBA PPP loans, Northrim had
Northrim estimates that
About Northrim BanCorp
Northrim BanCorp, Inc. is the parent company of Northrim Bank, an Alaska-based community bank with 17 branches in Anchorage, the Matanuska Valley, Soldotna, Juneau, Fairbanks, Ketchikan, and Sitka, and a loan production office in Kodiak, serving
www.northrim.com
Forward-Looking Statement
This release may contain “forward-looking statements” as that term is defined for purposes of Section 21E of the Securities Exchange Act of 1934, as amended. These statements are, in effect, management’s attempt to predict future events, and thus are subject to various risks and uncertainties. Readers should not place undue reliance on forward-looking statements, which reflect management’s views only as of the date hereof. All statements, other than statements of historical fact, regarding our financial position, business strategy, management’s plans and objectives for future operations, and statements related to the expected or potential impact of the novel coronavirus (COVID-19) pandemic and the related responses of the government are forward-looking statements. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” and “intend” and words or phrases of similar meaning, as they relate to Northrim and its management are intended to help identify forward-looking statements. Although we believe that management’s expectations as reflected in forward-looking statements are reasonable, we cannot assure readers that those expectations will prove to be correct. Forward looking statements, whether concerning the COVID-19 pandemic and the government responses related thereto or otherwise, are subject to various risks and uncertainties that may cause our actual results to differ materially and adversely from our expectations as indicated in the forward-looking statements. These risks and uncertainties include: the uncertainties relating to the impact of COVID-19 on the Company's credit quality, business, operations and employees; the impact of the results of the recent U.S. elections on the regulatory landscape, capital markets, and the response to and management of the COVID-19 pandemic, including the effectiveness of already-enacted fiscal stimulus from the federal government and a potential infrastructure bill; the timing of PPP loan forgiveness; our ability to maintain strong asset quality and to maintain or expand our market share or net interest margins; and our ability to execute our business plan. Further, actual results may be affected by our ability to compete on price and other factors with other financial institutions; customer acceptance of new products and services; the regulatory environment in which we operate; and general trends in the local, regional and national banking industry and economy as those factors relate to our cost of funds and return on assets. In addition, there are risks inherent in the banking industry relating to collectability of loans and changes in interest rates. Many of these risks, as well as other risks that may have a material adverse impact on our operations and business, are identified in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, and from time to time are disclosed in our other filings with the Securities and Exchange Commission. However, you should be aware that these factors are not an exhaustive list, and you should not assume these are the only factors that may cause our actual results to differ from our expectations. These forward-looking statements are made only as of the date of this release, and Northrim does not undertake any obligation to release revisions to these forward-looking statements to reflect events or conditions after the date of this release.
References:
https://www.bea.gov/
http://almis.labor.state.ak.us/
http://www.tax.alaska.gov/programs/oil/prevailing/ans.aspx
http://www.tax.state.ak.us/
www.mba.org
https://www.alaskarealestate.com/MLSMember/RealEstateStatistics.aspx
https://fred.stlouisfed.org/series/MORTGAGE30US
https://www.sba.gov/document/report-paycheck-protection-program-weekly-reports-2021
| Income Statement | |||||||||
| (Dollars in thousands, except per share data) | Three Months Ended | ||||||||
| (Unaudited) | March 31, | December 31, | March 31, | ||||||
| 2021 | 2020 | 2020 | |||||||
| Interest Income: | |||||||||
| Interest and fees on loans | $ | 19,424 | $ | 19,587 | $ | 15,359 | |||
| Interest on portfolio investments | 1,134 | 967 | 1,744 | ||||||
| Interest on deposits in banks | 38 | 25 | 236 | ||||||
| Total interest income | 20,596 | 20,579 | 17,339 | ||||||
| Interest Expense: | |||||||||
| Interest expense on deposits | 949 | 1,144 | 1,484 | ||||||
| Interest expense on borrowings | 154 | 211 | 165 | ||||||
| Total interest expense | 1,103 | 1,355 | 1,649 | ||||||
| Net interest income | 19,493 | 19,224 | 15,690 | ||||||
| Provision (benefit) for credit losses | (1,488 | ) | (599 | ) | 2,060 | ||||
| Net interest income after provision (benefit) for credit losses | 20,981 | 19,823 | 13,630 | ||||||
| Other Operating Income: | |||||||||
| Mortgage banking income | 13,622 | 14,811 | 4,665 | ||||||
| Bankcard fees | 740 | 743 | 643 | ||||||
| Purchased receivable income | 532 | 538 | 921 | ||||||
| Service charges on deposit accounts | 290 | 300 | 362 | ||||||
| Interest rate swap income | 92 | 206 | — | ||||||
| Gain on sale of securities | — | — | 98 | ||||||
| Unrealized (loss) gain on marketable equity securities | (84 | ) | 408 | (871 | ) | ||||
| Other income | 704 | 726 | 615 | ||||||
| Total other operating income | 15,896 | 17,732 | 6,433 | ||||||
| Other Operating Expense: | |||||||||
| Salaries and other personnel expense | 14,728 | 16,826 | 12,256 | ||||||
| Data processing expense | 2,035 | 2,015 | 1,769 | ||||||
| Occupancy expense | 1,660 | 1,701 | 1,657 | ||||||
| Professional and outside services | 624 | 951 | 608 | ||||||
| Marketing expense | 404 | 739 | 583 | ||||||
| Insurance expense | 314 | 300 | 312 | ||||||
| Intangible asset amortization expense | 9 | 12 | 12 | ||||||
| OREO expense, net rental income and gains on sale | (36 | ) | (250 | ) | (36 | ) | |||
| Other operating expense | 1,589 | 1,853 | 1,626 | ||||||
| Total other operating expense | 21,327 | 24,147 | 18,787 | ||||||
| Income before provision for income taxes | 15,550 | 13,408 | 1,276 | ||||||
| Provision for income taxes | 3,369 | 3,308 | 243 | ||||||
| Net income | $ | 12,181 | $ | 10,100 | $ | 1,033 | |||
| Basic EPS | $ | 1.96 | $ | 1.61 | $ | 0.16 | |||
| Diluted EPS | $ | 1.94 | $ | 1.59 | $ | 0.16 | |||
| Weighted average shares outstanding, basic | 6,219,871 | 6,245,254 | 6,467,630 | ||||||
| Weighted average shares outstanding, diluted | 6,277,177 | 6,324,461 | 6,560,593 | ||||||
| Balance Sheet | |||||||||
| (Dollars in thousands) | |||||||||
| (Unaudited) | March 31, | December 31, | March 31, | ||||||
| 2021 | 2020 | 2020 | |||||||
| Assets: | |||||||||
| Cash and due from banks | $ | 20,332 | $ | 23,304 | $ | 31,096 | |||
| Interest bearing deposits in other banks | 183,258 | 92,661 | 54,714 | ||||||
| Investment securities available for sale | 303,810 | 247,633 | 268,959 | ||||||
| Investment securities held to maturity | 20,000 | 10,000 | — | ||||||
| Marketable equity securities | 9,471 | 9,052 | 7,609 | ||||||
| Investment in Federal Home Loan Bank stock | 3,116 | 2,551 | 3,312 | ||||||
| Loans held for sale | 116,128 | 146,178 | 86,258 | ||||||
| Portfolio loans | 1,548,924 | 1,444,050 | 1,081,873 | ||||||
| Allowance for credit losses, loans | (14,764 | ) | (21,136 | ) | (21,017 | ) | |||
| Net portfolio loans | 1,534,160 | 1,422,914 | 1,060,856 | ||||||
| Purchased receivables, net | 11,818 | 13,922 | 23,670 | ||||||
| Mortgage servicing rights, at fair value | 11,657 | 11,218 | 11,653 | ||||||
| Other real estate owned, net | 7,563 | 7,289 | 7,205 | ||||||
| Premises and equipment, net | 38,171 | 38,102 | 39,293 | ||||||
| Lease right of use asset | 11,934 | 12,440 | 13,757 | ||||||
| Goodwill and intangible assets | 16,037 | 16,046 | 16,082 | ||||||
| Other assets | 63,788 | 68,488 | 66,798 | ||||||
| Total assets | $ | 2,351,243 | $ | 2,121,798 | $ | 1,691,262 | |||
| Liabilities: | |||||||||
| Demand deposits | $ | 762,793 | $ | 643,825 | $ | 453,003 | |||
| Interest-bearing demand | 524,373 | 459,095 | 333,352 | ||||||
| Savings deposits | 325,625 | 308,725 | 228,383 | ||||||
| Money market deposits | 253,934 | 237,705 | 207,418 | ||||||
| Time deposits | 184,592 | 175,631 | 173,336 | ||||||
| Total deposits | 2,051,317 | 1,824,981 | 1,395,492 | ||||||
| Other borrowings | 14,749 | 14,817 | 36,848 | ||||||
| Junior subordinated debentures | 10,310 | 10,310 | 10,310 | ||||||
| Lease liability | 11,883 | 12,378 | 13,685 | ||||||
| Other liabilities | 31,532 | 37,737 | 37,204 | ||||||
| Total liabilities | 2,119,791 | 1,900,223 | 1,493,539 | ||||||
| Shareholders' Equity: | |||||||||
| Total shareholders' equity | 231,452 | 221,575 | 197,723 | ||||||
| Total liabilities and shareholders' equity | $ | 2,351,243 | $ | 2,121,798 | $ | 1,691,262 | |||
Additional Financial Information
(Dollars in thousands)
(Unaudited)
| Composition of Portfolio Investments | |||||||||||||||||
| March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||||||||
| Balance | % of total | Balance | % of total | Balance | % of total | ||||||||||||
| U.S. Treasury securities | $ | 77,184 | 23.2 | % | $ | 37,547 | 14.1 | % | $ | 58,097 | 21.0 | % | |||||
| U.S. Agency securities | 147,309 | 44.2 | % | 137,054 | 51.4 | % | 153,812 | 55.6 | % | ||||||||
| Corporate securities | 50,456 | 15.1 | % | 40,492 | 15.2 | % | 30,567 | 11.1 | % | ||||||||
| Marketable equity securities | 9,471 | 2.8 | % | 9,052 | 3.4 | % | 7,609 | 2.8 | % | ||||||||
| Collateralized loan obligations | 48,005 | 14.4 | % | 41,684 | 15.6 | % | 24,160 | 8.7 | % | ||||||||
| Alaska municipality, utility, or state bonds | 856 | 0.3 | % | 856 | 0.3 | % | 2,323 | 0.8 | % | ||||||||
| Total portfolio investments | $ | 333,281 | $ | 266,685 | $ | 276,568 | |||||||||||
| Composition of Portfolio Loans | |||||||||||||||||||||||||||||
| March 31, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | |||||||||||||||||||||||||
| Balance | % of total | Balance | % of total | Balance | % of total | Balance | % of total | Balance | % of total | ||||||||||||||||||||
| Commercial loans | $ | 449,153 | 30 | % | $ | 469,540 | 33 | % | $ | 460,542 | 31 | % | $ | 426,675 | 29 | % | $ | 434,832 | 40 | % | |||||||||
| SBA Paycheck Protection loans | 414,381 | 26 | % | 310,518 | 21 | % | 375,636 | 25 | % | 353,485 | 24 | % | — | — | % | ||||||||||||||
| CRE owner occupied loans | 178,476 | 11 | % | 163,597 | 11 | % | 148,993 | 10 | % | 154,741 | 11 | % | 146,453 | 13 | % | ||||||||||||||
| CRE nonowner occupied loans | 368,145 | 23 | % | 355,694 | 24 | % | 364,232 | 24 | % | 360,533 | 25 | % | 355,753 | 33 | % | ||||||||||||||
| Construction loans | 121,943 | 8 | % | 118,782 | 8 | % | 120,619 | 8 | % | 114,464 | 8 | % | 109,849 | 10 | % | ||||||||||||||
| Consumer loans | 34,603 | 2 | % | 37,654 | 3 | % | 37,183 | 2 | % | 38,310 | 3 | % | 39,923 | 4 | % | ||||||||||||||
| Subtotal | 1,566,701 | 1,455,785 | 1,507,205 | 1,448,208 | 1,086,810 | ||||||||||||||||||||||||
| Unearned loan fees, net | (17,777 | ) | (11,735 | ) | (14,485 | ) | (15,007 | ) | (4,937 | ) | |||||||||||||||||||
| Total portfolio loans | $ | 1,548,924 | $ | 1,444,050 | $ | 1,492,720 | $ | 1,433,201 | $ | 1,081,873 | |||||||||||||||||||
| Composition of Deposits | |||||||||||||||||||||||||||||
| March 31, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | |||||||||||||||||||||||||
| Balance | % of total | Balance | % of total | Balance | % of total | Balance | % of total | Balance | % of total | ||||||||||||||||||||
| Demand deposits | $ | 762,793 | 37 | % | $ | 643,825 | 35 | % | $ | 697,363 | 38 | % | $ | 680,033 | 40 | % | $ | 453,003 | 33 | % | |||||||||
| Interest-bearing demand | 524,373 | 26 | % | 459,095 | 25 | % | 427,811 | 24 | % | 400,138 | 23 | % | 333,352 | 24 | % | ||||||||||||||
| Savings deposits | 325,625 | 16 | % | 308,725 | 17 | % | 272,624 | 15 | % | 261,934 | 15 | % | 228,383 | 16 | % | ||||||||||||||
| Money market deposits | 253,934 | 12 | % | 237,705 | 13 | % | 227,106 | 13 | % | 215,735 | 12 | % | 207,418 | 15 | % | ||||||||||||||
| Time deposits | 184,592 | 9 | % | 175,631 | 10 | % | 181,229 | 10 | % | 179,519 | 10 | % | 173,336 | 12 | % | ||||||||||||||
| Total deposits | $ | 2,051,317 | $ | 1,824,981 | $ | 1,806,133 | $ | 1,737,359 | $ | 1,395,492 | |||||||||||||||||||
Additional Financial Information
(Dollars in thousands)
(Unaudited)
| Asset Quality | March 31, | December 31, | March 31, | ||||||
| 2021 | 2020 | 2020 | |||||||
| Nonaccrual loans | $ | 14,463 | $ | 11,120 | $ | 15,074 | |||
| Loans 90 days past due and accruing | — | 449 | — | ||||||
| Total nonperforming loans | 14,463 | 11,569 | 15,074 | ||||||
| Nonperforming loans guaranteed by government | (1,382 | ) | (1,483 | ) | (1,671 | ) | |||
| Net nonperforming loans | 13,081 | 10,086 | 13,403 | ||||||
| Other real estate owned | 7,563 | 7,289 | 7,205 | ||||||
| Repossessed assets | 225 | 231 | 231 | ||||||
| Other real estate owned guaranteed by government | (1,279 | ) | (1,279 | ) | (1,279 | ) | |||
| Net nonperforming assets | $ | 19,590 | $ | 16,327 | $ | 19,560 | |||
| Nonperforming loans, net of government guarantees / portfolio loans | 0.84 | % | 0.70 | % | 1.24 | % | |||
| Nonperforming loans, net of government guarantees / portfolio loans, net of government guarantees | 1.19 | % | 0.92 | % | 1.28 | % | |||
| Nonperforming assets, net of government guarantees / total assets | 0.83 | % | 0.77 | % | 1.16 | % | |||
| Nonperforming assets, net of government guarantees / total assets net of government guarantees | 1.03 | % | 0.92 | % | 1.18 | % | |||
| Performing restructured loans | $ | 2,354 | $ | 2,355 | $ | 4,389 | |||
| Performing restructured loans guaranteed by government | (1,542 | ) | (1,523 | ) | (2,953 | ) | |||
| Net performing restructured loans | $ | 812 | $ | 832 | $ | 1,436 | |||
| Nonperforming loans plus performing restructured loans, net of government guarantees | $ | 13,893 | $ | 10,918 | $ | 14,839 | |||
| Nonperforming loans plus performing restructured loans, net of government guarantees / portfolio loans | 0.90 | % | 0.76 | % | 1.37 | % | |||
| Nonperforming loans plus performing restructured loans, net of government guarantees / portfolio loans, net of government guarantees | 1.26 | % | 1.00 | % | 1.41 | % | |||
| Nonperforming assets plus performing restructured loans, net of government guarantees / total assets | 0.87 | % | 0.81 | % | 1.24 | % | |||
| Nonperforming assets plus performing restructured loans, net of government guarantees / total assets, net of government guarantees | 1.08 | % | 0.97 | % | 1.27 | % | |||
| Adversely classified loans, net of government guarantees | $ | 16,902 | $ | 12,805 | $ | 17,388 | |||
| Special mention loans, net of government guarantees | $ | 14,629 | $ | 19,063 | $ | 16,254 | |||
| Loans 30-89 days past due and accruing, net of government guarantees / portfolio loans | 0.05 | % | 0.05 | % | 0.33 | % | |||
| Loans 30-89 days past due and accruing, net of government guarantees / portfolio loans, net of government guarantees | 0.07 | % | 0.07 | % | 0.34 | % | |||
| Allowance for credit losses / portfolio loans | 0.95 | % | 1.46 | % | 1.94 | % | |||
| Allowance for credit losses / portfolio loans, net of government guarantees | 1.34 | % | 1.93 | % | 2.00 | % | |||
| Allowance for credit losses / nonperforming loans, net of government guarantees | 113 | % | 210 | % | 157 | % | |||
| Gross loan charge-offs for the quarter | $ | 163 | $ | 11 | $ | 165 | |||
| Gross loan recoveries for the quarter | $ | (207 | ) | $ | (64 | ) | $ | (34 | ) |
| Net loan (recoveries) charge-offs for the quarter | $ | (44 | ) | $ | (53 | ) | $ | 131 | |
| Net loan charge-offs (recoveries) for the quarter / average loans, for the quarter | 0.00 | % | 0.00 | % | 0.01 | % | |||
Additional Financial Information
(Dollars in thousands)
(Unaudited)
| Nonperforming Assets Rollforward | ||||||||||||||||||||||||
| Balance at December 31, 2020 | Additions this quarter | Payments this quarter | Writedowns /Charge-offs this quarter | Transfers to OREO/ REPO | Transfers to Performing Status this quarter | Sales this quarter | Balance at March 31, 2021 | |||||||||||||||||
| Commercial loans | $ | 5,576 | $ | 5,995 | $ | (1,345 | ) | $ | (163 | ) | $ | (274 | ) | $ | — | $ | — | $ | 9,789 | |||||
| Commercial real estate | 5,122 | — | (280 | ) | — | — | (449 | ) | — | 4,393 | ||||||||||||||
| Construction loans | 702 | — | (585 | ) | — | — | — | — | 117 | |||||||||||||||
| Consumer loans | 169 | — | (5 | ) | — | — | — | — | 164 | |||||||||||||||
| Non-performing loans guaranteed by government | (1,483 | ) | — | 101 | — | — | — | — | (1,382 | ) | ||||||||||||||
| Total non-performing loans | 10,086 | 5,995 | (2,114 | ) | (163 | ) | (274 | ) | (449 | ) | — | 13,081 | ||||||||||||
| Other real estate owned | 7,289 | 274 | — | — | — | — | — | 7,563 | ||||||||||||||||
| Repossessed assets | 231 | — | — | (6 | ) | — | — | — | 225 | |||||||||||||||
| Nonperforming purchased receivables | — | — | — | — | — | — | — | — | ||||||||||||||||
| Other real estate owned guaranteed by government | (1,279 | ) | — | — | — | — | — | — | (1,279 | ) | ||||||||||||||
| Total non-performing assets, net of government guarantees | $ | 16,327 | $ | 6,269 | $ | (2,114 | ) | $ | (169 | ) | $ | (274 | ) | $ | (449 | ) | $ | — | $ | 19,590 | ||||
The following table details loan charge-offs, by industry:
| Loan Charge-offs by Industry | |||||||||||||||
| Three Months Ended | |||||||||||||||
| March 31, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | |||||||||||
| Charge-offs: | |||||||||||||||
| Support for oil and gas operations | $ | — | $ | — | $ | — | $ | — | $ | 36 | |||||
| Plastic material and resin manufacturing | 150 | — | — | — | — | ||||||||||
| Aircraft parts and auxiliary equipment manufacturing | 13 | — | — | — | — | ||||||||||
| Office of physicians | — | 11 | — | — | — | ||||||||||
| Retail sales | — | — | — | — | 16 | ||||||||||
| Food service contractors | — | — | — | — | 99 | ||||||||||
| Excavation and construction | — | — | 33 | — | — | ||||||||||
| Health care and social assistance | — | — | 108 | 804 | — | ||||||||||
| Consumer | — | — | — | — | 14 | ||||||||||
| Total charge-offs | $ | 163 | $ | 11 | $ | 141 | $ | 804 | $ | 165 | |||||
Additional Financial Information
(Dollars in thousands)
(Unaudited)
| Average Balances, Yields, and Rates | |||||||||||||||||
| Three Months Ended | |||||||||||||||||
| March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||||||||
| Average | Average | Average | |||||||||||||||
| Average | Tax Equivalent | Average | Tax Equivalent | Average | Tax Equivalent | ||||||||||||
| Balance | Yield/Rate | Balance | Yield/Rate | Balance | Yield/Rate | ||||||||||||
| Assets | |||||||||||||||||
| Interest bearing deposits in other banks | $ | 120,875 | 0.12 | % | $ | 84,872 | 0.12 | % | $ | 68,076 | 1.37 | % | |||||
| Portfolio investments | 298,776 | 1.45 | % | 231,867 | 1.73 | % | 284,068 | 2.59 | % | ||||||||
| Loans held for sale | 114,585 | 2.73 | % | 135,776 | 2.79 | % | 50,375 | 3.51 | % | ||||||||
| Portfolio loans | 1,492,906 | 5.08 | % | 1,489,029 | 5.00 | % | 1,059,023 | 5.69 | % | ||||||||
| Total interest-earning assets | 2,027,142 | 4.14 | % | 1,941,544 | 4.24 | % | 1,461,542 | 4.82 | % | ||||||||
| Nonearning assets | 170,565 | 175,413 | 174,049 | ||||||||||||||
| Total assets | $ | 2,197,707 | $ | 2,116,957 | $ | 1,635,591 | |||||||||||
| Liabilities and Shareholders' Equity | |||||||||||||||||
| Interest-bearing deposits | $ | 1,207,079 | 0.32 | % | $ | 1,140,327 | 0.40 | % | $ | 925,859 | 0.64 | % | |||||
| Borrowings | 25,100 | 2.47 | % | 24,819 | 3.35 | % | 22,188 | 2.95 | % | ||||||||
| Total interest-bearing liabilities | 1,232,179 | 0.36 | % | 1,165,146 | 0.46 | % | 948,047 | 0.70 | % | ||||||||
| Noninterest-bearing demand deposits | 687,789 | 679,924 | 433,347 | ||||||||||||||
| Other liabilities | 46,922 | 51,363 | 46,231 | ||||||||||||||
| Shareholders' equity | 230,817 | 220,524 | 207,966 | ||||||||||||||
| Total liabilities and shareholders' equity | $ | 2,197,707 | $ | 2,116,957 | $ | 1,635,591 | |||||||||||
| Net spread | 3.78 | % | 3.78 | % | 4.12 | % | |||||||||||
| NIM | 3.90 | % | 3.94 | % | 4.32 | % | |||||||||||
| NIMTE* | 3.92 | % | 3.96 | % | 4.37 | % | |||||||||||
| Cost of funds | 0.23 | % | 0.29 | % | 0.48 | % | |||||||||||
| Average portfolio loans to average | |||||||||||||||||
| interest-earning assets | 73.65 | % | 76.69 | % | 72.46 | % | |||||||||||
| Average portfolio loans to average total deposits | 78.79 | % | 81.80 | % | 77.91 | % | |||||||||||
| Average non-interest deposits to average total deposits | 36.30 | % | 37.35 | % | 31.88 | % | |||||||||||
| Average interest-earning assets to average interest-bearing liabilities | 164.52 | % | 166.64 | % | 154.16 | % | |||||||||||
The components of the change in NIMTE* are detailed in the table below:
| 1Q21 vs. 4Q20 | 1Q21 vs. 1Q20 | |||
| Nonaccrual interest adjustments | 0.03 | % | 0.01 | % |
| Impact of SBA Paycheck Protection Program loans | 0.12 | % | 0.19 | % |
| Interest rates and loan fees, all other loans | (0.05 | )% | (0.49 | )% |
| Volume and mix of other interest-earning assets and liabilities | (0.14 | )% | (0.16 | )% |
| Change in NIMTE* | (0.04 | )% | (0.45 | )% |
Additional Financial Information
(Dollars in thousands, except per share data)
(Unaudited)
| Capital Data (At quarter end) | |||||||||||
| March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||
| Book value per share | $ | 37.29 | $ | 35.45 | $ | 31.06 | |||||
| Tangible book value per share* | $ | 34.71 | $ | 32.88 | $ | 28.53 | |||||
| Total shareholders' equity/total assets | 9.84 | % | 10.44 | % | 11.69 | % | |||||
| Tangible Common Equity/Tangible Assets* | 9.22 | % | 9.76 | % | 10.84 | % | |||||
| Tier 1 Capital / Risk Adjusted Assets | 14.55 | % | 14.20 | % | 13.25 | % | |||||
| Total Capital / Risk Adjusted Assets | 15.50 | % | 15.46 | % | 14.50 | % | |||||
| Tier 1 Capital / Average Assets | 10.33 | % | 10.25 | % | 11.93 | % | |||||
| Shares outstanding | 6,206,913 | 6,251,004 | 6,366,100 | ||||||||
| Unrealized gain (loss) on AFS debt securities, net of income taxes | $ | 177 | $ | 1,260 | $ | 13 | |||||
| Unrealized gain (loss) on derivatives and hedging activities, net of income taxes | $ | (340 | ) | $ | (1,242 | ) | $ | (1,718 | ) | ||
| Profitability Ratios | ||||||||||||||
| March 31, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | ||||||||||
| For the quarter: | ||||||||||||||
| NIM | 3.90 | % | 3.94 | % | 3.90 | % | 3.98 | % | 4.32 | % | ||||
| NIMTE* | 3.92 | % | 3.96 | % | 3.93 | % | 4.02 | % | 4.37 | % | ||||
| Efficiency ratio | 60.24 | % | 65.31 | % | 58.85 | % | 64.76 | % | 84.87 | % | ||||
| Return on average assets | 2.25 | % | 1.90 | % | 2.31 | % | 2.04 | % | 0.25 | % | ||||
| Return on average equity | 21.40 | % | 18.22 | % | 22.10 | % | 19.44 | % | 2.00 | % | ||||
*Non-GAAP Financial Measures
(Dollars and shares in thousands, except per share data)
(Unaudited)
Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although we believe these non-GAAP financial measures are frequently used by stakeholders in the evaluation of the Company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of results as reported under GAAP.
Net interest margin on a tax equivalent basis
Net interest margin on a tax equivalent basis ("NIMTE") is a non-GAAP performance measurement in which interest income on non-taxable investments and loans is presented on a tax equivalent basis using a combined federal and state statutory rate of
| Three Months Ended | |||||||||||||||||||
| March 31, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | |||||||||||||||
| Net interest income | $ | 19,493 | $ | 19,224 | $ | 18,294 | $ | 17,457 | $ | 15,690 | |||||||||
| Divided by average interest-bearing assets | 2,027,142 | 1,941,544 | 1,866,936 | 1,762,140 | 1,461,542 | ||||||||||||||
| Net interest margin ("NIM")2 | 3.90 | % | 3.94 | % | 3.90 | % | 3.98 | % | 4.32 | % | |||||||||
| Net interest income | $ | 19,493 | $ | 19,224 | $ | 18,294 | $ | 17,457 | $ | 15,690 | |||||||||
| Plus: reduction in tax expense related to tax-exempt interest income | 111 | 122 | 136 | 168 | 187 | ||||||||||||||
| $ | 19,604 | $ | 19,346 | $ | 18,430 | $ | 17,625 | $ | 15,877 | ||||||||||
| Divided by average interest-bearing assets | 2,027,142 | 1,941,544 | 1,866,936 | 1,762,140 | 1,461,542 | ||||||||||||||
| NIMTE2 | 3.92 | % | 3.96 | % | 3.93 | % | 4.02 | % | 4.37 | % | |||||||||
2Calculated using actual days in the quarter divided by 365 for the quarter ended in 2021 and 366 for quarters ended in 2020.
*Non-GAAP Financial Measures
(Dollars and shares in thousands, except per share data)
(Unaudited)
Tangible Book Value
Tangible book value is a non-GAAP measure defined as shareholders' equity, less intangible assets, divided by shares outstanding. The most comparable GAAP measure is book value per share and the following table sets forth the reconciliation of tangible book value per share and book value per share.
| March 31, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | |||||||||||||||
| Total shareholders' equity | $ | 231,452 | $ | 221,575 | $ | 214,616 | $ | 206,923 | $ | 197,723 | |||||||||
| Divided by shares outstanding | 6,207 | 6,251 | 6,279 | 6,368 | 6,366 | ||||||||||||||
| Book value per share | $ | 37.29 | $ | 35.45 | $ | 34.18 | $ | 32.49 | $ | 31.06 | |||||||||
| March 31, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | |||||||||||||||
| Total shareholders' equity | $ | 231,452 | $ | 221,575 | $ | 214,616 | $ | 206,923 | $ | 197,723 | |||||||||
| Less: goodwill and intangible assets | 16,037 | 16,046 | 16,058 | 16,070 | 16,082 | ||||||||||||||
| $ | 215,415 | $ | 205,529 | $ | 198,558 | $ | 190,853 | $ | 181,641 | ||||||||||
| Divided by shares outstanding | 6,207 | 6,251 | 6,279 | 6,368 | 6,366 | ||||||||||||||
| Tangible book value per share | $ | 34.71 | $ | 32.88 | $ | 31.62 | $ | 29.97 | $ | 28.53 | |||||||||
Tangible Common Equity to Tangible Assets
Tangible common equity to tangible assets is a non-GAAP ratio that represents total equity less goodwill and intangible assets divided by total assets less goodwill and intangible assets. The most comparable GAAP measure of shareholders' equity to total assets is calculated by dividing total shareholders' equity by total assets and the following table sets forth the reconciliation of tangible common equity to tangible assets and shareholders' equity to total assets.
| Northrim BanCorp, Inc. | March 31, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | ||||||||||||||
| Total shareholders' equity | $ | 231,452 | $ | 221,575 | $ | 214,616 | $ | 206,923 | $ | 197,723 | |||||||||
| Total assets | 2,351,243 | 2,121,798 | 2,097,738 | 2,016,705 | 1,691,262 | ||||||||||||||
| Total shareholders' equity to total assets | 9.84 | % | 10.44 | % | 10.23 | % | 10.26 | % | 11.69 | % | |||||||||
| Northrim BanCorp, Inc. | |||||||||||||||||||
| March 31, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | |||||||||||||||
| Total shareholders' equity | $ | 231,452 | $ | 221,575 | $ | 214,616 | $ | 206,923 | $ | 197,723 | |||||||||
| Less: goodwill and other intangible assets, net | 16,037 | 16,046 | 16,058 | 16,070 | 16,082 | ||||||||||||||
| Tangible common shareholders' equity | $ | 215,415 | $ | 205,529 | $ | 198,558 | $ | 190,853 | $ | 181,641 | |||||||||
| Total assets | $ | 2,351,243 | $ | 2,121,798 | $ | 2,097,738 | $ | 2,016,705 | $ | 1,691,262 | |||||||||
| Less: goodwill and other intangible assets, net | 16,037 | 16,046 | 16,058 | 16,070 | 16,082 | ||||||||||||||
| Tangible assets | $ | 2,335,206 | $ | 2,105,752 | $ | 2,081,680 | $ | 2,000,635 | $ | 1,675,180 | |||||||||
| Tangible common equity ratio | 9.22 | % | 9.76 | % | 9.54 | % | 9.54 | % | 10.84 | % | |||||||||
| Contact: | Joe Schierhorn, President, CEO, and COO (907) 261-3308 Jed Ballard, Chief Financial Officer (907) 261-3539 | |
FAQ
What were Northrim BanCorp's earnings for Q1 2021?
How much did Northrim loan under the PPP in the first quarter of 2021?
What is the total deposit growth for Northrim BanCorp in Q1 2021?
What is the provision for credit losses reported by Northrim for Q1 2021?
