Northrim BanCorp Earns $8.2 Million, or $1.48 Per Diluted Share, in First Quarter 2024
- Net income increased to $8.2 million in Q1 2024 from $6.6 million in Q4 2023 and $4.8 million in Q1 2023.
- Dividends per share rose to $0.61 in Q1 2024, a 2% increase from Q4 and Q1 2023.
- New branch openings in Homer and Soldotna showcase Northrim's expansion efforts.
- Net interest income decreased slightly to $26.4 million in Q1 2024 but increased 6% from Q1 2023.
- Total deposits were $2.43 billion in Q1 2024, a 6% increase from a year ago.
- Mr. Schierhorn resigned, and Mr. Huston was appointed as President and CEO.
- Northrim's ROAA was 1.19% and ROAE was 13.84% in Q1 2024.
- Alaska's economic growth in various sectors like Construction and Health Care positively impacts Northrim's performance.
- Northrim's deposit market share in Alaska increased to 15.04% in June 2023.
- Home mortgage lending saw an increase in loans funded for sale and investment in Q1 2024.
- Northrim's total assets were $2.76 billion in Q1 2024, a 7% increase from a year ago.
- None.
Insights
Northrim Bancorp's reported net income of
Examining the dividends, we observe a modest hike to
With the net interest margin on a tax equivalent basis (NIMTE) showing a small uptick from the previous quarter and a slight decline from the year before, it indicates a nuanced balance between the cost of interest-bearing liabilities and the income generated from interest-earning assets. Importantly, the return on average assets (ROAA) and return on average equity (ROAE) indicate strong profitability metrics which are likely to instill investor confidence.
The 18% year-over-year growth in portfolio loans and the 6% growth in total deposits are clear indicators of Northrim's expanding footprint in the market. The strategy to retain mortgages originated by a subsidiary in the loan portfolio likely contributed to this growth, reflecting a move to capitalize on in-house mortgage origination.
On a macroeconomic level, the Alaska economy's performance, with a lower unemployment rate compared to the national average and the growth in sectors such as Construction and Health Care, provides a favorable backdrop for the bank's operations. Northrim's strategic branch expansions, including the new branch in Homer, are aligned with this economic momentum and appear to position the bank to capture additional market share.
Considering the competition, Northrim's net interest margin is reported to be above the peer average, which is a testament to the bank's efficient management of its assets and liabilities. Nonetheless, the uptick in the average cost of interest-bearing deposits requires monitoring, as it may affect future margins if interest rates continue to rise.
The banking sector is particularly sensitive to management changes and the resignation of Mr. Schierhorn as President, CEO and COO, while notable, appears to have been part of a planned succession strategy, with Mr. Huston taking over the helm. Mr. Schierhorn's continued presence as Chairman could ensure continuity in corporate strategy and investor relations.
It's also worth noting the increase in non-interest bearing demand deposits, which typically serve as a low-cost funding source for banks. A decline in these deposits could suggest a shift in customer behavior or increased competition for deposits, which could affect the bank's cost of funds going forward.
ANCHORAGE, Alaska, April 24, 2024 (GLOBE NEWSWIRE) -- Northrim BanCorp, Inc. (NASDAQ:NRIM) (“Northrim” or the “Company”) today reported net income of
Dividends per share in the first quarter of 2024 increased
On March 29, 2024, the Company announced by press release that Mr. Schierhorn resigned from his position as President, Chief Executive Officer and Chief Operating Officer of the Company and Chief Executive Officer of the Bank, effective April 6, 2024. Mr. Schierhorn will continue to serve as Chairman of the Board of Directors of the Company and Chairman of the Board of Directors of the Bank. In connection with Mr. Schierhorn's resignation, Mr. Huston was appointed to the position of President, Chief Executive Officer and Chief Operating Officer of the Company and President and Chief Executive Officer of the Bank as part of the Company's long-term succession plans.
“We are grateful for Mr. Schierhorn's many years of leadership as one of Northrim's charter employees and in his role as Chairman, Chief Executive Officer, and President," said Mike Huston. "We look forward to his continued contributions as Chairman in the years ahead.”
“First quarter results benefited from stable net interest income and operating expenses, lower credit loss provisions, and increased mortgage originations,” continued Mr. Huston. “We continued our expansion by opening a branch in Homer to build on the success of the loan production office we opened there in 2023. Despite the uncertain interest rate outlook, the Alaskan economy continues to perform well and we believe we are well-positioned in 2024.”
First Quarter 2024 Highlights:
- Net interest income in the first quarter of 2024 decreased
1% to$26.4 million compared to$26.7 million in the fourth quarter of 2023 and increased6% compared to$25.0 million in the first quarter of 2023. - Net interest margin on a tax equivalent basis (“NIMTE”)* was
4.22% for the first quarter of 2024, up 10-basis points from the fourth quarter of 2023 and down 8-basis points from the first quarter a year ago. - The weighted average interest rate for portfolio loans originated in the first quarter of 2024 was
7.15% compared to7.35% for loans originated in the fourth quarter of 2023 and6.04% in the first quarter a year ago. - Return on average assets (“ROAA”) was
1.19% and return on average equity (“ROAE”) was13.84% for the first quarter of 2024. - Portfolio loans were
$1.81 billion at March 31, 2024, up1% from the preceding quarter and up18% from a year ago, primarily due to retaining certain mortgages originated by Residential Mortgage, a subsidiary of Northrim Bank (the “Bank”), in the loan portfolio, new customer relationships, and expanding market share. - Total deposits were
$2.43 billion at March 31, 2024, down2% from the preceding quarter, and up6% from$2.30 billion a year ago. Non-interest bearing demand deposits decreased5% from the preceding quarter and decreased7% year-over-year to$714.2 million at March 31, 2024 and represents29% of total deposits. - The average cost of interest-bearing deposits was
2.13% at March 31, 2024, up from2.00% at December 31, 2023 and1.20% at March 31, 2023. - A new branch opened in Homer, Alaska to serve the communities on the Kenai Peninsula along with the Soldotna branch that opened in 2019.
| Financial Highlights | Three Months Ended | ||||||||||||||
| (Dollars in thousands, except per share data) | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | ||||||||||
| Total assets | $ | 2,759,560 | $ | 2,807,497 | $ | 2,790,189 | $ | 2,638,207 | $ | 2,580,037 | |||||
| Total portfolio loans | $ | 1,811,135 | $ | 1,789,497 | $ | 1,720,091 | $ | 1,659,239 | $ | 1,535,187 | |||||
| Total deposits | $ | 2,434,083 | $ | 2,485,055 | $ | 2,427,930 | $ | 2,302,311 | $ | 2,296,273 | |||||
| Total shareholders’ equity | $ | 239,327 | $ | 234,718 | $ | 225,259 | $ | 221,336 | $ | 224,425 | |||||
| Net income | $ | 8,199 | $ | 6,613 | $ | 8,374 | $ | 5,577 | $ | 4,830 | |||||
| Diluted earnings per share | $ | 1.48 | $ | 1.19 | $ | 1.48 | $ | 0.98 | $ | 0.84 | |||||
| Return on average assets | 1.19 | % | 0.93 | % | 1.22 | % | 0.85 | % | 0.76 | % | |||||
| Return on average shareholders’ equity | 13.84 | % | 11.36 | % | 14.67 | % | 9.85 | % | 8.73 | % | |||||
| NIM | 4.16 | % | 4.06 | % | 4.15 | % | 4.14 | % | 4.22 | % | |||||
| NIMTE* | 4.22 | % | 4.12 | % | 4.21 | % | 4.21 | % | 4.30 | % | |||||
| Efficiency ratio | 68.93 | % | 72.21 | % | 66.64 | % | 74.03 | % | 78.51 | % | |||||
| Total shareholders’ equity/total assets | 8.67 | % | 8.36 | % | 8.07 | % | 8.39 | % | 8.70 | % | |||||
| Tangible common equity/tangible assets* | 8.14 | % | 7.84 | % | 7.54 | % | 7.83 | % | 8.13 | % | |||||
| Book value per share | $ | 43.52 | $ | 42.57 | $ | 40.60 | $ | 39.45 | $ | 39.56 | |||||
| Tangible book value per share* | $ | 40.61 | $ | 39.68 | $ | 37.72 | $ | 36.60 | $ | 36.74 | |||||
| Dividends per share | $ | 0.61 | $ | 0.60 | $ | 0.60 | $ | 0.60 | $ | 0.60 | |||||
| Common stock outstanding | 5,499,578 | 5,513,459 | 5,548,436 | 5,610,841 | 5,672,841 | ||||||||||
* References to NIMTE, tangible book value per share, tangible common equity to tangible common assets, and tangible common equity to tangible assets, excluding the unrealized losses on the available for sale securities portfolio, (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 11.)
The Alaska Department of Labor (“DOL”) has reported Alaska’s seasonally adjusted unemployment rate in February of 2024 was
According to the DOL, Construction and Health Care had the largest growth in new jobs through February of 2024 compared to the prior year. The Construction sector added 1,900 positions for a year over year growth rate of
Alaska’s Gross State Product (“GSP”) in the fourth quarter of 2023, was estimated to be
The BEA also calculated Alaska’s seasonally adjusted personal income at
The monthly average price of Alaska North Slope (“ANS”) crude oil was in a range between
According to the Alaska Multiple Listing Services, the average sales price of a single family home in Anchorage rose
Average sales prices for single family homes in the Matanuska Susitna Borough rose
However, the Alaska Multiple Listing Services reported a large decrease in the number of units sold in both communities. There were 2,162 housing units sold in Anchorage in 2023, down
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 2024, Northrim generated a ROAA of
Net Interest Income/Net Interest Margin
Net interest income decreased
NIMTE* was
Provision for Credit Losses
Northrim recorded a provision for credit losses of
Nonperforming loans, net of government guarantees, increased during the quarter to
The allowance for credit losses was
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 Operating Expenses
Operating expenses were
1As of December 31, 2023, the S&P U.S. Small Cap Bank Index tracked 251 banks with total common market capitalization between
Income Tax Provision
In the first quarter of 2024, Northrim recorded
Community Banking
In the most recent deposit market share data from the FDIC, Northrim’s deposit market share in Alaska increased to
Net interest income in the Community Banking segment totaled
Other operating expenses totaled
The following table provides highlights of the Community Banking segment of Northrim:
| Three Months Ended | ||||||||||
| (Dollars in thousands, except per share data) | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | |||||
| Net interest income | $ | 24,215 | $ | 24,456 | $ | 24,050 | $ | 22,700 | $ | 24,752 |
| Provision for credit losses | 197 | 885 | 1,190 | 1,407 | 360 | |||||
| Other operating income | 3,813 | 4,048 | 3,597 | 3,067 | 2,900 | |||||
| Other operating expense | 17,552 | 18,516 | 16,946 | 17,805 | 17,417 | |||||
| Income before provision for income taxes | 10,279 | 9,103 | 9,511 | 6,555 | 9,875 | |||||
| Provision for income taxes | 2,242 | 1,941 | 1,709 | 1,192 | 2,315 | |||||
| Net income | $ | 8,037 | $ | 7,162 | $ | 7,802 | $ | 5,363 | $ | 7,560 |
| Weighted average shares outstanding, diluted | 5,554,930 | 5,578,491 | 5,624,906 | 5,677,292 | 5,757,458 | |||||
| Diluted earnings per share | $ | 1.45 | $ | 1.29 | $ | 1.39 | $ | 0.94 | $ | 1.31 |
Home Mortgage Lending
During the first quarter of 2024, mortgage loans funded for sale increased to
The Company has mortgage products including adjustable rate mortgages, a second home product, jumbo, and extended locks which are intended to appeal to customers given the current interest rate environment. During the first quarter of 2024, our home mortgage lending subsidiary, Residential Mortgage originated
The expansion efforts of mortgage production in the Arizona, Colorado, and the Pacific Northwest markets contributed to
The net change in fair value of mortgage servicing rights decreased mortgage banking income by
As of March 31, 2024, Northrim serviced 3,910 loans in its
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, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | ||||||||||
| Mortgage commitments | $ | 56,208 | $ | 22,926 | $ | 50,128 | $ | 71,123 | $ | 41,050 | |||||
| Mortgage loans funded for sale | $ | 84,324 | $ | 79,742 | $ | 131,863 | $ | 113,824 | $ | 50,725 | |||||
| Mortgage loans funded for investment | 17,403 | 27,114 | 21,585 | 55,595 | 41,964 | ||||||||||
| Total mortgage loans funded | $ | 101,727 | $ | 106,856 | $ | 153,448 | $ | 169,419 | $ | 92,689 | |||||
| Mortgage loan refinances to total fundings | 4 | % | 4 | % | 5 | % | 3 | % | 5 | % | |||||
| Mortgage loans serviced for others | $ | 1,060,007 | $ | 1,044,516 | $ | 982,098 | $ | 921,616 | $ | 911,065 | |||||
| Net realized gains on mortgage loans sold | $ | 1,980 | $ | 1,462 | $ | 2,491 | $ | 2,570 | $ | 1,305 | |||||
| Change in fair value of mortgage loan commitments, net | 386 | (296 | ) | (289 | ) | 358 | 125 | ||||||||
| Total production revenue | 2,366 | 1,166 | 2,202 | 2,928 | 1,430 | ||||||||||
| Mortgage servicing revenue | 1,561 | 2,180 | 2,396 | 1,424 | 1,368 | ||||||||||
| Change in fair value of mortgage servicing rights: | |||||||||||||||
| Due to changes in model inputs of assumptions1 | 289 | (707 | ) | — | (3 | ) | (212 | ) | |||||||
| Other2 | (314 | ) | (301 | ) | (310 | ) | (571 | ) | (583 | ) | |||||
| Total mortgage servicing revenue, net | 1,536 | 1,172 | 2,086 | 850 | 573 | ||||||||||
| Other mortgage banking revenue | 129 | 99 | 117 | 135 | 5 | ||||||||||
| Total mortgage banking income | $ | 4,031 | $ | 2,437 | $ | 4,405 | $ | 3,913 | $ | 2,008 | |||||
| Net interest income | $ | 2,232 | $ | 2,276 | $ | 2,300 | $ | 2,442 | $ | 280 | |||||
| (Benefit) provision for credit losses | (48 | ) | — | — | — | — | |||||||||
| Mortgage banking income | 4,031 | 2,437 | 4,405 | 3,913 | 2,008 | ||||||||||
| Other operating expense | 6,086 | 5,477 | 5,951 | 5,977 | 6,092 | ||||||||||
| Income (loss) before provision for income taxes | 225 | (764 | ) | 754 | 378 | (3,804 | ) | ||||||||
| Provision (benefit) for income taxes | 63 | (215 | ) | 182 | 164 | (1,074 | ) | ||||||||
| Net income (loss) | $ | 162 | $ | (549 | ) | $ | 572 | $ | 214 | ($ | 2,730 | ) | |||
| Weighted average shares outstanding, diluted | 5,554,930 | 5,578,491 | 5,624,906 | 5,677,292 | 5,757,458 | ||||||||||
| Diluted earnings per share | $ | 0.03 | $ | (0.10 | ) | $ | 0.09 | $ | 0.04 | ($ | 0.47 | ) | |||
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 were
At March 31, 2024, our liquid assets and investments and loans maturing within one year were
Average interest-earning assets were
Average investment securities decreased to
Total unrealized losses, net of tax, on available for sale securities decreased by
Average interest bearing deposits in other banks decreased to
Portfolio loans were
Alaskans continue to account for substantially all of Northrim’s deposit base. Total deposits were
Shareholders’ equity was
Asset Quality
Northrim believes it has a consistent lending approach throughout economic cycles, which emphasizes appropriate loan-to-value ratios, adequate debt coverage ratios, and competent management.
Nonperforming assets (“NPAs”) net of government guarantees were
Net adversely classified loans were
Northrim had
Northrim estimates that
About Northrim BanCorp
Northrim BanCorp, Inc. is the parent company of Northrim Bank, an Alaska-based community bank with 20 branches in Anchorage, Eagle River, the Matanuska Valley, the Kenai Peninsula, Juneau, Fairbanks, Nome, Kodiak, Ketchikan, and Sitka, serving
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 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, 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: potential further increases in interest rates; the value of securities held in our investment portfolio; the impact of the results of government initiatives on the regulatory landscape, natural resource extraction industries, and capital markets; the impact of declines in the value of commercial and residential real estate markets, high unemployment rates, inflationary pressures and slowdowns in economic growth; changes in banking regulation or actions by bank regulators; inflation, supply-chain constraints, and potential geopolitical instability, including the wars in Ukraine and the Middle East; financial stress on borrowers (consumers and businesses) as a result of higher rates or an uncertain economic environment; the general condition of, and changes in, the Alaska economy; our ability to maintain or expand our market share or net interest margin; the sufficiency of our provision for credit losses and the accuracy of the assumptions or estimates used in preparing our financial statements, including those related to current expected credit losses accounting guidance; our ability to maintain asset quality; our ability to implement our marketing and growth strategies; our ability to identify and address cyber-security risks, including security breaches, “denial of service attacks,” “hacking,” and identity theft; disease, outbreaks, such as the COVID-19 pandemic, or similar health threats and measures implemented to combat them; and our ability to execute our business plan. Further, actual results may be affected by competition 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. 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, 2023, 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.
| Contact: | Mike Huston, President, CEO, and COO |
| (907) 261-8750 | |
| Jed Ballard, Chief Financial Officer | |
| (907) 261-3539 |
References:
http://almis.labor.state.ak.us/
http://www.tax.alaska.gov/programs/oil/prevailing/ans.aspx
https://www.alaskarealestate.com/MLSMember/RealEstateStatistics.aspx
https://www.capitaliq.spglobal.com/web/client?auth=inherit&overridecdc=1&#markets/indexFinancials
| Income Statement | |||||||||
| (Dollars in thousands, except per share data) | Three Months Ended | ||||||||
| (Unaudited) | March 31, | December 31, | March 31, | ||||||
| 2024 | 2023 | 2023 | |||||||
| Interest Income: | |||||||||
| Interest and fees on loans | $ | 30,450 | $ | 29,508 | $ | 23,694 | |||
| Interest on portfolio investments | 4,520 | 4,677 | 4,612 | ||||||
| Interest on deposits in banks | 838 | 1,743 | 1,489 | ||||||
| Total interest income | 35,808 | 35,928 | 29,795 | ||||||
| Interest Expense: | |||||||||
| Interest expense on deposits | 9,180 | 8,676 | 4,583 | ||||||
| Interest expense on borrowings | 181 | 520 | 180 | ||||||
| Total interest expense | 9,361 | 9,196 | 4,763 | ||||||
| Net interest income | 26,447 | 26,732 | 25,032 | ||||||
| Provision for credit losses | 149 | 885 | 360 | ||||||
| Net interest income after provision for credit losses | 26,298 | 25,847 | 24,672 | ||||||
| Other Operating Income: | |||||||||
| Mortgage banking income | 4,031 | 2,437 | 2,008 | ||||||
| Purchased receivable income | 1,345 | 1,307 | 977 | ||||||
| Bankcard fees | 917 | 946 | 908 | ||||||
| Service charges on deposit accounts | 549 | 532 | 457 | ||||||
| Unrealized gain (loss) on marketable equity securities | 314 | 565 | (223 | ) | |||||
| Other income | 688 | 698 | 781 | ||||||
| Total other operating income | 7,844 | 6,485 | 4,908 | ||||||
| Other Operating Expense: | |||||||||
| Salaries and other personnel expense | 15,417 | 15,417 | 15,484 | ||||||
| Data processing expense | 2,659 | 2,500 | 2,355 | ||||||
| Occupancy expense | 1,962 | 1,783 | 1,943 | ||||||
| Insurance expense | 779 | 675 | 557 | ||||||
| Professional and outside services | 755 | 802 | 722 | ||||||
| Marketing expense | 513 | 933 | 564 | ||||||
| Intangible asset amortization expense | — | 6 | 4 | ||||||
| OREO expense, net rental income and gains on sale | (391 | ) | (28 | ) | 26 | ||||
| Other operating expense | 1,944 | 1,905 | 1,854 | ||||||
| Total other operating expense | 23,638 | 23,993 | 23,509 | ||||||
| Income before provision for income taxes | 10,504 | 8,339 | 6,071 | ||||||
| Provision for income taxes | 2,305 | 1,726 | 1,241 | ||||||
| Net income | $ | 8,199 | $ | 6,613 | $ | 4,830 | |||
| Basic EPS | $ | 1.49 | $ | 1.19 | $ | 0.85 | |||
| Diluted EPS | $ | 1.48 | $ | 1.19 | $ | 0.84 | |||
| Weighted average shares outstanding, basic | 5,499,578 | 5,513,041 | 5,691,432 | ||||||
| Weighted average shares outstanding, diluted | 5,554,930 | 5,578,491 | 5,757,458 | ||||||
| Balance Sheet | |||||||||
| (Dollars in thousands) | |||||||||
| (Unaudited) | March 31, | December 31, | March 31, | ||||||
| 2024 | 2023 | 2023 | |||||||
| Assets: | |||||||||
| Cash and due from banks | $ | 30,159 | $ | 27,457 | $ | 28,976 | |||
| Interest bearing deposits in other banks | 50,205 | 91,073 | 110,235 | ||||||
| Investment securities available for sale, at fair value | 592,479 | 637,936 | 677,734 | ||||||
| Investment securities held to maturity | 36,750 | 36,750 | 36,750 | ||||||
| Marketable equity securities, at fair value | 13,467 | 13,153 | 10,515 | ||||||
| Investment in Federal Home Loan Bank stock | 3,236 | 2,980 | 3,752 | ||||||
| Loans held for sale | 43,818 | 31,974 | 23,985 | ||||||
| Portfolio loans | 1,811,135 | 1,789,497 | 1,535,187 | ||||||
| Allowance for credit losses, loans | (17,533 | ) | (17,270 | ) | (14,157 | ) | |||
| Net portfolio loans | 1,793,602 | 1,772,227 | 1,521,030 | ||||||
| Purchased receivables, net | 37,698 | 36,842 | 21,190 | ||||||
| Mortgage servicing rights, at fair value | 20,055 | 19,564 | 18,303 | ||||||
| Other real estate owned, net | — | — | 273 | ||||||
| Premises and equipment, net | 40,836 | 40,693 | 38,163 | ||||||
| Lease right of use asset | 8,867 | 9,092 | 9,469 | ||||||
| Goodwill and intangible assets | 15,967 | 15,967 | 15,980 | ||||||
| Other assets | 72,421 | 71,789 | 63,682 | ||||||
| Total assets | $ | 2,759,560 | $ | 2,807,497 | $ | 2,580,037 | |||
| Liabilities: | |||||||||
| Demand deposits | $ | 714,244 | $ | 749,683 | $ | 767,772 | |||
| Interest-bearing demand | 889,581 | 927,291 | 717,910 | ||||||
| Savings deposits | 246,902 | 255,338 | 292,857 | ||||||
| Money market deposits | 209,785 | 221,492 | 262,478 | ||||||
| Time deposits | 373,571 | 331,251 | 255,256 | ||||||
| Total deposits | 2,434,083 | 2,485,055 | 2,296,273 | ||||||
| Other borrowings | 13,569 | 13,675 | 13,991 | ||||||
| Junior subordinated debentures | 10,310 | 10,310 | 10,310 | ||||||
| Lease liability | 8,884 | 9,092 | 9,466 | ||||||
| Other liabilities | 53,387 | 54,647 | 25,572 | ||||||
| Total liabilities | 2,520,233 | 2,572,779 | 2,355,612 | ||||||
| Shareholders’ Equity: | |||||||||
| Total shareholders’ equity | 239,327 | 234,718 | 224,425 | ||||||
| Total liabilities and shareholders’ equity | $ | 2,759,560 | $ | 2,807,497 | $ | 2,580,037 | |||
Additional Financial Information
(Dollars in thousands)
(Unaudited)
| Composition of Portfolio Loans | |||||||||||||||||||||||||||||
| March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | |||||||||||||||||||||||||
| Balance | % of total | Balance | % of total | Balance | % of total | Balance | % of total | Balance | % of total | ||||||||||||||||||||
| Commercial loans | $ | 475,220 | 26 | % | $ | 486,057 | 27 | % | $ | 492,145 | 28 | % | $ | 499,780 | 29 | % | $ | 448,446 | 29 | % | |||||||||
| Commercial real estate: | |||||||||||||||||||||||||||||
| Owner occupied properties | 372,507 | 20 | % | 368,357 | 20 | % | 359,019 | 21 | % | 350,411 | 21 | % | 344,734 | 22 | % | ||||||||||||||
| Nonowner occupied and | |||||||||||||||||||||||||||||
| multifamily properties | 529,904 | 30 | % | 519,115 | 30 | % | 509,939 | 30 | % | 494,505 | 31 | % | 476,897 | 32 | % | ||||||||||||||
| Residential real estate: | |||||||||||||||||||||||||||||
| 1-4 family properties | |||||||||||||||||||||||||||||
| secured by first liens | 218,552 | 12 | % | 203,534 | 11 | % | 180,719 | 10 | % | 160,467 | 10 | % | 112,758 | 7 | % | ||||||||||||||
| 1-4 family properties | |||||||||||||||||||||||||||||
| secured by junior liens & | |||||||||||||||||||||||||||||
| revolving secured by first liens | 35,460 | 2 | % | 33,783 | 2 | % | 27,342 | 2 | % | 24,970 | 1 | % | 22,864 | 1 | % | ||||||||||||||
| 1-4 family construction | 27,751 | 2 | % | 31,239 | 2 | % | 32,374 | 2 | % | 35,527 | 2 | % | 40,881 | 3 | % | ||||||||||||||
| Construction loans | 153,537 | 8 | % | 149,788 | 8 | % | 120,909 | 7 | % | 96,015 | 6 | % | 92,615 | 6 | % | ||||||||||||||
| Consumer loans | 6,444 | — | % | 6,180 | — | % | 5,930 | — | % | 5,498 | — | % | 4,617 | — | % | ||||||||||||||
| Subtotal | 1,819,375 | 1,798,053 | 1,728,377 | 1,667,173 | 1,543,812 | ||||||||||||||||||||||||
| Unearned loan fees, net | (8,240 | ) | (8,556 | ) | (8,286 | ) | (7,934 | ) | (8,625 | ) | |||||||||||||||||||
| Total portfolio loans | $ | 1,811,135 | $ | 1,789,497 | $ | 1,720,091 | $ | 1,659,239 | $ | 1,535,187 | |||||||||||||||||||
| Composition of Deposits | ||||||||||||||||||||||||
| March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | ||||||||||||||||||||
| Balance | % of total | Balance | % of total | Balance | % of total | Balance | % of total | Balance | % of total | |||||||||||||||
| Demand deposits | $ | 714,244 | 29 | % | $ | 749,683 | 31 | % | $ | 764,647 | 31 | % | $ | 711,390 | 31 | % | $ | 767,772 | 34 | % | ||||
| Interest-bearing demand | 889,581 | 37 | % | 927,291 | 37 | % | 875,814 | 36 | % | 795,128 | 35 | % | 717,910 | 31 | % | |||||||||
| Savings deposits | 246,902 | 10 | % | 255,338 | 10 | % | 265,799 | 11 | % | 275,602 | 12 | % | 292,857 | 13 | % | |||||||||
| Money market deposits | 209,785 | 9 | % | 221,492 | 9 | % | 230,814 | 10 | % | 232,698 | 10 | % | 262,478 | 11 | % | |||||||||
| Time deposits | 373,571 | 15 | % | 331,251 | 13 | % | 290,856 | 12 | % | 287,493 | 12 | % | 255,256 | 11 | % | |||||||||
| Total deposits | $ | 2,434,083 | $ | 2,485,055 | $ | 2,427,930 | $ | 2,302,311 | $ | 2,296,273 | ||||||||||||||
Additional Financial Information
(Dollars in thousands)
(Unaudited)
| Asset Quality | March 31, | December 31, | March 31, | ||||||||
| 2024 | 2023 | 2023 | |||||||||
| Nonaccrual loans | $ | 5,260 | $ | 6,069 | $ | 8,775 | |||||
| Loans 90 days past due and accruing | — | — | — | ||||||||
| Total nonperforming loans | 5,260 | 6,069 | 8,775 | ||||||||
| Nonperforming loans guaranteed by government | — | (1,067 | ) | (2,692 | ) | ||||||
| Net nonperforming loans | 5,260 | 5,002 | 6,083 | ||||||||
| Other real estate owned | — | — | 273 | ||||||||
| Nonperforming purchased receivables | 183 | 808 | — | ||||||||
| Net nonperforming assets | $ | 5,443 | $ | 5,810 | $ | 6,356 | |||||
| Nonperforming loans, net of government guarantees / portfolio loans | 0.29 | % | 0.28 | % | 0.40 | % | |||||
| Nonperforming loans, net of government guarantees / portfolio loans, | |||||||||||
| net of government guarantees | 0.31 | % | 0.30 | % | 0.43 | % | |||||
| Nonperforming assets, net of government guarantees / total assets | 0.20 | % | 0.21 | % | 0.25 | % | |||||
| Nonperforming assets, net of government guarantees / total assets | |||||||||||
| net of government guarantees | 0.21 | % | 0.21 | % | 0.26 | % | |||||
| Adversely classified loans, net of government guarantees | $ | 7,206 | $ | 7,057 | $ | 7,221 | |||||
| Special mention loans, net of government guarantees | $ | 9,976 | $ | 6,580 | $ | 15,547 | |||||
| Loans 30-89 days past due and accruing, net of government guarantees / | |||||||||||
| portfolio loans | 0.03 | % | 0.03 | % | 0.06 | % | |||||
| Loans 30-89 days past due and accruing, net of government guarantees / | |||||||||||
| portfolio loans, net of government guarantees | 0.04 | % | 0.03 | % | 0.06 | % | |||||
| Allowance for credit losses / portfolio loans | 0.97 | % | 0.97 | % | 0.92 | % | |||||
| Allowance for credit losses / portfolio loans, net of government guarantees | 1.03 | % | 1.02 | % | 0.99 | % | |||||
| Allowance for credit losses / nonperforming loans, net of government | |||||||||||
| guarantees | 333 | % | 345 | % | 233 | % | |||||
| Gross loan charge-offs for the quarter | $ | 25 | $ | 281 | $ | 14 | |||||
| Gross loan recoveries for the quarter | $ | (67 | ) | $ | (185 | ) | $ | (74 | ) | ||
| Net loan (recoveries) charge-offs for the quarter | $ | (42 | ) | $ | 96 | $ | (60 | ) | |||
| Net loan charge-offs (recoveries) for the quarter / average loans, for the quarter | — | % | 0.01 | % | — | % | |||||
Additional Financial Information
(Dollars in thousands)
(Unaudited)
| Average Balances, Yields, and Rates | |||||||||||||||||
| Three Months Ended | |||||||||||||||||
| March 31, 2024 | December 31, 2023 | March 31, 2023 | |||||||||||||||
| 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 | $ | 61,561 | 5.38 | % | $ | 126,174 | 5.40 | % | $ | 130,929 | 4.55 | % | |||||
| Portfolio investments | 670,937 | 2.82 | % | 690,659 | 2.48 | % | 727,610 | 2.40 | % | ||||||||
| Loans held for sale | 32,635 | 6.13 | % | 45,732 | 6.55 | % | 20,901 | 5.54 | % | ||||||||
| Portfolio loans | 1,793,425 | 6.75 | % | 1,749,732 | 6.55 | % | 1,524,130 | 6.28 | % | ||||||||
| Total interest-earning assets | 2,558,558 | 5.69 | % | 2,612,297 | 5.51 | % | 2,403,570 | 5.10 | % | ||||||||
| Nonearning assets | 201,137 | 214,934 | 185,755 | ||||||||||||||
| Total assets | $ | 2,759,695 | $ | 2,827,231 | $ | 2,589,325 | |||||||||||
| Liabilities and Shareholders’ Equity | |||||||||||||||||
| Interest-bearing deposits | $ | 1,731,923 | 2.13 | % | $ | 1,724,409 | 2.00 | % | $ | 1,543,437 | 1.20 | % | |||||
| Borrowings | 23,944 | 2.95 | % | 47,964 | 4.25 | % | 24,366 | 2.92 | % | ||||||||
| Total interest-bearing liabilities | 1,755,867 | 2.14 | % | 1,772,373 | 2.06 | % | 1,567,803 | 1.23 | % | ||||||||
| Noninterest-bearing demand deposits | 705,134 | 760,566 | 756,088 | ||||||||||||||
| Other liabilities | 60,407 | 63,321 | 41,067 | ||||||||||||||
| Shareholders’ equity | 238,287 | 230,971 | 224,367 | ||||||||||||||
| Total liabilities and shareholders’ equity | $ | 2,759,695 | $ | 2,827,231 | $ | 2,589,325 | |||||||||||
| Net spread | 3.55 | % | 3.45 | % | 3.87 | % | |||||||||||
| NIM | 4.16 | % | 4.06 | % | 4.22 | % | |||||||||||
| NIMTE* | 4.22 | % | 4.12 | % | 4.30 | % | |||||||||||
| Cost of funds | 1.53 | % | 1.44 | % | 0.83 | % | |||||||||||
| Average portfolio loans to average | |||||||||||||||||
| interest-earning assets | 70.10 | % | 66.98 | % | 63.41 | % | |||||||||||
| Average portfolio loans to average total deposits | 73.59 | % | 70.41 | % | 66.28 | % | |||||||||||
| Average non-interest deposits to average | |||||||||||||||||
| total deposits | 28.93 | % | 30.61 | % | 32.88 | % | |||||||||||
| Average interest-earning assets to average | |||||||||||||||||
| interest-bearing liabilities | 145.71 | % | 147.39 | % | 153.31 | % | |||||||||||
The components of the change in NIMTE* are detailed in the table below:
| 1Q24 vs. 4Q23 | 1Q24 vs. 1Q23 | |||
| Nonaccrual interest adjustments | 0.02 | % | — | % |
| Interest rates on loans and liabilities and loan fees, all other loans | 0.08 | % | (0.35)% | |
| Volume and mix of other interest-earning assets and liabilities | — | % | 0.27 | % |
| Change in NIMTE* | 0.10 | % | (0.08)% | |
Additional Financial Information
(Dollars in thousands, except per share data)
(Unaudited)
| Capital Data (At quarter end) | |||||||||||
| March 31, 2024 | December 31, 2023 | March 31, 2023 | |||||||||
| Book value per share | $ | 43.52 | $ | 42.57 | $ | 39.56 | |||||
| Tangible book value per share* | $ | 40.61 | $ | 39.68 | $ | 36.74 | |||||
| Total shareholders’ equity/total assets | 8.67 | % | 8.36 | % | 8.70 | % | |||||
| Tangible Common Equity/Tangible Assets* | 8.14 | % | 7.84 | % | 8.13 | % | |||||
| Tier 1 Capital / Risk Adjusted Assets | 11.55 | % | 11.43 | % | 12.75 | % | |||||
| Total Capital / Risk Adjusted Assets | 12.47 | % | 12.35 | % | 13.60 | % | |||||
| Tier 1 Capital / Average Assets | 9.01 | % | 8.72 | % | 9.40 | % | |||||
| Shares outstanding | 5,499,578 | 5,513,459 | 5,672,841 | ||||||||
| Total unrealized loss on AFS debt securities, net of income taxes | $ | (17,205 | ) | $ | (17,415 | ) | $ | (24,311 | ) | ||
| Total unrealized gain on derivatives and hedging activities, net of income taxes | $ | 1,172 | $ | 978 | $ | 827 | |||||
| Profitability Ratios | ||||||||||
| March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | ||||||
| For the quarter: | ||||||||||
| NIM | 4.16 | % | 4.06 | % | 4.15 | % | 4.14 | % | 4.22 | % |
| NIMTE* | 4.22 | % | 4.12 | % | 4.21 | % | 4.21 | % | 4.30 | % |
| Efficiency ratio | 68.93 | % | 72.21 | % | 66.64 | % | 74.03 | % | 78.51 | % |
| Return on average assets | 1.19 | % | 0.93 | % | 1.22 | % | 0.85 | % | 0.76 | % |
| Return on average equity | 13.84 | % | 11.36 | % | 14.67 | % | 9.85 | % | 8.73 | % |
*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, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | |||||||||||||||
| Net interest income | $ | 26,447 | $ | 26,732 | $ | 26,350 | $ | 25,142 | $ | 25,032 | |||||||||
| Divided by average interest-bearing assets | 2,558,558 | 2,612,297 | 2,516,126 | 2,434,611 | 2,403,570 | ||||||||||||||
| Net interest margin (“NIM”)2 | 4.16 | % | 4.06 | % | 4.15 | % | 4.14 | % | 4.22 | % | |||||||||
| Net interest income | $ | 26,447 | $ | 26,732 | $ | 26,350 | $ | 25,142 | $ | 25,032 | |||||||||
| Plus: reduction in tax expense related to | |||||||||||||||||||
| tax-exempt interest income | 379 | 374 | 373 | 400 | 429 | ||||||||||||||
| $ | 26,826 | $ | 27,106 | $ | 26,723 | $ | 25,542 | $ | 25,461 | ||||||||||
| Divided by average interest-bearing assets | 2,558,558 | 2,612,297 | 2,516,126 | 2,434,611 | 2,403,570 | ||||||||||||||
| NIMTE2 | 4.22 | % | 4.12 | % | 4.21 | % | 4.21 | % | 4.30 | % | |||||||||
2Calculated using actual days in the quarter divided by 366 for the quarters ended in 2024 and 365 for the quarters ended in 2023, respectively.
*Non-GAAP Financial Measures
(Dollars and shares in thousands, except per share data)
(Unaudited)
Tangible Book Value Per Share
Tangible book value per share 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, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | ||||||||||
| Total shareholders’ equity | $ | 239,327 | $ | 234,718 | $ | 225,259 | $ | 221,336 | $ | 224,425 | ||||
| Divided by shares outstanding | 5,500 | 5,513 | 5,548 | 5,611 | 5,673 | |||||||||
| Book value per share | $ | 43.52 | $ | 42.57 | $ | 40.60 | $ | 39.45 | $ | 39.56 | ||||
| March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | ||||||||||
| Total shareholders’ equity | $ | 239,327 | $ | 234,718 | $ | 225,259 | $ | 221,336 | $ | 224,425 | ||||
| Less: goodwill and intangible assets | 15,967 | 15,967 | 15,973 | 15,977 | 15,980 | |||||||||
| $ | 223,360 | $ | 218,751 | $ | 209,286 | $ | 205,359 | $ | 208,445 | |||||
| Divided by shares outstanding | 5,500 | 5,513 | 5,548 | 5,611 | 5,673 | |||||||||
| Tangible book value per share | $ | 40.61 | $ | 39.68 | $ | 37.72 | $ | 36.60 | $ | 36.74 | ||||
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, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | ||||||||||||||
| Total shareholders’ equity | $ | 239,327 | $ | 234,718 | $ | 225,259 | $ | 221,336 | $ | 224,425 | |||||||||
| Total assets | 2,759,560 | 2,807,497 | 2,790,189 | 2,638,207 | 2,580,037 | ||||||||||||||
| Total shareholders’ equity to total assets | 8.67 | % | 8.36 | % | 8.07 | % | 8.39 | % | 8.70 | % | |||||||||
| Northrim BanCorp, Inc. | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | ||||||||||||||
| Total shareholders’ equity | $ | 239,327 | $ | 234,718 | $ | 225,259 | $ | 221,336 | $ | 224,425 | |||||||||
| Less: goodwill and other intangible assets, net | 15,967 | 15,967 | 15,973 | 15,977 | 15,980 | ||||||||||||||
| Tangible common shareholders’ equity | $ | 223,360 | $ | 218,751 | $ | 209,286 | $ | 205,359 | $ | 208,445 | |||||||||
| Total assets | $ | 2,759,560 | $ | 2,807,497 | $ | 2,790,189 | $ | 2,638,207 | $ | 2,580,037 | |||||||||
| Less: goodwill and other intangible assets, net | 15,967 | 15,967 | 15,973 | 15,977 | 15,980 | ||||||||||||||
| Tangible assets | $ | 2,743,593 | $ | 2,791,530 | $ | 2,774,216 | $ | 2,622,230 | $ | 2,564,057 | |||||||||
| Tangible common equity ratio | 8.14 | % | 7.84 | % | 7.54 | % | 7.83 | % | 8.13 | % | |||||||||
*Non-GAAP Financial Measures
(Dollars and shares in thousands, except per share data)
(Unaudited)
Tangible Common Equity to Tangible Assets, excluding the unrealized losses on the available for sales securities portfolio
Tangible common equity to tangible assets, excluding the unrealized losses on the available for sales securities portfolio, is a non-GAAP ratio that represents total equity less goodwill and intangible assets and the unrealized gain (loss) on available for sale securities, net of income taxes divided by total assets less goodwill and intangible assets and the unrealized gain (loss) on available for sale securities, net of income taxes. 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, excluding the unrealized losses on the available for sales securities portfolio and shareholders' equity to total assets.
| Northrim BanCorp, Inc. | March 31, 2024 | December 31, 2023 | March 31, 2023 | ||||||||
| Total shareholders' equity | $ | 239,327 | $ | 234,718 | $ | 224,425 | |||||
| Total assets | 2,759,560 | 2,807,497 | 2,580,037 | ||||||||
| Total shareholders' equity to total assets | 8.67 | % | 8.36 | % | 8.70 | % | |||||
| Northrim BanCorp, Inc. | March 31, 2024 | December 31, 2023 | March 31, 2023 | ||||||||
| Total shareholders' equity | $ | 239,327 | $ | 234,718 | $ | 224,425 | |||||
| Less: goodwill and other intangible assets, net | 15,967 | 15,967 | 15,980 | ||||||||
| Less: unrealized (loss) on available for sale securities, net income taxes | (17,205 | ) | (17,415 | ) | (24,311 | ) | |||||
| Tangible common shareholders' equity, excluding unrealized losses on available for sale securities | $ | 240,565 | $ | 236,166 | $ | 232,756 | |||||
| Total assets | $ | 2,759,560 | $ | 2,807,497 | $ | 2,580,037 | |||||
| Less: goodwill and other intangible assets, net | 15,967 | 15,967 | 15,980 | ||||||||
| Less: unrealized (loss) on available for sale securities, net income taxes | (17,205 | ) | (17,415 | ) | (24,311 | ) | |||||
| Tangible assets, excluding unrealized losses on available for sale securities | $ | 2,760,798 | $ | 2,808,945 | $ | 2,588,368 | |||||
| Tangible common equity ratio, excluding unrealized losses on available for sale securities | 8.71 | % | 8.41 | % | 8.99 | % | |||||
Note Transmitted on GlobeNewswire on April 24, 2024, at 12:15 pm Alaska Standard Time.
FAQ
What was Northrim BanCorp's net income in the first quarter of 2024?
What was the increase in dividends per share in the first quarter of 2024 compared to the previous quarters?
What branch expansions did Northrim BanCorp announce in the first quarter of 2024?
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