Northrim BanCorp Earns $8.9 Million, or $1.42 Per Diluted Share, in Third Quarter 2021, and $29.4 Million, or $4.69 Per Diluted Share, in First Nine Months of 2021
Northrim BanCorp reported net income of $8.88 million ($1.42 per diluted share) for Q3 2021, up from $8.35 million in Q2 2021 but down from $11.86 million YoY. Strong performance was driven by SBA PPP loans, high mortgage lending volume, and core loan growth. The bank's total deposits increased 27% YoY to $2.30 billion. Total revenue for Q3 was $33.1 million, down from $39.9 million a year earlier. Northrim remains well-capitalized with a tangible common equity ratio of 8.73%.
- Net income rose 6.4% QoQ to $8.88 million in Q3 2021.
- Total deposits increased 27% YoY to $2.30 billion.
- Core loan growth saw a 4% increase compared to the previous quarter.
- Net income decreased 25.5% YoY from $11.86 million in Q3 2020.
- Total revenue fell 17% YoY from $39.9 million in Q3 2020.
- Net loans decreased 2% YoY to $1.44 billion due to PPP forgiveness.
ANCHORAGE, Alaska, Oct. 29, 2021 (GLOBE NEWSWIRE) -- Northrim BanCorp, Inc. (NASDAQ:NRIM) (“Northrim” or the "Company") today reported net income of
Also benefiting third quarter 2021 results was a
Net income for the first nine months of 2021 increased
“Northrim’s third quarter operating results continue to reflect the effort put forth by all of our employees to meet the needs of our community,” said Joe Schierhorn, President and CEO. “Strong residential mortgage business along with the continued success of our outreach to new and existing customers during the quarter generated increased income and had a meaningful impact on core loan and deposit growth.”
“We chose to be active participants in the SBA’s PPP lending programs from the onset of the pandemic, helping our new and existing business customers sustain their business operations. Under the initial PPP program, we helped approximately 2,900 businesses receive
COVID-19 Issues:
“Our team is generating success in spite of strong headwinds in our local economy. The pandemic has been extremely challenging for the Alaskan economy, especially in the tourism and hospitality sector,” Schierhorn added.
- Industry Exposure: Northrim has identified various industries that may be adversely impacted by the COVID-19 pandemic and the volatility in oil prices that has occurred over the last year and a half, although oil prices have rebounded recently. 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 September 30, 2021, are: Healthcare (
8% ), Tourism (7% ), Oil and Gas (5% ), Aviation (non-tourism) (5% ), Fishing (5% ), Accommodations (4% ), 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 September 30, 2020, with approximately
82% of the modifications at September 30, 2021, representing three relationships. The total outstanding principal balance of loan modifications due to the impacts of COVID-19 as of September 30, 2021, June 30, 2021, and September 30, 2020 were as follows:
| Loan Modifications due to COVID-19 as of September 30, 2021 | |||||||||
| (Dollars in thousands) | Interest Only | Full Payment Deferral | Total | ||||||
| Portfolio loans | $ | 49,888 | $ | 7,533 | $ | 57,421 | |||
| Number of modifications | 21 | 3 | 24 | ||||||
| Loan Modifications due to COVID-19 as of June 30, 2021 | |||||||||
| (Dollars in thousands) | Interest Only | Full Payment Deferral | Total | ||||||
| Portfolio loans | $ | 75,613 | $ | 7,440 | $ | 83,053 | |||
| Number of modifications | 23 | 1 | 24 | ||||||
| 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 | ||||||
All 24 loan modifications totaling
- Provision for Credit Losses: Northrim booked a benefit for credit loss provisions of
$1.1 million for the quarter ended September 30, 2021. This compares to a benefit for credit loss provisions of$427,000 during the previous quarter and a$567,000 provision for credit losses in the third 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 third quarter of 2021 is primarily the result of the improvement in economic assumptions used to estimate lifetime credit losses, which have improved but are not yet at pre-pandemic levels, and a decrease in unfunded commitments, off-set partially by a growth in core loans.
- Credit Quality: Nonaccrual loans, net of government guarantees decreased to
$11.5 million at September 30, 2021, compared to$12.0 million in the previous quarter. Net adversely classified loans increased to$17.4 million at September 30, 2021, compared to$14.5 million in the third quarter a year ago. Net loan recoveries were$39,000 in the third quarter of 2021, compared to net loan recoveries of$463,000 in the third quarter of 2020.
- Branch Operations: Branch operations have returned to pre-pandemic levels, while a number of customer and employee safety measures continue to be implemented.
- Growth and Paycheck Protection Program:
- Over the last eighteen months, Northrim funded a total of nearly 5,800 PPP loans totaling
$612.6 million to both existing and new customers. Of this amount, 745 loans totaling$33 million were originated during the second quarter of 2021 and 2,125 loans totaling$204.0 million were originated during the first quarter of 2021, through the second round of PPP funding. No new PPP loans were originated during the third quarter of 2021. - As of September 30, 2021, PPP has resulted in 2,341 new customers totaling
$68.0 million in non-PPP loans, and$125.6 million in new deposit balances. - Management estimates that Northrim funded approximately
24% of the number and32% of the value of all Alaska PPP second round loans. - As of September 30, 2021, Northrim customers had received forgiveness through the SBA on 3,439 PPP loans totaling
$405.8 million , of which 1,118 PPP loans totaling$102.4 million were forgiven in the third quarter of 2021, and 617 PPP loans totaling$133 million were forgiven in the second quarter of 2021. Of the PPP loans forgiven in the third quarter of 2021, 578 loans totaling$35.2 million related to PPP round two. As of September 30, 2021, approximately98% of PPP round one and16% of PPP round two loans have been forgiven. - 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 eighteen months, Northrim funded a total of nearly 5,800 PPP loans totaling
- Capital Management: At September 30, 2021, the Company’s tangible common equity to tangible assets* ratio was
8.73% and the capital of Northrim Bank (the "Bank") was well in excess of all regulatory requirements. During the third quarter of 2021, the Company repurchased 29,613 shares of common stock under the previously announced share repurchase program, with 221,988 shares remaining of the 313,000 shares authorized for repurchase.
Third Quarter 2021 Highlights:
- For the third quarter of 2021, total revenue was
$33.1 million , compared to$39.9 million in the third quarter of 2020, and$33.3 million in the second quarter of 2021.- Community Banking provided
68% of total revenues and77% of earnings in the third quarter of 2021. - Home Mortgage Lending provided
32% of total revenue and23% of earnings in the third quarter of 2021.
- Community Banking provided
- Net interest income in the third quarter of 2021 was
$20.4 million , up6% from$19.2 million in the preceding quarter and up12% from$18.3 million in the third quarter a year ago. - Net interest margin on a tax equivalent basis (“NIMTE”)* was
3.47% in the third quarter of 2021, a 3 bps decrease compared to the preceding quarter, and a 46 bps decrease compared to the third quarter a year ago. - Return on average assets ("ROAA") was
1.40% and return on average equity ("ROAE") was14.47% for the third quarter of 2021 compared to ROAA of2.31% and ROAE of22.10% for the third quarter of 2020. - Net loans decreased to
$1.44 billion at September 30, 2021, compared to$1.47 billion at both September 30, 2020 and at June 30, 2021, as a result of PPP forgiveness. Core loans increased to$1.25 billion at September 30, 2021, compared to$1.13 billion at September 30, 2020. - Total deposits increased
27% to$2.30 billion at September 30, 2021, compared to$1.81 billion at September 30, 2020, and increased7% compared to$2.15 billion at June 30, 2021. - The mortgage servicing right asset increased by
$1.2 million for the quarter ended September 30, 2021, compared to an increase of$1.2 million for the preceding quarter and an increase of$567,000 for the third quarter a year ago.
| Financial Highlights | Three Months Ended | ||||||||||||||||||
| (Dollars in thousands, except per share data) | September 30, 2021 | June 30, 2021 | March 31, 2021 | December 31, 2020 | September 30, 2020 | ||||||||||||||
| Total assets | $ | 2,609,946 | $ | 2,453,567 | $ | 2,351,243 | $ | 2,121,798 | $ | 2,097,738 | |||||||||
| Total portfolio loans | $ | 1,450,657 | $ | 1,487,968 | $ | 1,548,924 | $ | 1,444,050 | $ | 1,492,720 | |||||||||
| Average portfolio loans | $ | 1,469,072 | $ | 1,541,701 | $ | 1,492,906 | $ | 1,489,029 | $ | 1,465,839 | |||||||||
| Total deposits | $ | 2,296,541 | $ | 2,146,438 | $ | 2,051,317 | $ | 1,824,981 | $ | 1,806,133 | |||||||||
| Average deposits | $ | 2,207,402 | $ | 2,082,983 | $ | 1,894,868 | $ | 1,820,251 | $ | 1,750,167 | |||||||||
| Total shareholders' equity | $ | 242,474 | $ | 237,218 | $ | 231,452 | $ | 221,575 | $ | 214,616 | |||||||||
| Net income | $ | 8,877 | $ | 8,345 | $ | 12,181 | $ | 10,100 | $ | 11,855 | |||||||||
| Diluted earnings per share | $ | 1.42 | $ | 1.33 | $ | 1.94 | $ | 1.59 | $ | 1.84 | |||||||||
| Return on average assets | 1.40 | % | 1.42 | % | 2.25 | % | 1.90 | % | 2.31 | % | |||||||||
| Return on average shareholders' equity | 14.47 | % | 14.26 | % | 21.40 | % | 18.22 | % | 22.10 | % | |||||||||
| NIM | 3.45 | % | 3.48 | % | 3.90 | % | 3.94 | % | 3.90 | % | |||||||||
| NIMTE* | 3.47 | % | 3.50 | % | 3.92 | % | 3.96 | % | 3.93 | % | |||||||||
| Efficiency ratio | 68.07 | % | 67.00 | % | 60.24 | % | 65.31 | % | 58.85 | % | |||||||||
| Total shareholders' equity/total assets | 9.29 | % | 9.67 | % | 9.84 | % | 10.44 | % | 10.23 | % | |||||||||
| Tangible common equity/tangible assets* | 8.73 | % | 9.07 | % | 9.22 | % | 9.76 | % | 9.54 | % | |||||||||
| Book value per share | $ | 39.25 | $ | 38.22 | $ | 37.29 | $ | 35.45 | $ | 34.18 | |||||||||
| Tangible book value per share* | $ | 36.66 | $ | 35.64 | $ | 34.71 | $ | 32.88 | $ | 31.62 | |||||||||
| Dividends per share | $ | 0.38 | $ | 0.37 | $ | 0.37 | $ | 0.35 | $ | 0.35 | |||||||||
* References to NIMTE, tangible book value per share, and tangible common equity to 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 14.)
The Alaska economy is slowly recovering in 2021 from the effect of the global pandemic. Mark Edwards, EVP Chief Credit Officer and Bank Economist summarizes, “Rising oil prices, an improvement in tourism, and strong liquidity levels in the private sector from government stimulus programs have helped Alaska rebound from the economic lows seen in 2020. The housing market remains strong with average sales prices and the number of units sold up significantly, while home foreclosure and delinquency rates continue to improve. Rising prices are starting to stress affordability levels for homes and supply chain disruptions are expected to moderate construction activity in the short run.”
The Alaska Department of Labor ("DOL") has released data through August of 2021. They report total payroll jobs in Alaska have grown by 13,600 compared to August of 2020. This is a total of 308,900 jobs or an improvement of
Alaska’s revised Gross State Product (“GSP”) for 2020 was
Alaska’s seasonally adjusted personal income for the second quarter of 2021 was
Alaska North Slope (“ANS”) crude oil began 2020 at
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 improved from
The Mortgage Bankers Association survey reported that the percentage of delinquent mortgage loans at the end of 2019 in Alaska was
According to the Alaska Multiple Listing Services, 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 an all-time record low 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 third quarter of 2021, Northrim generated a ROAA of
Net Interest Income/Net Interest Margin
Net interest income increased
NIMTE* was
The yield on interest earning assets in the third quarter of 2021 was
1As of June 30, 2021, the S&P U.S. Small Cap Bank Index tracked 263 banks with total common market capitalization between
Provision for Credit Losses
Northrim recorded a benefit to the provision for credit losses of
Nonperforming loans, net of government guarantees, decreased 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 third quarter of 2021, Northrim recorded
Community Banking
“We are proud of the work we are doing to address the needs of our customers in our communities, and as a result we are growing our market share across all of our major markets,” said Schierhorn. “To better serve our customers, 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 are geographically diversified throughout our markets and feel that by choosing to expand into new markets when other banks in Alaska were contracting was the right choice, as evident by the new deposit market share data that came out in September 2021.”
In the recent deposit market share data from the FDIC for the period from June 30, 2020 to June 30, 2021, Northrim’s deposit market share in Alaska increased to
Net interest income in the Community Banking segment totaled
The following tables provide highlights of the Community Banking segment of Northrim:
| Three Months Ended | |||||||||||||||||||
| (Dollars in thousands, except per share data) | September 30, 2021 | June 30, 2021 | March 31, 2021 | December 31, 2020 | September 30, 2020 | ||||||||||||||
| Net interest income | $ | 19,728 | $ | 18,468 | $ | 18,734 | $ | 18,349 | $ | 17,388 | |||||||||
| (Benefit) provision for credit losses | (1,106 | ) | (427 | ) | (1,488 | ) | (599 | ) | 567 | ||||||||||
| Other operating income | 2,765 | 2,772 | 2,274 | 2,921 | 3,696 | ||||||||||||||
| Other operating expense | 14,849 | 14,551 | 13,664 | 15,536 | 14,353 | ||||||||||||||
| Income before provision for income taxes | 8,750 | 7,116 | 8,832 | 6,333 | 6,164 | ||||||||||||||
| Provision (benefit) for income taxes | 1,955 | 1,850 | 1,452 | 1,303 | 1,249 | ||||||||||||||
| Net income | $ | 6,795 | $ | 5,266 | $ | 7,380 | $ | 5,030 | $ | 4,915 | |||||||||
| Weighted average shares outstanding, diluted | 6,265,602 | 6,277,265 | 6,277,177 | 6,324,461 | 6,413,221 | ||||||||||||||
| Diluted earnings per share | $ | 1.08 | $ | 0.84 | $ | 1.18 | $ | 0.79 | $ | 0.76 | |||||||||
| Year-to-date | |||||||
| (Dollars in thousands, except per share data) | September 30, 2021 | September 30, 2020 | |||||
| Net interest income | $ | 56,930 | $ | 49,298 | |||
| (Benefit) provision for credit losses | (3,021 | ) | 3,031 | ||||
| Other operating income | 7,811 | 7,772 | |||||
| Other operating expense | 43,064 | 42,078 | |||||
| Income before provision for income taxes | 24,698 | 11,961 | |||||
| Provision for income taxes | 5,257 | 1,391 | |||||
| Net income | $ | 19,441 | $ | 10,570 | |||
| Weighted average shares outstanding, diluted | 6,274,634 | 6,467,991 | |||||
| Diluted earnings per share | $ | 3.10 | $ | 1.63 | |||
Home Mortgage Lending
“The increased activity in the mortgage market has continued through the third quarter of 2021, although refinance activity has slowed somewhat compared to the record setting pace of the last several quarters,” said Ballard. “New home purchase activity continues in our market, with mortgage production commitments remaining significantly higher than normal.”
During the third quarter of 2021, mortgage loan volume was
Loan fundings decreased during the third quarter of 2021 as compared to the preceding quarter and year-over-year, driven by lower refinance activity. The net change in fair value of mortgage servicing rights decreased mortgage banking income by
“Our mortgage servicing business, which we initiated to service loans primarily for the Alaska Housing Finance Corporation, generated continued growth throughout the quarter,” said Ballard. As of September 30, 2021, Northrim serviced 3,024 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 tables provide highlights of the Home Mortgage Lending segment of Northrim:
| Three Months Ended | |||||||||||||||||||
| (Dollars in thousands, except per share data) | September 30 2021 | June 30, 2021 | March 31, 2021 | December 31, 2020 | September 30, 2020 | ||||||||||||||
| Mortgage commitments | $ | 169,436 | $ | 173,994 | $ | 181,417 | $ | 150,276 | $ | 257,304 | |||||||||
| Mortgage loans funded for sale | $ | 283,165 | $ | 286,314 | $ | 300,963 | $ | 381,942 | $ | 364,159 | |||||||||
| Mortgage loan refinances to total fundings | 23 | % | 31 | % | 60 | % | 48 | % | 39 | % | |||||||||
| Mortgage loans serviced for others | $ | 750,327 | $ | 713,926 | $ | 682,827 | $ | 683,117 | $ | 655,733 | |||||||||
| Net realized gains on mortgage loans sold | $ | 7,957 | $ | 9,470 | $ | 11,795 | $ | 15,557 | $ | 14,736 | |||||||||
| Change in fair value of mortgage loan commitments, net | 533 | (427 | ) | 98 | (2,724 | ) | 1,943 | ||||||||||||
| Total production revenue | 8,490 | 9,043 | 11,893 | 12,833 | 16,679 | ||||||||||||||
| Mortgage servicing revenue | 2,449 | 2,452 | 2,152 | 2,510 | 2,044 | ||||||||||||||
| Change in fair value of mortgage servicing rights: | |||||||||||||||||||
| Due to changes in model inputs of assumptions1 | (928 | ) | 16 | (180 | ) | (410 | ) | (699 | ) | ||||||||||
| Other2 | (530 | ) | (583 | ) | (829 | ) | (783 | ) | (806 | ) | |||||||||
| Total mortgage servicing revenue, net | 991 | 1,885 | 1,143 | 1,317 | 539 | ||||||||||||||
| Other mortgage banking revenue | 412 | 432 | 586 | 661 | 714 | ||||||||||||||
| Total mortgage banking income | $ | 9,893 | $ | 11,360 | $ | 13,622 | $ | 14,811 | $ | 17,932 | |||||||||
| Net interest income | $ | 704 | $ | 724 | $ | 759 | $ | 875 | $ | 906 | |||||||||
| Mortgage banking income | 9,893 | 11,360 | 13,622 | 14,811 | 17,932 | ||||||||||||||
| Other operating expense | 7,685 | 7,785 | 7,663 | 8,611 | 9,153 | ||||||||||||||
| Income before provision for income taxes | 2,912 | 4,299 | 6,718 | 7,075 | 9,685 | ||||||||||||||
| Provision for income taxes | 830 | 1,220 | 1,917 | 2,005 | 2,745 | ||||||||||||||
| Net income | $ | 2,082 | $ | 3,079 | $ | 4,801 | $ | 5,070 | $ | 6,940 | |||||||||
| Weighted average shares outstanding, diluted | 6,265,602 | 6,277,265 | 6,277,177 | 6,324,461 | 6,413,221 | ||||||||||||||
| Diluted earnings per share | $ | 0.34 | $ | 0.49 | $ | 0.76 | $ | 0.80 | $ | 1.08 | |||||||||
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.
| Year-to-date | |||||||
| (Dollars in thousands, except per share data) | September 30, 2021 | September 30, 2020 | |||||
| Mortgage loans funded for sale | $ | 870,442 | $ | 913,469 | |||
| Mortgage loan refinances to total fundings | 39 | % | 51 | % | |||
| Net realized gains on mortgage loans sold | $ | 29,222 | $ | 30,701 | |||
| Change in fair value of mortgage loan commitments, net | 204 | 4,977 | |||||
| Total production revenue | 29,426 | 35,678 | |||||
| Mortgage servicing revenue | 7,053 | 5,004 | |||||
| Change in fair value of mortgage servicing rights: | |||||||
| Due to changes in model inputs of assumptions1 | (1,092 | ) | (2,291 | ) | |||
| Other2 | (1,942 | ) | (2,072 | ) | |||
| Total mortgage servicing revenue, net | 4,019 | 641 | |||||
| Other mortgage banking revenue | 1,430 | 1,505 | |||||
| Total mortgage banking income | $ | 34,875 | $ | 37,824 | |||
| Net interest income | $ | 2,187 | $ | 2,143 | |||
| Mortgage banking income | 34,875 | 37,824 | |||||
| Other operating expense | 23,133 | 22,889 | |||||
| Income before provision for income taxes | 13,929 | 17,078 | |||||
| Provision for income taxes | 3,967 | 4,860 | |||||
| Net income | $ | 9,962 | $ | 12,218 | |||
| Weighted average shares outstanding, diluted | 6,274,634 | 6,467,991 | |||||
| Diluted earnings per share | $ | 1.59 | $ | 1.89 | |||
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
Liquidity levels are at record highs with interest bearing deposits in other banks at
Average interest-earning assets were
Average investment securities increased to
“Core loan growth was strong during the quarter, with
Alaskans continue to account for substantially all of Northrim’s deposit base, which is primarily made up of low-cost transaction accounts. Total deposits were
“We continue to attract new customers through our outreach in the community, with a large portion of our deposit growth coming from the over 2,300 new customers we gained from helping with PPP lending,” said Michael Martin, the Bank's Chief Operating Officer and General Counsel. “The investments in our people, products and services have allowed us to attract a broader customer base and convert new PPP customers into full banking relationships.”
Shareholders’ equity improved to
Asset Quality
“Credit quality remains solid, with nearly every credit quality metric improving compared to a year ago,” said Martin. “Additionally, loan modifications are down
Nonperforming assets ("NPAs") net of government guarantees were
Net adversely classified loans were
Performing restructured loans that were not included in nonaccrual loans at September 30, 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
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, natural resource extraction industries, capital markets, and the response to and management of the COVID-19 pandemic, including the effectiveness of previously-enacted fiscal stimulus from the federal government and a potential infrastructure bill; the timing of PPP loan forgiveness; the impact of interest rates, inflation, supply-chain constraints, trade policies and tensions, including tariffs, and potential geopolitical instability; 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:
www.sba.gov/ak
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
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 | Year-to-date | |||||||||||||||||
| (Unaudited) | September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||
| Interest Income: | |||||||||||||||||||
| Interest and fees on loans | $ | 19,900 | $ | 18,963 | $ | 18,691 | $ | 58,287 | $ | 51,504 | |||||||||
| Interest on portfolio investments | 1,233 | 1,229 | 1,086 | 3,596 | 4,349 | ||||||||||||||
| Interest on deposits in banks | 149 | 61 | 17 | 248 | 284 | ||||||||||||||
| Total interest income | 21,282 | 20,253 | 19,794 | 62,131 | 56,137 | ||||||||||||||
| Interest Expense: | |||||||||||||||||||
| Interest expense on deposits | 667 | 879 | 1,320 | 2,495 | 4,135 | ||||||||||||||
| Interest expense on borrowings | 183 | 182 | 180 | 519 | 561 | ||||||||||||||
| Total interest expense | 850 | 1,061 | 1,500 | 3,014 | 4,696 | ||||||||||||||
| Net interest income | 20,432 | 19,192 | 18,294 | 59,117 | 51,441 | ||||||||||||||
| (Benefit) provision for credit losses | (1,106 | ) | (427 | ) | 567 | (3,021 | ) | 3,031 | |||||||||||
| Net interest income after provision (benefit) for credit losses | 21,538 | 19,619 | 17,727 | 62,138 | 48,410 | ||||||||||||||
| Other Operating Income: | |||||||||||||||||||
| Mortgage banking income | 9,893 | 11,360 | 17,932 | 34,875 | 37,824 | ||||||||||||||
| Bankcard fees | 878 | 879 | 770 | 2,497 | 2,094 | ||||||||||||||
| Purchased receivable income | 530 | 575 | 516 | 1,637 | 2,112 | ||||||||||||||
| Service charges on deposit accounts | 345 | 308 | 269 | 943 | 802 | ||||||||||||||
| Interest rate swap income | 195 | 103 | 726 | 390 | 743 | ||||||||||||||
| Gain on sale of securities | 36 | 31 | — | 67 | 98 | ||||||||||||||
| Unrealized gain (loss) on marketable equity securities | (67 | ) | 178 | 375 | 27 | (347 | ) | ||||||||||||
| Other income | 848 | 698 | 1,040 | 2,250 | 2,270 | ||||||||||||||
| Total other operating income | 12,658 | 14,132 | 21,628 | 42,686 | 45,596 | ||||||||||||||
| Other Operating Expense: | |||||||||||||||||||
| Salaries and other personnel expense | 15,756 | 14,917 | 16,418 | 45,401 | 44,311 | ||||||||||||||
| Data processing expense | 2,198 | 2,206 | 1,851 | 6,439 | 5,653 | ||||||||||||||
| Occupancy expense | 1,707 | 1,869 | 1,648 | 5,236 | 4,923 | ||||||||||||||
| Professional and outside services | 703 | 642 | 884 | 1,969 | 2,206 | ||||||||||||||
| Marketing expense | 533 | 672 | 302 | 1,609 | 1,581 | ||||||||||||||
| Insurance expense | 322 | 329 | 315 | 965 | 928 | ||||||||||||||
| Intangible asset amortization expense | 9 | 9 | 12 | 27 | 36 | ||||||||||||||
| OREO expense, net rental income and gains on sale | (378 | ) | 47 | 23 | (367 | ) | 8 | ||||||||||||
| Other operating expense | 1,684 | 1,645 | 2,053 | 4,918 | 5,321 | ||||||||||||||
| Total other operating expense | 22,534 | 22,336 | 23,506 | 66,197 | 64,967 | ||||||||||||||
| Income before provision for income taxes | 11,662 | 11,415 | 15,849 | 38,627 | 29,039 | ||||||||||||||
| Provision for income taxes | 2,785 | 3,070 | 3,994 | 9,224 | 6,251 | ||||||||||||||
| Net income | $ | 8,877 | $ | 8,345 | $ | 11,855 | $ | 29,403 | $ | 22,788 | |||||||||
| Basic EPS | $ | 1.43 | $ | 1.34 | $ | 1.87 | $ | 4.73 | $ | 3.57 | |||||||||
| Diluted EPS | $ | 1.42 | $ | 1.33 | $ | 1.84 | $ | 4.69 | $ | 3.52 | |||||||||
| Weighted average shares outstanding, basic | 6,196,260 | 6,206,913 | 6,338,465 | 6,207,681 | 6,391,164 | ||||||||||||||
| Weighted average shares outstanding, diluted | 6,265,602 | 6,277,265 | 6,413,221 | 6,274,634 | 6,467,991 | ||||||||||||||
| Balance Sheet | |||||||||||
| (Dollars in thousands) | |||||||||||
| (Unaudited) | September 30, | June 30, | September 30, | ||||||||
| 2021 | 2021 | 2020 | |||||||||
| Assets: | |||||||||||
| Cash and due from banks | $ | 34,216 | $ | 25,486 | $ | 31,165 | |||||
| Interest bearing deposits in other banks | 458,063 | 321,399 | 69,964 | ||||||||
| Investment securities available for sale, at fair value | 379,122 | 337,231 | 215,369 | ||||||||
| Investment securities held to maturity | 20,000 | 20,000 | — | ||||||||
| Marketable equity securities, at fair value | 8,551 | 9,588 | 8,534 | ||||||||
| Investment in Federal Home Loan Bank stock | 3,110 | 3,114 | 2,508 | ||||||||
| Loans held for sale | 106,224 | 105,819 | 128,105 | ||||||||
| Portfolio loans | 1,450,657 | 1,487,968 | 1,492,720 | ||||||||
| Allowance for credit losses, loans | (13,816 | ) | (14,539 | ) | (21,683 | ) | |||||
| Net portfolio loans | 1,436,841 | 1,473,429 | 1,471,037 | ||||||||
| Purchased receivables, net | 20,118 | 12,500 | 13,520 | ||||||||
| Mortgage servicing rights, at fair value | 13,080 | 12,835 | 10,589 | ||||||||
| Other real estate owned, net | 5,912 | 7,073 | 6,962 | ||||||||
| Premises and equipment, net | 37,610 | 38,202 | 38,615 | ||||||||
| Lease right of use asset | 11,371 | 11,374 | 12,943 | ||||||||
| Goodwill and intangible assets | 16,019 | 16,028 | 16,058 | ||||||||
| Other assets | 59,709 | 59,489 | 72,369 | ||||||||
| Total assets | $ | 2,609,946 | $ | 2,453,567 | $ | 2,097,738 | |||||
| Liabilities: | |||||||||||
| Demand deposits | $ | 868,810 | $ | 798,231 | $ | 697,363 | |||||
| Interest-bearing demand | 644,035 | 582,669 | 427,811 | ||||||||
| Savings deposits | 330,465 | 322,645 | 272,624 | ||||||||
| Money market deposits | 278,529 | 258,116 | 227,106 | ||||||||
| Time deposits | 174,702 | 184,777 | 181,229 | ||||||||
| Total deposits | 2,296,541 | 2,146,438 | 1,806,133 | ||||||||
| Other borrowings | 14,605 | 14,680 | 13,737 | ||||||||
| Junior subordinated debentures | 10,310 | 10,310 | 10,310 | ||||||||
| Lease liability | 11,334 | 11,335 | 12,881 | ||||||||
| Other liabilities | 34,682 | 33,586 | 40,061 | ||||||||
| Total liabilities | 2,367,472 | 2,216,349 | 1,883,122 | ||||||||
| Shareholders' Equity: | |||||||||||
| Total shareholders' equity | 242,474 | 237,218 | 214,616 | ||||||||
| Total liabilities and shareholders' equity | $ | 2,609,946 | $ | 2,453,567 | $ | 2,097,738 | |||||
Additional Financial Information
(Dollars in thousands)
(Unaudited)
| Composition of Portfolio Investments | |||||||||||||||||
| September 30, 2021 | June 30, 2021 | September 30, 2020 | |||||||||||||||
| Balance | % of total | Balance | % of total | Balance | % of total | ||||||||||||
| U.S. Treasury securities | $ | 102,014 | 25.0 | % | $ | 87,097 | 23.7 | % | $ | 37,691 | 16.8 | % | |||||
| U.S. Agency securities | 197,810 | 48.5 | % | 166,254 | 45.4 | % | 119,861 | 53.6 | % | ||||||||
| Corporate securities | 55,411 | 13.6 | % | 55,487 | 15.1 | % | 27,215 | 12.2 | % | ||||||||
| Marketable equity securities | 8,551 | 2.1 | % | 9,588 | 2.6 | % | 8,534 | 3.8 | % | ||||||||
| Collateralized loan obligations | 43,037 | 10.6 | % | 47,541 | 13.0 | % | 28,266 | 12.6 | % | ||||||||
| Alaska municipality, utility, or state bonds | 850 | 0.2 | % | 852 | 0.2 | % | 2,336 | 1.0 | % | ||||||||
| Total portfolio investments | $ | 407,673 | $ | 366,819 | $ | 223,903 | |||||||||||
| Composition of Portfolio Loans | |||||||||||||||||||||||||||||
| September 30, 2021 | June 30, 2021 | March 31, 2021 | December 31, 2020 | September 30, 2020 | |||||||||||||||||||||||||
| Balance | % of total | Balance | % of total | Balance | % of total | Balance | % of total | Balance | % of total | ||||||||||||||||||||
| Commercial loans | $ | 498,585 | 34 | % | $ | 476,900 | 31 | % | $ | 449,153 | 30 | % | $ | 469,540 | 33 | % | $ | 460,542 | 31 | % | |||||||||
| SBA Paycheck Protection loans | 211,449 | 14 | % | 311,971 | 21 | % | 414,381 | 26 | % | 310,518 | 21 | % | 375,636 | 25 | % | ||||||||||||||
| CRE owner occupied loans | 206,756 | 14 | % | 190,880 | 13 | % | 178,476 | 11 | % | 163,597 | 11 | % | 148,993 | 10 | % | ||||||||||||||
| CRE nonowner occupied loans | 405,666 | 28 | % | 373,325 | 25 | % | 368,145 | 23 | % | 355,694 | 24 | % | 364,232 | 24 | % | ||||||||||||||
| Construction loans | 106,020 | 7 | % | 115,917 | 8 | % | 121,943 | 8 | % | 118,782 | 8 | % | 120,619 | 8 | % | ||||||||||||||
| Consumer loans | 37,044 | 3 | % | 36,420 | 2 | % | 34,603 | 2 | % | 37,654 | 3 | % | 37,183 | 2 | % | ||||||||||||||
| Subtotal | 1,465,520 | 1,505,413 | 1,566,701 | 1,455,785 | 1,507,205 | ||||||||||||||||||||||||
| Unearned loan fees, net | (14,863 | ) | (17,445 | ) | (17,777 | ) | (11,735 | ) | (14,485 | ) | |||||||||||||||||||
| Total portfolio loans | $ | 1,450,657 | $ | 1,487,968 | $ | 1,548,924 | $ | 1,444,050 | $ | 1,492,720 | |||||||||||||||||||
| Composition of Deposits | |||||||||||||||||||||||||||||
| September 30, 2021 | June 30, 2021 | March 31, 2021 | December 31, 2020 | September 30, 2020 | |||||||||||||||||||||||||
| Balance | % of total | Balance | % of total | Balance | % of total | Balance | % of total | Balance | % of total | ||||||||||||||||||||
| Demand deposits | $ | 868,810 | 38 | % | $ | 798,231 | 37 | % | $ | 762,793 | 37 | % | $ | 643,825 | 35 | % | $ | 697,363 | 38 | % | |||||||||
| Interest-bearing demand | 644,035 | 28 | % | 582,669 | 27 | % | 524,373 | 26 | % | 459,095 | 25 | % | 427,811 | 24 | % | ||||||||||||||
| Savings deposits | 330,465 | 14 | % | 322,645 | 15 | % | 325,625 | 16 | % | 308,725 | 17 | % | 272,624 | 15 | % | ||||||||||||||
| Money market deposits | 278,529 | 12 | % | 258,116 | 12 | % | 253,934 | 12 | % | 237,705 | 13 | % | 227,106 | 13 | % | ||||||||||||||
| Time deposits | 174,702 | 8 | % | 184,777 | 9 | % | 184,592 | 9 | % | 175,631 | 10 | % | 181,229 | 10 | % | ||||||||||||||
| Total deposits | $ | 2,296,541 | $ | 2,146,438 | $ | 2,051,317 | $ | 1,824,981 | $ | 1,806,133 | |||||||||||||||||||
Additional Financial Information
(Dollars in thousands)
(Unaudited)
| Asset Quality | September 30, | June 30, | September 30, | |||||||||
| 2021 | 2021 | 2020 | ||||||||||
| Nonaccrual loans | $ | 12,493 | $ | 12,976 | $ | 12,647 | ||||||
| Loans 90 days past due and accruing | — | 128 | — | |||||||||
| Total nonperforming loans | 12,493 | 13,104 | 12,647 | |||||||||
| Nonperforming loans guaranteed by government | (1,017 | ) | (1,096 | ) | (1,600 | ) | ||||||
| Net nonperforming loans | 11,476 | 12,008 | 11,047 | |||||||||
| Other real estate owned | 5,912 | 7,073 | 6,962 | |||||||||
| Repossessed assets | — | — | 779 | |||||||||
| Other real estate owned guaranteed by government | (1,279 | ) | (1,279 | ) | (1,279 | ) | ||||||
| Net nonperforming assets | $ | 16,109 | $ | 17,802 | $ | 17,919 | ||||||
| Nonperforming loans, net of government guarantees / portfolio loans | 0.79 | % | 0.81 | % | 0.74 | % | ||||||
| Nonperforming loans, net of government guarantees / portfolio loans, | ||||||||||||
| net of government guarantees | 0.97 | % | 1.06 | % | 1.02 | % | ||||||
| Nonperforming assets, net of government guarantees / total assets | 0.62 | % | 0.73 | % | 0.85 | % | ||||||
| Nonperforming assets, net of government guarantees / total assets | ||||||||||||
| net of government guarantees | 0.69 | % | 0.85 | % | 1.06 | % | ||||||
| Performing restructured loans | $ | 2,382 | $ | 2,341 | $ | 2,367 | ||||||
| Performing restructured loans guaranteed by government | (1,586 | ) | (1,564 | ) | (1,502 | ) | ||||||
| Net performing restructured loans | $ | 796 | $ | 777 | $ | 865 | ||||||
| Nonperforming loans plus performing restructured loans, net of government | ||||||||||||
| guarantees | $ | 12,272 | $ | 12,785 | $ | 11,912 | ||||||
| Nonperforming loans plus performing restructured loans, net of government | ||||||||||||
| guarantees / portfolio loans | 0.85 | % | 0.86 | % | 0.80 | % | ||||||
| Nonperforming loans plus performing restructured loans, net of government | ||||||||||||
| guarantees / portfolio loans, net of government guarantees | 1.03 | % | 1.13 | % | 1.10 | % | ||||||
| Nonperforming assets plus performing restructured loans, net of government | ||||||||||||
| guarantees / total assets | 0.65 | % | 0.76 | % | 0.90 | % | ||||||
| Nonperforming assets plus performing restructured loans, net of government | ||||||||||||
| guarantees / total assets, net of government guarantees | 0.72 | % | 0.89 | % | 1.12 | % | ||||||
| Adversely classified loans, net of government guarantees | $ | 17,360 | $ | 14,055 | $ | 14,492 | ||||||
| Special mention loans, net of government guarantees | $ | 15,151 | $ | 15,855 | $ | 18,141 | ||||||
| Loans 30-89 days past due and accruing, net of government guarantees / | ||||||||||||
| portfolio loans | 0.03 | % | 0.02 | % | 0.16 | % | ||||||
| Loans 30-89 days past due and accruing, net of government guarantees / | ||||||||||||
| portfolio loans, net of government guarantees | 0.04 | % | 0.03 | % | 0.22 | % | ||||||
| Allowance for credit losses / portfolio loans | 0.95 | % | 0.98 | % | 1.45 | % | ||||||
| Allowance for credit losses / portfolio loans, net of government guarantees | 1.16 | % | 1.29 | % | 2.00 | % | ||||||
| Allowance for credit losses / nonperforming loans, net of government | ||||||||||||
| guarantees | 120 | % | 121 | % | 196 | % | ||||||
| Gross loan charge-offs for the quarter | $ | — | $ | 110 | $ | 141 | ||||||
| Gross loan recoveries for the quarter | $ | (39 | ) | $ | (46 | ) | $ | (604 | ) | |||
| Net loan (recoveries) charge-offs for the quarter | $ | (39 | ) | $ | 64 | $ | (463 | ) | ||||
| Net loan charge-offs (recoveries) year-to-date | $ | (19 | ) | $ | 20 | $ | 436 | |||||
| Net loan charge-offs (recoveries) for the quarter / average loans, for the quarter | 0.00 | % | 0.00 | % | (0.03 | ) | % | |||||
| Net loan charge-offs (recoveries) year-to-date / average loans, | ||||||||||||
| year-to-date annualized | — | % | — | % | 0.05 | % | ||||||
Additional Financial Information
(Dollars in thousands)
(Unaudited)
| Nonperforming Assets Rollforward | |||||||||||||||||||||||||||
| Writedowns | Transfers to | Transfers to | |||||||||||||||||||||||||
| Balance at June 30, 2021 | Additions this quarter | Payments this quarter | /Charge-offs this quarter | OREO/ REPO | Performing Status this quarter | Sales this quarter | Balance at September 30, 2021 | ||||||||||||||||||||
| Commercial loans | $ | 8,335 | $ | — | $ | (385 | ) | $ | — | $ | — | $ | — | $ | — | $ | 7,950 | ||||||||||
| Commercial real estate | 4,458 | — | (219 | ) | — | — | — | — | 4,239 | ||||||||||||||||||
| Construction loans | 109 | — | — | — | — | — | — | 109 | |||||||||||||||||||
| Consumer loans | 202 | — | (7 | ) | — | — | — | — | 195 | ||||||||||||||||||
| Non-performing loans guaranteed by government | (1,096 | ) | — | 79 | — | — | — | — | (1,017 | ) | |||||||||||||||||
| Total non-performing loans | 12,008 | — | (532 | ) | — | — | — | — | 11,476 | ||||||||||||||||||
| Other real estate owned | 7,073 | — | — | — | — | — | (1,161 | ) | 5,912 | ||||||||||||||||||
| Other real estate owned guaranteed | |||||||||||||||||||||||||||
| by government | (1,279 | ) | — | — | — | — | — | — | (1,279 | ) | |||||||||||||||||
| Total non-performing assets, | |||||||||||||||||||||||||||
| net of government guarantees | $ | 17,802 | $ | — | $ | (532 | ) | $ | — | $ | — | $ | — | $ | (1,161 | ) | $ | 16,109 | |||||||||
The following table details loan charge-offs, by industry:
| Loan Charge-offs by Industry | |||||||||||||||
| Three Months Ended | |||||||||||||||
| September 30, 2021 | June 30, 2021 | March 31, 2021 | December 31, 2020 | September 30, 2020 | |||||||||||
| Charge-offs: | |||||||||||||||
| Plastic material and resin manufacturing | $ | — | $ | — | $ | 150 | $ | — | $ | — | |||||
| Aircraft parts and auxiliary equipment manufacturing | — | 110 | 13 | — | — | ||||||||||
| Office of physicians | — | — | — | 11 | — | ||||||||||
| Excavation and construction | — | — | — | — | 33 | ||||||||||
| Health care and social assistance | — | — | — | — | 108 | ||||||||||
| Total charge-offs | $ | — | $ | 110 | $ | 163 | $ | 11 | $ | 141 | |||||
Additional Financial Information
(Dollars in thousands)
(Unaudited)
| Average Balances, Yields, and Rates | |||||||||||||||||
| Three Months Ended | |||||||||||||||||
| September 30, 2021 | June 30, 2021 | September 30, 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 | $ | 390,004 | 0.15 | % | $ | 208,067 | 0.12 | % | $ | 60,504 | 0.11 | % | |||||
| Portfolio investments | 389,631 | 1.20 | % | 354,260 | 1.32 | % | 217,599 | 2.11 | % | ||||||||
| Loans held for sale | 99,716 | 2.92 | % | 111,228 | 2.74 | % | 122,994 | 3.11 | % | ||||||||
| Portfolio loans | 1,469,072 | 5.19 | % | 1,541,701 | 4.75 | % | 1,465,839 | 4.83 | % | ||||||||
| Total interest-earning assets | 2,348,423 | 3.62 | % | 2,215,256 | 3.69 | % | 1,866,936 | 4.25 | % | ||||||||
| Nonearning assets | 170,317 | 173,164 | 172,853 | ||||||||||||||
| Total assets | $ | 2,518,740 | $ | 2,388,420 | $ | 2,039,789 | |||||||||||
| Liabilities and Shareholders' Equity | |||||||||||||||||
| Interest-bearing deposits | $ | 1,380,461 | 0.19 | % | $ | 1,316,029 | 0.27 | % | $ | 1,077,193 | 0.49 | % | |||||
| Borrowings | 24,962 | 2.89 | % | 25,032 | 2.90 | % | 23,574 | 3.02 | % | ||||||||
| Total interest-bearing liabilities | 1,405,423 | 0.24 | % | 1,341,061 | 0.32 | % | 1,100,767 | 0.54 | % | ||||||||
| Noninterest-bearing demand deposits | 826,941 | 766,954 | 672,974 | ||||||||||||||
| Other liabilities | 42,923 | 43,017 | 52,611 | ||||||||||||||
| Shareholders' equity | 243,453 | 237,388 | 213,437 | ||||||||||||||
| Total liabilities and shareholders' equity | $ | 2,518,740 | $ | 2,388,420 | $ | 2,039,789 | |||||||||||
| Net spread | 3.38 | % | 3.37 | % | 3.71 | % | |||||||||||
| NIM | 3.45 | % | 3.48 | % | 3.90 | % | |||||||||||
| NIMTE* | 3.47 | % | 3.50 | % | 3.93 | % | |||||||||||
| Cost of funds | 0.15 | % | 0.20 | % | 0.34 | % | |||||||||||
| Average portfolio loans to average | |||||||||||||||||
| interest-earning assets | 62.56 | % | 69.59 | % | 78.52 | % | |||||||||||
| Average portfolio loans to average total deposits | 66.55 | % | 74.01 | % | 83.75 | % | |||||||||||
| Average non-interest deposits to average | |||||||||||||||||
| total deposits | 37.46 | % | 36.82 | % | 38.45 | % | |||||||||||
| Average interest-earning assets to average | |||||||||||||||||
| interest-bearing liabilities | 167.10 | % | 165.19 | % | 169.60 | % | |||||||||||
The components of the change in NIMTE* are detailed in the table below:
| 3Q21 vs. 2Q21 | 3Q21 vs. 3Q20 | |||
| Nonaccrual interest adjustments | 0.04 | % | (0.07 | )% |
| Impact of SBA Paycheck Protection Program loans | 0.20 | % | 0.61 | % |
| Interest rates and loan fees, all other loans | 0.02 | % | (0.18 | )% |
| Volume and mix of other interest-earning assets and liabilities | (0.29 | )% | (0.82 | )% |
| Change in NIMTE* | (0.03 | )% | (0.46 | )% |
Additional Financial Information
(Dollars in thousands)
(Unaudited)
| Average Balances, Yields, and Rates | |||||||||||
| Year-to-date | |||||||||||
| September 30, 2021 | September 30, 2020 | ||||||||||
| Average | Average | ||||||||||
| Average | Tax Equivalent | Average | Tax Equivalent | ||||||||
| Balance | Yield/Rate | Balance | Yield/Rate | ||||||||
| Assets | |||||||||||
| Interest bearing deposits in other banks | $ | 240,635 | 0.14 | % | $ | 60,011 | 0.62 | % | |||
| Portfolio investments | 347,888 | 1.31 | % | 252,594 | 2.42 | % | |||||
| Loans held for sale | 108,455 | 2.79 | % | 95,050 | 3.18 | % | |||||
| Portfolio loans | 1,501,139 | 5.01 | % | 1,289,838 | 5.12 | % | |||||
| Total interest-earning assets | 2,198,117 | 3.80 | % | 1,697,493 | 4.46 | % | |||||
| Nonearning assets | 171,350 | 177,811 | |||||||||
| Total assets | $ | 2,369,467 | $ | 1,875,304 | |||||||
| Liabilities and Shareholders' Equity | |||||||||||
| Interest-bearing deposits | $ | 1,301,825 | 0.26 | % | $ | 1,007,122 | 0.55 | % | |||
| Borrowings | 25,031 | 2.75 | % | 39,645 | 1.87 | % | |||||
| Total interest-bearing liabilities | 1,326,856 | 0.30 | % | 1,046,767 | 0.60 | % | |||||
| Noninterest-bearing demand deposits | 761,070 | 569,972 | |||||||||
| Other liabilities | 44,273 | 49,800 | |||||||||
| Shareholders' equity | 237,268 | 208,765 | |||||||||
| Total liabilities and shareholders' equity | $ | 2,369,467 | $ | 1,875,304 | |||||||
| Net spread | 3.50 | % | 3.86 | % | |||||||
| NIM | 3.60 | % | 4.05 | % | |||||||
| NIMTE* | 3.62 | % | 4.09 | % | |||||||
| Cost of funds | 0.19 | % | 0.39 | % | |||||||
| Average portfolio loans to average interest-earning assets | 68.29 | % | 75.98 | % | |||||||
| Average portfolio loans to average total deposits | 72.77 | % | 81.79 | % | |||||||
| Average non-interest deposits to average total deposits | 36.89 | % | 36.14 | % | |||||||
| Average interest-earning assets to average interest-bearing liabilities | 165.66 | % | 162.17 | % | |||||||
The components of the change in NIMTE* are detailed in the table below:
| YTD21 vs.YTD20 | ||
| Nonaccrual interest adjustments | (0.01 | )% |
| Impact of SBA Paycheck Protection Program loans | 0.19 | % |
| Interest rates and loan fees | (0.33 | )% |
| Volume and mix of interest-earning assets and liabilities | (0.32 | )% |
| Change in NIMTE* | (0.47 | )% |
Additional Financial Information
(Dollars in thousands, except per share data)
(Unaudited)
| Capital Data (At quarter end) | ||||||||||||
| September 30, 2021 | June 30, 2021 | September 30, 2020 | ||||||||||
| Book value per share | $ | 39.25 | $ | 38.22 | $ | 34.18 | ||||||
| Tangible book value per share* | $ | 36.66 | $ | 35.64 | $ | 31.62 | ||||||
| Total shareholders' equity/total assets | 9.29 | % | 9.67 | % | 10.23 | % | ||||||
| Tangible Common Equity/Tangible Assets* | 8.73 | % | 9.07 | % | 9.54 | % | ||||||
| Tier 1 Capital / Risk Adjusted Assets | 14.17 | % | 14.54 | % | 14.11 | % | ||||||
| Total Capital / Risk Adjusted Assets | 15.00 | % | 15.45 | % | 15.36 | % | ||||||
| Tier 1 Capital / Average Assets | 9.48 | % | 9.77 | % | 10.31 | % | ||||||
| Shares outstanding | 6,177,300 | 6,206,913 | 6,279,304 | |||||||||
| Unrealized gain on AFS debt securities, net of income taxes | $ | (272 | ) | $ | 109 | $ | 1,308 | |||||
| Unrealized (loss) on derivatives and hedging activities, net of income taxes | $ | (644 | ) | $ | (760 | ) | $ | (1,543 | ) | |||
| Profitability Ratios | |||||||||||||||
| September 30, 2021 | June 30, 2021 | March 31, 2021 | December 31, 2020 | September 30, 2020 | |||||||||||
| For the quarter: | |||||||||||||||
| NIM | 3.45 | % | 3.48 | % | 3.90 | % | 3.94 | % | 3.90 | % | |||||
| NIMTE* | 3.47 | % | 3.50 | % | 3.92 | % | 3.96 | % | 3.93 | % | |||||
| Efficiency ratio | 68.07 | % | 67.00 | % | 60.24 | % | 65.31 | % | 58.85 | % | |||||
| Return on average assets | 1.40 | % | 1.42 | % | 2.25 | % | 1.90 | % | 2.31 | % | |||||
| Return on average equity | 14.47 | % | 14.26 | % | 21.40 | % | 18.22 | % | 22.10 | % | |||||
| September 30, 2021 | September 30, 2020 | |||||
| Year-to-date: | ||||||
| NIM | 3.60 | % | 4.05 | % | ||
| NIMTE* | 3.62 | % | 4.09 | % | ||
| Efficiency ratio | 65.00 | % | 66.91 | % | ||
| Return on average assets | 1.66 | % | 1.62 | % | ||
| Return on average equity | 16.57 | % | 14.58 | % | ||
*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 | |||||||||||||||||||
| September 30, 2021 | June 30, 2021 | March 31, 2021 | December 31, 2020 | September 30, 2020 | |||||||||||||||
| Net interest income | $ | 20,432 | $ | 19,192 | $ | 19,493 | $ | 19,224 | $ | 18,294 | |||||||||
| Divided by average interest-bearing assets | 2,348,423 | 2,215,256 | 2,027,142 | 1,941,544 | 1,866,936 | ||||||||||||||
| Net interest margin ("NIM")2 | 3.45 | % | 3.48 | % | 3.90 | % | 3.94 | % | 3.90 | % | |||||||||
| Net interest income | $ | 20,432 | $ | 19,192 | $ | 19,493 | $ | 19,224 | $ | 18,294 | |||||||||
| Plus: reduction in tax expense related to | |||||||||||||||||||
| tax-exempt interest income | 126 | 121 | 111 | 122 | 136 | ||||||||||||||
| $ | 20,558 | $ | 19,313 | $ | 19,604 | $ | 19,346 | $ | 18,430 | ||||||||||
| Divided by average interest-bearing assets | 2,348,423 | 2,215,256 | 2,027,142 | 1,941,544 | 1,866,936 | ||||||||||||||
| NIMTE2 | 3.47 | % | 3.50 | % | 3.92 | % | 3.96 | % | 3.93 | % | |||||||||
| Year-to-date | |||||||
| September 30, 2021 | September 30, 2020 | ||||||
| Net interest income | $ | 59,117 | $ | 51,441 | |||
| Divided by average interest-bearing assets | 2,198,117 | 1,697,493 | |||||
| Net interest margin ("NIM")3 | 3.60 | % | 4.05 | % | |||
| Net interest income | $ | 59,117 | $ | 51,441 | |||
| Plus: reduction in tax expense related to | |||||||
| tax-exempt interest income | 358 | 491 | |||||
| $ | 59,475 | $ | 51,932 | ||||
| Divided by average interest-bearing assets | 2,198,117 | 1,697,493 | |||||
| NIMTE3 | 3.62 | % | 4.09 | % | |||
2Calculated using actual days in the quarter divided by 365 for the quarter ended in 2021 and 366 for quarters ended in 2020.
3Calculated using actual days in the year divided by 365 for year-to-date period in 2021 and 366 for year-to-date period 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.
| September 30, 2021 | June 30, 2021 | March 31, 2021 | December 31, 2020 | September 30, 2020 | |||||||||||||||
| Total shareholders' equity | $ | 242,474 | $ | 237,218 | $ | 231,452 | $ | 221,575 | $ | 214,616 | |||||||||
| Divided by shares outstanding | 6,177 | 6,207 | 6,207 | 6,251 | 6,279 | ||||||||||||||
| Book value per share | $ | 39.25 | $ | 38.22 | $ | 37.29 | $ | 35.45 | $ | 34.18 | |||||||||
| September 30, 2021 | June 30, 2021 | March 31, 2021 | December 31, 2020 | September 30, 2020 | |||||||||||||||
| Total shareholders' equity | $ | 242,474 | $ | 237,218 | $ | 231,452 | $ | 221,575 | $ | 214,616 | |||||||||
| Less: goodwill and intangible assets | 16,019 | 16,028 | 16,037 | 16,046 | 16,058 | ||||||||||||||
| $ | 226,455 | $ | 221,190 | $ | 215,415 | $ | 205,529 | $ | 198,558 | ||||||||||
| Divided by shares outstanding | 6,177 | 6,207 | 6,207 | 6,251 | 6,279 | ||||||||||||||
| Tangible book value per share | $ | 36.66 | $ | 35.64 | $ | 34.71 | $ | 32.88 | $ | 31.62 | |||||||||
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. | September 30, 2021 | June 30, 2021 | March 31, 2021 | December 31, 2020 | September 30, 2020 | ||||||||||||||
| Total shareholders' equity | $ | 242,474 | $ | 237,218 | $ | 231,452 | $ | 221,575 | $ | 214,616 | |||||||||
| Total assets | 2,609,946 | 2,453,567 | 2,351,243 | 2,121,798 | 2,097,738 | ||||||||||||||
| Total shareholders' equity to total assets | 9.29 | % | 9.67 | % | 9.84 | % | 10.44 | % | 10.23 | % | |||||||||
| Northrim BanCorp, Inc. | September 30, 2021 | June 30, 2021 | March 31, 2021 | December 31, 2020 | September 30, 2020 | ||||||||||||||
| Total shareholders' equity | $ | 242,474 | $ | 237,218 | $ | 231,452 | $ | 221,575 | $ | 214,616 | |||||||||
| Less: goodwill and other intangible assets, net | 16,019 | 16,028 | 16,037 | 16,046 | 16,058 | ||||||||||||||
| Tangible common shareholders' equity | $ | 226,455 | $ | 221,190 | $ | 215,415 | $ | 205,529 | $ | 198,558 | |||||||||
| Total assets | $ | 2,609,946 | $ | 2,453,567 | $ | 2,351,243 | $ | 2,121,798 | $ | 2,097,738 | |||||||||
| Less: goodwill and other intangible assets, net | 16,019 | 16,028 | 16,037 | 16,046 | 16,058 | ||||||||||||||
| Tangible assets | $ | 2,593,927 | $ | 2,437,539 | $ | 2,335,206 | $ | 2,105,752 | $ | 2,081,680 | |||||||||
| Tangible common equity ratio | 8.73 | % | 9.07 | % | 9.22 | % | 9.76 | % | 9.54 | % | |||||||||
| Contact: | Joe Schierhorn, President, CEO, and COO |
| (907) 261-3308 | |
| Jed Ballard, Chief Financial Officer | |
| (907) 261-3539 |
FAQ
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