In the third quarter of 2012, net interest income increased 1% to $10.6 million, compared to $10.5 million in the immediate prior quarter and up 2% compared to $10.4 million in the third quarter of 2011. In the first nine months of 2012, net interest income fell 1% to $31.4 million compared to $31.6 million in the like period a year ago.
“Although our net interest margin continues to come under pressure from low interest rates, the growth in the loan portfolio and the continuing contribution from our deposit mix is helping sustain revenues,” Schierhorn noted. In the third quarter of 2012, Northrim’s net interest margin (NIM) was 4.36%, down 15 basis points from 4.51% in the second quarter and down 9 basis points from 4.45% in the third quarter a year ago. Year-to-date, NIM was 4.46% compared to 4.60% in the first nine months of 2011.
Provision for Loan Losses
“The recovery of $1 million on a previously charge-off loan combined with other recoveries totaling $500,000 during the quarter allowed us to return those funds to capital through a negative loan loss provision. With NPAs below 1% of total assets, and reserves at 2.46% of gross loans and more than triple the balance of nonperforming loans, we believe a reverse provision was appropriate,” said Schierhorn. Northrim booked a negative loan loss provision in the third quarter of 2012 totaling $1.4 million, compared to a provision of $89,000 in the preceding quarter and $550,000 in the third quarter a year ago. For the first nine months of 2012, the loan loss provision was a benefit of $1.3 million, compared to a provision of $1.6 million in the first nine months of last year.Other Operating Income Northrim has a number of complementary businesses that provide a comprehensive suite of financial services to businesses and individuals, including purchased receivables financing, health insurance plans, mortgages, and wealth management. “With interest rates at historic lows, our mortgage affiliate continues to generate significant revenues, primarily from refinance activity. Refinance activity in the mortgage industry varies largely with changes in interest rates and is difficult to predict,” said Beedle. Total other operating income increased 12% in the third quarter of 2012, compared to the preceding quarter and 24% year over year. Other operating income was $4.2 million in the third quarter of 2012, compared to $3.7 million for the preceding quarter and $3.4 million for the third quarter a year ago. In the first nine months of 2012, other operating income grew 20% to $11.1 million, compared to $9.2 million in the first nine months of 2011.