ANCHORAGE, Alaska, Oct. 26, 2010 (GLOBE NEWSWIRE) -- Northrim BanCorp, Inc. (Nasdaq:NRIM) ("Northrim"), the bank holding company for Northrim Bank, today reported net income in the third quarter increased 63% to $3.2 million, or $0.49 per diluted share, boosted by $1.2 million in gains on sale of other real estate owned and a $1 million reduction in the provision for loan losses. In the second quarter of 2010, net income was $2.1 million, or $0.33 per diluted share, and in the third quarter a year ago it was $1.9 million, or $0.30 per diluted share. For the first nine months of 2010, profits grew 25% to $7.2 million, or $1.11 per diluted share, from $5.8 million, or $0.90 per diluted share, in the like period a year ago. Financial Highlights (at or for the quarter ended September 30, 2010, compared to June 30, 2010, and September 30, 2009)
- Northrim continued to maintain strong capital ratios with Tier 1 Capital/risk adjusted assets of 14.46% as compared to 14.77% in the immediate prior quarter and 13.96% a year ago. Because the company elected not to participate in the Capital Purchase Program sponsored by the U. S. Treasury in 2008, these ratios do not reflect any government investment in Northrim.
- Northrim's tangible common equity to tangible assets at quarter end was 10.50%, up from 10.32% a year earlier.
- Nonperforming assets declined in the quarter to $25.0 million or 2.41% of total assets, compared to $28.4 million, or 2.82% of total assets at the end of the second quarter 2010 and $39.0 million or 3.95% at September 30, 2009.
- Book value was $18.22 per share and tangible book value was $16.86 per share, up from $17.28 and $15.85 respectively a year earlier.
- The allowance for loan losses continued to increase, now totaling 2.31% of total portfolio loans at September 30, 2010, compared to 2.00% at September 30, 2009. The allowance for loan losses to nonperforming loans also increased to 105.93% from 46.62% a year ago.
- Other operating income, which includes revenues from service charges, electronic banking, and financial services affiliates, contributed 29% of total third quarter revenues and 25% of year-to-date revenues.
- The cash dividend paid on September 17, 2010, rose 20% to $0.12 per diluted share from $0.10 per diluted share paid in the prior quarter.
Alaska Economic UpdateAccording to the Department of Labor, "Alaska's seasonally adjusted unemployment rate for August was 7.7%, unchanged from July. The comparable national jobless rate for August was 9.6%, up slightly from 9.5% in July. One year ago, the national unemployment rate was 9.7% compared to 8.2% for Alaska. August was the 22nd consecutive month that Alaska's unemployment rate was lower than the nation's." The average monthly payroll job count in Alaska has increased 1% to 325,875 from 322,550 through August of 2010 when compared to the first eight months of 2009. According to the Bureau of Economic Analysis, personal income in Alaska rose 3.5% between the second quarter of 2009 and 2010. This is compared to 2.2% growth over the same period in the US. Personal income in Alaska has grown for six consecutive quarters between the first quarter of 2009 and the second quarter of 2010. The retail sector is currently benefitting from the seasonal boost in consumption generated from the Permanent Fund Dividend, which paid $1,281 to every resident early in October. Northrim Bank hosts the Alaskanomics blog to provide news, analysis and commentary on Alaska's economy. With contributions from economists, business leaders, policy makers and everyday Alaskans, Alaskanomics aims to engage readers in an ongoing conversation about our economy, now and in the future. Join the conversation at www. Alaskanomics.com for more information on the Alaska economy by visiting www.northrim.com and click on the "About Alaska" tab. Asset Quality and Balance Sheet Review Northrim's total assets grew 3% to $1.04 billion at September 30, 2010, from $1.01 billion at June 30, 2010, and 5% from $986 million at September 30, 2009, with an increase in overnight and portfolio investments offsetting continuing maturities in the construction loan portfolio and lower levels of commercial loans. Total portfolio loans decreased 6% in the third quarter to $635 million from $674 million a year ago. Loans held for sale increased to $20.1 million, reflecting the rebound in mortgage refinancing this quarter. These loans were purchased from our mortgage affiliate and are held until their final sale in the secondary market.
The loan portfolio remains diversified with commercial loans accounting for 37% of the portfolio and commercial real estate accounting for 48% of the portfolio at September 30, 2010. Construction and land development loans, which accounted for 8% of the loan portfolio at September 30, 2010, are down 38% to $51.0 million from $82.2 million a year ago, reflecting the maturing of projects funded in past years, the reduction in new project starts in the past two years, and continuing successful collection efforts.Nonperforming assets at September 30, 2010 declined by $14.0 million year-over-year and $3.4 million from the preceding quarter. The risk profile of the portfolio improved as a result of the following developments:
- Loans measured for impairment decreased to $22.2 million at September 30, 2010, compared to $25.1 million at June 30, 2010, and $52.6 million in the third quarter a year ago.
- Nonperforming loans totaled $13.9 million, or 2.19% of total portfolio loans at September 30, 2010, compared to $28.9 million, or 4.28% of total portfolio loans a year ago.
- The $4.8 million condominium conversion project in Anchorage that moved into OREO during the fourth quarter of 2009 continues to generate rental income producing an average yield of approximately 2%. Of the 68 original units, 35 condos have been sold and 22 are rented, providing positive year-to-date cash flow for the project.
- Sales of OREO continued during the third quarter, with 26 properties sold for an aggregate of $3.3 million, generating a $332,000 net gain over current carrying value. The Company also recognized $830,000 in deferred gains on sales of OREO property that occurred in previous periods and now meet the accounting requirements for gain recognition. The deferred gains recognized in the current period included $422,000 related to one commercial property that was sold in 2007, and the remainder of these gains were from the sale of ten condominiums and two lots sold in late 2009 and throughout the first half of 2010. At September 30, 2010, the company had $194,000 in remaining deferred gains on sale of OREO property.
- Year-to-date OREO sales generated $9.2 million in gross proceeds, $613,000 in gain on sale of 62 properties total. Year-to-date gain on the sale of OREO totaled $1.4 million including recognition of the $830,000 in deferred gains discussed above.
- Net charge-offs in the third quarter of 2010, totaled $132,000, or 0.02% of average loans, reflecting the effects of $661,000 in recoveries, compared to net charge-offs of $1.1 million, or 0.16% of average loans during the third quarter of 2009. Year-to-date net charge-offs totaled $1.6 million, or 0.32%, annualized, of average loans, down from $4.3 million, or 0.83%, annualized, of average loans in the first nine months of 2009.
- The coverage ratio of the allowance to nonperforming loans increased to 105.93% at September 30, 2010, compared to 46.62% in the third quarter a year ago. This increase is primarily due to the decrease in nonperforming loans to $13.9 million at September 30, 2010 from $28.9 million at September 30, 2009.
The allowance for loan losses was $14.7 million, or 2.31% of portfolio loans at the end of the third quarter of 2010, compared to $14.4 million, or 2.30% of total loans at June 30, 2010, and $13.5 million, or 2.00% of total loans a year ago.The investment portfolio increased 39% to $215.0 million at the end of the third quarter, from $154.3 million a year ago. At September 30, 2010, the portfolio was comprised of 71% U.S. Agency securities, 11% securities of Alaskan municipalities, utilities, or state agencies, 17% corporate bonds, and 1%, or $2 million of stock in the Federal Home Loan Bank of Seattle. "With strong local deposit growth, we continue to build our securities portfolio, emphasizing high-quality and short duration," said Joe Schierhorn, Chief Financial Officer. "We have instituted an outreach program to leverage this deposit growth and add new loan relationships." Total deposits grew 3% in the quarter and 5% year-over-year to $878.7 million at September 30, 2010, compared to $851.5 million at June 30, 2010 and $837.1 million a year ago. "All of our deposits are in-market and time deposits continue to be heavily weighted to shorter-term maturities," said Chris Knudson, Chief Operating Officer. Noninterest-bearing demand deposits at September 30, 2010, increased 5% from a year ago and account for 32% of total deposits. Interest-bearing demand deposits also increased 9% year-over-year and account for 14% of total deposits. The Alaska CD (a flexible certificate of deposit program) grew 3% and accounts for 13% of total deposits. Savings account balances were up 24% from a year ago and represent 9% of total deposits. Money market balances were up 7% and account for 15% of all deposits and time deposit balances fell 7% year-over year and now account for 17% of total deposits. Shareholders' equity increased 6% to $116.9 million, or $18.22 book value per share, at quarter end, compared to $109.9 million, or $17.28 book value per share, at September 30, 2009. Tangible book value per share was $16.86 up from $15.85 a year earlier. Northrim remains well capitalized with Tier 1 Capital to Risk Adjusted Assets of 14.46% at September 30, 2010.
Review of OperationsIncluding increased contributions from Northrim's mortgage affiliate and gains from sales of OREO, revenue (net interest income plus other operating income) grew to $15.4 million up from $14.7 million in the preceding quarter and $15.1 million in the third quarter of 2009. Year-to-date revenue totaled $44.2 million compared to $45.2 million in the first nine months of 2009. Third quarter 2010 net interest income, before the provision for loan losses, was $10.9 million compared to $11.1 million in the preceding quarter and $11.7 million in the third quarter of 2009. In the first nine months of 2010, net interest income before provision for loan losses was $33.3 million compared to $34.6 million in the first nine months of 2009. Northrim's net interest margin (net interest income as a percentage of average earning assets on a tax equivalent basis) was 4.77% in the third quarter of 2010, compared to 5.06% in the second quarter of 2010 and 5.38% in the third quarter a year ago. For the first nine months of 2010, Northrim's net interest margin was 5.05% compared to 5.36% in the like period a year ago. " The combination of lower rates on our loans and securities along with lower loan volumes has led to a lower margin," said Beedle. "As a result of these factors we expect pressures on our margin to continue for the next few quarters." Northrim added $417,000 to the loan loss provision in the third quarter of 2010, compared to $1.4 million in both the immediate prior quarter and the third quarter a year ago. Year-to-date, the provision for loan losses totaled $3.2 million compared to $4.9 million in the first nine months of 2009. In the third quarter of 2010, net interest income, after the provision for loan losses, was $10.5 million compared to $9.7 million in the prior quarter and $10.4 million a year ago. For the first nine months of 2010, net interest income after the provision for loan losses was $30.1 million compared to $29.7 million in the like period a year ago.
Total other operating income increased 24% for the third quarter of 2010 from the prior quarter and grew 33% year-over-year reflecting strong contributions from the company's mortgage affiliate and increased gains on the sale of OREO. Other operating income totaled $4.5 million in the third quarter of 2010 compared to $3.6 million in the second quarter of 2010 and $3.4 million in the third quarter of 2009. For the first nine months of 2010, other operating income totaled $10.9 million compared to $10.6 million for the first nine months of 2009. Deposit account service charge income declined 14% in the linked quarter to $659,000 down from $762,000 in the preceding quarter and compared to $791,000 in the third quarter of 2009, reflecting legislative changes on the assessment of overdraft fees for debit card transactions. For the first nine months of the year, service charges on deposit accounts were down 7% to $2.1 million from $2.3 million a year ago.Purchased receivable income contributed $485,000 to third quarter revenues, compared to $595,000 in the preceding quarter and $474,000 in the year ago quarter. Year-to-date, purchased receivables income contributed $1.4 million compared to $1.7 million for the first nine months of 2009. "Purchase receivables are a good source of revenues for us, allowing us to offer local financing options for small businesses in the Puget Sound area," said Beedle. Employee benefit plan income contributed $466,000 to third quarter revenues compared to $469,000 for the third quarter of 2009. Year-to-date employee benefit plan income totaled $1.4 million, up from $1.3 million a year ago. "Health care benefits are important to our small business customers and this product offering is a good source of revenues and a competitive differentiator for us in our market," noted Langland. "We also benefit from the two wealth management affiliates in which we have an ownership interest, Elliott Cove Capital and Pacific Wealth Advisors. Both of these firms provide additional financial choices to our customers while adding value to the overall customer relationship."
Income from Northrim's mortgage affiliate contributed $570,000 to third quarter revenues, up from $385,000 in the third quarter a year ago. "Continuing declines in mortgage rates are stimulating another refinance wave in the mortgage market," said Knudson.Third quarter operating expense was down 2% from the second quarter and down 8% year-over-year, reflecting reduced salary and other personnel expenses, insurance expenses, and OREO management costs. In addition, the third quarter of 2009 included a one-time $718,000 prepayment penalty on Federal Home Loan Bank advances. Noninterest expense in the third quarter of 2010 was $10.0 million compared to $10.9 million in the third quarter a year ago. Noninterest expense in the first nine months of 2010 was $30.3 million compared to $31.9 million in the like period a year ago. The efficiency ratio during the third quarter of 2010 was 64.47%, compared to 68.63% in the second quarter of 2010 and 71.42% in the third quarter a year ago. The efficiency ratio, calculated by dividing noninterest expense, excluding intangible asset amortization expense, by net interest income and noninterest income, measures overhead costs as a percentage of total revenues. About Northrim BanCorp Northrim BanCorp, Inc. is the parent company of Northrim Bank, a commercial bank that provides personal and business banking services through locations in Anchorage, Eagle River, Wasilla, and Fairbanks, Alaska, and an asset based lending division in Washington. The bank differentiates itself with a "Customer First Service" philosophy. Affiliated companies include Elliott Cove Capital Management, LLC; Residential Mortgage, LLC; Northrim Benefits Group, LLC; and Pacific Wealth Advisors, LLC. The Northrim BanCorp, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3818 www.northrim.com Sources include the State of Alaska Department of Labor and US Department of Commerce Bureau of Economic Analysis
|(Dollars in thousands, except per share data)||Three Months Ending|
|(Unaudited)||September 30, 2010||June 30, 2010||Three Month % Change||September 30, 2009||One Year % Change|
|Interest and fees on loans||$11,249||$11,212||0%||$12,218||-8%|
|Interest on portfolio investments||963||1,315||-27%||1,155||-17%|
|Interest on overnight investments||54||42||29%||31||74%|
|Total interest income||12,266||12,569||-2%||13,404||-8%|
|Interest expense on deposits||1,161||1,265||-8%||1,351||-14%|
|Interest expense on borrowings||209||201||4%||311||-33%|
|Total interest expense||1,370||1,466||-7%||1,662||-18%|
|Net interest income||10,896||11,103||-2%||11,742||-7%|
|Provision for loan losses||417||1,375||-70%||1,374||-70%|
|Net interest income after provision for loan losses||10,479||9,728||8%||10,368||1%|
|Other Operating Income:|
|Service charges on deposit accounts||659||762||-14%||791||-17%|
|Purchased receivable income||485||595||-18%||474||2%|
|Employee benefit plan income||466||530||-12%||469||-1%|
|Electronic banking income||449||435||3%||463||-3%|
|OREO gain on sale and rental income||1,277||383||233%||206||520%|
|Equity in earnings from mortgage affiliate||570||182||213%||385||48%|
|Gain on sale of securities||58||132||-56%||24||142%|
|Total other operating income||4,477||3,605||24%||3,365||33%|
|Other Operating Expense:|
|Salaries and other personnel expense||5,394||5,402||0%||5,730||-6%|
|OREO expense, including any impairment||308||343||-10%||309||0%|
|Professional and outside services||338||323||5%||374||-10%|
|Purchased receivable (gain) losses||(3)||406||-101%||--||NA|
|Intangible asset amortization expense||76||77||-1%||82||-7%|
|Prepayment penalty on FHLB advance repayments||--||--||NA||718||-100%|
|Total other operating expense||9,987||10,171||-2%||10,872||-8%|
|Income before provision for income taxes||4,969||3,162||57%||2,861||74%|
|Provision for income taxes||1,629||912||79%||810||101%|
|Less: Net income attributable to the noncontrolling interest||162||110||47%||102||59%|
|Net income attributable to Northrim BanCorp||$3,178||$2,140||49%||$1,949||63%|
|Average basic shares||6,401,069||6,386,925||0%||6,348,519||1%|
|Average diluted shares||6,479,813||6,473,622||0%||6,422,262||1%|
|(Dollars in thousands, except per share data)||Nine Months Ended September 30,|
|(Unaudited)||2010||2009||One Year % Change|
|Interest and fees on loans||$33,883||$36,672||-8%|
|Interest on portfolio investments||3,607||3,352||8%|
|Interest on overnight investments||119||122||-2%|
|Total interest income||37,609||40,146||-6%|
|Interest expense on deposits||3,701||4,495||-18%|
|Interest expense on borrowings||605||1,067||-43%|
|Total interest expense||4,306||5,562||-23%|
|Net interest income||33,303||34,584||-4%|
|Provision for loan losses||3,167||4,866||-35%|
|Net interest income after provision for loan losses||30,136||29,718||1%|
|Other Operating Income:|
|Service charges on deposit accounts||2,121||2,269||-7%|
|Employee benefit plan income||1,417||1,282||11%|
|Purchased receivable income||1,394||1,706||-18%|
|Electronic banking Income||1,284||1,124||14%|
|OREO gain on sale and rental income||1,930||446||333%|
|Gain on sale of securities||471||220||114%|
|Equity in earnings from mortgage affiliate||679||1,997||-66%|
|Total other operating income||10,945||10,614||3%|
|Other Operating Expense:|
|Salaries and other personnel expense||16,416||16,889||-3%|
|OREO expense, including any impairment||1,023||1,170||-13%|
|Professional and outside services||903||1,061||-15%|
|Intangible asset amortization expense||229||247||-7%|
|Purchased receivable (gain) losses||404||(16)||2625%|
|Prepayment penalty on FHLB advance repayment||--||718||-100%|
|Total other operating expense||30,322||31,941||-5%|
|Income before provision for income taxes||10,759||8,391||28%|
|Provision for income taxes||3,243||2,318||40%|
|Less: Net income attributable to the noncontrolling interest||298||292||2%|
|Net income attributable to Northrim BanCorp||$7,218||$5,781||25%|
|Average basic shares||6,391,252||6,388,757||0%|
|Average diluted shares||6,473,915||6,406,117||1%|
|(Dollars in thousands, except per share data)|
|(Unaudited)||September 30, 2010||June 30, 2010||Three Month % Change||September 30, 2009||One Year % Change|
|Cash and due from banks||$22,367||$22,316||0%||$24,979||-10%|
|Commercial real estate||305,808||290,122||5%||298,828||2%|
|Unearned loan fees||(2,951)||(2,498)||18%||(2,706)||9%|
|Total portfolio loans||635,475||628,373||1%||674,191||-6%|
|Loans held for sale||20,082||8,210||145%||--||NA|
|Allowance for loan losses||(14,711)||(14,427)||2%||(13,452)||9%|
|Purchased receivables, net||8,654||10,754||-20%||8,202||6%|
|Premises and equipment, net||28,769||27,932||3%||28,889||0%|
|Goodwill and intangible assets||8,767||8,843||-1%||9,072||-3%|
|Other real estate owned||11,019||12,973||-15%||10,118||9%|
|Money market deposits||132,349||126,841||4%||123,239||7%|
|Securities sold under repurchase agreements||9,996||8,871||13%||5,090||96%|
|Junior subordinated debentures||18,558||18,558||0%||18,558||0%|
|Northrim BanCorp shareholders' equity||116,814||113,981||2%||109,900||6%|
|Total shareholders' equity||116,856||114,024||2%||109,931||6%|
|Total liabilities and shareholders' equity||$1,037,934||$1,007,164||3%||$985,692||5%|
|Financial Ratios and Other Data|
|(Dollars in thousands, except per share data)|
|(Unaudited)||September 30, 2010||June 30, 2010||September 30, 2009|
|Loans 90 days past due||200||1,000||2,625|
|Total nonperforming loans||13,888||15,413||28,857|
|Other real estate owned||11,019||12,973||10,118|
|Total nonperforming assets||$25,012||$28,386||$38,975|
|Nonperforming loans / portfolio loans||2.19%||2.45%||4.28%|
|Nonperforming assets / assets||2.41%||2.82%||3.95%|
|Allowance for loan losses / portfolio loans||2.31%||2.30%||2.00%|
|Allowance / nonperforming loans||105.93%||93.60%||46.62%|
|Gross loan charge-offs for the quarter||$793||$1,136||$1,522|
|Gross loan recoveries for the quarter||$661||$142||$413|
|Net loan charge-offs for the quarter||$132||$994||$1,109|
|Net loan charge-offs year-to-date||$1,563||$1,431||$4,314|
|Net loan charge-offs for the quarter / average loans, quarter||0.02%||0.16%||0.16%|
|Net loan charge-offs year-to-date / average loans, annualized||0.32%||0.45%||0.83%|
|Capital Data (At quarter end):|
|Book value per share||$18.22||$17.85||$17.28|
|Tangible book value per share||$16.86||$16.46||$15.85|
|Tangible Common Equity/Tangible Assets 1||10.50%||10.53%||10.32%|
|Tier 1 Capital / Risk Adjusted Assets||14.46%||14.77%||13.96%|
|Total Capital / Risk Adjusted Assets||15.72%||16.02%||15.21%|
|Tier 1 Capital / Average Assets||12.48%||12.52%||12.29%|
|Unrealized gain on AFS securities, net of income taxes||$1,476||$1,242||$1,727|
|Profitability Ratios (For the quarter):|
|Net interest margin (tax equivalent) 2||4.77%||5.06%||5.38%|
|Efficiency ratio 3||64.47%||68.63%||71.42%|
|Return on average assets||1.24%||0.86%||0.79%|
|Return on average equity||10.89%||7.52%||7.05%|
|Profitability Ratios (Year-to-date):|
|Net interest margin (tax equivalent) 2||5.05%||5.20%||5.36%|
|Efficiency ratio 3||68.01%||69.89%||70.12%|
|Return on average assets||0.97%||0.83%||0.79%|
|Return on average equity||8.45%||7.19%||7.15%|
|1 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. This ratio has received more attention over the past several years from stock analysts and regulators. The GAAP measure of assets to equity would be total assets to total equity. Total equity to total assets was 11.26% at September 30, 2010 as compared to 11.32% at June 30, 2010 and 11.15% at September 30, 2009.|
|2 Tax-equivalent net interest margin 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 41.11% in both 2010 and 2009.|
|3 The efficiency ratio is a non-GAAP ratio that is calculated by dividing non-interest expense, exclusive of intangible asset amortization, by the sum of net interest income and non-interest income.|
|(Dollars in thousands, except per share data)|
|September 30, 2010||June 30, 2010||Three Month % Change||September 30, 2009||One Year % Change|
|Average Quarter Balances|
|Total earning assets||913,082||885,059||3%||868,459||5%|
|Average Year-to-date Balances - unaudited|
|Total earning assets||887,490||874,482||1%||868,507||2%|
This release may contain "forward-looking statements" that are subject to 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 and 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 or management, are intended to help identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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 our ability to maintain or expand our market share or net interest margins, and to implement our marketing and growth strategies. 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 our other filings with the SEC. 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.
CONTACT: Northrim BanCorp, Inc. Joe Schierhorn, Chief Financial Officer (907) 261-3308