ANCHORAGE, Alaska, Jan. 24, 2025 (GLOBE NEWSWIRE) -- Northrim BanCorp, Inc. (NASDAQ:NRIM) ("Northrim” or the "Company”) today reported net income of $10.9 million, or $1.95 per diluted share, in the fourth quarter of 2024, compared to $8.8 million, or $1.57 per diluted share, in the third quarter of 2024, and $6.6 million, or $1.19 per diluted share, in the fourth quarter a year ago. The increase in the fourth quarter of 2024 compared to the third quarter of 2024 is primarily due to an increase in purchased receivable income due to the Company's acquisition of Sallyport Commercial Finance, LLC ("Sallyport”), which was completed on October 31, 2024. Sallyport and its direct and indirect subsidiaries provide services and products related to factoring and asset-based lending in the United States, Canada, and the United Kingdom. Additionally, in the fourth quarter of 2024 the Company had an increase in mortgage banking income, primarily as a result of an increase in the fair value of a mortgage servicing portfolio that the Company purchased from another financial institution in the fourth quarter. The increase profitability in the fourth quarter of 2024 as compared to the same quarter of the prior year was largely driven by an increase in mortgage banking income and higher net interest income, as well as an increase in purchased receivable income as noted above, which was only partially offset by higher other operating expenses and an increase in the provision for credit losses.
Net income for the full year of 2024 increased 46% to $37.0 million, or $6.62 per diluted share, compared to $25.4 million, or $4.49 per diluted share, for the full year of 2023. Increased net interest income resulting from loan and deposit growth supported 2024 earnings in the Community Banking segment but were offset by increases in other operating expenses, primarily in salaries and other personnel expense as the Company continued to expand its branch network into new markets in Alaska. An increase in mortgage originations and an increase in the fair value of mortgage servicing rights resulted in net income of $4.4 million in the Home Mortgage Lending segment in 2024 compared to a $2.5 million loss in 2023.
Dividends per share in the fourth quarter of 2024 remained consistent with the third quarter of 2024 at $0.62 per share and increased from $0.60 per share in the fourth quarter of 2023.
"Northrim reported record core earnings in 2024 and record earnings per share in the fourth quarter,” said Mike Huston, Northrim's President and Chief Executive Officer. "We are pleased with our results as we continue to focus on profitable growth. In the last five years Northrim's deposit market share in Alaska has increased from 11% to 16%, loans and deposits have increased by almost 100%, and net interest income has increased by 60%.”
"2024 results were also supported by an improvement in mortgage banking income,” continued Mr. Huston. "We believe the acquisition of Sallyport in the fourth quarter will further diversify fee income and provide attractive risk-adjusted returns to Northrim shareholders.”
Fourth Quarter 2024 Highlights:
- Net interest income in the fourth quarter of 2024 increased 7% to $30.8 million compared to $28.8 million in the third quarter of 2024 and increased 15% compared to $26.7 million in the fourth quarter of 2023.
- Net interest margin on a tax equivalent basis ("NIMTE”)* was 4.47% for the fourth quarter of 2024, a 12-basis point increase from the third quarter of 2024 and a 35-basis point increase compared to the fourth quarter of 2023.
- Return on average assets ("ROAA”) was 1.43% and return on average equity ("ROAE”) was 16.32% for the fourth quarter of 2024.
- Portfolio loans were $2.13 billion at December 31, 2024, up 6% from the preceding quarter and up 19% from a year ago, primarily due to new customer relationships, expanding market share, and to retaining certain mortgage loans originated by Residential Mortgage, a subsidiary of Northrim Bank (the "Bank”), in the loan portfolio.
- Total deposits were $2.68 billion at December 31, 2024, up 2% from the preceding quarter, and up 8% from $2.49 billion a year ago. Noninterest bearing demand deposits represented 27% of total deposits at December 31, 2024, down from 29% at September 30, 2024 and 31% at December 31, 2023.
- Total assets at December 31, 2024 exceeded $3 billion for the first time.
- The average cost of interest-bearing deposits was 2.15% in the fourth quarter of 2024, down from 2.24% in the third quarter of 2024 and up from 2.00% in the fourth quarter a year ago.
- Acquired Sallyport for approximately $53.9 million (approximately $47.9 million in cash and $6 million in an earn-out payable over 3 years) on October 31, 2024.
Financial Highlights | Three Months Ended | |||||||||
(Dollars in thousands, except per share data) | December 31,
2024 |
September 30, 2024 | June 30, 2024 | March 31, 2024 | December 31,
2023 | |||||
Total assets | $3,041,869 | $2,963,392 | $2,821,668 | $2,759,560 | $2,807,497 | |||||
Total portfolio loans | $2,129,263 | $2,007,565 | $1,875,907 | $1,811,135 | $1,789,497 | |||||
Total deposits | $2,680,189 | $2,625,567 | $2,463,806 | $2,434,083 | $2,485,055 | |||||
Total shareholders' equity | $267,116 | $260,050 | $247,200 | $239,327 | $234,718 | |||||
Net income | $10,927 | $8,825 | $9,020 | $8,199 | $6,613 | |||||
Diluted earnings per share | $1.95 | $1.57 | $1.62 | $1.48 | $1.19 | |||||
Return on average assets | 1.43 | % | 1.22 | % | 1.31 | % | 1.19 | % | 0.93 | % |
Return on average shareholders' equity | 16.32 | % | 13.69 | % | 14.84 | % | 13.84 | % | 11.36 | % |
NIM | 4.41 | % | 4.29 | % | 4.24 | % | 4.16 | % | 4.06 | % |
NIMTE* | 4.47 | % | 4.35 | % | 4.30 | % | 4.22 | % | 4.12 | % |
Efficiency ratio | 66.96 | % | 66.11 | % | 68.78 | % | 68.93 | % | 72.21 | % |
Total shareholders' equity/total assets | 8.78 | % | 8.78 | % | 8.76 | % | 8.67 | % | 8.36 | % |
Tangible common equity/tangible assets* | 7.23 | % | 8.28 | % | 8.24 | % | 8.14 | % | 7.84 | % |
Book value per share | $48.41 | $47.27 | $44.93 | $43.52 | $42.57 | |||||
Tangible book value per share* | $39.17 | $44.36 | $42.03 | $40.61 | $39.68 | |||||
Dividends per share | $0.62 | $0.62 | $0.61 | $0.61 | $0.60 | |||||
Common shares outstanding | 5,518,210 | 5,501,943 | 5,501,562 | 5,499,578 | 5,513,459 | |||||
Alaska Economic Update
(Note: sources for information in this section are listed on page 13.)
The Alaska Department of Labor ("DOL”) has reported Alaska's seasonally adjusted unemployment rate in November 2024 was 4.6% compared to the U.S. rate of 4.2%. The total number of payroll jobs in Alaska, not including uniformed military, increased 2.4% or 7,700 jobs between November 2023 and November 2024.
According to the DOL, Construction had the largest growth in new jobs in Alaska through November compared to the prior year. The Construction sector added 2,100 positions for a year over year growth rate of 12.7% in November 2024. The larger Health Care sector grew by 1,500 jobs for an annual growth rate of 3.7%. The Oil & Gas sector increased by 9.2% or 700 new direct jobs. Transportation, Warehousing and Utilities added 1,000 jobs for a 4.5% growth rate. Professional and Business Services increased 700 jobs year over year through November 2024, up 2.5%.
The Government sector grew by 1,200 jobs for 1.5% growth, adding 100 Federal jobs, 800 State and 300 Local government positions in Alaska over the same period. Declining sectors between November 2023 and November 2024 were Manufacturing (primarily seafood processing) shrinking 500 jobs (-6.6%), Information, down 100 jobs (-2.2%), and Retail lost 100 jobs (-0.3%).
Alaska's Gross State Product ("GSP”) in the third quarter of 2024, exceeded $70 billion for the first time, and is estimated to be $70.1 billion in current dollars, according to the Federal Bureau of Economic Analysis ("BEA”). Alaska's inflation adjusted "real” GSP increased 6.5% in 2023, placing Alaska fifth best of all 50 states. In the third quarter of 2024 Alaska GSP increased at an annualized rate of 2.2%, compared to the average U.S. growth rate of 3.1%. Alaska's real GSP improvement in the third quarter of 2024 was primarily caused by growth in the Health Care, Trade, Transportation and Warehousing sectors.
The BEA also calculated Alaska's seasonally adjusted personal income at $55.7 billion in the third quarter of 2024. This was an annualized improvement in the third quarter of 3.3% for Alaska, compared to the national average of 3.2%. Alaska enjoyed an annual personal income improvement of 3.8% in 2023. The $445 million increase in personal income in the third quarter in Alaska came from a $310 million increase in net earnings from wages, $145 million growth in government transfer receipts (which grew in all 50 states), and a $10 million decrease in investment income.
The monthly average price of Alaska North Slope ("ANS”) crude oil was at an annual high of $89.05 in April 2024 and most recently averaged $72.50 in November 2024. The Alaska Department of Revenue ("DOR”) calculated ANS crude oil production was 461 thousand barrels per day ("bpd”) in Alaska's fiscal year ending June 30, 2024 and is projected to increase to 467 thousand bpd in Alaska's fiscal year 2025. The DOR expects production to continue to grow rapidly to 657 thousand bpd by fiscal year 2034. This is primarily a result of new production coming on-line in and around the NPR-A region west of Prudhoe Bay. A partnership between Santos and Repsol is constructing the new Pikka field and ConocoPhillips is reportedly developing the large new Willow field. There are also a number of smaller new fields in Alaska's North Slope that are contributing to the State of Alaska's production growth estimates.
According to the Alaska Multiple Listing Services, the average sales price of a single family home in Anchorage rose 6.2% in 2024 to $509,994, following a 5.2% increase in 2023. This was the seventh consecutive year of price increases.
The average sales price for single family homes in the Matanuska Susitna Borough rose 3.9% in 2024 to $412,907, after increasing 4% in 2023. This continues a trend of average price increases for more than a decade in the region. These two markets represent where the vast majority of the Bank's residential lending activity occurs.
The Alaska Multiple Listing Services reported a 3.4% increase in the number of units sold in Anchorage when comparing 2024 to 2023. There was virtually no change in the number of homes sold in the Matanuska Susitna Borough, with only four fewer homes sold in 2024 than in 2023 or 0.2%.
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 fourth quarter of 2024, Northrim generated a ROAA of 1.43% and a ROAE of 16.32%, compared to 1.22% and 13.69%, respectively, in the third quarter of 2024 and 0.93% and 11.36%, respectively, in the fourth quarter a year ago. For the year 2024, Northrim generated a ROAA of 1.29% and a ROAE of 14.70%, compared to 0.94% and 11.17% for 2023.
Net Interest Income/Net Interest Margin
Net interest income increased 7% to $30.8 million in the fourth quarter of 2024 compared to $28.8 million in the third quarter of 2024 and increased 15% compared to $26.7 million in the fourth quarter of 2023. Interest expense on deposits increased to $10.6 million in the fourth quarter compared to $10.1 million in the third quarter of 2024 and $8.7 million in the fourth quarter of 2023.
NIMTE* was 4.47% in the fourth quarter of 2024 compared to 4.35% in the preceding quarter and 4.12% in the fourth quarter a year ago. NIMTE* increased 12 basis points in the fourth quarter of 2024 compared to the prior quarter and 35 basis points compared to the fourth quarter of 2023 primarily due to a favorable change in the mix of earning-assets towards higher loan balances as a percentage of total earning-assets, higher earning-assets, and higher yields on those assets which were only partially offset by an increase in costs on interest-bearing deposits. The weighted average interest rate for new loans booked in the fourth quarter of 2024 was 7.23% compared to 7.24% in the third quarter of 2024 and 7.74% in the fourth quarter a year ago. The yield on the investment portfolio increased to 2.84% from 2.80% in the third quarter of 2024 and increased from 2.48% in the fourth quarter of 2023. "We are beginning to see improvements in our net interest margin as a result of lower deposit costs from the recent Fed interest rate cuts, in addition to the benefit of new loan volume and loan repricing driving our net interest margin to 4.47% for the fourth quarter,” said Jed Ballard, Chief Financial Officer. Northrim's NIMTE* continues to remain above the peer average of 3.16% posted by the S&P U.S. Small Cap Bank Index with total market capitalization between $250 million and $1 billion as of September 30, 2024.
Provision for Credit Losses
Northrim recorded a provision for credit losses of $1.2 million in the fourth quarter of 2024, which includes a $125,000 provision for credit losses on purchased receivables, $107,000 benefit to the provision for credit losses on unfunded commitments, and a provision for credit losses on loans of $1.2 million. This compares to a provision for credit losses of $2.1 million in the third quarter of 2024, and a provision for credit losses of $885,000 in the fourth quarter a year ago. The $1.2 million provision for credit losses in the fourth quarter of 2024 is largely attributable to increases in loan and purchased receivable balances.
Nonperforming loans, net of government guarantees, increased during the quarter to $7.5 million at December 31, 2024, compared to $5.0 million at both September 30, 2024 and December 31, 2023.
The allowance for credit losses was 292% of nonperforming loans, net of government guarantees, at the end of the fourth quarter of 2024, compared to 394% three months earlier and 345% a year ago.
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 $13.0 million, or 30% of total fourth quarter 2024 revenues, as compared to $11.6 million, or 29% of revenues in the third quarter of 2024, and $6.5 million, or 20% of revenues in the fourth quarter of 2023. The increase in other operating income in the fourth quarter of 2024 as compared to the preceding quarter and the fourth quarter of 2023 is largely the result of higher purchased receivable income due to the acquisition of Sallyport. Additionally, other operating income in the fourth quarter of 2024 as compared to the fourth quarter a year ago increased due to an increase in mortgage banking income arising from higher volume of mortgage activity and an increase in the value of mortgage servicing rights. The changes in mortgage banking are discussed further in the Home Mortgage Lending section below.
Other Operating Expenses
Operating expenses were $29.4 million in the fourth quarter of 2024, compared to $26.7 million in the third quarter of 2024, and $24.0 million in the fourth quarter of 2023. The increase in other operating expenses in the fourth quarter of 2024 compared to the third quarter of 2024 and the fourth quarter a year ago is primarily due to an increase in salaries and other personnel expense, as well as increases in professional fees from one-time deal costs associated with the acquisition of Sallyport and insurance expense due to higher FDIC insurance costs due to the Company's asset and net income growth.
Income Tax Provision
In the fourth quarter of 2024, Northrim recorded $2.4 million in state and federal income tax expense for an effective tax rate of 17.8%, compared to $2.8 million, or 24.2% in the third quarter of 2024 and $1.7 million, or 20.7% in the fourth quarter a year ago. For the year, Northrim recorded $10.0 million in state and federal income tax expense in 2024 for an effective tax rate of 21.3%, compared to $6.2 million, or 19.7% in 2023. The decrease in the tax rate in the fourth quarter of 2024 as compared to the third quarter of 2024 and the fourth quarter a year ago is primarily the result of increased tax benefits related to the Company's investment in low income housing tax credits and the purchase of renewable energy tax credits.
Community Banking
In the most recent deposit market share data from the FDIC, Northrim's deposit market share in Alaska increased to 15.66% of Alaska's total deposits as of June 30, 2024 compared to 15.04% of Alaska's total deposits as of June 30, 2023. This represents 62 basis points of growth in market share percentage for Northrim during that period while, according to the FDIC, the total deposits in Alaska were up 2.3% during the same period. Northrim opened a branch in Kodiak in the first quarter of 2023, a loan production office in Homer in the second quarter of 2023, a permanent branch in Nome in the third quarter of 2023, and a branch in Homer in the first quarter of 2024. See below for further discussion regarding the Company's deposit movement for the quarter.
Northrim is committed to meeting the needs of the diverse communities in which it operates. As a testament to that support, the Bank has branches in four regions of Alaska identified by the Federal Reserve as "distressed or underserved non-metropolitan middle-income geographies”.
Net interest income in the Community Banking segment totaled $27.6 million in the fourth quarter of 2024, compared to $25.9 million in the third quarter of 2024 and $24.2 million in the fourth quarter of 2023. Net interest income increased in the fourth quarter of 2024 as compared to the third quarter of 2024 and the fourth quarter a year ago mostly due to increased interest income on loans that was only partially offset by higher interest expense on deposits.
The following table provides highlights of the Community Banking segment of Northrim:
Three Months Ended | ||||||||||
(Dollars in thousands, except per share data) | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | December 31, 2023 | |||||
Net interest income | $27,643 | $25,928 | $24,318 | $24,215 | $24,221 | |||||
Provision (benefit) for credit losses | 771 | 1,492 | (184 | ) | 197 | 885 | ||||
Other operating income | 2,535 | 3,507 | 2,450 | 2,468 | 2,741 | |||||
Other operating expense | 19,116 | 18,723 | 18,068 | 17,177 | 18,158 | |||||
Income before provision for income taxes | 10,291 | 9,220 | 8,884 | 9,309 | 7,919 | |||||
Provision for income taxes | 1,474 | 2,133 | 1,786 | 1,966 | 1,604 | |||||
Net income Community Banking segment | $8,817 | $7,087 | $7,098 | $7,343 | $6,315 | |||||
Weighted average shares outstanding, diluted | 5,597,889 | 5,583,055 | 5,558,580 | 5,554,930 | 5,578,491 | |||||
Diluted earnings per share | $1.58 | $1.26 | $1.27 | $1.32 | $1.14 | |||||
Year Ended | ||||
(Dollars in thousands, except per share data) | December 31, 2024 | December 31, 2023 | ||
Net interest income | $102,104 | $95,555 | ||
Provision for credit losses | 2,276 | 3,842 | ||
Other operating income | 10,960 | 9,130 | ||
Other operating expense | 73,085 | 69,253 | ||
Income before provision for income taxes | 37,703 | ()[\]\\.,;:\s@\"]+)*)|(\".+\"))@((\[[0-9]{1,3}\.[0-9]{1,3}\.[0-9]{1,3}\.[0-9]{1,3}\])|(([a-zA-Z\-0-9]+\.)+[a-zA-Z]{2,}))$/;return b.test(a)}$(document).ready(function(){if(performance.navigation.type==2){location.reload(true)}$("iframe[data-lazy-src]").each(function(b){$(this).attr("src",$(this).attr("data-lazy-src"))});if($(".owl-article-body-images").length){$(".owl-article-body-images").owlCarousel({items:1,loop:true,center:false,dots:false,autoPlay:true,mouseDrag:false,touchDrag:false,pullDrag:false,nav:true})}var a=$("#display_full_text").val();if(a==0){$.ajax({url:"/ajax/set-article-cookie",type:"POST",data:{cmsArticleId:$("#cms_article_id").val()},dataType:"json",success:function(b){},error:function(b,d,c){}})}$(".read-full-article").on("click",function(d){d.preventDefault();var b=$(this).attr("data-cmsArticleId");var c=$(this).attr("data-productId");var f=$(this).attr("data-href");dataLayer.push({event:"paywall_click",paywall_name:"the_manila_times_premium",paywall_id:"paywall_article_"+b});$.ajax({url:"/ajax/set-article-cookie",type:"POST",data:{cmsArticleId:b,productId:c},dataType:"json",success:function(e){window.location.href=$("#BASE_URL").val()+f},error:function(e,h,g){}})});$(".article-embedded-newsletter-form .close-btn").on("click",function(){$(".article-embedded-newsletter-form").fadeOut(1000)})});$(document).on("click",".article-embedded-newsletter-form .newsletter-button",function(){var b=$(".article-embedded-newsletter-form .newsletter_email").val();var d=$("#ga_user_id").val();var c=$("#ga_user_yob").val();var a=$("#ga_user_gender").val();var e=$("#ga_user_country").val();if(validateEmail(b)){$.ajax({url:"/ajax/sendynewsletter",type:"POST",data:{email:b},success:function(f){$(".article-embedded-newsletter-form .nf-message").html(f);$(".article-embedded-newsletter-form .nf-message").addClass("show");setTimeout(function(){$(".article-embedded-newsletter-form .nf-message").removeClass("show");$(".article-embedded-newsletter-form .nf-message").html("")},6000);dataLayer.push({event:"newsletter_sub",user_id:d,product_name:"newsletter",gender:a,yob:c,country:e})},error:function(f,h,g){}})}else{$(".article-embedded-newsletter-form .nf-message").html("Please enter a valid email address.");$(".article-embedded-newsletter-form .nf-message").addClass("show");setTimeout(function(){$(".article-embedded-newsletter-form .nf-message").removeClass("show");$(".article-embedded-newsletter-form .nf-message").html("")},6000)}});$(document).on("click",".article-embedded-newsletter-form .nf-message",function(){$(this).removeClass("show");$(this).html("")});
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