ANCHORAGE, Alaska, April 23, 2025 (GLOBE NEWSWIRE) -- Northrim BanCorp, Inc. (NASDAQ:NRIM) ("Northrim” or the "Company”) today reported net income of $13.3 million, or $2.38 per diluted share, in the first quarter of 2025, compared to $10.9 million, or $1.95 per diluted share, in the fourth quarter of 2024, and $8.2 million, or $1.48 per diluted share, in the first quarter a year ago. The increase in first quarter 2025 profitability as compared to the first quarter a year ago was primarily the result of an increase in purchased receivable income, higher net interest income, increased mortgage banking income, and a benefit for the provision for credit losses, which were only partially offset by higher other operating expenses. Purchased receivable income increased primarily due to the Company's acquisition of Sallyport Commercial Finance, LLC ("Sallyport or SCF”), which was completed on October 31, 2024. Sallyport and its direct and indirect subsidiaries provide services and products related to purchased receivable factoring and asset-based lending in the United States, Canada, and the United Kingdom.
Dividends per share in the first quarter of 2025 increased to $0.64 per share as compared to $0.62 per share in the fourth quarter of 2024 and $0.61 per share in the first quarter of 2024.
"Our record first quarter earnings are the result of Northrim's focus on profitable, market share driven growth,” said Mike Huston, Northrim's President and Chief Executive Officer. "Our strong financial performance is due to our history of investing in our people and banking infrastructure to consistently deliver 'Superior Customer First Service'. We remain confident that our dedication to serving our customers and communities will support future growth.”
First Quarter 2025 Highlights:
- Net interest income in the first quarter of 2025 increased 1% to $31.3 million compared to $30.8 million in the fourth quarter of 2024 and increased 18% compared to $26.4 million in the first quarter of 2024.
- Net interest margin on a tax equivalent basis ("NIMTE”)* was 4.61% for the first quarter of 2025, up 14-basis points from the fourth quarter of 2024 and up 39-basis points from the first quarter a year ago.
- Return on average assets ("ROAA”) was 1.76% and return on average equity ("ROAE”) was 19.70% for the first quarter of 2025. ROAA was 1.19% and ROAE was 13.84% for the first quarter of 2024.
- Portfolio loans were $2.12 billion at March 31, 2025, down slightly from the preceding quarter and up 17% from a year ago. Portfolio loans in the first quarter of 2025 decreased from the preceding quarter primarily due to the reclassification of $100 million of consumer mortgages previously held as residential real estate loans to loans held for sale. The consumer mortgages are expected to be sold in the second quarter of 2025 to reduce the concentration of residential real estate loans and provide additional liquidity for future commercial and construction loan growth.
- Total deposits were $2.78 billion at March 31, 2025, up 4% from the preceding quarter, and up 14% from $2.43 billion a year ago. Non-interest bearing demand deposits increased 5% from the preceding quarter and increased 4% year-over-year to $742.6 million at March 31, 2025 and represent 27% of total deposits.
- The average cost of interest-bearing deposits was 2.01% at March 31, 2025, down from 2.15% at December 31, 2024 and 2.13% at March 31, 2024.
- Mortgage loan originations were $121.6 million in the first quarter of 2025, down from $185.9 million in the fourth quarter of 2024 and up from $101.7 million in the first quarter a year ago. Mortgage loans funded for sale were $108.5 million in the first quarter of 2025, compared to $162.5 million in the fourth quarter of 2024 and $84.3 million in the first quarter of 2024.
| Financial Highlights | Three Months Ended | ||||||||||||||
| (Dollars in thousands, except per share data) | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | ||||||||||
| Total assets | $ | 3,140,960 | $ | 3,041,869 | $ | 2,963,392 | $ | 2,821,668 | $ | 2,759,560 | |||||
| Total portfolio loans | $ | 2,124,330 | $ | 2,129,263 | $ | 2,007,565 | $ | 1,875,907 | $ | 1,811,135 | |||||
| Total deposits | $ | 2,777,977 | $ | 2,680,189 | $ | 2,625,567 | $ | 2,463,806 | $ | 2,434,083 | |||||
| Total shareholders' equity | $ | 279,756 | $ | 267,116 | $ | 260,050 | $ | 247,200 | $ | 239,327 | |||||
| Net income | $ | 13,324 | $ | 10,927 | $ | 8,825 | $ | 9,020 | $ | 8,199 | |||||
| Diluted earnings per share | $ | 2.38 | $ | 1.95 | $ | 1.57 | $ | 1.62 | $ | 1.48 | |||||
| Return on average assets | 1.76 | % | 1.43 | % | 1.22 | % | 1.31 | % | 1.19 | % | |||||
| Return on average shareholders' equity | 19.70 | % | 16.32 | % | 13.69 | % | 14.84 | % | 13.84 | % | |||||
| NIM | 4.55 | % | 4.41 | % | 4.29 | % | 4.24 | % | 4.16 | % | |||||
| NIMTE* | 4.61 | % | 4.47 | % | 4.35 | % | 4.30 | % | 4.22 | % | |||||
| Efficiency ratio | 64.47 | % | 66.96 | % | 66.11 | % | 68.78 | % | 68.93 | % | |||||
| Total shareholders' equity/total assets | 8.91 | % | 8.78 | % | 8.78 | % | 8.76 | % | 8.67 | % | |||||
| Tangible common equity/tangible assets* | 7.41 | % | 7.23 | % | 8.28 | % | 8.24 | % | 8.14 | % | |||||
| Book value per share | $ | 50.67 | $ | 48.41 | $ | 47.27 | $ | 44.93 | $ | 43.52 | |||||
| Tangible book value per share* | $ | 41.47 | $ | 39.17 | $ | 44.36 | $ | 42.03 | $ | 40.61 | |||||
| Dividends per share | $ | 0.64 | $ | 0.62 | $ | 0.62 | $ | 0.61 | $ | 0.61 | |||||
| Common stock outstanding | 5,520,892 | 5,518,210 | 5,501,943 | 5,501,562 | 5,499,578 | ||||||||||
Alaska Economic Update
(Note: sources for information included in this section are included on page 13.)
The Alaska Department of Labor ("DOL”) has reported Alaska's seasonally adjusted unemployment rate in February of 2025 was 4.7% compared to the U.S. rate of 4.1%. The total number of payroll jobs in Alaska, not including uniformed military, increased 1.6% or 5,200 jobs between February of 2024 and February of 2025.
According to the DOL, the Oil and Gas sector had the largest growth rate in new jobs of 7.5% through February 2025 compared to the prior year, up 600 direct jobs. The Construction sector added 1,000 positions for a year-over-year growth rate of 6.1% in February of 2025. The larger Health Care sector grew by 1,400 jobs for an annual growth rate of 3.4%. Transportation, Warehousing and Utilities added 1,100 jobs for a 5% growth rate. Leisure and Hospitality increased 500 jobs year-over-year through February of 2025, up 1.6%.
The Government sector grew by 600 jobs for 0.7% growth, adding 100 Federal jobs, and 500 State positions in Alaska over the same period. Declining sectors between February 2024 and February 2025 were Manufacturing (primarily seafood processing) shrinking 500 positions (-4.4%), Financial Activities, down 100 jobs (-0.9%), and Retail lost 100 jobs (-0.3%).
Alaska's seasonally adjusted personal income was $56.5 billion in the fourth quarter of 2024 according to the Federal Bureau of Economic Analysis ("BEA”). This was an annualized improvement in the fourth quarter of 4.7% for Alaska, compared to the national average of 4.6%. Alaska enjoyed an annual personal income improvement of 6% in 2024 compared to the U.S. increase of 5.4%, ranking Alaska 6th best in the nation. The $650 million increase in personal income in the fourth quarter in Alaska came from a $446 million increase in net earnings from wages, $154 million growth in government transfer receipts, and a $49 million increase in investment income.
Alaska's Gross State Product ("GSP”) in 2024, reached $70 billion for the first time according to the BEA. Alaska's inflation adjusted "real” GSP increased 1.5% in 2024 and 4% annualized in the fourth quarter of 2024, placing Alaska third best of all 50 states for the quarter. The average U.S. GDP growth rate was 2.8% for the year and 2.4% in the fourth quarter of 2024. Alaska's real GSP improvement in the fourth quarter of 2024 was primarily caused by growth in the Mining, Oil & Gas; Transportation & Warehousing; and to a lesser extent the Health Care sector. Construction played a larger role in the annual state GSP performance.
Based on data from the U.S. Chamber of Commerce, Alaska exported $5.2 billion in goods to foreign countries in 2023. China is the largest importer of Alaska's products at $1.2 billion, followed by Japan at $710 million and Korea at $702 million in 2023. Fish and related maritime products accounted for the largest volume at $2.1 billion, followed by minerals and ores $1.5 billion, and primary metals at $780 million in 2023. Chief Credit Officer and Bank Economist Mark Edwards stated, "President Trump's significant changes to international tariffs has created uncertainty in trade markets. At this time, it is unknown how each country will respond. Alaska's natural resources are highly valued commodities throughout the world. If issues arise with one country, such as China, it is most likely that Alaska's products will be redirected to other markets like Japan and South Korea or sold domestically in the United States. Canada is the largest long-term investor in Alaska's mining industry. This involves significant fixed capital investments made over decades that are unlikely to shift dramatically in the short-run."
According to the US Bureau of Labor Statistics, the Consumer Price Index, or CPI, for the U.S. increased 2.8% between February of 2024 and February of 2025. In Alaska, the rate of increase was 2.9% for the same time period. Food and beverage; housing rents and mortgage rates; transportation; and medical care costs are the largest causes for inflation. Declining motor fuel prices, new and used car prices, and household furnishing costs have helped moderate inflationary pressures in Alaska.
The monthly average price of Alaska North Slope ("ANS”) crude oil was $76.39 in January, $74.03 in February and $73.39 in March of 2025. 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. Through nine months of the fiscal year 2025, production has averaged slightly above the State of Alaska forecast of 467 thousand bpd. In the Spring 2025 Revenue Forecast published March 12, 2025, the DOR expects production to continue to grow to 663 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 oil field and ConocoPhillips is developing the new Willow oil field. There are also a number of smaller new oil fields in Alaska's North Slope that are contributing to the State of Alaska's production growth estimates.
The Alaska Permanent Fund is seeded annually by the oil wealth the State continues to save each year and has grown significantly over 40 years of successful investment. As of February 28, 2025 the funds value was $81.35 billion. According to the DOR it is scheduled to contribute $3.7 billion to the Alaska General Fund in fiscal year 2025 for general government spending and to pay the annual dividend to Alaskan residents.
According to the Alaska Multiple Listing Services, the average sales price of a single family home in Anchorage rose 6.2% in 2024 to $510,109, 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 3.8% in 2024 to $412,859, 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 residential lending activity for Northrim Bank (the"Bank") 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 first quarter of 2025, Northrim generated a ROAA of 1.76% and a ROAE of 19.70%, compared to 1.43% and 16.32%, respectively, in the fourth quarter of 2024 and 1.19% and 13.84%, respectively, in the first quarter a year ago.
Net Interest Income/Net Interest Margin
Net interest income increased 1% to $31.3 million in the first quarter of 2025 compared to $30.8 million in the fourth quarter of 2024 and increased 18% compared to $26.4 million in the first quarter of 2024. Interest expense on deposits decreased to $9.9 million in the first quarter of 2025 compared to $10.6 million in the fourth quarter of 2024 and increased compared to $9.2 million in the first quarter of 2024.
NIMTE* was 4.61% in the first quarter of 2025 up from 4.47% in the preceding quarter and 4.22% in the first quarter a year ago. NIMTE* increased 39 basis points in the first quarter of 2025 compared to the first quarter of 2024 primarily due to a favorable change in the mix of earning-assets towards higher loan balances as a percentage of total earning-assets, slightly higher yields on those assets, and a decrease in costs on interest-bearing liabilities. The weighted average interest rate for new loans booked in the first quarter of 2025 was 7.30% compared to 7.23% in the fourth quarter of 2024 and 7.84% in the first quarter a year ago. The yield on the investment portfolio in the first quarter of 2025 increased to 2.97% from 2.84% in the fourth quarter of 2024 and 2.82% in the first quarter of 2024. "We are starting to see some benefit from lower deposit costs that benefit our net interest margin and outweigh the impact of the recent Fed rate cuts on our loan portfolio, which we could continue to see for the next couple of quarters,” said Jed Ballard, Chief Financial Officer. Northrim's NIMTE* continues to remain above the peer average of 3.23% posted by the S&P U.S. Small Cap Bank Index with total market capitalization between $250 million and $1 billion as of December 31, 2024.
Provision for Credit Losses
Northrim recorded a benefit to the provision for credit losses of $1.4 million in the first quarter of 2025, which was comprised of a benefit to the provision for credit losses on loans of $1.1 million, a $322,000 benefit to the provision for credit losses on unfunded commitments, and a provision for credit losses on purchased receivables of $46,000. This compares to a provision for credit losses of $1.2 million in the fourth quarter of 2024, and provision for credit losses of $149,000 in the first quarter a year ago.
The benefit to the provision for unfunded commitments in the first quarter of 2025 was primarily due to a decrease in estimated loss rates due to changes in mix that was only partially offset by management's assessment of economic conditions and estimated funding rates. The decrease to the provision for credit losses on loans in the first quarter of 2025 as compared to the prior quarter and the same quarter a year ago was primarily a result of the reclassification of $100 million in mortgage loans to loans held for sale, which provided a benefit to the provision of $2.2 million in the Home Mortgage Lending segment for the first quarter of 2025. This benefit was only partially offset by a $1.5 million provision for credit losses in the Home Mortgage Lending segment due to changes in the Company's loss rate regression models for home mortgage loans. Additionally, the Company recorded $1.7 million net benefit for credit losses in the Community Banking segment related to changes in the Company's loss rate regression models for commercial, commercial real estate, and construction loans. These decreases in the provision were only partially offset by increases in estimated loss rates for management's assessment of economic conditions, an increase for higher loan balances in other loan segments, and specific provisions for credit losses in the Specialty Finance segment. These items reduced the overall benefit by $1.3 million. The provision for credit losses related to the Specialty Finance segment of $666,000 in the first quarter of 2025 consisted of a $621,000 provision for credit losses on loans and a $46,000 provision for credit losses on purchased receivables and represents management's estimate of collateral shortfalls for four loans.
Nonperforming loans, net of government guarantees, increased during the quarter to $8.0 million at March 31, 2025, compared to $7.5 million at December 31, 2024, and $5.3 million at March 31, 2024.
The allowance for credit losses on loans was 262% of nonperforming loans, net of government guarantees, at the end of the first quarter of 2025, compared to 292% three months earlier and 333% 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 $14.2 million, or 31% of total first quarter 2025 revenues, as compared to $13.0 million, or 30% of revenues in the fourth quarter of 2024, and $7.8 million, or 23% of revenues in the first quarter of 2024. The increase in other operating income in the first quarter of 2025 as compared to the preceding quarter and the first quarter of 2024 was primarily the result of increased purchased receivable income due to the Company's acquisition of Sallyport on October 31, 2024. The fair market value of marketable equity securities decreased $50,000 in the first quarter of 2025 compared to a decrease of $364,000 in the prior quarter and an increase of $314,000 in the first quarter of 2024. Additionally, the increase in other operating income in the first quarter of 2025 as compared to the fourth quarter of 2024 was partially offset by a decrease in mortgage banking income due to a lower volume of mortgage activity. See further discussion regarding mortgage activity contained under "Home Mortgage Lending” below.
Other Operating Expenses
Operating expenses were $29.3 million in the first quarter of 2025, compared to $29.4 million in the fourth quarter of 2024, and $23.6 million in the first quarter of 2024. The decrease in other operating expenses in the first quarter of 2025 compared to the fourth quarter of 2024 was primarily due to a decrease in salaries and other personnel expense, including $623,000 in lower mortgage commissions expense due to lower mortgage volume and a decrease in profit share expense. Professional fees decreased in the first quarter of 2025 compared to the fourth quarter of 2024 primarily due to one-time deal costs associated with the acquisition of Sallyport of $1.1 million recorded in the fourth quarter of 2024. These decreases were only partially offset by $600,000 in compensation expense for Sallyport acquisition payments and an increase in other operating expense for a decrease in fair value of loans held for sale of $1.2 million as a result of reclassifying the consumer mortgages discussed above. The increase in other operating expenses in the first quarter of 2025 compared to the first quarter a year ago was primarily due to an increase in salaries and other personnel expense, the increase in compensation expense for Sallyport acquisition payments, the increase in other operating expense for the decrease in fair value of loans held for sale, as well as an increase in other real estate owned, or OREO, expense due to a gain on sale recorded in the first quarter of 2024 for proceeds received related to a government guarantee on an OREO property in prior years. Total other operating expense increased $2.7 million in the Specialty Finance segment in the first quarter of 2025 compared to the first quarter of 2024 from the addition of Sallyport on October 31, 2024.
Income Tax Provision
In the first quarter of 2025, Northrim recorded $4.3 million in state and federal income tax expense for an effective tax rate of 24.2%, compared to $2.4 million, or 17.8% in the fourth quarter of 2024 and $2.3 million, or 21.9% in the first quarter a year ago. The increase in the tax rate in the first quarter of 2025 as compared to the fourth and first quarters of 2024 is primarily the result of a decrease in tax credits and tax exempt interest income as a percentage of pre-tax income in 2025 as compared to 2024.
Community Banking
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 $28.2 million in the first quarter of 2025, compared to $27.6 million in the fourth quarter of 2024 and $24.2 million in the first quarter of 2024. Net interest income increased slightly in the first quarter of 2025 as compared to the fourth quarter of 2024 mostly due to lower interest expense on deposits and borrowings and higher interest income on loans. These increases were only partially offset by lower interest income on investments.
Other operating expenses in the Community Banking segment totaled $18.6 million in the first quarter of 2025, down $535,000 or 3% from $19.1 million in the fourth quarter of 2024, and up $1.4 million or 8% from $17.2 million in the first quarter a year ago. The decrease in the first quarter of 2025 as compared to the prior quarter was mostly due to decreases in salaries and other personnel expense, marketing expense, and professional and outside services expense. The increase in the first quarter of 2025 as compared to the first quarter a year ago was primarily due to an increase in OREO expense due to a gain on sale recorded in the first quarter of 2024 for proceeds received related to a government guarantee on an OREO property sold in prior years, as well as increases in data processing expense, insurance expense, salaries and other personnel expense, and marketing expense.
The following table provides highlights of the Community Banking segment of Northrim:
| Three Months Ended | |||||||||||||||
| (Dollars in thousands, except per share data) | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | ||||||||||
| Net interest income | $ | 28,151 | $ | 27,643 | $ | 25,928 | $ | 24,318 | $ | 24,215 | |||||
| (Benefit) provision for credit losses | (1,768 | ) | 771 | 1,492 | (184 | ) | 197 | ||||||||
| Other operating income | 2,703 | 2,535 | ()[\]\\.,;:\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("")});
| ||||||||||||