Financial Performance - Net income for the first quarter of 2024 was $8.2 million, an increase of 71% from $4.8 million in the same period of 2023[122] - Earnings per diluted share rose to $1.48 in Q1 2024, compared to $0.84 in Q1 2023, reflecting strong performance[122] - Return on average assets improved to 1.19% in Q1 2024, compared to 0.76% in Q1 2023[123] - Return on average shareholders' equity increased to 13.84% in Q1 2024, up from 8.73% in Q1 2023[123] Income and Revenue - Net interest income increased by 6% to $26.4 million in Q1 2024, up from $25.0 million in Q1 2023[122] - Total interest income increased by $6,013,000, or 20%, driven by a $6,546,000 increase in loans[134] - Other operating income rose by $2,900,000, or 60%, to $7,800,000, primarily due to a $2,000,000 increase in mortgage banking income[137] Loans and Deposits - Total loans reached $1.81 billion as of March 31, 2024, a 1% increase from December 31, 2023, driven by growth in commercial real estate and consumer mortgage loans[126] - Total deposits were $2.43 billion at March 31, 2024, a decrease of 2% from December 31, 2023, with demand deposits down 5%[126] - Total loans increased by $21.6 million, or 1%, to $1.811 billion as of March 31, 2024, from $1.789 billion at December 31, 2023, primarily due to increased commercial real estate and consumer mortgage loans[142] Asset Quality - Nonperforming assets decreased to $5.4 million as of March 31, 2024, down from $5.8 million at December 31, 2023[123] - Nonperforming loans decreased to $5.260 million as of March 31, 2024, from $6.069 million as of December 31, 2023[146] - The provision for credit losses decreased to $149,000 in Q1 2024 from $360,000 in Q1 2023, reflecting improved estimated loss rates[136] Deposits and Funding - The average cost of interest-bearing deposits rose to 2.13% in Q1 2024, up from 1.20% in Q1 2023[126] - Non-interest bearing demand deposits decreased by $50,954,000, or 7%, to $705,134,000 compared to the previous year[136] - Total interest-bearing deposits increased by $188,486,000, or 12%, to $1,731,923,000[136] Capital and Shareholder Information - The Company maintained a total risk-based capital ratio of 12.47% and a Tier 1 risk-based capital ratio of 11.55% as of March 31, 2024, exceeding the minimum requirements[166] - The Company has 10.0 million authorized shares of common stock, with 5.5 million issued and outstanding, leaving 4.5 million shares available for issuance[157] - The Company repurchased 15,034 shares of common stock in the first three months of 2024, with 110,000 shares remaining under the repurchase program[163] Tax and Expenses - The effective tax rate for Q1 2024 was 21.94%, up from 20.44% in Q1 2023, with income tax expense recorded at $2,300,000[139] Investment Portfolio - Total investment securities decreased by 7% to $642,696,000 from $687,839,000 at the end of 2023, mainly due to maturities and calls[140] - The average estimated duration of the investment portfolio was approximately 2.7 years as of March 31, 2024[141] - The weighted average maturity of available for sale securities was 2.7 years as of March 31, 2024, down from 2.8 years at December 31, 2023[159] Cash and Liquidity - As of March 31, 2024, the Company had cash and cash equivalents of $80.4 million, representing 3% of total assets, down from $118.5 million or 4% at December 31, 2023[159] - Liquid assets, including investments and loans maturing within a year, totaled $515.6 million as of March 31, 2024[160] - The Company reported net cash used by operating activities of $5.5 million for the first three months of 2024, primarily due to cash used in loan origination[161] Other Information - Direct exposure to the oil and gas industry decreased to $88.0 million, or approximately 5% of loans as of March 31, 2024, down from $96.1 million, or approximately 5% of loans as of December 31, 2023[143] - The Company's allowance for credit losses (ACL) increased to $17.533 million as of March 31, 2024, from $14.157 million as of March 31, 2023[148] - Uninsured deposits totaled approximately $989.5 million, or 41% of total deposits, as of March 31, 2024, unchanged from December 31, 2023[152] - The Company had outstanding advances of $13.6 million from the Federal Home Loan Bank as of March 31, 2024, for low-income housing projects[153] - Total unfunded commitments to fund loans and letters of credit were $483.0 million as of March 31, 2024, with expectations that not all loans will be fully drawn at once[159] - The accumulated unrealized losses on available for sale securities were $17.2 million as of March 31, 2024[159] - The Company expects to continue receiving dividends from the Bank throughout 2024, as it meets all applicable capital adequacy requirements[157]

Northrim BanCorp (NRIM) came out with quarterly earnings of $1.48 per share, beating the Zacks Consensus Estimate of $1.05 per share. This compares to earnings of $0.84 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 40.95%. A quarter ago, it was expected that this holding company for Northrim Bank would post earnings of $1.24 per share when it actually produced earnings of $1.19, delivering a surprise of -4.03%.Over the last ...

Financial Performance - Northrim BanCorp reported net income of $8.2 million, or $1.48 per diluted share, in Q1 2024, up from $6.6 million, or $1.19 per diluted share, in Q4 2023, and $4.8 million, or $0.84 per diluted share, in Q1 2023[1]. - Northrim reported net income of $8.2 million, or $1.48 per diluted share for Q1 2024, compared to $7.16 million, or $1.29 per diluted share, in Q4 2023[25]. - Total interest income for Q1 2024 was $35.8 million, up from $29.8 million in Q1 2023, reflecting a 20% year-over-year growth[55]. - The bank's net interest income after provision for credit losses was $26.3 million, an increase from $24.7 million in the same quarter last year, marking a 6.6% year-over-year increase[55]. - The efficiency ratio improved to 68.93% in Q1 2024 from 72.21% in Q4 2023, indicating better operational efficiency[7]. - Return on average assets (ROAA) was 1.19% and return on average equity (ROAE) was 13.84% for Q1 2024, compared to 0.93% and 11.36% in Q4 2023[18]. - The net change in fair value of mortgage servicing rights decreased mortgage banking income by $25,000 in Q1 2024, compared to a decrease of $1.0 million in Q4 2023[33]. - The bank's mortgage banking income rose to $4.03 million in Q1 2024, compared to $2.01 million in Q1 2023, representing a 100% increase year-over-year[55]. Loan and Deposit Metrics - Total portfolio loans reached $1.81 billion at March 31, 2024, up 1% from the previous quarter and up 18% year-over-year[9]. - Total deposits were $2.43 billion at March 31, 2024, down 2% from the previous quarter but up 6% from $2.30 billion a year ago[9]. - The loan-to-deposit ratio increased to 74% at March 31, 2024, from 72% at December 31, 2023, and 67% at March 31, 2023[36]. - Approximately 32% of loans are set to mature or reprice in the next three months, indicating potential changes in interest income[43]. - Mortgage loans funded for sale increased to $84.3 million in Q1 2024, compared to $79.7 million in Q4 2023 and $50.7 million in Q1 2023[30]. - The average interest-bearing deposits increased to $1.73 billion with an average cost of 2.13% in Q1 2024, compared to $1.72 billion and 2.00% in Q4 2023[44]. Asset Quality - Nonperforming loans increased to $5.3 million at March 31, 2024, from $5.0 million at December 31, 2023, but decreased from $6.1 million a year ago[22]. - Nonperforming loans decreased to $5.26 million, down from $6.07 million in Q4 2023, showing a 13% improvement in asset quality[59]. - The allowance for credit losses as a percentage of portfolio loans remained stable at 0.97% as of March 31, 2024[59]. - Northrim recorded a provision for credit losses of $149,000 in Q1 2024, significantly lower than $885,000 in Q4 2023 and $360,000 in Q1 2023[21]. - Net adversely classified loans were $7.2 million at March 31, 2024, unchanged from a year ago, with net loan recoveries of $42,000 in Q1 2024[48]. Shareholder Equity - Shareholders' equity increased to $239.3 million, or $43.52 book value per share, at March 31, 2024, compared to $234.7 million at December 31, 2023[46]. - Total shareholders' equity increased to $239,327 million as of March 31, 2024, compared to $234,718 million in 2023, and $224,425 million in March 2023, reflecting a year-over-year growth of 6.6%[71]. - The ratio of total shareholders' equity to total assets improved to 8.67% as of March 31, 2024, compared to 8.36% in 2023, but slightly decreased from 8.70% in March 2023[71]. - The tangible common equity ratio increased to 8.14% in Q1 2024 from 7.84% in Q4 2023[68]. Market Presence and Operations - A new branch was opened in Homer, Alaska, to expand market presence following the success of a loan production office established in 2023[4]. - Northrim's deposit market share in Alaska grew to 15.04% as of June 30, 2023, up from 13.95% a year earlier, despite a total deposit decline of 8.5% in Alaska[26]. - Operating expenses decreased to $23.6 million in Q1 2024 from $24.0 million in Q4 2023 and $23.5 million in Q1 2023[24].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from_____to____ WASHINGTON, DC 20549 FORM 10-K (Mark One) ☑ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2023 Commission File Number 000-33501 NORTHRIM BANCORP, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation ...

Financial Performance - The Company reported net income of $8.4 million and earnings per diluted share of $1.48 for Q3 2023, down from $10.1 million and $1.76 in Q3 2022[126]. - For the first nine months of 2023, net income was $18.8 million and earnings per diluted share were $3.30, compared to $22.1 million and $3.79 in the same period of 2022[126]. - Net income for Q3 2023 decreased by $1.8 million to $8.4 million compared to $10.1 million in Q3 2022, primarily due to a $1.5 million increase in the provision for credit losses[132]. - For the first nine months of 2023, net income decreased by $3.4 million to $18.8 million from $22.1 million in the same period of 2022, mainly due to a decrease in mortgage banking income and an increase in the provision for credit losses[133]. Interest Income and Expenses - Net interest income increased 13% to $76.5 million in the first nine months of 2023, up from $67.8 million in the same period of 2022[128]. - Total interest income for the three months ended September 30, 2023, increased by $6,849,000, with contributions of $1,871,000 from volume and $4,978,000 from rate changes compared to the same period in 2022[140]. - Total interest expense for the three months ended September 30, 2023, increased by $6,810,000, with $754,000 from volume and $6,056,000 from rate changes compared to the same period in 2022[140]. - Net interest income for the nine months ended September 30, 2023, increased by $8,697,000, or 13%, to $76,524,000 compared to $67,827,000 for the same period in 2022[142]. - Total interest income for the nine months ended September 30, 2023, increased by $25,414,000, with $5,260,000 from volume and $20,154,000 from rate changes compared to the same period in 2022[144]. - Total interest expense for the nine months ended September 30, 2023, increased by $16,717,000, with $1,144,000 from volume and $15,573,000 from rate changes compared to the same period in 2022[144]. Loans and Deposits - Loans totaled $1.72 billion at September 30, 2023, representing a 14% increase from December 31, 2022, primarily due to commercial and consumer mortgage loan growth[128]. - Total deposits were $2.43 billion at September 30, 2023, a 2% increase from December 31, 2022[128]. - Loans increased by $218.3 million, or 15%, to $1.720 billion at September 30, 2023, primarily due to increased commercial and consumer mortgage loans[154]. - Total deposits increased by $40.7 million, or 2%, to $2.428 billion as of September 30, 2023, compared to $2.387 billion at December 31, 2022[158]. - Uninsured deposits totaled $999.5 million, or 41% of total deposits, as of September 30, 2023, down from $1.1 billion, or 46%, at December 31, 2022[160]. Credit Quality - Nonperforming loans decreased by 20% to $5.1 million as of September 30, 2023, from $6.4 million at December 31, 2022[129]. - Potential problem loans increased to $2.2 million as of September 30, 2023, from $1.6 million at December 31, 2022, primarily due to increased line of credit usage[131]. - The Company’s allowance for credit losses (ACL) increased to $16.491 million as of September 30, 2023, from $11.982 million at the end of Q3 2022[157]. - Provision for credit loss expense for the three months ended September 30, 2023, was $1,190,000, compared to a benefit of $353,000 for the same period in 2022[145]. Operating Expenses - Other operating income for the three months ended September 30, 2023, decreased by $670,000, or 8%, to $8,000,000 compared to $8,700,000 for the same period in 2022[146]. - Other operating expense for the three months ended September 30, 2023, increased by $610,000, or 3%, to $22,900,000 compared to $22,300,000 for the same period in 2022[148]. - Other operating income for the nine months ended September 30, 2023, decreased by $7,400,000, or 27%, to $19,900,000 compared to $27,300,000 for the same period in 2022[147]. Capital and Shareholder Returns - The dividend payout ratio increased to 40.40% in Q3 2023, compared to 28.23% in Q3 2022[127]. - The Company has 10.0 million authorized shares of common stock, with 5.5 million issued and outstanding, leaving 4.5 million shares available for issuance[165]. - The Company repurchased 152,887 shares of its common stock in the first nine months of 2023, with 132,113 shares remaining under the repurchase program[171]. - Northrim recorded a lower effective tax rate of 18.43% in Q3 2023 compared to 22.41% in Q3 2022, with tax expense decreasing from $2.9 million to $1.9 million[150]. Liquidity and Investments - The Company had cash and cash equivalents of $111.2 million, representing 4% of total assets, down from $259.4 million or 10% of total assets at December 31, 2022[168]. - The Company’s liquid assets, including investments and loans maturing within a year, totaled $517.8 million as of September 30, 2023[169]. - The average estimated duration of the investment portfolio was approximately 2.8 years as of September 30, 2023, with $308.9 million scheduled to mature in the next year[152]. - The Company has access to additional liquidity sources, including borrowings through correspondent banking relationships and credit lines with the Federal Reserve Bank and the FHLB[169]. Branch Expansion - The Company opened its 19th branch in Kodiak in the first quarter of 2023, contributing to increased salaries and personnel expenses[149].

Part I [Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) The company's financial statements reflect a slight asset decrease, loan growth, and mixed income results influenced by net interest income and mortgage banking [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Total assets slightly decreased to $2.64 billion, while net loans grew 10.5% to $1.64 billion, funded by reduced deposits and increased borrowings Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 | December 31, 2022 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Total Assets** | **$2,638,207** | **$2,674,318** | **($36,111)** | **-1.4%** | | Net Loans | $1,643,594 | $1,487,947 | $155,647 | 10.5% | | Investment Securities (AFS & HTM) | $707,889 | $713,779 | ($5,890) | -0.8% | | Total Deposits | $2,302,311 | $2,387,211 | ($84,900) | -3.6% | | Borrowings | $64,887 | $14,095 | $50,792 | 360.4% | | Total Shareholders' Equity | $221,336 | $218,629 | $2,707 | 1.2% | [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) Q2 2023 net income rose to $5.6 million due to higher net interest income, while YTD net income decreased to $10.4 million from lower mortgage banking income Income Statement Summary (in thousands, except per share data) | Metric | Q2 2023 | Q2 2022 | YTD 2023 | YTD 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $25,142 | $22,212 | $50,174 | $41,516 | | Provision for credit losses | $1,407 | $463 | $1,767 | $313 | | Mortgage banking income | $3,913 | $5,900 | $5,921 | $12,882 | | **Net Income** | **$5,577** | **$4,795** | **$10,407** | **$12,021** | | **Earnings Per Share, Diluted** | **$0.98** | **$0.83** | **$1.82** | **$2.03** | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash and equivalents decreased by $222.6 million, with cash used in operations, investing, and financing activities primarily for loan growth and deposit outflows Six Months Ended June 30, 2023 Cash Flow Summary (in thousands) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net Cash (Used) Provided by Operating Activities | ($22,519) | $15,309 | | Net Cash (Used) by Investing Activities | ($155,329) | ($218,820) | | Net Cash Used by Financing Activities | ($44,750) | ($105,393) | | **Net Change in Cash and Cash Equivalents** | **($222,598)** | **($308,904)** | [Notes to the Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) Notes detail accounting policies, including ASU 2022-02 adoption, investment portfolio unrealized losses, loan portfolio growth, and segment performance - The company adopted **ASU 2022-02**, which eliminates the accounting guidance for troubled debt restructurings (TDRs) and enhances disclosure requirements for loan modifications to borrowers experiencing financial difficulty; the adoption did **not have a material impact**[29](index=29&type=chunk) - The investment portfolio held available-for-sale securities with gross unrealized losses of **$38.4 million** as of June 30, 2023; management believes these losses are due to **noncredit-related factors**, primarily interest rate changes, and has **not recognized any credit losses**[33](index=33&type=chunk)[36](index=36&type=chunk) - Total loans held for investment grew to **$1.66 billion**; the Allowance for Credit Losses (ACL) for these loans was **$15.6 million**, or **0.94%** of the total loan portfolio[41](index=41&type=chunk) - The Community Banking segment generated **$12.9 million** in net income for the first six months of 2023, while the Home Mortgage Lending segment incurred a **net loss of $2.5 million**, a significant decline from a **$0.6 million profit** in the prior-year period[108](index=108&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2023 net income growth driven by net interest income, stable Alaskan economy, solid financial condition, and strong liquidity and capital - Alaska's economy is improving, with the seasonally adjusted unemployment rate at **3.6%** in May 2023, below the U.S. average; job growth was led by the **Leisure and Hospitality** sector[113](index=113&type=chunk)[114](index=114&type=chunk) - Q2 2023 net income rose to **$5.6 million**, driven by a **13% increase** in net interest income to **$25.1 million**; net interest margin expanded by **47 basis points** to **4.14%** compared to Q2 2022[123](index=123&type=chunk)[124](index=124&type=chunk) - Loans grew **10%** to **$1.66 billion** since year-end 2022, while deposits decreased **4%** to **$2.30 billion** over the same period[124](index=124&type=chunk) [Results of Operations](index=43&type=section&id=Results%20of%20Operations) H1 2023 net income decreased to $10.4 million due to lower mortgage banking income and higher credit loss provisions, partially offset by increased net interest income Key Performance Ratios | Ratio | Q2 2023 | Q2 2022 | YTD 2023 | YTD 2022 | | :--- | :--- | :--- | :--- | :--- | | Return on average assets, annualized | 0.85 % | 0.74 % | 0.81 % | 0.93 % | | Return on average shareholders' equity, annualized | 9.85 % | 8.58 % | 9.30 % | 10.51 % | - Net interest margin (NIM) for Q2 2023 increased by **47 basis points** to **4.14%** compared to Q2 2022, primarily due to higher yields on earning assets outpacing the rise in deposit costs[131](index=131&type=chunk)[133](index=133&type=chunk) - The provision for credit losses increased to **$1.8 million** for the first six months of 2023, up from **$0.3 million** in the prior-year period, reflecting loan growth and changes in economic forecasts under CECL[142](index=142&type=chunk) - Other operating income for H1 2023 decreased **36%** to **$11.9 million**, mainly due to a **$7.0 million** drop in mortgage banking income from lower production volume caused by rising interest rates; the prior year period also included a one-time **$2.0 million** life insurance proceed[144](index=144&type=chunk) [Financial Condition](index=50&type=section&id=Financial%20Condition) The company's financial condition shows 10% loan growth to $1.66 billion, funded by a 4% deposit decrease and increased borrowings, with strong credit quality - The loan portfolio grew by **$157.5 million** (**10%**) in the first six months of 2023, with commercial & industrial loans and 1-4 family residential properties showing notable increases[151](index=151&type=chunk) - Nonperforming assets, net of government guarantees, decreased to **$5.6 million** at June 30, 2023, from **$6.4 million** at December 31, 2022[125](index=125&type=chunk) - Total deposits decreased by **$84.9 million** (**4%**) to **$2.30 billion**, with a notable shift from demand and savings accounts into higher-yielding time deposits[155](index=155&type=chunk) - Uninsured deposits totaled **$910.7 million**, representing **40%** of total deposits as of June 30, 2023, down from **46%** at year-end 2022[157](index=157&type=chunk) [Liquidity and Capital Resources](index=54&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains robust liquidity with $442.9 million in liquid assets and $1.224 billion in borrowing capacity, exceeding all 'well-capitalized' regulatory capital ratios - The company has strong liquidity sources, including **$442.9 million** in liquid assets maturing within a year and **$1.224 billion** in available borrowing lines from the FHLB and Federal Reserve[165](index=165&type=chunk) Capital Ratios as of June 30, 2023 | Ratio | Minimum Required | Well Capitalized | Company Actual | Bank Actual | | :--- | :--- | :--- | :--- | :--- | | Total risk-based capital | 8.00% | 10.00% | 13.02% | 11.16% | | Tier 1 risk-based capital | 6.00% | 8.00% | 12.13% | 10.26% | | Common equity tier 1 capital | 4.50% | 6.50% | 11.64% | 10.27% | | Leverage ratio | 4.00% | 5.00% | 9.28% | 7.83% | - The company repurchased **89,887 shares** of its common stock in the first six months of 2023; as of June 30, 2023, **195,113 shares** remain authorized for repurchase[167](index=167&type=chunk)[181](index=181&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=56&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in market risk disclosures were identified from the prior annual report as of June 30, 2023 - There have been **no material changes** in the company's market risk profile since the end of 2022[173](index=173&type=chunk) [Controls and Procedures](index=57&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during Q2 2023 - The principal executive and financial officers concluded that disclosure controls and procedures were **effective** as of June 30, 2023[174](index=174&type=chunk) - **No material changes** to the internal control over financial reporting occurred during the second quarter of 2023[175](index=175&type=chunk) Part II [Legal Proceedings](index=57&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal actions not expected to materially impact its financial condition or results of operations - The company is party to various routine debtor-creditor legal actions, which are **not expected to have a material impact** on its financial position[177](index=177&type=chunk) [Risk Factors](index=57&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors were identified from the prior annual report as of June 30, 2023 - Risk factors have **not changed materially** as of June 30, 2023, from what was reported in the 2022 Form 10-K[178](index=178&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=57&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 62,000 shares in Q2 2023 at an average of $40.30, with 195,113 shares remaining for repurchase Share Repurchases in Q2 2023 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2023 | 19,000 | $44.34 | | May 2023 | 22,000 | $37.10 | | June 2023 | 21,000 | $40.09 | | **Total Q2** | **62,000** | **$40.30** | - As of June 30, 2023, **195,113 shares** remain available for repurchase under the company's publicly announced plan[181](index=181&type=chunk)

For the quarterly period ended March 31, 2023 ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from_____to____ Commission File Number 000-33501 NORTHRIM BANCORP, INC. (Exact name of registrant as specified in its charter) Alaska 92-0175752 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☑ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (State or other jurisdi ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K (Mark One) ☑ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2022 ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from_____to____ Commission File Number 000-33501 NORTHRIM BANCORP, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☑ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2022 ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from_____to____ Commission File Number 000-33501 NORTHRIM BANCORP, INC. (Exact name of registrant as specified in its charter) Alaska 92-0175752 (State or other jur ...

[Part I FINANCIAL INFORMATION](index=4&type=section&id=Part%20I%20FINANCIAL%20INFORMATION) This section provides the unaudited consolidated financial statements, management's discussion, and market risk disclosures for the company [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Northrim BanCorp's unaudited consolidated financial statements, including balance sheets, income, and cash flow statements, with detailed accounting policy notes [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to $2.61 billion, driven by reduced interest-bearing deposits, while shareholders' equity fell to $215.3 million Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$2,611,154** | **$2,724,719** | | Net Loans | $1,394,172 | $1,402,147 | | Investment Securities (AFS & HTM) | $641,777 | $446,684 | | Interest bearing deposits in other banks | $312,888 | $625,022 | | **Total Liabilities** | **$2,395,865** | **$2,486,902** | | Total Deposits | $2,335,390 | $2,421,631 | | **Total Shareholders' Equity** | **$215,289** | **$237,817** | [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) Net income significantly decreased in Q2 and YTD 2022, primarily due to lower mortgage banking income and a shift to credit loss provisions Key Income Statement Data (in thousands, except per share data) | Metric | Q2 2022 | Q2 2021 | YTD 2022 | YTD 2021 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $22,212 | $19,192 | $41,516 | $38,685 | | Provision (benefit) for credit losses | $463 | ($427) | $313 | ($1,915) | | Mortgage banking income | $5,900 | $11,360 | $12,882 | $24,982 | | **Net Income** | **$4,795** | **$8,345** | **$12,021** | **$20,526** | | **Earnings Per Share, Diluted** | **$0.83** | **$1.33** | **$2.03** | **$3.27** | [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) The company reported a comprehensive loss for Q2 and YTD 2022, driven by significant unrealized losses on available-for-sale securities Comprehensive Income (Loss) Summary (in thousands) | Metric | Q2 2022 | Q2 2021 | YTD 2022 | YTD 2021 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $4,795 | $8,345 | $12,021 | $20,526 | | Other comprehensive (loss), net of tax | ($4,930) | ($488) | ($15,934) | ($669) | | **Comprehensive (loss) income** | **($135)** | **$7,857** | **($3,913)** | **$19,857** | [Consolidated Statements of Changes in Shareholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders%27%20Equity) Shareholders' equity decreased to $215.3 million, primarily due to stock repurchases and increased other comprehensive loss, offsetting net income - Key drivers for the change in shareholders' equity in the first six months of 2022 include net income of **$7.2 million in Q1** and **$4.8 million in Q2**, offset by stock repurchases totaling **$14.2 million** and cash dividends of **$4.8 million**[21](index=21&type=chunk) - A significant factor in the equity reduction was the other comprehensive loss, net of tax, which amounted to **$11.0 million in Q1** and **$4.9 million in Q2 2022**, totaling **$15.9 million** for the first half of the year[21](index=21&type=chunk) [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The company experienced a net decrease in cash and cash equivalents of $308.9 million, driven by investing and financing activities Six-Month Cash Flow Summary (in thousands) | Activity | YTD 2022 | YTD 2021 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $15,309 | $68,450 | | Net Cash (Used) by Investing Activities | ($218,820) | ($152,030) | | Net Cash (Used) Provided by Financing Activities | ($105,393) | $314,500 | | **Net Change in Cash and Cash Equivalents** | **($308,904)** | **$230,920** | | Cash and Cash Equivalents at Beginning of Period | $645,827 | $115,965 | | **Cash and Cash Equivalents at End of Period** | **$336,923** | **$346,885** | [Notes to the Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) The notes detail accounting policies, including the LIBOR transition, investment securities, loan activity, and segment performance - The company operates in two primary segments: **Community Banking** and **Home Mortgage Lending**[25](index=25&type=chunk) - The company is managing the transition away from LIBOR, with approximately **$179.1 million of assets** and **$10.0 million of liabilities** linked to USD LIBOR as of June 30, 2022[31](index=31&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, economic conditions, credit quality, and capital position, including a key accounting policy change for credit losses [Update on Economic Conditions](index=42&type=section&id=Update%20on%20Economic%20Conditions) Alaska's economy shows job growth, particularly in tourism and oil & gas, with rising oil prices and housing market appreciation - Total payroll jobs in Alaska increased by **2.9% (8,900 jobs)** compared to May 2021, with the Leisure and Hospitality sector growing by **12.4%**[118](index=118&type=chunk) - The price of Alaska North Slope crude oil reached a monthly average of **$120.17 a barrel** in June 2022[120](index=120&type=chunk) - The average sales price of a single-family home in Anchorage climbed **7.5%** in the first six months of 2022 to **$456,052**[122](index=122&type=chunk) [Highlights and Summary of Performance - Second Quarter of 2022](index=43&type=section&id=Highlights%20and%20Summary%20of%20Performance%20-%20Second%20Quarter%20of%202022) Q2 2022 net income decreased to $4.8 million due to lower mortgage banking income, despite a 16% increase in net interest income Q2 2022 Performance vs. Q2 2021 | Metric | Q2 2022 | Q2 2021 | | :--- | :--- | :--- | | Net Income | $4.8M | $8.3M | | Diluted EPS | $0.83 | $1.33 | | Total Revenue | $30.0M | $33.3M | | Net Interest Income | $22.2M | $19.2M | | Net Interest Margin | 3.67% | 3.48% | - The company paid a cash dividend of **$0.41 per share** in Q2 2022, an **11% increase** from Q2 2021[126](index=126&type=chunk) [Credit Quality](index=44&type=section&id=Credit%20Quality) Credit quality improved, with nonperforming assets decreasing 22% to $11.7 million and COVID-19 loan modifications significantly reduced - Nonperforming assets, net of government guarantees, decreased by **$3.3 million (22%)** to **$11.7 million** at June 30, 2022, compared to December 31, 2021[130](index=130&type=chunk) - The outstanding principal balance of loan modifications due to COVID-19 impacts fell to **$23.6 million (5 modifications)** as of June 30, 2022, down from **$49.2 million (16 modifications)** at December 31, 2021[129](index=129&type=chunk) - Total Troubled Debt Restructurings (TDRs), net of government guarantees, decreased to **$5.8 million** at June 30, 2022, from **$7.3 million** at December 31, 2021[133](index=133&type=chunk) [Results of Operations](index=46&type=section&id=Results%20of%20Operations) Net income declined in Q2 and H1 2022 due to reduced mortgage banking income, despite growth in net interest income - Net interest income increased **16% to $22.2 million** in Q2 2022, and net interest margin expanded **19 basis points to 3.67%** compared to Q2 2021[137](index=137&type=chunk) - The company recorded a provision for credit losses of **$463,000** in Q2 2022, compared to a benefit of **$427,000** in Q2 2021, mainly due to growth in unguaranteed loan balances[148](index=148&type=chunk) - Other operating income fell **45%** in Q2 2022, primarily due to a **$5.5 million decrease** in mortgage banking income as rising rates reduced refinance activity[149](index=149&type=chunk) [Financial Condition](index=52&type=section&id=Financial%20Condition) The balance sheet reflects a strategic shift with portfolio investments increasing 43%, while total deposits decreased and capital remains strong - Portfolio investments grew by **43% to $650.9 million** at June 30, 2022, from **$455.1 million** at year-end 2021[154](index=154&type=chunk) - While total loans decreased **1%** due to PPP forgiveness, loans excluding PPP increased by **$78.2 million (6%)** to **$1.374 billion** since December 31, 2021[156](index=156&type=chunk) - Total deposits decreased **4% to $2.335 billion** as of June 30, 2022, from **$2.422 billion** at year-end 2021, mainly due to a large temporary deposit drawdown[161](index=161&type=chunk) [Critical Accounting Policies](index=59&type=section&id=Critical%20Accounting%20Policies) The company updated its Allowance for Credit Losses policy, now using U.S. unemployment and peer historical default data - Effective January 1, 2022, the ACL model for discounted cash flow (DCF) loan pools now uses **U.S. unemployment** as the sole economic loss driver[178](index=178&type=chunk) - The regression models for probability of default (PD) now utilize **peer historical loan level default data** instead of the Company's own historical data[178](index=178&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=59&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes in the company's market risk assessment since the 2021 Annual Report - There were no material changes in quantitative and qualitative disclosures about market risk as of June 30, 2022, compared to the 2021 year-end report[180](index=180&type=chunk) [Controls and Procedures](index=60&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal control - The principal executive and financial officers concluded that disclosure controls and procedures were **effective** as of June 30, 2022[182](index=182&type=chunk) - No material changes to internal control over financial reporting occurred during the second quarter of 2022[183](index=183&type=chunk) [Part II OTHER INFORMATION](index=60&type=section&id=Part%20II%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, and other disclosures not included in financial statements [Legal Proceedings](index=60&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal actions not expected to materially affect its financial condition or operations - The company is party to various debtor-creditor legal actions in the normal course of business, which are not expected to have a material impact[185](index=185&type=chunk) [Risk Factors](index=60&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2021 Annual Report - Risk factors have not materially changed as of June 30, 2022, from those reported in the 2021 Form 10-K[186](index=186&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=60&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2022, the company repurchased 200,619 shares, completing its existing share repurchase authorization Share Repurchases in Q2 2022 | Period | Total Shares Purchased | Average Price Paid | | :--- | :--- | :--- | | April 2022 | 57,333 | $42.30 | | May 2022 | 77,219 | $40.23 | | June 2022 | 66,067 | $40.89 | | **Total Q2** | **200,619** | **$41.04** | - As of June 30, 2022, there were no shares remaining for repurchase under the publicly announced plan[189](index=189&type=chunk) [Defaults Upon Senior Securities](index=61&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - None[190](index=190&type=chunk) [Mine Safety Disclosures](index=61&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[191](index=191&type=chunk) [Other Information](index=62&type=section&id=Item%205.%20Other%20Information) The company reports no material changes to the procedures by which shareholders may nominate directors - There have been no material changes to the procedures for shareholder nomination of directors[192](index=192&type=chunk) [Exhibits](index=62&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data - Exhibits filed include certifications from the CEO and CFO under Rules 13a-14(a) and 13a-14(b), and Section 906 of the Sarbanes-Oxley Act[193](index=193&type=chunk) [Signatures](index=63&type=section&id=SIGNATURES) This section contains the required signatures for the financial report