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Northrim Banp(NRIM) - 2024 Q2 - Quarterly Report
NRIMNorthrim Banp(NRIM)2024-07-31 21:45

Financial Performance - The Company reported net income of 9.0millionandearningsperdilutedshareof9.0 million and earnings per diluted share of 1.62 for Q2 2024, compared to 5.6millionand5.6 million and 0.98 for Q2 2023, representing a 60.7% increase in net income [127]. - The return on average assets was 1.31% for Q2 2024, up from 0.85% in Q2 2023, and the return on average shareholders' equity was 14.84%, compared to 9.85% in the same period last year [129]. - The company experienced a 16% increase in total interest income, amounting to 36,909thousandinQ22024,comparedto36,909 thousand in Q2 2024, compared to 31,820 thousand in Q2 2023 [138]. - Other operating income for the six-month period increased by 5.5million,or475.5 million, or 47%, to 17.4 million, primarily driven by a 4.0millionincreaseinmortgagebankingincome[152].InterestIncomeandMargin−Netinterestincomeincreasedby84.0 million increase in mortgage banking income [152]. Interest Income and Margin - Net interest income increased by 8% to 27.1 million in Q2 2024, up from 25.1millioninQ22023,andforthefirstsixmonthsof2024,itroseby725.1 million in Q2 2023, and for the first six months of 2024, it rose by 7% to 53.5 million [128]. - The net interest margin was 4.24% for Q2 2024, a 10 basis point increase from 4.14% in Q2 2023, and 4.20% for the first six months of 2024, a 2 basis point increase from the same period in 2023 [134]. - Net interest income increased by 27,053thousandinQ22024comparedtoQ22023,representingan827,053 thousand in Q2 2024 compared to Q2 2023, representing an 8% growth [139]. - The net interest margin improved to 4.24% in Q2 2024, up from 4.14% in Q2 2023, reflecting a 0.10% increase [139]. Loans and Deposits - Loans totaled 1.88 billion at June 30, 2024, reflecting a 5% increase from December 31, 2023, driven by growth in commercial and consumer mortgage loans [128]. - Total deposits were 2.46billionatJune30,2024,down12.46 billion at June 30, 2024, down 1% from December 31, 2023, with demand deposits decreasing by 6% [128]. - Mortgage loan originations increased to 181.51 million in Q2 2024, up from 101.73millioninQ12024and101.73 million in Q1 2024 and 169.42 million in Q2 2023 [128]. - Total loans increased by 86.4million,or586.4 million, or 5%, to 1.876 billion as of June 30, 2024, from 1.789billionatDecember31,2023[158].AssetQuality−Nonperformingassetsdecreasedto1.789 billion at December 31, 2023 [158]. Asset Quality - Nonperforming assets decreased to 5.1 million at June 30, 2024, down from 5.8millionatDecember31,2023,withnonperformingloansdecreasingby55.8 million at December 31, 2023, with nonperforming loans decreasing by 5% [129]. - Nonaccrual loans decreased to 4.830 million as of June 30, 2024, from 6.069millionatDecember31,2023[164].−Thenetnonperformingloanswere6.069 million at December 31, 2023 [164]. - The net nonperforming loans were 4.847 million as of June 30, 2024, compared to 5.002millionatDecember31,2023[164].CreditLosses−Theprovisionforcreditlossexpensedecreasedsignificantly,withatotalof5.002 million at December 31, 2023 [164]. Credit Losses - The provision for credit loss expense decreased significantly, with a total of 29,000 for the six months ended June 30, 2024, compared to 1.77millionforthesameperiodin2023[150].−Theprovisionforcreditlosseswas1.77 million for the same period in 2023 [150]. - The provision for credit losses was 135,000 for the three months ended June 30, 2024 [166]. - The allowance for credit losses (ACL) for loans held for investment increased by 424,000fromDecember31,2023,primarilyduetohighernongovernmentguaranteedloanbalances[169].CapitalandLiquidity−TheCompanymetallapplicablecapitaladequacyrequirementsfora"well−capitalized"institutionasofJune30,2024[183].−Totalrisk−basedcapitalratiofortheCompanywas12.58424,000 from December 31, 2023, primarily due to higher nongovernment guaranteed loan balances [169]. Capital and Liquidity - The Company met all applicable capital adequacy requirements for a "well-capitalized" institution as of June 30, 2024 [183]. - Total risk-based capital ratio for the Company was 12.58% as of June 30, 2024, exceeding the minimum required ratio of 8.00% [186]. - The Company had cash and cash equivalents of 54.4 million, or 2% of total assets, as of June 30, 2024, down from 118.5million,or4118.5 million, or 4%, at December 31, 2023 [179]. Deposits Composition - The Company’s mix of deposits included 83% in transaction accounts as of June 30, 2024, down from 87% at December 31, 2023 [170]. - Non-interest bearing demand deposits decreased by 40.1 million, or 5%, to 705.7millioncomparedtothepreviousyear[1].−Timedepositsincreasedby705.7 million compared to the previous year [1]. - Time deposits increased by 124 million, or 49%, to 376millioncomparedtothepreviousyear[1].MarketRiskandEconomicSensitivity−Thecompany’sassessmentofmarketriskasofJune30,2024,showsnomaterialchangesfromthepreviousannualreport[193].−Ahypotheticalsensitivityanalysisindicatesthata5376 million compared to the previous year [1]. Market Risk and Economic Sensitivity - The company’s assessment of market risk as of June 30, 2024, shows no material changes from the previous annual report [193]. - A hypothetical sensitivity analysis indicates that a 5% increase in the U.S. unemployment rate would raise the ACL for loans by 594,000, or 3% [192]. - If the U.S. GDP growth rate were 12% lower, the ACL for loans would also increase by 594,000,or3594,000, or 3% [192]. - A 41% increase in the unemployment rate forecast would lead to a 2.6 million, or 15%, increase in the ACL for loans [192].