Northrim Banp(NRIM) - 2019 Q3 - Quarterly Report

Financial Performance - The Company reported net income of $7.5 million and diluted earnings per share of$ 1.11 for Q3 2019, compared to $5.3 million and$ 0.75 for Q3 2018, reflecting a year-over-year increase of 41.5% in net income [135]. - Total revenue for Q3 2019 increased by 9% to $26.8 million from$ 24.5 million in Q3 2018 [138]. - Net income for Q3 2019 increased by $2.2 million, or 43%, to$ 7.5 million compared to $5.3 million in Q3 2018 [142]. - Net interest income for Q3 2019 rose by$ 487,000, or 3%, to $16.3 million from$ 15.8 million in Q3 2018 [143]. - Other operating income for the three months ended September 30, 2019, increased by $1.8 million, or 21%, to$ 10.5 million, primarily due to higher mortgage origination volume [155]. - Total interest income for the three months ended September 30, 2019, increased by $1,257,000, or 12%, compared to the same period in 2018, driven by increases in loans and long-term investments [147]. Asset Quality - Nonperforming assets decreased by$ 1.1 million, or 5%, to $21.5 million as of September 30, 2019, compared to$ 22.6 million at December 31, 2018 [137]. - Total nonperforming loans decreased to $15.5 million as of September 30, 2019, down from$ 16.6 million at September 30, 2018 [139]. - Potential problem loans decreased to $9.8 million as of September 30, 2019, compared to$ 17.1 million at December 31, 2018 [139]. - Total nonperforming assets, net of government guarantees, were $21.5 million as of September 30, 2019, down from$ 24.1 million at September 30, 2018 [139]. - The provision for loan losses was a benefit of $2.1 million for the third quarter of 2019, attributed to improvements in qualitative factors and a decrease in nonaccrual loans [152]. - The Company maintained an Allowance for Loan Losses of$ 19.1 million as of September 30, 2019, down from $20.2 million at the end of the previous year [173]. Loan and Deposit Growth - The Company anticipates continued growth in loans and deposits, supported by improvements in the local economy and job growth [122]. - Portfolio loans increased by$ 52.2 million, or 5%, to $1.037 billion as of September 30, 2019, from$ 984.3 million at December 31, 2018, primarily due to increased commercial loans [163]. - Total loans reached $1.036 billion as of September 30, 2019, compared to$ 984.3 million at December 31, 2018, reflecting a growth in commercial and real estate loans [164]. - Total deposits increased by $122.9 million, or 10%, to$ 1.351 billion as of September 30, 2019, compared to $1.228 billion at December 31, 2018 [174]. - Demand deposits were$ 460.3 million, representing 33% of total deposits as of September 30, 2019, compared to $421.0 million, or 34%, at December 31, 2018 [174]. - Certificates of deposit increased to$ 155.4 million as of September 30, 2019, from $113.3 million at December 31, 2018, with 46% maturing within the next 12 months [175]. Interest Income and Expenses - Net interest income rose by 3% in Q3 2019 and by 7% in the first nine months of 2019 compared to the same periods in 2018, driven by higher average earning asset balances [138]. - Net interest margin for Q3 2019 was 4.60%, a decrease of 9 basis points from 4.69% in Q3 2018 [143]. - Total interest expense for the first nine months of 2019 was$ 2,090,000, an increase of 110% compared to the same period in 2018 [151]. - Average loans to average interest-earning assets ratio was 72.53% for Q3 2019, down from 73.60% in Q3 2018 [145]. - Average loans to average interest-earning assets ratio improved to 73.64% for the nine months ended September 30, 2019, compared to 72.15% in 2018 [148]. Capital and Commitments - The Company met all applicable capital adequacy requirements for a "well-capitalized" institution, with total risk-based capital at 15.82% [188]. - Total unfunded commitments to fund loans and letters of credit were $260.2 million as of September 30, 2019 [183]. - The Company had outstanding advances of$ 8.9 million from the FHLB, with fixed interest rates ranging from 2.61% to 3.25% [177]. - Funds available for borrowing under existing lines of credit were $789.3 million as of September 30, 2019 [185]. - The Company issued 4,256 shares of common stock and repurchased 347,676 shares in the first nine months of 2019 [187]. Economic Indicators - Alaska's personal income grew by 4.3% annualized in Q1 2019, reaching$ 45.5 billion, with significant contributions from wages and proprietors' income [127]. - Alaska's gross state product (GSP) increased by 3.9% annualized in Q1 2019, marking the fourth consecutive quarter of improvement [126]. - The average monthly oil price for Alaska North Slope (ANS) was $63.83 in September 2019, with an annual average forecast of$ 68.90 per barrel for FY 2019 [129]. - Direct exposure to the oil and gas industry accounted for $66.3 million, or approximately 6% of total loans as of September 30, 2019, up from$ 62.3 million, also 6%, at December 31, 2018 [165]. - The Company’s unfunded commitments to borrowers with direct exposure to the oil and gas industry were $29.1 million as of September 30, 2019, down from$ 32.5 million at December 31, 2018 [165].