Northrim Banp(NRIM) - 2019 Q1 - Quarterly Report

Financial Performance - The Company reported net income of $4.3 million and diluted earnings per share of $0.62 for Q1 2019, compared to $4.1 million and $0.58 for Q1 2018, reflecting a 4.9% increase in net income [127]. - Total revenue for Q1 2019 increased by 7% to $23.3 million from $21.7 million in Q1 2018 [128]. - Net income attributable to the Company for Q1 2019 increased by $250,000, or 6%, to $4.3 million compared to $4.1 million in Q1 2018 [135]. - Other operating income for Q1 2019 increased by $71,000, or 1%, to $7.5 million, driven by a $534,000 gain on marketable securities [142]. - Other operating expenses rose by $285,000, or 2%, to $17.1 million, primarily due to a $717,000 increase in salaries and personnel expenses [144]. - The provision for income taxes increased by $292,000, or 34%, in Q1 2019, with an effective tax rate rising to 21% from 18% in the same period of 2018 [145]. Interest Income and Loans - Net interest income rose by 11% to $15.8 million in Q1 2019, driven by higher yields on loans and investments [128]. - The net interest margin improved to 4.83% in Q1 2019, up from 4.28% in Q1 2018 [128]. - Net interest income for Q1 2019 rose by $1.5 million, or 11%, to $15.8 million, with a net interest margin increase of 55 basis points to 4.83% [136]. - Total loans remained essentially unchanged at $982.3 million as of March 31, 2019, compared to $984.3 million at December 31, 2018, with a decrease in real estate term loans [149]. - Loan production decreased to $92.4 million in Q1 2019 from $109.1 million in Q1 2018, primarily due to rising interest rates and low housing inventory levels [142]. Asset Quality - Nonperforming assets increased by $2.9 million, or 13%, to $25.5 million as of March 31, 2019, compared to $22.6 million at December 31, 2018 [130]. - Potential problem loans decreased to $9.6 million as of March 31, 2019, down from $17.1 million at December 31, 2018 [132]. - The provision for loan losses was $750,000 in Q1 2019, attributed to an increase in nonperforming loans and large borrower concentration [140]. - The ratio of the Allowance to total nonperforming loans, net of government guarantees, was 109% at March 31, 2019, compared to 110% at March 31, 2018 [140]. - The Allowance for Loan Losses increased to $20.2 million as of March 31, 2019, from $19.5 million at the beginning of the period [157]. Deposits and Funding - The Company’s total deposits remained stable at $1.228 billion as of March 31, 2019, compared to $1.228 billion as of December 31, 2018 [158]. - Demand deposits accounted for 34% of total deposits at both March 31, 2019, and December 31, 2018 [158]. - The Company’s certificates of deposit increased to $121.2 million as of March 31, 2019, compared to $113.3 million as of December 31, 2018 [160]. - 50% of the Company’s certificates of deposit are scheduled to mature over the next 12 months as of March 31, 2019 [160]. - The Company had outstanding advances of $7.2 million from the Federal Home Loan Bank as of March 31, 2019 [161]. Capital and Commitments - The Company met all applicable capital adequacy requirements for a "well-capitalized" institution, with total risk-based capital at 16.86% as of March 31, 2019 [174]. - The Company had capital commitments of approximately $624,000 at March 31, 2019, with $503,000 allocated for a new branch in Soldotna, Alaska [176]. - The Company’s commitments to extend credit and provide letters of credit not reflected on its balance sheet amounted to $253.0 million as of March 31, 2019 [175]. - Funds available for borrowing under existing lines of credit were $742.4 million as of March 31, 2019 [169]. Market and Economic Conditions - Alaska's tourism industry generated $4.5 billion in economic output in 2017, with a projected growth of 16% in cruise passengers for 2019 [123]. - Oil production is expected to generate over $2.1 billion in unrestricted state revenue for FY 2019, up from $1.9 billion in FY 2018 [125]. - The average seasonally adjusted unemployment rate in Alaska was stable at 6.5% through February 2019, indicating modest job growth [122].