Northrim Banp(NRIM) - 2020 Q1 - Quarterly Report

Financial Performance - The Company reported net income of $1.0 million and diluted earnings per share of $0.16 for Q1 2020, a decrease from $4.3 million and $0.62 in Q1 2019, primarily due to increased provision for loan losses and operating expenses [149]. - Total revenue for Q1 2020 decreased by 5% to $22.1 million from $23.3 million in Q1 2019, primarily due to a $1.4 million decrease in gain (loss) on marketable equity securities [151]. - Net income for Q1 2020 decreased by $3.3 million, or 76%, to $1.0 million compared to $4.3 million in Q1 2019, mainly due to an increase in the provision for loan losses [157]. - Net interest income for Q1 2020 decreased slightly by $79,000, or less than 1%, to $15.7 million compared to $15.8 million in Q1 2019 [158]. - Other operating income decreased by $1.1 million, or 15%, to $6.4 million in Q1 2020 compared to $7.5 million in Q1 2019, primarily due to a decrease in gains on marketable equity securities [165]. Loan Loss Provisions - The Company increased its loan loss reserves by $2.1 million for Q1 2020, compared to a $750,000 provision for loan losses in Q1 2019 [151]. - Provision for loan losses increased to $2.1 million in Q1 2020 from $750,000 in Q1 2019, reflecting increased risks due to COVID-19 and oil price reductions [163]. - The Company’s allowance for loan losses increased to $21.017 million as of March 31, 2020, from $20.209 million as of March 31, 2019 [181]. - The provision for loan losses was $2.060 million for the three months ended March 31, 2020, compared to $750,000 for the same period in 2019 [181]. Economic Conditions - The COVID-19 pandemic is expected to negatively impact the previously positive economic growth trends in Alaska, with significant declines in tourism and oil prices anticipated [142]. - The Alaska economy showed positive job growth with an increase of 1,300 jobs (0.4%) in February 2020 compared to February 2019, marking 14 consecutive months of year-over-year job increases prior to COVID-19 [137]. - Alaska's personal income grew by 3.7% in 2019, increasing from $43.8 billion in 2018 to $45.4 billion in 2019, driven mainly by wage improvements [141]. - The Federal Open Market Committee cut the target federal funds rate by 150 basis points to a range of 0-0.25% in March 2020, aiming to stabilize the economy [146]. Asset and Loan Management - Total portfolio investments decreased by 3%, or $7.5 million, to $276.6 million as of March 31, 2020, from $284.1 million at December 31, 2019 [168]. - Portfolio loans increased by $38.5 million, or 4%, to $1.082 billion at March 31, 2020, driven by growth in commercial and real estate loans [171]. - Total loans amounted to $1.081 billion as of March 31, 2020, compared to $1.043 billion at December 31, 2019 [172]. - The Company had $63.7 million, or 6% of portfolio loans, in the tourism sector as of March 31, 2020 [174]. Capital and Funding - The Company met all applicable capital adequacy requirements for a "well-capitalized" institution as of March 31, 2020, with total risk-based capital at 14.50% [196]. - The Company had $793.4 million available for borrowing under existing lines of credit as of March 31, 2020 [193]. - The Company had outstanding advances of $8.9 million as of March 31, 2020, with fixed interest rates ranging from 2.61% to 3.25% [185]. - Total unfunded commitments to fund loans and letters of credit at March 31, 2020 were $321.2 million [191]. Dividend and Stock Activity - The Company paid cash dividends of $0.34 per common share in Q1 2020, up 13% from $0.30 in Q1 2019 [152]. - The Company suspended its previously announced stock repurchasing activity as of March 31, 2020, while maintaining capital ratios well in excess of regulatory requirements [151]. - The Company repurchased 192,709 shares of its common stock in the first three months of 2020 [195]. Nonperforming Assets - Nonperforming assets decreased by $386,000, or 2%, to $19.6 million as of March 31, 2020, compared to $19.9 million at December 31, 2019 [153]. - Potential problem loans decreased to $4.5 million as of March 31, 2020, from $9.0 million at December 31, 2019 [153].