Northrim Banp(US:NRIM)2025-10-27 21:16Financial Performance - The Company reported net income of $27.1 million and earnings per diluted share of $1.20 for Q3 2025, compared to $8.8 million and $0.39 for Q3 2024, representing a significant increase [141]. - For the first nine months of 2025, net income was $52.2 million with earnings per diluted share of $2.32, up from $26.0 million and $1.17 in the same period of 2024 [141]. - Net income for Q3 2025 increased by $18.2 million to $27.1 million compared to $8.8 million in Q3 2024, driven by a $14.2 million gain on asset sales and a $6.5 million increase in net interest income [145]. - The Community Banking segment's net income increased by $15.2 million or 214% in Q3 2025, primarily due to the asset sale gain and a $6.4 million increase in net interest income [150]. - Home Mortgage Lending segment's net income rose by $579,000 or 45% in Q3 2025, attributed to a decrease in the provision for credit losses and higher mortgage servicing revenue [154]. - Specialty Finance segment's net income surged by $2.5 million or 541% in Q3 2025, largely due to the acquisition of Sallyport [162]. Loan and Deposit Growth - Portfolio loans reached $2.22 billion at September 30, 2025, an 11% increase year-over-year, driven by new customer relationships and market share expansion [141]. - Total deposits were $2.91 billion at September 30, 2025, up 11% from $2.63 billion a year ago, with non-interest bearing demand deposits increasing 14% to $872.1 million [141]. - Total loans in the commercial real estate sector reached $1.15 billion, accounting for 52.7% of the total loan portfolio as of September 30, 2025 [187]. - Demand deposits rose to $872.1 million, representing 30% of total deposits, up from 27% at the end of 2024 [195]. - Total deposits increased by $226.3 million, or 8%, to $2.91 billion as of September 30, 2025, compared to $2.68 billion as of December 31, 2024 [195]. Interest Income and Margin - The net interest margin improved to 4.83% for Q3 2025, up 54 basis points from the previous year [142]. - Net interest income for Q3 2025 increased by 23% or $6.5 million to $35.3 million compared to $28.8 million in Q3 2024 [166]. - Interest income increased by $6,562,000, a 17% rise compared to the same period in 2024, driven primarily by a $6,055,000 increase in loans [172]. - The net interest margin increased by 54 basis points to 4.83% in Q3 2025 compared to 4.29% in Q3 2024, reflecting a favorable change in earning-assets mix [166]. - Average loans to average interest-earning assets ratio increased to 75.89% from 72.29% year-over-year [170]. Credit Quality and Losses - Nonperforming loans, net of government guarantees, rose by $3.7 million or 49% to $11.3 million as of September 30, 2025, from $7.5 million at December 31, 2024 [143]. - Potential problem loans increased significantly to $28.7 million as of September 30, 2025, up from $1.6 million at December 31, 2024 [144]. - The provision for credit losses in the Community Banking segment was $1.6 million in Q3 2025, slightly up from $1.5 million in the same quarter last year [151]. - The company reported net loan charge-offs of $1.2 million for the quarter ended September 30, 2025, compared to a recovery of $51,000 in the same quarter of the previous year [192]. - The allowance for credit losses (ACL) for loans held for investment increased by $1.3 million from December 31, 2024, primarily due to higher loan balances and increased estimated loss rates [194]. Capital and Liquidity - The total risk-based capital ratio was 11.56% as of September 30, 2025, exceeding the minimum requirement of 8.00% [211]. - The Company had cash and cash equivalents of $212.7 million, or 6% of total assets, as of September 30, 2025, up from $62.7 million, or 2%, at December 31, 2024 [205]. - The Company expects to continue receiving dividends from the Bank during the remainder of 2025, as it meets all applicable capital adequacy requirements [203]. - The Company had no long-term borrowings outstanding other than FHLB advances as of September 30, 2025 [202]. Operating Expenses - Other operating expenses for the nine months ended September 30, 2025, increased by $15.4 million, or 20%, to $91.0 million, driven by higher salaries and personnel expenses [182]. - The provision for credit losses for the nine months ended September 30, 2025, was $2.6 million, compared to $2.1 million for the same period in 2024 [193]. Market and Investment - Investment securities decreased by 11% to $464.3 million as of September 30, 2025, from $524.1 million at December 31, 2024, primarily due to maturities and calls of available for sale securities [185]. - The average estimated duration of the investment portfolio was approximately 2.16 years as of September 30, 2025 [186]. - The company reported a 64% increase in nonearning assets, totaling $322,825,000 compared to $196,266,000 in the previous year [170].