Northrim Banp(US:NRIM)2021-05-05 17:36Economic Performance - In 2020, Alaska's Gross State Product (GSP) was $52.1 billion, a decline of 4.9% from $54.7 billion in 2019, with the U.S. GDP declining by 3.5%[162]. - The unemployment rate in Alaska saw a 7% reduction in total payroll jobs, equating to a loss of 22,300 jobs compared to February 2020, with the leisure and hospitality sector down 23% year over year[161]. - Alaska's personal income for 2020 was $47.4 billion, an increase of 3.1% from $46 billion in 2019, while U.S. personal income rose by 6.1%[163]. - The average price of Alaska North Slope crude oil fell to a low of $16.54 per barrel in April 2020 but stabilized to an average of $55.56 in January 2021[166]. - Alaska's crude oil production averaged 485,300 barrels per day in FY 2020, a decrease of 4.8% from the previous fiscal year, with a forecasted increase to 488,900 bpd in FY 2021[167]. - The foreclosure rate in Alaska was 0.45% at the end of 2020, an improvement from 0.63% at the end of 2019, compared to a national average of 0.56%[168]. - Government transfer payments in Alaska rose by 24.2% or $1.9 billion over 2019 levels, significantly contributing to personal income growth[164]. Company Financial Performance - The company reported net income of $12.2 million and diluted earnings per share of $1.94 for Q1 2021, a significant increase from $1.0 million and $0.16 in Q1 2020[177]. - Total revenue for Q1 2021 increased by 60% to $35.4 million, up from $22.1 million in the same period last year, primarily driven by a $9.0 million increase in mortgage banking income[180]. - Net income for Q1 2021 increased by $11.1 million to $12.2 million compared to $1.0 million in Q1 2020[184]. - Net interest income rose by $3.8 million, or 24%, to $19.5 million in Q1 2021 from $15.7 million in Q1 2020[185]. - Other operating income increased by $9.5 million, or 147%, to $15.9 million in Q1 2021 compared to $6.4 million in Q1 2020, driven by a $9.0 million increase in mortgage banking income[191]. - Other operating expenses rose by $2.5 million, or 14%, to $21.3 million in Q1 2021, primarily due to higher salaries and personnel expenses[192]. - The provision for income taxes increased by $3.1 million, or 1,286%, in Q1 2021 compared to Q1 2020, with an effective tax rate of 22%[193]. Credit and Loan Performance - Nonperforming assets increased by $3.2 million, or 20%, to $19.5 million as of March 31, 2021, compared to $16.3 million at December 31, 2020[179]. - The company recorded a benefit for credit losses of $1.5 million for Q1 2021, compared to a provision of $2.1 million in Q1 2020[180]. - Total credit loss expense decreased to ($1.5 million) in Q1 2021 from $2.1 million in Q1 2020, reflecting improved economic assumptions[190]. - Total loans increased by $104.9 million, or 7%, to $1.549 billion as of March 31, 2021, from $1.444 billion at December 31, 2020, primarily due to increased commercial loans from SBA PPP participation[196]. - The company estimates that $64.7 million, or approximately 4% of loans, had direct exposure to the oil and gas industry as of March 31, 2021, compared to $65.1 million, or approximately 4%, as of December 31, 2020[198]. - The company’s exposure to the tourism sector was $80.0 million, or 5% of portfolio loans, as of March 31, 2021[199]. - The company’s total charge-offs for the three months ended March 31, 2021, were $163,000, while recoveries were $207,000, resulting in net recoveries of $(44,000)[201]. Capital and Funding - The capital ratios of the company were well in excess of all regulatory requirements as of March 31, 2021[177]. - Total risk-based capital ratio was 15.50% and Tier 1 risk-based capital ratio was 14.55% as of March 31, 2021, exceeding regulatory requirements[216]. - The allowance for credit losses (ACL) decreased to $14.764 million as of March 31, 2021, from $21.017 million as of March 31, 2020[201]. - The company had total unfunded commitments to fund loans and letters of credit of $375.7 million as of March 31, 2021[209]. - The company had outstanding advances of $14.7 million from the Federal Home Loan Bank as of March 31, 2021, used to match fund low-income housing projects[204]. - The company's commitments to extend credit and provide letters of credit amounted to $375.7 million as of March 31, 2021[217]. - Commitments to originate loans held for sale were $181.4 million as of March 31, 2021[217]. Cash Flow and Investments - Net cash provided by operating activities was $44.6 million for the first three months of 2021, primarily from loan sales[210]. - Net cash used by investing activities was $178.7 million, mainly due to increases in loans, particularly PPP loans[210]. - Net cash provided by financing activities was $221.8 million, largely due to increases in deposits from funding PPP loans[210]. - As of March 31, 2021, the company had $1.116 billion available for borrowing under existing lines of credit[211]. - The company had $349.9 million in PPP loans eligible for the PPPLF program as of March 31, 2021[211]. Market and Risk Disclosures - The Company implemented ASU 2016-13, which updated the Allowance for Credit Losses Policy, reflecting a shift in credit loss estimation methodology[152]. - The Company anticipates potential impacts from COVID-19 on credit quality and business operations, highlighting the inherent uncertainties in forward-looking statements[151]. - The company’s critical accounting policies include the valuation of goodwill and other intangible assets, with no material changes in valuation techniques during 2021[152]. - There were no material changes in market risk disclosures from the previous annual report as of March 31, 2021[219]. - The company's mix of deposits includes 91% in transaction accounts as of March 31, 2021, contributing to a low cost of funds[202]. - Capital commitments related to branch remodel and relocation in Anchorage are considered immaterial[218].