Northrim Banp(US:NRIM)2023-11-03 21:06Financial Performance - The Company reported net income of $8.4 million and earnings per diluted share of $1.48 for Q3 2023, down from $10.1 million and $1.76 in Q3 2022[126]. - For the first nine months of 2023, net income was $18.8 million and earnings per diluted share were $3.30, compared to $22.1 million and $3.79 in the same period of 2022[126]. - Net income for Q3 2023 decreased by $1.8 million to $8.4 million compared to $10.1 million in Q3 2022, primarily due to a $1.5 million increase in the provision for credit losses[132]. - For the first nine months of 2023, net income decreased by $3.4 million to $18.8 million from $22.1 million in the same period of 2022, mainly due to a decrease in mortgage banking income and an increase in the provision for credit losses[133]. Interest Income and Expenses - Net interest income increased 13% to $76.5 million in the first nine months of 2023, up from $67.8 million in the same period of 2022[128]. - Total interest income for the three months ended September 30, 2023, increased by $6,849,000, with contributions of $1,871,000 from volume and $4,978,000 from rate changes compared to the same period in 2022[140]. - Total interest expense for the three months ended September 30, 2023, increased by $6,810,000, with $754,000 from volume and $6,056,000 from rate changes compared to the same period in 2022[140]. - Net interest income for the nine months ended September 30, 2023, increased by $8,697,000, or 13%, to $76,524,000 compared to $67,827,000 for the same period in 2022[142]. - Total interest income for the nine months ended September 30, 2023, increased by $25,414,000, with $5,260,000 from volume and $20,154,000 from rate changes compared to the same period in 2022[144]. - Total interest expense for the nine months ended September 30, 2023, increased by $16,717,000, with $1,144,000 from volume and $15,573,000 from rate changes compared to the same period in 2022[144]. Loans and Deposits - Loans totaled $1.72 billion at September 30, 2023, representing a 14% increase from December 31, 2022, primarily due to commercial and consumer mortgage loan growth[128]. - Total deposits were $2.43 billion at September 30, 2023, a 2% increase from December 31, 2022[128]. - Loans increased by $218.3 million, or 15%, to $1.720 billion at September 30, 2023, primarily due to increased commercial and consumer mortgage loans[154]. - Total deposits increased by $40.7 million, or 2%, to $2.428 billion as of September 30, 2023, compared to $2.387 billion at December 31, 2022[158]. - Uninsured deposits totaled $999.5 million, or 41% of total deposits, as of September 30, 2023, down from $1.1 billion, or 46%, at December 31, 2022[160]. Credit Quality - Nonperforming loans decreased by 20% to $5.1 million as of September 30, 2023, from $6.4 million at December 31, 2022[129]. - Potential problem loans increased to $2.2 million as of September 30, 2023, from $1.6 million at December 31, 2022, primarily due to increased line of credit usage[131]. - The Company’s allowance for credit losses (ACL) increased to $16.491 million as of September 30, 2023, from $11.982 million at the end of Q3 2022[157]. - Provision for credit loss expense for the three months ended September 30, 2023, was $1,190,000, compared to a benefit of $353,000 for the same period in 2022[145]. Operating Expenses - Other operating income for the three months ended September 30, 2023, decreased by $670,000, or 8%, to $8,000,000 compared to $8,700,000 for the same period in 2022[146]. - Other operating expense for the three months ended September 30, 2023, increased by $610,000, or 3%, to $22,900,000 compared to $22,300,000 for the same period in 2022[148]. - Other operating income for the nine months ended September 30, 2023, decreased by $7,400,000, or 27%, to $19,900,000 compared to $27,300,000 for the same period in 2022[147]. Capital and Shareholder Returns - The dividend payout ratio increased to 40.40% in Q3 2023, compared to 28.23% in Q3 2022[127]. - The Company has 10.0 million authorized shares of common stock, with 5.5 million issued and outstanding, leaving 4.5 million shares available for issuance[165]. - The Company repurchased 152,887 shares of its common stock in the first nine months of 2023, with 132,113 shares remaining under the repurchase program[171]. - Northrim recorded a lower effective tax rate of 18.43% in Q3 2023 compared to 22.41% in Q3 2022, with tax expense decreasing from $2.9 million to $1.9 million[150]. Liquidity and Investments - The Company had cash and cash equivalents of $111.2 million, representing 4% of total assets, down from $259.4 million or 10% of total assets at December 31, 2022[168]. - The Company’s liquid assets, including investments and loans maturing within a year, totaled $517.8 million as of September 30, 2023[169]. - The average estimated duration of the investment portfolio was approximately 2.8 years as of September 30, 2023, with $308.9 million scheduled to mature in the next year[152]. - The Company has access to additional liquidity sources, including borrowings through correspondent banking relationships and credit lines with the Federal Reserve Bank and the FHLB[169]. Branch Expansion - The Company opened its 19th branch in Kodiak in the first quarter of 2023, contributing to increased salaries and personnel expenses[149].