KBRA Assigns Ratings to Northrim BanCorp, Inc.

Core Viewpoint - KBRA has assigned various ratings to Northrim BanCorp, Inc. and its subsidiary, Northrim Bank, reflecting the company's strong earnings power and stable outlook [1][2]. Ratings Summary - Northrim BanCorp, Inc. received a senior unsecured debt rating of BBB, a subordinated debt rating of BBB-, and a short-term debt rating of K3 [1]. - Northrim Bank was assigned deposit and senior unsecured debt ratings of BBB+, a subordinated debt rating of BBB, and short-term deposit and debt ratings of K2 [1]. Earnings and Financial Performance - The company's strong earnings power is supported by a low-cost deposit franchise and a higher-yielding commercial loan portfolio, contributing to an above-average net interest margin (NIM) [2]. - Northrim reported a core return on assets (ROA) of 1.7% through the first nine months of 2025, benefiting from organic loan growth and a shift towards higher-yielding loans [2]. - The acquisition of Sallyport Commercial Finance, LLC in the fourth quarter of 2024 has bolstered noninterest income contributions [2]. Capital and Asset Quality - Capital levels have decreased due to strong organic loan growth and share repurchases, with the common equity tier 1 (CET1) ratio falling to 9.4% as of the second quarter of 2025 [2]. - A pre-tax gain of $14.2 million from the sale of a minority interest in Pacific Wealth Advisors contributed 20 basis points to CET1, improving it to 10.3% by the third quarter of 2025 [2]. - The company has maintained minimal net charge-offs (NCOs), averaging just 1 basis point over the past five years, indicating strong asset quality [2]. Market Position and Funding - Northrim has increased its deposit market share in Alaska to 18% as of the second quarter of 2025, up from 10% in 2017, benefiting from a less competitive environment [2]. - The cost of funds for Northrim is lower than similarly rated peers, recorded at 1.47% for the third quarter of 2025 [2].