Northrim BanCorp (NRIM) 8-K Northrim BanCorp, Inc. Reports Net Income Increased 22% to $2.7 Million for the Third Quarter 2003

Northrim News EXHIBIT 99.1

Headquarters: 3111 C Street, Anchorage, AK 99503
     For Immediate Release Date: October 15, 2003
Contact:Chris Knudson
                 EVP & COO
Phone: (907) 261-3304

Northrim BanCorp, Inc. Reports Net Income Increased 22% to $2.7 Million
for the Third Quarter 2003

ANCHORAGE, AK—October 15, 2003—Northrim BanCorp, Inc. (the “company”) (Nasdaq: NRIM) reported today that net income for the third quarter of 2003 increased 22% to $2.7 million, from $2.2 million for the same period last year. Diluted earnings per share were $0.44, a 26% increase from $0.35 per share in the like period of 2002. For the nine-month period ended September 30, 2003, the company’s net income was $7.9 million, up 27% from $6.2 million for the same period in 2002. Diluted earnings per share for the first nine months of 2003 were $1.27, a 30% increase from $0.98 per share in the like period of 2002.

Total assets at September 30, 2003, were $736 million, up 4% from $709 million a year ago. Total average assets for the third quarter ended September 30, 2003, were $726 million, up 11% from $652 million for the same period a year ago. Total portfolio loans, which exclude loans for sale, grew 14% to $583 million, compared to $512 million at September 30, 2002. Commercial loans accounted for approximately one-half of the loan growth, increasing $38 million to $220 million, or 21%, from $182 million at September 30, 2002. The remainder of the loan growth was split between construction loans and commercial real estate term loans. A majority of the company’s commercial real estate loans have periodic re-pricing features and maturities of 10 years or less.

Deposits increased 2% to $644 million, up from $634 million a year ago. Total average deposits for the third quarter ended September 30, 2003, were $633 million, up 10% from $578 million for the same period a year ago. The main areas of deposit growth were non-interest bearing demand deposits and interest-bearing demand deposits, which increased 28% and 9%, respectively. Money market deposits, savings deposits, and time deposits decreased 15%, 3%, and 2%, respectively. “We are pleased with the strength of our demand deposits which have provided a steady source of funding for the growth in our loan portfolio,” said Chris Knudson, executive vice president and COO.

Net interest income, before the provision for loan losses, increased 10% to $10 million for the third quarter of 2003, from $9.1 million for the same period last year. Net interest income, as a percentage of average earning assets on a tax equivalent basis (net interest margin), for the third quarter of 2003 equaled 5.92%, which was equal to the 5.92% margin in the third quarter of 2002.

At September 30, 2003, the allowance for loan losses was $9.9 million, or 1.70% of portfolio loans and 96% of non-performing loans. A year ago, the allowance for loan losses was $8.3 million, or 1.61% of portfolio loans and 148% of non-performing loans. The provision for loan losses for the quarter ended September 30, 2003, increased 40% to $1.4 million from $980,000 in the third quarter a year ago.

Net loan charge-offs for the third quarter of 2003 were $842,000, versus charge-offs of $271,000 for the third quarter of 2002. Net loan charge-offs for the first nine months of 2003 were $1.3 million, compared to $801,000 in net loan charge-offs for the same period in 2002. Non-performing assets totaled $10.4 million, or 1.42% of total assets, at September 30, 2003, up from $5.6 million, or 0.79% of assets at September 30, 2002. The increase in non-performing assets at September 30, 2003, resulted in large part from the remaining portions of one relationship being categorized as non-performing and the inclusion of three larger commercial loans in the non-performing category. These loans comprise 59% of the non-performing loan totals. “We have reviewed these loans and taken what we believed to be an appropriate charge-off that reflected the loss exposure at the time that they were transferred to a non-performing category,” said Marc Langland, chairman and CEO. “We believe that the carrying value for these loans is appropriate.”

Other operating income increased 34% to $1.9 million in the third quarter of 2003 due primarily to an increase in earnings from Northrim’s affiliated mortgage company and also due in part to an increase in the gain on the sale of securities. Earnings from the affiliate increased $516,000 to $1 million in the third quarter of 2003, from income of $502,000 for the

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Page Two—Northrim BanCorp, Inc. Third Quarter 2003 Earnings—October 15, 2003

same period last year. Gain on sale of securities increased $95,000 to $155,000 in the third quarter of 2003, from a gain of $60,000 for the same period last year. “The housing market and the refinance business has benefited from historically low interest rates,” Langland said. “In September, these rates began to rise which will likely have the effect of decreasing refinance activity if that trend continues in the future.”

Other operating expense was $6.2 million in the third quarter of 2003, an increase of 5% from the $5.9 million expense in the same period in 2002. The efficiency ratio was 50.9% for the third quarter of 2003, an improvement from 55.2% for the same period a year ago.

In the third quarter of 2003, the company’s return on average assets (ROA) was 1.49%, compared to 1.35% in the same quarter a year ago. Return on average equity was 15% in the quarter, compared to 13.6% in 2002. The company has continued to repurchase shares of its common stock according to the plan that it announced in September 2002 in which it stated its intention to repurchase 5% of its outstanding shares of common stock, or approximately 306,000 shares. Since that time, the company has repurchased 224,800 shares with 13,800 shares repurchased in the third quarter of this year.

The ratio of total capital to risk adjusted assets was 12.6% at September 30, 2003, compared to 11.5% one year ago. The company’s capital ratios were favorably impacted when it completed an $8 million offering of trust preferred securities in May of this year. Although they are classified as liabilities on the company’s balance sheet, these securities are included in capital for regulatory purposes due to the fact that they are a form of subordinated debt.

Tangible book value per share was $10.93 at September 30, 2003, compared to $9.67 one year ago. Shareholders’ equity increased 9% to $72.5 million, and book value per share increased to $12.11 from $10.90 in the same period last year.

Northrim BanCorp, Inc. is the parent company of Northrim Bank. Northrim Bank is a full-service commercial bank that provides a full range of personal and business banking services. With locations in Anchorage, Eagle River, Wasilla and Fairbanks, Alaska, Northrim Bank differentiates itself with a “Customer First Service” philosophy.

www.northrim.com

This release may contain “forward-looking statements” that are subject to risks and uncertainties. Readers should not place undue reliance on forward-looking statements, which reflect management’s views only as of the date hereof. All statements, other than statements of historical fact, regarding our financial position, business strategy and management’s plans and objectives for future operations are forward-looking statements. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” and “intend” and words or phrases of similar meaning, as they relate to Northrim or management, are intended to help identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although we believe that management’s expectations as reflected in forward-looking statements are reasonable, we cannot assure readers that those expectations will prove to be correct. Forward-looking statements are subject to various risks and uncertainties that may cause our actual results to differ materially and adversely from our expectations as indicated in the forward-looking statements. These risks and uncertainties include our ability to maintain or expand our market share or net interest margins, and to implement our marketing and growth strategies. Further, actual results may be affected by our ability to compete on price and other factors with other financial institutions; customer acceptance of new products and services; the regulatory environment in which we operate; and general trends in the local, regional and national banking industry and economy as those factors relate to our cost of funds and return on assets. In addition, there are risks inherent in the banking industry relating to collectibility of loans and changes in interest rates. Many of these risks, as well as other risks that may have a material adverse impact on our operations and business, are identified in our other filings with the SEC and the FDIC. However, you should be aware that these factors are not an exhaustive list, and you should not assume these are the only factors that may cause our actual results to differ from our expectations.

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Page Three—Northrim BanCorp, Inc. Third Quarter 2003 Earnings—October 15, 2003

Income Statement
(Dollars in thousands, except per share data)

			Quarter Ended September 30:
			2003		2002		% Change
			(unaudited)		(unaudited)		(unaudited)
Interest Income:
	Interest and fees on loans		$	10,908	$	10,660		2	%
	Interest on portfolio investments			668		862		-23	%
	Interest on overnight investments			26		65		-60	%
		Total interest income	$	11,602	$	11,587		0	%
Interest Expense:
	Interest expense on deposits			1,458		2,467		-41	%
	Interest expense on borrowings			155		61		154	%
		Total interest expense		1,613		2,528		-36	%
		Net interest income		9,989		9,059		10	%
Provision for loan losses				1,373		980		40	%
		Net interest income after provision for loan losses		8,616		8,079		7	%
Other Operating Income:
	Service charges on deposit accounts			460		444		4	%
	Earning from mortgage affiliate			1,018		502		103	%
	Other income			447		490		-9	%
		Total other operating income		1,925		1,436		34	%
Other Operating Expense:
	Salaries and other personnel expense			3,726		3,292		13	%
	Occupancy, net			502		513		-2	%
	Equipment expense			361		322		12	%
	Intangible asset amortization expense			92		92		0	%
	Other expense			1,469		1,665		-12	%
		Total other operating expense		6,150		5,884		5	%
		Income before income taxes		4,391		3,631		21	%
Provision for income taxes				1,672		1,404		19	%
	Net income		$	2,719	$	2,227		22	%
	Basic EPS		$	0.46	$	0.36		28	%
	Diluted EPS		$	0.44	$	0.35		26	%
	Average basic shares			5,962,366		6,122,323		-3	%
	Average diluted shares			6,218,140		6,290,699		-1	%

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Page Four—Northrim BanCorp, Inc. Third Quarter 2003 Earnings—October 15, 2003

FINANCIAL DATA

Income Statement
(Dollars in thousands, except per share data)

			Nine Months Ended September 30:
			2003		2002			% Change
			(unaudited)		(unaudited)		(unaudited)
Interest Income:
	Interest and fees on loans		$	32,056	$	30,098			7	%
	Interest on portfolio investments			2,190		2,884			-24	%
	Interest on overnight investments			87		145			-40	%
		Total interest income		34,333		33,127			4	%
Interest Expense:
	Interest expense on deposits			4,788		7,730			-38	%
	Interest expense on borrowings			337		155			117	%
		Total interest expense		5,125		7,885			-35	%
		Net interest income		29,208		25,242			16	%
Provision for loan losses				2,738		1,855			48	%
		Net interest income after provision for loan losses		26,470		23,387			13	%
Other Operating Income:
	Service charges on deposit accounts			1,384		1,258			10	%
	Earnings from mortgage affiliate			2,368		1,055			124	%
	Other income			1,122		1,328			-16	%
		Total other operating income		4,874		3,641			34	%
Other Operating Expense:
	Salaries and other personnel expense			10,469		9,511			10	%
	Occupancy, net			1,489		1,460			2	%
	Equipment expense			1,109		1,068			4	%
	Intangible asset amortization expense			276		276			0	%
	Other expense			5,180		4,819			7	%
		Total other operating expense		18,523		17,134			8	%
		Income before income taxes		12,821		9,894			30	%
Provision for income taxes				4,922		3,692			33	%
	Net income		$	7,899	$	6,202			27	%
	Basic EPS		$	1.32	$	1.01			31	%
	Diluted EPS		$	1.27	$	0.98			30	%
	Average basic shares			5,986,253		6,117,452			-2	%
	Average diluted shares			6,206,154		6,331,329			-2	%

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Page Five—Northrim BanCorp, Inc. Third Quarter 2003 Earnings—October 15, 2003

Balance Sheet
(Dollars in thousands, except per share data)

			September 30,			December 31,			September 30,			Annual
			2003			2002			2002			% Change
			(unaudited)						(unaudited)			(unaudited)
Assets:
	Cash and due from banks		$	27,675		$	28,078		$	31,348			-12	%
	Overnight investments			32,222			37,502			59,918			-46	%
	Portfolio investments			62,882			81,279			81,304			-23	%
	Loans for sale			2,566			7,437			4,782			-46	%
	Portfolio loans			583,233			527,553			511,887			14	%
	Allowance for loan losses			(9,915	)		(8,476	)		(8,254	)		20	%
		Net loans		575,884			526,514			508,415			13	%
	Premises and equipment, net			11,154			10,481			6,408			74	%
	Intangible assets			7,094			7,370			7,462			-5	%
	Other non-interest earning assets			19,148			13,025			13,896			38	%
		Total assets	$	736,059		$	704,249		$	708,751			4	%
Liabilities and Shareholders’ Equity:
	Demand deposits		$	178,850		$	151,780		$	139,931			28	%
	Interest-bearing demand			55,980			53,365			51,589			9	%
	Savings deposits			100,160			104,568			103,754			-3	%
	Money market deposits			144,993			154,232			170,446			-15	%
	Time deposits			164,188			162,470			167,935			-2	%
		Total deposits		644,171			626,415			633,655			2	%
	Borrowings			5,646			6,365			5,271			7	%
	Trust preferred securities			8,000			—			—			N/M
	Other liabilities			5,744			3,096			3,437			67	%
		Total liabilities		663,561			635,876			642,363			3	%
	Shareholders’ equity			72,498			68,373			66,388			9	%
		Total liabilities and equity	$	736,059		$	704,249		$	708,751			4	%
Average Quarter Balances- unaudited
	Loans		$	596,018		$	532,266		$	519,628			15	%
	Total earning assets			673,451			645,657			610,085			10	%
	Total assets			726,030			694,683			652,378			11	%
	Non-interest bearing deposits			165,756			152,850			138,647			20	%
	Interest bearing deposits			466,796			464,676			438,889			6	%
		Total deposits		632,552			617,526			577,536			10	%
	Shareholders’ equity		$	71,740		$	66,802		$	64,986			10	%

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Page Six—Northrim BanCorp, Inc. Third Quarter 2003 Earnings—October 15, 2003

Other Data
(Dollars in thousands, except per share data)

			September 30,			December 31,			September 30,
			2003			2002			2002
			(unaudited)			(unaudited)			(unaudited)
Asset Quality:
	Non accrual loans		$	7,043		$	4,717		$	3,291
	Loans 90 days past due			2,666			1,019			635
	Restructured loans			639			—			1,667
		Total non-performing loans		10,348			5,736			5,593
	Other real estate owned			99			—			—
		Total non-performing assets	$	10,447		$	5,736		$	5,593
	Non-performing loans / portfolio loans			1.77	%		1.09	%		1.09	%
	Non-performing assets / assets			1.42	%		0.81	%		0.79	%
	Allowance for loan losses / portfolio loans			1.70	%		1.61	%		1.61	%
	Allowance / non-performing loans			95.82	%		147.77	%		147.58	%
	Loan charge-offs, net for the quarter		$	842		$	1,018		$	271
	Loan charge-offs, net year-to-date		$	1,299		$	1,819		$	801
	Net loan charge-offs / average loans, annualized			0.31	%		0.36	%		0.21	%
Other Data (At quarter end):
	Book value per share		$	12.11		$	11.22		$	10.90
	Tangible book value per share		$	10.93		$	10.01		$	9.67
	Tier 1 / Risk Adjusted Assets			11.33	%		10.25	%		10.25	%
	Total Capital / Risk Adjusted Assets			12.58	%		11.50	%		11.50	%
	Tier 1 /Average Assets			10.10	%		8.65	%		8.96	%
	Shares outstanding			5,984,318			6,094,536			6,092,812
	Unrealized gain (loss) on AFS securities, net of income taxes		$	846		$	1,204		$	1,131
Other Data (For the quarter):
	Net interest margin (tax equivalent)			5.92	%		5.83	%		5.92	%
	Efficiency ratio*			50.85	%		53.11	%		55.19	%
	Return on average assets			1.49	%		1.34	%		1.35	%
	Return on average equity			15.04	%		13.90	%		13.60	%
Other Data (Year-to-date):
	Net interest margin (tax equivalent)			6.10	%		5.82	%		5.82	%
	Efficiency ratio*			53.54	%		56.92	%		58.37	%
	Return on average assets			1.52	%		1.33	%		1.32	%
	Return on average equity			15.14	%		13.32	%		13.12	%

*excludes intangible asset amortization expense

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