Northrim BanCorp (NRIM) 8-K Northrim BanCorp, Inc. Reports Net Income of $2.8 Million in Second Quarter 2004

Exhibit 99.1

Northrim News
Headquarters: 3111 C Street, Anchorage, AK 99503

              For Immediate Release

Date:	July 21, 2004
Contact:	Chris Knudson
	EVP & COO
Phone:	(907) 261-3304

Northrim BanCorp, Inc. Reports Net Income of $2.8 Million in Second Quarter 2004

ANCHORAGE, AK—July 21, 2004—Northrim BanCorp, Inc. (the “company”) (Nasdaq: NRIM) reported today that net income for the second quarter of 2004 increased 5% to $2.8 million, from $2.6 million for the same period last year. Diluted earnings per share were $0.44, a 2% increase from $0.43 per share in the like period of 2003. For the six-month period ended June 30, 2004, the company’s net income was $5.1 million, down 1% from $5.2 million for the same period in 2003. Diluted earnings per share for the first six months of 2004 were $0.82, a 2% decrease from $0.84 per share in the like period of 2003.

Total assets at June 30, 2004, were $739 million, up 3% from $715 million a year ago. Total average assets for the period ended June 30, 2004, were $743 million, up 8% from $686 million for the period ended June 30, 2003. Total portfolio loans, which exclude loans for sale, grew 12% to $617 million, compared to $551 million at June 30, 2003. Commercial loans were the major component of loan growth, increasing $38 million to $239 million, or 19%, from $202 million at June 30, 2003.

Deposits increased 2% to $643 million, up from $628 million a year ago. Total average deposits for the period ended June 30, 2004, were $644 million, up 7% from $603 million for the period ended June 30, 2003. The main areas of deposit growth were savings deposits, non-interest-bearing demand deposits, and interest-bearing demand deposits, which increased 28%, 13%, and 6%, respectively. The increase in savings deposits was due to the growth of the Alaska CD product that is categorized as a variable-rate savings account since it has an adjustable interest rate and an open-ended maturity. Money market and time deposits decreased by 15% and 10%, respectively. “Our Alaska CD account has helped us to grow our deposit base and retain those customers who want added flexibility in this current interest rate environment,” said Chris Knudson, executive vice president and COO.

Net interest income, before the provision for loan losses, increased 6% to $10.3 million for the second quarter of 2004, from $9.7 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 second quarter of 2004 equaled 6.03%, which was a decrease from the 6.11% margin in the second quarter of 2003. In the second quarter of 2003, the company received $122,000 in prepayment fees on several commercial real estate loans that increased the margin in that period and accounted for most of the decrease when compared to the margin in 2004. “We are pleased that our margin has remained strong, particularly as interest rates have been at historically low levels for a sustained period,” Knudson said.

At June 30, 2004, the allowance for loan losses was $10.3 million, or 1.67% of portfolio loans and 115% of non-performing loans. A year ago, the allowance for loan losses was $9.4 million, or 1.70% of portfolio loans and 106% of non-performing loans. The provision for loan losses for the quarter ended June 30, 2004, decreased 54% to $429,000, from $936,000 in the second quarter a year ago.

Net loan charge-offs for the second quarter of 2004 were $365,000, versus net loan charge-offs of $380,000 for the second quarter of 2003. Non-performing assets totaled $9 million, or 1.21% of total assets, at June 30, 2004, down from $10.3 million or 1.40% of total assets at December 31, 2003. Non-performing assets totaled $8.9 million, or 1.25% of assets, at June 30, 2003. “We have directed a concentrated amount of activity toward our non-performing loans and are pleased that we are beginning to see positive results from these efforts,” said Marc Langland, chairman and CEO.

(more)

Page Two—Northrim BanCorp, Inc. Second Quarter 2004 Earnings—July 21, 2004

Other operating income decreased 46% to $955,000 in the second quarter of 2004, due primarily to a decrease in earnings from Northrim’s affiliated mortgage company that was caused primarily by a decrease in refinance activity. Earnings from the affiliate decreased $763,000 to $123,000 in the second quarter of 2004, from income of $886,000 for the same period last year. “Despite the declines in our mortgage income, the earnings from our core assets have continued to increase, particularly in the commercial loan area,” Langland said.

Other operating expense was $6.5 million in the second quarter of 2004, an increase of 5% from the $6.2 million expense in the same period in 2003. The increase in other operating expense was due primarily to increases in salaries and benefits, which increased by $605,000, or 18%, to $4 million at June 30, 2004, from $3.4 million in the same period in 2003. The company incurred higher personnel costs mainly due to higher wage costs, which were brought on in part by more competition for key staff.

The efficiency ratio was 57.1% for the second quarter of 2004, an increase from 53.2% for the same period a year ago. The main reasons for the change in the efficiency ratio were the large drop in revenues from the company’s affiliated mortgage company and the lack of non-recurring pre-payment fees.

In the second quarter of 2004, the company’s return on average assets (ROA) was 1.50%, compared to 1.54% in the same quarter a year ago. Return on average equity was 14.23% in the quarter, compared to 15.38% in 2003.

Tangible book value per share was $11.73 at June 30, 2004, which was an increase of 11% when compared to a tangible book value per share of $10.57 one year ago. Shareholders’ equity increased 11% to $78.2 million, and book value per share increased to $12.85 from $11.77 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

(more)

Page Three—Northrim BanCorp, Inc. Second Quarter 2004 Earnings—July 21, 2004

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.

(more)

Page Four—Northrim BanCorp, Inc. Second Quarter 2004 Earnings—July 21, 2004

FINANCIAL DATA

Income Statement

(Dollars in thousands, except per share data)

			Quarter Ended June 30:
			2004		2003		% Change
			(unaudited)		(unaudited)		(unaudited)
Interest Income:
	Interest and fees on loans		$	11,236	$	10,652		5	%
	Interest on portfolio investments			614		700		-12	%
	Interest on overnight investments			9		45		-80	%
		Total interest income		11,859		11,397		4	%
Interest Expense:
	Interest expense on deposits			1,438		1,620		-11	%
	Interest expense on borrowings			142		108		31	%
		Total interest expense		1,580		1,728		-9	%
		Net interest income		10,279		9,669		6	%
Provision for loan losses				429		936		-54	%
		Net interest income after provision for loan losses		9,850		8,733		13	%
Other Operating Income:
	Service charges on deposit accounts			443		478		-7	%
	Earning from mortgage affiliate			123		886		-86	%
	Other income			389		413		-6	%
		Total other operating income		955		1,777		-46	%
Other Operating Expense:
	Salaries and other personnel expense			4,031		3,426		18	%
	Occupancy, net			495		488		1	%
	Equipment expense			327		369		-11	%
	Intangible asset amortization expense			92		92		0	%
	Other expense			1,562		1,811		-14	%
		Total other operating expense		6,507		6,186		5	%
		Income before income taxes		4,298		4,324		-1	%
Provision for income taxes				1,536		1,689		-9	%
		Net income	$	2,762	$	2,635		5	%
		Basic EPS	$	0.45	$	0.44		2	%
		Diluted EPS	$	0.44	$	0.43		2	%
		Average basic shares		6,081,658		5,959,974		2	%
		Average diluted shares		6,260,985		6,184,656		1	%

(more)

Page Five—Northrim BanCorp, Inc. Second Quarter 2004 Earnings—July 21, 2004

Income Statement

(Dollars in thousands, except per share data)

			Six Months Ended June 30:
			2004		2003		% Change
			(unaudited)		(unaudited)		(unaudited)
Interest Income:
	Interest and fees on loans		$	21,918	$	21,148		4	%
	Interest on portfolio investments			1,296		1,522		-15	%
	Interest on overnight investments			20		61		-67	%
		Total interest income		23,234		22,731		2	%
Interest Expense:
	Interest expense on deposits			2,782		3,331		-16	%
	Interest expense on borrowings			281		181		55	%
		Total interest expense		3,063		3,512		-13	%
		Net interest income		20,171		19,219		5	%
Provision for loan losses				858		1,365		-37	%
		Net interest income after provision for loan losses		19,313		17,854		8	%
Other Operating Income:
	Service charges on deposit accounts			874		924		-5	%
	Earnings from mortgage affiliate			166		1,350		-88	%
	Other income			751		666		13	%
		Total other operating income		1,791		2,940		-39	%
Other Operating Expense:
	Salaries and other personnel expense			7,871		6,743		17	%
	Occupancy, net			1,023		977		5	%
	Equipment expense			691		748		-8	%
	Intangible asset amortization expense			184		184		0	%
	Other expense			3,371		3,713		-9	%
		Total other operating expense		13,140		12,365		6	%
		Income before income taxes		7,964		8,429		-6	%
Provision for income taxes				2,829		3,250		-13	%
		Net income	$	5,135	$	5,179		-1	%
		Basic EPS	$	0.85	$	0.86		-1	%
		Diluted EPS	$	0.82	$	0.84		-2	%
		Average basic shares		6,069,816		5,998,078		1	%
		Average diluted shares		6,273,931		6,200,095		1	%

(more)

Page Six—Northrim BanCorp, Inc. Second Quarter 2004 Earnings—July 21, 2004

Balance Sheet

(Dollars in thousands, except per share data)

			June 30,			December 31,			June 30,			Annual
			2004			2003			2003			% Change
			(unaudited)			(unaudited)			(unaudited)			(unaudited)
Assets:
	Cash and due from banks		$	24,564		$	31,298		$	18,295			34	%
	Overnight investments			6,917			5,597			10,692			-35	%
	Portfolio investments			60,970			73,208			71,260			-14	%
	Loans for sale			—			1,395			39,703			-100	%
	Portfolio loans			617,151			599,724			551,098			12	%
	Allowance for loan losses			(10,293	)		(10,186	)		(9,384	)		10	%
		Net loans		606,858			590,933			581,417			4	%
	Premises and equipment, net			11,002			11,107			11,394			-3	%
	Intangible assets			6,818			7,002			7,186			-5	%
	Other assets			22,140			19,424			14,703			51	%
		Total assets	$	739,269		$	738,569		$	714,947			3	%
Liabilities and Shareholders’ Equity:
	Demand deposits		$	184,775		$	179,461		$	163,971			13	%
	Interest-bearing demand			57,991			56,312			54,719			6	%
	Savings deposits			131,286			109,740			102,939			28	%
	Money market deposits			117,697			137,657			138,174			-15	%
	Time deposits			150,784			163,027			168,107			-10	%
		Total deposits		642,533			646,197			627,910			2	%
	Borrowings			5,327			5,143			5,423			-2	%
	Trust preferred securities			8,000			8,000			8,000			N/M
	Other liabilities			5,220			3,944			3,475			50	%
		Total liabilities		661,080			663,284			644,808			3	%
	Shareholders’ equity			78,189			75,285			70,139			11	%
		Total liabilities and equity	$	739,269		$	738,569		$	714,947			3	%
Average Quarter Balances – unaudited
	Loans		$	621,466		$	593,800		$	552,291			13	%
	Total earning assets			688,765			683,084			636,815			8	%
	Total assets			742,609			738,352			686,244			8	%
	Non-interest bearing deposits			175,559			177,932			150,789			16	%
	Interest bearing deposits			468,367			467,641			452,170			4	%
		Total deposits		643,926			645,573			602,959			7	%
Shareholders’ equity				78,049			74,022			68,728			14	%

(more)

Page Seven—Northrim BanCorp, Inc. Second Quarter 2004 Earnings—July 21, 2004

Other Data

(Dollars in thousands, except per share data)

			June 30,			December 31,			June 30,
			2004			2003			2003
			(unaudited)			(unaudited)			(unaudited)
Asset Quality:
	Non accrual loans		$	5,988		$	7,426		$	4,314
	Loans 90 days past due			2,541			2,283			3,952
	Restructured loans			453			597			552
		Total non-performing loans		8,982			10,306			8,818
	Other real estate owned			—			—			99
		Total non-performing assets	$	8,982		$	10,306		$	8,917
	Non-performing loans/portfolio loans			1.46	%		1.72	%		1.60	%
	Non-performing assets/assets			1.21	%		1.40	%		1.25	%
	Allowance for loan losses/portfolio loans			1.67	%		1.70	%		1.70	%
	Allowance/non-performing loans			114.60	%		98.84	%		106.42	%
	Loan charge-offs, net for the quarter		$	365		$	558		$	380
	Loan charge-offs, net year-to-date		$	751		$	1,857		$	457
	Net loan charge-offs/average loans, annualized			0.25	%		0.33	%		0.17	%
Other Data (At quarter end):
	Book value per share		$	12.85		$	12.44		$	11.77
	Tangible book value per share		$	11.73		$	11.29		$	10.57
	Tier 1/Risk Adjusted Assets			11.85	%		11.58	%		11.37	%
	Total Capital/Risk Adjusted Assets			13.10	%		12.83	%		12.62	%
	Tier 1/Average Assets			10.79	%		10.37	%		10.11	%
	Shares outstanding			6,085,657			6,050,359			5,957,046
Unrealized gain (loss) on AFS securities, net of income taxes			$	(62	)	$	623		$	1,166
Other Data (For the quarter):
	Net interest margin (tax equivalent)			6.03	%		5.87	%		6.11	%
	Efficiency ratio*			57.10	%		54.26	%		53.24	%
	Return on average assets			1.50	%		1.42	%		1.54	%
	Return on average equity			14.23	%		14.18	%		15.38	%
Other Data (Year-to-date):
	Net interest margin (tax equivalent)			5.97	%		6.04	%		6.19	%
	Efficiency ratio*			58.99	%		53.71	%		54.97	%
	Return on average assets			1.41	%		1.50	%		1.54	%
	Return on average equity			13.37	%		14.89	%		15.24	%
	*excludes intangible asset amortization expense

-0-