Northrim BanCorp 8K Reports Loans and Deposits Up, Earnings Down 1% for Third Quarter 2004 | NRIM 26 Oct 04

EXHIBIT 99.1

Northrim News
Headquarters: 3111 C Street, Anchorage, AK 99503
For Immediate Release


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

Northrim BanCorp Reports Loans and Deposits Up,
Earnings Down 1% for Third Quarter 2004

ANCHORAGE, AK—October 21, 2004—Northrim BanCorp, Inc. (the “company”) (Nasdaq: NRIM) reported today that net income for the third quarter of 2004 decreased 1%, or $22,000, from $2.7 million for the same period last year. Diluted earnings per share were $0.43, a 2% decrease from $0.44 per share in the like period of 2003. For the nine-month period ended September 30, 2004, the company’s net income was $7.8 million, down 1% from $7.9 million for the same period in 2003. Diluted earnings per share for the first nine months of 2004 were $1.25, a 2% decrease from $1.27 per share in the like period of 2003.

Total assets at September 30, 2004, were $786 million, up 7% from $736 million a year ago. Total portfolio loans, which exclude loans for sale, grew 10% to $644 million, compared to $583 million at September 30, 2003. Commercial real estate loans accounted for approximately one-half of this loan growth, increasing $27 million to $252 million, or 12%, from $225 million at September 30, 2003. The remainder of the loan growth was split between commercial and construction loans. A majority of the company’s commercial real estate loans have periodic repricing features and maturities of 10 years or less.

Deposits increased 7% to $687 million, up from $644 million a year ago. Savings deposits led deposit growth, increasing 61% over the period ended September 30, 2003. The increase in the savings deposits was due in large part to the growth in the Alaska CD product that is categorized as a savings account since it has an adjustable interest rate and an open-ended maturity. “Our Alaska CD continues to contribute strongly to deposit growth and forms an important component of funding for our loan growth,” said Executive Vice President and Chief Operating Officer Chris Knudson.

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Net interest income, before the provision for loan losses, increased 2% to $10.2 million for the third quarter of 2004, from $10 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 2004 equaled 5.70%, which was a decrease from the 5.92% margin in the third quarter of 2003. “Our margin has been impacted by increases in deposit costs while our loan rates have remained relatively stable due to competitive pressures,” said Knudson.

At September 30, 2004, the allowance for loan losses was $10.7 million, or 1.66% of portfolio loans and 128% of non-performing loans. A year ago, the allowance for loan losses was $9.9 million, or 1.70% of portfolio loans and 96% of non-performing loans. The provision for loan losses for the quarter ended September 30, 2004, decreased 90% to $143,000 from $1.4 million in the third quarter a year ago due to improved credit quality.

Net loan recoveries for the third quarter of 2004 were $256,000 versus net loan charge-offs of $842,000 for the third quarter of 2003. Non-performing assets totaled $8.4 million, or 1.06% of total assets, at September 30, 2004, down from $10.4 million or 1.42% of total assets at September 30, 2003. “We are pleased with the improvement in our credit quality and plan to continue to focus on this area,” said President and CEO Marc Langland.

Other operating income decreased 54% to $885,000 in the third quarter of 2004, due primarily to a decrease in earnings from Northrim’s affiliated mortgage company. Earnings from the affiliate decreased to $15,000 in the third quarter of 2004, from earnings of $1 million for the same period last year. “With the refinancing boom all but over,” said Langland, “competition for mortgage loans and key employees in this sector has increased substantially in our market.”

Other operating expense was $6.5 million in the third quarter of 2004, an increase of 6% from the $6.2 million expense in the same period in 2003. The efficiency ratio was 58.2 % for the third quarter of 2004, an increase from 50.9% for the same period a year ago. In the third quarter of 2004, the company’s return on average assets (ROA) was 1.39%, compared to 1.49% in the same quarter a year ago. Return on average equity was 13.44% in the quarter, compared to 15.04% in 2003.

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Tangible book value per share was $12.23 at September 30, 2004, which was an increase over the same period a year ago, when tangible book value per share was $10.93. Shareholders’ equity increased 12% to $81.2 million, and book value per share increased to $13.33 from $12.11 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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Balance Sheet
(Dollars in thousands, except per share data)
			September 30,			December 31,			September 30,			Annual
				2004			2003			2003		% Change

			(unaudited)			(unaudited)			(unaudited)			(unaudited)
Assets:
	Cash and due from banks		$	26,649		$	31,298		$	27,675			-4	%
	Overnight investments			19,573			5,597			32,222			-39	%
	Portfolio investments			65,138			73,208			62,882			4	%
	Loans for sale			465			1,395			2,566			-82	%
	Portfolio loans			644,267			599,724			583,233			10	%
	Allowance for loan losses			(10,692	)		(10,186	)		(9,915	)		8	%

		Net loans		634,040			590,933			575,884			10	%
	Premises and equipment, net			10,742			11,107			11,154			-4	%
	Intangible assets			6,726			7,002			7,094			-5	%
	Other assets			23,146			19,424			19,148			21	%
		Total assets	$	786,014		$	738,569		$	736,059			7	%

Liabilities and Shareholders’ Equity:
	Demand deposits		$	186,577		$	179,461		$	178,850			4	%
	Interest-bearing demand			61,989			56,312			55,980			11	%
	Savings deposits			161,039			109,740			100,160			61	%
	Money market deposits			135,763			137,657			144,993			-6	%
	Time deposits			141,721			163,027			164,188			-14	%

		Total deposits		687,089			646,197			644,171			7	%
	Borrowings			4,960			5,143			5,646			-12	%
	Trust preferred securities			8,000			8,000			8,000			N/M
	Other liabilities			4,789			3,944			5,744			-17	%

		Total liabilities		704,838			663,284			663,561			6	%
	Shareholders' equity			81,176			75,285			72,498			12	%
		Total liabilities and equity	$	786,014		$	738,569		$	736,059			7	%

Average Quarter Balances- unaudited

	Loans		$	626,891		$	593,800		$	596,018			5	%
	Total earning assets			714,075			683,084			673,451			6	%
	Total assets			769,952			738,352			726,030			6	%
	Non-interest bearing deposits			192,369			177,932			165,756			16	%
	Interest bearing deposits			479,777			467,641			466,796			3	%
		Total deposits		672,146			645,573			632,552			6	%
	Shareholders' equity			79,846			74,022			71,740			11	%


Income Statement
(Dollars in thousands, except per share data)
			Quarter Ended September 30:
				2004		2003	% Change

			(unaudited)		(unaudited)		(unaudited)
Interest Income:
	Interest and fees on loans		$	11,437	$	10,908		5	%
	Interest on portfolio investments			603		668		-10	%
	Interest on overnight investments			79		26		204	%

		Total interest income		12,119		11,602		4	%
Interest Expense:
	Interest expense on deposits			1,780		1,458		22	%
	Interest expense on borrowings			140		155		-10	%

		Total interest expense		1,920		1,613		19	%

		Net interest income		10,199		9,989		2	%
Provision for loan losses				143		1,373		-90	%

		Net interest income after provision for loan losses		10,056		8,616		17	%
Other Operating Income:
	Service charges on deposit accounts			439		460		-5	%
	Earning from mortgage affiliate			15		1,018		-99	%
	Other income			431		447		-4	%

		Total other operating income		885		1,925		-54	%
Other Operating Expense:
	Salaries and other personnel expense			3,794		3,726		2	%
	Occupancy, net			542		502		8	%
	Equipment expense			325		361		-10	%
	Intangible asset amortization expense			92		92		0	%
	Other expense			1,792		1,469		22	%

		Total other operating expense		6,545		6,150		6	%
		Income before income taxes		4,396		4,391		0	%
Provision for income taxes				1,699		1,672		2	%
		Net income	$	2,697	$	2,719		-1	%

		Basic EPS	$	0.44	$	0.46		-4	%
		Diluted EPS	$	0.43	$	0.44		-2	%
		Average basic shares		6,086,677		5,962,366		2	%
		Average diluted shares		6,259,297		6,218,140		1	%


Income Statement
(Dollars in thousands, except per share data)
			Nine Months Ended September 30:
				2004		2003	% Change

Interest Income:			(unaudited)		(unaudited)		(unaudited)
	Interest and fees on loans		$	33,355	$	32,056		4	%
	Interest on portfolio investments			1,899		2,190		-13	%
	Interest on overnight investments			99		87		14	%

		Total interest income		35,353		34,333		3	%
Interest Expense:
	Interest expense on deposits			4,561		4,788		-5	%
	Interest expense on borrowings			422		337		25	%

		Total interest expense		4,983		5,125		-3	%

		Net interest income		30,370		29,208		4	%
Provision for loan losses				1,001		2,738		-63	%

		Net interest income after provision for loan losses		29,369		26,470		11	%
Other Operating Income:
	Service charges on deposit accounts			1,313		1,384		-5	%
	Earnings from mortgage affiliate			181		2,368		-92	%
	Other income			1,182		1,122		5	%

		Total other operating income		2,676		4,874		-45	%
Other Operating Expense:
	Salaries and other personnel expense			11,664		10,469		11	%
	Occupancy, net			1,564		1,489		5	%
	Equipment expense			1,016		1,109		-8	%
	Intangible asset amortization expense			276		276		0	%
	Other expense			5,165		5,180		0	%

		Total other operating expense		19,685		18,523		6	%
		Income before income taxes		12,360		12,821		-4	%
Provision for income taxes				4,528		4,922		-8	%
		Net income	$	7,832	$	7,899		-1	%

		Basic EPS	$	1.29	$	1.32		-2	%
		Diluted EPS	$	1.25	$	1.27		-2	%
		Average basic shares		6,075,439		5,986,253		1	%
		Average diluted shares		6,269,060		6,206,154		1	%


Other Data
(Dollars in thousands, except per share data)
			September 30,			December 31,			September 30,
				2004			2003			2003

			(unaudited)			(unaudited)			(unaudited)
Asset Quality:
	Non accrual loans		$	6,879		$	7,426		$	7,043
	Loans 90 days past due			1,046			2,283			2,666
	Restructured loans			443			597			639

		Total non-performing loans		8,368			10,306			10,348
	Other real estate owned			—			—			99
		Total non-performing assets	$	8,368		$	10,306		$	10,447

	Non-performing loans / portfolio loans			1.30	%		1.72	%		1.77	%
	Non-performing assets / assets			1.06	%		1.40	%		1.42	%
	Allowance for loan losses / portfolio loans			1.66	%		1.70	%		1.70	%
	Allowance / non-performing loans			127.77	%		98.84	%		95.82	%
	Loan charge-offs, net for the quarter		$	(256	)	$	558		$	842
	Loan charge-offs, net year-to-date		$	495		$	1,857		$	1,299
	Net loan charge-offs / average loans, annualized			0.11	%		0.33	%		0.31	%
Other Data (At quarter end):
	Book value per share		$	13.33		$	12.44		$	12.11
	Tangible book value per share		$	12.23		$	11.29		$	10.93
	Tier 1 / Risk Adjusted Assets			11.73	%		11.58	%		11.33	%
	Total Capital / Risk Adjusted Assets			12.98	%		12.83	%		12.58	%
	Tier 1 /Average Assets			10.77	%		10.37	%		10.10	%
	Shares outstanding			6,087,470			6,050,359			5,984,318
	Unrealized gain (loss) on AFS securities,
		net of income taxes	$	207		$	623		$	846
Other Data (For the quarter):
	Net interest margin (tax equivalent)			5.70	%		5.87	%		5.92	%
	Efficiency ratio*			58.22	%		54.26	%		50.85	%
	Return on average assets			1.39	%		1.42	%		1.49	%
	Return on average equity			13.44	%		14.18	%		15.04	%
Other Data (Year-to-date):
	Net interest margin (tax equivalent)			5.88	%		6.04	%		6.10	%
	Efficiency ratio*			58.73	%		53.71	%		53.54	%
	Return on average assets			1.40	%		1.50	%		1.52	%
	Return on average equity			13.39	%		14.89	%		15.14	%
	*excludes intangible asset amortization expense

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Northrim BanCorp (NRIM) 8-KNorthrim BanCorp Reports Loans and Deposits Up, Earnings Down 1% for Third Quarter 2004