Northrim BanCorp 8K Reports Strong Loan and Deposit Growth in Second Quarter 2005; Net Income of $2.7 Million | NRIM 21 Jul 05


Northrim News			Exhibit 99.1
Headquarters: 3111 C Street, Anchorage, AK 99503
For Immediate Release
Date:	July 20, 2005
Contact:	Joe Schierhorn, Chief Financial Officer
Phone:		(907) 261-3308

Northrim BanCorp, Inc. Reports Strong Loan and Deposit Growth
in Second Quarter 2005; Net Income of $2.7 Million

ANCHORAGE, AK—July 20, 2005—Northrim BanCorp, Inc. (the “company”) (Nasdaq: NRIM) reported today that total portfolio loans, which exclude loans for sale, grew 13% to $700 million, compared to $617 million at June 30, 2004. Commercial loans continued to be the major component of loan growth, increasing $64 million to $303 million, or 26%, from $239 million at June 30, 2004.

At June 30, 2005, the allowance for loan losses was $10.9 million, or 1.56% of portfolio loans and 160% of non-performing loans. A year ago, the allowance for loan losses was $10.3 million, or 1.67% of portfolio loans and 115% of non-performing loans. The provision for loan losses for the quarter and six month period ended June 30, 2005, decreased 77% and 88%, respectively, to $100,000 for each period, from $429,000 and $858,000, respectively for the quarter and six month period ended June 30, 2004 due to net loan recoveries and a reduction of non-performing loans.

Net loan recoveries for the second quarter of 2005 were $49,000, versus net loan charge-offs of $365,000 for the second quarter of 2004. For the first six months of 2005, net loan recoveries were $18,000, compared to net loan charge-offs of $751,000 for the same period in 2004. Non-performing assets totaled $6.8 million, or .81% of total assets, at June 30, 2005, as compared to non-performing assets of $9 million, or 1.21% of assets, at June 30, 2004.

Total assets at June 30, 2005, were $837 million, up 13% from $739 million a year ago. Total average assets for the period ended June 30, 2005, were $818 million, up 10% from $743 million for the period ended June 30, 2004.

Total deposits increased 14% to $732 million, up from $643 million a year ago. Total average deposits for the period ended June 30, 2005, were $709 million, up 10% from $644 million for the period ended June 30, 2004. The Alaska CD, a variable-rate savings account, again led deposit growth, increasing 87% to $159 million, from $85 million at June 30, 2004.

Net income for the second quarter of 2005 decreased 4% to $2.7 million, from $2.8 million for the same period last year, which benefited from a tax rate of 35.7% as compared to a tax rate of 37.8% for the same period ending June 30, 2005. Diluted earnings per share were $0.42 at June 30, 2005, a 5% decrease from $0.44 per share in the period ended June 30, 2004. For the six-month period ended June 30, 2005, the company’s net income was $5.2 million, up 2% from $5.1 million for the same period in 2004. Diluted earnings per share for the first six months of 2005 were $0.83, a 1% increase from $0.82 per share in the first six months of 2004.

Net interest income, before the provision for loan losses, increased 4% to $10.7 million for the second quarter of 2005, from $10.3 million for the second quarter of 2004. Net interest income, as a percentage of average earning assets on a tax equivalent basis (net interest margin), for the second quarter of 2005 equaled 5.67%, which was a decrease from the 6.03% margin in the second quarter of 2004. “Short-term interest rates paid on deposits have risen rapidly in the past twelve months,” said Joe Schierhorn, executive vice president and chief financial officer. “This has put pressure on our net interest margin, as we cannot re-price our loans at the same pace.”

Total other operating income increased 12% to $1.1 million in the second quarter of 2005. “Income from our new Northrim Funding Services division in Washington and our Business Manager product in Alaska, both of which are used to purchase accounts receivable from customers, accounted for a majority of the increase in other operating income,” Schierhorn explained.

Total other operating expense was $7.4 million in the second quarter of 2005, an increase of 13% from the $6.5 million expense in the same period in 2004. Salaries and personnel expenses were up 10%, to $4.4 million, and occupancy costs increased 16% to $574,000, due in part to new rental costs for Northrim Funding Services division, based in the state of Washington, expansion into additional square footage in our Anchorage headquarters building, and increased amortization of leasehold improvements at other facilities. Other expenses were up 24% to $1.9 million. Approximately 50% of this increase can be attributed to costs of our new High Performance Checking program, which is a turnkey approach to restructure and market Northrim’s demand deposit accounts. “The High Performance Checking Program is designed to broaden and diversify Northrim’s deposit base, reducing our deposit costs, and generating more internal funds to meet our strong commercial loan demand,” said Marc Langland, chairman and CEO. “The transition to these new accounts will reduce fee income in the short term, but we expect the program to result in higher fee income over time.”

In the second quarter of 2005, the company’s return on average assets (ROA) was 1.30%, compared to 1.50% in the same quarter a year ago. Return on average equity was 12.36% in the quarter, compared to 14.23% in 2004.

Tangible book value per share was $13.11 at June 30, 2005, which was an increase of 12% when compared to a tangible book value per share of $11.73 one year ago. Shareholders’ equity increased 10% to $86 million at June 30, 2005 compared to $78 million at June 30, 2004, and book value per share increased to $14.17 at June 30, 2005, from $12.85 at June 30, 2004.

In September of 2002, the company instituted a stock repurchase program. The company repurchased 33,140 shares of stock in the three month period ending June 30, 2005 under this program, which leaves a remaining balance of 352,715 shares available for repurchase by the company in the future.

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.


Balance Sheet
(Dollars in thousands, except per share data)
June 30,				December 31,			June 30,			Annual
		2005			2004			2004		% Change

(unaudited)				(unaudited)			(unaudited)			(unaudited)
Assets:
Cash and due from banks	$	29,168		$	18,936		$	24,564			19	%
Overnight investments		8,392			12,157			6,917			21	%
Portfolio investments		61,849			61,475			60,970			1	%
Loans for sale		—			—			—			n/a
Portfolio loans		699,663			678,269			617,151			13	%
Allowance for loan losses		(10,882	)		(10,764	)		(10,293	)		6	%

Net loans		688,781			667,505			606,858			13	%
Premises and equipment, net		10,950			10,583			11,002			0	%
Purchased receivables		8,661			2,191			1,365			535	%
Intangible assets		6,450			6,634			6,818			-5	%
Other assets		22,314			21,245			20,775			7	%
Total assets	$	836,565		$	800,726		$	739,269			13	%

Liabilities and Shareholders’ Equity:
Demand deposits	$	191,953		$	183,959		$	184,775			4	%
Interest-bearing demand		66,288			59,933			57,991			14	%
Savings deposits		48,452			47,406			46,246			5	%
Alaska CDs		158,627			123,223			85,040			87	%
Money market deposits		124,441			142,181			117,697			6	%
Time deposits		142,012			142,359			150,784			-6	%

Total deposits		731,773			699,061			642,533			14	%
Borrowings		5,761			6,478			5,327			8	%
Trust preferred securities		8,000			8,000			8,000			0	%
Other liabilities		5,009			3,829			5,220			-4	%

Total liabilities		750,543			717,368			661,080			14	%
Shareholders' equity		86,022			83,358			78,189			10	%
Total liabilities and equity	$	836,565		$	800,726		$	739,269			13	%

Average Quarter Balances — unaudited
Loans	$	691,815		$	664,978		$	621,466			11	%
Total earning assets		758,493			740,256			688,765			10	%
Total assets		818,493			796,697			742,609			10	%
Non-interest bearing deposits		176,679			191,863			175,559			1	%
Interest bearing deposits		532,116			503,697			468,367			14	%
Total deposits		708,795			695,560			643,926			10	%
Shareholders' equity		86,193			82,693			78,049			10	%
Average Year-to-date Balances — unaudited
Loans	$	687,413		$	628,830		$	611,539			12	%
Total earning assets		753,735			704,471			681,528			11	%
Total assets		811,526			759,259			734,929			10	%
Non-interest bearing deposits		176,320			181,731			171,231			3	%
Interest bearing deposits		523,997			478,951			466,024			12	%
Total deposits		700,317			660,682			637,255			10	%
Shareholders' equity		85,269			79,278			77,264			10	%


Income Statement
(Dollars in thousands, except per share data)
	Quarter Ended June 30:
		2005		2004	% Change
(unaudited)			(unaudited)		(unaudited)
Interest Income:
Interest and fees on loans	$	13,501	$	11,236		20	%
Interest on portfolio investments		544		614		-11	%
Interest on overnight investments		33		9		267	%
Total interest income		14,078		11,859		19	%
Interest Expense:
Interest expense on deposits		3,183		1,438		121	%
Interest expense on borrowings		220		142		55	%
Total interest expense		3,403		1,580		115	%
Net interest income		10,675		10,279		4	%
Provision for loan losses		100		429		-77	%
Net interest income after provision for loan losses		10,575		9,850		7	%
Other Operating Income:
Service charges on deposit accounts		450		443		2	%
Earning from mortgage affiliate		82		123		-33	%
Purchased receivable income		186		45		313	%
Other income		347		344		1	%
Total other operating income		1,065		955		12	%
Other Operating Expense:
Salaries and other personnel expense		4,426		4,031		10	%
Occupancy, net		574		495		16	%
Equipment expense		349		327		7	%
Intangible asset amortization expense		92		92		0	%
Other expense		1,932		1,562		24	%
Total other operating expense		7,373		6,507		13	%
Income before income taxes		4,267		4,298		-1	%
Provision for income taxes		1,611		1,536		5	%
Net income	$	2,656	$	2,762		-4	%
Basic EPS	$	0.44	$	0.45		-2	%
Diluted EPS	$	0.42	$	0.44		-5	%
Average basic shares		6,095,922		6,081,658		0	%
Average diluted shares		6,278,673		6,260,985		0	%


Income Statement
(Dollars in thousands, except per share data)
			Six Months Ended June 30:
				2005		2004	% Change
Interest Income:			(unaudited)		(unaudited)		(unaudited)
	Interest and fees on loans		$	26,226	$	21,918		20	%
	Interest on portfolio investments			1,106		1,296		-15	%
	Interest on overnight investments			59		20		195	%
		Total interest income		27,391		23,234		18	%
Interest Expense:
	Interest expense on deposits			5,790		2,782		108	%
	Interest expense on borrowings			443		281		58	%
		Total interest expense		6,233		3,063		103	%
		Net interest income		21,158		20,171		5	%
Provision for loan losses				100		858		-88	%
		Net interest income after provision for loan losses		21,058		19,313		9	%
Other Operating Income:
	Service charges on deposit accounts			851		874		-3	%
	Earnings from mortgage affiliate			61		166		-63	%
	Purchased receivable income			347		80		334	%
	Other income			654		671		-3	%
		Total other operating income		1,913		1,791		7	%
Other Operating Expense:
	Salaries and other personnel expense			8,784		7,871		12	%
	Occupancy, net			1,141		1,023		12	%
	Equipment expense			693		691		0	%
	Intangible asset amortization expense			184		184		0	%
	Other expense			3,701		3,371		10	%
		Total other operating expense		14,503		13,140		10	%
		Income before income taxes		8,468		7,964		6	%
Provision for income taxes				3,232		2,829		14	%
		Net income	$	5,236	$	5,135		2	%
		Basic EPS	$	0.86	$	0.85		1	%
		Diluted EPS	$	0.83	$	0.82		1	%
		Average basic shares		6,097,797		6,069,816		0	%
		Average diluted shares		6,285,520		6,273,931		0	%


Other Data
(Dollars in thousands, except per share data)
June 30,				December 31,			June 30,
		2005			2004			2004

(unaudited)				(unaudited)			(unaudited)
Asset Quality:
Non accrual loans	$	5,706		$	5,876		$	5,988
Loans 90 days past due		1,095			290			2,541
Restructured loans		—			424			453

Total non-performing loans		6,801			6,590			8,982
Other real estate owned		—			—			—
Total non-performing assets	$	6,801		$	6,590		$	8,982

Non-performing loans / portfolio loans		0.97	%		0.97	%		1.46	%
Non-performing assets / assets		0.81	%		0.82	%		1.21	%
Allowance for loan losses / portfolio loans		1.56	%		1.59	%		1.67	%
Allowance / non-performing loans		160.01	%		163.34	%		114.60	%
Loan charge-offs, net for the quarter	$	(49	)	$	529		$	365
Loan charge-offs, net year-to-date	$	(18	)	$	1,024		$	751
Net loan charge-offs / average loans, annualized		-0.01	%		0.16	%		0.25	%
Other Data (At quarter end):
Book value per share	$	14.17		$	13.69		$	12.85
Tangible book value per share	$	13.11		$	12.60		$	11.73
Tier 1 / Risk Adjusted Assets		11.65	%		11.62	%		11.85	%
Total Capital / Risk Adjusted Assets		12.90	%		12.87	%		13.10	%
Tier 1 /Average Assets		10.80	%		10.72	%		10.79	%
Shares outstanding		6,071,237			6,089,120			6,085,657
Unrealized gain (loss) on AFS securities,
net of income taxes	$	(150	)	$	4		$	(62	)
Other Data (For the quarter):
Net interest margin (tax equivalent)		5.67	%		5.87	%		6.03	%
Efficiency ratio*		62.02	%		56.24	%		57.10	%
Return on average assets		1.30	%		1.43	%		1.50	%
Return on average equity		12.36	%		13.79	%		14.23	%
Other Data (Year-to-date):
Net interest margin (tax equivalent)		5.68	%		5.88	%		5.97	%
Efficiency ratio*		62.06	%		58.07	%		58.99	%
Return on average assets		1.30	%		1.41	%		1.41	%
Return on average equity		12.38	%		13.50	%		13.44	%
*excludes intangible asset amortization expense

Northrim BanCorp (NRIM) 8-KNorthrim BanCorp, Inc. Reports Strong Loan and Deposit Growth in Second Quarter 2005; Net Income of $2.7 Million