Northrim NewsExhibit 99.1 Headquarters: 3111 C Street, Anchorage, AK 99503 For Immediate Release
Date: Contact: Phone:
July 19, 2006 Joe Schierhorn, Chief Financial Officer (907) 261-3308
Northrim BanCorp, Inc. Reports 19% Earnings Per Share Growth in the Second Quarter
ANCHORAGE, AK—July 19, 2006—Northrim BanCorp, Inc. (the “company”) (Nasdaq: NRIM) reported today that diluted earnings per share for the quarter ended June 30, 2006 were $0.50, up 19% from the same period in 2005. For the six-month period ended June 30, 2006, diluted earnings per share were $0.99, a 19% increase from the same period in 2005.
The company’s net income for the quarter ended June 30, 2006 was $2.9 million, up 11%, from $2.7 million for the quarter ended June 30, 2005. Net income for the first six months of 2006 was $5.8 million, up 11% from $5.2 million for the same period in 2005.
“We are pleased with Northrim’s performance for the quarter and year to date,” said Marc Langland, Chairman, President, and CEO. “Our earnings growth has allowed us to increase our dividend by 14% to $0.125 per share, which provides a 2% annualized yield to our shareholders based on the recent stock price of $25 per share.”
Total assets at June 30, 2006 were $879 million, up 5% from $837 million at June 30, 2005. Total average assets for the quarter ended June 30, 2006, were $874 million, up 7% from $818 million for the like period ended June 30, 2005.
Total loans grew 4% to $728 million at June 30, 2006, compared to $700 million at June 30, 2005. Construction loans were the major component of loan growth, increasing $31 million to $140 million, or 28%, from June 30, 2005.
Total deposits increased 4% to $761 million at June 30, 2006, up from $732 million a year ago. Total average deposits for the quarter ended June 30, 2006, were $750 million, up 6% from $709 million for the same period ended June 30, 2005. The Alaska CD, a variable-rate savings account, again led deposit growth, increasing 28% to $203 million at June 30, 2006, from $159 million at June 30, 2005. Money market deposits at June 30, 2006 grew 18%, and interest-bearing demand deposits increased 13%, over the like period in 2005.
Net interest income, before the provision for loan losses, increased 8% to $11.5 million for the quarter ended June 30, 2006, from $10.7 million for the same period of 2005. Net interest income, as a percentage of average earning assets on a tax equivalent basis (net interest margin), for the second quarter of 2006 was 5.82%, an increase from 5.67% in the second quarter of 2005.
“Despite continued increases in short-term interest rates, Northrim’s net interest margin grew in the second quarter, primarily due to construction loan growth,” said Joe Schierhorn, Executive Vice President and Chief Financial Officer.
Interest expense on borrowings, which includes interest expense on our junior subordinated debentures, increased to $469,000 for the quarter ended June 30, 2006, from $220,000 for the quarter ended June 30, 2005, due in large part to the interest expense from the additional $10.6 million in junior subordinated debentures that the company acquired in December of 2005.
Total other operating income increased 83%, to $2.0 million, for the quarter ended June 30, 2006, from $1.1 million for the quarter ended June 30, 2005. Employee benefit plan income contributed $385,000 to other operating income for the quarter ended June 30, 2006 as the company began to realize a return on the initial investment that it made in Northrim Benefits Group in the first quarter of 2005. Purchased receivable income increased 144%, from $186,000 in the second quarter of 2005 to $453,000 for the second quarter of 2006. Equity in earnings from the company’s mortgage affiliate grew 80%, from $82,000 in the second quarter of 2005 to $148,000 for the second quarter of 2006, and other income grew 37%, from $347,000 in the second quarter of 2005 to $475,000 in the second quarter of 2006.
Total other operating expense was $7.7 million in the second quarter of 2006, an increase of 5% from $7.4 million in the same period in 2005. A portion of the increase in the salary and other personnel expense section of other operating expense in the second quarter of 2006 as compared to the second quarter of 2005 resulted from stock option expense of $53,000 as the company continued to expense stock options in 2006 as required under the provisions of Financial Accounting Standard Board Statement 123 R “Share-Based Payment.” The efficiency ratio improved to 56% for the quarter ended June 30, 2006, compared to 62% in the same period in 2005.
“We believe the company has done a good job at controlling costs as we have expanded our revenue sources and increased our net interest margin, which has helped us to improve our efficiency ratio,” said Chris Knudson, Chief Operating Officer.
Net loan charge-offs for the second quarter of 2006 were $149,000 versus net loan recoveries of $49,000 for the second quarter of 2005. For the first six months of 2006, net loan charge-offs were $39,000, compared to net loan recoveries of $18,000 for the same period in 2005. Non-performing assets totaled $6.5 million, or 0.74% of total assets, at June 30, 2006, as compared to non-performing assets of $6.8 million, or 0.81% of total assets, at June 30, 2005.
At June 30, 2006, the allowance for loan losses was $11.6 million, or 1.59% of portfolio loans and 177% of non-performing loans. A year ago, the allowance for loan losses was $10.9 million, or 1.56% of portfolio loans and 160% of non-performing loans. The provision for loan losses for the quarter and six month period ended June 30, 2006 was $860,000 and $914,000, respectively, as compared to $100,000 each, respectively, for the same periods in 2005. The provision for loan losses has increased due to loan growth and because the company had loan charge-offs for the quarter and six months ended June 30, 2006 compared to loan recoveries in the same periods in 2005.
In the second quarter of 2006, the company’s return on average assets (ROA) was 1.35%, compared to 1.30% in the same quarter a year ago. Return on average equity was 13.38% for the quarter ended June 30, 2006, compared to 12.36% for the quarter ended June 30, 2005. Tangible book value per share was $13.98 at June 30, 2006, an increase from $13.11 per share at June 30, 2005. Shareholders’ equity increased 3% to $88 million at June 30, 2006 compared to $86 million at June 30, 2005.
In September of 2002, the company instituted a stock repurchase program. In the three- and twelve-month periods ending June 30, 2006, the company repurchased none and 293,002 shares, respectively, under this program, which leaves a remaining balance of 59,713 shares available for repurchase by the company in the future. The company intends to continue to repurchase its common stock from time to time depending upon market conditions, but it can make no assurances that it will repurchase all of the shares authorized for repurchase under its stock repurchase program.
Northrim BanCorp, Inc. is the parent company of Northrim Bank, a full-service commercial bank that provides personal and business banking services through locations in Anchorage, Eagle River, Wasilla, and Fairbanks, Alaska, and an accounts receivable financing division in Washington. The bank differentiates itself with a “Customer First Service” philosophy. Affiliated companies include Elliott Cove Capital Management, LLC; Residential Mortgage, LLC; Northrim Benefits Group, LLC, and Pacific Wealth Advisors, LLC.
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. 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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2
Balance Sheet
(Dollars in thousands, except per share data)
June 30,
December 31,
June 30,
Annual
2006
2005
2005
% Change
(unaudited)
(unaudited)
(unaudited)
Assets:
Cash and due from banks
$
30,882
$
28,854
$
29,168
6
%
Overnight investments
6,810
60,836
8,392
-19
%
Portfolio investments
58,532
54,975
61,849
-5
%
Loans
728,088
705,059
699,663
4
%
Allowance for loan losses
(11,581
)
(10,706
)
(10,882
)
6
%
Net loans
716,507
694,353
688,781
4
%
Purchased receivables
20,854
12,198
8,661
141
%
Premises and equipment, net
11,618
10,603
10,950
6
%
Intangible assets
7,148
7,385
6,450
11
%
Other assets
26,946
26,376
22,314
21
%
Total assets
$
879,297
$
895,580
$
836,565
5
%
Liabilities and Shareholders’ Equity:
Demand deposits
$
191,537
$
196,616
$
191,953
0
%
Interest-bearing demand
74,818
75,988
66,288
13
%
Savings deposits
48,166
46,790
48,452
-1
%
Alaska CDs
203,388
197,989
158,627
28
%
Money market deposits
146,639
151,903
124,441
18
%
Time deposits
96,289
110,580
142,012
-32
%
Total deposits
760,837
779,866
731,773
4
%
Borrowings
6,234
8,415
5,761
8
%
Junior subordinated debentures
18,558
18,558
8,000
132
%
Other liabilities
5,266
4,267
5,009
5
%
Total liabilities
790,895
811,106
750,543
5
%
Minority interest in subsidiaries
25
0
0
n/a
Shareholders' equity
88,377
84,474
86,022
3
%
Total liabilities and equity
$
879,297
$
895,580
$
836,565
5
%
Average Quarter Balances — unaudited
Loans
$
725,776
$
713,849
$
691,815
5
%
Total earning assets
796,926
826,548
758,493
5
%
Total assets
873,654
899,476
818,493
7
%
Non-interest bearing deposits
176,480
192,006
176,679
0
%
Interest bearing deposits
573,867
598,898
532,116
8
%
Total deposits
750,347
790,904
708,795
6
%
Shareholders' equity
88,072
84,105
86,193
2
%
Average Year-to-date Balances — unaudited
Loans
$
717,263
$
698,240
$
687,413
4
%
Total earning assets
794,980
778,597
753,735
5
%
Total assets
868,148
842,407
811,526
7
%
Non-interest bearing deposits
176,466
182,535
176,320
0
%
Interest bearing deposits
570,988
550,782
523,997
9
%
Total deposits
747,454
733,317
700,317
7
%
Shareholders' equity
86,912
84,833
85,269
2
%
��
Income Statement
(Dollars in thousands, except per share data)
Quarter Ended June 30:
2006
2005
% Change
(unaudited)
(unaudited)
(unaudited)
Interest Income:
Interest and fees on loans
$16,288
$13,501
21
%
Interest on portfolio investments
597
544
10
%
Interest on overnight investments
78
33
136
%
Total interest income
16,963
14,078
20
%
Interest Expense:
Interest expense on deposits
4,968
3,183
56
%
Interest expense on borrowings
469
220
113
%
Total interest expense
5,437
3,403
60
%
Net interest income
11,526
10,675
8
%
Provision for loan losses
860
100
760
%
Net interest income after provision for loan losses
10,666
10,575
1
%
Other Operating Income:
Service charges on deposit accounts
490
450
9
%
Purchased receivable income
453
186
144
%
Employee benefit plan income
385
0
n/m
Equity in earnings from mortgage affiliate
148
82
80
%
Other income
475
347
37
%
Total other operating income
1,951
1,065
83
%
Other Operating Expense:
Salaries and other personnel expense
4,671
4,426
6
%
Occupancy, net
597
574
4
%
Equipment expense
357
349
2
%
Intangible asset amortization expense
120
92
30
%
Other expense
1,970
1,932
2
%
Total other operating expense
7,715
7,373
5
%
Income before income taxes and minority interest
4,902
4,267
15
%
Minority interest in subsidiaries
103
-
n/m
Pre tax income
4,799
4,267
12
%
Provision for income taxes
1,860
1,611
15
%
��
Net income
$
2,939
$
2,656
11
%
Basic EPS
$
0.50
$
0.44
14
%
Diluted EPS
$
0.50
$
0.42
19
%
Average basic shares
5,821,793
6,095,922
-4
%
Average diluted shares
5,907,153
6,278,673
-6
%
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Income Statement
(Dollars in thousands, except per share data)
Income Statement
(Dollars in thousands, except per share data)
Six Months Ended June 30:
2006
2005
% Change
Interest Income:
(unaudited)
(unaudited)
(unaudited)
Interest and fees on loans
$31,564
$26,226
20
%
Interest on portfolio investments
1,126
1,106
2
%
Interest on overnight investments
337
59
471
%
Total interest income
33,027
27,391
21
%
Interest Expense:
Interest expense on deposits
9,364
5,790
62
%
Interest expense on borrowings
838
443
89
%
Total interest expense
10,202
6,233
64
%
Net interest income
22,825
21,158
8
%
Provision for loan losses
914
100
814
%
Net interest income after provision for loan losses
21,911
21,058
4
%
Other Operating Income:
Service charges on deposit accounts
974
851
14
%
Purchased receivable income
766
347
121
%
Employee benefit plan income
558
0
n/m
Equity in earnings from mortgage affiliate
155
61
154
%
Other income
926
654
42
%
Total other operating income
3,379
1,913
77
%
Other Operating Expense:
Salaries and other personnel expense
9,436
8,784
7
%
Occupancy, net
1,238
1,141
9
%
Equipment expense
698
693
1
%
Intangible asset amortization expense
241
184
31
%
Other expense
4,066
3,701
10
%
Total other operating expense
15,679
14,503
8
%
Income before income taxes and minority interest
9,611
8,468
13
%
Minority interest in subsidiaries
148
-
n/m
Pre tax income
9,463
8,468
12
%
Provision for income taxes
3,629
3,232
12
%
Net income
$
5,834
$
5,236
11
%
Basic EPS
$
1.00
$
0.86
16
%
Diluted EPS
$
0.99
$
0.83
19
%
Average basic shares
5,823,577
6,097,797
-4
%
Average diluted shares
5,905,178
6,285,520
-6
%
Other Data
(Dollars in thousands, except per share data)
June 30,
December 31,
June 30,
2006
2005
2005
(unaudited)
(unaudited)
(unaudited)
Asset Quality:
Non accrual loans
$
4,686
$
5,090
$
5,706
Loans 90 days past due
1,846
981
1,095
Restructured loans
—
—
—
Total non-performing loans
6,532
6,071
6,801
Other real estate owned
—
105
—
Total non-performing assets
$
6,532
$
6,176
$
6,801
Non-performing loans / portfolio loans
0.90
%
0.86
%
0.97
%
Non-performing assets / assets
0.74
%
0.69
%
0.81
%
Allowance for loan losses / portfolio loans
1.59
%
1.52
%
1.56
%
Allowance / non-performing loans
177.30
%
176.35
%
160.01
%
Loan charge-offs, net for the quarter
$
149
$
1,184
($49
)
Loan charge-offs, net year-to-date
$
39
$
1,228
($18
)
Net loan charge-offs / average loans, annualized
0.01
%
0.18
%
-0.01
%
Other Data (At quarter end):
Book value per share
$
15.21
$
14.56
$
14.17
Tangible book value per share
$
13.98
$
13.28
$
13.11
Tier 1 / Risk Adjusted Assets
12.31
%
12.10
%
11.65
%
Total Capital / Risk Adjusted Assets
13.56
%
13.35
%
12.90
%
Tier 1 /Average Assets
11.59
%
10.81
%
10.80
%
Shares outstanding
5,811,379
5,803,487
6,071,237
Unrealized gain (loss) on AFS securities,
net of income taxes
($692
)
($489
)
($150
)
Other Data (For the quarter):
Net interest margin (tax equivalent)
5.82
%
5.59
%
5.67
%
Efficiency ratio*
56.36
%
55.82
%
62.02
%
Return on average assets
1.35
%
1.36
%
1.30
%
Return on average equity
13.38
%
14.59
%
12.36
%
Other Data (Year-to-date):
Net interest margin (tax equivalent)
5.81
%
5.66
%
5.68
%
Efficiency ratio*
58.91
%
59.72
%
62.06
%
Return on average assets
1.36
%
1.33
%
1.30
%
Return on average equity
13.54
%
13.17
%
12.38
%
*excludes intangible asset amortization expense
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