Northrim NewsExhibit 99.1
Headquarters: 3111 C Street, Anchorage, AK 99503
For Immediate Release
Date: Contact: Phone: | October 25, 2006 Joe Schierhorn, Chief Financial Officer (907) 261-3308 |
Northrim BanCorp, Inc. Reports Earnings per Share Up 27%,
Net Income Up 21% in the Third Quarter
ANCHORAGE, AK—October 25, 2006—Northrim BanCorp, Inc. (the “company”) (Nasdaq: NRIM) reported today that diluted earnings per share for the quarter ended September 30, 2006 were $0.56, up 27% from $0.44 per diluted share for the same quarter a year ago (restated to reflect a 5% stock dividend distributed to shareholders on September 1, 2006). For the nine-month period ended September 30, 2006, diluted earnings per share were $1.50, a 21% increase from diluted earnings per share of $1.24 for the same period in 2005.
The company’s net income for the quarter ended September 30, 2006 was $3.5 million, up 21%, from $2.8 million for the quarter ended September 30, 2005. Net income for the first nine months of 2006 was $9.3 million, up 15% from $8.1 million for the same period in 2005.
“We are very pleased with Northrim’s results for the quarter and year to date,” said Marc Langland, Chairman, President, and CEO. “Strength in our core banking services, and good results from our affiliates, continue to position the company for long-term growth and shareholder returns.”
Total assets at September 30, 2006 were $902 million, up 6% from $850 million at September 30, 2005. Total loans were down 2% to $698 million at September 30, 2006, compared to $711 million at September 30, 2005. Commercial real estate loans were the primary driver of this decline, as customers sought to refinance for longer terms at fixed rates.
Total deposits increased 4% to $777 million at September 30, 2006, up from $746 million a year ago. Lower-cost deposits, including demand deposits, interest-bearing demand deposits, and savings deposits, grew $30 million, or 10%, to $329 million at September 30, 2006, from $299 million at September 30, 2005. Higher-cost deposits, including Alaska CDs, money market deposits and time deposits, declined $161,000 over the same period to a total of $448 million at September 30, 2006.
Net interest income, before the provision for loan losses, increased 7% to $11.9 million for the quarter ended September 30, 2006, from $11.1 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 third quarter of 2006 was 5.79%, an increase from 5.68% in the third quarter of 2005.
“We’ve had good deposit growth with our High Performance Checking program, which has changed our mix of deposits to emphasize more low-cost deposits,” said Joe Schierhorn, CFO. “Segments of our loan portfolio have repriced to higher levels due to rising interest rates, and these two factors have led to an increase in our net interest margin.”
Interest expense on borrowings increased to $418,000 for the quarter ended September 30, 2006, from $199,000 for the quarter ended September 30, 2005, due in large part to the interest expense from the additional $10.6 million in junior subordinated debentures that the company issued in December of 2005.
Total other operating income increased 47%, to $2.2 million for the quarter ended September 30, 2006, from $1.5 million for the quarter ended September 30, 2005. Purchased receivable income increased 88%, to $579,000 in the third quarter of 2006, from $308,000 in the same period of 2005 due to a 92% increase in the volume of purchased receivables. Other income grew 25%, to $542,000 in the third quarter of 2006 from $435,000 in the third quarter of 2005, due to increases in electronic banking revenues and a decrease in the loss from the company’s affiliate, Elliott Cove Capital Management.
Employee benefit plan income from our affiliate, Northrim Benefits Group, contributed $271,000 to other operating income for the quarter ended September 30, 2006 and equity in earnings from the company’s mortgage affiliate, Residential Mortgage, grew 15%, to $317,000 for the third quarter of 2006, from $276,000 for the third quarter of 2005.
Total other operating expense increased just 1%, to $7.7 million for the quarter ended September 30, 2006, from $7.6 million for the quarter ended September 30, 2005. The efficiency ratio improved to 53% for the quarter ended September 30, 2006, compared to 59% in the same period in 2005.
“We are pleased that our strong income growth against a 1% increase in operating expenses improved our efficiency ratio to 53% for the quarter,” said Chris Knudson, Chief Operating Officer.
Net loan recoveries for the third quarter of 2006 were $215,000 versus net loan charge-offs of $62,000 for the third quarter of 2005. For the first nine months of 2006, net loan recoveries were $176,000, compared to net loan charge-offs of $44,000 for the same period in 2005. Non-performing assets totaled $8.3 million, or 0.93% of total assets, at September 30, 2006, as compared to non-performing assets of $5.9 million, or 0.69% of total assets, at September 30, 2005. The change in non-performing assets was caused in large part by an increase in loans 90 days past due to $2.8 million at September 30, 2006 from $446,000 at September 30, 2005.
At September 30, 2006, the allowance for loan losses was $12.6 million, or 1.81% of portfolio loans and 152% of non-performing loans. A year ago, the allowance for loan losses was $11.2 million, or 1.58% of portfolio loans and 192% of non-performing loans. The provision for loan losses for the quarter and six month period ended September 30, 2006 was $850,000 and $1.8 million, respectively, as compared to $428,000 and $528,000, respectively, for the same periods in 2005.
For the third quarter of 2006, the company’s return on average assets (ROA) was 1.52%, compared to 1.33% in the same quarter a year ago. Return on average equity was 15.02% for the quarter ended September 30, 2006, compared to 13.31% for the quarter ended September 30, 2005. Tangible book value per share was $13.95 at September 30, 2006, an increase from $12.50 per share at September 30, 2005. Shareholders’ equity increased 11% to $92 million at September 30, 2006 compared to $83 million at September 30, 2005.
Northrim BanCorp, Inc. is the parent company of Northrim Bank, a 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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Balance Sheet | ||||||||||||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||||||||||
September 30, | December 31, | September 30, | Annual | |||||||||||||||||||||
2006 | 2005 | 2005 | % Change | |||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Cash and due from banks | $ | 30,316 | $ | 28,854 | $ | 31,460 | -4 | % | ||||||||||||||||
Overnight investments | 39,778 | 60,836 | 7,330 | 443 | % | |||||||||||||||||||
Portfolio investments | 75,884 | 54,975 | 60,110 | 26 | % | |||||||||||||||||||
Loans | 698,076 | 705,059 | 710,944 | -2 | % | |||||||||||||||||||
Allowance for loan losses | (12,646 | ) | (10,706 | ) | (11,248 | ) | 12 | % | ||||||||||||||||
Net loans | 685,430 | 694,353 | 699,696 | -2 | % | |||||||||||||||||||
Purchased receivables | 20,215 | 12,198 | 10,532 | 92 | % | |||||||||||||||||||
Premises and equipment, net | 11,888 | 10,603 | 10,762 | 10 | % | |||||||||||||||||||
Intangible assets | 7,024 | 7,385 | 6,358 | 10 | % | |||||||||||||||||||
Other assets | 31,065 | 26,376 | 23,509 | 32 | % | |||||||||||||||||||
Total assets | $ | 901,600 | $ | 895,580 | $ | 849,757 | 6 | % | ||||||||||||||||
Liabilities and Shareholders’ Equity: | ||||||||||||||||||||||||
Demand deposits | $ | 196,466 | $ | 196,616 | $ | 180,832 | 9 | % | ||||||||||||||||
Interest-bearing demand | 83,178 | 75,988 | 69,465 | 20 | % | |||||||||||||||||||
Savings deposits | 49,436 | 46,790 | 48,415 | 2 | % | |||||||||||||||||||
Alaska CDs | 209,290 | 197,989 | 175,110 | 20 | % | |||||||||||||||||||
Money market deposits | 156,564 | 151,903 | 140,855 | 11 | % | |||||||||||||||||||
Time deposits | 81,853 | 110,580 | 131,581 | -38 | % | |||||||||||||||||||
Total deposits | 776,787 | 779,866 | 746,258 | 4 | % | |||||||||||||||||||
Borrowings | 5,767 | 8,415 | 7,622 | -24 | % | |||||||||||||||||||
Junior subordinated debentures | 18,558 | 18,558 | 8,000 | 132 | % | |||||||||||||||||||
Other liabilities | 8,218 | 4,267 | 4,879 | 68 | % | |||||||||||||||||||
Total liabilities | 809,330 | 811,106 | 766,759 | 6 | % | |||||||||||||||||||
Minority interest in subsidiaries | 27 | 0 | 0 | n/a | ||||||||||||||||||||
Shareholders' equity | 92,243 | 84,474 | 82,998 | 11 | % | |||||||||||||||||||
Total liabilities and equity | $ | 901,600 | $ | 895,580 | $ | 849,757 | 6 | % | ||||||||||||||||
Average Quarter Balances — unaudited | ||||||||||||||||||||||||
Loans | $ | 710,157 | $ | 713,849 | $ | 703,933 | 1 | % | ||||||||||||||||
Total earning assets | 821,660 | 826,548 | 779,557 | 5 | % | |||||||||||||||||||
Total assets | 900,562 | 899,476 | 846,092 | 6 | % | |||||||||||||||||||
Non-interest bearing deposits | 192,399 | 192,006 | 185,291 | 4 | % | |||||||||||||||||||
Interest bearing deposits | 585,758 | 598,898 | 555,361 | 5 | % | |||||||||||||||||||
Total deposits | 778,157 | 790,904 | 740,652 | 5 | % | |||||||||||||||||||
Shareholders' equity | 91,128 | 84,105 | 84,701 | 8 | % | |||||||||||||||||||
Average Year-to-date Balances — unaudited | ||||||||||||||||||||||||
Loans | $ | 714,978 | $ | 698,240 | $ | 692,980 | 3 | % | ||||||||||||||||
Total earning assets | 804,082 | 778,597 | 762,437 | 5 | % | |||||||||||||||||||
Total assets | 878,970 | 842,407 | 823,175 | 7 | % | |||||||||||||||||||
Non-interest bearing deposits | 181,835 | 182,535 | 179,343 | 1 | % | |||||||||||||||||||
Interest bearing deposits | 575,992 | 550,782 | 534,566 | 8 | % | |||||||||||||||||||
Total deposits | 757,827 | 733,317 | 713,909 | 6 | % | |||||||||||||||||||
Shareholders' equity | 88,330 | 84,833 | 85,078 | 4 | % |
Income Statement | ||||||||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||||||
Quarter Ended September 30: | ||||||||||||||||||||
2006 | 2005 | % Change | ||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||
Interest Income: | ||||||||||||||||||||
Interest and fees on loans | $ | 16,601 | $ | 14,364 | 16 | % | ||||||||||||||
Interest on portfolio investments | 725 | 567 | 28 | % | ||||||||||||||||
Interest on overnight investments | 515 | 116 | 344 | % | ||||||||||||||||
Total interest income | 17,841 | 15,047 | 19 | % | ||||||||||||||||
Interest Expense: | ||||||||||||||||||||
Interest expense on deposits | 5,486 | 3,711 | 48 | % | ||||||||||||||||
Interest expense on borrowings | 418 | 199 | 110 | % | ||||||||||||||||
Total interest expense | 5,904 | 3,910 | 51 | % | ||||||||||||||||
Net interest income | 11,937 | 11,137 | 7 | % | ||||||||||||||||
Provision for loan losses | 850 | 428 | 99 | % | ||||||||||||||||
Net interest income after provision for loan losses | 11,087 | 10,709 | 4 | % | ||||||||||||||||
Other Operating Income: | ||||||||||||||||||||
Service charges on deposit accounts | 494 | 475 | 4 | % | ||||||||||||||||
Purchased receivable income | 579 | 308 | 88 | % | ||||||||||||||||
Employee benefit plan income | 271 | 0 | n/m | |||||||||||||||||
Equity in earnings from mortgage affiliate | 317 | 276 | 15 | % | ||||||||||||||||
Other income | 542 | 435 | 25 | % | ||||||||||||||||
Total other operating income | 2,203 | 1,494 | 47 | % | ||||||||||||||||
Other Operating Expense: | ||||||||||||||||||||
Salaries and other personnel expense | 4,790 | 4,489 | 7 | % | ||||||||||||||||
Occupancy, net | 626 | 616 | 2 | % | ||||||||||||||||
Equipment expense | 325 | 332 | -2 | % | ||||||||||||||||
Intangible asset amortization expense | 121 | 92 | 32 | % | ||||||||||||||||
Other expense | 1,799 | 2,076 | -13 | % | ||||||||||||||||
Total other operating expense | 7,661 | 7,605 | 1 | % | ||||||||||||||||
Income before income taxes and minority interest | 5,629 | 4,598 | 22 | % | ||||||||||||||||
Minority interest in subsidiaries | 70 | - | n/m | |||||||||||||||||
Pre tax income | 5,559 | 4,598 | 21 | % | ||||||||||||||||
Provision for income taxes | 2,108 | 1,756 | 20 | % | ||||||||||||||||
Net income | $ | 3,451 | $ | 2,842 | 21 | % | ||||||||||||||
Basic EPS | $ | 0.56 | $ | 0.46 | 22 | % | ||||||||||||||
Diluted EPS | $ | 0.56 | $ | 0.44 | 27 | % | ||||||||||||||
Average basic shares | 6,122,657 | 6,215,672 | -1 | % | ||||||||||||||||
Average diluted shares | 6,209,633 | 6,401,606 | -3 | % |
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Income Statement | ||||||||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||||||
Nine Months Ended September 30: | ||||||||||||||||||||
2006 | 2005 | % Change | ||||||||||||||||||
Interest Income: | (unaudited) | (unaudited) | (unaudited) | |||||||||||||||||
Interest and fees on loans | $ | 48,165 | $ | 40,590 | 19 | % | ||||||||||||||
Interest on portfolio investments | 1,851 | 1,673 | 11 | % | ||||||||||||||||
Interest on overnight investments | 852 | 174 | 390 | % | ||||||||||||||||
Total interest income | 50,868 | 42,437 | 20 | % | ||||||||||||||||
Interest Expense: | ||||||||||||||||||||
Interest expense on deposits | 14,850 | 9,501 | 56 | % | ||||||||||||||||
Interest expense on borrowings | 1,256 | 641 | 96 | % | ||||||||||||||||
Total interest expense | 16,106 | 10,142 | 59 | % | ||||||||||||||||
Net interest income | 34,762 | 32,295 | 8 | % | ||||||||||||||||
Provision for loan losses | 1,764 | 528 | 234 | % | ||||||||||||||||
Net interest income after provision for loan losses | 32,998 | 31,767 | 4 | % | ||||||||||||||||
Other Operating Income: | ||||||||||||||||||||
Service charges on deposit accounts | 1,468 | 1,327 | 11 | % | ||||||||||||||||
Purchased receivable income | 1,345 | 654 | 106 | % | ||||||||||||||||
Employee benefit plan income | 829 | 0 | n/m | |||||||||||||||||
Equity in earnings from mortgage affiliate | 472 | 337 | 40 | % | ||||||||||||||||
Other income | 1,468 | 1,089 | 35 | % | ||||||||||||||||
Total other operating income | 5,582 | 3,407 | 64 | % | ||||||||||||||||
Other Operating Expense: | ||||||||||||||||||||
Salaries and other personnel expense | 14,226 | 13,273 | 7 | % | ||||||||||||||||
Occupancy, net | 1,864 | 1,757 | 6 | % | ||||||||||||||||
Equipment expense | 1,023 | 1,025 | 0 | % | ||||||||||||||||
Intangible asset amortization expense | 362 | 276 | 31 | % | ||||||||||||||||
Other expense | 5,865 | 5,776 | 2 | % | ||||||||||||||||
Total other operating expense | 23,340 | 22,107 | 6 | % | ||||||||||||||||
Income before income taxes and minority interest | 15,240 | 13,067 | 17 | % | ||||||||||||||||
Minority interest in subsidiaries | 218 | - | n/m | |||||||||||||||||
Pre tax income | 15,022 | 13,067 | 15 | % | ||||||||||||||||
Provision for income taxes | 5,737 | 4,989 | 15 | % | ||||||||||||||||
Net income | $ | 9,285 | $ | 8,078 | 15 | % | ||||||||||||||
Basic EPS | $ | 1.52 | $ | 1.28 | 19 | % | ||||||||||||||
Diluted EPS | $ | 1.50 | $ | 1.24 | 21 | % | ||||||||||||||
Average basic shares | 6,114,898 | 6,330,847 | -3 | % | ||||||||||||||||
Average diluted shares | 6,198,324 | 6,517,951 | -5 | % |
S.CONTOther Data | ||||||||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||||||
September 30, | December 31, | September 30, | ||||||||||||||||||
2006 | 2005 | 2005 | ||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||
Asset Quality: | ||||||||||||||||||||
Non accrual loans | $ | 5,532 | $ | 5,090 | $ | 5,407 | ||||||||||||||
Loans 90 days past due | 2,811 | 981 | 446 | |||||||||||||||||
Restructured loans | — | — | — | |||||||||||||||||
Total non-performing loans | 8,343 | 6,071 | 5,853 | |||||||||||||||||
Other real estate owned | — | 105 | — | |||||||||||||||||
Total non-performing assets | $ | 8,343 | $ | 6,176 | $ | 5,853 | ||||||||||||||
Non-performing loans / portfolio loans | 1.20 | % | 0.86 | % | 0.82 | % | ||||||||||||||
Non-performing assets / assets | 0.93 | % | 0.69 | % | 0.69 | % | ||||||||||||||
Allowance for loan losses / portfolio loans | 1.81 | % | 1.52 | % | 1.58 | % | ||||||||||||||
Allowance / non-performing loans | 151.58 | % | 176.35 | % | 192.17 | % | ||||||||||||||
Loan (recoveries) charge-offs, net for the quarter | ($215 | ) | $ | 1,184 | $ | 62 | ||||||||||||||
Loan (recoveries) charge-offs, net year-to-date | ($176 | ) | $ | 1,228 | $ | 44 | ||||||||||||||
Net loan (recoveries) charge-offs / average loans, annualized | (0.03 | %) | 0.18 | % | 0.01 | % | ||||||||||||||
Other Data (At quarter end): | ||||||||||||||||||||
Book value per share | $ | 15.10 | $ | 13.86 | $ | 13.54 | ||||||||||||||
Tangible book value per share | $ | 13.95 | $ | 12.65 | $ | 12.50 | ||||||||||||||
Tier 1 / Risk Adjusted Assets | 12.84 | % | 12.10 | % | 10.91 | % | ||||||||||||||
Total Capital / Risk Adjusted Assets | 14.09 | % | 13.35 | % | 12.16 | % | ||||||||||||||
Tier 1 /Average Assets | 11.57 | % | 10.81 | % | 10.12 | % | ||||||||||||||
Shares outstanding | 6,109,426 | 6,094,214 | 6,130,992 | |||||||||||||||||
Unrealized gain (loss) on AFS securities, | ||||||||||||||||||||
net of income taxes | ($341 | ) | ($489 | ) | ($408 | ) | ||||||||||||||
Other Data (For the quarter): | ||||||||||||||||||||
Net interest margin (tax equivalent) | 5.79 | % | 5.59 | % | 5.68 | % | ||||||||||||||
Efficiency ratio* | 53.32 | % | 55.82 | % | 59.48 | % | ||||||||||||||
Return on average assets | 1.52 | % | 1.36 | % | 1.33 | % | ||||||||||||||
Return on average equity | 15.02 | % | 14.59 | % | 13.31 | % | ||||||||||||||
Other Data (Year-to-date): | ||||||||||||||||||||
Net interest margin (tax equivalent) | 5.81 | % | 5.66 | % | 5.68 | % | ||||||||||||||
Efficiency ratio* | 56.96 | % | 59.72 | % | 61.15 | % | ||||||||||||||
Return on average assets | 1.41 | % | 1.33 | % | 1.31 | % | ||||||||||||||
Return on average equity | 14.05 | % | 13.17 | % | 12.69 | % | ||||||||||||||
*excludes intangible asset amortization expense |
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