Northrim BanCorp 8K Reports Earnings per Share Up 20%, Net Income Up 19% in the Fourth Quarter | NRIM 24 Jan 07

Northrim NewsExhibit 99.1
Headquarters: 3111 C Street, Anchorage, AK 99503
For Immediate Release


Date: Contact: Phone:		January 24, 2007 Joe Schierhorn, Chief Financial Officer (907) 261-3308

Northrim BanCorp, Inc. Reports Earnings per Share Up 20%,
Net Income Up 19% in the Fourth Quarter

ANCHORAGE, AK—January 24, 2007—Northrim BanCorp, Inc. (the “company”) (Nasdaq: NRIM) reported today that diluted earnings per share for the quarter ended December 31, 2006 were $0.59, up 20%, from $0.49 per diluted share for the same quarter a year ago (adjusted to reflect a 5% stock dividend distributed to shareholders on September 1, 2006). For the year ended December 31, 2006, diluted earnings per share were $2.09, a 22% increase from diluted earnings per share of $1.72 for the year ended 2005.

The company’s net income for the quarter ended December 31, 2006 was $3.7 million, up 19% from $3.1 million for the quarter ended December 31, 2005. Net income for the year ended December 31, 2006 was $13 million, up 16% from $11.2 million for the year ended December 31, 2005.

“We are pleased with the strength of our operations,” said Marc Langland, Chairman, President, and CEO.“Growth from our core banking services along with improved results from our affiliates increased our profitability.”

Total assets at December 31, 2006 were $926 million, up 3% from $896 million at December 31, 2005. Total average assets for the year ended December 31, 2006, were $889 million, up 5% from $842 million, for the year ended December 31, 2005. Assets from purchased receivables increased 74%, to $21.2 million as compared to $12.2 million at December 31, 2005.

Total loans were up 2% to $717 million at December 31, 2006, compared to $705 million at December 31, 2005. Construction and consumer loans provided the loan growth, with construction loans increasing $21.5 million, or 16% to $153 million, and consumer loans increasing $5.6 million, or 15% to $42 million, respectively. On the other hand, commercial real estate loans decreased $14.8 million, or 6%, from $252.4 million at December 31, 2005 to $238 million at December 31, 2006. “Despite declines in commercial real estate loans due to refinance activity, we built on our strong base in residential construction lending and extended our customer base by increasing our consumer loans,” said Joe Beedle, Executive Vice President and Chief Lending Officer.

Total deposits increased 2% to $795 million at December 31, 2006, up from $780 million a year ago. Total average deposits for the period ended December 31, 2006 were $766 million, up 4% from $733 million, for the period ended December 31, 2005. The Company’s lower cost deposits, including demand, interest-bearing demand, and savings deposits, increased 8% to $344 million at December 31, 2006, from $319 million at December 31, 2005. In contrast, the Company’s higher cost deposits, including the Alaska CDs, money market, and time deposits, declined by 2% to $451 million at December 31, 2006, from $460 million at December 31, 2005.

Net interest income, before the provision for loan losses, was up 10%, from $11.6 million for the quarter ended December 31, 2005, to $12.8 million, for the quarter ended December 31, 2006, and 8% for the year ended December 31, 2006 to $47.6 million, from $43.9 million for the year ended December 31, 2005. Net interest income, as a percentage of average earning assets on a tax equivalent basis (net interest margin), for 2006 was 5.89%, an increase from 5.66% for the like period in 2005. “We continued to expand our deposit base with our High Performance Checking program which allowed us to keep our cost of funds down and helped to increase our interest margin,” said Joe Schierhorn, CFO.

Total other operating income increased 46%, to $2.1 million for the quarter ended December 31, 2006, from $1.4 million for the quarter ended December 31, 2005. Deposit service charge income was up 7% for the quarter ended December 31, 2006, from $474,000 to $507,000 due to an increase in the number of consumer deposit accounts. Purchased receivable income increased 50%, to $510,000 in the fourth quarter of 2006, from $339,000 in the same period of 2005 due to the increase in the volume of purchased receivables. Other income grew 31%, to $598,000 in the fourth quarter of 2006 from $457,000 in the fourth quarter of 2005, due to increases in revenues from electronic banking and merchant services, and decreased losses from the company’s affiliate, Elliot Cove Capital Management. Employee benefit plan income from our affiliate, Northrim Benefits Group, also contributed $284,000 to other operating income for the quarter ended December 31, 2006.

Total other operating expense increased 9%, to $8 million for the quarter ended December 31, 2006, from $7.4 million for the quarter ended December 31, 2005, primarily driven by increases in salaries and other personnel expense. The efficiency ratio improved to 53% for the quarter ended December 31, 2006, compared to 56% in the same period in 2005.

“We are pleased that the growth rate of our revenues exceeded that of our expenses and resulted in an improved efficiency ratio of 53% for the quarter,” said Chris Knudson, Chief Operating Officer.

At December 31, 2006, the allowance for loan losses was $12.1 million, or 1.69% of portfolio loans and 183% of non-performing loans. A year ago, the allowance for loan losses was $10.7 million, or 1.52% of portfolio loans and 176% of non-performing loans. The provision for loan losses for the quarter and 12-month period ended December 31, 2006, was $800,000 and $2.6 million, respectively, as compared to $642,000 and $1.2 million, for the same periods in 2005.

Net loan charge-offs for 2006 were $1.1 million, or 0.16% of average loans, as compared to $1.2 million, or 0.18% of average loans for 2005. Non-performing assets totaled $7.3 million, or 0.79% of total assets, at December 31, 2006, as compared to non-performing assets of $6.2 million, or 0.69% of total assets, at December 31, 2005. The change in non-performing assets was caused in large part by an increase in restructured loans to $748,000 at December 31, 2006, as compared to a zero balance for these loans at December 31, 2005.

For the fourth quarter of 2006, the company’s return on average assets (ROA) was 1.60%, compared to 1.36% in the same quarter a year ago. ROA was 1.46% for the full year of 2006 compared to an ROA of 1.33% in 2005. Return on average equity was 15.55% for the fourth quarter of 2006 and 14.45% for the year, compared to 14.59% and 13.17%, respectively, in 2005.

Tangible book value per share was $14.48 at December 31, 2006, an increase of 14% from $12.65 per share at December 31, 2005. Shareholders’ equity increased 13% to $95 million at December 31, 2006, as compared to $84 million at December 31, 2005. “Our strong earnings allowed us to increase our cash dividend by 14% during the year,” said Marc Langland. “In 2006 we also paid a 5% stock dividend to our shareholders.”

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.


Balance Sheet
(Dollars in thousands, except per share data)
December 31,				December 31,			Annual
		2006			2005		% Change

(unaudited)				(unaudited)			(unaudited)
Assets:
Cash and due from banks	$	25,565		$	28,854			-11	%
Overnight investments		18,717			60,836			-69	%
Portfolio investments		100,325			54,975			82	%
Loans		717,056			705,059			2	%
Allowance for loan losses		(12,125	)		(10,706	)		13	%

Net loans		704,931			694,353			2	%
Purchased receivables		21,183			12,198			74	%
Premises and equipment, net		12,874			10,603			21	%
Intangible assets		6,903			7,385			-7	%
Other assets		35,122			26,376			33	%
Total assets	$	925,620		$	895,580			3	%

Liabilities and Shareholders’ Equity:
Demand deposits	$	206,343		$	196,616			5	%
Interest-bearing demand		89,476			75,988			18	%
Savings deposits		48,330			46,790			3	%
Alaska CDs		207,492			197,989			5	%
Money market deposits		157,345			151,903			4	%
Time deposits		85,918			110,580			-22	%

Total deposits		794,904			779,866			2	%
Borrowings		6,502			8,415			-23	%
Junior subordinated debentures		18,558			18,558			0	%
Other liabilities		10,209			4,267			139	%

Total liabilities		830,173			811,106			2	%
Minority interest in subsidiaries		29			0			n/a
Shareholders' equity		95,418			84,474			13	%
Total liabilities and equity	$	925,620		$	895,580			3	%

Average Quarter Balances — unaudited
Loans	$	703,678		$	713,849			-1	%
Total earning assets		831,314			826,548			1	%
Total assets		917,559			899,476			2	%
Non-interest bearing deposits		198,193			192,006			3	%
Interest bearing deposits		590,184			598,898			-1	%
Total deposits		788,377			790,904			0	%
Shareholders' equity		94,149			84,105			12	%
Average Year-to-date Balances — unaudited
Loans	$	712,130		$	698,240			2	%
Total earning assets		810,946			778,597			4	%
Total assets		888,697			842,407			5	%
Non-interest bearing deposits		185,959			182,535			2	%
Interest bearing deposits		579,569			550,782			5	%
Total deposits		765,528			733,317			4	%
Shareholders' equity		89,797			84,833			6	%


Income Statement
(Dollars in thousands, except per share data)
	Quarter Ended December 31:

		2006		2005	% Change

(unaudited)			(unaudited)		(unaudited)

Interest Income:

Interest and fees on loans	$	17,182	$	15,281		12	%

Interest on portfolio investments		948		529		79	%

Interest on overnight investments		523		534		-2	%

Total interest income		18,653		16,344		14	%

Interest Expense:

Interest expense on deposits		5,468		4,489		22	%

Interest expense on borrowings		425		241		76	%

Total interest expense		5,893		4,730		25	%

Net interest income		12,760		11,614		10	%

Provision for loan losses		800		642		25	%

Net interest income after provision for loan losses		11,960		10,972		9	%

Other Operating Income:

Service charges on deposit accounts		507		474		7	%

Purchased receivable income		510		339		50	%

Employee benefit plan income		284		0		n/m

Equity in earnings from mortgage affiliate		177		156		13	%

Other income		598		457		31	%

Total other operating income		2,076		1,426		46	%

Other Operating Expense:

Salaries and other personnel expense		5,051		4,383		15	%

Occupancy, net		639		660		-3	%

Equipment expense		327		346		-5	%

Intangible asset amortization expense		120		92		30	%

Other expense		1,891		1,890		0	%

Total other operating expense		8,028		7,371		9	%

Income before income taxes and minority interest		6,008		5,027		20	%

Minority interest in subsidiaries		78		-		n/m

Pre tax income		5,930		5,027		18	%

Provision for income taxes		2,241		1,935		16	%

Net income	$	3,689	$	3,092		19	%

Basic EPS	$	0.60	$	0.51		18	%

Diluted EPS	$	0.59	$	0.49		20	%

Average basic shares		6,135,314		6,121,782		0	%

Average diluted shares		6,228,333		6,312,402		-1	%


Income Statement
(Dollars in thousands, except per share data)
			Twelve Months Ended December 31:

				2006		2005	% Change

Interest Income:			(unaudited)		(unaudited)		(unaudited)

	Interest and fees on loans		$	65,347	$	55,870		17	%

	Interest on portfolio investments			2,799		2,202		27	%

	Interest on overnight investments			1,375		709		94	%

		Total interest income		69,521		58,781		18	%

Interest Expense:

	Interest expense on deposits			20,318		13,990		45	%

	Interest expense on borrowings			1,681		883		90	%

		Total interest expense		21,999		14,873		48	%

		Net interest income		47,522		43,908		8	%

Provision for loan losses				2,564		1,170		119	%

		Net interest income after provision for loan losses		44,958		42,738		5	%

Other Operating Income:

	Service charges on deposit accounts			1,975		1,800		10	%

	Purchased receivable income			1,855		993		87	%

	Employee benefit plan income			1,113		0		n/m

	Equity in earnings from mortgage affiliate			649		493		32	%

	Other income			2,066		1,547		34	%

		Total other operating income		7,658		4,833		58	%

Other Operating Expense:

	Salaries and other personnel expense			19,277		17,656		9	%

	Occupancy, net			2,503		2,417		4	%

	Equipment expense			1,350		1,371		-2	%

	Intangible asset amortization expense			482		368		31	%

	Other expense			7,756		7,665		1	%

		Total other operating expense		31,368		29,477		6	%

		Income before income taxes and minority interest		21,248		18,094		17	%

Minority interest in subsidiaries				296		-		n/m

		Pre tax income		20,952		18,094		16	%

Provision for income taxes				7,978		6,924		15	%

		Net income	$	12,974	$	11,170		16	%

		Basic EPS	$	2.12	$	1.78		19	%

		Diluted EPS	$	2.09	$	1.72		22	%

		Average basic shares		6,120,002		6,286,774		-3	%

		Average diluted shares		6,205,826		6,481,794		-4	%


S.CONTOther Data
(Dollars in thousands, except per share data)
December 31,				December 31,
		2006			2005

(unaudited)				(unaudited)
Asset Quality:
Non accrual loans	$	5,176		$	5,090
Loans 90 days past due		708			981
Restructured loans		748			—

Total non-performing loans		6,632			6,071
Other real estate owned		717			105
Total non-performing assets	$	7,349		$	6,176

Non-performing loans / portfolio loans		0.92	%		0.86	%
Non-performing assets / assets		0.79	%		0.69	%
Allowance for loan losses / portfolio loans		1.69	%		1.52	%
Allowance / non-performing loans		182.83	%		176.35	%
Loan (recoveries) charge-offs, net for the quarter	$	1,322		$	1,184
Loan (recoveries) charge-offs, net year-to-date	$	1,145		$	1,228
Net loan (recoveries) charge-offs / average loans, annualized		0.16	%		0.18	%
Other Data (At quarter end):
Book value per share	$	15.61		$	13.86
Tangible book value per share	$	14.48		$	12.65
Tier 1 / Risk Adjusted Assets		12.95	%		12.10	%
Total Capital / Risk Adjusted Assets		14.21	%		13.35	%
Tier 1 /Average Assets		11.71	%		10.81	%
Shares outstanding		6,114,247			6,094,214
Unrealized gain (loss) on AFS securities,
net of income taxes		($287	)		($489	)
Other Data (For the quarter):
Net interest margin (tax equivalent)		6.11	%		5.59	%
Efficiency ratio*		53.30	%		55.82	%
Return on average assets		1.60	%		1.36	%
Return on average equity		15.55	%		14.59	%
Other Data (Year-to-date):
Net interest margin (tax equivalent)		5.89	%		5.66	%
Efficiency ratio*		55.97	%		59.72	%
Return on average assets		1.46	%		1.33	%
Return on average equity		14.45	%		13.17	%
*excludes intangible asset amortization expense

Northrim BanCorp (NRIM) 8-KNorthrim BanCorp, Inc. Reports Earnings per Share Up 20%, Net Income Up 19% in the Fourth Quarter