Northrim BanCorp Reports First Quarter Profits of $2.7 Million, or $0.44 Per Share
ANCHORAGE, AK—April 25, 2007—Northrim BanCorp, Inc. (NASDAQ: NRIM) today reported first quarter profits were short of last year’s first quarter level with an improved net interest margin and solid contributions from affiliate companies. First quarter net income was $2.7 million, or $0.44 per diluted share, compared to $2.9 million, or $0.47 per diluted share, in the first quarter of 2006. All per share results reflect the 5% stock dividend distributed to shareholders September 1, 2006.
“Residential real estate developers experienced slower sales during the winter and general business activity was also seasonally slow during the first quarter. This seasonality impacts all of our financial results, including profitability ratios, deposit and loan portfolio growth and asset quality,” said Marc Langland, Chairman, President, and CEO.
“Overall, the economy in our market areas has been relatively stable with unemployment down to 6.1% from 6.9% a year ago,” Langland continued. “According to the Alaska Department of Labor, statewide employment growth produced about 4,500 new jobs over the past year. Anchorage, our primary market, absorbed much of the growth, with its employment rising by approximately 2,500 new positions last year. Strong energy prices have fueled growth in the oil and gas market, bringing new exploration and production activity from both smaller independents and Shell Oil, and contributing to the State of Alaska budget surplus. The replacement of the network of gathering lines that feed the Trans Alaska Pipeline is also a new source of employment in the state.”
FINANCIAL HIGHLIGHTS(at or for the three-month periods ended March 31, 2007, compared to March 31, 2006)
•
Net interest margin was 6.04% up 24 basis points from the first quarter a year ago.
•
Revenues grew 8% to $13.8 million.
•
Book value per share grew 12% to $15.82 and tangible book value grew 14% to $14.71 per share.
•
Northrim declared a $0.15 per share cash dividend, representing a 20% increase from the prior dividend and a 14% compounded annual growth rate since the company initiated dividend payments in 1995.
•
New checking accounts are growing as a result of the June 2005 introduction of our High Performance Checking (HPC) program for consumers, which helped boost demand deposits 5% and interest bearing demand deposits 10%.
•
The recent introduction of High Performance Checking for businesses will target new business deposits in 2007.
REVIEW OF OPERATIONS Revenue (net interest income plus noninterest income) grew 8% to $13.8 million in the first quarter of 2007, compared to $12.7 million in the first quarter of 2006. Net interest income before the provision for loan losses grew 7% to $12.1 million in the first quarter from $11.3 million in the same quarter a year ago. Net interest margin (net interest income as a percentage of average earning assets on a tax equivalent basis) was 6.04% in the first quarter of 2007, compared to 5.80% in the first quarter a year ago. “Yields on earning assets outpaced the growth in funding costs primarily due to the success of our High Performance Checking program. In addition, net recoveries of $160,000 in interest from non-accrual loans contributed to year-over-year margin growth,” said Joe Schierhorn, CFO.
Net interest income after the $455,000 provision for loan losses during the first quarter was $11.6 million, compared to $11.2 million a year ago.
Noninterest income increased 16% to $1.7 million, with contributions from affiliate services generating more than 40% of Northrim’s noninterest income. Purchased receivable income grew 36% to $427,000 and employee benefit plan income increased 49% to $257,000. ”The addition of these two complementary business services to our core banking business has been well received by our customers, and we believe that there are further opportunities for us to expand our fee-based business,” said Chris Knudson, Chief Operating Officer.
Operating expenses rose 12% in the first quarter of 2007 with compensation, internet banking and training costs accounting for the majority of the increase. In addition, the company incurred a $245,000 loss on one of its purchased receivable accounts, which was included in other expenses. Noninterest expense in the first quarter of 2007 was $8.9 million compared to $8.0 million in the first quarter a year ago. “Our operating costs reflect the investments we are making in building our management team and establishing a sales culture across our organization,” said Knudson. “Looking ahead, we are planning to relocate one of our Anchorage branches, and are looking at other expansion opportunities including a potential new branch in Fairbanks. We believe these investments in our franchise will be profitable in the long-term, although they will increase costs up front.” The efficiency ratio during the first quarter of 2007 was 64.01%, compared to 61.62% a year ago. The efficiency ratio, calculated by dividing noninterest expense, excluding intangible asset amortization expense, by net interest income and noninterest income, measures overhead costs as a percentage of total revenues.
BALANCE SHEET PERFORMANCE
Total assets continued to grow, reaching $911 million at March 31, 2007, compared to $867 million a year ago, with portfolio investments up 33% and purchased receivables up 27%.
The loan portfolio grew 1% to $720 million at March 31, 2007, from $716 million at March 31, 2006. Commercial loans, which account for 42% of the portfolio, posted modest growth and commercial real estate loans, which account for 33% of the portfolio, declined by 3 % from a year ago due to continued refinance activity. Consumer loans, which account for 6% of the portfolio, grew 17% compared to a year ago, as a result of the growth in consumer accounts from the HPC program.
Asset quality declined during the quarter as two large lending relationships moved into the 90-days past due category, bringing total nonperforming assets to 1.21% of total assets at March 31, 2007 as compared to 0.74% a year ago. “The seasonal nature of the Alaska economy was a contributing factor to the portfolio performance, and this winter was more difficult than last winter in terms of the real estate market. We are working with our borrowers to resolve these issues in a timely way,” said Joe Beedle, Executive Vice President and Chief Lending Officer. “We are well-secured on these nonperforming loans and believe the resolution process will yield positive results. We manage the risk associated with our market by maintaining solid reserves, utilizing our experienced management team, and quickly responding to potential problems.”
Nonperforming loans grew to $10.2 million or 1.42% of total loans, from $6.4 million, or 0.89% of total loans a year ago. At the end of the first quarter, nonperforming assets totaled $11.0 million, compared to $6.4 million, or 0.74% of assets at March 31, 2006. The allowance for loan losses increased to $11.9 million, or 1.65% of gross loans at quarter end, compared to $10.9 million, or 1.52% of gross loans, at March 31, 2006. Net charge-offs in the quarter were 41 basis points as a percentage of total loans , compared to recoveries of 6 basis points a year ago.
Total deposits increased 3% to $775 million at March 31, 2007, compared to $751 million a year earlier. Strong growth in money market balances and interest bearing demand deposits contributed to moderate growth in overall deposits. “Our High Performance Checking program helped build consumer accounts, contributing to a 5% increase in demand deposits, which were $185 million at quarter-end, versus $175 million a year ago. With the launch of HPC for businesses, we anticipate further growth in demand deposits,” said Knudson. Time deposits fell 1% and the Alaska CD balances dropped 6%.
Shareholders’ equity increased 13% to $97 million, or $15.82 per share, at March 31, 2007, compared to $86 million, or $14.11 per share, at March 31, 2006. Tangible book value per share at quarter-end was $14.71 compared to $12.91 a year earlier. All per share calculations reflect the 5% stock dividend paid on September 1, 2006.
Northrim BanCorp will hold its annual meeting on May 3 at 9:00 a.m. (AKDT) at the Hilton Anchorage Hotel. Shareholders, customers and interested investors are welcome to attend. For more information visit the company’s website at www.northrim.com.
About Northrim BanCorp
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 asset based lending 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.
1
Income Statement
(Dollars in thousands, except per share data)
Quarter Ended March 31:
2007
2006
% Change
(unaudited)
(unaudited)
(unaudited)
Interest Income:
Interest and fees on loans
$
16,821
$
15,276
10
%
Interest on portfolio investments
1,007
529
90
%
Interest on overnight investments
154
259
-41
%
Total interest income
17,982
16,064
12
%
Interest Expense:
Interest expense on deposits
5,429
4,396
23
%
Interest expense on borrowings
450
369
22
%
Total interest expense
5,879
4,765
23
%
Net interest income
12,103
11,299
7
%
Provision for loan losses
455
54
743
%
Net interest income after provision for loan losses
11,648
11,245
4
%
Other Operating Income:
Service charges on deposit accounts
504
484
4
%
Purchased receivable income
427
313
36
%
Employee benefit plan income
257
173
49
%
Equity in earnings from mortgage affiliate
14
7
100
%
Other income
460
451
2
%
Total other operating income
1,662
1,428
16
%
Other Operating Expense:
Salaries and other personnel expense
5,255
4,765
10
%
Occupancy, net
698
641
9
%
Equipment expense
342
341
0
%
Intangible asset amortization expense
121
121
0
%
Other expense
2,516
2,096
20
%
Total other operating expense
8,932
7,964
12
%
Income before income taxes and minority interest
4,378
4,709
-7
%
Minority interest in subsidiaries
50
45
11
%
Pre tax income
4,328
4,664
-7
%
Provision for income taxes
1,599
1,769
-10
%
Net income
$
2,729
$
2,895
-6
%
Basic EPS
$
0.44
$
0.47
-7
%
Diluted EPS
$
0.44
$
0.47
-6
%
Average basic shares
6,144,114
6,109,522
1
%
Average diluted shares
6,244,364
6,187,370
1
%
2
Balance Sheet
(Dollars in thousands, except per share data)
March 31,
December 31,
March 31,
Annual
2007
2006
2006
% Change
(unaudited)
(unaudited)
(unaudited)
Assets:
Cash and due from banks
$
20,658
$
25,565
$
24,792
-17
%
Overnight investments
21,937
18,717
12,400
77
%
Portfolio investments
84,498
100,325
63,681
33
%
Loans:
Commercial loans
300,804
287,155
296,384
1
%
Commercial real estate
234,769
237,599
242,005
-3
%
Construction loans
144,024
153,059
143,955
0
%
Consumer loans
42,772
42,140
36,410
17
%
Other loans
364
126
350
4
%
Unearned loan fees
(2,589
)
(3,023
)
(3,018
)
-14
%
Total loans
720,144
717,056
716,086
1
%
Allowance for loan losses
(11,853
)
(12,125
)
(10,870
)
9
%
Net loans
708,291
704,931
705,216
0
%
Purchased receivables, net
20,365
21,183
16,044
27
%
Premises and equipment, net
12,834
12,874
10,593
21
%
Intangible assets
6,783
6,903
7,296
-7
%
Other assets
35,799
35,122
26,622
34
%
Total assets
$
911,165
$
925,620
$
866,644
5
%
Liabilities and Shareholders’ Equity:
Demand deposits
$
184,653
$
206,343
$
175,319
5
%
Interest-bearing demand
83,194
89,476
75,723
10
%
Savings deposits
47,856
48,330
49,606
-4
%
Alaska CDs
194,952
207,492
208,414
-6
%
Money market deposits
168,867
157,345
144,781
17
%
Time deposits
95,915
85,918
96,658
-1
%
Total deposits
775,437
794,904
750,501
3
%
Borrowings
8,602
6,502
5,488
57
%
Junior subordinated debentures
18,558
18,558
18,558
0
%
Other liabilities
11,802
10,209
6,209
90
%
Total liabilities
814,399
830,173
780,756
4
%
Minority interest in subsidiaries
18
29
23
-22
%
Shareholders' equity
96,748
95,418
85,865
13
%
Total liabilities and equity
$
911,165
$
925,620
$
866,644
5
%
Other Data
(Dollars in thousands, except per share data)
March 31,
December 31,
March 31,
2007
2006
2006
(unaudited)
(unaudited)
(unaudited)
Asset Quality:
Non accrual loans
$
6,435
$
5,176
$
4,980
Loans 90 days past due
3,679
708
1,396
Restructured loans
78
748
—
Total non-performing loans
10,192
6,632
6,376
Other real estate owned
829
717
—
Total non-performing assets
$
11,021
$
7,349
$
6,376
Non-performing loans / portfolio loans
1.42
%
0.92
%
0.89
%
Non-performing assets / assets
1.21
%
0.79
%
0.74
%
Allowance for loan losses / portfolio loans
1.65
%
1.69
%
1.52
%
Allowance / non-performing loans
116.30
%
182.83
%
170.48
%
Loan (recoveries) charge-offs, net for the quarter
$
727
$
1,322
($111
)
Net loan (recoveries) charge-offs / average loans, annualized
0.41
%
0.16
%
-0.06
%
Capital Data (At quarter end):
Book value per share
$
15.82
$
15.61
$
14.11
Tangible book value per share
$
14.71
$
14.48
$
12.91
Tier 1 / Risk Adjusted Assets
13.29
%
12.95
%
12.08
%
Total Capital / Risk Adjusted Assets
14.54
%
14.21
%
13.33
%
Tier 1 /Average Assets
12.08
%
11.71
%
11.35
%
Shares outstanding
6,116,729
6,114,247
6,084,188
Unrealized gain (loss) on AFS securities, net of income taxes
($173
)
($287
)
($600
)
Profitability Ratios (For the quarter):
Net interest margin (tax equivalent)
6.04
%
6.11
%
5.80
%
Efficiency ratio*
64.01
%
53.30
%
61.62
%
Return on average assets
1.23
%
1.60
%
1.36
%
Return on average equity
11.47
%
15.55
%
13.69
%
*excludes intangible asset amortization expense
3
Average Balances
(Dollars in thousands, except per share data)
March 31,
December 31,
March 31,
Annual
2007
2006
2006
% Change
(unaudited)
(unaudited)
(unaudited)
Average Quarter Balances
Loans
$
715,417
$
703,678
$
708,746
1
%
Total earning assets
815,088
831,314
792,181
3
%
Total assets
900,557
917,559
862,261
4
%
Non-interest bearing deposits
180,054
198,193
176,453
2
%
Interest bearing deposits
584,018
590,184
568,143
3
%
Total deposits
764,072
788,377
744,596
3
%
Shareholders' equity
96,512
94,149
85,733
13
%
4
We use cookies on this site to provide a more responsive and personalized service. Continuing to browse, clicking I Agree, or closing this banner indicates agreement. See our Cookie Policy for more information.