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

Business Wire, Jan 24, 2007

ANCHORAGE, Alaska -- 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.