^* References to NIMTE, tangible book value per share, tangible common equity to tangible common assets, and tangible common equity to tangible assets, excluding the unrealized losses on the available for sale securities portfolio, (all of which exclude intangible assets) represent non-GAAP financial measures. Management has presented these non-GAAP measurements in this earnings release, because it believes these measures are useful to investors. See the end of this release for reconciliations of these non-GAAP financial measures to GAAP financial measures.

Alaska Economic Update
(Note: sources for information included in this section are included on page 12.)

The Alaska Department of Labor ("DOL") has reported Alaska’s seasonally adjusted unemployment rate in November of 2023 was 4.4% compared to the U.S. rate of 3.7%.   The total number of payroll jobs in Alaska, not including uniformed military, increased 1.6% or 5,000 jobs between November of 2022 and November of 2023.

According to the DOL, Health Care had the largest growth in new jobs in Alaska through November compared to the prior year.   The sector added 1,300 positions for a year over year growth rate of 3.3%.   The Oil & Gas sector had the largest percentage growth rate at 5.6% or 400 new jobs. Leisure and Hospitality added 800 jobs for a 2.6% growth rate.   Professional & Business Services and Trade, Transportation & Utilities both added 700 jobs year over year through November of 2023.   The Government sector grew by 500 jobs for 0.6% growth due to more federal positions in Alaska, which offset declines in Alaska state government jobs.

Alaska’s Gross State Product (“GSP”) in the third quarter of 2023, was estimated to be $67.7 billion in current dollars, according to the Federal Bureau of Economic Analysis ("BEA").   Alaska’s inflation adjusted “real” GSP grew 3.6% at annualized rates in the third quarter of 2023, compared to the average U.S. rate of 4.9%.   Alaska’s real GSP improvement in the third quarter of 2023 was aided by gains in the Transportation & Warehousing and Construction sectors.

The BEA also calculated Alaska’s seasonally adjusted personal income at $52.3 billion in the third quarter of 2023.   This was an annualized improvement of 2.2% for Alaska over the second quarter of 2023, compared to the national average of 3.5%.

The monthly average price of Alaska North Slope (“ANS”) crude oil was in a range between $75.64 and $95.05 in 2023. The Alaska Department of Revenue (“DOR”) calculated ANS crude oil production was 479 thousand barrels per day (“bpd”) in Alaska’s fiscal year ending June 30, 2023.   The DOR has forecast production to decline slightly to 470 thousand bpd in Alaska’s fiscal year 2024. That number is projected to grow by the DOR to 663 thousand bpd by fiscal year 2033.   This is primarily a result of new production coming on line in and around the NPR-A region west of Prudhoe Bay.

According to the Alaska Multiple Listing Services, the average sales price of a single family home in Anchorage rose 5.4% in 2023 to $481,181, following a 7.6% increase in 2022.   This was the sixth consecutive year of price increases.

Average sales prices for single family homes in the Matanuska Susitna Borough rose 4% in 2023 to $397,858, after increasing 9.9% in 2022.   This continues a trend of average price increases for more than a decade in the region. These two markets represent where the vast majority of the Bank’s residential lending activity occurs.

However, the Alaska Multiple Listing Services reported a large decrease in the number of units sold in both communities.   There were 2,162 housing units sold in Anchorage in 2023, down 24.1% compared to 2,849 in 2022. In the Matanuska Susitna Borough there were 1,632 homes sold in 2023, compared to 2,103 in 2022, a decrease of 22.4%.

Northrim Bank sponsors the Alaskanomics blog to provide news, analysis, and commentary on Alaska’s economy. Join the conversation at Alaskanomics.com, or for more information on the Alaska economy, visit: www.northrim.com and click on the “Business Banking” link and then click “Learn.” Information from our website is not incorporated into, and does not form, a part of this earnings release.

Review of Income Statement

Consolidated Income Statement

In the fourth quarter of 2023, Northrim generated a ROAA of 0.93% and a ROAE of 11.36%, compared to 1.22% and 14.67%, respectively, in the third quarter of 2023 and 1.26% and 15.71%, respectively, in the fourth quarter a year ago. For the year 2023, Northrim generated a ROAA of 0.94% and a ROAE of 11.17%, compared to 1.16% and 13.68% for 2022.

Net Interest Income/Net Interest Margin

Net interest income increased 1% to $26.7 million in the fourth quarter of 2023 compared to $26.4 million in the third quarter of 2023 and decreased 2% compared to $27.3 million in the fourth quarter of 2022. Interest expense on deposits increased to $8.7 million in the fourth quarter compared to $7.1 million in the third quarter of 2023 and $2.2 million in the fourth quarter of 2022.

NIMTE^* was 4.12% in the fourth quarter of 2023 compared to 4.21% in the preceding quarter and 4.36% in the fourth quarter a year ago. NIMTE^* decreased 9 basis points in the fourth quarter of 2023 compared to the prior quarter and 24 basis points compared to the fourth quarter of 2022 primarily due to higher costs on interest bearing demand deposits that was only partially offset by higher earning asset balances and higher loan yields. The weighted average interest rate for new loans booked in the fourth quarter of 2023 was 8.03% compared to 7.39% in the third quarter of 2023 and 6.26% in the fourth quarter a year ago. Long-term investments were purchased in the fourth quarter of 2023 with a weighted average yield of 5.33%. The yield on the investment portfolio increased to 2.48% for the quarter as a result of repricing of the variable rate investments which represent 10% of the investment portfolio. “We expect our net interest margin to continue to remain relatively stable as estimated increases in earning-asset yields from the repricing of earning assets will likely be offset by increases in deposit costs,” said Jed Ballard, Chief Financial Officer. Northrim’s NIMTE^* continues to remain above the peer average posted by the S&P U.S. Small Cap Bank Index with total market capitalization between $250 million and $1 billion as of September 30, 2023.¹

Provision for Credit Losses

Northrim recorded a provision for credit losses of $885,000 in the fourth quarter of 2023, which includes a $9,000 provision for credit losses on unfunded commitments and a provision for credit losses on loans of $876,000. This compares to a provision for credit losses of $1.2 million in the third quarter of 2023, and a provision for credit losses of $1.9 million in the fourth quarter a year ago. The $885,000 provision for credit losses in the fourth quarter of 2023 is largely attributable to increases in loan and unfunded commitment balances.

Nonperforming loans, net of government guarantees, decreased during the quarter to $5.0 million at December 31, 2023, compared to $5.1 million at September 30, 2023, and $6.4 million at December 31, 2022.

The allowance for credit losses was 345% of nonperforming loans, net of government guarantees, at the end of the fourth quarter of 2023, compared to 326% three months earlier and 215% a year ago.

Other Operating Income

In addition to home mortgage lending, Northrim has interests in other businesses that complement its core community banking activities, including purchased receivables financing and wealth management. Other operating income contributed $6.5 million, or 20% of total fourth quarter 2023 revenues, as compared to $8.0 million, or 23% of revenues in the third quarter of 2023, and $6.8 million, or 20% of revenues in the fourth quarter of 2022. The decrease in other operating income in the fourth quarter of 2023 as compared to the preceding quarter and the fourth quarter of 2022 is primarily the result of decreased mortgage banking income due to lower volume of mortgage activity and a change in the value of mortgage servicing rights, that was only partially offset by higher purchased receivable income and unrealized gains on marketable equity securities.

Other Operating Expenses

Operating expenses were $24.0 million in the fourth quarter of 2023, compared to $22.9 million in the third quarter of 2023, and $22.2 million in the fourth quarter of 2022. The increase in other operating expenses in the fourth quarter of 2023 compared to the third quarter of 2023 is primarily due to an increase in OREO expense due to a gain on sale recorded in the third quarter of 2023 for subsequent proceeds received related to a government guarantee on an OREO property sold in December 2022. The increase in other operating expenses in the fourth quarter of 2023 as compared to the fourth quarter a year ago is primarily due to increased salaries and other personnel expense.

Income Tax Provision

In the fourth quarter of 2023, Northrim recorded $1.7 million in state and federal income tax expense for an effective tax rate of 20.7%, compared to $1.9 million, or 18.4% in the third quarter of 2023 and $1.4 million, or 13.6% in the fourth quarter a year ago. The increase in the tax rate in the fourth quarter of 2023 as compared to the third quarter of 2023 and the fourth quarter a year ago is primarily the result of decreased tax benefits related to the Company's investment in low income housing tax credits.

Community Banking

In the most recent deposit market share data from the FDIC, Northrim’s deposit market share in Alaska increased to 15.04% of Alaska's total deposits as of June 30, 2023 compared to 13.95% of Alaska's total deposits as of June 30, 2022. This represents 7.8% growth in market share percentage for Northrim during that period while, according to the FDIC, the total deposits in Alaska were down 8.5% during the same period. Northrim opened a branch in Kodiak in the first quarter of 2023, a loan production office in Homer in the second quarter of 2023, and a permanent branch in Nome in the third quarter of 2023. Northrim also plans to open a branch in Homer later this year. See below for further discussion regarding the Company's deposit movement for the quarter.

Net interest income in the Community Banking segment totaled $24.5 million in the fourth quarter of 2023, compared to $24.1 million in the third quarter of 2023 and $26.7 million in the fourth quarter of 2022. Net interest income increased in the fourth quarter of 2023 as compared to the third quarter of 2023 mostly due to increased interest income on loans that was only partially offset by higher interest expense on deposits. Net interest income decreased in the fourth quarter of 2023 as compared to the fourth quarter of 2022 primarily due to higher interest expense on deposits, which was only partially offset by increased interest income on loans and investments. Other operating expense increased in the fourth quarter of 2023 as compared to the third quarter of 2023 primarily due to an increase in OREO expense. The third quarter of 2023 reflected a decrease in OREO expense discussed above.

The following table provides highlights of the Community Banking segment of Northrim:

Home Mortgage Lending

During the fourth quarter of 2023, mortgage loans funded for sale decreased to $79.7 million, of which 96% was for home purchases, compared to $131.9 million and 95% of loans funded for home purchases in the third quarter of 2023, and decreased as compared to $82.1 million, of which 89% was for home purchases in the fourth quarter of 2022.

The Company has developed mortgage products including adjustable rate mortgages, a second home product, and extended locks, which are intended to appeal to customers given the current interest rate environment. During the fourth quarter of 2023, our home mortgage lending subsidiary, Residential Mortgage originated $27.1 million in home mortgages, of which roughly half were adjustable rate mortgages and half were mortgages for second homes, that the Bank purchased and booked as consumer loans at a weighted average interest rate of 7.05%, up from $21.6 million and 6.60% in the third quarter of 2023, $55.6 million and 5.70% in the second quarter of 2023, $42.0 million and 5.11% in the first quarter of 2023, and $34.6 million and 5.52% in the fourth quarter of 2022. Total mortgage production for the fourth quarter of 2023 was down 30% compared to the third quarter of 2023 and down 8% compared to the fourth quarter a year ago. Given the seasonality of the mortgage operations, the Company usually sees lower production in the fourth and first quarters and an increase in production in the second quarter. Additionally, management anticipates that the volume of mortgages that the Bank will purchase from Residential Mortgage will continue to decrease, as they look to sell a larger percentage of production on the secondary market going forward. Mr. Ballard noted that “purchases of mortgages by Northrim Bank was a long-term, strategic decision to deploy excess liquidity, reduce asset sensitivity, and provide products to loan originators to market for increased production in this rising interest rate environment.” Mr. Ballard added, “we are at our target for these mortgages of approximately 10% of our loan portfolio.”

The expansion efforts of mortgage production in the Arizona, Colorado, and Pacific Northwest markets in late 2022 contributed to 11% of Residential Mortgage's $107 million total production in the fourth quarter of 2023, 8% of $153 million in total production in the third quarter of 2023, 15% of $169 million in total production in the second quarter of 2023, and 19% of $93 million in total production in the first quarter of 2023. The expansion efforts into new markets contributed to 13% of Residential Mortgage's $522 million total production in 2023.

The net change in fair value of mortgage servicing rights decreased mortgage banking income by $1.0 million during the fourth quarter of 2023 compared to a decrease of $310,000 for the third quarter of 2023 and a decrease of $318,000 for the fourth quarter of 2022. Mortgage servicing revenue decreased to $2.2 million in the fourth quarter of 2023 from $2.4 million in the prior quarter and increased from $2.1 million in the fourth quarter of 2022 due to changes in production of loans sold with servicing retained. In the fourth quarter of 2023, the Company's servicing portfolio increased $78.6 million in new mortgage loans, net of amortization and payoffs as compared to an increase of $77.7 million in the third quarter of 2023 and $58.6 million in the fourth quarter of 2022.

As of December 31, 2023, Northrim serviced 3,863 loans in its $1.04 billion home-mortgage-servicing portfolio, a 6% increase compared to the $982.1 million serviced as of the end of the third quarter of 2023, and a 16% increase from the $898.8 million serviced a year ago. Delinquencies in the loan servicing portfolio totaled 3.0% at December 31, 2023, compared to 2.0% at December 31, 2022.

The following table provides highlights of the Home Mortgage Lending segment of Northrim:

¹Principally reflects changes in discount rates and prepayment speed assumptions, which are primarily affected by changes in interest rates.
²Represents changes due to collection/realization of expected cash flows over time.

¹Principally reflects changes in discount rates and prepayment speed assumptions, which are primarily affected by changes in interest rates.
²Represents changes due to collection/realization of expected cash flows over time.

Balance Sheet Review

Northrim’s total assets were $2.81 billion at December 31, 2023, up 1% from the preceding quarter and up 5% from a year ago. Northrim’s loan-to-deposit ratio was 72% at December 31, 2023, up from 71% at September 30, 2023, and 63% at December 31, 2022.

At December 31, 2023, our liquid assets and investments and loans maturing within one year were $575.6 million and our funds available for borrowing under our existing lines of credit were $742.9 million. Given these sources of liquidity and our expectations for customer demands for cash and for our operating cash needs, we believe our sources of liquidity to be sufficient for the foreseeable future.

Average interest-earning assets were $2.61 billion in the fourth quarter of 2023, up 4% from $2.52 billion in the third quarter of 2023 and up 4% from $2.51 billion in the fourth quarter a year ago. The average yield on interest-earning assets was 5.51% in the fourth quarter of 2023, up from 5.48% in the preceding quarter and 4.74% in the fourth quarter a year ago.

Average investment securities decreased to $690.7 million in the fourth quarter of 2023, compared to $715.8 million in the third quarter of 2022 and $712.8 million in the fourth quarter a year ago. The average net tax equivalent yield on the securities portfolio was 2.48% for the fourth quarter of 2023, up from 2.43% in the preceding quarter and up from 2.30% in the year ago quarter. The average estimated duration of the investment portfolio at December 31, 2023, was approximately 2.8 years down from approximately 3.3 years a year ago. As of December 31, 2023, $63.1 million of available for sale securities are scheduled to mature in the next six months, $99.7 million are scheduled to mature in six months to one year, and $141.3 million are scheduled to mature in the following year, representing a total of $304.1 million or 12% of earning assets that are scheduled to mature in the next 24 months.

Total unrealized losses, net of tax, on available for sale securities decreased by $9.1 million in the fourth quarter of 2023 as compared to the prior quarter, and decreased by $12.7 million compared to the fourth quarter of 2022, resulting in a total unrealized loss of $17.4 million at December 31, 2023 compared to $26.5 million at September 30, 2023 and $30.1 million a year ago. The average maturity of the available for sale securities with the majority of the unrealized loss is 1.9 years. Total unrealized losses on held to maturity securities were $3.3 million at December 31, 2023, compared to $4.5 million at September 30, 2023, and $4.1 million a year ago.

Average interest bearing deposits in other banks increased to $126.2 million in the fourth quarter from $42.3 million in the third quarter of 2023 due to higher deposit balances and maturing portfolio investments. Average interest bearing deposits in other banks decreased in the fourth quarter of this year compared to $294.3 million in the fourth quarter of 2022 as cash was used to fund the growing loan portfolio.

Portfolio loans were $1.79 billion at December 31, 2023, up 4% from the preceding quarter and up 19% from a year ago. Portfolio loans, excluding consumer mortgage loans, increased by 3% or $43.0 million to $1.60 billion from the preceding quarter and were up 11% from a year ago. Average portfolio loans in the third quarter of 2023 were $1.75 billion, which was up 3% from the preceding quarter and up 19% from a year ago. Yields on average portfolio loans in the fourth quarter of 2023 decreased slightly to 6.55% from 6.61% in the third quarter of 2023 due to some one time adjustments in both periods and increased from 5.98% in the fourth quarter of 2022. Without certain one-time items, including fees from loan prepayments, yields on average portfolio loans would have been 6.60% in the fourth quarter of 2023 and 6.46% in the third quarter of 2023. The yield on new portfolio loans, excluding consumer mortgage loans, was 8.79% in the fourth quarter of 2023 as compared to 7.98% in the third quarter of 2023 and 6.42% in the fourth quarter of 2022. 31% of loans mature or reprice in the next three months, 15% of loans mature or reprice in three to twelve months, and 16% of loans mature or reprice in one to two years.

Alaskans continue to account for substantially all of Northrim’s deposit base. Total deposits were $2.49 billion at December 31, 2023, up 2% from $2.43 billion at September 30, 2023, and up 4% from $2.39 billion a year ago. At December 31, 2023, 71% of total deposits were held in business accounts and 29% of deposit balances were held in consumer accounts. Northrim had approximately 33,000 deposit customers with an average balance of $75,000 as of December 31, 2023. Northrim had 19 customers with balances over $10 million as of December 31, 2023, which accounted for $453.0 million, or 18%, of total deposits. Of these $453.0 million of deposits, approximately 36% are insured using ICS or CDARS and an additional 20% are long-term customers with whom Northrim has significant lending relationships. ICS and CDARS deposits are divided into amounts under the FDIC insurance maximum and allocated among member banks, making the large deposit eligible for FDIC insurance. Demand deposits decreased by 2% from the prior quarter and decreased 6% year-over-year to $749.7 million at December 31, 2023. Demand deposits remained consistent at 31% of total deposits at December 31, 2023 and September 30, 2023 and decreased from 34% of total deposits at December 31, 2022. Average interest-bearing deposits were up 6% to $1.72 billion with an average cost of 2.00% in the fourth quarter of 2023, compared to $1.62 billion and an average cost of 1.75% in the third quarter of 2023, and up 9% compared to $1.58 billion and an average cost of 0.56% in the fourth quarter of 2022. Uninsured deposits totaled $1.02 billion or 41% of total deposits as of December 31, 2023 compared to $1.1 billion or 46% of total deposits as of December 31, 2022. As interest rates continued to increase in 2023, Northrim has taken a proactive, targeted approach to increase deposit rates.

Shareholders’ equity was $234.7 million, or $42.57 book value per share, at December 31, 2023, compared to $225.3 million, or $40.60 book value per share, at September 30, 2023 and $218.6 million, or $38.35 book value per share, a year ago. Tangible book value per share^* was $39.68 at December 31, 2023, compared to $37.72 at September 30, 2023, and $35.55 per share a year ago. The increase in shareholders’ equity in the fourth quarter of 2023 as compared to the third quarter of 2023 was largely the result of earnings of $6.6 million and an increase in the fair value of the available for sale securities portfolio, which increased $9.1 million, net of tax, which were only partially offset by dividends paid of $3.3 million and repurchases of common stock of $2.5 million. The Company purchased 55,786 shares of common stock in the fourth quarter of 2023 at an average cost of $43.34 per share and has 76,327 shares remaining under the current share repurchase program as of December 31, 2023. Tangible common equity to tangible assets^* was 7.84% as of December 31, 2023. Tangible common equity to tangible common assets, excluding the impact of the fair value of the available for sale securities portfolio^*, was 8.41% as of December 31, 2023, compared to 8.42% as of September 30, 2023 and 8.67% as of December 31, 2022. Northrim continues to maintain capital levels in excess of the requirements to be categorized as “well-capitalized” with Tier 1 Capital to Risk Adjusted Assets of 11.43% at December 31, 2023, compared to 11.67% at September 30, 2023, and 12.81% at December 31, 2022.

Asset Quality

Northrim believes it has a consistent lending approach throughout the economic cycles, which emphasizes appropriate loan-to-value ratios, adequate debt coverage ratios, and competent management.

Nonperforming assets (“NPAs”) net of government guarantees were $5.8 million at December 31, 2023, up from $5.2 million at September 30, 2023 and down from $6.4 million a year ago. Of the NPAs at December 31, 2023, $3.5 million, or 61% are nonaccrual loans related to three commercial relationships.

Net adversely classified loans were $7.1 million at December 31, 2023, as compared to $7.3 million at September 30, 2023, and $7.6 million a year ago. Adversely classified loans are loans that Northrim has classified as substandard, doubtful, and loss, net of government guarantees. Net loan charge-offs were $96,000 in the fourth quarter of 2023, compared to net loan recoveries of $96,000 in the third quarter of 2023, and net loan recoveries of $87,000 in the fourth quarter of 2022.

The Company adopted Accounting Standards Update 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures ("ASU 2022-02") on January 1, 2023. The amendments in ASU 2022-02 eliminate the accounting guidance for troubled debt restructurings by creditors while enhancing disclosure requirements for certain loan modifications by creditors when a borrower is experiencing financial difficulty. Northrim had eight loan modifications to borrowers experiencing financial difficulty totaling $4.0 million, net of government guarantees in the fourth quarter of 2023.

Northrim had $123.3 million, or 7% of total portfolio loans, in the Healthcare sector; $100.4 million, or 6% of portfolio loans, in the Tourism sector; $84.2 million, or 5% in the Accommodations sector; $75.0 million, or 4% in the Fishing sector; $72.8 million, or 4% in Retail loans; $63.4 million, or 4% of portfolio loans, in the Aviation (non-tourism) sector; and $52.2 million, or 3% in the Restaurants and Breweries sector as of December 31, 2023.

Northrim estimates that $96.1 million, or approximately 5% of portfolio loans, had direct exposure to the oil and gas industry in Alaska, as of December 31, 2023, and $2.0 million of these loans are adversely classified. As of December 31, 2023, Northrim has an additional $38.6 million in unfunded commitments to companies with direct exposure to the oil and gas industry in Alaska, and none of these unfunded commitments are considered to be adversely classified loans. Northrim defines direct exposure to the oil and gas sector as loans to borrowers that provide oilfield services and other companies that have been identified as significantly reliant upon activity in Alaska related to the oil and gas industry, such as lodging, equipment rental, transportation and other logistics services specific to this industry.

About Northrim BanCorp

Northrim BanCorp, Inc. is the parent company of Northrim Bank, an Alaska-based community bank with 19 branches in Anchorage, the Matanuska Valley, Soldotna, Juneau, Fairbanks, Ketchikan, Sitka, Kodiak, and Nome, and a loan production office in Homer, serving 90% of Alaska’s population; and an asset based lending division in Washington; and a wholly-owned mortgage brokerage company, Residential Mortgage Holding Company, LLC. Northrim Bank differentiates itself with its detailed knowledge of Alaska’s economy and its “Customer First Service” philosophy. Pacific Wealth Advisors, LLC is an affiliated company of Northrim BanCorp.

www.northrim.com

Forward-Looking Statement

This release may contain “forward-looking statements” as that term is defined for purposes of Section 21E of the Securities Exchange Act of 1934, as amended. These statements are, in effect, management’s attempt to predict future events, and thus are subject to various 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, 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 and its management are intended to help identify forward-looking statements. 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: potential further increases in interest rates; the value of securities held in our investment portfolio; the impact of the results of government initiatives on the regulatory landscape, natural resource extraction industries, and capital markets; the impact of declines in the value of commercial and residential real estate markets, high unemployment rates, inflationary pressures and slowdowns in economic growth; changes in banking regulation or actions by bank regulators, including, the continued availability of the Federal Reserve Bank's Bank Term Funding Program; inflation, supply-chain constraints, and potential geopolitical instability, including the wars in Ukraine and the Middle East; financial stress on borrowers (consumers and businesses) as a result of higher rates or an uncertain economic environment; the general condition of, and changes in, the Alaska economy; our ability to maintain or expand our market share or net interest margin; the sufficiency of our provision for credit losses and the accuracy of the assumptions or estimates used in preparing our financial statements, including those related to current expected credit losses accounting guidance; our ability to maintain asset quality; our ability to implement our marketing and growth strategies; our ability to identify and address cyber-security risks, including security breaches, “denial of service attacks,” “hacking,” and identity theft; disease, outbreaks, such as the COVID-19 pandemic, or similar health threats and measures implemented to combat them; and our ability to execute our business plan. Further, actual results may be affected by competition 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. In addition, there are risks inherent in the banking industry relating to collectability 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 the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and from time to time are disclosed in our other filings with the Securities and Exchange Commission. 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. These forward-looking statements are made only as of the date of this release, and Northrim does not undertake any obligation to release revisions to these forward-looking statements to reflect events or conditions after the date of this release.

References:

www.sba.gov/ak

https://www.bea.gov/

http://almis.labor.state.ak.us/

http://www.tax.alaska.gov/programs/oil/prevailing/ans.aspx

http://www.tax.state.ak.us/

www.mba.org

https://www.alaskarealestate.com/MLSMember/RealEstateStatistics.aspx

https://www.capitaliq.spglobal.com/web/client?auth=inherit&overridecdc=1&#markets/indexFinancials

Additional Financial Information
(Dollars in thousands)
(Unaudited)

...

Additional Financial Information
(Dollars in thousands)
(Unaudited)

Additional Financial Information
(Dollars in thousands)
(Unaudited)

The following table details loan charge-offs, by industry:

Additional Financial Information
(Dollars in thousands)
(Unaudited)

The components of the change in NIMTE^* are detailed in the table below:

Additional Financial Information
(Dollars in thousands)
(Unaudited)

The components of the change in NIMTE^* are detailed in the table below:

Additional Financial Information
(Dollars in thousands, except per share data)
(Unaudited)

*Non-GAAP Financial Measures
(Dollars and shares in thousands, except per share data)
(Unaudited)

Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although we believe these non-GAAP financial measures are frequently used by stakeholders in the evaluation of the Company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of results as reported under GAAP.

Net interest margin on a tax equivalent basis

Net interest margin on a tax equivalent basis ("NIMTE") is a non-GAAP performance measurement in which interest income on non-taxable investments and loans is presented on a tax equivalent basis using a combined federal and state statutory rate of 28.43% in both 2023 and 2022. The most comparable GAAP measure is net interest margin and the following table sets forth the reconciliation of NIMTE to net interest margin.

²Calculated using actual days in the quarter divided by 365 for the quarter ended in 2023 and 2022.

³Calculated using actual days in the year divided by 365 for year-to-date period in 2023 and 2022.

*Non-GAAP Financial Measures
(Dollars and shares in thousands, except per share data)
(Unaudited)

Tangible Book Value

Tangible book value is a non-GAAP measure defined as shareholders' equity, less intangible assets, divided by common shares outstanding. The most comparable GAAP measure is book value per share and the following table sets forth the reconciliation of tangible book value per share and book value per share.

Tangible Common Equity to Tangible Assets

Tangible common equity to tangible assets is a non-GAAP ratio that represents total equity less goodwill and intangible assets divided by total assets less goodwill and intangible assets. The most comparable GAAP measure of shareholders' equity to total assets is calculated by dividing total shareholders' equity by total assets and the following table sets forth the reconciliation of tangible common equity to tangible assets and shareholders' equity to total assets.

Tangible Common Equity to Tangible Assets, excluding the unrealized losses on the available for sales securities portfolio

Tangible common equity to tangible assets, excluding the unrealized losses on the available for sales securities portfolio, is a non-GAAP ratio that represents total equity less goodwill and intangible assets and the unrealized gain (loss) on available for sale securities, net of income taxes divided by total assets less goodwill and intangible assets and the unrealized gain (loss) on available for sale securities, net of income taxes. The most comparable GAAP measure of shareholders' equity to total assets is calculated by dividing total shareholders' equity by total assets and the following table sets forth the reconciliation of tangible common equity to tangible assets and shareholders' equity to total assets.

Note Transmitted on GlobeNewswire on January 25, 2024, at 12:15 pm Alaska Standard Time.