Northrim BanCorp, Inc. (NASDAQ:NRIM) (“Northrim” or the “Company”)
today reported net income of $5.6 million, or $0.98 per diluted
share, in the second quarter of 2023, compared to $4.8 million, or
$0.84 per diluted share, in the first quarter of 2023, and $4.8
million, or $0.83 per diluted share, in the second quarter a year
ago. The increase in second quarter 2023 profitability as compared
to the prior quarter was primarily the result of higher mortgage
banking income. This increase was partially offset by a higher
provision for credit losses compared to the preceding quarter due
to loan growth. The increase in profitability in the second quarter
of 2023 compared to the same period a year ago was primarily due to
an increase in net interest income, which was only partially offset
by a higher provision for credit losses and a decrease in mortgage
banking income.
Dividends per share in the second quarter
remained consistent with the first quarter of 2023 at $0.60 per
share and increased 48% from $0.41 per share in the second quarter
of 2022.
“We had solid loan growth in the second quarter
as we continue to establish new customer relationships and gain
market share,” said Joe Schierhorn, President and Chief Executive
Officer Northrim BanCorp, Inc. “We continue to face increased
deposit and funding costs but expect stabilization of our net
interest margin in future quarters as lower yielding securities and
loans begin to reprice.Credit remains strong but we remain vigilant
as businesses adjust to increased expenses due to inflation and
interest costs due to the rate environment.”
Second Quarter 2023
Highlights:
- Net interest income in the second
quarter of 2023 increased slightly to $25.1 million compared to
$25.0 million in the first quarter of 2023 and increased 13%
compared to $22.2 million in the second quarter of 2022.
- Net interest margin on a tax
equivalent basis (“NIMTE”)* was 4.21% for the second quarter of
2023, a 9-basis point decrease from the first quarter of 2023 and a
51-basis point increase compared to the second quarter of 2022 due
primarily to the increased yields on loans, investments, and
cash.
- The weighted average interest rate
for new portfolio loans booked in the second quarter of 2023 was
6.93% compared to 6.42% in the first quarter of 2023 and 5.07% in
the second quarter a year ago.
- Return on average assets (“ROAA”)
was 0.85% and return on average equity (“ROAE”) was 9.85% for the
second quarter of 2023.
- Portfolio loans were $1.66 billion
at June 30, 2023, up 8% from the preceding quarter and up 18% from
a year ago, primarily due to new customer relationships and
expanding market share. Approximately 74% of portfolio loans are
variable and 15% of earning assets are subject to rate increases
immediately when prime or other rate indices increase.
- Total deposits were $2.30 billion
at June 30, 2023, up slightly from the preceding quarter, and down
1% from $2.34 billion a year ago. Demand deposits decreased 14%
year-over-year to $711.4 million at June 30, 2023 and currently
represent 31% of total deposits.
- The average cost of
interest-bearing deposits was 1.56% at June 30, 2023, up from 1.20%
at March 31, 2023 and 0.16% at June 30, 2022.
- Total liquid assets and investments
and loans maturing within one year were $442.9 million and our
funds available for borrowing under our existing lines of credit
were $1.2 billion at June 30, 2023.
|
Financial Highlights |
Three Months Ended |
|
(Dollars in thousands, except per share data) |
June 30, 2023 |
March 31, 2023 |
December 31, 2022 |
September 30, 2022 |
June 30, 2022 |
|
Total assets |
$2,638,207 |
|
$2,580,037 |
|
$2,674,318 |
|
$2,717,514 |
|
$2,611,154 |
|
|
Total portfolio loans |
$1,659,239 |
|
$1,535,187 |
|
$1,501,785 |
|
$1,407,266 |
|
$1,405,709 |
|
|
Total portfolio loans (excluding PPP loans) |
$1,655,660 |
|
$1,531,007 |
|
$1,494,675 |
|
$1,395,932 |
|
$1,373,837 |
|
|
Total deposits |
$2,302,311 |
|
$2,296,273 |
|
$2,387,211 |
|
$2,439,335 |
|
$2,335,390 |
|
|
Total shareholders’ equity |
$221,336 |
|
$224,425 |
|
$218,629 |
|
$210,699 |
|
$215,289 |
|
|
Net income |
$5,577 |
|
$4,830 |
|
$8,595 |
|
$10,125 |
|
$4,795 |
|
|
Diluted earnings per share |
$0.98 |
|
$0.84 |
|
$1.48 |
|
$1.76 |
|
$0.83 |
|
|
Return on average assets |
|
0.85 |
% |
|
0.76 |
% |
|
1.26 |
% |
|
1.52 |
% |
|
0.74 |
% |
|
Return on average shareholders’ equity |
|
9.85 |
% |
|
8.73 |
% |
|
15.71 |
% |
|
18.18 |
% |
|
8.58 |
% |
|
NIM |
|
4.14 |
% |
|
4.22 |
% |
|
4.31 |
% |
|
4.22 |
% |
|
3.67 |
% |
|
NIMTE* |
|
4.21 |
% |
|
4.30 |
% |
|
4.36 |
% |
|
4.27 |
% |
|
3.70 |
% |
|
Efficiency ratio |
|
74.03 |
% |
|
78.51 |
% |
|
65.23 |
% |
|
63.69 |
% |
|
77.39 |
% |
|
Total shareholders’ equity/total assets |
|
8.39 |
% |
|
8.70 |
% |
|
8.18 |
% |
|
7.75 |
% |
|
8.24 |
% |
|
Tangible common equity/tangible assets* |
|
7.83 |
% |
|
8.13 |
% |
|
7.62 |
% |
|
7.21 |
% |
|
7.68 |
% |
|
Book value per share |
$39.45 |
|
$39.56 |
|
$38.35 |
|
$37.09 |
|
$37.90 |
|
|
Tangible book value per share* |
$36.60 |
|
$36.74 |
|
$35.55 |
|
$34.27 |
|
$35.08 |
|
|
Dividends per share |
$0.60 |
|
$0.60 |
|
$0.50 |
|
$0.50 |
|
$0.41 |
|
|
Common stock outstanding |
|
5,610,841 |
|
|
5,672,841 |
|
|
5,700,728 |
|
|
5,681,089 |
|
|
5,681,089 |
|
* References to NIMTE, tangible book value per
share, tangible common equity to tangible assets, and tangible
common equity to tangible assets, excluding the fair value of 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 13.)
The Alaska Department of Labor ("DOL") has
released preliminary jobs data through May of 2023. The DOL
reported Alaska’s seasonally adjusted unemployment rate for May of
2023 decreased to 3.6%, which is now lower than the U.S. rate,
which rose to 3.7%. The DOL reports total payroll jobs in Alaska
increased 1.8% or 5,800 jobs compared to May of 2022.
According to the DOL, Leisure and Hospitality
had the largest growth of 7.2% year over year in May
2023. The 2,600 job increase over the prior 12 months
brings the sector to 38,700 jobs, which is higher than the
pre-pandemic level. Professional and Business Services added 800
jobs and Health Care increased by 600 jobs over the same 12 month
period. The Oil and Gas sector has benefited from higher energy
prices and new exploration activity, resulting in an increase of
300 jobs or 4.3% since May of 2022. Transportation, Warehousing and
Utilities added 400 jobs and Retail also increased by 400 jobs year
over year compared to May of 2022. Manufacturing, which is
primarily seafood processing, declined 500 jobs and Information
decreased 100 jobs for the same 12 month period.
Alaska’s Gross State Product (“GSP”) in the
first quarter of 2023, was estimated to be $63.8 billion in current
dollars, according to the Federal Bureau of Economic Analysis
("BEA"). Alaska’s inflation adjusted “real” GSP grew 1.6% at
annualized rates in the first quarter of 2023, compared to the
average U.S. rate of 2%. Alaska’s real GSP improvement
in the first quarter of 2023 was most positively impacted by gains
in the Construction and Health Care sectors.
The BEA also calculated Alaska’s seasonally
adjusted personal income at $52.1 billion in the first quarter of
2023. This was an annualized improvement of 7.2% for Alaska and
larger than the national average of 5.1%. Alaskans had annualized
wage earnings growth of 6.6%, compared to a U.S. average of 4.6% in
the first quarter of 2023 as compared to a year ago.
The monthly average price of Alaska North Slope
(“ANS”) crude oil has been in a stable range between $75.81 and
$82.83 in the first six months of 2023. The Alaska Department of
Revenue (“DOR”) calculated ANS crude oil production was 486
thousand barrels per day (“bpd”) in Alaska’s fiscal year ending
June 30, 2022. The DOR has forecast production to increase to 494
thousand bpd in Alaska’s fiscal year 2023 and 504 thousand bpd in
2024. That number is projected by the DOR to grow to 556 thousand
bpd in 2028. This is primarily a result of new
production coming on line in the NPR-A region west of Prudhoe
Bay.
According to the Mortgage Bankers Association,
Alaska’s home mortgage delinquency rate in the first quarter of
2023 improved to 2.7% compared to 2.9% in the fourth quarter of
2022. Alaska’s delinquency rate of 2.7% compares to the national
average rate of 3.3% for the first quarter of 2023. The Mortgage
Bankers Association survey reported that the mortgage foreclosure
inventory in Alaska in the first quarter of 2023 was 0.54% and the
national average was 0.57%.
According to the Alaska Multiple Listing
Services, the average sales price of a single family home in
Anchorage rose 7.6% in 2022 to $456,544. This was the fifth
consecutive year of price increases, following growth of 6.9% in
2021 and 5.8% in 2020. In the first six months of 2023, the average
sales price in Anchorage continued to increase 3.7% to
$473,330.
Average sales prices for single family homes in
the Matanuska Susitna Borough rose 9.9% in 2022 to $382,504,
continuing a trend of average price increases for more than a
decade. Average home prices in the Matanuska Susitna Borough
increased 15.6% in 2021 and 9.9% in 2020. In the first six months
of 2023, the average sales price in the Matanuska Susitna Borough
has increased 3.5% to $395,952. These two markets represent the
regions where the vast majority of Northrim Bank’s residential
lending activity occurs.
The Alaska Multiple Listing Services reported
there were 934 housing units sold in Anchorage in the first six
months of 2023, compared to 1,298 in the first half of 2022 for a
decline of 33.2%. Anchorage home sales also declined by 21.2% in
2022 compared to 2021. “A lack of inventory due to a reduction in
the supply of new homes being constructed and a lower churn of
existing homes being listed on the market are the primary reasons
for the decline in sales,” explains Mark Edwards, EVP Chief Credit
Officer and Bank Economist. “The limited supply of homes is not
keeping up with demand and therefore price increases are
continuing, despite the higher interest rate environment,” he
concludes. The Matanuska Susitna Borough also experienced a lower
volume of home sales in the last 18 months. For the first six
months of 2023 there were 761 homes sales in the Matanuska Susitna
Borough, compared to 1,077 in the first half of 2022 for a decrease
of 29.3%. Matanuska Susitna Borough home sales also declined 11.9%
in 2022 compared to the prior year according to the Alaska Multiple
Listing Services.
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 second quarter of 2023, Northrim
generated a ROAA of 0.85% and a ROAE of 9.85%, compared to 0.76%
and 8.73%, respectively, in the first quarter of 2023 and 0.74% and
8.58%, respectively, in the second quarter a year ago.
Net Interest Income/Net Interest Margin
Net interest income increased slightly to
$25.1 million in the second quarter of 2023 compared to
$25.0 million in the first quarter of 2023 and increased 13%
compared to $22.2 million in the second quarter of
2022. Interest expense on deposits increased to $6.1
million in the second quarter compared to $4.6 million in the first
quarter of 2023 and $599,000 in the second quarter of 2022.
NIMTE* was 4.21% in the second quarter of 2023
compared to 4.30% in the preceding quarter and 3.70% in the second
quarter a year ago. NIMTE* decreased 9 basis points in
the second quarter of 2023 compared to the prior quarter mostly due
to an increase in the cost of interest-bearing deposits and
borrowings and increased 51 basis points compared to the second
quarter of 2022 primarily due to higher yields on portfolio loans,
investments, and interest bearing deposits in other banks. This
increase in yields in the second quarter of 2023 compared to the
second quarter of 2022 was only partially offset by higher rates on
interest-bearing deposits and borrowings. The weighted average
interest rate for new loans booked in the second quarter of 2023
was 6.93% compared to 6.42% in the first quarter of 2023 and 5.07%
in the second quarter a year ago. No long-term investments were
purchased in the second quarter of 2023, however, the Company
purchased long-term investments in the first quarter of 2023 with a
weighted average yield of 7.21% compared to 3.22% in the second
quarter a year ago. “We expect our net interest margin to remain
relatively stable as estimated increases in earning-asset yields
and the change in mix of our earning-assets with the maturing of
low rate investment securities supporting future loan growth to
likely to be offset by increases in deposit rates, as the deposit
market remains competitive in this rising interest rate
environment,” 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 March 31, 20231.
Provision for Credit Losses
Northrim recorded a provision for credit losses
of $1.4 million in the second quarter of 2023, which includes
a $103,000 benefit to the provision for credit losses on unfunded
commitments and a provision for credit losses on loans of $1.5
million. This compares to a provision for credit losses of $360,000
in the first quarter of 2023, and a provision for credit losses of
$463,000 in the second quarter a year ago. The increase in the
provision for credit losses on loans in the second quarter of 2023
is primarily due to loan growth during the quarter which was only
partially offset by a slight improvement in management's forecasted
economic factors.
Nonperforming loans, net of government
guarantees, decreased during the quarter to $5.3 million at
June 30, 2023, compared to $6.1 million at March 31,
2023, and decreased compared to $7.3 million at June 30,
2022.
The allowance for credit losses was 292% of
nonperforming loans, net of government guarantees, at the end of
the second quarter of 2023, compared to 233% three months earlier
and 158% a year ago.
1As of March 31, 2023, the S&P U.S. Small Cap
Bank Index tracked 243 banks with total common market
capitalization between $250 million to $1B for the following ratio:
NIMTE* of 3.43%.
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
$7.0 million, or 22% of total second quarter 2023 revenues, as
compared to $4.9 million, or 16% of revenues in the first
quarter of 2023, and $7.8 million, or 26% of revenues in the
second quarter of 2022. The increase in other operating income in
the second quarter of 2023 as compared to the preceding quarter is
primarily the result of an increase in mortgage banking income due
to higher volume of mortgage activity. The decrease in other
operating income in the second quarter of 2023 as compared to the
second quarter a year ago was due primarily to lower volume of
mortgage activity. See further discussion regarding mortgage
activity during the second quarter contained under “Home
Mortgage Lending” below. The fair market value of marketable equity
securities decreased $234,000 in the second quarter of 2023
compared to a decrease of $223,000 in the prior quarter and a
decrease of $810,000 in the second quarter of 2022.
Other Operating Expenses
Operating expenses were $23.8 million in
the second quarter of 2023, compared to $23.5 million in the
first quarter of 2023, and $23.2 million in the second quarter
of 2022. The increase in other operating expenses in
the second quarter of 2023 compared to the prior reported periods
is primarily due to increased marketing and insurance expenses as
well as an increase in other operating expenses.
Income Tax Provision
In the second quarter of 2023, Northrim recorded
$1.4 million in state and federal income tax expense for an
effective tax rate of 19.6%, compared to $1.2 million, or
20.4% in the first quarter of 2023 and $1.5 million, or 24.1%
in the second quarter a year ago. The decrease in the tax rate in
the second quarter of 2023 as compared to the second quarter of
2022 is primarily the result of an increase in tax credits and tax
exempt interest income as a percentage of pre-tax income in 2023 as
compared to 2022.
Community Banking
Northrim opened a loan production office in
Homer, Alaska in the second quarter of 2023. “We are pleased to
continue our expansion throughout Alaska with our loan production
office in Homer as we continue to look for opportunities to expand
our market share,” said Mike Huston, Northrim Bank President.
Net interest income in the Community Banking
segment totaled $22.7 million in the second quarter of 2023,
compared to $24.8 million in the first quarter of 2023 and
$21.6 million in the second quarter of 2022. Net interest
income decreased in the second quarter of 2023 as compared to the
first quarter of 2023 mostly due to a reclassification of $768,000
of mortgage net interest income from the first quarter of 2023 out
of the Community Banking segment and into Home Mortgage
Lending.
In the most recent deposit market share data
from the FDIC for the period from June 30, 2021, to June 30, 2022,
Northrim’s deposit market share in Alaska increased to $2.4
billion, or 13.95% of Alaska's total deposits as of June 30, 2022
from $2.2 billion, or 13.00% of Alaska's total deposits as of June
30, 2021. This represents 7.3% growth in market share
percentage for Northrim during that period while, according to the
FDIC, the total deposits in Alaska were up only 1% during the same
period. See further discussion regarding the Company's deposit
movement for the quarter below.
The following table provides highlights of the
Community Banking segment of Northrim:
| |
Three Months Ended |
|
(Dollars in thousands, except per share data) |
June 30, 2023 |
March 31, 2023 |
December 31, 2022 |
September 30, 2022 |
June 30, 2022 |
|
Net interest income |
$22,700 |
$24,752 |
$26,741 |
$25,668 |
|
$21,603 |
|
Provision (benefit) for credit losses |
|
1,407 |
|
360 |
|
1,886 |
|
(353 |
) |
|
463 |
|
Other operating income |
|
3,067 |
|
2,900 |
|
3,819 |
|
2,938 |
|
|
1,907 |
|
Other operating expense |
|
17,805 |
|
17,417 |
|
16,678 |
|
15,977 |
|
|
16,415 |
|
Income before provision for income taxes |
|
6,555 |
|
9,875 |
|
11,996 |
|
12,982 |
|
|
6,632 |
|
Provision for income taxes |
|
1,192 |
|
2,315 |
|
1,884 |
|
2,911 |
|
|
1,605 |
|
Net income |
$5,363 |
$7,560 |
$10,112 |
$10,071 |
|
$5,027 |
|
Weighted average shares outstanding, diluted |
|
5,677,292 |
|
5,757,458 |
|
5,769,415 |
|
5,740,494 |
|
|
5,805,870 |
|
Diluted earnings per share |
$0.94 |
$1.31 |
$1.74 |
$1.75 |
|
$0.87 |
| |
Year-to-date |
|
(Dollars in thousands, except per share data) |
June 30, 2023 |
June 30, 2022 |
|
Net interest income |
$47,452 |
$40,512 |
|
Provision for credit losses |
|
1,767 |
|
313 |
|
Other operating income |
|
5,967 |
|
5,748 |
|
Other operating expense |
|
35,222 |
|
31,246 |
|
Income before provision for income taxes |
|
16,430 |
|
14,701 |
|
Provision for income taxes |
|
3,507 |
|
3,246 |
|
Net income Community Banking segment |
$12,923 |
$11,455 |
|
Weighted average shares outstanding, diluted |
|
5,719,453 |
|
5,902,287 |
|
Diluted earnings per share |
$2.26 |
$1.94 |
Home Mortgage Lending
During the second quarter of 2023, mortgage
loans funded for sale increased to $113.8 million, of which
97% was for home purchases, compared to $50.7 million and 95%
of loans funded for home purchases in the first quarter of 2023,
and decreased as compared to $191.0 million, of which 90% was
for home purchases in the second quarter of 2022. The rising
interest rate environment has caused the housing market to slow
down and also resulted in fewer refinances compared to 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 second quarter of
2023, Residential Mortgage originated $55.6 million in home
mortgages, which were mostly adjustable rate mortgages, that
Northrim Bank purchased and booked as consumer loans at a weighted
average interest rate of 5.70%, up from $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
second quarter of 2023 was up 83% compared to the first quarter of
2023 and down 11% compared to the second quarter a year ago. Given
the seasonality of the mortgage operations, the Company usually
sees an increase in production in the second quarter. Additionally,
management anticipates that the volume of mortgages that Northrim
Bank will purchase from Residential Mortgage to decrease, as they
look to sell a larger percentage of production on the secondary
market going forward. Mr. Ballard noted that “the recent purchases
of mortgage by Northrim Bank was a long-term, strategic decision in
order to utilize prior year's excess liquidity, reduce asset
sensitivity, and provide products to loan originators to market for
increased production.” Mr. Ballard added, “our target for these
mortgages is approximately 10% of our loan portfolio.”
The expansion efforts of mortgage production in
the Arizona, Colorado, and Pacific Northwest markets in late 2022
have contributed to 15% of Residential Mortgage's $169 million
total production in the second quarter of 2023 and 19% of $93
million in total production in the first quarter of 2023.
The net change in fair value of mortgage
servicing rights decreased mortgage banking income by $574,000
during the second quarter of 2023 compared to a decrease of
$795,000 for the first quarter of 2023 and a decrease of $250,000
for the second quarter of 2022. Mortgage servicing revenue remained
stable at $1.4 million in the second quarter of 2023 relative
to the prior quarter and decreased from $1.9 million in the
second quarter of 2022 due to lower production of Alaska Housing
Finance Corporation (AHFC) mortgages which contribute to servicing
revenues at origination. In the second quarter of 2023, the Company
added $30 million in new mortgage loans to the servicing portfolio
as compared to $26 million in the first quarter of 2023 and $57
million in the second quarter of 2022.
As of June 30, 2023, Northrim serviced
3,537 loans in its $921.6 million home-mortgage-servicing
portfolio, a 1% increase compared to the $911.1 million
serviced for the first quarter of 2023, and a 13% increase from the
$818.3 million serviced a year ago. Delinquencies in the loan
servicing portfolio totaled 2.1% at June 30, 2023, compared to
2.6% at June 30, 2022.
Other operating expense decreased to $6.0
million in the second quarter of 2023, compared to $6.1 million in
the first quarter of 2023, and compared to $6.8 million in the
second quarter of 2022. The decrease in other operating expenses in
the second quarter of 2023 compared to the second quarter of 2022
is primarily due to decreased salaries and other personnel expense.
Despite higher mortgage loan production volumes, salaries and other
personnel expense decreased mostly due to deferred salary costs on
mortgage loans originated for investment.
The following table provides highlights of the
Home Mortgage Lending segment of Northrim:
| |
Three Months Ended |
|
(Dollars in thousands, except per share data) |
June 30, 2023 |
March 31, 2023 |
December 31, 2022 |
September 30, 2022 |
June 30, 2022 |
|
Mortgage commitments |
$71,123 |
|
$41,050 |
|
$29,065 |
|
$74,731 |
|
$116,167 |
|
|
Mortgage loans funded for sale |
$113,824 |
|
$50,725 |
|
$82,149 |
|
$168,786 |
|
$191,023 |
|
|
Mortgage loans funded for investment |
$55,595 |
|
$41,964 |
|
$34,622 |
|
|
$— |
|
|
$— |
|
|
Total mortgage loans funded |
$169,419 |
|
$92,689 |
|
$116,771 |
|
$168,786 |
|
$191,023 |
|
|
Mortgage loan refinances to total fundings |
|
3 |
% |
|
5 |
% |
|
11 |
% |
|
7 |
% |
|
10 |
% |
|
Mortgage loans serviced for others |
$921,616 |
|
$911,065 |
|
$898,840 |
|
$859,288 |
|
$818,266 |
|
| |
|
|
|
|
|
|
Net realized gains on mortgage loans sold |
$2,570 |
|
$1,305 |
|
$1,567 |
|
$3,736 |
|
$4,649 |
|
|
Change in fair value of mortgage loan commitments, net |
|
358 |
|
|
125 |
|
|
(446 |
) |
|
(395 |
) |
|
(603 |
) |
|
Total production revenue |
|
2,928 |
|
|
1,430 |
|
|
1,121 |
|
|
3,341 |
|
|
4,046 |
|
|
Mortgage servicing revenue |
|
1,424 |
|
|
1,368 |
|
|
2,120 |
|
|
2,121 |
|
|
1,932 |
|
|
Change in fair value of mortgage servicing rights: |
|
|
|
|
|
|
Due to changes in model inputs of assumptions1 |
|
(3 |
) |
|
(212 |
) |
|
93 |
|
|
555 |
|
|
(225 |
) |
|
Other2 |
|
(571 |
) |
|
(583 |
) |
|
(411 |
) |
|
(410 |
) |
|
(25 |
) |
|
Total mortgage servicing revenue, net |
|
850 |
|
|
573 |
|
|
1,802 |
|
|
2,266 |
|
|
1,682 |
|
|
Other mortgage banking revenue |
|
135 |
|
|
5 |
|
|
33 |
|
|
127 |
|
|
172 |
|
|
Total mortgage banking income |
$3,913 |
|
$2,008 |
|
$2,956 |
|
$5,734 |
|
$5,900 |
|
| |
|
|
|
|
|
|
Net interest income |
$2,442 |
|
$280 |
|
$546 |
|
$643 |
|
$609 |
|
|
Mortgage banking income |
|
3,913 |
|
|
2,008 |
|
|
2,956 |
|
|
5,734 |
|
|
5,900 |
|
|
Other operating expense |
|
5,977 |
|
|
6,092 |
|
|
5,548 |
|
|
6,309 |
|
|
6,823 |
|
|
(Loss) income before provision for income taxes |
|
378 |
|
|
(3,804 |
) |
|
(2,046 |
) |
|
68 |
|
|
(314 |
) |
|
(Benefit) provision for income taxes |
|
164 |
|
|
(1,074 |
) |
|
(529 |
) |
|
14 |
|
|
(82 |
) |
|
Net (loss) income |
$214 |
|
|
($2,730 |
) |
|
($1,517 |
) |
$54 |
|
|
($232 |
) |
| |
|
|
|
|
|
|
Weighted average shares outstanding, diluted |
|
5,677,292 |
|
|
5,757,458 |
|
|
5,769,415 |
|
|
5,740,494 |
|
|
5,805,870 |
|
|
Diluted earnings per share |
$0.04 |
|
|
($0.47 |
) |
|
($0.26 |
) |
$0.01 |
|
|
($0.04 |
) |
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.
| |
Year-to-date |
|
(Dollars in thousands, except per share data) |
June 30, 2023 |
June 30, 2022 |
|
Mortgage loans funded for sale |
$164,549 |
|
$334,598 |
|
|
Mortgage loans funded for investment |
|
97,559 |
|
|
— |
|
|
Total mortgage loans funded |
$262,108 |
|
$334,598 |
|
|
Mortgage loan refinances to total fundings |
|
4 |
% |
|
16 |
% |
| |
|
|
|
Net realized gains on mortgage loans sold |
$3,875 |
|
$8,569 |
|
|
Change in fair value of mortgage loan commitments, net |
|
482 |
|
|
(193 |
) |
|
Total production revenue |
|
4,357 |
|
|
8,376 |
|
|
Mortgage servicing revenue |
|
2,792 |
|
|
3,703 |
|
|
Change in fair value of mortgage servicing rights: |
|
|
|
Due to changes in model inputs of assumptions1 |
|
(215 |
) |
|
967 |
|
|
Other2 |
|
(1,154 |
) |
|
(506 |
) |
|
Total mortgage servicing revenue, net |
|
1,423 |
|
|
4,164 |
|
|
Other mortgage banking revenue |
|
140 |
|
|
342 |
|
|
Total mortgage banking income |
$5,920 |
|
$12,882 |
|
| |
|
|
|
Net interest income |
$2,722 |
|
$1,004 |
|
|
Mortgage banking income |
|
5,921 |
|
|
12,882 |
|
|
Other operating expense |
|
12,069 |
|
|
13,093 |
|
|
Income before provision for income taxes |
|
(3,426 |
) |
|
793 |
|
|
Provision for income taxes |
|
(910 |
) |
|
227 |
|
|
Net (loss) income Home Mortgage Lending segment |
|
($2,516 |
) |
$566 |
|
| |
|
|
|
Weighted average shares outstanding, diluted |
|
5,719,453 |
|
|
5,902,287 |
|
|
Diluted (loss) earnings per share |
|
($0.44 |
) |
$0.10 |
|
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 $2.64 billion
at June 30, 2023, up 2% from the preceding quarter and 1% from
a year ago. Northrim’s loan-to-deposit ratio was 72% at
June 30, 2023, up from 67% at March 31, 2023, and 60% at
June 30, 2022.
At June 30, 2023, our liquid assets and
investments and loans maturing within one year were $442.9 million
and our funds available for borrowing under our existing lines of
credit were $1.2 billion. 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
$2.43 billion in the second quarter of 2023, up 1% from
$2.40 billion in the first quarter of 2023 and consistent with
$2.43 billion in the second quarter a year ago. The average
yield on interest-earning assets was 5.31% in the second quarter of
2023, up from 5.10% in the preceding quarter and 3.83% in the
second quarter a year ago.
Average investment securities increased to
$727.8 million in the second quarter of 2023, compared to
$727.6 million in the first quarter of 2023 and
$589.6 million in the second quarter a year ago. The average
net tax equivalent yield on the securities portfolio was 2.40% for
the second quarter of 2023, consistent with 2.40% in the preceding
quarter and up from 1.59% in the year ago quarter. The average
estimated duration of the investment portfolio at June 30,
2023, was approximately three-years compared to approximately three
and a half-years at June 30, 2022. As of June 30, 2023, $66.1
million available for sale securities are scheduled to mature in
the next six months, $61.9 million are scheduled to mature in six
months to one year, and $175.6 million are scheduled to mature in
the following year, representing a total of $303.5 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 increased by $3.2 million in the
second quarter of 2023 resulting in total unrealized loss, net of
tax, of $27.5 million due largely to increasing interest rates,
compared to $24.3 million at March 31, 2023, and $19.9 million a
year ago. Total unrealized losses on held to maturity securities
were $4.2 million at June 30, 2023, compared to $4.2 million at
March 31, 2023, and $3.4 million a year ago.
Average interest bearing deposits in other banks
decreased to $66.1 million in the second quarter from $130.9
million in the first quarter of 2023 and $382.0 million in the
second quarter of 2022 as cash was used to fund the growing loan
portfolio.
“Portfolio loans increased $124.1 million during
the second quarter of 2023 as compared to the first quarter of
2023, largely as a result of new customer relationships and
expanding market share, as well as mortgages purchased from
Residential Mortgage,” said Mike Huston, Northrim Bank President.
Mr. Huston added that “last quarter we noted that we had a strong
loan pipeline, which materialized in the second quarter.” Portfolio
loans were $1.66 billion at June 30, 2023, up 8% from the
preceding quarter and up 18% from a year ago. Average portfolio
loans in the second quarter of 2023 were $1.60 billion, which
was up 5% from the preceding quarter and up 15% from a year ago.
Yields on average portfolio loans in the second quarter of 2023
increased to 6.48% from 6.28% in the first quarter of 2023 and
increased from 5.52% in the second quarter of 2022. The increase in
the yield on portfolio loans in the second quarter of 2023 compared
to the first quarter of 2023 and the second quarter a year ago is
primarily due to loan repricing due to the increases in interest
rates and new loans booked at higher rates due to changes in the
interest rate environment. Yields on average portfolio loans,
excluding consumer mortgage loans, were 6.57% in the second quarter
of 2023 as compared to 6.32% in the first quarter of 2023 and 5.51%
in the second quarter of 2022. 31% of loans mature or reprice in
the next three months, 13% of loans mature or reprice in three to
twelve months, and 17% 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
$2.30 billion at June 30, 2023, consistent with
$2.30 billion at March 31, 2023, and down 1% from
$2.34 billion a year ago. At June 30, 2023, 69% of total
deposits were held in business accounts and 31% of deposit balances
were held in consumer accounts. Northrim had approximately 33,000
deposit customers with an average balance of $70,000 as of
June 30, 2023. Northrim had 15 customers with balances over
$10 million as of June 30, 2023, which accounted for $332.6
million, or 14%, of total deposits. Of these $332.6 million of
deposits, approximately 41% 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 7% from the prior quarter
and decreased 14% year-over-year to $711.4 million at
June 30, 2023. Demand deposits decreased to 31% of total
deposits at June 30, 2023 from 34% at March 31, 2023 and 35% of
total deposits at March 31, 2022. Average interest-bearing deposits
were up 2% to $1.57 billion with an average cost of 1.56% in
the second quarter of 2023, compared to $1.54 billion and an
average cost of 1.20% in the first quarter of 2023, and up 4%
compared to $1.51 billion and an average cost of 0.16% in the
second quarter of 2022. Uninsured deposits totaled $910.7 million
or 40% of total deposits as of June 30, 2023 compared to $1.1
billion or 46% of total deposits as of December 31, 2022. As
interest rates continued to increase in the first six months of
2023, Northrim has taken a proactive, targeted approach to increase
deposit rates. There was no significant unusual deposit activity
during the first six months of 2023.
Shareholders’ equity was $221.3 million, or
$39.45 book value per share, at June 30, 2023, compared to
$224.4 million, or $39.56 book value per share, at March 31,
2023 and $215.3 million, or $37.90 book value per share, a
year ago. Tangible book value per share* was $36.60 at
June 30, 2023, compared to $36.74 at March 31, 2023, and
$35.08 per share a year ago. The decrease in shareholders’ equity
in the second quarter of 2023 as compared to the first quarter of
2023 was largely the result of the decrease in the fair value of
the available for sale securities portfolio, which decreased $3.0
million, net of tax, as well as dividends paid of $3.4 million and
repurchases of common stock of $2.5 million, which was only
partially offset by earnings of $5.6 million. The Company purchased
62,000 shares of common stock in the second quarter of 2023 at an
average cost of $40.33 per share and has 195,113 shares remaining
under the current share repurchase program as of June 30, 2023.
Tangible common equity to tangible assets* was 7.83% as of June 30,
2023. Tangible common equity to tangible common assets, excluding
the impact of the fair value of the available for sale securities
portfolio*, was 8.79% as of June 30, 2023, compared to 8.99% as of
March 31, 2023 and 8.38% as of June 30, 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 12.13% at June 30, 2023, compared to 12.75%
at March 31, 2023, and 12.74% at June 30, 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 $5.6 million at June 30, 2023 and down
from $6.4 million at March 31, 2023 and down from
$11.7 million a year ago. Of the NPAs at June 30, 2023,
$3.9 million, or 70% are nonaccrual loans related to three
commercial relationships.
Net adversely classified loans were
$6.9 million at June 30, 2023, as compared to
$7.2 million at March 31, 2023, and $8.8 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 $22,000 in the second quarter
of 2023, compared to net loan recoveries of $60,000 in the first
quarter of 2023, and net loan charge-offs of $46,000 in the second
quarter of 2022.
Special mention loans decreased to $5.9 million
at June 30, 2023 from $15.5 million at March 31, 2023. The
improvement comes primarily from a commercial credit that was
previously cited with documentation deficiencies that have since
been rectified. Northrim is actively working with the customers to
improve the credit risk profile of these loans.
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 two loan modification to
borrowers experiencing financial difficulty totaling $2.2 million,
net of government guarantees in the second quarter of 2023.
Northrim had $127.6 million, or 8% of portfolio
loans, in the Healthcare sector, $102.2 million, or 6% of portfolio
loans, in the Tourism sector, $75.7 million, or 5% of portfolio
loans, in the Accommodations sector, $72.5 million, or 4% of
portfolio loans, in the Retail sector, $71.6 million, or 4% of
portfolio loans, in the Fishing sector, $64.7 million, or 4% of
portfolio loans, in the Aviation (non-tourism) sector, and $48.6
million, or 3% in the Restaurants and Breweries sector as of
June 30, 2023.
Northrim estimates that $97.3 million, or
approximately 6% of portfolio loans, had direct exposure to the oil
and gas industry in Alaska, as of June 30, 2023, and $3.4
million of these loans are adversely classified. As of
June 30, 2023, Northrim has an additional $42.5 million in
unfunded commitments to companies with direct exposure to the oil
and gas industry in Alaska, and $816,000 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 StatementThis
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; inflation, supply-chain constraints,
and potential geopolitical instability, including the war in
Ukraine; 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://tax.alaska.gov/programs/programs/reports/RSB.aspx?Year=2023&Type=Spring
https://www.capitaliq.spglobal.com/web/client?auth=inherit&overridecdc=1&#markets/indexFinancials
|
|
|
|
|
|
|
|
|
Income Statement |
|
|
|
|
|
|
|
(Dollars in thousands, except per share data) |
Three Months Ended |
|
Year-to-date |
|
(Unaudited) |
June 30, |
March 31, |
June 30, |
|
June 30, |
June 30, |
|
|
|
2023 |
|
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
|
Interest Income: |
|
|
|
|
|
|
|
Interest and fees on loans |
$26,313 |
|
$23,694 |
|
$19,807 |
|
|
$50,007 |
|
$38,075 |
|
|
Interest on portfolio investments |
|
4,679 |
|
|
4,612 |
|
|
2,419 |
|
|
|
9,291 |
|
|
3,967 |
|
|
Interest on deposits in banks |
|
828 |
|
|
1,489 |
|
|
766 |
|
|
|
2,317 |
|
|
1,008 |
|
|
Total interest income |
|
31,820 |
|
|
29,795 |
|
|
22,992 |
|
|
|
61,615 |
|
|
43,050 |
|
|
Interest Expense: |
|
|
|
|
|
|
|
Interest expense on deposits |
|
6,114 |
|
|
4,583 |
|
|
599 |
|
|
|
10,697 |
|
|
1,174 |
|
|
Interest expense on borrowings |
|
564 |
|
|
180 |
|
|
181 |
|
|
|
744 |
|
|
360 |
|
|
Total interest expense |
|
6,678 |
|
|
4,763 |
|
|
780 |
|
|
|
11,441 |
|
|
1,534 |
|
|
Net interest income |
|
25,142 |
|
|
25,032 |
|
|
22,212 |
|
|
|
50,174 |
|
|
41,516 |
|
| |
|
|
|
|
|
|
|
Provision for credit losses |
|
1,407 |
|
|
360 |
|
|
463 |
|
|
|
1,767 |
|
|
313 |
|
|
Net interest income after provision for credit losses |
|
23,735 |
|
|
24,672 |
|
|
21,749 |
|
|
|
48,407 |
|
|
41,203 |
|
| |
|
|
|
|
|
|
|
Other Operating Income: |
|
|
|
|
|
|
|
Mortgage banking income |
|
3,913 |
|
|
2,008 |
|
|
5,900 |
|
|
|
5,921 |
|
|
12,882 |
|
|
Purchased receivable income |
|
1,018 |
|
|
977 |
|
|
566 |
|
|
|
1,995 |
|
|
968 |
|
|
Bankcard fees |
|
986 |
|
|
908 |
|
|
927 |
|
|
|
1,894 |
|
|
1,731 |
|
|
Service charges on deposit accounts |
|
505 |
|
|
457 |
|
|
402 |
|
|
|
962 |
|
|
776 |
|
|
Keyman insurance proceeds |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
2,002 |
|
|
Unrealized loss on marketable equity securities |
|
(234 |
) |
|
(223 |
) |
|
(810 |
) |
|
|
(457 |
) |
|
(1,232 |
) |
|
Other income |
|
792 |
|
|
781 |
|
|
822 |
|
|
|
1,573 |
|
|
1,503 |
|
|
Total other operating income |
|
6,980 |
|
|
4,908 |
|
|
7,807 |
|
|
|
11,888 |
|
|
18,630 |
|
| |
|
|
|
|
|
|
|
Other Operating Expense: |
|
|
|
|
|
|
|
Salaries and other personnel expense |
|
15,183 |
|
|
15,484 |
|
|
15,401 |
|
|
|
30,667 |
|
|
29,507 |
|
|
Data processing expense |
|
2,377 |
|
|
2,355 |
|
|
2,311 |
|
|
|
4,732 |
|
|
4,303 |
|
|
Occupancy expense |
|
1,811 |
|
|
1,943 |
|
|
1,748 |
|
|
|
3,754 |
|
|
3,474 |
|
|
Marketing expense |
|
933 |
|
|
564 |
|
|
814 |
|
|
|
1,497 |
|
|
1,239 |
|
|
Professional and outside services |
|
801 |
|
|
722 |
|
|
708 |
|
|
|
1,523 |
|
|
1,430 |
|
|
Insurance expense |
|
647 |
|
|
557 |
|
|
516 |
|
|
|
1,204 |
|
|
1,082 |
|
|
Intangible asset amortization expense |
|
3 |
|
|
4 |
|
|
6 |
|
|
|
7 |
|
|
12 |
|
|
OREO expense, net rental income and gains on sale |
|
(8 |
) |
|
26 |
|
|
19 |
|
|
|
18 |
|
|
7 |
|
|
Other operating expense |
|
2,035 |
|
|
1,854 |
|
|
1,715 |
|
|
|
3,889 |
|
|
3,285 |
|
|
Total other operating expense |
|
23,782 |
|
|
23,509 |
|
|
23,238 |
|
|
|
47,291 |
|
|
44,339 |
|
| |
|
|
|
|
|
|
|
Income before provision for income taxes |
|
6,933 |
|
|
6,071 |
|
|
6,318 |
|
|
|
13,004 |
|
|
15,494 |
|
|
Provision for income taxes |
|
1,356 |
|
|
1,241 |
|
|
1,523 |
|
|
|
2,597 |
|
|
3,473 |
|
|
Net income |
$5,577 |
|
$4,830 |
|
$4,795 |
|
|
$10,407 |
|
$12,021 |
|
| |
|
|
|
|
|
|
|
Basic EPS |
$0.99 |
|
$0.85 |
|
$0.83 |
|
|
$1.84 |
|
$2.05 |
|
|
Diluted EPS |
$0.98 |
|
$0.84 |
|
$0.83 |
|
|
$1.82 |
|
$2.03 |
|
|
Weighted average shares outstanding, basic |
|
5,632,174 |
|
|
5,691,432 |
|
|
5,750,873 |
|
|
|
5,661,803 |
|
|
5,844,455 |
|
|
Weighted average shares outstanding, diluted |
|
5,677,292 |
|
|
5,757,458 |
|
|
5,805,870 |
|
|
|
5,719,453 |
|
|
5,902,287 |
|
|
Balance Sheet |
|
|
|
|
(Dollars in thousands) |
|
|
|
|
(Unaudited) |
June 30, |
March 31, |
June 30, |
|
|
|
2023 |
|
|
2023 |
|
|
2022 |
|
| |
|
|
|
|
Assets: |
|
|
|
|
Cash and due from banks |
$34,809 |
|
$28,976 |
|
$24,035 |
|
|
Interest bearing deposits in other banks |
|
1,943 |
|
|
110,235 |
|
|
312,888 |
|
|
Investment securities available for sale, at fair value |
|
671,139 |
|
|
677,734 |
|
|
612,027 |
|
|
Investment securities held to maturity |
|
36,750 |
|
|
36,750 |
|
|
29,750 |
|
|
Marketable equity securities, at fair value |
|
10,604 |
|
|
10,515 |
|
|
9,122 |
|
|
Investment in Federal Home Loan Bank stock |
|
5,858 |
|
|
3,752 |
|
|
3,824 |
|
|
Loans held for sale |
|
60,759 |
|
|
23,985 |
|
|
63,080 |
|
|
|
|
|
|
|
Portfolio loans |
|
1,659,239 |
|
|
1,535,187 |
|
|
1,405,709 |
|
|
Allowance for credit losses, loans |
|
(15,645 |
) |
|
(14,157 |
) |
|
(11,537 |
) |
|
Net portfolio loans |
|
1,643,594 |
|
|
1,521,030 |
|
|
1,394,172 |
|
|
Purchased receivables, net |
|
21,866 |
|
|
21,190 |
|
|
15,277 |
|
|
Mortgage servicing rights, at fair value |
|
18,248 |
|
|
18,303 |
|
|
16,301 |
|
|
Other real estate owned, net |
|
273 |
|
|
273 |
|
|
5,638 |
|
|
Premises and equipment, net |
|
39,573 |
|
|
38,163 |
|
|
37,106 |
|
|
Lease right of use asset |
|
10,088 |
|
|
9,469 |
|
|
9,875 |
|
|
Goodwill and intangible assets |
|
15,977 |
|
|
15,980 |
|
|
15,997 |
|
|
Other assets |
|
66,726 |
|
|
63,682 |
|
|
62,062 |
|
|
Total assets |
$2,638,207 |
|
$2,580,037 |
|
$2,611,154 |
|
| |
|
|
|
|
Liabilities: |
|
|
|
|
Demand deposits |
$711,390 |
|
$767,772 |
|
$830,156 |
|
|
Interest-bearing demand |
|
795,128 |
|
|
717,910 |
|
|
666,283 |
|
|
Savings deposits |
|
275,602 |
|
|
292,857 |
|
|
349,208 |
|
|
Money market deposits |
|
232,698 |
|
|
262,478 |
|
|
319,843 |
|
|
Time deposits |
|
287,493 |
|
|
255,256 |
|
|
169,900 |
|
|
Total deposits |
|
2,302,311 |
|
|
2,296,273 |
|
|
2,335,390 |
|
|
Other borrowings |
|
64,887 |
|
|
13,991 |
|
|
14,302 |
|
|
Junior subordinated debentures |
|
10,310 |
|
|
10,310 |
|
|
10,310 |
|
|
Lease liability |
|
10,087 |
|
|
9,466 |
|
|
9,846 |
|
|
Other liabilities |
|
29,276 |
|
|
25,572 |
|
|
26,017 |
|
|
Total liabilities |
|
2,416,871 |
|
|
2,355,612 |
|
|
2,395,865 |
|
| |
|
|
|
|
Shareholders’ Equity: |
|
|
|
|
Total shareholders’ equity |
|
221,336 |
|
|
224,425 |
|
|
215,289 |
|
|
Total liabilities and shareholders’ equity |
$2,638,207 |
|
$2,580,037 |
|
$2,611,154 |
|
| |
|
|
|
Additional Financial
Information(Dollars in thousands)(Unaudited)
|
Composition of Portfolio Loans |
|
|
|
|
|
|
|
|
|
|
|
|
| |
June 30, 2023 |
|
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
| |
Balance |
% of total |
|
Balance |
% of total |
|
Balance |
% of total |
|
Balance |
% of total |
|
Balance |
% of total |
|
Commercial loans |
|
$666,949 |
|
40 |
% |
|
|
$608,499 |
|
39 |
% |
|
|
$600,292 |
|
41 |
% |
|
|
$584,533 |
|
41 |
% |
|
|
$547,495 |
|
39 |
% |
|
SBA Paycheck Protection Program loans |
|
3,723 |
|
— |
% |
|
|
4,375 |
|
— |
% |
|
|
7,331 |
|
— |
% |
|
|
11,724 |
|
1 |
% |
|
|
32,948 |
|
2 |
% |
|
CRE owner occupied loans |
|
258,440 |
|
16 |
% |
|
|
254,911 |
|
17 |
% |
|
|
255,470 |
|
17 |
% |
|
|
231,404 |
|
16 |
% |
|
|
241,575 |
|
17 |
% |
|
CRE nonowner occupied loans |
|
448,955 |
|
27 |
% |
|
|
432,679 |
|
28 |
% |
|
|
438,680 |
|
29 |
% |
|
|
418,845 |
|
30 |
% |
|
|
416,285 |
|
30 |
% |
|
Construction loans |
|
115,522 |
|
7 |
% |
|
|
119,641 |
|
8 |
% |
|
|
125,739 |
|
8 |
% |
|
|
118,452 |
|
8 |
% |
|
|
131,850 |
|
9 |
% |
|
Consumer loans |
|
173,584 |
|
10 |
% |
|
|
123,707 |
|
8 |
% |
|
|
82,883 |
|
5 |
% |
|
|
50,281 |
|
4 |
% |
|
|
43,852 |
|
3 |
% |
|
Subtotal |
|
1,667,173 |
|
|
|
|
1,543,812 |
|
|
|
|
1,510,395 |
|
|
|
|
1,415,239 |
|
|
|
|
1,414,005 |
|
|
|
Unearned loan fees, net |
|
(7,934 |
) |
|
|
|
(8,625 |
) |
|
|
|
(8,610 |
) |
|
|
|
(7,973 |
) |
|
|
|
(8,296 |
) |
|
|
Total portfolio loans |
|
$1,659,239 |
|
|
|
|
$1,535,187 |
|
|
|
|
$1,501,785 |
|
|
|
|
$1,407,266 |
|
|
|
|
$1,405,709 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Composition of Deposits |
|
|
|
|
|
|
|
|
|
|
|
|
| |
June 30, 2023 |
|
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
| |
Balance |
% of total |
|
Balance |
% of total |
|
Balance |
% of total |
|
Balance |
% of total |
|
Balance |
% of total |
|
Demand deposits |
|
$711,390 |
31 |
% |
|
|
$767,772 |
34 |
% |
|
|
$797,434 |
34 |
% |
|
|
$861,378 |
35 |
% |
|
|
$830,156 |
35 |
% |
|
Interest-bearing demand |
|
795,128 |
35 |
% |
|
|
717,910 |
31 |
% |
|
|
767,686 |
32 |
% |
|
|
757,422 |
31 |
% |
|
|
666,283 |
29 |
% |
|
Savings deposits |
|
275,602 |
12 |
% |
|
|
292,857 |
13 |
% |
|
|
320,917 |
13 |
% |
|
|
344,975 |
14 |
% |
|
|
349,208 |
15 |
% |
|
Money market deposits |
|
232,698 |
10 |
% |
|
|
262,478 |
11 |
% |
|
|
308,317 |
13 |
% |
|
|
309,690 |
13 |
% |
|
|
319,843 |
14 |
% |
|
Time deposits |
|
287,493 |
12 |
% |
|
|
255,256 |
11 |
% |
|
|
192,857 |
8 |
% |
|
|
165,870 |
7 |
% |
|
|
169,900 |
7 |
% |
|
Total deposits |
|
$2,302,311 |
|
|
|
$2,296,273 |
|
|
|
$2,387,211 |
|
|
|
$2,439,335 |
|
|
|
$2,335,390 |
|
Additional Financial
Information(Dollars in thousands)(Unaudited)
|
Asset Quality |
June 30, |
|
March 31, |
|
June 30, |
|
|
|
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
Nonaccrual loans |
$7,723 |
|
|
$8,775 |
|
|
$8,001 |
|
|
|
Loans 90 days past due and accruing |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Total nonperforming loans |
|
7,723 |
|
|
|
8,775 |
|
|
|
8,001 |
|
|
|
Nonperforming loans guaranteed by government |
|
(2,374 |
) |
|
|
(2,692 |
) |
|
|
(683 |
) |
|
|
Net nonperforming loans |
|
5,349 |
|
|
|
6,083 |
|
|
|
7,318 |
|
|
|
Other real estate owned |
|
273 |
|
|
|
273 |
|
|
|
5,638 |
|
|
|
Other real estate owned guaranteed by government |
|
— |
|
|
|
— |
|
|
|
(1,279 |
) |
|
|
Net nonperforming assets |
$5,622 |
|
|
$6,356 |
|
|
$11,677 |
|
|
|
Nonperforming loans, net of government guarantees / portfolio
loans |
|
0.32 |
|
% |
|
0.40 |
|
% |
|
0.52 |
|
% |
|
Nonperforming loans, net of government guarantees / portfolio
loans, |
|
|
|
|
|
|
|
net of government guarantees |
|
0.34 |
|
% |
|
0.43 |
|
% |
|
0.57 |
|
% |
|
Nonperforming assets, net of government guarantees / total
assets |
|
0.21 |
|
% |
|
0.25 |
|
% |
|
0.45 |
|
% |
|
Nonperforming assets, net of government guarantees / total
assets |
|
|
|
|
|
|
|
net of government guarantees |
|
0.22 |
|
% |
|
0.26 |
|
% |
|
0.47 |
|
% |
| |
|
|
|
|
|
|
|
Adversely classified loans, net of government guarantees |
$6,927 |
|
|
$7,221 |
|
|
$8,836 |
|
|
|
Special mention loans, net of government guarantees |
$5,882 |
|
|
$15,547 |
|
|
$5,665 |
|
|
|
Loans 30-89 days past due and accruing, net of government
guarantees / |
|
|
|
|
|
|
|
portfolio loans |
|
0.01 |
|
% |
|
0.06 |
|
% |
|
0.02 |
|
% |
|
Loans 30-89 days past due and accruing, net of government
guarantees / |
|
|
|
|
|
|
|
portfolio loans, net of government guarantees |
|
0.01 |
|
% |
|
0.06 |
|
% |
|
0.02 |
|
% |
| |
|
|
|
|
|
|
|
Allowance for credit losses / portfolio loans |
|
0.94 |
|
% |
|
0.92 |
|
% |
|
0.82 |
|
% |
|
Allowance for credit losses / portfolio loans, net of government
guarantees |
|
1.01 |
|
% |
|
0.99 |
|
% |
|
0.90 |
|
% |
|
Allowance for credit losses / nonperforming loans, net of
government |
|
|
|
|
|
|
|
guarantees |
|
292 |
|
% |
|
233 |
|
% |
|
158 |
|
% |
| |
|
|
|
|
|
|
|
Gross loan charge-offs for the quarter |
$49 |
|
|
$14 |
|
|
$166 |
|
|
|
Gross loan recoveries for the quarter |
|
($27 |
) |
|
|
($74 |
) |
|
|
($120 |
) |
|
|
Net loan (recoveries) charge-offs for the quarter |
$22 |
|
|
|
($60 |
) |
|
$46 |
|
|
|
Net loan charge-offs (recoveries) year-to-date |
|
($38 |
) |
|
|
($60 |
) |
|
$308 |
|
|
|
Net loan charge-offs (recoveries) for the quarter / average loans,
for the quarter |
|
— |
|
% |
|
— |
|
% |
|
— |
|
% |
|
Net loan charge-offs (recoveries) year-to-date / average
loans, |
|
|
|
|
|
|
|
year-to-date annualized |
|
— |
|
% |
|
(0.02 |
) |
% |
|
0.04 |
|
% |
Additional Financial
Information(Dollars in thousands)(Unaudited)
|
Nonperforming Assets Rollforward |
|
|
|
|
|
|
|
| |
Balance at March 31, 2023 |
Additions this quarter |
Payments this quarter |
Writedowns/Charge-offs this quarter |
Transfers toOREO/ REPO |
Transfers toPerforming Statusthis quarter |
Sales this quarter |
Balance at June 30, 2023 |
|
Commercial loans |
$6,375 |
|
|
$— |
|
($545 |
) |
|
($49 |
) |
|
$— |
|
$— |
|
$— |
$5,781 |
|
|
Commercial real estate |
|
2,095 |
|
|
— |
|
(449 |
) |
|
— |
|
|
— |
|
— |
|
— |
|
1,646 |
|
|
Construction loans |
|
109 |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
— |
|
— |
|
109 |
|
|
Consumer loans |
|
196 |
|
|
— |
|
(9 |
) |
|
— |
|
|
— |
|
— |
|
— |
|
187 |
|
|
Non-performing loans guaranteed by government |
|
(2,692 |
) |
|
— |
|
269 |
|
|
49 |
|
|
— |
|
— |
|
— |
|
(2,374 |
) |
|
Total non-performing loans |
|
6,083 |
|
|
— |
|
(734 |
) |
|
— |
|
|
— |
|
— |
|
— |
|
5,349 |
|
|
Other real estate owned |
|
273 |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
— |
|
— |
|
273 |
|
|
Total non-performing assets, |
|
|
|
|
|
|
|
|
|
net of government guarantees |
$6,356 |
|
|
$— |
|
($734 |
) |
|
$— |
|
|
$— |
|
$— |
|
$— |
$5,622 |
|
The following table details loan charge-offs, by
industry:
|
Loan Charge-offs by Industry |
|
|
|
|
| |
Three Months Ended |
| |
June 30, 2023 |
March 31, 2023 |
December 31, 2022 |
September 30, 2022 |
June 30, 2022 |
|
Charge-offs: |
|
|
|
|
|
|
Residential intellectual & developmental disability
facility |
$49 |
|
$— |
|
$— |
|
$— |
|
$— |
|
Land subdivision |
|
— |
|
— |
|
— |
|
— |
|
166 |
|
Architectural services |
|
— |
|
— |
|
— |
|
20 |
|
— |
|
Restaurants |
|
— |
|
— |
|
— |
|
25 |
|
— |
|
Consumer |
|
— |
|
14 |
|
— |
|
3 |
|
— |
|
Total charge-offs |
$49 |
$14 |
$ |
— |
$48 |
$166 |
Additional Financial
Information(Dollars in thousands)(Unaudited)
|
Average Balances, Yields, and Rates |
|
|
|
|
|
|
|
|
| |
Three Months Ended |
| |
June 30, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
| |
|
Average |
|
|
Average |
|
|
Average |
| |
Average |
Tax Equivalent |
|
Average |
Tax Equivalent |
|
Average |
Tax Equivalent |
| |
Balance |
Yield/Rate |
|
Balance |
Yield/Rate |
|
Balance |
Yield/Rate |
|
Assets |
|
|
|
|
|
|
|
|
|
Interest bearing deposits in other banks |
$66,058 |
|
4.96 |
% |
|
$130,929 |
|
4.55 |
% |
|
$382,015 |
|
0.79 |
% |
|
Portfolio investments |
|
727,833 |
|
2.40 |
% |
|
|
727,610 |
|
2.40 |
% |
|
|
589,553 |
|
1.59 |
% |
|
Loans held for sale |
|
37,594 |
|
5.96 |
% |
|
|
20,901 |
|
5.54 |
% |
|
|
59,677 |
|
4.16 |
% |
|
Portfolio loans |
|
1,603,126 |
|
6.48 |
% |
|
|
1,524,130 |
|
6.28 |
% |
|
|
1,398,149 |
|
5.52 |
% |
|
Total interest-earning assets |
|
2,434,611 |
|
5.31 |
% |
|
|
2,403,570 |
|
5.10 |
% |
|
|
2,429,394 |
|
3.83 |
% |
|
Nonearning assets |
|
185,342 |
|
|
|
|
185,755 |
|
|
|
|
172,655 |
|
|
|
Total assets |
$2,619,953 |
|
|
|
$2,589,325 |
|
|
|
$2,602,049 |
|
|
| |
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
|
|
Interest-bearing deposits |
$1,568,173 |
|
1.56 |
% |
|
$1,543,437 |
|
1.20 |
% |
|
$1,513,957 |
|
0.16 |
% |
|
Borrowings |
|
54,602 |
|
4.11 |
% |
|
|
24,366 |
|
2.92 |
% |
|
|
24,675 |
|
2.92 |
% |
|
Total interest-bearing liabilities |
|
1,622,775 |
|
1.65 |
% |
|
|
1,567,803 |
|
1.23 |
% |
|
|
1,538,632 |
|
0.20 |
% |
| |
|
|
|
|
|
|
|
|
|
Noninterest-bearing demand deposits |
|
735,615 |
|
|
|
|
756,088 |
|
|
|
|
808,186 |
|
|
|
Other liabilities |
|
34,514 |
|
|
|
|
41,067 |
|
|
|
|
31,064 |
|
|
|
Shareholders’ equity |
|
227,049 |
|
|
|
|
224,367 |
|
|
|
|
224,167 |
|
|
|
Total liabilities and shareholders’ equity |
$2,619,953 |
|
|
|
$2,589,325 |
|
|
|
$2,602,049 |
|
|
|
Net spread |
|
3.66 |
% |
|
|
3.87 |
% |
|
|
3.63 |
% |
|
NIM |
|
4.14 |
% |
|
|
4.22 |
% |
|
|
3.67 |
% |
|
NIMTE* |
|
4.21 |
% |
|
|
4.30 |
% |
|
|
3.70 |
% |
|
Cost of funds |
|
1.13 |
% |
|
|
0.83 |
% |
|
|
0.13 |
% |
|
Average portfolio loans to average |
|
|
|
|
|
|
|
|
|
interest-earning assets |
|
65.85 |
% |
|
|
|
63.41 |
% |
|
|
|
57.55 |
% |
|
|
Average portfolio loans to average total deposits |
|
69.59 |
% |
|
|
|
66.28 |
% |
|
|
|
60.21 |
% |
|
|
Average non-interest deposits to average |
|
|
|
|
|
|
|
|
|
total deposits |
|
31.93 |
% |
|
|
|
32.88 |
% |
|
|
|
34.80 |
% |
|
|
Average interest-earning assets to average |
|
|
|
|
|
|
|
|
|
interest-bearing liabilities |
|
150.03 |
% |
|
|
|
153.31 |
% |
|
|
|
157.89 |
% |
|
The components of the change in NIMTE* are detailed
in the table below:
|
|
2Q23 vs. 1Q23 |
2Q23 vs. 2Q22 |
|
Nonaccrual interest adjustments |
— |
% |
(0.11 |
)% |
|
Impact of SBA Paycheck Protection Program loans |
— |
% |
(0.17 |
)% |
|
Interest rates on loans and liabilities and loan fees, all other
loans |
(0.15 |
)% |
0.72 |
% |
|
Volume and mix of other interest-earning assets and
liabilities |
0.06 |
% |
0.07 |
% |
|
Change in NIMTE* |
(0.09 |
)% |
0.51 |
% |
Additional Financial
Information(Dollars in thousands)(Unaudited)
|
Average Balances, Yields, and Rates |
|
|
|
|
|
| |
Year-to-date |
| |
June 30, 2023 |
|
June 30, 2022 |
| |
|
Average |
|
|
Average |
| |
Average |
Tax Equivalent |
|
Average |
Tax Equivalent |
| |
Balance |
Yield/Rate |
|
Balance |
Yield/Rate |
|
Assets |
|
|
|
|
|
|
Interest bearing deposits in other banks |
$98,314 |
|
4.69 |
% |
|
$459,843 |
|
0.44 |
% |
|
Portfolio investments |
|
727,722 |
|
2.40 |
% |
|
|
540,563 |
|
1.43 |
% |
|
Loans held for sale |
|
29,294 |
|
5.80 |
% |
|
|
56,173 |
|
3.65 |
% |
|
Portfolio loans |
|
1,563,847 |
|
6.39 |
% |
|
|
1,389,050 |
|
5.40 |
% |
|
Total interest-earning assets |
|
2,419,177 |
|
5.21 |
% |
|
|
2,445,629 |
|
3.58 |
% |
|
Nonearning assets |
|
185,545 |
|
|
|
|
164,611 |
|
|
|
Total assets |
$2,604,722 |
|
|
|
$2,610,240 |
|
|
| |
|
|
|
|
|
|
Liabilities and Shareholders' Equity |
|
|
|
|
|
|
Interest-bearing deposits |
$1,555,874 |
|
1.39 |
% |
|
$1,519,995 |
|
0.16 |
% |
|
Borrowings |
|
39,567 |
|
3.74 |
% |
|
|
24,726 |
|
2.91 |
% |
|
Total interest-bearing liabilities |
|
1,595,441 |
|
1.44 |
% |
|
|
1,544,721 |
|
0.20 |
% |
| |
|
|
|
|
|
|
Noninterest-bearing demand deposits |
|
745,795 |
|
|
|
|
801,481 |
|
|
|
Other liabilities |
|
37,772 |
|
|
|
|
33,436 |
|
|
|
Shareholders' equity |
|
225,714 |
|
|
|
|
230,602 |
|
|
|
Total liabilities and shareholders' equity |
$2,604,722 |
|
|
|
$2,610,240 |
|
|
|
Net spread |
|
3.77 |
% |
|
|
3.38 |
% |
|
NIM |
|
4.18 |
% |
|
|
3.42 |
% |
|
NIMTE* |
|
4.25 |
% |
|
|
3.45 |
% |
|
Cost of funds |
|
0.98 |
% |
|
|
0.13 |
% |
|
Average portfolio loans to average interest-earning assets |
|
64.64 |
% |
|
|
|
56.80 |
% |
|
|
Average portfolio loans to average total deposits |
|
67.94 |
% |
|
|
|
59.83 |
% |
|
|
Average non-interest deposits to average total deposits |
|
32.40 |
% |
|
|
|
34.52 |
% |
|
|
Average interest-earning assets to average interest-bearing
liabilities |
|
151.63 |
% |
|
|
|
158.32 |
% |
|
The components of the change in NIMTE* are detailed
in the table below:
| |
YTD23 vs.YTD22 |
|
Nonaccrual interest adjustments |
(0.05 |
)% |
|
Impact of SBA Paycheck Protection Program loans |
(0.20 |
)% |
|
Interest rates and loan fees |
1.00 |
% |
|
Volume and mix of interest-earning assets and liabilities |
0.05 |
% |
|
Change in NIMTE* |
0.80 |
% |
Additional Financial
Information(Dollars in thousands, except per share
data)(Unaudited)
|
Capital Data (At quarter end) |
|
|
|
|
|
|
| |
June 30, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
|
|
Book value per share |
$39.45 |
|
|
$39.56 |
|
|
$37.90 |
|
|
|
Tangible book value per share* |
$36.60 |
|
|
$36.74 |
|
|
$35.08 |
|
|
|
Total shareholders’ equity/total assets |
|
8.39 |
|
% |
|
8.70 |
|
% |
|
8.24 |
|
% |
|
Tangible Common Equity/Tangible Assets* |
|
7.83 |
|
% |
|
8.13 |
|
% |
|
7.68 |
|
% |
|
Tier 1 Capital / Risk Adjusted Assets |
|
12.13 |
|
% |
|
12.75 |
|
% |
|
12.74 |
|
% |
|
Total Capital / Risk Adjusted Assets |
|
13.02 |
|
% |
|
13.60 |
|
% |
|
13.45 |
|
% |
|
Tier 1 Capital / Average Assets |
|
9.28 |
|
% |
|
9.40 |
|
% |
|
8.84 |
|
% |
|
Shares outstanding |
|
5,610,841 |
|
|
|
5,672,841 |
|
|
|
5,681,089 |
|
|
|
Total unrealized loss on AFS debt securities, net of income
taxes |
|
($27,470 |
) |
|
|
($24,311 |
) |
|
|
($19,911 |
) |
|
|
Total unrealized gain (loss) on derivatives and hedging activities,
net of income taxes |
$1,028 |
|
|
$827 |
|
|
$571 |
|
|
|
Profitability Ratios |
|
|
|
|
|
|
|
|
|
|
| |
June 30, 2023 |
|
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
|
|
For the quarter: |
|
|
|
|
|
|
|
|
|
|
|
NIM |
4.14 |
% |
4.22 |
% |
4.31 |
% |
4.22 |
% |
3.67 |
% |
|
NIMTE* |
4.21 |
% |
4.30 |
% |
4.36 |
% |
4.27 |
% |
3.70 |
% |
|
Efficiency ratio |
74.03 |
% |
78.51 |
% |
65.23 |
% |
63.69 |
% |
77.39 |
% |
|
Return on average assets |
0.85 |
% |
0.76 |
% |
1.26 |
% |
1.52 |
% |
0.74 |
% |
|
Return on average equity |
9.85 |
% |
8.73 |
% |
15.71 |
% |
18.18 |
% |
8.58 |
% |
|
|
June 30, 2023 |
|
June 30, 2022 |
|
|
Year-to-date: |
|
|
|
|
|
NIM |
4.18 |
% |
3.42 |
% |
|
NIMTE* |
4.25 |
% |
3.45 |
% |
|
Efficiency ratio |
76.19 |
% |
73.70 |
% |
|
Return on average assets |
0.81 |
% |
0.93 |
% |
|
Return on average equity |
9.30 |
% |
10.51 |
% |
*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.
| |
Three Months Ended |
| |
June 30, 2023 |
|
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
|
Net interest income |
$25,142 |
|
|
$25,032 |
|
|
$27,287 |
|
|
$26,311 |
|
|
$22,212 |
|
|
Divided by average interest-bearing assets |
|
2,434,611 |
|
|
|
2,403,570 |
|
|
|
2,513,862 |
|
|
|
2,471,640 |
|
|
|
2,429,394 |
|
|
Net interest margin (“NIM”)2 |
|
4.14 |
% |
|
|
4.22 |
% |
|
|
4.31 |
% |
|
|
4.22 |
% |
|
|
3.67 |
% |
| |
|
|
|
|
|
|
|
|
|
|
Net interest income |
$25,142 |
|
|
$25,032 |
|
|
$27,287 |
|
|
$26,311 |
|
|
$22,212 |
|
|
Plus: reduction in tax expense related to |
|
|
|
|
|
|
|
|
|
|
tax-exempt interest income |
|
400 |
|
|
|
429 |
|
|
|
325 |
|
|
|
284 |
|
|
|
193 |
|
|
|
$25,542 |
|
|
$25,461 |
|
|
$27,612 |
|
|
$26,595 |
|
|
$22,405 |
|
|
Divided by average interest-bearing assets |
|
2,434,611 |
|
|
|
2,403,570 |
|
|
|
2,513,862 |
|
|
|
2,471,640 |
|
|
|
2,429,394 |
|
|
NIMTE2 |
|
4.21 |
% |
|
|
4.30 |
% |
|
|
4.36 |
% |
|
|
4.27 |
% |
|
|
3.70 |
% |
| |
Year-to-date |
| |
June 30, 2023 |
|
June 30, 2022 |
|
Net interest income |
$50,174 |
|
|
$41,516 |
|
|
Divided by average interest-bearing assets |
|
2,419,177 |
|
|
|
2,445,629 |
|
|
Net interest margin ("NIM")3 |
|
4.18 |
% |
|
|
3.42 |
% |
| |
|
|
|
|
Net interest income |
$50,174 |
|
|
$41,516 |
|
|
Plus: reduction in tax expense related to |
|
|
|
|
tax-exempt interest income |
|
829 |
|
|
|
358 |
|
|
|
$51,003 |
|
|
$41,874 |
|
|
Divided by average interest-bearing assets |
|
2,419,177 |
|
|
|
2,445,629 |
|
|
NIMTE3 |
|
4.25 |
% |
|
|
3.45 |
% |
2Calculated using actual days in the quarter
divided by 365 for the quarters ended in 2023 and 2022,
respectively.
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 Per Share
Tangible book value per share is a non-GAAP measure
defined as shareholders’ equity, less intangible assets, divided by
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.
| |
June 30, 2023 |
|
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
| |
|
|
|
|
|
|
|
|
|
|
Total shareholders’ equity |
$221,336 |
|
$224,425 |
|
$218,629 |
|
$210,699 |
|
$215,289 |
|
Divided by shares outstanding |
|
5,611 |
|
|
5,673 |
|
|
5,701 |
|
|
5,681 |
|
|
5,681 |
|
Book value per share |
$39.45 |
|
$39.56 |
|
$38.35 |
|
$37.09 |
|
$37.90 |
| |
June 30, 2023 |
|
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
| |
|
|
|
|
|
|
|
|
|
|
Total shareholders’ equity |
|
$221,336 |
|
|
$224,425 |
|
|
$218,629 |
|
|
$210,699 |
|
|
$215,289 |
|
Less: goodwill and intangible assets |
|
15,977 |
|
|
15,980 |
|
|
15,984 |
|
|
15,990 |
|
|
15,997 |
| |
|
$205,359 |
|
|
$208,445 |
|
|
$202,645 |
|
|
$194,709 |
|
|
$199,292 |
|
Divided by shares outstanding |
|
5,611 |
|
|
5,673 |
|
|
5,701 |
|
|
5,681 |
|
|
5,681 |
|
Tangible book value per share |
|
$36.60 |
|
|
$36.74 |
|
|
$35.55 |
|
|
$34.27 |
|
|
$35.08 |
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.
|
Northrim BanCorp, Inc. |
June 30, 2023 |
|
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
| |
|
|
|
|
|
|
|
|
|
|
Total shareholders’ equity |
|
$221,336 |
|
|
|
$224,425 |
|
|
|
$218,629 |
|
|
|
$210,699 |
|
|
|
$215,289 |
|
|
Total assets |
|
2,638,207 |
|
|
|
2,580,037 |
|
|
|
2,674,318 |
|
|
|
2,717,514 |
|
|
|
2,611,154 |
|
|
Total shareholders’ equity to total assets |
|
8.39 |
% |
|
|
8.70 |
% |
|
|
8.18 |
% |
|
|
7.75 |
% |
|
|
8.24 |
% |
|
Northrim BanCorp, Inc. |
June 30, 2023 |
|
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
|
Total shareholders’ equity |
|
$221,336 |
|
|
$224,425 |
|
|
$218,629 |
|
|
$210,699 |
|
|
$215,289 |
|
|
Less: goodwill and other intangible assets, net |
|
15,977 |
|
|
|
15,980 |
|
|
|
15,984 |
|
|
|
15,990 |
|
|
|
15,997 |
|
|
Tangible common shareholders’ equity |
$205,359 |
|
|
$208,445 |
|
|
$202,645 |
|
|
$194,709 |
|
|
$199,292 |
|
| |
|
|
|
|
|
|
|
|
|
|
Total assets |
$2,638,207 |
|
|
$2,580,037 |
|
|
$2,674,318 |
|
|
$2,717,514 |
|
|
$2,611,154 |
|
|
Less: goodwill and other intangible assets, net |
|
15,977 |
|
|
|
15,980 |
|
|
|
15,984 |
|
|
|
15,990 |
|
|
|
15,997 |
|
|
Tangible assets |
$2,622,230 |
|
|
$2,564,057 |
|
|
$2,658,334 |
|
|
$2,701,524 |
|
|
$2,595,157 |
|
|
Tangible common equity ratio |
|
7.83 |
% |
|
|
8.13 |
% |
|
|
7.62 |
% |
|
|
7.21 |
% |
|
|
7.68 |
% |
*Non-GAAP Financial Measures
(Dollars and shares in thousands, except per share
data)(Unaudited)
Tangible Common Equity to Tangible Assets,
excluding the fair value of the available for sale securities
portfolio
Tangible common equity to tangible assets,
excluding the fair value of the available for sale 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, excluding the fair
value of the available for sale securities portfolio, and
shareholders' equity to total assets.
|
Northrim BanCorp, Inc. |
June 30, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
| |
|
|
|
|
|
|
Total shareholders' equity |
$221,336 |
|
|
$224,425 |
|
|
$215,289 |
|
|
Total assets |
|
2,638,207 |
|
|
|
2,580,037 |
|
|
|
2,611,154 |
|
|
Total shareholders' equity to total assets |
|
8.39 |
% |
|
|
8.70 |
% |
|
|
8.24 |
% |
|
Northrim BanCorp, Inc. |
June 30, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
| |
|
|
|
|
|
|
Total shareholders' equity |
$221,336 |
|
|
$224,425 |
|
|
$215,289 |
|
|
Less: goodwill and other intangible assets, net |
|
15,977 |
|
|
|
15,980 |
|
|
|
15,997 |
|
|
Less: unrealized gain (loss) on available for sale securities, net
income taxes |
|
(27,470 |
) |
|
|
(24,311 |
) |
|
|
(19,911 |
) |
|
Tangible common shareholders' equity, excluding the fair value of
the available for sale securities portfolio |
$232,829 |
|
|
$232,756 |
|
|
$219,203 |
|
| |
|
|
|
|
|
|
Total assets |
$2,638,207 |
|
|
$2,580,037 |
|
|
$2,611,154 |
|
|
Less: goodwill and other intangible assets, net |
|
15,977 |
|
|
|
15,980 |
|
|
|
15,997 |
|
|
Less: unrealized gain (loss) on available for sale securities, net
income taxes |
|
(27,470 |
) |
|
|
(24,311 |
) |
|
|
(19,911 |
) |
|
Tangible assets, excluding the fair value of the available for sale
securities portfolio |
$2,649,700 |
|
|
$2,588,368 |
|
|
$2,615,068 |
|
|
Tangible common equity ratio, excluding the fair value of the
available for sale securities portfolio |
|
8.79 |
% |
|
|
8.99 |
% |
|
|
8.38 |
% |
Note Transmitted on GlobeNewswire on July 27,
2023, at 12:15 pm Alaska Standard Time.
|
|
|
|
Contact: |
Joe Schierhorn, President, CEO, and COO |
| |
(907) 261-3308 |
| |
Jed Ballard, Chief Financial Officer |
| |
(907) 261-3539 |
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