Northrim BanCorp, Inc. (NASDAQ:NRIM) (“Northrim” or the "Company")
today reported net income of $4.8 million, or $0.83 per diluted
share, in the second quarter of 2022, compared to $7.2 million, or
$1.20 per diluted share, in the first quarter of 2022, and $8.3
million, or $1.33 per diluted share, in the second quarter a year
ago. The decline in second quarter 2022 profitability as compared
to the prior periods was primarily due to a continued decline in
mortgage banking income, an increase in the provision for credit
losses due to loan growth, and a decrease in the value of
marketable equity securities. The decrease in the value of
marketable equity securities reduced net income by $810,000 or
$0.14 per diluted share in the second quarter of 2022. These items
were partially offset by a 15% increase in net interest income in
the second quarter of 2022 compared to the prior quarter as
interest income increased and interest expense remained stable.
Dividends per share remained at $0.41 in the
second quarter of 2022 compared to the first quarter of 2022 and
increased from $0.37 per share in the second quarter of 2021. Share
repurchases also continued with 200,619 shares of common stock, or
3.5% of shares outstanding, repurchased in the second quarter.
“Second quarter results benefited from rising
interest rates resulting in a 15% increase in net interest income
but were negatively impacted by certain items and the continued
slowdown in mortgage originations,” said Joe Schierhorn, President
and Chief Executive Officer. “Our core deposit base, asset
sensitivity, and continued market share gains should continue to
drive improved margins and profitability in a rising interest rate
environment.”
Second Quarter 2022
Highlights:
- Net income decreased to $4.8
million, or $0.83 per diluted share, in the second quarter of 2022
compared to $7.2 million, or $1.20 per diluted share in the
preceding quarter and $8.3 million, or $1.33 per diluted share in
the second quarter of 2021.
- For the second quarter of 2022,
Community Banking revenue was $23.5 million, compared to $22.8
million in the first quarter of 2022, and $21.2 million in the
second quarter of 2021.
- Mortgage banking income was $5.9
million in the second quarter, compared to $7.0 million in the
first quarter of 2022, and $11.4 million in the second quarter of
2021.
- Net interest income in the second
quarter of 2022 increased 15% to $22.2 million compared to $19.3
million in the first quarter of 2022 and increased 16% compared to
$19.2 million in the second quarter of 2021.
- Core net interest income* in the
second quarter of 2022 (excluding Paycheck Protection Program
("PPP") interest and fees) increased 33% to $20.8 million in the
second quarter of 2022, compared to $15.6 million in the second
quarter of 2021.
- Net interest margin on a tax
equivalent basis (“NIMTE”)* was 3.70% for the second quarter of
2022, a 50-basis point increase from the first quarter of 2022 and
a 20-basis point increase compared to the second quarter of 2021
due primarily to the increased yields on loans and
investments.
- The weighted average interest rate
for new loans booked in the second quarter of 2022 was 4.66%
compared to 4.02% in the first quarter of 2022 and 3.59% in the
second quarter a year ago.
- Long-term investments in the second
quarter of 2022 were purchased with a weighted average yield of
3.22% compared to 1.93% in the first quarter of 2022 and 0.93% in
the second quarter a year ago.
- Return on average assets ("ROAA")
was 0.74% and return on average equity ("ROAE") was 8.58% for the
second quarter of 2022.
- Portfolio loans were $1.41 billion
at June 30, 2022, up 2% from the preceding quarter due to core loan
growth and down 6% from a year ago, primarily as a result of PPP
forgiveness.
- Core portfolio loans (loans
excluding PPP loans), were $1.37 billion at June 30, 2022, up 5%
from the preceding quarter and up 16% from a year ago. At June 30,
2022, 76% of core portfolio loans are adjustable rate and are
subject to rate increases as the prime rate and other indices
increase.
- Total deposits were $2.34 billion
at both June 30, 2022 and March 31, 2022, and up 9% from $2.15
billion a year ago. Demand deposits increased 4% year-over-year to
$830.2 million at June 30, 2022 and currently represent 35% of
total deposits.
- Repurchased 200,619 shares of
common stock in the second quarter of 2022 at an average price of
$41.04 per share.
|
Financial Highlights |
Three Months Ended |
|
(Dollars in thousands, except per share data) |
June 30, 2022 |
March 31, 2022 |
December 31, 2021 |
September 30, 2021 |
June 30, 2021 |
|
Total assets |
$2,611,154 |
|
$2,626,160 |
|
$2,724,719 |
|
$2,609,946 |
|
$2,453,567 |
|
|
Total portfolio loans |
$1,405,709 |
|
$1,377,387 |
|
$1,413,886 |
|
$1,450,657 |
|
$1,487,968 |
|
|
Total portfolio loans (excluding PPP loans) |
$1,373,837 |
|
$1,313,114 |
|
$1,295,657 |
|
$1,247,297 |
|
$1,187,032 |
|
|
Total deposits |
$2,335,390 |
|
$2,343,066 |
|
$2,421,631 |
|
$2,296,541 |
|
$2,146,438 |
|
|
Total shareholders' equity |
$215,289 |
|
$225,832 |
|
$237,817 |
|
$242,474 |
|
$237,218 |
|
|
Net income |
$4,795 |
|
$7,226 |
|
$8,114 |
|
$8,877 |
|
$8,345 |
|
|
Diluted earnings per share |
$0.83 |
|
$1.20 |
|
$1.31 |
|
$1.42 |
|
$1.33 |
|
|
Return on average assets |
|
0.74 |
% |
|
1.12 |
% |
|
1.23 |
% |
|
1.40 |
% |
|
1.40 |
% |
|
Return on average shareholders' equity |
|
8.58 |
% |
|
12.36 |
% |
|
13.14 |
% |
|
14.47 |
% |
|
14.10 |
% |
|
NIM |
|
3.67 |
% |
|
3.18 |
% |
|
3.52 |
% |
|
3.45 |
% |
|
3.48 |
% |
|
NIMTE* |
|
3.70 |
% |
|
3.20 |
% |
|
3.54 |
% |
|
3.47 |
% |
|
3.50 |
% |
|
Efficiency ratio |
|
77.39 |
% |
|
70.02 |
% |
|
73.48 |
% |
|
68.07 |
% |
|
67.00 |
% |
|
Total shareholders' equity/total assets |
|
8.24 |
% |
|
8.60 |
% |
|
8.73 |
% |
|
9.29 |
% |
|
9.67 |
% |
|
Tangible common equity/tangible assets* |
|
7.68 |
% |
|
8.04 |
% |
|
8.19 |
% |
|
8.73 |
% |
|
9.07 |
% |
|
Book value per share |
$37.90 |
|
$38.39 |
|
$39.54 |
|
$39.25 |
|
$38.22 |
|
|
Tangible book value per share* |
$35.08 |
|
$35.67 |
|
$36.88 |
|
$36.66 |
|
$35.64 |
|
|
Dividends per share |
$0.41 |
|
$0.41 |
|
$0.38 |
|
$0.38 |
|
$0.37 |
|
|
Common stock outstanding |
|
5,681,089 |
|
|
5,881,708 |
|
|
6,014,813 |
|
|
6,177,300 |
|
|
6,206,913 |
|
* References to core net interest income, NIMTE, tangible book
value per share, tangible common equity to tangible assets (all of
which exclude intangible assets), and core net interest income
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.
2nd Quarter Update:
- Growth and Paycheck
Protection Program:
- In 2020 and 2021, Northrim funded a
total of nearly 5,800 PPP loans totaling $612.6 million to both
existing and new customers. Management estimates that Northrim
funded approximately 24% of the number and 32% of the value of all
Alaska PPP second round loans.
- As of June 30, 2022, PPP has
resulted in 2,344 new customers totaling $69.7 million in non-PPP
loans, and $132.4 million in new deposit balances.
- As of June 30, 2022, Northrim
customers had received forgiveness through the U.S. Small Business
Administration ("SBA") on 5,407 PPP loans totaling $582.0 million,
of which 417 PPP loans totaling $33.7 million were forgiven in the
second quarter of 2022, 537 PPP loans totaling $56.9 million were
forgiven in the first quarter of 2022, and 4,451 PPP loans totaling
$491.4 million were forgiven in 2021. Of the PPP loans forgiven in
the second quarter of 2022, 414 loans totaling $33.4 million
related to PPP round two. As of June 30, 2022, approximately 99% of
the number of PPP round one loans funded and 88% of the number of
PPP round two loans funded have been forgiven.
- Customer
Accommodations: The Company implemented assistance to help
its customers experiencing financial challenges as a result of
COVID-19 in addition to participation in PPP lending. As of June
30, 2022, these accommodations include interest only and deferral
options on loan payments. The total outstanding principal balance
of loan modifications due to the impacts of COVID-19 as of June 30,
2022, March 31, 2022, and June 30, 2021 were as follows:
|
Loan Modifications due to COVID-19 as of June 30,
2022 |
|
(Dollars in thousands) |
Interest Only |
Full Payment Deferral |
Total |
|
Portfolio loans |
$23,573 |
|
$— |
$23,573 |
|
Number of modifications |
|
5 |
|
— |
|
5 |
|
Number of relationships |
|
2 |
|
— |
|
2 |
|
Loan Modifications due to COVID-19 as of March 31,
2022 |
|
(Dollars in thousands) |
Interest Only |
Full Payment Deferral |
Total |
|
Portfolio loans |
$45,074 |
|
$— |
$45,074 |
|
Number of modifications |
|
13 |
|
— |
|
13 |
|
Number of relationships |
|
3 |
|
— |
|
3 |
|
Loan Modifications due to COVID-19 as of June 30,
2021 |
|
(Dollars in thousands) |
Interest Only |
Full Payment Deferral |
Total |
|
Portfolio loans |
$75,613 |
$7,440 |
$83,053 |
|
Number of modifications |
|
23 |
|
1 |
|
24 |
|
Number of relationships |
|
10 |
|
1 |
|
11 |
The $23.6 million COVID-19 loan accommodations
as of June 30, 2022 are scheduled to return to normal principal and
interest payments in 2022.
- Provision for Credit
Losses: Northrim booked a provision for credit losses of
$463,000 for the quarter ended June 30, 2022. This compares to a
benefit for credit loss provisions of $150,000 during the previous
quarter and a $427,000 benefit for credit losses in the second
quarter a year ago. The provision for the current quarter was
recorded using a discounted cash flow model under the Current
Expected Credit Loss ("CECL") methodology and reflects expected
lifetime credit losses on loans and off-balance sheet unfunded loan
commitments. The increase in the provision for credit losses in the
second quarter of 2022 is primarily the result of growth in core
loans.
- Credit Quality:
Nonaccrual loans, net of government guarantees decreased to $7.3
million at June 30, 2022, compared to $8.7 million in the previous
quarter, and $12.0 million at June 30, 2021. Net adversely
classified loans decreased to $8.8 million at June 30, 2022,
compared to $11.7 million in the first quarter of 2022 and $14.1
million in the second quarter a year ago. Net loan charge-offs were
$46,000 in the second quarter of 2022, compared to net loan
charge-offs of $262,000 in the first quarter and $64,000 in the
second quarter of 2021.
- Capital
Management: At June 30, 2022, the Company’s tangible
common equity to tangible assets* ratio was 7.68% and the capital
of Northrim Bank (the "Bank") was well in excess of all regulatory
requirements. During the second quarter of 2022, the Company
repurchased 200,619 shares of common stock under the previously
announced share repurchase programs, with no shares remaining of
the 300,000 shares previously authorized for repurchase in February
2022.
Alaska Economic Update(Note:
sources for information included in this section are included on
page 12.)
The Alaska economy has seen continued job growth
and personal income gains. A strong rebound in tourism activity,
coupled with high oil prices has benefited the state. “The national
focus on supply chain issues and the desire for more domestic
production should improve the demand for Alaska’s vast natural
resources,” stated Mark Edwards, EVP Chief Credit Officer and Bank
Economist. “Like the rest of the nation, Alaska’s housing market
saw large price increases over the last year. However, we expect
the rapidly rising interest rate environment to temper the Alaska
housing market in the second half of 2022.”
The Alaska Department of Labor ("DOL") has
released data through May of 2022. The DOL reports total payroll
jobs in Alaska increased 2.9% or 8,900 jobs compared to May of
2021. The Leisure and Hospitality sector showed the fastest year
over year increase of 12.4%. Tourism related jobs were the hardest
hit from the pandemic travel restrictions, but were also the
quickest to rebound. The Oil and Gas sector has benefited from high
energy prices and added 600 jobs since May of 2021, a 9.1%
increase. Other sectors showing improvement over the last 12 months
include Trade, Warehousing, and Utilities (+6.8%), Other Services
(+4.8%); Financial Activities (+2.8%), and Professional and
Business Services (+2.6%). The only private sectors to decline year
over year were Manufacturing (-2.9%) and Information (-2.1%). The
Government sector was up slightly by 0.6%, an increase of 500 jobs
through May 2022 year-over-year.
Alaska’s Gross State Product (“GSP”), was
estimated to be $58 billion at the end of 2021 by the Federal
Bureau of Economic Analysis ("BEA"). This was a 0.3% increase in
2021 over 2020 figures. The BEA also calculated Alaska’s seasonally
adjusted personal income was $49 billion in 2021, an improvement of
5.9% over 2020. This was largely a result of COVID related
government transfer payments and an improvement in employment
leading to higher wage income last year.
The price of Alaska North Slope crude oil began
2021 averaging $55.56 a barrel in January and climbed steadily
throughout the year due to rising global demand to a monthly
average high of $84.36 in October 2021. 2022 began with a monthly
average of $86.50 a barrel in January and surpassed $100 in March
after the war in Ukraine began. Prices increased in the second
quarter of 2022, reaching a monthly average of $120.17 a barrel in
June.
Alaska’s home mortgage delinquency level
continues to be better than most of the nation. According to the
Mortgage Bankers Association, Alaska’s delinquency rate in the
first quarter of 2022 was 3.49% compared to the national average
rate of 3.84%. The Mortgage Bankers Association survey reported
that the mortgage foreclosure rate in Alaska in the first quarter
of 2022 was identical to the national average rate of 0.53%.
According to the Alaska Multiple Listing
Services, the average sales price of a single family home in
Anchorage rose 6.9% in 2021 to $424,148. In the first six months of
2022 prices climbed another 7.5% to $456,052. Average sales prices
in the Matanuska Susitna Borough rose 15.6% in 2021 and another 11%
in the first six months of 2022 to $386,429. These two markets
represent where the vast majority of the Bank’s residential lending
activity occurs. Prices also increased 13.9% in the Fairbanks North
Star Borough, 13.4% in the Kenai Peninsula Borough, and 13.8% in
the Kodiak Island Borough in 2021.
The number of housing units sold in Anchorage
was up significantly in 2021 by 11.2%, following an increase of
19.5% in 2020, as reported by the Alaska Multiple Listing Services.
The Matanuska Susitna Borough also had strong sales activity, up
11.7% in 2021 and 9.7% in 2020.
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 2022, Northrim
generated a ROAA of 0.74% and a ROAE of 8.58%, compared to 1.12%
and 12.36%, respectively, in the first quarter of 2022 and 1.40%
and 14.10%, respectively, in the second quarter a year ago.
Net Interest Income/Net Interest Margin
Net interest income increased 16% to
$22.2 million in the second quarter of 2022 compared to
$19.2 million in the second quarter of 2021 and increased 15%
compared to $19.3 million in the first quarter of 2022.
Interest income continues to benefit from the amortization of PPP
loan fees and the full recognition of the deferred PPP loan fees
upon forgiveness by the SBA. During the second quarter of 2022,
Northrim received $33.7 million in loan forgiveness through the
SBA, compared to $56.9 million in loan forgiveness during the prior
quarter, resulting in total net PPP fee income of $1.3 million and
$2.1 million, respectively. As of June 30, 2022, there was
$1.1 million of net deferred PPP fee income remaining.
NIMTE* was 3.70% in the second quarter of 2022
compared to 3.20% in the preceding quarter and 3.50% in the second
quarter a year ago. NIMTE* increased 50 basis points in the second
quarter of 2022 compared to the prior quarter and 20 basis points
compared to the second quarter of 2021 primarily due to higher
yields on portfolio loans, investments, and interest bearing
deposits in other banks. The weighted average interest rate for new
loans booked in the second quarter of 2022 was 4.66% compared to
4.02% in the first quarter of 2022 and 3.59% in the second quarter
a year ago. Additionally, the Company purchased long-term
investments in the second quarter of 2022 with a weighted average
yield of 3.22% compared to 1.93% in the first quarter of 2022 and
0.93% in the second quarter a year ago. Also notable during the
second quarter of 2022 was the impact of SBA PPP loan fees and
interest on net interest income, which increased our NIMTE* by 18
basis points during the quarter compared to what our NIMTE* would
have been if we had not made any SBA PPP loans. “We expect our net
interest margin to continue to improve with increases in interest
rates in 2022, as nearly 75% of our loan portfolio has adjusting
rates and our large cash position will reprice immediately upon any
rate increases,” 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,
20221.
Provision for Credit Losses
Northrim recorded a provision for credit losses
of $463,000 in the second quarter of 2022, which includes a
$189,000 provision for credit losses on unfunded commitments and a
provision for credit losses on loans of $274,000. This compares to
a benefit to the provision for credit losses of $150,000 in the
first quarter of 2022, and a benefit to the provision for credit
losses of $427,000 in the second quarter a year ago. The provision
for credit losses in the second quarter of 2022 is largely
attributable to the growth in our core loan portfolio.
Nonperforming loans, net of government
guarantees, decreased during the quarter to $7.3 million at
June 30, 2022, compared to $8.7 million at March 31,
2022, and decreased compared to $12.0 million at June 30,
2021. The allowance for credit losses was 158% of nonperforming
loans, net of government guarantees, at the end of the second
quarter of 2022, compared to 130% three months earlier and 121% a
year ago.
|
1As of March 31, 2022, the S&P U.S. Small Cap Bank Index
tracked 289 banks with total common market capitalization between
$250 million to $1B for the following ratios: NIMTE* of 2.78%. |
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
$7.8 million, or 26% of total second quarter 2022 revenues, as
compared to $10.8 million, or 36% of revenues in the first
quarter of 2022, and $14.1 million, or 42% of revenues in the
second quarter of 2021. The decrease in other operating income in
the second quarter of 2022 as compared to the preceding quarter is
primarily the result of $2.0 million in life insurance proceeds
received in the first quarter of 2022 in connection with the death
of the Company’s former Executive Vice President, General Counsel
and Corporate Secretary who passed away on November 11, 2021.
Additionally, there were decreases in the value of marketable
equity securities and mortgage banking income. These decreases were
only partially offset by increases in bankcard fees, purchased
receivable income, and service charges on deposit accounts. The
decrease in other operating income in the second quarter of 2022 as
compared to the second quarter a year ago was due primarily to a
lower volume of mortgage activity.
Other Operating Expenses
Operating expenses were $23.2 million in the
second quarter of 2022, compared to $21.1 million in the first
quarter of 2022, and $22.3 million in the second quarter of 2021.
The increase in other operating expenses in the second quarter of
2022 compared to the first quarter of 2022 is primarily due to
increased salaries and other personnel expense and higher mortgage
commissions expense due to higher mortgage volume, as well as
increased marketing expense due to the timing of payments for
charitable contributions.
Income Tax Provision
In the second quarter of 2022, Northrim recorded
$1.5 million in state and federal income tax expense for an
effective tax rate of 24.1%, compared to $2.0 million, or
21.3% in the first quarter of 2022 and $3.1 million, or 26.9%
in the second quarter a year ago. The increase in the tax rate in
the second quarter of 2022 as compared to the first quarter of 2022
is primarily the result of a decrease in tax credits and tax exempt
interest income as a percentage of pre-tax income.
Community Banking
Net interest income in the Community Banking
segment totaled $21.6 million in the second quarter of 2022,
compared to $18.9 million in the first quarter of 2022 and
$18.5 million in the second quarter of 2021. Net interest
income benefited from $1.5 million of PPP income in the second
quarter of 2022, and $2.3 million of PPP income in the first
quarter of 2022. As of June 30, 2022, there was $1.1 million of
unearned loan fees net of costs related to round one and round two
PPP loans.
The following table provides highlights of the
Community Banking segment of Northrim:
| |
Three Months Ended |
|
(Dollars in thousands, except per share data) |
June 30, 2022 |
March 31, 2022 |
December 31, 2021 |
September 30, 2021 |
June 30, 2021 |
|
Net interest income |
$21,603 |
$18,909 |
|
$21,150 |
|
$19,728 |
|
$18,468 |
|
|
Provision (benefit) for credit losses |
|
463 |
|
(150 |
) |
|
(1,078 |
) |
|
(1,106 |
) |
|
(427 |
) |
|
Other operating income |
|
1,907 |
|
3,841 |
|
|
2,308 |
|
|
2,765 |
|
|
2,772 |
|
|
Other operating expense |
|
16,415 |
|
14,831 |
|
|
15,583 |
|
|
14,849 |
|
|
14,551 |
|
|
Income before provision for income taxes |
|
6,632 |
|
8,069 |
|
|
8,953 |
|
|
8,750 |
|
|
7,116 |
|
|
Provision for income taxes |
|
1,605 |
|
1,641 |
|
|
1,211 |
|
|
1,955 |
|
|
1,850 |
|
|
Net income |
$5,027 |
$6,428 |
|
$7,742 |
|
$6,795 |
|
$5,266 |
|
|
Weighted average shares outstanding, diluted |
|
5,805,870 |
|
5,997,351 |
|
|
6,177,766 |
|
|
6,265,602 |
|
|
6,277,265 |
|
|
Diluted earnings per share |
$0.87 |
$1.07 |
|
$1.25 |
|
$1.08 |
|
$0.84 |
|
| |
Year-to-date |
|
(Dollars in thousands, except per share data) |
June 30, 2022 |
June 30, 2021 |
|
Net interest income |
$40,512 |
$37,202 |
|
|
Provision (benefit) for credit losses |
|
313 |
|
|
(1,915 |
) |
|
Other operating income |
|
5,748 |
|
|
5,046 |
|
|
Other operating expense |
|
31,246 |
|
|
28,215 |
|
|
Income before provision for income taxes |
|
14,701 |
|
|
15,948 |
|
|
Provision for income taxes |
|
3,246 |
|
|
3,302 |
|
|
Net income |
$11,455 |
$12,646 |
|
|
Weighted average shares outstanding, diluted |
|
5,902,287 |
|
|
6,280,369 |
|
|
Diluted earnings per share |
$1.94 |
$2.02 |
|
Home Mortgage Lending
During the second quarter of 2022, mortgage loan
volume increased to $191.0 million, of which 90% was for new
home purchases, compared to $143.6 million and 76% of loans
funded for new home purchases in the first quarter of 2022, and
decreased as compared to $286.3 million, of which 69% was for
new home purchases in the second quarter of 2021. The rising
interest rate environment has caused the housing market to slow
down compared to prior year and decreased the yields on mortgage
loans sold in the second quarter of 2022 as compared to the prior
quarter and the second quarter of the prior year.
The net change in fair value of mortgage
servicing rights decreased mortgage banking income by $250,000
during the second quarter of 2022, primarily due to an increase in
the discount rate used to value the mortgage servicing rights,
which was generally caused by the increase in mortgage rates and
only partially offset by a reduction in estimated prepayment
speeds.
As of June 30, 2022, Northrim serviced
3,241 loans in its $818.3 million home-mortgage-servicing
portfolio, a 4% increase compared to the $789.4 million
serviced for the first quarter of 2022, and a 15% increase from the
$713.9 million serviced a year ago. Delinquencies in the loan
servicing portfolio totaled 2.6% at June 30, 2022, compared to
3.3% at June 30, 2021. Mortgage servicing revenue contributed
$1.9 million to revenues in the second quarter of 2022,
compared to $1.8 million in the first quarter of 2022, and
$2.5 million in the second quarter of 2021.
Total mortgage servicing income fluctuates based
on the number of mortgage servicing rights originated during the
period and changes in the fair value of those servicing rights. The
fair value of mortgage servicing rights is driven by interest rate
volatility and the number of serviced mortgages that pay off during
the period, as well as fluctuations in estimated prepayment speeds
based on published industry metrics. The change in the fair value
of mortgage servicing rights was a decrease of $250,000 for the
second quarter of 2022, compared to an increase of $711,000 for the
first quarter of 2022 and a decrease of $567,000 for the second
quarter of 2021.
The following table provides highlights of the
Home Mortgage Lending segment of Northrim:
| |
Three Months Ended |
|
(Dollars in thousands, except per share data) |
June 30,2022 |
March 31, 2022 |
December 31, 2021 |
September 30, 2021 |
June 30, 2021 |
|
Mortgage commitments |
$116,167 |
|
$130,208 |
|
$81,617 |
|
$169,436 |
|
$173,994 |
|
|
Mortgage loans funded for sale |
$191,023 |
|
$143,575 |
|
$247,249 |
|
$283,165 |
|
$286,314 |
|
|
Mortgage loan refinances to total fundings |
|
10 |
% |
|
24 |
% |
|
30 |
% |
|
23 |
% |
|
31 |
% |
|
Mortgage loans serviced for others |
$818,266 |
|
$789,382 |
|
$772,764 |
|
$750,327 |
|
$713,926 |
|
| |
|
|
|
|
|
|
Net realized gains on mortgage loans sold |
$4,649 |
|
$3,921 |
|
$7,214 |
|
$7,957 |
|
$9,470 |
|
|
Change in fair value of mortgage loan commitments, net |
|
(603 |
) |
|
409 |
|
|
(1,687 |
) |
|
533 |
|
|
(427 |
) |
|
Total production revenue |
|
4,046 |
|
|
4,330 |
|
|
5,527 |
|
|
8,490 |
|
|
9,043 |
|
|
Mortgage servicing revenue |
|
1,932 |
|
|
1,771 |
|
|
1,975 |
|
|
2,449 |
|
|
2,452 |
|
|
Change in fair value of mortgage servicing rights: |
|
|
|
|
|
|
Due to changes in model inputs of assumptions1 |
|
(225 |
) |
|
1,192 |
|
|
(89 |
) |
|
(928 |
) |
|
16 |
|
|
Other2 |
|
(25 |
) |
|
(481 |
) |
|
(460 |
) |
|
(530 |
) |
|
(583 |
) |
|
Total mortgage servicing revenue, net |
|
1,682 |
|
|
2,482 |
|
|
1,426 |
|
|
991 |
|
|
1,885 |
|
|
Other mortgage banking revenue |
|
172 |
|
|
170 |
|
|
316 |
|
|
412 |
|
|
432 |
|
|
Total mortgage banking income |
$5,900 |
|
$6,982 |
|
$7,269 |
|
$9,893 |
|
$11,360 |
|
| |
|
|
|
|
|
|
Net interest income |
$609 |
|
$395 |
|
$560 |
|
$704 |
|
$724 |
|
|
Mortgage banking income |
|
5,900 |
|
|
6,982 |
|
|
7,269 |
|
|
9,893 |
|
|
11,360 |
|
|
Other operating expense |
|
6,823 |
|
|
6,270 |
|
|
7,416 |
|
|
7,685 |
|
|
7,785 |
|
|
(Loss) income before provision for income taxes |
|
(314 |
) |
|
1,107 |
|
|
413 |
|
|
2,912 |
|
|
4,299 |
|
|
(Benefit) provision for income taxes |
|
(82 |
) |
|
309 |
|
|
41 |
|
|
830 |
|
|
1,220 |
|
|
Net (loss) income |
($232 |
) |
$798 |
|
$372 |
|
$2,082 |
|
$3,079 |
|
| |
|
|
|
|
|
|
Weighted average shares outstanding, diluted |
|
5,805,870 |
|
|
5,997,351 |
|
|
6,177,766 |
|
|
6,265,602 |
|
|
6,277,265 |
|
|
Diluted earnings per share |
($0.04 |
) |
$0.13 |
|
$0.06 |
|
$0.34 |
|
$0.49 |
|
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, 2022 |
June 30, 2021 |
|
Mortgage loans funded for sale |
$334,598 |
|
$587,277 |
|
|
Mortgage loan refinances to total fundings |
|
16 |
% |
|
46 |
% |
| |
|
|
|
Net realized gains on mortgage loans sold |
$8,569 |
|
$21,265 |
|
|
Change in fair value of mortgage loan commitments, net |
|
(193 |
) |
|
(329 |
) |
|
Total production revenue |
|
8,376 |
|
|
20,936 |
|
|
Mortgage servicing revenue |
|
3,703 |
|
|
4,604 |
|
|
Change in fair value of mortgage servicing rights: |
|
|
|
Due to changes in model inputs of assumptions1 |
|
967 |
|
|
(164 |
) |
|
Other2 |
|
(506 |
) |
|
(1,412 |
) |
|
Total mortgage servicing revenue, net |
|
4,164 |
|
|
3,028 |
|
|
Other mortgage banking revenue |
|
342 |
|
|
1,018 |
|
|
Total mortgage banking income |
$12,882 |
|
$24,982 |
|
| |
|
|
|
Net interest income |
$1,004 |
|
$1,483 |
|
|
Mortgage banking income |
|
12,882 |
|
|
24,982 |
|
|
Other operating expense |
|
13,093 |
|
|
15,448 |
|
|
Income before provision for income taxes |
|
793 |
|
|
11,017 |
|
|
Provision for income taxes |
|
227 |
|
|
3,137 |
|
|
Net income |
$566 |
|
$7,880 |
|
| |
|
|
|
Weighted average shares outstanding, diluted |
|
5,902,287 |
|
|
6,280,369 |
|
|
Diluted earnings per share |
$0.10 |
|
$1.25 |
|
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 $2.61 billion
at June 30, 2022, down 1% from the preceding quarter and up 6%
from a year ago. Northrim’s loan-to-deposit ratio was 60% at
June 30, 2022, up slightly from 59% at March 31, 2022, and
down from 69% at June 30, 2021.
Liquidity levels remain high with interest
bearing deposits in other banks at $312.9 million, representing 13%
of interest-earning assets as of June 30, 2022, compared to
14% at June 30, 2021.
Average interest-earning assets were
$2.43 billion in the second quarter of 2022, down 1% from
$2.46 billion in the first quarter of 2022 and up 10% from
$2.22 billion in the second quarter a year ago. The average
yield on interest-earning assets was 3.83% in the second quarter of
2022, up from 3.33% in the preceding quarter and 3.69% in the
second quarter a year ago.
Average investment securities increased to
$589.6 million in the second quarter of 2022, compared to
$491.0 million in the first quarter of 2022 and
$354.3 million in the second quarter a year ago. The average
net tax equivalent yield on the securities portfolio was 1.59% for
the second quarter of 2022, up from 1.23% in the preceding quarter
and up from 1.32% in the year ago quarter. The average estimated
duration of the investment portfolio at June 30, 2022, was
approximately three and a half years.
“Core loans, excluding PPP loans, increased
$60.7 million during the second quarter of 2022 as compared to the
first quarter of 2022 as new customer relationships continued to
expand and grow,” said Michael Huston, Bank President and Chief
Lending Officer. At June 30, 2022, commercial loans
represented 38% of total loans, PPP loans represented 2% of total
loans, commercial real estate owner occupied loans comprised 17% of
total loans, commercial real estate non-owner occupied loans
comprised 29% of total loans, and construction loans made up 9% of
total loans. Portfolio loans were $1.41 billion at
June 30, 2022, up 2% from the preceding quarter and down 6%
from a year ago. Portfolio loans excluding the impact from PPP
(core loans) were $1.37 billion at June 30, 2022 up 5% from
the preceding quarter and up 16% from a year ago. Average portfolio
loans in the second quarter of 2022 were $1.40 billion, which
was up 1% from the preceding quarter and down 9% from a year ago.
Yields on average portfolio loans in the second quarter of 2022
increased to 5.52% from 5.27% in the first quarter of 2022 and
increased from 4.75% in the second quarter of 2021. The increase in
the yield on portfolio loans in the second quarter of 2022 compared
to the first quarter of 2022 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.
Alaskans continue to account for substantially
all of Northrim’s deposit base, which is primarily made up of
low-cost transaction accounts. Total deposits were
$2.34 billion at both June 30, 2022 and March 31, 2022,
up 9% from $2.15 billion a year ago. Demand deposits increased
by 2% from the prior quarter and increased 4% year-over-year to
$830.2 million at June 30, 2022. Average interest-bearing
deposits were down 1% to $1.51 billion with an average cost of
0.16% in the second quarter of 2022, compared to $1.53 billion
and an average cost of 0.15% in the first quarter of 2022, and up
15% compared to $1.32 billion and an average cost of 0.27% in
the second quarter of 2021.
Shareholders’ equity was $215.3 million, or
$37.90 book value per share, at June 30, 2022, compared to
$225.8 million, or $38.39 book value per share, at March 31,
2022 and $237.2 million, or $38.22 book value per share, a
year ago. Tangible book value per share* was $35.08 at
June 30, 2022, compared to $35.67 at March 31, 2022, and
$35.64 per share a year ago. The decrease in shareholders' equity
in the second quarter of 2022 as compared to the first quarter of
2022 was largely the result of $8.2 million for the repurchase of
stock during the quarter, as well as the decrease in the fair value
of the available for sale securities portfolio, which decreased
$5.5 million, net of tax, and dividends paid of $2.3 million, which
was only partially offset by earnings of $4.8 million. 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 12.74% at June 30, 2022, compared to 13.76%
at March 31, 2022, and 14.54% at June 30, 2021.
Asset Quality
Nonperforming assets ("NPAs") net of government
guarantees were $11.7 million at June 30, 2022, down from
$13.1 million at March 31, 2022 and from $17.8 million a
year ago. Of the NPAs at June 30, 2022, $5.9 million, or 74%
are nonaccrual loans related to five commercial relationships. One
of these relationships, which totaled $915,000 at June 30,
2022, is a business in the medical industry.
Net adversely classified loans were
$8.8 million at June 30, 2022, as compared to
$11.7 million at March 31, 2022, and $14.1 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 $46,000 in the second quarter
of 2022, compared to net loan charge-offs of $262,000 in the first
quarter of 2022, and net loan charge-offs of $64,000 in the second
quarter of 2021.
Performing restructured loans that were not
included in nonaccrual loans at June 30, 2022, net of
government guarantees were $588,000, down from $596,000 three
months earlier and down from $777,000 a year ago. Borrowers who are
in financial difficulty and who have been granted concessions that
may include interest rate reductions, term extensions, or payment
alterations are categorized as restructured loans, unless it is the
result of the COVID-19 global pandemic. The Company presents
restructured loans that are performing separately from those that
are classified as nonaccrual to provide more information on this
category of loans and to differentiate between accruing performing
and nonperforming restructured loans.
Excluding SBA PPP loans, Northrim had $121.3
million, or 9% of total portfolio loans, in the Healthcare sector;
$96.6 million, or 7% of portfolio loans, in the Tourism sector;
$63.1 million, or 5% in Retail loans; $50.0 million, or 4% of
portfolio loans, in the Aviation (non-tourism) sector; $59.9
million, or 4% in the Accommodations sector; $58.5 million, or 4%
in the Fishing sector; and $51.1 million, or 4% in the Restaurants
and Breweries sector as of June 30, 2022.
Northrim estimates that $59.2 million, or
approximately 4% of portfolio loans excluding SBA PPP loans, had
direct exposure to the oil and gas industry in Alaska, as of
June 30, 2022, and $3.2 million of these loans are adversely
classified. As of June 30, 2022, Northrim has an additional
$68.1 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 17 branches in
Anchorage, the Matanuska Valley, Soldotna, Juneau, Fairbanks,
Ketchikan, and Sitka, and loan production offices in Kodiak and
Nome, 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. The
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, and statements related to the
expected or potential impact of the novel coronavirus (COVID-19)
pandemic and the related responses of the government 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, whether concerning the COVID-19
pandemic and the government responses related thereto or otherwise,
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: the uncertainties relating to the
impact of COVID-19 on the Company's credit quality, business,
operations and employees; the impact of the results of government
initiatives on the regulatory landscape, natural resource
extraction industries, capital markets, and the response to and
management of the COVID-19 pandemic, including the effectiveness of
previously-enacted fiscal stimulus from the federal government and
a potential infrastructure bill; the timing of PPP loan
forgiveness; the impact of interest rates, inflation, supply-chain
constraints, trade policies and tensions, including tariffs, and
potential geopolitical instability, including the war in Ukraine;
our ability to maintain strong asset quality and to maintain or
expand our market share or net interest margins; and our ability to
execute our business plan. Further, actual results may be affected
by our ability to compete on price and other factors with other
financial institutions; customer acceptance of new products and
services; the regulatory environment in which we operate; and
general trends in the local, regional and national banking industry
and economy as those factors relate to our cost of funds and return
on assets. In addition, there are risks inherent in the banking
industry relating to 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, 2021, 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.sba.gov/document/report-paycheck-protection-program-weekly-reports-2021
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, |
|
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
|
2022 |
|
|
2021 |
|
|
Interest Income: |
|
|
|
|
|
|
|
Interest and fees on loans |
$19,807 |
|
$18,268 |
|
$18,963 |
|
|
$38,075 |
|
$38,387 |
|
|
Interest on portfolio investments |
|
2,419 |
|
|
1,548 |
|
|
1,229 |
|
|
|
3,967 |
|
|
2,363 |
|
|
Interest on deposits in banks |
|
766 |
|
|
242 |
|
|
61 |
|
|
|
1,008 |
|
|
99 |
|
|
Total interest income |
|
22,992 |
|
|
20,058 |
|
|
20,253 |
|
|
|
43,050 |
|
|
40,849 |
|
|
Interest Expense: |
|
|
|
|
|
|
|
Interest expense on deposits |
|
599 |
|
|
575 |
|
|
879 |
|
|
|
1,174 |
|
|
1,828 |
|
|
Interest expense on borrowings |
|
181 |
|
|
179 |
|
|
182 |
|
|
|
360 |
|
|
336 |
|
|
Total interest expense |
|
780 |
|
|
754 |
|
|
1,061 |
|
|
|
1,534 |
|
|
2,164 |
|
|
Net interest income |
|
22,212 |
|
|
19,304 |
|
|
19,192 |
|
|
|
41,516 |
|
|
38,685 |
|
| |
|
|
|
|
|
|
|
Provision (benefit) for credit losses |
|
463 |
|
|
(150 |
) |
|
(427 |
) |
|
|
313 |
|
|
(1,915 |
) |
|
Net interest income after provision (benefit) for credit
losses |
|
21,749 |
|
|
19,454 |
|
|
19,619 |
|
|
|
41,203 |
|
|
40,600 |
|
| |
|
|
|
|
|
|
|
Other Operating Income: |
|
|
|
|
|
|
|
Mortgage banking income |
|
5,900 |
|
|
6,982 |
|
|
11,360 |
|
|
|
12,882 |
|
|
24,982 |
|
|
Bankcard fees |
|
927 |
|
|
804 |
|
|
879 |
|
|
|
1,731 |
|
|
1,619 |
|
|
Purchased receivable income |
|
566 |
|
|
402 |
|
|
575 |
|
|
|
968 |
|
|
1,107 |
|
|
Service charges on deposit accounts |
|
402 |
|
|
374 |
|
|
308 |
|
|
|
776 |
|
|
598 |
|
|
Keyman insurance proceeds |
|
— |
|
|
2,002 |
|
|
— |
|
|
|
2,002 |
|
|
— |
|
|
Gain on sale of securities |
|
— |
|
|
— |
|
|
31 |
|
|
|
— |
|
|
31 |
|
|
Unrealized gain (loss) on marketable equity securities |
|
(810 |
) |
|
(422 |
) |
|
178 |
|
|
|
(1,232 |
) |
|
94 |
|
|
Other income |
|
822 |
|
|
681 |
|
|
801 |
|
|
|
1,503 |
|
|
1,597 |
|
|
Total other operating income |
|
7,807 |
|
|
10,823 |
|
|
14,132 |
|
|
|
18,630 |
|
|
30,028 |
|
| |
|
|
|
|
|
|
|
Other Operating Expense: |
|
|
|
|
|
|
|
Salaries and other personnel expense |
|
15,401 |
|
|
14,106 |
|
|
14,917 |
|
|
|
29,507 |
|
|
29,645 |
|
|
Data processing expense |
|
2,311 |
|
|
1,992 |
|
|
2,206 |
|
|
|
4,303 |
|
|
4,241 |
|
|
Occupancy expense |
|
1,748 |
|
|
1,726 |
|
|
1,869 |
|
|
|
3,474 |
|
|
3,529 |
|
|
Marketing expense |
|
814 |
|
|
425 |
|
|
672 |
|
|
|
1,239 |
|
|
1,076 |
|
|
Professional and outside services |
|
708 |
|
|
722 |
|
|
642 |
|
|
|
1,430 |
|
|
1,266 |
|
|
Insurance expense |
|
516 |
|
|
566 |
|
|
329 |
|
|
|
1,082 |
|
|
643 |
|
|
OREO expense, net rental income and gains on sale |
|
19 |
|
|
(12 |
) |
|
47 |
|
|
|
7 |
|
|
11 |
|
|
Intangible asset amortization expense |
|
6 |
|
|
6 |
|
|
9 |
|
|
|
12 |
|
|
18 |
|
|
Other operating expense |
|
1,715 |
|
|
1,570 |
|
|
1,645 |
|
|
|
3,285 |
|
|
3,234 |
|
|
Total other operating expense |
|
23,238 |
|
|
21,101 |
|
|
22,336 |
|
|
|
44,339 |
|
|
43,663 |
|
| |
|
|
|
|
|
|
|
Income before provision for income taxes |
|
6,318 |
|
|
9,176 |
|
|
11,415 |
|
|
|
15,494 |
|
|
26,965 |
|
|
Provision for income taxes |
|
1,523 |
|
|
1,950 |
|
|
3,070 |
|
|
|
3,473 |
|
|
6,439 |
|
|
Net income |
$4,795 |
|
$7,226 |
|
$8,345 |
|
|
$12,021 |
|
$20,526 |
|
|
|
|
|
|
|
|
|
|
Basic EPS |
$0.83 |
|
$1.22 |
|
$1.34 |
|
|
$2.05 |
|
$3.30 |
|
|
Diluted EPS |
$0.83 |
|
$1.20 |
|
$1.33 |
|
|
$2.03 |
|
$3.27 |
|
|
Weighted average shares outstanding, basic |
|
5,750,873 |
|
|
5,938,037 |
|
|
6,206,913 |
|
|
|
5,844,455 |
|
|
6,213,392 |
|
|
Weighted average shares outstanding, diluted |
|
5,805,870 |
|
|
5,997,351 |
|
|
6,277,265 |
|
|
|
5,902,287 |
|
|
6,280,369 |
|
|
Balance Sheet |
|
|
|
|
(Dollars in thousands) |
|
|
|
|
(Unaudited) |
June 30, |
March 31, |
June 30, |
|
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
| |
|
|
|
|
Assets: |
|
|
|
|
Cash and due from banks |
$24,035 |
|
$19,326 |
|
$25,486 |
|
|
Interest bearing deposits in other banks |
|
312,888 |
|
|
513,482 |
|
|
321,399 |
|
|
Investment securities available for sale, at fair value |
|
612,027 |
|
|
488,347 |
|
|
337,231 |
|
|
Investment securities held to maturity |
|
29,750 |
|
|
24,750 |
|
|
20,000 |
|
|
Marketable equity securities, at fair value |
|
9,122 |
|
|
7,997 |
|
|
9,588 |
|
|
Investment in Federal Home Loan Bank stock |
|
3,824 |
|
|
3,828 |
|
|
3,114 |
|
|
Loans held for sale |
|
63,080 |
|
|
49,980 |
|
|
105,819 |
|
| |
|
|
|
|
Portfolio loans |
|
1,405,709 |
|
|
1,377,387 |
|
|
1,487,968 |
|
|
Allowance for credit losses, loans |
|
(11,537 |
) |
|
(11,310 |
) |
|
(14,539 |
) |
|
Net portfolio loans |
|
1,394,172 |
|
|
1,366,077 |
|
|
1,473,429 |
|
|
Purchased receivables, net |
|
15,277 |
|
|
8,552 |
|
|
12,500 |
|
|
Mortgage servicing rights, at fair value |
|
16,301 |
|
|
15,422 |
|
|
12,835 |
|
|
Other real estate owned, net |
|
5,638 |
|
|
5,638 |
|
|
7,073 |
|
|
Premises and equipment, net |
|
37,106 |
|
|
37,416 |
|
|
38,202 |
|
|
Lease right of use asset |
|
9,875 |
|
|
10,432 |
|
|
11,374 |
|
|
Goodwill and intangible assets |
|
15,997 |
|
|
16,003 |
|
|
16,028 |
|
|
Other assets |
|
62,062 |
|
|
58,910 |
|
|
59,489 |
|
|
Total assets |
$2,611,154 |
|
$2,626,160 |
|
$2,453,567 |
|
| |
|
|
|
|
Liabilities: |
|
|
|
|
Demand deposits |
$830,156 |
|
$812,545 |
|
$798,231 |
|
|
Interest-bearing demand |
|
666,283 |
|
|
674,393 |
|
|
582,669 |
|
|
Savings deposits |
|
349,208 |
|
|
351,681 |
|
|
322,645 |
|
|
Money market deposits |
|
319,843 |
|
|
329,261 |
|
|
258,116 |
|
|
Time deposits |
|
169,900 |
|
|
175,186 |
|
|
184,777 |
|
|
Total deposits |
|
2,335,390 |
|
|
2,343,066 |
|
|
2,146,438 |
|
|
Other borrowings |
|
14,302 |
|
|
14,404 |
|
|
14,680 |
|
|
Junior subordinated debentures |
|
10,310 |
|
|
10,310 |
|
|
10,310 |
|
|
Lease liability |
|
9,846 |
|
|
10,402 |
|
|
11,335 |
|
|
Other liabilities |
|
26,017 |
|
|
22,146 |
|
|
33,586 |
|
|
Total liabilities |
|
2,395,865 |
|
|
2,400,328 |
|
|
2,216,349 |
|
| |
|
|
|
|
Shareholders' Equity: |
|
|
|
|
Total shareholders' equity |
|
215,289 |
|
|
225,832 |
|
|
237,218 |
|
|
Total liabilities and shareholders' equity |
$2,611,154 |
|
$2,626,160 |
|
$2,453,567 |
|
| |
|
|
|
Additional Financial
Information(Dollars in thousands)(Unaudited)
|
Composition of Portfolio Loans |
|
|
|
|
|
|
|
|
|
|
|
|
| |
June 30, 2022 |
|
March 31, 2022 |
|
December 31, 2021 |
|
September 30, 2020 |
|
June 30, 2021 |
| |
Balance |
% of total |
|
Balance |
% of total |
|
Balance |
% of total |
|
Balance |
% of total |
|
Balance |
% of total |
|
Commercial loans |
$547,495 |
|
38 |
% |
|
$529,331 |
|
37 |
% |
|
$521,785 |
|
37 |
% |
|
$498,585 |
|
34 |
% |
|
$476,900 |
|
31 |
% |
|
SBA Paycheck Protection loans |
|
32,948 |
|
2 |
% |
|
|
66,680 |
|
5 |
% |
|
|
122,729 |
|
9 |
% |
|
|
211,449 |
|
14 |
% |
|
|
311,971 |
|
21 |
% |
|
CRE owner occupied loans |
|
241,575 |
|
17 |
% |
|
|
230,350 |
|
17 |
% |
|
|
220,367 |
|
15 |
% |
|
|
206,756 |
|
14 |
% |
|
|
190,880 |
|
13 |
% |
|
CRE nonowner occupied loans |
|
416,285 |
|
29 |
% |
|
|
397,212 |
|
29 |
% |
|
|
402,879 |
|
28 |
% |
|
|
405,666 |
|
28 |
% |
|
|
373,325 |
|
25 |
% |
|
Construction loans |
|
131,850 |
|
9 |
% |
|
|
126,679 |
|
9 |
% |
|
|
121,104 |
|
8 |
% |
|
|
106,020 |
|
7 |
% |
|
|
115,917 |
|
8 |
% |
|
Consumer loans |
|
43,852 |
|
3 |
% |
|
|
36,516 |
|
3 |
% |
|
|
36,565 |
|
3 |
% |
|
|
37,044 |
|
3 |
% |
|
|
36,420 |
|
2 |
% |
|
Subtotal |
|
1,414,005 |
|
|
|
|
1,386,768 |
|
|
|
|
1,425,429 |
|
|
|
|
1,465,520 |
|
|
|
|
1,505,413 |
|
|
|
Unearned loan fees, net |
|
(8,296 |
) |
|
|
|
(9,381 |
) |
|
|
|
(11,543 |
) |
|
|
|
(14,863 |
) |
|
|
|
(17,445 |
) |
|
|
Total portfolio loans |
$1,405,709 |
|
|
|
$1,377,387 |
|
|
|
$1,413,886 |
|
|
|
$1,450,657 |
|
|
|
$1,487,968 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Composition of Deposits |
|
|
|
|
|
|
|
|
|
|
|
|
| |
June 30, 2022 |
|
March 31, 2022 |
|
December 31, 2021 |
|
September 30, 2020 |
|
June 30, 2021 |
| |
Balance |
% of total |
|
Balance |
% of total |
|
Balance |
% of total |
|
Balance |
% of total |
|
Balance |
% of total |
|
Demand deposits |
$830,156 |
35 |
% |
|
$812,545 |
35 |
% |
|
$887,824 |
37 |
% |
|
$868,810 |
38 |
% |
|
$798,231 |
37 |
% |
|
Interest-bearing demand |
|
666,283 |
29 |
% |
|
|
674,393 |
29 |
% |
|
|
692,683 |
29 |
% |
|
|
644,035 |
28 |
% |
|
|
582,669 |
27 |
% |
|
Savings deposits |
|
349,208 |
15 |
% |
|
|
351,681 |
15 |
% |
|
|
348,164 |
14 |
% |
|
|
330,465 |
14 |
% |
|
|
322,645 |
15 |
% |
|
Money market deposits |
|
319,843 |
14 |
% |
|
|
329,261 |
14 |
% |
|
|
314,996 |
13 |
% |
|
|
278,529 |
12 |
% |
|
|
258,116 |
12 |
% |
|
Time deposits |
|
169,900 |
7 |
% |
|
|
175,186 |
7 |
% |
|
|
177,964 |
7 |
% |
|
|
174,702 |
8 |
% |
|
|
184,777 |
9 |
% |
|
Total deposits |
$2,335,390 |
|
|
$2,343,066 |
|
|
$2,421,631 |
|
|
$2,296,541 |
|
|
$2,146,438 |
|
Additional Financial
Information(Dollars in thousands)(Unaudited)
|
Asset Quality |
June 30, |
|
March 31, |
|
June 30, |
|
|
|
|
2022 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
Nonaccrual loans |
$8,001 |
|
|
$9,609 |
|
|
$12,976 |
|
|
|
Loans 90 days past due and accruing |
|
— |
|
|
|
— |
|
|
|
128 |
|
|
|
Total nonperforming loans |
|
8,001 |
|
|
|
9,609 |
|
|
|
13,104 |
|
|
|
Nonperforming loans guaranteed by government |
|
(683) |
|
|
|
(907) |
|
|
|
(1,096) |
|
|
|
Net nonperforming loans |
|
7,318 |
|
|
|
8,702 |
|
|
|
12,008 |
|
|
|
Other real estate owned |
|
5,638 |
|
|
|
5,638 |
|
|
|
7,073 |
|
|
|
Repossessed assets |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Other real estate owned guaranteed by government |
|
(1,279) |
|
|
|
(1,279) |
|
|
|
(1,279) |
|
|
|
Net nonperforming assets |
$11,677 |
|
|
$13,061 |
|
|
$17,802 |
|
|
|
Nonperforming loans, net of government guarantees / portfolio
loans |
|
0.52 |
|
% |
|
0.63 |
|
% |
|
0.81 |
|
% |
|
Nonperforming loans, net of government guarantees / portfolio
loans, |
|
|
|
|
|
|
|
net of government guarantees |
|
0.57 |
|
% |
|
0.70 |
|
% |
|
1.06 |
|
% |
|
Nonperforming assets, net of government guarantees / total
assets |
|
0.45 |
|
% |
|
0.50 |
|
% |
|
0.73 |
|
% |
|
Nonperforming assets, net of government guarantees / total
assets |
|
|
|
|
|
|
|
net of government guarantees |
|
0.47 |
|
% |
|
0.53 |
|
% |
|
0.85 |
|
% |
| |
|
|
|
|
|
|
|
Performing restructured loans |
$3,008 |
|
|
$2,978 |
|
|
$2,341 |
|
|
|
Performing restructured loans guaranteed by government |
|
(2,420) |
|
|
|
(2,382) |
|
|
|
(1,564) |
|
|
|
Net performing restructured loans |
$588 |
|
|
$596 |
|
|
$777 |
|
|
|
Nonperforming loans plus performing restructured loans, net of
government |
|
|
|
|
|
|
|
guarantees |
$7,906 |
|
|
$9,298 |
|
|
$12,785 |
|
|
|
Nonperforming loans plus performing restructured loans, net of
government |
|
|
|
|
|
|
|
guarantees / portfolio loans |
|
0.56 |
|
% |
|
0.68 |
|
% |
|
0.86 |
|
% |
|
Nonperforming loans plus performing restructured loans, net of
government |
|
|
|
|
|
|
|
guarantees / portfolio loans, net of government guarantees |
|
0.61 |
|
% |
|
0.75 |
|
% |
|
1.13 |
|
% |
|
Nonperforming assets plus performing restructured loans, net of
government |
|
|
|
|
|
|
|
guarantees / total assets |
|
0.47 |
|
% |
|
0.52 |
|
% |
|
0.76 |
|
% |
|
Nonperforming assets plus performing restructured loans, net of
government |
|
|
|
|
|
|
|
guarantees / total assets, net of government guarantees |
|
0.49 |
|
% |
|
0.55 |
|
% |
|
0.89 |
|
% |
| |
|
|
|
|
|
|
|
Adversely classified loans, net of government guarantees |
$8,836 |
|
|
$11,652 |
|
|
$14,055 |
|
|
|
Special mention loans, net of government guarantees |
$5,665 |
|
|
$4,211 |
|
|
$15,855 |
|
|
|
Loans 30-89 days past due and accruing, net of government
guarantees / |
|
|
|
|
|
|
|
portfolio loans |
|
0.02 |
|
% |
|
0.03 |
|
% |
|
0.02 |
|
% |
|
Loans 30-89 days past due and accruing, net of government
guarantees / |
|
|
|
|
|
|
|
portfolio loans, net of government guarantees |
|
0.02 |
|
% |
|
0.03 |
|
% |
|
0.03 |
|
% |
| |
|
|
|
|
|
|
|
Allowance for credit losses / portfolio loans |
|
0.82 |
|
% |
|
0.82 |
|
% |
|
0.98 |
|
% |
|
Allowance for credit losses / portfolio loans, net of government
guarantees |
|
0.90 |
|
% |
|
0.92 |
|
% |
|
1.29 |
|
% |
|
Allowance for credit losses / nonperforming loans, net of
government |
|
|
|
|
|
|
|
guarantees |
|
158 |
|
% |
|
130 |
|
% |
|
121 |
|
% |
| |
|
|
|
|
|
|
|
Gross loan charge-offs for the quarter |
$166 |
|
|
$295 |
|
|
$110 |
|
|
|
Gross loan recoveries for the quarter |
($120) |
|
|
($33) |
|
|
($46) |
|
|
|
Net loan (recoveries) charge-offs for the quarter |
$46 |
|
|
$262 |
|
|
$64 |
|
|
|
Net loan charge-offs (recoveries) year-to-date |
$308 |
|
|
$262 |
|
|
$20 |
|
|
|
Net loan charge-offs (recoveries) for the quarter / average loans,
for the quarter |
|
0.00 |
|
% |
|
0.02 |
|
% |
|
— |
|
% |
|
Net loan charge-offs (recoveries) year-to-date / average
loans, |
|
|
|
|
|
|
|
year-to-date annualized |
|
0.04 |
|
% |
|
0.07 |
|
% |
|
0.00 |
|
% |
Additional Financial
Information(Dollars in thousands)(Unaudited)
|
Nonperforming Assets Rollforward |
|
|
|
|
|
|
|
| |
|
|
|
Writedowns |
Transfers to |
Transfers to |
|
|
| |
Balance at March 31, 2022 |
Additions this quarter |
Payments this quarter |
/Charge-offs this quarter |
OREO/ REPO |
Performing Statusthis quarter |
Sales this quarter |
Balance at June 30, 2022 |
|
Commercial loans |
$5,230 |
|
$— |
($469 |
) |
($166 |
) |
$— |
$— |
$— |
$4,595 |
|
|
Commercial real estate |
|
3,993 |
|
|
— |
|
(990 |
) |
|
— |
|
|
— |
|
— |
|
— |
|
3,003 |
|
|
Construction loans |
|
109 |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
— |
|
— |
|
109 |
|
|
Consumer loans |
|
277 |
|
|
22 |
|
(5 |
) |
|
— |
|
|
— |
|
— |
|
— |
|
294 |
|
|
Non-performing loans guaranteed by government |
|
(907 |
) |
|
— |
|
224 |
|
|
— |
|
|
— |
|
— |
|
— |
|
(683 |
) |
|
Total non-performing loans |
|
8,702 |
|
|
22 |
|
(1,240 |
) |
|
(166 |
) |
|
— |
|
— |
|
— |
|
7,318 |
|
|
Other real estate owned |
|
5,638 |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
— |
|
— |
|
5,638 |
|
|
Other real estate owned guaranteed |
|
|
|
|
|
|
|
|
|
by government |
|
(1,279 |
) |
|
— |
|
— |
|
|
— |
|
|
— |
|
— |
|
— |
|
(1,279 |
) |
|
Total non-performing assets, |
|
|
|
|
|
|
|
|
|
net of government guarantees |
$13,061 |
|
$22 |
($1,240 |
) |
($166 |
) |
$— |
$— |
$— |
$11,677 |
|
The following table details loan charge-offs, by
industry:
|
Loan Charge-offs by Industry |
|
|
|
|
| |
Three Months Ended |
| |
June 30, 2022 |
March 31, 2022 |
December 31, 2021 |
September 30, 2021 |
June 30, 2021 |
|
Charge-offs: |
|
|
|
|
|
|
Land subdivision |
$166 |
$— |
$— |
$— |
$— |
|
Assisted living facility |
|
— |
|
19 |
|
— |
|
— |
|
— |
|
Aircraft parts and auxiliary equipment manufacturing |
|
— |
|
— |
|
185 |
|
— |
|
110 |
|
Amusement and recreational activities |
|
— |
|
— |
|
9 |
|
— |
|
— |
|
Scenic and sightseeing transportation |
|
— |
|
— |
|
416 |
|
— |
|
— |
|
Site preparation contractors |
|
— |
|
276 |
|
224 |
|
— |
|
— |
|
Specialized freight trucking, long-distance |
|
— |
|
— |
|
345 |
|
— |
|
— |
|
Total charge-offs |
$166 |
$295 |
$1,179 |
$— |
$110 |
Additional Financial
Information(Dollars in thousands)(Unaudited)
|
Average Balances, Yields, and Rates |
|
|
|
|
|
|
|
|
| |
Three Months Ended |
| |
June 30, 2022 |
|
March 31, 2022 |
|
June 30, 2021 |
| |
|
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 |
$382,015 |
|
0.79 |
% |
|
$538,537 |
|
0.18 |
% |
|
$208,067 |
|
0.12 |
% |
|
Portfolio investments |
|
589,553 |
|
1.59 |
% |
|
|
491,029 |
|
1.23 |
% |
|
|
354,260 |
|
1.32 |
% |
|
Loans held for sale |
|
59,677 |
|
4.16 |
% |
|
|
52,630 |
|
3.08 |
% |
|
|
111,228 |
|
2.74 |
% |
|
Portfolio loans |
|
1,398,149 |
|
5.52 |
% |
|
|
1,379,850 |
|
5.27 |
% |
|
|
1,541,701 |
|
4.75 |
% |
|
Total interest-earning assets |
|
2,429,394 |
|
3.83 |
% |
|
|
2,462,046 |
|
3.33 |
% |
|
|
2,215,256 |
|
3.69 |
% |
|
Nonearning assets |
|
172,655 |
|
|
|
|
156,482 |
|
|
|
|
173,164 |
|
|
|
Total assets |
$2,602,049 |
|
|
|
$2,618,528 |
|
|
|
$2,388,420 |
|
|
| |
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity |
|
|
|
|
|
|
|
|
|
Interest-bearing deposits |
$1,513,957 |
|
0.16 |
% |
|
$1,526,100 |
|
0.15 |
% |
|
$1,316,029 |
|
0.27 |
% |
|
Borrowings |
|
24,675 |
|
2.92 |
% |
|
|
24,777 |
|
2.91 |
% |
|
|
25,032 |
|
2.90 |
% |
|
Total interest-bearing liabilities |
|
1,538,632 |
|
0.20 |
% |
|
|
1,550,877 |
|
0.20 |
% |
|
|
1,341,061 |
|
0.32 |
% |
| |
|
|
|
|
|
|
|
|
|
Noninterest-bearing demand deposits |
|
808,186 |
|
|
|
|
794,702 |
|
|
|
|
766,954 |
|
|
|
Other liabilities |
|
31,064 |
|
|
|
|
35,835 |
|
|
|
|
43,017 |
|
|
|
Shareholders' equity |
|
224,167 |
|
|
|
|
237,114 |
|
|
|
|
237,388 |
|
|
|
Total liabilities and shareholders' equity |
$2,602,049 |
|
|
|
$2,618,528 |
|
|
|
$2,388,420 |
|
|
|
Net spread |
|
3.63 |
% |
|
|
3.13 |
% |
|
|
3.37 |
% |
|
NIM |
|
3.67 |
% |
|
|
3.18 |
% |
|
|
3.48 |
% |
|
NIMTE* |
|
3.70 |
% |
|
|
3.20 |
% |
|
|
3.50 |
% |
|
Cost of funds |
|
0.13 |
% |
|
|
0.13 |
% |
|
|
0.20 |
% |
|
Average portfolio loans to average |
|
|
|
|
|
|
|
|
|
interest-earning assets |
|
57.55 |
% |
|
|
|
56.04 |
% |
|
|
|
69.59 |
% |
|
|
Average portfolio loans to average total deposits |
|
60.21 |
% |
|
|
|
59.46 |
% |
|
|
|
74.01 |
% |
|
|
Average non-interest deposits to average |
|
|
|
|
|
|
|
|
|
total deposits |
|
34.80 |
% |
|
|
|
34.24 |
% |
|
|
|
36.82 |
% |
|
|
Average interest-earning assets to average |
|
|
|
|
|
|
|
|
|
interest-bearing liabilities |
|
157.89 |
% |
|
|
|
158.75 |
% |
|
|
|
165.19 |
% |
|
The components of the change in NIMTE* are detailed
in the table below:
| |
2Q22 vs. 1Q22 |
2Q22 vs. 2Q21 |
|
Nonaccrual interest adjustments |
(0.01) |
% |
(0.04) |
% |
|
Impact of SBA Paycheck Protection Program loans |
(0.11) |
% |
0.11 |
% |
|
Interest rates and loan fees, all other loans |
0.45 |
% |
0.36 |
% |
|
Volume and mix of other interest-earning assets and
liabilities |
0.17 |
% |
(0.23) |
% |
|
Change in NIMTE* |
0.50 |
% |
0.20 |
% |
Additional Financial
Information(Dollars in thousands)(Unaudited)
|
Average Balances, Yields, and Rates |
|
|
|
|
|
| |
Year-to-date |
| |
June 30, 2022 |
|
June 30, 2021 |
| |
|
Average |
|
|
Average |
| |
Average |
Tax Equivalent |
|
Average |
Tax Equivalent |
| |
Balance |
Yield/Rate |
|
Balance |
Yield/Rate |
|
Assets |
|
|
|
|
|
|
Interest bearing deposits in other banks |
$459,843 |
|
0.44 |
% |
|
$164,712 |
|
0.12 |
% |
|
Portfolio investments |
|
540,563 |
|
1.43 |
% |
|
|
326,671 |
|
1.38 |
% |
|
Loans held for sale |
|
56,173 |
|
3.65 |
% |
|
|
112,897 |
|
2.74 |
% |
|
Portfolio loans |
|
1,389,050 |
|
5.40 |
% |
|
|
1,517,438 |
|
4.91 |
% |
|
Total interest-earning assets |
|
2,445,629 |
|
3.58 |
% |
|
|
2,121,718 |
|
3.90 |
% |
|
Nonearning assets |
|
164,611 |
|
|
|
|
171,870 |
|
|
|
Total assets |
$2,610,240 |
|
|
|
$2,293,588 |
|
|
| |
|
|
|
|
|
|
Liabilities and Shareholders' Equity |
|
|
|
|
|
|
Interest-bearing deposits |
$1,519,995 |
|
0.16 |
% |
|
$1,261,855 |
|
0.29 |
% |
|
Borrowings |
|
24,726 |
|
2.91 |
% |
|
|
25,066 |
|
2.68 |
% |
|
Total interest-bearing liabilities |
|
1,544,721 |
|
0.20 |
% |
|
|
1,286,921 |
|
0.34 |
% |
| |
|
|
|
|
|
|
Noninterest-bearing demand deposits |
|
801,481 |
|
|
|
|
727,589 |
|
|
|
Other liabilities |
|
33,436 |
|
|
|
|
44,959 |
|
|
|
Shareholders' equity |
|
230,602 |
|
|
|
|
234,119 |
|
|
|
Total liabilities and shareholders' equity |
$2,610,240 |
|
|
|
$2,293,588 |
|
|
|
Net spread |
|
3.38 |
% |
|
|
3.56 |
% |
|
NIM |
|
3.42 |
% |
|
|
3.68 |
% |
|
NIMTE* |
|
3.45 |
% |
|
|
3.70 |
% |
|
Cost of funds |
|
0.13 |
% |
|
|
0.22 |
% |
|
Average portfolio loans to average interest-earning assets |
|
56.80 |
% |
|
|
|
71.52 |
% |
|
|
Average portfolio loans to average total deposits |
|
59.83 |
% |
|
|
|
76.27 |
% |
|
|
Average non-interest deposits to average total deposits |
|
34.52 |
% |
|
|
|
36.57 |
% |
|
|
Average interest-earning assets to average interest-bearing
liabilities |
|
158.32 |
% |
|
|
|
164.87 |
% |
|
The components of the change in NIMTE* are detailed
in the table below:
| |
YTD22 vs.YTD21 |
|
Nonaccrual interest adjustments |
0.05 |
% |
|
Impact of SBA Paycheck Protection Program loans |
0.09 |
% |
|
Interest rates and loan fees |
0.07 |
% |
|
Volume and mix of interest-earning assets and liabilities |
(0.46) |
% |
|
Change in NIMTE* |
(0.25) |
% |
Additional Financial
Information(Dollars in thousands, except per share
data)(Unaudited)
|
Capital Data (At quarter end) |
|
|
|
|
|
|
| |
June 30,2022 |
|
March 31, 2022 |
|
June 30, 2021 |
|
|
Book value per share |
$37.90 |
|
|
$38.39 |
|
|
$38.22 |
|
|
|
Tangible book value per share* |
$35.08 |
|
|
$35.67 |
|
|
$35.64 |
|
|
|
Total shareholders' equity/total assets |
|
8.24 |
|
% |
|
8.60 |
|
% |
|
9.67 |
|
% |
|
Tangible Common Equity/Tangible Assets* |
|
7.68 |
|
% |
|
8.04 |
|
% |
|
9.07 |
|
% |
|
Tier 1 Capital / Risk Adjusted Assets |
|
12.74 |
|
% |
|
13.76 |
|
% |
|
14.54 |
|
% |
|
Total Capital / Risk Adjusted Assets |
|
13.45 |
|
% |
|
14.49 |
|
% |
|
15.45 |
|
% |
|
Tier 1 Capital / Average Assets |
|
8.84 |
|
% |
|
9.00 |
|
% |
|
9.77 |
|
% |
|
Shares outstanding |
|
5,681,089 |
|
|
|
5,881,708 |
|
|
|
6,206,913 |
|
|
|
Total unrealized gain on AFS debt securities, net of income
taxes |
($19,911 |
) |
|
($14,390 |
) |
|
$109 |
|
|
|
Total unrealized (loss) on derivatives and hedging activities, net
of income taxes |
$571 |
|
|
($20 |
) |
|
($760 |
) |
|
|
Profitability Ratios |
|
|
|
|
|
|
|
|
|
|
| |
June 30, 2022 |
|
March 31, 2022 |
|
December 31, 2021 |
|
September 30, 2021 |
|
June 30, 2021 |
|
|
For the quarter: |
|
|
|
|
|
|
|
|
|
|
|
NIM |
3.67 |
% |
3.18 |
% |
3.52 |
% |
3.45 |
% |
3.48 |
% |
|
NIMTE* |
3.70 |
% |
3.20 |
% |
3.54 |
% |
3.47 |
% |
3.50 |
% |
|
Efficiency ratio |
77.39 |
% |
70.02 |
% |
73.48 |
% |
68.07 |
% |
67.00 |
% |
|
Return on average assets |
0.74 |
% |
1.12 |
% |
1.23 |
% |
1.40 |
% |
1.40 |
% |
|
Return on average equity |
8.58 |
% |
12.36 |
% |
13.14 |
% |
14.47 |
% |
14.10 |
% |
|
|
June 30, 2022 |
|
June 30, 2021 |
|
|
Year-to-date: |
|
|
|
|
|
NIM |
3.42 |
% |
3.68 |
% |
|
NIMTE* |
3.45 |
% |
3.70 |
% |
|
Efficiency ratio |
73.70 |
% |
63.52 |
% |
|
Return on average assets |
0.93 |
% |
1.80 |
% |
|
Return on average equity |
10.51 |
% |
17.68 |
% |
*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 2022 and 2021. 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, 2022 |
|
March 31, 2022 |
|
December 31, 2021 |
|
September 30, 2021 |
|
June 30, 2021 |
|
Net interest income |
$22,212 |
|
|
$19,304 |
|
|
$21,710 |
|
|
$20,432 |
|
|
$19,192 |
|
|
Divided by average interest-bearing assets |
|
2,429,394 |
|
|
|
2,462,046 |
|
|
|
2,446,716 |
|
|
|
2,348,423 |
|
|
|
2,215,256 |
|
|
Net interest margin ("NIM")2 |
|
3.67 |
% |
|
|
3.18 |
% |
|
|
3.52 |
% |
|
|
3.45 |
% |
|
|
3.48 |
% |
| |
|
|
|
|
|
|
|
|
|
|
Net interest income |
$22,212 |
|
|
$19,304 |
|
|
$21,710 |
|
|
$20,432 |
|
|
$19,192 |
|
|
Plus: reduction in tax expense related to |
|
|
|
|
|
|
|
|
|
|
tax-exempt interest income |
|
193 |
|
|
|
137 |
|
|
|
131 |
|
|
|
126 |
|
|
|
121 |
|
|
|
$22,405 |
|
|
$19,441 |
|
|
$21,841 |
|
|
$20,558 |
|
|
$19,313 |
|
|
Divided by average interest-bearing assets |
|
2,429,394 |
|
|
|
2,462,046 |
|
|
|
2,446,716 |
|
|
|
2,348,423 |
|
|
|
2,215,256 |
|
|
NIMTE2 |
|
3.70 |
% |
|
|
3.20 |
% |
|
|
3.54 |
% |
|
|
3.47 |
% |
|
|
3.50 |
% |
| |
Year-to-date |
| |
June 30, 2022 |
|
June 30, 2021 |
|
Net interest income |
$41,516 |
|
|
$38,685 |
|
|
Divided by average interest-bearing assets |
|
2,445,629 |
|
|
|
2,121,718 |
|
|
Net interest margin ("NIM")3 |
|
3.42 |
% |
|
|
3.68 |
% |
| |
|
|
|
|
Net interest income |
$41,516 |
|
|
$38,685 |
|
|
Plus: reduction in tax expense related to |
|
|
|
|
tax-exempt interest income |
|
330 |
|
|
|
232 |
|
|
|
$41,846 |
|
|
$38,917 |
|
|
Divided by average interest-bearing assets |
|
2,445,629 |
|
|
|
2,121,718 |
|
|
NIMTE3 |
|
3.45 |
% |
|
|
3.70 |
% |
2Calculated using actual days in the quarter
divided by 365 for the quarters ended in 2022 and 2021,
respectively.
3Calculated using actual days in the year divided
by 365 for year-to-date period in 2022 and 2021, respectively.
*Non-GAAP Financial Measures
(Dollars and shares in thousands, except per share
data)(Unaudited)
Core net interest income
Core net interest income is a non-GAAP measure
defined as net interest income less interest income on SBA PPP
loans. The most comparable GAAP measure is net interest income and
the following table sets forth the reconciliation of core net
interest income to net interest income.
| |
Three Months Ended |
| |
June 30, 2022 |
|
March 31, 2022 |
|
December 31, 2021 |
|
September 30, 2021 |
|
June 30, 2021 |
|
Net interest income |
$22,212 |
|
$19,304 |
|
$21,710 |
|
$20,432 |
|
$19,192 |
| |
|
|
|
|
|
|
|
|
|
|
Net interest income |
$22,212 |
|
$19,304 |
|
$21,710 |
|
$20,432 |
|
$19,192 |
|
Less interest income on SBA PPP loans |
|
1,451 |
|
|
2,310 |
|
|
4,003 |
|
|
3,667 |
|
|
3,557 |
|
Core net interest income |
$20,761 |
|
$16,994 |
|
$17,707 |
|
$16,765 |
|
$15,635 |
| |
Year-to-date |
| |
June 30, 2022 |
|
June 30, 2021 |
|
Net interest income |
$41,516 |
|
$38,685 |
| |
|
|
|
|
Net interest income |
$41,516 |
|
$38,685 |
|
Less interest income on SBA PPP loans |
|
3,761 |
|
|
7,758 |
|
Core net interest income |
$37,755 |
|
$30,927 |
Tangible Book Value
Tangible book value 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, 2022 |
|
March 31, 2022 |
|
December 31, 2021 |
|
September 30, 2021 |
|
June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders' equity |
$215,289 |
|
$225,832 |
|
$237,817 |
|
$242,474 |
|
$237,218 |
|
Divided by shares outstanding |
|
5,681 |
|
|
5,882 |
|
|
6,015 |
|
|
6,177 |
|
|
6,207 |
|
Book value per share |
$37.90 |
|
$38.39 |
|
$39.54 |
|
$39.25 |
|
$38.22 |
| |
June 30, 2022 |
|
March 31, 2022 |
|
December 31, 2021 |
|
September 30, 2021 |
|
June 30, 2021 |
| |
|
|
|
|
|
|
|
|
|
|
Total shareholders' equity |
$215,289 |
|
$225,832 |
|
$237,817 |
|
$242,474 |
|
$237,218 |
|
Less: goodwill and intangible assets |
|
15,997 |
|
|
16,003 |
|
|
16,009 |
|
|
16,019 |
|
|
16,028 |
| |
$199,292 |
|
$209,829 |
|
$221,808 |
|
$226,455 |
|
$221,190 |
|
Divided by shares outstanding |
|
5,681 |
|
|
5,882 |
|
|
6,015 |
|
|
6,177 |
|
|
6,207 |
|
Tangible book value per share |
$35.08 |
|
$35.67 |
|
$36.88 |
|
$36.66 |
|
$35.64 |
*Non-GAAP Financial Measures
(Dollars and shares in thousands, except per share
data)(Unaudited)
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, 2022 |
|
March 31, 2022 |
|
December 31, 2021 |
|
September 30, 2021 |
|
June 30, 2021 |
| |
|
|
|
|
|
|
|
|
|
|
Total shareholders' equity |
$215,289 |
|
|
$225,832 |
|
|
$237,817 |
|
|
$242,474 |
|
|
$237,218 |
|
|
Total assets |
|
2,611,154 |
|
|
|
2,626,160 |
|
|
|
2,724,719 |
|
|
|
2,609,946 |
|
|
|
2,453,567 |
|
|
Total shareholders' equity to total assets |
|
8.24 |
% |
|
|
8.60 |
% |
|
|
8.73 |
% |
|
|
9.29 |
% |
|
|
9.67 |
% |
|
Northrim BanCorp, Inc. |
June 30, 2022 |
|
March 31, 2022 |
|
December 31, 2021 |
|
September 30, 2021 |
|
June 30, 2021 |
|
Total shareholders' equity |
$215,289 |
|
|
$225,832 |
|
|
$237,817 |
|
|
$242,474 |
|
|
$237,218 |
|
|
Less: goodwill and other intangible assets, net |
|
15,997 |
|
|
|
16,003 |
|
|
|
16,009 |
|
|
|
16,019 |
|
|
|
16,028 |
|
|
Tangible common shareholders' equity |
$199,292 |
|
|
$209,829 |
|
|
$221,808 |
|
|
$226,455 |
|
|
$221,190 |
|
| |
|
|
|
|
|
|
|
|
|
|
Total assets |
$2,611,154 |
|
|
$2,626,160 |
|
|
$2,724,719 |
|
|
$2,609,946 |
|
|
$2,453,567 |
|
|
Less: goodwill and other intangible assets, net |
|
15,997 |
|
|
|
16,003 |
|
|
|
16,009 |
|
|
|
16,019 |
|
|
|
16,028 |
|
|
Tangible assets |
$2,595,157 |
|
|
$2,610,157 |
|
|
$2,708,710 |
|
|
$2,593,927 |
|
|
$2,437,539 |
|
|
Tangible common equity ratio |
|
7.68 |
% |
|
|
8.04 |
% |
|
|
8.19 |
% |
|
|
8.73 |
% |
|
|
9.07 |
% |
Note Transmitted on GlobeNewswire on July 28,
2022, 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 |
Northrim BanCorp (NASDAQ:NRIM)
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Northrim BanCorp (NASDAQ:NRIM)
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