NORTHRIM BANCORP INC

Previous wording

The Alaska Department of Labor (“DOL”) has reported Alaska’s seasonally adjusted unemployment rate in February of 2024 was 4.7% compared to the U.S. rate of 3.9%. The total number of payroll jobs in Alaska, not including uniformed military, increased 2.6% or 8,200 jobs between February of 2023 and February of 2024.

Current wording

The Alaska Department of Labor (“DOL”) has reported Alaska’s seasonally adjusted unemployment rate in May of 2024 was 4.5% compared to the U.S. rate of 4%. The total number of payroll jobs in Alaska, not including uniformed military, increased 2.9% or 9,300 jobs between May of 2023 and May of 2024.

Previous wording

According to the DOL, Construction and Health Care had the largest growth in new jobs through February of 2024 compared to the prior year. The Construction sector added 1,900 positions for a year over year growth rate of 13.3% in February. The Health Care sector grew by 1,600 jobs for an annual growth rate of 4%. The Oil & Gas sector increased by 6.8% or 500 direct new jobs. Trade, Transportation & Utilities added 1,500 jobs year over year through February of 2024, up 2.4%. The Government sector grew by 1,400 jobs over the same period for 1.8% growth, mainly due to more state and local positions in Alaska.

Current wording

According to the DOL, Construction and Health Care had the largest growth in new jobs through May 2024 compared to the prior year. The Construction sector added 2,500 positions for a year over year growth rate of 14.5% in May of 2024. The Health Care sector grew by 1,700 jobs for an annual growth rate of 4.3%. The Oil & Gas sector increased by 9.5% or 700 new direct jobs. Professional and Business Services added 1,100 jobs year over year through May of 2024, up 3.9%. The Government sector grew by 1,200 jobs for 1.5% growth, adding 600 Federal jobs and 600 State and local positions in Alaska. The only sectors to decline between May 2023 and May 2024 were Financial Activities, shrinking 100 positions and Information, down 200 jobs.

Previous wording

Alaska’s Gross State Product (“GSP”) in the fourth quarter of 2023, was estimated to be $68.7 billion in current dollars, according to the Federal Bureau of Economic Analysis (“BEA”). Alaska’s inflation adjusted “real” GSP grew 5.3% in all of 2023, placing Alaska fourth best of all 50 states. In the fourth quarter of 2023 Alaska grew at an annualized rate of 4.5%, compared to the average U.S. rate of 3.4%. Alaska’s real GSP improvement in the fourth quarter of 2023 was aided by gains in the Mining, Oil and Gas sector.

Current wording

Alaska’s Gross State Product (“GSP”) in the first quarter of 2024, was estimated to be $69.2 billion in current dollars, according to the Federal Bureau of Economic Analysis ("BEA"). Alaska’s inflation adjusted “real” GSP grew 5.3% in 2023, placing Alaska fourth best of all 50 states. In the first quarter of 2024 Alaska grew at an annualized rate of 2.6%, compared to the average U.S. rate of 1.4%. This ranked Alaska 10 th best of the 50 states for the first quarter of 2024. Alaska’s real GSP improvement in the first quarter of 2024 was aided by gains in the Mining, Oil & Gas; and Transportation and Warehousing sectors.

Previous wording

The BEA also calculated Alaska’s seasonally adjusted personal income at $53.7 billion in the fourth quarter of 2023. This was an annual improvement of 4.3% for Alaska compared to the national average improvement of 5.2%.

Current wording

The BEA also calculated Alaska’s seasonally adjusted personal income at $54.1 billion in the first quarter of 2024. This was an annualized improvement of 7% for Alaska, equal to the national average of 7%.

Previous wording

The monthly average price of Alaska North Slope (“ANS”) crude oil was in a range between $75.64 and $95.05 in 2023. The Alaska Department of Revenue (“DOR”) calculated ANS crude oil production was 479,000 barrels per day (“bpd”) in Alaska’s fiscal year ending June 30, 2023. The DOR has forecast production to decline slightly to 468,000 bpd in Alaska’s fiscal year 2024 and grow to 477,000 bpd in fiscal year 2025. The DOR projects the number to reach 641,000 bpd by fiscal year 2034. This is primarily a result of new production coming on line in and around the NPR-A region west of Prudhoe Bay.

Current wording

The monthly average price of Alaska North Slope (“ANS”) crude oil was in a range between $75.64 and $95.05 in 2023. In the first five months of 2024 the monthly average price has been between $79.64 and $89.05. The Alaska Department of Revenue (“DOR”) calculated ANS crude oil production was 479 thousand barrels per day (“bpd”) in Alaska’s fiscal year ending June 30, 2023. The DOR has forecast production to decline slightly to 468 thousand bpd in Alaska’s fiscal year 2024 and grow to 477 thousand bpd in fiscal year 2025. The DOR projects the number to reach 641 thousand bpd by fiscal year 2034 over the next decade. This is primarily a result of new production coming on line in and around the NPR-A region west of Prudhoe Bay.

Previous wording

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

Current wording

According to the Alaska Multiple Listing Services, the average sales price of a single family home in Anchorage rose 5.4% in 2023 to $480,272, following a 7.6% increase in 2022. This was the sixth consecutive year of price increases. In the first six months of 2024 the average price continues to increase 4.8% to an average sale of $503,474.

Previous wording

Average sales prices for single family homes in the Matanuska Susitna Borough rose 4% in 2023 to $397,589, after increasing 9.9% in 2022. This continues a trend of average price increases for more than a decade in the region. These two markets represent where the vast majority of the residential lending activity of Northrim Bank (the “Bank”) occurs.

Current wording

The average sales price for single family homes in the Matanuska Susitna Borough rose 4% in 2023 to $397,589, after increasing 9.9% in 2022. This continues a trend of average price increases for more than a decade in the region. In the first six months of 2024 the average sales price increased 3.4% to $410,912, according to the Alaska Multiple Listing Services. These two markets represent where the vast majority of the residential lending activity for Northrim Bank’s (the “Bank”) occurs.

Previous wording

However, the Alaska Multiple Listing Services reported a large decrease in the number of units sold in both communities. There were 2,162 housing units sold in Anchorage in 2023, down 24.1% compared to 2,849 in 2022. In the Matanuska Susitna Borough there were 1,636 homes sold in 2023, compared to 2,103 in 2022, a decrease of 22.2%.

Current wording

However, the Alaska Multiple Listing Services reported a large decrease in the number of units sold in both communities in 2023. There were 2,162 housing units sold in Anchorage in 2023, down 24.1% compared to 2,849 in 2022. In the Matanuska Susitna Borough there were 1,636 homes sold in 2023, compared to 2,103 in 2022, a decrease of 22.2%.

Previous wording

Highlights and Summary of Performance - First Quarter of 2024

Current wording

Highlights and Summary of Performance - Second Quarter of 2024

Previous wording

The Company reported net income and earnings per diluted share of $8.2 million and $1.48, respectively, for the first quarter of 2024 compared to net income and earnings per diluted share of $4.8 million and $0.84, respectively, for the first quarter of 2023. The increase in net income for the three-month period ending March 31, 2024 compared to the same period last year is primarily attributable to an increase in mortgage banking income, higher net interest income, a lower provision for credit losses, unrealized gains on marketable equity securities, and a gain on an other real estate ("OREO") sale.

Current wording

The Company reported net income and earnings per diluted share of $9.0 million and $1.62, respectively, for the second quarter of 2024 compared to net income and earnings per diluted share of $5.6 million and $0.98, respectively, for the second quarter of 2023. The Company reported net income and earnings per diluted share of $17.2 million and $3.10, respectively, for the first six months of 2024 compared to net income and earnings per diluted share of $10.4 million and $1.82, respectively, for the first six months of 2023. The increase in net income for both the three and six-month periods ending June 30, 2024 compared to the same periods last year is primarily attributable to an increase in mortgage banking income, higher net interest income, and a lower provision for credit losses.

Previous wording

•Net interest margin was 4.16% for the first quarter of 2024, an 8 basis point decrease from the first quarter of 2023. The decrease in the first quarter of 2024 compared to the same period in 2023 was primarily due to a higher interest costs which were only partially offset by higher yields on earning assets, a favorable change in the mix of earning-assets, and an increase in total earning assets.

Current wording

•Net interest margin was 4.24% for the second quarter of 2024, a 10 basis point increase from the second quarter of 2023. Net interest margin was 4.20% for the first six months of 2024, a 2 basis point increase from the first six months of 2023. The increase in the second quarter and first six months of 2024 compared to the same periods in 2023 was primarily due higher yields on earning assets, a favorable change in the mix of earning-assets, and an increase in total earning assets which were only partially offset by higher interest costs.

Previous wording

•The weighted average interest rate for new loans booked in the first quarter of 2024 was 7.15% compared to 6.04% in the first quarter a year ago.

Current wording

•The weighted average interest rate for new loans booked in the second quarter of 2024 was 7.26% compared to 6.93% in the second quarter a year ago.

Previous wording

•Loans were $1.81 billion at March 31, 2024, up 1% from December 31, 2023 primarily as a result of commercial real estate and consumer mortgage loan growth.

Current wording

•Loans were $1.88 billion at June 30, 2024, up 5% from December 31, 2023 primarily as a result of commercial, commercial real estate, and consumer mortgage loan growth.

Previous wording

•Total deposits were $2.43 billion at March 31, 2024, down 2% from December 31, 2023. Demand deposits decreased 5% at March 31, 2024 from December 31, 2023 and represent 29% of total deposits at March 31, 2024.

Current wording

•Total deposits were $2.46 billion at June 30, 2024, down 1% from December 31, 2023. Demand deposits decreased 6% at June 30, 2024 from December 31, 2023 and represent 29% of total deposits at June 30, 2024.

Previous wording

•The average cost of interest-bearing deposits for the quarter was 2.13% at March 31, 2024, up from 1.20% at March 31, 2023.

Current wording

•The average cost of interest-bearing deposits for the quarter was 2.21% at June 30, 2024, up from 1.56% at June 30, 2023.

Previous wording

•Total liquid assets and investments and loans maturing within one year were $515.6 million and our funds available for borrowing under our existing lines of credit were $712.3 million at March 31, 2024.

Current wording

•Total liquid assets and investments and loans maturing within one year were $526.5 million and our funds available for borrowing under our existing lines of credit were $643.1 million at June 30, 2024.

Previous wording

Nonperforming assets: Nonperforming assets, net of government guarantees were $5.4 million at March 31, 2024 and $5.8 million at December 31, 2023. OREO, net of government guarantees was zero at March 31, 2024 and December 31, 2023. Nonperforming loans, net of government guarantees increased $258,000 or 5% to $5.3 million as of March 31, 2024 from $5.0 million as of December 31, 2023, primarily due to the transfer of one nonaccrual purchased receivable relationship to nonaccrual loans which was only partially offset by payoffs and pay downs in the first three months of 2024. $3.3 million, or 61% of nonperforming assets, net of government guarantees at March 31, 2024, are nonaccrual loans related to three commercial relationships.

Current wording

Nonperforming assets: Nonperforming assets, net of government guarantees were $5.1 million at June 30, 2024 and $5.8 million at December 31, 2023. Other Real Estate Owned (“OREO”), net of government guarantees was zero at June 30, 2024 and December 31, 2023. Repossessed assets increased to $297,000 as of June 30, 2024 from zero at December 31, 2023. Nonperforming loans, net of government guarantees decreased $255,000 or 5% to $4.8 million as of June 30, 2024 from $5.0 million as of December 31, 2023, primarily due to payoffs and pay downs which were only partially offset by the addition of one commercial loan in the first six months of 2024. $3.1 million, or 64% of nonperforming assets, net of government guarantees at June 30, 2024, are nonaccrual loans related to three commercial relationships.

Previous wording

Potential problem assets: Potential problem loans are loans which are currently performing in accordance with contractual terms but that have developed negative indications that the borrower may not be able to comply with present payment terms and which may later be included in nonaccrual, past due, or impaired loans. These loans are closely monitored and their performance is reviewed by management on a regular basis. At March 31, 2024, management had identified $1.9 million potential problem loans unchanged from $1.9 million at December 31, 2023.

Current wording

Potential problem assets: Potential problem loans are loans which are currently performing in accordance with contractual terms but that have developed negative indications that the borrower may not be able to comply with present payment terms and which may later be included in nonaccrual, past due, or impaired loans. These loans are closely monitored and their performance is reviewed by management on a regular basis. At June 30, 2024, management had identified $2.2 million potential problem loans, up slightly from $1.9 million at December 31, 2023.

Previous wording

Net income for the first quarter of 2024 increased $3.4 million to $8.2 million as compared to $4.8 million for the same period in 2023. The increase in net income in the first quarter of 2024 as compared to the same quarter a year ago is largely attributable to a $2.0 million increase in mortgage banking income, a $1.4 million increase in net interest income, and a $392,000 gain on OREO sale.

Current wording

Net income for the second quarter of 2024 increased $3.4 million to $9.0 million as compared to $5.6 million for the same period in 2023. The increase in net income in the second quarter of 2024 as compared to the same quarter a year ago is largely attributable to a $2.0 million increase in mortgage banking income, a $1.9 million increase in net interest income, and a $1.5 million decrease in the provision for credit losses. These changes were only partially offset by a $1.4 million increase in salaries and other personnel expense.

Previous wording

The increase in net interest income in the first quarter of 2024 compared to the same period in 2023 was primarily the result of increased interest on loans which was only partially offset by a decrease in interest income on investments and interest bearing deposits in other banks, as well as an increase in interest expense on interest-bearing deposits and borrowings.

Current wording

The increase in net interest income in the second quarter and first six months of 2024 compared to the same periods in 2023 was primarily the result of increased interest on loans which was only partially offset by a decrease in interest income on investments and interest bearing deposits in other banks, as well as an increase in interest expense on interest-bearing deposits.

Previous wording

The decrease in net interest margin in the first quarter of 2024 as compared to the same period of 2023 was primarily due to higher interest costs which were only partially offset by higher yields on earning assets, a favorable change in the mix of earning-assets, and an increase in total earning assets. Changes in net interest margin in the three-month period ended March 31, 2024 as compared to the same period in the prior year are detailed below:

Current wording

The increase in net interest margin in the second quarter and first six months of 2024 as compared to the same periods of 2023 was primarily due to higher yields on earning assets, a favorable change in the mix of earning-assets, and an increase in total earning assets which were only partially offset by higher interest costs. Changes in net interest margin in the three and six-month period ended June 30, 2024 as compared to the same period in the prior year are detailed below:

Previous wording

3 Interest income includes loan fees. Loan fees recognized during the period and included in the yield calculation totaled $1.0 million and $1.3 million in the first quarter of 2024 and 2023, respectively.

Current wording

3 Interest income includes loan fees. Loan fees recognized during the period and included in the yield calculation totaled $1.2 million and $1.1 million in the second quarter of 2024 and 2023, respectively.

Previous wording

4 Nonaccrual loans are included with a zero effective yield. Average nonaccrual loans included in the computation of the average loan balances were $5.7 million and $7.1 million in the first quarter of 2024 and 2023, respectively.

Current wording

4 Nonaccrual loans are included with a zero effective yield. Average nonaccrual loans included in the computation of the average loan balances were $5.0 million and $8.3 million in the second quarter of 2024 and 2023, respectively.

Previous wording

The provision for credit loss expense is the amount of expense that, based on our judgment, is required to maintain the Allowance for Credit Losses (“ACL”) at an appropriate level under the Current Expected Credit Losses (“CECL”) model. The determination of the amount of the ACL is complex and involves a high degree of judgment and subjectivity. The following table presents the major categories of credit loss expense:

Current wording

The provision for credit loss expense is the amount of expense that, based on our judgment, is required to maintain the Allowance for Credit Losses (“ACL”) at an appropriate level under the Company's Current Expected Credit Losses (“CECL”) model. The determination of the amount of the ACL is complex and involves a high degree of judgment and subjectivity. The following table presents the major categories of credit loss expense:

Previous wording

The decrease in the provision for credit losses for the three-month periods ending March 31, 2024 as compared to the same period in 2023 is primarily the result of a decrease in estimated loss rates for both loans and unfunded commitments that was only partially offset by growth in outstanding balances and a specific allowance for one individually evaluated loan. Fluctuations in the provision for credit losses in the future will be dependent upon changes in economic conditions and forecasts, as well as loan portfolio composition, quality, and duration.

Current wording

The decrease in the provision for credit losses for the three and six-month periods ending June 30, 2024 as compared to the same periods in 2023 is primarily the result of a lower loan growth. The provision for credit losses on unfunded commitments is negative in all periods is primarily due to seasonal decreases in unfunded commitment balances, and changes in mix of the portfolio. Fluctuations in the provision for credit losses in the future will be dependent upon changes in economic conditions and forecasts, as well as loan portfolio composition, quality, and duration.

Previous wording

Other operating income for the three-month period ended March 31, 2024 increased $2.9 million, or 60%, to $7.8 million as compared to $4.9 million for the same period in 2023, primarily due to a $2.0 million increase in mortgage banking income in the first quarter of 2024 compared to the same quarter a year ago as well as a $537,000 increase in the fair value of marketable equity securities and a $368,000 increase in purchased receivable income. The increase in mortgage banking income in the three-month period ended March 31, 2024 as compared to the same period in 2023 was primarily due to increased production volume due to stabilizing mortgage interest rates.

Current wording

Other operating income for the three-month period ended June 30, 2024 increased $2.6 million, or 37%, to $9.6 million as compared to $7.0 million for the same period in 2023, primarily due to a $2.0 million increase in mortgage banking income in the second quarter of 2024 compared to the same quarter a year ago as well as a $224,000 increase in purchased receivable income and a $174,000 increase in the fair value of marketable equity securities. Service charges on deposit accounts and bankcard fees also increased in the second quarter of 2024 as compared to the same period in 2023. The increase in mortgage banking income in the three-month period ended June 30, 2024 as compared to the same period in 2023 was primarily due to increased production volume due to increased home purchase activity.

Previous wording

Other operating expense for the first quarter of 2024 increased $129,000, or 1%, to $23.6 million as compared to $23.5 million for the same period in 2023 is primarily due to a $304,000 increase in data processing expense and a $222,000 increase in insurance expense, which was only partially offset by a decrease in OREO expense due to subsequent proceeds received in the first quarter of 2024 that are related to a government guarantee on an OREO property sold in December 2022.

Current wording

Other operating expense for the six-month period ended June 30, 2024 increased $1.5 million, or 3%, to $48.8 million as compared to $47.3 million for the same period in 2023 is primarily due to a $1.4 million increase in salaries and other personnel expense primarily due to higher profit sharing expense and lower deferral of loan origination costs as well as a $528,000 increase in data processing expense and $267,000 increase in insurance expense, which was only partially offset by a $294,000 decrease in marketing expense and $407,000 decrease in OREO expense due to subsequent proceeds received in the first quarter of 2024 that are related to a government guarantee on an OREO property sold in December 2022.

Previous wording

For the first quarter of 2024, Northrim recorded a higher effective tax rate as compared to the same period in 2023 as a result of a decrease in tax credits and tax exempt interest income as a percentage of pre-tax income in 2024. In the first quarter of 2024, Northrim recorded $2.3 million in state and federal income tax expense, for an effective tax rate of 21.94% compared to $1.2 million and 20.44% for the same period in 2023.

Current wording

For the second quarter and first six months of 2024, Northrim recorded a higher effective tax rate as compared to the same periods in 2023 as a result of a decrease in tax credits and tax exempt interest income as a percentage of pre-tax income in 2024. In the second quarter of 2024, Northrim recorded $2.5 million in state and federal income tax expense, for an effective tax rate of 21.95% compared to $1.4 million and 19.56% for the same period in 2023. In the first six months of 2024, Northrim recorded $4.8 million in state and federal income tax expense, for an effective tax rate of 21.94% compared to $2.6 million and 19.97% for the same period in 2023.

Previous wording

Investment Securities include investment securities available for sale, investment securities held to maturity, and marketable equity securities, at March 31, 2024 decreased 7% to $642.7 million from $687.8 million at December 31, 2023 primarily due to maturities and calls of available for sale securities during the first three months of 2024.

Current wording

Investment Securities include investment securities available for sale, investment securities held to maturity, and marketable equity securities, at June 30, 2024 decreased 8% to $634.1 million from $687.8 million at December 31, 2023 primarily due to maturities and calls of available for sale securities during the first six months of 2024.

Previous wording

The average estimated duration of the investment portfolio at March 31, 2024, was approximately 2.7 years. As of March 31, 2024, $48.8 million of available for sale securities with a weighted average yield of 1.83% are scheduled to mature in the next six months, $40.1 million with a weighted average yield of 0.66% are scheduled to mature in six months to one year, and $238.1 million with a weighted average yield of 1.52% are scheduled to mature in the following year, representing a total of $326.9 million or 13% of earning assets that are scheduled to mature in the next 24 months.

Current wording

The average estimated duration of the investment portfolio at June 30, 2024, was approximately 2.5 years. As of June 30, 2024, $111.5 million of available for sale securities with a weighted average yield of 1.02% are scheduled to mature in the next six months, $77.3 million with a weighted average yield of 2.35% are scheduled to mature in six months to one year, and $172.2 million with a weighted average yield of 1.49% are scheduled to mature in the following year, representing a total of $361.0 million or 14% of earning assets that are scheduled to mature in the next 24 months.

Previous wording

Loans increased by $21.6 million, or 1%, to $1.811 billion at March 31, 2024 from $1.789 billion at December 31, 2023, primarily as a result of increased commercial real estate and consumer mortgage loans.

Current wording

Loans increased by $86.4 million, or 5%, to $1.876 billion at June 30, 2024 from $1.789 billion at December 31, 2023, primarily as a result of increased commercial, commercial real estate, and consumer mortgage loans.

Previous wording

The Company defines “direct exposure” to the oil and gas industry as companies that it has identified as significantly reliant upon activity related to the oil and gas industry, such as oilfield services, lodging, equipment rental, transportation, and other logistic services specific to the industry. The Company estimates that $88.0 million, or approximately 5% of loans as of March 31, 2024 have direct exposure to the oil and gas industry as compared to $96.1 million, or approximately 5% of loans as of December 31, 2023. The Company's unfunded commitments to borrowers that have direct exposure to the oil and gas industry were $42.6 million and $38.6 million at March 31, 2024 and December 31, 2023, respectively. The portion of the

Current wording

The Company defines “direct exposure” to the oil and gas industry as companies that it has identified as significantly reliant upon activity related to the oil and gas industry, such as oilfield services, lodging, equipment rental, transportation, and other logistic services specific to the industry. The Company estimates that $88.3 million, or approximately 5% of loans as of June 30, 2024 have direct exposure to the oil and gas industry as compared to $96.1 million, or approximately 5% of loans as of December 31, 2023. The Company's unfunded commitments to borrowers that have direct exposure to the oil and gas industry were $31.7 million and $38.6 million at June 30, 2024 and December 31, 2023, respectively. The portion of the Company's ACL that related to the loans with direct exposure to the oil and gas industry was estimated at $939,000 as of June 30, 2024 and $884,000 as of December 31, 2023.

Previous wording

The Company monitors other concentrations within the loan portfolio depending on trends in the current and future estimated economic conditions. At March 31, 2024, the Company had $123.1 million, or 7% of portfolio loans, in the Healthcare sector, $108.6 million, or 6% of portfolio loans, in the Tourism sector, $92.6 million, or 5% of portfolio loans, in the Accommodations sector, $74.0 million, or 4% of portfolio loans, in the Fishing sector, $74.0 million, or 4% of portfolio loans, in the Retail sector, $59.6 million, or 3% of portfolio loans, in the Aviation (non-tourism) sector, and $52.5 million, or 3% in the Restaurant sector.

Current wording

The Company monitors other concentrations within the loan portfolio depending on trends in the current and future estimated economic conditions. At June 30, 2024, the Company had $122.2 million, or 6% of portfolio loans, in the Healthcare sector, $121.1 million, or 6% of portfolio loans, in the Tourism sector, $93.9 million, or 5% of portfolio loans, in the Accommodations sector, $78.4 million, or 4% of portfolio loans, in the Fishing sector, $70.8 million, or 4% of portfolio loans, in the Aviation (non-tourism) sector, $63.9 million, or 3% of portfolio loans, in the Retail sector, and $52.1 million, or 3% in the Restaurant sector.

Previous wording

The ACL for loans held for investment at March 31, 2024 increased $263,000 from December 31, 2023 primarily due to higher non-government guaranteed loan balances, changes in management's CECL model assumptions, and an increase in the allowance for loans individually evaluated. These changes were only partially offset by a decrease in the Company's forecasted future economic drivers. While management believes that it uses the best information available to determine the ACL, unforeseen market conditions and other events could result in adjustment to the ACL, and net income could be significantly affected if circumstances differed substantially from the assumptions used in making the final determination of the ACL.

Current wording

The ACL for loans held for investment at June 30, 2024 increased $424,000 from December 31, 2023 primarily due to higher non-government guaranteed loan balances and changes in management's CECL model assumptions. These changes were only partially offset by a decrease in the Company's forecasted future economic drivers and the estimated timing of future cash flows. While management believes that it uses the best information available to determine the ACL, unforeseen market conditions and other events could result in adjustment to the ACL, and net income could be significantly affected if circumstances differed substantially from the assumptions used in making the final determination of the ACL.

Previous wording

Deposits are the Company’s primary source of funds. Total deposits decreased $51.0 million, or 2%, to $2.434 billion as of March 31, 2024 compared to $2.485 billion as of December 31, 2023, primarily due to seasonality. The following table summarizes the Company's composition of deposits as of the periods indicated:

Current wording

Deposits are the Company’s primary source of funds. Total deposits decreased $21.2 million, or 1%, to $2.464 billion as of June 30, 2024 compared to $2.485 billion as of December 31, 2023, primarily due to seasonality. The following table summarizes the Company's composition of deposits as of the periods indicated:

Previous wording

The Company’s mix of deposits continues to contribute to a low cost of funds with balances in transaction accounts representing 85% of total deposits at March 31, 2024 and 87% of total deposits at December 31, 2023.

Current wording

The Company’s mix of deposits continues to contribute to a low cost of funds with balances in transaction accounts representing 83% of total deposits at June 30, 2024 and 87% of total deposits at December 31, 2023.

Previous wording

The only deposit category with stated maturity dates is certificates of deposit. At March 31, 2024, the Company had $373.6 million in certificates of deposit as compared to certificates of deposit of $331.3 million at December 31, 2023. At March 31, 2024, $324.2 million, or 87%, of the Company’s certificates of deposits are scheduled to mature over the next 12 months as compared to $268.5 million, or 81%, of total certificates of deposit at December 31, 2023. The aggregate amount of certificates of deposit in amounts of $250,000 and greater at March 31, 2024 and December 31, 2023, was $165.9 million and $142.1 million, respectively. The following table sets forth the amount outstanding of deposits in amounts of $250,000 and greater by time remaining until maturity and percentage of total deposits as of March 31, 2024:

Current wording

The only deposit category with stated maturity dates is certificates of deposit. At June 30, 2024, the Company had $420.0 million in certificates of deposit as compared to certificates of deposit of $331.3 million at December 31, 2023. At June 30, 2024, $381.9 million, or 91%, of the Company’s certificates of deposits are scheduled to mature over the next 12 months as compared to $268.5 million, or 81%, of total certificates of deposit at December 31, 2023. The aggregate amount of certificates of deposit in amounts of $250,000 and greater at June 30, 2024 and December 31, 2023, was $196.5 million and $142.1 million, respectively. The following table sets forth the amount outstanding of deposits in amounts of $250,000 and greater by time remaining until maturity and percentage of total deposits as of June 30, 2024:

Previous wording

At March 31, 2024, 70% of total deposits were held in business accounts and 30% of deposit balances were held in consumer accounts. Northrim had approximately 33,000 deposit customers with an average balance of $73,000 as of March 31, 2024. Northrim had 19 customers with balances over $10 million as of March 31, 2024 which accounted for $459.9 million, or 19%, of total deposits.

Current wording

At June 30, 2024, 71% of total deposits were held in business accounts and 29% of deposit balances were held in consumer accounts. Northrim had approximately 34,000 deposit customers with an average balance of $74,000 as of June 30, 2024. Northrim had 21 customers with balances over $10 million as of June 30, 2024 which accounted for $474.5 million, or 20%, of total deposits.

Previous wording

Uninsured deposits totaled approximately $989.5 million or 41% of total deposits as of March 31, 2024 compared to $1.0 billion or 41% of total deposits as of December 31, 2023. Since interest rates began increasing in 2023, Northrim has taken a proactive, targeted approach to increase deposit rates. There was no unusual deposit activity during the first three months of 2024.

Current wording

Uninsured deposits totaled approximately $980.0 million or 40% of total deposits as of June 30, 2024 compared to $1.0 billion or 41% of total deposits as of December 31, 2023. Since interest rates began increasing in 2023, Northrim has taken a proactive, targeted approach to increase deposit rates. There was no unusual deposit activity during the first six months of 2024.

Previous wording

FHLB: The Bank is a member of the Federal Home Loan Bank of Des Moines (the “FHLB”). As a member, the Bank is eligible to obtain advances from the FHLB. FHLB advances are dependent on the availability of acceptable collateral such as marketable securities or real estate loans, although all FHLB advances are secured by a blanket pledge of the Bank’s assets. At March 31, 2024, our maximum borrowing line from the FHLB was approximately 45% of the Bank’s assets, subject to the FHLB’s collateral requirements. Based on the Company's current collateral pledged to the FHLB, less outstanding advances, the Company's borrowing line is $359.5 million as of March 31, 2024. The Company has outstanding advances of $13.6 million as of March 31, 2024 which were originated to match fund low income housing projects that qualify for long term fixed interest rates. These advances have original terms of either 18 or 20 years with 30 year amortization periods and fixed interest rates ranging from 1.23% to 3.25%.

Current wording

FHLB: The Bank is a member of the Federal Home Loan Bank of Des Moines (the “FHLB”). As a member, the Bank is eligible to obtain advances from the FHLB. FHLB advances are dependent on the availability of acceptable collateral such as marketable securities or real estate loans, although all FHLB advances are secured by a blanket pledge of the Bank’s assets. At June 30, 2024, our maximum borrowing line from the FHLB was approximately 45% of the Bank’s assets, subject to the FHLB’s collateral requirements. Based on the Company's current collateral pledged to the FHLB, less outstanding advances, the Company's borrowing line is $346.0 million as of June 30, 2024. The Company has outstanding advances of $13.5 million as of June 30, 2024 which were originated to match fund low income housing projects that qualify for long term fixed interest rates. These advances have original terms of either 18 or 20 years with 30 year amortization periods and fixed interest rates ranging from 1.23% to 3.25%. Additionally, the Company has a short-term $30.5 million advance from the FHLB outstanding as of June 30, 2024 at an interest rate of 5.56% which resets daily.