NORTHRIM BANCORP INC

In 2022, the SEC adopted rules requiring annual disclosure of the relationship between executive compensation actually paid and the financial performance of the Company, commonly referred to as "pay versus performance", or "pay for performance". The rule requires companies to designate a "company-selected measure", which in the Company's assessment represents the most important financial performance measure (that is not otherwise required to be disclosed in the table below) used by the Company to link compensation actually paid to the Company's named executive officers to the Company's performance. For the purposes of the pay versus performance rule, "financial performance measures" means measures that are determined and presented in accordance with the accounting principles used in preparing the Company's financial statements, any measures that are derived wholly or in part from such measures, and stock price and total shareholder return, or TSR.

Management believes that the size of the Company, as measured by total assets as of the end of each fiscal year, represents the most important financial performance measure used by the Company to link compensation of our Principal Executive Officer and the other named executive officers to the Company's performance. As noted throughout the Compensation Discussion and Analysis section above, the Company evaluates both executive performance and the structure of executive compensation to ensure that compensation for executives is reasonable and competitive with similar positions held in peer group organizations. The selection of the peer group for this evaluation has a material impact on executive compensation. The Company considers several factors when selecting the peer group, including but not limited to geographical markets in which the entities operate and similarities to the Company in entity structure and business activities. The Company's peer group for the years ended 2020 and 2021 included 14 companies. The Company's peer group for the years ended 2022, 2023, and 2024 included 16 companies. While these criteria are important, the Company believes that the size of the entities selected as peers has the most significant impact on executive compensation.

The table below, read in conjunction with the following narrative discussion, provides information relevant to an analysis of the Company's pay versus performance for our Principal Executive Officer ("PEO") and our other named executive officers for the years ended 2024, 2023, 2022, 2021 and 2020: