NORTHRIM BANCORP INC

Previous wording

This quarterly report on Form 10-Q includes “forward-looking statements,” as that term is defined for purposes of Section 21E of the Securities Exchange Act of 1934, as amended, which are not historical facts. These forward-looking statements describe management’s expectations about future events and developments such as future operating results, growth in loans and deposits, continued success of the Company’s style of banking, and the strength of the local economy. All statements, other than statements of historical fact, regarding our financial position, business strategy, management’s plans and objectives for future operations are forward-looking statements. We use words such as “anticipate,” “believe,” “expect,” “intend” and similar expressions in part to help identify forward-looking statements. Forward-looking statements reflect management’s current plans and expectations and are inherently uncertain. Our actual results may differ significantly from management’s expectations, and those variations may be both material and adverse. Forward-looking statements are subject to various risks and uncertainties that may cause our actual results to differ materially and adversely from our expectations as indicated in the forward-looking statements. These risks and uncertainties include: descriptions of the financial condition, results of operations, asset based lending volumes, asset and credit quality trends and profitability and statements about the expected financial benefits and other effects of the acquisition of Sallyport Commercial Finance, LLC (“Sallyport”) by Northrim Bank; expected cost savings, synergies and other financial benefits from the acquisition of Sallyport by Northrim Bank might not be realized within the expected time frames and costs or difficulties relating to integration matters might be greater than expected; the ability of Northrim and Sallyport to execute their respective business plans; potential further increases in interest rates; the value of securities held in our investment portfolio; impact of the results of government initiatives, including tariffs, on the regulatory landscape, natural resource extraction industries, and capital markets; the impact of declines in the value of commercial and residential real estate markets, high unemployment rates, inflationary pressures and slowdowns in economic growth; changes in banking regulation or actions by bank regulators; potential further increases in inflation, supply-chain constraints, and potential geopolitical instability, including the war in Ukraine and the conflicts in the Middle East; financial stress on borrowers (consumers and businesses) as a result of higher rates or an uncertain economic environment; the general condition of, and changes in, the Alaska economy; our ability to maintain or expand our market share or net interest margin; the sufficiency of our allowance for credit losses and the accuracy of the assumptions or estimates used in preparing our finan…

Excerpt shortened here; the source contains the full paragraph.

Current wording

This quarterly report on Form 10-Q includes “forward-looking statements,” as that term is defined for purposes of Section 21E of the Securities Exchange Act of 1934, as amended, which are not historical facts. These forward-looking statements describe management’s expectations about future events and developments such as future operating results, growth in loans and deposits, continued success of the Company’s style of banking, and the strength of the local economy. All statements, other than statements of historical fact, regarding our financial position, business strategy, management’s plans and objectives for future operations are forward-looking statements. We use words such as “anticipate,” “believe,” “expect,” “intend” and similar expressions in part to help identify forward-looking statements. Forward-looking statements reflect management’s current plans and expectations and are inherently uncertain. Our actual results may differ significantly from management’s expectations, and those variations may be both material and adverse. Forward-looking statements are subject to various risks and uncertainties that may cause our actual results to differ materially and adversely from our expectations as indicated in the forward-looking statements. These risks and uncertainties include: descriptions of the financial condition, results of operations, asset based lending volumes, asset and credit quality trends and profitability and statements about the expected financial benefits and other effects of the acquisition of Sallyport Commercial Finance, LLC (“Sallyport”) by Northrim Bank; expected cost savings, synergies and other financial benefits from the acquisition of Sallyport by Northrim Bank might not be realized within the expected time frames and costs or difficulties relating to integration matters might be greater than expected; the ability of Northrim and Sallyport to execute their respective business plans; potential further increases in interest rates; the value of securities held in our investment portfolio; impact of the results of government shutdowns and government initiatives, including tariffs, on the regulatory landscape, natural resource extraction industries, and capital markets; the impact of declines in the value of commercial and residential real estate markets, high unemployment rates, inflationary pressures and slowdowns in economic growth; changes in banking regulation or actions by bank regulators; potential further increases in inflation, supply-chain constraints, and potential geopolitical instability, including the war in Ukraine and the conflicts in the Middle East; financial stress on borrowers (consumers and businesses) as a result of higher rates or an uncertain economic environment; the general condition of, and changes in, the Alaska economy; our ability to maintain or expand our market share or net interest margin; the sufficiency of our allowance for credit losses and the accuracy of the assumptions or estimates us…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

The Alaska Department of Labor (“DOL”) has reported Alaska’s seasonally adjusted unemployment rate in May of 2025 was 4.7% compared to the U.S. rate of 4.2%. The rate has held steady in Alaska at 4.7% for eight consecutive months. The total number of payroll jobs in Alaska, not including uniformed military, increased 1.1% or 3,800 jobs between May of 2024 and May of 2025.

Current wording

The Alaska Department of Labor (“DOL”) has reported Alaska’s seasonally adjusted unemployment rate in August of 2025 was 4.7% compared to the U.S. rate of 4.3%. The total of 355,900 payroll jobs in Alaska, not including uniformed military, increased 0.8% or 2,900 jobs between August of 2024 and August of 2025. This matched the year-over-year increase for the U.S. of 0.8% for the same period.

Previous wording

According to the DOL, the Oil and Gas sector had the largest growth rate in new jobs of 8.8% through May of this year compared to the prior year, up 700 direct jobs. The Construction sector added 700 positions for a year-over-year growth rate of 3.7% through May of 2025. The larger Health Care sector grew by 1,200 jobs for an annual growth rate of 2.9%. Transportation, Warehousing and Utilities added 600 jobs for a 2.3% growth rate over the same period. Professional and Business Services increased 500 jobs year-over-year through May of 2025, up 1.7%.

Current wording

According to the DOL, the Oil and Gas sector had the largest growth rate in new jobs of 6% through August compared to the prior year, up 500 direct jobs. The Construction sector added 1,000 positions for a year-over-year growth rate of 4.8% in August of 2025. The Manufacturing sector, which is dominated by seafood processing, added 900 jobs and grew 5.7% in the same period. The larger Health Care sector also grew by 900 jobs for an annual growth rate of 2.1%. Transportation, Warehousing and Utilities added 300 jobs for a 1.1% growth rate. Professional and Business Services increased 200 jobs year-over-year through August of 2025, up 0.7%.

Previous wording

The Government sector grew by 200 jobs for 0.2% growth, adding 400 State positions while losing 200 Federal jobs in Alaska over the same period. Declining sectors between May 2024 and May 2025 were Information down 100 jobs or (-2.3%), Manufacturing (primarily seafood processing) shrinking 200 positions (-2.1%), Wholesale Trade lost 100 jobs (-1.5%) and Financial Activities, down 100 jobs (-0.9%).

Current wording

The Government sector declined by 100 jobs (0.1%). Government gained 200 State positions, while losing 100 Federal jobs and 200 Local government jobs in Alaska between August of 2024 and August of 2025. Other declining sectors include: Information down 300 jobs or (-6.8%); Leisure/Hospitality declined 100 jobs (-0.2%); Wholesale Trade lost 100 jobs (-1.5%) and Financial Activities, down 100 jobs (-0.9%).

Previous wording

Alaska’s seasonally adjusted personal income was $57.4 billion in the first quarter of 2025 according to the Federal Bureau of Economic Analysis (“BEA”). This was an annualized improvement in the first quarter of 6.4% for Alaska, compared to the national average of 6.7%. Alaska enjoyed an annual personal income improvement of 6% in 2024 compared to the U.S. increase of 5.4%, ranking Alaska 6 th best in the nation. The $885 million increase in personal income in the first quarter of 2025 in Alaska came from a $352 million increase in net earnings from wages, $440 million growth in government transfer receipts, and a $92 million increase in investment income.

Current wording

Alaska’s seasonally adjusted personal income was $59.4 billion in the second quarter of 2025 according to the Federal Bureau of Economic Analysis (“BEA”). Alaska had an annualized improvement of 9.7% in the first quarter and 5% in the second quarter of 2025. This is compared to the national average of 6.4% in the first quarter and 5.5% in second quarter of 2025. Alaska enjoyed an annual personal income improvement of 5.8% in 2024 compared to the U.S. increase of 5.6%. Per capita personal income in Alaska is now estimated at $80,208 according to the BEA, ranking it 12 th highest of the 50 U.S. states.

Previous wording

Alaska’s Gross State Product (“GSP”) in the first quarter of 2025 reached $72 billion according to the BEA. Alaska’s inflation adjusted “real” GSP increased 1.5% in 2024 and decreased -1.8% annualized in the first quarter of 2025. The average U.S. GDP growth rate was 2.8% for 2025 and -0.5% in the first quarter of 2025. Alaska’s real GSP decrease in the first quarter of 2025 was primarily caused by a decrease in the Mining, Oil & Gas sector, somewhat offset by improvements in the Construction sector.

Current wording

Alaska’s Gross State Product (“GSP”) in the second quarter of 2025 reached $74.2 billion according to the BEA. Alaska’s inflation adjusted “real” GSP increased 1.5% in 2024, 1.8% annualized in the first quarter of 2025, and 2% in the second quarter of 2025. The average U.S. GDP growth rate was 2.8% for 2024, annualized -0.6% in the first quarter of 2025 and 3.8% in the second quarter of 2025. Alaska’s real GSP improvement in the second quarter of 2025 was led by the Mining, Oil & Gas sector; Transportation & Warehousing; Professional, Scientific & Technical Services; and Manufacturing, but was somewhat offset by decreases in Retail Trade and Government.

Previous wording

Alaska exported $5.9 billion in goods to foreign countries in 2024 according to the U.S. International Trade Administration. China is the largest importer of Alaska’s products at $1.5 billion, followed by Australia at $804 million, Japan at $674 million and South Korea at $634 million in 2024. Fish and related maritime products accounted for the largest volume at $2.1 billion, followed by minerals and ores at $2 billion, and primary metals at $992 million in 2024. Oil & Gas exports are $380 million because the majority of Alaska’s production is refined and consumed in the United States.

Current wording

Alaska exported $5.9 billion in goods to foreign countries in 2024 according to the U.S. International Trade Administration. China is the largest importer of Alaska’s products at $1.5 billion, followed by Australia at $804 million, Japan at $674 million and South Korea at $634 million in 2024. Fish and related maritime products accounted for the largest volume at $2.1 billion, followed by minerals and ores $2 billion, and primary metals at $992 million in 2024. Oil & Gas international exports were $380 million because the majority of Alaska’s production is refined and consumed within the United States.

Previous wording

According to the US Bureau of Labor Statistics, the Consumer Price Index (“CPI”) for the U.S. increased 2.7% between June of 2024 and June of 2025. In Alaska, the rate of CPI increase was lower at 1.6% for the same time period. Food and beverage, housing costs, and medical care costs were the largest causes for inflation.Declining motor fuel prices, transportation, recreation and household furnishing costs have helped moderate inflationary pressures in Alaska.

Current wording

According to the U.S. Bureau of Labor Statistics, the Consumer Price Index, or CPI, for the U.S. increased 2.9% between August of 2024 and August of 2025. In Alaska, the rate of increase was lower at 2.4% for the same time period. The largest increases since last August came from Apparel (+6.9%), Food and beverage (+3.9%), and Housing (+3.8%). Slower increases or declining costs in Medical Care (+1.2%), Gasoline (+0.9%), Transportation (-1.2%) and Recreation (-1.7%) through August 2025 have helped moderate inflationary pressures in Alaska relative to the U.S.

Previous wording

The monthly average price of Alaska North Slope (“ANS”) crude oil has ranged between $76.39 a barrel in January of 2025 and $67.07 in May of the prior year. The June 2025 average was $72.62. The Alaska Department of Revenue (“DOR”) calculated ANS crude oil production was 461 thousand barrels per day (“bpd”) in Alaska’s fiscal year ending June 30, 2024. Production rose to 469 thousand bpd in fiscal year ending June 30, 2025. In the Spring 2025 Revenue Forecast published March 12, 2025, the DOR expects production to continue to grow to 663 thousand 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. A partnership between Santos and Repsol is constructing the new Pikka field and ConocoPhillips is developing the large new Willow field. There are also a number of smaller new fields in the ANS that are contributing to the State of Alaska’s production growth estimates.

Current wording

The monthly average price of Alaska North Slope (“ANS”) crude oil has ranged between a high of $76.39 a barrel in January of 2025 and a low of $67.07 in May of 2025. The August 2025 average was $69.29. The Alaska Department of Revenue (“DOR”) calculated ANS crude oil production was 461 thousand barrels per day (“bpd”) in Alaska’s fiscal year ending June 30, 2024. Production rose to 469 thousand bpd in fiscal year ending June 30, 2025. In the Spring 2025 Revenue Forecast published March 12, 2025, the DOR expects production to continue to grow to 663 thousand bpd, or 41% 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. A partnership between Santos and Repsol is constructing the new Pikka field and ConocoPhillips is developing the large new Willow field. There are also several smaller new fields in Alaska’s North Slope that are contributing to the State of Alaska’s production growth estimate.

Previous wording

The Alaska Permanent Fund is seeded annually by the oil wealth the State continues to save each year and has grown significantly over 40 years of successful investment. As of May 31, 2025 the fund's value was $83.13 billion. According to the DOR it is scheduled to contribute $3.7 billion to Alaska General Fund in fiscal year 2025 for general government spending and to pay the annual dividend to Alaskan residents.

Current wording

The Alaska Permanent Fund is seeded annually by the oil wealth the State continues to save each year and has grown significantly over 40 years of successful investment. As of August 31, 2025 the fund’s value was $83.26 billion. According to the DOR it is scheduled to contribute $3.7 billion to Alaska’s General Fund in fiscal year 2025 for general government spending and over $600 million to pay the annual dividend of $1,000 in October to Alaskan residents.

Previous wording

According to the Alaska Multiple Listing Services, the average sales price of a single family home in Anchorage rose 6.2% in 2024 to $510,064, following a 5.2% increase in 2023. This was the seventh consecutive year of price increases. Through June of 2025 prices have continued to increase on average 2.6% to $523,059.

Current wording

According to the Alaska Multiple Listing Services, the average sales price of a single-family home in Anchorage rose 6.2% in 2024 to $510,015, following a 5.2% increase in 2023. This was the seventh consecutive year of price increases. Through September of 2025 prices continued to increase on average 3.7% to $529,097.

Previous wording

The average sales price for single family homes in the Matanuska Susitna Borough rose 3.8% in 2024 to $412,859, after increasing 4% in 2023. This continues a trend of average price increases for more than a decade in the region. Through June of 2025 prices have continued to increase on average 6.9% to $441,463. These two markets represent where the vast majority of 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 3.8% in 2024 to $412,859, after increasing 4% in 2023. This continues a trend of average price increases for more than a decade in the region. Through September of 2025 prices continued to increase on average 6.7% to $440,366. These two markets represent where the vast majority of the residential lending activity of Northrim Bank (the “Bank”) occurs.

Previous wording

The Alaska Multiple Listing Services reported a 3.4% increase in the number of units sold in Anchorage when comparing 2024 to 2023. The first six months of 2025 has seen a 4.8% increase in home sales compared to the first half of 2024 in Anchorage.

Current wording

The Alaska Multiple Listing Services reported a 3.4% increase in the number of units sold in Anchorage when comparing 2024 to 2023. The first nine months of 2025 saw a 4.7% increase in home sales compared to the same nine months of 2024 in Anchorage.

Previous wording

There was virtually no change in the number of homes sold in the Matanuska Susitna Borough, with only four fewer homes sold in 2024 than in 2023 or -0.2%. In the first six months of 2025 the number of units sold has increased 13.1% in the Matanuska Susitna Borough compared to the first half of 2024 according to the Alaska Multiple Listing Services.

Current wording

Last year there was virtually no change in the number of homes sold in the Matanuska Susitna Borough, with only four fewer homes sold in 2024 than in 2023 or -0.2%. In the first nine months of 2025 the number of units sold has increased by 133 sold or 11.1% in the Matanuska Susitna Borough compared to the first nine months of 2024.

Previous wording

The Board of Governors of the Federal Reserve System left its benchmark interest rate target unchanged at 4.25%-4.50% as of both June 30, 2025 and December 31, 2024. The prime rate of interest is 7.50% as of both June 30, 2025 and December 31, 2024.

Current wording

The Board of Governors of the Federal Reserve System lowered its benchmark interest rate target to 4.00%-4.25% as of September 30, 2025 from 4.25%-4.50% as of December 31, 2024. The prime rate of interest has dropped to 7.25% as of September 30, 2025 compared to 7.50% as of December 31, 2024.

Previous wording

Highlights and Summary of Performance - Second Quarter of 2025

Current wording

Highlights and Summary of Performance - Third Quarter of 2025

Previous wording

The Company reported net income and earnings per diluted share of $11.8 million and $2.09, respectively, for the second quarter of 2025 compared to net income and earnings per diluted share of $9.0 million and $1.62, respectively, for the second quarter of 2024. The Company reported net income and earnings per diluted share of $25.1 million and $4.47, respectively for the first six months of 2025 compared to net income and earnings per diluted share of $17.2 million and $3.10, respectively, for the first six months of 2024. The increase in net income for both periods in 2025 compared to the same periods last year is primarily attributable to higher net interest income, an increase in purchased receivable income and increased mortgage banking income, which were only partially offset by higher operating expenses and an increase in the provision for credit losses.

Current wording

The Company reported net income and earnings per diluted share of $27.1 million and $1.20, respectively, for the third quarter of 2025 compared to net income and earnings per diluted share of $8.8 million and $0.39, respectively, for the third quarter of 2024. The Company reported net income and earnings per diluted share of $52.2 million and $2.32, respectively for the first nine months of 2025 compared to net income and earnings per diluted share of $26.0 million and $1.17, respectively, for the first nine months of 2024. The increase in net income for both periods in 2025 compared to the same periods last year is primarily attributable to the gain from the sale of certain assets by Pacific Wealth Advisors, as well as higher net interest income, an increase in purchased receivable income and increased mortgage banking income, which were only partially offset by higher operating expenses and provisions for income taxes.

Previous wording

•Net interest margin was 4.66% for the second quarter of 2025, up 42-basis points from the second quarter a year ago.

Current wording

•Net interest margin was 4.83% for the third quarter of 2025, up 54-basis points from the third quarter a year ago.

Previous wording

•Return on average assets (“ROAA”) was 1.48% and return on average equity (“ROAE”) was 16.37% for the second quarter of 2025. ROAA was 1.31% and ROAE was 14.84% for the second quarter of 2024.

Current wording

•Return on average assets (“ROAA”) was 3.32% and return on average equity (“ROAE”) was 35.66% for the third quarter of 2025. ROAA was 1.22% and ROAE was 13.69% for the third quarter of 2024.

Previous wording

•Portfolio loans were $2.20 billion at June 30, 2025, up 17% from a year ago, primarily due to new customer relationships and expanding market share, as well as retaining certain mortgages originated by Residential Mortgage, a subsidiary of the Bank. The Company sold $61 million in consumer mortgages in the second quarter of 2025 to reduce the concentration of residential real estate loans and to provide additional liquidity for future commercial and construction loan growth.

Current wording

•Portfolio loans were $2.22 billion at September 30, 2025, up 11% from a year ago, primarily due to new customer relationships and expanding market share, as well as retaining certain mortgages originated by Residential Mortgage, a subsidiary of the Bank. The Company sold $16 million in consumer mortgages in the third quarter of 2025 to reduce the concentration of residential real estate loans and to provide additional liquidity for future commercial and construction loan growth.

Previous wording

•Total deposits were $2.81 billion at June 30, 2025, up 14% from $2.46 billion a year ago. Non-interest bearing demand deposits increased 10% year-over-year to $777.9 million at June 30, 2025 and represent 28% of total deposits.

Current wording

•Total deposits were $2.91 billion at September 30, 2025, up 11% from $2.63 billion a year ago. Non-interest bearing demand deposits increased 14% year-over-year to $872.1 million at September 30, 2025 and represent 30% of total deposits.

Previous wording

•The average cost of interest-bearing deposits was 2.04% at June 30, 2025, down from 2.21% at June 30, 2024.

Current wording

•The average cost of interest-bearing deposits was 2.00% at September 30, 2025, down from 2.24% at September 30, 2024.

Previous wording

•Mortgage loan originations were $277.1 million in the second quarter of 2025, up from $181.5 million in the second quarter a year ago. Mortgage loans funded for sale were $249.7 million in the second quarter of 2025, compared to $152.3 million in the second quarter of 2024.

Current wording

•Mortgage loan originations were $234.0 million in the third quarter of 2025, down from $248.0 million in the third quarter a year ago. Mortgage loans funded for sale were $218.2 million in the third quarter of 2025, compared to $210.0 million in the third quarter of 2024.

Previous wording

Other financial measures are shown in the table below:

Current wording

Other financial measures for the periods indicated are shown in the table below:

Previous wording

Nonperforming assets: Nonperforming assets, net of government guarantees were $11.9 million at June 30, 2025 and $11.6 million at December 31, 2024. Other Real Estate Owned (“OREO”), net of government guarantees was zero at both June 30, 2025 and December 31, 2024. Repossessed assets were $50,000 as of June 30, 2025 and $297,000 as of December 31, 2024. Nonperforming loans, net of government guarantees increased $258,000 or 3% to $7.8 million as of June 30, 2025 from $7.5 million as of December 31, 2024, primarily due to the addition of four loans in the first six months of 2025. Nonperforming purchased receivables increased $249,000 or 7% to $4.0 million as of June 30, 2025 from $3.8 million as of December 31, 2024. Of the nonperforming assets at June 30, 2025, $4.2 million are attributable to the Community Banking segment, $197,000 are attributable to the Home Mortgage Lending segment, and $7.5 million are attributable to the Specialty Finance segment.

Current wording

Nonperforming assets: Nonperforming assets, net of government guarantees were $13.6 million at September 30, 2025 and $11.6 million at December 31, 2024. Other Real Estate Owned (“OREO”), net of government guarantees was zero at both September 30, 2025 and December 31, 2024. Repossessed assets were $50,000 as of September 30, 2025 and $297,000 as of December 31, 2024. Nonperforming loans, net of government guarantees increased $3.7 million or 49% to $11.3 million as of September 30, 2025 from $7.5 million as of December 31, 2024, primarily due to the addition of seven loans in the first nine months of 2025. Nonperforming purchased receivables decreased $1.5 million or 40% to $2.3 million as of September 30, 2025 from $3.8 million as of December 31, 2024 as a result of a paydown received on one relationship. Of the nonperforming assets, net of government guarantees at September 30, 2025, $5.3 million are attributable to the Community Banking segment, $510,000 are attributable to the Home Mortgage Lending segment, and $7.7 million are attributable to the Specialty Finance segment.

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 or past due. These loans are closely monitored and their performance is reviewed by management on a regular basis. At June 30, 2025, management had identified $28.0 million potential problem loans, up from $1.6 million at December 31, 2024.

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 or past due. These loans are closely monitored and their performance is reviewed by management on a regular basis. All potential problem loans are individually evaluated for the purposes of establishing an allowance for credit losses. At September 30, 2025, management had identified $28.7 million potential problem loans, up from $1.6 million at December 31, 2024. This increase is primarily due to the addition of three relationships which management consider to be isolated, customer specific events that do not impact the ACL beyond the individual analysis of these credits.

Previous wording

Net income for the second quarter of 2025 increased $2.8 million to $11.8 million as compared to $9.0 million for the same period in 2024. The increase in net income in the second quarter of 2025 as compared to the same quarter a year ago is largely attributable to a $6.5 million increase in net interest income, a $4.7 million increase in purchased receivable income, and a $1.5 million increase in mortgage banking income. These increases were only partially offset by a $7.3 million increase in other operating expenses and a $2.1 million increase in the provision for credit losses.

Current wording

Net income for the third quarter of 2025 increased $18.2 million to $27.1 million as compared to $8.8 million for the same period in 2024. The increase in net income in the third quarter of 2025 as compared to the same quarter a year ago is largely attributable to a $14.2 million gain on sale of certain assets by Pacific Wealth Advisors, as well as a $6.5 million increase in net interest income and a $6.2 million increase in purchased receivable income. These increases were only partially offset by a $3.6 million increase in other operating expenses and $4.7 million increase in provision for income taxes.

Previous wording

Net income for the first six months of 2025 increased $7.9 million to $25.1 million as compared to $17.2 million for the same period in 2024. The increase in net income in the first six months of 2025 as compared to the same period a year ago is largely attributable to a $11.4 million increase in net interest income, a $9.5 million increase in purchased receivable income, and a $1.7 million increase in mortgage banking income. These increases were only partially offset by a $11.8 million increase in other operating expenses and a $0.5 million increase in the provision for credit losses.

Current wording

Net income for the first nine months of 2025 increased $26.1 million to $52.2 million as compared to $26.0 million for the same period in 2024. The increase in net income in the first nine months of 2025 as compared to the same period a year ago is largely attributable to a $17.9 million increase in net interest income, a $15.7 million increase in purchased receivable income, a $14.2 million gain on sale of certain assets by Pacific Wealth Advisors, and a $2.0 million increase in mortgage banking income. These increases were only partially offset by a $15.4 million increase in other operating expenses and a $8.1 million increase in the provision for income taxes.

Previous wording

Our business segments are defined as Community Banking, Home Mortgage Lending, and Specialty Finance. The following table summarizes net income from our segments. Additional information about segment performance is presented in Note 10 included in Part I - Item 1 “Financial Statements” of this report.

Current wording

Our business segments are defined as Community Banking, Home Mortgage Lending, and Specialty Finance. The following table summarizes net income from our segments. Additional information about segment performance is presented in Note 10 to the Financial Statements included in Part I - Item 1 of this report.

Previous wording

Net income in the Community Banking segment increased $645,000 or 9% in the second quarter of 2025 compared to the same period a year ago primarily due to an increase in net interest income which totaled $30.0 million in the second quarter of 2025, and $24.3 million in the second quarter of 2024. Net interest income increased $5.7 million or 23% in the second quarter of 2025 as compared to the second quarter of 2024 mostly due to higher interest income on loans. This increase was only partially offset by lower interest income on investments and higher interest expense on deposits and borrowings.

Current wording

Net income in the Community Banking segment increased $15.2 million or 214% in the third quarter of 2025 compared to the same period a year ago primarily due to the gain on sale of certain assets by Pacific Wealth Advisors of $14.2 million, as well as an increase in net interest income which totaled $32.3 million in the third quarter of 2025, and $25.9 million in the third quarter of 2024. Net interest income increased $6.4 million or 25% in the third quarter of 2025 as compared to the third quarter of 2024 mostly due to higher interest income on loans and deposits in banks as well as lower interest expense. This increase was only partially offset by lower interest income on investments.

Previous wording

The provision for credit losses in the Community Banking segment was $1.3 million in the second quarter of 2025 compared to a benefit to the provision for credit losses of $184,000 in the same quarter a year ago. The increase to the provision for credit losses in the Community Banking segment in the second quarter of 2025 as compared to the same quarter a year ago was primarily a result of increased loan balances as well as an increase in estimated loss rates due to less favorable economic forecasts and trends in qualitative factors.

Current wording

The provision for credit losses in the Community Banking segment was $1.6 million in the third quarter of 2025 compared to a provision for credit losses of $1.5 million in the same quarter a year ago. The increase to the provision for credit losses in the Community Banking segment in the third quarter of 2025 as compared to the same quarter a year ago was primarily a result of increased loan balances as well as an increase in estimated loss rates due to less favorable economic forecasts and trends in qualitative factors.

Previous wording

Other operating expenses in the Community Banking segment totaled $21.8 million in the second quarter of 2025, up $3.7 million or 20% from $18.1 million in the second quarter a year ago. The increase in the second quarter of 2025 as compared to the same quarter a year ago was mostly due to increases in salaries and other personnel expense, including $667,000 in higher salary expense, $873,000 increase in group medical expenses, as well as increases in profit share expense and payroll taxes. Additionally, marketing expense increased due to timing of annual charitable contributions.

Current wording

Other operating expenses in the Community Banking segment totaled $20.0 million in the third quarter of 2025, up $1.2 million or 7% from $18.7 million in the third quarter a year ago. The increase in the third quarter of 2025 as compared to the same quarter a year ago was mostly due to increases in salaries and other personnel expense, including $641,000 in higher salary expense and a $260,000 increase in group medical expenses, which were only partially offset by a $293,000 decrease in profit share expense. Additionally, data processing expense and insurance expense increased in the quarter ended September 30, 2025 as compared to the same quarter last year.

Previous wording

Net income in the Community Banking segment increased $4.1 million or 28% in the first six months of 2025 as compared to the same period a year ago primarily due to increases in net interest income primarily due to higher interest income due to higher earning-asset balances and higher yields. Additionally, there was a decrease in the provision for loan losses due to a decrease in estimated loss rates resulting from changes in the Company's loss rate regression models for commercial, commercial real estate, and construction loans that was only partially offset by higher loan balances and an increase in estimated loss rates due to less favorable economic forecasts and trends in qualitative factors. Other operating income also increased primarily due to higher merchant fees and an increase in commercial servicing rights resulting from higher balances. These changes were only partially offset by higher other operating expenses, primarily due to higher salaries and other personnel expenses, data processing expenses, marketing expenses, OREO expenses net of gains on sale.

Current wording

Net income in the Community Banking segment increased $19.3 million or 89% in the first nine months of 2025 as compared to the same period a year ago primarily due to the gain on sale of certain assets by Pacific Wealth Advisors of $14.2 million in the third quarter of 2025, as well as increases in net interest income primarily due to higher interest income due to higher earning-asset balances and higher yields. These changes were only partially offset by higher other operating expenses, primarily due to higher salaries and other personnel expenses, data processing expenses, marketing expenses, and OREO expenses net of gains on sale.

Previous wording

Net income in the Home Mortgage Lending segment increased $563,000 or 41% in the second quarter of 2025 compared to the same period a year ago primarily due higher net interest income due to higher balances of both consumer mortgage loans held for sale and consumer mortgage loans held for investment, as well as higher mortgage banking income due to higher mortgage loans funded for sale. During the second quarter of 2025, mortgage loans funded for sale were $249.7 million, compared to $152.3 million in the second quarter of 2024. These increases were partially offset by increases in the provision for credit losses and other operating expenses.

Current wording

Net income in the Home Mortgage Lending segment increased $579,000 or 45% in the third quarter of 2025 compared to the same period a year ago primarily due to a decrease in the provision for credit losses in the Home Mortgage Lending segment, as well as higher mortgage servicing revenue. During the third quarter of 2025, mortgage loans funded for sale were $218.2 million, compared to $210.0 million in the third quarter of 2024. These increases were partially offset by decreases in the net interest income and other operating expenses.

Previous wording

The provision for credit losses in the Home Mortgage Lending segment was $639,000 in the second quarter of 2025 compared to a provision for credit loses of $64,000 in the second quarter of 2024. The increase in the provision for credit losses in the second quarter of 2025 in the Home Mortgage Lending segment as compared to the same quarter a year ago was primarily a result of increased loan balances.

Current wording

The provision for credit losses in the Home Mortgage Lending segment was $158,000 in the third quarter of 2025 compared to $571,000 in the third quarter of 2024. The decrease in the provision for credit losses in the third quarter of 2025 in the Home Mortgage Lending segment as compared to the same quarter a year ago was primarily a result of decreased loan balances.

Previous wording

Other operating expenses in the Home Mortgage Lending segment totaled $7.6 million in the second quarter of 2025 compared to $6.7 million in the second quarter a year ago. The increase in the second quarter of 2025 as compared to the same quarter a year ago was mostly due to increases in salaries and other personnel expense due to higher commissions paid to mortgage originators due to higher volume.

Current wording

Other operating expenses in the Home Mortgage Lending segment totaled $7.4 million in the third quarter of 2025 compared to $7.6 million in the third quarter a year ago. The decrease in the third quarter of 2025 as compared to the same quarter a year ago was mostly due to decreases in salaries and other personnel expense due to lower commissions paid to mortgage originators due to lower volume.

Previous wording

The Arizona, Colorado, and Pacific Northwest mortgage expansion markets were responsible for 22% of Residential Mortgage's $216 million total production in the second quarter of 2025 and 22% of $182 million total production in the second quarter of 2024.

Current wording

The Arizona, Colorado, and Pacific Northwest mortgage expansion markets were responsible for 16% of Residential Mortgage's $218 million total production in the third quarter of 2025 and 20% of $248 million total production in the third quarter a year ago.

Previous wording

The Company reclassified $100 million in consumer mortgages held for investment to held for sale in the first quarter of 2025 and recorded unrealized losses of $1.2 related to this portfolio in the first quarter of 2025. In the second quarter of 2025, the Company sold $61 million of the $100 million that was reclassified to loans held for sale in the first quarter of 2025 for a total realized loss $545,000.

Current wording

The Company reclassified $100 million in consumer mortgages held for investment to held for sale in the first quarter of 2025 and recorded unrealized losses of $1.2 related to this portfolio in the first quarter of 2025. In the second quarter of 2025, the Company sold $61 million of the $100 million that was reclassified to loans held for sale in the first quarter of 2025 for a total realized loss of $545,000. In the third quarter of 2025, the Company sold $16 million of the $100 million that was reclassified to loans held for sale in the first quarter of 2025 for a total realized loss of $37,000.

Previous wording

As of June 30, 2025, Northrim serviced 6,458 loans in its $1.55 billion home-mortgage-servicing portfolio, a 41% increase from the $1.10 billion serviced a year ago.

Current wording

As of September 30, 2025, Northrim serviced 6,475 loans in its $1.60 billion home-mortgage-servicing portfolio, a 37% increase from the $1.17 billion serviced a year ago.

Previous wording

Net income in the Home Mortgage Lending segment increased $1.2 million or 79% in the first six months of 2025 as compared to the same period a year ago primarily due to higher net interest income due to higher balances of both consumer mortgage loans held for sale and consumer mortgage loans held for investment, as well as higher mortgage banking income due to higher mortgage loans funded for sale. These increases were only partially offset by a higher provision for credit losses due to loan growth and higher other operating expenses primarily due to higher originator commissions.

Current wording

Net income in the Home Mortgage Lending segment increased $1.8 million or 64% in the first nine months of 2025 as compared to the same period a year ago primarily due to higher net interest income due to higher balances of both consumer mortgage loans held for sale and consumer mortgage loans held for investment, as well as higher mortgage banking income due to higher mortgage loans funded for sale. These increases were only partially offset by higher other operating expenses primarily due to higher originator commissions.