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 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.

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 Northrim’s financial condition, results of operations, asset based lending volumes, asset and credit quality trends and profitability; the ability of Northrim to execute its business plans; potential further increases in interest rates; the value of securities held in our investment portfolio; the impact of the results of government shutdowns and government initiatives on the regulatory landscape, natural resource extraction industries, and capital markets; the impact of declines in the value of commercial and residential real estate markets, high unemployment rates, tariffs, 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 wars in Ukraine and Iran; 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 financial statements, including those related to current expected credit losses accounting guidance; our ability to maintain asset quality; our ability to implement our marketing and growth strategies; our ability to identify and address cyber-security risks, including security breaches, “denial of service attacks,” “hacking,” and identity theft and increased cyber threats due to artificial intelligence; disease outbreaks; and our ability to exe…

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 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.

Current wording

Alaska’s seasonally adjusted unemployment rate was 4.8% at the end of 2025, compared to 4.4% for the United States, according to the Alaska Department of Labor and Workforce Development. Alaska had a total of 323,900 payroll jobs in December of 2025 in Alaska, not including uniformed military. This was an increase of 0.5% or 1,500 jobs from December of 2024.

Previous 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.

Current wording

Alaska’s seasonally adjusted aggregate personal income was $59.2 billion in the third quarter of 2025 according to the Federal Bureau of Economic Analysis (“BEA”). Alaska enjoyed an annual personal income improvement of 4.4% between the third quarter of 2024 and the third quarter of 2025. Per capita personal income in Alaska was estimated at $79,850 compared to the U.S. average of $76,513, according to the BEA, ranking Alaska 14 th highest of the 50 U.S. states.

Previous 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.

Current wording

Alaska’s Gross State Product (“GSP”) in the third quarter of 2025 reached $75.3 billion according to the BEA. Alaska’s inflation adjusted “real” GSP increased 1.5% in 2024, and 3.8% annualized through the third quarter of 2025. The average U.S. GDP growth rate was 2.8% for 2024, and 4.4% annualized through the third quarter of 2025.

Previous 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.

Current wording

According to the U.S. Bureau of Labor Statistics, the Consumer Price Index (“CPI”) for the U.S. increased 2.4% between February of 2025 and February of 2026. In Alaska, the rate of increase was lower at 1.5% for the same time period. The largest increases since last February came from Apparel (+9.7%), Motor Fuel (+4.9%), Housing (+3.3%), and Recreation (+2%). Slower increases or declining costs in Food and Beverage (+1.7%) Medical Care (+1.2%), Education (-1.3%), and Transportation (-3.3%), helped moderate inflationary pressures in Alaska relative to the U.S. in 2025.

Previous 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.

Current wording

The monthly average price of Alaska North Slope (“ANS”) crude oil ranged between $76.39 a barrel in January of 2025 and $62.70 in December 2025. Prices began to rise dramatically in 2026 after conflict began in Venezuela and Iran. ANS was priced at $110 a barrel on March 31, 2026. The Alaska Department of Revenue (“DOR”) calculated ANS crude oil production was 468 thousand barrels per day (“bpd”) in Alaska’s fiscal year ending June 30, 2025. In the Fall 2025 Revenue Forecast published December 19, 2025, the DOR expects production to average 457 thousand bpd in fiscal year 2026 and 518 thousand bpd in fiscal year 2027. Over the next decade it is expected to continue to grow to 621 thousand bpd, or 33% by fiscal year 2036. 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 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.

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 February 28, 2026 the fund’s value was $88.8 billion. According to the DOR it is scheduled to contribute $3.8 billion to Alaska’s General Fund in fiscal year 2026 and $4 billion in fiscal year 2027 for general government spending and to pay the annual dividend 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 $510,015, 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.

Current wording

According to the Alaska Multiple Listing Services, the average sales price of a single-family home in Anchorage rose 4.4% in 2025 to $532,339, following an increase of 6.2% in 2024 and 5.2% in 2023. This was the eighth consecutive year of price increases.

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 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.

Current wording

The average sales price for single family homes in the Matanuska Susitna Borough rose 6.6% in 2025 to $440,217, after climbing 3.8% in 2024 and 4% in 2023. This continues a trend of average price increases for more than a decade in the region. These two markets represent where the majority of the Bank’s residential lending activity 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 nine months of 2025 saw a 4.7% increase in home sales compared to the same nine months of 2024 in Anchorage.

Current wording

The Alaska Multiple Listing Services reported a 0.6% decrease in the number of units sold in Anchorage when comparing 2025 to 2024. There were 2,222 homes sold in 2025 and 2,235 sold in 2024. Last year there were 1,766 homes sold in the Matanuska Susitna Borough, compared to 1,632 in 2024, an increase of 8.2%.

Previous 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.

Current wording

The Board of Governors of the Federal Reserve System lowered its benchmark interest rate target to 3.50%-3.75% as of both March 31, 2026 and December 31, 2025. The prime rate of interest was 6.75% as of both March 31, 2026 and December 31, 2025.

Previous wording

Highlights and Summary of Performance - Third Quarter of 2025

Current wording

Highlights and Summary of Performance - First Quarter of 2026

Previous 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.

Current wording

The Company reported net income and earnings per diluted share of $13.7 million and $0.61, respectively, for the first quarter of 2026 compared to net income and earnings per diluted share of $13.3 million and $0.60, respectively, for the first quarter of 2025. The increase in net income in 2026 compared to the period last year is mostly due to an increase in net interest income and higher mortgage banking income, which were partially offset by a higher provision for credit losses and higher other operating expenses.

Previous wording

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

Current wording

•Net interest margin was 4.72% for the first quarter of 2026, up 17-basis points from the first quarter a year ago.

Previous 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.

Current wording

•Portfolio loans were $2.36 billion at March 31, 2026, 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.

Previous 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.

Current wording

•Total deposits were $2.87 billion at March 31, 2026, up 2% from $2.81 billion at December 31, 2025. Non-interest bearing demand deposits increased 11% year-over-year to $826.4 million at March 31, 2026 and represent 29% of total deposits.

Previous wording

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

Current wording

•The average cost of interest-bearing deposits was 1.77% at March 31, 2026, down from 2.01% at March 31, 2025.

Previous 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.

Current wording

Nonperforming assets: Nonperforming assets, net of government guarantees were $15.3 million at March 31, 2026 and $11.4 million at December 31, 2025. Other Real Estate Owned (“OREO”), net of government guarantees was $1.0 million at March 31, 2026 and zero at December 31, 2025. Repossessed assets were zero at both March 31, 2026 and December 31, 2025. Nonperforming loans, net of government guarantees increased $2.9 million or 25% to $14.2 million as of March 31, 2026 from $11.3 million as of December 31, 2025, primarily due to the addition of four loans in the first three months of 2026. Nonperforming purchased receivables decreased $67,000 or 100% to zero as of March 31, 2026 from $67,000 as of December 31, 2025 as a result of a paydown received on one relationship. Of the nonperforming assets, net of government guarantees at March 31, 2026, $10.5 million are attributable to the Community Banking segment, $499,000 are attributable to the Home Mortgage Lending segment, and $4.3 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. 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.

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 March 31, 2026, management had identified $20.1 million potential problem loans, down slightly from $21.2 million at December 31, 2025. This decrease is primarily due to paydowns which occurred in the first quarter of 2026.

Previous wording

Our critical accounting estimates are described in detail in Part II. Item 7, Management’s Discussion and Analysis, and in Note 1, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. There have been no material changes to the valuation techniques or assumptions within the models that affect our estimates during the first, second or third quarters of 2025.

Current wording

Our critical accounting estimates are described in detail in Part II. Item 7, Management’s Discussion and Analysis, and in Note 1, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes to the valuation techniques or assumptions within the models that affect our estimates during the first quarter of 2026.

Previous wording

Allowance for Credit Losses Policy: Management performs a hypothetical sensitivity analysis of our ACL quarterly to understand the impact of a change in a key input on our ACL. As of September 30, 2025, if the four-quarter U.S. unemployment rate forecast had been approximately 5% higher and the four-quarter annualized growth rate in the U.S. Gross Domestic Product had been approximately 29% lower, our ACL for loans would have increased $620,000, or 3%. As of September 30, 2025, if the four-quarter national unemployment rate forecast had been approximately 29% higher and the four-quarter annualized growth rate in the U.S. Gross Domestic Product had been approximately 50% higher, which represents management's estimate of long-term mean rates for these economic factors, our ACL for loans would have increased $1.4 million, or 6%. As of September 30, 2025, if the estimated prepayment and curtailment rates are doubled (with a maximum rate of 100%), our ACL for loans would have decreased $2.0 million, or 9%. As of September 30, 2025, if the estimated prepayment and curtailment rates are cut in half, our ACL for loans would have increased $1.5 million, or 7%. These sensitivity analyses include the impact to both the quantitative and qualitative components of our ACL. Changes in quantitative inputs and qualitative loss factors may not occur in the same direction or magnitude across all segments of our loan portfolio and deterioration in some quantitative inputs and qualitative loss factors may offset improvement in others. This sensitivity analysis does not represent a change to our expectations of the economic environment but provides a hypothetical result to assess the sensitivity of the ACL to a change in a key input. This sensitivity analysis does not incorporate changes to management’s judgment of qualitative loss factors.

Current wording

Allowance for Credit Losses Policy: Management performs a hypothetical sensitivity analysis of our ACL quarterly to understand the impact of a change in a key input on our ACL. As of March 31, 2026, if the four-quarter U.S. unemployment rate forecast had been approximately 3% higher and the four-quarter annualized growth rate in the U.S. Gross Domestic Product had been approximately 13% lower, our ACL for loans would have increased $483,000, or 2%. As of March 31, 2026, if the four-quarter national unemployment rate forecast had been approximately 28% higher and the four-quarter annualized growth rate in the U.S. Gross Domestic Product had been approximately 6% lower, which represents management's estimate of long-term mean rates for these economic factors, our ACL for loans would have increased $2.4 million, or 10%. As of March 31, 2026, if the estimated prepayment and curtailment rates are doubled (with a maximum rate of 100%), our ACL for loans would have decreased $2.2 million, or 9%. As of March 31, 2026, if the estimated prepayment and curtailment rates are cut in half, our ACL for loans would have increased $1.8 million, or 7%. These sensitivity analyses include the impact to both the quantitative and qualitative components of our ACL. Changes in quantitative inputs and qualitative loss factors may not occur in the same direction or magnitude across all segments of our loan portfolio and deterioration in some quantitative inputs and qualitative loss factors may offset improvement in others. This sensitivity analysis does not represent a change to our expectations of the economic environment but provides a hypothetical result to assess the sensitivity of the ACL to a change in a key input. This sensitivity analysis does not incorporate changes to management’s judgment of qualitative loss factors.

Previous 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.

Current wording

Net income for the first quarter of 2026 increased $351,000 to $13.7 million as compared to $13.3 million for the same period in 2025. The increase in net income in the first quarter of 2026 as compared to the same quarter a year ago is mostly due to a $3.4 million increase in net interest income and a $2.2 million increase in mortgage banking income. These increases were only partially offset by a $2.5 million increase in other operating expenses and $2.4 million increase in provision for credit losses.

Previous 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.

Current wording

Net income in the Community Banking segment decreased $288,000 or 3% in the first quarter of 2026 compared to the same period a year ago primarily due to an increase in the provision for credit losses and salaries and other personnel expense which were only partially offset by an increase in net interest income which totaled $31.8 million in the first quarter of 2026, and $28.2 million in the first quarter of 2025. Net interest income increased $3.7 million or 13% in the first quarter of 2026 as compared to the first quarter of 2025 mostly due to higher interest income on loans and deposits in banks as well as lower interest expense on deposits.

Previous 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.

Current wording

The provision for credit losses in the Community Banking segment was $153,000 in the first quarter of 2026 compared to a benefit to the provision for credit losses of $1.8 million in the same quarter a year ago. The increase to the provision for credit losses in the Community Banking segment in the first quarter of 2026 as compared to the same quarter a year ago was primarily a result of the fact that there were changes in the Company's loss rate regression models for commercial, commercial real estate, and construction loans in the first quarter of 2025.

Previous 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.

Current wording

Other operating expenses in the Community Banking segment totaled $20.4 million in the first quarter of 2026, up $1.8 million or 10% from $18.6 million in the first quarter a year ago. The increase in the first quarter of 2026 as compared to the same quarter a year ago was mostly due to a $1.6 million increase in salaries and other personnel expense, which includes $771,000 in higher salary expense and a $296,000 increase in group medical expenses, as well as increases in occupancy expense, marketing expense, professional fees, and data processing expense. These increases were partially offset by a decrease in insurance expense. Insurance expense decreased due to a decrease in FDIC insurance expense resulting primarily from higher capital ratios. The issuance of subordinated debentures in the fourth quarter of 2025 positively impacted the Company's risk based capital ratios which benefited the FDIC's calculation for insurance expense.

Previous 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.

Current wording

Net income in the Home Mortgage Lending segment increased $282,000 or 35% in the first quarter of 2026 compared to the same period a year ago primarily due to higher mortgage servicing revenue, which was only partially offset by an increase in the provision for credit losses, higher other operating expenses, and lower net interest income in the Home Mortgage Lending segment. During the first quarter of 2026, mortgage loans funded for sale were $123.4 million, compared to $108.5 million in the first quarter of 2025.

Previous 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.

Current wording

The provision for credit losses in the Home Mortgage Lending segment was $562,000 in the first quarter of 2026 compared to a benefit to the provision for credit losses of $307,000 in the first quarter of 2025. The increase in the provision for credit losses in the first quarter of 2026 in the Home Mortgage Lending segment as compared to the same quarter a year ago was primarily a result of higher growth in loan balances.

Previous 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.

Current wording

Other operating expenses in the Home Mortgage Lending segment totaled $7.2 million in the first quarter of 2026 compared to $6.5 million in the first quarter a year ago. The increase in the first quarter of 2026 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.

Previous 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.

Current wording

The Arizona, Colorado, and Pacific Northwest mortgage expansion markets were responsible for 35% of Residential Mortgage's $152 million total production in the first quarter of 2026 and 20% of $122 million total production in the first quarter a year ago.

Previous 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.

Current wording

As of March 31, 2026, Northrim serviced 6,637 loans in its $1.64 billion home-mortgage-servicing portfolio, an 11% increase from the $1.48 billion serviced a year ago.

Previous wording

Net income in the Specialty Finance segment increased $5.1 million or 297% in the first nine months of 2025 as compared to the same period a year ago primarily due to the acquisition of Sallyport. Total pre-tax income for Sallyport for the first nine months of 2025 was $4.7 million.

Current wording

Net income in the Specialty Finance segment increased $357,000 or 21% in the first quarter of 2026 compared to the same period a year ago primarily due to increased purchased receivable balances.

Previous wording

Net interest income for the third quarter of 2025 increased 23% or $6.5 million, to $35.3 million as compared to $28.8 million for the third quarter of 2024. The net interest margin increased 54 basis points to 4.83% in the third quarter of 2025 as compared to 4.29% in the third quarter of 2024. The increase in net interest income in the third quarter of 2025 compared to the same period in 2024 was primarily the result of increased interest on loans, loans held for sale, and interest bearing deposits in other banks which was only partially offset by a decrease in interest income on investments, as well as an increase in interest expense on interest-bearing deposits and borrowings. The increase in net interest margin in the third quarter of 2025 as compared to the same period of 2024 was primarily due to a favorable change in the mix of earning-assets towards higher loan balances as a percentage of total earning-assets and higher yields on those assets as well as a decrease in the cost of interest-bearing liabilities.

Current wording

Net interest income for the first quarter of 2026 increased 11% or $3.4 million, to $34.7 million as compared to $31.3 million for the first quarter of 2025. The net interest margin increased 17 basis points to 4.72% in the first quarter of 2026 as compared to 4.55% in the first quarter of 2025. The increase in net interest income in the first quarter of 2026 compared to the same period in 2025 was primarily the result of increased interest on loans, loans held for sale, interest bearing deposits in other banks, and long term investments, as well as a decrease in interest expense on deposits, which were only partially offset by an increase in interest expense on borrowings. The increase in net interest margin in the first quarter of 2026 as compared to the same period of 2025 was primarily due to a favorable change in the mix of earning-assets towards higher loan balances as a percentage of total earning-assets as well as a decrease in the cost of interest-bearing deposits.

Previous wording

3 Interest income includes loan fees. Loan fees recognized during the period and included in the yield calculation totaled $1.3 million and $1.1 million in the third quarter of 2025 and 2024, 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 first quarter of 2026 and 2025, 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 $8.1 million and $5.0 million in the third quarter of 2025 and 2024, 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 $13.2 million and $7.6 million in the first quarter of 2026 and 2025, respectively.

Previous wording

The provision or benefit for credit loss is the amount of expense or benefit 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 for the three and nine-month periods ended September 30, 2025 and 2024:

Current wording

The provision or benefit for credit loss is the amount of expense or benefit 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 for the three-month periods ended March 31, 2026 and 2025:

Previous wording

The increase to the provision for credit losses on loans in the third quarter of 2025 and inthe first nine months of 2025 as compared to the same periods 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. Qualitative factors have increased in 2025 for an increase in adversely classified loans as well as for a slight increase in concentration risk for loans to large borrowers. The decrease to the provision for unfunded commitments in the third quarter of 2025 and increase in the first nine months of 2025 compared to the same periods a year ago was primarily due to changes in mix of unfunded commitments.

Current wording

The increase to the provision for credit losses on loans in the first quarter of 2026 as compared to the same period a year ago was primarily a result of higher growth loan balances as well as an increase in individually evaluated loans. The decrease to the provision for unfunded commitments in the first quarter of 2026 primarily due to changes in the loss rate on unfunded commitments.

Previous wording

Other operating income for the three-month period ended September 30, 2025 increased $19.7 million, or 170%, to $31.2 million as compared to $11.6 million for the same period in 2024, primarily due to the gain on sale of certain assets by Pacific Wealth Advisors of $14.2 million, as well as a $6.2 million increase in purchased receivable income and $226,000 increase in mortgage banking income in the third quarter of 2025 compared to the same quarter a year ago. The fair value of marketable equity securities decreased $496,000 in the third quarter of 2025 compared to the same quarter a year ago. The increase in purchased receivable income in the three-month period ended September 30, 2025 as compared to the same period in 2024 was primarily due to the acquisition of Sallyport in the fourth quarter of 2024.

Current wording

Other operating income for the three-month period ended March 31, 2026 increased $1.8 million, or 14%, to $14.9 million as compared to $13.0 million for the same period in 2025, primarily due to a $2.2 million increase in mortgage banking income in the first quarter of 2026 compared to the same quarter a year ago. The fair value of marketable equity securities decreased $206,000 in the first quarter of 2026 compared to the same quarter a year ago.

Previous wording

For the third quarter of 2025, Northrim recorded a lower effective tax rate as compared to the same period in 2024 primarily as a result of change in mix of how pretax income is allocated to states with varying tax rates as well as an increase in estimated tax deductions related to low income housing tax credit investments. In the third quarter of 2025, Northrim recorded $7.5 million in state and federal income tax expense, for an effective tax rate of 21.71% compared to $2.8 million and 24.17% for the same period in 2024. In the nine-month period ended September 30, 2025, Northrim recorded $15.7 million in state and federal income tax expense, for an effective tax rate of 23.18% compared to $7.7 million and 22.71% for the same period in 2024. The increase in the effective tax rate for the first nine months of 2025 compared to the same period in 2024 is due to a decrease in tax credits and tax exempt interest income as a percentage of pre-tax income in 2025.

Current wording

For the first quarter of 2026, Northrim recorded a lower effective tax rate as compared to the same period in 2025 primarily as a result of an increase in tax credits and tax exempt interest income as a percentage of pre-tax income in 2026 as compared to 2025. In the first quarter of 2026, Northrim recorded $4.3 million in state and federal income tax expense, for an effective tax rate of 23.85% compared to $4.3 million and 24.19% for the same period in 2025.

Previous wording

Investment Securities include investment securities available for sale, investment securities held to maturity, and marketable equity securities, at September 30, 2025 decreased 11% to $464.3 million from $524.1 million at December 31, 2024 primarily due to maturities and calls of available for sale securities during the first nine months of 2025. The proceeds of these maturities and calls were invested in loans.

Current wording

Investment Securities include investment securities available for sale, investment securities held to maturity, and marketable equity securities, at March 31, 2026 increased 1% to $460.3 million from $455.8 million at December 31, 2025 primarily due to purchases of available for sale securities during the first three months of 2026.

Previous wording

The average estimated duration of the investment portfolio at September 30, 2025, was approximately 2.16 years. As of September 30, 2025, $80.7 million of available for sale securities with a weighted average yield of 1.15% are scheduled to mature in the next six months, $103.9 million with a weighted average yield of 1.44% are scheduled to mature in six months to one year, and $124.8 million with a weighted average yield of 2.69% are scheduled to mature in the following year, representing a total of $309.4 million or 10% of earning assets that are scheduled to mature in the next 24 months.

Current wording

The average estimated duration of the investment portfolio at March 31, 2026, was approximately 2.2 years. As of March 31, 2026, $109.0 million of available for sale securities with a weighted average yield of 1.55% are scheduled to mature in the next six months, $68.3 million with a weighted average yield of 2.15% are scheduled to mature in six months to one year, and $84.8 million with a weighted average yield of 3.41% are scheduled to mature in the following year, representing a total of $262.1 million or 9% of earning assets that are scheduled to mature in the next 24 months.