About Northrim BanCorp

Northrim BanCorp, Inc. and its subsidiaries operate as the holding company for Northrim Bank (the bank) that provides business and personal banking services. Through the company’s banking branches and eight mortgage origination offices, the company is accessible to approximately 90% of the Alaskan population. The company has three direct wholly-owned subsidiaries: Northrim Bank (the ‘Bank’), a state chartered, full-service commercial bank headquartered in Anchorage, Alaska. The bank is regulated by the Federal Deposit Insurance Corporation (the ‘FDIC’) and the State of Alaska Department of Commerce, Community and Economic Development, Division of Banking and Securities. The bank has branch locations in Alaska, Anchorage, Wasilla, Juneau, Fairbanks, Ketchikan, Sitka, Eagle River, Nome, and Soldotna. Additionally, the company has a loan production office in Kodiak. The company operates in Washington State through Northrim Funding Services (‘NFS’), a factoring business that the bank started in 2004. The company offers a wide array of commercial and consumer loan and deposit products, investment products, and electronic banking services over the Internet. Northrim Investment Services Company (‘NISC’) was formed in November 2002. Through NISC, the company owns 22% of the total outstanding equity interest in Pacific Wealth Advisors, LLC (‘PWA’), an investment advisory, trust, and wealth management business located in Seattle, Washington. PWA is a holding company that owns Pacific Portfolio Consulting, LLC and Pacific Portfolio Trust Company. Northrim Statutory Trust 2 (‘NST2’), an entity that the company formed in December 2005 to facilitate a trust preferred securities offering by the company. The bank has three direct wholly-owned subsidiaries: Northrim Capital Investments Co. (‘NCIC’) is a wholly-owned subsidiary of the bank, which holds a 100% interest in a residential mortgage holding company, Residential Mortgage Holding Company, LLC, the parent company of Residential Mortgage, LLC (collectively ‘RML’). RML became a wholly-owned subsidiary of NCIC on December 1, 2014. Prior to that, the company held a 23.5% interest in RML. RML holds a 30% investment in Homestate Mortgage, LLC. Northrim Building, LLC (‘NBL’) is a wholly-owned subsidiary of the bank that owns and operates the company’s main office facility at 3111 C Street in Anchorage. Northrim Building LO, LLC is a wholly-owned subsidiary of the bank that owns and operates the company’s community branch facility at 2270 E. 37th Avenue in Anchorage. Segments The company operates in two primary segments: Community Banking and Home Mortgage Lending. Business Strategy The company’s strategy is one of value-added growth. The company’s business strategy emphasizes commercial lending products and services through relationship banking with businesses and professional individuals. The company’s business strategy also emphasizes the origination of a variety of home mortgage loan products, most of which the company sells to the secondary market. The company retains servicing for home mortgages that the company originates and sells to the Alaska Housing Finance Corporation (‘AHFC’). The company has targeted the acquisition of new customers in professional fields, including physicians, dentists, accountants, and attorneys. In addition to lending products, in many cases commercial customers also require multiple deposit and affiliated services that add franchise value to the company. The company’s business strategy also stresses the importance of customer deposit relationships to support its lending activities. In addition to market share growth, a significant aspect of the company’s business strategy is focused on managing the credit quality of the company’s loan portfolio Products and Services Community Banking Lending Services The company has an emphasis on commercial and real estate lending. The company’s loan products include short and medium-term commercial loans, commercial credit lines, construction and real estate loans, and consumer loans. The company emphasizes providing financial services to small and medium-sized businesses and to individuals. These types of lending products have provided the company with needed market opportunities and generally provide higher net interest margins compared to other types of lending, such as consumer lending. However, they also involve greater risks, including greater exposure to changes in local economic conditions. Purchase of Accounts Receivable: The company provides short-term working capital to customers primarily in the company’s Alaska markets, as well as Washington, Oregon and some other states by purchasing their accounts receivable through NFS. Deposit Services: The company’s deposit services include business and personal noninterest-bearing checking accounts and interest-bearing time deposits, checking accounts, savings accounts, and individual retirement accounts. Several of the company’s deposit services and products are a specialized business checking account customized to account activity; a money market deposit account; a ‘Jump-Up’ certificate of deposit (‘CD’) that allows additional deposits with the opportunity to increase the rate to the current market rate for a similar term CD; a savings account that is priced like a money market account that allows additional deposits, quarterly withdrawals without penalty, and tailored maturity dates; IntraFi Network Deposits and business sweep; consumer online banking, mobile app, and mobile deposit; business online banking, business mobile app, and business mobile deposit; and instantly issued debit cards for business and consumer accounts at account opening. Other Services: In addition to the company’s traditional deposit and lending services, the company offers its customers several convenience services: Mobile Web and Text Banking, consumer online account opening, Personal Finance, Online Documents, Consumer Debit Cards, Business Debit Cards, My Rewards for consumer debit cards, retail lockbox services, card controls, Consumer Credit Cards, Business Credit Cards, Corporate Purchase Cards, Integrated Payables, home equity advantage access cards, telebanking, and automated teller services. Other services include personalized checks at account opening, overdraft protection from a savings account, commercial drive-up banking at many locations, automatic transfers and payments, People Pay (a peer-to-peer payment functionality), external transfers, Bill Pay, wire transfers, direct payroll deposit, electronic tax payments, Automated Clearing House origination and receipt, remote deposit capture, account reconciliation and positive pay, merchant services, cash management programs and sweep options to meet the needs of business customers, annuity products, and long term investment portfolios. Other Services Provided Through Affiliates: The company’s affiliate PWA provides investment advisory, trust, and wealth management services for customers who are primarily located in the Pacific Northwest and Alaska. The company plans to continue to leverage these affiliate relationships to strengthen the company’s existing customer base and bring new customers into the bank. Home Mortgage Lending Lending Services: The company originates 1-4 family residential mortgages, the majority of which are located in Alaska, most of which the company sells to the secondary market. Residential mortgage choices include several products from AHFC, including first-time homebuyer, veteran's and rural community programs; Federal Housing Authority, or ‘FHA’ loans; Veterans Affairs, or ‘VA’ loans; Jumbo loans; and various conventional mortgages. The company retains servicing rights on loans sold to AHFC since implementing a loan servicing program in July 2015. Investment Securities As of December 31, 2022, the company’s investment portfolio included the U.S. treasury and government sponsored entities, municipal securities, corporate bonds, and collateralized loan obligations. Supervision and Regulation The company is a bank holding company within the meaning of the bank Holding Company Act of 1956 (the ‘BHC Act’) registered with and subject to examination by the Board of Governors of the Federal Reserve System (the ‘FRB’). The company’s bank subsidiary is an Alaska-state chartered commercial bank and is subject to examination, supervision, and regulation by the Alaska Department of Commerce, Community and Economic Development, Division of Banking and Securities (the ‘Division’). The FDIC insures the bank’s deposits and also examines, supervises, and regulates the bank. The company’s affiliated investment advisory and wealth management company, Pacific Portfolio Consulting, LLC, is subject to and regulated under the Investment Advisors Act of 1940 and applicable state investment advisor rules and regulations. The company’s affiliated trust company, Pacific Portfolio Trust Company, is regulated as a non-depository trust company under the trust company laws of the State of Washington and is subject to supervision and examination by the Washington State Department of Financial Institutions. Other Dodd-Frank Act changes include: (i) tightened capital requirements for the bank and the Company; (ii) new requirements on parties engaged in residential mortgage origination, brokerage, lending and securitization; (iii) expanded restrictions on affiliate and insider transactions; (iv) enhanced restrictions on management compensation and related governance procedures; (v) creation of a federal Consumer Financial Protection Bureau (the ‘CFPB’) with broad authority to regulate consumer financial products and services; and (vi) restrictions and prohibitions on the ability of banking entities to engage in proprietary trading and to invest in or have certain relationships with hedge funds and private equity funds. The bank is subject to the Community Reinvestment Act of 1977 (‘CRA’). The company is also subject to the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the ‘USA PATRIOT Act’) and the Anti-Money Laundering Act of 2020 (the ‘AMLA’). The bank is an SBA lender. A number of other federal and state consumer protection laws extensively govern the bank’s relationship with its customers. These laws include the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in Lending Act, the Truth in Savings Act, the Electronic Fund Transfer Act, the Expedited Funds Availability Act, the Home Mortgage Disclosure Act, the Fair Housing Act, the Real Estate Settlement Procedures Act, the Fair Debt Collection Practices Act, Telephone Consumer Protection Act, the Service Members Civil Relief Act and these laws’ respective state-law counterparts, as well as state and territorial usury laws and laws regarding unfair and deceptive acts and practices. The company is also subject to the information, proxy solicitation, insider trading restrictions and other requirements of the Securities Exchange Act of 1934, as amended (the ‘Securities Exchange Act of 1934’), including certain requirements under the Sarbanes-Oxley Act of 2002. Competition The company competes with Global Credit Union. History Northrim BanCorp, Inc., an Alaska corporation, was founded in 1990. The company was incorporated in 2001.