Northrim BanCorp — Third Quarter 2026 Earnings Summary

Financial Performance

• Net income was $14.4 million ($0.63 per diluted share) for the third quarter of 2026, compared to $15.3 million ($0.68 per share) in the second quarter of 2026 and $27.1 million ($1.20 per share) in the third quarter of 2025.
• Net interest income increased 5% to $38.9 million in Q3 2026 from $37.1 million in Q2 2026 and 10% from $35.3 million in Q3 2025.
• Net interest margin on a tax-equivalent basis (NIMTE) was 5.02% in Q3 2026, up 1 basis point from Q2 2026 and 14 basis points from Q3 2025.
• Pre-provision net revenue increased 21% in Q3 2026 compared to the prior year quarter.
• Provision for credit losses was $7.7 million in Q3 2026, compared to $1.6 million in Q2 2026 and $1.7 million in Q3 2025.
• Operating expenses were $33.2 million in Q3 2026, up from $32.0 million in Q2 2026 and $30.3 million in Q3 2025.
• Return on average assets (ROAA) was 1.65% in Q3 2026, down from 1.84% in Q2 2026 and 3.32% in Q3 2025.
• Return on average equity (ROAE) was 15.96% in Q3 2026, down from 17.77% in Q2 2026 and 35.66% in Q3 2025.
• Total assets were $3.58 billion at September 30, 2026, up 5% from the preceding quarter and 8% from a year ago.
• Total deposits were $3.05 billion at September 30, 2026, up 5% from the preceding quarter and 5% from a year ago.
• Portfolio loans were $2.40 billion at September 30, 2026, up 1% from the preceding quarter and 8% from a year ago.
• Non-interest bearing demand deposits were $833.7 million at September 30, 2026, down 4% year-over-year.
• Average cost of interest-bearing deposits was 1.69% at September 30, 2026, down from 2.00% a year ago.
• Book value per share was $16.01 at September 30, 2026, compared to $15.63 at June 30, 2026 and $14.29 a year ago.
• Tangible book value per share was $13.72 at September 30, 2026, compared to $13.34 at June 30, 2026 and $11.99 a year ago.
• Tier 1 Capital to Risk Adjusted Assets was 11.04% at September 30, 2026.

Guidance and Future Outlook

• The acquisition of PBCO Financial Corporation is expected to close in the first quarter of 2027.
• The combination is intended to create a company with more than $4 billion in assets.
• Management anticipates the resolution of the impaired Specialty Finance relationship will take several quarters.
• Alaska oil production is forecasted to grow by 40% over the next decade, reaching 650 thousand barrels per day by 2034.
• The Alaska Permanent Fund is expected to contribute $4 billion to the General Fund in fiscal year 2027.

Business Segments and Product Lines

• Community Banking: Net interest income was $35.8 million in Q3 2026, up 11% from Q3 2025. Net income for the segment was $15.2 million. A new branch opened in Palmer, Alaska at the end of Q2 2026.
• Home Mortgage Lending: Mortgage loans funded for sale were $189.0 million in Q3 2026. Net interest income contributed $3.2 million. Mortgage servicing revenue increased to $3.3 million. The segment recorded a benefit to provision for credit losses of $575,000.
• Specialty Finance: Average purchased receivables balances were $164.3 million in Q3 2026. The segment reported a net loss of $4.3 million in Q3 2026, primarily due to an $8.8 million individual impairment on a $20.0 million credit.
• Pacific Wealth Advisors: Recorded a gain on sale of certain assets in Q3 2025 which contributed to prior year profitability; a true-up of expected earn-out cash proceeds is expected in Q4 2026.

Market and Competitive Landscape

• Northrim's deposit market share in Alaska increased to 17.71% as of June 30, 2026, up from 17.53% a year ago.
• Alaska's seasonally adjusted unemployment rate was 4.3% in August 2026.
• Alaska's Gross State Product grew 8.6% nominally in Q2 2026 compared to Q2 2025.
• The average sales price of single-family homes in Anchorage rose 6.3% in the first nine months of 2026.
• Oil prices for Alaska North Slope crude grew from $68.89 a barrel in September 2025 to $105.54 in September 2026.

Risks and Challenges

• A single credit in the Specialty Finance segment with an outstanding balance of $20.0 million was impaired by $8.8 million due to customer receivable payment disputes, uncertainty regarding insurance claims, and the need to liquidate collateral.
• Nonperforming assets increased to $42.9 million at September 30, 2026, primarily in the Specialty Finance segment.
• Adversely classified loans increased to $52.0 million at September 30, 2026.
• The Company recorded $993,000 in merger and acquisition expenses related to the proposed PBCO acquisition.
• Medical claims under the self-insured employee plan increased by $998,000 compared to the prior year quarter.

Management Commentary and Tone

• CEO Mike Huston stated that record net interest income, strong deposit growth, and a net interest margin above 5% drove a 21% increase in pre-provision net revenue.
• Management noted that earnings were reduced by a higher provision for credit losses tied to a single relationship in the Specialty Finance segment.
• Management highlighted that credit quality across the Community Banking portfolio remains solid.
• Management expressed confidence in the benefits of the diversified business model, citing a strong quarter from the Home Mortgage Lending segment.
• Management confirmed progress on the PBCO acquisition, noting the transaction is an all-stock deal where PBCO shareholders will receive 1.16 shares of Northrim stock for each PBCO share.

Other Key Points

• Dividends per share increased to $0.17 in Q3 2026, up from $0.16 in Q2 2026 and Q3 2025.
• The Company recorded a $1.9 million gain on the sale of VISA shares in Q3 2026.
• The Company did not repurchase any shares of common stock in Q3 2026 and has no plans to repurchase shares for the remainder of the year.
• The Company reclassified $63 million in consumer mortgages held for investment to held for sale in Q3 2026, recording $375,000 in unrealized losses.
• The Alaska Permanent Fund dividend of $1,200 per resident is scheduled for distribution in October 2026.
• The Company has $86.5 million in unfunded commitments to companies with direct exposure to the oil and gas industry in Alaska, with no unfunded commitments on adversely classified loans.