NORTHRIM BANCORP INC - 10-Q Quarterly Report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2002

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from_____to____

Commission File Number 000-33501

NORTHRIM BANCORP, INC.

(Exact name of registrant as specified in its charter)


Alaska (State or other jurisdiction of incorporation or organization)		92-0175752 (I.R.S. Employer Identification Number)









3111 C Street Anchorage, Alaska (Address of principal executive offices)		99503 (Zip Code)

(907) 562-0062
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section
13 of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes [X] No [ ]

The number of shares of the issuer’s Common Stock outstanding at November 4, 2002 was 6,094,536.

TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION
	ITEM ONE
		CONSOLIDATED BALANCE SHEETS
		CONSOLIDATED STATEMENTS OF INCOME
		CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
		CONSOLIDATED STATEMENTS OF CASH FLOWS
	ITEM 2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 3 QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 4 CONTROLS AND PROCEDURES
	ITEM 6 EXHIBITS AND REPORT ON FORM 8-K
SIGNATURES
EXHIBIT 99.1
EXHIBIT 99.2

TABLE OF CONTENTS


PART I	FINANCIAL INFORMATION




Item 1.	Consolidated Financial Statements (unaudited)




	Consolidated Balance Sheets




	- September 30, 2002 (unaudited)	3




	- December 31, 2001	3




	Consolidated Statements of Income (unaudited)




	- Three and nine months ended September 30, 2002 and 2001	4




	Consolidated Statements of Comprehensive Income (unaudited)




	- Three and nine months ended September 30, 2002 and 2001	5




	Consolidated Statements of Cash Flows (unaudited)




	- Nine months ended September 30, 2002 and 2001	6




	Notes to the Consolidated Financial Statements	7




Item 2.	Management’s Discussion and Analysis of Financial	11




	Condition and Results of Operations




Item 3.	Qualitative and Quantitative Disclosures About	22




	Market Risk




Item 4.	Controls and Procedures	23




PART II	OTHER INFORMATION




Item 6.	Exhibits and Reports on Form 8-K	24




SIGNATURES		25

-2-

NORTHRIM BANCORP, INC.
PART I — FINANCIAL INFORMATION
ITEM ONE

NORTHRIM BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2002 AND DECEMBER 31, 2001
(in thousands, except share data)


					September 30,			December 31,
					2002			2001

					(unaudited)			(audited)
ASSETS




	Cash and due from banks				$	31,348		$	26,040




	Money market investments					59,918			15,832




	Investment securities held to maturity					1,281			1,832




	Investment securities available for sale					78,279			74,111




	Investment in Federal Home Loan Bank stock					1,744			2,660




	Real estate loans for sale					4,782			19,496




	Loans					511,887			463,066




	Allowance for loan losses					(8,254	)		(7,200	)

		Net loans				508,415			475,362




	Premises and equipment, net					6,408			5,877




	Accrued interest receivable					3,263			3,470




	Intangible assets					7,462			7,737




	Other assets					10,633			7,597

				Total Assets	$	708,751		$	620,518

LIABILITIES




	Deposits:




		Demand			$	139,931		$	128,881




		Interest-bearing demand				51,589			49,916




		Savings				103,754			47,669




		Money market				170,446			139,524




		Certificates of deposit less than $100,000				77,480			86,631




		Certificates of deposit greater than $100,000				90,455			97,986

			Total deposits			633,655			550,607

	Borrowings					5,271			5,682




	Other liabilities					3,437			3,438

			Total liabilities			642,363			559,727

SHAREHOLDERS’ EQUITY




	Common stock, $1 par value, 10,000,000 shares authorized, 6,092,812 and 6,106,823 shares issued and outstanding at September 30, 2002 and December 31, 2001, respectively					6,093			6,107




	Additional paid-in capital					46,739			47,023




	Retained earnings					12,425			7,140




	Accumulated other comprehensive income — unrealized gain (loss) on securities, net					1,131			521

			Total shareholders’ equity			66,388			60,791

				Total Liabilities and Shareholders’ Equity	$	708,751		$	620,518

See notes to the consolidated financial statements

-3-

NORTHRIM BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(in thousands, except per share data)


				Three Months Ended:				Nine Months Ended:
				September 30,				September 30,

				2002		2001		2002		2001

				(unaudited)				(unaudited)
Interest Income




	Interest and fees on loans			$	10,660	$	11,091	$	30,098	$	32,938




	Interest on investment securities:




		Assets available for sale			807		890		2,711		2,903




		Assets held to maturity			55		58		173		170




	Interest on money market investments				65		174		145		562

			Total Interest Income		11,587		12,213		33,127		36,573




Interest Expense




	Interest expense on deposits and borrowings				2,528		4,101		7,885		13,537

			Net Interest Income		9,059		8,112		25,242		23,036




Provision for loan losses					980		615		1,855		1,435

			Net Interest Income After Provision for Loan Losses		8,079		7,497		23,387		21,601




Other Operating Income




	Service charges on deposit accounts				444		393		1,258		1,237




	Other income				992		893		2,383		2,244

			Total Other Operating Income		1,436		1,286		3,641		3,481




Other Operating Expense




	Salaries and other personnel expense				3,292		2,980		9,511		9,022




	Occupancy, net				513		519		1,460		1,444




	Equipment expense				322		398		1,068		1,169




	Marketing expense				312		300		934		906




	Supply expense				104		105		314		340




	Intangible asset amortization expense				92		207		276		624




	Other operating expense				1,249		1,275		3,571		3,407

			Total Other Operating Expense		5,884		5,784		17,134		16,912

			Income Before Income Taxes		3,631		2,999		9,894		8,170




	Provision for income taxes				1,404		1,072		3,692		2,993

			Net Income	$	2,227	$	1,927	$	6,202	$	5,177

	Earnings Per Share, Basic			$	0.36	$	0.32	$	1.01	$	0.85




	Earnings Per Share, Diluted			$	0.35	$	0.31	$	0.98	$	0.83




	Weighted Average Shares Outstanding, Basic				6,122,323		6,101,396		6,117,452		6,101,396




	Weighted Average Shares Outstanding, Diluted				6,290,699		6,281,012		6,331,329		6,259,664

See notes to the consolidated financial statements

-4-

NORTHRIM BANCORP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(in thousands)


		Three Months Ended:				Nine Months Ended:
		September 30,				September 30,

		2002		2001		2002		2001

		(unaudited)		(unaudited)		(unaudited)		(unaudited)
Net income		$	2,227	$	1,927	$	6,202	$	5,177




Other comprehensive income, net of tax:




	Unrealized gains (losses) on securities:




	Unrealized holding gains (losses) arising during period		362		634		677		910




Less: reclassification adjustment for gains included in net income			34		1		67		28

Comprehensive income		$	2,556	$	2,561	$	6,812	$	6,059

See notes to the consolidated financial statements

-5-

NORTHRIM BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(in thousands)


					Nine Months Ended:
					September 30,

					2002			2001

					(unaudited)			(unaudited)
Operating Activities




	Net income				$	6,202		$	5,177




Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities




	Security (gains) losses					(113	)		(46	)




	Depreciation and amortization of premises and equipment					824			955




	Amortization of software					289			307




	Intangible asset amortization					276			276




	Deferred tax expense (benefit)					(507	)		538




	Deferral of loan fees and costs, net					670			275




	Gain on sale of building					(9	)		(22	)




	Provision for loan losses					1,855			1,435




	(Increase) decrease in accrued interest receivable					207			202




	(Increase) decrease in other assets					(2,820	)		(2,278	)




	Amortization of investment security premium, net of discount accretion					114			64




	Increase (decrease) of other liabilities					8			1,493

				Net Cash Provided by Operating Activities		6,996			8,376

Investing Activities




	Investment in securities:




		Purchases of investment securities:




			Available-for-sale			(74,200	)		(65,107	)




			Held-to-maturity			(120	)		(129	)




		Proceeds from sales / maturities of securities:




			Available-for-sale			70,642			66,754




			Held-to-maturity			1,587			250




	Investments in loans:




		Sales of loans and loan participations				72,983			150,347




		Loans made, net of repayments				(108,561	)

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