NRIM filing — read by section

nrim-20240630 
 
 UNITED STATES SECURITIES AND EXCHANGE COMMISSION 
 WASHINGTON, DC 20549 
 FORM 10-Q 
 (Mark One) 
 ☑ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 
 For the quarterly period ended June 30, 2024 
 ☐ 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 92-0175752 
 (State or other jurisdiction of incorporation or organization) 
 (I.R.S. Employer Identification No.) 

 3111 C Street 
 Anchorage , Alaska 99503 
 (Address of principal executive offices) (Zip Code) 
 
 ( 907 ) 562-0062 
 
 (Registrant’s telephone number, including area code) 
 Securities registered pursuant to Section 12(b) of the Act: None 
 
 TITLE OF EACH CLASS TRADING SYMBOL NAME OF EXCHANGE 
 
 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) 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. 
 ý Yes ¨ No 
 Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). 
 ý Yes ¨ No 
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act: 
 Large Accelerated Filer ¨ Accelerated Filer ý Non-accelerated Filer ¨ 
 Smaller Reporting Company ☐ Emerging Growth Company ☐ 
 
 If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ 
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 
 ☐ Yes ý No 
 
 The number of shares of the issuer’s Common Stock, par value $1 per share, outstanding at July 31, 2024 was 5,501,943 . 
 
 TABLE OF CONTENTS 
 
 Part I FINANCIAL INFORMATION 
 Item 1. Financial Statements (unaudited) 
 Consolidated Balance Sheets 
 3 
 
 Consolidated Statements of Income 
 4 
 
 Consolidated Statements of Comprehensive Income 
 5 
 
 Consolidated Statements of Changes in Shareholders' Equity 
 6 
 
 Consolidated Statements of Cash Flows 
 8 
 
 Notes to the Consolidated Financial Statements 
 10 
 
 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 
 38 
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk 
 56 
 
 Item 4. Controls and Procedures 
 56 
 
 Part II OTHER INFORMATION 
 Item 1. Legal Proceedings 
 57 
 
 Item 1A. Risk Factors 
 57 
 
 Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities 
 57 
 
 Item 5. Other Information 
 58 
 
 Item 6. Exhibits 
 58 
 
 SIGNATURES 
 59 
 
 1 

 PART I. FINANCIAL INFORMATION 
 These consolidated financial statements should be read in conjunction with the consolidated financial statements, accompanying notes and other relevant information included in Northrim BanCorp, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2023. 
 
 ITEM 1. FINANCIAL STATEMENTS 
 2 

 CONSOLIDATED FINANCIAL STATEMENTS 
 NORTHRIM BANCORP, INC. 
 Consolidated Balance Sheets 
 (Unaudited) 
 
 June 30,
2024 December 31,
2023 
 (In Thousands, Except Share Data) 
 ASSETS 
 Cash and due from banks $ 33,364 $ 27,457 
 Interest bearing deposits in other banks 21,058 91,073 
 Investment securities available for sale, at fair value 584,964 637,936 
 Marketable equity securities 12,381 13,153 
 Investment securities held to maturity, at amortized cost 36,750 36,750 
 Investment in Federal Home Loan Bank stock 4,929 2,980 
 
 Loans held for sale 85,926 31,974 
 Loans 1,875,907 1,789,497 
 Allowance for credit losses, loans ( 17,694 ) ( 17,270 ) 
 Net loans 1,858,213 1,772,227 
 Purchased receivables, net 25,722 36,842 
 Mortgage servicing rights, at fair value 21,077 19,564 
 
 Premises and equipment, net 40,393 40,693 
 Operating lease right-of-use assets 8,244 9,092 
 Goodwill 15,017 15,017 
 Other intangible assets, net 950 950 
 Other assets 72,680 71,789 
 Total assets $ 2,821,668 $ 2,807,497 
 LIABILITIES 
 Deposits: 
 Demand $ 704,471 $ 749,683 
 Interest-bearing demand 906,010 927,291 
 Savings 238,156 255,338 
 Money market 195,159 221,492 
 Certificates of deposit less than $250,000 223,559 189,106 
 Certificates of deposit $250,000 and greater 196,451 142,145 
 Total deposits 2,463,806 2,485,055 
 
 Borrowings 43,961 13,675 
 Junior subordinated debentures 10,310 10,310 
 Operating lease liabilities 8,269 9,092 
 Other liabilities 48,122 54,647 
 Total liabilities 2,574,468 2,572,779 
 SHAREHOLDERS' EQUITY 
 Preferred stock, $ 1 par value, 2,500,000 shares authorized, none issued or outstanding 
 — — 
 Common stock, $ 1 par value, 10,000,000 shares authorized, 5,501,562 and 5,513,459 issued and outstanding at June 30, 2024 and December 31, 2023, respectively 
 5,502 5,513 
 Additional paid-in capital 9,208 9,605 
 Retained earnings 246,475 236,037 
 Accumulated other comprehensive loss, net of tax ( 13,985 ) ( 16,437 ) 
 Total shareholders' equity 247,200 234,718 
 Total liabilities and shareholders' equity $ 2,821,668 $ 2,807,497 

 See notes to consolidated financial statements 
 3 

 NORTHRIM BANCORP, INC. 
 Consolidated Statements of Income 
 (Unaudited) 
 
 Three Months Ended Six Months Ended 
 June 30, June 30, 
 (In Thousands, Except Per Share Data) 2024 2023 2024 2023 
 Interest and Dividend Income 
 Interest and fees on loans and loans held for sale $ 32,367 $ 26,313 $ 62,817 $ 50,007 
 Interest on investment securities available for sale 3,556 3,996 7,274 7,930 
 Dividends on marketable equity securities 227 175 470 343 
 Interest on investment securities held to maturity 470 473 952 947 
 Dividends on Federal Home Loan Bank stock 57 35 134 71 
 Interest on deposits in other banks 232 828 1,070 2,317 
 Total Interest and Dividend Income 36,909 31,820 72,717 61,615 
 Interest Expense 
 Interest expense on deposits 9,476 6,114 18,656 10,697 
 
 Interest expense on borrowings 287 470 373 557 
 Interest expense on junior subordinated debentures 93 94 188 187 
 Total Interest Expense 9,856 6,678 19,217 11,441 
 Net Interest Income 27,053 25,142 53,500 50,174 
 (Benefit) provision for credit losses ( 120 ) 1,407 29 1,767 
 Net Interest Income After Provision for Credit Losses 
 27,173 23,735 53,471 48,407 
 Other Operating Income 
 Mortgage banking income 5,884 3,913 9,915 5,921 
 Purchased receivable income 1,242 1,018 2,587 1,995 
 Bankcard fees 1,105 986 2,022 1,894 
 Service charges on deposit accounts 572 505 1,121 962 
 Unrealized gain (loss) on marketable equity securities 
 ( 60 ) ( 234 ) 254 ( 457 ) 
 
 Other income 834 792 1,522 1,573 
 Total Other Operating Income 9,577 6,980 17,421 11,888 
 Other Operating Expense 
 Salaries and other personnel expense 16,627 15,183 32,044 30,667 
 Data processing expense 2,601 2,377 5,260 4,732 
 Occupancy expense 1,843 1,811 3,805 3,754 
 Professional and outside services 726 801 1,481 1,523 
 Insurance expense 692 647 1,471 1,204 
 Marketing expense 690 933 1,203 1,497 
 OREO expense, net rental income and gains on sale 2 ( 8 ) ( 389 ) 18 
 Intangible asset amortization expense — 3 — 7 
 
 Other operating expense 2,013 2,035 3,957 3,889 
 Total Other Operating Expense 25,194 23,782 48,832 47,291 
 Income Before Provision for Income Taxes 11,556 6,933 22,060 13,004 
 Provision for income taxes 2,536 1,356 4,841 2,597 
 
 Net Income $ 9,020 $ 5,577 $ 17,219 $ 10,407 
 Earnings Per Share, Basic $ 1.64 $ 0.99 $ 3.13 $ 1.84 
 Earnings Per Share, Diluted $ 1.62 $ 0.98 $ 3.10 $ 1.82 
 Weighted Average Common Shares Outstanding, Basic 
 5,500,588 5,632,174 5,500,083 5,661,803 
 Weighted Average Common Shares Outstanding, Diluted 
 5,558,580 5,677,292 5,562,025 5,719,453 

 See notes to consolidated financial statements 
 4 

 NORTHRIM BANCORP, INC. 
 Consolidated Statements of Comprehensive Income 
 (Unaudited) 
 2010 
 
 Three Months Ended June 30, Six Months Ended June 30, 
 (In Thousands) 2024 2023 2024 2023 
 Net income $ 9,020 $ 5,577 $ 17,219 $ 10,407 
 Other comprehensive income (loss), net of tax: 
 Securities available for sale: 
 Unrealized holding gains (losses) arising during the period $ 2,806 ($ 4,414 ) $ 3,098 $ 3,705 
 
 Derivatives and hedging activities: 
 Unrealized holding gains (losses) arising during the period 
 56 281 328 ( 18 ) 
 Income tax expense related to unrealized (gains) losses 
 ( 814 ) 1,175 ( 974 ) ( 1,048 ) 
 Other comprehensive income (loss), net of tax 2,048 ( 2,958 ) 2,452 2,639 
 Comprehensive income 
 $ 11,068 $ 2,619 $ 19,671 $ 13,046 
 
 See notes to consolidated financial statements 
 
 5 

 NORTHRIM BANCORP, INC. 
 Consolidated Statements of Changes in Shareholders’ Equity 
 (Unaudited) 
 
 Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss), net of Tax Total 
 Number of Shares Par Value 
 (In Thousands) 
 Balance as of January 1, 2023 5,701 $ 5,701 $ 17,784 $ 224,225 ($ 29,081 ) $ 218,629 
 Cash dividend on common stock ($ 0.60 per share) 
 — — — ( 3,444 ) — ( 3,444 ) 
 Stock-based compensation expense — — 140 — — 140 
 
 Repurchase of common stock ( 28 ) ( 28 ) ( 1,299 ) — — ( 1,327 ) 
 Other comprehensive gain, net of tax 
 — — — — 5,597 5,597 
 
 Net income — — — 4,830 — 4,830 
 Balance as of March 31, 2023 5,673 $ 5,673 $ 16,625 $ 225,611 ($ 23,484 ) $ 224,425 
 Cash dividend on common stock ($ 0.60 per share) 
 — — — ( 3,432 ) — ( 3,432 ) 
 Stock-based compensation expense — — 225 — — 225 
 
 Repurchase of common stock ( 62 ) ( 62 ) ( 2,439 ) — — ( 2,501 ) 
 Other comprehensive loss, net of tax — — — — ( 2,958 ) ( 2,958 ) 
 Net income — — — 5,577 — 5,577 
 Balance as of June 30, 2023 5,611 $ 5,611 $ 14,411 $ 227,756 ($ 26,442 ) $ 221,336 
 Cash dividend on common stock ($ 0.60 per share) 
 — — — ( 3,384 ) — ( 3,384 ) 
 Stock-based compensation expense — — 254 — — 254 
 Exercise of stock options and vesting of restricted stock units, net — — ( 12 ) — — ( 12 ) 
 Repurchase of common stock ( 63 ) ( 63 ) ( 2,648 ) — — ( 2,711 ) 
 Other comprehensive gain, net of tax 
 — — — — 1,402 1,402 
 Net income — — — 8,374 — 8,374 
 Balance as of September 30, 2023 5,548 $ 5,548 $ 12,005 $ 232,746 ($ 25,040 ) $ 225,259 
 Cash dividend on common stock ($ 0.60 per share) 
 — — — ( 3,322 ) — ( 3,322 ) 
 Stock-based compensation expense — — 318 — — 318 
 Exercise of stock options and vesting of restricted stock units, net 21 21 ( 269 ) — — ( 248 ) 
 Repurchase of common stock ( 56 ) ( 56 ) ( 2,449 ) — — ( 2,505 ) 
 Other comprehensive gain, net of tax 
 — — — — 8,603 8,603 
 Net income — — — 6,613 — 6,613 
 Balance as of December 31, 2023 5,513 $ 5,513 $ 9,605 $ 236,037 ($ 16,437 ) $ 234,718 

 See notes to consolidated financial statements 
 
 6 

 NORTHRIM BANCORP, INC. 
 Consolidated Statements of Changes in Shareholders’ Equity 
 (Continued) 
 (Unaudited) 
 
 Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss), net of Tax Total 
 Number of Shares Par Value 
 (In Thousands) 
 Balance as of January 1, 2024 5,513 $ 5,513 $ 9,605 $ 236,037 ($ 16,437 ) $ 234,718 
 Cash dividend on common stock ($ 0.61 per share) 
 — — — ( 3,388 ) — ( 3,388 ) 
 Stock-based compensation expense — — 208 — — 208 
 Exercise of stock options and vesting of restricted stock units, net 1 1 ( 27 ) — — ( 26 ) 
 Repurchase of common stock ( 14 ) ( 14 ) ( 774 ) — — ( 788 ) 
 Other comprehensive gain, net of tax 
 — — — — 404 404 
 
 Net income — — — 8,199 — 8,199 
 Balance as of March 31, 2024 5,500 $ 5,500 $ 9,012 $ 240,848 ($ 16,033 ) $ 239,327 
 Cash dividend on common stock ($ 0.61 per share) 
 — — — ( 3,393 ) — ( 3,393 ) 
 Stock-based compensation expense — — 219 — — 219 
 Exercise of stock options and vesting of restricted stock units, net 2 2 ( 23 ) — — ( 21 ) 
 
 Other comprehensive gain, net of tax 
 — — — — 2,048 2,048 
 Net income — — — 9,020 — 9,020 
 Balance as of June 30, 2024 5,502 $ 5,502 $ 9,208 $ 246,475 ($ 13,985 ) $ 247,200 
 
 See notes to consolidated financial statements 
 7 

 NORTHRIM BANCORP, INC. 
 Consolidated Statements of Cash Flows 
 (Unaudited) 
 
 Six Months Ended June 30, 
 (In Thousands) 2024 2023 
 Operating Activities: 
 Net income $ 17,219 $ 10,407 
 Adjustments to Reconcile Net Income to Net Cash (Used) by Operating Activities: 
 
 Depreciation and amortization of premises and equipment 1,815 1,576 
 Amortization of software 437 576 
 Intangible asset amortization — 7 
 Amortization of investment security premium, net of discount accretion 228 255 
 Unrealized (gain) loss on marketable equity securities ( 254 ) 457 
 
 Stock-based compensation 427 365 
 
 Deferred loan fees and amortization, net of costs ( 238 ) ( 676 ) 
 Provision for credit losses 29 1,767 
 
 Additions to home mortgage servicing rights carried at fair value ( 1,619 ) ( 982 ) 
 Change in fair value of home mortgage servicing rights carried at fair value 106 1,369 
 Change in fair value of commercial servicing rights carried at fair value 145 105 
 Gain on sale of loans ( 5,168 ) ( 3,875 ) 
 Proceeds from the sale of loans held for sale 
 187,879 135,203 
 Origination of loans held for sale ( 236,663 ) ( 164,549 ) 
 Gain on sale of other real estate owned ( 392 ) — 
 
 Net changes in assets and liabilities: 
 (Increase) in accrued interest receivable ( 1,092 ) ( 595 ) 
 Decrease in other assets 1,478 739 
 (Decrease) in other liabilities ( 8,381 ) ( 4,668 ) 
 Net Cash (Used) by Operating Activities 
 ( 44,044 ) ( 22,519 ) 
 Investing Activities: 
 Investment in securities: 
 Purchases of investment securities available for sale ( 9,977 ) ( 6,000 ) 
 Purchases of marketable equity securities ( 1,964 ) ( 324 ) 
 Purchases of FHLB stock ( 11,775 ) ( 2,715 ) 
 
 Proceeds from sales/calls/maturities of securities available for sale 65,823 15,340 
 Proceeds from calls of marketable equity securities 
 2,989 — 
 
 Proceeds from redemption of FHLB stock 9,826 673 
 Increase in purchased receivables, net 
 11,120 ( 1,872 ) 
 Increase in loans, net 
 ( 109,573 ) ( 157,013 ) 
 Proceeds from the sale of loans 
 23,469 — 
 Proceeds from sale of other real estate owned 392 — 
 
 Purchases of software ( 419 ) ( 90 ) 
 
 Purchases of premises and equipment ( 1,515 ) ( 3,328 ) 
 Net Cash (Used) by Investing Activities 
 ( 21,604 ) ( 155,329 ) 
 Financing Activities: 
 (Decrease) in deposits 
 ( 21,249 ) ( 84,900 ) 
 
 Increase in borrowings 30,286 50,792 
 Repurchase of common stock ( 788 ) ( 3,828 ) 
 
 Cash dividends paid ( 6,709 ) ( 6,814 ) 
 Net Cash Provided by (Used) Financing Activities 
 1,540 ( 44,750 ) 
 Net Change in Cash and Cash Equivalents ( 64,108 ) ( 222,598 ) 
 Cash and Cash Equivalents at Beginning of Period 118,530 259,350 
 Cash and Cash Equivalents at End of Period $ 54,422 $ 36,752 

 8 

 Supplemental Information: 
 Income taxes paid $ 1,488 $ 856 
 Interest paid $ 18,722 $ 11,081 
 
 Transfer of loans to other real estate owned $ — $ 273 
 
 Non-cash lease liability arising from obtaining right of use assets $ 288 $ 423 
 Cash dividends declared but not paid $ 72 $ 62 
 
 See notes to consolidated financial statements 
 9 

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
 
 (Unaudited) 
 
 1. Basis of Presentation and Significant Accounting Policies 
 The accompanying unaudited consolidated financial statements and corresponding footnotes have been prepared by Northrim BanCorp, Inc. (the “Company”) in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and with instructions to Form 10-Q under the Securities Exchange Act of 1934, as amended. The year-end Consolidated Balance Sheet data was derived from the Company's audited financial statements. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The Company owns a 100% interest in Residential Mortgage Holding Company, LLC, the parent company of Residential Mortgage, LLC (collectively “RML”) and consolidates their balance sheets and income statement into its financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The Company determined that it operates in two primary operating segments: Community Banking and Home Mortgage Lending. The Company has evaluated subsequent events and transactions for potential recognition or disclosure. Operating results for the interim period ended June 30, 2024 are not necessarily indicative of the results anticipated for the year ending December 31, 2024. These consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. 
 The Company’s significant accounting policies are discussed in Note 1 to the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. There have been no significant changes in our application of these accounting policies in 2024. 
 Reclassification of Prior Period Presentation 
 Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations or total shareholders' equity. 
 Recent Accounting Pronouncements 
 Accounting pronouncements implemented in 2024 
 In March 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-02, Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (“ASU 2023-02”). Under current GAAP, an entity can only elect to apply the proportional amortization method to investments in low income housing tax credit (“LIHTC”) structures. The amendments in ASU 2023-02 allow entities to elect to account for equity investments made primarily for the purpose of receiving income tax credits using the proportional amortization method, regardless of the tax credit program through which the investment earns income tax credits, if certain conditions are met. ASU 2023-02 provides amendments to Accounting Standards Codification (“ASC”) paragraph 323-740-25-1, which sets forth the conditions needed to apply the proportional amortization method. The amendments make certain limited changes to those conditions to clarify their application to a broader group of tax credit investment programs. However, the conditions in substance remain consistent with current GAAP. The amendments in this ASU 2023-02 also eliminate certain LIHTC-specific guidance to align the accounting more closely for LIHTCs with the accounting for other equity investments in tax credit structures and require that the delayed equity contribution guidance in paragraph ASC 323-740-25-3 applies only to tax equity investments accounted for using the proportional amortization method. The Company adopted ASU 2023-02 on January 1, 2024. The adoption of ASU 2023-02 did not have a material impact on the Company's consolidated financial statements. 
 In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures (“ASU 2023-07”). Under current GAAP, public entities are required to report a measure of segment profit or loss. The amendments in ASU 2023-07 do not change or remove this requirement, nor does it change how an entity identifies its operating segments. The amendments in ASU 2023-07 improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The Company adopted ASU 2023-07 on January 1, 2024. The adoption of ASU 2023-07 did not have a material impact on the Company's consolidated financial statements. 
 10 

 Accounting pronouncements to be implemented in future periods 
 In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures (“ASU 2023-09”). The amendments in ASU 2023-09 improve transparency of income tax disclosures related to rate reconciliation and income taxes paid disclosures by requiring consistent categories and greater disaggregation of information in rate reconciliation, and by requiring disclosure of income taxes paid disaggregated by jurisdiction. The amendments in ASU 2023-09 allow investors to better assess, in their capital allocation decisions, how an entity's worldwide operations and related tax risks and tax planning and operations opportunities affect its income tax rate and prospects for future cash flow. ASU 2023-09 is effective for the Company for fiscal years beginning after December 15, 2024 and may be applied on a prospective or retrospective basis. The Company intends to adopt ASU 2023-09 prospectively and does not believe that the adoption will have a material impact on the Company's consolidated financial statements. 
 In March 2024, the FASB issued ASU 2024-02, Codification Improvements - Amendments to Remove References to the Concepts Statements ("ASU 2024-02"). ASU 2024-02 contains amendments to the Codification that remove references to various Concepts Statements. In most instances, the references are extraneous and not required to understand or apply the guidance. In other instances, the references were used in prior Concepts Statements to provide guidance in certain topical areas. FASB Concepts Statement are nonauthoritative. Removing all references to Concepts Statements in the guidance is intended to simplify the Codification and draw a distinction between authoritative and nonauthoritative literature. ASU 2024-02 is effective for the Company for fiscal years beginning after December 15, 2024 and may be applied on a prospective or retrospective basis. The Company intends to adopt ASU 2024-02 prospectively and does not believe that the adoption will have a material impact on the Company's consolidated financial statements. 
 
 2. Investment Securities 
 Marketable Equity Securities 
 The Company held marketable equity securities with fair values of $ 12.4 million and $ 13.2 million at June 30, 2024 and December 31, 2023, respectively. The gross realized and unrealized gains (losses) recognized on marketable equity securities in other operating income in the Company's Consolidated Statements of Income were as follows: 
 
 Three Months Ended June 30, Six Months Ended June 30, 
 (In Thousands) 2024 2023 2024 2023 
 Unrealized (loss) gain on marketable equity securities ($ 60 ) ($ 234 ) $ 254 ($ 457 ) 
 Gain on sale of marketable equity securities, net — — — — 
 Total ($ 60 ) ($ 234 ) $ 254 ($ 457 ) 

 Debt securities 
 Debt securities have been classified in the financial statements as available for sale or held to maturity. The following table summarizes the amortized cost, estimated fair value, and the Allowance for Credit Losses ("ACL") of debt securities and the corresponding amounts of gross unrealized gains and losses of available-for-sale securities recognized in accumulated other comprehensive income (loss) and gross unrecognized gains and losses of held to maturity securities at the periods indicated: 
 
 (In Thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Allowance for Credit Losses Fair Value 
 June 30, 2024 
 Securities available for sale 
 U.S. Treasury and government sponsored entities $ 546,492 $ 277 ($ 21,086 ) $ — $ 525,683 
 
 Corporate bonds 9,012 41 ( 360 ) — 8,693 
 Collateralized loan obligations 50,693 30 ( 135 ) — 50,588 
 Total securities available for sale $ 606,197 $ 348 ($ 21,581 ) $ — $ 584,964 

 11 

 (In Thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value 
 June 30, 2024 
 Securities held to maturity 
 Corporate bonds $ 36,750 $ — ($ 3,041 ) $ 33,709 
 Allowance for credit losses — — — — 
 Total securities held to maturity, net of ACL $ 36,750 $ — ($ 3,041 ) $ 33,709 

 (In Thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Allowance for Credit Losses Fair Value 
 December 31, 2023 
 Securities available for sale 
 U.S. Treasury and government sponsored entities $ 587,639 $ 451 ($ 23,965 ) $ — $ 564,125 
 Municipal securities 820 — ( 4 ) — 816 
 
 Corporate bonds 14,014 28 ( 418 ) — 13,624 
 Collateralized loan obligations 59,795 12 ( 436 ) — 59,371 
 Total securities available for sale $ 662,268 $ 491 ($ 24,823 ) $ — $ 637,936 

 (In Thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value 
 December 31, 2023 
 Securities held to maturity 
 Corporate bonds $ 36,750 $ — ($ 3,337 ) $ 33,413 
 Allowance for credit losses — — — — 
 Total securities held to maturity, net of ACL $ 36,750 $ — ($ 3,337 ) $ 33,413 

 Gross unrealized losses on available for sale securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2024 and December 31, 2023 were as follows: 
 
 Less Than 12 Months More Than 12 Months Total 
 (In Thousands) Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses 
 March 31, 2024 
 Securities available for sale 
 U.S. Treasury and government sponsored entities $ 24,736 ($ 328 ) $ 480,666 ($ 20,758 ) $ 505,402 ($ 21,086 ) 
 Corporate bonds — — 4,653 ( 360 ) 4,653 ( 360 ) 
 Collateralized loan obligations — — 9,859 ( 135 ) 9,859 ( 135 ) 
 
 Total $ 24,736 ($ 328 ) $ 495,178 ($ 21,253 ) $ 519,914 ($ 21,581 ) 
 
 December 31, 2023: 
 Securities available for sale 
 U.S. Treasury and government sponsored entities $ 9,997 ($ 3 ) $ 528,574 ($ 23,962 ) $ 538,571 ($ 23,965 ) 
 Corporate bonds — — 6,599 ( 418 ) 6,599 ( 418 ) 
 Collateralized loan obligations 3,909 ( 91 ) 43,149 ( 345 ) 47,058 ( 436 ) 
 Municipal securities — — 816 ( 4 ) 816 ( 4 ) 
 
 Total $ 13,906 ($ 94 ) $ 579,138 ($ 24,729 ) $ 593,044 ($ 24,823 ) 

 12 

 Management evaluates available for sale debt securities in unrealized loss positions to determine whether the impairment is due to credit-related factors or noncredit-related factors. Consideration is given to the extent to which the fair value is less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value. 
 
 At June 30, 2024, the Company had 59 available for sale securities in an unrealized loss position without an ACL. At June 30, 2024, the Company had five held to maturity securities in an unrealized loss position without an ACL. Management does not have the intent to sell any of these securities and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline. Accordingly, as of June 30, 2024, management believes that the unrealized losses detailed in the previous table are due to noncredit-related factors, primarily changes in interest rates, and therefore no losses have been recognized in the Company's Consolidated Statements of Income. 
 
 At June 30, 2024 and December 31, 2023, carrying amounts of $ 175.6 million and $ 180.1 million in securities were pledged for deposits and borrowings, respectively. 
 
 The amortized cost and estimated fair values of debt securities at June 30, 2024, are distributed by contractual maturity as shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. 
 
 (In Thousands) Amortized Cost Fair Value 
 US Treasury and government sponsored entities 
 Within 1 year $ 188,089 $ 184,712 
 1-5 years 358,403 340,971 
 
 Total $ 546,492 $ 525,683 
 
 Corporate bonds 
 Within 1 year $ 3,999 $ 4,040 
 1-5 years 15,013 14,453 
 5-10 years 26,750 23,909 
 Total $ 45,762 $ 42,402 
 Collateralized loan obligations 
 
 5-10 years $ 31,693 $ 31,583 
 Over 10 years 19,000 19,005 
 Total $ 50,693 $ 50,588 
 
 There were no proceeds from sales of investment securities for the three or six-month periods ending June 30, 2024 and 2023. 
 A summary of interest income for the three and six-month periods ending June 30, 2024 and 2023, on available for sale investment securities are as follows: 
 
 Three Months Ended June 30, Six Months Ended June 30, 
 (In Thousands) 2024 2023 2024 2023 
 US Treasury and government sponsored entities $ 2,499 $ 2,835 $ 5,068 $ 5,630 
 
 Other 1,057 1,156 2,203 2,291 
 Total taxable interest income $ 3,556 $ 3,991 $ 7,271 $ 7,921 
 Municipal securities $ — $ 5 $ 3 $ 9 
 Total tax-exempt interest income $ — $ 5 $ 3 $ 9 
 Total $ 3,556 $ 3,996 $ 7,274 $ 7,930 

 13 

 3. Loans and Allowance for Credit Losses 
 Loans Held for Sale 
 Loans held for sale are comprised entirely of 1-4 family residential mortgage loans as of June 30, 2024 and December 31, 2023. The Company designates loans held for sale as either carried at fair value or the lower of cost or fair value at loan level at origination. 
 Loans Held for Investment 
 The following table presents amortized cost and unpaid principal balance of loans, categorized by the segments used in the Company's Current Expected Credit Losses (“CECL”) methodology to assess credit risk, for the periods indicated: 
 
 June 30, 2024 December 31, 2023 
 (In Thousands) Amortized Cost Unpaid Principal Difference Amortized Cost Unpaid Principal Difference 
 Commercial & industrial loans $ 415,931 $ 417,858 ($ 1,927 ) $ 411,387 $ 413,293 ($ 1,906 ) 
 Commercial real estate: 
 Owner occupied properties 382,050 383,832 ( 1,782 ) 366,741 368,357 ( 1,616 ) 
 Non-owner occupied and multifamily properties 547,488 551,130 ( 3,642 ) 515,528 519,115 ( 3,587 ) 
 Residential real estate: 
 1-4 family residential properties secured by first liens 222,488 222,026 462 203,738 203,534 204 
 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 41,500 41,258 242 33,996 33,783 213 
 1-4 family residential construction loans 29,281 29,510 ( 229 ) 30,976 31,239 ( 263 ) 
 Other construction, land development and raw land loans 152,767 154,009 ( 1,242 ) 148,373 149,788 ( 1,415 ) 
 Obligations of states and political subdivisions in the US 29,671 29,673 ( 2 ) 30,407 30,409 ( 2 ) 
 Agricultural production, including commercial fishing 45,079 45,320 ( 241 ) 41,007 41,237 ( 230 ) 
 Consumer loans 6,743 6,679 64 6,241 6,180 61 
 Other loans 2,909 2,930 ( 21 ) 1,103 1,118 ( 15 ) 
 Total 1,875,907 1,884,225 ( 8,318 ) 1,789,497 1,798,053 ( 8,556 ) 
 Allowance for credit losses ( 17,694 ) ( 17,270 ) 
 $ 1,858,213 $ 1,884,225 ($ 8,318 ) $ 1,772,227 $ 1,798,053 ($ 8,556 ) 

 The difference between the amortized cost and unpaid principal balance is net deferred origination fees totaling $ 8.3 million at June 30, 2024 and $ 8.6 million at December 31, 2023. 
 Accrued interest on loans, which is excluded from the amortized cost of loans held for investment, totaled $ 8.7 million and $ 7.4 million at June 30, 2024 and December 31, 2023, respectively, and is included in other assets in the Consolidated Balance Sheets. 
 Amortized cost in the above table includes $ 1.6 million and $ 2.8 million as of June 30, 2024 and December 31, 2023, respectively, in Paycheck Protection Program loans administered by the U.S. Small Business Administration within the Commercial & industrial loan segment. 
 
 14 

 Allowance for Credit Losses 
 The table below presents activity in the ACL related to loans held for investment for the periods indicated. 
 
 Three Months Ended June 30, Beginning Balance Credit Loss Expense (Benefit) Charge-offs Recoveries Ending Balance 
 (In Thousands) 
 2024 
 Commercial & industrial loans $ 4,052 ($ 22 ) $ — $ 17 $ 4,047 
 Commercial real estate: 
 Owner occupied properties 2,893 70 — — 2,963 
 Non-owner occupied and multifamily properties 3,419 80 — — 3,499 
 Residential real estate: 
 1-4 family residential properties secured by first liens 3,425 64 — — 3,489 
 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 581 80 — 4 665 
 1-4 family residential construction loans 159 21 — — 180 
 Other construction, land development and raw land loans 2,675 ( 149 ) — — 2,526 
 Obligations of states and political subdivisions in the US 105 ( 5 ) — — 100 
 Agricultural production, including commercial fishing 156 ( 4 ) — 5 157 
 Consumer loans 60 1 — — 61 
 Other loans 8 ( 1 ) — — 7 
 Total $ 17,533 $ 135 $ — $ 26 $ 17,694 
 2023 
 Commercial & industrial loans $ 3,080 $ 366 ($ 49 ) $ 21 $ 3,418 
 Commercial real estate: 
 Owner occupied properties 2,778 29 — — 2,807 
 Non-owner occupied and multifamily properties 3,174 86 — — 3,260 
 Residential real estate: 
 1-4 family residential properties secured by first liens 2,226 980 — — 3,206 
 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 392 26 — 5 423 
 1-4 family residential construction loans 260 ( 54 ) — — 206 
 Other construction, land development and raw land loans 1,925 71 — — 1,996 
 Obligations of states and political subdivisions in the US 106 ( 18 ) — — 88 
 Agricultural production, including commercial fishing 150 12 — — 162 
 Consumer loans 61 12 — 1 74 
 Other loans 5 — — — 5 
 Total $ 14,157 $ 1,510 ($ 49 ) $ 27 $ 15,645 

 15 

 Six Months Ended June 30, Beginning Balance Credit Loss Expense (Benefit) Charge-offs Recoveries Ending Balance 
 (In Thousands) 
 2024 
 Commercial & industrial loans $ 3,438 $ 532 $ — $ 77 $ 4,047 
 Commercial real estate: 
 Owner occupied properties 2,867 96 — — 2,963 
 Non-owner occupied and multifamily properties 3,294 205 — — 3,499 
 Residential real estate: 
 1-4 family residential properties secured by first liens 3,470 19 — — 3,489 
 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 551 104 — 10 665 
 1-4 family residential construction loans 191 ( 11 ) — — 180 
 Other construction, land development and raw land loans 3,127 ( 601 ) — — 2,526 
 Obligations of states and political subdivisions in the US 80 20 — — 100 
 Agricultural production, including commercial fishing 168 9 ( 25 ) 5 157 
 Consumer loans 81 ( 21 ) — 1 61 
 Other loans 3 4 — — 7 
 Total $ 17,270 $ 356 ($ 25 ) $ 93 $ 17,694 
 2023 
 Commercial & industrial loans $ 2,914 $ 467 ($ 49 ) $ 86 $ 3,418 
 Commercial real estate: 
 Owner occupied properties 3,094 ( 287 ) — — 2,807 
 Non-owner occupied and multifamily properties 3,615 ( 355 ) — — 3,260 
 Residential real estate: 
 1-4 family residential properties secured by first liens 1,413 1,793 — — 3,206 
 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 389 22 — 12 423 
 1-4 family residential construction loans 312 ( 106 ) — — 206 
 Other construction, land development and raw land loans 1,803 193 — — 1,996 
 Obligations of states and political subdivisions in the US 79 9 — — 88 
 Agricultural production, including commercial fishing 145 17 — — 162 
 Consumer loans 68 17 ( 14 ) 3 74 
 Other loans 6 ( 1 ) — — 5 
 Total $ 13,838 $ 1,769 ($ 63 ) $ 101 $ 15,645 

 16 

 The following table shows gross charge-offs by year of loan origination for the periods indicated: 
 
 Six Months Ended June 30, 
 
 (In Thousands) 2024 2023 2022 2021 2020 Prior Total 
 2024 
 
 Agricultural production, including commercial fishing $ — $ — $ 25 $ — $ — $ — $ 25 
 
 Total $ — $ — $ 25 $ — $ — $ — $ 25 

 Credit Quality Information 
 As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management utilizes a loan risk grading system called the Asset Quality Rating (“AQR”) system to assign a risk classification to each of its loans. The risk classification is a dual rating system that contemplates both probability of default and risk of loss given default. Loans are graded on a scale of 1 to 10 and, loans graded 1 – 6 are considered “pass” grade loans. Loans graded 7 or higher are considered “classified” loans. A description of the general characteristics of the AQR risk classifications are as follows: 
 Pass grade loans – 1 through 6: The borrower demonstrates sufficient cash flow to fund debt service, including acceptable profit margins, cash flows, liquidity and other balance sheet ratios. Historic and projected performance indicates that the borrower is able to meet obligations under most economic circumstances. The borrower has competent management with an acceptable track record. The category does not include loans with undue or unwarranted credit risks that constitute identifiable weaknesses. 
 
 Classified loans: 
 Special Mention – 7: A “special mention” credit has weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset at some future date. 
 
 Substandard – 8: A “substandard” credit is inadequately protected by the current worth and paying capacity of the obligor or by the collateral pledged, if any. Assets so classified must have a well-defined weakness, or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that Northrim Bank will sustain some loss if the deficiencies are not corrected. 
 
 Doubtful – 9: An asset classified “doubtful” has all the weaknesses inherent in one that is classified "substandard-8" with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable and improbable. The loan has substandard characteristics, and available information suggests that it is unlikely that the loan will be repaid in its entirety. 
 
 Loss – 10: An asset classified “loss” is considered uncollectible and of such little value that its continuance on the books is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this basically worthless asset, even though partial recovery may be affected in the future. 
 
 The following tables present the Company's portfolio of risk-rated loans by grade and by year of origination. Management considers the guidance in ASC 310-20 when determining whether a modification, extension, or renewal of loan constitutes a current period origination. Generally, current period renewals of credit are re-underwritten at the point of renewal and considered current period originations for purposes of the table below. 
 
 June 30, 2024 2024 2023 2022 2021 2020 Prior Total 
 (In Thousands) 
 Commercial & industrial loans 
 Pass $ 64,413 $ 78,672 $ 103,490 $ 48,862 $ 17,388 $ 57,242 $ 370,067 
 Classified 344 4,676 16,918 15,735 6,178 2,013 45,864 
 Total commercial & industrial loans $ 64,757 $ 83,348 $ 120,408 $ 64,597 $ 23,566 $ 59,255 $ 415,931 
 
 Commercial real estate: 
 Owner occupied properties 
 Pass $ 17,609 $ 43,546 $ 77,465 $ 67,033 $ 78,768 $ 95,049 $ 379,470 
 Classified — — 492 — 358 1,730 2,580 

 17 

 Total commercial real estate owner occupied properties $ 17,609 $ 43,546 $ 77,957 $ 67,033 $ 79,126 $ 96,779 $ 382,050 
 
 Non-owner occupied and multifamily properties 
 Pass $ 25,950 $ 63,898 $ 108,205 $ 77,767 $ 66,823 $ 193,723 $ 536,366 
 Classified — — 1,167 — — 9,955 11,122 
 Total commercial real estate non-owner occupied and multifamily properties $ 25,950 $ 63,898 $ 109,372 $ 77,767 $ 66,823 $ 203,678 $ 547,488 
 
 Residential real estate: 
 1-4 family residential properties secured by first liens 
 Pass $ 24,144 $ 135,976 $ 46,441 $ 3,935 $ 3,954 $ 7,320 $ 221,770 
 Classified — 544 — — — 174 718 
 Total residential real estate 1-4 family residential properties secured by first liens $ 24,144 $ 136,520 $ 46,441 $ 3,935 $ 3,954 $ 7,494 $ 222,488 
 
 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 
 Pass $ 8,452 $ 15,066 $ 5,677 $ 2,935 $ 2,028 $ 6,649 $ 40,807 
 Classified — 372 — — — 321 693 
 Total residential real estate 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens $ 8,452 $ 15,438 $ 5,677 $ 2,935 $ 2,028 $ 6,970 $ 41,500 
 
 1-4 family residential construction loans 
 Pass $ 15,414 $ 7,588 $ 2,730 $ — $ — $ 3,443 $ 29,175 
 Classified — — — — — 106 106 
 Total residential real estate 1-4 family residential construction loans $ 15,414 $ 7,588 $ 2,730 $ — $ — $ 3,549 $ 29,281 
 
 Other construction, land development and raw land loans 
 Pass $ 15,089 $ 53,727 $ 49,235 $ 25,769 $ 1,704 $ 5,451 $ 150,975 
 Classified — — — 32 — 1,760 1,792 
 Total other construction, land development and raw land loans $ 15,089 $ 53,727 $ 49,235 $ 25,801 $ 1,704 $ 7,211 $ 152,767 
 
 Obligations of states and political subdivisions in the US 
 Pass $ — $ — $ 29,648 $ — $ — $ 23 $ 29,671 
 Classified — — — — — — — 
 Total obligations of states and political subdivisions in the US $ — $ — $ 29,648 $ — $ — $ 23 $ 29,671 
 
 Agricultural production, including commercial fishing 
 Pass $ 5,211 $ 9,055 $ 8,982 $ 16,443 $ 3,287 $ 2,101 $ 45,079 
 Classified — — — — — — — 
 Total agricultural production, including commercial fishing $ 5,211 $ 9,055 $ 8,982 $ 16,443 $ 3,287 $ 2,101 $ 45,079 
 
 Consumer loans 
 Pass $ 1,547 $ 2,793 $ 833 $ 95 $ 327 $ 1,146 $ 6,741 
 Classified 2 — — — — — 2 
 Total consumer loans $ 1,549 $ 2,793 $ 833 $ 95 $ 327 $ 1,146 $ 6,743 
 
 Other loans 
 Pass $ 488 $ 359 $ 150 $ 296 $ 1,320 $ 296 $ 2,909 
 Classified — — — — — — — 
 Total other loans $ 488 $ 359 $ 150 $ 296 $ 1,320 $ 296 $ 2,909 
 
 Total loans 
 Pass $ 178,317 $ 410,680 $ 432,856 $ 243,135 $ 175,599 $ 372,443 $ 1,813,030 
 Classified 346 5,592 18,577 15,767 6,536 16,059 62,877 
 Total loans $ 178,663 $ 416,272 $ 451,433 $ 258,902 $ 182,135 $ 388,502 $ 1,875,907 
 
 Total pass loans $ 178,317 $ 410,680 $ 432,856 $ 243,135 $ 175,599 $ 372,443 $ 1,813,030 
 Government guarantees ( 24,829 ) ( 5,293 ) ( 8,343 ) ( 16,724 ) ( 1,946 ) ( 19,472 ) ( 76,607 ) 
 Total pass loans, net of government guarantees $ 153,488 $ 405,387 $ 424,513 $ 226,411 $ 173,653 $ 352,971 $ 1,736,423 
 
 Total classified loans $ 346 $ 5,592 $ 18,577 $ 15,767 $ 6,536 $ 16,059 $ 62,877 

 18 

 Government guarantees — ( 2,276 ) ( 16,622 ) ( 14,162 ) ( 5,882 ) ( 7,965 ) ( 46,907 ) 
 Total classified loans, net government guarantees $ 346 $ 3,316 $ 1,955 $ 1,605 $ 654 $ 8,094 $ 15,970 

 December 31, 2023 2023 2022 2021 2020 2019 Prior Total 
 (In Thousands) 
 Commercial & industrial loans 
 Pass $ 97,377 $ 123,874 $ 58,708 $ 24,177 $ 13,990 $ 44,674 $ 362,800 
 Classified 3,319 18,790 16,964 7,032 56 2,426 48,587 
 Total commercial & industrial loans $ 100,696 $ 142,664 $ 75,672 $ 31,209 $ 14,046 $ 47,100 $ 411,387 
 
 Commercial real estate: 
 Owner occupied properties 
 Pass $ 40,745 $ 70,925 $ 69,316 $ 82,339 $ 28,588 $ 71,930 $ 363,843 
 Classified — — — 1,115 — 1,783 2,898 
 Total commercial real estate owner occupied properties $ 40,745 $ 70,925 $ 69,316 $ 83,454 $ 28,588 $ 73,713 $ 366,741 
 
 Non-owner occupied and multifamily properties 
 Pass $ 59,990 $ 96,532 $ 83,277 $ 67,037 $ 56,192 $ 143,619 $ 506,647 
 Classified — — — — — 8,881 8,881 
 Total commercial real estate non-owner occupied and multifamily properties $ 59,990 $ 96,532 $ 83,277 $ 67,037 $ 56,192 $ 152,500 $ 515,528 
 
 Residential real estate: 
 1-4 family residential properties secured by first liens 
 Pass $ 139,829 $ 47,775 $ 4,119 $ 4,070 $ 2,240 $ 5,388 $ 203,421 
 Classified 224 — — — — 93 317 
 Total residential real estate 1-4 family residential properties secured by first liens $ 140,053 $ 47,775 $ 4,119 $ 4,070 $ 2,240 $ 5,481 $ 203,738 
 
 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 
 Pass $ 16,145 $ 5,417 $ 3,331 $ 1,906 $ 2,277 $ 4,581 $ 33,657 
 Classified — — — — 339 339 
 Total residential real estate 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens $ 16,145 $ 5,417 $ 3,331 $ 1,906 $ 2,277 $ 4,920 $ 33,996 
 
 1-4 family residential construction loans 
 Pass $ 16,845 $ 4,469 $ — $ — $ — $ 9,553 $ 30,867 
 Classified — — — — — 109 109 
 Total residential real estate 1-4 family residential construction loans $ 16,845 $ 4,469 $ — $ — $ — $ 9,662 $ 30,976 
 
 Other construction, land development and raw land loans 
 Pass $ 42,615 $ 58,714 $ 32,780 $ 1,982 $ 1,454 $ 7,896 $ 145,441 
 Classified — 1,175 — — — 1,757 2,932 
 Total other construction, land development and raw land loans $ 42,615 $ 59,889 $ 32,780 $ 1,982 $ 1,454 $ 9,653 $ 148,373 
 
 Obligations of states and political subdivisions in the US 
 Pass $ — $ 30,317 $ — $ — $ — $ 90 $ 30,407 
 Classified — — — — — — — 
 Total obligations of states and political subdivisions in the US $ — $ 30,317 $ — $ — $ — $ 90 $ 30,407 
 
 Agricultural production, including commercial fishing 
 Pass $ 8,643 $ 9,649 $ 17,061 $ 3,465 $ 524 $ 1,665 $ 41,007 
 Classified — — — — — — — 
 Total agricultural production, including commercial fishing $ 8,643 $ 9,649 $ 17,061 $ 3,465 $ 524 $ 1,665 $ 41,007 
 
 Consumer loans 
 Pass $ 3,396 $ 983 $ 209 $ 368 $ 258 $ 1,026 $ 6,240 
 Classified 1 — — — — — 1 

 19 

 Total consumer loans $ 3,397 $ 983 $ 209 $ 368 $ 258 $ 1,026 $ 6,241 
 
 Other loans 
 Pass $ 160 $ 77 $ 135 $ 592 $ 138 $ 1 $ 1,103 
 Classified — — — — — — — 
 Total other loans $ 160 $ 77 $ 135 $ 592 $ 138 $ 1 $ 1,103 
 
 Total loans 
 Pass $ 425,745 $ 448,732 $ 268,936 $ 185,936 $ 105,661 $ 290,423 $ 1,725,433 
 Classified 3,544 19,965 16,964 8,147 56 15,388 64,064 
 Total loans $ 429,289 $ 468,697 $ 285,900 $ 194,083 $ 105,717 $ 305,811 $ 1,789,497 
 
 Total pass loans $ 425,745 $ 448,732 $ 268,936 $ 185,936 $ 105,661 $ 290,423 $ 1,725,433 
 Government guarantees ( 2,792 ) ( 8,409 ) ( 19,305 ) ( 2,295 ) ( 12,133 ) ( 7,696 ) ( 52,630 ) 
 Total pass loans, net of government guarantees $ 422,953 $ 440,323 $ 249,631 $ 183,641 $ 93,528 $ 282,727 $ 1,672,803 
 
 Total classified loans $ 3,544 $ 19,965 $ 16,964 $ 8,147 $ 56 $ 15,388 $ 64,064 
 Government guarantees — ( 16,805 ) ( 15,268 ) ( 7,043 ) — ( 11,311 ) ( 50,427 ) 
 Total classified loans, net government guarantees $ 3,544 $ 3,160 $ 1,696 $ 1,104 $ 56 $ 4,077 $ 13,637 

 20 

 Past Due Loans: The following tables present an aging of contractually past due loans as of the periods presented: 
 
 (In Thousands) 30-59 Days
Past Due 60-89 Days
Past Due Greater Than
90 Days Past Due Total Past
Due Current Total Greater Than 90 Days Past Due Still Accruing 
 June 30, 2024 
 Commercial & industrial loans $ 295 $ — $ — $ 295 $ 415,636 $ 415,931 $ — 
 Commercial real estate: 
 Owner occupied properties — — — — 382,050 382,050 — 
 Non-owner occupied and multifamily properties — — — — 547,488 547,488 — 
 Residential real estate: 
 1-4 family residential properties secured by first liens 42 — 216 258 222,230 222,488 — 
 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 44 372 54 470 41,030 41,500 17 
 1-4 family residential construction loans — — — — 29,281 29,281 — 
 Other construction, land development and raw land loans 170 — — 170 152,597 152,767 — 
 Obligations of states and political subdivisions in the US — — — — 29,671 29,671 — 
 Agricultural production, including commercial fishing — — — — 45,079 45,079 — 
 Consumer loans 14 2 — 16 6,727 6,743 — 
 Other loans — — — — 2,909 2,909 — 
 Total $ 565 $ 374 $ 270 $ 1,209 $ 1,874,698 $ 1,875,907 $ 17 
 December 31, 2023 
 Commercial & industrial loans $ 326 $ 148 $ 1,253 $ 1,727 $ 409,660 $ 411,387 $ — 
 Commercial real estate: 
 Owner occupied properties — — 260 260 366,481 366,741 — 
 Non-owner occupied and multifamily properties — — — — 515,528 515,528 — 
 Residential real estate: 
 1-4 family residential properties secured by first liens 458 — 224 682 203,056 203,738 — 
 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 53 — 155 208 33,788 33,996 — 
 1-4 family residential construction loans — — 109 109 30,867 30,976 — 
 Other construction, land development and raw land loans — — 1,545 1,545 146,828 148,373 — 
 Obligations of states and political subdivisions in the US — — — — 30,407 30,407 — 
 Agricultural production, including commercial fishing — — — — 41,007 41,007 — 
 Consumer loans 18 1 — 19 6,222 6,241 — 
 Other loans — — — — 1,103 1,103 — 
 Total $ 855 $ 149 $ 3,546 $ 4,550 $ 1,784,947 $ 1,789,497 $ — 

 21 

 Nonaccrual loans: Nonaccrual loans net of government guarantees totaled $ 4.8 million and $ 5.0 million at June 30, 2024 and December 31, 2023, respectively. The following table presents loans on nonaccrual status and loans on nonaccrual status for the periods presented for which there was no related ACL. All loans with no ACL are individually evaluated for credit losses in the Company's CECL methodology. 
 
 June 30, 2024 December 31, 2023 
 (In Thousands) Nonaccrual Nonaccrual With No ACL Nonaccrual Nonaccrual With No ACL 
 
 Commercial & industrial loans $ 2,516 $ 2,221 $ 3,655 $ 3,651 
 Commercial real estate: 
 Owner occupied properties 242 242 271 260 
 Non-owner occupied and multifamily properties — — — — 
 Residential real estate: 
 1-4 family residential properties secured by first liens 253 — 270 224 
 1-4 family residential properties secured by junior liens
 and revolving secured by 1-4 family first liens 201 108 219 176 
 1-4 family residential construction loans 106 106 109 109 
 Other construction, land development and raw land loans 1,512 1,512 1,545 1,545 
 
 Total nonaccrual loans 4,830 4,189 6,069 5,965 
 Government guarantees on nonaccrual loans — — ( 1,067 ) ( 1,067 ) 
 Net nonaccrual loans $ 4,830 $ 4,189 $ 5,002 $ 4,898 

 There was no interest on nonaccrual loans reversed through interest income during the three and six-month periods ending June 30, 2024 or June 30, 2023. 
 
 There was no interest earned on nonaccrual loans with a principal balance during the three and six-month periods ending June 30, 2024 and June 30, 2023. However, the Company recognized interest income of $ 32,000 and $ 205,000 in the three-month periods ending June 30, 2024 and 2023, respectively, and $ 234,000 and $ 384,000 in the six-month periods ending June 30, 2024 and 2023, respectively, related to interest collected on nonaccrual loans whose principal had been paid down to zero. 
 
 Loan Modifications: The Company modifies loans to borrowers experiencing financial difficulty as a normal part of our business. These modifications include providing term extensions/modifications, payment modifications, interest rate modifications, or, on rare occasions, principal forgiveness. When principal forgiveness is provided, the amount of forgiveness is charged-off against the ACL. The Company may provide multiple types of concessions on one loan. 
 
 The following table shows the amortized cost basis of the loans that were both experiencing financial difficulty and modified as of the dates indicated, by class and type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers experiencing financial difficulty as compared to the amortized cost basis of each class of financing receivable is also presented below: 
 
 Three Months Ended June 30, 2024 
 
 Term Modification Payment Modification Total Modifications Percentage of Class of Financing Receivable 
 (In Thousands) 
 Commercial & industrial loans $ — $ — $ — — % 
 
 Total $ — $ — $ — — % 

 22 

 Three Months Ended June 30, 2023 
 Term Modification Payment Modification Total Modifications Percentage of Class of Financing Receivable 
 (In Thousands) 
 Commercial & industrial loans $ 2,468 $ 1,988 $ 4,456 1.06 % 
 
 Total $ 2,468 $ 1,988 $ 4,456 — % 

 Six Months Ended June 30, 2024 
 Term Modification Term and payment modifications Total Modifications Percentage of Class of Financing Receivable 
 (In Thousands) 
 Commercial & industrial loans $ 5,396 $ 265 $ 5,661 1.36 % 
 
 Total $ 5,396 $ 265 $ 5,661 0.30 % 

 Six Months Ended June 30, 2023 
 Term Modification Term and payment modifications Total Modifications Percentage of Class of Financing Receivable 
 (In Thousands) 
 Commercial & industrial loans $ 2,468 $ 1,988 $ 4,456 1.06 % 
 
 Total $ 2,468 $ 1,988 $ 4,456 — % 

 The Company has no outstanding unfunded commitments to the borrowers included in the previous tables. 
 
 The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty as of the dates indicated: 
 
 Three Months Ended June 30, 2024 
 Principal Forgiveness Weighted-Average Interest Rate Reduction Weighted-Average Term Extension (months) 
 (In Thousands) 
 Commercial & industrial loans $ — — % 0 
 
 Three Months Ended June 30, 2023 
 Principal Forgiveness Weighted-Average Interest Rate Reduction Weighted-Average Term Extension (months) 
 (In Thousands) 
 Commercial & industrial loans $ — — % 3 
 
 Six Months Ended June 30, 2024 
 Principal Forgiveness Weighted-Average Interest Rate Reduction Weighted-Average Term Extension (months) 
 (In Thousands) 
 Commercial & industrial loans $ — 8 % 7 
 
 Six Months Ended June 30, 2023 
 Principal Forgiveness Weighted-Average Interest Rate Reduction Weighted-Average Term Extension (months) 
 (In Thousands) 
 Commercial & industrial loans $ — — % 3 
 
 23 

 The following table presents the amortized cost basis of loans that had a payment default during the period indicated and were modified in the twelve months before default to borrowers experiencing financial difficulty: 
 
 Three Months Ended June 30, 2024 Six Months Ended June 30, 2024 
 Term modification Term modification 
 (In Thousands) 
 
 Residential real estate: 
 
 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens $ — $ 112 
 1-4 family residential construction loans — 109 
 Other construction, land development and raw land loans — 968 
 
 Total $ — $ 1,189 

 There were no loans that had a payment default during the three or six-month periods ended June 30, 2023 which were modified in the twelve months prior to that default to borrowers experiencing financial difficulty. 
 
 The Company monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table presents the payment performance of loans that have been modified in the last twelve months as of the date indicated: 
 
 June 30, 2024 
 Greater Than 89 Days Past Due Total Past Due Current 
 Total 
 
 (In Thousands) 
 Commercial & industrial loans $ — $ — $ 5,394 $ 5,394 
 Commercial real estate: 
 Owner occupied properties — — 242 242 
 
 Residential real estate: 
 
 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens — — 108 108 
 1-4 family residential construction loans — — 106 106 
 Other construction, land development and raw land loans — — 1,512 1,512 
 
 Total $ — $ — $ 7,362 $ 7,362 

 June 30, 2023 
 Greater Than 89 Days Past Due Total Past Due Current Total 
 (In Thousands) 
 Commercial & industrial loans $ — $ — $ 4,456 $ 4,456 
 
 Total $ — $ — $ 4,456 $ 4,456 

 Upon the Company's determination that a modified loan (or a portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount. 
 
 24 

 4. Purchased Receivables 
 Purchased receivables are carried at their principal amount outstanding, net of an ACL, and have a maturity of less than one year . There were no purchased receivables past due at June 30, 2024 or December 31, 2023, and there were no restructured purchased receivables at June 30, 2024 or December 31, 2023. 
 Income on purchased receivables is accrued and recognized on the principal amount outstanding using an effective interest method except when management believes doubt exists as to the collectability of the income or principal. There were no nonperforming purchased receivables as of June 30, 2024 and there was one nonperforming purchased receivable with a balance of $ 808,000 as of December 31, 2023 for which management was not accruing income. 
 There was no activity and no balance in the ACL for purchased receivables as of June 30, 2024 or December 31, 2023. 
 The following table summarizes the components of net purchased receivables for the dates indicated: 
 
 (In Thousands) June 30, 2024 December 31, 2023 
 Purchased receivables $ 25,722 $ 36,842 
 Allowance for credit losses - purchased receivables — — 
 Total $ 25,722 $ 36,842 

 5. Servicing Rights 
 Mortgage servicing rights 
 The following table details the activity in the Company's mortgage servicing rights (“MSR”) for the three and six-month periods ended June 30, 2024 and 2023: 
 
 Three Months Ended June 30, Six Months Ended June 30, 
 (In Thousands) 2024 2023 2024 2023 
 
 Balance, beginning of period $ 20,055 $ 18,303 $ 19,564 $ 18,635 
 Additions for new MSR capitalized 1,103 519 1,619 982 
 Changes in fair value: 
 Due to changes in model inputs of assumptions (1) 
 239 ( 3 ) 528 ( 215 ) 
 Other (2) 
 ( 320 ) ( 571 ) ( 634 ) ( 1,154 ) 
 Balance, end of period $ 21,077 $ 18,248 $ 21,077 $ 18,248 

 (1) Principally reflects changes in discount rates and prepayment speed assumptions, which are primarily affected by changes in interest rates. 
 (2) Represents changes due to collection/realization of expected cash flows over time. 
 
 The following table details information related to our serviced mortgage loan portfolio as of June 30, 2024 and December 31, 2023: 
 
 (In Thousands) June 30, 2024 December 31, 2023 
 
 Balance of mortgage loans serviced for others $ 1,101,800 $ 1,044,516 
 Weighted average rate of note 
 4.22 % 4.03 % 
 MSR as a percentage of serviced loans 1.91 % 1.87 % 

 25 

 The Company recognized servicing fees of $ 1.1 million and $ 906,000 during the three-month periods ending June 30, 2024 and 2023, respectively, and $ 2.1 million and $ 1.8 million during the six-month periods ending June 30, 2024 and 2023, respectively, which includes contractually specified servicing fees and ancillary fees as a component of other noninterest income in the Company's Consolidated Statements of Income. 
 
 The following table outlines the weighted average key assumptions used in measuring the fair value of MSRs and the sensitivity of the current fair value of MSRs to immediate adverse changes in those assumptions as of the dates indicated. See Note 8 for additional information on key assumptions for MSRs. 
 
 (In Thousands) 
 June 30, 2024 December 31, 2023 
 
 Fair value of MSRs 
 $ 21,077 $ 19,564 
 Expected weighted-average life (in years) 
 10.41 10.23 
 
 Key assumptions: 
 
 Constant prepayment rate 1 
 8.26 % 8.48 % 
 Impact on fair value from 10% adverse change 
 ($ 722 ) ($ 1,754 ) 
 Impact on fair value from 25% adverse change 
 ($ 1,723 ) ($ 2,552 ) 
 Discount rate 
 10.98 % 10.98 % 
 Impact on fair value from 100 basis point increase 
 ($ 877 ) ($ 811 ) 
 Impact on fair value from 200 basis point increase 
 ($ 1,687 ) ($ 1,560 ) 
 Cost to service assumptions ($ per loan) 
 $ 82 $ 82 
 Impact on fair value from 10% adverse change 
 ($ 397 ) ($ 160 ) 
 Impact on fair value from 25% adverse change 
 ($ 649 ) ($ 401 ) 

 1 Prepayment speeds are influenced by mortgage interest rates as well as our estimation of drivers of borrower behavior. 
 These sensitivities in the preceding table are hypothetical and caution should be exercised when relying on this data. Changes in value based on variations in assumptions generally cannot be extrapolated because the relationship of the change in the assumption to the change in the value may not be linear. Also, the effect of a variation in a particular assumption on the value of the MSR held is calculated independently without changing any other assumptions. In reality, changes in one factor may result in changes in others, which might magnify or counteract the sensitivities. 
 
 Commercial servicing rights 
 The commercial servicing rights asset (“CSR”) has a carrying value of $ 2.1 million at June 30, 2024 and $ 2.2 million December 31, 2023, respectively, and is included in other assets and carried at fair value on the Company's Consolidated Balance Sheets. Total commercial loans serviced for others were $ 273.2 million and $ 282.2 million at June 30, 2024 and December 31, 2023, respectively. Key assumptions used in measuring the fair value of the CSR as of June 30, 2024 and December 31, 2023 include a constant prepayment rate of 11.76 % and a discount rate of 9.50 %. 
 
 6. Leases 
 
 The Company's lease commitments consist primarily of agreements to lease land and office facilities that it occupies to operate several of its retail branch locations that are classified as operating leases and are recognized on the balance sheet as right-of-use (“ROU”) assets and lease liabilities. As of June 30, 2024, the Company has operating lease ROU assets of $ 8.2 million and operating lease liabilities of $ 8.3 million. As of December 31, 2023, the Company had operating lease ROU assets of $ 9.1 million and operating lease liabilities of $ 9.1 million. The Company did not have any agreements that are classified as finance leases as of June 30, 2024 or December 31, 2023. 
 
 26 

 The following table presents additional information about the Company's operating leases for the periods indicated: 
 
 Three Months Ended June 30, Six Months Ended June 30, 
 (In Thousands) 2024 2023 2024 2023 
 Lease Cost 
 Operating lease cost (1) 
 $ 745 $ 702 $ 1,482 $ 1,401 
 Short term lease cost (1) 
 13 46 51 79 
 Total lease cost $ 758 $ 748 $ 1,533 $ 1,480 
 
 Other information 
 Operating leases - operating cash flows $ 1,373 $ 1,307 
 Weighted average lease term - operating leases, in years 10.67 10.47 
 Weighted average discount rate - operating leases 3.62 % 3.49 % 
 (1) 
 Expenses are classified within occupancy expense on the Consolidated Statements of Income. 

 The table below reconciles the remaining undiscounted cash flows for the next five years for each twelve-month period presented (unless otherwise indicated) and the total of the subsequent remaining years to the operating lease liabilities recorded on the balance sheet: 
 
 (In Thousands) Operating Leases 
 2024 (Six months) $ 1,381 
 2025 2,422 
 2026 1,245 
 2027 783 
 2028 547 
 Thereafter 3,879 
 Total minimum lease payments $ 10,257 
 Less: amount of lease payment representing interest ( 1,988 ) 
 Present value of future minimum lease payments $ 8,269 

 27 

 7. Derivatives 
 Derivatives swaps related to community banking activities 
 The Company enters into commercial loan interest rate swap agreements with commercial banking customers which are offset with a corresponding swap agreement with a third party financial institution (“counterparty”). The Company has agreements with its counterparties that contain provisions that provide that if the Company fails to maintain its status as a “well-capitalized” institution under applicable regulatory guidelines, then the counterparty could terminate the derivative positions and the Company would be required to settle its obligations under the agreements. These agreements also require that the Company and the counterparty collateralize any fair value shortfalls that exceed $ 250,000 with eligible collateral, which includes cash and securities backed with the full faith and credit of the federal government. Similarly, the Company could be required to settle its obligations under the agreement if specific regulatory events occur, such as if the Company were issued a prompt corrective action directive or a cease and desist order, or if certain regulatory ratios fall below specified levels. The Company pledged $ 566,000 as of June 30, 2024 and $ 566,000 as of December 31, 2023, in available for sale securities to collateralize fair value shortfalls on interest rate swap agreements. 
 The Company had interest rate swaps related to commercial loans with an aggregate notional amount of $ 228.0 million and $ 218.0 million at June 30, 2024 and December 31, 2023, respectively. At June 30, 2024, the notional amount of interest rate swaps is made up of 21 variable to fixed rate swaps to commercial loan customers totaling $ 114.0 million, and 21 fixed to variable rate swaps with a counterparty totaling $ 114.0 million. Changes in fair value from these 21 interest rate swaps offset each other in the three and six-month periods ending June 30, 2024. The Company recognized $ 10,000 and $ 61,000 fee income related to interest rate swaps in the three-month periods ending June 30, 2024 and 2023, respectively, and $ 73,000 and $ 61,000 in fee income related to interest rate swaps in the six-month periods ending June 30, 2024 and 2023, respectively. Interest rate swap income is recorded in other operating income on the Consolidated Statements of Income. None of these interest rate swaps are designated as hedging instruments. 
 The Company has an interest rate swap to hedge the variability in cash flows arising out of its junior subordinated debentures, which is floating rate debt, by swapping the cash flows with an interest rate swap which receives floating and pays fixed. The Company has designated this interest rate swap as a hedging instrument. The interest rate swap effectively fixes the Company's interest payments on the $ 10.0 million of junior subordinated debentures held under Northrim Statutory Trust 2 at 3.72 % through its maturity date. The floating rate that the dealer pays was equal to the three month LIBOR plus 1.37 % through September 15, 2023. The floating rate that the dealer pays is now equal to the three month CME SOFR plus tenor spread adjustment 0.26 % plus 1.37 %, which reprices quarterly on the payment date. This rate was 6.97 % as of June 30, 2024. The Company pledged $ 130,000 in cash to collateralize initial margin and fair value exposure of our counterparty on this interest rate swap as of June 30, 2024 and December 31, 2023. Changes in the fair value of this interest rate swap are reported in other comprehensive income on the Consolidated Statements of Income. The unrealized gain, net of tax on this interest rate swap was $ 1.2 million as of June 30, 2024 and the unrealized gain, net of tax was $ 1.0 million as of December 31, 2023. 
 Derivatives related to home mortgage banking activities 
 The Company also uses derivatives to hedge the risk of changes in the fair values of interest rate lock commitments. The Company enters into commitments to originate residential mortgage loans at specific rates; the value of these commitments are detailed in the table below as “interest rate lock commitments”. The Company also hedges the interest rate risk associated with its residential mortgage loan commitments, which are referred to as "retail interest rate contracts" in the table below. Market risk with respect to commitments to originate loans arises from changes in the value of contractual positions due to changes in interest rates. RML had commitments to originate mortgage loans held for sale totaling $ 88.0 million and $ 22.9 million at June 30, 2024 and December 31, 2023, respectively. Changes in the value of RML's interest rate derivatives are recorded in mortgage banking income on the Consolidated Statements of Income. None of these derivatives are designated as hedging instruments. 
 
 28 

 The following table presents the fair value of derivatives not designated as hedging instruments at June 30, 2024 and December 31, 2023: 
 
 (In Thousands) Asset Derivatives 
 June 30, 2024 December 31, 2023 
 Balance Sheet Location Fair Value Fair Value 
 
 Interest rate swaps Other assets $ 12,534 $ 10,470 
 Interest rate lock commitments Other assets 1,059 342 
 Retail interest rate contracts Other assets 120 — 
 Total $ 13,713 $ 10,812 

 (In Thousands) Liability Derivatives 
 June 30, 2024 December 31, 2023 
 Balance Sheet Location Fair Value Fair Value 
 
 Interest rate swaps Other liabilities $ 12,534 $ 10,470 
 Retail interest rate contracts Other liabilities — 13 
 Total $ 12,534 $ 10,483 

 The following table presents the net gains (losses) of derivatives not designated as hedging instruments for periods indicated below: 
 
 Three Months Ended June 30, Six Months Ended June 30, 
 (In Thousands) Income Statement Location 2024 2023 2024 2023 
 Retail interest rate contracts Mortgage banking income $ 99 $ 291 $ 220 $ 168 
 Interest rate lock commitments Mortgage banking income 260 129 645 358 
 Total $ 359 $ 420 $ 865 $ 526 

 Our derivative transactions with counterparties under International Swaps and Derivative Association master agreements include “right of set-off” provisions. “Right of set-off” provisions are legally enforceable rights to offset recognized amounts and there may be an intention to settle such amounts on a net basis. We do not offset such financial instruments for financial reporting purposes. 
 
 29 

 The following table summarizes the derivatives that have a right of offset as of June 30, 2024 and December 31, 2023: 
 
 June 30, 2024 Gross amounts not offset in the Statement of Financial Position 
 (In Thousands) Gross amounts of recognized assets and liabilities Gross amounts offset in the Statement of Financial Position Net amounts of assets and liabilities presented in the Statement of Financial Position Financial Instruments Collateral Posted Net Amount 
 Asset Derivatives 
 Interest rate swaps $ 12,534 $ — $ 12,534 $ — $ — $ 12,534 
 Retail interest rate contracts 120 — 120 — — 120 
 
 Liability Derivatives 
 Interest rate swaps $ 12,534 $ — $ 12,534 $ — $ 12,534 $ — 
 
 December 31, 2023 Gross amounts not offset in the Statement of Financial Position 
 (In Thousands) Gross amounts of recognized assets and liabilities Gross amounts offset in the Statement of Financial Position Net amounts of assets and liabilities presented in the Statement of Financial Position Financial Instruments Collateral Posted Net Amount 
 Asset Derivatives 
 Interest rate swaps $ 10,470 $ — $ 10,470 $ — $ — $ 10,470 
 
 Liability Derivatives 
 Interest rate swaps $ 10,470 $ — $ 10,470 $ — $ 10,470 $ — 
 Retail interest rate contracts 13 — 13 — — 13 

 8. Fair Value Measurements 
 Assets and Liabilities Measured at Fair Value on a Recurring Basis 
 Investment securities available for sale and marketable equity securities : Fair values are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments. 
 
 Servicing rights: MSR and CSR are measured at fair value on a recurring basis. These assets are classified as Level 3 as quoted prices are not available. In order to determine the fair value of MSR and CSR, the present value of net expected future cash flows is estimated. Assumptions used include market discount rates, anticipated prepayment speeds, escrow calculations, delinquency rates, and ancillary fee income net of servicing costs. 
 
 Derivative instruments: The fair value of the interest rate lock commitments are estimated using quoted or published market prices for similar instruments, adjusted for factors such as pull-through rate assumptions based on historical information, where appropriate. The pull-through rate assumptions are considered Level 3 valuation inputs and are significant to the interest rate lock commitment valuation; as such, the interest rate lock commitment derivatives are classified as Level 3. Interest rate contracts are valued in a model, which uses as its basis a discounted cash flow technique incorporating credit valuation adjustments to reflect nonperformance risk in the measurement of fair value. Although the Company has determined that the majority of inputs used to value its interest rate derivatives fall within Level 2 of the fair value hierarchy, the credit valuation 
 30 

 adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of June 30, 2024, the Company has assessed the significance of the impact of these adjustments on the overall valuation of its interest rate positions and has determined that they are not significant to the overall valuation of its interest rate derivatives. As a result, the Company has classified its interest rate derivative valuations in Level 2 of the fair value hierarchy. 
 
 Commitments to extend credit and standby letters of credit : The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair value of letters of credit is based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligation with the counterparties at the reporting date. 
 
 Assets Subject to Nonrecurring Adjustment to Fair Value 
 
 The Company is also required to measure certain assets such as equity method investments, goodwill, intangible assets, impaired loans, and Other Real Estate Owned (“OREO”) at fair value on a nonrecurring basis in accordance with GAAP. Any nonrecurring adjustments to fair value usually result from the write-down of individual assets. 
 
 The Company uses either in-house evaluations or external appraisals to estimate the fair value of OREO and impaired loans as of each reporting date. In-house appraisals are considered Level 3 inputs and external appraisals are considered Level 2 inputs. The Company’s determination of which method to use is based upon several factors. The Company takes into account compliance with legal and regulatory guidelines, the amount of the loan, the size of the assets, the location and type of property to be valued and how critical the timing of completion of the analysis is to the assessment of value. Those factors are balanced with the level of internal expertise, internal experience and market information available, versus external expertise available such as qualified appraisers, brokers, auctioneers and equipment specialists. 
 
 Limitations 
 
 Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. 
 
 31 

 Estimated fair values as of the periods indicated are as follows: 
 
 June 30, 2024 December 31, 2023 
 (In Thousands) Carrying Amount Fair Value Carrying Amount Fair Value 
 Financial assets: 
 Level 1 inputs: 
 Cash, due from banks and deposits in other banks $ 54,422 $ 54,422 $ 118,530 $ 118,530 
 Investment securities available for sale 289,442 289,442 310,896 310,896 
 Marketable equity securities 12,381 12,381 13,153 13,153 
 
 Level 2 inputs: 
 Investment securities available for sale 295,522 295,522 327,040 327,040 
 Investment in Federal Home Loan Bank stock 4,929 4,929 2,980 2,980 
 Loans held for sale 85,926 85,926 31,974 31,974 
 Accrued interest receivable 13,050 13,050 11,958 11,958 
 Interest rate swaps 14,172 14,172 11,836 11,836 
 Retail interest rate contracts 120 120 — — 
 
 Level 3 inputs: 
 Investment securities held to maturity 36,750 33,709 36,750 33,413 
 Loans 1,875,907 1,688,042 1,789,497 1,686,362 
 Purchased receivables, net 25,722 25,722 36,842 36,842 
 Interest rate lock commitments 1,059 1,059 342 342 
 Mortgage servicing rights 21,077 21,077 19,564 19,564 
 Commercial servicing rights 2,116 2,116 2,200 2,200 
 
 Financial liabilities: 
 Level 2 inputs: 
 Deposits $ 2,463,806 $ 2,460,917 $ 2,485,055 $ 2,482,937 
 
 Accrued interest payable 697 697 202 202 
 Borrowings 43,961 40,874 13,675 11,872 
 Interest rate swaps 12,534 12,534 10,470 10,470 
 Retail interest rate contracts — — 13 13 
 
 Level 3 inputs: 
 
 Junior subordinated debentures 10,310 11,641 10,310 12,030 

 32 

 The following table sets forth the balances as of the periods indicated of assets and liabilities measured at fair value on a recurring basis: 
 
 (In Thousands) Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) 
 June 30, 2024 
 Assets: 
 Available for sale securities 
 U.S. Treasury and government sponsored entities $ 525,683 $ 280,749 $ 244,934 $ — 
 
 Corporate bonds 8,693 8,693 — — 
 Collateralized loan obligations 50,588 — 50,588 — 
 Total available for sale securities $ 584,964 $ 289,442 $ 295,522 $ — 
 Marketable equity securities $ 12,381 $ 12,381 $ — $ — 
 Total marketable equity securities $ 12,381 $ 12,381 $ — $ — 
 Interest rate swaps $ 14,228 $ — $ 14,228 $ — 
 Interest rate lock commitments 1,059 — — 1,059 
 Mortgage servicing rights 21,077 — — 21,077 
 Commercial servicing rights 2,116 — — 2,116 
 Retail interest rate contracts 120 — — 120 
 Total other assets $ 38,600 $ — $ 14,228 $ 24,372 
 Liabilities: 
 Interest rate swaps $ 12,534 $ — $ 12,534 $ — 
 
 Total other liabilities $ 12,534 $ — $ 12,534 $ — 
 December 31, 2023 
 Assets: 
 Available for sale securities 
 U.S. Treasury and government sponsored entities $ 564,125 $ 300,274 $ 263,851 $ — 
 Municipal securities 816 — 816 — 
 
 Corporate bonds 13,624 10,622 3,002 — 
 Collateralized loan obligations 59,371 — 59,371 — 
 Total available for sale securities $ 637,936 $ 310,896 $ 327,040 $ — 
 Marketable equity securities $ 13,153 $ 13,153 $ — $ — 
 Total marketable securities $ 13,153 $ 13,153 $ — $ — 
 Interest rate swaps $ 11,836 $ — $ 11,836 $ — 
 Interest rate lock commitments 342 — — 342 
 Mortgage servicing rights 19,564 — — 19,564 
 Commercial servicing rights 2,200 — — 2,200 
 
 Total other assets $ 33,942 $ — $ 11,836 $ 22,106 
 Liabilities: 
 Interest rate swaps $ 10,470 $ — $ 10,470 $ — 
 Retail interest rate contracts 13 — 13 — 
 Total other liabilities $ 10,483 $ — $ 10,483 $ — 

 33 

 The following tables provide a reconciliation of the assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring basis during the three and six-month periods ended June 30, 2024 and 2023: 
 
 (In Thousands) Beginning balance Change included in earnings Purchases and issuances Sales and settlements Ending balance Net change in unrealized gains (losses) relating to items held at end of period 
 Three Months Ended June 30, 2024 
 Interest rate lock commitments $ 765 ($ 453 ) $ 3,416 ($ 2,669 ) $ 1,059 $ 1,059 
 Mortgage servicing rights 20,055 ( 81 ) 1,103 — 21,077 — 
 Commercial servicing rights 2,100 ( 16 ) 32 — 2,116 — 
 Total $ 22,920 ($ 550 ) $ 4,551 ($ 2,669 ) $ 24,252 $ 1,059 
 Three Months Ended June 30, 2023 
 Interest rate lock commitments $ 685 ($ 378 ) $ 2,735 ($ 2,191 ) $ 851 $ 851 
 Mortgage servicing rights 18,303 ( 574 ) 519 — 18,248 — 
 Commercial servicing rights 2,170 ( 56 ) 25 — 2,139 — 
 Total $ 21,158 ($ 1,008 ) $ 3,279 ($ 2,191 ) $ 21,238 $ 851 

 (In Thousands) Beginning balance Change included in earnings Purchases and issuances Sales and settlements Ending balance Net change in unrealized gains (losses) relating to items held at end of period 
 Six Months Ended June 30, 2024 
 Interest rate lock commitments $ 342 ($ 728 ) $ 5,929 ($ 4,484 ) $ 1,059 $ 1,059 
 Mortgage servicing rights 19,564 ( 106 ) 1,619 — 21,077 — 
 Commercial servicing rights 2,200 ( 145 ) 61 — 2,116 — 
 Total $ 22,106 ($ 979 ) $ 7,609 ($ 4,484 ) $ 24,252 $ 1,059 
 Six Months Ended June 30, 2023 
 Interest rate lock commitments $ 440 ($ 552 ) $ 4,232 ($ 3,269 ) $ 851 $ 851 
 Mortgage servicing rights 18,635 ( 1,369 ) 982 — 18,248 — 
 Commercial servicing rights 2,129 ( 105 ) 115 — 2,139 — 
 Total $ 21,204 ($ 2,026 ) $ 5,329 ($ 3,269 ) $ 21,238 $ 851 

 There were no changes in unrealized gains and losses for the three and six-month periods ending June 30, 2024 and 2023 included in other comprehensive income for recurring Level 3 fair value measurements. 
 
 As of and for the periods ending June 30, 2024 and December 31, 2023, except for certain assets as shown in the following table, no impairment or valuation adjustment was recognized for assets recognized at fair value on a nonrecurring basis. For loans individually measured for credit losses, the Company classifies fair value measurements using observable inputs, such as external appraisals, as Level 2 valuations in the fair value hierarchy, and unobservable inputs, such as in-house evaluations, as Level 3 valuations in the fair value hierarchy. 
 34 

 (In Thousands) Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) 
 June 30, 2024 
 Loans individually measured for credit losses $ 295 $ — $ — $ 295 
 
 Total $ 295 $ — $ — $ 295 
 December 31, 2023 
 Loans individually measured for credit losses $ — $ — $ — $ — 
 
 Total $ — $ — $ — $ — 

 The following table presents the (gains) losses resulting from nonrecurring fair value adjustments for the three and six-month periods ended June 30, 2024 and 2023: 
 
 Three Months Ended June 30, Six Months Ended June 30, 
 (In Thousands) 2024 2023 2024 2023 
 Loans individually measured for credit losses ($ 182 ) ($ 27 ) $ 2 $ — 
 
 Total loss from nonrecurring measurements ($ 182 ) ($ 27 ) $ 2 $ — 

 Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3) 
 The following tables provide a description of the valuation technique, unobservable input, and qualitative information about the unobservable inputs for the Company’s assets and liabilities classified as Level 3 and measured at fair value on a recurring and nonrecurring basis at June 30, 2024 and December 31, 2023: 
 
 Financial Instrument Valuation Technique - Recurring Basis 
 Unobservable Input Weighted Average Rate Range 
 June 30, 2024 
 
 Interest rate lock commitment External pricing model Pull through rate 92.42 % 
 Mortgage servicing rights Discounted cash flow Constant prepayment rate 6.10 % - 15.14 % 
 
 Discount rate 9.50 % - 11.00 % 
 
 Commercial servicing rights Discounted cash flow Constant prepayment rate 3.99 % - 18.90 % 
 
 Discount rate 9.50 % 
 December 31, 2023 
 
 Interest rate lock commitment External pricing model Pull through rate 89.84 % 
 Mortgage servicing rights Discounted cash flow Constant prepayment rate 6.13 % - 25.33 % 
 
 Discount rate 9.50 % - 11.00 % 
 
 Commercial servicing rights Discounted cash flow Constant prepayment rate 3.99 % - 18.90 % 
 
 Discount rate 9.50 % 

 Financial Instrument Valuation Technique - Nonrecurring Basis 
 Unobservable Input Weighted Average Rate Range 
 June 30, 2024 
 Loans individually measured for credit losses In-house valuation of collateral Discount rate 7 % 
 
 35 

 9. Segment Information 
 The Company's operations are managed along two operating segments: Community Banking and Home Mortgage Lending. The Community Banking segment's principal business focus is the offering of loan and deposit products to business and consumer customers in its primary market areas. As of June 30, 2024, the Community Banking segment operated 20 branches throughout Alaska. The Home Mortgage Lending segment's principal business focus is the origination and sale of mortgage loans for 1-4 family residential properties. 
 Summarized financial information for the Company's reportable segments and the reconciliation to the consolidated financial results is shown in the following tables: 
 
 Three Months Ended June 30, 2024 
 (In Thousands) Community Banking Home Mortgage Lending Consolidated 
 
 Interest income $ 32,892 $ 4,017 $ 36,909 
 Interest expense 8,614 1,242 9,856 
 Net interest income 24,278 2,775 27,053 
 (Benefit) provision for credit losses ( 184 ) 64 ( 120 ) 
 Other operating income 3,693 5,884 9,577 
 
 Salaries and other personnel expense 
 11,523 5,104 16,627 
 Other operating expense 6,974 1,593 8,567 
 Total other operating expense 
 18,497 6,697 25,194 
 Income before provision for income taxes 9,658 1,898 11,556 
 Provision for income taxes 2,004 532 2,536 
 Net income $ 7,654 $ 1,366 $ 9,020 

 Three Months Ended June 30, 2023 
 (In Thousands) Community Banking Home Mortgage Lending Consolidated 
 
 Interest income $ 28,675 $ 3,145 $ 31,820 
 Interest expense 5,975 703 6,678 
 Net interest income 22,700 2,442 25,142 
 Provision for credit losses 1,407 — 1,407 
 Other operating income 3,067 3,913 6,980 
 
 Salaries and other personnel expense 
 10,690 4,493 15,183 
 Other operating expense 7,115 1,484 8,599 
 Total other operating expense 
 17,805 5,977 23,782 
 Income before provision for income taxes 6,555 378 6,933 
 Provision for income taxes 1,192 164 1,356 
 Net income $ 5,363 $ 214 $ 5,577 

 36 

 Six Months Ended June 30, 2024 
 (In Thousands) Community Banking Home Mortgage Lending Consolidated 
 
 Interest income $ 65,415 $ 7,302 $ 72,717 
 Interest expense 16,922 2,295 19,217 
 Net interest income 48,493 5,007 53,500 
 Provision for credit losses 13 16 29 
 Other operating income 7,506 9,915 17,421 
 
 Salaries and other personnel expense 
 22,401 9,643 32,044 
 Other operating expense 13,648 3,140 16,788 
 Total other operating expense 
 36,049 12,783 48,832 
 Income before provision for income taxes 19,937 2,123 22,060 
 Provision for income taxes 4,246 595 4,841 
 Net income $ 15,691 $ 1,528 $ 17,219 

 Six Months Ended June 30, 2023 
 (In Thousands) Community Banking Home Mortgage Lending Consolidated 
 
 Interest income $ 58,168 $ 3,447 $ 61,615 
 Interest expense 10,716 725 11,441 
 Net interest income 47,452 2,722 50,174 
 Provision for credit losses 1,767 — 1,767 
 Other operating income 5,967 5,921 11,888 
 
 Salaries and other personnel expense 
 21,394 9,273 30,667 
 Other operating expense 13,828 2,796 16,624 
 Total other operating expense 
 35,222 12,069 47,291 
 Income before provision for income taxes 16,430 ( 3,426 ) 13,004 
 Provision for income taxes 3,507 ( 910 ) 2,597 
 Net income $ 12,923 ($ 2,516 ) $ 10,407 

 June 30, 2024 
 (In Thousands) Community Banking Home Mortgage Lending Consolidated 
 
 Total assets $ 2,485,353 $ 336,315 $ 2,821,668 
 Loans held for sale $ — $ 85,926 $ 85,926 

 December 31, 2023 
 (In Thousands) Community Banking Home Mortgage Lending Consolidated 
 
 Total assets $ 2,539,791 $ 267,706 $ 2,807,497 
 Loans held for sale $ — $ 31,974 $ 31,974 

 37 

 ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
 This discussion should be read in conjunction with the unaudited consolidated financial statements of Northrim BanCorp, Inc. (the “Company”) and the notes thereto presented elsewhere in this report and with the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. 
 Except as otherwise noted, references to “we”, “our”, “us” or “the Company” refer to Northrim BanCorp, Inc. and its subsidiaries that are consolidated for financial reporting purposes. 
 Note Regarding Forward Looking-Statements 
 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: potential further increases in interest rates; the value of securities held in our investment portfolio; the impact of the results of 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, inflationary pressures and slowdowns in economic growth; changes in banking regulation or actions by bank regulators; inflation, supply-chain constraints, and potential geopolitical instability, including the wars in Ukraine and 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 provision 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; disease outbreaks, such as the COVID-19 pandemic, or similar health threats and measures implemented to combat them; and our ability to execute our business plan. Further, actual results may be affected by competition on price and other factors with other financial institutions; customer acceptance of new products and services; the regulatory environment in which we operate; and general trends in the local, regional and national banking industry and economy. In addition, there are risks inherent in the banking industry relating to collectability of loans and changes in interest rates. Many of these risks, as well as other risks that may have a material adverse impact on our operations and business, are identified in Part II. Item 1A Risk Factors of this report and Part I. Item 1A in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, as well as in our other filings with the Securities and Exchange Commission. However, you should be aware that these factors are not an exhaustive list, and you should not assume these are the only factors that may cause our actual results to differ from our expectations. In addition, you should note that forward looking statements are made only as of the date of this report and that we do not intend to update any of the forward-looking statements or the uncertainties that may adversely impact those statements, other than as required by law. 
 
 38 

 Update on Economic Conditions 
 
 The Alaska Department of Labor (“DOL”) has reported Alaska’s seasonally adjusted unemployment rate in May of 2024 was 4.5% compared to the U.S. rate of 4%. The total number of payroll jobs in Alaska, not including uniformed military, increased 2.9% or 9,300 jobs between May of 2023 and May of 2024. 
 According to the DOL, Construction and Health Care had the largest growth in new jobs through May 2024 compared to the prior year. The Construction sector added 2,500 positions for a year over year growth rate of 14.5% in May of 2024. The Health Care sector grew by 1,700 jobs for an annual growth rate of 4.3%. The Oil & Gas sector increased by 9.5% or 700 new direct jobs. Professional and Business Services added 1,100 jobs year over year through May of 2024, up 3.9%. The Government sector grew by 1,200 jobs for 1.5% growth, adding 600 Federal jobs and 600 State and local positions in Alaska. The only sectors to decline between May 2023 and May 2024 were Financial Activities, shrinking 100 positions and Information, down 200 jobs. 
 
 Alaska’s Gross State Product (“GSP”) in the first quarter of 2024, was estimated to be $69.2 billion in current dollars, according to the Federal Bureau of Economic Analysis ("BEA"). Alaska’s inflation adjusted “real” GSP grew 5.3% in 2023, placing Alaska fourth best of all 50 states. In the first quarter of 2024 Alaska grew at an annualized rate of 2.6%, compared to the average U.S. rate of 1.4%. This ranked Alaska 10 th best of the 50 states for the first quarter of 2024. Alaska’s real GSP improvement in the first quarter of 2024 was aided by gains in the Mining, Oil & Gas; and Transportation and Warehousing sectors. 
 
 The BEA also calculated Alaska’s seasonally adjusted personal income at $54.1 billion in the first quarter of 2024. This was an annualized improvement of 7% for Alaska, equal to the national average of 7%. 
 
 The monthly average price of Alaska North Slope (“ANS”) crude oil was in a range between $75.64 and $95.05 in 2023. In the first five months of 2024 the monthly average price has been between $79.64 and $89.05. The Alaska Department of Revenue (“DOR”) calculated ANS crude oil production was 479 thousand barrels per day (“bpd”) in Alaska’s fiscal year ending June 30, 2023. The DOR has forecast production to decline slightly to 468 thousand bpd in Alaska’s fiscal year 2024 and grow to 477 thousand bpd in fiscal year 2025. The DOR projects the number to reach 641 thousand bpd by fiscal year 2034 over the next decade. This is primarily a result of new production coming on line in and around the NPR-A region west of Prudhoe Bay. 
 
 According to the Alaska Multiple Listing Services, the average sales price of a single family home in Anchorage rose 5.4% in 2023 to $480,272, following a 7.6% increase in 2022. This was the sixth consecutive year of price increases. In the first six months of 2024 the average price continues to increase 4.8% to an average sale of $503,474. 
 
 The average sales price for single family homes in the Matanuska Susitna Borough rose 4% in 2023 to $397,589, after increasing 9.9% in 2022. This continues a trend of average price increases for more than a decade in the region. In the first six months of 2024 the average sales price increased 3.4% to $410,912, according to the Alaska Multiple Listing Services. These two markets represent where the vast majority of the residential lending activity for Northrim Bank’s (the “Bank”) occurs. 
 
 However, the Alaska Multiple Listing Services reported a large decrease in the number of units sold in both communities in 2023. There were 2,162 housing units sold in Anchorage in 2023, down 24.1% compared to 2,849 in 2022. In the Matanuska Susitna Borough there were 1,636 homes sold in 2023, compared to 2,103 in 2022, a decrease of 22.2%. 
 
 In the first six months of 2024 in Anchorage there were 4.2% fewer homes sold then over the same period in 2023. The Matanuska Susitna Borough declined 9.1% in homes sold comparing the first six months of 2023 and 2024. 
 
 The Board of Governors of the Federal Reserve System kept its benchmark interest rate target 5.25%-5.50% as of December 31, 2023 and as of June 30, 2024. The prime rate of interest has remained consistent at 8.50% as of December 31, 2023 and as of June 30, 2024. 
 
 39 

 Highlights and Summary of Performance - Second Quarter of 2024 
 
 The Company reported net income and earnings per diluted share of $9.0 million and $1.62, respectively, for the second quarter of 2024 compared to net income and earnings per diluted share of $5.6 million and $0.98, respectively, for the second quarter of 2023. The Company reported net income and earnings per diluted share of $17.2 million and $3.10, respectively, for the first six months of 2024 compared to net income and earnings per diluted share of $10.4 million and $1.82, respectively, for the first six months of 2023. The increase in net income for both the three and six-month periods ending June 30, 2024 compared to the same periods last year is primarily attributable to an increase in mortgage banking income, higher net interest income, and a lower provision for credit losses. 
 • Net interest income in the second quarter of 2024 increased 8% to $27.1 million compared to $25.1 million in the second quarter of 2023. Net interest income in the first six months of 2024 increased 7% to $53.5 million compared to $50.2 million in the first six months of 2023. 
 • Net interest margin was 4.24% for the second quarter of 2024, a 10 basis point increase from the second quarter of 2023. Net interest margin was 4.20% for the first six months of 2024, a 2 basis point increase from the first six months of 2023. The increase in the second quarter and first six months of 2024 compared to the same periods in 2023 was primarily due higher yields on earning assets, a favorable change in the mix of earning-assets, and an increase in total earning assets which were only partially offset by higher interest costs. 
 • The weighted average interest rate for new loans booked in the second quarter of 2024 was 7.26% compared to 6.93% in the second quarter a year ago. 
 • Loans were $1.88 billion at June 30, 2024, up 5% from December 31, 2023 primarily as a result of commercial, commercial real estate, and consumer mortgage loan growth. 
 • Total deposits were $2.46 billion at June 30, 2024, down 1% from December 31, 2023. Demand deposits decreased 6% at June 30, 2024 from December 31, 2023 and represent 29% of total deposits at June 30, 2024. 
 • The average cost of interest-bearing deposits for the quarter was 2.21% at June 30, 2024, up from 1.56% at June 30, 2023. 
 • Total liquid assets and investments and loans maturing within one year were $526.5 million and our funds available for borrowing under our existing lines of credit were $643.1 million at June 30, 2024. 
 • Mortgage loan originations increased to $181.51 million in the second quarter of 2024, up from $101.73 million in the first quarter of 2024 and $169.42 million in the second quarter a year ago. Mortgage loans funded for sale were $152.34 million in the second quarter of 2024, compared to $84.32 million in the first quarter of 2024 and $113.82 million in the second quarter of 2023. 
 • Placed three graduates from Northrim's Commercial Banking Training Program into full-time positions within the Bank. 
 
 Other financial measures are shown in the table below: 
 
 Three Months Ended June 30, Six Months Ended June 30, 
 2024 2023 2024 2023 
 Return on average assets, annualized 1.31 % 0.85 % 1.25 % 0.81 % 
 Return on average shareholders' equity, annualized 14.84 % 9.85 % 14.35 % 9.30 % 
 Dividend payout ratio 37.62 % 61.54 % 39.38 % 66.07 % 

 Nonperforming assets: Nonperforming assets, net of government guarantees were $5.1 million at June 30, 2024 and $5.8 million at December 31, 2023. Other Real Estate Owned (“OREO”), net of government guarantees was zero at June 30, 2024 and December 31, 2023. Repossessed assets increased to $297,000 as of June 30, 2024 from zero at December 31, 2023. Nonperforming loans, net of government guarantees decreased $255,000 or 5% to $4.8 million as of June 30, 2024 from $5.0 million as of December 31, 2023, primarily due to payoffs and pay downs which were only partially offset by the addition of one commercial loan in the first six months of 2024. $3.1 million, or 64% of nonperforming assets, net of government guarantees at June 30, 2024, are nonaccrual loans related to three commercial relationships. 
 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, past due, or impaired loans. These loans are closely monitored and their performance is reviewed by management on a regular basis. At June 30, 2024, management had identified $2.2 million potential problem loans, up slightly from $1.9 million at December 31, 2023. 
 40 

 RESULTS OF OPERATIONS 
 Income Statement 
 Net Income 
 Net income for the second quarter of 2024 increased $3.4 million to $9.0 million as compared to $5.6 million for the same period in 2023. The increase in net income in the second quarter of 2024 as compared to the same quarter a year ago is largely attributable to a $2.0 million increase in mortgage banking income, a $1.9 million increase in net interest income, and a $1.5 million decrease in the provision for credit losses. These changes were only partially offset by a $1.4 million increase in salaries and other personnel expense. 
 Net income for the first six months of 2024 increased $6.8 million to $17.2 million as compared to $10.4 million for the same period in 2023. The increase in net income in the first six months of 2024 as compared to the same period a year ago is largely attributable to a $4.0 million increase in mortgage banking income, a $3.3 million increase in net interest income, and a $1.7 million decrease in the provision for credit losses which were only partially offset by and a $1.4 million increase in salaries and other personnel expense. 
 Net Interest Income/Net Interest Margin 
 Net interest income for the second quarter of 2024 increased 8% or $1.9 million, to $27.1 million as compared to $25.1 million for the second quarter of 2023. The net interest margin increased 10 basis points to 4.24% in the second quarter of 2024 as compared to 4.14% in the second quarter of 2023. Net interest income for the first six months of 2024 increased 7% or $3.3 million, to $53.5 million as compared to $50.2 million for the first six months of 2023. The net interest margin increased 2 basis points to 4.20% in the first six months of 2024 as compared to 4.18% in the first six months of 2023. 
 The increase in net interest income in the second quarter and first six months of 2024 compared to the same periods in 2023 was primarily the result of increased interest on loans which was only partially offset by a decrease in interest income on investments and interest bearing deposits in other banks, as well as an increase in interest expense on interest-bearing deposits. 
 The increase in net interest margin in the second quarter and first six months of 2024 as compared to the same periods of 2023 was primarily due to higher yields on earning assets, a favorable change in the mix of earning-assets, and an increase in total earning assets which were only partially offset by higher interest costs. Changes in net interest margin in the three and six-month period ended June 30, 2024 as compared to the same period in the prior year are detailed below: 
 
 Three Months Ended June 30, 2024 vs. June 30, 2023 
 Nonaccrual interest adjustments (0.02) % 
 Interest rates on loans and liabilities and loan fees, all other loans (0.17) % 
 Volume and mix of other interest-earning assets and liabilities 0.29 % 
 Change in net interest margin 0.10 % 

 Six Months Ended June 30, 2024 vs. June 30, 2023 
 Nonaccrual interest adjustments (0.01) % 
 Interest rates on loans and liabilities and loan fees, all other loans (0.25) % 
 Volume and mix of other interest-earning assets and liabilities 0.28 % 
 Change in net interest margin 0.02 % 

 41 

 Components of Net Interest Margin 
 
 The following table compares average balances and rates as well as margins on earning assets for the three-month periods ended June 30, 2024 and 2023. Average yields or costs are calculated on a tax-equivalent basis. 
 
 (Dollars in Thousands) Three Months Ended June 30, 
 Interest income/ Average Tax Equivalent 
 Average Balances Change expense Change Yields/Costs 6 
 
 2024 2023 $ % 2024 2023 $ % 2024 2023 Change 
 Interest-bearing deposits in other banks 1 
 $17,352 $66,058 ($48,706) (74) % $232 $828 ($596) (72) % 5.27 % 4.96 % 0.31 % 
 Taxable long-term investments 2 
 639,980 727,833 (87,853) (12) % 4,310 4,679 (369) (8) % 2.82 % 2.40 % 0.42 % 
 
 Loans held for sale 65,102 37,594 27,508 73 % 990 559 431 77 % 6.08 % 5.96 % 0.12 % 
 Loans 3,4 
 1,845,832 1,603,126 242,706 15 % 31,377 25,754 5,623 22 % 6.87 % 6.48 % 0.39 % 
 Interest-earning assets 5 
 2,568,266 2,434,611 133,655 5 % 36,909 31,820 5,089 16 % 5.83 % 5.31 % 0.52 % 
 Nonearning assets 204,509 185,342 19,167 10 % 
 Total $2,772,775 $2,619,953 $152,822 6 % 
 
 Interest-bearing demand $888,633 $765,984 $122,649 16 % $4,357 $2,849 $1,508 53 % 1.97 % 1.49 % 0.48 % 
 Savings deposits 242,594 282,579 (39,985) (14) % 264 326 (62) (19) % 0.44 % 0.46 % (0.02) % 
 Money market deposits 201,025 245,790 (44,765) (18) % 827 813 14 2 % 1.65 % 1.33 % 0.32 % 
 Time deposits 392,761 273,820 118,941 43 % 4,028 2,126 1,902 89 % 4.12 % 3.11 % 1.01 % 
 Total interest-bearing deposits 1,725,013 1,568,173 156,840 10 % 9,476 6,114 3,362 55 % 2.21 % 1.56 % 0.65 % 
 Borrowings 38,390 54,602 (16,212) (30) % 380 564 (184) (33) % 3.92 % 4.11 % (0.19) % 
 Total interest-bearing liabilities 1,763,403 1,622,775 140,628 9 % 9,856 6,678 3,178 48 % 2.25 % 1.65 % 0.60 % 
 Non-interest bearing demand deposits 706,339 735,615 (29,276) (4) % 
 Other liabilities 58,549 34,514 24,035 70 % 
 Equity 244,484 227,049 17,435 8 % 
 Total $2,772,775 $2,619,953 $152,822 6 % 
 Net interest income $27,053 $25,142 $1,911 8 % 
 Net interest margin 4.24 % 4.14 % 0.10 % 
 
 Average loans to average interest-earning assets 71.87 % 65.85 % 
 Average loans to average total deposits 75.92 % 69.59 % 
 Average non-interest deposits to average total deposits 29.05 % 31.93 % 
 Average interest-earning assets to average interest-bearing liabilities 145.64 % 150.03 % 

 1 Consists of interest bearing deposits in other banks and domestic CDs. 
 2 Consists of investment securities available for sale, investment securities held to maturity, marketable equity securities, and investment in Federal Home Loan Bank stock. 
 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 second quarter of 2024 and 2023, respectively. 
 4 Nonaccrual loans are included with a zero effective yield. Average nonaccrual loans included in the computation of the average loan balances were $5.0 million and $8.3 million in the second quarter of 2024 and 2023, respectively . 
 5 The Company does not have any fed funds sold or securities purchased with agreements to resell to disclose as part of its total interest-earning assets in the periods presented. 
 6 Tax-equivalent yields/costs assume a federal tax rate of 21% and state tax rate of 7.43% for a combined tax rate of 28.43%. 
 
 42 

 The following tables set forth the changes in consolidated net interest income attributable to changes in volume and to changes in interest rates for the three-month periods ending June 30, 2024 and 2023. Changes attributable to the combined effect of volume and interest rate have been allocated proportionately to the changes due to volume and the changes due to interest rates. The Company did not have any fed funds sold or securities purchased with agreements to resell for the three-month periods ending June 30, 2024 and 2023. 
 
 (In Thousands) Three Months Ended June 30, 2024 vs. 2023 
 Increase (decrease) due to 
 Volume Rate Total 
 Interest Income: 
 Short-term investments ($640) $44 ($596) 
 Taxable long-term investments (636) 267 (369) 
 
 Loans held for sale 419 12 431 
 Loans 4,032 1,591 5,623 
 Total interest income $3,175 $1,914 $5,089 
 
 Interest Expense: 
 Interest-bearing demand $323 $1,185 $1,508 
 Savings deposits (43) (19) (62) 
 Money market deposits (165) 179 14 
 Time deposits 1,088 814 1,902 
 Interest-bearing deposits 1,203 2,159 3,362 
 Borrowings (156) (28) (184) 
 Total interest expense $1,047 $2,131 $3,178 

 43 

 The following table compares average balances and rates as well as margins on earning assets for the six-month periods ended June 30, 2024 and 2023. Average yields or costs are calculated on a tax-equivalent basis. 
 
 (Dollars in Thousands) Six Months Ended June 30, 
 Interest income/ Average Tax Equivalent 
 Average Balances Change expense Change Yields/Costs 6 
 
 2024 2023 $ % 2024 2023 $ % 2024 2023 Change 
 Interest-bearing deposits in other banks 1 
 $39,457 $98,314 ($58,857) (60) % $1,070 $2,317 ($1,247) (54) % 5.36 % 4.69 % 0.67 % 
 Taxable long-term investments 2 
 655,458 727,722 (72,264) (10) % 8,830 9,291 (461) (5) % 2.82 % 2.40 % 0.42 % 
 
 Loans held for sale 48,868 29,294 19,574 67 % 1,490 849 641 76 % 6.10 % 5.80 % 0.30 % 
 Loans 3,4 
 1,819,629 1,563,847 255,782 16 % 61,327 49,158 12,169 25 % 6.81 % 6.39 % 0.42 % 
 Interest-earning assets 5 
 2,563,412 2,419,177 144,235 6 % 72,717 61,615 11,102 18 % 5.76 % 5.21 % 0.55 % 
 Nonearning assets 202,819 185,545 17,274 9 % 
 Total $2,766,231 $2,604,722 $161,509 6 % 
 
 Interest-bearing demand $897,340 $742,356 $154,984 21 % $8,783 $4,876 $3,907 80 % 1.97 % 1.32 % 0.65 % 
 Savings deposits 246,582 291,904 (45,322) (16) % 544 667 (123) (18) % 0.44 % 0.46 % (0.02) % 
 Money market deposits 208,515 269,584 (61,069) (23) % 1,664 1,595 69 4 % 1.60 % 1.19 % 0.41 % 
 Time deposits 376,031 252,030 124,001 49 % 7,665 3,559 4,106 115 % 4.10 % 2.85 % 1.25 % 
 Total interest-bearing deposits 1,728,468 1,555,874 172,594 11 % 18,656 10,697 7,959 74 % 2.17 % 1.39 % 0.78 % 
 Borrowings 31,167 39,567 (8,400) (21) % 561 744 (183) (25) % 3.55 % 3.74 % (0.19) % 
 Total interest-bearing liabilities 1,759,635 1,595,441 164,194 10 % 19,217 11,441 7,776 68 % 2.19 % 1.44 % 0.75 % 
 Non-interest bearing demand deposits 705,736 745,795 (40,059) (5) % 
 Other liabilities 59,478 37,772 21,706 57 % 
 Equity 241,382 225,714 15,668 7 % 
 Total $2,766,231 $2,604,722 $161,509 6 % 
 Net interest income $53,500 $50,174 $3,326 7 % 
 Net interest margin 4.20 % 4.18 % 0.02 % 
 
 Average loans to average interest-earning assets 70.98 % 64.64 % 
 Average loans to average total deposits 74.75 % 67.94 % 
 Average non-interest deposits to average total deposits 28.99 % 32.40 % 
 Average interest-earning assets to average interest-bearing liabilities 145.68 % 151.63 % 

 1 Consists of interest bearing deposits in other banks and domestic CDs. 
 2 Consists of investment securities available for sale, investment securities held to maturity, marketable equity securities, and investment in Federal Home Loan Bank stock. 
 3 Interest income includes loan fees. Loan fees recognized during the period and included in the yield calculation totaled $2.2 million and $2.3 million in the first six months of 2024 and 2023, respectively. 
 4 Nonaccrual loans are included with a zero effective yield. Average nonaccrual loans included in the computation of the average loan balances were $5.4 million and $7.6 million in the first six months of 2024 and 2023, respectively . 
 5 The Company does not have any fed funds sold or securities purchased with agreements to resell to disclose as part of its total interest-earning assets in the periods presented. 
 6 Tax-equivalent yields/costs assume a federal tax rate of 21% and state tax rate of 7.43% for a combined tax rate of 28.43%. 
 
 44 

 The following tables set forth the changes in consolidated net interest income attributable to changes in volume and to changes in interest rates for the six-month periods ending June 30, 2024 and 2023. Changes attributable to the combined effect of volume and interest rate have been allocated proportionately to the changes due to volume and the changes due to interest rates. The Company did not have any fed funds sold or securities purchased with agreements to resell for the six-month periods ending June 30, 2024 and 2023. 
 
 (In Thousands) Six Months Ended June 30, 2024 vs. 2023 
 Increase (decrease) due to 
 Volume Rate Total 
 Interest Income: 
 Short-term investments ($1,534) $287 ($1,247) 
 Taxable long-term investments (978) 517 (461) 
 
 Loans held for sale 600 41 641 
 Loans 8,638 3,531 12,169 
 Total interest income $6,726 $4,376 $11,102 
 
 Interest Expense: 
 Interest-bearing demand $649 $3,258 $3,907 
 Savings deposits (97) (26) (123) 
 Money market deposits (411) 480 69 
 Time deposits 2,169 1,937 4,106 
 Interest-bearing deposits 2,310 5,649 7,959 
 Borrowings (141) (42) (183) 
 Total interest expense $2,169 $5,607 $7,776 

 45 

 Provision for Credit Losses 
 The provision for credit loss expense is the amount of expense 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: 
 
 Three Months Ended June 30, Six Months Ended June 30, 
 (In Thousands) 2024 2023 2024 2023 
 Credit loss expense on loans held for investment $135 $1,510 $356 $1,769 
 Credit loss expense on unfunded commitments (255) (103) (327) (2) 
 Credit loss expense on available for sale debt securities — — — — 
 Credit loss expense on held to maturity securities — — — — 
 Credit loss expense on purchased receivables — — — — 
 Total credit loss expense ($120) $1,407 $29 $1,767 

 The decrease in the provision for credit losses for the three and six-month periods ending June 30, 2024 as compared to the same periods in 2023 is primarily the result of a lower loan growth. The provision for credit losses on unfunded commitments is negative in all periods is primarily due to seasonal decreases in unfunded commitment balances, and changes in mix of the portfolio. Fluctuations in the provision for credit losses in the future will be dependent upon changes in economic conditions and forecasts, as well as loan portfolio composition, quality, and duration. 
 Other Operating Income 
 Other operating income for the three-month period ended June 30, 2024 increased $2.6 million, or 37%, to $9.6 million as compared to $7.0 million for the same period in 2023, primarily due to a $2.0 million increase in mortgage banking income in the second quarter of 2024 compared to the same quarter a year ago as well as a $224,000 increase in purchased receivable income and a $174,000 increase in the fair value of marketable equity securities. Service charges on deposit accounts and bankcard fees also increased in the second quarter of 2024 as compared to the same period in 2023. The increase in mortgage banking income in the three-month period ended June 30, 2024 as compared to the same period in 2023 was primarily due to increased production volume due to increased home purchase activity. 
 
 Other operating income for the six-month period ended June 30, 2024 increased $5.5 million, or 47%, to $17.4 million as compared to $11.9 million for the same period in 2023, primarily due to a $4.0 million increase in mortgage banking income as well as a $711,000 increase in the fair value of marketable equity securities and a $592,000 increase in purchased receivable income. Bankcard fees and service charges on deposit accounts also increased in the first six months of 2024 as compared to the same period in 2023. The increase in mortgage banking income in the six-month period ended June 30, 2024 as compared to the same period in 2023 was primarily due to increased production volume due to increased home purchase activity. 
 
 Other Operating Expense 
 Other operating expense for the second quarter of 2024 increased $1.4 million, or 6%, to $25.2 million as compared to $23.8 million for the same period in 2023, primarily due to a $1.4 million increase in salaries and other personnel expense as well as a $224,000 increase in data processing expense, which was only partially offset by a $243,000 decrease in marketing expense. The increase in salaries and other personnel expense was primarily due to lower deferral of loan origination costs due to lower portfolio loan originations in the first quarter of 2024 compared to the same period in 2023 as well as higher profit sharing expense, which generally increases when net income increases to reflect a higher expected payout to employees. 
 Other operating expense for the six-month period ended June 30, 2024 increased $1.5 million, or 3%, to $48.8 million as compared to $47.3 million for the same period in 2023 is primarily due to a $1.4 million increase in salaries and other personnel expense primarily due to higher profit sharing expense and lower deferral of loan origination costs as well as a $528,000 increase in data processing expense and $267,000 increase in insurance expense, which was only partially offset by a $294,000 decrease in marketing expense and $407,000 decrease in OREO expense due to subsequent proceeds received in the first quarter of 2024 that are related to a government guarantee on an OREO property sold in December 2022. 
 46 

 Income Taxes 
 For the second quarter and first six months of 2024, Northrim recorded a higher effective tax rate as compared to the same periods in 2023 as a result of a decrease in tax credits and tax exempt interest income as a percentage of pre-tax income in 2024. In the second quarter of 2024, Northrim recorded $2.5 million in state and federal income tax expense, for an effective tax rate of 21.95% compared to $1.4 million and 19.56% for the same period in 2023. In the first six months of 2024, Northrim recorded $4.8 million in state and federal income tax expense, for an effective tax rate of 21.94% compared to $2.6 million and 19.97% for the same period in 2023. 
 
 FINANCIAL CONDITION 
 Balance Sheet Overview 
 Investment Securities 
 Investment Securities include investment securities available for sale, investment securities held to maturity, and marketable equity securities, at June 30, 2024 decreased 8% to $634.1 million from $687.8 million at December 31, 2023 primarily due to maturities and calls of available for sale securities during the first six months of 2024. 
 The table below details portfolio investment balances by portfolio investment type for the periods indicated: 
 
 June 30, 2024 December 31, 2023 
 Dollar Amount Percent of Total Dollar Amount Percent of Total 
 (In Thousands) 
 Balance % of total Balance % of total 
 U.S. Treasury and government sponsored entities $525,683 82.9 % $564,125 82.1 % 
 Municipal securities — — % 816 0.1 % 
 
 Corporate bonds 45,443 7.2 % 50,374 7.3 % 
 Collateralized loan obligations 50,588 8.0 % 59,371 8.6 % 
 Preferred stock 12,381 2.0 % 13,153 1.9 % 
 Total $634,095 $687,839 

 The average estimated duration of the investment portfolio at June 30, 2024, was approximately 2.5 years. As of June 30, 2024, $111.5 million of available for sale securities with a weighted average yield of 1.02% are scheduled to mature in the next six months, $77.3 million with a weighted average yield of 2.35% are scheduled to mature in six months to one year, and $172.2 million with a weighted average yield of 1.49% are scheduled to mature in the following year, representing a total of $361.0 million or 14% of earning assets that are scheduled to mature in the next 24 months. 
 
 47 

 Loans and Lending Activities 
 The following table presents the concentration distribution of the loan portfolio, net of deferred fees and costs, as of the dates indicated: 
 
 June 30, 2024 December 31, 2023 
 Dollar Amount Percent of Total Dollar Amount Percent of Total 
 (In Thousands) 
 Commercial & industrial loans $415,931 22.1 % $411,387 23.0 % 
 Commercial real estate: 
 Owner occupied properties 382,050 20.4 % 366,741 20.5 % 
 Non-owner occupied and multifamily properties 547,488 29.1 % 515,528 28.8 % 
 Residential real estate: 
 1-4 family residential properties secured by first liens 222,488 11.9 % 203,738 11.4 % 
 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 41,500 2.2 % 33,996 1.9 % 
 1-4 family residential construction loans 29,281 1.6 % 30,976 1.7 % 
 Other construction, land development and raw land loans 152,767 8.1 % 148,373 8.3 % 
 Obligations of states and political subdivisions in the US 29,671 1.6 % 30,407 1.7 % 
 Agricultural production, including commercial fishing 45,079 2.4 % 41,007 2.3 % 
 Consumer loans 6,743 0.4 % 6,241 0.3 % 
 Other loans 2,909 0.2 % 1,103 0.1 % 
 Total loans $1,875,907 $1,789,497 

 Loans increased by $86.4 million, or 5%, to $1.876 billion at June 30, 2024 from $1.789 billion at December 31, 2023, primarily as a result of increased commercial, commercial real estate, and consumer mortgage loans. 
 Information about industry concentrations 
 The Company defines “direct exposure” to the oil and gas industry as companies that it has identified as significantly reliant upon activity related to the oil and gas industry, such as oilfield services, lodging, equipment rental, transportation, and other logistic services specific to the industry. The Company estimates that $88.3 million, or approximately 5% of loans as of June 30, 2024 have direct exposure to the oil and gas industry as compared to $96.1 million, or approximately 5% of loans as of December 31, 2023. The Company's unfunded commitments to borrowers that have direct exposure to the oil and gas industry were $31.7 million and $38.6 million at June 30, 2024 and December 31, 2023, respectively. The portion of the Company's ACL that related to the loans with direct exposure to the oil and gas industry was estimated at $939,000 as of June 30, 2024 and $884,000 as of December 31, 2023. 
 
 The following table details loan balances by loan segment and class of financing receivable for loans with direct oil and gas exposure as of the dates indicated: 
 
 (In Thousands) June 30, 2024 December 31, 2023 
 Commercial & industrial loans $70,922 $77,917 
 Commercial real estate: 
 Owner occupied properties 10,902 11,410 
 Non-owner occupied and multifamily properties 5,135 5,434 
 
 Other loans 1,320 1,357 
 Total $88,279 $96,118 

 The Company monitors other concentrations within the loan portfolio depending on trends in the current and future estimated economic conditions. At June 30, 2024, the Company had $122.2 million, or 6% of portfolio loans, in the Healthcare sector, $121.1 million, or 6% of portfolio loans, in the Tourism sector, $93.9 million, or 5% of portfolio loans, in the Accommodations sector, $78.4 million, or 4% of portfolio loans, in the Fishing sector, $70.8 million, or 4% of portfolio loans, in the Aviation (non-tourism) sector, $63.9 million, or 3% of portfolio loans, in the Retail sector, and $52.1 million, or 3% in the Restaurant sector. 
 48 

 The portion of the Company's ACL that related to the loans with exposure to these industries is estimated at the following amounts as of June 30, 2024: 
 
 (In Thousands) Tourism Aviation (non-tourism) Healthcare Retail Fishing Restaurant Accommodations Total 
 ACL $706 $625 $963 $594 $492 $397 $872 $4,649 

 49 

 Credit Quality and Nonperforming Assets 
 The following table sets forth information regarding our nonperforming loans and total nonperforming assets for the periods indicated: 
 
 June 30, December 31, 
 (In Thousands) 2024 2023 
 Nonaccrual loans $4,830 $6,069 
 Loans 90 days past due and accruing 17 — 
 Total nonperforming loans $4,847 $6,069 
 Nonperforming loans guaranteed by government — (1,067) 
 Net nonperforming loans $4,847 $5,002 
 
 Repossessed assets 297 — 
 Nonperforming purchased receivables — 808 
 
 Net nonperforming assets $5,144 $5,810 
 Nonperforming loans, net of government guarantees / portfolio loans 0.26 % 0.28 % 
 Nonperforming loans, net of government guarantees / portfolio loans, net of government guarantees 0.28 % 0.30 % 
 Nonperforming assets, net of government guarantees / total assets 0.18 % 0.21 % 
 Nonperforming assets, net of government guarantees / total assets net of government guarantees 0.19 % 0.21 % 
 
 Adversely classified loans, net of government guarantees $7,068 $7,057 
 Special mention loans, net of government guarantees $8,902 $6,580 
 Loans 30-89 days past due and accruing, net of government guarantees /portfolio loans 0.03 % 0.03 % 
 Loans 30-89 days past due and accruing, net of government guarantees / 
 portfolio loans, net of government guarantees 0.04 % 0.03 % 
 
 Allowance for credit losses / portfolio loans 0.94 % 0.97 % 
 Allowance for credit losses / portfolio loans, net of government guarantees 1.01 % 1.02 % 
 Allowance for credit losses / nonperforming loans, net of government 
 guarantees 365 % 345 % 
 
 Gross loan charge-offs for the quarter $— $281 
 Gross loan recoveries for the quarter ($26) ($185) 
 Net loan (recoveries) charge-offs for the quarter ($26) $96 
 Net loan (recoveries) charge-offs year-to-date ($68) ($38) 
 Net loan (recoveries) charge-offs for the quarter / average loans, for the quarter — % 0.01 % 
 Net loan (recoveries) charge-offs year-to-date / average loans, 
 year-to-date annualized — % — % 

 50 

 Allowance for Credit Losses 
 The following table sets forth information regarding changes in the ACL for the periods indicated: 
 
 Three Months Ended June 30, Six Months Ended June 30, 
 (In Thousands) 2024 2023 2024 2023 
 Balance at beginning of period $17,533 $14,157 $17,270 $13,838 
 
 Charge-offs: 
 Commercial & industrial loans — (49) — (49) 
 
 Agricultural production, including commercial fishing — — (25) — 
 Consumer loans — — — (14) 
 
 Total charge-offs — (49) (25) (63) 
 Recoveries: 
 Commercial & industrial loans 17 21 77 86 
 
 Residential real estate: 
 
 1-4 family residential properties secured by junior liens 
 and revolving secured by 1-4 family first liens 4 5 10 12 
 
 Agricultural production, including commercial fishing 5 — 5 — 
 Consumer loans — 1 1 3 
 
 Total recoveries 26 27 93 101 
 Net, recoveries and (charge-offs) 26 (22) 68 38 
 Provision for credit losses 
 135 1,510 356 1,769 
 Balance at end of period $17,694 $15,645 $17,694 $15,645 

 The following table sets forth information regarding changes in the ACL for unfunded commitments for the periods indicated: 
 
 Three Months Ended June 30, Six Months Ended June 30, 
 (In Thousands) 2024 2023 2024 2023 
 Balance at beginning of period $2,346 $2,071 $2,418 $1,970 
 
 (Benefit) provision for credit losses (255) (103) (327) (2) 
 Balance at end of period $2,091 $1,968 $2,091 $1,968 

 51 

 The ACL for loans held for investment at June 30, 2024 increased $424,000 from December 31, 2023 primarily due to higher non-government guaranteed loan balances and changes in management's CECL model assumptions. These changes were only partially offset by a decrease in the Company's forecasted future economic drivers and the estimated timing of future cash flows. While management believes that it uses the best information available to determine the ACL, unforeseen market conditions and other events could result in adjustment to the ACL, and net income could be significantly affected if circumstances differed substantially from the assumptions used in making the final determination of the ACL. 
 Deposits 
 Deposits are the Company’s primary source of funds. Total deposits decreased $21.2 million, or 1%, to $2.464 billion as of June 30, 2024 compared to $2.485 billion as of December 31, 2023, primarily due to seasonality. The following table summarizes the Company's composition of deposits as of the periods indicated: 
 
 June 30, 2024 December 31, 2023 
 (In thousands) Balance % of total Balance % of total 
 Demand deposits $704,471 29 % $749,683 31 % 
 Interest-bearing demand 906,010 36 % 927,291 37 % 
 Savings deposits 238,156 10 % 255,338 10 % 
 Money market deposits 195,159 8 % 221,492 9 % 
 Time deposits 420,010 17 % 331,251 13 % 
 Total deposits $2,463,806 $2,485,055 

 The Company’s mix of deposits continues to contribute to a low cost of funds with balances in transaction accounts representing 83% of total deposits at June 30, 2024 and 87% of total deposits at December 31, 2023. 
 The only deposit category with stated maturity dates is certificates of deposit. At June 30, 2024, the Company had $420.0 million in certificates of deposit as compared to certificates of deposit of $331.3 million at December 31, 2023. At June 30, 2024, $381.9 million, or 91%, of the Company’s certificates of deposits are scheduled to mature over the next 12 months as compared to $268.5 million, or 81%, of total certificates of deposit at December 31, 2023. The aggregate amount of certificates of deposit in amounts of $250,000 and greater at June 30, 2024 and December 31, 2023, was $196.5 million and $142.1 million, respectively. The following table sets forth the amount outstanding of deposits in amounts of $250,000 and greater by time remaining until maturity and percentage of total deposits as of June 30, 2024: 
 
 Time Certificates of Deposit 
 of $250,000 or More 
 Percent of Total Deposits 
 (In Thousands) Amount 
 Amounts maturing in: 
 Three months or less $57,601 29 % 
 Over 3 through 6 months 77,895 40 % 
 Over 6 through 12 months 38,249 19 % 
 Over 12 months 22,706 12 % 
 Total $196,451 100 % 

 At June 30, 2024, 71% of total deposits were held in business accounts and 29% of deposit balances were held in consumer accounts. Northrim had approximately 34,000 deposit customers with an average balance of $74,000 as of June 30, 2024. Northrim had 21 customers with balances over $10 million as of June 30, 2024 which accounted for $474.5 million, or 20%, of total deposits. 
 
 Uninsured deposits totaled approximately $980.0 million or 40% of total deposits as of June 30, 2024 compared to $1.0 billion or 41% of total deposits as of December 31, 2023. Since interest rates began increasing in 2023, Northrim has taken a proactive, targeted approach to increase deposit rates. There was no unusual deposit activity during the first six months of 2024. 
 
 52 

 Borrowings 
 FHLB: The Bank is a member of the Federal Home Loan Bank of Des Moines (the “FHLB”). As a member, the Bank is eligible to obtain advances from the FHLB. FHLB advances are dependent on the availability of acceptable collateral such as marketable securities or real estate loans, although all FHLB advances are secured by a blanket pledge of the Bank’s assets. At June 30, 2024, our maximum borrowing line from the FHLB was approximately 45% of the Bank’s assets, subject to the FHLB’s collateral requirements. Based on the Company's current collateral pledged to the FHLB, less outstanding advances, the Company's borrowing line is $346.0 million as of June 30, 2024. The Company has outstanding advances of $13.5 million as of June 30, 2024 which were originated to match fund low income housing projects that qualify for long term fixed interest rates. These advances have original terms of either 18 or 20 years with 30 year amortization periods and fixed interest rates ranging from 1.23% to 3.25%. Additionally, the Company has a short-term $30.5 million advance from the FHLB outstanding as of June 30, 2024 at an interest rate of 5.56% which resets daily. 
 
 Federal Reserve Bank: The Federal Reserve Bank of San Francisco (the “Federal Reserve Bank”) is holding $70.0 million of securities as collateral to secure the Company's ability to take advances through the discount window on June 30, 2024. There were no discount window advances outstanding at either June 30, 2024 or December 31, 2023. 
 
 Other Short-term Borrowings: The Company is subject to provisions under Alaska state law, which generally limit the amount of outstanding debt to 35% of total assets or $981.3 million at June 30, 2024 and $975.9 million at December 31, 2023. 
 
 At June 30, 2024 and December 31, 2023, the Company had no short-term (original maturity of one year or less) borrowings that exceeded 30% of shareholders’ equity. 
 Long-term Borrowings. The Company had no long-term borrowing outstanding other than the FHLB advances noted above as of June 30, 2024 or December 31, 2023. 
 
 Liquidity and Capital Resources 
 The Company is a single bank holding company and its primary ongoing source of liquidity is from dividends received from the Bank. Such dividends arise from the cash flow and earnings of the Bank. Banking regulations and regulatory authorities may limit the amount of, or require the Bank to obtain certain approvals before paying, dividends to the Company. Given that the Bank currently meets and the Bank anticipates that it will continue to meet, all applicable capital adequacy requirements for a “well-capitalized” institution by regulatory standards, the Company expects to continue to receive dividends from the Bank during the remainder of 2024. Other available sources of liquidity for the bank holding company include the issuance of debt and the issuance of common or preferred stock. As of June 30, 2024, the Company has 10.0 million authorized shares of common stock, of which approximately 5.5 million are issued and outstanding, leaving approximately 4.5 million shares available for issuance. Additionally, the Company has 2.5 million authorized shares of preferred stock available for issuance. 
 The Bank manages its liquidity through its Asset and Liability Committee. The Bank's primary source of funds are customer deposits. These funds, together with loan repayments, loan sales, maturity of investment securities, borrowed funds, and retained earnings are used to make loans, to acquire securities and other assets, and to fund deposit flows and continuing operations. The primary sources of demands on our liquidity are customer demands for withdrawal of deposits and borrowers’ demands that we advance funds against unfunded lending commitments. 
 53 

 The Company had cash and cash equivalents of $54.4 million, or 2% of total assets at June 30, 2024 compared to $118.5 million, or 4% of total assets as of December 31, 2023. The decrease in cash and cash equivalents since the end of 2023 is primarily due to an increase in loans. The Company had other comprehensive income, net of tax, of $2.0 million for the six-month period ending June 30, 2024 primarily due to unrealized holding gains on available for sale securities. Accumulated unrealized losses, net of income taxes on available for sale securities, which are recorded in total shareholders' equity, are $15.2 million as of June 30, 2024. Accumulated unrealized losses, net of income taxes on held to maturity securities, which are not recorded in shareholders' equity, are $2.2 million as of June 30, 2024. Management does not believe that liquidation of these securities, which would result in realized losses, will occur prior to maturity of these securities. As of June 30, 2024, the weighted average maturity of available for sale securities is 2.5 years, compared to 2.8 years at December 31, 2023, and 3.3 years at December 31, 2022. At June 30, 2024, $188.8 million available for sale securities mature within one year, $172.2 million mature within one to two years, and $126.9 million mature within two to three years. Our total unfunded commitments to fund loans and letters of credit at June 30, 2024 were $472.4 million. We do not expect that all of these loans are likely to be fully drawn upon at any one time. At June 30, 2024, certificates of deposit totaling $381.9 million are scheduled to mature over the next 12 months and may be withdrawn from the Bank. Similar to loans, we do not expect that these maturing certificates of deposit, or other non-maturity deposits, to be withdrawn from the Bank in a manner that will strain liquidity; however, unforeseen future circumstances or events may cause higher than anticipated withdrawal of deposits or draws of unfunded commitments to fund new loans. Management believes that cash requirements to fund future non-deposit and non-borrowing liabilities, including operating lease liabilities and other liabilities, as of June 30, 2024, are not material to the Company's liquidity position as of June 30, 2024. 
 The Company has other available sources of liquidity to fund unforeseen liquidity requirements. These include borrowings available through our correspondent banking relationships and our credit lines with the Federal Reserve Bank and the FHLB. At June 30, 2024, our liquid assets, which include investments and loans maturing within a year, were $526.5 million. Our funds available for borrowing under our existing lines of credit based on loans currently pledged and investments available to be pledged as collateral were $643.1 million. Given these sources of liquidity and our expectations for customer demands for cash and for our operating cash needs, we believe our sources of liquidity to be sufficient for the foreseeable future. 
 As shown in the Consolidated Statements of Cash Flows included in Part I - Item 1 “Financial Statements” of this report, net cash used by operating activities was $44.0 million for the first six months of 2024, primarily due to cash used in connection with the origination of loans held for sale, which was only partially offset by cash provided by net income and net proceeds from the sale of loans held for sale. Net cash used by investing activities was $21.6 million for the same period, primarily due to an increase in loans which was only partially offset by maturities and calls of available for sale securities. Net cash provided by financing activities in the same period was $1.5 million, primarily due to an increase in borrowings which was only partially offset by decreases in deposits and to a lesser extent by cash dividends paid to shareholder and repurchases of common stock. 
 Throughout our history, the Company has periodically repurchased for cash a portion of its shares of common stock in the open market. The Company repurchased 15,034 shares of its common stock under the Company's previously announced repurchase programs in the first quarter of 2024 and did not repurchase any shares in the second quarter of 2024. At June 30, 2024, there are 110,000 shares remaining under the repurchase program. The Company may elect to continue to repurchase our common stock from time-to-time depending upon market conditions, but we can make no assurances that we will continue this program or that we will authorize additional shares for repurchase. 
 Capital Requirements and Ratios 
 We are subject to minimum capital requirements. Federal banking agencies have adopted regulations establishing minimum requirements for the capital adequacy of banks and bank holding companies. The requirements address both risk-based capital and leverage capital. We believe as of June 30, 2024, that the Company and the Bank met all applicable capital adequacy requirements for a “well-capitalized” institution by regulatory standards. 
 
 The table below illustrates the capital requirements in effect for the periods noted for the Company and the Bank and the actual capital ratios for each entity that exceed these requirements. Management intends to maintain capital ratios for the Bank in 2024, exceeding the FDIC’s requirements for the “well-capitalized” classification. The capital ratios for the Company exceed those for the Bank primarily because the $10 million trust preferred securities offering completed in the fourth quarter of 2005 is included in the Company’s capital for regulatory purposes, although they are accounted for as a long-term debt in our financial statements. The trust preferred securities are not accounted for on the Bank’s financial statements nor are they included in its capital. As a result, the Company has $10 million more in regulatory capital than the Bank at June 30, 2024, which explains most of the difference in the capital ratios for the two entities. 
 54 

 Minimum Required Capital Well-Capitalized Actual Ratio Company Actual Ratio Bank 
 
 June 30, 2024 
 Total risk-based capital 8.00% 10.00% 12.58% 11.19% 
 Tier 1 risk-based capital 6.00% 8.00% 11.68% 10.28% 
 Common equity tier 1 capital 4.50% 6.50% 11.23% 10.28% 
 Leverage ratio 4.00% 5.00% 9.17% 8.07% 

 See Note 22 of the Consolidated Financial Statements in Part II. Item 8 of the Company's Annual Report on Form 10-K for the year ended December 31, 2023 for a detailed discussion of the capital ratios. The requirements for “well-capitalized” come from the Prompt Corrective Action rules. See Part I. Item 1 - Business - Supervision and Regulation in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. These rules apply to the Bank but not to the Company. Under the rules of the Federal Reserve Bank, a bank holding company such as the Company is generally defined to be “well capitalized” if its Tier 1 risk-based capital ratio is 8.0% or more and its total risk-based capital ratio is 10.0% or more. 
 
 Critical Accounting Policies 
 
 Our critical accounting policies 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, 2023. The SEC defines “critical accounting policies” as those that require application of management's most difficult, subjective or complex judgments as a result of the need to make “critical accounting estimates”, which are estimates that involve estimation uncertainty that has had or is reasonably likely to have a material impact on the Company's financial condition or results of operations. The Company's critical accounting policies include allowance for credit losses, valuation of goodwill and other intangible assets, and the valuation of mortgage servicing rights. There have been no material changes to the valuation techniques or assumptions within the models, that affect our estimates during 2024 except as noted below. 
 Allowance for Credit Losses Policy : For loan pools that utilize the discounted cash flow ("DCF") method, the Company utilizes complex models to obtain reasonable and supportable forecasts to calculate two predictive metrics, the probability of default ("PD") and loss given default ("LGD"). The PD measures the probability that a loan will default within a given time horizon and is an assumption derived from regression models which determine the relationship between historical defaults and certain economic variables. As of December 31, 2023, management used a DCF method for eight of its 11 loan pools, which represented 96% of the amortized cost basis of total loan pools at December 31, 2023. The weighted average remaining life method was used for the remaining three loan pools primarily because loan level data constraints preclude the use of the DCF model. As of December 31, 2023, management utilized and forecasted U.S. unemployment as the sole loss driver for all of the loan pools that utilize the DCF method. The Company's regression models for PD as of these time periods utilize peer historical loan level default data. Peers for this purpose include banks in the United States with total assets between $1 billion and $5 billion whose loan portfolios share certain characteristics with the Company's loan portfolio. Peers differ by loan segment; a bank is included in the peer group for each loan segment under the following circumstances: 
 • The percentage the balance of the loan segment compared to total loans over a five year look back period is within 1.5 standard deviations of the Company's data; 
 • The percentage of total charge offs for the loan segment over a five year look back period is within 1 standard deviation of the Company's data; and 
 • The percentage of total charge offs for the loan segment during the recessionary period from the fourth quarter of 2008 to the fourth quarter of 2012 is within 1 standard deviation of the Company's data. 
 
 As of January 1, 2024, management uses a DCF method for seven of its 11 loan pools, which represented 95% of the amortized cost basis of total loan pools at June 30, 2024. The weighted average remaining life method was used for the remaining four loan pools; management changed the consumer pool to the remaining life method primarily because the regression model under the DCF model for this pool fell outside of acceptable levels for certain statistical tests performed by management to determine the appropriateness of model method selections. 
 55 

 Additionally, as of January 1, 2024, management utilizes and forecasts both U.S. unemployment and U.S. Gross Domestic Product in a multi-loss driver model for all of the loan pools that utilize the DCF method. The Company's regression models for PD as of January 1, 2024 utilize peer historical loan level default data. Peers for this purpose include banks in the United States with total assets between $1 billion and $5 billion whose loan portfolios share certain characteristics with the Company's loan portfolio. Peers differ by loan segment; a bank is included in the peer group for each loan segment under the following circumstances: 
 • The percentage the balance of the loan segment compared to total loans over a five year look back period is within 0.5 standard deviations of the Company's data, and 
 • The percentage of total charge offs for the loan segment over a five year look back period is within 0.25 standard deviation of the Company's data; and 
 • The percentage of total charge offs for the loan segment during the recessionary period from the fourth quarter of 2008 to the fourth quarter of 2012 is within 0.25 standard deviation of the Company's data. 
 
 There were no other changes to estimates and assumptions used in the Company's ACL since December 31, 2023. 
 
 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 June 30, 2024, 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 12% lower, our ACL for loans would have increased $594,000, or 3%. As of June 30, 2024, if the four-quarter national unemployment rate forecast had been approximately 41% higher and the four-quarter annualized growth rate in the U.S. Gross Domestic Product had been approximately 5% higher, which represents management's estimate of long-term mean rates for these economic factors, our ACL for loans would have increased $2.6 million, or 15%. This sensitivity analysis includes 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. 
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 
 Our assessment of market risk as of June 30, 2024 indicates that there are no material changes in the quantitative and qualitative disclosures from those in our Annual Report on Form 10-K for the year ended December 31, 2023. 
 
 ITEM 4. CONTROLS AND PROCEDURES 
 Evaluation of Disclosure Controls and Procedures 
 As of the end of the period covered by this report, we evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Securities Exchange Act of 1934). Our principal executive and financial officers supervised and participated in this evaluation. Based on this evaluation, our principal executive and financial officers each concluded that as of June 30, 2024, the disclosure controls and procedures are effective in timely alerting them to material information required to be included in the periodic reports to the Securities and Exchange Commission. The design of any system of controls is based in part upon various assumptions about the likelihood of future events, and there can be no assurance that any of our plans, products, services or procedures will succeed in achieving their intended goals under future conditions. 
 Changes in Internal Control over Disclosure and Reporting 
 There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15-d-15(f) of the Securities Exchange Act of 1934) that occurred during the quarterly period ended June 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 
 
 56 

 PART II - OTHER INFORMATION 
 
 ITEM 1. LEGAL PROCEEDINGS 
 During the normal course of its business, the Company is a party to various debtor-creditor legal actions, disputes, claims, and litigation related to the conduct of its banking business. These include cases filed as a plaintiff in collection and foreclosure cases, and the enforcement of creditors’ rights in bankruptcy proceedings. Management does not expect that the resolution of these matters will have a material effect on the Company’s business, financial position, results of operations, or cash flows. 
 
 ITEM 1A. RISK FACTORS 
 For information regarding risk factors, please refer to Part I. Item 1A in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as updated by the Company's periodic filings with the SEC. These risk factors have not changed materially as of June 30, 2024. 
 
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES 
 (a)-(b) Not applicable 
 (c) There were no stock repurchases by the Company during the three-month period ending June 30, 2024. 
 
 57 

 ITEM 5. OTHER INFORMATION 
 Rule 10b5-1 Trading Plans 
 
 During the quarter ended June 30, 2024, none of the Company’s directors or executive officers adopted , modified or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.” 
 
 ITEM 6. EXHIBITS 
 
 31.1 
 Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) 
 
 31.2 
 Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) 
 
 32.1 
 Certification of Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 
 
 32.2 
 Certification of Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 
 
 101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document 
 
 101.SCH Inline XBRL Taxonomy Extension Schema Document 
 
 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 
 
 101.LAB Inline XBRL Taxonomy Extension Labels Linkbase Document 
 
 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 
 
 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 
 
 104 The cover page for the Company's Quarterly Report on 10-Q for the quarter ended June 30, 2024 - formatted in Inline XBRL (included in Exhibit 101) 
 
 58 

 SIGNATURES 
 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. 
 NORTHRIM BANCORP, INC. 
 
 July 31, 2024 By /s/ Michael G. Huston 
 Michael G. Huston 
 President, Chief Executive Officer
 and Chief Operating Officer 
 (Principal Executive Officer) 

 July 31, 2024 By /s/ Jed W. Ballard 
 Jed W. Ballard 
 Executive Vice President, Chief Financial Officer 
 (Principal Financial and Accounting Officer) 

 59
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.
NORTHRIM BANCORP INC 10-Q
