What changed in this filing

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Item 1. Financial Statements

2025-04-28 compared with 2024-10-30 · 394 added, 313 removed, 882 unchanged (44% of the section changed)

3 unchanged sentences

Consolidated Balance Sheets

September 30,

2025 December 31,

2 unchanged sentences

Interest bearing deposits in other banks 35,852 20,635

Investment securities available for sale, at fair value 545,210 637,936

Marketable equity securities 8,669 8,719

Investment securities available for sale, at fair value 463,096 478,617

Investment securities held to maturity, at amortized cost 36,750 36,750

26 unchanged sentences

Preferred stock, $ 1 par value, 2,500,000 shares authorized, none issued or outstanding

Common stock, $ 1 par value, 10,000,000 shares authorized, 5,501,943 and 5,513,459 issued and outstanding at September 30, 2024 and December 31, 2023, respectively

Common stock, $ 1 par value, 10,000,000 shares authorized, 5,520,892 and 5,518,210 issued and outstanding at March 31, 2025 and December 31, 2024, respectively

Additional paid-in capital 9,523 9,311

6 unchanged sentences

Consolidated Statements of Income

Three Months Ended Nine Months Ended

September 30, September 30,

Three Months Ended

(In Thousands, Except Per Share Data) 2025 2024

13 unchanged sentences

Net Interest Income 31,297 26,447

Provision for credit losses

(Benefit) provision for credit losses

( 1,409 ) 149

2 unchanged sentences

Other Operating Income

Purchased receivable income 6,150 1,345

Mortgage banking income 5,411 4,031

Bankcard fees 1,074 917

Purchased receivable income 1,033 1,180 3,620 3,175

Service charges on deposit accounts 677 549

Unrealized gain (loss) on marketable equity securities

576 12 830 ( 445 )

Other income 938 688

5 unchanged sentences

Professional and outside services 1,115 755

Marketing expense 860 499 2,063 1,996

Insurance expense 1,017 779

Marketing expense 672 513

Compensation expense - Sallyport acquisition payments

OREO expense, net rental income and gains on sale 3 ( 391 )

Intangible asset amortization expense — 4 — 11

Other operating expense 3,708 1,944

12 unchanged sentences

Consolidated Statements of Comprehensive Income

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

Three Months Ended March 31,

(In Thousands) 2025 2024

6 unchanged sentences

Unrealized holding gains (losses) arising during the period

( 488 ) 639 ( 160 ) 621

Foreign currency translation income (loss) 5 —

Income tax expense related to unrealized (gains) losses

1 unchanged sentence

Other comprehensive income, net of tax

7,231 1,402 9,682 4,040

Comprehensive income

10 unchanged sentences

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

Other comprehensive income, net of tax

— — — — 404 404

4 unchanged sentences

Stock-based compensation expense — — 219 — — 219

Repurchase of common stock ( 62 ) ( 62 ) ( 2,439 ) — — ( 2,501 )

Other comprehensive loss, net of tax — — — — ( 2,958 ) ( 2,958 )

Exercise of stock options and vesting of restricted stock units, net 2 2 ( 23 ) — — ( 21 )

Other comprehensive income, net of tax

— — — — 2,048 2,048

Net income — — — 9,020 — 9,020

4 unchanged sentences

Exercise of stock options and vesting of restricted stock units, net — — ( 13 ) — — ( 13 )

Repurchase of common stock ( 63 ) ( 63 ) ( 2,648 ) — — ( 2,711 )

Other comprehensive gain, net of tax

Other comprehensive income, net of tax

— — — — 7,231 7,231

5 unchanged sentences

Exercise of stock options and vesting of restricted stock units, net 16 16 ( 370 ) — — ( 354 )

Repurchase of common stock ( 56 ) ( 56 ) ( 2,449 ) — — ( 2,505 )

Other comprehensive gain, net of tax

Other comprehensive loss, net of tax

— — — — ( 270 ) ( 270 )

12 unchanged sentences

Exercise of stock options and vesting of restricted stock units, net 3 3 ( 20 ) — — ( 17 )

Repurchase of common stock ( 14 ) ( 14 ) ( 774 ) — — ( 788 )

Other comprehensive gain, net of tax

Other comprehensive income, net of tax

— — — — 2,674 2,674

1 unchanged sentence

Balance as of March 31, 2025 5,521 $ 5,521 $ 9,523 $ 269,062 ($ 4,350 ) $ 279,756

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

Cash dividend on common stock ($ 0.62 per share)

— — — ( 3,458 ) — ( 3,458 )

Stock-based compensation expense — — 265 — — 265

Exercise of stock options and vesting of restricted stock units, net — — ( 13 ) — — ( 13 )

Other comprehensive gain, net of tax

— — — — 7,231 7,231

Net income — — — 8,825 — 8,825

Balance as of September 30, 2024 5,502 $ 5,502 $ 9,460 $ 251,842 ($ 6,754 ) $ 260,050

See notes to consolidated financial statements

1 unchanged sentence

Consolidated Statements of Cash Flows

Nine Months Ended September 30,

Three Months Ended March 31,

(In Thousands) 2025 2024

1 unchanged sentence

Net income $ 13,324 $ 8,199

Adjustments to Reconcile Net Income to Net Cash (Used) by Operating Activities:

Adjustments to Reconcile Net Income to Net Cash Provided (Used) by Operating Activities:

Depreciation and amortization of premises and equipment 895 897

Amortization of software 511 865

Intangible asset amortization — 11

Amortization of investment security premium, net of discount accretion 50 111

2 unchanged sentences

Deferred loan fees and amortization, net of costs 502 ( 316 )

Provision for credit losses 2,092 2,957

(Benefit) provision for credit losses ( 1,409 ) 149

Additions to home mortgage servicing rights carried at fair value ( 1,230 ) ( 517 )

1 unchanged sentence

Change in fair value of commercial servicing rights carried at fair value 73 144

Change in fair value of loans held for sale

Gain on sale of loans ( 2,740 ) ( 1,979 )

3 unchanged sentences

Gain on sale of other real estate owned — ( 392 )

Impairment on other real estate owned — 123

Net changes in assets and liabilities:

1 unchanged sentence

Decrease in other assets 2,836 2,633

(Decrease) increase in other liabilities ( 6,808 ) 1,127

Net Cash (Used) by Operating Activities

( 44,245 ) ( 11,111 )

Increase (decrease) in other liabilities 1,420 ( 3,226 )

Net Cash Provided (Used) by Operating Activities 16,540 ( 5,545 )

Investing Activities:

1 unchanged sentence

Purchases of investment securities available for sale ( 15,187 ) —

Purchases of marketable equity securities ( 1,964 ) ( 324 )

Purchases of FHLB stock ( 7,472 ) ( 266 )

Proceeds from sales/calls/maturities of securities available for sale 34,631 45,640

Proceeds from calls of marketable equity securities

Proceeds from redemption of FHLB stock 7,461 10

Decrease (increase) in purchased receivables, net

13,278 ( 14,584 )

Increase in purchased receivables, net ( 21,457 ) ( 856 )

Increase in loans, net

( 96,010 ) ( 21,280 )

Proceeds from the sale of loans

Proceeds from sale of other real estate owned — 392

Purchases of software ( 419 ) ( 104 )

Sallyport Commercial Finance, LLC acquisition, net of cash received 144 —

Purchases of premises and equipment ( 208 ) ( 1,040 )

Net Cash (Used) by Investing Activities

( 100,692 ) ( 210,723 )

Net Cash (Used) Provided by Investing Activities ( 98,098 ) 22,600

Financing Activities:

Increase in deposits 140,512 40,719

Increase (decrease) in deposits 97,788 ( 50,972 )

(Decrease) increase in borrowings ( 9,909 ) ( 106 )

1 unchanged sentence

Cash dividends paid ( 3,534 ) ( 3,355 )

Net Cash Provided by Financing Activities

129,283 73,712

Net Cash Provided (Used) by Financing Activities 84,345 ( 55,221 )

Net Change in Cash and Cash Equivalents 2,787 ( 38,166 )

4 unchanged sentences

Interest paid $ 10,345 $ 9,173

Noncash commitments to invest in Low Income Housing Tax Credit Partnerships $ — $ 14,273

Transfer of loans to other real estate owned $ — $ 273

Non-cash lease liability arising from obtaining right of use assets $ 265 $ 423

Cash dividends declared but not paid $ 39 $ 33

2 unchanged sentences

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.

The Company prepares its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S.

The accompanying consolidated financial statements have not been audited, and they include the accounts of the Company and it's wholly-owned subsidiaries, and the wholly owned subsidiaries of Northrim Bank (the “Bank”).

Significant intercompany balances have been eliminated in consolidation.

As of December 31, 2024, the Company had one wholly-owned business trust subsidiary, Northrim Statutory Trust 2 (“Trust 2”), that was formed to issue trust preferred securities and related common securities of Trust 2.

The Company has not consolidated the accounts of Trust 2 in its consolidated financial statements in accordance with U.S.

As a result, the junior subordinated debentures issued by the Company to Trust 2 are reflected on the Company’s consolidated balance sheet as junior subordinated debentures.

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 determined that it operates in three primary operating segments:

Community Banking, Home Mortgage Lending, and Specialty Finance.

The Company has evaluated subsequent events and transactions for potential recognition or disclosure.

Operating results for the interim period ended September 30, 2024 are not necessarily indicative of the results anticipated for the year ending December 31, 2024.

Operating results for the interim period ended March 31, 2025 are not necessarily indicative of the results anticipated for the year ending December 31, 2025.

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, 2024.

5 unchanged sentences

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.

Accounting pronouncements to be implemented in future periods

4 unchanged sentences

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.

Business Combinations

On October 31, 2024, the Company completed the acquisition of 100 % of the equity interest in Sallyport Commercial Finance, LLC (“SCF” or “Sallyport”) in a cash transaction that is valued at approximately $ 53.9 million.

The primary reason for the acquisition was to expand the Company's presence in the specialty finance industry.

SCF provides factoring, asset based lending, and alternative working capital solutions to small and medium sized enterprises in the United States, and, to a lessor extent, in Canada and the United Kingdom through its subsidiaries.

SCF will operate as a wholly-owned subsidiary of the Bank, and is expected to complement the products currently offered by Northrim Funding Services, a factoring division of the Bank.

The consideration transferred or transferable to the former owners of SCF and the assets acquired and liabilities assumed have been accounted for under the acquisition method of accounting and were recorded at their estimated fair values as of the October 31, 2024 acquisition date.

The Company paid $ 47.9 million in cash on October 31, 2024 when the acquisition was completed.

The Company had pre-existing loans to SCF which totaled $ 12.0 million.

The fair value of these loans approximate their carrying value, and as a result of the acquisition, the loans were effectively settled at their carrying value, resulting in no gain or loss.

The fair value of the loans were considered as part of the total purchase consideration in the transaction.

Estimated fair values recorded in the transaction are subject to change for up to one year after the closing date of the acquisition.

The application of the acquisition method of accounting resulted in the initial recognition of goodwill in the amount of $ 35.0 million.

No other intangibles were identified.

In February 2025, in accordance with the terms of the purchase agreement, the Company determined the final value of consideration transferred to the former owners of SCF.

The final value of consideration transferred decreased $ 144,000 to $ 47.7 million from $ 47.9 million, which decreased goodwill to $ 34.9 million.

The former owners of SCF (the “sellers”) will receive additional cash proceeds (the “earn-out payments”) of up to $ 6.0 million.

The earn-out payments of $ 2.0 million per year are payable on each of the first three anniversaries of the closing date.

The purchase agreement provides for the these earn-out payments to be paid to the sellers in future periods, provided that certain principal employees of SCF, including certain of the sellers, have not been terminated for cause or terminated their employment for good reason.

The earn-out payments have not been included in acquisition consideration and are being expensed as compensation expense during the periods in which they are being earned based on management's determination that payment of these amounts is probable.

A summary of the net assets acquired and the estimated fair value adjustments are presented below:

(In Thousands) October 31, 2024

Cost basis net assets $ 29,638

Cash payment made ( 47,855 )

Pre-existing debt effectively settled ( 12,000 )

Fair value adjustments:

Net loans ( 1,260 )

Net purchased receivables ( 3,524 )

Goodwill ($ 35,001 )

The $ 35.0 million of goodwill recorded in connection with the acquisition of SCF represents the excess purchase price over the estimated fair value of the net assets acquired, and resulted from the expected decrease in funding costs and, to a lesser extent, expected operational efficiencies.

All of the goodwill is expected to be deductible for tax purposes.

A summary of the assets acquired and liabilities assumed at their estimated fair values are presented below:

(In Thousands) October 31, 2024

Assets Acquired:

Cash and equivalents $ 7,197

Loans, net 9,158

Purchased receivables, net 48,034

Premises and equipment

Right-of-use assets 44

Other assets 1,642

Total assets acquired $ 66,129

Liabilities Assumed:

Borrowings $ 40,207

Lease liability 47

Other liabilities 1,021

Total liabilities assumed $ 41,275

The fair value of assets acquired and liabilities assumed approximates book value as of the acquisition date as all loans and borrowings have variable interest rates.

Purchased receivables have an average life of less than 45 days.

Some of the assets acquired exhibited evidence of credit deterioration at the acquisition date.

These assets were designated as purchased credit deteriorated (“PCD”) assets in accordance with U.S.

The following table presents PCD loan and purchased receivable activity at the date of acquisition:

(In Thousands) Loans Purchased Receivables

Unpaid principal balance $ 10,418 $ 51,558

ACL at acquisition ( 1,260 ) ( 3,524 )

Total $ 9,158 $ 48,034

Based on an evaluation in accordance with Rule 3-05 and Rule 11-01(b) of Regulations S-X, the acquisition of SCF does not meet the significance thresholds requiring separate financial statement disclosure.

The operations of SCF are included in our operating results from October 31, 2024, and added revenue of $ 2.6 million, non-interest expense of $ 1.5 million, and net income of $ 943,000 , before taxes, for the year ended December 31, 2024.

SCF’s results of operations prior to the acquisition are not included in our operating results.

Additionally, deal-related costs of $ 1.1 million for the year ended December 31, 2024 have been incurred and expensed in connection with the acquisition of Sallyport and recognized within professional and outside services expense on the Consolidated Statements of Income .

The following table presents unaudited pro forma results of operations for the three-month period ended March 31, 2024 as if the acquisition of SCF had occurred on January 1, 2024.

The proforma results have been prepared for comparative purposes only and are not necessarily indicative of the results that would have been obtained had the acquisition actually occurred on January 1, 2024, primarily due to the Company's lower cost of funding as compared to SCF.

(In Thousands, except per share data) Three Months Ended March 31, 2024

Pro Forma Adjustments 2

Pro Forma Combined

Net interest and other income $ 34,291 $ 5,122 $ 39,413

Net income 8,199 1,123 ( 319 ) 9,003

Earnings Per Share, Basic $ 1.49 $ 1.64

Earnings Per Share, Diluted $ 1.48 $ 1.62

Weighted Average Shares Outstanding, Basic 5,499,578 5,499,578

Weighted Average Shares Outstanding, Diluted 5,554,930 5,554,930

1 SCF represents unaudited results from January 1 to March 31 for 2024.

2 Proforma adjustments include a provision for income taxes using the Company's statutory rate.

Investment Securities

Marketable Equity Securities

The Company held marketable equity securities with fair values of $ 13.0 million and $ 13.2 million at September 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 September 30, Nine Months Ended September 30,

The Company held marketable equity securities with fair values of $ 8.7 million at both March 31, 2025 and December 31, 2024.

The 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 March 31,

(In Thousands) 2025 2024

6 unchanged sentences

(In Thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Allowance for Credit Losses Fair Value

September 30, 2024

March 31, 2025

Securities available for sale

Treasury and government sponsored entities $ 424,446 $ 865 ($ 8,340 ) $ — $ 416,971

Agency mortgage-backed securities 5,063 — — 5,063

Corporate bonds 5,009 — ( 173 ) — 4,836

2 unchanged sentences

(In Thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value

September 30, 2024

March 31, 2025

Securities held to maturity

6 unchanged sentences

Treasury and government sponsored entities $ 444,370 $ 294 ($ 11,733 ) $ — $ 432,931

Municipal securities 820 — ( 4 ) — 816

Corporate bonds 9,009 9 ( 223 ) — 8,795

7 unchanged sentences

Total securities held to maturity, net of ACL $ 36,750 $ 175 ($ 1,175 ) $ 35,750

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 September 30, 2024 and December 31, 2023 were as follows:

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 March 31, 2025 and December 31, 2024 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

September 30, 2024

March 31,2025

Securities available for sale

3 unchanged sentences

Total $ 39,026 ($ 118 ) $ 336,277 ($ 8,400 ) $ 375,303 ($ 8,518 )

Securities Held to Maturity

Corporate bonds

$ — $ — $ 20,593 ($ 1,157 ) $ 20,593 ($ 1,157 )

Total $ — $ — $ 20,593 ($ 1,157 ) $ 20,593 ($ 1,157 )

December 31, 2024:

3 unchanged sentences

Collateralized loan obligations — — 4,993 ( 2 ) 4,993 ( 2 )

Municipal securities — — 816 ( 4 ) 816 ( 4 )

Total $ 44,262 ($ 422 ) $ 368,225 ($ 11,536 ) $ 412,487 ($ 11,958 )

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.

Securities Held to Maturity

Corporate bonds

$ — $ — $ 20,575 ($ 1,175 ) $ 20,575 ($ 1,175 )

Total $ — $ — $ 20,575 ($ 1,175 ) $ 20,575 ($ 1,175 )

Management evaluates available for sale debt securities and securities held to maturity 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 September 30, 2024, the Company had 50 available for sale securities in an unrealized loss position without an ACL.

At September 30, 2024, the Company had five held to maturity securities in an unrealized loss position without an ACL.

At March 31, 2025, the Company had six available for sale securities in an unrealized loss position without an ACL, respectively, that have been in a loss position for less than twelve months.

There were 36 available for sale securities without an ACL with unrealized losses at March 31, 2025 that have been in a loss position for more than twelve months.

At March 31, 2025, the Company had three held to maturity securities in an unrealized loss position without an ACL that have been in a loss position for more than twelve months.

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 September 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 September 30, 2024 and December 31, 2023, carrying amounts of $ 179.2 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 September 30, 2024, are distributed by contractual maturity as shown below.

Accordingly, as of March 31, 2025, management believes that the unrealized losses detailed in the previous table are due to noncredit-related factors, primarily changes in interest rates and other market conditions, and therefore no losses have been recognized in the Company's Consolidated Statements of Income .

At March 31, 2025 and December 31, 2024, carrying amounts of $ 200.8 million and $ 177.4 million in securities were pledged for deposits and borrowings, respectively.

The amortized cost and estimated fair values of available for sale and held to maturity debt securities at March 31, 2025, 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.

4 unchanged sentences

Total $ 424,446 $ 416,971

Agency mortgage-backed securities

Over 10 years $ 5,063 $ 5,063

Total $ 5,063 $ 5,063

Corporate bonds

7 unchanged sentences

Total $ 36,196 $ 36,226

There were no proceeds from sales of investment securities for the three or nine-month periods ending September 30, 2024 and 2023.

A summary of interest income for the three and nine-month periods ending September 30, 2024 and 2023, on available for sale investment securities are as follows:

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

There were no proceeds from sales of investment securities for the three-month periods ending March 31, 2025 and 2024.

A summary of interest income for the three-month periods ending March 31, 2025 and 2024, on available for sale investment securities are as follows:

Three Months Ended March 31,

(In Thousands) 2025 2024

US Treasury and government sponsored entities $ 2,324 $ 2,569

Agency mortgage-backed securities 4 —

Other 624 1,146

5 unchanged sentences

Loans Held for Sale

Loans held for sale are comprised entirely of 1-4 family residential mortgage loans as of September 30, 2024 and December 31, 2023.

Loans held for sale are comprised entirely of 1-4 family residential mortgage loans as of March 31, 2025 and December 31, 2024.

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.

1 unchanged sentence

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:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

(In Thousands) Amortized Cost Unpaid Principal Difference Amortized Cost Unpaid Principal Difference

15 unchanged sentences

Net loans $ 2,103,408 $ 2,134,019 ($ 9,689 ) $ 2,107,243 $ 2,138,450 ($ 9,187 )

The difference between the amortized cost and unpaid principal balance is net deferred origination fees totaling $ 8.7 million at September 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 $ 9.0 million and $ 7.4 million at September 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 $ 1.2 million and $ 2.8 million as of September 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.

The difference between the amortized cost and unpaid principal balance is net deferred origination fees totaling $ 9.7 million at March 31, 2025 and $ 9.2 million at December 31, 2024.

Accrued interest on loans, which is excluded from the amortized cost of loans held for investment, totaled $ 9.9 million and $ 8.4 million at March 31, 2025 and December 31, 2024, respectively, and is included in other assets in the Consolidated Balance Sheets .

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 September 30, Beginning Balance Credit Loss Expense (Benefit) Charge-offs Recoveries Ending Balance

(In Thousands)

Commercial & industrial loans $ 4,047 $ 153 $ — $ 104 $ 4,304

Commercial real estate:

Owner occupied properties 2,963 ( 42 ) — — 2,921

Non-owner occupied and multifamily properties 3,499 273 — — 3,772

Residential real estate:

1-4 family residential properties secured by first liens 3,489 571 — — 4,060

1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 665 62 — 6 733

1-4 family residential construction loans 180 62 — — 242

Other construction, land development and raw land loans 2,526 639 — — 3,165

Obligations of states and political subdivisions in the US 100 — — — 100

Agricultural production, including commercial fishing 157 ( 3 ) — 1 155

Consumer loans 61 25 ( 15 ) — 71

Other loans 7 ( 2 ) — — 5

Total $ 17,694 $ 1,738 ($ 15 ) $ 111 $ 19,528

Commercial & industrial loans $ 3,418 ($ 55 ) ($ 91 ) $ 181 $ 3,453

Commercial real estate:

Owner occupied properties 2,807 ( 15 ) — — 2,792

Non-owner occupied and multifamily properties 3,260 ( 36 ) — — 3,224

Residential real estate:

1-4 family residential properties secured by first liens 3,206 334 — — 3,540

1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 423 78 — 5 506

1-4 family residential construction loans 206 ( 31 ) — — 175

Other construction, land development and raw land loans 1,996 480 — — 2,476

Obligations of states and political subdivisions in the US 88 ( 11 ) — — 77

Agricultural production, including commercial fishing 162 2 — — 164

Consumer loans 74 4 — 1 79

Other loans 5 — — — 5

Total $ 15,645 $ 750 ($ 91 ) $ 187 $ 16,491

Nine Months Ended September 30, Beginning Balance Credit Loss Expense (Benefit) Charge-offs Recoveries Ending Balance

Three Months Ended March 31, Beginning Balance Credit Loss Expense (Benefit) Charge-offs Recoveries Ending Balance

(In Thousands)

28 unchanged sentences

The following table shows gross charge-offs by year of loan origination for the periods indicated:

Nine Months Ended September 30,

Three Months Ended March 31,

(In Thousands) 2025 2024 2023 2022 2021 Prior Total

Agricultural production, including commercial fishing $ — $ — $ 25 $ — $ — $ — $ 25

Commercial & industrial loans $ — $ — $ — $ — $ 37 $ — $ 37

Consumer loans — — 3 — — 10 13

18 unchanged sentences

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.

They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful – 9:

6 unchanged sentences

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.

September 30, 2024 2024 2023 2022 2021 2020 Prior Total

March 31, 2025 2025 2024 2023 2022 2021 Prior Total

(In Thousands)

116 unchanged sentences

Due Current Total Greater Than 90 Days Past Due Still Accruing

September 30, 2024

March 31, 2025

Commercial & industrial loans $ — $ 80 $ 1,499 $ 1,579 $ 490,366 $ 491,945 $ —

1 unchanged sentence

Owner occupied properties

— — 217 217 428,226 428,443 —

Non-owner occupied and multifamily properties

— — — — 686,097 686,097 —

Residential real estate:

1-4 family residential properties secured by first liens

991 — — 991 187,095 188,086 —

1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens

— — 460 460 53,765 54,225 —

1-4 family residential construction loans

— — — — 33,786 33,786 —

Other construction, land development and raw land loans — — 1,490 1,490 153,668 155,158 —

8 unchanged sentences

Owner occupied properties

— 492 224 716 417,376 418,092 —

Non-owner occupied and multifamily properties

— — — — 615,662 615,662 —

Residential real estate:

1-4 family residential properties secured by first liens

712 323 205 1,240 269,726 270,966 —

1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens

— — 466 466 48,694 49,160 17

1-4 family residential construction loans

— — 94 94 39,422 39,516 —

Other construction, land development and raw land loans — — 1,432 1,432 211,129 212,561 —

5 unchanged sentences

Nonaccrual loans:

Nonaccrual loans net of government guarantees totaled $ 4.9 million and $ 5.0 million at September 30, 2024 and December 31, 2023, respectively.

Nonaccrual loans net of government guarantees totaled $ 8.0 million and $ 7.5 million at March 31, 2025 and December 31, 2024, 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.

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

(In Thousands) Nonaccrual Nonaccrual With No ACL Nonaccrual Nonaccrual With No ACL

11 unchanged sentences

Net nonaccrual loans $ 7,988 $ 4,053 $ 7,516 $ 6,976

There was no interest on nonaccrual loans reversed through interest income during the three and nine-month periods ending September 30, 2024 or September 30, 2023.

There was no interest earned on nonaccrual loans with a principal balance during the three and nine-month periods ending September 30, 2024 and September 30, 2023.

However, the Company recognized interest income of $ 11,000 and $ 200,000 in the three-month periods ending September 30, 2024 and 2023, respectively, and $ 245,000 and $ 584,000 in the nine-month periods ending September 30, 2024 and 2023, respectively, related to interest collected on nonaccrual loans whose principal had been paid down to zero.

There was no interest on nonaccrual loans reversed through interest income during the three-month periods ending March 31, 2025 or March 31, 2024.

There was no interest earned on nonaccrual loans with a principal balance during the three-month periods ending March 31, 2025 and March 31, 2024.

However, the Company recognized interest income of $ 42,000 and $ 202,000 in the three-month periods ending March 31, 2025 and 2024, respectively, related to interest collected on nonaccrual loans whose principal had been paid down to zero.

Loan Modifications:

3 unchanged sentences

The Company may provide multiple types of concessions on any 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 following table shows the amortized cost basis of the loans that were both experiencing financial difficulty and modified during the periods 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 September 30, 2024

Three Months Ended March 31, 2025

Payment Modification Term and payment modifications Total Modifications Percentage of Class of Financing Receivable

(In Thousands)

Commercial & industrial loans $ — $ 195 $ 195 0.05 %

Residential real estate:

1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 372 — 372 0.82 %

Total $ 372 $ 195 $ 567 0.03 %

Three Months Ended September 30, 2023

Term Modification Term and payment modifications Total Modifications Percentage of Class of Financing Receivable

(In Thousands)

Commercial real estate:

Owner occupied properties $ — $ 3,252 $ 3,252 0.76 %

Residential real estate:

1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 119 — 119 0.43 %

1-4 family residential construction loans 109 — 109 0.34 %

Other construction, land development and raw land loans 968 577 1,545 1.29 %

Total $ — $ 3,252 $ 3,252 0.15 %

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2024

Term Modification Term and payment modifications Total Modifications Percentage of Class of Financing Receivable

1 unchanged sentence

Commercial & industrial loans $ 5,396 $ 265 $ 5,661 1.43 %

Residential real estate:

1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens — — 372 0.82 %

Total $ 5,396 $ 842 $ 5,661 0.31 %

Nine Months Ended September 30, 2023

Term Modification Payment Modification Term and payment modifications Total Modifications Percentage of Class of Financing Receivable

(In Thousands)

Commercial & industrial loans $ 1,511 $ 1,985 $ — $ 3,496 0.84 %

Commercial real estate:

Owner occupied properties — — 271 271 0.08 %

Residential real estate:

1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 119 — — 119 0.43 %

1-4 family residential construction loans 109 — — 109 0.34 %

Other construction, land development and raw land loans 968 — 577 1,545 1.29 %

Total $ 2,707 $ 1,985 $ 848 $ 5,540 0.32 %

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 September 30, 2024

Principal Forgiveness Weighted-Average Interest Rate Reduction Weighted-Average Term Extension (months)

(In Thousands)

Commercial & industrial loans $ — — % 73

Three Months Ended September 30, 2023

Three Months Ended March 31, 2025

Principal Forgiveness Weighted-Average Interest Rate Reduction Weighted-Average Term Extension (months)

2 unchanged sentences

Owner occupied properties $ — — % 33

Residential real estate:

1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens — — % 5

1-4 family residential construction loans — — % 5

Other construction, land development and raw land loans — — % 5

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2024

Principal Forgiveness Weighted-Average Interest Rate Reduction Weighted-Average Term Extension (months)

1 unchanged sentence

Commercial & industrial loans $ — 8 % 7

Nine Months Ended September 30, 2023

Principal Forgiveness Weighted-Average Interest Rate Reduction Weighted-Average Term Extension (months)

The following table presents the amortized cost basis of loans to borrowers experiencing financial difficulty as of the dates indicated:

March 31, 2025 December 31, 2024

(In Thousands)

6 unchanged sentences

Other construction, land development and raw land loans 1,490 1,432

Total $ 9,736 $ 7,291

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 September 30, 2024 Nine Months Ended September 30, 2024

Term modification Term modification

Three Months Ended March 31, 2025

Term modification

(In Thousands)

3 unchanged sentences

Other construction, land development and raw land loans —

Total $ — $ 977

Three Months Ended September 30, 2023

Term modification Term and payment modification

Three Months Ended March 31, 2024

Term modification

(In Thousands)

Commercial real estate:

Owner occupied properties $ — $ 271

Residential real estate:

5 unchanged sentences

The following table presents the payment performance of loans that have been modified in the last twelve months as of the date indicated:

September 30, 2024

March 31, 2025

60-89 Days Past Due Greater Than 89 Days Past Due Total Past Due Current

5 unchanged sentences

1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens — 460 460 — 460

1-4 family residential construction loans — 99 99 — 99

Other construction, land development and raw land loans — 1,490 1,490 — 1,490

Total $ — $ 2,167 $ 2,167 $ 7,569 $ 9,736

September 30, 2023

March 31, 2024

30-59 Days Past Due Greater Than 89 Days Past Due Total Past Due Current Total

12 unchanged sentences

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 September 30, 2024 or December 31, 2023, and there were no restructured purchased receivables at September 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 September 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 September 30, 2024 or December 31, 2023.

There were seven nonperforming purchased receivables with a balance of $ 4.0 million as of March 31, 2025 and there were four nonperforming purchased receivable with a balance of $ 3.8 million as of December 31, 2024 for which management was not accruing income.

The following table summarizes the components of net purchased receivables for the dates indicated:

(In Thousands) September 30, 2024 December 31, 2023

(In Thousands) March 31, 2025 December 31, 2024

Purchased receivables $ 99,184 $ 77,727

1 unchanged sentence

Total $ 95,489 $ 74,078

The following table sets forth information regarding changes in the ACL on purchased receivables for the period indicated:

Three Months Ended March 31,

(In Thousands) 2025 2024

Balance at beginning of year $ 3,649 $ —

Charge-offs — —

Recoveries — —

Charge-offs net of recoveries — —

Provision for purchased receivables

Balance at end of year $ 3,695 $ —

Servicing Rights

Mortgage servicing rights

The following table details the activity in the Company's mortgage servicing rights (“MSR”) for the three and nine-month periods ended September 30, 2024 and 2023:

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

The following table details the activity in the Company's mortgage servicing rights (“MSR”) for the three-month periods ended March 31, 2025 and 2024:

Three Months Ended March 31,

(In Thousands) 2025 2024

4 unchanged sentences

( 533 ) ( 314 )

( 402 ) ( 310 ) ( 1,036 ) ( 1,464 )

Balance, end of period $ 26,814 $ 20,055

1 unchanged sentence

(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 September 30, 2024 and December 31, 2023:

(In Thousands) September 30, 2024 December 31, 2023

The following table details information related to our serviced mortgage loan portfolio as of March 31, 2025 and December 31, 2024:

(In Thousands) March 31, 2025 December 31, 2024

Balance of mortgage loans serviced for others $ 1,484,714 $ 1,460,720

2 unchanged sentences

MSR as a percentage of serviced loans 1.81 % 1.81 %

The Company recognized servicing fees of $ 1.1 million and $ 937,000 during the three-month periods ending September 30, 2024 and 2023, respectively, and $ 3.2 million and $ 2.7 million during the nine-month periods ending September 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 Company recognized servicing fees of $ 1.5 million and $ 1.0 million during the three-month periods ending March 31, 2025 and 2024, 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.

1 unchanged sentence

(In Thousands)

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Fair value of MSRs

25 unchanged sentences

Commercial servicing rights

The commercial servicing rights asset (“CSR”) has a carrying value of $ 2.1 million at September 30, 2024 and $ 2.2 million at 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 $ 275.8 million and $ 282.2 million at September 30, 2024 and December 31, 2023, respectively.

Key assumptions used in measuring the fair value of the CSR as of September 30, 2024 and December 31, 2023 include a constant prepayment rate of 11.76 % and a discount rate of 9.50 %.

The commercial servicing rights asset (“CSR”) has a carrying value of $ 2.3 million at March 31, 2025 and $ 2.2 million at December 31, 2024, 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 $ 295.3 million and $ 279.7 million at March 31, 2025 and December 31, 2024, respectively.

Key assumptions used in measuring the fair value of the CSR as of March 31, 2025 and December 31, 2024 include a constant prepayment rate of 11.38 % and a discount rate of 12.00 %.

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 September 30, 2024, the Company has operating lease ROU assets of $ 7.6 million and operating lease liabilities of $ 7.6 million.

As of March 31, 2025, the Company has operating lease ROU assets of $ 7.6 million and operating lease liabilities of $ 7.7 million.

As of December 31, 2024, the Company had operating lease ROU assets of $ 7.5 million and operating lease liabilities of $ 7.5 million.

The Company did not have any agreements that are classified as finance leases as of September 30, 2024 or December 31, 2023.

The Company did not have any agreements that are classified as finance leases as of March 31, 2025 or December 31, 2024.

The following table presents additional information about the Company's operating leases for the periods indicated:

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

Three Months Ended March 31,

(In Thousands) 2025 2024

Operating lease cost (1)

$ 743 $ 708 $ 2,225 $ 2,109

Short term lease cost (1)

7 unchanged sentences

(In Thousands) Operating Leases

2024 (Three months) $ 678

2025 (Nine months) $ 1,999

Thereafter 3,751

7 unchanged sentences

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 $ 580,000 as of September 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 $ 278.6 million and $ 218.0 million at September 30, 2024 and December 31, 2023, respectively.

At September 30, 2024, the notional amount of interest rate swaps is made up of 23 variable to fixed rate swaps to commercial loan customers totaling $ 139.3 million, and 23 fixed to variable rate swaps with a counterparty totaling $ 139.3 million.

Changes in fair value from these 23 interest rate swaps offset each other in the three and nine-month periods ending September 30, 2024.

The Company recognized $ 287,000 and no fee income related to interest rate swaps in the three-month periods ending September 30, 2024 and 2023, respectively, and $ 361,000 and $ 61,000 in fee income related to interest rate swaps in the nine-month periods ending September 30, 2024 and 2023, respectively.

The Company pledged $ 584,000 as of March 31, 2025 and $ 579,000 as of December 31, 2024, 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 $ 321.2 million and $ 309.0 million at March 31, 2025 and December 31, 2024, respectively.

At March 31, 2025, the notional amount of interest rate swaps is made up of 26 variable to fixed rate swaps to commercial loan customers totaling $ 160.6 million, and 26 fixed to variable rate swaps with a counterparty totaling $ 160.6 million.

Changes in fair value from these 26 interest rate swaps offset each other in the three-month periods ending March 31, 2025.

The Company recognized $ 129,000 and $ 63,000 in fee income related to interest rate swaps in the three-month periods ending March 31, 2025 and 2024, respectively.

Interest rate swap income is recorded in other operating income on the Consolidated Statements of Income .

5 unchanged sentences

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 6.58 % as of September 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 September 30, 2024 and December 31, 2023.

This rate was 5.93 % as of March 31, 2025.

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 March 31, 2025 and December 31, 2024.

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 $ 863,000 as of September 30, 2024 and the unrealized gain, net of tax was $ 1.0 million as of December 31, 2023.

The unrealized gain, net of tax on this interest rate swap was $ 1.1 million as of March 31, 2025 and the unrealized gain, net of tax was $ 1.3 million as of December 31, 2024.

Derivatives related to home mortgage banking activities

4 unchanged sentences

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 $ 77.6 million and $ 22.9 million at September 30, 2024 and December 31, 2023, respectively.

Residential Mortgage Holding Company, LLC, the parent company of Residential Mortgage, LLC (collectively “RML”) had commitments to originate mortgage loans held for sale totaling $ 68.3 million and $ 32.3 million at March 31, 2025 and December 31, 2024, 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.

The following table presents the fair value of derivatives not designated as hedging instruments at September 30, 2024 and December 31, 2023:

The following table presents the fair value of derivatives not designated as hedging instruments at March 31, 2025 and December 31, 2024:

(In Thousands) Asset Derivatives

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Balance Sheet Location Fair Value Fair Value

1 unchanged sentence

Interest rate lock commitments Other assets 1,389 465

Retail interest rate contracts Other assets — 49

Total $ 11,624 $ 13,525

(In Thousands) Liability Derivatives

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Balance Sheet Location Fair Value Fair Value

3 unchanged sentences

The following table presents the net gains (losses) of derivatives not designated as hedging instruments for periods indicated below:

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

Three Months Ended March 31,

(In Thousands) Income Statement Location 2025 2024

5 unchanged sentences

We do not offset such financial instruments for financial reporting purposes.

The following table summarizes the derivatives that have a right of offset as of September 30, 2024 and December 31, 2023:

September 30, 2024 Gross amounts not offset in the Statement of Financial Position

The following table summarizes the derivatives that have a right of offset as of March 31, 2025 and December 31, 2024:

March 31, 2025 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

8 unchanged sentences

Interest rate swaps $ 13,011 $ — $ 13,011 $ — $ — $ 13,011

Retail interest rate contracts 49 — 49 — — 49

Liability Derivatives

Interest rate swaps $ 13,011 $ — $ 13,011 $ — $ 13,011 $ —

Retail interest rate contracts 13 — 13 — — 13

Fair Value Measurements

15 unchanged sentences

majority of inputs used to value its interest rate derivatives fall within Level 2 of the fair value hierarchy, the credit valuation 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 September 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.

However, as of March 31, 2025, 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.

17 unchanged sentences

Estimated fair values as of the periods indicated are as follows:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

(In Thousands) Carrying Amount Fair Value Carrying Amount Fair Value

6 unchanged sentences

Investment securities available for sale 215,704 215,704 209,836 209,836

Investment in Federal Home Loan Bank stock 4,318 4,318 2,980 2,980

Loans held for sale 159,603 159,603 59,957 59,957

Accrued interest receivable 12,909 12,909 11,958 11,958

Interest rate swaps 11,768 11,768 14,788 14,788

9 unchanged sentences

Deposits $ 2,777,977 $ 2,779,991 $ 2,680,189 $ 2,683,029

Accrued interest payable 707 707 202 202

Borrowings 13,136 10,393 23,045 19,991

Interest rate swaps 10,235 10,235 13,011 13,011

Retail interest rate contracts 96 96 13 13

Level 3 inputs:

2 unchanged sentences

(In Thousands) Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

September 30, 2024

March 31, 2025

Available for sale securities

Treasury and government sponsored entities $ 416,971 $ 247,392 $ 169,579 $ —

Agency mortgage-backed securities 5,063 — 5,063 —

Corporate bonds 4,836 — 4,836 —

24 unchanged sentences

Commercial servicing rights 2,194 — — 2,194

Retail interest rate contracts 49 — 49 —

Total other assets $ 43,935 $ — $ 14,837 $ 29,098

Interest rate swaps $ 13,011 $ — $ 13,011 $ —

Retail interest rate contracts 13 — 13 —

Total other liabilities $ 13,011 $ — $ 13,011 $ —

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 nine-month periods ended September 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 September 30, 2024

Interest rate lock commitments $ 1,059 ($ 647 ) $ 5,173 ($ 4,258 ) $ 1,327 $ 1,327

Mortgage servicing rights 21,077 ( 968 ) 1,461 — 21,570 —

Commercial servicing rights 2,116 ( 10 ) 30 — 2,136 —

Total $ 24,252 ($ 1,625 ) $ 6,664 ($ 4,258 ) $ 25,033 $ 1,327

Three Months Ended September 30, 2023

Interest rate lock commitments $ 851 ($ 267 ) $ 2,021 ($ 2,087 ) $ 518 $ 518

Mortgage servicing rights 18,248 ( 310 ) 1,458 — 19,396 —

Commercial servicing rights 2,139 ( 39 ) 18 — 2,118 —

Total $ 21,238 ($ 616 ) $ 3,497 ($ 2,087 ) $ 22,032 $ 518

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Interest rate lock commitments $ 465 ($ 226 ) $ 1,996 ($ 846 ) $ 1,389 $ 1,389

2 unchanged sentences

Total $ 29,098 ($ 1,154 ) $ 3,422 ($ 846 ) $ 30,520 $ 1,389

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Interest rate lock commitments $ 342 ($ 275 ) $ 2,513 ($ 1,815 ) $ 765 $ 765

2 unchanged sentences

Total $ 22,106 ($ 429 ) $ 3,058 ($ 1,815 ) $ 22,920 $ 765

There were no changes in unrealized gains and losses for the three and nine-month periods ending September 30, 2024 and 2023 included in other comprehensive income for recurring Level 3 fair value measurements.

As of and for the periods ending September 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.

There were no changes in unrealized gains and losses for the three-month periods ending March 31, 2025 and 2024 included in other comprehensive income for recurring Level 3 fair value measurements.

As of and for the periods ending March 31, 2025 and December 31, 2024, 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.

(In Thousands) Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

September 30, 2024

March 31, 2025

Loans individually measured for credit losses $ — $ — $ — $ —

3 unchanged sentences

Total $ — $ — $ — $ —

The following table presents the (gains) losses resulting from nonrecurring fair value adjustments for the three and nine-month periods ended September 30, 2024 and 2023:

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

The following table presents the (gains) losses resulting from nonrecurring fair value adjustments for the three-month periods ended March 31, 2025 and 2024:

Three Months Ended March 31,

(In Thousands) 2025 2024

3 unchanged sentences

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 September 30, 2024 and December 31, 2023:

Financial Instrument Valuation Technique - Recurring Basis

Unobservable Input Weighted Average Rate Range

September 30, 2024

March 31, 2025

Interest rate lock commitment External pricing model Pull through rate 91.19 %

9 unchanged sentences

Discount rate 12.00 %

Financial Instrument Valuation Technique - Nonrecurring Basis

Unobservable Input Weighted Average Rate Range

September 30, 2024

Loans individually measured for credit losses In-house valuation of collateral Discount rate 47 %

Segment Information

The Company's operations are managed along two operating segments:

Community Banking and Home Mortgage Lending.

The Company's operations are managed along three operating segments:

Community Banking, Home Mortgage Lending, and Specialty Finance.

The Company reevaluated our reportable operating segments in the fourth quarter of 2024 concurrent with the acquisition of SCF, which resulted in the addition of the Specialty Finance segment.

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 September 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 September 30, 2024

(In Thousands) Community Banking Home Mortgage Lending Consolidated

As of March 31, 2025, 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, mortgage loan servicing for a portion of mortgage loans sold, and investment in certain 1-4 family residential mortgage loans on our balance sheet.

The Specialty Finance segment's principal business focus is factoring, asset based lending and alternative working capital solutions to small and medium sized enterprises, and includes SCF and Northrim Funding Services, which was previously reported in the Community Banking segment prior to the acquisition of SCF.

The Company's reportable segments are determined by our Chief Financial Officer and the Chief Executive Officer, whom collectively are the designated chief operating decision maker.

The reportable segments are determined based on information provided about the Company's products and services offered.

They are also distinguished by the level of information provided to the chief operating decision maker, who uses the information to review performance of various components of the business, which are then aggregated if operating performance, products and services, and customers are similar.

The chief operating decision maker evaluates the financial performance of the Company's business components such as by evaluating revenue streams, significant expenses, and budget to actual results in assessing the performance of the Company's segments and in the determination of allocating resources.

Segment pretax net income or loss is used to assess the performance of the community banking segment by monitoring the margin between interest income and interest expense and the efficiency ratio specific to the segment.

Segment pretax net income or loss is used to assess the performance of the home mortgage lending segment by monitoring the premium received on loan sales, the margin between interest income and interest expense, and the profitability of home mortgage servicing activities.

Segment pretax net income or loss is used to assess the performance of the specialty finance segment by monitoring pretax income and the yield of purchased receivable fees.

Accounting policies for segments are the same as those described in Note 1 to the Consolidated Financial Statements.

Interest expense is allocated to each segment based on average cash utilized to fund the operations of the segment and the average cost of interest-bearing liabilities for the consolidated entity.

Indirect salary expense for activities such as general management, accounting and finance, human resources, compliance, information technology, risk management, and internal audit are allocated based on the average percentage of employee time spent working in each specific segment.

Summarized financial information for the Company's reportable segments and the reconciliation to the consolidated financial results for the periods presented is shown in the following tables:

Three Months Ended March 31, 2025

(In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated

Interest income $ 36,573 $ 4,392 $ 596 $ 41,561

1 unchanged sentence

Net interest income 28,151 3,046 100 31,297

(Benefit) provision for credit losses 1,492 571 2,063

Provision (benefit) for credit losses

( 1,768 ) ( 307 ) 666 ( 1,409 )

Net interest income after provision for credit losses 29,919 3,353 ( 566 ) 32,706

Net realized gains on mortgage loans sold — 2,740 — 2,740

Change in fair value of mortgage loan commitments, net — 660 — 660

Total production revenue — 3,400 — 3,400

Mortgage servicing revenue — 2,696 — 2,696

Change in fair value of mortgage servicing rights:

Due to changes in model inputs of assumptions — ( 322 ) — ( 322 )

Other — ( 533 ) — ( 533 )

Total mortgage servicing revenue, net — 1,841 — 1,841

Other mortgage banking revenue — 170 — 170

Total mortgage banking revenue — 5,411 — 5,411

Purchased receivable income — — 6,150 6,150

Other operating income 2,703 — ( 64 ) 2,639

Total other operating income 2,703 5,411 6,086 14,200

Salaries and other personnel expense 10,764 4,769 1,690 17,223

11,691 5,858 17,549

Data processing expense 2,670 263 171 3,104

Occupancy expense 1,381 438 70 1,889

Professional and outside services 562 256 297 1,115

Marketing expense 519 150 3 672

Insurance expense 989 22 6 1,017

Compensation expense - Sallyport acquisition payments — — 600 600

Other operating expense 1,696 1,752 263 3,711

Total other operating expense 18,581 7,650 3,100 29,331

19,085 7,643 26,728

Income before provision for income taxes 14,041 1,114 2,420 17,575

1 unchanged sentence

Net income $ 10,788 $ 804 $ 1,732 $ 13,324

Three Months Ended September 30, 2023

(In Thousands) Community Banking Home Mortgage Lending Consolidated

March 31, 2025

(In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated

Interest income

Interest expense 7,291 767 8,058

Net interest income 24,050 2,300 26,350

Provision for credit losses 1,190 — 1,190

$ 36,573 $ 4,392 $ 596 $ 41,561

Mortgage banking income - external revenue

— 5,411 — 5,411

Mortgage banking income - intersegment revenues

Purchased receivable income

— — 6,150 6,150

Other operating income

2,703 — ( 64 ) 2,639

39,276 10,244 6,682 56,202

Reconciliation of revenue

Elimination of intersegment revenues

— ( 441 ) — ( 441 )

Total consolidated revenues

$ 39,276 $ 9,803 $ 6,682 $ 55,761

Interest expense

8,422 1,346 496 10,264

Provision (benefit) for credit losses

( 1,768 ) ( 307 ) 666 ( 1,409 )

Segment gross profit

32,622 8,764 5,520 46,906

Salaries and other personnel expense $ 10,764 $ 4,769 $ 1,690 $ 17,223

Data processing expense 2,670 263 171 3,104

Occupancy expense 1,381 438 70 1,889

Professional and outside services 562 256 297 1,115

Marketing expense 519 150 3 672

Insurance expense 989 22 6 1,017

Compensation expense - Sallyport acquisition payments

Intersegment expense

Other segment items (2)

1,696 1,752 263 3,711

Other operating expense 5,781 1,458 7,239

Total other operating expense

Segment expense

19,022 7,650 3,100 29,772

Reconciliation of expense

Elimination of intersegment expense

($ 441 ) $ — $ — ( 441 )

Total consolidated expense

$ 18,581 $ 7,650 $ 3,100 $ 29,331

Income before provision for income taxes

Provision for income taxes 1,710 182 1,892

Net income $ 7,802 $ 572 $ 8,374

Nine Months Ended September 30, 2024

(In Thousands) Community Banking Home Mortgage Lending Consolidated

$ 14,041 $ 1,114 $ 2,420 $ 17,575

1 The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker.

All expenses are allocated to a segment.

2 Other segment items for each reportable segment include:

Community Banking:

OREO (income) expense, net of rental income and gains on sale, director fees, operational charge offs net of recoveries, loan collection and collateral costs, and other miscellaneous operating costs related to community banking activities.

Home Mortgage Lending:

OREO (income) expense, net of rental income and gains on sale related home mortgage loans, director fees related at RML, loan collection and collateral costs related to home mortgage loans, and other miscellaneous operating costs related to home mortgage lending activities.

Specialty Finance:

miscellaneous operating costs related to specialty finance activities.

Three Months Ended March 31, 2024

(In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated

Interest income $ 32,311 $ 3,285 $ 212 $ 35,808

1 unchanged sentence

Net interest income 24,215 2,232 — 26,447

Provision for credit losses 1,505 587 2,092

Provision (benefit) for credit losses

197 ( 48 ) — 149

Net interest income after provision for credit losses 24,018 2,280 — 26,298

Net realized gains on mortgage loans sold — 1,980 — 1,980

Change in fair value of mortgage loan commitments, net — 386 — 386

Total production revenue — 2,366 — 2,366

Mortgage servicing revenue — 1,561 — 1,561

Change in fair value of mortgage servicing rights:

Due to changes in model inputs of assumptions — 289 — 289

Other — ( 314 ) — ( 314 )

Total mortgage servicing revenue, net — 1,536 — 1,536

Other mortgage banking revenue — 129 — 129

Total mortgage banking revenue — 4,031 — 4,031

Purchased receivable income — — 1,345 1,345

Other operating income 2,468 — — 2,468

Total other operating income 2,468 4,031 1,345 7,844

Salaries and other personnel expense 10,602 4,539 276 15,417

34,092 15,501 49,593

Data processing expense 2,411 238 10 2,659

Occupancy expense 1,467 464 31 1,962

Professional and outside services 563 173 19 755

Marketing expense 380 129 4 513

Insurance expense 754 25 — 779

Other operating expense 1,001 518 34 1,553

Total other operating expense 17,178 6,086 374 23,638

55,134 20,426 75,560

Income before provision for income taxes 9,308 225 971 10,504

Provision for income taxes 6,562 1,092 7,654

Provision (benefit) for income taxes 1,966 63 276 2,305

Net income $ 7,342 $ 162 $ 695 $ 8,199

Nine Months Ended September 30, 2023

(In Thousands) Community Banking Home Mortgage Lending Consolidated

March 31, 2024

(In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated

Interest income

Interest expense 18,007 1,492 19,499

Net interest income 71,502 5,022 76,524

Provision for credit losses 2,957 — 2,957

$ 32,311 $ 3,285 $ 212 $ 35,808

Mortgage banking income - external revenue

— 4,031 — 4,031

Mortgage banking income - intersegment revenues

Purchased receivable income

— — 1,345 1,345

Other operating income

2,468 — — 2,468

34,779 7,883 1,557 44,219

Reconciliation of revenue

Elimination of intersegment revenues

— ( 567 ) — ( 567 )

Total consolidated revenues

$ 34,779 $ 7,316 $ 1,557 $ 43,652

Interest expense

8,096 1,053 212 9,361

Provision (benefit) for credit losses

197 ( 48 ) — 149

Segment gross profit

26,486 6,311 1,345 34,142

Salaries and other personnel expense $ 10,602 $ 4,539 $ 276 $ 15,417

Data processing expense 2,411 238 10 2,659

Occupancy expense 1,467 464 31 1,962

Professional and outside services 563 173 19 755

Marketing expense 380 129 4 513

Insurance expense 754 25 — 779

Intersegment expense

Other segment items (2)

1,001 518 34 1,553

Other operating expense 19,611 4,253 23,864

Total other operating expense

Segment expense

17,745 6,086 374 24,205

Reconciliation of expense

Elimination of intersegment expense

($ 567 ) $ — $ — ( 567 )

Total consolidated expense

$ 17,178 $ 6,086 $ 374 $ 23,638

Income before provision for income taxes

Provision for income taxes 5,216 ( 728 ) 4,488

Net income $ 20,725 ($ 1,944 ) $ 18,781

September 30, 2024

(In Thousands) Community Banking Home Mortgage Lending Consolidated

$ 9,308 $ 225 $ 971 $ 10,504

1 The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker.

All expenses are allocated to a segment.

2 Other segment items for each reportable segment include:

Community Banking:

Home Mortgage Lending:

Specialty Finance:

miscellaneous operating costs related to specialty finance activities.

March 31, 2025

(In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated

Total assets $ 2,619,966 $ 365,360 $ 155,634 $ 3,140,960

Loans held for sale $ — $ 159,603 $ — $ 159,603

1-4 family residential properties secured by first liens $ — $ 188,086 $ — $ 188,086

Purchased receivables, net $ — $ — $ 95,489 $ 95,489

Goodwill $ 7,525 $ 7,492 $ 34,857 $ 49,874

December 31, 2024

(In Thousands) Community Banking Home Mortgage Lending Consolidated

(In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated

Total assets $ 2,547,709 $ 357,630 $ 136,530 $ 3,041,869

Loans held for sale $ — $ 59,957 $ — $ 59,957

1-4 family residential properties secured by first liens $ — $ 270,966 $ — $ 270,966

Purchased receivables, net $ — $ — $ 74,078 $ 74,078

Goodwill $ 7,525 $ 7,492 $ 35,001 $ 50,018

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements