Northrim Bancorp Inc · NASDAQ:NRIM
Northrim Bancorp — Investor Presentation (May 2015)
34 slides from Northrim Bancorp's investor presentation, May 12, 2015
Slide 1: Northrim BanCorp, Inc. - Reaching New Heights
NNORTHRIM BANCOor?P, INC. (NASDAQ: NRIM) REACHING NEW HEIGHTS May 2015 Maa Northrim Bank ACHIEVE MORED RO is ie — P r¥ iy
Slide 2: Forward Looking Statements
rors LOOKING STATEMENTS his presentation ey cay: “Yorward looking cele ED that term is defined for purposes of Section 21D of the gene ies and Exchan: effect attempt to predict future events, and thus are subject to various ee na ies reuaelciatere crcl at place undue reliance on forward-looking stat
Slide 3: Northrim: Solid Value
NORTHRIM: SOLID VALUE Price @ May 1, 2015 $25.34 Market Cap @ May 1, 2015 $174M Net Interest Margin Q1 2015 4.39% Tangible Book Value Q1 2015 $20.92 Price/Tangible Book 1.21x EPS (ttm) $2.64 P/E Ratio 9.60x Dividend Yield 2.84% Laas Northrim Bank ACHIEVE MORE. ie ke, ras weer
Slide 4: 2014 Northrim M&A Activity
2014 NORTHRIM M&A ACTIVITY ACQUIRED ALASKA PACIFIC BANCSHARES, INC. APRIL 1, 2014 + New region in Alaska + Diversified portfolio + Accretive to earnings ACQUIRED 76.5% OF RESIDENTIAL MORTGAGE HOLDING COMPANY, LLC DECEMBER 1, 2014 (NOW WHOLLY OWNED SUBSIDIARY) * Top 3 Alaska producer + Statewide oper
Slide 5: Northrim Performance
NORTHRIM PERFORMANCE Net Income $20,000 Adjusted net $17,408 income* 18,000 : : : increased 15% $16,000 in 2014 vs $14,000 2H, $12,325 $12,641 $12,000 3 $10,000 ‘a *Adjusted net income excludes M&A costs and gains, gains on acquired loans , and the gain on the sale of a branch location in 201 $8,000
Slide 6: Northrim History
NORTHRIM HISTORY Acquired Alas! Opened Pacifi with Invested in Invested in Invested in Acquired Invested in original Startup of Elliott Cove Northrim Alas! Elliott Cove and 100% offering of Residential Capital Benefits First Bank Insurance Residential $8.2 million Mortgage Management Group & Trust C
Slide 7: Strategies for Success
STRATEGIES FOR SUCCESS Northrim’s original strategies, and our execution, continue to serve us well today Strong balance sheet Solid net interest margin Focus on asset quality Diversified income sources Strategic Investments Leadership to build Alaska’s economy eo Ae nm ACHIEVE MORE. abe 2 of (eerie
Slide 8: Strong Balance Sheet: Total Capital Ratio
STRONG BALANCE SHEET: TOTAL CAPITAL RATIO Ba 17.01% \o/ .| %. OD mmlewars 16.30% 7. 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 13.96% Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 EINRIM —Well Capitalized ae z Vas ACHIEVE MORE. Northrim Bank
Slide 9: A History of Increasing Shareholder Value
NORTHRIM BANCORP, INC.: A HISTORY OF INCREASING SHAREHOLDER VALUE 3/31/2015 $167.4 million $180,000 $160,000 =Total Shareholders’ Equity ZL. $140,000 4 Capital Raises: Pa 3 1990: $ 9.3 million VG $120,000 +———j 1992: $ 1.6 million 1993: § 6.0 million he ~ $100,000 7——+ 1999: $20.3 million mem J 2014
Slide 10: Core Deposits
CORE DEPOSITS YTD Average Cost of As of 3/31/15 CDs under Demand, 35% $100,000, 5% CDs over $100,000, 7% Interest- bearing Money Market, is 19% demand, 15% Alaska CD, 8% Savings, 11% ACHIEVE MORE, | G00 nee abt we . Deposits: 0.25% fam Northrim Bank
Slide 11: Loan Portfolio
LOAN PORTFOLIO YTD Average Yield on Loans: 5.63% As of 3/31/15 Non-owner Occupied CRE 35% Owner Occupied CRE 11% Consumer 6% Commercial Construction 34% 14% ACHIEVE MORE. 0 s ake ean a " fam Northrim Bank
Slide 12: Loan Volume: Portfolio Loans
LOAN VOLUME: PORTFOLIO LOANS $1,000,000 $960,000 $960,564 $936,659 $920,000 | April 1, 2014 $926,809 $924,504 , acquired $138.4 $880,000 +— million from Alaska Pacific E Bancshares, Inc. 1 2015: pe OD : Up 4% vs Q4 2014 8 Up 26% vs Q1 2014 S $800,000 + $763,065 $760,000 + $721,609 $720,000 $680,000
Slide 13: Net Interest Margin
NET INTEREST MARGIN 5.00% —— 2 4.50% + — SS , ee ee ae Se 4.00% 3.50% 3.00% + 2.50% 2.00% = 1.50% = 1.00% 0.50% + = = oe "13.01 ‘14 Q1 @ a3 aa 151 [aomea 4.54% 4.45% 4.58% 4.58% 4.50% 4.62% |sm=cor 033% 0.26% 0.24% 0.24% 0.31% 036% [nim TE 4.32% 4.28% 4.43% 4.43% 4.31% 4.39% a aa nm ACHIEVE MORE. ab
Slide 14: Focus on Asset Quality: Nonperforming Assets
FOCUS ON ASSET QUALITY: NONPERFORMING ASSETS $10,000 $9,000 + $8,000 + $7,000 + $6,000 + $5,000 + $4,000 + $3,000 + $2,000 + $1,000 + T|NPA —NPA/Assets (000) Q1-13 Q1-14 Q2 Q3 Q4 Q1-15 nonie Soe aly ake ae : ~ ry: ay ate! 43 Maa Northrim Bank
Slide 15: Loan Volume: Loans Held for Sale
LOAN VOLUME: LOANS HELD FOR SALE (000) $70,000 $61,873 $60,000 $50,000 RML became $43,866 $40,000. ~——_—_———_ wholly owned subsidiary $30,000 5 December 1, 2014 $20,000 14,328 14,189 7 $i0.c00n ae : : $10,325 $0 4 Q1-13 Q1-14 Q2 Q3 Q4 Qi -15 Maa Northrim Bank ACHIEVE One é ——. ie cnt : r¥ iy
Slide 16: Acquisition of Residential Mortgage Holding Company, LLC
ACQUISITION OF RESIDENTIAL MORTGAGE HOLDING COMPANY, LLC (“RML”) DECEMBER 1, 2014 Overview Business: Full service mortgage company, 1-4 single family mortgages, founded 1 Service Territory: 11 branches in Alaska and one ila (Homestate Mortgage Company — a 30% owned) ip to Northrim: 23.5% founding me
Slide 17: Northrim Bank and Residential Mortgage Branch System
NORTHRIM BANK AND RESIDENTIAL MORTGAGE BRANCH SYSTEM: EXTENDED ALASKA COVERAGE Alaska 2 901) & é Anchorage Soldotna Juneau © Ketehikan ; aa ACHIEVE MORE. Northrim Bank
Slide 18: Home Mortgage Lending, Q1 2015
HOME MORTGAGE LENDING, Q1 2015 esos Gross loan origination income, closed mortgages $ 6,153 Other income 1,130 Total Mortgage Banking Income 7,283 Net interest income 116 Total revenue, Home Mortgage Lending segment 7,399 Other operating expense 5,137 Income tax expense 934 Net income, Home Mortgage
Slide 19: Home Mortgage Lending: Impact of Earn-Out Liability
HOME MORTGAGE LENDING: IMPACT OF EARN-OUT LIABILITY RML’s estimated pre-tax net income for the twelve month period ending November 30, 2015 currently exceeds Northrim’s original estimate by $1.8 million. The earn-out owed to sellers is 85% of the pre-tax earnings of RML between $4 million and $6 mil
Slide 20: Home Mortgage Lending: Historical Production
HOME MORTGAGE LENDING: HISTORICAL PRODUCTION $1,200 $1,122 $1,000 $800 + $600 $400 $200 $0 2006 2007 2008 2009 2010 2011 2012 2013 2014 Qi- Q1- 14 15) Maa Northrim Bank ACHIEVE One ¢ ——, : ‘ —— ie 7
Slide 21: High Non Interest Income
HIGH NON INTEREST INCOME QUARTER ENDED 3/31/15 Other Income 44% Net Interest Income 56% ACHIEVE One ——. 4 : ‘ sent 7 Maa Northrim Bank
Slide 22: Diversified Other Operating Income
DIVERSIFIED OTHER OPERATING INCOME QUARTER ENDED 3/31/15 OG Mortgage banking income Benefit Plan Income 69.1% O Electronic Banking Income G Purchased Receivable Income ODeposit Service Charges OGain on Sale of Securities @ Other Income ACHIEVE MORE.
Slide 23: Affiliates and Diversification
AFFILIATES AND DIVERSIFICATION th Northrim one Statutory Trust 2 Northrim Ban NCE eae ACHIEVE MORE. abe *.4°° © Northrim Bank
Slide 24: Alaska's Resource-Based Economy
ALASKA’S RESOURCE-BASED ECONOMY All Other 34% Federal 35% Petroleum 31% Source: Alaska Institute of Social and Economic Research, 2010 Geen eee aly ake ae 1 " Maa Northrim Bank _—
Slide 25: Oil and Gas: Status in Alaska
OIL AND GAS: STATUS IN ALASKA * Capital commitments from producers are continuing ¢ Current employment levels on Alaska’s North Slope are at a record high ¢ Stable level of oil production 45 a Northrim Bank ACHIEVE MORE. ie ke, ras fy: oat
Slide 26: Alaska Building Permits
ALASKA BUILDING PERMITS Number of new, privately owned housing, 1-5 units authorized a 11,248 10000 8000 6000 = 430 unit increase in 2014, most since 2007 ree | 1] | i] 4599 2000 | | ( u TT RP a oO Ph gg gH HP oH aah eH WHE 4H 4K oh Or yw ys? 914 ACHIEVE MORE.
Slide 27: Alaska Crude Prices 2004 - 2014
ALASKA CRUDE PRICES 2004 - 2014 = green aves Dollars per Barrel High $134 June 2008 Prices over$100 April 2011 to July 2014 f\ a / \ PAV Arar $61 Dec. 2014 Low $37 December 2008 $20 $o ue re ee eee Ta, ey ey “ee ry te yD Ay “WH My “Dy “Oy “Ye “OY YY ACHIEVE MORE. eee F ie re Northrim Bank
Slide 28: Global Supply and Demand
GLOBAL SUPPLY AND DEMAND juid Fuels Production and Consumption Balance (million barrels per day) T 6 ‘projections a4 2014 t 5 World consumption (left .. 4 3 2 1 ’ i | H i ; i ae : i | ' t H (million barrels per day) 78 Q12010 «1201112012, 12013, 12018 «= at 2015 at 2016 @® implied stock change and b
Slide 29: Reasons for Optimism in Alaska
REASONS FOR OPTIMISM IN ALASKA « The state withstood a similar price shock only 5 years ago. * $19 billion in undedicated savings, $53 B Permanent Fund * “Oil provides 90% of unrestricted general funds” does not account for $11.5 billion from Federal govt. and investments Oil was 33% of total state
Slide 30: Reasons for Optimism in Alaska
REASONS FOR OPTIMISM IN ALASKA * State production will end a 25 year decline and increase slightly in 2016 and 2017 to 547,000 bpd. « Alaska energy investments based on long-term price avg. * Producers must keep investment promises made last election. * Producers must meet lease requirements and spe
Slide 31: Conclusion
CONCLUSION Low oil prices put a strain on state revenues, but required spending discipline and fiscal discussions are prudent for the long run. Alaska has sufficient savings to offset large current budget deficits. Strength in retail, health care and tourism will offset the drag. Rising global deman
Slide 32: Leadership to Build Alaska's Economy
LEADERSHIP TO BUILD BLASS’ ECONOMY _ ACHIEVE MORE.
Slide 33: Questions?
QUESTIONS? i L i j \ ie i Aaa (GES ha
Slide 34: Exhibit A: Calculation of Earn-Out Payments
EXHIBIT A: CALCULATION OF EARN-OUT PAYMENTS [Adjusted pretax earnings First tier earn- |greater than $1,000,000 and y ill be calculated as product of lout payment __|than or equal to $2,000,000 amount of adjusted pretax earnings times 40% The first tier earn-out payment, plus the product| Secondtier