Northrim Bancorp Inc.
Annual Report 2021

Plain-text annual report

Northrim BanCorp, Inc. Annual Report Annual Report 20 21 20 21 Annual Report Message to Shareholders Joe Schierhorn For Northrim Bank (the Bank), 2021 was a year of growth and profi tability, driven by our employees and our commitment to community. We opened a new branch in Fairbanks, expanding in response to our customers’ needs. We att racted talented new bankers, who brought experti se and relati onships that helped drive our growth across all markets. We enhanced customer relati onships through dedicated outreach, and we conti nued to invest in our people, products and services to meet our customers’ increasingly sophisti cated needs. The Bank ended the year with net income of $37.52 million, an increase of 14% from 2020. Total assets increased to $2.72 billion, up 28% from a year ago. Total revenue was $133.1 million, compared to $134 million for 2020. Our improved profi tability in 2021 was due to fee and interest income from the Small Business Administrati on’s (SBA) Paycheck Protecti on Program (PPP) loans, strong core loan and deposit growth and conti nued high levels of producti on at our wholly-owned subsidiary, Residenti al Mortgage. Through our acti ve parti cipati on in the PPP, we helped both new and existi ng customers sustain their business operati ons as the pandemic conti nued to impact the economy. Northrim was the largest originator of PPP loans in Alaska. Our PPP eff orts brought more than 2,300 new customers to the Bank, and we are working hard to develop full banking relati onships with these businesses. We are proud of the work we are doing to address the needs of our customers, and as a result, we are growing our market share across all of our major markets. Our employees’ outreach to customers, including those introduced to the Bank through the PPP, had a meaningful impact on core loan and deposit growth in 2021. Portf olio loans excluding the impact from PPP were $1.3 billion for 2021, up 14% from the year prior. Total portf olio loans were $1.41 billion, down 2% from a year ago, a result of PPP loan forgiveness. Total deposits were $2.42 billion at year-end, up 33% from a year ago, with a large porti on of growth coming from new customers gained through the PPP. Producti on at Residenti al Mortgage was another important driver of our 2021 profi tability. The company conti nued to provide Alaskans with industry-leading service and experti se, originati ng $1.1 billion in mortgages in 2021, making them Alaska’s leading mortgage loan originator. 1 We Bank on Alaskans In spite of historically low interest rates, net interest income for 2021 was $80.8 million, up 14% from 2020. Excluding PPP interest and fees, core net interest income in 2021 increased 5% to $65.4 million, compared to $62.6 million in 2020, and our net interest margin at the end of 2021 remains above peer average. Also contributi ng to our 2021 results was a $4.1 million benefi t to the provision for credit losses, compared to a $2.43 million provision for credit losses in 2020. Higher credit quality and improving economic conditi ons in the state were major factors in this shift . Northrim conti nues to maintain capital levels in excess of the requirements needed to be categorized as “well-capitalized.” We conti nued our stock repurchase program, which is an important component of our capital plan, repurchasing a total of 279,276 shares. We increased our shareholder dividend twice in 2021, for an increase of 9% from 2020, highlighti ng the Bank’s steady growth and solid capital positi on, and commitment to increasing returns to our shareholders. Our 2021 results refl ect the eff ort of our employees to meet the needs of our community. In additi on to serving Alaskans’ banking needs, we also serve our communiti es through fi nancial support and volunteerism. We increased our community giving in 2021, both at the Bank and individual employee level, and volunteer hours increased from 2020 as we found creati ve ways to be involved in the community during these challenging ti mes. As we moved through the second full year of the pandemic, a thoughtf ul combinati on of teamwork, customer and employee safety measures, processes and IT infrastructure allowed us to keep our branches operati onal and provide our customers with a consistently high level of service. We are deeply appreciati ve of our employees’ eff orts and their unwavering dedicati on to providing Superior Customer First Service. As Alaska’s local, community bank, we are grateful for the opportunity to serve the customers and communiti es of our state, and we look forward to conti nuing to grow together. Joe Schierhorn Joe Schierhorn Chairman, President, CEO and COO, Northrim BanCorp, Inc. Chairman, President and CEO, Northrim Bank Annual Report | 2021 2 2021 Financial Snapshot(1) 2021 2020 2019 2018 2017 2016 Five-Year Compound Growth Rate Net interest income Provision (benefit) for credit losses Other operating income Compensation expense, RML acquisition payments Other operating expense Income before provision for income taxes Provision for income taxes Net income Less: Net income attributable to noncontrolling interest Net income attributable to Northrim Bancorp, Inc. Year-End Balance Sheet Assets Loans Deposits Shareholders’ equity Common shares outstanding Average Balance Sheet Assets Earning assets Loans Deposits Shareholders’ equity Basic common shares outstanding Diluted common shares outstanding Per Common Share Data Basic earnings Diluted earnings Book value per share Tangible book value per share(2) Cash dividends per share Performance Ratios Return on average assets Return on average equity Equity/assets Tangible common equity/tangible assets(3) Net interest margin Net interest margin (tax equivalent)(4) Non-interest income/total revenue Efficiency ratio(5) Dividend payout ratio Asset Quality Nonperforming loans, net of government guarantees Nonperforming assets, net of government guarantees Nonperforming loans, net of government guarantees/portfolio loans Net charge-offs (recoveries)/average loans Allowance for credit losses/portfolio loans Nonperforming assets, net of government guarantees/assets Other Data Effective tax rate(6) Number of banking offices(7) Number of employees (FTE)(8) $80,827 (4,099) 52,263 - 89,196 $47,993 10,476 37,517 - $37,517 $2,724,719 1,413,886 2,421,631 237,817 6,014,813 $2,432,599 2,260,778 1,478,318 2,125,080 239,214 6,180,801 6,249,313 $6.07 $6.00 $39.54 $36.88 $1.50 1.54% 15.68% 8.73% 8.19% 3.58% 3.60% 39.27% 66.99% 25.02% $10,672 $15,031 0.75% 0.07% 0.83% 0.55% 22% 18 451 $70,665 2,432 63,328 - 89,114 $42,447 9,559 32,888 - $32,888 $2,121,798 1,444,050 1,824,981 221,575 6,251,004 $1,936,047 1,758,839 1,339,908 1,638,216 211,721 6,354,687 6,431,367 $5.18 $5.11 $35.45 $32.88 $1.38 1.70% 15.53% 10.44% 9.76% 4.02% 4.05% 47.26% 66.47% 26.66% $10,048 $16,289 0.70% 0.03% 1.46% 0.77% 23% 17 438 $64,442 (1,175) 37,346 468 76,370 $26,125 5,434 20,691 - $20,691 $1,643,996 1,043,371 1,372,351 207,117 6,558,809 $1,555,707 1,386,557 1,010,098 1,276,407 208,602 6,708,622 6,808,209 $3.08 $3.04 $31.58 $29.12 $1.26 1.33% 9.92% 12.60% 11.73% 4.65% 4.70% 36.69% 75.43% 40.79% $13,951 $19,946 1.34% (0.07)% 1.83% 1.21% 21% 16 431 $61,208 (500) 32,167 - 69,800 $24,075 4,071 20,004 - $20,004 $1,502,988 984,346 1,228,088 205,947 6,883,216 $1,493,385 1,346,449 971,548 1,227,272 201,022 6,877,573 6,981,557 $2.91 $2.86 $29.92 $27.57 $1.02 1.34% 9.95% 13.70% 12.76% 4.55% 4.60% 34.45% 74.68% 35.08% $14,694 $22,619 1.49% 0.15% 1.98% 1.50% 17% 16 430 $57,678 3,200 40,474 130 71,023 $23,799 10,321 13,478 327 $13,151 $1,518,596 954,953 1,258,283 192,802 6,871,963 $1,511,052 1,367,203 981,001 1,248,333 193,129 6,889,621 6,977,910 $1.91 $1.88 $28.06 $25.70 $0.86 0.87% 6.81% 12.70% 11.75% 4.22% 4.28% 41.24% 72.39% 45.44% $21,411 $28,729 2.24% 0.15% 2.25% 1.89% 43% 14 429 $56,357 2,298 43,263 4,775 71,505 $21,042 6,052 14,990 579 $14,411 $1,525,851 974,074 1,267,653 186,712 6,897,890 $1,506,522 1,361,913 976,613 1,250,243 181,628 6,883,663 6,974,864 $2.09 $2.06 $27.07 $24.70 $0.78 0.96% 7.93% 12.24% 11.29% 4.14% 4.20% 43.43% 76.44% 37.59% $12,936 $19,315 1.33% 0.08% 2.02% 1.27% 29% 14 451 7% NM 4% (100)% 5% 18% 12% 20% (100)% 21% 12% 8% 14% 5% (3)% 10% 11% 9% 11% 6% (2)% (2)% 24% 24% 8% 8% 14% 10% 15% (7)% (6)% (3)% (3)% (2)% (3)% (8)% (4)% (5)% (11)% (3)% (16)% (15)% (5)% 5% - % 3 We Bank on AlaskansBanking on Alaska Businesses Northrim was founded as a commercial bank, and that remains true today. We believe it is important for Alaska businesses to have a dedicated financial team that understands the local economy, and the obstacles and opportunities of operating a business in challenging environments. Northrim has that expertise, and we are committed to sharing it for the benefit of the business community. This commitment was demonstrated clearly over the past two years through our participation in the Small Business Administration’s (SBA) Paycheck Protection Program (PPP). We originated more PPP loans than any other bank in Alaska, both in number of loans and in dollar amount, providing the assistance businesses required to survive in the face of tremendous challenges. Under the initial program, we helped approximately 2,900 businesses receive $375.6 million in PPP loans. During the second round, we helped approximately 2,870 businesses receive $237 million in PPP loans. Northrim was recognized as the SBA’s 2020 Top Lender of the Year for the state of Alaska. We are proud to contribute to the strength of Alaska by supporting the businesses that form the foundation of our state’s economy. Annual Report | 2021 4 CITC Net Income Att ributi on to Northrim BanCorp, Inc. (in thousands) Total Assets (in thousands) $40k $35k $30k $25k $20k $15k $10k $5k 5 5 5 $0k $13,151 $37,517 $32,888 $3m $2.5m $2m 2,724,719 2,121,798 $20,691 $20,004 $1.5m 1,643,996 1,518,596 1,502,988 $1m $500k $0 We Bank on Alaskans We Bank on Alaskans 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 From PPP to Full Banking Relationships Through the Paycheck Protecti on Program (PPP), we off ered assistance to both existi ng and new customers, working with them as their needs changed and providing soluti ons tailored to their circumstances. Our responsiveness, experti se and high level of service throughout the PPP process helped us att ract 2,300 new customers to the Bank. The PPP process helped us attract 2,300 new customers to the Bank. While the number of businesses served in the fi rst and second rounds of PPP were comparable, our increased experience, IT infrastructure, automated systems and incredible teamwork resulted in a highly streamlined process in 2021. This allowed us to produce a signifi cant volume of PPP loans in a shorter period of ti me, providing a bett er experience for both customers and employees. Our increased internal effi ciency enabled us to adjust employee resources from loan processing to customer outreach, with a focus on converti ng new PPP customers into full banking relati onships. This led to signifi cant loan and deposit growth in 2021, with growth geographically diversifi ed across all of our markets. In 2020 and 2021, $63 million, or 25% of our core loan growth, and $119 million, or 11% of our deposit growth, came from new customers obtained from our PPP eff orts over the last two years. As a community leader, the Bank reached out to nonprofi ts and new customers to ensure they were able to apply for PPP loans. Portf olio Loans (in thousands) Total Deposits (in thousands) 1,444,050 1,413,886 1,043,371 954,953 984,346 $1.6m $1.4m $1.2m $1m $800k $600k $400k $200k $0 2,421,631 1,824,981 1,258,283 1,228,088 1,372,351 $2.5m $2m $1.5m $1m $500k $0 6 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Customer-Driven Growth Listening and responding to the needs of our customers and communiti es led to conti nued growth of our places, people, processes, and products and services in 2021. Places To bett er serve our customers, we opened our second Fairbanks branch in the fi rst quarter of 2021, further diversifying our geographic footprint throughout Alaska. Our decision to expand during a ti me when some other banks are contracti ng was validated by our customer, loan, deposit and market share growth in 2021. We also made investments in several of our existi ng faciliti es, including energy effi ciency upgrades that will help us reduce energy consumpti on and expense. People Northrim has a history of att racti ng talented bankers, and that success conti nued in 2021 as we added members to our team in communiti es across Alaska. These new employees brought both experti se and new relati onships with them, adding value to the Bank and further encouraging our growth. We added another experienced lender to our Kodiak loan producti on offi ce, which opened in spring 2020, enhancing our presence in that market and allowing us to serve more borrowers in the community. We also expanded our lending staff in Soldotna to meet customer needs on the Kenai Peninsula. Total Capital Ratio 14% 14.5% 15% 15.5% 16% 16.5% 17% 14.79% 15.46% 15.63% 15.90% 16.73% Nonperforming Assets (NPA) | (in thousands) Net of Government Guarantees $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $15,031 0.55% $16,289 0.77% $19,946 1.21% $22,619 1.50% $28,729 1.89% 2021 2020 2019 2018 2017 2021 2020 2019 2018 2017 Composition of Northrim BanCorp Equity | (in millions) Capital as of December 31, 2021 -$100 -$50 $0 $50 $100 $150 $200 $250 $300 $350 Total Capital Raised Cumulati ve Earnings $45 Cumulati ve Dividends Paid -$96 Repurchases, Equity Compensati on, Costs of Capital Raises, and Other Total Equity 7 7 7 -$41 $329 $238 We Bank on Alaskans We Bank on Alaskans Processes We maintained our investments in IT infrastructure, which facilitated employee communicati on and collaborati on both in-offi ce and remotely, so we could seamlessly serve our customers, whether physically in the branch or virtually online. We also upgraded our online banking platf orm for an improved customer experience. Products and Services We conti nued to invest in products and services to address the needs of larger and increasingly sophisti cated customers. We rebranded our treasury management services in 2021 and hired a new director of treasury management, who is leading the development of enhanced products and services for our customers. Loan Portfolio | As of December 31, 2021 Deposits | As of December 31, 2021 3% | Consumer 8% | Constructi on 46% | Commercial 7% | Time 13% | Money Market 14% | Savings 37% | Demand 43% | Commercial Real Estate 29% | Interest-Bearing Demand Annual Report | 2021 8 + H I G H L I G H T S + Role of Residential Mortgage With offi ces in Anchorage, Juneau, Kodiak, Soldotna, Eagle River, Fairbanks and the Mat-Su Region, our wholly-owned subsidiary, Residenti al Mortgage Lending, LLC, retained their positi on as a market leader for mortgage loan originati ons in Alaska. Solid residenti al mortgage business conti nued to add strength to the Bank in 2021. Residenti al Mortgage originated $1.1 billion in mortgage loans in 2021, compared to $1.3 billion in 2020. Home mortgage lending provided 25% of the Bank’s total revenue and 5% of earnings in 2021. While refi nance acti vity slowed slightly compared to the record-setti ng pace of 2020, new home purchases remained strong in 2021 as homebuyers conti nued to take advantage of interest rates that were at near-historic lows. Residenti al Mortgage’s keys to success are their long-standing relati onships and returning customer base, earned through their team’s responsive service and extensive experience. The company deepened its mortgage and executi ve experti se in 2021 with the additi on of a new chief operati ng offi cer, who brings many years of mortgage experience to the company. 9 9 We Bank on Alaskans We Bank on Alaskans + C U S T O M E R P R O F I L E + We Bank on Alaskans: Cook Inlet Tribal Council People. Partnership. Potenti al. This is what Cook Inlet Tribal Council (CITC) is all about. When the Southcentral Alaska-based tribal nonprofi t organizati on takes on new projects, they search for new partners to engage with – especially partners who invest in the community they serve. So when CITC was looking to acquire property for their latest project – the Super Fab Lab – they connected with Northrim. “CITC knows how acti ve Northrim is in the community and appreciates the important role they play in philanthropy and as a banking insti tuti on for Alaskans,” says Amy Fredeen, CITC’s Chief Financial Offi cer. “Thanks to their great reputati on in Alaska, CITC is excited to partner with Northrim on this incredible project.” The Super Fab Lab is a milestone in CITC’s eff orts to grow Science, Technology, Engineering and Math (STEM) learning for Alaska Nati ve/American Indian youth. In 2013, CITC created the original Fab Lab, an educati onal space that challenges students to develop hands-on STEM skills. The expanded Super Fab Lab will add capacity for students and programs, increasing access to the latest design and fabricati on technology. It will also be a hub for entrepreneurs developing the products and businesses of tomorrow. Aft er acquiring the property, CITC partnered with Northrim on the renovati on of the Super Fab Lab, which they hope to open in winter 2022-23. Northrim also helped CITC acquire a warehouse property for storage, providing CITC with a new earned income stream to support their mission. “Going into these projects during the pandemic was a unique situati on,” Fredeen notes. “Northrim went above and beyond to make sure the pandemic didn’t impact the additi on of these important assets for CITC’s mission.” CITC has more than doubled in size in the last two years – and has much more planned. “CITC will conti nue working to open new paths to opportunity and potenti al for Our People no matt er what obstacles we may face,” Fredeen says. “To be successful, we know we need great partners on this journey with us.” “Northrim’s focus is on being an outstanding partner to the community and Alaska businesses. It’s great to collaborate with an organizati on like CITC that is so aligned with the community and to be able to help them with their projects,” says Bond Stewart, Northrim Vice President, Commercial Real Estate Loan Offi cer. “We really appreciate CITC working with Northrim and look forward to working together on future projects to help the Alaska Nati ve and American Indian community.” Annual Report | 2021 CITC 10 Diversifying Services and Revenue Sources In addition to home mortgage lending, Northrim has interests in other businesses, including purchased receivables financing and wealth management. These investments allow us to provide additional services to our customers, while diversifying our revenue sources and adding strength to our non-interest income. Other operating income contributed $52.3 million, or 39% of revenues, in 2021, compared to $63.3 million, or 47% of revenues, in 2020. Northrim Funding Services Northrim Funding Services, a division of the Bank, purchases the accounts receivable of capital-constrained small to mid-size businesses, as well as businesses experiencing rapid growth or change. The division also offers financial solutions to transition customers back to other bank lending programs. Northrim Funding Services saw a rebound in 2021, after a decrease in activity in 2020 due to many of its customers obtaining PPP loans or receiving loan accommodations. As the economy began to recover in 2021, the division saw balances increase to nearly pre-pandemic levels. Northrim Funding Services contributed $2.3 million to other operating income in 2021, compared to $2.7 million in 2020. Northrim Investment Services Northrim Investment Services offers investment services through Elliott Cove Capital Management and insurance products via Elliott Cove Insurance Agency. Through this relationship, our business and individual customers can access a range of financial products and services. In 2021, Northrim Investment Services continued to offer diversified portfolios to our customers. Pacific Portfolio Pacific Wealth Advisors is the holding company for Pacific Portfolio Consulting, LLC and Pacific Portfolio Trust Company (Pacific Portfolio). Founded in 1992 and part of the Northrim family since 2006, Pacific Portfolio is an independent wealth management and investment advisor serving high-net-worth individuals and families, as well as institutions, foundations, and trustee- or participant-directed retirement plans. Pacific Portfolio had a strong year, growing assets under advisement and adding strength to their organization through the hiring of a chief operating officer at the end of 2020. For the seventh year in a row, the company’s founder, President and CEO Larry Hood was recognized by Barron’s as one of America’s Top 100 Independent Financial Advisors in 2021. The company contributed $92,000 to Northrim’s other operating income in 2021, compared to $243,000 in 2020. 11 We Bank on Alaskans + C U S T O M E R P R O F I L E + We Bank on Alaskans: Kenaitze Indian Tribe The mission of the Kenaitze Indian Tribe, located on Alaska’s Kenai Peninsula, is “To assure Kahtnuht’ana Dena’ina thrive forever.” The Tribe was federally recognized as a sovereign, independent nati on in 1971. Today, they have more than 1,800 Tribal Members who live across the Kenai Peninsula and beyond. The Tribe’s more than 300 employees deliver a variety of programs and services that promote the wellness of their people and the community. The Dena’ina Wellness Center, the Tribe’s integrated healthcare facility, as well as tribal justi ce system, educati on programs, an Elder center, and social and family services are among the Tribe’s current eff orts – and much more is on the horizon. The Tribe has experienced tremendous growth over the past decade. As the Tribal Council and administrati on look to the future, they are working to ensure that growth is sustainable, and that the Tribe’s membership and community conti nue to thrive. The Tribe is currently constructi ng the Kahtnuht’ana Duhdeldiht Campus, a 67,000-square-foot facility that will house the Tribe’s educati on programs, which focus on language and culture preservati on. Also in progress is a new transportati on building, named Hetl Qenq’a, or “Sled House,” which will provide a hub for the Tribe’s vehicle fl eet. The Tribe also plans to pilot a fi xed-route bus service for the central Kenai Peninsula. Planning is also underway for a new pavilion at the Tribe’s educati onal fi shery at the mouth of the Kenai River, and they are expanding their Tribal Court facility to meet the Tribe’s growing needs. The Tribe began working with Northrim in spring 2021, choosing the Bank for its return on investment, competi ti ve fee structure and responsive local support. The Tribal Council recognizes it is important to be good stewards of resources, including fi nancial resources. While the Tribe’s primary focus in selecti ng a fi nancial partner was stewardship of resources, leadership said fi nding that partner in a local Alaska bank has been an added benefi t. “Since my childhood on the Kenai Peninsula, the Kenaitze Indian Tribe has remained a leader both in terms of our community and our economy,” says Mike Dye, Northrim Vice President and Lending Branch Manager in Soldotna. “We are honored that the Kenaitze Indian Tribe selected Northrim as their fi nancial partner, and we are excited to play a role in supporti ng their conti nued growth to serve their people and our community into the future.” Annual Report | 2021 12 Kenaitze A Leader in Community Commitment As Alaska’s local, community bank, we feel a responsibility to take a leadership role in building the communiti es we serve. This commitment has been a core value since the Bank began, and we are proud of our conti nued ability to share our success to improve the quality of life in our communiti es. When community needs shift ed and grew due to the pandemic, so did our giving. We made new contributi ons to organizati ons including Cook Inlet Soccer Club and the University of Alaska Anchorage athleti cs program, as well as increased giving to the Alaska Nati ve Heritage Center, United Way and the University of Alaska. We conti nued support of organizati ons forced to postpone or cancel events, and we were fl exible with our donati on request deadlines. We modifi ed our School-Business Partnerships, focusing on donati ons that helped connect students to the community whether from home or the classroom. Our employees also demonstrated their generosity through increased giving in 2021. Together, we increased our annual United Way campaign and have contributed nearly $2.5 million to support United Way since the Bank was founded. In additi on to fi nancial contributi ons, we acti vely encourage employee volunteerism, both during work hours and personal ti me. Volunteer hours increased from 2020 as in-person opportuniti es began to return. In 2021, Northrim employees gave more than 1,343 hours of their ti me, supporti ng a wide range of community acti viti es and causes. Our employees also serve in leadership roles with professional and nonprofi t organizati ons, adding value by sharing their passion and experti se in the community. Our team gave presentati ons on government assistance programs and other fi nancial topics, and we presented a virtual economic event for our customers and employees, as we were once again unable to hold our in-person event due to pandemic precauti ons. Our employees also serve in leadership roles with professional and nonprofit organizations, adding value by sharing their passion and expertise in the community. Facilitati ng the availability of aff ordable housing for Alaska families conti nued to be a priority for the Bank in 2021. We were honored to receive the Charles L. Edson Tax Credit Excellence Award from the Aff ordable Housing Tax Credit Coaliti on for our involvement in the Coronado Park II/Qintali View project, which provides safe, quality aff ordable housing to residents of Eagle River. We were pleased to work with project partners Cook Inlet Housing Authority, R4 Capital, The Rasmuson Foundati on and the Federal Home Loan Bank of Des Moines on this important eff ort. 13 We Bank on Alaskans Environmental, Social and Governance In 2021, Northrim began work on our initi al environmental, social and governance (ESG) report, which was published on the Bank’s website in the fi rst quarter of 2022. We believe we have built a strong foundati on in these areas, as they have been integral to Northrim throughout our history. The ESG report highlights our hard work and achievements in areas including energy effi ciency; diversity, equity and inclusion; workplace fl exibility; employee training, health and wellness; volunteerism and giving; support of small businesses and low- and moderate-income communiti es; and compliance, management and marketi ng. We look forward to conti nually enhancing these practi ces for the benefi t of the customers and communiti es we serve. Annual Report | 2021 14 14 Talent and Teamwork Northrim Bank is a collection of our people, and our success is the result of their dedication and effort. Throughout our history, we have been successful in attracting the right people with the right expertise and the right attitude. In 2021, our people demonstrated their ability to work together as a team to care for our customers and the community, while adjusting to a changing environment, to produce a year of strong growth and profitability. We feel pride in seeing employees from different departments throughout the Bank collaborating and taking on new roles to provide services that, in many cases, were essential for customers to remain in business. Our employees understand the importance of their work to our customers and community, and this sense of purpose drives them to put forth their best effort every day. In line with our Vision to be Alaska’s Employer of Choice, we are purposeful in supporting our employees, so they can remain highly focused on our customers. In 2021, we created the foundations for an employee development program with the goal of building the next generation of Bank leaders internally. We also continue to promote from within and recognize the growing expertise and capabilities of our employees. Our people demonstrated their ability to work together as a team to care for our customers and the community. 15 15 We Bank on Alaskans We Bank on Alaskans+ C U S T O M E R P R O F I L E + We Bank on Alaskans: American Mechanical From designing and building state-of-the-art aircraft hangars at Fairbanks Internati onal Airport, to installing window walls at a 28-story apartment building in Waikiki, American Mechanical, Inc. and its family of companies play an important role in shaping Interior Alaska – and beyond. Founded in 1982 by Dennis L. Michel, American Mechanical provides general contracti ng, design-build, and general building/faciliti es maintenance and repair to commercial and industrial customers throughout Alaska. American-Bucher JV is a Fairbanks-based joint venture between American Mechanical and Bucher Glass that installs curtain/window walls, exterior metal and glass fi nish products in commercial and residenti al high-rise buildings in Hawaii. Omni Logisti cs, Inc. is an aviati on ground handling company at Fairbanks Internati onal Airport providing aircraft , security and passenger services for its airline partners, which range from small commuters, to commercial airlines and cargo aircraft . Arcti c Sands LLC is a real estate and equipment leasing company that services the family of companies’ capital expenditure needs. As an Alaska Nati ve, family-owned company with a long history and deep roots in the community, the Michels believe in the importance of giving back. This includes sponsoring a wide variety of youth organizati ons. They also strive to provide sustainable wages and steady employment for employees. “Being locally owned and operated means that every dollar of revenue that fl ows through our companies stays in the local community. We are proud of that,” says Dennis L. Michel II, President of Omni Logisti cs. The multi -faceted family of companies began working with Northrim in 2020, starti ng with a line of credit for American-Bucher JV and expanding into a full banking relati onship, including assistance with a PPP loan. “Like a lot of companies during the pandemic, we applied for a PPP loan. American Mechanical had a very good experience with Northrim to get this done. Their experti se working with our CPA and the SBA to quickly process our PPP loan applicati on and forgiveness was outstanding,” remarks Karen Michel, Vice President of American Mechanical. “There are lots of opportuniti es for Interior Alaska coming down the pike,” Dennis says. “All of this is backed by our fi nancial partner, Northrim Bank, that gives us the capacity to respond to these opportuniti es.” Scott y Watkins, Northrim Vice President – Commercial Lending Team Lead in Fairbanks, says it is an honor to work with the Michels and their group of companies. “The Michel family of companies have been a staple in our community over the past 40 years,” he says. “They have provided Interior Alaska with superior integrity and knowledge in the industries they support.” Annual Report | 2021 16 16 Omni - Hangar 2 Shining in Superior Customer First Service The changes and challenges resulti ng from the pandemic presented many opportuniti es for our employees to provide Superior Customer First Service. As an organizati on, we remained adaptable and made adjustments throughout the year in order to provide a consistently high level of service to our customers. We focused on keeping our branches operati onal, our services accessible, and our employees and customers safe. This involved a combinati on of remote work, facilitated by our IT infrastructure, and CDC-approved health and safety measures that allowed our frontline employees to remain on-site. These eff orts enabled our customers to access the support and services they needed, when they needed it, throughout the year. Our employees were highly responsive to Paycheck Protecti on Protecti on Program (PPP) applicants, criti cally reviewing the applicati ons to maximize the assistance businesses could receive. Depending on a customer’s circumstances, we identi fi ed other programs they might benefi t from. We also assisted customers through the PPP forgiveness process, again helping them take advantage of the available support. Beyond responsiveness, our employees were also proacti ve in reaching out to customers. From government assistance programs to growth opportuniti es, we explored and presented soluti ons tailored to customers’ specifi c situati ons, then helped them navigate the process from start to fi nish. As appropriate, we worked with customers to restructure their debt and provide loan repayment accommodati ons. We focused on keeping our branches operational, our services accessible, and our employees and customers safe. 17 17 17 We Bank on Alaskans We Bank on Alaskans We Bank on Alaskans Celebrating Customer First Service Each year, we present our Customer First Service Awards to celebrate employees who embody Northrim’s core value of Superior Customer First Service: demonstrati ng sincere appreciati on for our customers, and building lasti ng customer relati onships through professional, prompt and caring service. We honor our 2021 Customer First Service Award recipients, and thank them and the many other members of the Northrim family for their dedicati on and genuine care for their jobs, their co-workers and the customers they serve. Daisy Arce Assistant Branch Manager, Sitka Financial Center Michele Bear Card Services Administrator, Electronic Banking Mary Ann Robinson Branch Supervisor, Wasilla Financial Center Tori Brandon Data Analyst, Informati on Technology Cindy Fields SVP, Internal Audit Director, Internal Audit Julius Bustarde Operati ons Specialist, Electronic Banking Annual Report | 2021 Annual Report | 2021 18 18 Our Leadership Team We grew our leadership team in 2021 through internal promoti ons and outside talent, adding strength and a diverse set of skills to the Bank. This team off ers experti se and vision gained through decades of experience at Northrim and in the industry. With their combined talent, and the support of our employees, they led the Bank through a year of changes, challenges and opportuniti es to achieve our 2021 growth and profi tability. Jed Ballard EVP, Chief Financial Offi cer Mark Edwards EVP, Chief Credit Offi cer & Bank Economist Mike Huston EVP, Chief Lending Offi cer Amber Zins EVP, Chief Administrati on Offi cer Benjamin Craig EVP, Chief Informati on Offi cer Joe Schierhorn Chairman, President and CEO 19 19 19 We Bank on Alaskans We Bank on Alaskans We Bank on Alaskans + I N M E M O R Y + Michael Marti n, EVP — Chief Operati ng Offi cer, General Council and Corporate Secretary, passed away in November 2021. He had recently celebrated his 10-year anniversary at Northrim. Mike will be remembered for his deep commitment to the company and the meaningful relati onships he formed throughout his career. Mike was acti ve in his community, having served as a past-president of Alaska Public Media and was currently on the board of the Anchorage Symphony Orchestra and president of the Alaska Bankers Associati on. In additi on, he taught many courses at Alaska Pacifi c University, the University of Alaska Anchorage, Pacifi c Coast Banking School at the University of Washington and the American Insti tute of Banking. To honor his legacy, the Bank created the Michael Marti n Youth and Sport Development Endowment fund with a donati on of $100,000 to the Nordic Skiing Associati on of Anchorage (NSAA), administered by the Alaska Community Foundati on. The donati on will benefi t NSAA’s Junior Nordic program and will be used to ensure that NSAA is able to promote cross-country skiing as a health and wellness acti vity and is made available to children of low-income families and throughout diverse neighborhoods. Mike was passionate about his work at the Bank and the many customers and colleagues that he worked with over the years. Northrim is grateful to him for his many years of dedicated service to the Bank and our community. Annual Report | 2021 20 Senior Management TJ Alinen SVP, Human Resources Director Audrey Amundson SVP, Director of Accounti ng, Treasury & Financial Planning Kati e Bates SVP, Director of Business Applicati ons & Digital Channels Ryan Caldwell SVP, Systems & Network Manager Catherine Claxton SVP, Real Estate Lending Manager Jason Criqui SVP, Commercial Lending Manager Barb Ervin SVP, Director of Core Applicati ons Cindy Fields SVP, Internal Audit Director Doug Frey SVP, Security & Business Conti nuity Manager Latosha Frye SVP, Corporate Accounti ng Manager Joe Gelione SVP, Commercial Loan Unit Manager Carolyn Jennings SVP, Retail Banking Director Josh King SVP, Northrim Funding Services Division Manager Tammy Kosa SVP, Regional Market Manager Doug Ladenburger SVP, Director of Treasury Management Services Nate Olmstead SVP, Data Analyti cs Manager Kari Skinner SVP, Marketi ng & Communicati ons Director Erick Stoeckle SVP, Enterprise Architecture Manager Kevin Tillotson SVP, Regional Market Manager Linda Utt ech SVP, Director of Faciliti es Operati ons Suzanne Whitt le SVP, Compliance Manager 21 We Bank on Alaskans Board of Directors Joe Schierhorn Director since 2016 Larry Cash Director since 1995 Anthony Drabek Director since 1991 Karl Hanneman Director since 2014 David Karp Director since 2015 Joe Marushack Director since 2021 David McCambridge Director since 2011 Chairman, Audit Committ ee Krystal Nelson Director since 2015 Chairman, Compensati on Committ ee Aaron Schutt Director since 2018 John Swalling Director since 2002 Lead Director, Chairman, Governance & Nominati ng Committ ee Linda Thomas Director since 2014 David Wight Director since 2004 Our Board of Directors is composed of Alaska business leaders representi ng industries and communiti es across the state. We are grateful for their diverse perspecti ves and guidance as they add strength to our organizati on and help guide the directi on and conti nued success of the Bank. Joe Schierhorn Chairman, President, CEO and COO, Northrim BanCorp, Inc. Chairman, President and CEO, Northrim Bank Larry Cash Founder and Chair, RIM Architects, LLC (President, 1986-2016) Executi ve Committ ee/Director, Anchorage Economic Development Corporati on (Emeritus) Member/Manager of RIM Investments, LLC Board Trustee of Alaska Pacifi c University (Emeritus) Anthony Drabek Director, Koniag, Inc., an Alaska Nati ve Corporati on, 2019-2020; Secretary since 2021 President and CEO, Nati ves of Kodiak, Inc., an Alaska Nati ve Corporati on, 1989-2010 Chairman, Koncor Forest Products Company, 1986-2010 (President 2001-2010) Karl Hanneman CEO and Director, Internati onal Tower Hill Mines Ltd. (COO 2015-2016, Alaska General Manager 2010-2015) Director, Fairbanks Chamber of Commerce, 2010-2020 Director, Usibeli Coal Mine, Inc., since 2011 Director, Sunshine Silver Mining & Refi ning Corp., 2018-2019 Director, Gatos Silver, Inc., since 2020 David Karp SVP, Managing Director, Alaska Saltchuk, since 2019 President and CEO, Northern Aviati on Services, Inc., 2011-2018 Director, Alaska Communicati ons Systems, Inc., 2011-2021 Community Advisory Board Chair, Alaska Communicati ons Systems, Inc., since 2022 Director, Anchorage Economic Development Corporati on Director, Alaska Resource Educati on Joe Marushack Board Member, Yellowstone Forever, since 2015 President, ConocoPhillips Alaska, 2015-2021 President, ConocoPhillips Asia, Pacifi c and Middle East, 2012-2015 President, ConocoPhillips Canada, 2010-2012 President, ConocoPhillips Australia, 2007-2010 David McCambridge Audit Partner, KPMG LLP, 1978-2010 Director and Treasurer, the Tanaka Foundati on, 1985-2015 Director, Great Alaska Council Boy Scouts of America, 1993-2012 Director, Alaska Kidney Foundati on, 1999-2020 and President Krystal Nelson EVP and COO, Bering Straits Nati ve Corporati on, since 2014 SVP and COO, Ahtna Engineering Services, 2007-2014 Recipient of the Alaska Top 40 under 40 Award, 2004 Aaron Schutt President and CEO, Doyon Limited, an Alaska Nati ve Corporati on, since 2011 (COO 2008-2011 and SVP 2006-2011) Director, Akeela, Inc., since 2001 and Chair, since 2018 Recipient of the William A. Egan Alaskan of the Year Award, 2021 Member of the University of Alaska Fairbanks Advisory Board, since 2021 Director, Alaska Nati ve Heritage Center, 2012-2019 Director, ANCSA Regional Associati on and Chair, since 2018 Board of Managers for Doyon Uti liti es, LLC, since 2007 John Swalling Founder, Swalling & Associates, PCC, an accounti ng fi rm, 1991-2020 Director of Swalling Constructi on Co., Inc., 1975-2018 Ernst & Young LLP, Partner, 1984-1991 Director and past Chairman, Providence Health & Services Alaska, 1998-2019 Director and past Chairman, Visit Anchorage, 1986-2019 Director and Vice Chairman, CIVIC Ventures, 2005-2019 Director, Commonwealth North, 2002-2020 Linda Thomas CEO, VP and Director, Alaskan Brewing & Bott ling Co. and its subsidiaries, since 2016 CFO 1994-1996, COO 1996-2016 Member and Past President, Juneau Chamber of Commerce Co-Chair, Mayor’s Task Force for Economic Stabilizati on Juneau, 2020 Board Member, League of Women Voters, since 2021 David Wight President and CEO, Alyeska Pipeline Service Company, 2000-2005, following a 41-year career with the Amoco Corporati on, which became BP in 1999 Director, Storm Cat Energy, 2006-2010 Director, Alaska Gasline Development Corporati on, since 2016 Director, Commonwealth North Director, United Way of Anchorage Past Director and Chair of Providence Alaska and UAA Chancellor’s Advisory Board 22 Northrim Bank Officers Executi ve Vice Presidents Joseph Schierhorn, Chairman, President & Chief Executi ve Offi cer6 Jed Ballard, Chief Financial Offi cer Benjamin Craig, Chief Informati on Offi cer2 Mark Edwards, Chief Credit Offi cer & Bank Economist2 Michael Huston, Chief Lending Offi cer Amber Zins, Chief Administrati ve Offi cer2 Senior Vice Presidents Thomas Alinen, Human Resources Director Audrey Amundson, Dir of Accounti ng, Treasury & Fncl Planning6 Kathleen Bates, Dir of Bus Applicati ons & Digital Channels4 Ryan Caldwell, Systems & Network Manager1 Catherine Claxton, Real Estate Lending Manager5 Jason Criqui, Commercial Lending Manager1 Barbara Ervin, Director of Core Applicati ons2 Cynthia Fields, Internal Audit Director Douglas Frey, Security & Business Conti nuity Manager1 Latosha Frye, Corporate Accounti ng Manager3 Joseph Gelione, Commercial Loan Unit Manager Carolyn Jennings, Retail Banking Director5 Josh King, Division Manager2 Tammy Kosa, Regional Market Manager I3 Douglas Ladenburger, Director of Treasury Management Services Nathaniel Olmstead, Data Analyti cs Manager1 Kari Skinner, Marketi ng & Communicati ons Director Erick Stoeckle, Enterprise Architecture Manager1 Kevin Tillotson, Regional Market Manager I Linda Utt ech, Director of Faciliti es Operati ons1 Suzanne Whitt le, Compliance Manager4 Vice Presidents Lisa Adams, NFS Operati ons Manager2 Mark Anderson, Loan Offi cer IV - Commercial Adam Baxter, Loan Offi cer V – Commercial1 James Beasley, Electronic Banking Manager1 Katherine Bender, Community & Public Relati ons Manager1 Clark Bihag, Loan Offi cer IV - Commercial Timothy Breeden, Loan Offi cer IV - Commercial David Byrne, Loan Offi cer IV - Commercial Casey Campbell, Loan Offi cer IV - Commercial Sean Christi an, Strategic & Planning Manager3 John Damjanovich, Loan Offi cer V - Commercial Real Estate Anita DeVore, Regional Sales & Service Manager4 Michael Dye, Lending Branch Manager II Cynthia El-Khoury Hanna, Loan Administrati ve Manager Kimberly Farrell Brewington, Treasury Management Consultant4 Jyah Gitomer, Call Center Manager1 Allen Hippler, Lending Team Lead1 Jaime Kissner, Loan Offi cer IV – Commercial Jeanine Lillo, Controller3 Kelly Lykins-Longlet, Risk Manager3 Steven Manley, Loan Offi cer IV - Commercial Kathleen Marti n, Loan Offi cer V – Constructi on4 Kelly McCormack, Credit Analyst Team Lead3 Gerlie Monta-Guevarra, Branch Manager II1 Loren Olsen, Lending Branch Manager I Darci Ornellas, Regional Sales & Consumer Lending Manager5 Aili Peyton-Jalbert, Treasury Management Consultant Nicole Pintsch, Controller of Financial Reporti ng2 Phillip Reid, Loan Offi cer V - Commercial James Richards, Bus Development Off r Relati onship Manager II1 Jeff rey Sanford, Loan Offi cer IV - Commercial Davina Simmons Napier, Consumer Lending Manager William Simpson, Collecti ons Supervisor2 Susan Stenstrom, Corporate Secretary2 James Stewart, Loan Offi cer V - Commercial Real Estate Mildred Sy, Special Credits & Loan Servicing Manager2 Joann Thayer, Treasury Management Consultant3 Jonathan Tibbs, Loan Offi cer V - Commercial Bruce Tretzen, NFS Relati onship Manager1 Scott y Watkins, Lending Team Lead Lynn Wolfe, Loan Operati ons Manager6 23 23 23 We Bank on Alaskans We Bank on Alaskans We Bank on Alaskans Assistant Vice Presidents Lindsay Atkins, Branch Manager I1 Aracelis Bell, Nrim Investment Services Relati onship Banker3 Erika Bills, Business Banker III5 Angela Bradford, Community Development & Ln Compliance Manager1 Christopher Chambos, Retail & Investment Services Manager2 Rena Dalman, Treasury Management Business Banker II Kristi Dent, Consumer Lender III Paul Dombroski, Loan Offi cer III - Commercial Seane English, Credit Administrati on Operati ons Manager1 Erin Gage, Retail Banking Operati ons Manager4 Melissa Galloway, Loan Offi cer III - Commercial Lawrence Gluck, Loan QA Offi cer1 Eric Hamilton, Loan Offi cer IV - Commercial Real Estate Maia Hernandez, Branch Manager II1 Dawn Hoxie, Branch Manager II5 Eileen Kehoe, Mortgage Servicing Manager James Larson, Special Credits Offi cer II Terre Lefebvre, Treasury Merchant Relati onship Manager3 Brian Leonard, Branch Manager II2 Katreena Litt le, Branch Manager I2 Yana Milett e, Electronic Banking Operati ons Manager1 Jill Milham, Retail Banking Operati ons Assistant Manager2 Joseph Moran, Loan Offi cer III – Constructi on1 Bessie Paraoan, Special Credits Offi cer I3 Rick Pinkerton, Loan Review Offi cer3 Kelly Reynolds, Security Manager3 Blake Rod, Branch Manager I Teressa Saaiman, Branch Manager I1 Judith Schnese, Audit Manager2 Benjamin Schulman, Loan Offi cer III – Commercial2 Micah Scott , BSA & Deposit Comp Manager3 Delores Siah, Branch Manager II1 Sathiane Sikeo, Branch Manager I Rodlynn Smallwood, Operati ons Support Manager4 Diana Soliday, Branch Manager II3 Kathleen Sti lwell, Card Services Manager Maureen Swartwood, Branch Manager II Reynold Udarbe, Branch Manager I2 Tammi Whistler, Loan Administrati ve Offi cer1 Offi cers Kevin Anderson, Corporate Training Manager Daisy Arce, Assistant Branch Manager I1 Johnico Bashford-Blumer, Assistant Branch Manager I Deborah Bolton, Assistant Branch Manager II2 Maricel Bratcher, Assistant Branch Manager I4 Milagros Casti glione, Business Banker I3 Cindy Cheely, Business Banker II4 Christi na Clayton, Assistant Branch Manager II1 Paula Duracinski, Faciliti es Manager4 Astrid Erdman, Treasury Management Business Banker I Donna Fountain, Call Center Assistant Manager3 Mary Fox, Special Credits Offi cer I3 Jay Gilling, Security Offi cer1 Heidi Hurben, Assistant Branch Manager II Brigitt e Lampert, Assistant Branch Manager I2 Christi na Lawrence, Assistant Branch Manager II4 Stephanie Love, Marketi ng & Sales Manager1 Michelle Lozano, Special Credits Associate Offi cer3 Lloyd Malpaya, Assistant Branch Manager I Amanda Maly, Consumer Lender II Neddie Manabat, Assistant Branch Manager II1 Nicole Mariman, Operati ons Support Assistant Manager4 Sarah Maycock, Electronic Banking Support Manager Chellaney Middlemas, Assistant Branch Manager I Fejie Monta-Carandang, Assistant Branch Manager I1 Pamela Oberts, Assistant Branch Manager II Criselda Parrocha, Business Banker I4 Ruth Regan, Assistant Branch Manager I William Ringo, Assistant Branch Manager I Kiersten Russell, Loan Offi cer II – Commercial1 Dagmar Sanchez, Senior Training Specialist5 Jodie Stone, Assistant Branch Manager I Edwin Strupulis, Assistant Branch Manager I Deatrice Swazer, Senior Real Estate Valuati on Offi cer3 Elias Wilterding, Credit Administrati on Offi cer1 Rosemarie Yadao, Assistant Branch Manager I1 AVP and above as of 2/2/2022: 1 ≥ Five-year employee | 2 ≥ Ten-year employee | 3 ≥ Fift een-year employee | 4 ≥ Twenty-year employee 5 ≥ Twenty-fi ve-year employee | 6 ≥ Thirty-year employee Annual Report | 2021 24 Mission Mission To Be Alaska’s Most Trusted Financial Insti tuti on We are committ ed to adding value for our customers, communiti es and shareholders. Vision Vision To Be Alaska’s Premier Bank And Employer Of Choice We will be a leader in fi nancial experti se, products and services, focused on conti nuous improvement and market growth. Values Values Proud To Be Alaskan We are Alaskan managed. We embody Alaska’s fronti er spirit and values, and strongly support our communiti es. Superior Customer First Service We have a sincere appreciati on for our customers. We want to build lasti ng customer relati onships through professional, prompt and caring service. Growth We look for growth opportuniti es for our customers, our insti tuti on and our employees. We strive to be bett er, personally and professionally. Integrity We are trustworthy, reliable and ethical, and provide our customers with secure, confi denti al services. We do what is right. We Are Engaged We achieve more because we are dynamic, proacti ve and innovati ve. Accountable We take personal responsibility. We do what we say we will do. Aligned We value alignment within teams and across departments. Together we are stronger. 25 25 25 We Bank on Alaskans We Bank on Alaskans We Bank on Alaskans  Information & Addresses Annual Meeti ng: May 26, 2022 Virtual Meeti ng Stock Symbol: Northrim BanCorp, Inc. (NASDAQ: NRIM) Auditor: Moss Adams LLP Transfer Agent & Registrar: American Stock Transfer & Trust Company LLC (800) 937-5449, info@amstock.com Legal Counsel: Davis Wright Tremaine LLP Accreti ve Legal, PLLC Investor Informati on: For stock informati on and SEC fi lings, copies of earnings and dividend releases, click on “Investor Relati ons” secti on at northrim.com Investor Requests: Call our Corporate Secretary at (907) 562-0062 or write Corporate Secretary, Northrim Bank PO Box 241489, Anchorage, AK 99524-1489 This report has not been approved or disapproved for accuracy or adequacy by the Federal Deposit Insurance Corporati on, Federal Reserve Bank, Securiti es and Exchange Commission, or any other regulatory authority. An Equal Opportunity and Affi rmati ve Acti on Employer. Qualifi ed applicants and employees receive considerati on for employment without regard to race, color, religion, sex, sexual orientati on, gender identi ty, age, nati onal origin, physical or mental disability, protected veteran status, pregnancy, parenthood, marital status, changes in marital status, geneti c informati on or any other status protected by federal, state or local law. Cauti onary Note Regarding Forward-Looking Statements This report contains forward-looking statements within the meaning of the Private Securiti es Liti gati on Reform Act of 1995, as amended, which are not historical facts. These forward-looking statements are, in eff ect, management’s att empt to predict future events, and thus are subject to various risks and uncertainti es. Readers should not place undue reliance on forward- looking statements, which refl ect management’s views only as of the date hereof. When used herein, the words “anti cipate,” “believe,” “esti mate,” “expect,” and “intend” and words or phrases of similar meaning are intended to help identi fy forward-looking statements. Although we believe that management’s expectati ons as refl ected in forward- looking statements are reasonable, we cannot assure readers that those expectati ons will prove to be correct as forward- looking statements are subject to various risks and uncertainti es that may cause our actual results to diff er materially and adversely from our expectati ons as indicated in the forward-looking statements. Many of these risks, as well as other risks that may have a material adverse impact on our operati ons and business, are identi fi ed in our fi lings with the Securiti es and Exchange Commission. Forward-looking statements contained herein are made only as of the date of this report, and Northrim does not undertake any obligati on to release revisions to these forward- looking statements to refl ect events or conditi ons aft er the date of this report. Financial Snapshot Endnotes: 1 These unaudited schedules provide selected fi nancial informati on concerning the Company that should be read in conjuncti on with Item 7 “Management’s Discussion and Analysis of Financial Conditi on and Results of Operati ons” of this report. 2 Tangible book value per share is a non-GAAP rati o defi ned as shareholders’ equity, less intangible assets, divided by common shares outstanding. Management believes that tangible book value is a useful measurement of the value of the Company’s equity because it excludes the eff ect of intangible assets on the Company’s equity. 3 Tangible common equity to tangible assets is a non-GAAP rati o that represents total equity less goodwill and intangible assets divided by total assets less goodwill and intangible assets. Management believes this rati o is important as it has received more att enti on over the past several years from stock analysts and regulators. The most comparable GAAP measure of shareholders’ equity to total assets is calculated by dividing total shareholders’ equity by total assets. 4 Tax-equivalent net interest margin is a non-GAAP performance measurement in which interest income on non-taxable investments and loans is presented on a tax-equivalent basis using a combined federal and state statutory rate of 28.43% in 2018 through 2021 and 41.11% in all other years presented. Management believes that tax-equivalent net interest margin is a useful fi nancial measure because it enables investors to evaluate net interest margin excluding tax expense in order to monitor our eff ecti veness in growing higher interest yielding assets and managing our costs of interest bearing liabiliti es over ti me on a fully tax equivalent basis. 5 In managing our business, we review the effi ciency rati o exclusive of intangible asset amorti zati on, which is a non-GAAP performance measurement. Management believes that this is a useful fi nancial measurement because we believe this presentati on provides investors with a more accurate picture of our operati ng effi ciency. The effi ciency rati o is calculated by dividing other operati ng expense, exclusive of intangible asset amorti zati on, by the sum of net interest income and other operati ng income. Other companies may defi ne or calculate this data diff erently. 6 The Company’s 2017 results included the impact of the enactment of the Tax Cuts and Jobs Act, which was signed into law on December 22, 2017. The law includes signifi cant changes to the U.S. corporate tax system, including a Federal corporate rate reducti on from 35% to 21%. In 2017, the Company applied the newly enacted corporate federal income tax rate of 21%, reducing the value of the Company’s net deferred tax asset, resulti ng in approximately a $2.7 million increase in tax expense. In 2018, the Company fi nalized changes related to the reducti on in the federal tax rate which resulted in a $470,000 reducti on in tax expense. 7 Number of banking offi ces does not include RML locati ons. 2021 number of banking offi ces includes 17 full service branches and 1 loan producti on offi ce. 2020 number of banking offi ces includes 16 full service branches and 1 loan producti on offi ce. 2018 number of banking offi ces include 15 full service branches and 1 loan producti on offi ce. 8 FTE includes 321, 312, 311, 320, 314, and 321 Community Banking employees in 2021, 2020, 2019, 2018, 2017 and 2016, respecti vely. FTE includes 130, 126, 120, 110, 115, and 130 Home Mortgage Lending employees in 2021, 2020, 2019, 2018, 2017 and 2016, respecti vely. Annual Report | 2021 Annual Report | 2021 Annual Report | 2021 Annual Report | 2021 26 26 26 Anchorage Northrim Headquarters PO Box 241489 Anchorage, AK 99524 (907) 562-0062 (800) 478-2265 outside Anchorage northrim.com Eastside Community Branch 7905 Creekside Center Drive, Suite 100 Huff man Branch 1501 E. Huff man Road Jewel Lake Branch 4000 W. Dimond Blvd., Suite 2 Lake Oti s Community Branch 2270 E. 37th Avenue Midtown Financial Center 3111 C Street Seventh Avenue Branch 517 W. 7th Avenue, Suite 300 Southside Financial Center 8730 Old Seward Highway West Anchorage Branch 2709 Spenard Road Eagle River Eagle River Branch 12812 Old Glenn Highway, Suite C-3 Wasilla Wasilla Financial Center 850 E. USA Circle, Suite A (907) 376-0357 Bellevue, Washington Northrim Funding Services 170 120th Ave. NE, Suite 202 PO Box 50245 Bellevue, WA 98015 (425) 453-1105 Home Mortgage Lending Residenti al Mortgage, LLC Headquarters 100 Calais Drive Anchorage, AK 99503 (907) 222-8800 residenti almtg.com 10 locati ons statewide Affi liated Companies Northrim Investment Services 3111 C Street Anchorage, AK 99503 (907) 562-0062 Pacifi c Portf olio Consulti ng, LLC and Pacifi c Portf olio Trust Company Columbia Center 701 5th Ave., Suite 6850 Seatt le, WA 98104 (206) 623-6641 pacifi c-portf olio.com Fairbanks Fairbanks Financial Center 360 Merhar Avenue (907) 455-1111 Fairbanks West Community Branch 3637 Airport Way (907) 452-5965 Juneau Juneau Financial Center 2094 Jordan Avenue (907) 790-5168 Juneau Downtown Branch 301 N. Franklin Street (907) 586-1010 Ketchikan Ketchikan Financial Center 2491 Tongass Avenue (907) 225-4545 Kodiak Kodiak Loan Producti on Offi ce 2011 Mill Bay Road (907) 481-1020 Sitka Sitka Financial Center 315 Lincoln Street, Suite 206 (907) 747-6252 Soldotna Soldotna Financial Center 44384 Sterling Highway, Suite 101 (907) 260-7669 northrim.com 

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