 ANCHORAGE, Alaska, July 27, 2020 GLOBE NEWSWIRE -- Northrim BanCorp, Inc. NASDAQ:NRIM Northrim or the Company today reported net income of 9.90 million, or 1.52 per diluted share, in the second quarter of 2020, compared to 1.03 million, or 0.16 per diluted share, in the first quarter of 2020, and 4.26 million, or 0.62 per diluted share, in the second quarter a year ago. The effort put forth by all of our employees to meet the needs of our community during the pandemic resulted in increased production in the Home Mortgage Lending segment, as well as significant participation in the Small Business Administration SBA Paycheck Protection Program PPP in the Community Banking segment, which contributed to record profitability.Net income for the first six months of 2020 was 10.93 million, or 1.68 per diluted share, compared to 8.57 million, or 1.24 per diluted share, in the first six months of 2019. The provision for loan losses increased to 2.5 million, compared to a 1.1 million loan loss provision in the first half of 2019.Our second quarter was highlighted by higher production in new purchase and refinance activity in the Home Mortgage Lending segment, as a result of the historically low interest rate environment. Additionally, PPP loans generated during the quarter had a meaningful impact on loan and deposit growth in the Community Banking segment, which also contributed to strong second quarter results, said Joe Schierhorn, President and CEO. In addition to the impact of the COVID-19 pandemic, Alaskas economy continues to reflect the downturn in the energy sector, particularly with the sharp decline in oil prices. While Alaska is one of the few states that has re-opened, we have taken a structured approach to resuming all branch activities with many employees continuing to work remotely while maintaining our high level of customer service.Northrims participation in the PPP helped service the needs of our customers and the community, said Schierhorn. In early April we made the decision to offer the program to existing customers and new customers. As a result, according to the SBA, Northrim originated more PPP loans than any other financial institution in Alaska, funding 23 of all Alaska PPP loans through the period ending June 30, 2020. We were able to help approximately 1,000 new customers receive PPP funding in addition to helping more than 1,500 of our existing customers who participated in the program.COVID-19 Issues: Industry Exposure: Northrim has identified various industries that may be adversely impacted by the COVID-19 pandemic and the significant decline in oil prices. Though the industries affected may change through the progression of the pandemic, the following sectors for which Northrim has exposure, as a percent of the total loan portfolio excluding SBA PPP loans as of June 30, 2020, are: Tourism 6, Oil and Gas 6, Aviation non-tourism 5, Healthcare 5, Accommodations 3, Retail 2 and Restaurants 2. Customer Accommodations: The Company has implemented several forms of assistance to help our customers in the event that they experience financial hardship as a result of COVID-19 in addition to our participation in PPP lending. These accommodations include interest only and deferral options on loan payments, as well as the waiver of various fees related to loans, deposits and other services. As of June 30, 2020, the Company has made the following loan modifications due to the impacts of COVID-19:Loan Modifications due to COVID-19 Dollars in thousandsInterest OnlyFull Payment DeferralTotal Portfolio loans64,298293,224357,522 Number of modifications76403479 Consumer loans represent 1 of total loan modifications identified above. Loan Loss Reserve: Northrim booked a loan loss provision of 404,000 for the quarter ended June 30, 2020. This compares to a provision for loan losses of 2.1 million during the previous quarter and a 300,000 provision for loan losses in the second quarter a year ago. Credit Quality: Net adversely classified loans improved to 15.7 million at June 30, 2020, as compared to 25.0 million at June 30, 2019. Net loan chargeoffs were 768,000 in the second quarter of 2020, compared to net loan recoveries of 9,000 in the second quarter of 2019. Branch Operations: All but one branch remained open throughout the quarter. Branch lobbies were available by appointment from March 23 to June 17. All but one branch was fully reopened on June 17 with a number of customers and employee safety measures implemented. Growth and Paycheck Protection Program: The Companys asset base increased during the second quarter ended June 30, 2020, due primarily to loans originated under the SBAs PPP. Through June 30, 2020, Northrim had funded approximately 2,500 PPP loans totaling 353.5 million to both existing and new customers. According to the SBA, the Company originated more SBA PPP loans in the State of Alaska than any other financial institution, funding 23 of the number and 28 of the value of all Alaska PPP loans for the period ending June 30, 2020. The Company initially utilized the Federal Reserve Banks Paycheck Protection Program Liquidity Facility the PPPLF to fund PPP loans, but has since repaid those funds back in full and has funded the SBA PPP loans through core deposits and maturity of long-term investments. Capital Management: At June 30, 2020, the Companys tangible common equity to tangible assets ratio was 9.54 and the Banks capital was well in excess of all regulatory requirements. As previously announced, the Company suspended its previously announced stock repurchasing activity effective March 26, 2020.Second Quarter 2020 Highlights: Total revenue, which includes net interest income plus other operating income, increased 58 to 35.0 million in the second quarter of 2020, compared to 22.1 million in the first quarter of 2020 and increased 37 compared to 25.5 million in the second quarter a year ago. Community Banking provided 54 of total revenues and 46 of earnings in the second quarter of 2020. Home Mortgage Lending provided 46 of total revenue and 54 of earnings in the second quarter of 2020. Net interest income in the second quarter of 2020 was 17.5 million, up 11 from 15.7 million in the preceding quarter and up 9 from 16.0 million in the second quarter a year ago. Net interest margin on a tax equivalent basis NIMTE was 4.02 in the second quarter of 2020, a 35-basis point contraction compared to the preceding quarter, and a 75-basis point contraction compared to the second quarter a year ago. Return on average assets was 2.04 and return on average equity was 19.44 for the second quarter of 2020. Net loans increased 33 to 1.41 billion at June 30, 2020, compared to 1.06 billion at March 31, 2020, and increased 42 compared to 995.2 million at June 30, 2019. Total deposits increased 24 to 1.74 billion at June 30, 2020, compared to 1.40 billion at March 31, 2020, and increased 35 compared to 1.29 billion a year earlier. The Companys wholly owned subsidiary, Residential Mortgage, LLC, generated 212 million or 126 more production during the quarter ended June 30, 2020 as compared to the same period in 2019. The decrease in mortgage interest rates resulted in a decrease of the Banks mortgage servicing rights by 1.9 million for the quarter ended June 30, 2020, compared to a decrease of 930,000 for the preceding quarter and a decrease of 950,000 for the second quarter a year ago.Financial HighlightsThree Months Ended Dollars in thousands, except per share dataJune 30, 2020March 31, 2020December 31, 2019September 30, 2019June 30, 2019 Total assets2,016,705 1,691,262 1,643,996 1,616,631 1,552,770 Total portfolio loans1,433,201 1,081,873 1,043,371 1,036,547 1,015,704 Average portfolio loans1,342,717 1,059,023 1,027,728 1,020,186 1,003,019 Total deposits1,737,359 1,395,492 1,372,351 1,351,029 1,288,178 Average deposits1,620,008 1,359,206 1,361,786 1,307,795 1,239,354 Total shareholders equity206,923 197,723 207,117 204,039 206,338 Net income9,900 1,033 4,580 7,538 4,261 Diluted earnings per share1.52 0.16 0.69 1.11 0.62 Return on average assets2.040.251.111.901.12 Return on average shareholders equity19.442.008.7414.458.13 NIM3.984.324.484.604.71 NIMTE4.024.374.524.654.77 Efficiency ratio64.7684.8778.7972.0177.58 Total shareholders equitytotal assets10.2611.6912.6012.6213.29 Tangible common equitytangible assets9.5410.8411.7311.7412.38 Book value per share32.49 31.06 31.58 31.20 30.66 Tangible book value per share29.97 28.53 29.12 28.74 28.27 Dividends per share0.34 0.34 0.33 0.33 0.30 References to NIMTE, tangible book value per share, tangible common equity and tangible assets all of which exclude intangible assets represent non-GAAP financial measures. Management has presented these non-GAAP measurements in this earnings release, because it believes these measures are useful to investors. See the end of this release for reconciliations of these non-GAAP financial measures to GAAP financial measures.Alaska Economic Update Note: sources for information included in this section are included on page 10.The COVID-19 pandemic has disrupted economies all around the world. In Alaska, the tourism and hospitality industries have been most affected with job losses. Oil prices dropped precipitously at the beginning of the pandemic, but have rebounded recently to healthier levels. The governments fiscal and monetary response has been far reaching. This has greatly eased the short run impacts of the virus for most of Northrims customers. 