Financial Analysis

Fair Value Measurements Assets and Liabilities Measured at Fair Value on a Recurring Basis Investment securities available for sale and marketable equity securities : Fair values are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments. Servicing rights: MSR and CSR are measured at fair value on a recurring basis. These assets are classified as Level 3 as quoted prices are not available. In order to determine the fair value of MSR and CSR, the present value of net expected future cash flows is estimated. Assumptions used include market discount rates, Interest rate swaps: The fair value of the interest rate swap agreements is determined using standard valuation models that calculate the present value of expected future cash flows. These valuation models incorporate observable market inputs, including contractual terms, interest rate yield curves, forward interest rates, and credit risk adjustments. The Company classifies its interest rate swaps within Level 2 of the fair value hierarchy. Interest rate lock commitments: The fair value of the interest rate lock commitments are estimated using quoted or published market prices for similar instruments, adjusted for factors such as pull-through rate assumptions based on historical information, where appropriate. The pull-through rate assumptions are considered Level 3 valuation inputs and are significant to the interest ra …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

Leases The Company's lease commitments consist primarily of agreements to lease land and office facilities that it occupies to operate several of its retail branch locations that are classified as operating leases and are recognized on the balance sheet as right-of-use (ROU) assets and lease liabilities. As of June 30, 2026, the Company has operating lease ROU assets of $11.3 million and operating lease liabilities of $11.5 million. As of December 31, 2025, the Company had operating lease ROU assets of $5.9 million and operating lease liabilities of $5.9 million. The Company did not have any agreements that are classified as finance leases as of June 30, 2026 or December 31, 2025. The Company entered into a new seven year lease for the headquarters building for Residential Mortgage, LLC (RML) in the first quarter of 2026. Upon commencement, the operating lease ROU assets increased $6.3 million and the operating lease liabilities increased $6.4 million. The following table presents additional information about the Company's operating leases for the periods indicated: Three Months Ended June 30, Six Months Ended June 30, (In Thousands) 2026 2025 2026 2025 Lease Cost Operating lease cost (1) $615 $761 $1,337 $1,469 Short term lease cost (1) 73 78 143 164 Total lease cost $688 $839 $1,480 $1,633 Other information Operating leases - operating cash flows $1,103 $1,371 Weighted average lease term - operating leases, in years 10.11 11.88 Weighted average discount rate - operating lea …

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Recent Accounting Pronouncements Accounting pronouncements to be implemented in future periods In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (ASU 2024-03). This updated mandates that public business entities provide detailed disclosures in the notes to the financial statements, breaking down specific expense categories such as purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities included in each relevant expense action. The objective is to enhance transparency, enabling investors to gain a clearer understanding of the nature and impact of these expenses on the Company's financial performance. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and may be applied on a prospective or retrospective basis. The Company intends to adopt ASU 2024-03 retrospectively and does not currently expect the adoption to have a material impact on the Company's consolidated financial statements. In November 2025, the FASB issued ASU 2025-08, Financial InstrumentsCredit Losses (Topic 326): Purchased Loans (ASU 2025-08). The amendments in ASU2025-08 are intended to simplify and improve the accounting for acquired loans under the Current Expected Credit Losses (CECL) model by expanding the use of the gross-up approach currently applied only to purchased credit deteriorated (PCD) …

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Segment Information 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 Sallyport Commercial Finance, LLC (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 June 30, 2026, the Community Banking segment operated 21 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 …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

Subsequent Events On July 22, 2026, the Company announced that it entered into an Agreement and Plan of Merger (the Merger Agreement) by and among Northrim, Whitewater Sub, Inc., a wholly owned subsidiary of the Company (Merger Sub), and PBCO Financial Corporation (PBCO), pursuant to which the Company will acquire PBCO in an all-stock transaction. Upon the terms and subject to the conditions set forth in the Merger Agreement, (i) PBCO will merge with and into Merger Sub, with Merger Sub surviving the merger, (ii) immediately following the merger of PBCO and Merger Sub, and as a part of a single integrated transaction, Merger Sub will merge with and into the Company, with the Company continuing as the surviving entity, and (iii) promptly following such merger, Northrim Bank (the Bank) and Peoples Bank of Commerce, a wholly owned subsidiary of PBCO, will merge (the Bank Merger), with the Bank continuing as the surviving bank. Pursuant to the terms of the Merger Agreement, PBCO shareholders will receive 1.160 shares of the Companys common stock for each PBCO share they own. Following closing, PBCO shareholders will own approximately 21% of the outstanding common stock of the Company. The combined company will have approximately $4.2 billion in assets and will expand the Companys banking footprint into Oregon. The closing of the merger is subject to approvals from the Federal Reserve, the FDIC, the Oregon Department of Consumer and Business Services, Division of Financial Regulat …

SubsequentEventsTextBlock · excerpt; the full note is in the filing