Northrim BanCorp, Inc. (Form: 8-K)

Northrim News Exhibit 99.1
Headquarters: 3111 C Street, Anchorage, AK 99503
For Immediate Release

Northrim BanCorp, Inc. Reports Earnings per Share Up 27%,
Net Income Up 21% in the Third Quarter

ANCHORAGE, AK—October 25, 2006—Northrim BanCorp, Inc. (the “company”) (Nasdaq: NRIM) reported today that diluted earnings per share for the quarter ended September 30, 2006 were $0.56, up 27% from $0.44 per diluted share for the same quarter a year ago (restated to reflect a 5% stock dividend distributed to shareholders on September 1, 2006). For the nine-month period ended September 30, 2006, diluted earnings per share were $1.50, a 21% increase from diluted earnings per share of $1.24 for the same period in 2005.

The company’s net income for the quarter ended September 30, 2006 was $3.5 million, up 21%, from $2.8 million for the quarter ended September 30, 2005. Net income for the first nine months of 2006 was $9.3 million, up 15% from $8.1 million for the same period in 2005.

“We are very pleased with Northrim’s results for the quarter and year to date,” said Marc Langland, Chairman, President, and CEO. “Strength in our core banking services, and good results from our affiliates, continue to position the company for long-term growth and shareholder returns.”

Total assets at September 30, 2006 were $902 million, up 6% from $850 million at September 30, 2005. Total loans were down 2% to $698 million at September 30, 2006, compared to $711 million at September 30, 2005. Commercial real estate loans were the primary driver of this decline, as customers sought to refinance for longer terms at fixed rates.

Total deposits increased 4% to $777 million at September 30, 2006, up from $746 million a year ago. Lower-cost deposits, including demand deposits, interest-bearing demand deposits, and savings deposits, grew $30 million, or 10%, to $329 million at September 30, 2006, from $299 million at September 30, 2005. Higher-cost deposits, including Alaska CDs, money market deposits and time deposits, declined $161,000 over the same period to a total of $448 million at September 30, 2006.

Net interest income, before the provision for loan losses, increased 7% to $11.9 million for the quarter ended September 30, 2006, from $11.1 million for the same period of 2005. Net interest income, as a percentage of average earning assets on a tax equivalent basis (net interest margin), for the third quarter of 2006 was 5.79%, an increase from 5.68% in the third quarter of 2005.

“We’ve had good deposit growth with our High Performance Checking program, which has changed our mix of deposits to emphasize more low-cost deposits,” said Joe Schierhorn, CFO. “Segments of our loan portfolio have repriced to higher levels due to rising interest rates, and these two factors have led to an increase in our net interest margin.”

Interest expense on borrowings increased to $418,000 for the quarter ended September 30, 2006, from $199,000 for the quarter ended September 30, 2005, due in large part to the interest expense from the additional $10.6 million in junior subordinated debentures that the company issued in December of 2005.

Total other operating income increased 47%, to $2.2 million for the quarter ended September 30, 2006, from $1.5 million for the quarter ended September 30, 2005. Purchased receivable income increased 88%, to $579,000 in the third quarter of 2006, from $308,000 in the same period of 2005 due to a 92% increase in the volume of purchased receivables. Other income grew 25%, to $542,000 in the third quarter of 2006 from $435,000 in the third quarter of 2005, due to increases in electronic banking revenues and a decrease in the loss from the company’s affiliate, Elliott Cove Capital Management.

Employee benefit plan income from our affiliate, Northrim Benefits Group, contributed $271,000 to other operating income for the quarter ended September 30, 2006 and equity in earnings from the company’s mortgage affiliate, Residential Mortgage, grew 15%, to $317,000 for the third quarter of 2006, from $276,000 for the third quarter of 2005.

Total other operating expense increased just 1%, to $7.7 million for the quarter ended September 30, 2006, from $7.6 million for the quarter ended September 30, 2005. The efficiency ratio improved to 53% for the quarter ended September 30, 2006, compared to 59% in the same period in 2005.

“We are pleased that our strong income growth against a 1% increase in operating expenses improved our efficiency ratio to 53% for the quarter,” said Chris Knudson, Chief Operating Officer.

Net loan recoveries for the third quarter of 2006 were $215,000 versus net loan charge-offs of $62,000 for the third quarter of 2005. For the first nine months of 2006, net loan recoveries were $176,000, compared to net loan charge-offs of $44,000 for the same period in 2005. Non-performing assets totaled $8.3 million, or 0.93% of total assets, at September 30, 2006, as compared to non-performing assets of $5.9 million, or 0.69% of total assets, at September 30, 2005. The change in non-performing assets was caused in large part by an increase in loans 90 days past due to $2.8 million at September 30, 2006 from $446,000 at September 30, 2005.

At September 30, 2006, the allowance for loan losses was $12.6 million, or 1.81% of portfolio loans and 152% of non-performing loans. A year ago, the allowance for loan losses was $11.2 million, or 1.58% of portfolio loans and 192% of non-performing loans. The provision for loan losses for the quarter and six month period ended September 30, 2006 was $850,000 and $1.8 million, respectively, as compared to $428,000 and $528,000, respectively, for the same periods in 2005.

For the third quarter of 2006, the company’s return on average assets (ROA) was 1.52%, compared to 1.33% in the same quarter a year ago. Return on average equity was 15.02% for the quarter ended September 30, 2006, compared to 13.31% for the quarter ended September 30, 2005. Tangible book value per share was $13.95 at September 30, 2006, an increase from $12.50 per share at September 30, 2005. Shareholders’ equity increased 11% to $92 million at September 30, 2006 compared to $83 million at September 30, 2005.

Northrim BanCorp, Inc. is the parent company of Northrim Bank, a commercial bank that provides personal and business banking services through locations in Anchorage, Eagle River, Wasilla, and Fairbanks, Alaska, and an accounts receivable financing division in Washington. The bank differentiates itself with a “Customer First Service” philosophy. Affiliated companies include Elliott Cove Capital Management, LLC; Residential Mortgage, LLC; Northrim Benefits Group, LLC, and Pacific Wealth Advisors, LLC.

This release may contain “forward-looking statements” that are subject to risks and uncertainties. Readers should not place undue reliance on forward-looking statements, which reflect management’s views only as of the date hereof. All statements, other than statements of historical fact, regarding our financial position, business strategy and management’s plans and objectives for future operations are forward-looking statements. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” and “intend” and words or phrases of similar meaning, as they relate to Northrim or management, are intended to help identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although we believe that management’s expectations as reflected in forward-looking statements are reasonable, we cannot assure readers that those expectations will prove to be correct. Forward-looking statements are subject to various risks and uncertainties that may cause our actual results to differ materially and adversely from our expectations as indicated in the forward-looking statements. These risks and uncertainties include our ability to maintain or expand our market share or net interest margins, and to implement our marketing and growth strategies. Further, actual results may be affected by our ability to compete on price and other factors with other financial institutions; customer acceptance of new products and services; the regulatory environment in which we operate; and general trends in the local, regional and national banking industry and economy as those factors relate to our cost of funds and return on assets. In addition, there are risks inherent in the banking industry relating to collectibility of loans and changes in interest rates. Many of these risks, as well as other risks that may have a material adverse impact on our operations and business, are identified in our other filings with the SEC. However, you should be aware that these factors are not an exhaustive list, and you should not assume these are the only factors that may cause our actual results to differ from our expectations.


Balance Sheet
(Dollars in thousands, except per share data)
September 30,				December 31,			September 30,			Annual
		2006			2005			2005		% Change

(unaudited)							(unaudited)			(unaudited)
Assets:
Cash and due from banks	$	30,316		$	28,854		$	31,460			-4	%
Overnight investments		39,778			60,836			7,330			443	%
Portfolio investments		75,884			54,975			60,110			26	%
Loans		698,076			705,059			710,944			-2	%
Allowance for loan losses		(12,646	)		(10,706	)		(11,248	)		12	%

Net loans		685,430			694,353			699,696			-2	%
Purchased receivables		20,215			12,198			10,532			92	%
Premises and equipment, net		11,888			10,603			10,762			10	%
Intangible assets		7,024			7,385			6,358			10	%
Other assets		31,065			26,376			23,509			32	%
Total assets	$	901,600		$	895,580		$	849,757			6	%

Liabilities and Shareholders’ Equity:
Demand deposits	$	196,466		$	196,616		$	180,832			9	%
Interest-bearing demand		83,178			75,988			69,465			20	%
Savings deposits		49,436			46,790			48,415			2	%
Alaska CDs		209,290			197,989			175,110			20	%
Money market deposits		156,564			151,903			140,855			11	%
Time deposits		81,853			110,580			131,581			-38	%

Total deposits		776,787			779,866			746,258			4	%
Borrowings		5,767			8,415			7,622			-24	%
Junior subordinated debentures		18,558			18,558			8,000			132	%
Other liabilities		8,218			4,267			4,879			68	%

Total liabilities		809,330			811,106			766,759			6	%
Minority interest in subsidiaries		27			0			0			n/a
Shareholders' equity		92,243			84,474			82,998			11	%
Total liabilities and equity	$	901,600		$	895,580		$	849,757			6	%

Average Quarter Balances — unaudited
Loans	$	710,157		$	713,849		$	703,933			1	%
Total earning assets		821,660			826,548			779,557			5	%
Total assets		900,562			899,476			846,092			6	%
Non-interest bearing deposits		192,399			192,006			185,291			4	%
Interest bearing deposits		585,758			598,898			555,361			5	%
Total deposits		778,157			790,904			740,652			5	%
Shareholders' equity		91,128			84,105			84,701			8	%
Average Year-to-date Balances — unaudited
Loans	$	714,978		$	698,240		$	692,980			3	%
Total earning assets		804,082			778,597			762,437			5	%
Total assets		878,970			842,407			823,175			7	%
Non-interest bearing deposits		181,835			182,535			179,343			1	%
Interest bearing deposits		575,992			550,782			534,566			8	%
Total deposits		757,827			733,317			713,909			6	%
Shareholders' equity		88,330			84,833			85,078			4	%


Income Statement
(Dollars in thousands, except per share data)
	Quarter Ended September 30:
		2006		2005	% Change
(unaudited)			(unaudited)		(unaudited)
Interest Income:
Interest and fees on loans	$	16,601	$	14,364		16	%
Interest on portfolio investments		725		567		28	%
Interest on overnight investments		515		116		344	%
Total interest income		17,841		15,047		19	%
Interest Expense:
Interest expense on deposits		5,486		3,711		48	%
Interest expense on borrowings		418		199		110	%
Total interest expense		5,904		3,910		51	%
Net interest income		11,937		11,137		7	%
Provision for loan losses		850		428		99	%
Net interest income after provision for loan losses		11,087		10,709		4	%
Other Operating Income:
Service charges on deposit accounts		494		475		4	%
Purchased receivable income		579		308		88	%
Employee benefit plan income		271		0		n/m
Equity in earnings from mortgage affiliate		317		276		15	%
Other income		542		435		25	%
Total other operating income		2,203		1,494		47	%
Other Operating Expense:
Salaries and other personnel expense		4,790		4,489		7	%
Occupancy, net		626		616		2	%
Equipment expense		325		332		-2	%
Intangible asset amortization expense		121		92		32	%
Other expense		1,799		2,076		-13	%
Total other operating expense		7,661		7,605		1	%
Income before income taxes and minority interest		5,629		4,598		22	%
Minority interest in subsidiaries		70		-		n/m
Pre tax income		5,559		4,598		21	%
Provision for income taxes		2,108		1,756		20	%
Net income	$	3,451	$	2,842		21	%
Basic EPS	$	0.56	$	0.46		22	%
Diluted EPS	$	0.56	$	0.44		27	%
Average basic shares		6,122,657		6,215,672		-1	%
Average diluted shares		6,209,633		6,401,606		-3	%


Income Statement
(Dollars in thousands, except per share data)
			Nine Months Ended September 30:
				2006		2005	% Change
Interest Income:			(unaudited)		(unaudited)		(unaudited)
	Interest and fees on loans		$	48,165	$	40,590		19	%
	Interest on portfolio investments			1,851		1,673		11	%
	Interest on overnight investments			852		174		390	%
		Total interest income		50,868		42,437		20	%
Interest Expense:
	Interest expense on deposits			14,850		9,501		56	%
	Interest expense on borrowings			1,256		641		96	%
		Total interest expense		16,106		10,142		59	%
		Net interest income		34,762		32,295		8	%
Provision for loan losses				1,764		528		234	%
		Net interest income after provision for loan losses		32,998		31,767		4	%
Other Operating Income:
	Service charges on deposit accounts			1,468		1,327		11	%
	Purchased receivable income			1,345		654		106	%
	Employee benefit plan income			829		0		n/m
	Equity in earnings from mortgage affiliate			472		337		40	%
	Other income			1,468		1,089		35	%
		Total other operating income		5,582		3,407		64	%
Other Operating Expense:
	Salaries and other personnel expense			14,226		13,273		7	%
	Occupancy, net			1,864		1,757		6	%
	Equipment expense			1,023		1,025		0	%
	Intangible asset amortization expense			362		276		31	%
	Other expense			5,865		5,776		2	%
		Total other operating expense		23,340		22,107		6	%
		Income before income taxes and minority interest		15,240		13,067		17	%
Minority interest in subsidiaries				218		-		n/m
		Pre tax income		15,022		13,067		15	%
Provision for income taxes				5,737		4,989		15	%
		Net income	$	9,285	$	8,078		15	%
		Basic EPS	$	1.52	$	1.28		19	%
		Diluted EPS	$	1.50	$	1.24		21	%
		Average basic shares		6,114,898		6,330,847		-3	%
		Average diluted shares		6,198,324		6,517,951		-5	%


S.CONTOther Data
(Dollars in thousands, except per share data)
September 30,				December 31,			September 30,
		2006			2005			2005

(unaudited)				(unaudited)			(unaudited)
Asset Quality:
Non accrual loans	$	5,532		$	5,090		$	5,407
Loans 90 days past due		2,811			981			446
Restructured loans		—			—			—

Total non-performing loans		8,343			6,071			5,853
Other real estate owned		—			105			—
Total non-performing assets	$	8,343		$	6,176		$	5,853

Non-performing loans / portfolio loans		1.20	%		0.86	%		0.82	%
Non-performing assets / assets		0.93	%		0.69	%		0.69	%
Allowance for loan losses / portfolio loans		1.81	%		1.52	%		1.58	%
Allowance / non-performing loans		151.58	%		176.35	%		192.17	%
Loan (recoveries) charge-offs, net for the quarter		($215	)	$	1,184		$	62
Loan (recoveries) charge-offs, net year-to-date		($176	)	$	1,228		$	44
Net loan (recoveries) charge-offs / average loans, annualized		(0.03	%)		0.18	%		0.01	%
Other Data (At quarter end):
Book value per share	$	15.10		$	13.86		$	13.54
Tangible book value per share	$	13.95		$	12.65		$	12.50
Tier 1 / Risk Adjusted Assets		12.84	%		12.10	%		10.91	%
Total Capital / Risk Adjusted Assets		14.09	%		13.35	%		12.16	%
Tier 1 /Average Assets		11.57	%		10.81	%		10.12	%
Shares outstanding		6,109,426			6,094,214			6,130,992
Unrealized gain (loss) on AFS securities,
net of income taxes		($341	)		($489	)		($408	)
Other Data (For the quarter):
Net interest margin (tax equivalent)		5.79	%		5.59	%		5.68	%
Efficiency ratio*		53.32	%		55.82	%		59.48	%
Return on average assets		1.52	%		1.36	%		1.33	%
Return on average equity		15.02	%		14.59	%		13.31	%
Other Data (Year-to-date):
Net interest margin (tax equivalent)		5.81	%		5.66	%		5.68	%
Efficiency ratio*		56.96	%		59.72	%		61.15	%
Return on average assets		1.41	%		1.33	%		1.31	%
Return on average equity		14.05	%		13.17	%		12.69	%
*excludes intangible asset amortization expense


Alaska	0-33501	92-0175752
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)

3111 C Street, Anchorage, Alaska		99503
_________________________________ (Address of principal executive offices)		___________ (Zip Code)


	Northrim BanCorp, Inc.

October 25, 2006	By:	R. Marc Langland

		Name: R. Marc Langland
		Title: Chairman, President & CEO


Exhibit No.		Description

99.1		Press Release dated October 25, 2006


Date of Report (Date of Earliest Event Reported):		October 25, 2006


Registrant’s telephone number, including area code:		907-562-0062


Date: Contact: Phone:		October 25, 2006 Joe Schierhorn, Chief Financial Officer (907) 261-3308