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

Northrim BanCorp Reports Record Third Quarter Profits of $3.6 Million, or $0.56 per
Share

ANCHORAGE, AK—October 24, 2007—Northrim BanCorp, Inc. (NASDAQ: NRIM) today reported third quarter profits fueled by solid core deposit growth, strong revenue contribution from its affiliates other than its mortgage affiliate, and the year-over-year increase in net interest margin. Third quarter 2007 net income increased 5% to $3.6 million, or $0.56 per diluted share, compared to $3.5 million, or $0.53 per diluted share, in the third quarter of 2006. For the first nine months of 2007, Northrim earned $9.5 million, or $1.46 per diluted share, compared to $9.3 million, or $1.43 per diluted share, in the like period a year ago. All per share results reflect the 5% stock dividend declared on September 6, 2007, and distributed to shareholders on October 5, 2007. In addition, these calculations reflect the fact that the Company repurchased 75,000 shares of its common stock during the third quarter ended September 30, 2007.

“Continuing high prices for energy and natural resources are providing a solid base to the Alaska economy and generating steady employment growth,” said Marc Langland, Chairman, President and CEO. “Our housing market has been relatively more stable than other areas of the country because it did not have the rapid appreciation experienced in other markets. However, mortgage loan volumes are down as compared to last year. In addition, residential building permits are down 50% since last year.”

“We completed the acquisition of Alaska First Bank & Trust last week, so it did not impact our third quarter results” Langland continued. “We are delighted to add this local bank to our system and expect it will begin contributing to our earnings in 2008.”

FINANCIAL HIGHLIGHTS (at or for the three-month periods ended September 30, 2007, compared to September 30, 2006)

•

Net interest margin was 5.81% up 2 basis points from the third quarter a year ago.

•

Revenues grew 7% to $15.2 million, boosted by a 26% rise in other operating income.

Revenue (net interest income plus noninterest income) grew 7% to $15.2 million in the third quarter of 2007, compared to $14.1 million in the third quarter of 2006. Net interest income before the provision for loan losses grew 4% to $12.4 million in the third quarter of 2007 from $11.9 million in the same quarter a year ago. Year-to-date revenue increased 9% to $44.0 million from $40.3 million in the first nine months of 2006. Net interest income before provision for loan losses grew 6% to $36.9 million in the first nine months of 2007 from $34.8 million in the first nine months of last year.

“Our High Performance Checking program helped generate strong growth in core deposits, and is a solid foundation for our above-average margin,” said Joe Schierhorn, CFO. “The recent cut in the Fed Funds rate, however, reduced our net interest margin slightly in the third quarter.” Net interest margin (net interest income as a percentage of average earning assets on a tax equivalent basis) was 5.81% in the third quarter of 2007, compared to 5.79% in the third quarter a year ago. Net interest margin for the first nine months of 2007 was 5.93% compared to 5.81% in the first nine months of 2006.

“Our provision for loan losses was $725,000 in the third quarter, which brought the year-to-date totals to $2.5 million in the first nine months of the year,” said Schierhorn. Third quarter 2007 net interest income after the provision for loan losses grew 5% to $11.7 million from $11.1 million for the third quarter a year ago. Year-to-date net interest income after provision for loan losses grew 4% to $34.4 million compared to $33.0 million in the like period of 2006.

Other operating income grew 26% in the third quarter of 2007 and 27% year-to-date reflecting the bank’s initiatives to expand the financial services it offers, directly and through affiliates. Total other operating income increased in the third quarter of 2007 to $2.8 million compared to $2.2 million in the third quarter of 2006. Year-to-date other operating income rose to $7.1 million compared to $5.6 million in the same period of 2006. Deposit account service charge income increased 77% to $873,000 in the third quarter of 2007 as compared to $494,000 for the third quarter of 2006 and 55% to $2.3 million in the first nine months of 2007 from $1.5 million a year ago, reflecting the growth in new accounts and fees associated with new services. Purchased receivable income grew 28% to $744,000 in the third quarter as compared to $579,000 in the third quarter of 2006 and 35% to $1.8 million year-to-date as compared to $1.3 million a year ago. Income from the employee benefit plan services we provide grew 18% in the third quarter of 2007 to $319,000 as compared to $271,000 in the third quarter of 2006 and 7% to $890,000 year-to-date as compared to $829,000 a year ago. ”Understandably, the mortgage affiliates’ contribution declined in the third quarter by 36% to $202,000 and was down 17% year-to-date at $390,000,” said Chris Knudson, Chief Operating Officer.

Other operating expenses rose 12% in both the third quarter and first nine months of 2007 with higher occupancy costs, compensation, and other expenses which include internet banking, training costs, and professional fees. In addition, the company incurred a $245,000 loss on one of its purchased receivable accounts in the first quarter ended March 31, 2007, that was included in other expenses. Other operating expense in the third quarter of 2007 was $8.6 million compared to $7.7 million in the third quarter a year ago. Other operating expense in the first nine months of 2007 was $26.1 million compared to $23.3 million a year ago.

“We expect our year-end operating costs to rise as we integrate the Alaska First system into ours, although we expect these cost to be quickly offset by anticipated synergies,” said Knudson. The efficiency ratio during the third quarter of 2007 was 56.14% up from 53.32% a year ago. In the first nine months of the year, the efficiency ratio was 58.76% compared to 56.96% in the first nine months of 2006. The efficiency ratio, calculated by dividing noninterest expense (excluding intangible asset amortization expense) by net interest income and noninterest income, measures overhead costs as a percentage of total revenues.

Total assets grew 6% to $959 million at September 30, 2007, compared to $902 million a year ago, with portfolio investments up 19%, purchased receivables up 15%, and total loans down by less than 1%.

The loan portfolio totaled $695 million at September 30, 2007, compared to $698 million at September 30, 2006. Commercial loans, which account for 43% of the portfolio, grew 2% year over year. Commercial real estate loans, which account for 31% of the portfolio, declined by 1% and construction loans, which accounted for 20% of the portfolio, dropped 6% from a year ago. “Our exposure to new construction, particularly residential, has decreased as activity in that sector has declined this year,” said Joe Beedle, Executive Vice President and Chief Lending Officer. Consumer loans, which account for 7% of the portfolio, grew 11% at September 30, 2007, compared to a year ago, as a result of the growth in overall consumer accounts.

Nonperforming assets showed a small improvement over the immediate prior quarter, although they were higher than last year at this time. “Our efforts to work with our customers to bring past due balances current helped us to reduce the balance of loans that were 90 days or more past due. A few large loans comprise the majority of nonperforming loans and these loans are well secured by real estate and other business assets,” said Beedle.

At September 30, 2007, total nonperforming assets were $9.3 million, or 0.97% of total assets, down from $10.6 million, or 1.12% at June 30, 2007 and up from $8.3 million, or 0.93% at September 30, 2006. Nonperforming loans were $8.6 million, or 1.24% of total loans at quarter end, compared to $9.9 million, or 1.41% of total loans, at June 30, 2007, and $8.3 million, or 1.20% of total loans, a year ago.

The allowance for loan losses totaled $12.1 million, or 1.74% of gross loans, at quarter end compared to $12.6 million, or 1.81% of gross loans, at September 30, 2006 and an allowance of $11.8 million, or 1.69% of gross loans, at June 30, 2007. The allowance for loan losses increased at September 30, 2007 as compared to the quarter ending June 30, 2007 as a result of continued softening in the residential construction market. Net charge-offs for the third quarter ending September 30, 2007 were 49 basis points as a percentage of total loans, compared to 58 basis points for the second quarter ending June 30, 2007 and recoveries of 3 basis points in the third quarter ending September 30, 2006.

Total deposits increased 5% to $818 million at September 30, 2007, compared to $777 million a year earlier. “Strong growth in money market deposits helped offset a decline in balances of the Alaska CD program, and the success of our High Performance Checking program contributed to solid growth in demand deposits,” said Knudson. “We expect the acquisition of Alaska First will further enhance our core deposit base.”

At September 30, 2007, money market balances account for 23% of total deposits, up from 20% a year ago. Alaska CDs, a unique and flexible certificate of deposit, also accounted for 23% of total deposits at September 30, 2007 compared to 27% a year ago. Non interest bearing demand deposits represented 25% of the deposit mix at both September 30, 2007 and September 30, 2006.

Shareholders’ equity increased 9% to $100 million, or $15.87 per share, at September 30, 2007, compared to $92 million, or $14.39 per share, at September 30, 2006. Tangible book value per share at September 30, 2007 was $14.82 compared to $13.29 at September 30, 2006. All per share calculations reflect the 5% stock dividend declared on September 6, 2007 and distributed to shareholders on October 5, 2007. In addition, these calculations reflect the fact that the Company repurchased 75,000 shares of its common stock during the third quarter ended September 30, 2007.

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 asset based lending 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.


Income Statement	Quarter Ended September 30:
(Dollars in thousands, except per share data)		2007		2006	% Change

(unaudited)			(unaudited)		(unaudited)
Interest Income:
Interest and fees on loans	$	16,613	$	16,601		0	%
Interest on portfolio investments		964		725		33	%
Interest on overnight investments		893		515		73	%

Total interest income		18,470		17,841		4	%
Interest Expense:
Interest expense on deposits		5,581		5,486		2	%
Interest expense on borrowings		477		418		14	%

Total interest expense		6,058		5,904		3	%

Net interest income		12,412		11,937		4	%
Provision for loan losses		725		850		-15	%

Net interest income after provision for loan losses		11,687		11,087		5	%
Other Operating Income:
Service charges on deposit accounts		873		494		77	%
Purchased receivable income		744		579		28	%
Employee benefit plan income		319		271		18	%
Equity in earnings from mortgage affiliate		202		317		-36	%
Other income		645		542		19	%

Total other operating income		2,783		2,203		26	%
Other Operating Expense:
Salaries and other personnel expense		5,110		4,790		7	%
Occupancy, net		695		626		11	%
Equipment expense		333		325		2	%
Intangible asset amortization expense		28		121		-77	%
Other expense		2,393		1,799		33	%

Total other operating expense		8,559		7,661		12	%
Income before income taxes and minority interest		5,911		5,629		5	%

Minority interest in subsidiaries		85		70		21	%

Pre tax income		5,826		5,559		5	%

Provision for income taxes		2,200		2,108		4	%

Net income	$	3,626	$	3,451		5	%

Basic EPS	$	0.57	$	0.54		6	%
Diluted EPS	$	0.56	$	0.53		6	%
Average basic shares		6,386,334		6,428,830		-1	%
Average diluted shares		6,480,057		6,520,261		-1	%


Income Statement			Nine Months Ended September 30:
(Dollars in thousands, except per share data)				2007		2006	% Change
Interest Income:			(unaudited)		(unaudited)		(unaudited)
	Interest and fees on loans		$	50,370	$	48,165		5	%
	Interest on portfolio investments			2,949		1,851		59	%
	Interest on overnight investments			1,506		852		77	%

		Total interest income		54,825		50,868		8	%
Interest Expense:
	Interest expense on deposits			16,543		14,850		11	%
	Interest expense on borrowings			1,380		1,256		10	%

		Total interest expense		17,923		16,106		11	%

		Net interest income		36,902		34,762		6	%
Provision for loan losses				2,513		1,764		42	%

		Net interest income after provision for loan losses		34,389		32,998		4	%
Other Operating Income:
	Service charges on deposit accounts			2,269		1,468		55	%
	Purchased receivable income			1,820		1,345		35	%
	Employee benefit plan income			890		829		7	%
	Equity in earnings from mortgage affiliate			390		472		-17	%
	Other income			1,746		1,468		19	%

		Total other operating income		7,115		5,582		27	%
Other Operating Expense:
	Salaries and other personnel expense			15,526		14,226		9	%
	Occupancy, net			2,013		1,864		8	%
	Equipment expense			1,040		1,023		2	%
	Intangible asset amortization expense			249		362		-31	%
	Other expense			7,287		5,865		24	%

		Total other operating expense		26,115		23,340		12	%
		Income before income taxes and minority interest		15,389		15,240		1	%

Minority interest in subsidiaries				215		218		-1	%

		Pre tax income		15,174		15,022		1	%

Provision for income taxes				5,677		5,737		-1	%

		Net income	$	9,497	$	9,285		2	%

		Basic EPS	$	1.48	$	1.45		2	%
		Diluted EPS	$	1.46	$	1.43		2	%
		Average basic shares		6,420,054		6,420,642		0	%
		Average diluted shares		6,515,894		6,580,240		-1	%


Balance Sheet
(Dollars in thousands, except per share data)
September 30,				December 31,			September 30,			Annual
		2007			2006			2006		% Change

(unaudited)							(unaudited)			(unaudited)
Assets:
Cash and due from banks	$	26,159		$	25,565		$	30,316			-14	%
Overnight investments		78,443			18,717			39,778			97	%
Portfolio investments		90,536			100,325			75,884			19	%
Loans:
Commercial loans		297,882			287,155			293,427			2	%
Commercial real estate		213,214			237,599			215,664			-1	%
Construction loans		141,268			153,059			150,772			-6	%
Consumer loans		45,472			42,140			41,032			11	%
Other loans		113			126			309			-63	%
Unearned loan fees		(3,000	)		(3,023	)		(3,128	)		-4	%

Total loans		694,949			717,056			698,076			0	%
Allowance for loan losses		(12,074	)		(12,125	)		(12,646	)		-5	%

Net loans		682,875			704,931			685,430			0	%
Purchased receivables, net		23,168			21,183			20,215			15	%
Premises and equipment, net		13,910			12,874			11,888			17	%
Goodwill and intangible assets		6,656			6,903			7,024			-5	%
Other assets		37,125			35,122			31,065			20	%
Total assets	$	958,872		$	925,620		$	901,600			6	%

Liabilities and Shareholders’ Equity:
Demand deposits	$	208,441		$	206,343		$	196,466			6	%
Interest-bearing demand		86,250			89,476			83,178			4	%
Savings deposits		51,645			48,330			49,436			4	%
Alaska CDs		187,765			207,492			209,290			-10	%
Money market deposits		187,448			157,345			156,564			20	%
Time deposits		96,060			85,918			81,853			17	%

Total deposits		817,609			794,904			776,787			5	%
Borrowings		12,698			6,502			5,767			120	%
Junior subordinated debentures		18,558			18,558			18,558			0	%
Other liabilities		9,703			10,209			8,218			18	%

Total liabilities		858,568			830,173			809,330			6	%
Minority interest in subsidiaries		29			29			27			7	%
Shareholders’ equity		100,275			95,418			92,243			9	%
Total liabilities and equity	$	958,872		$	925,620		$	901,600			6	%


Financial Ratios and Other Data
(Dollars in thousands, except per share data)
September 30,				December 31,			September 30,
		2007			2006			2006

(unaudited)				(unaudited)			(unaudited)
Asset Quality:
Non accrual loans	$	5,666		$	5,176		$	5,532
Loans 90 days past due		2,917			708			2,811
Restructured loans		17			748			—

Total non-performing loans		8,600			6,632			8,343
Other real estate owned		717			717			—
Total non-performing assets	$	9,317		$	7,349		$	8,343

Non-performing loans / portfolio loans		1.24	%		0.92	%		1.20	%
Non-performing assets / assets		0.97	%		0.79	%		0.93	%
Allowance for loan losses / portfolio loans		1.74	%		1.69	%		1.81	%
Allowance / non-performing loans		140.40	%		182.83	%		151.58	%
Loan (recoveries) charge-offs, net for the quarter	$	492		$	1,322			($215	)
Loan (recoveries) charge-offs, net year-to-date	$	2,564		$	1,145			($176	)
Net loan (recoveries) charge-offs / average loans,		0.49	%		0.16	%		-0.03	%
annualized
Capital Data (At quarter end):
Book value per share	$	15.87		$	14.87		$	14.39
Tangible book value per share	$	14.82		$	13.80		$	13.29
Tier 1 / Risk Adjusted Assets		13.33	%		12.95	%		12.84	%
Total Capital / Risk Adjusted Assets		14.58	%		14.21	%		14.09	%
Tier 1 /Average Assets		11.89	%		11.71	%		11.57	%
Shares outstanding		6,317,268			6,414,976			6,410,155
Unrealized gain (loss) on AFS securities, net of	$	3			($287	)		($341	)
income taxes
Profitability Ratios (For the quarter):
Net interest margin (tax equivalent)		5.81	%		6.11	%		5.79	%
Efficiency ratio*		56.14	%		53.30	%		53.32	%
Return on average assets		1.52	%		1.60	%		1.52	%
Return on average equity		14.32	%		15.55	%		15.02	%
Profitability Ratios (Year-to-date):
Net interest margin (tax equivalent)		5.93	%		5.89	%		5.81	%
Efficiency ratio*		58.76	%		55.97	%		56.96	%
Return on average assets		1.37	%		1.46	%		1.41	%
Return on average equity		12.89	%		14.45	%		14.05	%
*excludes intangible asset amortization expense


Average Balances
(Dollars in thousands, except per share data)
September 30,			December 31,		September 30,		Annual
		2007		2006		2006	% Change

(unaudited)			(unaudited)		(unaudited)		(unaudited)
Average Quarter Balances
Loans	$	698,570	$	703,678	$	710,157		-2	%
Total earning assets		850,285		831,314		821,660		3	%
Total assets		944,176		917,559		900,562		5	%
Non-interest bearing deposits		199,845		198,193		192,399		4	%
Interest bearing deposits		601,787		590,184		585,758		3	%
Total deposits		801,632		788,377		778,157		3	%
Shareholders’ equity		100,481		94,149		91,128		10	%
Average Year-to-date Balances
Loans	$	711,148	$	712,130	$	714,978		-1	%
Total earning assets		834,990		810,946		804,082		4	%
Total assets		924,092		888,697		878,970		5	%
Non-interest bearing deposits		190,573		185,959		181,835		5	%
Interest bearing deposits		594,312		579,569		575,992		3	%
Total deposits		784,885		765,528		757,827		4	%
Shareholders’ equity		98,523		89,797		88,330		12	%

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.


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 24, 2007	By:	R. Marc Langland

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


Exhibit No.		Description

99.1		Press Release dated October 24, 2007


Northrim BanCorp, Inc.		Exhibit 99.1
Contact:	Joe Schierhorn, Chief Financial Officer (907) 261-3308


Date of Report (Date of Earliest Event Reported):		October 24, 2007


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