Tangible book value per share at quarter-end was $15.30 compared to $14.63a year earlier. Northrim remains well capitalized with Tier 1 Capital to RiskAdjusted Assets of 13.60% at March 31, 2009.Review of OperationsReflecting strong contributions from affiliates, revenue (net interest incomeplus other operating income) grew 1% year-over-year and 6% from the precedingquarter to $14.8 million in the first quarter of 2009, compared to $14.0 millionin the preceding quarter and $14.6 million in the first quarter a year ago.First quarter 2009 net interest income, before the provision for loan losses,declined 8% year-over-year to $11.2 million, but increased 1% from $11.1 millionin the preceding quarter. In the first quarter a year ago, Northrim’s netinterest income, before the provision totaled $12.2 million.Northrim’s net interest margin (net interest income as a percentage of averageearning assets on a tax equivalent basis) was 5.20% in the first quarter of 2009compared to 5.13% in the fourth quarter of 2008 and 5.60% in first quarter ayear ago. “With fewer reversals of interest relating to loans that fell into thenonperforming status, combined with lower cost of deposits, our net interestmargin moved up 7 basis points from the prior quarter,” said Joe Schierhorn,Chief Financial Officer. Reversal of interest accruals on nonperforming assetsreduced the net interest margin by 8 basis points on an annualized basis in thefirst quarter of 2009, compared to 12 basis points on an annualized basis in thefourth quarter of 2008 and 9 basis points in the first quarter of 2008.The loan loss provision in the first quarter of 2009 totaled $1.4 million,compared to $1.7 million in the first quarter of 2008. In the first quarter of2009, net interest income, after the provision for loan losses, was $9.8 millionup from $9.6 million in the prior quarter and down from $10.5 million a yearago.Total other operating income grew significantly, up 23% for the first quarter of2009 and 48% year-over-year, due to strong contributions from affiliatedfinancial services offerings, particularly from earnings in Northrim’s mortgageaffiliate.

Other operating income grew to $3.6 million, in the first quarter of2009 compared to $2.9 million in the fourth quarter of 2008 and $2.4 million inthe first quarter of 2008. Deposit account service charge income was down 18% at$703,000 in the first quarter of 2009 compared to $862,000 for the first quartera year ago. “We are seeing our customers managing their accounts more frugally,which is a continuing trend in our business,” said Knudson.Purchased receivable income grew 43% to $758,000 in the first quarter of 2009from $529,000 in the first quarter a year ago despite the 48% decrease inpurchased receivable balances during this same time period. These balancesdecreased primarily because one purchased receivable customer sold a portion ofits business which allowed it to pay off its purchased receivable balance priorto the end of the first quarter of 2009. Employee benefit plan income grew to$366,000 for the first quarter of 2009 compared to $307,000 for the firstquarter of 2008 due to the addition of more customers to this product line.Income from Northrim’s mortgage affiliate increased significantly in the firstquarter of 2009 to $848,000 from $33,000 in the first quarter a year ago,reflecting the strong refinance activity from lower mortgage rates.

“Demand formortgage refinancing continues to be strong due to the recent drop in mortgagerates and the stable real estate market that continues to provide many of ourcustomers with adequate equity to refinance their homes,” said Langland.Operating expenses in the first quarter of 2009 decreased 1%quarter-over-quarter and increased 11% year-over-year. Overhead expensesdecreased in the first quarter ended March 31, 2009 as compared to the quarterended December 31, 2008 due to a large drop in OREO impairment and managementcosts that was offset in part by an increase in salaries and other personnelexpense. If an impairment is required, the current results willbe correspondingly adjusted and reported in the Form 10-Q. Although any goodwillimpairment will reduce reported earnings, it will be non-cash in nature and willnot affect Northrim’s regulatory capital ratios, as goodwill is excluded fromregulatory capital.About Northrim BanCorpNorthrim BanCorp, Inc. is the parent company of Northrim Bank, a commercial bankthat provides personal and business banking services through locations inAnchorage, Eagle River, Wasilla, and Fairbanks, Alaska, and an asset basedlending division in Washington.