Regulatory Matters (Notes)

12 Months Ended

Dec. 31, 2013

Regulatory Capital Requirements [Abstract]

Regulatory Matters

Regulatory Matters

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory practices.  The Company’s and the Bank’s capital amounts and classification are also subject to qualitative judgment by the regulators about components, risk weightings, and other factors.

Federal banking agencies have established minimum amounts and ratios of total and Tier I capital to risk-weighted assets, and of Tier I capital to average assets.  The regulations set forth the definitions of capital, risk-weighted and average assets.  Management believes, as of December 31, 2013, that the Company and the Bank met all capital adequacy requirements.

The tables below illustrate the capital requirements for the Company and the Bank and the actual capital ratios for each entity that exceed these requirements.  Management intends to maintain a Tier 1 risk-based capital ratio for the Bank in excess of 10% in 2014, exceeding the FDIC’s “well-capitalized” capital requirement classification.  The dividends that the Bank pays to the Company are limited to the extent necessary for the Bank to meet the regulatory requirements of a “well-capitalized” bank.  The capital ratios for the Company exceed those for the Bank primarily because the $18 million trust preferred securities offerings that the Company completed in the second quarter of 2003 and in the fourth quarter of 2005 are included in the Company’s capital for regulatory purposes although they are accounted for as a liability in its financial statements.  The trust preferred securities are not accounted for on the Bank’s financial statements nor are they included in its capital.  As a result, the Company has $18 million more in regulatory capital than the Bank at December 31, 2013 and 2012, which explains most of the difference in the capital ratios for the two entities.

Northrim BanCorp, Inc.	Actual				Adequately-Capitalized				Well-Capitalized
(In Thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of December 31, 2013:
Total Capital (to risk-weighted assets)		$168,587	16.61	%		$81,198	≥ 8	%		$101,497	≥ 10	%
Tier I Capital (to risk-weighted assets)		$155,851	15.35	%		$40,613	≥ 4	%		$60,919	≥ 6	%
Tier I Capital (to average assets)		$155,851	13.06	%		$47,734	≥ 4	%		$59,667	≥ 5	%
As of December 31, 2012:
Total Capital (to risk-weighted assets)		$158,820	16.60	%		$76,540	≥ 8	%		$95,675	≥ 10	%
Tier I Capital (to risk-weighted assets)		$146,802	15.34	%		$38,280	≥ 4	%		$57,419	≥ 6	%
Tier I Capital (to average assets)		$146,802	12.99	%		$45,205	≥ 4	%		$56,506	≥ 5	%
Northrim Bank	Actual				Adequately-Capitalized				Well-Capitalized
(In Thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of December 31, 2013:
Total Capital (to risk-weighted assets)		$151,308	15.00	%		$80,698	≥ 8	%		$100,872	≥ 10	%
Tier I Capital (to risk-weighted assets)		$138,650	13.75	%		$40,335	≥ 4	%		$60,502	≥ 6	%
Tier I Capital (to average assets)		$138,650	11.68	%		$47,483	≥ 4	%		$59,354	≥ 5	%
As of December 31, 2012:
Total Capital (to risk-weighted assets)		$143,684	15.12	%		$76,023	≥ 8	%		$95,029	≥ 10	%
Tier I Capital (to risk-weighted assets)		$131,748	13.87	%		$37,995	≥ 4	%		$56,993	≥ 6	%
Tier I Capital (to average assets)		$131,748	11.74	%		$44,889	≥ 4	%		$56,111	≥ 5	%