Segment Information

12 Months Ended

Dec. 31, 2024

Segment Reporting [Abstract]

Segment Information

Segment Information

    The Company's operations are managed along three reportable operating segments: Community Banking, Home Mortgage Lending, and Specialty Finance. The Company reevaluated our reportable operating segments in 2024 concurrent with the acquisition of 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 December 31, 2024, the Community Banking segment operated 20 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 the 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 about the Company's products and services offered. They are also distinguished by the level of information provided to the chief operating decision maker, who uses the information to review performance of various components of the business, which are then aggregated if operating performance, products and services, and customers are similar. The chief operating decision maker evaluates the financial performance of the Company's business components such as by evaluating revenue streams, significant expenses, and budget to actual results in assessing the performance of the Company's segments and in the determination of allocating resources. Segment pretax net income or loss is used to assess the performance of the community banking segment by monitoring the margin between interest income and interest expense and the efficiency ratio specific to the segment. Segment pretax net income or loss is used to assess the performance of the home mortgage lending segment by monitoring the premium received on loan sales, the margin between interest income and interest expense, and the profitability of home mortgage servicing activities. Segment pretax net income or loss is used to assess the performance of the specialty finance segment by monitoring the yield of purchased receivable fees.

Accounting policies for segments are the same as those described in Note 1 to the Consolidated Financial Statements. Interest expense is allocated to each segment based on average cash utilized to fund the operations of the segment and the average cost of interest-bearing liabilities for the consolidated entity. Indirect salary expense for activities such as general management, accounting and finance, human resources, compliance, information technology, risk management, and internal audit are allocated based on the average percentage of employee time spent working in each specific segment.

    Financial information for the Company's reportable segments and the reconciliation to the consolidated financial results is shown in the following tables:

December 31, 2024
(In Thousands)	Community Banking	Home Mortgage Lending	Specialty Finance	Consolidated
Interest income	$136,495	$16,477	$947	$153,919
Interest expense	34,391	5,249	1,096	40,736
Net interest income (loss)	102,104	11,228	(149)	113,183
Provision for credit losses	2,276	892	125	3,293
Net interest income after provision for credit losses	99,828	10,336	(274)	109,890
Net realized gains on mortgage loans sold	—	13,994	—	13,994
Change in fair value of mortgage loan commitments, net	—	172	—	172
Total production revenue	—	14,166	—	14,166
Mortgage servicing revenue	—	9,155	—	9,155
Change in fair value of mortgage servicing rights:
Due to changes in model inputs of assumptions	—	1,334	—	1,334
Other	—	(1,535)	—	(1,535)
Total mortgage servicing revenue, net	—	8,954	—	8,954
Other mortgage banking revenue	—	882	—	882
Total mortgage banking income	—	24,002	—	24,002
Purchased receivable income	—	—	7,146	7,146
Other operating income	10,960	—	(67)	10,893
Total other operating income	10,960	24,002	7,079	42,041
Salaries and other personnel expense	44,864	20,968	2,015	67,847
Data processing expense	9,918	966	102	10,986
Occupancy expense	5,534	1,927	148	7,609
Professional and outside services	2,284	827	1,240	4,351
Marketing expense	2,518	499	11	3,028
Insurance expense	2,690	101	170	2,961
Other operating expense	5,277	2,336	542	8,155
Total other operating expense	73,085	27,624	4,228	104,937
Income (loss) before provision for income taxes	37,703	6,714	2,577	46,994
Provision for income taxes	7,359	1,934	730	10,023
Net income (loss)	$30,344	$4,780	$1,847	$36,971
Total assets	$2,547,709	$357,630	$136,530	$3,041,869
Loans held for sale	$—	$59,957	$—	$59,957
1-4 family residential properties secured by first liens	$—	$270,966	$—	$270,966
Purchased receivables, net	$—	$—	$74,078	$74,078
Goodwill	$7,525	$7,492	$35,001	$50,018

December 31, 2024
(In Thousands)	Community Banking	Home Mortgage Lending	Specialty Finance	Consolidated
Interest income	$136,495	$16,477	$947	$153,919
Mortgage banking income - external revenue	—	24,002	—	24,002
Mortgage banking income - intersegment revenues	—	3,623	—	3,623
Purchased receivable income	—	—	7,146	7,146
Other operating income	10,960	—	(67)	10,893
	147,455	44,102	8,026	199,583
Reconciliation of revenue
Elimination of intersegment revenues	—	(3,623)	—	(3,623)
Total consolidated revenues	$147,455	$40,479	$8,026	$195,960
Less:
Interest expense	34,391	5,249	1,096	40,736
Provision for credit losses	2,276	892	125	3,293
Segment gross profit	110,788	34,338	6,805	151,931
Less(1):
Salaries and other personnel expense	$44,864	$20,968	$2,015	$67,847
Data processing expense	9,918	966	102	10,986
Occupancy expense	5,534	1,927	148	7,609
Professional and outside services	2,284	827	1,240	4,351
Marketing expense	2,518	499	11	3,028
Insurance expense	2,690	101	170	2,961
Intersegment expense	3,623	—	—	3,623
Other segment items(2)	5,277	2,336	542	8,155
Segment expense	76,708	27,624	4,228	108,560
Reconciliation of expense
Elimination of intersegment expense	($3,623)	$—	$—	(3,623)
Total consolidated expense	$73,085	$27,624	$4,228	$104,937
Income before provision for income taxes	$37,703	$6,714	$2,577	$46,994

1The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker. All expenses are allocated to a segment.

2Other segment items for each reportable segment include:

Community banking: OREO (income) expense, net of rental income and gains on sale, director fees, operational charge offs net of recoveries, loan collection and collateral costs, and other miscellaneous operating costs related to community banking activities.

Home mortgage lending: OREO (income) expense, net of rental income and gains on sale related home mortgage loans, director fees related at Residential Mortgage, loan collection and collateral costs related to home mortgage loans, and other miscellaneous operating costs related to home mortgage lending activities.

Specialty finance: miscellaneous operating costs related to specialty finance activities.

December 31, 2023
(In Thousands)	Community Banking	Home Mortgage Lending	Specialty Finance	Consolidated
Interest income	$121,855	$9,693	$403	$131,951
Interest expense	26,300	2,395	—	28,695
Net interest income	95,555	7,298	403	103,256
Provision for credit losses	3,842	—	—	3,842
Net interest income after provision for credit losses	91,713	7,298	403	99,414
Net realized gains on mortgage loans sold	—	7,828	—	7,828
Change in fair value of mortgage loan commitments, net	—	(102)	—	(102)
Total production revenue	—	7,726	—	7,726
Mortgage servicing revenue	—	7,368	—	7,368
Change in fair value of mortgage servicing rights:
Due to changes in model inputs of assumptions	—	(922)	—	(922)
Other	—	(1,765)	—	(1,765)
Total mortgage servicing revenue, net	—	4,681	—	4,681
Other mortgage banking revenue	—	356	—	356
Total mortgage banking income	—	12,763	—	12,763
Purchased receivable income	—	—	4,482	4,482
Other operating income	9,130	—	—	9,130
Total other operating income	9,130	12,763	4,482	26,375
Salaries and other personnel expense	42,795	17,873	1,073	61,741
Data processing expense	9,091	692	38	9,821
Occupancy expense	5,432	1,839	123	7,394
Professional and outside services	2,305	751	72	3,128
Marketing expense	2,465	462	2	2,929
Insurance expense	2,423	96	—	2,519
Other operating expense	4,742	1,784	123	6,649
Total other operating expense	69,253	23,497	1,431	94,181
Income (loss) before provision for income taxes	31,590	(3,436)	3,454	31,608
Provision for income taxes	6,175	(943)	982	6,214
Net income (loss)	$25,415	($2,493)	$2,472	$25,394
Total assets	$2,496,910	$267,706	$42,881	$2,807,497
Loans held for sale	$—	$31,974	$—	$31,974
1-4 family residential properties secured by first liens	$—	$203,738	$—	$203,738
Purchased receivables, net	$—	$—	$36,842	$36,842
Goodwill	$7,525	$7,492	$—	$15,017

December 31, 2023
(In Thousands)	Community Banking	Home Mortgage Lending	Specialty Finance	Consolidated
Interest income	$121,855	$9,693	$403	$131,951
Mortgage banking income - external revenue	—	12,763	—	12,763
Mortgage banking income - intersegment revenue	—	4,693	—	4,693
Purchased receivable income	—	—	4,482	4,482
Other operating income	9,130	—	—	9,130
	130,985	27,149	4,885	163,019
Reconciliation of revenue
Elimination of intersegment revenues	—	(4,693)	—	(4,693)
Total consolidated revenues	$130,985	$22,456	$4,885	$158,326
Less:
Interest expense	26,300	2,395	—	28,695
Provision for credit losses	3,842	—	—	3,842
Segment gross profit	100,843	20,061	4,885	125,789
Less(1):
Salaries and other personnel expense	$42,795	$17,873	$1,073	$61,741
Data processing expense	9,091	692	38	9,821
Occupancy expense	5,432	1,839	123	7,394
Professional and outside services	2,305	751	72	3,128
Marketing expense	2,465	462	2	2,929
Insurance expense	2,423	96	—	2,519
Intersegment expense	4,693	—	—	4,693
Other segment items(2)	4,742	1,784	123	6,649
Segment expense	73,946	23,497	1,431	98,874
Reconciliation of expense
Elimination of intersegment expense	($4,693)	$—	$—	(4,693)
Total consolidated expense	$69,253	$23,497	$1,431	$94,181
Income before provision for income taxes	$31,590	($3,436)	$3,454	$31,608

1The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker. All expenses are allocated to a segment.

2Other segment items for each reportable segment include:

Community banking: OREO (income) expense, net of rental income and gains on sale, director fees, operational charge offs net of recoveries, loan collection and collateral costs, and other miscellaneous operating costs related to community banking activities.

Home mortgage lending: OREO (income) expense, net of rental income and gains on sale related home mortgage loans, director fees related at Residential Mortgage, loan collection and collateral costs related to home mortgage loans, and other miscellaneous operating costs related to home mortgage lending activities.

Specialty finance: miscellaneous operating costs related to specialty finance activities.

December 31, 2022
(In Thousands)	Community Banking	Home Mortgage Lending	Specialty Finance	Consolidated
Interest income	$96,045	$2,250	$2,033	$100,328
Interest expense	5,156	57	—	5,213
Net interest income	90,889	2,193	2,033	95,115
Provision for credit losses	1,846	—	—	1,846
Net interest income after provision for credit losses	89,043	2,193	2,033	93,269
Net realized gains on mortgage loans sold	—	13,873	—	13,873
Change in fair value of mortgage loan commitments, net	—	(1,035)	—	(1,035)
Total production revenue	—	12,838	—	12,838
Mortgage servicing revenue	—	7,944	—	7,944
Change in fair value of mortgage servicing rights:
Due to changes in model inputs of assumptions	—	1,615	—	1,615
Other	—	(1,327)	—	(1,327)
Total mortgage servicing revenue, net	—	8,232	—	8,232
Other mortgage banking revenue	—	502	—	502
Total mortgage banking income	—	21,572	—	21,572
Purchased receivable income	—	—	2,002	2,002
Other operating income	10,503	—	—	10,503
Total other operating income	10,503	21,572	2,002	34,077
Salaries and other personnel expense	37,963	19,304	905	58,172
Data processing expense	8,104	618	204	8,926
Occupancy expense	4,993	1,819	103	6,915
Professional and outside services	2,026	895	72	2,993
Marketing expense	2,317	427	3	2,747
Insurance expense	1,986	68	—	2,054
Other operating expense	5,107	1,819	119	7,045
Total other operating expense	62,496	24,950	1,406	88,852
Income (loss) before provision for income taxes	37,050	(1,185)	2,629	38,494
Provision for income taxes	7,293	(288)	748	7,753
Net income (loss)	$29,757	($897)	$1,881	$30,741
Total assets	$2,523,092	$131,232	$19,994	$2,674,318
Loans held for sale	$—	$27,538	$—	$27,538
1-4 family residential properties secured by first liens	$—	$203,738	$—	$203,738
Purchased receivables, net	$—	$—	$19,994	$19,994
Goodwill	$7,525	$7,492	$—	$15,017

December 31, 2022
(In Thousands)	Community Banking	Home Mortgage Lending	Specialty Finance	Consolidated
Interest income	$96,045	$2,250	$2,033	$100,328
Mortgage banking income - external revenue	—	21,572	—	21,572
Mortgage banking income - intersegment revenue	—	1,370	—	1,370
Purchased receivable income	—	—	2,002	2,002
Other operating income	10,503	—	—	10,503
	106,548	25,192	4,035	135,775
Reconciliation of revenue
Elimination of intersegment revenues	—	(1,370)	—	(1,370)
Total consolidated revenues	$106,548	$23,822	$4,035	$134,405
Less:
Interest expense	5,156	57	—	5,213
Provision for credit losses	1,846	—	—	1,846
Segment gross profit	99,546	23,765	4,035	127,346
Less(1):
Salaries and other personnel expense	$37,963	$19,304	$905	$58,172
Data processing expense	8,104	618	204	8,926
Occupancy expense	4,993	1,819	103	6,915
Professional and outside services	2,026	895	72	2,993
Marketing expense	2,317	427	3	2,747
Insurance expense	1,986	68	—	2,054
Intersegment expense	1,370	—	—	1,370
Other segment items(2)	5,107	1,819	119	7,045
Segment expense	63,866	24,950	1,406	90,222
Reconciliation of expense
Elimination of intersegment expense	($1,370)	$—	$—	(1,370)
Total consolidated expense	$62,496	$24,950	$1,406	$88,852
Income before provision for income taxes	$37,050	($1,185)	$2,629	$38,494

1The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker. All expenses are allocated to a segment.

2Other segment items for each reportable segment include:

Community banking: OREO (income) expense, net of rental income and gains on sale, director fees, operational charge offs net of recoveries, loan collection and collateral costs, and other miscellaneous operating costs related to community banking activities.

Home mortgage lending: OREO (income) expense, net of rental income and gains on sale related home mortgage loans, director fees related at Residential Mortgage, loan collection and collateral costs related to home mortgage loans, and other miscellaneous operating costs related to home mortgage lending activities.

Specialty finance: miscellaneous operating costs related to specialty finance activities.