Segment Information

3 Months Ended

Mar. 31, 2025

Segment Reporting [Abstract]

Segment Information

Segment Information

    The Company's operations are managed along three operating segments: Community Banking, Home Mortgage Lending, and Specialty Finance. The Company reevaluated our reportable operating segments in the fourth quarter of 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 March 31, 2025, 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 our 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 pretax income and 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.

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

	Three Months Ended March 31, 2025
(In Thousands)	Community Banking	Home Mortgage Lending	Specialty Finance	Consolidated
Interest income	$36,573	$4,392	$596	$41,561
Interest expense	8,422	1,346	496	10,264
Net interest income	28,151	3,046	100	31,297
Provision (benefit) for credit losses	(1,768)	(307)	666	(1,409)
Net interest income after provision for credit losses	29,919	3,353	(566)	32,706
Net realized gains on mortgage loans sold	—	2,740	—	2,740
Change in fair value of mortgage loan commitments, net	—	660	—	660
Total production revenue	—	3,400	—	3,400
Mortgage servicing revenue	—	2,696	—	2,696
Change in fair value of mortgage servicing rights:
Due to changes in model inputs of assumptions	—	(322)	—	(322)
Other	—	(533)	—	(533)
Total mortgage servicing revenue, net	—	1,841	—	1,841
Other mortgage banking revenue	—	170	—	170
Total mortgage banking revenue	—	5,411	—	5,411
Purchased receivable income	—	—	6,150	6,150
Other operating income	2,703	—	(64)	2,639
Total other operating income	2,703	5,411	6,086	14,200
Salaries and other personnel expense	10,764	4,769	1,690	17,223
Data processing expense	2,670	263	171	3,104
Occupancy expense	1,381	438	70	1,889
Professional and outside services	562	256	297	1,115
Marketing expense	519	150	3	672
Insurance expense	989	22	6	1,017
Compensation expense - Sallyport acquisition payments	—	—	600	600
Other operating expense	1,696	1,752	263	3,711
Total other operating expense	18,581	7,650	3,100	29,331
Income before provision for income taxes	14,041	1,114	2,420	17,575
Provision for income taxes	3,253	310	688	4,251
Net income	$10,788	$804	$1,732	$13,324

March 31, 2025
(In Thousands)	Community Banking	Home Mortgage Lending	Specialty Finance	Consolidated
Interest income	$36,573	$4,392	$596	$41,561
Mortgage banking income - external revenue	—	5,411	—	5,411
Mortgage banking income - intersegment revenues	—	441	—	441
Purchased receivable income	—	—	6,150	6,150
Other operating income	2,703	—	(64)	2,639
	39,276	10,244	6,682	56,202
Reconciliation of revenue
Elimination of intersegment revenues	—	(441)	—	(441)
Total consolidated revenues	$39,276	$9,803	$6,682	$55,761
Less:
Interest expense	8,422	1,346	496	10,264
Provision (benefit) for credit losses	(1,768)	(307)	666	(1,409)
Segment gross profit	32,622	8,764	5,520	46,906
Less(1):
Salaries and other personnel expense	$10,764	$4,769	$1,690	$17,223
Data processing expense	2,670	263	171	3,104
Occupancy expense	1,381	438	70	1,889
Professional and outside services	562	256	297	1,115
Marketing expense	519	150	3	672
Insurance expense	989	22	6	1,017
Compensation expense - Sallyport acquisition payments	—	—	600	600
Intersegment expense	441	—	—	441
Other segment items(2)	1,696	1,752	263	3,711
Segment expense	19,022	7,650	3,100	29,772
Reconciliation of expense
Elimination of intersegment expense	($441)	$—	$—	(441)
Total consolidated expense	$18,581	$7,650	$3,100	$29,331
Income before provision for income taxes	$14,041	$1,114	$2,420	$17,575

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 RML, 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.

	Three Months Ended March 31, 2024
(In Thousands)	Community Banking	Home Mortgage Lending	Specialty Finance	Consolidated
Interest income	$32,311	$3,285	$212	$35,808
Interest expense	8,096	1,053	212	9,361
Net interest income	24,215	2,232	—	26,447
Provision (benefit) for credit losses	197	(48)	—	149
Net interest income after provision for credit losses	24,018	2,280	—	26,298
Net realized gains on mortgage loans sold	—	1,980	—	1,980
Change in fair value of mortgage loan commitments, net	—	386	—	386
Total production revenue	—	2,366	—	2,366
Mortgage servicing revenue	—	1,561	—	1,561
Change in fair value of mortgage servicing rights:
Due to changes in model inputs of assumptions	—	289	—	289
Other	—	(314)	—	(314)
Total mortgage servicing revenue, net	—	1,536	—	1,536
Other mortgage banking revenue	—	129	—	129
Total mortgage banking revenue	—	4,031	—	4,031
Purchased receivable income	—	—	1,345	1,345
Other operating income	2,468	—	—	2,468
Total other operating income	2,468	4,031	1,345	7,844
Salaries and other personnel expense	10,602	4,539	276	15,417
Data processing expense	2,411	238	10	2,659
Occupancy expense	1,467	464	31	1,962
Professional and outside services	563	173	19	755
Marketing expense	380	129	4	513
Insurance expense	754	25	—	779
Other operating expense	1,001	518	34	1,553
Total other operating expense	17,178	6,086	374	23,638
Income before provision for income taxes	9,308	225	971	10,504
Provision (benefit) for income taxes	1,966	63	276	2,305
Net income	$7,342	$162	$695	$8,199

March 31, 2024
(In Thousands)	Community Banking	Home Mortgage Lending	Specialty Finance	Consolidated
Interest income	$32,311	$3,285	$212	$35,808
Mortgage banking income - external revenue	—	4,031	—	4,031
Mortgage banking income - intersegment revenues	—	567	—	567
Purchased receivable income	—	—	1,345	1,345
Other operating income	2,468	—	—	2,468
	34,779	7,883	1,557	44,219
Reconciliation of revenue
Elimination of intersegment revenues	—	(567)	—	(567)
Total consolidated revenues	$34,779	$7,316	$1,557	$43,652
Less:
Interest expense	8,096	1,053	212	9,361
Provision (benefit) for credit losses	197	(48)	—	149
Segment gross profit	26,486	6,311	1,345	34,142
Less(1):
Salaries and other personnel expense	$10,602	$4,539	$276	$15,417
Data processing expense	2,411	238	10	2,659
Occupancy expense	1,467	464	31	1,962
Professional and outside services	563	173	19	755
Marketing expense	380	129	4	513
Insurance expense	754	25	—	779
Intersegment expense	567	—	—	567
Other segment items(2)	1,001	518	34	1,553
Segment expense	17,745	6,086	374	24,205
Reconciliation of expense
Elimination of intersegment expense	($567)	$—	$—	(567)
Total consolidated expense	$17,178	$6,086	$374	$23,638
Income before provision for income taxes	$9,308	$225	$971	$10,504

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 RML, 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.

March 31, 2025
(In Thousands)	Community Banking	Home Mortgage Lending	Specialty Finance	Consolidated
Total assets	$2,619,966	$365,360	$155,634	$3,140,960
Loans held for sale	$—	$159,603	$—	$159,603
1-4 family residential properties secured by first liens	$—	$188,086	$—	$188,086
Purchased receivables, net	$—	$—	$95,489	$95,489
Goodwill	$7,525	$7,492	$34,857	$49,874

December 31, 2024
(In Thousands)	Community Banking	Home Mortgage Lending	Specialty Finance	Consolidated
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