NRIM

This discussion should be read in conjunction with the unaudited consolidated financial statements of Northrim BanCorp, Inc. (the “Company”) and the notes thereto presented elsewhere in this report and with the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. Except as otherwise noted, references to “we”, “our”, “us” or “the Company” refer to Northrim BanCorp, Inc. and its subsidiaries that are consolidated for financial reporting purposes. Note Regarding Forward Looking-Statements This quarterly report on Form 10-Q includes “forward-looking statements,” as that term is defined for purposes of Section 21E of the Securities Exchange Act of 1934, as amended, which are not historical facts. These forward-looking statements describe management’s expectations about future events and developments such as future operating results, growth in loans and deposits, continued success of the Company’s style of banking, and the strength of the local economy. All statements, other than statements of historical fact, regarding our financial position, business strategy, management’s plans and objectives for future operations are forward-looking statements. We use words such as “anticipate,” “believe,” “expect,” “intend” and similar expressions in part to help identify forward-looking statements. Forward-looking statements reflect management’s current plans and expectations and are inherently uncertain. Our actual results may differ significantly from management’s expectations, and those variations may be both material and adverse. 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: descriptions of Northrim’s financial condition, results of operations, asset based lending volumes, asset and credit quality trends and profitability; the ability of Northrim to execute its business plans; potential further increases in interest rates; the value of securities held in our investment portfolio; the impact of the results of government shutdowns and government initiatives on the regulatory landscape, natural resource extraction industries, and capital markets; the impact of declines in the value of commercial and residential real estate markets, high unemployment rates, tariffs, inflationary pressures and slowdowns in economic growth; risks related to the proposed merger with PBCO Financial Corporation including, among others, (i) failure to complete the merger or unexpected delays related to the merger or either party’s inability to obtain regulatory, shareholder approvals, or satisfy other closing conditions required to complete the merger, (ii) regulatory approvals resulting in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction, (iii) certain restrictions during the pendency of the merger that may impact the parties’ ability to pursue certain business opportunities or strategic transactions, (iv) diversion of management’s attention from ongoing business operations and opportunities, (v) cost savings and any revenue or expense synergies from the merger may not be fully realized or may take longer than anticipated to be realized, (vi) deposit attrition, customer or employee loss, and/or revenue loss as a result of the announcement of the merger, (viii) expenses related to the merger being greater than expected, and (ix) shareholder litigation that could prevent or delay the closing of the Merger or otherwise negatively impact our business and operations; changes in banking regulation or actions by bank regulators; potential further increases in inflation, supply-chain constraints, and potential geopolitical instability, including the wars in Ukraine and Iran; financial stress on borrowers (consumers and businesses) as a result of higher rates or an uncertain economic environment; the general condition of, and changes in, the Alaska economy; our ability to maintain or expand our market share or net interest margin; the sufficiency of our allowance for credit losses and the accuracy of the assumptions or estimates used in preparing our financial statements, including those related to current expected credit losses accounting guidance; our ability to maintain asset quality; our ability to implement our marketing and growth strategies; our ability to identify and address cyber-security risks, including security breaches, “denial of service attacks,” “hacking,” and identity theft and increased cyber threats due to artificial intelligence; disease outbreaks; and our ability to execute our business plan. Further, actual results may be affected by competition 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. In addition, there are risks inherent in the banking industry relating to collectability 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 Part II. Item 1A Risk Factors of this report and Part I. Item 1A in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, as well as in our other filings with the Securities and Exchange Commission. 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. In addition, you should note that forward looking statements are made only as of the date of this report and that we do not intend to update any of the forward-looking statements or the uncertainties that may adversely impact those statements, other than as required by law. Recent Developments On July 22, 2026, we announced that we, Whitewater Sub, Inc., a wholly owned subsidiary of the Company (“Merger Sub”), and PBCO Financial Corporation (“PBCO”), the parent company of People’s Bank of Commerce, entered into an 51 Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which Northrim will acquire PBCO in an all-stock transaction. Upon the terms and subject to the conditions set forth in the Merger Agreement, (i) PBCO will merge with and into Merger Sub, with Merger Sub surviving the merger (the “Merger”), (ii) immediately following the merger of PBCO and Merger Sub, and as a part of a single integrated transaction, Merger Sub will merge with and into the Company, with the Company continuing as the surviving entity (the “Subsidiary Merger”, and together with the Merger, the “Mergers”), and (iii) promptly following such merger, Northrim Bank (the “Bank”) and People’s Bank of Commerce, a wholly owned subsidiary of PBCO, will merge (the “Bank Merger”), with the Bank continuing as the surviving bank. Pursuant to the terms of the Merger Agreement, PBCO shareholders will receive 1.160 shares of Northrim common stock for each PBCO share they own. The combined company will have approximately $4.2 billion in assets and will expand Northrim’s banking footprint into Oregon. The acquisition is expected to close in the fourth quarter of 2026 or early in the first quarter of 2027, subject to satisfaction of customary closing conditions, including receipt of regulatory, and shareholder approvals. The acquisition reflects a significant strategic investment to diversify the Company’s geographic footprint and position the Company for continued growth while preserving its Alaska-based community banking identity. Update on Economic Conditions Alaska’s seasonally adjusted unemployment rate was 4.6% in May of 2026, compared to 4.3% for the United States, according to the Alaska Department of Labor and Workforce Development. Both rates were unchanged from April of 2026. Alaska had a total of 343,600 payroll jobs in May of 2026 in Alaska, not including uniformed military. This was consistent with May of 2025. Year over year, the private sector grew by 0.9%, while the government sector declined 2.9%. The Federal component lost 1,500 jobs, or -9.8% since May of 2025, the State of Alaska decreased -700 jobs or 2.9% and Local government decreased -0.5%. The largest private sector growth came from Oil & Gas, up 1,000 direct jobs or +11.6%. Transportation, Warehousing and Utilities grew 1,600 jobs or +5.9% and Financial Activities added 200 jobs or +1.9%. Alaska’s seasonally adjusted aggregate personal income was $60 billion in the first quarter of 2026 according to the Federal Bureau of Economic Analysis (“BEA”). Alaska enjoyed an annual personal income improvement of 2.9% between the first quarter of 2025 and the first quarter of 2026. Based on a population estimate of 736,884 people, the per capita personal income in Alaska was $81,386. This is compared to the U.S. average of $77,816, according to the BEA, ranking Alaska 11th highest of the 50 U.S. states. Alaska’s Gross State Product (“GSP”) in the first quarter of 2026 reached $78.8 billion according to the BEA. Alaska’s inflation adjusted “real” GSP increased 2.1% between the first quarter of 2025 and 2026. The average U.S. GDP growth rate was 2.7% for the same time period. Alaska exported $6.7 billion in goods directly to foreign countries in 2025 according to the U.S. Census Bureau, a 13.4% increase over 2024 totals. South Korea took over the top trade spot by importing $1.1 billion in goods directly from Alaska. This was a 73% increase over 2024. South Korea imports significant quantities of fish, lead and zinc. The rapid growth came primarily from $515 million in gold and silver purchases in 2025. Australia imported over $1 billion in goods, primarily gold, zinc and lead. Australia’s growth rate in Alaska products was 30% in 2025. Japan moved up to the third spot with a 38% growth in purchases totaling $927 million in 2025. Japan has been a leading customer of a large variety of fish products from Alaska for decades and also purchases an array of minerals. China slipped from first to fourth place due to complex U.S. tariff negotiations. China’s imports from Alaska dropped 47% from $1.5 billion in 2024 to $803 million in 2025. Oil & Gas does not contribute a significant amount to international exports ($246 million in 2025) because the majority of Alaska’s production is refined and consumed within the United States. According to the U.S. Bureau of Labor Statistics, the Consumer Price Index (“CPI”) for the U.S. increased 3.8% between April of 2025 and April of 2026. In Alaska, the rate of increase was higher at 4.3% for the same time period. The largest increases since last April came from Motor Fuel (+33.1%), Apparel (+15%), Recreation (+5.3%), and Housing (+4.8%). There were declining costs in New and Used Vehicles (-2.8%), and Education (-2%), to help moderate inflationary pressures in Alaska. The monthly average price of Alaska North Slope (“ANS”) crude oil ranged between $76.39 a barrel in January of 2025 and $62.70 in December 2025. Prices began to rise dramatically in 2026 after conflicts began in Venezuela and Iran. ANS was priced at a monthly average price of $111.17 in April of 2026 and $114.66 a barrel in May of 2026. ANS has been earning a consistent premium over Brent and West Texas crude prices. The Alaska Department of Revenue (“DOR”) calculated ANS crude oil production was 468 thousand barrels per day (“bpd”) in Alaska’s fiscal year ending June 30, 2025. In the Fall 2025 Revenue Forecast published December 19, 2025, the DOR expects production to average 457 thousand bpd in fiscal year 2026 and 518 thousand bpd in fiscal year 2027. Over the next decade it is expected to continue to grow to 621 thousand bpd, or 52 33% by fiscal year 2036. This is primarily a result of new production coming on-line in and around the NPR-A region west of Prudhoe Bay. A partnership between Santos and Repsol is constructing the new Pikka field and ConocoPhillips is developing the large new Willow field. There are also several smaller new fields in Alaska’s North Slope that are contributing to the State of Alaska’s production growth estimate. The Alaska Permanent Fund is seeded annually by the natural resource wealth the State continues to save each year and has grown significantly over 40 years of successful investment. As of May 31, 2026 the fund’s value was $92.2 billion. According to the DOR it is scheduled to contribute $3.8 billion to Alaska’s General Fund in fiscal year 2026 and $4 billion in fiscal year 2027 for general government spending and to pay the annual dividend in October to Alaskan residents. According to the Alaska Multiple Listing Services, the average sales price of a single-family home in Anchorage rose 4.4% in 2025 to $532,339, following an increase of 6.2% in 2024 and 5.2% in 2023. This was the eighth consecutive year of price increases. In the first six months of 2026, prices are up 6.5% on average to $567,221. The average sales price for single family homes in the Matanuska Susitna Borough rose 6.6% in 2025 to $440,217, after climbing 3.8% in 2024 and 4% in 2023. In the first half of 2026 average prices in the Matanuska Susitna Borough are up 2.9%. This continues a trend of average price increases for more than a decade in the region. These two markets represent where the majority of the Bank’s residential lending activity occurs. The Alaska Multiple Listing Services reported a 1% increase in the number of units sold in Anchorage when comparing January to June 2026 to the same period in 2025. The number of homes sold in the Matanuska Susitna Borough in the first half of 2026 is 1.9% lower than January to June 2025. The Board of Governors of the Federal Reserve System lowered its benchmark interest rate target to 3.50%-3.75% as of both June 30, 2026 and December 31, 2025. The prime rate of interest was 6.75% as of both June 30, 2026 and December 31, 2025. Highlights and Summary of Performance - Second Quarter of 2026 The Company reported net income and earnings per diluted share of $15.3 million and $0.68, respectively, for the second quarter of 2026 compared to net income and earnings per diluted share of $11.8 million and $0.52, respectively, for the second quarter of 2025. The Company reported net income and earnings per diluted share of $29.0 million and $1.29, respectively, for the first six months of 2026 compared to net income and earnings per diluted share of $25.1 million and $1.12, respectively, for the first six months of 2025. The increase in net income for the second quarter of 2026 compared to the same quarter last year was mostly due to an increase in net interest income. The increase in net income for the first six months of 2026 compared to the same period a year ago was primarily due to an increase in net interest income and mortgage banking income, which were partially offset by an increase in the provision for credit losses and other operating expenses. •Net interest margin was 4.96% for the second quarter of 2026, up 30-basis points from the second quarter a year ago. •Portfolio loans were $2.39 billion at June 30, 2026, up 4% from December 31, 2025, primarily due to new customer relationships and expanding market share, as well as retaining certain mortgages originated by Residential Mortgage, a subsidiary of the Bank. •Total deposits were $2.92 billion at June 30, 2026, up 4% from $2.81 billion at December 31, 2025. Non-interest bearing demand deposits increased 6% year-over-year to $826.3 million at June 30, 2026 and represent 28% of total deposits. •The average cost of interest-bearing deposits was 1.71% at June 30, 2026, down from 2.04% at June 30, 2025. •Average purchased receivables and loan balances for the Specialty Finance segment were $141.5 million for the second quarter of 2026, compared to average balances of $124.1 million for the second quarter of 2025. Other financial measures for the periods indicated are shown in the table below: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Return on average assets, annualized 1.84 % 1.48 % 1.77 % 1.61 % Return on average shareholders' equity, annualized 17.77 % 16.37 % 17.20 % 17.99 % Dividend payout ratio 23.91 % 30.43 % 25.02 % 28.51 % 53 Nonperforming assets: Nonperforming assets, net of government guarantees were $23.0 million at June 30, 2026 and $11.4 million at December 31, 2025. Other Real Estate Owned (“OREO”), net of government guarantees was $1.2 million at June 30, 2026 and zero at December 31, 2025. Repossessed assets were zero at both June 30, 2026 and December 31, 2025. Nonperforming loans, net of government guarantees increased $10.5 million or 93% to $21.8 million as of June 30, 2026 from $11.3 million as of December 31, 2025, primarily due to the addition of three loans to a single borrower in the first six months of 2026. Nonperforming purchased receivables decreased $67,000 or 100% to zero as of June 30, 2026 from $67,000 as of December 31, 2025 as a result of a paydown received on one relationship. Of the nonperforming assets, net of government guarantees at June 30, 2026, $18.6 million are attributable to the Community Banking segment, $494,000 are attributable to the Home Mortgage Lending segment, and $3.9 million are attributable to the Specialty Finance segment. The increase in nonperforming assets was primarily in the Community Banking segment and was mostly attributable to one relationship which includes both commercial real estate and commercial loans which are well-collateralized. Potential problem assets: Potential problem loans are loans which are currently performing in accordance with contractual terms but that have developed negative indications that the borrower may not be able to comply with present payment terms and which may later be included in nonaccrual or past due. These loans are closely monitored and their performance is reviewed by management on a regular basis. All potential problem loans are individually evaluated for the purposes of establishing an allowance for credit losses. At June 30, 2026, management had identified $11.5 million potential problem loans, down from $21.2 million at December 31, 2025. This decrease is primarily due to the transfer of three loans to a single borrower to nonaccrual status, as well as paydowns which occurred in the first six months of 2026. Summary of Critical Accounting Estimates Our critical accounting estimates are described in detail in Part II. Item 7, Management’s Discussion and Analysis, and in Note 1, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes to the valuation techniques or assumptions within the models that affect our estimates during the second quarter of 2026. Allowance for Credit Losses Policy: Management performs a hypothetical sensitivity analysis of our Allowance for Credit Losses (“ACL”) quarterly to understand the impact of a change in a key input on our ACL. As of June 30, 2026, if the four-quarter U.S. unemployment rate forecast had been approximately 3% higher and the four-quarter annualized growth rate in the U.S. Gross Domestic Product had been approximately 12% lower, our ACL for loans would have increased $519,000, or 2%. As of June 30, 2026, if the four-quarter national unemployment rate forecast had been approximately 29% higher and the four-quarter annualized growth rate in the U.S. Gross Domestic Product had been approximately 3% lower, which represents management's estimate of long-term mean rates for these economic factors, our ACL for loans would have increased $2.2 million, or 9%. As of June 30, 2026, if the estimated prepayment and curtailment rates are doubled (with a maximum rate of 100%), our ACL for loans would have decreased $2.1 million, or 9%. As of June 30, 2026, if the estimated prepayment and curtailment rates are cut in half, our ACL for loans would have increased $1.7 million, or 7%. These sensitivity analyses include the impact to both the quantitative and qualitative components of our ACL. Changes in quantitative inputs and qualitative loss factors may not occur in the same direction or magnitude across all segments of our loan portfolio and deterioration in some quantitative inputs and qualitative loss factors may offset improvement in others. This sensitivity analysis does not represent a change to our expectations of the economic environment but provides a hypothetical result to assess the sensitivity of the ACL to a change in a key input. This sensitivity analysis does not incorporate changes to management’s judgment of qualitative loss factors. RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026 AS COMPARED TO THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 Net Income Net income for the second quarter of 2026 increased $3.6 million to $15.3 million as compared to $11.8 million for the same period in 2025. The increase in net income in the second quarter of 2026 as compared to the same quarter a year ago is mostly due to a $3.5 million increase in net interest income. Net income for the first six months of 2026 increased $3.9 million to $29.0 million as compared to $25.1 million for the 54 same period in 2025. The increase in net income in the first six months of 2026 as compared to the same period a year ago is mostly due to a $6.9 million increase in net interest income and a $1.9 million increase in mortgage banking income, which were partially offset by a $2.0 million increase in the provision for credit losses and a $2.0 million increase in other operating expenses. Analysis of Business Segments Our business segments are defined as Community Banking, Home Mortgage Lending, and Specialty Finance. The following table summarizes net income from our segments. Additional information about segment performance is presented in Note 10 to the Financial Statements included in Part I - Item 1 of this report. (In Thousands) Three Months Ended June 30, 2026 Three Months Ended June 30, 2025 Six Months Ended June 30, 2026 Six Months Ended June 30, 2025 Community Banking $11,745 $7,743 $22,245 $18,531 Home Mortgage Lending 1,607 1,929 2,693 2,733 Specialty Finance 1,990 2,106 4,079 3,838 Net income $15,342 $11,778 $29,017 $25,102 Community Banking Net income in the Community Banking segment increased $4.0 million or 52% in the second quarter of 2026 compared to the same period a year ago primarily due to an increase in net interest income, which totaled $33.2 million in the second quarter of 2026, and $30.0 million in the second quarter of 2025, as well as a decrease in other operating expenses and the provision for credit losses. Net interest income increased $3.3 million or 11% in the second quarter of 2026 as compared to the second quarter of 2025 mostly due to higher interest income on loans, investments, and deposits in banks as well as lower interest expense on deposits. The provision for credit losses in the Community Banking segment was $503,000 in the second quarter of 2026 compared to a provision for credit losses of $1.3 million in the same quarter a year ago. The decrease to the provision for credit losses in the Community Banking segment in the second quarter of 2026 as compared to the same quarter a year ago was primarily a result of larger increases in qualitative factors in the second quarter of 2025 when adversely classified assets, net of government guarantees increased 75% to $32.1 million. Adversely classified assets, net of government guarantees are $28.9 million in the Community Banking segment at June 30, 2026. Other operating expenses in the Community Banking segment totaled $20.4 million in the second quarter of 2026, down $1.3 million or 6% from $21.8 million in the second quarter a year ago. The decrease in the second quarter of 2026 as compared to the same quarter a year ago was mostly due to a $942,000 decrease in salaries and other personnel expense due to lower group medical claims expense and lower accruals for profit sharing and related taxes, as well as a decrease in FDIC insurance expense due to improved regulatory capital ratios and a decrease in marketing expense. These decreases were only partially offset by an increase in professional fees. Net income in the Community Banking segment increased $3.7 million or 20% in the first six months of 2026 as compared to the same period a year ago primarily due to increases in net interest income primarily due to higher interest income due to higher earning-asset balances and higher yields. This increase was only partially offset by an increase the provision for credit losses due to higher loan balances and a higher estimated loss rate due to an increase in estimated loss rates due to trends in qualitative factors, as well as an increase in the provision for income taxes. Home Mortgage Lending Net income in the Home Mortgage Lending segment decreased $322,000 or 17% in the second quarter of 2026 compared to the same period a year ago primarily due to higher other operating expenses and lower mortgage servicing revenue, which was only partially offset by a decrease in the provision for credit losses in the Home Mortgage Lending segment due to lower loan growth. During the second quarter of 2026, mortgage loans funded for sale were $239.1 million, compared to $249.7 million in the second quarter of 2025. The provision for credit losses in the Home Mortgage Lending segment was $279,000 in the second quarter of 2026 compared to a provision for credit losses of $639,000 in the second quarter of 2025. The decrease in the provision for credit 55 losses in the second quarter of 2026 in the Home Mortgage Lending segment as compared to the same quarter a year ago was primarily a result of a lower increase in loan balances primarily due to the the sale of mortgage loans. Other operating expenses in the Home Mortgage Lending segment totaled $8.1 million in the second quarter of 2026 compared to $7.6 million in the second quarter a year ago. The increase in the second quarter of 2026 as compared to the same quarter a year ago was mostly due to increases in salaries and other personnel expense due to higher group medical expenses. The Arizona, Colorado, and Pacific Northwest mortgage expansion markets were responsible for 27% of Residential Mortgage's $222 million total production in the second quarter of 2026 and 22% of $216 million total production in the second quarter a year ago. As of June 30, 2026, Northrim serviced 6,657 loans in its $1.66 billion home-mortgage-servicing portfolio, a 7% increase from the $1.55 billion serviced a year ago. Net income in the Home Mortgage Lending segment decreased slightly, $40,000 or 1% in the first six months of 2026. An increase in other operating income due to higher mortgage loans funded for sale was offset by increases in other operating expenses primarily due to higher originator commissions and an increase in the the provision for credit losses as compared to the same period a year ago. Specialty Finance Net income in the Specialty Finance segment decreased $116,000 or 6% in the second quarter of 2026 compared to the same period a year ago primarily due to higher other operating expenses, which were only partially offset by increased purchased receivable balances. Net income in the Specialty Finance segment increased $241,000 or 6% in the first six months of 2026 compared to the same period a year ago primarily due to increased purchased receivable balances, which were only partially offset by higher other operating expenses. Average purchased receivables and loan balances for the Specialty Finance segment were $141.5 million for the second quarter of 2026, compared to average balances of $124.1 million for the second quarter of 2025. Net Interest Income/Net Interest Margin Net interest income for the second quarter of 2026 increased 11% or $3.5 million, to $37.1 million as compared to $33.6 million for the second quarter of 2025. The net interest margin increased 30 basis points to 4.96% in the second quarter of 2026 as compared to 4.66% in the second quarter of 2025. The increase in net interest income in the second quarter of 2026 compared to the same period in 2025 was primarily the result of increased interest on loans, interest bearing deposits in other banks, and long term investments, as well as a decrease in interest expense on deposits and borrowings, which were only partially offset by an increase in interest expense on subordinated debentures. The increase in net interest margin in the second quarter of 2026 as compared to the same period of 2025 was primarily due to a favorable change in the mix of earning-assets towards higher loan balances as a percentage of total earning-assets, as well as a decrease in the cost of interest-bearing deposits and higher average yields on interest-earning assets. Net interest income for the first six months of 2026 increased 11% or $6.9 million, to $71.8 million as compared to $64.9 million for the first six months of 2025. The net interest margin increased 23 basis points to 4.84% in the first six months of 2026 as compared to 4.61% in the first six months of 2025. The increase in net interest income in the first six months of 2026 compared to the same period in 2025 was primarily the result of increased interest on loans, interest bearing deposits in other banks, and long term investments, as well as a decrease in interest expense on deposits and borrowings, which were only partially offset by an increase in interest expense on subordinated debentures. The increase in net interest margin in the first six months of 2026 as compared to the same period of 2025 was primarily due to a favorable change in the mix of earning-assets towards higher loan balances as a percentage of total earning-assets and higher yields on those assets, as well as a decrease in the cost of interest-bearing liabilities. 56 Components of Net Interest Margin The following table compares average balances and rates as well as margins on earning assets for the three-month periods ended June 30, 2026 and 2025. Average yields or costs are calculated on a tax-equivalent basis. (Dollars in Thousands) Three Months Ended June 30, Interest income/ Average Tax Equivalent Average Balances Change expense Change Yields/Costs6 2026 2025 $ % 2026 2025 $ % 2026 2025 Change Interest-bearing deposits in other banks1 $85,140 $27,216 $57,924 213 % $795 $515 $280 54 % 3.69 % 7.60 % (3.91) % Taxable long-term investments2 450,388 515,916 (65,528) (13) % 4,281 3,979 302 8 % 3.79 % 3.07 % 0.72 % Loans held for sale 86,526 173,675 (87,149) (50) % 1,343 2,824 (1,481) (52) % 6.21 % 6.50 % (0.29) % Loans3,4 2,381,119 2,172,482 208,637 10 % 41,190 37,891 3,299 9 % 6.94 % 6.99 % (0.05) % Interest-earning assets5 3,003,173 2,889,289 113,884 4 % 47,609 45,209 2,400 5 % 6.35 % 6.27 % 0.08 % Nonearning assets 338,827 306,206 32,621 11 % Total $3,342,000 $3,195,495 $146,505 5 % Interest-bearing demand $1,233,708 $1,193,344 $40,364 3 % $5,070 $6,007 ($937) (16) % 1.65 % 2.02 % (0.37) % Savings deposits 244,310 250,580 (6,270) (3) % 334 355 (21) (6) % 0.55 % 0.57 % (0.02) % Money market deposits 200,848 192,123 8,725 5 % 749 801 (52) (6) % 1.50 % 1.67 % (0.17) % Time deposits 378,716 393,053 (14,337) (4) % 2,624 3,141 (517) (16) % 2.78 % 3.21 % (0.43) % Total interest-bearing deposits 2,057,582 2,029,100 28,482 1 % 8,777 10,304 (1,527) (15) % 1.71 % 2.04 % (0.33) % Borrowings 81,625 86,404 (4,779) (6) % 1,241 903 338 37 % 6.08 % 4.14 % 1.94 % Total interest-bearing liabilities 2,139,207 2,115,504 23,703 1 % 10,018 11,207 (1,189) (11) % 1.88 % 2.12 % (0.24) % Non-interest bearing demand deposits 786,791 737,112 49,679 7 % Other liabilities 69,661 54,320 15,341 28 % Equity 346,341 288,559 57,782 20 % Total $3,342,000 $3,195,495 $146,505 5 % Net interest income (tax equivalent) $37,591 $34,002 $3,589 11 % Net interest margin (tax equivalent) 5.01 % 4.72 % 0.29 % Reconciliation to reported net interest income: Adjustments for taxable equivalent basis ($455) ($410) ($45) 11 % Net interest income and margin, as reported $37,136 $33,592 $3,544 11 % 4.96 % 4.66 % 0.30 % Average loans to average interest-earning assets 79.29 % 75.19 % Average loans to average total deposits 83.71 % 78.54 % Average non-interest deposits to average total deposits 27.66 % 26.65 % Average interest-earning assets to average interest-bearing liabilities 140.39 % 136.58 % 1Consists of interest bearing deposits in other banks and domestic CDs. 2Consists of investment securities available for sale, investment securities held to maturity, marketable equity securities, and investment in Federal Home Loan Bank stock. 3Interest income includes loan fees. Loan fees recognized during the period and included in the yield calculation totaled $1.4 million and $1.2 million in the second quarter of 2026 and 2025, respectively. 4Nonaccrual loans are included with a zero effective yield. Average nonaccrual loans included in the computation of the average loan balances were $16.4 million and $8.1 million in the second quarter of 2026 and 2025, respectively. 57 5The Company does not have any fed funds sold or securities purchased with agreements to resell to disclose as part of its total interest-earning assets in the periods presented. 6Tax-equivalent yields/costs assume a federal tax rate of 21% and state tax rate of 7.43% for a combined tax rate of 28.43%. 58 The following tables set forth the changes in tax equivalent net interest income attributable to changes in volume and to changes in interest rates for the three-month periods ending June 30, 2026 and 2025. Changes attributable to the combined effect of volume and interest rate have been allocated proportionately to the changes due to volume and the changes due to interest rates. The Company did not have any fed funds sold or securities purchased with agreements to resell for the three-month periods ending June 30, 2026 and 2025. (In Thousands) Three Months Ended June 30, 2026 vs. 2025 Increase (decrease) due to Volume Rate Total Interest Income: Short-term investments $368 ($88) $280 Taxable long-term investments (501) 803 302 Loans held for sale (1,351) (130) (1,481) Loans 3,610 (311) 3,299 Total interest income $2,126 $274 $2,400 Interest Expense: Interest-bearing demand $197 ($1,134) ($937) Savings deposits (10) (11) (21) Money market deposits 35 (87) (52) Time deposits (111) (406) (517) Interest-bearing deposits 111 (1,638) (1,527) Borrowings (45) 383 338 Total interest expense $66 ($1,255) ($1,189) 59 The following table compares average balances and rates as well as margins on earning assets for the six-month periods ended June 30, 2026 and 2025. Average yields or costs are calculated on a tax-equivalent basis. (Dollars in Thousands) Six Months Ended June 30, Interest income/ Average Tax Equivalent Average Balances Change expense Change Yields/Costs6 2026 2025 $ % 2026 2025 $ % 2026 2025 Change Interest-bearing deposits in other banks1 $104,287 $32,563 $71,724 220 % $1,940 $931 $1,009 108 % 3.70 % 5.77 % (2.07) % Taxable long-term investments2 458,343 519,813 (61,470) (12) % 8,288 7,849 439 6 % 3.61 % 3.05 % 0.56 % Loans held for sale 80,369 110,301 (29,932) (27) % 2,424 3,502 (1,078) (31) % 6.03 % 6.35 % (0.32) % Loans3,4 2,343,360 2,172,950 170,410 8 % 80,253 74,866 5,387 7 % 6.90 % 6.94 % (0.04) % Interest-earning assets5 2,986,359 2,835,627 150,732 5 % 92,905 87,148 5,757 7 % 6.26 % 6.19 % 0.07 % Nonearning assets 325,195 299,848 25,347 8 % Total $3,311,554 $3,135,475 $176,079 6 % Interest-bearing demand $1,227,922 $1,173,057 $54,865 5 % $9,999 $11,438 ($1,439) (13) % 1.64 % 1.97 % (0.33) % Savings deposits 244,644 250,955 (6,311) (3) % 643 717 (74) (10) % 0.53 % 0.58 % (0.05) % Money market deposits 199,386 193,039 6,347 3 % 1,477 1,608 (131) (8) % 1.49 % 1.68 % (0.19) % Time deposits 390,363 398,869 (8,506) (2) % 5,655 6,476 (821) (13) % 2.92 % 3.27 % (0.35) % Total interest-bearing deposits 2,062,315 2,015,920 46,395 2 % 17,774 20,239 (2,465) (12) % 1.74 % 2.02 % (0.28) % Borrowings 81,663 61,879 19,784 32 % 2,479 1,232 1,247 101 % 6.10 % 3.96 % 2.14 % Total interest-bearing liabilities 2,143,978 2,077,799 66,179 3 % 20,253 21,471 (1,218) (6) % 1.90 % 2.08 % (0.18) % Non-interest bearing demand deposits 759,773 717,432 42,341 6 % Other liabilities 67,587 58,809 8,778 15 % Equity 340,216 281,435 58,781 21 % Total $3,311,554 $3,135,475 $176,079 6 % Net interest income (tax equivalent) $72,652 $65,677 $6,975 11 % Net interest margin (tax equivalent) 4.89 % 4.66 % 0.23 % Reconciliation to reported net interest income: Adjustments for taxable equivalent basis ($855) ($788) ($67) 9 % Net interest income and margin, as reported $71,797 $64,889 $6,908 11 % 4.84 % 4.61 % 0.23 % Average loans to average interest-earning assets 78.47 % 76.63 % Average loans to average total deposits 83.04 % 79.50 % Average non-interest deposits to average total deposits 26.92 % 26.25 % Average interest-earning assets to average interest-bearing liabilities 139.29 % 136.47 % 1Consists of interest bearing deposits in other banks and domestic CDs. 2Consists of investment securities available for sale, investment securities held to maturity, marketable equity securities, and investment in Federal Home Loan Bank stock. 3Interest income includes loan fees. Loan fees recognized during the period and included in the yield calculation totaled $2.6 million and $2.3 million in the first six months of 2026 and 2025, respectively. 4Nonaccrual loans are included with a zero effective yield. Average nonaccrual loans included in the computation of the average loan balances were $14.8 million and $7.8 million in the first six months of 2026 and 2025, respectively. 5The Company does not have any fed funds sold or securities purchased with agreements to resell to disclose as part of its total interest-earning assets in the periods presented. 6Tax-equivalent yields/costs assume a federal tax rate of 21% and state tax rate of 7.43% for a combined tax rate of 28.43%. 60 61 The following tables set forth the changes in tax equivalent net interest income attributable to changes in volume and to changes in interest rates for the six-month periods ending June 30, 2026 and 2025. Changes attributable to the combined effect of volume and interest rate have been allocated proportionately to the changes due to volume and the changes due to interest rates. The Company did not have any fed funds sold or securities purchased with agreements to resell for the six-month periods ending June 30, 2026 and 2025. (In Thousands) Six Months Ended June 30, 2026 vs. 2025 Increase (decrease) due to Volume Rate Total Interest Income: Short-term investments $1,442 ($433) $1,009 Taxable long-term investments (1,065) 1,504 439 Loans held for sale (895) (183) (1,078) Loans 5,838 (451) 5,387 Total interest income $5,320 $437 $5,757 Interest Expense: Interest-bearing demand $516 ($1,955) ($1,439) Savings deposits (18) (56) (74) Money market deposits 52 (183) (131) Time deposits (136) (685) (821) Interest-bearing deposits 414 (2,879) (2,465) Borrowings 97 1,150 1,247 Total interest expense $511 ($1,729) ($1,218) 62 Provision for Credit Losses The provision or benefit for credit loss is the amount of expense or benefit that, based on our judgment, is required to maintain the ACL at an appropriate level under the Company's Current Expected Credit Losses (“CECL”) model. The determination of the amount of the ACL is complex and involves a high degree of judgment and subjectivity. The following table presents the major categories of credit loss expense for the six-month periods ended June 30, 2026 and 2025: Three Months Ended June 30, Six Months Ended June 30, (In Thousands) 2026 2025 2026 2025 Credit loss expense on loans held for investment $760 $1,803 $2,047 $671 Credit loss (benefit) expense on unfunded commitments 242 155 (80) (168) Credit loss expense on available for sale debt securities — — — — Credit loss expense on held to maturity securities — — — — Credit loss expense on purchased receivables 625 18 620 64 Total credit loss expense $1,627 $1,976 $2,587 $567 The decrease to the provision for credit losses on loans in the second quarter of 2026 as compared to the same period a year ago was primarily a result of larger increases in qualitative factors in the second quarter of 2025 due to the fact that adversely classified assets, net of government guarantees increased 75% to $32.1 million. The increase to the provision for credit losses on unfunded commitments in the second quarter of 2026 as compared to the same period a year ago was primarily due to higher balances of unfunded commitments. The increase to the provision for credit losses on purchased receivables in the second quarter of 2026 as compared to the same period a year ago was primarily due to an increase in the quantitive allowance for credit losses on pooled purchased receivables due to an increase in concentration of these assets. Fluctuations in the provision for credit losses in the future will be dependent upon changes in economic conditions and forecasts, as well as loan portfolio composition, quality, and duration. Other Operating Income Other operating income for the three-month period ended June 30, 2026 increased $97,000, or 1%, to $16.7 million as compared to $16.6 million for the same period in 2025, primarily due to a $576,000 increase in purchased receivable income in the second quarter of 2026 compared to the same quarter a year ago, as well as increases in bankcard fees and services charges on deposit accounts. The fair value of marketable equity securities increased $86,000 in the second quarter of 2026 compared to the same quarter a year ago. These increases were partially offset by lower mortgage banking income due to lower production and a decrease in other income mostly attributable to lower merchant fees and a decrease in the fair value of commercial servicing rights. Other operating income for the six-month period ended June 30, 2026 increased $1.9 million, or 7%, to $31.6 million as compared to $29.7 million for the same period in 2025, primarily due to a $1.9 million increase in mortgage banking income due to higher production, as well as a $576,000 increase in purchased receivable income in the first six months of 2026 compared to the same period a year ago. Bankcard fees and services charges on deposit accounts also increased in the first six months of 2026 compared to the same period a year ago. These increases were partially offset by a decrease in other income mostly attributable to lower merchant fees and a decrease in the fair value of commercial servicing rights. The fair value of marketable equity securities decreased $120,000 in the first six months of 2026 compared to the same period a year ago. Other Operating Expense Other operating expense for the second quarter of 2026 decreased $466,000, or 1%, to $32.0 million as compared to $32.5 million for the same period in 2025. The decrease was primarily due to lower marketing, insurance, and occupancy expenses. These decreases were partially offset by an increase in professional and outside services and data processing expense. Other operating expense for the six-month period ended June 30, 2026 increased $2.0 million, or 3%, to $62.6 million as compared to $60.7 million for the same period in 2025. The increase was primarily due to a $2.2 million increase in salaries and other personnel expense, as well as increases in data processing expense and professional and other outside services. These increases were partially offset by a decrease in FDIC insurance expense due to improved regulatory capital ratios. 63 Income Taxes For the second quarter of 2026 and first six months of 2026, Northrim recorded a lower effective tax rate as compared to the same periods in 2025 primarily as a result of an increase in tax credits and tax exempt interest income as a percentage of pre-tax income in 2026 as compared to 2025. In the second quarter of 2026, Northrim recorded $4.9 million in state and federal income tax expense, for an effective tax rate of 24.14% compared to $4.0 million and 25.30% for the same period in 2025. In the first six months of 2026, Northrim recorded $9.2 million in state and federal income tax expense, for an effective tax rate of 24.00% compared to $8.2 million and 24.72% for the same period in 2025. ANALYSIS OF FINANCIAL CONDITION AT JUNE 30, 2026 COMPARED TO DECEMBER 31, 2025 Balance Sheet Overview Investment Securities Investment Securities include investment securities available for sale, investment securities held to maturity, and marketable equity securities, at June 30, 2026 decreased slightly to $454.7 million from $455.8 million at December 31, 2025 primarily due to maturities of available for sale securities which were only partially offset by purchases of available for sale securities during the first six months of 2026. The table below details portfolio investment balances by portfolio investment type as of the periods indicated: June 30, 2026 December 31, 2025 Dollar Amount Percent of Total Dollar Amount Percent of Total (In Thousands) Balance % of total Balance % of total U.S. Treasury and government sponsored entities $379,789 83.5 % $388,737 85.2 % U.S. Agency mortgage-backed securities 4,620 1.0 % 4,798 1.1 % Corporate bonds 33,747 7.4 % 31,702 7.0 % Collateralized loan obligations 25,238 5.6 % 22,174 4.9 % Preferred stock 11,315 2.5 % 8,392 1.8 % Total $454,709 $455,803 The average estimated duration of the investment portfolio at June 30, 2026, was approximately 2.5 years, as compared to approximately 2.0 years at December 31, 2025. As of June 30, 2026, $87.0 million of available for sale securities with a weighted average yield of 1.30% are scheduled to mature in the next six months, $63.7 million with a weighted average yield of 3.15% are scheduled to mature in six months to one year, and $87.1 million with a weighted average yield of 3.75% are scheduled to mature in the following year, representing a total of $237.7 million or 8% of earning assets that are scheduled to mature in the next 24 months. 64 Loans and Lending Activities The following table presents the concentration distribution of the loan portfolio, net of deferred fees and costs, as of the dates indicated: June 30, 2026 December 31, 2025 Dollar Amount Percent of Total Dollar Amount Percent of Total (In Thousands) Commercial & industrial loans $471,215 19.7 % $450,826 19.6 % Commercial real estate: Owner occupied properties 443,054 18.6 % 433,157 18.9 % Non-owner occupied and multifamily properties 769,928 32.2 % 763,180 33.2 % Residential real estate: 1-4 family residential properties secured by first liens 260,301 10.9 % 243,185 10.6 % 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 79,995 3.4 % 67,116 2.9 % 1-4 family residential construction loans 28,839 1.2 % 39,059 1.7 % Other construction, land development and raw land loans 175,656 7.4 % 173,589 7.6 % Obligations of states and political subdivisions in the US 39,525 1.7 % 32,434 1.4 % Agricultural production, including commercial fishing 55,833 2.3 % 47,445 2.1 % Consumer loans 9,877 0.4 % 9,763 0.4 % Other loans 52,105 2.2 % 35,745 1.6 % Total loans $2,386,328 $2,295,499 Loans increased by $90.8 million, to $2.39 billion at June 30, 2026 from $2.30 billion at December 31, 2025. There were increases in nearly all loan segments, but the largest increases were in commercial and industrial loans, 1-4 family residential loans secured by first liens, other loans, and commercial real estate in the first six months of 2026. Information about industry concentrations The Company defines “direct exposure” to the oil and gas industry as companies that it has identified as significantly reliant upon activity related to the oil and gas industry, such as oilfield services, lodging, equipment rental, transportation, and other logistic services specific to the industry. The Company estimates that $128.6 million, or approximately 5% of loans as of June 30, 2026 have direct exposure to the oil and gas industry as compared to $123.4 million, or approximately 5% of loans as of December 31, 2025. The Company's unfunded commitments to borrowers that have direct exposure to the oil and gas industry were $89.0 million and $88.6 million at June 30, 2026 and December 31, 2025, respectively. The portion of the Company's ACL that related to the loans with direct exposure to the oil and gas industry was estimated at $1.5 million as of June 30, 2026 and $1.6 million as of December 31, 2025. The following table details loan balances by loan segment and class of financing receivable for loans with direct oil and gas exposure as of the dates indicated: (In Thousands) June 30, 2026 December 31, 2025 Commercial & industrial loans $117,248 $113,036 Commercial real estate: Owner occupied properties 6,209 4,996 Non-owner occupied and multifamily properties 3,935 4,207 Other loans 1,161 1,203 Total $128,553 $123,442 The Company monitors other concentrations within the loan portfolio depending on trends in the current and future estimated economic conditions. At June 30, 2026, the Company had $153.1 million, or 6% of portfolio loans, in the Accommodations sector, $133.3 million, or 6% of portfolio loans, in the Healthcare sector, $113.4 million, or 5% of portfolio loans, in the Tourism sector, $101.5 million, or 4% of portfolio loans, in the Retail sector, $94.0 million, or 4% of portfolio loans, in the Aviation (non-tourism) sector, $71.2 million, or 3% of portfolio loans, in the Fishing sector, and $64.2 million, or 3% in the Restaurant sector. 65 The portion of the Company's ACL that related to the loans with exposure to these industries is estimated at the following amounts as of June 30, 2026: (In Thousands) Tourism Aviation (non-tourism) Healthcare Retail Fishing Restaurant Accommodations Total ACL $698 $804 $827 $915 $323 $493 $990 $5,050 66 Credit Quality and Nonperforming Assets The following table sets forth information regarding our nonperforming loans and total nonperforming assets as of the periods indicated: June 30, December 31, (In Thousands) 2026 2025 Nonaccrual loans - Community Banking $18,733 $9,066 Nonaccrual loans - Home Mortgage Lending 306 514 Nonaccrual loans - Specialty Finance 3,943 2,388 Nonaccrual loans - Total 22,982 11,968 Loans 90 days past due and accruing - Community Banking — — Loans 90 days past due and accruing - Home Mortgage Lending — — Loans 90 days past due and accruing - Specialty Finance — — Loans 90 days past due and accruing - Total — — Total nonperforming loans - Community Banking 18,733 9,066 Total nonperforming loans - Home Mortgage Lending 306 514 Total nonperforming loans - Specialty Finance 3,943 2,388 Total nonperforming loans - Total 22,982 11,968 Nonperforming loans guaranteed by gov't - Community Banking 1,171 639 Nonperforming loans guaranteed by gov't - Home Mortgage Lending — — Nonperforming loans guaranteed by gov't - Specialty Finance — — Nonperforming loans guaranteed by gov't - Total 1,171 639 Net nonperforming loans - Community Banking 17,562 8,427 Net nonperforming loans - Home Mortgage Lending 306 514 Net nonperforming loans - Specialty Finance 3,943 2,388 Net nonperforming loans - Total 21,811 11,329 Other real estate owned - Community Banking 1,036 — Other real estate owned - Home Mortgage Lending 188 — Other real estate owned - Specialty Finance — — Other real estate owned - Total 1,224 — Other real estate owned guaranteed by government - Community Banking — — Other real estate owned guaranteed by government - Home Mortgage Lending — — Other real estate owned guaranteed by government - Specialty Finance — — Other real estate owned guaranteed by government - Total — — Repossessed assets - Community Banking — — Repossessed assets - Home Mortgage Lending — — Repossessed assets - Specialty Finance — — Repossessed assets - Total — — Nonperforming purchased receivables - Specialty Finance — 67 Net nonperforming assets - Community Banking 18,598 8,427 Net nonperforming assets - Home Mortgage Lending 494 514 Net nonperforming assets - Specialty Finance 3,943 2,455 Net nonperforming assets - Total $23,035 $11,396 Adversely classified loans, net of gov't guarantees - Community Banking $28,945 $29,447 Adversely classified loans, net of gov't guarantees - Home Mortgage Lending 470 687 Adversely classified loans, net of gov't guarantees - Specialty Finance 3,943 3,364 Adversely classified loans, net of gov't guarantees - Total $33,358 $33,498 67 Special mention loans, net of gov't guarantees - Community Banking $9,030 $10,481 Special mention loans, net of gov't guarantees - Home Mortgage Lending 218 — Special mention loans, net of gov't guarantees - Specialty Finance — — Special mention loans, net of gov't guarantees - Total $9,248 $10,481 Nonperforming loans, net of government guarantees / portfolio loans 0.91 % 0.49 % Nonperforming loans, net of government guarantees / portfolio loans, net of gov't guarantees 0.97 % 0.53 % Nonperforming assets, net of government guarantees / total assets 0.67 % 0.35 % Nonperforming assets, net of government guarantees / total assets net of gov't guarantees 0.70 % 0.36 % Loans 30-89 days past due and accruing, net of government guarantees / portfolio loans 0.05 % 0.07 % Loans 30-89 days past due and accruing, net of government guarantees / portfolio loans, net of government guarantees 0.06 % 0.08 % Allowance for credit losses for loans / portfolio loans 1.07 % 1.03 % Allowance for credit losses for loans / portfolio loans, net of gov't guarantees 1.13 % 1.10 % Allowance for credit losses for loans / nonperforming loans, net of gov't guarantees 117 % 210 % Net loan charge-offs (recoveries) year-to-date - Community Banking $72 $1,429 Net loan charge-offs (recoveries) year-to-date - Home Mortgage Lending — — Net loan charge-offs (recoveries) year-to-date - Specialty Finance 250 364 Net loan charge-offs (recoveries) year-to-date - Total $322 $1,793 Net loan charge-offs (recoveries) for the quarter / average loans, for the quarter — % 0.02 % Net loan charge-offs (recoveries) year-to-date / average loans, year-to-date annualized 0.03 % 0.08 % Allowance for credit losses for purchased receivables / purchased receivables 0.49 % — % Net purchased receivable (recoveries) charge-offs for the quarter / average purchased receivables, for the quarter — % — % Net purchased receivable charge-offs (recoveries) year-to-date / average purchased receivables, year-to-date annualized (0.01) % 2.15 % 68 Allowance for Credit Losses The following table sets forth information regarding changes in the ACL as of the periods indicated: Three Months Ended June 30, Six Months Ended June 30, (In Thousands) 2026 2025 2026 2025 Balance at beginning of period $24,812 $20,922 $23,737 $22,020 Charge-offs: Commercial & industrial loans (64) (152) (314) (189) Commercial real estate: Non-owner occupied and multifamily properties (78) — (78) — Consumer loans — (3) (2) (16) Total charge-offs (142) (155) (394) (205) Recoveries: Commercial & industrial loans 27 5 64 79 Residential real estate: 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 3 7 6 14 Agricultural production, including commercial fishing 1 1 1 3 Consumer loans — 2 — 3 Total recoveries 31 15 71 99 Net (charge-offs), recoveries (111) (140) (323) (106) Provision for credit losses 760 1,803 2,047 671 Balance at end of period $25,461 $22,585 $25,461 $22,585 The following table sets forth information regarding changes in the ACL for unfunded commitments as of the periods indicated: Three Months Ended June 30, Six Months Ended June 30, (In Thousands) 2026 2025 2026 2025 Balance at beginning of period $2,346 $1,987 $2,668 $2,310 (Benefit) provision for credit losses 242 168 (80) (155) Balance at end of period $2,588 $2,155 $2,588 $2,155 69 The following table sets forth information regarding changes in the ACL for purchased receivables as of the periods indicated: Three Months Ended June 30, Six Months Ended June 30, (In Thousands) 2026 2025 2026 2025 Balance at beginning of period $— $3,695 $— $3,649 Charge-offs — (281) — (281) Recoveries — — 5 — Net (charge-offs), recoveries — (281) 5 (281) Foreign currency translation adjustment (15) — (15) — (Benefit) provision for purchased receivables 625 18 620 64 Balance at end of period $610 $3,432 $610 $3,432 The ACL for loans held for investment at June 30, 2026 increased $1.7 million from December 31, 2025 primarily due to increased loan balances and an increase in qualitative factors to account for the increase in nonperforming loans, net of government guarantee. While management believes that it uses the best information available to determine the ACL, unforeseen market conditions and other events could result in adjustment to the ACL, and net income could be significantly affected if circumstances differed substantially from the assumptions used in making the final determination of the ACL. Deposits Deposits are the Company’s primary source of funds. Total deposits increased $105.8 million, or 4%, to $2.92 billion as of June 30, 2026 compared to $2.81 billion as of December 31, 2025, primarily due to new deposit relationships and normal seasonal fluctuations. The following table summarizes the Company's composition of deposits as of the periods indicated: June 30, 2026 December 31, 2025 (In thousands) Balance % of total Balance % of total Demand deposits $826,271 28 % $721,925 26 % Interest-bearing demand 1,281,777 44 % 1,242,546 44 % Savings deposits 246,617 8 % 250,006 9 % Money market deposits 194,665 7 % 195,793 7 % Time deposits 369,458 13 % 402,759 14 % Total deposits $2,918,788 $2,813,029 The Company’s mix of deposits continues to contribute to a low cost of funds with balances in transaction accounts representing 87% of total deposits at June 30, 2026 and 86% of total deposits at December 31, 2025. The only deposit category with stated maturity dates is certificates of deposit. At June 30, 2026, the Company had $369.5 million in certificates of deposit as compared to certificates of deposit of $402.8 million at December 31, 2025. At June 30, 2026, $346.1 million, or 94%, of the Company’s certificates of deposits are scheduled to mature over the next 12 months as compared to $369.2 million, or 92%, of total certificates of deposit at December 31, 2025. The aggregate amount of certificates of deposit in amounts of $250,000 and greater at June 30, 2026 and December 31, 2025, was $183.4 million and $208.2 million, respectively. The following table sets forth the amount outstanding of deposits in amounts of $250,000 and greater by time remaining until maturity and percentage of total deposits as of June 30, 2026: 70 Time Certificates of Deposit of $250,000 or More Percent of Total Deposits (In Thousands) Amount Amounts maturing in: Three months or less $48,444 26 % Over 3 through 6 months 57,256 31 % Over 6 through 12 months 62,382 35 % Over 12 months 15,342 8 % Total $183,424 100 % At June 30, 2026, 76% of total deposits were held in business accounts and 24% of deposit balances were held in consumer accounts. Northrim had approximately 33,000 deposit customers with an average balance of $65,000 as of June 30, 2026. Northrim had 33 customers with balances over $10 million as of June 30, 2026 which accounted for $745.7 million, or 26%, of total deposits. Uninsured deposits totaled approximately $1.14 billion or 39% of total deposits as of June 30, 2026 compared to $1.1 billion or 38% of total deposits as of December 31, 2025. There was no unusual deposit activity during the first six months of 2026. Borrowings FHLB: The Bank is a member of the Federal Home Loan Bank of Des Moines (the “FHLB”). As a member, the Bank is eligible to obtain advances from the FHLB. FHLB advances are dependent on the availability of acceptable collateral such as marketable securities or real estate loans, although all FHLB advances are secured by a blanket pledge of the Bank’s assets. At June 30, 2026, our maximum borrowing line from the FHLB was approximately 45% of the Bank’s assets, subject to the FHLB’s collateral requirements. Based on the Company's current collateral pledged to the FHLB, less outstanding advances, the Company's borrowing line is $459.5 million as of June 30, 2026. The Company has outstanding advances of $12.6 million as of June 30, 2026 which were originated to match fund low income housing projects that qualify for long term fixed interest rates. These advances have original terms of either 18 or 20 years with 30 year amortization periods and fixed interest rates ranging from 1.23% to 3.25%. Federal Reserve Bank: The Federal Reserve Bank of San Francisco (the “Federal Reserve Bank”) is holding $70.0 million of securities as collateral to secure the Company's ability to take advances through the discount window on June 30, 2026. There were no discount window advances outstanding at either June 30, 2026 or December 31, 2025. Other Short-term Borrowings: The Company is subject to provisions under Alaska state law, which generally limit the amount of outstanding debt to 15% of total assets or $509.2 million at June 30, 2026 and $490.6 million at December 31, 2025. At June 30, 2026 and December 31, 2025, the Company had no short-term (original maturity of one year or less) borrowings that exceeded 30% of shareholders’ equity. Long-term Borrowings. The Company had no long-term borrowing outstanding other than the FHLB advances noted above as of June 30, 2026 or December 31, 2025. 71 Junior Subordinated Debentures At June 30, 2026 and December 31, 2025, the Company had trust preferred securities in the principal amount of $10 million. These securities carry an interest rate of 90-day CME SOFR plus tenor spread adjustment of 0.26% plus 1.37% per annum, adjusted quarterly. The securities have a maturity date of March 15, 2036, and are callable by the Company on or after March 15, 2011. These securities are treated as Tier 1 capital by the Company’s regulators for capital adequacy calculations. At June 30, 2026 and December 31, 2025, the securities had an interest rate of 5.30% and 5.35%, respectively. The Company entered into an interest rate swap in the third quarter of 2017 to hedge the variability in cash flows arising out of its junior subordinated debentures, by swapping the cash flows with an interest rate swap which receives floating and pays fixed. The Company has designated this interest rate swap as a hedging instrument. The interest rate swap effectively fixes the Company's interest payments on the $10 million of junior subordinated debentures held under Northrim Statutory Trust 2 at 3.72% through its maturity date. Net of the impact of the interest rate swap, interest expense on these securities was $95,000 in the second quarter of 2026 and $94,000 in the second quarter of 2025. Net of the impact of the interest rate swap, interest expense on these securities was $189,000 in the first six months of 2026 and $185,000 in the first six months of 2025. The Company also had interest expense of $4,000 in the second quarter of 2026 and $5,000 in the second quarter of 2025 and $8,000 in the first six months of 2026 and $9,000 in the first six months of 2025 on common securities related to this junior subordinated debt. Subordinated Notes At June 30, 2026 and December 31, 2025, the Company had $60.0 million in aggregate principal amount of its 6.875% Fixed-to-Floating Rate Subordinated Notes due 2035 (the “Subordinated Notes”). The Subordinated Notes mature on December 1, 2035 and currently carry interest at a fixed rate of 6.875% per year. The interest cost to the Company on the Subordinated Notes was $1.0 million in the second quarter of 2026 and $2.1 million in the first six months of 2026. The Company incurred debt issuance costs of $1.4 million which will be amortized through December 1, 2035. The amortization expense amounted to $35,000 in the second quarter of 2026 and $70,000 in the first six months of 2026. The Subordinated Notes are intended to qualify as Tier 2 capital of the Company for regulatory capital purposes. Liquidity and Capital Resources The Company is a single bank holding company and its primary ongoing source of liquidity is from dividends received from the Bank. Such dividends arise from the cash flow and earnings of the Bank. Banking regulations and regulatory authorities may limit the amount of, or require the Bank to obtain certain approvals before paying, dividends to the Company. Given that the Bank currently meets, and the Bank anticipates that it will continue to meet, all applicable capital adequacy requirements for a “well-capitalized” institution by regulatory standards, the Company expects to continue to receive dividends from the Bank during the remainder of 2026. Other available sources of liquidity for the bank holding company include the issuance of debt and the issuance of common or preferred stock. As of June 30, 2026, the Company has 40.0 million authorized shares of common stock, of which approximately 22.2 million are issued and outstanding, leaving approximately 17.8 million shares available for issuance. Additionally, the Company has 2.5 million authorized shares of preferred stock available for issuance. The Bank manages its liquidity through its Asset and Liability Committee. The Bank's primary source of funds are customer deposits. These funds, together with loan repayments, loan sales, maturity and sale of investment securities, borrowed funds, and retained earnings are used to make loans, to acquire securities and other assets, and to fund deposit flows and continuing operations. The primary sources of demands on our liquidity are customer demands for withdrawal of deposits and borrowers’ demands that we advance funds against unfunded lending commitments. 72 The Company had cash and cash equivalents of $172.2 million, or 5% of total assets at June 30, 2026 compared to $145.9 million, or 4% of total assets as of December 31, 2025. The increase in cash and cash equivalents since the end of 2025 is primarily due to an increase in deposits. The Company had other comprehensive loss, net of tax, of $323,000 for the six-month period ending June 30, 2026 primarily due to unrealized holding gains on available for sale securities. Accumulated unrealized losses, net of income taxes on available for sale securities, which are recorded in total shareholders' equity, are $1.3 million as of June 30, 2026. Accumulated unrealized losses, net of income taxes on held to maturity securities, which are not recorded in shareholders' equity, are $702,000 as of June 30, 2026. Management does not believe that liquidation of these securities, which would result in realized losses, will occur prior to maturity of these securities. As of June 30, 2026, the weighted average maturity of available for sale securities is 2.5 years as compared to 2.0 years as of December 31, 2025. At June 30, 2026, $150.7 million available for sale securities mature within one year, $87.1 million mature within one to two years, and $84.8 million mature within two to three years. Our total unfunded commitments to fund loans and letters of credit at June 30, 2026 were $656.5 million. We do not expect that all of these loans are likely to be fully drawn upon at any one time. At June 30, 2026, certificates of deposit totaling $346.1 million are scheduled to mature over the next 12 months and may be withdrawn from the Bank. Similar to loans, we do not expect that these maturing certificates of deposit, or other non-maturity deposits, to be withdrawn from the Bank in a manner that will strain liquidity; however, unforeseen future circumstances or events may cause higher than anticipated withdrawal of deposits or draws of unfunded commitments to fund new loans. Management believes that cash requirements to fund future non-deposit and non-borrowing liabilities, including operating lease liabilities and other liabilities, as of June 30, 2026, are not material to the Company's liquidity position as of June 30, 2026. The Company has other available sources of liquidity to fund unforeseen liquidity requirements. These include borrowings available through our correspondent banking relationships and our credit lines with the Federal Reserve Bank and the FHLB. At June 30, 2026, our liquid assets, which include investments and loans maturing within a year, were $1.11 billion. Our funds available for borrowing under our existing lines of credit based on loans currently pledged and investments available to be pledged as collateral were $560.6 million. Given these sources of liquidity and our expectations for customer demands for cash and for our operating cash needs, we believe our sources of liquidity to be sufficient for the foreseeable future. As shown in the Consolidated Statements of Cash Flows included in Part I - Item 1 “Financial Statements” of this report, net cash provided by operating activities was $67.3 million for the first six months of 2026, primarily due to net proceeds from the sale of loans held for sale and cash provided by net income, which was only partially offset by cash used in connection with the origination of loans held for sale. Net cash used by investing activities was $139.9 million for the same period, primarily due to an increase in loans and purchases of long term investments which were only partially offset by maturities and calls of available for sale and held to maturity securities. Net cash provided by financing activities in the first six months of 2026 was $98.9 million, primarily due to increases in deposits which were only partially offset by cash dividends paid to shareholders. Throughout our history, the Company has periodically repurchased for cash a portion of its shares of common stock in the open market. At June 30, 2026, there are no shares remaining under the repurchase program, and we did not repurchase any shares in the second quarter of 2026. The Company currently has no plans to repurchase shares of its common stock in 2026. Capital Requirements and Ratios We are subject to minimum capital requirements. Federal banking agencies have adopted regulations establishing minimum requirements for the capital adequacy of banks and bank holding companies. The requirements address both risk-based capital and leverage capital. We believe as of June 30, 2026, that the Company and the Bank met all applicable capital adequacy requirements for a “well-capitalized” institution by regulatory standards. The table below illustrates the capital requirements in effect for the periods noted for the Company and the Bank and the actual capital ratios for each entity that exceed these requirements. Management intends to maintain capital ratios for the Bank in 2026, exceeding the FDIC’s requirements for the “well-capitalized” classification. Some capital ratios for the Company exceed those for the Bank primarily because the $10 million trust preferred securities offering and the $60 million in Subordinated Notes are included in the Company’s capital for regulatory purposes, although they are accounted for as a long-term debt in our consolidated financial statements. These items are not accounted for on the Bank’s financial statements nor are they included in its capital. As a result, the Company has $70 million more in regulatory capital than the Bank at June 30, 2026, which explains most of the difference in the capital ratios for the two entities. 73 Minimum Required Capital Well-Capitalized Actual Ratio Company Actual Ratio Bank June 30, 2026 Total risk-based capital 8.00% 10.00% 14.46% 13.39% Tier 1 risk-based capital 6.00% 8.00% 11.26% 12.38% Common equity tier 1 capital 4.50% 6.50% 10.90% 12.38% Leverage ratio 4.00% 5.00% 9.32% 10.26% See Note 23 of the Consolidated Financial Statements in Part II. Item 8 of the Company's Annual Report on Form 10-K for the year ended December 31, 2025 for a detailed discussion of the capital ratios. The requirements for “well-capitalized” come from the Prompt Corrective Action rules. See Part I. Item 1 - Business - Supervision and Regulation in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. These rules apply to the Bank but not to the Company. Under the rules of the Federal Reserve Bank, a bank holding company such as the Company is generally defined to be “well capitalized” if its Tier 1 risk-based capital ratio is 8.0% or more and its total risk-based capital ratio is 10.0% or more.