SEC Company Response from NORTHRIM BANCORP INC (NRIM) (CIK 0001163370) (NRIM) — Oct 28, 2016
NORTHRIM BANCORP INC (NRIM) (CIK 0001163370)
Date: Oct. 28, 2016 · CIK: 0001163370 · Accession: 0001163370-16-000088
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 000-33501
Referenced dates: April 29, 2016, August 17, 2016
Letter
Document
October 28, 2016
VIA EDGAR AND FEDERAL EXPRESS OVERNIGHT
Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Washington, D.C. 20549-4561
Attention:
Stephanie Sullivan
Michelle Miller
Re:
Northrim BanCorp, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2015 (the “Report”)
Filed March 11, 2016
File No. 000-33501
Northrim BanCorp, Inc., (the “Company”) has reviewed the comment letter from the Division of Corporate Finance of the U.S. Securities and Exchange Commission (the “Staff”) dated August 17, 2016 in which the Staff indicated that the Staff objected to the Company’s view that the contingent payments related to the Company’s acquisition of Residential Mortgage Holding Company, LLC (“RML”) should be accounted for as contingent purchase consideration instead of compensation.
We respectfully submit this analysis in response to your letter dated August 17, 2016, which stated the following:
Staff Comment No. 1: Item 8. Financial Statements and Supplementary Data, Note 2 - Business Combinations, page 70; Residential Mortgage, page 72
We note your responses to prior comment 2 to our letter dated April 29, 2016 and object to your view that the contingent payments related to the acquisition of RML should be accounted for as contingent consideration instead of compensation. Please provide us with your materiality analysis pursuant to ASC 250-10-S99 as of December 31, 2014 and updated through your most recent quarter end that reflects the impact of recognizing the contingent payments as compensation. To the extent you conclude that this error is not material to your historical financial statements, please describe how you plan to correct this error in future filings and describe the types of disclosures you would plan to make.
Response:
Securities and Exchange Commission
October 28, 2016
Page 2
The Company has completed its materiality assessment of the accounting in question. After considering both quantitative and qualitative factors, the Company has determined that the impact of the change to account for the contingent payments to the sellers of RML as compensation instead of contingent consideration is not material to the Company’s previously issued consolidated financial statements. The Company proposes to correct the accounting for these contingent payments as an out-of period adjustment on a prospective basis in its next interim financial statements included in its Quarterly Report on Form 10-Q for the period ended September 30, 2016.
ASC 250-10-S99 (“SAB 99”) indicates that quantifying, in percentage terms, the magnitude of a misstatement is only the beginning of an analysis of materiality and that it cannot appropriately be used as a substitute for a full analysis of all relevant considerations. SAB 99 also indicates that the formulation of materiality in the accounting literature is in substance identical to the formulation used by the courts in interpreting the federal securities laws. The U.S. Supreme Court has held that a fact is material if there is “a substantial likelihood that the…fact would have been viewed by the reasonable investor as having significantly altered the “total mix” of information made available.” Lastly, specifically the Staff’s interpretive response says that “A matter is ‘material’ if there is a substantial likelihood that a reasonable person would consider it important.”
The SAB 99 analysis herein seeks to apply these criteria. As such, the quantitative and qualitative conclusions made by the Company have been considered both individually and in the aggregate in determining whether or not the items at issue were material to the consolidated financial statements of the Company.
As discussed below, the Company respectfully offers that the impacts of accounting for the contingent payments to the sellers of RML as compensation instead of as contingent consideration on its financial position and operating results for the quarterly, year-to-date, and annual periods since the date of acquisition are not material.
Quantitative Assessment
Impact to historical financial statements
The following tables detail the impact of this change in the Company’s consolidated financial statements, including significant financial ratios, for each quarter since the transaction was completed as of December 1, 2014.
Table 2 below outlines the impact of adjusting the individual line items and the overall Consolidated Balance Sheets of the Company as of the impacted balance sheet dates. While the percentage change in goodwill is 33% and the percentage change in other liabilities is as high as 27%, the Company does not believe that these changes are material because the dollar amount of these changes is not material to the balance sheet overall. Goodwill, which represents as much as 2% as reported and 1% after the adjustment of total assets, decreases $7.3 million, and other liabilities, which represents as much as 3% of total liabilities and between 1% and 3% after the adjustment, decreases between $5 million and $7.2 million for each relevant period. Total assets, total liabilities, and total shareholders’ equity all decrease by 1% or less in all periods.
Tables 1 and 4 below show the impact of adjusting the individual line items and the overall Consolidated Statements of Income for the seven quarters affected, the year ended December 31, 2015, and year-to-date through June 30, 2016. The impact on net income ranges between -1% to 6% in each of the relevant periods.
Table 3 below shows the impact of the adjustments on various financial ratios, and the Company believes
Securities and Exchange Commission
October 28, 2016
Page 3
that these changes are also not material. Book value per share decreases by less than 1% at each balance sheet date, and regulatory capital ratios increase between 3% and 5% at these dates due to the decrease in goodwill.
Additionally, the change does not affect the amount of the contingent payments and there is no impact to the Company’s total cash flows from operating, investing or financing activities or the liquidity ratios.
Securities and Exchange Commission
October 28, 2016
Page 4
Table 1
December 31,
March 31,
June 30,
September 30,
December 31,
March 31,
June 30,
(Dollars in Thousands)
As Reported:
Net interest income
$13,924
$13,632
$14,195
$14,682
$14,400
$14,174
$14,079
Provision for loan losses
Other operating income
9,376
10,535
11,563
12,407
10,104
9,105
11,864
Other operating expense
13,671
18,461
17,753
18,203
18,229
17,371
19,369
Income before provision
for income taxes
9,129
5,380
7,629
8,210
5,899
5,205
6,374
Provision for income taxes
2,325
1,747
2,686
2,678
1,673
1,699
1,868
Net income
6,804
3,633
4,943
5,532
4,226
3,506
4,506
Less: Net income attributable
to noncontrolling interest
Net income attributable to
Northrim BanCorp, Inc.
$6,674
$3,561
$4,781
$5,335
$4,106
$3,376
$4,350
Earnings per share, basic
$0.98
$0.52
$0.70
$0.78
$0.60
$0.49
$0.63
Earnings per share, diluted
$0.97
$0.51
$0.69
$0.77
$0.59
$0.48
$0.63
Revised:
Net interest income
$13,924
$13,632
$14,195
$14,682
$14,400
$14,174
$14,079
Provision for loan losses
Other operating income
9,376
10,535
11,563
12,407
10,104
9,105
11,864
Other operating expense
13,799
18,813
18,113
18,563
18,589
17,732
19,730
Income before provision
for income taxes
9,001
5,028
7,269
7,850
5,539
4,844
6,013
Provision for income taxes
2,272
1,602
2,538
2,530
1,525
1,551
1,720
Net income
6,729
3,426
4,731
5,320
4,014
3,293
4,293
Less: Net income attributable
to noncontrolling interest
Net income attributable to
Northrim BanCorp, Inc.
$6,599
$3,354
$4,569
$5,123
$3,894
$3,163
$4,137
Earnings per share, basic
$0.97
$0.49
$0.67
$0.75
$0.57
$0.46
$0.60
Earnings per share, diluted
$0.96
$0.48
$0.66
$0.74
$0.56
$0.45
$0.60
%Change:
Net interest income
0%
0%
0%
—%
—%
—%
—%
Provision for loan losses
0%
0%
0%
—%
—%
—%
—%
Other operating income
0%
0%
0%
—%
—%
—%
—%
Other operating expense
1%
2%
2%
2%
2%
2%
2%
Income before provision
for income taxes
-1%
-7%
-5%
(4)%
(6)%
(7)%
(6)%
Provision for income taxes
-2%
-8%
-6%
(6)%
(9)%
(9)%
(8)%
Net income
-1%
-6%
-4%
(4)%
(5)%
(6)%
(5)%
Less: Net income attributable
to noncontrolling interest
0%
0%
0%
—%
—%
—%
—%
Net income attributable to
Northrim BanCorp, Inc.
-1%
-6%
-4%
(4)%
(5)%
(6)%
(5)%
Earnings per share, basic
-1%
-6%
-4%
(4)%
(5)%
(6)%
(5)%
Earnings per share, diluted
-1%
-6%
-4%
(4)%
(5)%
(6)%
(5)%
Securities and Exchange Commission
October 28, 2016
Page 5
Table 2
December 31,
March 31,
June 30,
September 30,
December 31,
March 31,
June 30,
(Dollars in Thousands)
As Reported:
Goodwill
22,334
22,334
22,334
22,334
22,334
22,334
22,334
Total assets
1,449,349
1,447,984
1,500,331
1,539,253
1,499,492
1,500,199
1,518,370
Other liabilities
40,456
30,640
31,770
34,569
29,388
20,602
29,748
Total liabilities
1,284,908
1,280,600
1,329,249
1,363,917
1,322,278
1,319,801
1,334,405
Retained earnings
95,493
97,809
101,343
105,363
108,150
110,209
113,238
Total shareholders' equity
164,441
167,384
171,082
175,336
177,214
180,398
183,965
Total liabilities and
shareholders' equity
1,449,349
1,447,984
1,500,331
1,539,253
1,499,492
1,500,199
1,518,370
Revised:
Goodwill
15,017
15,017
15,017
15,017
15,017
15,017
15,017
Total assets
1,442,032
1,440,667
1,493,014
1,531,936
1,492,175
1,492,882
1,511,053
Other liabilities
33,214
23,606
24,948
27,959
22,990
14,416
23,775
Total liabilities
1,277,666
1,273,566
1,322,427
1,357,307
1,315,880
1,313,615
1,328,432
Retained earnings
95,418
97,526
100,848
104,656
107,231
109,078
111,894
Total shareholders' equity
164,366
167,101
170,587
174,629
176,295
179,267
182,621
Total liabilities and
shareholders' equity
1,442,032
1,440,667
1,493,014
1,531,936
1,492,175
1,492,882
1,511,053
% Change:
Goodwill
(33
)%
(33
)%
(33
)%
(33
)%
(33
)%
(33
)%
(33
)%
Total assets
(1
)%
(0.5
)%
(0.5
)%
(0.5
)%
(0.5
)%
(0.5
)%
(0.5
)%
Other liabilities
(18
)%
(23
)%
(21
)%
(19
)%
(22
)%
(30
)%
(20
)%
Total liabilities
(1
)%
(1
)%
(0.5
)%
(0.5
)%
(0.5
)%
(0.5
)%
(0.4
)%
Retained earnings
(0.1
)%
(0.3
)%
(0.5
)%
(1
)%
(1
)%
(1
)%
(1
)%
Total shareholders' equity
—
%
(0.2
)%
(0.3
)%
(0.4
)%
(0.5
)%
(1
)%
(1
)%
Total liabilities and
shareholders' equity
(1
)%
(0.5
)%
(0.5
)%
(0.5
)%
(0.5
)%
(0.5
)%
(0.5
)%
Securities and Exchange Commission
October 28, 2016
Page 6
Table 3
December 31,
March 31,
June 30,
September 30,
December 31,
March 31,
June 30,
As Reported:
Efficiency ratio
58.4
%
76.1
%
68.6
%
66.9
%
74.2
%
74.5
%
74.5
%
Book value / share
$23.99
$24.42
$24.96
$25.56
$25.77
$26.23
$26.75
Tier 1 Capital / Risk Adjusted Assets
13.1
%
12.7
%
12.7
%
%
13.3
%
13.7
%
13.9
%
Total 1 Capital / Risk Adjusted Assets
14.3
%
%
13.9
%
14.3
%
14.6
%
14.9
%
15.1
%
Tier 1 Capital / Average Assets
11.2
%
10.4
%
10.3
%
10.2
%
%
11.9
%
12.1
%
Revised:
Efficiency ratio
58.9
%
77.5
%
%
68.3
%
75.7
%
%
75.9
%
Book value / share
$23.98
$24.38
$24.89
$25.46
$25.63
$26.07
$26.55
Tier 1 Capital / Risk Adjusted Assets
13.7
%
13.3
%
13.2
%
13.5
%
13.9
%
14.2
%
14.3
%
Total 1 Capital / Risk Adjusted Assets
15.0
%
14.5
%
14.5
%
14.8
%
15.1
%
15.4
%
15.6
%
Tier 1 Capital / Average Assets
11.8
%
10.9
%
10.7
%
10.7
%
10.5
%
12.3
%
12.5
%
% Change:
Efficiency ratio
%
%
%
%
%
%
%
Book value / share
0.0
%
(0.2
)%
(0.3
)%
(0.4
)%
(0.5
)%
(0.6
)%
(0.7
)%
Tier 1 Capital / Risk Adjusted Assets
%
%
%
%
%
%
%
Total 1 Capital / Risk Adjusted Assets
%
%
%
%
%
%
%
Tier 1 Capital / Average Assets
%
%
%
%
%
%
%
Securities and Exchange Commission
October 28, 2016
Page 7
The following table details the impact of this change in the Company’s consolidated financial statements for the year ended December 31, 2015 and year-to-date through June 30, 2016:
Table 4
Year Ended
Six Months Ended
December 31,
June 30,
(Dollars in thousands)
As Reported:
Net interest income
56,909
28,253
Provision for loan losses
1,754
Other operating income
44,609
20,969
Other operating expense
72,646
36,740
Income before provision
for income taxes
27,118
11,579
Provision for income taxes
8,784
3,567
Net income
18,334
8,012
Less: Net income attributable
to noncontrolling interest
Net income attributable to
Northrim BanCorp, Inc.
17,783
7,726
Earnings per share, basic
$2.59
$1.12
Earnings per share, diluted
$2.56
$1.12
Efficiency ratio
71.3
%
74.5
%
Revised:
Net interest income
56,909
28,253
Provision for loan losses
1,754
Other operating income
44,609
20,969
Other operating expense
74,078
37,462
Income before provision
for income taxes
25,686
10,857
Provision for income taxes
8,195
3,270
Net income
17,491
7,587
Less: Net income attributable
to noncontrolling interest
Net income attributable to
Northrim BanCorp, Inc.
16,940
7,301
Earnings per share, basic
$2.47
$1.06
Earnings per share, diluted
$2.44
$1.06
Efficiency ratio
72.7
%
76.0
%
% Change:
Net interest income
%
%
Provision for loan losses
%
%
Other operating income
%
%
Other operating expense
%
%
Income before provision
for income taxes
(5
)%
(6
)%
Provision for income taxes
(7
)%
(8
)%
Net income
(5
)%
(5
)%
Less: Net income attributable
to noncontrolling interest
%
%
Net income attributable to
Northrim BanCorp, Inc.
(5
)%
(6
)%
Earnings per share, basic
(5
)%
(5
)%
Earnings per share, diluted
(5
)%
(5
)%
Efficiency ratio
%
%
Securities and Exchange Commission
October 28, 2016
Page 8
The following tables detail the components of the changes in expenses on the Company’s Consolidated Statement of Income for the year ended December 31, 2015 and the six months ended June 30, 2016:
Table 5
Impact to the Statement of Income for the 2015
As Previously
As
%
(Dollars in
Show Raw Text
CORRESP
1
filename1.htm
Document
October 28, 2016
VIA EDGAR AND FEDERAL EXPRESS OVERNIGHT
Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Washington, D.C. 20549-4561
Attention:
Stephanie Sullivan
Michelle Miller
Re:
Northrim BanCorp, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2015 (the “Report”)
Filed March 11, 2016
File No. 000-33501
Northrim BanCorp, Inc., (the “Company”) has reviewed the comment letter from the Division of Corporate Finance of the U.S. Securities and Exchange Commission (the “Staff”) dated August 17, 2016 in which the Staff indicated that the Staff objected to the Company’s view that the contingent payments related to the Company’s acquisition of Residential Mortgage Holding Company, LLC (“RML”) should be accounted for as contingent purchase consideration instead of compensation.
We respectfully submit this analysis in response to your letter dated August 17, 2016, which stated the following:
Staff Comment No. 1: Item 8. Financial Statements and Supplementary Data, Note 2 - Business Combinations, page 70; Residential Mortgage, page 72
We note your responses to prior comment 2 to our letter dated April 29, 2016 and object to your view that the contingent payments related to the acquisition of RML should be accounted for as contingent consideration instead of compensation. Please provide us with your materiality analysis pursuant to ASC 250-10-S99 as of December 31, 2014 and updated through your most recent quarter end that reflects the impact of recognizing the contingent payments as compensation. To the extent you conclude that this error is not material to your historical financial statements, please describe how you plan to correct this error in future filings and describe the types of disclosures you would plan to make.
Response:
Securities and Exchange Commission
October 28, 2016
Page 2
The Company has completed its materiality assessment of the accounting in question. After considering both quantitative and qualitative factors, the Company has determined that the impact of the change to account for the contingent payments to the sellers of RML as compensation instead of contingent consideration is not material to the Company’s previously issued consolidated financial statements. The Company proposes to correct the accounting for these contingent payments as an out-of period adjustment on a prospective basis in its next interim financial statements included in its Quarterly Report on Form 10-Q for the period ended September 30, 2016.
ASC 250-10-S99 (“SAB 99”) indicates that quantifying, in percentage terms, the magnitude of a misstatement is only the beginning of an analysis of materiality and that it cannot appropriately be used as a substitute for a full analysis of all relevant considerations. SAB 99 also indicates that the formulation of materiality in the accounting literature is in substance identical to the formulation used by the courts in interpreting the federal securities laws. The U.S. Supreme Court has held that a fact is material if there is “a substantial likelihood that the…fact would have been viewed by the reasonable investor as having significantly altered the “total mix” of information made available.” Lastly, specifically the Staff’s interpretive response says that “A matter is ‘material’ if there is a substantial likelihood that a reasonable person would consider it important.”
The SAB 99 analysis herein seeks to apply these criteria. As such, the quantitative and qualitative conclusions made by the Company have been considered both individually and in the aggregate in determining whether or not the items at issue were material to the consolidated financial statements of the Company.
As discussed below, the Company respectfully offers that the impacts of accounting for the contingent payments to the sellers of RML as compensation instead of as contingent consideration on its financial position and operating results for the quarterly, year-to-date, and annual periods since the date of acquisition are not material.
Quantitative Assessment
Impact to historical financial statements
The following tables detail the impact of this change in the Company’s consolidated financial statements, including significant financial ratios, for each quarter since the transaction was completed as of December 1, 2014.
Table 2 below outlines the impact of adjusting the individual line items and the overall Consolidated Balance Sheets of the Company as of the impacted balance sheet dates. While the percentage change in goodwill is 33% and the percentage change in other liabilities is as high as 27%, the Company does not believe that these changes are material because the dollar amount of these changes is not material to the balance sheet overall. Goodwill, which represents as much as 2% as reported and 1% after the adjustment of total assets, decreases $7.3 million, and other liabilities, which represents as much as 3% of total liabilities and between 1% and 3% after the adjustment, decreases between $5 million and $7.2 million for each relevant period. Total assets, total liabilities, and total shareholders’ equity all decrease by 1% or less in all periods.
Tables 1 and 4 below show the impact of adjusting the individual line items and the overall Consolidated Statements of Income for the seven quarters affected, the year ended December 31, 2015, and year-to-date through June 30, 2016. The impact on net income ranges between -1% to 6% in each of the relevant periods.
Table 3 below shows the impact of the adjustments on various financial ratios, and the Company believes
Securities and Exchange Commission
October 28, 2016
Page 3
that these changes are also not material. Book value per share decreases by less than 1% at each balance sheet date, and regulatory capital ratios increase between 3% and 5% at these dates due to the decrease in goodwill.
Additionally, the change does not affect the amount of the contingent payments and there is no impact to the Company’s total cash flows from operating, investing or financing activities or the liquidity ratios.
Securities and Exchange Commission
October 28, 2016
Page 4
Table 1
December 31,
March 31,
June 30,
September 30,
December 31,
March 31,
June 30,
(Dollars in Thousands)
2014
2015
2015
2015
2015
2016
2016
As Reported:
Net interest income
$13,924
$13,632
$14,195
$14,682
$14,400
$14,174
$14,079
Provision for loan losses
500
326
376
676
376
703
200
Other operating income
9,376
10,535
11,563
12,407
10,104
9,105
11,864
Other operating expense
13,671
18,461
17,753
18,203
18,229
17,371
19,369
Income before provision
for income taxes
9,129
5,380
7,629
8,210
5,899
5,205
6,374
Provision for income taxes
2,325
1,747
2,686
2,678
1,673
1,699
1,868
Net income
6,804
3,633
4,943
5,532
4,226
3,506
4,506
Less: Net income attributable
to noncontrolling interest
130
72
162
197
120
130
156
Net income attributable to
Northrim BanCorp, Inc.
$6,674
$3,561
$4,781
$5,335
$4,106
$3,376
$4,350
Earnings per share, basic
$0.98
$0.52
$0.70
$0.78
$0.60
$0.49
$0.63
Earnings per share, diluted
$0.97
$0.51
$0.69
$0.77
$0.59
$0.48
$0.63
Revised:
Net interest income
$13,924
$13,632
$14,195
$14,682
$14,400
$14,174
$14,079
Provision for loan losses
500
326
376
676
376
703
200
Other operating income
9,376
10,535
11,563
12,407
10,104
9,105
11,864
Other operating expense
13,799
18,813
18,113
18,563
18,589
17,732
19,730
Income before provision
for income taxes
9,001
5,028
7,269
7,850
5,539
4,844
6,013
Provision for income taxes
2,272
1,602
2,538
2,530
1,525
1,551
1,720
Net income
6,729
3,426
4,731
5,320
4,014
3,293
4,293
Less: Net income attributable
to noncontrolling interest
130
72
162
197
120
130
156
Net income attributable to
Northrim BanCorp, Inc.
$6,599
$3,354
$4,569
$5,123
$3,894
$3,163
$4,137
Earnings per share, basic
$0.97
$0.49
$0.67
$0.75
$0.57
$0.46
$0.60
Earnings per share, diluted
$0.96
$0.48
$0.66
$0.74
$0.56
$0.45
$0.60
%Change:
Net interest income
0%
0%
0%
—%
—%
—%
—%
Provision for loan losses
0%
0%
0%
—%
—%
—%
—%
Other operating income
0%
0%
0%
—%
—%
—%
—%
Other operating expense
1%
2%
2%
2%
2%
2%
2%
Income before provision
for income taxes
-1%
-7%
-5%
(4)%
(6)%
(7)%
(6)%
Provision for income taxes
-2%
-8%
-6%
(6)%
(9)%
(9)%
(8)%
Net income
-1%
-6%
-4%
(4)%
(5)%
(6)%
(5)%
Less: Net income attributable
to noncontrolling interest
0%
0%
0%
—%
—%
—%
—%
Net income attributable to
Northrim BanCorp, Inc.
-1%
-6%
-4%
(4)%
(5)%
(6)%
(5)%
Earnings per share, basic
-1%
-6%
-4%
(4)%
(5)%
(6)%
(5)%
Earnings per share, diluted
-1%
-6%
-4%
(4)%
(5)%
(6)%
(5)%
Securities and Exchange Commission
October 28, 2016
Page 5
Table 2
December 31,
March 31,
June 30,
September 30,
December 31,
March 31,
June 30,
(Dollars in Thousands)
2014
2015
2015
2015
2015
2016
2016
As Reported:
Goodwill
22,334
22,334
22,334
22,334
22,334
22,334
22,334
Total assets
1,449,349
1,447,984
1,500,331
1,539,253
1,499,492
1,500,199
1,518,370
Other liabilities
40,456
30,640
31,770
34,569
29,388
20,602
29,748
Total liabilities
1,284,908
1,280,600
1,329,249
1,363,917
1,322,278
1,319,801
1,334,405
Retained earnings
95,493
97,809
101,343
105,363
108,150
110,209
113,238
Total shareholders' equity
164,441
167,384
171,082
175,336
177,214
180,398
183,965
Total liabilities and
shareholders' equity
1,449,349
1,447,984
1,500,331
1,539,253
1,499,492
1,500,199
1,518,370
Revised:
Goodwill
15,017
15,017
15,017
15,017
15,017
15,017
15,017
Total assets
1,442,032
1,440,667
1,493,014
1,531,936
1,492,175
1,492,882
1,511,053
Other liabilities
33,214
23,606
24,948
27,959
22,990
14,416
23,775
Total liabilities
1,277,666
1,273,566
1,322,427
1,357,307
1,315,880
1,313,615
1,328,432
Retained earnings
95,418
97,526
100,848
104,656
107,231
109,078
111,894
Total shareholders' equity
164,366
167,101
170,587
174,629
176,295
179,267
182,621
Total liabilities and
shareholders' equity
1,442,032
1,440,667
1,493,014
1,531,936
1,492,175
1,492,882
1,511,053
% Change:
Goodwill
(33
)%
(33
)%
(33
)%
(33
)%
(33
)%
(33
)%
(33
)%
Total assets
(1
)%
(0.5
)%
(0.5
)%
(0.5
)%
(0.5
)%
(0.5
)%
(0.5
)%
Other liabilities
(18
)%
(23
)%
(21
)%
(19
)%
(22
)%
(30
)%
(20
)%
Total liabilities
(1
)%
(1
)%
(0.5
)%
(0.5
)%
(0.5
)%
(0.5
)%
(0.4
)%
Retained earnings
(0.1
)%
(0.3
)%
(0.5
)%
(1
)%
(1
)%
(1
)%
(1
)%
Total shareholders' equity
—
%
(0.2
)%
(0.3
)%
(0.4
)%
(0.5
)%
(1
)%
(1
)%
Total liabilities and
shareholders' equity
(1
)%
(0.5
)%
(0.5
)%
(0.5
)%
(0.5
)%
(0.5
)%
(0.5
)%
Securities and Exchange Commission
October 28, 2016
Page 6
Table 3
December 31,
March 31,
June 30,
September 30,
December 31,
March 31,
June 30,
2014
2015
2015
2015
2015
2016
2016
As Reported:
Efficiency ratio
58.4
%
76.1
%
68.6
%
66.9
%
74.2
%
74.5
%
74.5
%
Book value / share
$23.99
$24.42
$24.96
$25.56
$25.77
$26.23
$26.75
Tier 1 Capital / Risk Adjusted Assets
13.1
%
12.7
%
12.7
%
13
%
13.3
%
13.7
%
13.9
%
Total 1 Capital / Risk Adjusted Assets
14.3
%
14
%
13.9
%
14.3
%
14.6
%
14.9
%
15.1
%
Tier 1 Capital / Average Assets
11.2
%
10.4
%
10.3
%
10.2
%
10
%
11.9
%
12.1
%
Revised:
Efficiency ratio
58.9
%
77.5
%
70
%
68.3
%
75.7
%
76
%
75.9
%
Book value / share
$23.98
$24.38
$24.89
$25.46
$25.63
$26.07
$26.55
Tier 1 Capital / Risk Adjusted Assets
13.7
%
13.3
%
13.2
%
13.5
%
13.9
%
14.2
%
14.3
%
Total 1 Capital / Risk Adjusted Assets
15.0
%
14.5
%
14.5
%
14.8
%
15.1
%
15.4
%
15.6
%
Tier 1 Capital / Average Assets
11.8
%
10.9
%
10.7
%
10.7
%
10.5
%
12.3
%
12.5
%
% Change:
Efficiency ratio
1
%
2
%
2
%
2
%
2
%
2
%
2
%
Book value / share
0.0
%
(0.2
)%
(0.3
)%
(0.4
)%
(0.5
)%
(0.6
)%
(0.7
)%
Tier 1 Capital / Risk Adjusted Assets
5
%
4
%
4
%
4
%
4
%
4
%
3
%
Total 1 Capital / Risk Adjusted Assets
5
%
4
%
4
%
4
%
3
%
3
%
3
%
Tier 1 Capital / Average Assets
5
%
5
%
5
%
5
%
4
%
4
%
3
%
Securities and Exchange Commission
October 28, 2016
Page 7
The following table details the impact of this change in the Company’s consolidated financial statements for the year ended December 31, 2015 and year-to-date through June 30, 2016:
Table 4
Year Ended
Six Months Ended
December 31,
June 30,
(Dollars in thousands)
2015
2016
As Reported:
Net interest income
56,909
28,253
Provision for loan losses
1,754
903
Other operating income
44,609
20,969
Other operating expense
72,646
36,740
Income before provision
for income taxes
27,118
11,579
Provision for income taxes
8,784
3,567
Net income
18,334
8,012
Less: Net income attributable
to noncontrolling interest
551
286
Net income attributable to
Northrim BanCorp, Inc.
17,783
7,726
Earnings per share, basic
$2.59
$1.12
Earnings per share, diluted
$2.56
$1.12
Efficiency ratio
71.3
%
74.5
%
Revised:
Net interest income
56,909
28,253
Provision for loan losses
1,754
903
Other operating income
44,609
20,969
Other operating expense
74,078
37,462
Income before provision
for income taxes
25,686
10,857
Provision for income taxes
8,195
3,270
Net income
17,491
7,587
Less: Net income attributable
to noncontrolling interest
551
286
Net income attributable to
Northrim BanCorp, Inc.
16,940
7,301
Earnings per share, basic
$2.47
$1.06
Earnings per share, diluted
$2.44
$1.06
Efficiency ratio
72.7
%
76.0
%
% Change:
Net interest income
0
%
0
%
Provision for loan losses
0
%
0
%
Other operating income
0
%
0
%
Other operating expense
2
%
2
%
Income before provision
for income taxes
(5
)%
(6
)%
Provision for income taxes
(7
)%
(8
)%
Net income
(5
)%
(5
)%
Less: Net income attributable
to noncontrolling interest
0
%
0
%
Net income attributable to
Northrim BanCorp, Inc.
(5
)%
(6
)%
Earnings per share, basic
(5
)%
(5
)%
Earnings per share, diluted
(5
)%
(5
)%
Efficiency ratio
2
%
2
%
Securities and Exchange Commission
October 28, 2016
Page 8
The following tables detail the components of the changes in expenses on the Company’s Consolidated Statement of Income for the year ended December 31, 2015 and the six months ended June 30, 2016:
Table 5
Impact to the Statement of Income for the 2015
As Previously
As
%
(Dollars in