Anchorage Daily News

Northrim Bancorp said its second-quarter profits totaled $1.44 million, down 54 percent from the same three months of last year.

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Langland

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Beedle

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The Anchorage-based banking company said profits fell due primarily to two factors:

• Interest received from loans fell more than interest paid on deposits.

• Northrim set aside more money to cover bad loans, and it wrote down $977,000 connected to foreclosed real estate.

However, these declines were partly offset by an increase in income from its other operations, Northrim said.

"While our housing market remains stable, we have experienced longer sales cycles in our major markets, reflecting a tighter mortgage loan market and reduced consumer confidence and uncertainty," said Marc Langland, chief executive.

But, he said, high prices for oil and other natural resources are prompting new investments in Alaska's economy, helping to stabilize employment.

Joe Beedle, executive vice president, said: "Higher levels of nonperforming assets were primarily due to a dozen residential construction projects located mainly in the greater Anchorage market that were adversely affected by a slower sales cycle. Additional loss reserves were necessary to take into account increased inherent loss in the loan portfolio, the underlying real estate values, and the length of time we expect will be needed to go through the full cycle of construction and sale.

"We are seeing some improvement, however, in delinquencies that are less than 90 days past due at the end of the second quarter, which were down to $7 million at the end of June 2008 from $36 million at the end of March of this year," Beedle said.

The percentage of the bank's loans and other assets that were past due or foreclosed on totaled 2.8 percent as of June 30, up from 2.3 percent three months earlier.

Northrim's foreclosed real estate holdings include a three-story, 21-unit condo project that is nearly done, a single-family-housing development for nine houses and 32 lots, and four other small housing projects, the bank said.

As of June 30, Northrim's assets totaled $1.04 billion, up 10 percent from a year earlier. Loans compose most of the assets, and these totaled $710 million on June 30, up 1 percent from a year earlier.

Deposits totaled $902 million, up 12 percent.

For the first six months, Northrim recorded a $3.6 million profit, down 39 percent.

The Anchorage-based company owns Northrim Bank -- with branches in Anchorage, Eagle River, Wasilla and Fairbanks, and a lending division in Washington. Northrim also is affiliated with Elliott Cover Capital Management, Residential Mortgage, Northrim Benefits Group and Pacific Wealth Advisors.

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