v3.26.1
Derivatives
 3 Months Ended
Mar. 31, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives Derivatives
Derivatives swaps related to community banking activities: Interest rate swaps
    The Company enters into commercial loan interest rate swap agreements with commercial banking customers which are offset with a corresponding swap agreement with a third party financial institution (“counterparty”). The Company has agreements with its counterparties that contain provisions that provide that if the Company fails to maintain its status as a “well-capitalized” institution under applicable regulatory guidelines, then the counterparty could terminate the derivative positions and the Company would be required to settle its obligations under the agreements. These agreements also require that the Company and the counterparty collateralize any fair value shortfalls that exceed $250,000 with eligible collateral, which includes cash and securities backed with the full faith and credit of the federal government. Similarly, the Company could be required to settle its obligations under the agreement if specific regulatory events occur, such as if the Company were issued a prompt corrective action directive or a cease and desist order, or if certain regulatory ratios fall below specified levels. The Company pledged $598,000 as of March 31, 2026 and $596,000 as of December 31, 2025, in available for sale securities to collateralize fair value shortfalls on interest rate swap agreements.
    At March 31, 2026, the notional amount of interest rate swaps is made up of 27 variable to fixed rate swaps to commercial loan customers totaling $178.0 million with a fair value of negative $8.1 million and 27 fixed to variable rate swaps with a counterparty totaling $178.0 million with a fair value of $8.1 million. Changes in fair value from these 27 interest rate swaps offset each other in the three-month periods ending March 31, 2026. The Company recognized zero and $129,000 in fee income related to interest rate swaps in the three-month periods ending March 31, 2026 and 2025, respectively. Interest rate swap income is recorded in other operating income on the Consolidated Statements of Income. None of these interest rate swaps are designated as hedging instruments.
    The Company has an interest rate swap to hedge the variability in cash flows arising out of a portion of its junior subordinated debentures, which is floating rate debt, 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 $10.0 million of junior subordinated debentures held under Northrim Statutory Trust 2 at 3.72% through its maturity date. The floating rate that the dealer pays is equal to the three month CME SOFR plus tenor spread adjustment 0.26% plus 1.37%, which reprices quarterly on the payment date. This rate was 5.31% as of March 31, 2026. The Company pledged $130,000 in cash to collateralize initial margin and fair value exposure of our counterparty on this interest rate swap as of March 31, 2026 and December 31, 2025. The fair value of this interest rate swap was $1.4 million as of both March 31, 2026 and December 31, 2025, which is included in other assets on the Consolidated Balance Sheet. Changes in the fair value of this interest rate swap are reported in other comprehensive income on the Consolidated Statements of Income. The unrealized gain, net of tax on this interest rate swap was $1.0 million as of March 31, 2026 and December 31, 2025.
Derivatives related to home mortgage banking activities: Interest rate lock commitments and retail interest rate contracts    
    The Company also uses derivatives to hedge the risk of changes in the fair values of interest rate lock commitments. The Company enters into commitments to originate residential mortgage loans at specific rates; the value of these commitments are detailed in the table below as “interest rate lock commitments”. The Company also hedges the interest rate risk associated with its residential mortgage loan commitments, which are referred to as “retail interest rate contracts” in the table below. Market risk with respect to commitments to originate loans arises from changes in the value of contractual positions due to changes in interest rates. Residential Mortgage, LLC (“RML”) had commitments to originate mortgage loans held for sale totaling $85.8 million and $45.7 million at March 31, 2026 and December 31, 2025, respectively. The fair value of these interest rate lock commitments was $1.6 million and $923,000 at March 31, 2026 and December 31, 2025, respectively. Changes in the value of RML's interest rate derivatives are recorded in mortgage banking income on the Consolidated Statements of Income. None of these derivatives are designated as hedging instruments.
    The following table presents the fair value of derivatives not designated as hedging instruments at March 31, 2026 and December 31, 2025:
(In Thousands)Asset Derivatives
March 31, 2026December 31, 2025
Balance Sheet LocationFair ValueFair Value
Interest rate swapsOther assets$8,057 $7,999 
Interest rate lock commitmentsOther assets1,580 923 
Retail interest rate contractsOther assets58 — 
Total$9,695 $8,922 
(In Thousands)Liability Derivatives
March 31, 2026December 31, 2025
Balance Sheet LocationFair ValueFair Value
Interest rate swapsOther liabilities$8,057 $7,999 
Retail interest rate contractsOther liabilities— 50 
Total$8,057 $8,049 
    The following table presents the net gains (losses) of derivatives not designated as hedging instruments for periods indicated below:
Three Months Ended March 31,
(In Thousands)Income Statement Location20262025
Retail interest rate contractsMortgage banking income$70 ($309)
Interest rate lock commitmentsMortgage banking income613 880 
Total$683 $571 
    Our derivative transactions with counterparties under International Swaps and Derivative Association master agreements include “right of set-off” provisions. “Right of set-off” provisions are legally enforceable rights to offset recognized amounts and there may be an intention to settle such amounts on a net basis. We do not offset such financial instruments for financial reporting purposes.
    The following table summarizes the derivatives that have a right of offset as of March 31, 2026 and December 31, 2025:
March 31, 2026Gross amounts not offset in the Statement of Financial Position
(In Thousands)Gross amounts of recognized assets and liabilitiesGross amounts offset in the Statement of Financial PositionNet amounts of assets and liabilities presented in the Statement of Financial PositionFinancial InstrumentsCollateral PostedNet Amount
Asset Derivatives
Interest rate swaps$8,057$— $8,057$— $— $8,057 
Retail interest rate contracts58 — 58 — — 58 
Liability Derivatives
Interest rate swaps$8,057$— $8,057$— $8,057$— 
December 31, 2025Gross amounts not offset in the Statement of Financial Position
(In Thousands)Gross amounts of recognized assets and liabilitiesGross amounts offset in the Statement of Financial PositionNet amounts of assets and liabilities presented in the Statement of Financial PositionFinancial InstrumentsCollateral PostedNet Amount
Asset Derivatives
Interest rate swaps$7,999$— $7,999$— $— $7,999 
Liability Derivatives
Interest rate swaps$7,999$— $7,999$— $7,999$— 
Retail interest rate contracts50 — 50 — — 50