Northrim Bancorp Gains on Residential Mortgage Buyout
Northrim Bancorp, Inc (NRIM) recently announced the acquisition of its remaining 76.5% membership interest in the Residential Mortgage Holding Company, LLC (“RML”) by its subsidiary on Dec 2, 2014. Following the news, the company’s shares gained about 2%. Northrim Bancorp shelled out approximately $29.5 million for this deal.
The wholly owned subsidiary, Northrim Capital Investments Co. (:NCIC), previously held 23.5% stake in the acquired company at the time of its inception in 1998.
Residential Mortgage is one the prime mortgage originators in Alaska, funding loans of $1.2 billion in 2012 and $792 million in 2013. It plays a strong role in the housing market of the concerned region through its offices spread across the state.
As a community bank, Northrim Bancorp caters to 75% of Alaska’s population and the acquisition of RML enhances its role in the economy. RML’s expertise in mortgage originations should help Northrim Bancorp to augment its client base in Alaska. Management expects the acquisition to be accretive to Northrim Bancorp’s earnings per share in 2015.
The company’s prior acquisition of Alaska Pacific Bancshares in Apr 2014, was a major success. It drove the company to hike its quarterly dividend by 6% to 18 cents per share in Sep 2014.
NRIM currently carries a Zacks Rank #3 (Hold). Better-ranked banks in the West market region include Western Alliance Bancorporation (WAL) and Preferred Bank (PFBC), with a Zacks Rank #1 (Strong Buy) and City National (CYN) with a Zacks Rank #2 (Buy).
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