Northrim BanCorp To Buy Residential Mortgage For $29.8 Mln

(RTTNews) - Northrim BanCorp, Inc. (NRIM) and Residential Mortgage Holding Company, LLC, on Thursday jointly announced the signing of a definitive purchase agreement for a subsidiary of Northrim Bank, Northrim Capital Investment Co., to acquire 76.5% of the membership interests in Residential Mortgage Holding, the parent company of Residential Mortgage, LLC in a cash deal currently valued at $29.8 million.

The terms of the deal call for Northrim Bank to make an estimated payment of about $22.4 million at closing that consists of $17.8 million in cash and the assignment of life insurance policies with cash surrender values totaling $3.7 million to certain members of Residential Mortgage Holding, subject to a closing adjustment currently estimated at $900,000 to cover any difference between the equity of Residential Mortgage Holding at June 30, 2014 and its equity at the close of the deal. The purchase agreement also contains an earn-out provision that requires Northrim Bank to pay the current owners of Residential Mortgage Holding additional cash proceeds currently estimated at $7.4 million over a five year period, provided that the annual adjusted earnings of Residential Mortgage Holding achieve thresholds specified in the purchase agreement during that period.

Northrim Bank was an original investor in Residential Mortgage when it was founded in 1998 and currently owns, through Northrim Capital Investment, the remaining 23.5% of the membership interests in Residential Mortgage Holding.

Residential Mortgage is one of the largest mortgage originators in Alaska, funding about $792 million in loans in 2013 and about $1.2 billion in 2012.

The deal is expected to close in the fourth quarter of 2014.

Northrim Bank's board of directors and Residential Mortgage Holding's owners have unanimously approved the deal. In order to ensure continuity of management of Residential Mortgage, Northrim Bank intends to offer five year employment contracts to each of the three principals of Residential Mortgage.