Northrim Bancorp (NRI) Risk Analysis

The Merger Agreement prohibits Northrim from soliciting, initiating, knowingly encouraging, or knowingly facilitating certain third-party acquisition proposals. These provisions might discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of Northrim from considering or proposing such an acquisition.

Uncertainty about the effect of the Mergers on employees and customers may have an adverse effect on Northrim. These uncertainties may impair Northrim's ability to attract, retain and motivate key personnel until the Mergers are completed, and could cause customers and others that deal with Northrim to seek to change existing business relationships with Northrim. In addition, subject to certain exceptions, Northrim has agreed to operate its business in the ordinary course prior to closing in all material respects. These restrictions may prevent Northrim from pursuing attractive business opportunities that may arise prior to the completion of the Mergers.

Both Northrim and PBCO will incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the Merger Agreement. These costs include legal, financial advisory, accounting, consulting, and other advisory fees, retention, severance and employee benefit-related costs, public company filing fees and other regulatory fees, financial printing and other printing costs, closing, integration, and other related costs. Some of these costs are payable by Northrim regardless of whether or not the Mergers are completed.

The Merger Agreement is subject to a number of conditions which must be fulfilled in order to complete the Mergers. Those conditions include, among other things: (i) approval by each of the Company's shareholders and the PBCO shareholders of certain matters relating to the Mergers at each company's respective special meeting; (ii) the receipt of required regulatory approvals, including the approval of the Federal Reserve, the FDIC, the Oregon Department of Consumer and Business Services, Division of Financial Regulation; and the Alaska Department of Commerce, Community, and Economic Development, Division of Banking and Securities; and (iii) the absence of any order, injunction, decree, or other law preventing or making illegal the completion of the Mergers, the Bank Merger or any of the other transactions contemplated by the Merger Agreement. Each party's obligation to complete the Merger is also subject to certain additional customary conditions, including (a) subject to applicable materiality standards, the accuracy of the representations and warranties of the other party, (b) the performance in all material respects by the other party of its obligations under the Merger Agreement and (c) the receipt by each party of an opinion from its counsel to the effect that the Mergers should qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986. These conditions to the closing of the Mergers may not be fulfilled in a timely manner or at all, and, accordingly, the Mergers may not be completed. In addition, the parties can mutually decide to terminate the Merger Agreement at any time, before or after the requisite shareholder approvals, or Northrim or PBCO may unilaterally elect to terminate the Merger Agreement in certain other circumstances.

If the Mergers are not completed for any reason, including as a result of Northrim shareholders or PBCO shareholders failing to approve certain matters in connection with the Mergers at each company's respective special meeting, there may be various adverse consequences and Northrim may experience negative reactions from the financial markets and from its customers and employees. For example, Northrim's business may have been impacted adversely by the failure to pursue other beneficial opportunities due to the focus of management on the Mergers, without realizing any of the anticipated benefits of completing the Mergers. Also, Northrim has devoted significant internal resources to the pursuit of the Mergers and the expected benefit of those resource allocations would be lost if the Mergers are not completed. Additionally, if the Merger Agreement is terminated, the market price of Northrim's common stock could decline to the extent that current market prices reflect a market assumption that the Mergers will be beneficial and will be completed. Northrim also could be subject to litigation related to any failure to complete the Mergers or to proceedings commenced against Northrim to perform its obligations under the Merger Agreement.