Document:

EX-10.41

EXHIBIT 10.41

NORTHRIM BANCORP, INC.

PROFIT SHARING PLAN

1. Purpose of the Plan

The purpose of the Northrim BanCorp, Inc. Inc. Profit Sharing Plan (the “Plan”) is to increase
stockholder value and to enhance the ability of Northrim BanCorp, Inc. (the “Company”) and its
subsidiary, Northrim Bank (the “Bank”), to attract, retain and motivate employees who are expected
to contribute to the success of the Company and the Bank and to stimulate the efforts of the
employees to contribute to the continued success and growth of the Company and the Bank.

2. Definitions

The following terms as used in the Plan shall have the meanings set forth below:

(a) “Board” means the Board of Directors of the Company.

(b) “Profit Share” means the cash payment made under the Plan to a Participant for a
Performance Period.

(c) “Profit Share Pool Allocation” means the percentage of the Profit Share Pool
allocated to each Participant by the Committee for a Performance Period.

(d) “Profit Share Pool” means the amount established by the Committee for a
Performance Period.

(e) “Committee” means the Compensation Committee of the Board or a subcommittee
thereof.

(f) “Participant” means, as to any Performance Period, any employee of the Company or
the Bank who commenced employment prior to the January 1 that precedes or coincides with the start
of the Performance Period, unless an employee is expressly excluded from participation by the
Committee.

(g) “Performance Goals” means the goals and measures of Company performance or Bank
performance for a Performance Period established by the Committee. The Performance Goals may be
based on corporate financial measures on a consolidated basis, Bank basis, or business unit basis
(or a combination thereof) as the Committee shall determine in its discretion.

(h) “Performance Period” means the Company’s fiscal year or shorter period selected by
the Committee.

(i) “Performance Rating Factor” means the adjustment factor that shall be applied to
each Participant’s Profit Share Pool Allocation based on the Participant’s performance rating
during the Performance Period.

3. Administration

(a) The Plan shall be administered by the Committee. The Committee shall have full power and
authority to: (i) designate the length of the Performance Period; (ii) designate any employees who
will not be Participants for a particular Performance Period; (iii) establish the Profit Share Pool
formula for the Performance Period; (iv) determine the Performance Goals used in the Profit Share
Pool formula for the Performance Period; (v) determine the initial and final Profit Share
Allocations for Participants for the Performance Period; (vi) determine the Performance Rating
Factor that should be used for each level of individual performance during the Performance Period;
(vii) determine the Profit Share payable for the Performance Period, including the effect of the
termination of a Participant’s employment during the Performance Period; (viii) establish any other
terms and conditions of each Profit Share; (ix) construe, interpret and administer the Plan and any
agreement or other document in connection with the Plan; (x) adopt, amend, suspend, waive or
rescind such rules as it shall deem necessary or desirable for the administration of the Plan;
(xi) correct any defect or supply any omission or reconcile any inconsistency in the manner and to
the extent that the Committee shall deem desirable to carry it into effect; and (xii) make any
other determinations and take any other action that the Committee deems necessary or desirable for
the administration of the Plan.

(b) All designations, determinations, interpretations and other decisions under or with
respect to the Plan by the Committee shall be final, conclusive and binding on all persons,
including the Company, the Bank and Participants (and their legal representatives and
beneficiaries, and any person claiming a benefit or right under the Plan).

(c) The Committee may in its discretion delegate to officers of the Company or the Bank the
authority to take actions on its behalf pursuant to the Plan.

4. Eligibility

All employees of the Company and the Bank who commenced employment prior to the January 1 that
precedes or coincides with a Performance Period are eligible and will participate in the Plan
during the Performance Period, unless the Committee designates the employee as ineligible, which
the Committee may do, in its complete discretion.

5. Profit Share Provisions

(a) Annual Designations. Within 120 days following the beginning of each fiscal year,
the Committee shall designate (i) one or more Performance Periods for the fiscal year, (ii) assign
to each Participant an initial Profit Share Pool Allocation for each Performance Period based on
responsibility level (which assignment may be done by assigning a Profit Share Pool Allocation to a
class or grouping of employees), (iii) establish the Performance Rating Factor that should be used
for each level of individual performance during the Performance Period, and (iv) establish the
formula for determining the Profit Share Pool for each Performance Period, including the
Performance Goal(s) used in the formula. The following example illustrates how the process might
work.

Example 1

Assume that during the first quarter of the 2012 fiscal year the Committee makes the following
designations:

	•	 	Performance Period – the full fiscal year

	•	 	Participants – all eligible employees, as listed on a schedule

	•	 	Initial Profit Share Pool Allocations – percentages listed on a schedule for each
Participant or groupings of Participants, which range between 0.5% and 4%

Note that these initial allocation percentages may be modified by the Committee, in its
discretion, when the Profit Share Pool Allocation is finalized, based on each
Participant’s base salary and Performance Rating Factor.

	•	 	Profit Share Pool formula – based on the Company’s consolidated return on average assets
calculated using net after tax income, excluding the after tax effect of any profit sharing
accrual, divided by average assets (ROA ) and pre-tax income, which excludes any accrual for
the Profit Share Pool, as follows:

	 	 	 
	ROA	 	Profit Share Pool
	<0.75%
	 	0

	0.75% to 1.0%
	 	5% of pre-tax income

	>1.0% to 1.25%
	 	5% of pre-tax income + 3% of pre-tax income in excess of 1%

ROA and not greater than 1.25%

	>1.25%
	 	No additional amount

	 
	 	 

(b) Balance Sheet Quality Requirements. In order for there to be a Profit Share
Pool for a Performance Period, the Committee must determine that the Company and the Bank (i) meet
the regulatory definition of being well capitalized and (ii) have adversely classified assets to
total risk-based capital of 35% or less at the end of the Performance Period. The Committee will
make these determinations in its complete discretion.

(c) Profit Share Determinations. If the Committee determines the regulatory
requirements in paragraph (b) of this Section have been satisfied, then as soon as reasonably
practicable after the end of a Performance Period the Committee will determine:

(i) The size of the Profit Share Pool;

(ii) The Participant’s final Profit Share Pool Allocation for the Performance Period, based on
the initial Profit Share Pool Allocation as adjusted by the Committee for various factors,
including (but not limited to) the weighted factors of the Participant’s actual base salary paid
during the Performance Period and Performance Rating Factor; provided, however, that no
final Profit Share Pool Allocation shall exceed 7.5% of the Profit Share Pool for any Performance
Period and the aggregate amount of all final Profit Share Pool Allocations for any Performance
Period shall not exceed 100% of the Profit Share Pool for the Performance Period; and

(iii) Each Participant’s Profit Share, by multiplying the Profit Share Pool by the
Participant’s final Profit Share Pool Allocation for the Performance Period; provided,
however, no payment to any one Participant shall exceed 50% of base salary.

Notwithstanding the foregoing (a) the Committee shall have the discretion to eliminate or reduce
the Profit Share that otherwise would be payable to a Participant, based on such factors as deemed
appropriate by the Committee, and (b) in no event may more than 25% of the Profit Share Pool for
the Performance Period be payable in the aggregate to the executive officers of the Company. In
applying adjustments, the Committee has complete discretion. The following example illustrates how
the process might work.

Example 2

In addition to the assumptions in Example 1, assume the following for the 2012 Performance Period:

	•	 	The Committee deemed the regulatory requirements in paragraph (b) of this Section to have
been met.

	•	 	ROA = 0.9%

	•	 	Pre-tax income = $13,800,000

	•	 	Final Profit Share Pool Allocations of 1% for Mr. A and 4% for Ms. B

These percentages reflect the initial Profit Share Pool Allocations, which were then
adjusted based on each Participant’s base salary and Performance Rating Factor for the
performance period.

As a result:

	•	 	Profit Share Pool: 5% x $13,800,000 = $690,000

	•	 	Final Profit Share Pool Allocation for Mr. A: 1% x $690,000 = $6,900

	•	 	Final Profit Share Pool Allocation for Ms. B: 4% x $690,000 = $27,600

	•	 	Maximum aggregate payments to executive officers: 25% x $690,000 = $172,500

Payment of Profit Shares. No Profit Share payments will be effective unless they are
approved by the Board. Profit Shares under the Plan shall be paid to the Participants in cash in a
single lump sum within two and one-half months following the end of the Company’s fiscal year in
which the Performance Period ends; provided, however, that to the extent a Participant is
eligible to participate in the Northrim Bank Deferred Compensation Plan, and has made an election
that complies with that plan and Section 409A of the Internal Revenue Code of 1986, as amended,
then payment will occur pursuant to that plan and Section 409A.

(d) Termination of Employment. In the event a Participant’s employment with the
Company terminates for any reason before payment of a Profit Share for a Performance Period, the
Participant shall have no further rights under the Plan and shall not be entitled to payment of any
Profit Share under the Plan, except a Participant will not forfeit rights under the Plan if the
early termination was due to death, disability or retirement. For these purposes “disability”
means the Participant is either: (i) Unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be expected to result
in death or can be expected to last for a continuous period of not less than twelve (12) months; or
(ii) by reason of any medically determinable physical or mental impairment, which can be expected
to result in death or can be expected to last for a continuous period of not less than twelve (12)
months, receiving income replacement benefits for a period of not less than three (3) months under
an accident or health plan covering employees of the Company. In addition, “retirement” means a
termination of employment on or after age 65.

6. Amendment and Termination of the Plan

The Board may, in its sole discretion, from time to time amend, alter, suspend, discontinue or
terminate the Plan; provided, however, that, without the consent of the Participant, no amendment,
alteration, suspension, discontinuation or termination of the Plan may materially and adversely
affect the rights of such Participant under any Profit Share Allocation granted to the Participant
for a Performance Period.

7. Generally Applicable Provisions

(a) No Transferability. No Profit Share granted under the Plan nor any other rights
acquired by a Participant under the Plan shall be assignable or transferable by a Participant,
other than by a will or the laws of descent and distribution, and no Profit Share under the Plan
shall be subject in any manner to anticipation, pledge, encumbrance, charge, garnishment, execution
or levy or lien of any kind, whether voluntary or involuntary, and any attempt contrary thereto
shall be void.

(b) Designation of Beneficiary. Subject to applicable law, each Participant shall
have the right to file with the Company a written designation of one or more beneficiaries who
shall be entitled to receive the amount, if any, payable under the Plan pursuant to a Profit Share
upon the Participant’s death. A Participant may from time to time revoke or change a beneficiary
or beneficiaries by filing a new designation with the Company. The last such designation received
by the Company shall be controlling; provided, however, that no designation, change or revocation
thereof shall be effective unless received by the Company prior to the Participant’s death, and in
no event shall it be effective as of a date prior to receipt. If no such beneficiary designation
is in effect at the time of a Participant’s death, or if no designated beneficiary survives the
Participant, or if such designation conflicts with law, the payment of the amount, if any, payable
pursuant to a Profit Share under the Plan upon the Participant’s death shall be made to the
Participant’s estate by the Committee. If the Committee is in doubt as to the right of any Person
to receive any amount, then the Committee may retain such amount, without liability for any
interest thereon, until the rights thereto are determined, or the Committee may pay such amount
into any court of appropriate jurisdiction or to the estate of the Participant, in which event the
Company and the Committee shall have no further liability to any Person with respect to such an
amount.

(c) No Right to Profit Share. Nothing in the Plan shall be construed as giving any
Participant, employee or other person any right to claim to a Profit Share under the Plan, or to be
treated uniformly with other Participants and employees.

(d) Tax Withholding. The Company and the Bank are authorized to withhold from any
Profit Share granted or any payment due under the Plan all applicable federal, state and local
income, employment and other taxes due with respect to a Profit Share. The Company and the Bank
shall also have the right to withhold from other compensation or amounts payable to the Participant
the taxes required by law, or to otherwise require the Participant to pay such withholding taxes.

(e) No Right to Employment. Nothing contained in the Plan shall, and no grant of any
Profit Share shall be construed to (i) confer upon any Participant any right to continue in
employment with the Company or the Bank or (ii) interfere in any way with the right of the Company
or the Bank to terminate any Participant’s employment at any time.

(f) Unfunded Status of Profit Shares. Each Profit Share payable under the Plan shall
be paid solely from the general assets of the Company or the Bank. The Plan is intended to
constitute an “unfunded” plan for incentive compensation, and nothing contained in the Plan shall
give any such Participant any rights that are greater than those of a general unsecured creditor of
the Company and the Bank.

(g) Governing Law. The validity, interpretation, construction and effect of the Plan
and any rules relating to the Plan shall be governed by the laws of the State of Alaska, without
regard to provisions governing conflicts of laws.

(h) Severability. If any provision of the Plan shall be held unlawful or otherwise
invalid or unenforceable in whole or in part by a court of competent jurisdiction, such provision
shall (i) be deemed limited to the extent that such court of competent jurisdiction deems it
lawful, valid and/or enforceable and as so limited shall remain in full force and effect, and
(ii) not affect any other provision of the Plan or part thereof, each of which shall remain in full
force and effect. If the making of any payment or the provision of any other benefit required
under the Plan shall be held unlawful or otherwise invalid or unenforceable by a court of competent
jurisdiction, such unlawfulness, invalidity or unenforceability shall not prevent any other payment
or benefit from being made or provided under the Plan, and if the making of any payment in full or
the provision of any other benefit required under the Plan in full would be unlawful or otherwise
invalid or unenforceable, then such unlawfulness, invalidity or unenforceability shall not prevent
such payment or benefit from being made or provided in part, to the extent that it would not be
unlawful, invalid or unenforceable, and the maximum payment or benefit that would not be unlawful,
invalid or unenforceable shall be made or provided under the Plan.

(i) Limitation of Liability; Indemnification. The Committee and each member thereof
shall be entitled to, in good faith, rely or act upon any report or other information furnished to
him or her by any officer or employee of the Company or the Bank, the Company’s independent
auditors, legal counsel, consultants or any other agents assisting in the administration of the
Plan. Members of the Committee, and any officer or employee of the Company or the Bank acting at
the direction or on behalf of the Committee, shall not be personally liable for any action or
determination taken or made in good faith with respect to the Plan, and shall, to the extent
permitted by law, be fully indemnified and protected by the Company with respect to any such action
or determination.

Each member of the Committee shall be indemnified and held harmless by the Company against and
from any loss, cost, liability or expense that may be imposed upon or reasonably incurred by him or
her in connection with or resulting from any claim, action, suit or proceeding to which he may be
made a party or in which he may be involved by reason of any action taken or failure to act under
the Plan and against and from any and all amounts paid by him or her in settlement thereof, with
the Company’s approval, or paid by him or her in satisfaction of any judgment in any such action,
suit or proceeding against him or her, provided he or she shall give the Company an opportunity, at
its own expense, to handle and defend the same before he or her undertakes to handle and defend it
on his or her own behalf. The foregoing right of indemnification shall not be exclusive and shall
be independent of any other rights of indemnification to which such persons may be entitled under
the Company’s Certificate of Incorporation or By-laws, by contract, as a matter of law, or
otherwise.

(j) Costs and Expenses. The costs and expenses of administering the Plan shall be
borne solely by the Company.

(k) Requirements of Law. The Plan and all Profit Shares under the Plan shall be
subject to all applicable laws, rules and regulations, and to any required approvals by
governmental agencies.

(l) Clawback. Notwithstanding any provision of this Plan to the contrary, in the
event that (i) (A) the Company is required to prepare an accounting restatement due to material
noncompliance with financial reporting requirements under federal law or (B) a miscalculation is
made in the determination of the Profit Share payable to a Participant and (ii) as a result the
Profit Share paid to an executive officer of the Company is in excess of the amount that would have
been paid under the restatement or if there had been no miscalculation during the three years prior
to the restatement or miscalculation, the executive officer will be required to repay to the
Company, the excess amount of any Profit Share payable for such three-year period.

(m) Headings. Headings are given to the sections and subsections of the Plan solely
as a convenience to facilitate reference. Such headings shall not be deemed in any way material or
relevant to the construction or interpretation of the Plan or any provision thereof.

8. Effective Date

The Plan shall be effective as of December 31, 2011.2012 Director Compensation and Travel Expense Policy

Board Approved 11-17-11

Federal Home Loan Bank of Indianapolis
Directors' Compensation and Travel Expense Reimbursement Policy
Effective January 1, 2012
    

Annual Director Fees

The annual director fees are generally split in half in the form of an annual retainer fee with the other half being paid based on attendance. The retainer and attendance fees will be paid quarterly, on or about the end of each quarter. The director will be paid a per-day fee for each day a director spends at an in-person meeting of the Board or its committees. The annual fee schedule for 2012 represents reasonable compensation and expense reimbursement based on market comparable data for directorships, including other Federal Home Loan Banks.  The fee schedule is summarized as follows:

	
					
	 
	Total Estimated Annual Fee*
	Quarterly 
Retainer
	Per-Day Attendance Fee
	Additional Annual Committee Chair Fees

	Chair
	$100,000
	$12,500
	$4,167
	$10,000 Finance Committee

	Vice Chair
	$85,000
	$10,625
	$3,542
	$10,000 Audit Committee

	Director
	$75,000
	$9,375
	$3,125
	$10,000 Other Committees

*Third or fourth quarter payments may be reduced because payments are subject to the annual cap.  The cap is determined based on director status and committee chair assignments throughout the year.    

The annual director fees are established based on an evaluation of McLagan market research data and a fee comparison among the FHLBanks.  It is also based on the Bank's ability to recruit and retain highly qualified directors with particular emphasis on retaining directors during conditions of economic stress for the Bank and the industry.
    
Per-Day Fees Defined

Per-day attendance fee will be paid for each day, or partial day, that a director attends an in-person meeting of the Board or its committees. Per-day fee payments will also include pre-scheduled director orientations and FHLBank System meetings, including the Council of FHLBanks. Bank webinar meetings and member marketing meetings are not included in the per-day fee.  Cancellations by the Bank due to inclement weather or other circumstances beyond a director's control (except illness) will be reimbursed as a regular per-day meeting fee.

Except as provided below, attendance by conference call for Board or committee meetings will not be eligible for reimbursement.

Timing of Fee Payments

Fees shall be paid quarterly on or about the last day of each March, June, September and December and shall be paid to the Director upon timely election by the Director, or to the Director's employer pursuant to the terms of the employer's authorized charitable contribution plan.  Annual Committee Chair 

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fees shall be paid pro-rata on a quarterly basis, and to be eligible for a Committee Chair fee the Director must be designated by the Board as Chair as of the last day of the quarter.  Directors retiring or resigning from the Board shall be entitled to a pro-rata payment (measured monthly) of their quarterly retainer. 

Attendance Hardship Provision

If a director is unable to attend enough of the meetings of the Board or its committees in order to receive the full annual fee payment, the director may petition the Board for consideration of payment based on hardship. The Human Resources committee will review the petition and will make recommendation to the Board on whether to make a hardship payment. Hardship will not include other ordinary business commitments. The Board and Human Resources committee will consider such petitions on a case-by-case basis.

As part of the hardship provision, the Board may reimburse attendance for Board or committee meeting conference calls (limited to $250 per call per day) and other special meetings attended on behalf of the Bank throughout the year, subject to the annual director fee limit.

Travel Expense Reimbursement

Travel expense reimbursement will be provided for Board meetings, committee meetings, director orientation, director educational seminars, or member events scheduled concurrently with board meetings, Federal Housing Finance Agency System meetings, Council of Federal Home Loan Bank meetings, Community Investment Conference meetings, or Bank marketing meetings. Travel expenses include reasonable transportation, food, hotel expenses, and reasonable long-distance telephone and internet charges.

Expense Procedures

		
	1.
	No gift or entertainment expenses initiated by a director shall be reimbursed without being prearranged by the Bank.  Each director should review the Bank's Code of Conduct concerning gift and entertainment restrictions.

		
	2.
	To qualify for reimbursement, all eligible expenses incurred must be submitted for payment to the Bank within 3 months of the date that the expenses were incurred.  This requirement may be waived, at the discretion of the Chief Accounting Officer, in the event of an error or omission or other reasonable circumstances.

Spouse/Guest Travel (Two Events per Year)

Expenses of a director's spouse or guest may be reimbursed in accordance with the Travel Expense Policy subject to a limit of two travel events per year.  Spousal entertainment expenses incidental to the hotel property or event are permitted where prearranged by the Bank, subject to two travel events per year.  Income tax reporting will be made by the Bank as required by law, on spousal/guest travel if the spouse or guest attends the event without a bona fide Bank business purpose.

Air Travel and First Class

		
	1.
	     The Bank will pay the direct common carrier expense (as defined in paragraph 4 below) for a 

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director between the director's residence and the site of a Bank function and the return.  The actual cost of private air travel will not be reimbursed, but the equivalent direct common carrier expense (as defined in paragraph 4 below) may be substituted. 

		
	2.
	First-class air travel will be reimbursed at the regular coach rate, unless the upgrade was necessary due to scheduling or flight availability.

		
	3.
	If a director's non-Bank activity requires a route to attend a Bank function which originates or terminates in a location other than the place of residence, the Bank will reimburse the director an amount equal to the direct common carrier expense from the director's location to the location of the Bank function and then to the director's next intended destination (without regard to stops named as temporary layovers), subject to a limit of an amount not to exceed two times the direct common carrier expense to the Board meeting location and from the director's residence and return to his residence.

		
	4.
	The “direct common carrier expense” shall be the regular market-rate coach or first-class fare if applicable, and should be documented by the director submitting an expense report.  The direct common carrier expense will also include any reasonable fees associated with air travel, including baggage fees and airport fees. These items should be documented by the director and included in the expense report. Travel scheduling affecting the direct common carrier expense shall be reasonable, given the timing of the meetings.  

Issues of Interpretation

Unless expressly provided herein or in 12 CFR Part 1261.20-24 (as amended), the Bank's current Travel Policy as contained in the Employee Handbook shall control with respect to the travel expense reimbursement.  The Federal Housing Finance Agency's former Director Travel Policy (FHFB Resolution 93-12) is superseded, but may be used as non-binding precedent should issues of interpretation arise. The General Counsel, and Chief Accounting Officer are authorized, in their respective reasonable discretion, to interpret the provisions of the policy and to address situations not anticipated by the policy, consistent with the requirements set forth in the statute or the regulations promulgated by the Federal Housing Finance Agency.

 
Human Resources Committee Annual Review and Reporting

The Human Resources Committee shall annually review this policy and shall submit its recommendation to the Board for approval no later than the last regularly scheduled meeting of the Board for the year. Per 1261.22, the Board shall also submit the annually adopted Directors' Compensation and Travel Expense Reimbursement Policy and supporting decisional documentation to the Federal Housing Finance Agency Director within ten days of Board approval, no later than December 31 of each calendar year and at least 30 days prior to disbursing the first payment to any directors. 

In addition, per 1261.21, no later than the tenth business day of each calendar year, the Bank shall report to the Finance Agency the amount of compensation and expenses paid to each director, along with the total number of meetings held by the Board and its designated committees, and the number of Board and designated committee meetings each director attended in-person or through electronic means for the immediately preceding calendar year.  

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