News Column

Loans edge up, net income drops for Alaska-based banks

June 5, 2014

By Molly Dischner, Alaska Journal of Commerce, Anchorage

June 05--Alaska-based financial institutions posted healthy first quarter results, similar to the first quarter of 2013.

For the first quarter of 2014, Alaska-based banks saw year-over-year increases in total assets, total loans and leases, and total deposits. However, the banks also saw, on the whole, a slight decrease in net income. Collectively, net income at the Alaska-based banks at the end of the 2013 first quarter was $13.7 million compared to $11.6 million for 2014 first quarter.

More than a third of the total decrease was attributable to a $794,000 loss posted by Alaska Pacific Bank, which was acquired by Northrim Bank effective April 1.

In total, deposits in Alaska-based banks grew from $4 billion at the end of the first quarter of 2013 to $4.2 billion by March 31, 2014.

Market share information for all of the banks operating in the state is only updated annually each June 30; as of that day in 2013, Wells Fargo NA had the most deposits at $5.3 billion, or about 52 percent of the deposits in the state.

First National Bank Alaska and Northrim Bank were second and third, with $1.98 billion and $969.6 million, or about 19.5 and 9.5 percent of the market, respectively.

Deposit data is the only state-specific metric for Outside-based banks Wells Fargo and KeyBank, the latter of which was fourth behind Northrim with about $836 million in deposits as of June 30, 2013.

Loans and leases were up slightly statewide at the end of the first quarter, for a total $2.72 billion at the state's banks compared to $2.62 billion for the same quarter of the prior year, although there was a slight drop compared to the prior quarter, when the banks reported $2.73 billion in loans and leases.

Alaska's largest credit unions -- Alaska USA and Credit Union 1 -- saw similar trends, with increases in total loans and leases year-over-year, although year-to-date loans and leases were down.

At Alaska USA, total loans and leases grew by about $342 million to $3.69 billion through the first quarter of 2014. Credit Union 1 saw an increase of $49.9 million, for a total of $625.5 million in total loans and leases through the first quarter of 2014.

Both also saw an increase in assets. At Alaska USA, assets grew from $5.3 billion in the first quarter of 2013 to $5.5 billion for the first quarter of 2014. Credit Union 1's assets increased from $863.9 million at the end of the 2013 first quarter to $893.8 million for first quarter 2014.

Asset growth for banks was similar; the Alaska's state-banks posted a total $5.64 billion in assets for the first quarter of 2014, compared to $5.57 billion at the end of 2013, and $5.29 billion at the end of the 2013 first quarter.

Interior Alaska'sMt. McKinley Bank followed the trends on all of those metrics.

CEO Craig Ingham said the growth in loans and leases came from an increase in business loans.

Ingham said the housing market in Fairbanks remains somewhat soft, but there's been an increase in commercial activity in the region.

"That's helping a little bit," he said, noting that there weren't any major changes in the economy compared to 2013.

Mt. McKinley recorded $115.6 million in total loans and leases, up from $110.9 million in the first quarter of 2013.

The largest state-based banks -- First National Bank Alaska and Northrim Bank -- posted the largest changes in total loans and leases, up 5.5 and 4.7 percent year-over-year, respectively.

At FNBA, loans and leases were up both quarterly and year-over-year, with a $1.33 billion in loans for the first quarter of 2014, compared to $1.3 billion at the end of 2013 and $1.26 billion in the first quarter of 2013.

Northrim posted about a 1 percent decline in total loans and leases compared to the prior quarter, but lending activity was up 4.7 percent year-over-year, at $787.5 million compared to $752.1 million for the first quarter of 2013.

Northrim generally matched the statewide trends, but was the only bank to post an increase in net income, ending the first quarter of 2014 at $3.3 million, up from $2.98 million in the first quarter 2013.

Mt. McKinley, like other banks, had a slight decrease in net income. Ingham said the decrease from $851,000 to $778,000 was largely flat, but that the bank had slightly higher security gains and more gain from the sale of loans in the first quarter of 2013 compared to the first quarter of 2014.

First National Bank Alaska also had a decrease in net income of about 11 percent, at $7.48 million for the first quarter of 2014 compared to $8.4 million for the first quarter of 2013.

In a statement, the bank noted that loan income increased for the first quarter, but the average yield on earning assets decreased 7 basis points to 3.38 percent from an adjusted yield of 3.45 percent for the first quarter of 2013.

FNBA President Betsy Lawer was positive about the bank's overall performance, however.

"First National's ability to meet the continuing challenges of lower interest margins, increased regulatory expenses and ever-rising healthcare costs are due in large part to the financial strength of our bank," Lawer said in a statement. "This strength, backed by the local expertise our bankers have developed in the communities where they live and work, continue to be the cornerstones of our stability."

Loans around the state are also generally performing better than they have in the recent past. Most of the Alaska-based banks posted a decrease in the number of loans 30-89 days past due, several had a decrease in loans in non-accrual, and a decrease in charge-offs.

At Northrim, loans in nonaccrual dropped dramatically, from 4,292 for first quarter 2013, to 999 for first quarter 2014, driven in part by a decrease in the number of loans in nonaccrual secured by 1-4 family properties.

At Ketchikan'sFirst Bank, loans 30-89 days past due decreased from 3,210 at the end of the first quarter 2013 to 1,984 at the end of the first quarter 2014.

First Bank President William Moran said that the loans seemed to be moving from that category to getting paid off. "People paid their bills," Moran said.

Like other banks, First Bank saw an increase in total loans and leases for the first quarter, with that metric rising from about $207.1 million for first quarter 2013 to $210.1 million for first quarter 2014.

Moran said the economy seemed to be picking up a little bit, with the visitor industry in Southeast getting off to a faster start this year than in the recent past. As fishing ramps up, that will also help the bank, Moran said.

First Bank will also see a slightly changed banking dynamic in Southeast, as Northrim closed on its acquisition of Alaska Pacific BankApril 1.

But Moran said First Bank hadn't seen any impacts, and didn't anticipate any in the future, from that change.

Ingham said that the major factors for the remainder of 2014 will be whether commercial loan activity continues to grow, offsetting home mortgage loan performance, and low interest rates. Increased rates could be beneficial to the bank, he said.

"We're optimistic that our earnings for 2014, for the year, will be comparable with 2013," he said. "But we don't see a material change."

Molly Dischner can be reached at molly.dischner@alaskajournal.com.

___

(c)2014 the Alaska Journal of Commerce (Anchorage, Alaska)

Visit the Alaska Journal of Commerce (Anchorage, Alaska) at www.alaskajournal.com

Distributed by MCT Information Services


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Alaska Journal of Commerce (Anchorage)


Story Tools






HispanicBusiness.com Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters