Bank income starts 2021 where it left off in 2020
2021 is starting to look a lot like 2020 for Alaska’s banks, which is a good thing for them, at least.
Alaska’s local and statewide banks reported consistently strong results again in the first quarter. First National Bank Alaska led the way with net income of more than $13.9 million during the period, a slight improvement over the $13.2 million netted to end 2020 and in line with the $14.1 million Alaska’s largest in-state bank made in the first quarter of last year, according to filings with the Federal Deposit Insurance Corp.
FNBA total assets also grew by 4.9 percent in the first quarter, reaching nearly $5 billion, or a 29 percent increase in the past year.
Fellow Anchorage-based statewide institution Northrim Bank reported $12.2 million in first quarter net income to FDIC officials, up from $10.1 million to end 2020 and just more than $1 million a year ago. Northrim’s quarterly profit was on the back of more than $2.3 billion in assets, which grew 10.8 percent in the quarter and have also increased by nearly 40 percent since the first quarter of 2020.
Alaska’s smaller, local banks fared much the same to start the year.
Denali State Bank netted $1.3 million in the first quarter on $397 million in total assets. A year ago, the Fairbanks-based community bank netted $552,000 in quarterly income on $306 million in assets, for 29 percent growth over the last 12 months.
Southeast’s First Bank reported total assets of more than $715 million at the end of the first quarter for growth of nearly 23 percent since March 2020, with a first quarter net income tally of more than $2.5 million compared to $843,000 a year ago, according to FDIC filings.
FNBA Chief Financial Officer Michele Schuh wrote via email that Paycheck Protection Program loans and low interest rates have continued to drive profitability across the banking sector.
The Alaska Housing Finance Corp. advertised interest rates June 1 as low as 2.25 percent for a 15-year mortgage and rates for a 30-year loan as low as 2.65 percent. The low borrowing costs have fueled a boom in home sales since being implemented early last year in an attempt to mitigate the potential economic side effects of the pandemic.
Northrim executives said in a conference call that the deposit growth should provide additional strength to future operations and PPP activity should provide another boost to the bank when more recent applications start to be forgiven in the second half of the year.
Northrim led Alaska-based banks in PPP loans, residential mortgage activity and market share growth last year, according to bank leaders. PPP loans accounted for 26 percent of the bank’s approximately $1.5 billion total loan portfolio, according to a quarterly release.
Additionally, home mortgages accounted for approximately 40 percent of Northrim’s first quarter total revenue and earnings, according to bank figures.
“It’ll be a bit of a stretch to think 2021 will have the same activity from residential mortgages as 2020 even though the first quarter was strong,” Northrim Chief Financial Officer Jed Ballard said.
Northrim CEO Joe Schierhorn noted the bank continues to grow its core loan and deposit portfolios alongside the growth more tied to outside forces, such as interest rates driving home-buying and mortgage refinance activity.
Northrim increased its net loans by 45 percent, from just more than $1 billion to more than $1.5 billion, in the past year, and 7 percent during the first quarter.
A return to more normal life post-pandemic should also encourage more traditional bank activity as federal COVID-19 aid work eventually fades, according to Schuh.
“The increasing reopening of broad business activity will help fuel the Alaska economy, leading once again to increasing loan demand, which supports strong bank performance long-term,” Schuh wrote.
Elwood Brehmer can be reached at [email protected].