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Loan volume on rise at banks, credit unions as economy picks up

Posted: August 7, 2013 - 1:46pm

Alaska’s financial institutions are seeing an increase in loan volume as the economy picks up.

At the state’s banks and credit unions, loans are on the rise and other performance metrics also look strong.

First National Bank of Alaska had about $1.28 billion in total loans for the second quarter of 2013, up slightly from $1.26 billion in the first quarter, and up from $1.21 billion in the second quarter of 2012.

Northrim Bank saw second quarter growth in loans, including strong mortgage origination performance for its affiliate, and an improvement in loan and asset quality.

Nonperforming assets declined to $8.1 million, or 0.7 percent of assets for the second quarter, compared to $8.9 million and 0.77 percent of assets in the first quarter of this year, and $12.5 million and 1.15 percent of assets in the second quarter of 2012.

Net loans and leases also grew on a quarterly basis at Alaska Pacific in Southeast. The bank went from about $147.2 million in loans at the end of the first quarter this year, to about $147.7 million at the end of the second quarter. That’s similar to about $147.6 million at the end of the second quarter of 2012.

Credit unions are experiencing a similar trend.

Credit Union 1 President Leslie Ellis said that institution has been focused on lending as part of its overall strategy.

That’s been largely successful, with an overall increase in real estate and total loans for the second quarter, compared to both the first quarter and the prior year.

The credit union had about $601.5 million in total loans in the second quarter of 2013, up from $575.5 million in the prior quarter and $531.1 in the second quarter of 2012.

Denali Alaskan Credit Union has experienced loan growth as well.

Total loans are at $443.3 million for the second quarter of 2013, up slightly from the first quarter, when they totaled $426.8 million, and up significantly from $399.4 million in the second quarter of 2012.

Real estate loans and unsecured loans saw the largest chunk of that growth.

Loan income at Denali Alaskan has also risen, at $12.8 million for the second quarter this year, compared to $6.3 million in the prior quarter.

Not every credit union is experiencing the increase in real estate loans, however.

Alaska USA and Spirit of Alaska both posted growth in total loans despite decreases in real estate loans.

At Alaska USA loans totaled about $3.4 billion at the end of the second quarter of this year, compared to $3.3 billion in the prior quarter, and $3.2 billion at the end of second quarter 2012.

Real estate loans, however, dropped from $681.6 million in the first quarter, to $672.1 in the second. That was a decrease from second quarter 2012, as well, when the credit union had about $713 million in real estate loans.

Spirit of Alaska also saw an increase in loans, going from $77.7 million in second quarter of 2012 to $80.1 million for the second quarter of 2013. The credit union had a quarterly rise in loans of about half a million dollars.

Real estate loans at Spirit of Alaska were down about half a million dollars compared to the prior quarter, but up a little more than one million compared to the second quarter of 2012.

Loan income at Spirit of Alaska has been in flux, with the bank taking in about $2.6 million for loan income in the second quarter of this year, compared to $1.33 million in the first quarter of 2013, but down from $2.7 million in the second quarter of 2012.

Ellis attributed that much of the loan growth to a strong local economy.

“I think in general Alaskans are more optimistic about the economy,” Ellis said.

There’s been more consumer confidence throughout the recession here than elsewhere in the country, Ellis said.

Credit Union 1 also has focused on its loans, and has worked with customers individually to consolidate debt and lower interest rates as a way to keep making loans.

Ellis said that a creative approach to lending has helped maintain the institution’s loan volume.

In a statement, Northrim’s chief executive officer, president and chairman, Marc Langland, agreed that Alaska’s economy is driving the strong loan rates, and other performance indicators for banks.

“The recently passed decrease in oil tax rates is showing early signs of success in attracting new capital for energy exploration and production in Alaska,” Langland wrote. “Major energy producers have announced plans for significant new drilling programs, which bodes well for the future health of Alaska’s economy.”

Generally, the economy is contributing to strong overall performance outside of loan growth for many of the state’s financial institutions.

Northrim saw a 7 percent increase in total revenues for the second quarter, reaching $14.6 million compared to $13.7 million in the first quarter of this year, and $14.2 million for the second quarter of 2012.

At First National Bank Alaska, interest income totaled about $49 million through the second quarter of 2013, down compared to the second quarter of 2012.

But the bank’s overall performance is strong, and First National announced July 25 that it will pay a cash dividend of $12.50 per share to shareholders on record as of Sept. 1.

Not every metric is doing well at every institution.

Credit Union 1 had a decrease in total shares and deposits for the second quarter.

The credit union had about $749.6 million for the second quarter of this year, compared to $756.9 for the first quarter. Those numbers are still up from 2012, when second quarter shares and deposits totaled $713.4 million.

Ellis said that was largely related to the bank’s better-than-expected lending.

“When that happens, the cash goes down and the loans go up,” she said.

Generally, CU1 is consistently seeing growth of about 5 percent to 6 percent, Ellis said.

At Denali Alaskan, total assets were up slightly in the second quarter.

The credit union had about $519.6 million in total assets at the end of the second quarter of this year, compared to $516.2 million at the end of the first quarter, and $484.3 million at the end of the second quarter of 2012.

Denali Alaskan also saw slight growth in shares and deposits, totaling $452.2 million for the quarter, up from $449.2 million in the prior quarter.

Alaska USA is showing less growth overall, with drops in total shares and deposits and total investments, too.

Shares and deposits were down slightly for the second quarter compared to the first, but up compared to the second quarter of 2012.

Spirit of Alaska had about $115.8 million in total shares and deposits for the second quarter of 2013, a growth of about $4 million compared to the same quarter in 2012, and about $1 million more than the prior quarter.

The state’s financial institutions are also continuing their community involvement.

Credit Union 1 has taught its Discover Financial Fitness program to 581 individuals, in 28 sessions.

Those are conducted in person also are via Skype or WebEx. Some sessions have even been taught at the Fairbanks Rescue Mission via WebEx, Ellis said.

The credit union has taught the financial literacy and budgeting program for three or four years, Ellis said, but the expansion to using the internet to reach more people has just happened within the last year.

“It’s just kind of taken off,” Ellis said. “…There’s a great need for it.”

Molly Dischner is a reporter for the Alaska Journal of Commerce. She can be reached at molly.dischner@alaskajournal.com.

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