First National Bank Alaska’s (OTCQX:FBAK) unaudited net income for third quarter 2020 was $15.6 million, or $4.91 per share. This compares to net income of $14.8 million, or $4.68 per share, for the same period in 2019. Unaudited year-to-date net income was $44.3 million, or $13.98 per share, compared to net income of $41.4 million, or $13.07 per share for the same period in 2019.
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Financial Overview (Unaudited)
Net interest and loan fee income for third quarter 2020 was $36.6 million, an increase of 5.3% from third quarter 2019. This improvement came about through lower cost of funds and a $195 million increase in average earning assets during the third quarter. Total assets increased $910.4 million year-to-date to reach $4.72 billion at September 30, 2020. Gross loans increased $278.5 million to $2.29 billion during the year.
Support for Alaskans during the COVID-19 pandemic was demonstrated by the bank’s continuing participation in the Small Business Administration Paycheck Protection Program (SBA PPP). For the quarter, the bank originated 308 SBA PPP loans, bringing the number of originated loans to 2,464, totaling $344.7 million with an anticipated weighted average origination fee of 3.73% as of September 30, 2020.
Deposits and repurchase agreements increased $131.3 million to $4.07 billion during the quarter. This increase was due mainly to additional PPP and CARES Act stimulus to governmental entities and Native tribes, increased savings rates of businesses and individuals as well as continued growth from organic business development efforts.
First National continued to help meet the financial challenges of Alaskans during the pandemic through modifications of existing loan terms. Loan modifications as of September 30, 2020 totaled $416.9 million, or 21.35% of total loans, excluding SBA PPP loans. Modification to interest-only payments accounted for more than 80% of the modifications, with interest-only periods ranging from three to fourteen months. Modifications remain concentrated in commercial real estate loans to customers in the rental and leasing and hotel and food service industries.
At September 30, 2020 delinquent loans from 30 to 89 days were $3.9 million, 0.20% of outstanding loans excluding SBA PPP loans, a decrease of $11.7 million from June 30, 2020. Nonperforming loans were $13.0 million, 0.67% of outstanding loans excluding SBA PPP loans, showing no change from the prior quarter. The allowance for loan losses at September 30, 2020 was $21.6 million, 0.94% of total loans (1.10% of loans excluding SBA PPP).
Noninterest income for third quarter 2020, excluding realized investment gains and losses, increased 8.3% from third quarter 2019 on elevated mortgage loan originations driven by the significant decrease in market interest rates. Noninterest expenses for third quarter 2020 increased 5.6% as compared to third quarter 2019 on increases in salary and benefit expenses. The efficiency ratio improved to 51.74% on current revenue growth, compared to 52.77% in 2019.
The blended yield on interest-earning assets decreased from 4.16% to 3.67% for the nine-month periods ending September 30, 2020 and 2019, respectively. Lower yields on earning assets resulted from variable loan repricing, addition of SBA PPP loans, and significant cash balances and short-term investments held on strong deposit inflows with uncertain timing of outflow. The cost to fund earning assets for the same nine-month comparative periods decreased faster from 0.44% to 0.11%. As a result, the net interest margin year-to-date moved to 3.56% compared to 3.72% in 2019. Return on assets for the nine months ended September 30, 2020 decreased from 1.47% in 2019 to 1.40%. Return on equity of 10.27% for the first nine months of 2020 decreased from 10.49% in the same period in 2019 on an increase in total shareholders’ equity of $37.7 million to $585.4 million. Book value per share as of September 30, 2020 was $184.86, compared with $172.24 and $172.91 as of September 30, 2019 and December 31, 2019, respectively. The bank’s September 30, 2020 Tier 1 leverage capital ratio of 11.63% remains above well capitalized standards.
First National Bank Alaska files a quarterly financial report with the Federal Financial Institution Examination Council. Our latest Consolidated Report of Condition and Income (Call Report) is filed by the 30th of the month following quarter-end and is subsequently posted at www.FNBAlaska.com > Financial Reports and at www.OTCMarkets.com.
Alaskan-owned and -operated since 1922, First National proudly meets the financial needs of Alaskans with ATMs and branches in 18 communities throughout the state, and by providing banking services to meet their needs across the nation and around the world. In 2020, Alaska Business readers voted the bank the "Best of Alaska Business" in the Best Place to Work category for the fifth year in a row. American Banker recognized First National as a "Best Bank to Work For" for the third year in a row in 2020, and Anchorage Daily News readers voted the bank one of the state’s top three financial institutions in the ADN "Best of Alaska" Awards in 2019. First National has also been recognized as the most admired company in the state by MSN.com and received the Rita Sholton Large Business of the Year Award from the Alaska Chamber.
Visit FNBAlaska.com for more information about Alaska’s largest locally owned bank and access to efficient and secure online banking services. First National Bank Alaska is a Member FDIC and Equal Housing Lender.
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Cheri Gillian, (907) 777-3409