ANCHORAGE, Alaska, July 31, 2023 (GLOBE NEWSWIRE) -- First National Bank Alaska's (OTCQX:FBAK) net income for the second quarter of 2023 was $14.5 million, or $4.57 per share. This compares to a net income of $14.4 million, or $4.54 per share, for the same period in 2022. Year-to-date net income was $27.9 million, or $8.81 per share, compared to $28.2 million, or $8.91 per share for the same period in 2022.
Assets totaled $5.5 billion as of June 30, 2023, increasing $168.2 million during the first half of the year. Return on assets for the year was 1.01%, 2 basis points lower from the same period last year when total assets were lower by $132.9 million. Growth in assets in 2023 was supported by borrowing under the Federal Reserve Bank Term Funding Program outlined below.
Total loans increased $122.3 million year-over-year. On June 30, 2023, delinquent loans from 30 to 89 days were $3.9 million, 0.17% of outstanding loans compared to 0.23% on June 30, 2022. Nonperforming loans were $4.8 million, 0.21% of outstanding loans, a decrease of $1.6 million from June 30, 2022. The allowance for credit losses on June 30, 2023, was $18.9 million, 0.82% of total loans.
Deposits and repurchase agreements totaled $4.5 billion as of June 30, 2023, compared to $4.9 billion as of June 30, 2022 and December 21, 2022. Second quarter net deposit outflow of $144.3 million was lower than first quarter. Year-to-date net outflow totaled $378.7 million. More than 70% of the pandemic period deposit growth remains at the bank.
Interest and fees on loans increased $14.9 million, interest and dividends on investment securities increased $4.6 million, and interest on cash increased $7.0 million year-over-year, driven by the higher interest rate environment and volume growth in average loans and cash balances during the period. The year-to-date net interest margin increased to 2.77% compared to 2.62% for the six months ending June 30, 2022. The blended yield on interest-earning assets increased to 3.66% from 2.70% for the year-to-date periods ending June 30, 2023 and 2022, respectively. Interest expense increased $22.0 million year-over-year as the cost of interest-bearing deposits as a percentage of earning assets increased to 0.79% from 0.09% compared to the same period last year.
Year-to-date noninterest income totaled $12.1 million compared with $12.4 million as of June 30, 2022. The slight decrease in noninterest income is attributed to realized losses on available-for-sale securities of $0.3 million taken in the first quarter of 2023. Noninterest expenses for the first half of 2023 increased 8.45% over the first half of 2022. Salaries and employee benefits increased year-over-year on market wage adjustments delivered to employees during the second half of 2022. Other noninterest expenses are higher due to increased operating expenses in software licensing, deposit insurance premiums, and increased check fraud activity.
"First National has unique advantages in meeting the uncertainties of Alaska economic development," said Betsy Lawer, Board Chair and CEO/President. "More than a century of experience gives us the foresight to see the opportunities and challenges ahead, the resources to respond to those challenges, and the flexibility and innovation to overcome the unexpected. We're ready and able to help Alaskans shape a brighter tomorrow."
The bank borrowed $180 million under the Federal Reserve Bank Term Funding Program in May, bringing the total borrowing to $530 million as of June 2023. All borrowing under this Program was matched in volume to maturing securities over the borrowing term to provide repayment in March and May of 2024. The borrowed funds remained in cash balances as of June 30 and benefited net interest margin through the spread in cash yield over the borrowing cost. The bank continues to maintain ample liquidity for operations and future growth through the combination of cash, unpledged securities, and borrowing facilities with the Federal Reserve and the Federal Home Loan Bank of Des Moines.
Shareholders' equity was $424.3 million as of June 30, 2023, compared to $407.6 million as of December 31, 2022, an increase of $16.7 million resulting from a decrease in the unrealized loss position of the securities portfolio. Return on equity as of June 30, 2023, increased to 13.29% compared to 11.49% for the same period last year. Book value per share as of June 30, 2023 was $133.97, compared to $128.69 as of December 31, 2022. The bank's June 30, 2023 Tier 1 leverage capital ratio of 10.01% remains above well-capitalized standards.
ABOUT FIRST NATIONAL BANK ALASKA
First National Bank Alaska files a quarterly financial report with the Federal Financial Institution Examination Council. The bank's latest Consolidated Report of Condition and Income (Call Report) is filed by the 30th of the month following quarter-end and is subsequently posted at FNBAlaska.com and at OTCMarkets.com.
Alaska's community bank since 1922, First National proudly meets the financial needs of Alaskans with ATMs and 28 locations in 19 communities throughout the state, and by providing banking services to meet their needs across the nation and around the world.
In 2023, Alaska Business readers voted the bank the "Best of Alaska Business" in the Best Place to Work category for the eighth year in a row, Best Bank/Credit Union for the third time running, and Best Corporate Citizen for a fourth time. American Banker recognized First National in 2022 as a "Best Bank to Work For" for the fifth year running. In the same year, Anchorage Daily News readers voted the bank one of the state's top three financial institutions for the fourth year in a row in the ADN "Best of Alaska" Awards.
First National Bank Alaska is a Member FDIC and Equal Housing Lender.
| Financial Overview (Unaudited) | Quarter Ended ($ in thousands) | ||||||||||||||
| 6/30/2023 | 3/31/2023 | 12/31/2022 | 9/30/2022 | 6/30/2022 | |||||||||||
| Balance Sheet | |||||||||||||||
| Total Assets | $ | 5,505,931 | $ | 5,473,245 | $ | 5,337,737 | $ | 5,502,968 | $ | 5,373,051 | |||||
| Total Securities | $ | 2,413,791 | $ | 2,606,018 | $ | 2,815,357 | $ | 2,863,905 | $ | 2,817,076 | |||||
| Total Loans | $ | 2,294,558 | $ | 2,283,553 | $ | 2,227,047 | $ | 2,169,670 | $ | 2,172,230 | |||||
| Total Deposits | $ | 3,874,988 | $ | 3,989,843 | $ | 4,224,857 | $ | 4,383,798 | $ | 4,161,642 | |||||
| Repurchase Agreements | $ | 642,114 | $ | 671,532 | $ | 670,974 | $ | 696,779 | $ | 748,316 | |||||
| Total Deposits and Repurchase Agreements | $ | 4,517,102 | $ | 4,661,375 | $ | 4,895,831 | $ | 5,080,577 | $ | 4,909,958 | |||||
| Total Borrowing | $ | 530,000 | $ | 350,000 | $ | - | $ | - | $ | - | |||||
| Unrealized gain (loss) on marketable securities, net of tax | $ | (137,198 | ) | $ | (128,594 | ) | $ | (146,279 | ) | $ | (170,608 | ) | $ | (109,987 | ) |
| Total Shareholders' Equity | $ | 424,274 | $ | 428,555 | $ | 407,550 | $ | 389,118 | $ | 444,218 | |||||
| IncomeStatement | |||||||||||||||
| Net Interest and Loan Fee Income | $ | 37,011 | $ | 37,771 | $ | 38,194 | $ | 36,987 | $ | 35,489 | |||||
| Provision for Loan losses | $ | (349 | ) | $ | 600 | $ | (276 | ) | $ | (1,129 | ) | $ | 472 | ||
| Total Noninterest Income | $ | 6,646 | $ | 5,484 | $ | 5,916 | $ | 6,335 | $ | 6,736 | |||||
| Total Noninterest Expense | $ | 24,210 | $ | 24,392 | $ | 24,952 | $ | 23,306 | $ | 22,554 | |||||
| Provision for Income Taxes | $ | 5,339 | $ | 4,809 | $ | 5,063 | $ | 5,490 | $ | 4,826 | |||||
| Net Income | $ | 14,457 | $ | 13,454 | $ | 14,371 | $ | 15,655 | $ | 14,373 | |||||
| Earnings per common share | $ | 4.57 | $ | 4.25 | $ | 4.54 | $ | 4.94 | $ | 4.54 | |||||
| Dividend per common share | $ | 3.20 | $ | 3.20 | $ | 6.40 | $ | 3.20 | $ | 3.20 | |||||
| Financial Measures | |||||||||||||||
| Return on Assets | 1.01 | % | 0.98 | % | 1.04 | % | 1.05 | % | 1.03 | % | |||||
| Return on Equity | 13.29 | % | 12.87 | % | 12.83 | % | 12.56 | % | 11.49 | % | |||||
| Net Interest Margin | 2.77 | % | 2.84 | % | 2.66 | % | 2.63 | % | 2.62 | % | |||||
| Yield on Loans | 5.95 | % | 5.81 | % | 5.22 | % | 5.09 | % | 4.97 | % | |||||
| Yield on Securities | 1.67 | % | 1.72 | % | 1.40 | % | 1.33 | % | 1.29 | % | |||||
| Cost of Interest Bearing Deposits | 0.79 | % | 0.65 | % | 0.21 | % | 0.13 | % | 0.09 | % | |||||
| Efficiency Ratio | 55.45 | % | 55.66 | % | 54.34 | % | 53.76 | % | 53.91 | % | |||||
| Capital | |||||||||||||||
| Shareholders' Equity/Total Assets | 7.71 | % | 7.83 | % | 7.64 | % | 7.07 | % | 8.27 | % | |||||
| Tier 1 Leverage Ratio | 10.01 | % | 10.20 | % | 9.64 | % | 9.83 | % | 10.03 | % | |||||
| Regulatory Well Capitalized Minimum Ratio - Tier 1 Leverage Ratio | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % | |||||
| Tier 1 (Core) Capital | $ | 561,472 | $ | 557,149 | $ | 553,829 | $ | 559,726 | $ | 554,205 | |||||
| Credit Quality | |||||||||||||||
| Noncurrent Loans and OREO | $ | 4,843 | $ | 4,984 | $ | 5,899 | $ | 5,864 | $ | 6,454 | |||||
| Noncurrent Loans and OREO/Total Assets | 0.09 | % | 0.09 | % | 0.11 | % | 0.11 | % | 0.12 | % | |||||
| Noncurrent Loans and OREO/Tier 1 Capital | 0.86 | % | 0.89 | % | 1.07 | % | 1.05 | % | 1.16 | % | |||||
| Allowance for Loan Losses | $ | 18,850 | $ | 19,050 | $ | 18,800 | $ | 19,000 | $ | 19,500 | |||||
| Allowance for Loan Losses/Total Loans | 0.82 | % | 0.83 | % | 0.84 | % | 0.88 | % | 0.90 | % | |||||
| Net interest margin, yields, and efficiency ratios are tax effected | |||||||||||||||
| Financial measures are year-to-date. | |||||||||||||||
| Per common share amounts are not in thousands. | |||||||||||||||
