Low rates, PPP loans drive bank gains for 2020 | Local Business

Homebuyers taking advantage of record low interest rates and businesses utilizing federal disaster funds led to a banner year for Alaska’s banks.

The three largest Alaska-based banks all saw increases in annual income and achieved total asset growth greater than 15%  in 2020.

Anchorage-based Northrim led the way with 29%  year-over-year asset growth to more than $2.1 billion. First National Bank Alaska, the largest Alaska-based institution, surpassed $4 billion in assets and nearly reached $4.7 billion on 23%  growth.

Ketchikan-based First Bank grew by more than 16%  to $689 million in assets by years-end.

Jed Ballard, chief financial officer for Anchorage-based Northrim, said the bank likely had its busiest fourth quarter for mortgages ever.

Throughout the year bank officials reported a strong consumer response to sub-3%  mortgage rates even when the pandemic led long-term plans to be paused in many other aspects of life.

“There were just a lot of folks over the past year that upgraded square footage or number of bedrooms — whatever they wanted,” Ballard said in an interview.

The Alaska Housing Finance Corp. reported 30-year mortgage rates starting at 2.75% March 23.

The rate-driven buying spree extended beyond homes to other large items such as cars and recreational vehicles, according to bank leaders.

Northrim, which netted $32.9 million for a 59%  annual income increase, also saw the Small Business Administration ramp up processing of forgiveness applications for the immensely popular Paycheck Protection Program in December, according to Ballard.

Best known as PPP, the agency has used it to offer widely forgivable loans to small businesses across the country.

That allowed the bank to realize the fee income from the transaction immediately.

“When (loans) are forgiven you no longer need to amortize it so you get it all in one fell swoop,” Ballard said.

He noted the second round of PPP applications closes March 31 unless Congress extends it. As of March 21, the SBA had approved more than 3.1 million loans totaling $195 billion in this year’s round of PPP funding, leaving roughly $90 billion available.

Northrim increased its total loan and lease portfolio 41% in 2020 to $1.6 billion. FNBA similarly recorded nearly 10% portfolio growth to more than $2.2 billion and First Bank added loans for 14% growth to $241 million to end the year, according to the bank’s filings with the Federal Deposit Insurance Corp.

Wells Fargo Alaska Market Executive Joe Everhart said the national bank’s Alaska portfolio performed “remarkably well” through the economic downturn of last year and continues to.

“Wells Fargo and a lot of banks were really proactive with deferrals and loan extensions,” Everhart said, adding that the stimulus funds, such as PPP loans, have helped keep large numbers of small businesses afloat.

Northrim leaders still expect to handle a significant amount of applications in the second round of PPP loans even with added restrictions on the funds, according to Ballard.

“There’s still a lot of folks out there that need money, but overall it hasn’t been as bad as originally anticipated,” he said.

He noted many tourism-centered companies in Southeast will continue to have extremely tight cash flows through much of this year if a second cruise ship season is ultimately called off or drastically reduced.

Traditional borrowers largely made their payments in 2020 as well despite the income disruptions brought by business activity restrictions at various times of the year.

FNBA experienced a 3.6%  increase to the value of loans up to 89 days past due to $2.7 million over the year, while Northrim’s past due volume was cut nearly in half to $889,000 and First Bank held no loans up to 89 days past due, according to the FDIC filings.

FNBA did…