WE DON’T WORK THIS HARD TO BE SIMPLY AVERAGE
In 2019 our team achieved several “bests” never seen before in the nearly 100-year history of our bank. Among those, the bank’s total loans passed the $2 billion mark, First National was voted the “Best Place to Work in Alaska” for the fourth year in a row, the bank was also named a national “Best Bank to Work For” for the second year in a row, and year-end net income of $55.6 million represented the highest net income performance in bank history.
ur bank’s loan quality during 2019 was remarkable, a testament to the strong relationships First National’s bankers have established with Alaska businesses across the Last Frontier. For a record 18 years in a row, the bank’s support of Alaska communities through contributions and investment helped earn an “Outstanding” rating, the highest possible, for compliance with the Community Reinvestment Act (CRA).
I COULD NOT BE PROUDER OF OUR EMPLOYEES, OUR MANAGERS AND OUR BANK’S BOARD OF DIRECTORS. TOGETHER, WE SET OUR SIGHTS ON REACHING NEW PINNACLES EVERY DAY IN EVERY WAY.
When we strive to reach challenging goals, the capable management team around me says I am prone to say, “We don’t work this hard to be simply average.” And let me tell you, the bank’s team is more than simply average. They are dedicated and hard-working women and men who go above and beyond to meet our customers’ needs and to serve the interests of the bank and its shareholders.
Even as I write this message, our state, our nation and the world as a whole are facing an unprecedented challenge posed by the pandemic outbreak of the Covid-19 virus. The livelihoods of our friends and neighbors and their very safety hang in the balance. The volatile world petroleum market continues to threaten the health of Alaska’s three-legged stool economy. It is difficult to see what may lie ahead for the citizens of our wonderful state. But as I watch the extraordinary efforts of the bank’s employees tirelessly serving Alaskans throughout the crisis, I am reassured the bank can face the uncertain future with hope. We believe in Alaska.
When the going gets tough, the bank’s leadership team reminds me of something else I often tell them: If it were easy,
It’s not easy. But the bank’s team is not “anyone.” They’re Alaskans. And they’re First National Bank Alaska employees. I am #FirstNationalProud to work alongside this team.
My sincere thanks to the bank’s employees, to the members of our Board of Directors and to you, our shareholders for your continued confidence and support of our bank. Because together, we’re the best.
Sincerely,
Betsy Lawer
BETSY LAWER | BOARD CHAIR & CEO
Statement Productivity
The power of our theme Together the Best was demonstrated in 2019 with the highest net income performance in bank history. Bank total assets reached a seasonal peak in November of $3.91 billion and total loans surpassed $2 billion in August. Net income of $55.6 million was delivered through core earnings and outstanding expense and efficiency management. All areas of the bank participated in delivering improvements.
Net interest income after provision was $136.5 million, an improvement of 5.2% on earning asset growth and net interest margin improvement to 3.74%. Annual loan growth exceeded $55 million. Strong underwriting and loan quality was demonstrated with low delinquency throughout the year and a low provision for loan loss. Gross loans to average assets improved to 53%, pushing improvement in the ratio of interest income to average earning assets above 4%.
Noninterest income, our secondary source of service revenues, totaled $23.3 million, an increase of 7.2% on improvements in bankcard fees and mortgage loan servicing income. Mortgage loan origination volume was lower in 2019 and was offset by improvements in other customer service fees and revenues. Net gains on investment securities in 2019 replaced strategic loss-harvesting taken in 2018 to enhance future portfolio returns.
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Shareholders’ Equity: Common stock, $10 par value (Authorized shares: 2019 and 2018 - 4,000,000 shares) (Issued shares: Dec. 19, 3,167,510; Dec. 18,
Noninterest or operating expenses of the bank totaled $85.8 million in 2019. When nonrecurring gains recognized in 2018 are set apart, this compares favorably to the same pool of operating expenses in 2018 which totaled $85.1 million. Management’s ability to realign operating expenses and hold growth to less than 1% contributed significantly to delivering net income performance and is attributed to cost savings, efficiency gains and technology enhancements.
Net income of $55.6 million, return on assets of 1.47% and return on equity of 10.48% compare well to $54.1 million, 1.46% and 10.93%, respectively, in 2018. In 2018 our results were lifted by $2.3 million in nonrecurring transactions. Through the collective efforts of employees across all work teams, this nonrecurring income was replaced and exceeded in 2019 on earning asset growth, yield improvements, higher service fees and operating expense discipline.
We were further rewarded with our fourth consecutive Best Place to Work award affirming the proposition that creating a great environment for your employees generates dividends to customers and shareholders alike.
Together the BEST
Common beliefs and values tie First National Bank Alaska employees together as a strong team. This unity of purpose was seen clearly in 2019 as, together, we achieved our best year ever in several financial and customer service areas.
nd it’s not just our employees working together that shows us at our best. This report also highlights how highly we value the importance of collaborating with our customers and our communities.
Employees, customers and community combine to show how, when we come together, the best results often lie straight ahead.
Loans > $2 billion
LOANS HIT HISTORIC HIGH
In 2019, for the first time in bank history, loans passed the $2 billion mark.
This performance milestone, a 3% increase over 2018 loans, is all the more notable as it came in the face of a continuing Alaska recession. With a strong strategy in place to expand existing relationships and generate new ones, loans were up throughout the state. Corporate lenders increased loans by $75.4 million. Regional managers and their branch lending teams combined to improve loan totals by $16.6 million over 2018.
TAX CREDIT LOANS INCREASED BY MORE THAN $23.4 MILLION IN 2019, A 9.6% JUMP.
Tax credit loans, an expanding focus for First National, increased by more than $23.4 million in 2019, a 9.6% jump. These loans finance projects developed with the assistance of the federal low-income housing tax credit program, designed to encourage the development and rehabilitation of affordable rental housing. With these loans, the bank can support communities in need of affordable housing. (see page 7)
LOAN QUALITY MATCHES QUANTITY
Quality loans start with quality relationships, a philosophy showcased quite well in 2019. At year-end, with a loan portfolio of $2 billion, the delinquency rate was 0.13%
ur lenders have worked hard to gain their extensive knowledge of the Alaska economy and of their customers’ businesses. Working together with those customers, they help chart a path that can respond to unexpected challenges and help discover new growth opportunities. Of course, the key to new opportunities is the ability to take advantage of them before they pass. As the state’s largest community bank, First National’s experienced bankers make quick lending decisions right here in Alaska. And with $3.8 billion in assets, we have the resources to help Alaskans succeed in the state and all across the country.
Net charge-offs = 0.01%
Avg. loans
THE IMAGES OF HEALTH
Established in 2006, Advanced Sonograms of Alaska has grown to be one of the premier ultrasound imaging services in Alaska. Since the beginning, co-founders and owners Scott Pickett (l.) and Mike Ruiz have worked with First National to help enhance and grow their business with financing, deposit and cash management services, and much more. Local experts like U-Med Branch Manager Rachel Carlson have the experience and healthcare industry knowledge to help Pickett and Ruiz keep their business in the picture of health.
“ WE WANT TO MAKE ALL THE GOOD LOANS WE CAN.”
PRESIDENT DOUG LONGACRE
KEY RATIOS COMPARE
WELL
WITH U.S. TOP 25%
Performance ratios such as Return on Assets (ROA), Return on Equity (ROE) and the Efficiency Ratio are reliable indicators of a bank’s strength and proficiency. That’s why First National is proud that these ratios, and many others, outperformed the average of those of our peers in Alaska and the nation over the past several years.
TODAY, THE BANK’S KEY RATIOS FALL RIGHT IN THE NEIGHBORHOOD OF THOSE OF THE TOP 25% OF PEER BANKS IN THE UNITED STATES.
ow did First National get there? It’s not easy to maintain and improve performance in an economy as challenging as Alaska’s. But, with nearly a century of experience to draw on, the board of directors and executive management have a solid strategy in place to meet that challenge. At the same time, the bank showed the flexibility to quickly respond to unanticipated economic realities.
That helps us earn great numbers, but it’s what they represent that’s important — First National is ready, willing and able to provide the financial resources our fellow Alaskans need to make their numbers improve.
MAJOR ATTRACTION
Major Marine Tours owner Tom Tougas (top) wanted to add a hotel to complement his Seward cruise business. He came to First National, attracted by the bank’s near-century of experience and resources. First National provided the financing for the Harbor 360 Hotel and a full range of banking services for all his enterprises. First National Regional Branch Manager Tim Redder and Tougas work together to steer the business toward successful shores.
OUTSTANDING
X 18
2019 marked the 18th year First National has held an “Outstanding” rating, the highest possible, from the Office of the Comptroller of the Currency for its compliance with the Community Reinvestment Act (CRA). The act ensures banks meet the credit needs of their communities, especially low- and moderate-income neighborhoods.
upporting the communities we serve has been part of First National’s DNA since we opened our doors in 1922. Our goal, for nearly a century, has always been to be an outstanding corporate citizen. It’s nice to hear from the top that we’re succeeding.
Vice President Natasha Pope, CRA Officer, has helped guide the bank down this “outstanding” path. She says, “Every bank employee – whether a member of the board of directors, a senior manager, a bank officer, or any one of our 650 employees–helps play a vital role in the bank’s outreach efforts, lending, investments within and services to our communities.”
INCREASING AFFORDABLE HOUSING
First National Vice President Ligia Lutan (r.) discusses details of a recent low-income housing tax credit (LIHTC) program project with Deputy Executive Director Tim Geraty (l.) and Executive Director Jim Nordlund (c.) of NeighborWorks Alaska. First National financing of new construction and rehabilitation units to developers such as NeighborWorks and others has boosted Alaska affordable housing availability. First National has five LITHC projects in the works, in Anchorage, Homer, Kodiak, Wasilla and Petersburg.
“ ONLY BY WORKING TOGETHER CAN WE DO OUR BEST AS WE STRIVE TOWARD EXCELLENCE IN COMMUNITY DEVELOPMENT.”
NATASHA POPE, CRA OFFICER
CONTRIBUTIONS TO COMMUNITIES >
$1 MILLION
DISASTER RECOVERY TEST
SUCCESS
DECADES OF TRUST
For more than two decades, Bethel Native Corporation (BNC) has relied on First National Bank Alaska and their local experts to help their business succeed. (from l. to r.) BNC Chief Financial Officer Kyunga Rose, First National Senior Vice President Stacy Tomuro, BNC President and CEO Ana Hoffman
How do you move the brains of a bank? Very carefully, to be sure. That’s the challenge First National faced in 2019.
ctually, it was the back-up brains. The bank maintains a Disaster Recovery (DR) site in Fairbanks in the event a natural disaster or emergency compromises the data center in Anchorage. In that case, core systems and operations can be transferred to the Fairbanks data center. Significant and strategic investments went into moving the DR site to the Johansen branch.
“ THE TEAM HAS A HIGH LEVEL OF CONFIDENCE WE CAN FULLY RUN THE BANK FROM THE DR SITE WITH THIS NEW INFRASTRUCTURE.”
PHIL GRIFFIN EXECUTIVE VICE PRESIDENT CHIEF INFORMATION OFFICER
With intricate coordination, First National’s Information Technology Division, Property Department and local vendors completed the complex operation. Not only was the DR site moved, but the hardware infrastructure was likewise upgraded to mirror Anchorage hardware. Then testing began. A comprehensive, successful and cross-divisional DR test was completed. Multiple phases of running systems from Fairbanks and having staff work at contingency sites were included; the testing and processes involved went unnoticed by customers. “The team has a high level of confidence we can fully run the bank from the DR site with this new infrastructure,” said Executive Vice President Phil Griffin, Chief Information Officer. “In those times when our customers require their banking services the most, First National will be there to deliver what they need.”
SIGNIFICANT GAINS IN DIGITAL ADOPTION
Every new online banking customer and every new electronic service used means increased efficiency for First National. It also means greater convenience and accessibility for the bank’s customer.
he Digital Adoption team had some very good news to share about the use of online and mobile banking in 2019. Business users increased by 7.6%, personal users by 12%. The use of e–Statements, which represents a significant reduction in bank costs, increased by 42.7% in business accounts and 21.6% in personal accounts.
These major upward trends resulted from an increased focus on digital adoption at the branch level. Electronic tablets were rolled out at all branches so employees could help enroll customers in online and mobile banking on the spot; procedures were overhauled and employee training enhanced, all aimed at giving more customers the convenience and security of online and mobile banking.
The diligent work by the cross-divisional team has led First National to virtual parity in online and mobile banking services with our Alaska peers, giving our customers more tools to succeed with banking anytime, anywhere.
ALL ON BOARD
With a strategy of focusing on the branch level to increase mobile and online banking adoption, First National was able to significantly enhance and standardize employee knowledge and implementation of the digital onboarding process. This helped the bank realize a 31% rise in business mobile banking users, among other increased digital adoption indicators.
Above: Vanessa Gozum, South Center Teller
PERSONAL MOBILE DEPOSITS
MAKING ERRORS COUNT
IN THE STATE, ACROSS THE COUNTRY
With offices in Anchorage and Houston, TX, Thompson & Co. Public Relations CEO and President Jennifer Thompson (l.) relies on the convenience, service and value offered by First National’s local team of financial experts, headed up by Vice President Melissa Reiser.
Achieving outstanding operational efficiency is always near the top of First National’s goals. But when you’re responsible for the bank’s conformance with the ever-growing and ever-changing regulations governing national banks, the task can be herculean. First National’s Compliance Division was up to the task in 2019.
utting new procedures and systems in place, the Compliance team moved away from a labor-intensive, extremely manual process that tracked bank compliance at each branch and bank department in a silo. Data was delivered in a way that offered no easy way to track trends or areas of concern. Today, senior managers use a concise dashboard showing compliance performance across all areas of the bank at a glance. The new system reduces the amount of time to prepare reporting requirements and determines the error rates for reporting. And if you know where errors are concentrated, you can focus training on those areas. That’s exactly what the bank has done, and error rates are dropping accordingly.
To err is human. To use that error to increase efficiency and improve the bottom line is divine.
“ WHEN YOU PROVIDE AN ENVIRONMENT WHERE PEOPLE LIKE TO WORK, A PLACE WHERE THEY COME TO BE MUCH MORE THAN AVERAGE, THEN EVERY CUSTOMER BENEFITS.”
PATTY MILLER SENIOR VICE PRESIDENT HUMAN RESOURCES DIRECTOR
The Knik Tribe provides social, educational and economic development services to tribal members over a 25,000-square-mile Tribal service area, the largest in Alaska. Since 2002, the tribe has depended on First National’s local knowledge and resources to help them in their mission, with services from cash management to online and mobile banking.
from l. to r. – Knik Tribe Deputy Director Lori Canady, First National Senior Vice President and Regional Branch Manager Craig Thorn, Knik Tribe Executive Director Richard Porter, First National Vice President Chris Longacre
THE POWER OF CULTURE CONTINUES
For decades, First National has fostered a work culture that places a high value on — among many other things — honesty and integrity, the importance of relationships with our employees and customers, and a constant commitment to improve ourselves and our bank.
his culture produces a workplace where employees feel valued and their opinions matter, a workplace that in 2019 was, for the fourth year in a row, recognized as the “Best of Alaska Business” in the Best Place to Work category by Alaska Business readers. Anchorage Daily News readers voted the bank one of the state’s top three financial institutions in the ADN “Best of Alaska” Awards. On a national scale, American Banker recognized First National as a “Best Bank to Work For” for the second year in a row.
“The real importance of this recognition is what it means to our customers,” said Senior Vice President Patty Miller, Human Resources Director. “When you provide an environment where people like to work, a place where they come to be much more than average, then every customer benefits.”
That’s what you’ll find at First National Bank Alaska, where, together, we give you our best.
KNOWING THE GREAT LAND
BOARD OF DIRECTORS Leadership
Perry
Margy
Jane Klopfer
EXECUTIVE MANAGEMENT TEAM
SENIOR MANAGEMENT TEAM
Rick
Pamela Keeler
BRANCHES
ANCHORAGE
777-4362
Dimond Branch
8725 Old Seward Hwy.
P.O. Box 100720
Anchorage, AK 99510-0720
Eastchester Branch
1821 Gambell Street
P.O. Box 100720
Anchorage, AK 99510-0720
Metro Branch
360 K Street, Suite 100
P.O. Box 100720 Anchorage, AK 99510-0720
Muldoon Branch
1100 Muldoon Road
P.O. Box 100720
Anchorage, AK 99510-0720
North Star Branch
5850 Westover Avenue JBER, AK 99506-1603
Northern Lights Branch
1210 W. Northern Lights Blvd.
P.O. Box 100720 Anchorage, AK 99510-0720
Parkway Branch
5305 E. Northern Lights Blvd.
P.O. Box 100720 Anchorage, AK 99510-0720
South Center Branch
201 W. 36th Avenue
P.O. Box 100720 Anchorage, AK 99510-0720
U-Med Branch
3650 Piper Street, Suite 100
P.O. Box 100720 Anchorage, AK 99510-0720
BETHEL
Kuskokwim Branch
700 Front Street
P.O. Box 286 Bethel, AK 99559-0286
543-7650
CORDOVA
Cordova Branch 528 First Street P.O. Box 360 Cordova, AK 99574-0360 424-6700
EAGLE RIVER
Eagle River Branch 11412 Business Blvd. Eagle River, AK 99577-7720 689-5200
FAIRBANKS
Golden Valley Branch 1300 Washington Drive P.O. Box 82487 Fairbanks, AK 99708-2487 459-7100
Johansen Branch 430 Merhar Avenue Fairbanks, AK 99701-3166 450-7300
GLENNALLEN
Glennallen Branch
Mile 187 Glenn Hwy., Suite C P.O. Box 85 Glennallen, AK 99588-8085 822-7350
HAINES
Haines Branch 123 Main Street P.O. Box 70 Haines, AK 99827-0070
766-6100
HEALY
Healy Branch
Tri-Valley Community Center P.O. Box 460 Healy, AK 99743-0460 683-7750
HOMER
Homer Branch 3655 Heath Street Homer, AK 99603-7667 235-5800
JUNEAU
Juneau Regional Branch
840 W. 10th Street
P.O. Box 21248 Juneau, AK 99802-1248 586-5400
Valley Centre Branch 8990 Glacier Hwy. Juneau, AK 99801-8030
790-8000
KENAI
Kenai Branch 11408 Kenai Spur Hwy. Kenai, AK 99611-7799 283-6800
KODIAK
Kodiak Branch 218 Center Avenue Kodiak, AK 99615-6312 486-7900
PALMER
Palmer Branch
303 W. Evergreen Avenue Palmer, AK 99645-6954 746-8900
SEWARD
Seward Branch 303 4th Avenue P.O. Box 69 Seward, AK 99664-0069 224-4200
SITKA
Sitka Branch 318 Lincoln Street Sitka, AK 99835-7545 747-7000
SOLDOTNA
Soldotna Branch 44501 Sterling Hwy. Soldotna, AK 99669-7938 260-6000
VALDEZ
Valdez Branch 101 Egan Drive P.O. Box 37 Valdez, AK 99686-0037
834-4800
WASILLA
Wasilla Branch 775 E. Parks Hwy. Wasilla, AK 99654-8191 352-5900
Corporate Headquarters 101 W. 36th Avenue Anchorage, AK 99503-5904
Operations Center 1751 Gambell Street Anchorage, AK 99501-5324
FNBAlaska.com
1-800-856-4FNB (4362) Connect with us!
Mission Statement
The bank’s multi-part mission is to safekeep depositors’ money, provide all legitimate financial services to the community consistent with bank resources, furnish employees with competitive salaries and a pleasant working environment, and earn a proper return for shareholders. For nearly a century our commitment to the mission has served our customers, our employees, our communities and our shareholders well.