Northrim BanCorp Inc · NASDAQ:NRIM
Northrim BanCorp — Investor Presentation (2015)
44 slides from Northrim BanCorp's investor presentation, Apr 4, 2015
Slide 1: 2015 Economic Luncheon
2015 ECONOMIC LUNCHEON Discipline Over Desire: Finding opportunities in a challenged economy
Slide 2: About Northrim
Northrim BanCorp, Inc : i “ie ching New Heights | 2014 ANNUAL a Northrim aus T
Slide 3: Mission, Vision, Values
MISSION A Northrim Bank TO BE ALASKA'S MOST TRUSTED FINANCIAL INSTITUTION We are committed to adding value for our customers, communities, and shareholders. VISION TO BE ALASKA'S PREMIER BANK AND EMPLOYER OF CHOICE We will be a leader in financial expertise, products and services, focused on continu
Slide 4: Northrim Bank Affiliates
NORTHRIM BANK AFFILIATES Elliott Cove Insurance Agency LLC 4
Slide 5: Community Engagement
COMMUNITY ENGAGEMENT 5
Slide 6: Alaska Economic Update
ALASKA ECONOMIC UPDATE Mark Edwards Senior Vice President Commercial Loan Unit Manager Bank Economist 6
Slide 7: Alaska's Major Economic Issues
ALASKA’S MAJOR ECONOMIC ISSUES • Sharp drop in oil prices create uncertainty • State and Federal budget issues create drag • Growth in tourism, retail and health care help • Flat population and job growth • Real estate stable, aided by low interest rates 7
Slide 8: Unemployment Rates, Alaska and U.S.
Unemployment Rates, Alaska and U.S. January 2003 to December 2014 Seasonally adjusted 10%} 12%; 8%} 6%} 4%' 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 m Bank | x O° ). Ga @) & — Northri @©&)4.
Slide 9: Foreclosure and Delinquency Rates
FORECLOSURE AND DELINQUENCY RATES 1-4 UNIT RESIDENTIAL PROPERTIES National Rank Alaska U.S. Delinquencies, total 4Q 2014 2nd best 3% 6% Foreclosures, total in progress 6th best 0.8% 2.3% Subprime delinquencies 2nd best 7.6% 19.1% Best in Subprime foreclosures Nation 1.7% 9.6% 9
Slide 10: Alaska Building Permits
ALASKA BUILDING PERMITS Number of new, privately owned housing, 1-5 units authorized 12000 11,248 10000 8000 6000 430 unit increase in 2014, most since 2007 4000 2000 1509 0 Source : U.S. Census Bureau, 2013 is November 10
Slide 11: Alaska Building Permits
ALASKA BUILDING PERMITS Number of new, privately owned housing, 1-5 units authorized 1800 1,706 1509 1600 430 unit increase in 2014, most since 2007 1400 1200 1000 868 800 600 400 200 0 Source : U.S. Census Bureau, 11
Slide 12: US Treasury Yield Curve
US TREASURY YIELD CURVE ‐‐‐‐‐‐ March 31, 2015 ‐‐‐‐‐‐‐ March 31, 2014 4.00% 3.56% 3.50% 3.00% 2.50% 2.54% 2.00% 1.50% 1.00% 0.50% 0.00% 3 mo. 6 mo. 1 year 2 year 5 year 10 year 30 year
Slide 13: Alaska Crude Prices 2004-2014
ALASKA CRUDE PRICES 2004 - 2014 $160 Dollars per Barrel High $134 June 2008 Prices over $100 $140 April 2011 to July 2014 $120 $100 $80 $60 $61 Dec. 2014 $40 Low $37 December 2008 $20 $0
Slide 14: Root Causes of Price Decline
ROOT CAUSES OF PRICE DECLINE • Sustained high prices led to increased energy investment • Technology led to lower marginal cost of production • Supply increased dramatically in the US as a result • US demand declined, we became a net energy exporter • Energy intensive manufacturing moved to China, I
Slide 15: Alaska North Slope Crude Average Annual Prices
ALASKA NORTH SLOPE CRUDE AVERAGE ANNUAL PRICES Dollars per Barrel – State Fiscal Year 1998 – 2015 $120 $113 $100 $76 $80 $60 $40 $13 $20 $0 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 15
Slide 16: Global Supply and Demand
GLOBAL SUPPLY AND DEMAND World Liquid Fuels Production and Consumption Balance (million barrels per day) 96 94 92 90 838 86 aa teed Le eT 82 80 78 7 T T T T T T Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 @®B Implied stock change and balance (right axis) — World production (left axis) —
Slide 17: Reasons Price Likely to Go Higher
REASONS PRICE LIKELY TO GO HIGHER • Global demand growing, population, standard of living • Additional 1 million barrels per day needed to meet demand • Meeting 94 million bpd demand takes high cost production • Marginal producers go out of business at low prices • Excess inventories expected to dec
Slide 18: Reasons for Optimism in Alaska
REASONS FOR OPTIMISM IN ALASKA • The state withstood a similar price shock only 5 years ago. • $19 billion in undedicated savings, $53 B Permanent Fund • “Oil provides 90% of unrestricted general funds” does not account for $11.5 billion from Federal govt. and investments Oil was 33% of total state
Slide 19: Alaska Oil Production 1978-2014
ALASKA OIL PRODUCTION 1978 - 2014 2.1 Peak: 2.05 million barrels in 1988 1.8 1.5 1.2 0.9 Population: 743,000 0.6 Low: 547,000 barrels 0.3 Population: 411,600 in 1978 0.0 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014
Slide 20: Reasons for Optimism in Alaska
REASONS FOR OPTIMISM IN ALASKA • State production will end a 25 year decline and increase slightly in 2016 and 2017 to 547,000 bpd. • Alaska energy investments based on long-term price avg. • Producers must keep investment promises made last election. • Producers must meet lease requirements and spe
Slide 21: Conclusion
CONCLUSION • Low oil prices put a strain on state revenues, but required spending discipline and fiscal discussions are prudent for the long run. • Alaska has sufficient savings to offset large current budget deficits. • Strength in retail, health care and tourism will offset the drag. • Rising glob
Slide 22: Conclusion
CONCLUSION • Collectively manage our businesses wisely, prepare for adversity. • Alaska is still a young state with trillions of dollars of natural resources to develop. The long-run will be prosperous. • We must continue to attract outside investment capital. • Make wise infrastructure decisions •
Slide 23: Thank You
THANK YOU Mark Edwards Senior Vice President Commercial Loan Unit Manager Bank Economist
Slide 24: The Economic Outlook: New Opportunities and Risks in the Evolving Business Cycle
THE ECONOMIC OUTLOOK: NEW OPPORTUNITIES AND RISKS IN THE EVOLVING BUSINESS CYCLE Bill Conerly for Northrim Bank
Slide 25: U.S. Real GDP Growth
U.S. Real GDP Growth 4 percent change 3 2 1 0 2011 2012 2013 2014 2015 2016
Slide 26: U.S. Economy: Major Sectors
U.S. Economy: Major Sectors Sector 2015-16 Outlook Consumer , spending Growth moderately good Housing construction Stronger in 2015-16 Non-res construction Light growth Bus. Capital Spending Good growth Federal Gov’t Cuts in goods, services (but entitlements grow) State & Local Gov’t Slow growth Exp
Slide 27: Consumer Spending
Consumer Spending 12.5 12.0 $ trillions 11.5 11.0 10.5 10.0 2011 2012 2013 2014 2015
Slide 28: Defense Spending
Defense Spending 900 800 $ billions 700 600 2011 2012 2013 2014
Slide 29: U.S. Exports
U.S. Exports 200 190 180 $ billions 170 160 150 2011 2012 2013 2014 2015
Slide 30: World Economic Growth
World Economic Growth IMF forecast 5 annual percent change 4 3 2 1 0 -1 2011 2012 2013 2014 2015 2016
Slide 31: Foreign Exchange Value of $
Foreign Exchange Value of $ trade-weighted index 115 110 index 105 100 95 90 2011 2012 2013 2014 2015
Slide 32: Inflation
Inflation Consumer Price Index 4 All Items % change 12 months 3 2 ex Food & 1 Energy 0 -1 2011 2012 2013 2014 2015
Slide 33: Oil Prices
Oil Prices 120 100 80 West Texas $ / barrel 60 40 20 0 2011 2012 2013 2014 2015
Slide 34: Fuel Prices
5 Fuel Prices Diesel 4 $ / gallon 3 Jet Fuel 2 1 0 2011 2012 2013 2014 2015
Slide 35: Interest Rate Forecast
Interest Rate Forecast 6 30-year 5 mortgage 4 percent 3 2 3-month T-bill 1 0 2011 2012 2013 2014 2015 2016
Slide 36: Bank Reserves
Bank Reserves 3.0 2.5 2.0 $ trillions 1.5 1.0 0.5 0.0 2007 2008 2009 2010 2011 2012 2013 2014 2015
Slide 37: Risk of Recession
Risk of Recession Wall Street Journal survey 30 25 20 percent 15 10 March: 11% 5 0
Slide 38: Business Cycle
Business Cycle 9 Recession: 8 Look for growth. 7 Increase debt as Industry Sales 6 Expansion: needed 5 Be cautious. 4 Pay down debt 3 2 1 0 Time
Slide 39: The Nutshell
The Nutshell Most likely Stronger U.S. growth in 2015-16 Higher interest rates Downside Risks Upside Chances Oil stays low Consumers spend Recession Risk Housing starts up Exports Decline Businesses spend Military Cutbacks
Slide 40: Questions?
Questions? Bill @ ConerlyConsulting.com one “n”
Slide 41: Closing
CLOSING • Presentations will be shared on Alaskanomics.com soon. • Visit Northrim.com for additional resources. 41
Slide 42: UAA Contributions
UAA CONTRIBUTIONS • To Date: – $2,126,000 • Presenting today $150,000 – UAA ISER $100,000 – UAA Small Business Development Center $50,000 42
Slide 43: Contributions History: $6.4 Million Since 2000
CONTRIBUTIONS HISTORY: $6.4 MILLION SINCE 2000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $‐ 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Education Tax Credit Other Contributions 43
Slide 44: Thank You!
ANK YOU! siti Be $. Pas 2 — Northrim Bank Y S Ts “ny CTT #Y, se uw