Northrim BanCorp Inc · NASDAQ:NRIM
Northrim BanCorp — Investor Presentation (April 2016)
52 slides from Northrim BanCorp's investor presentation, April 2016
Slide 1: 2016 Economic Luncheon Seminar
2016 ECONOMIC LUNCHEON SEMINAR The Keys to SurThrival: Learn to not only survive, but thrive in Alaska’s dynamic economy
Slide 2: Join the Conversation
JOIN THE CONVERSATION ALASKANOMICS.COM Leave your business card for: Y Achance to win 20,000 Alaska Airlines Miles Y To be subscribed to Alaskanomics (current subscribers eligible to enter) About Alaskanomics Northrim Bank launched the Alaskanomics blog to provide news, analysis and commentary on Al
Slide 3: SurThrival Speaker Series
SurThrival Speaker Series • Held third Tuesday of each month in Anchorage • Seating is limited, registration is required. • Visit Northrim.com for full course descriptions and dates or ask your Northrim banker.
Slide 4: Northrim Bank
7? Northrim Bank MISSION Th RE ALACKA P DICTEN CINANPIA eTITITING 1U BE ALAD INA ' Dinver ne runic APLOYER OF CHOIC We will be a leader in financial expertise, products and services, focused on continuous improvement and market growth. Api VALUES AY, L\ W/ om. ——————— PPNIIN ThE A , N AK) PROUD TO B
Slide 5: Northrim Bank Affiliates & Divisions
NORTHRIM BANK AFFILIATES & DIVISIONS 5
Slide 6: Alaska Economic Update
ALASKA ECONOMIC UPDATE Mark Edwards Senior Vice President Senior Credit Underwriter Bank Economist 6
Slide 7: Alaska's Major Economic Issues
ALASKA’S MAJOR ECONOMIC ISSUES • Sharp drop in oil prices has created uncertainty • State and Federal budget issues create drag on government jobs and related construction. • Department of Labor predicts -2,500 jobs, -0.7% • Private sector growth in tourism, retail, native corporations and health ca
Slide 8: Alaska's 2015 Macro Indicators
ALASKA’S 2015 MACRO INDICATORS • Per capita income +3.8% 2015, $55,940, 6th in US • Inflation 2015, -0.1% Anchorage, +0.7% US • Flat population 737,625. 0% growth for 2 years. • 339,300 payroll jobs +0.5% in 2015, +1,700 jobs • Real estate stable, aided by low interest rates. Anchorage average home
Slide 9: 30 Year Conventional Mortgage
30 YEAR CONVENTIONAL MORTGAGE 18% 16.6% In 1981 16% 14% 12% 10% 8% 6% 4% 2% 3.69% March 2016 0%
Slide 10: Alaska Building Permits
ALASKA BUILDING PERMITS Number of new, privately owned housing, 1-5 units authorized 12000 11,248 10000 8000 6000 4000 1291 2000 0 10
Slide 11: Foreclosure and Delinquency Rates
FORECLOSURE AND DELINQUENCY RATES 1-4 UNIT RESIDENTIAL PROPERTIES National Rank Alaska U.S. Delinquencies, total 4Q 2015 2nd best 2.7% 5% Foreclosures, total in progress 4th best 0.7% 1.8% Best in Subprime delinquencies Nation 6.3% 16.2% Best in Subprime foreclosures Nation 1.7% 7.8% 11
Slide 12: Don't Panic!
DON’T PANIC!
Slide 13: Prepare
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Slide 14: A Few Tips to SurThrival
A FEW TIPS TO SURTHRIVE • Cash is King. Slow dividends to conserve cash. • Take advantage of historically low interest rates. Consolidate or refinance debt, and reset amortization. • Consider selling underutilized or non-performing assets • If sales slow you may need cash to service debt and rent •
Slide 15: A Few Tips to SurThrival
A FEW TIPS TO SURTHRIVE • Track economic variables that most affect your industry • Are any of your key customers or suppliers impacted? • Any business segment that could benefit from outsourcing? • Shift employee focus from past problems to future opportunities to help morale and productivity. • Th
Slide 16: Alaska Crude Prices 2004 - 2016
ALASKA CRUDE PRICES 2004 - 2016 $160 Dollars per Barrel High $134 June 2008 Prices over $100 $140 April 2011 to July 2014 $120 $100 $80 $60 $40 $37 December 2008 $20 $38 March 2016 $0
Slide 17: Alaska Is Rich With Assets. Why Do We Have a Cash Flow Problem?
ALASKA IS RICH WITH ASSETS. WHY DO WE HAVE A CASH FLOW PROBLEM? Traditional Correct Answer: - Too much spending, oil prices are volatile and oil production continues to decline. Real Deeper Reason: - Many of the main revenue sources are off limits to spend. 17
Slide 18: Alaska Is Rich With Assets. Why Do We Have a Cash Flow Problem?
ALASKA IS RICH WITH ASSETS. WHY DO WE HAVE A CASH FLOW PROBLEM? Principle assets of the State of Alaska Energy wealth – heavily taxed and paying a lions share of State services 104 million acres of State land – only ½% is privately owned, no tax base for municipal services to reduce burden of State
Slide 19: Driving Principles for a Solution
DRIVING PRINCIPLES FOR A SOLUTION • Everything must be on the table for negotiations, it will take “all of the above” to close this large of a gap. • State government must diversify its revenue stream • We will likely have to accept less government services and spending and pay more personally for i
Slide 20: Thank You
THANK YOU Mark Edwards Senior Vice President Senior Credit Underwriter Bank Economist
Slide 21: Pacific Portfolio Consulting, LLC
Pacific Portfolio Consulting, LLC Economic & Capital Market Outlook Northrim Bank Economic Luncheon Seminar April, 2016 601 Union Street, Suite 4343 Seattle, WA 98101 206-623-6641
Slide 22: Key Points of Today's Presentation
Key Points of Today’s Presentation Global Economy: • Slow & steady, no recession this year • Developed economies: U.S. > Europe > Japan • EMs stabilizing, China poised for near-term up-tick • All major central banks increasingly biased towards easier policy Capital Markets: • Risk assets have run fa
Slide 23: Market-based Recession Flags Receding
Market-based Recession Flags Receding 100 80 MSCI ACWI YoY % Chg 60 40 20 0 -20 -40 -60 2500 Barclays HY Spread to 10Y Tsy ? 2000 LT Avg Spread = 527bps 1500 1000 500 0 Source: Bloomberg Not for reproduction and/or distribution. All data obtained from sources believed to be reliable. 23
Slide 24: Economic Data Continue To Reject Recession Claims
Economic Data Continue To Reject Recession Claims The yield curve has typically inverted prior to recession Albeit at a slow pace, leading indicators continue to advance U.S. has never gone into recession with this much slack Source: Bloomberg Not for reproduction and/or distribution. All data obtai
Slide 25: Global Economy Poised For Improvement
Global Economy Poised For Improvement Source: Bloomberg Not for reproduction and/or distribution. All data obtained from sources believed to be reliable. 25
Slide 26: Signs Of A Turn In Manufacturing?
Signs Of A Turn In Manufacturing? 62.5 60 57.5 55 52.5 50 ISM US Manufacturing Index 47.5 45 17.5 Avg MoM Change Regional Fed Mfg Surveys 12.5 7.5 2.5 -2.5 -7.5 -12.5 7/09 1/10 7/10 1/11 7/11 1/12 7/12 1/13 7/13 1/14 7/14 1/15 7/15 1/16 Source: Bloomberg Not for reproduction and/or distribution. All
Slide 27: Consumer Remains The Key For Now
Consumer Remains The Key For Now Gas Price $/Gallon Still down 25% since mid-2015 Even with a 20% rise since mid‐Feb, lower gas prices still driving consumer savings of $100b‐$200b per year Still down 45% over 2 years Wage growth is finally perking up and expected to continue Source: Bloomberg Not f
Slide 28: Employment Remains A Highlight
Employment Remains A Highlight US Unemployment Rate Labor Participation Rate FOMC long‐term est.: 4.8% PPC 2016 Outlook: 4.84% Non‐farm• Payrolls Payrollsremain solid, while participation rate is MoM showing Chg clear improvement • Offers potential to add significant new jobs without spiking wage ga
Slide 29: Global Feedback Loops Drive Major Fed Policy Shift
Global Feedback Loops Drive Major Fed Policy Shift •Fed consensus down from 4 ¼‐point hikes in 2016 to 2, expects to play catch‐up in later years •Market pricing in roughly 1 hike/year; could be more of an issue next year. •Policy risk reduced as Fed poised to err on side of more inflation/fewer rat
Slide 30: Europe: All The Right Moves, None Of The Results
Europe: All The Right Moves, None Of The Results Euro Stoxx 600 EPS Estimates ECB QE ECB QE US$/Euro Announced Begins Long-term Inflation ? Expectations Source: Bloomberg Not for reproduction and/or distribution. All data obtained from sources believed to be reliable. 30
Slide 31: Japan: Is Abenomics Missing The Target?
Japan: Is Abenomics Missing The Target? Source: Bloomberg Not for reproduction and/or distribution. All data obtained from sources believed to be reliable. 31
Slide 32: China Outcomes Will Be Critical
China Outcomes Will Be Critical Hard‐landing risk reduced as China backtracks to make growth top priority Better growth benefits oil , commodities, reduces temptation for a big Yuan deval, to benefit of EMs & risk assets in general Near‐term cyclical upturn potentially coming at cost of greate
Slide 33: Pause In Dollar's Advance A Key Driver
Pause In Dollar’s Advance A Key Driver • After strong multi-year run, US$ currently flat year-over-year • Beneficiaries: EM economies Commodities Corporate earnings Risk Assets in general +19% US Trade-Weighted 1.76 years Dollar +31% Average of ‘80s & ‘90s bull markets: 4.6 years +8.5%/year
Slide 34: Oil Appears To Be Forming A Bottom
Oil Appears To Be Forming A Bottom • Supply glut has resisted massive declines in price and the rig count • Bottoming process appears to be unfolding; this won’t be a V-shaped recovery U.S. OPEC Source: Bloomberg Not for reproduction and/or distribution. All data obtained from sources believed to be
Slide 35: Just In Case You Blinked…
Just In Case You Blinked… 20.0% +16.4% 15.0% +13.4% +12.3% 10.0% +7.8% +7.6% +5.5% 5.0% +1.7% +1.4% +1.1% +0.6% 0.0% -0.4% -5.0% -4.4% -4.6% -4.1% -5.9% -10.0% -7.9% -9.2% -11.8% -15.0% -15.1% -14.6% -20.0% 2015 -25.0% 2016 thru 2/10 Since 2/11/16* -24.7% -30.0% Lrg-Cap Sm-Cap Fgn EM Bond High Cmdty
Slide 36: 1Q'16 Capital Market Performance
1Q’16 Capital Market Performance (Annualized) PPC Long-term Index (as of 3/31/2016) 1Q16 1Yr Last 3 Last 5 Last 10 Risk Premia Yrs Yrs Yrs Assumptions Citi 3-month T-Bills 0.05% 0.08% 0.05% 0.06% 1.07% - Barclays Int. Govt/Credit 2.45% 2.06% 1.83% 3.01% 4.34% +1.70% Opportunistic Bonds* 5.04% 2.88%
Slide 37: Should We Be Bracing For A Bear Market?
Should We Be Bracing For A Bear Market? Bear markets don’t usually just “happen” but instead are typically driven by one or more of the “usual suspects” Source: JP Morgan Asset Management; * Bear Return and Duration defined based on peak-to-trough periods Not for reproduction and/or distribution. Al
Slide 38: Don't Be Surprised By A Pullback
Don’t Be Surprised By A Pullback • Bounce off Feb 11 low retracing most of YTD loss • Sentiment a key driver as recession fears have receded +13% 2/11 thru • Unsustainable pace; consolidation or mkt close 4/4/16 pullback likely within ongoing correction Source: Bloomberg Not for reproduction and/or
Slide 39: Tone Of The Market Has Started To Turn
Tone Of The Market Has Started To Turn • Narrow 2015/early‐2016 market favored defensive and momentum factors • Post‐2/11, sentiment has flipped to favor risk‐on factors • If sustained, this would add credence to the recent rally Source: Bloomberg Not for reproduction and/or distribution. All data o
Slide 40: Cumulative Flows
Few Signs of Exuberance Sentiment has rebounded after sinking below ‘08‐’09 levels % Investors Bullish % Investors Bearish $250 + $200B $200 Cumulative Fund Flows Since Mid‐2014 Cumulative Flows $150 ($Millions) $100 $50 - $114B - $23B $- $(50) $(100) $(150) Equity Bond Money Market Source: Bloomber
Slide 41: Outlook For Corporate Profits Remains Mixed
Outlook For Corporate Profits Remains Mixed •Profit cycle has peaked, given rising wages and lack of top‐line growth •Near‐term, bar is low; firmer oil prices & US $ pullback could make for upside surprises Employee Comp as % GDP U.S. Corporate Profits as % GDP Source: Bloomberg Not for reproduction
Slide 42: Be Prepared For More Volatility
Be Prepared For More Volatility • Volatility is back near its lows on receding recession fears, oil price stability, and US $ weakness, helping to drive markets higher • Further declines unlikely; need to see fundamentals improve or probably facing move back to higher levels Source: Bloomberg Not fo
Slide 43: Even Modest Rate Increase Expectations Challenging
Even Modest Rate Increase Expectations Challenging 22.5% Price Return Coupon Component Total Return (Barclays Agg) 17.5% 12.5% 7.5% 2.5% -2.5% -7.5% Boxed years = periods of Fed tightening -12.5% 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Slide 44: Stressed Credit Markets Rebound
Stressed Credit Markets Rebound 10.0% Bond Market Returns – 1st Half vs. 2nd Half Q1 7.6% 1/1 thru 2/10/16 7.5% 6.0% 2/11 thru 3/31/16 5.0% Total Return % 3.4% 2.6% 2.8% 2.5% 2.1% 1.7% 1.0% 0.0% -0.2% -0.7% -1.0% -2.5% Since 2/11 inflection, easing credit spreads and a weaker U.S. Dollar have driven
Slide 45: Be Prepared Not To Come In First (Or Last)
Be Prepared Not To Come In First (Or Last) 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD'16 66.4% 31.8% 12.4% 25.9% 56.3% 33.2% 34.5% 36.0% 39.8% 5.1% 79.0% 28.6% 9.2% 18.6% 38.8% 31.8% 4.2% 5.8% Best 27.3% 31.0% 9.0% 9.8% 47.3% 26.0% 21.4% 32.6% 16.2% 1.8%
Slide 46: Be Prepared To Keep A Long-term Perspective
Be Prepared To Keep A Long-term Perspective A diversified long‐term strategy may not be the top 249.5 250 performer in any one period, but proves its merit over time 231.9 PPC Balanced Growth Strategy (60/40) 200 S&P 500 TR USD 150 100 Thru 3/31/2016 12/31/1998 = 100 50 Source: Morningstar Direct No
Slide 47: Be Prepared To Stick To Your Long-term Plan
Be Prepared To Stick To Your Long-term Plan Disciplined, long‐term Asset Allocation process forms foundation for portfolio strategies Diversification through inclusion of assets with materially different characteristics will reduce overall portfolio risk in most environments Modest Shifts in A
Slide 48: Important Information
Important Information Views expressed are as of the date indicated; they are based on the information available at the time and are subject to changed based on economic, capital market, and other conditions. Any investment decision should be based on an individual’s own goals, time horizon, and tole
Slide 49: Additional Resources
ADDITIONAL RESOURCES • Presentations will be shared on Alaskanomics.com soon. • Drop your business card in the box on the back table to join the Alaskanomics mailing list plus a chance to win 20,000 Alaska Airlines miles 49
Slide 50: Community Engagement
COMMUNITY ENGAGEMENT 50
Slide 51: UA Contributions
UA CONTRIBUTIONS • UAA - $164,500 – UAA ISER $100,000 – UAA Small Business Development Center $50,000 – UAA Seawolf Debate, $10,000 – Knudson Scholarships, $4,500 • UAF - $50,000 – UAF School of Management • UAS - $50,000 – UAS School of Management: $40,000 – UAS Ketchikan: $5,000 – UAS Sitka: $5,00
Slide 52: Thank You!
ANK YOU! siti Be $. Pas 2 — Northrim Bank Y S Ts “ny CTT #Y, se uw
Northrim Bancorp — Investor Presentation (April 2016) on 6ix