here are thousands of financial institutions in Alaska, providing everything from checking and savings accounts to loans and investment solutions.
Banks and credit unions are among the most prominent financial services companies serving Alaskans. However, there are distinct differences—and similarities—between how these institutions function to meet the needs of businesses and consumers. And each one fills a particular role in the financial services marketplace.
The state’s diverse roster of financial institutions also includes specialized entities: trust companies, finance companies, money service businesses, mortgage lenders/loan originators, and payday lenders. All of these institutions give Alaskans more choices when it comes to satisfying their financial requirements.
© Matt Waliszek
Within Alaska, the Alaska Division of Banking and Securities regulates many of the financial institutions that operate in the state. The division charters and examines state-chartered banks, bank holding companies, credit unions, trust companies, small loan companies, business and industrial development corporations (BIDCOs), payday lenders, and premium finance companies. More specifically, it regulates four banks—Northrim Bank, First Bank, Denali State Bank, and Mt. McKinley Bank—and one credit union: Credit Union 1.
Banks and credit unions that are chartered in Alaska must adhere to distinct statutes, according to Patrice Walsh, director of the Alaska Division of Banking and Securities. Banks must follow AS 06.05. Alaska Banking Code. Credit unions are bound by AS 06.45. Alaska Credit Union Act. And both banks and credit unions must follow AS 06.01. Banks and Financial Institutions. “The credit union is a nonprofit and the banks are privately-owned corporations, so there are slightly different guidelines,” Walsh says.
Kroll attributes the difference in pricing to credit unions’ tax-exempt status. She explains: “Paying taxes is a significant cost of doing business incurred by banks; under today’s rules, credit unions can compete for the exact same market share, only with a tax-free advantage.”
Alaska Division of Banking and Securities
Northrim Bank
Kroll continues: “Regional or community banks are well-known to be more customer-friendly because of their local presence and knowledge. Loan requests and/or other customer needs can be nimbly and quickly met at the local level versus a standardized, non-flexible approach with which many larger banks struggle.”
Michael Martin, executive vice president, chief operations officer, general counsel, and corporate secretary at Northrim Bank, expresses similar thoughts. Community banks are much more localized, he says, and this allows them to really specialize and become experts in what makes Alaska’s economy work. For example, Northrim has sixteen branches in the state and strictly focuses on meeting the needs of Alaskans. “What we like to say is that we’re fully invested in the state of Alaska because that is clearly where we have all our operations,” he explains.
Community banks, like larger institutions, are spending a tremendous amount of capital to provide customers with the latest and greatest technology to enhance their access to banking services, says Martin, who also serves as vice president of the Alaska Bankers Association. Northrim, which is a $1.5 billion bank, has an app that allows customers to do pretty much anything they can do in a branch. Although Northrim gives customers different ways to do their banking, it still prioritizes providing “customer first” service. “Banks and credit unions are quick adaptors, and the price of technology is where we can keep up these days,” he says. “I believe there will always be people who will value customer service.”
SVP Cash Management/Anchorage Branch Administration Director
First National Bank Alaska
As a company, Wells Fargo employs innovation and technology to build stronger relationships with customers. For example, it recently introduced card-free ATMs and a free Control Tower mobile banking service to give customers a snapshot of their digital financial footprint. “It’s about giving our customers information to make better-informed financial decisions and giving them the tools and ability to instantly complete a transaction whenever they want and wherever they are,” Deal says.
Financial Examiner III, Alaska Division of Banking and Securities
As financial cooperatives, credit unions operate with a “people first” principle, says Randy Butler, regional executive at Denali a division of Nuvision Federal Credit Union. “In general, you’ll find credit unions offer lower costs on loans and fees and provide higher dividends on deposits than banks,” he says.
FNBA
FNBA
Like banks, credit unions also offer online and mobile services to ensure members have secure, easy access to their accounts. After all, people expect their bank or credit union to offer 24/7 access to accounts and to be secure, Butler says. He elaborates: “If you are not able to offer around-the-clock access to accounts, loan applications and follow-up, mobile banking [to include remote deposit capture and other remote access services], a call center, ATMs, and other financial technology channels, you are going to have a tough time competing for customers/members.”
Regional Executive-North
Denali a division of Nuvision Credit Union
Today, credit unions and banks are experiencing a trend toward more consolidation. There were roughly 12,000 credit unions in the United States about twenty years ago, and now there are approximately 6,000, Butler says. And according to a December 2018 report by the Congressional Research Service, the total number of credit unions declined from 9,014 to 5,573 between 2004 and 2017. During that same period, the number of community banks declined from 8,379 to 4,920. However, the number of credit unions with $1 billion or more in total assets increased from 99 to 287.
Denali is a dynamic example of how the consolidation trend is playing out in Alaska. Denali merged with Nuvision Credit Union in September 2018 and recently completed an upgrade to a new core computer system. “The merger with Nuvision now means we are a financial institution with the strength of $2.3 billion in assets and more than 170,000 members [compared to $670 million and 72,000 members prior to the merger] and branch offices in five western states: Alaska, Washington, California, Arizona, and Wyoming,” Butler says.
He adds: “This is an exciting time for Denali as we are working toward introducing new products to members and building a long-term service model keyed on the new computer system that’s in place. Denali’s fifteen-branch network that we built in Alaska and Washington remains in place, joining with the sixteen branches in Nuvision’s network to offer multi-state services to members in addition to the shared branch/ATM networks in which both Denali and Nuvision participate.”
Peak Trust Company
Morris adds: “Our team regulates BIDCOs, and we ensure that they are lending in a safe and sound manner and are following state statutes. We make sure they have the appropriate policies and procedures in place.”
Although most people do not think of Alaska as a financial services hub, Blattmachr says, Alaska has some of the best trust and estate planning laws in the nation. “That provides a huge advantage to Alaskans and brings outside revenue to the state,” he says. “It’s a very good kind of economic diversifier. It’s attractive for people to do business here.”
Alaska also has a wide range of other financial services industries operating in the state. According to Walsh, the Alaska Division of Banking and Securities regulates 2,700 mortgage loan originators, 306 mortgage lenders, 111 money service businesses, twenty-six premium finance companies, twenty-three payday lenders, and ten small loan companies.
Alaska’s diverse financial institutions play an important role in the economy and are beneficial for consumers and businesses, Walsh says. “Each one is needed, and each one serves its role,” she says. “This gives Alaskans a variety of choices in the financial marketplace.”