An economist at Anchorage-based Northrim BanCorp Inc. was optimistic last year about the state of Alaska's fiscal future, but things aren't quite the same now.
In an annual report filed last week with the Securities and Exchange Commission, Northrim said that "current economic conditions continue to pose significant challenges for us." There could be trouble for business, it said, as soon as next year if oil prices stay low and unemployment in Alaska grows.
"The company does not anticipate that the estimated decrease in jobs in Alaska in 2016 will have a significant impact on its operating results," the report said. "However, if oil prices remain low for an extended period of time, we expect that unemployment in Alaska could continue to increase in future years and negatively impact the company's operations as early as 2017."
In January, the Alaska Department of Labor and Workforce Development predicted that the state is on track for 2016 to be its first year of overall job losses since 2009, to the tune of 2,500 jobs (a loss of 0.7 percent). The Labor Department linked that prediction directly to low oil prices.
Over the past 20 months, those low oil prices -- even dipping below $30 per barrel -- have fueled a multibillion-dollar state budget deficit, and economists are now asking whether Alaska is either already in a recession or about to enter one.
"(A) return to a recessionary economy could result in financial stress on our borrowers that would adversely affect our financial condition and results of operations," Northrim's report said.
Of course, it's hard to know what the future holds.
"You cannot fully predict what can occur in 2017," said Joe Beedle, Northrim Bank's chairman. "It's not going to be catastrophic, in our opinion, and it's not going to be a repeat of 1986."
Beedle said the company doesn't "put on rose-colored glasses," but he retains some optimism when it comes to oil prices in the not-so-distant future.
"We still believe in the next two years, that we will bounce back, in some fashion migrate back to $50 to $60 (per barrel) oil," he said. "Alaska businesses, including this bank, are strong and resilient and can absorb some softening of the economy."
Northrim BanCorp owns Northrim Bank, Northrim Investment Services Company and two trusts. The company offers banking and investment services, and commercial and consumer loans.