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I wrote this on the plane to Fairbanks to go the annual meeting for Denali Bank. It’s been part of my New Year’s resolutions to attend an annual meeting for a stock that I own, and I figured it was a good excuse to get away to see a beautiful part of the country. Figured it was a good time to post the write up and later post the takeaways from the meeting.
 
Denali Bancorp is one of five banks headquartered in Alaska and one of 3 public banks. The other 2 public banks, First bank of Alaska (FBAK) and Northrim (NRIM) are based in Anchorage, while Denali is based in Fairbanks. Denali has 5 full service branches, 4 located in the Fairbanks area and 1 in Tok, which is a little further in the interior. 
 
Denali has a market cap of $50.3 million, a book value of $53.9 million or $18.52 per share (as of March 2026), giving it a price to book of 0.94. The ROE was 16.5% in 2025, which is significantly better than the average community bank, and is driven by a wide net interest margin of 5.3%. 
 
The bank earned $2.65 per share in 2025, and is currently trading at $17.25, giving it a PE of 6.5X. It pays a $1 per share dividend, which comes to a hefty 5.7% dividend yield, with a less than 40% payout ratio. Despite the large dividend payout, the bank had equity of $51.8 million of equity at the year end 2025, against $512 million of assets, giving them an equity to assets ratio of 10.1%. I generally use Peter Lynch’s rule of thumb for community banks - above 7.5% Equity to Assets is pretty well capitalized, and an E/A ratio above 10% is probably overcapitalized. This kind of juicy E/A ratio makes it an attractive target for a larger bank seeking to lower its leverage ratio and seek out more deposits. It also means there might be upside to that ROE if the deposits and loan book grow. 
 
Denali had $455 million of deposits as of March 31, 2026, making up nearly all of its $462 million in liabilities. $166 million, or 36%, of total deposits are non interest bearing. 
 
Non interest bearing deposits are a competitive advantage for a small community bank, as they provide a low cost of funding and can fuel a wide net interest margin (which is roughly the difference between the deposit rate and the average rate they get on loans). 
 
In Denali’s case, they operate in Fairbanks and serve interior Alaska, which has many areas designated as “banking deserts”, areas with few in person banking services. Rural communities in interior Alaska may be hours away from a branch, and even the commute into Fairbanks is quite onerous, while a commute to Anchorage is implausible. I think this drives the relatively high ratio of non interest bearing deposits at the bank. 
 
Now, the main pitch for any community bank in my opinion should center on why the local economy will do well. 
 
So why Alaska? 
 
The Alaska economy is heavily dependent on 4 sectors - oil and gas, mining, government and military, and fishing. When including the ancillary service businesses which depend on these, these four sectors make up the majority of economic drivers for the economy. 
 
In particular the Fairbanks economy is heavily dependent on the military presence, with both Fort Wainwright and Eielson Air Force base located within the city. 
 
Fort Wainwright hosts the 11th airborne “Arctic Angels”, which is the only Arctic division within the Army. 
 
The Eielson Air Force base began hosting hosts 2 squadrons of F-35s in the past 6 years, over 50 planes, which require service personnel and, the 18th aggressor squadron, a squad of F-16s used to train F-35 pilots. 
 
Arctic security is becoming increasingly contentious as northern waterways open up, and both Russia and China challenge the west for dominance of the Arctic, leading to some rambunctious threats by Trump to annex Greenland from Denmark. However Alaska remains the U.S. main gateway to the Arctic, and Fairbanks is the main military outpost supporting these efforts. So as the US gets serious about Arctic security, the more obvious move (rather than annexing a foreign territory) is a build up of forces in Fairbanks. 
 
Alaska’s mining sector has been performing incredibly well on the back of high precious metal prices. In the past couple of years, the U.S. has refocused on exploring for critical minerals. There are many exploratory projects in the Alaska interior but the infrastructure is lacking. For example, the U.S. government took a 10% stake in a company Trilogy metals to provide funding for the development of roads to explore for critical minerals in an area of west Alaska that has not been previously exploited.  
 
Many statistics aggregate mining and oil and gas, which has not been doing as well. However in the wake of the Iran war, the oil and gas sector is likely to turn around as well. Most of the oil and gas activity in Alaska is on the North Slope near Prudhoe Bay, which is pretty far from Fairbanks, but Fairbanks is the closest major city, and is a major stopping point between Anchorage and Prudhoe Bay. 
 
Alaskan seafood has been under pressure from an overhang of Russian inventory (a big surge of which hit the market right before sanctions hit in 2022), and a strong dollar. However years of sanctions have taken Russian supply offline, and the dollar is beginning to weaken. 2025 has been marginally better than 2024, though not fully recovered. 
 
A small but emerging sector is Space. High latitudes “see” more satellite passes per day. As of 2025, there were approximately 15,000 low earth orbit satellites and according to an estimate by pixalytics, there could be 100,000 by 2030. Fairbanks hosts NASA’s Alaska Satellite Facility, and there are several antennae in the farther north outposts of Deadhorse and Utqiaġvik. As these antennae are built out, several local contractors will be involved and should boost local lending activity. 
 
Overall, I think we are setting up for a 2026-2027, when all four sectors of Alaska’s economy - oil and gas, mining, government/military, and fishing - will be doing well simultaneously. 
 
Meanwhile sentiment on Alaska has been negative for many years. The permanent population of Alaska has been stagnant around 730,000 for the past 7 years. However this neglects the growth in the nonresident labor force, I.e. workers in Alaska who have a permanent residence in the “lower 48”. Since the pandemic, non resident workers have increased 35% to 95,000. 
 
While these workers are unlikely to bank with an Alaska community bank, the increased service activity to service these workers should drive continued economic growth. 
 
So I’ve made the case for “why Alaska” and I’ve shown a few metrics that demonstrate Denali is cheap and may have a competitive advantage in these non interest bearing deposits. Now let’s dive into that loan book and get a sense of the quality of that lending. 
 
As of December 2025, the bank had $366 million in loans, which made up 71% of total assets of $512 million. 
 
A brief look at the rest of the assets, which are mostly securities, most of which are municipal bonds and mortgage backed securities. There were $113 million of securities as of March 2026, making up 22% of assets, and of these $20 million were “held to maturity” while $93 million were classified as “available for sale”. 
 
If you recall the Silicon Valley Bank collapse in 2023, you may remember everyone fretting about “held to maturity” securities. With this “held to maturity” classification, the bank avoids marking its securities (mostly government bonds and mortgage securities) to market, so the bank avoids any hit to equity or book value from changes in the market price of securities. This became especially problematic in the rising rate environment of 2022 and 2023, when the market price of bonds took a big hit, and this wasn’t getting recognized in the book values of banks with lots of HTM securities. 
 
The good thing is that at Denali, such securities only make up less than 4% of total assets, and total unrealized losses were only a relatively small $760k as of December 2025. 
 
The $93 million of available for sale securities are marked to market, and previously mentioned equity value of $53.9 million takes into account about $5 million of mark to market losses on the available for sale securities. 
 
Now if we look at the composition of the loan book, 29% are commercial real estate loans (17% owner occupied and 12% non owner occupied), 29% commercial loans (I.e. loans to local businesses) and 15% are loans for construction. 
 
Between the commercial real estate loans and commercial loans, the bank’s loan book is heavily dependent on the health of local businesses in Fairbanks and the interior of Alaska. 
 
Only 13% of loans are residential real estate, as the majority of mortgage loans originated by the bank are sold on to the Alaska Housing Finance Corporation, Fannie Mae, or Freddie Mac. The bank services $230 million of residential real estate loans while it holds only about $100 million on its books. 
 
14% are consumer loans. This seems like a relatively high share of consumer loans for a small community bank and I am typically wary of consumer loans, but they seem to be performing relatively well. Only 0.4% of these loans ($240k out of $53 million total consumer loans) are over 30 days past due. 
 
On the overall loan book of $366 million, $4.6 million of loans were past due, or 1.2% of all loans. Almost all of that, $4.2 million, was 30-60 days past due. I start to get worried when this metric gets above 2% and a measure near 1% indicates relatively conservative underwriting. 
 
Loans that are more than 90 days past due are typically called “non performing assets”. It is worthwhile to note There were NO loans that weee more than 90 days past due, which is a pretty good sign. 
 
The bank did do a loan modification in 2025, consisting of a term extension on $2.9 million of loans. This is about 0.8% of the loan book. This could be considered a troubled asset, close to default. This is still below 1% of the total loan book, which is a fairly good indicator of health of the loan book. 
 
So overall the loan book looks relatively healthy, and nothing glaring stands out to justify the low PE and relatively low P/book ratio. 
 
For a bank that has a P/book near 1, the returns should approximate the ROE. The ROE of Denali has been well above 10% for many years since the pandemic.  Capital gains have been around 7-8% per year for the past 5-6 years plus a 5-6% dividend throughout that period, for a low to mid teens return. There has also been a bit of multiple compression from around 9-11x earnings to the current 6.5x earnings, and from around 1.2x book to the current 1.0x book. So the forward returns might be expected to be slightly higher than the past 5-6 years of returns. 
 
If Alaska (and Fairbanks in particular) really booms, and if the bank expands the balance sheet and leverages the equity a bit more, you could see really spectacular returns, where the ROE expands, the equity and earnings grow, and the multiples expand. In that scenario you might expect something closer to a 20% compounded over the forward 5 years. 
 
I’m pretty happy taking a 10%+ return with the chance to get a very high 20% return. 
 
At the annual meeting, I’m looking to gather some more insights from management as to their capture of deposit share of non resident workers, members of the military and base workers, and opportunities to expand share in the Alaskan interior and near Prudhoe bay to take advantage of the current bullish environment for the oil and gas and mining industries. 

I wrote this on the plane to Fairbanks to go the annual meeting for Denali Bank. It’s been part of my New Year’s resolutions to attend an annual meeting for a stock that I own, and I figured it was a good excuse to get away to see a beautiful part of the country. Figured it was a good time to post the write up and later post the takeaways from the meeting.
 
Denali Bancorp is one of five banks headquartered in Alaska and one of 3 public banks. The other 2 public banks, First bank of Alaska (FBAK) and Northrim (NRIM) are based in Anchorage, while Denali is based in Fairbanks. Denali has 5 full service branches, 4 located in the Fairbanks area and 1 in Tok, which is a little further in the interior. 
 
Denali has a market cap of $50.3 million, a book value of $53.9 million or $18.52 per share (as of March 2026), giving it a price to book of 0.94. The ROE was 16.5% in 2025, which is significantly better than the average community bank, and is driven by a wide net interest margin of 5.3%. 
 
The bank earned $2.65 per share in 2025, and is currently trading at $17.25, giving it a PE of 6.5X. It pays a $1 per share dividend, which comes to a hefty 5.7% dividend yield, with a less than 40% payout ratio. Despite the large dividend payout, the bank had equity of $51.8 million of equity at the year end 2025, against $512 million of assets, giving them an equity to assets ratio of 10.1%. I generally use Peter Lynch’s rule of thumb for community banks - above 7.5% Equity to Assets is pretty well capitalized, and an E/A ratio above 10% is probably overcapitalized. This kind of juicy E/A ratio makes it an attractive target for a larger bank seeking to lower its leverage ratio and seek out more deposits. It also means there might be upside to that ROE if the deposits and loan book grow. 
 
Denali had $455 million of deposits as of March 31, 2026, making up nearly all of its $462 million in liabilities. $166 million, or 36%, of total deposits are non interest bearing. 
 
Non interest bearing deposits are a competitive advantage for a small community bank, as they provide a low cost of funding and can fuel a wide net interest margin (which is roughly the difference between the deposit rate and the average rate they get on loans). 
 
In Denali’s case, they operate in Fairbanks and serve interior Alaska, which has many areas designated as “banking deserts”, areas with few in person banking services. Rural communities in interior Alaska may be hours away from a branch, and even the commute into Fairbanks is quite onerous, while a commute to Anchorage is implausible. I think this drives the relatively high ratio of non interest bearing deposits at the bank. 
 
Now, the main pitch for any community bank in my opinion should center on why the local economy will do well. 
 
So why Alaska? 
 
The Alaska economy is heavily dependent on 4 sectors - oil and gas, mining, government and military, and fishing. When including the ancillary service businesses which depend on these, these four sectors make up the majority of economic drivers for the economy. 
 
In particular the Fairbanks economy is heavily dependent on the military presence, with both Fort Wainwright and Eielson Air Force base located within the city. 
 
Fort Wainwright hosts the 11th airborne “Arctic Angels”, which is the only Arctic division within the Army. 
 
The Eielson Air Force base began hosting hosts 2 squadrons of F-35s in the past 6 years, over 50 planes, which require service personnel and, the 18th aggressor squadron, a squad of F-16s used to train F-35 pilots. 
 
Arctic security is becoming increasingly contentious as northern waterways open up, and both Russia and China challenge the west for dominance of the Arctic, leading to some rambunctious threats by Trump to annex Greenland from Denmark. However Alaska remains the U.S. main gateway to the Arctic, and Fairbanks is the main military outpost supporting these efforts. So as the US gets serious about Arctic security, the more obvious move (rather than annexing a foreign territory) is a build up of forces in Fairbanks. 
 
Alaska’s mining sector has been performing incredibly well on the back of high precious metal prices. In the past couple of years, the U.S. has refocused on exploring for critical minerals. There are many exploratory projects in the Alaska interior but the infrastructure is lacking. For example, the U.S. government took a 10% stake in a company Trilogy metals to provide funding for the development of roads to explore for critical minerals in an area of west Alaska that has not been previously exploited.  
 
Many statistics aggregate mining and oil and gas, which has not been doing as well. However in the wake of the Iran war, the oil and gas sector is likely to turn around as well. Most of the oil and gas activity in Alaska is on the North Slope near Prudhoe Bay, which is pretty far from Fairbanks, but Fairbanks is the closest major city, and is a major stopping point between Anchorage and Prudhoe Bay. 
 
Alaskan seafood has been under pressure from an overhang of Russian inventory (a big surge of which hit the market right before sanctions hit in 2022), and a strong dollar. However years of sanctions have taken Russian supply offline, and the dollar is beginning to weaken. 2025 has been marginally better than 2024, though not fully recovered. 
 
A small but emerging sector is Space. High latitudes “see” more satellite passes per day. As of 2025, there were approximately 15,000 low earth orbit satellites and according to an estimate by pixalytics, there could be 100,000 by 2030. Fairbanks hosts NASA’s Alaska Satellite Facility, and there are several antennae in the farther north outposts of Deadhorse and Utqiaġvik. As these antennae are built out, several local contractors will be involved and should boost local lending activity. 
 
Overall, I think we are setting up for a 2026-2027, when all four sectors of Alaska’s economy - oil and gas, mining, government/military, and fishing - will be doing well simultaneously. 
 
Meanwhile sentiment on Alaska has been negative for many years. The permanent population of Alaska has been stagnant around 730,000 for the past 7 years. However this neglects the growth in the nonresident labor force, I.e. workers in Alaska who have a permanent residence in the “lower 48”. Since the pandemic, non resident workers have increased 35% to 95,000. 
 
While these workers are unlikely to bank with an Alaska community bank, the increased service activity to service these workers should drive continued economic growth. 
 
So I’ve made the case for “why Alaska” and I’ve shown a few metrics that demonstrate Denali is cheap and may have a competitive advantage in these non interest bearing deposits. Now let’s dive into that loan book and get a sense of the quality of that lending. 
 
As of December 2025, the bank had $366 million in loans, which made up 71% of total assets of $512 million. 
 
A brief look at the rest of the assets, which are mostly securities, most of which are municipal bonds and mortgage backed securities. There were $113 million of securities as of March 2026, making up 22% of assets, and of these $20 million were “held to maturity” while $93 million were classified as “available for sale”. 
 
If you recall the Silicon Valley Bank collapse in 2023, you may remember everyone fretting about “held to maturity” securities. With this “held to maturity” classification, the bank avoids marking its securities (mostly government bonds and mortgage securities) to market, so the bank avoids any hit to equity or book value from changes in the market price of securities. This became especially problematic in the rising rate environment of 2022 and 2023, when the market price of bonds took a big hit, and this wasn’t getting recognized in the book values of banks with lots of HTM securities. 
 
The good thing is that at Denali, such securities only make up less than 4% of total assets, and total unrealized losses were only a relatively small $760k as of December 2025. 
 
The $93 million of available for sale securities are marked to market, and previously mentioned equity value of $53.9 million takes into account about $5 million of mark to market losses on the available for sale securities. 
 
Now if we look at the composition of the loan book, 29% are commercial real estate loans (17% owner occupied and 12% non owner occupied), 29% commercial loans (I.e. loans to local businesses) and 15% are loans for construction. 
 
Between the commercial real estate loans and commercial loans, the bank’s loan book is heavily dependent on the health of local businesses in Fairbanks and the interior of Alaska. 
 
Only 13% of loans are residential real estate, as the majority of mortgage loans originated by the bank are sold on to the Alaska Housing Finance Corporation, Fannie Mae, or Freddie Mac. The bank services $230 million of residential real estate loans while it holds only about $100 million on its books. 
 
14% are consumer loans. This seems like a relatively high share of consumer loans for a small community bank and I am typically wary of consumer loans, but they seem to be performing relatively well. Only 0.4% of these loans ($240k out of $53 million total consumer loans) are over 30 days past due. 
 
On the overall loan book of $366 million, $4.6 million of loans were past due, or 1.2% of all loans. Almost all of that, $4.2 million, was 30-60 days past due. I start to get worried when this metric gets above 2% and a measure near 1% indicates relatively conservative underwriting. 
 
Loans that are more than 90 days past due are typically called “non performing assets”. It is worthwhile to note There were NO loans that weee more than 90 days past due, which is a pretty good sign. 
 
The bank did do a loan modification in 2025, consisting of a term extension on $2.9 million of loans. This is about 0.8% of the loan book. This could be considered a troubled asset, close to default. This is still below 1% of the total loan book, which is a fairly good indicator of health of the loan book. 
 
So overall the loan book looks relatively healthy, and nothing glaring stands out to justify the low PE and relatively low P/book ratio. 
 
For a bank that has a P/book near 1, the returns should approximate the ROE. The ROE of Denali has been well above 10% for many years since the pandemic.  Capital gains have been around 7-8% per year for the past 5-6 years plus a 5-6% dividend throughout that period, for a low to mid teens return. There has also been a bit of multiple compression from around 9-11x earnings to the current 6.5x earnings, and from around 1.2x book to the current 1.0x book. So the forward returns might be expected to be slightly higher than the past 5-6 years of returns. 
 
If Alaska (and Fairbanks in particular) really booms, and if the bank expands the balance sheet and leverages the equity a bit more, you could see really spectacular returns, where the ROE expands, the equity and earnings grow, and the multiples expand. In that scenario you might expect something closer to a 20% compounded over the forward 5 years. 
 
I’m pretty happy taking a 10%+ return with the chance to get a very high 20% return. 
 
At the annual meeting, I’m looking to gather some more insights from management as to their capture of deposit share of non resident workers, members of the military and base workers, and opportunities to expand share in the Alaskan interior and near Prudhoe bay to take advantage of the current bullish environment for the oil and gas and mining industries.