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Letter from the President, Summer 2016

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JasonMetrokin04The summer months are upon us at last. The days are getting longer, temperatures are warming, and many of you are busily preparing for the subsistence activities that define summertime in Bristol Bay. Something about the lengthening days instills a sense of optimism and momentum. Every year at this time I appreciate this opportunity to say a few words to let you know what’s going on at BBNC before you venture into the beautiful Bristol Bay region to take part in the traditions that have sustained our people for centuries.

We’re a few months into FY17 and though we’re still auditing the final financial review of FY16, there are a few things I can share with you now. As expected, revenue took a bit of a hit in FY16, due in part to the plummeting price of oil. So while it should be no surprise that revenues are down, our FY16 earnings and net income remain robust. Diversification across our business sectors has buoyed our earnings. So despite a downturn in industrial services, we’ve seen strong performances in construction, government contracting, and petroleum distribution. Those three sectors carried earnings through FY16 and have positioned BBNC to remain vital, even as we stare down an uncertain economic situation in Alaska in the months, and perhaps years, ahead.

Diversification is one of our key strategic pillars here at BBNC. Without a diverse portfolio, we run the risk of becoming overly reliant on one or two industry sectors. This can present risks for any business, especially if the market in any given sector goes temporarily sideways, as it recently has in oil and industrial services. So, while BBNC continues to invest and grow our oil and gas portfolio, we would have taken a much harder hit had we not been committed to construction, government services, and tourism. Rounding out the picture are BBNC’s in-region investment efforts, like the businesses we’re helping to get off the ground through the Bristol Bay Development Fund. Together, these efforts have helped stabilize our earnings, and in some cases have escalated them.

And there’s a bit of a paradox in all of this: the right kind of diversification— the right mix of business lines—can help offset a single troubled sector. For example, the low cost of oil today means lower fuel costs. And that benefits our petroleum distribution operations, which have been some of our strongest performers in the past year. As always, our annual report will be mailed out in mid August. The report will give each of you an opportunity to see the full overview of BBNC’s finances and operations over the past fiscal year. If you look at nothing else, take a glance at our earnings over the past decade. The past ten years have been some of the strongest in our 44 year history. In addition to net income, be sure to pay attention to shareholder growth, as well as to our new strategic initiatives and shareholder equity. Together, these should give you an idea of our overall health. All of this is especially important as the economy becomes more unpredictable. While we know the pendulum will eventually swing back, there will be great need in Bristol Bay and across the state in the short term—the need for jobs and for reliable social services.

BBNC is committed to lifting up our shareholders to the best of our ability, especially when the chips are down. This means preparing the workforce so you’re ready to jump in when jobs become available again. Check out the article on the General Maintenance Technician Training BBNC funded this past March as an example of how we’ll invest in the workforce of tomorrow and ensure our shareholders have a shot at rewarding, economically viable careers.

BBNC will also continue to invest in social and cultural support, which will likely be the hardest hit as the state’s economy turns downward. If your organization provides benefits or has impact on shareholders and descendants in the areas of arts and culture, health and social services, or education, employment, and training, I encourage you to contact us about BBNC’s corporate giving program.

Tourism is likely to be a benefit to the Bristol Bay region in the coming years. Our investment in Mission Lodge several years ago opened the doors for a thriving tourism sector at BBNC. I’m excited about the recent purchase of Katmailand, Inc., which includes the Brooks Lodge and Grosvenor Lodge in Katmai National Park, and Kulik Lodge on Nonvianuk Lake. This acquisition makes BBNC a major player in tourism in Bristol Bay and across the state. It’s also a part of our in-region investment strategy, providing economic stability in the region as well as local and shareholder employment opportunities.

So, welcome summer. And before you head out, one last thought. Many of you who live and work in Bristol Bay have taken part in hunting, fishing, and gathering subsistence for decades. Yet too often, I’m saddened by accounts of accidents out in the wild—even by the more experienced among us—that could have been easily prevented. Please don’t take safety for granted. Invest in the proper gear. Practice safety protocol. Watch out for one another. Summer is exciting and fun; Alaska beautiful and thrilling.But please be careful out there.

As always, thank you for your support.