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Alaska Pacific Bank sees improving profits

Posted: November 22, 2011 - 1:03am

Alaska Pacific Bancshares, the Juneau-based parent of Alaska Pacific Bank, has reported in the quarter ended Sept. 30, its profits were slightly above the same quarter last year — $287,000, compared to $266,000 in 2010’s third quarter.

For the year so far, however, Alaska Pacific is doing much better than last year.

For the nine months ended Sept. 30, that means profits of $474,000, compared to a loss of $85,000 last year.

During the quarter, a number of measures by which financial institutions are measured continued to improve for the bank, but non-performing loans remained a problem.

Alaska Pacific President and Chief Executive Officer Craig Dahl was traveling and did not return phone calls.

Loans made in the Lower 48 proved troublesome for the bank a few years ago and resulted in a Troubled Asset Relief Program bailout of the bank and increased regulatory scrutiny.

In a statement filed with the Securities and Exchange Commission, Dahl said the bank’s quarterly earnings were “trending back to more normal performance.”

He credited that to both low interest rates spurring borrowing and the strength of the bank’s primary market area.

“The economic stability in the Southeast Alaska market has created sufficient (albeit lower) demand for our business and consumer loans,” Dahl said.

While the bank’s interest income, its largest source of revenue, declined over both the year and the quarter, so did its interest expense.

Alaska Pacific had to pay only 0.47 percent on deposits and other money it loaned out, compared to 0.71 percent a year ago.

The amount the bank was able to earn on its loans declined also, with the crucial interest rate margin decreasing from 5.1 percent last year to 4.92 percent this year.

That bank’s big improvement over the year came in fewer bad loans.

So far this year, the bank has had loan losses of $313,000, compared to more than $1 million at the same time last year.

The bank has total loans of about $145 million.

While five of its largest impaired loans, for which the bank isn’t sure it will get fully paid back, are in Alaska, two are in Idaho and one in Minnesota.

The total amount of impaired loans at the end of September was $12.3 million, up from $9.6 million at the start of the year.

More than half of those loans were for commercial real estate.

How those impaired loans work out will likely play a big role in Alaska Pacific’s future profitability, but Dahl said things were likely to continue to improve.

“Given the challenges of the operating environment during the past four years, we are satisfied with the bank’s overall performance and we remain confident in the positive direction the bank is taking,” Dahl said in the statement.

Alaska Pacific Bank was the only bank in Alaska forced to accept TARP funds during the financial crisis.

Alaska Pacific Bancshares, the bank’s parent company, is the only publicly traded company based in Juneau. Its stock closed unchanged at $6.60 Wednesday, down from about $25 a share before the crisis.

Wednesday, the bank also announced that Senior Vice President and Chief Credit Officer John E. Robertson had resigned to relocate and “pursue other interests,” but stated his departure was not due to any disagreement with the bank.

• Contact reporter Pat Forgey at 523-2250 or at patrick.forgey@juneauempire.com.

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