A new examination by bank regulators has forced Alaska Pacific Bank to restate its results from last quarter, further widening its loss as the bank recognized more problem loans in its portfolio.
In a filing Tuesday with the Securities and Exchange Commission, Alaska Pacific Bancshares revealed the new losses. That company is the publicly traded parent of the Juneau-based bank.
Alaska Pacific's losses for the first nine months of the year totaled $1.26 million, up from the loss of $311,000 announced earlier. That amounted to a loss of $1.92 a share, compared to the previously announced loss of $0.48 a share, for the first three months of the year.
Bank CEO Craig Dahl said the losses stemmed from a failed high-end real estate development in Telluride, Colo. That's one of a series of loans, made in participation with other small banks, that Alaska Pacific has long known were in trouble.
Federal bank examiners, the bank's auditors and its management were all in agreement about recognizing the losses as soon as possible, he said.
"From and accounting and a regulatory point of view, the best thing to do was to charge it off and get it behind us," Dahl said.
Alaska Pacific has been struggling with several such problem loans, mostly made in conjunction with other small banks, to finance large developments in several West Coast states.
Dahl said the economy in its core Southeast Alaska markets remains strong.
"We are having every month profitable in the core business of the bank," he said.
The federal government last year invested $4.8 million in Alaska Pacific as part of the Troubled Asset Relief Program's Capital Purchase Program, the only bank in Alaska that needed such help.
The bank also received a higher level of scrutiny from regulators, and the financial restatements came after an interim examination by the Office of Thrift Supervision, the bank's chief regulator.
In the year's third quarter, Alaska Pacific has listed an expense of $903,000 for loan losses, which has been increased to $2.5 million in the restated financial reports.
The bank's quarterly loss was now $2.27 per share, compared to a loss of $1.03 per share for the third quarter the previous year. That compares to a loss of $672,000, or $1.03 per share, for the same quarter of 2008.
The restated numbers leave it just barely above the required minimum capital ratios set by OTS examiners.
The bank's "risk-based capital ratio," a measurement regulators use to ensure banks are financially healthy, is now only 12.53 percent, barely above the minimum 12 percent the bank is required to maintain.
Bank regulators had earlier grown concerned about Alaska Pacific's condition and had imposed a tougher capital ratio for it.
If the bank falls below the required capital ratios, the OTS could impose fines or issue a cease and desist order requiring further corrective actions.
Dahl said he expects the bank to remain above its required capital ratios but that it may have taken the TARP funds to do that.
The restatement of the results will allow the bank to more quickly clear up the final bad loans in its portfolio, he said.
"It's time to move on to 2010 and put this behind us," Dahl said.
Contact reporter Pat Forgey at 586-4816 or e-mail email@example.com.
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