http://racerealty.com/

Government buys share in Alaska Pacific Bank

CEO: Bank's finances are so strong it may not need the money

Posted: Sunday, February 08, 2009

Alaska Pacific Bank completed a deal with the federal government's Troubled Asset Relief Program Friday in which $4.8 million was invested in the bank.

It is the first bank in Alaska to announce such an investment.

The United States Department of Treasury now owns a fifth of the bank, a subsidiary of the publicly traded, Juneau-based Alaska Pacific Bancshares.

Stock in Alaska Pacific Bancshares closed at $4.15 Friday, down from a high of $26 earlier this year.

Bank CEO Craig Dahl had previously said that Alaska Pacific had been approved for the Capital Purchase Program.

Many troubled banks have sought the federal cash infusions that come with inclusion in the program, but Dahl said only those in a strong enough financial position and likely to survive the nation's economic downturn have been approved.

Alaska Pacific's finances, despite holding some troubled loans outside Alaska, is strong enough that it might not even need the money, Dahl said.

"We were probably right on the cusp of not taking the funds," he said, adding that accepting the money will strengthen the bank's capital position.

"We view this as an added cushion to our capital," Dahl said.

Given a host of possible issues facing Alaska Pacific's primary market of Southeast Alaska, including possible tourism declines, capital move threats and legal squabbles over the Kensington Mine, Dahl said it was best to be as strongly capitalized as possible.

"We think it is in the best interest of our shareholders and the bank to take advantage of the program," he said.

The TARP investment comes in the form of purchased shares of preferred stock in the company. Those preferred shares will pay a 5 percent dividend, up to 9 percent after five years, but Dahl said he expected the money would be returned to the federal treasury well before that time.

Accepting the TARP money comes with restrictions of not paying the bank's top staff more than $500,000 a year. Dahl signed a statement to get the federal investment certifying the bank was in compliance with those restrictions, but declined to say what his compensation was.

"It's a long way from that," he said of the $500,000 figure.

Bank financial filings show a 2007 salary of $167,475, with bonuses, stock options and other compensation bringing his total compensation to $243,405.

Dahl said the federal help will ensure Alaska Pacific can continue to make loans, benefiting the local economy as well.

"We will clearly maintain our lending positions in all of our markets," he said.



CONTACT US

  • Switchboard: 907-586-3740
  • Circulation and Delivery: 907-523-2295
  • Newsroom Fax: 907-586-3028
  • Business Fax: 907-586-9097
  • Accounts Receivable: 907-523-2270
  • View the Staff Directory
  • or Send feedback

ADVERTISING

SUBSCRIBER SERVICES

SOCIAL NETWORKING