U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended September 30, 1999
[ ] Transition report under Section 13 or 15(d) of the Exchange Act For the
transition period from to
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Commission file number 0-26003
ALASKA PACIFIC BANCSHARES, INC.
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(Exact Name of Small Business Issuer as Specified in Its Charter)
Alaska 92-0167101
- --------------------------------------------- -------------------------
(State or Other Jurisdiction of Incorporation (I.R.S. Employer
or Organization) Identification No.)
2094 Jordan Avenue, Juneau, Alaska 99801
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(Address of Principal Executive Offices)
(907) 789-4844
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(Issuer's Telephone Number, Including Area Code)
NA
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(Former Name, Former Address and Former Fiscal Year,
If Changed Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
X Yes No
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State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date:
655,415 shares outstanding on September 30, 1999
-------
Transitional Small Business Disclosure Format (check one):
Yes X No
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<PAGE>
Alaska Pacific Bancshares, Inc. and Subsidiary
Juneau, Alaska
INDEX
PART I. Page(s)
- -------
FINANCIAL INFORMATION
Item 1.
Financial Statements
Consolidated Balance Sheets (Unaudited) as of December 31, 1998
and September 30, 1991................................................ 1
Consolidated Statements of Income (Unaudited) for the three- and six-
month periods ended September 30, 1998 and 1999....................... 2
Consolidated Statements of Cash Flows (Unaudited) for the nine months
ended September 30, 1998 and 1999....................................... 3
Notes to (Unaudited) Consolidated Financial Statements.................. 4
Item 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................... 6
PART II.
- --------
OTHER INFORMATION
Item 1. Legal Proceedings............................................... 13
Item 2. Changes in Securities and Use of Proceeds....................... 13
Item 3. Defaults Upon Senior Securities................................. 13
Item 4. Submission of Matters to a Vote of Security Holders............. 13
Item 5. Other Information............................................... 13
Item 6. Exhibits and Reports on Form 8-K................................ 13
Signatures ............................................................. 14
<PAGE>
ITEM 1. Financial Statements
Alaska Pacific Bancshares, Inc. and Subsidiary
Consolidated Balance Sheets
(Unaudited)
September 30, December 31,
(in thousands) 1999 1998
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Assets
Cash and due from banks $ 3,944 $ 3,201
Interest-earning deposits in banks 5,723 11,383
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Total cash and cash equivalents 9,667 14,584
Investment securities available for sale, at fair
value (amortized cost: 1999 - $24,448; 1998
- $18,474) 23,924 18,176
Federal Home Loan Bank stock 1,336 1,265
Loans held for sale 365 899
Loans 85,105 71,510
Less allowance for loan losses 653 674
- ------------------------------------------------------------------------------
Loans, net 8,452 70,836
Accrued interest receivable 661 593
Premises and equipment 3,716 3,306
Foreclosed properties -- 311
Other assets 1,030 836
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Total Assets $125,151 $110,806
==============================================================================
Liabilities and Equity Capital
Deposits:
Noninterest-bearing demand $ 8,023 $ 5,046
Interest-bearing demand 24,363 25,570
Money market 15,509 15,872
Savings 17,205 18,674
Certificates of deposit 35,289 36,783
- ------------------------------------------------------------------------------
Total deposits 100,389 101,945
Federal Home Loan Bank advances 10,900 --
Advances from borrowers for taxes and insurance 180 866
Accounts payable and accrued expenses 188 240
Accrued interest payable 591 389
Other liabilities 316 116
- ------------------------------------------------------------------------------
Total liabilities 112,564 103,556
Equity capital:
Common stock ($0.01 par value; 20,000,000 shares
authorized; 655,415 shares issued and outstanding,
including 52,433 unearned shares held by ESOP) 7 --
Additional paid-in capital 5,847 --
Retained earnings 7,780 7,548
Accumulated other comprehensive income (loss) (523) (298)
Unearned ESOP shares (524) --
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Total equity capital 12,587 7,250
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Total Liabilities and Equity Capital $125,151 $110,806
==============================================================================
See notes to unaudited interim financial statements.
1
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Alaska Pacific Bancshares, Inc. and Subsidiary
Consolidated Statements of Income
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
(dollars in thousands, --------------------------------------
except per share) 1999 1998 1999 1998
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Interest Income
Loans $1,796 $1,601 $5,143 $5,003
Investment securities 313 292 792 909
Interest-earning deposits in banks 79 120 264 309
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Total interest income 2,188 2,013 6,199 6,221
Interest Expense
Deposits 858 901 2,593 2,724
Federal Home Loan Bank advances 63 - 82 165
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Total interest expense 921 901 2,675 2,889
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Net Interest Income 1,267 1,112 3,524 3,332
Provision for loan losses - 15 15 45
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Net interest income after provision
for loan losses 1,267 1,097 3,509 3,287
Noninterest Income
Mortgage servicing income 47 59 149 175
Service charges on deposit accounts 86 47 245 136
Other service charges and fees 37 34 110 100
Gain on sale of mortgage loans 11 49 42 262
- ------------------------------------------------------------------------------
Total noninterest income 181 189 546 673
Noninterest Expense
Compensation and benefits 697 615 1,997 1,870
Occupancy 272 247 793 756
Data processing 90 77 268 235
Professional and consulting fees 36 33 101 114
Marketing and public relations 55 29 122 108
Cost of (gain on) operations of
foreclosed properties (3) - (2) -
Other 181 173 544 505
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Total noninterest expense 1,328 1,174 3,823 3,588
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Income before income tax 120 112 232 372
Income tax - - - -
- ------------------------------------------------------------------------------
Net Income $ 120 $ 112 $ 232 $ 372
==============================================================================
Basic earnings per share $ 0.20 N/A N/A N/A
==============================================================================
Diluted earnings per share $ 0.20 N/A N/A N/A
==============================================================================
See notes to unaudited interim financial statements.
2
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Alaska Pacific Bancshares. Inc. and Subsidiary
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
-----------------
(in thousands) 1999 1998
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Operating Activities
Net income $ 232 $ 372
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 15 45
Depreciation and amortization 279 267
Federal Home Loan Bank stock dividends (71) (67)
Amortization of fees, discounts, and premiums, net (31) 2
Cash provided by changes in operating assets and
liabilities:
Accrued interest receivable (68) 62
Loans held for sale 534 316
Other assets (194) (302)
Advances from borrowers for taxes and insurance (686) (619)
Accrued interest payable 202 457
Accounts payable and accrued expenses (52) 74
Other liabilities 200 131
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Net cash provided by operating activities 360 738
Investing Activities
Purchase of investment securities available for sale (12,750) -
Maturities and principal repayments of:
Investment securities available for sale 6,702 3,638
Investment securities held to maturity - 430
Proceeds from sale of foreclosed properties 311 -
Loan originations, net of principal repayments (13,525) 10,183
Purchase of premises and equipment (689) (381)
- ------------------------------------------------------------------------------
Net cash provided by (used in) investing
activities (19,951) 13,870
Financing Activities
Proceeds from issuance of common stock 5,330 -
Net decrease in Federal Home Loan Bank advances 10,900 (9,000)
Net increase (decrease) in demand and savings
deposits (62) 2,195
Net decrease in certificates of deposit (1,494) (901)
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Net cash provided by (used in) financing
activities 14,674 (7,706)
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Increase (decrease) in cash and cash equivalents (4,917) 6,902
Cash and cash equivalents at beginning of year 14,584 10,130
- ------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 9,667 $17,032
==============================================================================
Supplemental information:
Cash paid for interest $ 2,555 $ 2,597
Loans foreclosed and transferred to foreclosed
properties - 311
Net change in unrealized loss on securities
available for sale (225) 28
3
<PAGE>
<PAGE>
Alaska Pacific Bancshares, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(Unaudited)
Note 1 - Conversion to Stock Ownership
On July 1, 1999, Alaska Federal Savings Bank ("the Bank") consummated its
conversion from a federally chartered mutual savings bank to a federally
chartered stock savings bank pursuant to a Plan of Conversion. The conversion
was approved by the membership of Alaska Federal on June 21, 1999. Concurrent
with the conversion, Alaska Federal changed its name to Alaska Pacific Bank.
Alaska Pacific Bancshares, Inc. was formed for the purpose of becoming the
holding company of the Bank upon its conversion.
The Company sold 655,415 shares in a subscription and community offering
during June 1999, which, after giving effect to offering expenses of
approximately $700,000, resulted in net proceeds of $5,854,000 ($5,330,000
excluding purchases by the Employee Stock Ownership Plan). The Company
transferred approximately $4.6 million to the Bank in exchange for all of its
stock.
Note 2 - Basis of Presentation
While the accompanying financial statements of the Company are presented on a
consolidated basis with those of the Bank, the Company did not yet own any
shares of the Bank and had no assets, liabilities, equity or operations prior
to July 1, 1999. Therefore, the financial statements presented include only
the accounts and operations of the Bank prior to that date.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. They should be read in conjunction with
the audited financial statements of the Bank for the year ended December 31,
1998 filed as part of the registration statement on Form SB-2 for Alaska
Pacific Bancshares, Inc. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for fair
presentation have been included. The results of operations for the interim
periods ended September 30, 1999 and 1998 are not necessarily indicative of
the results which may be expected for an entire year or any other period.
Note 3 - Earnings Per Share
Basic earnings per share ("EPS") is calculated by dividing net income by the
weighted average number of common shares outstanding during the period.
Diluted EPS is calculated using the same method as basic EPS, but reflects the
potential dilution of any common stock equivalents. The Company had no such
common stock equivalents for any of the periods presented. Shares of common
stock held by the ESOP that have not been allocated (nor committed to be
released for allocation) to participants are not considered to be outstanding
for purposes of calculating basic or diluted EPS.
4
<PAGE>
Weighted average common shares outstanding for the three months ended
September 30, 1999 were 602,982 shares, excluding 52,433 unallocated shares in
the ESOP.
Because the Company had no shares outstanding prior to consummating the
initial stock offering on July 1, 1999, earnings per share information is not
presented for periods beginning before that date.
Note 4 - Capital Compliance
At September 30, 1999, the Bank exceeded each of the three current minimum
regulatory capital requirements. The following table summarizes the Bank's
regulatory capital position and requirements at September 30, 1999:
(dollars in thousands)
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Tangible Capital:
Actual $11,850 9.63%
Required 1,846 1.50
- -----------------------------------------------------------------------------
Excess $10,004 8.13%
=============================================================================
Core Capital:
Actual $11,850 9.63%
Required 3,692 3.00
- -----------------------------------------------------------------------------
Excess $8,158 6.63%
=============================================================================
Total Risk-Based Capital:
Actual $12,503 17.10%
Required 5,851 8.00
- -----------------------------------------------------------------------------
Excess $ 6,652 9.10%
=============================================================================
5
<PAGE>
Note 5 - Comprehensive Income
The Company's only item of comprehensive income other than net income is net
unrealized gains or losses on securities available for sale. Following is a
summary of accumulated other comprehensive income:
Nine Months Ended Year Ended
September 30, December 31,
(in thousands) 1999 1998 1998
- -----------------------------------------------------------------------------
Balance at beginning of period $(298) $ (72) $ (72)
Change in net unrealized gains
and losses on securities available
for sale (225) 28 (68)
Cumulative effect of reclassification
from securities held to maturity to
securities available for sale - - (158)
- -----------------------------------------------------------------------------
Balance at end of period $(523) $ (44) $(298)
=============================================================================
6
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
This section contains forward-looking statements that have been prepared on
the basis of the Company's best judgments and currently available information.
These forward-looking statements are inherently subject to significant
business, economic and competitive uncertainties and contingencies, many of
which are beyond the control of the Company. In addition, these forward-
looking statements are subject to assumptions with respect to future business
strategies and decisions that are subject to changes. Accordingly, there can
be no assurance that many of these strategies will be implemented or, if
implemented, achieve the amounts described or within the time periods
currently estimated.
General
The Company was organized for the purpose of becoming the holding company
for Alaska Pacific Bank (formerly Alaska Federal Savings Bank) ("the Bank")
upon its conversion from a federal mutual to a federal stock savings bank.
The conversion was completed on July 1, 1999. The Company operates
principally in the business of attracting deposits and making real estate,
consumer, and commercial loans. The Bank, with its headquarters in Juneau,
Alaska, operates through seven offices in southeast Alaska.
Comparison of Financial Condition at September 30, 1999 and December 31, 1998
Total assets were $125.2 million at September 30, 1999 compared to $110.8
million at December 31, 1998, a 12.9% increase. This increase resulted
primarily from an increase in loans and investment securities, funded by
Federal Home Loan Bank advances and reductions in short-term investments and
interest-earning deposits in banks.
Cash and cash equivalents were $9.7 million at September 30, 1999,
compared to $14.6 million at December 31, 1998. The liquidity was used
primarily to fund loan growth.
Investment securities available for sale increased 31.3% to $23.9
million at September 30, 1999, compared to $18.2 million at December 31, 1998.
The increase is due to the purchase of $9.8 million of mortgage-backed
securities, net of maturities of short- term investments as well as normal
principal reductions.
Loans, net, were $84.5 million at September 30, 1999 compared to $70.8
million at December 31, 1998, a significant 19.2% increase. This increase
resulted primarily from increased originations of both mortgage and
nonmortgage loans, as well as retaining a large portion of mortgage loans
originated during the period, rather than selling them in the secondary
market.
Deposits were $100.4 million at September 30, 1999 compared to $101.9
million at December 31, 1998, a 1.5% decrease. The decrease was at least
partially the result of customer purchases of stock in the Company's
subscription and community stock offering using funds previously held in
deposits.
7
<PAGE>
Federal Home Loan Bank advances grew to $10.9 million at September 30,
1999, compared with zero at December 31, 1999. The advances were used to fund
loan demand as well as purchase investment securities.
Net proceeds from the Company's stock offering of $5.3 million, along
with net income for the period of $232,000 and an increase in unrealized
losses on securities of $225,000, resulted in total shareholders' equity of
$12.6 million at September 30, 1999, compared with $7.3 million at December
31, 1999.
Comparison of Operating Results for the Three Months Ended September 30, 1999
and 1998
Net Income. Net income for the third quarter of 1999 increased to
$120,000 compared to $112,000 for same period in 1998. Excluding a $38,000
decrease in gains on sale of mortgage loans, income for the quarter increased
$46,000 over the third quarter of 1998.
Net Interest Income. Net interest income increased $155,000 to $1.3
million for the first nine months of 1999, compared with $1.1 million for the
same period in 1998. Average earning assets for the third quarter increased to
$111.2 million from $99.7 million in 1998, while the net interest margin on
earning assets increased to 4.56% in 1999 from 4.46% in 1998. The increase in
margin is primarily due to a shift from short-term investments to loans and
longer-term securities.
Provision for Loan Losses. There was no provision for loan losses in the
second quarter of 1999, compared with $15,000 for the same period in 1998. A
reduction in the provision was considered appropriate in order for the
allowance for loan losses to reflect management's best estimate of losses
inherent in the loan portfolio.
Noninterest Income. Noninterest income declined $8,000 to $181,000 in
the third quarter of 1999 compared with $189,000 for the same quarter in 1998.
The decline resulted primarily from a $38,000 decrease in gains on sale of
mortgage loans. The majority of mortgage loans originated during 1999 have
been retained in the loan portfolio, rather than being sold in the secondary
market, as was the case during most of 1998. Despite selling the majority of
mortgage loans (and retaining the related servicing rights) during most of
1998, mortgage servicing income has declined gradually due to rapid
prepayments in the servicing portfolio in 1998, as well as rising amortization
expense on capitalized mortgage servicing rights. As a result, mortgage
servicing income for quarter declined to $47,000 in 1999 compared with $59,000
in 1998.
Offsetting the declines in mortgage-related income was a significant
51.8% increase in service charges on deposit accounts and other service
charges and fees, which amounted to $123,000 in the third quarter of 1999,
compared to $81,000 in the third quarter of 1998. This increase resulted from
increases in both the number of accounts and the rates charged.
Noninterest Expense. Noninterest expense increased 13.1% to $1.3 million
for the third
8
<PAGE>
quarter of 1999 compared with $1.2 million for the same period in 1998.
Compensation and benefits increased 13.3% and other expenses increased 12.9%.
In addition to moderately higher salaries and prices, the increases are due to
continuing additions to facilities, technology, and personnel to enable
capacity for higher asset levels in the future. In August 1999, the Bank
opened a third branch in Juneau, bringing the total to seven branches at
September 30, 1999.
Income Taxes. No income tax expense was recognized for each of the
three-month periods ended September 30, 1999 and 1998 due to net operating
loss carryforwards, which expire in various years beginning in 2002 and
through 2012.
Comparison of Operating Results for the Nine Months Ended September 30, 1999
and 1998
General. During 1999, the Company has begun to reverse a decline in
total loans by increasing loan originations and by retaining a substantial
portion of mortgage loan production. By adding a balance to the portfolio of
fixed-rate mortgages and nonmortgage loans, it is management's intention to
build a base for enhanced net interest income, while maintaining interest-rate
risk at acceptable levels.
Net Income. Net income for the first nine months of 1999 was $232,000
compared to $372,000 for the same period in 1998, a decrease of $140,000. The
decrease resulted primarily from a $220,000 decrease in gains on sale of
mortgage loans. Excluding such gains in both periods, income increased by
$80,000.
Net Interest Income. Net interest income increased $192,000 to $3.5
million for the first nine months of 1999, compared with $3.3 million for the
same period in 1998. Average earning assets for the nine-month period
increased to $105.9 million from $102.9 million for the same period in 1998,
while the net interest margin on earning assets increased to 4.44% in 1999
from 4.32% in 1998. The increase in margin is primarily due to a gradual
shift from short- term investments to loans and longer-term securities.
Provision for Loan Losses. The provision for loan losses was reduced to
$15,000 in the first nine months of 1999 from $45,000 for the same period in
1998. This reduction was considered appropriate in order for the allowance
for loan losses to reflect management's best estimate of losses inherent in
the loan portfolio.
Noninterest Income. Noninterest income declined $127,000 to $546,000 in
the first nine months of 1999 compared with $673,000 for the same period in
1998. The decline resulted primarily from a $220,000 decrease in gains on
sale of mortgage loans. The majority of mortgage loans originated during the
first nine months of 1999 were retained in the loan portfolio, rather than
being sold in the secondary market, as was the case during most of 1998.
Despite selling the majority of mortgage loans (and retaining the related
servicing rights) during most of 1998, mortgage servicing income has declined
gradually due to rapid prepayments in the servicing portfolio in 1998, as well
as rising amortization expense on capitalized mortgage servicing rights. As a
result, mortgage servicing
9
<PAGE>
income for the nine-month period declined to $149,000 in 1999 compared with
$175,000 in 1998.
Offsetting the declines in mortgage-related income was a significant
50.4% increase in service charges on deposit accounts and other service
charges and fees, which amounted to $355,000 in the first nine months of 1999,
compared to $236,000 in the first nine months of 1998. This increase resulted
from increases in both the number of accounts and the rates charged.
Noninterest Expense. Noninterest expense increased 6.5% to $3.8 million
for the first nine months of 1999 compared with $3.6 million for the same
period in 1998. Compensation and benefits increased 6.8% and other expenses
increased 6.3%. In addition to moderately higher salaries and prices, the
increases are due to continuing additions to facilities, technology, and
personnel to enable capacity for higher asset levels in the future. In August
1999, the Bank opened a third branch in Juneau, bringing the total to seven
branches at September 30, 1999.
Income Taxes. No income tax expense was recognized for each of the
nine-month periods ended September 30, 1999 and 1998 due to net operating loss
carryforwards, which expire in various years beginning in 2002 and through
2012.
Nonperforming Assets
At September 30, 1999, the Company had one nonaccrual loan for $36,000,
and no nonaccrual loans at December 31, 1998. At September 30, 1999 and
December 31, 1998, the Company had no accruing loans 90 days or more past due.
The Company had troubled debt restructurings of $71,000 at September 30, 1999
and none at December 31, 1998. There were no foreclosed properties at
September 30, 1999, a reduction from two properties at December 31, 1998
totaling $311,000.
Liquidity and Capital Resources
The Company's primary sources of funds are deposits, Federal Home Loan
Bank advances, and principal and interest payments on loans. While maturities
and scheduled amortization of loans are a predictable source of funds, deposit
flows and mortgage prepayments are greatly influenced by general interest
rates, economic conditions and competition. The Company's primary investing
activity is loan originations. The Company maintains liquidity levels
adequate to fund loan commitments, investment opportunities, deposit
withdrawals and other financial commitments. The Office of Thrift Supervision
requires a savings institution to maintain an average daily balance of liquid
assets, which are cash and eligible investments, equal to at least 4.0% of the
average daily balance of its net withdrawable deposits and short-term
borrowings. The Bank's actual liquidity ratios were 28.7% and 32.6% at
September 30, 1999 and December 31, 1998, respectively. The Bank has
consistently maintained liquidity levels in excess of regulatory requirements.
At September 30, 1999, management had no knowledge of any trends, events or
uncertainties that will have or are reasonably likely to have material effects
on the liquidity, capital resources, or operations of the Company.
10
<PAGE>
Further, at September 30, 1999, management was not aware of any current
recommendations by the regulatory authorities which, if implemented, would
have such an effect.
The Company is not subject to any separate regulatory capital
requirements. The Bank exceeded all of its regulatory capital requirements at
September 30, 1999. See Note 4 of the Notes to Consolidated Financial
Statements contained herein for information regarding the Bank's regulatory
capital position at September 30, 1999.
Year 2000 Readiness
The Audit Committee of the Company's Board of Directors oversees the work
of the Y2K Task Force, which is chaired by a member of senior management. The
Task Force has developed and implemented a board-approved Y2K Plan designed to
ensure the Y2K readiness of all critical systems and the uninterrupted flow of
all core business processes through and beyond the century date change.
The Company has completed or substantially completed all phases of the
Y2K Plan as of September 30, 1999, as prescribed by the Federal Financial
Institutions Examination Council (FFIEC) guidelines. Following is a summary
of progress on the six major phases of the Y2K Plan.
1. Awareness-This educational phase was complete as of June 30, 1998.
2. Assessment-Plan development as well as identification and evaluation of
all critical systems was complete as of December 31, 1998.
3. Renovation-All critical systems were upgraded, renovated or replaced as
necessary to meet Y2K readiness standards. This phase was substantially
complete as of December 31, 1998 and complete prior to March 31, 1999.
The only major renovation required was the replacement of the aging
teller system with a state-of-the-art teller and sales platform that runs
over a Y2K- certified wide area network. Any necessary renovation of non-
critical systems that do not provide primary support to core business
processes will be evaluated and accomplished on a priority basis as time
permits.
4. Validation-Testing of all critical systems and third party vendors for
Y2K compliance was substantially complete prior to March 31, 1999 and
complete as of June 30, 1999. The second round of live testing on the
mainframe applications was successfully completed during April 1999.
Where it was not ossible to test directly with third parties, the Company
has reviewed and accepted the results of proxy testing conducted on
its behalf. Testing methods and results have been reviewed by an
independent third party and accepted by the Board of Directors. Testing
of non-critical systems that do not provide primary support to core
business processes will be evaluated and accomplished on a priority basis
as time permits.
5. Implementation-All critical systems have been renovated and tested and
are operating in an on-line environment. This phase was substantially
complete as of June 30, 1999. Ongoing
11
<PAGE>
vigilance will ensure that any routine upgrades to critical
systems prior to December 31, 1999 are properly implemented and
do not negatively impact Y2K readiness.
Contingency Planning The Company has developed a comprehensive Y2K
Contingency Plan to minimize disruption of normal service levels, and risk
of loss from safety and soundness, profitability and customer confidence
concerns. The Y2K Contingency Master Plan is further defined in two
specific contingency plans: the Business Resumption Contingency Plan and
the Remediation Contingency Plan. The contingency plan includes strategies
for meeting increased cash and liquidity needs through the first few
months of the Year 2000. The Company's Board of Directors has reviewed
and approved the entire Contingency Plan and the contingency planning
phase was considered substantially complete as of June 30,1999. The
Contingency Plan will be reviewed frequently to ensure that new
information is incorporated into the plan.
Despite the best efforts of management to address this issue, the vast
number of external entities that have direct and indirect business
relationships with the Bank, such as customers, vendors, payment system
providers and other financial institutions makes it impossible to assure that
a failure to achieve compliance by one or more of the entities would not have
material adverse impact on the operations of the Bank.
Management will continue efforts to promote customer confidence and
public education on Y2K issues. The Company's Y2K readiness effort is on
track and management is confident that the Company will complete a smooth
transition into the next century.
12
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
From time to time, the Company and any subsidiaries may be a party to various
legal proceedings incident to its or their business. At September 30, 1999,
there were no legal proceedings to which the Company or any subsidiary was a
party, or to which of any of their property was subject, which were expected
by management to result in a material loss.
Item 2. Changes in Securities and Use of Proceeds
-----------------------------------------
None
Item 3. Defaults Upon Senior Securities
-------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None
Item 5. Other Information
-----------------
None
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
Exhibits
3.1 Articles of Incorporation of Alaska Pacific Bancshares, Inc.*
3.2 Bylaws of Alaska Pacific Bancshares, Inc.*
10.1 Alaska Pacific Bank 401(k) Savings Plan*
27 Financial Data Schedule
No reports on Form 8-K were filed during the quarter ended June 30, 1999.
- ----------------
* Incorporated by reference to Registrant's Registration Statement on Form
SB-2, as amended (File No. 333-74827)
13
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Alaska Pacific Bancshares, Inc.
Date: November 15, 1999 /s/Craig E. Dahl
-------------------------------
Craig E. Dahl
President and Chief Executive Officer
Alaska Pacific Bancshares, Inc.
Date: November 15, 1999 /s/Roger K. White
-------------------------------
Roger K. White
Senior Vice President and
Chief Financial Officer
14
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<PAGE>
Exhibit 27
Financial Data Schedule
This schedule contains financial information extracted from the consolidated
financial statements of Alaska Pacific Bancshares, Inc. for the quarter ended
September 30, 1999 and is qualified in its entirety by reference to such
financial statements.
Financial Data
as of or for the quarter
Item Number ended September 30, 1999 Item Description
- ----------- ------------------------ ----------------
(In thousands)
9-03 (1) 3,944 Cash and due from Banks
9-03 (2) 5,723 Interest-bearing deposits
9-03 (3) 0 Federal funds sold - purchased
securities for resale
9-03 (4) 0 Trading account assets
9-03 (6) 23,924 Investment and mortgage backed
securities available for sale
9-03 (6) 0 Investment and mortgage backed
securities held to maturity -
carrying value
9-03 (6) 0 Investment and mortgage backed
securities held to
maturity - market value
9-03 (7) 85,105 Loans
9-03 (7)(2) 653 Allowance for losses
9-03 (11) 125,151 Total assets
9-03 (12) 100,389 Deposits
9-03 (13) 5,900 Short-term borrowings
9-03 (15) 1,275 Other liabilities
9-03 (16) 5,000 Long-term debt
9-03 (19) 0 Preferred stock - mandatory
redemption
9-03 (20) 0 Preferred stock - no mandatory
redemption
9-03 (21) 7 Common stocks
9-03 (22) 7,211 Other stockholders' equity
9-03 (23) 125,151 Total liabilities and
stockholders' equity
9-04 (1) 1,796 Interest and fees on loans
9-04 (2) 313 Interest and dividends on
investments
9-04 (4) 46 Other interest income
9-04 (5) 2,188 Total interest income
9-04 (6) 858 Interest on deposits
9-04 (9) 921 Total interest expense
9-04 (10) 1,267 Net interest income
9-04 (11) 0 Provision for loan losses
9-04 (13)(h) 0 Investment securities
gains/(losses)
9-04 (14) 1,328 Other expenses
9-04 (15) 120 Income/loss before income tax
9-04 (17) 120 Income/loss before extraordinary
items
9-04 (18) 0 Extraordinary items, less tax
9-04 (19) 0 Cumulative change in accounting
principles
9-04 (20) 120 Net income or loss
9-04 (21) 0.20 Earnings per share - primary
9-04 (21) 0.20 Earnings per share - fully
diluted
I.B. 5 4.56% Net yield - interest earning
assets - actual
III.C.1. (a) 36 Loans on non-accrual
III.C.1. (b) 0 Accruing loans past due 90 days
or more
III.C.2. (c) 71 Troubled debt restructuring
III.C.2 1,094 Potential problem loans
IV.A.1 670 Allowance for loan loss -
beginning of period
IV.A.2 22 Total chargeoffs
IV.A.3 5 Total recoveries
IV.A.4 653 Allowance for loan loss - end of
period
IV.B.1 653 Loan loss allowance allocated to
domestic loans
IV.B.2 0 Loan loss allowance allocated to
foreign loans
IV.B.3 0 Loan loss allowance - unallocated
<PAGE>
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 3944
<INT-BEARING-DEPOSITS> 5723
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 23924
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<ALLOWANCE> 653
<TOTAL-ASSETS> 125151
<DEPOSITS> 100389
<SHORT-TERM> 5900
<LIABILITIES-OTHER> 1275
<LONG-TERM> 5000
0
0
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<INTEREST-DEPOSIT> 858
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<INCOME-PRETAX> 120
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<EPS-BASIC> 0.20
<EPS-DILUTED> 0.20
<YIELD-ACTUAL> 4.56
<LOANS-NON> 36
<LOANS-PAST> 0
<LOANS-TROUBLED> 71
<LOANS-PROBLEM> 1094
<ALLOWANCE-OPEN> 670
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<ALLOWANCE-CLOSE> 653
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</TABLE>