Losses mounting at Anchor Bank

Anchor BanCorp Wisconsin Inc., the Madison-based parent company of Anchor Bank, announced a third quarter net loss of $12.1 million, or 57 cents per share, compared with a net loss of $19.6 million, or 92 cents per share, for the same period a year ago.

Anchor Bank has 55 offices, all of which are located in Wisconsin.
The company’s total assets fell during the past six months, decreasing by $124.0 million, or 4.4 percent, to $2.7 billion.
While the bank reported higher capital ratios, the corporation, as the holding company of the bank, continues to be burdened with significant senior debt and preferred stock obligations.
The corporation currently owes $116.3 million of loan principal to various lenders led by U.S. Bank under a credit agreement that matures Nov. 30. In addition, accrued but unpaid interest and fees totaling $50.6 million associated with that obligation are also due and payable at maturity.
The corporation issued $110 million in preferred stock in January 2009 to the United States Treasury pursuant to the Treasury’s Capital Purchase Program (CPP). As permitted under the CPP program, the corporation has deferred 14 quarterly preferred stock dividend payments to the Treasury; which has resulted in total unpaid dividends of $22.0 million, including compounding.
While the bank has substantial liquidity, it is currently precluded by its regulators from paying dividends to the corporation for purposes of repayment of the foregoing obligations.
The corporation continues to work with Sandler O’Neill & Partners, L.P. as its financial advisor in efforts to address its capital needs.
“We are pleased to report our ninth consecutive quarter of capital ratios above the threshold to be considered adequately capitalized,” said Chris Bauer, president and chief executive officer of the corporation and the bank. “This is the first time since March of 2009 that our total risk-based capital ratio at the bank has exceeded 9 percent. The improvement in bank capital ratios is primarily due to the tremendous effort expended to resolve issues in the credit portfolios and the resultant decrease in assets. We have recently developed and are implementing strategies to increase bank profitability by slowing asset runoff to improve our net interest margin,”


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