Alaska Pacific Bancshares, Inc. Reports Second Quarter Earnings for 2009.

JUNEAU, Alaska -- Alaska Pacific Bancshares, Inc. (OTCBB: AKPB) ("Company"), the parent company of Alaska Pacific Bank ("Bank"), today announced its second quarter results for the period ended June 30, 2009. Net income not including preferred stock dividend and discount accretion for the second quarter of 2009 was $140,000. After preferred stock dividend and discount accretion of $74,000, net income available to common shareholders for the second quarter of 2009 was $66,000, or $0.10 per diluted share. This compares to a net loss for the second quarter ended June 30, 2008 of $761,000, or $1.14 per diluted share. "While earnings are not at the level we would like them to be, we are still pleased with our second quarter results as we continue to work through the reduction of classified assets. The core business of the Bank remains sound and continues to perform as expected, but there will continue to be downward pressure on earnings as we work through the resolution of these loans," stated Craig E. Dahl, President & Chief Executive Officer.

Mortgage banking income decreased $9,000 (3.9%) for the second quarter of 2009 compared to the quarter ended March 31, 2009 and increased $137,000 (163.1%) from the quarter ended June 30, 2008. The increase in mortgage banking income during the second quarter of 2009 compared to 2008 was associated with low interest rate refinancing. Other noninterest income for the second quarter of 2009 increased $46,000 (17.3%) from March 31, 2009 and decreased $21,000 (6.31%) from the quarter ended June 30, 2008. The increase in other noninterest income over prior quarter is primarily attributable to document preparation fee income and overdraft fee income. The decrease in noninterest income over the comparable period in the prior year was due to non-recurring income of $56,000 recognized in prior year from the cash proceeds received on shares redeemed associated with the Company's ownership in VISA and VISA's initial public offering and business combination.

Noninterest expense for the second quarter of 2009 increased $58,000 (2.6%) from March 31, 2009 and increased $41,000 (1.83%) from the quarter ended June 30, 2008. The increase in expense in the second quarter of 2009 is primarily related to an increase in FDIC assessments. During the quarter ended June 30, 2009 our FDIC assessment was $90,000 compared to $4,000 for the comparable period in 2008.

Provision for loan losses increased $30,000 for the quarter ended June 30, 2009 compared to the quarter ended March 31, 2009 and decreased $1.5 million compared to the quarter ended June 30, 2008. The allowance for loan losses at June 30, 2009 was $2.9 million, representing 1.7% of total loans outstanding. Total non-accrual loans were $7.2 million at June 30, 2009 compared with $5.8 million at March 31, 2009 and $5.6 million at June 30, 2008. In addition, the Bank's real estate owned and repossessed assets were $69,000 at June 30, 2009 compared to $408,000 at March 31, 2009 and $556,000 at June 30, 2008. There was a $20,000 net loan recovery for the quarter ended June 30, 2009 compared to a $5,100 net loan recovery for the quarter ended March 31, 2009. There were no net loan charge offs or recoveries for the quarter ended June 30, 2008.

Interest income decreased $92,000 (3.43%) to $2.6 million for the second quarter of 2009 compared to the first quarter of 2009, reflecting a 1.0% decrease in average loans in addition to a declining yield on loans and other earning assets. The net interest margin on average earning assets for the second quarter of 2009 was 4.74% in 2009 compared with 4.85% in the second quarter of 2008.

Loans (excluding loans held for sale) were $167.7 million at June 30, 2009, a decrease of $291,000, or 0.2% from March 31, 2009, and a decrease of $8.1 million, or 4.6% from June 30, 2008. Deposits at June 30, 2009, were $152.7 million, a $13.3 million (9.6%) increase from March 31, 2009 and a $7.1 million (4.5%) decrease from June 30, 2008.

Forward-Looking Statements

Certain matters in this news release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to, among others, expectations of the business environment in which the Company operates, projections of future performance, perceived opportunities in the market, potential future credit experience, and statements regarding the Company's mission and vision. These forward-looking statements are based upon current management expectations, and may, therefore, involve risks and uncertainties. The Company's actual results, performance, or achievements may differ materially from those suggested, expressed, or implied by forward-looking statements as a result of a wide variety or range of factors including, but not limited to, the credit risk of lending activities, including changes in the level and trend of loan delinquencies and write-offs; results of examinations by our banking regulators including the possibility that any such regulatory authority may, among other things, require us to increase our reserve for loan losses or write-down assets; interest rate fluctuations; economic conditions in the Company's primary market area and other market areas where the collateral for our loans is located; demand for residential, commercial real estate, consumer, and other types of loans; success of new products; competitive conditions between banks and non-bank financial service providers; regulatory and accounting changes; technological factors affecting operations; pricing of products and services; and other risks detailed in the Company's reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2008. Accordingly, these factors should be considered in evaluating forward-looking statements, and undue reliance should not be placed on such statements. The Company undertakes no responsibility to update or revise any forward-looking statement.

[TABLE OMITTED]
[TABLE OMITTED]

(a) Noninterest expense, divided by the sum of net interest income and noninterest income, excluding gains on sale of loans or securities.

(b) Excludes treasury stock.