Alaska Pacific Bancshares Announces Record Quarterly Earnings.

Business Editors

JUNEAU, Alaska--(BUSINESS WIRE)--Nov. 14, 2002

Alaska Pacific Bancshares, Inc. (OTCBB:AKPB), the holding company for Alaska Pacific Bank, announced net income of $346,000, or $.58 per diluted share, for the third quarter of 2002, compared with $165,000, or $.28 per diluted share, for the second quarter and $24,000, or $.04 per diluted share, for the third quarter of 2001.

This brings net income for the first nine months of 2002 to $805,000, or $1.35 per diluted share compared with $138,000, or $.24 per diluted share, earned in the first nine months of 2001.

Affecting the earnings' year-to-year comparability was a $135,000 charge for branch closure costs in the third quarter of 2001, but even when that charge is excluded, income for the third quarter is more than double the previous year, and income for the first nine months is nearly three times the previous year.

"We are extremely pleased with the progress the bank has made since going public in June of 1999," stated Craig E. Dahl, President & CEO of Alaska Pacific Bancshares. "Our officers and employees have done an excellent job of meeting the goals in the bank's strategic plan, which has focused on being a full service community bank committed to quality local service. We are serving a growing base of local and regional business customers with a competitive line of business services, as well as a wide array of consumer and residential mortgage products to customers in Southeast Alaska. This includes a commitment to technology as a means of bringing banking services to more people throughout the region."

Net interest income continued to be strong in the third quarter at approximately $1.7 million, slightly higher than the second and first quarters, compared with $1.6 million in the third quarter a year ago. Growth in loans and a favorable interest-rate environment have contributed to an increase in the Bank's net interest margin to 4.66% of average total assets in the third quarter of 2002, compared with 4.21% in the third quarter of 2001.

The provision for loan losses decreased to $75,000 in the third quarter from $160,000 in the second quarter. Net loan losses were higher than normal in the second quarter at $135,000, but dropped to a net recovery of $2,000 in the third quarter. As a result of the $75,000 quarterly provision, the allowance for loan losses increased to $1.1 million at the end of September, or just under 1% of loans.

Noninterest expense amounted to $1.7 million in the third quarter of 2002, nearly unchanged from the second quarter of 2002 and the third quarter of 2001(excluding branch closure costs in 2001). Cost savings resulting from closing two unprofitable offices in October 2001 served to offset normal cost increases during the past twelve months.

As previously announced, the Company declared a regular quarterly dividend of $.06 per share, to be paid November 22, 2002, to shareholders of record as of November 11, 2002.

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 due to a wide range of factors including, but not limited to, the general business environment, interest rates, the economy in Southeast Alaska, the real estate market, competitive conditions between banks and non-bank financial services providers, regulatory changes, and other risks detailed in the Company's reports filed with the Securities and Exchange Commission.

Alaska Pacific Bancshares, Inc.
Financial Highlights (Unaudited)
Third Quarter 2002
(dollars in thousands, except per-share amounts)


                                            Three Months Ended
                                     ---------------------------------
                                     Sept. 30,   June 30,    Sept. 30,
                                        2002       2002          2001
                                     ---------   ---------   ---------
Condensed Income Statement:
 Interest income                       $2,344      $2,334      $2,676
 Interest expense                        (598)       (608)     (1,108)
                                     ---------   ---------   ---------
   Net interest income                  1,746       1,726       1,568
 Provision for loan losses                (75)       (160)        (60)
 Gain on sale of mortgage loans            81          23          77
 Other noninterest income                 260         224         238
 Branch closure costs                       -           -        (135)
 Other noninterest expense             (1,666)     (1,648)     (1,664)
                                     ---------   ---------   ---------
   Net income before income tax           346         165          24
 Income tax                                 -           -           -
                                     ---------   ---------   ---------
   Net income                            $346        $165         $24
                                     =========   =========   =========

Earnings per share:
 Basic                                   $.60        $.29        $.04
 Diluted                                 $.58        $.28        $.04

Performance Ratios:
 Return on average equity               10.06%       4.92%       0.75%
 Return on average assets                0.92        0.46        0.06
 Yield on average earning assets         6.68        6.95        7.69
 Cost of average interest-bearing
  liabilities                            2.04        2.12        3.71
 Interest rate spread                    4.65        4.83        3.98
 Net interest margin on:
   Average earning assets                4.98        5.14        4.50
   Average total assets                  4.66        4.82        4.21
 Efficiency ratio (a)                   83.05       84.51       92.14

Average balances:
 Loans                               $116,674    $116,246    $114,343
 Earning assets                       140,297     134,310     139,255
 Assets                               149,759     143,275     148,920
 Deposits                             117,464     114,287     119,834
 Interest-bearing liabilities         117,480     114,960     119,458
 Shareholders' equity                  13,756      13,416      12,741

Average shares outstanding:
 Basic                                573,000     571,689     560,973
 Diluted                              600,518     596,990     572,217

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



                                     Sept. 30,   June 30,    Sept. 30,
                                        2002        2002        2001
                                     ---------   ---------   ---------
Balance sheet data:
 Total assets                        $150,028    $146,666    $152,686
 Loans, net                           113,353     115,822     113,831
 Total deposits                       129,811     125,028     125,078
 Federal Home Loan Bank advances        5,000       5,000      13,000
 Shareholders' equity                  13,953      13,559      12,829

Shares outstanding (b)                623,132     623,132     623,132

Book value per share                   $22.39      $21.76      $20.59

Asset quality:
 Allowance for loan losses             $1,101      $1,024        $877
 Allowance as a percent of loans         0.96%       0.88%       0.76%
 Nonaccrual loans                      $2,144      $1,770      $1,381
 Total nonperforming assets             2,240       1,883       1,547
 Net chargeoffs (recoveries)
  for quarter                              (2)        135          27

(b) Excludes only treasury stock.