Alaska Pacific Bancshares Announces Third Quarter Results.

Business Editors

JUNEAU, Alaska--(BUSINESS WIRE)--Nov. 7, 2001

Alaska Pacific Bancshares, Inc. (OTCBB:AKPB) announced net income of $24,000, or $.04 per share, for the third quarter of 2001.

This compares with $101,000, or $.18 per share, for the second quarter of 2001 and $133,000, or $.23 per share, for the third quarter of 2000. Third-quarter net income included a $135,000 charge for the estimated costs of closing two unprofitable banking offices of the Company's wholly owned subsidiary, Alaska Pacific Bank. Excluding this charge, net income for the third quarter would have been $159,000 ($.28 per share), an increase of $58,000 ($.10 per share) over the previous quarter and an increase of $26,000 ($.05 per share) over the third quarter of 2000.

Revenues for the third quarter (net interest income plus noninterest income, including gain on sale of mortgage loans) increased $98,000, or 5.5%, from the second quarter of 2001 and increased $236,000, or 14.3%, from the third quarter of 2000. The increases were primarily in service charges resulting from increased deposits and other new business.

Third-quarter other noninterest expense increased $25,000, or 1.5%, from the previous quarter and $195,000, or 13.3%, from the same quarter a year ago. Approximately $40,000 of the year-to-year increase was attributable to two new banking offices opened in December 2000.

Total assets grew to $152.7 million at September 30, 2001 from $145.7 million at June 30, 2001 and from $132.8 million at September 30, 2000. Net loans were $113.8 million and deposits were $125.1 million at September 30, 2001.

The decision to close two of Alaska Pacific Bank's offices -- the Wrangell Office in Wrangell, Alaska, and the Auke Bay Office in Juneau, Alaska -- was based on the branches' small size and resulting inefficiencies. According to Craig E. Dahl, President and CEO of Alaska Pacific Bank, "Customers very much liked these offices, but we were unable to generate enough new business in their respective markets to turn an adequate profit." Both offices were closed on October 26, 2001.

As previously announced, the Company declared a regular quarterly dividend of $.05 per share, payable November 16, 2001, to shareholders of record as of November 5, 2001.

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, including the Annual Report on Form 10-KSB for the year ended December 31, 2000.

Alaska Pacific Bancshares, Inc. common stock trades on the Nasdaq Bulletin Board under the symbol "AKPB."

Alaska Pacific Bancshares, Inc.
Financial Highlights (Unaudited)
Third Quarter 2001
(dollars in thousands, except per-share amounts)

                                         Three Months Ended
                                -------------------------------------
                                Sept. 30,      June 30,     Sept. 30,
                                   2001          2001          2000
                                ---------     ---------     ---------
Condensed Income Statement:
 Interest income                $   2,676     $   2,675     $   2,588
 Interest expense                  (1,108)       (1,178)       (1,174)
                                ---------     ---------     ---------
   Net interest income              1,568         1,497         1,414
 Provision for loan losses            (60)          (45)          (45)
 Gain on sale of mortgage loans        77            74            46
 Other noninterest income             238           214           187
 Branch closure costs                (135)         --            --
 Other noninterest expense         (1,664)       (1,639)       (1,469)
                                ---------     ---------     ---------
   Net income before income tax        24           101           133
 Income tax                          --            --            --
                                ---------     ---------     ---------
   Net income                   $      24     $     101     $     133
                                =========     =========     =========

Earnings per share:
 Basic                          $     .04     $     .18     $     .23
 Diluted                        $     .04     $     .18     $     .23

Performance Ratios:
 Return on average equity            0.75%         3.21%         4.32%
 Return on average assets            0.06          0.29          0.41
 Yield on average earning
  assets                             7.69          8.08          8.53
 Cost of average
  interest-bearing liabilities       3.71          4.05          4.37
 Interest rate spread                3.98          4.03          4.16
 Net interest margin on:
   Average earning assets            4.50          4.52          4.66
   Average total assets              4.21          4.23          4.35
 Efficiency ratio (a)               99.61         95.79         91.76

Average balances:
 Loans                          $ 114,343     $ 111,215     $ 101,497
 Earning assets                   139,255       132,383       121,340
 Assets                           148,920       141,419       130,037
 Deposits                         119,834       113,000        99,326
 Interest-bearing liabilities     119,458       116,279       107,435
 Shareholders' equity              12,741        12,579        12,322

Average shares outstanding:
 Basic                            560,973       560,317       569,381
 Diluted                          572,217       572,806       574,332

(a) Noninterest expense 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,
                                2001       2001       2000
                              --------   --------   --------
Balance sheet data:
 Total assets                 $152,686   $145,744   $132,753
 Loans, net                    113,831    111,194    101,130
 Total deposits                125,078    117,162    102,085
 Federal Home Loan Bank
  advances                      13,000     13,000     17,100
 Shareholders' equity           12,829     12,654     12,100

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

Book value per share          $  20.59   $  20.31   $  19.42

Asset quality:
 Allowance for loan losses    $    877   $    844   $    543
 Nonaccrual loans                1,381      1,744        286
 Total nonperforming assets      1,547      1,860        357
 Net chargeoffs for quarter         27         28         23


(b) Excludes only treasury stock.