Anchor BanCorp faces crucial U.S. Bank deadline

Feb 19, 2009 (The Wisconsin State Journal - McClatchy-Tribune Information Services via COMTEX) -- ABKR | Quote | Chart | News | PowerRating -- AnchorBank may be in serious trouble.

Anchor BanCorp of Wisconsin, the 90-year-old bank's parent company, does not have enough cash to make a $56.3 million loan payment due March 2 to U.S. Bank, the Madison-based company said this week in a filing with the U.S. Securities and Exchange Commission.

Unless U.S. Bank again agrees to extend Anchor's loan or the bank secures other financing, failure to make the payment could trigger a series of events that affect the company's ability "to continue as a going concern," the company said.

Depositor money is safe no matter what happens because it's insured up to $250,000 by the Federal Deposit Insurance Corp.

"We're in active negotiations with our lenders and we're trying to figure out a mutually agreeable resolution for all parties," AnchorBank president Mark Timmerman told the Wisconsin State Journal on Thursday. "Those dialogues and discussions continue."

Timmerman said he could not comment further because of the "active negotiations."

U.S. Bank agreed to an extension of its $116.3 million credit agreement with Anchor last Dec. 30, requiring payment by March 2 to reduce the debt to $60 million.

"As of the date of this filing, we do not have sufficient cash on hand to reduce our outstanding borrowings to $60 million," the company said in its SEC filing. "There can be no assurance that we will be able to raise sufficient capital to reduce the borrowings to $60 million prior to March 2, 2009."

The company also may not have sufficient cash to further reduce its debt as required to $56 million by June 30 and to $54 million by Sept. 30, according to the filing.

If the March 2 payment isn't made, U.S. Bank could declare the loan in default and declare the entire amount payable. It also could seize shares of company stock held by the corporation as collateral, Anchor said.

If the bank's assets are liquidated, the company warned that holders of common stock would be paid after creditors and holders of preferred stock. Anchor stock was trading at $1.01 per share late Thursday on the Nasdaq exchange.

Earlier this week, Anchor reported a net loss of $167.3 million for the last quarter of 2008. The loss was due mainly to a $93 million provision for loan losses, up from $7.8 million a year ago, and a $72.2 million write-down of the value of certain assets.

Anchor also received $110 million in cash on Feb. 3 from the sale of 110,000 shares of preferred stock to the U.S. Treasury Dept. under the Capital Purchase Program, which is part of the federal Troubled Assets Relief Program (TARP).

Douglas Timmerman, Anchor BanCorp president and chief executive, said this week that commercial real estate has been the bank's biggest problem.

Anchor's bad commercial loans include Northern Bay, a condominium project on Castle Rock Lake, where the bank was owed $27 million according to foreclosure proceedings last year, and First Place on the River, a 152-unit Milwaukee condominium project where the bank's exposure is about $9 million.

To see more of The Wisconsin State Journal, or to subscribe to the newspaper, go to http://www.wisconsinstatejournal.com. Copyright (c) 2009, The Wisconsin State Journal Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

More News:   Market Updates | Stock Alerts | All Trading News | Stock Index