Just so we're all singin' from the same sheet of music...here's the article & link.
Regulators deny loan extension to Anchor BanCorp
Anchor owes $116.3 million, plus $60 million in interest and fees, to group led by U.S. Bank
July 5, 2013
Regulators won't let Anchor BanCorp Wisconsin Inc. receive another extension on a $116.3 million credit agreement from a group of lenders led by U.S. Bank, putting more financial pressure on the already troubled bank.
Although regulators have allowed Madison-based Anchor to extend the maturity date six times so far, the Federal Reserve hasn't approved the latest plan, Anchor disclosed Friday. The loan matured June 30.
"Frankly, it was a surprise and a disappointment," said Chris Bauer, chief executive of Anchor. "The key thing is that the bank group, led by U.S Bank, have all agreed, along with our board, to an extension."
The Fed holds sway over borrowing decisions at Anchor BanCorp by virtue of a special order it issued to the bank back in 2009 when loan defaults got the company in trouble. Regulators offered no explanation for denying the extension other than to say Anchor was unable to make the payments, Bauer said.
A spokeswoman for the Federal Reserve Bank of Chicago said Friday the regulator typically doesn't comment on individual banks.
"We can't speculate on what they think as they go through their process, but there are no other orders, no other deadlines that come along with this non-approval," said Bauer, a former Firstar Bank executive who was brought in four years ago to help Anchor recover.
U.S. Bank had no comment Friday afternoon.
Jon C. Bruss, chief executive of Fortress Partners Capital Management Ltd. in Hartland, noted that Anchor's document disclosing the issue states the Fed "is not, at the current time, prepared to approve the further extension" of the credit agreement. That might mean approval still is possible, he said.
But he was puzzled by the Fed's decision, because it technically forces the bank into default.
Anchor has hired an investment bank to try to help it raise capital. Bruss said regulators generally aren't fond of private equity ownership of banks.
"What I'm thinking is they are trying to drive Anchor into the arms of another — probably publicly traded — bank," Bruss said.
In addition to $116.3 million in principal, Anchor BanCorp owes more than $60 million in interest and fees on the credit agreement that matured June 30.
Anchor BanCorp is the parent company of AnchorBank, the fourth-largest bank based in Wisconsin.
Anchor, hit hard by real estate loans that started going bad during the recession, hasn't turned a profit in its last five fiscal years. Its 2013 loss of $48.1 million, however, was its smallest during that stretch. Anchor's worst one-year loss occurred in 2009, when it lost $232.8 million.
"Quite frankly, the bank continues to improve," Bauer said, noting a large reduction in shaky loans and in foreclosed properties on its books.
"We've been making new loans," Bauer said. "In fact, in the last couple of months we've actually increased our loan portfolio."
Anchor BanCorp also still has a $110 million Troubled Asset Relief Program, or TARP, investment from U.S. Treasury and owes the government more than $25 million in unpaid dividends. It received the TARP capital in 2009 during the financial crisis.
In some ways the bigger question I have is why did the regulators wait as long as they did? Back in 2009 , 10 & 11 regulators were shutting down banks like Anchor as a matter of routine...then in late 2011 to early 2012 they unexpectedly took a sharp turn towards leniency ...with no explanation given.
During that time many banks turned the corner and regained enough financial strength to actually become profittable again. TARP helped fill in the gap until other capital raising efforts stepped in.
Anchor seems to be lagging more than most and it looks to me like Regulators have seen enough. In 6 months the banks' TARP loan interest rate jumps to 9%... so unless they find some large investors willing to infuse a half billion or more into the bank asap..I think Anchor is a goner.
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