Feb. 22--The parent company of AnchorBank, which received $110 million in federal Troubled Asset Relief Program funds about three weeks ago, has a debt problem that threatens the bank's survival if it can't be resolved.

Anchor BanCorp Wisconsin Inc. said in a regulatory filing last week that it owes U.S. Bank $116 million, almost half of which is due March 2. Minneapolis-based U.S. Bank could foreclose on the bank if Anchor defaults because the debt is secured by Anchor stock. Anchor said it did not have sufficient cash to reduce the loan to $60 million by the deadline and didn't know whether it could raise sufficient capital in time.

In an interview Friday, Anchor chief executive Mark Timmerman said the bank is in negotiations with U.S. Bank over the debt.

"We are working with the lending folks and we are negotiating with them, and we are expecting an outcome that all parties can live with, and we're making progress," Timmerman said.

Along with its U.S. Bank debt, Anchor is struggling with delinquencies in its portfolio. Anchor reported last week it lost $167.3 million in the quarter ended Dec. 31 and added to reserves for more loans that could go bad.

Timmerman said the bank will report on its use of TARP money when February ends.

"Yes, we're absolutely tracking it," Timmerman said. "We've made lots of residential and consumer loans. We're adhering to the tenets of the TARP program to provide credit appropriately and prudently to those qualified borrowers in the current economic situation. We're a bank -- we make loans, we take deposits. So we want to do the business we're good at."

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