Bank of the Cascades filed suit June 30 in Deschutes County Circuit Court against a holding company linked to Pahlisch Homes, saying it is owed more than $9.5 million.

The suit names Mayberry Mountain LLC as a defendant along with Tucker and Jan Mayberry of Multnomah County and Dennis and Beverly Pahlisch of Deschutes County. Dennis Pahlisch is the president of Bend-based Pahlisch Homes. Mayberry Mountain has the same Bend business address as Pahlisch Homes, according to the Oregon Secretary of State’s Office.

According to the suit, Mayberry Mountain has defaulted on a promissory note, dated Oct. 23, 2006, with the bank for $9,529,000 that was due with interest on April 1. In addition, the suit says the two couples are in default with respect to commercial guarantees signed by them to guarantee payment of the note.

The promissory note was secured by a deed of trust for two lots in Redmond off of Northwest Way purchased by Mayberry Mountain on Oct. 27, 2006, according to county tax records. The lots comprise roughly 75 acres.

Dennis Pahlisch, in a phone message left for The Bulletin, said the lawsuit came as a surprise. He said his company was current on the interest payments required by the loan and that the company expected to renew the loan when it matured April 1. The suit states the maturity date had been extended three times.

A bank official said the bank wants to reduce its exposure to some real estate loans. Other banks have taken similar actions against several area builders in the past few months as the homebuilding industry soured.

Tucker Mayberry referred to Pahlisch Homes to comment. The company did not want to comment Tuesday directly on the suit but sent a prepared statement to The Bulletin, credited to Mayberry Mountain’s finance manager, Nancy Kowalski.

“From our understanding, this is a decision by Bank of the Cascades that is based solely on the current percentage of real estate within the bank’s portfolio, which it is trying to lessen,” Kowalski wrote. “The property, which is located in Redmond’s Northwest Area Plan, has retained its value since our original purchase, and we remain current on our payments for this loan, so this is not a negative reflection on the property or our company.”

Mike Delvin, the president of the Bank of the Cascades, said the bank generally does not comment on its clients’ actions but did say the loan in question matured and can only be considered current when it’s paid in full. Delvin said the bank extends maturity dates for a variety of reasons but also said the bank has more exposure in raw-land agreements — such as the Mayberry agreement — than is preferable given current market conditions.

Delvin would not comment as to whether the bank’s decision to file suit was related to the bank’s concerns about its loan portfolio but said “when economic cycles change, a number (that was) good in your portfolio two years ago can come under stress at a later point in time.”

Delvin added that Bank of the Cascades partnered with another bank to provide the loan and is only exposed to half the loan amount. Delvin declined to name the partner bank.

Kowalski also wrote that the company understands Bank of the Cascades’ need to file a suit was a business decision and that it’s confident it will be able to obtain an alternate lender for the property, “since our current loan to value is still at 65 percent and the property value will be increasing when our land use approvals for it are obtained later this year.”

Loan to value is the ratio between a borrower’s down payment and the loan amount needed to cover the purchase price. A 20 percent loan to value means a 20 percent down payment relative to the loan amount.