In a large mixing bowl, combine the peanut butter, butter, brown sugar, and sugar.
Beat in eggs, vanilla, and coconut extract.
In a large bowl, combine the flour and baking powder.
Add it to peanut butter mixture alternately with the milk.
Mix in the shredded coconut.
Spread batter into a greased 9x13-inch pan.
Bake at 325°F for 28-30 minutes, or until a toothpick inserted near the center comes out clean, and edges are golden brown.
Cool completely on a wire rack.
In a large mixing bowl, combine butter, peanut butter, vanilla, powdered sugar, and milk.
Beat until light and fluffy, about 5-7 minutes.
Spread over blondies.
Scatter coconut on a baking sheet.
Bake at 325°F for 3-5 minutes, or until coconut is pale golden brown.
Sprinkle the toasted coconut on top of the frosted blondies. Cut and serve!