TBAS projecting a loss of “a little less than a million dollars”

fili@samoanews.com

Although the Territorial Bank of American Samoa is projecting a loss of “a little less than a million dollars” for calendar year 2017, the government owned commercial financial institution has not touched the seed money of $10 million provided by the government to launch the commercial bank, according to testimonies by TBAS officials before a House committee late last week.

The hearing gave lawmakers a chance to get an update from TBAS chief executive officer Philip Ware and chief operations officer Makerita T. Polu on the bank’s operations. Ware told the committee that the bank is still awaiting Federal Reserve approval of its transit routing number. (See last Friday’s edition for more on routing number.)

Rep. Meauta L. Mageo raised several questions, which revealed where the bank stands since it opened for business on Oct. 3, last year.

Since it opened for business, Polu said TBAS has total deposits of $1.5 million and nearly $600,000 in loans. TBAS also still has the $10 million from ASG for seed money to kick start the bank’s operation.

Samoa News points out that the $10 million seed amount — which is a portion of the bond sale proceeds — is part of the local law, which established the government owned bank.

Mageo asked about a TBAS projected loss for this year 2017, and Ware replied, a “little less than a million dollars.”

Asked what TBAS plans to use to “close that gap”, Ware replied, “We have started purchasing loans and making investments, which I think will curb that within the next two months.” (It should be noted that the interest rate for loans were not asked for or stated during the hearing.)

Ware also told the committee that the bank has a strategic plan for its operation, but “we keep revising the plan because of our transit routing number” that is yet to be approved by the Federal Reserve.

Responding to committee questions Ware revealed three Congressional members — in both the US House and the US Senate, who are all Republicans — along with their staff have been very helpful, and stand ready to assist TBAS — and this includes efforts to get a routing number.

The three are: Congresswoman Aumua Amata, US Rep. Rob Bishop, who is chairman of the US Committee on Natural Resources, with oversight of the US territories; and US Sen. Orrin G. Hatch. Both Bishop and Hatch are from Utah, which is Ware’s home state.

BANK LOANS

Responding to questions on loan programs, Polu explained that TBAS launched last November the Christmas or holiday loan program for the Christmas holiday for the minimum amount of $300, with the highest at $2,500.

And the holiday loan program ended in early January this year and the bank plans to launch it again towards the end of this year, she said.

Also in January this year, the bank launched another loan program, which doesn’t have a ceiling amount or maximum loan amount. Polu said a person seeking a loan brings in the request and a review of the application is carried on to determine an amount to be approved.

She said the bank has already set criteria for the loan program and this includes the person’s income.

MANU’A SERVICE

House Vice Speaker Fetu Fetui Jr. told the TBAS officials that Manu’a has “been left out on almost everything that goes on” in American Samoa and he would like to see a bank operating on Ta’u or Ofu or both. Fetui is one of the three House members from Manu’a.

“We are very aware with the situation with banking services... in Manu’a. And it is our intent to address those as soon as we can,” Ware told the committee and noted that once the routing number is set up “it is my intent to identify a mechanism to deliver banking service to the people of Manu’a.”

He added, “Whether that be a ATM or whether that be a teller, or what ever that may be, we will do the math at that time and figure out how to take care of the people there. You have my commitment on that.” Fetui responded that he would personally take Ware for a tour of the Manu’a islands.

“I really want to see this service in Manu’a,” the Manu’a faipule commented.

BANK OF HAWAII

Fetui asked as to whether Bank of Hawaii is helping TBAS, to which Ware said “no”. While he doesn’t like to say negative things about other banks, Ware told the committee “when we approached this project, we counted on the help from two banks — the bank that the government uses, Zions Bank [of Utah] and Bank of Hawaii.

“And when it came right down to getting them to help us, both of them turned us down,” he said, noting that during a recent meeting in Washington D.C. that included the governor, the Federal Reserve noted that it was “very surprised, that there are so many customers that are coming to our bank when we don’t have FDIC (Federal Deposit Insurance Corporation) insurance and we don’t have a transit routing number.”

NEW SERVICES

Besides offering loan programs, Ware informed the committee that it was more than a week ago that TBAS started offering, “deposit boxes” and “has been received favorably.”

“We also have online banking, although that will be limited also [but] you’re able to go online and check your balance, and make a loan payment. So we keep adding things,” he said, and noted that without a routing number TBAS is not able at this time to offer business accounts.

“Business accounts... require too many money transfers and we can’t do transfers until we get the routing number. However, we’ve had a lot of inquiries because businesses want to move their accounts to us,” Ware said, adding that this is the same situation with government accounts.

(Samoa News notes that the law establishing TBAS requires all government accounts to be held at TBAS.)

“We’re doing everything we possibly can without a transit routing number to bring services to the people of American Samoa,” the TBAS CEO said and gave the committee a verbal commitment to getting TBAS moving forward.

“I will commit to you, that I am not in this for the money because I have no money involved in this myself. I am in this to try to do a service to the people of American Samoa. So you have my commitment that I will do that,” he said.

Last month the Lolo Administration sent to the Fono, legislation authorizing TBAS to provide Trust Services, and Ware is hopeful that lawmakers will approve the measure. (See Samoa News edition Feb. 23 for details on the bill.)

Although trust services are “not a big money maker,” Ware said TBAS would be able to provide this type of service in the territory.

The House will hold a hearing at a later time on the trust services bill, while the Senate hearing scheduled for yesterday was canceled because Ware left Friday night for an important meeting on the mainland dealing with TBAS.

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