Pago Pago, AMERICAN SAMOA — It takes about three years before a start-up commercial bank like the Territorial Bank of American Samoa (TBAS) to actually earn a profit, according bank president and chief executive officer, Drew Roberts, who said TBAS has issued about $8 million in commercial and personal loans in the last fiscal year.

Among several issues covered in a recent Samoa News interview with Roberts and TBAS chief operations officer, Makerita Polu, is how many years since opening their doors would a start-up bank start seeing profits.

“It takes three years before you’re actually going to see any positive returns. We’re almost to the third year [of operation],” said Roberts. “We’re actually doing a lot better than most banks, after they get their routing number.”

Roberts and Polu both credit the community’s support as one of the reasons for the bank’s success. “We had deposits coming in the bank before we had the routing number,” said Roberts, with Polu adding, “even the first day that we opened our doors, we had customers and we had deposits.”

“And we still have money coming in,” Roberts pointed out. “That will continue to a point where the more money that comes in, the more money we [can] loan out; the more money we make, the more profit we get.”

TBAS officially opened for business in October 2016 and announced in early January 2018 that the American Bankers Association has issued to TBAS a routing number, allowing it to add more services to its operation.

“A routing number usually takes two weeks, but for TBAS, it took 18 months because we were the bank that was not supposed to be a bank,” Roberts explained. “It doesn't fit in any requirement, because we’re government owned. Nobody knew what to do with it. We weren’t [FDIC] insured and the Federal Reserve Bank didn’t know what to do.”

TRAILBLAZING

With the routing number, TBAS was finally able to setup a Master Account and be a member of the Federal Reserve Bank, allowing TBAS access to the U.S payment system. And what TBAS has achieved so far, has attracted attention from other US jurisdictions.

“We have had several other banks in the US wanting to know how we started it,” said Polu, who has been with TBAS from the start and previously with ANZ Bank for many years.

Roberts notes that officials from several US municipalities and states — such as California, Oregon, Washington, Florida, New Jersey, Colorado — “all have approached us saying ‘if you can get a state owned bank up and running, can you help us? How do you do it?”

(Samoa News notes that the Chicago-based non-partisan government research organization, The Civic Federation, in a Mar. 12, 2019 report titled “Financial Challenges for the next Chicago Mayor and City Council” explains options for creating a Chicago Public Bank and cited TBAS in American Samoa.)

“So this is kind of a ‘trailblazing’ effort. And anybody that knows, if you’re doing something for the first time, there are a lot of firsts at the start. And it has happened,” he said. “Debit cards are a great example.”

“You’d think it's an easy thing to get debit cards,” but “there is a system where you’d have to process. Unfortunately, unless you’re are an FDIC member ... there is a much longer process as this would be a first-time for the debit card processors. So everything had to be invented and started from scratch.”

Polu added, “no bank has ever done it before, except us” in getting debit cards, while not FDIC insured. “As we go along, we learn new things, overcome challenges and find a way to provide services to our customers,” she said. TBAS debit cards are via Master Card.

“What TBAS has accomplished and set has also set the stage for future similar types of banks, not FDIC, when it comes to getting debit cards, working with card processing companies,” said Roberts.

“So we’re still trail blazing,” said Roberts. “We’ll see in the next six months the difference in a way that we do things, because of what we’ve learned in the past, and acceptance by other people, other entities, other processors, other banks.”

Polu said the steps taken by TBAS to be where it is today, “will be a good thing for others” to follow in setting up a commercial bank. “We’re the first one to do it and we’ve set the steps to make it work and others can mirror how we did it,” she said.

Roberts said, “People on the island should be proud, there is a bank, which is essentially theirs, that we’re Bank of the People, [although] it's a small bank that’s making huge ripples in the US.”

Responding to customer complaints when local vendors and even ATMs don’t accept TBAS debit cards, Roberts confirmed it has happened, but says it could be because of the “point of sale” machine (commonly referred to as the credit/ debit card machine) is not working or the telephone lines are down, “and that has happened many times.”

Or it could be the system goes down from the processor’s side, referring to the company that issues the debit card. He said TBAS debit cards were not processing for a five-day period last month because the “processor just wouldn’t process TBAS cards, because the company was going through upgrades of their own, and there was a hiccup in their program.

Polu said every time Master Card does its own upgrades on their system, “ours will go down too, since we carry Master Card.”

LOANS & BANKING FEES

Roberts said one of the many questions he keeps getting from the public is whether TBAS offers personal and commercial loans. Some people have even told him early this month that TBAS doesn’t loan out money.

“We can and we have made personal loans, commercial loans, and lines of credit,” he said. “We can wire money and we do, and we accept direct deposits — We’re a real bank."

He revealed that in the last fiscal year, the bank put out some $3 million into the “economy on personal loans” and that doesn’t include $5 million in loans to local businesses “so they can sell more products to consumers on the island.”

He shared some information on future plans pertaining to bank fees. “The banks down here make money by assessing fees and people have gotten used to paying fees, because the banks don’t loan any money,” he said and explained that Bank of Hawaii has a limited charter and they can’t lend money here while “ANZ Bank has decided that they just don’t want to.”

“There’s only two ways banks make money — either lending and charging an interest rate or they can charge their customers fees,” he said and then told Samoa News, “I think you’re going to see later that we will tend to make our money on the interest rate [on lending] rather than charging people fees.”

He said local residents appear to have gotten used to paying bank fees — among them, is to get a bank balance over the phone or a copy of a bank statement. “Everything is a fee,” he said.

Polu added, “We’ll make our money like every other bank makes money by loaning.”

“This is a community bank, serving a population of about 60,000 people. All of the earnings in the bank stays here,” said Roberts.

Polu said the “more customers make deposits to us, the more [money] we can lend to them for their fa’alavelave and the money stays here. But if they don’t deposit, we don’t have the money to lend.” Roberts agreed.

Roberts said there are criteria to meet and all the information is available at the bank for personal loans.

Roberts and Polu both credit the “great and fantastic loyal team” who has made TBAS what it is today, as a “trailblazer” and its continued success heading into the future. Most of the staff has been with TBAS from the beginning.

“And the senior management team, I can’t say enough good about them. We run very, very well. We make our own decisions in-house,” said Roberts.