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TBAS starts marketing its products, including ‘fa’alavelave loans”

Territorial Bank of American Samoa has already started marketing its products to government employees and some of those products include debit cards and ‘fa’alavelave loans”, which is expected to attract a lot of customers for the ASG owned commercial bank still set to open next Monday.

A few of TBAS products were revealed Tuesday during a Senate Government Operations Committee hearing, which provided an opportunity for senators to get updates on the bank’s status and other issues. Witnesses at the hearing included the seven-member board of the Territorial Bancorp Holding Company, which governs and oversees TBAS, whose chief executive officer Philip Ware was also present at the hearing.

At the outset of the hearing, board chairman Utu Abe Malae explained the reason the Lolo Administration moved to establish the charter bank after the government was unable to attract a US bank to replace Bank of Hawaii, which will officially close all its local operations once another financial institution is established.

Utu said it’s still planned to have TBAS open Oct. 3rd, Monday, and noted that although the bank will not be insured by the Federal Deposit Insurance Corporation (FDIC) from the start, TBAS “is behaving like it’s already regulated under FDIC purview. That’s the approach that we’re taking.”

“We have strict policies for the bank and we follow industry standards,” he said and noted that TBAS has already hired staff to kick-start the operation, as well as senior officials such as Ware, who has a long history of banking industry experience.

Another senior official, with many years of banking experience, with ANZ Amerika Samoa Bank is Makerita Polu, who is the vice president of operations. Polu along with board member Salaia Gabbard, who served for many years with ANZ bank, has started “marketing the bank” to ASG employees, said Utu.

And he reminded senators about a provision of the law, which established the bank, that all government accounts are deposited in TBAS.

The statue states, “Without exception, all government funds and deposits, including those earned or received by semi autonomous agencies of the American Samoa government including but not limited to the American Samoa Power Authority, the American Samoa Tele-Communications Authority, American Samoa Community College, LBJ Medical Center, Visitors Bureau, ASG Employees Retirement Fund operating accounts, Feleti Barstow Library, shall be deposited with and maintained” by TBAS.

Additionally, all revenues earned by the bank on such deposits shall be credited to and become part of the income of the bank.

The law also states that initial capital for the bank is no less than $10 million and Utu told the committee that this seed money is “just the capital”, which is not touched and it’s the deposits that operate the bank. (Samoa News notes that the $10 million comes from proceeds of the American Samoa Economic Development Authority issued bonds.)

The committee asked what type of loans are to be offered by the bank, and Gabbard outlined some of the loan programs.

For example, there are small loans, which are the “fa’alavelave loans” of $500 up to $2,500; and personal loans of over $2,500 up to $10,000. She said the bank has a set of criteria to meet for these loans, which will be available 30-days after the bank opens.

Gabbard said business loans come later but these types of loans are usually tied to the prime rate and also depend on the individual business. Additionally, auto loans will also be available later.

She also told the committee that the bank will have debit cards, “just like Bank of Hawaii”, which will be accepted off island, and “we are looking at having the credit cards, but probably not ‘til next year.”

Utu added that he is saddened that the banks currently operating here appear to have given up on “our residents” when it comes to offering loans. But TBAS “believes that the bank should not give up on our people, who are seeking loans,” he said.

Board member Steven Watson, who is also the governor’s chief legal counsel, informed senators that the bank has adopted a “loan policy and procedures guide lending practices” which has “forbidden any members of the board from borrowing from the bank.”

Utu added that bank employees are allowed to make loans, but reiterated that board members and their immediate family members as well as bank officers are prohibited from loaning from the bank.

Sen. Magalei Logovi’i sought clarification on loans, asking if the bank is going to accept people with bad credit histories or only those with good credit. He says it’s important that it’s made clear when it comes to loans.

Gabbard explained that the bank will have credit criteria and TBAS will be part of Equifax and TransUnion credit bureaus — which provide the credit history of a customer. She said that the bank is reviewing the policy and procedures now and it’s the reason loans will not start until November.

“Our goal is try to help people clear up their bad credit and that’s the message that I’ve put out there — if you have bad credit come and see us, let us help you fix it,” she said. “Don’t ignore it, because it will never go away. There are ways to clean up your credit; some will take longer than others. A lot of people just don’t want to deal with it.”

Towards the end of the hearing, Utu informed senators that the “operating procedure or the philosophy of the bank is to operate as if it’s FDIC insured”. He said the bank would follow all industry standards to meet the goal, which is to seek FDIC approval in two to three years after the bank opens.

Additionally, there are approved policies and procedures in place for the bank to follow dealing with a wide range of issues. For example, he said three committees of the board have been set up and were to be firmed up at a meeting of the board yesterday and they are: Asset-Liability Committee (or ALCO committee), audit and compliance committee; and credit committee.

In the end many senators praised the administration for moving to set up another commercial bank in the territory and gave the board and TBAS their blessings.

There were questions pertaining to the bank not being FDIC insured. Samoa News has reported several times on this issue in the past couple of months. See Samoa News edition Sept. 21 for the latest update as well as more information from Utu on the bank.