SUSUPE Saipan — After the courts lifted the four-year receivership off of Bank of Saipan the financial institution is looking ahead to better business. The Northern Mariana Islands Superior Court terminated the receivership on Aug. 11.
“I believe the termination of the receivership should boost the bank as the community in general knows that the bank has been operating under a microscope for the past few years and what we have done has worked ” Jon Bargfrede president and chief executive officer of the Bank of Saipan told the Journal.
In a 12-page order he issued Juan T. Lizama associate judge of the Superior Court who reviewed the case said ending the receivership which was put in place on Aug. 30 2002 “will not result in an unfair prejudice to creditors and depositors.
“A review of existing records and submissions of the parties to the stipulation suggests that the bank is capable of restoring its creditors’ funds and that terminating the receivership will not result in an unfair prejudice to creditors and depositors ” Lizama said.
He said the bank provided the court with information stating the following:
• The deposit level has increased in the last year;
• There is sufficient liquidity to pay retail deposits;
• The bank has continued making timely payments of the deposits by the Retitrement Fund Marianas Public Lands Authority which is now the Department of Public Lands and Commonwealth Development Authority.;
• The bank is currently profitable; meets the NMI capital earnings requirement; and has reserved funds that it believes will be sufficient to cover litigation costs; and
• The bank’s loans have increased and there are currently no delinquencies.
“The court takes notice that the bank under the current receiver has been able to recover 100% of depositors’ investments ” Lizama said. “The depositors are better served by terminating the receivership now … .” he said.
Lizama also instructed the bank to comply with the rehabilitation plan prepared by the Andela Consulting Group that was filed on Jan. 29 2003; and was approved by the court on Feb. 13 2003.
Bargfrede said the order is “terrific.” “The community owes a debt of gratitude to receiver Tony Muna who presided over the complete turnaround of the bank ” Bargfrede said in a media release. “We’ve done everything we said we would do. It’s just terrific. We’ve been functioning as a real bank. There will be no immediate changes. We’ll just keep improving the bank day by day ” he said.
According to Bargfrede the bank will have “various promotions from time to time as well as continue to be a good corporate citizen to the community.
“Our loan portfolio is about $16.5 million. That’s $16.5 million worth of collateral against their $8.5 million. So they are well secured ” Bargfrede said. He said the bank has enough cash to pay all depositors if they opt to withdraw their accounts all at the same time.
“We have enough cash on hand right now to pay all the retail depositors. If all of our retail depositors cash out today we’ll still have enough cash on hand to pay everyone ” he said.
Bargfrede said the bank has continued to be profitable consecutively since 2004. He said the Bank of Saipan posted a net profit of $800 000 that year and $250 000 in 2005. He said it was looking at having a $400 000 net profit this year.
Bargfrede said Bank of Saipan “sees no problem being profitable next year.”
“We are in pretty good shape right now all things considered. We were totally written off. I think 99% of the island pretty well wrote us off but here we are. To my knowledge I don’t believe the bank ever had three consecutive years of profitability ” Bargfrede said.
Bank of Saipan closed on April 30 2002 following a multi-million dollar embezzlement scandal. At the request of then NMI Banking Commissioner Fermin Atalig the bank was placed under receivership in May 2002. On May 27 2003 the bank re-opened. MBJ
