‘BoS is now out of the woods’

More than three years after being placed under receivership, the Bank of Saipan disclosed that it has achieved financial stability and is now ready to end the receivership.

The bank and its receiver, Antonio S. Muna, have jointly asked the Superior Court to end the receivership, soon after the BoS struck an agreement with the Commonwealth Development Authority for the agency to keep deposits intact with the bank for the next several years.

The CNMI government remains the bank’s biggest depositor, with over $15 million in deposits. Of the total amount, the Marianas Public Lands Authority has some $9 million; the Northern Mariana Islands Retirement Fund, $5.6 million. The CDA controls the rest of the deposits.

”The government depositor agreements with the CDA, the CNMI Retirement Fund and the MPLA are significant because they commit those agencies to keeping funds on deposit with the bank for the next several years, further stabilizing the bank’s depositor base,” said BoS president Jon Bargfrede in a statement.

Bargfrede and Muna said the bank has met the criteria established by the court for ending the receivership, saying that the reasons for the receivership are no longer present. They declared the bank stable and financially sound.

They said bank operations have normalized, and withdrawal restrictions on any private depositors’ accounts have been lifted. Deposits have grown and the bank has been generating new loans, they added.

“As I had concluded early on in my receivership, rehabilitating the bank was in the best interest of the depositors. As an added result, the bank continues to be an asset to the community, a source of livelihood for many CNMI residents and their families, and a positive contributor to the government revenue base in a time where government revenue sources continue to erode,” Muna said.

The court appointed Muna as receiver on Sept. 27, 2002. Muna took over the receivership from Randall Fennell, who had wanted to liquidate the bank’s assets and pay off depositors.

Unlike Fennell, Muna favored rehabilitation of the bank. He vowed to work closely with the bank’s shareholders, managers and depositors and implement a court-approved rehabilitation plan.

“Everyone here is grateful to Tony Muna for the courage and foresight he showed in supporting rehabilitation of the bank at a time when a lot of people thought the only alternative was liquidation. That would have been a tragedy for everyone—especially the depositors who would have gotten pennies on the dollar and the employees who would have lost their jobs,” Bargfrede said.

In January 2005, the bank reopened its Garapan branch and became one of the few banks on island that serve customers seven days weekly.

Before the reopening of the Garapan branch, Bargfrede disclosed that the bank had begun to normalize in its operations and had removed any withdrawal restrictions since December 2004. In that year, the bank reported an operating profit of approximately $1 million. At that time, the bank reported new deposits at $4 million, which increased total deposits to about $23 million.

The bank’s main branch in Chalan Kanoa reopened in May 2003 following the court’s approval of a rehabilitation plan. Both Chalan Kanoa and Garapan branches open daily from 9am to 5pm from Monday to Thursday. Friday’s closing time is 6pm. The Garapan branch also has banking hours on weekends from 10am to 1pm.

The bank temporarily shut down operations in 2002 after a bank run that ensued following the fraudulent acquisition of loans by the group of businessman Bert Douglas Montgomery, who is now in federal prison after being convicted of wire fraud and other charges.