Feb. 15, 2006 – Members of the V.I. Banking Board continue to have some concerns about the application for a new bank in the territory, but Board members say they are 90 percent ready to approve it.
Banking Board member Winston Bennett was the most vocally skeptical of the six board members in attendance at a meeting Wednesday at the Lieutenant Governor's Office. But even Bennett said," We're working to find a way to say yes."
The major concern was that Merchants Commercial Bank, which had begun the application process about 18 months ago, was not clear enough on its commitment to meet the terms of the Community Reinvestment Act. The CRA was enacted in 1977 to encourage banks to help meet the credit needs of all segments of their communities, including low- and moderate-income neighborhoods.
Bennett wanted to know, "How do we tangibly track your CRA commitment?"
James Crites, who is expected to serve as president of the new bank, said that a recent amendment to the original application outlined the bank's "enhanced CRA plan." He said there were "tangible" measures within the plan that the board could use to "hold our feet to the fire."
Attorney Tom Bolt, who is acting as counsel for the Merchants group and is also an investor, was adamant that Merchants would fill a crucial gap for small and medium-size businesses, who he said are unable to get commercial loans from other banks in the territory.
Bolt and others, including Merchants board member James Armour, said part of the problem is the decisions about who gets loans are being made in "Canada and Puerto Rico," not in the Virgin Islands.
Bolt said Merchants will offer "Virgin Islanders making decisions for Virgin Islanders for the first time."
Both Armour and Steve Simon, another of Merchants' founders, said they personally had given loans to friends and employees who were unable to get bank loans for commercial pursuits.
Simon, who lives on St. John, said his godchild's father had been leasing a taxi medallion. When he tried to get a $10,000 loan to buy it, he was turned down. Simon personally loaned him the money to buy the medallion.
Armour spoke of one of his tenants in International Plaza who was forced out of business because he couldn't get a loan to replenish his inventory.
Bolt said, "When you look at people's credit reports they show they are borrowing money from MasterCard … at incredibly high interest rates."
One of the other concerns expressed by the Banking Board was the scheme of the banking office that Merchants intends to create at Port of Sale Mall.
Instead of traditional teller platforms, business will be conducted at desks occupied by a version of a teller. And instead of waiting in lines, customers will have a "parlor" in which to wait.
Banking board members said they felt typical Virgin Islands patrons would be intimidated by such an atmosphere. They also felt that few would warm to the idea of having banking staff coming to their places of business with laptop computers, theoretically to make life easier for the business owners that Merchants hopes to court with such conveniences.
Banking Board member Ernesto Gutierrez said, "A lot of people on St. Croix would be suspicious of someone walking around with a computer." Gutierrez said, "We're about 95 percent for approval [of the application] but have concerns about how you will reach the average person."
In the end, the board opted to discuss the application among themselves further before giving or denying Merchant's the go ahead.
Lt. Gov. Vargrave Richards, Banking Board chairman, said it was likely the board would require some additional conditions, but that it was "90 percent there."
All of the members of the Banking Board were in attendance, including Bernice Turnbull, Finance commissioner; newly appointed member Desmond Maynard, attorney; Bennett, Gutierrez, and Pablo O'Neill. Deverita Carty Sturdivant, director of the Division of Banking and Insurance was also in attendance.
Along with Bolt, Crites, Simon and Armour, other Merchants' board members in attendance included Alda Monstanto and Michael Burgamy. Annette Williams, who is slated to be the bank's chief financial officer, was also at the meeting.
Share your reaction to this news with other Source readers. Please include headline, your name and city and state/country or island where you reside.