By Wayne Chargualaf
The banking and finance industry is one of the cornerstones of a modern economy. Guam Business Magazine gathered data on seven financial institutions to get a snapshot of the industry on the island. We also spoke with a handful of presidents and CEOs to get their insight into the industry as well as the effects of the 5% business privilege tax and tax refunds on the industry.
“There aren’t a lot of people complaining about the tax increase,” Philip J. Flores, president and CEO of BankPacific says. “Surely, on the commercial side, everybody would like to see it go back down 4%. We also have several other companies and paying the extra 1% is a little bit burdensome. In some cases, we’re able to pass that on, and in some cases we’re not.”
Gerard A. Cruz of Community First Guam Federal Credit Union is skeptical of the BPT entirely. “We haven’t seen any direct effect, and honestly, that’s really the problem with the business privilege tax,” Cruz says. “It’s a hidden tax in that there’s very little transparency in how it’s applied and whether or not there’s a direct effect on the price of goods sold.”
Joaquin P.L.G. Cook of Bank of Guam says the bank also has not seen any major impact. “We have explored the relationship between the business privilege tax increase and loans and deposits in Guam by category and subcategory, and we find no significant relationship, either within Bank of Guam or in the banking industry here as a whole,” he says.
Tax refunds have resulted in differing trends among the institutions. “In the recent steady distribution of tax refunds, we are mostly seeing members negotiate the checks and perhaps use them for daily spending,” Gener F. Deliquina of Coast360 Federal Credit Union says. “We are not seeing a large volume of deposits or payment towards loans.”
Both BankPacific and Community First, however, have seen an increase in deposits and debt payments, typically after an initial increase in spending on purchases that were delayed in anticipation of tax refunds.
“People are being very cognizant about how much money they have and are doing some very smart things with their money,” Cruz says.
Cook says the patterns they’ve seen with tax returns are largely business as usual.
“With regard to the fairly steady delivery of income tax refunds, those occur in the ordinary course of business,” he says. “Within the banking industry, they generally appear as transfers from government accounts into consumer and commercial accounts, with the added feature that a portion of our customers’ delinquent loans are brought up-to-date.”
Edward G. Untalan of First Hawaiian Bank views tax returns as good news for theeconomy. “For many people, tax refunds are seen as source of income and spending it on goods and services in our community will help stimulate the Guam economy,” he says. “Having a fairly steady flow of tax refunds makes it possible to extend this economic stimulation period.”
Clarke Schaumann, CEO of ANZ Guam Inc., gave his overview of banking on the island as a whole.
“Banking on Guam is unique due to hanging on the ‘edge of America,’” Schaumann says. As an example, according to Schaumann, customers on Guam have the same consumer protections as those on the U.S. mainland from entities such as the Federal Deposit Insurance Corp. “On the challenging side for us, with a population of roughly 165,000, it’s difficult to achieve scale. So, we need to know where we can make a difference and focus there.”
Clarke S. Schaumann |
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Joaquin P.L.G. Cook |
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Mark H. Tokito |
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Philip J. Flores |
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Gener F. Deliquina |
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Gerard A. Cruz |
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Edward G. Untalan |
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Banking information from the Federal Deposit Insurance Corp. Credit union information from the National Credit Union Administration.
