Building and Loan records over $3 million in operations profit

The St Vincent Building and Loan Association has recorded a profit of over $3 million in its operations for the 11-month period ending December 31, 2013.

President Jeremy Jackson, while welcoming members to the 72nd Annual General Meeting (AGM) of the Association at the Methodist Church Hall on Monday, June 30, said the Association performed {{more}}extremely well in its financial and operational results.

In his remarks, Jackson said these results were achieved from “deliberate and focused strategies and from the implementation of the ‘Back to Normalcy Plan’ as approved by the members of the 71st Annual General Meeting.”

According to the consolidated Financial Statements presented by auditors Grant Thornton, the Association recorded a profit of $3,064,504 for the 11-month period ending December 31, 2013.

Jackson however said, despite the huge gains made by the Association for the period ending December 31, 2013, “there still remain several challenges that will be targeted for resolution in the financial year 2014.”

Among these challenges are the implementation of “a more comprehensive software and management information system which will address many of the operational and reporting deficiencies of the Association,” and the issue of loan delinquency, which stood at in excess of 30 per cent when the Board took office last year.

Jackson said the Board and management have already identified strategies to be implemented in 2014 to reduce this level of delinquency, “to an acceptable level.”

The President was elected from among the directors, who were elected by the membership of the Association at the AGM of August 29, 2013. Camille Crichton is the Vice President. The other directors who were elected by the membership in 2013 are Allison Thomas, Fidel Neverson and Joseph Ince. The ex-officio members of the Board are Chief Executive Officer Richard Branch and Secretary to the Board Bernadine Nanton.

Jackson informed members that the Board is in the process of revising the rules which govern the operation of the Association. He said, at present, the Association is operating under rules revised by the Financial Services Authority (FSA) when they took over management and control of the Association in February 2013. The president stated that the new board has, in turn, revised these rules, which have been submitted to the FSA for their input. The President said, “very soon”, within the next quarter, a special meeting will be called to bring the new revised rules to the membership.

Gary Matthias, who represented the FSA at the AGM, said phase one of the forensic examination into the operations of the Building and Loan Association has been completed, and “based on further assessment and legal advice,” the second phase is now ongoing. He said the second phase is the detailed examination of the issues raised under phase one, and it is expected that if all goes well, that phase should be completed by September 2014. Matthias however said he was unable to say how far back the forensic audit would go.

Explaining the relationship of the Building and Loan Association with the FSA, Jackson said at present, the Association has a memorandum of understanding (MOU) with the FSA. Under this MOU, the FSA attends meetings of the board of the Association, but the FSA does not participate in decision making. Also under the MOU, minutes of the board meetings and of other committees must be submitted to the FSA within a certain time frame, and the Association must present the FSA with financial statements and cash flow projections. Jackson however stressed that the Board is independent, as the FSA “does not exert any undue influence” on them.

In response to a question from a member, Matthias said the FSA will always be involved with the Building and Loan, they are they are the regulators. “You really can’t get rid of us. The good thing about it is that we are here to protect the shareholders funds. It is a natural part of our regulatory function,” he said.

Matthias explained that the Building and Loan is still under what is referred to as an “enhanced supervision process” in which the level of supervision is a bit more than the other financial institutions regulated by the FSA.

The FSA representative said he was not in a position to say when the enhanced supervision process would be completed, but the idea is that as the organization gets back to normalcy, the supervision will be relaxed.

The President reported that as recommended by the membership at the AGM of 2013, only $1000 from each delinquent redeemable share account was converted to Permanent Shares.

He also announced that the Association resumed issuing loans in December 2013. “People are applying for loans, and loans are being issued,” he said. The President said the Association is focusing on the quality of the credit of the people applying for loans, as in the past, delinquency was a big problem with the Association.

We do not run into the same problems a couple years down the road,” he said.

The FSA took over management and control of the Association on February 1, 2013, following the withdrawal of substantial amounts of money from the Association, days after the January 18, 2013 publication of a letter written by economist Luke Browne, which questioned the governance and financial health of the Association.