April 5, 2001 — The sale of Chase Manhattan Bank's local branches to Innovative Communication subsidiary Virgin Islands Community Bank has been postponed, but both sides say it is still in the works.
"We were shooting for May 3" as a closing date, VICB President Michael Dow said Tuesday. "We're not going to make that."
Closing now will be "not before July," Dow said. He would not be more specific.
When the deal received final approval from the FDIC in early November, Dow said his company expected the acquisition to be completed in the first quarter of 2001, but this week he said "March was never in the cards" as a closing date.
Chase officials were silent on the deal this week. Tynetta McIntosh, who handles public relations for the bank in the Virgin Islands, would say only "it is still pending." A message through her to Chase V.I. manager Cassan Pancham received no response.
The deal was first announced in June 1999. Both federal and local regulatory agencies were slow to give approval for it. The V.I. Banking Board finally approved it last summer, conditioned in part on VICB obtaining a letter of credit from the Federal Home Loan Bank of at least $100 million. That was followed by the FDIC approval in November.
Dow said the delay has nothing to do with VICB or Innovative getting the necessary financing. Innovative is owned by communication and banking magnate Jeffrey Prosser.
The financing "was settled" before the sale was public knowledge, Dow said. He would not say where the money is coming from or what the sale price is.
He also would not say when VICB's option to buy runs out.
"That is not an issue," Dow said. "We just simply work to come to a closing." He said Chase has "as much a vested interest" in closing the deal as does VICB.
Dow blamed delays on the "more than 100" third-party agreements that the Community Bank must put in place. Many of them are necessary in order to continue services Chase offers that VICB doesn't.
For example, Chase sells and redeems U.S. Savings bonds, but VICB does not. Dow said he needs FDIC approval for that business.
VICB doesn't sell its mortgages. Chase does. To be able to do so, Dow said, VICB must be a member of Fannie Mae or Freddie Mac, the federally chartered companies involved in making mortgages more readily available to home buyers.
He said he sent applications to both programs and has received approval from Freddie Mac but hasn't heard back from Fannie Mae.
A major difference in the two banks' abilities to operate in a tourist economy is their handling of credit cards. Dow said a bank must be a "principal member" of VISA — Chase is, VICB isn't — in order to accept merchants' deposits of credit card sales.
When he was operating three branches of a small bank catering to residential business, it wasn't cost-effective to apply, he said. "Membership of VISA would have cost me $30,000."
VICB opened its third branch last fall. At the time approvals of the sale were pending, the bank had 49 employees and $78 million in assets.
In contrast, Chase had 250 employees, $342 million in assets and seven branches in the U.S. Virgin Islands — four on St. Thomas, two on St. Croix, and one on St. John.
The deal also includes a Chase branch in Tortola. Dow said the two sides are working to close on the BVI branch at the same time as the USVI branches.
Dow said customers of both banks will be formally notified in writing of the sale "probably a good 60 days before" the closing.
