Andrew Clunis, Freelance Reporter
THE MIDLAND People's Co-operative Bank, which serves St. Mary, parts of St. Ann and parts of St. Catherine, is in a woeful financial state. It's balance sheet as at December 31, 1998, is over $4.5 million in the red and the situation did not get better in 1999.
This was revealed at Wednesday's annual general meeting of the bank at the Guy's Hill Town Hall in St. Catherine. The bank's assets stood at $88,324,725 while its liabilities amounted to $92,871,346. General manager of the bank Hugh Small said the situation at Midland reflected what was happening with PC banks right across the country.
Mr. Small said the bank's level of arrears is extremely high, standing at about 30 per cent of its loan portfolio of $60 million. He added that loans to coffee farmers accounted for most of the arrears and the situation continues to get worse, as most of the farmers didn't even have the coffee. "We are basically insolvent," he told the Farmers' Weekly.
"We will have to seek guidance from the Agricultural Credit Bank with respect to the coffee loans, because it is their money. In the other cases, we will have to coerce people into paying or realise their assets used for collateral," he said.
Limitation of markets
Mr. Small said one of the reasons PC Banks are facing trying times, is that they only have a profit spread of three per cent. "We borrow from the AC bank at 10 per cent and lend at 13 per cent. From our loan portfolio, that would be just $1.8 million that we would be making. That wouldn't even pay our staff of 25 people," said the manager who took up his position three months ago.
Many of the loans on the books of the Midland PC bank date back to the 1980s.
One of the primary issues raised at Wednesday's meeting, was the lack of marketing avenues for farmers' produce. "The farmers are very concerned because there is a limitation of markets. Agricultural loans are already very risky and when that is coupled with the problem where farmers can't get to sell what they produce, we are in a bad state," he said.
The bank was forced to close its Annotto Bay branch in December of last year. Mr. Small said there wasn't any immediate plan for further downsizing. However, he noted that the Richmond branch got an ultimatum that there should be a turnaround by the end of the year. "We have been seeing signs of improvements since. If the people want it to remain there they will have to utilise its facilities and services," he said.
The AGM was well attended by farmers and other business people from St. Mary. Local committees had their members out in numbers.
