BOG president: Banks are flush with deposits despite the Covid pandemic


The Bank of Guam has seen an unexpected growth in deposits during the Covid year, resulting from a massive stream of federal aid, coupled with the people’s spending restraint, bank president & CEO Joaquin Cook said Wednesday.

Cook said the economic shocks of the pandemic might have compelled people to better manage their resources amid uncertainty.

“People are saving more out of fear or because they are waiting to see what happens in the economy,” Cook said.

While declining to provide a figure, Cook said the influx of deposits is a trend observed in the nation’s banking industry. “Banks are flush with deposits,” he said.

In its last quarterly report for 2020, the Federal Deposit Insurance Corp. (FDIC) reported that bank deposit balances increased by nearly 18 percent, or just under $2.6 trillion, over the first nine months of 2020.


Deposits in the U.S. banking system climbed steadily through much of 2019, but once the pandemic hit, they flooded the system to never-before-seen levels, FDIC said.

The trend continues in 2021 as trillions of dollars in federal stimulus further drove up deposit volume.

“Nearly all community banks reported an increase in deposit volume during the year,” the FDIC’s first-quarter report for 2021 stated.


Joaquin Cook

“Growth in deposits above the insurance limit drove the annual increase while alternative funding sources, such as brokered deposits, declined. However, even when doing a quarter-to-quarter comparison, deposits were up from fourth quarter 2020 by 5.6 percent.”

Despite the mass layoffs and unemployment resulting from the Covid-triggered economic shutdown, Cook said the Bank of Guam did not see account closures.


“Surprisingly, most of our customers are doing alright,” he said. “I would say, the federal assistance had a big role in keeping things going.”


The bank did not process new accounts in 2020 because such transactions required face-to-face interaction, which wasn’t permitted during the lockdown months.


“For a while, we held off on account openings but since we started opening, we have seen a return of account openings,” Cook said.


While people were expected to resort to borrowing, that prediction did not take place. On the contrary, loans are a lot lower than usual. “People are uncertain of their ability to pay, so they are unable to borrow,” Cook said.


But payments of existing loans have not suffered as much as anticipated, Cook added.


The Bank of Guam implemented a blanket three-month loan payment deferral following the governor’s public health emergency directive in March last year.


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After the three-month grace period, Cook said the bank facilitated arrangements with individual borrowers who still needed relief.


On the mortgage side, he said, Freddy Mac loans were deferred for 12 months.


Most borrowers have since maintained payments. “Some were even paying off faster than normal,” Cook said., “It’s not what we expected to see; we expected worse.”


Overall, Cook said, the federal aid has helped the community stay afloat despite the global economic massacre brought about by the Covid-19 pandemic.


The federal Covid-relief packages, authorized under the CARES Act and the American Rescue Plan, have provided Americans with pandemic unemployment benefits and stimulus checks.


The U.S. Small Business Administration has insulated the business sector from the impact of the pandemic by providing forgivable loans through the Payroll Protection Program and the Economic Injury Disaster Loan.


Cook also saw a silver lining in the pandemic. “Businesses have learned to operate lean and became better at managing their resources,” he said.


But given the expiration of federal assistance in September, the rest of 2021 may remain challenging.


Nevertheless, Cook is optimistic that 2022 will be a much better year.


The resumption of tourism, with the arrival of the first charter flight from Taiwan under the Air V&V program, offers a promising start.


Besides the Covid-relief packages, Cook said, uninterrupted federal activities such as the military build have also contributed to Guam’s relative economic stability.


“The military buildup will keep local businesses busy and that will continue for at least five years,” Cook said. “After that, things will be, I won’t say, blue skies but close to it. After this depression, or depressing time and economic challenges, we always come back with great years.”




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