2014
BANKGUAM
HOLDING
COMPANY
ANNUAL REPORT OF
BANKGUAM HOLDING COMPANY
& BANK OF GUAM®
Corporate Information
Annual Meeting
The 2015 annual meeting of stockholders will be held
at 7:00 p.m. on Monday, May 18, 2015, in Bank of Guam’s
Hagåtña Branch in the BankGuam Holding Company
Headquarters Building.
BankGuam Holding Company (BGHC) Headquarters
111 W. Chalan Santo Papa
Hagåtña, Guam 96910
Tel: (671) 472-5271 • Fax: (671) 477-8687
www.bankofguam.com
Independent Accountants
Squar, Milner, Peterson,
Miranda & Williamson LLP
4100 Newport Place Drive, 3rd Floor
Newport Beach, CA 92660
Tel: (949) 222-2999 • Fax: (949) 222-2989
www.squarmilner.com
Financial & Insurance Services
Tax Consultant
Bank of Guam®
BGHC Headquarters Building
111 W. Chalan Santo Papa
Hagåtña, Guam 96910
Tel: (671) 472-5300 • Fax (671) 472-5454
General Counsel
Bank of Guam® Trust Services*
BGHC Headquarters Building • 7th Floor
111 W. Chalan Santo Papa
Hagåtña, Guam 96910
Tel: (671) 472-5743 • Fax: (671) 472-5527
Robert J. Steffy, C.P.A.
210 Archbishop Flores Street • Suite 100
Hagåtña, Guam 96910
Tel: (671) 477-7829 • Fax: (671) 477-7845
Arriola, Cowan & Arriola
259 Martyr Street • Suite 201
Hagåtña, Guam 96910
Tel: (671) 477-9731 • Fax: (671) 477-9734
BankGuam Holding Company Stocks (BKGMF)
Computershare Trust Company, N.A. (“Computershare”) is the
Registrar, Stock Transfer and Dividend Disbursing Agent for
BankGuam Holding Company’s common stock, with duties that
include: stock transfers, dividend payments, address changes
and lost certificate replacements.
Computershare Trust Company, N.A.
for written requests, please write to:
Computershare Shareholder Services
PO Box 43078 • Providence, RI 02940-3078
BG Wealth Management Services*/Money Concepts
Capital Corp.
BGHC Headquarters Building • 6th Floor
111 W. Chalan Santo Papa
Hagåtña, Guam 96910
Tel: (671) 472-5713 • Fax: (671) 472-5701
BankGuam Insurance Underwriters, Ltd.*
BGHC Headquarters Building • 1st Floor
111 W. Chalan Santo Papa
Hagåtña, Guam 96910
Tel: (671) 479-2262/65/67 • Fax: (671) 479-2266 for written requests, by overnight delivery:
Computershare Shareholder Services
250 Royall Street
Canton, MA 02021
Tel: (888) 835-5678 (U.S., Canada, Puerto Rico & Guam)
Tel: (312) 360-5193 (non U.S.)
www.computershare.com/investor
The shares of the BankGuam Holding Company are traded
privately among individual stockholders, investors, and in the
over-the-counter market. The stock prices of such trades vary
with each transaction.
*Trust, investment and insurance products and services offered by Bank of Guam® are (1) not insured by the Federal Deposit Insurance Corporation,
any government agency, or any other deposit insurance program; (2) not deposits with, obligations of, or guaranteed by Bank of Guam; and (3) subject to investment risk, including possible loss of the principal amount invested.
Message to
Stockholders
Buenas yan Hafa Adai!
Thank you for your
continuing support of BankGuam Holding Company
and your local bank, Bank of Guam®. As in recent years,
we continue to distribute our Annual Report and accompanying materials in a way that conserves resources
and helps to contain our costs. We are still “going green,” so we have again distributed our
Proxy Statement, Annual Report, and Securities and Exchange Commission Report on Form
10-K electronically, saving not only trees, but also what had become high postage expenses.
Again, though, as in recent years, all of these materials are available on paper. This printed
Annual Report is limited to a brief narrative of the past year’s financial performance, focusing
more on some of the differences that were unique to 2014. Extensive details regarding our
financial condition and performance are reported in our Form 10-K report.
I am happy to announce that 2014 was again a profitable year for our Company. Despite a
couple of setbacks in our loan portfolio, we earned nearly $9.6 million after taxes on total
revenues of $77.3 million. Although those revenues represent an increase of $2.0 million
from 2013, our net profit actually declined by $308 thousand. We were able to hold the line
on total expenses, which increased by just $188 thousand from 2013, to $59.4 million, but we
increased our provision for loan losses by $2.4 million to raise our allowance for loan losses
to $12.5 million. We experienced an unexpected increase in net charge-offs during the year,
and loan growth, coupled with economic conditions, made it prudent for us to build a higher
allowance. Despite a surge in total assets by more than 14.2% during 2014, to $1.5 billion,
we were able to generate a return on average assets of 0.66%. We also increased your total
stockholders’ equity by 8.9%, to $102.2 million, and yielded a return on average equity of
9.8% during 2014.
Every business needs to grow to thrive, and during 2014, our surge in total assets presented
us with a difficult challenge, especially as it culminates growth of a total of 48.0% since the
end of 2010. Due to a combination of circumstances that would otherwise be quite favorable, our assets have grown far more rapidly than our stockholders’ equity. Since 2010, our
equity has grown by $17.8 million, or 21.1%, far more slowly than the growth in our assets.
As a consequence, our capital ratios, a primary focus of our regulators, have dropped significantly. While our rapid growth is an enviable problem, it is a problem nonetheless. Although
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we remain well-capitalized by every regulatory standard, we would be much more comfortable if we had the extra capital cushion that we always maintained in the past. We have been
faced with the hard decision to either slow the growth of our Company or to take measures
designed to increase our capital. We have chosen to increase our capital.
As I am sure most of you noticed, we reduced our dividend payout rate last year from 12.5
cents per share in the first and second quarters to 10.0 cents per share in the third and fourth
quarters. We did not do that because we were not earning sufficient profits. We did it because we need to accumulate more capital through retained earnings to keep up with the
growth in the size of our Company. We also sold $1.0 million in additional stock to accredited
investors in December in order to supplement those higher retained earnings and raise our
capital ratios.
These decisions were made to help realign the elements of our balance sheet to adjust to the
rapid growth that we have experienced. Looking forward, higher capital ratios will prepare
us to take advantage of opportunities in our region and in California so that we can continue
to maximize the value of our Company for you, our stockholders. As always, we truly appreciate your continued support and confidence.
Again, thank you and si yu´os ma´åsé,
Lourdes (Lou) A. Leon Guerrero
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President, CEO and Chair of the Board
2014 Corporate Highlights
42nd Founder’s Day Celebration
March 8, 2014: Bank of Guam® IFIT 5K Run/Walk
Bank of Guam® held its 9th Annual IFIT 5K Run/
Walk on Saturday, March 8, 2014 at the Bank’s
Headquarters in Hagatna to benefit Guam Cancer
Care. With over 1,800 runners, total sponsorships
and registration amounted to $45,500.00 donated to Guam Cancer Care, shattering the previous
year’s contribution. The Run, hailed as one of the
“greenest” runs on island resulted in 6 bags of trash.
April 3, 2014: SBA 2014 Small Business Award Winners
Bank of Guam® celebrates with its
nominees who received the U.S.
Small Business Administration
2014 Awards as follows: (Seated Left
to right, with leis): Elizabeth Rodgers,
wife of Victor Rodgers, Winner;
Romeo Angel, Bank of Guam®
Vice President/Upper Tumon
Branch Manager, Minority
Small Business Champion;
Siska Hutapea, Cornerstone
Valuation President, Women
in Business Champion; Teresita
and Bill Hagen—Hagens, Inc.
President and Vice President,
Jeffrey Butland Family-owned
Business of the Year; Standing
(with leis): Wayne Santos, Bank of
Guam Vice President/Marketing
Manager, Financial Services Champion; Victor Rodgers, Guam Community College Assistant Director for Continuing
Education and Workforce Development, Veteran Small Business Champion.
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April 4, 2014: Bank of Guam® wins Guam Cancer Care Spirit of Hope Award
The Guam Cancer Care “Spirit of Hope” Award is presented to an individual or
organization, who, through their commitment to the Fight Against Cancer, has
taken direct action to support Guam Cancer Care and its programs. The individual
or organization has made a significant impact on not only improving the services
and quality of cancer care for fellow island residents, but also on raising cancer
awareness here on island. Their efforts genuinely endorse the mission of Guam
Cancer Care and encourage our cancer patients and local community to LIVE,
FIGHT and SURVIVE the battle against this deadly disease.
Bank of Guam®
IFIT Website
Redesign
In 2014, Bank of Guam® completed a redesign of its corporate website, www.bankofguam.com, using a unique
local flavor while providing an
easy-to-use customer experience. The photos and colors
are not found on your traditional banking website, and
offer a warm perspective of
our island culture and hospitality.
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May 2014: Ifit Scholarship
Bank of Guam® is a proud supporter of higher education. Annually, the Bank awards each of 5 outstanding high school seniors with a $2,000 college grant to
attend a U.S. accredited 4-year college or university
of their choice. The applicants come from public and
private school backgrounds, have broad community
involvement and have earned distinguished scholastic
records. In addition to the grant, winners receive a paid
summer internship with the Bank of Guam®.
May 23-24, 2014: Relay For Life
Bank of Guam® is a major supporter of cancer
research through contributions to the Relay
for Life, sponsored annually by the American
Cancer Society (Guam). In 2014, Bank of Guam®
again garnered the top fundraising spot, raising over $50,000 through its employees’ fundraising efforts.
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May 20, 2014: Pika’s Café “SO FRESH” Summer Music Series
Bank of Guam® is a proud sponsor and supporter of the arts
and young adults. In collaboration with Pika’s Café, Bank
of Guam® sponsored their “SO
FRESH” music series, featuring
young, local entertainers who
performed throughout the
summer.
October 23, 2014: SBA Lender and Banker of the Year
Bank of Guam® received the U.S. Small Business
Association (SBA) Lender and Banker of the Year in fiscal
2014. As Lender of the Year, Bank of Guam® surpassed
all other banks in the number of loans extended to local
borrowers. Mrs. Renee Wade (right photo), Bank of Guam®
Vice President/Credit Officer, as Banker of the Year, led
all Guam bankers in generating the highest number of
SBA loans on Guam for the fiscal year 2014.
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January 26, 2014: 2013 Saipan Chamber of Commerce
Business Person of the Year
Bank of Guam® Vice President/CNMI Regional Manager, Merced
“Marcie” M. Tomokane, was awarded the Saipan Chamber of
Commerce’s coveted 2013 Businessperson of the Year award,
which honors businesspersons for their community involvement and contributions, business longevity, support for the local
workforce, and participation in Chamber activities.
Marcie bested four other nominees for the 2013 Businessperson
of the Year award. All the nominees were nominated by the
Chamber’s general membership. Past businesspersons of the
year select the winner.
to right): Marcie Tomokane,
Bank of Guam® CNMI Regional
Vice President & Marcia Ayuyu,
2012 Saipan Chamber of Commerce Businessperson of the
Year and General Manager,
McDonald’s Saipan.
(left
November, 2014:
Bank of Guam®
Delta SkyMiles® VISA®
Credit Card
1% Cash Back
Cardholder Benefit
Bank of Guam® Delta SkyMiles VISA
cardholder purchases can now earn
a minimum cash back of $5.00 per
account per calendar year with a
maximum of $600.00 per account
per calendar year*. Cash back shall
be credited to account in January
for purchases made from January
through December of the previous
year.
*Cardholders must spend a minimum of $500.00 to earn
cash back reward. Card must be in good standing to receive
these benefits. Other terms and conditions apply.
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BankGuam Holding Company Officers and Bank of Guam®
Senior Management, Headquarters & Branch Officials
BankGuam Holding Company
Officers
Lourdes A. Leon Guerrero
William D. Leon Guerrero
Jessica L.G. Diaz
David J. Arriola
Reanna R. Cruz
David R. Sablan
Patricia B. Salas
Melissa A. Toves
Beatrice T. Pereda
Katherine B. Martir
Kathrine C. Lujan
Joelle P. Fernandez
officer and vice chairman of the board
senior vice president/chief financial officer
vice president/harmon branch manager
assistant vice president/dededo branch manager
vice president/assistant central operations administrator
Danilo M. Rapadas
senior vice president/general counsel and
vice president/afid manager
chief risk officer
Merced M. Tomokane
vice president/loan support manager
vice president/cnmi regional manager
Maria Eugenia Leon Guerrero
Larry A. Phillip
vice president/business services division manager
Lourdes A. Leon Guerrero
assistant vice president/saipan branch manager
Teresa P. Catahay-Camacho
president, ceo and chair of the board
Teresa U. Palacios
vice president/compliance manager
William D. Leon Guerrero
assistant vice president/saipan chalan piao facility
Wayne S.N. Santos
executive vice president, chief operating
manager
vice president/marketing manager
officer and vice chairman of the board
Marilyn L. Mendiola
Luke M. Elliott
& service officer
assistant vice president/tinian facility manager
vice president/electronic data processing manager
Francisco M. Atalig
Carl J.C. Aguon, Jr.
Jocelyn B. Miyashita
Amoretta L.P. Carlson
Vicente S. Agulto
assistant vice president/rota branch manager
assistant vice president/product
senior vice president/chief financial officer
& information
management systems (pims) manager
senior vice president/chief credit officer
vice president/bg wealth management
Christine B. Quichocho
vice president/ebanking
& trust division
afid administrator
Danilo M. Rapadas
senior vice president/general counsel and
chief risk officer
Janice Chargualaf-Quichocho
Ernest P. Villaverde
administrator
Joseph P. Bradley
senior vice president/chief economist and business
assistant vice president/chuuk branch manager
vice president/director of customer service
Joseph F. Mesa
senior vice president/information management systems
Joanne H. Akinaga
Lesley-Anne Leon Guerrero
Jacqueline A. Marati
senior vice president/marketing administrator
assistant vice president/pohnpei branch manager
vice president/trust manager
Yolanda M. Padrones, phr
vice president/hr and training
Joan A. Pinerof
assistant vice president/yap branch manager
& development manager
assistant vice president/security, building, facilities
& neighboring islands regional
manager
Mary A. Simmering
manager
&
assistant vice president/yigo branch manager
assistant vice president/andersen afb branch manager
Bernadine Q. Pereda
Bank of Guam®
Senior Management
senior vice president/branch, central operations
vice president/tumon bay branch manager
vice president/relationship banking group manager
Francisco M. Atalig
Josephine L. Mariano
vice president/upper tumon branch manager
vice president/loan adjustment manager
executive vice president, chief operating
executive vice president/chief sales
Romeo A. Angel
vice president/mortgage banking group manager
vice president/retail banking group manager
president, ceo and chair of the board
Joaquin P.L.G. Cook
Jacqueline Ann Hocog
Gwendolyn E. San Nicolas
assistant vice president/kosrae branch manager
&
leases manager
Joseph J.Q. Pereira
vice president/project management department manager
Jackey Salomon
assistant vice president/majuro branch manager
Matthew C. Cruz
vice president/belau branch manager
continuity officer
Josephine L. Blas
senior vice president/policy administrator
J. David Joves
senior vice president/california regional manager
Theresa C. Obispo
senior vice president/human resources administrator
Bank of Guam® Regional,
Branch & Facility Managers
Jennifer B. Sanchez
Keven F. Camacho
vice president/chief lending officer
Lori C. Sablan
vice president/controller
Mike W. Naholowaa
vice president/credit officer
Daniel F. Anderson
vice president/other real estate owned
Kalistus D. Rengiil
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vice president/corporate banking group manager
vice president/san francisco branch manager
vice president/guam central-southern regional manager
Dina A. San Nicolas
vice president/hagåtña branch manager
Bank of Guam®
Headquarters Officials
Shirley N. Quitugua
Mariah B. Mafnas
assistant vice president/santa cruz branch manager
Edward G. Barcinas
assistant vice president/tamuning branch manager
Julie A. Gogue
assistant vice president/mangilao branch manager
Jeffery R. Fejarang
assistant vice president/malesso branch manager
Emily M. Ogo
assistant vice president/naval station branch manager
Richard G. Camacho
vice president/guam northern regional manager
BG Wealth
Management Services
Alexandra L.G. Taitano
vice president/wealth management advisor
Dave B. Guerrero
assistant vice president/bg wealth management
officer, saipan
& afid
BankGuam Holding Company & Bank of Guam® Board of Directors
Lourdes A. Leon Guerrero
William D. Leon Guerrero
Martin D. Leon Guerrero
Roger P. Crouthamel
• President, CEO and Chair of the
Board
• President, Guam Women’s
Chamber of Commerce
• Senator, 23rd, 24th, 26th, 27th and
28th Guam Legislatures
• Member, Guam Nurses Association
• Member, Teleguam LLC Board of
Directors
• Vice Chairman of the Board
• Chairman, Board of Regents,
University of Guam
• Board Treasurer and Assistant
Secretary
* Secretary/Treasurer of Adztech
& Public Relations, Inc.
• Board Secretary
• Attorney at Law, Guam & CNMI
• Director, Transpacific Travel dba
Travel Pacificana
• Director and Vice President,
Sports Concepts, Inc.
• Member, Vista Chino
Development, LLC
• Member, Maite Partners, LLC.
• Member, International Dining
Concepts, LLC.
Ralph G. Sablan, m.d.
Joe T. San Agustin
Frances L.G. Borja
Joseph “Joey” Crisostomo
• U.S. Navy Captain, Retired
• Former President, Guam Medical
Society
• Dermatologist, Retired
• Lifetime Member, American
Academy of Dermatology
• Speaker, 20th, 21st and 22nd
Guam Legislatures
• Senator, 14th - 23rd Guam
Legislatures
• Adjunct Instructor, University of
Guam
• Chairman, Government of Guam
Retirement Fund
• Former Director, Department of
Administration
• Former Director, Bureau of Budget
and Management Research
• President, Carmen Safeway
Enterprises, Inc.
• President, CarsPlus LLC
• President, CyclesPlus LLC
• Member, Pacific Auto Leasing dba
Thrifty Car Rental
• Immediate Past Chairman, Armed
Forces Committee, Guam
Chamber of Commerce
Joaquin P.L.G. Cook
Patricia P. Ada
Keven F. Camacho
• Bank of Guam® Executive Vice President/Chief Sales &
Service Officer
• Secretary/Treasurer, Byerly &
Cook Corp.
• Management Committee,
IP&E Holdings, LLC
• General Manager, Board Secretary
and Assistant Treasurer,
Ada’s Trust and Investment, Inc.
• Manager, P and M, LLP
• Manager, P.P. Ada Investment
• Bank of Guam® Vice President/
Chief Lending Officer
• President-Elect, Rotary Club of
Northern Guam
• Board Member, Sanctuary, Inc.
• Secretary, TSC, Inc.