When Los Angeles businessman Al Rodriguez learned some financiers were planning on opening a bank – a business bank – aimed at Hispanic entrepreneurs, he not only committed to bringing them his business but jumped on board as an investor.
The Cuban-born founder of Bella Cosmetics says he knows firsthand the need for a bank that understands the Hispanic entrepreneur and his or her customers.
"With Hispanic [companies], a lot of times the bulk of our business is focused on the Hispanic consumer," he explains. "My frustration was that when I talked to many of the other banks, they gave you all the lip service about wanting to support businesses that catered to the needs of the Hispanic consumer, but they didn't understand it.
"There's finally a bank that's absolutely focused on the need of the Hispanic business owner – and not just an appendage to a big business plan by a big bank that wants to service the world and not service the Hispanic community."
It's a lucrative market, as the rest of America is now discovering. According to the U.S. Census Bureau, there were 1.6 million Hispanic-owned firms generating revenues of $222 billion in 2002, the most recent year with full data available.
"When we submitted our application to the regulators, they said to us, 'We were wondering when you all were coming in,'" says George Pla, co-founder of California's Santa Ana Business Bank.
Banks run by or for Hispanics are by no means new, but they are unusual. The finance sector of the Hispanic Business 500, for example, is the smallest grouping in the directory, with 17 companies and only a few of those are banks. The biggest is the 235-branch International Bancshares Corp., founded by Tony Sanchez Sr. in 1966 to serve the small businesses of Laredo, Texas. It has morphed into a regional financial-services powerhouse beyond its "business bank" roots.
Small-business banks in South Florida have been catering to Hispanics very successfully for several years. For example, since U.S. Century Bank opened its first branch in Miami in October 2002, it has grown from $22 million in startup capital to more than $1.1 billion in assets and 16 branches.
Recent Hispanic startups include Security One Bank in the Washington D.C. area, AztecaAmerica Bank in Chicago, and the nascent Solera National Bank in Denver.
Other areas without a large Hispanic population also are seeing startups. Last year, Seattle saw the debut of Plaza Bank, the brainchild of fund manager Mike Sotelo and financial consultant Cristobal Guillen. It quickly attracted startup capital from athletes, business people, and even the former CEO of United Airlines. And almost a senior citizen in the group, Atlanta's United Americas Bank, one of the first Hispanic-owned banks in Georgia, was founded in 1999.
Until recently, the Southern California business banking market was a different story. The few Hispanic banks that opened in the 1960s and early '70s didn't make it. The lone survivor is Pan American, founded in East Los Angeles in 1964, which still operates three branches.
But in the last year, three new banks have sprung up in Los Angeles and Orange counties, including Americas United Bank in Glendale, Promerica Bank in downtown Los Angeles, and Santa Ana Business Bank in Santa Ana.
With worries about the housing market and hedge-fund gyrations sopping up extra liquidity, is now a good time to open a bank that caters to the Hispanic small-business owner?
Industry observers say it's a great time to open a Hispanic bank – if you look beyond the headlines to some underlying trends. "Our investment portfolio is completely clean, it has nothing to do with subprime mortgages," says Gilbert Dalmau, president and CEO of Americas United Bank. "We're full of liquidity."
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