Banking on Hispanics

By Carrie Barnes
December 2006/January 2007

Building Financial Security (junio/julio 2006) stash the cash (febrero/marzo 2005)

When John Samora needed a loan for a company vehicle, he turned to Hispanic-owned Sonoran Bank. “I wanted to support the endeavor,” says Samora, 48, a wholesale wine distributor in Phoenix, Arizona. He believes Hispanic banks represent a way for Latinos to gain access to capital and build wealth.

Hispanic-owned banks, which are growing in number, offer greater cultural sensitivity and customized products and services. While you might not find a Hispanic-owned bank in your neighborhood—the FDIC (Federal Deposit Insurance Corporation) says there are still just 44 in the United States—knowing what they offer can help you get the best service from a bank in your community.

A Personal Relationship: Like Sonoran, Plaza Bank, located in Washington State, targets Hispanics. “We like to deal with people we care about and who care about us. In Mexico, you never engage in a business agreement until you’ve built a relationship,” says founder and director Mike Sotelo, who finds such trust and mutual responsibility lacking at U.S. institutions. Hispanic-owned banks tend to stress the importance of building relationships with their customers.

Choosing a Bank
	Ask about fees (such as ATM, monthly, check, and debit) and minimum-balance requirements.
	Choose a bank that shares your culture, language, and values.
	Check what the deposit insurance covers.
	Compare interest rates at Bankrate or Moneycentral.

Multigenerational Home Loans: Hispanic-owned institutions also tend to consider culture and lifestyle when determining loan eligibility. For example, they’re more likely than mainstream banks to include the earnings of all household members. That’s good news, because longer life spans and a need to accommodate aging relatives are leading more people into multigenerational living arrangements.

But Hispanic bankers are quick to point out that they aren’t bending the rules or lowering standards. “We’re just taking into consideration all the information and evidence that is available,” says Carlos Guangorena, president and CEO of Plaza Bank. “That’s what any good loan officer would do.”

Consumers should be cautious, though. More relaxed lending standards have increased loans to minorities across the country, but often at higher rates. The Center for Responsible Lending reports that Latinos are more likely to get a higher-priced loan than white non-Hispanics with similar credit credentials.

Small Business Lending: “Lending and contracting to minority-owned firms is disturbingly low,” according to the Greenlining Institute, a public policy and advocacy group. Hispanic banks aim to fill that gap. Sonoran founder and chairman Ricardo Torres says mainstream banks aren’t always familiar with Hispanic business models. “At Sonoran there’s no learning curve,” he says. “We know what carnicerías are and what they do because we’ve grown up with them. That wouldn’t be the case in most banks.”

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