Thread: CA: Oxnard bank to court Hispanics

Oxnard bank to target Hispanics
Former Great Western chief cites need to serve growing population
By Jenni Mintz
Tuesday, July 3, 2007

Montgomery, former chairman and chief executive of Great Western Bank, which sold for $6.8 billion to Washington Mutual in 1997, is launching a bank in downtown Oxnard geared to Hispanics.

"The largest growing population in the country and clearly in California is Hispanic, and they need to be served. And they're not," Montgomery said.

At Banco BuenaVentura, a subsidiary of Financiera BuenaVentura Inc., Montgomery wants to promote traditional banking values and make it easier for Hispanics to protect their money.

"You'd be surprised how many people are still hiding their money under their mattresses," said Montgomery's son, Jeffrey Montgomery, vice chairman of Financiera BuenaVentura. "Tens of thousands of dollars are being buried because of suspicion in banking."

The goal is to serve "the unbanked," both legal and undocumented Hispanics in Ventura County. Undocumented immigrants can open a checking account without a Social Security card, as long as they have an Individual Taxpayer Identification Number, or ITIN, a nine-digit tax-processing number issued by the Internal Revenue Service.

"There are 12 to 20 million people undocumented in the U.S. going about their lives," said James Montgomery, chairman of Financiera BuenaVentura. "We intend to serve those people."

Many financial institutions are reassessing the makeup of their communities and shifting their business models to better serve an influx of Latin American immigrants, said David Barr, spokesman for the Federal Deposit Insurance Corp., which insures deposits and oversees financial institutions.

For instance, there are some banks in Chicago that are reaching out to high school students, who have a better grasp of the English language than their parents, to act as a liaison between the banks and their families.

And some large commercial banks have introduced remittance programs that allow immigrants to send money home for a lot less than the standard method of wiring money.

The banking challenge

The United States is unique because it doesn't exclude any parts of the population, which isn't seen in many other countries, Barr said. So some immigrants may not have been exposed to banking before traveling to the U.S.

"The banking system could be foreign to people of different cultures, and that poses another challenge to the banks," Barr said.

James Montgomery noted that some Hispanics might be comfortable starting with a safe-deposit box, which is safer than hiding money in the home, where it might be stolen.

Without a checking account, people have to stand in line to pay everything in cash, including their utility bills, he added.

"These habits won't change overnight," Montgomery said. "It takes time."

The target opening date is Oct. 1 or Jan. 1, depending on how long it takes to hire the bank's chief lending officer and chief financial officer.

After two years of restoring the former Bank of A. Levy branch, built in 1927 at 143 W. Fifth Street, the 9,100-square-foot bank is nearly ready to open with 15 marble teller stations.

Montgomery plans to hire about 45 bilingual and bicultural employees, including 10 mortgage consultants and several tellers. Montgomery has signed a 20-year lease on the building.

The bank will be well-capitalized with "more investors than we need" and roughly $6 million for capitalization, he said.

Enrique "Rick" Rodriguez, the bank's president, said he is eager to help a population that is often "overcharged, underserved, exploited and defrauded."

"I know there's a lot of predators that prey on these people," said Rodriguez, who lives in Diamond Bar

Rodriguez said he hopes to win over those who don't trust banks, from the wealthy to the strawberry pickers.

The bank will help Hispanics advance in society, whether they need help financing a home or their children's college education, he said.

Additional services

Besides traditional banking services, Banco BuenaVentura will provide immigration documentation. Working with the Mexican Consulate, it will help immigrants get Matricula Consulars, which would enable them to have a bank account. It also would issue ITIN cards on behalf of the IRS.

Other more traditional services would include check cashing, online banking, credit cards, small business loans and passbook savings accounts.

The bank's members will be able to wire money for free.

Banco BuenaVentura's members also will be able to make international calls for free in private, wooden booths. Through affiliates with insurance companies, the bank also will provide fire, auto and life insurance.

"These are services that Hispanics have to pay through the nose for, that we will offer very reasonably, under one roof," James Montgomery said. "We want to be the big-box-super-finance center in a comfortable environment." He said he thinks that the bank will be well-received in Oxnard, where the Hispanic population is 66 percent, according to the Census Bureau. Including illegal immigrants, Montgomery said he believes that the Hispanic population could be as high as 80 percent.

"All these underground people aren't going to be deported," he said. "We're going to have to deal with them. And if they don't become legal, let's get them as legitimized as possible."

That means enabling them to pay their taxes, their bills, get life insurance and even buy a home.

A mortgage loan to an undocumented worker is legal if the worker has an ITIN, but poses some challenges for financial institutions. Because undocumented immigrants do not have a FICO score, one of the few ways to see if they are a good credit risk is to check their banking history to see if their bills and loans have been paid on time.

Back to basics

If bank customers show that they handle money responsibly, Montgomery is not afraid to take a chance on them.

"Owning the American Dream is very important to these people," he said. "Once they get into a home, they don't want to let go."

The bank also will provide loan counseling and try to help people stay in their homes, much of which will be done pro bono, Montgomery said.

"We're going back to the basics. ... We're going to simplify banking. Part of the problem is that a lot of banking is very confusing. It will take a lot longer to open an account than it typically takes, and we intend to spend that time," Montgomery said.

"We don't know of another bank like this in America. We think it will be replicated in other areas, and we will pursue that someday, when the timing is right."


© 2007 Ventura County Star

http://www.venturacountystar.com/news/2 ... printer=1/

"There are 12 to 20 million people undocumented in the U.S. going about their lives," said James Montgomery, chairman of Financiera BuenaVentura. "We intend to serve those people."

What you mean is you're going to aid and abet illegal immigrants. Why isn't our Congress doing something to stop these banks? They're clearly in violation of the law. Well, at least they're certainly guilty of violating the spirit of the law!

How can we expect attrition through enforcement to work when the law is being undermined by the banking industry? The banking industry is providing them mortgages, wire transfer services, debit cards, etc.

Illegal immigrants are criminal fugitives hiding from federal authorities in plain site! They certainly aren't in the shadows as folks like Sen. Kennedy would have us believe.