Ponce Bank was founded in the South Bronx in 1960, a time when many financial institutions were packing up to leave. Times were tough for the New York City borough, whose residents were predominantly working-class Black and Puerto Rican. They found it nearly impossible to get loans to buy homes or start businesses, and they often fell victim to exploitative landlords who allowed buildings to fall into decay.
Without government support, it fell to local groups to step up and help. A cluster of community activists and business leaders pooled their resources to form Ponce de León Federal Savings and Loan Association, which opened its first branch on March 31, 1960. They named the community bank after the Spanish explorer and governor of Puerto Rico, Juan Ponce de León, to honor its founders’ roots.
“If you have a community that has small businesses and there’s no financing made available to them, eventually they’ll die… [Our founders] recognized that.”—Carlos Naudon, Ponce Bank
Confident in a strong work ethic and the entrepreneurial spirit of the local community, the new financial institution’s goal was simple: to serve the underserved.
“It really was the survival of the community,” says Carlos Naudon, president and CEO of $1.54 billion-asset Ponce Bank. “If you have a community that has small businesses and there’s no financing made available to them, eventually they’ll die; they’ll starve to death from lack of investment. The businesspeople recognized that and said, ‘Listen, we’ve got to essentially pull the community’s resources together so that we can lend and help businesses grow.’”
It wasn’t smooth sailing by any stretch of the imagination. “Within a couple of months,” Naudon says, “the people that had been identified as the ones to run the bank quit. So, the founders went to Puerto Rico and found a gentleman that was running a bank there. His name was Erasto Torres, and they brought him to New York to run the bank.”
Naudon adds that while Torres’ English was not very good, it didn’t hold him back. “He started in 1960 and he passed away in 2014,” he says. “By the time he died, the bank was around $600 million [in assets].”
Focused on community
Today, Ponce Bank is the largest U.S. Latino minority depository institution (MDI) east of the Mississippi. The community bank is part of the publicly traded PDL Community Bancorp and has 13 branches in immigrant communities throughout the Bronx, Queens, Brooklyn, Manhattan and Union City, N.J. It’s also a community development financial institution (CDFI) and a Small Business Administration (SBA) lender.
The pandemic has highlighted the importance of MDIs and CDFIs like Ponce Bank in dealing with social inequity, and 2020 was the most quantifiably successful year in the community bank’s history. It gained more than 25,000 new customers, thanks in large part to Paycheck Protection Program (PPP) loans totaling $85 million, but also to a new program that generated $25.5 million in microloans.
The statistics may be impressive, but the real glue that binds Ponce Bank is its commitment to community growth and social justice. It was recently ranked by Mighty Deposits as the No. 1 Latino-owned or Latino-led bank for community investment.
Meeting needs
Part of that community focus is recognizing needs and finding ways to meet them, whether it’s through small business loans, microloans or mortgage credit.
“We’re a very large housing lender,” Naudon says. “One of the problems we had was that a lot of our people need more affordable housing. We finance the construction of affordable housing, but the immigrant’s typical dream is to own a home. From a financial perspective, we can’t hold 30-year fixed-rate mortgages, and that’s really what the community needs. So, we’ve literally just bought a mortgage company that does that. They originate loans and sell in secondary markets.”
In 2020, after acquiring Mortgage World Bankers, Ponce Bank closed 249 such loans.
The community bank’s team are strong advocates of financial mastery, offering and sponsoring events throughout the year to help individuals and businesses become more than competent with their money. In late July, 45 Bronx-based entrepreneurs graduated from a four-week program, Being Ready, which the bank designed to prepare small business owners to apply for loans. It covers financial reporting, budgeting, cash and credit management, and loan documentation. So far, it’s been a success and is being repeated in Brooklyn, Queens and Manhattan.
Naudon says creating a lasting legacy for the community is his personal motivation, and that’s exactly what Ponce Bank is doing.
“We say that our population is underserved but not undeserving,” he says. “We have all along known that in order for the Latino population to be able to accumulate wealth, you have to provide financial services to it.”
