Tailor-made community banking

Centinel Bank of Taos, N.M.

The story of Centinel Bank’s founding makes clear why the bank is committed to serving all residents of its diverse community. Eliu Romero, a military veteran, attorney and fourth-generation resident of Taos County, decided to open his own law practice in Taos. He asked the bank for a $50 loan to buy furniture, but his application was rejected. He vowed to one day open a bank himself, and he eventually lived up to that promise when he launched Centinel Bank of Taos in 1969.

Today, the population of Taos County is about 56% Hispanic, according to the Census Bureau, and $395 million-asset Centinel Bank serves that population with care.

“There are many stories where we’ve been able to do things differently and do things that are unique to our market that really have benefited the growth of the businesses.”

—Angel Reyes, Centinel Bank of Taos

“We remain a largely Hispanic population, and we have additional immigration of Hispanic [people], and we are evaluating different ways to serve them,” says Angel Reyes, Centinel’s president and CEO.

Reyes says the community bank’s business is split about evenly between consumer and business lending. On the business side, lending to sole proprietorships, partnerships and small family-owned businesses is the bank’s core proficiency. Very few business clients have more than 20 employees. “In many cases, we were the initial loan for small [things] like a refrigerator or a desk … to loans to develop their own storefront or to buy equipment to make their business more efficient,” Reyes says. “There are many stories where we’ve been able to do things differently and do things that are unique to our market that really have benefited the growth of the businesses.”

Real estate lending comprises the largest portion of Centinel Bank’s consumer lending. Reyes is chairman of the New Mexico Mortgage Finance Authority, which gives him a say in making funding available for housing for those with low and moderate incomes.

In addition to current and former leaders playing important roles at the state and industry level, the bank also serves its community through volunteerism.

“We’re active in supporting our nonprofits, often through direct involvement in that nonprofit, maybe serving as a board member or volunteering for particular events,” Reyes says, adding that employees are encouraged and paid to volunteer during work hours. “We’re part of the fabric of our community and we want to make sure that, as a community, we’re progressing. As noted in our mission statement, we want to do our best to lead and make our community a better place to live and work.”

Ponce Bank, New York City

Ponce Bank was born out of the ashes of civil unrest in the Bronx in the middle of the 20th century.

“Ponce Bank started 62 years ago in the South Bronx,” says Carlos P. Naudon, the $2.1 billion-asset bank’s president and CEO. “When the South Bronx was burning and being deserted of businesses, including banks, a number of our local business leaders and Latino community advocates determined that they needed to have a source of funding. That’s how they started the bank.”

The focus on serving that community has not changed in the decades since. Four of Ponce Bank’s 13 locations are in the Bronx, whose population is about 55% Hispanic, according to U.S. Census data.

“We do quite a bit of loans to taxi drivers and owners of vehicles who drive for Lyft and Uber. … We also do a lot of delis and mom-and-pop stores, and a lot of professionals. If you walk down the streets of the Bronx, you could see on the left and on the right side the kind of businesses we [bank].”

—Carlos P. Naudon, Ponce Bank

Perhaps more indicative of Ponce Bank’s character than the demographics of its community is the fact that the bank continues to serve businesses and residents who might not be well served by other financial institutions.

“For example, we do quite a bit of loans to taxi drivers and owners of vehicles who drive for Lyft and Uber,” Naudon says. “Generally, they have difficulty [securing] bank accounts because of the nature of their business. We also do a lot of delis and mom-and-pop stores, and a lot of professionals. If you walk down the streets of the Bronx, you could see on the left and on the right side the kind of businesses we [bank].”

Ponce Bank judges the creditworthiness of these businesses based on their cash flow more so than on the credit score of the business owner, Naudon says. From Ponce Bank’s perspective, for example, consistent credit card revenue is a good indicator of a business owner’s ability to repay a loan.

Ponce Bank’s ability to serve its community was given a lift in 2017 when the bank earned community development financial institution (CDFI) designation from the U.S. Department of the Treasury. CDFI designation means it is eligible to tap funds from government programs aimed at helping communities in need. The effort to get CDFI designation was led by Madeline V. Marquez, the bank’s senior vice president and chief external affairs officer.

“When I joined the bank in 2015,” says Naudon, “one of the things that we looked at was what governmental advocacy and support programs existed for banks that were like us. Madeline came in to help us go through the process. And essentially, we are an easy qualification, because all of our lending essentially meets the CDFI requirements.” He adds that today, about 86% of Ponce Bank’s lending is in low- and moderate-income communities.

In addition to its business lending, the community bank assists customers with several consumer lending products. For example, CDFIs can offer nonqualified mortgages, which serve some Ponce Bank customers who are self-employed and may not be able to demonstrate the ability to repay a loan in the conventional fashion.

The community bank also has an app that provides microloans to consumers. Launched in 2020, it has provided small loans to 60,000 individuals.

Because the app is not limited geographically, Ponce Bank created an advisory panel of 14 nonbank CDFIs across the country to act as a governance board that represents the target population of the app; the panel keeps the bank in compliance with CDFI rules regarding the nature of the community being served.

The bank also serves its community through the Ponce de Leon Foundation, which it established in 2017 as part of its conversion from a mutual to a stock institution. The foundation owns some of the bank’s stock; so far, it has granted $1.3 million to a variety of groups.

“It could be anything from a youth program that’s going to help a child do better in school, to a senior program that’s going to help them get acclimated to the new technology,” Marquez says.

Ponce Bank’s influence in its community is primed to grow. It received $225 million from the Treasury Department’s Emergency Capital Investment Program in June, and that money, combined with funds raised by two rounds of IPO, has bumped up its capital from about $80 million in 2016 to $500 million today, Naudon says.

“The responsibility that we as the management team and the board of directors have is: How do you invest that capital and how do you deploy it to be impactful in the communities?” Naudon asks. “We think that it’s an obligation. We also have the fiduciary duty to ensure that we do so thoughtfully and with understanding that you still need a return to investors.”

International Finance Bank, Miami

The community that International Finance Bank serves stretches far beyond the borders of Miami, where it’s headquartered.

The $950 million-asset community bank, which is majority owned by a Spanish foreign national, serves clients in south and central Florida, New York City and throughout Latin America and Europe who desire a bank based in the United States for certain transactions.

“We have sister banks in Guatemala, Peru, Ecuador and other countries in Latin America, and there are always referrals from them and opportunities to work together,” says Jose E. Cueto, the bank’s president and CEO.

A large percentage of the domestic clients of International Finance Bank are also Hispanic. But that’s due more to the demographics of Miami—which is about 72% Hispanic, according to the United States Census Bureau—than to the fact that the bank is a minority depository institution (MDI), Cueto says.

Over the past three years, the community bank has launched a wealth management division and an insurance subsidiary. These new products help keep more of their clients’ business in house and generate “sticky” income that’s not interest driven, Cueto notes.

But helping clients manage wealth is not the only way International Finance Bank serves its community, financially supporting Habitat for Humanity, Big Brothers Big Sisters of America and dozens of other community organizations.

“As a community bank, it’s in our roots to give back,” says Cueto, who is a Miami native of Cuban descent. “We’re out there all the time. Giving back is on top of our priority list.”

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