Spotlight: Plaza Bank

In his day, former Seattle Mariner Edgar Martinez was considered a power hitter. Now, Martinez has had another solid hit, and it has nothing to do with baseball. Seattle-based Plaza Bank, an institution he helped found, is doing surprisingly well in an environment that has been tough for far larger and better-heeled banks.

Carlos Guangorena, the company’s CEO, says one important factor was that Plaza, with $90 million in assets, avoided the mortgage loan business that has pulled down so many banks. Instead, Plaza Bank focused on making loans to businesses and the Latino consumer market—historically, a demographic with a low default rate on its loans.

“A new bank cannot afford the risk of taking on 25- to 30-year, fixed-rate loans without long-term funding sources to match,” says Guangorena.

For generations, Latinos have had few homegrown banking options. Workers in the farm,  landscaping, construction and domestic care sectors are often very recent immigrants and they tend not to have long-term residences, which contributes to a lack of a banking relationship “on even a basic level,” Guangorena explains.

Plaza Bank was created in 2006 by a consortium of some of the area’s bigger names. In addition to Martinez, acclaimed salon entrepreneur Gene Juarez and Jack Creighton, the former CEO of Weyerhaeuser Co. and United Airlines, provided the necessary largesse for the bank’s next step: recruiting lending bankers, who have an average of 31 years of experience each.

Under Guangorena, the bank raised its initial capital in breakneck speed. Three years later, Plaza Bank now shows an impressive 17 percent capital ratio (the ratio of a bank’s capital to its risk-weighted assets), roughly twice the average level of an adequately capitalized bank of 8 percent.

Even so, Guangorena is realistic when forecasting the future of Plaza Bank: “Profitability eventually sustains capital levels. We expect the capital levels to decline slowly as we continue to grow, but to level off and then increase as we mature as a bank.”

Share this Article

• 
• 
• 
• 
• 
•