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 companys 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 markethistorically, 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 areas 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 banks 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 banks 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.