By DANIEL GUSS
Contributing Reporter
Tucked amid the mercados, discotecas, farmacias, tortillerias and other mom-and-pop operations in East L.A. is a somewhat unusual business for this neighborhood: Pan American Bank, which has been serving the largely Latino area since being founded in 1963.
While the financial giants have, for the most part, steered clear of establishing branches in local Latino communities, Pan American Bank continues to thrive.
“Our neighborhood has many cultural needs that large banking institutions don’t have the time, or inclination, to understand,” said Ramona Banuelos, chief financial officer of the 30-employee, three-branch bank.
The bank’s financials appear solid if unspectacular: net income last year was $329,000, up from $236,000 in 1997. Interest income (the rough equivalent of revenue for financial institutions) was about $2.7 million in both 1998 and 1997.
More striking is that its percentage of non-performing loans runs less than 2 percent of its total portfolio.
“It’s a myth that in East L.A. there is a large number of non-performing loans,” Banuelos said. “In the Anglo communities of Beverly Hills and the San Fernando Valley there are a lot of non-performers. But if we see two or three foreclosures a year, that’s a lot.”
While Pan American Bank is actually a public company whose shares trade on Nasdaq under the symbol PABK, customers consider it a family-owned business. (The stock is very thinly traded, and the Banuelos family holds 66 percent of the outstanding shares.)
Jose Del Real, owner of a fabric-cutting business and Pan American customer for the past 20 years, is among those who are drawn by the bank’s deep roots and commitment to the local community.
“If you have a problem, you can just walk in and talk to the owner. Mrs. B is right there,” he said. “Where can you go to find the owner of Bank of America? You can’t even get to first base with them.”
In general, community banks provide just such a hands-on approach a striking contrast to the financial behemoths that are unable to provide such a personal touch. That’s especially true when it comes to Latino customers, who remain wary of putting their money in large financial institutions.
“Many older Latinos are uncomfortable with ATM banking,” said one customer standing in line to conduct business with a teller. “They prefer the person-to-person contact that big banks don’t provide any more.”
This also is true in business-to-business banking.
“Small-business owners often blend their business banking with their personal banking,” Banuelos said. “This hinders their ability to prove that they can carry debt, as prescribed by the FDIC.”
Yet Pan American, like many old-time community banks, considers the personal intangibles of the loan applicant, rather than just pre-set financial qualification criteria.
“Our deep relationships with our neighborhood clients are factored into our loan decisions,” Banuelos said. “The big banks can’t do this because they are simply too rigid.”
In fact, Pan American considers educating customers to be part of its mission. “The Latino community, especially its recent immigrants, doesn’t have a good handle on the concept of credit,” Banuelos said. “In Mexico, for example, there’s no such thing as bankruptcy. If you go broke, you go to jail.”
Banuelos said uninformed Latinos are particularly vulnerable to the unregulated, hard-money lenders in town.
“They take advantage of a customer’s lack of financial savvy by obscuring percentage rates and hidden points,” she said. “When a client of ours looks elsewhere for a loan or to refinance, we’ll call them and find out the reason behind their decision. We help educate them about protecting their best interests.”
Pan American is looking to sponsor small-business finance classes at East L.A. College, as well as get a series of articles on the topic published in La Opinion. And the focus will remain local: There are no plans to expand beyond the two East L.A. and one Santa Ana branches.
Marketing to the little guy is a concept that Pan American has followed since its inception in 1963.
Banuelos’ mother, Romana, founded the bank with a group of Latino businessmen who initially had approached her husband, Alejandro. He was busy with local politics and suggested that they instead call Romana, who by then was enjoying considerable financial success with her Ramona’s Mexican Food Products (now one of the largest Mexican food manufacturers and distributors in the United States).
Daughter Ramona said the business got its name either from a sign-maker having accidentally misspelled her mother’s name, or it’s from the famous “Ramona” pageant play by Helen Carter, whose protagonists are named Alejandro and Ramona.
“I got named after the business, not the other way around,” daughter Ramona conceded. “That’s still a sore point with me.”
Matriarch Romana, who was born in Arizona but raised in a Mexican mining town before immigrating to Los Angeles in the late 1940s, still serves as chief executive of both the privately held food business and the publicly held bank. Now 74, she runs both companies from her L.A.-area home. Romana, who declined to be interviewed for this article, is probably best known as the 34th treasurer of the United States, a post she held from 1971 to 1974, during the Nixon administration.
“The Hispanic Republican Assembly, a political action committee, played a big role in getting Nixon elected,” daughter Ramona explained. “So Mr. Nixon came to them and said he had some high-level openings, including treasurer, and was looking for a Latina with both business and banking experience. Most Latinas back then were homemakers, so my mother was the natural choice.”
After finishing that Washington appointment, Romana returned to Los Angeles.
“My mother’s legacy at the Treasury is that she ran the place as a business, not as just another wing of the government,” Ramona said.
And under the matriarch’s guiding influence, both the food business and bank continue to prosper. But the next generation of customers is different, so Pan American is looking to evolve.
“The younger Latinos are more comfortable with computers because they grew up with them,” said Banuelos. “We’re considering joining an ATM system because the value and convenience of electronic banking is finally being realized in this community.”
