When Banco BuenaVentura was rolled out in Oxnard less than a year ago, it catered almost exclusively to the area’s Hispanic community. But in light of its upcoming Sept. 21 closure, some are left wondering if the niche bank’s business plan is to blame for its collapse.

The bank had a very clear goal when it opened in November 2008: serve the “unbanked” Hispanic population in Ventura County, both legal and undocumented. In addition to traditional banking services, Banco BuenaVentura offered safety deposit boxes, immigration documentation assistance, translation services, long-distance calling and financial education.

But Banco BuenaVentura never really got off the ground. Hobbled by lawsuits and a faltering economy, it is voluntarily liquidating all of its accounts. The institution that once planned to blaze a trail of new business in Oxnard is now planning to become the first bank in the state to shut down on its own.

It plans to close on Sept. 21, interim chief executive Tom Byington told the Business Times.
Now the debate begins — is there room for a Hispanic-oriented bank in Ventura County? Byington, for one, is standing behind the initial vision for the institutions.

“I don’t believe we were reaching too far,” he said. “Our business plan was fine, but the economy just wasn’t conducive.”

Ashley Bautista, executive director of the Gold Coast Hispanic Chamber of Commerce, agreed. Even though the bank was reaching out to “those in the Hispanic community that historically did not utilize banks as a source of financial security,” she said in an e-mail, “I think [the non-banking services] would have enabled the bank to really distinguish itself from other banks.”

But Eloy Ortega, a veteran banker and Santa Barbara resident who helped set up a largely Hispanic bank in Los Angeles in recent years, said the business plan may have been flawed.

“The bank had a lot of non-banking consumer services,” he said. “I think they were planning on doing a lot of notaries, INS documentation and other services for that segment of the population. It seems that they were doing more fee-based consumer services and relying on the fees from people who didn’t traditionally go to banks.”

Before Banco BuenaVentura received its charter, its proposed president, Rick Rodriguez, acknowledged that the new bank’s business plan was heavily dependent on building an new consumer base and not pursuing traditional banking customers such as small businesses.

“What we need to do is just gain the trust of people who don’t use banks … because trust will be, in essence, the foundation upon which we build the bank,” Rodriguez told the Business Times in June 2008.

From a financial perspective, the bank’s experiment in building new customers had mixed results. The bank saw some increase in assets, but capital was eroding, according to the Federal Financial Institutions Examination Council.

“Traditionally, the first couple of quarters are always hard,” Ortega said. “Typically, you do see losses in the initial startup period. So Banco BuenaVentura was no different.”

Byington said the bank does hold at least one distinction: It’s the first in the state to take on the voluntary liquidation process.

“We’re certainly blazing a trail that we hope no one else has to follow,” he said. “There are numerous vendor contracts that we still have to find a way to terminate.”

Among the thorniest problems facing the bank is a dispute over the bank’s leased office space in a former Bank of A. Levy building in downtown Oxnard.

Jeffrey Montgomery, vice chairman of Banco BuenaVentura’s former parent company, sued the bank his father, James, started. James Montgomery is a veteran of the banking industry and lived in Santa Barbara at the time Banco BuenaVentura was launched.

In a June 16 filing in Ventura County Superior Court, Jeffrey Montgomery claimed the bank is not paying rent owed to the Montgomery Family Trust, which owns the building.

“This lease lawsuit is not an in-family squabble by any means,” Byington said. “We’ve just got to find a way to get out of the lease, and the lessee and lessor have different ideas about how much we should pay for that.”

Proceedings in court have turned contentious, according to the Ventura County Star. A trial is set for October.