Negocios Now

18 Octubre 2012 Diciembre 2008 NegociosNow NegociosNow www.negociosnow.com In the intermediate term, AztecAmerica Bank wants "to continue to build on a history of consistent profitability and then look beyond that toward growth," said Carlos X. Montoya. Continued from page 17 manage expectations within, by any reasonable business standards. In a community bank like AztecAmerica, you can literally walk in and see an executive officer or perhaps even see the CEO. In any case, empowe- red decision-makers or those who can be held accountable to custo- mer service needs should not be that hard to find, whereas for all but the most sophisticated corporate borrowers, the prevalent experience within a large bank branch system is that of interfacing, at the most, with a moderately empowered branch manager or a teller supervisor. NN: Considering the outlook for the banking industry and the difficulties it still faces, what is the biggest challenge? Is it capitaliza- tion? "easy" as denying a loan, it beco- mes extremely difficult when dea- ling with customers who may have had their loans on the books of an institution for several years. Depen- ding on structure, borrower cash- flow and/or collateral conditions, there can often be a high degree of pressure to simply "remove" a loan from the books — which is much easier said than done. As hard as this proposition is for the banker, it can be many times more difficult for a struggling borrower, particularly for those who have always perfor- med well or otherwise handled their loans as agreed. NN: What would be the ideal envi- CM: Capital is key to operating within the current marketplace, and liquidity (balance sheet cash and marketable securities) is not far behind. The ability to adapt to changing economic and regulatory conditions is also very critical. Not surprisingly, banking regulators have become highly risk-averse. While banks have traditionally based their operations on the funda- mental principles of managing and monitoring risk—pricing both loans and, to a degree, deposits, accor- dingly—regulators have now taken a general stance against anything but the most moderate of condi- tional risk. Although this may be manageable while a loan is in the application stage, which can be as ronment going forward for smaller banks such as AztecAmerica? Do you think the federal government should have a more aggressive stan- ce and consider a stimulus package for smaller community banks, as was provided to larger banks? CM: There is no doubt that the lar- ger banks were afforded the capital and liquidity mechanisms needed to weather the storm while simply ridding their books of undesirable assets — some of it by means of TARP (the federal Troubled Asset Relief Program) dollars, some of it by means of much lesser-known Federal Reserve or Treasury-based borrowing and funds-availability programs. It is difficult to look past a perceived bias against smaller banks, as much of the applicable regulatory framework can be sub- jective or open to interpretation. The peril to the nation at large is that we cannot and will not get our eco- nomy off its heels until such time as capital — for business expan- sion, equipment purchases and/or the creation of new markets, all of which serve to drive new emplo- yment growth — is made readily available on Main Street. Wall Street can help drive capital markets, but it is the community banks that can get that cash delivered to small busines- ses, which mainly reside on or near Main Street, USA. NN: What is your outlook for the medium term? Where would do you see the bank 10 years from now? CM: In terms of future product and service development and growth, we firmly believe that we'll need to be both innovative and transformational, as the regula- tory environment, at least for now, remains highly risk-averse. It is still too difficult for small businesses to get traditional credit products. Some banks, at least for the time being, have stopped or pulled out of the small-business and middle markets altogether. In order to continue to compe- te in that marketplace, you have to have very solid control of your risk infrastructure and solid con- trol of your asset quality. For us, in the intermediate term we want to continue to build on a history of consistent profitability and then look beyond that toward growth. Looking ahead three to five years, we have identified 10 or 12 poten- tial submarkets within the Chicago and suburban marketplace where we could expand. Ultimately, five to 10 years hence, we think the model going forward is that there will be a lot of small businesses looking for credit—both regionally and natio- nally. Whether the regional Latino population base grows to from 2 million to 3 million, or the national population grows from 50 million to 75 million there will always be a tremendous opportunity in hel- ping small businesses adapt to, and successfully leverage, the primary factors that ultimately bring each borrower to the intersection of suc- cessful banking access: The 4 C's of lending --Character, Capacity, Credit and Collateral. Through the various business cycles, small businesses often get hurt in one or more of these areas. For instance, in the current market, property values have been hit hard. A lot of times people have a good track record of payment, good cha- racter, and good operational capaci- ty but they don't have the collateral value needed to support a new loan. By employing groundbreaking inno- vation, AztecAmerica is partnering these small businesses with larger, credit-worthy corporations that are compelled, by similar mission or community-based commitment, to bring their own resources to bear in ensuring that main street-based small businesses remain in position to fulfill their respective missions. AztecAmerica? CM: Yes it is. NN: Is that concept unique to In fact we've actua- lly trademarked it. We call it the AztecAmerica Business Infrastruc- ture Group, which again leverages our platform and our access to the Photo Brian Morowczynski small-business community by vir- tue of our management processes and our in-place capabilities which, in turn, attracts larger corporations. Right now, this environment is such that you have to be extremely cau- tious in terms of traditional lending practices. We are always striving to find innovative business means, and bringing that innovation to bear is exactly what the community needs. It is thus one of the ways that our local business community will get past, or work through, the current regulatory environment. At Azte- cAmerica we are fortunate to have a very solid base of individual and institutional investors who tend to be very innovative and forward thinking. All are drawn to our uni- que model and, for a number of similarly related reasons, like what we're doing in terms of serving an underserved marketplace. Many of our investors have factories or lar- ge businesses, and they see their employees cashing their checks at the check-cashing trucks parked near the factory gates, where they pay stiff fees to cash checks or pay for other nominal or related servi- ces. Can we open up the gates to financial services practices? My job, as a member of a small fraternity of Latino bank CEOs, is not only to ensure that credit is accessible, but to advocate for more credit access by small businesses and to educate both large corporations and gover- nmental bodies on how they can help bring "life-giving" credit bear. That is our mission and it's one we're proud of. to

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