New bank targets city's needs
Since 1990, creating a community bank in Lawrence has always been on the mind of Pedro L. Arce.
Arce worked for the Lawrence branch of the Bank of Boston and saw how, with a little bit of networking and attending quinceañeras (birthday parties), he could attract new Latino customers and businesses who were not being served well by other large banks. What if he and some local investors, he wondered, started a community bank for this population?
Two years ago, Arce decided to give it a shot. He quit his job as an executive at TD BankNorth, sold some real estate holdings, pulled money out of his savings, and launched the foundation of Veritas Bank.
This July, the bank is scheduled to open for business and will become the only community bank in a city where about 70 percent of residents are Latino.
According to Arce, the bank on Essex Street will cater to the city's large working-class population as well as local businesses committed to making Lawrence a better place to live. For example, the bank will offer landscaping companies bank cards to be given to employees instead of checks on pay day. That way, the workers won't have to stand in line after a hard day's work to deposit or cash checks. In addition, the bank will offer immigrants special bank cards for relatives in other countries who can withdraw set amounts on pay day for less than it costs to transfer money via Western Union.
So far, Arce said, the bank has raised $7 million and needs $3 million more in capital to open. He expects to raise the $3 million by June from more local investors. A board of directors comprising local business leaders and well-known Latino professionals from Lawrence and Boston has been created. The bank also has an advisory board that includes Boston Red Sox slugger Mike Lowell and Augusto de la Torre, the World Bank's chief economist for Latin America and the Caribbean.
A couple of municipalities have agreed to open accounts, and two hospitals have shown interest, Arce said, adding that residents have expressed interest in working with a bank that targets them and knows their needs.
"In urban markets, if you ask anybody, they never say anything good about any banks," Arce said in an interview from Veritas Bank's temporary offices in Riverside Mills. "But what we will offer is a more personal approach and financial education to help people with loans. We wanted to tap into a market that really hasn't been tapped."
The opening of Veritas Bank would come at a time when Lawrence has been hit hard by the mortgage crisis and a looming recession. City officials are expecting to see more than 800 foreclosures by the end of the year.
Still, Arce argues that now is a perfect time to start a bank since it won't have to contend with unfavorable subprime loans or large debts facing other banks. The bank won't issue subprime loans.
For Arce, an Ecuadorian immigrant raised in Lawrence, coming back to Immigrant City after working in Boston is a return to his family's roots. The Greater Lawrence Technical High School graduate said he doesn't remember much about transitioning from Ecuador to the United States, but he remembers seeing other immigrant families struggling.
Lawrence remains a gateway city for immigrants, said Arce, only now it's no longer just the first stop. Many times, it's a permanent settlement since the cost of living is so high elsewhere.
Tony Lopez, chairman of the Veritas board of directors and a founding partner of Lopez, Chaff, and Wiesman Associates, an accounting firm in Lawrence, said he was sold immediately on Arce's idea and believes it is a great way for Lawrence to "bootstrap itself."
"It's doing banking the old-fashioned way," said Lopez. "It will be based on personal relationships and financial education."That's not to say the bank isn't interested in making money, said Arce. "Yes. We are still a bank," said Arce. "But we have other goals as well."
