Once again a hybrid community bank-money services business is operating in the Atlanta area using the name El Banco de Nuestra Communidad.
Many of the people who ran the first incarnation of El Banco are running the new one, but this time the business has a different parent: Peoples Holding Co. in Winder, Ga., which wants to extend its community banking services to a burgeoning local population of underbanked Hispanics.
Peoples bought the money services business of Banuestra Financial Corp. in late October with little fanfare. It consisted of 12 offices that offered check-cashing, remittances, and other financial services like prepaid cards and cash deposits. Banuestra had once used the El Banco handle but dropped it after a partnership with SunTrust Banks Inc. in Atlanta ended in 2007 and the Roswell, Ga., company lost its ability take deposits.
Now that it is part of the $433 million-asset Peoples, El Banco is accepting deposits again in the 12 offices. Peoples Holding plans to apply for a separate bank charter for El Banco in about six months.
Luz Urrutia, the chief executive officer of El Banco, who was the president and chief operating officer of Banuestra before the acquisition, said in an interview Friday that there is room to establish another 18 El Banco offices in Georgia. She said the company would consider doing so once a successful integration is completed.
After expanding in Georgia, she said, El Banco could consider expanding across the Southeast.
Neither Peoples nor Banuestra would disclose the price paid for the El Banco operation.
Chris Maddox, the chairman of Peoples Holding and the president and chief executive of its bank, said in an interview Tuesday that El Banco is already contributing a "nice income stream" to the banking company though not enough to make it profitable.
However, Mr. Maddox said he expects the business to be in the black soon, now that it can accept deposits.
Banuestra has changed its name to Chexar Networks Inc. and retained its chairman and CEO, Drew Edwards, and its two other businesses — data processing and consulting services for banks.
In an interview Friday, Mr. Edwards said that Banuestra had operated "really just two different kinds of businesses."
He said, "It was just smarter to let that community bank go to a community bank," he said. "We made a run at it as a nonbank, but … [El Banco] really needed the FDIC umbrella."
After the split with SunTrust, Banuestra made an unsuccessful attempt to buy the $38.8 million-asset NBOG Bancorp. Inc., the parent of the one-branch National Bank of Gainesville [Ga.].
It also tried to secure capital from private-equity investors. The company has not been profitable since 2001.
Ms. Urrutia, a former executive at Wachovia Corp., said that "to serve this community in the manner in which they need to be served, i.e., getting them away from check cashers, predators, and nonmainstream institutions, we really needed to be a bank."
Mr. Maddox said that "way into the negotiations we realized how similar" Peoples and Banuestra were in terms of serving the community, though Peoples is focused on local residents and El Banco is dedicated more specifically to underbanked Hispanic consumers.
Ms. Urrutia agreed. "What we do in the Latino community, … [Peoples has] done in the mainstream community they operate in."
A successful charter application could make El Banco and Peoples Bank two entities under the Peoples Holding umbrella within 18 months to two years.
