| W Holding Company | |
| Type: | Public |
| Successor: | Banco Popular |
| Foundation: | Mayagüez, Puerto Rico, |
| Location: | Mayagüez, Puerto Rico |
| Key People: | Frank C. Stipes, Chairman & CEO |
| Industry: | Finance and Insurance |
| Fate: | The Office of the Commissioner of Financial Institutions of Puerto Rico seized it and appointed the FDIC to become the failed bank's receiver. The FDIC sold the deposits and assets to Banco Popular de Puerto Rico. |
| Homepage: | Archive of www.wbpr.com/ |
The W Holding Company was a financial holding corporation located in Mayagüez, Puerto Rico. On April 30, 2010, Westernbank, its wholly owned bank subsidiary, failed and its deposits and assets were seized by the Federal Deposit Insurance Corporation and subsequently sold to Banco Popular de Puerto Rico.[1]
Westernbank was founded on March 1, 1958, under the name Western Federal Savings and Loan Association of Puerto Rico in the western town of Mayagüez by Miguel A. García Méndez, a local statesman, businessman and experienced banker. With initial deposits reaching $250,000, the bank grew at a rapid rate, quadrupling its deposits and assets in less than nine months. By the early 1960s, Westernbank had expanded to the western and southwestern region of the island, with bank branches in the towns of Aguadilla, San Germán and Cabo Rojo.
Between 1978 and 1981, when the United States and Puerto Rican economies were suffering from high inflation rates, local banks were facing losses due to an increasing number in bankruptcies and unemployment rates, and some were forced to either close, merge, or sell portions of their assets. To counter these economic conditions, Westernbank applied conservative policies and banking practices that included tightening its credit lending criteria, assuming stricter loan to value ratios, favoring collateralized loans, and restructuring its assets and liabilities. In 1988, facing an impending recession in the US and Puerto Rico, Westernbank began applying the same conservative measures, to reduce inherent risks and protect the bank's capital position. During the following years, between 1989 and 1990, private and public savings banks on the island, with the exception of Westernbank, faced losses, restated their financial statements, and saw significant decreases in their stock prices.
Westernbank lending policies and practices focused mainly on mortgage residential loans rather than commercial and construction loans because, although commercial and construction loans offer a much higher rate of return, mortgage loans offer a much smaller risk of default. However, in 1994, after a revision of state bank laws, the company decided to diversify its loan portfolio and services by changing its charter to become a full-service commercial bank. This allowed the bank to experience significant increases in customers, bank branches, loans (which now included commercial and construction loans), and ultimately revenue, doubling its financial size every two and a half years without the need of consolidations or mergers during the 1990s.
In 1999, Westernbank was reorganized to improve its services and to better represent its future plans and strategy. This reorganization created the parent company, W Holding, and converted its main divisions, such as Westernbank, into wholly owned subsidiaries. In July 2000, the company was officially converted into a financial holding company under the Bank Holding Company Act, which allowed it to engage in all financial related activities, including those with stricter regulatory standards than banking such as insurance and market securities.
In 2001, W Holding created Westernbank Insurance Corp., a general insurance agent. This move diversified the company's services while at the same time improving its investment portfolio, given that it could now place property, casualty, life and disability insurance while generating commission income. Most of the agency's volume derived from two areas: mortgage insurance on residential mortgage loans and credit life insurance for borrowers of personal loans, both of which were awarded by its sister company Westernbank.
In early 2002, W Holding acquired from Banco Popular de Puerto Rico a 23-story building previously known as the Hato Rey Tower or the Banco de Ponce headquarters, in the San Juan Hato Rey financial district, more commonly known as the "Golden Mile District" (La Milla de Oro in Spanish). After renovations and improvements were made to its facilities, the building was renamed the "Westernbank World Plaza", and then hosted the company's San Juan metropolitan area headquarters, its Westernbank Business Credit and Expresso divisions’ main offices and several other non-related tenants.
Its main headquarters were located at 19 West Candelaria Street in Mayagüez, Puerto Rico, the town of the company's founding. Its main subsidiary, Westernbank, at one time operated 55 bank branches, all insured by the Federal Deposit Insurance Corporation. It had opened two bank branches in the Miramar and Old San Juan sections of the island's capital, which feature a new information system that allowed bank representatives to perform certain banking transactions with customers at informal places, such as the lobby area, the waiting area, and even in the customer waiting line for the teller counters.