Colorado bank promotes financial literacy through hands-on education

Rich Martinez Jr. has led Denver’s Young Americans Bank since 2007 after starting his career as an examiner with the Federal Reserve Bank of Kansas City.

It would be unthinkable for the typical community bank to have a negative 6.23 percent return on assets. For one Colorado bank, though, it’s just the cost of doing business.

“Our mission is philanthropic and educational,” said Richard Martinez, Jr., president and CEO of the Denver-based Young Americans Bank. “We run like a business, but we do lose money; we know where it goes: to educate youth to be good bankers and good bank customers. We have all the products of a commercial bank, but simplified to maximize the educational value.”

The $19 million bank doesn’t offer mortgage loans, but other than that, it will work with its young customers on everything from opening a simple deposit account to taking out a small-dollar loan for an entrepreneurial effort in high school or college.

The bank was founded in 1987 by Bill Daniels, a local cable entrepreneur who had a passion to pass on financial know-how to the next generation.

“Daniels felt the bank was the center of free enterprise economy, and if you can’t navigate that, how will you start businesses and do well personally?” Martinez said. “Many people tried to talk him out of starting a bank because it would be the hardest way to offer this financial education. They told him to create an educational program or give money to somebody else.”

The paperwork to get the bank off the ground was very involved, and the entire concept of a bank existing only for educational purposes raised more than one regulatory eyebrow. “There’s no reason for a foundation to own a for-profit bank other than its mission of promoting financial literacy,” Martinez said. This all took place against the backdrop of the banking crisis of the 1980s, and Daniels went back and forth with state regulators hammering out details.

Daniels wasn’t deterred, however, and he opened the bank, opting for a state charter because he wanted to know his regulators and be able to drop in and visit them, Martinez said.

The bank has always operated at a steep loss every year. Daniels underwrote the bank throughout his lifetime, but after his death in 2000, regulators questioned the continued existence of the bank. Fortunately, the Daniels Foundation was started shortly after his death and continues the work of supporting the bank.

The bank’s holding company, Young Americans Education Foundation, is also a 501(c)3 non-profit which offers classes and role-playing educational games where students from local schools take on different roles in both small town and international settings. The scenarios let students learn about fiscal concepts from both a personal and global perspective. Besides its main office, the bank also has a branch in a local school to reach kids where they’re at.

Martinez’ first job out of college was as an examiner with the Denver branch of the Federal Reserve Bank of Kansas City. Young Americans Bank was in the portfolio he managed. One day in the early 1990s, he went with his supervisor to give a presentation to the bank’s youth board. Impressed with the bank’s mission, he started volunteering with the foundation shortly after that. Seven years later, the foundation approached him to see if he was interested in heading up the bank, and he joined it as a vice president in late 1999 before becoming president and CEO in 2007.

Nearly 80,000 customers have worked their way through Young Americans Bank. Customers become too old for the bank’s program at their 22nd birthday.

“We don’t ever want to compete with our adult bank friends in the community,” Martinez said. “We don’t recommend any one bank, but we do a lot of exit interviews to help them figure out what products and needs they have.”

Once those customers have moved on from Young Americans, Martinez hopes they’ll be better equipped to face the financial hurdles of adulthood.

“We all make financial decisions, and you can make good ones or bad ones and they determine your future,” Martinez said. “We don’t give kids enough credit on what they know and what they can know.”