Ted Lau

Victor Diazgranados, Anita Figueredo, Rita McCoy

The Women’s Bank is a rusted-out dream. “And the shame of it is I suppose some men say ‘ha ha, I told you so,’ ” laments a former member of the bank’s board of directors. Her supposition appears to be accurate, as witnessed by the cynical comment from one well-known local banker, a man, who said, “Well, they finally had to get a man to run it for them.” He was referring to the election last July of Lance Morton to head what was previously the Women’s Bank, now called California Coastal Bank. Morton’s election capped two years of turmoil and distrust which resulted in the dissociation of employees, board members, and shareholders who are today scattered like bricks around a demolished dream house.

In March of 1976, when it opened for business, the time seemed so ripe and circumstances so supportive of a women’s bank. Up to then, many loan officers believed they could not put their trust in a woman’s not getting pregnant. They thought they could not trust a divorced woman. Some banks went so far as to have women sign a stipulation that they would practice birth control for the duration of a loan. Though laws were passed in the early Seventies prohibiting the use of separate credit standards for women, there was still a vacuum of trust for women in March of 1976. The Women’s Bank was created in an effort to fill it.

McCoy: “It’s Rita McCoy kicking time now. Everybody’s kicking me, but I can stand it."

What the bank initially set out to do, in the words of the stock-offering circular sent to prospective investors in August, 1975, was to . . make a major effort to serve the special banking needs and conveniences of women. To accomplish its objectives, the bank will provide among other services, financial education on such matters as personal accounting, checkbook handling, loans, investments, trusts, wills, and taxes.” In answer to questions about what the bank did for women, nearly everyone involved points to this education program. “A bank can’t do anything for women or men,” says Veryl Mortenson, currently chairman of the bank’s board of directors. “The only thing we can offer is service.” So a woman who was turned down for a loan at another bank couldn’t expect to come to the Women’s Bank and receive one. But she could, and women did, receive some very good information about finance. Unfortunately, the education program was cancelled a little over a year after the bank opened, one of the many victims of the huge losses suffered by the Women’s Bank. Also, the two women who were its prime movers have resigned from the board of directors. And while these developments didn’t completely negate what the bank was and is doing for women, it has shifted the bank’s emphasis regarding women from action to symbolism.

But just a symbol was not what the bank’s originators had in mind. In 1974 the notion of a San Diego women’s bank was developed by three women: Gabriela Myers, Linda Goldzimer, and Lynn Schenk. Banking expertise has never been a prerequisite for becoming a member of the board of directors, and neither was it a forte of the originators. Only Myers, who was a director and consultant for Southern California First National Bank, had any banking experience. Goldzimer was the women’s affirmative action officer for San Diego, and Schenk was an attorney. Myers is the only one on the board on directors today. Schenk is in Sacramento now. Goldzimer resigned last February and refuses to discuss the bank at all. Myers did not refuse to talk, but evaded attempts to converse with her on the subject.

The first person the three women contacted was Dr. Anita Figueredo, a La Jolla surgeon. “They came to me as an older, established person in the community for credibility,” she says. In all, about twenty organizers were drawn together, thirteen of whom became the bank's board of directors. Only two members of the original board were men. Joan, one of the organizers who later became a board member (she has since resigned and did not want her real name used here) says, “I always viewed it as an experiment of twenty-three people who didn’t know each other. Most banks are put together by six or eight men who’ve worked together. You really ought to know each other well.” As would be expected, this banding together of strangers was not entirely harmonious. “We were seeking diversity,” recalls Figueredo, “and we sure got it. The problem was, none of them [the board members and organizers] were indians. They were all chiefs in their own field. It made it more difficult to get a consensus.” Joan adds that part of the problem was the wide age range on the original board and among the organizers. “If you were over forty, you were terrified of being tagged women’s libbers. And there were disagreements on a very personal level of trust. It was truly a personality problem. We had trouble keeping on a business level. It was, if you don’t like my idea you don’t like me.

One thing the board did agree on was the sex of the president they wanted — female. But as the only other women’s bank that was operating at the time, First Women’s Bank of New York City, had discovered, it’s difficult to locate a woman who is both qualified to be a bank president and willing to leave her present employer. After finding no one in San Diego who would take the job, the search was expanded nationwide. Several women were interviewed, and the position was finally taken, in December, 1974, by Rita McCoy, a banker from Texas.

McCoy had worked in banking for nearly twenty years after finishing graduate school at Southern Methodist University. She had worked her way up to vice-president at a bank in Marshall, Texas, after filling nearly every position of responsibility below that. She appeared extremely qualified for the job. It wasn’t until later that a particular aspect of her personality became evident to those she worked with. “She depended on men for strength,’’ says a former employee of the bank. And she didn't have judgment when it came to men. When there were only women present in the bank, she’d make us close the drapes so we couldn’t appear vulnerable. But the drapes would stay open if there was just one man there, no matter who he was. It was just the way she was conditioned.” Other former employees have made similar comments about McCoy’s judgment regarding men. But that realization, too, came later.

Before a bank is allowed to organize in California, a president must be chosen and that choice scrutinized by the state banking department. With that done, the Women s Bank received approval in March of that year and immediately went to work raising the initial capitalization of $1.5 million. She produced the stock-offering circular for the sale of 150,000 of the bank’s authorized 300,000 shares at ten dollars apiece. (The remaining 150,000 shares still have not been sold, although the bank is considering selling some of them.) To assist in the actual sale of the stock McCoy hired her first employee, Victor Diazgranados, in September, 1975. Diazgranados had been working in a managerial position at the Ahmanson Bank in Los Angeles. The signing on of Diazgranados was McCoy’s first and most costly mistake.

The suave and dapper Diazgranados was to be the bank’s cashier and vice-president. As such he oversaw the inner workings of the bank and was in charge of its total operation. Given the bank’s subsequent problems, it’s not surprising that Diazgranados was later to be blamed for most of the $600,000 in losses. But even if he hadn't hightailed it to his native Colombia in December, 1976, he’d have a hard time denying his involvement in several loans that went bad and shouldn't have been made in the first place.

Some of the blame for the bank's losses goes to its first location in Mission Valley; it was tucked behind an office between Houlihan’s Old Place and Flanigan’s. “We almost went under as a result of the location,” McCoy says gloomily. “It almost killed us. People could not get to us, and when they did they were harassed. There was no parking. Construction was going on every day. I had to get out there and fight to keep the trucks out of the drive-through lanes. Our customers and stockholders were threatening to close accounts. They were calling, saying, ‘How do you expect us to get in? Do a mail drop?’ ’’

After the initial rush of interest, in which depositors had flocked to the bank and left a million dollars in the first month, new accounts slowed to a trickle. It was not a neighborhood bank; people had to come from outlying areas, and if it wasn’t convenient once they got there, what was the use? And many people, including disgruntled customers, founders, and shareholders, say the service they received was second-rate anyway. People phoning in would be put on hold and forgotten about. Records would be lost. Shareholder Maida Cooper says, “I’ve gone down there after being put on hold for twenty minutes and said, ‘What in the hell is going on in this bank? I’d tell Rita things. She’d thank me. I’d tell her the same things later on and she’d say, ‘I’ve never heard that before.’ ”

Sitting quietly in the eye of this accelerating hurricane of disaster was Victor Diazgranados. Only McCoy has anything remotely good to say about him. Women who were employees at the time and will talk about it say he was the reason a lot of people left the bank. “Victor was unprofessional and very temperamental,” says Barbara, one former employee. Another one, Lucy (both women asked that pseudonyms be used), relates how much easier it was to work when Diazgranados wasn’t around. “Except we’d be afraid, because Victor would come back after having too much to drink and he’d find some little mistake in balancing or something and he’d just be livid. He'd bare his teeth at us. We tried to speak up. One time we had a little meeting in the back room and he yelled at the top of his lungs that it was sabotage.” Lucy and Barbara say Diazgranados wasn’t even in the bank very much. “He was no longer interested in banking,” says Barbara. Lucy says Diazgranados and McCoy were out of the bank together much of the time. While it was part of McCoy’s job as bank president to be out drumming up business, it was not the job of the vice-president. Lucy believes the relationship between Diazgranados and McCoy was more than a working one. ”1 can't prove it, but anyone who saw it knew what it was,” she says. “There were these constant emotional quarrels and that’s why they couldn’t get any banking business done; they couldn’t concentrate on it. She wanted me to watch Victor when she wasn’t there and tell her if he talked to this girl or that girl and where he went and how long he was gone. And he would do the same thing with me. And these fights! He'd be sitting here and she over there and she’d say to me, ‘Tell Victor ....' ” Other former employees didn’t see the relationship the same way. “I don’t think there was anything going on between Rita and Victor,” says Barbara. “She was influenced by him. She would do anything he’d say. She needed to depend on somebody.” McCoy says Diazgranados “didn’t spend any time out with me, not during working hours. Victor and I didn't get along that well. We fought all the time. I almost fired him a half-dozen times. ” McCoy does admit, however, that she went down to Colombia to visit Diazgranados after he resigned. “Victor is a very intelligent man,” she says. “He had a good personality; he made friends with people who came info the bank.”

Ed Peterson, head of the state banking department office here, says Diazgranados was the dominant person in the bank. And even though Diazgranados was not the loan officer, he made several loans to one of the people he befriended — Michael Krupp — which the bank is still trying to collect. These loans, which amount to approximately $195,000 — almost one-third of the bank’s total losses — were taken out by Krupp in an effort to keep his volleyball team, the San Diego Breakers, on the court. Krupp had purchased the majority of the stock in the Breakers in April. 1976, one month after the Women’s Bank had opened. It cost him one dollar and the assumption of the previous owner’s debts. On June 24, 1976, two months after Krupp had bought the club, the league voted to take it away from him because of the team’s financial instability. There ensued a complicated series of helm changes between the league and Krupp, with the team finally ending up back in Krupp’s hands. He secured his first $25,000 loan from the Women’s Bank in August of 1976 after five ownership changes in which he was the in-again, out-again owner of the Breakers. (Part of the reason the league lost confidence in Krupp was that one payday all the players’ checks bounced.) He wasn’t exactly the best risk in town, but he had been a “financial consultant,” specializing in business mergers, so he knew how to make himself look good on paper.

How and when Krupp and Diazgranados met is unfortunately lost to history. (Krupp has disappeared; not even the Breakers know his whereabouts.) McCoy says she heard about him from Diazgranados long before she met Krupp. This seems to indicate that Diazgranados knew Krupp before he bought the Breakers and before the Women’s Bank opened. An ironic twist to this ill-fated relationship is that McCoy sat on the Breakers’ board of directors. She can’t remember exactly when. “It was only for about one month,” she says. “Before any of the loans were made.”

Banks must make their money work for them; loaning it out is a necessity. For a new bank it is more than a necessity; it is an imperative. Because of this, new banks inevitably attract chiselers and professional bilkers, and many people associated with the Women’s Bank believe Krupp was one of these. “Mike Krupp was a terribly fierce con man,” recalls one former employee. “At first everybody loved him. He was a nice person. He came in at Christmas time and gave everybody twenty-dollar bills, and he was always giving away box seats to Breakers games.” McCoy is more cautious in her assessment. “I could get sued for saying what I think about Krupp. I could get shot, too,” she says. McCoy maintains that the relationship between Diazgranados and Krupp was very friendly, and that Krupp was given the loans and allowed overdrafts of thousands of dollars because he kept promising Diazgranados he’d pay up. The last loan given to Krupp was for $50,000 in March of 1977, four months after Diazgranados had resigned and left for Colombia. By that time it seems impossible that Krupp could have looked good on paper, especially since the Breakers were losing money at a clip that eventually topped $900,000 in two years. McCoy had had experience in Texas with people who showed plenty of credentials and no assets, but she trusted Diazgranados, who in turn trusted Krupp.

Diazgranados left for Columbia in December, 1976, telling McCoy it was because he wanted to go into business for himself. According to Dr. Figueredo, who was then chairman of the board, Diazgranados “left on the best of terms. It was before we knew of the souring of those loans.” The word around the bank, however, was he was working for Krupp somehow. No one knows the details, not even the state banking department, which entered the bank in February, 1977 for a routine audit, sniffed a rat, and stayed there for more than a year. Krupp had defaulted on all his loans and overdrafts; Diazgranados, who had given them to him, had skipped the country; and now the banking department and the Federal Deposit Insurance Corporation were in the bank nearly every day, examining records. Still, Krupp was able to secure that last $50,000 loan after the banking department had discovered his defaults.

“The attitude of the whole staff changed toward him [Krupp] after we found out about the loans,” explains a former employee. The result was a loss of faith. “There was hardly any [personnel] turnover before the auditors got in there.” The turnover suddenly increased; morale sank. Today there is only one person left from the original crew. “When a bank makes a bad loan, it creates a hysteria kind of attitude,” remarks Ed Peterson of the state banking department. “It takes all the concentration of the officers.” This left the employees feeling there was even less leadership than before. Tom Tolbert, the vice-president at the time, should have filled that role, but as another former employee now puts it, “We didn’t respect him. His wife would call and he'd put her on hold for fifteen minutes; and if he didn’t respect his wife, why should we respect him? If Rita [McCoy] put her trust in him, we thought, geez, we can’t go to her.” She adds that the workers were afraid of McCoy. “She seemed like such a strong person. We had so much respect for her. But she was on a different plane. I was afraid to approach her.”

Amid the growing chaos, the board of directors failed to take decisive action. “No definitive issue was brought up or resolved,” a former board member recalls. “The meetings weren’t stormy; they just never jelled.” The board was strapped by its lack of banking knowledge. “Rita had to explain a lot to us,” says the board member.

The bank trudged along in the red, shedding the education program, board members, and employees. It did move to new quarters about a half mile away, still in Mission Valley, in December, 1977, but two months later Rita McCoy resigned. Just as she had projected, the bank started operating in the black in May of this year. Overall it still shows a deficit, but it isn't losing money day to day. Everyone involved, including the state banking department, feels the bank is in good shape now and is on the road to solvency. And Ed Peterson emphasizes that the saga of the Women’s Bank is not that much different from that of other minority banks, such as the Mexican-American National Bank and the Pacific Coast Bank, started by and for blacks. But even now, all is not calm at the Women's Bank.

The name change last July has sparked a small insurrection among some of the stockholders. No one is really protesting the fact that a man, Lance Morton, has been named the new president. The voices of the shareholders are being raised now because the name, the symbol of a bank run by women and sensitive to the needs of women, has been done away with. And part of their ire is raised because the bank had its turn-around last May when it was still called the Women’s Bank. “The name to me was important,” says Lillian Poltere, a shareholder. “I’d made the investment because it was a women’s bank. If I’d just wanted to buy bank stock there are other banks I would have invested in.” Poltere is one of a group of dissident shareholders who together own more than ten percent of the bank’s stock. This has allowed them to call a special shareholders' meeting, set for October 20, to take a new vote and try to change the name back. At the annual shareholders’ meeting in July a majority of the shares, 75,001, most of which were voted by proxy, was garnered to make the name change to California Coastal. “The name change is simply a way to do away with reverse discrimination. It’ll make the bank more profitable,” declares Dr. Figuercdo. She and the rest of the board and an apparent majority of stockholders feel a large part of the blame for the bank’s losses can be attributed to men who would not become customers because of the name. Those who want the original name reinstated claim the bank's problems stem from mismanagement and bad loans. And not only do the dissenters distrust the survey the bank did which showed fifteen percent of the public would not bank there because of the name, but some also distrust the counting of the votes at the shareholders’ meeting.

Shareholders at the meeting in July also voted San Diego resident Ingrid Croce, widow of deceased musician Jim Croce, to the board of directors. Her nomination was thought to be improper by a number of shareholders. “We asked Dr. Figueredo why Croce was being considered,” recalls Josie Rhodes, a shareholder. “She said, Well, Ingrid had deposited a lot of money recently and we felt obliged.” Figueredo confirms this. “Ingrid was nominated because she managed a large estate and had shown enormous support with large deposits.”

So the stormy infancy of the Women’s Bank rages on into temptestuous adolescence. The original staff is scattered, but some remain in San Diego. Rita McCoy, who could have sought shelter from the fallout by leaving town, is among them. She now works in the corporate office of San Diego Trust and Savings. She doesn’t allow herself any regrets.

“The main reason I left the bank was there came a time when it was better for me not to be involved in it. And it was better for the bank because the bank was kind of me. The image was Rita McCoy, and that was not fair to either of us. I’d be less than honest if I said that it doesn’t hurt. It still hurts.

“I made some mistakes, as every banker does. Many presidents have made far greater mistakes than I have. I was so busy trying to bring in business, making speeches and all. that I'm afraid I allowed things to happen that shouldn’t have.

“It’s Rita McCoy kicking time now. Everybody’s kicking me, but I can stand it. It doesn’t bother me; I have nothing to be ashamed of. I’m proud of what was done. I’m sorry that there were mistakes made and that things didn’t go the way I had hoped they would go, but I’ve not bowed my head. There will be a time when you hear from me again.”