An Indian tribe in northwestern Connecticut has taken initial steps to form a full-service bank on its reservation.
The Schaghticoke Indian Tribe, a group of less than 100 living on a 400-acre reservation near Kent, has hired Jay Umbarger, a veteran community banker turned independent consultant, as a technical adviser and to conduct a feasibility study.
Mr. Umbarger presented the idea to the Schaghticokes about two years ago. He said the bank would specialize in mortgage lending and try to capitalize on what he sees as a population influx into rural Litchfield County, which includes Kent, from pricey Fairfield County.
"The bank will be an economic benefit for the Schaghticoke Indian Tribe potentially for generations," Mr. Umbarger said.
He said he is exploring chartering options, seeking financing, and developing a business plan.
The bank, which would serve the reservation and the surrounding community, needs to raise at least $7 million. The application is expected to be filed with regulators by the end of July, Mr. Umbarger said.
He said he has been in contact with investment bankers and met with John P. Burke, Connecticut's banking commissioner, to discuss the venture on behalf of the tribe.
A spokeswoman for Mr. Burke confirmed the Jan. 27 meeting but said it was too soon in the process to say whether the commissioner would support the application.
James Ballentine, the American Bankers Association's director of community development, said the United States has about 25 American Indian-owned banks, mostly in the West. Gerald M. Noonan, the president and chief executive of the Connecticut Bankers Association, said he knew of no Indian tribe operating a bank on a reservation in Connecticut.
Mr. Umbarger said consolidation in the state has created an opportunity for a new community bank. At Sept. 30 there were 58 banks and thrifts headquartered in Connecticut, according to Federal Deposit Insurance Corp. statistics, versus 98 a decade ago.
But the Schaghticokes still have a long road in front of them. Mr. Umbarger has not started raising capital, and it remains to be seen if the economy of Litchfield County could support the type of bank the tribe is proposing. "There are a lot of steps that have to be taken and hurdles to be overcome, but none of that should be insurmountable," Mr. Umbarger said.
Mr. Ballentine sounded upbeat about the Schaghticokes' chances of starting the bank.
"There have been other Native American banks established already, so there is a mark that they can follow," he said. "I don't see how this would be any different."
