Like many community development banks, Native American Bank in Browning, Mont., relies heavily on deposits from corporations to support its mission - but rarely do they exceed the $100,000 covered by federal deposit insurance.
Then last week the $51 million-asset bank received its largest deposit by far when Microsoft Corp. opened a certificate of deposit account with $1 million. John Bierise, the president of the bank's Denver holding company, Native American Bancorp, called the deposit "a vote of confidence" and said it would go a long way toward stimulating economic development activity on the nation's reservations.
Mr. Bierise said the bank has gathered the bulk of its deposits by approaching corporations and encouraging them to put money in a bank that will use it to improve low-income communities. He approached Microsoft knowing that it has a program for opening accounts in minority-owned banks.
Mr. Bierise did not disclose the rate it is paying on the renewable certificate of deposit but said it is lower than the market rate.
Microsoft created its Minority Deposit Investors Program in 2000. The first recipient was the $313 million-asset Seaway National Bank of Chicago, which received $1 million. Since then Microsoft has opened accounts at 13 other minority-owned banks.
Some other big companies also make a point of spreading deposits among community development banks.
Since 2000, Shell Oil Co. has had a program in which it deposits about $1 million in banks that serve low-income communities, and it invests around $7 million in each bank to fund loans that help create jobs. Anheuser-Busch Inc. also has a program for inner-city community banks, investing in them to help them lend to small-business owners.
Ginny Terzano, a Microsoft spokeswoman, said the Redmond, Wash., company seeks minority-owned banks whose mission is to serve low- to middle-income communities. She said that because most of the deposits are uninsured, it generally considers opening accounts only in banks with longstanding financial stability.
"We have tried to focus on banks that have financial viability and a history of investing in minority communities, and we try to work across the board to serve all communities," she said.
Native American Bank has had its troubles in recent years but is starting to turn the corner.
The bank was created in 2001 when a dozen tribes banded together to buy the floundering Blackfeet National Bank in Browning. At the time, the $18 million-asset Blackfeet National had nonperforming loans equal to 3.65% of total loans and a core capital ratio of 7.67%. Today its assets have nearly tripled, and its nonperformers are down to 1.38% of total loans; its core capital ratio is up to 13.28%.
The bank's primary aim is to lend to large businesses and agricultural operations owned by Native Americans, and to community development groups that work with tribes.
A secondary goal of the bank is provide basic banking services and mortgages to Native Americans who have been underserved by traditional banks.
The commercial banking is done nationwide; the consumer banking is only offered in areas around Native American's branches, both of which are in Montana. The bank has said it hopes to build more branches soon.
