A Native American banking group wants more tribes to start their own banks, and it is bringing that message to the people.
The North American Native American Bankers Association has hosted annual conferences to encourage tribal start-ups, but will take its act on the road beginning next month. It will join with NuBank, a consulting firm in San Luis Obispo, Calif., in conducting daylong bank start-up seminars in 10 cities.
They will focus on tribes with thriving commercial centers - including casinos - providing them the wherewithal to start a bank, said J.D. Colbert, president of the bankers group.
Some tribes, such as the Mohegans in Connecticut and the Seminoles in Florida, have built popular casinos and may want to open their own banks, Mr. Colbert said.
"One of the biggest challenges to opening a bank is raising sufficient capital," he said in an interview. "But for many tribes that isn't a big issue - they have the money now. What they really need is expertise on how to do it."
Mr. Colbert said there are only nine Native American-owned banks in the United States, largely because many tribes do not believe that they have the know-how to start and run a bank. Since forming six years ago, the trade group has helped only one tribe, the Chickasaw Nation in Oklahoma, to start a bank.
The group is working with NuBank, which has hooked up with teams of attorneys, accountants, and other professionals to help organizers form more than 130 banks over the past 20 years. Last year, NuBank started holding seminars for Hispanic entrepreneurs seeking to open small banks.
Dan Hudson, NuBank's chief executive officer, said it is crucial that a tribe does not narrow its bank's focus to appeal exclusively to Native Americans.
However, he added, "The bank can also have a great niche - the Native American sector - because they'll know how to bank them better than other banks who don't know the culture."
If a tribe expresses interest at a seminar, NuBank will help it form a bank, for an additional fee.
Mr. Colbert said more tribal banks are needed on reservations, because many living there are simply not served well by mainstream banks. Tribal laws tend to make it difficult for Native Americans to pledge reservation property as collateral, so many banks have shied away from making loans there. Tribe-owned banks, however, can tailor their policies to work with tribal laws, Mr. Colbert said.
There is considerable opportunity: Only about 33% of Native Americans own their own homes, compared with more than 70% of the overall U.S. population, Mr. Colbert said. Moreover, casino development has raised the incomes for many Native Americans, who now want to start businesses and are therefore in the market for commercial loans.
Then there are the casinos themselves. Though a tribally owned bank is limited in the amount of loans it can make to that tribe's casino, the casino can deposit its funds at the bank and use the bank's cash management services, Mr. Colbert said. The bank can also make loans to other tribes' casinos, and many of the Native American-owned banks do just that.
"Several tribes have discovered that there are significant profit opportunities in bank ownership," Mr. Colbert said.
One of them is the Chickasaw Nation, which formed Chickasaw Banc Holding Co. in 2001 and bought $10.6 million-asset First State Bank in Davidson, Okla. The bank, renamed Bank 2 with its headquarters in Oklahoma City, has been able to grow to $60 million of assets, by banking tribe members, other tribes' casinos, and non-Native Americans.
Ross Hill, Bank 2's president and CEO, said he will be sharing his bank's success story with other tribes' representatives at the upcoming seminars.
"It's the mission of our board to help other tribes start banks," Mr. Hill said. "It would help us indirectly by helping the overall Native American economy. Right now that economy suffers because financial products are not readily available."
