Ask Bob Bryce what a salmon ceremony is, and he'll tell you. The president of Snohomish, WA-based First Heritage Bank has attended several of the events, which the Tulalip Native American tribe performs yearly to commemorate the arrival of the first salmon of the harvest season. "The salmon ceremony is genuine, historical and, I think, a time for their people to come together with the local community and each understand each other better," he says.
It's this understanding that he's counting on. The Tulalip Tribe is the largest shareholder in First Heritage Bank and, although its members hold only $10 million in deposits and $10 million in loans at the bank, the whole tribe is very important to business. "Tribal governments are often wealthy, even though the people are not," says Bryce.
The $117 million-asset First Heritage, which also holds the Tulalip government's funds, has made a loan as small as $400 to a tribal member who needed the money to cover living expenses. And it once made a $1,200 loan secured by a car that wasn't worth that much. The bank markets to tribal members by publishing articles on financial literacy in the tribal newspaper, having a member of the tribe on the bank's board, and employing a "tribal liaison" to bridge what Bryce calls a "trust gap."
Indeed, a problem with trustworthiness is the main obstacle to capitalizing on the demand generated by this 2.8 million-member minority group, which had an average median household income of $35,441 in 2003, according to U.S. Census data. Median household income for blacks, Hispanics and whites was $29,668, $33,429 and $45,875, respectively. "Over-promising is something to avoid because Native Americans have been promised a lot of things," says Michael Gray, president of Albuquerque, NM-based G&G Advertising, a Native American-owned advertising firm.
Cindy Koonce, vp of Hinckley, MN-based Woodlands National Bank, takes an approach similar to Bryce's, placing great emphasis on face time. Although the $101 million-asset bank is wholly owned by the Mille Lacs Band of the Ojibwe tribe, and draws 40 percent to 50 percent of its assets from its Native American customer base, rapport-building remains an ongoing activity. Monthly, Koonce delivers financial-literacy lectures at the tribe's Grand Casino. Woodlands National also adds bank brochures or "payroll stuffers" to casino employees' paychecks-up to 60 percent of employees are tribe members-with the HR department's blessing. "They were very happy to be able to do something to promote not only their bank, but to let other band members know they can open accounts, write checks, do the different types of things we can offer them," says Koonce. The bank also uses direct mail and advertises in the casino newsletter.
Financial literacy is a major concern of Native American-oriented banks. "So many Indian communities never had access," says Eloise Cobell, co-chair of Denver-based Native American Bank, which in 2001 acquired Blackfeet National Bank, a bank she co-founded. Native American Bank is owned by 13 tribes in equal parts, has two retail branches in Montana and a loan-production office in Anchorage. Cobell is also executive director of the Native American Community Development Corp., the bank's non-profit affiliate. The bank is on track to make more Section 184 home loans, granted to eligible tribes and guaranteed by the Department of Housing and Urban Development, than any other bank this year, says Jane DeMarines, director of communications and external relations at the National American Indian Housing Council.
There are 19 Native American-owned banks in the U.S., with an average asset size of $82 million, and an average return on equity of 11.3 percent in 2004, according to the Federal Deposit Insurance Corp. This compares to 8.5 percent ROE for all U.S. banks with under $100 million in assets. "Banks have begun to see Indian country for what it is: a very quickly emerging market in the U.S. at a tribal level and an individual level," says J.D. Colbert, president of Oklahoma City-based NANBA, and a member of the Chickasaw and Creek tribes. Colbert says the home-loan program is used as an entry point by many community banks into the market.
