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Native American National Bank Blackfeet acquisition gains approval

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DENVER ? The Federal Reserve Board has approved the application of Native American Bancorporation Co. here to acquire Blackfeet National Bank of Browning, Mont., giving a green light to startup of the first nationwide American Indian bank.

NABC, in the process of organizing the operation for several years, will change the Blackfeet National name to Native American National Bank. Its office will remain in Browning under the new name and will continue banking and community development efforts on the Blackfeet reservation.

In acquiring the $18 million asset Blackfeet National, NABC will become a holding company and is getting a $16.4 million depository base for its operations, the Federal Reserve reported.

The bancorporation also announced it has raised necessary initial capital to get the project off the ground, more than $10 million. Through a community development corporation (CDC) unit, Native American National Bank plans to focus on financial education, specialized housing and small business finance, and trust land recovery and utilization. It will specialize in Indian country finance around the nation but not be limited to that to avoid reverse discrimination concerns, the Fed said.

Its investors are a consortium of about 15 American Indian tribes and Alaska Native corporations. Tex Hall, chairman of the Three Affiliated Tribes of North Dakota, a founding tribe, is chairman of the board.

Other founding tribes are the Mashantucket Pequot of Connecticut, the Grand Traverse Band of Ottawa and Chippewa, Michigan, the Oneida of Wisconsin, the Mille Lacs Ojibwe Indians of Minnesota, the Blackfeet, the Chippewa-Cree of Montana, the Mountain Ute of Colorado, the Arctic Slope Regional Corp. and Sealaska Corp.

Blackfeet National and NABC are linked by the fact that Blackfeet activist Elouise Cobell has been a prime mover in starting both of them. In the late 1980s, she helped found Blackfeet National and served as chairwoman. She is an interim board member for Native American Bancorporation.

As tribal treasurer in the late 1980s, Cobell helped Blackfeet National get its charter after the only local bank in Browning failed. It is currently the 70th largest depository in Montana.

In late September, she referred questions on the deal to NABC chief executive John Beirise, except to comment, 'We're very delighted' about the approval. 'It couldn't come at a more opportune time.'

Cobell is lead plaintiff in the historic lawsuit against the Department of the Interior over mismanagement of tribal and individual American Indian trust funds.

Beirise, with 30 years of experience with such firms as Continental Bank, Chicago, and Mercantile Bank, St. Louis, said his Denver office plans to employ some 25 people (17 now work for Blackfeet National).

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In its approval order, the Federal Reserve 'concluded that consummation of the proposal likely would not have a significantly adverse effect on competition or on the concentration of banking resources in any relevant banking market.'

It also noted Blackfeet National's 'outstanding' rating under the Community Reinvestment Act and its status as a CDFI (community development financial institution) as favorable factors in its approval.

And it said 'the financial and managerial resources and future prospects of Bancorporation and Blackfeet Bank are consistent with approval.'

The board took note, without adjudication, of objections to the merger raised in a comment letter signed by Alvin Reevis and other members of the Blackfeet tribe, and said they did not prevent the approval.

Reevis alleged that Blackfeet National Bank, 94 percent owned by the Blackfeet tribe, was founded with tribal members' money but controlled by non-Blackfeet and non-Indians, that fraud may have been committed against the Blackfeet people, that the tribe could not sell its interest in the bank without consent of a majority of tribal members, and that the NABC is being founded to manage money that may be awarded as a result of the Cobell lawsuit.

Jeanne S. Whiteing, counsel for the Blackfeet Tribe, responded by writing to the Fed 'Mr. Reevis' objections are without merit.'

She pointed out that the tribe controls 94 percent of the shares, and that individual Blackfeet also own stock. She said the overwhelming majority of shares were voted in favor of the acquisition by NABC.

As to requiring a majority consent on sale of tribal assets worth more than $10,000, Whiteing said that referred only to cases where the tribe was acting under its corporate charter. In this case, the tribe was acting under its governmental capacity and thus did not require the referendum, she said.

Beirise said NABC was not established to manage trust suit money, but he didn't rule it out if a favorable ruling brings billions of dollars into Indian country. 'Indian people should have more choices with respect to how their money is invested.'

Data from the Office of Comptroller of the Currency, which regulates national banks, show Blackfeet, as of June 30, was well capitalized with a core capital ratio of 7.73 percent and a risk-based capital ratio of 18.93 percent.

It also was showing a favorable net interest margin of 5.98 percent. This reflects the difference between what it pays for money (3.92 percent) and what it earns on that money (9.9 percent).

However, it has booked a $1,000 loss year to date, meaning it has a negative return on assets and equity, and for the first half of 2000 it lost $396,000. It also had $693,000 in noncurrent loans and leases as of June 30, 2001. However, that figure was down from $1,399,000 the year before.