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Small Business Administration designation boosts bank's profitability

DENVER ñ When well-known Native banker J.D. Colbert agreed to helm the Native American Bank, he inherited daunting challenges. The biggest of these was that the bank had not turned a profit in its five years of operation.

Like bankers nationwide, he looked at fee income as a path to profitability. But the bank serves Indian country and is owned by 26 federally recognized tribes, Alaska Native corporations and tribal organizations. Given the household income profile of Indian country, just hiking bank fees wasnít the answer for NAB that it has been for larger banks.

But recently, the U.S. Small Business Administration approved Colbertís first alternative by giving NAB a HUBZone designation. The acronym stands for Historically Under-Utilized Business Zones; the program stands for economic growth in distressed communities, by offering the businesses that serve them access to a percentage of federal contracting opportunities.

With its HUBZone designation in place, NAB is eligible to be awarded federal contracts relating to financial services, worth up to $3 million per contract.

As a recognized HUBZone entity, Native American Bank hopes to take advantage of federal contracting opportunities in the finance sector, such as providing prepaid debit cards to federal employees, and managing financial programs and products ñ including government programs and products aimed at Native communities.

Colbert called the designation ìa natural fit for NAB, since we are the only bank focused primarily on serving historically underutilized business zones on Indian reservations.î

The fees from the new services NAB can provide under federal contract should help bring profitability to the bank and employment to Indian country, Colbert said. ìWe pride ourselves on the fact that over 65 percent of our staff is from Indian country. Now, with greater federal contracting opportunities, we look forward to hiring more staff members in the numerous Indian communities we serve.î

The president and CEO added, ìWe really do have the potential to be the ñ and I emphasize the ñ national Indian bank across Indian country, with dozens of branches.î

To Colbertís knowledge, NAB is the first bank designated a HUBZone entity in the programís 10-year history. ìI think a lot of other banks will be coming up behind us,î he said, noting that federal agencies are struggling to meet the minority business contracting goals they must set. If small businesses under $165 million in size do not apply for the contracts, those contracts go out to businesses with revenues far beyond $165 million annually.

The number of small businesses eligible for HUBZone financial services contracts is near zero, Colbert said. And without Native American Bank, it would be zero.

So for an $81 million HUBZone bank, headquartered in Denver with a branch in Browning, Mont., and loan offices in Rocky Boy, Mont., and Anchorage, profitability by the end of 2006 is looking better all the time.

DENVER ñ When well-known Native banker J.D. Colbert agreed to helm the Native American Bank, he inherited daunting challenges. The biggest of these was that the bank had not turned a profit in its five years of operation.Like bankers nationwide, he looked at fee income as a path to profitability. But the bank serves Indian country and is owned by 26 federally recognized tribes, Alaska Native corporations and tribal organizations. Given the household income profile of Indian country, just hiking bank fees wasnít the answer for NAB that it has been for larger banks.But recently, the U.S. Small Business Administration approved Colbertís first alternative by giving NAB a HUBZone designation. The acronym stands for Historically Under-Utilized Business Zones; the program stands for economic growth in distressed communities, by offering the businesses that serve them access to a percentage of federal contracting opportunities.With its HUBZone designation in place, NAB is eligible to be awarded federal contracts relating to financial services, worth up to $3 million per contract.As a recognized HUBZone entity, Native American Bank hopes to take advantage of federal contracting opportunities in the finance sector, such as providing prepaid debit cards to federal employees, and managing financial programs and products ñ including government programs and products aimed at Native communities.Colbert called the designation ìa natural fit for NAB, since we are the only bank focused primarily on serving historically underutilized business zones on Indian reservations.îThe fees from the new services NAB can provide under federal contract should help bring profitability to the bank and employment to Indian country, Colbert said. ìWe pride ourselves on the fact that over 65 percent of our staff is from Indian country. Now, with greater federal contracting opportunities, we look forward to hiring more staff members in the numerous Indian communities we serve.îThe president and CEO added, ìWe really do have the potential to be the ñ and I emphasize the ñ national Indian bank across Indian country, with dozens of branches.îTo Colbertís knowledge, NAB is the first bank designated a HUBZone entity in the programís 10-year history. ìI think a lot of other banks will be coming up behind us,î he said, noting that federal agencies are struggling to meet the minority business contracting goals they must set. If small businesses under $165 million in size do not apply for the contracts, those contracts go out to businesses with revenues far beyond $165 million annually.The number of small businesses eligible for HUBZone financial services contracts is near zero, Colbert said. And without Native American Bank, it would be zero.So for an $81 million HUBZone bank, headquartered in Denver with a branch in Browning, Mont., and loan offices in Rocky Boy, Mont., and Anchorage, profitability by the end of 2006 is looking better all the time.