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The Johnny Appleseed Approach to Seed More Native Credit Unions

Stephen Scott would like to help American Indians get better access to finance, and one way to do this is through tribal credit unions.
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Seneca tribal member Stephen Scott would like to become a modern-day Johnny Appleseed. And the seeds he would like to sow to help American Indians get better access to finance are tribal credit unions.

Scott spent the past three years working successfully on getting a credit union chartered for the Seneca Nation of Indians, and when it opens in August, he will have two Native CUs to his credit -- he helped develop LCO, in Heyward, Wis., for the Lac Courte Oreilles tribe. And he’s offering his experience as a consultant to other tribes that want to increase credit access for their members.

Scott, acting deputy director for planning and development for the New York tribe, sees a natural connection between a credit union’s cooperative organization (CUs are owned by their members) and tribes’ cooperative natures. “I think they work hand in hand,” he told ICTMN. “Their motto is people helping people, and that’s what tribal nations do — they help each other,” he said.

The Seneca tribe remains on track for an August opening, and Scott’s hopes for it are high. Three-year financial arrangements have just been approved by the tribe, and he thinks the financial institution has the potential to grow even faster than current projections.

“We could grow to the point we have our own buildings,” he said. Opening plans call for three branches in space provided by the tribe in Irving, Salamanca and Niagara Falls, N.Y. and about a half dozen employees. “We want to make sure we employ Seneca people who qualify,” he said. “There’s a lot of [Seneca] who remain unbanked, and don’t really have access to credit,” he said. “Having our own financial institution will allow that.”

Initial product offerings will include deposit accounts (called “share” accounts by credit unions), checking, secured and unsecured loans, new and used car loans, debit cards, money orders and bill payments.

Scott would like to see more sophisticated products like mortgages once the credit union establishes itself. The Nation already has a proprietary mortgage program, and he sees a natural fit there by offering second mortgages (home equity loans) that could be used to rehab existing houses. The credit union will not offer business loans at first, but Scott noted the tribe has a business called Snidec that does, up to a maximum of $250,000.

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Scott will have plenty of opportunity to be the Johnny Appleseed for CUs, as the number of Indian-controlled credit unions remains quite low. Just how few of them there are can be seen from the National Credit Union Administration’s Office of Minority and Women Inclusion. In its first report to Congress. OMWI found just 13 credit unions majority owned by Native Americans, about two per cent of the total number of minority CUs and a tiny fraction of all credit unions. These 13 are quite small, with total assets of $130 million and average assets of $10 million, serving 33,000 members, according to OMWI.

The smallest, Rabun-Tallulah of Tiger, Ga., has just $600,000 in assets and less than two hundred members. Some of the larger ones include, Four Corners, Kirtland, N.M., with 4,700 members and $22 million in assets; and San Juan in Blanding, Utah, with 4,000 members and $16 million in assets. Four Corners serves employees of Navajo Agricultural Products Inc. and the Navajo Housing Authority.

These 13 don’t comprise the entire universe of what might be considered Native credit unions. For instance, in a throwback to ancient methodology, Native Hawaiians and Pacific Islanders are lumped into the “Asian” category. So, none of the minority credit unions in Hawaii is counted as being owned by Native Hawaiians. Interestingly, two Hawaiian credit unions are counted as being owned by Native Americans.

It is also possible for a tribe to charter a credit union and have it not be considered a minority-owned CU by NCUA. This is because of the cooperative organization of credit unions. They are owned by their members. So in order to be considered a minority-owned institution, more than half of the members would have to be Native Americans. A small tribe with a large number of non-Native employees in its gaming operations could find itself majority owned by this definition if it included its employees in its field of membership (eligible customers).

Seneca Nation of Indians Federal Credit Union will serve employees and members of the Seneca Nation of Indians as well as employees of several other organizations affiliated with the Nation, according to the federal credit union regulator.

The Seneca Nation Council and executives committed capital for the credit union, said NCUA. The tribe has a membership of more than 8,100, and it employs more than 5,000 people, making it, collectively, one of the largest employers in western New York.

Other credit unions chartered by tribal entities around the country include First American Credit Union, Window Rock, Ariz., (Navajo); South Metro Federal Credit Union, Prior Lake, Minn., (Shakopee Mdewakanton Dakota), and Hocak Federal Credit Union, Black River Falls, Wis. (HoChunk).

South Metro is open to many other groups besides the Shakopee Mdewakanton Dakota. Its FOM (field of membership) includes any person who lives, works or has a business in Scott County, Minn., any employee or member of a list of qualifying organizations, and anyone who makes a one-time $10 membership donation, according to the CU.

First American has the longest history, going back to 1962, when it was founded as Navajoland Credit Union. It has since expanded from serving Navajos to including all Indian tribes and ethnicities in its area and has passed $100 million in total assets.