Independent Banker - October 2021 - 50

financial services. In fact, roughly
1 in 6 Native American and Native
Alaskan households are unbanked,
according to the FDIC.
AT A GLANCE:
Over the years, Eagle Bank has
taken action to make it easier for
unbanked people to open accounts,
obtain loans and cash checks. For
example, the bank has removed
check-cashing fees for nonaccountholders
and offers a smalldollar
loan program. It also lowered
consumer loan interest rates in early
2020 to make credit more accessible.
Native American Bank in Denver
is also dedicated to the mission
of bringing financial services to
tribal corporations, Native-owned
businesses and Native consumers
across the country. The $170 millionasset
community bank's lending
to these customers spans a variety
of different projects, ranging from
financing a commercial fishing vessel
in Alaska to construction loans for a
hotel next to a tribal casino. It also
provides loans for housing, healthcare
facilities and infrastructure projects
on tribal lands.
" From our perspective, the biggest
impact we can have is by helping to
diversify economies, which we do by
lending on larger-scale projects that
generate jobs, " says president and
CEO Thomas Ogaard.
Overcoming barriers to banking
Native tribes and individuals face
unique challenges when it comes
to accessing banking products and
services. One issue is simply access,
particularly for Native Americans
living in rural areas. According to the
Native American Financial Services
Association, only about 30 Nativeowned
banks and other financial
institutions serve the country's Native
American communities.
Some banks are wary of the
complexities related to lending on
tribal land. According to the Bureau
of Indian Affairs (BIA), 574 federally
BANKING
INDIAN
COUNTRY
18
minority depository
institutions (MDIs)
are Native-owned1
16.3%
of Native American
and Native Alaskan
households are
unbanked2
12.2
miles
The average distance
between the center
of a Native American
reservation and a bank,
nearly 20 times
the average distance
in rural areas3
573
sovereign tribal nations
are recognized by the
federal government4
Source: 1) Q1 2021 FDIC data 2) 2019 FDIC survey
3) 2017 Native Nations Institute data review, 2021 St. Louis
Federal Reserve Bank report 4) National Congress of
American Indians
recognized tribes and approximately
56.2 million acres of tribal land are
held in trust by the U.S. government
for the benefit of a particular tribe or
individual Native American. Some
reservations consist entirely of tribal
land, while others have a checkerboard
mix of tribal land and fee simple land
that can be bought and sold.
Land held in trust for a tribe
cannot be mortgaged, and land
held in trust for an individual must
receive approval from the BIA before
a lien is placed on the property.
Without the ability to mortgage and
foreclose on a home or place a lien
on individual trust property, lenders
aren't willing to make home loans to
individual Native Americans for the
purchase, construction or rehab of an
existing home.
Lending nuances
However, there are ways to make
these loans, such as with governmentbacked
guarantee programs, but there
are more nuances to lending on a
reservation. Community banks must
work with tribal laws and codes to lend
in a particular tribal community. Tribal
reservations are sovereign entities that
function much like a separate state.
Some reservations can be right next
door to one another and still have
completely different laws and codes.
" There is not necessarily uniformity
in those laws and codes, " Ogaard says.
" So, understanding how to navigate
those is important. "
Community bankers also need to
understand how those laws and codes
affect underwriting and risk.
For example, if a bank makes a car
loan to a Native American customer
who lives on tribal land and that
customer defaults on the loan, it
can be a more complicated process
to recoup the collateral. If a bank
wants to repossess the car, tribal law
may require that the bank go before
tribal court to obtain permission. In
that situation, it could take weeks or
50 Q ICBA Independent Banker Q October 2021
Independent Banker - October 2021

Table of Contents for the Digital Edition of Independent Banker - October 2021
