SCOTTSDALE, Ariz. – A commercial bank acquired by the Chickasaw Nation of Oklahoma has turned a profit within a year of starting up.
Ross Hill, president of Bank 2, a unit of Chickasaw Banc Holding Co., told the Federal Reserve Board’s “Banking Opportunities in Indian Country” symposium that in October, the new bank turned a profit of $26,000, less than a year after its Jan. 7 kickoff.
From a modest starting asset size of $6.5 million, Bank 2 has grown to $30 million in assets, he said.
The bank is based in Oklahoma City, although it soon plans deposit and loan production offices in Ada, the Chickasaw capital.
“The Chickasaw Nation borders are not a limitation” on Bank 2, Hill said. “The Oklahoma border is not a limitation.” The dream of the bank’s board of directors (all Chickasaws) is to make money, he said. (Neal McCaleb, the outgoing director of the BIA, was one of the original directors.)
In service to that, the bank has grown very fast, putting it into a liquidity squeeze that has been somewhat alleviated by a million-dollar deposit from the Nation, and deposits from six other banks.
Its loan-to-deposit ratio has gone as high as 97 percent. Since deposits are a big source of the funds banks lend to other people, this meant Bank 2 had little money to lend until it received additional deposits.
Hill said the bank has insurance (Bank 2 Insurance) and mortgage units (Bank 2 Funding LLC) in addition to its commercial bank operation.
Addressing general concerns about Indian-owned banks advanced by another speaker, that tribes have unstable governments and tend to exercise undue influence on tribal business concerns, Hill said that the Chickasaw governor (Bill Anoatubby) and legislature have put their total support in the board. Gov. Anoatubby has entered the bank just twice, he said.
“The Chickasaw Nation is stable in its leadership,” the banker said.
In addition, he averred, “we did not seek the business of the Chickasaw Nation. We didn’t want to be dependent on our shareholders to build our bank.”
Hill noted that his and all Indian-owned banks (there are 17 nationwide) face the issue of “self-dealing” with the tribes or Indian individuals that own them.
“If you want to be in the banking business, you have to play by the rules,” he noted. “Yes, there are restrictions. You can live with them.”
He urged other tribes at the meeting to “get into banking. It can be done by almost everyone here.” Hill said Bank 2 stands ready to counsel other Indian tribes on how to get into the banking business.
In addition to the bank, the Chickasaws own a community development financial institution, called Chickasaw Community LLP.
