Since its founding eight years ago, Canyon National Bank, one of a handful of Native American-owned banks, has seen capital growth and profits that outstrip those of many majority-owned banks.  Started with $8 million in capital in 1998, the bank today holds $240 million in total assets and has four branches serving the local Agua Caliente Band of Cahuilla Indians (ACBCI). The ACBCI’s initial capital investment of $3.6 million has paid off both fiscally and culturally. The bank’s average return on equity exceeded 20 percent in 2004 and 2005, while it provided culturally sensitive products and services to Native American and non-Native American customers.

Headquartered in Palm Springs, California, Canyon National Bank’s market area includes the tribe’s reservation, which spans Palm Springs, Cathedral City, Rancho Mirage, and portions of unincorporated Riverside County.

Growth and outreach in Native American finance has become the standard at Canyon National Bank. With a 45 percent investment by the ACBCI, Canyon National Bank is expanding its portfolio of Native American bank relationships, providing loans, investment deposits, ATM processing, and other services to both tribal governments and their members.

Economy Building

The bank, in its efforts to provide specialized banking services to Indian Country, recently helped the Torres Martinez Band of Desert Cahuilla Indians build its first economic development project. The project was a full-service Travel Center in Salton City on Highway 86, a busy stretch of interstate that serves recreational travelers and businesses transporting goods between California and Mexico. 

This project has generated a significant revenue stream for the tribe’s economic development division in part because the bank demonstrated to the tribe how to make the most of their investment.  The bank participated in the funding of an enterprise that will bring great economic benefits to the Torres Martinez tribe. 
 
The performance of the Tribal Services Division has contributed greatly to the bank’s overall success. Related loans and deposits amounted to as much as 20 percent of total assets, and the outstanding payment history of this portfolio has benefited the bank’s bottom line. 

Unique Challenges

One of the bank’s most unique challenges has been to replenish tribal loans that pay off early from the proceeds of gaming operations.  As a result, Canyon National Bank now strives to become “Indian Country’s Bank” by continuing to grow its efforts in business and personal finance to empower Native Americans.  Expanding its outreach to tribes in eight states (California, Washington, Oregon, Arizona, Nevada, New Mexico, Idaho, and Colorado) is evidence of this commitment.

The bank plans to expand its presence and scope of services within the Native American community. This top priority will be funded with additional resources targeting the bank’s expanded service area.

Culturally Tailored Products

As it continues to grow its market share, Canyon National Bank is confident that its combination of Native American cultural expertise and solid capitalization will enable it to meet the needs of bank customers everywhere in Indian Country.

The bank’s distinct products and services include a minor trust deposit account, and need-specific workshops for school-aged children, budding entrepreneurs, prospective homebuyers, and teens anticipating receipt of trust monies. 

Bank employees are also trained to focus on Native American customer needs. Not only are they experts in tribal-specific programs, many employees help customers find outside resources that can provide other nonbanking services.

Providing financial services at the tribal level has posed another set of challenges and opportunities. Canyon has structured loans to sovereign nations, which required developing the trust of historically underserved individuals.  Tribes and their land are protected entities by virtue of their legal status as sovereign domestic nations.  Thus, a thorough knowledge of tribal law, creative intellect, and political awareness are required when working with tribes. 

Government Loan Expertise

Even something as routine as mortgage lending is different when a bank enters the Native American market. During the past 18 months, Canyon National Bank has established itself as a lead processor of the U.S. Department of Housing and Urban Development’s Indian Home Loan Guarantee Program (Section 184).  The Section 184 program provides Native Americans with homeownership opportunities throughout Indian country in the United States. The program was developed specifically for Native Americans seeking homeownership opportunities on fee simple land, on Tribal Trust Land, or on individually allotted land on a reservation.  The number of people that did not realize they were eligible for this home loan product surprised us.  It is so rewarding to see families buying the home of their dreams and know that they are being treated fairly.

Market Sensitivities

Even for a bank familiar with Native American culture, the obstacles involved in home mortgage lending can be frustrating. For instance, leasehold interests can satisfy most secondary market loan collateralization issues, but sometimes tribes want input on structuring loan documents.  Once a tribe wanted to apply tribal law to a leasehold agreement. Canyon had to decline this request. Fortunately, the tribe withdrew this condition, and we were able to make mortgages in that community. 

Gaining trust and respecting tribal culture are significant requisites for working in Indian Country.  Like all bank customers, Native Americans also expect to be treated with integrity and respect. However, the political sensitivity of a government infrastructure intricately woven by generations of family ties can be difficult to manage.  

In one particular case, the bank had established a strong, five-year relationship with a tribe.  A dramatic shift in a tribal council election replaced long-standing members with representatives from different lineal families whose ideas varied considerably from their predecessors. The new regime was cautious of the bank’s relationship with the former council and within a matter of months, completely unraveled years of stable progress.  These situations, albeit infrequent, highlight a bank’s vulnerability to political changes in Indian Country.  

Regardless of these challenges, Canyon keenly appreciates Native American culture and successfully fills a niche providing Indian Country access to financial empowerment.   Our bank is staffed with people who are passionate about helping other people.  Those of us who work at Canyon National Bank see ourselves as liaisons who help bridge two worlds. On one side, we are bank experts committed to working with the regulatory bodies to resolve issues that have been historically thorny. On the other side, we are committed to understanding Native American law, Native American culture, and gaming. When we bring together our expertise from both worlds, Canyon National Bank creates fiscal benefits for all our customers.