Mutual trust 

First Interstate, Montana tribes build lucrative relationship

Maria Valandra, a member of the Chippewa-Cree Tribe, says she wouldn’t work for the First Interstate BancSystem if the company wasn’t sincere about helping American Indians.

“It’s genuine,” says Valandra, the Billings-based holding company’s vice president for community development, of the firm’s vow to boost tribal economies. “It’s a long-term commitment.”

First Interstate is a $3 billion, family-owned banking organization operating 56 branches in 30 communities in Wyoming and Montana, including Missoula, Hamilton, Polson, Kalispell and Whitefish. Seven of its branches—as well as its corporate headquarters—are located on, or adjacent to, five Indian reservations within the two-state area.

“We go out of our way to create business relationships with the tribes we’re closest to,” says Lyle Knight, the bank’s chief operating officer. “This is where we live and where we work.”

While many business and political leaders tout a desire to work closer with Montana’s tribes, First Interstate has clearly matched its words with deeds in recent years, despite a rocky start more than a decade ago with the Northern Cheyenne Tribe.

The bank ran into problems with federal regulators and Northern Cheyenne leaders in the late 1980s, when a merger attempt prompted the Lame Deer-based Native Action group to complain about the company’s lending practices.

Native Action Director Gail Small says the bank’s Colstrip branch was profiting from Northern Cheyenne transactions, yet was making very few loans to tribal members at the time. That, she says, was in violation of the federal 1977 Community Reinvestment Act (CRA), which protects minorities and other low-income groups from discriminatory “red lining” by lending institutions.

Native Action filed a formal challenge to the merger in early 1990 and First Interstate, federal regulators, and tribal activists eventually reached an agreement over the issue. The ensuing compact detailed specific goals the bank would work toward, including the expansion of lending programs to Indians. Among other measures, it also prompted bank officials to open a new branch office in Lame Deer two years ago.

“It got very nasty,” Small says of the fight. “It took half of my time for four years. It was huge. But it was actually the first time teeth were put into the CRA. What began as a confrontational relationship turned into an educational experience for all of us. We’ve seen a huge increase in lending on the reservation. I think overall it was one of the key ingredients to helping economic development here. [First Interstate] has done a real turnaround as far as their mindset.”

In recent years, the Northern Cheyenne Tribe and neighboring Crow Tribe have become two of the bank’s top 10 customers.

“The company is very committed to tribes as a business niche,” Knight says. “That only works if it’s a win-win situation. Our vision is very long-term. We’re trying to create an economic environment that’s good five to 10 years down the line.”

Business is so good at the bank’s Lame Deer branch, where the manager and most other employees are tribal members, that the current building will soon be outgrown. But Valandra says the CRA is not the only thing driving the company’s actions, and that the bank has gone far beyond federal requirements to help tribal economic development.

“If [the Lame Deer] community is not successful, the branch won’t be successful,” Valandra explains. “I believe the CRA is not something we just comply with. It’s another way that we can give back to our communities. What motivates us is that it’s the right thing to do for a community, not just because we may get CRA credit for it.”

First Interstate has developed a manager trainee program that targets Native Americans in both states. The firm is also creating a new internship program that will draw recruits from tribal colleges around the region, Valandra says. In addition, the bank has been heavily involved in helping tribal members both on and off reservations obtain housing loans, in part through the Native American Housing Lenders Task Force, which Valandra chairs.

First Interstate worked with the Native American Development Corporation (NADC) to create a micro-loan program for small business owners and other tribal entrepreneurs and a series of consumer education seminars. Topics include training for cleaning up credit, writing a business plan, and learning the steps needed for applying for business loans. In addition, the NADC partnership provides technical expertise for Tribal Business Information Centers, which operate on each of Montana’s seven reservations.

In the most recent CRA evaluation, the Federal Reserve Bank of Minneapolis gave First Interstate’s Montana operations an “outstanding” rating. The bank’s Wyoming operations, which until late last year were evaluated by the Federal Deposit Insurance Corporation, received a “satisfactory” rating for CRA compliance during their last review in 1999. First Interstate operations in both Wyoming and Montana will be evaluated again later this year by the Federal Reserve Bank.

“You have to establish trust,” adds Chief Executive Officer Tom Scott, a member of the bank’s founding family. “That’s a big thing—getting people to understand that your motives are sincere. I think there’s great opportunities for us as a bank to earn a trusted business relationship with tribes. We have faith in that, and that’s why we’re pursuing that. But we’ve got to work together to see that happen.”

In recent years First Interstate executives appointed Browning banker Elouise Cobell, a member of the Blackfeet Tribe and the lead plaintiff in the much-publicized federal lawsuit over the U.S. Department of Interior trust fund accounts, to their main board of directors. Salish and Kootenai Housing Authority Director Bob Gauthier serves on the bank’s board in Polson, and tribal members serve on other bank panels in Hardin, Colstrip and Lander, Wyo. Knight says another Indian member is being sought for the advisory panel in Cut Bank.

In 2001, the bank co-sponsored a major tribal economic development summit in Great Falls. Another project involves helping the Northern Cheyenne Partnerships for Community Development Action conduct and compile a reservation-wide survey on economic development needs. The bank’s foundation contributed more than $15,000 for the group’s work.

“We just look at this as a journey,” says Knight. “We keep moving ahead. I’m very satisfied with our strategy. I’m very satisfied with our vision. But I also realize that we have a long way to go.”

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