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Tribal members of the Fort Belknap Indian Reservation in Montana had few low-cost options for financial services until Bear Paw CU stepped forward.

For most credit unions, managing the geography involved in five branches is a routine part of business. When those branches are separated by nearly 150 miles of high-plains country, however, the challenge becomes formidable.

That's the case with Montana's Bear Paw Credit Union, located in Havre, some 40 miles south of the Canadian border. The $53 million asset Bear Paw earned a first-place award in the 2004 Louise Herring Philosophy in Action competition for its efforts to serve tribal members who live on or near an area American Indian reservation.

Chartered in 1942 as the Great Northern Credit Union Association, Bear Paw changed its name in 1989. It now includes in its field of membership residents of seven counties as well as Burlington Northern Santa Fe Railway employees and their families. Membership stands at 12,569.

Overcoming obstacles

In this rural area, serving members carries special considerations because many households are low income. The median family income at the Fort Belknap Indian Reservation is $23,583, compared with a national median family income of more than $43,000, and $34,375 for Montana residents. The median household income for white families in nearby Harlem, Mont., is $33,125, while the median household income for American Indians in Harlem is just $20,000.

Because they live in a rural area, members of the Fort Belknap reservation-consisting of both the Gros Ventre and Assiniboine tribes-have few, if any, options for obtaining low-cost, high-quality financial services.

Tribal members first approached the credit union to provide services to reservation members early in 2001. The director of the Fort Belknap Small Business Development Center (SBDC) led the effort to bring low-cost financial services to the reservation. The directors of Bear Paw Credit Union and Fort Belknap officials recognized the need and agreed to work together.

"We consider Bear Paw Credit Union to be part of our community," says Mildred Kinsey, SBDC director. "The credit union understands the problems inherent in serving a geographically dispersed tribal membership and has been responsive to our needs. We look forward to a long-term partnership that will benefit our members."

But the best efforts of both the credit union and the tribes met with numerous and significant obstacles. The terrorist attacks of Sept. 11, 2001, created a deluge of funds moving from equity markets to credit union deposits and forced the credit union to focus on its current members. This dramatic increase in deposits eroded Bear Paw's capital ratio, which in turn caused the National Credit Union Administration (NCUA) to place the credit union on its prompt corrective action list. NCUA told the credit union that it couldn't offer new products or services to members until it regained acceptable capital levels, unless those products would be profitable immediately. Increasing charge-offs due to bankruptcies also affected Bear Paw's capital at this time.

Despite these setbacks, both the credit union and Fort Belknap SBDC persisted in their efforts to bring financial services to the reservation. In 2004, Bear Paw received funding from NCUA's Community Development Revolving Loan Program to buy computer equipment for its outreach program. This fledgling program demonstrated to members of the Fort Belknap tribes that the credit union was dedicated to offering its products and services on the reservation.

"I know that NCUA understands the need for this kind of outreach service to consumers of modest means like those in the Fort Belknap tribes," says April Baiamonte, Bear Paw's vice president, organizational development and administration. "We're grateful to NCUA for making funds available for programs like ours. The funding the agency provides helps credit unions to help their members."

Baiamonte also credits the Montana congressional delegation for its support of credit union programs.

"During this time of political uncertainty on taxation," she reports, "our delegation steadfastly has supported credit unions and our tax-exempt status. We're also hoping legislators can assist us in obtaining future funding for our program."

The ultimate objective is to establish a physical branch location at Fort Belknap. Until that goal becomes financially feasible, Bear Paw management and board are determined to find interim solutions.

As they have since mid-2004, credit union staff each Wednesday make the 90-mile round trip to Fort Belknap with laptop computers to deliver services to members on the reservation. A member services representative, a lending officer, and Baiamonte set up shop in the offices of the SBDC. These Wednesday afternoon office hours give tribal members a specific time to come in with questions, make deposits, apply for loans, and conduct other financial business.

On its first day of service, Bear Paw staff served 13 people at the SBDC office. Since then, hundreds of individuals have come to call, many of whom had no relationship with a financial institution before the credit union began its outreach program.

In their first six months visiting the reservation, credit union staff opened more than 15 new accounts, the majority for unbanked individuals. Average monthly deposits total about $20,000. Members receive both personal loans and auto loans, Baiamonte notes.

Visiting loan officers also provide credit counseling. Members are encouraged to bring their questions to weekly sessions to determine how they can build or repair their credit.

Getting the word out

Bear Paw spreads the word about its presence on the reservation through multiple outlets. Fort Belknap has its own radio station, KGVA-FM, where the credit union advertises its services regularly. Print ads, placed in the Fort Belknap newspaper, inform members about the credit union's products and services. Bear Paw also distributes posters and fliers to various parts of the reservation to announce services and events of interest. Perhaps the most effective form of communication on the reservation is word-of-mouth, a powerful communication medium among tribal members.

Baiamonte hears firsthand how valuable credit union services are. "Many tribal members have told me they have an account at the local bank," she says, "and describe the fees they pay for services-fees substantially higher than what the credit union charges. We explain that we're a not-for-profit cooperative, and that because we're here to serve them, our fees are lower. We give them information about our fee schedule."

Typically, banks, grocery stores, or other retail outlets charge tribal members fees to cash checks. "At the credit union," Baiamonte says, "we offer no-fee check cashing for our members. That's just one place where we can differentiate our organization from for-profit providers."

Without a brick-and-mortar location on the reservation, however, the absence of cash services continues to be a problem. "We suggest to tribal members that if they open an account with us, they can deposit their checks and then go to the automated teller machine around the corner from the SBDC for cash," Baiamonte says.

Although a permanent branch on the reservation would solve many service delivery problems, that hurdle has been extremely difficult to clear. A grant proposal seeking funds from the Treasury Department's Community Development Financial Institutions Fund was unsuccessful. Even a minimal facility on the reservation would save tribal members significant fee charges. The reservation is more cash-dependent than most other communities.

"In my mind," says Bear Paw President/CEO Albert Vukasin Jr., "our biggest accomplishment has been to scale back our ideal program to one that is workable for us and beneficial to the tribes. Our board has supported the program from the start, but we realize that while we conduct the outreach program, we also have a fiduciary responsibility to our current members.

"As a credit union, we believe we should live up to the principles of helping those who need help most. It's a difficult undertaking, but lots of the most worthwhile things in life are difficult," Vukasin maintains.

Facing the future

Until a permanent branch office is feasible, Bear Paw is working with tribal leaders to offer a direct deposit program. Currently, reservation members still rely on paper checks. A direct deposit program would be beneficial to both the members and the credit union.

The credit union also is developing financial education and training programs for tribal members. Subjects under consideration include managing a checkbook and online banking.