Red Lake’s Deerwood Bank Branch will close on September 10^th

It could take up to 2 years for another bank in Red Lake

By Michael Barrett

Red Lake Net News

      Deerwood Bank’s Red Lake Branch, who first opened their doors about a year ago, will close it’s doors for business officially on Friday, September 10, 2004.

      It is the second bank to leave Red Lake in 2000, and sources say it may take up to two years for yet another bank to come to Red Lake. The likely candidate is said to be Wells-Fargo.

      At the Red Lake Special Tribal Council Meeting held on Tuesday, August 31, 2004 at Tribal Council Headquarters, the Council voted unanimously to discontinue further negotiations with Deerwood Bank on their staying in Red Lake, as well as to discontinue any further business with them.

      In Deerwoods proposal, presented to the Council by Red Lake Branch Manager Derek Head, there were 4 options the Tribe had in order for the bank to remain open and in Red Lake. One of the options included the Red Lake Band keeping a minimum $7 million in Deerwood Bank, along with an escrow account of $100,000. The $100,000 would then be paid to Deerwood Bank if the Band’s accounts went below the $7 million in deposits.

      One Council Member, Redby Representative Allen Pemberton, said that was like having a gun held to ones head.

      Treasurer Darrell Seki, and others, considered the option an insult to the Band.

      Head stated the bank has been running at a loss without large Tribal deposits and the amount of losses has been over $100,000.

      Tribal Attorney, Michelle Johnson, who was present at most of the meetings between the bank and the Tribe, said all 3 options presented had the appearance of the Tribe paying the bank to stay in Red Lake–without getting anything back in return.

      “In all fairness–and I can only speak in the matter of principle–the numbers and all that really are beyond me–when we came here, in good faith assuming–and I’ll use that term vaguely–it’s assuming they were going to gain business from the tribe that would have exceeded the dollar amounts that we’re even discussing right now,” Head explained. “But we continue to operate, for almost a year now, in the community, benefitting the community, but we’re still at an operational loss.”:

      He said that any proposal that the people of Deerwood Bank put together was something they deemed a fair way of saying, let’s regroup, let the panic discipate, we’re here, we’ll continue to serve the community, and let’s work at those other accounts where those numbers aren’t going to be an issue.

      “We’re already talking about revamping our Internet and electronic banking to cater to the accounting department,” Head said. “In my opinion, I don’t feel that that–the numbers are even going to be relevant in two, three months down the road. But they were all based assuming the accounts that were initially discussed when we came here last year.”

      Head was asked what was discussed at those meetings he was talking about and he replied that he wasn’t at any of those meetings. He said Deerwood Bank wasn’t running blind and throw up a figure. They thought they had something solid right from the very beginning.

      Rick Rothausen, CFO of Red Lake Gaming, said he had believed in trying to keep Deerwood Bank here, but he also believed the request for an escrow account exceeds what he could support.

      Chairman Jourdain stated the Council was not being unreasonable in their attempts to meet an agreement with Deerwood Bank, and he understood their request because companies take a tremendous risk when they come into Indian Country and do business and there are no guarantees on their investments.

      Rothausen also stated the escrow account sort of made him feel the same way as Pemberton–like a gun to the head type of deal. He did not support the escrow account.

      Treasurer Seki explained his position on the matter. He wondered how many times they would have to pay that $100,000 fee. He did not support any of the options after seeing that escrow option. There was also a bill that was presented to him that he knew nothing about–equipment to the bank. Now the Red Lake Band owes $22,000 for this equipment and is liable for it.

      Johnson said the Band had contributed a lot in renovating the site for the Bank, and it didn’t seem fair to guarantee business to a business that was not Indian owned, when they didn’t guarantee business for their own local people on the Reservation.

      Secretary Roy said the money belonged to the members and she couldn’t agree to paying such a fee to the bank.

      Little Rock Representative Richard Barrett said for the bank to put something out on the table like this, made it appear they thought of the Council as stupid.

      Jourdain said he didn’t foresee another bank here, if Deerwood Bank closed, for up to 2 years.

      Head stated for the time they have been in Red Lake, their losses exceed the amount of the requested escrow amount.

      After further discussion, Chairman Jourdain explained to Head that equally in good faith they tried to come to some sort of agreement to resolve the matter and keep the bank here, but he saw the Council was overwhelming disappointed at the options presented.

      “From what I’m gathering here–someone correct me if I’m wrong–that the Council is looking to reject these proposals, and not only to reject these proposals, but also to discontinue any further negotiations and business relationship with Deerwood Bank,” Jourdain said. “Am I correct?”

      Some of the Council members motioned that he was correct.

      Head thanked the Council and Jourdain said it was disappointing from their standpoint as well because they had three tribal members employed there.

      Hardy made the motion, seconded by Desjarlait, to reject the proposals offered by Deerwood Bank, and to discontinue further negotiations and business relationships with Deerwood Bank. It passed 10-0.

      Deerwood Bank officials stated their last day of operations would be Friday, September 10, 2004.