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July 1996

State Roundups
Minnesota

Woodlands National Bank grows with Native American businesses

The Mille Lacs Band of Ojibwe Indians received approval from banking authorities earlier this year to purchase the First State Bank in Onamia and to change from a state to a national charter. These approvals paved the way for the creation of the first Native American-owned holding company in the nation, and the state's only Native American-owned bank.

As the only bank in Onamia, population about 700, and one of three bank main offices in Mille Lacs County, the bank already served a wide area. When the owners planned to sell the bank, it was natural for them to approach the Mille Lacs Band, a growing economic force in the area through its ownership of two casinos, a hotel, restaurants, a convenience store, a bakery, two schools, a clinic and two community centers. The Band's leadership was looking for further investment opportunities and a vehicle by which to better serve its 2,800 members, located in three communities in the east central part of the state.

Clark Baldwin, Woodlands president, says the bank will initially update customer products and services, such as adding ATM service and electronic payment capabilities. Once operations are modernized, Baldwin says, the bank wants to expand housing services, especially to the Native American community, for example by offering home mortgage packages and by managing the Band's housing programs. The bank has already made outreach efforts to Band members, Baldwin says, largely in financial planning and family budgeting sessions.

The bank has received many service inquiries from Band members who live outside the current service area as well as from other Native Americans, Baldwin says. "They want to do business with Native Americans and to further the sense of community," he adds.

The bank is also exploring branching to the reservation and perhaps to locations near Hinckley and MacGregor, where the other Mille Lacs communities are located. And Minneapolis' American Indian community has expressed interest in creating a relationship with the bank, Baldwin says. "We want to try to serve the Indian community as a whole."

State program promotes innovative ag products

African cookies, chili-flavored nonalcoholic beer, natural cat litter—all these are products made in Minnesota with Minnesota ingredients by small businesses that have been nurtured by the Agricultural Utilization Research Institute (AURI).

AURI, a nonprofit corporation established by the state to strengthen the rural economy through new uses for Minnesota farm products, combines ag resources with business innovators and applied science expertise. AURI receives about $4.4 million annually from the state and has a budget of about $5 million to provide technical and financial assistance, through loans and grants, to clients who are developing new products or technologies. These clients must at least match, dollar-for-dollar, AURI expenditures on their projects.

Since 1989 AURI has been instrumental in 190 new products developed, 122 new products commercialized and 93 new business starts. In 1995 AURI was involved with 138 projects through its four offices in Marshall, Waseca, Morris and Crookston, and through its applied research facilities that include the oils and fats laboratory in Marshall and the pilot plant and lab in Crookston.

In addition, AURI staff work closely with regional economic development organizations, largely to inform companies about rural community business locations, according to Brad Mitteness, general manager of AURI's southwest office in Marshall.

The Marshall office has been working with the Minnesota Valley Alfalfa Producers (MnVAP) to establish a processing facility to turn alfalfa leaves into high quality dehydrated animal feed and, ultimately, the stems into energy. Over the last two years, MnVAP has raised more than $2 million in equity investment and received a start-up loan from AURI. Now the co-op has purchased an alfalfa processing plant in rural Priam, near Willmar, and is about to become the largest alfalfa feed processor in the United States.

The long-range plan is to establish a processing plant that would chop alfalfa stems, feed them into a gasifier and produce energy that would be sold to electric utilities.

AURI's Marshall office also brought together two existing companies that have created biodegradable pet toys made from corn starch polymers. The new toys will be made by RDS Associates in St. Bonifacius, an injection molding company that decided to manufacture and market its own products, and Minnesota Starch Polymers, which will supply the raw material and specializes in corn starch products.

Dan Schlueter, RDS president, says that AURI has helped with media exposure on the first product, a toy dog bone made of 70 percent corn starch. And AURI's knowledge of the product or materials serves to put investors at ease, Schlueter says.

By supporting value-added agriculture, Mitteness says, more of the food dollar is captured in Minnesota. "The dollars flowing into Minnesota agriculture are all new dollars, all new inflow," Mitteness says.

—Kathy Cobb