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|Articles - March 2011|
|Wednesday, March 02, 2011|
Page 2 of 4
There is only one state bank in the nation, the Bank of North Dakota. It was established in 1919 to give farmers more control and greater access to capital. Ninety-two years later it has evolved into a 170-employee institution with $4.2 billion in assets and an impressive record of performance. “We’ve had record profits for seven years in a row,” says bank president Eric Hardmeyer.
Hardmeyer has run the bank for the past 10 years. As an indication of the importance of his role, his predecessor John Hoeven left to become first governor and later U.S. Senator.
Hardmeyer explains that the Bank of North Dakota is funded through captive deposits. All taxes and fees collected by state government funnel through the treasury into the state bank, rather than going out to bid with private banks. The state bank uses that money to fund state services and manage a $2.8 billion loan portfolio, partnering with community banks in the private sector to boost agriculture and small business.
If that sounds like socialism, well, it kind of is. And it has worked. North Dakota has the lowest unemployment rate in the nation. Property values did not fall there during the housing crash. The bank transferred $340 million back to the state in dividends over the past dozen years, but has not contributed any money for the current biennium because, amazingly, it is not needed. While Oregon and other states are struggling with billions of dollars in shortfalls, North Dakota enjoys a budget surplus.
Hardmeyer is quick to clarify that he doesn’t recommend that other states try to replicate his bank’s model. Asked what advice he has to offer to states considering it, he says: “You’d better staff it with bankers, not economic development folks. Or else you will have a very expensive, short-lived experiment… The other issue is to make sure you aren’t competing with the private sector.”
Linda Navarro, CEO of the Oregon Bankers Association, says the Bank of North Dakota resulted from a “quirk of history” that has little to do with modern realities. “For most community banks, the crux of their business is commercial lending,” she says. “They are looking for good business loans to make… They just need to make sure the loans can be repaid.”
Bill Humphreys, CEO of Corvallis-based Citizens Bank, says he has studied the North Dakota model and concluded that a state bank would be against the interests of the state and taxpayers. “I don’t see how a state-owned bank could enter the marketplace and all of a sudden start making loans that aren’t being made now,” he says. “Unless they decide they’re going to take on greater levels of risk.”
Humphreys and other bankers point out that one driving reason behind the financial meltdown was loose, easy credit without proper collateral. A state-run bank committed to lending to businesses would “share the consequences of higher risk with the taxpayers,” Humphreys says. “This is not a good time to do this. If you look at the state as a business, they are in such a deficit position that they have no business investing in anything.”
Thursday, July 24, 2014
BY CLIFF HOCKLEY | OB GUEST CONTRIBUTOR
With the increasing retirements of Baby Boomers, a massive real estate shift has created a significant increase in demand for NNN properties. The result? Increased demand has triggered higher prices and lower yields.
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BY HANNAH WALLACE | OB BLOGGER
Demand for organic food continues to soar: Last year, sales of organic food rose to $32.3 billion — up 10% from 2012. In Oregon, organic produce wholesaler Organically Grown Co. has been championing organic growing methods for four decades.
Thursday, June 26, 2014
BY ERIC FRUTS | OB BLOGGER
Last year, the housing market in Oregon—and the U.S. as a whole—was blasting off. The Case-Shiller index of home prices ended the year 13% higher than at the beginning of the year. But, was last year a blip, or a trend?
Wednesday, August 20, 2014
By Kim Moore | OB Editor
The 2015 survey launched this week. It is open to for-profit private and public companies that have at least 15 full- or part-time employees in Oregon.
Friday, July 18, 2014
BY JASON NORRIS | OB GUEST CONTRIBUTOR
Back in May, we shared a common Wall Street quote about investing, “Sell in May and go away.” Fast forward to July and the most common question we have been getting from clients is, “When is the market pullback going to occur?”
Monday, July 07, 2014
BY TOM COX | OB BLOGGER
Named after the 2010 experiment by Thomas Ryan, "Robin Sages" are fake social media profiles designed to encourage linking and divulging valuable information.
Friday, August 15, 2014
In this week's poll, we asked readers: "Who should pay for the troubled Cover Oregon website?" Here are the results.
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