
Compare this to the Napa Valley Unified School District in California, which in 2009 took out a $22 million loan to build a high school, financed through capital appreciation bonds. By 2049, when the debt is paid, the $22 million loan will have cost taxpayers $154 million.
But another important role for the BND is in protecting the integrity of community banks in North Dakota. Because of the BND, North Dakota has the lowest community bank closure rate, and the strongest community banks overall, in the nation. So when I read recently that Choice Financial, a Fargo-based community banking organization, was making plans to acquire more North Dakota community banks, I was concerned. Acquisitions and consolidations scare me; they smell too much like predatory capitalism.
But out of over seventy community financial institutions in North Dakota, only four have been purchased in the last five years, compared to the national rate of 25% acquisition for community banks. Again, the BND helps community banks in North Dakota stay afloat and independent, and the statistics are continuously overwhelming. And why are community banks important? I usually offer up this list of reasons:
1. “Community banks focus attention on the needs of local families and businesses.”
2. “Community banks use local deposits to make loans to the neighborhoods where their depositors live and work.”
3. “Community bank officers are generally accessible to their customers on site with decisions on loans being made locally.”
4. “Community bank employees are typically deeply involved in local community affairs.”
5. “Community banks are willing to consider important attributes such as a person’s character when making loans.”
6. “Community banks are themselves small businesses, so they understand the needs of small business owners.”
7. “Community banks’ boards of directors are made up of local citizens who want to advance the interests of the towns and cities where they live and the bank does business.”
The Bank of North Dakota, a public bank without shareholders and run by the state, makes local communities and small banks in North Dakota stronger and more economically healthy. It's that simple.