Mission: History: Organizational Structure of the Bank. Industrial Commission. Advisory Board

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1 Missin: T deliver quality, sund financial services that prmte agriculture, cmmerce and industry in Nrth Dakta. Histry: During the early 1900's, Nrth Dakta's ecnmy was based n agriculture. Serius in-state prblems prevented chesive effrts in buying and selling crps and financing farm peratins. Grain dealers utside the state suppressed grain prices; farm suppliers increased their prices; and interest rates n farm lans climbed. By 1919, ppular cnsensus wanted state wnership and cntrl f marketing and credit agencies. Thus, the state legislature established Bank f Nrth Dakta and the Nrth Dakta Mill and Elevatr Assciatin. BND pened July 28, 1919, with $2 millin f capital. Over the years, ur fiscal respnsibilities t the state have increased dramatically. Tday, the Bank perates with mre than $270 millin in capital. The State f Nrth Dakta began using bank prfits in 1945 when mney was first transferred int the General Fund. Since that time, capital transfers have becme the nrm t augment state revenues. In partnership with mre than 100 ther Nrth Dakta financial institutins, Bank f Nrth Dakta cntinues t meet and expand its 90-plus year missin t prmte the develpment f agriculture, cmmerce and industry in Nrth Dakta. Organizatinal Structure f the Bank Industrial Cmmissin The 1919 State Legislature created the State Industrial Cmmissin whse functin was t cnduct and manage, n behalf f the State f Nrth Dakta, certain utilities, industries, enterprises, and business prjects. The Industrial Cmmissin was charged with the peratin, management, and cntrl f Bank f Nrth Dakta. The Industrial Cmmissin is cmpsed f the Gvernr (wh acts as Chairman), the Attrney General, and the Agriculture Cmmissiner f the State f Nrth Dakta. Advisry Bard Als jining the State Industrial Cmmissin in verseeing the peratins f Bank f Nrth Dakta is the Bank f Nrth Dakta Advisry Bard f Directrs, which was established by state statute in The Gvernr f Nrth Dakta was given the pwer t appint Advisry Bard members knwledgeable in banking and finance t the five-member bard. The Advisry Bard has since been expanded t include seven members. Duties f the Advisry Bard include review f the Bank's peratins and recmmendatins t the Industrial Cmmissin cncerning management, services, plicies and prcedures. 1 Find Bank f Nrth

2 Executive Cmmittee Bank f Nrth Dakta s Executive Cmmittee cnsists f seven members including the president and CEO and leaders in Lending, Banking, Accunting and Treasury, Student Lans, Human Resurces and Infrmatin Technlgy. Emplyees There are 168 peple emplyed by Bank f Nrth Dakta. Bank f Nrth Dakta Is an Ecnmic Develpment Bank Bank f Nrth Dakta has resided in Bismarck fr ver 90 years, mving t its current lcatin in There are n branches f the Bank. Participatin with ND s Financial Institutin BND wrks in partnership with mst financial institutins in Nrth Dakta amng a brad range f services and prducts. This efficient business mdel allws us t prmte the state s prgrams and wrk with knwledgeable peple that have the best interests f Nrth Dakta taxpayers in mind. Retail Banking While BND des have retail prducts similar t ther financial institutins, these services are limited in scpe. Retail depsits nly accunt fr apprximately 1.5 percent f ur ttal depsits. Federal Banking Laws and Regulatins mandate financial institutins the respnsibility t btain and dcument apprpriate identificatin and ther pertinent infrmatin f their custmers. Prcedures require that all new custmers pen accunts in persn at the Bank. Demand Depsit and NOW accunts (checking accunts) are limited t Nrth Dakta residents. Savings accunts and Certificates f Depsit are available t all U.S. Citizens. The Majrity f Bank Depsits cme frm Tax Cllectins and State Fees The depsit base f Bank f Nrth Dakta is unique. The riginal act f 1919 prvided that all public funds were t be depsited with the Bank f Nrth Dakta. An initiated measure in 1921 changed this by prviding that all plitical subdivisins, with the exceptin f the state itself, make depsits either with private institutins r with the Bank f Nrth Dakta. Because the law requires that all mnies f the state and state institutins must be depsited with Bank f Nrth Dakta, the state des nt have the prblem f allcating funds t varius financial institutins. As described in Sectin 9 f the riginal act: "The Bank f Nrth Dakta may receive depsits frm any surce, including the United States Gvernment and any freign r dmestic individual, crpratin, assciatin, municipality, bank r gvernment". The Bank f Nrth Dakta pays cmparable interest n all depsits whether state r private. 2 Find Bank f Nrth

3 BND Returns Prfits t the State Beginning in 1945 BND began transferring prfits t the general fund. Since then BND has returned ver $555 millin t the general fund. BND is Nt FDIC Insured In cntrast t mst cmmercial banks, Bank f Nrth Dakta is nt a member f the Federal Depsit Insurance Crpratin (FDIC). Nrth Dakta Century Cde prvides that all BND depsits are guaranteed by the full faith and credit f the State f Nrth Dakta. Minneaplis Federal Reserve Bank BND is an nline member f the Minneaplis Federal Reserve Bank. We d check prcessing, maintain a reserve requirement, safe keep all ur Fed bk entry securities and have discunt windw brrwing authrity. Bank f Nrth Dakta Service Areas Lending Services: On behalf f the State f Nrth Dakta, the Bank administers several lending prgrams that prmte agriculture, cmmerce and industry. Financing ecnmic develpment is the thrust f Bank f Nrth Dakta s effrts. The Bank is specifically authrized t assist numerus ther financial institutins in prviding financing t stimulate ecnmic develpment in the state. BND is invlved in tw types f lending: direct lending and participatin lans. BND by statute can d anything any ther bank can d, unless restricted by statute. Mstly by practice we d nt make direct lans. Hwever, legislative actin has given express lending authrity t BND fr: The purchase r acquisitin f bank stck r the frmatin f a bank hlding cmpany. The acquisitin r refinancing f farm real estate by qualified individuals. Assistance with pst secndary educatinal csts (i.e., student lans). All ther lending by BND is thrugh participatin with a lead financial institutin. This lead lender can be any qualified financial institutin - mst ntably a bank, savings and lan, credit unin r Farm Credit Services. 3 Find Bank f Nrth

4 Lending Service prgrams include: (See fr in-depth details.) Farm/Ranch Financing Prgrams Farm and Ranch Participatin Lan Prgram BND's Farm and Ranch Participatin Lan Prgram is funded n tw principles: t serve the agricultural credit needs f the state, and t ensure credit decisins are made n a sund and cllectible basis. This prgram is bradly defined t accmmdate the wide variety f credit needs in Nrth Dakta's agricultural market. Beginning and Established Farmer/Rancher Financing Prgrams Any farmer r rancher will tell yu that the business f agriculture is mre difficult tday than it has ever been. The challenges t the yung r beginning farmer are even greater. Bank f Nrth Dakta can help yu meet thse challenges thrugh ne f a number f farm lan prgrams that makes financing mre affrdable and easier t access. Livestck Retentin/Imprvement Prgrams In rder t psitin Nrth Dakta farmers and ranchers t survive in tday's agricultural climate, Bank f Nrth Dakta ffers assistance t livestck prducers with multiple prgrams. Farm Incme Diversificatin, Value-Added Equity Financing, and Irrigatin Prgrams In anther effrt t blster Nrth Dakta s farms and ranches, Bank f Nrth Dakta has cncentrated n helping prducers diversify their incmes. Guarantee Lan Prgrams fr Farmers and Ranchers Bank f Nrth Dakta ffers tw Guarantee Lan prgrams t farmers and ranchers, the Livestck Lan Guarantee Prgram and the Farm Real Estate Lan Guarantee Prgram. A lan guarantee is an agreement that in the event f default under the prmissry nte, the Bank shall pay t the lender the percentage as described in the specific prgram material referenced under the Farm Real Estate Lan Guarantee Prgram. Business Financing Prgrams Bank f Nrth Dakta (BND) ffers a number f prgrams that make financing easier t access, and less expensive. BND s business financing prgrams include: Cmmercial Bank Participatin Lan Prgram BND's Cmmercial Bank Participatin Lan Prgram is funded n the principles that all lans shuld serve the legitimate credit needs f the state & be made n a sund and cllectible basis. 4 Find Bank f Nrth

5 The Cmmercial Bank Participatin Lan Prgram is generally market driven in terms f the rates, terms and cnditins ffered t a brrwer. In mst instances, BND s participatin under this prgram is needed t assist a financial institutin with a brrwer whse financing needs have utgrwn the legal lending r expsures limits f the riginating lender. Small Business BND has a variety f small business prgrams available. Listed belw is a shrt summary f each. Business Develpment Lan Prgram The Business Develpment Lan Prgram assists new and existing businesses in btaining lans that wuld have a higher degree f risk than wuld nrmally be acceptable t a lending institutin. Beginning Entrepreneur Lan Guarantee Prgram This prgram assists in business start-up financing by prviding a financial institutin with an 85% guaranty f a lan nt t exceed $100,000. Ag PACE Prgram - (Agriculture Partnership in Assisting Cmmunity Expansin) The Ag PACE prgram prvides interest buydwn n lans t farmers wh are investing in nntraditinal agricultural activities t supplement farm incme. The prgram funds are used t reduce the interest rate n lans which have been apprved by a lcal lender and BND. The farmer shall have as his principal ccupatin, prir t applying fr the prgram, the prductin f agricultural cmmdities r livestck. PACE Prgram - (Partnership in Assisting Cmmunity Expansin) The PACE Fund assists Nrth Dakta cmmunities in expanding their ecnmic base by prviding fr new jb develpment. The PACE prgram has tw majr elements: (1) the participatin by BND with a lcal lender in a cmmunity based lan, and (2) the participatin by the PACE Fund with the lcal cmmunity in reducing the brrwer's verall interest rate. Flex PACE Prgram Qualified Businesses - The Flex Pace feature f the PACE prgram prvides interest buy dwn t brrwers that d nt fit int the traditinal definitin f a PACE qualifying business. Under Flex PACE, the cmmunity determines eligibility and accuntability standards. Flex PACE allws cmmunities the ability t prvide assistance t brrwers with a business fcus r need utside f the current requirements f PACE, such as jbs retentin, technlgy creatin with n new jbs, retail, smaller turist businesses and essential cmmunity services. 5 Find Bank f Nrth

6 Guarantee Prgrams fr Businesses The Beginning Entrepreneur Lan Guarantee Prgram This prgram assists in business start-up financing by prviding a financial institutin with an 85% guaranty f a lan nt t exceed $100,000. Business Incentive Prgrams In partnership with an riginating lender, BND takes a lead rle in prviding lan prgrams t encurage the creatin f new wealth, expanded emplyment pprtunities and farm incme diversificatin. PACE Prgram PACE is available t finance the purchase f equipment r real estate, as well as term wrking capital. In cnjunctin with cmmunity supprt, the prgram prvides an interest buy dwn that can reduce the brrwer's rate f interest by as much as 5%. This buy dwn can mean an interest savings f apprximately $462,000 ver the term f the lan. In return, the brrwer must create ne new jb in Nrth Dakta fr each $100,000 f ttal lan prceeds. The PACE prgram nw includes features utlined under the Flex PACE Prgram and Bifuels PACE Prgram. MATCH Prgram MATCH supprts the funding needs f a brrwer whse financial capacity is very strng. This strength must be evidenced by a lng-term credit rating f A r better as determined by a natinal rating agency. Fr the qualifying brrwer, BND ffers a rate f interest equal t.25% t.50% ver an equivalent term U.S. Treasury Nte. The rate can be fixed fr as lng as five years, r may be reset annually. New Venture Capital Prgram Administered by the Nrth Dakta Develpment Fund, the New Venture Capital Prgram thrugh the BND is an innvative financial prgram that prvides flexible financing thrugh debt and equity investments fr new r expanding businesses in the state f Nrth Dakta. BND can fund rapidly grwing cmpanies which require equity funding. Gvernment Guaranteed Lans fr Lenders Bank f Nrth Dakta ffers gvernment guaranty purchase ptins fr thse financial institutins making use f the federal guaranty prgrams f the Farm Service Administratin (FSA), Small Business Administratin (SBA) r, USDA Rural Develpment (RD). These prgrams serve tw purpses. The first is t prvide a belw market rate f interest t start-up r trubled brrwers within the state. The secnd is t prvide a surce f liquidity fr financial institutins. 6 Find Bank f Nrth

7 Gvernment Guaranteed Lan Purchase Prgram The agricultural sectr is served by the Gvernment Guaranteed Lan Purchase Prgram which allws BND t purchase the guaranteed prtin f a fully funded FSA r RD lan. The belw market rate n BND's purchase is set t prvide interest rate assistance t a Nrth Dakta farmer r rancher experiencing cash flw difficulties. SBA Lan Purchase Prgram This prgram is designed t prvide lw interest rates t a business perating within the State. Bank f Nrth Dakta's purchase is cnditined upn the firm authrizatin f the SBA guaranty, and als requires the benefit f the lwer interest rate t be passed n t the brrwer. Cmmunity, Rural, and Reginal Develpment Lan Funds BND manages several special lan funds fr the State f Nrth Dakta. BND administers these funds in cmpliance with requirements established by the agency fr which BND manages the fund r by the legislature. Cmmunity Water Facility Revlving Lan Fund This prgram was established t prvide financing fr cmmunity water prjects when the prject is abve the maximum lan limits set by Rural Develpment. It is als the intent f this prgram t prvide supplemental financing fr federal lan prgrams assciated with cmmunity water prjects. Lans frm this fund are made in accrdance with N.D.C.C. Chapter Develpmentally Disabled Facility Lan Fund This fund assists in the cnstructin f facilities t huse and train the develpmentally disabled, the chrnically mentally ill, and the physically disabled persns thrughut the State f Nrth Dakta. Health Infrmatin Technlgy Fund The Bank administers a $5,000,000 Health Infrmatin Technlgy Planning Lan Fund established by N.D.C.C fr the purpse f prviding lw-interest lans t health care entities t assist thse entities in imprving health infrmatin technlgy infrastructure. This fund is a revlving lan fund. 7 Find Bank f Nrth

8 Bank Stck/Trust Preferred Securities Financing Lan Prgram BND s Bank Stck Lan Prgram prvides financing ptins t accmmdate the acquisitin r refinancing f bank stck f a Nrth Dakta financial institutin. The Trust Preferred Securities Financing Prgram (r TPS) may prvide financing t an investment cmpany created t cmplete a trust preferred securities transactin fr the benefit f a financial institutin lcated within the state. Under either lan prgram, BND is typically a direct lender, but may be a participant in a lan riginated by anther financial institutin. Residential Lans - The Residential Real Estate Financing Prgram prvides a secndary single family mrtgage market fr financial institutins lcated in Nrth Dakta and ffers the peple f Nrth Dakta the pprtunity f keeping their mrtgage lan servicing in Nrth Dakta. Banking Services Bank f Nrth Dakta is a Crrespndent Bank fr mst financial institutins in Nrth Dakta. In this rle, the Bank prvides a secure, cst-effective service with high availability f funds. Currently, the Bank electrnically prcesses mre than 3 millin items per mnth. BND als prvides services fr a number f state agencies. Cash Management fr Respndent Banks and State Agencies BND ffers its Direct Cash Management System. This prcess enables custmers frm financial institutins, and ther eligible crprate and state institutins, the ability t access r btain infrmatin fr managing BND accunts. Services include nline wire transfer ptins, transfers between multiple accunts, intra-day accunt balance infrmatin and custmized reprts. Crrespndent Banking Services Autmated Clearing Huse - BND Autmated Clearing Huse (ACH) sftware is designed t electrnically riginate and receive autmated clearing huse items. Thrugh ur netwrk system, any financial institutin in the state can ffer its custmers the cnvenience f ACH. Check Clearing - BND serves as Nrth Dakta's Central Clearing Huse fr bth in-state and ut-f-state items and assures quick exchange f all checks and drafts. Services and prducts include Check Clearing (Image Exchange Services), Paper Check Prcessing, and Return Item Service. Federal Reserve Bank Settlement Prgram - BND participates in the Federal Reserve Bank Settlement Prgram. Under this prgram, respndent institutins can utilize BND's accunt at the Federal Reserve Bank fr autmatic charge r credit f services with the Federal Reserve Bank. BND, in turn, will charge r credit the respndent's accunt at BND. Financial Institutin Currency Prgram - BND prvides cin and currency t financial institutins within the state f Nrth Dakta that maintain accunts with ur bank. This prcess enables these institutins t btain cin and currency t meet the needs f their depsitrs. 8 Find Bank f Nrth

9 Treasury Services Investments The Investment Department's Federal Funds prgram includes mre than 110 financial institutins in Nrth Dakta averaging a daily vlume f $330 millin. Trust Safekeeping and Pledging Services cver mre than 200 custmers with assets f almst $2.0 billin. The Trust Department prvides Crprate Trust services fr the State f Nrth Dakta and its plitical subdivisins, serving as trustee fr 52 municipal issues with assets f $340 millin. The department als ffers bnd register, transfer agent and paying agent services fr mre than 225 municipal issues with utstanding principal balances exceeding $660 millin. The department serves as an escrw agent fr mre than 330 accunts with assets f $59 millin. Student Lan Services Since 1967, Bank f Nrth Dakta (BND) has been Nrth Dakta s trusted surce fr high quality custmer service and a range f valuable student lan ptins. The Bank wrks with individual brrwers, parents and clleges and universities t assist with the student lan prcess frm applying thrugh repayment, management and cnslidatin f a student lan. Dakta Educatin Alternative Lan (DEAL) Since 1997 BND has made the DEAL lan available t students wh fall shrt in meeting their cst f attendance at a pst-secndary institutin. Brrwers must fill ut the FAFSA and use Federal Student Lan Prgrams first, meet credit criteria and chse between fixed r variable interest rate lans. Students get a hst f benefits when chsing the DEAL lan and Nrth Dakta students, and students chsing t attend schl in Nrth Dakta, d nt pay the administrative fee. Cnslidatin is als an ptin. Prgrams and Services Administered by Bank f Nrth Dakta Student Lans f Nrth Dakta Student Lans f Nrth Dakta (SLND), funded in 1982, is a guaranty agency fr student lans made under the Federal Family Educatin Lan Prgram. SLND is dedicated t insuring student lans against death, disability and default, ur cre functins als include: prmting cllege access fr all students, distributing lan infrmatin t educate brrwers, preventing student lan defaults fr all brrwers, 9 Find Bank f Nrth

10 prviding training and supprt services t industry partners, supprting cmmunity utreach activities, educating students n financial literacy, SLND partners with the Nrth Dakta Cllege Access Netwrk (NDCAN) t prvide yu with quality resurces fr accessing and paying fr cllege. Fr mre infrmatin g t Cllege SAVE Bank f Nrth Dakta administers Nrth Dakta s 529 plan, Cllege SAVE. This higher educatin savings plan prvides many advantages fr students and their families pursuing a cllege educatin. The Nrth Dakta Cllege SAVE plan ffers valuable tax benefits, lw minimums and generus maximum cntributins, a range f investments frm Vanguard and a Matching Grant pprtunity at multiple adjusted grss incme levels. Fr mre infrmatin g t Nrth Dakta Dllars fr Schlars Bank f Nrth Dakta partners with Nrth Dakta Dllars fr Schlars (NDDFS). With BND administering the state chapter and absrbing expenditures, NDDFS can add t the 80-plus lcal Nrth Dakta chapters and disseminate mre student schlarships. Dllars fr Schlars chapters help hmetwn students achieve their educatinal gals by raising schlarship funds, establishing endwments, prviding assistance with cllege readiness and the financial aid prcess, and distributing schlarships each year. Fr mre infrmatin g t Other Affiliatins: G t Access Infrmatin n the Web site at Annual Reprts: Fr a cmplete financial picture f the Bank g t Press Releases: G t Newsletters: T learn mre abut the day-t-day activities the Bank is invlved in g t Access Infrmatin abut the Bank frm Nrth Dakta Century Cde Chapter 6-09 The Bank f Nrth Dakta: Chapter Industrial Cmmissin: Title 6 Banks and Banking: 10 Find Bank f Nrth