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I was happy to read this. ... 165276.txt
National money problems not affecting Bank of North Dakota
Sep 24, 2008 - 09:25:30 CDT
Associated Press Writer
The banking industry's financial woes have not affected the Bank of North Dakota, which expects to post a record $57 million profit this year, its president told state legislators.

The state-owned bank, and North Dakota's banks in general, have maintained conservative management, shunning exotic derivatives and home mortgage loans to people with poor credit, Eric Hardmeyer said Tuesday.
"There are no subprime issues that we're dealing with. Our residential (loan) portfolio is, for the most part, North Dakota loans underwritten very conventionally, with the standard 15 to 20 percent equity," Hardmeyer said.

"We are not feeling the effects that other institutions are, simply because our balance sheet has been conservative in how we handle it," he said. "We've been able to finance our way through this with the growth in state deposits because our economy is doing so well. ... We haven't had to go out and look at other types of funding mechanisms that may put us in riskier positions."

Hardmeyer told the Legislature's interim Budget and Finance Committee on Tuesday that he wants to increase the bank's capital base to 8 percent of its assets by June 2011, when he expects the bank to have $294 million in capital and $3.75 billion in assets.

The ratio is now just over 7 percent, which is acceptable but not as robust as he would like, Hardmeyer said. A minimum ratio is 5 percent.

"As you all have been looking around the problems in the banking industry, capital has become a very important item. It always has been, but more now so than ever," Hardmeyer told lawmakers.

Hardmeyer is forecasting the bank will make a $57 million profit during 2008, compared to last year's record $51.1 million in profits.

Members of the budget panel quizzed Hardmeyer and Vance Taylor, the manager of the state Mill and Elevator, on the two institutions' potential profit contributions to the state treasury.

When they wrote the 2007-09 budget for North Dakota government, legislators penciled in a $60 million profit contribution from the Bank of North Dakota and $5 million from the Grand Forks flour mill. The money will not be transferred until shortly before June 30, when the two-year budget cycle ends.

While the bank expects to make $108 million during the two years, the mill is coming off an $821,607 loss during its last budget year, which ended June 30. The mill made a $5.8 million profit during the previous 12 months.

A committee member, Sen. Raymon Holmberg, R-Grand Forks, who is chairman of the Senate Appropriations Committee, plans to sponsor legislation in the 2009 Legislature to erase the mill's $5 million obligation.

Taylor said the mill could request an increase in its Bank of North Dakota operating line of credit to make the payment.
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