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Measuring the Impact of the Bank of North Dakota (Graphs)

| Written by Stacy Mitchell | 9 Comments | Updated on Jul 1, 2015 The content that follows was originally published on the Institute for Local Self-Reliance website at

The only state-owned bank in the country, the Bank of North Dakota (BND) has a mission to “promote agriculture, commerce, and industry” and “be helpful to and assist in the development of… financial institutions… within the State.”

With a $3.9 billion lending portfolio (see graphs 3 and 4 below), BND is a significant source of financing in the state.  Almost all of its business and agricultural loans are made in partnership with locally owned banks and credit unions, thus boosting the overall lending capacity of these community institutions and giving them added strength in competing against large out-of-state banks.  In addition, BND buys mortgages and offers student loans at interest rates significantly lower than those available in other states.

Thanks in large part to BND, community banks and credit unions are much more robust in North Dakota than in other states. The state has more local banks per capita than any other state.  And, as the second graph below shows, small and medium-sized banks and credit unions — almost all of which are locally owned and headquartered in the state — hold 83 percent of the deposits in North Dakota.  Nationally, small and medium-size banks and credit unions account for just 29 percent of the market, while giant banks control 58 percent.

Over the last 21 years, BND has generated almost $1 billion in profit, with nearly $400 million of that, or about $3,300 per household, going into the state’s general fund to support education and other public services.

Learn more about the history, structure, and impact of the Bank of North Dakota.




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About Stacy Mitchell

Stacy Mitchell is co-director of the Institute for Local Self-Reliance, and directs its Community-Scaled Economy Initiative, which produces research and analysis, and partners with a range of allies to design and implement policies that curb economic consolidation and strengthen community-rooted enterprise.  She is the author of Big-Box Swindle and also produces a popular monthly newsletter, the Hometown Advantage Bulletin.  Connect with her on twitter and catch her TEDx Talk: Why We Can’t Shop Our Way to a Better Economy. More

Contact Stacy   |   View all articles by Stacy Mitchell

  • Tom Hagan

    As shown in this excellent collection of charts, local banks are thriving in North Dakota.

    There is another story that needs to be told about North Dakota, more directly concerning the workings of its publicly owned bank.

    In addition to promoting the growth of community banks, the Bank of North Dakota directly saves the citizens of the state a ton of money. It does this by using normal deposits from the state to fund loans the bank makes, largely through other local private banks in the state.

    Interest from those loans, which elsewhere leaves the state on a one-way trip to big Wall Street banks, instead stays in the state. The interest money flowing back to the Bank of North Dakota flows ultimately back into the state treasury, greatly relieving its budget.

    The BND has worked out its partnershjip arrangements with local banks in the state over many years. So local banks can fund many more projects than they otherwise could, and they can be more selective in picking projects that benefit the economy of the state.

    But any state can get off the ground quickly and benefit almost immediately from establishing a state-owned bank by using its early deposits to buy up already outstanding municipal bonds issued in the state. Its like throwing a gigantic switch: tax money now collected to pay interest on those bonds instead of being sent off to Wall Street is suddenly diverted to flow into the bank and stay in the state.

    Result: infrastructure costs are almost halved, because the long term debt used to finance infrastructire improvements – bridges, schools, etc. – results in interest payments that add up to about half the total money paid back to bond holders. When the state is the bondholder, it collects that interest, so it saves about half the cost it has been paying for infrastructure.

    Who can be against that? Schools, roads and bridges, at half price to the taxpayer! The only folks who don’t like this are the Wall Street bankers. Local bankers favor the whole idea – they are supporters of the publicly-owned Bank of North Dakota.