Small businesses there secured more PPP funds, relative to the state’s workforce, than their competitors in any other state — more than $5,000 per private-sector worker as of May 8, according to a Washington Post analysis.
In the program’s troubled first round in particular, the state put business lenders in the rest of the country to shame. North Dakota small businesses appeared to have a significant advantage in administration and organization.
What’s their secret? Much credit goes to the century-old Bank of North Dakota, which — even before the PPP officially rolled out — coordinated and educated local bankers in weekly conference calls and flurries of calls and emails.
According Eric Hardmeyer, BND’s president and chief executive, BND connected the state’s small bankers with politicians and U.S. Small Business Administration officials and even bought some of their PPP loans to help spread out the cost and risk.
“They were really expeditious and efficient,” said Robert Hockett, a Cornell Law School professor and a veteran of the Federal Reserve Bank of New York. “There was no leakage — the sort of ridiculous fee-charging that tends to happen when you do it through larger banking entities.” He added later that because BND is a public institution, “it isn’t really designed to maximize revenue lines by finding as many places to assess fees or brokerage charges as possible.”
Public banks are typically owned by state and local governments, which deposit their revenue there. The public banks use those deposits to help local businesses with loans and other services.
But BND offers few retail services or direct loans, with the notable exception of student loans. Instead it partners with local banks, multiplying their lending power and guiding them through the ever-evolving global financial system.
“They’re behind the scenes, supporting us,” said Christie Obenauer, the 47-year-old president and CEO of Union State Bank in Hazen, N.D. When a client needs a loan above her lending limit, for example, Obenauer said she can cover the full value needed by selling BND a slice of the loan. If she did the same with a major private lender, Obenauer said, she would have to worry about the competitor using that relationship to lure away the client. But BND is a public institution, not a competitor. (Obenauer is a member of the bank’s advisory board.)
This patriarchal role has helped small North Dakota banks such as Obenauer’s weather the waves of consolidation that consumed small lenders elsewhere. A Post analysis of data from the Federal Deposit Insurance Corp. shows North Dakota has more banks per person than any other state.
“It’s our job to evolve with our own environment. If I wasn’t changing with it, if I wasn’t evolving alongside the community that I serve, eventually I become irrelevant,” Obenauer said. “The…