A banker's perspective on economic development

The following address was given before the State of the State Conference held in Bismarck, N.D., in January. Reprinted with permission of the author. This is the second in a series of guest columns that address the problems and solutions facing Ninth District rural communities. We welcome contributions to this series. Others columns in the series: Main Street USA's economic slide isn't just a rural problem fedgazette, January 1995 Community development: an entrepreneurial approach fedgazette, July 1995

I have been a banker in Hazen for 26 years, one-half of my life. I have had the privilege to be president of our bank for the past 15 years.

I distinctly remember walking out of a coffee shop in Hazen in the winter of 1971 and there wasn't one car on Main Street at 2:30 in the afternoon. I commented to the grocer who was with me that perhaps we should be frightened ... but we weren't ... life was good.

Hazen had a population in 1971 of 1,230 people and small scale coal development. My work day started at 8:30 a.m. and I was most often home by 5 p.m. Production agriculture was stable, as was our energy economy. Our bank had $10 million in assets.

Most of you know that we experienced tremendous impact in the late '70s and early '80s followed by a bust in both energy and agriculture in the late '80s.

Today, Hazen is a city of 3,000 people. We live in a county that has the highest per capita income of any county in North Dakota. Our bank has $45 million in assets. My work day now begins at 7 a.m. It is the exception when I don't work at the bank every evening after dinner. We have never worked harder in Hazen, in Mercer and Oliver counties than we have done in the past five years to keep our city and our counties viable.

I have a real strong motivation. If the city of Hazen, Mercer County and Oliver County succeed, our bank will be a benefactor of that success.

One-third of my work now involves economic development initiatives. I serve as chairman of a two-county economic development group called Mercer-Oliver Economic Development. I am past chairman and a member of the board of Hazen Community Development. I serve on the Board of Directors of the Lewis & Clark Regional Council's CAPITAL Fund and the Community Development Loan Fund. I serve on the Community Bankers Council of the American Bankers Association, a group which consists of two bankers from every state in the country. We get together three times a year to discuss how we can keep community banks viable as we approach a new millennium.

I share these bits of trivia about my life not to solicit your sympathy, but simply to make this point: It is the best of times. It is the worst of times. Never in my career has it been more challenging to lead a bank. Never has it been more fun to be involved in determining the future of our bank and our city.

There are three things that motivate me and the leadership team in our city:

1. We recognize that the world by the year 2000 will be radically different from what it was in 1990.

2. We recognize that the status quo will not sustain us. Our energy economy is as stable as it has been in a decade. We have a cadre of leaders of the major businesses in our city that make me darn proud. Yet, we all recognize that we must aggressively work to retain, expand and attract jobs that provide a living wage.

3. We have completed an assessment of our city and of all of North Dakota. We understand that North Dakota will only have 50 viable cities remaining by the end of the decade. We will be one of them.

Enough of my Hazen Chamber of Commerce talk. I was also asked to speak about the role of the community banker in supporting economic development. That role has many facets:

1. The bank must be in a leadership role. If you as the CEO do not have the ability or interest to be actively involved, then assign those responsibilities to a senior staffer. Empower that individual by making time available from the normal work day and give that individual authority to represent the bank.

2. Active involvement with economic development doesn't mean you have to engage in risky, imprudent lending. But, it does mean that you should give strong financial support to economic development organizations and to projects. Our bank pays annual dues to both Hazen Community Development and to Mercer-Oliver Economic Development. Additionally, each time a project in our service area is in need of financial backing, we expect to be involved in providing some of that support. Active involvement also means that the banker must be aware of all state and federal programs that are available to banks and to communities.

I was also asked to address the types of cooperation by lenders that can increase the level of economic development.

Not in any particular order:

1. SBA Loan Programs. Our small bank is on the list of top 10 banks in North Dakota that use the SBA loan programs. It is also my observation that the SBA has moved aggressively forward to be of assistance to our industry. Our area would be at a devastating disadvantage if we did not have SBA as a willing partner in our efforts.

2. Bank of North Dakota. Our bank has $2 million in farm and business loans in participation with the Bank of North Dakota. ... Without BND's programs, our area would suffer.

3. Minot Magic Fund. Our city has used their marketing match dollars to promote our city. Our two most important new projects, a telemarketing company and a target manufacturer, received substantial dollars from the Magic Fund. We look to Minot as a partner in our economic development efforts ... oftentimes as an equity partner.

4. North Dakota Future Fund.

5. Lewis & Clark Regional Council. We look to the three funding pools of the Lewis & Clark Regional Council as a major source of funding for our economic development projects. We use them often. Equally important, we use two of their economic development specialists for technical support for our projects.

6. Ag Products Utilization Committee.

7. Small Business Development Center. ... [the] assistance to us in developing business plans is absolutely critical.

8. Bismarck State College's Small Business Management Department. ... If you visit with our commercial lending staff, they will tell you that they immediately know when one of our business customers has been a [Small Business Management Department] student ... they understand their balance sheet, they know something about inventory control and they have dating of their accounts receivable.

When I read The Bismarck Tribune and of the proposals being circulated in the State Capitol to gut North Dakota's economic development game plan, I break into a cold sweat. North Dakota is just beginning to reap the rewards of a cooperative effort. To deviate from that game plan now is economic development deprivation for rural North Dakota.

Hazen is a home rule city. We have a strong economic development group in Hazen and in the two counties. But we can't do it alone. We simply do not have the financial and people resources to get the job done without the types of cooperation I've just discussed with you.

North Dakota needs all of the entities if we're going to have a state that has strength in both its urban and rural sectors.