The reason a small start-up bank from Linton, North Dakota, moved into Bismarck a few years ago was simple, according to BNC National Bank's chief financial officer, Gregory Cleveland: "We needed loan demand." And that's the same reason the $241 million asset bank will establish a Minneapolis presence this fall.
"It's the logical place to be," Cleveland says. "We think we can do a good job in Minneapolis."
BNC National of Minneapolis is expected to open its doors this November and, according to Cleveland, will begin to aggressively work the metro area's small business market. And Cleveland knows that the Twin Cities small business market is large-about 70,000 firms have annual sales under $1 million, and they account for about 84 percent of all metro businesses. With a loan-to-deposit ratio of about 90 percent, those are attractive numbers for BNCCorp, the bank's holding company. "Our market niche is commercial lending. We have to be in an environment where that exists," Cleveland says.
And that's why BNCCorp quickly expanded its operations beyond its 1987 beginnings in Linton, a small, agricultural-based community in south central North Dakota. BNCCorp, now based in Bismarck, also opened a bank in Beach, N.D., on the state's western edge. From the last quarter of 1990 to the first quarter of this year, the bank increased its loan portfolio 183.6 percent to $112.6 million, its deposits 48 percent to $129.8 million and its assets 53.5 percent to $154 million. In just two quarters this year, the bank grew from $154 million in assets to $241 million.
This summer the company raised nearly $10 million in a stock offering, about half of which will be used to open the Minneapolis bank, and this fall it sold its Beach operation to Community First Bankshares of Fargo for $3.9 million.
Part of BNCCorp's strategy when moving into a new area is to hire seasoned lenders with existing portfolios to run the institutions, according to Cleveland. He said BNC National of Minneapolis will be run by two Twin Cities lenders with 40 years of combined experience. The bank's Twin Cities location will be headquartered in downtown Minneapolis and branches may be considered at some time, Cleveland says.
BNCCorp's operating philosophy is that a small bank offering professional, personal service in the commercial lending field can operate successfully in any market, no matter how many other lenders already exist, according to Cleveland. To that end, the bank is looking to expand to Wisconsin and Iowa, as well as throughout Minnesota and the Dakotas. This year the bank was a successful bidder for six former Metropolitan Federal Bank offices in the North Dakota towns of Crosby, Ellendale, Garrison, Kenmare, Stanley and Watford City. First Bank System, which completed its acquisition of Metropolitan this year, has sold 63 former Metropolitan branches.
"Either you're looking or being looked at," Cleveland says about the current spate of acquisitions in banking. "There's no standing still."
BNCCorp has the management and technology in place to operate efficiently as a bank with up to $1 billion in assets right now, Cleveland says, and the bank will continue to expand to meet that goal.
—David Fettig
