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It’s no secret that North Dakota has been experiencing rapid growth since the Bakken oil boom began about eight years ago.

And banks aren’t immune to that growth.

Total deposits in state-chartered banks in North Dakota totaled $7.7 billion in 2006, and nearly doubled to $13.7 billion in 2012, according to the North Dakota Department of Financial Institutions. Meanwhile, the number of banks remained relatively the same during that time, decreasing from 80 to 75.

But while bankers said deposit growth can be an indicator of the financial health of the state, it can also present some challenges.

“Finding good quality loans can be a challenge,” said Robert Entringer, who chairs the DFI’s banking board. “Basically, finding a way to put that money to use.”


Among the banks that has seen deposit growth increase significantly since the end of 2005, just before what’s considered the start of the oil boom, is Choice Financial based in Grafton, N.D. Deposits there increased from $282 million to $585 million by March, according to the Federal Deposit Insurance Corp., or FDIC.

Brian Johnson, Choice CEO, said certain industries have seen more loan growth than others over the past few years. He said the bank’s portfolio was roughly 70 percent agriculture-related 10 years ago, whereas it’s less than half today.

He said Choice has seen growth in residential real estate and hospitality over the past few years.

“The urban growth has brought us more diversity to our portfolio,” Johnson said.

Rick Clayburgh, president and CEO of the North Dakota Bankers Association, said that’s not uncommon. He said he’s talked with bankers who previously focused on agricultural lending but now are seeing more real estate loans.

“With the amount of deposits that have come into our banks, in order to maintain positive ratios they need to look for various sources of lending,” he said.

Meanwhile, total deposits at Grand Forks-based Alerus Financial grew from $557 million at the end of 2005 to $1.2 billion in March.

“We’re growing as our communities and our customers are growing, primarily on the east,” said Randy Newman, CEO and president of Alerus. He added that banks in the western part of the state, where construction and new investment has skyrocketed over the past few years, may be more challenged by rapid growth in deposits.

Steve Swiontek, president and CEO of Gate City Bank based in Fargo, said some banks in the western part of the state have limited the amount of deposits they would take in the past. 


Meanwhile, North Dakota has seen a number of bank acquisitions and mergers over the past few years. That includes an Iowa firm acquiring banks in Crosby and Tioga.

A firm from New York City has also applied to purchase the National Bank of Harvey, according to David Fettig, a spokesman for the Federal Reserve Bank of Minneapolis.

“We haven’t seen that for quite a while,” Entringer said of North Dakota banks being acquired from out of state. He said that may be happening now because of the strong economy in North Dakota.

Choice Financial is also continuing to expand its footprint across North Dakota. After acquiring Great Plains National Bank and its five branches earlier this year, it recently opened a loan production office in Bismarck.

Bankers largely pointed to a strong economy driving many changes in the industry here, along with increased federal regulations stemming from the latest financial crisis.

Swiontek said mortgage lending is an important part of their business, and cities in the eastern part of the state have been strong in that category.

“This economy... it’s just not in the western part, it’s all over the state,” Swiontek said.