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North Dakota's Banker Will See You Now

Lawmakers view the state-owned bank as a model to boost revenue

Eric Hardmeyer may be the most popular banker in America. Over the last two years officials and advocacy groups in more than 30 states have called the Bank of North Dakota, where he is chief executive officer, to ask: How does the country’s only state-owned bank work? “As the financial crisis deepened and there were liquidity issues around the country,” says Hardmeyer, “our model was looked at a little bit deeper than it ever had been before.”

The Bismarck-based bank was founded in 1919 to lend money to farmers, then the state’s biggest economic contributors, and retains its socially minded ethic by subsidizing loans for those it believes will stimulate growth: startup businesses and beginning farmers and ranchers. The borrowers apply for the loans through one of the state’s 100-plus local banks and credit unions. If they qualify, the community lender issues the loans at the market rate; the borrowers pay a fraction of the interest, with the Bank of North Dakota covering most of the difference. How can the state bank afford the subsidies? Profit isn’t its first priority. “We have a specific mission that we’re trying to achieve,” says Hardmeyer, “that’s not necessarily bottom-line driven.”