Bank of North Dakota lays out mission, new capital policy and recommends $212M dividend for 2025–27

Don Morgan, president and CEO of the Bank of North Dakota, told the Appropriations - Education and Environment Division on Jan. 15, 2025, that the bank is clarifying a mission order that places risk management and liquidity provision above pure return, and that the institution adopted a dynamic capital policy to guide dividends and capital buffers.

“We are risk managers. Return is not our top priority,” Morgan said. He described the bank’s mission stack as (1) risk management, (2) providing liquidity to the state, (3) leveraging deposits to support economic development, and (4) generating return as a for‑profit institution owned by the state’s Industrial Commission.

Morgan said the bank holds roughly $10,000,000,000 in assets, keeps about $4,000,000,000 in liquid securities, and leverages deposits into approximately $6,000,000,000 of loans (with core participations of about $4,000,000,000). He told the committee the bank has proposed and the Industrial Commission has approved a capital policy that targets a roughly 12% capital range and that the bank’s recommended dividend for the 2025–27 biennium is $212,000,000 — approximately 54% of the prior two years’ earnings — with a proposed split that includes $140,000,000 to the General Fund and $60,000,000 for buy‑down programs.

Rob Fenning, chief financial officer, presented the bank’s operational change package for 2025–27 and described a requested operations adjustment of about $3,180,000 that includes true‑ups for a July 1 4% staff increase ($641,000), health insurance adjustments (~$439,000), and market‑equity/promotions timing differences (~$2,100,000). Fenning said the total operations request would leave the bank’s 2025–27 operating budget roughly 0.9% higher than the 2023–25 biennium.

Kelvin Hollitheim, the bank’s chief business development officer, summarized the bank’s administration of multiple legislatively directed programs: the Infrastructure Revolving Loan Fund (115 loans, $362,000,000 committed to 71 communities as of Dec. 31, 2023), the School Construction Revolving Loan Fund (65 loans, $527,000,000 committed to 53 districts), and several other loan funds and buy‑down programs. Hollitheim explained how the bank has moved portions of loans into the Legacy Fund to manage cash flow for the Infrastructure Revolving Loan Fund and described demand for additional capital infusions to reach self‑sustainability targets for those revolving funds.

Morgan said the bank will roll out an Ag Disaster Relief Program for 2024 losses that would let affected borrowers amortize operational losses over 25 years at a below‑market rate, and said the bank expects demand for that program.

On capital policy, Morgan and staff described buffers layered on top of FDIC‑style base capital requirements, enterprise‑risk‑management buffers, and additional buffers tied to the bank’s unique constraints (for example, the inability to raise private capital quickly). Morgan emphasized stress testing and a yearly presentation of capital needs to the bank’s advisory board and the Industrial Commission before dividend recommendations are made to legislative leadership.

Committee members asked for additional detail about specific legislatively directed programs and for clarification on some accounting and operational items. No committee votes were taken; the bank’s presentation will be followed by legislative budget work and conversations about cash management and program capital infusions.

Ending: The committee accepted the presentation for follow‑up; the bank will continue to brief the Industrial Commission and legislative leaders on capital policy, program demands and dividend recommendations.