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Bank of North Dakota reports $16 million book loss; university system recovers $5.6 million in fraud payments
Summary
Bank of North Dakota reported a roughly $16 million book loss tied to investment repositioning; State Auditor staff said the University System made about $5.6 million in payments resulting from fraudulent supplier‑routing changes but recovered the funds and has updated controls.
Rob Pfennig, chief financial officer of the Bank of North Dakota, presented the Bank's College SAVE audit and explained that the bank experienced an approximate $16 million book loss in 2025 after selling low‑yielding securities to reposition the investment portfolio. Pfennig said the bank expects to recoup the loss over about 10 months as investments yield higher returns.
State Auditor Joshua C. Gallion told the committee the North Dakota University System office made roughly $5.6 million in payments tied to fraudulent activity within the supplier administration center database but recovered all funds. Deputy Commissioner and CFO David Krebsbach described the fraud as unauthorized changes to payment routing information; he said the University System has updated internal control processes to require verification and approval for future payment‑routing changes and that local and federal law enforcement agencies were notified.
Mr. Pfennig and audit staff fielded committee questions about accounting treatment and risk management. Jared Mack of Eide Bailly and other auditors also presented related audits for the Bank of North Dakota and trust and loan programs during the meeting.
