North Dakota program helps small lenders with oil patch lendingBISMARCK, N.D. (AP) — A new program through the Bank of North Dakota is helping community banks combine resources to finance projects in the western oil patch that none of the small banks could do alone.
BISMARCK, N.D. (AP) — A new program through the Bank of North Dakota is helping community banks combine resources to finance projects in the western oil patch that none of the small banks could do alone.
The state-owned bank has now been a part of two multi-bank loans, one of them for a $63 million housing development project in Williston that involves more than a dozen banks, commercial loan officer Tom Redmann told the Forum newspaper.
One of the participants was Garrison State Bank, a small-town bank that never would have been able to get involved in an oil patch project without the backing of the Bank of North Dakota, said Norman Thoreson, senior vice president of the Garrison bank.
The program was highlighted Thursday during this week's Bakken Investor Conference that attracted more than 200 people from around the country and a few foreign countries to Minot.
The energy industry in North Dakota has taken off in recent years as technology has helped companies crack the Bakken oil formation. The boom has led to some challenges, however, particularly a lack of housing for the people streaming into the region from around the country.
Jeff Zarling, president of a business development firm based in Williston and a conference organizer, said community banks in North Dakota don't have the ability to finance multimillion-dollar projects on their own, national lenders don't have a presence in western North Dakota and out-of-state banks are wary of investing.
"We're hoping that is one solution for opening up more commercial lending in western North Dakota," said Zarling, president of DAWA Solutions Group.
The program might also help get more eastern North Dakota banks investing in the oil patch. Banks in the east are interested in investing but need to get more comfortable with the idea, according to Redmann.
"The eastern part of the state is fairly convinced that the western part of the state is just going to fall off the side of the planet," he said. "They're not too sure that this oil play is for real."