I continue to be amazed at how well the economy is doing in North Dakota compared to the rest of the country. Amazing what happens when a good part of your state is an oil field.
Here is the latest news on the overall economy. Pretty dismal. By contrast, read these remarks by Mary Erman, chief operating officer of Starion Financial in Bismarck. Erman was elevated to president of the Independent Community Bank of North Dakota last week, when the group conducted its annual convention. Here is what she said about the state’s economy:
In looking at the North Dakota banking industry, I think we need to take note of how Independent Bankers have been committed to supporting their communities and serving their customers with integrity and good financial advice. We are blessed with a thriving economy – some of which we should take credit for due to our practices of conservative sound banking.
Isn’t it fun to see North Dakota in national publications – the July 12th Newsweek included an article titled “The Great Great Plains” noting North Dakota’s unemployment for May at 3.6 percent compared to national unemployment at 9.7 percent. The article also reported that Bismarck and Fargo are both in the top 10 of close to 400 metropolitan areas, according to data analyzed by economist Michael Shires for Forbes. Much of the growth has come in high paying jobs – just in Bismarck, jobs in professional and business services have shot up 40 percent.
We are no longer viewed as the “Fargo” from the movie anymore – and do we hear anyone say “Buffalo Commons”? Our very own “state owned” Bank of North Dakota has been in the national media and inundated with calls on why they are so successful.
The strength in the energy industry has brought opportunities and challenges. A flourishing ag economy and new manufacturing opportunities are having a positive impact in North Dakota small towns where independent bankers are ever involved in economic development and community support.
Job Service N.D. showed a growth in our labor force of 4,000 since June 2009 translating into increased tax dollars, more consumer spending, and more deposit dollars while the Fed Gazette noted that N.D. shows the least loss of consumer borrowing in the 9th district – a recipe for a sound economy.
On a more regional basis, Earnie Goss of Creighton University in Omaha released his Rural Mainstreet index yesterday for the month of August. It was down, and many bankers indicated they expect the country to return to recession in 2011.
More than four in 10, or 43 percent, said they thought a 2011 recession was likely or very likely. Only 26 percent indicated that a 2011 recession was unlikely or very unlikely. According to Frank Sullentrop, president, Legacy Bank in Colwich, Kan., “There is too much uncertainty (coming from Washington). Businesses do not like to take financial risks in uncertain times.”
But many signs were positive or neutral. The survey reports:
The farmland-price index moved above growth neutral for a seventh straight month to 55.3 from July’s 52.5 and June’s 54.7. “While Rural Mainstreet businesses are experiencing downturns in economic activity, farming income is holding up much better with resulting upturns in farmland prices,” Goss said.
The farm equipment-sales index rose to 52.7 from 51.8 in July. “Farm income will depend heavily on the value of the dollar. As long as we don’t experience any significant upward moves in the value of the dollar, I expect farm income to continue to grow for 2010,” said Goss, the Jack A. MacAllister Chair in Regional Economics at Creighton.
Many bankers reported very healthy crop yields. For example, Terry Engelken, CEO of Federation Bank in Washington, Iowa, said, “Our county ranges from excellent looking crops to some areas that were too wet to plant.”
Todd Douglas, CEO of the First National Bank in Fort Pierre, S.D., reported, “Although most area row crops look good, grass hoppers have caused damage west and south in our area.”
For a sixth straight month, all bank indicators were above growth neutral. The loan-volumes index increased to 54.2 from 53.1 in July. For August, the checking-deposit index improved to 59.1 from July’s 54.6. The index for certificates of deposit and other savings instruments slipped to 54.2 from July’s 55.4. Larry Winum, president of Glenwood State Bank in Glenwood, Iowa, reported that individuals and businesses are focusing on reducing their debt levels and cutting expenses, and as a result are borrowing less.
The August hiring index increased to a still weak 45.9 from 45.4 in July. “Most states in the region continue to lose jobs. Over the past year, Rural Mainstreet has lost approximately 3.5 percent of its total employment,” said Goss. Dale Bradley, CEO of Citizens State Bank in Miltonvale, Kan., echoed much of the sentiment saying, “The economy is certainly not out of the woods yet.”
Much like other elements of August’s survey, Rural Mainstreet retail sales declined to 40.2 from a July reading of 41.7. The economic confidence index, which reflects expectations for the economy six months out, slipped to 46.0 from 52.4 in July and 56.1 in June.
For a second straight month, the new home sales index sank to 38.8, down from July’s 41.7 and well down from June’s 56.1 and May’s 58.8. “This is the weakest home sales reading that we have recorded this year,” said Goss.
And Larry Rogers, president of First Bank of Utica, Neb., is concerned that increasingly, people seem to be more willing to walk away from their debt obligations.
Each month, community bank presidents and CEOs in nonurban, agriculturally and resource-dependent portions of the 10-state area are surveyed regarding current economic conditions in their communities and their projected economic outlooks six months down the road. Bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming are included.