Several local banks in the Minot area are some of the safest in the country, according to a recent article released by a financial research and publishing company.
"It's really an honor to be recognized," said Craig Johnson, president of Merchants Bank in Rugby, one of the banks on the list. "It's kind of a nice accomplishment."
Street Authority, in an article by Sara Glakas, identified the safest 359 banks in the United States based on a metric called the Texas Ratio. The article states that the formula was developed by Gerard Cassidy, a financial wizard who used it to correctly predict bank failures in Texas during the 1980s recession and in New England during the recession of the early 1990s. The anlaysis looks at a bank's non-performing assets and its loan-loss reserves.
The closer the ratio gets to zero, the lower the bank's risk of failure. Thirteen North Dakota banks have a ratio of zero. They include Farmers State Bank in Crosby, United Community Bank of North Dakota in Leeds, Liberty State Bank in Powers Lake, People's State Bank of Velva, Farmers Security Bank of Washburn and People's State Bank of Westhope. Other banks are in Edgeley, Forman, Golva, Napoleon and Strasburg.
Terry Zeltinger, president of United Community Bank's Minot and Burlington offices, said local banks in North Dakota are on solid footing because they act carefully.
"We are conservative and do things in moderation," he said. "North Dakota banks have done things in moderation all during this time of frenzy when housing prices were building and all of a sudden burst. We weren't part of that."
Even as this region goes through boom times now, banks are cautious, he said.
"We have to look at each deal and how would this deal be if the oil activity slowed way down," Zeltinger said.
Johnson agreed that North Dakota banks are conservative.
"The other thing is we live in the community and we know what's going on here at all times. We are such an active part of the community, and we have very loyal customers. For most of our employees, this is their hometown," he said.
Paul Hanisch, president of Farmers State Bank of Crosby, said North Dakota values contribute to non-existent loan defaults.
"It's nice to have customers that are honest, and we appreciate that," he said.
The Texas Ratio is just one measurement of bank strength, Hanisch said. The industry also uses other liquidity, earnings and other measurements, which have shown the Crosby bank to be faring well, he said.
The safest of the nation's more than 7,300 banks typically are local banks rather than banks with a national presence.
Texas has the largest number of safest banks with 58. More of the stronger banks are in the Midwest, including 27 in Illinois, 24 in Kansas, 23 in Nebraska and 16 in Iowa. New York had 17 and California 16.
The Street Authority article stated that bank failures in recent years have drawn down the Federal Deposit Insurance Fund that protects the public. Given the pressures on the fund, the article highlighted the safest banks for consumers seeking additional financial security.