A capital idea: Options abound in financial sector

Gauging the current financial climate can be tricky these days. Not only are we in the throes of a major economic strife of international proportion, but some of the people and organizations you want to talk to are busy trying to figure out just how they will survive. A case in point: calls made to Merrill Lynch were cordially received the week of September 7, but on September 15 Forbes.com was reporting that Merrill Lynch had been purchased by Bank of America, Lehman Brothers was filing for bankruptcy protection under Chapter 11, and American International Group (AIG) was looking for a buyer.

From Matt Engen, resident director for Merrill Lynch in Fargo, ND: “It’s certainly a challenging market right now. In our office we’re somewhat removed from the larger picture, yet we’re becoming more advisers than stockbrokers, which is what our clients need more than ever. This credit crisis is definitely bigger than most people expected.”

Some things, however, continue rolling along on the Northern Plains.

The Bank of North Dakota, the nation’s only state-owned bank, has been reporting robust activity and has extended its outreach to North Dakota students through its Student Loans of North Dakota with a new, three-year agreement that provides every middle school and high school in the state with access to a software program for career exploration, education planning, and test preparation tools (like the ACT tests).

“This is a valuable investment in North Dakota’s future and illustrates Bank of North Dakota’s commitment to North Dakota’s education system,” remarks Eric Hardmeyer, president of the state-owned bank.

Of course, for traditional and even some unusual growth demands by new and existing businesses that seek to expand, the U.S. Small Business Administration has a new set of tools designed to help rural banks with minimal paperwork as well as a program specifically intended for military veterans and their spouses. In this region, the SBA is often involved in assuming some risk from local banks in order to make a business expansion loan more viable for consideration and action.

The United States Department of Agriculture (USDA) Rural Development program is also a willing participant in funding ventures that benefit rural America, with Clare Carlson (in photo with tie), rural development director for North Dakota, recently awarding $924,000 in funding from First International Bank for Northern Grain Equipment in West Fargo on September 10. The funds assisted in the construction of a new $1.4 million headquarters for its 56 employees. According to Steve Haman of Northern Grain Equipment, the company is doing much more export sales in countries like Italy and Ukraine, thus making it more attractive to capital seeking a home.

Entrepreneurs and expanding business operations are still finding a source of funds, in some cases from unusual sources like the student-run Dakota Venture Group on campus at the University of North Dakota’s Center for Innovation. Initiated and funded by North Dakota natives Bart and Lynn Holaday, the Dakota Venture Group completes all due diligence, makes the final investment decision, and negotiates term structures for investment deals.

Holaday also works with RAIN Source Capital of St. Paul, MN in angel funds that have helped round up angel investors in Grand Forks, Fargo, and Bismarck. Working weekends and evenings, student members of the venture group have earmarked 50 percent of the $300,000 fund for student-run businesses. Part of their mentoring comes from Bruce Gjovig, founding director of the Center for Innovation.

Another angel investing company, Wingspan, was begun this spring by the Brown Corporations in Grand Forks. While Wingspan offers capital funding for start-ups, it also provides access to marketing and advertising personnel, accounting, legal, and IT services … as well as office, warehouse, and operating space.

Information technology is also making it more convenient for consumer and business banking customers to access their accounts and conduct business on a 24/7 basis. One of the region’s larger financial service firms, Alerus Financial based in Grand Forks, has recently initiated a mobile phone banking service called Alerus Mobile Access, allowing customers to review accounts, transfer money, receive alerts, and additional communications by text messaging. The service is free and is also being developed by other banks in the region.

There are still many financial advisors and other credible sources for business owners and individuals to utilize for financial services, including a family-owned business, Private Wealth Group, which has a 30-year history and now a new office in a restored Victorian house in south Fargo.

“Our industry is pretty complicated to most people,” acknowledges Michelle Feland , RJFS, wealth manager at the independent firm started by her father, Mike Strand, in the mid-70s. “We work with a select group of families and closely held businesses, helping them manage their financial goals.”

Affiliated with Raymond James, founded in 1962, Feland and her husband Chris round out the management team that remains independent and they offer securities and investment advisory services through Raymond James Financial Service, Inc. Member FINRA/SIPC.

“Our independence is our main asset,” she says. “Because Raymond James stayed out of the subprime mortgage mess for the most part , they might have more credibility, and most of their chief economists are predicting volatility through 2009. As always, long-term investors should maintain a diversified portfolio ”

While retired clients are among the most nervous right now, most of them understand how important it is to remain invested to combat inflation, according to Feland, who notes that business owners who are clients haven’t experienced a downturn in the local economy.