North Dakota banks merge to ensure future profitability

Four North Dakota banks - Citizens State Bank, Grafton-Petersburg; First Capital Bank of North Dakota, West Fargo; First State Bank Langdon and Walhalla State Bank - are combining to create one financial organization.

"This merger got started about a year and a half ago," said Brandi Jackson, vice president of marketing, Citizen State Bank. "Our CEO, Lynn Paulson, came up with the idea. There was already common ownership between the banks. So it made sense to merge for cost efficiencies and make it easier to introduce new products."

For Paulson, the move was about competition. "Our bank was $45 million, doing well and seeing nice profits. But quite clearly, where we needed to go, we couldn't get to at $45 million," said Paulson. "I simply said to my board and my shareholders that if we're not taking a look at acquisitions or merging, we have to take a look at selling. The demographics aren't favorable. We're in a shrinking and aging market. There's a real big difference between surviving and prospering, and I'm not in this business to survive-I'm in it to prosper."

The new $170 million dollar organization will have 69 employees in seven locations: Grafton, Petersburg, West Fargo, Goodrich, Hurdsfield, Walhall and Langdon. Paulson will be the CEO of the combined banks. The new organization will be called Citizen State Bank.

"It's been interesting merging four independent community banks, independent being the operative word. Bringing three holding companies and four banks into one organization held unknowns for us." Paulson said. "But each bank had individually come to the conclusion that this was the right move to make if they wanted to continue to prosper and compete."

The organization has already begun developing new products. "We've got some new investment products. We've been looking at doing a limited trust and we've brought on full-line insurance and Internet banking," Jackson said.

While armed with sound business logic and shareholder approval, Paulson said employees and customers were apprehensive. "There aren't too many good things the word 'merger' conjures up in people's minds. But I think it was less painless than people thought it would be," said Paulson. "Change for anybody is a little difficult. We've got different cultures in these banks and those don't change overnight. The cultural issues, as much as anything, are difficult. But we've got a great staff that's dealing with the change very well."

By Justin Dullum