Fargo financial institutions join
Two Fargo-founded financial institutions are joining forces.
State Bankshares Inc. -- the parent company of State Bank of Fargo, State Bank of Moorhead and State Bank of West Fargo -- is acquiring Northern Capital Holding Co., presidents of the institutions said Thursday.
Richard Solberg of State Bankshares and H. Michael Hardy of Northern Capital informed employees of their intent to merge the companies in staff meetings Thursday morning.
"Our goal in this was to keep both institutions locally owned -- beyond the lifetime of ourselves," Solberg said. "We're striking an agreement for the Fargo-Moorhead area and beyond for many years to come."
The acquisition is a tax-free, stock-for-stock trade between the owners of the two companies, according to Hardy and Solberg. The deal is expected to close in the first fiscal quarter of 2003, following regulatory approval from the Federal Reserve Board, FDIC and state of North Dakota.
State Bankshares Inc., the largest privately held bank in North Dakota, is owned by Sharon farmer Mickey Snortland, his family, and Solberg.
"The overall intent of this deal is to have these organizations continue beyond anyone's lifetime," said Snortland. "It now has a life of its own. It's bigger than any one individual. It makes business sense."
State Bankshares was chartered as a North Dakota banking company in 1966. Its predecessor was Bankers State Bank and Trust, organized by a number of rural banks to provide trust services.
Northern Capital is owned by Hardy and his family.
The acquisition of Northern Capital gives the State Banks a proven investment and trust department in the Fargo-Moorhead market. Hardy said the merger puts the combined company in a position to compete with the market's other privately and publicly held banking-and-investment institutions.
"There are mergers and synergies taking place in the financial services industry right now," he said.
In a letter distributed to employees Thursday morning, Hardy said, "Northern Capital and its subsidiaries, Northern Capital Management, Northern Capital Trust, Payroll Solutions, and Northern Capital Advisors, will continue as separate entities. The organization, employees and office location will remain. No major changes are anticipated."
The State Banks of Fargo, Moorhead and West Fargo, with their combined deposits and assets, have about one-third of the Fargo-Moorhead banking market, according to the most recent FDIC report. That share has been growing steadily, especially since the 1996 establishment of the State Bank of Moorhead.
A new State Bank of Moorhead, featuring stones hauled from Snortland's farm, opened in 2000.
The State Banks have more than 40,000 savings and checking accounts active in the Fargo-Moorhead banking market.
State Bankshares Inc. has eight full-service banking locations in Fargo, Moorhead and West Fargo, as well as loan offices in Detroit Lakes, Alexandria and Pelican Rapids, Minn. State Bankshares and its affiliates employ 290 people.
State Bank of Fargo is expanding into the second floor of its main office building at 3100 13th Avenue S.W. The main floor of that building is being expanded and new drive-up lanes are being added, Solberg said.
Northern Capital employs 70. Its Fargo offices are in the Pioneer Mutual building at 10th Street and 2nd Avenue North. The company also has offices in Bismarck and Boise, Idaho.
Hardy founded the company in 1987 to serve the investment needs of individuals, unions, insurance companies, foundations and government bodies.
Its services include personal trusts, 401K plans, payroll, flexible benefit plans, COBRA compliance and employee benefit record keeping. Northern Capital has, at a minimum, 50,000 client relationships, Hardy said. The company does payroll for more than 200 area companies.
Solberg, who joined State Bankshares in 1982, has served on the Northern Capital Trust board of directors since the company was established in 1987. "We've always had a good relationship," Hardy said. The two companies have informally referred clients to one another for at least the last five years, he said.
Hardy, who will stay on as Northern Capital Trust president and CEO, said he has had other offers for his company but insisted that it continue to be locally owned.
"I wanted to keep the company in this community and I wanted it to be locally owned," he said.
"He could have put more money in his pocket if he sold it on the open market," said Solberg.
The merged company has no immediate plans for expansion to other markets, Solberg said. But, it will continue to grow as opportunities present themselves.
Readers can reach Forum Business Editor Gerry Gilmour at (701) 241-5560