BND is a bank owned by the state of North Dakota. It differs from other state agencies in that it is expected to generate a profit for the state. Although the Bank is not insured by the Federal Deposit Insurance Corporation (FDIC), it follows FDIC guidelines for policy and practices. It is structured and operates like any local financial institution, with its success measured utilizing key performance metrics. Financial performance is measured by a number of parameters, but these are examples of key performance metrics utilized by BND:
- Return on Average Assets (ROAA): ROAA is assesses how well an organization uses its assets to generate profits.
- Return on Average Equity (ROAE): ROAE measures the profitability of an organization in relation to the equity retained in the organization.
- Tier 1 Leverage Ratio: Tier 1 Leverage Ratio is used by regulators to measure a bank’s near-term financial health. Tier 1 capital are those assets that can be easily liquidated if a bank needs capital in the event of a significant event or crisis.
BND 101 continued