This is not a feasibility study. It is a rough order-of-magnitude sketch to ground the public bank conversation in financial reality. A full feasibility study is a Phase 2 deliverable that should be commissioned before any public bank legislation is introduced.
State operating deposits available for redeployment: Minnesota’s state government maintains significant operating deposits across multiple commercial banks. Total state deposits are estimated in the range of $8–15 billion. This figure requires verification against Minnesota Management and Budget or Department of Finance records before this appendix is shared publicly — it is an order-of-magnitude estimate, not a confirmed Treasury figure. A target of 20–30% redeployment to a public bank would yield a deposit base of approximately $2–4 billion at full scale.
Initial capitalization: The Bank of North Dakota was initially capitalized at $2 million in 1919 (approximately $37 million in 2026 dollars). A Minnesota public bank would likely require $200–500 million in initial capitalization through a combination of legislative appropriation and revenue bond issuance, reflecting the larger state economy and the need to achieve minimum lending scale quickly.
Net interest margin: The BND has historically achieved net interest margins of approximately 2.5–3.0%. A conservative projection for a new institution in a more competitive banking environment would be 2.0–2.5%.
Lending model: Primarily wholesale — lending to community banks, credit unions, CDFIs, and the Ownership Economy Finance Authority — not retail. This is the BND model and the politically viable model (it avoids direct competition with commercial banks).
| Year | Deposit Base | Loan Portfolio | Net Interest Income | Operating Costs | Net Income |
|---|---|---|---|---|---|
| 1 | $500M | $200M | $4–5M | $8–10M | ($4–6M) |
| 3 | $1.5B | $800M | $16–20M | $10–12M | $4–10M |
| 5 | $2.5B | $1.5B | $30–38M | $12–15M | $15–25M |
| 10 | $3.5B | $2.5B | $50–63M | $15–20M | $30–45M |
| 15 | $4.0B+ | $3.0B+ | $60–75M | $18–22M | $40–55M |
These are illustrative, not projections. Actual performance depends on factors including: the state’s willingness to redirect deposits, credit quality of the loan portfolio, interest rate environment, operating efficiency, and political stability of the institution.
The BND comparison is instructive but imperfect. Important differences:
A Minnesota public bank can plausibly become a significant revenue source for the state — but not quickly. Break-even likely requires 3–5 years. Meaningful net income ($30M+/year) likely requires 8–12 years. The $100–200M/year range cited as comparable to BND performance is achievable only at full maturity (15+ years) and only if the deposit base grows substantially beyond initial targets.
The honest case for the public bank is: it is a long-term infrastructure investment that, once mature, generates permanent revenue without requiring legislative appropriations — but it requires patience, initial investment, and political durability through its vulnerable early years. The coalition and legislative champion must understand and accept this timeline.
Before Phase 3 legislation is introduced, commission a rigorous feasibility study covering:
This study should be commissioned in Phase 2 (years 3–7), funded through the Finance Authority, and conducted by an independent financial advisory firm with public banking expertise. It is the evidentiary foundation for Phase 3 legislation and should be completed at least 12 months before any public bank bill is introduced.