The Noahs of Grand Forks

Business owners from Grand Forks, ND tell how their companies were affected by the flood that hit their city last year. While the flood was disasterous for some, it spelled profit for others.

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Postflood reconstruction is a story of struggle and ingenuity

The red river flows north along a curving path between the downtowns of Grand Forks, N. Dak., and East Grand Forks, Minn. This past winter the river was tame, frozen and tucked well within its banks, lacking the ferocity to turn a population of 60,000 into refugees. That's just what happened in April 1997, when the river, gorged with snowmelt, spilled over the cities' reinforced dikes and overwhelmed the Grand Forks area.

As spring approached this year, businesspeople in Grand Forks were still taking stock of lost sales and the devastation to their property. Yet they had reason to be thankful. The vast majority of businesses were back in operation, and some of them have reaped some surprising benefits. (See "Some Blessings") But the flood was no blessing in disguise; it has exacted a tremendous cost. It has left most small-business owners strained and weary and saddled with new, burdensome debt. For virtually everyone--all the Noahs of Grand Forks--struggle and ingenuity have been the currency of survival.

For two of them, banker Randy Newman and baker MaryAnn Hastings, the flood brought profound changes to their lives and businesses--but with very different outcomes. For one the striving has paid off. The other is still striving.

Newman's story begins more than a year ago, on Friday, April 18, when water first topped the dikes protecting downtown, where First National Bank North Dakota was headquartered. Newman, the bank president and CEO, fully expected the downtown to flood, but what happened the next day was beyond everyone's imagination. A fire, likely caused by an electrical malfunction, started Saturday afternoon in a downtown building and quickly spread. It destroyed 11 buildings, 3 of which housed the bank's offices.

As he sandbagged his house and the National Guard evacuated the city, Newman scrambled to reach the bank's senior managers by cell phone. "It felt like a war zone," he says, recalling the smoke and rescue helicopters that filled the sky. "I thought I had lost my home, I knew I had lost my bank, and I thought I had lost my community. I felt like there had been three deaths in the family. That's how emotional it was."

If matters seemed dire to the 44-year-old North Dakota native, they could have been worse. As it turned out, he hadn't lost his house, although he and his family had to move out of it for two weeks. And on the Friday night the waters had closed in, three bank employees managed to truck the bank's central computer system to a branch office in Fargo, 78 miles south. Nobody had anticipated the fire. But the employees had feared that the flood might undermine telecommunications in Grand Forks, paralyzing the bank's computer network. By Saturday night First National's headquarters had gone up in smoke, but its electronic brain was safe and functioning in Fargo.

Newman put the word out on the radio that First National employees, who had scattered to emergency shelters and other locations outside Grand Forks, should call Fargo for instructions. First National temporarily relocated much of its operations and support staff to Fargo. Newman directed his sales and customer-relations staff, who had laptop computers, to begin calling and reassuring customers. "They were using their cell phones, calling businesses, saying, 'How are you doing? How can we restructure your mortgage so your payment doesn't put an additional financial burden on you?" he says.

Since that time, bank officials say, the necessity of working without a home base has actually improved operations. First National's customer-relations staff has learned to rely on house calls, which proved to be more convenient for customers and more effective for the bank in gathering information. "We'd been talking for probably a year to a year and a half about needing to be more mobile and go to the customers," says Karl Bollingberg, the bank's market manager for Grand Forks. "But it almost took the disaster to force it to happen."

While awaiting relocation into new downtown headquarters--the bank's temporary offices are in a converted warehouse--First National is slowly reconstituting thousands of vital records such as mortgages, titles, and personal guarantees consumed by the fire. On its bottom line First National looks surprisingly flush. It collected $17 million in a settlement with its fire-insurance company. Earnings in 1997 increased by 68%, reflecting a capital gain realized because the insurance paid a replacement value for its depreciated buildings.

Looking back at the flood, Newman sounds almost wistful. "It's been said that the ideal bank is a paperless bank with a mobile sales force," he says. "We did that in one day." Those gains, he says, he is determined to preserve.

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