Western Cooperative Credit UnionWhile national reports of gasoline dropping to less than $3a gallon had consumers almost everywhere revving their engines forjoy, in North Dakota, the mood was a little different.

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“Some of the oil producers here wouldn't be too excited [byfalling prices],” said Melanie Stillwell, president/CEO of $345million Western Cooperative Credit Union, who oversees the onlyfinancial cooperative in Williston, N.D.

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Until about five years ago, Western Cooperative was a leadingagricultural lender in an area known for its wheat and barleyproduction and little else. But then new drilling technology and anincreasing demand for domestic oil led to the tapping of themassive Bakken oil reserve two miles below those fields and life innorthwestern North Dakota and parts of eastern Montana abruptlychanged.

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Today, Williston and nearby Dickinson comprise the commercialhub of what has become, after Texas, the largest oil-producingstate in the U.S, according to the Credit Union Association of theDakotas and 24/7 Wall St. LLC, an online news source.

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The Bakken reserve is named for North Dakota farmer Henry Bakkenwho owned land where the first well was drilled and pumps anestimated 1.01 million barrels of oil per day, having reached itsbillionth barrel in August, according to a U.S Chamber of Commercereport. The reserve itself is estimated to contain more oil thanall of Saudi Arabia and is likely to produce crude at its currentrate for 30 more years.

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All that light, sweet crude has business booming in Williston,but there are negatives as well as positives to this economicgusher. Western Cooperative still makes agricultural loans, but the market hasn't grown since oilroyalties became the new cash crop for many local landowners.

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That's only one of many challenges facing area residents and thecredit union, Stillwell said.

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“I have been in credit unions since 1986 and I have to say thatthe past five years have been the most difficult in terms offinding ways to meet the challenges,” she acknowledged.

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Some of those challenges are typical to any fast-growthenvironment, while others are unique to Western Cooperative and itsmembers.

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Foremost among those challenges has been the rapid-fire growthsparked by the oil field, first discovered in 1951 but onlyrecently tapped in a significant way. In the past five years,Williston's population of about 12,000 has tripled to somewherenorth of the mid-30s, Stillwell said. The rapid growth has put astrain on area infrastructure and housing.

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“Someone did a national study and found that the most expensiveplace to live in the U.S. was Williston, N.D,” Stillwell said.“Yet, we still have a volunteer fire department.”

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The demand for housing is so great that a three-bedroomapartment, if there are any available, rents for $3,000-plus permonth, according to local home statistics. That may be fine for oilcompany workers that make a minimum of $90,000 per year without ahigh school diploma. But when it comes to service workers,including employees at Western Cooperative, the cost of living hasoften outpaced income levels.

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The local McDonald's made national headlines in 2013 for payingits starting workers $17 per hour in an attempt to keep them fromrunning off to work in the oil fields. Stillwell said the creditunion, which has eight branches in six area communities, pays inthe same range for the same reason.

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“Cost of labor is a big issue and we struggle finding front-lineemployees,” Stillwell said. “The state's unemployment rate is 2.8%,but our county has had less than 1% unemployment for several years.It's very difficult to find employees when you're competing withhigh-wage jobs.”

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The influx of new residents has proved less of an economic boonthan a burden for many in the community, Stillwell noticed. Inaddition to driving real estate prices up, many workers live in“man camps,” which are dormitory structures near the drillingfields, and have no permanent local address. This disqualifies themfrom joining the credit union, according to Stillwell.

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Read more: Big oil paychecks inflate cost-of-living…

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oil rigBig oil paychecks may meanthere is lots of money floating around, but the effect on WesternCooperative's loan demand, while steady, has been mixed, Stillwellsaid.

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“We have a huge demand for real estate loans, but the price ofhomes is quite high,” “CFPBrequirements have made the cost of compliance and the time it takesto close a real estate loan so much longer than it was before.”

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The credit union also is limited by the lack of lending staffrequired to handle loan demand.

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“That's the challenge of doing business in a really busy place,”Stillwell said.

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Consumer loans are hard to attract because members have theability to pay cash even for larger purchases, Stillwell said. Eventhe credit union's agricultural loan portfolio, which once grew at5% to 10% per year, has stagnated, Stillwell said. WesternCooperative has approximately $55 million in ag loans, $20 millionin real estate loans and around $18 million in commercial loans,she pointed out.

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Many of the landowners are making substantial sums in oilroyalties for wells drilled on their land and have either minimizedtheir farming efforts or are covering costs for which theypreviously would have taken out loans.

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The loss of that loan growth is further complicated by depositchallenges each time a landowner comes in to deposit a royaltycheck, some of which range between $3 million and $5 million,according to some oil production industry estimates.

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“We've had to tell many of them that we can't accept the fullamount and that they should consult a financial planner,” Stillwellsaid. “Sometimes, they don't understand and say, 'But this is mycredit union and I've always come here.'”

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Controlling growth has been a struggle over the past five years,according to Stillwell. At times, the credit union has grownbetween 25% and 30% at over a short period of time, and Stillwellhas had to put the brakes on growth more than once.

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The difficulty with making consumer loans has left WesternCooperative with $160 million of its $345 million asset level invarious safe investments, according to Stillwell. The $185 millionin total loans has led to a loan-to-share ratio of 50%, much lowerthan the 80% to 90% Stillwell would prefer. Still, the creditunion's 9.5% equity ratio is strong.

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“NCUA understands because they're seeing the same thingthroughout the state,” Stillwell said. “But they aren't looking atthe fact that half of our assets are not at risk. They're sittingin a fairly liquid investments or cash accounts, and our CAMEL rating is good,” but would not disclose it due to NCUArestrictions.

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Despite the challenges posed by the oil boom, there are alsosome slivers of success, Stillwell said, not the least of which isincome and opportunities for the next generation of workers. Whilesome young people struggle elsewhere to find well-paying jobs,those who live in Williston may have their future all sewn up.

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“There's a lot of opportunity for the 25-to-40 year olds,”Stillwell said. “They're already finding themselves in managementjobs they otherwise wouldn't have gotten at that age just becausethe demand is so great.”

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North Dakota's oil industry will continue booming for years tocome, she predicted. Even if prices go down and active drillingceases, there will still be good jobs in oil production demandingboth trained and untrained workers.

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Meanwhile, Western Cooperative has learned to prosper and safelygrow in the midst of Williston's boomtown mentality.

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“We've never seen something like this before and to me, it's alla little bit of a work in progress to me,” Stillwell said. “We hadto start making adjustments and going day by day. Now we're back tocontrolling the level of our growth and gaining stability in thework force.”

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Then, of course, there's all the money. For a time, it wasrumored that General Motors sold more Chevy Corvettes in Williston,N.D., than anywhere else in the world. That was news even toStillwell.

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“I don't know about that, but it sounds like something thatcould very well be true,” she said.

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