A banking company in Bismarck, N.D., is eyeing new Midwestern markets as part of a plan to double its assets in five years and bury a lending scandal.

BNCCorp, a $400 million-asset holding company, plans to build a branch in an as yet unchosen Minneapolis suburb next year and may also enter Sioux Falls, S.D., or Omaha. Construction has begun on a branch in Fargo, N.D., that is scheduled to be completed by February.

"We have tremendous opportunities for growth," said Gregory K. Cleveland, chief financial officer of the 11-year-old company. "We want to be in a strong competitive position in all of our markets."

BNCCorp aims to increase earnings by at least 15% per year, primarily by improving fee income, Mr. Cleveland said. Noninterest income was $1.6 million in the first quarter, up 39% from the same period last year.

About 35% of the company's first-quarter fee income was generated by insurance sales. BNCCorp plans to expand its insurance offerings this year by acquiring an agency in Fargo. The deal is expected to be announced in a few weeks, Mr. Cleveland said.

The finance chief and chief executive officer Tracy J. Scott spoke Tuesday to stockbrokers and investors in Chicago. To drum up interest in the company, the executives are giving similar presentations in four midwestern cities this spring.

BNCCorp has been dogged in recent years by a lending scandal. In 1996, a senior lender reportedly made $1.5 million of fraudulent loans to a single borrower. BNCCorp fired her in April 1997 and has since charged off a portion of the loans and increased its loan-loss provision. The company so far has recovered $900,000 from its bonding agent and sued the former employee.

But BNCCorp has faced questions about its asset quality ever since. Mr. Cleveland said the concerns are unfounded. "This was an isolated case," he said.

The company's stock price has also been a problem. Its shares have been trading below book value ($10.47 a share) since early February, and the price remains less than half its 52-week high of $20.75, reached last May. At midday Wednesday, the shares were trading at $8.75.

An analyst who covers BNCCorp predicted its stock price would rebound if the company carries out its expansion plans.

"Essentially I agree with their strategy," said Ben B. Crabtree, an analyst at Dain Rauscher Corp. in Minneapolis. "It's going to depend on their execution."

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