Banks pitch in with loans and aid for swamped clients.

CHICAGO - From sandbagging to small-business lending, midwestern community bankers are furiously coping with the floods that have engulfed their customers and, in some cases, even bank buildings and branches.

Up and down the swollen Mississippi, bankers have been rolling up their sleeves to do the most direct type of community service, bailing out borrowers' basements, moving furniture, and distributing food and water to the needy.

"Everyone at the bank has had to leave their duties at one time or another to shovel sand, haul bails of hay, and reinforce the levees," said Paul Pogue, president of North Adams State Bank of Ursa, Ill.

Billions in Damage

Losses from the torrential rains and flooding are estimated to top $2 billion and may go as high as $5 billion, most related to lost or unplanted crops. President Clinton asked Congress to appropriate $2.5 billion in aid.

Regulators are encouraging lenders to assist in rebuilding their communities. The Office of Thrift Supervision issued a forbearance order Wednesday for thrifts in eight states, and the other regulatory agencies are drafting similar relief guidelines.

In the meantime, many bankers are offering emergency low-interest loans to help customers cope.

The lowa Bankers Association has set up a referral program to help connect borrowers with low-interest loans and other assistance. In that disaster-stricken state, more than 36 banks have crafted emergency flood-relief loans with interest rates as low as 4%.

Larger regionals, from the Marquette Banks of Minnesota to Boatmen's National in St. Louis, have developed well-publicized aid programs. Boatmen's on Thursday announced a plan that includes expedited processing of loan applications, discounted rates, and deferred repayments on many consumer and commercial loans.

"Banks are trying to loosen up loans to give people some cash in their pockets," said Richard Goodson, president of the lowa League of Savings Institutions.

Five-Year Loans at 5%

In addition to running sump Pumps and shoveling, Daryl Barklow, president of East Dubuque (Ill.) Savings Bank, has been offering 5% five-year loans to residents of his river town. So far he's had five applications and 20 inquiries.

"A lot of people have water in their basements and have lost their furnaces, heaters, washers, and dryers," said Mr. Barklow.

Other banks are allowing more time for loan repayments and waiving some service fees.

"On a case-by-case basis we will exercise leniency and eliminate service charges until borrowers get back on their feet," said Dick Schroeder, a vice president at Iowa State Savings Bank, Clinton.

Calls for Volunteers

State banking groups affiliated with the Independent Bankers Association of America are encouraging lenders in areas unaffected by the floods to volunteer their services. The bankers are asked to help victims fill out Small Business Administration paperwork at relief centers. After less than a day's notice, the Community Bankers Association of Illinois signed up three volunteers, and more are expected.

"Everybody in town is helping out in whatever way they can," said Louie McLelland, executive vice president of Town and Country Bank of Quincy, Ill.

Quincy is one of several towns along the Mississippi that depends on workers from Missouri and frets about the possibility that the remaining bridge outside of St. Louis that connects the two states will be closed down.

New Meaning to |Full Service'

Many bankers have had to lend more than just their underwriting skills to soggy citizens.

In Hannibal, Mo., MCM Savings has been functioning more like a restaurant than a bank. The thrift has been preparing 150 lunches for national guardsmen and volunteers, and its employees baked 180 bags of cookies for hungry relief workers.

Palmyra Savings and Building Association used its parking lot to fill sandbags to bolster a levee in the nearby village of Canton. Employees pitched in to fill more than 2,000 bags.

Banks further from the front lines have launched fund-raising and relief drives to help their waterlogged cousins. In fact, the Illinois Bankers Association said it received calls from a bank in Homestead, Fla. - which was hit hard by Hurricane Andrew - offering advice on how to handle the disaster.

Home Federal Savings Association in St. Louis is allowing employees to dress casually - if they pay a $5 fee, which the bank will match and donate to relief efforts.

The lobby of First Federal Savings and Loan of Kansas City is crowded with piles of blankets, canned corn, and other supplies donated by employees.

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