Months after the flooded Red River destroyed homes and businesses in North Dakota and Minnesota, community bankers are teaming up to help displaced homeowners.

United Bankers' Bank in Bloomington, Minn., has formed a community development corporation to collect donations from banks and others. The money would go to help people buy homes away from the flood plain.

In April the melting of record snowfalls caused devastation along the Red River, which divides northeastern North Dakota and northwestern Minnesota.

At the flood's crest, some parts of the river normally 100 yards across widened to 10 miles. Federal and state governments estimate the damage in the two states at $2 billion.

William C. Rosacker, president of 22-year-old United Bankers' Bank, said community banks are still donating to the flood relief efforts because life for many victims has not yet returned to normal.

Many of the 1,400 Minnesotans displaced are still living in temporary trailer homes provided by the Federal Emergency Management Agency, he said.

In Minnesota, state and federal governments are distributing $830 million in aid to help victims get back on their feet. But government assistance will not be enough for many whose flooded homes are worth far less than a new one would cost.

The Minnesota Department of Commerce asked the private sector for help, and $130 million-asset United Bankers' Bank responded.

"At some point in time we have to reach out and help one another," Mr. Rosacker said. "We can't look to the government."

The bank's United Community Bankers' Development Corp., hopes to donate $2,000 and $2,500 per recipient for closing costs.

Some of the money will from banks, which must pay $1,000 each to join the not-for-profit corporation.

In addition, a grant of up to $2.5 million has been sought from the Federal Home Loan Bank of Des Moines, which has already committed more than $100 million so Home Loan banks can charge flood victims in the two states less for loans.

"We need to close the affordability gap," Mr. Rosacker said. "The goal is to get everyone into a new home with the same mortgage they had before."

About 30 Minnesota banks have already joined the development corporation, and Mr. Rosacker said he hopes membership will grow to at least 100. With strong support the organization could take on additional projects, such as building high-rises or assisted-care housing for seniors, he said.

"This is not going to be 'get in and build new homes and that's it,'" Mr. Rosacker said. "Who knows what might happen next spring?"

Allen I. Olson, president of the Independent Community Bankers of Minnesota, said he is moved by the way the banking community has responded to the disaster.

When floodwaters swamped some bank offices, Red River Valley banks helped each other serve customers. In addition, about 250 Minnesota banks donated $200,000 in all to a spring fund-raising effort for the American Red Cross and the Salvation Army.

Mr. Olson noted that several banks contributed to the Red Cross/Salvation Army fund while still fighting rising flood waters.

"I'm so proud that I shed a tear," Mr. Olson said. "It was a concerted banking industry effort."

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