VIBORG, S.D. -- C.L. "Pete" Jensen steps over a puddle and looks out over a mile-wide lake" whose surface is punctuated only by the roof of a barn and the tip of a grain silo.

"This is something I hope I never have to go through in my lifetime again," says the loan officer of Farmers State Bank. The water has dealt a crushing blow to one of the burly banker's borrowers.

Mr. Jensen's bank is in the center of one of the hardest-hit areas of the Corn Belt.

The fertile plains near here -- where the borders of Minnesota, South Dakota, and Iowa meet -- were among the first to experience the heavy rains that caused the Mississippi and its tributaries to overflow.

Impact Greatest?

Among the farm states experiencing crop losses, South Dakota may fare the worst, according to estimates prepared by Sung Won Sohn, chief economist at Norwest Corp., Minneapolis.

Agriculture accounts for a whopping 14% of the state's earned income, and 10% of personal income. That means that though the estimated dollar value of crop losses is higher for both Minnesota and Iowa, the impact on personal income is likely to be greater in South Dakota.

Mr. Sohn estimates that a $125 million loss of crops will translate into a 2% drop in South Dakota's personal income. Iowa, the next hardest hit state, may see a 1.5% decrease in personal income due to crop losses of $785 million.

A Businessman's Complaint

In Viborg (population 800), the economic casualties of crop damage will be higher. Every one of Main Street's small businesses, from the bank to the Kountry Kitchen luncheonette, quakes rises and falls with the fortunes of the town's farmers.

"There is always a program for the farmer, but there's nothing for the small businessman," complains Rodney Peterson, owner of Rod's Feed and Seed.

Most ag banks have lessened their exposure to crop losses by reducing their portfolios of loans to agricultural producers. Farmers State Bank, however, has about 90% of its portfolio invested in farm loans.

"Any bank is under severe stress if it has a high loan-to-deposit ratio, a large ag loan portfolio, and is in an area where 25% of the ground didn't get planted," said Ed Lotterman, an economist at the Minneapolis Federal Reserve Bank.

Farmers State Bank fits the bill.

But Mr. Jensen is confident that the bank can pull through difficult times with a little forbearance, some help from the government, and perhaps a few weeks of sunshine.

"Granted, before all this is over we'll know food assistance, fuel assistance, and other government programs real well."

Besides, says Mr. Jensen, the bank has no choice but to stick with most of its farm borrowers: "If we sell out a farmer, he is gone forever and there is no one to take his place."

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