A Huron, S.D., community bank is giving a break to some of its borrowers who lost their jobs when the town's biggest employer went out of business.

Marquette Bank offered relaxed repayment schedules to the 100 customers affected when Dakota Pork closed a processing plant last August.

"We felt it was the right thing to do for those who were hurting," said Lynn Schneider, president of the $150 million-asset bank. "Mostly what they needed was a little breathing room."

Mr. Schneider said the cost to the bank has been minimal because most customers have only taken 30- to 90-day extensions on their payments. "Basically we just have to wait a little longer to get our money," he said.

Marquette's good will gesture is fairly common among community banks that find their customers in similar situations. "Most of the community banks will do what they can because their future depends on the local economy," said Stephen Y. Scurlock, executive vice president of the Independent Bankers Association of Texas.

When agricultural borrowers of First State Bank of Happy, Tex., were hit by drought in 1996 the bank cut interest rates by 1% on its operating loans. "Anything that helps your community in the long term is good for the bank," said J. Pat Hickman, president and chief executive officer of $75 million-asset First State.

Mr. Hickman said the 1% rate break cost the bank $56,000, but the move brought in new business and a stream of positive news stories.

Several banks also relaxed loan repayment schedules for victims of the Red River flooding in Minnesota and North Dakota in April 1997 as well as for victims of earthquakes in California over the last several years, according to Ellen Lamb, a senior vice president at the Conference of State Bank Supervisors.

State regulators let banks grant loan payment extensions as long as loan-loss reserves and capital are adequate, she said. In fact, state regulators sometimes ask banks to be flexible with borrowers in good standing who experience an unexpected problem.

"The customers then have a personal relationship with the bank," she said. u

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