Worn out after a year of unpredictable weather and low crop prices, six young men who farm together near Finley, N.D., plan to call it quits after the fall harvest and move their families to the city.

It's a story that has become all too familiar to Roger Monson, president of Finley's only bank.

Since 1980 more than one-quarter of the residents in Finley and its surrounding county have moved away, according to the U.S. Census Bureau. That has left $29 million-asset Citizens State Bank struggling to find deposits and make loans.

"We're looking to see how we can remain viable in a shrinking market," Mr. Monson said.

Though most urban community banks battle to keep customers from switching to a competitor, many rural banks simply want to keep their customers in town. According to a new study by the Federal Reserve Bank of Minneapolis, one-quarter of the district's rural banks cited an aging or declining local population as their leading concern.

Of the five states in the Minneapolis Fed region, only Montana had an increase in rural population from 1980 to 1990, according to the U.S. Census Bureau. And though population is shrinking in rural regions nationwide, the trend is most pronounced in the 12 midwestern states, which had a 2.6% decline in rural population during the 1980s. North Dakota reported a 10.7% population decline-largest in the Midwest, census figures show.

And it's only getting worse. Department of Agriculture studies say that most rural counties in the Midwest have lost residents since the last census and will continue to do so. That spells more trouble for bankers who are already facing the challenges of low farm prices and young customers who would rather invest their savings in the stock market than in certificates of deposit.

"This is a chronic problem that bankers are wrestling with every day," said George G. Beattie, executive vice president of the Nebraska Bankers Association. "Their existence depends on how well they deal with it."

Keith Leggett, an economist at the American Bankers Association, said rural communities often lose residents because there are no jobs to keep them there. Many small towns rely on the farm sector as a major employer, so when farmers quit because of low prices, bad weather, or old age, new businesses often do not spring up to replace the old, Mr. Leggett said.

"A declining population is usually linked with a decline in the economic condition," he said.

Bankers feel the impact of a declining population when elderly customers die. The customers' children-many of whom have moved to the city-typically withdraw their parents' deposits and often invest them in the stock market. Then the banks must turn to more expensive sources of funding, such as brokered deposits or Federal Reserve Bank loans, to stay liquid and meet loan demand.

Such is the case at Ravenna (Neb.) Bank, where 75% of the bank's deposits are held by senior citizens. Dale E. Pohlmann, president and chief executive officer, said that as those deposits are willed to the younger generation, he buys brokered certificates of deposit and borrows from correspondent banks to keep the $47 million-asset bank's loan-to-deposit ratio at 80%.

Mr. Pohlmann said Ravenna plans to join the Federal Home Loan Bank System to expand its funding sources. Many agricultural banks had been barred from FHLB membership because they do not make enough mortgage loans to qualify. But a change adopted this summer lets banks pledge agricultural real estate loans as collateral for Home Loan Bank advances.

Aside from replacing deposits with purchased funds, bankers say they are looking for long-term solutions to reverse the population decline. Economic development projects, which many community banks support, have helped in some cases.

Janesville, Minn., which has 2,000 residents, has stemmed its population decline by building a housing development with the support of local government. The new homes, along with a new golf course, are giving young families a reason to call Janesville home, said Michael Finley, president of $38 million-asset Janesville State Bank.

Though Mr. Finley said he was encouraged by the growth, he noted that younger customers are harder to attract.

"Younger people aren't as willing to put their money into the bank," he said. "The bank has to learn how to draw them in."

Some rural community banks, such as Peoples State Bank in Mazomanie, Wis., are drawing more business from a younger customer base by setting up investment centers that give financial planning advice or by investing in technology to allow Internet banking.

But Mr. Beattie of the Nebraska Bankers Association said he believes the population trend toward aging and shrinking will continue.

Ultimately, small community banks may need to join forces to survive. Mr. Monson said he would consider merging Citizens State with a bank of similar size so the pair could save on overhead and operating expenses. Such a survival technique could become common, he predicted.

"A majority of these community banks are not just rolling over and dying," he said. "It's just another challenge."

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