The Associated Press June 16, 2011, 7:05PM ET

Midwest, Plains bankers worry about flood effects

Rural bankers in 10 Midwest and Plains states worry that Missouri River flooding will hurt the region's economy and tourism, according to a monthly survey of bankers released Thursday.

Many bankers who responded to the Rural Mainstreet survey pointed to the flood situation with concern.

"The current and potential flooding problems will certainly have an adverse economic impact on sectors of agriculture, business and on our communities along the Missouri River," said Larry Winum, president of Glenwood State Bank in Iowa. "A sad situation for a lot of people."

The Missouri River is rising because the U.S. Army Corps of Engineers is increasing the amount of water it releases from upstream reservoirs to make room for water brought by heavy rains and a late-melting snowpack. The river is expected to crest above flood stage in many locations by the end of June, but the water will remain high into fall.

Todd Douglas, chief executive of First National Bank in Pierre, S.D., said the prolonged flood situation will have a huge impact on tourism in much of the region.

Meanwhile, the Rural Mainstreet Index rose in June to 56.0 from last month's 54.9. Anytime the index, which ranges from 0 to 100, is over 50, it suggests the economy will expand over the next six months.

"Even though the Rural Mainstreet economy is expanding, I expect flooding and weather-related issues to slow growth in the months ahead," said Creighton University professor Ernie Goss, who oversees the survey. Bankers in rural parts of Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming are included.

The farmland price increase slipped from May's 75.0 to 62.0, and the farm equipment sales index fell to 63.1 from last month's 65.9. Goss attributed the declines to a slight weakening in the farm economy, but said he didn't think it was a bad thing.

"A significant upturn in the value of the dollar stemming from the European debt crisis could drive the dollar higher and agricultural commodity prices lower," he said. "This would weaken farm income growth and take even more of the air from the bubbles we have been seeing in farmland and farm equipment sales."

The home sales index dipped to 53.0 from May's 54.3 and April's 55.2. The retail sales index also fell, to 47.0 in June from 50.1. Goss said higher fuel prices continue to hurt sales.

The loan volume index increased to 59.0 from 55.5 in May. The checking deposit index grew to 59.7 from 58.2, while the index for certificates of deposit and other savings instruments also declined to 41.7 after hitting 44.6 in May and 48.5 in April.

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Online:

Creighton University economic surveys: http://www2.creighton.edu/business/


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