S&L CHIEF DESCRIBES FIRM'S SUCCESS

The U.S. League of Savings Institutions last year revealed that successful thrifts had twice as many assets in traditional housing-related investments as unhealthy savings and loans. Joe F. Lynch agrees.

"Some people veered away from the original intent of savings and loans," said Lynch, acting CEO and vice chairman of Farm & Home Finance Corp., headquartered in Nevada, Mo. "They got in trouble."

Lynch, of Houston, Texas, was in Cape Girardeau Monday to participate in a grand opening and ribbon- cutting ceremony celebrating the relocation of Farm & Home, a savings association that did not get into financial trouble.

Farm & Home Savings Association of Cape Girardeau recently moved from downtown Cape Girardeau to 211 Silver Springs Road.

"We're proud of our new location," said Lynch. "Farm & Home has been around almost 100 years, and it's unique that we have managed to improve our financial strength, even during difficult economic times. We're proud to be unique."

Almost a fourth of the nation's 3,200 federally insured S&Ls have failed over the past three years and have become involved in a bailout that may cost as much as $160 billion.

The building now occupied by Farm & Home Savings was originally used by one of two Cape Girardeau S&Ls that were caught up in the financial crunch. First Federal Savings and Loan of Southeast Missouri, headquartered here, was taken over by the feds in April 1989, and Colonial Federal Savings and Loan Association came under federal control in January of 1990. Both S&Ls have since been sold.

"Farm & Home stuck to business," said Lynch. "That business was making residential mortgage loans."

Lynch said that 97 percent of Farm & Home loans were for residential homes.

"That's well above the average," he said. "Most thrifts now average about 70 percent in traditional housing investments now. But previously, regulations called for only 60 percent in home loans.

"That's where a lot of thrifts failed," said Lynch. "They got involved with some non-traditional areas such as commercial loans or some risky securities. All through this we were sticking to the home-loan business."

Lynch said he felt the savings and loan industry was beginning to rebuild.

"I think the `fallout' is over now," he said. "More S&Ls are increasing their home-loan business and getting their equity-to-assets ratio in good order."

Farm & Home's capital at the close of the second quarter was $176.5 million, or 5.07 percent of assets, he said.

"Our tangible, core and risk-based capital ratios continue well in excess of regulatory requirements," he said.

Second-quarter reports, which were released by Farm & Home recently, show that net income for the second quarter of 1991 rose 61 percent of earnings for the same period last year.

"Earnings from April 1 through June 30 were $4.5 million," said Lynch. "That compares to $2.8 million for the same period in 1990."

Lynch attributed the second-quarter increase in earnings to a 24 percent increase in net interest income and a substantial increase in non-interest income such as loan servicing and annuity sales.

The second-quarter profit rose despite the company increasing its reserves for real-estate and loan losses. A $3.8 million pre-tax addition was made to the reserves, up from $1.3 million a year ago.

Farm and Home Financial Corp., whose principal subsidiary is Farm & Home Savings Association, has $3.5 billion in assets.

The Cape Girardeau office, which is managed by Karen Rigdon, will maintain open hours six days a week: 9 a.m. to 4:30 p.m. Mondays through Thursdays; 9 a.m. to 6 p.m. Fridays, and 9 a.m. to 12:30 p.m. Saturdays.