The Indianapolis Star from Indianapolis, Indiana • Page 42

Obituaries 13 Classified 49-38 Weather 39 INANGE PAGE 43 The Indianapolis Star FRIDAY, SEPTEMBER 6, 1985 Farm credit group hurt by series of defections The jfflf Tape -J Equitable Life Assurance Society of the United States. His company is experiencing similar activity across the country. Many farmers also are leaving the system for fear they will lose their stock, one banker said. To be a borrower, farmers must purchase stock in the system's banks and production credit associations. Those who are leaving the system cash in their stock, which can amount to as much as $50,000 for a farmer with a $1 million loan.

The Wabash Valley Bank of Vincennes and the Richmond office of the Metropolitan Life Insurance Agricultural Investments report they also are busy restructuring land bank loans. While these commercial lenders like the new business, they want to see the farmer-owned cooperative farm credit system survive. "We (commercial lenders) can't shoulder the burden" of taking care of all farm loan needs if the system fails, said Metropolitan's Richmond branch manager Thomas C. Nigh. But Nigh believes most borrowers with the system will stay with it.

Between June 1 and Aug. 1, 2,514 borrowers only 3.7 percent of its borrowers left the Fourth District land bank, ac what they have been paying the land banks in recent months. When the land bank interest rate increased, Cass County farmer Glen A. Snyder went shopping, finding he could pay off his $100,000 land bank loan carrying the 1314 rate by borrowing from a bank at HVi percent. But he knows he is gambling, because the bank rate is variable and could be raised within a year.

Some farmers. like H. Wayne Dillman, a legislative lobbyist for the Indiana Farmers Union, is remaining faithful to the farm credit system because he believes it can serve the credit needs of agriculture better than other lenders. After the land bank rate increased June 1, so did the work load of James D. Need, agricultural loan officer for the Clinton County Bank and Trust Co.

at Frankfort. He has written $2 million in loans since then for farmers using the money to pay off land bank loans, and has turned down another $2 million in such loan requests because the borrowers are outside the bank's normal lending area, Need said. All of these borrowers are "A-No. 1" and are so credit-worthy they could get loans almost anywhere, he said. Similar activity in northwestern Indiana is reported by R.

Wayne Buck of Otterbein. area investment manager for Equitable Agribusiness, a subsidiary of By ERNEST A. WILKINSON STAR FARM WRITER The Farm Credit System's most credit-worthy borrowers are defecting. They are paying off their debts with loans from banks and insurance companies. Their defections leave the system's federal land banks and production credit associations with borrowers who are not as credit-worthy, many of them are defaulting on loans.

As a result of loan losses and other reasons, the Fourth Farm Credit District's Federal Land Bank based at Louisville, raised its real estate mortgage loan rates from 12'i percent to 13'4 percent June 1. That is more than is charged by many banks and insurance companies. The losses are occurring mainly in the district's two grain states of Indiana and Ohio. Farmers in the other district states of Kentucky and Tennessee are mostly part-time farmers with outside income so they can pay off the loans. They also are in better financial shape because they are mainly tobacco and dairy farmers, two groups not as financially impaired as grain farmers, says Steven L.

Hunt, a land bank spokesman at Louisville. An informal survey of Indiana farmers and lenders dramatically illustrates this point as thousands of land bank customers restructure their loans at interest rates 1 percent and 2 percent below ITS cording to Daniel Arbach, vice president-marketing services. He also noted that as of June 30, district problem loans this year are 2.6 percent of the total compared to 2.55 percent a year ago. Super chip A silicon wafer with more than 100 very high-speed integrated circuit chips isJoaded into a special computer-controlled tester at Hughes Aircraft Radar Systems Group in Los Angeles. The tester closes around the wafer and checks the thousands of microscopic connections on the tiny chips, which are 10 times more powerful than conventional microprocessor chips.

Credit system faces crunch Plagued by bumper crop of bad loans I.U. reviewing plans for IUPUI building ment could help the system survive a severe crunch expected to hit within 18 to 24 months. "If we are the necessity unsuccessful we will begin to face of possible liquidation of portions of the Farm Credit System," including some of its reeional banks. Wilkinson said. "This, I think.

By JIM DRINKARD ASSOCIATED PRESS Washington The Farm Credit System, the nation's largest farm lender, is facing its most severe crisis since the Depression and could be forced to begin liquidating within two years unless the federal government comes to the rescue, the system's top regulatory official said Thursday. Donald E. Wilkinson, governor of the Farm Credit Administration, said increased losses in the system's mortgage lending arm will result this year in the first operating loss since the 1930s for the 37-bank, $74 billion system. Wilkinson said at a news conference that he would begin exploring with Congress and the Reagan administration ways in which the govern would be a very unfortunate situation to permit to happen." While many are unaware of the extent to which the system is tied into America's financial network, Wilkinson said, many institutions including banks and insurance companies are major holders of Farm Credit securities. He declined to specify the size of federal bailout that would be needed, but said it would be "multibillions of dollars." FROM STAR WIRE SERVICES Retail sales rise Sales at the major retailers picked up a bit last month, and upscale department stores again fared better than the mass mer-, chandisers because their customers were less affected by the recent slowdown in the economy, analysts said.

"I would charac terize the results as quite encouraging. They do show improve ment from the preceeding months," said Jeffrey Edelman, an analyst with Dean Witter Reynolds Inc. But he noted that sales in August 1984 were weak, making it easier for the retailers to record gains this year. Chrysler offer blasted The head negotiator for the 'United Auto Workers has strong ly criticized Chrysler ini tial contract proposals, which in clude reducing company job classifications from more than 500 to about half a dozen. UAW Vice President Marc Stepp said in an interview with the Detroit News that if the union had to vote on the company's initial of fer now, they would "strike before noon." 'Invisible curriculum' Corporate leaders charged that an alarmine number of young- leave school lacking the discipline, worK naDiis, command of Enelish and other skills need ed for iob success.

Their 107-paee report, Investing in Our Children: Business and the Public Schools, said schools were failing to stress what it called the "invisible cur riculum" of teamwork, honesty, reliability and "learning how to learn" traits the business world considers as important to I success in college and career as the three s. Debt repayment plan Continental Airlines, which en tered bankruptcy nearly two years ago, filed a reorganization plan in federal court tnat win fully repay more than $900 mil lion in debts through the next 10 years and remove the carrier from bankruptcy. Cash payments Of $121 million will be made to creditors when the plan is ap- oroved by a federal bankruptcy court judge. The plan calls for much of the debt to be repaid in five years. E.F.

Hutton listens Former U.S. Attorney General Griffin B. Bell blamed lax man agement for allowing E.F. Hutton Co. to slip into legal irouoie 'over its banking practices.

The firm said it will implement Bell's recommendations for an' exten sive reorganization. Three top officials are leaving corporate headauartcrs and a company statement said the board of di rectors will be restructured to ensure that a majority of the members are from outside the brokerage house. The report rec- nmmrnds that six Drancn man agers be assessed penalties rang ing from $25,000 to $50,000, with the money Deing paia to a cnan-ty; the firm said this will be done. The six are amone those that were given immunity by federal prosecutors investigating the case. Spending cut planned ritino a slueeish market for enmimndurtors.

Hitachi America Ltd. will cut capital spending on semiconductor production lacin-lips in fiscal 1985 and will cease making 64 kilobyte memory chips in the United Mates, com- nanv nffieia said, iwoanwniie, National Semiconductor one of the nation largest manu- fortnrers nf COmDUtCr CHIPS, Said it will close its operations for nine more days, adding to 34 shutdown days already tnis year. 'i Municipalities to sue Lawyers for municipalities that lost millions in the collapse of ESM Government Securities in Fort Lauderdale, plan to sue 400 Alexander Grant and Co. tinrfnnr JlfroSS the country to pay for their losses. The cities are suing the Chicago based accounting firm because Grant gave ESM's books a clean bill of health not long before ESM closed its doors in marcn.

Indiana University officials have entered the final stages of selecting a developer to construct a hotel ana office building at Indiana, University-Purdue University at Indiana polis. Proposals from live development groups for tne project were reviewed Wednesday by the architectural committee of the university's board of trustees. Developers submitting proposals are: The Saeamore Group, a part- nershio made ud of Geupcl DeMars F.C. Tucker Co. and the archi tectural firm of Browning Day Mul- tins Dierdorf Inc.

IndianaDolis Colts owner Rob ert J. Irsay's Colt Construction and Development Co. Philm R. Duke and Associates and General Motels Corp. University Development Group, which has an agreement with Radisson Hotels of Minneapolis to operate the hotel.

The group inc udes Robert N. Whitacre oi Thomas and Associates, a develop ment firm, and Larry A. Hall, direc Fletcher moving under new bank laws fat UNITED PRESS INTERNATIONAL tor of the Voieht financial group. A partnership consisting of Gary N. Schahet of the development firm of Sam S.

Schahet and Co. and Elliott Nelson of Modern Vending Co. The committee is now expected to continue negotiations with one or more of the development groups. IUPUI officials are hopeful that the hotel, which will have at least 200 rooms, can be completed in time for the 1987 Pan American Games. The hotel will be linked to an conference center and will be located on two diocks bounded by North, Blake, Agnes and Michigan streets.

The university will pay for the conference center, which is expected to cost about $12 million, and plans to lease the land for the hotel to the developer. The developer will be responsible for financing and building the hotel. University officials are hopeful the same developer will construct an office building at the southwest corner of Michigan and Locke streets as a private development. polis on Thursday to address a health care symposium sponsored by AMI, declined to name the Indiana hospitals in which the company is "We look at Indiana as a very unique state," he said. "Maybe we're better able to do that standing away at a distance than people here on a day-to day basis.

"It clearly is a progressive state in terms of creating opportunity and creating growth, and that's the kind of environment in which we want to participate. Thus, we are very much exploring avenues of approach to enlarge our participation in Indiana." To do that, he said, the company hoped to increase its activity in Indianapolis and central Indiana. hours would only serve as temporary measures to avert reductions. Hospital officials already have instituted hiring "freezes" in several areas, and have left 51 vacated jobs unfilled since January. They also have asked employees to take voluntary time off on slow work days and encouraged those who arc eligible to retire.

"We are staffed as a 500 bed hospital, and we arc operating at a 400 bud hospital," Yacko said. "The only solution is to downsize the hospital." Hospital adminslrator Don D. Hamachek said the actual number of employees being laid off still is being evaluated. Major hospital chain eyes "We're looking at the entire state. We are looking for attractive banking markets." AFNB Chairman Frank E.

McKinney Jr. more Indiana hospitals American Medical International, the second-largest investor-owned hospital chain in the nation, is actively seeking to increase its presence in Indiana througn acquisition of, or affiliation with, existing hospitals. The chain, which had gross revenue last year of $3 billion, already owns Culver Union Hospital in Crawfordsville and is affiliated with another hospital in Indianapolis. Walter L. weisman, president and chief executive officer of AMI, said the company is talking with several other Indiana hospitals in hopes of building a network through which it can market complete health care services, including health insurance.

Weisman. who was in Indiana American to expand By BILL KOENIG STAR STAFF WRITER The head of American Fletcher Corp. says that despite a relatively late start, the Indianapolis bank company will be active statewide under Indiana's cross-county banking law. Chairman Frank E. McKinney Jr.

said in an interview that the law's acquisition limits have caused American Fletcher to be careful about its plans. "You have got to be very cautious about what banks you buy, and what markets you buy into." The Indianapolis holding company has been a longtime supporter of statewide banking. But after this year's Indiana General Assembly legalized banking expansion after two decades of debate, American Fletcher was the last of the "Big Three" holding firms to acquire a bank. Moreover, after two purchase agreements made last week, American Fletcher has yet to expand beyond the Indianapolis metropolitan area. "I can't tell you our strategy because it's confidential," McKinney said.

"We're looking at the entire state. We are looking for attractive banking markets." He added that American Fletcher's acquisition pattern so far "was just fate, it wasn't planned that way." Under the law, which took effect July 1, a single firm can control no more than 10 percent of Indiana's bank deposits. That cap increases to 11 percent next July and 12 percent by July 1987. Thus, based on current deposit levels, a bank holding company can't have more than $3.66 billion in deposits. By 1987, the limit would be about $4.4 billion.

American Fletcher controls about $2.6 billion, not counting three pending acquisitions. "It injects discipline into the process," the American Fletcher chairman said. "During that first period (the first year of the law), you can be fairly active" in making acquisitions. "Then you really trim off." Hospital workers face layoff bank holding company announced agreements with banks in Plainficld and Carmcl. It also took over Shelby National Bank in Shelbyvillc last year after that bank was declared insolvent.

The move was an exception to the ban on cross-county activity in effect at the time. "Let me say we're talking to a number of banks around the state, a number of banks You have a lot of negotiations going on right now." McKinney said. "You don't know when they're going to consummate." American Fletcher has shown some signs of going beyond the immediate area. For example. Union Bank and Trust has plans to set up a branch in Columbus.

That is possible because the new banking law also legalized cross-county branch banks. However, bank companies with deposits of more than $400 million arc limited to two cross county branches between now and 1990. According to the Indiana Department of Financial Institutions. Union Bank's Columbus branch won't count against American Fletcher if it is operating before the Indianapolis company takes' over the Franklin bank. The department has approved Union Bank's branch application McKinney said American Fletcher as well as other banking companies faces the decision whether to pursue fewer, major deals or spread their bets across markets.

"That's the challenge, which means we won't get into all markets." Of the "Big Three," Indiana National Corp. has gone the farthest into outlying areas of the state. It has pending pacts to buy banks in Lafayette, Delphi and Lake County as well as Fidelity Bank of Indiana in Carmcl. Merchants National Corp. has concentrated on the metropolitan area; it has announced the acquisition of Farmers National Corp.

in Shelbyvillc and purchase of a 17 percent stake in Hancock Banc-shares in Greenfield. But it also has a deal pending outside the Indianapolis area, with Central National Bank in Grecncastlc. American Fletcher has not strayed from the counties surrounding Indianapolis. Its first deal, in July, was with Union Bank and Trust Co. in Franklin.

The estate of the late Frank E. McKinney the father of American Fletcher's chairman, already owned 32.9 percent of the bank's stock. Until last week, that had been the only announcement. Then, the An undetermined number of St. Francis Hospital Center employees will lose their jobs later this month because of a decline in patient admissions and shorter stays, hospital officials said Thursday.

Employees of the Beech Grove hospital were advised of the cutbacks during a scries of meetings last month. Administrators also said they have closed a 5th floor nursing unit because of the decline. Efforts are being made to place those nurses in other units. Ralph Yacko, St. Francis' associate administrator and chief financial officer, said cutting employee benefits and reducing salaries and.