ROANOKE -- First Federal Savings and Loan Association of Roanoke's buyout of the financially troubled American Federal Savings and Loan Association of Lynchburg will lead to the departure of American Federal President J.E. Causey Davis.

But Davis said his resignation was not part of the deal arranged through the federal regulators who had taken control of American Federal and taken bids from prospective buyers last year.

"I have never been a bargaining chip or part of the package," Davis said from his Lynchburg office after the merger agreement was announced Friday.

Officials at each institution declined comment on the price or many of the specifics of the buyout, as did a spokesman for the Federal Savings and Loan Insurance Corp. in Washington.

"Our strength and stability will be an important asset to the customers of American Federal," First Federal President R.K. Hutcherson said in a statement.

Two years ago, American Federal was staggering under $60 million in bad loans.

First Federal Executive Vice President Andy Shumate said that under the purchase plan worked out with the FSLIC, First Federal will not have to pay off any of American Federal's bad loans.

"With the deal that we worked out, we're protected against any losses of that kind," Shumate said.

Shumate said the FSLIC would end up picking up the tab for American Federal's bad loans.

American Federal's problems had prompted increased regulation by the FSLIC, which in June of 1986 appointed its own board that has been running American Federal.

Its problem loans were made throughout the Sun Belt region, primarily in Texas, Davis said. "At the high point, there were about $60 million worth of nonperforming loans," he said.

Davis said he did not know how many of the 45 workers at American Federal's Lynchburg headquarters would remain after First Federal takes over. "I feel very positive that they're going to need a good many of these people," Davis said. Workers in the branches will not be affected, he said.

Shumate said he was not allowed to release the names of the other two institutions that bid for American Federal, but said one was a Northern Virginia financial institution and the other was a Virginia savings and loan.

He expects First Federal to take over for the FSLIC-appointed board by late next month. The FSLIC must approve the acquisition, but Shumate said the agency is familiar with the deal and agrees with it.

Shumate said First Federal had about $510 million in assets, and the American Federal acquisition would bring the total to about $720 million. American Federal's operations will be consolidated into First Federal's, adding 11 American Federal offices to the Roanoke thrift's 15 offices in central and southwest Virginia, a First Federal statement said