Kona Kai Partnership Remains Intact

The would-be 50-50 partnership between Aircoa, a Denver-based hotel chain, and Kona Kai Club owner Bill DeLeeuw has been called off after Aircoa was unable to secure financing to buy out DeLeeuw’s partner.

A lawsuit between the two parties was settled out of court late last month, meaning that DeLeeuw remains partners with Dale Rorabaugh in the 12-acre Shelter Island resort.

Rorabaugh is the 42-year-old optometrist and inventor who developed a glaucoma test and an electronic digital “pachometer,” which measures the amount of oxygen flowing into the eye’s cornea.

Great American Goes Hollywood

Great American First Savings Bank is breaking a bit with the recent advertising trend among thrifts to push hard on longevity and security and solid-as-a-rock stability. Last week’s introduction of John James, star of TV’s “The Colbys” nighttime soap opera, as Great American’s new spokesman is designed to reflect the bank’s “on-the-move” approach, what with Great American’s flurry of acquisitions and expansions this year.

But it will cost. James is getting a cool $250,000 for a year’s worth of television, newspaper and radio ads, as well as several personal appearances. The campaign will cost Great American about $1 million through the end of the year.

Not surprisingly, there was competition for James’ spot. Great American Chairman and Chief Executive Gordon Luce joked last week that he offered his staffers a choice for company spokesman. “It was either me, Bob Hope or John James,” Luce told an employee gathering at James’ coming-out party.

Former actor John Gavin, now a Great American board member, apparently wasn’t considered for the part, according to Luce. After all, he said, Gavin is now a director, not an advertising spokesman. Luce, ever politic, didn’t bring up Gavin’s past role as spokesman for Bank of America, which may have played against his choice as Great American’s media man. Bank of America, after all, lost $640 million in the second quarter and $337 million last year.

Front End Alignments

While Great American was touting its new ad campaign, rival Home Federal Savings & Loan was announcing a “staff realignment”--giving some of its administrative employees their leave-takings and adding staff to its retail lending division.

In short, the San Diego-based thrift cut staffers from a cost center--between 80 and 120--and added employees to a profit center--more than 200.

“Even though we’re laying people off, it can be a positive thing for the company--reducing expenses while increasing the loan portfolio, which generates more income,” offered Joe Turner, the thrift’s director of human resources.

Bank Rules Defined

The revelation last month that BSD Bancorp Chairman James Brown is under FBI investigation--for his role in two loans made by a BSD subsidiary for land that a Brown-owned company later bought--has raised anew the issue of how many loans a financial institution can make to its directors and officers.

Financial institutions often appear caught in the middle. On the one hand, regulators and industry consultants urge directors to bring business to their institutions. On the other hand, financial institutions are under strict guidelines and pressure to avoid insider self-dealing and the appearance of same.

Here, then, are the regulations as they apply to both banks and savings and loans:

Bank directors and officers can borrow up to a set amount of money, depending on a complicated formula applied to the bank’s finances. The formula: Loans are limited to no more than 25% of a bank’s combined shareholders’ equity plus its allowance for loan losses.

Savings and loans have stricter and lengthier standards. Thrifts can lend directors any amount, as long as it’s secured by a principal residence. Directors also can receive a savings account loan, a loan for improving or equipping a principal residence, loans for overdraft protection of NOW accounts, educational or consumer loans, and credit card loans. But, according to regulators, loans must be approved in advance by a majority of directors, with the involved director not voting.

If the loan is lower than the market rate, the board must pass a resolution that justifies why, and the rate can never be lower than the institution’s cost of funds.

The toughest caveat is that loans to directors for commercial purposes can never exceed $100,000 “in the aggregate.” In addition, regulators must be notified by the thrift of any commercial loan made to a director that exceeds $10,000.