Simon Group’s S&L; in Hawaii Gets Infusion

A Los Angeles investment group led by former Treasury Secretary William E. Simon and lawyer Gerald L. Parsky disclosed Wednesday that they received a $50-million infusion from a Hawaiian educational trust for a Honolulu-based thrift the group owns.

The infusion into Honfed Bank from the Kamehameha Schools/Bernice Pauahi Bishop Estate is in lieu of a public offering of preferred stock that the two men planned. The decision to offer the stock to the public was considered an audacious move because industry turmoil has left all but a few savings and loans nationwide out of favor with investors.

In an interview, Parsky said he believes that the infusion is the first equity investment made in a large thrift since the government’s S&L; reform legislation was signed into law last August. Parsky denied that the stock sale was going badly, adding that investment bankers Smith Barney, Harris Upham & Co. believed that it could have sold the stock.

At the end of last year, Honfed Bank, which has $3.2 billion in assets, was $65 million short of what it needed to meet new federal levels for capital, or money that banks and thrifts maintain to protect against losses. Parsky said the infusion from the foundation, combined with profit made in the first six months of this year, should bring the thrift in line with the new capital requirements.

The Kamehameha Schools/Bernice Pauahi Bishop Estate is a private education trust founded by descendants of Hawaiian royalty. The trust was also an investor with the Simon group in First Interstate Bank of Hawaii. In February, the group disclosed plans to sell that bank to First Hawaiian Inc. in a lucrative deal in which investors are expected to receive double what they put in when the group bought the bank a year ago.