Great American Won’t Sign Up Cirona
Thrift regulator James M. Cirona, offered the chief executive job at troubled Great American Bank last week, won’t be taking the position.
Cirona, president of the Federal Home Loan Bank of San Francisco, expressed strong interest in the Great American job, but he and the thrift’s board could not agree on terms of an employment contract, sources close to the negotiations said Friday. Directors at San Diego-based Great American considered as excessive Cirona’s compensation demands, totaling up to $1 million a year, the sources said.
Cirona, 58, sought financial guarantees from Great American should the capital-weakened thrift be taken over by regulators. He also wanted 600,000 shares of Great American stock, worth $1.125 million at current prices, and a lifetime pension of $250,000 for each year after his retirement, sources said.
Neither Cirona, formerly the Western region’s top S&L; regulator, nor Great American Bank officials would comment on Cirona’s withdrawal from consideration for the job. Cirona’s decision was outlined in a Federal Home Loan Bank staff bulletin dated Thursday.
Cirona’s withdrawal left unclear whom Great American may try to hire to fill the chief executive slot now held by Gordon C. Luce, who is also chairman. Great American considered offering the job to its general counsel, Marc Sandstrom, and to board member and former Senior Vice President Thomas F. Carter, before deciding upon Cirona, sources said.
Sources said Luce had planned to announce his retirement at Great American’s annual shareholders meeting on May 24, but that he may delay that announcement if no successor is decided upon by then. Luce, who turns age 65 in November, was unavailable for comment Friday.
Hiring Cirona was designed to give Great American credibility with the federal Office of Thrift Supervision. Until the OTS was created last August, its examiners worked directly for Cirona. Now, the Federal Home Loan Bank of San Francisco’s chief function is to supply credit to mortgage lenders in its 11th District, which includes California, Nevada and Arizona.
Great American Bank needs that credibility given that it is operating under intense OTS scrutiny. Unless it can drastically shrink assets, raise $350 million in outside capital or find a buyer for all or part of its assets by year-end, Great American may be seized.
Heavy 1989 losses left Great American with a severely weakened capital position. Its so-called tangible capital of $128 million as of March 30 is about half the minimum amount required by regulators. Tangible capital is one measure of a thrift’s financial cushion against losses.
A look at Great American’s first-quarter 1990 results released earlier this weak showed that its loan problems continue to deteriorate by several measures. The S&L; also disclosed that it is involved in a dispute with the OTS that could result in asset writedowns of up to $65 million in the second quarter, if the agency prevails.
Cirona was also seen as an attractive hire because he has extensive experience running troubled thrifts. Before being named in 1983 to the Federal Home Loan Bank of San Francisco, the largest of the 12 regional home loan banks, Cirona was chief executive of the $2.6-billion First Federal Savings & Loan Assn. of Rochester, N.Y.
That thrift was created through the consolidation of several troubled thrifts and received financial aid from the now-defunct Federal Savings and Loan Insurance Corp.
Times staff writer James Bates contributed to this story.
