Gibraltar Averts Run on Deposits but Seeks Buyer : No Panic Follows Warning by Federal S&L; Regulators

Deposits at Gibraltar Savings appeared to hold fairly steady Thursday in the wake of an unexpected public announcement late Wednesday that federal thrift regulators have grave concerns about the company’s financial condition.

“We did not have the panicked reaction that we were afraid we might have,” said James N. Thayer, the company’s chief executive. “That was a strong dose of medicine we had to take.” Gibraltar Financial, the parent company, disclosed that the Federal Home Loan Bank of San Francisco considers the thrift to be a “troubled institution” in an “unsafe and unsound” condition. Gibraltar also disclosed that it expects to report losses in 1988 that may run as high as $76 million.

The announcement about regulatory concerns was highly unusual because, though Gibraltar is losing money fast with no relief in sight, its capital still meets federal minimums even with the latest losses.

Though regulators declined to comment directly on Gibraltar’s woes, they acknowledged that they have stepped up efforts to crack down sooner on problem thrifts, like Gibraltar, that still technically meet capital requirements. Federally insured thrifts must have capital that roughly equals at least 3% of assets.

Depositors Seek Clarification

Regulators have ordered the company to prepare a business plan on ways to raise capital and said the firm will be required to submit to a supervisory agreement that will limit its operations.

The news did concern depositors, who went to the branch offices in unusual numbers seeking clarification of the announcement, company officials said. “But there was not a significant outflow of deposits,” said John R. Williamson, a company executive vice president.

Gibraltar Savings has some $8.5 billion in deposits and is the principal subsidiary of Gibraltar Financial, based in Beverly Hills. The company is among the 10 largest thrifts in the state, with more than $14 billion in assets. It has more than 80 retail branches around the state.

Though Gibraltar has had well-publicized problems in recent months, outside experts were surprised to hear regulators describe the firm as “unsafe and unsound”--a phrase often used as regulators are about to place a failing thrift in receivership.

However, Gibraltar officials reiterated that they did not believe a receivership was imminent, and regulators cautioned against coming to that conclusion. “The public should not see that as a last step before takeover,” a spokeswoman for the San Francisco Home Loan Bank said.

No Deals Imminent

Gibraltar is now looking for investors to buy the company and restore its capital, but Thayer said no deals are close. Financial analysts were not sanguine about the prospects of finding a buyer either.

“They have a good branch network,” said Jonathan Gray, a thrift analyst for Sanford C. Bernstein & Co. in New York. “That’s about all you can say.”

Gibraltar has been laboring under immense problems in recent months, mainly heavy losses on real estate development loans and fixed-rate assets rendered unprofitable by rising interest rates.

Regulators have temporarily ordered Gibraltar to stay the same size, meaning that it cannot increase its assets and liabilities, pending submission of the business plan, expected within 45 days.

But thrift officials say they may fund existing loan commitments and loans in process, as well as make additional loans as existing assets mature or are sold. The company can continue to raise deposits--considered liabilities in the banking industry--by reducing other debts, such as short-term borrowings.

Meanwhile, company officials sought to clarify a report in Thursday’s Times that Gibraltar is seeking reconfirmation from the Federal Savings & Loan Insurance Corp. that its deposits are insured up to $100,000 per account.

In fact, officials explained, Gibraltar has only sought assurances on interest rates paid on brokered deposits, which are savings raised mainly through investment banking houses. These funds are often placed in high-yielding certificates of deposit.