Gibraltar Financial Restricted to Home Loans in 3 States
Gibraltar Financial, one of the state’s 10 biggest thrifts, said late Thursday that it agreed with federal regulators to limit its lending operations to residential loans in three states, including California.
The financial institution, parent company of Gibraltar Savings in Beverly Hills, also said it will close a lending operation known as Gibraltar MoneyCenter, which makes loans to customers outside California. The move will result in a $20-million writeoff in the first quarter of 1989, the company said.
The announcement continues a string of bad news for the large savings and loan, which several weeks ago was classified as “unsafe and unsound” by the Federal Home Loan Bank of San Francisco.
The firm has said it expects its 1988 losses to reach as much as $76 million, including up to $35 million in the fourth quarter. Final results still have not been reported.
The continuing losses mean that Gibraltar will be unable to meet minimum capital standards “without a merger or other major investment by a third party,” according to a statement from Chief Executive James N. Thayer.
Thayer said any such merger would require will require “significant” assistance from the Federal Savings & Loan Insurance Corp.
“There is no assurance that we will be successful in our efforts,” he said.
With $15 billion in assets, Gibraltar Financial has about 85 retail branch offices in California, as well as branches in Washington and Florida. The company has been on a sharp slide financially since late 1987, when it announced a $155-million loss in the third quarter.
The huge loss, which cut deeply into capital, resulted largely from problems on real estate development loans around the country. The resignation of the company’s chief executive, Herbert J. Young, followed several months later.
The company’s latest losses have resulted from sharply rising interest rates, which have wiped out profit margins on the firm’s large collection of fixed-rate assets, including home loans and mortgage-backed securities.
Gibraltar announced in late January that a supervisory agreement to limit its operations was being negotiated. The supervisory agreement was struck with FSLIC, the government agency that supervises and liquidates sick thrifts. The company has also been prohibited from increasing the size of its assets.
A spokesman for the thrift was not able to say how many employees would be laid off in the Gibraltar MoneyCenter closure. But she said the 20 to 30 employees who work at company headquarters in Beverly Hills will keep their jobs with the savings and loan operations.
