14 Gibraltar Financial Loan Offices Closed
Gibraltar Financial, one the state’s largest savings and loan companies, said Monday that it has closed 14 loan offices to comply with growth limits set by federal regulators.
The troubled financial institution, the parent of Gilbraltar Savings in Beverly Hills, said that it has also stopped making mortgage loans for apartment buildings.
It entered a supervisory agreement last month with regulators after the Federal Home Loan Bank of San Francisco declared the company “unsafe and unsound.” Under the agreement, Gilbratar was prohibited from increasing its level of assets.
Gibraltar, which has $15 billion in assets, has been on a financial slide since the third quarter of 1987, when it lost $155 million. It expects to report 1988 losses of $76 million, with up to $35 million of that deficit in the fourth quarter.
James R. Boyle, Gilbraltar executive vice president for real estate lending, said that the thrift was forced to close the offices and curtail apartment lending to comply with the supervisory agreement. “These actions are regrettable and we really agonized over the decision,” he said.
Gilbraltar closed 10 offices Friday, including locations in Long Beach, Downey and Riverside, that specialized in home mortgage lending. It closed four other Southern California offices, in Century City, Orange, Newport Beach and San Diego, that dealt exclusively with apartment building lending.
113 Laid Off
Boyle said Gibraltar will continue to offer home mortgages in Northern California through its 45 branches there and will maintain 10 home mortgage lending offices in Southern California.
He said that all the affected workers were notified Friday, and 113 of the 185 people who worked in the 14 offices were immediately laid off. He said a small number of the others were reassigned to other offices. The exact number wasn’t available.
In addition, he said, some people will continue to work in Gibraltar’s San Mateo home mortgage office for the next three months to help wind down operations.
Boyle said that workers were given three weeks of pay in lieu of notice in addition to severance pay. He said the thrift’s attorneys said Gibraltar wasn’t required to give employees advance notice of the layoffs under the new federal plant-closing law “because of the number of locations involved and the number of people involved.” The law was intended to provide notice to employees involved in major layoffs or closings.
With its decision to close the offices, Gilbratar is losing a significant chunk of business. Boyle said the thrift is giving up an estimated $1 billion in apartment loans this year. In addition, he estimated that total home mortgages would be reduced to $750 million, or 60% of what Gilbraltar expected earlier this year.
Boyle said Gilbraltar does not expect to post a significant writedown because of the office closings. Last month, Gilbraltar closed its MoneyCenter operation that made loans to customers outside California, and that closing was expected to result in a $20-million writeoff.
Boyle said Gilbratar was forced to close its 14 offices last week because an increase in interest rates made it difficult to sell its older, lower-interest mortgages profitably. Because it is under growth restrictions, Gibraltar can’t add new loans to its books without removing old ones. The rise in interest rates also slowed mortgage prepayments, Boyle said.