Losses continued to mount at Gibraltar Financial in Beverly Hills as the ailing savings and loan company reported Friday that it lost another $10.5 million in the second quarter, bringing total red ink in the past 12 months to more than $170 million.
Though interest income rose in the quarter, the company said, earnings fell because the firm reported sharply lower gains on the sales of loans and securities.
Gibraltar also announced that it has decided to keep its nationwide loan origination company known as Gibraltar MoneyCenter, which had been up for sale. A company spokeswoman said the firm had received "a ton of offers" but that none of them were high enough.
Gibraltar's principal subsidiary is Gibraltar Savings, which has 92 retail sales offices all over California and uses the "rock of Gibraltar" as a symbol of strength in advertising and corporate logos. But the thrift's financial strength has been drained markedly by the recent losses.
The firm has not been a stellar performer in recent years, but its real problems surfaced dramatically in the third quarter of 1987 when it reported a shocking $155-million loss, the worst in its 102-year history. The losses resulted primarily from additions to reserves and writedowns on commercial real estate development loans across the country.
The company rebounded with a slight profit in the fourth quarter of 1987 but lost nearly $7 million in the first quarter of 1988. Last year at this time, the firm posted a second-quarter profit of $9.27 million.
In March, Gibraltar Financial overhauled its top management. Herbert J. Young, longtime chief executive, chose early retirement at age 56, while a top deputy, Jerome Nussbaum, was demoted.
Longtime board member James Thayer was picked as the new chief executive, while Jay Janis was appointed chairman. Janis, a one-time chairman of the Federal Home Loan Bank Board, had been a consultant to the firm and chairman of its executive committee.
Thus far, the new management has been working to straighten out and get rid of the company's troubled loans. Gibraltar said it has disposed of $137 million in non-performing assets since the end of last year, including $58 million in the second quarter.
Share Price Plunges
The problem assets range from an office building in San Jose known as Techmart that caters to high-tech companies to a retail-commercial complex in suburban New Orleans known as Metairie. Gibraltar Savings also owns the well-known Equestrian Center in Griffith Park, which it took over through foreclosure after years of financial problems.
Gibraltar's shareholders' equity has now fallen below $180 million and equals 1.22% of its $14.7 billion in assets. Its healthy large competitors in California have equity-to-asset ratios that are four or five times that high.
Gibraltar's shares have plunged from a 52-week high of $10.50 a share to Friday's close of $3 a share on the New York Stock Exchange, tying its 52-week low. The earnings report was released Friday after the close of trading.