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Gibraltar Thrifts' Loss Hits $337.5 Million in Quarter

August 26, 1989|JAMES BATES | Times Staff Writer

Gibraltar Savings and its sister Gibraltar Savings Bank, two Simi Valley-based thrifts being operated under the supervision of federal regulators, said Friday that they lost a combined $337.5 million in the second quarter of this year.

The record loss for the institutions was expected, confirming figures released earlier this week by the Office of Thrift Supervision, a new federal agency that is mopping up the nation's thrift mess.

Gibraltar Savings, the larger of the two with 83 branches in California, lost $330.1 million in the quarter, while Gibraltar Savings Bank, which operates 25 branches in Washington and Florida, lost $7.4 million. The loss for the thrifts in the first six months of 1989 totaled $398.6 million.

Mortgage-Backed Securities

About two-thirds of the Gibraltar losses were non-operating ones, as overvalued assets on Gibraltar's books were written down to their market value or assets were sold at a loss. The moves are being taken as authorities try to whip the troubled operations into shape so they can be sold.

Most of the Gibraltar assets sold so far have been mortgage-backed securities--securities in which investors are paid off with principal and interest payments on underlying mortgages. James Boyle, Gibraltar Savings executive vice president and chief operating officer, said the institution has sold about half of its $4 billion in mortgage-backed securities, a large portion of them last week.

In addition, Boyle said, about $400 million worth of Gibraltar's $500-million portfolio of high-yield, high-risk junk bonds has been sold.

The two thrifts were previously operated by Gibraltar Financial in Beverly Hills until regulators seized the operations March 31.

Huge Losses at Lincoln

Because of its large branch system, Gibraltar has attracted widespread interest among potential buyers. Boyle confirmed that about a dozen potential buyers have shown interest, including other thrifts, banks and foreign investors. He said Gibraltar probably will be sold in three to four months.

As big as it was, Gibraltar's loss in the second quarter was dwarfed by losses at Lincoln Savings & Loan, an Irvine-based institution seized by regulators in April. Lincoln lost $788 million in the second quarter and $847 million in the first six months of the year.

Together, losses at Lincoln and Gibraltar made up 80% of the $1.5-billion loss posted in the second quarter by thrifts in the San Francisco Home Loan Bank district, which includes California, Arizona and Nevada.

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