Gibraltar Savings Association was a

Houston Houston (; ) is the most populous city in Texas, the most populous city in the Southern United States, the fourth-most populous city in the United States, and the sixth-most populous city in North America, with a population of 2,304,580 in ...

Texas Texas (, ; Spanish language, Spanish: ''Texas'', ''Tejas'') is a state in the South Central United States, South Central region of the United States. At 268,596 square miles (695,662 km2), and with more than 29.1 million residents in 2 ...

based

savings and loan Wealth is the abundance of valuable financial assets or physical possessions which can be converted into a form that can be used for transactions. This includes the core meaning as held in the originating Old English word , which is from an I ...

. Its failure in 1988 and resolution was one of the most expensive in the savings and loan crisis at an estimated cost of $2.875 billion.

Background

The thrift was founded as Gibraltar Savings and Building Association in 1921. It was formerly owned by Imperial Corporation of America in

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, but was spun off to shareholders in 1981. In 1984, Gibraltar Savings was acquired by First Texas Financial Corporation. FTFC, which had acquired First Texas Savings Association in

Dallas Dallas () is the List of municipalities in Texas, third largest city in Texas and the largest city in the Dallas–Fort Worth metroplex, the List of metropolitan statistical areas, fourth-largest metropolitan area in the United States at 7.5 ...

in 1982, was controlled by nursing home developer J. Livingston Kosberg. An investor in FTFC was lawyer and political power broker

Robert S. Strauss Robert Schwarz Strauss (October 19, 1918 – March 19, 2014) was an influential figure in American politics, diplomacy, and law whose service dated back to future President Lyndon Johnson's first congressional campaign in 1937. By the 1950s, he ...

, who owned 10% of the stock. His son, real estate developer Richard Strauss, joined the board and was active in running the thrift.

Failure

Gibraltar Savings failed in December 1988, at which time it was the largest thrift in Texas. Under the

Federal Home Loan Bank Board The Federal Home Loan Bank Board (FHLBB) was a board created in 1932 that governed the Federal Home Loan Banks (FHLB or FHLBanks) also created by the act, the Federal Savings and Loan Insurance Corporation (FSLIC) and nationally-chartered savings ...

and

Federal Savings and Loan Insurance Corporation The Federal Savings and Loan Insurance Corporation (FSLIC) was an institution that administered deposit insurance for savings and loan institutions in the United States. History Establishment The FSLIC was established by the National Housing Act ...

's Southwest Plan, five failed Texas thrifts with total assets of $12.2 billion were combined. The five thrifts were Gibraltar Savings Association (with $6.3 billion in assets), First Texas Savings Association in Dallas ($3.2 billion), Home Savings and Loan Association in Houston ($568 million), Killeen Savings and Loan Association in Killeen ($256 million), and Montfort Federal Savings and Loan Association in Dallas ($1.8 billion). (Montfort was formerly Vernon Savings and Loan.)

Sale

In a controversial deal, the thrifts were sold in December 1988 to MacAndrews & Forbes Holdings Inc., (owned by

Ronald Perelman Ronald Owen Perelman (; born January 1, 1943) is an American banker, businessman and investor. MacAndrews & Forbes Incorporated, his company, has invested in companies with interests in groceries, cigars, licorice, makeup, cars, photography, t ...

) and

Gerald J. Ford Gerald J. Ford (born 1944) is an American attorney and businessman.

for $315 million, with the government spending $5.1 billion as their side of the transaction. As part of the sale, the investment group gained about $1 billion in tax benefits. The transaction was one of several sales of failed Texas thrifts that took place in the last days of 1988, as the special tax breaks were due to expire on January 1, 1989. The estimated resolution cost by the federal government for Gibraltar Savings Association was $2.875 billion, and $2.545 billion for the affiliated First Texas Savings Association, or a total combined cost of $5.42 billion.

Revival and eventual sale

The thrift was reopened as First Texas Bank F.S.B., but then renamed First Gibraltar Bank, F.S.B. in 1989.

BankAmerica Corp. The Bank of America Corporation (often abbreviated BofA or BoA) is an American multinational investment bank and financial services holding company headquartered at the Bank of America Corporate Center in Charlotte, North Carolina. The bank ...

acquired 130 branches of the thrift in 1993. Four branches were retained and renamed First Madison Federal Savings Bank, which then purchased First Nationwide Bank in 1994, California Federal Bank in 1997 and Glendale Federal Bank in 1998. In 2002 the thrift, by then renamed CalFed Bank, was purchased by

Citigroup Citigroup Inc. or Citi (Style (visual arts), stylized as citi) is an American multinational investment banking, investment bank and financial services corporation headquartered in New York City. The company was formed by the merger of banking ...

.Citigroup to Buy Parent of Cal Fed ''Los Angeles Times'' May 22, 2002
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Background

Failure

Sale

Revival and eventual sale

References

Further reading