Gibraltar Savings Sells Its Mortgage Banking Unit

Gibraltar Savings of California said Monday that it has sold its mortgage banking operation to Shawmut Bank of Boston for about $50 million, adding that profits from the sale would be offset by expected additions to loan loss reserves.

“While the sale resulted in a significant gain,” Gibraltar Chairman Herbert J. Young said in a statement, “a substantial portion will be absorbed by increased loan reserves for commercial real estate loans made by Gibraltar in prior years and provisions for current and foreseeable losses on real estate joint ventures.”

Gibraltar Savings’ mortgage banking operation is known as First Gibraltar Mortgage Corp. Based in Dallas, it services a mortgage portfolio of more than $1.6 billion and operates 20 offices in nine states.

Mortgage banking firms normally make home loans and sell them into the secondary market. Then they make their money by servicing the payments for a fee.

Jerome Nussbaum, the S&L;’s president, said First Gibraltar Mortgage is being sold “because we received a very attractive price.” Because the sale was consummated before the end of 1986, the profits will be taxed at a lower rate under the old tax code that expired last week, he added.

Gibraltar Savings is the main subsidiary of Beverly Hills-based Gibraltar Financial. Though it is one of the nation’s largest S&L; companies, Gibraltar Financial has not been one of the most successful. Its earnings have increased only slightly in recent years, unlike the profits shown by most of its large competitors in California.

Gibraltar Financial has announced in recent months that it is phasing out several operations, including real estate joint developments, because they were either losing money or did not have a bright enough future.