MIAMI -- CenTrust Bank was sold Friday to Great Western Bank of California, four months after federal regulators took over the insolvent thrift and ousted its chairman amid allegations he used the institution as his personal 'piggy bank.'
Great Western's bid for the Miami-based CenTrust bested offers from 15 other institutions made to the Resolution Trust Corp., which took over the thrift in February from its lavish-spending chairman, David Paul.
Great Western, the second largest thrift in the nation, will assume all of CenTrust's deposits, totaling about $5.2 billion, the RTC said. Great Western bought CenTrust's 71 branches for $86 million.
'This sale of CenTrust reflects both a significant interest from Great Western and the aggressive sales efforts of the RTC resolutions staff,' said David C. Cooke, executive director of the RTC.
'We are very pleased with this sale and with Great Western's purchase later today of the Florida branches of Gibraltar Savings,' he said.
Great Western also obtained Friday 18 branches with $700 million in deposits from Gibraltar Savings Bank for $3.75 million. Gibraltar like Great Western is based in Beverly Hills, Calif.
The two deals will give Great Western 154 retail branch offices in Florida and deposits totaling $6 billion.
'Great Western is more than doubling its presence in Florida, one of the most attractive retail banking markets in the United States,' said James F. Montgomery, chairman and chief executive offficer.
Cooke said the total cost to the RTC of the CenTrust transaction is estimated at $1.7 billion.
On Saturday, the RTC auctioned off paintings and other artworks, books, china, Baccarat crystal and Persian rugs purchased with CenTrust funds by Paul, recouping more than $300,000.
On Dec. 20, state regulators moved to oust Paul, saying he 'maintained an opulent lifestyle largely at the expense of the association, and generally treated a federally insured institution and public company as if it were his own personal piggy bank.'
CenTrust, which was the largest thrift in the southeastern United States and the 23rd-largest in the nation, had total assets of $6.7 billion with liabilities of $7.5 billion, including $5.2 billion in 266,092 deposit accounts, the RTC said.
The failed thrift also had $2.3 billion insecured liabilities, including $500 million in advances from the RTC.
Federal regulators estimated that CenTrust's core deposit base is $1.78 billion.
The failed institution's assets include $783 million in cash and investment grade securities, $1.58 billion in one- to four-family mortgages and $928 million in consumer loans.
Great Western will purchase the $3.3 billion in CenTrust assets and will be given three months to review its purchase and return those assets that are found to have 'documentary deficiencies or that have specific defects,' the RTC said.
The RTC will provide about $1.8 billion to Great Western to facilitate the sale and will retain about $3.1 billion of the closed institution's assets.
Cooke said the RTC will recover a portion of its initial cash advances through the sale of assets to be held in the receivership.
Before CenTrust was taken over by federal regulators, Great Western had agreed to buy 63 of CenTrust's branches for $150 million. The federal takeover voided the deal.
Great Western first entered the Florida market in 1986, acquiring the failed Intercapital Savings Bank thrift of Jacksonville.
Two weeks ago, Great Western announced a deal to buy 13 Florida branches of Cartaret Savings Bank from AmBase Corp. for $26.5 million.
Paul gained control of CenTrust, formerly called Dade Savings and Loan, in November 1983, when it was $500 million in the red and near collapse.
He rebuilt the company's balance sheets and expanded the branch network while paying high rates of interest to attract deposits and using that money to buy higher paying, but often risky, junk bonds.
CenTrust fell on hard times in 1988 and 1989. Federal regulators told the House Banking Committee in March that the thrift's junk bond portfolio of about $1 billion appeared to have lost about $400 million in value, 'large losses' were expected in CenTrust's auto leasing business and there were $300 million in undeclared losses, known as regulatory goodwill, that Paul assumed when he took over Dade Savings.