CenTrust Bank
CenTrust Bank was a Miami-based American savings and loan association that failed during the U.S. savings and loan crisis in 1990.
Last updated August 31, 2026
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Overview
CenTrust Bank was an American savings and loan association headquartered in Miami, Florida. Its institutional predecessor, Dade Savings & Loan Association, opened in 1934. The thrift remained a relatively conventional local savings institution until 1983, when real-estate developer David L. Paul acquired the failing association for $32 million. At the time of the acquisition, it operated 32 branches and reported approximately $2.2 billion in assets. The institution was renamed CenTrust Savings & Loan Association the following year and embarked on a rapid expansion strategy. Under Paul's leadership, CenTrust became one of the largest thrifts in the United States and the largest thrift in the southeastern United States. Its assets exceeded $9 billion at their peak in 1989. The institution's growth was accompanied by substantial exposure to high-yield, or junk, bonds and other securities transactions associated with the aggressive financial practices of the late-1980s thrift industry. CenTrust reportedly held more than $1.4 billion in junk bonds at its peak and became linked to a network of thrift institutions and securities firms involved in transactions later scrutinized by regulators and congressional investigators. The bank also became closely associated with Paul’s personal wealth, political activity, and highly visible lifestyle. Its headquarters were in the CenTrust Tower, a prominent Miami building designed by I. M. Pei and later renamed Miami Tower. The executive offices were known for unusually lavish features, including gold-plated plumbing, gold-leaf ceilings, an expensive Italian marble staircase, and a bulletproof shower door. CenTrust funds were alleged to have been used for personal expenses, including improvements to Paul's home and costs connected with his yacht Grand Cru. The institution also acquired an art collection valued at approximately $29 million, including a Peter Paul Rubens painting that was kept at Paul's residence. CenTrust's financial position deteriorated amid the broader savings and loan crisis and changes introduced by the Financial Institutions Reform, Recovery and Enforcement Act of 1989. The legislation restricted thrifts' ability to hold junk bonds, required them to dispose of such holdings over time, and required market-value accounting rather than valuation at face value. It also phased out supervisory goodwill. These changes exposed losses and contributed to CenTrust's insolvency. The institution was placed into government conservatorship in February 1990. Great Western Bank acquired CenTrust's assets in June 1990, when the failed thrift had approximately $8.2 billion in assets and ranked as the country's 23rd-largest thrift. The government's loss from the seizure was estimated at $1.7 billion at the time. CenTrust therefore became one of the largest and most costly failures of the savings and loan crisis. The collapse generated extensive criminal, regulatory, and congressional scrutiny. In 1993, Paul was convicted in federal court on 68 counts involving tax fraud, obstruction of justice, and misapplication of bank funds. He received an 11-year prison sentence, a $5 million fine, and an order to pay $60 million in restitution. He later pleaded guilty to 29 securities-related offenses and was released in 2004. CenTrust also figured in investigations of nominee ownership arrangements connected to Bank of Credit and Commerce International, securities dealings involving Drexel Burnham Lambert and American Continental Corporation, and political influence activities involving contributions, fund-raising, and contacts with public officials. The CenTrust banking operation ceased to exist after its conservatorship and asset sale.
History
Dade Savings & Loan Association opened in 1934 and served as the predecessor to CenTrust. In 1983, real-estate developer David L. Paul purchased the troubled thrift for $32 million. The institution had 32 branches and approximately $2.2 billion in assets at the time. It was renamed CenTrust Savings & Loan Association in 1984 and expanded rapidly under Paul's control. CenTrust's growth reflected the aggressive environment of the American thrift industry in the 1980s. The institution expanded its balance sheet, became the largest thrift in the southeastern United States, and reached more than $9 billion in assets in 1989. Its activities extended beyond ordinary deposit-taking and mortgage lending. CenTrust became a major holder of high-yield bonds, with more than $1.4 billion in junk bonds reportedly recorded on its books at its peak. Its securities dealings were connected to transactions involving Drexel Burnham Lambert, American Continental Corporation, and other thrifts that later attracted regulatory and congressional scrutiny. The bank's public image was shaped by its headquarters and by Paul's conspicuous spending. CenTrust Tower, designed by I. M. Pei, became a prominent Miami landmark and was later renamed Miami Tower. The executive offices featured costly and highly unusual decorative elements. Investigators alleged that bank resources were used for Paul's personal benefit, including home improvements and expenses related to the yacht Grand Cru. CenTrust also acquired a large art collection, including a Rubens painting that was kept at Paul's home. These practices became central to the public narrative surrounding the bank's collapse. CenTrust was also examined in relation to Bank of Credit and Commerce International. Through nominee ownership associated with Saudi businessman Ghaith Pharaon, BCCI became the thrift's largest shareholder, with a reported 28 percent interest. Investigators examined a subordinated-debt transaction in which BCCI acquired $25 million from a $150 million CenTrust offering and CenTrust later repurchased the securities at a loss. Other inquiries addressed alleged stock transactions with American Continental Corporation involving Playtex and Memorex shares, which were characterized as arrangements that could create artificial gains in thinly traded securities. The enactment of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 worsened CenTrust's reported financial position. The law restricted thrift ownership of junk bonds, required their disposal over a specified period, and required market-value accounting. It also phased out supervisory goodwill. These requirements exposed losses that had previously been less visible on the institution's books and contributed to insolvency. The government placed CenTrust into conservatorship in February 1990. Great Western Bank acquired its assets in June of that year. CenTrust had approximately $8.2 billion in assets at the time and was described as the 23rd-largest thrift in the country. The estimated government loss was approximately $1.7 billion, making the failure one of the largest and most expensive episodes of the savings and loan crisis. The collapse led to criminal prosecutions and continuing public investigations. In November 1993, Paul was convicted on 68 counts involving tax fraud, obstruction of justice, and misapplication of bank funds. He was sentenced to 11 years in prison, fined $5 million, and ordered to pay $60 million in restitution. He later pleaded guilty to 29 securities violations and was released in 2004. CenTrust's history is consequently associated with the risks of rapid thrift expansion, speculative securities exposure, weak controls over insider conduct, and the systemic pressures that characterized the late-1980s savings and loan crisis.
- 1993
David L. Paul convicted
[1]Paul is convicted on 68 federal counts related to tax fraud, obstruction of justice, and misuse of bank funds.
- 1990
CenTrust enters conservatorship
[1]The government places the thrift into conservatorship in February amid the savings and loan crisis.
- 1990
Great Western Bank acquires assets
[1]Great Western Bank acquires CenTrust's assets in June, after which CenTrust ceases to operate as an independent thrift.
- 1989
Assets peak during expansion
[1]CenTrust's assets exceed $9 billion, making it the largest thrift in the southeastern United States.
- 1989
New thrift legislation exposes losses
[1]The Financial Institutions Reform, Recovery and Enforcement Act changes junk-bond and goodwill accounting requirements, worsening CenTrust's solvency position.
- 1984
Institution renamed CenTrust Savings & Loan Association
[1]Following Paul's acquisition, the thrift adopts the CenTrust name and begins a period of rapid expansion.
- 1983
David L. Paul acquires the thrift
[1]Real-estate developer David L. Paul purchases the troubled association, then operating 32 branches with approximately $2.2 billion in assets.
- 1934
Dade Savings & Loan Association opens
[1]The institution that later became CenTrust begins operations as Dade Savings & Loan Association in Miami.
Products and positioning
A rapidly expanding regional thrift that evolved from a traditional Miami savings-and-loan institution into a large, securities-exposed financial institution before collapsing during the U.S. savings and loan crisis.
Retail banking
Savings accounts
As a savings and loan association, CenTrust's core business included deposit-taking and conventional thrift services for customers in its regional branch network. The available reference material does not identify specific account names, rates, or terms.
Lending
Mortgage and real-estate lending
Mortgage and real-estate finance formed part of the institution's traditional savings-and-loan business. CenTrust expanded substantially beyond its original local scale, but the available sources do not provide a detailed breakdown of its mortgage products or underwriting practices.
Investment securities
High-yield bond holdings
CenTrust became one of the largest thrift buyers of junk bonds, holding more than $1.4 billion in high-yield securities at its peak. These investments exposed the institution to market and valuation risk and became important to later regulatory scrutiny and its eventual failure.
Controversies
1993
Federal conviction of David L. Paul
Paul was convicted on 68 counts of tax fraud, obstruction of justice, and misapplication of bank funds. He received an 11-year sentence, a $5 million fine, and a $60 million restitution order, and later pleaded guilty to 29 securities violations.
1990
Alleged misuse of bank funds
Investigators alleged that David L. Paul used CenTrust resources for personal purposes, including home improvements, yacht expenses, and costs associated with an art collection. The allegations contributed to the criminal case surrounding the thrift's collapse.
1990
BCCI nominee ownership and securities transactions
CenTrust was investigated over a reported 28 percent ownership interest held through a nominee linked to Bank of Credit and Commerce International, as well as a subordinated-debt transaction that allegedly caused CenTrust to repurchase securities at a loss.
1990
Securities dealings and alleged artificial profits
Investigators examined CenTrust transactions involving Playtex and Memorex shares and American Continental Corporation. The dealings were described as potentially inflating prices and producing unsupported or bogus profits in thinly traded securities.
1990
Political influence and bribery allegations
CenTrust and Paul attracted scrutiny over political contributions, fund-raising activities, and contacts with public officials. Miami Beach mayor Alex Daoud was convicted of accepting a bribe related to permits for expanding the dock at Paul's residence.
Brand decisions
1990
Transfer assets to Great Western BankM&ABackground
CenTrust entered government conservatorship after becoming insolvent during the savings and loan crisis.
Action taken
Great Western Bank acquired CenTrust's assets in June 1990.
Aftermath
CenTrust ceased independent operations; the government estimated its loss from the seizure at approximately $1.7 billion.
Assets at seizure. $8.2 billion (June 1990)
1984
Accelerate regional expansionStrategyBackground
After David L. Paul acquired the troubled thrift, CenTrust sought rapid growth from its existing Miami base.
Action taken
The institution expanded its scale and branch presence and became the largest thrift in the southeastern United States.
Aftermath
Assets exceeded $9 billion by 1989, but the expansion increased the institution's exposure to securities and balance-sheet risk.
1980
Build a large high-yield securities positionStrategyBackground
During the 1980s, aggressive thrifts increasingly used securities investments to expand earnings and assets.
Action taken
CenTrust accumulated more than $1.4 billion in junk bonds and participated in securities transactions involving firms and other thrifts later examined by investigators.
Aftermath
Regulatory changes requiring market-value treatment and the disposal of junk bonds exposed losses and contributed to insolvency.
High-yield bond holdings. More than $1.4 billion at peak (1980s)
Recent events
- 1990
CenTrust Bank placed into government conservatorship[1]
Bankruptcy · Regulation
CenTrust was taken into government conservatorship as its financial condition deteriorated during the savings and loan crisis.
- 1990
Great Western Bank acquires CenTrust assets[1]
M&A · Bankruptcy
Great Western Bank acquired CenTrust's assets after the failed thrift was seized, ending the institution's independent operation.
Sources1 sources
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