Guaranty Financial Says Still Short Of Capital

WASHINGTON (AP) — Bank holding company Guaranty Financial Group Inc. on Monday expressed grave concern over its financial condition and said it is working with federal regulators as they pursue possible buyers or other alternatives.

Austin, Texas-based Guaranty Financial, the parent of Guaranty Bank, said in a regulatory filing that it won't be able to file its second-quarter financial statements on time and that it remains critically short of capital. The company said it "no longer believes that it will be able to continue as a going concern."

In a filing last month, Guaranty Financial, with around $15 billion in assets and 160 branches in Texas and California, said it likely wouldn't be able to stay in business. It reported an additional $1.45 billion in writedowns on soured loans to homebuilders and borrowers in California and securities tied to mortgages.

In April, the federal Office of Thrift Supervision said the company had engaged in "unsafe and unsound" banking practices and ordered it to raise fresh capital, find a buyer or face a takeover by the government.

Guaranty Financial's predicament sets up a possible takeover by the Federal Deposit Insurance Corp. On Friday, the FDIC seized Montgomery, Ala.-based Colonial BancGroup Inc., a big lender in real estate development. With about $25 billion in assets, it is the largest U.S. bank to fail this year.