Skip to main content

AUSTIN, Texas (

TheStreet

) --

Guaranty Financial Group

(GFG)

shares were slumping 5 cents to 34 cents after a published report that the lender is set to be shut down by regulators on Friday.

The Wall Street Journal

cited sources "familiar with the matter," saying that

Banco Bilbao Vizcaya Argentaria SA

(BBV)

was the likely winner of a government auction of the troubled thrift holding company's branches and deposits.

When a troubled bank or savings and loan association's main regulator determines that an institution is going to fail, the regulator notifies the

Federal Deposit Insurance Corp.

, which seeks bids from other banks or investors to acquire the deposits of the failed institution. The FDIC usually lines up a buyer, before the regulator of the failing bank or thrift shuts it down, nearly always on a Friday.

Last Friday, there was a similar leak of the auction process, with published reports saying that

BB&T Corp.

TheStreet Recommends

(BBT) - Get BB&T Corporation Report

would acquire the failing

Colonial BancGroup

, which was indeed shut down that evening.

FDIC spokesman David Barr told

TheStreet.com

that the leaks were "unfortunate," since a very confusing situation could develop if a published report of a pending bank failure proves inaccurate.

Guaranty Financial's main subsidiary is

Guaranty Bank

of Austin, Texas. As of June 30, the thrift had a Tier 1 leverage ratio of negative 7.11%, which was quite a drop from a positive 7.30% just the previous quarter. This ratio needs to be at least 5% for most banks and thrifts to be considered

well-capitalized

.

Guaranty Financial announced on July 17 that its capital had been wiped out because the

Office of Thrift Supervision

had required a restatement of Guaranty Bank's financial report for March 31, reflecting "substantial asset writedowns." At that time, Guaranty said it was probably the company could not "continue as a going concern."

The $15 billion thrift's lending activities were highly concentrated in construction loans, commercial and industrial loans and commercial mortgages, which together comprised 51% of total assets as of June 30.

Guaranty Bank reported $1.6 billion in uninsured deposits as of June 30.

There have been 77 bank or thrift failures in 2009.

All failures since the beginning of 2008 are detailed on

TheStreet.com's

interactive

Bank Failure Map

.

Georgia

continues to lead all states with 21 bank or thrift failures during 2008 and 2009, followed by

Illinois

with 14,

California

with 13,

Florida

with eight and

Nevada

with five.

In addition BB&T and

JPMorgan Chase

(JPM) - Get JPMorgan Chase & Co. Report

, which acquired Washington Mutual, the largest-ever bank or thrift to fail in the U.S., large bank holding companies that have acquired failed institutions during 2008 and 2009 include

SunTrust Banks

(STI) - Get SunTrust Banks, Inc. Report

;

Regions Financial

(RF) - Get Regions Financial Corporation Report

;

Fifth Third Bancorp

(FITB) - Get Fifth Third Bancorp Report

;

U.S. Bancorp

(USB) - Get U.S. Bancorp Report

;

Zions Bancorp

(ZION) - Get Zions Bancorporation, N.A. Report

; and

PNC Financial

(PNC) - Get PNC Financial Services Group, Inc. Report

.

--

Written by Philip van Doorn in Jupiter, Fla.

Philip W. van Doorn joined TheStreet.com Ratings., Inc., in February 2007. He is the senior analyst responsible for assigning financial strength ratings to banks and savings and loan institutions. He also comments on industry and regulatory trends. Mr. van Doorn has fifteen years experience, having served as a loan operations officer at Riverside National Bank in Fort Pierce, Florida, and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a Bachelor of Science in business administration from Long Island University.