Guaranty Financial Group ( GFG) signaled its Guaranty Bank of Austin probably would "not be able to continue as a going concern," after the holding restated the bank's first-quarter financial statements late Thursday. Guaranty Financial was directed by the Office of Thrift Supervision to announce a $1.5 billion writedown of private mortgage-backed securities, as well as a goodwill impairment charge of $107 million. This left Guaranty Bank with a Tier 1 leverage ratio of -5.78% and a total risk-based capital ratio was -5.52% as of March 31. These ratios need to be at least a positive 5% and 10% for most banks and S&Ls to be considered well-capitalized under regulatory capital guidelines. Under an OTS cease and desist order from April 6, the bank was required to raise capital sufficient for it to maintain a Tier 1 leverage ratio of 8% and a total risk-based capital ratio of 11%. The company said that the OTS and Federal Deposit Insurance Corp. were still pursuing "potential alternatives for the business of the bank. Any such transaction would not be expected to result in the receipt of any proceeds by the stockholders of the company." Guaranty Financial also said that its board of directors had complied with an OTS request for it to consent to handing the FDIC operating control of Guaranty Bank, although this had not yet occurred. "In the meantime, the board continues to function, but the OTS is exercising a significant degree of control over what had heretofore been the functions of the board," the company said.
Guaranty Bank had $13.4 billion in total assets as of March 31 and 164 branch offices. The thrift also reported uninsured deposits totaling $2.1 billion. TheStreet.com Ratings had assigned Guaranty Bank a financial strength rating of E-plus (very weak) based on the original March 31 Thrift Financial Report, which showed the institution was adequately capitalized. The rating has been downgraded to an E-minus, and will soon be update on TheStreet.com's Bank & Thrift Ratings Screener. There have been three bank failures in Texas during 2008 and 2009. The larges was Franklin Bank of Houston, which was closed by state regulators in November, with deposits and branches acquired by Prosperity Bancshares ( PRSP) of Houston. The last large thrift to fail was BankUnited of Coral Gables, Fla., which reported having $2.7 billion in uninsured deposits as of Dec. 31, before failing on May 21. Luckily for depositors with uninsured balances, all of BankUnited's retail deposits and branches were acquired by an investor group led by former North Fork Bank CEO John Kanas. TheStreet.com's interactive Bank Failure Map contains a summary of all failed banks and thrifts for 2008 and 2009.
Large bank holding companies that have acquired failed banks and thrifts during 2008 and 2009 include JPMorgan Chase ( JPM), which acquired Washington Mutual, the largest-ever bank or thrift to fail in the U.S.; SunTrust Banks ( STI); Regions Financial ( RF); Fifth Third Bancorp ( FITB); US Bancorp ( USB); BB&T Corp. ( BBT); and Zions Bancorp ( ZION).
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