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. ( BBT) 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), 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); Regions Financial ( RF); Fifth Third Bancorp ( FITB); U.S. Bancorp ( USB); Zions Bancorp ( ZION); and PNC Financial ( PNC). -- Written by Philip van Doorn in Jupiter, Fla.