NEW YORK, July 24 Guaranty Financial Group Inc
GFG.N, the second-largest publicly traded bank in Texas, said
it will probably fail after loan losses and writedowns left it
"critically" short of capital.
In a regulatory filing late on Thursday, the Austin-based
lender said it had been unable to obtain a capital infusion
from its shareholders, and believes it will not be eligible for
help from federal regulators.
Guaranty has about $16 billion of assets and more than 150
branches in Texas and California, according to its website. On
that basis, if it were to fail, Guaranty would be the largest
U.S. bank to do so in 2009.
Companies owned by billionaire investor Carl Icahn own 17
percent of Guaranty, Reuters data show. Neither Guaranty nor
Icahn immediately returned calls seeking comment.
Guaranty has been operating under a cease-and-desist order
from the federal Office of Thrift Supervision (OTS) since
April, and said it does not expect to raise sufficient capital
to comply with the order. It said losses and writedowns have
left it "critically undercapitalized," with negative capital
"In light of these developments, the company believes that
it is probable that it will not be able to continue as a going
concern," Guaranty said.
The company also said it has agreed to an OTS demand that
the regulator exercise its statutory authority to appoint the
Federal Deposit Insurance Corp as a receiver or conservator for
That appointment has not yet happened, but the OTS is
exercising "a significant degree of control" over what had been
functions of the board of directors, Guaranty said.
The largest publicly-traded bank based in Texas is
Dallas-based Comerica Inc (CMA.N).
Guaranty shares closed Thursday at 22 cents.
(Reporting by Jonathan Stempel; Editing by Derek Caney)