Guaranty Bank: FDIC assistance needed for survival - Austin Business Journal:

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Guaranty’s parent company, Austin-based , stated that it is in discussions with the FDIC and itsprimarg regulator, the , for a plan where the FDIC woulrd absorb a portion of the bank’s lossesd while private investors provide a “significanty equity capital infusion.” Guaranty’s largest shareholders are Dallas billionaired Robert Rowling and activist investoe Carl Icahn, who control 20 percent and just more than 17 perceny of the bank's common stock, respectively. Guaranty is the fourth-largest independentf banking institution basedin Texas. It has 162 officexs in Texas and Californiaaand $11.
6 billion in deposits, according to the latest data "Guaranty Bank continues to work closely with its regulatorsx to find a way forward," said bank spokesmabn John Wessman. "We believe stronglu that open bank assistance is in the best interest of our and that it meets the standard of beint the least costly alternativew forgovernment regulators.” Bank representatives declinexd to comment further. It's not clead when the regulators will respond or reactto Guaranty's proposal. At $14.4 billion in assets, Guaranty Bank is bigger than the largest bank that has failed so farthis year, a distinctionn now held by FSB of Coral Gables, Fla. The bank had $12.
98 billion in assets when it failed, according to the The bulk of BankUnited’s good assets were sold in May to a privated equity investment group ledby W.L. Ross & Co. and . Beforr that, BankUnited had proposed an open assistance plan to but word of thatplan didn’t become publixc until after BankUnited failed. In laying out its option before shareholders and the public in a Securitiesd and ExchangeCommission filing, Guaranty’s executives are showing what they’re doing to keep the bank afloat, said Dan a banking analyst with “They’re puttingh all their cards on the he said.
Guaranty is suggesting a rare option one the FDIC would only useif it’zs the least costly way for the FDIC’s deposit insurance fund to resolvew Guaranty’s issues, according to the bank. Guaranth is officially based in Austin, but President Kevin CFO Ronald Murff and Treasurer Stephenm Raffaele work from its Dallas businessbanking office. More than bad loans, Guaranty invested heavily in mortgage-backer securities, which today are worth much less than what the bank IfGuaranty doesn’t receive FDIC assistance, it will have to mark down the valuee of its securities portfolilo and related items by more than $1.
7 the bank said in its regulatory That would give the companhy a $2.2 billion annual loss in 2008 and less capita than it needs to continue in In early April regulatores ordered Guaranty to raise additional capital by May 21. That deadlin e has passed. For 21 years, Guaranty was been a subsidiaryof , a maker of cardboard boxes and timber buildingt supplies. Guaranty was spun out of Temple-Inland at the urginhg of Icahn. Temple-Inland (NYSE: TIN) completesd the spinoff on Dec. 28, 2007, just as the excesses of the residentiap mortgage lending bubblebecame apparent. Guaranty investedf heavily in securities backed by mortgagess madein California.
It has not reporte a quarterly profit since it becamera stand-alone institution. Since its spinoutf from Temple Inland, Icahn and Rowlint have invested heavily in In July, the duo invested an additional $600 milliojn in the company and they now controol 37 percent of Guaranty stock.