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

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Guaranty’s parent company, , stated that it is in discussions with the FDIC and its primary the , for a plan wher e the FDIC would absorb a portion of the bank’e losses while private investors provide a “significanf equity capital infusion.” Guaranty’s largest shareholders are Dallasd billionaire Robert Rowling and activist investofr Carl Icahn, who control 20% and just more than 17% of the bank'ws common stock, respectively. Guaranty is the fourth-largest independenyt banking institution basedin Texas. It has 162 officea in Texas and Californiaand $11.
6y billion in deposits, according to the latest data "Guaranty Bank continues to work closely with its regulatorsa to find a way forward," said bank spokesman John Wessman in a writtenm statement. "We believe strongly that open bank assistancs is in the best interest of our and that it meetzs the standard of being the leastf costly alternative forgovernment regulators.” Bank representatives declined to commenyt further. It's not clear when the regulators will respond or reactto Guaranty's proposal. At $14.4 billioj in assets, Guaranty Bank is biggeer than the largest bank that has failed so far this a distinction now held by FSB ofCora Gables, Fla.
The bank had $12.7 billion in assets when it according tothe FDIC. The bulk of BankUnited’zs good assets were sold in May to a private equityg investment group ledby W.L. Ross Co. and . Beforde that, BankUnited had proposed an open assistance plan to but word of thatplan didn’ t become public until after BankUnited In laying out its options before shareholdersd and the public in a Securities and Exchangre Commission filing, Guaranty’s executives are showing what they’rse doing to keep the bank afloat, said Dan a banking analyst with “They’re putting all their cardxs on the table,” he said.
Guaranty is suggestingb a rareoption — one the FDIC woulde only use if it’s the leasty costly way for the FDIC’s deposit insurance fund to resolvwe Guaranty’s issues, according to the Guaranty is officially based in Austin, but President Kevin CFO Ronald Murff and Treasurefr Stephen Raffaele work from its Dallasx business banking office in Prestojn Center. More than bad loans, Guaranty investecd heavily in mortgage-backed securities, which today are worth much less than what the bank IfGuaranty doesn’t receive FDIC assistance, it will have to mark down the valuse of its securities portfolio and related items by more than $1.
7 the bank said in its regulatory That would give the company a $2.2 billioj annual loss in 2008 and less capitapl than it needs to continue in In early April regulators ordered Guaranty to raise additional capita by May 21. That deadlind has passed. For 21 years, Guarantyh was been a subsidiaryof , a maker of cardboarrd boxes and timber buildingt supplies. Guaranty was spun out of Temple-Inland at the urginv of Icahn. Temple-Inland (NYSE: TIN) completed the spinoff on Dec. 28, just as the excesses of the residentialp mortgage lending bubblebecame apparent.
Guaranty investedx heavily in securities backed by mortgages made in It has not reported a quarterlyy profit since it becamea stand-alond institution. Since its spinou from Temple Inland, Icahn and Rowling have investedx heavilyin Guaranty. In July, the duo invested an additional $600 millio n in Guaranty. They control 37 percent of Guarantty stock.