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Guaranty Financial Group, the second-largest publicly traded bank in Texas, is in talks with at least one investor group for a possible recapitalization, a source familiar with the matter said Friday.
Earlier Friday, the bank said it will probably fail after loan losses and write-downs left it "critically" short of capital.
The Austin-based lender has about $16 billion of assets and more than 150 branches in Texas and California, according to its Web site.
Guaranty was not available for immediate comment. The source did not want to be identified because the talks are not public.
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If Guaranty were to fail, it would be the largest U.S. bank to do so in 2009. Guaranty is about half the size of IndyMac, which failed last July.
Its largest investors include companies run by billionaire Carl Icahn and by Robert Rowling, whose investment firm owns the Omni Hotels chain.
In a regulatory filing late Thursday, Guaranty said it has been unable to obtain new capital from shareholders, and believes it will be ineligible for help from U.S. regulators. Guaranty had said it did not expect to raise enough capital to comply with an April cease-and-desist order from the federal Office of Thrift Supervision (OTS).
It said losses and writedowns have left it "critically undercapitalized," with negative capital ratios.
"The company believes that it is probable that it will not be able to continue as a going concern," Guaranty said.
Guaranty also said it has agreed to an OTS demand for the appointment of the Federal Deposit Insurance Corp as a receiver or conservator. 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 company has not filed official results since the third quarter of 2008. It has estimated it lost $444 million in all of 2008 and another $256 million in the first quarter of 2009. Chief Marketing Officer John Wessman in a statement said Guaranty is still working with regulators, and believes it can avoid disruptions to customers.
Guaranty's largest investors include Rowling's investment firm TRT Holdings, which has a 19.9 percent stake according to a regulatory filing. A company run by Icahn has a 17 percent stake, Reuters data show.
Icahn and Rowling did not immediately return calls for comment.
Guaranty began operations in 1988, according to its Web site. It was spun off in December 2007 by Temple-Inland [TIN
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], a corrugated packaging and building products company.
The largest publicly traded bank based in Texas is Dallas-based Comerica [CMA
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].
Guaranty shares [GFG
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] were unchanged in after-hours trading on the New York Stock Exchange after closing down 7 cents. Their 52-week high is $6.75, set last Sept. 18.
Data is a real-time snapshot *Data is delayed at least 15 minutes