Guaranty Bank Insiders Bailing Out, Abandon Ship, Kids!!
Well, well, well. What should we take this to mean?
Guaranty shareholders bailing out by the dozens on a Friday afternoon? On this particular Friday afternoon, none the less, with the FDIC seizing Colonial Bank and all hell breaking loose?
We already knew Guaranty was in trouble, of course, but this is akin to yelling "FIRE!" in a crowded movie theater. In other words, RUN!
Houston Business Journal:
Guaranty Financial Group Inc. (GFG), which operates 27 Guaranty Bank branches in the Houston region, is likely to fail after loan losses and writedowns have left it short of capital.Ruh-oh. After Colonial, Sheila and Co. can't take another blow.
Austin-based Guaranty, the second-largest publicly traded bank in Texas, said in a regulatory filing that it couldn’t raise enough capital from its shareholders to remain solvent, and is not eligible for federal government assistance due to continued loan writedowns that have left the bank “critically undercapitalized.”
An adjustment to write down non-agency mortgage-backed securities to estimated fair value has resulted in a massive impairment charge of $1.4 billion and restatement of Guaranty’s first quarter financial report.
“In light of those developments, the company believes that it is probable that it will not be able to continue as a going concern,” the filing says, noting that contingency plans are in place for the Federal Deposit Insurance Corp. to take control of the bank if it fails.
As we have postulated before, perhaps the FDIC will have to seize itself.
I can see the press release now:
People's Bank of China, Beijing, China, Assumes All of the Deposits of the Federal Deposit Insurance Corporation, Washington, District of Columbia
FAIL! Guaranty has been given until the 21st of August to find a buyer. We get a sense of deja vu that feels a tad like Bank United.
(h/t Caleb... please let me know when we can start drinking, I'm about done for the damn day)