Guaranty Bank was a major bank based in

Austin Austin is the capital city of the U.S. state of Texas, as well as the seat and largest city of Travis County, with portions extending into Hays and Williamson counties. Incorporated on December 27, 1839, it is the 11th-most-populous city ...

, which collapsed in 2009. It was formed in 1988 as part of

Temple-Inland Temple-Inland, Inc. was an American corrugated packaging and building products company. It was acquired by International Paper in 2012. History Inland Container Corporation was founded by Herman C. Krannert as Anderson Box Company in Anderson ...

and in 2007 became a standalone company. At the time of its collapse, Guaranty was the second largest bank in Texas, with 162 branches across Texas and California, and had $13 billion in assets and held $12 billion in deposits. Major shareholders included billionaire investor

Carl Icahn Carl Celian Icahn (; born February 16, 1936) is an American financier. He is the founder and controlling shareholder of Icahn Enterprises, a public company and diversified conglomerate holding company based in Sunny Isles Beach. Icahn takes l ...

and hotel tycoon Robert Rowling, who jointly invested $600 million in the bank in 2008.

History

Guaranty Bank's origins date to 1938, when a charter was issued to the Guaranty Building and Loan in

Galveston, Texas Galveston ( ) is a coastal resort city and port off the Southeast Texas coast on Galveston Island and Pelican Island in the U.S. state of Texas. The community of , with a population of 47,743 in 2010, is the county seat of surrounding Galvesto ...

which operated as the Guaranty Federal Savings and Loan Association. In 1988, Temple-Inland formed Guaranty by acquiring three financial institutions: Guaranty Federal Savings and Loan Association, Delta Savings Association and First Federal Savings and Loan. It expanded from Texas into California in the 1990s, acquiring Stockton Savings Bank and Hemet Federal Savings & Loan. In November 2007, Temple-Inland announced that it planned to separate itself into three stand-alone public companies. Shareholders in the original company would eventually receive stock in all three companies depending on the amount owned on the day the company split-up. The three companies were: * Temple-Inland Inc. *Guaranty Financial Group Inc. * Forestar Real Estate Group Inc. Guaranty Financial Group Inc. became a standalone

financial services Financial services are the Service (economics), economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, acco ...

holding company A holding company is a company whose primary business is holding a controlling interest in the securities of other companies. A holding company usually does not produce goods or services itself. Its purpose is to own shares of other companies ...

that operated in various business segments through its primary operating subsidiaries, "Guaranty Bank" and "Guaranty Insurance Services, Inc." Guaranty Bank became a federally chartered

savings bank A savings bank is a financial institution whose primary purpose is accepting savings account, savings deposits and paying interest on those deposits. History of banking, They originated in Europe during the 18th century with the aim of providi ...

with total assets in excess of $16 billion (consolidated) that conducted consumer and business banking activities through a network of approximately 150 bank branches located in

Texas Texas (, ; Spanish language, Spanish: ''Texas'', ''Tejas'') is a state in the South Central United States, South Central region of the United States. At 268,596 square miles (695,662 km2), and with more than 29.1 million residents in 2 ...

and

California California is a U.S. state, state in the Western United States, located along the West Coast of the United States, Pacific Coast. With nearly 39.2million residents across a total area of approximately , it is the List of states and territori ...

that provided

commercial bank A commercial bank is a financial institution which accepts deposits from the public and gives loans for the purposes of consumption and investment to make profit. It can also refer to a bank, or a division of a large bank, which deals with co ...

ing products and services to various geographic markets throughout the

United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...

. Guaranty Insurance Services, Inc. became an insurance agency that focused on property and casualty insurance with fixed annuities and operated out of 17 offices located in

and

, as well as through branches of Guaranty Bank. Also in November In November 2008, Kenneth R. Dubuque resigned as president and

chief executive officer A chief executive officer (CEO), also known as a central executive officer (CEO), chief administrator officer (CAO) or just chief executive (CE), is one of a number of corporate executives charged with the management of an organization especially ...

of the company and the bank, positions he had served in beginning in 1998 and continuing through November 18, 2008. John T. Stuart III, a director of the company and the bank, was appointed as interim chief executive officer and interim chairman of the board of the company. Also in November 2008, the company appointed Kevin J. Hanigan, previously a senior executive vice president and chief banking officer of the company and the bank, to fill the role of president and

chief operating officer A chief operating officer or chief operations officer, also called a COO, is one of the highest-ranking executive positions in an organization, composing part of the "C-suite". The COO is usually the second-in-command at the firm, especially if t ...

of the company and the bank.

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As a thrift bank, its charter required it to keep 70% of its assets in housing-related investments, leaving it exposed to the 2008 US housing crash In April 2009, the

Office of Thrift Supervision The Office of Thrift Supervision (OTS) was a List of federal agencies in the United States, United States federal agency under the United States Department of the Treasury, Department of the Treasury that chartered, supervised, and regulated all ...

ordered the bank to take a $1.5 billion

writedown A write-off is a reduction of the recognized value of something. In accounting, this is a recognition of the reduced or zero value of an asset. In income tax statements, this is a reduction of taxable income, as a recognition of certain expenses ...

on the value of the

mortgage-backed securities A mortgage-backed security (MBS) is a type of asset-backed security (an 'instrument') which is secured by a mortgage or collection of mortgages. The mortgages are aggregated and sold to a group of individuals (a government agency or investment ba ...

it held. This in turn left the bank with an inadequate

Tier 1 capital Tier 1 capital is the core measure of a bank's financial strength from a regulator's point of view.By definition of Bank for International Settlements. It is composed of ''core capital'', which consists primarily of common stock and disclosed res ...

ratio, with the bank issuing a statement saying that it was likely to be too undercapitalized to continue as a going concern. The bank's share price collapsed from $18.50 to less than 15 cents. The

Federal Deposit Insurance Corporation The Federal Deposit Insurance Corporation (FDIC) is one of two agencies that supply deposit insurance to depositors in American depository institutions, the other being the National Credit Union Administration, which regulates and insures cred ...

assumed control of the failed bank August 21, 2009. This was the 10th largest bank failure in US history, and the second largest of the 140 bank collapses of 2009 (behind Colonial Bank). The FDIC immediately sold the assets of the bank to

BBVA Compass BBVA USA was a bank headquartered in Birmingham, Alabama. It was a subsidiary of Banco Bilbao Vizcaya Argentaria from 2007 until 2021, when it was acquired by PNC Financial Services. It operated mainly in Alabama, Arizona, California, Colorad ...

, the US-based subsidiary of

Banco Bilbao Vizcaya Argentaria Banco Bilbao Vizcaya Argentaria, S.A. (), better known by its initialism BBVA, is a Spanish multinational financial services company based in Madrid and Bilbao, Spain. It is one of the largest financial institutions in the world, and is present ...

(BBVA), the second biggest bank in Spain. This was the first deal between the FDIC and an institution bank tied to a foreign bank for almost 20 years. Under the agreement, the FDIC and BBVA Compass shared the losses of the bank, with the costs to the FDIC's

Deposit Insurance Fund The Federal Deposit Insurance Corporation (FDIC) is one of two agencies that supply deposit insurance to depositors in American depository institutions, the other being the National Credit Union Administration, which regulates and insures credi ...

estimated to be $3 billion. Guaranty Bank was absorbed into its new parent company, with its branches being

rebranded Rebranding is a marketing strategy in which a new name, term, symbol, design, concept or combination thereof is created for an established brand with the intention of developing a new, differentiated identity in the minds of consumers, investors ...

as BBVA Compass outlets.

References

{{reflist, 2 Bank failures in the United States Banks based in Texas Banks established in 1988 Banks disestablished in 2009 Companies based in Austin, Texas Defunct companies based in Texas Defunct banks of the United States

History

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See also

Further reading

References