Guaranty Bank (Texas)

Last updated
Guaranty Financial Group Inc.
Predecessor Temple-Inland
Founded1938/1988 [1]
Defunct2009
FateAcquired by BBVA Compass in 2009
Headquarters Austin, Texas, U.S.
Area served
 Texas and California
Key people
Kenneth R. Dubuque (1998–2008)
(chairman and CEO)
John T. Stuart III (2008–2009)
(interim chairman and interim CEO)
Kevin J. Hanigan (2008–2009)
(president and COO)

Guaranty Bank was a major bank based in Austin, which collapsed in 2009. [2] It was formed in 1988 [3] as part of Temple-Inland 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, [4] and had $13 billion in assets and held $12 billion in deposits. [2] Major shareholders included billionaire investor Carl Icahn and hotel tycoon Robert Rowling, who jointly invested $600 million in the bank in 2008. [3] [5]

Contents

History

Guaranty Bank's origins date to 1938, when a charter was issued to the Guaranty Building and Loan in Galveston, Texas 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. [1] [3] It expanded from Texas into California in the 1990s, acquiring Stockton Savings Bank and Hemet Federal Savings & Loan. [6] [7] [8]

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: [9]

Guaranty Financial Group Inc. became a standalone financial services holding company 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 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 and California that provided commercial banking products and services to various geographic markets throughout the United States. 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 Texas and California, as well as through branches of Guaranty Bank. [9] Also in November

In November 2008, Kenneth R. Dubuque resigned as president and chief executive officer 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. [10] 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 of the company and the bank. [10]

Collapse

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 [3]

In April 2009, the Office of Thrift Supervision ordered the bank to take a $1.5 billion writedown on the value of the mortgage-backed securities it held. This in turn left the bank with an inadequate Tier 1 capital ratio, with the bank issuing a statement saying that it was likely to be too undercapitalized to continue as a going concern. [11] The bank's share price collapsed from $18.50 to less than 15 cents. [5]

The Federal Deposit Insurance Corporation assumed control of the failed bank August 21, 2009. [2] This was the 10th largest bank failure in US history, and the second largest of the 140 bank collapses of 2009 (behind Colonial Bank). [12]

The FDIC immediately sold the assets of the bank to BBVA Compass, the US-based subsidiary of Banco Bilbao Vizcaya Argentaria (BBVA), the second biggest bank in Spain. [2] This was the first deal between the FDIC and an institution bank tied to a foreign bank for almost 20 years. [13] Under the agreement, the FDIC and BBVA Compass shared the losses of the bank, with the costs to the FDIC's Deposit Insurance Fund estimated to be $3 billion. [2] [12] Guaranty Bank was absorbed into its new parent company, with its branches being rebranded as BBVA Compass outlets. [14]

See also

Further reading

Related Research Articles

<span class="mw-page-title-main">Federal Deposit Insurance Corporation</span> US government agency providing deposit insurance

The Federal Deposit Insurance Corporation (FDIC) is a United States government corporation supplying deposit insurance to depositors in American commercial banks and savings banks. The FDIC was created by the Banking Act of 1933, enacted during the Great Depression to restore trust in the American banking system. More than one-third of banks failed in the years before the FDIC's creation, and bank runs were common. The insurance limit was initially US$2,500 per ownership category, and this was increased several times over the years. Since the enactment of the Dodd–Frank Wall Street Reform and Consumer Protection Act in 2010, the FDIC insures deposits in member banks up to $250,000 per ownership category. FDIC insurance is backed by the full faith and credit of the government of the United States of America, and according to the FDIC, "since its start in 1933 no depositor has ever lost a penny of FDIC-insured funds."

<span class="mw-page-title-main">Banking in the United States</span> Overview of the U.S. financial system

Banking in the United States began by the 1780s along with the country's founding and has developed into highly influential and complex system of banking and financial services. Anchored by New York City and Wall Street, it is centered on various financial services namely private banking, asset management, and deposit security.

Washington Mutual was the United States' largest savings and loan association until its collapse in 2008.

Temple-Inland, Inc. was an American corrugated packaging and building products company. It was acquired by International Paper in 2012.

A savings and loan association (S&L), or thrift institution, is a financial institution that specializes in accepting savings deposits and making mortgage and other loans. The terms "S&L" or "thrift" are mainly used in the United States; similar institutions in the United Kingdom, Ireland and some Commonwealth countries include building societies and trustee savings banks. They are often mutually held, meaning that the depositors and borrowers are members with voting rights, and have the ability to direct the financial and managerial goals of the organization like the members of a credit union or the policyholders of a mutual insurance company. While it is possible for an S&L to be a joint-stock company, and even publicly traded, in such instances it is no longer truly a mutual association, and depositors and borrowers no longer have membership rights and managerial control. By law, thrifts can have no more than 20 percent of their lending in commercial loans—their focus on mortgage and consumer loans makes them particularly vulnerable to housing downturns such as the deep one the U.S. experienced in 2007.

<span class="mw-page-title-main">Savings and loan crisis</span> US financial crisis from 1986 to 1995

The savings and loan crisis of the 1980s and 1990s was the failure of 32% savings and loan associations (S&Ls) in the United States from 1986 to 1995. An S&L or "thrift" is a financial institution that accepts savings deposits and makes mortgage, car and other personal loans to individual members.

<span class="mw-page-title-main">Office of Thrift Supervision</span>

The Office of Thrift Supervision (OTS) was a United States federal agency under the Department of the Treasury that chartered, supervised, and regulated all federally chartered and state-chartered savings banks and savings and loans associations. It was created in 1989 as a renamed version of the Federal Home Loan Bank Board, another federal agency. Like other U.S. federal bank regulators, it was paid by the banks it regulated. The OTS was initially seen as an aggressive regulator, but was later lax. Declining revenues and staff led the OTS to market itself to companies as a lax regulator in order to get revenue.

<span class="mw-page-title-main">BBVA USA</span> Former American bank holding company

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, Colorado, Florida, New Mexico, and Texas. The bank was earlier named Central Bank and Trust Company, Central Bank, Central Bancshares of the South, and Compass Bancshares.

H.F. Ahmanson & Co. was a California holding company named after Howard F. Ahmanson Sr. It was best known as the parent of Home Savings of America, once one of the largest savings and loan associations in the United States.

<span class="mw-page-title-main">Financial Institutions Reform, Recovery, and Enforcement Act of 1989</span>

The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), is a United States federal law enacted in the wake of the savings and loan crisis of the 1980s.

<span class="mw-page-title-main">Beal Bank</span> American bank

Beal Bank is an American bank, which was founded by Texas-based entrepreneur D. Andrew "Andy" Beal. It includes two separately chartered banks, Beal Bank and Beal Bank USA. Each entity is insured by the Federal Deposit Insurance Corporation (FDIC).

All regulated financial institutions in the United States are required to file periodic financial and other information with their respective regulators and other parties. For banks in the U.S., one of the key reports required to be filed is the quarterly Consolidated Report of Condition and Income, generally referred to as the call report or RC report. Specifically, every National Bank, State Member Bank and insured Nonmember Bank is required by the Federal Financial Institutions Examination Council (FFIEC) to file a call report as of the close of business on the last day of each calendar quarter, i.e. the report date. The specific reporting requirements depend upon the size of the bank and whether or not it has any foreign offices. Call reports are due no later than 30 days after the end of each calendar quarter. Revisions may be made without prejudice up to 30 days after the initial filing period. Form FFIEC 031 is used for banks with both domestic (U.S.) and foreign (non-U.S.) offices; Forms FFIEC 041 and 051 is for banks with domestic (U.S.) offices only.

IndyMac, a contraction of Independent National Mortgage Corporation, was an American bank based in California that failed in 2008 and was seized by the United States Federal Deposit Insurance Corporation (FDIC).

Corus Bankshares, Inc. operated as the holding company for Corus Bank, N.A., a United States company that offered consumer and corporate banking products and services.

First Republic Bank Corporation was an American bank based in Texas. Founded as the Guaranty Bank and Trust Company in 1920, in 1922 it assumed the name Republic National Bank of Dallas. Afterwards the bank acquired several banks and invested in others, and changed its name several times. By 1948 Republic had grown to become the largest bank in Texas. The bank failed in 1988, during the savings and loan crisis. It was acquired by NCNB Corporation in 1988. As a result of a series of mergers over the next two decades, most of what was once First Republic is now part of Bank of America.

The government interventions during the subprime mortgage crisis were a response to the 2007–2009 subprime mortgage crisis and resulted in a variety of government bailouts that were implemented to stabilize the financial system during late 2007 and early 2008.

Pathward Financial, Inc. is a United States bank with retail branches in Iowa and South Dakota. It offers traditional banking services designed to serve the needs of individual, agricultural, and business depositors and borrowers.

Bank United Corporation, headquartered in Houston, Texas, was a broad-based financial services provider and the largest publicly traded depository institution headquartered in Texas before its merger with Washington Mutual in 2001. Bank United Corp. conducted its business through its wholly owned subsidiary, Bank United, a federally chartered savings bank. The company operated a 155-branch community banking network in Texas, including 77 in the Dallas/Fort Worth Metroplex, 66 in the greater Houston area, five in Midland, four in Austin, and three in San Antonio; operated 19 SBA lending offices in 14 states; was a national middle market commercial bank with 23 regional offices in 16 states; originated mortgage loans through 11 wholesale offices in 10 states; operated a national mortgage servicing business serving approximately 324,000 customers, and managed an investment portfolio. As of June 30, 2000, Bank United Corp. had assets of $18.2 billion, deposits of $8.8 billion, and stockholder's equity of $823 million.

<span class="mw-page-title-main">PacWest Bancorp</span> American bank holding company

PacWest Bancorp is a bank holding company based in Beverly Hills, California, with one wholly owned banking subsidiary, Pacific Western Bank. Pacific Western Bank has 69 full-service branches throughout California, one in Denver, Colorado, one in Durham, North Carolina, and several loan production offices across the country. Pacific Western provides commercial banking services, including real estate, construction, and commercial loans, and deposit and treasury management services to small and medium-sized businesses.

References

  1. 1 2 "Community Reinvestment Act Performance Evaluation". Office of the Comptroller of Currency; U.S. Department of Treasury. Office of Thrift Supervision. 2007-12-28. Retrieved 2020-06-24.
  2. 1 2 3 4 5 "BBVA Compass, Birmingham, Alabama, Assumes All of the Deposits of Guaranty Bank, Austin, Texas" (Press release). FDIC. August 21, 2009. Retrieved 2015-01-07.
  3. 1 2 3 4 Barr, Colin (July 31, 2009). "Big Texas bank on verge of failure". Fortune . Retrieved 2015-01-07.
  4. ↑ Gordon, Marcy (August 21, 2009). "Regulators Shut Guaranty Bank, 2nd Largest Failure". The San Diego Union-Tribune . Associated Press . Retrieved 2015-01-07.
  5. 1 2 "Guaranty Bank warns that it's on the verge of failure". Los Angeles Times . July 25, 2009. Retrieved 2015-01-07.
  6. ↑ Temple-Inland to Buy California Financial
  7. ↑ Financial Services
  8. ↑ "FDIC BankFind: Guaranty Federal Savings and Loan Association (FDIC #29990)". FDIC Bank Data & Statistics. Federal Deposit Insurance Corporation. Retrieved 2020-06-24.
  9. 1 2 Mathis, Chris (November 29, 2007). "Temple-Inland Announces Details for Completion of the Spin-Offs of Guaranty Financial Group Inc. and Forestar Real Estate Group Inc". Business Wire. Retrieved 18 February 2016.
  10. 1 2 LaForge, Rusty (November 19, 2008). "Guaranty Financial Group Inc. Announces Resignation of Chairman, President and Chief Executive Officer". Business Wire. Retrieved 19 February 2016.
  11. ↑ Von Doorn, Philip (July 24, 2009). "Guaranty Financial On The Brink". TheStreet.com . Retrieved 2015-01-07.
  12. 1 2 "Guaranty Bank bought by BBVA Compass". The Herald Sun . Melbourne. August 24, 2009. Retrieved 2015-01-07.
  13. ↑ "BBVA Compass stays busy rebranding with Guaranty Bank buy". Houston Business Journal . August 28, 2009. Retrieved 2015-01-07.
  14. ↑ "BBVA Compass Acquires the Banking Operations of Guaranty Bank" (Press release). BBVA Compass. August 21, 2009. Retrieved 2015-01-07.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.