Less than a week after federal regulators seized Gauranty Financial Group’s banking unit and sold the assets to Banco Bilbao Vizcaya Argentaria SA (a Spanish bank), Guaranty Financial Group Inc (GFGF.PK) has filed for Chapter 11 bankruptcy protection. The Austin, TX based firm and its three related affiliates filed for protection from creditors on Thursday in a U.S. bankruptcy court in Dallas, TX.
The bank stated that it had $24.3 million in assets and $323.4 million in debt as of June 30th. The bankruptcy filing includes the holding company, which was not part of the sale of the bank assets to BBVA on August 21st. Guaranty was the third largest publically-traded bank in the state of Texas. The bank had $13 billion in assets, $12 billion in deposits, and had 162 branches in California and Texas, according to the FDIC.
Guaranty Bank began its operations in 1988 when it was part of Temple-Inland Inc and was the second largest bank failure in the United States in 2009, only second to Colonial BancGroup Inc (CBCGQ.PK), which was based in Montgomery, Alabama. Colonial also filed for chapter 11 bankruptcy protection on Tuesday.
Guaranty Bank became illiquid and collapsed because of significant losses in mortgage-backed securities. The values of the mortgage backed securities the bank owned fell significantly as the loans inside those securities went into default because of pressures from the ailing economy and real estate market. BBVA purchased most of the bank’s assets and the FDIC took a loss on $11 billion.
