By Truman Lewis
ConsumerAffairs.Com
August 23, 2009
Guaranty Bank of Texas is the latest to be added to the gallery of failed financial institutions. Federal regulators seized the bank Friday night, the 10th-largest banking failure in U.S. history. It comes on the heels of last weekend's failure of Colonial Bank of Alabama, the 6th-largest failure.
Guaranty Bank had 103 branches in Texas and 59 branches in California. Guaranty Bank's branches, deposits and most of its assets were sold to Spain's Banco Bilbao Vizcaya Argentaria (BBVA), operating as NNVA Compass, Birmingham, Alabama. It was the 106th bank failure since the financial meltdown began in early 2008.
Former branches of Guaranty Bank will reopen during normal banking hours starting tomorrow as branches of BBVA Compass. Depositors of Guaranty Bank will automatically become depositors of BBVA Compass. Depositors will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branches until BBVA Compass can fully integrate the deposit records of Guaranty Bank.
Over the weekend, depositors of Guaranty Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.
Customers who have questions can call the FDIC toll-free at 1-800-405-8739 or visit the agency's Web site.
The failure of Guaranty, with $13 billion in loans and other assets, was the 10th-largest in U.S. history and the fourth-largest since the financial crisis began last year.
The FDIC said that as of June 30, 2009, Guaranty Bank had total assets of approximately $13 billion and total deposits of approximately $12 billion. In addition to assuming all of the deposits of the failed bank, BBVA Compass agreed to purchase $12 billion of the failed bank's assets. The FDIC will retain the remaining assets for later disposition.
Not over yet
Although economists have been heralding the beginnings of an economic recovery, local and regional banks are continuing to collapse, many under the weight of real-estate loans gone bad. A Greenwich, Ct., hedge fund manager told ConsumerAffairs.com he expects many more mid-sized banks to fail.
"The big banks are now supported by the government, leaving the smaller ones as roadkill," he said. "When this is over, there will be a few big banks in the country -- and not much else."
Regulators, meanwhile, are finding it harder to find buyers for failed banks. With more than 100 bank failures in less than two years, the supply may be beginning to exceed demand. Last week, a Nevada bank was liquidated when no buyers could be found.
Other bank failures
• CapitalSouth Bank, Birmingham, Alabama, was closed Friday. The FDIC entered into a purchase and assumption agreement with IBERIABANK, Lafayette, Louisiana, to assume all of the deposits of CapitalSouth Bank, excluding those from brokers.
• First Coweta, Newnan, Georgia was closed Friday. today by the Georgia Department of Banking and Finance, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. The FDIC entered into a purchase and assumption agreement with United Bank, Zebulon, Georgia, to assume all of the deposits of First Coweta, excluding those from brokers.
• ebank, Atlanta, Georgia, was closed Friday. The FDIC entered into a purchase and assumption agreement with Stearns Bank, National Association, St. Cloud, Minnesota, to assume all of the deposits of ebank.
