An investment fund controlled by Guaranty Bancorp chairman John Eggemeyer is seeking Federal Reserve Board approval to roughly quadruple its stake in the Denver banking company.

Guaranty announced Monday that Castle Creek Capital Partners III LP had applied to the Fed for authority to own up to 19.9% of the $2 billion-asset company. It also said that Castle Creek, a Rancho Santa Fe, Calif., investment firm, is considering buying more shares, depending on market conditions.

It now owns about 5% of Guaranty's shares.

Mr. Eggemeyer owns a controlling interest in Castle Creek. Including his stake in the investment fund, he controls 6.2% of Guaranty's shares.

In a research note Tuesday, Fox-Pitt, Kelton Cochran Caronia Waller analyst Jonathan Elmi wrote that the application appears to be "a show of support" for Guaranty's stock, which has lost roughly two-thirds of its value since early September.

The investment could generate up to $12.5 million of capital for Guaranty, he added. This, combined with what he estimated to be $60 million it is seeking through the Treasury Department's Troubled Asset Relief Program, "would provide a buffer against further credit costs," he said.

In the third quarter, the bank's nonperforming loans totaled $56.1 million, up 177% from a year earlier, and chargeoffs totaled $12.5 million, down 36% from a year earlier but up more than 3,000% from the second quarter.

The company reported a $265.8 million loss after writing off $251 million of goodwill and allocating $31 million for loan losses.

Guaranty announced Nov. 4 that it had applied for Tarp funds. As of Tuesday it had yet to announce whether its application had been approved.

In late trading Tuesday, Guaranty's shares were up 12%, to $1.78.

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