Guaranty Bank, a $13.5 billion-asset Austin thrift, failed on Friday and was scooped up by a Spanish-owned bank.
Regulators also shut a second thrift and two banks Friday, bringing the total number of failures this year to 81. The night's activity is expected to cost the Deposit Insurance Fund nearly $3.3 billion.
BBVA Compass, a subsidiary of Spain's Banco Bilbao Vizcaya Argentaria, has agreed to buy Guaranty. The Birmingham, Ala., bank has agreed to take on $12 billion of Guaranty's assets and has entered into a loss-sharing agreement with the Federal Deposit Insurance Corp. for $11 billion of them.
Since March 31, Guaranty has been operating with negative capital, reporting a total risk-based capital ratio of -5.8% for the end of the first quarter. At the time of its failure, Guaranty's total negative equity was over $381 million.
Guaranty's problems stemmed from both residential construction loans in California, as well as mortgage-backed securities. The company has yet to file its annual report for 2008, but had pegged the annual loss at an estimated $2.2 billion, driven by $1.7 billion in writedowns on its investments.
It was spun off from the timber company Temple-Inland Inc. in late 2007. It has not reported a quarterly profit since.
In July of last year the Austin banking company raised $600 million from a group that included the financiers Carl Icahn and Robert Rowling.
But by March it was looking for capital again. The following month Guaranty disclosed that the Office of Thrift Supervision had ordered it to raise capital or find a buyer.
In June, in a last-ditch effort, Guaranty sought open-bank assistance from the FDIC, a rarity.
Guaranty said last month that it had little chance of raising capital. It also said its board had given consent for the OTS to move forward with an FDIC seizure.
BBVA Compass is assuming all but $344 million of Guaranty's $12 billion in deposits. The rest is made up of brokered deposits, and will be paid to brokers directly by the FDIC.
The FDIC estimated that the Guaranty failure will cost the insurance fund $3 billion.
The evening's other failures were considerably smaller. The Alabama State Banking Department closed CapitalSouth Bank in Birmingham. The $617 million asset bank is being purchased by Iberiabank in Lafayette, La.
Iberiabank is taking on $589 million worth of CapitalSouth's assets, and has entered into a loss-sharing agreement with the FDIC for $499 million of them.
CapitalSouth had $546 million in deposits, and Iberiabank is taking on all but $3.6 million in brokered deposits.
In Georgia, two more failures brought the tally for that state alone to 18.
The Georgia Department of Banking and Finance closed the $167 million asset First Coweta in Newnan.
United Bank, which is based in Zebulon, is purchasing all but about $11 million of First Coweta's $155 million deposits at a 1.01% premium. The rest, which are brokered deposits, will be paid to the brokers directly.
United is also buying $155 million worth of First Coweta's assets, and has forged a loss-sharing agreement with the FDIC for $124 million of them.
A Georgia thrift also failed. Ebank had $143 million in assets and $130 million in deposits when the Office of Thrift Supervision closed it. Stearns Bank, which is based in St. Cloud, Minn., will buy the bank's deposits and "essentially all," of its assets, the FDIC said in a press release. The agency has entered into a loss-sharing agreement with Stearns Bank for $111 million of ebank's assets.
Ebank began its existence as Commerce Bank in 1998 and in 1999 changed its name and focused its business predominantly on Internet banking, the OTS said.