Guaranty Financial Group (Austin, TX)

Posted: Tue Apr 21, 2009 10:11 pm

Guaranty Financial Group (Austin, TX) and Guaranty Bank have filed an
8-K (Order to Cease and Desist) on April 6, 2009. Is there any reason why we have not seen them on the implode list yet. I admit to not completely understand the ramifications of a Cease and Desist order, so I'm not sure if it allows for liquidation as opposed to the FDIC taking them over. Can one of you much more versed in this subject enlighten me?

Since they quit doing business with brokers last summer, I hated to do so, but I have been referring business to them for a certain product that they were still offering that my customers needed. I'll need to take them off of my list if this means that they will be shutting down.

thanks,
DG

C-4 Joined: 08 Nov 2007 Posts: 1275

Since1993 wrote:

Guaranty Financial Group (Austin, TX) and Guaranty Bank have filed an
8-K (Order to Cease and Desist) on April 6, 2009. Is there any reason why we have not seen them on the implode list yet. I admit to not completely understand the ramifications of a Cease and Desist order, so I'm not sure if it allows for liquidation as opposed to the FDIC taking them over. Can one of you much more versed in this subject enlighten me?

Since they quit doing business with brokers last summer, I hated to do so, but I have been referring business to them for a certain product that they were still offering that my customers needed. I'll need to take them off of my list if this means that they will be shutting down.

thanks,
DG

You can go to the fdic website and read their c&d for yourself. You could probably just search "xyz bank cease and desist" and the pdf will populate to the top of the search. A c&d does not mean "you are hereby closed and owned by the gvt" although it could lead to that. They were issued a c&d and they are given very specific areas to address and correct.

Many banks operate as normal on the surface after a c&d. The "corrections" in tier one capital, loan loss provisions, management, board members, reserves, lending standards, etc take place in the business offices in the back and depositors remain unnafected. Many banks work their way out of c&d's and are a heck of a lot better off after than they were before.

C-4 Joined: 08 Nov 2007 Posts: 1275

ah what the heck, here you go

http://files.ots.treas.gov/enforcement/97097.pdf

Link to FDIC c&d's so far for 2009. My ex employer is on this list.

http://www.fdic.gov/bank/indiv.....gsrch.html

Posted: Wed Apr 22, 2009 2:29 pm

Thank you so much for the explanation. Maybe, like you said, they'll come out better on the other side.

C-4 Joined: 08 Nov 2007 Posts: 1275

I would also add that a c&d is never a shock to the bank that was given one. They have most likely been operating under a written agreement or a memorandum of understanding for some time and have probably been working on the issues raised in their c&d months before it ever being issued. There is so much interaction between regulators and the banks they examin that the banks are well aware of what the regulators have problems with. Smart banks dump their executive group at the written agreement stage and bring in a management team that knows how to work their way out of c&d's well before the c&d is issued.

Dud? Joined: 04 May 2009 Posts: 1

Guaranty Financial Group of Austin TX is not the same organization as Guaranty Bank of Milwaukee WI.

Guaranty Bank (Milw) was issued the Cease and Desist order as a result of 10 consecutive quarters of posting losses. The bank had originated a large wholesale home equity loan portfolio through it's subsidiary, GB Home Equity. The loans were sold primarily to Citi Bank, M&I Bank and other investors. GB home equity was merged with GN mortgage to form GB mortgage. GB mortgage has been closed as a subsidiary.

According to the Milwaukee Journal Sentinel www.jsonline.com, the bank will be out of capital by the end of June.

C-4 Joined: 10 Dec 2007 Posts: 1391 Location: Dallas

Should not be a shock to anyone. I stopped using them in December.

When you guys start seeing rediculous conditions that put off closings, take it as a sign your investor is in trouble. Not the first time we have seen this.