Guaranty Bank has become the third largest bank failure of 2009

August 25, 2009 – 11:34 am – No Comment

Federal regulators closed Guaranty Bank on Friday. The move marked the third largest bank failure of 2009. The total for the year is now 81. The FDIC was named the receiver of the bank and it acquired its $13 billion in assets along with the $12 billion in deposits.

Guaranty Bank was operated in Texas and California and will reopen as a subsidiary of BBVA Compass, which is a U.S. subsidiary of Banco Bilbao Vizcaya Argentaria, a Spanish bank which agreed to take all of the deposits and $12 billion of the assets. The FDIC will end up picking up the rest of the bill.

The bank is the 11th largest failure in the history of the United States. It has tied with First City Bancorporation, a bank that failed in 1988. This failure is estimated to cost the FDIC $3 billion.

This is also the first time any foreign overseas bank has tried to acquire a U.S. bank that has failed this year. However, if you look at this particular bank, it has already made a few acquisitions of banks in Texas.

So far this year, most of the banks that have failed have been smaller banks. We’re not seeing the failures on the scale that we were seeing last year and the government isn’t trying to step in to save these banks or deem them too large to fail.

Unfortunately, this trend will likely continue simply because unemployment is still high and people are still trying to pay back loans and mortgages that they can’t afford.