Guaranty Bank, unable to ever recover from devastating loan losses stemming from the housing and foreclosure crisis, failed and was shut down by regulators Friday.
The 94-year-old Glendale, Wisconsin-based bank was closed by the U.S. Office of the Comptroller of the Currency, with First Citizens Bank & Trust Co. of Raleigh, North Carolina, assuming all of its deposits.
Only the 12 stand-alone branch locations in Wisconsin, Illinois and Minnesota will reopen as branches of First Citizens Bank. Guaranty operated mostly from grocery store branches in those states plus Michigan and Georgia, and the company’s 107 in-store branches won’t be reopening, according to the Federal Deposit Insurance Corp., which was the receiver for Guaranty when it failed.
All depositors of Guaranty Bank, regardless of where they conducted business, will automatically become depositors of First Citizens, the FDIC said.
The last Wisconsin bank to fail was North Milwaukee State Bank, which was shut down in March of 2016 and also was taken over by First Citizens.
With assets of about $1 billion, Guaranty is one of the 20 largest banks headquartered in Wisconsin.
Regulator Continues Scrutiny of Guaranty Bank
In addition to assuming all of the deposits of the failed bank, First Citizens agreed to purchase $892.6 million of the failed bank’s assets. The FDIC will retain the remaining assets for later disposition.
Guaranty had been under orders by federal regulators since 2009 to improve its financial condition. But the bank struggled to return to profitability and boost its capital to required levels.
In 2012, Guaranty sold off its national Shelter Mortgage unit to bolster the bank’s capital, but the boost was temporary.
In the last 10 calendar years, Guaranty has posted a profit just twice, records from the FDIC show. Its worst calendar-year loss was $52.6 million in 2009. In calendar year 2016, Guaranty lost $4.2 million.
In March, the OCC disclosed it had reiterated its orders that Guaranty increase capital, make sure its books were accurate and in compliance, and develop a plan for restoring the health of the bank.
Doug Levy, Guaranty Bank chief executive, said Friday night he couldn’t comment publicly except to say, “We’re very concerned about our employees, our customers and the communities that we serve.”
Guaranty has about 1,000 employees.
The FDIC estimates that the cost to its Deposit Insurance Fund will be $146.4 million. Compared with other alternatives, the First Citizens acquisition was the least costly resolution, the FDIC said.
Guaranty Bank, which started in 1923 as Guaranty Building & Loan, is the fifth FDIC-insured institution to fail in the nation this year, and the first in Wisconsin.
