Customers of troubled Guaranty Bank have mixed emotions about the bank’s future.

They hope it does not fail, though it could without help from the Federal Deposit Insurance Corp. But even if it does go under, they know their accounts are insured by the FDIC.

“Some of my employees have said they’re talking with their wives about taking money out of Guaranty,” said Jason Ball, manager of Elliott Electric Supply in Waco. Ball said he has a business account at Guaranty and really is not concerned “because of the FDIC insurance.”

Austin-based Guaranty, which has three locations in the Waco area, confirmed this week it needs financial help to stay afloat. It suffered losses of more than $2.2 billion last year.

If the FDIC does not come to its rescue, “there would be substantial doubt that the company would be able to continue as a going concern,” Guaranty told the Securities and Exchange Commission.

Guaranty is hoping to get a deal done, but success is not a sure thing.

“Guaranty Bank continues to work closely with regulators to find a way forward,” company spokesman John Wessman said. “We believe strongly that open bank assistance is in the best interest of our depositors, and that it meets the standards of being the least costly alternative for government regulators.”

Open bank assistance means the FDIC would help find investors to save Guaranty. The FDIC would benefit because it would not have to shell out money on the accounts it insures.

Accounts at Guaranty and other FDIC-affiliated banks are insured up to $250,000.

Monte Hulse, chairman and CEO of the First National Bank of Central Texas, said he hates to see any company perform poorly, “but I think Guaranty’s business could be absorbed by our bank and other banks in the market without any problem. Regulators for years have said Waco is overbanked.”

Hulse said Guaranty pays competitive interest rates but is not very active in lending locally.

Bill Nesbitt, chairman and CEO of Central National Bank, said the problems Guaranty is experiencing are not reflective of the Waco banking market, adding that “less than 3 percent of their assets are based in McLennan County.”

“All of the locally owned, independent banks are in excellent condition,” Nesbitt said.

Guaranty’s problems reportedly can be traced to bad loans and heavy investment in mortgage-backed securities, which are worth far less than what the bank paid for them.

If Guaranty does not receive FDIC assistance, it will have to mark down the value of its securities portfolio and related items by more than $1.7 billion, the bank said in a regulatory filing. That would give the company a $2.2 billion annual loss in 2008 and less capital than it needs to continue in business.

“I am concerned to a certain extent,” said Ruth Ann Smith, a Waco customer. “But I have faith and trust that it will stay the institution we’ve known it to be over the years. I think things will work out for the best.”

Guaranty is the fourth-largest independent banking institution based in Texas. It has 162 offices in Texas and California and $11.6 billion in deposits, according to the most recent data.

At $14.4 billion in assets, Guaranty Bank is bigger than the largest bank that has failed so far this year, a distinction now held by BankUnited FSB of Coral Gables, Fla., which had assets of $12.8 billion when it folded.

mcopeland@wacotrib.com

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