Apr. 10--Austin-based Guaranty Financial Group Inc.'s shares fell about 11 percent Thursday, after federal regulators gave its banking subsidiary six weeks to improve its financial health or potentially face a forced merger, sale or liquidation.

The Office of Thrift Supervision ordered Guaranty Bank to meet a core capital ratio of at least 8 percent and a risk-based capital ratio of at least 11 percent -- two key measures of a bank's financial strength.

Guaranty said in a regulatory filing that its "management believes, based upon presently available unaudited financial information, that the bank does not meet the required capital ratios set forth above."

If the bank does not meet the required capital levels by May 21, Guaranty said, it would adopt plans to merge with or be acquired by another financial institution, or face liquidation.

Guaranty stock closed at 62 cents a share. Shares have fallen about 95 percent over the last 12 months, as bad loans have mounted and the company has posted a string of losses since being spun off from Austin-based Temple-Inland Inc. in late 2007.

"It's a good bank, but their clock is definitely ticking," said Dan Bass, managing director in Houston of Carson Medlin Co., an investment banking firm. "I hope they do find the capital to get through this."

Guaranty, which has significant operations in Dallas and about $15 billion in assets, also said Wednesday that it would file its 2008 Form 10-K annual report late. The company is reviewing with its accountants the appropriate valuation of the mortgage-backed securities portfolio on its balance sheet.

Guaranty said it is in talks with its board of directors and principal stockholders, as well as with the government, about raising additional capital.

In June 2008, the company said it had raised about $600 million in capital from several investors including Dallas billionaire Robert Rowling and New York billionaire Carl Icahn. Neither man returned phone calls seeking comment Thursday.

Guaranty has more than 160 branches in Texas and California, and a portfolio of mortgages, commercial loans and other assets.

The company has seen its bad loans mount amid the housing bust in California and the worst financial crisis in decades.

Past-due loans accounted for about 5 percent of Guaranty's loans as of September 2008 compared with less than 1.4 percent a year earlier, the company told investors last year. The situation continued to deteriorate in the last three months of 2008, banking analysts said.

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