Guaranty Financial Group Inc , the second-largest publicly traded bank in Texas, said it will probably fail after loan losses and write-downs

left it critically short of capital.

The bank, whose investors include Carl Icahn and Robert Rowling, is in talks with at least one investor group for a possible recapitalization, said a source familiar with the situation. The source requested anonymity because the talks are not public.

The company believes that it is probable that it will not be able to continue as a going concern, Guaranty said in a regulatory filing.

The Austin-based lender has about $16 billion of assets and more than 150 branches in Texas and California, according to its website.

On that basis, if it were to fail, Guaranty would be the largest U.S. bank to collapse in 2009. Guaranty is about half the size of IndyMac Bancorp Inc , which failed last July.

So far 64 banks have failed this year, including seven on Friday, according to the Federal Deposit Insurance Corp. Friday's failures include six bank subsidiaries of Security Bank Corp of Macon, Georgia.

In a regulatory filing late on Thursday, Guaranty said it has been unable to obtain new capital from shareholders, and believes it will be ineligible for help from U.S. regulators.

Its largest investors include companies run by billionaire Carl Icahn and by Rowling, whose investment firm owns the Omni Hotels chain.

Guaranty said it does not expect to raise enough capital to comply with an April cease-and-desist order from the federal Office of Thrift Supervision (OTS).

It said losses and write-downs have left it critically undercapitalized, with negative capital ratios.

Guaranty also said it has agreed to an OTS demand for the appointment of the Federal Deposit Insurance Corp as a receiver or conservator. That appointment has not yet happened, but the OTS is exercising a significant degree of control over what had been functions of the board of directors, Guaranty said.

The company has not filed official results since the third quarter of 2008. It has estimated it lost $444 million in all of 2008 and another $256 million in the first quarter of 2009.

Chief Marketing Officer John Wessman said in a statement that Guaranty is still working with regulators, and believes it can avoid disruptions to customers.

Guaranty's largest investors include Rowling's investment firm TRT Holdings Inc, which has a 19.9 percent stake according to a regulatory filing. A company run by Icahn has a 17 percent stake, Reuters data shows.

Icahn and Rowling did not immediately return calls for comment.

Guaranty began operations in 1988, according to its website. It was spun off in December 2007 by Temple-Inland Inc , a corrugated packaging and building products company.

The largest publicly traded bank based in Texas is Dallas-based Comerica Inc .

Guaranty shares closed down 7 cents, or 32 percent, at 15 cents on the New York Stock Exchange on Friday. Their 52-week high is $6.75, set last September 18.

(Reporting by Jonathan Stempel and Paritosh Bansal; Editing by Matthew Lewis, Gary Hill, Tim Dobbyn and Richard Chang)