A Texas-based bank holding company is caught in regulatory crosshairs for the third time this year with an enforcement action from the Federal Reserve over alleged unsafe and unsound business practices.
Three of Industry Bancshares’ subsidiary banks – Industry, Texas-based Industry State Bank; Fayetteville Bank, based in Fayetteville, Texas; and Citizens State Bank in Buffalo, Texas – were cited for regulatory shortcomings last month by the Federal Deposit Insurance Corp.; and its three other subsidiaries – The First National Bank of Shriner, Bank of Brenham and The First National Bank of Bellville – were cited by the Office of the Comptroller of the Currency in January.
The Fed did not specify which issues led to the Nov. 13 enforcement action against Industry Bancshares but outlined a number of tasks the holding company must complete for its enforcement order to be lifted, including submitting written plans on how to strengthen board oversight, enhance risk management practices including those pertaining to interest rates, and enhance liquidity and fund management programs.
Industry Bancshares must also submit to the Fed a plan to improve its earnings and overall condition, its cash flow projections and a capital plan addressing expected uses and sources of capital and a detailed description of its process for assessing capital adequacy.
A spokesperson for the Fed said the agency had nothing to share on the matter beyond the order. Industry Bancshares did not respond to a request for comment.
Industry Bancshares fell on hard times during last year’s banking crisis, American Banker reported, as rising interest rates crushed the value of its assets, heavily composed of bonds.
The firm received a capital infusion of $195 million in August from CSBH, parent company of New Horizon Bank, according to a LinkedIn post. As part of the deal, Carl Chaney joined Industry Bancshares as executive chair, and Brian Hobart joined as CEO.
“I’ve bought a lot of troubled banks in my past, and I’ve bought a lot of healthy banks,” Chaney told American Banker at the time. “This, I have to say, is one of the most unique opportunities that I’ve ever come across.”
He said Industry would gradually sell off about $1 billion in bonds, or one-third of its portfolio, “very methodically and very judiciously.”
The Fed in September made its first interest rate cut since 2020, then made another this month.
Chair Jerome Powell indicated the Fed would likely cut rates in the months to come, but slowly, to hedge inflation.
“The economy is not sending any signals that we need to be in a hurry to lower rates,” the Fed chair said, according to The Associated Press. “The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.”
