Regulatory body make moves against three banks under beleaguered Texas banking group corporation
In a series of regulatory actions, the Federal Deposit Insurance Corporation (FDIC) has issued consent orders to three Texas banks: Industry State Bank in Industry, Fayetteville Bank in Fayetteville, and Citizens State Bank in Buffalo. These enforcement orders, officially published on August 29, 2025, follow a number of needed corrections, including issues related to the banks' capital position, liquidity, staffing, and credit risk management.
Industry State Bank was specifically ordered to enhance its credit risk practices when it comes to large loan relationships. Fayetteville Bank, on the other hand, must establish a threshold for when certain documents are required, taking into consideration the type, size, and risk of the credit relationship, and update its loan policy to reflect the requirements.
The banks have been directed to implement bank-specific scenarios for liquidity stress testing. They are also required to assess their management and staffing needs, including hiring additional personnel as necessary. The banks must establish goals for reducing problem loans and plans for maintaining adequate liquidity.
When purchasing a participation loan, Fayetteville Bank and Citizens State Bank must perform the same degree of independent credit analysis as if they were the originator. Both banks, along with Industry State Bank, must strengthen their interest rate risk management programs.
The banks face dividend restrictions and have been told to come up with plans to bolster their capital positions and achieve and maintain a tier 1 leverage capital ratio of at least 10%.
In a bid to strengthen its financial position, Industry Bancshares, the parent company of the three banks, received a $195 million capital infusion in August from CSBH, parent company of New Horizon Bank. Following this infusion, Industry Bancshares appointed Carl J. Chaney as executive chairman and Brian E. Hobart as CEO.
Soaring interest rates have reportedly crushed the value of Industry Bancshares' assets, which are heavily composed of bonds. As a response, the company is revising its strategic plans, assessing its current financial conditions, market areas, and operating assumptions.
Fayetteville Bank and its board must devise an action plan to address problem credits. The banks are also required to require third-party inspections before advancing funds and require Certificates of Occupancy or completion percentages for construction loans.
Industry Bancshares, with approximately $5 billion in assets across six bank subsidiaries, was pursuing a capital raise and exploring its options before the capital infusion. The banks in question are Industry State Bank, Fayetteville Bank, and Citizens State Bank.
