BANK OF BRENHAM: OCC CHARGES ARE ‘GOVERNMENT OVERREACH’
Bank of Brenham is one of three regional banks that are contesting a notice of charges issued by the Office of the Comptroller of the Currency (OCC).
On January 17th, the OCC filed notices seeking cease and desist orders against three subsidiary banks of Industry Bancshares: Bank of Brenham, First National Bank of Bellville and First National Bank of Shiner.
The cease and desist orders pertain to what the OCC called “unsafe or unsound practices relating to an investment strategy concentrated in long-term securities that exposed each bank to excessive interest rate risk without sufficient sources of contingency funding and contingency capital, and that each bank failed to timely mitigate such risk.” The notices claim that the three banks are in “less than satisfactory” and “troubled” condition.
A statement from Industry Bancshares reads that the boards of directors for all three banks named voted unanimously not to sign formal agreements requested by the OCC, who then proceeded with the notices of charges. The agreements, according to the statement, did not outline any remedial actions that the banks “were not already undertaking and making progress on to address.”
Industry Bancshares said those remedial actions included a capital raise intended to reposition its subsidiary banks’ balance sheets to be “safer and stronger institutions.” The firm said it “fully cooperated” with the OCC in an attempt to find a fair path forward.
The statement claimed that while an acceptable compromise for both properties is usually found, in this instance, the OCC “went from very little or zero scrutiny to a formal enforcement action in a very short time.” It stated that the agreements requested by the OCC do not advance the principles designed to protect the best interests of customers and consistent best practices. Further, it called the OCC’s action “an unfortunate example of regulatory overreach.”
Bank of Brenham President Gary Durrenberger said the bank is “vigorously” fighting the charges presented by the OCC. He said the bank appreciates the local support of those it serves and will continue to be engaged in the community.
Jim Kruse of Industry Bancshares said its banks have done all that the OCC has asked them to do in the past, the banks are “safe and sound,” and that “no one is shutting our doors.” He said they are striving to do what is best for community banks, adding, “We’re fighting government overreach that has come to small-town America.”
According to the notices, a hearing will be held on a date to be determined before a federal judge in the Southern District of Texas regarding the charges brought forth.