| Coastal Bend
Bancshares With Disparate
Loans and Secret Filings Gets
Fed Rubber Stamp
by
Matthew Russell Lee, Patreon Book
Substack FEDERAL COURT, Aug 4 – Coastal Bend Bancshares proposes to expand in Texas by buying First National Bank in Port Lavaca. Fair
Finance Watch, after the
Federal Reserve refused to act
to ensure public access to
Home Mortgage Disclosure Act
data, has commented to
the Fed on the 2024 and now
2025 HMDA data. On June 2, the
Fed asked Coastal Bend some
questions - but withheld two
of them. While less redacted
than on Enova, it is still
problematic. This while
Coastal Bend CEO W. Wes.
Hoskins wrote in that he takes
no position on Inner City
Press "purported Freedom of
Information Act ('FOIA')
request." Purported? On July 7
notice of appearance was
belatedly filed for the Fed in
SDNY - but still no answer. While in 2024
First National Bank of Port
Lavaca made 35 loans to whites
- and NONE to African
Americans. It grew even more
extreme in 2025: FORTY THREE
loans to whites, and again
none to African
Americans.
As to the July 7 submission by
Coastal Bend: the applicant
has now resubmitted, "on a
non-confidential basis," its
responses to Questions 3 and 4
— the very responses it
improperly filed
confidentially on June 12,
2026, and which FFW
challenged. This
comment must be considered by
the Board on this basis alone
- Coastal Bend gamed the
system. That belated
disclosure vindicates FFW's
position that these materials
never qualified for
confidential treatment. What
they reveal also explains why
the applicant preferred to try
to keep them from the
public. The
applicant's now-public
response to Question 3
confirms that consummation of
this merger will result in
concrete reductions in banking
access and increases in cost
for the customers of First
National Bank in Port Lavaca —
a community bank whose
branches in Port Lavaca,
Seadrift, Port O'Connor, and
Victoria serve rural Calhoun
County and surrounding areas.
It appears: The minimum
balance requirement for NOW
accounts will increase 50%,
from $1,000 to $1,500;
The minimum balance
requirement for Money Market
accounts will increase 150%,
from $1,000 to $2,500;
Education IRAs will be
eliminated; The Club
account with insurance
services will be closed to new
customers; Official
checks, money orders, and wire
transfers 'may be
discontinued' for individuals
who do not maintain a deposit
account — cutting off unbanked
and underbanked residents of
rural Calhoun County from
basic payment services they
currently obtain at FNB's
branches; Trust
services, which FNB offers and
First Community Bank does not,
may be discontinued entirely:
the applicant 'reserves the
right to discontinue trust
services if it is unable to do
so on a viable
basis.' Increased minimum
balances fall hardest on low-
and moderate-income
depositors, who are most
likely to be pushed below
thresholds and into fees or
out of the banking system. The
potential elimination of
official checks, money orders,
and wire transfers for
non-customers is particularly
consequential in a non-MSA
rural county where
alternatives are scarce and
where such services are
disproportionately relied upon
by lower-income residents.
These are precisely the
convenience-and-needs harms
that the Bank Holding Company
Act, 12 U.S.C. § 1842(c)(2),
requires the Board to weigh —
and they were disclosed only
after FFW's challenge, weeks
into the comment
process.
Coastal Bend now argues —
citing the Board's April 21,
2026 Updated Statement of
Supervisory Operating
Principles — that "the Federal
Reserve may be able to satisfy
the applicable statutory
criterion regarding community
credit needs by reference to
the existing CRA ratings" of
the two banks, without further
analysis. The Board should
decline this invitation to
abdicate its statutory
duty. The
convenience and needs analysis
under section 3(c)(2) of the
BHC Act is an independent
statutory obligation of the
Board in acting on this
application. It is not
satisfied by the existence of
backward-looking CRA ratings —
particularly "Satisfactory"
ratings, which are assigned to
well over 90% of examined
institutions and are therefore
of limited analytical value in
distinguishing among
applicants. Nor can prior
ratings answer the question
actually before the Board: not
how each bank performed
separately in the past, but
what this combination will do
to the communities served
going forward. The applicant's
own Question 3 response
answers that question — higher
minimums, discontinued
products, and reduced services
for non-customers. A
supervisory statement about
examination resource
allocation cannot amend the
BHC Act, and the applicant's
attempt to convert it into a
substantive safe harbor from
convenience-and-needs scrutiny
should be rejected on the
record of this
application.
FNB
customers currently rely on
its trust services; First
Community Bank offers none.
The applicant states only that
it is "evaluating"
continuation, possibly through
outsourcing, and reserves the
right to discontinue. If the
Board approves this
application — which FFW
opposes on this record — it
should at minimum condition
approval on a binding
commitment regarding
continuity of trust services
for existing FNB trust
customers, and require the
applicant to state on the
record, before the comment
period closes, what its
determination is. A merger
application is not the place
for material terms to be left
as reservations of
rights. The
applicant's July 7, 2026
submission continues to
withhold Confidential Exhibit
B in full, under a boilerplate
confidentiality request
indistinguishable from the one
it has just been forced to
abandon as to Questions 3 and
4. The Federal
Reserve approved Coastal Bend
Bancshares' acquisition of The
First National Bank in Port
Lavaca on August 4, and the
order is notable as much for
what it doesn't cite as for
what it does. Coastal Bend's
counsel had told the Board, in
writing, that its April 21,
2026 "Updated Statement of
Supervisory Operating
Principles" meant the Board
"may be able to satisfy the
applicable statutory criterion
regarding community credit
needs by reference to the
existing CRA ratings" alone. Fair Finance
Watch's comment countered that
the memo never mentions CRA or
convenience and needs at all —
and the Board's own approval
order proves the point by
omission: fourteen pages of
detailed convenience-and-needs
analysis, full CRA performance
evaluations of both banks, and
direct engagement with the
HMDA disparities FFW raised,
with no reference anywhere to
the April 21 memo or any
CRA-ratings shortcut. On
the merits, the Board did real
work. It recites Coastal
Bend's own rebuttal statistics
— 43 percent of FCB's mortgage
applications and 38 percent of
originations went to minority
borrowers, with 77 and 79
percent respectively from
majority-minority census
tracts — and weighs them
against FFW's HMDA-based
objection rather than simply
deferring to the bank's
"Satisfactory" ratings. That
is precisely the
individualized analysis FFW's
comment demanded, and
precisely what the April 21
memo, on its own terms, was
never equipped to substitute
for. But FFW's
procedural requests fared
worse. The Board denied the
request for a public hearing,
finding no "disputed issues of
fact" a hearing would clarify,
and denied the request to
extend the comment period. On
the substantive protections
FFW sought — a binding
commitment to continue trust
services, given FNB offers
them and FCB does not — the
order records only that
Coastal Bend "is evaluating
whether" to keep them, with no
condition requiring it. Branch
closures are addressed the
same way: a non-binding
representation that none are
"currently" anticipated, not a
commitment. The larger
irony sits one level up.
Coastal Bend's combined pro
forma assets come to roughly
$1.0 billion — already well
below today's $1.6 billion CRA
threshold, and a small
fraction of the $10 billion
line the Fed and OCC have
jointly proposed making the
new standard. The full-scale
review just conducted here,
whatever its result, is
exactly the kind of scrutiny
the pending threshold rule
would make optional for
mergers like this one going
forward. The Board did its job
on this application. Its own
pending rulemaking would let
the next one skip it. Watch
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Friday, August 7, 2026
Coastal Bend Bancshares With Disparate Loans and Secret Filings Gets Fed Rubber Stamp
