TS Banking Group and its bank holding company subsidiary TS Contrarian Bancshares were handed an enforcement action by the Federal Reserve Monday for “unsafe or unsound practices” related to capital and liquidity at two banks Contrarian owns.

Both bank holding companies, based in Treynor, Iowa, must demonstrate to the Fed their ability to serve as a “source of strength” for their banking subsidiaries, Clinton, Illinois-based First National Bank & Trust Company and Tioga, North Dakota-based Bank of Tioga.

TS Banking and Contrarian must demonstrate their ability to provide financial assistance to the banks by raising capital or taking other steps to improve the banks’ financial condition in the event of financial distress.

They must also make sure First National complies with a July 2025 formal agreement with the Office of the Comptroller of the Currency. The agency took action against the bank for unsafe and unsound practices.

A spokesperson for TS Banking did not immediately respond to a request for comment.

Within 60 days of the agreement, TS Banking and Contrarian must submit a written plan to the Federal Reserve Bank of Chicago to maintain sufficient capital.

Within the plan, the firms must assess the adequacy of the banks’ capital, submit an action plan to raise capital or take steps to improve the financial conditions of the banks, and submit an enhanced capital contingency plan that addresses both the holding companies’ and banks’ short-term and long-term capital needs, the agreement said.

TS Banking and Contrarian are prohibited from paying dividends, engaging in share repurchases or making any other capital distribution without prior written approval from the Chicago Fed.

As of April, First National had roughly $383.8 million in assets, and Bank of Tioga had $413 million.