A West Texas bank buyout and the following mass migration of bankers had devastating consequences for Lubbock business owner Angie Castillo, who closed her Three Dog Bakery locations in Lubbock and Amarillo, saying bankruptcy is her next step.

“They cut me off at my knees in many different ways,” Castillo said.

She was referring to American State Bank in Tyler – not to be confused with the American State Bank which operated for many years in Lubbock before it was bought out in 2012 by Prosperity Bank. Same name, different bank.

But two other banks are involved. Arkansas-based Centennial Bank bought out and merged with Happy State Bank (HSB). We cover that story here with details on the legal battle that followed.

Castillo had a loan with HSB at the time. Her bankers, including Jerry “Bud” Holmes and Jessica Terrell, left HSB for ASB, which was expanding into West Texas with locations getting started in Lubbock, Plainview, Littlefield and other cities.

“I followed my bankers,” Castillo said.

In a different sort of way, Centennial also followed Castillo’s bankers, filing a lawsuit in 2023 against Holmes, Terrell and others. The claim was violations of the federal Defend Trade Secrets Act, breach of contract, unfair competition and a few other things.

Castillo, in her conversation with LubbockLights.com, said she was not tricked into following her bankers. It’s what she wanted.

“I followed Jessica because she knows my business. … When I followed Jessica [to] American State Bank, she bought my loan from Happy State Bank.” Castillo said.

But one day things changed. Castillo went to ASB and said she was told “Bud’s not here anymore” – a reference to Holmes.

On another visit to the bank, she spoke with the receptionist.

“She went quiet, and she said Jessica’s gonna call you. Well then, that’s when I found out that American State Bank was pulling out of this area,” Castillo said.

Castillo did not know it yet, but it was the beginning of the end of her business.

LubbockLights.com offered the legal teams for ASB, Terrell and Holmes more than one chance to comment.

‘Should have been a red flag’

Castillo’s time with JC Penney, more than 20 years, brought her to Lubbock, but felt the company was changing and she needed a change.

“And I thought, ‘Okay, I’m going to see what business I can open up.’ And I knew about the franchise at a Kansas City, Missouri, Three Dog Bakery,” Castillo said.

She described it as an artisan bakery for dogs.

Her Lubbock franchise with Three Dog Bakery was the first to gross $1 million per year, she said.

LubbockLights.com reached out to Three Dog Bakery offices several times but never got a response.

“Immediately – and that should have been a red flag – he started asking me about my credit lines.”

angie castillo

Documentation provided by Castillo and by a local representative of the Small Business Administration bolstered her claims of having a successful franchise before the bank battle.

“We have been a fun place to be. We’ve established ourselves within the community. I still have long-lasting customers that have come in for 11 years. And we’ve carried dog food, dog treats, clothing, apparel, toys,” Castillo said.

She decided to start a second location in Amarillo – opening in May 2023.

Once Holmes and Terrell were out, the loan was transferred from the Lubbock branch of ASB to Plainview. That meant dealing with a different banker.

“Immediately – and that should have been a red flag – he started asking me about my credit lines,” Castillo said.

This was part of a pattern Castillo said. The loan was transferred more than once from location to location. Each time a new banker would have different requirements – different expectations.

Pay this down

Her loans and revolving credit were roughly $700,000.

Castillo described the conversation with her Plainview banker.

“He’s like, ‘Well, you need to pay down on this.’ So, I did. I paid $15,000 on both lines for $30,000. And then what I noticed was they dropped my lines,” Castillo said.

Without that money, she could not stay stocked with inventory.

Then her loan was transferred to the ASB branch in Center, Texas. That meant changing bankers again.

“He started talking about the credit lines. And I’m like, ‘Hey, are you not gonna work with me?” she said.

She tried to show him she was purchasing $12,000 worth of dog food every week.

“He’s like, ‘No, we’re not gonna do this,” Castillo said.

She was allowed to cash in a CD held as collateral, sold her house to pay down more on the loan and then got another loan from another source at a high interest rate, she said.

Her financial reports in 2024 were “healthy as could be,” she said. But once she couldn’t purchase dog food, she said she lost her customer base.

These were products her customers were accustomed to buying. But with her credit line cut – even after making the requested payments – she could not keep going.

“So yes, I lost my customer base, as well as customer trust. My situation is not just losing a business it’s losing everything I worked for these past 11 years,” Castillo said.

Castillo described it as being “upside down.” The bank sent a written notice, declaring her in default even before she missed a payment.

She did try to get other financing from other sources, but it was too late.

‘I’ve already offered you the skin off my back’

“I love retail. This is what I do. I’ve done it better than anybody in the franchise,” Castillo said.

Castillo described one of the conversations with her most recent banker like this.

“I said, ‘You’re putting so much pressure on me.’ I said, ‘I’ve already offered you the skin off my back.’ I said, ‘What do you want from me?’ He’s like, ‘Well, Angie, I want to be able to sleep at night.’ And I said, ‘Yeah. Me too.’”

Related

Related posts