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Bank Failure Friday Returns (again): Citizens Bank of Iowa

And here we go gang…

The FDIC Fridays are back after a Federal Reserve artificial pause so the party might get going every Friday night now. First up to bat in November is Citizens Bank of Sac City, Iowa. Here is the FDIC Press release:

Iowa Trust & Savings Bank, Emmetsburg, Iowa, Assumes All of the Deposits of Citizens Bank, Sac City, Iowa

WASHINGTON — Citizens Bank, Sac City, Iowa, was closed today by the Iowa Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect depositors, the FDIC entered into a Purchase and Assumption Agreement with Iowa Trust & Savings Bank, Emmetsburg, Iowa, to assume all of the deposits of Citizens Bank.

The two branches of Citizens Bank will reopen as branches of Iowa Trust & Savings Bank on Monday during normal business hours. This evening and over the weekend, depositors of Citizens Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

Depositors of Citizens Bank will become depositors of Iowa Trust & Savings Bank, so customers do not need to change their banking relationship in order to retain their deposit insurance coverage. Customers of Citizens Bank should continue to use their existing branch until they receive notice from Iowa Trust & Savings Bank that it has completed systems changes to allow its branch offices to process their accounts as well.

As of September 30, 2023, Citizens Bank had approximately $66 million in total assets and $59 million in total deposits. In addition to assuming all of the deposits, Iowa Trust & Savings Bank agreed to purchase essentially all of the failed bank’s assets.

Customers with questions about the transaction should call the FDIC toll-free at 1-866-314-1744. The phone number will be operational this evening until 9:00 p.m. Central Time (CT); on Saturday from 9:00 a.m. to 6:00 p.m. CT; on Sunday from noon to 6:00 p.m. CT; on Monday from 8:00 a.m. to 8:00 p.m. CT; and thereafter from 9:00 a.m. to 5:00 p.m. CT. Interested parties can also visit the FDIC’s website.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $14.8 million. Compared to other alternatives, Iowa Trust & Savings Bank’s acquisition was the least costly resolution for the DIF, an insurance fund created by Congress in 1933 and managed by the FDIC to protect the deposits at the nation’s banks.  Citizens Bank is the fifth bank to fail in the nation this year. The last failure in Iowa was Polk County Bank, Johnston, Iowa, on November 18, 2011.

This is just the beginning boys and girls. This is a small institution in the heart of the agricultural center of America. As the small family farms start to fail in concert with large commercial real estate defaults accelerating, I would count on the old days of two to three banks per week starting to fail as we accelerate towards a severe recession. Stay tuned, the night is young.

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