In the heartland of Iowa, the financial landscape is making waves as Citizens Bank of Sac City becomes the latest casualty of the tumultuous year 2023 for U.S. banks. The Iowa Division of Banking has slammed the door shut on Citizens Bank, citing financial instability, making it the fifth bank under the FDIC’s watchful eye this year.
So, what exactly happened? Citizens Bank’s troubles led to the Iowa Division of Banking appointing the Federal Deposit Insurance Corporation (FDIC) as the receiver. To safeguard depositors, the FDIC inked a deal with Iowa Trust & Savings Bank to take over all the deposits from Citizens Bank.
The excellent news for Citizens Bank customers is that the two branches are still open for good. Instead, they are reopening under the banner of Iowa Trust & Savings Bank. For depositors, this means business as usual – checks can be written, and ATM or debit cards can still be used. Loan customers are advised to stay the course and continue making regular payments.
As of the latest data on September 30, 2023, Citizens Bank reported around $66 million in total assets and $59 million in total deposits. Iowa Trust & Savings Bank took over all the deposits and agreed to purchase almost all of Citizens Bank’s assets.
But what about deposit insurance coverage? No need to worry there. Depositors of Citizens Bank will seamlessly transition to becoming depositors of Iowa Trust & Savings Bank without any need to change their banking relationship.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be approximately $14.8 million. In the grand scheme of things, Iowa Trust & Savings Bank’s acquisition is seen as the least costly resolution for the DIF, established by Congress in 1933 to protect the deposits at the nation’s banks. The last time Iowa saw a bank failure was Polk County Bank in Johnston back in 2011.
Citizens Bank’s closure is just the latest in a string of FDIC interventions in 2023. Heartland Tri-State Bank in Elkhart, Kansas; First Republic Bank in San Francisco, California; Signature Bank in New York, New York; and Silicon Valley Bank in Santa Clara, California, all faced similar fates earlier this year.
The banking landscape is undoubtedly shifting, and customers must stay informed. As we witness the ebb and flow of financial institutions, the FDIC remains a crucial player in ensuring stability and protection for depositors across the country. So, stay tuned for more updates on the evolving saga of U.S. banks in 2023.