Citizens Bank Collapse: FDIC Steps in for Smooth Transition

In a significant move within the Iowa banking sector, Citizens Bank, located in Sac City, has been officially closed by the Iowa Division of Banking. The closure, which took place today, has led to the Federal Deposit Insurance Corporation (FDIC) being appointed as the receiver, ensuring that depositors' interests are protected amidst these changes.

In a swift response to safeguard the interests of the depositors, the FDIC has facilitated a Purchase and Assumption Agreement with Iowa Trust & Savings Bank, based in Emmetsburg, Iowa. This strategic agreement allows Iowa Trust & Savings Bank to assume all deposits previously held by Citizens Bank.

As a result of this transition, the two branches of the now-closed Citizens Bank are set to reopen as branches of Iowa Trust & Savings Bank come Monday, operating during the usual business hours. In the interim, Citizens Bank depositors will retain full access to their funds. This accessibility is made possible through various channels, including check-writing, ATM, and debit card transactions. Furthermore, the processing of checks drawn on the bank will continue without interruption, and loan customers are advised to continue with their regular payment schedules.

In a seamless transition, depositors of Citizens Bank will automatically become depositors of Iowa Trust & Savings Bank. This change will occur without the need for customers to take any action, thereby maintaining their deposit insurance coverage without any disruption. Citizens Bank customers are encouraged to continue using their existing branches until Iowa Trust & Savings Bank communicates the completion of system integrations necessary to service their accounts fully.

As of the last financial quarter ending September 30, 2023, Citizens Bank reported having total assets of approximately $66 million and total deposits amounting to $59 million. Iowa Trust & Savings Bank has agreed to purchase essentially all assets of the failed bank, which is a testament to its commitment to maintaining stability and confidence in the local banking system.

For customers seeking further information regarding the transition, the FDIC has established a dedicated hotline at 1-866-314-1744. This service will be available during specified hours throughout the weekend and the following week. Additionally, the FDIC's website offers comprehensive details and updates on the matter.

The estimated cost of Citizens Bank's closure to the Deposit Insurance Fund (DIF) is $14.8 million. However, the acquisition by Iowa Trust & Savings Bank is considered the least costly resolution for the DIF, which has been a cornerstone of the nation's banking system since its establishment by Congress in 1933.

The closure of Citizens Bank marks the fifth bank failure in the nation this year and the first in Iowa since the Polk County Bank in Johnston met a similar fate on November 18, 2011.

List of Bank failures in the United States in 2023

The FDIC's proactive measures and Iowa Trust & Savings Bank's willingness to assume control ensure that the impact on customers will be minimal and that the integrity of the banking system remains intact.

References: FDIC: PR-91-2023