FDIC Takes Over Fifth U.S. Bank of 2023

Citizens Bank, based in Sac City, Iowa, has been closed by the Iowa Division of Banking due to financial instability, marking the fifth U.S. bank failure reported in 2023.

The Iowa Division of Banking has 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 to assume all of the deposits of Citizens Bank.

The two branches of Citizens Bank have reopened as branches of Iowa Trust & Savings Bank, and 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 are advised to continue to make their payments as usual.

As of September 30, 2023, Citizens Bank reported 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.

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.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be approximately $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. The last bank failure in Iowa was Polk County Bank, Johnston, Iowa, on November 18, 2011.

The closure of Citizens Bank marks the fifth institution shuttered by the FDIC to date in 2023, followed by:

• Heartland Tri-State Bank of Elkhart, Kansas, which was closed on July 28 by the Kansas Office of the State Bank Commissioner, which appointed the FDIC as receiver. To protect depositors, the FDIC entered into a purchase and assumption agreement with Dream First Bank, National Association, of Syracuse, Kansas, to assume all of the deposits of Heartland Tri-State Bank. The four branches of Heartland Tri-State Bank reopened as branches of Dream First Bank, National Association.
• First Republic Bank, San Francisco, California, was closed on May 1 by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver. To protect depositors, the FDIC entered into a purchase and assumption agreement with JPMorgan Chase Bank, National Association, Columbus, Ohio, to assume all of the deposits and substantially all of the assets of First Republic Bank. As part of the transaction, First Republic Bank’s 84 offices in eight states reopened as branches of JPMorgan Chase Bank, National Association.
• On March 12, Signature Bank of New York, New York was closed by the New York State Department of Financial Services, which appointed the FDIC as receiver. To protect depositors, the FDIC transferred all the deposits and substantially all of the assets of Signature Bank to Signature Bridge Bank, N.A., a full-service bank that was operated by the FDIC as it marketed the institution to potential bidders. Just days later on March 20, the FDIC entered into a purchase and assumption agreement for substantially all deposits and certain loan portfolios of Signature Bridge Bank, National Association, by Flagstar Bank, National Association of Hicksville, New York, a wholly owned subsidiary of New York Community Bancorp, Inc., Westbury, New York where the 40 former branches of Signature Bank began operating under New York Community Bancorp's Flagstar Bank, N.A.
• The first bank closure of 2023, back on March 13 saw the FDIC transferring all deposits—both insured and uninsured—and substantially all assets of the former Silicon Valley Bank of Santa Clara, California, to a newly created, full-service FDIC-operated ‘bridge bank’ in an action designed to protect all depositors of Silicon Valley Bank. The FDIC eventually entered into a purchase and assumption agreement for all deposits and loans of Silicon Valley Bridge Bank, National Association, by First-Citizens Bank & Trust Company, Raleigh, North Carolina. The 17 former branches of Silicon Valley Bridge Bank, National Association, opened as First-Citizens Bank & Trust Company two weeks later on March 27, 2023.