Failure of Citizens Bank comes as several other major banks experienced payroll deposit freezes due to a “glitch” on Friday.
Citizens Bank was shut down by government regulators on Friday, making it the sixth regional bank to collapse in 2023.
Citizens Bank had about $66 million in total assets at the time it was shut down. Iowa Trust & Savings Bank agreed to purchase essentially all of the failed bank’s assets and assume all deposits.
Another Bank Failure…
Citizens Bank Iowa
$66 Million in Assetshttps://t.co/RCqQmhlgcY pic.twitter.com/qPb9e9eycf
— Tony Kambeitz (@Kambeitz9) November 4, 2023
The Federal Deposit Insurance Corporation (FDIC) issued a statement breaking down the development:
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.
Citizens Bank joins the likes of Heartland Tri-State Bank, First Republic Bank, Signature Bank, Silicon Valley Bank and First–Citizens Bank to fail this year. First-Citizens bank was the first to fail in March 10, 2023.
The bank failure came as several other major banks, including JPMorgan Chase & Co, Wells Fargo & Co, Bank of America Corp, and Truist Financial Corp, experienced payroll deposit freezes due to a “glitch” on Friday.
The incident left almost a million Americans without their wages.
“Reports of the issue began to emerge, with Downdetector, an outage tracking website, documenting a spike in complaints across various banks. These ranged from incorrect account balances to stalled transactions,” Bezinga reported.
“According to a spokesperson from JPMorgan Chase, the delay was due to payroll files that had not been processed as anticipated, ThinkAdvisor reports.”
Is this what Joe Biden meant when he said Bidenomics was working?