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Failed Bank Review - Citizens Bank


The Federal Deposit Insurance Corporation Office of Inspector General has issued its memorandum on the Failed Bank Review |Citizens Bank | Sac City, Iowa

 On November 3, 2023, the Iowa Division of Banking (IDOB) closed Citizens Bank and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver.  According to the FDIC’s Division of Finance, the estimated loss to the Deposit Insurance Fund (DIF) was $14.8 million or 23 percent of the bank’s $65 million in total assets.  Following a period of supervisory actions by regulators, the IDOB took possession and closed Citizens Bank during an ongoing examination because FDIC and IDOB examiners found significant loan losses in the loan portfolio.  These loan losses eroded the institution’s capital and earnings position and the bank had become insolvent.  

 When the DIF incurs a loss under $50 million, the Federal Deposit Insurance Act requires the Inspector General of the appropriate federal banking agency to determine the grounds identified by the state or federal banking agency for appointing the FDIC as receiver and to determine whether any unusual circumstances exist that might warrant an In-Depth Review of the loss.  

 The OIG considers a series of factors to determine whether unusual circumstances warrant an In-Depth Review.  These factors include: (1) the magnitude and significance of the loss to the DIF in relation to the total assets of the failed institution; (2) the extent to which the FDIC’s supervision identified and effectively addressed the issues that led to the bank’s failure or the loss to the DIF; (3) indicators of fraudulent activity that significantly contributed to the loss to the DIF; and (4) other relevant conditions or circumstances that significantly contributed to the bank’s failure or the loss to the DIF. 

 Our review did not find unusual circumstances that warrant an In-Depth Review of the loss.