The failure of a bank in Iowa has been tied its portfolio of loans to commercial trucking companies.
On November 3, the Iowa Division of Banking shut down Citizens Bank, Sac City. The Federal Deposit Insurance Corporation (FDIC) has taken over receivership of the bank.
Citizens Bank is the first Iowa bank to be closed since 2011.
“During a joint and ongoing examination of the bank, examiners identified significant loan losses that had not previously been identified by the bank. The bank was declared insolvent. The bank had a concentration of out-of-territory and out-of-state loans to one industry and incurred heavy losses on some of those loans,” the Iowa Division of Banking said in a news release.
The Des Moines Register has confirmed that the bad loans were to trucking industry clients, though the companies were not named.
The trucking industry — and in particular smaller carriers — have struggled this year due to post-pandemic overcapacity and a freight recession.
Iowa Trust & Savings Bank has stepped in purchase all loans and to take over all consumer, business, and public deposits so there is no loss to any depositors.
Citizens Bank was established in 1929.