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Citizens Bank closure marks fifth US bank failure this year

Published Nov 06, 2023 08:28AM ET
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In a continuation of the trend of US banks succumbing to financial issues, Citizens Bank in Sac City, Iowa, ceased operations on November 3, 2023. The bank's closure was confirmed by the FDIC (Federal Deposit Insurance Corporation), marking it as the fifth such incident this year and the first one in Iowa since 2011. The FDIC cited undisclosed loan losses tied to a single industry outside the bank's local territory as the primary reason for the failure.

The assets and deposits of Citizens Bank, which amounted to $65,558,000 and $58,930,000 respectively prior to its closure, along with the majority of its operations, have been taken over by Iowa Trust & Savings Bank. The FDIC and IDOB (Iowa Division of Banking) had previously initiated an investigation into Citizens Bank's non-local loan losses that resulted in a consent order. An independent consultant was appointed to manage the commercial trucking loan portfolio tied to these losses.

The number of physical bank branches in the US has seen a steady decline from nearly 100,000 in 2009 to less than 80,000 today. This trend has been attributed to increased investments in online platforms and smartphone apps by S&P Global Market Intelligence data. The shift towards digital banking platforms has been accelerated by the COVID-19 pandemic and the banking industry's move towards mergers and acquisitions.

Other notable bank failures this year include Silvergate Bank and Signature Bank (OTC:SBNY), two major players in the US crypto banking sector. Silvergate Capital (OTC:SICP) decided to wind down operations after experiencing a net loss of nearly $1 billion due to customer withdrawals in Q4 2022. Similarly, Signature Bank closed following significant deposit withdrawals after Silicon Valley Bank collapsed.

Despite these incidents, customers' deposits are protected up to at least $25,000 at each FDIC-insured bank under the FDIC's deposit insurance program. This coverage includes direct deposits and escrow payments. The FDIC continues to address public queries regarding the closure of Citizens Bank.

InvestingPro Insights

In light of the recent closure of Citizens Bank, it is crucial to consider the financial health of other banks in the US. As an example, let's take a look at CZWI, which, according to InvestingPro, has raised its dividend for four consecutive years and has maintained dividend payments for 11 consecutive years. This shows a consistent return for investors, a key indicator of financial stability.

However, it's not all rosy. Two analysts have revised their earnings downwards for the upcoming period, indicating potential financial challenges. Furthermore, the company is trading at a low earnings multiple, which could suggest undervaluation or low growth expectations.

InvestingPro's real-time data reveals a market cap of 97.46M USD and a P/E ratio of 6.95 for CZWI. The company's revenue stands at 60.85M USD as of Q3 2023, but it has been declining at an accelerating rate. The dividend yield as of the end of 2023 is 3.11%, signifying a steady return for shareholders.

For more insights and tips, consider exploring InvestingPro's platform, which offers a wealth of information for discerning investors. For instance, there are six more InvestingPro Tips available for CZWI that can provide a deeper understanding of the company's financial health and outlook.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Citizens Bank closure marks fifth US bank failure this year
 

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Comments (1)
Mark Gesswein
Mark Gesswein Nov 06, 2023 3:42PM ET
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Another bank goes belly up, and it’s barely a blip on the business media radar. Then, a million people don’t get their direct deposit paychecks on the same day Citizens Bank collapses. Coincidence?I don’t believe in coincidences…
 
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