June 13, 2024

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Iowa bank failure tied to bad trucking loans

2 min read

Trucking bloodbath expands to lenders as industry experiences one of the sharpest downturns in history. (Photo: Shutterstock)

As everyone in and associated with the trucking industry knows, most of the last two years have been very difficult ones for the industry.

Trucking companies large and small have gone out of business. There are too many trucks chasing too little freight. Rates on most lanes are at or below 2019 levels — another bad year for the industry.

In addition, brokerages have also been hurt. As widely reported by FreightWaves and other media, Convoy, a very high-profile brokerage, recently shut down for financial reasons. Other brokerages have also gone out of business, and layoffs have become relatively commonplace.

There are hiring freezes and other belt-tightening moves in effect throughout the freight industry.

Citizens Bank goes under

Now the trucking bloodbath has taken down a bank.

Citizens Bank of Sac City, Iowa, has failed, and it appears that its exposure to commercial trucking is the cause.

Citizens Bank was a small state-chartered bank. Its loan portfolio was focused on “commercial and industrial loans,” according to Bank Reg Blog.

The blog reported on Nov. 3 that the Federal Deposit Insurance Corporation (FDIC) “announced that Citizens Bank, a $66 million asset nonmember bank … had failed.”

Supervised by the FDIC and the Iowa Department of Insurance and Financial Services, all of the deposits of Citizens Bank were assumed by Iowa Trust & Savings Bank, the blog reported.

Because Citizens Bank was a state-chartered bank and not a member of FDIC, the bank’s estimated losses of $14.8 million will be the responsibility of the Iowa Department of Insurance and Financial Services.

Bad trucking industry loans? 

The superintendent of the Iowa Division of Banking (IDOB), which is part of the department, also issued a statement, according to the blog, saying that in the course of a joint FDIC/IDOB examination, “examiners identified…

2023-11-05 12:02:03

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