Iowa Bank Collapses Under Trucking Debt

The trucking industry's recent hardships have claimed an unexpected victim - Citizens Bank of Sac City, Iowa. The bank's collapse is primarily attributed to its significant involvement in commercial trucking loans, a sector that has witnessed widespread company closures and layoffs.

• Bank Breakdown: Citizens Bank's failure was announced on Nov. 3, with the FDIC stating its assets were taken over due to substantial unrecognized loan losses.
• Loan Losses: An FDIC review revealed a high concentration of troubled out-of-state trucking loans.

This fallout mirrors the broader industry's downturn, marked by reduced rates and an excess of vehicles. The bank's estimated losses of $14.8 million now fall to the Iowa Department of Insurance and Financial Services, as the bank was state-chartered and not FDIC-insured. Despite the bank's small size, with a $66 million asset base in a town of 2,000, the risky loans raise questions about its lending practices.

The trucking industry faces a bumpy road ahead, with new Class 8 trucks ranging from $150,000 to over $220,000. As the community of Sac City and the state of Iowa grapple with the bank's failure, the incident serves as a reminder of the risks in sector-focused lending.