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The Federal Deposit Insurance Corporation (FDIC) has shut down a bank in Iowa after regulators discovered “significant loan losses” on its balance sheet.

The FDIC is adding Citizens Bank in Sac City to its list of failed banks, and says Iowa Trust & Savings Bank has assumed all deposits in order to protect depositors.

The bank’s pair of physical locations will reopen as Iowa Trust & Savings Bank on Monday.

Citizens Bank was established in 1929 and is the first bank closure in Iowa since 2011.

Its closure represents the fifth bank failure in the US this year, following the collapse of Heartland Tri-State Bank, First Republic Bank, Signature Bank and Silicon Valley Bank.

According to the Iowa Division of Banking, the bank had about $66 million in total assets and $59 million in total deposits as of September of this year.

“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.”

Regulators have not specified which loans went sour at the bank.

As a whole, the banking industry has been plagued by underwater bond portfolios throughout 2023, triggered by a series of aggressive rate hikes from the Federal Reserve.

The pitfalls of these so-called unrealized losses came into focus early this year amid the collapse of Silicon Valley Bank.

An abrupt run on the bank back in March was sparked by an announcement that the bank had booked a $1.8 billion loss from selling a portion of its underwater bond portfolio.

According to a recent report from Moody’s, the industry is facing approximately $650 billion in unrealized losses that don’t have to be marked at market value.

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