Citizens First National Bank of Princeton, a Nationally Chartered Bank v. Cincinnati Insurance Company, an Ohio Corporation

TERENCE T. EVANS, Circuit Judge.

When the Cincinnati Insurance Company sold a directors and officers liability policy to Citizens Bank covering breaches of fiduciary duty in the rural bank’s tiny trust department, it probably seemed like a safe bet that the bank would never make a claim approaching the policy’s $5 million limit. The odds changed dramatically, however, when Citizens’ trust officer, without fully understanding the risks involved, began investing the vast majority of his customers’ life savings in extremely volatile derivative instruments. Given this combination, before you could…