KENTLAND, Ind. — The nation’s smallest standalone bank has been closed after becoming critically undercapitalized, according to a federal banking regulator.
The Office of the Comptroller of the Currency closed Kentland Federal Savings and Loan Association after determining the institution had become “critically undercapitalized” and had experienced a substantial dissipation of assets and earnings due to unsafe and unsound practices, Banking Dive reported.
The OCC appointed nearby Kentland Bank, an unrelated institution despite the similar name, as receiver through the Federal Deposit Insurance Corp.
Branch Had Operated for More Than 100 Years
According to Banking Dive, Kentland Federal Savings and Loan Association reported $3.73 million in assets and $3.65 million in deposits as of March 31. The bank’s lone branch, which had operated for more than 100 years, has permanently closed, and all depositors automatically became customers of Kentland Bank.
The FDIC estimates the failure will cost the Deposit Insurance Fund approximately $1.2 million, Banking Dive reported.
An employee who answered the phone at the closed bank declined to comment, according to Barron’s.
Family-Owned for More Than a Century
The bank had been operated by the Sammons family since its founding in 1920 by Hume Sammons. Banking Dive, citing a 2023 Bloomberg News profile, reported that President John Sammons had acknowledged regulatory concerns about the institution’s viability.
“When I am finished — whether it’s [regulators] pressuring us to be absorbed or me walking away — we will have to be acquired,” Sammons told Bloomberg in 2023. He added that following a recent examination, regulators believed the bank was “too small to survive” because of concerns over its capital growth.
In its closing order, the OCC determined there was “no reasonable prospect” that the institution would return to adequate capitalization, according to Banking Dive.
