Small Business Bank failed 18 days after the Fed gave it 30 days to raise capital or sell
The Kansas Office of the State Bank Commissioner closed Small Business Bank of Lenexa on Friday and appointed the Federal Deposit Insurance Corporation receiver. The Farmers State Bank of Oakley, Kansas agreed to assume substantially all deposits and to purchase certain assets. As of March 31, 2026 the bank reported total assets of $73m and total deposits of approximately $69m. The branch reopens Monday. The FDIC preliminarily estimates the failure will cost the Deposit Insurance Fund about $5.7m, an estimate it says is expected to change as retained assets are sold.
The closure did not come without a public warning. On June 29 the Federal Reserve Board issued a prompt corrective action directive to the bank upon its consent, docket 26-039-PCA-SM, recording a determination that as of June 18 the bank was significantly undercapitalized as defined in section 208.43(b)(4) of Regulation H. The directive gave the bank 30 days to increase equity through a sale of shares or contributions to surplus, to enter into and close a contract to be acquired or combined with another insured depository institution, or to take other measures sufficient to make it adequately capitalized. It also barred capital distributions and required Reserve Bank approval before the bank could solicit new deposits or renew time deposits at rates above prevailing regional levels. That window would have run to July 29.
Nor was the directive the first supervisory action on the record. By its own terms it does not supersede a cease and desist order between the bank and the Board dated November 13, 2024, or an earlier cease and desist order among Gardner Bancshares, Inc., the bank and the Board dated September 1, 2023.
Small Business Bank carried FDIC certificate 25744 and is listed as failure number 10553. The three insured institutions ahead of it with 2026 closing dates are Metropolitan Capital Bank and Trust of Chicago on January 30, Community Bank and Trust of West Georgia in LaGrange on May 1, and Kentland Federal Savings and Loan Association of Kentland, Indiana on July 10.
