Kansas bank becomes second bank in a week to fail

• Key insight: Small Business Bank in Kansas, with $73 million in assets, failed Friday, the fourth failure this year.
• Supporting data: The failure will cost the Deposit Insurance Fund roughly $5.7 million, about 8% of the firm's total assets at the time of failure.
• Forward look: The fourth failure makes 2026 the worst year for bank failures since 2023, but bank failures have become exceedingly rare in recent years.

A Kansas community bank failed Friday, marking the fourth failure this year, just a week after what was previously the nation's smallest standalone bank failed, according to the Federal Deposit Insurance Corp.

The FDIC said Farmers State Bank of Oakley, Kansas, would purchase all deposits and some assets of Small Business Bank located in Lenexa, Kansas, a major suburb of Kansas City. 

It was not entirely unexpected. Small Business Bank was deemed to be "significantly undercapitalized" by the Federal Reserve in a July enforcement action and given 30 days to raise its capital level. It was the third enforcement action the Fed had leveled against the $73 million-asset bank since 2023. 

Small Business Bank's failure will cost the agency's Deposit Insurance Fund about 7.8% the cost of the bank's total assets.

"The FDIC preliminarily estimates that the failure will cost the Deposit Insurance Fund approximately $5.7 million," the agency wrote. "The estimate is expected to change over time as retained assets are sold."

According to the release, Small Business Bank was shuttered by the Kansas Office of the State Bank Commissioner on Friday and the agency tapped the FDIC as receiver in order to protect consumer deposits.

Small Business Bank held approximately $73 million in assets, of which total deposits totaled roughly $69 million. 

"Small Business Bank's sole branch will reopen as a branch of Farmers State Bank during its normal business hours on Monday, July 20, 2026. Depositors of Small Business Bank will automatically become depositors of Farmers State Bank," The FDIC wrote. "The deposits assumed by Farmers State Bank will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship."

The year's fourth bank failure comes exactly a week after regulators announced that the Office of the Comptroller of the Currency had closed the sole branch of Kentland Federal Savings and Loan Association, the nation's smallest standalone bank, appointing the Federal Deposit Insurance Corp. as receiver.

The FDIC also announced that unaffiliated Kentland Bank, also based in Kentland, Indiana, agreed to purchase substantially all of the failed institution's assets and assume all of its deposits.

Kentland's failure will cost the Deposit Insurance Fund an estimated $1.2 million, according to the FDIC. 

Four banks have failed this year. Community Bank and Trust - West Georgia, a community bank based in LaGrange, Georgia, was the second U.S. bank to fail in 2026 and cost the FDIC's Deposit Insurance Fund roughly $97 million, subject to adjustments. The year's first failure was Chicago-based Metropolitan Capital Bank & Trust, which was estimated to have cost the DIF about $19.7 million.

Bank failures have become exceedingly rare in recent years. Only two banks failed in both 2025 and 2024. And no banks failed in either 2021 or 2022. But five banks failed in 2023, including the high-profile collapses of Silicon Valley Bank, First Republic Bank and Signature Bank.

Since 2014, when 18 banks failed, no more than eight banks have failed in any year, according to FDIC records. That happened twice, in 2015 and 2017. Between 2008 and 2013, during and in the wake of the financial crisis, 489 banks failed, with the worst year being 2010, when 157 failed.  

The FDIC recently proposed lowering deposit insurance assessments for small banks, who could see their assessment rates decrease by two basis points under a June proposed rule; large and highly complex institutions would enjoy a one-basis-point reduction.