Smallest standalone bank in America fails

• Key insight: Kentland Federal Savings and Loan Association failed Friday and was acquired by a local bank in an FDIC-assisted transaction.
• Supporting data: The thrift held $3.73 million in assets and $3.65 million in deposits as of March 31. The FDIC estimates the failure will cost the Deposit Insurance Fund about $1.2 million.
• Forward look: Customers will have access to their insured deposits through Kentland Bank beginning Monday, July 13.

Regulators on Friday 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, and appointed 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 Federal, which opened in 1920, had $3.73 million in assets and $3.65 million in deposits as of March 31. On its website, the bank writes that "people tend to think bigger is better, which is not always the case."

"We operate with a sense of pride that we have helped our community by providing sensible financial instruments critical to financial independence," Kentland's website states. "We help people acquire their first real estate mortgages and offer savings accounts and certificates of deposit … local money, serving local people."

Enforcement

Iowa bank holding company cited for inadequate capital

July 9, 2026 1:51 PM

By Ebrima Santos Sanneh

The only branch of the failed bank, established in 1920, closed permanently. Depositors of the failed bank will become customers of Kentland Bank automatically and their deposits are protected by FDIC insurance. The deposits assumed by Kentland Bank will continue to be insured by the FDIC.

The FDIC said it estimates the failure will cost the Deposit Insurance Fund about $1.2 million. Kentland becomes the third bank failure 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.

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.