The Federal Reserve hit Small Business Bank with a “prompt corrective action directive” last week after determining that it was "significantly undercapitalized.”

The Lenexa, Kansas-based lender has 30 days to increase its equity through the sale of shares, to find a buyer or to take “other necessary measures” to become adequately capitalized, the Fed ordered.

This is the third time Small Business Bank has been in hot water since 2023, when the central bank cited deficiencies in the lender’s staffing, internal controls, credit risk management, lending and credit administration, capital, IT and third-party risk management.

Examiners found “new and continuing deficiencies” the following year within its anti-money laundering and Bank Secrecy Act compliance.

Small Business Bank was deemed “significantly undercapitalized” as of June 18, according to the Fed. But the bank’s last call report, filed April 30, shows a common equity tier 1 capital ratio of about 14%, much higher than the figure needed to be considered well-capitalized.

Small Business Bank isn’t allowed to solicit or accept new deposit accounts unless expressly approved by the Fed, according to the order.

A representative for the bank did not immediately respond to a request for comment.