The nation’s smallest standalone bank shuttered Friday after depleting its capital to the point of being “critically undercapitalized,” according to the Office of the Comptroller of the Currency.

Regulators closed Kentland Federal Savings and Loan Association of Kentland, Indiana, after finding that the bank had “experienced substantial dissipation of assets and earnings due to unsafe and unsound practices.”

Nearby Kentland Bank – similarly named but unrelated – was appointed receiver by the Federal Deposit Insurance Corp. 

Kentland Federal Savings and Loan Association reported $3.73 million in assets and $3.65 million in deposits as of March 31.

Kentland Federal Savings and Loan Association’s sole branch, which has been open for more than a century, has permanently closed, and its depositors have automatically become depositors of Kentland Bank.

The failure will cost the Deposit Insurance Fund roughly $1.2 million, the FDIC estimated.

An employee who answered the phone at the shuttered bank said she couldn’t respond to questions, Barron’s reported Friday. The bank was run by the Sammons family after the President John Sammons’ great-grandfather, Hume Sammons, founded the bank in 1920, Barron’s reported.

Bloomberg News profiled John Sammons in 2023.

“When I am finished — whether it’s [regulators] pressuring us to be absorbed or me walking away — we will have to be acquired,” he told the outlet. The bank had recently gone through an exam, and the “powers that be are concerned about our capital growth — they deem us ‘too small to survive,’” he said.

The OCC found “there is no reasonable prospect that the bank will become adequately capitalized” when it decided to shutter the bank Friday.

Kentland Federal Savings and Loan Association is the third bank to fail in 2026, after Chicago lender Metropolitan Capital Bank & Trust failed in January and LaGrange, Georgia-based Community Bank & Trust - West Georgia failed in May.