Fed Warns Kansas Bank Is Significantly Undercapitalized, Sets Deadline for Action

Small Business Bank, founded in 1984 and based in Lenexa, Kansas, had assets of just $72.9 million in the first quarter of 2026, down from a peak of $103.8 million in the third quarter of 2022. The bank has faced regulatory action since 2023 over deficiencies in staffing, internal controls, credit and anti-money-laundering compliance. The latest measure is its third enforcement action, underscoring capital and governance risks at small banks.

The Federal Reserve issued a prompt corrective action directive on July 2, 2026, finding that the bank was “significantly undercapitalized” as of June 18. Within 30 days, it must issue new shares, secure a capital injection, seek acquisition by a bank holding company or merge with another bank. It also may not solicit or accept new deposit accounts without Fed approval.