U.S. Regulators Close America’s Smallest Standalone Bank

Founded in 1920 in Kentland, Indiana, Kentland Federal Savings and Loan Association operated one branch with two employees and focused largely on residential mortgages. Its demise carries little systemic risk but highlights the pressure facing tiny community lenders as compliance costs, digital competition and limited access to fresh capital erode their viability. The case has revived debate over whether uniform supervision places disproportionate burdens on institutions deemed “too small to save.”

The Office of the Comptroller of the Currency closed Kentland Federal on July 10, 2026, citing unsafe and unsound practices, depleted capital and no reasonable prospect of recovery. Its capital had fallen below the 2% threshold associated with critical undercapitalization. As of March 31, the lender had $3.73 million in assets and $3.65 million in deposits. The FDIC appointed Kentland Bank, an unrelated lender, to assume all deposits and substantially all assets, estimating a $1.2 million loss to the Deposit Insurance Fund.