The Kansas Office of the State Bank Commissioner officially closed the Small Business Bank in Lenexa, Kansas.
Subsequently, the Federal Deposit Insurance Corporation (FDIC), appointed as receiver, entered into an agreement with The Farmers State Bank of Oakley, Kansas, to assume substantially all deposits and purchase certain assets of Small Business Bank.
According to the Kansas Office of the State Bank Commissioner, the Small Business Bank has operated with financial difficulties for the past several years and has been subject to strict supervisory oversight. Ongoing operating losses resulted in the bank’s capital becoming critically under-capitalized.
The Small Business Bank had about $73 million in total assets and $69 million in total deposits as of March 31.
Small Business Bank’s sole branch reopened as a branch of Farmers State Bank on Monday, July 20. Depositors of Small Business Bank will automatically become depositors of Farmers State Bank and the deposits assumed by Farmers State Bank will continue to be insured by the FDIC. Customers of Small Business Bank will have immediate access to their deposits.
The FDIC estimates that the failure will cost the Deposit Insurance Fund approximately $5.7 million. The estimate is expected to change over time as retained assets are sold.