Without a website, commissions and ATMs: how the smallest US bank works

James A. Sammons is the owner and CEO of the smallest US bank, Kentland Federal Savings and Loan, with $3 million in assets. The bank has no ATMs, no website and no fees, reports ThePage.

Photo: IStock

Sammons usually arrives at the bank by 7:30 in the morning. The only other bank employee, a part-time teller, comes in at 9 am. The bank has a single office located in Kentland, Indiana (pop. 1640). It doesn't have ATMs or a website. Bank customers can get a mortgage loan, open a savings account or a certificate of deposit (CD). All procedures are carried out in paper form. Sammons, the fourth generation of the family that runs the bank, admits he has a bit of a dislike for technology. “Computers are good when they work,” laughs the 55-year-old banker. “I don’t have the patience for them.”

The bank was founded in 1920 and has been located in the same premises all the time. Sammons, like two of his ancestors, worked in the city government. He believes that this bond of power and trust is the key to the bank's longevity. “We were the only institution that didn't close during the stock market crash of the late 1920s,” says Sammons. “People were sure that their money would not go anywhere.”

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Banks like Kentland Savings, which managed to maintain their independence after decades of industry consolidation, were born in a very different era of regulation. According to Roger Lowenstein, financial journalist and author of The Bank of America: The Epic Struggle to Create the Federal Reserve, banking rules were then used, in part, to protect small creditors—in the 1930s, you could not have more than one branch or work. out of state.

In the years following the passage of the Dodd-Frank Act in 2010, a loud debate flared up about whether the burden of regulation was too much on the shoulders of small banks, forcing them to merge or put themselves up for sale. As a result, regulation was relaxed in 2018. And at the beginning of 2023, SVB Bank went bankrupt. He had assets of about $ 200 billion, but was still considered unworthy of the close attention of the regulator.

The tiny Kentland Savings is a matter of concern to the authorities, who consider it "too small to survive."

Regulators are concerned about the bank's deteriorating asset base: it currently has only 40 mortgages, not replenished by loans to a younger generation with little inclination for personal banking.

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There are two other banks in Kentland. Sammons says that while he can attract local customers with better rates on savings accounts and mortgages, Kentland Savings has no other source of income. What is most surprising is that he has no commission income. No fees for ATMs, for transfers and transactions of any kind. “We're not talking about that. It would undermine what we believe in,” says Sammons.

The deposits of the bank's clients are fully insured, so there is no reason to worry about savings. According to Sammons, the competitive advantage of his bank lies in the social plane. Half of his customers deliver their checks in person, so that "there is something to do." It's about the human relationships that a bank maintains, striving to remain autonomous for as long as possible. “We're proud that when someone calls the bank, they'll be talking to the bank's manager,” says Sammons.

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However, he seems quite resigned to the notion that his business might end with him. He has four sons, and none of them is interested in continuing the family business.

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