Metropolitan Capital Bank & Trust Has Failed - Here's What Caused It (Video)

On Friday, January 30, 2026, Illinois regulators closed Chicago-based Metropolitan Capital Bank & Trust, marking the first bank failure in the United States for the year 2026. 

The Illinois Department of Financial and Professional Regulation closed the bank due to “unsafe and unsound conditions” and an “impaired capital position”. Regulators determined that the bank’s capital was insufficient to cover potential losses, making it unable to continue operations safely. The FDIC was appointed as receiver and arranged for Detroit-based First Independence Bank to take over most of Metropolitan’s deposits and assets. Customers of Metropolitan Capital automatically became customers of First Independence Bank and maintained access to their funds. The bank’s sole location at 9 E. Ontario St. is scheduled to reopen as a First Independence Bank branch on Monday, February 2, 2026. Borrowers should continue making loan payments. Deposits transferred to First Independence Bank remain federally insured. 

As of September 30, 2025, the bank had approximately $261.1 million in assets. Their deposits totaled roughly $212.1 million. The failure is estimated to cost the FDIC’s Deposit Insurance Fund around $19.7 million. By the third quarter of 2025, the bank’s net equity capital ratio had dropped to 1.62 percent, significantly below the 5 percent typically required for a bank to be considered “well capitalized”. The institution had been struggling with negative retained earnings and persistent losses. As of September 30, 2025, it held approximately $261.1 million in assets against $257 million in liabilities. Also, the bank relied heavily on external borrowing, including $43 million in advances from the Federal Home Loan Bank system. Both the CEO and CFO reportedly left the bank in 2025, further destabilizing the institution during its financial decline. The additional tightening financial conditions and losses on U.S. Treasury holdings contributed to the final “unsafe” state of the bank’s balance sheet

https://youtu.be/FlN846EntyA

Chapters:
0:00 Intro
0:47 The FDIC Announcement
4:52 The 2019 Consent Order
5:44 The CEO and CFO Both Quit
7:09 The Balance Sheet
11:57 Extend and Pretend
12:59 Private Equity
16:12 Commercial Real Estate
18:53 Long Story Short