Chicago's Metropolitan Capital Bank Collapses, Marking First U.S. Bank Failure of 2026
CHICAGO – In a troubling repeat of recent history, federal and state regulators were forced to close a Chicago bank this weekend, marking the first U.S. bank failure of 2026. Metropolitan Capital Bank & Trust, a boutique lender catering to small and mid-sized businesses, was shuttered by the Illinois Department of Financial and Professional Regulation (IDFPR) late Friday.
The regulator cited "unsafe and unsound banking conditions and an impaired capital position" as the reasons for the takeover. The Federal Deposit Insurance Corporation (FDIC) was immediately appointed as receiver and brokered a deal with Detroit-based First Independence Bank to assume the bulk of the failed institution's operations.
"All depositors of Metropolitan Capital Bank & Trust will be fully protected. No one will lose a single penny of their insured deposits," stated Susana Soriano, Acting Director of the IDFPR's Division of Banking, in an official release. The bank's two branches reopened Monday under the First Independence Bank banner.
According to FDIC data, Metropolitan Capital held approximately $261 million in total assets and $212 million in total deposits at the time of its collapse. First Independence Bank has agreed to assume "substantially all" of the deposits and purchased about $251 million of the assets. The FDIC will retain the remaining assets for later sale, estimating the cost to its Deposit Insurance Fund at $19.7 million, subject to change.
The failure casts a spotlight on the lingering vulnerabilities within the community and regional banking sector, which continues to grapple with the aftershocks of higher interest rates and commercial real estate pressures. Metropolitan Capital, founded in 2005 and headquartered in the city's River North district, had positioned itself as North America's only boutique "Universal Bank" for entrepreneurs and privately-held companies.
Its acquirer, First Independence Bank, is a Michigan state-chartered commercial bank founded in 1970. It is the only African American-owned bank headquartered in Michigan and has a mission of serving underserved communities. "First Independence Bank is well-positioned to continue essential banking services for former Metropolitan Capital customers," Soriano added.
This closure eerily echoes the start of 2025, when Chicago's Pulaski Savings Bank became the nation's first failure that year. Prior to 2025, the city had seen a nearly decade-long period without a bank collapse, a streak broken dramatically in 2017 by two high-profile failures. One, the century-old Washington Federal Bank for Savings, collapsed amid a massive embezzlement scheme and a subsequent political scandal that ensnared a former Chicago alderman.
Reaction & Analysis:
"This is a sobering but contained event," said Michael Thorne, a financial stability analyst at the Great Lakes Economic Institute. "The system worked as designed—the FDIC facilitated a seamless transition over a weekend, preventing contagion. It underscores, however, that banks with concentrated, niche business models remain under pressure."
Linda Garcia, a small business owner who banked with Metropolitan Capital for 12 years, expressed relief mixed with frustration. "I got the emails and alerts over the weekend. It's a huge relief that our money is safe, but it's incredibly disruptive. We chose them for their personalized service. Now we're just another account number at a bigger bank. It feels like the soul of community banking is dying."
Offering a sharper critique, David R. Feldstein, a professor of finance and former regulator, was blunt: "This is a failure of supervision as much as a failure of management. For the second year running, the first bank to fall is from Chicago. What are the patterns here? Aggressive growth in commercial lending, potential overexposure to a softening market—these are red flags that should have been addressed quarters ago. The FDIC's fund taking a $20 million hit is a $20 million bill for every other well-run bank in America."
Priya Chen, a venture capitalist whose firm used the bank's services, saw a market lesson. "It's a stark reminder that 'boutique' and 'specialized' in finance can sometimes mean 'undiversified and vulnerable.' For the startup ecosystem, it means due diligence on your banking partner is as crucial as on your investors. The good news is the safety net held."