Chicago bank becomes first failure of 2026

• Key insight: Federal Deposit Insurance Corp. officials wound down Chicago-based Metropolitan Capital Bank & Trust Friday, brokering a sale of most of the bank’s assets to Detroit-based First Independence Bank.
• Supporting data: The failure is the first of 2026, and is estimated to cost the FDIC’s Deposit Insurance Fund $19.7 million, according to the agency. Metropolitan reported $43 million in liabilities against advances from the Federal Home Loan Bank system in the third quarter of 2025.
• Forward look: The swift resolution of Metropolitan and sale to First Independence are in line with FDIC Chair Travis Hill’s stated priority to resolve and sell failed banks quickly to prevent their value from eroding.

Metropolitan Capital Bank & Trust failed Friday, according to the Federal Deposit Insurance Corp., marking the first bank failure of 2026. 

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The Chicago-based firm, with $261.1 million of assets, was shuttered by the Illinois Department of Financial and Professional Regulation and placed into FDIC receivership. FDIC entered into a purchase-and-assumption deal with Detroit-based First Independence Bank, which will take over $251 million of Metropolitan’s assets, including all of its $212.1 million in deposits. The FDIC will “retain the remaining assets for later disposition,” according to an agency release.

Depositors at Metropolitan will automatically become depositors of First Independence and will be able to access their accounts by writing checks or using ATM or debit cards, according to the FDIC. 

The FDIC also said it estimates the failure will cost its Deposit Insurance Fund $19.7 million. As with all bank failures, the exact cost to the DIF won’t be known until the remaining assets are marketed and sold.

The most recent financial statements available on the FDIC’s website, from Q3 2025, show that Metropolitan had $261 million of assets against $257 million of liabilities, a 1.62% net equity capital ratio. Metropolitan had also reported having $43 million in liabilities against Federal Home Loan Bank advances in Q3. Metropolitan also held among the largest Commercial & Industrial loan portfolios in the county last year.    

Metropolitan Capital Bank & trust was led by President and CEO Frank Novel, an industry veteran who has helmed three other banks in his career, according to his LinkedIn profile. Novel also worked as an FDIC bank examiner, working at the agency for six years, beginning in 1968.

The first bank failure of the year follows a relatively quiet year for bank resolutions, but involves a somewhat larger firm than any that failed in 2025, when the FDIC reported two bank failures nationwide. Another Chicago-based firm, Pulaski Savings Bank, failed in January 2025 with $49.5 million in assets; Santa Anna National Bank of Texas, with $63.8 million of assets, failed in June 2025 after reportedly taking losses related to fraud.

Pulaski’s failure cost the deposit insurance fund $28.5 million — roughly 58% of the bank’s assets — marking the most expensive bank failure since at least 2019.

The FDIC’s move to sell the bank the same day of the failure’s announcement fits into Chair Travis Hill’s focus on swift transactions of failed banks, something he’s cited as a priority in the past. Hill has argued the longer the agency takes to sell bank assets, the harder it is to find willing buyers. 

Speaking virtually at a panel held by Georgetown University in 2023, then-FDIC Vice Chair Hill spoke about the reputational harm caused as the public witnessed the agency’s prolonged search for a buyer for Silicon Valley Bank’s assets following its March 2023 failure. To speed up the process, he said at the time a very high level government official should negotiate directly with bank CEOs.

“What we really needed was somebody with very high stature at the top of government reaching out to the different bank CEOs who potentially could make credible bids for the institution and encouraging them to bid, finding out what type of obstacles or impediments there might be to bidding and seeing what can be done to try to address some of those concerns,” Hill said. “Once the bridge bank [opens on] Monday, it'[s] a reminder to everyone that that’s a very undesirable place to be as value seeps out.”

John Heltman contributed to this report.