Chicago Experiences Back-to-Back Bank Failures
Chicago has made headlines as the first city in the country to face two bank failures in consecutive years.
On Friday, the Illinois Department of Financial and Professional Regulation shut down Metropolitan Capital Bank & Trust. Officials cited “unsafe and unsound conditions and a compromised capital base” as the reasons for the closure.
However, the failed bank reopened on Monday under a new name after the Federal Deposit Insurance Corp. stepped in and made an agreement with First Independence Bank from Detroit.
“We want to reassure everyone that no depositor will incur any losses from this situation,” said Susana Soriano, Deputy Director of the Banking Division at IDFPR, in a news release.
Metropolitan Capital Bank & Trust had $261 million in assets and $212 million in total deposits. First Independence Bank has agreed to assume “substantially all deposits” and has purchased $251 million of the failed bank’s assets, with other assets slated for future disposal, as indicated by the FDIC.
The FDIC estimates that this bankruptcy could cost the Deposit Insurance Fund around $19.7 million, though the actual cost may fluctuate as assets are sold off.
Located at 9 East Ontario Street in the River North area, Metropolitan Capital opened in 2005, branding itself as a universal bank offering a variety of financial services, from commercial and personal banking to investment banking. Its website claimed it was the only boutique universal bank in North America catering specifically to small businesses and their founders.
First Independence Bank, established in 1970, was created to provide financial services to underserved minority communities in Detroit and is the only African-American-owned bank headquartered in Michigan.
“First Independence Bank is in a good position to provide essential banking services for customers of Metropolitan Capital Bank & Trust,” Soriano mentioned in the release.
A representative from First Independence Bank opted not to comment when contacted on Monday.
Last year, Chicago witnessed the first of only two major bank failures in the nation, with Pulaski Savings Bank being closed by the same regulatory body in January 2025. Its assets and deposits were subsequently taken over by Millennium Bank in Des Plaines.
Additionally, the FDIC reported that Santa Ana National Bank in Texas failed in June 2025.
Before last year, Chicago hadn’t seen a bank failure in nearly ten years. In 2017, two banks did collapse, one of which was tied to a political scandal.
Seaway Bank & Trust, a former African-American-owned institution in the city, was shut down by regulators and thereafter acquired by the State Bank of Texas in January 2017.
Later that year, Washington Federal Savings Bank, an established century-old saving association from Bridgeport, failed due to a significant embezzlement scheme worth $31 million.
Royal Savings Bank of Chicago acquired the federally insured deposits of Washington and took over two of its locations in the Bridgeport and Little Italy neighborhoods.
At the time of its closure, Washington Federal had at least $66 million in troubled loans, leading to criminal charges against multiple individuals, including high-ranking bank officials. Former Chicago Ald. Patrick Daley Thompson resigned from the City Council after being found guilty of misleading regulators about loans from a now-defunct bank.
Tragically, John Gemballa, the CEO of Washington Federal, took his own life just two weeks before the bank’s closure, as reported by a coroner’s report.
