FDIC flagged the same gap twice. Both Chicago banks failed anyway.
Summary
Metropolitan Capital Bank & Trust cost the Deposit Insurance Fund $19.6 million when it failed in January 2026 -- the end of an eight-year run of downgrades, upgrades, and two separate Consent Orders. FDIC's inspector general cleared its own supervision of blame, but flagged one recurring gap: the bank's chairman and CEO wasn't formally designated a 'dominant official' -- triggering closer scrutiny -- until April 2025, though examiners believe the conditions justifying it were present since 2022. The same gap had just been flagged, two months earlier, at another failed Chicago bank.
A relationship bank built on unsecured trust
Metro Capital, -insured since 2005, ran a single leased office in Chicago and built its business on relationship banking with high-net-worth clients⧉ -- heavy on unsecured loans and 'Private Interest Collateral' (PIC) loans backed by privately held stock or LLC interests rather than hard assets. 's review found the bank pursued this high-risk strategy without adequate board oversight, and that management routinely applied unreasonably optimistic risk scores to the PIC book while under-reserving for losses.
View data as table
| Through 2016 | 2 |
|---|---|
| May 2018 | 4 |
| June 2020 | 3 |
| Aug 2022 | 2 |
| March 2024 | 3 |
| April 2025 | 5 |
Eight years of downgrade, fix, upgrade, repeat
Metro Capital held a top-tier '2' composite safety-and-soundness rating from 2005 through 2016. Then the cycle began: a downgrade to '4' in May 2018⧉ for poor asset quality, a joint /Illinois Consent Order that August, an upgrade back to '3' in 2020, the Consent Order swapped for a lighter Memorandum of Understanding in 2021, and a clean bill of health -- '2' again -- by August 2022. It didn't last: examiners downgraded the bank to '3' in March 2024 and issued a second MOU that October. By April 2025, with management and the board having failed to satisfactorily address 8 of that MOU's 9 provisions, Metro Capital fell to '5' -- the worst rating a bank can receive.
View data as table
| Charged off | 12,600,000 |
|---|---|
| Remaining book value | 2,400,000 |
One loan, then a second wave, then failure
The collapse arrived fast once it started. In September 2025, the FDIC forced Metro Capital to charge off $12.6 million of a single $15 million PIC loan⧉ and add a $7.9 million loss provision -- pushing its Tier 1 capital ratio down to 3.61% and triggering a 'Significantly Undercapitalized' designation. By December, roughly $7 million in additional forced provisions on two more loans dropped the bank, as of its November 30 capital position, into 'Critically Undercapitalized' territory. It failed eight weeks later.
OIG cleared supervision, but not the timing
's four-factor test found no case for a deeper, in-depth review: the loss ratio ran below the 23% five-year average⧉ for failed banks, and 's supervision had overall identified and addressed the causes of failure. did find evidence supporting 'misuse of position and self-dealing' by senior bank officials -- referred to 's investigation team -- but concluded that insider conduct did not significantly contribute to the DIF loss.
What did flag: examiners could have designated the chairman and CEO a 'dominant official' -- a status meant to intensify scrutiny of a bank run by one dominant figure -- as early as 2022, rather than waiting until April 2025, three months before failure. made the identical observation two months earlier in a separate report on Pulaski Savings Bank, another failed Chicago-area bank, writing that 'consistent application of the dominant official designation by FDIC examiners is critical to effective supervision⧉.'
The takeaway
- A $19.6 million loss, but a below-average one. Metro Capital's 8% DIF loss ratio ran 15 percentage points below the 23% five-year average for failed banks -- one reason didn't order a deeper review.
- One loan broke the bank's back. The forced an 84% charge-off on a single $15 million unsecured loan in September 2025; four months later, the bank had failed.
- The same supervisory gap, twice. flagged Metro Capital's late 'dominant official' designation just two months after making the identical criticism at another failed Chicago bank -- itself calling consistent application of that designation 'critical to effective supervision.'
explicitly found no evidence that an earlier dominant-official designation would have materially changed the outcome or addressed the underlying cause of failure -- the criticism is about supervisory consistency and timing, not a claim that it would have prevented the collapse. also noted a caveat: pandemic-era constraints on off-site examination may partly explain why the designation wasn't made earlier. This is an 'review,' not a full Material Loss Review, and it made no formal numbered recommendations.
Sources(1) ▾
- FDIC Office of Inspector General, Failed Bank Review - Metropolitan Capital Bank & Trust, Chicago, IL (Memorandum No. REV-26-01) (2026-05-29) — 's statutorily required failed-bank review (required for DIF losses under $50 million), examining Metro Capital's 2018-2025 supervisory history via and Illinois state examination and enforcement records. WebFetch returned the PDF as binary, saved to a local path; converted with pdftotext -layout and read in full. fdicoig.gov · original document
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Metropolitan Capital Bank & Trust failed on January 30, 2026, costing the 's Deposit Insurance Fund an estimated $19,647,000 -- 8% of the bank's $232 million in total assets⧉. In its required failed-bank review, the 's inspector general cleared the agency's own supervision of significant blame -- but singled out one recurring problem: examiners didn't formally designate the bank's chairman and CEO a 'dominant official,' a status that triggers closer scrutiny, until April 2025, even though believes the conditions justifying it had been present since 2022.