First U.S. Bank Failure Of 2026 Has Ties To Commercial Real Estate
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The first failure of an FDIC-insured bank in 2026 surfaced quietly late Friday with little explanation.
Illinois regulators seized Metropolitan Capital Bank & Trust, which had $261M in assets, and appointed the Federal Deposit Insurance Corp. as receiver. Regulators haven’t publicly identified a direct cause of the failure, and no FDIC post-seizure analysis has been released.
The FDIC transferred all deposits and most of the bank’s assets to Detroit-based First Independence Bank, which will reopen Metropolitan’s River North branch under its own name. The seizure is the largest bank failure in Illinois since 2017.
A Bisnow review of court records and enforcement filings over the weekend shows the Chicago bank had longstanding exposure to a real estate loan tied to the largest default in the federal government’s skilled nursing facility lending program. That $4.5M loan, originated in 2014, was used to restructure debt on 13 Rosewood-branded facilities in the Midwest.
The loan was made to entities controlled by Chicago real estate investor and Rabbi Zvi Feiner and was junior to a $146M senior mortgage insured by the Department of Housing and Urban Development. That HUD-backed financing eventually defaulted, and the Department of Justice charged Feiner with running a Ponzi scheme.
Court records show Metropolitan Capital Bank modified its loan with Feiner five times between 2014 and 2017 as the borrower struggled with cash flow across the Rosewood Care Centers portfolio. In the first four modifications, the bank extended repayment terms without requiring additional collateral.
During a fifth modification, Metropolitan accepted collateral already pledged to another Feiner-controlled entity. An Illinois appellate court ruled in 2020 that while Feiner made material misrepresentations, the bank failed to conduct adequate due diligence that would have revealed the conflicting lien, leaving it without recourse on the loan.
The $4.5M exposure was a significant portion of Metropolitan’s loan book. Regulators imposed a consent order in 2019 requiring management changes, higher capital levels and restrictions on substandard lending, citing “unsafe and unsound conditions” and an impaired capital position.
Metropolitan Capital was founded in 2005 by former Illinois Housing Development Authority Executive Director Michael Rose. He left in July to become managing partner of Affinitas Capital.
