First US Bank Failure Of 2026 Hits, But Another One Looks Unlikely, Polymarket Says

Metropolitan Capital Bank & Trust became the first U.S. bank to fail in 2026 after Illinois regulators shut the small Chicago lender on Jan. 30, with the Federal Deposit Insurance Corporation stepping in as receiver.

This is Chicago's second bank failure in as many years, but the resolution looks contained: the FDIC brokered a clean handoff to First Independence Bank, which assumed all deposits.

Court records and commercial real estate reporting show Metropolitan spent years working through a $4.5 million loan tied to a troubled skilled-nursing facility lending situation, a deal that was modified repeatedly before ending up in a long court fight.

In that litigation, the bank alleged it was misled by the borrower's representations, indicating underwriting and due diligence issues.

FDIC estimated the cleanup will cost the Deposit Insurance Fund $19.7 million—a big bill for a bank that had just $261.1 million in assets and $212.1 million in deposits as of Sept. 30, 2025.

There were just two nationwide bank failures in 2025, both small, local institutions. 

So far, the market is treating this as idiosyncratic, a small-bank credit story, not the start of a new regional-bank contagion, but traders aren't pricing the next failure at zero.

On Polymarket, traders are pricing in an 18% probability of another U.S. bank failure by March 31, a meaningful tail risk.

What bank beta is doing today

The bank beta isn't panicking, it’s green. 

SPDR S&P Regional Banking ETF (NYSE:KRE) last traded around $70.16, up about ~2% on the session.
SPDR S&P Bank ETF (NYSE:KBE) near $64.64, up about ~1.7%.
Financial Select Sector SPDR Fund (NYSE:XLF) near $53.85, up about ~0.8%.

What to watch next

• Whether this stays a single impaired-capital story or turns into a Q1 cluster
• Any signs of deposit competition or credit deterioration showing up in small/regional lender commentary 

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