By acquiring the first failed bank of 2026, First Independence Bank (FIB) of Michigan could gain as much as $140M in liquidity this year. Metropolitan Capital Bank & Trust (MCB&T) of Chicago was closed by the Illinois Department of Financial and Professional Regulation on January 30. The FDIC, as the receiver, facilitated the transfer of substantially all MCB&T deposits to FIB. In this short note we examine the EOY December 31, 2025, balance sheets of these two banks (as reported in their respective quarterly Uniform Bank Performance Reports (UBPR)) to examine this material liquidity uplift for FIB.
The FDIC facilitated a so-called Purchase and Assumption (P&A) transaction, whereby FIB purchased MCB&T’s assets and assumed substantially all its deposits. It is not clear from the FDIC press release if the terms include an FDIC Shared Loss Agreement (SLA). In an SLA the FDIC would agree to share subsequent losses on specific pools of MCB&T assets. We expect clarity on this point after the transaction term sheet is published on the FDIC website.
As of December 31, 2025, FIB’s Net Interest Income (NIM) as a percentage of assets was 2.55%, which placed it in the 5th percentile of its bank peer group. On the other hand, the failed MCB&T had a relatively healthy NIM of 4.19%, which is in the 73rd percentile of its bank peer group. Based on the NIM metric, FIB acquired a bank with an impressive NIM performance metric. Table 1 shows additional end-of-year (EOY) balance sheet metrics for each bank.
Table 1 – Metrics as of Dec. 31, 2025 (from each banks Uniform Bank Performance Report).
A bank’s Tier 1 Leverage Ratio measures its core capital (equity and retained earnings) against its total consolidated assets. A ratio of 5% or higher is generally considered to indicate a well-capitalized bank, while a ratio below 3% is considered undercapitalized, signaling potential financial instability. The low MCB&T ratio is an indicator of the bank’s distress. MCB&T’s ratio dropped from 11.1% to 4.6% over the period 2023-2024 and it continued its downward trajectory thru the end of 2025.
Bank core deposits are a stable, low-cost source of funding for financial institutions, generally consisting of funds from local, loyal customers, such as checking accounts and savings accounts. These deposits are less sensitive to interest rate changes, making them more reliable for bank lending compared to volatile brokered deposits. Both institutions have a high ratio of brokered deposits – each is approximately 22% which is well above their respective bank peer averages of about 3%.
The take-away from this balance sheet snapshot is that the acquiring bank, FIB, grew its assets approximately 34% and its core deposits 39.8% over its EOY position. Additional insight into these assets is gained by examining the maturity profile of each bank’s asset portfolio – see Figure 1. The asset portfolios consist of loans and securities that mature in less than one year (Short-Term Assets), one – five years (Medium-Term Assets) and greater than five-years (Long-Term Assets). Unlike MCB&T, FIB’s asset maturity profile is approximately in-line with its peer group. As indicated in the figure, approximately 60% of the acquired bank’s (MCB&T) asset portfolio has less than one-year maturity. It turns out that a large fraction of this short-term asset bucket, 43.28% of MCB&T’s assets, consists of loans. The balance in this short-term bucket, 16.29% of assets, consists of Interest-Bearing Balances (IBB), Federal Funds Sold (FFS) and Reverse Repo positions. If there are no impairments of these short-term assets, as these positions mature, they will convert into about $140M of liquidity for FIB.
Figure 1-Maturity profile of the MCB&T and FIB asset portfolios, as of Dec. 31, 2025. Note the MCB&T portfolio falls mainly in the < 1-year tenor bucket. As it matures FIB will gain this liquidity. Source – the UBPR reports at the FFIEC website .
The acquisition appears to be a great opportunity for FIB to expand its geographic footprint – MCB&T has a single branch in downtown Chicago, whereas FIB’s legacy four locations are in
Michigan and Minnesota. In addition to increasing its core deposits 39.8%, FIB bought a portfolio of short-term assets which, as they mature, will improve its short-term liquidity position. Through the lens of this EOY snapshot, it appears this acquisition is a great opportunity for FIB to grow its loan business as it uses this new liquidity [Footnote 1] to originate on-balance sheet loans.
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Footnote 1 – The actual liquidity benefit is net any external funding secured by FIB to close this transaction.
