Raymond Przybilinski socked away $521,000 from a lifetime of driving trucks, working overtime when he could and playing the piano or accordion late into the evenings at weddings, hotel bars and social clubs.
"I never drank, I never smoked, always saving," said Mr. Przybilinski, speaking from his kitchen in Stanton Heights.
The money was destined for his five children. But that was before more than half of the family nest egg disappeared on Feb. 2 as state banking regulators seized Metropolitan Savings Bank in Lawrenceville, citing "unsafe and unsound" operations. When Mr. Przybilinski tried to take his money out, the man in charge of Metropolitan Savings' assets informed him that there was only $200,000 left to withdraw -- the amount protected by the federal government. A letter from the Federal Deposit Insurance Corp. later confirmed Mr. Przybilinski's status as a creditor for the remaining $321,573.47. He may or may not recover some of that money.
The 77-year-old is still in shock.
"It's like it never happened," he said.
U.S. bank failures are rare -- the last one before Metropolitan was 2004, and the previous Pittsburgh-based collapse was 1992. But as unexpected events carried out with no forewarning, the closings highlight dangers to consumers who are unaware of the insurance limits set by the federal government.
The FDIC, formed in 1934 following a rash of bank failures during the Great Depression, covers individual checking and savings accounts only up to $100,000 and retirement accounts (IRAs, Keoghs) up to $250,000.
"Obviously there are a lot of people who don't understand," said Laura Bruce with Bankrate.com in North Palm Beach, Fla. The case of Mr. Przybilinski, who salvaged $200,000 instead of $100,000 only because his son, Ray, is also an account holder and the FDIC sets its limit person by person, is clearly a "cautionary tale" of what can happen to anyone who is unaware or uninformed, added Ms. Bruce. "This is tragic, what this gentleman is going through.
"It is just a tremendous loss."
Mr. Przybilinski said he never knew about the FDIC limits and that Metropolitan Savings officials assured him that his savings would be covered when he moved his money there two years ago, even though the $100,000 limit is typically posted at the teller window underneath the FDIC logo.
"But who reads those small- print things?" said Miami-based banking consultant Ken Thomas. "Unfortunately," he added, "losses in such failed banks are more common than it should be, often times because bankers don't do a good enough job explaining how each person ... can get maximum FDIC coverage."
FDIC spokesman David Barr agrees there are ways to have more than $100,000 fully insured -- through joint accounts where each person is insured up to $100,000 and trust accounts that offer $100,000 coverage per beneficiary, including parents, siblings, spouse, children and grandchildren -- but "the rules can be tricky and even bankers are known to get it wrong." In the end, he said, the "responsibility does ultimately rest on the shoulder of the depositors even if they are relying on experts like financial planners or bank personnel."
Mr. Przybilinski spent a lifetime trying to undo the near-poverty of his childhood in Lawrenceville, where he hauled ash and shoveled coal as a teenager after dropping out of high school following the ninth grade. His dad died when he was 24, and much of the money he made went to his mom. It was not until the 1960s that he was able to save money for himself, and he went at the task with abandon, working 90 hours a week and rising at 5:45 a.m. to start his shifts as a trucker. In the evening, he would change his clothes and play in one of three professional bands at places like the Javor Hall on the North Side or the Beverly Hills Hotel on Route 19.
"I didn't want to be poor," he said. "I went through enough of it."
Later in life, he chose not to invest his savings in stocks, which "go up and down," he said. Instead, he stashed all of it in banks. Two years ago, he transferred all his savings from Fidelity Bank to Metropolitan because of an account program offering interest of 5 percent. The branch was down the hill from his home in Stanton Heights.
When the bank failed, "I told them I better get all of my money back," he said.
But the lesson here is that probably will not happen.
The average recovery for uninsured account deposits, according to the FDIC, is about 72 cents on the dollar, and smaller banks like Metropolitan (which collapsed with just $15.6 million in assets) tend to provide a lower rate. On top of that, it can take three to six years to return the uninsured money after attempts to recover it through sales of loans, furniture, fixtures and equipment, property, fax machines, computers and potted plants.
In the case of Metropolitan, FDIC already has sold about $3.2 million in assets. The uninsured deposits amount to about $925,000.
But no payments have been made yet.
Some money "possibly" could be returned later this year, according to Mr. Barr, the FDIC spokesman. "I don't want to get people's hopes up."
It is important to note that, despite the risks to account holders, the chances of any additional bank failures in the Pittsburgh area are slim.
Across the country, there have been 29 bank failures since October 2000, an average of about four a year but a long way from the Panic of 1873, when half of the banks in Pittsburgh failed. Or 1930, when 2,294 banks around the country closed, including 522 in one month. In 1915, coke baron Henry Clay Frick wired $170,000 from New York on Christmas Eve when he learned about the failure of the Pittsburgh Bank for Savings, home to $130,000 belonging to local schoolchildren who accumulated the money a dime and a quarter at a time.
Another financial crisis in 1931 severely tested many of Pittsburgh's largest banks; the Bank of Pittsburgh shut down after 121 years in business, and a $1 million bailout attempt failed when then-U.S,. Treasury Secretary Andrew Mellon refused to help unless the Mellon banking family could gain majority interest in the rival institution, according to Mellon biographer David Cannadine. That same year, the Highland Bank and the Franklin Savings and Trust Co. also failed, as did the Pittsburgh-American Bank and the Merchant Savings and Trust Co..
Failures slowed after 1934, when the FDIC began insuring deposits, starting with a limit of $2,500 (it went to $100,000 in 1980 and last year Congress authorized $250,000 for retirement accounts, up from $100,000). There was one Pittsburgh-area failure in 1934, one in 1940, two in the 1950s, four in the 1980s and four in the early 1990s, according to the FDIC.
The last local shutdown before Metropolitan Savings was the nine-branch First Home Federal Savings, which was seized by the government in 1992 because of insufficient capital following two years of losses. It reopened under a new name, First Home Federal Savings Association.
It is not known yet what the final result will be from the Metropolitan Savings failure or what caused the sudden closure. State regulators still are declining to explain what may have happened beyond a February filing with the Allegheny County Court of Common Pleas claiming the bank had been operating in an "unsafe and unsound manner" and that the institution would have been "unable to meet the demands of its depositors." The bank also "refused to cooperate and submit records and affairs to duly authorized examiners in connection with a lawful examination," according to the state.
The FBI is also involved.
"We are aware of what happened at the bank," said a local FBI spokesman. "We are reviewing the situation to determine whether or not there may have been violations of federal or criminal law."
Former bank officers John Paul Spina, president & chief executive officer, and Donna M. Shebetich, vice president & treasurer, could not be reached for comment.
As for Mr. Przybilinski, the 77-year-old former truck driver is trying to find work again -- in the last six months he sent out 60 to 70 applications and took a driving test with the Salvation Army. He walks three miles every day to stay in shape and tries to remain calm despite his predicament. Just last month, he lost another $20 when two men mugged him in East Liberty but "maybe I'm lucky" for emerging with no injuries.
His daughters, he said, worry about his state of mind.
But he dismisses such talk.
"Why should I kill myself after working all my life?" he said.
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