Regulators closed five more banks Friday night, bringing the total number of failures this year to 89, as losses on bad mortgages and construction loans continue to plague the financial industry.
Located in Illinois, Iowa, Kansas and Arizona, the banks will cost the Federal Deposit Insurance Corp., the federal agency in charge of taking them over when they fail, a total of $401 million to close. Some observers say the price tag for these failures is becoming an issue; the agency has only a little over $10 billion in its account and will have to go to the Treasury if that sum rapidly dwindles.Near Chicago, InBank was shut down by regulators. It had $199 million in deposit. Chicago-based MB Financial Bank has agreed to assume its deposits. InBank's failure will cost the deposit insurance fund $66 million.
Also in northern Illinois, Platinum Community Bank was closed by the Office of Thrift Supervision and the FDIC was made the receiver. The bank had total assets of $345.6 million and deposits of $305 million, the FDIC said. It authorized payout of insured deposits and estimated the cost to its Deposit Insurance Fund will be $114.3 million. MB Financial Bank will take the failed bank's direct deposits.
First Bank of Kansas City was also closed. The FDIC said Great American Bank has agreed to assume the failed bank's deposits. First Bank had $16 million in assets and $15 million in deposits. Its failure is expected to cost the federal deposit insurance fund $6 million.
In Arizona, First State Bank of Flagstaff's $95 million in deposits and $105 million in assets were sold off to Sunwest Bank, based in Tustin, Calif.
And Vantus Bank in Sioux City, Iowa was also seized by the FDIC. Great Southern Bank of Springfield is assuming Vantus' $368 million in deposits.
The most pessimistic analysts think a total of 300 or more banks may be shut in the next two years. The process still has a long way to go.
Douglas A. McIntyre is an editor at 24/7 Wall St.