Federal regulators shut down Rolling Meadows bank

Regulators on Friday shut down Rolling Meadows-based Platinum Community Bank as well as an Oak Forest-based bank.

Banks in Missouri and Iowa were also closed, pushing to 88 the number of banks that have failed this year under the weight of the soured economy and rising loan defaults.

The Federal Deposit Insurance Corp. seized Oak Forest-based InBank, with $212 million in assets and $199 million in deposits.

Nearly all of InBank's deposits will be assumed by MB Financial Bank in Chicago. Some brokered deposits will not be assumed by MB Financial Bank. InBank's three branches will reopen today as branches of MB Financial Bank.

The FDIC did not find another bank to take over Platinum Community Bank's branches or deposits. Instead, the FDIC will pay out insured deposits at Platinum Community Bank. Government direct deposits, such as Social Security and veterans' payments, will be handled by MB Financial Bank's Palatine branch.

The FDIC insures accounts up to $250,000. Depositors with accounts larger than $250,000 will be able to receive details about whether their accounts are fully covered beginning Tuesday by checking the FDIC's Web site.

The failure of Platinum Community Bank is expected to cost the FDIC's deposit insurance fund an estimated $114 million. InBank's failure will cost the insurance fund $66 million.

Hundreds more banks are expected to fail in the next few years largely because of souring loans for commercial real estate. The number of banks on the FDIC's confidential "problem list" jumped to 416 at the end of June from 305 in the first quarter. That's the highest number since June 1994, during the savings-and-loan crisis.

The insurance fund has been so depleted by the epidemic of collapsing financial institutions that some analysts have warned it could sink into the red by the end of this year. The fund fell 20 percent to $10.4 billion at the end of June, the FDIC reported Thursday.