NEW YORK - Regulators on Friday shut down First Bank of Kansas City in Missouri, pushing to 85 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. was appointed receiver of First Bank of Kansas City, based in Kansas City, Mo. It had $16 million in assets and $15 million in deposits as of June 30.

The FDIC said Friday the bank's deposits will be assumed by Great American Bank based in De Soto, Kan. Its sole branch will reopen Saturday as a branch of Great American Bank.

The failure of First Bank of Kansas City is expected to cost the FDIC's deposit insurance fund an estimated $6 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.

Last month, Guaranty Bank became the second-largest U.S. bank to fail this year after the big Texas lender was shut down and most of its operations sold at a loss of billions of dollars for the government to a major Spanish bank. The failure, the 10th-largest in U.S. history, is expected to cost the insurance fund an estimated $3 billion.

The sale of most of Austin-based Guaranty's operations to the U.S. division of Banco Bilbao Vizcaya Argentaria SA, Spain's No. 2 bank, marked the first time a foreign bank has bought a failed American bank during the current financial 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.

That's its lowest point since 1992, at the height of the S&L crisis. The agency estimates bank failures will cost the fund around $70 billion through 2013.

U.S. banks overall lost $3.7 billion in the second quarter, compared with a profit of $7.6 billion in the January-March quarter, according to the FDIC. Surging levels of soured loans at banks dragged down profits in the April-June period.

FDIC Chairman Sheila Bair has said there were no immediate plans to borrow money from the government to replenish the insurance fund by tapping the agency's $500 billion credit line with the Treasury. The FDIC may, however, impose an additional fee on U.S. banks this year to bolster the fund, atop the estimated $5.6 billion from a new emergency premium that took effect June 30.

The FDIC is fully backed by the government, which means depositors' money is guaranteed up to $250,000 per account. And the agency still has billions in loss reserves - including $21.6 billion in cash - apart from the insurance fund.

Last week, the FDIC opened the door wider for private investors to buy failed financial institutions. The FDIC's board voted to reduce the cash that private equity funds must maintain in banks they acquire.

Private equity funds have been criticized as excessive risk-takers. But with fewer healthy banks willing to buy ailing institutions, the banking crisis has softened the FDIC's resistance to private buyers.

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