Oct. 24 (Bloomberg) -- U.S. regulators closed more than 100 banks in a single year for the first time since 1992, signaling the financial crisis hasn’t abated for lenders struggling with mounting losses tied to commercial real estate.

Seven banks -- three in Florida and one each in Georgia, Wisconsin, Minnesota and Illinois -- were shut yesterday, according to the Federal Deposit Insurance Corp., pushing this year’s total to 106. That’s the most since the savings-and-loan crisis led regulators to shutter 179 institutions in 1992.

“It’s very painful, it costs a lot of money, it ruins careers,” said Gerard Cassidy, an RBC Capital Markets analyst in Portland, Maine. “But shutting down failed banks and writing off the bad loans is a necessary solution that has to be done to get the economy and the banking system back on its feet.”

Banks looking to weather the storm of bad loans have slowed lending to U.S. consumers and sought ways to preserve and raise capital. U.S. financial institutions have suffered about $1.1 trillion in credit losses and writedowns since 2007. The nation’s unemployment rate rose to 9.8 percent in September, the highest since 1983, according to the Labor Department. A record 531 lenders were seized in 1989, according to the FDIC’s Web site, which cites data back to 1934.

In August, the FDIC said 416 banks with combined assets of $299.8 billion were on its list of “problem” lenders at mid- year. It isn’t known whether the banks closed yesterday were among them because the FDIC doesn’t release the list.

Commercial Loans

Declines in commercial property loans contributed to the collapse of U.S. banks this year. Losses linked to hotels, malls and condominiums pose the biggest threat to lenders as financing comes up for renewal, FDIC Chairman Sheila Bair said last week.

“The most prominent area of risk for rising credit losses at FDIC-insured institutions during the next several quarters is in CRE lending,” Bair said to the Senate subcommittee on financial institutions, referring to commercial real estate.

Banks with assets of $10 billion or less tend to have more commercial loans than loans tied to residential real estate, Foresight Analytics LLC analyst Matthew Anderson said.

“The largest banks have a meaningful dollar exposure to commercial real estate, but it’s a relatively smaller piece of what they do,” Anderson said. The Oakland, California-based firm maintains a “watch list” of 466 problem banks.

Regulators closed Partners Bank of Naples, Florida, and Stonegate Bank in Fort Lauderdale, agreed to assume about $64.9 million of deposits without paying a premium, the FDIC said in an e-mailed statement. Stonegate also agreed to acquire all $84 million in deposits of Hillcrest Bank Florida, another Naples- based lender.

Other Bank Closings

Federal regulators closed Flagship National Bank in Bradenton, Florida, and the FDIC arranged for First Federal Bank of Florida in Lake City to assume all $175 million in deposits.

State regulators closed American United Bank of Lawrenceville, Georgia, the FDIC said. Ameris Bank of Moultrie, Georgia, agreed to assume $101 million in deposits, the FDIC said in an e-mailed statement.

Riverview Community Bank of Otsego, Minnesota, was seized. Stillwater, Minnesota-based Central Bank bought Community Bank’s deposits. State officials closed Bank of Elmwood in Racine, Wisconsin. Tri City National Bank of Oak Creek, Wisconsin purchased all of the Bank of Elmwood’s deposits and almost all of the assets, the FDIC said in a statement.

First Dupage Bank of Westmont, Illinois, was closed by state regulators. First Midwest Bank of Itasca, Illinois, paid a premium to assume all of First Dupage’s deposits.

Yesterday’s failures cost the FDIC’s insurance fund almost $357 million.

FDIC Insurance

The FDIC insures deposits of up to $250,000 and the collapse of more than 120 banks in the past two years has depleted the agency’s deposit-insurance fund.

The number of bank closings would likely be higher this year if the FDIC’s fund wasn’t depleted and if the agency had more bank examiners, RBC’s Cassidy said. The agency shrank under President George W. Bush before adding employees in the Obama administration. The FDIC has about 6,000 employees now, compared with 21,000 during the savings-and-loan crisis in 1991, he said.

“We certainly know there are hundreds and hundreds of zombie banks out there,” Cassidy said. “The only alternative for them is to be seized and it’s only a matter of manpower and money before they get to it.”

The FDIC has proposed banks pay three years of advance deposit insurance fees to raise $45 billion and replenish the insurance fund. It costs anywhere from 25 percent to 30 percent of a failed bank’s assets to shut it down, Cassidy said.

“There are losses that will have to float through the system not just for one quarter or two, but for years,” said Paul Miller, a financial industry analyst at FBR Capital Markets in Arlington, Virginia. “I think you’ll see closures speed up after they replenish the fund.”

To contact the reporters on this story: Dakin Campbell in San Francisco at dcampbell27@bloomberg.net; Michael McKee in New York at mmckee@bloomberg.net.

Last Updated: October 24, 2009 00:00 EDT