Atlanta's frozen real estate market is expected to force banking companies with operations there to write off more loans.

Unable to sell enough bad Atlanta residential loans, Synovus Financial Corp. said Saturday that it would add $350 million to its reserves to cover losses in that market.

The $34 billion-asset Columbus, Ga., company's shares fell 12.6% on Monday, and the grim outlook drove down shares of other companies in the region, including SunTrust Banks Inc. of Atlanta and BB&T Corp. of Winston Salem, N.C.

"Things are clearly getting worse in Atlanta, and there are a lot of banks that still have to play catch-up," said Robert Patten, an analyst at Regions Financial Corp.'s Morgan Keegan & Co. Inc. "There is no loan-sale market in the city, and if you can't sell property, then you can't establish a value."

Atlanta's gridlocked real estate market is expected to force many bankers to hold on to foreclosed properties, which could mean even steeper losses when they finally can find buyers for the troubled assets. The market has a surplus of homes following years of residential overbuilding that had persuaded scores of bankers to expand in the region.

Anthony Davis, an analyst at Stifel, Nicolaus & Co. Inc., warned that problems could spread to income-producing real estate and commercial and industrial lending.

"Conditions are changing so rapidly that it is hard for companies to stay on top of it all," he said.

In a note to clients Monday, Scott Valentin, an analyst at Friedman, Billings, Ramsey Group Inc., wrote that SunTrust, Atlanta's largest banking company by deposits, "remains the most at risk."

SunTrust jolted investors early last month when it went back to the Treasury Department for a second round of funding from the Capital Purchase Program. The $175 billion-asset company received a total of $4.9 billion under the program, and James Wells 3rd, SunTrust's chairman and chief executive, said in a press release that taking the additional capital was a "prudent step" to deal with an "increasingly uncertain economic outlook."

SunTrust's shares fell 6.8% Monday.

BB&T was off 3.2%. The $137 billion-asset company's earnings have held up better than those of many other regional companies, but Atlanta has been its worst market for loan losses. One of the company's few acquisitions in the past three years was a community bank there.

A SunTrust spokesman declined to comment, and calls to BB&T were not immediately returned.

Late Monday, United Community Banks Inc. in Blairsville, Ga., said it would record a loan-loss provision of $85 million in the fourth quarter to pad its reserves by $11 million to deal with souring loans in the Atlanta area. Like Synovus, the $8.3 billion-asset company said provisions and chargeoffs would remain elevated largely due to its residential construction portfolio around Atlanta. United Community's shares fell 5.2% Monday.

Analysts said Synovus' revelation Saturday that it had set aside $350 million — a correction to a release Friday that had put the reserve addition at $250 million — does not bode well for fourth-quarter results.

On Monday the average analyst estimate called for Synovus to report a fourth-quarter loss of 17 cents a share, according to Thomson Reuters.

Synovus lost $26.9 million in the third quarter, when it set aside $151.4 million for weak loans. The loss came after the historically decentralized company switched tactics for managing credit quality in late 2007, giving regional offices more authority. It has also sought to shed foreclosed properties through online auctions with limited success. In June, Synovus said it had sold roughly 120 homes in Atlanta to individuals and planned another auction for November. But the company has not revealed whether that auction took place or what the results were.

A spokesman would not discuss the matter but relayed a statement from Thomas Prescott, Synovus' chief financial officer, that the company recently put John Creech, an asset-disposition specialist, in charge of handling troubled assets companywide.

Mr. Prescott also said the estimate for the fourth-quarter loan-loss provision jumped by $100 million in a day's time because Synovus "made an estimate and subsequently discovered additional adjustments that warranted an update."

But several analysts said they were told by the company that it issued the warning Friday while its chief risk officer, Mark Holladay, was out of the office dealing with a family emergency. He spotted the mistake after its release, forcing a correction on Saturday to the higher figure, according to analysts.

Mr. Davis called it an "unfortunate incident," but one that shows how an understandable error can affect a company's stock price in a jittery market.

"You have to be careful how you communicate things," he said.

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