Analysts and investors were still reeling Wednesday after SunTrust Banks Inc. in Atlanta disclosed higher-than-expected nonperforming assets for the third quarter.

Their concerns are coming from more than health-care companies, retailers, and movie theater chains. Loans to telecommunications companies are also raising red flags in the third quarter.

The concern over syndicated loans is an offshoot of worries over high-yield bonds that banks have underwritten for telecommunications companies, analysts said.

First Union Corp. is coming under greater scrutiny because, analysts said, it also has a piece of at least two of the four loans that SunTrust cited for its $100 million increase in nonperforming assets: a credit to Carmike Cinemas Inc., a movie theater operator; and a credit to Heilig-Meyers Co., a furniture retailer. Both companies have filed for bankruptcy protection.

Analysts said First Union, and fellow southern banking company Wachovia Corp., participated in the Carmike and Heilig-Meyers loans. First Union also acts as trustee for Heilig-Meyers bonds.

First Union is also thought to have exposure to credits in the telecommunications sector, analysts said. A spokeswoman would not provide details on the size of First Union’s syndicated loan portfolio that is specific to telecommunications firms. At the end of last year, the Charlotte, N.C., banking company had $2 billion in loans to the sector, just under 3% of all loans.

Southeastern banks stand to have the most troublesome loan exposures this quarter, analysts said. Amsouth Bancorp in Birmingham, Ala., warned last month about rising nonperforming assets. Wachovia Corp. sent financial shares into a tailspin in June when it revealed that it would post $200 million in additional reserves, in part because of its participation in a syndicated loan that was turning sour.

SunTrust reported a 32% rise in nonperforming assets from the second quarter, half of it attributed to the Carmike loan.

“It’s much more vexing today,” said Nancy Bush, an analyst at Prudential Securities. “The magnitude caught people by surprise.”

Analysts are trying to figure out how much exposure banks now have to a portion of the telecommunications sector known as competitive local exchange carriers. Those companies have had a spate of bad publicity since late summer, when some high-profile debt offerings for these carriers began to unravel.

The spokeswoman said First Union ranks sixth in syndicated loans to this sector, but she would not provide specific numbers.

SunTrust said its $11 billion syndicated loan portfolio contained $1.5 billion of loans to telecommunications firms, including $15 million to the local exchange carriers. FleetBoston Financial Corp. has a $2 billion telecom portfolio, about $200 million of which is loans to the sector.


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