Several banking companies in the Southeast that have been working to dump bad assets say the process is taking longer than they had anticipated, especially for loans on foreclosed homes.

Colonial BancGroup Inc., South Financial Group Inc., and Synovus Financial Corp. reported losses for the third quarter, saying they used a range of strategies to shed mortgages and residential development loans.

The hits were exacerbated by spikes in other expenses tied to the sometimes long and arduous process of selling foreclosed properties.

Synovus, often seen as aggressive in selling bad loans, lost $26.9 million. Its third-quarter loan-loss provision climbed 61.7% from the second quarter and 157% from a year earlier, to $151.4 million. The $34.4 billion-asset Columbus, Ga., company also said foreclosed real estate costs tripled from the second quarter and rose 25-fold from a year earlier, to $43.2 million.

Richard Anthony, Synovus' chairman and chief executive, said its return to profitability could hinge on a real estate auction planned for next month. In two auctions conducted during the third quarter, properties were sold for 63% of the original loan amount, he said.

Robert Lowder, Colonial's chairman, president, and CEO, said its efforts to sell properties through a so-called war room encountered problems last month.

Concerns about the financial system gave would-be investors a reason to back away from pending sales, Mr. Lowder said.

"There was just a kind of chaos out there," he said. Sales activity "stopped dead in its tracks."

As of Sept. 30 the $26.3 billion-asset Montgomery, Ala., company's special assets office housed 71 nonperforming loans worth $510 million; nearly two-thirds of the loans involved residential real estate and construction projects, the vast majority of them in Florida. The scuttled deals led to $63 million of third-quarter chargeoffs and derailed Colonial's hopes of getting a handle on its loan problems this year, Mr. Lowder said. "It will probably spill over" into the first quarter. Colonial reported a third-quarter loss of $71 million. Its provision doubled from the second quarter and grew 33-fold from a year earlier, to $159.4 million. Costs related to loans and other real estate rose 1.4% from the second quarter and 289% from a year earlier, to $4.6 million.

South Financial reported a third-quarter loss of $25 million. Its provision rose 32.6% from the second quarter and more than eightfold from a year earlier, to $84.6 million. Expenses for loan collection and monitoring climbed 89.7% from the second quarter and nearly sixfold from a year earlier, to $4.1 million.

James Gordon, the $13.7 billion-asset Columbia, S.C., company's chief financial officer, said in an interview Thursday that there were at least $8 million of additional expenses associated with loan problems. They included $4.1 million for loan collection, $2.1 million from margin compression tied to funding nonaccrual loans, $1 million of reversals for interest on such loans, and $800,000 of writedowns tied to other real estate owned. "Those types of costs will still go up as long as nonperforming loans rise," he said.

Robert Patten, an analyst for Regions Financial Corp.'s Morgan Keegan & Co. Inc., said in an interview that expenses tied to loan-loss reserves and foreclosures are likely to accelerate through the middle of next year as companies realize the need to be more aggressive in unloading assets. "Provisions will be meaningfully higher," Mr. Patten said. "I expect the fourth quarter to be much worse in terms of credit metrics."

Adam Barkstrom, an analyst at Sterne, Agee & Leach Inc., agreed that this quarter will be worse. Banking companies are just now beginning to see spikes in foreclosure costs, because it takes 12 months for a company to move through the process in Florida, one of the nation's hardest-hit states in terms of housing prices, he said in an interview.

"Some will lose even more ground" as foreclosed properties threaten to send valuations down further, he said.

Analysts said a wild card for credit costs and loan sales is the government's plan to buy distressed assets and to provide capital by buying preferred shares in certain banking companies. All three companies have expressed an interest in participating in the programs, but none has said it has been approved to sell preferred stock to the government.

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