Atlanta Foreclosures for Sale Rose as Banks Posted Losses

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Atlanta foreclosures for sale continued to grow in number as banks posted bigger losses in their residential and commercial property loan portfolios.

In the July to September quarter, Atlanta-based SunTrust and Columbus-based Synovus posted substantial losses – $377 million for SunTrust and $423.7 million for Synovus. SunTrust lost 76 cents per share while Synovus lost $1.27 cents per share.

SunTrust’s losses increased sharply because it wrote off bad real estate loans and set higher loan reserves for expected losses in the next quarter. Reserves for real estate loan losses climbed up by $171.7 million, pushing total reserves for bad loans above $1.1 billion.

Synovus in the meantime posted big loan losses when it aggressively marked down its non-performing loans and sold off $339 million of its troubled assets at liquidation-sale prices to clean its balance sheet.

Richard Antony, chief executive of Synovus, explained that the bank needed to cut its exposure in the real estate sector to be able to survive and grow after the recession.

SunTrust is historically a conservative bank, but it lent heavily during the boom to the residential housing construction sector and made a lot of home loans. The July to September quarter was the fourth quarter that SunTrust posted losses, accumulating a total loss of $1.8 billion during the four quarters and adding a lot of residential properties to lists of Atlanta foreclosures for sale.

Georgia had more than 33,300 foreclosure postings in the third quarter, with more than 11,200 of these already in banks’ REO listings.

James Wells, chief executive of SunTrust, said the bank continues to face difficult challenges, but he added that SunTrust has raised over $2 billion to protect its assets and to maintain its capital at regulatory levels.

FIG Partners analyst Chris Marinac remarked that SunTrust has been successful in writing down its non-performing real estate loans, but the bank may not be able to be profitable until next year.

According to Sterne Agee analyst Adam Barkstrom, he was not surprised that SunTrust was still struggling with its loan problems, but the third quarter figures were worse than he had expected.

Agee added that SunTrust may continue to struggle because of its troubled loans to commercial property developers who built office buildings and retail centers in Atlanta. A lot of these developers have been facing difficulties in meeting their financial obligations because of high vacancies and business failures.