Nov. 3--The pang of the economic downturn and the erosion of commercial real estate values forced several local community banks to book millions of dollars of losses in the third quarter.

This week, Dunmore-based First National Community Bancorp posted third-quarter losses of $4.9 million, and Clarks Summit-based Community Bank & Trust Co. posted losses before adjustments of $2.4 million, according to call reports filed with the Federal Deposit Insurance Corp.

The losses come days after another bank, Dunmore-based Fidelity D&D Bancorp, reported third-quarter losses of $3.2 million.

In all cases, the losses are overwhelmingly due to the banks' massive contributions to cover possible loan losses, losses made more likely by falling commercial real estate values and struggling business borrowers.

Such dramatic moves have rarely been necessary in a region where community banks reliably profit every quarter and are more likely to make symbolic contributions, if any, to loan loss reserves. The economic hit underscores the depth of the recession on small businesses and commercial real estate in Northeast Pennsylvania and the potential for a commercial loan crisis.

The situation goes far beyond the region. Banks confronting stronger-armed regulators nationwide are being encouraged to identify and account for potential problem loans before they become problems.

In prepared statements, William F. Farber, Sr., president and chief executive officer of Community Bank parent, Comm Bancorp Inc., attributed his bank's $9.7 million provision for loan losses to the heightened regulatory environment. The bank was able to offset a $2.5 million loss with provisions to pay income taxes, reducing the stated quarter loss to $385,000. Comm Bancorp shares fell 14 percent Monday, to a $25.43 close.

The banks moves are painful, but necessary, say banking observers. The large contributions to loan losses and more aggressive write downs of bad loans suggest that lenders are trying to get in front of a brewing problem, said Wilson Smith, a bank equities analyst with Patriot Capital Partners.

Both Community Bank & Trust and FNCB have doubled the balances in their loan loss reserves by the end of September, even as Community Bank wrote off $3.6 million of loans for the year and FNCB took a loss for $10.2 million. FNCB shares price took a hit Monday, falling 11 percent to $5.35 per share.

Bank failures were nearly non-existent but so far this year more than 110 banks have failed. The FDIC, which is funded by premiums from all banks, has become more aggressive in monitoring all banks.