Richard Kattel resigned yesterday as chairman and president of troubled Citizens & Southern National Bank of Atlanta, the third largest bank in the Southeast, with assets of $3.5 billion.

Kattel blamed his fall on misjuding the bank's investment in Atlanta's collapsed real estate market.

Before the announcement, trading in C&S stock was suspended yesterday for up to 10 days by the U.S. Comptroller of the Currency, who Comptroller of the Currency, who regulates national banks. Recently, C&S eliminated its dividend - the first time in 71 years - when it reported profits for 1977 of $3.2 million, down from $14.5 million a year earlier.

The bank named the assistant president, Bennett A. Brown, to replace Kattell as acting chief executive officer.

In his initial statement as acting chief executive, Brown said he would recommend to the directors, who meet today in Atlanta, that the bank restate its reported $3.2 million earnings. Brown said the revised figure should reflect on additional $10 million writeoff of real estate loans and a $5 million provision for loan losses.

In the fourth quarter of 1977, the bank reported a net loss of $2.5 million compared with a profit of $2.3 million for the same period a year earlier.

Known as a go-go bank, C&S has been the slowest of Atlanta' banks to recover from the city's real estate nosedive. In thepast four years, C&S has charged off about $150 million of a $2 billion loan portfolio.

One stock analyst who specializes in southeastern banking shares predicted: "It's going to be next to impossible for C&S to avoid an operating loss now."

Kattel, a powerful figure in Georgia business and political affairs, was finance committee cochairman of President Carter's "people's inaugural," along with former budget director Bert Lance and Atlanta banker Gordon Jones. Kattel said he was stepping down to restore credibility in the bank.

"Through five years we struggled with the adverse effects that real-estate-related loans have had on our bank," he said. "In fact, we misjudged . . . the recovery."

One Wall Street bank analyst echoed Kattel, "He had been wrong in forecasting a turnaround for the company. Things instead just kept getting worse. His credibility was destroyed."

The disasterous downturn in Atlanta's once-booming real estate market was accented two weeks ago when a consortium of lenders, led by Morgan Guaranty Trust Co. of New York, foreclosed on the $100 million Omni International complex.

The Omni, a dramatic steel and glass structure included a hotel, retail and office space, ice rink and numerous restaurants. It had come to symbolize the rebirth of Atlanta's downtown.

Now, however, Omni could become the fourth of six major Atlanta projects, with a total investment value of about $250 million, to be repossessed.

C&S also announced recently that it is under investigation by the Securities and Exchange Commission. One area of interest to the SEC is the relationship between the bank and C&S Realty Investors, which is run by the bank under a management contract.

The bank reportedly made casual loans to clients of C&S Realty, a separate company which, like other real estate investment trusts, is trying to fight back from severe losses.

The autumn edition, a report on southern banks by Keefe, Bruyette-Woods Inc., a Wall Street firm specializing in bank stocks, said: "The incestuous relationship of this 'bank with the REIT it sponsored has produced some monstrous difficulties . . ."

According to one knowledgeable source, the SEC is examining allegations that the bank made loans to C&S Realty customers without passing them through normal and proper bank channels.