Dominion Bankshares Corp., blaming the continued slump in the region's commercial real estate market, yesterday announced a massive increase in its problem loans, a restructuring of its business that includes layoffs of 10 percent of its work force and a $14.6 million loss for the third quarter.

The announcement by the Roanoke-based bank company, the fifth-largest bank company in the region, came as C&S/Sovran Corp. and Signet Banking Corp., the largest and third-largest area bank firms, both reported plummeting profits for the quarter.

Analysts said the poor financial results, although anticipated, offer further evidence of the weakness of the area's economy.

"For a while, it looked like we might see some stability in the real estate market by the third quarter," said Anthony Davis, who follows the area's banks for Wheat, First Securities Inc. in Richmond. "Now, it's anybody's guess."

To help stem the fallout from the real estate downturn, Dominion Chairman Warner N. Dalhouse said the bank company would cut expenses by $20 million to $25 million annually by combining operations, laying off employees, closing some of its more than 300 branches and centralizing operations. Smaller measures, such as limiting charitable contributions and freezing senior officer salaries for 1991, also are planned.

A spokeswoman for the company said the specific cuts and operational changes will be announced in the coming months.

The losses and dwindling profits for the three bank companies stemmed largely from their efforts to shore up cash reserves to protect against potential losses from real estate lending.

Dominion said a jump in its nonperforming loans -- those that are in default or are no longer paying interest -- forced the bank company to add $35 million to its loan-loss reserve in the third quarter, after having increased the reserve fourfold at the beginning of the year.

The additional reserves, which come directly out of the bottom line, contributed to Dominion's $14.6 million loss, which compared with a profit of $23.6 million (62 cents a share) in the third quarter last year. For the first nine months, Dominion said, it lost $8.3 million, compared with earnings of $70.2 million ($1.83) for the same period in 1989.

"Barring further deterioration in economic conditions, we expect the growth in problem loans to peak in the near future," said Chairman Warner N. Dalhouse.

Dalhouse called his bank's restructuring "unprecedented in Dominion's history." But he emphasized that "these actions are appropriate, prudent and necessary in view of the challenging operating environment and the very dramatic changes taking place in the banking industry today."

Wheat, First Securities's Davis said he believes Dominion "is trying to take its medicine and get it over with."

"We don't know what the impact of this will be on the company, but it's clearly an attempt to deal with the problems all at once," Davis said. "When you have these kinds of difficulties, it's like being overweight. It's hard on your heart. The sooner you can deal with it, the better."

Davis and other analysts said they expect a similar announcement next week from Baltimore-based MNC Financial Inc., the region's second-largest bank holding company. MNC suffered a $75 million loss in the second quarter, which it blamed on the weak commercial real estate market and tougher oversight of banks by federal regulators. But more losses are anticipated and a plan for reorganization should be revealed, analysts said.

Like Dominion, Signet said its 84 percent slide in third-quarter earnings reflected higher levels of problem loans and larger than normal provisions for loan losses.

Signet said it earned $4.5 million (17 cents) in the third quarter, compared with a profit of $27.8 million ($1.04) in the same quarter last year. For the first nine months, the bank company recorded a profit of $34.6 million ($1.30), down almost 62 percent from $90.6 million ($3.33) in the same period last year.

Signet said its nonperforming loans increased by $67 million in the quarter and are nearly double the level of nonperforming assets on the books last year. Loan-loss reserves totaled $144.7 million, up $24 million since June 30.

Signet Chairman Robert M. Freeman said his bank company is "fortunate to have a strong capital position and solid core earnings to see us through this stressful period."

C&S/Sovran reported a 74 percent drop in third-quarter earnings to $33.9 million (23 cents) for the third quarter, compared with $130.6 million (94 cents) for the same quarter last year. For the first nine months, the newly formed regional banking giant said it earned $221.9 million ($1.59), compared with $374.4 million ($2.71) in the same period last year.

The C&S Sovran results were a bit surprising to some analysts, who said they expected that the combined power of the two banks would carry the company through rough times.

"The results aren't quite as strong as we were looking for," said an analyst for Moody's Investors Service Inc., a New York-based debt rating agency. "We thought the management would be able to control this a little better."

C&S/Sovran officials attributed much of the decline to restructuring costs related to the merger and the slowdown in the real estate market.

Chairman Bennett A. Brown said nonperforming assets increased $54 million in metropolitan Washington and $30 million in Florida. But he said nonperforming loans declined in the rest of Virginia and Tennessee.

The company's merger costs included the consolidation of staffs and operations, including about 50 bank branches. Brown said C&S/Sovran will cut about 1,200 jobs across seven states over the next 15 months, but the number of actual employees affected will be fewer because of job turnover and attrition.