When William R. Klich took over as chief executive officer of Republic Bancshares last March, he predicted that by yearend the St. Petersburg, Fla., company’s earnings would be “a little better” than the $10.7 million it earned in 1999.

But after a tumultuous 10 months — capped by the announcement last week that his company lost $4.6 million for the year and $9.4 million in the fourth quarter — Mr. Klich acknowledged that “the problems were a little deeper and a little broader than I anticipated.” Aiming at the very least to avoid a repeat of 2000, Mr. Klich has unveiled a plan that includes what he calls a “plain vanilla” approach to lending, with a renewed focus on Republic’s core markets and a departure from the warehouse lending business that contributed to its recent troubles.

“We put a plan out there,” Mr. Klich said in an interview last week. “Now we just have to run with it.”

Mr. Klich, a former executive at SunTrust Bank, was named president and chief executive officer of Florida’s third-largest banking company on the same day that Republic warned of possible losses in its warehouse lending division. Months later, problems in its securities and loan portfolios surfaced that led to its disastrous fourth quarter.

“I think there was probably more work to do than he was aware of going in,” said Roberta Probber, an analyst at Ryan, Beck Southeast Research in Livingston, N.J. She noted that, for example, Republic was forced in the third quarter to put two loans totaling $28.4 million in the nonperforming category.

Mortgage lending has plagued Republic since 1998, when it lost $12.8 million, mainly to defaults, at its now-defunct Flagship Mortgage Services subsidiary.

The losses continued into the second quarter of 2000, when Republic was forced to add $5 million in loan-loss reserves because of troubles in the soon-to-close warehouse lending division, which provides mortgage companies with interim financing secured by loans held for sale.

Then, last quarter, Republic charged off $12.3 million in connection with residual-interest-asset losses from the sales of high-loan-to-value mortgage-backed securities, issued in 1997 and 1998 by Flagship Mortgage.

Benjamin Bishop, an analyst with Allen C. Ewing & Co. in Jacksonville, Fla., said Republic has identified its problems and is now in a good position to start its long-awaited turnaround. Mr. Bishop said he is confident Mr. Klich can make this happen.

“I’m sure he looked in every closet and under every rug and scoured the bank to make sure any problem was written off in 2000,” the analyst said. “Now he’s ready for Stage 2: development of earning powers.”

When he took the helm of Republic, Mr. Klich laid out a conservative — though vague — plan that called for a thorough review of the company’s operations.

Last week, Mr. Klich offered more details about how it intends to turn Republic into a “high-performing bank.” The company said it has already eliminated all high-risk residential lending activities — including warehouse lending — and will concentrate instead on making traditional residential lending the focus of its retail banking efforts.

Mr. Klich said Republic also plans to beef up its commercial lending division, which now accounts for less than 7% of its $1.7 billion loan portfolio, and try to attract small and medium-size businesses. The business plan also says that the division will make loans to high-net-worth individuals.

He also said the company, which in 1999 expanded its branch network by 40% with the acquisition of 25 former NationsBank branches, is planning to pull out of markets it no longer considers central to its strategy.

Mr. Klich said Republic will stop lending outside Florida and unload out-of-state credits from its loan portfolio. The company has also announced plans to leave Miami-Dade, Suwannee, and Columbia counties, sell seven branches in those markets, and close or sell other unprofitable branches. Republic now has 81 branches.

Meanwhile, he said, Republic aims to add branches in its core markets in south Florida, particularly in Palm Beach and Broward counties.

Analysts and investors seem to like what they see of Mr. Klich’s plan. Despite the earnings announcement, the investment firm Robinson-Humphrey & Co. in Atlanta upgraded Republic’s stock from “neutral” to “outperform.”

It has “completed the self-assessment phase and now the risks have moved from the unknown to the known,” said Jefferson Harralson, an analyst at the firm.

Republic’s stock, which sunk to an all-time low of $8.5625 in November, has been climbing steadily since. It was trading at $13.25 late Monday.

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