Cathleen H. Nash will have her work cut out for her when she takes over as chief executive at Citizens Republic Bancorp Inc. in Flint, Mich., next month.

The $13 billion-asset company is coming off what was easily its worst quarterly loss ever and, with credit weakness beginning to advance beyond residential real estate and into the commercial and industrial and commercial real estate portfolios, it is facing what one analyst called "a multiyear struggle" to return to profitability.

Ms. Nash, 46, Citizens Republic's head of regional banking, was named CEO early Friday, less than 24 hours after the company announced it had lost $195.4 million in the fourth quarter. She succeeds William R. Hartman, 60, who said Friday that he will retire Jan. 31.

In an interview Friday, Ms. Nash struck a confident tone, acknowledging the challenges the company faces, but insisting that it has the expertise to get its customers through the financial crisis.

She also stressed that Citizens Republic is very well capitalized. That is due in large part to a $300 million capital infusion from the Treasury Department last month. It also raised about $200 million in a stock sale in June.

"I am confident that we have the capital to get through these difficult times," she said.

"We are very realistic about the times we are in, but we will get through this and will come out the other side."

But Jason O'Donnell, a senior research analyst at Boenning & Scattergood Inc., was not so sure. Problems in the commercial real estate and commercial and industrial portfolios came as a surprise, he said, and given the weak Michigan economy are likely to get worse this year and perhaps beyond.

Its plummeting market value, he said, only makes it more vulnerable to larger, healthier banking companies. Its shares fell 18% Friday, to $1.55, and have lost roughly 89% of their value in the last year.

"I question whether" Citizens Republic "will be able to continue as an independent operation," he said.

The fourth-quarter results were driven by a noncash valuation allowance of $136.6 million against deferred tax assets, as well as by a loan-loss provision of $118.5 million, up nearly 1,900% from a year earlier.

The provision grew significantly throughout 2008 but more than doubled from the third to the fourth quarters. The company cited its chargeoffs of four commercial loans, totaling $45.3 million, for the most recent increase.

Nonperforming loans totaled $306 million at the end of the fourth quarter, up 62% from 2007.

During the conference call, Mr. Hartman said the company's performance had little impact on the timing of his decision to retire. He said he had been considering retirement for a while and that the board regularly discusses management succession.

"This is just the right time," he said. "It may appear more sudden externally than it was internally."

Terry McEvoy, an analyst at Oppenheimer & Co. Inc., said he believes that, under Mr. Hartman, Citizens Republic has been one of the better-run banking companies in Michigan. Its recent troubles are largely a function of Michigan's weak economy, he said.

He added, however, that the 2006 purchase of Republic Bancorp Inc. in Ann Arbor, though giving it more attractive markets in the state, carried an "above average amount of assets tied to real estate" that have added to the company's problems.

Mr. McEvoy said that, though Ms. Nash's immediate attention should be squarely focused on the credit problems, her retail banking expertise should go a long way toward helping the company build deposit market share and continuing to attract customers from larger banks with bigger problems.

Still, he said, "I think credit losses will continue to grow and the earnings power likely will not return until maybe 2010.

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