In the same breath it announced the hiring of a new chief executive officer, Republic Bancshares of St. Petersburg, Fla., warned of possible mortgage losses.

The $2.6 billion-asset parent of Republic Bank last week named William R. Klich as president and CEO, succeeding John Sapanski, who retired a year ago. Mr. Klich was chairman and chief executive of SunTrust Bank's $2.4 billion Gulf Coast operation, which is based in Sarasota, Fla.

One of his challenges will be to get a handle on Republic's warehouse lending problem. The company, which had serious mortgage troubles in 1998, last week reported "operational deficiencies" in the warehouse lending division, which provides mortgage companies with interim financing secured by an inventory of mortgage loans held for sale.

"The collateral underlying these loans is typically expected to be sold in 60 to 90 days," but it now it seems that such sales will take longer, said Republic's chief financial officer, William R. Falzone. Several borrowers have workout plans for the outstanding loans, he said.

It is unclear what losses, if any, will result, but the company believes that reserves as of Dec. 31 were adequate, Mr. Falzone said.

Mr. Klich, who will start on his new job Wednesday, was on vacation and did not return phone calls seeking comment.

His other challenges will include managing the company's rapid growth and generating loan volume. Of Republic's 81 branches, all of which are in Florida, 23 were purchased last year, so staffing and managing them "in a smooth way is a real task," said Benjamin Bishop, president of Allen C. Ewing & Co., an investment banking company in Jacksonville, Fla.

Roberta M. Probber, an analyst at Ryan, Beck & Co. in Livingston, N.J. said Republic must put those new deposits to work by boosting its commercial loan base. "They've been generating deposits in branches, and they need to put that funding out into working assets," she said.

Though its most recent setback involves loans to mortgage originators, mortgage lending has thwarted the company in the past. In 1998 it lost $12.7 million, mainly because of troubles in its once-thriving Flagship Mortgage subsidiary. The problems began in the third quarter of that year, when secondary-market demand for Republic's mortgage loans all but dried up.

Republic has since closed Flagship.

Despite recent growth and lending concerns, Republic made money in 1999; it reported earnings of 95 cents a share, or $10.5 million. "One thing people don't realize is that Republic hasn't lost money," Mr. Bishop said, and there is "no reason to lose money in 2000."'

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