Florida's Republic Bancshares said it expects to lose from $10 million to $13 million in the fourth quarter.

As a result, the St. Petersburg-based company-which earned $6.5 million in the third quarter-could lose as much as $4 million this year.

On the news Monday, the shares of the fast-growing, $2.3 billion-asset holding company's dropped $2.625, to $13.625. But they had rebounded to $15.0625 in Tuesday's midday trading.

The losses stem from the bank's high-loan-to-value and subprime mortgage division, which operates in about half the 50 states. Republic has been in the business since 1995, originating large numbers of loans and selling them for a quick profit.

But the turmoil in financial markets has brought down the price for these packaged loans. With the market offering less than what Republic spent to make the loans, management has opted to put them on the bank's books.

In transferring the loans, the bank faced a one-two punch that clobbered earnings. First, Republic had to add to its reserves to back the new loans. Second, the bank did not get the immediate profit it expected from selling the portfolio.

Analysts said that though the loss is substantial, it is not devastating because Republic will recoup much of the expected profit as the loans are repaid. If the secondary mortgage market turns again, the bank could always sell the loans then.

"The problems they are facing are not as bad as the problems they are reporting," said Alan F. Morel, bank analyst at Hilliard & Lyons Inc., Louisville, Ky.

John W. Sapanski, Republic's president and chief executive officer, could not be reached to comment. A bank spokesman said management is comfortable with the quality of the loans being added to the books. He said the mortgage division raised its credit standards this summer, anticipating a market swoon.

The losses will not alter Republic's growth plans, the spokesman added. The bank is digesting the seven bank deals it has completed in recent years, which have expanded Republic from 29 branches at the beginning of 1997 to 57.

For a short time, those deals made Republic the largest commercial bank in Florida. It was dethroned last month, however, when Republic Security Financial Corp. in West Palm Beach almost doubled in size by buying a local rival.

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