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The St. Petersburg bank writes off $5.9-million as a bad loan to troubled GreatStone Mortgage.
By JEFF HARRINGTON
© St. Petersburg Times, published October 18, 2001
ST. PETERSBURG -- A $5.9-million charge for a bad loan to GreatStone Mortgage wiped away Republic Bancshares' third-quarter profits. And then some.
The St. Petersburg bank on Wednesday reported a net loss of $3-million, or 27 cents a share, for the quarter ended Sept. 30. A year ago, Republic posted net income of $1.5-million, or 13 cents a share. Absent the charge, Republic would have earned about $600,000, or 6 cents a share, still off 60 percent from a year ago.
Chief financial officer Bill Falzone blamed the poor results on a rapid decrease in interest rates and substantial loan payoffs.
In August, Republic sued GreatStone, a Tampa mortgage company, to recoup the $6-million balance from a $15-million loan made in November 2000. GreatStone, an aggressive telemarketer of mortgage refinancings, was supposed to use the Republic funds to make loans. GreatStone surrendered its license in September amid federal scrutiny for what housing officials have called "predatory lending" practices.
The GreatStone write-off is an embarrassing setback for Republic, which was just starting to recover from its own in-house debacle involving an aggressive mortgage sales operation gone sour. Republic shut its troubled Flagship Mortgage unit in late 1998, fired 340 employees and briefly considered selling the bank.
-- Jeff Harrington can be reached at harrington@sptimes.com or (813) 226-3407.