Norcross turns on old ally, seeks seats on Hill’s Republic bank board
George Norcross, his brother, and a former TD Bank executive are pushing for new blood at Vernon Hill's Republic Bank, 20 years after Hill built Commerce Bank with Norcross as his vice chair.
Longtime South Jersey business and political leader George E. Norcross III and his allies are pushing to force changes at Republic Bank, hoping to turn around what they call the Philadelphia lender’s “sub-par performance” by making more business loans and spending less on branches.
Norcross’ letter to the eight directors of Republic First Bancorp Inc. implies strong criticism of the regime of Republic chairman and chief executive Vernon W. Hill II, the Moorestown fast-food, real estate, and financial investor and sometime Donald Trump golfing buddy. Hill is a major Republic shareholder.
The group urges directors to accept Norcross and former TD Bank N.A. chief executive Gregory Braca as directors, as an alternative to voting for three rival board candidates already nominated by activist investor Driver Management Co. LLC of New York, which has made similar criticisms of Republic.
Hill previously founded Metro Bank PLC in England, and built Commerce Bancorp into the largest bank based in New Jersey -- with help from Norcross, his vice chairman at Commerce, head of the company’s insurance business.
The two split after 2007 when Hill was forced from the bank he built after disputes with regulators at the Federal Reserve Bank and the federal Office of the Comptroller of the Currency over Hill’s use of services run by companies tied to family members. Norcross helped engineer the company’s $8.5 billion sale later that year to Toronto-based TD Bank.
Asked if he had responded to the Norcross letter, Hill replied with a one-word email: “No” and did not elaborate. A Norcross spokesperson said the letter laid out the investors’ position and that the group had no additional comment.
In their letter, dated Monday, Norcross, along with his lawyer brother Philip Norcross and Braca, say they have purchased 6.6% of Republic, ranking them among the bank’s largest owners, and adding that they plan to buy more.
Adding George Norcross and Braca would take the board to ten members.
Republic First shares closed Monday at $4.30 a share, down 3.4% for the day. Share prices trade at a fraction of the more than $12 a share the stock commanded in the mid-2010s, before the bank expanded beyond its initial handful of offices.
Other banks have been shutting branches as customers switch to smartphones and laptops.
But at Republic, Hill has invested in a network of 33 branches, most around Philadelphia, particularly in South Jersey, and recently at two Manhattan sites. The “stores,” as he calls them, resemble the hundreds of branches he built for Commerce across the Philadelphia, New York, and Washington metro areas, with a similar red-letter logo.
“The Power of Red is Back,” Hill has proclaimed in Republic’s marketing materials, to underscore the similarities.
Hill’s critics, including Driver managing member J. Abbott Cooper, say the bank should cut expenses to boost profits. Selling more shares, as Hill proposed last year, ”will injure existing shareholders [by driving down the price] and only benefit Mr. Hill and his ego,” Cooper wrote in a letter to Republic last year.
“We believe that the underlying value” of Republic “is substantially greater” than the share price reflects, the Norcrosses and Braca wrote in their letter Monday.
They said Republic trades at a depressed price, given its size and the value of its loans and other assets. They said that’s because its profits are low and investors doubt they will improve under current policies -- an implicit criticism of Hill’s leadership.
They urged directors with questions to meet with them or send legal questions to their veteran New York banking lawyers, H. Rodgin Cohen and Mitch Eitel, at Sullivan & Cromwell.