Republic Bank board fractures into opposing camps loyal to Vernon Hill or George Norcross
"Concerned directors" move against severance, expense plans as two factions jockey for control of Republic Bank.
The board of Republic First Bancorp, which owns Philadelphia-based Republic Bank and its 33 branches in Pennsylvania, New Jersey, and New York, appears to have split evenly into two camps. One side is supportive of CEO Vernon W. Hill II. And a rival group is close to Hill’s former South Jersey business ally George Norcross, who is seeking to oust him, cut the bank’s expenses, and boost profits.
In an unusual move, a faction calling itself “Concerned Republic First Bancorp Directors,” comprising four of the eight directors, on Friday sent a public letter to the bank, urging Hill and three board members loyal to him “not to pursue self-dealing transactions” that would make a takeover of the bank by dissidents like Norcross more difficult.
The dissidents asked their fellow directors to delay voting on proposals they said were under consideration for the upcoming Republic board meeting that has yet to be scheduled.
These include:
New payments to a design firm controlled by Shirley Hill, Vernon Hill’s wife, to design Republic’s growing branch network;
New expenses “related to the opening of new branches” and renovating existing offices;
And “most critically,” a plan to boost severance payments in case Hill loses control of the company at the next shareholders’ meeting and is fired or replaced as CEO.
Republic management responded with a brief statement that the bank “is deeply troubled” that the dissident directors “would seek to publicize a letter that is both factually and legally unfounded.”
The fight is taking place at a time when rising interest rates have revived interest in bank mergers, even for low-priced banks like Republic First. Its share value under the symbol FRBK had mostly declined since Hill took over in 2016 — until Norcross’ campaign and other dissidents revived interest, boosting the price above $5 a share last month, from a low of around $3 last fall.
Hill’s faction faces opposition in elections expected at that next meeting from three rival board candidates backed by another group of dissident investors, whom Norcross’ group said it will support
In addition, Norcross and former TD Bank chief executive Gregory Braca have asked for new seats on the board. Their group has bought nearly 10% of the bank and wants to buy more.
In their statement, the dissidents say some of the measures the oppose have already been approved by the board of the company’s banking subsidiary, and suggested there has been a campaign to “sidestep” the corporate board.
And they protest that the proposed changes constitute a “thinly-veiled attempt” to give Hill’s supporters an unfair advantage at the expense of other investors.
The dissident directors who issued the challenge are Andrew B. Cohen, Lisa Jacobs, Harry Madonna, and Harris Wildstein.
Cohen has a history with Hill: He is a longtime investment manager for Wall Street billionaire hedge fund manager Steven A. Cohen of SAC Capital Advisors LP, who was a major investor in Hill’s previous bank, MetroBank Plc, whose share value collapsed after British regulators realized it had underreported bad loans.
Andrew Cohen was also an investor in PetPlan, a Newtown Square pet insurer where Hill, the lead investor, became embroiled in a costly battle with the managers he had previously installed.
Also sympathetic to Norcross’ campaign are Jacobs, a partner at the Philadelphia office of law firm Stradley Ronon Stevens and Young; Madonna, the former Republic chairman who stepped aside from that job when Hill bought 10% of the bank in 2016; and Wildstein, who runs LifeLine Funding LLC.
Of Hill’s allies, Theodore Flocco and Barry Spevak are CPAs, and Brian Tierney, a former Inquirer publisher and longtime member of its board, is chairman of Realtime Media and founder of Brian Communications, which represents Republic.