Vernon Hill is out, an investigation continues, and changes wait at Republic Bank

Rebel directors won control of Republic First Bancorp’s board in early July, but investors, employees and customers are still waiting for the largest bank based in Philadelphia to settle business decisions left hanging in the fight.

The months-long struggle between former Republic chairman and chief executive Vernon W. Hill and his critics has stalled:

Hill and one of his two remaining allies left the board last week in protest; they had announced their intended departure last month. Even without them, the remaining directors, headed by Harry Madonna — Hill’s predecessor and now his successor — are waiting to act, pending an investigation the board ordered in March at the insistence of bank auditors, according to people familiar with the board’s deliberations.

Directors commissioned a review of operations by Washington law firm Wilmer Cutler Pickering Hale & Dorr LLP after board critics accused Hill of insider dealing at the expense of shareholders when he hired his wife’s design firm and an ally’s public relations firm. Hill said the firms did good work at good prices.

Hill’s board critics include, among others, Madonna and Andrew Cohen, chief investment adviser to Wall Street billionaire Steven A. Cohen’s family investment firm, Cohen Private Ventures LLC, a major Republic shareholder.

Shareholder critics include Hill’s past lieutenant George Norcross, part of an investor group that includes Greg Braca, an ex-TD Bank executive the group proposed as a future Republic executive.

“Present management of Republic Bancorp is not aligned” with Norcross or any other group of shareholders, but “works with all shareholders,” the bank said in a statement.

Norcross, a South Jersey political and insurance broker and Cooper Health chairman, isn’t the only former Hill ally to turn against the Moorestown banker, who took credit for forcing larger competitors to extend branch hours and add teller lines as he built a network of more than 400 Commerce Bank branches in the Philadelphia, New York and Washington metro areas into what he called “America’s Most Convenient Bank” from 1973 to 2007.

The Cohens, who are unrelated, had backed a couple of Hill’s previous companies before Andrew Cohen joined the opposition on the Republic Bank board last winter. And Madonna had previously welcomed Hill’s involvement in the bank Madonna first headed in 1988.

Despite Hill’s earlier success, critics challenged his continued policy of rapid branch expansion at a time when more Americans bank remotely and rarely visit branches. They say profits have been slow to arrive, and the bank’s share price has suffered.

Some shareholders who back the insurgents, including Abbott Cooper, leader of Driver Management Co., say Republic ought to be sold, possibly to WSFS, Univest or another survivor among the suburban Philadelphia-based banks that have been gobbling up smaller area lenders in recent years.

In their resignation letter last week, Hill and one of his two remaining board allies, Barry L. Spevak, dubbed their opponents the Cohen “cabal” and blamed them for disrupting business. Hill and Spevak would have faced a rare contested reelection campaign against Norcross-backed opponents at this year’s still-unscheduled annual meeting.

The resignation letter alleges that the “Cohen director loyal cabal” had broken with “corporate governance standards” and U.S. bank regulatory requirements by making decisions privately and excluding input from Hill, Spevak, or their remaining board ally, Brian Tierney of Brian Communications in Philadelphia. Tierney remains on the board.

Madonna, Cohen and their allies took over the bank board last month after winning a federal court case confirming that they constituted a majority, following the death of a Hill ally, accountant Theodore Flocco, in May. Flocco’s death broke a 4-4 deadlock between Hill and anti-Hill factions and put the insurgents in power.

The new board majority added a fifth ally to cement its majority and removed Hill as chairman, though he retained his board seat until he resigned last week.

The new majority also fired Tierney’s public relations firm, along with the design firm owned by Hill’s wife, Shirley, which designed branches for two other banks Hill founded: Commerce and Metro Bank (UK).

Hill left Commerce in 2007 after U.S. bank regulators stopped approving new branches while they reviewed that bank’s related-parties transactions. He departed from Metro in 2019, after the bank said it had underreported troubled loans.

After departing Metro, Hill stepped up his activity at Republic, opening new branches, boosting new loans and deposits, and signing up small-business customers during the federal government’s PPP loan program designed to help avoid a recession during the pandemic.

In their letter, Hill and Spevak said “the Cohen directors have stripped the full board of even the patina of basic corporate governance,” all “in service of a singular company shareholder — Cohen Private Ventures — and not in the best interests of the company, its shareholders, and the bank, or the employees, customers and communities it serves.”

The resigning directors expressed confidence that the Wilmer Hale investigation would “refute all the allegations” from the Cohens and their allies but added that they are “deeply concerned” the new board majority ”will not fairly and objectively disclose the results.”

For its part, the board said in a public letter last week that it “disagrees with the allegations by Messrs. Hill and Spevak” and notes the investigation will help determine whether allegations of “improper conduct” may still be brought against Hill and his allies.

Through a spokeswoman, Andrew Cohen and the Cohen firm declined to comment.