Unable to gain timely regulatory approval, Metro Bancorp Inc. has again delayed its acquisition of Republic First Bancorp Inc. in Philadelphia.
Last week the $2.1 billion-asset Metro announced the third extension for completing the deal, initially announced in November 2008. The companies gave themselves until March 31 to persuade regulators to approve the deal. But if that deadline is not met, the companies have already set another extension, to June 30. The deal received approval from shareholders in the spring.
Regulators may be balking because Metro, of Harrisburg, Pa., switched from a national bank to a state-regulated bank right before announcing the acquisition, and because Vernon W. Hill 2nd is a major investor in Republic First and would be the combined company's largest shareholder.
Hill is well known as a founder of Commerce Bancorp Inc. of Cherry Hill, N.J., which had assets of $49 billion when it was sold to Toronto-Dominion Bank's TD Banknorth Inc. of Portland, Maine, in March 2008. Metro, which was previously known as Pennsylvania Commerce Bancorp Inc., was co-founded by Hill in the likeness of Commerce Bancorp.
In November 2008, the Office of the Comptroller of Currency issued a cease-and-desist order against Hill and restricted his real estate dealings with banks.
"No doubt, you have Vernon Hill in the mix and that may be giving them some problems," said Stephen H. Moss, an analyst at Janney Montgomery Scott LLC.
Moss said the delays are unfortunate as the deal makes sense.
"It would be good if it got done because what you basically have is a lot of synergies and a better footprint in the Philadelphia metro area," he said. "Republic First has been hiring a lot of old Commerce people. So you have the re-emergence of the Commerce employees that know the area and were previously successful — I like the deal from a business standpoint. You have Vernon's Rolodex, which is a big positive in my mind. Plus you get a branch presence to grow and continue from there."
Several other deals recently have been delayed by regulatory obstacles. For instance, Glacier Bancorp Inc. in Kallispell, Mont., twice extended its offer to acquire the $280 million-asset First National Bank of Morgan in Utah, before finally closing the deal Oct. 2.
Other banks have called deals off rather than endure delays that are disruptive to customers and employees.Earlier this month, OceanFirst Financial Corp. in Toms River, N.J., and Central Jersey Bancorp in Oakhurst, N.J., agreed to nix their deal after it became clear that they would not obtain regulatory approval by a Dec. 31 deadline.
"We believed on May 26, 2009, that the combination of these two institutions was in the best interest of our customers, shareholders, employees and our communities," the companies said in a joint statement announcing the deal's termination. "We still believe that today, however, the current environment is such that obtaining regulatory approval has taken much longer than we anticipated and has reached a point where we believe that continuing to wait for the approval is not in the best interest of either company."
Metro officials would not comment and calls to Republic First were not returned Wednesday. But Chip MacDonald, a partner at Jones Day in Atlanta, said he expects the two companies to persist. "They have a meeting of the minds holding it together," he said. "They have ownership and management that want the deal to happen. They both probably see it as an advantageous deal."