Two investor groups raise pressure on Republic First

An investor group seeking big changes in management and strategy at Republic First Bancorp in Philadelphia has increased its ownership stake and doubled down on calls for what it termed a “candid discussion” with the $5.6 billion-asset company’s board. Another group is seeking to place its own people on Republic’s board.

“We continue to believe that … we could potentially arrive at a mutually beneficial plan for our group to make a substantial, long-term investment in the company’s stock, make available management resources that the company itself has sought out in the recent past, and assist the board in thinking carefully through certain elements of the strategic direction for the company,” the group, whose members include former TD Bank CEO Gregory Braca, wrote in a letter sent to Republic First’s directors on Monday.

On Monday, the group reported an 8.8% ownership stake, up from 6.6% it had at the start of its campaign.

Meanwhile, a second group led by Driver Management and its managing member, Abbott Cooper, separately filed a proxy statement with the Securities and Exchange Commission on Monday, urging Republic First shareholders to elect its three director candidates, Peter Bartholow, Pamala Bundy and Richard Sinkerfield, to the board. The Driver group, which has a 1.17% ownership stake, has urged the board to consider selling the bank.

Led by Chairman and CEO Vernon Hill, Republic First is the holding company for Republic Bank.

Hill gained fame for founding Commerce Bancorp in the United States and Metro Bank in the United Kingdom. He ran Cherry Hill, New Jersey-based Commerce from 1973 to 2007, when federal banking regulators, concerned about insider business dealings, forced his resignation. Hill founded Commerce and led it to become a $48 billion-asset regional bank with more than 400 branches.

Hill founded London-based Metro Bank in 2010 and served as chairman from 2013 to 2019. His departure was prompted by revelations that Metro had failed to properly weigh the risk of some commercial loans. While still connected to Metro, Hill had joined Republic First in 2016 as nonexecutive chairman. He was named CEO in February 2021.

As Republic First’s CEO, Hill has relied heavily on the strategic playbook he used to spark rapid growth at both Commerce, which was acquired by TD Bank in 2008, and Metro. Hill has emphasized retail banking, added branches and focused on gathering deposits. Last month, Republic First reported net income totaling $25.2 million powered by big increases in deposits, which rose 29% year-over-year to $4 billion.

But Republic First also reported a loan-to-deposit ratio of 48%, significantly lower than comparably sized institutions, and an efficiency ratio topping 70%, much higher than its peers.

In its initial letter to Republic’s board, which was made public Jan. 31, the Braca group claimed Republic First’s results have been “so poor as to suggest an immediate reevaluation of strategy.” It suggested replacing Hill as CEO with Braca. This group also includes New Jersey insurance executive George Norcross and his brother, Philip Norcross, the managing shareholder and CEO of the Parker McCay law firm in Mount Laurel, New Jersey.

In its letter Monday, the group indicated it had received “no substantial reply” from the board, only "a brief and unproductive conversation” with Hill. “We are very disappointed not to have received the benefit of a substantive response that our letter warrants from the board of a public company looking to carry out its responsibilities as fiduciaries to those constituencies owed their loyalty,” it added.