Banking in the U.S. has changed considerably during Vernon Hill's decade-long hiatus.
On the plus side, the incoming administration promises to ease up on the regulatory second-guessing that frustrated Hill when he ran Commerce Bancorp and ultimately led to his resignation after building that bank into a retail powerhouse.
On the downside, branches are no longer the traffic driver they were during Commerce's heyday. So it's unclear how well the model Hill pioneered can continue to work for Republic First Bancorp in Philadelphia, which announced his appointment as chairman this week along with a $100 million capital raise.
In an interview, Hill, 71, said he would have taken the post and raised the capital even if Donald Trump had lost on Election Day.
"We've been working on this raise of capital and this progression before this election," Hill said. "We hope that the Trump team reduces the unbelievable regulation, not only for banks, but the American economy as a whole."
As for the relevance of branches in an increasingly digitized world, Hill points to an example across the Atlantic: The $11 billion-asset Metro Bank, which he founded in London in 2010. Metro generated average per-branch deposit growth of more than $21 million during the third quarter.
Metro "has proved to me again that this model really works," Hill said. "Physical store facilities [remain] a very important part of the model and the brand."
Hill's appointment seemingly puts to rest a tense relationship with regulators who hit him with a 2008 consent order after Commerce disclosed it had been paying several of Hill's relatives to help buy properties and decorate branches. In 2010, regulators refused to act on Hill's application to merge Republic First and Metro Bancorp in Harrisburg, Pa.
Those problems "are completely resolved," Hill said in the interview, declining to elaborate. "It's probably time for me to be the chairman to help the management team get to the next level."
The veteran banker, who owns nearly 10% of the $1.7 billion-asset Republic First, had been quietly working as a consultant to the company's management team over the past few years. Though he will hold a nonexecutive post, Hill will be largely in charge of strategy, a role he excelled at while building Commerce from scratch into a $48 billion-asset regional in the 1990s and early 2000s.
Republic First "clearly threw some Holy Water on" Hill's past issues with Washington, said Ted Peters, chairman and CEO of Bluestone Financial Institutions Fund and a former bank CEO.
Timing is everything, and the results of the election could also benefit Hill, an acquaintance of President-elect Trump and of Wilbur Ross, who was tapped to run the Commerce Department.
Harry Madonna, who remains the company's CEO and chairman and CEO of its bank and will still manage day-to-day operations, said he had prodded Hill for some time to formalize his involvement by joining the board. "I think now he has time to devote to" Republic First, Madonna said.
A bold retail model "worked for Commerce, it's working in London and it will work here," Madonna said.
To understand Republic First's future, take a quick refresher course on Commerce's history. The bank, founded in 1973, was famous for building branches, operating nearly 450 by the time it was sold to TD Bank for $8.5 billion in 2008.
Branches will certainly play a role in Republic First's plans. The company wants to open at least six locations next year, a pace it hopes to continue for several more years, Madonna said. The initial focus will be metro Philadelphia, with a clear acknowledgement that branch building will be tempered given trends in customer usage.
"Commerce had 150 locations in metro Philly," Hill said. "We'll never get that many at Republic because the world has changed."
A decline in customer traffic, along with an extended low interest rate environment that has stifled returns from earning assets, has some people scratching their heads about a branch-building strategy in today's market.
"Every year, bank visits go down," Peters said. "It's going to be a continuing trend. … My feeling is that the Commerce model won't work as well as it did before."
Peters, however, said Hill is one of the few bankers who could prove him wrong.
"Vernon is a hard-driving executive," Peters said. "With him in there, something is going to happen.
Hill argues that there is still value from building branches to bring in deposits. Republic had $1.6 billion in deposits at Sept. 30, representing a 28% increase from a year earlier.
For Hill, branches still offer the quickest and most efficient way to raise deposits, which in his mind remain the industry's best source of value. "Everybody can make loans but only we can accept deposits," he said.
"Once we decided that core deposits were the real value creator, we learned how to grow deposits at a lower cost … at a very rapid rate and a very long life by delivering service and convenience," Hill said. "Amazingly, no one in America ever copied this model."
For some investors, Hill's name still has considerable clout domestically despite his long absence from the public eye.
"Vernon Hill is just a winner," said Douglas Schaller, CEO of Schaller Investment Group in Winston-Salem, N.C. Schaller's funds, which participated in the recent capital raise, own about 9.3% of Republic First. They also own shares in Metro.
"You have business people that just go from one success to another," Schaller added. "What he's doing is transferring the DNA of the old Commerce to Republic."
Metro's results should provide more than enough evidence to dispel any doubts that the Commerce model has lost its relevance, Schaller said.
"I've watched him build Metro from two people to thousands of employees," Schaller said. "That culture is like a well-oiled machine. Everyone buys into its differentiated value proposition and brand. "
Hill, even when he was behind the scenes, seemed to have an influence on Republic First. Most of the company's management team – even "down to the branch level" – once worked at Commerce, he said. Madonna noted that Hill was also heavily involved in the design of Republic's distinctive all-glass, cube-shaped branches.
"I've never been in a retail business where a new building has been such an important factor in building a brand," Hill said. "The glass cube building, as we call it, is the focus of what the Republic brand is and it's been incredibly important in giving us tremendous growth."
Hill sounded eager to dive into his new role at Republic First, which will be the sixth bank he has worked for.
"To me it's fun," Hill said. "This is what I like to do."