Vernon Hill is out, an investigation continues and changes await at Republic Bank
Rebel administrators took control of Republic First Bancorp’s board in early July, but investors, employees and customers are still waiting for the largest Philadelphia-based bank to settle business decisions left hanging in the fight.
The months-long struggle between former Republic President and CEO Vernon W. Hill and his critics has stalled:
The bank’s annual meeting and board elections, which usually take place in April but are unscheduled;
Two quarterly sales and earnings reports and this year’s financial audit — delays that jeopardize the company’s continued Nasdaq listing;
Hill preferred the fate of planned new Republic Bank branches, including a Delaware County site that was already slated to open.
Hill and one of his two remaining allies quit the board last week in protest; they had announced their intention to leave last month. Even without them, the remaining directors, led 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, people say. familiar with council deliberations.
Directors commissioned a review of operations by Washington law firm Wilmer Cutler Pickering Hale & Dorr LLP after board critics accused Hill of insider trading at the expense of shareholders when he hired the his wife’s design firm and an ally’s public relations firm. Hill said the companies have done good work at good prices.
Critics of Hill’s board 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 shareholder of the Republic.
Shareholder critics include Hill’s former lieutenant George Norcross, who is part of an investor group that includes Greg Braca, a former TD Bank executive whom the group has proposed as the future leader of the Republic.
“Current management at Republic Bancorp is not aligned” with Norcross or any other shareholder group, but “works with all shareholders,” the bank said in a statement.
Norcross, a South Jersey political and insurance broker and president of Cooper Health, is not the only former Hill ally to turn against the Moorestown banker, who has taken credit for forcing larger competitors to extend branch hours and add teller lines as it built a network of more than 400 Commerce Bank branches in the Philadelphia, New York and Washington metropolitan areas in what he called it “America’s Most Convenient Bank” from 1973 to 2007.
The Cohens, who are unrelated, had backed a few previous Hill companies before Andrew Cohen joined the opposition on the Republic Bank board last winter. And Madonna had previously praised Hill’s involvement with the bank Madonna first ran in 1988.
Despite Hill’s earlier success, critics have challenged his continued policy of rapid branch expansion at a time when more Americans are banking remotely and rarely visit branches. They say earnings have been slow to arrive and the bank’s share price has suffered.
Some shareholders who support the insurgents, including Abbott Cooper, head of Driver Management Co., say Republic should be sold, perhaps to WSFS, Univest or another surviving suburban Philadelphia bank that gobbled up lenders smaller in size lately. 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 accused them of disrupting business. Hill and Spevak were expected to face a rare contested re-election campaign against Norcross-backed opponents at this year’s still-unscheduled annual meeting.
The resignation letter alleges that the “loyal cabal of Cohen directors” had broken with “corporate governance standards” and regulatory requirements for US banks by making decisions in private and excluding contributions from Hill, Spevak or of their remaining ally on the board, Brian Tierney of Brian Communications in Philadelphia. . Tierney remains on the board.
Madonna, Cohen and their allies took over the bank’s board last month after winning a lawsuit in federal court confirming they were a majority, following the death of a Hill ally, the accountant Theodore Flocco, in May. Flocco’s death broke a 4-4 stalemate between the Hill and anti-Hill factions and brought the insurgents to power.
The new board majority added a fifth ally to cement its majority and removed Hill as chairman, although he retained his seat on the board until his resignation last week.
The new majority also laid off Tierney’s public relations firm, as well as the design firm owned by Hill’s wife, Shirley, which designed branches for two other banks founded by Hill: Commerce and Metro Bank (UK). United).
Hill left Commerce in 2007 after US banking regulators stopped approving new branches as they reviewed that bank’s related party transactions. He left Metro in 2019, after the bank said it underreported troubled loans.
After leaving Metro, Hill ramped up his business at Republic, opening new branches, increasing new loans and deposits and enrolling small businesses under the federal government’s PPP loan program designed to help stave off a recession during the pandemic. .
In their letter, Hill and Spevak said “Cohen’s directors have stripped the entire board of directors of even the patina of basic corporate governance” all “in the service of a shareholder sole purpose of the company – 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 said they were confident the Wilmer Hale investigation would “rebut all allegations” by the Cohens and their allies, but added they were “deeply concerned” the new board majority “will not disclose.” the results fairly and objectively”.
For its part, the board said in a public letter last week that it “disagrees with the allegations of Messrs. Hill and Spevak” and notes that the investigation will help determine whether allegations of ” improper conduct” can still be brought against Hill and his allies. .
Through a spokeswoman, Andrew Cohen and The Cohen Firm declined to comment.