Vernon Hill says he has agreed to step down as chief executive of Republic Bank of Philadelphia, after Wednesday’s federal appeals court decision handed control of its parent company, Republic First Bancorp, to his critics.
The court ruling “gives me no choice but to resign as chief executive officer,” Hill said in his statement. He will officially depart Aug. 8. “I made this decision reluctantly,” he added, accusing the winning board faction, headed by his predecessor Harry Madonna and backed by some of the bank’s biggest investors, of acting in their own interests, before those of other shareholders.
The Madonna group accused Hill of overspending on branch expansion, to the benefit of contractors including some with ties to Hill’s family. With Hill out of the way, they are expected to cut spending, including Hill’s plan to add to the bank’s 33 branches, and possibly to seek a sale of the bank. Both sides have insisted they have shareholders’ best interests at heart.
» READ MORE: Vernon Hill’s control of Republic slipping away after boardroom rebels win in court
The bank did not immediately name a successor or specify when Hill’s resignation will take effect. A group of investors who support the Madonna faction, including Cooper Health executive chairman, insurance broker, and Democratic Party kingmaker George Norcross, has backed former TD Bank executive Greg Braca as a potential replacement.
“I’ve been starting and running banks now for 49 years,” since founding Commerce in 1973, Hill noted in a brief interview Friday morning. He boasted that Republic loans and other assets had zoomed to nearly $6 billion, from around $600 million when he invested in the late 2000s. Hill also lamented the lack of entrepreneurial spirits among today’s investors, acknowledging shareholders often prefer quarterly profit gains and the promise of rising share prices, over the long-term vision of building big companies over time. He demurred when asked what he plans to do next.
At his previous bank, Commerce Bancorp of Marlton, Hill built a 450-branch East Coast network offering extended hours and shorter wait times in glass-walled, pet-friendly branches, provoking similar moves by larger banks after Commerce won customers from them. He became a leading investor in Republic in 2008, after leaving the chief executive and chairman posts at Commerce Bancorp under pressure from federal bank regulators and an earlier board revolt. That bank was sold to Canada-based TD in 2007.
Hill’s attempt to build another large mid-Atlantic bank by merging Republic with a Commerce spin-off in Harrisburg failed to win regulatory approval; Hill then started MetroBank UK in England, attracting investors including Wall Street billionaire Steven A. Cohen, but stepped down as chairman of that company in 2019 after British regulators said it understated potential loan losses. The share price fell, costing investors such as Cohen many millions.
The combative Hill also owned Burger King franchises in Philadelphia’s northern suburbs and called commercial real estate his favorite occupation. He later backed PetPlan, a dog insurer, and SaladWorks, the lunch chain, and fell out publicly with their managers in disputes that landed in court.
After Metro, Hill focused his banking plans on Republic, serving most recently as the bank’s chief executive. Its logo had been changed to a red letter R that resembled the old Commerce C signs, after Hill became a major investor and promised to bring “the Power of Red” back to Philadelphia-area banking.
Investor Cohen’s aide Andrew Cohen took a seat on Hill’s board, but joined Hill’s critics in the Madonna faction. (The Cohens are not related.)
In his statement, Hill declared his tenure a success, noting that the bank was a top issuer of PPP loans during the COVID-19 pandemic, and that Forbes magazine had rated its customer service highly.
Critics, including the Norcross group as well as New York hedge fund activist investor Abbott Cooper of Driver Management, were more concerned about the bank’s languishing share price, which they said was depressed by high expenses and low profits. Hill had agreed to spend more on technology as bank customers have moved online and cut visits to branches, thousands of which have been closed in the U.S. since the late 2000s.
Hill blamed his downfall on his critics’ seizure of power in May after the death of a Hill board ally, accountant Theodore Flocco, gave the Madonna and Cohen faction a 4-3 majority. Though a lower-court ruling delayed the takeover, Wednesday’s Third Circuit decision “allowed four members of the board of directors to seize unfettered control,” Hill said.
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