Republic First Bank CEO Vernon Hill resigned Friday, both he and the Philadelphia-based bank acknowledged in separate statements. 

The move punctuates a months-long power struggle within the bank. The rift opened in October, when activist investor Abbott Cooper of New York-based hedge fund Driver Management groused about Republic First’s earnings per share and stock price, which he saw as low, relative to the bank’s peers. 

Hill, meanwhile, had announced a strategy to raise capital and grow the bank’s footprint beyond its 36 branches. Republic First delayed that capital raise indefinitely in January.

Cooper gained allies that month when a second faction, led by South Jersey power broker George Norcross and former TD Bank U.S. CEO Greg Braca, backed a slate of board candidates Cooper proposed. The Norcross-Braca alliance also offered to buy a majority stake in the bank.

Republic First’s founder, Harry Madonna — who had served as the bank’s chairman until 2016 and CEO until 2021 — joined the growing force opposing Hill when Republic First in February chose not to renew Madonna’s contract.

The bank’s eight-member board was split evenly between Madonna and Hill supporters until Hill ally Ted Flocco died in May. That prompted the Madonna faction to oust Hill as chairman and install Madonna on an interim basis.

Hill and his allies sued for emergency relief and the U.S. District Court for the Eastern District of Pennsylvania appointed a custodian to oversee the filling of the board seat once held by the late Flocco.

The Madonna faction appealed. And the Third Circuit Court of Appeals’ three-judge panel on Wednesday overruled the district court’s decision.

District Judge Paul Diamond’s move to “displace the corporate governance structure of a publicly traded company, while no doubt well-intended, did not reflect the required caution, circumspection, or justification for such a drastic step,” U.S. Circuit Judge Kent Jordan wrote in the appeals court’s 30-page ruling.

New board member

Hill cited Flocco’s death and the appeals court’s decision in his resignation statement Friday, saying both events “have allowed four members of the board of directors to seize unfettered control of Republic First Bancorp and has given me no choice but to resign as chief executive officer.” 

Hill also claims the bank violated his employment agreement.

“I made this decision reluctantly, as the actions of this faction of the board show they are serving their own narrow interests instead of those of the shareholders,” Hill said, according to the Philadelphia Business Journal.

Hill’s resignation is effective Aug. 8, the outlet reported, citing a statement from Madonna.

The appeals court ruling cleared the way for a quorum of Republic First’s board to appoint Benjamin Duster IV — the bank board’s first director of color — to the vacant seat. Duster is CEO of Cormorant IV Corp., a consulting firm specializing in operational turnarounds and organizational transformations.

“To attract a professional of Ben’s caliber to the Board is a true testament to the strong potential he sees in the bank’s future,” said Harris Wildstein, chairman of Republic First’s nominating and governance committee. “Ben’s extensive knowledge of public company governance and [mergers and acquisitions] processes as well as his financial expertise and business and legal background will be welcomed in the boardroom.”

Hill, meanwhile, said in a statement late Thursday that he and his allies hadn’t had a chance to interview Duster before his appointment.

Hill remains on the board but did not indicate whether he would stand for re-election at this year’s annual shareholder meeting, which has been delayed. The date and agenda are forthcoming, the board said. 

Republic First’s board said it was evaluating candidates to serve as interim CEO and will “formally announce an appointment in due course.” A group of investors, including Norcross, has backed Braca as a potential replacement, The Philadelphia Inquirer reported.

Strike 3?

Hill’s resignation represents his third high-profile departure in a decade and a half. He resigned from Commerce Bancorp in 2007 — a South Jersey bank he founded in 1973 and grew into a $58 billion-asset company with more than 400 branches — after regulators probed allegations of insider dealings. TD bought Commerce months later in a $8.5 billion deal. 

No charges were brought, but the specter of “insider” allegations has followed Hill. The Madonna faction, in present day, accused Hill of overspending on his branch expansion plan, a move that would benefit contractors connected to Hill’s family.

Hill launched Metro Bank U.K. in London in 2010, employing some of the fast-growth techniques he oversaw at Commerce. But he resigned in 2019, after Metro admitted it incorrectly classified a portfolio of commercial loans for capital purposes. 

Hill, to that point, had been a strategic and financial adviser for Republic First, since Madonna brought him aboard in 2008. The Metro collapse allowed Hill to shift his focus to the Philadelphia bank, which, he said, has grown from $700 million in assets in the late 2000s to $5.6 billion now.

"I am especially grateful to the talented team that we were able to attract to the bank,” Hill said in his resignation statement. “I’m also secure in the knowledge that I always acted in the best interests of shareholders, customers and employees, and I would like to personally thank all those who made this success happen.”