Republic First delays capital raise as activist group revs up challenge

An investor group seeking to win control of Philadelphia-based Republic First Bancorp said it intends to press forward with a proxy contest and a related legal challenge to the company's move in November to shrink its board to six directors from the previous eight. 

The group, led by New Jersey insurance executive George Norcross and former TD Bank CEO Greg Braca, said Braca would seek a board seat at Republic First's long-delayed annual meeting. The $6.2 billion-asset company has been engulfed in controversy for well over a year as different groups have fought for control. The conflict has led to long delays in the filing of required financial reports with the Securities and Exchange Commission, while the 2022 annual meeting has yet to be held. 

Founder and Chairman Harry Madonna, along with three allied directors "mismanaged Republic First for years," Braca said Monday in a statement. "Shareholders are now paying the price for their recklessness and unwillingness to simply do what is right, give up control and get out of the way."

Braca also criticized Republic First's decision to wait for more favorable market conditions before completing a proposed $125 million capital raise. "Recent inaction and failure to raise badly needed capital only proves to us that these four legacy directors care more about their personal interests than they do about Republic First and its future," Braca said. 

The planned capital raise includes commitments of $60.725 million by the prominent bank investment firm Castle Creek Capital along with $30 million by an affiliate of Cohen Private Investors. The remaining $34.275 million is to come from investors identified by Republic First. It's that process of lining up investors that Republic First opted to place on hold. 

"We remain focused on taking actions to preserve the bank's capital, strengthen our core business and position us to identify additional investor commitments at the right time and on the right terms," Republic First CEO Thomas Geisel said Monday in a statement.

According to Republic First, the board consulted with outside legal and financial advisors before Monday's announcement, concluding the bank has adequate capital. 

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Tony Scavuzzo, a Castle Creek managing principal, declined comment Monday. 

In an email Tuesday to American Banker, Republic First added that it has made repeated attempts to heal the breach with the Norcross-Braca group, including an offer to add Braca to the board and provide what it described as "seven-figure expense reimbursement." Given these proffers, Republic First labeled Braca's statements Monday as "old news" and "repetitive."

Earlier this month, Geisel, who was named CEO in December, announced plans to quit originating mortgages and streamline commercial lending in New York. Those moves came days after the company released financial results for the first quarter. Republic First reported a $9.7 million loss, driven in part by $5.5 million spent on legal, audit and other professional fees. The May 1 earnings release marked the first time since January 2022 that Republic First reported on its finances. 

Initially, the Norcross-Braca group, which controls 9.9% of Republic First's outstanding shares, shared a common purpose with the Madonna-led board faction in opposing former Chairman and CEO Vernon Hill. Following Hill's ouster as chairman in May 2022  and subsequent resignation as CEO in July, their interests diverged dramatically. The Norcross-Braca group sought to install Braca as CEO and later offered a $100 million equity injection, only to see both tenders rejected.