An investor group's decision
The investor group, led by New Jersey insurance executive George Norcross, agreed to invest $35 million Friday. Just days earlier, according to a Bloomberg report,
Norcross' group, which includes his brother Philip Norcross, a prominent New Jersey attorney, and Greg Braca, TD Bank's former CEO, is no stranger to the $6.3 billion-asset Republic First. They've been vying for control of the company since the start of 2022.
In recent weeks, however, the group has shifted from battling management to seeking to prop it up. The group signed a letter of intent to participate in a planned $75 million capital raise in September. That agreement stated explicitly that the group's cash would come after Republic First secured $40 million from outside investors. According to the Sept. 26 letter of intent, "the consummation of the investments by the [group] and the additional investors will occur simultaneously."
On Friday, in a press release, Republic First and the investor group stated that the remainder of the capital raise — which will seek as much as $65 million from outside investors — will commence "upon closing of the new investment." Additionally, Braca and Philip Norcross would join Republic First's board of directors, with Norcross serving as chairman. Four so-called "legacy" directors, all of whom served during the tenure of former CEO Vernon Hill, will step down. The Sept. 26 agreement permitted two legacy directors to retain seats.
Neither Republic First nor the Norcross-led investor group would comment on the changes to the agreement. Pennsylvania's Department of Banking and Securities, Republic First's state regulator, declined comment. The FDIC does not comment "on open and operating institutions," a spokeswoman wrote in an email.
While a $35 million capital infusion would benefit Republic First, it would fall far short of solving the company's capital woes, said Bert Ely, an Alexandria, Virginia-based banking consultant. Based on its Sept. 30 call report, Republic First has more than $500 million in mark-to-market losses embedded in its $2.6 billion securities portfolio — far in excess of the $301 million in Common Equity Tier 1 capital it reported. On a mark-to-market basis the bank would still be deeply insolvent, Ely said.
Republic First reported $4.7 billion of deposits, but approximately $2.5 billion — or 54% — were uninsured. For the three months ending Sept. 30, Republic First reported a loss of $29.8 million.
"The numbers just jump out at you," Ely said. "They're terrible numbers. ... The bottom-line question is why would anyone invest in First Republic or even buy it without FDIC assistance."
The Norcross-led group declined to comment on the call report data, as did a spokesman for the bank.
Republic First has spent much of the year seeking additional capital. In March, it announced plans to
For his part, George Norcross said he hoped additional capital combined with new leadership on the board would lead to a change in fortune for Republic First.
"As we said when we first announced we had taken a stake in Republic First more than 18 months ago, we believe that with proper board leadership and a focus on improving operations, the company can provide great service to its customers and depositors as well as value to its shareholders," Norcross said in the press release Friday. "This investment and new leadership on the board is the next step of what will be the new Republic First."
