Founder Vernon W. Hill II of Moorestown will be replaced as chairman of Metro Bank PLC, the upstart, 67-branch U.K. bank he started 10 years ago, the company said Thursday, after reporting sharp drops in profits and deposits for the first half of 2019.
Shares of the bank fell to £4 ($4.98) in Thursday trading, down 90% from Metro’s peak value in March 2018, and a fraction of the £22 ($27.40) it commanded when it went public in 2016, after earlier financing by Anglo-American investors including real estate mogul Richard LeFrak and hedge fund billionaire Steven A. Cohen.
Hill, 73, shares his fellow directors’ view “that Metro Bank has now reached a point where an independent chair is appropriate to oversee the next stage of our journey and that process will start immediately,” Michael Snyder, the board’s lead independent director, said in a statement.
He praised Hill as “the inspiration behind Metro Bank,” whose “vision and leadership” challenged the British banking establishment, and added that he is “delighted" that Hill will remain on the board, with the title of president.
As recently as July 12, Hill told reporters he had no plans to step aside as head of the bank that promised to energize the staid cartel of British retail lenders. But a search for his replacement is now underway, and Hill will remain chairman only "until a successor is appointed,” the bank said.
The bank also announced it is adding new leaders, including former Bank of Ireland executive Michael Torpey as director, Daniel Frumkin as “chief transformation officer” in charge of cost-cutting, and Cheryl Newton as chief information officer.
CEO Craig Donaldson called it “a challenging first half for the bank" in a statement. Metro bank deposits fell to £13.7 billion ($17.06 billion) as of June 30, down from £15.6 billion ($19.43 billion) in December, before the bank disclosed that it had misclassified almost £1 billion in troubled loans, and had to raise new capital to appease regulators and guard against losses.
Metro says some corporate clients responded by withdrawing their deposits, blaming what Donaldson called “intense speculation” over how regulators would respond to the accounting trouble. Pre-tax profits also fell, to £3.4 million ($4.2 million) for the first half, from £20.8 million ($25.9 million) a year earlier.
All was not lost: Metro says the deposit flow has reversed and is growing again, with customers opening more new accounts and adding funds since May. Fee income and loans increased, and Donaldson and Hill in their statements expressed optimism.
Hill modeled Metro after his former Mount Laurel-based Commerce Bancorp, whose scrubbed, glass-walled branches speeding customers through their business — plus pet treats, coin-changing machines, and other crowd-pleasing extras — attracted fans in metro Philadelphia, New York, and Washington. That forced competing banks to improve their services, before he was forced out in 2007 and the company sold to TD Bank.
Hill left after regulators stopped approving new Commerce branches as they questioned his bank’s practice of using Hill family-affiliated site locations, designs, and title services as Commerce’s preferred providers. Wife Shirley Hill’s company, InterArch, was closely integrated to Hill’s rapid expansion plans. But Metro said in public filings earlier this year that it has cut ties with InterArch.
Hill remains chairman of Philadelphia-based Republic Bank, which has opened a string of Commerce-style branches in the city’s suburbs since he took the top board job, and increased his investment in parent Republic First Bancorp two years ago, at a time when the region’s dominant banks, including Wells Fargo, PNC, and TD, have been closing offices as more customers do their banking online.
On July 3, Hill opened Republic’s first branch in New York, echoing Commerce’s move to that city nearly 20 years ago, though President Donald Trump, Hill’s sometime golf buddy and a featured speaker at the earlier opening, was absent this time.
Despite its rapid recent growth, Republic First’s share price has lagged, finishing Thursday trading at $4.55, down $0.07 (1.52%), half its most recent peak price in October 2017.