Vernon Hill: Republic can be new Commerce Bank
Ex-Commerce Bank chief Vernon Hill and 3 associates have invested $7.8 million in money-losing Republic First Bancorp, which runs First Republic Bank, Philadelphia. Hill also gets a 4-year consulting contract, and he'll name a director.
Commerce Bancorp founder Vernon W. Hill II and three associates, including his Burger King partner, Steve Lewis, have invested $7.8 million in Republic First Bancorp, which runs 12-branch First Republic Bank. Republic chairman Harry D. Madonna pumped in $3 million more. Republic shares, which had trading at a five-year low with other bank stocks, rose more than 10 percent in early trading.
The bank lost money in the first quarter, but Madonna said it has restructured problem loans and didn’t have to raise new capital. Instead, he said, Republic will use the money to add new branches in South Jersey, Northeast Philadelphia and other markets, to attract retail deposits. Hill also gets a four-year consulting contract, and he gets to name a Republic director.
Hill said he hopes $1 billion-asset Republic will replace $48 billion-asset Commerce as a major locally-based bank. "Philadelphia needs a headquarters bank, and Republic has a chance to be that bank," he said. Toronto-Dominion Bank agreed to buy $48 billion-asset Commerce for $8 billion after Hill was forced out as chief executive officer last year.
The investments, trust-preferred securities, yield 8 percent, and may convert to stock at $6.50 per share. Sandler O’Neill + Partners L.P., a Wall Street investment bank specializing in midsize commercial banks, advised Republic in the deal.