When bank profits don't matter

Republic First Bancorp Inc., the Philadelphia bank run by Harry Madonna along the customer-friendly lines pioneered by his finanical backer Vernon Hill of Marlton (ex boss of the former Commerce Bank and currently of Britain's Metro Bank), eked out a 3 cents-a-share profit last quarter and isn't likely to make much more anytime soon, warns Frank Schiraldi, bank analyst at Sandler O'Neill + Partners, in a report to investors today: "Republic First is in a build-out phase, and we expect earnings per share to continue to be minimal as the company invests in future growth." Schiraldi has rated the stock "Sell" but is reviewing his projections in light of the bank's aggressive new branch plans.

The real news, as Schiraldi notes, is Republic's bank's $45 million private share sale, priced April 22 at $3.80 a share, an apparent discount to the $4-and-change where it's been trading lately; and the news the bank plans to expand its mostly Philadelphia-area branch network with new glass-walled "stores" in Marlton, Moorestown, Mount Holly, Medford, Glassboro, Washington Township, and a second new Cherry Hill store, after opening one in Voorhees on May 10. In a statement, Madonna promised "world-class service and convenience." 

Hill's Metro Bank, in England, has similarly raised hundreds of millions from investors without turning a profit as it continues building branches and market share -- even though Hill's former partner, Anthony Thomson, says he's changed his mind about branches and is now promoting a "branchless" Internet lender, Atom Bank.