George Norcross and former TD Bank executive Gregory Braca have reiterated their desire to revamp Republic First Bancorp’s top echelon after the community bank paused a $125 million capital raise amid a slumping share price.
On Monday, Republic First said that it would pause its $125 million financing transaction with Castle Creek Capital and Cohen Private Ventures, suggesting the recent turbulences in the U.S. regional banking sector made it hard to identify additional funding partners to round out the deal. “The Board has decided to wait for market conditions to stabilize before identifying additional participants to round out the capital raise on acceptable terms,” the statement reads.
The Philadelphia-based bank said it had an ‘‘adequate’’ capital allocation position after a recent decision to wind down both its New York City commercial lending business and mortgage origination business to focus on its core business lines.
Castle Creek and Cohen pledged to buy $60.7 million worth of Republic First at $2.25 per share but the arrangement was conditioned on other investors committing to purchase roughly $34 million on the same terms. The company’s stock has fallen from about $5.30 in mid-March to below $0.70 earlier in May amid several large regional bank failures.
In a statement Monday, Norcross, who leads a group that controls 10% of Republic First’s shares, pointed to the bank’s most recent earnings report to argue that it needs a new leadership team to turn around its fortunes. He revealed plans to nominate Braca and potentially other directors to the lender’s board in a bid to replace four legacy board members, including Republic First founder Harry Madonna.
Republic First swung to a $9.7 million loss in the first quarter of 2023, from a $5.4 million profit a year before. The activist noted that the report reflects a $400 million unrealized loss in the bank’s securities portfolio.
“More than a year ago, we first raised the alarm about the poor decision Republic First’s legacy directors made to make long term investments at a time when interest rates were rising,” said Braca on Monday. “Now, it should be clear why new capital, and new leadership, are so important to Republic First’s future,’’ he added.
Norcross and Braca also highlighted their five public proposals to inject capital in Republic First at prices ranging from $2.35 to $5.20 since starting agitating for changes last year in January.
‘‘In addition to the damaging decision to invest assets in long-term securities while interest rates were rising, in the last fifteen months, a steady drip of revelations have come out about the company [Republic First], including the disclosure of hundreds of thousands of dollars of related party transactions, the award of golden parachutes to executives and an ongoing inability to file required public disclosures,” said the activists.
In a statement to Insightia, Republic First said it has engaged in good faith with the Norcross-Braca Group to pursue a compromise that balances the interests of all its stakeholders.
“The group’s latest round of false and misleading statements is old news, repetitive and is particularly unproductive given our most recent offer to add its only identified director candidate – Mr. Braca – to Republic’s Board, provide seven-figure expense reimbursement and allow them to nominate an independent director,” the company stated.