Investor cancels capital infusion for Republic First

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The drawn-out and often contentious saga involving Republic First Bancorp in Philadelphia and an activist group hit another twist this week. A planned capital raise fell through.

The Norcross-Braca group — led by insurance executive George Norcross, lawyer Philip Norcross and former TD Bank CEO Greg Braca — had for the past two years complained of the $6 billion-asset Republic First's substandard profitability and stock performance. The activist investor had pushed for management and board changes, among other efforts for strategic shifts and transparency, and ultimately last September announced a deal to invest at least $35 million in common stock and securities in the bank.

That plan, had it come to fruition, would have bolstered Republic First's capital position and ended a lengthy Norcross-Braca proxy contest. However, the deal required the bank to first raise $40 million from third-party investors, issue a long-delayed 10-K regulatory filing for 2022 and hold an annual meeting with shareholders.  

In a statement issued late Wednesday, the Norcross-Braca group cited the bank's "failure" to "take actions and satisfy closing conditions," including filing the 10-K and hosting the meeting, as reasons to terminate the deal. The group noted the deadline for completion of the deal had previously been extended from Nov. 30 to today. The group did not provide more detail and said it would not comment further on the nixed agreement.

The Norcross-Braca group has wrestled for control of Republic First since early 2022. 

Republic First, the parent of Republic Bank, did not delve into detail either. But it confirmed the deal was canceled in a regulatory filing and provided an emailed statement to American Banker noting that it was not reliant on the Norcross-Braca capital raise.

"Our strategic plan has been designed to be executed even without the investment announced last fall. We have continued to maintain the bank's adequately capitalized position, and believe we have a strong deposit base and ample liquidity," Republic First said.  

"As previously disclosed," the company added, "we engaged Wolf & Company for 2022, 2023 and 2024 to support us in getting current with our annual and periodic financial reporting obligations and believe this is key for us and investors in considering opportunities for growth capital in the future."

Republic First has made multiple attempts to raise capital over the past year and shore up its finances. These included an early 2023 plan to raise a total of $125 million in partnership with Castle Creek that was later canceled.

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These efforts followed infighting on the bank's board and changes in leadership. Current President and CEO Thomas Geisel joined Republic First in December 2022 to lead a turnaround. Last year, he announced plans to quit originating mortgages, streamline commercial lending in New York and curb expenses elsewhere. 

In a statement late last year, Geisel said "our team continues to work on making sustainable process and operational efficiency improvements, while maintaining Republic Bank's focus on providing a high level of service and responsiveness for our customers and communities."

Republic First posted a fourth-quarter loss of $42.7 million, according to its latest call report. For the quarter ended Sept. 30 of last year, the company reported a loss of $29.8 million.