Republic First Bank drama continues as two sides trade more words

Matthew Fazelpoor//February 8, 2023

The ongoing saga at Republic First Bank heated up again this week as the company and an activist investor group, led by George Norcross, exchanged more barbs.

As NJBIZ reported last month, the bank’s long-delayed annual shareholder meeting was once again pushed back after a judge issued an order postponing the event until May 31, while he works through an injunction filed in November by the Norcross-Braca Group investor group that challenged the reduction of the bank’s board, among other contentions.

Since the ruling, which effectively moved the standoff to its next chapter, the rhetoric continues to ramp up between the two sides. (See the bottom of this story for an index of NJBIZ’s complete coverage of this ongoing story.)

On Feb. 6, Republic First called out the Norcross-Braca Group, saying while it claims to care about the bank’s constituencies, its actions indicate a “fundamental disregard for fellow shareholders and stakeholders.”

“The group is running a disruptive, misleading and self-serving campaign that appears to be all about positioning George Norcross to make a control-like investment in Republic First on his preferred terms and rushed timeline,” the company said in a statement. “As evidence, the group refuses to halt public attacks and sign a standard non-disclosure agreement to participate in a full and fair strategic review process that it initially welcomed. This posture – which is consistent with Mr. Norcross’s actions in other situations – is the case despite the company sharing preliminary feedback and trying to facilitate a dialogue.”

At the center of some of the back-and-forth was a recent $100 million offer made by the Norcross side to inject capital to improve the bank’s operations in exchange for a just-under 50% stake and two board seats. The group claims that the offer was ignored by the bank’s board, as previous offers had been as well.

Meanwhile, Republic First accused the Norcross-Braca Group of relying on disingenuous claims and litigation to try to force it to accept the investment proposal, which the bank says requires nearly $10 million in expense reimbursements and provides the group the right to appoint or approve nearly half of the bank’s board.

“In contrast, other parties have signed customary non-disclosure agreements and are working through our process in a normal fashion,” Republic First continued in its statement. “We suspect the group would agree to participate in our process – rather disrupt it from the outside – if it actually believed its proposal was competitive and viable.”

The Norcross-Braca Group shot back the following day calling out the bank and its board, claiming they are attempting to shift responsibility for its failures.

“The claims made in today’s Republic First statement are clearly just another attempt to deflect attention from its own failures because the record is clear: we have repeatedly offered serious, substantive proposals to make a major investment and inject badly needed capital into the company, but all we have been met with is silence and legal gamesmanship,” said Greg Braca in a statement on behalf of the group, which also includes Philip Norcross. “Meanwhile, the company continues to flounder.”

Braca also countered Republic First’s quote about disregarding the shareholders and stakeholders.

“The issue isn’t that we ‘claim to care about all of Republic First’s constituencies,’ as today’s release states, but rather that the deeply conflicted board does not,” said Braca. “We find it astounding that instead of working with us to develop a plan for solving the bank’s pressing needs – capital, earnings and leadership – the board has now stalled for over one year.”

Braca said that Republic First alleges that the group has been running a misleading campaign but does not specify what things they’ve said that are misleading.

“Why is that?” Braca asked, rattling off a laundry list of points of contention and questions from his group, such as the underperforming stock, party-related transactions, a costly accounting error, failure to complete U.S. Securities and Exchange Commission filings, threats of delisting from the Nasdaq Exchange, and more.

Braca closed the statement by also countering the claim by Republic First that the group refuses to sign a standard NDA.

“We submitted a perfectly fine NDA, which we have today released, but they insist that we abandon all our work and efforts in order for an opportunity to have a single meeting with them, a meeting where they could just tell us nothing,” said Braca. “That’s not something anyone in our position would do.”

Republic First closed its statement by saying the reality is that it is already the beginning of a new day at the bank.

“We have a rebuilt leadership team and refreshed board that has additive skills, relevant experience, and meaningful shareholdings. We are making initial progress in optimizing our expense base, leveraging new technology and engaging with prospective capital and strategic partners – all of which we believe will support future profitability and long-term value for all our shareholders, employees, and customers. We look forward to sharing updates on our progress in the coming weeks and months.”

An April hearing has been set for the injunction.