The Third Circuit U.S. Court of Appeals will allow a group led by shareholder activist George E. Norcross III to remove Vernon W. Hill as the chairman of Republic First Bancorp in a ruling that is comparable to a change of party control in a special election.
The move appears to settle a flourishing grudge match between Norcross, one of New Jersey’s most powerful political leaders, and Hill, his onetime mentor.
Norcross, along with his brother, Phil, and former TD Bank U.S. CEO Gregory Braca, had announced in January their intent to increase their holding of Republic First stock, blaming Hill for the company’s poor performance. The Norcross group had increased their stake to 9.6%, the largest non-institutional, non-insider shareholder.
The three had been actively involved in litigation against Hill and the bank in May when Theodore Flocco, a board member allied with Hill, suddenly died. The new math gave Norcross and his ally, Harry D. Madonna, a 4-3 majority and he used it to fire Hill, whom they had accused of improper related-party transactions.
Today’s decision by the Third Circuit reversed a ruling by a U.S. District Court Judge to appoint a custodian to manage operations of the chain of 32 banks in New York, New Jersey and Pennsylvania.
The three-judge panel found that there were no “solid grounds for appointing a custodian.
“The bylaws obligate a majority of the directors in office to fill the vacancy resulting from Flocco’s death, regardless of any quorum requirement,” the opinion stated.
Since the Norcross-Braca-Madonna faction “make up a majority of the directors in office, they can fill the vacancy, the judges decided.
“And then with control of a full quorum, they can ratify past acts and transact business on behalf of Republic First – at least until the upcoming annual shareholders’ meeting, where the shareholders will have an opportunity to alter the board’s composition,” the court said. “The fact that the (Norcross-Braca) Madonna directors’ current conquest of the board came through a sad and unexpected event – rather than through a shareholder vote – does not justify judicial intervention.”
Republic First. The Bylaws a majority of the directors in office to fill the vacancy resulting from Flocco’s death, regardless of any quorum requirement. Because the Madonna Directors make up a majority of the directors in office, they and then “shall” , with control of a fill the vacancy full quorum, they can (App. at 45) , ratify past acts and transact business on behalf of Republic First at least until the upcoming annual shareholders’ meeting, where the shareholders will have an opportunity to alter the Board’s
Hill, who founded Commerce Bank in 1973, was a pioneer in retail banking and among the first to open banks on nights and weekends. Norcross joined Commerce in the 1980s and ran Commerce Insurance.
But the relationship did not last beyond the sale of Commerce to TD Bank, with Norcross working a deal purchasing the insurance arm from TD Bank and turning it into Conner Strong & Buckalew.
