Republic First Bank’s leadership has abandoned plans for a $125 million private equity placement and set its sights on a new long-term strategy.
The bank’s CEO, Thomas Geisel, who took over in the role in December 2022, wrote to shareholders last week and admitted that the previous leadership had participated in an “ill-advised” expansion of its physical branch network as well as residential mortgage portfolio, putting the organization in a difficult position as interest rates have risen.
“The former executive team also failed to maintain appropriate internal controls related to a systems conversion in June 2022, leading to delays with our audits and financial reports,” he added.
However, he maintained that the new leadership team was “neither discouraged nor overwhelmed by these challenges”, and planned to focus on core businesses.
Republic First Bank has also scrapped plans to raise $125 million from an equity injection from two private equity companies.
Cohen Private Ventures, which already has a stake in the bank, and Castle Creek Capital had initially planned to invest in the bank earlier this year, but the initiative has been shelved as all parties decided that it was unlikely that other investors would join them on the same terms.
Despite this, Tony Scavuzzo, managing principal of Castle Creek, said his company was still “impressed with how the new Republic First management team is managing the bank in a very challenged environment”. “We look forward to following them as they continue to execute on their strategic plan,” he added.
As well as previous initiatives enacted by Republic First to wind down its mortgage origination business, reduce branch opening hours and review its real estate portfolio, Geisel and new board chair Andrew Cohen set out the next stages of the bank’s journey.
Republic First Bank will focus on its core banking operations on key markets such as Metropolitan Philadelphia and Southern New Jersey, and work to reduce expenses and improve the bank’s liquidity position.
It also plans to make better use of technology to support customers and other stakeholders.
“We have made headway this year and will continue to do the heavy lifting required to realize the potential of our plan,” Geisel and Cohen wrote. “We have a strong foundation, an actionable strategy and the right team in place to improve value for all Republic stakeholders.”