Norcross-Braca Group challenges Republic First/FDIC deal

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The basics:

• Norcross-Braca Group files objection to FDIC settlement in Republic First case
• Group cites $1B in shareholder and public losses from bank’s collapse
• Separate lawsuit targets former directors for alleged mismanagement
• FDIC seized Republic First in April 2024; assets acquired by Fulton Bank

The Republic First Bank situation is once again simmering.

Just before Labor Day weekend, the Norcross-Braca Group – comprising George Norcross III, Gregory Braca and Philip Norcross – filed an objection to the proposed settlement agreement between Republic First Bancorp Inc. (former parent company) and the Federal Deposit Insurance Co. in the United States Bankruptcy Court for the Eastern District of Pennsylvania. The activist investor group owned nearly 9% of the shares of the now-defunct bank.

NJBIZ extensively chronicled the proxy fight between the Norcross-Braca Group and Republic First’s board, which was often contentious (see a timeline below). It eased briefly with a deal for the group to invest $35 million as part of a capital raise in exchange for board seats, a reconstitution of the board and more.

However, that deal fell apart in February 2024. The Norcross-Braca group cited the failure of Republic First to take actions and satisfy required closing conditions, such as filing its 2022 Form 10-K and scheduling the required shareholder meeting.

Then in April 2024, FDIC regulators seized Republic First Bank, which Fulton Bank acquired.

Last month, the former parent company and the FDIC reached a settlement that would allow it to keep about $250,000 in funds to pursue a $9 million insurance claim.

Seeking clarity

In the filing, the Norcross-Braca Group says the settlement does not provide sufficient protection for the shareholders and others who they allege were harmed by the mismanagement of the bank by its board members.

The group also filed a separate derivative action against FRBK Directors Andrew Cohen, Harry Madonna, Lisa Jacobs, Harris Wildstein, Benjamin Duster IV and Peter Bartholow for what they allege as “gross management failures.” The move reignites the intense feud that marked the proxy fight with the group and board often at odds.

“[The Norcross-Braca Group] believe(s) the proposed Settlement Agreement lacks necessary clarity for the parties, and the Court, to determine whether the settlement is reasonable and in the best interest[s] of impacted parties. … Specifically, it remains unclear to what, if any, extent the terms and conditions of the Settlement Agreement impact [ongoing lawsuits] and whether any component of the proposed settlement could have the unintended consequences of diluting the merit of the meritorious claims in those suits,” according to the filing.

It also notes that the bank, shareholders and public have suffered losses of approximately $1 billion — as it was the sixth-largest failed bank by total assets since 2010. And they allege that the FDIC has done nothing to protect those parties despite knowing about the ongoing management failures.

“During the year-and-one-half period the shenanigans outlined in [the lawsuit] leading to the bank’s seizure were occurring, FDIC did nothing,” the release said. “To date, the FDIC has done nothing to bring the perpetrators of these shenanigans to justice or to make them account financially for the harm they have caused to the bank, the shareholders, and the public.”

The FDIC as well as Republic First Bancorp’s counsel did not immediately respond to a request for comment.

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