UPDATED: His Commerce Bank is gone for good, but Vernon Hill is back as a force in local banking. Pennsylvania Commerce Bancorp is paying $10 a share for Harry Madonna's First Republic Bank of Philadelphia, in which Hill is a major investor, to form Metro Bank, to which Hill will be a consultant and a significant shareholder. Metro's logo: a big red M, replacing the big red C that marked door handles, lapel pins and all things Commerce in the old days. Release on Metro Bank here.
Hill's ambitions go beyond the local: He also used the name "Metro Bank" in rolling out plans for a new, middle class-oriented British branch bank earlier this year. PhillyDeals link here.
Hill founded Commerce Bancorp of Cherry Hill in the 1970s; it was bought by TD Bank last year, after he was forced out by his board after a long-running dispute with the federal Office of the Comptroller of the Currency (OCC) over Commerce's use of the Hill family's design and site location companies slowed the company's rapid expansion. OCC also limited PA Commerce's use of insider-controlled companies.
PA Commerce was Commerce Bancorp's franchise in Harrisburg and central PA, an independent company that paid Commerce Bancorp for the use of its name, logo, systems and strategies. Just last week, PA Commerce dropped OCC as its regulator and switched to the Pennsylvania Banking Department and the FDIC. It also ended the insider-limitations agreement with the OCC, notes Sandler O'Neill + artners managing director Joseph Fenech in a report to clients today. That means Hill's now free to take a more active role in Metro Bank.
Both banks will adopt the Metro name next year. The merger comes two days after TD dropped the Commerce name from the branches it bought last year. "It took us 34 years to build a great brand and only 10 months for TD to destroy it," Hill told me before the event. He blamed "Canadian corporate arrogance" -- and praised Pennsylvania Commerce chairman and chief executive Gary L. Nalbandian for soldiering on with the Commerce name.
Commerce "will live on in Metro Bank," Nalbandian said in the statement today. "We are at the dawn of becoming America's next great bank." He'll be chairman of Metro Bancorp and run the combined company.
The "tax-free" merger "is going to change the banking landscape," said Madonna, who'll be vice-chairman. "Our team is committed to embracing Pennsylvania Commerce’s renowned retail model.”
Hill, a consultant for Republic First, "will continue as a consultant with the combined company and as one of its largest individual shareholders." Keefe Bruyette & Woods advised PA Commerce in the deal; Sandler O'Neill & Partners LP advised Republic.