"FREEDOM LIVES," writes Vernon W. Hill II, founder of the former Commerce Bank, from his parttime exile in London, where he runs Metro Bank Plc, in response to my query about the improved climate for founders like him under President-elect Donald Trump in Washington.
Hill made more than $300 million in Commerce's sale to TD Bank back in 2007. It wasn't his idea to sell: He'd been obliged to step down as boss of the bank he founded by U.S. bank regulators, who had stalled his company's rapid growth. Hill's later attempt to combine Philadelphia's Republic Bank, with his former Commerce Bank of Pennsylvania, was also stymied by Washington.
But it's a new day in D.C. Trump, Hill's sometime golfing buddy who helped Hill promote Commerce's New York branches by taunting rivals Citigroup and JPMorgan, is the next President. Steve Mnuchin, the veteran Goldman Sachs banker who made a fortune investing in the late mortgage mess, is the new Secretary of the Treasury, overseeing bank regulators. And Wilbur Ross, a Hill admirer with investments in Philadelphia-area banking and steel mills, is Trump's choice for Secretary of Commerce.
Is it time Hill gets back into U.S. banking with both feet? I asked. That's when he wrote me about freedom.
More Ross: Dubbed the "King of Bankruptcy," he has specialized in buying, cutting costs and finding new owners at higher prices for troubled American industries. That includes, among others:
- W.L. Ross & Co. is 22.5% owner of Sun National Bancorp, the Mount Laurel company that is the largest bank in South Jersey. Ross's $50 million investment in 2010 helped rescue Sun from its own bad loans. His shares are now worth around $90 million.
The deal put Ross in regular contact with some of the most powerful people in New Jersey. Sun's board was headed by Bernie Brown, whose family expanded from Vineland retail real estate to build up the Cherry Hill-based NFI (National Freight) trucking and logistics group.
Brown's sons Sidney and Jeffrey remain on the Sun board, whose new chairman is New Brunswick lawyer Anthony R. Coscia, who chairs the Amtrak board and formerly headed the powerful New Jersey Economic Development Administration and the Port Authority of New York and New Jersey.
Ross serves on the Sun bank board, where fellow directors included Philip Norcross, brother of South Jersey Democratic leader, Cooper Health chairman and insurance broker George Norcross and U.S. Rep. Donald Norcross (D-NJ). Phil Norcross stepped down from the Sun board earlier this year.
Though its share price still lags, Sun has been profitable every quarter since spring 2015. Last winter the U.S. Treasury's bank regulator (OCC) ended a Consent Order that had taken the bank to task for former mortgage law violations.
- Ross was previously (until 2014) a director of Ocwen Financial Corp., a Florida-based mortgage-servicing firm that in 2011 agreed to pay more than $2 billion to federal regulators and 49 states for alleged home foreclosure irregularities. Most recently the firm agreed to pay $30 million to settle alleged violations of federal housing finance rules. Ross was sued last year by Ocwen investors who alleged he improperly sold shares in advance of a price decline.
- Ross reorganized Bethlehem Steel Corp., including the former Lukens mill in Coatesville and the Alan Wood mill in Conshohocken, and sold them with other works to global steel giant ArcelorMittal, where he also serves as a director.
Ross paid the equivalent of $3 a share for the U.S. mills in the early 2000s, after they had already cut payroll and frozen worker pensions, and faced expected bankruptcy. He folded the mills into a single company, sold it to the European-Asian ArcelorMittal group for $42 a share, and joined the ArcelorMittal board.
At the time of the Sun investment, Ross told me he wasn't planning to create one big bank as he did with the steel companies; rather, he was making opportunistic investments in depressed-price lenders he expected could boost profits.
- Later in 2010, Ross joined banker Hill at a London kick-off party for Hill's current company, U.K.-based Metro Bank Plc.
At the time, Ross told me his friends, international real estate developers Richard LeFrak and the Reuven brothers, were backing Hill's U.K. bank.
Hill "has an interesting concept," Ross said.
"The question is whether his promotional flair and service concept will produce enough customers to offset the extra operational cost of providing the extra space and of being a subtenant in the space," Ross concluded.
U.S. regulators had pressured Hill to leave Commerce after challenging the close relationships between his family's title, real estate and design companies and the bank. Hill maintained the companies worked well together and paid market prices for services, as the law required. I saw that firsthand when I visited Metro in London in 2011.
Regulators also killed, by delaying, Hill's post-recession plan to merge the former Harrisburg-based Metro Bank (previously Commerce Bank of Pennsylvania) with Philadelphia's Republic First Bank, where Hill remains a leading investor. Bank investors tell me this was typical for the times, when regulators were delaying or preventing most deals. Metro of Harrisburg was later sold to First National Bank of Pa. (Pittsburgh) for $474 million.
Like Ross, and Trump, Hill is in his 70s. Will the new administration make space for another attempt at a Hill banking empire in the U.S.? (Revised)