Republic First Bank will exit its legacy mortgage origination business and pull back on its New York City commercial lending business in an effort to focus on core business lines, the bank announced Friday.
CEO Thomas X. Geisel said both changes were “important steps” in a direction that would grow profitability and create value for all stakeholders.
Historically, Republic First primarily offered long-term jumbo loans at aggressive rates, but this no longer aligns with its preference for asset classes with shorter durations and better risk-adjusted returns, the bank said.
The cost of jumbo mortgage loans is also inconsistent with Republic First’s profitability enhancement strategy, the company said.
In the commercial lending space, the bank plans to focus more of its energy on the Philadelphia metropolitan market, where it’s headquartered.
As such, the bank said it made workforce reductions in its New York lending and credit teams, though it did not specify how many people were affected.
“While these were difficult decisions – especially because of the inherent reduction in force required – we strongly believe they are in the best interests of the Company and will allow us to build a strong foundation for the future,” Geisel said.
Geisel, a 20-year banking industry vet, joined Republic First as CEO in December. He replaced Harry Madonna, the bank’s founder and interim CEO, who had held the post since former CEO Vernon Hill resigned in July following a months-long power struggle within the bank.
Since taking his post, Geisel has had to contend with a case of mistaken identity for the bank: Its full name, Republic First Bancorp, is similar to that of San Francisco-based First Republic Bancorp, a startup-focused bank that saw notable losses following the collapse of Silicon Valley Bank in March and last week was seized by the Federal Deposit Insurance Corp. and acquired by JPMorgan Chase.
Eleven of the nation's largest banks infused First Republic with a $30 billion lifeline March 16; the following day, shares of Philadelphia’s Republic First fell as much as 28% — a decrease that marked Republic First’s worst single-day performance since 1994, according to Fortune.
“Republic Bank is very different [than startup-focused banks like First Republic and SVB]; we DO NOT lend to start-ups and are not involved in Crypto. We lend primarily to established businesses,” Geisel said in March. “We lend against collateral and cash flow, we lend to profitable companies that can service the debt, and we typically have personal guarantees. Our portfolio is not overly concentrated in any one specific class or industry.”