Republic First Bancorp and the Norcross Braca Group have signed of a non-binding letter of intent detailing a significant investment by Norcross in the struggling bank.
Norcross will invest at least $35 million as part of a $75 million capital raise.
The agreement is conditional upon Republic raising $40 million of additional capital from third-party investors.
As part of the agreement, Norcross will designate two directors on the Republic Board, who will work alongside two candidates put forth by the additional investors, two new independent directors, the Republic’s CEO Thomas Geisel and two legacy independent directors.
The agreement also depends upon the departure of the other legacy directors, among other provisions.
Republic reported a loss of $9.7 million in the first three months of 2023, which included a $3.1 million hit from an investment in collapsed Signature Bank.
Geisel said: “In addition to strengthening our balance sheet, we anticipate that this additional capital will provide greater flexibility to invest in the business and deliver extraordinary service to our loyal customer base and depositors.”
In May, Republic announced it would overhaul its lending businesses in a bid to recover from its losses in the first quarter of 2023. It halted mortgage origination and announced it would be “streamlining” its commercial lending businesses in New York.
The bank then abandoned its plans for a $125 million private equity placement in July, setting its sights on a new long-term strategy.
Cohen Private Ventures, which already has a stake in the bank, and Castle Creek Capital had planned to invest in the bank at the start of 2023 with the provision of an equity injection, but the initiative was shelved.