Commerce Bancorp, under fire for its business dealings with insiders, on on Friday said that Chairman and Chief Executive Officer Vernon Hill is leaving the company, and that it has settled two federal regulatory probes.
The Cherry Hill-based company also said the banking unit has agreed to governance changes in a consent order with the Office of the Comptroller of the Currency. The parent also signed a memorandum of understanding with the Federal Reserve Bank of Philadelphia. Commerce had on June 12 said regulators expected it to settle the probes.
Commerce did not in a press statement say who will replace Hill at Commerce Bancorp. A spokesman was not immediately available for comment.
"It's shocking. I'm very surprised that Vernon stepped down," said Mark Fitzgibbon, director of research at Sandler O'Neill & Partners LP. "He had been on the road marketing the company to investors after the bank said it expected to settle things. That makes you wonder whether something came up in the last two weeks that prompted him to step down."
Commerce shares rose $2.64, or 7.8 percent, to $36.45 in pre-market trading on speculation the company might be a takeover target. "If they put up a 'for sale' sign, there will be a line around the block," said Fitzgibbon. "Any U.S. or foreign banking behemoth would be interested in this company."
The governance changes include a ban on future real estate and vendor transactions with officers, board members and their relatives; termination, revision or review of prior transactions; creation of a board-level real estate review committee; and a restructuring of the board's audit and nominating and governance committees.
Commerce has previously disclosed property leases with entities in which Hill was a partner, and that it had bought services for 34 years from an architectural design business run by Hill's wife, Shirley. It had also disclosed a variety of other business relationships with insiders.
Separately, the company said it is creating an office of the chairman for Commerce Bank, comprising Dennis DiFlorio as chairman, Robert Falese as president and chief executive, and Douglas Pauls as chief financial officer. DiFlorio was most recently the bank's president, overseeing retail banking, while Falese was president of commercial and investment banking.
Commerce ended March with 437 branches in several mid-Atlantic states and Florida, and had $47.4 billion of assets and $44 billion of deposits.