Skip to content

'Fair price' for 'dated' bank: Nat Penn to pay $138M for 3d Fed

Allentown-based NatPenn spreads through Phila suburbs

    by Joseph N. DiStefano
    Published 

National Penn Bancshares Inc., Allentown, says it will pay $42 a share (for 40% of outstanding shares) or give 4.22 shares of NatPenn stock (for the rest), to purchase TF Financial Corp. of Newtown, Bucks County, and eighteen 3rd Fed Bank branches in Bucks and Mongomery Counties, Northeast Philly, the Trenton area and Burlington County, NJ, in a deal worth $138 million.

National Penn has been saying for years that it hoped to buy more banks, but has had a hard time landing deals, wrote analyst Matthew Schultheis in a report to clients at Boenning & Scattergood. He called 3rd Fed's offices "a little dated" and "not the best franchise," but concluded that "overall the deal makes sense" at the price.

The price represents a record high for TF shares, which previously peaked around $35 in 2003, fell in the late 2000s recession, and had recently risen above $30. Kirk Wycoff, a former bank CEO turned bank investor at Philadelphia-based Patriot Financial Partners, said the price works out to "161% of book value, after adjusting for TF excess capital," and called that "a fair price for a bank that was an average performer. Good deal for National Penn."

National Penn has nearly $9 billion in assets and more than 100 branches, mostly in the Lehigh Valley, the Reading area, Northeast Philadelphia and the city's northern suburbs. 3rd Fed will add $609 million in loans and a total of $846 million in deposits and investment assets.

In trading today TF shares zoomed toward the deal price, enriching major shareholders such as bank-stock investors Thomson Horstmann & Bryant, Joseph Stilwell and Lawrence B. Seidman, as well as a company employee-stock ownership program that owns 9% of the shares, plus inside owners such as directors Albert M. Tantala Sr. and Carl F. Gregory, chairman Robert N. Dusek, and ceo Kent C. Lufkin.

The deal will increase National Penn's focus on Philadelphia's northern suburbs and add its first branches in New Jersey, in the Trenton area and northern Burlington County. Nat Penn and other regional banks compete in the region with Wells Fargo, PNC, Citizens, TD and other large multistate lenders. Lawyers at Reed Smith advised National Penn.