PhillyInc: Roebling had few options but sale to TF Financial

Just before 2012 ended, TF Financial Corp. announced that it would acquire tiny Roebling Financial Corp. for $14.5 million.

I viewed it then as simply another example of a small fish in the local banking sector swallowing a minnow.

TF, which operates as 3rd Fed Bank in 13 locations in Philadelphia, Bucks, and Mercer Counties, had assets of $716 million as of March 31. Roebling Bank had just five branches in Burlington and Ocean Counties and assets of $156 million as of March 31.

After all, other midsize community banks have been absorbing smaller financial institutions over the last six months to expand.

Bryn Mawr Bank Corp. agreed to buy the four-branch MidCoast Community Bancorp Inc. in Delaware for $33 million in March. Investors Bancorp Inc. announced it would buy the 26-branch Roma Financial Corp. in New Jersey in December and the four-branch GCF Bank in Gloucester County in April.

However, a proxy statement being sent out to Roebling shareholders makes clear that Kent C. Lufkin, CEO of Newtown-based TF Financial, pretty much knew in February 2012 what he would be buying - because he'd been Roebling's CEO from 1996 to 2000.

That same proxy lays bare how hamstrung Roebling was as a result of enforcement actions by federal regulators. Like other banks, Roebling made some bad lending decisions and struggled during the aftermath of the U.S. financial crisis that erupted during 2008.

In June 2009, the small bank entered into a supervisory agreement with the federal Office of Thrift Supervision that prohibited it from making many types of nonresidential loans.

The OTS found itself out of the oversight business with the passage of the Dodd-Frank Act in 2010. But Roebling's new regulator, the Office of the Comptroller of the Currency, kept the bank under many restrictions in a formal agreement in July 2012. In addition, the OCC imposed higher capital requirements on Roebling, which the bank said limited its ability to grow.

Finally, another bank regulator, the Federal Reserve Bank of Philadelphia, restricted Roebling's board in December from paying dividends to shareholders.

While Roebling's board sought other bidders for the bank, TF was the only one willing to pay Roebling shareholders $8.60 per share in cash and/or stock. Those shareholders will gather June 17 to make it official.