ACQUISITION OF ROEBLING FINANCIAL CORP, INC. (Tables)

9 Months Ended

Sep. 30, 2013

ACQUISITION OF ROEBLING FINANCIAL CORP, INC. [Abstract]

Summary of purchase consideration

The following table summarizes the purchase of Roebling as of July 2, 2013:

	At July 2, 2013
	(in thousands, except per share data)
Purchase Price Consideration in Common Stock
Roebling common shares settled for stock		843,058
Exchange Ratio		0.364
TF Financial Corporation shares issued		306,873
Value assigned to TF Financial Corporation common share	$	25.00
Purchase price assigned to Roebling common      shares exchanged for TF Financial				$	7,672
Purchase Price Consideration - Cash for Common Stock
Roebling shares exchanged for cash		843,478
Purchase price paid to each Roebling common      share exchanged for cash	$	8.60
Purchase price assigned to Roebling common      shares exchanged for cash					7,254
Total Purchase Price					14,926
Net Assets Acquired:
Roebling shareholders’ equity	$	16,461
Adjustments to reflect assets acquired at fair value:
Investments		2
Loans
Interest rate		932
General credit		(1,069	)
Specific credit - non-amortizing		(325	)
Specific credit - amortizing		(198	)
Eliminate allowance for loan losses		1,214
Core deposit intangible		553
Owned premises		(976	)
Leased premises contracts		33
Deferred tax assets		(276	)
Other assets		280
Adjustments to reflect liabilities acquired at fair value:
Time deposits		(440	)
FHLB advances		(51	)
					16,140
Purchase gain resulting from acquisition				$	1,214

Net assets as of the acquisition date

The following condensed statement reflects the values assigned to Roebling’s net assets as of the acquisition date:

	At July 2, 2013
	(in thousands)
Total purchase price				$	14,926
Net assets acquired:
Cash	$	4,081
Investment securities		37,339
Loans		102,026
Premises and equipment, net		2,154
Core deposit intangible		553
Other assets		2,625
Time deposits		(49,061	)
Deposits other than time deposits		(78,689	)
Other liabilities		(4,888	)
					16,140
Purchase gain on acquisition				$	1,214

Composition of the loans acquired

The following table reflects the composition of the loans acquired as well as the fair value adjustments made:

	At July 2, 2013
	Loans acquired with no credit quality deterioration		Loans acquired loans with credit quality deterioration		Total
	(in thousands)
Residential
Residential mortgages	$	54,965	$	21	$	54,986
Commercial
Real estate-commercial		13,262		—		13,262
Real estate-residential		5,143		356		5,499
Real estate-multi-family		1,595		331		1,926
Commercial and industrial loans		308		—		308
Consumer
Home equity and second mortgage		25,847		89		25,936
Other consumer		109		—		109
Total	$	101,229	$	797	$	102,026

The following table contains the fair value adjustments on loans acquired without significant credit deterioration:

Fair value of loans acquired not accounted for under ASC 310-30	At July 2, 2013
	(in thousands)
Contractual amount of acquired loans at acquisition	$	101,365
Contractual cash flows not expected to be collected (general credit valuation)		(1,068	)
Expected cash flows at acquisition		100,297
Interest rate fair value adjustment		932
Total	$	101,229

The following table contains the adjustments on loans acquired with credit deterioration:

Fair value of loans acquired accounted for under ASC 310-30	At July 2, 2013
	(in thousands)
Contractual amount of acquired loans at acquisition	$	1,320
Contractual cash flows not expected to be collected (non-accretable yield)		(325	)
Expected cash flows at acquisition		995
Interest component of expected cash flows (accretable yield)		(198	)
Total	$	797

Estimated future amortization expense

As of September 30, 2013, the current year and estimated future amortization expense for the core deposit intangible was as follows:

	At September 30, 2013
	(in thousands)
2013	$	76
2014		91
2015		80
2016		70
2017		60
2018		50
2019		40
2020		30
2021		21
2022		10
	$	528

Schedule of proforma information

The table below has been prepared for comparative purposes only and is not necessarily indicative of the actual results that would have been attained had the acquisition occurred as of the beginning of the periods presented, nor is it indicative of future results. Furthermore, the unaudited pro forma information does not reflect management’s estimate of any revenue-enhancing opportunities nor anticipated cost savings as a result of the integration and consolidation of the acquisition. Merger and acquisition integration costs and amortization of fair value adjustments net of the related income tax effects are included in the amounts below, but any purchase gain has been excluded.

	Actual from Acquisition Date
	Through September 30, 2013
	(in thousands)
Net interest income	$	1,119
Noninterest income		123
Net loss		(840	)

	Pro Formas
	Three Months Ended  September 30,				Nine Months Ended  September 30,
	2013		2012		2013		2012
	(in thousands, except per share data)
Net interest income	$	7,759	$	8,698	$	23,917	$	22,130
Noninterest income		832		1,060		4,432		3,289
Net income		661		1,410		3,835		4,045
Pro forma earnings per share:
Basic	$	0.22	$	0.46	$	1.26	$	1.33
Diluted	$	0.22	$	0.46	$	1.26	$	1.33