Roma Bank has been acquired by Short Hills-based Investors Bank in an all-stock deal announced on December 19. Under the deal, Investors will acquire Robbinsville-based Roma Financial Corp, the parent company of Roma Bank and its holdings — $1.84 billion in assets and $1.5 billion in deposits — for some $452 million.
The majority of the funds — about $338.5 million — will be used to buy shares held by Roma Financial, and $113.5 million will buy privately held Roma shares.
Meanwhile, legal action may be imminent as a result of the deal. New York-based law firm Levi & Korsinsky has announced it is considering a class action suit.
In a letter on its website, Levi said it is investigating whether the Roma board of directors didn’t adequately shop the company before entering into the Investors deal, thus underpaying for Roma shares and unlawfully harming Roma stockholders.
Shareholders seeking information or who wish to join the action are asked by the law firm to go to http://zlkdocs.com/ROMA-Info-Request-Form-552.
Under the deal, each outstanding share of Roma Financial common stock will be converted into 0.8653 shares of Investors common stock upon completion of the merger. The transaction is valued at $15 per Roma Financial common share based on Investors Bancorp’s average closing stock price for the 10-day trading period ending on December 18.
Also, Investors would own 100 percent of Roma’s shares, and all 26 Roma branches will be renamed Investors Bank. Roma Bank has branches in Mercer, Burlington, Ocean, Camden and Middlesex counties. Roma has 302 full-time and 64 part-time employees. Officials did not specify how the merger would affect existing Roma employees and branches.
It is anticipated that RomAsia Bank, a subsidiary that is 91 percent owned by Roma Financial, will merge into Investors Bank, according to a release.
If the merger is successful, Investors Bank will have $8.9 billion in deposits and $14.1 billion in assets. That would make it the largest New Jersey-headquartered bank by measure of deposits held in the state, and the second-largest by measure of assets.
Roma Financial has faced difficulties in recent months as a result of low-interest rates, delinquent loans, and tougher banking regulations. Peter Inverso, Roma president and CEO, who is slated to retire next year, called the bank’s most recent earnings, announced November 5, “disappointing,” adding that nine months of profits were severely impacted by charges the bank had to take over troubled loans and related costs. The bank also announced in October that federal rules were forcing it to cut in half its regular quarterly dividend to 4 cents a share.
Roma faced a significant challenge when the federal Office of the Comptroller of the Currency in September ordered the bank to improve its credit review process, compliance with federal anti-money laundering laws, internal audit procedures, and oversight of information technology.
According to Inverso, the decision to merge was one of two options being considered by bank officials. The other was to convert all of the company’s shares to publicly traded stock as a way to raise capital. In that case, Roma would have had to deal with increased oversight and regulations from the federal government.
“Our board had a responsibility to evaluate and consider the offer from the standpoint of their governance obligations to the shareholders,” said Inverso. “In doing that, you have to look at what the opportunities are for our shareholders and our employees.”
Under the terms of the merger agreement, three members of Roma Financial’s board of directors will be appointed to the board of directors of Investors Bank, with the remaining Roma board members serving on an advisory board. Current Roma Bank customers will become depositors of Investors Bank, and will have the same rights and privileges in Investors as if their accounts had been established with Investors Bank on the date they were established with Roma Bank.
“The Roma Bank branch network complements our presence in central and southern New Jersey and provides a strong foothold in the greater Philadelphia market,” said Kevin Cummings, Investors Bank president and CEO. “Roma Bank’s customers can look forward to an enhanced array of products and services delivered with the same high level of service Roma Bank provides.”
The deal will be the seventh that Investors has made since June 2008, said Cummings. During that same period, the bank nearly doubled in size, from $6.8 billion in assets to its current $12.2 billion now, and expanded to 102 branches.
“Investors is a well-managed, community-oriented institution which, like Roma Bank, distinguishes itself with its focus on customer service,” said Inverso. “The breadth of Investors’ product offerings will allow us to maintain, expand, and enhance services and products for our customers.”
The merger has been approved by each company’s board of directors and is anticipated to close in the second quarter of 2013, subject to the approval of Investor Bancorp and Roma Financial shareholders, and regulatory approvals.
Roma Bank was founded in 1920 as the Roma Building and Loan Association with $21,000 in assets with a small office in Trenton. According to the Roma website, “the bank’s founders were public-spirited citizens of Italian ancestry responding to the need to help fellow Italian immigrants become deeply rooted in their community through home ownership and sound thrift and savings habits.”
“In those pre-FDIC days, Roma Bank’s customers trusted the bank’s founders and knew their money was safe with Roma Bank. From its very beginning, it was evident that Roma Bank was all about building things,” says the website.
In 2006, Roma concluded its initial public offering and began trading on NASDAQ under the symbol “ROMA.” In 2010, Roma acquired Sterling Bank which increased the companies reach into southern Jersey.
The deal with Investors also includes a new 30,000-square-foot office building being constructed on Route 33 in Robbinsville Town Center adjacent to the Roma Headquarters. The three-story building, which will accommodate mixed use retail and office space, broke ground in October. Robbinsville Township is expected to occupy the building’s third floor.
Roma Bank (ROMA), 2300 Route 33, Robbinsville 08691; 609-223-8200; fax, 609-223-8303. Peter Inverso, president. www.romabank.com.