Griffin Advises Sterling Banks, Inc. in Merger with Roma Financial Corporation

Situation
Sterling Banks, Inc. (NASDAQ: STBK), $383.1 million in assets, is based in Mount Laurel, NJ, with 10 branches located in vibrant neighborhoods in the Philadelphia suburbs. At December 31, 2009, Sterling’s NPAs plus 90 days past due as a percentage of total assets were 6.24%, its Allowance as a percentage of NPAs plus 90 was 43.09% and its TCE/TA was 3.87%.

Solution
Sterling’s Board engaged Griffin Financial Group to explore a substantial capital infusion or sale. Griffin ran a competitive process, resulting in the announced merger between Sterling and Roma Financial Corporation (NASDAQ: ROMA), a $1.31 billion asset, 15 branch thrift based in Robbinsville, NJ. At December 31, 2009, Roma’s NPAs plus 90 days past due as a percentage of total assets were 1.32% and TCE/TA was 16.44%.

Terms of Agreement

  • Sterling will merge into Roma in exchange for a cash payment to Sterling shareholders of $2.52 per share for each share of Sterling common stock outstanding
  • Sterling’s NPAs, inclusive of troubled debt restructurings, may not exceed $30.0 million for the period from December 31, 2009, through the transaction’s closing date. In addition, Sterling’s TCE must equal at least $9.9 million on closing date. At December 31, 2009, NPAs were $23.9 million and TCE was $14.2 million
  • The merger is subject to regulatory approval and the approval of Sterling’s shareholders

Market Data

  • The closing price of Sterling’s common stock on Tuesday, March 16, 2010, was $1.80, which is 70% of its tangible common equity per share as of December 31, 2009
  • Based on preliminary December 31, 2009 information, the transaction price represents a 4% premium to tangible book. Based on Sterling’s March 16 closing price of $1.80, the one-day premium is 40.0%. Based on Sterling’s February 17 closing price of $1.32, the one-month premium is 90.9%.

For more information on this transaction, please contact Joseph M. Harenza, CEO/Senior Managing Director, at 610.478.2160.

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