Investors Bancorp (ISBC) in Short Hills, N.J., has found the road toward closing its purchase of Roma Financial filled with potholes.

Investors, a $12.8 billion-asset mutual, unveiled plans to buy the Robbinsville, N.J., thrift in December. Buying the $1.8 billion-asset Roma is supposed to help Investors expand into southern New Jersey near Philadelphia.

The deal, which was expected to close in the second quarter, has faced a fair share of hiccups including shareholders litigation, a check-kiting scandal at Roma and protests by an activist group over lending practices to minorities.

Roma's shareholders approved the sale in late May. The thrifts still need final approval from the Federal Reserve Board.

"I would have thought it would have closed by now, other than regulators are moving at a snail's pace," says Rick Weiss, an analyst at Boenning & Scattergood.

A Fed spokeswoman declined to comment. A spokesman for Investors said that Kevin Cummings, the thrift company's president and chief executive, would not comment.

Industry observers say they expect the issues with Roma will delay Investors' long-awaited second-step conversion, which Weiss says should allow the nation's biggest mutual thrift to raise up to $1.5 billion.

Investors will likely wait until it closes its purchases of Roma and Gateway Community Financial in Sewell, N.J., to file its conversion documents, says Matthew Kelley, an analyst at Sterne Agee. He says Investors should be able to complete the Roma deal during the third quarter.

Once Investors converts to a stock-only structure, it will no longer be able to buy mutual thrifts like Roma or Gateway. Cummings, in a December interview when he was named one of American Banker's 10 CEOs to watch in 2013, said a second-step conversion is "not a matter of 'if,' it's a matter of 'when.'"

The latest hurdles for Investors and Roma are best classified as annoyances, Weiss says.

Inner City Press/Fair Finance Watch, a Bronx, N.Y., watchdog group, filed a comment letter with the Fed claiming that Investors' mortgage lending discriminates against minorities. In the metro New York area in 2011, Investors made 220 conventional home-purchase loans to white borrowers, and only two such loans to blacks, the group claimed.

The Fed has not responded to the complaint.

The activist group's complaint is probably off-base, says Weiss, who notes that Investors is active in community involvement and charitable work.

Roma said on May 24 that it was the victim of a check-kiting scheme by a commercial client. The issue will force Roma to post a second-quarter loss of $1.1 million. Roma, which referred the matter to the Federal Bureau of Investigation, said it is trying to collect from the former client.

In April, the thrifts settled a lawsuit that claimed that Investors' acquisition undervalued Roma. Terms of the settlement were undisclosed; the thrifts continue to deny the lawsuit's allegations.

Investors also ran into controversy in Robbinsville after it nixed plans by Roma to construct a building that would have housed offices for the thrift and the township. Investors has held talks with Robbinsville officials about leasing other space for township offices, according to the Robbinsville Sun. Investors also offered to sell the property to the township.

Regardless of the challenges, Investors has been busy preparing for the deal's closing. Paul Kalamaras, Investors' director of retail banking, has been laying the groundwork for expansion in southern New Jersey.

"There's one thing I've learned at Investors — change and growth are good things, even though it may prove a little bit uncomfortable," Cummings said during an April 30 conference call that took place before many of the recent issues surfaced.

"We're moving seasoned investment bankers to Roma," Cummings said. "The region will hit the ground running when the deal is completed."

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