Retirement and Non-Competition Agreement

     This Retirement and Non-Competition Agreement ("Agreement") is entered into
this 30th day of June,  2003  ("Effective  Date") by and between  Third  Federal
Savings Bank  ("Bank"),  a federal  savings bank having its  principal  place of
business located in Newtown, Pennsylvania and John R. Stranford ("Employee").

     WHEREAS,  Employee  has  previously  served the Bank as an employee and its
President, Chief Executive Officer and a member of the Board of Directors;

     WHEREAS, the Bank recognizes the specialized knowledge and expertise of the
Employee  related to the business  affairs of the Bank, and the  subsidiaries of
the Bank ("Bank Subsidiaries");

     WHEREAS,  Employee has advised the Bank that upon his  retirement  from the
Bank as an  officer,  employee  and  director,  he shall  elect to  receive  his
retirement benefits under the Bank's defined benefit pension plan in the form of
an annuity benefit and not in the form of a lump-sum payment;

     WHEREAS,  Employee and the Bank desire to enter into such a retirement  and
non-competition agreement upon the terms and conditions hereinafter contained;

     NOW,  THEREFORE,  in  consideration of the covenants and terms contained in
this Agreement as set forth herein and of the mutual  benefits  accruing to Bank
and to Employee from the retirement and  non-competition  agreement  between the
parties as set forth by the terms of this  Agreement,  the Bank and the Employee
agree as follows:

1.   Resignation
     -----------

     This  Agreement  shall  constitute  written  notice  from  the  Bank to the
Employee that effective as of the Effective Date, the Employee's  resignation as
an  officer,  employee  and  director  of the  Bank  and all  Bank  Subsidiaries
(collectively,  the "Companies") effective July 1, 2003 is accepted on behalf of
the Bank and its Board of Directors and shall be effective as of July 1, 2003.

2.   Non-Competition and Confidential Business
     -----------------------------------------

     The Employee hereby agrees that for the period  commencing on the Effective
Date and ending April 30, 2006:


     (a)  Employee  will  not,  without  the  express  written  consent  of  the
Companies,  directly or indirectly communicate or divulge to, or use for his own
benefit  or  for  the  benefit  of  any  other  person,  firm,  association,  or
corporation,  any of the trade secrets,  proprietary data or other  confidential
information  communicated  to or  otherwise  learned or acquired by the Employee
from the Companies, except that Employee may disclose such matters to the extent
that disclosure is required by a court or other governmental agency of competent
jurisdiction.

     (b) Employee  will not contact  (with a view toward  selling any product or
service  competitive  with any product or service sold or proposed to be sold by
the  Companies  during the three year period  prior to July 1, 2003) any person,
firm,  association or corporation (A) to which the Companies sold any product or
service,  (B) which  Employee  solicited,  contacted or otherwise  dealt with on
behalf of the Companies,  or (C) which Employee was otherwise aware was a client
of the  Companies.  Employee  will  not  directly  or  indirectly  make any such
contact,  either  for his own  benefit or for the  benefit of any other  person,
firm, association, or corporation.

     (c)  Employee   hereby  agrees  that  he  shall  not  engage  in  providing
professional  services  or enter into  employment  or other  relationship  as an
employee, director, consultant,  representative,  or similar relationship to any
financial services  enterprise  (including but not limited to a savings and loan
association,  bank, credit union or insurance company) whereby the Employee will
have a work location within 50 miles of the home office of the


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Bank  located  in  Newtown,  Pennsylvania,  or within 30 miles of any  office or
branch of the Companies existing as of the Effective Date.

     (d)  Employee  hereby  agrees  that he shall  not,  on his own behalf or on
behalf of others,  employ,  solicit, or induce, or attempt to employ, solicit or
induce,  any  employee  of the  Companies,  for  employment  with any  financial
services   enterprise   (including  but  not  limited  to  a  savings  and  loan
association,  bank, credit union, or insurance  company),  nor will the Employee
directly or  indirectly,  on his behalf or for  others,  seek to  influence  any
employee of the Companies to leave the employ of the Companies.

     (e) Employee  will not make any public  statements  regarding the Companies
without the prior consent of the Companies,  and the Employee shall not make any
statements  that  disparage  the  Companies  or the  business  practices  of the
Companies.  The Bank shall not knowingly or  intentionally  make any  statements
that disparage the Employee.

     (f) The Employee and the Companies  acknowledge and agree that  irreparable
injury  will  result  to the  parties  in the  event of a  breach  of any of the
provisions of this Section 2 (the "Designated Provisions") and that the Employee
and the  Companies  will have no adequate  remedy at law with  respect  thereto.
Accordingly,  in the event of a material breach of any Designated Provision, and
in addition to any other legal or equitable remedy the Employee or the Companies
may have,  the  Employee  or the  Companies  shall be entitled to the entry of a
preliminary and a permanent injunction (including, without limitation,  specific
performance  by a court of  competent  jurisdiction  located  in  Bucks  County,
Pennsylvania,  or  elsewhere),  to restrain the  violation or breach  thereof by
either the  Employee  or the  Companies,  and the  parties  shall  submit to the
jurisdiction of such court in any such action.

     (g)  The  Designated  Provisions  shall  survive  the  termination  of  the
Agreement.

3.   Compensation
     ------------

     (a) The Bank agrees to pay Employee for his  commitments  and agreements as
contained  herein,  including  Section 2 herein,  the  remuneration  detailed at
Schedule A,  attached  hereto.  The Bank  acknowledges  that  compliance  by the
Employee with the requirements  set forth at Section 2, herein,  is an essential
component of this Agreement,  and that such compliance is necessary for the Bank
to obtain the full value of its  consideration  paid under this  Agreement.  The
parties agree that Employee  shall not be entitled to  participate in or receive
benefits  under  any Bank  programs  maintained  for its  employees,  except  as
specifically  agreed to in writing by the parties.  Further, as of the Effective
Date, Employee hereby waives any rights,  claims and payments that may be due at
any time thereafter,  if any, in accordance with the Change in Control Severance
Agreement  between the Employee and the Bank,  dated  January 1, 2003,  and such
agreement shall be deemed terminated and of no further legal force and effect as
of the Effective Date.

     (b) Nothing  contained in this Agreement shall be deemed to modify or amend
any  previously  awarded  options  to  acquire  common  stock  of  TF  Financial
Corporation ("TF") held by the Employee.

     (c) The Employee hereby acknowledges that upon his retirement from the Bank
as an officer and employee,  he shall elect to receive his  retirement  benefits
under the Bank's defined  benefit pension plan in the form of an annuity benefit
and not in the form of a lump-sum payment.

4.   Releases
     --------

     (a)  Employee  hereby  knowingly  and  voluntarily  waives and releases the
Companies  and TF, and officers,  directors,  and employees of the Companies and
TF, from any and all claims or causes of action,  known or unknown,  arising out
of or in any way relating to: 1)any  wrongful  discharge  from the employ of the
Companies,  2) any rights or claims arising out of title VII of the Civil Rights
Act of 1964, as amended, 3)the Age Discrimination in Employment Act ("ADEA"), 4)
the Americans with Disabilities Act, or 5)any


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other   federal,   state  or  municipal   statute  or   ordinance   relating  to
discrimination  in  employment  (the  "Release").  However,  Employee may pursue
claims or institute legal action to enforce the provisions of this Agreement.

     (b) Employee  further states that he has carefully read the foregoing,  has
had  sufficient  opportunity  to review and  deliberate  the  foregoing  with or
without counsel of Employee's own choosing,  has been advised of the opportunity
to  consult  with an  attorney,  knows  and  understands  the  contents  of this
Agreement  and  related  Release,  and  signs  the same as  Employee's  free and
independent act. No inducements,  representations,  or agreements have been made
or relied upon to make this Agreement except as stated in this Agreement.

     (c) Employee  understands and  acknowledges  that the Release and waiver of
claims contained herein is exchanged for a portion of the compensation described
at Section 3, herein,  and Schedule A, attached hereto,  which  compensation the
Employee is not otherwise entitled to receive.

     (d)  Employee  understands  that he has a period of seven (7) days from the
date of executing this Agreement during which time Employee shall have the right
to revoke this Agreement.  Any such revocation shall be in writing and delivered
to the Chief Financial Officer of the Bank.

5.   The Complete Agreement
     ----------------------

     This Agreement,  and any  attachments or exhibits  appended  hereto,  shall
represent the complete  Agreement  between the Bank and Employee  concerning the
subject  matter hereof and supersedes  all prior  agreements or  understandings,
written or oral. No attempted  modification  or waiver of any of the  provisions
hereof  shall be binding on either  party  unless  made in writing and signed by
both Employee and the Bank.

6.   Notices
     -------

     Any notice  required or permitted to be given hereunder shall be in writing
and  shall  be  effective  three  business  days  after it is  properly  sent by
registered or certified mail, if to the Bank, its Chief Financial Officer at the
administrative  offices of the Bank,  or if to Employee to the address set forth
beneath his  signature  to this  Agreement,  or to such other  address as either
party may from time to time designate by notice.

7.   Assignability
     -------------

     This  Agreement  may not be assigned by any party without the prior written
consent  of the other  parties,  except  that no consent  is  necessary  for the
Companies to assign this Agreement to a corporation  succeeding to substantially
all the assets or business of the  Companies  whether by merger,  consolidation,
acquisition  or otherwise.  This Agreement  shall be binding upon Employee,  his
heirs and permitted assigns and the Bank, its successors and permitted assigns.

8.   Severability
     ------------

     Each of the  sections  contained  in this  Agreement  shall be  enforceable
independently  of every other section in this  Agreement,  and the invalidity or
non-enforceability of any section shall not invalidate or render non-enforceable
any other section  contained herein. If any section or provision in a section is
found invalid or unenforceable,  it is the intent of the parties that a court of
competent  jurisdiction  shall reform the section or  provisions  to produce its
nearest enforceable economic equivalent.

9.   Arbitration
     -----------

     Except as provided at Section 2(f) herein, any controversy or claim arising
out of or relating to this  Agreement or the breach  thereof shall be settled by
binding arbitration in accordance with the


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Commercial Arbitration Rules of the American Arbitration Association,  with such
arbitration  hearing  to be  held at the  offices  of the  American  Arbitration
Association  ("AAA")  nearest to Newtown,  Pennsylvania,  and judgment  upon the
award  rendered  by  the  arbitrator(s)  may be  entered  in  any  court  having
jurisdiction  thereof.  Either the  Employee  or the Bank may file a request for
such arbitration with the AAA.

10.  Applicable Law
     --------------

     It  is  the  intention  of  the  parties  hereto  that  all  questions  and
interpretations  with  respect  to the  construction  and  performance  of  this
Agreement  and the  rights  and  liabilities  of the  parties  hereto  shall  be
determined in accordance with the laws of the Commonwealth of Pennsylvania, with
respect  to any  matter  or thing  arising  out of this  Agreement  or  pursuant
thereto.


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<PAGE>

     IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of
the date first above written.


                               Third Federal Savings Bank ("Bank")


                               By:  /s/George A. Olsen
                                    --------------------------------------------
                                    George A. Olsen


                                    /s/John R. Stranford
                                    --------------------------------------------
                                    John R. Stranford, Employee



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SCHEDULE A

Payment of $17,981 related to unused vacation days.

Payout under Incentive Compensation Plan of $116,799.00.

Continuation of Medical  insurance  coverage until Employee's  attainment of age
65. Such  coverage  may not be the same as that  available  to  employees of the
Bank.

Continuation of Life and AD&D coverage until Employee's attainment of age 65.

The Employee  hereby  acknowledges  that upon his retirement from the Bank as an
officer and employee,  he shall elect to receive his  retirement  benefits under
the Bank's defined  benefit  pension plan in the form of an annuity  benefit and
not in the form of a lump-sum payment.

ACKNOWLEDGEMENT OF SCHEDULE A:

                               Third Federal Savings Bank ("Bank")

                               By:  /s/George A. Olsen
                                    --------------------------------------------
                                    George A. Olsen


                                    /s/John R. Stranford
                                    --------------------------------------------
                                    John R. Stranford, Employee




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