EMPLOYMENT AGREEMENT


     THIS  AGREEMENT,  is entered into this 1st day of July,  2003,  ("Effective
Date") by and between TF Financial  Corporation (the "TF") and John R. Stranford
(the "Executive").

                                   WITNESSETH

     WHEREAS,  the  Executive  has  heretofore  been  employed by Third  Federal
Savings  Bank  ("Bank")  as the  President  and Chief  Executive  Officer and is
experienced in all phases of the business of the Bank and TF; and

     WHEREAS, the Executive has retired as an officer,  employee and director of
the Bank and continues to serve TF as a director; and

     WHEREAS,  in order to induce the Executive to serve in the employ of the TF
and in  consideration  of the Executive's  agreeing to be an employee of the TF,
the parties desire to specify the employment relationship between the TF and the
Executive;

     NOW THEREFORE,  in consideration of the premises and the mutual  agreements
herein contained, the parties hereby agree as follows:

1.   Employment.
     ----------

     TF hereby  employs the  Executive in the capacity of Senior  Advisor to the
     President and Chairman of TF. The Executive  hereby accepts said employment
     and  agrees to  render  consultation  and  advisory  services  to TF as are
     requested by TF's  President and Chairman from time to time during the term
     of this Agreement.  The Executive shall be available for service  hereunder
     upon receipt of not less than five (5) business  days' written  notice from
     TF.

2.   Term of Employment.
     ------------------

     The term of employment of the Executive  under this Agreement  shall be for
     the period  commencing on the Effective  Date and ending on April 30, 2005,
     or such earlier date that the Executive  shall retire or otherwise cease to
     serve as a director of TF ("Term").

3.   Remuneration.
     ------------

     The TF  shall  compensate  the  Executive  sole  during  the  Term  of this
     Agreement at the rate of $1,000 per month ("Base Salary"),  payable in cash
     not less frequently than quarterly.  While an employee of TF, the Executive
     shall not be paid any  additional  compensation  or fees for  service  as a
     director of TF.  Except as otherwise  provided by the  provisions  of other
     written

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     agreements,  if any,  the  Executive  shall not  otherwise  be  eligible to
     participate in any  compensation  or benefit  programs  applicable to other
     employees of TF or its subsidiary  companies as a result of this Agreement.
     Nothing in this Agreement shall impact any previously awarded stock options
     held by the Executive.


4.   Noncompetition and Non-Disclosure.
     ---------------------------------

     During the term of the Executive's  employment under this Agreement and for
     a period of five years following termination of the Executive's  employment
     with TF,  the  Executive  shall not  engage  in any  business  or  activity
     contrary to the business affairs or interests of the TF or any subsidiaries
     of TF (collectively,  the "Companies"),  including,  but not limited to the
     foregoing:

     (a)  Executive  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 Executive  from the  Companies,  except that  Executive may disclose
     such matters to the extent that  disclosure is required by a court or other
     governmental agency of competent jurisdiction.

     (b) Executive  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  Executive  solicited,  contacted  or
     otherwise dealt with on behalf of the Companies, or (C) which Executive was
     otherwise aware was a client of the Companies.  Executive 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)  Executive  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
     Executive  will have a work location  within 50 miles of the home office of
     the Bank located in Newtown, Pennsylvania, or within 30 miles of any office
     or branch of the Companies existing as of the Effective Date.

     (d)  Executive  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
     Executive  directly or  indirectly,  on his behalf or for  others,  seek to
     influence  any  employee  of the  Companies  to  leave  the  employ  of the
     Companies.

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

     (f) The Executive 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 4 (the  "Designated  Provisions")  and that the
     Executive  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  Executive  or the  Companies  may have,  the  Executive  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
     Executive  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.

5.   Standards.
     ---------

     During the term of this  Agreement,  the Executive shall perform his duties
     in accordance  with such reasonable  standards  expected of executives with
     comparable positions in comparable  organizations and as may be established
     from time to time by the TF. The Executive shall make no public  statements
     in his  capacity as an employee of TF. The  Executive  shall not act in any
     manner contrary to the terms of his Non-Competition and Severance Agreement
     between the Executive and Third Federal Savings Bank,  dated June __, 2003.
     Notwithstanding  anything herein to the contrary,  failure by the Executive
     to comply with the provisions of this Agreement, including, but not limited
     to this Section 5 and Section 10, hereinafter,  may result in the immediate
     termination  of the  Agreement  within  the  sole  discretion  of  the  TF,
     disciplinary  action against the Executive  taken by the TF,  including but
     not limited to the termination of employment of the Executive for breach of
     the  Agreement,  and/or other  remedies  that may be available in law or in
     equity.

6.   Governing Law.
     -------------

     The  validity,   interpretation,   construction  and  performance  of  this
     Agreement   shall  be  governed  by  the  laws  of  the   Commonwealth   of
     Pennsylvania.

7.   Withholding.
     -----------

     All payments required to be made by the TF hereunder to the Executive shall
     be subject to the withholding of such amounts,  if any, relating to tax and
     other payroll deductions as the TF

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     may reasonably  determine should be withheld pursuant to any applicable law
     or regulation.

8.   Successors and Assigns.
     ----------------------

     (a) This  Agreement  shall inure to the benefit of and be binding  upon any
     corporate  or other  successor of the TF which shall  acquire,  directly or
     indirectly,  by  merger,  consolidation,  purchase  or  otherwise,  all  or
     substantially all of the assets or stock of the TF.

     (b) Since the TF is contracting  for the unique and personal  skills of the
     Executive,  the Executive  shall be precluded  from assigning or delegating
     his rights or duties hereunder  without first obtaining the written consent
     of the TF.

9.   Amendment; Waiver.
     -----------------

     No  provisions  of this  Agreement  may be modified,  waived or  discharged
     unless such  waiver,  modification  or  discharge  is agreed to in writing,
     signed by the  Executive  and such officer or officers of the TF authorized
     to sign on its  behalf.  No waiver  by any party  hereto at any time of any
     breach by any other party hereto of, or compliance  with,  any condition or
     provision  of this  Agreement  to be performed by such other party shall be
     deemed a waiver of similar or  dissimilar  provisions  or conditions at the
     same or at any prior or subsequent time.

10.  Confidential Information.
     ------------------------

     The  Executive  acknowledges  that during his  employment he will learn and
     have access to confidential  information regarding the TF and its customers
     and  businesses  ("Confidential  Information").  The  Executive  agrees and
     covenants not to disclose or use for his own benefit, or the benefit of any
     other person or entity, any such Confidential Information,  unless or until
     the TF  consents  to such  disclosure  or use or such  information  becomes
     common  knowledge  in the  industry or is  otherwise  legally in the public
     domain.  The  Executive  shall  not  knowingly  disclose  or  reveal to any
     unauthorized person any Confidential Information relating to the TF, or any
     subsidiaries or affiliates,  or to any of the businesses  operated by them,
     and the Executive confirms that such information  constitutes the exclusive
     property of the TF. The  Executive  shall not  otherwise  knowingly  act or
     conduct   himself  (a)  to  the  material   detriment  of  the  TF  or  its
     subsidiaries,  or  affiliates,  or (b) in a  manner  which is  inimical  or
     contrary to the interests of the TF. Executive acknowledges and agrees that
     the existence of this  Agreement and its terms and  conditions  constitutes
     Confidential  Information  of the  TF,  and  the  Executive  agrees  not to
     disclose the Agreement or its contents without the prior written consent of
     the TF. The provisions of this Section shall survive the termination of the
     Agreement.  Notwithstanding the foregoing, the TF reserves the right in its
     sole  discretion to make disclosure of this Agreement as it deems necessary
     or appropriate in compliance with its regulatory reporting requirements

11.  Entire Agreement.
     ----------------

     This Agreement together with any understanding or modifications  thereof as
     agreed to in writing by the parties,  shall constitute the entire agreement
     between the parties hereto and shall supersede all prior understandings and
     commitments, whether oral or in writing.

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<PAGE>

IN WITNESS  WHEREOF,  the parties have executed this Agreement on the date first
hereinabove written.


                                    TF FINANCIAL CORPORATION



                                    By:   /s/ Robert N. Dusek
                                          --------------------------------------
                                          Robert N. Dusek

                                    Its   Chairman July 1, 2003
                                          -------------------------------------



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






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