By Joshua Burd
Provident Bank and Lakeland Bank are joining forces under a $1.3 billion merger announced Tuesday, bringing together two key lenders in the state’s commercial real estate sector.
The banks’ parent companies on Tuesday said the all-stock merger, which is slated to close next spring, combines two complementary platforms that will have more than $25 billion in assets and $20 billion in total deposits. It also will create what they described as a super-community bank in New Jersey, one that benefits from enhanced scale and improved opportunities for growth and profitability.
“We are excited to announce this transformational combination of two amazing organizations,” said Anthony Labozzetta, CEO and president of Iselin-based Provident Financial Services Inc. “The scale and profitability of the combined organization will enable us to invest in the future, better compete for market share, and better serve our customers and communities. We bring together a diverse group of employees who are committed to delivering exceptional service to our customers and the communities we serve.
“It is particularly gratifying to embark on this journey with our colleagues on the Lakeland team and Tom Shara, whom we have held in high regard for many years.”
Notably, the banks said the deal will fortify Provident and Lakeland’s positions as leading players in the tristate commercial real estate market. It will also provide opportunities for additional growth and relationship expansion for both Provident’s two ancillary fee-based business lines in insurance and wealth management and Lakeland’s growing asset-based lending and equipment lease financing unit.
Meantime, the combined company will have roughly 4 percent of all bank deposits in New Jersey, which represents the second-largest share of New Jersey bank deposits for institutions with less than $100 billion in assets, according to a news release. Its enhanced branch footprint in northern and central New Jersey and strong capital base will allow the merged platform to better serve small to midsized businesses, while bolstering its role in commercial lending.
The new platform will operate as Provident Bank under the Provident Financial Services Inc. name, with the administrative headquarters remaining in Iselin. The merged board will have 16 directors, nine from Provident and seven from Lakeland, while Provident Executive Chairman Christopher Martin will continue to serve in that role and Labozzetta will remain CEO and president.
“As two of New Jersey’s most-respected banks that nearly mirror each other in our shared cultures and missions to support and deliver to our customers, communities and shareholders, we are thrilled that we’re combining our talented teams,” said Thomas J. Shara, CEO and president of Lakeland Bancorp Inc. “The combination of our companies will allow us to achieve substantially more for our clients, associates, communities and shareholders than we could alone. I have tremendous respect for Tony Labozzetta, Chris Martin, Provident’s management team and associates. We will continue to build upon and leverage our combined strengths as we focus on the future together.”
Additionally, Shara will serve as executive vice chairman of the combined company board of directors, while Provident’s Thomas Lyons will remain as senior executive vice president and chief financial officer, the news release said. The remainder of the executive team will draw from both banks.
“Lakeland’s board of directors and executive leadership are fully aligned with Provident’s vision, values and culture,” Martin said. “Both companies provide best in class products and services to their customers. We are confident that this strategic combination and the resulting strong pro forma financial performance, synergies and experienced management team will deliver on our commitment to providing superior long-term shareholder returns.”
Under the terms of the merger agreement, which was unanimously approved by both boards, Lakeland shareholders will receive 0.8319 shares of Provident common stock for each share of Lakeland common stock they own, the news release said. Upon completion of the transaction, which is subject to both Provident and Lakeland shareholder approval, Provident shareholders will own 58 percent and Lakeland shareholders will own 42 percent of the combined company.
Piper Sandler Cos. is acting as financial adviser, while Sullivan & Cromwell LLP is serving as legal counsel to Provident. Keefe, Bruyette & Woods, a Stifel Co., is acting as financial adviser, while Luse Gorman PC is serving as legal counsel to Lakeland.
