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Provident Financial Services, Inc. (NYSE:PFS) ("Provident"), the parent company of Provident Bank, and Lakeland Bancorp, Inc. (NASDAQ:LBAI) ("Lakeland"), the parent company of Lakeland Bank, today announced receipt of regulatory approvals from the Federal Deposit Insurance Corporation and the New Jersey Department of Banking and Insurance for Provident and Lakeland to complete their previously announced merger. With these approvals, the only pending regulatory approval required to complete the merger is the approval of the Board of Governors of the Federal Reserve System.
Upon completion of the merger, the combined company will operate under the Provident name and will benefit from enhanced scale, and opportunities for growth and profitability. Provident's and Lakeland's complementary strengths will provide exceptional service to customers and communities served.
"We are very pleased to be closer to combining our two great banks to create a top-tier super-community bank. This merger will afford us greater opportunity to serve the financial needs of our customers and communities, and to continue to expand and grow our product offerings," said Anthony Labozzetta, President and CEO of Provident Bank. "The combination of our two organizations gives me great pride as we bring together top talent and leadership under one team," said Thomas J. Shara, Lakeland's President and CEO.
The regulatory approvals contain certain conditions and commitments, including that Provident complete a $200 million capital raise prior to completion of the merger. Provident intends to satisfy this condition by raising $200 million of Tier 2 qualifying subordinated debt prior to completing the merger.
Further, for a period of three years following completion of the merger, Provident Bank will be required to maintain a Tier 1 capital to total assets leverage ratio of at least 8.5% and a total capital to risk-based assets ratio of at least 11.25%. In addition, Provident Bank will maintain its ratio of commercial real estate loans to total capital and reserves at or below the levels set forth in the three-year projections supporting its regulatory applications. Provident Bank will also be obligated to develop an action plan, subject to FDIC approval, to improve home mortgage applications from and originations to all demographic populations within the combined bank's reasonably expected market area. In connection with these approvals, Provident and Lakeland expect to agree that the combined board of directors will consist of nine directors from Provident and five directors from Lakeland.
The two companies also expect to extend their merger agreement to June 30, 2024, to provide time to receive the remaining regulatory approval and to complete the subordinated debt issuance.
The merger is expected to be completed in the second calendar quarter, subject to the receipt of approval for the merger from the Board of Governors of the Federal Reserve System, completion of the debt issuance and satisfaction of customary closing conditions.
