The merger of two New Jersey banks has received its final necessary regulatory approval for the creation of what they’ve dubbed a “super-community bank.”
The Federal Reserve Board Thursday said it approved the merger between Provident Financial Services and Lakeland Bancorp, roughly three weeks after the banks announced receipt of approval from the Federal Deposit Insurance Corp. and the New Jersey Department of Banking and Insurance.
With Fed approval, the banks can move forward with their merger under the Provident name.
The regulatory approvals, including Fed approval, were given on the condition that Provident complete a $200 million capital raise ahead of or concurrent with the merger’s completion. The bank plans to raise that amount of Tier 2 qualifying subordinated debt.
Additionally, Provident will submit a capital plan to the Federal Reserve Bank of New York, within 60 days of the merger’s completion, on how it intends to maintain satisfactory capital at its holding company. For two years after the merger’s completion, the bank will also provide the FRBNY 30 days’ prior written notice of any capital distribution.
Per FDIC approval, for three years following the merger, Provident will be required to maintain a Tier 1 capital to total assets leverage ratio of 8.5% and a total capital to risk-based assets ratio of 11.25%. The bank must also maintain its ratio of commercial real estate loans to total capital and reserves at or below levels indicated in its regulatory applications; and it must develop an FDIC-approved action plan to improve mortgage applications from and originations to all demographics within its market area.
Provident said in a press release that it expects the merger to be completed in the second calendar quarter, subject to the subordinated debt issuance and customary closing conditions.
The banks originally inked the deal in September 2022 with plans to close in the second quarter of 2023. They extended their merger agreement twice to make time for required approvals.
Provident, based in Iselin, will pay $1.3 billion in stock for $11.2 billion-asset Lakeland, which is headquartered in Oak Ridge roughly 35 miles away.
Together, the combined bank will have more than $25 billion in assets, $20 billion in deposits and locations throughout New Jersey, New York and Pennsylvania. The new Provident will be the 83rd largest insured depository organization in the nation; and the 7th largest in New Jersey, where it will represent approximately 4.1% of total deposits in the state.
It will be the second-largest bank by asset size based in the Garden State, following the $61 billion-asset Valley Bank in Wayne.
“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,” Provident CEO Anthony Labozzetta said in a prepared statement in March.
A Provident spokesperson said in March that Provident aims to offer an expanded branch network and broader product offerings and services through the tie-up. Lakeland customers, he noted, will benefit from the addition of wealth management and insurance services offered by the acquiring bank.
