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 that they have entered into a definitive merger
agreement pursuant to which the companies will combine in an
all-stock merger, valued at approximately $1.3 billion. The merger
combines two complementary banking platforms to create New Jersey’s
preeminent super-community bank. The combined company will have
more than $25 billion in assets and $20 billion in total deposits.
“We are excited to announce this
transformational combination of two amazing organizations. 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,”
said Anthony Labozzetta, President and Chief Executive Officer of
Provident. “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.”
“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, Lakeland’s President and CEO. “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.”
Chris Martin, Executive Chairman of Provident
added: “Lakeland’s board of directors and executive leadership are
fully aligned with Provident’s vision, values and culture. 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.”
Strategic Benefits of the Merger
Enhances Scale and Builds Upon
Complementary Strengths: The combined company will be
strategically positioned to benefit from enhanced scale and
improved opportunities for growth and profitability. While the
transaction fortifies Provident and Lakeland’s positions as leading
players in the Tri-State commercial real estate market, Provident’s
two ancillary fee-based business lines in insurance and wealth
management and Lakeland’s growing asset-based lending and equipment
lease financing provide opportunities for additional growth and
relationship expansion. Both Provident and Lakeland have extensive
experience successfully integrating with merger partners, and both
are intensely focused on ensuring a smooth integration.
Creates a Bank with a Significant New
Jersey Banking Presence: The combined company will have
approximately 4% 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. Its enhanced
branch footprint in attractive Northern and Central New Jersey and
strong capital base will allow the combined company to better serve
the needs of small-to-mid-sized businesses. The combined company
will further strengthen its deep commitment to and extensive
skillset in commercial lending.
Financially Compelling: Pro
forma calculations with respect to the combined company indicate
2024 GAAP earnings per share accretion of approximately 24% or 9%
with and without purchase accounting interest rate marks,
respectively. The transaction is approximately 17% (3.6 year
earnback) or 4% (1.7 year earnback) dilutive to tangible book value
with and without purchase accounting interest rate marks,
respectively. Management believes that conservative and achievable
cost savings, projected to be approximately 35% of Lakeland’s
expense base, will drive strong financial metrics, material capital
generation and tangible book value per share growth. The
transaction results in an internal rate of return of approximately
20%.
Transaction Details
Under the terms of the merger agreement, which
was unanimously approved by the boards of directors of both
companies, Lakeland will merge with and into Provident, with
Provident as the surviving corporation, and Lakeland Bank will
merge with and into Provident Bank, with Provident Bank as the
surviving bank. Following the closing of the transaction, Lakeland
shareholders will receive 0.8319 shares of Provident common stock
for each share of Lakeland common stock they own. Upon completion
of the transaction, which is subject to both Provident and Lakeland
shareholder approval, Provident shareholders will own 58% and
Lakeland shareholders will own 42% of the combined company.
Name, Branding and Headquarters
The combined company will operate under the
“Provident Financial Services, Inc.” name and the combined bank
will operate under the “Provident Bank” name.
The administrative headquarters of the combined
company will be located in Iselin, New Jersey.
The combined company will trade under the
Provident ticker symbol “PFS” on the New York Stock Exchange.
Governance and Leadership
The combined company’s board of directors will
have sixteen directors, consisting of nine directors from Provident
and seven directors from Lakeland.
- Christopher Martin, Provident’s
current Executive Chairman, will continue to serve as Executive
Chairman of the combined company board of directors
- Thomas Shara Jr., Lakeland’s
current President, Chief Executive Officer and director, will serve
as Executive Vice Chairman of the combined company board of
directors
- Anthony Labozzetta, a current
director of Provident, will continue to serve as a director of the
combined company
- A Provident board representative
will serve as the independent lead director of the combined company
board of directors
The combined company will be led by a
well-respected management team that is comprised of individuals
with significant financial services and M&A integration
experience.
- Anthony Labozzetta, Provident’s
current President and Chief Executive Officer, will continue to
serve in that role in the combined company
- Thomas Lyons, Provident’s current
Senior Executive Vice President and Chief Financial Officer, will
continue to serve in that role in the combined company
- The remainder of the executive team
will draw from both Provident and Lakeland
Timing and Approvals
The merger is expected to close in the second
quarter of 2023, subject to satisfaction of customary closing
conditions, including receipt of customary regulatory approvals and
approval by the shareholders of each company.
Advisors
Piper Sandler Companies is acting as financial
advisor, and has rendered a fairness opinion to the board of
directors of Provident. Sullivan & Cromwell LLP is serving as
legal counsel to Provident. Keefe, Bruyette & Woods, A Stifel
Company is acting as financial advisor, and has rendered a fairness
opinion to the board of directors of Lakeland. Luse Gorman, PC is
serving as legal counsel to Lakeland.
Joint Conference Call and Webcast Details
Provident and Lakeland will conduct a live
conference call and webcast to discuss the transaction at 8:30 AM
Eastern Time on September 27, 2022. To listen to the live call,
please dial 1-833-927-1758 (United States Toll Free),
1-844-200-6205 (United States Local), 1-833-950-0062 (Canada Toll
Free), 1-226-828-7575 (Canada Local), or 1-929-526-1599 (All other
locations). Speakers will need to enter speaker access code
(587268) before being met by a live operator. Internet access to
the call is also available at provident.bank by going to Investor
Relations and clicking on "Webcast” and upon dialing in, request to
be joined into the “Provident Financial and Lakeland
Bancorp Merger Announcement” call with the conference
operator. The webcast, along with related slides, will be available
on both the Provident website (www.provident.bank) and the Lakeland
website (www.lakelandbank.com).
A replay of the conference call will be
available on the websites listed above. You may also access a
replay of the call beginning at 12:00 noon (ET) on September 27,
2022 until 9:00 a.m. (ET) on October 11, 2022, by dialing:
US (Local): |
1-929-458-6194 |
US Toll Free: |
1-866-813-9403 |
Canada: |
1-226-828-7578 |
All other locations: |
+44 204 525 0658 |
Access Code: |
260541 |
The call will also be archived on the Company’s
website for a period of one year.
About Provident Financial Services, Inc.
Provident Financial Services, Inc. is the
holding company for Provident Bank, a community-oriented bank
offering "commitment you can count on" since 1839. Provident Bank
provides a comprehensive array of financial products and services
through its network of branches throughout northern and central New
Jersey, as well as Bucks, Lehigh and Northampton counties in
Pennsylvania and Queens and Nassau counties, New York. The Bank
also provides fiduciary and wealth management services through its
wholly owned subsidiary, Beacon Trust Company and insurance
services through its wholly owned subsidiary, Provident Protection
Plus, Inc.
About Lakeland Bancorp, Inc.
Lakeland Bank is the wholly-owned subsidiary of
Lakeland Bancorp, Inc. (NASDAQ:LBAI), which had $10.4 billion in
total assets at June 30, 2022. With an extensive branch
network and commercial lending centers throughout New Jersey and
Highland Mills, New York, Lakeland Bank offers business and retail
banking products and services. Business services include commercial
loans and lines of credit, commercial real estate loans, loans for
healthcare services, asset-based lending, equipment financing,
small business loans and lines and cash management services.
Consumer services include online and mobile banking, home equity
loans and lines, mortgage options and wealth management solutions.
Lakeland is proud to be recognized as New Jersey's Best-In
State-Bank by Forbes and Statista for the fourth consecutive year,
Best Banks to Work For by American Banker, rated a 5-Star Bank by
Bauer Financial and named one of New Jersey's 50 Fastest Growing
Companies by NJBIZ.
Forward-Looking Statements
This press release includes “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995, Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, with respect to Provident’s and Lakeland’s beliefs, goals,
intentions, and expectations regarding the proposed transaction,
revenues, earnings, earnings per share, loan production, asset
quality, and capital levels, among other matters; our estimates of
future costs and benefits of the actions we may take; our
assessments of probable losses on loans; our assessments of
interest rate and other market risks; our ability to achieve our
financial and other strategic goals; the expected timing of
completion of the proposed transaction; the expected cost savings,
synergies and other anticipated benefits from the proposed
transaction; and other statements that are not historical
facts.
Forward-looking statements are typically
identified by such words as “believe,” “expect,” “anticipate,”
“intend,” “outlook,” “estimate,” “forecast,” “project,” “should,”
and other similar words and expressions, and are subject to
numerous assumptions, risks, and uncertainties, which change over
time. These forward-looking statements include, without limitation,
those relating to the terms, timing and closing of the proposed
transaction.
Additionally, forward-looking statements speak
only as of the date they are made; Provident and Lakeland do not
assume any duty, and do not undertake, to update such
forward-looking statements, whether written or oral, that may be
made from time to time, whether as a result of new information,
future events, or otherwise. Furthermore, because forward-looking
statements are subject to assumptions and uncertainties, actual
results or future events could differ, possibly materially, from
those indicated in such forward-looking statements as a result of a
variety of factors, many of which are beyond the control of
Provident and Lakeland. Such statements are based upon the current
beliefs and expectations of the management of Provident and
Lakeland and are subject to significant risks and uncertainties
outside of the control of the parties. Caution should be exercised
against placing undue reliance on forward-looking statements. The
factors that could cause actual results to differ materially
include the following: the occurrence of any event, change or other
circumstances that could give rise to the right of one or both of
the parties to terminate the definitive merger agreement between
Provident and Lakeland; the outcome of any legal proceedings that
may be instituted against Provident or Lakeland; the possibility
that the proposed transaction will not close when expected or at
all because required regulatory, shareholder or other approvals are
not received or other conditions to the closing are not satisfied
on a timely basis or at all, or are obtained subject to conditions
that are not anticipated (and the risk that required regulatory
approvals may result in the imposition of conditions that could
adversely affect the combined company or the expected benefits of
the proposed transaction); the ability of Provident and Lakeland to
meet expectations regarding the timing, completion and accounting
and tax treatments of the proposed transaction; the risk that any
announcements relating to the proposed transaction could have
adverse effects on the market price of the common stock of either
or both parties to the proposed transaction; the possibility that
the anticipated benefits of the proposed transaction will not be
realized when expected or at all, including as a result of the
impact of, or problems arising from, the integration of the two
companies or as a result of the strength of the economy and
competitive factors in the areas where Provident and Lakeland do
business; certain restrictions during the pendency of the proposed
transaction that may impact the parties’ ability to pursue certain
business opportunities or strategic transactions; the possibility
that the transaction may be more expensive to complete than
anticipated, including as a result of unexpected factors or events;
diversion of management’s attention from ongoing business
operations and opportunities; the possibility that the parties may
be unable to achieve expected synergies and operating efficiencies
in the merger within the expected timeframes or at all and to
successfully integrate Lakeland’s operations and those of
Provident; such integration may be more difficult, time consuming
or costly than expected; revenues following the proposed
transaction may be lower than expected; Provident’s and Lakeland’s
success in executing their respective business plans and strategies
and managing the risks involved in the foregoing; the dilution
caused by Provident’s issuance of additional shares of its capital
stock in connection with the proposed transaction; effects of the
announcement, pendency or completion of the proposed transaction on
the ability of Provident and Lakeland to retain customers and
retain and hire key personnel and maintain relationships with their
suppliers, and on their operating results and businesses generally;
and risks related to the potential impact of general economic,
political and market factors on the companies or the proposed
transaction and other factors that may affect future results of
Provident and Lakeland; uncertainty as to the extent of the
duration, scope, and impacts of the COVID-19 pandemic on Provident,
Lakeland and the proposed transaction; and the other factors
discussed in the “Risk Factors” section of each of Provident’s and
Lakeland’s Annual Report on Form 10-K for the year ended December
31, 2021, in the “Risk Factors” and ”Management’s Discussion and
Analysis of Financial Condition and Results of Operations” sections
of each of Provident’s and Lakeland’s Quarterly Report on Form 10-Q
for the quarter ended June 30, 2022, and other reports Provident
and Lakeland file with the U.S. Securities and Exchange Commission
(the “SEC”).
Additional Information and Where to Find It
In connection with the proposed transaction,
Provident will file a registration statement on Form S-4 with the
SEC. The registration statement will include a joint proxy
statement of Provident and Lakeland, which also constitutes a
prospectus of Provident, that will be sent to stockholders of
Provident and shareholders of Lakeland seeking certain approvals
related to the proposed transaction.
The information contained herein does not
constitute an offer to sell or a solicitation of an offer to buy
any securities or a solicitation of any vote or approval, nor shall
there be any sale of securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such
jurisdiction. INVESTORS AND SECURITY HOLDERS OF PROVIDENT AND
LAKELAND AND THEIR RESPECTIVE AFFILIATES ARE URGED TO READ, WHEN
AVAILABLE, THE REGISTRATION STATEMENT ON FORM S-4, THE JOINT PROXY
STATEMENT/PROSPECTUS TO BE INCLUDED WITHIN THE REGISTRATION
STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO
BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION,
AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS,
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT PROVIDENT,
LAKELAND AND THE PROPOSED TRANSACTION. Investors and security
holders will be able to obtain a free copy of the registration
statement, including the joint proxy statement/prospectus, as well
as other relevant documents filed with the SEC containing
information about Provident and Lakeland, without charge, at the
SEC’s website (http://www.sec.gov). Copies of documents filed with
the SEC by Provident will be made available free of charge in the
“SEC Filings” section of Provident’s website,
https://investorrelations.provident.bank/, under the heading “SEC
Filings.” Copies of documents filed with the SEC by Lakeland will
be made available free of charge in the “Investor Relations”
section of Lakeland’s website,
https://investorrelations.lakelandbank.com/, under the heading
“Documents.”
Participants in Solicitation
Provident, Lakeland, and certain of their
respective directors and executive officers may be deemed to be
participants in the solicitation of proxies in respect of the
proposed transaction under the rules of the SEC. Information
regarding Provident’s directors and executive officers is available
in its definitive proxy statement, which was filed with the SEC on
March 18, 2022, and certain other documents filed by Provident with
the SEC. Information regarding Lakeland’s directors and executive
officers is available in its definitive proxy statement, which was
filed with the SEC on April 7, 2022, and certain other documents
filed by Lakeland with the SEC. Other information regarding the
participants in the solicitation of proxies in respect of the
proposed transaction and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in
the joint proxy statement/prospectus and other relevant materials
to be filed with the SEC. Free copies of these documents, when
available, may be obtained as described in the preceding
paragraph.
Provident Financial Services, Inc.
Investor Relations Contact: Thomas LyonsSEVP
& Chief Financial Officer(732) 590-9348
Lakeland Bancorp, Inc.
Investor Relations Contacts: Thomas J.
SharaPresident & Chief Executive Officer(973) 697-2000
Thomas F. SplaineEVP & Chief Financial Officer(973)
697-2000
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