Well-positioned. It’s the phrase Tony Labozzetta used throughout his first public comments since being elevated to CEO at Provident Bank at the beginning of the year.
He was referring to the company’s succession plan following a merger that took place during the pandemic — he takes over for Chris Martin, who will become the company’s executive chairman.
He was referring to the suite of products that Provident can now offer — including wealth management (Beacon Trust) and insurance (SB One Insurance Agency).
He was referring to the potential growth of what already is the third-largest bank headquartered in the state — growth that can come both organically and through mergers & acquisitions.
But, mostly, Labozzetta was referring to the fact that Provident Bank is operating from a position of strength.
“We set out more than a year ago, putting together a strategic plan with the executive team and the board that makes Provident relevant in these changing times,” he said. “It’s a combination of continuing to diversify our business as well as growth and expansion.
“I think we’re well-positioned in the state as a really good, diversified commercial bank. And, when I say Provident is well-positioned, what that basically means is that we control our destiny.
“We don’t have a plan that’s running out of gas, that is going to force us to look for a merger partner. The choices are ours in terms of what we do. It’s a great position to be in.”
Provident, which is headquartered in Iselin, has 1,200 employees and 96 branches spread throughout northern and central New Jersey — as well as Eastern Pennsylvania and Queens County, New York. As of its last filing, Sept. 30 of last year, it had $13.39 billion in assets and $10.84 billion in deposits.
That’s why Labozzetta, who came to the bank during the merger with SB One in a deal that closed in the fall of 2020, is confident.
“If you look at our scale and our size today, we have the resources and the capacity to operate like a larger bank,” he said. “But, we’re still small enough that we can be agile. We can provide the one-on-one services customers want.”
Labozzetta and Martin recently talked with ROI-NJ about all things Provident Bank. Here’s a look at the conversation, edited for space and clarity.
Bullish on New Jersey, but …
Provident Bank CEO Tony Labozzetta and Executive Chairman Chris Martin remain bullish on New Jersey.
Labozzetta said: “New Jersey is a pretty resilient place. It’s a state that seems to overcome adversity. And, even with the challenges that we face, it has a lot of opportunity, and it still has capacity for growth. That bodes well for us.”
And Martin added: “You can’t replace the fact we are the most densely populated state in the nation with access to a port that is an outlet for everything. From industrial to supply chain to warehousing, everything that has to happen helps the New Jersey economy. You can’t fight it, if you wanted to. The business side is great.”
Martin worries about the cost of living.
“I think the consumer is more of our concern, because they’re part of our deposit base,” he said. “How many people, when they retire, are going to say, ‘I’m going to pay all these New Jersey taxes’ when they can go one state over to Pennsylvania or Delaware and not have tax on their retirement. I worry about who’s going to pay the real estate taxes, because we have a very transitory consumer population.
“Imagine what it would be like if we collaborated with our political leaders,” he said. “Imagine what this state could be. It could be the best state in the union.”
ROI-NJ: Let’s start with merger and the succession plan — all of which took place during the most tumultuous time in all businesses, but especially banking.
Chris Martin: About six years ago, we started talking as a board about a management succession plan: What do we have to do; what are the steps? I had known and respected Tony for more than 20 years, so there was a good trust between the two of us. So, when we put together the merger with SB One Bank, which Tony ran, the succession plan was right there.
We were able to move forward very quickly. The transition has been pretty smooth, internally and externally.
Tony Labozzetta: Trust has been a key. We merged companies — what greater trust is that? Chris is staying on as executive chairman and I’m thrilled about that. I view him as a key player for me to be able to bounce ideas off. A CEO needs somebody to validate some of their thoughts. I think Chris is perfectly suited for that because of his vast experience in banking and what he’s accomplished.
ROI: Let’s talk about the bank — and the banking industry — moving forward. This obviously is a very competitive banking market, featuring all of the largest banks in the country. How are you positioned to compete?
TL: I think the value of relationships was heightened and clearly evident during the pandemic through the processing of (Paycheck Protection Program) loans. You could see the relevancy of community banking and regional banking. Everybody thought it was dying — maybe even thought it was a little bit obsolete. That’s the not the case. We clearly showed our value.
It also pointed out that some of the pillars of our plan are spot-on. One of our key focuses is to deepen emotional connections with our customers. It sounds like consultant-speak, but we really have some action items around that. We care about our customers; we want to deepen that relationship. It’s not just providing them a service.
Part of Chris’ role moving forward is to be a huge advocate for us through the network, meeting with customers on a regular basis. That doesn’t happen in a lot of larger banks. Sometimes, it falls down into the district or region, but it’s not a top-down strategy. We still have the capacity, from the top of house all the way down, to be customer-centric. And I think that’s what we’re going to deliver.
Making a loan or opening up a checking account — these are not complex tasks. It’s how we make customers feel that’s going to be unique.
ROI: Let’s talk about growth. How and when and where can it occur — both organically and through future mergers?
TL: From my perspective — and in my role — I think I have to prove to the board that we should be doing acquisitions, because we can do organic growth. If you can’t grow your business naturally, how are you going to do it when you compound that with a lot with another institution? The challenge doesn’t become easier, it becomes greater.
So, we don’t want to mask performance by doing mergers. We want to have a good, organically growing company. When you can do that, then you’ve earned the right to go out and do M&A. You just can’t have a merger strategy as the only growth path.
ROI: Banks can grow in a number of ways. If we were to talk a year from now, what would you hope would be your biggest accomplishments of Year One?
TL: The things that I want to achieve more formally are the on the human side. We have a lot of initiatives in our strategic plan around the employee and customer experience. If, at the end of 2022, I can sit back and say, ‘Here’s some proof points about how my employee journeys have been enhanced, where the experience in our poll scores and our survey scores have gone up,’ I would be hugely satisfied. Those scores will translate to customer experience scores. If I can get that done, the numbers and everything else will come.
We have a lot of strategic initiatives in terms of diversifying our product lines, but if I don’t have employees and customers super-satisfied and advocating on our behalf, the initiatives that we put into motion will pay fewer dividends.
Preparing for the pandemic … in 2019
Provident Bank officials felt the bank was prepared to handle the pandemic in 2020, because they had practiced such a scenario the year before.
Executive Chairman Chris Martin tells the story.
“We had business continuity planning where we all got together to prepare for a potential scenario, and the test ended up being a pandemic,” he said. “There we were, 75 of our managers, practicing for this.”
It paid off.
“I think it accelerated the ability for us to be remote,” Martin said. “We already were in the middle of digital changeover, converting our old platform to one that is state-of-the-art, but because of COVID and because of the preparation, we were ready for this to happen, and it did elevate our performance.”
Even if they didn’t realize it would at the time.
“One of our managers said to me at the time, ‘The next time we do this exercise, can we do something more realistic?’” Martin said.
ROI: When you say diversifying the product line, give us some examples.
TL: We’re expanding our small business product set, but, even more, we’re going to be able to operate more on an integrated basis. Our business lines will better work together. For instance, look at Beacon Trust, SB One Insurance, commercial and retail — the pace of how they’re cross-pollinating and referring clients has really picked up.
Provident had never had insurance, SB One never had wealth. Now, we’re seeing a lot of people voluntarily referring clients, because it’s the right thing, not because we’re trying to cross-sell a product or open a new account. We’re doing it because it’s a great service.
So, for our commercial clients, we can help them on the insurance side by the advice we provide for them and go through their policies and see where the gaps are. That’s exciting. The client sees that as a huge value-add.
ROI: What areas do you see significant potential?
TL: One of the things that I’d like to see more of — and I think it’ll happen when there’s a little clearer political landscape — is people investing in their plant. There’s some energy, there’s some excitement, and you see people investing in real estate and operations and business, but there’s still a lot of liquidity in the commercial space. You can see that by the line usage — it is very low to historical standard.
That investment back into your plant and equipment and things of that nature needs to happen, but that’s not going to happen until people get back to work. It’s a big circle that needs to be closed.
ROI: This all goes back to our starting point. It’s clear you feel Provident is well-positioned.
TL: Absolutely. And, here’s a key reason why: Mergers tend to pull together the best talent of the groups. So, on the other side of a merger, you have a great team of highly talented individuals. I’m certainly proud and pleased with this group. The quality of the team is really important. I can’t do anything by myself. These folks are executing, they’re empowered. And that’s exciting.
Reach Provident Bank at: provident.bank or call 800-448-7768.