The long-awaited merger between Provident Bank and Lakeland Bank took two big steps closer to completion late last week when the banks received regulatory approvals from the Federal Deposit Insurance Corp. and the New Jersey Department of Banking and Insurance.
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.
As is the case with the Federal Reserve, there is no timeline for when it may act. If the board grants approval, it will be the last step in a process that was first announced in September 2022.
The two companies are expected to extend their merger agreement to June 30 to provide time to receive the remaining regulatory approval and to complete the subordinated debt issuance.
Should the merger be completed, the combined company will operate under the Provident name.
Provident CEO Anthony Labozzetta said the combined bank 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, he said.
“We are very pleased to be closer to combining our two great banks to create a top-tier supercommunity bank,” Labozzetta said. “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.”
Lakeland Bank CEO Thomas Shara ageeed.
“The combination of our two organizations gives me great pride, as we bring together top talent and leadership under one team,” he said.
The regulatory approvals contain certain conditions and commitments, including that Provident raise $200 million of Tier 2 qualifying subordinated debt prior to completion of the merger. Provident officials have said they intend to satisfy this condition prior to completing the merger.
In addition, 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 be required to 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 also will 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.
