MORRIS COUNTY — Provident Financial Services, Inc. and Lakeland Bancorp, Inc. have entered into a definitive $1.3 billion all-stock merger agreement, creating a preeminent super-community bank in the state, according to the two financial institutions. The merger of Provident Bank and Lakeland Bank will create a financial institution that will have more than $25 billion in assets and $20 billion in total deposits. It will also 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.

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. 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.

“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,” said Anthony Labozzetta, president and CEO 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.”

According to 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, “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

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.

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 CEO, 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

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.

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.

MORRIS COUNTY — The Justice Department announced an agreement to resolve allegations that Lakeland Bank (Lakeland) engaged in a pattern or practice of lending discrimination by “redlining” in the Newark metropolitan area, including neighborhoods in Essex, Somerset and Union counties in New Jersey. This resolution is part of the Justice Department’s nationwide Combating Redlining Initiative and represents the third-largest redlining settlement in department history.

“Financial institutions that refuse to provide mortgage lending services to communities of color not only contribute to the persistent racial wealth gap that exists in this country, but also violate federal law,” said Attorney General Merrick B. Garland. “The agreement with Lakeland announced today represents the Justice Department’s continued commitment to addressing modern-day redlining, and to ensuring that all Americans have equal opportunity to obtain credit, no matter their race or national origin.”

“Ending redlining is a critical step in our work to close the widening gaps in wealth between communities of color and others,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “This settlement demonstrates our firm commitment to combating modern day redlining and holding banks and other lenders accountable when they deny people of color equal access to lending opportunities. Through this agreement, we are sending a strong message to the financial industry that we will not stand for discriminatory and unlawful barriers in residential mortgage lending.”

“Redlining creates an unequal playing field that unfairly prevents many persons of color from achieving the dream of home ownership, and this type of systemic and intentional discrimination cannot and will not be tolerated,” said U.S. Attorney Philip R. Sellinger for the District of New Jersey. “It is wholly unacceptable that redlining persists into the 21st Century, and this case demonstrates our commitment to combating redlining and hold banks and others accountable when they engage in unlawful discrimination. Through this agreement, we are taking a major step forward by removing unlawful and discriminatory barriers in residential mortgage lending.”

Redlining is an illegal practice in which lenders avoid providing credit services to individuals living in communities of color because of the race, color or national origin of the residents in those communities. The complaint filed in federal court today alleges that from at least 2015 to 2021, Lakeland failed to provide mortgage lending services to Black and Hispanic neighborhoods in the Newark, metropolitan area, that all its branches were located in majority-white neighborhoods and that its loan officers did not serve the credit needs of Black and Hispanic neighborhoods in and around Newark.

Under the proposed consent order, which is subject to court approval and was filed today in the U.S. District Court for the District of New Jersey along with a complaint, Lakeland has agreed to do the following:

• Invest at least $12 million in a loan subsidy fund for residents of Black and Hispanic neighborhoods in the Newark area; $750,000 for advertising, outreach and consumer education; and $400,000 for development of community partnerships to provide services that increase access to residential mortgage credit.
• Open two new branches in neighborhoods of color, including at least one in the city of Newark; ensure at least four mortgage loan officers are dedicated to serving all neighborhoods in and around Newark; and employ a full-time Community Development Officer who will oversee the continued development of lending in neighborhoods of color in the Newark area.
• Maintain an expanded Community Reinvestment Act Assessment Area that includes Essex, Somerset and Union counties.

Lakeland has agreed to settle this matter without contested litigation and worked cooperatively with the department to remedy the redlining concerns that were identified.

In October 2021, Attorney General Merrick B. Garland launched the Justice Department’s Combating Redlining Initiative, a coordinated enforcement effort to address this persistent form of discrimination against communities of color. The initiative is expanding the department’s reach by strengthening partnerships with U.S. Attorneys’ Offices around the country, regulatory partners and its partners in state Attorneys General offices. Since the initiative was launched, the department has announced four redlining cases and settlements with a combined $38 million in relief for communities that have been the victims of lending discrimination. This includes the $20 million settlement with Trident Mortgage Company — the second largest settlement in Justice Department history.

Additional information about the section’s fair lending enforcement can be found by clicking here. Individuals may report lending discrimination by calling the Justice Department’s housing discrimination tip line at 1-833-591-0291, or submitting a report online. Individuals may also report civil rights violations by clicking here or call the U.S. Attorney’s Civil Rights Hotline at (855) 281-3339.