Banking institution, Provident Bank, announces closure of 22 branches situated within the state of New Jersey.
Provident Financial Services, a New Jersey-based financial institution with a history dating back to 1839, has completed its merger with Lakeland Bancorp. The combined entity, operating as Provident Bank, will be the 83rd largest insured depository organization in the U.S. and the 7th largest in New Jersey, with approximately $24.5 billion in assets, $18.8 billion of loans, deposits of $18.6 billion, and total stockholders' equity of $2.3 billion.
In a move to optimize operations post-merger, Provident Financial Services has announced a strategic consolidation plan, which includes the closure of 22 locations of overlapping branches in New Jersey by the end of August. This represents roughly 15% of its physical footprint.
Rationale behind branch closures
The strategic consolidation plan aims to eliminate duplicate locations, improve cost-efficiency, and streamline operations in the merged bank. By closing some branches, Provident Financial Services hopes to achieve economies of scale, reduce overhead, and focus on higher-growth or more profitable markets and digital banking initiatives.
Impact on customers and employees
Customers may face inconvenience due to branch closures, as they may need to switch to other branches or online banking options. However, the bank often provides alternatives such as expanded digital services or access to remaining nearby branches.
Employees at closed branches may face layoffs or reassignment, though banks sometimes offer relocation options or severance packages. Any specific employee impact at Provident has not been detailed in the available information.
Moving Forward
Following the merger, Provident will be required to maintain certain capital ratios and levels of commercial real estate loans to total capital and reserves for the next three years, as per the Federal Deposit Insurance Corp.'s approval condition. The bank will also tap into Lakeland's asset-based lending and equipment lease financing business to expand its offerings.
Provident CEO Anthony Labozzetta stated that the merger creates a company with significant scale and capabilities, a strong capital base, and a low credit risk profile. The merger aims to generate an internal rate of return of around 20% and produce cost savings amounting to approximately 35% of Lakeland's overall expense base.
Despite the branch closures, affected customers can still access any of Provident's 140 branches through its expanded network in New Jersey, New York, and Pennsylvania. Provident has encouraged transitioned employees to apply for available open positions and is supporting those employees impacted to ensure a smooth transition.
The merger received final approval from the Federal Reserve in April, and regulatory approvals, including from the Federal Reserve, came with the condition that Provident completes a $200 million capital raise ahead of or concurrent with the merger's completion. The merger aims to provide greater opportunities and resources for Provident's employees, a wider array of products and services for customers, and benefits to the communities served by Provident.
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