Provident Financial Services, Inc. Announces Completion of Subordinated Notes Offering and Expected Merger Closing Date for the Lakeland Bancorp, Inc. Merger

Rhea-AI Summary

Provident Financial Services, Inc. completed a $225 million subordinated notes offering to meet regulatory conditions related to the Lakeland Bancorp, Inc. merger, with the merger expected to close on May 15, 2024. The net proceeds will be invested in the Bank, serving as Tier 1 and Tier 2 capital.

Positive

• Successful completion of the $225 million subordinated notes offering.

• Meeting regulatory conditions for the Lakeland Bancorp, Inc. merger.

• Expected closure of the merger on May 15, 2024.

• The net proceeds will be invested in the Bank for general corporate purposes.

• Notes intended to qualify as Tier 2 capital at the holding company level.

• Net proceeds to be used as Tier 1 capital at the Bank level for regulatory purposes.

Negative

• No specific negative aspects reported in the press release.

Insights

Financial Analyst

The completion of a substantial subordinated notes offering by Provident Financial Services, Inc. is a strategic move designed to fortify the company's capital structure, especially in anticipation of a merger with Lakeland Bancorp, Inc. From an investor's perspective, the $225 million raised through this offering at a 9.00% interest rate due in 2034 provides a clear signal of Provident's commitment to regulatory compliance and financial robustness. By investing the net proceeds into Provident Bank, the company is bolstering its Tier 1 capital, which is a critical measure of a bank's financial strength and stability. Tier 1 capital is essential for absorbing losses and ensuring that depositors and senior creditors are insulated from risks. Conversely, Tier 2 capital typically includes subordinated debt and is a secondary form of banking capital. The planned investments in securities and potential repayment of debts with the proceeds could lead to a more optimized balance sheet. However, it is imperative to consider the cost of capital; a 9.00% interest rate is quite substantial, which might indicate that investors are demanding a higher return for potential risks associated with the company or the industry. The strategic timing of this offering, just ahead of the merger's expected completion, suggests a move towards a smooth transition and compliance with regulatory capital requirements. An investor should keep an eye on how this infusion of capital will affect the company's return on equity and overall financial performance post-merger.

M&A Legal Expert

The announcement by Provident Financial Services, Inc. regarding the completion of their subordinated notes offering has important legal and regulatory implications that intersect with the proposed merger with Lakeland Bancorp, Inc. The underlying purpose of the offering, beyond raising capital, was to meet certain regulatory conditions, indicative of a proactive approach to regulatory compliance and merger preparedness. For investors, these actions suggest that both Provident and Lakeland are committed to ensuring a seamless regulatory transition. Legally, it is important for all conditions to be meticulously satisfied before the merger can close and this move is a testament to Provident's adherence to this process. Additionally, the involvement of reputable legal counsel and underwriters may provide additional confidence in the due diligence performed during this offering and the merger process. Finally, while the offering is a positive step towards merger completion, it is necessary to monitor the post-merger integration from a legal standpoint. The complexities of melding two corporate entities and their respective regulatory obligations should not be underestimated, as they can have significant implications for the combined entity's future compliance and governance landscape.

ISELIN, N.J., May 13, 2024 (GLOBE NEWSWIRE) -- Provident Financial Services, Inc. (NYSE:PFS) (the “Company”), the holding company for Provident Bank (the “Bank”), today announced the completion of its offering and sale of $225 million of its 9.00% fixed-to-floating rate subordinated notes due 2034 (the “Notes”) in a registered public offering (the “Offering”). The Notes were sold at par, resulting in net proceeds, after discounts and estimated offering expenses, of approximately $219.3 million.

The purpose of the Offering was to satisfy certain previously announced regulatory conditions that were agreed to in connection with the merger (the “Merger Transaction”) between the Company and Lakeland Bancorp, Inc. (“Lakeland”). In light of the completion of the Offering, the Merger Transaction is now expected to close after the close of trading on May 15, 2024, pending satisfaction of customary closing conditions. The Company intends to invest all of the net proceeds from the Offering in the Bank. The Bank expects that the net proceeds will be initially invested in securities and used for other general corporate purposes, which may include the repayment of Federal Home Loan Bank advances and other indebtedness. The Notes are intended to qualify as Tier 2 capital at the holding company level and the net proceeds invested in the Bank will qualify as Tier 1 capital at the Bank level for regulatory purposes.

Piper Sandler & Co. and Keefe, Bruyette & Woods, A Stifel Company acted as joint book-running managers for the Offering. Luse Gorman, PC acted as legal counsel to the Company and Holland & Knight, LLP acted as legal counsel to the underwriters.

This press release is neither an offer to sell nor a solicitation of an offer to purchase any securities of the Company. There will be no sale of securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

About Provident

Provident Financial Services, Inc. (NYSE: PFS) is the holding company for Provident Bank, a New Jersey State-charted 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, Bucks, Lehigh and Northampton counties in Pennsylvania, as well as Queens and Nassau Counties in 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.

Forward-Looking Statements

This news release contains a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These statements may be identified by use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar terms and phrases, including references to assumptions.

The forward-looking statements reflect the Company’s current views about future events and financial performance and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from historical results and those expressed in any forward looking statement. Some factors that could cause actual results to differ materially from historical or expected results include, but are not limited to, those set forth in Item 1A of the Company's Annual Report on Form 10-K, as may be supplemented by its Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and those related to the economic environment, particularly in the market areas in which the Company operates; inflation and unemployment; competitive products and pricing; real estate values; fiscal and monetary policies of the U.S. Government; changes in accounting policies and practices that may be adopted by the regulatory agencies and the accounting standards setters; changes in government regulations affecting financial institutions, including regulatory fees and capital requirements; changes in prevailing interest rates; acquisitions and the integration of acquired businesses; credit risk management; asset-liability management; the financial and securities markets, the availability of and costs associated with sources of liquidity; the possibility that the Merger Transaction does not close when expected or at all; the risk that any announcements relating to the Offering or the Merger Transaction could have adverse effects on the market price of the Company’s common stock; risks related to the potential impact of general economic, political and market factors on the Company or the Offering; and uncertainty as to the impacts of natural disasters or health epidemics on the Company.

The Company cautions readers not to place undue reliance on any such forward-looking statements which speak only as of the date they are made. The Company advises readers that the factors listed above could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not assume and expressly disclaims any duty, and does not undertake, to update any forward-looking statements in this presentation to reflect events or circumstances after the date of this statement or otherwise.

Contact:
Provident Financial Services, Inc.
Thomas M. Lyons
Senior Executive Vice President and Chief Financial Officer
Phone: 732-590-9348
Email: thomas.lyons@provident.bank 

 

FAQ

What was the purpose of the subordinated notes offering by Provident Financial Services, Inc.?

The purpose of the subordinated notes offering was to meet regulatory conditions for the Lakeland Bancorp, Inc. merger.

When is the expected closing date for the merger between Provident Financial Services, Inc. and Lakeland Bancorp, Inc.?

The merger is expected to close after the close of trading on May 15, 2024.

Who acted as joint book-running managers for the subordinated notes offering?

Piper Sandler & Co. and Keefe, Bruyette & Woods, A Stifel Company acted as joint book-running managers for the offering.

What will the net proceeds from the offering be used for?

The net proceeds will be invested in the Bank for general corporate purposes, including repayment of Federal Home Loan Bank advances and other indebtedness.

What will the Notes sold by Provident Financial Services, Inc. qualify as?

The Notes are intended to qualify as Tier 2 capital at the holding company level.