US-based Provident Bank’s parent Provident Financial Services has signed a definitive agreement to buy Lakeland Bancorp in a deal valued at $1.3bn.

As per the terms of the agreement, Lakeland, which owns Lakeland Bank, will merge with and into Provident, with New Jersey-based Provident as the surviving entity.

The deal is an all-stock merger and Lakeland shareholders will be eligible to receive 0.8319 shares of Provident common stock for each Lakeland common stock held when the deal closes.

The combined entity will have more than $25bn in assets and $20bn in total deposits.

As per the official statement, the merged bank will benefit from enhanced scale and access to opportunities for growth and profitability.

The merger is also expected to bolster Provident and Lakeland’s positions as leading players in the Tri-State commercial real estate market.

Upon completion, Provident shareholders will control 58% and Lakeland shareholders will own 42% of the merged company.

Provident president and CEO Anthony Labozzetta said: “The scale and profitability of the combined organisation will enable us to invest in the future, better compete for market share, and better serve our customers and communities.  

“We bring together a diverse group of employees who are committed to delivering exceptional service to our customers and the communities we serve.”

Lakeland president and CEO Thomas Shara said: “The combination of our companies will allow us to achieve substantially more for our clients, associates, communities, and shareholders than we could alone. We will continue to build upon and leverage our combined strengths as we focus on the future together.”

Subject to the receipt of approval from regulators and shareholders, the deal is expected to close in the second quarter of 2023.