SB One Bank will merge into Provident Bank, creating the third-largest bank headquartered in the state.

On Thursday, Iselin-based Provident Financial Service Inc. and SB One Bancorp, the institution’s respective parent companies, announced entering into a definitive merger agreement. Provident, the name the surviving entities will bear, will acquire SB One in the $208.9 million-valued transaction, based upon Provident’s closing stock price on March 11.

“We are excited about our partnership with SB One. This business combination provides attractive financial attributes to shareholders of both Provident and SB One,” Provident Chairman and Chief Executive Officer Christopher Martin said in a prepared statement. “At $12 billion in assets, the combined company comfortably surpasses the $10 billion asset threshold and provides Provident a clear management succession plan with the addition of a very skilled leader and banker in Tony Labozzetta, who will serve as president and chief operating officer of the combined company.”

Labozzetta – currently president and CEO at SB One, and who will join the boards of directors of Provident and Provident Bank along with two additional SB One directors – said in a prepared statement that the deal would give the combined organization the size and scale to compete in the markets they serve.

As of the most recent information available, Dec. 31, 2019, SB had assets of $2 billion and 18 branches in New Jersey and New York; Provident had assets of $9.8 billion and locations throughout North and Central Jersey, and in Bucks, Lehigh and Northampton counties in Pennsylvania.

The deal will specifically expand Provident’s footprint into new markets in Bergen County and Astoria, N.Y.

The agreement was unanimously approved by both companies’ boards of directors, the organizations said, and is expected to close in the third quarter of this year, subject to satisfaction of customary closing conditions.

SB One Chairman of the Board Edward Leppert said in a prepared statement that the deal “makes strategic, cultural and fiscal sense.”

Provident will acquire all outstanding shares of SB One in exchange for common shares of Provident with a fixed exchange ratio of 1.357 Provident shares for each share of SB One. According to the organizations, the transaction consideration is currently $22.09 per share for SB One shareholders.

Piper Sandler & Co. served as financial advisor to Provident, while Luse Gorman PC provided legal counsel; Keefe, Bruyette & Woods, A Stifel Co., served as financial advisor to Paramus-based SB one with Hogan Lovells US LLP serving as legal counsel.