New Jersey banks Provident Financial Services ( PFS) and First Sentinel Bancorp ( FSLA) said Monday that they will merge in a $642 million stock and cash deal.

Under terms of the deal, First Sentinel's shareholders can receive either 1.09 shares of Provident's common stock, $22.25 in cash, or a combination of cash and stock. The price represents a premium of 18.5% over First Sentinel's closing stock price of $18.78 on Dec. 19.

The merged company will operate as Provident Bank, which will absorb all of First Sentinel's First Savings Bank operations. With $6.4 billion in assets and $4.1 billion in deposits, Provident will be the eighth-largest bank in the state.

The deal is expected to close by the end of the second quarter of 2004, and it will add about 11.5% to Provident Financial's estimated 2004 earnings.

Provident shares fell 96 cents, or 4.71%, to $19.41, while shares of First Sentinel gained $2.79, or 14.86%, to $21.57.

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