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Under the definitive agreement, First Morris will merge into the company's bank subsidiary, The Provident Bank. As part of the transaction, First Morris stockholders will be paid a consideration of about $124.1 million.

Under the terms of agreement, 50% of First Morris common shares will be converted into Provident common stock and the remaining will be converted into cash. Also, First Morris' stockholders will have the option to elect to receive either 2.1337 shares of the company's common stock or $39.

75 in cash for each First Morris common share, subject to proration to ensure that in the aggregate 50% of the First Morris shares will be converted into stock. The company noted that the purchase price represents a premium of 20.9% over First Morris' closing stock price of $32.

89 on October 13, 2006, a 18.7% premium to core deposits, 325% of book value, 327% of tangible book value and 30.3 times management's 2007 estimated earnings.

The transaction is expected to be breakeven to the company's 2007 IBES earnings estimate, accretive to 2008 IBES estimates and accretive in both the years to Cash Earnings per share, exclusive of the anticipated positive effect of incremental lending opportunities afforded by First Morris' geographic market and balance sheet. The company added that the merger adds nine branches to its franchise with $518 million in deposits in Morris County and increases its market share position from 26th to 8th in one of New Jersey's most attractive banking markets. PFS is currently trading at $18.

66, up $0.02 or 0.11%, on volume of 91,400 shares.