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Another institution helped push New York Community Bancorp to add cash to its bid, a filing disclosed. While Astoria's board was concerned about NYCB's plans for an aggressive balance sheet restructuring and capital raise, management believed the other suitor's offer had more execution risk.
December 22 -
New York Community has long wanted a deal to push it over $50 billion of assets. While Astoria accomplishes that, it does little to diversify New York Community's geography or reduce its reliance on multifamily lending.
October 29 -
New York Community Bancorp has agreed to buy Astoria Financial for about $2 billion in cash and stock, combining two of the largest New York-area banks to create an institution with about $64 billion in total assets.
October 29
New York Community Bancorp in Westbury has finished the balance sheet repositioning it previewed as part of its agreement to buy Astoria Financial in Lake Success, N.Y.
The $44.9 billion-asset company said in a press release Tuesday that it prepaid $10.4 billion in wholesale borrowings. It replaced the borrowings, which had an average cost of 3.16%, with a similar amount with an average cost of 1.58%.
The reduced cost should provide an annual after-tax benefit of roughly $100 million starting next year. As a result of the company's repositioning, future dividends will require regulatory clearance for the next four quarters.
The repositioning cost the company $547 million in a one-time after-tax prepayment charge, which will be reflected in its fourth quarter results. New York Community said the charge was more than offset by the $630.5 million in net proceeds it generated through a common stock offering completed in early November. The prepayment charge also fell short of the $614 million that the company forecast when the repositioning was announced in October.
"It is encouraging that this strategy, together with the offering completed in November, will be even more beneficial to the combined company than we originally thought," New York Community President and Chief Executive Joseph Ficalora said in the release. "In addition to the positive impact on our earnings going forward, the combination of these strategies will add approximately $83 million to our capital" at Dec. 31.
Ficalora pushed for derisking New York Community's balance sheet ahead of the merger, saying it would strengthen the financial performance. Nevertheless, Astoria's board
Astoria ultimately chose New York Community because the other, unnamed financial institution competing for the deal featured greater execution risk in the board's eyes. The companies expect the merger to close by the end of next year.
