New York Community Bancorp in Westbury has agreed to buy Astoria Financial in Lake Success, N.Y., to create an institution with about $64 billion in total assets.
The $49 billion-asset New York Community said in a press release that it will pay about $2 billion, or $19.66 a share, in cash and stock for the $15.1 billion-asset Astoria, making it the second-biggest bank acquisition this year. (The largest is Royal Bank of Canada's $5.3 billion acquisition of City National in Los Angeles.)
The deal, which is expected to close in the fourth quarter of 2016, should be 20% accretive to New York Community's earnings in 2017 and have 6% tangible book value accretion when it closes. The transaction values Astoria at about 150% of its tangible book value.
New York Community said it plans to cut about $150 million in costs, or roughly half of Astoria's noninterest expenses. The company also expects to incur about $180 million in merger-related costs.
"We've been prepping for a large merger since the end of 2011 and, now that all the stars have aligned, I have to say it certainly looks and feels right," Joe Ficalora, New York Community's chief executive, said in the release.
"The merger combines two companies with similar lines of business," Ficalora added. "Both of us place an emphasis on multifamily lending and both of us are producers of one-to-four family mortgage loans. Both of us take particular pride in providing exceptional customer service, and both of us are deeply committed to the communities we serve."
New York Community also said it would prepay about $10 billion of wholesale borrowings this quarter, for which it will record a $614 million after-tax $614 million. The prepayment will require the company to obtain regulatory approval for future dividend payments.
To offset the charge, New York Community said it plans to raise about $650 million in a follow-on offering of its common stock. The prepayment and stock offering combined are expected to boost the company's net interest income and margin.
Joseph Ficalora, New York Community's chief executive, will be maintain his position after the deal closes. Monte Redman, Astoria's president and chief executive, will join New York Community's board.
Goldman Sachs, and Credit Suisse and Sullivan & Cromwell advised New York Community. Sandler O'Neill and Wachtell, Lipton, Rosen & Katz advised Astoria.