New York Bancorp this week disclosed a $16.1 million restructuring charge in its acquisition of Hamilton Bancorp.
The charge, which was $3.4 million higher than estimated in a September proxy statement by the Douglaston, N.Y, thrift, contributed to a $12.3 million loss - equal to 90 cents a share, in the first two months of the year. The Hamilton deal closed in the last week of January.
Because New York Bancorp's stock price fell below a floor or "collar" in its original agreement to acquire Hamilton, it was forced to renegotiate the sale, agreeing to a higher exchange ratio that lifted the price $5 million to $126 million.
At New York Bancorp's stock price when the merger was announced in July, the deal would have been valued at $139 million.
While New York Bancorp was debating whether to adjust the exchange ratio, both thrifts ran up expensive legal bills, contributing to the charge, said Jeffrey Cohn, an analyst at H.C. Wainwright & Co.
In addition to the $16.1 million in merger costs, the thrift had to absorb a loss of about $700,000 related to the restructuring and sale of part of Hamilton Bancorp's securities portfolio.
New York Bancorp chief executive Michael McManus said more than just legal charges contributed to the loss. His bank also had to buy out a lease and pay some unexpected bonuses to Hamilton officials.
But overall, he said, the restructuring charge was in line with estimates. In fact, he said, investment banking fees were lower than anticipated since the deal value declined from the original $139 million price tag.
Without the merger, New York Bancorp would have earned $4.5 million in the first two months of the year.
New York Bancorp said it now expects annual expense reductions for the combined operations to "substantially exceed" the $6 million it first expected.