Provident New York Bancorp (PBNY) in Montebello, N.Y., has agreed to acquire Sterling Bancorp (STL) in New York.
The $3.8 billion-asset Provident said Thursday it would pay $344 million in stock for Sterling, or about 1.3 shares of Provident stock for each Sterling share.
Provident said it expects to raise $80 million through a debt offering before completed the acquisition. The debt offering should boost capital levels and allow Provident to redeem trust preferred securities issued by the $2.7 billion-asset Sterling. Provident also said it would boost the quarterly dividend it pays on common stock to 7 cents a share, which would enable dividends paid to Sterling's shareholders to go unchanged.
Provident will own about 53% of the company, though the combined bank will take on the Sterling name. The deal is expected to close in the fourth quarter.
"This merger is a tremendous opportunity for Provident and a significant step in our strategy to expand within the greater New York metropolitan area," Jack Kopinsky, Provident's chief executive said in a press release. "It provides greater diversity of product sets, clients, and revenue streams while presenting considerable potential to build our small-to-middle market and consumer client bases."
"For shareholders, it provides a premium to the current value of our stock and creates a banking institution with even greater competitive strength, growth potential and profitability," Louis Cappelli, Sterling's chief executive, said.
American Banker reported last month that Provident was seeking a acquire a bank close to home as part of a deal that would allow the company to retain control. Sterling was said to be among the banks that Provident had courted.
Kopinsky and Louis Massiani, Provident's chief financial officer, will keep their titles in the company, while Cappelli would become its chairman. Provident is expected to have seven of 13 board seats at the company, which would be managed by executives drawn from both institutions.
Bank of America Merrill Lynch, Credit Suisse and the law firm of Wachtell, Lipton, Rosen & Katz advised Provident. Sterling was advised by JPMorgan Securities, Keefe Bruyette & Woods and the law firm of Sullivan & Cromwell.