Sterling Bancorp in Montebello, N.Y., has agreed to buy Hudson Valley Holding in Yonkers, N.Y.

The $7.3 billion-asset Sterling will pay $539 million in stock for the $3.1 billion asset Hudson Valley. As a result, Sterling will cross over the $10 billion-asset threshold where banks have to participate in regular stress testing and face heightened regulation.

Sterling said in a press release Wednesday that the merger should generate about $34 million in fully phased-in annual cost savings. It should also be accretive to Sterling's earnings per share in 2015 and 2016. The deal is expected to close in the second quarter.

"The unique strengths of Hudson Valley Holding … and Sterling Bancorp are a perfect strategic fit, and will strengthen our position as a high-performance regional bank," Jack Kopinsky, Sterling's president and chief executive, said in the release. "In particular, Sterling's commercial lending expertise will be complemented by Hudson Valley's attractive deposit base."

Sterling will add four Hudson Valley directors to its board.

Hudson Valley is the first significant acquisition for Sterling since last year, when it was known as Provident New York. (Provident bought Sterling in October 2013, taking its name).

Sterling was advised by Jefferies and Wachtell, Lipton, Rosen & Katz, while RBC Capital Markets rendered a fairness opinion. Hudson Valley was advised Keefe, Bruyette & Woods and Day Pitney.

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