USD 2.2 BN DEAL - Sterling Bancorp and Astoria Financial Corporation Announce Plans to Merge, Creating a High Performing Regional Bank

Sterling Bancorp and Astoria Financial Corporation Announce Plans to Merge, Creating a High Performing Regional Bank

Sterling Bancorp and Astoria Financial Corporation Announce Plans to

Merge,

Creating a High Performing Regional Bank

 

With $29 Billion in Assets, Resulting Company Will Be One of the Leading Banking Franchises in the Greater NYC Metro Region

 

MONTEBELLO, NY and LAKE SUCCESS, NY -- (Marketwired) -- 03/07/17 -- Sterling Bancorp (NYSE: STL) ("Sterling") and Astoria Financial Corporation (NYSE: AF) ("Astoria") announced today that they have entered into a definitive merger agreement in a stock-for-stock transaction valued at approximately $2.2 billion, based on the closing price of Sterling Bancorp common stock on March 6, 2017.

 

The merger agreement calls for a fixed exchange of 0.875 shares of Sterling common stock for each share of Astoria common stock. The resulting purchase price of $21.92 per Astoria share represents an 18.6% premium to Astoria's share price as of the close of business on March 6, 2017. Upon closing, Sterling stockholders will own approximately 60% of the combined company and Astoria stockholders will own approximately 40%.

 

The strategic combination will create a high performing regional bank with a diversified business mix, serving the needs of business owners and consumers in the greater New York City metropolitan area. The resulting institution, to be known as Sterling Bancorp, will be the sixth largest regional bank in the New York City area in terms of deposits. Upon completion of the merger, the resulting company will have approximately $29 billion in assets, $20 billion in loans and $19 billion in deposits, with a diversified commercial lending focus, solid capital foundation, and broad footprint in a dynamic and growing marketplace.

 

Creating a Premier NYC-Regional Bank

 

"By joining forces, Astoria and Sterling will create one of the leading banking enterprises in the NYC metropolitan area and will be well positioned to deliver performance and value for our customers, shareholders, employees and communities," said Jack L. Kopnisky, President and CEO of Sterling. "We are excited about the opportunity to bring together two companies with extremely complementary strengths, providing a platform to extend Sterling's business banking solutions across a substantially larger market area, while introducing Astoria's retail products to a wider financial center network. Our goal is to build on these strengths to provide exceptional solutions to our combined customer base, while driving best-in-class financial performance by taking advantage of our enhanced scale, opportunities for growth and operating efficiency. Execution is always key to the success of such a transformative acquisition; we are confident in the proven integration skills of our Sterling team and the talent and professionalism of Astoria's associates."

 

Monte N. Redman, President and Chief Executive Officer of Astoria, commented "We are very pleased to be merging with Sterling Bancorp. Astoria Bank's strong presence in attractive markets should provide Sterling with an ideal platform from which to continue executing on their differentiated, team-based commercial relationship model. Combining our significant strengths will create a strong regional bank that will provide exceptional value for our investors while maintaining our strong commitment to our customers and the communities we serve."

 

The combined company will operate under the Sterling Bancorp name and its principal banking subsidiary will operate under the name Sterling National Bank. The resulting institution will have a footprint spanning New York City, the Hudson Valley, Long Island and northern New Jersey.

 

Pro Forma Financial Impact

 

On a pro forma basis, the transaction is expected to be ~12% accretive to Sterling Bancorp's tangible book value per share at closing, and assuming a transaction close in the fourth quarter of 2017, is expected to be ~9% accretive to earnings per share in 2018, exclusive of the restructuring charge, and ~16% accretive to earnings per share in 2019. The integration of the two companies is expected to generate approximately $100 million in fully phased-in annual net cost savings, which is equal to about 35% of Astoria's non-interest expenses. Longer-term, the combination is expected to result in substantial value creation as Astoria's balance sheet and earning assets are transitioned to Sterling's diversified commercial lending model. The pro forma bank will have substantial internal capital generation for future growth and is expected to maintain a quarterly dividend of $0.07 per share, equal to ~17% dividend payout ratio.

 

Leadership

 

The leadership team of the combined company will be assembled from both organizations, with Sterling Bancorp's Jack Kopnisky serving as President and Chief Executive Officer and Luis Massiani serving as Chief Financial Officer. Effective at the closing of the transaction, four members of the Board of Directors of Astoria will join the Board of Directors of the combined company.

 

Approvals

 

The transaction has been approved by the Boards of Directors of both companies, and is expected to close in the fourth quarter of 2017. The transaction is subject to approval by each company's stockholders, as well as regulatory approval and other customary closing conditions.

 

Advisors

 

RBC Capital Markets and Citi are lead financial advisors to Sterling Bancorp. Squire Patton Boggs is acting as Sterling's legal counsel. Sandler O'Neill + Partners, L.P. is serving as financial advisor to Astoria Financial Corporation. Wachtell, Lipton, Rosen & Katz is acting as Astoria's legal counsel.

 

Conference Call

 

Sterling Bancorp and Astoria Financial Corporation will host a joint conference call and webcast on March 7, 2017 at 10:30 a.m. Eastern Time to discuss the transaction. The conference call will be accessible by dialing (877) 419-6594, conference ID number 3423423, or by visiting the companies' websites: www.sterlingbancorp.com or ir.astoriabank.com. An audio replay will be accessible via the companies' websites.

 

About Sterling Bancorp

 

Sterling Bancorp, whose principal subsidiary is Sterling National Bank, specializes in the delivery of service and solutions to business owners, their families and consumers within the communities it serves through teams of dedicated and experienced relationship managers. Sterling National Bank offers a complete line of commercial, business, and consumer banking products and services. For more information, visit the Sterling Bancorp website at www.sterlingbancorp.com.

 

About Astoria Financial Corporation

 

Astoria Financial Corporation, with assets of $14.6 billion, is the holding company for Astoria Bank. Established in 1888, Astoria Bank, with deposits in New York totaling $8.9 billion, is the second largest thrift depository in New York and provides its retail and business customers and local communities it serves with quality financial products and services through 88 convenient banking branch locations, a business banking office in Manhattan, and multiple delivery channels, including its flexible mobile banking app. Astoria Bank commands a significant deposit market share in the attractive Long Island market, which includes Brooklyn, Queens, Nassau, and Suffolk counties with a population exceeding that of 38 individual states. Astoria Bank originates multi-family and commercial real estate loans, primarily on rent controlled and rent stabilized apartment buildings, located in New York City and the surrounding metropolitan area and originates residential mortgage loans through its banking and loan production offices in New York, a broker network in four states, primarily along the East Coast, and correspondent relationships covering 13 states and the District of Columbia.