Sterling Bancorp, Astoria Financial To Merge In $2.2 Bln Stock-for-Stock Deal

(RTTNews) - Sterling Bancorp (STL) and Astoria Financial Corp. (AF) announced that they reached a definitive merger agreement in a stock-for-stock transaction valued at about $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%.

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 dynar.

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.

On a pro forma basis, the transaction is expected to be about 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 about 9% accretive to earnings per share in 2018, exclusive of the restructuring charge, and about 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.

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.

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.

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.