New York Community Bancorp, Astoria Financial To Merge In $2.0 Bln Deal

(RTTNews) - New York Community Bancorp Inc. (NYCB), the parent company for New York Community Bank and New York Commercial Bank, and Astoria Financial Corp. (AF), the parent company for Astoria Bank, announced the signing of a definitive agreement under which the two companies will combine in a strategic merger. The transaction is valued at approximately $2.0 billion.

The transaction is expected to be immediately accretive to pro forma diluted earnings per share and pro forma tangible book value per share.

As per the terms of the agreement, which has been unanimously approved by the Boards of Directors of both companies, Astoria Financial will merge into New York Community Bancorp, Inc. and Astoria Bank will merge into New York Community Bank. Astoria's branches will then operate through a newly formed Astoria Bank Division of New York Community Bank.

Shareholders of Astoria will receive one share of New York Community common stock and $0.50 in cash in exchange for each share of Astoria stock held at the merger date. Pending receipt of the necessary shareholder and regulatory approvals, the merger is currently expected to be completed in the fourth quarter of 2016.

Based on New York Community's closing price of $19.16 per share on October 28, 2015, the merger will result in each Astoria share being valued at $19.66.

As per the agreement and plan of merger, Joseph Ficalora will continue to serve as President and Chief Executive Officer of the combined company. Monte N. Redman, President and Chief Executive Officer of Astoria and Astoria Bank, and Ralph Palleschi, Astoria's Chairman, will become members of the Board of Directors of New York Community and its bank subsidiaries.

"Based upon an anticipated dividend payout ratio of 50% upon completion of the merger, we have decided, going forward, to re-allocate $0.08 cents per share from our traditional dividend payment to support our future growth and capital strength. "Accordingly, our expected dividend will be $0.17 per share, subject to regulatory approval, beginning in the first quarter of 2016." Mr. Ficalora said.

The combined company, on a pro forma basis, will have 241 banking offices in Metro New York, including all five boroughs of New York City, Long Island, and Westchester County. Including New York Community's 115 branches in Ohio, Arizona, Florida, and New Jersey, the combined company will have more than 350 branch offices and pro forma deposits of approximately $37.3 billion.

In anticipation of the merger, New York Community expects to reposition its balance sheet in the current fourth quarter by prepaying approximately $10 billion of wholesale borrowings, which is expected to result in a one-time after-tax prepayment charge of approximately $614 million. Due to this charge, any future dividends paid by New York Community over the next four quarters will require regulatory clearance.

To offset the impact of this charge on its capital, New York Community also announced that it will shortly commence a follow-on offering of its common stock. The offering is expected to raise an amount at least equal to that of the after-tax prepayment charge. The proceeds from the offering will qualify as tangible common equity and Tier 1 common equity.