New York Community Bancorp (NYCB) and Flagstar Bancorp have entered into a definitive merger agreement, creating a company with more than $87 billion in assets.
The combined company will retain the Flagstar Bank brand in the Midwest and other states will retain their current branding, while Thomas Cangemi will be president and CEO, the companies announced this week.
The combined bank will have more than 400 branches across nine states.
Alessandro DiNello, the current president and CEO of Flagstar, will become non-executive chairman and John Pinto will take up the role of senior executive vice president and chief financial officer of the new company.
The agreement, which was approved by the boards of both companies, sees Flagstar shareholders receive a little over four shares of New York Community common stock for each share they own in Flagstar. Based on pre-announcement share prices, this values the deal at approximately $2.6 billion.
Cangemi, who was appointed CEO of New York Community earlier this year, said one of his top priorities had been to “seek out a like-minded partner that would provide NYCB with a diversified revenue stream, an improved funding mix, and leverage our scale and technology, as we transition away from a traditional thrift model”.
He continued: “In Flagstar, we have found such a like-minded partner. The combination of our two companies will allow each of us to continue our transformation to a full-service commercial bank by broadening our product offerings while expanding our geographic reach with no branch overlap.”
It is expected that the transaction will lead to a 16% increase in New York Community Bancorp’s earnings per share in 2022 and a 3.5% increase to its tangible book value per share.
The transaction is expected to close by the end of 2021, subject to regulatory and shareholder approvals.