New York Community Bancorp Inc. has agreed to buy Astoria Financial Corp., in a $2 billion deal that combines two of the largest Long Island-based banks.
The merged company would have 202 branches in Nassau, Suffolk, Queens and Brooklyn, the companies said Thursday. Including branches elsewhere, the combined company would have 241 branches in the New York metropolitan area, and more than 350 overall. The bank's assets would total $64.1 billion.
The merger is expected to close in 2016's fourth quarter.
New York Community president and chief executive Joseph R. Ficalora will lead the combined company. Astoria president and chief executive Monte N. Redman and chairman Ralph Palleschi will join the board of directors of New York Community and its bank subsidiaries.
The banks, which have survived market ups and downs since they were founded in the mid- and late 1800s, emphasize lending for multifamily homes and "take particular pride in providing exceptional customer service," Ficalora said in a statement. "Both of us stand as symbols of stability, strength and service."
"We have found a very strong partner in New York Community Bank," which has provided "great service" to the community, Redman said in an interview. "It's a great deal for both companies, and we look forward to driving greater shareholder value."
Astoria's branches will operate under a new division of New York Community. Branches located near each other will likely be "consolidated," Redman said.
The companies didn't discuss the merger's impact on staffing levels. At the end of 2014, Westbury-based New York Community had 3,416 employees and Lake Success-based Astoria had 1,555 at the end of September, according to Bloomberg data.
The agreement calls for Astoria's stockholders to receive one share of New York Community common stock and 50 cents in cash for each share of stock in Astoria, New York Community announced in a news release Thursday. New York Community was valued at $19.16 per share at the closing bell on Wednesday, so the merger gave each Astoria share a nominal value of $19.66.
In New York trading Thursday, Astoria's stock price fell $1.37, or 7.7 percent, to close at $16.53, and New York Community's dropped $2.30, or 12 percent, to $16.86.
Investors may be concerned that the combined bank will have more than $50 billion in assets, subjecting it to greater regulation, said Erik Oja, a banking industry analyst at S&P Capital IQ. Now, New York Community has slightly more than $49 billion in assets, he said.
Among investors, "there's some great disappointment there, but I think they'll get over it, because New York Community is a very, very solid company and has a long history and probably a very good future," Oja said.
New York Community is the largest bank based on Long Island by stock-market value, and the fourth-largest public company here, with a stock market capitalization of $8.51 billion.
Astoria is the Island's second-largest bank by stock market value, and its ninth-largest public company, with its shares valued at $1.8 billion.
The combined bank is expected to have a 9.7 percent share of the deposits in Long Island, Queens and Brooklyn, the companies said.
In connection with the deal, New York Community said Thursday that it will sell about $650 million in stock in a follow-on offering.
In addition, the bank intends to prepay about $10 billion of wholesale borrowings, which will result in a one-time, after-tax charge of $614 million.