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New York Community Bancorp, Astoria Financial terminate deal

Astoria Financial Corp. headquarters in Lake Success on

Astoria Financial Corp. headquarters in Lake Success on July 9, 2015. Credit: Danielle Finkelstein

New York Community Bancorp’s deal to acquire Astoria Financial has been called off, the two banks said Tuesday.

In a statement, the companies said their “boards of directors have mutually agreed not to extend the companies’ definitive merger agreement, and to terminate the agreement effective Jan. 1, 2017.”

Westbury-based New York Community Bancorp wouldn’t comment beyond the statement. Lake Success-based Astoria Financial didn’t immediately return a call seeking comment.

The deal was announced in 2015 and was pending regulatory approval.

New York Community Bancorp said last month that the deal wouldn’t close by the end of the year, which meant Astoria Financial could terminate the merger without penalty.

The combined company would have had assets of about $64 billion.

“It’s possible Astoria was not happy about waiting around forever and NYCB could not give assurances they’d get regulatory approval,” said Art Loomis, president of Northeast Capital, a boutique investment bank that concentrates on financial institutions.

After the merger, NYCB would have been designated a “systemically important financial institution,” or SIFI. A bank is designated a SIFI if its failure would cause significant disruption to the economy.

Crossing the SIFI threshold creates greater regulatory scrutiny and compliance burdens for banks, Loomis said.

“It’s a threshold you’re very reluctant to cross,” Loomis said. “There are a significant number of procedures that need to be in place. A capital plan has to be in place.”

But Loomis said he expected a friendlier regulatory environment once President-elect Donald Trump takes office. So he thought regulators in the new administration would eventually have approved the deal.

“I’m baffled this was a walkaway,” he said.

New York Community Bancorp has assets of $49.5 billion. Its shares fell 3 percent to close at $16.75 on Tuesday. The shares are up 3.6 percent over the last 12 months.

Astoria Financial has assets of $15 billion. Its shares rose less than 1 percent on Tuesday to close at $18.17. They are up 16 percent in the last 12 months.

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