Published on 8 Nov 2022 on Zacks via Yahoo Finance

New York Community Gets Final Regulatory Nod for Flagstar Merger

New York Community Bancorp, Inc. NYCB has received regulatory approval from the Federal Reserve Board (“FRB”) to complete its previously announced merger with Flagstar Bancorp, Inc. FBC. The approval by the FRB is the final approval for the acquisition. No further regulatory approvals are required to complete the deal.The consummation of the acquisition is expected on Dec 1, 2022.NYCB’s chairman, president, and CEO, Thomas R. Cangemi, stated, “We are extremely gratified to receive all necessary regulatory approvals required to close on our acquisition of Flagstar. The acquisition combines two like-minded organizations, creating a nearly $90 billion regional bank with better scale and capabilities, including an expanded branch network, a full-suite of financial products and services, a diversified funding base and loan portfolio, and importantly, the combined talent and leadership of our two companies.”Flagstar’s president and CEO, Alessandro DiNello, said, “The regulatory approval we received positions us to create a premier bank with a robust commercial lending operation, an expansive and powerful retail banking network, and industry-leading mortgage origination and servicing businesses. Our larger balance sheet will help us invest more in technologies that enhance the customer experience and create a more personalized approach to banking. We could not have teamed up with a more complementary partner and I look forward to the powerful results we will achieve when our Flagstar team is paired with our outstanding partners at NYCB.”

Details of the Merger

NYCB and Flagstar entered the $2.6-billion all-stock merger deal in April 2021. Back then, it was decided that Flagstar shareholders would receive 4.0151 shares of New York Community common stock for each of their shares held. New York Community would own 68% of the combined company and the remaining would be held by Flagstar shareholders.At the time of deal announcement, it was projected that the transaction would be 16% accretive to NYCB’s earnings per share in 2022 (assuming fully phased-in cost savings). Also, the deal was expected to be 3.5% accretive to NYCB’s tangible book value per share.Initially, the transaction was expected to close by the end of 2021, subject to the satisfaction of customary closing conditions, including the receipt of the requisite regulatory approvals and the requisite approval by shareholders of each company.In August 2021, the deal received approval from shareholders of NYCB and Flagstar.In April 2022, the companies decided to extend the timeline of the merger until Oct 31, 2022. Also, the banks announced that they were tweaking their structure to operate under a national bank charter rather than a state one. This put the surviving bank under the purview of the Office of the Comptroller of the Currency (“OCC”).On Oct 28, 2022, the banks received approval from the OCC to convert Flagstar to a national bank and to merge New York Community Bank into Flagstar Bank, N.A., with Flagstar Bank, N.A. being the surviving entity. On the same date, the banks agreed to extend the merger agreement from Oct 31, 2022, to Dec 31, 2022.Notably, the combination of NYCB and Flagstar will create one of the largest regional banks in the country, operating 395 branches across a nine-state geography, including strong footholds in the Northeast and the Midwest, with exposure to high-growth markets in the Southeast and West Coast.Over the past year, New York Community has lost 29.3% and FBC has dipped 27.7% compared with a 14.5% decline of the industry.