The deal creates a company with more than $87 billion in assets. It'll operate almost 400 branches in nine states and 87 loan offices across 28 states.
At last check shares of Flagstar Bancorp, Troy, Mich., were trading 8% higher at $49.02. The Westbury, N.Y., bank's shares were trading 5.6% higher at $12.66.
Under the terms of the agreement, New York Community will pay 4.0151 shares for each Flagstar share. At closing, New York Community holders will have 68% of the combined company and Flagstar holders 32%.
Thomas R. Cangemi, who is chairman, president and chief executive of New York Community Bancorp, will be president and CEO of the combined company.
Alessandro P. DiNello, currently Flagstar's president and CEO, will becomes non-executive chairman. John Pinto, who is senior executive vice president and chief financial officer at New York Community, will take those posts at the new company.
“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,” Cangemi said in a statement.
New York Community and Flagstar are among the many U.S. regional banks that have had to cope with low interest rates, weak loan demand and the need to boost technology spending, Bloomberg News reports.
The boards of New York Community and Flagstar have approved the terms. The deal is subject to conditions, including regulatory clearances and a vote of the shareholders of both companies.