New York Community Bancorp (NYCB) Buying Flagstar (FBC) In $2.6 Billion Deal

By Amit Chowdhry ● April 26, 2021
  • New York Community Bancorp, Inc. (NYSE: NYCB) and Flagstar Bancorp, Inc. (NYSE: FBC), jointly announced that they have entered into a definitive merger agreement under which the two companies will combine in an all-stock merger as part of a $2.6 billion deal. These are the details.

New York Community Bancorp, Inc. (NYSE: NYCB) and Flagstar Bancorp, Inc. (NYSE: FBC), jointly announced that they have entered into a definitive merger agreement under which the two companies will combine in an all-stock merger. And under terms of the agreement – which was unanimously approved by the Boards of Directors of both companies – Flagstar shareholders will receive 4.0151 shares of New York Community common stock for each Flagstar share they own. Following the completion of the deal, the New York Community shares held by New York Community shareholders immediately prior to the transaction are expected to collectively represent approximately 68% of the combined company, and the New York Community shares issued to Flagstar shareholders in the merger are expected to represent approximately 32% of the combined company. The implied total deal value based on closing prices as of April 23, 2021, is approximately $2.6 billion.

The new company is going to have over $87 billion in assets and operate nearly 400 traditional branches in nine states and 87 loan production offices across a 28 state footprint. And it will have its headquarters on Long Island, N.Y. with regional headquarters in Troy, MI, including Flagstar’s mortgage operations. The combined company is going to maintain the Flagstar Bank brand in the Midwest. Flagstar’s mortgage division is also going to maintain the Flagstar brand. Other states are going to retain their current branding.

Thomas R. Cangemi will be President and CEO of the combined company and Alessandro (Sandro) P. DiNello, Flagstar’s current President and CEO, will become Non-Executive Chairman with John Pinto serving as Senior Executive Vice President and Chief Financial Officer of the combined company. And Lee M. Smith will continue to lead the mortgage division as Senior Executive Vice President and President of Mortgage and Reginald Davis will head up the consumer and commercial banking and serve as Senior Executive Vice President and President of Banking. The remaining key roles will combine talent from both companies. And the Board of Directors will be comprised of 12 directors – 8 from New York Community and 4 from Flagstar.

The deal is 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 the shareholders of each company.

KEY QUOTES:

“When I was appointed President and CEO of New York Community earlier this year, one of my top priorities was 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.  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.  Over the past several months, I have gotten to know the Board and management team of Flagstar and found that we share the same values and commitment to our employees, customers, and the communities which we serve.  Importantly, we both hold shareholder value as paramount. Sandro and his team have done a terrific job at Flagstar and I look forward to working closely with them as we build a bank for the future. The merger of our two organizations will provide us with a larger platform, a more robust product offering, a strong employee talent pool, and significant balance sheet size to accelerate our transformation into a high performing commercial bank.”

— Thomas R. Cangemi

“For Flagstar, this is a unique opportunity. With our existing Flagstar platform, we had every expectation of continuing to build on our success as a leader in creating value in the mid-size bank space. Now, in partnership with NYCB, we are positioned to further accelerate everything we’ve been doing during my tenure as Flagstar’s CEO to build a best-in-class commercial bank, supported by one of the best mortgage and servicing businesses in the country.

“Tom is a young, dynamic CEO who shares my vision. Together his team and the Flagstar team will grow our combined businesses smartly and safely. I’m immensely proud of what we have achieved at Flagstar and can’t wait to see all we will accomplish as we supercharge our respective businesses through this transaction.”

— Alessandro DiNello, President and Chief Executive Officer of Flagstar Bancorp

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