A banking industry watchdog group is challenging the proposed merger of Sterling Bancorp and Astoria Financial Corp., claiming that Sterling has a weak record of making loans to nonwhite applicants.
Fair Finance Watch, based in the Bronx, opposed the merger in a letter sent on April 26 to the Federal Reserve Bank of New York. Executive Director Matthew Lee said an objection has also been filed with the Comptroller of the Currency.
The organization claims that Sterling, based in Montebello, Rockland County, denied loan applications to African-Americans 3.6 times more frequently than loans to white applicants in 2015.
A Sterling spokeswoman, Linda Dunbar, said the bank cannot respond to the charges yet because it is working on regulatory issues.
Sterling and Astoria announced on March 7 that combining their operations would create the sixth largest regional bank in the New York City area, with $29 billion in assets.
Astoria is based in Lake Success, Nassau County, and operates primarily in Queens, Nassau, Suffolk and Kings counties. Sterling”™s offices are concentrated in Westchester, Rockland and Orange counties.
The merger is structured as an all-stock deal valued at $2.2 billion. Sterling stockholders would own about 60 percent of the combined company and Astoria stockholders would own about 40 percent.
It would operate under the Sterling name.
Fair Finance Watch says Sterling made home purchase loans in 2015 to 22 African-Americans, 37 Latinos and 495 white customers. In Nassau and Suffolk, where Sterling has only a few branches, it made 149 home purchase loans to white applicants and to only one African American customer.
“This would be a combination of banks with disparate, and in places highly irregular, Home Mortgage Disclosure Act data,” the organization said in its letter to the Federal Reserve.
Sterling and Astoria hope to get approvals from their shareholders and bank regulators and to close the transaction by the end of the year.
