Sterling Bancorp will buy Hudson Valley Bank in a $539 million stock-for-stock deal that will greatly expand its presence in Westchester County, the companies announced Wednesday.
Headquartered in Yonkers, Hudson Valley Bank has 17 branches in Westchester County, including five in Yonkers, while Sterling National Bank, based in Montebello, has 26 branches in New York and New Jersey, including one on Executive Boulevard in Yonkers. The acquisition creates the 10th largest regional bank by deposits in the New York metropolitan area.
The combined company will operate under the Sterling Bancorp name and its principal banking subsidiary will continue under the name Sterling National Bank.
“The merger will create a $10 billion plus franchise serving small to middle-market commercial clients and consumers in the dynamic New York metro region,” said Sterling Bancorp CEO Jack Kopnisky in a conference call announcing the deal. “The merger brings us a scalable presence in the attractive Westchester market. Hudson Valley Bank is the largest bank headquartered in Westchester County.”
Kopnisky emphasized the strong cultural fit between Hudson Valley and Sterling, noting that Hudson Valley focuses on the small and middle-market business segment and has developed long, loyal relationships with its clientele.
“Sterling”™s commercial lending expertise will be complemented by Hudson Valley”™s deposit products,” Kopnisky said. “We will have strong liquidity to support robust lending activity.”
Sterling Bancorp merged with Provident New York Bancorp, of which Kopnisky was CEO, in 2013. After that transaction, the company kept the Sterling Bancorp name.
“We believe our progress to date in integrating and realizing the expected benefits of (the prior) merger and growing the resulting company bodes well for our ability to execute on the Hudson Valley merger and build value for our shareholders,” Kopnisky said.
Rumors of a sale of Hudson Valley Bank to either Sterling Bancorp or Bridgeport, Conn.-based People”™s United Bank were first reported by Bloomberg on Oct. 24. Just days later, the bank”™s parent company, Hudson Valley Holding Corp., reported $3.3 million in earnings and diluted earnings per share of 16 cents, up from 12 cents per diluted share in the second quarter.
“We”™re excited about the strategic merger with Sterling Bancorp,” said Stephen R. Brown, president and CEO of Hudson Valley Bank and its parent Hudson Valley Holding Corp. “Our shared commitment to customer relationship-based banking has been a cornerstone for us both and will make the combined bank a powerful regional bank in the dynamic New York metro market.”
Hudson Valley Holding Corp. shareholders will receive 1.92 shares of Sterling Bancorp common stock per Hudson Valley share. The share exchange ratio represents an 18.4 percent premium over Hudson Valley Holding’s share price of $13.99 at the close of trading on Nov. 4. When the deal is complete, Sterling Bancorp stockholders will own approximately 69 percent of the stock of the combined company and Hudson Valley Holding Corp. stockholders will own approximately 31 percent.
The bank expects to consolidate about 10 locations and will consider moving its headquarters to Westchester County.
Hudson Valley Bank was founded in Yonkers in 1972 with an initial capitalization of $2.5 million. According to the bank”™s website, the first branch was in a trailer on East Grassy Sprain Road. Currently, Hudson Valley Bank has more than $2.6 billion in assets.
Kopnisky will continue to lead the bank, with Luis Massianim, Sterling Bancorp”™s executive vice president and chief financial officer, continuing in that role.
Jefferies LLC is serving as lead financial adviser to Sterling Bancorp and rendered a fairness opinion to the board of directors of Sterling Bancorp in connection with the transaction. RBC Capital Markets LLC also rendered a fairness opinion to Sterling Bancorp”™s board of directors. Wachtell, Lipton, Rosen & Katz is acting as Sterling”™s legal counsel. Keefe, Bruyette & Woods Inc. is serving as financial adviser to Hudson Valley Holding Corp. and rendered a fairness opinion to the board of directors of Hudson Valley in connection with the transaction. Day Pitney LLP is acting as Hudson Valley”™s legal counsel.
The deal, which is expected to close in the second quarter of 2015, remains subject to approval by shareholders of both corporations as well as government regulators.
