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As filed with the Securities and Exchange Commission on March 15, 2016.

Registration No. 333-208649

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Amendment No. 4

to the

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

New York Community Bancorp, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

Delaware		6036		06-1377322
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

615 Merrick Avenue

Westbury, New York 11590

(516) 683-4100

(Address, including Zip Code, and Telephone Number, including Area Code, of Registrant’s Principal Executive Offices)

 

 

Joseph R. Ficalora

President and Chief Executive Officer

New York Community Bancorp, Inc.

615 Merrick Avenue

Westbury, New York 11590

(516) 683-4100

(Name, Address, including Zip Code, and Telephone Number, including Area Code, of Agent for Service)

 

 

With copies to:

 

H. Rodgin Cohen, Esq. Mark J. Menting, Esq. Jared M. Fishman, Esq. Sullivan & Cromwell LLP 125 Broad Street New York, New York 10004 (212) 558-4000		Monte N. Redman President and Chief Executive Officer Astoria Financial Corporation One Astoria Bank Plaza Lake Success, New York 11042 (516) 327-3000		Edward D. Herlihy, Esq. Matthew M. Guest, Esq. Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 (212) 403-1000

 

 

Approximate date of commencement of the proposed sale of the securities to the public:

As soon as practicable after this Registration Statement becomes effective and upon completion of the merger described in the enclosed document.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer		x		Accelerated filer		¨
Non-accelerated filer		¨  (Do not check if a smaller reporting company)		Smaller reporting company		¨

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ¨

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ¨

 

 

CALCULATION OF REGISTRATION FEE

 

Title of each class of Securities to be Registered		Amount to be Registered		Proposed Maximum Offering Price Per Share		Proposed Maximum Aggregate Offering Price		Amount of Registration Fee(5)
Common Stock, par value $0.01		104,833,319(1)		N/A		$1,612,892,822.01(3)		$162,418.31(6)
6.50% Non-Cumulative Perpetual Preferred Stock, Series A, par value $0.01		135,000(2)		N/A		$129,796,000(4)		$13,070.46(6)
Depositary Shares each representing a 1/40th interest in a share of 6.50% Non-Cumulative Perpetual Preferred Stock, Series A, par value $0.01		(7)		(7)		(7)		(7)

(1)

Represents the maximum number of shares of New York Community Bancorp, Inc. (“NYCB”) common stock estimated to be issuable upon completion of the merger described herein. This number is based on the number of shares of Astoria Financial Corporation (“Astoria”) common stock outstanding and reserved for issuance under various equity plans as of March 9, 2016, and the exchange of each such share of Astoria common stock for one share of NYCB common stock and $0.50 in cash, pursuant to the terms of the Agreement and Plan of Merger, dated as of October 28, 2015, by and between Astoria and NYCB (the “merger agreement”), which is attached to the joint proxy statement/prospectus as Annex A.

(2)

Represents the maximum number of shares of NYCB Non-Cumulative Preferred Stock, Series A, par value $0.01 per share, estimated to be issuable upon completion of the merger described herein. This number is based on the number of shares of Astoria Non-Cumulative Perpetual Preferred Stock, Series C, par value $1.00 per share, outstanding as of December 15, 2015, and the exchange of each such share of Astoria preferred stock for one share of NYCB preferred stock, pursuant to the terms of the merger agreement.

(3)

The proposed maximum aggregate offering price of the registrant’s common stock was calculated based upon the market value of shares of Astoria common stock in accordance with Rules 457(c) and 457(f) under the Securities Act as follows: (i) in connection with the registration of 103,715,234 shares of NYCB common stock on December 18, 2015, the product of (A) $15.89, the average of the high and low prices per share of Astoria common stock as reported on the New York Stock Exchange on December 18, 2015 and (B) 103,715,234, minus (C) $51,857,617, the estimated amount of cash that is to be paid by NYCB to Astoria common stockholders with respect to such shares in connection with the merger; and (ii) in connection with the registration of 1,118,085 shares of NYCB common stock on March 10, 2016, the product of (A) $15.45, the average of the high and low prices per share of Astoria common stock as reported on the New York Stock Exchange on March 9, 2016 and (B) 1,118,085, minus (C) $559,042.50, the estimated amount of cash that is to be paid by NYCB to Astoria common stockholders with respect to such shares in connection with the merger.

(4)

The proposed maximum aggregate offering price of the registrant’s preferred stock was calculated based upon the book value per share of Astoria Non-Cumulative Perpetual Preferred Stock, Series C as of September 30, 2015 (as disclosed in Astoria’s Form 10-Q for the three-month period ended September 30, 2015) pursuant to Rule 457(f)(2) under the Securities Act.

(5)	Estimated solely for the purpose of calculating the registration fee required by Section 6(b) of the Securities Act.

(6)	Previously paid.

(7)	No separate registration fee will be payable in respect of the depositary shares each representing a 1/40th interest in a share of 6.50% Non-Cumulative Perpetual Preferred Stock, Series A.

 

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

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Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This document shall not constitute an offer to sell or the solicitation of any offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

 

PRELIMINARY—SUBJECT TO COMPLETION—DATED MARCH 15, 2016

 

Proxy Statement			Prospectus

 

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

Dear Stockholder:

On October 28, 2015, New York Community Bancorp, Inc., or NYCB, and Astoria Financial Corporation, or Astoria, entered into an Agreement and Plan of Merger (which we refer to as the “merger agreement”) that provides for the combination of the two companies. Under the merger agreement, Astoria will merge with and into NYCB, with NYCB as the surviving corporation, in a transaction we refer to as the “merger.” Immediately following the completion of the merger, Astoria Bank, a wholly-owned bank subsidiary of Astoria, will merge with and into New York Community Bank, a wholly-owned subsidiary of NYCB, with New York Community Bank as the surviving bank, in a transaction we refer to as the “bank merger.” The merger will combine two community banks with a long history of service and a common commitment to enhancing shareholder value.

In the merger, each outstanding share of Astoria common stock (except for specified shares of Astoria common stock held by Astoria or NYCB and shares of Astoria common stock held by stockholders who properly exercise appraisal rights) will be automatically converted into the right to receive one share of NYCB common stock (which we refer to as the “stock consideration”) plus $0.50 in cash (which we refer to as the “cash consideration,” and, together with the stock consideration, the “merger consideration”). Although the cash consideration and the number of shares of NYCB common stock that each Astoria common stockholder will receive is fixed, the market value of the merger consideration will fluctuate with the market price of NYCB common stock. Based on the closing price of NYCB’s common stock on the New York Stock Exchange, or the NYSE, on October 28, 2015, the last trading day before public announcement of the merger, the one-for-one exchange of Astoria shares for shares of NYCB common stock (which we refer to as the “exchange ratio”) plus the cash consideration represented approximately $19.66 in value for each share of Astoria common stock and approximately $2.0 billion on an aggregate basis. Based on NYCB’s closing price on March 14, 2016 of $15.72, the stock consideration plus the cash consideration represented approximately $16.22 in value for each share of Astoria common stock and approximately $1.7 billion on an aggregate basis. Based on the one-for-one exchange ratio and the number of shares of Astoria common stock outstanding and reserved for issuance under various stock options and restricted stock and restricted stock unit awards as of March 9, 2016, the maximum number of shares of NYCB common stock issuable in the merger is 104,833,319. We urge you to obtain current market quotations for NYCB (trading symbol “NYCB”) and Astoria (trading symbol “AF”).

Also in the merger, each share of Astoria 6.50% Non-Cumulative Perpetual Preferred Stock, Series C, par value $1.00 per share, with a liquidation preference of $1,000 per share, issued and outstanding immediately prior to the effective time of the merger will be automatically converted into the right to receive one share of NYCB 6.50% Non-Cumulative Perpetual Preferred Stock, Series A, par value $0.01 per share, with a liquidation preference of $1,000 per share. But for the par value of the securities, the NYCB preferred stock to be issued in connection with the merger will have terms that are identical to the terms of the outstanding Astoria preferred stock. Likewise, following the completion of the merger, each outstanding Astoria depositary share listed on the NYSE under the symbol “AF.PRC” representing a 1/40th interest in a share of Astoria preferred stock will become a NYCB depositary share and will represent a 1/40th interest in a share of NYCB preferred stock. The NYCB depositary shares will be listed on the NYSE upon completion of the merger under a new name and ticker symbol to be assigned at the time of the completion of the merger. Based on the number of shares of Astoria Non-Cumulative Perpetual Preferred Stock, Series C, par value $1.00 per share, outstanding as of March 9, 2016, and the exchange of each such share of Astoria preferred stock for one share of NYCB preferred stock, the maximum number of shares of NYCB preferred stock issuable in the merger is 135,000 and the maximum number of depositary shares issuable in the merger is 5,400,000.

Astoria and NYCB will each hold a special meeting of their stockholders in connection with the merger. Astoria and NYCB common stockholders will be asked to vote to adopt the merger agreement and approve related matters, as described in the attached joint proxy statement/prospectus. Adoption of the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of NYCB common stock and the affirmative vote of the holders of a majority of the outstanding shares of Astoria common stock.

Holders of Astoria preferred stock and holders of depositary shares representing Astoria preferred stock are not entitled to, and are not requested to, vote at the Astoria special meeting.

The special meeting of NYCB stockholders will be held on April 26, 2016 at the Sheraton LaGuardia East Hotel, 135-20 39th Avenue, Flushing, New York 11354, at 10:00 a.m. local time. The special meeting of Astoria common stockholders will be held on April 26, 2016 at The Inn at New Hyde Park, 214 Jericho Turnpike, New Hyde Park, New York 11040, at 9:30 a.m. local time.

Astoria’s board of directors unanimously recommends that Astoria common stockholders vote “FOR” the adoption of the merger agreement and “FOR” the other matters to be considered at the Astoria special meeting.

NYCB’s board of directors unanimously recommends that NYCB stockholders vote “FOR” the adoption of the merger agreement and “FOR” the other matters to be considered at the NYCB special meeting.

 

 

The attached joint proxy statement/prospectus describes the special meeting of NYCB, the special meeting of Astoria, the merger, the documents related to the merger, and other related matters. Please carefully read the entire joint proxy statement/prospectus, including “Risk Factors,” beginning on page 30, for a discussion of the risks relating to the proposed merger. You also can obtain information about NYCB and Astoria from documents that each has filed with the Securities and Exchange Commission.

 

Joseph R. Ficalora President and Chief Executive Officer New York Community Bancorp, Inc.				Monte N. Redman President and Chief Executive Officer Astoria Financial Corporation

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in the merger or passed upon the adequacy or accuracy of this joint proxy statement/prospectus. Any representation to the contrary is a criminal offense.

The securities to be issued in the merger are not savings or deposit accounts or other obligations of any bank or non-bank subsidiary of either NYCB or Astoria, and they are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

The date of this joint proxy statement/prospectus is [                    ], and it is first being mailed or otherwise delivered to the stockholders of NYCB and Astoria on or about March 18, 2016.

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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To the Stockholders of New York Community Bancorp, Inc.:

New York Community Bancorp, Inc. (which we refer to as “NYCB”) will hold a special meeting of holders of common stock of NYCB (which we refer to as “NYCB stockholders”) at 10:00 a.m. local time, on April 26, 2016, at the Sheraton LaGuardia East Hotel, 135-20 39th Avenue, Flushing, New York 11354 (which we refer to as the “NYCB special meeting”) to consider and vote upon the following matters:

 

•

a proposal to adopt the Agreement and Plan of Merger, dated as of October 28, 2015, by and between Astoria Financial Corporation (which we refer to as “Astoria”) and NYCB, as such agreement may be amended from time to time, pursuant to which Astoria will merge with and into NYCB, with NYCB as the surviving corporation, as more fully described in the attached joint proxy statement/prospectus (which we refer to as the “NYCB merger proposal”), a copy of which is attached as Annex A;

 

•

a proposal to approve an amendment, a copy of which is attached as Annex F, to NYCB’s Amended and Restated Articles of Incorporation (which we refer to as the “NYCB charter”) to increase NYCB’s authorized shares of common stock by 300 million to 900 million (which we refer to as the “NYCB charter amendment proposal”); and

 

•

a proposal to adjourn the NYCB special meeting, if necessary or appropriate, to solicit additional proxies in favor of the NYCB merger proposal and the NYCB charter amendment proposal (which we refer to as the “NYCB adjournment proposal”).

We have fixed the close of business on February 29, 2016 as the record date for the special meeting. Only NYCB stockholders of record at that time are entitled to notice of, and to vote at, the NYCB special meeting, or any adjournment or postponement of the NYCB special meeting. Approval of each of the NYCB merger proposal and the NYCB charter amendment proposal requires the affirmative vote of holders of a majority of the outstanding shares of common stock of NYCB (which we refer to as “NYCB common stock”). The NYCB adjournment proposal will be approved if a majority of the votes cast at the NYCB special meeting are voted in favor of the adjournment proposal.

NYCB’s board of directors has unanimously approved the merger agreement, has determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable and in the best interests of NYCB and its stockholders, and unanimously recommends that NYCB stockholders vote “FOR” the NYCB merger proposal, “FOR” the NYCB charter amendment proposal, and “FOR” the NYCB adjournment proposal.

Your vote is very important. We cannot complete the merger unless NYCB’s stockholders adopt the merger agreement.

Regardless of whether you plan to attend the NYCB special meeting, please vote as soon as possible. If you hold stock in your name as a stockholder of record of NYCB, please complete, sign, date, and return the accompanying proxy card in the enclosed postage-paid return envelope. If you hold your stock in “street name” through a bank or broker, please follow the instructions on the voting instruction card furnished by the record holder.

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The enclosed joint proxy statement/prospectus provides a detailed description of the NYCB special meeting, the merger, the documents related to the merger, and other related matters. We urge you to read the joint proxy statement/prospectus, including any documents incorporated in the joint proxy statement/prospectus by reference, and its annexes carefully and in their entirety.

 

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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To the Stockholders of Astoria Financial Corporation:

NOTICE IS HEREBY GIVEN that Astoria Financial Corporation (which we refer to as “Astoria”) will hold a special meeting of holders of common stock of Astoria (which we refer to as “Astoria common stockholders”) at 9:30 a.m. local time, on April 26, 2016, at The Inn at New Hyde Park, 214 Jericho Turnpike, New Hyde Park, New York 11040 (which we refer to as the “Astoria special meeting”) to consider and vote upon the following matters:

 

•

a proposal to adopt the Agreement and Plan of Merger, dated as of October 28, 2015, by and between Astoria and New York Community Bancorp, Inc. (which we refer to as “NYCB”), as such agreement may be amended from time to time, pursuant to which Astoria will merge with and into NYCB, with NYCB as the surviving corporation, as more fully described in the attached joint proxy statement/prospectus (which we refer to as the “Astoria merger proposal”), a copy of which is attached as Annex A;

 

•

a proposal to approve, on an advisory (non-binding) basis, the compensation that certain executive officers of Astoria may receive in connection with the Astoria merger proposal pursuant to existing agreements or arrangements with Astoria (which we refer to as the “Astoria compensation proposal”); and

 

•

a proposal to approve one or more adjournments of the special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of the Astoria merger proposal (which we refer to as the “Astoria adjournment proposal”).

We have fixed the close of business on February 29, 2016 as the record date for the special meeting. Only Astoria common stockholders of record at that time are entitled to notice of, and to vote at, the Astoria special meeting, or any adjournment or postponement of the Astoria special meeting. Approval of the Astoria merger proposal requires the affirmative vote of holders of a majority of the outstanding shares of common stock of Astoria (which we refer to as “Astoria common stock”). Approval of each of the Astoria compensation proposal and the Astoria adjournment proposal requires a majority of the votes cast at the Astoria special meeting to be voted in favor of such proposal.

Astoria’s board of directors has unanimously approved the merger agreement, has determined that the merger, on the terms and conditions set forth in the merger agreement, is advisable and in the best interests of Astoria and its stockholders, and unanimously recommends that Astoria common stockholders vote “FOR” the Astoria merger proposal, “FOR” the Astoria compensation proposal and “FOR” the Astoria adjournment proposal.

Your vote is very important. We cannot complete the merger unless Astoria’s common stockholders adopt the merger agreement.

Regardless of whether you plan to attend the Astoria special meeting, please vote as soon as possible. If you hold stock in your name as a stockholder of record of Astoria, please complete, sign, date, and return the accompanying proxy card in the enclosed postage-paid return envelope. If you hold your stock in “street name” through a bank or broker, please follow the instructions on the voting instruction card furnished by the record holder.

Under Delaware law, Astoria common stockholders who do not vote in favor of the adoption of the Astoria merger proposal will have the right to seek appraisal of the fair value of their shares of Astoria common stock as determined by the Delaware Court of Chancery if the merger is completed, but only if they submit a written demand for such an appraisal prior to the vote on the Astoria merger proposal and comply with the other

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Delaware law procedures explained in the accompanying joint proxy statement/prospectus. Astoria common stockholders who do not vote in favor of the Astoria merger proposal and who submit a written demand for such an appraisal prior to the vote on the Astoria merger proposal and comply with the other Delaware law procedures will not receive the merger consideration.

The enclosed joint proxy statement/prospectus provides a detailed description of the special meeting, the merger, the documents related to the merger, and other related matters. We urge you to read the joint proxy statement/prospectus, including any documents incorporated in the joint proxy statement/prospectus by reference, and its annexes carefully and in their entirety.

 

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REFERENCES TO ADDITIONAL INFORMATION

This joint proxy statement/prospectus incorporates important business and financial information about New York Community Bancorp, Inc. (which we refer to as “NYCB”) and Astoria Financial Corporation (which we refer to as “Astoria”) from documents filed with the Securities and Exchange Commission (which we refer to as the “SEC”) that are not included in or delivered with this joint proxy statement/prospectus. You can obtain any of the documents filed with or furnished to the SEC by NYCB and/or Astoria at no cost from the SEC’s website at http://www.sec.gov. You may also request copies of these documents, including documents incorporated by reference in this joint proxy statement/prospectus, at no cost by contacting the appropriate company at the following address:

 

New York Community Bancorp, Inc.		Astoria Financial Corporation
615 Merrick Avenue		One Astoria Bank Plaza
Westbury, New York 11590		Lake Success, New York 11040
Attention: Investor Relations		Attention: Investor Relations
(516) 683-4420		(516) 327-7869

You will not be charged for any of these documents that you request. To obtain timely delivery of these documents, you must request them no later than five business days before the date of your meeting. This means that NYCB stockholders requesting documents must do so by April 19, 2016, in order to receive them before the NYCB special meeting, and Astoria common stockholders requesting documents must do so by April 19, 2016, in order to receive them before the Astoria special meeting.

You should rely only on the information contained in, or incorporated by reference into, this document. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this document. This document is dated [                    ], and you should assume that the information in this document is accurate only as of such date. You should assume that the information incorporated by reference into this document is accurate as of the date of such document. Neither the mailing of this document to Astoria common stockholders or NYCB stockholders, nor the issuance by NYCB of shares of common stock or shares of preferred stock in connection with the merger, will create any implication to the contrary.

This document does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Except where the context otherwise indicates, information contained in this document regarding Astoria has been provided by Astoria and information contained in this document regarding NYCB has been provided by NYCB.

Please see “Where You Can Find More Information” for more details.

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		Page
QUESTIONS AND ANSWERS			1
SUMMARY			10
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF NYCB			21
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF ASTORIA			23
SELECTED UNAUDITED PRO FORMA FINANCIAL DATA			25
COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA			27
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS			28
RISK FACTORS			30
THE NYCB SPECIAL MEETING			39
Date, Time, and Place of Meeting			39
Matters to Be Considered			39
Recommendation of NYCB’s Board of Directors			39
NYCB Record Date and Quorum			39
Vote Required; Treatment of Abstentions and Failure to Vote			39
Shares Held by Officers and Directors			40
Voting of Proxies; Incomplete Proxies			40
Shares Held in Street Name; Broker Non-Votes			41
Revocability of Proxies and Changes to an NYCB Stockholder’s Vote			41
Benefit Plan Voting			41
Solicitation of Proxies			41
Attending the NYCB Special Meeting			42
Delivery of Proxy Materials to Stockholders Sharing an Address			42
Assistance			42
NYCB PROPOSALS			43
Proposal No. 1: NYCB MERGER PROPOSAL			43
Proposal No. 2: NYCB CHARTER AMENDMENT PROPOSAL			43
Proposal No. 3: NYCB ADJOURNMENT PROPOSAL			44
THE ASTORIA SPECIAL MEETING			45
Date, Time, and Place of Meeting			45
Matters to Be Considered			45
Recommendation of Astoria’s Board of Directors			45
Astoria Record Date and Quorum			45
Vote Required; Treatment of Abstentions and Failure to Vote			45
Shares Held by Officers and Directors			46
Voting of Proxies; Incomplete Proxies			46
Shares Held in “Street Name”; Broker Non-Votes			46
Astoria 401(k) Plan Voting			47
Revocability of Proxies and Changes to an Astoria Common Stockholder’s Vote			47
Solicitation of Proxies			47
Attending the Astoria Special Meeting			47
Delivery of Proxy Materials to Stockholders Sharing an Address			48
Assistance			48

 

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		Page
ASTORIA PROPOSALS			49
PROPOSAL NO. 1: ASTORIA MERGER PROPOSAL			49
PROPOSAL NO. 2: ASTORIA COMPENSATION PROPOSAL			49
PROPOSAL NO. 3: ASTORIA ADJOURNMENT PROPOSAL			49
INFORMATION ABOUT NYCB			51
INFORMATION ABOUT ASTORIA			52
THE MERGER			53
Terms of the Merger			53
Background of the Merger			53
NYCB’s Reasons for the Merger; Recommendation of NYCB’s Board of Directors			60
Unaudited Prospective Financial Information			62
Opinion of Goldman, Sachs & Co.			64
Opinion of Credit Suisse Securities (USA) LLC			72
Astoria’s Reasons for the Merger; Recommendation of Astoria’s Board of Directors			80
Opinion of Sandler O’Neill & Partners, L.P.			82
Interests of NYCB’s Directors and Executive Officers in the Merger			93
Interests of Astoria’s Directors and Executive Officers in the Merger			94
Merger-Related Compensation for Astoria’s Named Executive Officers			97
Amendment to NYCB’s Certificate of Incorporation			101
Balance Sheet Repositioning			101
NYCB’s Dividend Policy			101
Public Trading Markets			101
Appraisal Rights in the Merger			102
Regulatory Approvals Required for the Merger			107
Litigation Relating to the Merger			109
THE MERGER AGREEMENT			110
Structure of the Merger			110
Treatment of Astoria Stock Options and Other Equity-Based Awards			111
Treatment of Astoria Preferred Stock and Depositary Shares			111
Closing and Effective Time of the Merger			112
Conversion of Shares; Exchange of Certificates			112
Representations and Warranties			113
Covenants and Agreements			114
Stockholder Meetings and Recommendation of Astoria’s and NYCB’s Boards of Directors			119
Agreement Not to Solicit Other Offers			120
Conditions to Complete the Merger			121
Termination of the Merger Agreement			122
Effect of Termination			123
Termination Fee			123
Expenses and Fees			123
Amendment, Waiver, and Extension of the Merger Agreement			124
ACCOUNTING TREATMENT			125
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER			126
Tax Consequences of the Merger Generally			127
Tax Consequences to U.S. Holders			127
Backup Withholding and Information Reporting			128
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS			129

 

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		Page
DESCRIPTION OF CAPITAL STOCK OF NYCB			136
Authorized Capital Stock			136
Common Stock			136
DESCRIPTION OF NEW NYCB PREFERRED STOCK			140
Preferred Stock			140
Series A Preferred Stock			140
Depositary Shares			148
COMPARISON OF STOCKHOLDERS’ RIGHTS			152
COMPARATIVE MARKET PRICES AND DIVIDENDS			163
LEGAL MATTERS			165
EXPERTS			165
DEADLINES FOR SUBMITTING STOCKHOLDER PROPOSALS			165
WHERE YOU CAN FIND MORE INFORMATION			167
ANNEX A – Agreement and Plan of Merger			A-1
ANNEX B – Opinion of Goldman, Sachs & Co.			B-1
ANNEX C – Opinion of Credit Suisse Securities (USA) LLC			C-1
ANNEX D – Opinion of Sandler O’Neill & Partners, L.P.			D-1
ANNEX E – General Corporation Law of Delaware § 262			E-1
ANNEX F – Form of Certificate of Amendment to the Amended and Restated Certificate of Incorporation of NYCB			F-1

 

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QUESTIONS AND ANSWERS

The following are some questions that you may have about the merger and the NYCB special meeting or the Astoria special meeting, and brief answers to those questions. We urge you to read carefully the remainder of this joint proxy statement/prospectus because the information in this section does not provide all of the information that might be important to you with respect to the merger, the NYCB special meeting or the Astoria special meeting. Additional important information is also contained in the documents incorporated by reference into this joint proxy statement/prospectus. Please see “Where You Can Find More Information.”

 

Q:	What is the merger?

 

A:

NYCB and Astoria have entered into an Agreement and Plan of Merger, dated as of October 28, 2015 (which we refer to as the “merger agreement”). Under the merger agreement, Astoria will be merged with and into NYCB, with NYCB continuing as the surviving corporation (which we refer to as the “merger”). Immediately following the completion of the merger, Astoria Bank, a wholly-owned bank subsidiary of Astoria, will merge with and into New York Community Bank, a wholly-owned bank subsidiary of NYCB (which we refer to as the “Community Bank”), with the Community Bank continuing as the surviving bank (which we refer to as the “bank merger”). A copy of the merger agreement is included in this joint proxy statement/prospectus as Annex A.

If the merger is completed, Astoria common stockholders will receive one share of NYCB common stock plus $.50 in cash for each share of Astoria common stock they hold immediately prior to the merger, plus an amount in cash (rounded to the nearest cent) based on the NYCB share closing price that an Astoria common stockholder would otherwise be entitled to receive for any fractional share of NYCB common stock. As a result of the foregoing, based on the number of shares of NYCB and Astoria common stock outstanding as of October 28, 2015, on a fully diluted basis, approximately 82.5% of outstanding NYCB common stock following the merger will be held by stockholders that were holders of NYCB common stock immediately prior to the effectiveness of the merger and approximately 17.5% of outstanding NYCB common stock will be held by stockholders that were holders of Astoria common stock immediately prior to the effectiveness of the merger.

NYCB currently expects that its total consolidated assets, based on a four quarter trailing average, will be over $50 billion and that it will be subject to stricter prudential standards required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, which we refer to as the “Dodd-Frank Act”, for large bank holding companies by the end of the second quarter of 2016. If NYCB’s total consolidated assets do not exceed $50 billion before the completion of the merger, its total consolidated assets will exceed the threshold upon the completion of the merger. Pursuant to the current requirements of the Dodd-Frank Act, NYCB will become subject to the enhanced regulatory standards applicable to bank holding companies at the end of the quarter in which its total consolidated assets exceed $50 billion, including but not limited to submitting an annual capital plan, undergoing an annual supervisory capital stress test and two company-run capital stress tests, enhanced requirements for liquidity risk management and overall risk management, liquidity buffer and liquidity stress testing requirements, submitting a resolution plan, implementation of an enhanced compliance program under the Volcker Rule, and payment of additional Federal Reserve Board assessments. NYCB will also be required to participate in the annual Comprehensive Capital Assessment and Review, and would be subjected to heightened supervisory expectations in a range of other areas.

The merger cannot be completed unless, among other things, both NYCB stockholders and Astoria common stockholders approve their respective proposals to adopt the merger agreement.

 

Q:	Why am I receiving this joint proxy statement/prospectus?

 

A:	We are delivering this document to you because it is a joint proxy statement being used by both the NYCB and Astoria boards of directors to solicit proxies of their respective common stockholders in connection with approval of the merger and related matters.

 

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In order to approve the merger and related matters, NYCB has called a special meeting of its stockholders. This document serves as proxy statement for the NYCB special meeting and describes the proposals to be presented at the NYCB special meeting.

Astoria has also called a special meeting of its common stockholders to approve the merger and related matters. This document serves as the proxy statement for the Astoria special meeting and describes the proposals to be presented at the Astoria special meeting. Holders of Astoria preferred stock, as defined below, and holders of depositary shares representing shares of Astoria preferred stock (which we refer to as the “Astoria depositary shares”) are not entitled to, and are not requested to, vote at the Astoria meeting.

Finally, this document is also a prospectus that is being delivered to Astoria common stockholders because, in connection with the merger, NYCB is offering, in addition to a $0.50 cash payment, shares of its common stock to Astoria common stockholders in a one-for-one exchange ratio (we refer to such exchange ratio as the “exchange ratio”). NYCB also is issuing shares of NYCB 6.50% Non-Cumulative Perpetual Preferred Stock, Series A, par value $0.01 and liquidation preference of $1,000 per share (which we refer to as the “NYCB preferred stock”), to holders of 6.50% Non-Cumulative Perpetual Preferred Stock, Series C, par value $1.00 and liquidation preference of $1,000 per share (which we refer to as the “Astoria preferred stock”). Each share of Astoria preferred stock will be automatically converted into one share of NYCB preferred stock in the merger. Following the completion of the merger, each outstanding Astoria depositary share will be automatically converted into a depositary share representing a 1/40th interest in a share of NYCB preferred stock (which we refer to as a “NYCB depositary share”).

This joint proxy statement/prospectus contains important information about the merger and the other proposals being voted on at the NYCB and Astoria special meetings and important information to consider in connection with an investment in NYCB common stock. You should read it carefully and in its entirety. The enclosed materials allow you to have your shares of common stock voted by proxy without attending your meeting. Your vote is important and we encourage you to submit your proxy as soon as possible.

 

Q:	What are NYCB stockholders being asked to vote on at the NYCB special meeting?

 

A:	NYCB is soliciting proxies from its stockholders with respect to the following proposals:

 

•

a proposal to adopt the merger agreement, as such agreement may be amended form time to time (which we refer to as the “NYCB merger proposal”);

 

•

a proposal to approve an amendment to NYCB’s Amended and Restated Articles of Incorporation (which we refer to as the “NYCB charter”) to increase NYCB’s authorized shares of common stock by 300 million to 900 million (which we refer to as the “NYCB charter amendment proposal”); and

 

•

a proposal to adjourn the NYCB special meeting, if necessary or appropriate, to solicit additional proxies in favor of the NYCB merger proposal (which we refer to as the “NYCB adjournment proposal”).

 

Q:	What are Astoria common stockholders being asked to vote on at the Astoria special meeting?

 

A:	Astoria is soliciting proxies from its stockholders with respect to the following proposals:

 

•

a proposal to adopt the merger agreement, as such agreement may be amended from time to time (which we refer to as the “Astoria merger proposal”);

 

•

a proposal to approve, on an advisory (non-binding) basis, the compensation that certain executive officers of Astoria may receive in connection with the Astoria merger proposal pursuant to existing agreements or arrangements with Astoria (which we refer to as the “Astoria compensation proposal”); and

 

•

a proposal to adjourn the Astoria special meeting, if necessary or appropriate, to solicit additional proxies in favor of the Astoria merger proposal (which we refer to as the “Astoria adjournment proposal”).

 

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Q:	What will Astoria common stockholders receive in the merger?

 

A:

If the merger is completed, Astoria common stockholders will receive one share of NYCB common stock (which we refer to as the “stock consideration”) plus a $0.50 cash payment (which we refer to as the “cash consideration,” and together with the stock consideration, as the “merger consideration”) for each share of Astoria common stock held immediately prior to the merger. NYCB will not issue any fractional shares of NYCB common stock in the merger. In addition to a cash payment equal to the proportion of the cash consideration equal to $0.50 multiplied by the fraction of a share (rounded to the nearest thousandth when expressed in decimal) of NYCB common stock that such shareholder would otherwise be entitled to receive, in lieu of fractional shares of NYCB common stock, NYCB will also pay to each former Astoria common stockholder who holds fractional shares an amount in cash determined by multiplying the average of the closing sale prices of NYCB common stock for the five full trading days ending on the day preceding the closing date of the merger (which we refer to as the “NYCB share closing price”) by the fraction of a share (rounded to the nearest thousandth when expressed in decimal) of NYCB common stock that such stockholder would otherwise be entitled to receive.

 

Q:	What will holders of Astoria depositary shares receive in the merger?

 

A:

If the merger is completed, holders of Astoria depositary shares will hold depositary shares of the combined company. After the merger is completed each outstanding NYCB depositary share will represent a 1/40th interest in a share of newly issued NYCB preferred stock, which will have terms that are substantively identical to the terms of Astoria’s outstanding preferred stock (except for the par value). For more information, see “Designation of New NYCB Preferred Stock.”

 

Q:	What will NYCB stockholders receive in the merger?

 

A:

If the merger is completed, NYCB stockholders will not receive any merger consideration and will continue to hold the shares of NYCB common stock that they currently hold. Following the merger, shares of NYCB common stock will continue to be traded on the New York Stock Exchange (which we refer to as the “NYSE”) under the symbol “NYCB.”

 

Q:	How will the merger affect Astoria equity awards?

 

A:	The Astoria equity awards will be affected as follows:

Stock Options: At the effective time of the merger, each outstanding option to purchase shares of Astoria common stock will fully vest and be converted automatically into the right to receive NYCB common stock with a value equal to the sum of (1) the exchange ratio multiplied by the NYCB share closing price and (2) the cash consideration, less the applicable exercise price. Any option to purchase shares of Astoria common stock that has an exercise price per share that is greater than or equal to the sum of the NYCB share closing price and the cash consideration (which we refer to as the “per share stock consideration”) will be cancelled in exchange for no consideration.

Restricted Stock: At the effective time of the merger, each outstanding restricted share of Astoria common stock will fully vest (with any performance-based vesting condition deemed to have been fully achieved (or achieved at the target level if more than one level of achievement has been contemplated)) and be converted automatically into the right to receive the merger consideration.

Restricted Stock Units: At the effective time of the merger, each outstanding restricted stock unit award in respect of Astoria common stock will fully vest (with any performance-based vesting condition deemed to have been fully achieved (or achieved at the target level if more than one level of achievement has been contemplated)) and be converted automatically into the right to receive the merger consideration in respect of each share of Astoria common stock underlying the restricted stock unit award.

 

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Q:	Will the value of the merger consideration change between the date of this joint proxy statement/prospectus and the time the merger is completed?

 

A:

Yes. Although the merger consideration is fixed, the value of the stock consideration will fluctuate between the date of this joint proxy statement/prospectus and the completion of the merger based upon the market value for NYCB common stock. Any fluctuation in the market price of NYCB common stock after the date of this joint proxy statement/prospectus will change the value of the shares of NYCB common stock that Astoria common stockholders will receive.

 

Q:	How does the NYCB board of directors recommend that I vote at the NYCB special meeting?

 

A:	NYCB’s board of directors unanimously recommends that you vote “FOR” the NYCB merger proposal, “FOR” the NYCB charter amendment proposal, and “FOR” the NYCB adjournment proposal.

 

Q:	How does the Astoria board of directors recommend that I vote at the Astoria special meeting?

 

A:	Astoria’s board of directors unanimously recommends that you vote “FOR” the Astoria merger proposal, “FOR” the Astoria compensation proposal, and “FOR” the Astoria adjournment proposal.

 

Q:	When and where are the meetings?

 

A:	The NYCB special meeting will be held at the Sheraton LaGuardia East Hotel, 135-20 39th Avenue, Flushing, New York 11354 on April 26, 2016, at 10:00 a.m. local time.

The Astoria special meeting will be held at The Inn at New Hyde Park, 214 Jericho Turnpike, New Hyde Park, New York 11040 on April 26, 2016, at 9:30 a.m. local time.

 

Q:	What do I need to do now?

 

A:

After you have carefully read this joint proxy statement/prospectus and have decided how you wish to vote your shares, please vote your shares promptly so that your shares are represented and voted at the NYCB special meeting and/or Astoria special meeting, as applicable. If you are a stockholder of both NYCB and Astoria, you will need to vote your NYCB and Astoria shares separately and to submit a separate proxy card to each company. If you hold your shares in your name as a stockholder of record, you must complete, sign, date, and mail your proxy card in the enclosed postage-paid return envelope as soon as possible. Alternatively, you may vote through the Internet or by telephone. Information and applicable deadlines for voting through the Internet or by telephone are set forth in the enclosed proxy card instructions. If you hold your shares in “street name” through a bank or broker, you must direct your bank or broker how to vote in accordance with the instructions you have received from your bank or broker. “Street name” stockholders who wish to vote in person at the NYCB special meeting or Astoria special meeting will need to obtain a legal proxy from the institution that holds their shares.

 

Q:	What constitutes a quorum for the NYCB special meeting?

 

A:

The presence at the NYCB special meeting, in person or by proxy, of holders of a majority of the outstanding shares of NYCB common stock entitled to vote at the special meeting (after subtracting any shares in excess of the “NYCB Limit” (as defined below) pursuant to the NYCB charter) will constitute a quorum for the transaction of business. Abstentions will be included in determining the number of shares present at the meeting for the purpose of determining the presence of a quorum.

 

Q:	What constitutes a quorum for the Astoria special meeting?

 

A:

The presence at the Astoria special meeting, in person or by proxy, of holders of a majority of the outstanding shares of Astoria common stock entitled to vote at the special meeting (after subtracting any shares in excess of the “Astoria Limit” (as defined below) pursuant to the Astoria Articles of Incorporation, which we refer to as the “Astoria charter”) will constitute a quorum for the transaction of business. Abstentions will be included in determining the number of shares present at the meeting for the purpose of determining the presence of a quorum.

 

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Q:	Is there a limit on voting shares of NYCB common stock or Astoria common stock?

 

A:

As provided in the NYCB charter and the Astoria charter, holders of NYCB and Astoria common stock who beneficially own in excess of 10% of the outstanding shares of NYCB or Astoria common stock (which we refer to, respectively, as the “NYCB Limit” and the “Astoria Limit”) are not entitled to any vote with respect to shares held in excess of the NYCB Limit or the Astoria Limit, respectively. A person or entity is deemed to beneficially own shares owned by an affiliate of, as well as by, persons acting in concert with such person or entity. The NYCB charter and the Astoria charter authorize each company’s board of directors (i) to make all determinations necessary to implement and apply the NYCB Limit or the Astoria Limit, respectively, including determining whether persons or entities are acting in concert, and (ii) to demand that any person who is reasonably believed to beneficially own stock in excess of the NYCB Limit or the Astoria Limit supply information to the respective company to enable its board of directors to implement and apply the NYCB Limit or the Astoria Limit. As of the date of this joint proxy statement/prospectus, no person is known to NYCB or Astoria to own in excess of the NYCB Limit or the Astoria Limit.

 

Q:	What is the vote required to approve each proposal?

 

A:	NYCB merger proposal:

 

•

Standard: Approval of the NYCB merger proposal requires the affirmative vote of the holders of at least a majority of the outstanding shares of NYCB common stock entitled to vote on the proposal.

 

•

Effect of abstentions and broker non-votes: If you fail to vote, mark “ABSTAIN” on your proxy, or fail to instruct your bank or broker with respect to the NYCB merger proposal, it will have the same effect as a vote “AGAINST” the proposal.

NYCB charter amendment proposal:

 

•

Standard: Approval of the NYCB charter amendment proposal requires the affirmative vote of the holders of at least a majority of the outstanding shares of NYCB common stock entitled to vote on the proposal.

 

•

Effect of abstentions and broker non-votes: If you fail to vote, mark “ABSTAIN” on your proxy, or fail to instruct your bank or broker with respect to the NYCB charter amendment proposal, it will have the same effect as a vote “AGAINST” the proposal.

NYCB adjournment proposal:

 

•

Standard: Approval of the NYCB adjournment proposal requires the affirmative vote of the holders of at least a majority of the votes cast at the NYCB special meeting.

 

•

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or vote in person at the NYCB special meeting, or fail to instruct your bank or broker how to vote with respect to the NYCB adjournment proposal, you will not be deemed to have cast a vote with respect to the proposal and it will have no effect on the proposal.

 

Q:	What is the vote required to approve each proposal at the Astoria special meeting?

Astoria merger proposal:

 

•

Standard: Approval of the Astoria merger proposal requires the affirmative vote of the holders of at least a majority of the outstanding shares of Astoria common stock entitled to vote on the proposal.

 

•

Effect of abstentions and broker non-votes: If you fail to vote, mark “ABSTAIN” on your proxy, or fail to instruct your bank or broker with respect to the Astoria merger proposal, it will have the same effect as a vote “AGAINST” the proposal.

 

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Astoria compensation proposal:

 

•

Standard: Approval of the Astoria compensation proposal requires the affirmative vote of the holders of at least a majority of the votes cast at the Astoria special meeting.

 

•

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or vote in person at the Astoria special meeting, or fail to instruct your bank or broker how to vote with respect to the Astoria compensation proposal, you will not be deemed to have cast a vote with respect to the proposal and it will have no effect on the proposal.

Astoria adjournment proposal:

 

•

Standard: Approval of the Astoria adjournment proposal requires the affirmative vote of the holders of at least a majority of the votes cast at the Astoria special meeting.

 

•

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or vote in person at the Astoria special meeting, or fail to instruct your bank or broker how to vote with respect to the Astoria adjournment proposal, you will not be deemed to have cast a vote with respect to the proposal and it will have no effect on the proposal.

 

Q:	Will holders of Astoria depositary shares be entitled to vote at the Astoria special meeting?

 

A:

No. Because the underlying Astoria preferred stock does not have voting rights with respect to any of the proposals that will be considered at the Astoria special meeting, holders of Astoria depositary shares will not be entitled to vote at the Astoria special meeting, and should not submit a proxy card with respect to the Astoria special meeting or otherwise attempt to vote with respect to their Astoria depositary shares.

 

Q:	Why is my vote important?

 

A:

If you do not vote, it will be more difficult for NYCB or Astoria to obtain the necessary quorum to hold their special meetings. In addition, your failure to submit a proxy or vote in person, or failure to instruct your bank or broker how to vote, or abstention will have the same effect as a vote “AGAINST” adoption of the merger agreement and, if you are a holder of NYCB common stock, a vote “AGAINST” the NYCB charter amendment proposal.

 

Q:	If my shares of common stock are held in “street name” by my bank or broker, will my bank or broker automatically vote my shares for me?

No. Your bank or broker cannot vote your shares without instructions from you. If your shares are held in “street name” through a bank, broker, or other holder of record, you must provide the record holder of your shares with instructions on how to vote the shares. Please follow the voting instructions provided by the bank or broker. You may not vote shares held in street name by returning a proxy card directly to NYCB or Astoria, or by voting in person at the NYCB special meeting or the Astoria special meeting, unless you provide a “legal proxy,” which you must obtain from your broker, bank, or other nominee. Further, brokers, banks, or other nominees who hold shares of NYCB common stock or Astoria common stock on behalf of their customers may not give a proxy to NYCB or Astoria to vote those shares with respect to any of the proposals without specific instructions from their customers, as brokers, banks, and other nominees do not have discretionary voting power on these matters. Failure to instruct your bank or broker how to vote will have the same effect as a vote “AGAINST” adoption of the merger agreement and, if you are a holder of NYCB common stock, a vote “AGAINST” the NYCB charter amendment proposal.

 

Q:	How do I vote if I own shares through an NYCB benefit plan?

 

A:	Active employee-participants in NYCB benefit plans who hold NYCB common stock will receive an e-mail that contains a link to this joint proxy statement/prospectus, along with procedures to follow in order to vote

 

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the shares of common stock credited to each participant’s account under the NYCB benefit plans and the shares of common stock (if any) held independently of the NYCB benefit plans. Retired and inactive employee-participants will receive their proxy materials via U.S. mail. Benefit plan voting instructions will be delivered to the trustee for the NYCB benefit plans and the shares will be voted as directed by participants. Shares for which no voting instructions are provided or are not timely received will be voted by the trustee for NYCB’s stock-based benefit plans in the same proportion as the voting instructions the trustee receives from other participants, or in the case of NYCB’s equity incentive plans, as directed by NYCB. Benefit plan voting instructions must be received by 11:30 p.m. Eastern Daylight Time on April 20, 2016.

 

Q:	How do I vote if I own shares through the Astoria 401(k) Plan?

 

A:

Participants in the Astoria Bank 401(k) Plan, referred to as the Astoria 401(k) Plan, as of the record date of the Astoria special meeting, have the right to participate in directing the voting of Astoria common stock held in their plan accounts as of that date, but do not have the right to vote those shares personally at the Astoria special meeting. Such participants should refer to the voting instructions provided by the plan fiduciaries for information on how to direct the voting of such shares.

 

Q:	Can I attend the NYCB and Astoria special meetings and vote my shares in person?

 

A:

Yes. All holders of the common stock of NYCB and Astoria, including stockholders of record and stockholders who hold their shares through banks, brokers, nominees, or any other holder of record, are invited to attend their respective special meetings. Holders of record of NYCB and Astoria common stock can vote in person at the NYCB special meeting and Astoria special meeting, respectively. If you are not a stockholder of record (i.e., if your shares are held for you in “street name”), you must obtain a legal proxy, executed in your favor, from the record holder of your shares, such as a broker, bank, or other nominee, to be able to vote in person at the meetings. If you plan to attend your meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership. In addition, you must bring a form of personal photo identification with you in order to be admitted to the meeting. You must also bring your admission ticket with you to be admitted to the NYCB special meeting. NYCB and Astoria reserve the right to refuse admittance to anyone without proper proof of share ownership or without proper photo identification. Whether or not you intend to be present at the NYCB special meeting or the Astoria special meeting, you are urged to sign, date, and return your proxy card, or to vote via the Internet or by telephone, promptly. If you are then present and wish to vote your shares in person, your original proxy may be revoked by voting at the special meeting.

 

Q:	Can I change my vote?

 

A:

NYCB stockholders: Yes. If you are a holder of record of NYCB common stock, you may change your vote at any time before your shares of NYCB common stock are voted at the NYCB special meeting by: (1) attending the NYCB special meeting and voting in person; (2) giving notice of revocation of the proxy at the NYCB special meeting; (3) voting by telephone or the Internet at a later time than the time at which you first voted; or (4) delivering to the Corporate Secretary of NYCB at 615 Merrick Avenue, Westbury, New York 11590 (i) a written notice of revocation or (ii) a duly executed proxy card relating to the same shares and matters to be considered at the NYCB special meeting, bearing a date later than the proxy card previously executed. If you hold your shares in “street name” through a bank, broker, or other holder of record, you should contact your record holder to change your vote.

Astoria common stockholders: Yes. If you are a holder of record of Astoria common stock, you may change your vote at any time before your shares of Astoria common stock are voted at the Astoria special meeting by: (1) signing and returning a proxy card with a later date; (2) attending the special meeting in person, notifying the corporate secretary, and voting by ballot at the special meeting; (3) voting by telephone or the Internet at a later time; or (4) delivering a written revocation letter to Astoria’s Corporate Secretary at One Astoria Bank Plaza, Lake Success, New York 11040. If you hold your shares in “street name” through a bank, broker, or other holder of record, you should contact your record holder to change your vote.

 

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Q:	Will NYCB be required to submit the proposal to adopt the merger agreement to its stockholders even if NYCB’s board of directors has withdrawn, modified, or qualified its recommendation?

 

A:	Yes. Unless the merger agreement is terminated before the NYCB special meeting, NYCB is required to submit the proposal to adopt the merger agreement to its stockholders even if NYCB’s board of directors has withdrawn or modified its recommendation.

 

Q:	Will Astoria be required to submit the proposal to adopt the merger agreement to its stockholders even if Astoria’s board of directors has withdrawn, modified, or qualified its recommendation?

 

A:	Yes. Unless the merger agreement is terminated before the Astoria special meeting, Astoria is required to submit the proposal to adopt the merger agreement to its stockholders even if Astoria’s board of directors has withdrawn or modified its recommendation.

 

Q:	What are the U.S. federal income tax consequences of the merger to Astoria common stockholders?

 

A:

It is a condition to the completion of the merger that NYCB and Astoria receive written opinions from their respective counsel to the effect that the merger will be treated as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (which we refer to as the “Code”). Subject to the limitations and qualifications described in the section entitled “Material U.S. Federal Income Tax Consequences of the Merger”, if you are a U.S. holder of Astoria common stock, you will recognize gain (but not loss) in an amount equal to the lesser of (1) the amount by which the sum of the fair market value of the NYCB common stock and cash you receive exceeds your tax basis in your Astoria common stock, and (2) the amount of cash you receive (in each case excluding any cash received instead of fractional shares of Astoria common stock).

Gain that you recognize in connection with the merger generally will constitute capital gain, except that depending on certain facts specific to you, any gain recognized could instead be taxable as a dividend.

For a definition of “U.S. holder” and a more detailed discussion of the material United States federal income tax consequences of the merger, see the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 126 of this proxy statement/prospectus.

The U.S. federal income tax consequences described above may not apply to all holders of Astoria common stock. We strongly urge you to consult your independent tax advisor for a full understanding of the application of U.S. federal income tax laws to your particular situation as well as any tax consequences arising under the U.S. federal estate or gift tax rules, or under the laws of any state, local, foreign or other taxing jurisdiction or under any applicable treaty.

 

Q:	Are Astoria common stockholders entitled to dissenters’ rights?

 

A:	Yes. Astoria common stockholders are expected to be entitled to dissenters’ rights. For further information, see “The Merger—Dissenters’ Rights in the Merger.”

 

Q:	If I am an Astoria common stockholder, should I send in my Astoria stock certificate(s) now?

 

A:	No. Please do not send in your Astoria stock certificates with your proxy. After the merger, an exchange agent will send you instructions for exchanging Astoria stock certificates for the merger consideration. See “The Merger Agreement—Conversion of Shares; Exchange of Certificates.”

 

Q:	What should I do if I hold my shares of Astoria common stock in book-entry form?

 

A:

You are not required to take any special additional actions if your shares of Astoria common stock are held in book-entry form. After the completion of the merger, shares of Astoria common stock held in book-entry form automatically will be exchanged for book-entry shares of NYCB common stock, plus the cash consideration.

 

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Q:	What should I do if I receive more than one set of voting materials?

 

A:

NYCB and Astoria common stockholders may receive more than one set of voting materials, including multiple copies of this joint proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold shares of NYCB and/or Astoria common stock in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold such shares. If you are a holder of record of NYCB common stock or Astoria common stock and your shares are registered in more than one name, you will receive more than one proxy card. In addition, if you are a holder of both NYCB common stock and Astoria common stock, you will receive one or more separate proxy cards or voting instruction cards for each company. Please complete, sign, date. and return each proxy card and voting instruction card that you receive or otherwise follow the voting instructions set forth in this joint proxy statement/prospectus to ensure that you vote every share of NYCB common stock and/or Astoria common stock that you own.

 

Q:	When do you expect to complete the merger?

 

A:

NYCB and Astoria expect to complete the merger in mid to late 2016. However, neither NYCB nor Astoria can assure you of when or if the merger will be completed. NYCB and Astoria must obtain the approval of NYCB stockholders and Astoria common stockholders to adopt the merger agreement at their respective special meetings, and also must obtain necessary regulatory approvals in addition to satisfying certain other closing conditions.

 

Q:	What happens if the merger is not completed?

 

A:

If the merger is not completed, Astoria common stockholders will not receive any consideration for their shares of Astoria common stock in connection with the merger. Instead, Astoria will remain an independent, public company and Astoria common stock and depositary shares will continue to be listed and traded on the NYSE. In addition, if the merger agreement is terminated in certain circumstances, a termination fee may be required to be paid by either NYCB or Astoria. See “The Merger Agreement—Termination Fee” for a complete discussion of the circumstances under which termination fees will be required to be paid.

 

Q:	Whom should I call with questions?

 

A:

NYCB stockholders: If you have any questions concerning the merger or this joint proxy statement/prospectus, would like additional copies of this joint proxy statement/prospectus, or need help voting your shares of NYCB common stock, please contact NYCB’s proxy solicitor, D.F. King & Co., Inc. at 48 Wall Street, 22nd Floor, New York, New York 10005, or toll-free at (866) 829-0545.

Astoria common stockholders: If you have any questions concerning the merger or this joint proxy statement/prospectus, would like additional copies of this joint proxy statement/prospectus, or need help voting your shares of Astoria common stock, please contact Astoria’s proxy solicitor, Innisfree M&A Incorporated, at 501 Madison Avenue, 20th Floor, New York, New York 10022, or toll-free at (877) 717-3930.

 

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RISK FACTORS

In addition to general investment risks and the other information contained in or incorporated by reference into this joint proxy statement/prospectus, including the matters addressed under the section “Cautionary Statement Regarding Forward-Looking Statements,” you should carefully consider the following risk factors in deciding how to vote for the proposals presented in this joint proxy statement/prospectus. You should also consider the other information in this joint proxy statement/prospectus and the other documents incorporated by reference into this joint proxy statement/prospectus. Please see “Where You Can Find More Information.”

Risks Related to the Merger and NYCB’s Business Upon Completion of the Merger

Because the market price of NYCB common stock will fluctuate, Astoria common stockholders cannot be certain of the market value of the merger consideration they will receive.

Upon completion of the merger, each outstanding share of Astoria common stock (except for specified shares of Astoria common stock held by Astoria or NYCB and shares of Astoria common stock held by stockholders who properly exercise appraisal rights) will be converted into one share of NYCB common stock and $0.50 in cash. The market value of the stock consideration will vary from the closing price of NYCB common stock on the date NYCB and Astoria announced the merger, on the date that this joint proxy statement/prospectus is mailed to Astoria common stockholders, on the date of the special meeting of the Astoria common stockholders, and on the date the merger is completed. Any change in the market price of NYCB common stock prior to the completion of the merger will affect the market value of the stock consideration that Astoria common stockholders will receive upon completion of the merger, and there will be no adjustment to the merger consideration for changes in the market price of either shares of NYCB common stock or shares of Astoria common stock.

The market price of NYCB’s common stock could be subject to significant fluctuations due to changes in sentiment in the market regarding NYCB’s operations or business prospects, including market sentiment regarding NYCB’s entry into the merger agreement. These risks may be affected by:

 

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operating results that vary from the expectations of NYCB management or of securities analysts and investors;

 

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developments in NYCB’s business or in the financial services sector generally;

 

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regulatory or legislative changes affecting NYCB’s industry generally or its business and operations;

 

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operating and securities price performance of companies that investors consider to be comparable to NYCB;

 

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changes in estimates or recommendations by securities analysts or rating agencies;

 

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announcements of strategic developments, acquisitions, dispositions, financings, and other material events by NYCB or its competitors; and

 

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changes in global financial markets and economies and general market conditions, such as interest or foreign exchange rates, stock, commodity, credit or asset valuations or volatility.

Therefore, at the time of the Astoria special meeting, you will not know the precise market value of the consideration you will receive at the effective time of the merger. You should obtain current market quotations for shares of NYCB common stock and for shares of Astoria common stock.

The market price of NYCB common stock after the merger may be affected by factors different from those affecting the shares of Astoria or NYCB currently.

Upon completion of the merger, holders of Astoria common stock will become holders of NYCB common stock. NYCB’s business differs in important respects from that of Astoria and, accordingly, the results of operations of the combined company and the market price of NYCB common stock after the completion of the merger may be

 

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affected by factors different from those currently affecting the independent results of operations of each of NYCB and Astoria. For example, NYCB operates in certain states of the United States, including Arizona, Florida, New Jersey and Ohio, where Astoria does not. Accordingly, the results of operations of NYCB will be affected by business and other developments in those areas of the country to a larger extent than those of Astoria. For a discussion of the businesses of NYCB and Astoria and of some important factors to consider in connection with those businesses, please see the documents incorporated by reference in this joint proxy statement/prospectus and referred to under “Where You Can Find More Information.”

NYCB currently expects that its total consolidated assets, based on a four quarter trailing average, will be over $50 billion and that it will be subject to stricter prudential standards required by the Dodd-Frank Act for large bank holding companies by the end of the second quarter of 2016.

Pursuant to the current requirements of the Dodd-Frank Act, a bank holding company whose total consolidated assets average more than $50 billion over the four most recent quarters is determined to be a “systemically important financial institution” (which we refer to as a “SIFI”), and therefore is subject to stricter prudential standards, primarily relating to capital requirements, liquidity requirements, risk-management requirements, capital stress test requirements, dividend limits, and early remediation regimes. The Dodd-Frank Act permits, but does not require, the Federal Reserve Board to apply heightened prudential standards in a number of other areas, including short-term debt limits and enhanced public disclosure. Based on current definitions and requirements for a SIFI, NYCB will become subject to the enhanced regulatory standards applicable to bank holding companies at the end of the second quarter of 2016, including but not limited to submitting an annual capital plan, undergoing an annual supervisory capital stress test and two company-run capital stress tests, enhanced requirements for liquidity risk management and overall risk management, liquidity buffer and liquidity stress testing requirements, submitting a resolution plan, implementation of an enhanced compliance program under the Volcker Rule, and payment of additional Federal Reserve Board assessments. If NYCB’s total consolidated assets do not exceed $50 billion, based on a four quarter trailing average, before the completion of the merger, its total consolidated assets will exceed the threshold upon the completion of the merger.

As a SIFI, NYCB would be required to participate in the annual Comprehensive Capital Assessment and Review, and would be subjected to heightened supervisory expectations in a range of other areas, including enterprise-wide compliance risk management, corporate governance, recovery and resolution planning, and management of core business lines. Other Dodd-Frank Act requirements applicable to SIFIs that have not yet been implemented in final regulations could apply to NYCB in the future, including single counterparty credit limits, early remediation requirements, and limits on the payment of incentive-based executive compensation. The date on which NYCB must comply with each SIFI requirement will vary depending on the terms of the particular regulation and the timing of the closing of the proposed merger with Astoria.

NYCB currently expects that it will be subject to the modified Liquidity Coverage Ratio applicable to bank holding companies with $50 billion or more in total consolidated assets at the end of the second quarter of 2016.

On September 3, 2014, the Federal Reserve Board and other banking regulators adopted final rules implementing a U.S. version of the Basel Committee’s Liquidity Coverage Ratio (which we refer to as the “LCR requirement”). The LCR requirement, including the modified version applicable to certain bank holding companies with $50 billion or more in total consolidated assets, requires a banking organization to maintain an amount of unencumbered “high-quality liquid assets” to be at least equal to the amount of its total net cash outflows over a 30-day stress period. Only specific classes of assets qualify under the rule as high-quality assets (the numerator of the LCR), with riskier classes of assets subject to haircuts and caps. The total net cash outflow amount (the denominator of the LCR) is determined under the rule by applying outflow and inflow rates that reflect certain standardized assumptions against the balances of the banking organization’s funding sources, obligations, transactions, and assets over a 30-day stress period. Inflows that can be included to offset outflows are limited to 75% of outflows (which effectively means that banking organizations must hold high-quality liquid assets equal to 25% of outflows even if outflows perfectly match inflows over the stress period).

 

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The initial compliance date for the modified LCR will be January 2016, with the requirement fully phased in by January 2017. Although NYCB is not currently subject to the modified LCR requirements, were NYCB to have average total consolidated assets over the four most recent quarters in excess of $50 billion, NYCB would have to comply with the requirements of the modified LCR beginning on the first day of the first quarter after which NYCB exceeded that threshold. NYCB currently expects that its total consolidated assets will be over $50 billion, based on a four quarter trailing average, by the end of the second quarter of 2016. If NYCB is not subject to the modified LCR before the completion of the merger, it will be subject to the modified LCR upon the completion of the merger. The modified LCR is a minimum requirement, and the Federal Reserve Board can impose additional liquidity requirements as a supervisory matter.

Regulatory approvals may not be received, may take longer than expected, or may impose conditions that are not presently anticipated or that could have an adverse effect on the combined company following the merger.

Before the merger and the bank merger may be completed, NYCB and Astoria must obtain approvals from the Federal Reserve Board, the FDIC, and the DFS. Other approvals, waivers, or consents from regulators may also be required. In determining whether to grant these approvals, the regulators consider a variety of factors, including the regulatory standing of each party and the factors described under “The Merger—Regulatory Approvals Required for the Completion of the Merger.” An adverse development in either party’s regulatory standing or these factors could result in an inability to obtain approval or delay receipt of required approvals. The regulators may impose conditions on the completion of the merger or the bank merger or require changes to the terms of the merger or the bank merger. Such conditions or changes could have the effect of delaying or preventing completion of the merger or the bank merger or imposing additional costs on, limiting the revenues of the combined company following the merger and the bank merger, or imposing other conditions any of which might have an adverse effect on the combined company following the merger.

The processing time for obtaining regulatory approvals for bank mergers, particularly for larger institutions, has increased since the financial crisis. Specifically, the Dodd-Frank Act requires bank regulators to consider financial stability concerns when evaluating a proposed bank merger.

In a recent approval order, the Federal Reserve Board has stated that if material weaknesses are identified by examiners before a banking organization applies to engage in expansionary activity, the Federal Reserve Board will not in the future allow the application to remain pending while the banking organization addresses its weaknesses. The Federal Reserve Board explained that, in the future, if issues arise during the processing of an application, it will require the applicant banking organization to withdraw its application pending resolution of any supervisory concerns. Accordingly, if there is an adverse development in either party’s regulatory standing, NYCB may be required to withdraw some or all of the applications for approval of the proposed mergers and, if possible, resubmit it after the applicable supervisory concerns have been resolved. See “The Merger—Regulatory Approvals Required for the Merger.”

The success of the merger and integration of NYCB and Astoria will depend on a number of uncertain factors.

The success of the merger will depend on a number of factors, including, without limitation:

 

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NYCB’s ability to integrate the branches acquired from Astoria Bank in the merger (which we refer to as the “acquired branches”) into the Community Bank’s current operations;

 

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NYCB’s ability to limit the outflow of deposits held by its new customers in the acquired branches and to successfully retain and manage interest-earning assets (i.e., loans) acquired in the merger;

 

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NYCB’s ability to control the incremental non-interest expense from the acquired branches in a manner that enables it to maintain a favorable overall efficiency ratio;

 

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NYCB’s ability to retain and attract the appropriate personnel to staff the acquired branches; and

 

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NYCB’s ability to earn acceptable levels of interest and non-interest income, including fee income, from the acquired branches.

Integrating the acquired branches will be an operation of substantial size and expense, and may be affected by general market and economic conditions or government actions affecting the financial industry generally. Integration efforts will also likely divert NYCB’s management’s attention and resources. No assurance can be given that NYCB will be able to integrate the acquired branches successfully, and the integration process could result in the loss of key employees, the disruption of ongoing business, or inconsistencies in standards, controls, procedures and policies that adversely affect NYCB’s ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits of the merger. NYCB may also encounter unexpected difficulties or costs during the integration that could adversely affect its earnings and financial condition, perhaps materially. Additionally, no assurance can be given that the operation of the acquired branches will not adversely affect NYCB’s existing profitability, that NYCB will be able to achieve results in the future similar to those achieved by its existing banking business, or that NYCB will be able to manage any growth resulting from the merger effectively.

Combining NYCB and Astoria may be more difficult, costly or time consuming than expected and the anticipated benefits and cost savings of the merger may not be realized.

NYCB and Astoria have operated and, until the completion of the merger, will continue to operate, independently. The success of the merger, including anticipated benefits and cost savings, will depend, in part, on NYCB’s ability to successfully combine and integrate the businesses of NYCB and Astoria in a manner that permits growth opportunities, and does not materially disrupt existing customer relations nor result in decreased revenues due to loss of customers. It is possible that the integration process could result in the loss of key employees, the disruption of either company’s ongoing businesses, or inconsistencies in standards, controls, procedures, and policies that adversely affect the combined company’s ability to maintain relationships with clients, customers, depositors, and employees or to achieve the anticipated benefits and cost savings of the merger. The loss of key employees could adversely affect NYCB’s ability to successfully conduct its business, which could have an adverse effect on NYCB’s financial results and the value of its common stock. If NYCB experiences difficulties with the integration process and attendant systems conversion, the anticipated benefits of the merger may not be realized fully or at all, or may take longer to realize than expected. As with any merger of financial institutions, there also may be business disruptions that cause NYCB and/or Astoria to lose customers or cause customers to remove their accounts from NYCB and/or Astoria and move their business to competing financial institutions. Integration efforts between the two companies will also divert management attention and resources. These integration matters could have an adverse effect on each of Astoria and NYCB during this transition period and for an undetermined period after completion of the merger on the combined company. In addition, the actual cost savings of the merger could be less than anticipated.

The combined company may be unable to retain NYCB and/or Astoria personnel successfully after the merger is completed.

The success of the merger will depend in part on the combined company’s ability to retain the talents and dedication of key employees currently employed by NYCB and Astoria. It is possible that these employees may decide not to remain with NYCB or Astoria, as applicable, while the merger is pending or with the combined company after the merger is consummated. If key employees terminate their employment, or if an insufficient number of employees is retained to maintain effective operations, the combined company’s business activities may be adversely affected and management’s attention may be diverted from successfully integrating Astoria to hiring suitable replacements, all of which may cause the combined company’s business to suffer. In addition, NYCB and Astoria may not be able to locate suitable replacements for any key employees who leave either company, or to offer employment to potential replacements on reasonable terms.

 

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The unaudited pro forma condensed combined financial statements included in this document are preliminary and the actual financial condition and results of operations of NYCB after the merger may differ materially.

The unaudited pro forma condensed combined financial statements in this document are presented for illustrative purposes only and are not necessarily indicative of what NYCB’s actual financial condition or results of operations would have been had the merger been completed on the dates indicated. The unaudited pro forma condensed combined financial statements reflect adjustments, which are based upon preliminary estimates, to record the Astoria identifiable assets acquired and liabilities assumed at fair value and the resulting goodwill recognized. The purchase price allocation reflected in this document is preliminary, and final allocation of the purchase price will be based upon the actual purchase price and the fair value of the assets and liabilities of Astoria as of the date of the completion of the merger. Accordingly, the final acquisition accounting adjustments may differ materially from the pro forma adjustments reflected in this document. For more information, please see “Unaudited Pro Forma Condensed Combined Financial Statements” beginning on page 129.

In connection with the merger, NYCB will assume Astoria’s outstanding debt obligations and preferred stock, and NYCB’s level of indebtedness following the completion of the merger could adversely affect NYCB’s ability to raise additional capital and to meet its obligations under its existing indebtedness.

In connection with the merger, NYCB will assume approximately $250 million of Astoria’s outstanding indebtedness and Astoria’s obligations related to its outstanding preferred stock. NYCB’s existing debt, together with any future incurrence of additional indebtedness, and assumption of Astoria’s outstanding preferred stock, could have important consequences for NYCB’s creditors and NYCB’s stockholders. For example, it could:

 

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limit NYCB’s ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions, and general corporate or other purposes;

 

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restrict NYCB from making strategic acquisitions or cause the combined company to make non-strategic divestitures;

 

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restrict NYCB from paying dividends to its stockholders;

 

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increase the combined company’s vulnerability to general economic and industry conditions; and

 

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require a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on the combined company’s indebtedness, thereby reducing NYCB’s ability to use cash flows to fund its operations, capital expenditures, and future business opportunities.

Following completion of the merger, holders of NYCB common stock will be subject to the prior dividend and liquidation rights of the holders of the NYCB preferred stock that NYCB will issue upon completion of the merger. The holders of shares of Astoria preferred stock, which NYCB will assume from Astoria, as well as the holders of any shares of NYCB preferred stock that NYCB may issue in the future, would receive, upon NYCB’s voluntary or involuntary liquidation, dissolution, or winding up, before any payment is made to holders of NYCB common stock, their liquidation preferences as well as any accrued and unpaid distributions. These payments would reduce the remaining amount of NYCB’s assets, if any, available for distribution to holders of its common stock.

General market conditions and unpredictable factors, including conditions and factors different from those affecting Astoria preferred stock and depositary shares currently, could adversely affect market prices for NYCB preferred stock and NYCB depositary shares once the NYCB preferred stock is issued.

There can be no assurance about the market prices for the NYCB preferred stock that will be issued upon completion of the merger or the NYCB depositary shares representing shares of NYCB preferred stock. Several factors, many of which are beyond the control of NYCB, could influence the market prices of the NYCB preferred stock and NYCB depositary shares, including:

 

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whether NYCB declares or fails to declare dividends on the NYCB preferred stock from time to time;

 

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real or anticipated changes in the credit ratings assigned to the NYCB depositary shares, NYCB preferred stock, or other NYCB securities;

 

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NYCB’s creditworthiness;

 

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interest rates;

 

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developments in the securities, credit, and housing markets, and developments with respect to financial institutions generally;

 

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the market for similar securities; and

 

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economic, corporate, securities market, geopolitical, regulatory or judicial events that affect NYCB, the banking industry, or the financial markets generally.

Shares of NYCB preferred stock will be equity interests and will not constitute indebtedness. As such, NYCB preferred stock and NYCB depositary shares will rank junior to all indebtedness of, and other non-equity claims on, NYCB with respect to assets available to satisfy claims. The market prices for the NYCB preferred stock and NYCB depositary shares may be affected by factors different from those currently affecting the Astoria preferred stock and Astoria depositary shares.

Certain of Astoria’s directors and executive officers have interests in the merger that may differ from the interests of Astoria’s stockholders.

Astoria’s common stockholders should be aware that some of Astoria’s directors and executive officers have interests in the merger and have arrangements that are different from, or in addition to, those of Astoria’s common stockholders generally. These interests and arrangements may create potential conflicts of interest. Astoria’s board of directors was aware of these interests and considered these interests, among other matters, when making its decision to approve the merger agreement, and in recommending that Astoria’s common stockholders vote in favor of adopting the merger agreement.

For a more complete description of these interests, please see “The Merger—Interests of Astoria’s Directors and Executive Officers in the Merger.”

Termination of the merger agreement could negatively impact Astoria or NYCB.

If the merger agreement is terminated, there may be various consequences. For example, Astoria’s or NYCB’s businesses may have been impacted adversely by the failure to pursue other beneficial opportunities due to the focus of management on the merger, without realizing any of the anticipated benefits of completing the merger. Additionally, if the merger agreement is terminated, the market price of Astoria’s or NYCB’s common stock could decline to the extent that the current market prices reflect a market assumption that the merger will be completed. If the merger agreement is terminated under certain circumstances, Astoria or NYCB may be required to pay to the other party a termination fee of $69.5 million.

Astoria and NYCB will be subject to business uncertainties and contractual restrictions while the merger is pending.

Uncertainty about the effect of the merger on employees and customers may have an adverse effect on Astoria or NYCB. These uncertainties may impair Astoria’s or NYCB’s ability to attract, retain, and motivate key personnel until the merger is completed, and could cause customers and others that deal with Astoria or NYCB to seek to change existing business relationships with Astoria or NYCB. Retention of certain employees by Astoria or NYCB may be challenging while the merger is pending, as certain employees may experience uncertainty about their future roles with the combined company. If key employees depart because of issues relating to the uncertainty and difficulty of integration, or a desire not to remain with Astoria or NYCB, Astoria’s business or NYCB’s business could be harmed. In addition, subject to certain exceptions, Astoria has agreed to operate its business in the ordinary course prior to closing. See “The Merger Agreement—Covenants and Agreements” for a description of the restrictive covenants applicable to Astoria and NYCB.

 

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If the merger is not completed, NYCB and Astoria will have incurred substantial expenses without realizing the expected benefits of the merger.

Each of NYCB and Astoria has incurred and will incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the merger agreement, as well as the costs and expenses of filing, printing, and mailing this joint proxy statement/prospectus, and all filing and other fees paid to the SEC in connection with the merger. If the merger is not completed, NYCB and Astoria would have to recognize these expenses without realizing the expected benefits of the merger.

The merger agreement limits Astoria’s ability to pursue acquisition proposals and requires NYCB or Astoria to pay a termination fee of $69.5 million under limited circumstances, including circumstances relating to acquisition proposals. Additionally, certain provisions of the NYCB and Astoria charter and bylaws may deter potential acquirers.

The merger agreement prohibits Astoria from initiating, soliciting, knowingly encouraging, or knowingly facilitating certain third-party acquisition proposals. See “The Merger Agreement—Agreement Not to Solicit Other Offers.” The merger agreement also provides that either NYCB or Astoria will be required to pay a termination fee in the amount of $69.5 million in the event that the merger agreement is terminated under certain circumstances, including a change of recommendation by such party’s board of directors. See “The Merger Agreement—Termination Fee.” These provisions might discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of Astoria from considering or proposing such an acquisition. Under the Astoria and NYCB charters, certain business combinations involving affiliates or interested stockholders require the approval of a supermajority of stockholders unless they are approved by two-thirds of the disinterested directors on their respective board or certain other requirements are met, and the Astoria and NYCB charters generally prohibit holders of shares that are beneficially owned by a person who beneficially owns more than 10% of the outstanding shares of NYCB common stock or Astoria common stock, as applicable, from voting shares in excess of such 10% limit. See “Comparison of Stockholders’ Rights—Anti-Takeover Provisions and Other Stockholder Protections.” These provisions and other provisions of the Astoria or NYCB charters or bylaws, including provisions regarding classified boards of directors, described below, or of the DGCL could make it more difficult for a third-party to acquire control of Astoria or NYCB and may discourage a potential competing acquirer.

Additionally, both Astoria and NYCB have a classified board of directors.

The shares of NYCB common stock to be received by Astoria common stockholders as a result of the merger will have different rights from the shares of Astoria common stock.

Upon completion of the merger, Astoria common stockholders will become NYCB stockholders and their rights as stockholders will be governed by the DGCL and the NYCB charter and bylaws. The rights associated with Astoria common stock are different from the rights associated with NYCB common stock. Please see “Comparison of Stockholders’ Rights” beginning on page 152 for a discussion of the different rights associated with NYCB common stock.

Holders of Astoria and NYCB common stock will have a reduced ownership and voting interest in the combined company after the merger and will exercise less influence over management.

Holders of Astoria and NYCB common stock currently have the right to vote in the election of the board of directors and on other matters affecting Astoria and NYCB, respectively. Upon completion of the merger, each Astoria common stockholder who receives shares of NYCB common stock will become a stockholder of NYCB, with a percentage ownership of NYCB that is smaller than the stockholder’s percentage ownership of Astoria. Based on the number of shares outstanding on October 28, 2015 and the shares expected to be issued in the merger, the former stockholders of Astoria as a group will receive shares in the merger constituting approximately 17.5% of the outstanding shares of NYCB common stock immediately after the merger. As a

 

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result, current stockholders of NYCB as a group will own approximately 83% of the outstanding shares of NYCB common stock immediately after the merger. Because of this, Astoria common stockholders may have less influence on the management and policies of NYCB than they now have on the management and policies of Astoria, and current NYCB stockholders may have less influence than they now have on the management and policies of NYCB.

The opinions of NYCB’s and Astoria’s financial advisors will not reflect changes in circumstances between the signing of the merger agreement and the completion of the merger.

NYCB and Astoria have not obtained updated opinions from their respective financial advisors as of the date of this joint proxy statement/prospectus. Changes in the operations and prospects of NYCB or Astoria, general market and economic conditions and other factors that may be beyond the control of NYCB or Astoria, and on which NYCB’s and Astoria’s financial advisors’ opinions were based, may significantly alter the value of Astoria or the prices of the Astoria common shares or shares of NYCB common stock by the time the merger is completed. The opinions do not speak as of the time the merger will be completed or as of any date other than the date of such opinions. Because NYCB and Astoria do not currently anticipate asking their respective financial advisors to update their opinions, the opinions will not address the fairness of the merger consideration from a financial point of view at the time the merger is completed.

Astoria common stockholders are expected to have appraisal rights in the merger.

If the merger agreement is adopted by Astoria common stockholders, Astoria common stockholders who do not vote in favor of the adoption of the merger agreement and who properly demand appraisal of their shares will be entitled to appraisal rights in connection with the merger under Section 262 of the DGCL. Neither Astoria nor NYCB can predict the number of Astoria common stockholders who will seek appraisal of their shares. For more information, please see “The Merger—Dissenters’ Rights in the Merger.”

Pending Litigation Against NYCB and Astoria Could Result in an Injunction Preventing the Completion of the Merger or a Judgment Resulting in the Payment of Damages.

Following the announcement on October 28, 2015 of the execution of the merger agreement, seven stockholders of Astoria filed putative class action lawsuits against Astoria, its directors, and NYCB challenging the proposed transaction. The outcome of any such litigation is uncertain. If the cases are not resolved, these lawsuits could prevent or delay completion of the merger and result in substantial costs to NYCB and Astoria, including any costs associated with the indemnification of directors and officers. One of the conditions to the closing of the merger is that no order, injunction, or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the merger shall be in effect. As such, if plaintiffs are successful in obtaining an injunction prohibiting the completion of the merger on the agreed-upon terms, then such injunction may prevent the merger from being completed, or from being completed within the expected timeframe. The defense or settlement of any lawsuit or claim that remains unresolved at the time the merger is completed may adversely affect NYCB’s business, financial condition, results of operations, and cash flows. For more information, see “The Merger—Litigation Related to the Merger.”

Risks Relating to NYCB’s Business

You should read and consider risk factors specific to NYCB’s business that will also affect the combined company after the merger. These risks are described in the sections entitled “Risk Factors” in NYCB’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and in other documents incorporated by reference into this proxy statement/prospectus. Please see the section entitled “Where You Can Find More Information” beginning on page 167 of this joint proxy statement/prospectus for the location of information incorporated by reference into this joint proxy statement/prospectus.

 

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Risks Relating to Astoria’s Business

You should read and consider risk factors specific to Astoria’s business that will also affect the combined company after the merger. These risks are described in the sections entitled “Risk Factors” in Astoria’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and in other documents incorporated by reference into this proxy statement/prospectus. Please see the section entitled “Where You Can Find More Information” beginning on page 167 of this joint proxy statement/prospectus for the location of information incorporated by reference into this joint proxy statement/prospectus.

 

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THE NYCB SPECIAL MEETING

This section contains information for NYCB stockholders about the special meeting that NYCB has called to allow its stockholders to consider and vote on the merger agreement and other matters. NYCB is mailing this joint proxy statement/prospectus to you, as an NYCB stockholder, on or about March 18, 2016. This joint proxy statement/prospectus is accompanied by a notice of the special meeting of NYCB stockholders and a form of proxy card that NYCB’s board of directors is soliciting for use at the special meeting and at any adjournments or postponements of the special meeting.

Date, Time, and Place of Meeting

The special meeting of NYCB stockholders will be held at the Sheraton LaGuardia East Hotel, 135-20 39th Avenue, Flushing, New York 11354 at 10:00 a.m., Eastern time, on April 26, 2016. On or about March 18, 2016, NYCB commenced mailing this document and the enclosed form of proxy card to its stockholders entitled to vote at the NYCB special meeting.

Matters to Be Considered

At the NYCB special meeting, NYCB stockholders will be asked to consider and vote upon the following matters:

 

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the NYCB merger proposal;

 

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the NYCB charter amendment proposal; and

 

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the NYCB adjournment proposal.

Recommendation of NYCB’s Board of Directors

The NYCB board of directors recommends that you vote “FOR” the NYCB merger proposal, “FOR” the NYCB charter amendment proposal, and “FOR” the NYCB adjournment proposal.

NYCB Record Date and Quorum

The NYCB board of directors has fixed the close of business on February 29, 2016 as the record date for determining the holders of NYCB common stock entitled to receive notice of and to vote at the NYCB special meeting.

As of the NYCB record date, there were 486,357,792 shares of NYCB common stock outstanding and entitled to vote at the NYCB special meeting held by 12,529 holders of record. Subject to the NYCB Limit, each share of NYCB common stock entitles the holder of record as of the NYCB record date to one vote at the NYCB special meeting on each proposal to be considered at the NYCB special meeting.

The representation (in person or by proxy) of holders of at least a majority of the votes entitled to be cast on the matters to be voted on at the NYCB special meeting constitutes a quorum for transacting business at the NYCB special meeting. All shares of NYCB common stock, whether present in person or represented by proxy, including abstentions, will be treated as present for purposes of determining the presence or absence of a quorum for all matters voted on at the NYCB special meeting.

Vote Required; Treatment of Abstentions and Failure to Vote

NYCB merger proposal:

 

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Standard: Approval of the NYCB merger proposal requires the affirmative vote of the holders of at least a majority of the outstanding shares of NYCB common stock entitled to vote on the proposal.

 

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Effect of abstentions and broker non-votes: If you fail to vote, mark “ABSTAIN” on your proxy, or fail to instruct your bank or broker with respect to the NYCB merger proposal, it will have the same effect as a vote “AGAINST” the proposal.

 

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NYCB charter amendment proposal:

 

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Standard: Approval of the NYCB charter amendment proposal requires the affirmative vote of the holders of at least a majority of the outstanding shares of NYCB common stock entitled to vote on the proposal.

 

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Effect of abstentions and broker non-votes: If you fail to vote, mark “ABSTAIN” on your proxy, or fail to instruct your bank or broker with respect to the NYCB charter amendment proposal, it will have the same effect as a vote “AGAINST” the proposal.

NYCB adjournment proposal:

 

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Standard: Approval of the NYCB adjournment proposal requires the affirmative vote of the holders of at least a majority of the votes cast at the NYCB special meeting.

 

•

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or vote in person at the NYCB special meeting, or fail to instruct your bank or broker how to vote with respect to the NYCB adjournment proposal, you will not be deemed to have cast a vote with respect to the proposal and it will have no effect on the proposal.

Shares Held by Officers and Directors

As of the NYCB record date, the directors and executive officers of NYCB and their affiliates owned, and were entitled to vote, 13,852,503 shares of NYCB common stock, representing approximately 2.8% of the shares of NYCB common stock outstanding on that date. NYCB currently expects that NYCB’s directors and executive officers will vote their shares in favor of the NYCB merger proposal, the NYCB charter amendment proposal, and the NYCB adjournment proposal, although none of them has entered into any agreements obligating them to do so.

Voting of Proxies; Incomplete Proxies

An NYCB stockholder may vote by proxy or in person at the NYCB special meeting. If you hold your shares of NYCB common stock in your name as a stockholder of record, to submit a proxy, you, as an NYCB stockholder, may use one of the following methods:

 

•

By telephone: by calling the toll-free number indicated on your proxy card and following the recorded instructions.

 

•

Through the Internet: by visiting the website indicated on your proxy card and following the instructions.

 

•

Complete and return the proxy card in the enclosed envelope. The envelope requires no additional postage if mailed in the United States.

NYCB requests that NYCB stockholders vote by telephone, over the Internet, or by completing and signing the accompanying proxy card and returning it to NYCB as soon as possible in the enclosed postage-paid envelope. When the accompanying proxy card is returned properly executed, the shares of NYCB stock represented by it will be voted at the NYCB special meeting in accordance with the instructions contained on the proxy card. If any proxy card is returned without indication as to how to vote, the shares of NYCB common stock represented by the proxy card will be voted as recommended by the NYCB board of directors.

Every NYCB stockholder’s vote is important. Accordingly, each NYCB stockholder should sign, date, and return the enclosed proxy card, or vote via the Internet or by telephone, whether or not the NYCB stockholder plans to attend the NYCB special meeting in person. Sending in your proxy card or voting by telephone or on the Internet will not prevent you from voting your shares personally at the meeting, since you may revoke your proxy at any time before it is voted.

 

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Shares Held in Street Name; Broker Non-Votes

If you are an NYCB stockholder and your shares are held in “street name” through a bank, broker, or other holder of record, you must provide the record holder of your shares with instructions on how to vote the shares. Please follow the voting instructions provided by the bank or broker. You may not vote shares held in street name by returning a proxy card directly to NYCB or by voting in person at the NYCB special meeting unless you provide a “legal proxy,” which you must obtain from your broker, bank, or other nominee. Further, brokers, banks, or other nominees who hold shares of NYCB common stock on behalf of their customers may not give a proxy to NYCB to vote those shares with respect to any of the proposals without specific instructions from their customers, as brokers, banks, and other nominees do not have discretionary voting power on the proposals that will be voted upon at the NYCB special meeting.

Revocability of Proxies and Changes to an NYCB Stockholder’s Vote

You have the power to change your vote at any time before your shares of NYCB common stock are voted at the NYCB special meeting by:

 

•

attending and voting in person at the NYCB special meeting;

 

•

giving notice of revocation of the proxy at the NYCB special meeting;

 

•

voting by telephone or the Internet at a later time; or

 

•

delivering to the Corporate Secretary of NYCB at 615 Merrick Avenue Westbury, New York 11590 (i) a written notice of revocation or (ii) a duly executed proxy card relating to the same shares and matters to be considered at the NYCB special meeting, bearing a date later than the proxy card previously executed.

Attendance at the NYCB special meeting will not in and of itself constitute a revocation of a proxy.

If you choose to send a completed proxy card bearing a later date than your original proxy card, the new proxy card must be received before the beginning of the NYCB special meeting. If you have instructed a bank, broker, or other nominee to vote your shares of NYCB common stock, you must follow the directions you receive from your bank, broker, or other nominee in order to change or revoke your vote.

Benefit Plan Voting

Active employee-participants in NYCB benefit plans who hold NYCB common stock will receive an e-mail that contains a link to this joint proxy statement/prospectus, along with procedures to follow in order to vote both the shares of common stock credited to each participant’s account under the NYCB benefit plans and the shares of common stock (if any) held independently of the NYCB benefit plans. Retired and inactive employee-participants will receive their proxy materials via U.S. mail. Benefit plan voting instructions will be delivered to the trustee for the NYCB benefit plans and the shares will be voted as directed by participants. Shares for which no voting instructions are provided, or are not timely received, will be voted by the trustee for NYCB’s stock-based benefit plans in the same proportion as the voting instructions the trustee receives from other participants, or in the case of NYCB’s equity incentive plans, as directed by NYCB. Benefit plan voting instructions must be received by 11:30 p.m. Eastern Daylight Time on April 20, 2016.

Solicitation of Proxies

In addition to solicitation by mail, directors, officers, and employees of NYCB may solicit proxies by personal interview, telephone, or electronic mail. NYCB reimburses brokerage houses, custodians, nominees, and fiduciaries for their expenses in forwarding proxies and proxy material to their principals. NYCB has retained D.F. King & Co. to assist in the solicitation of proxies, which firm will, by agreement, receive compensation of $15,000, plus expenses, for these services. NYCB will bear the entire cost of soliciting proxies from you.

 

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Attending the NYCB Special Meeting

Subject to space availability, all NYCB stockholders as of the NYCB record date, or their duly appointed proxies, may attend the NYCB special meeting. Since seating is limited, admission to the NYCB special meeting will be on a first-come, first-served basis. Registration and seating will begin at 8:30 a.m., Eastern time.

If you hold your shares of NYCB common stock in your name as a stockholder of record and you wish to attend the NYCB special meeting, please bring your legal proxy and evidence of your stock ownership, such as your most recent account statement, to the NYCB special meeting. You should also bring valid picture identification.

If your shares of NYCB common stock are held in “street name” in a stock brokerage account or by a bank or nominee and you wish to attend the NYCB special meeting, you need to bring a copy of a bank or brokerage statement to the NYCB special meeting reflecting your stock ownership as of the NYCB record date. You should also bring valid picture identification.

Delivery of Proxy Materials to Stockholders Sharing an Address

The SEC has adopted rules that permit companies to mail a single proxy statement to two or more stockholders sharing the same address. This practice is known as “householding.” Householding provides greater convenience to stockholders and saves NYCB money by reducing excess printing costs. You may have been identified as living at the same address as another NYCB stockholder. If this is the case, and unless NYCB receives contrary instructions from you, NYCB will continue to “household” your proxy statement for the reasons stated above.

If you are an NYCB stockholder or a beneficial owner at a shared address to which a single copy of the proxy statement has been delivered, and you would like to receive your own copy of this proxy statement, you may obtain it electronically from the Investor Relations portion of our website, www.myNYCB.com, by selecting “SEC Documents”; by contacting the Investor Relations Department of NYCB by phone (516-683-4420) or by e-mail (ir@myNYCB.com); or by writing to the Investor Relations Department of NYCB and indicating that you are a stockholder at a shared address and would like an additional copy of the document.

Assistance

If you need assistance in completing your proxy card, have questions regarding NYCB’s special meeting, or would like additional copies of this joint proxy statement/prospectus, please contact Investor Relations at (516) 683-4420 or NYCB’s proxy solicitor, D.F. King & Co., Inc., 48 Wall Street, 22nd Floor, New York, New York 10005, or Toll-free: (866) 829-0545; (212) 493-3910 (Banks and Brokerage Firms).

 

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NYCB PROPOSALS

PROPOSAL NO. 1: NYCB MERGER PROPOSAL

NYCB is asking its stockholders to adopt the merger agreement and approve the transactions contemplated thereby, including the merger, the bank merger, and the issuance of common stock in the merger pursuant to the merger agreement. Holders of NYCB common stock should read this joint proxy statement/prospectus carefully and in its entirety, including the annexes, for more detailed information concerning the merger agreement and the merger. A copy of the merger agreement is attached to this joint proxy statement/prospectus as Annex A.

After careful consideration, the NYCB board of directors, by a unanimous vote of all directors, approved the merger agreement and declared the merger agreement and the transactions contemplated thereby, including the merger, the bank merger, and the issuance of common stock in the merger pursuant to the merger agreement, to be advisable and in the best interests of NYCB and the stockholders of NYCB. See “The Merger—NYCB’s Reasons for the Merger; Recommendation of NYCB’s Board of Directors” included elsewhere in this joint proxy statement/prospectus for a more detailed discussion of the NYCB board of directors’ recommendation.

The NYCB board of directors recommends a vote “FOR” the NYCB merger proposal.

PROPOSAL NO. 2: NYCB CHARTER AMENDMENT PROPOSAL

NYCB is asking its stockholders to approve an amendment to the NYCB charter to increase the number of authorized shares of its common stock by 300 million to 900 million. It is a condition to the completion of the merger that NYCB amend its charter to increase the number of authorized shares of its common stock.

The proposed amendment would revise ARTICLE FOURTH, Section A of the NYCB charter to state:

“The total number of shares of stock of all classes which the Corporation shall have authority to issue is nine hundred and five million (905,000,000) consisting of:

 

1.

Five million (5,000,000) shares of Preferred Stock, par value one cent ($0.01) per share (the “Preferred Stock”); and

 

2.

Nine hundred million (900,000,000) shares of Common Stock, par value one cent ($0.01) per share (the “Common Stock”).”

As of the NYCB record date NYCB had 486,357,792 shares of common stock outstanding, 280 shares of common stock held in Treasury, and 10,275,052 shares of common stock reserved for issuance to directors and employees under various compensation and benefits plans, with the remaining 103,336,876 shares being authorized, unissued, and unreserved shares available for other corporate purposes. In connection with the merger, NYCB expects to issue approximately 104.8 million shares of common stock to Astoria common stockholders.

Without this approval, NYCB will not have a sufficient number of authorized shares to complete the merger. Based on current estimates, if the proposal is approved, NYCB will have approximately 291.7 million authorized but unissued shares of common stock available for issuance after completion of the merger. The NYCB board of directors considers the proposed increase in the number of authorized shares desirable because it will enable NYCB to complete the merger and it will provide greater flexibility in the capital structure of the combined company following the merger by allowing it to raise capital that may be necessary to further develop its business, to fund potential acquisitions, to have shares available for use in connection with stock plans, and to pursue other corporate purposes that may be identified by the NYCB board of directors in the future.

Each share of common stock authorized for issuance has the same rights as, and is identical in all respects with, each other share of common stock. The newly authorized shares of common stock will not affect the rights, such as voting and liquidation rights, of the shares of common stock currently outstanding. Under the NYCB charter, NYCB’s stockholders do not have pre-emptive rights. Therefore, should the NYCB board of directors elect to

 

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issue additional shares of common stock, existing common stockholders would not have any preferential rights to purchase those shares, and such issuance could have a dilutive effect on earnings per share, book value per share, and the voting power and shareholdings of current stockholders, depending on the particular circumstances in which the additional shares of common stock are issued. Please see “Description of Capital Stock of NYCB” included elsewhere in this joint proxy statement/prospectus for a description of NYCB capital stock and the rights of NYCB stockholders. The NYCB board of directors continually considers NYCB’s capital structure and will determine the terms and timing of any future issuance. Other than in connection with the merger and pursuant to the NYCB benefit plans, NYCB does not have any current plans to issue shares of common stock at this time.

The amendment to the NYCB charter will become effective on or prior to the effective time of the merger, and is not contingent on the completion of the merger. However, at any time prior to the effectiveness of the filing of the charter amendment with the Delaware Secretary of State, the NYCB board of directors may abandon the charter amendment without further action of the NYCB stockholders, notwithstanding prior authorization of the charter amendment proposal by the NYCB stockholders.

The foregoing description of the amendment to the NYCB charter does not purport to be complete and is qualified in its entirety by reference to the full text of the certificate of amendment, which is attached as Annex F to this joint proxy statement/prospectus.

The NYCB board of directors recommends a vote “FOR” the NYCB charter amendment proposal.

PROPOSAL NO. 3: NYCB ADJOURNMENT PROPOSAL

The NYCB special meeting may be adjourned to another time or place, if necessary or appropriate, to permit, among other things, further solicitation of proxies if necessary to obtain additional votes in favor of the NYCB merger proposal.

If, at the NYCB special meeting, the number of shares of NYCB common stock present or represented and voting in favor of the NYCB merger proposal is insufficient to approve such proposal, NYCB intends to move to adjourn the NYCB special meeting in order to solicit additional proxies for the adoption of the merger agreement. In this proposal, NYCB is asking its stockholders to authorize the holder of any proxy solicited by the NYCB board of directors on a discretionary basis to vote in favor of adjourning the NYCB special meeting to another time and place for the purpose of soliciting additional proxies, including the solicitation of proxies from NYCB stockholders who have previously voted.

The NYCB board of directors recommends a vote “FOR” the NYCB adjournment proposal.

 

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THE ASTORIA SPECIAL MEETING

Date, Time, and Place of Meeting

The special meeting will be held on April 26, 2016 at The Inn at New Hyde Park, 214 Jericho Turnpike, New Hyde Park, New York 11040, at 9:30 a.m. local time.

Matters to Be Considered

At the special meeting of stockholders, you will be asked to consider and vote upon the following matters:

 

•

the Astoria merger proposal;

 

•

the Astoria compensation proposal; and

 

•

the Astoria adjournment proposal.

Recommendation of Astoria’s Board of Directors

Astoria’s board of directors has determined that the merger is advisable and in the best interests of Astoria and its common stockholders and has unanimously approved the merger agreement. Astoria’s board of directors unanimously recommends that Astoria common stockholders vote “FOR” the Astoria merger proposal, “FOR” the Astoria compensation proposal, and “FOR” the Astoria adjournment proposal. See “The Merger— Recommendation of Astoria’s Board of Directors; Astoria’s Reasons for the Merger” for a more detailed discussion of the Astoria board of directors’ recommendation.

Astoria Record Date and Quorum

Astoria’s board of directors has fixed the close of business on February 29, 2016 as the record date for determining the holders of Astoria common stock entitled to receive notice of and to vote at the Astoria special meeting.

As of the Astoria record date, there were 101,405,071 shares of Astoria common stock outstanding and entitled to vote at the Astoria special meeting held by approximately 2,931 holders of record. Subject to the Astoria Limit, each share of Astoria common stock entitles the holder of record as of the Astoria record date to one vote at the Astoria special meeting on each proposal to be considered at the Astoria special meeting.

The presence at the Astoria special meeting, in person or by proxy, of holders of a majority of the outstanding shares of Astoria common stock entitled to vote at the special meeting will constitute a quorum for the transaction of business. All shares of Astoria common stock present in person or represented by proxy, including abstentions, will be treated as present for purposes of determining the presence or absence of a quorum for all matters voted on at the Astoria special meeting.

Vote Required; Treatment of Abstentions and Failure to Vote

Astoria merger proposal:

 

•

Standard: Approval of the Astoria merger proposal requires the affirmative vote of the holders of at least a majority of the outstanding shares of Astoria common stock entitled to vote on the proposal.

 

•

Effect of abstentions and broker non-votes: If you fail to vote, mark “ABSTAIN” on your proxy, or fail to instruct your bank or broker with respect to the Astoria merger proposal, it will have the same effect as a vote “AGAINST” the proposal.

Astoria compensation proposal:

 

•

Standard: Approval of the Astoria compensation proposal requires the affirmative vote of the holders of at least a majority of the votes cast at the Astoria special meeting.

 

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•

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or vote in person at the Astoria special meeting, or fail to instruct your bank or broker how to vote with respect to the Astoria compensation proposal, you will not be deemed to have cast a vote with respect to the proposal and it will have no effect on the proposal.

Astoria adjournment proposal:

 

•

Standard: Approval of the Astoria adjournment proposal requires the affirmative vote of the holders of at least a majority of the votes cast at the Astoria special meeting.

 

•

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or vote in person at the Astoria special meeting, or fail to instruct your bank or broker how to vote with respect to the Astoria adjournment proposal, you will not be deemed to have cast a vote with respect to the proposal and it will have no effect on the proposal.

Shares Held by Officers and Directors

As of the Astoria record date, the directors and executive officers of Astoria and their affiliates beneficially owned and were entitled to vote approximately 2,259,308.36 shares of Astoria common stock representing approximately 2.2% of the shares of Astoria common stock outstanding on that date.

Voting of Proxies; Incomplete Proxies

Each copy of this joint proxy statement/prospectus mailed to holders of Astoria common stock is accompanied by a form of proxy card with instructions for voting. If you hold stock in your name as a stockholder of record, you should complete and return the proxy card accompanying this joint proxy statement/prospectus, regardless of whether you plan to attend the special meeting. You may also vote your shares through the Internet or by telephone. Information and applicable deadlines for voting through the Internet or by telephone are set forth in the enclosed proxy card instructions.

If you hold your stock in “street name” through a bank or broker, you must direct your bank or broker how to vote in accordance with the instructions you have received from your bank or broker.

All shares represented by valid proxies that Astoria receives through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card. If you make no specification on your proxy card as to how you want your shares voted before signing and returning it, your proxy will be voted “FOR” the Astoria merger proposal, “FOR” the Astoria compensation proposal, and “FOR” the Astoria adjournment proposal. No matters other than the matters described in this joint proxy statement/prospectus are anticipated to be presented for action at the special meeting or at any adjournment or postponement of the special meeting. However, if other business properly comes before the special meeting, the proxy agents will, in their discretion, vote upon such matters in their best judgment.

Shares Held in “Street Name”; Broker Non-Votes

Under stock exchange rules, banks, brokers, and other nominees who hold shares of Astoria common stock in “street name” for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, banks, brokers, and other nominees are not allowed to exercise their voting discretion with respect to the approval of matters determined to be “non-routine,” without specific instructions from the beneficial owner. Broker non-votes are shares held by a broker, bank, or other nominee that are represented at the Astoria special meeting, but with respect to which the broker or nominee is not instructed by the beneficial owner of such shares to vote on the

 

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particular proposal and the broker does not have discretionary voting power on such proposal. If your broker, bank, or other nominee holds your shares of Astoria common stock in “street name,” your broker, bank, or other nominee will vote your shares of Astoria common stock only if you provide instructions on how to vote by filling out the voter instruction form sent to you by your broker, bank, or other nominee with this joint proxy statement/prospectus.

Astoria 401(k) Plan Voting

Participants in the Astoria 401(k) Plan as of the Astoria record date have the right to participate in directing the voting of Astoria common stock held in their plan accounts as of that date, but do not have the right to vote those shares personally at the special meeting. Such participants should refer to the voting instructions provided by the plan fiduciaries for information on how to direct the voting of such shares.

Revocability of Proxies and Changes to an Astoria Common Stockholder’s Vote

If you hold your shares of Astoria common stock in your name as a stockholder of record, you may revoke any proxy at any time before it is voted by (1) signing and returning a proxy card with a later date, (2) delivering a written revocation letter to Astoria’s corporate secretary, (3) attending the special meeting in person, notifying the corporate secretary, and voting by ballot at the special meeting, or (4) voting by telephone or the Internet at a later time.

Any stockholder entitled to vote in person at the Astoria special meeting may vote in person regardless of whether a proxy has been previously given, but the mere presence (without notifying Astoria’s corporate secretary) of a stockholder at the Astoria special meeting will not constitute revocation of a previously given proxy.

Written notices of revocation and other communications about revoking your proxy card should be addressed to:

Astoria Financial Corporation

One Astoria Bank Plaza

Lake Success, New York 11042-1085

Attention: Corporate Secretary

If your shares of Astoria common stock are held in “street name” by a bank or broker, you should follow the instructions of your bank or broker regarding the revocation of proxies.

Solicitation of Proxies

Astoria is soliciting your proxy in conjunction with the merger. Astoria will bear the cost of soliciting proxies from you. In addition to solicitation of proxies by mail, Astoria will request that banks, brokers, and other record holders send proxies and proxy material to the beneficial owners of Astoria common stock and secure their voting instructions. Astoria has also made arrangements with Innisfree M&A Incorporated to assist it in soliciting proxies and has agreed to pay Innisfree M&A Incorporated approximately $20,000 plus reasonable expenses for these services.

Attending the Astoria Special Meeting

All holders of Astoria common stock, including holders of record and stockholders who hold their shares through banks, brokers, nominees, or any other holder of record, are invited to attend the Astoria special meeting. Stockholders of record can vote in person at the special meeting. If you are not a stockholder of record, you must obtain a proxy executed in your favor from the record holder of your shares, such as a broker, bank, or other nominee, to be able to vote in person at the special meeting. If you plan to attend the Astoria special meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership. In addition, you must bring a form of personal photo identification with you in order to be admitted.

 

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Astoria reserves the right to refuse admittance to anyone without proper proof of share ownership and without proper photo identification. The use of cameras, sound recording equipment, communications devices, or any similar equipment during the Astoria special meeting is prohibited without Astoria’s express written consent.

Delivery of Proxy Materials to Stockholders Sharing an Address

As permitted by the Securities Exchange Act of 1934, as amended (which we refer to as the “Exchange Act”), only one copy of this joint proxy statement/prospectus is being delivered to multiple stockholders of Astoria sharing an address unless Astoria has previously received contrary instructions from one or more such stockholders. This is referred to as “householding.” Stockholders who hold their shares in “street name” can request further information on householding through their banks, brokers, or other holders of record. On written or oral request to Astoria’s proxy solicitor, Innisfree M&A Incorporated, at 501 Madison Avenue, 20th Floor, New York, New York 10022, or toll-free at (877) 717-3930. Astoria will deliver promptly a separate copy of this document to a stockholder at a shared address to which a single copy of the document was delivered.

Assistance

If you have any questions concerning the merger or this joint proxy statement/prospectus, would like additional copies of this joint proxy statement/prospectus, or need help voting your shares of Astoria common stock, please contact Investor Relations, One Astoria Bank Plaza, Lake Success, New York 11042, (516) 327-3000), or Astoria’s proxy solicitor, Innisfree M&A Incorporated, at 501 Madison Avenue, 20th Floor, New York, New York 10022, or toll-free at (877) 717-3930.

 

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ASTORIA PROPOSALS

PROPOSAL NO. 1: ASTORIA MERGER PROPOSAL

Astoria is asking its stockholders to adopt the merger agreement and approve the transactions contemplated thereby. Holders of Astoria common stock should read this joint proxy statement/prospectus carefully and in its entirety, including the annexes, for more detailed information concerning the merger agreement and the merger. A copy of the merger agreement is attached to this joint proxy statement/prospectus as Annex A.

After careful consideration, the Astoria board of directors, by a unanimous vote of all directors, determined that the merger, on the terms and conditions set forth in the merger agreement, is in the best interests of Astoria and its stockholders. Please see “The Merger—Astoria’s Reasons for the Merger; Recommendation of Astoria’s Board of Directors” included elsewhere in this joint proxy statement/prospectus for a more detailed discussion of the Astoria board of directors’ recommendation.

The Astoria board of directors unanimously recommends that Astoria common stockholders vote “FOR” the Astoria merger proposal.

PROPOSAL NO. 2: ASTORIA COMPENSATION PROPOSAL

Pursuant to the Dodd-Frank Act and Rule 14a-21(c) of the Exchange Act, Astoria is seeking non-binding, advisory approval from its common stockholders of the compensation of Astoria’s named executive officers that is based on or otherwise relates to the merger, as disclosed in “The Merger—Interests of Astoria Directors and Executive Officers in the Merger—Merger-Related Compensation for Astoria’s Named Executive Officers” beginning on page 97. The proposal gives Astoria’s stockholders the opportunity to express their views on the merger-related compensation of Astoria’s named executive officers. Accordingly, Astoria is requesting its stockholders to adopt the following resolution, on a non-binding, advisory basis:

“RESOLVED, that the compensation that may be paid or become payable to Astoria’s named executive officers in connection with the merger, and the agreements or understandings pursuant to which such compensation may be paid or become payable, in each case as disclosed pursuant to Item 402(t) of Regulation S-K in “The Merger—Interests of Astoria Directors and Executive Officers in the Merger—Merger-Related Compensation for Astoria’s Named Executive Officers,” are hereby APPROVED.”

Approval of this proposal is not a condition to completion of the merger, and the vote with respect to this proposal is advisory only and will not be binding on NYCB or Astoria. If the merger is completed, the merger-related compensation may be paid to Astoria’s named executive officers to the extent payable in accordance with the terms of the compensation agreements and arrangements even if Astoria common stockholders fail to approve the advisory vote regarding merger-related compensation.

The Astoria board of directors unanimously recommends that Astoria common stockholders vote “FOR” the Astoria compensation proposal.

PROPOSAL NO. 3: ASTORIA ADJOURNMENT PROPOSAL

The Astoria special meeting may be adjourned to another time or place, if necessary or appropriate, to permit, among other things, further solicitation of proxies if necessary to obtain additional votes in favor of the Astoria merger proposal.

If, at the Astoria special meeting, the number of shares of Astoria common stock present or represented and voting in favor of the Astoria merger proposal is insufficient to approve such proposal, Astoria intends to move to adjourn the Astoria special meeting in order to solicit additional proxies for the adoption of the merger agreement. In accordance with the Astoria bylaws, a vote to approve the proposal to adjourn the Astoria special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the Astoria special meeting to approve the Astoria merger proposal may be taken in the absence of a quorum.

 

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In this proposal, Astoria is asking its stockholders to authorize the holder of any proxy solicited by the Astoria board of directors on a discretionary basis to vote in favor of adjourning the Astoria special meeting to another time and place for the purpose of soliciting additional proxies, including the solicitation of proxies from Astoria common stockholders who have previously voted.

The Astoria board of directors unanimously recommends that Astoria common stockholders vote “FOR” the Astoria adjournment proposal.

 

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INFORMATION ABOUT NYCB

One of the largest U.S. bank holding companies, with assets of $50.3 billion as of December 31, 2015, NYCB is a leading producer of multi-family loans on rent-regulated buildings in New York City and the parent of the Community Bank and the Commercial Bank. With deposits of $28.4 billion as of December 31, 2015 and over 250 branches in Metro New York, New Jersey, Florida, Ohio, and Arizona, NYCB also ranks among the largest depositories in the United States.

Reflecting its growth through a series of acquisitions, the Community Bank operates through seven local divisions, each with a history of service and strength: Queens County Savings Bank, Roslyn Savings Bank, Richmond County Savings Bank, and Roosevelt Savings Bank in New York; Garden State Community Bank in New Jersey; Ohio Savings Bank in Ohio; and AmTrust Bank in Florida and Arizona. Similarly, the Commercial Bank currently operates 18 of its 30 New York-based branches under the divisional name Atlantic Bank. On September 17, 2015, NYCB submitted an application to the FDIC and the DFS requesting approval to merge the Commercial Bank with and into the Community Bank. The merger of the Commercial Bank and the Community Bank is not expected to impact either bank’s customers or employees, given that all of their respective branches operate on the same systems and, with few exceptions, offer the same products and services. Additional information about NYCB and its bank subsidiaries is available at www.myNYCB.com and www.NewYorkCommercialBank.com.

NYCB’s principal office is located at 615 Merrick Avenue, Westbury, New York 11590, and its telephone number at that location is (516) 683-4100. NYCB’s stock is traded on the NYSE under the symbol “NYCB.” Additional information about NYCB and its subsidiaries is included in documents incorporated by reference in this joint proxy statement/prospectus. Please see “Where You Can Find More Information.”

 

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INFORMATION ABOUT ASTORIA

With assets of $15.1 billion as of December 31, 2015, Astoria is the holding company for Astoria Bank. Established in 1888, Astoria Bank, with deposits in New York totaling $9.1 billion as of December 31, 2015, is the second largest thrift depository in New York and provides its retail and business customers and the local communities it serves with quality financial products and services through 87 convenient banking branch locations, a business banking office in Manhattan, and multiple delivery channels, including its flexible mobile banking app.

Astoria Bank has a significant presence in the Long Island market, which includes Brooklyn, Queens, Nassau, and Suffolk counties, with a population exceeding that of 38 individual states. Astoria Bank originates multi-family and commercial real estate loans, primarily on rent-controlled and rent-stabilized apartment buildings located in New York City and the surrounding metropolitan area, and originates residential mortgage loans through its banking and loan production offices in New York, a broker network in four states, primarily along the East Coast, and correspondent relationships covering 13 states and the District of Columbia.

Astoria’s principal office is located at One Astoria Bank Plaza, Lake Success, New York 11042, and its telephone number at that location is (516) 327-7869. Astoria’s stock is traded on the NYSE under the symbol “AF.” Additional information about Astoria and its subsidiaries is included in documents incorporated by reference in this joint proxy statement/prospectus. Please see “Where You Can Find More Information.”

 

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THE MERGER

The following discussion contains certain information about the merger. The discussion is subject, and qualified in its entirety by reference, to the merger agreement attached as Annex A to this joint proxy statement/prospectus and incorporated herein by reference. We urge you to read carefully this entire joint proxy statement/prospectus, including the merger agreement attached as Annex A, for a more complete understanding of the merger.

Terms of the Merger

Each of NYCB’s and Astoria’s respective boards of directors has unanimously approved the merger agreement. The merger agreement provides for the merger of Astoria with and into NYCB, with NYCB continuing as the surviving corporation. Immediately following the completion of the merger, Astoria Bank, a wholly-owned bank subsidiary of Astoria, will merge with and into the Community Bank, a wholly-owned bank subsidiary of NYCB. The Community Bank will be the surviving bank in the bank merger.

In the merger, each share of Astoria common stock issued and outstanding immediately prior to the completion of the merger, except for specified shares of Astoria common stock held by Astoria or NYCB and shares of Astoria common stock held by stockholders who properly exercise appraisal rights, will be converted into the right to receive one share of NYCB common stock, par value $0.01 per share, and $0.50 in cash. No fractional shares of NYCB common stock will be issued in connection with the merger.

Also in the merger, each share of Astoria Preferred Stock issued and outstanding immediately prior to the effective time of the merger will be automatically converted into the right to receive one share of NYCB Preferred Stock. But for the par value of the securities, the NYCB preferred stock to be issued in connection with the merger will have terms that are identical to the terms of the outstanding Astoria preferred stock.

Astoria common stockholders and NYCB stockholders are being asked to adopt the merger agreement. See “The Merger Agreement” for additional and more detailed information regarding the legal documents that govern the merger, including information about conditions to the completion of the merger and provisions for terminating or amending the merger agreement.

Background of the Merger

The Astoria board of directors reviews, with management, its business strategies, opportunities and challenges as part of its consideration and evaluation of its long-term prospects in light of developments in its business, in the sectors in which it competes, in the economy generally and in financial markets, with the goal of enhancing value for its stockholders.

From time to time, Astoria has had general discussions with other financial institutions (including NYCB) regarding the possibility of a potential future strategic transaction and has discussed this topic with representatives of Sandler O’Neill and other investment banking institutions. These discussions included a review of the banking market, as well as industry trends and developments in mergers and acquisitions. Starting in the early summer of 2015, the Astoria board of directors and management began regularly consulting with counsel at Wachtell, Lipton, Rosen & Katz (which we refer to as “Wachtell Lipton”) and representatives of Sandler O’Neill on industry topics and strategic and transaction developments. The Astoria board of directors formally retained Sandler O’Neill to act as its financial advisor in connection with a possible transaction based on, among other factors, Sandler O’Neill’s reputation, experience in mergers and acquisitions, valuations, financing and capital markets and its familiarity with Astoria, Astoria’s strategic goals and the industries in which Astoria competes.

Historically, growth through mergers and acquisitions has been an important part of NYCB’s strategic plan and NYCB has remained focused on mergers and acquisitions as a key component of its growth plans. For some time, NYCB management has publically stated that, as part of its strategic growth strategy, it desired to complete

 

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a large merger or acquisition transaction that would take NYCB substantially above the $50 billion in consolidated assets threshold, recognizing that this also would trigger the enhanced prudential regulation applicable to banking organizations that are known as “Systemically Important Financial Institutions” or “SIFIs”. NYCB has long considered Astoria a suitable candidate for these purposes. In addition, NYCB management has also publically stated that it had taken steps to seek to ensure that it was prepared to comply with such enhanced prudential regulation applicable to SIFIs and planned to cross the threshold organically during 2016.

On August 26, 2015, at a regularly scheduled meeting of the Astoria board of directors, members of the board discussed the future and strategic plans of Astoria. Representatives of Sandler O’Neill and Wachtell Lipton attended the meeting. Representatives of Wachtell Lipton reviewed with the Board the applicable legal standards in connection with a possible transaction. Representatives of Sandler O’Neill provided the Astoria board of directors with an overview of the current mergers and acquisitions market with respect to financial institutions generally and Astoria in particular. As part of those discussions, representatives of Sandler O’Neill discussed the operating environment faced by Astoria and similarly situated financial institutions as well as the potential benefits associated with exploring strategic alternatives and management commented on the current standalone strategic plan for Astoria.

As a result of these discussions, the Astoria board of directors authorized Astoria management and Sandler O’Neill to contact five specific institutions, including NYCB, that were considered to have a strong strategic fit, based on various factors, including their financial performance and management teams, financial capacity to engage in a transaction, apparent regulatory standing and geographic footprint. Sandler O’Neill subsequently contacted these five financial institutions confidentially during the week of August 31, 2015.

NYCB was among the five financial institutions the Astoria board of directors authorized Astoria management and Sandler O’Neill to contact. When Sandler O’Neill first contacted NYCB management about a possible transaction with Astoria, NYCB management promptly engaged in a review of Astoria and began to evaluate and make plans to pursue a possible transaction.

During the weeks of September 14 and September 21, 2015, representatives of four of the five financial institutions contacted by Sandler O’Neill delivered verbal indications of interest to Sandler O’Neill. These indications of interest were non-binding and were based solely on publicly available information. Sandler O’Neill communicated these indications of interest to Astoria management and the board. Each indication of interest contemplated a stock for stock merger of Astoria with and into the potential acquiror, to be immediately followed by a merger of Astoria Bank into the potential acquiror’s wholly owned banking subsidiary. Terms were as follows:

 

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Party A proposed a fixed exchange ratio of 1.5, which based on the then-current trading price of Party A’s common stock would provide consideration with a value equal to $17.95 per share of Astoria common stock.

 

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NYCB proposed an indicative value range of $18.00 to 19.00 per share of Astoria common stock.

 

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Party C proposed a range of fixed exchange ratios of 1.0 to 1.2, which based on the then-current trading price of Party C’s common stock would provide consideration with a value in a range between $15.22 and $18.26 per share of Astoria common stock.

 

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Party D expressed a general interest in considering a potential transaction at a possible valuation range of $17.00 to $18.00 per share of Astoria common stock.

On September 22, 2015, the Astoria board of directors met to discuss, among other items, an updated and comprehensive assessment of Astoria’s standalone strategic plan as well as the verbal indications of interests that Sandler O’Neill had received. Representatives from Wachtell Lipton and Sandler O’Neill attended the meeting. The Sandler O’Neill representatives provided an overview of each potential acquiror’s business, financial position, regulatory history (based on public sources) and geographic footprint, as well as a summary of publicly

 

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available data about each company’s trading price and valuation. The Astoria board of directors discussed alternative strategies, including: continuing discussions regarding a possible business combination; expanding the process to solicit indications of interest from a larger group of potentially interested financial institutions; or terminating the process and continuing to operate as an independent institution. The Astoria board of directors engaged in a robust discussion regarding the indications of interest. In the course of its discussions, the Astoria board of directors also considered other potential strategic partners, the likelihood of any such partners actually having interest in proceeding with such a transaction, as well as what the Astoria board of directors believed to be significant risks from a confidentiality, competitive, and employee retention perspective of approaching other potential strategic partners. The Astoria board of directors determined that these risks outweighed the limited, if any, expected benefit from attempting to solicit interest in a business combination transaction from other parties because of the Astoria board of directors’ view, following consultation with Sandler O’Neill, that Party A, NYCB, Party C and Party D were the only potential strategic parties that, based on their respective market and industry positions, were likely to be potentially interested, financially capable of submitting a competitive offer, and potentially capable of executing a transaction in the near term. Based on these discussions and analyses, the Astoria board of directors directed management and Sandler O’Neill to continue discussions with the parties that had already expressed interest.

On September 29, 2015, Astoria and Party A executed a mutual confidentiality agreement that contained customary standstill provisions. The confidentiality agreement provided for the standstill to automatically terminate if Astoria entered into an agreement with a third party providing for an acquisition of a majority of Astoria’s voting securities or all or substantially all of Astoria’s assets. In addition, Astoria executed a mutual confidentiality agreement with the same customary standstill provisions with Party C on October 8, 2015 and with NYCB on October 9, 2015. During this general time period Party D ceased regular contact on a potential transaction, and did not proceed with diligence or otherwise communicate any definitive indication of interest.

Over the course of the following weeks, Party A and NYCB began to undertake their respective due diligence investigations of Astoria’s business, including its financial condition, loan book and information technology and risk management applications and systems. Astoria made available to each party certain due diligence materials in an electronic data room. On October 8, 2015, representatives of Party A attended an in-person diligence session at Astoria’s offices. Astoria also began a reciprocal due diligence investigation of Party A. During this period, management updated the members of the Astoria board of directors on the results of the ongoing due diligence investigations. At the end of the following week, following completion of substantial due diligence work by Party A, Astoria directed Wachtell Lipton to deliver to Party A and its legal advisors an initial draft merger agreement for the proposed transaction.

On October 9, 2015, senior management of Astoria met in person with senior management of Party C. During the course of such meeting, Party C’s management expressed reservations about proceeding with any potential transaction in the near term, instead preferring to pursue a transaction at the end of 2015. Party C also obtained access to Astoria’s electronic data room. After this date, Astoria did not again receive any communication directly from Party C’s management with respect to their potential interest in a transaction or otherwise.

On October 20, 2015, at a regularly scheduled meeting of the NYCB board of directors, NYCB management presented an overview of the potential transaction with Astoria and preliminary transaction considerations. The NYCB board of directors agreed that NYCB should continue a comprehensive due diligence review and work towards a potential transaction with Astoria.

Also during the week of October 19, representatives of Sandler O’Neill contacted representatives of Party A, NYCB and Party C to request their updated views on valuation, which would be informed by the additional due diligence each party had conducted. In addition, Wachtell Lipton sent a draft merger agreement for the proposed transaction to NYCB and its legal counsel, Sullivan & Cromwell LLP (which we refer to as “S&C”).

 

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Party A submitted a written proposal contemplating a fixed exchange ratio of 1.5, which was unchanged from its initial indication, and committing to sign and announce a transaction by the end of October. Party A’s letter also indicated that it would intend to appoint four representatives from Astoria’s board of directors to Party A’s board of directors in connection with the transaction.

NYCB provided a verbal indication that it intended to offer between $18.00 to $19.00 per share of Astoria common stock. NYCB also indicated that it would envision a fixed exchange ratio of 1.0. Although NYCB did not make a specific commitment as to the date of signing and announcing a transaction, it indicated that it desired to execute and announce a transaction promptly. NYCB also informed Sandler O’Neill that it would be willing to discuss appointing representatives from Astoria’s board of directors to NYCB’s board of directors in proportion to the post-merger ownership of the combined company by former Astoria stockholders and by the NYCB stockholders.

Party C’s financial advisor provided a verbal indication that their view on valuation would fall in the top of their previously communicated range of exchange ratios. Party C’s financial advisor did not make a specific commitment as to the date of signing and announcing a transaction and indicated verbally that it would be willing to discuss the proportional appointment of representatives from Astoria’s board of directors to Party C’s board of directors.

On October 23, 2015, the Astoria board of directors met at a special meeting. At this meeting, management provided the Astoria board of directors with an update on the process, including the ongoing due diligence investigations by Party A, NYCB and Party C and the updated views on valuation provided by each of them. Sandler O’Neill then presented to the Astoria board of directors an analysis of the financial condition and trading prices of each of Astoria, Party A, NYCB and Party C and a comparison of the updated views of valuation. In addition, representatives of Wachtell Lipton provided the board with an overview of certain non-financial factors regarding each of Party A, NYCB and Party C, as described below. The Astoria board of directors discussed the analysis presented by Sandler O’Neill and Wachtell Lipton, including the financial metrics associated with each potential acquiror, the all stock-nature of each proposal, the fixed exchange ratio, each party’s perceived interest in negotiating and entering into a transaction, each party’s likely skill in obtaining required transaction approvals from its respective banking regulators in a timely manner and, in the case of NYCB and Party C, the amount of planning and preparation such party had performed in anticipation of being designated a SIFI, which would be likely to occur as a result of the acquisition of Astoria. The Astoria board of directors also discussed that Party A would not necessarily be designated a SIFI solely as a result of a potential acquisition of Astoria, but that with additional organic growth or other acquisitions could be expected to reach that designation in the foreseeable future. In this regard, the Astoria board of directors discussed at length their belief, based on public statements and commentary and the views of its advisors, that NYCB possessed execution advantages over each of Party A and Party C in completing and successfully integrating a transaction. The Astoria board of directors directed Sandler O’Neill to explore with each of the interested parties the possibility of an increase in the overall consideration to be paid in the transaction.

On October 24, 2015, senior management of Astoria, Sandler O’Neill and Wachtell, Lipton met in-person with Party A to conduct further due diligence on Party A. On October 25, 2015, senior management of Astoria and Sandler O’Neill met in-person with senior management of NYCB to continue their reciprocal due diligence efforts.

Between October 24 and October 27, 2015 Wachtell Lipton exchanged drafts of the merger agreement with Party A’s legal advisors and with S&C and worked towards finalizing the terms and conditions of the transaction with both parties on substantially the same terms. In addition, during this period, Astoria and Wachtell Lipton held preliminary discussions with NYCB and Party A and their respective legal advisors concerning the regulatory approvals that would be required in connection with a potential transaction and the process for obtaining required regulatory approvals.

On October 27, 2015, the NYCB board of directors held a special meeting to consider approval of the merger agreement and the transactions contemplated by the merger agreement, including the merger. At the meeting, the

 

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NYCB board of directors received an update from NYCB management on the status of negotiations with Astoria and information regarding the proposed merger and the combined business, and reviewed the terms of the proposed transaction and the strategic rationale and anticipated benefits of the proposed transaction to NYCB’s shareholders. Representatives of Goldman Sachs and Credit Suisse reviewed the financial terms of NYCB’s proposal to offer to acquire Astoria in a stock-for-stock merger at a fixed exchange ratio of one NYCB share for each Astoria share. Each of Goldman Sachs and Credit Suisse, respectively, reviewed the financial analyses each firm performed in connection with its evaluation of NYCB’s proposed offer, including discussing the various financial methodologies used in each advisor’s analysis. Each of Goldman Sachs and Credit Suisse then indicated that it expected it would be in a position to deliver an opinion to the NYCB board of directors to the effect that, and subject to and based on the procedures followed, assumptions made, matters considered and limitations on the scope of the review undertaken, in each case as set forth in its written opinion, a fixed exchange ratio of 1.0 was fair, from a financial point of view, to NYCB. A representative from S&C reviewed the terms of the merger agreement and other legal considerations. NYCB management and NYCB’s advisors then reviewed with the NYCB board of directors a letter contemplating NYCB’s proposal for a transaction.

On the basis of the update from NYCB management, and presentations from Goldman Sachs, Credit Suisse and S&C, the NYCB board of directors authorized NYCB management to submit a proposal to Astoria of a fixed exchange ratio of 1.0. At the same time, the NYCB board of directors authorized Joseph R. Ficalora, the chief executive officer of NYCB, if necessary, to deliver a subsequent, best and final proposal to Astoria of a fixed exchange ratio of 1.0 and an additional amount in cash to be reasonably determined by Mr. Ficalora based on his discussions with the NYCB board of directors (which we refer to as a “final proposal”), in all events subject to receipt by NYCB from each of Goldman Sachs and Credit Suisse of a fairness opinion on the final proposal (each of which was subsequently received as described below).

After considering the presentations of its financial advisors and the proposed terms of the merger agreement, including the possibility of NYCB submitting a final proposal, and taking into consideration the matters discussed during that meeting and during prior meetings of the NYCB board of directors, including the factors described under “—NYCB’s Reasons for the Merger; Recommendation of NYCB’s Board of Directors,” the NYCB board of directors unanimously determined that the merger with Astoria was advisable and in the best interests of NYCB and its stockholders and voted unanimously to approve and adopt the merger agreement and the transactions contemplated thereby and recommended that NYCB’s stockholders approve the merger agreement.

After its board meeting, on October 27, 2015, NYCB sent a letter to the Astoria board of directors with its proposal for a transaction. NYCB indicated that it was prepared to proceed with a transaction in which Astoria would merge into NYCB, immediately followed by the merger of Astoria Bank with the Community Bank. The letter contemplated that Astoria common stockholders would receive one share of NYCB common stock for each share of Astoria stock, which based on the closing price of NYCB’s common stock on October 27, 2015 represented consideration with a value equal to $18.79 per share of Astoria common stock. The letter did not contemplate the payment by NYCB of any amount of cash consideration. The letter also described in extensive detail NYCB’s proposed balance sheet repositioning, where NYCB would prepay approximately $10 billion of wholesale borrowings, resulting in an expected one-time after-tax prepayment charge of approximately $614 million that NYCB proposed to offset with the proceeds of a follow-on offering of its common stock. The letter also outlined the perceived benefits that the balance sheet repositioning would have in connection with a strategic combination with Astoria.

Later that evening, representatives of Party A told Sandler O’Neill that it would not increase its offer but that it was prepared to proceed with a transaction on the terms that it had presented in its letter of interest. Based on Party A’s then-current trading price, the fixed exchange ratio of 1.5 represented consideration with a value equal to $18.99 per share of Astoria common stock.

During this time, representatives of Party C’s financial advisor communicated verbally preliminary interest in a transaction at the top of Party C’s initially communicated valuation range. However, Party C did not communicate this interest directly or in writing, and did not indicate any ability or willingness to execute a

 

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transaction in the immediate future or provide an actionable proposal with respect to a possible transaction. Also during this time, Sandler O’Neill spoke with representatives of Party D, who declined to make a firm proposal for a transaction.

Based on the very similar pricing levels indicated by Party A and NYCB, and the significant amount of diligence work and discussions on the draft merger agreement completed with each party to that date, the Astoria board of directors invited senior management of each institution to present to the Astoria board at the October 28 regular board meeting.

On October 28, 2015, the Astoria board of directors met for a regularly scheduled meeting, which was attended by senior management and representatives of Sandler O’Neill and Wachtell, Lipton. Representatives of Sandler O’Neill and Astoria’s senior management discussed with the Astoria board of directors the process since the October 23 board meeting and reviewed with the board the offers that Astoria had received from Party A and NYCB the day before and also reviewed the communications with Party C and Party D. The Astoria board of directors determined that, based on the past discussions and materials that Sandler O’Neill had prepared in advance of the meeting, that each proposal presented Astoria common stockholders with significant value when compared to Astoria’s standalone strategy.

The Astoria board of directors then invited Mr. Ficalora to discuss NYCB’s proposed combination and strategic vision for the combined company. Following the oral presentation by Mr. Ficalora, the Astoria board of directors asked questions about NYCB’s proposed balance sheet repositioning, future dividends and strategic vision for the combined companies. Discussion ensued among Mr. Ficalora, the Astoria board of directors and Astoria’s advisors with respect to those matters and other related matters. At the conclusion of that discussion, the Astoria board of directors told Mr. Ficalora that in view of the competitive nature of the process NYCB would need to raise its offer. Mr. Ficalora indicated that NYCB would consider revising its proposal to pay a certain amount of cash consideration in addition to NYCB stock, and that NYCB would respond with a revised proposal. Mr. Ficalora then departed the meeting.

The Astoria board of directors then invited the Chief Executive Officer and Chief Operating Officer of Party A to discuss Party A’s proposed business combination and strategic vision for the combined company. Following the oral presentation by Party A’s Chief Executive Officer and Chief Operating Officer, the Astoria board of directors asked questions about Party A’s strategy for the combined company, the execution risk involved in the potential business combination and certain regulatory matters. Discussion ensued between the executive officers of Party A, the Astoria board of directors and its advisors. Following that discussion, the Astoria board of directors told Party A’s representatives that in view of the competitive nature of the process Party A would need to raise its offer. Party A’s representatives then left the meeting.

The Astoria board of directors then had an extensive discussion comparing and contrasting the competing offers of NYCB and Party A. During the course of that discussion, the Astoria board of directors received input from Wachtell Lipton, Sandler O’Neill and Astoria management on various aspects of the proposed strategic business combinations. Astoria management explained that, based on its due diligence efforts, a combination with Party A had greater execution risk. Management also observed that Party A could face obstacles in achieving synergies due to the higher relative cost of integration. This was in part due to significant recent growth of Party A, the smaller size of Party A relative to NYCB and the different business and current geographic focus of Party A. The Astoria board of directors also discussed, among other items, the concerns raised by NYCB’s proposal, including the timing of the proposed balance sheet repositioning, NYCB’s plans for an approximately $600 million capital raise, the announcement of a NYCB dividend reduction that would accompany an announcement of a deal and the effect that the balance sheet repositioning could have on the value of NYCB common stock. The Astoria board of directors then discussed the execution risks of each of the proposed transactions. Management observed that NYCB generally seemed in a better position to promptly execute and complete a transaction, and that its rapid and efficient work in the process provided evidence of this preparedness. Representatives from Wachtell Lipton also reviewed with the Astoria board of directors their fiduciary duties under Delaware law in connection

 

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with a proposed business combination transaction and the conduct of the process the board of directors had conducted to date. The Astoria board of directors also engaged in a lengthy discussion with respect to the risks and benefits of each of the proposals.

The Astoria board of directors then began to review with the representatives of Sandler O’Neill the financial aspects of the competing transaction proposals. The Astoria board of directors directed Sandler O’Neill to reach out to both bidders for their best and final offers so that these offers could be used as the basis for analyzing each proposal.

After consulting with Goldman Sachs and informing Credit Suisse, and on the basis of the instruction from the Astoria board of directors that NYCB would need to raise its offer and Sandler O’Neill’s request for a best and final offer, Mr. Ficalora delivered a final proposal for a fixed exchange ratio of 1.0 plus $0.50 in cash for each Astoria share.

During further discussions with the Astoria board of directors, Sandler O’Neill informed the Astoria board of directors that Party A increased the fixed exchange ratio in its offer to 1.52, which based on the closing price of Party A’s common stock on October 27, 2015, represented consideration with value equal to $19.24 per share of Astoria common stock and a total transaction value of $1.98 billion. Sandler O’Neill also informed the Astoria board of directors that NYCB had increased its offer to 1.0 share of NYCB stock and an additional $0.50 in cash for each outstanding share of Astoria common stock. Based on the closing price of NYCB common stock on October 27, 2015, the offer represented consideration with value equal to $19.29 per share of Astoria common stock and a total transaction value of $1.99 billion.

Following receipt of the revised offers, Sandler O’Neill reported to the Astoria board of directors on its discussions with representatives of NYCB and Party A with respect to their improved financial proposals. The Astoria board of directors and its advisors continued to discuss the relative merits of each proposal in detail. The Chairman of the Board then solicited comments from the outside directors on their view of the competing proposals. The outside directors unanimously concluded that, based on the offers, including the proposed terms of the transaction documents and the higher execution, compliance and regulatory risks with Party A’s proposal, that NYCB’s proposal had a higher certainty of completion and therefore was in the best interests of Astoria common stockholders.

Sandler O’Neill then rendered its oral opinion, which was confirmed by delivery of a written opinion dated October 28, 2015, to the effect that, as of that date and based on and subject to various assumptions and limitations described in its opinion, the consideration provided for in the merger was fair, from a financial point of view, to Astoria common stockholders. In addition, representatives of Wachtell Lipton discussed with the board the terms of the transaction documents to be executed with NYCB, including the treatment of Astoria equity awards, preferred stock and the depositary receipts representing fractional interests in the preferred stock, as well as the assumption by NYCB of Astoria’s existing debt. Following these discussions, and review and discussion among the members of the Astoria board of directors, including consideration of the factors described under “—Astoria’s Reasons for the Merger; Recommendation of the Astoria board of directors,” the Astoria board of directors determined that the merger agreement with NYCB and the transactions contemplated by the merger agreement, including the merger of Astoria and NYCB, were advisable and in the best interest of Astoria and its stockholders and voted unanimously to approve the merger agreement and the transactions contemplated by the merger agreement.

Goldman Sachs and Credit Suisse each rendered a written opinion, dated as of October 28, 2015, to the effect that, as of October 28, 2015, and subject to and based on the procedures followed, assumptions made, matters considered and limitations on the scope of the review undertaken, in each case as set forth in its written opinion, the merger consideration to be paid by NYCB pursuant to the merger agreement was fair, from a financial point of view, to NYCB.

 

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On the evening of October 28, 2015, representatives of Wachtell Lipton and S&C finalized the terms of the merger agreement, which Astoria and NYCB executed. On the morning of October 29, 2015, Astoria and NYCB issued a joint press release announcing the execution of the merger agreement.

NYCB’s Reasons for the Merger; Recommendation of NYCB’s Board of Directors

In reaching its decision to adopt the merger agreement, to approve the merger and the other transactions contemplated by the merger agreement, and to recommend that NYCB’s stockholders adopt the merger agreement, the NYCB board of directors consulted with NYCB management, as well as its independent financial and legal advisors, and considered a number of factors, including the following material factors:

 

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each of NYCB’s, Astoria’s, and the combined company’s business, operations, financial condition, asset quality, earnings, and prospects. In reviewing these factors, the NYCB board of directors considered its view that Astoria’s financial condition and asset quality are sound, that Astoria’s business and operations complement those of NYCB, and that the merger would result in a combined company with a larger market presence and more diversified loan portfolio as well as an attractive funding base, including through core deposit funding, and even stronger asset quality. The board of directors further considered that Astoria’s earnings and prospects, and the synergies potentially available in the proposed transaction, create the opportunity for the combined company to have superior future earnings and prospects compared to NYCB’s earnings and prospects on a stand-alone basis. In particular, the board of directors considered the following:

 

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the potential of creating the pre-eminent New York-based community banking franchise, aimed at supporting local borrowers, businesses, and economies in the greater New York metropolitan area, and management’s expectation that the merger would result in a significant increase of NYCB’s share of deposits in the attractive markets of Nassau, Suffolk, Queens and Brooklyn;

 

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combining the benefits of NYCB’s leading multi-family and wholesale mortgage lending platform and Astoria’s traditional in-market retail lending franchise, thereby diversifying the combined organization’s revenue sources and loan portfolio;

 

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the similarity of the business models and cultures of the two companies, including with respect to strategic focus, target markets, and client service, which management believes should facilitate integration and implementation of the transaction;

 

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the ability to enhance revenue by expanding NYCB’s multi-family and residential mortgage lending activities; and

 

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the expanded possibilities, including organic growth and future acquisitions, that would be available to the combined company, given its larger size, asset base, capital, and footprint;

 

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the NYCB board’s expectation that the merger will create the opportunity for the combined company to have superior future earnings and prospects compared to NYCB’s earnings and prospects on a stand-alone basis. In particular, the board of directors considered the anticipated pro forma impact of the merger on the combined company, including the expected positive impact on financial metrics including earnings, tangible stockholders’ equity per share and total deposits and on regulatory capital levels;

 

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the participation of two of Astoria’s directors in the combined company which the NYCB board of directors believed would enhance the likelihood that the strategic benefits that NYCB expects to achieve as a result of the merger will be realized;

 

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the positive effects on the combined company’s balance sheet, including a reduction in exposure to rising interest rates and improvement in NYCB’s interest rate sensitivity ratios, and the expected reduction of NYCB’s annual interest rate expense resulting from the planned NYCB balance sheet repositioning, the anticipated related one-time after-tax prepayment charge of approximately $614 million, and the planned common stock offering intended to offset the prepayment charge;

 

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the complementary nature of the customers and markets of NYCB and Astoria, given Astoria’s longstanding roots in the New York banking market and its strong ties to the same communities that NYCB serves;

 

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NYCB’s successful track record of creating stockholder value through M&A transactions, including its proven experience in successfully integrating acquired businesses, and management’s belief that NYCB will be able to integrate Astoria with NYCB successfully;

 

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its understanding of the current and prospective environment in which Astoria and NYCB operate, including national and local economic conditions, the interest rate environment, increasing operating costs resulting from regulatory initiatives and compliance mandates, the competitive environment for financial institutions generally, and the likely effect of these factors on NYCB both with and without the proposed transaction;

 

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its review and discussions with NYCB’s management concerning the due diligence examination of Astoria’s business;

 

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management’s expectation that NYCB will retain its strong capital position and superior asset quality upon completion of the transaction;

 

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that the proposed transaction will result in a combined company with total consolidated assets of more than $50 billion in a manner consistent with NYCB’s pre-existing plan to cross the $50 billion threshold organically by the end of the second quarter of 2016, and the related work that management of NYCB has done to prepare for the enhanced requirements relating to being a SIFI;

 

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the regulatory implications, including stricter prudential standards and increased compliance costs, to NYCB of becoming a SIFI, the costs of which the NYCB board of directors considered to be outweighed by the benefits of the proposed transaction, including a higher capacity to retain loans in the NYCB portfolio which will contribute to higher liquidity and an improved risk profile, an estimated 20% accretion in NYCB’s earnings and 6% accretion in NYCB’s tangible book value per share upon closing (estimated assuming a closing in the fourth quarter of 2016), NYCB’s preparedness to comply with the increased prudential standards and regulatory expectations applicable to a SIFI, and the NYCB board of directors’ and management’s belief that the merger will provide additional scale to absorb SIFI compliance-related costs (which NYCB expected to incur in 2016, regardless, as NYCB planned to cross the $50 billion threshold organically);

 

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the expectation that the merger will result in significant annual cost savings, estimated to be up to 50% on the Astoria side of the combined company (reflecting an approximately 50% reduction of Astoria’s non-interest expense) following the completion of the merger and full integration of the two companies;

 

•

the positive impact on the combined company’s capital position resulting from the anticipated dividend payout ratio of approximately 50% upon completion of the merger and the expected immediate reduction in NYCB’s quarterly dividend from $0.25 to $0.17;

 

•

the expectation that the transaction will be generally tax-free for United States federal income tax purposes to NYCB’s stockholders;

 

•

the financial presentations, delivered on October 27, 2015, by each of Goldman Sachs and Credit Suisse, financial advisors to the NYCB board of directors, in connection with each financial advisor’s evaluation of NYCB’s then-current proposal to offer to acquire Astoria in a stock-for-stock merger at a fixed exchange ratio of one NYCB share for each Astoria share and, with respect to such proposed consideration, the indication from each of Goldman Sachs and Credit Suisse that it expected it would be in a position to deliver an opinion to the board of directors to the effect that, and subject to and based on the procedures followed, assumptions made, matters considered and limitations on the scope of the review undertaken, in each case as set forth in its written opinion, such merger consideration was

 

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fair, from a financial point of view, to NYCB and the fact that any inclusion of cash consideration (as determined necessary by Mr. Ficalora) was in all events subject to receipt by NYCB from each of Goldman Sachs and Credit Suisse of a fairness opinion on the final proposal (each of which was subsequently received);

 

•

the fact that NYCB’s stockholders will have a chance to vote on the merger; and

 

•

its review with its independent legal advisor, Sullivan & Cromwell LLP, and its independent financial advisors, Goldman Sachs and Credit Suisse, of the financial and other terms of the merger agreement, including mutual deal protection and termination fee provisions.

The NYCB board of directors also considered the potential risks related to the merger but concluded that the anticipated benefits of the merger were likely to substantially outweigh these risks. These potential risks included:

 

•

the possibility of encountering difficulties in achieving anticipated cost synergies and savings in the amounts estimated or in the time frame contemplated;

 

•

the possibility of encountering difficulties in successfully integrating Astoria’s business, operations, and workforce with those of NYCB;

 

•

the transaction-related restructuring charges and other merger-related costs, including the payments and other benefits to be received by Astoria management in connection with the merger pursuant to existing Astoria plans and compensation arrangements and the merger agreement;

 

•

diversion of management attention and resources from the operation of NYCB’s business towards the completion of the merger; and

 

•

the regulatory and other approvals required in connection with the merger and the risk that such regulatory approvals will not be received in a timely manner and may impose unacceptable conditions.

The foregoing discussion of the information and factors considered by the NYCB board of directors is not intended to be exhaustive, but includes the material factors considered by the NYCB board of directors. In reaching its decision to approve the merger agreement, the merger, and the other transactions contemplated by the merger agreement, the NYCB board of directors did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors. The NYCB board of directors considered all these factors as a whole, including discussions with, and questioning of, NYCB’s management and Astoria’s independent financial and legal advisors, and overall considered the factors to be favorable to, and to support, its determination.

For the reasons set forth above, the NYCB board of directors unanimously determined that the merger agreement and the transactions contemplated by the merger agreement, are advisable and in the best interests of NYCB and its stockholders, and unanimously adopted and approved the merger agreement and the transactions contemplated by it.

The NYCB board of directors unanimously recommends that NYCB stockholders vote “FOR” the approval of the merger proposal and other merger-related proposals.

It should be noted that this explanation of the NYCB board of directors’ reasoning presented in this section contains information that is forward-looking in nature, and therefore should be read in light of the factors discussed under the heading “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 28.

Unaudited Prospective Financial Information

NYCB does not as a matter of course make public projections as to future performance, revenues, earnings or other financial results due to, among other reasons, the uncertainty of the underlying assumptions and estimates. However, NYCB is including in this joint proxy statement/prospectus certain

 

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unaudited prospective financial information that was provided to Goldman Sachs and Credit Suisse, financial advisors to the NYCB board of directors, for discussion in their October 27, 2015 presentations and for further analysis on October 28, 2015. The inclusion of this information should not be regarded as an indication that any of NYCB, Goldman Sachs or Credit Suisse, their respective representatives or any other recipient of this information considered, or now considers, it necessarily to be predictive of actual future results, or that it should be construed as financial guidance, and it should not be relied on as such. NYCB’s management directed Goldman Sachs’ and Credit Suisse’s to use the following unaudited prospective financial information in connection with their analysis of the fairness, from a financial point of view, of the merger consideration to NYCB’s shareholders. This information was prepared solely for internal use and is subjective in many respects.

While presented with numeric specificity, the unaudited prospective financial information reflects numerous estimates and assumptions made with respect to business, economic, market, competition, regulatory and financial conditions and matters specific to NYCB’s business, all of which are difficult to predict and many of which are beyond NYCB’s control. The unaudited prospective financial information reflects both assumptions as to certain business decisions that are subject to change and, in many respects, subjective judgment, and thus is susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. NYCB can give no assurance that the unaudited prospective financial information and the underlying estimates and assumptions will be realized. In addition, since the unaudited prospective financial information covers multiple years, such information by its nature becomes less predictive with each successive year.

Actual results may differ materially from those set forth below, and important factors that may affect actual results and cause the unaudited prospective financial information to be inaccurate include, but are not limited to, risks and uncertainties relating to NYCB’s business, industry performance, general business and economic conditions, customer requirements, competition and adverse changes in applicable laws, regulations or rules. For other factors that could cause actual results to differ, please see the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” in this joint proxy statement/prospectus and in NYCB’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and the other reports filed by NYCB with the SEC.

The unaudited prospective financial information does not take into account any circumstances or events occurring after the date it was prepared. NYCB can give no assurance that, had the unaudited prospective financial information been prepared as of the date of this joint proxy statement/prospectus, similar estimates and assumptions would be used. NYCB DOES NOT INTEND TO, AND DISCLAIMS ANY OBLIGATION TO, MAKE PUBLICLY AVAILABLE ANY UPDATE OR OTHER REVISION TO THE UNAUDITED PROSPECTIVE FINANCIAL INFORMATION TO REFLECT CIRCUMSTANCES EXISTING SINCE ITS PREPARATION OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE UNAUDITED PROSPECTIVE FINANCIAL INFORMATION ARE SHOWN TO BE IN ERROR, OR TO REFLECT CHANGES IN GENERAL ECONOMIC OR INDUSTRY CONDITIONS. The unaudited prospective financial information does not take into account the possible financial and other effects on NYCB of the merger and does not attempt to predict or suggest future results of the combined company. The unaudited prospective financial information does not give effect to the merger, including the impact of negotiating or executing the merger agreement, the expenses that may be incurred in connection with consummating the merger, the potential synergies that may be achieved by the combined company as a result of the merger or the effect of any business or strategic decisions or actions which would likely have been taken if the merger agreement had not been executed, but which were instead altered, accelerated, postponed or not taken in anticipation of the merger. Further, the unaudited prospective financial information does not take into account the effect on NYCB of any possible failure of the merger to occur. None of NYCB, Goldman Sachs or Credit Suisse, or their respective affiliates, officers, directors, advisors or other representatives has made, makes or is authorized in the future to make any representation to any shareholder of NYCB or Astoria or other person regarding NYCB’s ultimate performance

 

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compared to the information contained in the unaudited prospective financial information or that the forecasted results will be achieved. The summary of the unaudited prospective financial information included below is being provided solely because it was made available to the financial advisors to the NYCB board of directors in connection with the merger.

The following table presents two separate sets of selected unaudited prospective financial data for the fiscal years ending December 31, 2016 through December 31, 2022. The first set of information was provided to Goldman Sachs and Credit Suisse for discussion in their presentations to the NYCB board of directors at its October 27, 2015 meeting, and the second set of information was provided to Goldman Sachs and Credit Suisse for further analysis on October 28, 2015 in response to a request from Goldman Sachs and Credit Suisse.

 

NYCB net income projections (millions of dollars, as of December 31 of each year):		2016				2017				2018				2019				2020				2021				2022
October 27, 2015(1)		$	465			$	489			$	523			$	560			$	599			$	641			$	686
October 28, 2015(2)		$	477			$	491			$	525			$	562			$	601			$	643			$	688
Difference (% change)		$	12			$	2			$	2			$	2			$	2			$	2			$	2
			(2.6	%)			(0.3	%)			(0.3	%)			(0.3	%)			(0.3	%)			(0.3	%)			(0.3	%)
NYCB EPS projections (as of December 31 of each year):		2016				2017				2018				2019				2020				2021				2022
October 27, 2015(1)		$	1.05			$	1.10			$	1.18			$	1.26			$	1.35			$	1.44			$	1.54
October 28, 2015(2)		$	1.06			$	1.09			$	1.17			$	1.25			$	1.33			$	1.43			$	1.53
Difference (% change)		$	0.02			$	0.01			$	0.01			$	0.01			$	0.01			$	0.02			$	0.02
			(1.6	%)			(1.1	%)			(1.1	%)			(1.1	%)			(1.1	%)			(1.1	%)			(1.1	%)

 

(1)	The net income and EPS projections provided to Goldman Sachs and Credit Suisse on October 27, 2015 utilized I/B/E/S consensus estimates for 2016 and 2017 and NYCB management extrapolations for the subsequent years.

(2)	The net income and EPS projections provided to Goldman Sachs and Credit Suisse on October 28, 2015 represent NYCB management projections for 2016 and 2017 and NYCB management extrapolations for the subsequent years.

The unaudited prospective financial information was not prepared with a view toward public disclosure, nor was it prepared with a view toward compliance with GAAP, published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. Neither NYCB’s independent registered public accounting firm, nor any other independent accountants, have compiled, examined or performed any procedures with respect to the unaudited prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability. The independent registered public accountant reports included in this joint proxy statement/prospectus relate to NYCB’s historical financial information. They do not extend to the unaudited prospective financial information and should not be read to do so.

In light of the foregoing, and considering that NYCB’s special meeting will be held after the unaudited prospective financial information was prepared, as well as the uncertainties inherent in any forecasted information, Astoria and NYCB stockholders are cautioned not to place unwarranted reliance on such information, and NYCB urges all Astoria and NYCB stockholders to review NYCB’s most recent SEC filings for a description of NYCB’s reported financial results. See “Where You Can Find More Information.”

Opinion of Goldman, Sachs & Co.

Goldman Sachs, financial advisor to the NYCB board of directors, rendered its oral opinion to certain members of the NYCB board of directors acting on behalf of the board, which opinion was addressed to the board and was

 

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subsequently confirmed by delivery of a written opinion addressed to the board, to the effect that, as of October 28, 2015 and based upon and subject to the factors and assumptions set forth in its written opinion, the merger consideration to be paid by NYCB for each share of Astoria common stock pursuant to the merger agreement was fair from a financial point of view to NYCB.

The full text of the written opinion of Goldman Sachs, dated October 28, 2015, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex B to this joint proxy statement/prospectus. Goldman Sachs provided its opinion for the information and assistance of the NYCB board of directors in connection with its consideration of the merger. The Goldman Sachs opinion does not constitute a recommendation as to how any NYCB stockholder should vote with respect to the merger or any other matter.

In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things:

 

•

the merger agreement;

 

•

annual reports to stockholders and Annual Reports on Form 10-K of NYCB and Astoria for the five fiscal years ended December 31, 2014;

 

•

certain interim reports to stockholders and Quarterly Reports on Form 10-Q of NYCB and Astoria;

 

•

certain other communications from NYCB and Astoria to their respective stockholders;

 

•

certain publicly available research analyst reports for NYCB and Astoria;

 

•

(i) certain I/B/E/S consensus estimates for Astoria for the fiscal years ending December 31, 2016 and 2017 (extrapolated by the management of NYCB for the fiscal years ending December 31, 2018 through 2022), (ii) certain internal financial analyses and forecasts for NYCB prepared by its management and (iii) certain internal financial analyses and forecasts for NYCB pro-forma for the merger prepared by NYCB management that reflect, among other things, the Synergies (as defined below), the NYCB common stock offering, the NYCB balance sheet repositioning and the anticipated reduction in NYCB’s dividend payout ratio (which we refer to as the “NYCB dividend reduction”), in each case, as approved for its use by NYCB (which, for purposes of this section “—Opinion of Goldman, Sachs & Co.”, we refer to as the “Forecasts”), and certain operating synergies projected by the management of NYCB to result from the merger, as approved for its use by NYCB (which, for purposes of this section “—Opinion of Goldman, Sachs & Co.”, we refer to as the “Synergies”); and

 

•

certain internal financial analyses and forecasts for Astoria prepared by its management. Representatives of Astoria requested that all parties disregard such analyses and forecasts, which had previously been made available by Astoria, because such analyses and forecasts were outdated and did not represent Astoria management’s then-current view of the expected financial performance of Astoria. In lieu of updated forecasts, representatives of Astoria instead requested that such parties refer to and rely on I/B/E/S estimates for the fiscal years ending December 31, 2016 and 2017 for purposes of their financial analysis related to the potential merger of NYCB and Astoria. After a discussion between Goldman Sachs, Credit Suisse and members of Astoria management, and with the approval of NYCB management, Goldman Sachs disregarded the Astoria financial forecasts and relied exclusively on such I/B/E/S estimates, together with the extrapolations by the management of NYCB for Astoria for the fiscal years ending December 31, 2018 through 2022, in connection with its financial analysis and opinion.

Goldman Sachs also held discussions with members of the senior managements of NYCB and Astoria regarding their assessment of the past and current business operations, financial condition and future prospects of Astoria and with the members of senior management of NYCB regarding their assessment of the past and current

 

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business operations, financial condition and future prospects of NYCB and the strategic rationale for, and the potential benefits of, the merger; reviewed the reported price and trading activity for the shares of NYCB common stock and the shares of Astoria common stock; compared certain financial and stock market information for NYCB and Astoria with similar information for certain other companies the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations in the banking industry and in other industries; and performed such other studies and analyses, and considered such other factors, as it deemed appropriate.

For purposes of rendering this opinion, Goldman Sachs, with NYCB’s consent, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by, it, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed with NYCB’s consent that the Forecasts and the Synergies were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of NYCB. Goldman Sachs did not review individual credit files nor did it make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of NYCB or Astoria or any of their respective subsidiaries and it was not furnished with any such evaluation or appraisal. Goldman Sachs is not an expert in the evaluation of loan and lease portfolios for purposes of assessing the adequacy of the allowances for losses with respect thereto and, accordingly, it assumed that such allowances for losses were in the aggregate adequate to cover such losses. Goldman Sachs assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the merger will be obtained and that the NYCB common stock offering, the NYCB balance sheet repositioning and the NYCB dividend reduction will occur, in each case, without any adverse effect on NYCB or Astoria or on the expected benefits of the merger in any way meaningful to its analysis. Goldman Sachs also assumed that the merger will be consummated on the terms set forth in the merger agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.

Goldman Sachs’ opinion did not address the underlying business decision of NYCB to engage in the merger, or the relative merits of the merger as compared to any strategic alternatives that may be available to NYCB; nor did it address any legal, regulatory, tax or accounting matters. Goldman Sachs’ opinion addressed only the fairness from a financial point of view to NYCB, as of the date of the opinion, of the merger consideration to be paid by NYCB for each share of Astoria common stock pursuant to the merger agreement. Goldman Sachs’ opinion did not express any view on, and did not address, any other term or aspect of the merger agreement or merger or any term or aspect of any other agreement or instrument contemplated by the merger agreement or entered into or amended in connection with the merger, including, the fairness of the merger to, or any consideration received in connection therewith by, the holders of any class of securities, creditors, or other constituencies of NYCB; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of NYCB or Astoria, or any class of such persons in connection with the merger, whether relative to the merger consideration to be paid by NYCB for each share of Astoria common stock pursuant to the merger agreement or otherwise. Goldman Sachs did not express any opinion as to the prices at which shares of NYCB common stock will trade at any time or as to the impact of the merger on the solvency or viability of NYCB or Astoria or the ability of NYCB or Astoria to pay their respective obligations when they come due. Goldman Sachs’ opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to it as of, the date of the opinion and Goldman Sachs assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of the opinion. Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs.

The following is a summary of the material financial analyses performed by Goldman Sachs in connection with rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent the relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the

 

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full text of each summary and are alone not a complete description of Goldman Sachs’ financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before October 28, 2015, the last trading day before the public announcement of the merger, and is not necessarily indicative of current market conditions.

Selected Transactions Analysis

Goldman Sachs also analyzed certain information relating to the following selected transactions in the banking and thrift industry since 2010 with target assets in excess of $5 billion (which we refer to as the “Precedent Transactions”):

 

Acquiror		Target		Date Announced
BB&T Corporation		National Penn Bancshares, Inc.		August 17, 2015
Royal Bank of Canada		City National Corporation		January 22, 2015
BB&T Corporation		Susquehanna Bancshares, Inc.		November 12, 2014
CIT Group Inc.		IMB Holdco LLC		July 22, 2014
Umpqua Holdings Corporation		Sterling Financial Corporation		September 11, 2013
PacWest Bancorp		CapitalSource Inc.		July 22, 2013
MB Financial, Inc.		Taylor Capital Group, Inc.		July 15, 2013
FirstMerit Corporation		Citizens Republic Bancorp, Inc.		September 12, 2012
M&T Bank Corporation		Hudson City Bancorp, Inc.		August 27, 2012
Hilltop Holdings Inc.		PlainsCapital Corporation		May 8, 2012
Mitsubishi UFJ Financial Group, Inc.		Pacific Capital Bancorp		March 12, 2012
First Niagara Financial Group, Inc.		HSBC Holdings Plc (195 branches)		July 31, 2011
PNC Financial Services Group, Inc.		RBC Bank (USA)		June 20, 2011
Capital One Financial Corporation		ING Bank, FSB		June 16, 2011
Comerica Incorporated		Sterling Bancshares, Inc.		January 18, 2011
Hancock Holding Company		Whitney Holding Corporation		December 22, 2010
Bank of Montreal		Marshall & Ilsley Corporation		December 17, 2010
M&T Bank Corporation		Wilmington Trust Corporation		October 31, 2010
First Niagara Financial Group, Inc.		NewAlliance Bancshares, Inc.		August 19, 2010

While none of the companies that participated in the Precedent Transactions are directly comparable to NYCB or Astoria and none of the transactions in the Precedent Transactions are directly comparable to the merger, the companies that participated in the Precedent Transactions are companies with operations that, for the purposes of analysis, may be considered similar to certain of NYCB’s or Astoria’s results, market size and product profile. For each of the Precedent Transactions, Goldman Sachs calculated and compared:

 

•

price per share, as of October 28, 2015, as a multiple of estimated earnings per share for calendar year 2016, which is referred to below as “2016E P/E”;

 

•

price per share, as of October 28, 2015, as a multiple of tangible book value per share of the target entity (as of the date of announcement of the transaction), adjusted for disclosed transaction-related loan marks net of reserves (which, for purposes of this section “—Opinion of Goldman, Sachs & Co.”, we refer to as “P/TBV”);

 

•

price per share as a multiple of estimated earnings per share for the fiscal year as of the date of announcement of the transaction (which, for purposes of this section “—Opinion of Goldman, Sachs & Co.”, we refer to as “FY1 EPS”); and

 

•

the premium to the target companies’ core deposits implied by the announced transaction values (which, for purposes of this section “—Opinion of Goldman, Sachs & Co.”, we refer to as the “Core Deposit Premium”).

 

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Based on information obtained from SEC filings and certain publicly available research analyst reports, Goldman Sachs then further considered differences between the business, financial and operating characteristics and prospects of NYCB, Astoria and the Precedent Transactions. Based on its judgment and experience, Goldman Sachs then selected the M&T/Hudson City, BB&T/National Penn, First Niagara/NewAlliance and CIT/IMB transactions for the purposes of its analysis of 2016E P/E and P/TBV, and the BB&T/National Penn, First Niagara/NewAlliance and CIT/IMB transactions for the purposes of its analysis of Core Deposit Premium (which, for purposes of this section “—Opinion of Goldman, Sachs & Co.”, we refer to as the “Selected Transactions”). The M&T/Hudson City, First Niagara/NewAlliance and CIT/IMB transactions were selected because they were thrift deals involving over $5 billion in assets that were in the Northeast and/or included a large residential component such that these transactions were comparable to the proposed transaction. The BB&T/National Penn transaction was selected because it was the most recent Precedent Transaction.

 

Acquiror		Target		FY1 EPS		P/TBV		Core Deposit Premium
BB&T Corporation		National Penn Bancshares, Inc.		16.9		2.4		15.2%
CIT Group Inc.		IMB Holdco LLC		—		1.2		6.2%
M&T Bank Corporation		Hudson City Bancorp, Inc.		12.4		0.8		Not included
First Niagara Financial Group, Inc.		NewAlliance Bancshares, Inc.		23.1		1.8		14.0%
Median				16.9x		1.5x		14.0%

The ranges of equity values in this analysis were calculated based on ranges of multiples, including a range of price to earnings multiples (P/E multiples), derived by Goldman Sachs utilizing its experience and professional judgment, excluding current and historical trading data and the current P/E multiples for selected companies which exhibited similar business characteristics to NYCB and Astoria. Goldman Sachs then divided the range of illustrative equity values it derived from this analysis by the number of fully diluted outstanding shares of Astoria, as provided by management of NYCB, to derive ranges of illustrative present values per share of Astoria common stock (which we refer to as the “Illustrative Equity Valuation Range”).

The following table presents the results of this analysis:

 

Methodology		Selected Transactions
		Range		Median		Astoria Metric		Illustrative Equity Valuation Range
2016E P/E		12.4x-23.1x		16.9x		EPS of $0.62			$7.69-$14.32
P/TBV		0.8x-2.2x		1.5x		TBVPS of $13.03			$10.43-$28.67
Core Deposit Premium		6.2%-15.2%		14.0%		$ 8,527mm Core Deposits		$	17.89-25.36

Illustrative Discounted Cash Flow Analysis of Astoria

Using the Forecasts, Goldman Sachs performed an illustrative discounted cash flow analysis on Astoria. Using discount rates ranging from 7.0% to 9.0% (reflecting estimates of Astoria’s weighted average cost of capital) and a Tier 1 leverage target rate of 8.5% (reflecting an estimate of the ratio of a bank’s Tier 1 capital to its consolidated average adjusted tangible assets), Goldman Sachs discounted to present value (i) estimates of unlevered free cash flow for Astoria for the second half of calendar year 2015 through calendar year 2020, as reflected in the Forecasts, and (ii) a range of illustrative terminal values for Astoria by applying a terminal Tier 1 leverage target rate/Exit multiple range of 14.0x to 16.0x to a terminal year estimate of the free cash flow to be generated by Astoria, as reflected in the Forecasts.

Goldman Sachs then divided the range of illustrative equity values it derived by the number of fully diluted outstanding shares of Astoria, as provided by management of NYCB, to derive a range of illustrative present values per share of Astoria common stock ranging from $13.70 to $16.25 (excluding the impact of the

 

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Synergies), and a range of illustrative present values per share of Astoria Common Stock ranging from $16.25 to $18.94 (taking into account the Synergies).

Illustrative Discounted Cash Flow Analysis of NYCB

Using the Forecasts, Goldman Sachs performed an illustrative discounted cash flow analysis on NYCB. Using discount rates ranging from 7.0% to 9.0% (reflecting estimates of NYCB’s weighted average cost of capital) and a Tier 1 leverage target rate of 7.5% (reflecting an estimate of the ratio of a bank’s Tier 1 capital to its consolidated average adjusted tangible assets), Goldman Sachs discounted to present value (i) estimates of unlevered free cash flow for NYCB for the second half of calendar year 2015 through calendar year 2020, as reflected in the Forecasts, and (ii) a range of illustrative terminal values for NYCB for calendar year 2020 based on a terminal multiple range of 16.0x to 18.0x to a terminal year estimate of the free cash flow to be generated by NYCB, as reflected in the Forecasts.

Goldman Sachs then divided the range of illustrative equity values it derived by the number of fully diluted outstanding shares of NYCB, as provided by management of NYCB, to derive a range of illustrative present values per share of NYCB Common Stock ranging from $17.39 to $21.09.

Illustrative Discounted Cash Flow Analysis of the Pro Forma Company

Using the Forecasts and the Synergies, Goldman Sachs performed an illustrative discounted cash flow analysis on the pro forma company. Using discount rates ranging from 7.0% to 9.0% (reflecting estimates of the pro forma company’s weighted average cost of capital) and Tier 1 leverage target rates of 7.5% (reflecting an estimate of the ratio of a bank’s Tier 1 capital to its consolidated average adjusted tangible assets), Goldman Sachs discounted to present value (i) estimates of unlevered free cash flow for the pro forma company for calendar year 2016 through calendar year 2020 as reflected in the Forecasts, and (ii) a range of illustrative terminal values for the pro forma company for calendar year 2020 based on a terminal multiple range of 16.0x to 18.0x to a terminal year estimate of the free cash flow to be generated by the pro forma company, as reflected in the Forecasts.

Goldman Sachs then divided the range of illustrative equity values it derived by the number of fully diluted outstanding shares of NYCB, as provided by management of NYCB, on a pro forma basis to derive a range of illustrative present values per share of the pro forma company’s common stock ranging from $21.80 to $26.27.

Selected Companies Analysis

Goldman Sachs reviewed and compared certain financial information for NYCB and Astoria to corresponding financial information, ratios and public market multiples for the following publicly traded corporations in the banking industry (which we refer to, collectively, as the “selected companies”):

 

Company		2016E P/E				2017E P/E				P/TBV				Core Deposit Premium
BankUnited, Inc.			16.6				13.9				1.9				15.8
Dime Community Bankshares, Inc.			15.1				13.5				1.6				10.2
First Niagara Financial Group, Inc.			17.5				15.5				1.6				5.3
Flushing Financial Corporation			14.8				13.2				1.4				6.1
Investors Bancorp, Inc.			22.3				18.6				1.4				11.1
People’s United Financial, Inc.			17.9				16.2				2.0				10.5
Provident Financial Services, Inc.			14.6				13.5				1.7				10.7
Valley National Bancorp			15.6				13.6				1.9				9.3
Washington Federal, Inc.			15.2				14.6				1.4				8.5
Webster Financial Corporation			16.1				14.3				2.1				11.3
High			22.3				18.6				2.1				15.8
Mean			16.7				14.9				1.8				10.8
Median			16.1				14.3				1.7				10.5
Low			14.6				13.2				1.4				5.3

 

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Although none of the selected companies is directly comparable to NYCB or Astoria, the companies included were chosen because they are publicly traded companies with operations that for purposes of analysis may be considered similar to certain operations of NYCB and Astoria.

Goldman Sachs also calculated and compared various financial multiples and ratios based on financial data as of June 30, 2015, information it obtained from SEC filings and IBES estimates. The multiples and ratios of NYCB were calculated using the NYCB closing price on October 28, 2015 and the multiples and ratios of Astoria were calculated using the Astoria closing price on October 28, 2015. The multiples and ratios of NYCB and Astoria were based on the Forecasts. The multiples and ratios for each of the selected companies were based on the most recent publicly available information. With respect to the selected companies, Goldman Sachs calculated: 2016E P/E; price per share, as of October 28, 2015, as a multiple of estimated earnings per share for calendar year 2017, which is referred to below as “2017E P/E”; P/TBV; and Core Deposit Premium.

The results of these analyses are summarized as follows:

 

Calculation		Range
		Selected Companies		NYCB		Astoria
2016E P/E		14.6x-22.3x		18.2x		28.9x
2017E P/E		13.2x-18.6x		17.3x		26.9x
P/TBV		1.4x-2.1x		2.5x		1.4x
Core Deposit Premium		5.3%-15.8%		20.0%		5.6%

Implied Premia Analysis for Transactions

Based on publicly available information, the distribution of premia (expressed as a percentages of the per share merger consideration over the closing price on the trading day prior to announcement or undisturbed price) for transactions announced from 2010 through 2015 (as of October 28, 2015). The analysis included change of control transactions in which the publicly-held target’s primary industry was banking and such target’s assets exceeded $5 billion. The following table presents the results of this analysis:

 

Year		2010		2011		2012		2013		2014		YTD 2015
Number of Transactions		4		1		3		3		1		2
Implied Premia		30%		30%		17%		20%		36%		23%

Illustrative Contribution Analysis

Based on publicly available financial data as of June 30, 2015 and market data as of October 28, 2015, Goldman Sachs reviewed specific historical operating and financial information including, net income for the last twelve months (which, for purposes of this section “—Opinion of Goldman, Sachs & Co.”, we refer to as “LTM”), assets and market capitalization relative to a proposed transaction value of approximately $2.025 billion (calculated as the number of the number of fully diluted outstanding shares of NYCB, as provided by management of NYCB, multiplied by the merger consideration to be paid by NYCB for each share of Astoria common stock pursuant to the merger agreement), in each case for NYCB and Astoria in proportion to the combined entity resulting from the merger.

 

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The following table presents the results of this analysis:

 

		Contribution to Combined Entity
Metric		NYCB		Astoria
Market Cap/Transaction Value		80.8%		19.2%
LTM Net Interest Income		77.2%		23.9%
LTM Noninterest Income		79.6%		20.4%
LTM Net Income		85.5%		14.5%
Total Assets		76.1%		23.9%
Total Loans		75.8%		24.2%
Deposits		75.6%		24.2%
Core Deposits		75.1%		24.9%
Common Equity		79.5%		20.5%
Tangible Common Equity		72.0%		28.0%

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs’ opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to NYCB or Astoria or the contemplated transaction.

Goldman Sachs prepared these analyses for purposes of Goldman Sachs’ providing its opinion to the NYCB board of directors as to the fairness from a financial point of view to NYCB, as of October 28, 2015, of the merger consideration to be paid by NYCB for each share of Astoria common stock pursuant to the merger agreement. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of NYCB, Astoria, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecasts.

The merger consideration was determined through arm’s-length negotiations between NYCB and Astoria and was approved by the NYCB board of directors. Goldman Sachs provided advice to NYCB during these negotiations. Goldman Sachs did not, however, recommend any specific amount of consideration to NYCB or its board of directors or that any specific amount of consideration constituted the only appropriate consideration for the merger.

As described above, Goldman Sachs’ advice to the NYCB board of directors was one of many factors taken into consideration by the NYCB board of directors in making its determination to approve the merger agreement. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of Goldman Sachs attached as Annex B to this joint proxy statement/prospectus.

Goldman Sachs and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs and its affiliates and employees, and funds or other entities in which they invest or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of NYCB, Astoria, any of their respective affiliates and third parties, or any currency or commodity that may be involved in the transaction contemplated by the merger agreement. Goldman Sachs acted as financial

 

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advisor to NYCB in connection with, and participated in certain of the negotiations leading to, the transaction contemplated by the agreement. Goldman Sachs has provided certain financial advisory and/or underwriting services to NYCB and its affiliates from time to time for which the Investment Banking Division of Goldman Sachs has received, and may receive, compensation, including, without limitation, having acted as a joint book-running manager with respect to a public offering of 40,625,000 shares of NYCB common stock in November 2015. Goldman Sachs may also in the future provide financial advisory and/or underwriting services to NYCB, Astoria and their respective affiliates for which the Investment Banking Division of Goldman Sachs may receive compensation. During the two year period ended October 28, 2015, the Investment Banking Division of Goldman Sachs received compensation for services provided to NYCB of approximately $3 million. During the two year period ended October 28, 2015, the Investment Banking Division of Goldman Sachs did not receive any compensation for services provided to Astoria.

Goldman Sachs has advised NYCB from time to time on strategic matters, including potential acquisition transactions. NYCB engaged Goldman Sachs on September 7, 2015 to act as a financial advisor in connection with a possible transaction with Astoria.

The NYCB board of directors selected Goldman Sachs as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the merger. Pursuant to a letter agreement dated October 26, 2015, NYCB engaged Goldman Sachs to act as its financial advisor in connection with the contemplated merger. The engagement letter between NYCB and Goldman Sachs provides for a transaction fee that is estimated, based on the information available as of the date of announcement, at approximately $15 million, all of which is contingent upon consummation of the transaction. In addition, NYCB has agreed to reimburse Goldman Sachs for certain of its expenses, including attorneys’ fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under the federal securities laws.

Opinion of Credit Suisse Securities (USA) LLC

Credit Suisse, financial advisor to the NYCB board of directors, delivered to the NYCB board of directors a written opinion, dated October 28, 2015, to the effect that, as of that date and based upon and subject to the assumptions made, procedures followed, matters considered and limitations on the scope of review undertaken by Credit Suisse described in such opinion, the merger consideration was fair, from a financial point of view, to NYCB.

The full text of Credit Suisse’s written opinion, dated October 28, 2015, to the NYCB board of directors, which sets forth, among other things, the procedures followed, assumptions made, matters considered and limitations on the scope of review undertaken, is attached as Annex C hereto and is incorporated into this joint proxy statement/prospectus by reference in its entirety. The description of the opinion set forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of such opinion. Credit Suisse’s opinion was provided to the NYCB board of directors (solely in its capacity as such) for its information in connection with its evaluation of the merger consideration and did not address any other aspect of the proposed merger, including the relative merits of the merger as compared to alternative transactions or strategies that might be available to NYCB or the underlying business decision of NYCB to proceed with the merger. The opinion does not constitute advice or a recommendation to any NYCB stockholder as to how such stockholder should vote or act on any matter relating to the proposed merger or otherwise.

In arriving at its opinion, Credit Suisse:

 

•

reviewed the merger agreement;

 

•

reviewed certain publicly available business and financial information relating to Astoria and NYCB;

 

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•

reviewed certain other information relating to Astoria and NYCB, including certain internal financial analyses and forecasts related to NYCB and certain I/B/E/S consensus estimates relating to Astoria for the fiscal years ending December 31, 2016 and 2017 (extrapolated by the management of NYCB for the fiscal years ending December 31, 2018 through 2022) (which, for purposes of this section “—Opinion of Credit Suisse Securities (USA) LLC”, we refer to as the “Forecasts”), in each case, as approved for its use by NYCB;

 

•

met with the management of Astoria to discuss the business and prospects of Astoria;

 

•

met with management of NYCB to discuss the business and prospects of Astoria and NYCB and its estimates regarding future cost savings and synergies anticipated to result from the merger (which, for purposes of this section “—Opinion of Credit Suisse Securities (USA) LLC”, we refer to as the “Synergies”);

 

•

considered certain financial and stock market data of Astoria and NYCB, which Credit Suisse compared with similar data for other publicly held companies in businesses Credit Suisse deemed similar to that of Astoria and NYCB;

 

•

considered, to the extent publicly available, the financial terms of certain other business combinations and other transactions which have been effected or announced; and

 

•

considered such other information, financial studies, analyses and investigations and financial, economic and market criteria which Credit Suisse deemed relevant.

In connection with its review, Credit Suisse did not independently verify any of the foregoing information and Credit Suisse assumed and relied on such information being complete and accurate in all material respects. With respect to the Forecasts for Astoria utilized by Credit Suisse, as approved by the management of NYCB, for purposes of its analysis and opinion, Credit Suisse was advised by the management of NYCB, and Credit Suisse assumed, that such Forecasts represent reasonable estimates and judgments with respect to the future financial performance of Astoria. With respect to the Forecasts for NYCB utilized by Credit Suisse, as approved by the management of NYCB, for purposes of its analysis and opinion, Credit Suisse was advised by the management of NYCB, and Credit Suisse assumed, that such Forecasts were reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of NYCB as to the future financial performance of NYCB. With respect to the estimates provided to Credit Suisse by the management of NYCB with respect to the Synergies, Credit Suisse was advised by the management of NYCB, and Credit Suisse assumed, that the forecasts of such Synergies were reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of NYCB and that such Synergies will be realized in the amounts and at the times indicated thereby. At the direction of the management of NYCB, Credit Suisse assumed that the Forecasts for Astoria, the Forecasts for NYCB and NYCB’s forecasts of the Synergies are a reasonable basis on which to evaluate Astoria, NYCB and the merger, and Credit Suisse expressed no opinion with respect to such Forecasts or estimates or the assumptions upon which they were based.

Credit Suisse was also furnished with certain internal financial analyses and forecasts for Astoria prepared by its management. However, representatives of Astoria requested that all parties disregard such financial analyses and forecasts, which had previously been made available by Astoria, because such analyses and forecasts were outdated and did not represent Astoria management’s then-current view of the expected financial performance of Astoria. In lieu of updated forecasts, representatives of Astoria instead requested that such parties refer to and rely on I/B/E/S estimates for the fiscal years ending December 31, 2016 and 2017 for purposes of their financial analysis related to the potential merger of NYCB and Astoria. After a discussion between Credit Suisse, Goldman Sachs and members of Astoria management, and with the approval of NYCB management, Credit Suisse disregarded the Astoria financial forecasts and relied exclusively on such I/B/E/S estimates, together with the extrapolations by the management of NYCB for Astoria for the fiscal years ending December 31, 2018 through 2022, in connection with its financial analysis and opinion.

Credit Suisse also assumed, with the consent of NYCB, that, in the course of obtaining any regulatory and third party consents, approvals or agreements in connection with the merger, no delay, limitation, restriction or

 

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condition would be imposed (including as a result of NYCB becoming a SIFI) that would have an adverse effect on Astoria, NYCB or the contemplated benefits of the merger, and that the merger would be consummated in accordance with the terms of the merger agreement, without waiver, modification or amendment of any material term, condition or agreement thereof. In addition, Credit Suisse was not requested to, and did not, make an independent evaluation or appraisal of the assets (including the loan portfolios and related collateral arrangements) or liabilities (contingent or otherwise) of Astoria or NYCB, nor was Credit Suisse furnished with any such evaluations or appraisals. Credit Suisse also assumed that appraisal rights will not be exercised in a manner that would have any adverse effect on NYCB, Astoria or on the expected benefits of the merger in any way meaningful to its opinion or analysis. Credit Suisse also did not make an independent evaluation of the adequacy of the allowance for loan losses of Astoria, NYCB or the combined entity after the merger. Credit Suisse assumed, with the consent of the management of NYCB, that the respective allowances for loan losses for both Astoria and NYCB are adequate to cover such losses and will be adequate on a pro forma basis for the combined entity.

Credit Suisse’s opinion addressed only the fairness, from a financial point of view and as of the date of its opinion, to NYCB of the merger consideration to be paid by NYCB in the merger pursuant to the merger agreement and did not address any other aspect or implication of the merger or any other agreement, arrangement or understanding entered into in connection with the merger or otherwise including, without limitation, the form and structure of the merger and the merger consideration, the financing of the merger consideration or the fairness of the amount or nature of, or any other aspect relating to, any compensation to any officers, directors or employees of any party to the merger, or class of such persons, relative to the stock consideration, the cash consideration, the merger consideration or otherwise. Furthermore, no opinion, counsel or interpretation was intended regarding matters that require legal, regulatory, accounting, insurance, tax or executive compensation or other similar professional advice. Credit Suisse assumed that such opinions, counsel, interpretations or advice have been or will be obtained from the appropriate professional sources. The issuance of Credit Suisse’s opinion was approved by Credit Suisse’s authorized internal committee. Credit Suisse has not undertaken to, and is under no obligation to, update, revise, reaffirm or withdraw its opinion.

Credit Suisse’s opinion was necessarily based upon information made available to it as of the date of its opinion and upon financial, economic, market and other conditions as they existed and could be evaluated on that date. As the NYCB board of directors was aware, the Forecasts that Credit Suisse reviewed relating to the future financial performance of Astoria and NYCB, each on a standalone basis, reflected certain assumptions of the management of NYCB regarding the capital required to be retained to operate the respective businesses, in the absence of the merger, to achieve the results indicated by the Forecasts and that these assumptions, if different than assumed in the Forecasts, could have a material impact on Credit Suisse’s analyses and opinion. Credit Suisse did not express any opinion as to what the value of shares of NYCB common stock actually would be when issued to the Astoria common stockholders pursuant to the merger or the prices at which shares of NYCB common stock would trade at any time. Credit Suisse’s opinion does not address the relative merits of the merger as compared to alternative transactions or strategies that might be available to NYCB, nor does it address the underlying business decision of NYCB to proceed with the merger.

In preparing its opinion to the NYCB board of directors, Credit Suisse performed a variety of financial and comparative analyses, including those described below. The summary of Credit Suisse’s analyses described below is not a complete description of the analyses underlying Credit Suisse’s opinion. The preparation of a fairness opinion is a complex process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a fairness opinion is not readily susceptible to partial analysis or summary description. Credit Suisse arrived at its ultimate opinion based on the results of all analyses undertaken by it and assessed as a whole and did not draw, in isolation, conclusions from or with regard to any one factor or method of analysis. Accordingly, Credit Suisse believes that its analyses must be considered as a whole and that selecting portions of its analyses and factors or focusing on information presented in tabular format, without considering all analyses and factors or the narrative

 

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description of the analyses, could create a misleading or incomplete view of the processes underlying its analyses and opinion.

In its analyses, Credit Suisse considered industry performance, general business, economic, market and financial conditions and other matters as they existed on, and could be evaluated as of, the date of its opinion, many of which are beyond the control of NYCB. No company, transaction or business used in Credit Suisse’s analyses is identical to Astoria, NYCB or the proposed merger, and an evaluation of the results of those analyses is not entirely mathematical. Rather, the analyses involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the acquisition, public trading or other values of the companies, business segments or transactions analyzed. The estimates contained in Credit Suisse’s analyses and the implied per share reference ranges resulting from any particular analysis are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by the analyses. In addition, analyses relating to the value of businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold or acquired. Accordingly, the estimates used in, and the results derived from, Credit Suisse’s analyses are inherently subject to substantial uncertainty.

Credit Suisse was not requested to, and it did not, recommend the specific consideration payable by NYCB in the proposed merger, which merger consideration was determined through negotiations between NYCB and Astoria, and the decision to enter into the merger agreement was solely that of the NYCB board of directors. Credit Suisse’s advice and financial analyses were only one of many factors considered by the NYCB board of directors in its evaluation of the proposed merger and should not be viewed as determinative of the views of the NYCB board of directors or the management of NYCB with respect to the merger or the merger consideration. Under the terms of its engagement by NYCB, neither Credit Suisse’s opinion nor any other advice or services rendered by it in connection with the proposed merger or otherwise, should be construed as creating, and Credit Suisse should not be deemed to have, any fiduciary duty to the NYCB board of directors, NYCB, Astoria, any security holder or creditor of NYCB or Astoria or any other person, regardless of any prior or ongoing advice or relationship.

Summary of the Financial Analyses of Credit Suisse

The following is a summary of the material financial analyses performed by Credit Suisse in connection with its opinion. The financial analyses summarized below include information presented in tabular format. In order to fully understand Credit Suisse’s financial analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data in the tables below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Credit Suisse’s financial analyses.

For purposes of the financial analyses summarized below, the term “Implied Total Consideration” refers to $19.66 per share of Astoria common stock, calculated based on the total consideration mix provided for in the merger agreement, which consists of (i) $0.50 in cash per share of Astoria common stock and (ii) the implied value of the stock consideration based on the exchange ratio and the closing share price of NYCB common stock of $19.16 on October 28, 2015 (the last trading day prior to October 29, 2015).

Selected Companies Analyses

Credit Suisse performed separate selected companies analyses of NYCB and Astoria.

 

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Astoria. In performing a selected public companies analysis of Astoria, Credit Suisse reviewed financial and stock market information of Astoria and the following eleven selected publicly traded companies which Credit Suisse, in its professional judgment, considered generally relevant for comparative purposes (which we refer to, collectively, as the “Astoria selected companies”):

 

Company		2016E P/E				2017E P/E				P/TBV				Core Deposit         Premium
BankUnited, Inc.			16.0				13.3				1.77				14.1
Dime Community Bankshares, Inc.			14.4				13.7				1.55				9.3
First Niagara Financial Group, Inc.			14.5				12.8				1.34				2.9
Flushing Financial Corporation			13.6				12.6				1.31				4.3
Investors Bancorp, Inc.			21.8				19.5				1.33				9.6
New York Community Bancorp, Inc.			17.7				16.8				2.46				19.3
People’s United Financial, Inc.			17.5				15.9				1.94				9.4
Provident Financial Services, Inc.			14.1				13.1				1.82				11.2
Valley National Bancorp			14.9				13.0				1.84				8.4
Washington Federal, Inc.			14.7				13.8				1.39				7.9
Webster Financial Corporation			15.3				13.6				1.99				10.2
Median			14.9				13.6				1.77				9.4
Mean			15.9				14.4				1.70				9.7

Note: Market data as of 10/27/15 and financial data as of the most-recent quarter available, other than for First Niagara Financial Group, Inc. (“FNFG”), where such market data was based on the unaffected price for FNFG shares as of market close on 9/22/15 (prior to a Bloomberg article published after market close on such date indicating the exploration of a potential sale of FNFG).

Credit Suisse reviewed, among other things, per share stock prices as multiples of calendar years 2016 and 2017 estimated earnings per share as contained in the Forecasts (which we refer to as “EPS”); stock price as a multiple of per share tangible book value (which, for purposes of this section “—Opinion of Credit Suisse Securities (USA) LLC”, we refer to as “P/TBV”); and the tangible equity premium to core deposits (total deposits less time deposits greater than $100,000) (which, for purposes of this section “—Opinion of Credit Suisse Securities (USA) LLC”, we refer to as the “Core Deposit Premium”).

The EPS multiples for the Astoria selected companies for calendar years 2016 and 2017 had a mean of 15.9x and a median of 14.9x, and a mean of 14.4x and a median of 13.6x, respectively. The EPS multiples for the Astoria selected companies for calendar years 2016 and 2017 had a high of 21.8x and a low of 13.6x, and a high of 19.5x and a low of 12.6x, respectively. Credit Suisse observed that the calendar year 2016 and the calendar year 2017 EPS multiples for Astoria were 28.3x and 26.4x, respectively.

Credit Suisse also observed that, on an unaffected basis (based on publicly available research analysts’ estimates, public filings and other publicly available information as of July 20, 2015, before Basswood Capital Management LLC publicly disclosed a 9.2% ownership stake on August 3, 2015), the calendar year 2016 and the calendar year 2017 EPS multiples for Astoria were 22.6x and 21.1x, respectively. Credit Suisse then applied selected ranges of EPS multiples of 14.0x to 17.0x and 13.0x to 16.0x for calendar year 2016 and calendar year 2017, respectively, derived by Credit Suisse from the Astoria selected companies to corresponding data of Astoria.

The P/TBV multiples and Core Deposit Premium percentages for the Astoria selected companies had a mean of 1.70x and a median of 1.77x, and a mean of 9.7% and a median of 9.4%, respectively. The P/TBV multiples and Core Deposit Premium percentages for the Astoria selected companies had a high of 2.46x and a low of 1.31x, and a high of 19.3% and a low of 2.9%, respectively. Credit Suisse observed that the P/TBV multiple and the Core Deposit Premium percentage for Astoria were 1.35x and 5.2%, respectively, and, on an unaffected basis, were 1.09x and 1.1%, respectively. Credit Suisse then applied selected ranges of P/TBV multiples of 1.10x to 1.75x and Core Deposit Premium percentages of 1.0% to 9.5%, derived by Credit Suisse from the Astoria selected companies to corresponding P/TBV and Core Deposit Premium data of Astoria.

Financial data of the Astoria selected companies were based on publicly available research analysts’ estimates, public filings and other publicly available information. Financial data of Astoria was also based on the Forecasts.

 

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The foregoing analyses of the Astoria selected companies indicated the following approximate implied per share value reference ranges for Astoria common stock relative to the Implied Total Consideration:

 

2016 and 2017 EPS		P/TBV and Core Deposit Premium
$8.65-10.64		$	13.89-22.80

NYCB. In performing a selected public companies analysis of NYCB, Credit Suisse reviewed financial and stock market information of NYCB and the following seventeen selected publicly traded companies, which Credit Suisse in its professional judgment considered generally relevant for comparative purposes (which we refer to, collectively, as the “NYCB selected companies”):

 

Company		2016E P/E				2017E P/E				P/         TBV				Core Deposit Premium
BankUnited, Inc.			16.0				13.3				1.77				14.1
BB&T Corporation			11.7				10.3				1.87				11.0
Citizens Financial Group, Inc.			12.4				10.3				1.00				(0.1	)
Comerica Incorporated			13.4				11.4				1.07				1.7
Fifth Third Bancorp			10.9				9.4				1.24				2.9
First Republic Bank			17.7				15.1				2.19				13.4
Huntington Bancshares Incorporated			12.1				10.9				1.59				6.3
Investors Bancorp, Inc.			21.8				19.5				1.33				9.6
KeyCorp			11.0				9.7				1.19				2.6
M&T Bank Corporation			14.4				12.5				2.01				11.6
People’s United Financial, Inc.			17.5				15.9				1.94				9.4
Provident Financial Services, Inc.			14.1				13.1				1.82				11.2
Regions Financial Corporation			10.9				9.6				1.11				1.0	(1)
SunTrust Banks, Inc.			11.6				10.7				1.37				4.0	(1)
Valley National Bancorp			14.9				13.0				1.84				8.4
Webster Financial Corporation			15.3				13.6				1.99				10.2
Zions Bancorporation			14.3				12.1				1.02				0.6
Median			14.1				12.1				1.59				8.4
Mean			14.1				12.4				1.55				6.9

 

(1)	Based on Q2 2015 tangible common equity and core deposits

Credit Suisse reviewed, among other things, 2016 and 2017 EPS; P/TBV; and the Core Deposit Premium. The EPS multiples for the NYCB selected companies for calendar years 2016 and 2017 had a mean of 14.1x and a median of 14.1x, and a mean of 12.4x and a median of 12.1x, respectively. The EPS multiples for the NYCB selected companies for calendar years 2016 and 2017 had a high of 21.8x and a low of 10.9x, and a high of 19.5x and a low of 9.4x, respectively. Credit Suisse observed that the calendar year 2016 and the calendar year 2017 EPS multiples for NYCB were 17.7x and 16.8x, respectively. Credit Suisse then applied selected ranges of EPS multiples of 15.0x to 18.0x and 14.0x to 17.0x for calendar year 2016 and calendar year 2017, respectively, derived by Credit Suisse from the NYCB selected companies to corresponding data of NYCB.

The P/TBV multiples and Core Deposit Premium percentages for the NYCB selected companies had a mean of 1.55x and a median of 1.59x, and a mean of 6.9% and a median of 8.4%, respectively. The P/TBV multiples and Core Deposit Premium percentages for the NYCB selected companies had a high of 2.19x and a low of 1.00x, and a high of 14.1% and a low of (0.1)%, respectively. Credit Suisse observed that the P/TBV multiple and Core Deposit Premium percentage for NYCB were 2.46x and 19.3%, respectively. Credit Suisse then applied selected ranges of P/TBV multiples of 1.90x to 2.50x and Core Deposit Premium percentages of 10.0% to 20.0%, derived by Credit Suisse from the NYCB selected companies to corresponding P/TBV and Core Deposit Premium data of NYCB.

Financial data of the NYCB selected companies were based on publicly available research analysts’ estimates, public filings and other publicly available information. Financial data of NYCB was based on the Forecasts.

 

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The foregoing analyses of the NYCB selected companies indicated the following approximate implied per share value reference ranges for NYCB Common Stock:

 

2016 and 2017 EPS		P/TBV and Core Deposit Premium
$15.40-18.90		$	13.39-19.17

Selected Transactions Analysis

Credit Suisse reviewed and considered publicly available financial information of the following thirteen transactions since January 1, 2010, involving U.S. bank holding companies with “brick and mortar” bank franchises with equity values between $1 billion to $10 billion that Credit Suisse deemed relevant (which, for purposes of this section “—Opinion of Credit Suisse Securities (USA) LLC”, we refer to, collectively, as the “selected transactions”). Transactions that, in Credit Suisse’s view, involved distressed targets, noted below with an asterisk, were excluded from the aggregated financial data. The selected transactions were:

 

Acquiror		Target		Date Announced		P/TBV				P/LTM EPS				P/NTM EPS				Core Deposit Premium%
BB&T Corporation		National Penn Bancshares, Inc.		August 17, 2015			2.20				17.8				16.3				15.2
Royal Bank of Canada		City National Corporation		January 22, 2015			2.64				22.8				20.8				12.5
BB&T Corporation		Susquehanna Bancshares, Inc.		November 12, 2014			1.69				16.3				16.8				9.0
CIT Group Inc.		IMB HoldCo LLC		July 22, 2014			1.14				15.4				NA				3.6
Umpqua Holdings Corporation		Sterling Financial Corporation		September 11, 2013			1.65				18.8				19.3				13.1
PacWest Bancorp		CapitalSource Inc.		July 22, 2013			1.66				17.9				18.2				31.1
M&T Bank Corporation		Hudson City Bancorp, Inc.		August 27, 2012			0.85				NM				13.0				(3.7	)
Mitsubishi UFJ Financial Group, Inc.		Pacific Capital Bancorp		March 12, 2012			1.64				36.3	^			36.3	^			15.3
PNC Financial Services Group, Inc.		RBC Bank (USA)*		June 20, 2011			0.97				NM				NA				(0.5	)
Comerica Incorporated		Sterling Bancshares, Inc.		January 18, 2011			2.32				NM				62.5	^			16.0
Hancock Holding Company		Whitney Holding Corporation		December 22, 2010			1.64				NM				55.3	^			7.5
Bank of Montreal		Marshall & Ilsley Corporation*		December 17, 2010			0.70				NM				NM				(4.7	)
First Niagara Financial Group, Inc.		NewAlliance Bancshares, Inc.		August 19, 2010			1.63				23.9				20.1				10.7
Mean							1.73				19.0				17.8				11.8
Median							1.65				17.9				18.2				12.5

 

^	P/LTM EPS and P/NTM EPS average and median multiples exclude multiples ³30.0x.

*	Companies were excluded from calculation of mean and median because they were considered to be distressed assets.

The P/TBV multiples for the selected transactions had a mean of 1.73x and a median of 1.65x. The P/TBV multiples for the selected transactions had a high of 2.64x and low of 0.85x. Credit Suisse then applied selected ranges of P/TBV multiples of 1.25x to 1.75x, derived by Credit Suisse from the selected companies to the tangible book value data of Astoria.

The last twelve months (which, for purposes of this section “—Opinion of Credit Suisse Securities (USA) LLC”, we refer to as “LTM”), and next twelve months (which we refer to as “NTM”), earnings per share multiples for the selected transactions (excluding, in each case, multiples that were greater than 30.0x), had a mean of 19.0x and a median of 17.9x, and a mean of 17.8x and a median of 18.2x, respectively. The LTM and NTM earnings per share multiples for the selected transactions (excluding, in each case, multiples that were greater than 30.0x) had a high of 23.9x and a low of 15.4x, and a high of 20.8x and a low of 13.0x, respectively. Credit Suisse then applied selected ranges of LTM earnings per share multiples of 17.0x to 21.0x, and NTM earnings per share multiples of 16.0x to 20.0x, in each case derived by Credit Suisse from the companies in the selected transactions to LTM and NTM earnings per share data of Astoria.

The Core Deposit Premium percentages for the selected transactions had a mean of 11.8% and a median of 12.5%. The Core Deposit Premium percentages for the selected transactions had a high of 31.1% and a low of (3.7%). Credit Suisse then applied selected Core Deposit Premium percentages of 5.0% to 12.5%, derived by Credit Suisse from the companies in the selected transactions to the Core Deposit Premium data of Astoria.

 

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Financial data of the selected transactions were based on public filings and other publicly available information.

The foregoing analyses of the selected transactions indicated an approximate implied per share value reference range of $10.03 to $23.83 per share for Astoria common stock relative to the Implied Total Consideration.

Dividend Discount Analyses

Credit Suisse performed dividend discount analyses for each of NYCB and Astoria.

NYCB. In performing a dividend discount analysis of NYCB, Credit Suisse calculated the estimated present value of distributable cash flow that NYCB was forecasted to generate during calendar years ending December 31, 2016 through December 31, 2021 based on the Forecasts. Credit Suisse then calculated terminal value ranges for NYCB by applying a range of terminal value multiples of 15.0x to 18.0x to NYCB’s calendar year ending December 31, 2022 adjusted net income based on the Forecasts. The distributable cash flows and terminal values were then discounted to present values using discount rates ranging from 7.5% to 8.5%. The resulting analysis indicated an approximate implied per share value reference range for NYCB common stock of $16.35 to $20.17.

Astoria. In performing a dividend discount analysis of Astoria, Credit Suisse calculated the estimated present value of distributable cash flow that Astoria was forecasted to generate during calendar years ending December 31, 2016 through December 31, 2021 based on the Forecasts. Credit Suisse then calculated terminal value ranges for Astoria by applying a range of terminal value multiples of 14.0x to 17.0x to Astoria’s calendar year ending December 31, 2022 adjusted net income based on the Forecasts. The distributable cash flows and terminal values were then discounted to present values using discount rates ranging from 7.0% to 8.5%. The resulting analysis indicated an approximate implied per share value reference range for Astoria of $11.40 to $14.50 (excluding the impact of the Synergies) and $21.66 to $27.50 (including the impact of the Synergies), in each case relative to the Implied Total Consideration.

Implied Exchange Ratio Analysis

Credit Suisse also performed an implied exchange ratio analysis by deducting the cash consideration of $0.50 per share of Astoria common stock from the implied reference ranges indicated by its financial analyses for Astoria and dividing the result by the implied reference ranges indicated by its financial analyses for NYCB. To determine the low ends of the implied exchange ratio reference ranges, the low ends of the implied reference ranges indicated by the selected companies analysis, the dividend discount analysis (including and excluding the impact of the Synergies) and the selected transactions analysis for Astoria (after reduction by the amount of the cash consideration) were divided, respectively, by the high ends of the implied reference ranges indicated by the selected companies analysis, the discounted cash flow analysis and the selected companies analysis for NYCB. To determine the high ends of the implied exchange ratio reference ranges, the high ends of the implied reference ranges indicated by the selected companies analysis, the dividend discount analysis (including and excluding the impact of the Synergies) and the selected transactions analysis for Astoria (after reduction by the amount of the cash consideration) were divided, respectively, by the low ends of the implied reference ranges indicated by the selected companies analysis, the discounted cash flow analysis and the selected companies analysis for NYCB.

The foregoing analyses indicated implied exchange ratio reference ranges of 0.698x to 1.665x, based on the selected companies analyses of P/TBV and Core Deposit Premium of Astoria and NYCB; 0.431x to 0.658x, based on the selected companies analyses of 2016 and 2017 EPS of Astoria and NYCB; 0.540x to 0.856x, based on the dividend discount analyses of Astoria and NYCB (excluding Synergies); 1.049x to 1.651x, based on the dividend discount analyses of Astoria and NYCB (including Synergies); and 0.497x to 1.742x, based on the selected transactions analysis for Astoria and the selected companies analysis for NYCB, as compared to the stock consideration.

Financial data of Astoria and NYCB were based on the Forecasts.

 

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Other Factors

Credit Suisse also noted certain additional factors that were not considered in its financial analysis with respect to its opinion but that were referenced for informational purposes.

Credit Suisse reviewed the 52-week trading range for Astoria of $12.09 to $14.08 and the 52-week volume-weighted average share price of Astoria of $12.97. Credit Suisse also reviewed the research analyst price target ranges that were available to Credit Suisse for the share prices of Astoria of $14.00 to $17.50 (as of October 27, 2015) and the research analyst price target ranges as of unaffected share prices of Astoria of $13.50 to $16.00 (as of July 20, 2015, before Basswood Capital Management LLC publicly disclosed a 9.2% ownership stake).

Financial Advisor Disclosure

NYCB retained Credit Suisse as its financial advisor in connection with the proposed merger. NYCB selected Credit Suisse based on Credit Suisse’s experience and reputation and Credit Suisse’s knowledge of NYCB and its industry. Credit Suisse is an internationally recognized investment banking firm and is regularly engaged in the evaluation of businesses and securities in connection with mergers and acquisitions, leveraged buyouts, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes. Credit Suisse’s role in the merger was to be an additional financial advisor to the board of directors of NYCB and to render a written opinion to the board of directors of NYCB with respect to the fairness, from a financial point of view, to NYCB of the merger consideration. Given the significance of the merger to NYCB, the board of directors wanted an additional opinion from another financial advisor. Credit Suisse will receive a transaction fee of $5 million for its services as financial advisor to NYCB in connection with the merger, $1 million of which became payable to Credit Suisse upon the rendering of its opinion to the NYCB board of directors and the balance of which is contingent upon completion of the merger. NYCB may, in its sole discretion, pay to Credit Suisse an additional incentive amount upon completion of the merger reflecting NYCB’s assessment of Credit Suisse’s role in connection with the transaction, the amount of which would be determined by NYCB in its sole discretion and which amount would not be subject to any cap or measured as a percentage of the total merger consideration (there being no understanding as to what specific factors, if any, that NYCB would take into account in exercising its discretion). Credit Suisse has been informed by NYCB that it does not currently expect to pay such additional incentive amount to Credit Suisse. NYCB has agreed to reimburse certain of Credit Suisse’s expenses and to indemnify Credit Suisse and certain related parties for certain liabilities and other items arising out of or related to its engagement.

During the two year period ended October 28, 2015, Credit Suisse did not receive any compensation from either NYCB or Astoria for investment banking services provided to either of them. NYCB engaged Credit Suisse on October 25, 2015 to act as a financial advisor in connection with a possible transaction with Astoria. Credit Suisse and its affiliates have provided investment banking and other financial services, and in the future may provide, investment banking and other financial services to Astoria, NYCB and their respective affiliates for which Credit Suisse and its affiliates have received, and would expect to receive, compensation including, since January 2013, having acted as an underwriter in the Astoria’s offering of preferred securities in March 2013. In particular, Credit Suisse acted as a bookrunner for an issuance of common stock by NYCB subsequent to the announcement of the merger. Credit Suisse is a full service securities firm engaged in securities trading and brokerage activities as well as providing investment banking and other financial services. In the ordinary course of business, Credit Suisse and its affiliates may acquire, hold or sell, for its and its affiliates’ own accounts and the accounts of customers, any currency or commodity that may be involved in the merger and equity, debt and other securities and financial instruments (including bank loans and other obligations) of Astoria, NYCB and any other company that may be involved in the merger, as well as provide investment banking and other financial services to such companies.

Astoria’s Reasons for the Merger; Recommendation of Astoria’s Board of Directors

After careful consideration, the Astoria board of directors, at a meeting held on October 28, 2015, determined that merger with NYCB is in the best interests of Astoria and its common stockholders and approved and

 

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declared advisable the merger agreement and the transactions contemplated therein, including the merger, and recommends that Astoria’s common stockholders vote “FOR” the adoption of the Astoria merger proposal. In reaching its decision to approve and recommend the adoption of the merger agreement, the Astoria board of directors consulted with Astoria’s management, as well as its financial and legal advisors, and considered a number of factors, including the following material factors:

 

•

each of Astoria’s, NYCB’s and the combined company’s business, operations, financial condition, asset quality, earnings and prospects;

 

•

the soundness of NYCB’s financial condition and asset quality;

 

•

the complementary nature of NYCB’s business and operations, including NYCB’s longstanding presence in the New York banking market and ties to the same communities that Astoria serves, that would result in a combined company with a more diversified balance sheet and asset mix as well as a superior deposit mix and attractive cost of funding;

 

•

the complementary nature of the cultures and product mix of the two companies, including with respect to strategic focus, target markets and client service;

 

•

the expanded possibilities, including organic growth and future acquisitions, that would be available to the combined company, given its larger size, asset base, capital and footprint;

 

•

NYCB’s successful track record in executing mergers and the likelihood of completion in a timely manner;

 

•

the anticipated pro forma impact of the merger on the combined company, including the expected 20% pro forma earnings accretion in 2017 and 6% tangible book value accretion upon closing of the merger;

 

•

the anticipated continued participation of certain of Astoria’s directors, officers and employees in the combined company, which enhances the likelihood that the strategic benefits that Astoria expects to achieve as a result of the merger will be realized and that the benefits and talents that Astoria brings to the combined institution will be appropriately valued and effectively utilized;

 

•

its understanding of the current and prospective environment in which Astoria and NYCB operate, including national and local economic conditions, the interest rate environment, increasing operating costs resulting from regulatory initiatives and compliance mandates, the competitive environment for financial institutions generally, and the likely effect of these factors on Astoria both with and without the proposed transaction;

 

•

its consideration that the transaction with NYCB was more favorable to the Astoria stockholders than the potential value that might result from other alternatives reasonably available to Astoria, including, but not limited to:

 

•

the Astoria board of directors negotiations and exploration of a possible combination with Party A, Party C and Party D,

 

•

the fact that, in a consolidating industry, institutions with an interest in merging with another institution typically make that interest known,

 

•

the fact that, in the current regulatory environment, many institutions may not be able to obtain regulatory approval for a strategic transaction with Astoria,

 

•

the attractiveness and strategic fit of NYCB as a potential merger partner given its multi-family wholesale mortgage lending, its knowledge of the New York banking market and its history of integrating previous acquisitions, and

 

•

the likelihood of an alternative transaction emerging;

 

•

its review and discussions with Astoria’s management concerning the due diligence examination of the business of NYCB and Party A;

 

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•

the potential positive impact of the balance sheet repositioning on the future prospects of the combined company upon completion of the transaction;

 

•

management’s expectation that the combined company will have a strong capital position upon completion of the transaction;

 

•

the Astoria board of directors’ belief that the transaction is likely to provide substantial value to Astoria’s stockholders, including the combined company’s strong market presence in New York, a more diversified loan portfolio and attractive funding base and the expected superior pro forma earnings impact to Astoria’s earning prospects on a stand-alone basis;

 

•

the expectation that the transaction will be generally tax-free for United States federal income tax purposes to Astoria’s stockholders;

 

•

the written opinion of Sandler O’Neill, dated as of October 28, 2015, delivered to the Astoria board of directors to the effect that, as of that date, and subject to and based on the various assumptions, considerations, qualifications and limitations set forth in the opinion, the merger consideration was fair, from a financial point of view, to the holders of Astoria common stock;

 

•

the fact that the exchange ratio is fixed, which the Astoria board of directors believed was consistent with market practice for transactions of this type and with the strategic purpose of the transaction;

The board of directors of Astoria also considered the potential risks related to the merger but concluded that the anticipated benefits of the merger were likely to substantially outweigh these risks. These potential risks included:

 

•

the potential risks associated with achieving anticipated cost synergies and savings and successfully integrating Astoria’s business, operations and workforce with those of NYCB;

 

•

the transaction-related restructuring charges and other merger-related costs;

 

•

the risk that the market would react negatively to NYCB’s concurrent announcement of its balance sheet repositioning, including the reduction of NYCB’s dividend, and the follow-on offering;

 

•

the nature and amount of payments to be received by Astoria’s management in connection with the merger;

 

•

the potential risk of diverting management attention and resources from the operation of Astoria’s business and towards the completion of the merger; and

 

•

the regulatory and other approvals required in connection with the merger and the expectation that such regulatory approvals will be received in a timely manner and without the imposition of unacceptable conditions.

The foregoing discussion of the information and factors considered by the Astoria board of directors is not intended to be exhaustive, but includes the material factors considered by the Astoria board of directors. In reaching its decision to approve the merger agreement, the merger and the other transactions contemplated by the merger agreement, the Astoria board of directors did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors. The Astoria board of directors considered all these factors as a whole, including discussions with, and questioning of, Astoria’s management and Astoria’s independent financial and legal advisors, and overall considered the factors to be favorable to, and to support, its determination.

Opinion of Sandler O’Neill & Partners, L.P.

By letter dated October 6, 2015, Astoria retained Sandler O’Neill to act as financial advisor to the Astoria board of directors in connection with Astoria’s consideration of a possible business combination. Sandler O’Neill is a nationally recognized investment banking firm whose principal business specialty is financial institutions. In the ordinary course of its investment banking business, Sandler O’Neill is regularly engaged in the valuation of

 

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financial institutions and their securities in connection with mergers and acquisitions and other corporate transactions. The Astoria board of directors also considered the fact that Sandler O’Neill is familiar with Astoria and its business as Sandler O’Neill has provided investment banking services to Astoria in the past.

Sandler O’Neill acted as financial advisor in connection with the proposed merger and participated in certain of the negotiations leading to the execution of the merger agreement. At the October 28, 2015 meeting at which Astoria’s board of directors considered and approved the merger agreement, Sandler O’Neill delivered to the Astoria board of directors its oral opinion, which was subsequently confirmed in writing, to the effect that, as of such date, the merger consideration was fair to the holders of Astoria common stock from a financial point of view.

The full text of Sandler O’Neill’s opinion is attached as Annex D to this joint proxy statement/prospectus. The opinion outlines the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Sandler O’Neill in rendering its opinion. The description of the opinion set forth below is qualified in its entirety by reference to the full text of the opinion. Astoria common stockholders are urged to read the entire opinion carefully in connection with their consideration of the Astoria merger proposal.

Sandler O’Neill’s opinion speaks only as of the date of the opinion. The opinion was directed to Astoria’s board of directors in connection with its consideration of the merger and is directed only to the fairness, from a financial point of view, of the merger consideration to Astoria common stockholders. Sandler O’Neill’s opinion does not constitute a recommendation to any Astoria common stockholder as to how such Astoria common stockholder should vote at any meeting of stockholders called to consider and vote upon the Astoria merger proposal. It does not address the underlying business decision of Astoria to engage in the merger, the relative merits of the merger as compared to any other alternative business strategies that might exist for Astoria or the effect of any other transaction in which Astoria might engage. Sandler O’Neill did not express any opinion as to the fairness of the amount or nature of the compensation to be received in the merger by Astoria’s officers, directors, or employees, or class of such persons, relative to the merger consideration to be received by Astoria common stockholders. Sandler O’Neill’s opinion was approved by Sandler O’Neill’s fairness opinion committee.

In connection with rendering its opinion, Sandler O’Neill reviewed and considered, among other things:

 

•

a draft of the merger agreement, dated October 28, 2015;

 

•

certain publicly available financial statements and other historical financial information of Astoria that Sandler O’Neill deemed relevant;

 

•

certain publicly available financial statements and other historical financial information of NYCB that Sandler O’Neill deemed relevant;

 

•

publicly available mean and median analyst earnings per share estimates for Astoria for the years ending December 31, 2015 through December 31, 2017, and estimated long-term annual earnings per share and balance sheet growth rates for the years thereafter, based on guidance from the senior management of Astoria;

 

•

publicly available mean and median analyst earnings per share estimates for NYCB for the years ending December 31, 2015 through December 31, 2017, and estimated long-term annual earnings per share and balance sheet growth rates for the years thereafter, based on guidance from the senior management of NYCB;

 

•

the pro forma financial impact of the merger on NYCB based on assumptions related to transaction expenses, purchase accounting adjustments, and an estimated dividend payout ratio as well as certain cost savings, as provided by senior management of NYCB;

 

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•

the pro forma financial impact of the merger on NYCB based on assumptions related to the repositioning of certain of NYCB’s outstanding liabilities and the offer and sale of NYCB common stock following the announcement of the merger (the “Repositioning”) as provided by NYCB;

 

•

the publicly reported historical price and trading activity for Astoria’s and NYCB’s common stock, including a comparison of certain financial and stock market information for Astoria’s and NYCB’s common stock and similar publicly available information for certain other similar companies, the securities of which are publicly traded;

 

•

a comparison of certain financial information of Astoria and NYCB with similar bank and thrift institutions for which information is publicly available;

 

•

the financial terms of certain other recent merger and acquisition transactions in the commercial banking industry, to the extent publicly available;

 

•

the current market environment generally and the banking environment in particular; and

 

•

such other information, financial studies, analyses and investigations and financial, economic and market criteria as they considered relevant.

Sandler O’Neill also discussed with certain members of Astoria’s senior management the business, financial condition, results of operations and prospects of Astoria and held similar discussions with the senior management of NYCB regarding the business, financial condition, results of operations and prospects of NYCB.

In conducting its review and arriving at its opinion, Sandler O’Neill relied upon and assumed the accuracy and completeness of all of the financial and other information provided to Sandler O’Neill or that was publicly available and Sandler O’Neill did not independently verify the accuracy or completeness of any such information or assume any responsibility or liability for such verification, accuracy or completeness. Sandler O’Neill further relied upon NYCB senior management as to the reasonableness and achievability of the estimates regarding certain pro forma financial effects of the merger, including with respect to the Repositioning, on NYCB (and the assumptions and bases therefor, including without limitation, cost savings, related expenses and, as provided by senior management of NYCB and referred to above). Sandler O’Neill further relied on the assurance of senior management of NYCB that such estimates reflected the best currently available estimates of such management and that such estimates would be realized in the amounts and in the time periods estimated by such management.

Sandler O’Neill also assumed that there were no material changes in the assets, liabilities, financial condition, results of operations, business or prospects of either Astoria or NYCB since the date of the last financial statements of each such entity that were made available to, or reviewed by, Sandler O’Neill. Sandler O’Neill is not an expert in the independent verification of the adequacy of allowances for loan and lease losses and Sandler O’Neill assumed, without independent verification and with Astoria’s consent, that the aggregate allowances for loan and lease losses for Astoria and NYCB were adequate to cover such losses. In rendering its opinion, Sandler O’Neill did not make or obtain any evaluations or appraisals or physical inspection of the property, assets or liabilities (contingent or otherwise) of Astoria or NYCB, the collateral securing any of such assets or liabilities, or the collectability of any such assets, nor did Sandler O’Neill examine any individual loan or credit files, nor did Sandler O’Neill evaluate the solvency, financial capability or fair value of Astoria or NYCB under any state or federal laws, including those relating to bankruptcy, insolvency or other matters.

Sandler O’Neill assumed that, in all respects material to its analyses, (i) each of the parties to the merger agreement would comply in all material respects with all material terms of the merger agreement, (ii) that all of the representations and warranties contained in the merger agreement were true and correct in all material respects, that each of the parties to the merger agreement would perform in all material respects all of the covenants required to be performed by such party under the merger agreement and that the conditions precedent in the merger agreement were not waived, (iii) in the course of obtaining the necessary regulatory or third party approvals, consents and releases with respect to the merger, no delay, limitation, restriction or condition would

 

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be imposed that would have an adverse effect on Astoria, NYCB or the merger in any respect that would be material to its analyses, (iv) the merger and any related transactions will be consummated in accordance with the terms of the merger agreement without any waiver, modification or amendment of any material term, condition or agreement thereof and in compliance with all applicable laws and other requirements, and (v) the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code.

In preparing its analyses, Sandler O’Neill used publicly available mean and median analyst earnings per share estimates for Astoria for the years ending December 31, 2015 through December 31, 2017, and estimated long-term annual earnings per share and balance sheet growth rates for the years thereafter, based on guidance from the senior management of the Astoria. In addition, Sandler O’Neill used publicly available mean and median analyst earnings per share estimates for NYCB for the years ending December 31, 2015 through December 31, 2017, and estimated long-term annual earnings per share and balance sheet growth rates for the years thereafter, based on guidance from the senior management of NYCB. Sandler O’Neill also received and used in its analyses certain assumptions related to transaction expenses, purchase accounting adjustments, an estimated dividend payout ratio, certain cost savings as well as the Repositioning, as provided by the senior management of NYCB. With respect to those estimates, the senior management of Astoria and NYCB confirmed to Sandler O’Neill that they reflected the best currently available estimates of the senior managements of Astoria and NYCB, respectively, and Sandler O’Neill assumed that such estimates would be achieved. Sandler O’Neill expressed no opinion as to any such estimates or the assumptions on which they were based. Sandler O’Neill assumed in all respects material to its analysis that Astoria and NYCB would remain as going concerns for all periods relevant to its analyses.

Sandler O’Neill’s opinion was necessarily based upon conditions as they existed and could be evaluated on the date of such opinion and the information made available to Sandler O’Neill through such date. Developments subsequent to the date of Sandler O’Neill’s opinion may have affected, and may affect, the conclusion reached in Sandler O’Neill’s opinion and Sandler O’Neill has not undertaken to update, revise or reaffirm its opinion or otherwise comment upon events occurring after the date thereof. Sandler O’Neill expressed no opinion as to the actual value of NYCB common stock to be issued in the merger when it is received by Astoria shareholders or the prices, trading range or volume at which Astoria common stock or NYCB common stock will trade following the public announcement of the merger or the prices, trading range or volume at which NYCB common stock would trade following consummation of the merger. Sandler O’Neill did not express any opinion as to any of the legal, regulatory, accounting or tax matters relating to the merger or any other transactions contemplated in connection therewith, including whether or not the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code.

In performing its analyses, Sandler O’Neill made numerous assumptions with respect to industry performance, general business, economic, market and financial conditions and other matters, which are beyond the control of Sandler O’Neill, Astoria and NYCB. Any estimates contained in the analyses performed by Sandler O’Neill are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by these analyses. Additionally, estimates of the values of businesses or securities do not purport to be appraisals or to reflect the prices at which such businesses or securities might actually be sold. Accordingly, these analyses and estimates are inherently subject to substantial uncertainty. In addition, Sandler O’Neill’s opinion was among several factors taken into consideration by the Astoria board of directors in making its determination to approve the merger agreement and the merger. Consequently, the analyses described below should not be viewed as determinative of the decision of the Astoria board of directors with respect to the fairness of the merger consideration. The type and amount of consideration payable in the merger were determined through negotiation between Astoria and NYCB and the decision to enter into the merger agreement was solely that of the Astoria board of directors.

The following is a summary of the material financial analyses presented by Sandler O’Neill to the Astoria board of directors in connection with its opinion. The summary is not a complete description of the financial analyses underlying the opinion or the presentation made by Sandler O’Neill to the Astoria board of directors, but

 

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summarizes the material analyses performed and presented in connection with such opinion. The financial analyses summarized below include information presented in tabular format. In order to fully understand the financial analyses, these tables must be read together with the accompanying text. The tables alone do not constitute a complete description of the financial analyses. The preparation of a fairness opinion is a complex analytic process involving various determinations as to appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. Therefore, a fairness opinion is not readily susceptible to partial analysis or summary description. In arriving at its opinion, Sandler O’Neill did not attribute any particular weight to any analysis or factor that it considered, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, Sandler O’Neill believes that its analyses and the summary of its analyses must be considered as a whole and that selecting portions of its analyses and factors or focusing on the information presented below in tabular format, without considering all analyses and factors or the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the process underlying its analyses and opinion.

Summary of Proposed Merger Consideration and Implied Transaction Metrics

Sandler O’Neill reviewed the financial terms of the proposed merger. As described in the merger agreement, upon the effective time of the merger, each share of Astoria common stock issued and outstanding immediately prior to the effective time, other than certain shares described in the merger agreement, will be converted into the right to receive (i) one share of NYCB common stock and (ii) $0.50 in cash. Using NYCB’s October 27, 2015 closing stock price of $18.79, and based upon the following, (a) 100,786,186 shares of Astoria common stock outstanding, (b) all 12,000 shares of Astoria common stock reserved for issuance upon the exercise of outstanding Astoria stock options (which have a weighted average exercise price of $29.76 per share) will be cancelled with no consideration, and (c) 2,205,597 outstanding Astoria restricted shares, which will vest according to their terms, Sandler O’Neill calculated an implied transaction value per share of $19.29 and aggregate implied transaction value of $1,986,711,000.

Sandler O’Neill calculated the following implied transaction metrics :

 

Transaction Price / Last Twelve Months Earnings Per Share:			23.0	x
Transaction Price / September 30, 2015 Book Value Per Share:			128	%
Transaction Price / September 30, 2015 Tangible Book Value Per Share:			146	%
Transaction Price / 2015 Analyst Estimated Earnings Per Share:			29.2	x
Transaction Price / 2016 Analyst Estimated Earnings Per Share:			31.1	x
Tangible Book Premium / Core Deposits1:			7.8	%
Market Premium as of August 03, 2015 2 :			25.7	%
Market Premium as of October 27, 2015:			10.0	%

 

1	Core deposits equal to total deposits less jumbo CDs.

2	The date of Basswood Capital Management, LLC 13D filing

Stock Trading History

Sandler O’Neill reviewed the historical publicly reported trading prices of Astoria and NYCB common stock for three year period ended October 27, 2015. Sandler O’Neill then compared the relationship between the movements in the price of Astoria and NYCB common stock, respectively, to movements in their respective comparable groups (as described on pages 87 and 88) as well as certain stock indices.

 

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Astoria’s Three-Year Stock Performance

 

		Beginning Value October 27, 2012		Ending Value October 27, 2015
Astoria		100%		176.5%
Astoria Peer Group (as defined below)		100%		148.5%
NASDAQ Bank Index		100%		152.8%
S&P 500 Index		100%		146.3%

NYCB’s Three-Year Stock Performance

 

		Beginning Value October 27, 2012		Ending Value October 27, 2015
NYCB		100%		135.8%
NYCB Peer Group (as defined below)		100%		159.0%
NASDAQ Bank Index		100%		152.8%
S&P 500 Index		100%		146.3%

Astoria Comparable Company Analysis

Using publicly available information, Sandler O’Neill compared selected financial information for Astoria with a group of financial institutions selected by Sandler O’Neill. The Astoria peer group consisted of public bank and thrift holding companies whose securities were listed on major exchanges and which had total assets between $12.0 billion and $20.0 billion, excluding Puerto Rican headquartered banks and announced merger targets (the “Astoria Peer Group”).

The Astoria Peer Group included:

 

IBERIABANK Corporation.		Bank of Hawaii Corporation
Valley National Bancorp		MB Financial, Inc.
Texas Capital Bancshares, Inc.		Washington Federal, Inc.
UMB Financial Corporation		Western Alliance Bancorporation
Fulton Financial Corporation		BancorpSouth, Inc.
PrivateBancorp, Inc.		Cathay General Bancorp
F.N.B. Corporation		Flagstar Bancorp, Inc.
PacWest Bancorp		Hilltop Holdings Inc.
United Bankshares, Inc.		Trustmark Corporation
International Bancshares Corporation

The analysis compared publicly available financial information for Astoria with the corresponding data for the Astoria Peer Group as of or for the twelve months ended September 30, 2015 (unless otherwise indicated), with pricing data as of October 27, 2015. The table below sets forth the data for Astoria and the median, mean, high and low data for the Astoria Peer Group. Certain financial data prepared by Sandler O’Neill, as referenced in the tables presented below, may not correspond to the data presented in Astoria’s historical financial statements, as a result of the different periods, assumptions and methods used by Sander O’Neill to compute the financial data presented.

 

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Sandler O’Neill’s analysis showed the following concerning the financial performance and financial condition of Astoria and the Astoria Peer Group:

 

		Astoria (2)				Peer Group Median				Peer Group Mean				Peer Group High				Peer Group Low
Total assets (in millions)		$	15,099			$	14,950			$	15,343			$	19,534			$	12,074
Tangible common equity/Tangible assets			8.93	%			8.85	%			9.23	%			12.21	%			6.85	%
Leverage ratio			10.06	%			10.35	%			10.24	%			12.64	%			7.18	%
Total risk-based capital ratio			18.63	%			13.50	%			14.86	%			21.64	%			11.39	%
LTM Return on average assets			0.60	%			1.06	%			1.11	%			1.95	%			0.63	%
LTM Return on average equity			5.82	%			8.21	%			9.17	%			14.81	%			6.42	%
LTM Net interest margin			2.31	%			3.41	%			3.52	%			5.80	%			2.54	%
LTM Efficiency ratio			72.1	%			57.9	%			60.2	%			83.5	%			38.2	%
Loan loss reserves/Gross loans			0.92	%			1.09	%			1.12	%			2.34	%			0.60	%
Non-performing assets (1)/Total assets			1.64	%			0.95	%			1.01	%			3.04	%			0.27	%
Price/Tangible book value			133	%			174	%			187	%			297	%			104	%
Price/LTM Earnings per share			20.9	x			16.2	x			16.3	x			20.7	x			10.0	x
Price/2015 Earnings per share³			26.6	x			15.9	x			16.2	x			19.7	x			13.0	x
Price/2016 Earnings per share³			28.3	x			14.9	x			14.8	x			18.8	x			11.0	x
Current Dividend Yield			0.9	%			2.1	%			2.1	%			4.4	%			0.0	%
Market value (in millions)		$	1,767			$	2,353			$	2,543			$	5,452			$	1,290

 

(1)	Nonperforming assets include nonaccrual loans and leases, renegotiated loans and leases and real estate owned.

(2)	September 30, 2015 financials per Astoria management except LTM profitability metrics, current dividend yield, LTM dividend payout ratio and NPAs/Assets are as of June 30, 2015

Note: Financial data as of June 30, 2015 for Valley National Bancorp, Hilltop Holdings Inc., United Bankshares, Inc. and International Bancshares Corporation and as of September 30, 2015 for all others

No company in the Astoria Peer Group is identical to Astoria. Accordingly, an analysis of the results of Sandler O’Neill’s analyses is not mathematical. Rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies involved.

NYCB Comparable Company Analysis

Using publicly available information, Sandler O’Neill compared selected financial information for NYCB with a group of financial institutions selected by Sandler O’Neill. The NYCB peer group consisted of banks and bank and thrift holding companies whose securities were listed on a major stock exchange that which had total assets between $30.0 billion and $80.0 billion, excluding Puerto Rican banks and announced merger targets (the “NYCB Peer Group”).

The NYCB Peer Group included:

 

Comerica Incorporated		First Niagara Financial Group, Inc.
Huntington Bancshares Incorporated		People’s United Financial, Inc.
Zions Bancorporation		Signature Bank
First Republic Bank.		East West Bancorp, Inc.
SVB Financial Group		BOK Financial Corporation

 

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The analysis compared publicly available financial information for NYCB with corresponding data for the NYCB Peer Group as of or for the twelve months ended September 30, 2015 (unless otherwise indicated), with pricing data as of October 27, 2015. The table below sets forth the data for NYCB and the median, mean, high and low data for the NYCB Peer Group. Certain financial data prepared by Sandler O’Neill, as referenced in the tables presented below, may not correspond to the data presented in NYCB’s historical financial statements, as a result of the different periods, assumptions and methods used by Sander O’Neill to compute the financial data presented. Sandler O’Neill’s analysis showed the following concerning the financial performance and financial condition of Astoria and the selected companies:

 

		NYCB				Peer Group Median				Peer Group Mean				Peer Group High				Peer Group Low
Total assets (in millions)		$	49,045			$	40,572			$	46,740			$	71,012			$	30,726
Tangible common equity/Tangible assets			7.27	%			8.12	%			8.35	%			9.92	%			6.32	%
Leverage ratio			7.80	%			8.90	%			9.10	%			11.63	%			7.66	%
Total risk-based capital ratio			13.89	%			12.81	%			13.28	%			16.48	%			11.80	%
LTM Return on average assets			1.00	%			0.99	%			0.92	%			1.31	%			0.50	%
LTM Return on average equity			8.42	%			9.39	%			9.07	%			13.48	%			3.84	%
LTM Net interest margin			2.61	%			3.11	%			3.00	%			3.48	%			2.57	%
LTM Efficiency ratio			44.2	%			63.7	%			59.1	%			72.5	%			34.3	%
Loan loss reserves/Gross loans			0.50	%			1.16	%			1.08	%			1.48	%			0.59	%
Non-performing assets (1)/Total assets			0.17	%			0.50	%			0.68	%			1.91	%			0.12	%
Price/Tangible book value			247	%			174	%			176	%			265	%			102	%
Price/LTM Earnings per share			16.9	x			18.6	x			18.3	x			25.5	x			13.8	x
Price/2015 Earnings per share³			17.6	x			18.1	x			17.6	x			23.3	x			13.4	x
Price/2016 Earnings per share³			17.7	x			15.5	x			15.4	x			17.8	x			12.1	x
Current Dividend Yield			5.3	%			2.0	%			1.8	%			4.1	%			0.0	%
LTM Dividend Ratio			90.1	%			28.6	%			29.9	%			78.5	%			0.0	%
Market value (in millions)		$	8,349			$	5,984			$	6,387			$	9,188			$	3,725

 

(1)	Nonperforming assets defined as nonaccrual loans and leases, renegotiated loans and leases and real estate owned

(2)	Financial data as of September 30, 2015 for BOK Financial Corporation and as of June 30, 2015 for all others

No company in the NYCB Peer Group is identical to NYCB. Accordingly, an analysis of these results is not mathematical. Rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies involved.

Selected Transactions Analysis

Sandler O’Neill reviewed publicly available information for recent merger and acquisition transactions on a national basis. The group consisted of bank and thrift transactions announced between January 1, 2013 and October 27, 2015 with transaction values greater than $450 million (the “Precedent Transactions Group”). The Precedent Transactions Group included the following transactions:

 

Acquiror:		Target:
Bank of the Ozarks, Inc.		Community & Southern Holdings, Inc.
BB&T Corp.		National Penn Bancshares, Inc.
F.N.B. Corporation		Metro Bancorp, Inc.
PacWest Bancorp		Square 1 Financial, Inc.
Royal Bank of Canada		City National Corp.
BB&T Corp.		Susquehanna Bancshares, Inc.

 

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Acquiror:		Target:
Sterling Bancorp		Hudson Valley Holding Corp.
Banner Corp.		Starbucks Bancshares Inc.
CIT Group Inc.		IMB HoldCo LLC
First Citizens BancShares Inc.		First Citizens Bancorp
Umpqua Holdings Corp.		Sterling Financial Corp
PacWest Bancorp		CapitalSource Inc.
MB Financial Inc.		Taylor Capital Group Inc.
United Bankshares Inc.		Virginia Commerce Bancorp, Inc.

Using the latest publicly available information prior to the announcement of the relevant transaction, Sandler O’Neill reviewed the following transaction metrics: transaction price to last-twelve-months earnings per share, transaction price to estimated earnings per share, transaction price to tangible book value per share, transaction value to book value per share, core deposit premium, 1-month market premium, and 1-day market premium. Sandler O’Neill compared the indicated transaction metrics for the merger to the median, mean, high and low metrics of the Precedent Transactions group.

 

		Astoria/NYCB				Median Precedent Transactions				Mean Precedent Transactions				High Precedent Transactions				Low Precedent Transactions
Transaction price/LTM earnings per share			23.0	x			19.1	x			21.0	x			47.4	x			5.4	x
Transaction price/Estimated earnings per share:			29.2	x			19.3	x			21.0	x			44.0	x			14.0	x
Transaction price/Tangible book value per share:			146	%			177	%			182	%			263	%			102	%
Transaction price/Book value per share			128	%			166	%			159	%			262	%			89	%
Core deposit premium:			7.8	%			10.6	%			12.4	%			35.4	%			0.8	%
1-Day market premium:			10.0	%			20.1	%			22.5	%			40.4	%			(0.7	)%
1-Month market premium			17.9	%1			26.4	%			29.6	%			61.0	%			13.1	%

 

(1)	Market premium based off of September 28, 2015 closing stock price of $16.36

Net Present Value Analyses

Sandler O’Neill performed an analysis that estimated the net present value per share of Astoria’s common stock, assuming Astoria performed in accordance with publicly available median analyst earnings estimates for Astoria for the years ending December 31, 2015, December 31, 2016 and December 31, 2017. The estimates for December 31, 2018 and December 31, 2019 were calculated based on an estimated long-term earnings per share growth rate of 6.0%, which growth rate was selected based on guidance from the senior management of Astoria. To approximate the terminal value of Astoria common stock at December 31, 2019, Sandler O’Neill applied price to 2019 earnings multiples ranging from 12.0x to 22.0x and multiples of December 31, 2019 tangible book value ranging from 100% to 175%. The terminal values were then discounted to present values using different discount rates ranging from 6.8% to 9.8%, which were chosen to reflect different assumptions regarding required rates of return of holders or prospective buyers of Astoria common stock. As illustrated in the following tables, the analysis indicated an imputed range of values per share of Astoria common stock of $6.60 to $13.04 when applying multiples of earnings and $10.93 to $21.00 when applying multiples of tangible book value.

Earnings Per Share Multiples

 

Discount Rate		12.0x				14.0x				16.0x				18.0x				20.0x				22.0x
6.8%		$	7.39			$	8.52			$	9.65			$	10.78			$	11.91			$	13.04
7.3%		$	7.25			$	8.36			$	9.47			$	10.57			$	11.68			$	12.79
7.8%		$	7.12			$	8.20			$	9.29			$	10.37			$	11.46			$	12.54
8.3%		$	6.98			$	8.05			$	9.11			$	10.18			$	11.24			$	12.31
8.8%		$	6.85			$	7.90			$	8.94			$	9.98			$	11.03			$	12.07
9.3%		$	6.73			$	7.75			$	8.77			$	9.80			$	10.82			$	11.84
9.8%		$	6.60			$	7.61			$	8.61			$	9.61			$	10.62			$	11.62

 

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Tangible Book Value Multiples

 

Discount Rate		100%				115%				130%				145%				160%				175%
6.8%		$	12.27			$	14.01			$	15.76			$	17.51			$	19.26			$	21.00
7.3%		$	12.03			$	13.74			$	15.46			$	17.17			$	18.88			$	20.60
7.8%		$	11.80			$	13.48			$	15.16			$	16.84			$	18.52			$	20.20
8.3%		$	11.58			$	13.22			$	14.87			$	16.52			$	18.16			$	19.81
8.8%		$	11.36			$	12.97			$	14.59			$	16.20			$	17.82			$	19.43
9.3%		$	11.14			$	12.73			$	14.31			$	15.89			$	17.48			$	19.06
9.8%		$	10.93			$	12.49			$	14.04			$	15.59			$	17.15			$	18.70

Sandler O’Neill also considered and discussed with the Astoria board of directors how this analysis would be affected by changes in the underlying assumptions, including variations with respect to net income. To illustrate this impact, Sandler O’Neill performed a similar analysis, assuming Astoria’s net income varied from 15% above estimates to 15% below estimates. This analysis resulted in the following range of per share values for Astoria common stock, applying the price to 2019 earnings multiples range of 12.0x to 22.0x referred to above and a discount rate of 8.30%.

Earnings Per Share Multiples

 

Annual Estimate Variance		12.0x				14.0x				16.0x				18.0x				20.0x				22.0x
(15.0%)		$	6.02			$	6.93			$	7.83			$	8.74			$	9.64			$	10.55
(10.0%)		$	6.34			$	7.30			$	8.26			$	9.22			$	10.18			$	11.13
(5.0%)		$	6.66			$	7.67			$	8.69			$	9.70			$	10.71			$	11.72
0.0%		$	6.98			$	8.05			$	9.11			$	10.18			$	11.24			$	12.31
5.0%		$	7.30			$	8.42			$	9.54			$	10.66			$	11.77			$	12.89
10.0%		$	7.62			$	8.79			$	9.96			$	11.13			$	12.31			$	13.48
15.0%		$	7.94			$	9.17			$	10.39			$	11.61			$	12.84			$	14.06

Sandler O’Neill also performed an analysis that estimated the net present value per share of NYCB common stock, assuming that NYCB performed in accordance with publicly available median analyst earnings per share estimates for NYCB for the years ending December 31, 2015, December 31, 2016 and December 31, 2017 and estimated long-term annual earnings per share and balance sheet growth rates for NYCB for the years ending December 31, 2018 and December 21, 2019, based on guidance from the senior management of NYCB. To approximate the terminal value of NYCB common stock at December 31, 2019, Sandler O’Neill applied price to 2019 earnings multiples ranging from 12.0x to 22.0x and multiples of December 31, 2019 tangible book value ranging from 125% to 250%. The terminal values were then discounted to present values using different discount rates ranging from 6.7% to 9.7%, which were chosen to reflect different assumptions regarding required rates of return of holders or prospective buyers of NYCB common stock. As illustrated in the following tables, the analysis indicated an imputed range of values per share of NYCB common stock of $13.90 to $25.09 when applying earnings multiples and $10.57 to $19.52 when applying multiples of tangible book value.

Earnings Per Share Multiples

 

Discount Rate		12.0x				14.0x				16.0x				18.0x				20.0x				22.0x
6.7%		$	15.43			$	17.36			$	19.29			$	21.22			$	23.15			$	25.09
7.2%		$	15.16			$	17.05			$	18.95			$	20.84			$	22.73			$	24.63
7.7%		$	14.90			$	16.75			$	18.61			$	20.47			$	22.32			$	24.18
8.2%		$	14.64			$	16.46			$	18.28			$	20.10			$	21.92			$	23.74
8.7%		$	14.39			$	16.17			$	17.96			$	19.74			$	21.53			$	23.31
9.2%		$	14.14			$	15.89			$	17.64			$	19.39			$	21.14			$	22.89
9.7%		$	13.90			$	15.62			$	17.33			$	19.05			$	20.77			$	22.48

 

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Tangible Book Value Multiples

 

Discount Rate		125%				150%				175%				200%				225%				250%
6.7%		$	11.68			$	13.25			$	14.82			$	16.39			$	17.95			$	19.52
7.2%		$	11.49			$	13.02			$	14.56			$	16.10			$	17.63			$	19.17
7.7%		$	11.30			$	12.80			$	14.31			$	15.82			$	17.32			$	18.83
8.2%		$	11.11			$	12.59			$	14.06			$	15.54			$	17.02			$	18.50
8.7%		$	10.93			$	12.37			$	13.82			$	15.27			$	16.72			$	18.17
9.2%		$	10.75			$	12.17			$	13.59			$	15.01			$	16.43			$	17.85
9.7%		$	10.57			$	11.96			$	13.36			$	14.75			$	16.15			$	17.54

Sandler O’Neill also considered and discussed with the Astoria board of directors how this analysis would be affected by changes in the underlying assumptions, including variations with respect to net income. To illustrate this impact, Sandler O’Neill performed a similar analysis assuming NYCB’s net income varied from 15% above estimates to 15% below estimates. This analysis resulted in the following range of per share values for NYCB common stock, applying the price to 2019 earnings multiples range of 12.0x to 22.0x referred to above and a discount rate of 8.23%.

Earnings Per Share Multiples

 

Annual Estimate Variance		12.0x				14.0x				16.0x				18.0x				20.0x				22.0x
(15.0%)		$	13.00			$	14.55			$	16.10			$	17.64			$	19.19			$	20.74
(10.0%)		$	13.55			$	15.19			$	16.82			$	18.46			$	20.10			$	21.74
(5.0%)		$	14.09			$	15.82			$	17.55			$	19.28			$	21.01			$	22.74
0.0%		$	14.64			$	16.46			$	18.28			$	20.10			$	21.92			$	23.74
5.0%		$	15.19			$	17.10			$	19.01			$	20.92			$	22.83			$	24.74
10.0%		$	15.73			$	17.73			$	19.74			$	21.74			$	23.74			$	25.74
15.0%		$	16.28			$	18.37			$	20.46			$	22.56			$	24.65			$	26.74

In connection with its analyses, Sandler O’Neill considered and discussed with the Astoria board of directors how the present value analyses would be affected by changes in the underlying assumptions. Sandler O’Neill noted that the net present value analysis is a widely used valuation methodology, but the results of such methodology are highly dependent upon the numerous assumptions that must be made, and the results thereof are not necessarily indicative of actual values or future results.

Pro Forma Merger Analysis

Sandler O’Neill analyzed certain potential “base-case” pro forma effects of the merger, based on the following assumptions: (i) the merger closes in the fourth calendar quarter of 2016; (ii) per share merger consideration consisting of 1.00 fixed stock exchange ratio and $0.50 fixed cash payment; and (iii) all 12,000 shares of Astoria common stock reserved for issuance upon the exercise of outstanding Astoria stock options (which have a weighted average exercise price of $29.76 per share) will be cancelled with no consideration, and (iv) 2,205,597 outstanding Astoria restricted shares, which will vest according to their terms. Sandler O’Neill also utilized the following: (i) estimated earnings per share for Astoria based on median analyst consensus estimates and an estimated long-term earnings per share growth rate as discussed with the senior management of Astoria; (ii) estimated earnings per share for NYCB, based on median analyst consensus estimates and an estimated long-term earnings per share and balance sheet growth rate based upon guidance from the senior management of NYCB, (iii) purchase accounting adjustments, as provided by the senior management of NYCB; (iv) estimated annual cost savings, as provided by NYCB senior management; and (v) estimated pre-tax one-time transaction costs and expenses, provided by NYCB senior management. Sandler O’Neill also analyzed certain pro forma

 

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effects of the merger making all the assumptions described above and adding additional assumptions pertaining to the Repositioning. The Repositioning assumptions, as provided by the senior management of NYCB, included: (i) a $650 million common equity offering by NYCB, (ii) the repositioning of approximately $11.8 billion of liabilities, which included restructuring $10.4 billion of long-term borrowings and extending the duration of $1.5 billion of short-term borrowings, and (iii) an adjusted dividend payout ratio upon completion of the merger. Both the “base-case” and “Repositioning case” analyses indicated that the merger would be accretive to NYCB’s estimated earnings per share (excluding one-time transaction costs and expenses) in 2017 and 2018 and accretive to NYCB’s estimated tangible book value per share at close and at the year-end of 2017 and 2018.

In connection with this analysis, Sandler O’Neill considered and discussed with the Astoria’s board of directors how the analysis would be affected by changes in the underlying assumptions and noted that the actual results achieved by the combined company may vary from projected results and the variations may be material.

Sandler O’Neill’s Relationship

Sandler O’Neill is acting as Astoria’s financial advisor in connection with the merger and a significant portion of Sandler O’Neill’s fee is contingent upon the closing of the merger. Sandler O’Neill’s fee is equal to 0.75% of the aggregate purchase price, or approximately $14.9 million, which is due and payable in immediately available funds on the day of closing of the merger. Sandler O’Neill also received a $250,000 retainer fee upon the execution of a general advisory engagement letter with Astoria on August 10, 2015 as well as a $1 million fee from Astoria as a result of rendering its fairness opinion. The retainer fee and the fairness opinion fee will be credited towards the fee that will become due and payable to Sandler O’Neill on the day of closing of the merger. Astoria has also agreed to indemnify Sandler O’Neill against certain liabilities arising out of Sandler O’Neill’s engagement and to reimburse Sandler O’Neill for certain of its out-of-pocket expenses incurred in connection with its engagement.

In the two years preceding the date of its opinion, Sandler O’Neill provided certain other investment banking services for Astoria and received the $250,000 retainer fee mentioned above for such services. In addition, in the two years preceding the date of its opinion, an affiliate of Sandler O’Neill acted as a broker to NYCB in connection with NYCB’s sale of certain loans for which such affiliate received approximately $275,000. Sandler O’Neill, or its affiliates, may provide, and receive compensation for, investment banking services for NYCB in the future, including during the pendency of the merger. Additionally, in the ordinary course of Sandler O’Neill’s business as a broker-dealer, Sandler O’Neill may purchase securities from and sell securities to Astoria, NYCB and their affiliates. Sandler O’Neill may also actively trade the equity and debt securities of Astoria, NYCB or their affiliates for its own account and for the accounts of its customers.

Interests of NYCB’s Directors and Executive Officers in the Merger

In considering the recommendation of the NYCB board of directors with respect to its adoption of the merger agreement, NYCB stockholders should be aware that NYCB’s directors and officers have interests in the merger that are different from, or in addition to, those of NYCB stockholders generally. The NYCB board of directors was aware of these interests and considered them, among other matters, in adopting the merger agreement and making its recommendation that NYCB stockholders vote “FOR” the proposals set forth in this joint proxy statement/prospectus. Please see “—NYCB’s Reasons for the Merger; Recommendation of NYCB’s Board of Directors.”

These interests are summarized below.

Continuing Service as Directors on the NYCB Board

The NYCB board of directors after the merger will include each of the current directors from the current NYCB board of directors, in addition to two directors from the current Astoria board of directors. The NYCB board of directors presently consists of twelve directors.

 

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Continuing Employment with the NYCB Surviving Corporation

It is currently expected that the executive officers of NYCB will continue their employment with NYCB following the effective time of the merger on substantially similar terms and conditions as in existence immediately prior to the effective time of the merger.

None of NYCB’s directors or executive officers is a party to, or participates in any, NYCB plan, program, or arrangement that provides such director or executive officer with any kind of compensation that is based on or otherwise relates to the completion of the merger.

Directors’ and Officers’ Insurance

NYCB will continue to provide indemnification and insurance coverage to the directors and executive officers of NYCB.

Interests of Astoria’s Directors and Executive Officers in the Merger

In considering the recommendations of Astoria’s board of directors with respect to the merger, you should be aware that Astoria’s directors and executive officers have agreements or arrangements that provide them with interests in the merger, including financial interests, that may be different from, or in addition to, the interests of the other stockholders of Astoria. Astoria’s board of directors was aware of these interests during its deliberations of the merits of the merger and in determining to recommend to Astoria’s stockholders that they vote for the Astoria merger proposal and thereby approve the transactions contemplated by the merger agreement, including the merger. See the sections entitled “The Merger—Background of the Merger” and “The Merger—Recommendation of Astoria’s Board of Directors; Astoria’s Reasons for the Merger” of this joint proxy statement/prospectus, respectively. These interests are described in more detail below, and certain of them are quantified in the narrative and table below.

Treatment of Astoria Equity Awards

Stock Options. At the effective time of the merger, each outstanding option to purchase shares of Astoria common stock will fully vest and be converted automatically into the right to receive NYCB common stock with a value equal to the sum of (1) the exchange ratio multiplied by the NYCB share closing price and (2) the cash consideration, less the applicable exercise price. Any option to purchase shares of Astoria common stock that has an exercise price per share that is greater or equal to the per share stock consideration will be cancelled in exchange for no consideration.

Restricted Stock. At the effective time of the merger, each outstanding restricted share of Astoria common stock will fully vest (with any performance-based vesting condition deemed to have been fully achieved (or achieved at the target level if more than one level of achievement has been contemplated)) and be converted automatically into the right to receive the merger consideration.

Restricted Stock Units. At the effective time of the merger, each outstanding restricted stock unit award in respect of Astoria common stock will fully vest (with any performance-based vesting condition deemed to have been fully achieved (or achieved at the target level if more than one level of achievement has been contemplated)) and be converted automatically into the right to receive the merger consideration in respect of each share of Astoria common stock underlying the restricted stock unit award.

Quantification of Payments. For an estimate of the amounts that would be payable to each of Astoria’s named executive officers upon settlement of their unvested Astoria equity awards, see “Merger-Related Compensation for Astoria’s Named Executive Officers” below. The estimated aggregate amount that would be payable to Astoria’s four executive officers who are not named executive officers upon settlement of their unvested Astoria

 

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equity awards if the effective time of the merger occurred on February 16, 2016 is $2,929,284. We estimate that the aggregate amount that would be payable to Astoria’s six non-employee directors upon settlement of their unvested Astoria equity awards if the effective time of the merger occurred on February 16, 2016 is $1,094,504. The amounts specified in this paragraph are determined using a price per share of Astoria common stock of $16.20, the average closing price per share over the first five business days following the announcement of the merger agreement.

Employment Agreements with Named Executive Officers

Astoria and Astoria Bank have existing employment agreements with each of Astoria’s named executive officers, which provide for severance benefits in the event of, among other things, a termination of employment by Astoria without cause, or a resignation by the named executive officer for good reason, in each case, following a change of control (which we refer to as a “qualifying termination”). The employment agreements with the named executive officers also permit the named executive officer to resign for any reason within six months following a change of control and have that resignation treated as a qualifying termination.

Upon a qualifying termination, the named executive officer would be entitled to receive:

 

•

a lump sum payment equal to the base salary the executive would have earned during the remainder of the employment agreement term (three years in the case of all named executive officers other than Gerard C. Keegan, Astoria’s Vice Chairman, Senior Executive Vice President, and Chief Operating Officer, whose employment agreement term was less than one year on February 16, 2016 and expires on August 28, 2016);

 

•

a lump sum payment equal to the target incentive compensation the executive could have earned during the remainder of the employment agreement term;

 

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a lump sum payment equal to the employer contributions the executive would have received under the defined contribution plans of Astoria and Astoria Bank during the remainder of the employment agreement term; and

 

•

continued life, medical, and disability insurance benefits for the remainder of the employment agreement term at no cost to the executive.

In addition, as described above, all of the outstanding equity awards held by the named executive officer will vest and be settled in connection with the merger. Under the employment agreements with Astoria, the named executive officers would also be entitled to a gross-up to compensate them for any excise taxes owed under Section 4999 of the Code.

For an estimate of the value of the payments and benefits described above that would be payable to each of the named executive officers under their employment agreements in connection with a qualifying termination following the merger, see “Merger-Related Compensation for Astoria’s Named Executive Officers” below.

Employment Agreements with Other Executive Officers

Astoria and Astoria Bank have existing employment agreements with each of Astoria’s four executive officers who are not named executive officers, which provide for severance benefits in the event of a qualifying termination following a change of control. The employment agreements with the other executive officers also permit the executive officer to resign for any reason within six months following a change of control and have that resignation treated as a qualifying termination.

Upon a qualifying termination, each executive officer who is not a named executive officer would be entitled to:

 

•

continued payment of the executive’s base salary during the remainder of the employment agreement term (two years in the case of each of the executive officers who are not named executive officers);

 

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•

a lump sum payment equal to the target incentive compensation the executive could have earned during the remainder of the employment agreement term; and

 

•

continued life, medical, and disability insurance benefits for the remainder of the employment agreement term at no cost to the executive.

In addition, as described above, all of the outstanding equity awards held by the executive officer will vest and be settled in connection with the merger. Under the employment agreements, any payments or benefits payable to the executive officer will be cut back to the extent that such payments or benefits would result in the imposition of excise taxes under Section 4999 of the Code.

The estimated aggregate amount that would be payable to Astoria’s four executive officers who are not named executive officers under their respective employment agreements if the effective time of the merger were to occur and they were to experience a qualifying termination on February 16, 2016 is $4,810,288.

Other Compensation Matters

All of Astoria’s executive officers are participants in the Astoria Financial Corporation Executive Officer Annual Incentive Plan (other than one executive officer who is not a named executive officer, who will commence participation in 2016), which provides that, if the executive officer is terminated without cause following a change of control, then he or she will be entitled to a prorated bonus payment for the year of termination based on actual performance. Under the merger agreement, Astoria has the right to pay prorated annual bonus awards in respect of the 2016 fiscal year on the closing date for the period from January 1, 2016 through the closing date, based upon the greater of actual performance through the closing and target performance and taking into account the expenses and costs related to the merger. For an estimate of the value of the prorated bonus payable to each of the named executive officers in connection with the merger, see “Merger-Related Compensation for Astoria’s Named Executive Officers.” The estimated aggregate prorated bonuses (based on target performance) that would be payable to Astoria’s four executive officers who are not named executive officers in connection with the merger if the effective time of the merger were to occur on February 16, 2016 is $104,709.

In addition, under the terms of the merger agreement, Astoria may determine and pay annual bonuses in respect of the 2015 fiscal year based on actual performance taking into account the expenses and costs related to the merger, and may grant 2016 annual equity awards in the ordinary course of business consistent with past practice, although such awards may provide for service-based vesting only. Astoria also, in consultation with NYCB, accelerated the determination and payment of the 2015 annual bonuses and the vesting of certain equity awards that would otherwise have vested later, so that such amounts were paid or awards vested in December 2015. The aggregate value of the accelerated Astoria equity awards held by Astoria’s four executive officers who are not named executive officers that vested on December 28, 2015, based on the closing price of Astoria common stock on the NYSE on December 23, 2015 of $16.09, was $1,422,517.

Under the merger agreement, Astoria is permitted to amend the employment agreements with Alan P. Eggleston, Astoria’s Senior Executive Vice President and Chief Risk Officer, and Frank E. Fusco, Astoria’s Senior Executive Vice President and Chief Financial Officer, and three executive officers who are not named executive officers to provide that for purposes of such individual’s participation in Astoria’s retiree welfare policy, they will receive age and service credit equal to the number of years such individuals are entitled to receive continued life, medical, and disability insurance benefits under their respective employment agreements. For an estimate of the value of the enhanced benefit under Astoria’s retiree welfare policy for Messrs. Eggleston and Fusco, see “Merger-Related Compensation for Astoria’s Named Executive Officers.” The estimated aggregate value of the enhanced benefit for the three executive officers who are not named executive officers if the effective time of the merger were to occur on February 16, 2016 is $211,612.

In addition, Astoria may amend the employment agreements with each executive officer to provide that such individual may purchase his or her Astoria-provided car at book value, plus any sales tax and registration fees on

 

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or following the effective time of the merger. Astoria may also amend the employment agreements with each of the executive officers who are not named executive officers to ensure that, upon the effective time of the merger, the employment period under the employment agreement will be extended for a two-year term.

Indemnification; Directors’ and Officers’ Insurance

The merger agreement provides that after the effective time of the merger, NYCB and the surviving corporation will indemnify and hold harmless all present and former directors, officers, and employees of Astoria and its subsidiaries against any costs or liabilities arising out of the fact that such person is or was a director, officer, or employee of Astoria or any of its subsidiaries and pertaining to matters, acts, or omissions existing or occurring at or prior to the effective time of the merger, to the fullest extent permitted by applicable law, and will also advance expenses to such persons to the fullest extent permitted by applicable law, provided that such person provides an undertaking to repay such advances if it is ultimately determined that such person is not entitled to indemnification.

Subject to certain limitations, the merger agreement also requires the surviving corporation to maintain, for a period of six years after the completion of the merger, Astoria’s existing directors’ and officers’ liability insurance policy, or policies with a substantially comparable insurer of at least the same coverage and amounts and containing terms and conditions that are no less advantageous to the insured, with respect to claims against present and former officers and directors of Astoria and its subsidiaries arising from facts or events that occurred at or prior to the effective time of the merger. NYCB will not, however, be required to spend annually in the aggregate an amount in excess of 300% of the annual premium currently paid by Astoria under its current policy. In lieu of the foregoing, Astoria, in consultation with NYCB, may obtain at or prior to the effective time a six-year prepaid “tail” policy under Astoria’s existing directors and officers insurance policy providing equivalent coverage to that described in the preceding sentence, if such policy can be obtained at an aggregate price of no more than the cap described in the preceding sentence. For additional information, see the section entitled “The Merger Agreement—Director and Officer Indemnification and Insurance” of this joint proxy statement/prospectus.

Board of Directors of NYCB and New York Community Bank Following the Merger

Pursuant to the merger agreement, NYCB has agreed to cause the number of directors that will comprise the board of directors of NYCB on or prior to the effective time of the merger to be increased by two and to appoint Monte Redman and Ralph Palleschi to fill the vacancies resulting from such increase. NYCB has also agreed to cause the number of directors that will comprise the board of directors of the Community Bank on or prior to the effective time of the merger to be increased by two and constituted in the same manner and with the same individuals as the board of directors of the surviving corporation.

Board of Astoria Bank Division of New York Community Bank

Promptly following the effective time of the merger, NYCB will invite members of the Astoria board of directors (other than Monte Redman and Ralph Palleschi ) to serve as a member of a board of the Astoria Bank Division of the Community Bank. As consideration for service on such board, each such member shall be entitled to receive compensation in the amount of $66,000 per year for a period of at least three years following the closing of the merger.

Merger-Related Compensation for Astoria’s Named Executive Officers

This section sets forth the information required by Item 402(t) of Regulation S-K regarding the compensation for each of Astoria’s named executive officers that is based on or otherwise relates to the merger. The merger-related compensation payable to these individuals is subject to a non-binding advisory vote of Astoria’s stockholders, as described above in “Astoria Proposals—Proposal No.3 Astoria Compensation Proposal.”

 

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The table below sets forth the amount of payments and benefits that each of Astoria’s named executive officers would receive in connection with the merger, assuming that the merger were consummated and each such named executive officer experienced a qualifying termination on February 16, 2016. The amounts below are determined using a price per share of Astoria common stock of $16.20, the average closing price per share over the first five business days following the announcement of the merger agreement, and are based on multiple assumptions that may or may not actually occur or be accurate on the relevant date, including the assumptions described in the footnotes to the table. The amounts below do not reflect certain compensation actions that may occur before the effective time of the merger, including the grants of 2016 equity awards, but do assume that the employment agreement amendments relating to age and service credit for purposes of Astoria’s retiree welfare plan is adopted. As a result of the foregoing assumptions, the actual amounts, if any, to be received by an Astoria named executive officer may materially differ from the amounts set forth below.

 

Name		Cash ($)(1)				Equity ($)(2)				Perquisites/ Benefits ($)(3)				Tax Reimbursement ($)(4)				Total ($)
Monte N. Redman			5,483,759				4,095,360				87,000				3,865,496				13,531,614
Frank E. Fusco			3,131,500				1,801,602				668,674				2,090,328				7,692,104
Gerard C. Keegan			625,963				1,583,550				13,000				—				2,222,513
Alan P. Eggleston			2,804,309				1,683,990				147,544				—				4,635,843
Hugh J. Donlon			2,351,276				1,061,861				115,000				—				3,528,137

 

(1)

The cash payments payable to each of the Astoria named executive officers consist of (a) a lump sum payment equal to the base salary the executive would have earned during the remainder of his employment agreement term (three years in the case of Messrs. Redman, Fusco, Eggleston, and Donlon and less than one year for Mr. Keegan, whose employment agreement term expires on August 28, 2016); (b) a lump sum payment equal to the target incentive compensation the executive could have earned during the remainder of his employment agreement term; (c) a lump sum prorated bonus for 2016 (based on target performance); and (d) a lump sum payment equal to the employer contributions the executive would have received under the defined contribution plans of Astoria and Astoria Bank during the remainder of his employment agreement term. The payment described in clause (c) is “single-trigger” and the payments described in clauses (a), (b), and (d) are “double-trigger.” Set forth below are the separate values of each of payments described in clauses (a)–(d) above.

 

Name		Salary Payment ($)				Bonus Payment ($)				Prorated Bonus ($)				Defined Contribution Payment ($)
Monte N. Redman			2,970,000				2,376,000				101,984				35,775
Frank E. Fusco			1,845,000				1,199,250				51,475				35,775
Gerard C. Keegan			342,822				222,834				53,986				6,321
Alan P. Eggleston			1,650,000				1,072,500				46,034				35,775
Hugh J. Donlon			1,380,000				897,000				38,501				35,775

 

(2)

As described above, all unvested equity-based awards held by Astoria’s named executive officers will become vested and be settled at the effective time of the merger (i.e., “single-trigger” vesting). Set forth below are the values of each type of equity-based award that would become vested and be settled upon the effective time of the merger, based on a price per share of Astoria common stock of $16.20, the average closing price per share over the first five business days following the announcement of the merger agreement. None of the named executive officers holds stock options, whether vested or unvested. If the effective time of the merger occurs on or after July 1, 2016, 65,000 shares of performance-based restricted stock held by Mr. Redman will be forfeited, thereby reducing the value in the Equity and Tax Reimbursement columns of this table. In addition, in December 2015, Astoria accelerated the vesting of certain equity awards held by its named executive officers that would have otherwise vested in a future year, so that such equity awards vested on December 23, 2015. The value of these awards, based on the closing

 

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price of Astoria common stock on the NYSE on December 23, 2015 of $16.09, was as follows: Mr. Redman, $1,604,012; Mr. Fusco, $767,976; Mr. Keegan, $809,327; Mr. Eggleston, $760,574; and Mr. Donlon, $544,598.

 

Name		Restricted Stock ($)				Restricted Stock Units ($)
Monte N. Redman			1,342,980				2,752,380
Frank E. Fusco			967,302				834,300
Gerard C. Keegan			867,510				716,040
Alan P. Eggleston			872,370				811,620
Hugh J. Donlon			796,181				265,680

 

(3)

The amounts in the table include (a) the estimated value of continued life, medical, and disability insurance benefits for the remainder of the named executive officer’s employment agreement term ($87,000 in the case of Messrs. Eggleston and Redman, $115,000 in the case of Messrs. Donlon and Fusco, and $13,000 in the case of Mr. Keegan), and (b) in the case of Messrs. Eggleston and Fusco, the estimated value of the enhanced benefit under the Astoria’s retire welfare policy ($60,544 in the case of Mr. Eggleston and $553,674 in the case of Mr. Fusco). The continued life, medical, and disability insurance benefits are “double-trigger,” while the enhanced benefits for Messrs. Eggleston and Fusco under the Astoria’s retire welfare policy are “single-trigger.” This table assumes that the book value purchase of the employer provided car does not result in additional compensation to the executive.

(4)

Each of the named executive officers is entitled to tax gross-up payments for excise taxes incurred under Section 4999 of the Code. Estimated excise tax reimbursements are subject to change based on the actual effective time of the merger, date of termination of employment (if any) of the named executive officer, interest rates then in effect, and certain other assumptions used in the calculations.

Information About the Astoria Directors Joining the NYCB Board of Directors on Completion of the Merger

Monte N. Redman (65) will join the NYCB board of directors upon completion of the merger. Mr. Redman has served as President, Chief Executive Officer and a director of Astoria since July 2011. Mr. Redman joined Astoria in 1977 and served as President and Chief Operating Officer from August 2007 to June 2011 and as Executive Vice President and Chief Financial Officer from December 1997 to August 2007. He is a member of the board of directors of the Federal Home Loan Bank of New York. He serves on the board of directors of the New York Banker’s Association and is the past Chairman and current member of the board of directors of the national Tourette Association of America. Mr. Redman, a magna cum laude graduate of New York Institute of Technology (NYIT) with a degree in accounting, serves as a member of NYIT’s board of trustees.

Mr. Redman brings to his position over thirty-eight years of experience in banking, with over twenty-five of them as an executive officer, of which for eighteen years he was a chief financial officer. As such, he is familiar with all material aspects of the business of Astoria and Astoria Bank, their culture and markets. Mr. Redman has been a primary spokesman for Astoria with the investing public since its initial public offering in 1993. He is well versed in the regulatory and other issues facing the banking industry. Mr. Redman has a background in accounting and finance. His executive management experience includes interest rate risk management, strategic and operational planning and the implementation and management of effective operating controls. Although no formal determination has been made by the NYCB board of directors, it is expected that Mr. Redman will be independent within the meaning of the rules of the New York Stock Exchange.

Astoria Bank maintains an Employee & Director Mortgage Loan Policy. Pursuant to the Employee & Director Mortgage Loan Policy, all full time employees, officers and directors of Astoria Bank in good standing and having at least three months of continuous service are eligible to obtain discounts on certain mortgage loans provided by Astoria Bank. The discount is available only on loans secured by the participant’s owner-occupied,

 

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primary residence. The discount is not available on mortgage loan products which are not intended to be held in portfolio by Astoria Bank. The loans must, in all respects, satisfy all normal underwriting parameters applicable to non-affiliated customers. Such loans may not involve more than the normal risk of collection or present other unfavorable features.

For eligible mortgage loans, the following discounts are provided:

 

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discount/origination fees, up to a maximum of 2% of the loan amount, if applicable, are waived at closing;

 

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underwriting and document preparation fees, if applicable, are waived at closing; and

 

•

the interest rate is adjusted as follows:

 

¡

on fixed rate mortgage loans, the applicable interest rate is lowered by 0.50%;

 

¡

on adjustable rate mortgage loans, both the initial rate and the margin used on future rate adjustments are reduced by 0.50%.

Once a discounted mortgage loan is obtained, it may be refinanced through use of Astoria Bank’s refinance programs once within the first ten years and the discounts will continue to be available. After ten years, the property can be refinanced one time with new discounts applied.

The interest rate discounts continue to apply so long as the participant continues in the service of Astoria Bank, or after the participant ceases service due to disability or retirement at or after age 55 with at least ten years of service. In the event of death, the benefit is available to the participant’s spouse for as long as the spouse occupies the principal residence. Upon retirement, no discounts are allowed on refinances of any kind or if a new primary residence is purchased.

Pursuant to Astoria’s Employee and Director Mortgage Loan Policy, Mr. Redman received a mortgage loan with a highest aggregate amount of indebtedness outstanding since January 1, 2015 of $343,985.58, with a principal outstanding balance as of December 31, 2015 of $315,857.89 and an interest rate of 3.5%. Mr. Redman paid $28,128 in principal and $11,591 in interest on the indebtedness in 2015. If this loan remains outstanding as of the closing of the merger, it will be assumed by the Community Bank in the bank merger.

Ralph F. Palleschi (69) will join the NYCB board of directors upon completion of the merger. Mr. Palleschi has served as Chairman of the Board of Directors of Astoria since June 2012, and as a director of Astoria since 1996. He serves as Chairman of the Nominating and Corporate Governance Committee of the Astoria Board of Directors. In 1983, he co-founded First Long Island Investors, Inc., an investment advisor registered under the Investment Advisers Act of 1940, as amended, and a broker/dealer registered with the SEC. He continues to serve as a director and is President and Chief Operating Officer of its successor companies, First Long Island Investors, LLC and FLI Investors, LLC. From 1993 to 1997, he served as Chief Operating Officer of the New York Islanders hockey team. From 1977 to 1983, he served as Vice President — Finance and Chief Financial Officer of Entenmann’s Inc., a publicly traded food products company. From 1968 to 1977, he was employed by Peat, Marwick, Mitchell & Co., the predecessor of KPMG LLP. He is Chairman of the board of trustees of the Variety Child Learning Center and a member of the board of directors of the Viscardi Center.

Mr. Palleschi, a certified public accountant, brings extensive experience in managing, planning and operating a financial services business in the Long Island market. He brings significant experience and knowledge of the equity markets. He has expertise in developing, reviewing and maintaining systems of internal controls and in financial controls, reporting and analysis. He also has experience in the operation of a significant retail products company focused on customer demands. Although no formal determination has been made by the NYCB board of directors, it is expected that Mr. Palleschi will be independent within the meaning of the rules of the New York Stock Exchange.

 

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Amendment to NYCB’s Certificate of Incorporation

In connection with the merger, NYCB is seeking stockholder approval of an amendment to the NYCB charter to increase the number of authorized shares of common stock by 300 million to 900 million, which amendment is referred to as the “NYCB charter amendment.” In connection with the merger, NYCB expects to issue approximately 104.8 million shares of common stock to Astoria common stockholders. The NYCB board of directors considers the proposed increase in the number of authorized shares desirable because it will provide greater flexibility in the capital structure of the combined company following the merger by allowing it to raise capital that may be necessary to further develop its business, to fund potential acquisitions, to have shares available for use in connection with stock plans, and to pursue other corporate purposes that may be identified by the NYCB board of directors in the future. The amendment to the NYCB charter will become effective on or prior to the effective time of the merger, and is not contingent on the completion of the merger. Please see “NYCB Proposals—Proposal No. 2 NYCB Charter Amendment Proposal” for additional information about the NYCB charter amendment.

The foregoing description of the amendment to the NYCB charter does not purport to be complete and is qualified in its entirety by reference to the full text of the Certificate of Amendment, which is attached as Annex F to this joint proxy statement/prospectus.

Balance Sheet Repositioning

In anticipation of the merger, NYCB repositioned its balance sheet in the fourth quarter of 2015 by prepaying approximately $10.4 billion of wholesale borrowings with an average cost of 3.16%, and replaced them with a similar amount of wholesale borrowings having an average cost of 1.58%. The repositioning resulted in a one-time after-tax prepayment charge of approximately $547 million. NYCB completed an offering of 40,625,000 shares of its common stock on November 4, 2015, which generated proceeds of approximately $630 million for NYCB, in order to offset the impact of this charge on its capital.

NYCB’s Dividend Policy

On October 21, 2015, NYCB announced that its board of directors declared a $0.25 per share dividend, payable on November 18, 2015 to stockholders of record as of November 6, 2015. Based upon an anticipated dividend payout ratio of approximately 50% upon completion of the merger, NYCB has decided, going forward, to re-allocate $0.08 cents per share from its traditional dividend payment to support its future growth and capital strength. Accordingly, NYCB’s dividend is expected to be $0.17 per share per quarter in 2016, subject to regulatory approval, beginning in the first quarter of 2016. NYCB paid its first $0.17 per share dividend on February 19, 2016 to shareholders of record as of February 8, 2016.

NYCB generally pays quarterly dividends on its common stock depending on its financial results, determinations by its board of directors; and certain regulatory requirements. Due to the charge related to NYCB’s balance sheet repositioning, described above in “NYCB Balance Sheet Repositioning,” any future dividends paid by NYCB over the next four quarters will require regulatory clearance.

Public Trading Markets

NYCB common stock is listed for trading on the NYSE under the symbol “NYCB”, and Astoria common stock is listed on the NYSE under the symbol “AF.” Upon completion of the merger, Astoria common stock will no longer be quoted on the NYSE. Following the merger, shares of NYCB common stock will continue to be traded on the NYSE.

Under the merger agreement, NYCB will cause the shares of NYCB common stock to be issued in the merger, including with respect to Astoria stock options, Astoria restricted stock, and Astoria restricted stock units, to be approved for listing on the NYSE, subject to notice of issuance, and the merger agreement provides that neither

 

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NYCB nor Astoria will be required to complete the merger if such shares are not authorized for listing on the NYSE, subject to notice of issuance.

Each outstanding share of Astoria’s 6.50% Non-Cumulative, Perpetual Preferred Stock, Series C, is represented by Astoria depositary shares that are listed on the NYSE under the symbol “AF.PRC.” Each Astoria depositary share represents a 1/40th interest in a share of Astoria preferred stock. Following the conversion of Astoria preferred stock into NYCB preferred stock upon completion of the merger, the depositary shares will continue to be l