Great analysis Igurumo !!! That is, "it is a huge plus". Sounds like some kind of medieval religious faith to me. The Earth is the center of the Universe because that would be "a huge plus". Good luck to you.
Do you have any reasons that support your position? It is certainly good for Astoria, its Directors and the hedge fund that controls Astoria. It is probably also good for the Officers of NYCB who will be able to justify larger compensation packages because they are in control of a bigger pile of assets. However, it is not good for NYCB itself and its shareholders who get: significant stock dilution (50% increase in authorized shares); significantly decreased dividends; a poor loan portfolio that Astoria originated by outsourcing; merger with an operation with a significantly lower operating margin; and, high risk that NYCB’s default rate will substantially increase for many years with resulting drop in its own operating margin. As a NYCB long, I see nothing in the deal that is in my interest. I am voting NO.
Is there anyone who definitely benefits from the merger? Yes. In August 2015, an article appeared highlighting interest in AF by Basswood Capital, a small hedge fund led by Matthew Lindenbaum. Basswood took a 9.2% stake in AF and spots on AF’s Board. Their goal was to push for a sale of AF to a strategic buyer, and NYCB was mentioned as a potential player. Two months later, the merger deal was announced. Basswood and AF's shareholders definitely benefit from the merger. They benefit from NYCB's healthier business model and NYCB's dividend yield which is significantly higher than AF's. Also (no surprise here) the terms of the deal included all AF board members (including those from Basswood) staying in the new merged company for at least the next 3 years.
NYCB’s shareholders get significant stock dilution (50% increase in authorized shares), significantly decreased dividends and high risk that NYCB’s default rate will substantially increase for many years with resulting drop in operating margin.
NYCB has controlled costs and maintained an operating margin of approximately 56% far outstripping other banks (e.g. USB and WFC at 39%). This has been a consequence of NYCB's business model focusing on multifamily lending in rent-controlled buildings. This resulted in extremely low default rate, even through the 2008-09 meltdown.
AF not a well-run bank. Its operating margins run in the low 30s - significantly lower than NYC. AF’s lower efficiency is attributed to a potentially dangerous business decision - outsourcing the writing of its loans to a third party, resulting in a lower quality loan portfolio because this third party doesn't bear any risk or downside of issuing bad loans. Perhaps NYCB will improve AF's loan portfolio over time by bringing AF’s loan origination in-house. Until that happens, operating margin will suffer because many existing loans may still have to be written off.
Merger results in increased regulation costs. NYCB - post merger - will pass the threshold for becoming a Systemically Important Financial Institution - SIFI. This translates to higher compliance costs and NYCB’s capital allocation plan - including issuance of a dividend - must be approved by the Federal Reserve before taking effect. Of course, it's not likely that NYCB will stay under SIFI threshold forever - NYCB can still grow through organic growth on its own terms rather than through a merger. What doesn't make sense, however, is becoming a SIFI through a merger of this kind. NYCB is essentially incurring more costs in merging with a less efficient bank to then incur more costs as a SIFI.