Provident New York Bancorp and Sterling Bancorp announced they have entered into a definitive merger agreement in a stock-for-stock transaction valued at $344 million, based on the closing price of Provident New York Bancorp common stock on April 3, 2013. The merger will create a combined financial services firm specializing in serving small-to-middle market commercial and consumer clients in the greater New York metropolitan area.

Provident New York Bancorp expects to raise $80 million through a debt offering prior to the closing of the transaction and anticipates using the net proceeds to fund a capital contribution to Provident Bank, redeem Sterling's trust preferred securities and for general corporate purposes.

Beginning with the first dividend payment after closing and subject to board approval, Provident New York Bancorp currently intends to increase its regular quarterly cash dividend on its common stock to $0.07 per share -- this will result in current shareholders of Sterling Bancorp common stock maintaining a consistent dividend payment after the closing of the transaction.

"This merger is a tremendous opportunity for Provident and a significant step in our strategy to expand within the greater New York metropolitan area. It provides greater diversity of product sets, clients, and revenue streams while presenting considerable potential to build our small-to-middle market and consumer client bases. The combined business will be a more effective competitor in the marketplace than either company on its own," said Jack L. Kopnisky, president and CEO of Provident New York Bancorp. "Sterling Bancorp's established record of growth and profitability will provide continued value for shareholders of both organizations."

"This is the right transaction for Sterling Bancorp's shareholders, customers and communities," said Louis J. Cappelli, Sterling Bancorp's chairman and chief executive officer. "For shareholders, it provides a premium to the current value of our stock and creates a banking institution with even greater competitive strength, growth potential and profitability. Customers will have an expanded range of financial solutions, delivered by a team with a shared focus on superior service. And our communities will benefit from the presence of a strong, soundly managed financial institution committed to serving businesses and individuals across our markets."

Upon closing, Provident Bank will convert to a national bank charter and adopt the Sterling name, as will the holding company.

"Sterling's name is highly respected and allows us to grow beyond our combined footprint. The Provident name has served us well, but has limited our growth in New Jersey. Adopting the Sterling name will enable us to extend our brand to a broader regional market," continued Kopnisky.

The leadership team of the combined company will be assembled from both organizations with Provident New York Bancorp's Jack Kopnisky serving as chief executive officer for the combined company and Luis Massiani serving as chief financial officer. Sterling Bancorp's Louis J. Cappelli will serve as chairman of the board of directors. Other key executive positions will be drawn from the senior management of both organizations.

The Board of Directors of the combined company is expected to have 13 members at closing, with seven members selected from among Provident directors and six selected from among Sterling directors. Along with Messrs. Cappelli and Kopnisky, Provident New York Bancorp's current chairman of the board, William F. Helmer, will be appointed to the board of directors of the combined company. Current Sterling Bancorp president and director John C. Millman also will be appointed to the board of directors and will serve as a senior advisor to the combined company. The remainder of the board of directors will be announced by the anticipated closing in the fourth calendar quarter of 2013.

The transaction, which has been approved by the boards of directors of both companies, is expected to close in the fourth calendar quarter of 2013. The transaction is subject to approval by shareholders from both companies, regulatory approval and other customary closing conditions.