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.

Bank of America Merrill Lynch and Credit Suisse Securities (USA) served as financial advisors to Provident New York Bancorp and each rendered a fairness opinion in connection with the transaction. Wachtell, Lipton, Rosen & Katz is acting as Provident’s legal counsel.

J.P. Morgan Securities and Keefe Bruyette & Woods, a Stifel Company, served as financial advisors to Sterling Bancorp and each rendered a fairness opinion in connection with the transaction. Sullivan & Cromwell is acting as Sterling’s legal counsel.

In the merger, Sterling Bancorp shareholders will receive a fixed ratio of 1.2625 shares of Provident New York Bancorp common stock for each share of Sterling Bancorp common stock. Upon closing, Provident New York Bancorp shareholders will own approximately 53% of stock in the combined company; Sterling Bancorp shareholders will own approximately 47%. Combined, the companies had annualized pro forma revenue of $257 million and $41 million in net income for the 2012 calendar year, and upon completion of the merger will have nearly $7 billion in assets.

The merger is expected to generate approximately $34 million in fully phased-in annual cost savings or approximately 18% of the expected combined expense total. The merger is expected to be accretive to Provident New York Bancorp’s earnings per share in 2014, excluding the impact of the potential revenue enhancement opportunities.

“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 Kopnisky serving as chief executive officer for the combined company and Luis Massiani serving as chief financial officer. Sterling Bancorp’s Cappelli will serve as chairman of the board of directors. Other key executive positions will be drawn from the senior management of both organizations.