Montebello, N.Y.-based Sterling Bancorp is acquiring 100% of Advantage Funding Management Co. Inc.'s common stock in an all-cash deal.
Sterling Bancorp will buy the commercial vehicle and transportation financing services provider through a combination of cash on hand, runoff of existing residential mortgage loans and sales of securities.
Under the deal, Advantage Funding will merge with Sterling's national equipment finance platform, which will result in a combined portfolio of more than $1 billion in outstanding loans and around $205 million in aggregate loan receivables growth in 2017.
As of Dec. 31, 2017, Sterling Bancorp had $30.36 billion in assets. Advantage Funding, a unit of Sydney-based Macquarie Group Ltd., had $458 million in outstanding loans and leases.
The deal is expected to increase the company's operating expenses by about $6 million in 2018.
In the quarter ended Dec. 31, 2017, Advantage Funding's loan portfolio had a weighted average yield of approximately 7.5%. Excluding the impact of accretion income on acquired loans, the deal is expected to be accretive to loan yield, net interest margin and earnings per share available to common stockholders. It has an estimated internal rate of return of more than 25%.
Upon completion, which is expected in April, Advantage Funding's staff will join Sterling National Bank, a unit of Sterling Bancorp.
Hovde Group LLC served as Sterling Bancorp's financial adviser. Macquarie Capital acted as financial adviser and Mayer Brown LLP acted as legal adviser for Macquarie Group.