New York-based Sterling Bancorp has agreed to acquire local lender Astoria Financial in an all-stock deal valued at $2.2bn.

Under the terms of the merger deal, shareholders of Astoria will receive 0.875 Sterling shares for each share held.

The merged entity will operate under the name Sterling Bancorp across New York City, the Hudson Valley, Long Island and northern New Jersey. It will manage about $29bn in assets, $20bn in loans and $19bn in deposits.

Sterling stockholders will own nearly 60% of the entity, while Astoria stockholders will own the rest.

Sterling president and CEO Jack Kopnisky and CFO Luis Massiani will lead the combined group as president and CEO and CFO, respectively.

The merger is expected to generate about $100m of annual net cost savings, the banks said.

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The deal has already secured the approval from the boards of directors of both companies. It is expected to be completed in the fourth quarter of 2017, subject to shareholder and regulatory approvals.

"We are excited about the opportunity to bring together two companies with extremely complementary strengths, providing a platform to extend Sterling's business banking solutions across a substantially larger market area, while introducing Astoria's retail products to a wider financial center network. Our goal is to build on these strengths to provide exceptional solutions to our combined customer base, while driving best-in-class financial performance by taking advantage of our enhanced scale, opportunities for growth and operating efficiency,” Kopnisky said.

The deal with Sterling comes less than three months after a proposed merger of Astoria with New York Community Bank was scrapped.