N.Y. Community Joins Bank-Merger Rush With $2.5 Billion Deal (1)

New York Community Bancorp agreed to buy Michigan’s Flagstar Bancorp Inc. for $2.54 billion, joining this year’s string of tie-ups among small lenders trying to stay competitive against the nation’s banking giants.

U.S. regional banks have been merging to grapple with low interest rates, weak loan demand and the need to boost technology spending. Pressure is coming from the nation’s top lenders, such as JPMorgan Chase & Co., which are moving into new states and spending billions annually on digital offerings.

The deal comes a week after Webster Financial Corp. agreed to purchase Pearl River, New York-based Sterling Bancorp in ...