Southfield-based Sterling Bank being sold to Florida institution (Courtesy of The Detroit News) — Sterling Bancorp, Inc., the Southfield-based parent company of Sterling Bank and Trust, said Monday it has entered into an agreement to sell all of the bank’s stock to Jacksonville, Florida-based EverBank Financial Corp for $261 million in cash.
The transaction is expected to close in the first quarter of 2025, officials said. The board of directors for Sterling unanimously approved the sale. The sale is subject to customary closing conditions, including the approval of Sterling shareholders and regulators.
Thomas M. O’Brien, chairman, president, and CEO of Sterling Bancorp., said in a statement Monday that the company had been exploring strategic options for several years, including potential independent operations.
“Ultimately, Sterling’s board of directors determined that there was no practical way to pursue any form of stand-alone independent operations given the extremely high costs required and the multiple years needed to execute a new strategic vision without risking ongoing losses and substantial loss of capital,” he said. “The financial risk and potential need for a dilutive equity raise made those options impractical.”
Sterling Bancorp Inc. has faced repercussions in the past related to a home loan program, the Advantage Loan Program. In March 2023, the company agreed to plead guilty to securities fraud in filing false securities statements, according to the U.S. Department of Justice. DOJ officials said the company had made false statements relating to its 2017 initial public offering and in its 2018 and 2019 annual filings. The bank originated at least $5 billion in loans through the program from 2011-19, according to the government.
O’Brien said that amid a difficult capital market environment for banks post-March 2023 and with assistance from multiple financial advisers, the company reached out to dozens of financial institutions to assess their interest in merging with Sterling. Even after announcing its intent in a August 2023 SEC filing, no institutions showed interest in a deal with Sterling, O’Brien said, adding that reasons they received included lack of capacity, diminished market capitalizations and regulatory concerns.
“We were focused on finding a transaction that would be fully funded and not likely to raise regulatory concerns in the application process, while also providing our shareholders with as attractive a consideration as we could develop,” O’Brien said. “In EverBank, we believe that we have found solutions to each of those corporate imperatives. EverBank has been cooperative and forthcoming in all of our negotiations and we have confidence in their ability to execute the transaction in a timely fashion. EverBank has both the cash and capital to execute without need of further financing and we do not anticipate unusual delays in the regulatory approval process.”
O’Brien said things changed dramatically for Sterling following what he called the difficult days of 2020. O’Brien was brought on to lead the company in June 2020, amid the investigations by the DOJ and the Office of the Comptroller of the Currency.
“At that time, we were facing serious existential threats, which has evolved into a situation where our capital and liquidity positions are strong and the multiple governmental investigations have finally concluded, though our earnings capacity has diminished,” he said.
He said the mono-line nature of the bank’s legacy Advantage Loan Program business model created a significant revenue void.
“While our current financial condition stands in stark contrast to that of a few years ago, the legacy absence of a diversified business model has constrained the company’s ability to generate meaningful earnings and growth,” he said.