Sterling Bancorp, Inc. (NASDAQ: SBT)
(“Sterling” or the “Company”), the holding company of Sterling Bank
and Trust, F.S.B. (the “Bank”), today announced that the Company
has entered into a definitive stock purchase agreement with
Jacksonville, Florida-based EverBank Financial Corp (“EverBank”),
pursuant to which EverBank would acquire all of the stock of the
Bank for fixed cash consideration of $261,000,000. The sale
transaction is subject to customary closing conditions, including
regulatory approvals and approval by Sterling’s shareholders.
Sterling’s board of directors has unanimously approved the sale
transaction, which is expected to close in the first quarter of
2025. As a condition for EverBank to enter into the sale
transaction, trustees for family trusts representing approximately
38% of the outstanding common stock of the Company have entered
into agreements pursuant to which they have committed to vote their
shares in favor of the sale transaction.
As another condition for EverBank to enter into
the sale transaction, the Bank entered into a definitive mortgage
loan purchase agreement with Bayview Acquisitions LLC, a Delaware
limited liability company (“Bayview”), which provides for the sale
to Bayview of all of the Bank’s residential tenant-in-common
mortgage loans. The closing of the loan sale is to occur
immediately prior to the closing of the sale of the Bank.
In connection with its approval of the sale of the Bank to
EverBank, the Company also adopted a plan of dissolution for the
Company following closing of the sale (the “Plan of Dissolution”).
The Company expects to wind down as quickly as possible after the
sale, consistent with Michigan law and the Plan of Dissolution.
Cash distributions to shareholders pursuant to the Plan of
Dissolution will likely occur in two stages, with an initial
distribution to shareholders of substantially all of the proceeds
from the sale of the Bank to occur shortly following the closing.
The final distribution would occur following the resolution of all
of the Company’s obligations and liabilities in accordance with
Michigan law and the Plan of Dissolution. It is anticipated that
the earliest the final distribution would occur is six months
following the closing of the sale of the Bank to EverBank.
Thomas M. O’Brien, Chairman, President, and Chief Executive
Officer of the Company, commented:
“The board of directors of the Company has been considering
various strategic initiatives for several years.
We retained outside consultants to help model scenarios where we
would maintain various versions of independent operations. In
December 2022 we engaged Keefe Bruyette & Woods to act as our
financial advisor to assist us in exploring and evaluating
potential opportunities for a strategic combination with another
bank. As that process began we were finalizing the settlement with
the U.S. Department of Justice. Almost simultaneously, the banking
industry experienced the collapse of three large depository
institutions beginning in March 2023, which roiled the market for
acquisitions of banks. Consequently, our strategic process was
significantly extended over time as this has been the environment
in which we have been operating and evaluating our options.
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. The financial risk
and potential need for a dilutive equity raise made those options
impractical. In the difficult capital market environment for banks
post-March 2023, and with the assistance of our financial advisors,
we conducted multiple outreach efforts to dozens of other financial
institutions to assess the interest and value of a combination with
Sterling. We publicly announced that we engaged a financial advisor
to assist the board in evaluating strategic alternatives in our
Quarterly Report on Form 10-Q filed with the SEC in August of 2023.
However, for a variety of reasons particular to each institution,
including lack of capacity, diminished market capitalizations,
desired patience for future alternatives arguably more attractive
than Sterling, their own regulatory concerns and potentially other
reasons not shared with us, no interest was forthcoming that we
believed was actionable. 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. 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.
The situation at Sterling since the difficult days of 2020 has
changed dramatically. 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. The mono-line nature of the
Bank’s legacy Advantage Loan Program business model has created a
significant revenue void for us. 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. As
noted above, the projected time and costs in reinventing the Bank
would be punitive. Additionally, our strategic efforts have been
further complicated by the business conditions in the community
banking space. Such conditions have been very unsettled since the
crisis in March 2023. This has precipitated a dearth of merger and
acquisitions activity and a significant decline in valuations. All
of that continues to this day.
Sterling will be soliciting shareholder support for this
transaction at a special meeting of Sterling’s shareholders. In the
proxy statement to be distributed in connection with this meeting,
we will explain in greater detail the extensive process that we
have undertaken to arrive at this point and the business rationale
for avoiding a “go it alone” strategy. Since the engagement of
financial advisors as part of our strategic planning process, the
Company’s board of directors and management team have been deeply
involved in evaluating potential options. After multiple meetings
to consider the economic and operating alternatives, and after
consultation regarding legal and financial matters with counsel and
our financial advisors, the Company’s board of directors has
unanimously concluded that the EverBank proposal represented the
best available outcome for our shareholders, who have patiently
supported us in our remediation efforts these past several
years.”
Upon completion of the proposed sale of the Bank, the Bank will
be merged into EverBank, which will operate the Bank’s branch
offices, other than our Michigan branch, as offices of EverBank. We
will shortly commence efforts to close the Michigan branch at the
time of completion of the sale transaction in accordance with
applicable law. All of the Bank’s deposit accounts at the time of
the closing will continue to enjoy the benefits of FDIC coverage as
customers of EverBank and loan customers will be serviced on
EverBank’s platform following a transition period.
Purchase Agreement Terms
Under the terms of the stock purchase agreement, EverBank would
acquire all of the capital stock of the Bank from the Company for
fixed cash consideration of $261,000,000. Subsequent to EverBank’s
purchase of the stock of the Bank, the Bank will merge with and
into EverBank, National Association, with EverBank, National
Association as the surviving entity, and the separate existence of
the Bank will cease. The stock purchase agreement contains
customary representation, warranties and covenants and includes
closing conditions for EverBank’s obligation to complete the
transaction that (i) the average daily closing balance of the
Bank’s deposits (other than brokered deposits) for the monthly
period ending on the last day of the month before closing is not
less than 85% of the average daily closing balance of such deposits
for the monthly period ending on July 31, 2024 and (ii) the Bank
has sold its portfolio of residential tenant-in-common loans, which
had an aggregate principal balance of $372,880,890 at June 30,
2024, to Bayview, which is an affiliate of an experienced private
equity sponsor firm, at the purchase price agreed with Bayview.
Immediately following the closing of the sale transaction,
Sterling is expected to voluntarily delist its common stock from
Nasdaq, with trading in the stock intended to cease at such time or
immediately thereafter, and deregister its common stock in order to
terminate and suspend its reporting obligations under the
Securities Exchange Act of 1934, as amended. The closing date of
the sale would be the record date for the shareholder distributions
under the Plan of Dissolution.
Plan of Dissolution
The Company plans to seek shareholder approval and adoption of
the Plan of Dissolution at the same special meeting of shareholders
at which the sale of the Bank to EverBank will be voted upon. If
the Plan of Dissolution is approved by Sterling’s shareholders,
Sterling intends to file a certificate of dissolution with the
Michigan Department of Licensing and Regulatory Affairs and
distribute all remaining assets, expected to be all cash, to its
shareholders according to their respective rights and interests,
with the final distribution subject to first completing the wind
down of the Company and paying or providing for the Company’s
creditors and existing and reasonably foreseeable debts,
liabilities, and obligations in accordance with Michigan law and
the Plan of Dissolution. Cash distributions to shareholders
pursuant to the Plan of Dissolution will likely occur in two
stages, as described earlier in this release. Sterling expects that
liquidating distributions made to its shareholders would not be
treated as dividends for tax purposes, but rather as return of
capital. Selected members of the Company’s executive management
team along with outside advisors will oversee the Company’s wind
down and dissolution.
Advisors
Keefe, Bruyette & Woods, A Stifel Company, acted as
financial advisor to the Company, and Arnold & Porter Kaye
Scholer LLP served as legal advisor to the Company. Hovde Group,
LLC also acted as financial advisor to the Company solely to
provide certain additional financial advisory services to the
Company’s board of directors.
About Sterling Bancorp, Inc.
Sterling Bancorp, Inc. is a unitary thrift holding company. Its
wholly owned subsidiary, Sterling Bank and Trust, F.S.B., has
primary branch operations in the San Francisco and Los Angeles,
California metropolitan areas and New York City. Sterling offers a
range of loan products as well as retail and business banking
services. Sterling also has an operations center and a branch in
Southfield, Michigan. For additional information, please visit the
Company’s website at http://www.sterlingbank.com.
Forward-Looking Statements
This Press Release contains certain statements that are, or may
be deemed to be, “forward-looking statements” regarding the
Company’s plans, expectations, thoughts, beliefs, estimates, goals
and outlook for the future. These forward-looking statements
reflect our current views with respect to, among other things,
future events and our financial performance, including any
statements that refer to projections, forecasts or other
characterizations of future events or circumstances, including any
underlying assumptions. These statements are often, but not always,
made through the use of words or phrases such as “may,” “might,”
“should,” “could,” “believe,” “expect,” “continue,” “will,”
“estimate,” “intend,” “plan,” “anticipate,” and “would” or the
negative versions of those words or other comparable words or
phrases of a future or forward-looking nature, though the absence
of these words does not mean a statement is not forward-looking.
All statements other than statements of historical facts, including
but not limited to statements regarding the economy and financial
markets, government investigations, credit quality, the regulatory
scheme governing our industry, competition in our industry,
interest rates, our liquidity, our business and our governance, are
forward-looking statements. We have based the forward-looking
statements in this Press Release primarily on our current
expectations and projections about future events and trends that we
believe may affect our business, financial condition, results of
operations, prospects, business strategy and financial needs. These
forward-looking statements are not historical facts, and they are
based on current expectations, estimates and projections about our
industry, management's beliefs and certain assumptions made by
management, many of which, by their nature, are inherently
uncertain and beyond our control. There can be no assurance that
future developments will be those that have been anticipated. We
may not actually achieve the plans, intentions or expectations
disclosed in our forward-looking statements. Our statements should
not be read to indicate that we have conducted an exhaustive
inquiry into, or review of, all potentially available relevant
information. Accordingly, we caution you that any such
forward-looking statements are not guarantees of future performance
and are subject to risks, assumptions, estimates and uncertainties
that are difficult to predict. The risks, uncertainties and other
factors detailed from time to time in our public filings, including
those included in the disclosures under the headings “Cautionary
Note Regarding Forward-Looking Statements” and “Risk Factors” in
our Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 14, 2024, subsequent periodic reports
and future periodic reports, could affect future results and
events, causing those results and events to differ materially from
those views expressed or implied in the Company’s forward-looking
statements. These risks are not exhaustive. Other sections of this
Press Release and our filings with the Securities and Exchange
Commission include additional factors that could adversely impact
our business and financial performance. Moreover, we operate in a
very competitive and rapidly changing environment. New risks and
uncertainties emerge from time to time, and it is not possible for
us to predict all risks and uncertainties that could have an impact
on the forward-looking statements contained in this Press Release.
Should one or more of the foregoing risks materialize, or should
underlying assumptions prove incorrect, actual results or outcomes
may vary materially from those projected in, or implied by, such
forward-looking statements. Accordingly, you should not place undue
reliance on any such forward-looking statements. The Company
disclaims any obligation to update, revise, or correct any
forward-looking statements based on the occurrence of future
events, the receipt of new information or otherwise.
Additional Information and Where to Find It
In connection with the proposed transactions, Sterling intends
to file relevant materials with the SEC, including a proxy
statement on Schedule 14A.
This communication does not constitute an offer to sell or a
solicitation of an offer to buy any securities or a solicitation of
any vote or approval. SHAREHOLDERS OF STERLING ARE URGED TO READ,
WHEN AVAILABLE, ALL RELEVANT DOCUMENTS (INCLUDING ANY AMENDMENTS OR
SUPPLEMENTS THERETO) FILED WITH THE SEC, INCLUDING STERLING’S PROXY
STATEMENT, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
STERLING AND THE PROPOSED TRANSACTIONS.
Investors and shareholders of Sterling will be able to obtain a
free copy of the proxy statement as well as other relevant
documents filed with the SEC without charge at the SEC’s website
(http://www.sec.gov). Copies of the proxy statement and the filings
with the SEC that will be incorporated by reference in the proxy
statement can also be obtained, without charge, by directing a
request to One Towne Square, Suite 1900, Southfield, Michigan
48076, Attn: Shareholder Relations Department, (248) 355-2400.
Participants in the Solicitation
Sterling and certain of its directors, executive officers and
employees may be deemed to be participants in the solicitation of
proxies in respect of the proposed transactions under the rules of
the SEC. Information regarding Sterling’s directors and executive
officers is available in the proxy statement for its 2024 annual
meeting of shareholders, which was filed with the SEC on April 4,
2024, and certain of its Current Reports on Form 8-K. Other
information regarding the participants in the solicitation of
proxies in respect of the proposed transactions and a description
of their direct and indirect interests, by security holdings or
otherwise, will be contained in the proxy statement and other
relevant materials to be filed with the SEC. Free copies of these
documents, when available, may be obtained as described in the
preceding paragraph.
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version on businesswire.com: https://www.businesswire.com/news/home/20240916623794/en/
Investor Contact: Sterling Bancorp, Inc. Karen Knott
Executive Vice President and Chief Financial Officer (248) 359-6624
kzaborney@sterlingbank.com
Grafico Azioni Sterling Bancorp (NASDAQ:SBT)
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