Sterling Bancorp, Inc. operates as the unitary thrift holding company for Sterling Bank and Trust, F.S.B. that provides community banking services to individuals and businesses.
Lending Activities
One- to-Four Family Residential Loans: The company previously originated residential loans. In May 2022, the company outsourced the residential loan origination function to a third-party residential lending service provider. As a result, the company reduced its workforce in its in-house mortgage orig...
Sterling Bancorp, Inc. operates as the unitary thrift holding company for Sterling Bank and Trust, F.S.B. that provides community banking services to individuals and businesses.
Lending Activities
One- to-Four Family Residential Loans: The company previously originated residential loans. In May 2022, the company outsourced the residential loan origination function to a third-party residential lending service provider. As a result, the company reduced its workforce in its in-house mortgage origination area. In November 2022, the service provider notified the company of its intention to cease conducting business. The company explored possible other service providers but decided to suspend the origination of residential lending in early 2023.
The company offered fixed-rate and adjustable-rate mortgage loans with terms of up to 30 years.
Commercial Loans: The company offers a variety of commercial loan products, consisting primarily of commercial real estate loans, construction loans and commercial and industrial loans. The majority of the company's commercial loans are secured by real estate or other business assets. The company's underwriting practice for commercial loans requires the identification and documentation of the sources of repayment, risks to repayment, mitigating factors and the aggregate exposure of the lending relationship for each commercial loan. The company has several levels of lending authority. Lending limits are based on total exposure to the borrower including all extensions of credit, both used and unused, guarantees, co-signatures or endorsements. The company's commercial loans are almost exclusively recourse loans, as it endeavors to secure personal guarantees on each loan it underwrites.
Commercial Real Estate Loans: The company's commercial real estate loan portfolio includes loans secured by hotels, office, industrial, retail, multifamily and mixed-use properties. The company focuses on properties within or contiguous to its branch footprint, focusing on borrowers with income-producing properties, strong cash flow characteristics and strong collateral profiles. The company's loan-to-value policy limit is 75% for commercial real estate loans.
Construction Loans: The company originates such loans on a limited basis, generally in connection with the bank's Community Reinvestment Act (CRA) considerations. The company has construction loans on its balance sheet as of December 31, 2024, which include primarily of residential construction, commercial construction and mixed-use development loans.
Commercial and Industrial Loans: The company also offers commercial and industrial loans consisting of certain term loans and commercial lines of credit to businesses and individuals for business purposes. These term loans are secured by inventory, equipment, accounts receivable, other assets and in some instances by commercial real estate properties. These loans are typically extended to finance companies or other non-bank lenders with terms of less than 5 years. Also, the company's commercial lines of credit are typically secured by real estate, inventory, equipment, accounts receivable and other assets.
Investment Portfolio
The company regularly evaluates the composition of its investment portfolio as the interest rate yield curve changes and may sell investment securities from time to time to adjust its exposure to interest rates or to provide liquidity.
Deposits
The company offers traditional depository products, including checking, savings, money market, individual retirement accounts and certificates of deposits, to individuals and businesses throughout its market areas. The company's deposits are insured by the Federal Deposit Insurance Corporation (FDIC) up to statutory limits. The company offers customers traditional retail deposit products through its branch network and the ability to access their accounts through online and mobile banking platforms. The company seeks to grow its deposits through the use of competitive rates, a focused marketing campaign, and multi-product clubs in which it offers varying benefits depending on the overall relationship with the customer. The company's bankers are incentivized to acquire and maintain quality, core deposits as it depends on deposits to fund the majority of its loans.
Market Area
The primary markets in which the company operates are the San Francisco and Los Angeles metropolitan areas, and its branch network in these areas is its core distribution channel. In addition, the company has branch in New York City and its headquarters branch in Southfield, Michigan. The company's local branch network enables it to gather deposits, promote the Sterling brand and customer loyalty, originate loans and other products and maintain relationships with its customers through regular community involvement.
Supervision and Regulation
As a federal savings bank, the bank is subject to primary examination and regulation by the Office of the Comptroller of the Currency (OCC) and, as an insured depository institution, the FDIC. The federal system of regulation and supervision establishes a comprehensive framework of activities in which Sterling Bank may engage and is intended primarily for the protection of depositors and the FDIC's Deposit Insurance Fund (the DIF) rather than its shareholders. The bank also is a member of, and owns stock in, the Federal Home Loan Bank (the FHLB) of Indianapolis, which is one of the 11 regional banks in the FHLB system.
As a unitary thrift holding company, the company is required to comply with the rules and regulations of the FRB. The company is required to file certain reports with the FRB and are subject to examination by and the enforcement authority of the FRB. The company is also subject to the rules and regulations of the U.S. Securities and Exchange Commission (SEC) under the federal securities laws.
In addition, the company must comply with significant anti-money laundering (AML) and anti-terrorism laws and regulations, the CRA and regulations implemented thereunder, and fair lending laws and regulations. Government agencies have the authority to impose monetary penalties and other sanctions on institutions that fail to comply with these laws and regulations, which could significantly affect its business activities, including its ability to expand its branch network or acquire other financial institutions.
Finally, the company is also subject to the laws and regulations of the state of Michigan, in which its main office is located, and other states in which it does business, including California and New York.
Any change in applicable laws or regulations, whether by the OCC, the FDIC, the FRB, the SEC, state regulators, or Congress, could have a material adverse impact on the operations and financial performance of the company and the bank.
A federal savings bank derives its lending and investment powers from the Home Owners' Loan Act, as amended (HOLA), and applicable federal regulations. Under these laws and regulations, the bank may invest in mortgage loans secured by residential and commercial real estate, commercial business and consumer loans, certain types of debt securities and certain other assets, subject to applicable limits.
The company's residential real estate loans originated under its former programs, such as TIC loan program and Advantage Loan Program are not QMs, as its underwriting processes for those programs do not follow applicable regulatory guidance required for such qualification; however, its remaining conforming residential real estate loans originated in 2021 and 2022 were QMs.
A federal savings bank's authority to engage in transactions with its affiliates is limited by Sections 23A and 23B of the Federal Reserve Act and federal regulation. An affiliate is generally a company that controls, or is under common control with, an insured depository institution such as the bank. The company is an affiliate of bank because of its control of bank. A subsidiary of a bank that is not also a depository institution or a financial subsidiary under federal law is not treated as an affiliate of the bank for the purposes of Sections 23A and 23B; however, the OCC has the discretion to treat subsidiaries of a bank as affiliates on a case-by-case basis. Section 23A limits the extent to which a bank or its subsidiaries may engage in covered transactions with any one affiliate to 10% of the bank's capital stock and surplus.
The DIF insures deposits at FDIC-insured financial institutions such as the bank. Deposit accounts at the bank are insured by the FDIC generally up to a maximum of $250,000 per separately insured depositor. The FDIC charges insured depository institutions premiums to maintain the DIF.
The company is subject to a number of the U.S. federal, state, local and foreign laws and regulations relating to consumer privacy and data protection. Under the privacy protection provisions of the Gramm-Leach-Bliley Act and related regulations, the company is limited in its ability to disclose non-public information about consumers to nonaffiliated third parties.
The company is required to comply with these and other AML requirements. The federal banking agencies and the Financial Crimes Enforcement Network (FinCEN) are authorized to impose significant civil money penalties for violations of those requirements and have recently engaged in coordinated enforcement efforts against banks and other financial services providers with the U.S. Department of Justice (DOJ), Drug Enforcement Administration and Internal Revenue Service. The company is also subject to increased scrutiny of compliance with the sanctions programs administered by the Office of Foreign Assets Control.
Interest and other charges collected or contracted for by bank are subject to state usury laws and federal laws concerning interest rates. Loan operations are also subject to state and federal laws applicable to credit transactions, such as the Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; Home Mortgage Disclosure Act of 1975 (HMDA), requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; Truth in Savings Act; governing disclosure of information about deposit accounts to customers; Fair Credit Reporting Act of 1978, governing the use and provision of information to credit reporting agencies; and rules and regulations of the various federal and state agencies charged with the responsibility of implementing such federal and state laws.
The deposit operations of the bank also are subject to, among others, the Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; Check Clearing for the 21st Century Act (also known as Check 21), which gives substitute checks, such as digital check images and copies made from that image, the same legal standing as the original paper check; and Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers' rights and liabilities arising from the use of automated teller machines and other electronic banking services.
The bank is a member of the FHLB system, which consists of 11 regional FHLBs. The FHLB provides a central credit facility primarily for member institutions. The bank is required to acquire and hold shares of capital stock in the FHLB of Indianapolis and was in compliance with this requirement at December 31, 2024.
The company is a unitary thrift holding company subject to regulation and supervision by the FRB. The FRB has enforcement authority over the company and its non-savings institution subsidiaries. Among other things, this authority permits the FRB to restrict or prohibit activities that are determined to be a risk to the company.
As a unitary thrift holding company, the company's activities are limited to those activities permissible by law for financial holding companies. A financial holding company may engage in activities that are financial in nature, incidental to financial activities or complementary to a financial activity. Such activities include lending and other activities permitted for bank holding companies under Section 4(c)(8) of the bank Holding Company Act of 1956, as amended, insurance and underwriting equity securities.
History
Sterling Bancorp, Inc. was founded in 1984. The company was incorporated in 1989.
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