| Over a week ago | ||||
Piper Sandler analyst… Piper Sandler analyst Nicholas Cucharale upgraded Sterling Bancorp to Overweight from Neutral with a price target of $6, down from $6.75. The company entered into a Plea Agreement with the Department of Justice, resolving the DOJ's investigation relating to the bank's Advantage loan product, the analyst tells investors in a research note. The firm says the resolution "should allow for significant optionality." When coupled with a "discounted valuation," it sees an attractive opportunity in shares of Sterling. | ||||
Piper Sandler analyst… Piper Sandler analyst Nicholas Cucharale upgraded Sterling Bancorp to Overweight from Neutral with a price target of $6, down from $6.75. | ||||
The Department of Justice… The Department of Justice said in a statement: "A Southfield, Michigan-headquartered bank holding company has agreed to plead guilty to securities fraud for filing false securities statements relating to its 2017 initial public offering and its 2018 and 2019 annual filings. According to a signed plea agreement that will be publicly filed in court, Sterling Bancorp was the holding company for its wholly owned subsidiary, Sterling Bank and Trust F.S.B. . Sterling - with branches located in San Francisco, Los Angeles, Seattle, New York, and Southfield - completed an IPO in 2017, and the Company's stock began trading on the NASDAQ exchange under the ticker symbol "SBT." "For years, Sterling originated residential mortgages that were rife with fraud to pad its bottom line and then lied about these loans in its IPO and subsequent public filings, defrauding unwitting investors," said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department's Criminal Division. "This proposed guilty plea reflects the nature and seriousness of the wrongdoing and demonstrates the Department of Justice's commitment to protecting the integrity of our public markets, holding corporations accountable for their criminal misconduct, and compensating victims for their losses." The largest portion of the Bank's loan portfolio was composed of residential mortgage loans. In or around 2011, the Bank established a residential mortgage loan program known as the Advantage Loan Program or ALP . Between 2011 and 2019, the Bank's employees and agents originated at least $5 billion in ALP loans. The Bank touted the ALP's flexible documentation requirements and fast underwriting and closing capabilities. The program required a minimum 35% down payment and charged higher rates and fees than generally were available elsewhere in the market, but it did not require submission of typical loan documentation, such as an applicant's tax returns or payroll records. "The consequences of this type of financial fraud scheme are damaging and far-reaching," said Assistant Director Luis Quesada of the FBI's Criminal Investigative Division. "The FBI and our law enforcement partners remain committed to protecting good-faith investors and safeguarding the integrity of our markets from companies that commit securities fraud." Reference Link | ||||
| Over a month ago | ||||
Reports Q4 CET1 capital… Reports Q4 CET1 capital ratio 23.01%. "The Company's fourth quarter and year-end results reflect a continuation of both the accomplishments and challenges that have characterized the last few years. The long-running saga of the Advantage Loan Program continues to be felt in the operating expense lines of our earnings. The institutional damage from this program has been far reaching, and we are finally beginning to enjoy the fruits of our labor. We have tried to right-size the balance sheet in order to maintain strong capital levels, improve margins and effectively utilize liquidity. The legal investigation and consultant costs have swamped our profitability in most quarters. We have been successful in building a strong internal control environment and carefully addressing a long list of deficiencies. Those successes were realized in the closure of the Formal Agreement entered into with the OCC in 2019. Nonetheless, the DOJ investigation remains ongoing and continues to occupy substantial time and resources. As promised, we continue to offer our full cooperation in their work and are hopeful for resolution. Unfortunately, we continue to have little visibility into the timing or outcome of their investigation," said Thomas O'Brien, chairman, president, and CEO. | ||||
| Over a quarter ago | ||||
Reports Q3 net… Reports Q3 net charge-offs .12%. Reports Q3 CET1 capital ratio 25.33% "Once more this quarter there are a lot of moving parts in our results, but the main headline is continued and significant improvements in virtually all phases of the Company's operations. Most importantly, as recently disclosed, Sterling and the OCC entered into a Consent Order wherein the Bank agreed to a $6.0 million civil money penalty. In that context and in recognition of the successful work in addressing the many regulatory issues and violations facing the Bank, the Formal Agreement from 2019 was lifted. These represent major milestones for the Bank and are the product of our aggressive approach to remediation and compliance. | ||||
Sterling Bancorp current… Sterling Bancorp current and former directors of the company. The substance of the derivative action was originally set forth in a demand letter from a purported shareholder of the company received on July 28, 2020. The company entered into and announced the settlement agreement on January 19, 2022. The settlement agreement provides for the Company's adoption and implementation of certain corporate governance reforms, many of which were already in progress and have now been completed, and the payment of attorneys' fees and expenses in exchange for the release of all defendants from all alleged claims. The full amount of the attorneys' fees and expenses due under the settlement will be paid by the Company's insurance carriers under applicable insurance policies. Although the Company and the individual defendants named in the complaint deny any and all allegations of wrongdoing alleged by the purported shareholder, the Demand Review Committee established by the Company's Board of Directors after it received the Shareholder Demand and the Company's Board of Directors believe that the settlement is the most efficient manner for resolving this matter. The court approval of the settlement represents the final disposition of this matter. "This final approval of the settlement is another in the important milestones for Sterling. The Board of Directors made their decision with a clear determination to focus the Company on putting legacy matters in the rearview mirror as prudently as possible. We are particularly pleased with the significant corporate governance enhancements that we have implemented over the past two years," said Thomas M. O'Brien, Chairman, President and Chief Executive Officer. | ||||
Sterling Bancorp, the… Sterling Bancorp, the thrift holding company for Sterling Bank and Trust, F.S.B., Southfield, Michigan, announced that the bank has entered into a consent order with the Office of the Comptroller of the Currency, or OCC, dated September 27, resolving the OCC's formal investigation relating to the bank's former residential loan product, marketed as the Advantage Loan Program, and related matters. Under the consent order, the bank has agreed to pay a civil money penalty of $6M. The civil money penalty will be applied against the previously accrued liability for contingent losses reflected on the company's consolidated balance sheet, which amounted to $15M as of June 30. The consent order represents a full and final settlement of the OCC's investigation with respect to the bank. Concurrent with the consent order, the OCC notified the bank that the formal agreement between the bank and the OCC entered on June 18, 2019, has been terminated. The OCC agreement primarily related to certain aspects of the bank's Bank Secrecy Act/Anti-Money Laundering compliance program and the bank's credit administration. "Today's announcement from the OCC represents a painful resolution of the long running regulatory fallout from the ill-fated Advantage Loan Program. The level of cooperation that we have provided and the comprehensive internal investigation have been critical to our building a reputation with our regulators that had been absent previously. In my tenure as CEO, the board of directors, management and staff have placed this extensive cooperation along with the remediation of all of the critical findings in the OCC Agreement and elsewhere as our primary focus. Our commitment and the ultimate success are evidenced by the termination of the OCC Agreement. As regulatory enforcement orders go, our remediation was all accomplished in very quick order especially given the severity of the findings and rebuilding required. I feel it is recognition of the extraordinary efforts by the entire Sterling team. The $6 million civil money penalty, while significant, is a clear reflection of our extraordinary cooperation and remediation efforts and represents another significant milestone in putting these legacy issues behind us. Notwithstanding these achievements and as noted above, we remain engaged with the DOJ on the criminal aspects arising from the Advantage Loan Program. At this point in time, we have no visibility into the potential terms or timing of any settlement with the DOJ. We will continue to provide full cooperation and hope resolution with Sterling will be forthcoming. Both the Bank and the Company remain eager to put this entire episode behind them as expeditiously as possible. It is, however, possible that the issues surrounding multiple individuals regarding their involvement with the fraud will continue well into the future," said Thomas O'Brien, Chairman, President and CEO. | ||||
Net Interest Income and… Net Interest Income and Net Interest Margin - Net interest income for the first quarter of 2022 was $21.3M compared to $21.7M for the fourth quarter of 2021 and $23.2M for the first quarter of 2021. The decline in net interest income was due primarily to a decline in the average balance of our loan portfolio of $170.9 million, or 8%, from $2.2 billion in the fourth quarter of 2021 to $2.0 billion in the first quarter of 2022, while the average balance of lower-yielding securities and other interest-earning liquid assets in the first quarter of 2022 increased $17.7 million, or 2%, to $802.8 million compared to $785.1 million in the fourth quarter of 2021. The overall decline in interest income on interest earning assets was partially offset by a decrease in interest expense since our average rate paid on interest-bearing deposits declined from 0.47% in the fourth quarter of 2021 to 0.43% in the first quarter of 2022. Our average interest-bearing deposits decreased $58.6 million in the first quarter of 2022 from $2.2 billion in the fourth quarter of 2021. Additionally, total average interest-bearing liabilities decreased in the first quarter of 2022 due to our repayment of borrowings of $157.0 million with the FHLB in the fourth quarter of 2021. The net interest margin of 3.03% for the first quarter of 2022 increased compared to 2.94% for the fourth quarter of 2021 and 2.45% for the first quarter of 2021. The increase in our net interest margin in the first quarter of 2022 was favorably impacted by an increase in the average rate on interest earning assets of 4 basis points and a decrease in the cost of average interest-bearing liabilities of 4 basis points, each as compared to the immediately prior quarter. The increase in the average rate on interest earning assets in the first quarter of 2022 related to interest collected from nonperforming commercial real estate loans and construction loans. ."Sterling's first quarter of 2022 produced several improvements and milestones. Most importantly, our credit quality metrics continue the improvement that we have witnessed over the past few quarters. This was accomplished by both the continued hard work of our credit loss mitigation efforts and the successful sale of higher risk single room occupancy loans with original balances of approximately $62 million. Additionally, we continued to make meaningful progress on resolving the multiple regulatory matters as contained in our Formal Agreement with the OCC. The volume of remedial work remains substantial but the progress to date has been significant," said Thomas M. O'Brien, Chairman, President, and Chief Executive Officer. | ||||
Sterling Bancorp, the… Sterling Bancorp, the holding company of Sterling Bank and Trust, F.S.B., announced that it has revised its unaudited financial results for its fourth quarter and year ended December 31, 2021 in connection with the filing of its Annual Report on Form 10-K. "Subsequent to the company's press release issued on February 3, 2022, the company entered into an agreement with a third-party purchaser to sell a pool of its commercial real estate loans. The loans had been reclassified as held for sale and written down to fair value as of year-end. The company later determined that the timing of the measurement of the commercial real estate loans at fair value relative to their sale indicated the estimated fair value of the loans at year-end should have been higher. Accordingly, the company has revised its fair value estimate of the sold commercial real estate loans to correspond to their sale price. The net result of this change was to increase net income for the three months and year ended December 31, 2021 to $8.1M and $23.4M, respectively. The revision of the fair value of the sold loans at year-end also results in changing our allowance for loan losses at December 31, 2021 to $56.5M and our provision, or recovery, for loan losses to ($6.1M) and ($8.3M) for the three months and year ended December 31, 2021, respectively," the company stated. The revised fourth quarter net income of $8.1M equates to 16c per diluted share, Sterling Bancorp stated. | ||||
