Sterling Bancorp in Southfield, Mich., has implemented numerous governance measures to resolve a shareholder demand for change.
The $3.1 billion-asset company said in a press release Friday that the settlement of the July 2020 shareholder action will also include payment of the shareholder’s attorneys’ fees and expenses in exchange for the release of all defendants from all alleged claims.
Sterling noted that it had appointed three independent directors since July 28, adding that the shareholder’s demand “was a substantial factor” for those additions.
The company has also created the roles of chief risk officer, who will report to the CEO, and a chief compliance officer, who will report to the CRO.
The company formed a disclosure committee that includes the CEO, chief financial officer, controller, general counsel and CRO to go over all public announcements. It also created a board-level risk committee and an ethics and compliance committee.
Sterling said its CRO and CCO are supervising the creation of a rigorous training and compliance program, which will be mandatory for all directors and employees.
Sterling has been operating under a formal agreement with the Office of the Comptroller of the Currency since June 2019 tied to Bank Secrecy Act and anti-money laundering compliance.
The company fired several employees and abruptly discontinued a low-documentation mortgage program in December 2019 after discovering alleged fraud. Suspension of the program created a significant revenue hole for Sterling.
Thomas Lopp, who was named CEO shortly before the mortgage program was discontinued, resigned in May 2020, citing health reasons. A month later, Sterling hired Thomas O’Brien, a veteran turnaround expert, as CEO.
O’Brien has since closed some branches, returned Sterling to profitability and settled a shareholder lawsuit alleging that disclosures about the company’s residential lending practices violated federal securities laws.