Tom O’Brien has turned around and sold another bank.
EverBank in Jacksonville, Fla., agreed to buy Sterling Bank and Trust in Southfield, Mich., in an all-stock deal valued at $261 million. The sale is expected to close in the first quarter.
Sterling, as a condition of the deal, will sell its $373 million portfolio of residential tenant-in-common mortgage loans to Bayview Acquisitions. Trusts and family trusts that own about 38% of Sterling’s stock agreed to commit their shares to support the sale.
Sterling Bancorp will dissolve.
The board “has been considering various strategic initiatives for several years,” including hiring an investment bank in 2022, O’Brien, Sterling’s chairman, president and CEO, said in a press release. “Our strategic process was significantly extended over time as this has been the environment in which we have been operating and evaluating our options.”
Keefe, Bruyette & Woods and Arnold & Porter Kaye Scholer advised Sterling, while Hovde Group, provided additional financial advisory services to the company’s board.
Issues surfaced with Sterling’s low-documentation mortgage program in 2019. In June 2019, Sterling agreed to a formal agreement with the OCC tied to Bank Secrecy Act and anti-money laundering compliance. The OCC claimed that the bank originated numerous loans that were based on false or fraudulent loan information.
Sterling fired several employees and abruptly discontinued the mortgage program in December 2019 after discovering alleged fraud – a move that created a significant revenue hole.
The company hired O’Brien in mid-2020. He closed branches, returned Sterling to profitability and started working on resolving regulatory and legal issues.
Sterling agreed in September 2022 to pay a $6 million civil money penalty to the OCC and a $12.5 million payment to address a class-action lawsuit. At that time, it was freed from the 2019 written agreement.
Sterling then agreed to pay $27.2 million in restitution to non-insider shareholders as part of a plea agreement with the Justice Department. It also agreed to further enhance its compliance program and internal controls.