DEF 14A: Sterling Bancorp Sets Date for 2024 Annual Shareholder Meeting, Outlines Key Proposals

Sterling Bancorp will hold its 2024 annual shareholder meeting virtually on May 16, 2024, to vote on director elections, executive compensation, and the ratification of its accounting firm.

Summary

• Sterling Bancorp will hold its 2024 annual meeting of shareholders virtually on May 16, 2024, at 1:00 p.m. Eastern Time.
• Shareholders will vote on the election of directors, an advisory vote on executive compensation for 2023, and the ratification of Crowe LLP as the company's independent registered public accounting firm for the year ending December 31, 2024.
• The board of directors recommends voting FOR the director nominees, FOR the executive compensation proposal, and FOR the ratification of Crowe LLP.
• The record date for determining shareholders eligible to vote is March 21, 2024.
• As of the record date, there were 50,844,402 shares of common stock issued and outstanding and entitled to vote.
• The proxy statement is being mailed on or about April 4, 2024.
• Shareholders can attend, vote, and submit questions virtually at www.virtualshareholdermeeting.com/SBT2024 using a 16-digit control number.
• The company is utilizing virtual shareholder meeting technology to provide ready access and cost savings for shareholders.
• The board of directors met thirteen (13) times in 2023.
• The board of directors of the bank met eleven (11) times in 2023.

Sentiment

Score: 6

Explanation: The document is neutral to slightly positive. While it details past legal issues and financial penalties, it also highlights the company's efforts to resolve these issues and improve its compliance program. The restructuring of executive compensation and focus on long-term incentives are also positive signals.

Positives

• The company is resolving major regulatory investigations, including a Plea Agreement with the Department of Justice.
• The SEC concluded its investigation of the company and does not intend to recommend an enforcement action.
• The company completed the sale of $43.5 million of nonperforming and chronically delinquent residential real estate loans.
• The company completed its redemption of all $65 million of its Subordinated Notes, which bore interest at 11% at the time of redemption.
• The Banks election to become a covered savings association in accordance with federal banking law became effective, allowing us to operate as a commercial bank without being subject to the Qualified Thrift Lender Test that otherwise had required us to hold a substantial portion of our balance sheet in mortgage related assets.
• The company has enhanced its training and compliance program, which is being implemented and supervised by the Companys Chief Risk Officer and Chief Compliance Officer.
• The company has a clawback policy in place to recoup certain cash and equity incentive compensation from executive officers in the event of an accounting restatement or detrimental conduct.

Negatives

• The company paid a civil money penalty of $6.0 million as part of a Consent Order with the OCC.
• The company paid $27.2 million in restitution for the benefit of non-insider victim shareholders as part of a Plea Agreement with the DOJ.
• The company pleaded guilty to one count of securities fraud primarily relating to disclosures with respect to the Advantage Loan Program contained in the Company's filings with the SEC.
• The company is still facing costs and requirements of ongoing compliance efforts and increased regulatory expectations.
• The company is still facing continued requests for reimbursement of third party costs associated with government investigations of individuals.
• The company is still working to reduce the volume of classified loans.
• The company is still facing margin pressure from the prevailing higher interest rate environment.

Risks

• The company faces strategic planning challenges in the face of an uncertain economic environment for financial institutions.
• There are inherent limitations to the company's risk management strategies as there may exist, or develop in the future, risks that the company may not have appropriately anticipated or identified.
• The company is involved in ongoing litigation against its founder and controlling shareholder, with no assurance of a successful outcome.
• The company is required to review, test, and update its compliance program and internal controls, policies, and procedures and report back to the DOJ periodically for the period ending three years from the date of the Plea Agreement.

Future Outlook

The company is focused on strategic planning in the face of an uncertain economic environment for financial institutions, including the development of new products and restoring the Companys financial standing.

Management Comments

• The DOJ noted that the current management and Board fully cooperated with the investigation.

Industry Context

The announcement reflects ongoing efforts by financial institutions to address regulatory scrutiny and enhance compliance programs, particularly in the areas of BSA/AML and lending practices. The resolution of investigations and remediation of compliance issues are common themes in the banking industry.

Comparison to Industry Standards

• The peer groups used for executive compensation analysis include Bank of Marin Bancorp, First Foundation Inc., Hanmi Financial Corporation, Heritage Commerce Corp, Heritage Financial Corporation, Mercantile Bank Corporation, Northfield Bancorp, Inc., RBB Bancorp, Sierra Bancorp, TriCo Bancshares, Waterstone Financial, Inc., Westamerica Bancorporation, Banc of California, Inc., Banner Corporation, Brookline Bancorp Inc., Central Pacific Financial Corp., CVB Financial Corp., Flushing Financial Corp, Lakeland Bancorp Inc., Luther Burbank Corporation, National Bank Holdings Corporation, Peapack-Gladstone Financial Corporation, Washington Federal, Inc.
• The assets of the banks in the Historical Peer Group range from approximately $2.1 billion to approximately $13.6 billion as of March 31, 2023.
• The assets of the banks in the New Peer Group range from approximately $5.5 billion to approximately $22 billion as of March 31, 2023.

Management Changes

Corporate Governance

Legal Proceedings

• The Company entered into a Consent Order with the OCC, resolving the OCC's investigation, and paid a civil money penalty of $6.0 million.
• The United States District Court for the Eastern District of Michigan approved the Company's Plea Agreement with the Department of Justice (DOJ), resolving the DOJ's investigation focused on the Bank's Advantage Loan Program and related issues.
• The sentence issued by the court required the Company to pay $27.2 million in restitution for the benefit of non-insider victim shareholders; further enhance its compliance program and internal controls with respect to securities law compliance; and provide periodic reports to the DOJ with respect to compliance matters.
• The Company and the Bank commenced an action against the Bank's founder and controlling shareholder, alleging breach of fiduciary duties.

Related Party Transactions

• There were no related party transactions during the year ended December 31, 2023 required to be reported under Item 401(a) of Regulation S-K of the Exchange Act.

Stakeholder Impact

• Shareholders are encouraged to participate in the annual meeting and vote on key proposals.
• Employees are subject to enhanced training and compliance programs.
• The company's actions aim to restore its financial and regulatory standing, which benefits all stakeholders.
• The company is committed to strong corporate governance and social responsibility, which is essential to the long term success of the Company.

Next Steps

• Shareholders are encouraged to vote on the proposals outlined in the proxy statement.
• The company will hold its annual meeting on May 16, 2024.
• The company will continue to implement and monitor its compliance program.
• The company will continue to pursue its litigation against its founder and controlling shareholder.

Key Dates

Keywords

annual meeting, proxy statement, directors, executive compensation, Crowe LLP, audit, compliance, risk management, governance, shareholders