8-K: Sterling Bancorp to be Acquired by EverBank Financial Corp for $261 Million

Sterling Bancorp, Inc. has agreed to be acquired by EverBank Financial Corp in a deal valued at $261 million, which will result in the dissolution of Sterling Bancorp.

Summary

• Sterling Bancorp, Inc. has entered into a definitive agreement to sell its bank subsidiary, Sterling Bank and Trust, F.S.B., to EverBank Financial Corp for a fixed price of $261 million.
• Following the sale, Sterling Bank and Trust will merge into EverBank, National Association.
• The transaction is subject to shareholder approval, regulatory approvals, and other customary closing conditions.
• A special meeting of stockholders will be held to seek approval of the purchase agreement and related transactions.
• The agreement includes a termination fee of $9.135 million payable by Sterling under certain circumstances.
• Sterling has also agreed to sell its portfolio of residential tenant-in-common loans to an affiliate of Bayview Asset Management for $372,880,890 as of June 30, 2024.
• Sterling Bancorp plans to dissolve after the sale, distributing remaining assets to shareholders after settling all liabilities.

Sentiment

Score: 7

Explanation: The document outlines a strategic acquisition and dissolution plan, which is generally positive for shareholders seeking an exit. However, the presence of termination fees and the need for regulatory approvals introduce some uncertainty.

Positives

• The acquisition provides a clear exit strategy for Sterling Bancorp and its shareholders.
• The sale of the loan portfolio to Bayview provides additional liquidity.
• The fixed purchase price of $261 million provides certainty for Sterling Bancorp.
• The plan of dissolution allows for the distribution of remaining assets to shareholders after all liabilities are settled.

Negatives

• The transaction is subject to various approvals and conditions, which could delay or prevent the closing.
• Sterling Bancorp will incur a termination fee of $9.135 million if the deal is terminated under certain circumstances.
• The company will cease to exist after the dissolution, which may be a negative for some stakeholders.
• The sale of the loan portfolio is subject to conditions, including the receipt of Shareholder Approval and Regulatory Approvals.

Risks

• The transaction may not close if shareholder or regulatory approvals are not obtained.
• The deal could be terminated if certain conditions are not met, potentially resulting in a termination fee for Sterling.
• There is a risk that the average daily closing balance of the Banks deposits may fall below 85% of the July 31, 2024 level, which could prevent the transaction from closing.
• The company's dissolution plan is subject to shareholder approval and may not be completed as planned.

Future Outlook

The document includes forward-looking statements regarding the company's plans, expectations, and outlook for the future, but cautions that these statements are subject to risks and uncertainties.

Management Comments

• The Purchase Agreement was unanimously approved and adopted by the board of directors of the Company.
• The Company plans to hold a special meeting of stockholders to seek approval of the Purchase Agreement and the transactions contemplated therein.

Industry Context

This acquisition reflects a trend of consolidation within the financial services industry, where larger institutions acquire smaller ones to expand their market presence and capabilities. The sale of the loan portfolio to Bayview is also a common practice for banks looking to reduce risk and improve their balance sheets.

Comparison to Industry Standards

• The acquisition of Sterling Bancorp by EverBank is similar to other bank mergers where a larger entity acquires a smaller one to expand its footprint and market share.
• The sale of the loan portfolio to Bayview is a common practice in the banking industry to manage risk and improve capital ratios, similar to other banks selling off non-core assets.
• The termination fee of $9.135 million is within the typical range for transactions of this size in the financial sector.
• The requirement for regulatory approvals from the Federal Reserve and the OCC is standard for bank mergers and acquisitions, similar to other transactions in the industry.

Legal Proceedings

• The Company agrees to indemnify EverBank from all losses relating to or arising out of or resulting from breaches of any covenant or agreement by the Company or the Bank contained in the Purchase Agreement and any transaction expenses, shareholder claims and any other liabilities, obligations and commitments arising as a result of the Company being a publicly traded company or being subject to the Plea Agreement with the U.S. Department of Justice and the Plan of Dissolution.

Stakeholder Impact

• Shareholders will receive a distribution of remaining assets after the dissolution.
• Employees of Sterling Bank and Trust will likely become employees of EverBank, National Association.
• Customers of Sterling Bank and Trust will become customers of EverBank, National Association.
• Creditors of Sterling Bancorp will be paid or have provisions made for their debts.

Next Steps

• Sterling will file proxy materials with the SEC for a special meeting of stockholders.
• Shareholders will vote on the approval of the Purchase Agreement and the Plan of Dissolution.
• Regulatory approvals will be sought from the Federal Reserve and the OCC.
• The sale of the loan portfolio to Bayview will be completed.
• Sterling Bancorp will dissolve after the sale, distributing remaining assets to shareholders.

Key Dates

Keywords

acquisition, merger, bank, financial services, dissolution, stock purchase agreement, regulatory approvals, shareholder approval, mortgage loans, capital stock