DEFM14A: Sterling Bancorp to be Acquired by EverBank in $261 Million Deal, Dissolution Planned

Sterling Bancorp, Inc. announces a definitive agreement to be acquired by EverBank Financial Corp for $261 million, leading to the dissolution of Sterling Bancorp after the sale.

Summary

• Sterling Bancorp, Inc. (Sterling), Sterling Bank and Trust, F.S.B. (the Bank), and EverBank Financial Corp (EverBank) have entered into a definitive stock purchase agreement.
• EverBank will purchase all of the issued and outstanding shares of capital stock of the Bank from Sterling for a fixed purchase price of $261,000,000.
• Following the sale, EverBank will merge the Bank with and into EverBank, National Association.
• Sterling intends to dissolve under Michigan law following the closing of the sale.
• Shareholders will receive cash distributions, with an initial distribution expected shortly after the sale and a final distribution after Sterling's wind down.
• Sterling intends to voluntarily delist its common stock from Nasdaq and deregister with the SEC.
• The closing of the sale is expected in the first quarter of 2025, subject to shareholder and regulatory approvals.
• An initial distribution of approximately $4.89 per share is expected.

Sentiment

Score: 6

Explanation: The sentiment is neutral. While the acquisition provides a cash exit for shareholders, it also involves dissolution and a discount to the recent trading price. The document presents both positive and negative aspects of the transaction.

Positives

• The transaction provides a fixed cash purchase price of $261 million.
• Shareholders will receive cash distributions.
• The Board of Directors believes that entering into the Stock Purchase Agreement with EverBank at this time and subsequently winding down and dissolving the Company is the best strategic alternative for the Company's shareholders.
• The Company does not expect there to be any issues in obtaining the required regulatory approvals.

Negatives

• The expected initial distribution of approximately $4.89 per share represents an approximate 14.4% discount to the closing price of the Company's shares on September 13, 2024 and an approximate 9.9% discount to the closing price on the day the exclusivity agreement was signed.
• The final cash distribution is subject to first completing the wind down of Sterling and paying or providing for Sterlings creditors and existing and reasonably foreseeable debts, liabilities, and obligations in accordance with Michigan law and the Plan of Dissolution.
• The amount of cash to be reserved for Transaction costs, wind down expenses and known and contingent liabilities is preliminary and cannot be finalized until much closer to closing.
• The Board has legal obligations under Michigan law to set aside monies for both known and contingent liabilities, so there is a significant possibility that the final cash reserve will differ materially from the estimates that have been prepared.

Risks

• The announcement and pendency of the Transaction may adversely affect our business, financial condition, and results of operations.
• Regulatory approvals may not be received, may take longer than expected, or may impose conditions that are not presently anticipated.
• The Stock Purchase Agreement may be terminated in accordance with its terms, and the Transaction may not be completed.
• We will be subject to business uncertainties and contractual restrictions while the Transaction is pending.
• The Stock Purchase Agreement contains provisions that could discourage a potential competing acquiror that might be willing to pay more to acquire or merge with us.
• Shareholder litigation could prevent or delay the completion of the Transaction or otherwise negatively impact our business and operations.
• We cannot assure you as to the timing, amount, or number of distributions, if any, to be made to our shareholders.
• Our shareholders may be liable to third parties for part or all of the amount received from us in our liquidating distributions if cash reserves are inadequate.
• The loss of key personnel could adversely affect our ability to efficiently dissolve, delist, liquidate, and wind down.

Future Outlook

Sterling Bancorp anticipates closing the transaction in the first quarter of 2025, subject to customary conditions, and then dissolving, with cash distributions to shareholders.

Management Comments

• The Board ultimately determined there was no practical way to pursue any form of stand-alone independent operations given the extremely high costs required and multiple years needed to execute a new strategic vision.
• The financial risks and potential need for a dilutive equity raise make pursuing a stand-alone strategy impractical given prevailing economic conditions and the lack of a robust capital market for community banks.
• Accordingly, the Board believes that entering into the Stock Purchase Agreement with EverBank at this time and subsequently winding down and dissolving the Company is the best strategic alternative for the Company's shareholders.

Industry Context

The announcement comes amid ongoing consolidation in the banking industry, with EverBank seeking to expand its presence and Sterling facing challenges as a standalone entity.

Comparison to Industry Standards

• The document does not provide enough information to make a detailed comparison to industry standards.
• However, the document does mention that KBW compared the financial performance and financial condition of the Company, the Bank and 15 major exchange-traded U.S. banks with total assets between $1.5 billion and $4.0 billion and latest 12 months (LTM) core return on average assets less than 0.50%.
• KBW also reviewed publicly available information related to 15 U.S. bank transactions announced since January 1, 2023 with deal values between $150 million and $750 million.

Stakeholder Impact

• Shareholders will receive cash distributions but will no longer own shares in a publicly traded company.
• Employees face uncertainty regarding their future employment with EverBank.
• Customers may experience changes in services and operations as the Bank is integrated into EverBank.

Next Steps

• Shareholder vote on the Stock Purchase Agreement and Plan of Dissolution.
• Obtain required regulatory approvals.
• Close the transaction.
• Voluntarily delist from Nasdaq and deregister with the SEC.
• Wind down operations and distribute remaining assets to shareholders.

Key Dates

Keywords

acquisition, dissolution, EverBank, Sterling Bancorp, stock purchase agreement, merger, bank