Sterling Bancorp Reports $2.1 Million Net Income Decline, Enters Sale Agreement for Subsidiary

Sterling Bancorp, Inc. reported a net income of $2.1 million for the year ended December 31, 2024, a decrease of $5.3 million compared to the $7.4 million reported in 2023. This decline stemmed primarily from an $8.5 million decrease in net interest income and a $1.7 million decrease in non-interest income, partially offset by a $3.9 million reduction in non-interest expenses. The net interest margin compressed to 2.37% in 2024, down from 2.68% in 2023. Total deposits increased by 3% to $2.1 billion, while loans decreased by 14% to $1.2 billion, reflecting the suspension of residential loan originations in early 2023. Cash and due from banks increased significantly by 52% to $878.2 million.

The company's loan portfolio saw a shift in composition. Residential real estate loans decreased by 22% to $849.4 million, while commercial real estate loans increased by 25% to $296.5 million. Nonperforming assets increased to $14.6 million, up from $9.0 million in 2023, primarily due to an increase in nonaccrual loans. The allowance for credit losses decreased to $20.8 million (1.80% of total loans) from $29.4 million (2.18% of total loans) in 2023. The company's Tier 1 leverage capital ratios for both the company and the bank remained above the minimum requirements to be considered well-capitalized.

On September 15, 2024, Sterling Bancorp entered into a definitive stock purchase agreement to sell its subsidiary, Sterling Bank and Trust, F.S.B., to EverBank Financial Corp for $261 million. Simultaneously, a mortgage loan purchase agreement was signed with Bayview Acquisitions LLC for the sale of the Bank's residential tenant-in-common loans. The company's board of directors also approved a plan of dissolution, contingent on the successful completion of the sale. Shareholder approval for the sale and dissolution was obtained on December 18, 2024, with the transaction expected to close in the second quarter of 2025, subject to regulatory approvals. As of March 13, 2025, the OCC approved the transaction; however, Federal Reserve approval is still pending.

The company's employee count decreased to 216 full-time and seven part-time employees at the end of 2024, a net reduction of 32 employees from the previous year. This reduction was attributed to planned reductions for efficiency, expected attrition following the sale announcement, and voluntary resignations due to a competitive job market. The company also detailed its cybersecurity risk management strategy, including its information security program, incident response plan, and third-party risk management program. The company noted that it had experienced cybersecurity incidents in the past, but none had materially affected its business.

The 10-K filing also included a discussion of various risks, including those related to the pending transaction, the plan of dissolution, economic conditions, credit risk, interest rate risk, liquidity, regulatory changes, competition, and operational risks. The filing further detailed the company's compliance with various regulations, including those related to the Community Reinvestment Act, fair lending laws, and capital requirements. The company stated that it is currently disqualified from certain safe harbor exemptions under the federal securities laws due to a prior guilty plea and criminal conviction. The company is seeking a waiver from these disqualifications.