About Sterling Bancorp

Sterling Bancorp operates as the bank holding company for Sterling National Bank that provides commercial, business, and consumer banking products and services to business owners, their families and consumers. The company serves the Greater New York metropolitan region and targets various geographic markets, such as the New York Metro Market, which includes Manhattan, the boroughs and Long Island; and the New York Suburban Market, which consists of Rockland, Orange, Sullivan, Ulster and Westchester counties in New York and Bergen County in New Jersey. The company also operates its commercial finance businesses, which target markets across the U.S. and includes asset-based lending (ABL), payroll financing, factoring, warehouse lending, equipment financing, and public sector financing. The company’s principal business is accepting deposits and investing those deposits, together with funds generated from operations and borrowings, in various types of loans and securities. As of December 31, 2020, the company conducted its business through 76 full-service retail and commercial financial centers, which serve the New York Metro Market and the New York Suburban Market, 40 of which are owned and 36 of which are leased. Its financial centers are located in Nassau and Suffolk counties on Long Island, in the boroughs of Manhattan, Westchester and Rockland County, all of which are in New York. The company also has one office in New Jersey. Portfolio Loans The company’s commercial banking teams focus on the origination of commercial and industrial (C&I) loans and commercial real estate loans, including multi-family mortgages. It also originates residential mortgage loans and consumer loans, such as home equity lines of credit, homeowner loans and personal loans. Traditional C&I Lending: The company makes various types of secured and unsecured C&I loans to small and medium-sized businesses in its market area, including loans collateralized by assets, such as accounts receivable, inventory, marketable securities, other liquid collateral, equipment and other assets. The terms of these loans generally range from less than one year to seven years. The loans are either structured on a fixed-rate basis or carry adjustable interest rates indexed to a lending rate that is determined internally, or a short-term market rate index. The company provides ABL loans to businesses on a national basis. ABL loans are secured with a blanket lien over accounts receivable, inventory, machinery and equipment or real estate. The terms of these loans are generally, one to five years. The loans carry adjustable interest rates indexed to a lending rate that is determined internally, or a short-term market rate index. Payroll Finance Lending: The company provides financing and business process outsourcing, including full back-office, technology and tax accounting services, to temporary staffing companies nationwide. Loans are typically used by its clients to fund their employee payroll and are outstanding on average for 40 to 45 days. Warehouse Lending: The company provides residential mortgage warehouse funding facilities to non-bank mortgage origination companies. These loans consist of a line of credit used as temporary financing during the period between the closing of a mortgage loan until its sale into the secondary market, which on average, occurs within 20 days of closing. It provides warehouse lines generally ranging from $15.0 million to $250.0 million. The warehouse lines are collateralized by high quality first mortgage loans, which include mainly Agency (Fannie Mae and Freddie Mac), government (FHA and VA), and non-agency (Jumbo) mortgage loans. Factored Receivables Lending: The company provides accounts receivable management services. The purchase of a client’s accounts receivable is traditionally known as ‘factoring’ and results in payment by the client of a factoring fee, which is generally a percentage of the factored receivables or sales volume, and is designed to compensate it for the bookkeeping and collection services provided, and if applicable, its credit review of the client’s customer and the assumption of credit risk related to that end customer. Equipment Finance Lending: The company offers equipment financing nationally through direct lending programs, third-party sources and vendor programs. In 2019, the company completed the Santander Portfolio Acquisition (the acquisition of an equipment finance loan and lease portfolio consisting of equipment finance loans, sales-type leases and operating leases by the Bank from Santander), which included a geographically diverse portfolio of loans and leases collateralized by equipment and vehicles; and the Woodforest Portfolio Acquisition (the commercial loan portfolio consisting of equipment finance loans and leases and asset-based lending loans acquired by the Bank from Woodforest), which included loans collateralized by transportation, construction, industrial and other assets. Its equipment finance lending mainly includes full payout term loans and secured loans for various types of business equipment, with terms generally ranging from two to five years. Public Sector Finance: The company originates loans to state, municipal and local government entities on a national basis. Public sector finance loans are either secured by equipment or are obligations that are backed by the ability to levy taxes, or collect essential service user fees, either generally or associated with a specific project. All loans in this portfolio are fixed rate and fully amortizing and the majority are tax exempt. Commercial Real Estate (CRE) and Multi-Family Lending: The company originates CRE loans secured predominantly by first liens on CRE and multi-family properties. The underlying collateral of its CRE and multi-family loans consists of multi-family properties, office buildings, retail properties (including shopping centers and strip malls), co-ops, nursing homes, hotels, motels or restaurants, warehouses, schools and industrial complexes. To a lesser extent, the company originates CRE loans for recreation, medical use, land, gas stations, not for profit and other categories. Substantially all of its CRE loans are secured by properties located in its primary market area. The majority of the company’s originated CRE and multi-family loans have terms that range from five to ten years and are structured as five-year fixed rate loans with a rate adjustment for the second five-year period; or as ten-year fixed-rate loans. Amortization on these loans is typically based on 20- to 25-year terms with balloon maturities generally in five or ten years. Acquisition, Development and Construction (ADC) Lending: The company originates construction loans to well qualified borrowers in its primary market area and in connection with its affordable housing tax credit investments nationally. The company provides permanent mortgage financing on most of its construction loans on income-producing property. The repayment of ADC loans generally depends on the sale of the property to third parties or the availability of permanent financing upon completion of all improvements. Residential Mortgage Lending: The company originates residential mortgage loans in the Greater New York metropolitan area. Its portfolio includes conforming and non-conforming, fixed-rate adjustable rate mortgage (ARM) loans with maturities up to 30 years and maximum loan amounts generally up to $4.0 million, which are fully amortizing with monthly or bi-weekly loan payments. ARM loan products are secured by residential properties with rates that are fixed for a period ranging from six months to ten years. In connection with the Astoria Financial Corporation Merger, the company acquired residential mortgage loans originated in 2010 or earlier that are interest-only ARM loans with terms of up to forty years, which have an initial fixed rate for five or seven years and convert into one year interest-only ARM loans at the end of the initial fixed rate period. The company requires title insurance on all of its residential mortgage loans, and also requires that borrowers maintain fire and extended coverage or all risk casualty insurance (if appropriate, flood insurance) in an amount at least equal to the loan balance or the replacement cost of the improvements. Consumer Lending: The company originates a variety of consumer loans, including homeowner loans, home equity lines of credit, new and used automobile loans, and personal unsecured loans, including fixed-rate installment loans and variable lines of credit. It offers fixed-rate, fixed-term second mortgage loans, referred to as homeowner loans. It also offers adjustable-rate home equity lines of credit secured by junior liens on residential properties. Investment Securities As of December 31, 2020, the company’s investment securities included residential mortgage-backed securities (MBS), including agency-backed and CMO/other MBS; and federal agencies, corporate bonds, and state and municipal securities. Deposits As of December 31, 2020, the company’s deposits included non-interest bearing demand deposits; and interest bearing demand deposits, such as savings accounts, money market accounts, and certificates of deposit. Strategy The key elements of the company's strategy are to target specific ‘high value’ client segments and industry sectors; deploy a single point of contact, relationship-based distribution strategy through its commercial banking teams, business banking teams and financial centers, in which its colleagues are directly responsible for managing all aspects of the client relationship and experience; augment its distribution and client coverage strategy with a contemporary digital product and service offering that provides its commercial and consumer clients with the flexibility to self-serve or interact with it through various channels; expand into new technology-enabled, growth-oriented business verticals, including direct banking offerings and leverage its platform and technology to provide banking to other financial services providers; invest in technology to build a robust operating platform that uses artificial intelligence and related automation tools; create a high productivity culture through differentiated compensation programs based on a pay-for-performance philosophy; and maintain and continue to enhance its strong risk management systems and proactively manage enterprise risk. Supervision and Governmental Regulation As a bank and a financial holding company, the company is regulated under the Bank Holding Company Act of 1956, and its subsidiaries are subject to inspection, examination and supervision by the Board of Governors of the Federal Reserve System (FRB) as its primary federal regulator. As a national bank, the bank is principally subject to the supervision, examination and reporting requirements of the Office of the Comptroller of the Currency, as its primary federal regulator, as well as the Federal Deposit Insurance Corporation (FDIC). Further, because the bank’s total assets exceed $10 billion, it is also subject to the Consumer Financial Protection Bureau supervision. Substantially all of the deposits of the bank are insured up to applicable limits by the Deposit Insurance Fund (DIF) of the FDIC, and the bank is subject to deposit insurance assessments to maintain the DIF. The Dodd-Frank Wall Street Reform and Consumer Protection Act requires the federal bank regulatory agencies and the Securities and Exchange Commission to establish joint regulations or guidelines that apply to the company and the bank and prohibit incentive-based payment arrangements at specified regulated entities that encourage inappropriate risk takings by providing an executive officer, employee, director or principal shareholder with excessive compensation, fees, or benefits or that could lead to material financial loss to the entity. The bank received a rating of ‘satisfactory’ in its most recent Community Reinvestment Act of 1977 exam, which was conducted in 2020. Transactions between the bank and its affiliates are regulated by the FRB under sections 23A and 23B of the Federal Reserve Act and related FRB regulations. The bank is a member of the Federal Home Loan Bank System. As a member of the Federal Home Loan Bank of New York (FHLB), the bank is required to acquire and hold shares of capital stock of the FHLB in an amount at least equal to the sum of the membership stock purchase requirement, determined on an annual basis at the end of each calendar year, and the activity-based stock purchase requirement, determined on a daily basis. The bank is subject to federal consumer protection statutes and regulations promulgated under those laws, including the Truth-In-Lending Act and Regulation Z, governing disclosures of credit terms to consumer borrowers; the Home Mortgage Disclosure Act and Regulation C, requiring financial institutions to provide certain information about home mortgage and refinanced loans; the Equal Credit Opportunity Act and Regulation B, prohibiting discrimination on the basis of race, creed, or other prohibited factors in extending credit; the Fair Credit Reporting Act and Regulation V, governing the provision of consumer information to credit reporting agencies and the use of consumer information; and the Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies. History Sterling Bancorp, a Delaware corporation, was founded in 1888.