EverBank Financial Corp. is set to buy Sterling Bank & Trust, a wholly owned subsidiary of Southfield, Michigan-based Sterling Bancorp, for $261 million, the banks announced Monday.
The Jacksonville, Florida-based bank formerly known as TIAA Bank will acquire 24 Sterling Bank branches in California and one in New York City, along with $900 million in loans and $2 billion in deposits.
The deal is subject to Sterling shareholder and regulatory approval and expected to close in the first quarter of 2025.
“This acquisition will significantly accelerate our efforts to expand EverBank's footprint in the California market, where we recently opened a West Coast headquarters in Irvine and will soon open new financial centers in Roseville and Encino,” EverBank CEO Greg Seibly said in a prepared statement. “The addition of Sterling Bank's branches in the San Francisco Bay area and in metro Los Angeles/Orange County will enable us to deliver our value-added products and services to even more California consumer and commercial clients.”
An EverBank spokesperson told Banking Dive that the opening of its West Coast hub and the Sterling deal, though months apart, were unrelated to each other.
Sterling Bancorp, meanwhile, adopted a plan of dissolution that will follow the deal’s closing.
Sterling CEO Thomas O’Brien said in a prepared statement that the board has been considering “various strategic initiatives” for several years to allow the bank to maintain some independent operations. Then, in March 2023, when the bank was finalizing a settlement with the Justice Department after pleading guilty to $69 million in securities fraud, Signature and Silicon Valley Bank collapsed.
“Consequently, our strategic process was significantly extended over time as this has been the environment in which we have been operating and evaluating our options,” said O’Brien, who took the helm in 2020 to lead remediation efforts.
“Ultimately, Sterling’s board of directors determined that there was no practical way to pursue any form of stand-alone independent operations given the extremely high costs required and the multiple years needed to execute a new strategic vision without risking ongoing losses and substantial loss of capital,” he said. “The financial risk and potential need for a dilutive equity raise made those options impractical.”
Sterling sought a transaction that would be fully funded, not raise regulatory concern and provide shareholders with an attractive consideration. Various combinations prior to the EverBank deal didn’t work, O’Brien said.
“In EverBank, we believe that we have found solutions to each of those corporate imperatives. EverBank has been cooperative and forthcoming in all of our negotiations and we have confidence in their ability to execute the transaction in a timely fashion,” O’Brien said. “EverBank has both the cash and capital to execute without need of further financing and we do not anticipate unusual delays in the regulatory approval process.”
Two Sterling assets won’t be going to EverBank: its $372.9 million portfolio of residential tenant-in-common mortgage loans, which will be sold to Delaware-based Bayview Acquisitions LLC immediately prior to the closing of the bank’s sale; and Sterling’s Michigan branch, which will close when the sale is completed.
O’Brien told Banking Dive via email that EverBank did not want the tenant-in-common loans because it’s more of a commercial lender. Sterling’s sole Michigan branch, meanwhile, “didn’t fit in EverBank’s strategy,” O’Brien said.
And while Sterling Bank employees will move to EverBank as part of the deal, no Sterling executives are expected to join EverBank, he said.
As for himself, O’Brien told Banking Dive, “My job is to get the deal closed. Then we will see what is out there. I have spent my career fixing troubled banks. There always seems like one more in the queue — but who knows.”
The Office of the Comptroller of the Currency this year barred former Sterling CEO Gary Judd and founder Scott Seligman from working in the banking sector and fined them $300,000 and $400,000 respectively, for their roles in the operation of Sterling’s Advantage Loan Program, which originated numerous loans that had false or fraudulent applications and was the subject of the March 2023 DOJ settlement.
