Sterling Bancorp Inc., based in Southfield, is making progress on its restructuring initiative.
Sterling (NASDAQ: SBT) said in a press release Monday morning that it had “in principle” reached an agreement to settle a pending class action lawsuit. In the case in federal court in the eastern district of Michigan, the Oklahoma Police Pension and Retirement System v Sterling Bancorp, Inc. et al., The bank alleges that the bank violated state securities laws related to residential property lending practices.
The bank had previously moved to dismiss the lawsuit.
The terms of the settlement were not disclosed as the money would come from the bank’s insurance policy. The agreement “provides for a single cash payment in exchange for the release of all defendants from all alleged claims,” according to a press release.
Tom O’Brien, Sterling chairman, president and CEO, who was brought on board last year to oversee a turnaround in the bank, said the deal was “big, big headway” in the bank’s restructuring.
The pending litigation was “time consuming, distracting and very expensive,” he said in an interview with Crain’s on Monday morning.
Sterling’s troubles largely resulted from engaging in a mortgage loan program that has since been discontinued and resulted in compliance issues and federal investigations. O’Brien has stressed that the bank remains well capitalized.
Shortly after the pending settlement agreement was announced, Sterling also announced earnings for the final quarter and full year 2020.
The bank’s newly released financial reports show Sterling posted a net loss of $ 13 million for the year, or 26 cents per diluted share. $ 54.9 million was written off for 2020 credit losses and the bank has approximately $ 3.9 billion in assets.
After the litigation is due to be removed from the bank’s list of issues, O’Brien said the next issues to be addressed will be a technology overhaul and continued collaboration with state investigations.
Despite the fact that Sterling is headquartered in Southfield, the bank’s 30 or so branches are mostly in California, with a handful in New York and Washington State.
O’Brien previously told Crain’s that moving its headquarters would not be prudent given the myriad of other issues the bank is facing.
Miller Canfield Paddock and Stone plc of Detroit was one of the companies that represented Sterling Bancorp.