Banking, finance, and taxes

Sterling Bancorp Files for IPO

Chris Lange

Published: October 20, 2017 10:25 am

Last Updated: January 12, 2020 6:59 am

Sterling Bancorp has filed an S-1 form with the U.S. Securities and Exchange Commission (SEC) regarding its initial public offering (IPO). No pricing details were given in the filing, but the offering is valued up to $230 million. The company intends to list its shares on the Nasdaq but has yet to decide a ticker symbol.

The sole underwriter for the offering is Sandler O’Neill.

This is a unitary thrift holding company headquartered in Southfield, Michigan, with its primary branch operations in San Francisco and Los Angeles. Through its wholly owned bank subsidiary, Sterling Bank and Trust, the firm offers a broad range of loan products to the residential and commercial markets, as well as retail banking services.

Since 2013, Sterling Bancorp has grown organically at a compound annual growth rate of 29% while maintaining stable margins and solid asset quality. Since 2013, the company has grown its branch network from 16 branches to the current total of 26, including 20 in the San Francisco area, four in greater Los Angeles, its recently opened branch in New York City and its headquarters’ branch in Michigan.

An important contributor to growth since 2015 has been the firm’s successful entry into the greater Los Angeles market, where it started with a loan production office in 2015 and has grown to four full-service branches, constituting 20.4% and 21.7% of total loans and retail deposits as of June 30, 2017, with two new branches expected to open in the market in early 2018.

Sterling Bancorp has a large and growing portfolio of adjustable rate residential mortgage loans. The company manages residential credit risks through a financial documentation process and programs with low loan to value ratios, which averaged 63% across its residential portfolio as of the end of June 2017.

The company intends to contribute a portion of the net proceeds of the offering to the bank as needed to support its current growth while remaining well-capitalized. The remainder will be put toward general corporate purposes, which could include future contributions to the bank to support growth initiatives or selective acquisition activity, though no specific opportunities are currently under consideration.