Sterling Bank Under Active Federal Investigations
June 2, 2020
Thomas M. O’Brien, a veteran banker who has led many New York financial institutions, has been hired to be the president, CEO and chairman of Sterling Bancorp Inc., the holding company of Sterling Bank and Trust in Southfield, Michigan. The bank is currently under close scrutiny by federal bank and civil officials for questionable business practices.
O’Brien has over 44 years of industry experience. Most recently, he served as vice chairman of New York City-based Emigrant Bancorp Inc. and Emigrant Bank from October 2018 to March 2020. He has served as president, CEO, and on the boards of Sun Bancorp, Inc. and Sun National Bank from April 2014 to February 2018.
Benjamin Wineman, chairman of the special committee of independent directors of the bank, said in an announcement, “Each time Tom has been in the CEO chair, he has successfully led the turnaround of difficult situations, while enhancing operational integrity, driving shareholder value and creating a strong regulatory compliance culture. We believe Tom is well-positioned to lead Sterling through its current regulatory and operational challenges while providing clear strategic direction during these difficult economic times for the Bank and our customers.”
In the first quarter of 2020, Sterling reported a net loss of $27.8 million. That was largely driven by non-interest expense of $47 million, reflecting loan repurchase reserves of $7.8 million related primarily to the sale of loans originated under the bank’s Advantage Loan Program and contingency reserves of $25 million related to previously disclosed litigation and investigations stemming from the Advantage Loan Program; these reserves reflect additional information obtained during the course of the previously-disclosed internal review of this program, according to the bank’s quarterly report.
As previously disclosed, the bank is currently under formal investigation by the OCC and continues to be subject to a publicly-available formal agreement with the OCC, dated June 18, 2019, relating to certain aspects of its Bank Secrecy Act/Anti-Money Laundering compliance program as well as the bank’s credit administration. The bank also has received grand jury subpoenas from the U.S. Department of Justice requesting the production of documents and information in connection with an investigation that appears to be focused on the bank’s residential lending practices and related issues. The Bank is fully cooperating with these ongoing investigations.
Sterling Bancorp, Inc. is a unitary thrift holding company. Its wholly-owned subsidiary, Sterling Bank and Trust, F.S.B., has primary branch operations in San Francisco and Los Angeles, California, New York City and Bellevue, Washington.
O’Brien currently serves as a consultant to the board of directors of Sterling Bank and will not assume the duties and responsibilities of president and CEO until he receives regulatory non-objection from the Office of the Comptroller of the Currency.
In the past, O’Brien also served on the boards of BankUnited, Inc. and Bank United, NA from May 2012 to April 2014. O’Brien served as president, CEO and a director of State Bank of Long Island and State Bancorp, Inc. from November 2006 to January 2012.
From 2000 to 2006, O’Brien was president, CEO and a director of Atlantic Bank of New York and, following the acquisition of Atlantic Bank of New York by New York Commercial Bank, continued to serve as president and CEO during the post-closing transition. From 1996 to 2000, O’Brien was vice chairman and a board member of North Fork Bank and North Fork Bancorporation, Inc. From 1977 to 1996, O’Brien was chairman, president and CEO of North Side Savings Bank.
O’Brien served as a director of the Federal Home Loan Bank of New York from 2008 to 2012 and served as Chairman of New York Bankers Association in 2007. He is currently trustee and chairman of the audit committee of Prudential Insurance Company of America $175 Billion Annuity Fund Complex, and vice-chairman of the board and chairman of the Finance Committee of Archcare and Catholic Healthcare Foundation for the Archdiocese of New York.