UNITED STATES
SCHEDULE 14A
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One Towne Square, Suite 1900
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 15, 2018
NOTICE IS HEREBY GIVEN
that the1. | Elect three directors, each to hold office for a three-year term; |
2. | Ratify the appointment of Crowe Horwath LLP as the Company’s independent registered accounting firm for the year ending December 31, |
3. | To transact such other business as may properly come before the Annual Meeting or any adjournment thereof, all in accordance with the accompanying proxy statement. |
The Board of Directors of the Company (the “Board”) recommends a vote FOR each of the Director nominees in this proxy statement and FOR the ratification of Crowe Horwath LLP’s appointment.
The Board has fixed March 23, 2018,25, 2019, as the record date for the determination of shareholders entitled to notice of and to vote at the Annual Meeting or any adjournment of the Annual Meeting.
We call your attention to the proxy statement accompanying this notice for a more complete statement regarding the matters to be acted upon at the Annual Meeting. Please read it carefully.
If you have questions or comments, please direct them to Sterling Bancorp, Inc., One Towne Square, Suite 1900, Southfield, MI 48076, Attention: Thomas Lopp.
Your vote is important. Even if you plan to attend the Annual Meeting, you may vote your shares electronically via the Internet, by using telephone or, if you prefer the paper copy, please date and sign the enclosed proxy form, indicate your choice with respect to the matters to be voted upon, and return it promptly in the enclosed envelope. Note that if your stock is held in more than one name, all parties must sign the proxy form. Dated: April
To Our Shareholders: Sterling Bancorp, Inc. (“Sterling”) reported strong financial performance for 2018; our first full year as a public company. We reported record net income of $64.5 million, which translated into a 46% increase in earnings per share reflecting the company’s 25% year-over-year increase in total revenue, net of interest expense. These outstanding results were driven by the successful execution of Sterling’s strategic focus on strong customer relationships, targeted growth products and markets, and a culture where every dollar of cost counts. Our success in 2018 was generated by solid balance sheet growth, continued strong credit quality and operating leverage. For the full year, total loans increased 12%. We had our sixth consecutive year of net loan recoveries, and we operated with an efficiency ratio of 35.4%, driven in part from having the majority of our back-office operations in Michigan, a lower-cost region of the country. Our ability to grow our balance sheet, while maintaining strong credit metrics and efficiencies, produced a superior level of returns. Our return on average assets was 2.04%, while our return on average tangible common equity before tax was 29.19%, which again puts Sterling as the second highest within the 50 best-performing community banks of 2018 as ranked by S&P Global Market Intelligence. And, for a second year in a row, we were rated as the top performing community bank with total assets between $3 billion and $10 billion by S&P (note in 2017 the threshold was $1 to $10 billion). During the latter half of 2018, the growth dynamics in our market environment began to change with respect to the housing market as well as the Chinese economy, particularly as it related to the escalated trade tensions/restrictions between the U.S. and China. Despite rising deposit costs, driven by the increase in short-term rates, we achieved a strong net interest margin of 3.94% for the year. These market uncertainties cause us to be somewhat more cautious for the near-term. However, we believe that consistent execution of our straightforward business model and, in particular, our focus on relationship-based lending are key to our long-term success. Our commitment to highly personalized service leads to customer loyalty and a deposit portfolio comprised of over 90% in high-quality core deposits. On the lending side, we benefit from a strong understanding of our borrowers’ needs within our target markets. This has enabled us to develop a suite of niche lending products where we can earn a yield premium without compromising on credit quality. We remain committed to our four major metropolitan locations – San Francisco, Los Angeles, New York City and the greater Seattle market – four of the most attractive markets in the United States based on overall growth, household income, wealth and employment rates. We ended the year with 28 locations in these markets, having added branches in Chino Hills, CA, Bellevue, WA, and Flushing in Queens, NY during 2018. Our current plan is to add additional branches in these markets as strategic locations become available. However, we will closely evaluate market conditions and our de novo plans as the year progresses. As always, we will adapt to market changes quickly and make the necessary investments to grow the business through expanding our presence in our existing markets and adding client-facing professionals. We believe that 2019 will be another positive year for Sterling. We are excited about the success we are having in attracting new customers to Sterling and the valued loyalty of our existing customer base. We believe the investments we are making in our business, along with our expanding geographic footprint, will position us for continued growth and strong profitability in 2019 and beyond. In closing, we would like to thank the entire team at Sterling for their hard work and commitment to achieving a superior level of performance. The depth of talent we have built throughout the Sterling organization allows us to consistently create value for our customers, our communities and our shareholders. Sincerely,
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One Towne Square, Suite 1900 Southfield, Michigan 48076 PROXY STATEMENT This proxy statement and the enclosed proxy are furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Sterling Bancorp, Inc., a Michigan corporation (the “Company”), to be voted at the This proxy statement is being mailed on or about April If a proxy in the enclosed form is properly executed and returned to the Company, the shares represented by the proxy will be voted on each matter that properly arises at the Annual Meeting and any adjournment of the Annual Meeting. If a shareholder specifies a choice as to a particular matter, the proxy will be voted as specified. Brokers do not have discretion to cast votes on non-routine matters with respect to any shares held in street name for which they have not received voting directions from the beneficial owners. Therefore, if you hold your shares in street name, you must vote your proxy if you wish your shares to be voted in the election of directors. A proxy may be revoked before exercise by notifying the Chief Operating Officer of the Company in writing or in open meeting, by submitting a proxy of a later date or attending the Annual Meeting and voting in person. All shareholders are encouraged to date and sign the enclosed proxy, indicate a choice with respect to the matters to be voted upon, and return it to the Company. Quorum, Required Vote, and Related Matters Quorum. A quorum is present if a majority of the votes entitled to be cast on a proposal are represented at the Annual Meeting in person or by proxy.“Street Name” Accounts. If you hold shares in “street name” with a broker, bank, or other custodian, you will receive voting instructions from the holder of record of your shares. In some cases, a broker may be able to vote your shares even if you provide no instructions. But on other matters (such as the election of directors) your broker may vote the shares held for you only if you provide voting instructions. Shares for which a broker does not have the authority to vote are recorded as “broker non-votes” and are not counted in the vote by shareholders.If you hold your shares in street name through a broker, bank, or other nominee, it is critical that you cast your vote if you want it to count in the election of our director nominees. Certain regulations prohibit your broker, bank, or other nominee from voting uninstructed shares on a discretionary basis on proposals one or two at the Annual Meeting. Thus, if you hold your shares in street name and you do not instruct your broker how to vote at the Annual Meeting, no votes will be cast on your behalf for Proposal No. 1. Further, if you abstain from voting on a particular proposal, the abstention does not count as a vote in favor of or against a particular proposal.Proposal No. 1 – Election of Directors. Directors are elected by a plurality of the votes cast by the shares entitled to vote. For this purpose, a “plurality” means that the individuals receiving the largest number of votes are elected1 as directors. You may vote in favor of the nominees specified on the accompanying form of proxy or may withhold your vote as to one or more of such nominees. Shares withheld or not otherwise voted in the election of directors (because of abstention, broker non-vote, or otherwise) will have no effect on the election of directors. Proposal No. 2 – Ratification of Appointment of Independent Registered Public Accounting Firm. The affirmative vote of holders of a majority of shares entitled to vote and present at the annual meeting, in person or by proxy, is required for ratification of the appointment of Crowe Horwath LLP as our independent registered public accounting firm forAlthough the vote on Proposal 2 is not binding on the Company, the audit committee of the Company will take your vote on this proposal into consideration when selecting our independent registered public accounting firm in the future. Registered Holders If you are a “registered holder” (meaning your shares are registered in your name with our transfer agent, Computershare), then you may vote either in person at the Annual Meeting or by proxy. If you decide to vote by proxy, you may vote via the Internet, by using the telephone or by mail and your shares will be voted at the Annual Meeting in the manner you direct. For those shareholders who wish to vote by mail, such shareholders can complete, sign and return the mailed proxy card in the prepaid and addressed envelope that was enclosed with the proxy materials. Internet and telephone voting facilities for shareholders of record will close at 1:00 a.m. on Beneficial Holders If, you are a beneficial owner of shares held in “street name,” you may vote in person at the Annual Meeting only if you obtain a legal proxy from the nominee that holds your shares and present it to the inspector of elections with your ballot at the Annual Meeting. Alternatively, you may provide instructions to the nominee that holds your shares to vote by completing, signing and returning the voting instruction form that the nominee provides to you, by using telephone or Internet voting arrangements described on the voting instruction form or other materials that the nominee provides to you or by following any other procedures that the nominee communicates to you. 2 PROPOSAL 1: ELECTION OF DIRECTORS The Second Amended and Restated Articles of Incorporation (“Articles of Incorporation”) and Amended and Restated Bylaws (“Bylaws”) of the Company provide for a Board consisting of a number of members to be determined by a resolution adopted by the affirmative vote of at least 80% of the Board and a majority of the “Continuing Directors” (as defined in the Articles of Incorporation). The Board has fixed the number of directors at nine. The Articles of Incorporation and Bylaws of the Company also provide for the division of the Board into three classes of nearly equal size with staggered three-year terms of office. See “Information about Directors and Nominees–Director Information” below. Three persons have been nominated for election to the Board at the Annual Meeting, each to serve a three-year term expiring at the
Unless otherwise directed, the persons named as proxy holders in the accompanying proxy will vote for Messrs.
Information about Directors and Nominees Director Information The Company believes that the Board as a whole should encompass a range of talent, skill, diversity, and expertise that enables the Board to provide sound guidance with respect to the Company’s operations and interests. The following information has been furnished to the Company by the respective directors. Each of them has been engaged in the occupations stated below during the periods indicated, or if no period is indicated, for more than five years. Nominees Standing for Election Gary Judd, Chairman and Chief Executive Officer. Mr. Judd has served as our chairman and chief executive officer since August 2008. Additionally, he served as our president from 2008 until 2016. He began his banking career with Citibank, serving over sixteen years, including assignments over eight years in international banking based in New York, the Middle East, and India. Mr. Judd held positions in commercial lending, operations, treasury/foreign exchange, and country management. He held domestic positions in Citibank’s Operating Group, worked on acquisitions at Citicorp, and ending as Citibank’s Consumer Group’s senior executive for Manhattan south of Forty Second Street. Mr. Judd was also responsible as a business manager for a large scale consumer banking system development project. He then served as a general partner of Campbell Oil, Ltd., a private oil and gas exploration and production company in Denver, Colorado. Mr. Judd was co-founder, president, chief executive officer, and director of Vectra Bank. After its sale to Zions Bancorporation, he served as president, chief executive officer, and chairman of Vectra Bank Colorado and as a vice president of Zions Bancorporation, serving on its Executive Committee. Mr. Judd then served as president and director of Metyor, Inc., a technology start-up company based in Sydney, Australia, before returning to banking as a senior executive and director with WestStar Bank/Vail Banks, becoming president and chief executive officer in 2004. Following the sale of Vail Banks to U.S. Bank, he served as chairman of U.S. Bank’s Denver, Colorado Board. He holds a M.A. from Johns Hopkins University School of Advanced International Studies. Our Board believes that Mr. Judd should serve as a director because he has broad banking and executive management experience spanning over forty years. 3 Seth Meltzer, Director. Mr. Meltzer has served as a member of our Board since 2000. Mr. Meltzer is President, CEO and a director of the Seligman Group, a family owned real estate and investment company. Mr. Meltzer worked for various subsidiaries of the Seligman Group. Prior to joining the Seligman group, Mr. Meltzer interned at Sterling Bank and Trust, F.S.B. In 1998, Mr. Meltzer began work for Seligman & Associates, Inc. as its Vice President until his promotion to President. Mr. Meltzer led the Bank’s initial development of online banking from 1998-2001. He has since ran the Seligman Group’s management affiliate (Seligman Western Enterprises, Ltd.) from 2005 to date. He has a BS in Finance from the University of Arizona. Our Board believes that Mr. Meltzer should serve as a director because of his investment expertise and deep historical knowledge of the Company. He helped guide the Bank through the 2008 financial crisis and was instrumental in curing Sterling’s troubled asset and OREO portfolio. He currently chairs the Bank’s ALCO Committee. Benjamin J. Wineman, Director. Mr. Wineman has served as a director of our Board since 2013. Mr. Wineman has 20 years of extensive commercial real estate and financial experience. Currently, Mr. Wineman is a Principal at Mid-America Real Estate Corporation, where he has worked since July 2001. Mid-America is based in Chicago, Illinois, and is one of the companies within Mid-America Real Estate Group, a midwestern full-service retail real estate organization with offices in Chicago, Detroit, Milwaukee, and Minneapolis. Mr. Wineman co-leads Mid-America’s Retail Investment Sales Group, focusing specifically on the disposition of shopping centers and retail properties throughout the greater Midwest region for institutional, REIT, and private owners. Prior to employment with Mid-America, Mr. Wineman worked at LaSalle Investment Management (JLL) as a Financial Analyst in the Private Equity Acquisitions Group, where he was responsible for the valuation, due diligence, and closing of commercial real estate transactions on behalf of its institutional pension fund clients from 1998 to 2001. Within the International Council of Shopping Centers (ICSC), he is a member of the Illinois State Committee and the Government Relations National Economic Policy Sub-Committee. Within the community, Mr. Wineman is a member of the Executive Committees of the Harold E. Eisenberg Foundation and the board President of the Ravinia Festival Associates Board, and a member of the executive committee of the Ravinia Festival Board of Trustees. Mr. Wineman graduated from DePauw University in 1998 with a Bachelor’s of Arts Degree. Our Board believes that Mr. Wineman should serve as a director because of his extensive commercial real estate and financial experience. Continuing Directors Whose Terms Expire in 2020 Sandra Seligman, Director. Ms. Seligman has served as a member of our Board since its inception in 1984. Ms. Seligman is a philanthropist, actively dedicating her professional time and expertise to the charitable communities of Greater Detroit, Miami, and New York City. Through the Seligman Family Foundation, Ms. Seligman contributes to the Mount Sinai Medical Center in Florida, the University of San Francisco Medical Center in California, the Beaumont Health System, and Wayne State University Medical School in Michigan. Ms. Seligman is also a director of the Wolfsonian-Florida International University, the Museum of Contemporary Art of Detroit, the Detroit Institute of Arts, and the Jewish Women’s Foundation of the Jewish Federation of Detroit. She has a BS from Michigan State University. Our Board believes that Ms. Seligman should serve as a director because of her long term commitment to and experience with the Company. Additionally, Ms. Seligman’s significant involvement with community and charitable groups brings unique insights to the Board. Peter Sinatra, Director. Mr. Sinatra has served as a member of our Board since 2004 and as CEO of Quantum since 2010. He was Chairman of the Compensation Committee from 2008 until 2017. Mr. Sinatra is also a Senior Managing Partner with The Seligman Group Family Office where he is a member of the Investment Committee, managing traditional and privately held investments in the community banking, commercial real estate, aerospace, film, and asset management industries. Prior to joining Seligman, Mr. Sinatra held leadership positions with Bank of America, N.A. in Divisional Sales Management and with Fidelity Investments in Product Management & Development. Mr. Sinatra began his career at Arthur Andersen & Co. as a consultant in the financial services industry. Mr. Sinatra has served on numerous boards, including Sentient Flight Group from 2007 to 2009. He is a member of the CFA Institute, the San Francisco Security Analysts Society, and the Investment Management Consultants Association (IMCA). Mr. Sinatra received his BA in Mathematics from College of the Holy Cross. 4 Our Board believes that Mr. Sinatra should serve as a director because of his considerable experience in the financial, institutional asset and wealth management industries. Rachel Tronstein Stewart, Director.Ms. Tronstein has served as a member of our Board since 2018. Ms. Tronstein Stewart is currently the President of Gardner-White Furniture, a Michigan furniture retailer founded in 1912. Prior to joining Gardner-White Furniture in 2012, Ms. Tronstein Stewart worked in clean energy technologies, most recently at the U.S. Department of Energy. She helped to develop the department’s SunShot Initiative, a project to make solar energy cost-competitive with traditional sources of electricity by 2020. Previously, Ms. Tronstein Stewart focused on the clean energy portfolio at former President Clinton’s Clinton Global Initiative. Ms. Tronstein Stewart earned an MSc from the London School of Economics and a BA from the University of Michigan. She was also appointed the Board Chair of New Detroit, a coalition of leaders working towards racial equity in Metropolitan Detroit. Our Board believes that Ms. Tronstein Stewart should serve as a director because of her significant managerial and business experience. Whose Terms Expire in 2021 Barry Allen, Director. Mr. Allen, CPA has served as a member of our Board since 1998. He has been a member of the board of directors, and chairman of the audit committee since 1998. Mr. Allen was the Regional Managing Partner, Owner, Member of the Management Committee, and Director of Baker Tilly Virchow Krause, LLP. Mr. Allen began his career at PriceWaterhouseCoopers, LLP as a junior accountant. In 1972 he founded Barry Allen & Associates, P.C. and developed it into a prestigious boutique CPA and Tax Firm, providing services to small and medium sized companies. In 1982, he partnered with another firm and formed Nemes Allen & Company, PLLC, where he was Managing Partner until 2003. Mr. Allen served middle market companies and high net worth individuals. Mr. Allen has previously served on the Board of Directors and acted as Treasurer of Forgotten Harvest, a food rescue organization. Additionally, he served on the Board of Directors of Pathway Family Centers, an adolescent addiction and recovery center. He has a BBA from the University of Detroit, and is a certified public accountant. He also was a Certified Insolvency and Reorganization Accountant, and had a State of Michigan Insurance License in the past. He currently serves on the Board of the Riviera Dunes Marina Condominium Association as Treasurer, and on the Board of Legend Valve, Inc., a Our Board believes that Mr. Allen should serve as a director because of his extensive experience in the business and financial world, as well as his particular expertise in accounting and management issues. Jon Fox, Director. Mr. Fox has served as a member of our Board since 1997. Mr. Fox hasOur Board believes that Mr. Fox should serve as a director because of his significant financial and executive level commercial banking experience. Lyle Wolberg, Director. Mr. Wolberg joined our Board in August 2017. He is one of the founding partners of Telemus Capital Partners, a financial advisory firm heOur Board believes that Mr. Wolberg should serve as a director because of his extensive experience in the financial and wealth management industries. 5 Director Independence We are a “controlled company” under the rules of Nasdaq because more than 50% of our outstanding voting power is held by the Seligman family trustee. See “Beneficial Ownership of Common Stock.” We do not intend to rely upon the “controlled company” exception relating to the board of directors and committee independence requirements under the rules of Nasdaq. The “controlled company” exception does not modify the independence requirements for the audit committee, and we comply with the audit committee requirements of the Exchange Act and the rules of Nasdaq. Absent the use of the “controlled company” exception, the rules of the NASDAQ Capital Market, would have required that independent directors must comprise a majority of our board of directors within a specified period of time following the closing of 6 BOARD OF DIRECTORS AND COMMITTEES Board Meetings All directors are expected to attend all meetings of the Board and of the Board committees on which they serve. The Board met twelve (12) times during present. Board and Committee Membership Current Board and committee memberships are shown in the table below.
Audit and Risk Management Committee The Audit and Risk Management Committee (the “Audit Committee’) assists the board of directors in fulfilling its responsibilities for general oversight of the integrity of our financial statements, compliance with legal and regulatory requirements, the independent auditors’ qualifications and independence, and the performance of our internal audit and risk management function and independent auditors. Among other things, the Audit Committee: appoints, evaluates and determines the compensation of our independent auditors; reviews and approves the scope of the annual audit, audit fees and financial statements; reviews disclosure controls and procedures, internal controls, internal audit function and corporate policies with respect to financial information; oversees investigations into complaints concerning financial matters, if any; reviews related party transactions as required; and annually review the Audit Committee charter and periodically review the committee’s performance. The Audit Committee works closely with management as well as our independent auditors. The Audit Committee has the authority to obtain advice and assistance from and receive appropriate funding to engage outside legal, accounting or other advisors as the Audit Committee deems necessary to carry out its duties. The Audit Committee is composed solely of members who satisfy the applicable independence and other requirements of the SEC and the NASDAQ Capital Market for Audit Committees. Mr. Allen is the Company’s “audit committee financial expert” as such term is defined in applicable SEC regulations. The Audit Committee has adopted a written charter that among other things, specifies the scope of its rights and responsibilities. The Board has adopted a charter for the Audit Committee, a copy of which is available on the Company’s website at 7 Nominating Committee The Nominating Committee is responsible for making recommendations to our board of directors regarding candidates for directorships and the size and composition of our board of directors. In addition, the Nominating Committee is responsible for overseeing our corporate governance guidelines and reporting and making recommendations to our board of directors concerning governance matters. Among other things, the Nominating Committee: identifies qualified individuals to be directors consistent with the criteria approved by the board of directors and recommending director nominees to the full board of directors and considers candidate recommendations of shareholders; develops and oversees policies and procedures and review shareholder communications to the board; annually When evaluating nominees for director, the Nominating Committee considers the skills a nominee could offer the Company, as well as business experience, how the nominee fits into the Company’s core values, professional and personal integrity, policy-making experience, and strategic planning skills, amongst other traits. The Board has adopted a charter for the Nominating Committee, a copy of which is available on the Company’s website at investors.sterlingbank.com. The Nominating Committee held one (1) meeting in 2018. Compensation Committee Compensation Committee. The Compensation Committee is responsible for discharging the board of directors’ responsibilities relating to compensation of the executives and directors. Among other things, the Compensation Committee:evaluates compensation strategies and policies; reviews and approves objectives relevant to executive officer compensation; evaluates performance and determines the compensation of the Chief Executive Officer and other executive officers in accordance with those objectives; oversees the incentive compensation and oversees management succession planning; recommends to the board of directors compensation for directors; prepares the Compensation Committee report required by SEC rules to be included in our annual report and proxy statement; and annually reviews the Compensation Committee charter. The Compensation Committee has adopted a written charter that, among other things, specifies the scope of its rights and responsibilities. The charter is available on the Company’s website at 2018. Communication with Directors; Attendance at Annual Meetings; Code of Ethics The Board invites shareholders to send written communications to the Board or any director by mail, c/o Secretary, Sterling Bancorp, Inc., One Towne Square, Suite 1900, Southfield, Michigan 48076. All communications will be compiled by the Company’s Secretary and submitted to the Board or the individual director(s) on a regular basis unless such communications are considered, in the reasonable judgment of the Secretary, to be improper for submission to the intended recipient(s). Examples of shareholder communications that would be considered improper for submission include, without limitation, customer complaints, solicitations, communications that do not relate directly or indirectly to the Company’s business, or communications that relate to improper or irrelevant topics. 8 All directors are expected to attend annual meetings of shareholders in person or via teleconference, except in cases of extraordinary circumstances. The Company anticipates that all directors will attend this year’s Annual Meeting. Our board of directors adopted a code of business conduct and ethics (our “Code of Conduct”) that applies to all of our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer and persons performing similar functions. The Code of Conduct is available on the Company’s website at investors.sterlingbank.com. Board Leadership Structure The Board does not have a policy regarding the separation of the roles of Chief Executive Officer and Chairman of the Board as the Board believes it is in the best interests of the Company to make that determination based on the then-current position and direction of the Company and membership of the Board. The Board believes having the Chief Executive Officer also fill the role of Chairman is more efficient and effective at this time than alternate structures. Board’s Role in Risk Oversight Our board of directors sets the tone at the top of our organization, adopting and overseeing the implementation of our company-wide risk management framework, which establishes our overall risk appetite and risk management strategy. Risk management refers generally to the activities by which we identify, measure, monitor, evaluate and manage the risks we face in the course of our banking activities. These include liquidity, interest rate, credit, operational, cyber/technological, legal, compliance, regulatory, strategic, financial and reputational risk exposures. Our board of directors and management team have created a risk-conscious culture that is focused on quality growth, which includes infrastructure capable of addressing the evolving risks we face, as well as the changing regulatory and compliance landscape. Our risk management approach employs comprehensive policies and processes to establish robust governance and emphasizes personal ownership and accountability for risk with our employees. We also perform an annual capital stress test through which we consider the worst case scenario published by the Federal Reserve Board and evaluate the effect on the capital position of the Company. We seek to build a risk management culture through educational seminars for our employees, management analysis of risk scenarios, risk performance studies and the formulation of contingency plans. EXECUTIVE OFFICERS The executive officers of the Company serve at the pleasure of the Board. Set forth below are the current executive officers of the Company and a brief explanation of their principal employment during at least the last five years. Additional information concerning the employment arrangements of the Company’s executive officers is included elsewhere in this proxy statement under the heading “Compensation of Executive Officers and Directors – Executive Compensation.” Our named executive officers, which consist of our principal executive officer and the Company’s two other most highly compensated executive officers, are:
Mr. Lopp was elected President in 2016, and has served as Chief Operating Officer since 2009, and as Chief Financial Officer and Treasurer since 2002. In his position, Mr. Lopp oversees the Company’s operations, finance department, and credit administration. In 2015, he obtained additional responsibility as the executive in charge of the Southern California expansion. Mr. Lopp joined Sterling in 1997 and prior leadership positions include Director of the Consumer Loan Division and Divisional Controller. Prior to Sterling, he served as a senior financial analyst at First of America Bank Corporation, credit card product manager at NBD Bank, N.A., and credit card portfolio analyst for Security Bancorp, Inc., later acquired by First of America Bank Corporation. Mr. Lopp has a B.B.A. in Finance from Walsh College. 9
Mr. Montemayor has served as our Chief Lending Officer since 2006, President of Commercial and Retail Banking since 2016, and has been with the Company since 1992. Prior positions at Sterling include Director of Commercial Lending Commercial Loan Officer, Construction Lending Manager and Branch Manager/Regional Branch Manager and Residential Lending Supervisor. Mr. Montemayor is a Trustee of the Alpha Phi Omega Endowment Trust of Michigan State University, and has also served as a fundraiser event coordinator for the Make A Wish Foundation. He has a B.S. in Finance from Michigan State University. COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS Compensation Program Details The foregoing discussion provides background and context for the information that follows regarding the Company’s compensation of its named executive officers in Executive Compensation Summary Compensation Table As an emerging growth company under the JOBS Act, we have opted to comply with the executive compensation disclosure rules applicable to “smaller reporting companies” as such term is defined in the rules promulgated under the Securities Act, which permit us to limit reporting of executive compensation to our principal executive officer and our two other most highly compensated executive officers, which are referred to as our “named executive officers.” The compensation reported in the Summary Compensation Table below is not necessarily indicative of how we will compensate our named executive officers in the future. We will continue to review, evaluate and modify our compensation framework to maintain a competitive total compensation package. As such, and as a result of our becoming a publicly traded company in 2017, the compensation program following our initial public offering The following table sets forth information regarding the compensation paid, awarded to, or earned for our fiscal
10 The bonus amount set forth above with respect to Mr. Judd was determined pursuant to his employment agreement described below. With respect to Messrs. Lopp and Montemayor, bonuses are discussed by the Compensation Committee at the beginning of each fiscal year based on various performance metrics that are driven by the Company’s annual strategic plan. Following determination of Company performance for the applicable year, Mr. Judd makes a recommendation to the Compensation Committee with respect to the appropriate bonus amounts for Messrs. Lopp and Montemayor in light of such results. The final bonus amount is then determined by the Compensation Committee. Each of Messrs. Lopp and Montemayor were granted stock Messrs. Lopp and Montemayor received equity awards in 2018 consisting of 8,000 stock options and 5,500 restricted stock awards in the case of Mr. Lopp, and 6,500 stock options and 4,750 restricted stock awards in the case of Mr. Montemayor that were attributable to 2018 service. Narrative Disclosure to Summary Compensation Table Employment Agreements The Company and the Bank jointly entered into an employment agreement with Gary Judd, our Chairman of the Board and Chief Executive Officer, in July 2008, as subsequently amended on July 16, 2014. Under the terms of the agreement, Mr. Judd was initially entitled to an annual base salary of $225,000, which may be adjusted annually in the discretion of the Board. Mr. Judd was also entitled to an annual bonus in the discretion of the Board based upon the achievement of objectives set by the Board. The employment agreement may be terminated by either party, with or without cause, and due to death, disability and mutual agreement. If Mr. Judd is terminated for any reason, he is entitled to any base salary earned but not yet paid, any bonus awarded but not yet paid, reimbursement of business expenses incurred but not yet paid and any other benefits accrued and earned through the date of termination in accordance with applicable plans and programs of the Bank. If he is terminated without cause, in addition, he will be entitled to a continuation of his base salary, at the rate in effect on the date of his termination for a period of one year (the “Severance Period”) and continued participation in benefit programs and plans and other benefits made available to employees of the Bank until the expiration of the Severance Period. In the event Mr. Judd is unable to participate in any employee benefit plan based on its terms, he will receive the economic equivalent of the benefits provided under the plan through the end of the Severance Period. The employment agreement also contains confidentiality and 2017 Omnibus Equity Incentive Plan We adopted the Sterling Bancorp, Inc. Omnibus Equity Incentive Plan (the “Omnibus Plan”) 11 Defined Contribution Retirement Plan The Company has a defined contribution retirement plan that allows for annual employee contributions up to the lesser of 100% of eligible compensation or Supplemental Retirement Benefit Plan An unfunded supplemental retirement benefit plan covers certain employees. The agreements are subject to various terms and conditions but generally provide covered employees with a specified retirement benefit if they retire from the Company at a normal retirement date. The agreements also provide for the payment of vested amounts upon termination. The participant can elect to receive the payout as a lump sum or as an annuity. The supplemental retirement obligation liability was Severance and Change of Control Benefits The Company does not provide for any severance or change of control benefits, other than those discussed Outstanding Equity Awards at 2018 Fiscal Year-End The following table provides information on the holdings of equity awards by our named executive officers as of December 31, 2018.
12 Director Compensation 2018 Director Compensation Table The table below sets forth the compensation of each non-employee director in
Director Fees Board members of the Company receive fees for board and committee meetings attended. Board members Additionally, the committee chairs receive premiums as follows: Audit Committee, $10,000; Compensation Committee, $7,500; Nominating Committee, $2,500; and Credit & Loan Committee, $5,000. Compensation Committee Interlocks and Insider Participation None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors or compensation committee. PROPOSAL NO. 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Audit Committee has selected Crowe Horwath LLP as independent auditors for the Company, for the fiscal year ending December 31, The affirmative vote of holders of a majority of shares entitled to vote and present at the annual meeting, in person or by proxy, is required for advisory approval of Crowe Horwath LLP as our independent registered public accounting firm for Although the vote on Proposal 2 is not binding on the Company, the Audit Committee will take your vote on this proposal into consideration when selecting our independent registered public accounting firm in the future. Representatives of Crowe Horwath LLP will attend the meeting, will have the opportunity to make a statement, if they desire to do so, and will be available to answer appropriate questions from our shareholders.
AUDIT COMMITTEE REPORT The Audit Committee has reviewed and discussed the Company’s audited financial statements with management. 13 As described more fully in its charter, the purpose of the Audit Committee is to assist the Board in its general oversight of the Company’s financial reporting and internal control functions and the Audit Committee is directly responsible for the appointment, retention, compensation and oversight of the work of our independent registered public accounting firm, currently Crowe Horwath LLP, and our internal audit team. Crowe Horwath LLP is responsible for performing an independent audit of the Company’s consolidated financial statements and the effectiveness of the Company’s internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (U.S.) (“PCAOB”) and for expressing their opinions thereon. In Reviewed and discussed with management and Crowe Horwath LLP the Company’s audited financial statements. Based on the foregoing, the Audit Committee recommended to the Board that the audited consolidated financial statements of the Company be included in the Company’s annual report on Form 10-K for
14 INDEPENDENT PUBLIC ACCOUNTANT FEES AND SERVICES The following table summarizes fees for professional services rendered by Crowe Horwath LLP, the Company’s independent auditors for the years ended December 31,
The Audit Committee is required to review and pre-approve both audit and non-audit services to be provided by the independent auditor (other than with respect to de minimis exceptions permitted by the Sarbanes-Oxley Act of 2002). During 2017. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS In addition to the compensation arrangements with directors and executive officers described in “Executive Compensation” above, the following is a description of transactions in Policies and Procedures Regarding Related Party Transactions Transactions by the Company or its bank subsidiary, Sterling Bank & Trust, FSB (the “Bank”) with related parties are subject to certain regulatory requirements and restrictions, including Sections 23A and 23B of the Federal Reserve Act (which govern certain transactions by the Bank with its affiliates) and the Federal Reserve’s Regulation O (which governs certain loans by the Bank to its executive officers, directors and principal shareholders). Both the Company and the Bank have Affiliate Transactions Policies. The Affiliate Transaction Policy limits covered transactions with any single affiliate to less than 10%, and with all affiliates, to less than 20%, of unimpaired capital and surplus. All covered transactions with affiliates must be made on terms and conditions that are consistent with safe and sound banking practices, and require appropriate security. Neither the Company nor the Bank may purchase low-quality assets from an affiliate. Transactions between the Company or Bank and affiliates must be made on terms and under circumstances that are substantially the same, or at least as favorable to the Company or the Bank, respectively, as those prevailing at the time for comparable transactions with unaffiliated companies. All service agreements are reviewed annually. The Bank’s Regulation O Policy requires any extension of credit to insiders be on the same terms as, and following the same underwriting procedures, as those in place for non-insider customers. The Board of Directors must approve any loan to an insider which does not qualify as an exception and that causes the aggregate of loans outstanding to that individual and any related interests of that individual to exceed $25,000, or 5%, of the Bank’s capital. The aggregate of all loans to insiders shall not exceed 5% of the Bank’s equity capital. As for executive officers of the Bank, general purpose loans may not exceed $100,000 in the aggregate or 2.5% of capital, whichever is less, and all such loans must be reported to the Board of Directors. All loans to directors and officers, including renewals, require the prior approval of the Board of Directors with the exception of mortgage loans on an officer or director’s primary residence when made in accordance with underwriting standards acceptable to the secondary market. All insiders are identified on an annual basis, and are required to submit an annual report of borrowings from the Bank. We have adopted a written related person transactions policy pursuant to which our executive officers, directors and principal shareholders, including their immediate family members, will not be permitted to enter into a related 15 person transaction with us without the consent of our Audit Committee, another independent committee of our board or the full board. Any request for us to enter into a transaction with an executive officer, director, principal shareholder or any of such persons’ immediate family members, in which the amount involved exceeds $120,000, will be required to be presented to our Audit Committee for review, consideration and approval. All of our directors, executive officers and employees will be required to report to our Audit Committee any such related person transaction. In approving or rejecting the proposed transaction, our Audit Committee will take into account, among other factors it deems appropriate, whether the proposed related person transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances, the extent of the related person’s interest in the transaction and, if applicable, the impact on a director’s independence. Under the policy, if we should discover related person transactions that have not been approved, our Audit Committee will be notified and will determine the appropriate action, including ratification, rescission or amendment of the transaction. Indemnification of Officers and Directors Our Bylaws will generally require us to indemnify our officers and directors to the fullest extent permitted by law, and to advance expenses incurred by our directors and officers prior to the final disposition of any action or proceeding arising by reason of the fact that any such person is or was our agent. In addition, our Bylaws permit us to provide such other indemnification and advancement of expenses to our other employees and agents as permitted by law and authorized by the Board from time to time. We will also have the power to secure insurance on behalf of any director, officer, employee or other agent for any liability arising out of his or her status as such, regardless of whether we would have the power to indemnify such person against such liability pursuant to our Bylaws. Related-Party Transactions Lease Agreements The Bank has a sublease agreement with Seligman & Associates, where Mr. Meltzer serves as President, (“S&A”) for office space, plus related expenses, in Southfield, MI at an annual amount of The Bank leases 7,560 square feet of warehouse space from S&A at 1630 Thorncroft in Troy, MI at an annual base rent of The Bank leases office space from Transamerica Pyramid Properties, LLC in San Francisco under the lease agreement dated August 26, 2016. In turn, the Bank subleases 75% of that space to Pioneer Realty, a subsidiary of S&A, at an annual base rent amount of $267,626. The Bank also subleases storage space at 545 Sansome Street Charitable Donations From time to time, the Company makes charitable donations to the Seligman Family Foundation, including $900 thousand in Data Processing The Bank provides monthly data processing and programming services to entities controlled by the Company’s principal shareholders. Aggregate fees amounted to $105 thousand during 2018. Other Family Relationships Sandra Seligman is a Director of the Company and the Bank and is the sister of the Bank’s founder, Scott J. Seligman. In 16 Seth Meltzer is a Director of the Company and the Bank and is the son of Sandra Seligman. In Indebtedness of and Transactions with Management Certain of the directors and officers of the Company may, in the future, have transactions with the Bank, or are or will be directors or officers of corporations, or members of partnerships or limited liability companies, which may have in the future, transactions with the Bank. We expect that all such transactions (i) will be made in the ordinary course of business, (ii) will be made on substantially the same terms, including interest rates and collateral, as those prevailing at the same time for comparable transactions with other customers, and (iii) will not involve more than normal risk of collectability or present other unfavorable features. The Audit Committee has responsibility for reviewing and approving transactions with related persons, in accordance with the rules of Nasdaq. The Audit Committee, as a general policy, approves transactions to related parties at essentially the same terms and conditions that apply to similar transactions with non-related parties. 17 BENEFICIAL OWNERSHIP OF COMMON STOCK The following table sets forth information as of March each shareholder known by us to beneficially own more than 5% of our outstanding common stock; each of our directors and named executive officers; and all of our directors and executive officers as a group. We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally provide that a person is the beneficial owner of securities if such person has or shares the power to vote or direct the voting of securities, or to dispose or direct the disposition of securities, or has the right to acquire such powers within 60 days. Except as disclosed in the footnotes to this table and subject to applicable community property laws, we believe that each person identified in the table has sole voting and investment power over all of the shares shown opposite such person’s name. The address for each listed shareholder is: c/o Sterling Bancorp, Inc., One Towne Square, Suite 1900, Southfield, Michigan 48076.
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Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires the Company’s directors and executive officers and persons who beneficially own more than 10% of a registered class of the Company’s equity securities 2017 and Mr. Wineman filed a late Form 4 on October 26, 2018 to report the purchase of common shares of beneficial ownership on September 28, 2018. Equity Compensation Plans The following table sets forth certain information as of December 31,
SHAREHOLDER PROPOSALS FOR THE 2019 ANNUAL MEETING Deadline for Shareholder Proposals to be Considered for Inclusion in the Company’s Proxy Materials A proposal submitted by a shareholder for the Deadline for Shareholder Proposals and Director Nominations to be Brought Before the In order to be considered at any meeting, a shareholder proposal submitted outside of Rule 14a-8 under the Exchange Act, other than a nomination of directors, must (i) comply with the requirements in the Company’s Articles of Incorporation and Bylaws as to form and content, and (ii) must be received by the Company 19 is called for a date that is not within twenty (20) days before or OTHER MATTERS The Board is not aware of any matter to be presented for action at the Annual Meeting, other than the matters set forth herein. If any other business should properly come before the meeting, the proxy will be voted regarding the matter in accordance with the best judgment of the persons authorized in the proxy, and discretionary authority to do so is included in the proxy. The proxy solicitation is being made by the Company and the cost of soliciting proxies will be borne by the Company. If requested, the Company will reimburse banks, brokerage houses and other custodians, nominees and certain fiduciaries for their reasonable expenses incurred in mailing proxy materials to their principals. In addition to solicitation by mail, officers and other employees of the Company and its subsidiaries may solicit proxies by telephone, facsimile or in person, without compensation other than their regular compensation. The Company may elect to send a single copy of its annual report and this proxy statement to any household at which two or more shareholders reside, unless one of the shareholders at such address notifies the Company that he or she desires to receive individual copies. This “householding” practice reduces the Company’s printing and postage costs. Shareholders may request to discontinue or re-start householding, or to request a separate copy of the Shareholders owning common stock through a bank, broker or other holder of record should contact such record holder directly; and Shareholders of record should contact the Company at (248) 355-2400 or at Shareholder Relations, Sterling Bancorp, Inc., One Towne Square, Suite 1900, Southfield, MI 48076. The Company will promptly deliver such materials upon request. Your cooperation in giving this matter your immediate attention and in voting your proxies promptly will be appreciated. The Annual Report of the Company for investors.sterlingbank.com. THE ANNUAL REPORT ON FORM 10-K TO THE SECURITIES AND EXCHANGE COMMISSION AND THE COMPANY’S 20 It is important that proxies be submitted promptly in order to ensure your representation at the Annual Meeting. You may submit your proxy via the Internet, by the telephone or you may vote your shares by completing, signing and dating the proxy card as promptly as possible and returning it in the enclosed envelope (to which no postage need be affixed if mailed in the United States). Please refer to the section entitled 21 LOCATION OF STERLING BANCORP 2018 ANNUAL MEETING OF SHAREHOLDERS Thursday, May One Towne Square, Suite 1900 Southfield, Michigan 48076 Beneficial owners of common stock held in street name by a broker, bank, trust or other nominee may need proof of ownership to be admitted to the meeting. A brokerage or holding statement or letter from the broker, bank, trust or other nominee are examples of proof of ownership. ![]() ![]() 22
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