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​

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

​

FORM 10-Q

​

​

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

​

For the quarterly period ended June 30, 2024

​

OR

​

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

​

For the transition period from       to       

​

Commission File Number 001-38290

​

Sterling Bancorp, Inc.

(Exact name of registrant as specified in its charter)

​

Michigan

    

38-3163775

(State or other jurisdiction of
incorporation or organization)

​

(I.R.S. Employer
Identification Number)

​

One Towne Square, Suite 1900

Southfield, Michigan 48076

(248) 355-2400

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

​

Securities registered pursuant to Section 12(b) of the Act:

​

​

​

​

​

Title of each class

    

Trading Symbol(s)

    

Name of each exchange on which registered

Common Stock

​

SBT

​

Nasdaq Capital Market

​

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

​

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

​

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

​

Large accelerated filer ☐

    

Accelerated filer ☒

    

Non-accelerated filer ☐

    

Smaller reporting company ☒

​

​

​

​

​

​

​

Emerging growth company ☐

​

​

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

​

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

​

As of July 31, 2024, 52,327,626 shares of the registrant’s Common Stock were outstanding.

​

​

​

STERLING BANCORP, INC.

QUARTERLY REPORT ON FORM 10-Q

INDEX

​

​

​

​

​

​

    

Page

PART I — FINANCIAL INFORMATION

​

​

​

​

​

Item 1.

Financial Statements (Unaudited)

​

2

​

Condensed Consolidated Balance Sheets at June 30, 2024 and December 31, 2023

​

2

​

Condensed Consolidated Statements of Income for the three and six months ended June 30, 2024 and 2023

​

3

​

Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2024 and 2023

​

4

​

Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three and six months ended June 30, 2024 and 2023

​

5

​

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023

​

6

​

Notes to the Condensed Consolidated Financial Statements

​

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

​

29

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

​

50

Item 4.

Controls and Procedures

​

52

​

​

​

PART II — OTHER INFORMATION

​

​

​

​

​

Item 1.

Legal Proceedings

​

53

Item 1A.

Risk Factors

​

53

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

​

53

Item 5.

Other Information

​

53

Item 6.

Exhibits

​

54

Exhibit Index

​

54

SIGNATURES

​

55

​

​

​

​

1

Sterling Bancorp, Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(dollars in thousands)

PART 1. FINANCIAL INFORMATION

​

ITEM 1. FINANCIAL STATEMENTS

​

​

​

​

​

​

​

​

​

​

June 30, 

​

December 31, 

​

    

2024

    

2023

Assets

 

​

  

 

​

  

Cash and due from banks

​

$

599,774

​

$

577,967

Interest-bearing time deposits with other banks

​

​

5,232

​

​

5,226

Debt securities available for sale, at fair value (amortized cost $464,176 and $440,211 at June 30, 2024 and December 31, 2023, respectively)

​

 

441,930

​

 

419,213

Equity securities

​

 

4,637

​

 

4,703

Loans, net of allowance for credit losses of $27,556 and $29,404 at June 30, 2024 and December 31, 2023, respectively

​

 

1,236,687

​

 

1,319,568

Accrued interest receivable

​

 

8,835

​

 

8,509

Mortgage servicing rights, net

​

​

1,392

​

​

1,542

Leasehold improvements and equipment, net

​

 

4,961

​

 

5,430

Operating lease right-of-use assets

​

​

11,481

​

​

11,454

Federal Home Loan Bank stock, at cost

​

​

18,423

​

​

18,923

Federal Reserve Bank stock, at cost

​

​

9,139

​

​

9,048

Company-owned life insurance

​

 

8,818

​

 

8,711

Deferred tax asset, net

​

 

17,923

​

 

16,959

Other assets

​

 

5,507

​

 

8,750

Total assets

​

$

2,374,739

​

$

2,416,003

​

​

​

​

​

​

​

Liabilities and Shareholders’ Equity

​

​

​

​

​

​

Liabilities

​

 

​

​

 

  

Noninterest-bearing deposits

​

$

32,167

​

$

35,245

Interest-bearing deposits

​

 

1,981,298

​

 

1,968,741

Total deposits

​

 

2,013,465

​

 

2,003,986

Federal Home Loan Bank borrowings

​

 

—

​

 

50,000

Operating lease liabilities

​

​

12,504

​

​

12,537

Other liabilities

​

 

19,900

​

 

21,757

Total liabilities

​

 

2,045,869

​

 

2,088,280

​

​

​

​

​

​

​

Shareholders’ equity

​

 

​

​

 

​

Preferred stock, authorized 10,000,000 shares; no shares issued and outstanding

​

 

—

​

 

—

Common stock, no par value, authorized 500,000,000 shares; issued and outstanding 52,371,509 shares and 52,070,361 shares at June 30, 2024 and December 31, 2023, respectively

​

 

84,323

​

 

84,323

Additional paid-in capital

​

 

17,592

​

 

16,660

Retained earnings

​

 

243,083

​

 

241,964

Accumulated other comprehensive loss

​

 

(16,128)

​

 

(15,224)

Total shareholders’ equity

​

 

328,870

​

 

327,723

Total liabilities and shareholders’ equity

​

$

2,374,739

​

$

2,416,003

​

See accompanying notes to condensed consolidated financial statements.

​

​

2

STERLING BANCORP, INC.

Condensed Consolidated Statements of Income (Unaudited)

(dollars in thousands, except per share amounts)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended

​

Six Months Ended

​

​

June 30, 

​

June 30, 

​

    

2024

    

2023

    

2024

    

2023

Interest income

​

​

​

​

​

​

​

​

  

​

​

  

Interest and fees on loans

​

$

20,620

​

$

21,892

​

$

41,589

​

$

44,052

Interest and dividends on investment securities and restricted stock

​

​

4,758

​

​

2,666

​

 

8,776

​

 

5,122

Interest on interest-bearing cash deposits

​

​

8,486

​

​

7,002

​

 

16,781

​

 

11,809

Total interest income

​

​

33,864

​

​

31,560

​

 

67,146

​

 

60,983

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest expense

​

​

​

​

​

​

​

 

​

​

 

​

Interest on deposits

​

​

19,350

​

​

13,337

​

 

37,450

​

 

23,146

Interest on Federal Home Loan Bank borrowings

​

​

119

​

​

248

​

 

367

​

 

493

Interest on Subordinated Notes

​

​

—

​

​

1,791

​

 

—

​

 

3,484

Total interest expense

​

​

19,469

​

​

15,376

​

 

37,817

​

 

27,123

​

​

​

​

​

​

​

​

​

​

​

​

​

Net interest income

​

​

14,395

​

​

16,184

​

 

29,329

​

 

33,860

Provision for (recovery of) credit losses

​

​

(2,079)

​

​

(2,902)

​

 

(2,038)

​

 

(2,228)

Net interest income after provision for (recovery of) credit losses

​

​

16,474

​

​

19,086

​

 

31,367

​

 

36,088

​

​

​

​

​

​

​

​

​

​

​

​

​

Non-interest income

​

​

​

​

​

​

​

 

​

​

 

​

Service charges and fees

​

​

92

​

​

78

​

 

179

​

 

172

Loss on the sale of investment securities

​

​

—

​

​

—

​

​

—

​

​

(2)

Gain on sale of loans held for sale

​

​

—

​

​

1,720

​

​

—

​

​

1,695

Unrealized loss on equity securities

​

​

(19)

​

​

(71)

​

​

(66)

​

​

—

Net servicing income

​

​

46

​

​

102

​

​

121

​

​

161

Income earned on company-owned life insurance

​

​

84

​

​

81

​

 

167

​

 

161

Other

​

​

209

​

​

1

​

 

210

​

 

2

Total non-interest income

​

​

412

​

​

1,911

​

 

611

​

 

2,189

​

​

​

​

​

​

​

​

​

​

​

​

​

Non-interest expense

​

​

​

​

​

​

​

 

​

​

 

​

Salaries and employee benefits

​

​

8,196

​

​

9,274

​

 

16,656

​

 

18,684

Occupancy and equipment

​

​

2,005

​

​

2,051

​

 

4,089

​

 

4,163

Professional fees

​

​

2,147

​

​

3,521

​

 

4,329

​

 

6,742

FDIC insurance assessments

​

​

262

​

​

263

​

 

524

​

 

520

Data processing

​

​

742

​

​

754

​

 

1,475

​

 

1,492

Other

​

​

1,571

​

​

1,478

​

 

3,242

​

 

3,577

Total non-interest expense

​

​

14,923

​

​

17,341

​

 

30,315

​

 

35,178

​

​

​

​

​

​

​

​

​

​

​

​

​

Income before income taxes

​

​

1,963

​

​

3,656

​

 

1,663

​

 

3,099

Income tax expense

​

​

647

​

​

1,117

​

 

544

​

 

1,063

Net income

​

$

1,316

​

$

2,539

​

$

1,119

​

$

2,036

​

​

​

​

​

​

​

​

​

​

​

​

​

Income per share, basic and diluted

​

$

0.03

​

$

0.05

​

$

0.02

​

$

0.04

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Weighted average common shares outstanding:

​

​

​

​

​

​

​

​

​

​

​

​

Basic

​

​

50,920,703

​

​

50,672,461

​

​

50,881,905

​

​

50,559,092

Diluted

​

​

51,349,764

​

​

50,778,213

​

​

51,326,379

​

​

50,705,998

​

See accompanying notes to condensed consolidated financial statements.

​

​

3

Sterling Bancorp, Inc.

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(dollars in thousands)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended

​

Six Months Ended

​

​

June 30, 

​

June 30, 

​

    

2024

    

2023

    

2024

    

2023

Net income

​

$

1,316

​

$

2,539

​

$

1,119

​

$

2,036

Other comprehensive income (loss), net of tax:

​

​

​

​

​

​

​

 

​

​

 

​

Unrealized gain (loss) on investment securities, arising during the period, net of tax effect of $(50), $(603), $(343) and $451, respectively

​

​

(131)

​

​

(1,593)

​

 

(904)

​

 

1,192

Reclassification adjustment for loss included in net income of $—, $—, $ — and $2, respectively, included in loss on sale of investment securities, net of tax effect of $—, $— , $— and $1, respectively

​

​

—

​

​

—

​

​

—

​

​

1

Total other comprehensive income (loss)

​

​

(131)

​

​

(1,593)

​

 

(904)

​

 

1,193

Comprehensive income

​

$

1,185

​

$

946

​

$

215

​

$

3,229

​

See accompanying notes to condensed consolidated financial statements.

​

4

Sterling Bancorp, Inc.

Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)

(dollars in thousands)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Accumulated

​

​

​

​

​

​

​

​

​

​

Additional

​

​

​

​

Other

​

Total

​

​

Common Stock

​

Paid-in

​

Retained

​

Comprehensive

​

Shareholders’

​

    

Shares

    

Amount

    

Capital

    

Earnings

    

Loss

    

Equity

Balance at January 1, 2023

​

50,795,871

​

$

83,295

​

$

14,808

​

$

234,049

​

$

(19,525)

​

$

312,627

Cumulative-effect adjustment of a change in accounting principle, net of tax, on adoption of ASU 2016-13

​

—

​

​

—

​

​

—

​

​

778

​

​

—

​

​

778

Cumulative-effect adjustment of a change in accounting principle, net of tax, on adoption of ASU 2022-02

​

—

​

​

—

​

​

—

​

​

(276)

​

​

—

​

​

(276)

Net loss

​

—

​

​

—

​

​

—

​

​

(503)

​

​

—

​

​

(503)

Repurchase of restricted shares to pay employee tax liability

​

(12,166)

​

 

—

​

 

(75)

​

 

—

​

 

—

​

 

(75)

Stock-based compensation

​

24,411

​

​

—

​

​

173

​

​

—

​

​

—

​

​

173

Other comprehensive income

​

—

​

​

—

​

​

—

​

​

—

​

​

2,786

​

​

2,786

Balance at March 31, 2023

​

50,808,116

​

​

83,295

​

​

14,906

​

​

234,048

​

​

(16,739)

​

​

315,510

Net income

​

—

​

​

—

​

​

—

​

​

2,539

​

​

—

​

​

2,539

Repurchase of restricted shares to pay employee tax liability

​

(28,826)

​

​

—

​

​

(158)

​

​

—

​

​

—

​

​

(158)

Issuance of shares of common stock to defined contribution retirement plan (Note 10)

​

184,928

​

​

1,028

​

​

—

​

​

—

​

​

—

​

​

1,028

Stock-based compensation

​

1,117,668

​

​

—

​

​

350

​

​

—

​

​

—

​

​

350

Other comprehensive loss

​

—

​

​

—

​

​

—

​

​

—

​

​

(1,593)

​

​

(1,593)

Balance at June 30, 2023

​

52,081,886

​

$

84,323

​

$

15,098

​

$

236,587

​

$

(18,332)

​

$

317,676

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance at January 1, 2024

​

52,070,361

​

$

84,323

​

$

16,660

​

$

241,964

​

$

(15,224)

​

$

327,723

Net loss

​

—

​

​

—

​

​

—

​

​

(197)

​

​

—

​

​

(197)

Repurchase of restricted shares to pay employee tax liability

​

(38,033)

​

​

—

​

​

(216)

​

​

—

​

​

—

​

​

(216)

Stock-based compensation

​

14,355

​

​

—

​

​

729

​

​

—

​

​

—

​

​

729

Other comprehensive loss

​

—

​

​

—

​

​

—

​

​

—

​

​

(773)

​

​

(773)

Balance at March 31, 2024

​

52,046,683

​

​

84,323

​

​

17,173

​

​

241,767

​

​

(15,997)

​

​

327,266

Net income

​

—

​

​

—

​

​

—

​

​

1,316

​

​

—

​

​

1,316

Repurchase of restricted shares to pay employee tax liability

​

(72,806)

​

​

—

​

​

(378)

​

​

—

​

​

—

​

​

(378)

Stock-based compensation

​

397,632

​

​

—

​

​

797

​

​

—

​

​

—

​

​

797

Other comprehensive loss

​

—

​

​

—

​

​

—

​

​

—

​

​

(131)

​

​

(131)

Balance at June 30, 2024

​

52,371,509

​

$

84,323

​

$

17,592

​

$

243,083

​

$

(16,128)

​

$

328,870

​

See accompanying notes to condensed consolidated financial statements.

​

5

Sterling Bancorp, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(dollars in thousands)

​

​

​

​

​

​

​

​

​

Six Months Ended

​

​

June 30, 

​

    

2024

    

2023

Cash Flows From Operating Activities

 

​

  

 

​

  

Net income

​

$

1,119

​

$

2,036

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

​

 

​

​

 

​

Provision for (recovery of) credit losses

​

 

(2,038)

​

 

(2,228)

Deferred income taxes

​

 

(621)

​

 

4,524

Loss on sale of investment securities

​

 

—

​

 

2

Unrealized loss on equity securities

​

 

66

​

 

—

Net accretion on debt securities

​

 

(2,010)

​

 

(1,140)

Depreciation and amortization on leasehold improvements and equipment

​

​

536

​

​

693

Originations, net of principal payments, of loans held for sale

​

 

—

​

 

(2,655)

Proceeds from sale of mortage loans held for sale

​

 

—

​

 

2,979

Gain on sale of loans held for sale

​

 

—

​

 

(1,695)

Increase in cash surrender value of company-owned life insurance, net of premiums

​

 

(107)

​

 

(104)

Valuation allowance adjustments and amortization of mortgage servicing rights

​

 

150

​

 

136

Stock-based compensation

​

​

1,526

​

​

523

Other

​

 

(80)

​

 

60

Change in operating assets and liabilities:

​

 

​

​

 

​

Accrued interest receivable

​

 

(326)

​

 

340

Other assets

​

​

3,183

​

​

1,843

Other liabilities

​

 

(2,077)

​

 

(4,794)

Net cash provided by (used in) operating activities

​

 

(679)

​

 

520

​

​

​

​

​

​

​

Cash Flows From Investing Activities

​

 

  

​

 

  

Maturities and principal receipts of debt securities

​

​

167,739

​

​

11,684

Proceeds from sale of debt securities

​

​

—

​

​

2,977

Purchases of debt securities

​

​

(189,693)

​

​

(2,979)

Maturities (purchases) of debt securities, net

​

​

—

​

​

153

Purchase of shares of Federal Reserve Bank stock

​

 

(91)

​

​

—

Proceeds received from redemptions of Federal Home Loan Bank stock

​

​

500

​

​

—

Net decrease in loans

​

​

85,223

​

​

136,336

Proceeds received from loans held for sale previously classified as portfolio loans

​

​

—

​

​

37,930

Principal payments received on loans held for sale previously classified as portfolio loans

​

​

—

​

​

1,959

Proceeds from the sales of equipment

​

​

—

​

​

46

Purchases of leasehold improvements and equipment

​

 

(77)

​

 

(254)

Net cash provided by investing activities

​

 

63,601

​

 

187,852

​

​

​

​

​

​

​

Cash Flows From Financing Activities

​

 

  

​

 

  

Net increase in deposits

​

 

9,479

​

 

87,454

Repayment of advance from Federal Home Loan Bank

​

​

(50,000)

​

​

—

Cash paid for surrender of vested shares to satisfy employee tax liability

​

​

(594)

​

​

(233)

Net cash provided by (used in) financing activities

​

​

(41,115)

​

​

87,221

Net change in cash and due from banks

​

 

21,807

​

 

275,593

Cash and due from banks at beginning of period

​

 

577,967

​

 

379,798

Cash and due from banks at end of period

​

$

599,774

​

$

655,391

​

​

​

​

​

​

​

Supplemental cash flows information

​

 

  

​

 

  

Cash paid for:

​

 

  

​

 

  

Interest

​

$

37,729

​

$

26,382

Income taxes

​

​

—

​

​

300

Noncash investing and financing activities:

​

​

​

​

​

​

Transfer of residential real estate loans to loans held for sale

​

​

—

​

​

34,581

Transfer of residential real estate loans from loans held for sale

​

​

—

​

​

3,906

Shares of common stock issued in satisfaction of Company’s matching contribution in defined contribution retirement plan

​

​

—

​

​

1,028

Right-of-use assets obtained in exchange for new operating lease liabilities

​

​

1,780

​

​

—

​

See accompanying notes to condensed consolidated financial statements.

​

​

​

6

Table of Contents

STERLING BANCORP, INC.

Notes to Condensed Consolidated Financial Statements – (Unaudited)

(dollars in thousands, except share and per share amounts)

Note 1—Nature of Operations and Basis of Presentation

Nature of Operations

Sterling Bancorp, Inc. (unless stated otherwise or the context otherwise requires, together with its subsidiaries, the “Company”) is a unitary thrift holding company that was incorporated in 1989 and the parent company of its wholly owned subsidiary, Sterling Bank and Trust, F.S.B. (the “Bank”), which was formed in 1984. The Company’s business is conducted through the Bank. The Bank originates commercial real estate loans and commercial and industrial loans, and provides deposit products, consisting primarily of checking, savings and term certificate accounts. The Bank also engages in mortgage banking activities and, as such, acquires, sells and services residential mortgage loans. The Bank operates through a network of 27 branches of which 25 branches are located in the San Francisco and Los Angeles, California metropolitan areas with the remaining branches located in New York, New York and Southfield, Michigan. In February 2024, the Company closed one of its branches in San Francisco and consolidated the operations into a nearby branch office. The Company is headquartered in Southfield, Michigan.

Historically, the Company’s largest asset class has been residential mortgage loans. In 2023, the Bank discontinued originating residential loans. The Company is currently exploring and evaluating potential strategic alternatives which may include incorporating new banking products and services.

The Company is subject to regulation, examination and supervision by the Board of Governors of the Federal Reserve System (the “FRB” or “Federal Reserve”). The Bank is a federally chartered stock savings bank that elected to operate as a covered savings association, effective August 9, 2023. As a covered savings association, the Bank will generally function as a commercial bank without the constraints applicable to a thrift institution. Prior to the election becoming effective, the Bank was subject to the Qualified Thrift Lender (“QTL”) test. Under the QTL test, a savings institution is required to maintain at least 65% of its portfolio assets in certain qualified thrift investments (primarily residential mortgages and related investments, including certain mortgage-backed and related securities) in at least nine months out of each 12-month period. The Bank is subject to regulation, supervision and examination by the Office of the Comptroller of the Currency (“OCC”) of the U.S. Department of Treasury and the Federal Deposit Insurance Corporation (“FDIC”) and is a member of the FRB system and Federal Home Loan Bank (“FHLB”) system.

Basis of Presentation

The condensed consolidated balance sheet as of June 30, 2024, and the condensed consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for the three and six months ended June 30, 2024 and 2023 are unaudited. The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect all adjustments, in the opinion of management, of a normal recurring nature that are necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented. The financial data and other financial information disclosed in these notes to the condensed consolidated financial statements related to these periods are also unaudited. The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ended December 31, 2024 or for any future annual or interim period. The condensed consolidated balance sheet at December 31, 2023 included herein was derived from the audited financial statements as of that date. The accompanying unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the U.S. Securities and Exchange Commission on March 14, 2024.

​

7

Table of Contents

STERLING BANCORP, INC.

Notes to Condensed Consolidated Financial Statements – (Unaudited)

(dollars in thousands, except share and per share amounts)

Note 2—Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The condensed consolidated financial statements include the results of Sterling Bancorp, Inc. and its wholly-owned subsidiaries.

All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Due to the inherent uncertainty involved in making estimates, actual results reported in the future periods may be based upon amounts that could differ from those estimates.

Concentration of Credit Risk

The loan portfolio consists primarily of residential real estate loans, which are collateralized by real estate. At June 30, 2024 and December 31, 2023, residential real estate loans accounted for 77% and 80% of total gross loans, respectively. In addition, most of these residential loans and other commercial loans have been made to individuals and businesses in the state of California, which are dependent on the area economy for their livelihoods and servicing of their loan obligation. At June 30, 2024 and December 31, 2023, approximately 78% and 80%, respectively, of gross loans were originated with respect to properties or businesses located in the state of California.

Also, the loan portfolio consists of a loan product of one-, three-, five- or seven-year adjustable-rate mortgages that required a down payment of at least 35% (also referred to herein as “Advantage Loan Program loans”) which was terminated at the end of 2019 and continues to be the largest portion of gross residential loans. An internal review of the Advantage Loan Program and investigations conducted by the U.S. Department of Justice (“DOJ”) and the OCC indicated that certain employees engaged in misconduct in connection with the origination of a significant number of such loans, including the falsification of information with respect to verification of income, the amount of income reported for borrowers, reliance on third parties and related documentation. This former loan product totaled $540,509, or 56% of gross residential loans, and $628,245, or 58% of gross residential loans, at June 30, 2024 and December 31, 2023, respectively.

​

Recently Issued Accounting Standards Not Yet Adopted

​

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires greater disaggregation of information in a reporting entity’s effective tax rate reconciliation as well as disaggregation of income taxes paid by jurisdiction. This ASU 2023-09 is effective for annual periods beginning after December 15, 2024. The guidance should be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-09 on its income tax disclosures.

​

8

Table of Contents

STERLING BANCORP, INC.

Notes to Condensed Consolidated Financial Statements – (Unaudited)

(dollars in thousands, except share and per share amounts)

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires more disaggregated expense information about a public entity’s reportable segments if the significant segment expenses are regularly provided to the chief operating decision maker and included in each reported measure of segment profit or loss. Additionally, ASU 2023-07 allows public entities to disclose more than one measure of segment profit or loss used by the chief operating decision maker. For public entities that have one reportable segment, ASU 2023-07 confirmed that all of the disclosures required in the segment guidance, including disclosing a measure of segment profit or loss and reporting significant segment expense and other items apply to these entities. This ASU 2023-07 does not change the definition of a segment, the method of determining segments, or the criteria for aggregating operating segments into reportable segments. The ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024. The ASU 2023-07 should be adopted retrospectively as of the beginning of the earliest period presented. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-07 on its segment reporting disclosures.

​

Note 3—Debt Securities

The following tables summarize the amortized cost and fair value of available for sale debt securities at June 30, 2024 and December 31, 2023 and the corresponding amounts of gross unrealized gains and losses:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

June 30, 2024

​

​

Amortized

​

Gross Unrealized

​

Fair

​

    

Cost

    

Gain

    

Loss

    

Value

Available for sale:

 

​

  

 

​

  

 

​

  

 

​

  

U.S. Treasury and Agency securities

​

$

179,455

​

$

—

​

$

(3,870)

​

$

175,585

Mortgage-backed securities

​

​

32,917

​

​

4

​

​

(4,024)

​

​

28,897

Collateralized mortgage obligations

​

 

251,656

​

 

8

​

 

(14,360)

​

​

237,304

Collateralized debt obligations

​

 

148

​

 

—

​

 

(4)

​

 

144

Total

​

$

464,176

​

$

12

​

$

(22,258)

​

$

441,930

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2023

​

​

Amortized

​

Gross Unrealized

​

Fair

​

    

Cost

    

Gain

    

Loss

    

Value

Available for sale:

 

​

  

 

​

  

 

​

  

 

​

  

U.S. Treasury and Agency securities

​

$

253,107

​

$

57

​

$

(4,176)

​

$

248,988

Mortgage-backed securities

​

​

35,757

​

​

—

​

​

(3,830)

​

​

31,927

Collateralized mortgage obligations

​

 

151,196

​

 

27

​

 

(13,066)

​

 

138,157

Collateralized debt obligations

​

 

151

​

 

—

​

 

(10)

​

 

141

Total

​

$

440,211

​

$

84

​

$

(21,082)

​

$