Sterling Bancorp, Inc. (Southfield, MI) (SBT): Business Model Canvas [11-2024 Updated]
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Sterling Bancorp, Inc. (Southfield, MI) (SBT) Bundle
Discover the dynamic business model of Sterling Bancorp, Inc. (SBT), a key player in the financial landscape of Southfield, MI. This blog post delves into their strategic partnerships, diverse customer segments, and robust revenue streams. Learn how Sterling Bancorp effectively addresses local banking needs while ensuring a strong community presence and competitive offerings. Dive deeper to uncover the elements that drive their success!
Sterling Bancorp, Inc. (Southfield, MI) (SBT) - Business Model: Key Partnerships
Collaborations with local businesses for deposit generation
Sterling Bancorp engages in partnerships with local businesses to enhance deposit generation. As of September 30, 2024, total deposits were reported at $2.1 billion, reflecting an increase of $63.2 million from December 31, 2023. The bank leverages its retail presence and customer referrals to attract deposits across various types, including demand, savings, money market, and time deposits. Time deposits due within one year were $903.8 million, which constituted 44% of total deposits.
Relationships with financial institutions for funding
Sterling Bancorp maintains strategic relationships with financial institutions for funding purposes. The bank has access to federal funds credit lines, which were reduced to $60,000 in March 2024. The company also engages in borrowings from the Federal Home Loan Bank (FHLB), where a repayment of a $50 million advance occurred in May 2024. As of September 30, 2024, total borrowings from the FHLB included loans collateralized by residential real estate totaling $474.4 million.
Partnerships with mortgage servicers and investors
Partnerships with mortgage servicers and investors are critical for Sterling Bancorp's mortgage banking activities. The principal balance of residential real estate mortgage loans serviced for others was $152.7 million as of September 30, 2024, down from $169.7 million at December 31, 2023. Notable partnerships include the Mortgage Loan Purchase Agreement with Bayview Acquisitions LLC, which allows for the purchase of the bank's residential tenant-in-common mortgage loans. The servicing income net of amortization of servicing rights was reported at $61,000 for the three months ended September 30, 2024.
| Partnership Type | Details | Financial Impact |
|---|---|---|
| Local Businesses | Deposit Generation | Total Deposits: $2.1 billion; Increase: $63.2 million |
| Financial Institutions | Funding and Borrowings | FHLB Borrowings: $474.4 million; Repaid $50 million advance |
| Mortgage Servicers | Loan Servicing and Sales | Serviced Loans: $152.7 million; Servicing Income: $61,000 |
Sterling Bancorp, Inc. (Southfield, MI) (SBT) - Business Model: Key Activities
Offering a range of banking services including loans and deposits
Sterling Bancorp provides a variety of banking services, prominently featuring loans and deposits. As of September 30, 2024, the total loans held for investment amounted to $1.22 billion, a decrease from $1.35 billion at December 31, 2023. The composition of the loan portfolio is as follows:
| Loan Type | Amount (in thousands) | Percentage of Total Loans |
|---|---|---|
| Residential Real Estate | $910,091 | 74% |
| Commercial Real Estate | $306,927 | 25% |
| Construction | $5,229 | 0% |
| Commercial and Industrial | $2,164 | 1% |
The bank also reported total deposits of $2.1 billion, reflecting an increase of $63.2 million from December 31, 2023. Time deposits due within one year were $903.8 million, or 44% of total deposits.
Managing interest rate risk through financial instruments
Interest rate risk management is crucial for Sterling Bancorp, especially given the current high-interest environment. For the nine months ended September 30, 2024, net interest income was $42.9 million, a decrease of $6.9 million, or 14%, from the same period in 2023. The interest expense for the same period was $58.6 million, up from $44.0 million in 2023, primarily due to increased rates on interest-bearing deposits.
The net interest margin decreased to 2.42% compared to 2.73% in the prior year, illustrating the impact of rising deposit costs. To mitigate these risks, Sterling Bancorp utilizes various financial instruments, including interest rate swaps and options, to hedge against fluctuations in interest rates.
Conducting credit evaluations and risk assessments
Credit evaluations and risk assessments are integral to Sterling Bancorp’s operations. The allowance for credit losses at September 30, 2024, was $25.0 million, representing 2.04% of total loans held for investment. The bank's nonperforming assets, which consisted entirely of residential real estate loans, totaled $13.2 million, or 0.54% of total assets.
The credit quality of the loan portfolio is closely monitored, with provisions for credit losses reflecting ongoing assessments of borrower creditworthiness. The provision for credit losses during the nine months ended September 30, 2024, was $(4.9 million), indicating a recovery compared to the previous year. This proactive approach helps to ensure the stability of Sterling Bancorp’s financial health amidst varying economic conditions.
Sterling Bancorp, Inc. (Southfield, MI) (SBT) - Business Model: Key Resources
Total Assets
The total assets of Sterling Bancorp, Inc. were approximately $2.4 billion as of September 30, 2024.
Experienced Banking Staff and Management Team
Sterling Bancorp boasts a team of experienced banking professionals, contributing to its operational effectiveness and customer service excellence. The bank's management team has a track record in the financial services sector, enhancing its capability to navigate the complexities of the banking environment.
Established Customer Base with a Focus on Residential Loans
Sterling Bancorp has developed an established customer base, particularly in the area of residential loans. As of September 30, 2024, the composition of Sterling Bancorp's loan portfolio included:
| Loan Type | Amount (in thousands) |
|---|---|
| Residential Real Estate | $904,438 |
| Commercial Real Estate | $306,927 |
| Construction | $5,212 |
| Commercial and Industrial | $7,158 |
| Other Consumer Loans | $2 |
| Total Loans | $1,223,737 |
Additionally, the allowance for credit losses was reported at $24.97 million, leading to net loans totaling $1.198 billion.
Sterling Bancorp, Inc. (Southfield, MI) (SBT) - Business Model: Value Propositions
Comprehensive financial services tailored to local market needs
Sterling Bancorp offers a wide range of financial services, including commercial real estate loans, commercial and industrial loans, and deposit products such as checking and savings accounts. As of September 30, 2024, the company reported total assets of $2.41 billion. The average balance of their securities portfolio reached $476.5 million, reflecting a 19% increase year-over-year. Despite a challenging market, Sterling has maintained its focus on local community needs, ensuring that its offerings align with customer requirements.
Competitive interest rates on loans and deposit products
Sterling Bancorp has positioned itself competitively in the market by offering attractive interest rates. As of September 30, 2024, the net interest margin was 2.30%, a decrease from 2.62% in the previous year. Interest income for the nine months ended September 30, 2024, was $101.5 million, showing an 8% increase from the prior year. The interest expense for the same period was $58.6 million, up from $44.0 million, indicating a strategic approach to pricing deposits in a higher interest rate environment.
| Interest Rate Type | Rate (as of September 30, 2024) | Change from Previous Year |
|---|---|---|
| Money Market Accounts | 3.78% | +0.56% |
| Time Deposits | 4.43% | +1.17% |
| Average Rate on Loans | 6.83% | +0.85% |
Strong community presence and customer service focus
Sterling Bancorp emphasizes a strong community presence through its network of 27 branches, with a significant concentration in California and New York . The bank's commitment to customer service is reflected in its efforts to maintain low nonperforming assets, which stood at $13.2 million or 0.54% of total assets as of September 30, 2024. The company has also seen a decrease in non-interest expenses, which dropped by 12% year-over-year, indicating efficient operations and a focus on customer satisfaction.
| Financial Metric | Value (as of September 30, 2024) | Change from Previous Year |
|---|---|---|
| Nonperforming Assets | $13.2 million | +47% (vs. $9.0 million) |
| Non-Interest Expenses | $15.61 million | -12% |
| Customer Satisfaction Rate | Not disclosed | N/A |
Sterling Bancorp, Inc. (Southfield, MI) (SBT) - Business Model: Customer Relationships
Personalized banking services to enhance customer loyalty
Sterling Bancorp focuses on personalized banking services to strengthen customer loyalty. The bank offers customized financial solutions, including tailored loan products and specialized account management services. As of September 30, 2024, the total net loans stood at $1.198 billion, reflecting a strategic emphasis on meeting individual customer needs.
Regular communication through digital channels and in-branch services
The bank maintains regular communication with its customers through various channels, including digital platforms and in-branch services. This approach is evident in the increased engagement metrics, with customer inquiries and transactions conducted digitally rising by 15% over the past year. The bank operates 27 branches, providing face-to-face interactions while also enhancing its digital banking capabilities.
Support for customers experiencing financial difficulties
Sterling Bancorp has implemented support programs for customers facing financial hardships. As of September 30, 2024, the bank reported $25.6 million in past due loans, indicating the need for proactive measures. The bank has a history of providing loan modifications, including interest rate reductions and term extensions, to assist customers in maintaining their financial stability.
| Type of Support | Details | Financial Impact |
|---|---|---|
| Loan Modifications | Interest rate reductions, term extensions | Past due loans: $25.6 million |
| Customer Engagement | Digital platforms and in-branch services | 15% increase in digital transactions |
| Total Net Loans | Loans outstanding | $1.198 billion |
Sterling Bancorp, Inc. (Southfield, MI) (SBT) - Business Model: Channels
Physical branches located in Southfield, MI
Sterling Bancorp operates a network of physical branches, including 27 locations. Among these, one branch is situated in Southfield, Michigan. The branches serve as vital touchpoints for customer engagement, allowing for direct communication and service delivery.
Online banking platform for ease of access
The online banking platform of Sterling Bancorp provides customers with 24/7 access to account management, enabling them to perform transactions, monitor account activity, and utilize various banking services from the comfort of their homes. As of September 30, 2024, the total deposits of Sterling Bancorp reached $2.1 billion, which reflects the effectiveness of their online services in attracting and retaining customers.
Mobile banking applications for on-the-go services
In addition to online banking, Sterling Bancorp offers mobile banking applications that facilitate on-the-go banking services. Customers can manage their accounts, transfer funds, and deposit checks remotely. The mobile banking platform has contributed to the bank's customer base and engagement, enhancing convenience and accessibility.
| Service Type | Details | Statistics |
|---|---|---|
| Physical Branches | Locations in Southfield, MI | 1 Branch in Southfield; 27 total branches |
| Online Banking | 24/7 account access and transaction capabilities | Total Deposits: $2.1 billion as of September 30, 2024 |
| Mobile Banking | Remote account management and transaction services | Increased customer engagement through mobile app features |
Sterling Bancorp, Inc. (Southfield, MI) (SBT) - Business Model: Customer Segments
Individual consumers seeking residential mortgages
As of September 30, 2024, Sterling Bancorp's residential real estate loans accounted for approximately 74% of total gross loans held for investment, totaling $904.4 million. The company has ceased originating new residential real estate loans since early 2023, and thus, no new loans were added to the residential loan portfolio during the nine months ended September 30, 2024. The primary product in this segment is the former adjustable-rate mortgage, which comprised $486 million or 54% of gross residential loans.
Small to medium-sized businesses for commercial loans
Sterling Bancorp offers a variety of commercial loan products, including commercial real estate loans, construction loans, and commercial and industrial loans. As of September 30, 2024, total commercial loans amounted to $319.3 million, reflecting an increase of $56.1 million from December 31, 2023. The commercial real estate loans totaled $306.9 million, with the largest portion (39%) secured by multifamily properties. The company originated commercial loans with an aggregate principal balance of $125 million during the nine months ended September 30, 2024.
| Loan Type | Amount (in thousands) | Percentage of Total |
|---|---|---|
| Commercial Real Estate | $306,927 | 96% |
| Commercial and Industrial | $7,158 | 2% |
| Construction | $5,212 | 2% |
Investors and institutions utilizing banking services
Sterling Bancorp also serves investors and institutions by providing various banking services. As of September 30, 2024, total deposits were approximately $2.1 billion, with money market, savings, and NOW accounts contributing $1.06 billion. The company’s strategy includes offering competitive interest rates to maintain its existing customer deposit base. The tiered structure of deposits indicates a significant segment of institutional investors.
| Deposit Type | Amount (in thousands) | Percentage Change (from Dec 31, 2023) |
|---|---|---|
| Noninterest-bearing Deposits | $31,276 | -11% |
| Money Market, Savings and NOW | $1,063,746 | -3% |
| Time Deposits | $972,171 | +11% |
Sterling Bancorp, Inc. (Southfield, MI) (SBT) - Business Model: Cost Structure
Operational costs including salaries and branch maintenance
The operational costs for Sterling Bancorp, Inc. include salaries and employee benefits amounting to $25.2 million for the nine months ended September 30, 2024, a decrease of $2.2 million, or 8%, from $27.4 million for the same period in 2023. Occupancy and equipment expenses were $6.1 million, showing a slight decrease from $6.3 million in 2023. Total non-interest expense for the three months ended September 30, 2024, was $15.6 million, down from $17.7 million in the same quarter of 2023, primarily due to reductions in professional fees and other expenses.
Interest expenses on customer deposits and borrowings
For the nine months ended September 30, 2024, Sterling Bancorp reported total interest expenses of $58.6 million, compared to $44.0 million for the same period in 2023. The interest expense for the three months ended September 30, 2024, was $20.7 million, reflecting a 23% increase from $16.9 million in 2023. The average rate paid on interest-bearing deposits increased by 120 basis points during this period, driven by competitive pricing in a higher interest rate environment.
Costs associated with regulatory compliance and risk management
Regulatory compliance costs for Sterling Bancorp have been significant due to ongoing efforts to resolve previous government investigations. Professional fees related to compliance were reported at $7.3 million for the nine months ended September 30, 2024, down from $11.0 million in the same period of the previous year, indicating a decrease of $3.7 million attributed to the resolution of these investigations. The company anticipates incurring additional professional fees related to ongoing compliance activities and the pending Transaction.
| Cost Category | Q3 2024 (in millions) | Q3 2023 (in millions) | 9M 2024 (in millions) | 9M 2023 (in millions) |
|---|---|---|---|---|
| Salaries and Employee Benefits | 8.5 | 8.8 | 25.2 | 27.4 |
| Occupancy and Equipment | 2.0 | 2.1 | 6.1 | 6.3 |
| Professional Fees | 3.0 | 4.2 | 7.3 | 11.0 |
| Total Non-Interest Expense | 15.6 | 17.7 | 45.9 | 52.9 |
| Total Interest Expense | 20.7 | 16.9 | 58.6 | 44.0 |
Sterling Bancorp, Inc. (Southfield, MI) (SBT) - Business Model: Revenue Streams
Interest income from loans, primarily residential mortgages
For the three months ended September 30, 2024, Sterling Bancorp reported interest income of $34.4 million, representing a 4% increase from $32.9 million in the same period in 2023. This increase was driven by a 60 basis point increase in the yield on the average balance of the loan portfolio, particularly due to an 85 basis point increase in the yield on residential real estate loans. As of September 30, 2024, the average balance of the loan portfolio was $1.2 billion, a decrease of 14% or $204.1 million compared to the prior year.
Fees from banking services and financial products
Non-interest income for the nine months ended September 30, 2024, totaled $990,000, a decrease from $2.57 million in the same period in 2023. The components of non-interest income included:
- Service charges and fees: $248,000
- Gain on sale of mortgage loans held for sale: $0 (compared to $1.7 million in 2023)
- Net servicing income: $182,000
- Income earned on company-owned life insurance: $251,000
- Other income: $215,000
These figures reflect a competitive environment and a focus on maintaining customer relationships through service offerings.
Investment income from securities portfolio management
Sterling Bancorp's investment income showed notable performance in the nine months ended September 30, 2024, with total interest income from securities reaching $8.7 million, an increase of 21% from $7.2 million in 2023. The average balance of the securities portfolio increased to $459.6 million, up $78.7 million or 21% year-over-year. The yield on the average balance of securities increased 110 basis points due to the higher interest rate environment.
| Revenue Stream | Q3 2024 Amount (in millions) | Q3 2023 Amount (in millions) | Change (%) |
|---|---|---|---|
| Interest Income from Loans | $34.4 | $32.9 | 4% |
| Service Charges and Fees | $0.248 | $0.269 | -8% |
| Investment Income from Securities | $8.7 | $7.2 | 21% |
| Total Non-Interest Income | $0.990 | $2.573 | -61% |
Updated on 16 Nov 2024
Resources:
- Sterling Bancorp, Inc. (Southfield, MI) (SBT) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Sterling Bancorp, Inc. (Southfield, MI) (SBT)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Sterling Bancorp, Inc. (Southfield, MI) (SBT)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.