DEF 14A 1 nc10022924x1_def14a.htm DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934

(Amendment No. )

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Filed by a Party other than the Registrant ☐

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☒	Definitive Proxy Statement

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☐	Soliciting Material under §240.14a-12

Sterling Bancorp, Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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To Our Shareholders:

You are cordially invited to attend the 2021 annual meeting of shareholders (the “Annual Meeting”) of Sterling Bancorp, Inc. (“Sterling”), which will be held virtually on Thursday, May 27, 2021, at 1:00 p.m., Eastern Time. There is no physical location for the Annual Meeting.

The attached Notice of Annual Meeting and the attached Proxy Statement describe the business to be transacted at the Annual Meeting. Directors and officers of Sterling, as well as a representative of Crowe LLP, the accounting firm appointed by the Audit Committee of the Board of Directors to be Sterling’s independent registered public accounting firm for the fiscal year ending December 31, 2021, will be present at the Annual Meeting to respond to appropriate questions.

Please complete, sign, date and return the accompanying proxy card promptly or, if you prefer, vote by using the telephone or Internet, whether or not you plan to attend the Annual Meeting. Your vote is important regardless of the number of shares you own. Voting by proxy will not prevent you from voting in person at the Annual Meeting, but it will assure that your vote is counted if you are unable to attend the meeting. If you are a shareholder whose shares are not registered in your own name, you will need additional documentation from your record holder to attend and to vote personally at the Annual Meeting. Examples of appropriate documentation include a broker’s statement, letter or other document confirming your ownership of shares of Sterling common stock.

On behalf of the Board of Directors and the employees of Sterling, we thank you for your continued support and hope to see you at the Annual Meeting.

Sincerely,

Thomas M. O’Brien

Chairman, President and Chief Executive Officer

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One Towne Square, Suite 1900

Southfield, Michigan 48076

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To Be Held May 27, 2021

NOTICE IS HEREBY GIVEN that the 2021 annual meeting of shareholders (the “Annual Meeting”) of Sterling Bancorp, Inc., a Michigan corporation (the “Company”), will be held virtually on Thursday, May 27, 2021, at www.virtualshareholdermeeting.com/SBT2021, at 1:00 p.m., Eastern Time. There is no physical location for the Annual Meeting. To attend the Annual Meeting virtually, you will need to have your 16-digit control number that is included on your proxy card. You will not be able to physically attend the meeting in person. The agenda for the Annual Meeting is as follows:

1.	To elect three directors to serve for a three-year term expiring at the 2024 annual meeting of shareholders;

2.	To approve the compensation of our named executive officers for 2020 (an advisory, non-binding “Say on Pay” vote);

3.	To recommend whether the frequency of the advisory, non-binding vote to approve the compensation of our named executive officers should be every year, every two years or every three years (an advisory, non-binding “Say When on Pay” vote);

4.	To ratify the appointment of Crowe LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2021; and

5.	To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof, all in accordance with the accompanying proxy statement.

The Board of Directors of the Company (the “Board of Directors”) recommends a vote FOR each of the director nominees named in the accompanying proxy statement, FOR the advisory, non-binding approval of the compensation of our named executive officers for 2020, of “EVERY YEAR” for the advisory, non-binding vote on the frequency of the advisory, non-binding vote to approve the compensation of our named executive officers and FOR the ratification of the appointment of Crowe LLP.

The Board of Directors has fixed March 29, 2021, as the record date for the determination of shareholders entitled to notice of and to vote at the Annual Meeting or any adjournment or postponement of the Annual Meeting. We are pleased to utilize the virtual shareholder meeting technology (i) to provide ready access and cost savings for our shareholders and the Company and (ii) to promote social distancing pursuant to guidance provided by the Centers for Disease Control and Prevention and the U.S. Securities and Exchange Commission due to the COVID-19 pandemic. The virtual meeting format allows attendance from any location in the world.

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: General Counsel and Corporate Secretary.

			By order of the Board of Directors


			Colleen Kimmel
			Executive Vice President, General Counsel and Corporate Secretary

Your vote is important. You may vote your shares electronically via the Internet, by using the telephone or, if you prefer the paper copy, please date and sign the accompanying proxy card, indicate your choice with respect to the matters to be voted upon and return it promptly in the accompanying envelope. Note that if your stock is held in more than one name, all owners must sign the proxy card.

Dated: April 13, 2021

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One Towne Square, Suite 1900

Southfield, Michigan 48076

STERLING BANCORP, INC.

2021 PROXY STATEMENT

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General Information			1
PROPOSAL NO. 1: ELECTION OF DIRECTORS			3
Corporate Governance			10
Executive Officers			13
Compensation Discussion and Analysis			15
Executive Compensation			24
Potential Payments Upon Termination or Change in Control			33
Change in Control and Severance Payments as of December 31, 2020			34
Director Compensation			36
Certain Relationships and Related Party Transactions			37
PROPOSAL NO. 2: ADVISORY, NON-BINDING VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS FOR 2020			39
PROPOSAL NO. 3: ADVISORY, NON-BINDING VOTE RECOMMENDING THE FREQUENCY OF THE ADVISORY, NON-BINDING VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS			40
PROPOSAL NO. 4: RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			41
Audit Committee Report			42
Beneficial Ownership of Common Stock			43
Shareholder Proposals for the 2022 Annual Meeting			46
Other Matters			47

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PROXY STATEMENT

GENERAL INFORMATION

This proxy statement and the accompanying proxy card are furnished in connection with the solicitation of proxies by the Board of Directors (the “Board of Directors” or “Board”) of Sterling Bancorp, Inc., a Michigan corporation (the “Company”), to be voted at the 2021 annual meeting of shareholders of the Company (the “Annual Meeting”) to be held virtually on Thursday, May 27, 2021, at www.virtualshareholdermeeting.com/SBT2021, at 1:00 p.m., Eastern Time, for the purposes set forth in this proxy statement.

The Board of Directors has fixed the close of business on March 29, 2021 (the “Record Date”), as the record date for the determination of shareholders entitled to notice of and to vote at the Annual Meeting and any adjournment or postponement of the Annual Meeting. This proxy statement is being mailed on or about April 13, 2021, to all holders of record of common stock of the Company as of the close of business on the Record Date. This proxy statement and our 2020 annual report (the “2020 Annual Report”) are also available electronically at investors.sterlingbank.com. As of the Record Date, there were 49,866,496 shares of common stock issued and outstanding and entitled to vote. Each share of common stock is entitled to one vote on each matter properly brought before the Annual Meeting.

If the accompanying proxy card is properly executed and returned to the Company, the shares represented by the proxy card will be voted on each matter that properly arises at the Annual Meeting and any adjournment or postponement of the Annual Meeting. Every properly executed proxy card that is received by the Company prior to the closing of the polls at the Annual Meeting will be voted in accordance with the instructions contained therein unless otherwise revoked. Properly executed but unmarked proxy cards received by the Company prior to the closing of the polls at the Annual Meeting, unless otherwise revoked, will be voted FOR each of the director nominees named in this proxy statement, FOR the advisory, non-binding approval of the compensation of our named executive officers for 2020, EVERY YEAR for the advisory, non-binding vote on the frequency of the advisory, non-binding vote to approve the compensation of our named executive officers and FOR the ratification of the appointment of Crowe LLP. If any other business should properly come before the meeting, all properly executed proxies will be voted on such other matters as directed by the Board.

A proxy may be revoked before it is voted at the Annual Meeting by notifying the General Counsel and Corporate Secretary of the Company in writing or at the Annual Meeting prior to the closing of the polls, by submitting a duly executed proxy (including a proxy given over the Internet or by telephone) bearing a later date or by attending the Annual Meeting and voting electronically. All shareholders are encouraged to date and sign the accompanying proxy card, indicate a choice with respect to the matters to be voted upon and return it to the Company.

You will be able to attend the Annual Meeting, vote and submit your questions in advance of and in real-time during the meeting via a live audio webcast by visiting www.virtualshareholdermeeting.com/SBT2021. To participate in the meeting, you must have your 16-digit control number that is shown on your proxy card. If you access the meeting but do not enter your control number, you will be able to listen to the proceedings, but you will not be able to vote or otherwise participate. You should log on to the meeting site at least fifteen minutes prior to the start of the Annual Meeting to provide time to register and download the required software, if needed. We anticipate holding a question-and-answer session following the formal business portion of the meeting, during which shareholders may submit questions to us through the voting site. You will not be able to physically attend the Annual Meeting in person.

Voting via the Internet, Telephone or by Mail

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 electronically at the virtual Annual Meeting using your 16-digit control number (included on your proxy card) 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 accompanying proxy card in the prepaid and addressed envelope that accompanied the proxy materials. Internet and telephone voting for shareholders of record will close at 11:59 p.m., Eastern Time, on May 26, 2021. Further instructions for voting via the Internet and telephone are set forth on the accompanying proxy card.

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Beneficial Holders

If you are a beneficial owner of shares held in “street name,” you may vote electronically at the Annual Meeting using the 16-digit control number included on your proxy card. 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.

Quorum, Required Vote, and Related Matters

Quorum. A quorum is present if the number of shares entitled to cast a majority of the votes on a proposal is represented at the Annual Meeting by proxy or in person (by electronic participation). Abstentions and broker non-votes will be counted as present only for the purpose of determining whether a quorum is present.

“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. However, certain regulations prohibit your broker, bank or other nominee from voting uninstructed shares on a discretionary basis for Proposal Nos. 1, 2 and 3 at the Annual Meeting. 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. Thus, if you hold your shares in street name and you do not instruct your broker on how to vote at the Annual Meeting, votes may not be cast on your behalf for Proposal Nos. 1, 2 and 3.

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 elected as directors. You may vote in favor of the nominees specified on the accompanying proxy card 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 – Advisory, Non-Binding Vote to Approve the Compensation of our Named Executive Officers for 2020. The affirmative vote of a majority of the votes cast by the holders of shares entitled to vote, with one vote, in person or by written proxy, for each share entitled to vote, will be considered our shareholders’ approval of the advisory, non-binding resolution approving the compensation of our named executive officers for 2020. Shares withheld or not otherwise voted with respect to this proposal (because of abstention, broker non-vote or otherwise) will not be counted as votes cast and will have no effect on the vote on this proposal.

Proposal No. 3 – Advisory, Non-Binding Vote Recommending the Frequency of the Advisory, Non-Binding Vote on the Compensation of our Named Executive Officers. The affirmative vote of a majority of the votes cast by the holders of shares entitled to vote, with one vote, in person or by written proxy, for each share entitled to vote, will be considered our shareholders’ recommendation of the frequency of holding a shareholder advisory, non-binding vote to approve the compensation of our named executive officers. A shareholder may vote for holding such advisory vote every year, every two years or every three years. If none of these frequency options receives the affirmative vote of a majority of the votes cast by the holders of shares entitled to vote, the frequency receiving the largest number of votes cast will be considered by the Board of Directors to be the frequency recommended by our shareholders. Shares withheld or otherwise not voted with respect to this proposal (because of abstention, broker non-vote or otherwise) will not be counted as votes cast and will have no effect on the vote on this proposal.

Proposal No. 4 – Ratification of the Appointment of the Company’s Independent Registered Public Accounting Firm. The affirmative vote of a majority of the votes cast by the holders of shares entitled to vote, with one vote, in person or by written proxy, for each share entitled to vote, is required for ratification of the appointment of Crowe LLP as our independent registered public accounting firm for 2021. Shares withheld or otherwise not voted with respect to this proposal (because of abstention, broker non-vote or otherwise) will not be counted as votes cast and will have no effect on the vote on this proposal.

Although the votes on Proposal Nos. 2 and 3 are not binding on the Company, the Compensation Committee of the Board of Directors will take your vote on these proposals into consideration when determining the compensation of our named executive officers and the frequency of the advisory, non-binding vote to approve the compensation of our named executive officers in the future. Although the vote on Proposal No. 4 is not binding on the Company, the Audit Committee of the Board of Directors will take your vote on this proposal into consideration when selecting our independent registered public accounting firm in the future.

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PROPOSAL NO. 1: ELECTION OF DIRECTORS

The Second Amended and Restated Articles of Incorporation (the “Articles of Incorporation”) and the Amended and Restated Bylaws (the “Bylaws”) of the Company provide for a Board of Directors consisting of a number of members to be determined by a resolution adopted by the affirmative vote of at least 80% of the Board of Directors and a majority of the “Continuing Directors” (as defined in the Articles of Incorporation) divided into three classes of nearly equal size with staggered three-year terms of office. During 2020, the following directors stepped down from their positions on the Board: Mr. Barry Allen, Mr. Peter Sinatra and Ms. Rachel Tronstein. The Board is extremely grateful for their service and wishes them well in their future endeavors. During 2020, the Board appointed Mr. Denny Kim, Mr. Steven Gallotta and Ms. Tracey Dedrick to the Board. Each of these appointments was effective upon the receipt of the applicable regulatory non-objection. Messrs. Kim and Gallotta were appointed to serve until, and were reelected at, the 2020 annual meeting of shareholders, and their terms now expire at the 2023 annual meeting of shareholders. Ms. Dedrick was appointed to serve until, and has been nominated for reelection at, the Annual Meeting. Accordingly, the Board of Directors currently consists of nine members as follows:

The three directors whose terms expire at the Annual Meeting, Ms. Daitch, Ms. Dedrick and Mr. Wolberg, have been nominated for election to the Board of Directors at the Annual Meeting, each to serve a three-year term expiring at the 2024 annual meeting of shareholders. Unless otherwise directed, the persons named as proxies in the accompanying proxy card will vote for the election of Mses. Daitch and Dedrick and Mr. Wolberg. All nominees are currently directors of the Company. In the event that any of the nominees becomes unavailable, which is not anticipated, the Board of Directors, in its discretion, may reduce the number of directors or designate substitute nominees, in which event all properly executed proxies will be voted for such substitute nominees. Proxies cannot be voted for a greater number of directors than the number of nominees named.

OUR BOARD OF DIRECTORS RECOMMENDS

A VOTE FOR THE ELECTION OF THE THREE DIRECTOR NOMINEES

Information about Directors and Nominees

The Company believes that the Board of Directors as a whole should encompass a range of talent, skill, diversity and expertise that enables the Board of Directors 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

Peggy Daitch, Director. Ms. Daitch has served as a member of our Board of Directors since December 2019. Ms. Daitch brings over 40 years of experience as a highly respected and recognized advertising and marketing executive, innovative thinker and community leader. After leaving General Motors’ largest advertising agency (D’Arcy Masius Benton & Bowles) as a Vice President, she spent the majority of her career with Condé Nast (1987–2008), where she was a Vice President and the leader of Detroit’s Condé Nast office representing, at its peak, 29 of America’s most celebrated magazine titles and websites including Vogue, Vanity Fair, The New Yorker, Golf Digest, Architectural Digest, Wired, Bon Appetit, epicurious.com and wired.com. She has also represented titles from Hearst Corporation, National Geographic and other leading media companies. After retiring from advertising in 2016, Ms. Daitch pivoted to a new role at Strategic Philanthropy, Ltd., stewarding the 20-year philanthropic advisory firm’s growth in Michigan where she is an ongoing consultant. Immediately prior to this position, Ms. Daitch served as a Partner of Aperture Media Group from 2010 to 2016. Ms. Daitch was the first woman to be president of the Adcraft Club of Detroit, the world’s largest advertising club. She has been honored with The Advertising Woman of the Year Award and has been inducted into the Adcraft Hall of Fame. She serves on the Board of Governors of Cranbrook

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Academy of Art and Museum where she is a member of the Executive Committee. She is also a member of the Public Arts Board of the City of Birmingham. She is a past president of Hebrew Free Loan of Metropolitan Detroit and has held board positions with the Jewish Federation of Metropolitan Detroit, Franklin Hills Country Club, the Detroit Institute of Arts Founders Junior Council, the Michigan Arts Foundation, CATCH, Jewish Ensemble Theater and others. Ms. Daitch is a graduate of the University of Michigan.

Our Board of Directors believes that Ms. Daitch should serve as a director because of her experience as an executive and her highly respected reputation as an innovative thinker and leader.

Tracey Dedrick, Director. Ms. Dedrick was appointed to our Board of Directors on December 17, 2020, effective upon receipt of regulatory non-objection from the Office of the Comptroller of the Currency (the “OCC”), which was recently received. Ms. Dedrick brings over 40 years of experience in the financial services industry to the Board. She is a former Executive Vice President and Head of Enterprise Risk Management for Santander Holdings U.S., where she was responsible for enterprise risk, operational risk and market risk for the Americas from September 2016 until her retirement in 2017. Prior to that role, Ms. Dedrick was Executive Vice President and Chief Risk Officer at Hudson City Bancorp from July 2011 until November 2015 and served with its successor, M&T Bank, from November 2015 to February 2016. From January 2010 to February 2011, Ms. Dedrick served as the Treasurer of PineBridge Investments, an asset management company with $83 billion in assets under management. Prior to this, Ms. Dedrick was employed by MetLife, the largest insurance provider in the United States, where she served as Vice President and Assistant Treasurer from June 2001 until July 2004, Vice President and Head of Investor Relations from July 2004 until July 2007 and then served as the Senior Vice President and Head of Market Risk from July 2007 until September 2009. Ms. Dedrick currently serves on the board of directors of First BanCorp., where she is also the Chair of First Bancorp.’s Risk Committee. Additionally, Ms. Dedrick currently serves as the Chair and a board member of the Information Systems Audit and Control Association (“ISACA”). As a board member of ISACA, Ms. Dedrick is a member of ISACA’s Risk and Technology Committee and Compensation Committee as well as the Chair of its Executive Committee. Ms. Dedrick recently served as a board member of Fieldpoint Private, a private wealth management firm. Ms. Dedrick obtained her Bachelor of Arts in Economics from the University of Minnesota—Twin Cities.

Our Board of Directors believes that Ms. Dedrick should serve as a director because of her relevant experience in the financial services industry, particularly in enterprise risk management and treasury functions.

Lyle Wolberg, Director. Mr. Wolberg joined our Board of Directors in August 2017. He is one of the founding partners of Telemus Capital Partners, a financial advisory firm he co-founded in 2005. Mr. Wolberg was a former Financial Advisor at Merrill Lynch from 1994 to 1997 and Senior Vice President-Investments at UBS Financial Services from 1999 to 2005. Mr. Wolberg has more than 20 years of industry experience across all facets of financial wealth planning and investment management. He is a certified financial planner. He serves on the boards of The Children’s Foundation and First Tee of Greater Detroit, and is Past President and Co-Founder of the Berkley Educational Foundation. Mr. Wolberg has a B.B.A. in finance from the University of Michigan.

Our Board of Directors believes that Mr. Wolberg should serve as a director because of his extensive experience in the financial and wealth management industries.

Continuing Directors

Whose Terms Expire in 2022

Thomas M. O’Brien, Chairman, President and Chief Executive Officer. Mr. O’Brien has served as our Chairman, President and Chief Executive Officer since June 2020. In connection with hiring Mr. O’Brien, our Board of Directors appointed Mr. O’Brien to fill the Board of Directors vacancy created by the resignation of Thomas Lopp. Mr. O’Brien was similarly appointed to the board of directors of Sterling Bank and Trust, F.S.B. (the “Bank”). These appointments were effective June 3, 2020, pursuant to the interim non-objection of the OCC, and confirmed pursuant to the final non-objection of the OCC on September 21, 2020. Prior to his appointment, Mr. O’Brien provided consulting services to the Bank beginning in March 2020. Mr. O’Brien is an accomplished leader in the financial services industry with over 44 years of industry experience. Most recently, he served as Vice Chairman of New York City-based Emigrant Bancorp, Inc. and Emigrant Bank from October 2018 to March 2020. Mr. O’Brien served as president, chief executive officer and on the boards of Sun Bancorp, Inc. and Sun National Bank from April 2014 to February 2018. Mr. O’Brien previously served on the boards of BankUnited, Inc. and BankUnited, NA from May 2012 to April 2014. Prior to that, Mr. O’Brien served as president, chief executive officer and a director of State Bank of Long Island and State Bancorp, Inc. from November 2006 to January 2012. From 2000 to 2006, Mr. O’Brien

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was president and chief executive officer of Atlantic Bank of New York and, following the acquisition of Atlantic Bank of New York by New York Commercial Bank, continued to serve as president and chief executive officer during the post-closing transition. From 1996 to 2000, Mr. O’Brien was vice chairman and a board member of North Fork Bank and North Fork Bancorporation, Inc. Mr. O’Brien began his career at North Side Savings Bank in 1977, where he worked until 1996, becoming chairman, president and chief executive officer in 1985. Mr. O’Brien served as a director of the Federal Home Loan Bank (the “FHLB”) of New York from 2008 to 2012 and served as chairman of the New York Bankers Association in 2007. Mr. O’Brien is currently trustee and chairman of the audit committee of Prudential Insurance Company of America $175 Billion Annuity Fund Complex, and vice-chairman of the board and chairman of the finance committee of ArchCare and Catholic Healthcare Foundation for the Archdiocese of New York. Mr. O’Brien received a B.A. in Political Science from Niagara University in 1972 and an M.B.A. from Iona College in 1982.

Our Board of Directors believes that Mr. O’Brien should serve as a director because of his extensive management experience in the banking industry.

Seth Meltzer, Director. Mr. Meltzer has served as a member of our Board of Directors since 2000. Mr. Meltzer was previously President, CEO and a director of the Seligman Group, a family-owned real estate and investment company. Mr. Meltzer has also 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 run the Seligman Group’s management affiliate (Seligman Western Enterprises, Ltd.) from 2005 to 2018. He has a BS in Finance from the University of Arizona. Mr. Meltzer’s mother, Sandra Seligman, is also a member of our Board of Directors, and his uncle, Scott J. Seligman, is the Company’s founder. Currently, Mr. Meltzer oversees investments for his family and sits on the board of several foundations, including the Sandra Seligman Family Foundation. Mr. Meltzer is currently on the board of governors for Cranbrook Schools.

Our Board of Directors 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 board’s Asset & Liability Committee.

Benjamin J. Wineman, Director. Mr. Wineman has served as a director of our Board of Directors since 2013. Mr. Wineman has 22 years of extensive commercial real estate and financial experience. Currently, Mr. Wineman is a Principal and Managing Broker 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 Ravinia Festival Associates board (having served as board President from 2017-2019). Mr. Wineman graduated from DePauw University in 1998 with a Bachelor of Arts Degree.

Our Board of Directors believes that Mr. Wineman should serve as a director because of his extensive commercial real estate and financial experience.

Whose Terms Expire in 2023

Steven Gallotta, Director. Mr. Gallotta was appointed to our Board of Directors on September 22, 2020, effective upon receipt of regulatory non-objection from the OCC, which was received later in 2020. Mr. Gallotta brings over 35 years of financial reporting and assurance experience in the financial services industry to the Board of Directors. Mr. Gallotta spent the majority of his career at KPMG, from 1975 until his mandatory retirement from the firm in 2013. He became an audit partner in the New York Financial Services Practice of KPMG in 1986, serving all types of financial institutions, including depository institutions. During this time, Mr. Gallotta also served as an

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Advisory partner in KPMG’s Office of General Counsel. Since 2016, Mr. Gallotta has served on the board of directors of St. Patrick’s Home for the Aged and Infirm, a non-compensated role, in the Bronx, New York. Mr. Gallotta has been a certified public accountant licensed in New York since 1979. He obtained his Bachelor of Business Administration from Iona College.

Our Board of Directors believes that Mr. Gallotta should serve as a director because of his extensive experience in the business and financial world, as well as his particular expertise in U.S. Securities and Exchange Commission (the “SEC”) matters and accounting and management issues.

Denny Kim, Director. Mr. Kim was appointed to our Board of Directors on September 22, 2020, effective upon receipt of regulatory non-objection from the OCC, which was received later in 2020. Mr. Kim brings over 15 years of financial experience to the Board of Directors. Mr. Kim is the Managing Principal of 7911 Partners, a private investment and advisory firm he founded in 2019. Previously, Mr. Kim was a senior investment professional and Investment Committee Member at WL Ross & Co., a private equity firm founded by former U.S. Commerce Secretary Wilbur L. Ross, where he specialized in financial services investments from 2010-2018. Prior to WL Ross & Co., Mr. Kim worked at J.C. Flowers & Co., a private equity firm dedicated to investing globally in the financial services industry. Mr. Kim began his career at Credit Suisse First Boston’s Investment Banking Division, where he advised on mergers, acquisitions and capital raising initiatives for financial institutions. Mr. Kim previously served as a member of the board of directors of Talmer Bancorp, Inc., a board observer at Sun Bancorp, Inc. and Advisor at Gemspring Capital. Mr. Kim earned a Bachelor of Arts degree from Northwestern University and an MBA from Tuck School of Business at Dartmouth.

Our Board of Directors believes that Mr. Kim should serve as a director because of his extensive experience in the business world, as well as his particular expertise in advisory and investment services.

Sandra Seligman, Director. Ms. Seligman has served as a member of our Board of Directors 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. Ms. Seligman’s brother, Scott J. Seligman, is the Company’s founder and her son, Seth Meltzer, is also a director.

Our Board of Directors 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 of Directors.

Legal Proceedings

The Bank is currently under formal investigation by the OCC relating primarily to certain aspects of its BSA/AML compliance program as well as the Bank’s credit administration, including our Advantage Loan Program. The Bank also has received grand jury subpoenas from the Department of Justice (the “DOJ”) beginning in 2020 requesting the production of documents and information in connection with an investigation that appears to be focused on the Bank’s residential lending practices and related issues. In addition, the Company is responding to a formal investigation recently initiated by the SEC that is related to the Advantage Loan Program. The Bank also continues to be subject to the OCC Agreement, relating primarily to certain aspects of the Bank’s BSA/AML compliance program and credit administration. The OCC Agreement generally requires that the Bank enhance its policies and procedures to ensure compliance with BSA/AML laws and regulations, and ensure effective controls over residential loan underwriting. Specifically, the OCC Agreement requires the Bank to: (i) establish a compliance committee to monitor and oversee the Bank’s compliance with the provisions of OCC Agreement; (ii) develop a revised customer due diligence and enhanced due diligence program; (iii) develop a revised suspicious activity monitoring program; (iv) engage an independent, third-party consultant to review and provide a written report on the Bank’s suspicious activity monitoring; (v) develop revised policies and procedures to ensure effective BSA/AML model risk management for the Bank’s automated suspicious activity monitoring system, which must be validated by a qualified, independent third party; (vi) ensure that the Bank’s BSA Department maintains sufficient personnel; and

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(vii) develop revised policies and procedures to ensure effective controls over loan underwriting. The OCC Agreement was entered into in June of 2019, and the following current directors, acting as directors at that time, signed the OCC Agreement in such capacity: Mr. Meltzer, Ms. Seligman, Mr. Wineman and Mr. Wolberg.

Board of Directors Meetings

All directors are expected to attend all meetings of the Board of Directors and of the Board of Directors committees on which they serve. The Board of Directors met thirteen (13) times during 2020. In 2020, all directors attended more than 75% of the aggregate number of all meetings of the Board of Directors and the committees on which he or she served. The Company’s independent directors routinely meet in executive session without management present.

Board of Directors Committee Membership

Current membership of the standing committees of the Board of Directors are shown in the table below.

Mr. O’Brien

Chairman, President and

Chief Executive Officer

Ms. Daitch

Director

Member

Chairperson

Ms. Dedrick

Director

Chairperson

Member

Mr. Gallotta

Director

Chairperson

Member

Mr. Kim

Director

Member

Mr. Meltzer

Director

Ms. Seligman

Director

Mr. Wineman

Director

Chairperson

Member

Mr. Wolberg

Director

Chairperson

Member

Audit 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 (“Nasdaq”) for audit committees. Steven Gallotta serves as the Company’s “audit committee financial expert” as such term is defined in applicable SEC regulations. The Board of Directors has adopted a written charter for the Audit Committee that, among other things, specifies the scope of the Audit Committee’s rights and responsibilities. A copy of the charter is available on the Company’s website at investors.sterlingbank.com. The Audit Committee held eleven (11) meetings in 2020.

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The Board of Directors recently separated the former Audit and Risk Management Committee into the current Audit Committee and a new Risk Committee. The Audit Committee’s charter currently remains unchanged from since before the separation of the former Audit and Risk Management Committee. See “— New Risk Committee and Ethics and Compliance Committee.”

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance 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, recommends director nominees to the full Board of Directors and considers candidate recommendations of shareholders;

•	develops and oversees policies and procedures and reviews shareholder communications to the Board of Directors;

•	reviews and makes recommendations to the Board of Directors on its policies and practices related to corporate governance; and

•	annually reviews the Nominating Committee charter.

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, among other traits.

The Board of Directors has adopted a written charter for the Nominating Committee, a copy of which is available on the Company’s website at investors.sterlingbank.com. The Nominating Committee held two (2) meetings in 2020. Sandra Seligman and Seth Meltzer, who are not independent directors, served on our Nominating Committee until the Company’s Board meeting in March 2021, when Ms. Daitch, Ms. Dedrick and Mr. Kim were appointed to the Nominating Committee, ending the Company’s reliance upon the “controlled company” exception to the board of directors and committee independence requirements under the rules of Nasdaq. See “Corporate Governance—Director Independence.”

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 equity-based plans and policies;

•	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 investors.sterlingbank.com. The Compensation Committee held three (3) meetings in 2020. We have determined that all members of our Compensation Committee are considered “independent” under applicable SEC and Nasdaq listing rules.

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New Risk Committee and Ethics and Compliance Committee.

During 2020, our Board of Directors discussed and considered actions to expand its committees, the final proposals of which are being completed in 2021. Specifically, our Board of Directors recently separated the former Audit and Risk Management Committee into the current Audit Committee and a new Risk Committee and created a new Ethics & Compliance Committee. The Risk Committee is expected to meet for the first time in May 2021, when it will discuss its inaugural charter. Ms. Dedrick and Messrs. Gallotta and Kim comprise the Risk Committee. The Ethics & Compliance Committee is expected to meet for the first time later in April 2021, when it will discuss its inaugural charter. Mses. Daitch and Dedrick and Mr. Kim comprise the Ethics & Compliance Committee.

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CORPORATE GOVERNANCE

Board of Directors Leadership Structure

The Board of Directors does not have a policy regarding the separation of the roles of Chief Executive Officer and Chairman of the Board of Directors, as the Board of Directors 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 of Directors. The Board of Directors believes having the Chief Executive Officer also fill the role of Chairman is more efficient and effective at this time than alternate structures given the extraordinary legal and regulatory challenges the Company continues to face.

Director Independence

The rules of Nasdaq, as well as those of the SEC, impose several requirements with respect to the independence of our directors. Our Board of Directors has evaluated the independence of its members based upon the rules of Nasdaq and the SEC. Applying these standards, our Board of Directors has affirmatively determined that, with the exception of Mr. O’Brien, Mr. Meltzer and Ms. Seligman, each of our current directors is an independent director, as defined under the applicable rules.

Since our initial public offering, we have qualified as a “controlled company” under the corporate governance rules for Nasdaq-listed companies because, prior to August 2020, more than 50% of our outstanding voting power was held by the same trustee utilized by Scott J. Seligman and Sandra Seligman for their respective family trusts. Due to a change in the trustee for certain of those trusts established by Ms. Seligman, effective as of August 19, 2020, we are no longer a controlled company under the Nasdaq rules, but we remain eligible to take advantage of the controlled company exceptions under such rules for one year following the loss of controlled company status. Accordingly, we are not currently required to have a majority of our Board of Directors be independent, nor are we currently required to have a compensation committee or an independent nominating function. However, Sandra Seligman and Seth Meltzer, who are not independent directors, ceased to serve on our Nominating Committee following the Company’s Board meeting in March 2021, when Ms. Daitch, Ms. Dedrick and Mr. Kim were appointed to the Nominating Committee, thereby ending the Company’s reliance upon the “controlled company” exceptions.

Family Relationships

Sandra Seligman is a Director of the Company and the Bank and is the sister of Scott J. Seligman, the Company’s founder. Her son, Seth Meltzer, is also a Director. In 2018, 2019 and 2020, Sandra Seligman did not receive compensation for her service to the Board of Directors or any other compensation from the Company.

Seth Meltzer is a Director of the Company and the Bank and is the son of Sandra Seligman. Mr. Meltzer’s uncle, Scott J. Seligman, is the Company’s founder. In 2018, 2019 and 2020, Mr. Meltzer did not receive compensation for his service to the Board of Directors or any other compensation from the Company.

Communication with Directors; Attendance at Annual Meetings

The Board of Directors invites shareholders to send written communications to the Board of Directors or any director by mail, c/o General Counsel and Corporate Secretary, Sterling Bancorp, Inc., One Towne Square, Suite 1900, Southfield, Michigan 48076. All communications will be compiled by the Company’s General Counsel and Corporate Secretary and submitted to the Board of Directors or the individual director(s) on a regular basis unless such communications are considered, in the reasonable judgment of the General Counsel and Corporate 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.

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 the Annual Meeting.

Code of Conduct

Our Board of Directors adopted a code of business conduct and ethics (the “Code of Conduct”) that applies to all of our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer and persons performing similar functions. The Code of Conduct is available on the Company’s website at investors.sterlingbank.com.

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See “Proposal No. 1— New Risk Committee and Ethics and Compliance Committee” for further discussion regarding the establishment of an ethics committee, effective 2021.

Clawback Policy

The Company has adopted the Clawback Policies during 2020 that generally provide that the Board of Directors may require current and former officers subject to the reporting requirements of Section 16 of the Exchange Act and other employees eligible to receive incentive compensation (the “Covered Persons”) to reimburse or forfeit excess incentive compensation, including equity awards, received by the Covered Person during the three fiscal years preceding the restatement of the Company’s financial statements in the event that the Company issues such a restatement due to material noncompliance with securities laws, regardless of whether such Covered Person engaged in misconduct or was responsible for or contributed to the circumstances requiring the restatement. In addition, if the Board of Directors determines a Covered Person engaged in acts or omissions which involved intentional misconduct, intentional violations of the Company’s written policies or applicable legal or regulatory requirements or fraud, and which contributed to the circumstances requiring the restatement, the Board of Directors may require the Covered Person to forfeit all of the Covered Person’s incentive compensation received during the three fiscal years preceding the restatement and to reimburse the Company for costs incurred in connection with the restatement. The Clawback Policies also provide that in the event a Covered Person engages in certain detrimental conduct that, in the discretion of the Board of Directors, is likely to cause or has caused material financial, operational or reputational harm to the Company, the Board of Directors may require reimbursement or forfeiture of all of the Covered Person’s incentive compensation received from and after the date on which such conduct occurred. The Board of Directors has discretion to determine the method for recouping any incentive compensation under the Clawback Policies.

Whistleblower Policy

Our Board of Directors adopted a Whistleblower Policy, most recently amended in 2020, that is intended to enable employees, customers, vendors or any other interested party to promptly report good faith complaints or concerns regarding potential or actual violations of applicable laws, regulations or the Company’s policies, including violations of our Code of Conduct. Our Audit Committee has oversight over the receipt, retention and treatment of concerns or complaints received.

Anti-Hedging Policy

We have adopted an Insider Trading Policy that prohibits all of our directors, officers and employees, as well as any other person having access to material nonpublic information, from entering into certain forms of hedging or monetization transactions that allow such person to lock in much of the value of his or her stock holdings in exchange for all or part of the potential upside appreciation of the Company’s stock, such as zero-cost collars and forward sale contracts. Such transactions allow such person to continue to own the Company’s stock without the full risks and rewards of ownership, which may cause such person to no longer have the same objectives as the Company or other shareholders. Similarly, our Insider Trading Policy prohibits short sales, standing orders and transactions in publicly traded options. Additionally, a director, officer or employee desiring to hold Company securities in a margin account or pledge Company securities as collateral for a loan must notify the Company’s General Counsel prior to taking such action because a margin sale or foreclosure sale may occur at a time when such person, a pledgor, is aware of nonpublic information or otherwise not permitted to trade in the Company’s stock. Finally, our Insider Trading Policy prohibits the use of derivative securities to separate any financial interest in our Company’s securities from related voting rights and any transaction in the Company’s securities where a reasonable investor would conclude that such transaction is for short-term gain or speculative.

Board of Directors’ Role in Risk Oversight

Our Board of Directors adopts and oversees 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. Our enterprise risk management framework seeks to achieve an appropriate balance between risk and return, which is critical to optimizing shareholder value. We have established processes and procedures intended to identify, measure, monitor, report and analyze the types of risk to which we are subject,

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including compliance, regulatory, liquidity, interest rate, credit, operational, cyber/technological, legal, strategic, financial and reputational risk exposures. However, as with any risk management framework, there are inherent limitations to our risk management strategies as there may exist, or develop in the future, risks that we may not have appropriately anticipated or identified.

Compliance. Our Board of Directors and management team are striving to create a risk-conscious culture that is focused on addressing compliance issues. In response to a publicly available formal agreement with the OCC, dated June 18, 2019 (the “OCC Agreement”), relating primarily to certain aspects of the Bank’s Bank Secrecy Act/Anti-Money Laundering (“BSA/AML”) compliance program as well as the Bank’s credit administration, our Board of Directors established a Compliance Committee, consisting of four independent members of our Board of Directors, to monitor and assure compliance with the OCC Agreement, oversee the completion of an independent review of account and transaction activity to be conducted by a third-party vendor and engage a third party to conduct a model validation for its BSA/AML monitoring software. In addition, on December 9, 2019, the Company announced it had voluntarily suspended its Advantage Loan Program in connection with an internal review of the program (the “Internal Review”). The primary focus of the Internal Review, which has been led by outside legal counsel under the direction of a special committee of independent directors, has involved the origination of residential mortgage loans under the Advantage Loan Program and related matters. The Internal Review has indicated that certain employees engaged in misconduct in connection with the origination of a significant number of such loans. As a result, the Company permanently discontinued the Advantage Loan Program. We also hired a Chief Risk Officer in February 2020 to create, implement, improve and administer the risk management programs for the Company. The Chief Risk Officer is responsible for the Company’s risk governance, further developing and maintaining a risk aware culture and implementing risk decision-making into day-to-day operations. The Chief Risk Officer reports directly to the Board of Directors.

Culture. Our Board of Directors and its committees play a key role in oversight of our culture, setting the “tone at the top” and holding management accountable for its maintenance of high ethical standards and effective policies and practices. The Company’s core values include community, service, integrity and employees working together. We embrace diversity and inclusion, which we believe fosters creativity, innovation and thought leadership through new ideas and perspectives.

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EXECUTIVE OFFICERS

The executive officers of the Company serve at the pleasure of the Board of Directors. In addition to Mr. O’Brien, 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.

Stephen Huber, Executive Vice President and Chief Financial Officer, age 55. Mr. Huber has served as our Chief Financial Officer and Treasurer since November 2019. Prior to this role, Mr. Huber served as Chief Financial Officer of the Bank since 2017 and has been with the Company since 1995. He has also served as the Company’s Vice President since 2015 and Administrative Officer of Accounting and Servicing from 2015 to 2017. Prior to such time, he served as the Company’s corporate controller from 2006 to 2015 and its mortgage divisional controller from 1995 to 2006. Before joining the Company, Mr. Huber served in special loan analyst and mortgage accounting positions at Source One Mortgage Services Corporation and Independence One Mortgage/Michigan National Bank (later acquired by Norwest Mortgage), respectively. Mr. Huber received his Bachelor of Business Administration degree from Eastern Michigan University.

Christine Meredith, Executive Vice President and Chief Risk Officer, age 47. Ms. Meredith has served as the Bank’s Chief Risk Officer since February 3, 2020. Prior to joining the Bank, Ms. Meredith served in various risk management and regulatory compliance roles, including SVP & Director, Enterprise Risk Management with Columbia Bank from December 2010 to January 2020. Before joining Columbia Bank, Ms. Meredith held various roles working with the Federal Deposit Insurance Corporation from 2009 to 2010, Washington Mutual from 2003 to 2009, and Union Bank of California in 2003. Ms. Meredith received her bachelor’s degree from Georgetown University.

Colleen Kimmel, Executive Vice President, General Counsel and Corporate Secretary, age 40. Ms. Kimmel has served as the Company’s General Counsel since 2016 and joined the Bank as corporate counsel in 2012. Prior to joining the Bank, Ms. Kimmel worked as corporate counsel at First Place Bank from May 2011 to December 2012 and as in-house counsel in the real estate division at Sprint Nextel from August 2010 to 2011. Ms. Kimmel received her bachelors’ degree from Michigan State University and juris doctorate from Michigan State University College of Law.

Executive Officer Transitions

The Company experienced significant executive and Board transitions commencing in late 2019 and continuing through 2020. On October 17, 2019, we announced the retirement of our then-Chairman and Chief Executive Officer, Gary Judd, effective as of November 30, 2019. On October 15, 2019, the Board of Directors appointed Thomas Lopp, our then-President, Chief Financial Officer and Chief Operating Officer, to assume the role of Chief Executive Officer and Chairman effective upon Mr. Judd’s retirement. The Board of Directors also appointed Stephen Huber as Chief Financial Officer, also effective November 30, 2019. On May 7, 2020, Mr. Lopp resigned from each of his positions with the Company and the Board of Directors appointed Mr. Huber as interim Chief Executive Officer. On May 29, 2020, Michael Montemayor was terminated from his positions as President of Commercial and Retail Banking and Chief Lending Officer. Effective June 3, 2020, the Company and the Bank appointed Thomas M. O’Brien as Chairman, President and Chief Executive Officer of the Company and the Bank, respectively. Mr. Huber continued in his role as Chief Financial Officer following the appointment of Mr. O’Brien. Christine Meredith was hired by the Bank in the role of Chief Risk Officer starting on February 3, 2020.

On October 14, 2020, Peter Sinatra notified the Company of his resignation from the boards of directors of both the Company and the Bank, in connection with the execution by QCM, LLC, doing business as Quantum Capital Management (“Quantum Capital Management”), of an Asset Purchase Agreement to sell substantially all of its assets. Mr. Sinatra also resigned from all his other positions with Quantum Capital Management, the Company and the Bank, effective on December 31, 2020. In addition to the transitions described above, we appointed our first Chief Compliance Officer and a new Chief Auditor who performed a staffing analysis on our current internal audit team structure and qualifications, and we created a new IT Risk Management function.

Delinquent Section 16(a) Reports

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 (“insiders”) to file reports with the SEC regarding their pecuniary interest in the Company’s equity securities and any changes thereto, and to

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furnish copies of these reports to the Company. Based solely on our review of the insiders’ forms filed with the SEC and representations made by the directors and executive officers, no insider failed to file on a timely basis a Section 16(a) report during 2020, except for the delinquent filings described below by certain holders of more than 10% of the Company’s equity securities. Michael Shawn failed to timely file a Form 3 upon becoming the beneficial owner of more than 10% of the Company’s equity securities as a result of becoming the trustee of the K.I.S.S. Dynasty Trust No. 5 and the Sandra Seligman 1993 Long Term Irrevocable Trust on August 19, 2020, and a Form 3 was not filed until September 4, 2020. Erwin Rubenstein, the trustee of the K.I.S.S. Dynasty Trust No. 9, failed to file Forms 4 to report transactions in the Company’s securities on August 19, 2020 and October 19, 2020, which were not reported until a Form 5 was filed on February 12, 2021. Harry S. Stern failed to file a Form 3 upon becoming the beneficial owner of more than 10% of the Company’s equity securities as a result of becoming the trustee of the Scott J. Seligman 1993 Long Term Irrevocable Dynasty Trust and the Scott J. Seligman 1993 Irrevocable Dynasty Trust on October 19, 2020, and such ownership was not reported until a Form 5 was filed on February 17, 2021.

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COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion & Analysis (“CD&A”) sets forth the Company’s executive compensation philosophy, practices and decisions for the fiscal year 2020 for its named executive officers (“NEOs”) listed below and included in the Summary Compensation Table.

Name			Title Held with the Company During 2020
Thomas M. O’Brien⁽¹⁾			Chairman, President and Chief Executive Officer
Thomas Lopp⁽²⁾			Chairman, President and Chief Executive Officer
Stephen Huber⁽³⁾			Executive Vice President, Chief Financial Officer and Treasurer
Peter Sinatra⁽⁴⁾			President of Quantum Capital Management, an indirect wholly-owned subsidiary of the Bank
Christine Meredith⁽⁵⁾			Executive Vice President and Chief Risk Officer
Colleen Kimmel			Executive Vice President, General Counsel and Corporate Secretary

(1)	Mr. O’Brien was appointed by the Board of Directors to serve as Chairman, President and CEO effective June 3, 2020.

(2)	Mr. Lopp resigned from each of his positions at the Company effective May 7, 2020.

(3)	Mr. Huber was acting CEO from May 7, 2020 through June 3, 2020.

(4)	Mr. Sinatra resigned from all positions with Quantum Capital Management, the Company and the Bank on December 31, 2020, following the closing of the sale of substantially all of the assets of Quantum Capital Management by the Bank.

(5)	Ms. Meredith was hired as Chief Risk Officer effective February 3, 2020.

In addition to the CD&A, the compensation and benefits provided to our NEOs in 2020 are set forth below in the Summary Compensation Table and other tables that follow this CD&A, as well as in the footnotes and narrative material that accompany those tables.

Executive Summary

In 2020, the Company’s principal focus was managing its outstanding compliance and regulatory issues, government investigations and third-party litigation as well as developing a strong culture of compliance and re-establishing strong credit metrics for potential new lending initiatives. The Company continued implementing the items required by the OCC Agreement related to the Bank’s BSA/AML compliance and credit administration and was fully cooperating with the OCC and DOJ investigations that are focused on the Bank’s former residential lending practices and related issues. The Company is also responding to a formal investigation recently initiated by the SEC that is related to the Advantage Loan Program. The Company sought to stabilize executive officer and board positions with the hiring of a new Chairman, President and CEO and three new independent directors. In March 2020, Nasdaq notified the Company that it was not in compliance with Nasdaq listing requirements as a result of not timely filing its annual report on Form 10-K for the year ended December 31, 2019 and was in danger of being delisted. In October and November 2020, the Company filed all delinquent annual and quarterly reports with the SEC and as a result was no longer in danger of being delisted by Nasdaq. While delayed because of the late SEC filings, which filings were delayed as a result of additional review and procedures, including by the Company’s independent auditors, relating to the Advantage Loan Program, the Company was able to hold its annual meeting of shareholders in December 2020. In addition, we explored exiting unproductive or ancillary businesses and aggressively resolving problem loans. For example, the Company closed the sale of substantially all of the assets of Quantum Capital Management, its registered investment advisory business, on December 21, 2020 and placed $19.4 million of nonperforming loans into held for sale as of year-end. We also pursued a strategy of aggressively increasing our liquidity to prepare for potential Advantage Loan Program repurchase requests, which we have solicited from loan investors, and to compensate for the Bank’s reduced borrowing capacity from the FHLB, as well as to prepare for additional uncertainties related to our ongoing examinations and investigations.

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Accomplishments and Challenges for 2020 and First Quarter 2021

Accomplishments

•	Exceeded all applicable regulatory capital requirements.

○	The Company’s total adjusted capital to risk-weighted assets at 2020 year-end was 22.58%.

○	The Company’s Tier 1 capital to adjusted tangible assets at 2020 year-end was 8.08%.

•	Reached an agreement in principle to settle the pending securities class action lawsuit.

•	Regained compliance with SEC reporting requirements.

•	Increased total consolidated deposits to $3.1 billion at 2020 year-end to build liquidity.

Challenges

•	Manage costs and requirements of regulatory agreements and investigations.

•	Reverse the decline in net income.

•	Manage impact of the COVID-19 pandemic.

•	Replace Advantage Loan Program with a similarly profitable product.

Thomas M. O’Brien

With respect to executive management and compensation in 2020, the Board of Directors focused on hiring a new Chief Executive Officer. Early in 2020, the Board of Directors determined that the Company needed an independent monitor acting as a non-executive chairman of the Board to help oversee the response to regulatory concerns and tackle the multiple operational challenges faced by the Company, including, but not limited to, repercussions related to the Advantage Loan Program. After reviewing the backgrounds and resumes of potential candidates available for such a role, the Board of Directors determined that Mr. O’Brien was the best fit for the position due to his proven experience in turning around troubled financial institutions and his reputation as a banking industry leader. In March 2020, Mr. O’Brien met with the Board of Directors and agreed to a one-year consulting contract to provide strategic advice to the Board and assist management of the Bank regarding, among other things, bank operations, risk assessment and management, matters under current or future internal investigation and strategic transactions. With the resignation of Mr. Lopp as President and CEO on May 7, 2020, the Board offered a permanent executive management position to Mr. O’Brien. Mr. O’Brien was subsequently appointed as Chairman, President and CEO, effective as of June 3, 2020, after the receipt of regulatory non-objection.

Background of Mr. O’Brien. Mr. O’Brien has over 44 years of experience in the financial services industry and has served as President and Chief Executive Officer of many financial institutions, as described in detail in “Proposal No. 1—Continuing Directors—Whose Terms Expire in 2022.”

Based on the Compensation Committee’s and the Board’s knowledge of Mr. O’Brien’s expertise at similar banking institutions, the Board and the Compensation Committee determined that Mr. O’Brien possesses the necessary qualifications and experience to address the challenges at Sterling as its new Chairman, President and CEO.

Executive Management Turnover. In May 2020, the Company was facing a leadership void. In the six months prior to Mr. O’Brien’s appointment as Chairman, President and CEO of the Company, the majority of executive management had retired, resigned or been terminated. Gary Judd, the Company’s CEO from August 2008, had retired effective as of November 30, 2019. Thomas Lopp, who had been with the Company since 2002 and had replaced Mr. Judd as CEO in November 2019, abruptly resigned as President and CEO on May 7, 2020. And Michael Montemayor, the Chief Lending Officer and President of Retail and Commercial Banking, who had been with the Company since 1992, was terminated by the Company as of May 29, 2020. The Board was searching for someone who could provide strong and steady leadership and much needed continuity, with expertise in turning around troubled financial institutions and an established reputation in the banking industry.

Formidable Challenges. In May 2020, the Company was facing significant challenges on multiple fronts. The Bank was subject to a formal agreement with the OCC relating primarily to certain aspects of the Bank’s BSA/AML compliance program and credit administration. The Bank’s Advantage Loan Program, which comprised 78% of the Banks’s residential loan portfolio at December 31, 2020, had been voluntarily suspended on December 9, 2019 and was subsequently discontinued on March 6, 2020. The suspension of this loan program created a significant revenue

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issue for the Company. On February 26, 2020, a class action lawsuit alleging violations of the federal securities laws had been filed by the Oklahoma Police Pension and Retirement System against the Company and certain current and former officers and directors. In March 2020, the Company disclosed that it had received grand jury subpoenas from the DOJ seeking documents and information that appears to be focused on its residential lending practices and related issues and that it was also subject to a formal investigation by the OCC. Also, in March 2020, the Company disclosed that it was unable to timely file its annual report on Form 10-K for the year ended December 31, 2019 with the SEC as a result of additional review and procedures, including by the Company’s independent auditors, relating to the circumstances that led to the permanent discontinuation of the Advantage Loan Program. Because of its inability to timely file its annual report with the SEC, Nasdaq notified the Company that it was not in compliance with Nasdaq listing requirements and was in danger of being delisted. The Company’s stock price had fallen from $9.60 on December 2, 2019 to $2.65 on May 22, 2020. In addition, the Company, like other financial institutions, was dealing with the repercussions of the Covid-19 pandemic including disruptions to national and global economic conditions generally and more specifically to the Bank’s financial operations.

Board Response. The Board realized that Mr. O’Brien was uniquely qualified to tackle the myriad challenges facing the Company. As a consultant, Mr. O’Brien advised the Board and management on a variety of matters but reported solely to the independent directors of the Board. The Board had the opportunity and ability to observe Mr. O’Brien over the course of his consultancy and believed he was the right person for the job and had the experience and reputation to assist the Board in navigating the complexities of the Company’s financial, regulatory and legal challenges. They recognized that Mr. O’Brien has experience in turning around companies, is well respected by peers, regulators and investors alike and had a firm grasp of the problems facing the Company.

Contractual Terms. While Mr. O’Brien’s total compensation package would be higher than most of the Company’s peer group, the Board believes it was justified given the circumstances for the following reasons.

In negotiating the terms of his employment agreement, the Compensation Committee viewed Mr. O’Brien’s compensation in light of the totality of the challenges facing the Company and the scarcity of executive talent with the experience, skills and reputation necessary to lead the Company through such challenges. The Compensation Committee carefully reviewed and considered the qualifications of Mr. O’Brien and his extensive bank leadership experience. The Compensation Committee took into consideration that Mr. O’Brien’s compensation would be competitive with the total compensation of chief executives at midsize and regional banks located in the New York metropolitan area where Mr. O’Brien spent his career and where Mr. O’Brien would be considered a competitive candidate. The Board understood it is not unusual for a company to have to pay a higher price than they are accustomed to in order to hire a good candidate in a difficult situation. Although the salary of $3 million a year is above levels for the Company’s peer group, Mr. O’Brien is not entitled to, nor does he expect to, receive a bonus. In addition, there are aspects of Mr. O’Brien’s contract that are not typical of such a position and are protective of, and favorable to, the Company. Mr. O’Brien’s employment agreement provides that he is an “at will” employee, and his agreement can be terminated by the Company at any time for any reason or no reason without any requirement to pay severance or other financial penalty to Mr. O’Brien. This is unusual for an employment agreement for a public company CEO and is a significant risk for Mr. O’Brien. The Company was unable to offer Mr. O’Brien a change in control agreement or severance provisions without prior regulatory approval and subject to regulatory limitations that would be unattractive to most candidates. Such agreements typically provide for a lump sum payment of a multiple of salary and bonus for a CEO and also include other provisions, such as accelerated vesting of equity awards, that offer some protection to the executive in the event of a merger, takeover or related event. The agreement does provide that Mr. O’Brien and the Company will negotiate in good faith for a severance and change of control agreement to be entered into after first receiving applicable regulatory approval. Also, under the term of his contract, Mr. O’Brien agreed to personally invest in the Company by purchasing from his own funds 300,000 shares of the Company’s stock within one year of the date of his agreement. This provision, together with an equity award that consists solely of stock options, demonstrates Mr. O’Brien’s alignment with the interests of the shareholders of the Company. The agreement includes a one-year non-compete clause pursuant to which Mr. O’Brien agrees, among other things, not to enter into employment with a competitor of the Company in Michigan or California or solicit any employee of the Company upon his termination of employment with Bank. The Board also took into consideration that Mr. O’Brien had to resign from his position as vice chairman of Emigrant Bank and had to travel from his home in Florida to Michigan during a pandemic.

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For all of the reasons set forth above, the Board believes it was in the best interests of shareholders to offer Mr. O’Brien the position of Chairman, President and CEO upon the terms set forth in his employment agreement. A full description of Mr. O’Brien’s employment agreement is set forth herein. See “Executive Compensation—Employment Arrangements—Thomas M. O’Brien” below.

Executive Compensation Philosophy

The goals of the executive compensation program are to enable the Company to attract, develop and retain an executive team capable of maximizing the Company’s performance for the benefit of its shareholders and to promote increases in long-term shareholder value by aligning the financial interests of the Company and its shareholders with the NEOs and other members of executive management. It strives to provide employees with incentives that appropriately balance risk and reward, to be compatible with effective controls and risk management and to be supported by strong corporate governance, including active and effective oversight by the Board of Directors and the Compensation Committee. For 2020, the Compensation Committee once again recognized the significant time and effort required by the executive officers and others to respond to the governmental inquires and investigations while continuing to work to resolve the Company’s outstanding compliance issues, re-establish strong credit metrics, diversify the Company’s overall loan production, exit unproductive or ancillary businesses, resolve problem loans, and increase the Company’s liquidity in preparation of potential Advantage Loan Program repurchase requests and reduced borrowing capacity from the FHLB.

Pay Mix. Our compensation program for executive officers in 2020 consisted of three primary components: (i) base salary; (ii) cash-based annual bonuses (other than with respect to Mr. O’Brien); and (iii) equity-based long-term incentive awards. We also offer retirement and other benefits. This is designed to reward executive officers consistent with the goals in the immediately preceding paragraph. During 2020, the Company was a party to employment agreements with each of Mr. O’Brien and Mr. Sinatra.

Executive Compensation Process

All compensation decisions for the NEOs other than Mr. O’Brien for 2020 occurred in February and March 2020, and therefore the following discussion does not include decisions regarding Mr. O’Brien’s compensation, which was decided by the Board of Directors as discussed above. See “—Thomas M. O’Brien” above.

Role of Compensation Committee – The Compensation Committee is ultimately responsible for all compensation decisions for the NEOs after considering input from management, its independent compensation consultant and reviewing peer group compensation. The Compensation Committee, among other things, oversees the Company’s incentive compensation and equity-based plans and policies and fulfills other responsibilities delegated to the Committee by the Board of Directors.

The Compensation Committee also has the authority to select, retain and obtain the advice of a compensation consultant, as necessary, to assist with the execution of its duties and responsibilities set forth in the Compensation Committee Charter.

Role of Management – For 2020, the CEO reviewed the relevant financial and other results for the year and submitted his suggestions for base salary, bonus and equity compensation for the executive officers to the Compensation Committee for its review. The CEO gave suggestions to the Compensation Committee regarding what metrics would be relevant to incentive compensation. The CEO attended the Compensation Committee meetings and participated in deliberations of the Compensation Committee but did not participate during, or attend, deliberations concerning his compensation.

Role of Independent Compensation Consultant – The Compensation Committee retained Meridian Compensation Partners, LLC (“Meridian”) to assist it in analyzing executive compensation for 2019 and 2020. Meridian is an independent compensation consultant that provides, among other things, executive compensation program design as well as research and competitive market intelligence on executive pay. Prior to engaging Meridian, the Compensation Committee considered the independence of Meridian and concluded that the work of Meridian did not raise any conflicts of interests. Meridian did not advise the Compensation Committee or the Board in decisions regarding Mr. O’Brien’s compensation.

Peer Group

In 2018, Meridian collaborated with the Company to develop a peer group of 20 banks. The peer group was chosen based on their similar size in terms of assets, their similar operating models and business lines and their

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operations in similar geographic markets. This peer group represents banks from key geographic markets in which the Bank competes including San Francisco, Los Angeles, New York, Seattle and Michigan. The list of the banks in our peer group is set forth below.

Axos Financial, Inc.			Opus Bank⁽²⁾
Bank of Marin Bancorp			Oritani Financial Corp⁽³⁾
Bridge Bancorp, Inc.⁽¹⁾			Pacific Mercantile Bancorp
First Foundation Inc			Pacific Premier Bancorp, Inc.
Hanmi Financial Corporation			Preferred Bank
Heritage Commerce Corp.			RBB Bancorp
Heritage Financial Corporation			Sierra Bancorp
HomeStreet, Inc.			TriCo Bancshares
Luther Burbank Corporation			Unity Bancorp Inc
Mercantile Bank Corporation			Westamerica Bancorporation

(1)	On February 1, 2021, Bridge Bancorp, Inc. acquired Dime Community Bancshares, Inc. and changed its name to Dime Community Bancshares, Inc.

(2)	On June 1, 2020, Pacific Premier Bank acquired Opus Bank.

(3)	On December 1, 2019, Valley National Bancorp acquired Oritani Financial Corp.

Key elements of compensation

Base Salary – The Company seeks to pay a competitive base salary at levels that reflect each executive’s position, individual performance, experience and expertise. Such base salaries are reviewed annually by the Compensation Committee in comparison to the peer group and adjusted as appropriate, with no guarantee of annual increases. Base salaries had historically been lower at the Company as compared to those in its peer group. In order to attract and retain qualified executive management, the Compensation Committee, in consultation with Meridian, endeavored to increase salaries in order to remain competitive. Since the Company’s peer group consisted primarily of companies located in San Francisco, Los Angeles and New York, which generally have higher costs of living than Michigan, the Compensation Committee determined to target base salaries to be near the 25^th percentile of its peer group.

Name	2019 Base Salary Rate	2020 Base Salary Rate	% Increase
Thomas M. O’Brien	N/A	$3,000,000	N/A
Thomas Lopp	$350,000	$350,000	0%
Peter Sinatra	$500,000	$500,000	0%
Stephen Huber	$175,000	$175,000	0%
Christine Meredith	N/A	$250,000	N/A
Colleen Kimmel	$131,145	$260,000	98%

Mr. O’Brien’s employment agreement provided for an annual base salary determined by the Board of Directors in its reasonable discretion. See “—Thomas M. O’Brien” above and “Executive Compensation—Employment Arrangements—Thomas M. O’Brien” below. Neither Mr. Lopp nor Mr. Huber received a base salary increase in 2020, as each had been given a base salary increase on November 30, 2019 in connection with their respective promotions. Mr. Lopp was promoted to CEO upon the retirement of Gary Judd, and Mr. Huber was promoted to CFO of the Company upon Mr. Lopp’s promotion to CEO. Mr. Sinatra’s base salary was as set forth in his employment agreement and remained unchanged at $500,000 for 2020. See “Executive Compensation—Employment Arrangements—Peter Sinatra” below. Ms. Meredith was hired effective February 3, 2020 for an annual base salary of $250,000, which was determined by the Board of Directors in its reasonable discretion. See “Executive Compensation—Employment Arrangements—Christine Meredith” below. Ms. Kimmel received a significant increase in base salary, effective March 2, 2020, in recognition that a base salary increase was long overdue, to better align her compensation with the Company’s peer group and as a reflection of her considerable additional workload in responding to requests for information related to the various government investigations related to the Advantage Loan Program.

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Annual Cash Incentive Compensation

The Company has historically had an annual bonus program in which bonus payouts were determined on a discretionary basis. This discretionary assessment of performance included a review of financial and non-financial performance but was not directly linked to performance measures. In 2019 and 2020, the Compensation Committee and the Board of Directors wanted to formalize the Company’s annual bonus program to include objective measurements. Meridian conducted a market-based review of annual program design for the Company’s benchmarking peer group. Meridian also collaborated with executive management to develop a proposal for the 2020 bonus program. The Company identified four key areas of focus and gave each measure a weight as well as performance goals for each measure. The Compensation Committee approved the targets and measures in consultation with Meridian. The four measures are earnings per share (“EPS”), return on assets (“ROA”), efficiency ratio and charge offs. The table below summarizes the bonus program for 2020, the weighting of each performance measure and the performance goals associated with each measure. The Compensation Committee was targeting bonus payments to be near the 25^th percentile of its peer group for those employees in similar positions.

EPS

35%

$0.75

94% of target

$0.80

$0.85

106% of target

ROA

25%

1.18%

92% of target

1.29%

1.39%

108% of target

Efficiency Ratio

25%

51.9%

105% of target

49.4%

46.8%

95% of target

Charge Offs

15%

$2,000,000

133% of target

$1,500,000

$1,000,000

50% of target

Payout Opportunity (% of Target)

50%

100%

150%

Using these targets and measures, Mr. Lopp was granted a bonus of $105,917 in February 2020, which was lower than the previous year as the targets and measures they were based upon were lower than in the prior year. This was due, in part, to decreased residential loan production as well as heightened costs of regulatory compliance. Mr. Huber and Ms. Kimmel received discretionary bonuses of $50,000 and $45,000, respectively, in February 2020. Ms. Meredith received a $70,000 sign-on bonus, which bonus is subject to certain clawback provisions for a period of two years from the date of grant. See “Executive Compensation—Employment Arrangements—Christine Meredith” below. Neither Mr. O’Brien nor Mr. Sinatra received a bonus in 2020.

Equity grants

Long-term incentive grants for executive officers serve to promote the interests of the Company by providing such executives with additional incentives to remain with the Company, to increase their effort to make the Company more successful and to reward such executives by providing an opportunity to acquire shares of common stock on favorable terms and to attract and retain the best available personnel. Such equity awards serve to align the interests of the executive officers with that of shareholders. Under the 2017 Omnibus Equity Incentive Plan, the Company can award a variety of equity awards, including stock options and restricted stock. The Company believes these grants support its business objectives and as to restricted stock awards are an effective retention vehicle with limited downside risk. The Compensation Committee discussed equity awards for executive management at the beginning of the fiscal year and in making its decisions reviewed the Company’s performance in the prior year, the targets and measures discussed above, as well as peer group information. The goal was to grant awards that would position each executive at the 25^th percentile of those holding similar positions in its peer group. In 2020, the Compensation Committee decided that stock options should be granted to only the most senior officers in the Company because they should have more of a risk as they are the ones with the ability to affect the performance of the Company, which may influence share price. The table below sets forth the option and restricted stock awards for the NEOs for 2020. Mr. O’Brien’s option grant was awarded pursuant to his employment agreement and vests one-third on January 1, 2021, one-third on the first anniversary of the date of the grant, which is June 5, 2021, and one-third on January 1, 2022. The exercise price for Mr. O’Brien’s stock award is equal to the high and low of the sales prices on Nasdaq

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on the date of the grant, which was $4.00 per share. The awards to the other NEOs vest ratably over three years (one-third per year) after the date of grant. The exercise price for the NEOs’ option awards is the closing stock price on the date of the grant, which was $7.10 per share on March 2, 2020.

2020 Long Term Incentive Grants

Name	2020 LTI Targeted LTI Level	Options	RSAs	Grant Date	Number of Options	Grant Value of options	Number of RSAs	Grant Value of RSAs
O’Brien	N/A	100%	0%	6-5-20	300,000	$354,000	—	$—
Lopp	$200,000	25%	75%	3-2-20	27,778	$49,445	21,127	$147,466
Sinatra	$0	—	—	—	—	—	—	—
Huber	$65,000	25%	75%	3-2-20	9,028	$16,070	6,866	$47,925
Meredith	$50,000	0%	100%	3-2-20	—	—	7,042	$49,153
Kimmel	$65,000	0%	100%	3-2-20	—	—	9,155	$63,902

Upon Mr. Lopp’s resignation, he forfeited all of his restricted stock, and his vested options expired unexercised. Mr. Lopp did not receive any payments on account of his resignation. Upon Mr. Sinatra’s resignation, he forfeited all of his outstanding options and restricted stock.

Payments Upon Termination of Service or Change of Control. The Bank has entered into individual executive incentive retirement plan (“EIRP”) agreements with each of Mr. Lopp and Mr. Huber; these agreements are described in more detail in “Executive Compensation—Executive Incentive Retirement Agreements” and “Executive Compensation—Potential Payments Upon Termination or Change in Control” below. Under the terms of these agreements, each of these executives was credited with an additional amount to his book-entry “incentive award account” under his agreement in 2020 based on a monthly crediting formula. These amounts would be generally payable upon a separation from service or certain “change of control” events, if payable in accordance with their terms and in accordance with applicable law, and provide for death benefits in the event of death in active service to the Bank. For fiscal year 2020, Mr. Lopp’s benefit under his agreement increased by $12,912, and Mr. Huber’s benefit under his agreement increased by $24,761. The EIRP agreements were terminated effective January 1, 2021, which will eliminate any further crediting to an individual’s book-entry incentive award account but will allow for interest crediting in accordance with the EIRP agreements. None of Mr. O’Brien, Mr. Sinatra, Ms. Meredith or Ms. Kimmel was a party to an EIRP agreement.

Severance Agreements. Pursuant to the terms of a Change of Control Agreement between the Bank and Ms. Meredith, Ms. Meredith may be entitled to certain payments in the event of a change of control of the Bank. See “Potential Payments Upon Termination or Change in Control” and “Executive Compensation—Employment Arrangements—Christine Meredith” below.

On December 17, 2020, the Bank’s Board of Directors approved a nondiscriminatory severance payment plan (the “Severance Plan”), subject to the receipt of applicable regulatory approval prior to its implementation. Such plan provides for payment of severance benefits upon the occurrence of certain involuntary termination events. If the Bank receives regulatory approval to implement the Severance Plan, Mr. Huber and Ms. Kimmel would be entitled to payments thereunder upon the occurrence of certain involuntary termination events. These payments would be on the same terms and conditions as for all other eligible employees. Mr. Sinatra would also be entitled to a payment of $105,769 under the Severance Plan pursuant to the terms of his release agreement entered into in connection with his termination of employment. See “—Potential Payments Upon Termination or Change in Control” and “Executive Compensation—Employment Arrangements—Severance Plan” below.

Mr. O’Brien is not a party to a change of control or severance agreement with the Bank, but the terms of his employment agreement provide that the parties will negotiate in good faith for a severance and change of control agreement to be entered into after first receiving approval under the FDIC’s “golden parachute” rules. See “Executive Compensation—Employment Arrangements—Thomas M. O’Brien” below. Prior to approval of a change of control agreement between the Bank and Mr. O’Brien, Mr. O’Brien would be entitled to payments under the Severance Plan if applicable regulatory approval is obtained for the Severance Plan.

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Perquisites. Mr. O’Brien received travel reimbursement of $8,059, hotel reimbursement of $7,938, a car allowance of $3,686 and an apartment allowance of $7,986 for 2020, all in accordance with the terms of his employment agreement. Mr. Lopp received a car allowance of $2,500 for 2020. Mr. Sinatra received a car allowance of $25,296 for 2020 and also received $9,349 in 2020 as reimbursement for dues related to a club membership.

Other Compensation. In addition to the compensation components listed above, the NEOs are eligible to participate in the Company’s broad-based employee plans such as medical, dental, vision, disability and the 401(k) plan with a Company matching contribution, which is described in more detail in “Executive Compensation—Defined Contribution Retirement Plan” below. Each NEO was eligible to participate in the Company’s employee term life insurance policy during the 2020 fiscal year at no cost to the employee with such death benefit equal to one times current annual base salary, up to a maximum death benefit of $200,000. NEOs may also purchase additional life insurance for themselves and their spouse and dependents (up to a maximum death benefit of $500,000 for themselves) on the same terms and conditions as other employees. For 2021, the death benefit was increased to two times current annual base salary up to a maximum of $500,000.

Clawback Policy

Effective as of September 9, 2020, the Board of Directors has adopted policies (together, the “Clawback Policy”) which provides for the recoupment of certain cash and equity incentive compensation from executive officers in the event of an accounting restatement and/or detrimental conduct. See “Corporate Governance—Clawback Policy” above.

Risk Assessment

The charter for the Compensation Committee provides that it is responsible for reviewing the Company’s compensation policies and practices for all employees regarding whether any risks arising from the Company’s compensation practices, policies and programs are reasonably likely to have a material adverse effect on the Company. Day-to-day risk management is the responsibility of management. With respect to executive management, the Compensation Committee designed the incentive compensation program for executives to include multiple performance measures with Compensation Committee discretion rather than a purely formulaic approach based on a single performance metric so as to not encourage its executive officers to take unnecessary or excessive risks that threaten the value of the Company. Such plans do not encourage behavior focused on short-term results to the detriment of long-term value creation. Therefore, the Compensation Committee believes that its compensation policies and practices for its executive officers do not encourage unnecessary risk taking that is reasonably likely to have a material adverse effect on the Company.

In 2019 and prior years, the Company’s commission plans and programs did not properly account for potential risks, particularly those risks that were identified in the Internal Review. The Company took a number of steps to remedy these potential risks including first voluntarily suspending and thereafter permanently discontinuing the Advantage Loan Program. The Company also engaged an outside consultant in 2020 to review its compensation programs that previously rewarded loan officers solely for production volume. In March 2021, the Compensation Committee implemented a compensation program for both residential and commercial loan officers that it believes will mitigate risk. In addition to a base salary, residential loan officers will receive a commission determined by performance scorecard points based on weighted factors related to the quality of loans closed each month with a loan production component. Commissions for residential loan officers will be calculated monthly. Compensation for the commercial lending staff is comprised of salary with an annual variable compensation component. Variable compensation for commercial loan officers will not exceed a certain percentage of a loan officer’s base salary and is discretionary based on a variety of weighted criteria, including portfolio management, loan production, and corporate compliance. The Compensation Committee is confident that the changes implemented will mitigate the potential for unnecessary risk-taking going forward.

Shareholder Advisory Vote

The Company has not previously sought a shareholder advisory vote on executive compensation issues because of the Company’s status as an “emerging growth company” under the rules of the SEC. Included in this proxy statement are both a “Say on Pay” shareholder advisory vote and a “Say When on Pay” shareholder advisory vote.

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Compensation Committee Report

The Compensation Committee has reviewed and discussed the CD&A required by Item 402(b) of Regulation S-K with management. Based on the review and discussions, the Compensation Committee recommended to the Board of Directors that the CD&A be included in the Company’s Proxy Statement on Schedule 14A for the Annual Meeting.

COMPENSATION COMMITTEE OF STERLING BANCORP, INC.

Lyle Wolberg, Chairman

Peggy Daitch

Denny Kim

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EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth information regarding the compensation paid or awarded to, or earned by, each of our NEOs for our fiscal years ended December 31, 2020, 2019 and 2018.

Name and Principal Position	Year	Salary ($)	Bonus ($)⁽¹⁾	Stock Awards ($)⁽²⁾	Option Awards ($)⁽³⁾	Non-Equity Incentive Plan Compensation ($)	Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)	All other Compensation ($)⁽⁴⁾⁽⁵⁾	Total ($)
Thomas M. O’Brien, Chief Executive Officer⁽⁶⁾	2020	1,650,000	—	—	354,000	—	—	36,219	2,040,219
Stephen Huber, Chief Financial Officer⁽⁷⁾	2020	175,000	50,000	47,925	16,070	—	—	35,613	324,608
Stephen Huber, Chief Financial Officer⁽⁷⁾	2019	159,337	45,000	36,949	12,461	—	—	29,122	282,869
Thomas Lopp, President, COO, CFO and Chief Executive Officer⁽⁸⁾	2020	147,560	105,917	147,466	49,445	—	—	15,412	465,800
	2019	295,962	150,000	61,575	62,304	—	—	52,696	622,537
	2018	244,616	175,000	112,035	54,720	—	—	48,813	635,184
Colleen Kimmel, Executive Vice President, General Counsel and Corporate Secretary	2020	235,576	45,000	63,902	—	—	—	7,067	351,747
Peter Sinatra, Chief Executive Officer of Quantum Capital Management⁽⁹⁾	2020	500,000	—	—	—	—	—	43,195	543,195
	2019	500,000	250,000	29,551	9,968	—	—	46,363	835,882
	2018	500,000	500,000	37,345	18,240	—	—	48,136	1,103,721
Christine Meredith, Executive Vice President and Chief Risk Officer⁽¹⁰⁾	2020	221,154	70,000	49,153	—	—	—	5,481	345,788

(1)	Mr. Lopp’s bonus was paid in accordance with the metrics described in the “Compensation Discussion & Analysis - Annual Cash Incentive Compensation” section above. Mr. Huber and Ms. Kimmel received discretionary bonuses. These bonuses were all paid in 2020.

(2)

Represents the grant date fair value calculated based on the closing price of the Company’s common stock on the grant date, reduced by the dividends per share expected to be paid during the period the shares are not vested. For more information concerning the assumptions used for these calculations, see Note 12 to our consolidated financial statements included in “Item 8. Financial Statements and Supplementary Data” in our 2020 Annual Report.

(3)

Represents the grant-date fair value of option awards calculated in accordance with FASB Accounting Standards Codification Topic 718. The Company uses the Black-Scholes option pricing model to determine the grant-date fair value of the stock options on the date of grant. For more information concerning the assumptions used for these calculations, see Note 12 to our consolidated financial statements included in “Item 8. Financial Statements and Supplementary Data” in our 2020 Annual Report.

(4)	The NEOs are eligible to participate in certain group life, health and disability insurance plans not disclosed in the Summary Compensation Table that are generally available to salaried employees and do not discriminate in scope, terms and operation.

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(5)	The table below summarizes all other compensation for our NEOs for fiscal years 2018, 2019 and 2020:

All Other Compensation ($)
Officer	2018	2019	2020
Thomas M. O’Brien
Automobile Allowance	—	—	3,686
Employer Contributions to Defined Contribution Plan	—	—	8,550
Travel Reimbursement	—	—	8,059
Apartment Allowance	—	—	7,986
Hotel Reimbursement	—	—	7,938
Subtotal	—	—	36,219

Stephen Huber
Amounts Credited to EIRP	—	22,863	24,761
Employer Contributions to Defined Contribution Plan	—

Term Expiring in 2021

Term Expiring in 2022

Term Expiring in 2023

Peggy Daitch

Seth Meltzer

Steven Gallotta

Tracey Dedrick

Thomas M. O’Brien

Lyle Wolberg

Benjamin Wineman

Sandra Seligman

SEC Form DEF 14A filed by Sterling Bancorp, Inc.