Michigan Community Bank executive abruptly resigns

Sterling Bancorp in Southfield, Michigan, is looking to hire a new CEO for the second time in less than a year.

The $ 3.2 billion-asset company, which is struggling with its revenue after shutting down its largest lending program, revealed in a regulatory filing Friday that Thomas Lopp had resigned a day earlier.

Lopp, who succeeded Gary Judd as chairman and chief executive on November 30, cited health reasons for his departure, according to the filing. Lopp was previously COO and CFO of Sterling.

Sterling said its board of directors has appointed Steve Huber, the company’s chief financial officer and treasurer, as interim president and chief executive officer. The company said it was “evaluating its alternatives” to select its next CEO.

Lopp took over as head of Sterling shortly before the company ended its Advantage Loan mortgage program due to concerns about underwriting and documentation procedures. The decision, made on December 9, came just weeks after Sterling fired two of the major lenders after an internal compliance review.

Advantage loans allowed applicants to use non-standard forms of documentation, such as a letter from an employer or a monthly bank statement. Problems with the program have raised concerns about potentially broader issues related to internal controls.

The suspension of the program also created a significant revenue hole for the company.

About 86% of Sterling’s total loans as of September 30 were mortgages, and Advantage loans accounted for 83% of all mortgage production in the first nine months of 2019.

The uncertainty imposed by mortgage challenges was one of the reasons Lopp was one of American Banker’s community bankers to watch in 2020.

The company also operates under a formal agreement with the Office of the Comptroller of the Currency since June related to banking secrecy law and anti-money laundering compliance.

Sterling revealed in March that he had received subpoenas to appear before a Department of Justice grand jury to request documents and information related to his home lending practices and related issues. Sterling also revealed at that time that the OCC had reviewed its credit administration and compliance with BSA and AML.

Sterling has yet to file its annual report for 2019.