Annual Meeting of
Stockholders
The Studio Museum in Harlem
September 13, 2005
CHALLENGING YEAR FOR BANKING INDUSTRY AND FOR
CARVER
BRIGHT SPOTS IN OPERATING RESULTS DESPITE
DISAPPOINTING FINANCIAL RESULTS
FY2005 ACHIEVEMENTS: BUILDING LONG-TERM
SHAREHOLDER VALUE
-- New Branch and 24/7 ATM Centers
-- New products
-- Additional Milestones
SUBSTANTIAL OPPORTUNITIES AHEAD
OVERVIEW
2
FY2005 earnings impacted by industry-wide issues:
-- Margin Compression
-- Reduced Prepayment Penalties
-- Delivery channel expansion
FY2005 earnings also impacted by:
-- Independence Federal merger
-- Management restructure
First quarter 2006 earnings reflect similar industry-wide trends
Net interest income reflects solid results in growing loans to replace lower
yielding securities and strong asset quality, in addition to growing deposits to
replace higher cost borrowings
Non-interest income stable despite slowdown on prepayments, as other loan and
deposit fees increase
REVIEW OF FINANCIAL AND OPERATIONAL RESULTS
3
Higher cost structure reflects investments to build long-term franchise
value. Management is aggressively working to develop cost saving
strategies, including outsourcing some core operations, to reduce the
Company’s efficiency ratio
Lower return on average assets and return on average equity
ratios reflect decline in profitability resulting from franchise investments
and one-time charges
These results are reflected in Carver’s stock price which trades at a
discount to peers
Nevertheless, as the Board of Directors is confident in our long-term
prospects, it increased first quarter 2006 dividend from $0.07 to $0.08
per share
REVIEW OF FINANCIAL AND OPERATIONAL RESULTS
4
$ In millions
$ In millions
NET INCOME
5
(fully diluted)
EARNINGS PER SHARE
6
$ In millions
7
$ In millions
8
$ In millions
9
$ In millions
10
11
$ In millions
$ In millions
FEE INCOME
12
13
RETURN ON AVERAGE EQUITY
14
STOCK PRICE
March 2002 to September 12th, 2005
Stock Price
Book Value per Share
Book value per share is calculated using fully diluted weighted average common shares outstanding.
15
Organic Growth
Increase penetration in core markets by expanding delivery channels
-- One New Branch
Harlem: 145th Street at Frederick Douglass Blvd in the Pathmark Supermarket:
December 2005
-- New 24/7 ATM Centers
Manhattan: 116th Street/5th Avenue: January 2005
Brooklyn: Fulton Street/Ralph Avenue: May 2005
Launched new products
Wealth Management
Custom mortgages for a broader range customers (income levels and credit
histories)
Expanded Free Checking to all branches
FY2005 Operational Achievements
16
145th Street Branch: Ribbon Cutting
17
145th Street Branch
18
145th Street Branch: Inside Pathmark Supermarket
19
116th /5th Avenue 24/7 ATM Center
20
New York Times Harlem Week Ad
21
Fulton/Ralph 24/7 ATM Center: Ribbon Cutting
22
ADDITIONAL ACHIEVEMENTS
First Outstanding CRA rating in Carver’s history
Solid ratings by ISS/Glass Lewis, reflecting corporate
governance strength
$1.5 million CDFI grant from the Treasury Department,
based on strong growth in lending in the inner city
23
Launch broader range of consumer products and services to drive fee income
-- Expand product line for landlords, including lock box and more robust lease security
account
-- Overdraft lines of credit for preferred customers
Aggressively increase penetration of customer base in markets surrounding branches
recently built (Jamaica, Atlantic Terminal and 145th Street)
-- New “calling program” developed and execution begun
-- Continue grass roots advertising and outreach to support new products and
delivery channel expansion
Continue to leverage public programs to enhance community and financial returns
-- Will soon open Carver Financial Literacy Center at Bradhurst Court
-- Have formed Carver Community Development Corporation to consolidate and
expand financial literacy and other community development efforts
Will review acquisition options to increase fee income and/or footprint
SUBSTANTIAL OPPORTUNITIES AHEAD
INITIATIVES FOR BUILDING SHAREHOLDER VALUE
24
“We Get It” Mortgage Products ad
25
“Stronger Together” Relationship Account ad
26
Lease Security Product
27
Annual Meeting of
Stockholders
The Studio Museum in Harlem
September 13, 2005
