EXHIBIT 99.1
[LOGO OF CARVER BANCORP, INC.] FOR IMMEDIATE
RELEASE
Contact: David Lilly / Ruth Pachman William Gray
Kekst and Company Carver Bancorp, Inc.
(212) 521-4800 (212) 360-8840
CARVER BANCORP, INC. ANNOUNCES THIRD QUARTER RESULTS
REPORTS EPS OF $0.47 AND $1.45 FOR THE THIRD QUARTER AND YEAR-TO-DATE,
RESPECTIVELY
ANNOUNCES QUARTERLY DIVIDEND OF $0.05
NEW YORK, NEW YORK, JANUARY 29, 2004 - Carver Bancorp, Inc. (the "Company" or
"Carver") (AMEX: CNY), the holding company for Carver Federal Savings Bank (the
"Bank"), today announced its results of operations for the three- and nine-month
periods ended December 31, 2003 for the fiscal year ending March 31, 2004
("fiscal 2004").
The Company reported diluted earnings per share of $0.47 for the quarter ended
December 31, 2003 compared to $0.38 diluted earnings per share for the same
period last year, an increase of 24%. Net income available to common
stockholders increased $289,000, or 32.2%, to $1.2 million compared to $898,000
for the same period last year.
Financial highlights for the three-month period ended December 31, 2003 compared
to December 31, 2002, unless otherwise indicated, include:
o Net interest income decreased $123,000, or 2.7%, to $4.4 million
from $4.5 million.
o Non-interest income increased $826,000, or 110.0%, to $1.6 million
from $751,000.
o Non-interest expense increased $585,000, or 16.5%, to $4.1 million
from $3.5 million.
o Total assets increased $19.7 million, or 3.9%, to $529.6 million
from $509.8 million at March 31, 2003.
o Total loans receivable, net, increased $44.4 million, or 15.2%, to
$337.1 million from $292.7 million at March 31, 2003.
o Investment securities decreased $15.4 million, or 9.3%, to $150.2
million from $165.6 million at March 31, 2003.
o Total deposits increased $21.1 million, or 6.1%, to $368.3 million
from $347.2 million at March 31, 2003.
o Total borrowings decreased $11.4 million, or 10.5%, to $97.6 million
from $109.0 million at March 31, 2003.
o Stockholders' Equity increased $2.2 million, or 5.4%, to $43.3
million from $41.1 million at March 31, 2003.
Commenting on the Company's results, President and Chief Executive Officer
Deborah C. Wright stated: "The third quarter of fiscal 2004 marked another
quarter of strong performance for Carver in a difficult economic and interest
rate environment. Margin compression continues to be a challenge for the Company
and the banking industry. However, Carver continues to achieve increased
earnings while maintaining strong asset quality. Although we do not expect the
significant increases in mortgage prepayment penalty income evident in the
second and the third quarter results to continue, we remain committed to growing
sustainable non-interest
income through current and new products. The Company continues to explore
opportunities to use its capital to expand market presence and build franchise
and stockholder value. As such we are excited to announce the opening, in
February 2004, of our new state-of-the-art full service branch at Jamaica Center
in Queens. Expenses related to development of this branch, other expansion
opportunities, new regulatory requirements and other infrastructure investments
have increased non-interest expenses this fiscal year."
The Board has declared a $0.05 per share dividend for the quarter ended December
31, 2003. The dividend is payable on February 13, 2004 to holders of record at
the close of business on February 6, 2004.
INCOME STATEMENT HIGHLIGHTS
Quarterly Results
- -----------------
Net income available to common stockholders increased $289,000, or 32.2%, to
$1.2 million compared to $898,000 for the same period last year. The improvement
is primarily due to increased non-interest income of $826,000, partially offset
by increased non-interest expense of $585,000.
Net interest income before the provision for loan losses decreased by $123,000,
or 2.7%, to $4.4 million compared to $4.5 million for the same period last year.
Interest income declined $278,000, or 4.1%, compared to the same period last
year. Partially offsetting the decline in interest income was a decrease in
interest expense of $155,000, or 7.0%. Interest income decreased primarily as a
result of the lower interest rate environment compared to the same period last
year, which in turn has decreased yields on interest earning assets. Interest
expense benefited from the lower interest rate environment and the Bank's
periodic adjustment of certain deposit rates in an effort to better position the
balance sheet.
The Company did not provide for additional loan loss reserves as the Company
considers the current overall allowance for loan losses to be adequate.
Non-interest income increased $826,000, or 110.0%, to $1.6 million compared to
$751,000 for the same period last year. This increase was primarily due to a
$771,000 increase in loan fees and service charges. The increase in loan fees
and service charges reflected higher mortgage prepayment penalties related to
refinancing activity, principally prepayment penalties on two loans in the
amount of $496,000. Although their occurrence is unpredictable, the Company does
not expect the level of prepayment penalties that occurred in the third quarter
to continue in future periods. As part of the management of its interest rate
risk profile the Company sold certain fixed rate one- to four-family mortgage
loans during the quarter which generated a net gain on sale of loans of $55,000.
Non-interest expense increased $585,000, or 16.5%, to $4.1 million compared to
$3.5 million for the same period last year. The increase in non-interest expense
was primarily due to an increase of $447,000 in employee compensation and
benefits expense resulting from salary increases, new hires, increased cost of
benefits plans and the timing for accruals of employee bonus expense.
Additionally, increases of $89,000 in net occupancy expenses resulted primarily
from new and upgraded 24/7 ATM centers. Also contributing to the increase in
non-interest expense were capital securities costs of $152,000 for debt service
on the recent $13 million in subordinated debt raised by Carver through an
issuance of trust preferred securities in September 2003. These increases were
offset by a decrease of $72,000 in equipment expenses.
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Income before taxes increased $118,000, or 6.7%, to $1.9 million compared to
$1.8 million for the same period last year. Income taxes decreased $171,000, or
21.2%, to $636,000 compared to $807,000 for the same period last year primarily
due to a reduction in the Company's tax rate following the establishment of a
real estate investment trust in February 2003.
Nine-Month Results
- ------------------
Net income available to common stockholders increased $992,000, or 38.0%, to
$3.6 million compared to $2.6 million for the same period last year. The
improvement is primarily due to increased non-interest income of $1.9 million
and a decrease in the Bank's effective tax rate, partially offset by increased
non-interest expense of $952,000 and a decrease in net interest income of
$300,000.
Net interest income before the provision for loan losses decreased by $300,000,
or 2.2%, to $13.2 million compared to $13.5 million for the same period last
year. Interest income declined $686,000, or 3.4%, compared to the same period
last year. Partially offsetting the decline in interest income was a reduction
in interest expense of $386,000, or 5.7%. Interest income decreased primarily as
a result of the lower interest rate environment compared to the same period last
year, which in turn has decreased yields on interest earning assets. Interest
expense benefited from the lower interest rate environment and the Bank's
periodic adjustment of certain deposit rates in an effort to better position the
balance sheet.
The Company did not provide for additional loan loss reserves as the Company
considers the current overall allowance for loan losses to be adequate.
Non-interest income increased $1.9 million, or 77.4%, to $4.3 million compared
to $2.4 million for the same period last year. The change in non-interest income
was primarily attributable to a $1.1 million increase in loan fees and service
charges primarily due to higher mortgage prepayment penalties of $1.1 million,
increases of $110,000 in depository fees and charges resulting from increased
ATM usage over the same period last year and growth in debit card income. The
higher mortgage prepayment penalties were related to refinancing activity.
Although their occurrence is unpredictable, the Company does not expect the
level and amounts of prepayment penalties to continue in future periods. The
increase of $570,000 in other non-interest income resulted primarily from a
recovery of $558,000 in mortgage income of which $411,000 was related to the
recognition of previously unrecognized mortgage loan income from one problem
loan that had been held in escrow pending the resolution of certain mechanics'
liens. The remaining $147,000 was from previously unrecognized prepaid mortgage
loan income. Additionally, in an effort to reposition the balance sheet and
manage interest rate risk, the Company sold investment securities during the
second quarter of fiscal 2004 which generated a net gain of $31,000 and sold
certain fixed rate one- to four-family mortgage loans during the third quarter
of fiscal 2004 which generated a net gain on sale of loans of $55,000.
Non-interest expense increased $952,000, or 8.8%, to $11.8 million compared to
$10.9 million for the same period last year. The increase in non-interest
expense was primarily due to an increase of $787,000 in employee compensation
and benefits expense resulting from salary increases, new hires, increased cost
of benefits plans and the timing for accruals of employee bonus expense. Net
occupancy expenses increased $100,000 primarily from new and upgraded 24/7 ATM
centers. Also contributing to the increase in non-interest expense was an
expense for capital securities costs of $175,000 for debt service on the recent
$13 million in subordinated debt raised by Carver through an issuance of trust
preferred securities in September 2003. These
3
increases were offset by decreases of $62,000 in equipment expenses and $48,000
in other non-interest expense. The decrease in other non-interest expense is
predominantly attributable to reductions in advertising expense of $195,000,
loan expenses of $95,000 and security services of $68,000. Partially offsetting
these decreases in other non-interest expense was a $262,000 increase in
consulting expenses primarily related to establishing the Bank's real estate
investment trust and complying with certification requirements in the new
regulatory environment, a $47,000 increase in stationery and supplies as the
Bank updated its privacy disclosure statements to comply with regulatory
requirements and increased insurance and surety expense of $29,000.
Income before taxes increased $620,000, or 12.2%, to $5.7 million compared to
$5.1 million for the same period last year. Income taxes decreased $372,000, or
16.0%, to $1.9 million compared to $2.3 million for the same period last year
due to a reduction in the Company's tax rate following establishment of a real
estate investment trust.
FINANCIAL CONDITION HIGHLIGHTS
At December 31, 2003, total assets increased by $19.7 million, or 3.9%, to
$529.6 million compared to $509.8 million at March 31, 2003. The asset growth
primarily reflects an increase in total loans receivable, net, of $44.4 million
as mortgage loan originations and purchases exceeded mortgage loan repayments.
The increase was partially offset by a decline in total securities of $15.4
million as new mortgage loans replaced investments that matured, prepaid or were
sold. Management will continue to evaluate the balance of interest earning
assets allocated to loan originations and purchases as well as additional
purchases of mortgage-backed securities while continuing to assess yields and
economic risk.
At December 31, 2003, total liabilities increased by $4.8 million, or 1.0%, to
$473.5 million from $468.8 million at March 31, 2003. The increase in
liabilities is a result of deposit growth of $21.1 million, partially offset by
net repayments of borrowings from the Federal Home Loan Bank of New York of
$11.4 million and a decrease of $4.9 million in other liabilities. The
guaranteed preferred beneficial interest in junior subordinated debentures is
the net addition of $12.7 million in trust preferred securities issued in the
second quarter of fiscal 2004.
At December 31, 2003, total stockholders' equity increased $2.2 million, or
5.4%, to $43.3 million compared to $41.1 million at March 31, 2003. The increase
in total stockholders' equity was primarily attributable to an increase in
retained earnings year-to-date of $3.2 million, partially offset by a decrease
of $775,000 in accumulated other comprehensive income and a $211,000 decrease
related to treasury stock. The $211,000 decrease related to treasury stock is
attributable to repurchases of the Company's stock, partially offset by payments
made from treasury stock for stock-based compensation plans.
During the quarter ended December 31, 2003, the Company did not purchase any
additional shares of its common stock in open market transactions as part of its
stock repurchase program announced on August 6, 2002. To date, the Company has
purchased 29,100 shares of its common stock in open market transactions at an
average price of $13.84 per share. The Company intends to use the repurchased
shares to fund its stock-based benefit and compensation plans and for any other
purpose the Board of Directors of the Company deems advisable in compliance with
applicable law.
4
ASSET QUALITY
At December 31, 2003, non-performing assets totaled $1.2 million, or 0.37% of
total loans receivable, compared to $1.8 million, or 0.61% of total loans
receivable, at March 31, 2003. At December 31, 2003, the allowance for loan
losses of $4.1 million was substantially unchanged from $4.2 million at March
31, 2003. The allowance for loan losses decreased $30,000 due to net charge-offs
during fiscal 2004. At December 31, 2003, the ratio of the allowance for loan
losses to non-performing loans was 330.6% compared to 230.7% at March 31, 2003.
At December 31, 2003, the ratio of the allowance for loan losses to total loans
receivable was 1.21% compared to 1.40% at March 31, 2003.
Carver Bancorp, Inc., the largest African- and Caribbean-American operated
financial services institution in the United States, is the holding company for
Carver Federal Savings Bank, a federally chartered stock savings bank. The Bank
operates five full-service branches in the New York City boroughs of Brooklyn,
Queens and Manhattan. For further information, please visit the Company's
website at www.carverbank.com.
STATEMENTS CONTAINED IN THIS NEWS RELEASE WHICH ARE NOT HISTORICAL FACTS ARE
FORWARD-LOOKING STATEMENTS AS THAT TERM IS DEFINED IN THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. THIS NEWS RELEASE CONTAINS FORWARD-LOOKING
STATEMENTS WHICH MAY BE IDENTIFIED BY THE USE OF SUCH WORDS AS "BELIEVE,"
"EXPECT," "ANTICIPATE," "INTEND," "SHOULD," "COULD," "PLANNED," "ESTIMATED,"
"POTENTIAL" AND SIMILAR TERMS AND PHRASES. SUCH FORWARD-LOOKING STATEMENTS ARE
SUBJECT TO RISKS AND UNCERTAINTIES WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE CURRENTLY ANTICIPATED DUE TO A NUMBER OF FACTORS. FACTORS
WHICH COULD RESULT IN MATERIAL VARIATIONS INCLUDE, BUT ARE NOT LIMITED TO, THE
COMPANY'S SUCCESS IN IMPLEMENTING ITS INITIATIVES, INCLUDING EXPANDING ITS
PRODUCT LINE, ADDING NEW BRANCHES, SUCCESSFULLY REBRANDING ITS IMAGE AND
ACHIEVING GREATER OPERATING EFFICIENCIES; CHANGES IN INTEREST RATES WHICH COULD
AFFECT NET INTEREST MARGINS AND NET INTEREST INCOME; COMPETITIVE FACTORS WHICH
COULD AFFECT NET INTEREST INCOME AND NON-INTEREST INCOME; GENERAL ECONOMIC
CONDITIONS WHICH COULD AFFECT THE VOLUME OF LOAN ORIGINATION, DEPOSIT FLOWS,
REAL ESTATE VALUES, THE LEVELS OF NON-INTEREST INCOME AND THE AMOUNT OF LOAN
LOSSES AS WELL AS OTHER FACTORS DISCUSSED IN DOCUMENTS FILED BY THE COMPANY WITH
THE SECURITIES AND EXCHANGE COMMISSION FROM TIME TO TIME. ALL FORWARD-LOOKING
STATEMENTS ARE MADE AS OF THE DATE HEREOF AND THE COMPANY AND THE BANK UNDERTAKE
NO OBLIGATION TO UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR
CIRCUMSTANCES THAT OCCUR AFTER THE DATE ON WHICH SUCH STATEMENTS WERE MADE.
# # #
5
CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except share data)
DECEMBER 31, MARCH 31,
2003 2003
---- ----
(UNAUDITED)
ASSETS
Cash and cash equivalents:
Cash and due from banks $ 15,413 $ 17,660
Federal funds sold 5,900 5,500
------------------ -----------------
Total cash and cash equivalents 21,313 23,160
------------------ -----------------
Securities:
Available-for-sale, at fair value (including pledged as collateral of
$86,600 at December 31, 2003, $124,139 at March 31, 2003) 100,918 129,055
Held-to-maturity, at amortized cost (including pledged as collateral of
$48,028 at December 31, 2003, $35,138 at March 31, 2003) 49,267 36,530
------------------ -----------------
Total securities 150,185 165,585
------------------ -----------------
Loans receivable:
Real estate mortgage loans 335,258 294,710
Consumer and commercial business loans 6,014 2,186
Allowance for loan losses (4,128) (4,158)
------------------ -----------------
Total loans receivable, net 337,144 292,738
------------------ -----------------
Office properties and equipment, net 10,869 10,193
Federal Home Loan Bank of New York stock, at cost 4,876 5,440
Accrued interest receivable 2,416 3,346
Identifiable intangible asset, net 18 178
Other assets 2,750 9,205
------------------ -----------------
Total assets $ 529,571 $ 509,845
================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $ 368,276 $ 347,164
Advances from the Federal Home Loan Bank of New York and other borrowed
money 97,592 108,996
Other liabilities 7,676 12,612
------------------ -----------------
Total liabilities 473,544 468,772
------------------ -----------------
Guaranteed preferred beneficial interest in junior subordinated debentures 12,728 -
Stockholders' equity:
Preferred stock (par value $0.01 per share; 1,000,000
shares authorized; 100,000 issued and outstanding) 1 1
Common stock (par value $0.01 per share: 5,000,000 shares authorized;
2,316,358 shares issued; 2,284,390 and 2,296,960 outstanding at
December 31, 2003 and March 31, 2003, respectively) 23 23
Additional paid-in capital 23,816 23,781
Retained earnings 19,921 16,712
Unamortized awards of common stock under management recognition plan (36) (4)
Treasury stock, at cost (31,968 shares at December 31, 2003 and 19,398
shares at March 31, 2003) (401) (190)
Accumulated other comprehensive income (25) 750
------------------ -----------------
Total stockholders' equity 43,299 41,073
------------------ -----------------
Total liabilities and stockholders' equity $ 529,571 $ 509,845
================== =================
6
CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------ ------------
(UNAUDITED) (UNAUDITED)
2003 2002 2003 2002
---- ---- ---- ----
Interest Income: (1)
Loans $ 5,025 $ 5,141 $ 14,952 $ 15,829
Total securities 1,396 1,541 4,507 4,193
Federal funds sold 62 79 143 266
-------------- -------------- -------------- --------------
Total interest income 6,483 6,761 19,602 20,288
-------------- -------------- -------------- --------------
Interest expense:
Deposits 1,140 1,373 3,560 4,443
Advances and other borrowed money 924 846 2,821 2,324
-------------- -------------- -------------- --------------
Total interest expense 2,064 2,219 6,381 6,767
-------------- -------------- -------------- --------------
Net interest income 4,419 4,542 13,221 13,521
Provision for loan losses - - - -
-------------- -------------- -------------- --------------
Net interest income after provision for loan losses 4,419 4,542 13,221 13,521
-------------- -------------- -------------- --------------
Non-interest income:
Depository fees and charges 479 483 1,454 1,344
Loan fees and service charges 1,037 266 2,175 1,069
Gain on sale of securities - - 31 -
Gain on sale of loans 55 - 55 -
Other 6 2 577 7
-------------- -------------- -------------- --------------
Total non-interest income 1,577 751 4,292 2,420
-------------- -------------- -------------- --------------
Non-interest expense: (1)
Employee compensation and benefits 1,989 1,542 5,592 4,805
Net occupancy expense 385 296 1,053 953
Equipment 331 403 1,113 1,175
Capital securities cost 152 - 175 -
Other 1,267 1,298 3,885 3,933
-------------- -------------- -------------- --------------
Total non-interest expense 4,124 3,539 11,818 10,866
-------------- -------------- -------------- --------------
Income before income taxes 1,872 1,754 5,695 5,075
Income taxes 636 807 1,946 2,318
-------------- -------------- -------------- --------------
Net income $ 1,236 $ 947 $ 3,749 $ 2,757
============== ============== ============== ==============
Dividends applicable to preferred stock $ 49 $ 49 $ 148 $ 148
Net income available to common stockholders $ 1,187 $ 898 $ 3,601 $ 2,609
============== ============== ============== ==============
Earnings per common share:
Basic $ 0.52 $ 0.39 $ 1.58 $ 1.14
============== ============== ============== ==============
Diluted $ 0.47 $ 0.38 $ 1.45 $ 1.09
============== ============== ============== ==============
(1) Reclassifications have been made to prior year periods in order to conform
with current periods.
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CARVER BANCORP, INC. AND SUBSIDIARIES
SELECTED KEY RATIOS
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
KEY OPERATING RATIOS: DECEMBER 31, DECEMBER 31,
------------ ------------
2003 2002 2003 2002
---- ---- ---- ----
Return on average assets (1) 0.94 % 0.80 % 0.96 % 0.81 %
Return on average equity (2) 11.45 9.67 11.86 9.66
Interest rate spread (3) 3.33 3.93 3.41 4.10
Net interest margin (4) 3.53 4.08 3.58 4.26
Operating expenses to average assets (5) 3.15 3.00 3.04 3.21
Equity-to-assets (6) 8.18 8.23 8.18 8.23
Efficiency ratio (7) 68.78 66.86 67.48 68.16
Average interest-earning assets to
interest-bearing liabilities 1.12 1.08 1.10 1.08
ASSET QUALITY RATIOS: DECEMBER 31, MARCH 31,
------------ ---------
2003 2002 2003 2002
---- ---- ---- ----
Non performing assets to total assets (8) 0.24 0.48 0.36 0.63
Non performing assets to total loans receivable (8) 0.37 0.81 0.61 0.96
Allowance for loan losses to total loans receivable 1.21 1.41 1.40 1.41
Allowance for loan losses to non-performing loans (8) 330.6 176.1 230.7 146.2
(1) Net income divided by average total assets, annualized
(2) Net income divided by average total equity, annualized
(3) Combined weighted average interest rate earned less combined weighted
average interest rate cost
(4) Net interest income divided by average interest-earning assets annualized
(5) Non-interest expenses less loss on foreclosed real estate divided by average
total assets, annualized
(6) Total equity divided by assets at period end
(7) Operating expenses divided by sum of net interest income plus non-interest
income
(8) Non performing assets consist of non-accrual loans, loans accruing 90 days
or more past due, & property acquired in settlement of loans
8