[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 FISCAL YEAR 2004 RESULTS
REPORTS EPS OF $0.42 AND $1.87 FOR THE FOURTH QUARTER AND FISCAL YEAR,
RESPECTIVELY ANNOUNCES QUARTERLY DIVIDEND OF $0.05
NEW YORK, NEW YORK, APRIL 30, 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
twelve-month periods ended March 31, 2004 ("fiscal 2004").
The Company reported diluted earnings per share of $1.87 for fiscal 2004
compared to $1.52 for the same period last year, an increase of 23%. Net income
available to common stockholders for fiscal 2004 increased $1.0 million, or
27.8%, to $4.6 million compared to $3.6 million for the same period last year.
Net income available to common stockholders for the fourth quarter of fiscal
2004 was relatively unchanged at $1.0 million, compared to the same period last
year which resulted in the Company reporting diluted earnings per share of
$0.42, also unchanged from the same period last year.
Commenting on the Company's fiscal 2004 results, President and Chief Executive
Officer Deborah C. Wright stated: "Fiscal 2004 was another successful year for
Carver. Once again the Company has reported strong earnings growth and continued
momentum in increasing franchise value through the expansion of our loan and
deposit portfolios. These results have been accomplished in an economic
environment evidenced by continuing unemployment in our markets and
extraordinarily high mortgage loan and mortgage-backed securities repayments as
interest rates have remained at 40 year lows. As such, margin compression
continues to be a challenge for the banking industry and the Company.
Nevertheless, Carver continues to achieve increased earnings while maintaining
strong asset quality."
Commenting on the Company's growth strategy, Ms. Wright continued: "As Carver
has proven its ability to produce consistent earnings momentum and increased
capital, the Company is now accelerating its expansion strategy to grow its core
franchise. In the last 12 months Carver has opened two 24/7 ATM centers in
Harlem and a new branch at Jamaica Center in Queens. Importantly, the Company
announced an agreement to acquire Independence Federal Savings Bank in
Washington, D.C., which is expected to close by December 31, 2004. In addition,
plans are underway for two new branches in the next twelve months, one at
Atlantic Terminal in Fort Greene, Brooklyn and the other in Harlem. Customer
response to our new 24/7 ATM centers and Jamaica Center branch has been very
positive and we are pleased that Carver's expansion has been met with such
enthusiasm in our neighborhoods."
Financial highlights for the three-month period ended March 31, 2004 compared to
March 31, 2003, unless otherwise indicated, include:
o Net interest income decreased $396,000, or 8.1%, to $4.5 million
from $4.9 million.
o Non-interest income increased $243,000, or 32.8%, to $984,000 from
$741,000.
o Non-interest expense remained relatively unchanged at $3.8
million.
o Total assets increased $9.3 million, or 1.7%, to $538.8 million
from $529.6 million at December 31, 2003.
o Total loans receivable, net, increased $14.8 million, or 4.4%, to
$351.9 million from $337.1 million at December 31, 2003.
o Investment securities decreased $10.3 million, or 6.9%, to $139.9
million from $150.2 million at December 31, 2003.
o Total deposits increased $5.4 million, or 1.5%, to $373.7 million
from $368.3 million at December 31, 2003.
o Total borrowings decreased $6.0 million, or 5.5%, to $104.3
million from $110.3 million at December 31, 2003.
o Stockholders' Equity increased $1.3 million, or 3.1%, to $44.6
million from $43.3 million at December 31, 2003.
Financial highlights for the twelve-month period ended March 31, 2004 compared
to March 31, 2003 include:
o Net interest income decreased $872,000, or 4.7%, to $17.5 million
from $18.4 million.
o Non-interest income increased $2.1 million, or 66.9%, to $5.3
million from $3.2 million.
o Non-interest expense increased $776,000, or 5.3%, to $15.5 million
from $14.7 million.
o Total assets increased $29.0 million, or 5.7%, to $538.8 million
from $509.8 million.
o Total loans receivable, net, increased $59.2 million, or 20.2%, to
$351.9 million from $292.7 million.
o Investment securities decreased $25.7 million, or 15.5%, to $139.9
million from $165.6 million.
o Total deposits increased $26.5 million, or 7.6%, to $373.7 million
from $347.2 million.
o Total borrowings decreased $4.7 million, or 4.3%, to $104.3
million from $109.0 million.
o Stockholders' Equity increased $3.6 million, or 8.7%, to $44.6
million from $41.1 million.
The Board has declared a $0.05 per share dividend for the quarter ended March
31, 2004. The dividend is payable on May 24, 2004 to holders of record at the
close of business on May 10, 2004.
INCOME STATEMENT HIGHLIGHTS
Fourth Quarter Results
- ----------------------
Net income available to common stockholders was relatively unchanged at $1.0
million, compared to the same period last year. This is the net result of an
increase in non-interest income of $243,000 and lower income tax expense of
$168,000 offset by a decrease in net interest income of $396,000.
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Net interest income before the provision for loan losses decreased by $396,000,
or 8.1%, to $4.5 million compared to $4.9 million for the same period last year.
Interest income declined $468,000, or 6.6%, compared to the same period last
year. Partially offsetting the decline in interest income was a decrease in
interest expense of $72,000, or 3.2%. Interest income decreased primarily as a
result of the lower interest rate environment compared to the same period last
year, which 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.
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 $243,000, or 32.8%, to $984,000 compared to
$741,000 for the same period last year. This increase was primarily due to a
$160,000 increase in loan fees and service charges, which reflected higher
mortgage prepayment penalties related to refinancing activity. 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 $60,000.
Non-interest expense remained unchanged at $3.8 million. While employee
compensation and benefits increased moderately by $26,000, or 1.3%, compared to
the same period last year. The prior year quarter contained an additional
$195,000 in bonus expenses which was accrued mostly in the fourth quarter
compared to fiscal 2004 where the accrual was made evenly over each quarter. Net
occupancy expense increased 82,000, or 26.6%, to 390,000 compared to $308,000
for the same period last year primarily due to the opening of new 24/7 ATM
centers and our recently opened Jamaica Center branch. Partially offsetting
these increases were reductions of $62,000 and $47,000 in equipment expense and
other non-interest expense, respectively.
Income before taxes decreased $152,000, or 8.5%, to $1.6 million compared to
$1.8 million for the same period last year. Income taxes decreased $168,000, or
23.5%, to $547,000 compared to $715,000 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.
Fiscal 2004 Results
- -------------------
Net income available to common stockholders increased $1.0 million, or 27.7%, to
$4.6 million compared to $3.6 million for the same period last year. The
improvement is primarily due to increased non-interest income of $2.1 million
and a decrease in the Bank's effective tax rate, resulting in lower income tax
expenses of $540,000, partially offset by decreased net interest income of
$872,000 and an increase in non-interest expense of $776,000.
Net interest income before the provision for loan losses decreased by $872,000,
or 4.7%, to $17.5 million compared to $18.4 million for the same period last
year. Interest income declined $1.2 million, or 4.2%, compared to the same
period last year. Partially offsetting the decline in interest income was a
reduction in interest expense of $284,000, or 3.2%. Interest income decreased
primarily as a result of the lower interest rate environment compared to the
same period last year, which has decreased yields on interest earning assets.
Although interest expense benefited from the lower interest rate environment and
the Bank's periodic adjustment of certain deposit rates, an additional $328,000
in interest expense resulted from the debt service costs of
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the $13 million in subordinated debt raised by Carver through an issuance of
trust preferred securities in September 2003.
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 $2.1 million, or 66.9%, to $5.3 million compared
to $3.2 million for the same period last year. The change in non-interest income
was primarily attributable to a $1.3 million increase in loan fees and service
charges, primarily due to higher mortgage prepayment penalties and a $112,000
increase in depository fees and charges, primarily due to 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
$590,000 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 its balance sheet and manage interest
rate risk, the Company sold investment securities during fiscal 2004 which
generated a net gain of $31,000 and sold certain fixed rate one- to four-family
mortgage loans during fiscal 2004 which generated a net gain on sale of loans of
$118,000.
Non-interest expense increased $776,000, or 5.3%, to $15.5 million compared to
$14.7 million for the same period last year. The increase in non-interest
expense was primarily due to an increase of $813,000 in employee compensation
and benefits expense, resulting from salary increases, new hires and the
increased costs of benefits plans. Net occupancy expenses increased $182,000
primarily from new and upgraded 24/7 ATM centers and the Bank's recently opened
Jamaica Center branch. These increases were offset by decreases of $124,000 in
equipment expense and $95,000 in other non-interest expense primarily due to
lower miscellaneous operating expenses offset by higher expenses related to
increased shareholder communications and costs related to regulatory compliance.
Income before taxes increased $468,000, or 6.8%, to $7.3 million compared to
$6.9 million for the same period last year. Income taxes decreased $540,000, or
17.8%, to $2.5 million compared to $3.0 million 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.
FINANCIAL CONDITION HIGHLIGHTS
At March 31, 2004, total assets increased by $29.0 million, or 5.7%, to $538.8
million compared to $509.8 million at March 31, 2003. The asset growth primarily
reflects an increase in total loans receivable, net, of $59.2 million as
mortgage loan originations and purchases exceeded mortgage loan repayments. The
increase was partially offset by a decrease in total securities of $25.7 million
as investments that matured, prepaid or were sold were replaced with new
mortgage loans. 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.
4
At March 31, 2004, total liabilities increased by $25.4 million, or 5.4%, to
$494.2 million from $468.8 million at March 31, 2003. The increase in
liabilities is a result of deposit growth of $26.5 million, the net addition of
$12.7 million in trust preferred securities issued in the second quarter of
fiscal 2004 and a decrease of $3.6 million in other liabilities. Partially
offsetting the increase in total liabilities were $17.5 million in net
repayments of borrowings from the Federal Home Loan Bank of New York.
At March 31, 2004, total stockholders' equity increased $3.6 million, or 8.7%,
to $44.6 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 of $4.2 million for fiscal 2004 partially offset by a decrease of
$492,000 in accumulated other comprehensive income and a $200,000 decrease
related to repurchases of the Company's stock, partially offset by payments made
from treasury stock for stock-based compensation plans.
During the quarter ended March 31, 2004, 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. Since inception of the
stock repurchase program, 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.
ASSET QUALITY
At March 31, 2004, non-performing assets totaled $2.1 million, or 0.60% of total
loans receivable, compared to $1.8 million, or 0.61% of total loans receivable,
at March 31, 2003. At March 31, 2004, the allowance for loan losses of $4.1
million was substantially unchanged from that of March 31, 2003. At March 31,
2004, the ratio of the allowance for loan losses to non-performing loans was
194.3% compared to 230.7% at March 31, 2003. At March 31, 2004, the ratio of the
allowance for loan losses to total loans receivable was 1.16% 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 six 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.
ANNUAL MEETING DATE ANNOUNCED
The Company will hold its annual meeting of stockholders for fiscal 2004 on
September 21, 2004 at a location to be announced.
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 AND ATM CENTERS, SUCCESSFULLY REBRANDING ITS
IMAGE, ACHIEVING GREATER OPERATING EFFICIENCIES AND COMPLETING ITS PLANNED
ACQUISITION OF A SAVINGS BANK IN A NEW MARKET AND INTEGRATING ITS OPERATIONS
INTO THE
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COMPANY'S; 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.
# # #
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CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS, EXCEPT SHARE DATA)
MARCH 31, MARCH 31,
2004 2003
---- ----
(UNAUDITED)
ASSETS
Cash and cash equivalents:
Cash and due from banks $ 11,574 $ 15,160
Federal funds sold 8,200 5,500
Interest Earning Deposits 3,000 2,500
--------- ---------
Total cash and cash equivalents 22,774 23,160
--------- ---------
Securities:
Available-for-sale, at fair value (including pledged as collateral of
$82,325 at March 31, 2004, $124,954 at March 31, 2003) 96,403 129,055
Held-to-maturity, at amortized cost (including pledged as collateral of
$42,189 at March 31, 2004, $35,138 at March 31, 2003) 43,474 36,530
--------- ---------
Total securities 139,877 165,585
--------- ---------
Loans receivable:
Real estate mortgage loans 350,015 294,710
Consumer and commercial business loans 6,010 2,186
Allowance for loan losses (4,125) (4,158)
--------- ---------
Total loans receivable, net 351,900 292,738
--------- ---------
Office properties and equipment, net 11,826 10,193
Federal Home Loan Bank of New York stock, at cost 4,576 5,440
Accrued interest receivable 2,489 3,346
Identifiable intangible asset, net -- 178
Other assets 5,388 9,205
--------- ---------
Total assets $ 538,830 $ 509,845
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $ 373,665 $ 347,164
Advances from the Federal Home Loan Bank of New York and other borrowed money 104,282 108,996
Other liabilities 16,238 12,612
--------- ---------
Total liabilities 494,185 468,772
--------- ---------
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;
2,285,267 and 2,296,960 outstanding at March 31, 2004 and March 31, 2003, respectively) 23 23
Additional paid-in capital 23,882 23,781
Retained earnings 20,892 16,712
Unamortized awards of common stock under management recognition plan (21) (4)
Treasury stock, at cost (31,091 shares at March 31, 2004 and 19,398 shares at March 31, 2003) (390) (190)
Accumulated other comprehensive income 258 750
--------- ---------
Total stockholders' equity 44,645 41,073
--------- ---------
Total liabilities and stockholders' equity $ 538,830 $ 509,845
========= =========
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CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31, MARCH 31,
--------- ---------
(UNAUDITED) (UNAUDITED)
2004 2003 2004 2003
---- ---- ---- ----
Interest Income: (1)
Loans $ 5,165 $ 5,364 $ 20,117 $ 21,194
Total securities 1,444 1,703 5,950 5,896
Federal funds sold 24 34 167 300
------- ------- -------- --------
Total interest income 6,633 7,101 26,234 27,390
------- ------- -------- --------
Interest expense:
Deposits 1,089 1,316 4,649 5,760
Advances and other borrowed money 1,055 900 4,051 3,224
------- ------- -------- --------
Total interest expense 2,144 2,216 8,700 8,984
------- ------- -------- --------
Net interest income 4,489 4,885 17,534 18,406
Provision for loan losses - - - -
------- ------- -------- --------
Net interest income after provision for loan losses 4,489 4,885 17,534 18,406
------- ------- -------- --------
Non-interest income:
Depository fees and charges 472 469 1,925 1,813
Loan fees and service charges 432 272 2,607 1,342
Gain on sale of securities - - 31 -
Gain on sale of loans 60 - 118 -
Other 20 - 597 7
------- ------- -------- --------
Total non-interest income 984 741 5,278 3,162
------- ------- -------- --------
Non-interest expense: (1)
Employee compensation and benefits 1,995 1,969 7,587 6,774
Net occupancy expense 390 308 1,443 1,261
Equipment 373 435 1,486 1,610
Other 1,078 1,125 4,964 5,059
Total non-interest expense 3,836 3,837 15,480 14,704
Income before income taxes 1,637 1,789 7,332 6,864
Income taxes 547 715 2,493 3,033
------- ------- -------- --------
Net income $ 1,090 $ 1,074 $ 4,839 $ 3,831
======= ======= ======== ========
Dividends applicable to preferred stock $ 49 $ 49 $ 197 $ 197
Net income available to common stockholders $ 1,041 $ 1,025 $ 4,642 $ 3,634
======= ======= ======== ========
Earnings per common share:
Basic $ 0.46 $ 0.45 $ 2.03 $ 1.59
======= ======= ======== ========
Diluted $ 0.42 $ 0.42 $ 1.87 $ 1.52
======= ======= ======== ========
(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 TWELVE MONTHS ENDED
KEY OPERATING RATIOS: MARCH 31, MARCH 31,
--------- ---------
2004 2003 2004 2003
---- ---- ---- ----
Return on average assets (1) 0.83 % 0.88 % 0.93 % 0.83 %
Return on average equity (2) 10.07 10.86 11.40 9.77
Interest rate spread (3) 3.48 4.12 3.39 4.16
Net interest margin (4) 3.63 4.27 3.56 4.30
Operating expenses to average assets (5) 2.91 3.13 2.97 3.18
Equity-to-assets (6) 8.29 8.06 8.29 8.06
Efficiency ratio (7) 70.09 68.20 67.86 68.18
Average interest-earning assets to
interest-bearing liabilities 1.08 1.08 1.09 1.07
ASSET QUALITY RATIOS: MARCH 31,
---------
2004 2003
---- ----
Non performing assets to total assets (8) 0.39 0.36
Non performing assets to total loans receivable (8) 0.60 0.61
Allowance for loan losses to total loans receivable 1.16 1.40
Allowance for loan losses to non-performing loans (8) 194.3 230.7
(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
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