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. REPORTS FIRST QUARTER RESULTS
ANNOUNCES FIRST QUARTER EPS OF $0.42, INCREASES FIRST QUARTER DIVIDEND TO $0.07
NEW YORK, NEW YORK, JULY 28, 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-month period
ended June 30, 2004, the first quarter of the fiscal year ended March 31, 2005
("fiscal 2005").
The Company reported diluted earnings per share of $0.42 for the quarter ended
June 30, 2004, unchanged compared to the same period last year. Net income
available to common stockholders of $1.0 million remained substantially
unchanged from the same period last year.
Commenting on the Company's results, President and Chief Executive Officer
Deborah C. Wright stated: "Carver's first quarter fiscal 2005 results reflect
continued growth in net interest income in a very challenging interest rate
environment. This result has been achieved through growth in the loan portfolio
and successful balance sheet management, while maintaining a disciplined
approach to asset quality and limiting long-term interest rate risk. Our
business model has enabled the Company to replace lower yielding investments
with real estate loans and replace borrowings with deposits, thereby increasing
franchise value. The rise in long-term interest rates has reduced mortgage
refinance activity which, as expected, has reduced mortgage prepayment penalty
income compared to the same period last year. However, non-interest income has
remained stable as fee income from other sources, including loan and deposit
services, increased."
Ms. Wright continued: "We remain committed to making investments to expand
Carver's presence in important target markets and thereby provide long-term
earnings momentum and stockholder value. During March 2004, Carver announced its
intention to acquire Independence Federal Savings Bank in Washington, D.C.
Integration efforts will begin upon approval of Independence shareholders which
is expected later this year. Carver continues to make significant investments in
its New York City franchise. The successful opening of the Jamaica Center branch
in Queens in February 2004 and the planned opening of our new branch at Atlantic
Terminal in Fort Greene, Brooklyn this week reflects the Bank's strategy to
achieve disciplined growth in our core markets. While the additional costs
associated with this expansion have increased non-interest expense in the near
term, we anticipate that these costs will be mitigated by revenues generated
from newly acquired deposits, loans and fees provided by customers from these
sites."
Ms. Wright continued: "We are pleased to report that on July 27, 2004 the Board
of Directors, based on its confidence in Carver's long-term growth and earnings
outlook, declared a $0.07 per
1
share quarterly dividend for the first quarter of fiscal 2005, a 40% increase
from the previous quarter's dividend."
SUBSEQUENT EVENTS TO CLOSE OF FIRST QUARTER
Ms. Wright further commented: "After the close of our first quarter, Carver
received two significant honors. First, the Office of Thrift Supervision has
advised us that as a result of its most recent examination, Carver's Community
Reinvestment Act performance has been rated "Outstanding" for the first time in
the Bank's history. Second, the Community Development Financial Institutions
Fund of the Department of the Treasury has selected the Bank to receive a $1.5
million grant as part of its Bank Enterprise Award Program, which seeks to
expand financing activities in economically distressed areas throughout the
nation. Carver was one of only four institutions to receive the maximum grant. A
portion of these funds will be shared with our non-profit lending partners
related to this grant, and the remaining amount will be invested in furtherance
of our business strategy to enhance stockholder value. Both developments
recognize our success in expanding capital in Carver's markets."
INCOME STATEMENT HIGHLIGHTS
Net income available to common stockholders of $1.0 million remained
substantially unchanged from the same period last year. These results were
achieved primarily from a 6.0% increase in net interest income offset by a 4.2%
increase in non-interest expense and an increase in income tax expense partially
due to an increase in the Bank's effective tax rate.
Net interest income before the provision for loan losses increased $258,000, or
6.0%, to $4.5 million compared to $4.3 million for the same period last year.
This increase is a result of an increase in interest income of $196,000, or
3.0%, coupled with a reduction in interest expense of $62,000, or 2.8%, compared
to the same period last year. Interest income rose primarily as a result of
increased real estate mortgage loan balances partially offset by a decline in
securities balances. Interest expense benefited from the low interest rate
environment that resulted in lower cost deposits.
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 remained unchanged at $1.1 million compared to the same
period last year. These results were achieved this quarter primarily from a gain
on the sale of securities of $94,000 and additional deposit fees and charges of
$36,000, primarily offset by a reduction in loan fees and service charges of
$123,000. The decline in loan fees and service charges was largely attributable
to a decrease of $246,000 in mortgage prepayment penalty income, partially
offset by the recognition of $116,000 of income from mortgage servicing rights
on prior period sales of fixed rate loans where servicing rights were retained.
Non-interest expense increased $158,000, or 4.2%, to $3.9 million compared to
$3.8 million for the same period last year. The increase in non-interest expense
was largely due to increases in employee compensation, net occupancy and
supplies primarily related to the new Jamaica Center branch, partially offset by
reductions in legal and consulting expenses.
Income before taxes increased $99,000, or 6.0%, to $1.7 million compared to the
same period last year. Income taxes increased $104,000, or 18.6%, to $663,000
compared to the same period last year partly due to an increase in the Company's
effective tax rate from 34% in fiscal 2004 to
2
38% in fiscal 2005 to maintain an appropriate tax provision.
FINANCIAL CONDITION HIGHLIGHTS
At June 30, 2004, total assets increased by $14.0 million, or 2.6%, to $552.8
million compared to $538.8 million at March 31, 2004. The asset growth primarily
reflects an increase in total loans receivable, net, of $18.9 million as new
mortgage loan originations and purchases exceeded mortgage loan repayments.
Additional increases were achieved in cash and cash equivalents and office
properties and equipment, net, of $3.1 million and $1.3 million, respectively.
The $1.3 million increase in office properties and equipment is primarily
attributable to the new Jamaica Center branch in Queens. The increase in total
assets was partially offset by a decline in total securities of $8.5 million as
loan growth replaced investments that matured or prepaid. Management continues
to evaluate the balance of interest earning assets allocated to loan
originations and purchases as well as mortgage-backed securities while
continuing to assess yields and economic risk.
At June 30, 2004, total liabilities increased by $14.2 million, or 2.9%, to
$508.4 million from $494.2 million at March 31, 2004. The increase in
liabilities is a result of strong deposit growth of $23.8 million, of which
$15.0 million was deposited by the City of New York under its Banking
Development District program. The increase in deposits was partially offset by
repayments of matured borrowings of $2.0 million and a decrease of $7.5 million
in other liabilities resulting primarily from the payment of income taxes and
bank checks.
At June 30, 2004, total stockholders' equity decreased $222,000, or 0.5%, to
$44.4 million compared to $44.6 million at March 31, 2004. The decrease in total
stockholders' equity was primarily attributable to a decrease of $1.1 million in
accumulated other comprehensive income related to the mark-to-market of the
Bank's available-for-sale securities. This decrease was partially offset by an
increase in retained earnings of $869,000 from net income derived in the first
quarter of fiscal 2005.
During the quarter ended June 30, 2004, the Company purchased 1,350 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 30,450 shares of its common stock in open market transactions at an
average price of $14.14 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 June 30, 2004, non-performing assets totaled $1.9 million, or 0.50% of total
loans receivable, compared to $2.1 million, or 0.60% of total loans receivable,
at March 31, 2004. At June 30, 2004, the allowance for loan losses of $4.1
million decreased $20,000 from March 31, 2004 due to net charge-offs in the
first quarter of fiscal 2005. At June 30, 2004, the ratio of the allowance for
loan losses to non-performing loans was 217.8% compared to 194.3% at March 31,
2004. At June 30, 2004, the ratio of the allowance for loan losses to total
loans receivable was 1.10% compared to 1.16% at March 31, 2004.
Carver Bancorp, Inc. is the holding company for Carver Federal Savings Bank, a
federally chartered stock savings bank. Carver Federal Savings Bank, the largest
publicly-traded African- and Caribbean-American run financial institution in the
United States, operates six full-service
3
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" WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933, AS AMENDED, (THE "SECURITIES ACT"), AND SECTION 21E OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"). IN ADDITION,
SENIOR MANAGEMENT MAY MAKE FORWARD LOOKING STATEMENTS ORALLY TO ANALYSTS,
INVESTORS, THE MEDIA AND OTHERS. THESE FORWARD-LOOKING STATEMENTS MAY BE
IDENTIFIED BY THE USE OF SUCH WORDS AS "BELIEVE," "EXPECT," "ANTICIPATE,"
"INTEND," "SHOULD," "WILL," "WOULD," "COULD," "MAY," "PLANNED," "ESTIMATED,"
"POTENTIAL," "OUTLOOK," "PREDICT," "PROJECT" AND SIMILAR TERMS AND PHRASES,
INCLUDING REFERENCES TO ASSUMPTIONS. FORWARD-LOOKING STATEMENTS ARE BASED ON
VARIOUS ASSUMPTIONS AND ANALYSES MADE BY THE COMPANY IN LIGHT OF THE
MANAGEMENT'S EXPERIENCE AND ITS PERCEPTION OF HISTORICAL TRENDS, CURRENT
CONDITIONS AND EXPECTED FUTURE DEVELOPMENTS, AS WELL AS OTHER FACTORS BELIEVED
TO BE APPROPRIATE UNDER THE CIRCUMSTANCES. THESE STATEMENTS ARE NOT GUARANTEES
OF FUTURE PERFORMANCE AND ARE SUBJECT TO RISKS, UNCERTAINTIES AND OTHER FACTORS,
MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL, THAT COULD CAUSE ACTUAL RESULTS
TO DIFFER MATERIALLY FROM FUTURE RESULTS EXPRESSED OR IMPLIED BY SUCH
FORWARD-LOOKING STATEMENTS. FACTORS WHICH COULD RESULT IN MATERIAL VARIATIONS
INCLUDE, WITHOUT LIMITATION, THE COMPANY'S SUCCESS IN IMPLEMENTING ITS
INITIATIVES, INCLUDING EXPANDING ITS PRODUCT LINE, ADDING NEW BRANCHES AND ATM
CENTERS, SUCCESSFULLY RE-BRANDING ITS IMAGE AND ACHIEVING GREATER OPERATING
EFFICIENCIES; INCREASES IN COMPETITIVE PRESSURE AMONG FINANCIAL INSTITUTIONS OR
NON-FINANCIAL INSTITUTIONS; LEGISLATIVE OR REGULATORY CHANGES WHICH MAY
ADVERSELY AFFECT THE COMPANY'S BUSINESS; TECHNOLOGICAL CHANGES WHICH MAY BE MORE
DIFFICULT OR EXPENSIVE THAN WE ANTICIPATE; CHANGES IN INTEREST RATES WHICH MAY
REDUCE NET INTEREST MARGINS AND NET INTEREST INCOME; CHANGES IN DEPOSIT FLOWS,
LOAN DEMAND OR REAL ESTATE VALUES WHICH MAY ADVERSELY AFFECT THE COMPANY'S
BUSINESS; CHANGES IN ACCOUNTING PRINCIPLES, POLICIES OR GUIDELINES WHICH MAY
CAUSE THE COMPANY'S CONDITION TO BE PERCEIVED DIFFERENTLY; LITIGATION OR OTHER
MATTERS BEFORE REGULATORY AGENCIES, WHETHER CURRENTLY EXISTING OR COMMENCING IN
THE FUTURE, WHICH MAY DELAY THE OCCURRENCE OR NON-OCCURRENCE OF EVENTS LONGER
THAN ANTICIPATED; THE ABILITY OF THE COMPANY TO ORIGINATE AND PURCHASE LOANS
WITH ATTRACTIVE TERMS AND ACCEPTABLE CREDIT QUALITY; THE ABILITY OF THE COMPANY
TO REALIZE COST EFFICIENCIES; COMPLETION OF THE COMPANY'S PLANNED ACQUISITION OF
A SAVINGS BANK IN A NEW MARKET AND INTEGRATING ITS OPERATIONS INTO THE COMPANY;
AND GENERAL ECONOMIC CONDITIONS, EITHER NATIONALLY OR LOCALLY IN SOME OR ALL
AREAS IN WHICH THE COMPANY DOES BUSINESS, OR CONDITIONS IN THE SECURITIES
MARKETS OR THE BANKING INDUSTRY WHICH COULD AFFECT DECREASED LIQUIDITY IN THE
CAPITAL MARKETS, THE VOLUME OF LOAN ORIGINATION, DEPOSIT FLOWS, REAL ESTATE
VALUES, THE LEVELS OF NON-INTEREST INCOME AND THE AMOUNT OF LOAN LOSSES. THE
FORWARD-LOOKING STATEMENTS CONTAINED WITHIN HEREIN ARE MADE AS OF THE DATE OF
THIS REPORT, AND THE COMPANY ASSUMES NO OBLIGATION TO UPDATE THESE
FORWARD-LOOKING STATEMENTS TO REFLECT ACTUAL RESULTS, CHANGES IN ASSUMPTIONS OR
CHANGES IN OTHER FACTORS AFFECTING SUCH FORWARD-LOOKING STATEMENTS OR TO UPDATE
THE REASONS WHY ACTUAL RESULTS COULD DIFFER FROM THOSE PROJECTED IN THE
FORWARD-LOOKING STATEMENTS. YOU SHOULD CONSIDER THESE RISKS AND UNCERTAINTIES IN
EVALUATING FORWARD-LOOKING STATEMENTS AND YOU SHOULD NOT PLACE UNDUE RELIANCE ON
THESE STATEMENTS.
# # #
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CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except share data)
JUNE 30, MARCH 31,
2004 2004
(UNAUDITED)
----------- ---------
ASSETS
Cash and cash equivalents:
Cash and due from banks $ 9,908 $ 11,574
Federal funds sold 15,400 8,200
Interest Earning Deposits 600 3,000
--------- ---------
Total cash and cash equivalents 25,908 22,774
--------- ---------
Securities:
Available-for-sale, at fair value (including pledged as collateral of
$73,753 at June 30, 2004, $82,325 at March 31, 2004) 90,932 96,403
Held-to-maturity, at amortized cost (including pledged as collateral of
$39,588 at June 30, 2004, $42,189 at March 31, 2004) 40,414 43,474
--------- ---------
Total securities 131,346 139,877
--------- ---------
Loans receivable:
Real estate mortgage loans 369,141 350,015
Consumer and commercial business loans 5,770 6,010
Allowance for loan losses (4,105) (4,125)
--------- ---------
Total loans receivable, net 370,806 351,900
--------- ---------
Office properties and equipment, net 13,173 11,826
Federal Home Loan Bank of New York stock, at cost 4,576 4,576
Accrued interest receivable 2,433 2,489
Other assets 4,600 5,388
--------- ---------
Total assets $ 552,842 $ 538,830
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $ 397,430 $ 373,665
Advances from the Federal Home Loan Bank of New York and other borrowed money 102,266 104,282
Other liabilities 8,723 16,238
--------- ---------
Total liabilities 508,419 494,185
--------- ---------
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;
2,290,780 and 2,285,267 outstanding at June 30, 2004 and March 31, 2004, respectively) 23 23
Additional paid-in capital 23,922 23,882
Retained earnings 21,761 20,892
Unamortized awards of common stock under management recognition plan (102) (21)
Treasury stock, at cost (25,578 shares at June 30, 2004 and 31,091 shares at March 31, 2004) (330) (390)
Accumulated other comprehensive income (852) 258
--------- ---------
Total stockholders' equity 44,423 44,645
--------- ---------
Total liabilities and stockholders' equity $ 552,842 $ 538,830
========= =========
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CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED
JUNE 30,
(UNAUDITED)
2004 2003
-------- --------
Interest Income:
Loans $ 5,416 $ 4,866
Total securities 1,260 1,596
Federal funds sold 36 54
-------- --------
Total interest income 6,712 6,516
-------- --------
Interest expense:
Deposits 1,125 1,276
Advances and other borrowed money 1,043 954
-------- --------
Total interest expense 2,168 2,230
-------- --------
Net interest income 4,544 4,286
Provision for loan losses - -
-------- --------
Net interest income after provision for loan losses 4,544 4,286
-------- --------
Noninterest income:
Depository fees and charges 520 484
Loan fees and service charges 523 646
Gain on sale of securities 94 -
Gain on sale of loans 2 -
Other - 10
-------- --------
Total non-interest income 1,139 1,140
-------- --------
Noninterest expense:
Employee compensation and benefits 2,001 1,805
Net occupancy expense 404 324
Equipment 370 382
Other 1,163 1,269
-------- --------
Total non-interest expense 3,938 3,780
-------- --------
Income before income taxes 1,745 1,646
Income taxes 663 559
Net income $ 1,082 $ 1,087
======== ========
Dividends applicable to preferred stock $ 49 $ 49
Net income available to common stockholders $ 1,033 $ 1,038
======== ========
Earnings per common share:
Basic $ 0.45 $ 0.45
======== ========
Diluted $ 0.42 $ 0.42
======== ========
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CARVER BANCORP, INC. AND SUBSIDIARIES
SELECTED KEY RATIOS
(Unaudited)
THREE MONTHS ENDED
KEY OPERATING RATIOS: JUNE 30,
-------------------------
2004 2003
----------- -------------
Return on average assets (1) 0.79 % 0.85 %
Return on average equity (2) 9.64 10.59
Interest rate spread (3) 3.41 3.39
Net interest margin (4) 3.46 3.55
Operating expenses to average assets (5) 2.88 2.95
Equity-to-assets (6) 8.04 8.09
Efficiency ratio (7) 69.29 69.66
Average interest-earning assets to
interest-bearing liabilities 1.11 1.09
ASSET QUALITY RATIOS: JUNE 30, MARCH 31,
---------------- ---------------
2004 2003 2004 2003
------ --------- ------- -------
Non performing assets to total assets (8) 0.34 0.35 0.39 0.36
Non performing assets to total loans receivable (8) 0.50 0.59 0.60 0.61
Allowance for loan losses to total loans receivable 1.10 1.35 1.16 1.40
Allowance for loan losses to non-performing loans (8) 217.8 228.5 194.3 230.7
(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 interestearning 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 noninterest
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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