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 SECOND QUARTER RESULTS
REPORTS EPS OF $0.55 AND $0.98 FOR THE SECOND QUARTER AND YEAR TO DATE,
RESPECTIVELY DECLARES QUARTERLY DIVIDEND OF $0.05
NEW YORK, NEW YORK, OCTOBER 24, 2003 - 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 September 30, 2003, the second quarter of the fiscal year ending March 31,
2004 ("fiscal 2004").
The Company reported diluted earnings per share of $0.55 for the quarter ended
September 30, 2003, compared to $0.37 diluted earnings per share for the same
period last year, an increase of 49%. Net income available to common
stockholders increased $491,000, or 55.4%, to $1.4 million compared to $886,000
for the same period last year. During the quarter, the Company recovered
$558,000 related to previously unrecognized income from mortgage loans. This
recovery, which was recorded in other non-interest income, resulted in
additional diluted earnings per share of $0.13 for the quarter.
Financial highlights for the three-month period ended September 30, 2003
compared to September 30, 2002, unless otherwise indicated, include:
o Net interest income decreased $56,000, or 1.2%, relatively unchanged
at $4.5 million.
o Non-interest income increased $858,000, or 119.8%, to $1.6 million
from $716,000.
o Non-interest expense increased $357,000, or 10.1%, to $3.9 million
from $3.5 million.
o Total assets increased $12.1 million, or 2.4%, to $521.9 million from
$509.8 million at March 31, 2003.
o Total loans receivable, net, increased $21.8 million, or 7.5%, to
$314.6 million from $292.7 million at March 31, 2003.
o Investment securities decreased $11.1 million, or 6.7%, to $154.5
million from $165.6 million at March 31, 2003.
o Total deposits increased $14.1 million, or 4.1%, to $361.2 million
from $347.2 million at March 31, 2003.
o Total borrowings increased $1.4 million, or 1.3%, to $110.4 million
from $109.0 million at March 31, 2003.
o Stockholders' Equity increased $1.3 million, or 3.2%, to $42.4 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 second quarter of fiscal 2004 included strong
accomplishments for Carver demonstrated by our continued earnings and balance
sheet growth and the successful issuance of approximately $13 million in
subordinated debt raised through an issuance of trust preferred securities. The
proceeds of trust preferred securities have been contributed to the Bank to
enhance regulatory capital which will facilitate our growth strategy. While
Carver's net interest
margin improved relative to the first quarter, we are continually monitoring and
positioning our balance sheet to meet the challenges of an unpredictable
interest rate climate. We remain focused on controlling expenses required to
expand Carver's presence in our target markets to provide long-term earnings
momentum and stockholder value."
Ms. Wright continued: "Pleased with Carver's results and prospects going
forward, the Board of Directors on October 23, 2003 declared a $0.05 per share
quarterly dividend for the second quarter of fiscal 2004, our fourth quarterly
dividend following the Board's establishment of a regular quarterly dividend on
its common stock on January 8, 2003."
INCOME STATEMENT HIGHLIGHTS
Quarterly Results
- -----------------
Net income available to common stockholders increased $491,000, or 55.4%, to
$1.4 million compared to $886,000 for the same period last year. The improvement
is primarily due to increased non-interest income of $858,000 and a decrease in
the Bank's effective tax rate, partially offset by increased non-interest
expenses of $357,000.
Net interest income before the provision for loan losses decreased by $56,000,
or 1.2%, to $4.5 million, relatively unchanged compared to the same period last
year. Interest income declined $157,000, or 2.3%, compared to the same period
last year. Partially offsetting the decline in interest income was a decrease in
interest expense of $101,000, or 4.6%. Interest income decreased primarily as a
result of the declining interest rate environment, which in turn has decreased
yields on interest earning assets. Interest expense benefited from the declining
interest rate environment and the Bank's restructuring 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 $858,000, or 119.8%, to $1.6 million compared to
$716,000 for the same period last year. This increase was primarily due to the
change in other non-interest income. The change in other non-interest income was
primarily attributable to 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. The increases in loan fees and
charges as well as depository fees and charges were primarily due to higher
mortgage prepayment penalties, increases in ATM usage over the same period last
year, growth in debit card income and a restructuring of loan and depository
fees and service charges which began in the second quarter of the fiscal year
ended March 31, 2003 ("fiscal 2003"). In an effort to reposition the balance
sheet, the Company sold investment securities during the quarter which generated
a net gain of $31,000.
Non-interest expense increased $357,000, or 10.1%, to $3.9 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 $209,000 in employee compensation and
benefit expense resulting from salary increases, new hires, increased cost of
benefit plans and the timing for accruals of employee bonus expense.
Additionally, there were minor increases in net occupancy and equipment expenses
primarily resulting from new and upgraded 24/7 ATM centers and an increase in
other non-interest
2
expense due primarily to higher consulting expenses related to establishing the
Bank's real estate investment trust.
Income before taxes increased $445,000, or 25.7%, to $2.2 million compared to
the same period last year. Income taxes decreased $46,000, or 5.8%, to $751,000
compared to the same period last year due to a reduction in the Company's tax
rate following the establishment of the real estate investment trust.
Six-Month Results
- -----------------
Net income available to common stockholders increased $703,000, or 41.1%, to
$2.4 million compared to $1.7 million for the same period last year. The
improvement is primarily due to increased non-interest income of $1.0 million
and a decrease in the Bank's effective tax rate, partially offset by increased
non-interest expenses of $344,000 and a decrease in net interest income of
$199,000.
Net interest income before the provision for loan losses decreased by $199,000,
or 2.2%, to $8.8 million compared to $9.0 million for the same period last year.
Interest income declined $409,000, or 3.0%, compared to the same period last
year. Partially offsetting the decline in interest income was a reduction in
interest expense of $210,000, or 4.6%. Interest income decreased primarily as a
result of the declining interest rate environment, which in turn has decreased
yields on interest earning assets. Interest expense benefited from the declining
interest rate environment and the Bank's restructuring 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 $1.0 million, or 62.6%, to $2.7 million compared
to $1.7 million for the same period last year. The change in other non-interest
income was primarily attributable to a recovery of $558,000 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. The increases in loan fees and
charges as well as depository fees and charges were primarily due to higher
mortgage prepayment penalties, increases in ATM usage over the same period last
year, growth in debit card income and a restructuring of loan and depository
fees and service charges which began in the second quarter of fiscal 2003. In an
effort to reposition the balance sheet, the Company sold investment securities
during the second quarter which generated a net gain of $31,000.
Non-interest expense increased $344,000, or 4.7%, to $7.7 million compared to
$7.3 million for the same period last year. The increase in non-interest expense
was primarily due to an increase of $340,000 in employee compensation and
benefit expense resulting from salary increases, new hires, increased cost of
benefit plans and the timing for accruals of employee bonus expense.
Additionally, $204,000 in increased consulting expenses was related to
establishing the Bank's real estate investment trust. Partially offsetting these
increases were reductions in advertising expense of $124,000 and loan expenses
of $77,000.
Income before taxes increased $502,000, or 15.1%, to $3.8 million compared to
$3.3 million for the same period last year. Income taxes decreased $201,000, or
13.3%, to $1.3 million compared to the same period last year due to a reduction
in the Company's tax rate following the
3
establishment of the real estate investment trust.
FINANCIAL CONDITION HIGHLIGHTS
At September 30, 2003, total assets increased by $12.1 million, or 2.4%, to
$521.9 million compared to $509.8 million at March 31, 2003. The asset growth
primarily reflects an increase in total loans receivable, net, of $21.8 million
as mortgage loan originations and purchases exceeded mortgage loan repayments.
The increase was partially offset by a decline in total securities of $11.1
million as new 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 September 30, 2003, total liabilities increased by $10.8 million, or 2.3%, to
$479.6 million from $468.8 million at March 31, 2003. The increase in
liabilities is a result of deposit growth of $14.1 million and the net addition
of $12.7 million in trust preferred securities, partially offset by net
repayments of borrowings from the Federal Home Loan Bank of New York of $11.3
million and a decrease of $4.7 million in other liabilities.
At September 30, 2003, total stockholders' equity increased $1.3 million, or
3.2%, to $42.4 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 $2.2 million, partially offset by a decrease
of $669,000 in accumulated other comprehensive income and a $222,000 decrease
related to treasury stock. The $222,000 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 September 30, 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.
ASSET QUALITY
At September 30, 2003, non-performing assets totaled $2.9 million, or 0.91% of
total loans receivable, compared to $1.8 million, or 0.61% of total loans
receivable, at March 31, 2003. The increase is primarily attributable to three
loans totaling approximately $1.3 million that were over 90 days past due at
September 30, 2003. At September 30, 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 $45,000 due to net charge-offs during fiscal
2004. At September 30, 2003, the ratio of the allowance for loan losses to
non-performing loans was 141.8% compared to 230.7% at March 31, 2003. At
September 30, 2003, the ratio of the allowance for loan losses to total loans
receivable was 1.29% compared to 1.40% at March 31, 2003.
Carver Bancorp, Inc., the largest publicly-traded African- and Caribbean-
American run financial services institution in the United States, is the holding
company for Carver Federal Savings
4
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, 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. 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)
SEPTEMBER 30, MARCH 31,
2003 2003
------------------ -----------------
(UNAUDITED)
ASSETS
Cash and cash equivalents:
Cash and due from banks $ 11,856 $ 17,660
Federal funds sold 9,000 5,500
------------------ -----------------
Total cash and cash equivalents 20,856 23,160
------------------ -----------------
Securities:
Available-for-sale, at fair value (including pledged as collateral of
$90,603 at September 30, 2003, $124,139 at March 31, 2003) 102,650 129,055
Held-to-maturity, at amortized cost (including pledged as collateral of
$51,039 at September 30, 2003, $35,138 at March 31, 2003) 51,852 36,530
------------------ -----------------
Total securities 154,502 165,585
------------------ -----------------
Loans receivable:
Real estate mortgage loans 316,555 294,710
Consumer and commercial business loans 2,117 2,186
Allowance for loan losses (4,113) (4,158)
------------------ -----------------
Total loans receivable, net 314,559 292,738
------------------ -----------------
Office properties and equipment, net 10,469 10,193
Federal Home Loan Bank of New York stock, at cost 5,602 5,440
Accrued interest receivable 2,984 3,346
Identifiable intangible asset, net 71 178
Other assets 12,885 9,205
------------------ -----------------
Total assets $ 521,928 $ 509,845
================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $ 361,220 $ 347,164
Advances from the Federal Home Loan Bank of New York and other borrowed money 97,644 108,996
Subordinated borrowings 12,742 --
Other liabilities 7,956 12,612
------------------ -----------------
Total liabilities 479,562 468,772
================== =================
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; 2,283,558 and 2,296,960 outstanding at September 30, 2003 and
March 31, 2003, respectively) 23 23
Additional paid-in capital 23,811 23,781
Retained earnings 18,898 16,712
Unamortized awards of common stock under management recognition plan (36) (4)
Treasury stock, at cost (32,800 shares at September 30, 2003 and 19,398 shares
at March 31, 2003) (412) (190)
Accumulated other comprehensive income 81 750
------------------ -----------------
Total stockholders' equity 42,366 41,073
------------------ -----------------
Total liabilities and stockholders' equity $ 521,928 $ 509,845
================== =================
6
CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
(UNAUDITED) (UNAUDITED)
------------------------------- --------------------------------
2003 2002 2003 2002
-------------- -------------- --------------- ---------------
Interest Income: (1)
Loans $ 5,061 $ 5,310 $ 9,927 $ 10,688
Total securities 1,515 1,372 3,111 2,652
Federal funds sold 26 77 81 188
-------------- -------------- --------------- ---------------
Total interest income 6,602 6,759 13,119 13,528
-------------- -------------- --------------- ---------------
Interest expense:
Deposits 1,133 1,469 2,405 3,071
Advances and other borrowed money 976 741 1,934 1,478
-------------- -------------- --------------- ---------------
Total interest expense 2,109 2,210 4,339 4,549
-------------- -------------- --------------- ---------------
Net interest income 4,493 4,549 8,780 8,979
Provision for loan losses - - - -
-------------- -------------- --------------- ---------------
Net interest income after provision for loan losses 4,493 4,549 8,780 8,979
-------------- -------------- --------------- ---------------
Non-interest income:
Depository fees and charges 490 457 974 861
Loan fees and service charges 492 257 1,137 804
Gain on sale of securities 31 - 31 -
Other 561 2 572 4
-------------- -------------- --------------- ---------------
Total non-interest income 1,574 716 2,714 1,669
-------------- -------------- --------------- ---------------
Non-interest expense: (1)
Employee compensation and benefits 1,798 1,589 3,603 3,263
Net occupancy expense 343 320 667 656
Equipment 399 354 782 772
Other 1,350 1,270 2,619 2,636
-------------- -------------- --------------- ---------------
Total non-interest expense 3,890 3,533 7,671 7,327
-------------- -------------- --------------- ---------------
Income before income taxes 2,177 1,732 3,823 3,321
Income taxes 751 797 1,310 1,511
-------------- -------------- --------------- ---------------
Net income $ 1,426 $ 935 $ 2,513 $ 1,810
============== ============== =============== ===============
Dividends applicable to preferred stock $ 49 $ 49 $ 98 $ 98
Net income available to common stockholders $ $ 1,377 $ 886 $ 2,415 $ 1,712
============== ============== =============== ===============
Earnings per common share:
Basic $ 0.60 $ 0.39 $ 1.05 $ 0.75
============== ============== =============== ===============
Diluted $ 0.55 $ 0.37 $ 0.98 $ 0.72
============== ============== =============== ===============
(1) Reclassifications have been made to prior year periods in order to conform
with current periods.
7
CARVER BANCORP, INC. AND SUBSIDIARIES
SELECTED KEY RATIOS
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
KEY OPERATING RATIOS: SEPTEMBER 30, SEPTEMBER 30,
------------------------------ ---------------------------
2003 2002 2003 2002
--------------- ------------- ------------ -------------
Return on average assets (1) 1.10% 0.85% 0.97% 0.82%
Return on average equity (2) 13.51 9.85 12.07 9.64
Interest rate spread (3) 3.51 4.24 3.45 4.18
Net interest margin (4) 3.64 4.40 3.60 4.35
Operating expenses to average assets (5) 2.99 3.20 2.97 3.32
Equity-to-assets (6) 8.12 8.30 8.12 8.30
Efficiency ratio (7) 64.12 67.10 66.74 68.81
Average interest-earning assets to
interest-bearing liabilities 1.08 1.07 1.08 1.08
ASSET QUALITY RATIOS: SEPTEMBER 30, MARCH 31,
------------------------------ ---------------------------
2003 2002 2003 2002
--------------- ------------- ------------ -------------
Non performing assets to total assets (8) 0.56 0.45 0.36 0.63
Non performing assets to total loans receivable (8) 0.91 0.74 0.61 0.96
Allowance for loan losses to total loans receivable 1.29 1.47 1.40 1.41
Allowance for loan losses to non-performing loans (8) 141.8 198.1 230.7 146.2
(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