Reports First Quarter Net Income of $0.7 Million or Diluted Earnings
Per Share of $0.18
Board Declares Dividend of $0.10 Per Share
NEW YORK, Aug. 17, 2009 (GLOBE NEWSWIRE) -- Carver Bancorp, Inc. (the "Company") (Nasdaq:CARV), the holding company for Carver Federal Savings Bank ("Carver Federal" or the "Bank"), today announced financial results for the three month period ended June 30, 2009, the first quarter of the fiscal year ending March 31, 2010 ("fiscal 2010").
The Company reported net income of $0.7 million and diluted earnings per share of $0.18 for the first quarter of fiscal 2010, compared to net income of $0.7 million and diluted earnings per share of $0.27 for the first quarter of fiscal 2009. Net income for the first quarter of fiscal 2010 was negatively impacted by a $0.4 million FDIC special assessment as well as a $0.5 million increase in the provision for loan losses. The decline in earnings per share from the prior year period reflects the payment of $0.2 million in preferred dividends pursuant to Carver's participation in the U.S. Treasury Department's Troubled Asset Relief Program's Capital Purchase Program ("TARP").
Deborah C. Wright, the Company's Chairman and Chief Executive Officer, stated: "I am pleased to report that the Company returned to profitable operations in the first quarter, despite economic headwinds that continue to impact our customers, and therefore our company. Carver's strong net interest margin led the way, reaching 3.71%, up 18 basis points year over year, fueled by the steepness of the yield curve and our historically stable core deposit base. Total non-interest expense declined 3.7% year over year, reflecting our cost savings initiatives on a number of fronts, including compensation and benefits and other operating expenses. These savings were achieved despite the FDIC special assessment impacting our entire industry, reducing diluted earnings per share by $0.10 this quarter.
On the credit front, we continue to execute a very aggressive approach to address delinquent loans, which was successful in reducing non-performing loans from 3.42% of total assets at March 31, 2009 to 3.12% this quarter. However, total delinquencies continued to rise. We therefore increased the provision for loan losses by $0.7 million, or $0.18 per diluted share, generating a total allowance for loan losses of $7.4 million. The allowance now represents 1.12% of the total loan portfolio and 29.2% of non-performing assets.
We remain cautious, yet proactive, in managing credit in this unprecedented climate. While this remains a difficult period, making predictions of the future particularly challenging, Carver has a long history of low credit losses. This result follows, in part, from the nature of our loan portfolio. For example, the majority of Carver's total delinquencies are in construction loans for affordable homes, an asset class that remains in high demand, and commercial mortgages. The housing developments are built by experienced builder-developers, whose apartment sales have been disrupted by dislocations in the secondary markets. While we work with our borrowers to identify mortgage options for their buyers, we note that the average loan-to-value on construction loans, when underwritten, was 45%. In addition, we have additional credit protection beyond the borrowers, and multiple ways to achieve payoff on these loans, including rental conversions and sale of the loans to the New York City Pension Fund.
As we address the risks inherent in the current economic climate, we continue to prepare to take advantage of business opportunities that are likely to occur during this period. When the economy emerges from the current financial crisis, we'll be prepared to profitably provide the lending and deposit services that our customers need, thereby building the shareholder value to which we are all committed," concluded Ms. Wright.
Carver also announced that on August 13, 2009, the Company's Board of Directors declared a cash dividend on its common stock of ten cents ($0.10) per common share for the first quarter. The dividend will be payable on September 14, 2009, to stockholders of record at the close of business on September 1, 2009.
First-Quarter Results
Net income for the first quarter of fiscal 2010 was $0.7 million, unchanged from the prior year period. Net interest income increased by $0.6 million to $6.9 million reflecting an 18 basis points increase in the net interest margin to 3.71%, compared to 3.53% in the prior year period. The increase in net interest income resulted from the significant reduction in interest rates during the year, attributable to the cost of interest-bearing liabilities declining faster than the yield on interest earning assets. Interest income decreased $1.2 million, or 10.8%, to $9.9 million, reflecting a decrease in yield on interest earning assets of 92 basis points to 5.34%, compared to the decrease in total interest expense of $1.8 million, reflecting a 117 basis points decrease in the average cost of interest-bearing liabilities to 1.82%.
The Bank provided a $0.7 million loan loss provision for the first quarter of fiscal 2010 compared to $0.2 million in the prior year period. At June 30, 2009, the Bank's allowance for loan losses was $7.4 million, which represents 1.12% of total loans and 29.4% of non-performing loans. The Bank's future level of non-performing loans will be influenced by economic conditions, including the impact of those conditions on the Bank's customers, interest rates and other external factors existing at the time.
Non-interest income decreased $0.6 million, or 34.0%, to $1.2 million, primarily due to decreases of $0.2 million, in each of the following: loan fees and service charges, gain on sale of loans and other income. The decrease in loan fees and gain on sales of loans reflects the decline in pre-payment fees during the quarter. The $0.2 million decrease in other income reflects deconsolidation of a minority interest entity which was included in the first quarter prior year results.
Non-interest expense decreased $0.3 million, or 3.8%, to $7.1 million, primarily due to a decrease of $0.3 million in employee compensation and benefits and a $0.7 million decrease in other operating expenses offset by a $0.8 million increase in FDIC insurance premiums. The decrease in employee compensation and benefits is mainly related to reduced headcount. The decrease in other operating expenses is primarily related to progress made with respect to vendor management. Offsetting these significant reductions in expenses was higher FDIC insurance premiums compared to the prior year including a special assessment of $0.4 million.
Financial Condition Highlights
At June 30, 2009, total assets increased $18.2 million, or 2.3%, to $809.6 million from $791.4 million at March 31, 2009. The increase in total assets was primarily the result of an increase of $17.8 million in total gross loans receivable, an increase of $4.7 million in cash and cash equivalents, offset by a decrease of $5.6 million in investment securities. Total gross loans receivable, increased $17.8 million to $680.0 million compared to $662.2 million at March 31, 2009. The increase was primarily related to increases in multi-family loans of $16.5 million, commercial business loans of $7.4 million, offset by decreases in construction loans of $5.7 million and one- to four- family loans of $2.1 million. Total securities decreased $5.6 million, or 7.5%, to $69.2 million compared to $74.8 million at March 31, 2009. The decrease was primarily the result of principal repayments and maturities.
At June 30, 2009, total liabilities increased $18.2 million, or 2.5%, to $745.3 million compared to $727.1 million at March 31, 2009. The increase in total liabilities was primarily the result of an increase of $16.1million, or 14.0%, in advances. At June 30, 2009, based on available collateral held at the Federal Home Loan Bank of New York ("FHLB-NY"), the Bank had the ability to borrow an additional $29.7 million to meet its projected funding needs.
Total stockholders' equity at June 30, 2009 totaled $64.4 million, unchanged compared to March 31, 2009. At June 30, 2009, the Bank's capital levels met regulatory requirements of a well-capitalized financial institution.
Asset Quality
At June 30, 2009, non-performing assets totaled $25.3 million, or 3.12% of total assets, compared to $27.1 million, or 3.42% of total assets at March 31, 2009. The ratio of the allowance for loan losses to non-performing loans was 29.4% at June 30, 2009 compared to 26.5% at March 31, 2009. The ratio of the allowance for loan losses to total loans was 1.12% at June 30, 2009 compared to 1.06% at March 31, 2009.
About Carver Bancorp, Inc.
Carver Bancorp, Inc. is the holding company for Carver Federal Savings Bank, a federally chartered stock savings bank. Carver Federal Savings Bank, the largest African- and Caribbean-American run bank in the United States, operates nine 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.
Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in these statements due to a variety of factors, risks and uncertainties. More information about these factors, risks and uncertainties is contained in our filings with the Securities and Exchange Commission.
CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except per share data)
June 30, March 31,
2009 2009
---- ----
(unaudited)
ASSETS
Cash and cash equivalents:
Cash and due from banks $ 17,100 $ 8,251
Money market investments 952 5,090
----------- -----------
Total cash and cash equivalents 18,052 13,341
Securities:
Available-for-sale, at fair value (including
pledged as collateral of $54,237 and
$59,928 at June 30, 2009 and March 31,
2009, respectively) 54,685 59,973
Held-to-maturity, at amortized cost
(including pledged as collateral of $14,087
and $14,342 at June 30, 2009 and March 31,
2009, respectively; fair value of $14,244
and $14,528 at June 30, 2009 and March 31,
2009, respectively) 14,474 14,808
----------- -----------
Total securities 69,159 74,781
Loans held-for-sale 21,069 21,105
Loans receivable:
Real estate mortgage loans 592,611 581,987
Commercial business loans 64,789 57,398
Consumer loans 1,535 1,674
Allowance for loan losses (7,369) (7,049)
----------- -----------
Total loans receivable, net 651,566 634,010
Office properties and equipment, net 14,888 15,237
Federal Home Loan Bank of New York stock, at
cost 4,945 4,174
Bank owned life insurance 9,561 9,481
Accrued interest receivable 3,591 3,697
Core deposit intangibles, net 342 380
Other assets 16,465 15,222
----------- -----------
Total assets $ 809,638 $ 791,428
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $ 605,144 $ 603,416
Advances from the FHLB-New York and other
borrowed money 131,110 115,017
Other liabilities 9,005 8,657
----------- -----------
Total liabilities 745,259 727,090
Stockholders' equity:
Preferred stock (TARP) (par value $0.01 per
share, 2,000,000 shares authorized; 18,980
shares, with a liquidation preference of
$1,000.00 per share, issued and outstanding
as of June 30, 2009) 18,980 18,980
Common stock (par value $0.01 per share:
10,000,000 shares authorized; 2,524,691
shares issued; 2,470,072 and 2,475,037
shares outstanding at June 30, 2009 and
March 31, 2009, respectively) 25 25
Additional paid-in capital 24,219 24,214
Retained earnings 22,096 21,898
Unamortized awards of common stock under
ESOP
Treasury stock, at cost (49,972 and 49,654
shares at June 30, 2009 and March 31, 2009,
respectively) (696) (760)
Accumulated other comprehensive loss (245) (19)
----------- -----------
Total stockholders' equity 64,379 64,338
----------- -----------
Total liabilities and stockholders' equity $ 809,638 $ 791,428
=========== ===========
CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended
June 30,
------------------
2009 2008
-------- --------
Interest Income:
Loans $ 9,100 $ 10,453
Mortgage-backed securities 743 561
Investment securities 60 66
Money market investments 10 39
-------- --------
Total interest income 9,913 11,119
Interest expense:
Deposits 2,037 4,139
Advances and other borrowed money 986 722
-------- --------
Total interest expense 3,023 4,861
-------- --------
Net interest income 6,890 6,258
Provision for loan losses 688 169
-------- --------
Net interest income after provision for loan
losses 6,202 6,089
Non-interest income:
Depository fees and charges 717 668
Loan fees and service charges 228 417
Gain on loans 43 247
Other 165 416
-------- --------
Total non-interest income 1,153 1,748
Non-interest expense:
Employee compensation and benefits 3,119 3,414
Net occupancy expense 987 1,016
Equipment, net 584 615
Consulting fees 207 165
Federal deposit insurance premiums 793 31
Other 1,367 2,094
-------- --------
Total non-interest expense 7,057 7,335
Income before income taxes and minority interest 298 502
Income tax benefit (396) (322)
Minority interest, net of taxes -- 138
-------- --------
Net income $ 694 $ 686
======== ========
Earnings per common share:
Basic $ 0.18 $ 0.28
======== ========
Diluted $ 0.18 $ 0.27
======== ========
CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCES
(In thousands)
(Unaudited)
------------------------- -------------------------
2009 2008
------------------------- -------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
--------- ------ ------ --------- ------ ------
Interest Earning
Assets:
Loans (1) $ 667,230 $9,100 5.46% $ 654,501 $10,453 6.39%
Mortgage-backed
securities 70,159 743 4.24% 43,454 561 5.16%
Investment
securities (2) 4,874 60 4.94% 4,656 66 5.69%
Other investments
and federal funds
sold 965 10 4.16% 7,501 39 2.09%
--------- ------ ------ --------- ------ ------
Total interest-
earning assets 743,228 9,913 5.34% 710,112 11,119 6.26%
Non-interest-
earning assets 52,737 78,692
--------- ---------
Total assets $ 795,965 $ 788,804
========= =========
Interest Bearing
Liabilities:
Deposits:
Now demand $ 54,172 23 0.17% $ 24,231 20 0.33%
Savings and clubs 119,239 66 0.22% 125,496 166 0.53%
Money market 43,674 147 1.35% 46,229 296 2.57%
Certificates of
deposit 325,613 1,790 2.20% 391,008 3,643 3.74%
Mortgage escrow
deposits 2,891 11 1.53% 3,314 14 1.69%
--------- ------ ------ --------- ------ ------
Total deposits 545,589 2,037 1.50% 590,278 4,139 2.81%
Borrowed money 120,276 986 3.29% 62,267 722 4.65%
--------- ------ ------ --------- ------ ------
Total interest-
bearing
liabilities 665,865 3,023 1.82% 652,545 4,861 2.99%
Non-interest-
bearing
liabilities:
Demand 58,406 53,658
Other liabilities 7,904 9,470
--------- ---------
Total
liabilities 732,175 715,673
Minority Interest -- 19,150
Stockholders'
equity 63,790 53,981
--------- ---------
Total
liabilities &
stockholders'
equity $ 795,965 $ 788,804
========= =========
Net interest ------ ------
income $6,890 $6,258
====== ======
Average interest
rate spread 3.52% 3.28%
====== ======
Net interest
margin 3.71% 3.53%
====== ======
(1) Includes non-accrual loans
(2) Includes FHLB-NY stock
CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED SELECTED KEY RATIOS
(Unaudited)
Three Months Ended
June 30,
---------------------
Selected Statistical Data: 2009 2008
--------- ---------
Return on average assets(1) 0.35% 0.35%
Return on average equity(2) 4.35 5.08
Net interest margin(3) 3.71 3.53
Interest rate spread(4) 3.52 3.28
Efficiency ratio(5) 87.74 91.62
Operating expenses to average assets(6) 3.55 3.72
Average equity to average assets(7) 8.01 6.84
Average interest-earning assets to average
interest-bearing liabilities 1.12x 1.09x
Net income per share - basic $0.18 $0.28
Net income per share - diluted $0.18 $0.27
Average shares outstanding - basic 2,470,072 2,479,328
Average shares outstanding - diluted 2,470,072 2,517,058
Cash dividends $0.10 $0.10
Dividend payout ratio(8) 35.59% 36.07%
Capital Ratios:
---------------
Tier I leverage capital ratio(9) 9.39% 8.03%
Tier I risk-based capital ratio(9) 11.40 9.86
Total risk-based capital ratio(9) 12.50 10.65
At At
June 30, March 31,
2009 2009
---- ----
Asset Quality Ratios:
---------------------
Non performing assets to total assets(10) 3.12% 3.42%
Non performing loans to total loans
receivable(10) 3.69 4.15
Allowance for loan losses to total loans
receivable 1.12 1.06
Allowance for loan losses to non-performing
loans 29.37 26.48
(1) Net income, annualized, divided by average total assets.
(2) Net income, annualized, divided by average total equity.
(3) Net interest income, annualized, divided by average
interest-earning assets.
(4) Combined weighted average interest rate earned less combined
weighted average interest rate cost.
(5) Operating expenses divided by sum of net interest income plus
non-interest income.
(6) Non-interest expenses annualized, divided by average total assets.
(7) Average equity divided by average assets for the period ended.
(8) Dividends paid on common stock during the period divided by net
income for the period.
(9) These ratios reflect consolidated bank only.
(10) Non performing assets consist of non-accrual loans, loans
accruing 90 days or more past due and real estate owned.