NEW YORK, Aug. 9, 2013 (GLOBE NEWSWIRE) -- Carver Bancorp, Inc. (the "Company") (Nasdaq:CARV), the holding company for Carver Federal Savings Bank ("Carver" or the "Bank"), today announced financial results for its first fiscal quarter of 2014 ended June 30, 2013 ("Fiscal 2014").
The Company reported net income of $410 thousand or basic and diluted earnings per share of $0.11 for the first quarter of fiscal 2014, compared to a net loss of $361 thousand or a basic loss per share of $0.10, for the prior year period.
Deborah C. Wright, Carver Bancorp Chairman and CEO said, "We are pleased to report our third consecutive quarter of positive earnings results. Our loan performance continued to improve, with non-performing assets declining 33% from the prior year's quarter and 57% year-over-year, while delinquencies declined 29% over the prior quarter. Our net interest margin increased to 3.19%, reflecting both a low interest rate environment at the start of the quarter and strengthening rates in the back half. While loan balances remain below our desired levels due to above average prepayment activity, our pipeline remains strong. The uptick in interest rates, along with our retention efforts, should help to mitigate refinancing activities going forward. Our capital ratios remain strong with our Tier I leverage ratio increasing to 10.43%."
Ms. Wright concluded, "We remain prudently optimistic for the balance of Fiscal 2014 despite the economic challenges our communities continue to face. We have great confidence in the strength of our management team and our strategic plan to grow the Carver franchise through innovative products and technologies such as Carver Community Cash, and we remain committed to the communities we serve."
Statement of Operations Highlights
First Quarter Results
The Company reported net income for the three months ended June 30, 2013 of $410 thousand compared to a net loss of $361 thousand for the prior year period. Primary drivers of improvement over the prior year period were reductions in non-interest expenses and increases in the gains on sales of securities and loans, which were partially offset by an increase in the provision for loan losses.
Net Interest Income
Interest income decreased $581 thousand, or 9.4%, to $5.6 million compared to the prior year quarter, primarily attributable to a $64.7 million, or 15.0%, decrease in average loans. Although the average yield on loans increased 19 basis points to 5.38% from 5.19%, following a reduction in non-performing loans, the decrease in average loans reduced total interest income on loans. Decreases in interest income are likely to continue until average loan balances increase, given lower yields available on alternative interest-earning assets. The average yield on mortgage-backed securities fell 31 basis points to 1.81% from 2.12% as the securities added to the portfolio carried lower yields than the securities that were sold or paid down.
Interest expense decreased $310 thousand, or 23.5%, to $1.0 million, compared to $1.3 million for the prior year quarter, following lower rates paid on money market accounts and certificates of deposits. The average rate on interest-bearing liabilities decreased 20 basis points to 0.85% for the quarter ended June 30, 2013.
Provision for Loan Losses
The Company recorded a $831 thousand provision for loan losses compared to a $224 thousand provision for the prior year quarter. Net charge-offs of $1.5 million were recognized compared to $1.4 million in the prior year period. Charge-offs in both periods were primarily related to impaired loans and loans moved to held-for-sale ("HFS"). The impact of the charge-offs to the provision was partially offset by a reduction in the allowance for loan losses due to stabilization in valuations of non-performing loans and a decrease in loss experience.
Non-interest Income
Non-interest income increased $1.2 million, or 126.4%, to $2.1 million, compared to $0.9 million for the prior year quarter. The increase was primarily due to net gains realized on sale of HFS loans, gains on sale of securities, and increases in the Bank's depository fees, including fees generated by Carver Community Cash.
Non-interest Expense
Non-interest expense decreased $1.4 million to $5.3 million, compared to $6.6 million in the prior year quarter. The decrease was primarily due to lower employee compensation expenses of $352 thousand following reduced staffing levels, and decreases in other expenses including a $300 thousand charge-off recovery related to the Company's former money carrier provider and a reduction of $355 thousand in reserves for losses associated with repurchase of mortgage loans sold by the Bank to Fannie Mae.
Income Taxes
The income tax expense was $73 thousand for the first quarter compared to $159 thousand in the prior year period.
Financial Condition Highlights
At June 30, 2013, total assets decreased $4.1 million, or 0.6%, to $634.2 million, compared to $638.3 million at March 31, 2013. The overall change was primarily due to decreases in the loan portfolio, net of the allowance for loan losses of $13.8 million, and in HFS loans of $3.4 million. These decreases were offset by increases in other assets of $8.9 million and $4.8 million in the investment portfolio.
Total investment securities increased $4.8 million, or 3.9%, to $129.9 million at June 30, 2013, compared to $125.1 million at March 31, 2013. This change reflects an increase of $4.5 million in held-to-maturity securities, as the Company continues to diversify its investment portfolio to increase interest-earning assets.
Net loans receivable decreased $14.5 million, or 3.9%, to $355.7 million at June 30, 2013, compared to $370.1 million at March 31, 2013. The majority of the decrease resulted from $24.9 million of principal repayments and loan payoffs across all loan classifications. An additional $5.4 million in loans were transferred from held for investment to HFS and $1.4 million represented principal charge-offs. Decreases were partially offset by loan originations and advances of $17.0 million. Early payoffs of loans slowed during the second half of the quarter as interest rates increased following the Federal Reserve Chairman's Congressional testimony in May 2013.
HFS loans decreased $3.4 million, or 25.9%, to $9.7 million as the Company continued to take aggressive steps to resolve troubled loans. During the quarter, there were $8.8 million in sales and paydowns, offset by $5.4 million in loans, net of charge-offs, that transferred into the HFS portfolio from the held for investment portfolio.
Total liabilities remained flat at $581.4 million at June 30, 2013, compared to $581.5 million at March 31, 2013, due to an increase in borrowings of $11.0 million, offset by reductions in deposits of $10.2 million.
Deposits decreased $10.2 million, or 2.1%, to $485.5 million at June 30, 2013, compared to $495.7 million at March 31, 2013, due primarily to runoff of certificates of deposit as the low interest rate environment led depositors to seek alternative investment opportunities for maturing deposits.
Advances from the Federal Home Loan Bank of New York ("FHLB-NY") and other borrowed money increased $11.0 million, or 14.4%, to $87.4 million at June 30, 2013, compared to $76.4 million at March 31, 2013, as the Company added short-term borrowings during the quarter to offset the runoff in certificates of deposit.
Total equity decreased $3.9 million, or 6.9%, to $52.8 million at June 30, 2013, compared to $56.7 million at March 31, 2013. The majority of the decrease was due to $4.4 million unrealized losses on investments caused by the spike in interest rates in the second half of the quarter.
Asset Quality
At June 30, 2013, non-performing assets totaled $30.1 million, or 4.7% of total assets, compared to $46.1 million or 7.2% of total assets at March 31, 2013, and $71.8 million or 11.1% of total assets at June 30, 2012. Non-performing assets at June 30, 2013 were comprised of $8.2 million of loans 90 days or more past due and non-accruing, $6.9 million of loans classified as a troubled debt restructuring, $4.3 million of loans that were either performing or less than 90 days past due that have been classified as impaired, $0.9 million of Real Estate Owned, and $9.7 million of loans classified as HFS.
The allowance for loan losses was $10.3 million at June 30, 2013, which represents a ratio of the allowance for loan losses to non-performing loans of 53.0% compared to 35.9% at March 31, 2013. The ratio of the allowance for loan losses to total loans was 2.9% at June 30, 2013, a decrease from 3.0% at March 31, 2013.
About Carver Bancorp, Inc.
Carver Bancorp, Inc. is the holding company for Carver Federal Savings Bank, a federally chartered stock savings bank, founded in 1948 to serve African-American communities whose residents, businesses, and institutions had limited access to mainstream financial services. Carver, the largest African- and Caribbean-American run bank in the United States, operates ten full-service branches in the New York City boroughs of Brooklyn, Manhattan, and Queens. 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 | ||
| June 30, | March 31, | |
| $ in thousands except per share data | 2013 | 2013 |
| ASSETS | ||
| Cash and cash equivalents: | ||
| Cash and due from banks | $101,942 | $98,083 |
| Money market investments | 5,911 | 6,563 |
| Total cash and cash equivalents | 107,853 | 104,646 |
| Restricted cash | 6,556 | 10,666 |
| Investment securities: | ||
| Available-for-sale, at fair value | 116,377 | 116,051 |
| Held-to-maturity, at amortized cost (fair value of $13,667 and $9,629 at June 30, 2013 and March 31, 2013, respectively) | 13,537 | 9,043 |
| Total investments | 129,914 | 125,094 |
| Loans held-for-sale ("HFS") | 9,709 | 13,107 |
| Loans receivable: | ||
| Real estate mortgage loans | 322,118 | 334,594 |
| Commercial business loans | 33,330 | 35,281 |
| Consumer loans | 219 | 247 |
| Loans, net | 355,667 | 370,122 |
| Allowance for loan losses | (10,317) | (10,989) |
| Total loans receivable, net | 345,350 | 359,133 |
| Premises and equipment, net | 8,376 | 8,597 |
| Federal Home Loan Bank of New York ("FHLB-NY") stock, at cost | 3,866 | 3,503 |
| Accrued interest receivable | 2,418 | 2,247 |
| Other assets | 20,179 | 11,284 |
| Total assets | $634,221 | $638,277 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| LIABILITIES: | ||
| Deposits: | ||
| Savings | $97,126 | $98,066 |
| Non-interest bearing checking | 56,118 | 58,239 |
| NOW | 25,863 | 25,927 |
| Money market | 115,327 | 113,259 |
| Certificates of deposit | 191,033 | 200,225 |
| Total deposits | 485,467 | 495,716 |
| Advances from the FHLB-New York and other borrowed money | 87,403 | 76,403 |
| Other liabilities | 8,506 | 9,423 |
| Total liabilities | 581,376 | 581,542 |
| STOCKHOLDERS' EQUITY: | ||
| Preferred stock (par value $0.01 per share: 45,118 Series D shares, with a liquidation preference of $1,000 per share, issued and outstanding) | 45,118 | 45,118 |
| Common stock (par value $0.01 per share: 10,000,000 shares authorized; 3,697,661 and 3,697,364 issued; 3,695,717 and 3,695,420 shares outstanding at June 30, 2013 and March 31, 2013, respectively) | 61 | 61 |
| Additional paid-in capital | 55,844 | 55,708 |
| Accumulated deficit | (44,028) | (44,439) |
| Non-controlling interest | 101 | 141 |
| Treasury stock, at cost (1,944 shares at June 30, 2013 and March 31, 2013) | (417) | (417) |
| Accumulated other comprehensive (loss)/income | (3,834) | 563 |
| Total stockholders' equity | 52,845 | 56,735 |
| Total liabilities and stockholders' equity | $634,221 | $638,277 |
| CARVER BANCORP, INC. AND SUBSIDIARIES | ||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||
| Three Months Ended | ||
| June 30, | ||
| $ in thousands except per share data | 2013 | 2012 |
| Interest income: | ||
| Loans | $4,915 | $5,587 |
| Mortgage-backed securities | 263 | 294 |
| Investment securities | 348 | 200 |
| Money market investments | 43 | 69 |
| Total interest income | 5,569 | 6,150 |
| Interest expense: | ||
| Deposits | 697 | 976 |
| Advances and other borrowed money | 313 | 344 |
| Total interest expense | 1,010 | 1,320 |
| Net interest income | 4,559 | 4,830 |
| Provision for loan losses | 831 | 224 |
| Net interest income after provision for loan losses | 3,728 | 4,606 |
| Non-interest income: | ||
| Depository fees and charges | 912 | 796 |
| Loan fees and service charges | 299 | 200 |
| Gain on sale of securities | 278 | — |
| Gain on sale of loans, net | 490 | 36 |
| Gain (loss) on sale of real estate owned | (48) | (288) |
| Lower of cost or market adjustment on loans held-for-sale | (69) | — |
| Other | 266 | 196 |
| Total non-interest income | 2,128 | 940 |
| Non-interest expense: | ||
| Employee compensation and benefits | 2,368 | 2,720 |
| Net occupancy expense | 871 | 858 |
| Equipment, net | 175 | 288 |
| Data processing | 356 | 194 |
| Consulting fees | 120 | 66 |
| Federal deposit insurance premiums | 309 | 343 |
| Other | 1,081 | 2,164 |
| Total non-interest expense | 5,280 | 6,633 |
| Income/(loss) before income taxes | 576 | (1,087) |
| Income tax expense | 73 | 159 |
| Consolidated net income/(loss) | 503 | (1,246) |
| Less: Net income/(loss) attributable to non-controlling interest | 93 | (885) |
| Net income/(loss) attributable to Carver Bancorp, Inc. | $410 | $(361) |
| Earnings/(loss) per common share: | ||
| Basic | $0.11 | $(0.10) |
| Diluted | $0.11 | N/A |
| CARVER BANCORP, INC. AND SUBSIDIARIES | |||||
| Non Performing Asset Table | |||||
| $ in thousands | June 2013 | March 2013 | December 2012 | September 2012 | June 2012 |
| Loans accounted for on a non-accrual basis (1): | |||||
| Gross loans receivable: | |||||
| One-to-four family | $6,666 | $7,642 | $7,249 | $6,094 | $7,363 |
| Multi-family | 659 | 423 | 483 | 1,724 | 1,790 |
| Commercial real estate | 8,091 | 14,788 | 18,872 | 14,145 | 16,487 |
| Construction | 693 | 1,230 | 1,230 | 4,258 | 4,658 |
| Business | 3,350 | 6,505 | 7,718 | 8,717 | 9,337 |
| Consumer | — | 38 | 14 | 15 | — |
| Total non-performing loans | $19,459 | $30,626 | $35,566 | $34,953 | $39,635 |
| Other non-performing assets (2): | |||||
| Real estate owned | $946 | $2,386 | $2,996 | $2,119 | $1,961 |
| Loans held-for-sale | 9,709 | 13,107 | 18,991 | 26,830 | 30,163 |
| Total other non-performing assets | 10,655 | 15,493 | 21,987 | 28,949 | 32,124 |
| Total non-performing assets (3): | $30,114 | $46,119 | $57,553 | $63,902 | $71,759 |
| Non-performing loans to total loans | 5.47% | 8.27% | 9.76% | 9.20% | 10.17% |
| Non-performing assets to total assets | 4.75% | 7.23% | 8.98% | 10.01% | 11.13% |
| (1) Non-accrual status denotes any loan where the delinquency exceeds 90 days past due and in the opinion of management, the collection of contractual interest and/or principal is doubtful. Payments received on a non-accrual loan are either applied to the outstanding principal balance or recorded as interest income, depending on assessment of the ability to collect on the loan. | |||||
| (2) Other non-performing assets generally represent loans that the Bank is in the process of selling and has designated held-for-sale or property acquired by the Bank in settlement of loans less costs to sell (i.e., through foreclosure, repossession or as an in-substance foreclosure). These assets are recorded at the lower of their cost or fair value. | |||||
| (3) Troubled debt restructured loans performing in accordance with their modified terms for less than six months and those not performing in accordance with their modified terms are considered non-accrual and are included in the non-accrual category in the table above. At June 30, 2013 there were $9.7 million TDR loans that have performed in accordance with their modified terms for a period of at least six months. These loans are generally considered performing loans and are not presented in the table above. | |||||
| CARVER BANCORP, INC. AND SUBSIDIARIES | ||||||
| CONSOLIDATED AVERAGE BALANCES | ||||||
| For the Three Months Ended June 30, | ||||||
| 2013 | 2012 | |||||
| Average | Average | Average | Average | |||
| $ in thousands | Balance | Interest | Yield/Cost | Balance | Interest | Yield/Cost |
| Interest Earning Assets: | ||||||
| Loans (1) | $365,706 | $4,915 | 5.38% | $430,367 | $5,587 | 5.19% |
| Mortgage-backed securities | 57,968 | 263 | 1.81% | 55,360 | 294 | 2.12% |
| Investment securities | 62,832 | 274 | 1.74% | 31,883 | 110 | 1.38% |
| Restricted Cash Deposit | 9,266 | 1 | 0.03% | 6,415 | 1 | 0.03% |
| Equity securities (2) | 1,957 | 19 | 3.89% | 2,566 | 23 | 3.61% |
| Other investments and federal funds sold | 74,076 | 97 | 0.53% | 99,794 | 135 | 0.54% |
| Total interest-earning assets | 571,805 | 5,569 | 3.90% | 626,385 | 6,150 | 3.93% |
| Non-interest-earning assets | 29,899 | 6,277 | ||||
| Total assets | $601,704 | $632,662 | ||||
| Interest Bearing Liabilities: | ||||||
| Deposits: | ||||||
| Now demand | $26,423 | $10 | 0.15% | $26,607 | $10 | 0.15% |
| Savings and clubs | 97,997 | 65 | 0.27% | 101,305 | 67 | 0.27% |
| Money market | 114,440 | 132 | 0.46% | 109,330 | 203 | 0.75% |
| Certificates of deposit | 193,260 | 480 | 1.00% | 220,255 | 685 | 1.25% |
| Mortgagors deposits | 2,248 | 10 | 1.78% | 2,460 | 11 | 1.80% |
| Total deposits | 434,368 | 697 | 0.64% | 459,957 | 976 | 0.85% |
| Borrowed money | 45,001 | 313 | 2.79% | 43,930 | 344 | 3.15% |
| Total interest-bearing liabilities | 479,369 | 1,010 | 0.85% | 503,887 | 1,320 | 1.05% |
| Non-interest-bearing liabilities: | ||||||
| Demand | 56,472 | 65,198 | ||||
| Other liabilities | 8,698 | 6,852 | ||||
| Total liabilities | 544,539 | 575,937 | ||||
| Minority Interest | (256) | 667 | ||||
| Stockholders' equity | 57,421 | 56,058 | ||||
| Total liabilities & stockholders' equity | $601,704 | $632,662 | ||||
| Net interest income | $4,559 | $4,830 | ||||
| Average interest rate spread | 3.05% | 2.87% | ||||
| Net interest margin | 3.19% | 3.08% | ||||
| (1) Includes non-accrual loans | ||||||
| (2) Includes FHLB-NY stock | ||||||
| CARVER BANCORP, INC. AND SUBSIDIARIES | ||
| CONSOLIDATED SELECTED KEY RATIOS | ||
| Three Months Ended | ||
| June 30 | ||
| Selected Statistical Data: | 2013 | 2012 |
| Return on average assets (1) | 0.27% | (0.23)% |
| Return on average equity (2) | 2.86% | (2.54)% |
| Net interest margin (3) | 3.19% | 3.08% |
| Interest rate spread (4) | 3.05% | 2.87% |
| Efficiency ratio (5)(10) | 78.96% | 114.96% |
| Operating expenses to average assets (6) | 3.51% | 4.19% |
| Average equity to average assets (7) | 9.54% | 8.97% |
| Average interest-earning assets to average interest-bearing liabilities | 1.19 x | 1.24 x |
| Basic earnings (loss) per share | $0.11 | $(0.10) |
| Average shares outstanding | 3,695,966 | 3,695,540 |
| June 30 | ||
| 2013 | 2012 | |
| Capital Ratios: | ||
| Tier 1 leverage ratio (8) | 10.43% | 9.72% |
| Tier I risk-based capital ratio (8) | 17.42% | 15.13% |
| Total risk-based capital ratio (8) | 20.00% | 17.63% |
| Asset Quality Ratios: | ||
| Non performing assets to total assets (9) | 4.75% | 11.13% |
| Non performing loans to total loans receivable (9) | 5.47% | 10.17% |
| Allowance for loan losses to total loans receivable | 2.90% | 4.77% |
| Allowance for loan losses to non-performing loans | 53.02% | 46.95% |
| (1) Net income/(loss), annualized, divided by average total assets. | ||
| (2) Net income/(loss), 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) These ratios reflect consolidated bank only. | ||
| (9) Non performing assets consist of non-accrual loans, and real estate owned. | ||
| (10) Non-GAAP Financial Measures: In addition to evaluating Carver Bancorp's results of operations in accordance with U.S. generally accepted accounting principles ("GAAP"), management routinely supplements their evaluation with an analysis of certain non-GAAP financial measures, such as the efficiency ratios. Management believes this non-GAAP financial measure provides information useful to investors in understanding the Company's underlying operating performance and trends, and facilitates comparisons with the performance of other banks and thrifts. Further, the efficiency ratio is used by management in its assessment of financial performance, including non-interest expense control. | ||