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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
November 3, 2023
CARVER BANCORP, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware |
001-13007 |
13-3904174 |
(State or Other Jurisdiction
of Incorporation) |
(Commission File No.) |
(I.R.S. Employer
Identification No.) |
75 West 125th Street, New York, NY |
10027-4512 |
(Address of Principal Executive Offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (212)
360-8820
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
¨ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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|
¨ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
|
¨ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
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¨ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b)
of the Act:
|
Title of each class |
|
Trading symbol(s) |
|
Name of each exchange on which registered |
Common stock, par value $0.01 per share |
|
CARV |
|
The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant is an emerging
growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange
Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
¨
If an emerging growth company, indicate by check mark
if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 7.01. Regulation FD Disclosure.
On November 3, 2023,
Carver Bancorp, Inc. (the “Company”) issued a letter to its shareholders. A copy of the letter is attached as Exhibit 99.1
hereto and incorporated by reference.
The information contained in this Item 7.01
and Exhibit 99.1 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended,
or otherwise subject to the liability of that section, and shall not be incorporated by reference into any filings made by the Company
under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as expressly set forth by specific
reference in such filing.
Item 9.01. Financial Statements and
Exhibits.
(d) Exhibits.
Forward Looking
Statements
The
Company may from time to time make written or oral “forward-looking statements,” including statements contained in the shareholder
letter and in the Company's filings with the Securities and Exchange Commission. The forward-looking statements contained in this disclosure,
are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking
statements. The Company and its operations are subject to numerous risks and uncertainties that include: changes in interest rates,
which may reduce net interest margin and net interest income; monetary and fiscal policies of the U.S. government, including policies
of the U.S. Treasury and the Board of Governors of the Federal Reserve System; the ability of the Company to obtain approval from the
Federal Reserve Bank of Philadelphia (the "Federal Reserve Bank") to distribute interest payments owed to the holders of the
Company's subordinated debt securities; the limitations imposed on the Company which require, among other things, written approval of
the Federal Reserve Bank prior to the declaration or payment of dividends, any increase in debt by the Company, or the redemption of Company
common stock, and the effect on operations resulting from such limitations; the impact of the recent bank closings of First Republic Bank,
Silicon Valley Bank and Signature Bank and the risks related to continued disruption in the banking industry and financial markets; the
market price and trading volume of our shares of common stock has been and may continue to be volatile, and purchasers of our securities
could incur substantial losses; changes in the level of trends of delinquencies and write-offs and in our allowance and provision for
credit losses; the results of examinations by our regulators, including the possibility that our regulators may, among other things, require
us to increase our reserve for credit losses, write down assets, change our regulatory capital position, limit our ability to borrow funds
or maintain or increase deposits, or prohibit us from paying dividends, which could adversely affect our dividends and earnings; national
and/or local changes in economic conditions, which could occur from numerous causes, including political changes, domestic and international
policy changes, unrest, war and weather, inflation or deflation conditions in the real estate, securities markets or the banking industry,
which could affect liquidity in the capital markets, the volume of loan originations, deposit flows, real estate values, the levels of
non-interest income and the amount of credit losses; adverse changes in the financial industry and the securities, credit, national and
local real estate markets (including real estate values); changes in our existing loan portfolio composition (including reduction in commercial
real estate loan concentration) and credit quality or changes in credit loss requirements; legislative or regulatory changes that may
adversely affect the Company’s business, including but not limited to new capital regulations, which could result in, among other
things, increased deposit insurance premiums and assessments, capital requirements, regulatory fees and compliance costs, and the resources
we have available to address such changes; changes in the level of government support of housing finance; changes to state rent control
laws, which may impact the credit quality of multifamily housing loans; our ability to control costs and expenses; the continuing impact
of the COVID-19 pandemic on our business and results of operations; the impairment of our investment securities; risks related to a high
concentration of loans to borrowers secured by property located in our market area; increases in competitive pressure among financial
institutions or non-financial institutions; unexpected outflows of uninsured deposits could require us to sell investment securities at
a loss; changes in consumer spending, borrowing and savings habits; technological changes that may be more difficult to implement or more
costly than anticipated; changes in deposit flows, loan demand, real estate values, borrowing facilities, capital markets and investment
opportunities, which may adversely affect our business; changes in accounting standards, policies and practices, as may be adopted or
established by the regulatory agencies or the Financial Accounting Standards Board could negatively impact the Company's financial results;
litigation or regulatory actions, whether currently existing or commencing in the future, which may restrict our operations or strategic
business plan; the ability to originate and purchase loans with attractive terms and acceptable credit quality; and the ability to attract
and retain key members of management, and to address staffing needs in response to product demand or to implement business initiatives.
You should carefully review the risk factors described in the Form 10-K for the fiscal year ended March 31, 2023 and other documents the
Company files from time to time with the Securities and Exchange Commission. The words “would be,” “could be,”
“should be,” “probability,” “risk,” “target,” “objective,” “may,”
“will,” “estimate,” “project,” “believe,” “intend,” “anticipate,”
“plan,” “seek,” “expect” and similar expressions or variations on such expressions are intended to
identify forward-looking statements. All such statements are made in good faith by the Company pursuant to the “safe harbor”
provisions of the Private Securities Litigation Reform Act of 1995. The Company does not undertake to update any forward-looking statement,
whether written or oral, that may be made from time to time by or on behalf of the Company, except as may be required by applicable law
or regulations.
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto
duly authorized.
|
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CARVER BANCORP, INC.
|
DATE: November 3, 2023 |
By: |
/s/ Isaac Torres |
|
|
Isaac Torres |
|
|
Senior Vice President, General Counsel and Corporate Secretary |
Exhibit 99.1
November 1, 2023
Dear Carver Shareholders:
|
In the four short weeks since assuming the role of Interim President & CEO of Carver Bancorp, Inc. and our
wholly-owned subsidiary, Carver Federal Savings Bank (“Carver” or the “Bank”), I have been inspired by the
passion of our people, the unwavering support of our shareholders, and our impact on the communities that we serve.
im·pact
ˈim-ˌpakt
-
… the force of impression of one thing on another;
a significant or major effect
|
In January
2023, the Bank emerged from a formal agreement with its primary regulator, concluding a period of enhanced oversight, foundation-building,
capital-raising, technology upgrades, and portfolio rationalization. Carver is now a better capitalized and more capable bank with solid
liquidity and Tier 1 Capital (12.4%), Leverage (10.1%) and Total Risk Based Capital (13.4%) ratios in excess of “well capitalized”
levels.
The Bank continues to
grow in scale, market reach and in the diversification of its suite of retail and commercial offerings, while remaining committed to
our mission to address the wealth gap by “…providing local residents with a place to save, grow businesses and
build wealth, block by block, generation to generation.” With over $720 million in assets as of June 30, 2023, the Bank has
grown organically by 28% since 2019, which was achieved through increased productivity and the use of advanced technology (assets
per employee up 33%).
This year Carver is
celebrating 75 years of providing urban communities and Minority and Women-Owned Business Enterprises (“MWBEs”) with
access to capital and competitively priced banking solutions. We lead the way in community-driven finance across the Greater New York
City region. From micro-loans to large commercial facilities, to our performance in deploying $50 million of Payroll Protection Program
loans (preserving over 5,000 jobs), Carver is recognized as a leading Community Development Financial Institution (“CDFI”)
in our market. The Bank has received ”Outstanding“ Community Reinvestment Act (“CRA”) ratings since 2004,
and in our latest evaluation, the Office of the Comptroller of the Currency determined that 90% of Carver’s loans were made
within our assessment area.
Carver has recently
broadened its commercial presence, participating in the financing of national credits and projects such as Krispy Kreme Donuts and the
new Atlanta Hawks Training Facility, which provide additional loan portfolio diversification. By leveraging our fintech partnerships,
the Bank has:
| · | Expanded
its consumer credit solutions, deployed robust mobile banking services to underbanked urban
centers, and extended its deposit-taking footprint to encompass 9 states, with additional
expansion on the horizon |
| · | Supported
over 16,000 small business loans nationwide, through a liquidity funding partnership with
a minority-owned fintech company |
Carver’s management
team and Board of Directors are also shareholders. While Carver’s stock may experience sector-driven volatility or speculation,
we firmly believe that our prospects, transparency, and ability to deliver against objectives will ultimately be reflected in Carver’s
valuation. We are executing upon a strategy to (i) fuel greater organic growth, (ii) deepen our collaboration with our strategic and
fintech partners, (iii) leverage our new technology to achieve greater scale and operating efficiencies, (iv) continue supporting a culture
of disciplined risk management, and (v) position the Bank to grow into sustainable core profitability.
I am
encouraged by the following results:
| · | Asset
Growth – strong organic loan growth (8.7% 4-Year CAGR thru FY-2023) and
a 95% Loan-to-Deposit ratio, vs. 74% for our peer group, indicating a more profitable asset
mix. |
| · | Portfolio
Diversification – commercial and industrial loans (“C&I”) now comprise
over 28% of the portfolio; notwithstanding portfolio growth and diversification, over 80%
of our lending still supports businesses, investors, non-profit organizations, and individuals
in our urban communities. |
| · | Deposit
Growth – Carver’s deposit growth (5.8% 4-Year CAGR thru FY-2023) has
been driven by “sticky” institutional deposits, reducing our reliance on external
leverage and expensive brokered deposits. |
| · | Fintech
Partnerships – through our fintech partnerships, Carver has expanded its ability
to grow loans and deposits, and enhance its commercial and retail offerings, including cash
management and credit cards. |
| · | Charge-offs
– The Bank has achieved significant asset growth while maintaining a strong underwriting
and portfolio management discipline. Annual net charge-offs of 0.09%, among the lowest in
our peer group. |
| · | Net
Interest Margin – Carver’s YTD FY-2024 net interest margin, at 3.14%, is
comparable to our peer group and has been sustained by the support of our core relationship
deposit accounts. |
| · | Rising
Efficiency – loan assets per employee, a general indicator of efficiency, has increased
for four consecutive years at a 7.4% CAGR. Carver is completing more loans by volume
and reducing cycle time with the advent of new technologies and best practices. |
| · | Capital-Raising
– since 2019, Carver has taken in over $40 million of net capital additions, primarily
driven by direct institutional investor placements and at-the-market common stock offerings. |
| · | Investment
in Technology – The Bank has invested over $3 million since 2019 to upgrade our
technology, power a more robust mobile banking platform, and enhance operating efficiency. |
Carver’s path
to sustainable core profitability hinges on well-learned lessons in portfolio diversification, capital adequacy, and risk and liquidity
management, which will enable:
| · | Continued
growth of C&I lending fueled by our (i) new SBA initiative, (ii) healthcare finance partnership,
(iii) progress in Green Energy and contractor financing, and (iv) measured exposure to broadly
syndicated loans |
| · | Ongoing
expansion of our digital deposit footprint and mobile banking capabilities |
| · | Growth
in consumer lending via our fintech partnerships |
| · | Strategic
partnerships to expand product/service offerings (e.g., wealth management, estate planning) |
| · | Continued
focus on leveraging technology, operating efficiency, and fixed cost management |
On behalf of our management
team and Board of Directors, thank you for holding us accountable on this journey to create enduring value for our shareholders, and
for enabling Carver to have “a significant or major effect” on the communities that we serve…impact.
Sincerely,
Craig C. MacKay
Interim President &
CEO
Carver Bancorp, Inc.
ABOUT CARVER FEDERAL
SAVINGS BANK
Carver was founded
by a consortium of faith and business leaders in Harlem in 1948 to address the banking needs of the predominantly African American and
Caribbean communities whose residents, businesses, and institutions had limited access to mainstream financial services and business
capital. Carver remains headquartered in Harlem today, with a branch and 24/7 ATM network that serves the traditionally low-to-moderate-income
neighborhoods of the five boroughs of New York City and surrounding areas. As the neighborhoods that we serve have evolved, so has Carver,
which today proudly serves as a vehicle of wealth accumulation, finance, and commerce for communities with increasingly diverse income,
ethnicity, and socio-economic profiles.
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