Carver Bancorp, Inc. Reports Second Quarter Fiscal Year 2017 Results

NEW YORK, Nov. 14, 2016 /PRNewswire/ -- Carver Bancorp, Inc. (the "Company") CARV, the holding company for Carver Federal Savings Bank ("Carver" or the "Bank"), today announced financial results for its second quarter ended September 30, 2016 of fiscal year 2017.

The Company reported a net loss of $252 thousand, or basic and diluted loss per share of $0.07, for the quarter ended September 30, 2016, compared to a net loss of $156 thousand, or basic and diluted loss per share of $0.04, for the quarter ended September 30, 2015.  For the six months ended September 30, 2016, the Company reported net income of $156 thousand, or basic and diluted earnings per share of $0.02, compared to net income of $289 thousand, or basic and diluted earnings per share of $0.03, for the comparative prior year period.

"Strengthening our asset quality by reducing non-performing loans and other assets is a key element of our plan to improve profitability at Carver," said Michael T. Pugh, the Company's President and Chief Executive Officer.  "During the second quarter of fiscal year 2017, we demonstrated progress by reducing non-performing loans held for investment and other non-performing assets.  The decision to make these reductions helped to improve our asset quality ratios as follows:  1) non-performing loans to total loans declined to 1.62% at September 30, 2016 from 1.69% at June 30, 2016, and 2) non-performing assets to total assets declined to 1.55% at September 30, 2016 from 2.36% at June 30, 2016."

"Carver's Board of Directors and management continue to emphasize compliance with regulatory standards and guidelines.  In connection with certain regulatory loan guidelines, we have sought to diversify our loan portfolio and to reduce our concentrations in commercial real estate.  Our non-owner occupied CRE loan concentration declined from 494% at March 31, 2016 to 449% at September 30, 2016.  Although we have made reductions in CRE loan concentration, our Tier 1 capital remains strong.  Additional efforts are underway for further diversification in our portfolio as we move ahead."

"As a community development financial institution, which first opened its doors in Harlem in 1948, we are committed to providing our customers with the means to access and better manage their money.  During the second quarter, Carver hosted an IDNYC Outreach and Awareness Event and an IDNYC Pop-Up Site in our Harlem 125th Street branch.  IDNYC is a free form of identification for New York City residents, including immigrants, who might otherwise not have access to an acceptable form of identification.  We are pleased to report that approximately 100 bank accounts have been opened at Carver branches using IDNYC.  Our efforts remain committed to serving the Greater New York City area and providing vital banking services to the community."

Statement of Operations Highlights

Second Quarter and Six Months Results

The Company reported a net loss of $252 thousand for the three months ended September 30, 2016, compared to a net loss of $156 thousand for the prior year quarter.  For the six months ended September 30, 2016, the Company reported net income of $156 thousand, compared to net income of $289 thousand for the prior year period.  The changes in our results for both comparative periods were primarily driven by lower net interest income and higher non-interest expense, partially offset by recoveries of loan losses in the current periods compared to provisions for loan losses in the prior year periods.

Net Interest Income

Net interest income decreased $754 thousand, or 13.4%, to $4.9 million for the three months ended September 30, 2016, compared to $5.6 million for the prior year quarter.  Net interest income decreased $239 thousand, or 2.2%, to $10.5 million for the six months ended September 30, 2016, compared to $10.8 million for the prior year period.

Interest income decreased $446 thousand, or 6.6%, to $6.3 million for the three months ended September 30, 2016, compared to $6.7 million for the prior year quarter.  For the six months ended September 30, 2016, interest income increased $252 thousand, or 1.9%, to $13.2 million compared to $12.9 million for the prior year period.  Although the average yield on investment securities increased in both periods, interest income on investment securities decreased due to a decrease in the average balances as a result of sales, calls and maturities of securities in the Bank's available-for-sale portfolio.  Interest income on loans increased $505 thousand  for the six months ended September 30, 2016, compared to the prior year period due to a $62.7 million, or 12.3%, increase in the Bank's average loan balances.  For the three months ended September 30, 2016, interest income on loans decreased $292 thousand, or 4.7%, compared to the prior year quarter due to lower yields.

Interest expense increased $308 thousand, or 28.2%, to $1.4 million for the three months ended September 30, 2016, compared to $1.1 million for the prior year quarter.  For the six months ended September 30, 2016, interest expense increased $491 thousand, or 22.8%, to $2.6 million, compared to $2.2 million for the prior year period.  The second quarter included $183 thousand additional interest on the deferred debenture dividends on the Company's outstanding Capital Statutory Trust I capital securities.  The additional interest was related to the nineteen quarters of deferred payments that were settled and brought current in September.  Interest expense on deposits was also higher due to an increase in the average balance of certificates of deposit compared to the prior year periods.

Provision for Loan Losses

The Company recorded a $160 thousand recovery of loan loss for the three months ended September 30, 2016, compared to a $643 thousand provision for loan loss for the prior year quarter.  Net charge-offs of $276 thousand were recognized during the second quarter, compared to net charge-offs of $179 thousand for the prior year quarter. 

For the six months ended September 30, 2016, the Company recorded a $364 thousand recovery of loan loss, compared to a $677 thousand provision for loan loss for the prior year period.  Net charge-offs of $121 thousand were recognized for the six months ended September 30, 2016, compared to net charge-offs of $666 thousand in the prior year period.

Non-interest Income

Non-interest income increased $147 thousand, or 13.0%, to $1.3 million for the three months ended September 30, 2016, compared to $1.1 million for the prior year quarter.  For the six months ended September 30, 2016, non-interest income increased $117 thousand, or 5.0%, to $2.4 million compared to $2.3 million for the prior year period.  The increase in both periods was primarily due to higher other non-interest income related to miscellaneous loan fees.  Also, higher depository fees in the current six month period were offset by higher gains on sales of loans in the prior year period.

Non-interest Expense

Non-interest expense increased $371 thousand, or 6.0%, to $6.6 million for the three months ended September 30, 2016, compared to $6.2 million for the prior year quarter.  For the six months ended September 30, 2016, non-interest expense increased $1.1 million, or 9.2%, to $13.2 million compared to $12.1 million for the prior year period.  The increase in both periods was primarily due to higher other non-interest expense and employee compensation and benefits.  The increase in employee compensation and benefits is related to staffing costs associated with strengthening the Bank's regulatory and compliance infrastructure.  The increase in other non-interest expense is the result of significant audit and legal expenses incurred as a result of the restatement of the Company's 2015 financial statements and the resultant going concern issue (since eliminated).

Income Taxes

For the three months ended September 30, 2016, there was no income tax expense compared to $79 thousand for the prior year quarter.  For the six months ended September 30, 2016, income tax expense was $37 thousand, compared to $92 thousand for the prior year period.

Financial Condition Highlights

At September 30, 2016, total assets were $701.7 million, reflecting a decrease of $40.0 million, or 5.4%, from total assets of $741.7 million at March 31, 2016.  The reduction is primarily attributable to a $45.9 million decline in the loan portfolio (including loans held-for-sale), partially offset by an increase of $10.1 million in cash and cash equivalents.  The decline in the loan portfolio was largely attributable to loan attrition through scheduled paydowns and payoffs, which the Bank did not actively try to retain as it was making efforts to reduce the concentration of commercial real estate loans.

Total cash and cash equivalents increased $10.1 million, or 15.9%, to $73.8 million at September 30, 2016, compared to $63.7 million at March 31, 2016 due to loan activity, partially offset by the Bank's repayment of short-term borrowings and a reduction of brokered deposits during the period.

Total investment securities decreased $3.3 million, or 4.6%, to $68.2 million at September 30, 2016, compared to $71.5 million at March 31, 2016, as the Bank sold two available-for-sale securities.  Also, cash generated from calls of securities was reinvested to diversify the Bank's available-for-sale investment portfolio.

Gross portfolio loans decreased $59.9 million, or 10.2%, to $529.1 million at September 30, 2016, compared to $589.0 million at March 31, 2016, as the Bank began a targeted reduction of its concentration in commercial real estate mortgage loans by reducing its efforts to slow attrition in and payoffs of Non Owner Occupied CRE loans.

Loans held-for-sale ("HFS") increased $13.5 million to $16.0 million at September 30, 2016, compared to $2.5 million at March 31, 2016.  The Bank transferred $15.0 million of portfolio loans to its held-for-sale portfolio during the second quarter.  The transfer was an additional step in the strategic reduction of CRE loan concentration as the loans transferred represent CRE loans being aggressively marketed for sale.

Total liabilities decreased $40.2 million, or 5.8%, to $647.3 million at September 30, 2016, compared to $687.5 million at March 31, 2016, following declines in the Bank's deposits and borrowed funds.

Deposits decreased $23.1 million, or 3.8%, to $583.6 million at September 30, 2016, compared to $606.7 million at March 31, 2016, due primarily to decreases in brokered deposits in money market accounts and in certificates of deposit.  The Company did not actively pursue the retention of certain deposits as it has been seeking to reduce its overall level of brokered deposits.

Advances from the Federal Home Loan Bank of New York and other borrowed money decreased $25.0 million, or 36.5%, to $43.4 million at September 30, 2016, compared to $68.4 million at March 31, 2016 due to the repayment of short-term borrowings during the period.

Total equity increased $198 thousand, or 0.4%, to $54.4 million at September 30, 2016, compared to $54.2 million at March 31, 2016.  The increase was due to net income of $156 thousand and a decrease of $42 thousand in unrealized losses on investments for the six month period. 

Asset Quality

At September 30, 2016, non-performing assets totaled $10.9 million, or 1.6% of total assets, compared to $17.5 million, or 2.4% of total assets, at March 31, 2016, and $12.8 million, or 1.7% of total assets, at September 30, 2015.  Non-performing assets at September 30, 2016, consisted of $7.0 million of loans classified as impaired, $1.5 million of loans classified as troubled debt restructurings, $1.3 million of other real estate owned, and $1.0 million of loans classified as HFS.  During the second quarter, the Bank was successful in selling $4.6 million of HFS loans at par.

At September 30, 2016, the allowance for loan losses was $4.7 million, representing a ratio of the allowance for loan losses to non-performing loans of 55.45% compared to a ratio of 37.51% at March 31, 2016.  The ratio of the allowance for loan losses to total loans was 0.90% at September 30, 2016 compared to a ratio of 0.89% at March 31, 2016.  Non-performing loans have decreased 38.6% to $8.6 million for the six months ended September 30, 2016, primarily due to the sale of one commercial real estate loan from the Bank's held-for-sale portfolio.

About Carver Bancorp, Inc.

Carver Bancorp, Inc. is the holding company for Carver Federal Savings Bank, a federally chartered stock savings bank.  Carver was founded in 1948 to serve African-American communities whose residents, businesses, and institutions had limited access to mainstream financial services.  In light of its mission to promote economic development and revitalize underserved communities, Carver has been designated by the U.S. Department of the Treasury as a community development financial institution.  Carver is the largest African- and Caribbean-American managed bank in the United States, with nine 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.

Contacts:
Michael Herley/Ruth Pachman
Kekst
(212) 521-4897/4891
michael.herley@kekst.com 
ruth.pachman@kekst.com

Christina L. Maier
Carver Bancorp, Inc.
First Senior Vice President and Chief Financial Officer
(212) 360-8894
christina.maier@carverbank.com

 

 

 

 

 

 

 

 

 

 

 

 

 

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 ratio, return on average stockholders' equity excluding average accumulated other comprehensive income (loss) ("AOCI"), and average stockholders' equity excluding AOCI to average assets.  Management believes these non-GAAP financial measures provide information that is 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.

Return on equity measures how efficiently we generate profits from the resources provided by our net assets.  Return on average stockholders' equity is calculated by dividing annualized net income (loss) by average stockholders' equity, excluding AOCI.  Management believes that this performance measure explains the results of the Company's ongoing businesses in a manner that allows for a better understanding of the underlying trends in the Company's current businesses.  For purposes of the Company's presentation, AOCI includes the changes in the market or fair value of its investment portfolio and former pension plan.  These fluctuations have been excluded due to the unpredictable nature of this item and are not necessarily indicative of current operating or future performance.

 

 

Logo - http://photos.prnewswire.com/prnh/20161114/439076LOGO

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/carver-bancorp-inc-reports-second-quarter-fiscal-year-2017-results-300362547.html

SOURCE Carver Bancorp, Inc.