Carver Bancorp, Inc., a Delaware corporation, is the holding company for Carver
Federal Savings Bank, a federally chartered savings bank. The Company is headquartered
in New York, New York. The Company conducts business as a unitary savings and
loan holding company, and the principal business of the Company consists of
the operation of its wholly-owned subsidiary, Carver Federal. Carver Federal
was founded in 1948 to serve African-American communities whose residents, businesses
and institutions had limited access to mainstream financial services. The Bank
remains headquartered in Harlem, and predominantly all of its ten branches and
four stand-alone 24/7 ATM centers are located in low- to moderate-income neighborhoods.
Many of these historically underserved communities have experienced unprecedented
growth and diversification of incomes, ethnicity and economic opportunity, after
decades of public and private investment.
Carver Federal is the largest African-American operated bank in the United
States. The Bank remains dedicated to expanding wealth enhancing opportunities
in the communities it serves by increasing access to capital and other financial
services for consumers, businesses and non-profit organizations, including faith-based
institutions. A measure of its progress in achieving this goal includes the
Bank's third consecutive "Outstanding" rating, issued by the OCC following
its most recent Community Reinvestment Act (“CRA”) examination in
December 2012. As of December 2012, approximately 78% of newly originated loans
were within Carver's assessment area, and the Bank has demonstrated excellent
responsiveness to its assessment area's needs through its community development
lending, investing and service activities.
Carver Federal engages in a wide range of consumer and commercial banking services.
Carver Federal provides deposit products, including demand, savings and time
deposits for consumers, businesses, and governmental and quasi-governmental
agencies in its local market area within New York City. In addition to deposit
products, Carver Federal offers a number of other consumer and commercial banking
products and services, including debit cards, online banking, online bill pay
and telephone banking. Carver Federal also offers a suite of products and services
for unbanked and underbanked consumers, branded as Carver Community Cash. This
includes check cashing, wire transfers, bill payment, reloadable prepaid cards
and money orders.
Carver Federal offers loan products covering a variety of asset classes, including
commercial, multifamily and residential mortgages, construction loans and business
loans. The Bank finances mortgage and loan products through deposits or borrowings.
Funds not used to originate mortgages and loans are invested primarily in U.S.
government agency securities and mortgage-backed securities.
The Bank's primary market area for deposits consists of the areas served by
its ten branches in the Brooklyn, Manhattan and Queens boroughs of New York
City. The neighborhoods in which the Bank's branches are located have historically
been low- to moderate-income areas. The Bank's primary lending market includes
Kings, New York, Bronx and Queens Counties in New York City, and lower Westchester
County, New York. Although the Bank's branches are primarily located in areas
that were historically underserved by other financial institutions, the Bank
faces significant competition for deposits and mortgage lending in its market
areas. Management believes that this competition has become more intense as
a result of increased examination emphasis by federal banking regulators on
financial institutions' fulfillment of their responsibilities under the CRA
and more recently due to the decline in demand for loans. Carver Federal's market
area has a high density of financial institutions, many of which have greater
financial resources, name recognition and market presence, and all of which
are competitors to varying degrees. The Bank's competition for loans comes principally
from commercial banks, savings institutions and mortgage banking companies.
The Bank's most direct competition for deposits comes from commercial banks,
savings institutions and credit unions. Competition for deposits also comes
from money market mutual funds, corporate and government securities funds, and
financial intermediaries such as brokerage firms and insurance companies. Many
of the Bank's competitors have substantially greater resources and offer a wider
array of financial services and products. This, combined with competitors' larger
presence in the New York market, add to the challenges the Bank faces in expanding
its current market share and growing its near-term profitability.
Carver Federal's more than 65 year history in its market area, its community
involvement and relationships, targeted products and services and personal service
consistent with community banking, help the Bank compete with competitors that
have entered its market.
The Bank formalized its many community focused investments on August 18, 2005,
by forming Carver Community Development Corporation ("CCDC"). CCDC
oversees the Bank's participation in local economic development and other community-based
initiatives, including financial literacy activities. CCDC coordinates the Bank's
development of an innovative approach to reach the unbanked customer market
in Carver Federal's communities. Importantly, CCDC spearheads the Bank's applications
for grants and other resources to help fund these important community activities.
In this connection, Carver Federal has successfully competed with large regional
and global financial institutions in a number of competitions for government
grants and other awards.The NMTC award is used to stimulate economic development
in low- to moderate-income communities. The NMTC awards enable the Bank to invest
with community and development partners in economic development projects with
attractive terms including, in some cases, below market interest rates, which
may have the effect of attracting capital to underserved communities and facilitating
revitalization of the community, pursuant to the goals of the NMTC program.
NMTC awards provide a credit to Carver Federal against Federal income taxes
when the Bank makes qualified investments. The credits are allocated over seven
years from the time of the qualified investment. Alternatively, the Bank can
utilize the award in projects where another investor entity provides funding
and receives the tax benefits of the award in exchange for the Bank receiving
fee income.
Carver Federal's loan portfolio consists primarily of mortgage loans originated
by the Bank's lending teams and secured by commercial real estate, multifamily
and one-to-four family residential property and construction loans. Substantially
all of the Bank's mortgage loans are secured by properties located within the
Bank's market area. From time to time, the Bank may purchase loans that comply
with the Bank's underwriting standards from other financial institutions or
in contiguous market geographies to achieve loan growth objectives.
In recent years, Carver Federal has focused on the origination of commercial
real estate loans and multifamily residential loans. These loans generally have
higher yields and shorter maturities than one-to-four family residential properties,
and include prepayment penalties that the Bank collects if the loans pay in
full prior to the contractual maturity. The Bank's increased emphasis on portfolio
management and monitoring of the commercial real estate and multifamily residential
mortgage loans was required given the increase of the overall level of credit
risk inherent in this market segment. Due to the overall improvement in the
loan portfolio, the Bank has been able to recover provision for loan losses
in years 2013 to 2015. However, the greater risk associated with commercial
real estate and multifamily residential loans may require the Bank to increase
its provisions for loan losses and could require the Bank to maintain an allowance
for loan losses as a percentage of total loans in excess of the allowance currently
maintained. Carver Federal continually reviews the composition of its mortgage
loan portfolio and underwriting standards to manage the risk in the portfolio.
