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Struggling Carver Bancorp is going on the offensive in its effort to fix its balance sheet and return to profitability, adding the newly created position of president and chief operating officer.
May 26 -
By the end of this month the Office of Thrift Supervision wants Carver, a minority-owned bank that serves underbanked communities in New York City, to increase capital ratios by at least $20 million. Analysts, however, believe Carver may need as much as $35 million to properly repair itself.
April 7
Several of the nation's largest and best-known financial services firms have teamed up to recapitalize the ailing Carver Bancorp Inc.
Under an enforcement order to boost its capital ratios, New York-based Carver said yesterday that it has raised $55 million from seven institutional investors — including Citigroup Inc., Goldman Sachs Group Inc. and the Prudential Insurance Co — and that the Treasury Department had agreed to exchange nearly $19 million of Carver preferred shares it purchased under the Troubled Asset Relief Program into common stock. The influx of fresh capital would boost capital ratios above minimums established by the Office of Thrift Supervision and help Carver clean up its loan portfolio so that it can "return to profitability," said Deborah Wright, Carver's president and chief executive officer.
"We recognize the trust bestowed upon us by our new investors...and thank them for their vote of confidence in the value of our franchise and its importance to New York City's urban communities," Wright said in a news release.
Carver, which largely serves low- and middle-income communities, has been hit hard by defaults on real estate loans. Early Thursday, the company said that it lost $5.5 million in its fiscal fourth quarter that ended March 31, compared to a loss of $2.2 million in the prior quarter, after setting aside $6.8 million for loan losses. For the fiscal year, it lost $39.5 million, versus a loss of $1 million in the prior one-year period.
In March, Carver was slapped with a cease-and-desist order from the OTS that, among other things, required it to increase its total-risk based capital ratio to at least 13% and its Tier 1 capital ratio to 9% — both well above the minimum thresholds for well-capitalized institutions.
The $55 million it raised includes investments of $15 million each from investment banks Goldman Sachs and Morgan Stanley and $10 million each from Citi and Prudential. American Express Co. and First Republic Bank are investing $2 million each and the National Community Investment Fund has committed $1 million.
