Carver Bancorp Inc.

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Carver Bancorp Inc.

founded: 1948

Contact Information:

headquarters: 75 w. 125th st. new york, ny 10027-4512 fax: (212)426-6159 phone: (212)876-4747 url:


The largest minority-owned financial institution in the United States, Carver Bancorp Inc. offers traditional banking services to African Americans and other minority groups via its five Carver Federal Savings Bank branches in New York City. The firm struggled to maintain profitability throughout the 1990s and underwent a series of management changes. It also successfully defended itself against various takeover attempts. Financial troubles continued into the early 2000s.


Sales for Carver Bancorp grew 4.3 percent to $31.2 million in 2001. Although the firm posted a loss of $400,000 that year, its financial status was actually more solid than in the previous two years. In 2000 Carver had lost $1.1 million, and in 1999 it had lost $4.5 million. Assets for Carver grew from $420.1 million in 2000 to $424.5 million in 2001; despite two consecutive years of growth, assets remained lower than their peak of $437.5 million in 1998. After reaching a high of $17.50 per share in late 1997, stock prices fell to $8.50 per share in 1998 and to $7.30 per share in late 2000.


The 1990s proved to be a tumultuous time for Carver Bancorp Inc. as it fended off takeover attempts and experienced a series of management shakeups. Losses mounted, stock prices plummeted, and industry analysts began to wonder just how long the firm could function independently. Of major concern to analysts was the increased competition for minority business coming from the industry's largest players. As stated in a January 2000 issue of Crain's New York Business, competition was no longer "just from other ethnic-focused banks, but from big guys like Chase and Bank One, which see this as an expanding market. . . .The whole notion of whether an ethnically focused bank can work is in question." Despite its struggles, Carver remained first on Black Enterprise's list of banks and on its Black Stock Index in the early 2000s.


Carver was created in 1949 as a savings and loan bank serving African Americans living in Harlem and the rest of New York City. The bank was named after African-American inventor George Washington Carver. Like most other banks serving minority groups, Carver focused mainly on securities, rather than loans. Its services were limited to savings and checking accounts and other standard banking functions. As a result, when the Community Reinvestment Act was passed in 1977 and traditional banks began to target poor neighborhoods, Carver found itself struggling to compete with the broad ranger of services offered by the larger banking firms. The firm established its first automated teller machine (ATM) in 1989.

To raise money for expansion, the bank conducted an initial public offering (IPO) in 1994. By then, seven branches were in operation throughout New York. Stock prices began to fall shortly after the IPO, and the threat of takeover became imminent. As a result, Carver hired Thomas L. Clark, Jr. as CEO, charging him with the task of keeping Carver independent, despite shareholder demands that the board make the decision to sell the bank. A buyout offer from investment banker Joseph Curry was turned down by Carver's board in 1996. Under Clark's guidance, Carver began to increase its number of loans. The firm also launched a loan program backed by the Small Business Administration, established some mortgage lending offices, and recruited a marketing executive to identify and pursue new institutional clients, such as African-American churches, as well as more traditional customers. Recognizing that mortgage loans were more lucrative than the securities upon which Carver had traditionally relied, Clark also led Carver's purchase of roughly $150 million worth of existing mortgages from Countrywide Home Loans and Chase Manhattan Bank.

FAST FACTS: About Carver Bancorp Inc.

Ownership: Carver Bancorp Inc. is a publicly owned company traded on the American Stock Exchange.

Ticker Symbol: CNY

Officers: Frederick O. Terrell, Chmn.; Deborah C. Wright, Pres., CEO, and Dir.; William C. Gray, SVP and CFO

Principal Subsidiary Companies: Carver Bancorp Inc. is the holding company for Carver Federal Savings Bank, which operates five branches in New York City.

Chief Competitors: Competitors to Carver Bancorp include banking industry giants such as Bank of New York, Citigroup, and J.P. Morgan Chase, all three of which have started to compete directly with Carver by targeting minority populations such as African Americans.

When Carver posted a $5.7 million quarterly loss in December of 1998, the board decided to replace him. Deborah C. Wright was hired as his successor in January of the following year. Within two years, Wright had replaced each of the firm's senior executives, as well as nearly 50 percent of its workforce. Boston Bank of Commerce, which owned 7 percent of Carver, made two unsolicited bids, the last one totaling $29.78 million, for Carver in April 1999. Carver's board rejected the offer, and a bitter battle among the company's shareholders ensued.

In 2000, Carver secured a $2.5 million loan from Morgan Stanley Dean Witter & Co. and Provender Capital Group. The firm planned to use the money to broaden its product base with new online and telephone-based banking services, as well as a debit card. In 2001 Carver sold the two of its seven branches that served middle-class neighborhoods and began looking to open new units in inner city neighborhoods. Chief financial officer James Boyle, hired in early 2000 to help restore Carver to profitability, resigned in June 2001. William C. Gray succeeded Boyle in January 2002.


In an effort to boost profits, Carver began issuing a growing number of loans—including car loans, consumer loans, and credit cards—in the mid-1990s. As a result, by early 1997 the bank's loan-asset ratio had increased to 47 percent, compared to 17 percent in 1993; this ratio grew to 55 percent in 1998. However, the firm's focus on consumer lending, a strategic decision prompted by shareholder demands for improved profitability, proved disastrous. Carver did not have a staff experienced in these types of consumer lending, which caused a variety of problems for the firm. According to Crain's New York Business, Carver's "stock plunged in 1998 as an expansion into consumer lending, including auto loans and credit cards, increased costs and produced a high percentage of defaults. The bad loans resulted in a $7.8 million charge in fiscal 1999, ended March 31, and the resignation of its CEO." Negative press continued when one Carver executive was arrested and charged with defrauding the bank. Although Carver's stock did recover somewhat in later months, it failed to return to its $17.50 per share high of late 1997. Despite these problems, Carver continued with its strategy of increasing its loan-asset ratio, which grew to 67 percent in 2001. That year, loans originated by Carver rose to $30.5 million, compared to $4.6 million in 2000. Helping to improve the firm's performance in the early 2000s was its establishment and enforcement of stricter rules regarding delinquent loans.

Carver launched a major print and radio advertising campaign in late 2000. The campaign centered around the firm's new slogan, "Profit from the Partnership," and focused on two new products: a nine-month certificate of deposit (CD) and a first-time home buyers mortgage program. Carver sought to attract new clients wishing to "declare financial independence." The campaign also allowed Carver to showcase its 50-year anniversary, a milestone for a minority-focused bank.

CHRONOLOGY: Key Dates for Carver Bancorp Inc.


Carver Bancorp Inc. is established in Harlem


Carver begins offering ATM services


The firm completes its IPO


Thomas L. Clark, Jr. is hired as CEO


Deborah C. Wright takes over as CEO


Carver begins a first-time home buyers mortgage program


The location of Carver Bancorp Inc.'s headquarters, on Harlem's well-known 125th St., is a reflection of the bank's commitment to serving inner city neighborhoods. Although Carver's headquarters burned down in 1992, the firm chose to rebuild in Harlem, which remains one of the more poverty-stricken neighborhoods in New York City.


A major cause of Carver's financial troubles in the 1980s and 1990s was its structure as a traditional minority bank. Like other minority banks, Carver's headquarters building was located in a major metropolitan area, which meant operating costs were much higher than those of banks operating from less pricey areas. In addition, Carver's banking activities were limited to offering standard savings and checking accounts and investments in money market funds and securities, neither of which produced high returns. For most banks, the interest paid on loans proves to be a major source of profits. Because Carver's loan-asset ratio (the percentage of assets attributable to loans), was a mere 17 percent in 1993, Carver struggled to generate enough revenue to cover expenses. This prompted the firm's decision to increase its loan offerings in the mid-1990s.


Carver offers traditional checking and savings accounts; a range of investment vehicles, such as CDs and Individual Retirement Accounts (IRAs); money market accounts; mortgage loans; auto loans; consumer loans; and business loans. Online banking services and a debit card are scheduled for launch in mid-2002.


Via the Carver Federal Scholarship Fund, Carver Bancorp Inc. offers annual college tuition scholarships, worth up to $3000, to its customers and their family members.



agosta, veronica. "at carver, the ceo has control; now comes the hardest part." american banker, 30 october 2000.

carver bancorp inc. home page, 2002. available at

gandel, stephen. "2 minority focused banks put money on ny expansion." crain's new york business, 17 january 2000.

oestricher, dwight. "carver's in for a fight." black enterprise, january 1999.

smith, eric l. "financial news: a deal to bank on." black enterprise, may 1998.

sullivan, joanna. "carver, slowly reviving, doesn't lack for critics." american banker, 19 may 1997.

whiteman, louis. "carver rejects sweetened bid from persistent boston suitor." american banker, 21 april 1999.

For additional industry research:

investigate companies by their standard industrial classification codes, also known as sics. carver bancorp inc.'s primary sics are:

6035 savings institutions federal chartered

6712 bank holding companies

also investigate companies by their north american industry classification system codes, also known as naics codes. carver bancorp inc.'s primary naics codes are:

522120 savings institutions

551111 offices of bank holding companies

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Carver Bancorp Inc.

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