ExChanging Places

Deborah C. Wright, Chairman and CEO of Carver Bancorp Inc. (No. 1 on the be banks list with $764.9 million in assets), recently rang The Nasdaq Stock Market ceremonial closing bell in Times Square to celebrate Carver’s listing on the exchange. Carver had previously been traded on the American Stock Exchange. Carver Federal Savings Bank is the nation’s largest African and Caribbean American-operated bank, and one of only two black banks on the Nasdaq. “Being associated with the Nasdaq brand is a real advantage for Carver,” says Wright. “It is a high-growth, high-profitability electronic platform, which allows for quicker and less expensive execution.”

Experts advised Carver that in a move from Amex to the Nasdaq, trading volatility could initially increase but should stabilize over time. The recent listing is one of several indicators of growth for an institution that will celebrate its 60th anniversary next year. “Unlike other companies that are experiencing severe credit issues, our portfolio is performing very well,” says Wright. Carver has increased dividends every year for the last four years. Even after spending $11 million to acquire Community Capital Bank in September 2006, Carver boasts a net income of $2.6 million ending fiscal year 2007. The purchase afforded Carver the capability to enter the small-business lending arena. “It was something our customers wanted us to do for some time, but we did not have the expertise,” Wright reflects.

Joe Gladue, equity analyst with B. Riley & Co., asserts that Carver is poised to jump in on a hot market: “There is a ready market for SBA loans, and in the secondary market a lot of investors like to buy SBA packages because they carry a guarantee from the federal government.”

Carver currently operates 10 full-service branches in New York City. Wright says the management team will also focus on expanding its geographic reach, customer base, and new lines of business for its customers in the inner city. She identified other regions in New York, New Jersey, and Connecticut as possible branch locations. “We are constantly looking at acquisition possibilities that are the right fit,” says Wright.

Gladue disagrees with such a strategy. “I wouldn’t encourage them to actively look at other acquisitions,” he maintains. “I’m sure they still have some work to do integrating the various systems from the Community Capital acquisition.”

However, he applauds Wright’s turnaround plan over the past decade. “[In 1999], Wright inherited a bank that was habitually underperforming and had a very bloated cost structure,” says Gladue. “She did a good job of getting rid of some underperforming branches before starting to expand. The bank is more efficient than it used to be, but it could stand to improve further.”

However, Gladue says that Carver’s commercial and industrial lending portfolio should be beefed up. “That is really key to the profitability of the bank,” he says. “For a small bank like Carver in a big competitive market, that is going to remain their biggest challenge.”