Dream Chasers Urges Institutional Shareholders to Join Retail Holders to Drive Change at Carver

Rhea-AI Summary

Dream Chasers Capital Group has issued an open letter urging institutional shareholders of Carver Bancorp (NASDAQ: CARV) to support board nominees Jeffrey Anderson and Jeffrey Bailey at the December 12, 2024 Annual Meeting. The letter highlights Carver's poor performance, including losses of nearly $25 million over the last decade and a 79% decline in shareholder value over ten years. ISS has noted Carver's 'long history of TSR and operational underperformance' and need to rethink strategy. Dream Chasers calls on major investors like National Community Investment Fund, Bank of America, J.P. Morgan, and American Express to drive change in leadership.

Positive

• Jeffrey Anderson brings experience overseeing $100 billion in deposits as former J.P. Morgan executive
• Jeffrey Bailey is Carver's largest individual shareholder, bringing direct shareholder representation to the board

Negative

• Company has lost nearly $25 million over the last decade
• Only one profitable year in the last ten years
• 79% decline in shareholder value over ten years
• 36% share price decline since National Community Investment Fund's investment
• Poor corporate governance framework noted by ISS

Insights

Financial Analyst

This proxy battle at Carver Bancorp represents a significant development for investors. The dissenting shareholder group highlights concerning financial metrics: $25 million in losses over a decade and a devastating 79% decline in shareholder value. The involvement of major institutional investors like Goldman Sachs, JP Morgan and Bank of America adds weight to this situation.

The proposed board nominees bring relevant expertise - particularly Jeff Anderson's experience managing $100 billion in deposits at JP Morgan. The ISS report citing poor TSR and operational performance provides independent validation of the activists' concerns. With the December 12 vote approaching, this represents a critical inflection point for CARV's governance and strategy.

Banking Industry Expert

The activist campaign targets fundamental issues plaguing minority-owned banks - balancing community service with profitability. With only one profitable year in the past decade (driven by a one-time real estate sale), Carver's business model needs urgent reform. The 36% decline in share value since NCIF's recent investment demonstrates the risks of maintaining status quo.

The proposed changes could help modernize operations while maintaining the bank's community focus. However, execution will be critical given Carver's small $9.4 million market cap and the challenging environment for community banks.

Letter calls on National Community Investment Fund, Bank of America, J.P. Morgan, American Express and other community-focused investors to help drive improved performance

Says continued support of under-performing Board does the community and Carver no good

Urges all shareholders to vote for change: Vote FOR Mr. Jeffrey "Jeff" Anderson and Mr. Jeffrey Bailey for the Board of Directors using the BLUE proxy card and vote WITHHOLD on Carver's under-performing Directors

ISS finds that Carver's "long history of TSR and operational underperformance suggest that the bank needs to rethink its strategy and its approach to execution"

NEW YORK, Dec. 2, 2024 /PRNewswire/ -- Dream Chasers Capital Group LLC ("Dream Chasers") today called on large financial institutions and funds that have invested in Carver Bancorp, Inc. ("Carver," or the "Company") (NASDAQ: CARV) to support nominees that will drive change on the Carver Board of Directors (the "Board"). While these investors' support of Carver over the years has been admirable, we can all agree it is counterproductive to support a Board that has presided over a prolonged period of poor performance.

In an open letter, Dream Chasers urged institutional shareholders to vote for Mr. Jeffrey "Jeff" Anderson and Mr. Jeffrey Bailey for election to the Board ahead of the December 12, 2024 Annual Meeting of Shareholders.

"We are encouraged by the support of many retail investors who have watched the value of their Carver shares drop significantly," said Greg Lewis, Chief Executive Officer of Dream Chasers Capital Group. "Our nominees' experience and perspective on how to drive profitability, support the community and move Carver forward can only benefit institutional shareholders. If Carver's Board thinks Jeff Anderson, an accomplished former J.P. Morgan executive who oversaw $10O billion in deposits, is not qualified then we are not sure who is qualified. Jeff Bailey is a highly successful businessman and Carver's largest individual shareholder who will bring the voice of the shareholder to the Board."

Lewis continued, "No bank or investment fund would tolerate such prolonged poor performance in their own organizations, and we shouldn't accept it from Carver. Mr. Anderson and Mr. Bailey will work hard for institutional shareholders as well as for the individual investor with only a small number of shares. We encourage all shareholders to vote for change and support these highly qualified and independent nominees. We stand ready to work with all retail and institutional shareholders to make sure Carver's best days are ahead."

As Dream Chasers has pointed out, Carver's Board has presided over losses of nearly $25 million over the last decade, and just one year of annual profits in the last ten¹. Shareholders have seen the value of their investments decline by 79% over ten years². 

Recently, Institutional Shareholder Services reported that Carver's performance and corporate governance are lacking, telling institutional investors in a recent report that³:

• Carver's "long history of TSR and operational underperformance suggest that the bank needs to rethink its strategy and its approach to execution,"
  
  
• The "company's overall operating results have been poor for the last several years, and have continued to be disappointing thus far in FY 2025," and
  
  
• "The company's corporate governance framework includes several features that do not align with the best interest of shareholders."

Dream Chasers urged institutional investors to conclude that there is a clear case for change on the Board.

The full text of the letter to institutional shareholders is below:

Dear Fellow Carver Shareholders:

After a decade of poor performance, it is time for change on the Carver Bancorp ("Carver" or the "Company") Board of Directors (the "Board") to improve the value of our investments.

Over the years, a number of financial institutions such as Goldman Sachs, Bank of America, J.P. Morgan, American Express and the National Community Investment Fund have invested in Carver in order to support an African American operated bank that serves lower- and middle-income communities in New York.

While that investment in Carver is admirable, we think continuing to support a Board that has presided over prolonged losses and shareholder value destruction is a mistake. Simply put, it does the community and Carver no good to back a Board that has overseen operating losses, share price declines, and poor performance for such a long period of time. If Carver is to continue its vital, decades-long service to New York communities, it must perform better. 

We encourage you to support the successful, qualified and independent nominees that Dream Chasers Capital Group ("Dream Chasers") has put forward. Jeffrey "Jeff" Anderson is an accomplished financial services and retail banking executive. Jeffrey Bailey is a successful business leader and Carver's largest individual shareholder. These nominees have the independent judgment, financial experience, and focus on profitability and shareholder returns that is desperately needed on Carver's Board.

As you are undoubtedly aware, Carver has posted losses totaling nearly $25 million in the last decade. The Company has earned an annual profit just once in that span, thanks to the sale of their headquarters building in 2018 that turned another year of losses into a one-time gain⁴. Shareholders – including you – have suffered, with a 10-year total shareholder return of -79%.

We should have a higher standard in our community. None of you would tolerate such lackluster performance in your own organizations. How can it be acceptable at Carver?

When the National Community Investment Fund (the "Fund") bought 378,788⁵ Carver shares last summer, it said that it did so because of the Bank's "mission-aligned impact and growth potential". Since then, Carver's shares have declined by 36%, meaning the Fund's $1 million investment is now worth $636,363.84⁶. To better protect its own interests – and to advance the Fund's own mission – we think it is crucial to demand better results, a return to profitability, and new voices on the Board.

Similarly, when Goldman Sachs, Morgan Stanley, American Express and others invested $55 million in Carver in 2011, Goldman's then CEO said that it was doing so to "ensure that these neighborhoods continue to grow and thrive"⁷. The firms who have invested in Carver should demand better results, and recognize that a bank losing money year after year is missing the opportunity to support their communities and neighborhoods.

Recently, Institutional Shareholder Services ("ISS"), a leading proxy advisory firm, pointed out that Carver's "long history of TSR and operational underperformance suggest that the bank needs to rethink its strategy and its approach to execution". Yet, despite the clearly abysmal performance, ISS suggests that there isn't a "case for change" on the Board. Ask yourselves: If a decade of losses does not constitute a case for change, then what does?

The time to take action to ensure Carver's long-term success, profitability and role in the community is now. We must not allow further losses and shareholder value declines to prevent Carver from serving the communities in New York that need its services.

We urge you to support Mr. Anderson and Mr. Bailey to join the Board and help Carver return to growth. If you have any questions concerning the proxy materials or need assistance voting your shares, please contact our proxy solicitor, Okapi Partners by calling (877) 629-6356 (toll-free) or via email at info@okapipartners.com.

We stand ready to work with you to make certain that Carver's future is bright.

Sincerely,

Greg Lewis
Dream Chasers Capital Group

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The information herein contains "forward-looking statements." Specific forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and include, without limitation, words such as "may," "will," "expects," "believes," "anticipates," "plans," "estimates," "projects," "potential," "targets," "forecasts," "seeks," "could," "should" or the negative of such terms or other variations on such terms or comparable terminology. Similarly, statements that describe our objectives, plans or goals are forward-looking. Forward-looking statements are subject to various risks and uncertainties and assumptions. There can be no assurance that any idea or assumption herein is, or will be proven, correct. If one or more of the risks or uncertainties materialize, or if any of the underlying assumptions of Dream Chasers Capital Group LLC ("Dream Chasers") or any of the other participants in the proxy solicitation prove to be incorrect, the actual results may vary materially from outcomes indicated by these statements. Accordingly, forward-looking statements should not be regarded as a representation by Dream Chasers that the future plans, estimates or expectations contemplated will ever be achieved.

Certain statements and information included herein may have been sourced from third parties. Dream Chasers does not make any representations regarding the accuracy, completeness or timeliness of such third party statements or information. Except as may be expressly set forth herein, permission to cite such statements or information has neither been sought nor obtained from such third parties. Any such statements or information should not be viewed as an indication of support from such third parties for the views expressed herein.

Dream Chasers disclaims any obligation to update the information herein or to disclose the results of any revisions that may be made to any projected results or forward-looking statements herein to reflect events or circumstances after the date of such information, projected results or statements or to reflect the occurrence of anticipated or unanticipated events.

IMPORTANT INFORMATION AND WHERE TO FIND IT

DREAM CHASERS STRONGLY ADVISES ALL STOCKHOLDERS OF THE COMPANY TO READ ITS DEFINITIVE PROXY STATEMENT, ANY AMENDMENTS OR SUPPLEMENTS TO SUCH PROXY STATEMENT AND OTHER PROXY MATERIALS FILED BY DREAM CHASERS WITH THE SEC AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE SEC'S WEBSITE AT WWW.SEC.GOV. THE DEFINITIVE PROXY STATEMENT AND OTHER RELEVANT DOCUMENTS ARE ALSO AVAILABLE ON THE SEC WEBSITE, FREE OF CHARGE, OR BY DIRECTING A REQUEST TO THE PARTICIPANTS' PROXY SOLICITOR, OKAPI PARTNERS LLC, 1212 AVENUE OF THE AMERICAS, 17TH FLOOR, NEW YORK, NEW YORK 10036-1600. STOCKHOLDERS CAN CALL TOLL-FREE: (877) 629-6356.

Contacts
For Media:

Breitenbush Partners
Andrew Wilson, (773) 425-4991
awilson@breitenbushpartners.com 

For Investors:

Okapi Partners
Bruce Goldfarb/Tony Vecchio
(877) 629-6356
(212) 297-0720
info@okapipartners.com

About Dream Chasers Capital Group

Dream Chasers Capital Group LLC is a New York City based minority owned investment firm. More information can be found at www.dreamchaserscapitalgroup.com.

_______________________

¹ Reflects net income attributable to Carver Bancorp for the years 2014 to 2023, according to Company SEC filings and S&P Capital IQ Pro.
² CARV share price and shareholder returns data as of October 23, 2024, one day prior to the filing of Dream Chasers Capital Group's preliminary proxy statement. Source: S&P Capital IQ Pro.
³ Permission to use quotes neither sought nor obtained.
⁴ Income before taxes would have been -$4.3 million excluding the $9.6 million gain on sale, as reported in Carver's 2018 Form 10-K filed with the SEC, which can be found at https://www.sec.gov/Archives/edgar/data/1016178/000101617818000008/fy201810kdocument.htm
⁵ Source: https://www.prnewswire.com/news-releases/carver-bancorp-inc-successfully-completes-1-000-000-private-placement-with-national-community-investment-fund-301892135.html
⁶ Based on CARV share price on October 23, 2024, one day prior to the filing of Dream Chasers Capital Group's preliminary proxy statement. Source: S&P Capital IQ Pro.
⁷ Source: https://www.globenewswire.com/news-release/2011/06/29/450410/7036/en/Carver-Bancorp-Inc-Raises-55-Million-in-New-Equity-Capital-From-Institutional-Investors.html

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SOURCE Dream Chasers Capital Group

FAQ

What is the total loss reported by Carver Bancorp (CARV) over the past decade?

Carver Bancorp (CARV) has reported losses totaling nearly $25 million over the past decade.

When is Carver Bancorp's (CARV) Annual Meeting of Shareholders scheduled for 2024?

Carver Bancorp's Annual Meeting of Shareholders is scheduled for December 12, 2024.

What was Carver Bancorp's (CARV) total shareholder return over the past 10 years?

Carver Bancorp (CARV) has experienced a negative total shareholder return of -79% over the past 10 years.

Who are the board nominees proposed by Dream Chasers for Carver Bancorp (CARV)?

Dream Chasers has nominated Jeffrey 'Jeff' Anderson, a former J.P. Morgan executive, and Jeffrey Bailey, Carver's largest individual shareholder.