investorscraft@gmail.com

Carver Bancorp, Inc. (CARV)

Previous Close
$1.83
Sector Valuation Confidence Level
High
Valuation methodValue, $Upside, %
Artificial intelligence (AI)1539.6584034
Intrinsic value (DCF)2.3528
Graham-Dodd Method5.66209
Graham Formulan/a

Strategic Investment Analysis

Company Overview

Carver Bancorp, Inc. (NASDAQ: CARV) is the holding company for Carver Federal Savings Bank, a New York-based community bank serving consumers, businesses, non-profits, and government agencies since 1948. Specializing in retail and commercial banking, Carver offers deposit products (checking, savings, CDs, IRAs) and lending solutions, including residential, multifamily, and commercial real estate loans, as well as SBA and consumer loans. Its digital services include online banking, bill pay, and prepaid cards, complementing its seven branches and four ATMs in the New York metro area. As a Minority Depository Institution (MDI), Carver plays a critical role in financial inclusion, focusing on underserved communities. Despite its niche focus, the bank faces challenges from larger regional competitors and economic sensitivity due to its concentrated geographic footprint and elevated beta (1.26). With a market cap of $7.6M and negative EPS (-$0.61), Carver’s turnaround potential hinges on improving asset quality and leveraging its community ties.

Investment Summary

Carver Bancorp presents a high-risk, speculative investment case. Its micro-cap status ($7.6M), negative net income (-$2.98M), and negative operating cash flow (-$6.57M) raise liquidity concerns, though $59M in cash provides a buffer. The bank’s 1.26 beta indicates volatility, likely tied to its exposure to New York’s cyclical real estate market (multifamily/commercial loans comprise 70%+ of its portfolio). However, its MDI status and CRA-advantaged lending could attract ESG-focused investors or acquisition interest. Near-term catalysts include cost-cutting (branch efficiency) and SBA loan growth, but profitability hinges on reducing credit costs (elevated net charge-offs) and deposit cost management. Dividend unlikely (zero payout). Suitable only for investors comfortable with turnaround plays in community banking.

Competitive Analysis

Carver Bancorp competes in the hyper-competitive New York regional banking sector, where scale and digital capabilities dominate. Its primary advantage is niche focus: as one of few Black-owned MDIs, it has deep relationships with underserved demographics (minority-owned businesses, affordable housing developers), often overlooked by larger banks. This allows higher-yielding SBA and multifamily lending but comes with elevated credit risk (evidenced by recent losses). Geographically, Carver’s seven-branch footprint is outsized by rivals like Flushing Financial (50+ branches) and Dime Community Bancorp (30+), which benefit from lower funding costs and tech investments. Carver’s lack of scale shows in efficiency ratios (~80% vs. peers at 50–60%) and limited digital offerings (no mobile app until 2022). Its loan portfolio is also less diversified, with heavy CRE exposure (regulatory scrutiny risk). Competitively, Carver survives via mission-driven deposits and government partnerships (e.g., NYC Banking Development Districts), but long-term viability requires either radical efficiency gains or strategic acquisition.

Major Competitors

  • Flushing Financial Corporation (FFIC): Flushing Financial (NASDAQ: FFIC) operates 50+ branches in NYC, offering similar community banking services but with stronger profitability (positive EPS) and a diversified loan book. Strengths include robust multifamily lending and lower-cost deposits. Weaknesses include exposure to NYC rent-regulated buildings. Outscales Carver in tech and footprint.
  • Dime Community Bancorp (DCOM): Dime (NASDAQ: DCOM) focuses on NYC commercial real estate with 30+ branches. Strengths include higher net interest margins and a digital-first strategy. Weaknesses include CRE concentration risks. Competes directly with Carver in multifamily lending but with 10x the market cap and better cost control.
  • Broadway Financial Corporation (BYFC): Another MDI (Black-owned) and Carver’s closest peer, Broadway (NASDAQ: BYFC) operates in LA with similar challenges (negative EPS, small scale). Strengths include CRA lending niche. Weaknesses mirror Carver’s: high overheads and geographic concentration. Both are acquisition targets for larger banks seeking CRA credit.
HomeMenuAccount