Harlem-Based Bank Needs $20 Million to Stay Afloat, Report Says
By Jeff Mays
HARLEM—Carver Federal Savings, the Harlem-based institution that is the largest black-owned bank in the country, is trying to raise $20 million from investors to avoid being seized, sold or closed, Crain's New York Business reported.
The 63-year-old bank is suffering from a high rate of real estate loan failure, Crain's said. Approximately $74 million in loans are overdue, but the bank has only $21 million in reserve to cover losses.
Michael Herley, a spokesperson for Carver Bancorp, told DNAinfo that the company is working to raise the additional capital in order to continue to serve the needs of the minority and low-income communities where its branches are located.
"The Bank remains rooted in expanding wealth enhancing opportunities in the communities it serves, by expanding access to capital and financial advice, to consumers, businesses and non-profit organizations, including faith-based institutions," Herley said.
The recent real estate and mortgage crisis is the cause of the problem, Herley said.
"Carver was profitable for seven consecutive fiscal years," he said. "The losses we have suffered in our most recent two fiscal years are consistent with the conditions all banks have been grappling with: an unprecedented recession, with particular strain on real estate assets" he added.
Carver CEO Deborah Wright told shareholders at the bank's annual meeting at the Studio Museum in Harlem that they could help by depositing additional funds in the bank because deposits are federally insured up to $250,000, according to the paper.
"There is a future for this institution, we believe," Wright told the roughly 100 people gathered at the meeting, Crain's reported.
The bank, which has nine branches in Manhattan, Brooklyn and Queens has assets of $740 million. It is well-regarded as a community institution that helps small business and first-time home buyers.
"It's a true community institution," Lucille McEwen, CEO of Harlem Congregations for Community Improvement, told Crain's. "Carver partners with us on housing counseling, home-ownership initiatives and financial literacy. It's where families get their first mortgages and kids open their first bank accounts."
Herley said the bank is now focusing on serving the unbanked, or people who rely on check cashing institutions for most of their financial services. He estimated that 65 percent of the people in the communities where Carver is located do not have bank accounts.
"Carver recently launched such a product line, including check cashing, bill payment, pre‐paid debit cards, and remittances. We're very pleased with our initial results and intend to roll this product line out to all of our nine branches over the next three months," Herley said.