Carver Federal Savings Bank, the nation's largest minority-owned thrift, got a wake-up call from downtown last week when a Wall Streeter launched a bid to take a controlling stake.
Joseph Curry, a heretofore unknown corporate raider, messengered a letter to Carver's board late Friday, demanding that Monday's annual meeting be postponed to allow consideration of his offer to buy 35% of the thrift's outstanding stock.
The board went ahead with the meeting, at which Carver's conversion to a holding company structure was approved. The thrift said its board would consider Mr. Curry's proposal next month. No further official word has been heard from Mr. Curry since the letter was sent, and he didn't show up at the annual meeting.
But that didn't stop Mr. Curry from alerting the New York media to his offer to pay up to $9.20 a share - or a 15% market premium - for a 35% stake for the $362 million-asset thrift. By Monday morning, a matter that Carver chief executive James L. Clark Jr. had planned to keep private "until the appropriate time" had been revealed in The New York Times and the Post.
"I don't know Mr. Curry or anything about him," said an angered Mr. Clark. "He tried to sell us some mortgages a couple of years ago when he was at Bear, Stearns. All we know is that he's sent us this unconfirmed offer and that he's been talking to all the media."
Mr. Clark said he could not hold up the annual meeting based on a preliminary offer for the stock. He also said the offer was of "questionable legality."
Mr. Curry could not be reached for comment. A Bear, Stearns & Co. spokesman confirmed that Mr. Curry was a managing director at the New York investment house from 1984 until July 6, working in the financial services group advising - and selling securities to - banks and thrifts. Since a copy of his letter was not made available to the American Banker, it's not known if he is leading a group of investors or acting on his own behalf.
According to published accounts of Mr. Curry's comments, he believes Carver Federal, one of the largest black-controlled financial institutions in the country, is overcapitalized and not doing enough to enhance shareholder value.
"I don't think the bank has served any of its constituents well - shareholders, depositors, or the community," Mr. Curry told the Times.
But Mr. Clark took strong issue with that assessment.
"We're here to enhance shareholder value and we've been doing an incredible job serving our depositors and our community," he said. "I don't know what kind of experience he has running a bank, but I've been in banking for 24 years."
Mr. Clark noted that Carver has been bulking up its balance sheet with loan purchases to get higher returns and has increased its lending capabilities in the areas of Harlem, the Bronx, and Queens where it has been established since 1949. He said that many of these communities are experiencing an economic upsurge, spurred by increasing real estate prices, adding that Carver is uniquely positioned to profit from it.
"Mr. Curry is obviously a Johnny-come-lately," he said.
Analysts watching the situation, however, said Carver is a very good candidate for such hostile offers. It's loan-to-deposit ratio is a meager 32% and it's earnings have been underperforming for years - its 0.3% first- quarter figure was as strong a return on assets as it has posted in any of the three previous years. It has better asset quality than most of its peers, however.
In addition, Carver is still fairly new as a stock institution, having converted from mutual form in 1994. Such institutions in the Northeast have been favorite targets of shareholder activists, who charge in most cases that management is unable to leverage capital for better performance.
James Benson at Ryan, Beck & Co. in West Orange, N.J., said that since Carver's $8-a-share trading price is a steep discount from its book value, it's not surprising that the thrift has gained interest from acquirers.
"A lot of investment bankers have been looking at institutions like this for opportunities like this," said William Michael Cunningham, head of Creative Investment Research in Washington. "It might be a pretty good buyout offer. And the renewed economic opportunity in Harlem is likely one of the reasons why it's being made."