Carver directors win re-election after controversial vote

Carver Bancorp shareholders narrowly re-elected two incumbent directors Thursday in a show of support for recently appointed CEO Donald Felix, but the leader of an activist investor group claimed the board kept the voting open longer than it should have. He is threatening to mount a legal challenge to the result. 

According to Greg Lewis, CEO of Dream Chasers Capital, Carver’s board adjourned the company’s annual meeting for an hour after initially calling for votes. While the meeting ultimately concluded as scheduled at noon, Lewis charged the board with improperly extending the voting. 

“If Carver doesn’t have the votes for their directors, then the shareholders have spoken,” Lewis said Thursday in a statement made public immediately after the annual meeting concluded.  “Keeping the voting open is an outrage and we will pursue every avenue available to ensure a fair and transparent election.”

Carver officials said the director election was conducted fairly and that the best path to a turnaround lies in supporting the board and management. “Greg Lewis now needs to decide if he’s in it for value creation or just headlines,” a source close to Carver said Thursday.  

Carver released voting results late Thursday. While its candidates, Jillian Joseph and Kenneth Knuckles, prevailed, less than 7,000 shares separated Knuckles from Lewis. Dream Chasers’ other candidate, Jeffrey Bailey, owner of the Orange, California-based Dunham Metal Processing and a 5% stake in Carver, received the fourth-highest share total.

The adjournment prompted a flurry of emails Thursday between Carver’s attorney, Marc Levy, a partner with Luse Gorman, and counsel representing Dream Chasers, Drew Chapman, chairman of the corporate practice at Hamilton Clarke. Dream Chasers disclosed the correspondence in a filing with the Securities and Exchange Commission. Writing to Levy, Chapman asserted “delaying the vote as the company has done potentially interferes with the integrity of the election process, disenfranchises shareholders and may have a deleterious effect on the corporate franchise.” 

 “Our client reserves all of its rights and remedies under law and in equity,” Chapman added. 

In response, Levy wrote that “some delay to allow shareholders of record the ability to vote is a good practice and is not the least bit unusual. The delay was a short one and, as you know, the polls were closed at noon.”

Carver is the holding company for the $749 million-asset, 75-year-old Carver Federal Savings Bank, one of the nation’s oldest and largest Black-operated banks. Dream Chasers mounted an unsuccessful attempt to acquire a controlling stake in Carver earlier this year. The group previously announced plans to contest the two board seats up for election. 

Carver has struggled since entering into a formal agreement with the Office of the Comptroller of the Currency in 2016. Carver was released from the agreement in February 2023, but it has continued to experience difficulty regaining its footing, grappling with higher interest rates and a fiercely competitive New York banking market. 

Carver, which operates on an April-through-March fiscal year, reported losses totaling $4.4 million and $3 million in 2023 and 2024. The losses have extended into the first six months of fiscal 2025, totaling $4.3 million. 

According to Lewis, Carver’s string of losses demonstrated a need for shaking up the board. “All this board has to show after ten years at the helm is a once promising 75-year-old bank with $9.4 million in market capitalization and a $1.83 stock price,” Lewis stated Monday in a letter to shareholders. 

Carver said Felix, a veteran banker who held high-ranking positions at Citigroup, JPMorgan Chase and Citizens Financial before joining Carver as CEO on Nov. 1, should be given a chance to implement a turnaround strategy. 

“Change is here with Donald Felix,” the source close to Carver told American Banker.