Dive Brief:

• By a narrow margin, shareholders of Black-owned Carver Federal Savings Bank voted Thursday at the bank’s annual meeting to reelect two board incumbents, fending off an activist investor’s attempt to install two directors to the board.
• However, Greg Lewis, the CEO of Dream Chasers Capital Group, protested the results, saying new CEO Donald Felix and the New York-based bank’s board allowed voting to occur 45 minutes past the deadline.
• Lewis issued a series of post-meeting demands Friday, including an accounting of “any high-pressure sales calls” made to large shareholders in the days leading up to the vote, and asserted that Dream Chasers “will pursue every avenue available to ensure a fair and transparent election.”

Dive Insight:

Carver’s incumbent board members Jillian E. Joseph and Kenneth J. Knuckles received 1,728,980 votes and 1,669,720 votes, respectively, according to preliminary results from Thursday’s meeting filed with the Securities and Exchange Commission. Joseph is the associate general counsel at TIAA’s asset-management arm, Nuveen; Knuckles, the CEO of the Upper Manhattan Empowerment Development Corp.

Those shares put them just ahead of Dream Chasers’ nominees Jeffrey Anderson and Jeffrey John Bailey, who received 1,662,387 and 1,605,764 votes, respectively. Anderson is an 11-year JPMorgan Chase veteran; Bailey is Carver’s largest individual shareholder.

But Lewis called out “a concerning set of unconventional practices” at the meeting, accusing the bank’s board of allowing more time for shareholders to vote than the proxy filed in October had indicated. Lewis urged Felix and the board “to provide clarity, certainty and transparency to shareholders,” the news release said. 

“If the preliminary results that Carver disclosed are accurate, then our nominees received essentially the same amount of votes as the sitting Directors,” Lewis said in the release. “We believe that the strong response from retail shareholders demands action from the Board. Conducting a Board vote under a cloud of uncertainty is no way for Mr. Felix to begin his tenure.”

The bank didn’t immediately respond to a request for comment Monday. In an email exchange following the meeting between Marc Levy, a Luse Gorman partner representing Carver, and Dream Chasers’ counsel Drew Chapman, Levy defended the board’s move to Chapman, noting polls closed at noon. “Some delay to allow shareholders of record the ability to vote is a good practice and is not the least bit unusual,” Levy wrote. Dream Chasers filed that correspondence with the SEC. 

In a letter to Felix and the bank’s board, Lewis said allowing extra time for voting “should make shareholders wonder if you were seeking to tip the scales in your favor.” 

Lewis’ demands included real-time vote totals for each candidate in 15-minute increments, starting at 9 a.m. Eastern Thursday, and “a full accounting of any high-pressure sales calls you made to large shareholders in the final days of the campaign, including any offers, promises or assurances provided to shareholders to sway their vote.”

Carver’s proxy alluded to the high stakes, telling shareholders their vote at this year’s meeting was “especially important” in light of Dream Chasers’ intention to nominate Bailey and Anderson. The bank urged shareholders to vote for Joseph and Knuckles. 

In his letter, Lewis also called on the bank to disclose questions submitted during the meeting, since Felix noted on the call that no “relevant questions” were submitted by shareholders.

During the meeting, an advisory “say-on-pay” proposal didn’t garner enough support for approval, which Lewis contended reflected “shareholders' dissatisfaction with the Board's management of compensation. We believe appointing Mr. Anderson and Mr. Bailey is an important gesture to ensure that decisions on compensation going forward more clearly reflect shareholders' perspectives.”

Dream Chasers made the same pitch for Bailey and Anderson in July, but the firm says it owns a larger stake in the bank now (9.7%) than it did then (5.5%). Carver has also installed a new CEO to spearhead a turnaround: Felix took the helm Nov. 1. 

Dream Chasers, a minority-owned investment firm, has been a thorn in Carver’s side for more than a year now. The investment fund has attempted what it dubbed a “hostile takeover” of the bank; the bank rebuffed that attempt, saying “association” with Dream Chasers was not in the best interest of Carver, its shareholders or stakeholders. 

Lewis said in November the bank’s board is “unaligned” with shareholder interests “and has no incentive to do what is necessary to right the ship.” The bank, released from a formal agreement with the Office of the Comptroller of the Currency in 2023 that ordered the lender to make a number of improvements, reduced its fiscal 2024 loss by 32%, to $3 million, Carver reported in July.

Lewis’ letter to Felix and the board suggested Dream Chasers isn’t likely to abandon its activist approach. 

“Given your behavior, and the extremely close preliminary results that you disclosed after the meeting, you should recognize that you and your nominees have no mandate,” Lewis scolded.