----

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**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**_________________**

**FORM        10-K/A**

**(Amendment      No. 1)**

**FOR      ANNUAL AND TRANSITION REPORTS PURSUANT TO**

**SECTIONS      13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

| **x** | **ANNUAL                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934** |
|-------|---------------------------------------------------------------------------------------------------------------------------------------|

**For      the fiscal year ended March 31, 2007**

**OR**

| **o** | **TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934** |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------|

**For      the transition period from _________ to _________**

** 1-13007**

**CARVER      BANCORP, INC.**

*(Exact      name of registrant as specified in its charter)*

| ***Delaware***                                                                                                    |   | ***13-3904174***                                           |
|-------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------|
| (State                or Other Jurisdiction of  Incorporation or                Organization)           |   | (I.R.S.                Employer Identification No.)        |
|                                                                                                              |   |                                                       |
| ***75                West 125th                Street, New                York, New York***                       |   | ***10027***                                                |
| (Address                of Principal Executive Offices)                                                           |   | (Zip                Code)                                  |
|  *Registrant’s                telephone number, including area code:**(718)                230-2900*** |
| ***Securities                Registered Pursuant to Section 12(b) of the                Act:***              |
| ***Common                Stock, par value $.01 per share***                                                       |   | ***American                Stock Exchange***               |
| (Title                of Class)                                                                                   |   | (Name                of each Exchange on which registered) |
|  ***Securities                registered pursuant to Section 12(g) of the                Act:***             |
|  ***None***                                                                                             |

| o                Large Accelerated                Filer | o                Accelerated                Filer | x                Non-accelerated                Filer |
|---------------------------------------------------------|---------------------------------------------------|-------------------------------------------------------|

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ARV

| Part                I        |                                                                                                                                             | Page   |
|------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Item                1.       | Business                                                                                                                                         | 2      |
| Item                1A.      | Risk                Factors                                                                                                                      | 30     |
| Item                1B.      | Unresolved                Staff Comments                                                                                                         | 33     |
| Item                2.       | Properties                                                                                                                                       | 33     |
| Item                3.       | Legal                Proceedings                                                                                                                 | 35     |
| Item                4.       | Submission                of Matters to a Vote of Security                Holders                                                                | 35     |
|                         |                                                                                                                                             |   |
| Part                II       |                                                                                                                                             |   |
|                         |                                                                                                                                             |   |
| Item                5.       | Market                for Registrant’s Common Equity, Related Stockholder                Matters and Issuer Purchases of Equity Securities | 35     |
| Item                6.       | Selected                Financial Data                                                                                                           | 38     |
| Item                7.       | Management’s                Discussion and Analysis of Financial Condition                and Results of Operations                   | 39     |
| Item                7A.      | Quantitative                and Qualitative Disclosures About Market                Risk                                                         | 52     |
| Item                8.       | Financial                Statements and Supplementary Data                                                                                       | 52     |
| Item                9.       | Changes                in and Disagreements With Accountants on Accounting                and Financial Disclosure                          | 87     |
| Item                9A.      | Controls                and Procedures                                                                                                           | 87     |
| Item                9B.      | Other                Information                                                                                                                 | 88     |
|                         |                                                                                                                                             |   |
| Part                III      |                                                                                                                                             |   |
|                         |                                                                                                                                             |   |
| Item                10.      | Directors,                Executive Officers of the Registrant and Corporate                Governance                                           | 88     |
| Item                11.      | Executive                Compensation                                                                                                            | 88     |
| Item                12.      | Security                Ownership of Certain Beneficial Owners and Management                and Related Stockholder Matters                     | 88     |
| Item                13.      | Certain                Relationships and Related Transactions and Director                Independence                                           | 89     |
| Item                14.      | Principal                Accounting Fees and Services                                                                                            | 89     |
|                         |                                                                                                                                             |   |
| Part                IV       |                                                                                                                                             |   |
|                         |                                                                                                                                             |   |
| Item                15.      | Exhibits,                Financial Statement Schedules                                                                                           | 89     |
|                         |                                                                                                                                             |   |
| SIGNATURES                   | 90                                                                                                                                               |
|                         |                                                                                                                                             |   |
| EXHIBIT                INDEX | E-1                                                                                                                                              |

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*Table          of Contents*

**FORWARD-LOOKING      STATEMENTS**

|   | · | the                Company's success in implementing its new business initiatives, including                expanding its product line, adding new branches and ATM centers and                successfully re-building its brand                image; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | increases                in competitive pressure among financial institutions or non-financial                institutions; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------|

|   | · | legislative                or regulatory changes which may adversely affect the Company’s                business; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------|

|   | · | technological                changes which may be more difficult or expensive than                anticipated; |
|--------|--------|----------------------------------------------------------------------------------------------------------------|

|   | · | changes                in interest rates which may reduce net interest margins and net interest                income; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------|

|   | · | changes                in deposit flows, loan demand or real estate values which may adversely                affect the business; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|

|   | · | changes                in accounting principles, policies or guidelines which may cause                conditions to be perceived                differently; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | litigation                or other matters before regulatory agencies, whether currently existing                or                commencing in the future, which may delay the occurrence or non-occurrence                of events longer than anticipated; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                ability to originate and purchase loans with attractive terms and                acceptable credit quality; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------|

|   | · | success                in integrating Community Capital Bank into existing                operations; |
|--------|--------|-------------------------------------------------------------------------------------------------------|

|   | · | the                ability to realize cost efficiencies;                and |
|--------|--------|-----------------------------------------------------------------------------|

|   | · | general                economic conditions, either  nationally or locally in some or                all areas in which business is conducted, or conditions in the securities                markets or the banking industry which could affect liquidity in the                capital markets, the volume of loan origination, deposit flows, real                estate values, the levels of non-interest income and the amount of                loan                losses. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**PART      I**

**ITEM      1.  BUSINESS**

**OVERVIEW**

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*Table          of Contents*

**GENERAL**

**Carver      Bancorp, Inc.**

----

*Table          of Contents*

**Carver      Federal Savings Bank**

----

*Table          of Contents*

**Available      Information**

**Lending      Activities**

*General*

*Loan        Portfolio Composition*

----

*Table          of Contents*

|                                                |   | **2007**   |    |   | **2006** |   |   | **2005**   |   |   | **2004** |   |   | **2003**   |   |
|-----------------------------------------------------|--------|------------|---------|--------|----------|--------|--------|------------|--------|--------|----------|--------|--------|------------|--------|
|                                                |   | **Amount** |    |   | **Pct.** |   |   | **Amount** |   |   | **Pct.** |   |   | **Amount** |   |   | **Pct.** |   |   | **Amount** |   |   | **Pct.** |   |   | **Amount** |   |   | **Pct.** |   |
| Gross                  loans receivable:            |   |       |    |   |     |   |   |       |   |   |     |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| One-to-four                  family                 |   | $          | 100,910 |   |     |   | 17.2   | %          |   | $      | 143,433  |   |   |       | 28.9   | % |   | $ | 155,797 |   |   |   | 36.7 | % |   | $ | 98,645 |   |   |   | 27.8 | % |   | $ | 71,735 |   |   |   | 24.2 | % |
| Multifamily                                         |   |       | 91,877  |   |     |   | 15.7   | %          |   |   | 104,718  |   |   |       | 21.1   | % |   |   | 101,899 |   |   |   | 24.0 | % |   |   | 120,252 |   |   |   | 33.9 | % |   |   | 131,749 |   |   |   | 44.5 | % |
| Non-residential                                     |   |       | 203,187 |   |     |   | 34.7   | %          |   |   | 154,044  |   |   |       | 31.0   | % |   |   | 116,769 |   |   |   | 27.5 | % |   |   | 102,641 |   |   |   | 28.9 | % |   |   | 79,244 |   |   |   | 26.7 | % |
| Construction                                        |   |       | 137,697 |   |     |   | 23.5   | %          |   |   | 92,511   |   |   |       | 18.7   | % |   |   | 48,579 |   |   |   | 11.4 | % |   |   | 27,376 |   |   |   | 7.7 | % |   |   | 11,539 |   |   |   | 3.9 | % |
| Business                                            |   |       | 51,226  |   |     |   | 8.7    | %          |   |   | 445      |   |   |       | 0.1    | % |   |   | 513 |   |   |   | 0.1 | % |   |   | 4,578 |   |   |   | 1.3 | % |   |   | 385 |   |   |   | 0.1 | % |
| Consumer                  and other (1)             |   |       | 1,067   |   |     |   | 0.2    | %          |   |   | 1,008    |   |   |       | 0.2    | % |   |   | 1,184 |   |   |   | 0.3 | % |   |   | 1,432 |   |   |   | 0.4 | % |   |   | 1,740 |   |   |   | 0.6 | % |
| Total                  loans receivable             |   |       | 585,964 |   |     |   | 100.0  | %          |   |   | 496,159  |   |   |       | 100.0  | % |   |   | 424,741 |   |   |   | 100.0 | % |   |   | 354,924 |   |   |   | 100.0 | % |   |   | 296,392 |   |   |   | 100.0 | % |
|                                                |   |       |    |   |     |   |   |       |   |   |     |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Add:                                                |   |       |    |   |     |   |   |       |   |   |     |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Premium                  on loans                   |   |       | 990     |   |     |   |   |       |   |   | 1,890    |   |   |       |   |   |   |   | 1,743 |   |   |   |   |   |   |   | 1,264 |   |   |   |   |   |   |   | 867 |   |   |   |   |   |
| Less:                                               |   |       |    |   |     |   |   |       |   |   |     |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deferred                  fees & loan discounts |   |       | (994    | )      |     |   |   |       |   |   | (602     | )      |   |       |   |   |   |   | (400 | ) |   |   |   |   |   |   | (163 | ) |   |   |   |   |   |   | (363 | ) |   |   |   |   |
| Allowance                  for loan losses          |   |       | (5,409  | )      |     |   |   |       |   |   | (4,015   | )      |   |       |   |   |   |   | (4,097 | ) |   |   |   |   |   |   | (4,125 | ) |   |   |   |   |   |   | (4,158 | ) |   |   |   |   |
| Total                  loans receivable, net        |   | $          | 580,551 |   |     |   |   |       |   | $      | 493,432  |   |   |       |   |   |   | $ | 421,987 |   |   |   |   |   |   | $ | 351,900 |   |   |   |   |   |   | $ | 292,738 |   |   |   |   |   |

*One-          to Four-Family Residential Lending*

----

*Table          of Contents*

*Multifamily        Real Estate Lending.*

*Non-residential        Real Estate Lending*

----

*Table          of Contents*

*Construction      Lending*

*Business          Loans*

----

*Table          of Contents*

*Consumer        Loans*

*Loan      Processing*

*Loan      Approval*
** **
**, **

*Loans-to-One-Borrower*

----

*Table          of Contents*

*Loan        Sales*

*Loan      Originations and Purchases*

|                                           |   | **2007**   |    |   | **2006**    |   |     | **2005**   |   |
|------------------------------------------------|--------|------------|---------|--------|-------------|--------|----------|------------|--------|
|                                           |   | **Amount** |    |   | **Percent** |   |     | **Amount** |   |   | **Percent** |   |   | **Amount** |   |   | **Percent** |   |
| Loans                Originated:               |   |       |    |   |        |   |     |       |   |   |   |   |   |   |   |   |   |   |
| One-                to four-family             |   | $          | 32,381  |   |        |   | 20.57%   |       |   | $ | 15,132 |   |   |   | 8.18% |   |   | $ | 15,437 |   |   |   | 8.46% |   |
| Multifamily                                    |   |       | 8,657   |   |        |   | 5.50%    |       |   |   | 18,063 |   |   |   | 9.77% |   |   |   | 15,969 |   |   |   | 8.75% |   |
| Non-residential                                |   |       | 31,108  |   |        |   | 19.76%   |       |   |   | 33,582 |   |   |   | 18.16% |   |   |   | 30,823 |   |   |   | 16.89% |   |
| Construction                                   |   |       | 56,834  |   |        |   | 36.11%   |       |   |   | 44,040 |   |   |   | 23.81% |   |   |   | 23,351 |   |   |   | 12.79% |   |
| Business                                       |   |       | 730     |   |        |   | 0.46%    |       |   |   | - |   |   |   | -% |   |   |   | - |   |   |   | -% |   |
| Consumer                and others (1)         |   |       | 282     |   |        |   | 0.18%    |       |   |   | 532 |   |   |   | 0.29% |   |   |   | 221 |   |   |   | 0.13% |   |
| Total                loans originated          |   |       | 129,992 |   |        |   | 82.58%   |       |   |   | 111,349 |   |   |   | 60.21% |   |   |   | 85,801 |   |   |   | 47.02% |    |
| Loans                purchased (2)             |   |       | 58,191  |   |        |   | 36.97%   |       |   |   | 96,140 |   |   |   | 51.98% |   |   |   | 104,734 |   |   |   | 57.39% |   |
| Loans                sold (3)                  |   |       | (30,778 | )      |        |   | (19.55)% |       |   |   | (22,543 | ) |   |   | (12.19)% |   |   |   | (8,043 | ) |   |   | (4.41)% |   |
| Net                additions to loan portfolio |   | $          | 157,405 |   |        |   | 100.00%  |       |   | $ | 184,946 |   |   |   | 100.00% |   |   | $ | 182,492 |   |   |   | 100.00% |   |

----

*Table          of Contents*

*Interest      Rates and Loan Fees. *

*Loan      Maturity Schedule*

|                                     |   | **Loan                  Maturities** |    |
|------------------------------------------|--------|--------------------------------------|---------|
|                                     |   | **<1                  Yr.**       |    |   | **1-2                  Yrs.** |   |   | **2-3                  Yrs.** |   |   | **3-5                  Yrs.** |   |   | **5-10                  Yrs.** |   |   | **10-20                  Yrs.** |   |   | **20+                  Yrs.** |   |   | **Total** |   |
| Gross                  loans receivable: |   |                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| One                  to four-family      |   | $                                    | 3,580   |   |   | $ | 1,039 |   |   | $ | 2,690 |   |   | $ | 2,801 |   |   | $ | 192 |   |   | $ | 1,605 |   |   | $ | 89,003 |   |   | $ | 100,910 |   |
| Multifamily                              |   |                                 | 4,804   |   |   |   | 15,911 |   |   |   | 5,315 |   |   |   | 31,280 |   |   |   | 6,514 |   |   |   | 9,004 |   |   |   | 19,049 |   |   |   | 91,877 |   |
| Non-residential                          |   |                                 | 7,610   |   |   |   | 26,645 |   |   |   | 48,079 |   |   |   | 69,530 |   |   |   | 29,937 |   |   |   | 14,897 |   |   |   | 6,489 |   |   |   | 203,187 |   |
| Construction                             |   |                                 | 102,689 |   |   |   | 27,875 |   |   |   | 6,188 |   |   |   | - |   |   |   | 945 |   |   |   | - |   |   |   | - |   |   |   | 137,697 |   |
| Business                                 |   |                                 | 13,604  |   |   |   | 1,228 |   |   |   | 9,976 |   |   |   | 2,547 |   |   |   | 9,834 |   |   |   | 8,660 |   |   |   | 5,377 |   |   |   | 51,226 |   |
| Consumer                                 |   |                                 | 312     |   |   |   | 10 |   |   |   | 51 |   |   |   | 138 |   |   |   | 442 |   |   |   | 114 |   |   |   | - |   |   |   | 1,067 |   |
| Total                                    |   | $                                    | 132,599 |   |   | $ | 72,708 |   |   | $ | 72,299 |   |   | $ | 106,296 |   |   | $ | 47,864 |   |   | $ | 34,280 |   |   | $ | 119,918 |   |   | $ | 585,964 |   |

----

*Table          of Contents*

|                                          |   | **Due                  After March 31, 2008** |   |
|-----------------------------------------------|--------|-----------------------------------------------|--------|
|                                          |   | **Fixed**                                     |   |   | **Adjustable** |   |   | **Total** |   |
| Gross loans                  receivable: |   |                                          |   |   |   |   |   |   |   |
| One-                  to four-family          |   | $                                             | 7,420  |   |   | $ | 89,910 |   |   | $ | 97,330 |   |
| Multifamily                                   |   |                                          | 26,127 |   |   |   | 60,946 |   |   |   | 87,073 |   |
| Non-residential                               |   |                                          | 48,376 |   |   |   | 147,201 |   |   |   | 195,577 |   |
| Construction                                  |   |                                          | -      |   |   |   | 35,008 |   |   |   | 35,008 |   |
| Business                                      |   |                                          | 9,725  |   |   |   | 27,897 |   |   |   | 37,622 |   |
| Consumer                                      |   |                                          | 755    |   |   |   | - |   |   |   | 755 |   |
| Total                                         |   | $                                             | 92,403 |   |   | $ | 360,962 |   |   | $ | 453,365 |   |

**Asset      Quality**

*General.      *

*Non-performing      Assets*

----

*Table          of Contents*

|                                                                         |   | **2007** |   |   | **2006** |   |   | **2005** |   |   | **2004** |   |   | **2003** |   |
|------------------------------------------------------------------------------|--------|----------|--------|--------|----------|--------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
| Loans                  accounted for on a non-accrual basis (1):             |   |     |   |   |     |   |   |     |   |   |     |   |   |
| Gross                  loans receivable:                                     |   |     |   |   |     |   |   |     |   |   |     |   |   |     |   |
| One-                  to four-family                                         |   | $        | 173    |   |     | $      | 1,098  |     |   | $      | 149      |   |   | $        | 558    |   |   | $ | 1,113 |   |
| Multifamily                                                                  |   |     | 3,886  |   |     |   | 763    |     |   |   | 167      |   |   |     | 1,532  |   |   |   | - |   |
| Non-residential                                                              |   |     | -      |   |     |   | -      |     |   |   | 665      |   |   |     | -      |   |   |   | 639 |   |
| Construction                                                                 |   |     | -      |   |     |   | 865    |     |   |   | -        |   |   |     | 23     |   |   |   | 23 |   |
| Business                                                                     |   |     | 439    |   |     |   | -      |     |   |   | -        |   |   |     | -      |   |   |   | - |   |
| Consumer                                                                     |   |     | 12     |   |     |   | 4      |     |   |   | 17       |   |   |     | 10     |   |   |   | 27 |   |
| Total                  non-accrual loans                                     |   |     | 4,510  |   |     |   | 2,730  |     |   |   | 998      |   |   |     | 2,123  |   |   |   | 1,802 |   |
|                                                                         |   |     |   |   |     |   |   |     |   |   |     |   |   |     |   |   |   |   |   |   |
| Accruing                  loans contractually past due> 90 days           |   |     | -      |   |     |   | -      |     |   |   | -        |   |   |     | -      |   |   |   | - |   |
|                                                                         |   |     |   |   |     |   |   |     |   |   |     |   |   |     |   |   |   |   |   |   |
| Total                  non-accrual & accruing loans past due> 90 days |   |     | 4,510  |   |     |   | 2,730  |     |   |   | 998      |   |   |     | 2,123  |   |   |   | 1,802 |   |
|                                                                         |   |     |   |   |     |   |   |     |   |   |     |   |   |     |   |   |   |   |   |   |
| Other                  non-performing assets (2):                            |   |     |   |   |     |   |   |     |   |   |     |   |   |     |   |   |   |   |   |   |
| Real                  estate - land                                          |   |     | 28     |   |     |   | 26     |     |   |   | -        |   |   |     | -      |   |   |   | - |   |
| Total                  other non-performing assets                           |   |     | 28     |   |     |   | 26     |     |   |   | -        |   |   |     | -      |   |   |   | - |   |
| Total                  non-performing assets (3)                             |   | $        | 4,538  |   |     | $      | 2,756  |     |   | $      | 998      |   |   | $        | 2,123  |   |   | $ | 1,802 |   |
|                                                                         |   |     |   |   |     |   |   |     |   |   |     |   |   |     |   |   |   |   |   |   |
| Non-performing                  loans to total loans                         |   |     | 0.74   | %      |     |   | 0.55   | %        |   |   | 0.23     | %      |   |     | 0.60   | % |   |   | 0.61 | % |
| Non-performing                  assets to total assets                       |   |     | 0.61   | %      |     |   | 0.42   | %        |   |   | 0.16     | %      |   |     | 0.39   | % |   |   | 0.36 | % |

| (1) | Non-accrual                status denotes any loan where the delinquency exceeds 90 days past                due and                in the opinion of management the collection of additional interest                is                doubtful.  Payments received on a non-accrual loan are either                applied to the outstanding principal balance or recorded as interest                income, depending on assessment of the ability to collect on the                loan. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Other                non-performing assets generally represent property acquired by the                Bank in                settlement of loans (i.e., through foreclosure, repossession or as                an                in-substance foreclosure).  These assets are recorded at the                lower of their fair value or the cost to                acquire. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Total                non-performing assets consist of non-accrual loans, accruing loans                90 days                or more past due, property acquired in settlement of                loans. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Asset      Classification and Allowances for Losses*

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*Table          of Contents*

----

*Table          of Contents*

|                                                          |   | **2007** |   |   | **2006** |   |   | **2005** |   |   | **2004** |   |   | **2003** |   |
|---------------------------------------------------------------|--------|----------|--------|--------|----------|--------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
|                                                          |   |     |   |   |     |   |   |     |   |   |     |   |   |     |   |
| Balance                  at beginning of year                 |   | $        | 4,015  |   |     | $      | 4,097  |     |   | $      | 4,125    |   |   | $        | 4,158  |   |   | $ | 4,128 |   |
| Less                  Charge-offs:                            |   |     |   |   |     |   |   |     |   |   |     |   |   |     |   |   |   |   |   |   |
| One-                  to four-family                          |   |     | 19     |   |     |   | 17     |     |   |   | 8        |   |   |     | 6      |   |   |   | 2 |   |
| Non-residential                                               |   |     | -      |   |     |   | -      |     |   |   | -        |   |   |     | -      |   |   |   | - |   |
| Business                                                      |   |     | 50     |   |     |   | -      |     |   |   | -        |   |   |     | 55     |   |   |   | - |   |
| Consumer                  and other                           |   |     | 51     |   |     |   | 100    |     |   |   | 65       |   |   |     | 264    |   |   |   | 226 |   |
| Total                  Charge-offs                            |   |     | 120    |   |     |   | 117    |     |   |   | 73       |   |   |     | 325    |   |   |   | 228 |   |
|                                                          |   |     |   |   |     |   |   |     |   |   |     |   |   |     |   |   |   |   |   |   |
| Add                  Recoveries:                              |   |     |   |   |     |   |   |     |   |   |     |   |   |     |   |   |   |   |   |   |
| One-                  to four-family                          |   |     | 2      |   |     |   | 5      |     |   |   | -        |   |   |     | 107    |   |   |   | - |   |
| Non-residential                                               |   |     | 2      |   |     |   | -      |     |   |   | -        |   |   |     | -      |   |   |   | - |   |
| Business                                                      |   |     | -      |   |     |   | -      |     |   |   | -        |   |   |     | 10     |   |   |   | 73 |   |
| Consumer                  and other                           |   |     | 43     |   |     |   | 30     |     |   |   | 45       |   |   |     | 175    |   |   |   | 185 |   |
| Total                  Recoveries                             |   |     | 47     |   |     |   | 35     |     |   |   | 45       |   |   |     | 292    |   |   |   | 258 |   |
|                                                          |   |     |   |   |     |   |   |     |   |   |     |   |   |     |   |   |   |   |   |   |
| Net                  loans charged-off (recovered)            |   |     | 73     |   |     |   | 82     |     |   |   | 28       |   |   |     | 33     |   |   |   | (30 | ) |
| CCB                  acquisition allowance                    |   |     | 1,191  |   |     |   | -      |     |   |   | -        |   |   |     | -      |   |   |   | - |   |
| Provision                  for losses                         |   |     | 276    |   |     |   | -      |     |   |   | -        |   |   |     | -      |   |   |   | - |   |
| Balance                  at end of year                       |   | $        | 5,409  |   |     | $      | 4,015  |     |   | $      | 4,097    |   |   | $        | 4,125  |   |   | $ | 4,158 |   |
|                                                          |   |     |   |   |     |   |   |     |   |   |     |   |   |     |   |   |   |   |   |   |
| Ratios:                                                       |   |     |   |   |     |   |   |     |   |   |     |   |   |     |   |   |   |   |   |   |
| Net                  charge-offs to average loans outstanding |   |     | 0.02   | %      |     |   | 0.02   | %        |   |   | 0.01     | %      |   |     | 0.01   | % |   |   | -0.01 | % |
| Allowance                  to total loans                     |   |     | 0.89   | %      |     |   | 0.81   | %        |   |   | 0.96     | %      |   |     | 1.16   | % |   |   | 1.40 | % |
| Allowance                  to non-performing loans (1)        |   |     | 119.93 | %      |     |   | 147.07 | %        |   |   | 410.65   | %      |   |     | 194.30 | % |   |   | 230.74 | % |

| (1) | Non-performing                  loans consist of non-accrual loans and accruing loans 90 days or                  more past                  due in settlement of loans. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                             |   | **2007**   |   |   | **2006**                                             |   |   | **2005**   |   |   | **2004**                                             |   |   | **2003**   |   |
|--------------------------------------------------|--------|------------|--------|--------|------------------------------------------------------|--------|--------|------------|--------|--------|------------------------------------------------------|--------|--------|------------|--------|
|                                             |   | **Amount** |   |   | **%                  of Loans to Total Gross Loans** |   |   | **Amount** |   |   | **%                  of Loans to Total Gross Loans** |   |   | **Amount** |   |   | **%                  of Loans to Total Gross Loans** |   |   | **Amount** |   |   | **%                  of Loans to Total Gross Loans** |   |   | **Amount** |   |   | **%                  of Loans to Total Gross Loans** |   |
| Allowance                  for loan losses:      |   |       |   |   |                                                 |   |   |       |   |   |                                                 |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| One-to                  four-family              |   | $          | 373    |   |                                                 |   | 17.2   | %          |   | $      | 565                                                  |   |   |       | 28.9   | % |   | $ | 528 |   |   |   | 36.7 | % |   | $ | 355 |   |   |   | 27.8 | % |   | $ | 298 |   |   |   | 24.2 | % |
| Multifamily                                      |   |       | 1,413  |   |                                                 |   | 15.7   | %          |   |   | 1,084                                                |   |   |       | 21.1   | % |   |   | 898 |   |   |   | 24.0 | % |   |   | 1,240 |   |   |   | 33.9 | % |   |   | 656 |   |   |   | 44.5 | % |
| Non-residential                                  |   |       | 1,487  |   |                                                 |   | 34.7   | %          |   |   | 960                                                  |   |   |       | 31.0   | % |   |   | 1,129 |   |   |   | 27.5 | % |   |   | 853 |   |   |   | 28.9 | % |   |   | 1,967 |   |   |   | 26.7 | % |
| Construction                                     |   |       | 951    |   |                                                 |   | 23.5   | %          |   |   | 303                                                  |   |   |       | 18.7   | % |   |   | 212 |   |   |   | 11.4 | % |   |   | 158 |   |   |   | 7.7 | % |   |   | 170 |   |   |   | 3.9 | % |
| Business                                         |   |       | 951    |   |                                                 |   | 8.7    | %          |   |   | 22                                                   |   |   |       | .1     | % |   |   | 10 |   |   |   | .1 | % |   |   | 92 |   |   |   | 1.3 | % |   |   | 8 |   |   |   | .1 | % |
| Consumer                  and other              |   |       | 234    |   |                                                 |   | .2     | %          |   |   | 420                                                  |   |   |       | .2     | % |   |   | 544 |   |   |   | .3 | % |   |   | 395 |   |   |   | .4 | % |   |   | 336 |   |   |   | .6 | % |
| Unallocated                                      |   |       | -      |   |                                                 |   | -      |       |   |   | 661                                                  |   |   |       | -      |   |   |   | 776 |   |   |   | - |   |   |   | 1,032 |   |   |   | - |   |   |   | 723 |   |   |   | - |   |
| Total                  Allowance for loan losses |   | $          | 5,409  |   |                                                 |   | 100.00 | %          |   | $      | 4,015                                                |   |   |       | 100.00 | % |   | $ | 4,097 |   |   |   | 100.00 | % |   | $ | 4,125 |   |   |   | 100.00 | % |   | $ | 4,158 |   |   |   | 100.00 | % |

----

*Table          of Contents*

**Investment      Activities**

*General.*

*Accounting for      Certain Investments in Debt and Equity Securities”,*

*Mortgage-Backed      Securities.*

----

*Table          of Contents*

|                                              |   | **2007** |   |   | **2006** |   |   | **2005** |   |
|---------------------------------------------------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
| Available-for-sale:                               |   |     |   |   |     |   |   |     |   |
| GNMA                                              |   | $        | 13,619 |   |     | $      | 63,007 |     |   | $ | 83,425 |   |
| FNMA                                              |   |     | 5,895  |   |     |   | 4,589  |     |   |   | 8,149 |   |
| FHLMC                                             |   |     | 1,125  |   |     |   | 2,209  |     |   |   | 3,908 |   |
| Other                                             |   |     | 537    |   |     |   | -      |     |   |   | - |   |
| Total                  available-for-sale         |   |     | 21,176 |   |     |   | 69,805 |     |   |   | 95,482 |   |
| Held                  to Maturity:                |   |     |   |   |     |   |   |     |   |   |   |   |
| GNMA                                              |   |     | 727    |   |     |   | 809    |     |   |   | 1,070 |   |
| FNMA                                              |   |     | 4,792  |   |     |   | 7,900  |     |   |   | 10,780 |   |
| FHLMC                                             |   |     | 13,308 |   |     |   | 17,372 |     |   |   | 19,115 |   |
| Other                                             |   |     | 120    |   |     |   | 70     |     |   |   | 51 |   |
| Total                  held to maturity           |   |     | 18,947 |   |     |   | 26,151 |     |   |   | 31,016 |   |
| Total                  mortgage-backed securities |   | $        | 40,123 |   |     | $      | 95,956 |     |   | $ | 126,498 |   |

|                                      |   | **Amortized****Cost** |   |   | **Fair                  Value** |   |   | **Weighted                  Avg Rate** |   |
|-------------------------------------------|--------|-----------------------|--------|--------|---------------------------------|--------|--------|----------------------------------------|--------|
| Available-for-sale:                       |   |                  |   |   |                            |   |   |                                   |   |
| One                  through five years   |   | $                     | 117    |   |                            | $      | 117    |                                   |   |   | 5.98 | % |
| Five                  through ten years   |   |                  | 3,789  |   |                            |   | 3,788  |                                   |   |   | 5.21 | % |
| After                  ten years          |   |                  | 17,269 |   |                            |   | 17,271 |                                   |   |   | 4.92 | % |
| Total                  available-for-sale |   |                  | 21,175 |   |                            |   | 21,176 |                                   |   |   | 4.98 | % |
| Held-to-maturity:                         |   |                  |   |   |                            |   |   |                                   |   |   |   |   |
| One                  through five years   |   |                  | 28     |   |                            |   | 28     |                                   |   |   | 5.63 | % |
| After                  ten years          |   |                  | 18,919 |   |                            |   | 18,790 |                                   |   |   | 5.54 | % |
| Total                  held-to-maturity   |   | $                     | 18,947 |   |                            | $      | 18,818 |                                   |   |   | 5.54 | % |

*Other        Investment Securities.*

----

*Table          of Contents*

|                                                         |   | **2007** |   |   | **2006** |   |   | **2005** |   |
|--------------------------------------------------------------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
| U.S.                Government, equity and other securities: |   |     |   |   |     |   |   |     |   |
| Available-for-sale                                           |   | $        | 26,804 |   |     | $      | 12,077 |     |   | $ | 22,551 |   |
| Held-to-maturity                                             |   |     | 190    |   |     |   | 253    |     |   |   | 286 |   |
| Total                other securities                        |   | $        | 26,994 |   |     | $      | 12,330 |     |   | $ | 22,837 |   |

|                                               |   |          |   |   |      |   |   | **Weighted** |   |
|----------------------------------------------------|--------|---------------|--------|--------|-----------|--------|--------|--------------|--------|
|                                               |   | **Amortized** |   |   | **Fair**  |   |   | **Average**  |   |
|                                               |   | **Cost**      |   |   | **Value** |   |   | **Rate**     |   |
| Available-for-sale:                                |   |          |   |   |      |   |   |         |   |
| One                year or less                    |   | $             | 3,468  |   |      | $      | 3,475  |         |   |   | 6.13 | % |
| One                through five years              |   |          | 9,915  |   |      |   | 10,011 |         |   |   | 5.59 | % |
| Five                through ten years              |   |          | 10,785 |   |      |   | 10,993 |         |   |   | 5.55 | % |
| After                ten years                     |   |          | 2,249  |   |      |   | 2,325  |         |   |   | 5.52 | % |
| Total                available-for-sale securities |   | $             | 26,417 |   |      | $      | 26,804 |         |   |   | 5.64 | % |

*Other      Earning Assets.*

**Deposit      Activity and Other Sources of Funds**

*General.*

*Deposits.*

----

*Table          of Contents*

|                                                              |   | **2007** |    |   | **2006** |   |    | **2005** |   |
|-------------------------------------------------------------------|--------|----------|---------|--------|----------|--------|---------|----------|--------|
|                                                              |   |     |    |   |     |   |    |     |   |
| Deposits                  at beginning of period                  |   | $        | 504,638 |   |     | $      | 455,870 |     |   | $ | 375,519 |   |
| Deposits                  acquired with CCB                       |   |     | 144,142 |   |     |   | -       |     |   |   | - |   |
| Net                  (decrease) increase before interest credited |   |     | (45,837 | )      |     |   | 39,847  |     |   |   | 74,896 |   |
| Interest                  credited                                |   |     | 12,179  |   |     |   | 8,921   |     |   |   | 5,455 |   |
| Deposits                  at end of period                        |   | $        | 615,122 |   |     | $      | 504,638 |     |   | $ | 455,870 |   |
|                                                              |   |     |    |   |     |   |    |     |   |   |   |   |
|                                                              |   |     |    |   |     |   |    |     |   |   |   |   |
| Net                  (decrease) increase during the year:    |   |     |    |   |     |   |    |     |   |   |   |   |
| Amount                                                            |   | $        | (33,658 | )      |     | $      | 48,768  |     |   | $ | 80,351 |   |
| Percent                                                           |   |     | -6.7    | %      |     |   | 10.7    | %        |   |   | 21.4 | % |

|                                         |   | **2007**   |    |   | **2006**                           |   |   | **2005**                   |   |
|----------------------------------------------|--------|------------|---------|--------|------------------------------------|--------|--------|----------------------------|--------|
|                                         |   | **Amount** |    |   | **%                  of****Total** |   |   | **Wtd. Avg.****Rate** |   |   | **Amount** |   |   | **%                  of****Total** |   |   | **Wtd. Avg.****Rate** |   |   | **Amount** |   |   | **%                  of****Total** |   |   | **Wtd. Avg.****Rate** |   |
|                                         |   |       |    |   |                               |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest-bearing                  demand |   | $          | 50,891  |   |                               |   | 8.27   | %                          |   |   | - |   |   | $ | 31,085 |   |   |   | 6.16 | % |   |   | 0.00 | % |   | $ | 25,570 |   |   |   | 5.61 | % |   |   | - |   |
| NOW                  accounts                |   |       | 28,910  |   |                               |   | 4.70   | %                          |   |   | 0.39 | % |   |   | 27,904 |   |   |   | 5.53 | % |   |   | 0.31 | % |   |   | 24,095 |   |   |   | 5.29 | % |   |   | 0.30 | % |
| Savings                  and club            |   |       | 137,960 |   |                               |   | 22.43  | %                          |   |   | 0.68 | % |   |   | 139,724 |   |   |   | 27.69 | % |   |   | 0.68 | % |   |   | 137,810 |   |   |   | 30.23 | % |   |   | 0.62 | % |
| Money                  market savings        |   |       | 46,996  |   |                               |   | 7.64   | %                          |   |   | 2.62 | % |   |   | 40,045 |   |   |   | 7.93 | % |   |   | 2.41 | % |   |   | 36,294 |   |   |   | 7.96 | % |   |   | 1.34 | % |
| Certificates                  of deposit     |   |       | 347,753 |   |                               |   | 56.53  | %                          |   |   | 4.17 | % |   |   | 263,963 |   |   |   | 52.31 | % |   |   | 3.76 | % |   |   | 229,685 |   |   |   | 50.38 | % |   |   | 2.30 | % |
| Other                                        |   |       | 2,612   |   |                               |   | 0.43   | %                          |   |   | 1.39 | % |   |   | 1,917 |   |   |   | 0.38 | % |   |   | 1.47 | % |   |   | 2,416 |   |   |   | 0.53 | % |   |   | 1.13 | % |
| Total                                        |   | $          | 615,122 |   |                               |   | 100.00 | %                          |   |   | 2.73 | % |   | $ | 504,638 |   |   |   | 100.00 | % |   |   | 2.37 | % |   | $ | 455,870 |   |   |   | 100.00 | % |   |   | 1.47 | % |

|                              |   |   | **Period                  to Maturity** |    |   |                          |   |
|-----------------------------------|--------|--------|-----------------------------------------|---------|--------|-------------------------------|--------|
|                              |   |   |                                    |    |   |                          |   |   |   |   |   |   |   |   | **Total** |   |   | **Percent** |   |   |   |   |
| **Rate**                          |   |   | **<                  1Yr.**          |    |   | **1-2                  Yrs.** |   |   | **2-3                  Yrs.** |   |   | **3+                  Yrs.** |   |   | **2007** |   |   | **of                  Total** |   |   | **2006** |   |
|                              |   |   |                                    |    |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  0%                  - 0.99% |   |   | $                                       | 12,401  |   |                          | $      | 26 |   |   | $ | - |   |   | $ | 12 |   |   | $ | 12,439 |   |   |   | 3.58 | % |   | $ | 746 |   |
|  1%                  - 1.99% |   |   |                                    | 20,721  |   |                          |   | 122 |   |   |   | - |   |   |   | - |   |   |   | 20,843 |   |   |   | 5.99 | % |   |   | 9,137 |   |
|  2%                  - 3.99% |   |   |                                    | 85,567  |   |                          |   | 12,480 |   |   |   | 13,047 |   |   |   | 3,901 |   |   |   | 114,995 |   |   |   | 33.07 | % |   |   | 137,602 |   |
| 4%                  and over      |   |   |                                    | 164,455 |   |                          |   | 24,530 |   |   |   | - |   |   |   | 10,491 |   |   |   | 199,476 |   |   |   | 57.36 | % |   |   | 116,478 |   |
| Total                             |   |   | $                                       | 283,144 |   |                          | $      | 37,158 |   |   | $ | 13,047 |   |   | $ | 14,404 |   |   | $ | 347,753 |   |   |   | 100.00 | % |   | $ | 263,963 |   |

----

*Table          of Contents*

*Borrowed      Money.*

|                                                                                                     |   |     |   |   |     |   |    |     |   |
|----------------------------------------------------------------------------------------------------------|--------|----------|--------|--------|----------|--------|---------|----------|--------|
|                                                                                                     |   | **2007** |   |   | **2006** |   |    | **2005** |   |
| Amounts                outstanding at the end of period:                                                 |   |     |   |   |     |   |    |     |   |
| FHLB                advances                                                                             |   | $        | 47,775 |   |     | $      | 80,935  |     |   | $ | 102,500 |   |
| Guaranteed                preferred beneficial interest in junior subordinated                debentures |   | $        | 13,318 |   |     | $      | 13,260  |     |   | $ | 13,202 |   |
|                                                                                                     |   |     |   |   |     |   |    |     |   |   |   |   |
| Rate                paid at period end:                                                                  |   |     |   |   |     |   |    |     |   |   |   |   |
| FHLB                advances                                                                             |   |     | 4.32   | %      |     |   | 4.13    | %        |   |   | 3.78 | % |
| Guaranteed                preferred beneficial interest in junior subordinated                debentures |   |     | 8.40   | %      |     |   | 7.97    | %        |   |   | 6.08 | % |
|                                                                                                     |   |     |   |   |     |   |    |     |   |   |   |   |
| Maximum                amount of borrowing outstanding at any month end:                                 |   |     |   |   |     |   |    |     |   |   |   |   |
| FHLB                advances                                                                             |   | $        | 93,975 |   |     | $      | 112,488 |     |   | $ | 112,506 |   |
| Guaranteed                preferred beneficial interest in junior subordinated                debentures |   | $        | 13,318 |   |     | $      | 13,260  |     |   | $ | 13,202 |   |
|                                                                                                     |   |     |   |   |     |   |    |     |   |   |   |   |
| Approximate                average amounts outstanding for period:                                       |   |     |   |   |     |   |    |     |   |   |   |   |
| FHLB                advances                                                                             |   | $        | 65,567 |   |     | $      | 94,798  |     |   | $ | 97,013 |   |
| Guaranteed                preferred beneficial interest in junior subordinated                debentures |   | $        | 13,286 |   |     | $      | 13,230  |     |   | $ | 13,171 |   |
|                                                                                                     |   |     |   |   |     |   |    |     |   |   |   |   |
| Approximate                weighted average rate paid during period:                                     |   |     |   |   |     |   |    |     |   |   |   |   |
| FHLB                advances                                                                             |   |     | 4.36   | %      |     |   | 3.81    | %        |   |   | 3.71 | % |
| Guaranteed                preferred beneficial interest in junior subordinated                debentures |   |     | 8.33   | %      |     |   | 7.50    | %        |   |   | 5.49 | % |

**REGULATION      AND SUPERVISION**

**General**

----

*Table          of Contents*

**Federal      Banking Regulation**

*Activity      Powers*

*Loans      to One Borrower Limitations*

*QTL      Test.*
** **

----

*Table          of Contents*

*Capital      Requirements.*

|   | (1) | a                tangible capital ratio requirement of 1.5% of total assets, as adjusted                under OTS regulations; |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | a                leverage ratio requirement of 4% of core capital to such adjusted                total                assets; and |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | a                risk-based capital ratio requirement of 8% of core and supplementary                capital to total risk-weighted                assets. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Prompt      Corrective Action Regulations*

----

*Table            of Contents*

*Limitation      on Capital Distributions.*

|   | (1) | the                Bank would be undercapitalized following the                distribution; |
|--------|-----|----------------------------------------------------------------------------------------------|

|   | (2) | the                proposed capital distribution raises safety and soundness concerns;                or |
|--------|-----|----------------------------------------------------------------------------------------------------------|

|   | (3) | the                capital distribution would violate a prohibition contained in any                statute,                regulation or agreement. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------|

*Liquidity*

*Branching*

*Community      Reinvestment*

|   | (1) | a                lending test, to evaluate the institution’s record of making loans in its                assessment areas; |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | an                investment test, to evaluate the institution’s record of investing in                community development projects, affordable housing and programs benefiting                low or moderate income individuals and businesses;                and |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | a                service test, to evaluate the institution’s delivery of banking services                through its branches, ATM centers and other                offices. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

*Table          of Contents*

*Transactions      with Related Parties*

*Assessment*

*Enforcement*

*Standards      for Safety and Soundness*

----

*Table          of Contents*

**Insurance      of Deposit Accounts**

*Federal        Home Loan Bank System*

----

*Table          of Contents*

*Federal      Reserve System*

*Privacy      Protection.  *

*Holding      Company Regulation*

----

*Table          of Contents*

*Restrictions      Applicable to All Savings and Loan Holding Companies.*

|   | (1) | control                (as defined under HOLA) of another savings institution (or a holding                company parent) without prior OTS                approval; |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | through                merger, consolidation, or purchase of assets, another savings institution                or a holding company thereof, or acquiring all or substantially all                of the                assets of such institution (or a holding company), without prior                OTS                approval; or |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | control                of any depository institution not insured by the FDIC (except through                a                merger with and into the holding company’s savings institution subsidiary                that is approved by the OTS). |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (1) | in                the case of certain emergency acquisitions approved by the                FDIC; |
|--------|-----|---------------------------------------------------------------------------------------------------|

|   | (2) | if                such holding company controls a savings institution subsidiary that                operated a home or branch office in such additional state as of March                5,                1987; or |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | if                the laws of the state in which the savings institution to be acquired                is                located specifically authorize a savings institution chartered by                that                state to be acquired by a savings institution chartered by the state                where                the acquiring savings institution or savings and loan holding company                is                located or by a holding company that controls such a state chartered                association. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Federal      Securities Laws*

*Delaware      Corporation Law*

*New      York State Banking Laws and Regulations*

*Other      Federal Regulation.  *

----

*Table          of Contents*

|   | • | Establishment                of anti-money laundering programs. |
|--------|---------|-----------------------------------------------------------------|

|   | • | Establishment                of a program specifying procedures for obtaining identifying information                from customers seeking to open new accounts, including verifying                the                identity of customers within a reasonable period of                time. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Establishment                of enhanced due diligence policies, procedures and controls designed                to                detect and report money laundering. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Prohibition                on correspondent accounts for foreign shell banks and compliance                with                recordkeeping obligations with respect to correspondent accounts                of                foreign banks. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**FEDERAL      AND STATE TAXATION**

**Federal      Taxation**

*General.*

*Bad      Debt Reserves.*

*Distributions.*

*Elimination      of Dividends; Dividends-Received Deduction*
*.*

**State      and Local Taxation**

*State        of New York.*

----

*Table          of Contents*

*New      York City.*

*Delaware      Taxation.*

**EXECUTIVE      OFFICERS OF THE HOLDING COMPANY**

**Deborah      C. Wright**
** **
** **

**Roy      Swan, **
** **

**Charles      F. Koehler, **

**Susan      M. Ifill**

**James      H. Bason, **
** **

**Gina      L. Bolden-Rivera, **

**Carmelo      Felix, **
** **

**Margaret      D. Roberts,**

----

*Table          of Contents*

**ITEM      1A. RISK FACTORS.**

**Changes      in interest rate environment may negatively affect Carver’s net income, mortgage      loan originations and valuation of available-for-sale      securities**
*.  *

* *

**Carver’s      results of operations are affected by economic conditions in the New      York**
** metropolitan area.  **

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*Table          of Contents*

**Strong      competition within the Bank’s market areas could hurt expected profits and slow      growth.  **

**The        Bank’s increased emphasis on non-residential and construction real estate        lending may create increased exposure to lending risks.**

**The      Bank may fail to realize the anticipated benefits of the acquisition, and      acquisitions may result in unforeseen integration      difficulties**
***.***

**The      Bank operates in a highly regulated industry, which limits the manner and scope      of our business activities.  **
*** ***

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*Table          of Contents*

**Efforts          to comply with the Sarbanes-Oxley Act will involve significant expenditures,          and          non-compliance with the Sarbanes-Oxley Act may adversely affect          us.  **

**Changes      in laws, government regulation and monetary policy may have a material effect      on      our results of operations.  **

**The      Bank’s ability to pay dividends or lend funds to the Company is subject to      regulatory limitations which may prevent the Company from making future dividend      payments or principal and interest payments on its debt      obligation.**
* *

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*Table          of Contents*

**Carver        faces system failure risks and security risks.**
* *

**Our      business could suffer if we **
**fail **
**to retain      skilled people.  **

**A      natural disaster could harm Carver’s business.  **

**ITEM      1B.  UNRESOLVED STAFF COMMENTS.**

**ITEM      2.  PROPERTIES.**

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*Table          of Contents*

|                                                        |   |                                       |   |                               |   |       |   |                          |   |  **Lease** |    |   |                         |   |   |                          |   |
|-------------------------------------------------------------|--------|--------------------------------------------|--------|------------------------------------|--------|------------|--------|-------------------------------|--------|-----------------|---------|--------|------------------------------|--------|--------|-------------------------------|--------|
|                                                        |   |                                       |   |                               |   | **Year**   |   | **Owned                  or** |   | **Expiration**  |    |   | **%                  Space** |   |   | **Net                  Book** |   |
| **Branches**                                                |   | **Address**                                |   | **City/State**                     |   | **Opened** |   | **Leased**                    |   | **Date**        |    |   | **Utilized**                 |   |   | **Value**                     |   |
|                                                        |   |                                       |   |                               |   |       |   |                          |   |            |    |   |                         |   |   |                          |   |
| Main                  Branch                                |   | 75                  West 125th Street      |   | New                  York, NY      |   | 1996       |   | Owned                         |   |            | n/a     |   |                         |   | 100%   |                          |   | $ | 7,566 |   |
|                                                        |   |                                       |   |                               |   |       |   |                          |   |            |    |   |                         |   |   |                          |   |   |   |   |
| Bedford-Stuyvesant                  Branch                  |   | 1281                  Fulton Street        |   | Brooklyn,                  NY      |   | 1989       |   | Owned                         |   |            | n/a     |   |                         |   | 70%    |                          |   |   | 1,491 |   |
|                                                        |   |                                       |   |                               |   |       |   |                          |   |            |    |   |                         |   |   |                          |   |   |   |   |
| Crown                  Heights Branch                       |   | 1009-1015                  Nostrand Avenue |   | Brooklyn,                  NY      |   | 1975       |   | Owned                         |   |            | n/a     |   |                         |   | 100%   |                          |   |   | 514 |   |
|                                                        |   |                                       |   |                               |   |       |   |                          |   |            |    |   |                         |   |   |                          |   |   |   |   |
| St                  Albans Branch                           |   | 115-02                  Merrick Boulevard  |   | Jamaica,                  NY       |   | 1996       |   | Leased                        |   |            | 02/2011 |   |                         |   | 75%    |                          |   |   | 404 |   |
|                                                        |   |                                       |   |                               |   |       |   |                          |   |            |    |   |                         |   |   |                          |   |   |   |   |
| Malcolm                  X Blvd. Branch                     |   | 142                  Malcolm X Boulevard   |   | New                  York, NY      |   | 2001       |   | Leased                        |   |            | 04/2011 |   |                         |   | 100%   |                          |   |   | 583 |   |
|                                                        |   |                                       |   |                               |   |       |   |                          |   |            |    |   |                         |   |   |                          |   |   |   |   |
| Jamaica                  Center Branch                      |   | 158-45                  Archer Avenue      |   | Jamaica,                  New York |   | 2003       |   | Leased                        |   |            | 07/2018 |   |                         |   | 100%   |                          |   |   | 916 |   |
|                                                        |   |                                       |   |                               |   |       |   |                          |   |            |    |   |                         |   |   |                          |   |   |   |   |
| Atlantic                  Terminal Branch                   |   | 4                  Hanson Place            |   | Brooklyn,                  NY      |   | 2004       |   | Leased                        |   |            | 07/2014 |   |                         |   | 100%   |                          |   |   | 1,194 |   |
|                                                        |   |                                       |   |                               |   |       |   |                          |   |            |    |   |                         |   |   |                          |   |   |   |   |
| Bradhurst                  Branch                           |   | 300                  West 145th Street     |   | New                  York, NY      |   | 2004       |   | Leased                        |   |            | 12/2009 |   |                         |   | 100%   |                          |   |   | 366 |   |
|                                                        |   |                                       |   |                               |   |       |   |                          |   |            |    |   |                         |   |   |                          |   |   |   |   |
| Livingston                  Branch                          |   | 111                  Livingston Street     |   | Brooklyn,                  NY      |   | 2004       |   | Leased                        |   |            | 01/2015 |   |                         |   | 100%   |                          |   |   | 375 |   |
|                                                        |   |                                       |   |                               |   |       |   |                          |   |            |    |   |                         |   |   |                          |   |   |   |   |
| Sunset                  Park Branch                         |   | 140                  58th Street           |   | Brooklyn,                  NY      |   | 2004       |   | Leased                        |   |            | 10/2010 |   |                         |   | 100%   |                          |   |   | 491 |   |
|                                                        |   |                                       |   |                               |   |       |   |                          |   |            |    |   |                         |   |   |                          |   |   |   |   |
| **ATM                  Centers**                            |   |                                       |   |                               |   |       |   |                          |   |            |    |   |                         |   |   |                          |   |   |   |   |
|                                                        |   |                                       |   |                               |   |       |   |                          |   |            |    |   |                         |   |   |                          |   |   |   |   |
| West                  125th Street                          |   | 503                  West 125th Street     |   | New                  York, NY      |   | 2003       |   | Leased                        |   |            | 03/2013 |   |                         |   | 100%   |                          |   |   | 158 |   |
|                                                        |   |                                       |   |                               |   |       |   |                          |   |            |    |   |                         |   |   |                          |   |   |   |   |
| West                  137th Street                          |   | 601                  West 137th Street     |   | New                  York, NY      |   | 2003       |   | Leased                        |   |            | 10/2013 |   |                         |   | 100%   |                          |   |   | 141 |   |
|                                                        |   |                                       |   |                               |   |       |   |                          |   |            |    |   |                         |   |   |                          |   |   |   |   |
| Hanson                  Place                               |   | 1                  Hanson Place            |   | New                  York, NY      |   | 2004       |   | Leased                        |   |            | 07/2009 |   |                         |   | 100%   |                          |   |   | 32 |   |
|                                                        |   |                                       |   |                               |   |       |   |                          |   |            |    |   |                         |   |   |                          |   |   |   |   |
| 5th                  Avenue                                 |   | 1400                  5th Avenue           |   | New                  York, NY      |   | 2004       |   | Leased                        |   |            | 08/2013 |   |                         |   | 100%   |                          |   |   | 155 |   |
|                                                        |   |                                       |   |                               |   |       |   |                          |   |            |    |   |                         |   |   |                          |   |   |   |   |
| Fulton                  Street                              |   | 1950                  Fulton Street        |   | New                  York, NY      |   | 2005       |   | Leased                        |   |            | 01/2010 |   |                         |   | 100%   |                          |   |   | 208 |   |
|                                                        |   |                                       |   |                               |   |       |   |                          |   |            |    |   |                         |   |   |                          |   |   |   |   |
| Atlantic                  Avenue                            |   | 625                  Atlantic Avenue       |   | New                  York, NY      |   | 2003       |   | Leased                        |   |            | 10/2013 |   |                         |   | 100%   |                          |   |   | 32 |   |
|                                                        |   |                                       |   |                               |   |       |   |                          |   |            |    |   |                         |   |   |                          |   |   |   |   |
| **ATM                  Machines***                          |   |                                       |   |                               |   |       |   |                          |   |            |    |   |                         |   |   |                          |   |   |   |   |
|                                                        |   |                                       |   |                               |   |       |   |                          |   |            |    |   |                         |   |   |                          |   |   |   |   |
| Bedford                  Avenue                             |   | 1650                  Bedford Avenue       |   | New                  York, NY      |   |       |   |                          |   |            |    |   |                         |   |   |                          |   |   |   |   |
|                                                        |   |                                       |   |                               |   |       |   |                          |   |            |    |   |                         |   |   |                          |   |   |   |   |
| 1150                  Carroll Street                        |   | 1150                  Carroll Street       |   | New                  York, NY      |   |       |   |                          |   |            |    |   |                         |   |   |                          |   |   |   |   |
|                                                        |   |                                       |   |                               |   |       |   |                          |   |            |    |   |                         |   |   |                          |   |   |   |   |
| AirTrain                                                    |   | 93-40                Sutphin Boulevard     |   | Jamaica,                NY         |   |       |   |                          |   |            |    |   |                         |   |   |                          |   |   |   |   |
|                                                        |   |                                       |   |                               |   |       |   |                          |   |            |    |   |                         |   |   |                          |   |   |   |   |
| Total                  office properties and equipment, net |   |                                       | $      | 14,626                             |   |

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*Table          of Contents*

**ITEM      3.  **
**LEGAL      PROCEEDINGS.**

**ITEM      4. **
**SUBMISSION      OF MATTERS TO A VOTE OF SECURITY      HOLDERS.**

**PART      II**

| **ITEM                5.** | **MARKET                FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER                MATTERS AND ISSUER PURCHASES OF EQUITY                SECURITIES.** |
|----------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                  |   | **High** |   |   | **Low** |   |   | **Dividend** |   |                             |   | **High** |                                |   | **Low** |   |   | **Dividend** |   |
|---------------------------------------|--------|----------|--------|--------|---------|--------|--------|--------------|--------|---------------------------------------|--------|----------|-------------------------------------|--------|---------|--------|--------|--------------|--------|
| **Fiscal                  Year 2007** |   |     |   |   |    |   |   |         |   | **Fiscal                  Year 2006** |   |     |                                |   |    |   |   |         |   |
| June                  30, 2006        |   | $        | 18.06  |   |    | $      | 16.35  |         |   | $                                     | 0.09   |     | June                  30, 2005      |   | $       | 18.75  |   |         | $      | 16.90 |   |   | $ | 0.08 |   |
| September                  30, 2006   |   | $        | 18.12  |   |    | $      | 16.40  |         |   | $                                     | 0.09   |     | September                  30, 2005 |   | $       | 17.35  |   |         | $      | 16.30 |   |   | $ | 0.08 |   |
| December                  31, 2006    |   | $        | 16.86  |   |    | $      | 15.25  |         |   | $                                     | 0.09   |     | December                  31, 2005  |   | $       | 16.70  |   |         | $      | 15.00 |   |   | $ | 0.08 |   |
| March                  31, 2007       |   | $        | 16.98  |   |    | $      | 15.50  |         |   | $                                     | 0.09   |     | March                  31, 2006     |   | $       | 17.32  |   |         | $      | 15.00 |   |   | $ | 0.08 |   |

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*Table          of Contents*

|                                                      |   |                         |   |   |                          |   |   | **Total                Number**      |   |   | **Maximum**                         |   |
|-----------------------------------------------------------|--------|------------------------------|--------|--------|-------------------------------|--------|--------|--------------------------------------|--------|--------|-------------------------------------|--------|
|                                                      |   | **Total**                    |   |   |                          |   |   | **of                Shares**         |   |   | **Number                of Shares** |   |
|                                                      |   | **Number                of** |   |   | **Average**                   |   |   | **Purchased                as part** |   |   | **that                May Yet Be**  |   |
|                                                      |   | **Shares**                   |   |   | **Price                Paid** |   |   | **of                Publicly**       |   |   | **Purchased                Under**  |   |
|                                                      |   | **Purchased**                |   |   | **per                Share**  |   |   | **Announced                Plan**    |   |   | **the                Plan**         |   |
|                                                      |   |                         |   |   |                          |   |   |                                 |   |   |                                |   |
| January                1, 2007 through January 31, 2007   |   |                         | 1,900  |   |                          | $      | 16.42  |                                 |   |   | 1,900                               |   |   |   | 126,461 |   |
| February                1, 2007 through February 28, 2007 |   |                         | 1,500  |   |                          | $      | 16.30  |                                 |   |   | 1,500                               |   |   |   | 124,961 |   |
| March                1, 2007 through March 31, 2007       |   |                         | 3,900  |   |                          | $      | 16.27  |                                 |   |   | 3,900                               |   |   |   | 121,061 |   |
|                                                      |   |                         | 7,300  |   |                          | $      | 16.32  |                                 |   |   | 7,300                               |   |   |   |   |   |

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*Table          of Contents*

**Stock      Performance Graph**

|                                                              |     |     |     |     |     |     |
|-------------------------------------------------------------------|----------|----------|----------|----------|----------|----------|
|                                                              | **3/02** | **3/03** | **3/04** | **3/05** | **3/06** | **3/07** |
|                                                              |     |     |     |     |     |     |
| Carver                      Bancorp Inc.                          | 100.00   | 123.30   | 209.22   | 168.73   | 156.86   | 156.66   |
| AMEX                      Composite                               | 100.00   | 89.68    | 139.62   | 161.45   | 194.20   | 216.95   |
| SIC                      Codes  6030-6039 (AMEX STOCKS) | 100.00   | 115.70   | 174.29   | 184.08   | 187.59   | 221.30   |

*The            stock price performance included in this graph is not necessarily indicative            of            future stock price performance*

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*Table          of Contents*

**ITEM        6.  SELECTED FINANCIAL DATA.**

|                                                                  |   | **2007** |    |   | **2006** |   |    | **2005** |   |   | **2004** |   |   | **2003** |    |
|-----------------------------------------------------------------------|--------|----------|---------|--------|----------|--------|---------|----------|--------|--------|----------|--------|--------|----------|---------|
| **Selected                  Financial Condition Data:**               |   |     |    |   |     |   |    |     |   |   |     |   |   |     |    |
| Assets                                                                |   | $        | 739,952 |   |     | $      | 661,396 |     |   | $      | 626,377  |   |   | $        | 538,830 |   |   | $ | 509,845 |   |
| Loans                  held-for-sale                                  |   |     | 23,226  |   |     |   | -       |     |   |   | -        |   |   |     | -       |   |   |   | - |   |
| Total                  loans receivable, net                          |   |     | 580,551 |   |     |   | 493,432 |     |   |   | 421,987  |   |   |     | 351,900 |   |   |   | 292,738 |   |
| Securities                                                            |   |     | 67,117  |   |     |   | 108,286 |     |   |   | 149,335  |   |   |     | 139,877 |   |   |   | 165,585 |   |
| Cash                  and cash equivalents                            |   |     | 17,350  |   |     |   | 22,904  |     |   |   | 20,420   |   |   |     | 22,774  |   |   |   | 23,160 |   |
| Deposits                                                              |   |     | 615,122 |   |     |   | 504,638 |     |   |   | 455,870  |   |   |     | 375,519 |   |   |   | 349,066 |   |
| Borrowed                  funds                                       |   |     | 61,093  |   |     |   | 93,792  |     |   |   | 115,299  |   |   |     | 104,282 |   |   |   | 108,996 |   |
| Stockholders'                  equity                                 |   |     | 51,627  |   |     |   | 48,697  |     |   |   | 45,801   |   |   |     | 44,645  |   |   |   | 41,073 |   |
|                                                                  |   |     |    |   |     |   |    |     |   |   |     |   |   |     |    |   |   |   |   |   |
| Number                  of deposit accounts                           |   |     | 46,034  |   |     |   | 41,614  |     |   |   | 40,199   |   |   |     | 38,578  |   |   |   | 41,220 |   |
| Number                  of branches                                   |   |     | 10      |   |     |   | 8       |     |   |   | 8        |   |   |     | 6       |   |   |   | 5 |   |
|                                                                  |   |     |    |   |     |   |    |     |   |   |     |   |   |     |    |   |   |   |   |   |
| **Operating                  Data:**                                  |   |     |    |   |     |   |    |     |   |   |     |   |   |     |    |   |   |   |   |   |
| Interest                  income                                      |   | $        | 41,740  |   |     | $      | 32,385  |     |   | $      | 28,546   |   |   | $        | 26,234  |   |   | $ | 27,390 |   |
| Interest                  expense                                     |   |     | 19,234  |   |     |   | 13,493  |     |   |   | 9,758    |   |   |     | 8,700   |   |   |   | 8,983 |   |
| Net                  interest income before provision for loan losses |   |     | 22,506  |   |     |   | 18,892  |     |   |   | 18,788   |   |   |     | 17,534  |   |   |   | 18,407 |   |
| Provision                  for loan losses                            |   |     | 276     |   |     |   | -       |     |   |   | -        |   |   |     | -       |   |   |   | - |   |
| Net                  interest income after provision for loan losses  |   |     | 22,230  |   |     |   | 18,892  |     |   |   | 18,788   |   |   |     | 17,534  |   |   |   | 18,407 |   |
| Non-interest                  income                                  |   |     | 2,869   |   |     |   | 5,341   |     |   |   | 4,075    |   |   |     | 5,278   |   |   |   | 3,161 |   |
| Non-interest                  expense                                 |   |     | 23,339  |   |     |   | 19,134  |     |   |   | 18,696   |   |   |     | 15,480  |   |   |   | 14,704 |   |
| Income before                  income taxes                      |   |     | 1,760   |   |     |   | 5,099   |     |   |   | 4,167    |   |   |     | 7,332   |   |   |   | 6,864 |   |
| Income                  tax (benefit) expense                         |   |     | (823    | )      |     |   | 1,329   |     |   |   | 1,518    |   |   |     | 2,493   |   |   |   | 3,033 |   |
| Net                  income                                           |   | $        | 2,583   |   |     | $      | 3,770   |     |   | $      | 2,649    |   |   | $        | 4,839   |   |   | $ | 3,831 |   |
| Basic                  earnings per common share                      |   | $        | 1.03    |   |     | $      | 1.50    |     |   | $      | 1.06     |   |   | $        | 2.03    |   |   | $ | 1.59 |   |
| Diluted                  earnings per common share                    |   | $        | 1.00    |   |     | $      | 1.45    |     |   | $      | 1.03     |   |   | $        | 1.87    |   |   | $ | 1.52 |   |
| Cash                  dividends paid per common share                 |   | $        | 0.35    |   |     | $      | 0.31    |     |   | $      | 0.26     |   |   | $        | 0.20    |   |   | $ | 0.10 |   |
|                                                                  |   |     |    |   |     |   |    |     |   |   |     |   |   |     |    |   |   |   |   |   |
| **Selected                  Statistical Data:**                       |   |     |    |   |     |   |    |     |   |   |     |   |   |     |    |   |   |   |   |   |
| Return                  on average assets (1)                         |   |     | 0.37    | %      |     |   | 0.60    | %        |   |   | 0.45     | %      |   |     | 0.93    | % |   |   | 0.83 | %  |
| Return                  on average equity (2)                         |   |     | 5.23    |   |     |   | 7.93    |     |   |   | 5.80     |   |   |     | 11.40   |   |   |   | 9.77 |   |
| Net                  interest margin (3)                              |   |     | 3.44    |   |     |   | 2.97    |     |   |   | 3.41     |   |   |     | 3.56    |   |   |   | 4.26 |   |
| Average                  interest rate spread (4)                     |   |     | 3.16    |   |     |   | 3.18    |     |   |   | 3.26     |   |   |     | 3.40    |   |   |   | 4.08 |   |
| Efficiency                  ratio (5)                                 |   |     | 91.98   |   |     |   | 78.96   |     |   |   | 81.77    |   |   |     | 67.86   |   |   |   | 68.18 |   |
| Operating                  expense to average assets (6)              |   |     | 3.34    |   |     |   | 3.04    |     |   |   | 3.21     |   |   |     | 2.97    |   |   |   | 3.18 |   |
| Average                  equity to average assets                     |   |     | 7.05    |   |     |   | 7.54    |     |   |   | 7.84     |   |   |     | 8.13    |   |   |   | 8.48 |   |
| Dividend                  payout ratio (7)                            |   |     | 34.04   |   |     |   | 20.63   |     |   |   | 24.64    |   |   |     | 9.86    |   |   |   | 3.19 |   |
|                                                                  |   |     |    |   |     |   |    |     |   |   |     |   |   |     |    |   |   |   |   |   |
| **Asset                  Quality Ratios:**                            |   |     |    |   |     |   |    |     |   |   |     |   |   |     |    |   |   |   |   |   |
| Non-performing                  assets to total assets (8)            |   |     | 0.61    | %      |     |   | 0.42    | %        |   |   | 0.16     | %      |   |     | 0.39    | % |   |   | 0.36 | %  |
| Non-performing                  loans to total loans receivable (8)   |   |     | 0.74    |   |     |   | 0.55    |     |   |   | 0.23     |   |   |     | 0.60    |   |   |   | 0.61 |   |
| Allowance                  for loan losses to total loans receivable  |   |     | 0.89    |   |     |   | 0.81    |     |   |   | 0.96     |   |   |     | 1.16    |   |   |   | 1.40 |   |

| (1) | Net                income divided by average total                assets. |
|-----|---------------------------------------------------------------------------|

| (2) | Net                income divided by average total                equity. |
|-----|---------------------------------------------------------------------------|

| (3) | Net                interest income divided by average interest-earning                assets. |
|-----|-----------------------------------------------------------------------------------------------|

| (4) | The                difference between the weighted average yield on interest-earning                assets                and the weighted average cost of interest-bearing                liabilities. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Non-interest                expense divided by the sum of net interest income and non-interest                income. |
|-----|-----------------------------------------------------------------------------------------------------------------------|

| (6) | Non-interest                expense less real estate owned expenses, divided by average total                assets. |
|-----|----------------------------------------------------------------------------------------------------------------------|

| (7) | Dividends                paid to common stockholders as a percentage of net income available                to                common stockholders. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------|

| (8) | Non-performing                assets consist of non-accrual loans, loans accruing 90 days or more                past                due, and property acquired in settlement of                loans. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Table          of Contents*

**ITEM      7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL      CONDITION AND RESULTS OF OPERATIONS.**

**Executive      Summary**

**Merger      with Community Capital Bank**

**Fiscal      2007**

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*Table          of Contents*

**Fiscal      2008**

----

*Table          of Contents*

**Critical      Accounting Policies**

**Asset/Liability      Management**

**Discussion      of Market Risk—Interest Rate Sensitivity Analysis**

----

*Table          of Contents*

|                                                   |   | **<                  3 Mos.** |    |   | **4-12                  Mos.** |       |     | **1-3                  Yrs.** |   |       | **3-5                  Yrs.** |   |   | **5-10                  Yrs.** |    |   | **10+                  Yrs.** |       |   | **Total** |   |
|--------------------------------------------------------|--------|----------------------------------|---------|--------|--------------------------------|------------|----------|-------------------------------|--------|------------|-------------------------------|--------|--------|--------------------------------|---------|--------|-------------------------------|------------|--------|-----------|--------|
| **Rate                  Sensitive Assets:**            |   |                             |    |   |                           |       |     |                          |   |       |                          |   |   |                           |    |   |                          |       |   |      |   |
| Loans                                                  |   | $                                | 199,554 |   |                           | $          | 85,197   |                          |   | $          | 109,408                       |   |   | $                              | 116,888 |   |                          | $          | 28,577 |      |   | $ | 64,153 |   |   | $ | 603,777 |   |
| Mortgage                  Backed Securities            |   |                             | -       |   |                           |       | 146      |                          |   |       | 20,218                        |   |   |                           | 16,673  |   |                          |       | 2,048  |      |   |   | - |   |   |   | 39,085 |   |
| Federal                  Funds Sold                    |   |                             | 1,300   |   |                           |       | -        |                          |   |       | -                             |   |   |                           | -       |   |                          |       | -      |      |   |   | - |   |   |   | 1,300 |   |
| Investment                  Securities                 |   |                             | 1,749   |   |                           |       | 4,863    |                          |   |       | 11,047                        |   |   |                           | -       |   |                          |       | 10,830 |      |   |   | 2,280 |   |   |   | 30,769 |   |
| Total                  interest-earning assets         |   |                             | 202,603 |   |                           |       | 90,206   |                          |   |       | 140,673                       |   |   |                           | 133,561 |   |                          |       | 41,455 |      |   |   | 66,433 |   |   |   | 674,931 |   |
|                                                   |   |                             |    |   |                           |       |     |                          |   |       |                          |   |   |                           |    |   |                          |       |   |      |   |   |   |   |   |   |   |   |
| **Rate                  Sensitive Liabilities:**       |   |                             |    |   |                           |       |     |                          |   |       |                          |   |   |                           |    |   |                          |       |   |      |   |   |   |   |   |   |   |   |
| NOW                  accounts                          |   |                             | 2,224   |   |                           |       | 2,566    |                          |   |       | 6,157                         |   |   |                           | 5,220   |   |                          |       | 6,903  |      |   |   | 5,839 |   |   |   | 28,909 |   |
| Savings                  Accounts                      |   |                             | 10,615  |   |                           |       | 12,246   |                          |   |       | 29,384                        |   |   |                           | 24,911  |   |                          |       | 32,941 |      |   |   | 27,863 |   |   |   | 137,960 |   |
| Money                  market accounts                 |   |                             | 3,616   |   |                           |       | 4,171    |                          |   |       | 10,009                        |   |   |                           | 8,486   |   |                          |       | 11,221 |      |   |   | 9,492 |   |   |   | 46,995 |   |
| Certificate                  of Deposits               |   |                             | 119,670 |   |                           |       | 178,173  |                          |   |       | 36,523                        |   |   |                           | 13,388  |   |                          |       | -      |      |   |   | - |   |   |   | 347,753 |   |
| Borrowings                                             |   |                             | 14,800  |   |                           |       | 30,817   |                          |   |       | 15,276                        |   |   |                           | -       |   |                          |       | -      |      |   |   | - |   |   |   | 60,893 |   |
| Total                  interest-bearing liabilities    |   | ** **                       | 150,925 |   |                           | ** ** | 227,973  |                          |   | ** ** | 97,349                        |   |   | ** **                     | 52,005  |   |                          | ** ** | 51,065 |      |   | ** ** | 43,194 |   |   |   | 622,510 |   |
|                                                   |   |                             |    |   |                           |       |     |                          |   |       |                          |   |   |                           |    |   |                          |       |   |      |   |   |   |   |   |   |   |   |
| Interest                  Sensitivity Gap              |   | $                                | 51,678  |   |                           | $          | (137,767 | )                             |   | $          | 43,324                        |   |   | $                              | 81,556  |   |                          | $          | (9,610 | )         |   | $ | 23,239 |   |   | $ | 52,420 |   |
|                                                   |   |                             |    |   |                           |       |     |                          |   |       |                          |   |   |                           |    |   |                          |       |   |      |   |   |   |   |   |   |   |   |
| Cumulative                  Interest Sensitivity Gap   |   | $                                | 51,678  |   |                           | $          | (86,089  | )                             |   | $          | (42,765                       | )      |   | $                              | 38,791  |   |                          | $          | 29,181 |      |   | $ | 52,420 |   |   |   |   |   |
| Ratio                  of Cumulative Gap to Total Rate |   |                             |    |   |                           |       |     |                          |   |       |                          |   |   |                           |    |   |                          |       |   |      |   |
| Sensitive                  assets                      |   |                             | 7.66    | %      |                           |       | -12.76   | %                             |   |       | -6.34                         | %      |   |                           | 5.75    | %      |                          |       | 4.32   | %         |   |   | 7.77 | % |   |   |   |   |

----

*Table          of Contents*

*Net        Portfolio Value (“NPV”) Analysis.*

|                                                 |   |  **Net                  Portfolio Value** |               |   |  **NPV                  as % of PV of Assets** |
|------------------------------------------------------|--------|------------------------------------------------|--------------------|--------|-----------------------------------------------------|
| **Change                  in Rate**                  |   | **$                  Amount**                  |               |   | **$                  Change**                       |   |   | **%                  Change** |   |   | **NPV                  Ratio** |   | **Change** |
| +300                  bp                             |   |                                           |   70,050 |   |                                                |   | -25,205 |   |   |   | -26% |   |   |   |  9.50% |   | -289                  bp |
| +200                  bp                             |   |                                           |   78,751 |   |                                                |   | -16,504 |   |   |   | -17% |   |   |   | 10.53% |   | -187                  bp |
| +100                  bp                             |   |                                           |   87,260 |   |                                                |   |  -7,995 |   |   |   |  -8% |   |   |   | 11.51% |   |  -                  89 bp |
|                        0 bp |   |                                           |   95,255 |   |                                                |   |                         -- |   |   |   | -- |   |   |   | 12.40% |   |                      -- bp |
| (100)                  bp                            |   |                                           | 103,264            |   |                                                |   |                    8,009 |   |   |   |                    8% |   |   |   | 13.26% |   |                     87 bp |
| (200)                  bp                            |   |                                           | 110,730            |   |                                                |   | 15,475 |   |   |   |  16% |   |   |   | 14.05% |   | 165                  bp |

|                                                           |   |                  **March                  31,** |   |
|----------------------------------------------------------------|--------|------------------------------------------------------|--------|
|                                                           |   | **2007**                                             |   |
| **Risk                  Measures: +200 BP Rate Shock:**        |   |                                                 |   |
| Pre-shock                  NPV Ratio: NPV as % of PV of Assets |   | 12.40%                                               |   |
| Post-shock                  NPV Ratio                          |   | 10.53%                                               |   |
| Sensitivity                  Measure: Decline in NPV Ratio     |   | 187                  bp               |   |

----

*Table          of Contents*

**Average      Balance, Interest and Average Yields and Rates**

|                                                                                                       |   | **2007**    |    |   | **2006**     |   |   | **2005**       |   |
|------------------------------------------------------------------------------------------------------------|--------|-------------|---------|--------|--------------|--------|--------|----------------|--------|
|                                                                                                       |   | **Average** |    |   |         |   |   | **Average**    |   |   | **Average** |   |   |   |   |   | **Average** |   |   | **Average** |   |   |   |   |   | **Average** |   |
| **Interest                  Earning Assets:**                                                              |   | **Balance** |    |   | **Interest** |   |   | **Yield/Cost** |   |   | **Balance** |   |   | **Interest** |   |   | **Yield/Cost** |   |   | **Balance** |   |   | **Interest** |   |   | **Yield/Cost** |   |
|                                                                                                       |   |        |    |   |         |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                                                                                                      |   | $           | 558,058 |   |         | $      | 37,278 |           |   |   | 6.68 | % |   | $ | 443,461 |   |   | $ | 26,563 |   |   |   | 5.99 | % |   | $ | 384,916 |   |   | $ | 22,940 |   |   |   | 5.96 | % |
| Investment                  securities                                                                     |   |        | 27,161  |   |         |   | 1,325  |           |   |   | 4.88 | % |   |   | 25,698 |   |   |   | 971 |   |   |   | 3.78 | % |   |   | 29,547 |   |   |   | 827 |   |   |   | 2.80 | % |
| Mortgage-backed                  securities                                                                |   |        | 64,682  |   |         |   | 2,877  |           |   |   | 4.45 | % |   |   | 113,574 |   |   |   | 4,439 |   |   |   | 3.91 | % |   |   | 125,643 |   |   |   | 4,605 |   |   |   | 3.67 | % |
| Fed                  funds sold                                                                            |   |        | 5,145   |   |         |   | 261    |           |   |   | 5.07 | % |   |   | 12,166 |   |   |   | 412 |   |   |   | 3.39 | % |   |   | 10,724 |   |   |   | 174 |   |   |   | 1.62 | % |
| Total                  interest earning assets                                                             |   |        | 655,046 |   |         |   | 41,741 |           |   |   | 6.37 | % |   |   | 594,899 |   |   |   | 32,385 |   |   |   | 5.44 | % |   |   | 550,830 |   |   |   | 28,546 |   |   |   | 5.18 | % |
| Non-interest                  earning assets                                                               |   |        | 44,576  |   |         |   |   |           |   |   |   |   |   |   | 35,198 |   |   |   |   |   |   |   |   |   |   |   | 31,677 |   |   |   |   |   |   |   |   |   |
| Total                  assets                                                                              |   | $           | 699,622 |   |         |   |   |           |   |   |   |   |   | $ | 630,097 |   |   |   |   |   |   |   |   |   |   | $ | 582,507 |   |   |   |   |   |   |   |   |   |
|                                                                                                       |   |        |    |   |         |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Interest                  Bearing Liabilities:**                                                         |   |        |    |   |         |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                                                  |   |        |    |   |         |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW                  demand                                                                                |   | $           | 25,313  |   |         | $      | 98     |           |   |   | 0.39 | % |   | $ | 24,397 |   |   | $ | 74 |   |   |   | 0.30 | % |   | $ | 22,933 |   |   | $ | 69 |   |   |   | 0.30 | % |
| Savings                  and clubs                                                                         |   |        | 136,785 |   |         |   | 931    |           |   |   | 0.68 | % |   |   | 137,934 |   |   |   | 919 |   |   |   | 0.67 | % |   |   | 133,621 |   |   |   | 801 |   |   |   | 0.60 | % |
| Money                  market savings                                                                      |   |        | 43,303  |   |         |   | 1,133  |           |   |   | 2.62 | % |   |   | 36,583 |   |   |   | 601 |   |   |   | 1.64 | % |   |   | 30,116 |   |   |   | 302 |   |   |   | 1.00 | % |
| Certificates                  of deposit                                                                   |   |        | 312,452 |   |         |   | 13,036 |           |   |   | 4.17 | % |   |   | 237,992 |   |   |   | 7,297 |   |   |   | 3.07 | % |   |   | 208,584 |   |   |   | 4,258 |   |   |   | 2.04 | % |
| Mortgagors                  deposits                                                                       |   |        | 2,154   |   |         |   | 30     |           |   |   | 1.39 | % |   |   | 2,044 |   |   |   | 30 |   |   |   | 1.47 | % |   |   | 2,217 |   |   |   | 25 |   |   |   | 1.13 | % |
| Total                  deposits                                                                            |   |        | 520,007 |   |         |   | 15,228 |           |   |   | 2.93 | % |   |   | 438,950 |   |   |   | 8,921 |   |   |   | 2.03 | % |   |   | 397,471 |   |   |   | 5,455 |   |   |   | 1.37 | % |
| Borrowed                  money                                                                            |   |        | 78,853  |   |         |   | 4,007  |           |   |   | 5.08 | % |   |   | 107,551 |   |   |   | 4,572 |   |   |   | 4.25 | % |   |   | 109,787 |   |   |   | 4,303 |   |   |   | 3.92 | % |
| Total                  interest bearing liabilities                                                        |   |        | 598,860 |   |         |   | 19,235 |           |   |   | 3.21 | % |   |   | 546,501 |   |   |   | 13,493 |   |   |   | 2.47 | % |   |   | 507,258 |   |   |   | 9,758 |   |   |   | 1.92 | % |
|                                                                                                       |   |        |    |   |         |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest-bearing                  liabilities:                                                         |   |        |    |   |         |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand                                                                                                     |   |        | 40,676  |   |         |   |   |           |   |   |   |   |   |   | 29,079 |   |   |   |   |   |   |   |   |   |   |   | 22,857 |   |   |   |   |   |   |   |   |   |
| Other                  liabilities                                                                         |   |        | 10,739  |   |         |   |   |           |   |   |   |   |   |   | 6,980 |   |   |   |   |   |   |   |   |   |   |   | 6,724 |   |   |   |   |   |   |   |   |   |
| Total                  liabilities                                                                         |   |        | 650,275 |   |         |   |   |           |   |   |   |   |   |   | 582,560 |   |   |   |   |   |   |   |   |   |   |   | 536,839 |   |   |   |   |   |   |   |   |   |
| Stockholders'                  equity                                                                      |   |        | 49,347  |   |         |   |   |           |   |   |   |   |   |   | 47,537 |   |   |   |   |   |   |   |   |   |   |   | 45,668 |   |   |   |   |   |   |   |   |   |
| Total                  liabilities and stockholders' equity                                                |   | $           | 699,622 |   |         |   |   |           |   |   |   |   |   | $ | 630,097 |   |   |   |   |   |   |   |   |   |   | $ | 582,507 |   |   |   |   |   |   |   |   |   |
| Net                  interest income                                                                       |   |        |    |   |         | $      | 22,506 |           |   |   |   |   |   |   |   |   |   | $ | 18,892 |   |   |   |   |   |   |   |   |   |   | $ | 18,788 |   |   |   |   |   |
|                                                                                                       |   |        |    |   |         |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average                  interest rate spread                                                              |   |        |    |   |         |   |   |           |   |   | 3.16 | % |   |   |   |   |   |   |   |   |   |   | 2.97 | % |   |   |   |   |   |   |   |   |   |   | 3.26 | % |
|                                                                                                       |   |        |    |   |         |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  interest margin                                                                       |   |        |    |   |         |   |   |           |   |   | 3.44 | % |   |   |   |   |   |   |   |   |   |   | 3.18 | % |   |   |   |   |   |   |   |   |   |   | 3.41 | % |
|                                                                                                       |   |        |    |   |         |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratio                  of average interest-earning assets to interest-earning                  liabilities |   |        |    |   |         |   |   |           |   |   | 109.38 | % |   |   |   |   |   |   |   |   |   |   | 108.86 | % |   |   |   |   |   |   |   |   |   |   | 108.59 | % |

----

*Table          of Contents*

**Rate/Volume      Analysis**

|                                                      |   | **2007                    vs. 2006**              |   |   | **2006                    vs. 2005**              |   |
|-----------------------------------------------------------|--------|---------------------------------------------------|--------|--------|---------------------------------------------------|--------|
|                                                      |   | **Increase                    (Decrease) due to** |   |   | **Increase                    (Decrease) due to** |   |
|                                                      |   | **Volume**                                        |   |   | **Rate**                                          |   |   | **Total** |   |   | **Volume** |   |   | **Rate** |   |   | **Total** |   |
| **Interest                    Earning Assets:**           |   |                                              |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                                                     |   | $                                                 | 6,864  |   |                                              | $      | 3,060 |   |   | $ | 9,924 |   |   | $ | 3,489 |   |   | $ | 116 |   |   | $ | 3,605 |   |
| Investment                    securities                  |   |                                              | 1,473  |   |                                              |   | 172 |   |   |   | 1,645 |   |   |   | (108 | ) |   |   | 289 |   |   |   | 181 |   |
| Mortgage-backed                    securities             |   |                                              | (3,377 | )      |                                              |   | 1,102 |   |   |   | (2,276 | ) |   |   | (442 | ) |   |   | 306 |   |   |   | (136 | ) |
| Fed                    funds sold, FHLB stock & other |   |                                              | (238   | )      |                                              |   | 205 |   |   |   | (33 | ) |   |   | 23 |   |   |   | 189 |   |   |   | 212 |   |
| Total                    interest earning assets          |   |                                              | 4,722  |   |                                              |   | 4,539 |   |   |   | 9,260 |   |   |   | 2,962 |   |   |   | 900 |   |   |   | 3,862 |   |
|                                                      |   |                                              |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Interest                    Bearing Liabilities:**      |   |                                              |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                  |   |                                              |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW                    demand                             |   |                                              | 3      |   |                                              |   | 20 |   |   |   | 23 |   |   |   | 4 |   |   |   | 1 |   |   |   | 5 |   |
| Savings                    and clubs                      |   |                                              | (8     | )      |                                              |   | 20 |   |   |   | 12 |   |   |   | 26 |   |   |   | 89 |   |   |   | 115 |   |
| Money                    market savings                   |   |                                              | 110    |   |                                              |   | 356 |   |   |   | 467 |   |   |   | 65 |   |   |   | 193 |   |   |   | 258 |   |
| Certificates                    of deposit                |   |                                              | 2,283  |   |                                              |   | 2,632 |   |   |   | 4,915 |   |   |   | 600 |   |   |   | 2,137 |   |   |   | 2,737 |   |
| Mortgagors                    deposits                    |   |                                              | 2      |   |                                              |   | (2 | ) |   |   | 0 |   |   |   | (2 | ) |   |   | 8 |   |   |   | 6 |   |
| Total                    deposits                         |   |                                              | 2,390  |   |                                              |   | 3,026 |   |   |   | 5,417 |   |   |   | 693 |   |   |   | 2,428 |   |   |   | 3,121 |   |
| Borrowed                    money                         |   |                                              | (1,220 | )      |                                              |   | 893 |   |   |   | (327 | ) |   |   | (88 | ) |   |   | 364 |   |   |   | 276 |   |
| Total                    interest bearing liabilities     |   |                                              | 1,170  |   |                                              |   | 3,919 |   |   |   | 5,090 |   |   |   | 605 |   |   |   | 2,792 |   |   |   | 3,397 |   |
|                                                      |   |                                              |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                    change in interest income          |   | $                                                 | 3,552  |   |                                              | $      | 620 |   |   | $ | 4,170 |   |   | $ | 2,357 |   |   | $ | (1,892 | ) |   | $ | 465 |   |

** Comparison      of Financial Condition at March 31, 2007 and 2006**

----

*Table          of Contents*

**Comparison      of Operating Results for the Years Ended March 31, 2007 and      2006**

***Net      Income***

***Interest      Income***

----

*Table          of Contents*

***Interest**Expense***

***Net      Interest Income***

----

*Table          of Contents*

***Provision      for Loan Losses***

***Non-Interest      Income***

***Non*-*Interest**Expense***

***Income**Tax**Expense***

**Comparison      of Operating Results for the Years Ended March 31, 2006 and      2005**

***Net      Income***

***Interest      Income***

----

*Table          of Contents*

***Interest**Expense***

***Net      Interest Income***

----

*Table          of Contents*

***Provision      for Loan Losses***

***Non-Interest      Income***

***Non*-*Interest**Expense***

***Income**Tax**Expense***

**Liquidity      and Capital Resources**

----

*Table          of Contents*

**Off      Balance Sheet Arrangements and Contractual Obligations**

|                                                                  |   | **2007** |    |   | **2006** |   |
|-----------------------------------------------------------------------|--------|----------|---------|--------|----------|--------|
|                                                                  |   |     |    |   |     |   |
| Commitments                to originate mortgage loans                |   | $        | 107,115 |   |     | $      | 64,163 |   |
| Commitments                to originate commercial and consumer loans |   |     | 214     |   |     |   | 439 |   |
| Lines                of credit                                        |   |     | 300     |   |     |   | - |   |
| Letters                of credit                                      |   |     | -       |   |     |   | 1,795 |   |
| Total                                                                 |   | $        | 107,629 |   |     | $      | 66,397 |   |

----

*Table          of Contents*

|                                                                                                         |   | **Payments                  due by period** |   |
|--------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|--------|
| **Contractual                  Obligations**                                                                 |   | **Total**                                   |   |   | **<                  1Yr.** |   |   | **1-3                  Yrs.** |   |   | **3-5                  Yrs.** |   |   | **5+                  Yrs.** |   |
| Long                  term debt obligations:                                                                 |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| FHLB                  advances                                                                               |   | $                                           | 47,775 |   |   | $ | 32,500 |   |   | $ | 15,107 |   |   | $ | - |   |   | $ | 168 |   |
| Guaranteed                  preferred beneficial interest in junior subordinated                  debentures |   |                                        | 13,318 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 13,318 |   |
| Total                  long term debt obligations                                                            |   |                                        | 61,093 |   |   |   | 32,500 |   |   |   | 15,107 |   |   |   | - |   |   |   | 13,486 |   |
|                                                                                                         |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                  lease obligations:                                                                |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Lease                  obligations for rental properties                                                     |   |                                        | 8,139  |   |   |   | 915 |   |   |   | 1,924 |   |   |   | 1,716 |   |   |   | 3,584 |   |
| Total                  contractual obligations                                                               |   | $                                           | 69,232 |   |   | $ | 33,415 |   |   | $ | 17,031 |   |   | $ | 1,716 |   |   | $ | 17,070 |   |

**Regulatory      Capital Position**

|                                                                      |   | **GAAP****Capital** |   |   | **Tangible****Equity** |   |   | **Leverage****Capital** |   |   | **Risk-Based****Capital** |   |
|---------------------------------------------------------------------------|--------|---------------------|--------|--------|------------------------|--------|--------|-------------------------|--------|--------|---------------------------|--------|
|                                                                      |   |                |   |   |                   |   |   |                    |   |   |                      |   |
| Stockholders'                    Equity at March 31, 2007 (1)        |   | $                   | 64,543 |   |                   | $      | 64,543 |                    |   | $      | 64,543                    |   |   | $ | 64,543 |   |
|                                                                      |   |                |   |   |                   |   |   |                    |   |   |                      |   |   |   |   |   |
| Add:                                                                      |   |                |   |   |                   |   |   |                    |   |   |                      |   |   |   |   |   |
| General                    valuation allowances                           |   |                |   |   |                   |   | -      |                    |   |   | -                         |   |   |   | 5,409 |   |
| Deduct:                                                                   |   |                |   |   |                   |   |   |                    |   |   |                      |   |   |   |   |   |
| Unrealized                    gains on securities available-for-sale, net |   |                |   |   |                   |   | 372    |                    |   |   | 372                       |   |   |   | 372 |   |
| Goodwill                    and qualifying intangible assets, net         |   |                |   |   |                   |   | 6,400  |                    |   |   | 6,400                     |   |   |   | 6,400 |   |
| Other                                                                     |   |                |   |   |                   |   | (31    | )                       |   |   | (31                       | )      |   |   | (31 | ) |
| Regulatory                    Capital                                     |   |                |   |   |                   |   | 57,802 |                    |   |   | 57,802                    |   |   |   | 63,211 |   |
| Minimum                    Capital requirement                            |   |                |   |   |                   |   | 14,641 |                    |   |   | 29,293                    |   |   |   | 49,241 |   |
| Regulatory                    Capital Excess                              |   |                |   |   |                   | $      | 43,161 |                    |   | $      | 28,509                    |   |   | $ | 13,970 |   |

**Impact      of Inflation and Changing Prices**

**IT**
**EM**
**      7A.  **

**QUANTITATIVE      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.**

**ITEM      8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY      DATA.**

----

*Table          of Contents*

**Report      of Independent Registered Public Accounting Firm**

----

*Table          of Contents*

**CARVER      BANCORP, INC. AND SUBSIDIARIES**

**CONSOLIDATED      STATEMENTS OF FINANCIAL CONDITION**

**(In        thousands)**

|                                                                                                                                                                                                                                                                                                   |   | **March                  31,** |    |   | **March                  31,** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|---------|--------|--------------------------------|--------|
|                                                                                                                                                                                                                                                                                                   |   | **2007**                       |    |   | **2006**                       |   |
|                                                                                                                                                                                                                                                                                                   |   |                           |    |   |                           |   |
| **ASSETS**                                                                                                                                                                                                                                                                                             |   |                           |    |   |                           |   |
| Cash                  and cash equivalents:                                                                                                                                                                                                                                                            |   |                           |    |   |                           |   |
| Cash                  and due from banks                                                                                                                                                                                                                                                               |   | $                              | 14,619  |   |                           | $      | 13,604 |   |
| Federal                  funds sold                                                                                                                                                                                                                                                                    |   |                           | 1,300   |   |                           |   | 8,700 |   |
| Interest                  earning deposits                                                                                                                                                                                                                                                             |   |                           | 1,431   |   |                           |   | 600 |   |
| Total                  cash and cash equivalents                                                                                                                                                                                                                                                       |   |                           | 17,350  |   |                           |   | 22,904 |   |
| Securities:                                                                                                                                                                                                                                                                                            |   |                           |    |   |                           |   |   |   |
| Available-for-sale,                  at fair value (including pledged as collateral of $34,649 and $79,211at                  March 31, 2007 and 2006, respectively)                                                                                                                                   |   |                           | 47,980  |   |                           |   | 81,882 |   |
| Held-to-maturity,                  at amortized cost (including pledged as collateral of $18,581 and                  $26,039                  at March 31, 2007 and 2006, respectively; fair value of $19,005                  and                  $25,880 at March 31, 2007 and 2006, respectively) |   |                           | 19,137  |   |                           |   | 26,404 |   |
| Total                  securities                                                                                                                                                                                                                                                                      |   |                           | 67,117  |   |                           |   | 108,286 |   |
|                                                                                                                                                                                                                                                                                                   |   |                           |    |   |                           |   |   |   |
| Loans                  held-for-sale                                                                                                                                                                                                                                                                   |   |                           | 23,226  |   |                           |   | -- |   |
|                                                                                                                                                                                                                                                                                                   |   |                           |    |   |                           |   |   |   |
| Loans                  receivable:                                                                                                                                                                                                                                                                     |   |                           |    |   |                           |   |   |   |
| Real                  estate mortgage loans                                                                                                                                                                                                                                                            |   |                           | 533,667 |   |                           |   | 495,994 |   |
| Consumer                  and commercial business loans                                                                                                                                                                                                                                                |   |                           | 52,293  |   |                           |   | 1,453 |   |
| Allowance                  for loan losses                                                                                                                                                                                                                                                             |   |                           | (5,409  | )      |                           |   | (4,015 | ) |
| Total                  loans receivable, net                                                                                                                                                                                                                                                           |   |                           | 580,551 |   |                           |   | 493,432 |   |
|                                                                                                                                                                                                                                                                                                   |   |                           |    |   |                           |   |   |   |
| Office                  properties and equipment, net                                                                                                                                                                                                                                                  |   |                           | 14,626  |   |                           |   | 13,194 |   |
| Federal                  Home Loan Bank of New York stock, at cost                                                                                                                                                                                                                                     |   |                           | 3,239   |   |                           |   | 4,627 |   |
| Bank                  owned life insurance                                                                                                                                                                                                                                                             |   |                           | 8,795   |   |                           |   | 8,479 |   |
| Accrued                  interest receivable                                                                                                                                                                                                                                                           |   |                           | 4,335   |   |                           |   | 2,970 |   |
| Goodwill                                                                                                                                                                                                                                                                                               |   |                           | 5,716   |   |                           |   | -- |   |
| Core                  deposit intangibles, net                                                                                                                                                                                                                                                         |   |                           | 684     |   |                           |   | -- |   |
| Other                  assets                                                                                                                                                                                                                                                                          |   |                           | 14,313  |   |                           |   | 7,504 |   |
| Total                  assets                                                                                                                                                                                                                                                                          |   | $                              | 739,952 |   |                           | $      | 661,396 |   |
|                                                                                                                                                                                                                                                                                                   |   |                           |    |   |                           |   |   |   |
| **LIABILITIES                  AND STOCKHOLDERS' EQUITY**                                                                                                                                                                                                                                              |   |                           |    |   |                           |   |   |   |
| Liabilities:                                                                                                                                                                                                                                                                                           |   |                           |    |   |                           |   |   |   |
| Deposits                                                                                                                                                                                                                                                                                               |   | $                              | 615,122 |   |                           | $      | 504,638 |   |
| Advances                  from the Federal Home Loan Bank of New York and other borrowed                  money                                                                                                                                                                                        |   |                           | 61,093  |   |                           |   | 94,195 |   |
| Other                  liabilities                                                                                                                                                                                                                                                                     |   |                           | 12,110  |   |                           |   | 13,866 |   |
| Total                  liabilities                                                                                                                                                                                                                                                                     |   |                           | 688,325 |   |                           |   | 612,699 |   |
| Stockholders'                  equity:                                                                                                                                                                                                                                                                 |   |                           |    |   |                           |   |   |   |
| Common                  stock (par value $0.01 per share: 10,000,000 shares authorized;                  2,524,691                  shares issued; 2,507,985 and 2,506,822 outstanding at March 31,                  2007 and                  2006, respectively)                                     |   |                           | 25      |   |                           |   | 25 |   |
| Additional                  paid-in capital                                                                                                                                                                                                                                                            |   |                           | 23,996  |   |                           |   | 23,935 |   |
| Retained                  earnings                                                                                                                                                                                                                                                                     |   |                           | 27,436  |   |                           |   | 25,736 |   |
| Unamortized                  awards of common stock under ESOP and Management Recognition Plan                  ("MRP")                                                                                                                                                                                |   |                           | (4      | )      |                           |   | (22 | ) |
| Treasury                  stock, at cost (16,706 and 17,869 shares at March 31, 2007 and                  2006,                  respectively)                                                                                                                                                         |   |                           | (277    | )      |                           |   | (303 | ) |
| Accumulated                  other comprehensive income (loss)                                                                                                                                                                                                                                         |   |                           | 451     |   |                           |   | (674 | ) |
| Total                  stockholders' equity                                                                                                                                                                                                                                                            |   |                           | 51,627  |   |                           |   | 48,697 |   |
| Total                  liabilities and stockholders' equity                                                                                                                                                                                                                                            |   | $                              | 739,952 |   |                           | $      | 661,396 |   |
|                                                                                                                                                                                                                                                                                                   |   |                           |    |   |                           |   |   |   |
| See                  accompanying notes to consolidated financial statements                                                                                                                                                                                                                           |   |                           |    |   |                           |   |   |   |

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*Table            of Contents*

**CARVER      BANCORP, INC. AND SUBSIDIARIES**

**CONSOLIDATED      STATEMENTS OF INCOME**

**(In      thousands, except per share data)**

|                                                                 |   | **Years                  Ended March 31,** |   |
|----------------------------------------------------------------------|--------|--------------------------------------------|--------|
|                                                                 |   | **2007**                                   |   |   | **2006** |   |   | **2005** |   |
|                                                                 |   |                                       |   |   |   |   |   |   |   |
| Interest                  Income:                                    |   |                                       |   |   |   |   |   |   |   |
| Loans                                                                |   | $                                          | 37,277 |   |   | $ | 26,563 |   |   | $ | 22,940 |   |
| Mortgage-backed                  securities                          |   |                                       | 2,877  |   |   |   | 4,439 |   |   |   | 4,605 |   |
| Investment                  securities                               |   |                                       | 1,325  |   |   |   | 971 |   |   |   | 827 |   |
| Federal                  funds sold                                  |   |                                       | 261    |   |   |   | 412 |   |   |   | 174 |   |
| Total                  interest income                               |   |                                       | 41,740 |   |   |   | 32,385 |   |   |   | 28,546 |   |
|                                                                 |   |                                       |   |   |   |   |   |   |   |   |   |   |
| Interest                  expense:                                   |   |                                       |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                             |   |                                       | 15,227 |   |   |   | 8,921 |   |   |   | 5,455 |   |
| Advances                  and other borrowed money                   |   |                                       | 4,007  |   |   |   | 4,572 |   |   |   | 4,303 |   |
| Total                  interest expense                              |   |                                       | 19,234 |   |   |   | 13,493 |   |   |   | 9,758 |   |
|                                                                 |   |                                       |   |   |   |   |   |   |   |   |   |   |
| Net                  interest income                                 |   |                                       | 22,506 |   |   |   | 18,892 |   |   |   | 18,788 |   |
|                                                                 |   |                                       |   |   |   |   |   |   |   |   |   |   |
| Provision                  for loan losses                           |   |                                       | 276    |   |   |   | -- |   |   |   | -- |   |
| Net                  interest income after provision for loan losses |   |                                       | 22,230 |   |   |   | 18,892 |   |   |   | 18,788 |   |
|                                                                 |   |                                       |   |   |   |   |   |   |   |   |   |   |
| Non-interest                  income:                                |   |                                       |   |   |   |   |   |   |   |   |   |   |
| Depository                  fees and charges                         |   |                                       | 2,476  |   |   |   | 2,458 |   |   |   | 2,212 |   |
| Loan                  fees and service charges                       |   |                                       | 1,238  |   |   |   | 2,231 |   |   |   | 1,675 |   |
| Write-down                  of loans held for sale                   |   |                                       | (702   | ) |   |   | -- |   |   |   | -- |   |
| Impairment                  of securities                            |   |                                       | --     |   |   |   | -- |   |   |   | (1,547 | ) |
| Gain                  (loss) on sale of securities                   |   |                                       | (624   | ) |   |   | -- |   |   |   | 94 |   |
| Gain                  on sale of loans                               |   |                                       | 192    |   |   |   | 351 |   |   |   | 277 |   |
| Loss                  on sale of real estate owned                   |   |                                       | (108   | ) |   |   | -- |   |   |   | - |   |
| Grant                  income                                        |   |                                       | --     |   |   |   | -- |   |   |   | 1,140 |   |
| Other                                                                |   |                                       | 397    |   |   |   | 301 |   |   |   | 224 |   |
| Total                  non-interest income                           |   |                                       | 2,869  |   |   |   | 5,341 |   |   |   | 4,075 |   |
|                                                                 |   |                                       |   |   |   |   |   |   |   |   |   |   |
| Non-interest                  expense:                               |   |                                       |   |   |   |   |   |   |   |   |   |   |
| Employee                  compensation and benefits                  |   |                                       | 10,470 |   |   |   | 9,512 |   |   |   | 9,461 |   |
| Net                  occupancy expense                               |   |                                       | 2,667  |   |   |   | 2,284 |   |   |   | 1,957 |   |
| Equipment,                  net                                      |   |                                       | 2,071  |   |   |   | 1,939 |   |   |   | 1,608 |   |
| Merger                  related expenses                             |   |                                       | 1,258  |   |   |   | -- |   |   |   | 847 |   |
| Other                                                                |   |                                       | 6,873  |   |   |   | 5,399 |   |   |   | 4,823 |   |
| Total                  non-interest expense                          |   |                                       | 23,339 |   |   |   | 19,134 |   |   |   | 18,696 |   |
|                                                                 |   |                                       |   |   |   |   |   |   |   |   |   |   |
| Income                  before income taxes                          |   |                                       | 1,760  |   |   |   | 5,099 |   |   |   | 4,167 |   |
| Income                  tax (benefit) expense                        |   |                                       | (823   | ) |   |   | 1,329 |   |   |   | 1,518 |   |
| Net                  income                                          |   |                                       | 2,583  |   |   |   | 3,770 |   |   |   | 2,649 |   |
|                                                                 |   |                                       |   |   |   |   |   |   |   |   |   |   |
| Dividends                  payable to preferred stock                |   |                                       | --     |   |   |   | -- |   |   |   | 114 |   |
|                                                                 |   |                                       |   |   |   |   |   |   |   |   |   |   |
| Net                  income available to common stockholders         |   | $                                          | 2,583  |   |   | $ | 3,770 |   |   | $ | 2,535 |   |
|                                                                 |   |                                       |   |   |   |   |   |   |   |   |   |   |
| Earnings                  per common share:                          |   |                                       |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                |   | $                                          | 1.03   |   |   | $ | 1.50 |   |   | $ | 1.06 |   |
| Diluted                                                              |   | $                                          | 1.00   |   |   | $ | 1.45 |   |   | $ | 1.03 |   |

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*Table          of Contents*

**CARVER      BANCORP, INC. AND SUBSIDIARIES**

**CONSOLIDATED      STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY & COMPREHENSIVE      INCOME**

**(In      thousands)**

|                                                                                                                                  |   | **Preferred                    Stock** |   |   | **Common                    Stock** |       |   | **Additional                    Paid-In Capital** |   |       | **Retained                    Earnings** |   |   | **Treasury                    Stock** |       |   | **Accumulated                    Other Comprehensive Income (Loss)** |       |     | **Common                    Stock Acquired By ESOP** |   |       | **Common                    Stock Acquired By MRP ** |   |   | **Total                    Stock-holders' Equity** |     |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|--------|--------|-------------------------------------|------------|--------|---------------------------------------------------|--------|------------|------------------------------------------|--------|--------|---------------------------------------|------------|--------|----------------------------------------------------------------------|------------|----------|------------------------------------------------------|--------|------------|-----------------------------------------------------------|--------|--------|----------------------------------------------------|----------|
| **Balance                    - March 31, 2004**                                                                                       |   | **$**                                  | **1**  |   |                                | **$**      | **23** |                                              |   | **$**      | **23,882**                               |   |   | **$**                                 | **20,892** |   |                                                                 | **$**      | **(390** | **)**                                                |   | **$**      | **258**                                                   |   |   | **$**                                              | **--**   |   |   | **$** | **(21** | **)** |   | **$** | **44,645** |   |
| Comprehensive                    income :                                                                                             |   |                                   |   |   |                                |       |   |                                              |   |       |                                     |   |   |                                  |       |   |                                                                 |       |     |                                                 |   |       |                                                      |   |   |                                               |     |   |   |   |   |   |   |   |   |   |
| Net                    income                                                                                                         |   |                                   | --     |   |                                |       | --     |                                              |   |       | --                                       |   |   |                                  | 2,649      |   |                                                                 |       | --       |                                                 |   |       | --                                                        |   |   |                                               | --       |   |   |   | -- |   |   |   | 2,649 |   |
| Change                    in net unrealized gain on available-for-sale securities, net                    of                    taxes |   |                                   | --     |   |                                |       | --     |                                              |   |       | --                                       |   |   |                                  | --         |   |                                                                 |       | --       |                                                 |   |       | (493                                                      | )      |   |                                               | --       |   |   |   | -- |   |   |   | (493 | ) |
|                                                                                                                                  |   |                                   |   |   |                                |       |   |                                              |   |       |                                     |   |   |                                  |       |   |                                                                 |       |     |                                                 |   |       |                                                      |   |   |                                               |     |   |   |   |   |   |   |   |   |   |
| Dividends                    paid                                                                                                     |   |                                   | --     |   |                                |       | --     |                                              |   |       | --                                       |   |   |                                  | (793       | )      |                                                                 |       | --       |                                                 |   |       | --                                                        |   |   |                                               | --       |   |   |   | -- |   |   |   | (793 | ) |
| Preferred                    stock redemption                                                                                         |   |                                   | (1     | )      |                                |       | 2      |                                              |   |       | --                                       |   |   |                                  | --         |   |                                                                 |       | --       |                                                 |   |       | --                                                        |   |   |                                               | --       |   |   |   | -- |   |   |   | 1 |   |
| Treasury                    stock activity                                                                                            |   |                                   | --     |   |                                |       | --     |                                              |   |       | 55                                       |   |   |                                  | --         |   |                                                                 |       | (30      | )                                                    |   |       | --                                                        |   |   |                                               | --       |   |   |   | -- |   |   |   | 25 |   |
| Allocation                    of ESOP Stock                                                                                           |   |                                   | --     |   |                                |       | --     |                                              |   |       | --                                       |   |   |                                  | --         |   |                                                                 |       | --       |                                                 |   |       | --                                                        |   |   |                                               | (126     | ) |   |   | -- |   |   |   | (126 | ) |
| Purchase                    of shares for MRP                                                                                         |   |                                   | --     |   |                                |       | --     |                                              |   |       | --                                       |   |   |                                  | --         |   |                                                                 |       | --       |                                                 |   |       | --                                                        |   |   |                                               | --       |   |   |   | (107 | ) |   |   | (107 | ) |
| **Balance—March                    31, 2005**                                                                                   |   | ** **                             | **--** |   |                                | ** ** | **25** |                                              |   | ** ** | **23,937**                               |   |   | ** **                            | **22,748** |   |                                                                 | ** ** | **(420** | **)**                                                |   | ** ** | **(235**                                                  | **)**  |   | ** **                                         | **(126** | **)** |   | ** ** | **(128** | **)** |   | ** ** | **45,801** |   |
| Comprehensive                    income :                                                                                             |   |                                   |   |   |                                |       |   |                                              |   |       |                                     |   |   |                                  |       |   |                                                                 |       |     |                                                 |   |       |                                                      |   |   |                                               |     |   |   |   |   |   |   |   |   |   |
| Net                    income                                                                                                         |   |                                   | --     |   |                                |       | --     |                                              |   |       | --                                       |   |   |                                  | 3,770      |   |                                                                 |       | --       |                                                 |   |       | --                                                        |   |   |                                               | --       |   |   |   | -- |   |   |   | 3,770 |   |
| Loss                    on pension liability                                                                                          |   |                                   | --     |   |                                |       | --     |                                              |   |       | --                                       |   |   |                                  | --         |   |                                                                 |       | --       |                                                 |   |       | (281                                                      | )      |   |                                               | --       |   |   |   | -- |   |   |   | (281 | ) |
| Change                    in net unrealized loss on available-for-sale securities, net                    of                    taxes |   |                                   | --     |   |                                |       | --     |                                              |   |       | --                                       |   |   |                                  | --         |   |                                                                 |       | --       |                                                 |   |       | (158                                                      | )      |   |                                               | --       |   |   |   | -- |   |   |   | (158 | ) |

----

|                                                                                                                                  |   |       | **Preferred                      Stock** |   |   |       | Common                    Stock |   |   |       | **Additonal                    Paid-In Capital** |   |   |       | **Retained                    Earnings** |   |   |       | **Treasury                    Stock**  |   |   |       | **Accumulated                    Other Comprehensive Income (Loss)** |   |   |       | **Common                    Stock Acquired By  ESOP** |   |   |       | **Common                    Stock Acquired by MRP** |   |   |       | **Total                    Stock-Holders Equity** |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|------------|------------------------------------------|--------|--------|------------|---------------------------------|--------|--------|------------|--------------------------------------------------|--------|--------|------------|------------------------------------------|--------|--------|------------|---------------------------------------------|--------|--------|------------|----------------------------------------------------------------------|--------|--------|------------|------------------------------------------------------------|--------|--------|------------|-----------------------------------------------------|--------|--------|------------|---------------------------------------------------|--------|
| Dividends                    paid                                                                                                     |   |       | --                                       |   |   |       | --                              |   |   |       | --                                               |   |   |       | (782                                     | )      |   |       | --                                          |   |   |       | --                                                                   |   |   |       | --                                                         |   |   |       | --                                                  |   |   |       | (782                                              | )      |
| Treasury                    stock activity                                                                                            |   |       | --                                       |   |   |       | --                              |   |   |       | (2                                               | )      |   |       | --                                       |   |   |       | 117                                         |   |   |       | --                                                                   |   |   |       | --                                                         |   |   |       | --                                                  |   |   |       | 115                                               |   |
| Allocation                    of ESOP Stock                                                                                           |   |       | --                                       |   |   |       | --                              |   |   |       | --                                               |   |   |       | --                                       |   |   |       | --                                          |   |   |       | --                                                                   |   |   |       | 116                                                        |   |   |       | --                                                  |   |   |       | 116                                               |   |
| Purchase                    of shares for MRP                                                                                         |   |       | --                                       |   |   |       | --                              |   |   |       | --                                               |   |   |       | --                                       |   |   |       | --                                          |   |   |       | --                                                                   |   |   |       | --                                                         |   |   |       | 116                                                 |   |   |       | 116                                               |   |
| **Balance—March                    31, 2006**                                                                                   |   | ** ** | **--**                                   |   |   | ** ** | **25**                          |   |   | ** ** | **23,935**                                       |   |   | ** ** | **25,736**                               |   |   | ** ** | **(303**                                    | **)**  |   | ** ** | **(674**                                                             | **)**  |   | ** ** | **(10**                                                    | **)**  |   | ** ** | **(12**                                             | **)**  |   | ** ** | **48,697**                                        |   |
| Comprehensive                    income :                                                                                             |   |       |                                     |   |   |       |                            |   |   |       |                                             |   |   |       |                                     |   |   |       |                                        |   |   |       |                                                                 |   |   |       |                                                       |   |   |       |                                                |   |   |       |                                              |   |
| Net                    income                                                                                                         |   |       | --                                       |   |   |       | --                              |   |   |       | --                                               |   |   |       | 2,583                                    |   |   |       | --                                          |   |   |       | --                                                                   |   |   |       | --                                                         |   |   |       | --                                                  |   |   |       | 2,583                                             |   |
| Minimum                    pension liability adjustment                                                                               |   |       | --                                       |   |   |       | --                              |   |   |       | --                                               |   |   |       | --                                       |   |   |       | --                                          |   |   |       | 79                                                                   |   |   |       | --                                                         |   |   |       | --                                                  |   |   |       | 79                                                |   |
| Adjustment                    to initially implement SFAS 158                                                                         |   |       | --                                       |   |   |       | --                              |   |   |       | --                                               |   |   |       | --                                       |   |   |       | --                                          |   |   |       | 281                                                                  |   |   |       | --                                                         |   |   |       | --                                                  |   |   |       | 281                                               |   |
| Change                    in net unrealized loss on available-for-sale securities, net                    of                    taxes |   |       | --                                       |   |   |       | --                              |   |   |       | --                                               |   |   |       | --                                       |   |   |       | --                                          |   |   |       | 765                                                                  |   |   |       | --                                                         |   |   |       | --                                                  |   |   |       | 765                                               |   |
|                                                                                                                                  |   |       |                                     |   |   |       |                            |   |   |       |                                             |   |   |       |                                     |   |   |       |                                        |   |   |       |                                                                 |   |   |       |                                                       |   |   |       |                                                |   |   |       |                                              |   |
| Dividends                    paid                                                                                                     |   |       | --                                       |   |   |       | --                              |   |   |       | --                                               |   |   |       | (883                                     | )      |   |       | --                                          |   |   |       | --                                                                   |   |   |       | --                                                         |   |   |       | --                                                  |   |   |       | (883                                              | )      |
| Treasury                    stock activity                                                                                            |   |       | --                                       |   |   |       | --                              |   |   |       | 61                                               |   |   |       | --                                       |   |   |       | 26                                          |   |   |       | --                                                                   |   |   |       | --                                                         |   |   |       | --                                                  |   |   |       | 87                                                |   |
| Allocation                    of ESOP Stock                                                                                           |   |       | --                                       |   |   |       | --                              |   |   |       | --                                               |   |   |       | --                                       |   |   |       | --                                          |   |   |       | --                                                                   |   |   |       | 6                                                          |   |   |       | --                                                  |   |   |       | 6                                                 |   |
| Purchase                    of shares for MRP                                                                                         |   |       | --                                       |   |   |       | --                              |   |   |       | --                                               |   |   |       | --                                       |   |   |       | --                                          |   |   |       | --                                                                   |   |   |       | --                                                         |   |   |       | 12                                                  |   |   |       | 12                                                |   |
| **Balance—March                    31, 2007**                                                                                   |   | **$**      | **--**                                   |   |   | **$**      | **25**                          |   |   | **$**      | **23,996**                                       |   |   | **$**      | **27,436**                               |   |   | **$**      | **(277**                                    | **)**  |   | **$**      | **451**                                                              |   |   | **$**      | **(4**                                                     | **)**  |   | **$**      | **--**                                              |   |   | **$**      | **51,627**                                        |   |

----

*Table          of Contents*

**CARVER      BANCORP, INC. AND SUBSIDIARIES**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

**(Dollars      in thousands)**

|                                                                                                            |   | **Years                  Ended March 31,** |     |
|-----------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|----------|
|                                                                                                            |   | **2007**                                   |     |   | **2006** |   |   | **2005** |   |
| Cash                  flows from operating activities:                                                          |   |                                       |     |   |   |   |   |   |   |
| Net                  income                                                                                     |   | $                                          | 2,583    |   |   | $ | 3,770 |   |   | $ | 2,649 |   |
| Adjustments                  to reconcile net income to net cash from operating                  activities:    |   |                                       |     |   |   |   |   |   |   |   |   |   |
| Provision                  for loan losses                                                                      |   |                                       | 276      |   |   |   | - |   |   |   | - |   |
| Stock                  based compensation expense                                                               |   |                                       | 426      |   |   |   | 233 |   |   |   | 358 |   |
| Depreciation                  expense                                                                           |   |                                       | 1,581    |   |   |   | 1,546 |   |   |   | 1,423 |   |
| Amortization                  of premiums and discounts                                                         |   |                                       | (1,145   | ) |   |   | 863 |   |   |   | 1,502 |   |
| Impairment                  charge on securities                                                                |   |                                       | -        |   |   |   | - |   |   |   | 1,547 |   |
| Loss                  from sale of securities                                                                   |   |                                       | 624      |   |   |   | - |   |   |   | (94 | ) |
| Gain                  on sale of loans                                                                          |   |                                       | (192     | ) |   |   | (351 | ) |   |   | (277 | ) |
| Writedown                  on loans held-for-sale                                                               |   |                                       | 702      |   |   |   | - |   |   |   | - |   |
| Loss                  on sale of real estate owned                                                              |   |                                       | 108      |   |   |   | - |    |   |   | - |   |
| Originations                  of loans held-for-sale                                                       |   |                                       | (24,708  | ) |   |   | (12,646 | ) |   |   | (7,631 | ) |
| Proceeds                  from sale of loans held-for-sale                                                      |   |                                       | 14,422   |   |   |   | 12,197 |   |   |   | 8,319 |   |
| Changes                  in assets and liabilities:                                                             |   |                                       |     |   |   |   |   |   |   |   |   |   |
| Increase                  in accrued interest receivable                                                        |   |                                       | (1,365   | )  |   |   | (268 | ) |   |   | (213 | ) |
| Increase in                  other assets                                                                  |   |                                       | (2,662   | ) |   |   | (2,430 | ) |   |   | (7,618 | ) |
| (Decrease)                  increase in other liabilities                                                  |   |                                       | (4,330   | ) |   |   | 4,249 |   |   |   | (4,452 | ) |
| Net                  cash provided by (used in) operating activities                                            |   |                                       | (13,680  | )  |   |   | 7,163 |   |   |   | (4,487 | ) |
| Cash                  flows from investing activities:                                                          |   |                                       |     |   |   |   |   |   |   |   |   |   |
| Purchases                  of securities:                                                                       |   |                                       |     |   |   |   |   |   |   |   |   |   |
| Available-for-sale                                                                                              |   |                                       | -        |   |   |   | (26,811 | ) |   |   | (83,219 | ) |
| Held-to-maturity                                                                                                |   |                                       | -        |   |   |   | (19 | ) |   |   | - |   |
| Proceeds                  from principal payments, maturities and calls of                  securities:         |   |                                       |     |   |   |   |   |   |   |   |   |   |
| Available-for-sale                                                                                              |   |                                       | 26,539   |   |   |   | 60,645 |   |   |   | 51,383 |   |
| Held-to-maturity                                                                                                |   |                                       | 7,185    |   |   |   | 4,816 |   |   |   | 11,996 |   |
| Proceeds                  from sales of available-for-sale securities                                           |   |                                       | 57,942   |   |   |   | 1,575 |   |   |   | 7,288 |   |
| Originations                  of loans held-for-investment                                                 |   |                                       | (105,284 | ) |   |   | (98,704 | ) |   |   | (78,170 | ) |
| Loans                  purchased from third parties                                                             |   |                                       | (58,191  | ) |   |   | (96,140 | ) |   |   | (104,734 | ) |
| Principal                  collections on loans                                                                 |   |                                       | 146,410  |   |   |   | 113,482 |   |   |   | 112,603 |   |
| Proceeds                  from sales of loan originations held-for-investment                                   |   |                                       | 16,548   |   |   |   | 10,697 |   |   |   | - |   |
| Redemption                  (purchase) of FHLB-NY stock                                                         |   |                                       | 1,388    |   |   |   | 498 |   |   |   | (549 | ) |
| Additions                  to premises and equipment                                                            |   |                                       | (1,869   | ) |   |   | (1,082 | ) |   |   | (3,399 | ) |
|                    Proceeds from sale of real estate owned                                       |   |                                       | 404      |   |   |   |  - |   |   |   |  - |   |
| Payment                  for acquisition, net of cash acquired                                                  |   |                                       | (2,425   | ) |   |   | - |   |   |   | - |   |
| Net                  cash provided by (used in) investing activities                                            |   |                                       | 88,647   |   |   |   | (31,043 | ) |   |   | (86,801 | ) |
| Cash                  flows from financing activities:                                                          |   |                                       |     |   |   |   |   |   |   |   |   |   |
| Net                  (decrease)/increase in deposits                                                            |   |                                       | (33,657  | ) |   |   | 48,768 |   |   |   | 79,789 |   |
| Net                  (repayment of) proceeds from FHLB advances and other borrowed                  money       |   |                                       | (45,660  | ) |   |   | (21,507 | ) |   |   | 10,959 |   |
| Common                  stock repurchased                                                                       |   |                                       | (321     | ) |   |   | (115 | ) |   |   | (1,021 | ) |
| Dividends                  paid                                                                                 |   |                                       | (883     | ) |   |   | (782 | ) |   |   | (793 | ) |
| Net                  cash from financing activities                                                        |   |                                       | (80,521  | ) |   |   | 26,364 |   |   |   | 88,934 |   |
| Net                  (decrease) increase in cash and cash equivalents                                      |   |                                       | (5,554   | ) |   |   | 2,484 |   |   |   | (2,354 | ) |
| Cash                  and cash equivalents at beginning of the year                                             |   |                                       | 22,904   |   |   |   | 20,420 |   |   |   | 22,774 |   |
| Cash                  and cash equivalents at end of  the year                                        |   | $                                          | 17,350   |   |   | $ | 22,904 |   |   | $ | 20,420 |   |
|                                                                                                            |   |                                       |     |   |   |   |   |   |   |   |   |   |
| Supplemental                  information:                                                                      |   |                                       |     |   |   |   |   |   |   |   |   |   |
| Noncash                  Transfers-                                                                             |   |                                       |     |   |   |   |   |   |   |   |   |   |
| Change                  in unrealized loss on valuation of available-for-sale investments,                  net |   | $                                          | 765      |   |   | $ | (158 | ) |   | $ | (493 | ) |
|                                                                                                            |   |                                       |     |   |   |   |   |   |   |   |   |   |
| Cash                  paid for-                                                                                 |   |                                       |     |   |   |   |   |   |   |   |   |   |
| Interest                                                                                                        |   | $                                          | 19,510   |   |   | $ | 13,502 |   |   | $ | 9,718 |   |
| Income                  taxes                                                                                   |   | $                                          | 652      |   |   | $ | 2,107 |   |   | $ | 2,395 |   |

----

*Table          of Contents*

**CARVER      BANCORP, INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE      1.**
**SUMMARY      OF SIGNIFICANT ACCOUNTING POLICIES**

**Nature      of operations**

*Consolidation of Variable Interest Entities, an interpretation of ARB      No. 51*

*.*

**Basis      of consolidated financial statement presentation**

----

*Table          of Contents*

**Cash      and cash equivalents**

**Securities**

**Loans      Held-for-Sale**

**Loans      Receivable**

**Allowance      for Loan Losses**

----

*Table          of Contents*

|   | · | Establishment                of reserve amounts for all specifically identified criticized loans                that                have been designated as requiring attention by management’s internal loan                review program, as discussed further                below |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | An                average loss factor, giving effect to historical loss experience                over                several years and linked to cyclical trends, is applied to smaller                balance                homogenous types of loans not subject to specific review.  These                loans include residential one- to four-family, multifamily, nonresidential                and construction loans and also include consumer and business                loans. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*“Accounting by Creditors for Impairment of a      Loan”*

**Segment          Reporting**

*Disclosures about Segement of an Enterprise and Related Information*

**Concentration      of Risk**

**Office        Properties and Equipment**

| Buildings                and improvements | 10                to 25 years                                                  |
|-------------------------------------------|--------------------------------------------------------------------------------|
| Furnishings                and equipment  | 3                to 5 years                                                    |
| Leasehold                improvements     | Lesser                of useful life or remaining term of                lease |

----

*Table          of Contents*

**Federal      Home Loan Bank Stock**

**Bank      Owned Life Insurance**

**Mortgage      Servicing Rights**

** **

**Real      Estate Owned**

**Identifiable      Intangible Assets**

*“Goodwill and Other Intangible Assets”,*

**Income      Taxes**

----

*Table          of Contents*

**Impairment**

**Earnings      per Common Share**

**Treasury      Stock**

**Pension      Plans**

*Employers’Accounting for Defined Benefits Pension and Other Post-retirement          Plans- an          amendment of SFAS Statement Nos. 87,88,106 and 132(R)*

**Stock-Based        Compensation Plans**

*Share-Based Payment*
*Accounting for Stock-Based Compensation*
*Accounting for            Stock Issued *
*to Employees*

*Accounting for Stock-based Compensation – Transition and            Disclosure*

----

*Table          of Contents*

|                                                                                                                                                               |   | **2006** |      |   | **2005** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|-----------|--------|----------|--------|
| Net                Income available to common shareholders:                                                                                                        |   |     |      |   |     |   |
| As                reported                                                                                                                                         |   | $        | 3,770     |   |     | $      | 2,535 |   |
| Total                stock-based employee compensation expense determined under fair value                based methods for all awards, net of related tax effects |   |     | (105      | )      |     |   | (124 | ) |
| Pro                forma                                                                                                                                           |   | $        | 3,665     |   |     | $      | 2,411 |   |
|                                                                                                                                                               |   |     |      |   |     |   |   |   |
| Basic                earnings per share:                                                                                                                           |   |     |      |   |     |   |   |   |
| As                reported                                                                                                                                         |   | $        | 1.50      |   |     | $      | 1.06 |   |
| Pro                forma                                                                                                                                           |   |     | 1.46      |   |     |   | 1.01 |   |
|                                                                                                                                                               |   |     |      |   |     |   |   |   |
| Diluted                earnings per share:                                                                                                                         |   |     |      |   |     |   |   |   |
| As                reported                                                                                                                                         |   | $        | 1.45      |   |     | $      | 1.03 |   |
| Pro                forma                                                                                                                                           |   |     | 1.43      |   |     |   | 0.98 |   |
|                                                                                                                                                               |   |     |      |   |     |   |   |   |
| Weighted                average number of shares outstanding                                                                                                       |   |     | 2,506,029 |   |     |   | 2,381,980 |   |

* *

**Immaterial      Restatement**

**Reclassifications**

----

*Table          of Contents*

**NOTE      2.  SECURITIES**

|                                                    |   | **Amortized** |   |   | **Gross                Unrealized** |   |   | **Estimated** |   |
|---------------------------------------------------------|--------|---------------|--------|--------|-------------------------------------|--------|--------|---------------|--------|
|                                                    |   | **Cost**      |   |   | **Gains**                           |   |   | **Losses**    |   |   | **Fair-Value** |   |
| **Available-for-Sale:**                                 |   |          |   |   |                                |   |   |          |   |   |   |   |
| Mortgage-backed                securities:              |   |          |   |   |                                |   |   |          |   |   |   |   |
| Government                National Mortgage Association |   | $             | 13,637 |   |                                | $      | 47     |          |   | $ | (65 | ) |   | $ | 13,619 |   |
| Federal                Home Loan Mortgage Corporation   |   |          | 1,116  |   |                                |   | 12     |          |   |   | (3 | ) |   |   | 1,125 |   |
| Federal                National Mortgage Association    |   |          | 5,905  |   |                                |   | 30     |          |   |   | (40 | ) |   |   | 5,895 |   |
| Other                                                   |   |          | 517    |   |                                |   | 20     |          |   |   | - |   |   |   | 537 |   |
| Total                mortgage-backed securities         |   |          | 21,175 |   |                                |   | 109    |          |   |   | (108 | ) |   |   | 21,176 |   |
| U.S.                Government Agency Securities        |   |          | 26,417 |   |                                |   | 387    |          |   |   | - |   |   |   | 26,804 |   |
| Total                available-for-sale                 |   |          | 47,592 |   |                                |   | 496    |          |   |   | (108 | ) |   |   | 47,980 |   |
|                                                    |   |          |   |   |                                |   |   |          |   |   |   |   |   |   |   |   |
| **Held-to-Maturity:**                                   |   |          |   |   |                                |   |   |          |   |   |   |   |   |   |   |   |
| Mortgage-backed                securities:              |   |          |   |   |                                |   |   |          |   |   |   |   |   |   |   |   |
| Government                National Mortgage Association |   |          | 727    |   |                                |   | 25     |          |   |   | - |   |   |   | 752 |   |
| Federal                Home Loan Mortgage Corporation   |   |          | 13,308 |   |                                |   | 9      |          |   |   | (166 | ) |   |   | 13,151 |   |
| Federal                National Mortgage Association    |   |          | 4,792  |   |                                |   | 53     |          |   |   | (50 | ) |   |   | 4,795 |   |
| Other                                                   |   |          | 120    |   |                                |   | -      |          |   |   | - |   |   |   | 120 |   |
| Total                mortgage-backed securities         |   |          | 18,947 |   |                                |   | 87     |          |   |   | (216 | ) |   |   | 18,818 |   |
| Other                                                   |   |          | 190    |   |                                |   | -      |          |   |   | (3 | ) |   |   | 187 |   |
| Total                held-to-maturity                   |   |          | 19,137 |   |                                |   | 87     |          |   |   | (219 | ) |   |   | 19,005 |   |
| Total                securities                         |   | $             | 66,729 |   |                                | $      | 583    |          |   | $ | (327 | ) |   | $ | 66,985 |   |

|                                                    |   | **Amortized** |    |   | **Gross                Unrealized** |   |   | **Estimated** |   |
|---------------------------------------------------------|--------|---------------|---------|--------|-------------------------------------|--------|--------|---------------|--------|
|                                                    |   | **Cost**      |    |   | **Gains**                           |   |   | **Losses**    |   |   | **Fair                Value** |   |
| **Available-for-Sale:**                                 |   |          |    |   |                                |   |   |          |   |   |   |   |
| Mortgage-backed                securities:              |   |          |    |   |                                |   |   |          |   |   |   |   |
| Government                National Mortgage Association |   | $             | 63,499  |   |                                | $      | 48     |          |   | $ | (540 | ) |   | $ | 63,007 |   |
| Federal                Home Loan Mortgage Corporation   |   |          | 2,229   |   |                                |   | 8      |          |   |   | (28 | ) |   |   | 2,209 |   |
| Federal                National Mortgage Association    |   |          | 4,696   |   |                                |   | 3      |          |   |   | (110 | ) |   |   | 4,589 |   |
| Total                mortgage-backed securities         |   |          | 70,424  |   |                                |   | 59     |          |   |   | (678 | ) |   |   | 69,805 |   |
| U.S.                Government Agency Securities        |   |          | 12,386  |   |                                |   | -      |          |   |   | (309 | ) |   |   | 12,077 |   |
| Total                available-for-sale                 |   |          | 82,810  |   |                                |   | 59     |          |   |   | (987 | ) |   |   | 81,882 |   |
|                                                    |   |          |    |   |                                |   |   |          |   |   |   |   |   |   |   |   |
|                                                    |   |          |    |   |                                |   |   |          |   |   |   |   |   |   |   |   |
| **Held-to-Maturity:**                                   |   |          |    |   |                                |   |   |          |   |   |   |   |   |   |   |   |
| Mortgage-backed                securities:              |   |          |    |   |                                |   |   |          |   |   |   |   |   |   |   |   |
| Government                National Mortgage Association |   |          | 809     |   |                                |   | 36     |          |   |   | - |   |   |   | 845 |   |
| Federal                Home Loan Mortgage Corporation   |   |          | 17,372  |   |                                |   | 15     |          |   |   | (500 | ) |   |   | 16,887 |   |
| Federal                National Mortgage Association    |   |          | 7,900   |   |                                |   | 34     |          |   |   | (107 | ) |   |   | 7,827 |   |
| Other                                                   |   |          | 70      |   |                                |   | -      |          |   |   | - |   |   |   | 70 |   |
| Total                mortgage-backed securities         |   |          | 26,151  |   |                                |   | 85     |          |   |   | (607 | ) |   |   | 25,629 |   |
| Other                                                   |   |          | 253     |   |                                |   | -      |          |   |   | (2 | ) |   |   | 251 |   |
| Total                held-to-maturity                   |   |          | 26,404  |   |                                |   | 85     |          |   |   | (609 | ) |   |   | 25,880 |   |
| Total                securities                         |   | $             | 109,214 |   |                                | $      | 144    |          |   | $ | (1,596 | ) |   | $ | 107,762 |   |

----

*Table          of Contents*

|                                  |   | **Amortized                Cost** |   |   | **Fair                Value** |   |   | **Weighted                Avg Rate** |   |
|---------------------------------------|--------|-----------------------------------|--------|--------|-------------------------------|--------|--------|--------------------------------------|--------|
|                                  |   |                              |   |   |                          |   |   |                                 |   |
| **Available-for-Sale:**               |   |                              |   |   |                          |   |   |                                 |   |
| Less                than one year     |   | $                                 | 3,468  |   |                          | $      | 3,475  |                                 |   |   | 6.13 | % |
| One                through five years |   |                              | 10,032 |   |                          |   | 10,128 |                                 |   |   | 5.55 | % |
| Five                through ten years |   |                              | 14,574 |   |                          |   | 14,781 |                                 |   |   | 5.46 | % |
| After                ten years        |   |                              | 19,518 |   |                          |   | 19,596 |                                 |   |   | 4.99 | % |
|                                  |   | $                                 | 47,592 |   |                          | $      | 47,980 |                                 |   |   | 5.33 | % |
|                                  |   |                              |   |   |                          |   |   |                                 |   |   |   |   |
| **Held-to-maturity:**                 |   |                              |   |   |                          |   |   |                                 |   |   |   |   |
| One                through five years |   | $                                 | 28     |   |                          | $      | 28     |                                 |   |   | 5.63 | % |
| Five                through ten years |   |                              | 190    |   |                          |   | 187    |                                 |   |   | 5.62 | % |
| After                ten years        |   |                              | 18,919 |   |                          |   | 18,790 |                                 |   |   | 5.54 | % |
|                                  |   | $                                 | 19,137 |   |                          | $      | 19,005 |                                 |   |   | 5.54 | % |

|                                               |   | **Less                  than 12 months** |   |   | **12                  months or longer** |    |   | **Total**    |   |
|----------------------------------------------------|--------|------------------------------------------|--------|--------|------------------------------------------|---------|--------|-----------------------------|--------|
|                                               |   | **Unrealized**                           |   |   | **Fair**                                 |    |   | **Unrealized**              |   |   | **Fair** |   |   | **Unrealized** |   |   | **Fair** |   |
|                                               |   | **Losses**                               |   |   | **Value**                                |    |   | **Losses**                  |   |   | **Value** |   |   | **Losses** |   |   | **Value** |   |
|                                               |   |                                     |   |   |                                     |    |   |                        |   |   |   |   |   |   |   |   |   |   |
| **Available-for-Sale:**                            |   |                                     |   |   |                                     |    |   |                        |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed                  securities        |   | $                                        | (108   | )      |                                     | $  | 9,498  |                        |   |   | - |   |   |   | - |   |   | $ | (108 | ) |   | $ | 9,498 |   |
| Total                  available-for-sale          |   |                                     | (108   | )      |                                     |    | 9,498  |                        |   |   | - |   |   |   | - |   |   |   | (108 | ) |   |   | 9,498 |   |
|                                               |   |                                     |   |   |                                     |    |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Held-to-Maturity:**                              |   |                                     |   |   |                                     |    |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed                  securities        |   |                                     | (216   | )      |                                     |    | 15,241 |                        |   |   |   |   |   |   |   |   |   |   | (216 | ) |   |   | 15,241 |   |
| U.S.                  Government Agency Securities |   |                                     | (3     | )      |                                     |    | 187    |                        |   |   |   |   |   |   |   |   |   |   | (3 | ) |   |   | 187 |   |
| Total                  held-to-maturity            |   |                                     | (219   | )      |                                     |    | 15,428 |                        |   |   | - |   |   |   | - |   |   |   | (219 | ) |   |   | 15,428 |   |
| Total                  securities                  |   | $                                        | (327   | )      |                                     | $       | 24,926 |                        |   |   | - |   |   |   | - |   |   | $ | (327 | ) |   | $ | 24,926 |   |

----

*Table          of Contents*

|                                               |   | **Less                  than 12 months** |   |   | **12                  months or longer** |   |   | **Total**      |   |
|----------------------------------------------------|--------|------------------------------------------|--------|--------|------------------------------------------|--------|--------|----------------|--------|
|                                               |   | **Unrealized**                           |   |   | **Fair**                                 |   |   | **Unrealized** |   |   | **Fair** |   |   | **Unrealized** |   |   | **Fair** |   |
|                                               |   | **Losses**                               |   |   | **Value**                                |   |   | **Losses**     |   |   | **Value** |   |   | **Losses** |   |   | **Value** |   |
|                                               |   |                                     |   |   |                                     |   |   |           |   |   |   |   |   |   |   |   |   |   |
| **Available-for-Sale:**                            |   |                                     |   |   |                                     |   |   |           |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed                  securities        |   | $                                        | (152   | )      |                                     | $      | 19,051 |           |   | $ | (526 | ) |   | $ | 39,795 |   |   | $ | (678 | ) |   | $ | 58,846 |   |
| U.S.                  Government Agency Securities |   |                                     | (141   | )      |                                     |   | 5,725  |           |   |   | (168 | ) |   |   | 6,352 |   |   |   | (309 | ) |   |   | 12,077 |   |
| Total                  available-for-sale          |   |                                     | (293   | )      |                                     |   | 24,776 |           |   |   | (694 | ) |   |   | 46,147 |   |   |   | (987 | ) |   |   | 70,923 |   |
|                                               |   |                                     |   |   |                                     |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Held-to-Maturity:**                              |   |                                     |   |   |                                     |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed                  securities        |   |                                     | (502   | )      |                                     |   | 16,777 |           |   |   | (105 | ) |   |   | 5,973 |   |   |   | (607 | ) |   |   | 22,750 |   |
| U.S.                  Government Agency Securities |   |                                     | -      |   |                                     |   | -      |           |   |   | (2 | ) |   |   | 251 |   |   |   | (2 | ) |   |   | 251 |   |
| Total                  Held-to- Maturity           |   |                                     | (502   | )      |                                     |   | 16,777 |           |   |   | (107 | ) |   |   | 6,224 |   |   |   | (609 | ) |   |   | 23,001 |   |
| Total                  securities                  |   | $                                        | (795   | )      |                                     | $      | 41,553 |           |   | $ | (801 | ) |   | $ | 52,371 |   |   | $ | (1,596 | ) |   | $ | 93,924 |   |

**NOTE      3.  LOANS RECEIVABLE, NET**

|                                              |   | **2007**   |    |   | **2006**    |   |
|---------------------------------------------------|--------|------------|---------|--------|-------------|--------|
|                                              |   | **Amount** |    |   | **Percent** |   |   | **Amount** |   |   | **Percent** |   |
| Gross                  loans receivable:          |   |       |    |   |        |   |   |   |   |   |   |   |
| One-                  to four-family              |   | $          | 100,910 |   |        |   | 17.22% |  |   | $ | 143,433 |   |   |   | 28.91% |   |
| Multifamily                                       |   |       | 91,877  |   |        |   | 15.68 |   |   |   | 104,718 |   |   |   | 21.11 |   |
| Non-residential                                   |   |       | 203,187 |   |        |   | 34.68 |   |   |   | 154,044 |   |   |   | 31.05 |   |
| Construction                                      |   |       | 137,697 |   |        |   | 23.50 |   |   |   | 92,511 |   |   |   | 18.64 |   |
| Business                                          |   |       | 51,226  |   |        |   | 8.74 |   |   |   | 445 |   |   |   | 0.09 |   |
| Consumer                                          |   |       | 1,067   |   |        |   | 0.18 |   |   |   | 1,008 |   |   |   | 0.20 |   |
| Total                  loans receivable           |   |       | 585,964 |   |        |   | 100.00% |   |   |   | 496,159 |   |   |   | 100.00% |   |
|                                              |   |       |    |   |        |   |   |   |   |   |   |   |   |   |   |   |
| Add:                                              |   |       |    |   |        |   |   |   |   |   |   |   |   |   |   |   |
| Premium                  on loans                 |   |       | 990     |   |        |   |   |   |   |   | 1,890 |   |   |   |   |   |
| Less:                                             |   |       |    |   |        |   |   |   |   |   |   |   |   |   |   |   |
| Deferred                  fees and loan discounts |   |       | (994    | )      |        |   |   |   |   |   | (602 | ) |   |   |   |   |
| Allowance                  for loan losses        |   |       | (5,409  | )      |        |   |   |   |   |   | (4,015 | ) |   |   |   |   |
| Total                  loans receivable, net      |   | $          | 580,551 |   |        |   |   |   |   | $ | 493,432 |   |   |   |   |   |

----

*Table          of Contents*

|                                                        |   | **2007** |   |   | **2006** |   |   | **2005** |   |
|-------------------------------------------------------------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
|                                                        |   |     |   |   |     |   |   |     |   |
| Balance                at beginning of the year             |   | $        | 4,015  |   |     | $      | 4,097  |     |   | $ | 4,125 |   |
| Provision                charged to operations              |   |     | 276    |   |     |   | -      |     |   |   | - |   |
| Recoveries                of amounts previously charged-off |   |     | 47     |   |     |   | 35     |     |   |   | 45 |   |
| Charge-offs                of loans                         |   |     | (120   | )      |     |   | (117   | )        |   |   | (73 | ) |
| Acquisition                of CCB                           |   |     | 1,191  |   |     |   | -      |     |   |   | - |   |
| Balance                at end of the year                   |   | $        | 5,409  |   |     | $      | 4,015  |     |   | $ | 4,097 |   |

**NOTE        4.   OFFICE PROPERTIES AND EQUIPMENT,        NET**

|                                                            |   | **2007** |    |   | **2006** |   |
|-----------------------------------------------------------------|--------|----------|---------|--------|----------|--------|
|                                                            |   |     |    |   |     |   |
| Land                                                            |   | $        | 415     |   |     | $      | 415 |   |
| Building                  and improvements                      |   |     | 9,834   |   |     |   | 9,391 |   |
| Leasehold                  improvements                         |   |     | 5,262   |   |     |   | 4,404 |   |
| Furniture                  and equipment                        |   |     | 10,039  |   |     |   | 8,367 |   |
|                                                            |   |     | 25,550  |   |     |   | 22,577 |   |
| Less                  accumulated depreciation and amortization |   |     | (10,924 | )      |     |   | (9,383 | ) |
| Office properties and                  equipment, net |   | $        | 14,626  |   |     | $      | 13,194 |   |

**NOTE      5. ACCRUED INTEREST RECEIVABLE**

----

*Table          of Contents*

|                                                         |   | **2007** |   |   | **2006** |   |
|--------------------------------------------------------------|--------|----------|--------|--------|----------|--------|
|                                                         |   |     |   |   |     |   |
| Loans                receivable                              |   | $        | 3,689  |   |     | $      | 2,300 |   |
| Mortgage-backed                securities                    |   |     | 590    |   |     |   | 482 |   |
| Investments                and other interest bearing assets |   |     | 56     |   |     |   | 188 |   |
| Total                accrued interest receivable             |   | $        | 4,335  |   |     | $      | 2,970 |   |

**NOTE      6.  DEPOSITS**

|                                        |   | **2007**   |    |   | **2006**                                     |   |
|---------------------------------------------|--------|------------|---------|--------|----------------------------------------------|--------|
|                                        |   | **Amount** |    |   | **Percent                of Total Deposits** |   |   | **Weighted                Average Rate** |   |   | **Amount** |   |   | **Percent                of Total Deposits** |   |   | **Weighted                Average Rate** |   |
|                                        |   |       |    |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest-bearing                demand  |   | $          | 50,891  |   |                                         |   | 8.27 | % |   |   | 0.00 | % |   | $ | 31,085 |   |   |   | 6.16 | % |   |   | 0.00 | % |
| NOW                accounts                 |   |       | 28,910  |   |                                         |   | 4.70 | % |   |   | 0.31 | % |   |   | 27,904 |   |   |   | 5.53 | % |   |   | 0.31 | % |
| Savings                and club             |   |       | 137,960 |   |                                         |   | 22.43 | % |   |   | 0.78 | % |   |   | 139,724 |   |   |   | 27.69 | % |   |   | 0.68 | % |
| Money                market savings account |   |       | 46,996  |   |                                         |   | 7.64 | % |   |   | 2.18 | % |   |   | 40,045 |   |   |   | 7.93 | % |   |   | 2.41 | % |
| Certificates                of deposit      |   |       | 347,753 |   |                                         |   | 56.53 | % |   |   | 4.28 | % |   |   | 263,963 |   |   |   | 52.31 | % |   |   | 3.76 | % |
| Other                                       |   |       | 2,612   |   |                                         |   | 0.43 | % |   |   | 1.39 | % |   |   | 1,917 |   |   |   | 0.38 | % |   |   | 1.47 | % |
| Total                                       |   | $          | 615,122 |   |                                         |   | 100.00 | % |   |   | 2.78 | % |   | $ | 504,638 |   |   |   | 100.00 | % |   |   | 2.37 | % |

|                           |   |   | **Period                    to Maturity**              |
|--------------------------------|--------|--------|-------------------------------------------------------------------------------------------------------------------------|
|                           |   |   |                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   | **Total** |   |   | **Percent** |   |
| **Rate**                       |   |   | **<                    1 Yr.**                                                                                       |   |   | **1-2                    Yrs.** |   |   | **2-3                    Yrs.** |   |   | **3+                    Yrs.** |   |   | **2007** |   |   | **of                    Total** |   |
|                           |   |   |                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  0%-0.99%                 |   |   | $                                                                                                                       | 12,401 |   |   | $ | 26 |   |   | $ | - |   |   | $ | 12 |   |   | $ | 12,439 |   |   |   | 3.58 | % |
|  1%-1.99%                 |   |   |                                                                                                                    | 20,721 |   |   |   | 122 |   |   |   | - |   |   |   | - |   |   |   | 20,843 |   |   |   | 5.99 | % |
|  2%-3.99%                 |   |   |                                                                                                                    | 85,567 |   |   |   | 12,480 |   |   |   | 13,047 |   |   |   | 3,901 |   |   |   | 114,995 |   |   |   | 33.07 | % |
| 4%                    and over |   |   |                                                                                                                    | 164,455 |   |   |   | 24,530 |   |   |   | - |   |   |   | 10,491 |   |   |   | 199,476 |   |   |   | 57.36 | % |
| Total                          |   |   | $                                                                                                                       | 283,144 |   |   | $ | 37,158 |   |   | $ | 13,047 |   |   | $ | 14,404 |   |   | $ | 347,753 |   |   |   | 100.00 | % |

----

*Table          of Contents*

|                                                                              |   | **2007** |   |   | **2006** |   |   | **2005** |   |
|-----------------------------------------------------------------------------------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
|                                                                              |   |     |   |   |     |   |   |     |   |
| NOW                demand                                                         |   | $        | 97     |   |     | $      | 74     |     |   | $ | 69 |   |
| Savings                and clubs                                                  |   |     | 931    |   |     |   | 919    |     |   |   | 801 |   |
| Money                market savings                                               |   |     | 1,133  |   |     |   | 601    |     |   |   | 302 |   |
| Certificates                of deposit                                            |   |     | 13,079 |   |     |   | 7,321  |     |   |   | 4,268 |   |
| Mortgagors                deposits                                                |   |     | 30     |   |     |   | 30     |     |   |   | 25 |   |
|                                                                              |   |     | 15,270 |   |     |   | 8,945  |     |   |   | 5,465 |   |
| Penalty                for early withdrawal of  certificates of deposit |   |     | (43    | )      |     |   | (24    | )        |   |   | (10 | ) |
| Total                interest expense                                             |   | $        | 15,227 |   |     | $      | 8,921  |     |   | $ | 5,455 |   |

**NOTE      7.  BORROWED MONEY**

*Federal      Home Loan Bank Advances. *

|   |  **Maturing**             |   |   | **2007**                          |                                                                 |   | **2006**   |   |
|--------|--------------------------------|--------|--------|-----------------------------------|----------------------------------------------------------------------|--------|------------|--------|
|   | ** Year Ended**      |   |   | **Weighted**                      |                                                                 |   |       |   |   | **Weighted** |   |   |   |   |
|   | **March                  31,** |   |   | **Average                  Rate** |                                                                 |   | **Amount** |   |   | **Average                  Rate** |   |   | **Amount** |   |
|   | 2007                           |   |   |                              |                           -% |   |       | $      | -     |   |   |   |                          4.40% |   |   | $ | 49,434 |   |
|   | 2008                           |   |   |                              | 4.58                                                                 |   |       |   | 32,500 |   |   |   |                      3.65 |   |   |   | 16,200 |   |
|   | 2009                           |   |   |                              | 3.78                                                                 |   |       |   | 15,107 |   |   |   |                      3.78 |   |   |   | 15,107 |   |
|   | 2013                           |   |   |                              | 3.50                                                                 |   |       |   | 168 |   |   |   |                      3.50 |   |   |   | 194 |   |
|   |                           |   |   |                              |                     4.32%                                  |   |       | $      | 47,775 |   |   |   |                          4.13% |   |   | $ | 80,935 |   |

*Subordinated        Debt Securities. *

----

*Table          of Contents*

|                                                                                                                |   | **2007** |   |   | **2006** |   |    | **2005** |   |
|---------------------------------------------------------------------------------------------------------------------|--------|----------|--------|--------|----------|--------|---------|----------|--------|
| Amounts                outstanding at the end of year:                                                              |   |     |   |   |     |   |    |     |   |
| FHLB                advances                                                                                        |   | $        | 47,775 |   |     | $      | 80,935  |     |   | $ | 102,500 |   |
| Guaranteed                preferred beneficial interest in junior subordinated                debentures            |   | $        | 13,318 |   |     | $      | 13,260  |     |   | $ | 13,202 |   |
|                                                                                                                |   |     |   |   |     |   |    |     |   |   |   |   |
| Rate                paid at year end:                                                                               |   |     |   |   |     |   |    |     |   |   |   |   |
| FHLB                advances                                                                                        |   |     | 4.32   | %      |     |   | 4.13    | %        |   |   | 3.78 | % |
| Guaranteed                preferred beneficial interest  in junior subordinated                debentures |   |     | 8.40   | %      |     |   | 7.97    | %        |   |   | 6.08 | % |
|                                                                                                                |   |     |   |   |     |   |    |     |   |   |   |   |
| Maximum                amount of borrowing outstanding at any month end:                                            |   |     |   |   |     |   |    |     |   |   |   |   |
| FHLB                advances                                                                                        |   | $        | 93,975 |   |     | $      | 112,488 |     |   | $ | 112,506 |   |
| Guaranteed                preferred beneficial interest  in junior subordinated                debentures |   | $        | 13,318 |   |     | $      | 13,260  |     |   | $ | 13,202 |   |
|                                                                                                                |   |     |   |   |     |   |    |     |   |   |   |   |
| Approximate                average amounts outstanding for year:                                                    |   |     |   |   |     |   |    |     |   |   |   |   |
| FHLB                advances                                                                                        |   | $        | 65,567 |   |     | $      | 94,798  |     |   | $ | 97,013 |   |
| Guaranteed                preferred beneficial interest in junior subordinated                debentures            |   | $        | 13,286 |   |     | $      | 13,230  |     |   | $ | 13,171 |   |
|                                                                                                                |   |     |   |   |     |   |    |     |   |   |   |   |
| Approximate                weighted average rate paid during year:                                                  |   |     |   |   |     |   |    |     |   |   |   |   |
| FHLB                advances                                                                                        |   |     | 4.36   | %      |     |   | 3.81    | %        |   |   | 3.71 | % |
| Guaranteed                preferred beneficial interest  in junior subordinated                debentures |   |     | 8.33   | %      |     |   | 7.50    | %        |   |   | 5.49 | % |

**NOTE      8. INCOME TAXES**

|                                                            |   | **2007** |   |   | **2006** |   |   | **2005** |   |
|-----------------------------------------------------------------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
| Federal                income tax expense (benefit):            |   |     |   |   |     |   |   |     |   |
| Current                                                         |   | $        | 1,887  |   |     | $      | 1,155  |     |   | $ | 1,978 |   |
| Deferred                                                        |   |     | (3,018 | )      |     |   | 35     |     |   |   | (782 | ) |
|                                                            |   |     | (1,131 | )      |     |   | 1,190  |     |   |   | 1,196 |   |
|                                                            |   |     |   |   |     |   |   |     |   |   |   |   |
| State                and local income tax expense:              |   |     |   |   |     |   |   |     |   |   |   |   |
| Current                                                         |   |     | 313    |   |     |   | 196    |     |   |   | 418 |   |
| Deferred                                                        |   |     | (5     | )      |     |   | (57    | )        |   |   | (96 | ) |
|                                                            |   |     | 308    |   |     |   | 139    |     |   |   | 322 |   |
|                                                            |   |     |   |   |     |   |   |     |   |   |   |   |
| Valuation                allowance                              |   |     | -      |   |     |   | -      |     |   |   | - |   |
|                                                            |   |     |   |   |     |   |   |     |   |   |   |   |
| Total                provision for income tax (benefit) expense |   | $        | (823   | )      |     | $      | 1,329  |     |   | $ | 1,518 |   |

----

*Table          of Contents*

|                                                                                                  |   | **2007**   |   |   | **2006**    |   |   | **2005**   |   |
|-------------------------------------------------------------------------------------------------------|--------|------------|--------|--------|-------------|--------|--------|------------|--------|
|                                                                                                  |   | **Amount** |   |   | **Percent** |   |   | **Amount** |   |   | **Percent** |   |   | **Amount** |   |   | **Percent** |   |
|                                                                                                  |   |       |   |   |        |   |   |       |   |   |   |   |   |   |   |   |   |   |
| Statutory                  Federal income tax                                                         |   | $          | 598    |   |        |   | 34.0   | %          |   | $ | 1,734 |   |   |   | 34.0 | % |   | $ | 1,417 |   |   |   | 34.0 | % |
| State                  and local income taxes, net of  Federal tax                  benefit |   |       | 204    |   |        |   | 11.6   | %          |   |   | 92 |   |   |   | 1.8 | % |   |   | 213 |   |   |   | 5.1 | % |
| New                  markets tax credit                                                               |   |       | (1,475 | )      |        |   | -83.8  | %          |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| General                  business credit                                                              |   |       | (69    | )      |        |   | -3.9   | %          |   |   | (73 | ) |   |   | -1.5 | % |   |   | - |   |   |   | - |   |
| Contingency                  reserve                                                                  |   |       | -      |   |        |   | -      |       |   |   | (500 | ) |   |   | -9.8 | % |   |   | - |   |   |   | - |   |
| Other                                                                                                 |   |       | (81    | )      |        |   | -4.6   | %          |   |   | 76 |   |   |   | 1.5 | % |   |   | (112 | ) |   |   | -2.7 | % |
| Total                  income tax (benefit) expense                                                   |   | $          | (823   | )      |        |   | -46.7  | %          |   | $ | 1,329 |   |   |   | 26.0 | % |   | $ | 1,518 |   |   |   | 36.4 | % |

|                                                                |   | **2007** |   |   | **2006** |   |
|---------------------------------------------------------------------|--------|----------|--------|--------|----------|--------|
| Deferred                    Tax Assets:                             |   |     |   |   |     |   |
| Income                    from affiliate                            |   | $        | 1,876  |   |     | $      | 1,975 |   |
| Allowance                    for loan losses                        |   |     | 1,839  |   |     |   | 1,365 |   |
| Deferred                    loan fees                               |   |     | 371    |   |     |   | 235 |   |
| Compensation                    and benefits                        |   |     | 109    |   |     |   | 113 |   |
| Non-accrual                    loan interest                        |   |     | 587    |   |     |   | 284 |   |
| Reserve                    for losses on other assets               |   |     | -      |   |     |   | 65 |   |
| Capital                    loss carryforward                        |   |     | 591    |   |     |   | 591 |   |
| Deferred                    rent                                    |   |     | 111    |   |     |   | - |   |
| Purchase                    accounting adjustment                   |   |     | 702    |   |     |   | - |   |
| Unrealized                    loss on available-for-sale securities |   |     | -      |   |     |   | 240 |   |
| New                    markets tax credit                           |   |     | 1,242  |   |     |   | - |   |
| Minimum                    pension liability                        |   |     | -      |   |     |   | 173 |   |
| Other                                                               |   |     | 2      |   |     |   | 2 |   |
| Total                    Deferred Tax Assets                        |   |     | 7,430  |   |     |   | 5,043 |   |
|                                                                |   |     |   |   |     |   |   |   |
| Deferred                    Tax Liabilities:                        |   |     |   |   |     |   |   |   |
| Depreciation                                                        |   |     | 128    |   |     |   | 352 |   |
| Minimum                    pension liability                        |   |     | 50     |   |     |   | - |   |
| Unrealized                    gain on available-for-sale securities |   |     | 228    |   |     |   | - |   |
| Total                    Deferred Tax Liabilities                   |   |     | 406    |   |     |   | 352 |   |
|                                                                |   |     |   |   |     |   |   |   |
| Net                    Deferred Tax Assets                          |   | $        | 7,024  |   |     | $      | 4,691 |   |

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*Table          of Contents*

**NOTE      9. EARNINGS PER COMMON SHARE**

|                                                                                                                                  |   | **2007** |   |   | **2006** |   |   | **2005** |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
|                                                                                                                                  |   |     |   |   |     |   |   |     |   |
| Net                income                                                                                                             |   | $        | 2,583  |   |     | $      | 3,770  |     |   | $ | 2,649 |   |
| Preferred                stock dividends                                                                                              |   |     | -      |   |     |   | -      |     |   |   | (114 | ) |
| Net                income – basic                                                                                               |   |     | 2,583  |   |     |   | 3,770  |     |   |   | 2,535 |   |
| Impact                of conversion/potential conversion of convertible preferred stock                to                common stock |   |     | -      |   |     |   | -      |     |   |   | 114 |   |
| Net                income – diluted                                                                                             |   | $        | 2,583  |   |     | $      | 3,770  |     |   | $ | 2,649 |   |
|                                                                                                                                  |   |     |   |   |     |   |   |     |   |   |   |   |
| Weighted                average common shares outstanding – basic                                                               |   |     | 2,511  |   |     |   | 2,506  |     |   |   | 2,382 |   |
| Effect                of dilutive options                                                                                             |   |     | 57     |   |     |   | 59     |     |   |   | 84 |   |
| Effect                of dilutive securities convertible preferred stock                                                              |   |     | -      |   |     |   | -      |     |   |   | 113 |   |
| Effect                of dilutive MRP shares                                                                                          |   |     | 18     |   |     |   | 27     |     |   |   | 15 |   |
| Weighted                average common shares outstanding – diluted                                                             |   |     | 2,586  |   |     |   | 2,592  |     |   |   | 2,594 |   |

**NOTE      10. STOCKHOLDERS’ EQUITY**

*Conversion      and Stock Offering. *

*Regulatory        Capital*

----

*Table          of Contents*

|                                                                  |   | **GAAP**    |   |   | **Tangible** |   |   | **Leverage** |   |   | **Risk-Based** |    |
|-----------------------------------------------------------------------|--------|-------------|--------|--------|--------------|--------|--------|--------------|--------|--------|----------------|---------|
|                                                                  |   | **Capital** |   |   | **Equity**   |   |   | **Capital**  |   |   | **Capital**    |    |
|                                                                  |   |        |   |   |         |   |   |         |   |   |           |    |
| Stockholders'                Equity at March 31, 2007 (1)             |   | $           | 64,543 |   |         | $      | 64,543 |         |   | $      | 64,543         |    |   | $ | 64,543 |   |
|                                                                  |   |        |   |   |         |   |   |         |   |   |           |    |   |   |   |   |
| Add:                                                                  |   |        |   |   |         |   |   |         |   |   |           |    |   |   |   |   |
| General                valuation allowances                           |   |        |   |   |         |   | -      |         |   |   | -              |    |   |   | 5,409 |   |
| Deduct:                                                               |   |        |   |   |         |   |   |         |   |   |           |    |   |   |   |   |
| Unrealized                gains on securities available-for-sale, net |   |        |   | 372    |         |   |   | 372          |   |   |           | 372     |   |
| Goodwill                and qualifying intangible assets, net         |   |        |   |   |         |   | 6,400  |         |   |   | 6,400          |    |   |   | 6,400 |   |
|                  Other                                 |   |        |   |   |         |   | (31    | )       |   |   | (31            | )  |   |   | (31 | )  |
| Regulatory                Capital                                     |   |        |   |   |         |   | 57,802 |         |   |   | 57,802         |    |   |   | 63,211 |   |
| Minimum                Capital requirement                            |   |        |   |   |         |   | 14,641 |         |   |   | 29,293         |    |   |   | 49,241 |   |
| Regulatory                Capital Excess                              |   |        |   |   |         | $      | 43,161 |         |   | $      | 28,509         |    |   | $ | 13,970 |   |

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*Table          of Contents*

*Comprehensive      Income. *

**  NOTE      11. EMPLOYEE BENEFIT AND STOCK COMPENSATION PLANS**

*Pension      Plan*

|                                                                    |   | **2007** |   |    | **2006** |   |
|-------------------------------------------------------------------------|--------|----------|--------|---------|----------|--------|
| Change                  in projected benefit obligation during the year |   |     |   |    |     |   |
| Projected                  benefit obligation at the beginning of year  |   | $        | 2,892  |    |     | $      | 2,785 |   |
| Interest                  cost                                          |   |     | 159    |    |     |   | 163 |   |
| Actuarial                  loss                                         |   |     | 55     |    |     |   | 197 |   |
| Benefits                  paid                                          |   |     | (219   | )       |     |   | (253 | ) |
| Projected                  benefit obligation at end of year            |   | $        | 2,887  |    |     | $      | 2,892 |   |
|                                                                    |   |     |   |    |     |   |   |   |
| Change                  in fair value of plan assets during the year    |   |     |   |    |     |   |   |   |
| Fair                  value of plan assets at beginning of year         |   | $        | 2,870  |    |     | $      | 2,950 |   |
| Actual                  return on plan assets                           |   |     | 226    |    |     |   | 173 |   |
| Benefits                  paid                                          |   |     | (219   | )       |     |   | (253 | ) |
| Fair                  value of plan assets at end of year               |   | $        | 2,877  |    |     | $      | 2,870 |   |
|                                                                    |   |     |   |    |     |   |   |   |
| Funded                  status                                          |   | $        | (10    | )  |     | $      | (22 | ) |
| Unrecognized                  loss                                      |   | -        |   |    |     | 454    |   |
| Accrued                  pension cost                                   |   | $        | (10    | )  |     | $      | 432 |   |

|                                          |   | **2007** |   |   | **2006** |   |   | **2005** |   |
|-----------------------------------------------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
|                                          |   |     |   |   |     |   |   |     |   |
| Interest                cost                  |   | $        | 159    |   |     | $      | 163    |     |   | $ | 167 |   |
| Expected                return on plan assets |   |     | (220   | )      |     |   | (227   | )        |   |   | (236 | ) |
| Net                periodic pension (benefit) |   | $        | (61    | )      |     | $      | (64    | )        |   | $ | (69 | ) |

----

*Table          of Contents*

|                                                                      |   | **2007** |   |   | **2006** |   |   | **2005** |   |
|---------------------------------------------------------------------------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
| Annual                  salary increase (1)                               |   | -        |   |   | -        |   |   | -        |   |
| Expected                  long-term return on assets                      |   |     | 8.00   | %      |     |   | 8.00   | %        |   |   | 8.00 | % |
| Discount                  rate used in measurement of benefit obligations |   |     | 5.88   | %      |     |   | 5.75   | %        |   |   | 6.10 | % |

*Directors’      Retirement Plan. *

|                                                                     |   | **2007** |    |   | **2006** |   |
|--------------------------------------------------------------------------|--------|----------|---------|--------|----------|--------|
| Change                  in projected benefit obligation during the year: |   |     |    |   |     |   |
| Projected                  benefit obligation at beginning of year       |   | $        | 102     |   |     | $      | 136 |   |
| Interest                  cost                                           |   |     | 5       |   |     |   | 7 |   |
| Actuarial                  gain                                          |   |     | (50     | )      |     |   | (7 | ) |
| Benefits                  paid                                           |   |     | (21     | )      |     |   | (34 | ) |
| Projected                  benefit obligation at end of year             |   | $        | 36      |   |     | $      | 102 |   |
|                                                                     |   |     |    |   |     |   |   |   |
| Change                  in fair value of plan assets during the year     |   |     |    |   |     |   |   |   |
| Fair                  value of plan assets at beginning of year          |   | $        | – |   |     | $      | – |   |
| Employer                  contributions                                  |   |     | 21      |   |     |   | 34 |   |
| Benefits                  paid                                           |   |     | (21     | )      |     |   | (34 | ) |
| Fair                  value of plan assets at end of year                |   | $        | – |   |     | $      | – |   |
|                                                                     |   |     |    |   |     |   |   |   |
| Funded                  status                                           |   | $        | (36     | )      |     | $      | (102 | ) |
| Unrecognized                  (gain)                                     |   | -        |    |   |     | (22    | ) |
| Accrued                  pension cost                                    |   | $        | (36     | )      |     | $      | (124 | ) |

**Impact      of Applying SFAS No. 158 on the Company’s Consolidated      Statement of Condition**

|                                                                  |   | **Before Application of                    SFAS No. 158** |    |   | **SFAS                    No. 158 Adjustment** |   |   | **After Application of                    SFAS No. 158** |   |
|-----------------------------------------------------------------------|--------|---------------------------------------------------------------------|---------|--------|-----------------------------------------------------|--------|--------|--------------------------------------------------------------------|--------|
| Liability                    for pension benefit costs                |   | $                                                                   | 550     |   |                                                | $      | (504   | )                                                                  |   | $ | 46 |   |
| Deferred                    income taxes                              |   |                                                                | (173    | )      |                                                |   | 223    |                                                               |   |   | 50 |   |
| Total                    Liabilities                                  |   |                                                                | 688,044 |   |                                                |   | 281    |                                                               |   |   | 688,325 |   |
| Accumulated                    other comprehensive income, net of tax |   |                                                                | 170     |   |                                                |   | 281    |                                                               |   |   | 451 |   |
| Total                    stockholders’ equity                   |   |                                                                | 51,346  |   |                                                |   | 281    |                                                               |   |   | 51,627 |   |

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*Table          of Contents*

|                                     |   | **2007** |   |   | **2006** |   |   | **2005** |   |
|------------------------------------------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
| Interest                cost             |   | $        | 5      |   |     | $      | 6      |     |   | $ | 9 |   |
| Net                periodic pension cost |   | $        | 5      |   |     | $      | 6      |     |   | $ | 9 |   |

*Savings        Incentive Plan.*

*BOLI.  *

*Management        Recognition Plan *
*. *

*Employee      Stock Ownership Plan. *

|                                              |   | **2007** |   |   | **2006** |   |
|---------------------------------------------------|--------|----------|--------|--------|----------|--------|
| Allocated                  shares                 |   |     | 73     |   |     |   | 72 |   |
| Unallocated                  shares               |   |     | -      |   |     |   | 1 |   |
| Total                  ESOP shares                |   |     | 73     |   |     |   | 73 |   |
|                                              |   |     |   |   |     |   |   |   |
| Fair                  value of unallocated shares |   | $   | 10     |   |     | $      | 10 |   |

*Stock        Option Plans.*
*** ***

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*Table          of Contents*

|                                            |   | **2007**    |    |   | **2006**     |   |   | **2005**    |   |
|-------------------------------------------------|--------|-------------|---------|--------|--------------|--------|--------|-------------|--------|
|                                            |   |        |    |   | **Weighted** |   |   |        |   |   | **Weighted** |   |   |   |   |   | **Weighted** |   |
|                                            |   |        |    |   | **Average**  |   |   |        |   |   | **Average** |   |   |   |   |   | **Average** |   |
|                                            |   |        |    |   | **Exercise** |   |   |        |   |   | **Exercise** |   |   |   |   |   | **Exercise** |   |
|                                            |   | **Options** |    |   | **Price**    |   |   | **Options** |   |   | **Price** |   |   | **Options** |   |   | **Price** |   |
| Outstanding,                  beginning of year |   |        | 238,061 |   |         | $      | 12.90  |        |   |   | 225,292 |   |   | $ | 12.37 |   |   |   | 229,636 |   |   | $ | 11.25 |   |
| Granted                                         |   |        | 21,019  |   |         |   | 16.50  |        |   |   | 35,277 |   |   |   | 16.98 |   |   |   | 39,347 |   |   |   | 19.65 |   |
| Exercised                                       |   |        | (11,776 | )      |         |   | 9.57   |        |   |   | (9,903 | ) |   |   | 9.57 |   |   |   | (35,954 | ) |   |   | 12.75 |   |
| Forfeited                                       |   |        | (7,217  | )      |         |   | 17.44  |        |   |   | (12,605 | ) |   |   | 17.44 |   |   |   | (7,737 | ) |   |   | 14.38 |   |
| Outstanding,                  end of year       |   |        | 240,087 |   |         | $      | 13.24  |        |   |   | 238,061 |   |   | $ | 12.90 |   |   |   | 225,292 |   |   | $ | 12.37 |   |
| Exercisable,                  at year end       |   |        | 192,110 |   |         |   |   |        |   |   | 144,836 |   |   |   |   |   |   |   | 151,846 |   |   |   |   |   |

|                               |   |   |       |   |          | **Options                Outstanding** |         |         | **Options                Exercisable** |         |
|------------------------------------|--------|--------|------------|--------|---------------|----------------------------------------|--------------|--------------|----------------------------------------|--------------|
|                               |   |   |       |   |          |                                   |         | **Weighted** |                                   | **Weighted** |   |   |   |   |   | **Weighted** |   |
|                               |   |   |       |   |          |                                   |         | **Average**  |                                   | **Average**  |   |   |   |   |   | **Average** |   |
| **Range                of**        |   |   |       |   | **Remaining** |                                   | **Exercise** |         |                                   |         |   |   | **Exercise** |   |
| **Exercise                Prices** |   |   | **Shares** |   | **Life**      |                                   | **Price**    |         |                                   | **Shares**   |   |   | **Price** |   |
| $                                  | 8.00   |   |       | $      | 8.99          |                                   |         |         | 60,000                                 |         | 3                years |   | $ | 8.17 |   |   |   | 60,000 |   |   | $ | 8.17 |   |
|                               | 9.00   |   |       |   | 9.99          |                                   |         |         | 32,000                                 |         |  4                years |   |   | 9.93 |   |   |   | 32,000 |   |   |   | 9.93 |   |
|                               | 10.00  |   |       |   | 10.99         |                                   |         |         | 3,000                                  |         | 3                years |   |   | 10.38 |   |   |   | 3,000 |   |   |   | 10.38 |   |
|                               | 12.00  |   |       |   | 12.99         |                                   |         |         | 39,875                                 |         | 5                years |   |   | 12.10 |   |   |   | 39,475 |   |   |   | 12.10 |   |
|                               | 13.00  |   |       |   | 13.99         |                                   |         |         | 1,000                                  |         | 1                year |   |   | 13.81 |   |   |   | 1,000 |   |   |   | 13.81 |   |
|                               | 16.00  |   |       |   | 16.99         |                                   |         |         | 46,267                                 |         | 7                years |   |   | 16.48 |   |   |   | 29,798 |   |   |   | 16.48 |   |
|                               | 17.00  |   |       |   | 17.99         |                                   |         |         | 29,592                                 |         | 7                years |   |   | 17.19 |   |   |   | 11,092 |   |   |   | 17.19 |   |
|                               | 19.00  |   |       |   | 19.99         |                                   |         |         | 27,243                                 |         | 6                years |   |   | 19.65 |   |   |   | 14,635 |   |   |   | 19.65 |   |
|                               | 20.00  |   |       |   | 20.99         |                                   |         |         | 729                                    |         | 8                years |   |   | 20.00 |   |   |   | 729 |   |   |   | 20.00 |   |
|                               | 21.00  |   |       |   | 21.99         |                                   |         |         | 381                                    |         | 7                years |   |   | 21.76 |   |   |   | 381 |   |   |   | 21.76 |   |
| Total                              |   |   |       |   |          |                                   |         | 240,087      |                                   |         |   |   |   |   |   |   | 192,110 |   |   |   |   |   |

|                                                |   |                              | 2007  |   |                              |   | 2006  |                              |   |   | 2005  |   |
|-----------------------------------------------------|--------|-----------------------------------|------------|--------|-----------------------------------|--------|------------|-----------------------------------|--------|--------|------------|--------|
| Risk-free                      interest rate        |   |                              | 4.5%       |   |                              |   | 3.5%       |                              |   |   | 2.5%       |   |
| Volatility                                          |   |                              | 19.0%      |   |                              |   | 35.0%      |                              |   |   | 45.0%      |   |
| Annual                      dividends               |   | $                                 | 0.32       |   |                              | $      | 0.28       |                              |   | $      | 0.20       |   |
| Expected                      life of option grants |   |                        7 yrs |       |   |                        7 yrs |   |       |                        7 yrs |   |

*Performance      Compensation Plan.  *

----

*Table            of Contents*

**NOTE      12.  COMMITMENTS AND CONTINGENCIES**

*Credit      Related Commitments.  *

|                                                                  |   | **2007** |    |   | **2006** |   |
|-----------------------------------------------------------------------|--------|----------|---------|--------|----------|--------|
|                                                                  |   |     |    |   |     |   |
| Commitments                to originate mortgage loans                |   | $        | 107,115 |   |     | $      | 64,163 |   |
| Commitments                to originate commercial and consumer loans |   |     | 214     |   |     |   | 439 |   |
| Lines                of credit                                        |   |     | 300     |   |     |   | - |   |
| Letters                of credit                                      |   |     | -       |   |     |   | 1,795 |   |
| Total                                                                 |   | $        | 107,629 |   |     | $      | 66,397 |   |

*Lease      Commitments.*

| **Year                  Ending** |   | **Minimum** |                              |
|----------------------------------|--------|-------------|-----------------------------------|
| **March                  31,**   |   | **Rental**  |                              |
|                             |   |        |                              |
| 2008                             |   |        | $  915             |   |
| 2009                             |   |        |                     946 |   |
| 2010                             |   |        |                     978 |   |
| 2011                             |   |        |                     972 |   |
| 2012                             |   |        |                     744 |   |
| Thereafter                       |   |        | 3,584                             |   |
|                             |   |        | $8,139                  |   |

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*Table          of Contents*

*Legal      Proceedings*

**NOTE      13. FAIR VALUE OF FINANCIAL INSTRUMENTS**

*“Disclosures about Fair Value of Financial Instruments” *

**Cash      and cash equivalents and accrued interest receivable**

**Securities**

**Loans      receivable and loan held-for-sale**

**Mortgage      servicing rights**

**Deposits**

**Borrowings**

**Commitments**

----

*Table          of Contents*

|                                                         |   | **2007**     |    |   | **2006**                      |   |
|--------------------------------------------------------------|--------|--------------|---------|--------|-------------------------------|--------|
|                                                         |   | **Carrying** |    |   | **Estimated**                 |   |   | **Carrying** |   |   | **Estimated** |   |
|                                                         |   | **Amount**   |    |   | **Fair                Value** |   |   | **Amount** |   |   | **Fair                Value** |   |
| Financial                Assets:                             |   |         |    |   |                          |   |   |   |   |   |   |   |
| Cash                and cash equivalents                     |   | $            | 17,350  |   |                          | $      | 17,350 |   |   | $ | 22,904 |   |   | $ | 22,904 |   |
| Investment                securities available-for-sale      |   |         | 26,804  |   |                          |   | 26,804 |   |   |   | 12,078 |   |   |   | 12,078 |   |
| Mortgage                backed securities available-for-sale |   |         | 21,176  |   |                          |   | 21,176 |   |   |   | 69,804 |   |   |   | 69,804 |   |
| Mortgage                backed securities held-to-maturity   |   |         | 19,137  |   |                          |   | 19,005 |   |   |   | 26,404 |   |   |   | 25,880 |   |
| Total                loans receivable, net                   |   |         | 580,551 |   |                          |   | 580,854 |   |   |   | 493,432 |   |   |   | 488,258 |   |
| Loans                held-for-sale                           |   |         | 23,226  |   |                          |   | 23,226 |   |   |   | - |   |   |   | - |   |
| Accrued                interest receivable                   |   |         | 4,335   |   |                          |   | 4,335 |   |   |   | 2,970 |   |   |   | 2,970 |   |
| Mortgage                servicing rights                     |   |         | 388     |   |                          |   | 467 |   |   |   | 339 |   |   |   | 325 |   |
| Financial                Liabilities:                        |   |         |    |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                     |   | $            | 615,122 |   |                          | $      | 614,199 |   |   | $ | 504,638 |   |   | $ | 506,886 |   |
| Advances                from FHLB of New York                |   |         | 47,775  |   |                          |   | 47,307 |   |   |   | 80,935 |   |   |   | 79,848 |   |
| Other                borrowed money                          |   |         | 13,318  |   |                          |   | 13,318 |   |   |   | 13,260 |   |   |   | 13,260 |   |

**Limitations**

**NOTE      14.  ACQUISITION OF COMMUNITY CAPITAL BANK**

----

*Table          of Contents*

|                                                                                                          |   | **Fair                  Value** |    |
|---------------------------------------------------------------------------------------------------------------|--------|---------------------------------|---------|
| **Assets**                                                                                                    |   |                            |    |
| Cash                  and due from banks                                                                      |   | $                               | 9,496   |   |
| Securities                                                                                                    |   |                            | 50,707  |   |
| Loans                  receivable, net                                                                        |   |                            | 98,805  |   |
| Other                  assets                                                                                 |   |                            | 6,412   |   |
| Total                  assets                                                                                 |   |                            | 165,420 |   |
|                                                                                                          |   |                            |    |   |
| **Liabilities**                                                                                               |   |                            |    |   |
| Deposits                                                                                                      |   |                            | 144,142 |   |
| Borrowings                                                                                                    |   |                            | 12,500  |   |
| Other                  liabilities                                                                            |   |                            | 2,683   |   |
| Total                  liabilities                                                                            |   |                            | 159,325 |   |
|                                                                                                          |   |                            |    |   |
| Tangible                  assets acquired and liabilities assumed                                             |   |                            | 6,095   |   |
| Excess                  of the purchase price over the fair value of identifiable net                  assets |   |                            | 5,066   |   |
| Core                  deposit intangibles                                                                     |   |                            | 760     |   |
| Total                  purchase price                                                                         |   | $                               | 11,921  |   |

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*Table          of Contents*

|                                                                  |   | **Carver                  Twelve Months Ended March 31, 2007** |   |   | **CCB                  Six Months Ended June 30, 2006** |   |   | **Combined                  Carver & CCB Twelve Months Ended March 31,                  2007** |   |   | **Pro                  Forma Adjustments** |   |   | **Pro                  Forma Combined** |                         |
|-----------------------------------------------------------------------|--------|----------------------------------------------------------------|--------|--------|---------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------------------|--------|--------|--------------------------------------------|--------|--------|-----------------------------------------|------------------------------|
|                                                                  |   |                                                           |   |   |                                                    |   |   |                                                                                               |   |   |                                       |   |   |                                    |                         |
| Total                  interest income                                |   | $                                                              | 41,740 |   |                                                    | $      | 4,934  |                                                                                               |   | $      | 46,674                                     |   |   | $                                       | (34                          | ) | (1)  | $ | 46,640 |   |
| Total                  interest expense                               |   |                                                           | 19,234 |   |                                                    |   | 2,590  |                                                                                               |   |   | 21,824                                     |   |   |                                    | -                            |   |   |   | 21,824 |   |
|                                                                  |   |                                                           |   |   |                                                    |   |   |                                                                                               |   |   |                                       |   |   |                                    |                         |   |   |   |   |   |
| Net                  interest income before provision for loan losses |   |                                                           | 22,506 |   |                                                    |   | 2,344  |                                                                                               |   |   | 24,850                                     |   |   |                                    | (34                          | ) |   |   | 24,816 |   |
| Provision                  for loan losses                            |   |                                                           | 276    |   |                                                    |   | 210    |                                                                                               |   |   | 486                                        |   |   |                                    | -                            |   |   |   | 486 |   |
| Net                  interest income after provision for loan losses  |   |                                                           | 22,230 |   |                                                    |   | 2,134  |                                                                                               |   |   | 24,364                                     |   |   |                                    | (34                          | ) |   |   | 24,330 |   |
|                                                                  |   |                                                           |   |   |                                                    |   |   |                                                                                               |   |   |                                       |   |   |                                    |                         |   |   |   |   |   |
| Total                  non-interest income                            |   |                                                           | 2,869  |   |                                                    |   | 780    |                                                                                               |   |   | 3,649                                      |   |   |                                    | -                            |   |   |   | 3,649 |   |
| Total                  non-interest expense                           |   |                                                           | 23,339 |   |                                                    |   | 2,688  |                                                                                               |   |   | 26,027                                     |   |   |                                    | 76                           |   | (2)  |   | 26,103 |   |
| Income                  before income taxes                           |   |                                                           | 1,760  |   |                                                    |   | 226    |                                                                                               |   |   | 1,986                                      |   |   |                                    | (110                         | ) |   |   | 1,876 |   |
| Income                  tax (benefit) expense                         |   |                                                           | (823   | )      |                                                    |   | 87     |                                                                                               |   |   | (736                                       | )      |   |                                    | (43                          | ) |   |   | (779 | ) |
| Net                  income                                           |   | $                                                              | 2,583  |   |                                                    | $      | 139    |                                                                                               |   | $      | 2,722                                      |   |   | $                                       | (67                          | ) |   | $ | 2,655 |   |
|                                                                  |   |                                                           |   |   |                                                    |   |   |                                                                                               |   |   |                                       |   |   |                                    |                         |   |   |   |   |   |
| Earnings                  per common share:                           |   |                                                           |   |   |                                                    |   |   |                                                                                               |   |   |                                       |   |   |                                    |                         |   |   |   |   |   |
| Basic                                                                 |   | $                                                              | 1.03   |   |                                                    |   |   |                                                                                               |   | $      | 1.08                                       |   |   |                                    |                    |   |   | $ | 1.06 |   |
| Diluted                                                               |   | $                                                              | 1.00   |   |                                                    |   |        |                                                                                               |   | $      | 1.05                                       |   |   |                                    |                    |   |   | $ | 1.03 |   |

**(1)      **

**(2)      **

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*Table          of Contents*

|                                                                  |   | **Carver****Twelve****Months****Ended**** March 31,****2006** |   |   | **CCB****Twelve****Months****Ended**** December 31,****2005** |   |   | **Combined****Carver****&                  CCB****Twelve****Months****Ended**** March 31,****2006** |   |   | **Pro                  Forma****Adjust****ments** |   |   | **Pro                  Forma****Combined** |   |
|-----------------------------------------------------------------------|--------|-------------------------------------------------------------------------|--------|--------|-------------------------------------------------------------------------|--------|--------|-------------------------------------------------------------------------------------------------------------------|--------|--------|---------------------------------------------------|--------|--------|--------------------------------------------|--------|
|                                                                  |   |                                                                    |   |   |                                                                    |   |   |                                                                                                              |   |   |                                              |   |   |                                       |   |
| Total                  interest income                                |   | $                                                                       | 32,385 |   |                                                                    | $      | 9,057  |                                                                                                              |   | $      | 41,442                                            |   |   | $                                          | (67    | ) | (1)  | $ | 41,375 |   |
| Total                  interest expense                               |   |                                                                    | 13,493 |   |                                                                    |   | 3,662  |                                                                                                              |   |   | 17,155                                            |   |   |                                       | -      |   |   |   | 17,155 |   |
|                                                                  |   |                                                                    |   |   |                                                                    |   |   |                                                                                                              |   |   |                                              |   |   |                                       |   |   |   |   |   |   |
| Net                  interest income before provision for loan losses |   |                                                                    | 18,892 |   |                                                                    |   | 5,395  |                                                                                                              |   |   | 24,287                                            |   |   |                                       | (67    | ) |   |   | 24,220 |   |
| Provision                  for loan losses                            |   |                                                                    | -      |   |                                                                    |   | 1,087  |                                                                                                              |   |   | 1,087                                             |   |   |                                       | -      |   |   |   | 1,087 |   |
| Net                  interest income after provision for loan losses  |   |                                                                    | 18,892 |   |                                                                    |   | 4,308  |                                                                                                              |   |   | 23,200                                            |   |   |                                       | (67    | ) |   |   | 23,133 |   |
|                                                                  |   |                                                                    |   |   |                                                                    |   |   |                                                                                                              |   |   |                                              |   |   |                                       |   |   |   |   |   |   |
| Total                  non-interest income                            |   |                                                                    | 5,341  |   |                                                                    |   | 1,726  |                                                                                                              |   |   | 7,067                                             |   |   |                                       | -      |   |   |   | 7,067 |   |
| Total                  non-interest expense                           |   |                                                                    | 19,134 |   |                                                                    |   | 5,779  |                                                                                                              |   |   | 24,913                                            |   |   |                                       | 1,410  |   | (2),                  (3)  |   | 26,323 |   |
| Income                  before income taxes                           |   |                                                                    | 5,099  |   |                                                                    |   | 255    |                                                                                                              |   |   | 5,354                                             |   |   |                                       | (1,477 | ) |   |   | 3,877 |   |
| Income                  tax (benefit) expense                         |   |                                                                    | 1,329  |   |                                                                    |   | 51     |                                                                                                              |   |   | 1,380                                             |   |   |                                       | (385   | ) |   |   | 995 |   |
| Net                  income                                           |   | $                                                                       | 3,770  |   |                                                                    | $      | 204    |                                                                                                              |   | $      | 3,974                                             |   |   | $                                          | (1,092 | ) |   | $ | 2,882 |   |
|                                                                  |   |                                                                    |   |   |                                                                    |   |   |                                                                                                              |   |   |                                              |   |   |                                       |   |   |   |   |   |   |
| Earnings                  per common share:                           |   |                                                                    |   |   |                                                                    |   |   |                                                                                                              |   |   |                                              |   |   |                                       |   |   |   |   |   |   |
| Basic                                                                 |   | $                                                                       | 1.50   |   |                                                                    |   |   |                                                                                                              |   | $      | 1.58                                              |   |   |                                       |   |   |   | $ | 1.15 |   |
| Diluted                                                               |   | $                                                                       | 1.45   |   |                                                                    |   |   |                                                                                                              |   | $      | 1.54                                              |   |   |                                       |   |   |   | $ | 1.11 |   |

**(1)      **

**(2)**

**(3)**

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*Table          of Contents*

**NOTE      15. QUARTERLY FINANCIAL DATA (UNAUDITED)**

|                                         |   | June                    30 |   |   | September                    30 |   |   | December                    30 |   |   | March                    31 |   |
|----------------------------------------------|--------|----------------------------|--------|--------|---------------------------------|--------|--------|--------------------------------|--------|--------|-----------------------------|--------|
| **Fiscal                    2007**           |   |                       |   |   |                            |   |   |                           |   |   |                        |   |
| Interest                    income           |   | $                          | 9,120  |   |                            | $      | 9,380  |                           |   | $      | 11,770                      |   |   | $ | 11,470 |   |
| Interest                    expense          |   |                       | (4,085 | )      |                            |   | (4,169 | )                              |   |   | (5,643                      | )      |   |   | (5,337 | ) |
| Net                    interest income       |   |                       | 5,035  |   |                            |   | 5,211  |                           |   |   | 6,127                       |   |   |   | 6,133 |   |
| Provision                    for loan losses |   |                       | -      |   |                            |   | -      |                           |   |   | (120                        | )      |   |   | (156 | ) |
| Non-interest                    income       |   |                       | 945    |   |                            |   | (337   | )                              |   |   | 966                         |   |   |   | 1,295 |   |
| Non-interest                    expense      |   |                       | (4,733 | )      |                            |   | (6,242 | )                              |   |   | (5,884                      | )      |   |   | (6,479 | ) |
| Income                    tax expense        |   |                       | (445   | )      |                            |   | 464    |                           |   |   | 311                         |   |   |   | 493 |   |
| Net                    income                |   | $                          | 802    |   |                            | $      | (904   | )                              |   | $      | 1,400                       |   |   | $ | 1,286 |   |
| Earnings                    per common share |   |                       |   |   |                            |   |   |                           |   |   |                        |   |   |   |   |   |
| Basic                                        |   | $                          | 0.32   |   |                            | $      | (0.36  | )                              |   | $      | 0.56                        |   |   | $ | 0.51 |   |
| Diluted                                      |   | $                          | 0.31   |   |                            | $      | (0.35  | )                              |   | $      | 0.54                        |   |   | $ | 0.50 |   |
|                                         |   |                       |   |   |                            |   |   |                           |   |   |                        |   |   |   |   |   |
| **Fiscal                    2006**           |   |                       |   |   |                            |   |   |                           |   |   |                        |   |   |   |   |   |
| Interest                    income           |   | $                          | 7,752  |   |                            | $      | 7,748  |                           |   | $      | 8,210                       |   |   | $ | 8,676 |   |
| Interest                    expense          |   |                       | (3,052 | )      |                            |   | (3,213 | )                              |   |   | (3,438                      | )      |   |   | (3,791 | ) |
| Net                    interest income       |   |                       | 4,700  |   |                            |   | 4,535  |                           |   |   | 4,772                       |   |   |   | 4,885 |   |
| Provision                    for loan losses |   |                       | -      |   |                            |   | -      |                           |   |   | -                           |   |   |   | - |   |
| Non-interest                    income       |   |                       | 1,399  |   |                            |   | 1,031  |                           |   |   | 1,123                       |   |   |   | 1,788 |   |
| Non-interest                    expense      |   |                       | (4,795 | )      |                            |   | (4,636 | )                              |   |   | (4,668                      | )      |   |   | (5,037 | ) |
| Income                    tax expense        |   |                       | (464   | )      |                            |   | (329   | )                              |   |   | 60                          |   |   |   | (595 | ) |
| Net                    income                |   | $                          | 840    |   |                            | $      | 601    |                           |   | $      | 1,287                       |   |   | $ | 1,041 |   |
| Earnings                    per common share |   |                       |   |   |                            |   |   |                           |   |   |                        |   |   |   |   |   |
| Basic                                        |   | $                          | 0.34   |   |                            | $      | 0.24   |                           |   | $      | 0.51                        |   |   | $ | 0.42 |   |
| Diluted                                      |   | $                          | 0.32   |   |                            | $      | 0.23   |                           |   | $      | 0.50                        |   |   | $ | 0.40 |   |

**NOTE      16. CARVER BANCORP, INC.  - PARENT COMPANY ONLY**

**CONDENSED      STATEMENTS OF FINANCIAL CONDITION (in thousands):**

|                                                                  |   | **As                  of March 31,** |   |
|-----------------------------------------------------------------------|--------|--------------------------------------|--------|
|                                                                  |   | **2007**                             |   |   | **2006** |   |
|                                                                  |   |                                 |   |   |   |   |
| **Assets**                                                            |   |                                 |   |   |   |   |
| Cash                  on deposit with subsidiaries                    |   | $                                    | 399    |   |   | $ | 59 |   |
| Investment                  in subsidiaries                           |   |                                 | 64,996 |   |   |   | 62,219 |   |
| Other                  assets                                         |   |                                 | 16     |   |   |   | 3 |   |
| **Total                  Assets**                                     |   | $                                    | 65,411 |   |   | $ | 62,281 |   |
|                                                                  |   |                                 |   |   |   |   |   |   |
| **Liabilities                  and Stockholders' Equity**             |   |                                 |   |   |   |   |   |   |
| Borrowings                                                            |   | $                                    | 13,318 |   |   | $ | 13,260 |   |
| Accounts                  payable to subsidiaries                     |   |                                 | 291    |   |   |   | 66 |   |
| Other                  liabilities                                    |   |                                 | 175    |   |   |   | 258 |   |
| Total                  liabilities                                    |   | $                                    | 13,784 |   |   | $ | 13,584 |   |
|                                                                  |   |                                 |   |   |   |   |   |   |
| Stockholders’                  equity                           |   |                                 | 51,627 |   |   |   | 48,697 |   |
| **Total                  Liabilities and Stockholders’ Equity** |   | $                                    | 65,411 |   |   | $ | 62,281 |   |

**CONDENSED      STATEMENTS OF INCOME (in thousands):**

|                                                            |   | **Years                  Ended March 31,** |   |
|-----------------------------------------------------------------|--------|--------------------------------------------|--------|
|                                                            |   | **2007**                                   |   |   | **2006** |   |   | **2005** |   |
| **Income**                                                      |   |                                       |   |   |   |   |   |   |   |
| Equity                  in net income from subsidiaries         |   | $                                          | 3,551  |   |   | $ | 6,758 |   |   | $ | 7,119 |   |
| Interest                  income from deposit with subsidiaries |   |                                       | -      |   |   |   | 5 |   |   |   | 7 |   |
| Other                  income                                   |   |                                       | 34     |   |   |   | 22 |   |   |   | 23 |   |
| Total                  income                                   |   |                                       | 3,585  |   |   |   | 6,785 |   |   |   | 7,149 |   |
|                                                            |   |                                       |   |   |   |   |   |   |   |   |   |   |
| **Expenses**                                                    |   |                                       |   |   |   |   |   |   |   |   |   |   |
| Interest                  expense on borrowings                 |   |                                       | 1,196  |   |   |   | 985 |   |   |   | 721 |   |
| Salaries                  and employee benefits                 |   |                                       | 180    |   |   |   | 287 |   |   |   | 225 |   |
| Shareholder                  expense                            |   |                                       | 439    |   |   |   | 407 |   |   |   | 488 |   |
| Other                                                           |   |                                       | 10     |   |   |   | 7 |   |   |   | 1,548 |   |
| Total                  expense                                  |   |                                       | 1,825  |   |   |   | 1,686 |   |   |   | 2,982 |   |
|                                                            |   |                                       |   |   |   |   |   |   |   |   |   |   |
| Income                  before income taxes                     |   |                                       | 1,760  |   |   |   | 5,099 |   |   |   | 4,167 |   |
| Income                  tax (benefit) expense                   |   |                                       | (823   | ) |   |   | 1,329 |   |   |   | 1,518 |   |
| **Net                  Income**                                 |   | $                                          | 2,583  |   |   | $ | 3,770 |   |   | $ | 2,649 |   |

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*Table          of Contents*

| **CONDENSED                    STATEMENTS OF CASH FLOWS (in thousands):**                                                  |   |                                         |   |    |
|----------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|--------|---------|
|                                                                                                                       |   |                                         |   |    |   |   |   |   |   |
|                                                                                                                       |   | **Years                    Ended March 31,** |   |
|                                                                                                                       |   | **2007**                                     |   |    | **2006** |   |   | **2005** |   |
| **Cash                    Flows From Operating Activities**                                                                |   |                                         |   |    |   |   |   |   |   |
| Net                    income                                                                                              |   | $                                            | 2,583  |    |   | $ | 3,770 |   |   | $ | 2,649 |   |
| Adjustments                    to reconcile net income to net cash from operating                    activities: |   |                                         |   |    |   |   |   |   |   |   |   |   |
| Equity                    in net income of Subsidiaries                                                                    |   |                                         | (3,551 | )       |   |   | (6,758 | ) |   |   | (7,119 | ) |
| Income                    taxes from the Bank                                                                              |   |                                         | (823   | )       |   |   | 1,329 |   |   |   | 1,518 |   |
| (Decrease)                    Increase in accounts payable to subsidiaries                                                 |   |                                         | 225    |    |   |   | (443 | ) |   |   | 645 |   |
| (Decrease)                    Increase in other liabilities                                                                |   |                                         | (83    | )       |   |   | 40 |   |   |   | (14 | ) |
| Other,  net                                                                                                      |   |                                         | (13    | )  |   |   | 299 |   |   |   | 2,534 |   |
| Net                    cash from operating activities                                                                 |   |                                         | (1,662 | )       |   |   | (1,763 | ) |   |   | 213 |   |
|                                                                                                                       |   |                                         |   |    |   |   |   |   |   |   |   |   |
| **Cash                    Flows From Investing Activities**                                                                |   |                                         |   |    |   |   |   |   |   |   |   |   |
| Dividends                    Received from Bank                                                                            |   |                                         | 3,201  |    |   |   | 850 |   |   |   | 4,866 |   |
| Proceeds                    from sale of investment securities                                                             |   |                                         | -      |    |   |   | 1,575 |   |   |   | - |   |
| Purchase                    of investment securities                                                                       |   |                                         | -      |    |   |   | - |   |   |   | (3,074 | ) |
| Net                    cash from investing activities                                                                 |   |                                         | 3,201  |    |   |   | 2,425 |   |   |   | 1,792 |   |
|                                                                                                                       |   |                                         |   |    |   |   |   |   |   |   |   |   |
| **Cash                    Flows From Financing Activities**                                                                |   |                                         |   |    |   |   |   |   |   |   |   |   |
| Purchase                    of treasury stock, net                                                                         |   |                                         | (321   | )  |   |   | (115 | ) |   |   | (1,021 | ) |
| Dividends                    paid                                                                                          |   |                                         | (878   | )  |   |   | (777 | ) |   |   | (788 | ) |
| Net                    cash from financing activities                                                                      |   |                                         | (1,199 | )       |   |   | (892 | ) |   |   | (1,809 | ) |
| Net                    increase (decrease) in cash                                                                    |   |                                         | 340    |    |   |   | (230 | ) |   |   | 196 |   |
|                                                                                                                       |   |                                         |   |    |   |   |   |   |   |   |   |   |
| Cash                    and cash equivalents – beginning                                                             |   |                                         | 59     |    |   |   | 289 |   |   |   | 93 |   |
| Cash                    and cash equivalents – ending                                                                |   | $                                            | 399    |    |   | $ | 59 |   |   | $ | 289 |   |

----

*Table          of Contents*

**NOTE        17.  RECENT ACCOUNTING PRONOUNCEMENTS**

*Accounting        for Certain Hybrid Financial Instruments*

*Accounting        for Servicing of Financial Assets*

*Fair      Value Measurements*

*The      Fair Value Option for Financial Assets and Liabilities*

*The Fair Value Option for      Financial Assets and Financial Liabilities— including an amendment of FASB      Statements No. 115*

----

*Table          of Contents*

*Accounting      for Uncertainty in Income Taxes*

*Accounting      for Purchases of Life Insurance*

*Accounting for Purchases of Life Insurance – Determining the      Amount That Could Be Realized in Accordance with FASB Technical      Bulletin  No. 85-4*
*, Accounting for Purchases      of Life Insurance*

*Prior      Year Misstatements*

**ITEM      9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND      FINANCIAL DISCLOSURE.**

**ITEM      9A.  DISCOSURE CONTROLS AND      PROCEDURES.**

*Disclosure      Controls and Procedures*

----

*Table          of Contents*

*Material      Weakness in Internal Control Over Financial Reporting*

*Changes      in Internal Control Over Financial Reporting*

**ITEM      9B.  OTHER INFORMATION.**

**PART      III**

**ITEM      10.  DIRECTORS, EXECUTIVE OFFICERS OF THE REGISTRANT      AND CORPORATE GOVERNANCE.**

**Audit      Committee Financial Expert**

**ITEM      11.  EXECUTIVE COMPENSATION.**

**ITEM      12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS      AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.**

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*Table          of Contents*

**ITEM      13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS      DIRECTOR INDEPENDENCE.**

**ITEM      14.  PRINCIPAL ACCOUNTING FEES AND      SERVICES.**

**PART      IV**

**ITEM      15.  EXHIBITS, FINANCIAL STATEMENT      SCHEDULES.**

| I. | List                of Documents Filed as Part of this Annual Report on Form                10-K |
|----|--------------------------------------------------------------------------------------------------|

|   | A. | The                following consolidated financial statements are included in Item                8 of this                annual report: |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1. | Report                of Independent Registered Public Accounting                Firm |
|--------|----|---------------------------------------------------------------------------------------|

|   | 2. | Consolidated                Statement of Financial Condition as of March 31, 2007 and                2006 |
|--------|----|-----------------------------------------------------------------------------------------------------------|

|   | 3. | Consolidated                Statements of Income for the years ended as of March 31, 2007, 2006                and                2005 |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------|

|   | 4. | Consolidated                Statements of Changes in Stockholders’ Equity and Comprehensive Income for                the years ended March 31, 2007, 2006 and                2005 |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5. | Consolidated                Statements of Cash Flows for the years ended March 31, 2007, 2006                and                2005 |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------|

|   | 6. | Notes                to Consolidated Financial                Statements. |
|--------|----|---------------------------------------------------------------------------|

|   | B. | Financial                Statement Schedules. All financial statement schedules have been                omitted,                as the required information is either inapplicable or included under                Item                8, “Financial Statement and Supplementary                Data”. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| II. | Exhibits                required by Item 601 of Regulation                S-K: |
|-----|--------------------------------------------------------------------------------|

|   | A. | See                Index of Exhibits on page E-1. |
|--------|----|---------------------------------------------------|

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*Table          of Contents*

AT

|                         |   | CARVER                BANCORP, INC.                 |
|------------------------------|--------|-----------------------------------------------------|
|                         |   |                                                |
| July                17, 2007 | By     | /s/                Deborah C. Wright                |
|                         |   | Deborah                C. Wright                    |
|                         |   | Chairman                and Chief Executive Officer |

| /s/                  Deborah C. Wright   |   | Chairman                  and Chief Executive Officer                 |
|------------------------------------------|--------|-----------------------------------------------------------------------|
| Deborah                  C. Wright       |   | (Principal                  Executive Officer)                        |
|                                     |   |                                                                  |
| /s/                  Roy Swan            |   | Executive                  Vice President and Chief Financial Officer |
| Roy                  Swan                |   |  (Principal                  Financial and Accounting Officer)   |
|                                     |   |                                                                  |
| /s/                  Carol Baldwin Moody |   | Director                                                              |
| Carol                  Baldwin Moody     |   |                                                                  |
|                                     |   |                                                                  |
| /s/                  David L. Hinds      |   | Director                                                              |
| David                  L. Hinds          |   |                                                                  |
|                                     |   |                                                                  |
| /s/                  Robert Holland, Jr. |   | Lead                  Director                                        |
| Robert                  Holland, Jr.     |   |                                                                  |
|                                     |   |                                                                  |
| /s/                  Pazel Jackson       |   | Director                                                              |
| Pazel                  G. Jackson, Jr.   |   |                                                                  |
|                                     |   |                                                                  |
| /s/                  Edward B. Ruggiero  |   | Director                                                              |
| Edward                  B. Ruggiero      |   |                                                                  |
|                                     |   |                                                                  |
| /s/                  Robert R. Tarter    |   | Director                                                              |
| Robert                  R. Tarter        |   |                                                                  |

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*Table          of Contents*

**EXHIBIT      INDEX**

| Exhibit                Number |   | Description                                                                                                                                                                                                                                                                                                                                                                      |
|-------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                          |   |                                                                                                                                                                                                                                                                                                                                                                             |
| 2.2                           |   | Agreement                and Plan of Merger dated as of April 5, 2006 by and between CarverBancorp,                Inc., Carver Federal Savings Bank and Community Capital                Bank(2.2)                                                                                                                                                                              |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                             |
| 3.1                           |   | Certificate                of Incorporation of Carver Bancorp, Inc. (1)                                                                                                                                                                                                                                                                                                          |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                             |
| 3.2                           |   | Amended                and Restated Bylaws of Carver Bancorp, Inc. (12)                                                                                                                                                                                                                                                                                                          |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                             |
| 4.1                           |   | Stock                Certificate of Carver Bancorp, Inc. (1)                                                                                                                                                                                                                                                                                                                     |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                             |
| 4.2                           |   | Federal                Stock Charter of Carver Federal Savings Bank (1)                                                                                                                                                                                                                                                                                                          |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                             |
| 4.3                           |   | Bylaws                of Carver Federal Savings Bank (1)                                                                                                                                                                                                                                                                                                                         |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                             |
| 4.4                           |   | Amendments                to Bylaws of Carver Federal Savings Bank (2)                                                                                                                                                                                                                                                                                                           |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                             |
| 4.5                           |   | Certificate                of Designations, Preferences and Rights of Series A Convertible Preferred                Stock (4)                                                                                                                                                                                                                                                    |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                             |
| 4.6                           |   | Certificate                of Designations, Preferences and Rights of Series B Convertible Preferred                Stock (4)                                                                                                                                                                                                                                                    |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                             |
| 10.1                          |   | Carver                Bancorp, Inc. 1995 Stock Option Plan, effective as of September 12,                1995                (1)                                                                                                                                                                                                                                                 |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                             |
| 10.2                          |   | Carver                Federal Savings Bank Retirement Income Plan, as amended and restated                effective as of January 1, 1997 and as further amended through January                1,                2001 (9)                                                                                                                                                       |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                             |
| 10.3                          |   | Carver                Federal Savings Bank 401(k) Savings Plan in RSI Retirement Trust,                as                amended and restated effective as of January 1, 1997 and including                provisions effective through January 1, 2002 (9)                                                                                                                      |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                             |
| 10.4                          |   | Carver                Bancorp, Inc. Employee Stock Ownership Plan, effective as of January                1,                1994, incorporating Amendment No. 1, incorporating Second Amendment,                incorporating Amendment No. 2, incorporating Amendment No. 2A,                incorporating Amendment No. 3 and incorporating Amendment No. 4                (9) |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                             |
| 10.5                          |   | Carver                Federal Savings Bank Deferred Compensation Plan, effective as of                August                10, 1993 (1)                                                                                                                                                                                                                                         |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                             |
| 10.6                          |   | Carver                Federal Savings Bank Retirement Plan for Nonemployee Directors, effective                as of October 24, 1994 (1)                                                                                                                                                                                                                                        |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                             |
| 10.7                          |   | Carver                Bancorp, Inc. Management Recognition Plan, effective as of September                12,                1995 (1)                                                                                                                                                                                                                                            |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                             |
| 10.8                          |   | Carver                Bancorp, Inc. Incentive Compensation Plan, effective as of September                12,                1995 (1)                                                                                                                                                                                                                                            |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                             |
| 10.9                          |   | Employment                Agreement by and between Carver Federal Savings Bank and Deborah                C.                Wright, entered into as of June 1, 1999 (3)                                                                                                                                                                                                          |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                             |   |
| 10.10                         |   | Employment                Agreement by and between Carver Bancorp, Inc. and Deborah C. Wright,                entered into as of June 1, 1999 (3)                                                                                                                                                                                                                                |

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*Table          of Contents*

| Exhibit                Number |   | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|-------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.11                         |   | Securities                Purchase Agreement by and among Carver Bancorp, Inc., Morgan Stanley&                Co. Incorporated and Provender Opportunities Fund L.P.                (5)                                                                                                                                                                                                                                                                                                                                                         |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.12                         |   | Registration                Rights Agreement by and among Carver Bancorp, Inc., Morgan Stanley&                Co. Incorporated and Provender Opportunities Fund L.P.                (5)                                                                                                                                                                                                                                                                                                                                                         |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.13                         |   | Settlement                Agreement and Mutual Release by and among BBC Capital Market, Inc.,                The                Boston Bank of Commerce, Kevin Cohee and Teri Williams; Carver Bancorp,                Inc., Deborah C. Wright, David N. Dinkins, Linda H. Dunham, Robert                J.                Franz, Pazel G. Jackson, Jr., Herman Johnson and David R. Jones;                Morgan                Stanley & Co., Incorporated; and Provender Opportunities Fund, L.P.                and Frederick O. Terrell (5) |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.14                         |   | Amendment                to the Carver Bancorp, Inc. 1995 Stock Option Plan (6)                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.15                         |   | Amended                and Restated Employment Agreement by and between Carver Federal Savings                Bank and Deborah C. Wright, entered into as of June 1, 1999                (7)                                                                                                                                                                                                                                                                                                                                                         |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.16                         |   | Amended                and Restated Employment Agreement by and between Carver Bancorp,                Inc. and                Deborah C. Wright, entered into as of June 1, 1999 (7)                                                                                                                                                                                                                                                                                                                                                                |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.17                         |   | Form                of Letter Employment Agreement between Executive Officers and Carver                Bancorp, Inc. (7)                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.18                         |   | Employment                Agreement by and between Carver Federal Savings Bank and Catherine                A.                Papayiannis, entered into as of April 22, 2002 (7)                                                                                                                                                                                                                                                                                                                                                                     |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.19                         |   | Carver                Bancorp, Inc. Compensation Plan for Non-Employee Directors                (9)                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.20                         |   | Amendment                Number One to Carver Federal Savings Bank Retirement Income Plan,                as                amended and restated effective as of January 1, 1997 and as further                amended through January 1, 2001 (9)                                                                                                                                                                                                                                                                                                   |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.21                         |   | First                Amendment to the Restatement of the Carver Federal Savings Bank 401(k)                Savings Plan (9)                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.22                         |   | Second                Amendment to the Restatement of the Carver Federal Savings Bank 401(k)                Savings Plan for EGTRRA (9)                                                                                                                                                                                                                                                                                                                                                                                                              |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.23                         |   | Guarantee                Agreement by and between Carver Bancorp, Inc. and U.S. Bank National                Association, dated as of September 17, 2003 (8)                                                                                                                                                                                                                                                                                                                                                                                         |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.24                         |   | Amended                and Restated Declaration of Trust by and among, U.S. Bank National                Association, as Institutional Trustee, Carver Bancorp, Inc., as Sponsor,                and Linda Dunn, William Gray and Deborah Wright, as Administrators,                dated                as of September 17, 2003 (8)                                                                                                                                                                                                                |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.25                         |   | Indenture,                dated as of September 17, 2003, between Carver Bancorp, Inc., as                Issuer,                and U.S. Bank National Association, as Trustee (8)                                                                                                                                                                                                                                                                                                                                                                  |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.26                         |   | Second                Amendment to the Carver Bancorp, Inc. Management Recognition Plan,                effective as of September 23, 2003 (11)                                                                                                                                                                                                                                                                                                                                                                                                      |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.27                         |   | Amended                Share Voting Stipulation and Undertaking made by Carver Bancorp,                Inc. in                favor of the OTS, made as of April 22, 2004 (11)                                                                                                                                                                                                                                                                                                                                                                       |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.28                         |   | Trust                Agreement between Carver Bancorp, Inc. and American Stock & Transfer                Trust Company, dated May 3, 2004 (11)                                                                                                                                                                                                                                                                                                                                                                                                   |
|                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.29                         |   | First                Amendment to Employment Agreement by and between Carver Federal Savings                Bank and Catherine A. Papayiannis, entered into as of May 27, 2004                (11)                                                                                                                                                                                                                                                                                                                                                   |

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*Table          of Contents*

| Exhibit                Number |   | Description                                                                                                                                                                                              |
|-------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                          |   |                                                                                                                                                                                                     |
| 10.30                         |   | First                Amendment to the Carver Bancorp, Inc. Retirement Income Plan, effective                as                of March 28, 2005 (12)                                                     |
|                          |   |                                                                                                                                                                                                     |
| 10.31                         |   | Sixth                Amendment to the Carver Bancorp, Inc. Employee Stock Ownership Plan,                effective as of  March 28, 2005 (12)                                                  |
|                          |   |                                                                                                                                                                                                     |
| 10.32                         |   | Carver                Bancorp, Inc. 2006 Stock Incentive Plan, effective as of September                12, 2006 (14)                                                                               |
|                          |   |                                                                                                                                                                                                     |
| 10.33                         |   | Performance                Compensation Plan of Carver Bancorp, Inc. effective as of December                14,                2006 ( *)                                                                |
|                          |   |                                                                                                                                                                                                     |
| 14                            |   | Code                of ethics (13)                                                                                                                                                                       |
| 21.1                          |   | Subsidiaries                of the Registrant (11)                                                                                                                                                       |
| 23.2                          |   | Consent                of KPMG LLP (*)                                                                                                                                                                   |
| 31.1                          |   | Certifications                of Chief Executive Officer (*)                                                                                                                                             |
| 31.2                          |   | Certifications                of Chief Financial Officer (*)                                                                                                                                             |
| 32.1                          |   | Written                Statement of Chief Executive Officer furnished pursuant to Section                906 of                the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350                (*) |
| 32.2                          |   | Written                Statement of Chief Financial Officer furnished pursuant to Section                906 of                the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350                (*) |

| (*) | Filed                herewith. |
|-----|--------------------------------|

| (1) | Incorporated                herein by reference to Registration Statement No. 333-5559 on Form                S-4 of                the Registrant filed with the Securities and Exchange Commission                on                June 7, 1996. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Incorporated                herein by reference to the Exhibits to the Registrant's Annual Report                on                Form 10-K for the fiscal year ended                March 31, 1998. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2.2) | Incorporated                herein by reference to the Exhibits to the Registrant's Report on                Form                8-K, dated April 6, 2006. |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Incorporated                herein by reference to the Exhibits to the Registrant's Annual Report                on                Form 10-K for the fiscal year ended                March 31, 1999. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Incorporated                herein by reference to the Exhibits to the Registrant's Report on                Form                8-K, dated January 14,2000. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Incorporated                herein by reference to the Exhibits to the Registrant's Annual Report                on                Form 10-K for the fiscal year ended                March 31, 2000. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | Incorporated                herein by reference to the Registrant's Proxy Statement dated January                25,                2001. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------|

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*Table          of Contents*

| (7) | Incorporated                herein by reference to the Exhibits to the Registrant's Annual Report                on                Form 10-K for the fiscal year ended                March 31, 2002. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (8) | Incorporated                herein by reference to the Exhibits to the Registrant's Quarterly                Report                on Form 10-Q for the three months ended                September 30, 2003. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (9) | Incorporated                herein by reference to the Exhibits to the Registrant’s Annual Report on                Form 10-K for the fiscal year ended March 31,                2003. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (10) | Incorporated                herein by reference to the Exhibits to the Registrant’s Report on Form                8-K, dated March 16, 2004. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------|

| (11) | Incorporated                herein by reference to the Exhibits to the Registrant’s Annual Report on                Form 10-K for the fiscal year ended March 31,                2004. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (12) | Incorporated                herein by reference to the Exhibits to the Registrant’s Annual Report on                Form 10-K for the fiscal year ended March 31,                2005. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (13) | Incorporated                herein by reference to the Exhibits to the Registrant’s Annual Report on                Form 10-K for the fiscal year ended March 31,                2006. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (14) | Incorporated                herein by reference to the Exhibits to the Registrant’s Definitive Proxy                Statement on Form 14A filed with the Securities and Exchange Commission                on                July 31, 2006. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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