##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K
 FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended March 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 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
    
    NASDAQ Global Market(Title of Class)
    
    (Name of each Exchange on which registered)
 Securities registered pursuant to Section 12(g) of the Act:
 None
 o Yes þ No
 o Yes þ No
 þ o
 o o
 o
  o Large Accelerated Filer
    
    o Accelerated Filer
    
    o Non-accelerated Filer
    
    þ Smaller Reporting Company
 o Yes þ No




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##### 



CARVER BANCORP, INC.
2010 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
 PagePART I
    
    
    2ITEM 1. BUSINESS
    
    
    2ITEM 1A. RISK FACTORS
    
    
    34ITEM 1B. UNRESOLVED STAFF COMMENTS
    
    
    41ITEM 2. PROPERTIES
    
    
    42ITEM 3. LEGAL PROCEEDINGS
    
    
    43ITEM 4. [REMOVED AND RESERVED]
    
    
    43PART II
    
    
    43ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
    
    
    43ITEM 6. SELECTED FINANCIAL DATA
    
    
    45ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    46ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    63ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    64ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    106ITEM 9A. CONTROLS AND PROCEDURES
    
    
    106ITEM 9B. OTHER INFORMATION
    
    
    107PART III
    
    
    107ITEM 10. DIRECTORS, EXECUTIVE OFFICERS OF THE REGISTRANT AND CORPORATE GOVERNANCE
    
    
    107ITEM 11. EXECUTIVE COMPENSATION
    
    
    108ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
    
    
    108ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
    
    
    108ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
    
    
    108PART IV
    
    
    108ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    108SIGNATURES
    
    
    109EXHIBIT INDEX
    
    
    110Exhibit 21.1Exhibit 23.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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FORWARD-LOOKING STATEMENTS
  
    
    general economic conditions, either nationally or locally in some or all areas in which business is conducted, or
conditions in the real estate or 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.
    
    changes in existing loan portfolio composition and credit quality, and changes in loan loss requirements;
    
    legislative or regulatory changes which may adversely affect the Companys business;
    
    the Companys success in implementing its new business initiatives, including expanding its product line, adding new
branches and ATM centers and successfully building its brand image;
    
    changes in interest rates which may reduce net interest margin and net interest income;
    
    increases in competitive pressure among financial institutions or non-financial institutions;
    
    technological changes which may be more difficult to implement or expensive than anticipated;
    
    changes in deposit flows, loan demand, real estate values, borrowing facilities, capital markets and investment
opportunities 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;
    
    the ability to attract and retain key members of management; and
    
    the ability to realize cost efficiencies.
   1




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PART I
  
 ITEM 1.
    
    BUSINESS.
 OVERVIEW
        2




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GENERAL
 Carver Bancorp, Inc.
    3




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Carver Federal Savings Bank
   Available Information
    4




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Lending Activities
 General
    Loan Portfolio Composition
  5




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March 31, 2010
    
    
    March 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2007
    
    
    March 31, 2006Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %Gross loans receivable:One- to four-family (1)
    
    $
    90,150
    
    
    
    13
    %
    
    $
    105,771
    
    
    
    16
    %
    
    $
    127,186
    
    
    
    19
    %
    
    $
    123,451
    
    
    
    20
    %
    
    $
    143,433
    
    
    
    29
    %Multifamily
    
    
    141,702
    
    
    
    21
    %
    
    
    80,321
    
    
    
    12
    %
    
    
    78,657
    
    
    
    12
    %
    
    
    91,877
    
    
    
    15
    %
    
    
    104,718
    
    
    
    21
    %Non-residential
    
    
    259,619
    
    
    
    39
    %
    
    
    273,595
    
    
    
    41
    %
    
    
    238,508
    
    
    
    36
    %
    
    
    203,187
    
    
    
    33
    %
    
    
    154,044
    
    
    
    31
    %Construction
    
    
    111,348
    
    
    
    17
    %
    
    
    144,318
    
    
    
    22
    %
    
    
    158,877
    
    
    
    24
    %
    
    
    137,697
    
    
    
    23
    %
    
    
    92,511
    
    
    
    19
    %Business
    
    
    68,523
    
    
    
    10
    %
    
    
    57,522
    
    
    
    9
    %
    
    
    51,424
    
    
    
    8
    %
    
    
    51,226
    
    
    
    8
    %
    
    
    445
    
    
    
    0
    %Consumer and other (2)
    
    
    1,403
    
    
    
    0
    %
    
    
    1,674
    
    
    
    0
    %
    
    
    1,728
    
    
    
    0
    %
    
    
    1,067
    
    
    
    0
    %
    
    
    1,008
    
    
    
    0
    %Total loans receivable
    
    
    672,745
    
    
    
    100
    %
    
    
    663,201
    
    
    
    100
    %
    
    
    656,380
    
    
    
    100
    %
    
    
    608,505
    
    
    
    100
    %
    
    
    496,159
    
    
    
    100
    %Add:Premium on loans
    
    
    130
    
    
    
    
    
    
    
    546
    
    
    
    
    
    
    
    725
    
    
    
    
    
    
    
    990
    
    
    
    
    
    
    
    1,890Less:Deferred fees and loan discounts
    
    
    (2,864
    )
    
    
    
    
    
    
    (1,583
    )
    
    
    
    
    
    
    (1,229
    )
    
    
    
    
    
    
    (994
    )
    
    
    
    
    
    
    (602
    )Allowance for loan losses
    
    
    (12,000
    )
    
    
    
    
    
    
    (7,049
    )
    
    
    
    
    
    
    (4,878
    )
    
    
    
    
    
    
    (5,409
    )
    
    
    
    
    
    
    (4,015
    )Total loans receivable, net
    
    $
    658,011
    
    
    
    
    
    
    $
    655,115
    
    
    
    
    
    
    $
    650,998
    
    
    
    
    
    
    $
    603,092
    
    
    
    
    
    
    $
    493,432
 (1)
    
    Includes loans held for sale(2)
    
    Includes personal, credit card, and home improvement Non-residential Real Estate Lending
     6




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Multi-family Real Estate Lending.
    7




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Construction Lending
      8




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One-to-four Family Residential Lending
     9




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Business Loans
 Consumer and other Loans
  Loan Processing
  10




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Loan Approval ,
 Loans-to-One-Borrower
 Loan Sales
 Loan Originations and Purchases
  11




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2010
    
    
    2009
    
    
    2008Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    PercentLoans Originated:One-to-four family
    
    $
    3,477
    
    
    
    2.92
    %
    
    $
    10,861
    
    
    
    7.17
    %
    
    $
    39,060
    
    
    
    18.38
    %Multi-family
    
    
    18,678
    
    
    
    15.67
    %
    
    
    21,019
    
    
    
    13.88
    %
    
    
    13,118
    
    
    
    6.17
    %Non-residential
    
    
    42,868
    
    
    
    35.97
    %
    
    
    57,785
    
    
    
    38.16
    %
    
    
    48,743
    
    
    
    22.94
    %Construction
    
    
    13,752
    
    
    
    11.54
    %
    
    
    38,471
    
    
    
    25.40
    %
    
    
    61,021
    
    
    
    28.72
    %Business
    
    
    29,368
    
    
    
    24.64
    %
    
    
    22,891
    
    
    
    15.12
    %
    
    
    18,982
    
    
    
    8.93
    %Consumer and others (1)
    
    
    277
    
    
    
    0.23
    %
    
    
    405
    
    
    
    0.27
    %
    
    
    1,804
    
    
    
    0.85
    %Total loans originated
    
    
    108,420
    
    
    
    90.97
    %
    
    
    151,432
    
    
    
    100.00
    %
    
    
    182,728
    
    
    
    86.00
    %Loans purchased (2)
    
    
    10,760
    
    
    
    9.03
    %
    
    
    
    
    
    
    
    %
    
    
    29,736
    
    
    
    14.00
    %Total loans originated and
purchased
    
    
    119,180
    
    
    
    100.00
    %
    
    
    151,432
    
    
    
    100.00
    %
    
    
    212,464
    
    
    
    100.00
    %Loans sold (3)
    
    
    (3,370
    )
    
    
    
    
    
    
    (10,291
    )
    
    
    
    
    
    
    (17,716
    )Net additions to loan portfolio
    
    $
    115,810
    
    
    
    
    
    
    $
    141,141
    
    
    
    
    
    
    $
    194,748
 (1)
    
    Comprised of personal and credit card loans.(2)
    
    Comprised of primarily non-residential and multifamily mortgage loans and business loans in
fiscal 2010 and construction and non-residential mortgage loans in fiscal 2008.(3)
    
    Comprised of primarily one-to-four family mortgage loans.    12




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Loan Maturity Schedule
 Loan Maturities<1 Yr.
    
    
    1-2 Yrs.
    
    
    2-3 Yrs.
    
    
    3-5 Yrs.
    
    
    5-10 Yrs.
    
    
    10-20 Yrs.
    
    
    20+ Yrs.
    
    
    TotalGross loans
receivable:One-to-four family
    
    $
    8
    
    
    $
    8
    
    
    $
    198
    
    
    $
    137
    
    
    $
    2,491
    
    
    $
    4,999
    
    
    $
    82,309
    
    
    $
    90,150Multi-family
    
    
    692
    
    
    
    11,818
    
    
    
    1,848
    
    
    
    9,302
    
    
    
    38,185
    
    
    
    65,725
    
    
    
    14,132
    
    
    
    141,702Non-residential
    
    
    23,113
    
    
    
    3,122
    
    
    
    11,503
    
    
    
    68,525
    
    
    
    73,131
    
    
    
    76,426
    
    
    
    3,799
    
    
    
    259,619Construction
    
    
    106,804
    
    
    
    1,544
    
    
    
    
    
    
    
    3,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    111,348Business
    
    
    17,971
    
    
    
    10,410
    
    
    
    6,068
    
    
    
    7,487
    
    
    
    20,559
    
    
    
    2,932
    
    
    
    3,096
    
    
    
    68,523Consumer
    
    
    54
    
    
    
    27
    
    
    
    1,001
    
    
    
    113
    
    
    
    185
    
    
    
    19
    
    
    
    4
    
    
    
    1,403Total
    
    $
    148,642
    
    
    $
    26,929
    
    
    $
    20,618
    
    
    $
    88,564
    
    
    $
    134,551
    
    
    $
    150,101
    
    
    $
    103,340
    
    
    $
    672,745
  Due After March 31, 2011Fixed
    
    
    Adjustable
    
    
    TotalGross loans receivable:One-to-four family
    
    $
    12,881
    
    
    $
    77,261
    
    
    $
    90,142Multi-family
    
    
    22,815
    
    
    
    118,195
    
    
    
    141,010Non-residential
    
    
    72,118
    
    
    
    164,388
    
    
    
    236,506Construction
    
    
    
    
    
    
    4,544
    
    
    
    4,544Business
    
    
    26,487
    
    
    
    24,065
    
    
    
    50,552Consumer
    
    
    1,349
    
    
    
    
    
    
    
    1,349Total
    
    $
    135,650
    
    
    $
    388,453
    
    
    $
    524,103
 Asset Quality
 General.
   13




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Non-performing Assets
   2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Loans accounted for on a non-accrual basis (1):Gross loans receivable:One-to-four family
    
    $
    7,682
    
    
    $
    4,396
    
    
    $
    567
    
    
    $
    173
    
    
    $
    1,098Multi-family
    
    
    10,334
    
    
    
    3,569
    
    
    
    
    
    
    
    3,886
    
    
    
    763Non-residential
    
    
    6,315
    
    
    
    11,375
    
    
    
    522
    
    
    
    
    
    
    
    Construction
    
    
    17,413
    
    
    
    3,286
    
    
    
    
    
    
    
    
    
    
    
    865Business
    
    
    5,799
    
    
    
    3,079
    
    
    
    1,708
    
    
    
    439
    
    
    
    Consumer
    
    
    28
    
    
    
    22
    
    
    
    57
    
    
    
    12
    
    
    
    4Total non-performing loans
    
    
    47,571
    
    
    
    25,727
    
    
    
    2,854
    
    
    
    4,510
    
    
    
    2,730Other
non-performing assets (2):Real estate owned
    
    
    66
    
    
    
    465
    
    
    
    1,163
    
    
    
    28
    
    
    
    26Total other non-performing assets
    
    
    66
    
    
    
    465
    
    
    
    1,163
    
    
    
    28
    
    
    
    26Total
non-performing assets (3):
    
    $
    47,637
    
    
    $
    26,192
    
    
    $
    4,017
    
    
    $
    4,538
    
    
    $
    2,756Accruing
loans contractually past due ≥ 90
days (4):
    
    $
    1,411
    
    
    $
    894
    
    
    $
    
    
    
    $
    
    
    
    $
    Non-performing loans to total loans
    
    
    7.10
    %
    
    
    4.01
    %
    
    
    0.43
    %
    
    
    0.74
    %
    
    
    0.55
    %Non-performing assets to total assets
    
    
    5.91
    %
    
    
    3.31
    %
    
    
    0.50
    %
    
    
    0.61
    %
    
    
    0.42
    %
 (1)
    
    Non-accrual status denotes any loan where the delinquency exceeds 90 days past due and
loans, 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 managements 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)
    
    Troubled debt restructured loans performing in accordance with their modified terms for less
than six months and those not performing to their modified terms are considered non-accrual
and are included in the non-accrual category in the table above. TDR loans that have
performed in accordance with their modified terms for a period of at least six months are
generally considered performing loans and are not presented in the table above.(4)
    
    Loans 90 days or more past due and still accruing, which were not included in the
non-performing category, are presented in the above table. Loans past due 90 days or more and
still accruing represent mostly 1-4 family loans where the loan servicer is contractually
obligated to make payments.  14




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Asset Classification and Allowances for Losses
   15




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16




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2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Balance at beginning of year
    
    $
    7,049
    
    
    $
    4,878
    
    
    $
    5,409
    
    
    $
    4,015
    
    
    $
    4,097Less Charge-offs:One-to-four family
    
    
    580
    
    
    
    
    
    
    
    22
    
    
    
    19
    
    
    
    17Non-residential
    
    
    1,648
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Business
    
    
    646
    
    
    
    501
    
    
    
    709
    
    
    
    50
    
    
    
    Consumer and other
    
    
    84
    
    
    
    83
    
    
    
    174
    
    
    
    51
    
    
    
    100Total Charge-offs
    
    
    2,958
    
    
    
    584
    
    
    
    905
    
    
    
    120
    
    
    
    117Add Recoveries:One-to-four family
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    5Non-residential
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    Business
    
    
    6
    
    
    
    10
    
    
    
    110
    
    
    
    
    
    
    
    Consumer and other
    
    
    46
    
    
    
    43
    
    
    
    42
    
    
    
    43
    
    
    
    30Total Recoveries
    
    
    64
    
    
    
    53
    
    
    
    152
    
    
    
    47
    
    
    
    35Net loans charged-off
    
    
    2,894
    
    
    
    531
    
    
    
    753
    
    
    
    73
    
    
    
    82CCB acquisition allowance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,191
    
    
    
    Provision for losses
    
    
    7,845
    
    
    
    2,702
    
    
    
    222
    
    
    
    276
    
    
    
    Balance at end of year
    
    $
    12,000
    
    
    $
    7,049
    
    
    $
    4,878
    
    
    $
    5,409
    
    
    $
    4,015Ratios:Net charge-offs to average loans
outstanding
    
    
    0.43
    %
    
    
    0.08
    %
    
    
    0.17
    %
    
    
    0.02
    %
    
    
    0.02
    %Allowance to total loans
    
    
    1.79
    %
    
    
    1.10
    %
    
    
    0.74
    %
    
    
    0.89
    %
    
    
    0.81
    %Allowance to non-performing loans
    
    
    31.18
    %
    
    
    27.40
    %
    
    
    170.89
    %
    
    
    119.93
    %
    
    
    147.07
    %
  2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofLoans
    
    
    
    
    
    
    Loans
    
    
    
    
    
    
    Loans
    
    
    
    
    
    
    Loans
    
    
    
    
    
    
    Loansto Total
    
    
    
    
    
    
    to Total
    
    
    
    
    
    
    to Total
    
    
    
    
    
    
    to Total
    
    
    
    
    
    
    to TotalGross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    GrossAmount
    
    
    Loans
    
    
    Amount
    
    
    Loans
    
    
    Amount
    
    
    Loans
    
    
    Amount
    
    
    Loans
    
    
    Amount
    
    
    LoansAllowance for loan
losses:One-to-four family
    
    $
    1,036
    
    
    
    8.6
    %
    
    $
    970
    
    
    
    13.8
    %
    
    $
    324
    
    
    
    6.6
    %
    
    $
    372
    
    
    
    6.9
    %
    
    $
    565
    
    
    
    14.1
    %Multi-family
    
    
    1,566
    
    
    
    13.1
    %
    
    
    428
    
    
    
    6.1
    %
    
    
    315
    
    
    
    6.5
    %
    
    
    1,414
    
    
    
    26.1
    %
    
    
    1,084
    
    
    
    27.0
    %Non-residential
    
    
    2,613
    
    
    
    21.8
    %
    
    
    2,417
    
    
    
    34.2
    %
    
    
    1,215
    
    
    
    24.9
    %
    
    
    1,487
    
    
    
    27.5
    %
    
    
    960
    
    
    
    23.9
    %Construction
    
    
    3,831
    
    
    
    31.9
    %
    
    
    896
    
    
    
    12.7
    %
    
    
    1,448
    
    
    
    29.7
    %
    
    
    951
    
    
    
    17.6
    %
    
    
    303
    
    
    
    7.5
    %Business
    
    
    2,069
    
    
    
    17.2
    %
    
    
    2,268
    
    
    
    32.2
    %
    
    
    1,124
    
    
    
    23.0
    %
    
    
    951
    
    
    
    17.6
    %
    
    
    22
    
    
    
    0.5
    %Consumer and other
    
    
    60
    
    
    
    0.5
    %
    
    
    70
    
    
    
    1.0
    %
    
    
    94
    
    
    
    1.9
    %
    
    
    234
    
    
    
    4.3
    %
    
    
    420
    
    
    
    10.5
    %Unallocated
    
    
    826
    
    
    
    6.9
    %
    
    
    
    
    
    
    0.0
    %
    
    
    358
    
    
    
    7.3
    %
    
    
    
    
    
    
    0.0
    %
    
    
    661
    
    
    
    16.5
    %Total Allowance
    
    $
    12,000
    
    
    
    100.0
    %
    
    $
    7,049
    
    
    
    100.0
    %
    
    $
    4,878
    
    
    
    100.0
    %
    
    $
    5,409
    
    
    
    100.0
    %
    
    $
    4,015
    
    
    
    100.0
    %
   17




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##### Table of Contents



Investment Activities
 General.
 ASC subtopic 320-942
 Mortgage-Backed Securities.
    18




---



##### Table of Contents



Other Investment Securities.
 Other Earning Assets.
 Securities Impairment.
 Sources of Funds
 General.
 Deposits.
   19




---



##### Table of Contents



Borrowed Money.
      20




---



##### Table of Contents



REGULATION AND SUPERVISION
 General
    Recent Government Actions
 de minimis
  21




---



##### Table of Contents



Federal Banking Regulation
 Activity Powers.
   22




---



##### Table of Contents



Loans-to-One Borrower Limitations.
  23




---



##### Table of Contents



Qualified Thrift Lender Test.
 Capital Requirements.
  Prompt Corrective Action Regulations.
   24




---



##### Table of Contents



Bank Regulatory Matters.
 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.
  25




---



##### Table of Contents



Transactions with Related Parties.
     Assessment.
  26




---



##### Table of Contents



Enforcement.
 Standards for Safety and Soundness.
 Insurance of Deposit Accounts
       27




---



##### Table of Contents



Anti-Money Laundering and Customer Identification
   
    
    Performance of a risk assessment and establishment of a Board approved policy
    
    Designation of a qualified BSA officer
    
    Establishment of an effective training program
    
    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 record keeping obligations with respect to correspondent accounts of foreign
banks.
   28




---



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Federal Home Loan Bank System
    Federal Reserve System
   29




---



##### Table of Contents



Privacy Protection
   Holding Company Regulation.
   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).
  30




---



##### Table of Contents



(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
  FEDERAL AND STATE TAXATION
 Federal Taxation
 General.
 Bad Debt Reserves .
  31




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Distributions.
  Dividends Received Deduction and Other Matters.
 State and Local Taxation
 State of New York .
   New York City.
  32




---



##### Table of Contents



Delaware Taxation.
 EXECUTIVE OFFICERS OF THE HOLDING COMPANY
  Deborah C. Wright
 Chris McFadden
 Mark A. Ricca, , cum laude
 James H. Bason
  33




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##### Table of Contents



Blondel A. Pinnock,
 Margaret D. Roberts,
 John Spencer
 David Toner
 James Carter ,
 
 ITEM 1A.
    
    RISK FACTORS.
   34




---



##### Table of Contents



The prolonged negative effect of the recession and weak economic recovery will adversely affect our
financial performance
  Carvers results of operations are affected by economic conditions in the New York
metropolitan area.
      35




---



##### Table of Contents



Our business may be adversely affected by current conditions in the financial markets, the real
estate market and economic conditions generally
    The soundness of other financial institutions could negatively affect us.
  The allowance for loan losses could be insufficient to cover Carvers actual loan losses.
    36




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##### Table of Contents



Carvers concentration in multifamily loans, commercial real estate loans, and construction loans
could, in a deteriorating economic climate, expose the Company to increased lending risks and
related loan losses
  Changes in interest rate environment may negatively affect Carvers net income, mortgage loan
originations and valuation of available-for-sale securities .
      Strong competition within the Banks market areas could adversely affect profits and slow growth
    37




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##### Table of Contents



The Bank operates in a highly regulated industry, which limits the manner and scope of business
activities.
    Controls and procedures may fail or be circumvented, which may result in a material adverse effect
on the Companys business
  Changes in laws, government regulation and monetary policy may have a material effect on results of
operations
   38




---



##### Table of Contents



pari passu
    39




---



##### Table of Contents



Future Federal Deposit Insurance Corporation assessments will hurt our earnings
  The Company is subject to certain risks with respect to liquidity
     The Banks ability to pay dividends or lend funds to the Holding Company is subject to regulatory
limitations which may prevent the Holding Company from making future dividend payments or principal
and interest payments on its debt obligation
    40




---



##### Table of Contents



Carver may not be able to utilize its income tax benefits
   Carver faces system failure risks and security risks
  The Companys business could suffer if it fails to retain skilled people
  A natural disaster could harm Carvers business.
  
 ITEM 1B.
    
    UNRESOLVED STAFF COMMENTS.
   41




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##### Table of Contents



ITEM 2.
    
    PROPERTIES.
 th
 LeaseYear
    
    Owned or
    
    Expiration
    
    % SpaceBranches
    
    Address
    
    City/State
    
    Opened
    
    Leased
    
    Date
    
    UtilizedMain Branch
    
    75 West 125th Street
    
    New York, NY
    
    1996
    
    Owned
    
    n/a
    
    100%Crown Heights Branch
    
    1009-1015 Nostrand Avenue
    
    Brooklyn, NY
    
    1975
    
    Owned
    
    n/a
    
    100%St Albans Branch
    
    115-02 Merrick Boulevard
    
    Jamaica, NY
    
    1996
    
    Leased
    
    02/2011
    
    75%Malcolm X Blvd. Branch
    
    142 Malcolm X Boulevard
    
    New York, NY
    
    2001
    
    Leased
    
    04/2011
    
    100%Jamaica Center Branch
    
    158-45 Archer Avenue
    
    Jamaica, New York
    
    2003
    
    Leased
    
    07/2018
    
    100%Atlantic Terminal Branch
    
    4 Hanson Place
    
    Brooklyn, NY
    
    2003
    
    Leased
    
    04/2014
    
    100%Bradhurst Branch
    
    300 West 145th Street
    
    New York, NY
    
    2004
    
    Leased
    
    01/2015
    
    100%Flatbush Branch
    
    833 Flatbush Avenue
    
    Brooklyn, NY
    
    2009
    
    Leased
    
    09/2019
    
    100%Restoration Plaza
    
    1392 Fulton Street
    
    Brooklyn, NY
    
    2009
    
    Leased
    
    10/2018
    
    100%Subleased:Livingston Branch
    
    111 Livingston Street
    
    Brooklyn, NY
    
    1999
    
    Leased
    
    06/2014
    
    0%ATM CentersWest 125th Street
    
    503 West 125th Street
    
    New York, NY
    
    2003
    
    Leased
    
    03/2013
    
    100%West 137th Street
    
    3381 Broadway
    
    New York, NY
    
    2003
    
    Leased
    
    10/2013
    
    100%5th Avenue
    
    1400 5th Avenue
    
    New York, NY
    
    2003
    
    Leased
    
    09/2013
    
    100%Fulton Street
    
    1950 Fulton Street
    
    Brooklyn, NY
    
    2005
    
    Leased
    
    01/2015
    
    100%Church & Nostrand
    
    2843-52 Church Avenue
    
    Brooklyn, NY
    
    2007
    
    Leased
    
    01/2012
    
    100%Myrtle Ave
    
    362 Myrtle Ave
    
    Brooklyn, NY
    
    2007
    
    Leased
    
    07/2017
    
    100%Bedford-Stuyvesant
    
    1281 Fulton Street
    
    Brooklyn, NY
    
    2010
    
    Leased
    
    05/2011
    
    100%ATM MachinesBrooklyn Army Terminal *
    
    140 58th Street
    
    Brooklyn, NY
    
    
    
    No lease or expiration dateAirTrain *
    
    93-40 Sutphin Boulevard
    
    Jamaica, NY
    
    
    
    No lease or expiration dateAtlantic Terminal Mall
    
    139 Flatbush Avenue
    
    Brooklyn, NY
    
    2004
    
    Leased
    
    No expiration
    
    100%Atlantic Avenue
    
    625 Atlantic Avenue
    
    Brooklyn, NY
    
    2003
    
    Leased
    
    03/2011
    
    100%Administrative OfficeMetrotech Center
    
    12  Metrotech Center
    
    Brooklyn, NY
    
    2007
    
    Leased
    
    12/2017
    
    100%
 *
    
    Stand alone ATMs, not under real estate lease agreements.  42




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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
    
    
    DividendFiscal Year 2010June 30, 2009
    
    $
    6.25
    
    
    $
    2.94
    
    
    $
    0.10September 30, 2009
    
    $
    7.59
    
    
    $
    5.01
    
    
    $
    0.10December 31, 2009
    
    $
    9.05
    
    
    $
    6.00
    
    
    $
    0.10March 31, 2010
    
    $
    8.75
    
    
    $
    7.08
    
    
    $
    0.05
 High
    
    
    Low
    
    
    DividendFiscal Year 2009June 30, 2008
    
    $
    12.76
    
    
    $
    8.05
    
    
    $
    0.10September 30, 2008
    
    $
    9.18
    
    
    $
    6.49
    
    
    $
    0.10December 31, 2008
    
    $
    7.20
    
    
    $
    5.00
    
    
    $
    0.10March 31, 2009
    
    $
    5.98
    
    
    $
    1.65
    
    
    $
    0.10
     43




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##### Table of Contents



Carver has four equity compensation plans as follows:
      
  44




---



##### Table of Contents



ITEM 6.
    
    SELECTED FINANCIAL DATA.
  2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Selected Financial Condition Data:Assets
    
    $
    805,474
    
    
    $
    791,428
    
    
    $
    796,182
    
    
    $
    739,530
    
    
    $
    661,396Total loans receivable, net
    
    
    658,011
    
    
    
    655,115
    
    
    
    650,998
    
    
    
    603,092
    
    
    
    493,432Investment securities
    
    
    55,393
    
    
    
    74,730
    
    
    
    38,172
    
    
    
    67,117
    
    
    
    108,286Cash and cash equivalents
    
    
    38,346
    
    
    
    13,341
    
    
    
    27,368
    
    
    
    17,350
    
    
    
    22,904Deposits
    
    
    603,249
    
    
    
    603,416
    
    
    
    654,663
    
    
    
    615,122
    
    
    
    504,638Advances from the FHLB-NY and other borrowed money
    
    
    131,557
    
    
    
    115,017
    
    
    
    58,625
    
    
    
    61,093
    
    
    
    93,792Stockholders equity
    
    
    61,686
    
    
    
    64,338
    
    
    
    53,881
    
    
    
    51,142
    
    
    
    48,697Number of deposit accounts
    
    
    44,805
    
    
    
    44,480
    
    
    
    46,771
    
    
    
    46,034
    
    
    
    41,614Number of branches
    
    
    9
    
    
    
    9
    
    
    
    10
    
    
    
    10
    
    
    
    8Operating Data:Interest income
    
    $
    40,463
    
    
    $
    42,000
    
    
    $
    48,132
    
    
    $
    41,740
    
    
    $
    32,385Interest expense
    
    
    11,008
    
    
    
    16,506
    
    
    
    22,656
    
    
    
    19,234
    
    
    
    13,493Net interest income before provision for loan losses
    
    
    29,455
    
    
    
    25,494
    
    
    
    25,476
    
    
    
    22,506
    
    
    
    18,892Provision for loan losses
    
    
    7,845
    
    
    
    2,703
    
    
    
    222
    
    
    
    276
    
    
    
    Net interest income after provision for loan losses
    
    
    21,610
    
    
    
    22,791
    
    
    
    25,254
    
    
    
    22,230
    
    
    
    18,892Non-interest income
    
    
    5,073
    
    
    
    5,175
    
    
    
    7,861
    
    
    
    2,869
    
    
    
    5,341Non-interest expense
    
    
    30,570
    
    
    
    37,832
    
    
    
    29,898
    
    
    
    24,100
    
    
    
    19,134(Loss) Income before income taxes
    
    
    (3,887
    )
    
    
    (9,866
    )
    
    
    3,217
    
    
    
    999
    
    
    
    5,099Income tax (benefit) expense
    
    
    (2,866
    )
    
    
    (3,202
    )
    
    
    (892
    )
    
    
    (1,099
    )
    
    
    1,329Minority interest, net of taxes
    
    
    
    
    
    
    360
    
    
    
    146
    
    
    
    
    
    
    
    Net (loss) income
    
    $
    (1,021
    )
    
    $
    (7,024
    )
    
    $
    3,963
    
    
    $
    2,098
    
    
    $
    3,770Basic (loss) earnings per common share
    
    $
    (0.79
    )
    
    $
    (2.87
    )
    
    $
    1.59
    
    
    $
    0.84
    
    
    $
    1.50Diluted
(loss) earnings per common share *
    
    
    NA
    
    
    
    NA
    
    
    
    1.55
    
    
    
    0.81
    
    
    
    1.45Cash dividends per common share
    
    $
    0.325
    
    
    $
    0.40
    
    
    $
    0.40
    
    
    $
    0.35
    
    
    $
    0.31Selected Statistical Data:Return on average assets (1)
    
    
    (0.13
    )%
    
    (0.90
    )%
    
    
    0.51
    %
    
    
    0.30
    %
    
    
    0.60
    %Return on average equity (2)
    
    
    (1.59
    )
    
    (13.21
    )
    
    
    7.18
    
    
    
    4.25
    
    
    
    7.93Net interest margin (3)
    
    
    3.92
    
    
    
    3.55
    
    
    
    3.62
    
    
    
    3.44
    
    
    
    2.97Average interest rate spread (4)
    
    
    3.76
    
    
    
    3.34
    
    
    
    3.34
    
    
    
    3.16
    
    
    
    3.18Efficiency ratio (5)
    
    
    88.54
    
    
    
    102.59
    
    
    
    89.68
    
    
    
    94.98
    
    
    
    78.96Operating expense to average assets (6)
    
    
    3.79
    
    
    
    3.96
    
    
    
    3.89
    
    
    
    3.34
    
    
    
    3.04Average equity to average assets
    
    
    7.97
    
    
    
    6.85
    
    
    
    7.16
    
    
    
    7.05
    
    
    
    7.54Dividend payout ratio (7)
    
    NM
    
    
    NM
    
    
    
    24.67
    
    
    
    34.04
    
    
    
    20.63Asset Quality Ratios:Non-performing assets to total assets (8)
    
    
    5.91
    %
    
    
    3.42
    %
    
    
    0.50
    %
    
    
    0.61
    %
    
    
    0.42
    %Non-performing loans to total loans receivable (8)
    
    
    7.10
    
    
    
    4.01
    
    
    
    0.43
    
    
    
    0.74
    
    
    
    0.55Allowance for loan losses to total loans receivable
    
    
    1.79
    
    
    
    1.10
    
    
    
    0.74
    
    
    
    0.89
    
    
    
    0.81
 (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.*
    
    NA-Not applicable.  45




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##### Table of Contents



ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
  Executive Summary
        46




---



##### Table of Contents



New Markets Tax Credit Award
     47




---



##### Table of Contents



Critical Accounting Policies
   Deferred Tax Asset
  Allowance for Loan and Lease Losses
   48




---



##### Table of Contents



49




---



##### Table of Contents



Asset/Liability Management
   Stock Repurchase Program
   50




---



##### Table of Contents



Discussion of Market RiskInterest Rate Sensitivity Analysis
     51




---



##### Table of Contents



Non-InterestBearing<3 Mos.
    
    
    3-12 Mos.
    
    
    1-3 Yrs.
    
    
    3-5 Yrs.
    
    
    5-10 Yrs.
    
    
    10+ Yrs.
    
    
    Funds
    
    
    TotalRate Sensitive Assets:Loans
    
    
    229,540
    
    
    
    174,621
    
    
    
    194,243
    
    
    
    57,009
    
    
    
    13,001
    
    
    
    1,596
    
    
    
    (12,000
    )
    
    
    658,011Mortgage backed
securities
    
    
    2,707
    
    
    
    10,184
    
    
    
    609
    
    
    
    516
    
    
    
    201
    
    
    
    38,783
    
    
    
    374
    
    
    
    53,374Investment securities
    
    
    15,278
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,496
    
    
    
    
    
    
    
    (12
    )
    
    
    16,762Other assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    77,327
    
    
    
    77,327Total assets
    
    
    247,525
    
    
    
    184,806
    
    
    
    194,851
    
    
    
    57,525
    
    
    
    14,699
    
    
    
    40,380
    
    
    
    65,689
    
    
    
    805,474Rate Sensitive
Liabilities:NOW accounts
    
    
    43,593
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,593Savings accounts
    
    
    115,817
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    115,817Money market accounts
    
    
    67,122
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    67,122Certificate of deposits
    
    
    101,490
    
    
    
    164,756
    
    
    
    39,913
    
    
    
    11,379
    
    
    
    381
    
    
    
    6
    
    
    
    
    
    
    
    317,925Borrowings
    
    
    11,000
    
    
    
    8,000
    
    
    
    59,154
    
    
    
    40,000
    
    
    
    
    
    
    
    13,403
    
    
    
    
    
    
    
    131,557Other liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    67,890
    
    
    
    67,890Shareholders Equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    61,571
    
    
    
    61,571Total liabilities and stockholders equity
    
    
    339,021
    
    
    
    172,756
    
    
    
    99,067
    
    
    
    51,379
    
    
    
    381
    
    
    
    13,409
    
    
    
    129,460
    
    
    
    805,474Interest sensitivity gap
    
    
    (91,496
    )
    
    
    12,050
    
    
    
    95,785
    
    
    
    6,146
    
    
    
    14,318
    
    
    
    26,970
    
    
    
    (63,772
    )
    
    
    (0
    )Cumulative interest sensitivity gap
    
    
    (91,496
    )
    
    
    (79,447
    )
    
    
    16,338
    
    
    
    22,484
    
    
    
    36,801
    
    
    
    63,771Ratio of cumulative gap to total rate
sensitive assets
    
    
    -12.37
    %
    
    
    -10.74
    %
    
    
    2.21
    %
    
    
    3.04
    %
    
    
    4.97
    %
    
    
    8.62
    %
   Net Portfolio Value (NPV) Analysis.
   52




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##### Table of Contents



Net Portfolio Value
    
    
    NPV as % of PV of AssetsChange in Rate
    
    $ Amount
    
    
    $ Change
    
    
    % Change
    
    
    NPV Ratio
    
    
    Change+300 bp
    
    
    105,117
    
    
    
    -12,820
    
    
    
    -11
    %
    
    
    12.69
    %
    
    -110 bp+200 bp
    
    
    110,324
    
    
    
    -7,612
    
    
    
    -6
    %
    
    
    13.16
    %
    
    -63 bp+100 bp
    
    
    113,858
    
    
    
    -4,078
    
    
    
    -3
    %
    
    
    13.46
    %
    
    -34 bp+50 bp
    
    
    116,016
    
    
    
    -1,921
    
    
    
    -2
    %
    
    
    13.64
    %
    
    -16 bp0 bp
    
    
    117,937
    
    
    
    
    
    
    
    0
    %
    
    
    13.79
    %
    
    
    -50 bp
    
    
    119,687
    
    
    
    1,751
    
    
    
    +1
    %
    
    
    13.93
    %
    
    +14 bp-100 bp
    
    
    122,308
    
    
    
    4,371
    
    
    
    +4
    %
    
    
    14.16
    %
    
    +37 bp
 March 31,2010Risk Measures: +200 BP Rate Shock:Pre-Shock NPV Ratio: NPV as % of PV of Assets
    
    
    13.79
    %Post-Shock NPV Ratio
    
    
    13.16
    %Sensitivity Measure: Decline in NPV Ratio
    
    -62.88 bp
   53




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##### Table of Contents



Average Balance, Interest and Average Yields and Rates
  2010
    
    
    2009
    
    
    2008Average
    
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Cost
    
    
    Balance
    
    
    Interest
    
    
    Cost
    
    
    Balance
    
    
    Interest
    
    
    CostInterest Earning Assets:Loans (1)
    
    $
    680,245
    
    
    $
    37,333
    
    
    
    5.49
    %
    
    $
    657,665
    
    
    $
    39,207
    
    
    
    5.96
    %
    
    $
    639,583
    
    
    $
    44,499
    
    
    
    6.96
    %Mortgage-backed securities
    
    
    64,740
    
    
    
    2,633
    
    
    
    4.07
    %
    
    
    50,003
    
    
    
    2,480
    
    
    
    4.96
    %
    
    
    39,079
    
    
    
    2,071
    
    
    
    5.30
    %Investment securities
    
    
    4,877
    
    
    
    375
    
    
    
    7.68
    %
    
    
    5,706
    
    
    
    239
    
    
    
    4.19
    %
    
    
    22,902
    
    
    
    1,434
    
    
    
    6.26
    %Fed funds sold & other
    
    
    1,009
    
    
    
    122
    
    
    
    12.06
    %
    
    
    3,990
    
    
    
    74
    
    
    
    1.85
    %
    
    
    3,007
    
    
    
    128
    
    
    
    4.26
    %Total interest earning assets
    
    
    750,871
    
    
    
    40,463
    
    
    
    5.39
    %
    
    
    717,364
    
    
    
    42,000
    
    
    
    5.85
    %
    
    
    704,571
    
    
    
    48,132
    
    
    
    6.83
    %Non-interest earning assets
    
    
    55,690
    
    
    
    
    
    
    
    
    
    
    
    59,283
    
    
    
    
    
    
    
    
    
    
    
    63,440Total assets
    
    $
    806,561
    
    
    
    
    
    
    
    
    
    
    $
    776,647
    
    
    
    
    
    
    
    
    
    
    $
    768,011Interest Bearing Liabilities:Deposits:NOW demand
    
    $
    48,553
    
    
    $
    79
    
    
    
    0.16
    %
    
    $
    26,339
    
    
    $
    61
    
    
    
    0.23
    %
    
    $
    24,660
    
    
    $
    138
    
    
    
    0.56
    %Savings
    
    
    116,477
    
    
    
    258
    
    
    
    0.22
    %
    
    
    120,659
    
    
    
    537
    
    
    
    0.45
    %
    
    
    131,627
    
    
    
    1,004
    
    
    
    0.76
    %Money market savings
    
    
    51,680
    
    
    
    702
    
    
    
    1.36
    %
    
    
    45,444
    
    
    
    903
    
    
    
    1.99
    %
    
    
    44,688
    
    
    
    1,193
    
    
    
    2.67
    %Certificates of deposit
    
    
    324,924
    
    
    
    5,839
    
    
    
    1.80
    %
    
    
    372,563
    
    
    
    11,357
    
    
    
    3.05
    %
    
    
    370,933
    
    
    
    16,489
    
    
    
    4.45
    %Mortgagors deposits
    
    
    2,335
    
    
    
    38
    
    
    
    1.61
    %
    
    
    2,738
    
    
    
    48
    
    
    
    1.75
    %
    
    
    2,687
    
    
    
    42
    
    
    
    1.56
    %Total deposits
    
    
    543,969
    
    
    
    6,916
    
    
    
    1.27
    %
    
    
    567,743
    
    
    
    12,906
    
    
    
    2.27
    %
    
    
    574,595
    
    
    
    18,866
    
    
    
    3.28
    %Borrowed money
    
    
    131,655
    
    
    
    4,092
    
    
    
    3.11
    %
    
    
    90,373
    
    
    
    3,600
    
    
    
    3.98
    %
    
    
    73,880
    
    
    
    3,790
    
    
    
    5.13
    %Total interest bearing liabilities
    
    
    675,624
    
    
    
    11,008
    
    
    
    1.63
    %
    
    
    658,116
    
    
    
    16,506
    
    
    
    2.51
    %
    
    
    648,475
    
    
    
    22,656
    
    
    
    3.49
    %Non-interest-bearing liabilities:Demand
    
    
    58,982
    
    
    
    
    
    
    
    
    
    
    
    53,066
    
    
    
    
    
    
    
    
    
    
    
    51,713Other liabilities
    
    
    7,709
    
    
    
    
    
    
    
    
    
    
    
    12,302
    
    
    
    
    
    
    
    
    
    
    
    12,803Total liabilities
    
    
    742,315
    
    
    
    
    
    
    
    
    
    
    
    723,484
    
    
    
    
    
    
    
    
    
    
    
    712,991Stockholders equity
    
    
    64,246
    
    
    
    
    
    
    
    
    
    
    
    53,163
    
    
    
    
    
    
    
    
    
    
    
    55,020Total liabilities and stockholders equity
    
    $
    806,561
    
    
    
    
    
    
    
    
    
    
    $
    776,647
    
    
    
    
    
    
    
    
    
    
    $
    768,011Net interest income
    
    
    
    
    
    $
    29,455
    
    
    
    
    
    
    
    
    
    
    $
    25,494
    
    
    
    
    
    
    
    
    
    
    $
    25,476Average interest rate spread
    
    
    
    
    
    
    
    
    
    
    3.76
    %
    
    
    
    
    
    
    
    
    
    
    3.34
    %
    
    
    
    
    
    
    
    
    
    
    3.34
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    3.92
    %
    
    
    
    
    
    
    
    
    
    
    3.55
    %
    
    
    
    
    
    
    
    
    
    
    3.62
    %Ratio of average interest-earning assets
to interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    111.1
    %
    
    
    
    
    
    
    
    
    
    
    109.0
    %
    
    
    
    
    
    
    
    
    
    
    108.7
    %
 (1)
    
    The average balance of loans includes nonaccrual loans, loans held for sale, and deferred
fees and expenses.  54




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##### Table of Contents



Rate/Volume Analysis
  2010 vs. 2009
    
    
    2009 vs. 2008Increase (Decrease) due to
    
    
    Increase (Decrease) due toVolume
    
    
    Rate
    
    
    Total
    
    
    Volume
    
    
    Rate
    
    
    TotalInterest Earning Assets:Loans
    
    $
    1,314
    
    
    $
    (3,188
    )
    
    $
    (1,874
    )
    
    $
    1,228
    
    
    $
    (6,520
    )
    
    $
    (5,292
    )Mortgage-backed securities
    
    
    649
    
    
    
    (496
    )
    
    
    153
    
    
    
    549
    
    
    
    (140
    )
    
    
    409Investment securities
    
    
    (39
    )
    
    
    175
    
    
    
    136
    
    
    
    (829
    )
    
    
    (366
    )
    
    
    (1,195
    )Fed funds sold, FHLB stock & other
    
    
    (91
    )
    
    
    139
    
    
    
    48
    
    
    
    33
    
    
    
    (87
    )
    
    
    (54
    )Total interest earning assets
    
    
    1,833
    
    
    
    (3,370
    )
    
    
    (1,537
    )
    
    
    981
    
    
    
    (7,113
    )
    
    
    (6,132
    )Interest Bearing Liabilities:DepositsNOW demand
    
    
    40
    
    
    
    (22
    )
    
    
    18
    
    
    
    9
    
    
    
    (86
    )
    
    
    (77
    )Savings and clubs
    
    
    (18
    )
    
    
    (261
    )
    
    
    (279
    )
    
    
    (78
    )
    
    
    (389
    )
    
    
    (467
    )Money market savings
    
    
    112
    
    
    
    (313
    )
    
    
    (201
    )
    
    
    20
    
    
    
    (310
    )
    
    
    (290
    )Certificates of deposit
    
    
    (1,311
    )
    
    
    (4,207
    )
    
    
    (5,518
    )
    
    
    72
    
    
    
    (5,204
    )
    
    
    (5,132
    )Mortgagors deposits
    
    
    (7
    )
    
    
    (3
    )
    
    
    (10
    )
    
    
    0
    
    
    
    5
    
    
    
    5Total deposits
    
    
    (1,184
    )
    
    
    (4,806
    )
    
    
    (5,990
    )
    
    
    24
    
    
    
    (5,984
    )
    
    
    (5,960
    )Borrowed money
    
    
    1,400
    
    
    
    (908
    )
    
    
    492
    
    
    
    752
    
    
    
    (942
    )
    
    
    (190
    )Total interest bearing liabilities
    
    
    216
    
    
    
    (5,714
    )
    
    
    (5,498
    )
    
    
    776
    
    
    
    (6,926
    )
    
    
    (6,150
    )Net change in net interest income
    
    $
    1,617
    
    
    $
    2,344
    
    
    $
    3,961
    
    
    $
    205
    
    
    $
    (187
    )
    
    $
    18
 Comparison of Financial Condition at March 31, 2010 and 2009
 Assets
     55




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##### Table of Contents



Liabilities and Stockholders Equity
 Liabilities
    Stockholders Equity
   56




---



##### Table of Contents



Comparison of Operating Results for the Years Ended March 31, 2010 and 2009
 Net Loss
  Net Interest Income
   Provision for Loan Losses
  Non-interest Income
  Non-interest Expense
   57




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##### Table of Contents



Income Taxes
  Comparison of Operating Results for the Years Ended March 31, 2009 and 2008
 Net Income
  Interest Income
      58




---



##### Table of Contents



Interest Expense
    Net Interest Income Before Provision for Loan Losses
   Provision for Loan Losses and Asset Quality
    59




---



##### Table of Contents



Non-Interest Income
  Non-Interest Expense
  Income Tax Expense
  Liquidity and Capital Resources
     60




---



##### Table of Contents



Off-Balance Sheet Arrangements and Contractual Obligations
    61




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##### Table of Contents



Payments due by periodContractual
    
    
    
    
    
    Less than
    
    
    1 - 3
    
    
    3 - 5
    
    
    More thanObligations
    
    Total
    
    
    1 year
    
    
    years
    
    
    years
    
    
    5 yearsLong term debt obligations:FHLB advances
    
    $
    69,086
    
    
    $
    19,000
    
    
    $
    15,086
    
    
    $
    35,000
    
    
    $
    Repo borrowings
    
    
    30,000
    
    
    
    
    
    
    
    30,000
    
    
    
    
    
    
    
    Other borrowings
    
    
    19,068
    
    
    
    
    
    
    
    14,068
    
    
    
    5,000Guaranteed preferred beneficial interest in
junior subordinated debentures
    
    
    13,403
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,403Total long term debt obligations
    
    
    131,557
    
    
    
    19,000
    
    
    
    59,154
    
    
    
    40,000
    
    
    
    13,403Operating lease obligations:Lease obligations for rental properties
    
    
    12,527
    
    
    
    2,075
    
    
    
    3,577
    
    
    
    2,966
    
    
    
    3,909Total contractual obligations
    
    $
    144,084
    
    
    $
    21,075
    
    
    $
    62,731
    
    
    $
    42,966
    
    
    $
    17,312
 Variable Interest Entities
      62




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##### Table of Contents



Regulatory Capital Position
   Impact of Inflation and Changing Prices
  
 ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
   63




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##### Table of Contents



ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 Report of Independent Registered Public Accounting Firm
 
    
  64




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##### Table of Contents



CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 March 31,
    
    
    March 31,2010
    
    
    2009ASSETSCash and cash equivalents:Cash and due from banks
    
    $
    37,513
    
    
    $
    8,251Money market investments
    
    
    833
    
    
    
    5,090Total cash and cash equivalents
    
    
    38,346
    
    
    
    13,341Investment securities:Available-for-sale, at fair value
    
    
    43,050
    
    
    
    59,973Held-to-maturity, at amortized cost (fair value of $12,603 and
$14,528 at March 31, 2010 and March 31, 2009, respectively)
    
    
    12,343
    
    
    
    14,808Total securities
    
    
    55,393
    
    
    
    74,781Loans held-for-sale
    
    
    
    
    
    
    21,105Loans receivable:Real estate mortgage loans
    
    
    600,913
    
    
    
    581,987Commercial business loans
    
    
    67,695
    
    
    
    57,398Consumer loans
    
    
    1,403
    
    
    
    1,674Loans, net
    
    
    670,011
    
    
    
    641,059Allowance for loan losses
    
    
    (12,000
    )
    
    
    (7,049
    )Total loans receivable, net
    
    
    658,011
    
    
    
    634,010Premises and equipment, net
    
    
    12,076
    
    
    
    15,237Federal Home Loan Bank of New York stock, at cost
    
    
    4,107
    
    
    
    4,174Bank owned life insurance
    
    
    9,803
    
    
    
    9,481Accrued interest receivable
    
    
    3,539
    
    
    
    3,697Core deposit intangibles, net
    
    
    228
    
    
    
    380Deferred tax asset
    
    
    14,321
    
    
    
    10,214Other assets
    
    
    9,650
    
    
    
    5,008Total assets
    
    $
    805,474
    
    
    $
    791,428LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Deposits:Savings
    
    $
    115,817
    
    
    $
    117,438Non-Interest Bearing Checking
    
    
    58,792
    
    
    
    56,505NOW
    
    
    43,593
    
    
    
    48,371Money Market
    
    
    67,122
    
    
    
    43,190Certificates of Deposit
    
    
    317,925
    
    
    
    337,912Total Deposits
    
    
    603,249
    
    
    
    603,416Advances from the FHLB-New York and other borrowed money
    
    
    131,557
    
    
    
    115,017Other liabilities
    
    
    8,982
    
    
    
    8,657Total liabilities
    
    
    743,788
    
    
    
    727,090Stockholders equity:Preferred stock (CPP) (par value $0.01 per share, 2,000,000 shares authorized; 18,980 shares,
with a liquidation preference of $1,000.00 per share, issued and outstanding
as of March 31, 2010 and March 31, 2009)
    
    
    18,980
    
    
    
    18,980Common stock (par value $0.01 per share: 10,000,000 shares authorized; 2,524,691 shares issued;
2,474,719 and 2,475,037 shares outstanding at March 31, 2010 and March 31, 2009, respectively)
    
    
    25
    
    
    
    25Additional paid-in capital
    
    
    24,374
    
    
    
    24,214Retained earnings
    
    
    18,806
    
    
    
    21,898Treasury stock, at cost (49,972 and 49,654 shares at March 31, 2010
and March 31, 2009, respectively)
    
    
    (697
    )
    
    
    (760
    )Accumulated other comprehensive income (loss)
    
    
    198
    
    
    
    (19
    )Total stockholders equity
    
    
    61,686
    
    
    
    64,338Total liabilities and stockholders equity
    
    $
    805,474
    
    
    $
    791,428
   65




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##### Table of Contents



CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
 Years EndedMarch 31,2010
    
    
    2009
    
    
    2008Interest Income:Loans
    
    $
    37,333
    
    
    $
    39,207
    
    
    $
    44,499Mortgage-backed securities
    
    
    2,633
    
    
    
    2,480
    
    
    
    2,071Investment securities
    
    
    357
    
    
    
    239
    
    
    
    1,434Money market investments
    
    
    140
    
    
    
    74
    
    
    
    128Total interest income
    
    
    40,463
    
    
    
    42,000
    
    
    
    48,132Interest expense:Deposits
    
    
    6,916
    
    
    
    12,906
    
    
    
    18,866Advances and other borrowed money
    
    
    4,092
    
    
    
    3,600
    
    
    
    3,790Total interest expense
    
    
    11,008
    
    
    
    16,506
    
    
    
    22,656Net interest income
    
    
    29,455
    
    
    
    25,494
    
    
    
    25,476Provision for loan losses
    
    
    7,845
    
    
    
    2,703
    
    
    
    222Net interest income after provision for loan losses
    
    
    21,610
    
    
    
    22,791
    
    
    
    25,254Non-interest income:Depository fees and charges
    
    
    2,963
    
    
    
    2,810
    
    
    
    2,669Loan fees and service charges
    
    
    972
    
    
    
    1,258
    
    
    
    1,628Gain on sale of securities, net
    
    
    446
    
    
    
    
    
    
    
    431(Loss) gain on sale of loans, net
    
    
    (212
    )
    
    
    (320
    )
    
    
    323Gain on sale of building
    
    
    1,172
    
    
    
    
    
    
    
    Lower of
cost or fair value adjustment on loans held for sale
    
    
    (2,136
    )
    
    
    (197
    )
    
    
    New Market Tax Credit fees
    
    
    984
    
    
    
    150
    
    
    
    1,888Other
    
    
    884
    
    
    
    1,474
    
    
    
    922Total non-interest income
    
    
    5,073
    
    
    
    5,175
    
    
    
    7,861Non-interest expense:Employee compensation and benefits
    
    
    12,217
    
    
    
    13,163
    
    
    
    13,323Net occupancy expense
    
    
    4,618
    
    
    
    4,350
    
    
    
    3,590Equipment, net
    
    
    2,143
    
    
    
    2,881
    
    
    
    2,451Consulting fees
    
    
    803
    
    
    
    1,174
    
    
    
    2,733Federal deposit insurance premiums
    
    
    1,656
    
    
    
    512
    
    
    
    75Goodwill Impairment
    
    
    
    
    
    
    7,055
    
    
    
    Other
    
    
    9,133
    
    
    
    8,697
    
    
    
    7,726Total non-interest expense
    
    
    30,570
    
    
    
    37,832
    
    
    
    29,898(Loss) Income before income taxes and minority interest
    
    
    (3,887
    )
    
    
    (9,866
    )
    
    
    3,217Income tax benefit
    
    
    (2,866
    )
    
    
    (3,202
    )
    
    
    (892
    )Minority interest, net of taxes
    
    
    
    
    
    
    360
    
    
    
    146Net (loss) income
    
    $
    (1,021
    )
    
    $
    (7,024
    )
    
    $
    3,963(Loss) Earnings per common share:Basic
    
    $
    (0.79
    )
    
    $
    (2.87
    )
    
    $
    1.59Diluted
    
    
    NA
    
    
    
    NA
    
    
    $
    1.55
   66




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##### Table of Contents



CARVER
BANCORP, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME (LOSS)
(In thousands)
 AccumulatedPreferred
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    TotalStock
    
    
    Common
    
    
    Paid-In
    
    
    Treasury
    
    
    Retained
    
    
    Comprehensive
    
    
    Stockholders(CPP)
    
    
    Stock
    
    
    Capital
    
    
    Stock
    
    
    Earnings
    
    
    Income (Loss)
    
    
    EquityBalanceMarch 31, 2007
    
    
    
    
    
    
    25
    
    
    
    23,996
    
    
    
    (277
    )
    
    
    26,951
    
    
    
    451
    
    
    
    51,142Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,963
    
    
    
    
    
    
    
    3,963Minimum pension liability adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    195
    
    
    
    195Change in net unrealized loss on
available-for-sale securities, net of
taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (221
    )
    
    
    (221
    )Comprehensive income, net of taxes:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,963
    
    
    
    (26
    )
    
    
    3,937Adjustment to initially implement SFAS 156
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49
    
    
    
    
    
    
    
    49Dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (975
    )
    
    
    
    
    
    
    (975
    )Treasury stock activity
    
    
    
    
    
    
    
    
    
    
    117
    
    
    
    (393
    )
    
    
    
    
    
    
    
    
    
    
    (272
    )BalanceMarch 31, 2008
    
    
    
    
    
    
    25
    
    
    
    24,113
    
    
    
    (670
    )
    
    
    29,988
    
    
    
    425
    
    
    
    53,881Net (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,024
    )
    
    
    
    
    
    
    (7,024
    )Minimum pension liability adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (492
    )
    
    
    (492
    )Change in net unrealized loss on
available-for-sale securities, net of
taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48
    
    
    
    48Comprehensive (loss), net of taxes:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,024
    )
    
    
    (444
    )
    
    
    (7,468
    )Common Dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (990
    )
    
    
    
    
    
    
    (990
    )Issuance of TARP preferred stock
    
    
    18,980
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,980Preferred Dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (76
    )
    
    
    
    
    
    
    (76
    )Treasury stock activity
    
    
    
    
    
    
    
    
    
    
    73
    
    
    
    (90
    )
    
    
    
    
    
    
    
    
    
    
    (17
    )Stock based compensation
    
    
    
    
    
    
    
    
    
    
    28
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28BalanceMarch 31, 2009
    
    $
    18,980
    
    
    $
    25
    
    
    $
    24,214
    
    
    $
    (760
    )
    
    $
    21,898
    
    
    $
    (19
    )
    
    $
    64,338Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,021
    )
    
    
    
    
    
    
    (1,021
    )Minimum pension liability adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36
    
    
    
    36Change in net unrealized loss on
available-for-sale securities, net of
taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    181
    
    
    
    181Comprehensive income, net of taxes:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,021
    )
    
    
    217
    
    
    
    (804
    )Common Dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (993
    )
    
    
    
    
    
    
    (993
    )CPP Preferred Dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (949
    )
    
    
    
    
    
    
    (949
    )Accrued CPP Preferred Dividends
    
    
    
    
    
    
    
    
    
    
    116
    
    
    
    
    
    
    
    (116
    )
    
    
    
    
    
    
    Treasury stock activity
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    63
    
    
    
    
    
    
    
    
    
    
    
    68Stock based compensation
    
    
    
    
    
    
    
    
    
    
    39
    
    
    
    
    
    
    
    (12
    )
    
    
    
    
    
    
    27BalanceMarch 31, 2010
    
    $
    18,980
    
    
    $
    25
    
    
    $
    24,374
    
    
    $
    (697
    )
    
    $
    18,806
    
    
    $
    198
    
    
    $
    61,686
   67




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##### Table of Contents



CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 2010
    
    
    2009
    
    
    2008OPERATING ACTIVITIESNet (loss) income
    
    $
    (1,021
    )
    
    $
    (7,024
    )
    
    $
    3,963Adjustments to reconcile net income to net cash from operating activities:Provision for loan losses
    
    
    7,845
    
    
    
    2,703
    
    
    
    222Provision for REO losses
    
    
    15
    
    
    
    178
    
    
    
    Goodwill impairment charge
    
    
    
    
    
    
    7,055
    
    
    
    Stock based compensation expense
    
    
    27
    
    
    
    68
    
    
    
    272Depreciation and amortization expense
    
    
    1,723
    
    
    
    1,932
    
    
    
    1,709Amortization of premiums and discounts
    
    
    1,143
    
    
    
    286
    
    
    
    (250
    )Impairment charge on securities
    
    
    
    
    
    
    52
    
    
    
    Gain on sale of building
    
    
    (1,172
    )
    
    
    
    
    
    
    Loss from sale of real estate owned
    
    
    14
    
    
    
    22
    
    
    
    Gain on sale of securities
    
    
    (446
    )
    
    
    
    
    
    
    (431
    )Loss (Gain) on sale of loans
    
    
    212
    
    
    
    (45
    )
    
    
    (323
    )Writedown on loans held-for-sale
    
    
    2,136
    
    
    
    197
    
    
    
    Originations of loans held-for-sale
    
    
    (2,850
    )
    
    
    (9,097
    )
    
    
    (20,172
    )Proceeds from sale of loans held-for-sale
    
    
    3,021
    
    
    
    9,993
    
    
    
    19,953Changes in assets and liabilities:Decrease in accrued interest receivable
    
    
    158
    
    
    
    366
    
    
    
    272(Increase) decrease in other assets
    
    
    (9,113
    )
    
    
    6,388
    
    
    
    (10,530
    )Decrease in other liabilities
    
    
    325
    
    
    
    (1,319
    )
    
    
    (2,305
    )Net cash provided by (used in) operating activities
    
    
    1,468
    
    
    
    11,755
    
    
    
    (7,620
    )INVESTING ACTIVITIESPurchase of available-for-sale securites
    
    
    (23,657
    )
    
    
    (46,588
    )
    
    
    (15,265
    )Proceeds from sales of securities
    
    
    23,479
    
    
    
    
    
    
    
    36,116Proceeds from principal payments, maturities, and calls:Available-for-sale
    
    
    16,958
    
    
    
    7,674
    
    
    
    7,358Held-to-maturity
    
    
    2,472
    
    
    
    2,452
    
    
    
    1,803Originations of loans held-for-investment
    
    
    (105,570
    )
    
    
    (151,432
    )
    
    
    (162,556
    )Loans purchased from third parties
    
    
    (10,760
    )
    
    
    
    
    
    
    (29,736
    )Principal collections on loans
    
    
    102,330
    
    
    
    142,151
    
    
    
    145,458Proceeds from sales of loans held-for-investment
    
    
    349
    
    
    
    
    
    
    
    Sale
(Purchase) of FHLB-NY stock
    
    
    67
    
    
    
    (2,549
    )
    
    
    1,614Disposals (Additions) to premises and equipment
    
    
    3,082
    
    
    
    (1,389
    )
    
    
    (2,862
    )Proceeds from sale of real estate owned
    
    
    423
    
    
    
    998
    
    
    
    Net cash provided by (used in) investing activities
    
    
    9,174
    
    
    
    (48,683
    )
    
    
    (18,070
    )FINANCING ACTIVITIESNet (decrease) increase in deposits
    
    
    (167
    )
    
    
    (51,247
    )
    
    
    39,541Net increase (decrease) in FHLB advances and other borrowings
    
    
    16,540
    
    
    
    56,392
    
    
    
    (2,527
    )Capital contribution by CPP
    
    
    
    
    
    
    18,980
    
    
    
    Common stock repurchased
    
    
    (68
    )
    
    
    (159
    )
    
    
    (331
    )Dividends paid
    
    
    (1,942
    )
    
    
    (1,065
    )
    
    
    (975
    )Net cash provided by financing activities
    
    
    14,363
    
    
    
    22,901
    
    
    
    35,708Net increase (decrease) in cash and cash equivalents
    
    
    25,005
    
    
    
    (14,027
    )
    
    
    10,018Cash and cash equivalents at beginning of period
    
    
    13,341
    
    
    
    27,368
    
    
    
    17,350Cash and cash equivalents at end of period
    
    $
    38,346
    
    
    $
    13,341
    
    
    $
    27,368Supplemental information:Noncash Transfers-Change in unrealized loss on valuation of available-for-sale investments, net
    
    $
    181
    
    
    $
    79
    
    
    $
    221Transfer of loans held-for-sale to loans held for investment
    
    $
    17,731
    
    
    $
    
    
    
    $
    Cash paid for-Interest
    
    $
    13,764
    
    
    $
    16,107
    
    
    $
    21,973Income taxes
    
    $
    120
    
    
    $
    297
    
    
    $
    922
   68




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##### Table of Contents



CARVER BANCORP, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1. ORGANIZATION
 Nature of operations
     NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of consolidated financial statement presentation
    69




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##### Table of Contents



Cash and cash equivalents
  Investment Securities
    Loans Held-for-Sale
   70




---



##### Table of Contents



Loans Receivable
     Allowance for Loan and Lease Losses
       71




---



##### Table of Contents



Trouble Debt Restructured Loans
   72




---



##### Table of Contents



Segment Reporting
  Concentration of Risk
  Office Properties and Equipment
  Buildings and improvements
    
    10 to 25 yearsFurnishings and equipment
    
    3 to 5 yearsLeasehold improvements
    
    Lesser of useful life or remaining term of lease
  Federal Home Loan Bank Stock
  Bank Owned Life Insurance
  Mortgage Servicing Rights
   73




---



##### Table of Contents



Real Estate Owned
  Identifiable Intangible Assets
   Income Taxes
  Earnings (Loss) per Common Share
  Preferred and Common Dividends
   Treasury Stock
   74




---



##### Table of Contents



Pension Plans
   NMTC fee income
  Reclassifications
  Restatement to correct error in operating results previously reported for the second quarter of
fiscal 2010
  Impact of Recent Accounting Standards and Interpretations
    75




---



##### Table of Contents



76




---



##### Table of Contents



NOTE 3. IMPAIRMENT AND GOODWILL
   77




---



##### Table of Contents



NOTE 4. SECURITIES
  Amortized
    
    
    Gross Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair-ValueAvailable-for-Sale:Mortgage-backed securities:Government National Mortgage
Association
    
    $
    23,993
    
    
    $
    27
    
    
    $
    (114
    )
    
    $
    23,906Federal Home Loan Mortgage Corporation
    
    
    4,293
    
    
    
    232
    
    
    
    (0
    )
    
    
    4,525Federal National Mortgage Association
    
    
    12,469
    
    
    
    283
    
    
    
    (2
    )
    
    
    12,750Other
    
    
    352
    
    
    
    85
    
    
    
    (52
    )
    
    
    385Total mortgage-backed securities
    
    
    41,107
    
    
    
    627
    
    
    
    (168
    )
    
    
    41,566U.S. Government Agency Securities
    
    
    1,496
    
    
    
    
    
    
    
    (12
    )
    
    
    1,484Total available-for-sale
    
    $
    42,603
    
    
    $
    627
    
    
    $
    (180
    )
    
    $
    43,050Held-to-Maturity:Mortgage-backed securities:Government National Mortgage
Association
    
    $
    431
    
    
    $
    41
    
    
    $
    
    
    
    $
    472Federal Home Loan Mortgage Corporation
    
    
    8,797
    
    
    
    74
    
    
    
    
    
    
    
    8,871Federal National Mortgage Association
    
    
    2,976
    
    
    
    147
    
    
    
    
    
    
    
    3,123Total mortgage-backed securities
    
    
    12,204
    
    
    
    262
    
    
    
    
    
    
    
    12,466Other
    
    
    139
    
    
    
    
    
    
    
    (2
    )
    
    
    137Total held-to-maturity
    
    
    12,343
    
    
    
    262
    
    
    
    (2
    )
    
    
    12,603Total securities
    
    $
    54,946
    
    
    $
    889
    
    
    $
    (182
    )
    
    $
    55,653
  78




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##### Table of Contents



Amortized
    
    
    Gross Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair-ValueAvailable-for-Sale:Mortgage-backed securities:Government National Mortgage
Association
    
    $
    39,252
    
    
    $
    26
    
    
    $
    (486
    )
    
    $
    38,792Federal Home Loan Mortgage Corporation
    
    
    5,847
    
    
    
    185
    
    
    
    (2
    )
    
    
    6,030Federal National Mortgage Association
    
    
    13,872
    
    
    
    493
    
    
    
    (8
    )
    
    
    14,357Other
    
    
    571
    
    
    
    
    
    
    
    (37
    )
    
    
    534Total mortgage-backed securities
    
    
    59,542
    
    
    
    704
    
    
    
    (533
    )
    
    
    59,713U.S. Government Agency Securities
    
    
    254
    
    
    
    6
    
    
    
    
    
    
    
    260Total available-for-sale
    
    
    59,796
    
    
    
    710
    
    
    
    (533
    )
    
    
    59,973Held-to-Maturity:Mortgage-backed securities:Government National Mortgage
Association
    
    
    488
    
    
    
    27
    
    
    
    
    
    
    
    515Federal Home Loan Mortgage Corporation
    
    
    10,292
    
    
    
    17
    
    
    
    (153
    )
    
    
    10,156Federal National Mortgage Association
    
    
    3,870
    
    
    
    80
    
    
    
    (248
    )
    
    
    3,702Total mortgage-backed securities
    
    
    14,650
    
    
    
    124
    
    
    
    (401
    )
    
    
    14,373Other
    
    
    158
    
    
    
    
    
    
    
    (3
    )
    
    
    155Total held-to-maturity
    
    
    14,808
    
    
    
    124
    
    
    
    (404
    )
    
    
    14,528Total securities
    
    $
    74,604
    
    
    $
    834
    
    
    $
    (937
    )
    
    $
    74,501
  Amortized
    
    
    Gross Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair-ValueAvailable-for-Sale:Mortgage-backed securities:Government National Mortgage
Association
    
    $
    8,303
    
    
    $
    
    
    
    $
    (123
    )
    
    $
    8,180Federal Home Loan Mortgage Corporation
    
    
    4,077
    
    
    
    19
    
    
    
    
    
    
    
    4,096Federal National Mortgage Association
    
    
    6,748
    
    
    
    107
    
    
    
    
    
    
    
    6,855Other
    
    
    205
    
    
    
    4
    
    
    
    
    
    
    
    209Total mortgage-backed securities
    
    
    19,333
    
    
    
    130
    
    
    
    (123
    )
    
    
    19,340U.S. Government Agency Securities
    
    
    1,473
    
    
    
    52
    
    
    
    
    
    
    
    1,525Total available-for-sale
    
    
    20,806
    
    
    
    182
    
    
    
    (123
    )
    
    
    20,865Held-to-Maturity:Mortgage-backed securities:Government National Mortgage
Association
    
    
    573
    
    
    
    34
    
    
    
    
    
    
    
    607Federal Home Loan Mortgage Corporation
    
    
    12,343
    
    
    
    11
    
    
    
    (230
    )
    
    
    12,124Federal National Mortgage Association
    
    
    4,216
    
    
    
    78
    
    
    
    (32
    )
    
    
    4,262Total mortgage-backed securities
    
    
    17,132
    
    
    
    123
    
    
    
    (262
    )
    
    
    16,993Other
    
    
    175
    
    
    
    
    
    
    
    (1
    )
    
    
    174Total held-to-maturity
    
    
    17,307
    
    
    
    123
    
    
    
    (263
    )
    
    
    17,167Total securities
    
    $
    38,113
    
    
    $
    305
    
    
    $
    (386
    )
    
    $
    38,032
  79




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##### Table of Contents



2010
    
    
    2009
    
    
    2008Available-for-Sale:Proceeds
    
    $
    25,239
    
    
    $
    1,265
    
    
    $
    36,116Gross gains
    
    
    457
    
    
    
    
    
    
    
    431Gross losses
    
    
    11
    
    
    
    
    
    
    
    
     Amortized
    
    
    
    
    
    
    WeightedCost
    
    
    Fair Value
    
    
    Avg RateAvailable-for-Sale:Less than one year
    
    $
    
    
    
    $
    
    
    
    
    
    %One through five years
    
    
    594
    
    
    
    705
    
    
    
    3.56
    %Five through ten years
    
    
    1,958
    
    
    
    1,958
    
    
    
    3.82
    %After ten years
    
    
    40,051
    
    
    
    40,387
    
    
    
    4.73
    %$
    42,603
    
    
    $
    43,050
    
    
    
    4.67
    %Held-to-maturity:One through five years
    
    $
    
    
    
    $
    
    
    
    
    
    %Five through ten years
    
    
    822
    
    
    
    826
    
    
    
    1.71
    %After ten years
    
    
    11,521
    
    
    
    11,777
    
    
    
    5.69
    %$
    12,343
    
    
    $
    12,603
    
    
    
    5.43
    %
  80




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##### Table of Contents



Less than 12 months
    
    
    12 months or longer
    
    
    TotalUnrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    FairLosses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    ValueAvailable-for-Sale:Mortgage-backed
securities
    
    $
    (42
    )
    
    $
    13,172
    
    
    $
    (126
    )
    
    $
    7,682
    
    
    $
    (168
    )
    
    $
    20,855Agencies
    
    $
    (12
    )
    
    $
    1,484
    
    
    $
    
    
    
    $
    
    
    
    $
    (12
    )
    
    $
    1,484Total available-for-sale
    
    $
    (54
    )
    
    $
    14,656
    
    
    $
    (126
    )
    
    $
    7,682
    
    
    $
    (180
    )
    
    $
    22,339Held-to-Maturity:Mortgage-backed
securities
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Other
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    137
    
    
    
    (2
    )
    
    
    137Total held-to-maturity
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    137
    
    
    
    (2
    )
    
    
    137Total securities
    
    $
    (54
    )
    
    $
    14,656
    
    
    $
    (128
    )
    
    $
    7,819
    
    
    $
    (182
    )
    
    $
    22,476
  Less than 12 months
    
    
    12 months or longer
    
    
    TotalUnrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    FairLosses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    ValueAvailable-for-Sale:Mortgage-backed
securities
    
    $
    (441
    )
    
    $
    30,008
    
    
    $
    (92
    )
    
    $
    2,938
    
    
    $
    (533
    )
    
    $
    32,946Total available-for-sale
    
    $
    (441
    )
    
    $
    30,008
    
    
    $
    (92
    )
    
    $
    2,938
    
    
    $
    (533
    )
    
    $
    32,946Held-to-Maturity:Mortgage-backed
securities
    
    $
    (246
    )
    
    $
    2,119
    
    
    $
    (155
    )
    
    $
    8,682
    
    
    $
    (401
    )
    
    $
    10,801Other
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    155
    
    
    
    (3
    )
    
    
    155Total held-to-maturity
    
    
    (246
    )
    
    
    2,119
    
    
    
    (158
    )
    
    
    8,837
    
    
    
    (404
    )
    
    
    10,956Total securities
    
    $
    (687
    )
    
    $
    32,127
    
    
    $
    (250
    )
    
    $
    11,775
    
    
    $
    (937
    )
    
    $
    43,902
   81




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##### Table of Contents



NOTE 5. LOANS RECEIVABLE, NET
  March 31, 2010
    
    
    March 31, 2009Amount
    
    
    %
    
    
    Amount
    
    
    %Gross loans receivable:One- to four-family (1)
    
    $
    90,150
    
    
    
    13
    %
    
    $
    105,771
    
    
    
    16
    %Multifamily
    
    
    141,702
    
    
    
    21
    %
    
    
    80,321
    
    
    
    12
    %Non-residential
    
    
    259,619
    
    
    
    39
    %
    
    
    273,595
    
    
    
    41
    %Construction
    
    
    111,348
    
    
    
    17
    %
    
    
    144,318
    
    
    
    22
    %Business
    
    
    68,523
    
    
    
    10
    %
    
    
    57,522
    
    
    
    9
    %Consumer and other (2)
    
    
    1,403
    
    
    
    0
    %
    
    
    1,674
    
    
    
    0
    %Total loans receivable
    
    
    672,745
    
    
    
    100
    %
    
    
    663,201
    
    
    
    100
    %Add:Premium on loans
    
    
    130
    
    
    
    
    
    
    
    546Less:Deferred fees and loan discounts
    
    
    (2,864
    )
    
    
    
    
    
    
    (1,583
    )Allowance for loan losses
    
    
    (12,000
    )
    
    
    
    
    
    
    (7,049
    )Total loans receivable, net
    
    $
    658,011
    
    
    
    
    
    
    $
    655,115
 (1)
    
    Includes loans held for sale(2)
    
    Includes personal, credit card, and home improvement     2010
    
    
    2009
    
    
    2008Balance at beginning of the year
    
    $
    7,049
    
    
    $
    4,878
    
    
    $
    5,409Provision for loan losses
    
    
    7,845
    
    
    
    2,702
    
    
    
    222Recoveries of amounts previously
charged-off
    
    
    64
    
    
    
    53
    
    
    
    153Charge-offs of loans
    
    
    (2,958
    )
    
    
    (584
    )
    
    
    (906
    )Balance at end of the year
    
    $
    12,000
    
    
    $
    7,049
    
    
    $
    4,878
   82




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##### Table of Contents



NOTE 6. OFFICE PROPERTIES AND EQUIPMENT, NET
  2010
    
    
    2009Land
    
    $
    155
    
    
    $
    415Building and improvements
    
    
    8,170
    
    
    
    10,149Leasehold improvements
    
    
    7,721
    
    
    
    8,221Furniture, equipment, and other
    
    
    11,200
    
    
    
    11,01427,246
    
    
    
    29,799Less accumulated depreciation and amortization
    
    
    (15,170
    )
    
    
    (14,562
    )Office properties and equipment, net
    
    $
    12,076
    
    
    $
    15,237
   NOTE 7. ACCRUED INTEREST RECEIVABLE
  2010
    
    
    2009Loans receivable
    
    $
    3,208
    
    
    $
    3,326Mortgage-backed securities
    
    
    252
    
    
    
    356Investments and other interest bearing assets
    
    
    79
    
    
    
    15Total accrued interest receivable
    
    $
    3,539
    
    
    $
    3,697
  83




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##### Table of Contents



NOTE 8. DEPOSITS
  2010
    
    
    2009Percent
    
    
    Weighted
    
    
    
    
    
    
    Percent
    
    
    Weightedof Total
    
    
    Average
    
    
    
    
    
    
    of Total
    
    
    AverageAmount
    
    
    Deposits
    
    
    Rate
    
    
    Amount
    
    
    Deposits
    
    
    RateNon-interest-bearing demand
    
    $
    58,792
    
    
    
    9.74
    %
    
    
    0.00
    %
    
    $
    56,505
    
    
    
    9.36
    %
    
    
    0.00
    %NOW accounts
    
    
    43,593
    
    
    
    7.23
    %
    
    
    0.18
    %
    
    
    48,371
    
    
    
    8.02
    %
    
    
    0.15
    %Savings
    
    
    115,817
    
    
    
    19.20
    %
    
    
    0.22
    %
    
    
    117,438
    
    
    
    19.46
    %
    
    
    0.22
    %Money market savings account
    
    
    67,122
    
    
    
    11.13
    %
    
    
    1.05
    %
    
    
    43,190
    
    
    
    7.16
    %
    
    
    1.35
    %Certificates of deposit
    
    
    315,728
    
    
    
    52.34
    %
    
    
    1.46
    %
    
    
    335,348
    
    
    
    55.58
    %
    
    
    2.25
    %Other
    
    
    2,197
    
    
    
    0.36
    %
    
    
    1.71
    %
    
    
    2,564
    
    
    
    0.42
    %
    
    
    1.86
    %Total
    
    $
    603,249
    
    
    
    100.00
    %
    
    
    0.94
    %
    
    $
    603,416
    
    
    
    100.00
    %
    
    
    1.41
    %
  Period to MaturityTotal
    
    
    PercentRate
    
    < 1 Yr.
    
    
    1-2 Yrs.
    
    
    2-3 Yrs.
    
    
    3+ Yrs.
    
    
    2010
    
    
    of Total0%  0.99%
    
    $
    79,572
    
    
    $
    20
    
    
    $
    2
    
    
    $
    9
    
    
    $
    79,603
    
    
    
    25.21
    %1%  1.99%
    
    $
    161,154
    
    
    $
    4,039
    
    
    $
    0
    
    
    $
    0
    
    
    $
    165,193
    
    
    
    52.32
    %2%  3.99%
    
    $
    19,266
    
    
    $
    19,334
    
    
    $
    6,535
    
    
    $
    11,426
    
    
    $
    56,561
    
    
    
    17.91
    %4% and over
    
    $
    4,057
    
    
    $
    5,864
    
    
    $
    4,119
    
    
    $
    331
    
    
    $
    14,371
    
    
    
    4.55
    %Total
    
    $
    264,049
    
    
    $
    29,257
    
    
    $
    10,656
    
    
    $
    11,766
    
    
    $
    315,728
    
    
    
    100.00
    %
   Maturing:April 1, 2010 to June 30, 2010
    
    $
    78,391July 1, 2010 to September 30, 2010
    
    
    44,062October 1, 2010 to March 31, 2011
    
    
    83,492April 1, 2011 and beyond
    
    
    17,629Total
    
    $
    223,574
  84




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##### Table of Contents



2010
    
    
    2009
    
    
    2008NOW demand
    
    $
    79
    
    
    $
    61
    
    
    $
    138Savings and clubs
    
    
    257
    
    
    
    537
    
    
    
    1,004Money market savings
    
    
    702
    
    
    
    903
    
    
    
    1,193Certificates of deposit
    
    
    5,857
    
    
    
    11,379
    
    
    
    16,522Mortgagors deposits
    
    
    38
    
    
    
    48
    
    
    
    426,933
    
    
    
    12,928
    
    
    
    18,899Penalty for early withdrawal of
certificates of deposit
    
    
    (17
    )
    
    
    (22
    )
    
    
    (33
    )Total interest expense
    
    $
    6,916
    
    
    $
    12,906
    
    
    $
    18,866
 NOTE 9. BORROWED MONEY
 Federal Home Loan Bank Advances, Repurchase agreements and Guaranteed Debt Securities.
 Maturing
    
    2010
    
    
    2009Year Ended
    
    Weighted
    
    
    
    
    
    
    WeightedMarch 31,
    
    Average Rate
    
    
    Amount
    
    
    Average Rate
    
    
    Amount2010
    
    
    
    
    
    
    
    
    
    
    2.11
    %
    
    $
    63,5002011
    
    
    2.43
    %
    
    
    19,000
    
    
    
    3.84
    %
    
    
    8,0002012
    
    
    1.84
    %
    
    
    29,068
    
    
    
    0.00
    %
    
    
    2013
    
    
    4.64
    %
    
    
    30,086
    
    
    
    4.64
    %
    
    
    30,1142014-15
    
    
    3.00
    %
    
    
    35,000
    
    
    
    
    
    
    
    3.04
    %
    
    $
    113,154
    
    
    
    2.99
    %
    
    $
    101,614
 Federal Home Loan Bank Advances.
 Repurchase agreements.
 Guaranteed Debt Securities.
  85




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##### Table of Contents



Subordinated Debt Securities.
    2010
    
    
    2009
    
    
    2008Amounts outstanding at the end of year:FHLB advances
    
    $
    69,086
    
    
    $
    71,614
    
    
    $
    15,250Subordinated debt securities
    
    $
    18,403
    
    
    $
    13,403
    
    
    $
    13,375Rate paid at year end:FHLB advances
    
    
    2.62
    %
    
    
    2.30
    %
    
    
    3.77
    %Subordinated debt securities
    
    
    4.31
    %
    
    
    4.92
    %
    
    
    5.85
    %Maximum amount of borrowing outstanding at any month end:FHLB advances
    
    $
    91,093
    
    
    $
    71,614
    
    
    $
    60,874Subordinated debt securities
    
    $
    18,403
    
    
    $
    13,403
    
    
    $
    13,375Approximate average amounts outstanding for year:FHLB advances
    
    $
    79,651
    
    
    $
    46,975
    
    
    $
    36,724Subordinated debt securities
    
    $
    15,924
    
    
    $
    13,395
    
    
    $
    13,344Approximate weighted average rate paid during year:FHLB advances
    
    
    2.39
    %
    
    
    1.96
    %
    
    
    5.18
    %Subordinated debt securities
    
    
    4.21
    %
    
    
    5.63
    %
    
    
    7.76
    %
  86




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##### Table of Contents



NOTE 10. INCOME TAXES
  2010
    
    
    2009
    
    
    2008Federal income tax expense (benefit):Current
    
    $
    920
    
    
    $
    
    
    
    $
    70Deferred
    
    
    (4,147
    )
    
    
    (3,025
    )
    
    
    (1,107
    )(3,227
    )
    
    
    (3,025
    )
    
    
    (1,037
    )State and local income tax expense (benefit):Current
    
    
    401
    
    
    
    176
    
    
    
    169Deferred
    
    
    (40
    )
    
    
    (353
    )
    
    
    (24
    )361
    
    
    
    (177
    )
    
    
    145Total income tax benefit
    
    $
    (2,866
    )
    
    $
    (3,202
    )
    
    $
    (892
    )
  2010
    
    
    2009
    
    
    2008Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    PercentStatutory Federal income tax
expense (benefit)
    
    $
    (1,322
    )
    
    
    34.0
    %
    
    $
    (3,477
    )
    
    
    34.0
    %
    
    $
    1,094
    
    
    
    34.0
    %State and local income taxes, net of
Federal tax benefit
    
    
    240
    
    
    
    (6.2
    )%
    
    
    116
    
    
    
    (1.1
    )%
    
    
    86
    
    
    
    2.7
    %New markets tax credit
    
    
    (2,295
    )
    
    
    59.0
    %
    
    
    (2,000
    )
    
    
    19.6
    %
    
    
    (2,000
    )
    
    
    (61.6
    )%General business credit
    
    
    (32
    )
    
    
    0.9
    %
    
    
    (31
    )
    
    
    0.3
    %
    
    
    (41
    )
    
    
    (1.3
    )%Goodwill amortization
    
    
    
    
    
    
    0.0
    %
    
    
    2,399
    
    
    
    (23.5
    )%
    
    
    
    
    
    
    0.0
    %Other
    
    
    543
    
    
    
    (14.0
    )%
    
    
    (209
    )
    
    
    2.0
    %
    
    
    (31
    )
    
    
    (1.0
    )%Total income tax benefit
    
    $
    (2,866
    )
    
    
    73.7
    %
    
    $
    (3,202
    )
    
    
    31.3
    %
    
    $
    (892
    )
    
    
    (27.2
    )%
   87




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##### Table of Contents



2010
    
    
    2009Deferred Tax Assets:Allowance for loan losses
    
    $
    4,080
    
    
    $
    2,397Deferred loan fees
    
    
    686
    
    
    
    168Compensation and benefits
    
    
    58
    
    
    
    31Non-accrual loan interest
    
    
    1,344
    
    
    
    911Capital loss carryforward
    
    
    84
    
    
    
    591Purchase accounting adjustment
    
    
    131
    
    
    
    119Net operating loss carry forward
    
    
    112
    
    
    
    756New markets tax credit
    
    
    7,322
    
    
    
    5,413Depreciation
    
    
    316
    
    
    
    204Minimum pension liability
    
    
    110
    
    
    
    132Market value adjustment on HFS loans
    
    
    817
    
    
    
    Other
    
    
    180
    
    
    
    315Total Deferred Tax Assets
    
    
    15,240
    
    
    
    11,037Deferred Tax Liabilities:Income from affiliate
    
    
    738
    
    
    
    700Unrealized gain on available-for-sale securities
    
    
    181
    
    
    
    123Total Deferred Tax Liabilities
    
    
    919
    
    
    
    823Net Deferred Tax Assets
    
    $
    14,321
    
    
    $
    10,214
       88




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##### Table of Contents



NOTE
11. (LOSS) EARNINGS PER COMMON SHARE
  2010
    
    
    2009
    
    
    2008Net (loss) income
    
    $
    (1,021
    )
    
    $
    (7,024
    )
    
    $
    3,952Preferred stock dividends
    
    
    (1,065
    )
    
    
    (76
    )
    
    $
    Net (loss) income available to common stockholders
    
    $
    (2,086
    )
    
    $
    (7,100
    )
    
    $
    3,952Weighted average common shares outstanding  basic
    
    
    2,474
    
    
    
    2,472
    
    
    
    2,492Effect of dilutive options
    
    
    
    
    
    
    
    
    
    
    50Effect of dilutive MRP shares
    
    
    
    
    
    
    
    
    
    
    19Weighted average common shares outstanding  diluted
    
    
    2,474
    
    
    
    2,472
    
    
    
    2,561Basic EPS
    
    $
    (0.84
    )
    
    $
    (2.87
    )
    
    $
    1.54Diluted EPS
    
    
    NA
    
    
    
    NA
    
    
    $
    1.54
 NOTE 12. STOCKHOLDERS EQUITY
 Conversion and Stock Offering.
 Regulatory Capital
  89




---



##### Table of Contents



GAAP
    
    
    Tangible
    
    
    Leverage
    
    
    Risk-BasedCapital
    
    
    Equity
    
    
    Capital
    
    
    CapitalStockholders Equity at March 31, 2010
    
    $
    74,811
    
    
    $
    74,811
    
    
    $
    74,811
    
    
    $
    74,811Add:General valuation allowances
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,063Qualifying
subordinated debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,000Other
    
    
    
    
    
    
    97
    
    
    
    97
    
    
    
    97Deduct:Disallowed deferred tax assets
    
    
    
    
    
    
    11,964
    
    
    
    11,964
    
    
    
    11,964Unrealized gains on securities available-for-sale, net
    
    
    
    
    
    
    296
    
    
    
    296
    
    
    
    296Goodwill and qualifying intangible assets, net
    
    
    
    
    
    
    228
    
    
    
    228
    
    
    
    228Regulatory Capital
    
    
    
    
    
    
    62,420
    
    
    
    62,420
    
    
    
    75,483Minimum Capital requirement
    
    
    
    
    
    
    11,889
    
    
    
    31,703
    
    
    
    51,560Regulatory Capital Excess
    
    
    
    
    
    $
    50,531
    
    
    $
    30,717
    
    
    $
    23,923Capital Ratios
    
    
    
    
    
    
    7.86
    %
    
    
    7.88
    %
    
    
    11.71
    %
 Comprehensive Income (Loss).
 NOTE 13. EMPLOYEE BENEFIT AND STOCK COMPENSATION PLANS
 Pension Plan
  90




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##### Table of Contents



2010
    
    
    2009Change in benefit obligation:Benefit obligation at the beginning of year
    
    $
    2,119
    
    
    $
    2,399Adjustment for Measurement Date Change
    
    
    
    
    
    
    37Interest cost
    
    
    149
    
    
    
    150Actuarial gain
    
    
    394
    
    
    
    (193
    )Benefits paid
    
    
    (180
    )
    
    
    (226
    )Settlements
    
    
    (102
    )
    
    
    (48
    )Benefit obligation at end of year
    
    $
    2,380
    
    
    $
    2,119Change in fair value of plan assets:Fair value of plan assets at beginning of year
    
    $
    1,751
    
    
    $
    2,766Actual return on plan assets
    
    
    523
    
    
    
    (741
    )Benefits paid
    
    
    (180
    )
    
    
    (226
    )Settlements
    
    
    (102
    )
    
    
    (48
    )Fair value of plan assets at end of year
    
    $
    1,991
    
    
    $
    1,751Funded status
    
    $
    (389
    )
    
    $
    (368
    )Accrued pension cost
    
    $
    (389
    )
    
    $
    (368
    )
  2010
    
    
    2009
    
    
    2008Interest cost
    
    $
    149
    
    
    $
    150
    
    
    $
    163Unrecognized loss
    
    
    62
    
    
    
    
    
    
    
    Expected return on plan assets
    
    
    (133
    )
    
    
    (214
    )
    
    
    (221
    )Net periodic pension benefit
    
    $
    78
    
    
    $
    (64
    )
    
    $
    (58
    )
  2010
    
    
    2009
    
    
    2008Annual salary increase (1)
    
    
    
    
    
    
    
    
    
    
    Expected long-term return on assets
    
    
    8.00
    %
    
    
    8.00
    %
    
    
    8.00
    %Discount rate used in measurement of benefit obligations
    
    
    5.75
    %
    
    
    7.38
    %
    
    
    6.50
    %
 (1)
    
    The annual salary increase rate is not applicable as the plan is frozen and no new benefits
accrue.    91




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##### Table of Contents



Quoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets
    
    
    Observable
    
    
    Unobservablefor Identical Assets
    
    
    Inputs
    
    
    Inputs(in thousands)
    
    Total
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Mutual Funds  Equity:Large-cap blend (1)
    
    $
    1,291
    
    
    $
    
    
    
    $
    1,291
    
    
    $
    Other Types of Investments:Stable Value fund (2)
    
    
    700
    
    
    
    
    
    
    
    
    
    
    
    700$
    1,991
    
    
    $
    
    
    
    $
    1,291
    
    
    $
    700
 
 (1)
    
    This category contains large-cap stocks or securities convertible into common stocks. The
portfolio is invested in 88%
U.S. Equity and 12% International Equity.(2)
    
    This category contains a broadly diversified portfolio with guaranteed protection of principal
and accumulated interest from market volatility. Current Asset Allocation
  At March 31,2010
    
    
    2009Equity securities
    
    
    65
    %
    
    
    65
    %Debt securities
    
    
    35
    %
    
    
    35
    %Total
    
    
    100
    %
    
    
    100
    %
 Expected Future Annuity Payments
  (in thousands)2011
    
    $
    1852012
    
    
    1812013
    
    
    1772014
    
    
    1782015
    
    
    1772016-2020
    
    
    865Total
    
    $
    1,763
  92




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##### Table of Contents



Directors Retirement Plan.
 Savings Incentive Plan.
   BOLI.
  Management Recognition Plan .
 Employee Stock Ownership Plan.
  93




---



##### Table of Contents



Stock Option Plans.
   2010
    
    
    2009
    
    
    2008Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Exercise
    
    
    
    
    
    
    ExerciseOptions
    
    
    Price
    
    
    Options
    
    
    Price
    
    
    Options
    
    
    PriceOutstanding, beginning of year
    
    
    220,931
    
    
    $
    12.86
    
    
    
    237,182
    
    
    $
    13.24
    
    
    
    240,087
    
    
    $
    13.24Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,978
    
    
    
    16.93Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,475
    )
    
    
    11.58Forfeited
    
    
    (30,200
    )
    
    
    8.21
    
    
    
    (16,251
    )
    
    
    17.02
    
    
    
    (15,408
    )
    
    
    17.72Outstanding, end of year
    
    
    190,731
    
    
    
    13.60
    
    
    
    220,931
    
    
    $
    12.86
    
    
    
    237,182
    
    
    $
    13.22Exercisable, at year end
    
    
    168,137
    
    
    
    
    
    
    
    191,427
    
    
    
    
    
    
    
    198,088
  94




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##### Table of Contents



Options Outstanding
    
    
    Options ExercisableWeighted
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    Average
    
    
    
    
    
    
    AverageRange of
    
    
    
    
    
    
    Remaining
    
    Exercise
    
    
    
    
    
    
    ExerciseExercise Prices
    
    
    Shares
    
    
    Life
    
    Price
    
    
    Shares
    
    
    Price$
    8.00
    
    
    $
    8.99
    
    
    
    30,000
    
    
    .16 years
    
    $
    8.17
    
    
    
    30,000
    
    
    $
    8.219.00
    
    
    
    9.99
    
    
    
    32,000
    
    
    1.39 years
    
    
    9.93
    
    
    
    32,000
    
    
    
    9.9310.00
    
    
    
    10.99
    
    
    
    2,000
    
    
    .23 years
    
    
    10.38
    
    
    
    2,000
    
    
    
    10.3812.00
    
    
    
    12.99
    
    
    
    37,400
    
    
    2.28 years
    
    
    12.10
    
    
    
    37,400
    
    
    
    12.1016.00
    
    
    
    16.99
    
    
    
    50,803
    
    
    5.27 years
    
    
    16.59
    
    
    
    37,434
    
    
    
    16.5417.00
    
    
    
    17.99
    
    
    
    18,000
    
    
    5.18 years
    
    
    17.20
    
    
    
    8,775
    
    
    
    17.2819.00
    
    
    
    19.99
    
    
    
    19,418
    
    
    4.26 years
    
    
    19.64
    
    
    
    19,418
    
    
    
    19.6420.00
    
    
    
    20.99
    
    
    
    729
    
    
    4.53 years
    
    
    20.00
    
    
    
    729
    
    
    
    20.0021.00
    
    
    
    21.99
    
    
    
    381
    
    
    3.83 years
    
    
    21.76
    
    
    
    381
    
    
    
    21.76Total
    
    
    
    
    
    
    190,731
    
    
    
    
    
    
    
    
    
    168,137
   2010
    
    
    2009
    
    
    2008Risk-free interest rate
    
    
    N/A
    
    
    
    N/A
    
    
    
    4.3
    %Volatility
    
    
    N/A
    
    
    
    N/A
    
    
    
    31.2
    %Annual dividends
    
    
    N/A
    
    
    
    N/A
    
    
    $
    0.29Expected life of option grants
    
    
    N/A
    
    
    
    N/A
    
    
    7 yrs
  Performance Compensation Plan.
 NOTE 14. COMMITMENTS AND CONTINGENCIES
 Credit Related Commitments.
    95




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2010
    
    
    2009Commitments to fund mortgage loans
    
    $
    18,886
    
    
    $
    38,056Commitments to fund commercial and consumer loans
    
    
    3,330
    
    
    
    4,616Lines of credit
    
    
    6,442
    
    
    
    16,028Letters of credit
    
    
    4,154
    
    
    
    4,164$
    32,812
    
    
    $
    62,864
    Lease Commitments.
 Year Ending
    
    Minimum
    
    
    SubletMarch 31,
    
    Rental
    
    
    Income
    
    
    Net2011
    
    $
    2,075
    
    
    $
    125
    
    
    $
    1,9502012
    
    
    1,818
    
    
    
    125
    
    
    $
    1,6932013
    
    
    1,759
    
    
    
    125
    
    
    $
    1,6352014
    
    
    1,688
    
    
    
    125
    
    
    $
    1,5642015
    
    
    1,277
    
    
    
    19
    
    
    $
    1,259Thereafter
    
    
    3,909
    
    
    
    
    
    
    $
    3,909$
    12,527
    
    
    $
    517
    
    
    $
    12,010
  Legal Proceedings
  96




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##### Table of Contents



NOTE 15. FAIR VALUE MEASUREMENTS
 Fair Value
Measurements
 
 
 
   Fair Value Measurements at March 31, 2010, UsingQuoted Prices in
    
    
    
    
    
    SignificantActive Markets for
    
    
    Significant Other
    
    
    UnobservableIdentical Assets
    
    
    Observable Inputs
    
    
    Inputs
    
    
    Total Fair(in thousands)
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    ValueMortgage servicing rights
    
    $
    
    
    
    $
    
    
    
    $
    721
    
    
    $
    721Securities available for sale
    
    $
    
    
    
    $
    42,909
    
    
    $
    141
    
    
    $
    43,050
 Fair Value Measurements at March 31, 2009, UsingQuoted Prices in
    
    
    
    
    
    SignificantActive Markets for
    
    
    Significant Other
    
    
    UnobservableIdentical Assets
    
    
    Observable Inputs
    
    
    Inputs
    
    
    Total Fair(in thousands)
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    ValueMortgage servicing rights
    
    $
    
    
    
    $
    
    
    
    $
    452
    
    
    $
    452Securities available for sale
    
    $
    
    
    
    $
    59,928
    
    
    $
    45
    
    
    $
    59,973
      97




---



##### Table of Contents



Mortgage
    
    
    SecuritiesServicing
    
    
    Available for(in thousands)
    
    Rights
    
    
    SaleBeginning balance, April 1, 2009
    
    $
    452
    
    
    $
    45Additions
    
    
    59
    
    
    
    11Total unrealized gain
    
    
    210
    
    
    
    85Ending balance, March 31, 2010
    
    $
    721
    
    
    $
    141
  Fair Value Measurements at March 31, 2010, UsingQuoted Prices in Active
    
    
    Significant Other
    
    
    SignificantMarkets for Identical
    
    
    Observable Inputs
    
    
    Unobservable Inputs
    
    
    Total Fair(in thousands)
    
    Assets (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    ValueCertain impaired loans
    
    $
    
    
    
    $
    23,487
    
    
    $
    
    
    
    $
    23,487
 Fair Value Measurements at March 31, 2009, UsingQuoted Prices in Active
    
    
    Significant Other
    
    
    SignificantMarkets for Identical
    
    
    Observable Inputs
    
    
    Unobservable
    
    
    Total Fair(in thousands)
    
    Assets (Level 1)
    
    
    (Level 2)
    
    
    Inputs (Level 3)
    
    
    ValueLoans held for sale
    
    $
    
    
    
    $
    21,105
    
    
    $
    
    
    
    $
    21,105Certain impaired loans
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    98




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##### Table of Contents



NOTE 16. FAIR VALUE OF FINANCIAL INSTRUMENTS
  Cash and cash equivalents and accrued interest receivable
  Securities
  Loans receivable
  Loans held-for-sale
  Mortgage servicing rights
  Deposits
   99




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##### Table of Contents



Borrowings
  Commitments
   March 31, 2010
    
    
    March 31, 2009Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    EstimatedAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair ValueFinancial Assets:Cash and cash equivalents
    
    $
    38,346
    
    
    $
    38,346
    
    
    $
    13,341
    
    
    $
    13,341Investment securities available-for-sale
    
    
    
    
    
    
    
    
    
    
    260
    
    
    
    260Mortgage backed securities
available-for-sale
    
    
    43,050
    
    
    
    43,050
    
    
    
    59,713
    
    
    
    59,713FHLB Stock
    
    
    4,107
    
    
    
    4,107
    
    
    
    4,174
    
    
    
    4,174Mortgage backed securities
held-to-maturity
    
    
    12,343
    
    
    
    12,603
    
    
    
    14,808
    
    
    
    14,528Loans receivable
    
    
    658,011
    
    
    
    664,522
    
    
    
    634,010
    
    
    
    649,219Loans held-for-sale
    
    
    
    
    
    
    
    
    
    
    21,105
    
    
    
    22,467Accrued interest receivable
    
    
    3,539
    
    
    
    3,539
    
    
    
    3,697
    
    
    
    3,697Mortgage servicing rights
    
    
    721
    
    
    
    721
    
    
    
    452
    
    
    
    452Financial Liabilities:Deposits
    
    $
    603,249
    
    
    $
    579,023
    
    
    $
    603,416
    
    
    $
    610,455Advances from FHLB of New York
    
    
    113,154
    
    
    
    113,671
    
    
    
    71,614
    
    
    
    71,592Other borrowed money
    
    
    18,403
    
    
    
    19,173
    
    
    
    43,403
    
    
    
    46,179
 Limitations
     100




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##### Table of Contents



NOTE 17. VARIABLE INTEREST ENTITIES
        101




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##### Table of Contents



NOTE 18. QUARTERLY FINANCIAL DATA (UNAUDITED)
  RestatedJune 30
    
    
    September 30
    
    
    December 31
    
    
    March 31Fiscal 2010Interest income
    
    $
    9,913
    
    
    $
    10,507
    
    
    $
    10,180
    
    
    $
    9,863Interest expense
    
    
    (3,023
    )
    
    
    (2,728
    )
    
    
    (2,700
    )
    
    
    (2,557
    )Net interest income
    
    
    6,890
    
    
    
    7,779
    
    
    
    7,480
    
    
    
    7,306Provision for loan losses
    
    
    (688
    )
    
    
    (1,315
    )
    
    
    (1,286
    )
    
    
    (4,555
    )Non-interest income
    
    
    1,153
    
    
    
    (673
    )
    
    
    2,954
    
    
    
    1,640Non-interest expense
    
    
    (7,057
    )
    
    
    (6,938
    )
    
    
    (8,934
    )
    
    
    (7,642
    )Income tax benefit
    
    
    396
    
    
    
    838
    
    
    
    574
    
    
    
    1,057Minority interest, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    694
    
    
    $
    (309
    )
    
    $
    788
    
    
    $
    (2,194
    )Earnings (loss) per common shareBasic
    
    $
    0.18
    
    
    $
    (0.22
    )
    
    $
    0.22
    
    
    $
    (0.97
    )Diluted
    
    $
    0.18
    
    
    $
    NA
    
    
    $
    0.22
    
    
    $
    NAFiscal 2009Interest income
    
    $
    11,119
    
    
    $
    10,543
    
    
    $
    10,421
    
    
    $
    9,917Interest expense
    
    
    (4,861
    )
    
    
    (4,342
    )
    
    
    (4,007
    )
    
    
    (3,296
    )Net interest income
    
    
    6,258
    
    
    
    6,201
    
    
    
    6,414
    
    
    
    6,621Provision for loan losses
    
    
    (169
    )
    
    
    (170
    )
    
    
    (431
    )
    
    
    (1,933
    )Non-interest income
    
    
    1,748
    
    
    
    1,571
    
    
    
    1,195
    
    
    
    661Non-interest expense
    
    
    (7,366
    )
    
    
    (7,305
    )
    
    
    (7,733
    )
    
    
    (8,373
    )Goodwill Impairment
    
    
    
    
    
    
    
    
    
    
    (7,055
    )
    
    
    Income tax benefit (expense)
    
    
    322
    
    
    
    422
    
    
    
    550
    
    
    
    1,908Minority interest, net of taxes
    
    
    (138
    )
    
    
    (98
    )
    
    
    (124
    )
    
    
    Net income
    
    $
    655
    
    
    $
    621
    
    
    $
    (7,184
    )
    
    $
    (1,116
    )Earnings per common shareBasic
    
    $
    0.28
    
    
    $
    0.25
    
    
    $
    (2.63
    )
    
    $
    (0.48
    )Diluted
    
    $
    0.27
    
    
    $
    0.25
    
    
    
    NA
    
    
    
    NA
  102




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##### Table of Contents



Restatement to correct error in operating results previously reported for the second quarter
of fiscal 2010
    As Reported
    
    
    
    
    
    
    RestatedSeptember 30
    
    
    Adjustments
    
    
    September 30Fiscal 2010:Interest Income
    
    $
    10,507
    
    
    $
    
    
    
    $
    10,507Interest expense
    
    
    2,728
    
    
    
    
    
    
    
    2,728Net interest income
    
    
    7,779
    
    
    
    
    
    
    
    7,779Provision for loan losses
    
    
    1,315
    
    
    
    
    
    
    
    1,315Net interest income after
provision for loan losses
    
    
    6,464
    
    
    
    
    
    
    
    6,464Non-interest income
    
    
    1,153
    
    
    
    (1,826
    )
    
    
    (673
    )Non-interest expense
    
    
    6,938
    
    
    
    
    
    
    
    6,938Income before income taxes and
minority interest
    
    
    679
    
    
    
    (1,826
    )
    
    
    (1,147
    )Income tax benefit
    
    
    140
    
    
    
    698
    
    
    
    838Minority interest, net of taxes
    
    
    
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    819
    
    
    $
    (1,128
    )
    
    $
    (309
    )Earnings per common share:Basic
    
    $
    0.23
    
    
    
    
    
    
    $
    (0.22
    )Diluted
    
    $
    0.23
    
    
    
    
    
    
    
    NA
   103




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##### Table of Contents



NOTE 19. CARVER BANCORP, INC.   PARENT COMPANY ONLY
 CONDENSED STATEMENTS OF FINANCIAL CONDITION (in thousands):
 As of March 31,2010
    
    
    2009AssetsCash on deposit with subsidiaries
    
    $
    59
    
    
    $
    1,090Investment in subsidiaries
    
    
    75,173
    
    
    
    77,930Other assets
    
    
    101
    
    
    
    644Total Assets
    
    $
    75,334
    
    
    $
    79,664Liabilities and Stockholders EquityBorrowings
    
    $
    13,403
    
    
    $
    13,403Accounts payable to subsidiaries
    
    
    19
    
    
    
    1,877Other liabilities
    
    
    1
    
    
    
    107Total liabilities
    
    $
    13,422
    
    
    $
    15,387Stockholders equity
    
    
    61,571
    
    
    
    64,281Total Liabilities and Stockholders
Equity
    
    $
    74,993
    
    
    $
    79,668
 CONDENSED STATEMENTS OF INCOME (in thousands):
 Years Ended March 31,2010
    
    
    2009
    
    
    2008IncomeEquity in
net income (loss) from subsidiaries
    
    $
    302
    
    
    $
    (8,527
    )
    
    $
    5,089Other income
    
    
    15
    
    
    
    23
    
    
    
    34Total income (loss)
    
    
    317
    
    
    
    (8,504
    )
    
    
    5,123ExpensesInterest Expense on Borrowings
    
    
    493
    
    
    
    784
    
    
    
    1,185Salaries and employee benefits
    
    
    203
    
    
    
    152
    
    
    
    157Shareholder expense
    
    
    377
    
    
    
    764
    
    
    
    664Other
    
    
    228
    
    
    
    22
    
    
    
    35Total expense
    
    
    1,301
    
    
    
    1,722
    
    
    
    2,041Income (loss) before income taxes
    
    
    (984
    )
    
    
    (10,226
    )
    
    
    3,082Income tax benefit
    
    
    41
    
    
    
    (3,202
    )
    
    
    (881
    )Net Income (loss)
    
    $
    (1,025
    )
    
    $
    (7,024
    )
    
    $
    3,963
  104




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CONDENSED STATEMENTS OF CASH FLOW (in thousands):
 Years Ended March 31,2010
    
    
    2009
    
    
    2008Cash Flows From Operating ActivitiesNet income (loss)
    
    $
    (1,025
    )
    
    $
    (7,024
    )
    
    $
    3,963Adjustments to reconcile net income to net cash
from operating activities:Loss (equity) in net income of Subsidiaries
    
    
    (567
    )
    
    
    8,608
    
    
    
    (5,224
    )Income taxes from the Bank
    
    
    41
    
    
    
    (3,202
    )
    
    
    (892
    )Decrease
(increase) in account receivable from subsidiaries
    
    
    621
    
    
    
    (621
    )
    
    
    Decrease (increase) in other assets
    
    
    (34
    )
    
    
    16
    
    
    
    (16
    )(Decrease) increase in accounts payable to subsidiaries
    
    
    (1,817
    )
    
    
    (68
    )
    
    
    1,654Increase
(decrease) in other liabilities
    
    
    192
    
    
    
    (6
    )
    
    
    (62
    )Other, net
    
    
    243
    
    
    
    
    
    
    
    168Net cash used in operating activities
    
    
    (2,346
    )
    
    
    (2,297
    )
    
    
    (409
    )Cash Flows From Investing ActivitiesDividends Received from Bank
    
    
    3,325
    
    
    
    3,200
    
    
    
    1,700Capital contribution from CPP
    
    
    
    
    
    
    18,980
    
    
    
    Net cash provided by investing activities
    
    
    3,325
    
    
    
    22,180
    
    
    
    1,700Cash Flows From Financing ActivitiesIncrease in borrowings
    
    
    
    
    
    
    27
    
    
    
    Redemption of treasury stock, net
    
    
    (68
    )
    
    
    (159
    )
    
    
    (331
    )Dividends paid
    
    
    (1,942
    )
    
    
    (1,065
    )
    
    
    (975
    )Push Down of CPP funds
    
    
    
    
    
    
    (17,980
    )
    
    
    Net cash used in financing activities
    
    
    (2,010
    )
    
    
    (19,177
    )
    
    
    (1,306
    )Net (decrease) increase in cash
    
    
    (1,031
    )
    
    
    706
    
    
    
    (15
    )Cash and cash equivalents  beginning
    
    
    1,090
    
    
    
    384
    
    
    
    399Cash and cash equivalents  ending
    
    $
    59
    
    
    $
    1,090
    
    
    $
    384
  105




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ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
  
 ITEM 9A.
    
    DISCLOSURE CONTROLS AND PROCEDURES.
 (a) Evaluation of Disclosure Controls and Procedures
   (b) Managements Report on Internal Control Over Financial Reporting
      106




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(c) 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
   107




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ITEM 11.
    
    EXECUTIVE COMPENSATION.
   
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS.
  
 ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND 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 Firm2.
    
    Consolidated Statement of Financial Condition as of March 31, 2010 and 20093.
    
    Consolidated Statements of Operations for the years ended as of March 31, 2010,
2009 and 20084.
    
    Consolidated Statements of Changes in Stockholders Equity and Comprehensive
Income (Loss) for the years ended March 31, 2010, 2009 and 20085.
    
    Consolidated Statements of Cash Flows for the years ended March 31, 2010, 2009
and 20086.
    
    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 110
  108




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##### Table of Contents



CARVER BANCORP, INC.July 15, 2010

    By:
    /s/ Deborah C. WrightDeborah C. WrightChairman and Chief Executive Officer  /s/ Deborah C. Wright

Deborah C. Wright
    
    Chairman and Chief Executive Officer (Principal
Executive Officer)/s/ Chris McFadden

Chris McFadden
    
    Executive Vice President and Chief Financial Officer (Principal
Accounting Officer)/s/ Carol Baldwin Moody

Carol Baldwin Moody
    
    Director/s/ Dr. Samuel J. Daniel

Samuel J. Daniel
    
    Director/s/ Robert Holland, Jr.

Robert Holland, Jr.
    
    Lead Director/s/ Pazel Jackson

Pazel G. Jackson, Jr.
    
    Director/s/ Robert R. Tarter

Robert R. Tarter
    
    Director
  109




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EXHIBIT INDEX
 ExhibitNumber
    
    Description3.1
    
    
    Certificate of Incorporation of Carver Bancorp, Inc. (1)3.2
    
    
    Second Amended and Restated Bylaws of Carver Bancorp, Inc. (10)4.1
    
    
    Stock Certificate of Carver Bancorp, Inc. (1)4.2
    
    
    Certificate of Designations of Fixed Rate Cumulative Perpetual Preferred Stock, Series A (2)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 Non-employee 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) (*)
  110




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ExhibitNumber
    
    Description10.14
    
    

Amendment to the Carver Bancorp, Inc. 1995 Stock Option Plan (3) (*)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 (4) (*)10.16
    
    
    Amended and Restated Employment Agreement by and between Carver Bancorp, Inc. and Deborah C.
Wright, entered into as of June 1, 1999 (4) (*)10.17
    
    
    Form of Letter Employment Agreement between Executive Officers and Carver Bancorp, Inc. (4) (*)10.18
    
    
    Carver Bancorp, Inc. Compensation Plan for Non-Employee Directors (9) (*)10.19
    
    
    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)10.20
    
    
    First Amendment to the Restatement of the Carver Federal Savings Bank 401(k) Savings Plan (9) (*)10.21
    
    
    Second Amendment to the Restatement of the Carver Federal Savings Bank 401(k) Savings Plan for
EGTRRA (9) (*)10.22
    
    
    Guarantee Agreement by and between Carver Bancorp, Inc. and U.S. Bank National Association,
dated as of September 17, 2003 (8)10.23
    
    
    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)10.24
    
    
    Indenture, dated as of September 17, 2003, between Carver Bancorp, Inc., as Issuer, and U.S.
Bank National Association, as Trustee (8)10.25
    
    
    Second Amendment to the Carver Bancorp, Inc. Management Recognition Plan, effective as of
September 23, 2003 (11) (*)10.26
    
    
    Amended Share Voting Stipulation and Undertaking made by Carver Bancorp, Inc. in favor of the
OTS, made as of April 22, 2004 (11)10.27
    
    
    Trust Agreement between Carver Bancorp, Inc. and American Stock & Transfer Trust Company, dated
May 3, 2004 (11)
  111




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ExhibitNumber
    
    Description10.28
    
    
    First Amendment to the Carver Bancorp, Inc. Retirement Income Plan, effective as of March 28, 2005 (12) (*)10.29
    
    
    Sixth Amendment to the Carver Bancorp, Inc. Employee Stock Ownership Plan, effective as of March 28, 2005
(12) (*)10.30
    
    
    Carver Bancorp, Inc. 2006 Stock Incentive Plan, effective as of September 12, 2006 (14) (*)10.31
    
    
    Performance Compensation Plan of Carver Bancorp, Inc. effective as of December 14, 2006 ( *)10.32
    
    
    Amendment to the Carver Bancorp, In. Stock Incentive Plan (16) (*)10.33
    
    
    Amendment to the Carver Bancorp, Inc. Performance Compensation Plan (16) (*)10.34
    
    
    First Amendment to the Employment Agreement Entered into as of June 1, 1999 Between Carver Bancorp, Inc.
and Deborah C. Wright (16) (*)10.35
    
    
    First Amendment to the Employment Agreement Entered into as of June 1, 1999 Between Carver Federal Savings
Bank and Deborah C. Wright (16) (*)14
    
    
    Code of ethics (13)21.1
    
    
    Subsidiaries of the Registrant23.1
    
    
    Consent of Independent Registered Public Accounting Firm31.1
    
    
    Certifications of Chief Executive Officer31.2
    
    
    Certifications of Chief Financial Officer32.1
    
    
    Written Statement of Chief Executive Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, 18 U.S.C. Section 135032.2
    
    
    Written Statement of Chief Financial Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, 18 U.S.C. Section 1350
 (*)
    
    Management Contract or Compensatory Plan.(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 Report on Form 8-K filed
with the Securities and Exchange Commission on January 22, 2009.(3)
    
    Incorporated herein by reference to the Registrants Proxy Statement dated January 25, 2001.(4)
    
    Incorporated herein by reference to the Exhibits to the Registrants Annual Report on Form
10-K for the fiscal year ended March 31, 2001.  112




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##### Table of Contents



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 filed
with the Securities and Exchange Commission on December 19, 2007.(11)
    
    [Intentionally omitted](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.(15)
    
    Incorporated herein by reference to the Registrants Report on Form 8-K filed with the
Securities and Exchange Commission on December 19, 2006.(16)
    
    Incorporated herein by reference to the Exhibits to the Registrants Quarterly Report on Form
10-Q for the quarter ended December 31, 2009, filed with the Securities and Exchange
Commission on February 17, 2009.  113