##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2009
 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
  þ Yes o No
  o Yes o No
  o Large Accelerated Filer
    
    o Accelerated Filer
    
    o Non-accelerated Filer
    
    þ Smaller Reporting Company
  o þ
  Common Stock, par value $0.01
    
    2,470,072Class
    
    Outstanding at August 14, 2009




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##### 



TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Statements of Financial Condition as of
June 30, 2009 (unaudited) and March 31, 2009
    
    
    2Consolidated
Statements of Income for the Three Months
Ended June 30, 2009 and 2008 (unaudited)
    
    
    3Consolidated Statement of Changes in Stockholders Equity and
Comprehensive Income (Loss) for the Three Months Ended June 30, 2009 (unaudited)
    
    
    4Consolidated Statements of Cash Flows for the Three Months
Ended June 30, 2009 and 2008 (unaudited)
    
    
    5Notes to Consolidated Financial Statements (unaudited)
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    15Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    25Item 4. Controls and Procedures
    
    
    25PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    26Item 1A. Risk Factors
    
    
    26Item 2. Issuer Purchases of Equity Securities
    
    
    26Item 3. Defaults Upon Senior Securities
    
    
    26Item 4. Submission of Matters to a Vote of Security Holders
    
    
    27Item 5. Other Information
    
    
    27Item 6. Exhibits
    
    
    27SIGNATURES
    
    
    28Exhibit 11Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   1




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##### Table of Contents



CARVER BANCORP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
  June 30,
    
    
    March 31,2009
    
    
    2009(unaudited)ASSETSCash and cash equivalents:Cash and due from banks
    
    $
    17,100
    
    
    $
    8,251Money market investments
    
    
    952
    
    
    
    5,090Total cash and cash equivalents
    
    
    18,052
    
    
    
    13,341Securities:Available-for-sale, at fair value (including pledged as collateral of $54,237 and
$59,928 at June 30, 2009 and March 31, 2009, respectively)
    
    
    54,685
    
    
    
    59,973Held-to-maturity, at amortized cost (including pledged as collateral of $14,087 and
$14,342 at June 30, 2009 and March 31, 2009, respectively; fair value of $14,244 and
$14,528 at June 30, 2009 and March 31, 2009, respectively)
    
    
    14,474
    
    
    
    14,808Total securities
    
    
    69,159
    
    
    
    74,781Loans held-for-sale
    
    
    21,069
    
    
    
    21,105Loans receivable:Real estate mortgage loans
    
    
    592,611
    
    
    
    581,987Commercial business loans
    
    
    64,789
    
    
    
    57,398Consumer loans
    
    
    1,535
    
    
    
    1,674Allowance for loan losses
    
    
    (7,369
    )
    
    
    (7,049
    )Total loans receivable, net
    
    
    651,566
    
    
    
    634,010Office properties and equipment, net
    
    
    14,888
    
    
    
    15,237Federal Home Loan Bank of New York stock, at cost
    
    
    4,945
    
    
    
    4,174Bank owned life insurance
    
    
    9,561
    
    
    
    9,481Accrued interest receivable
    
    
    3,591
    
    
    
    3,697Core deposit intangibles, net
    
    
    342
    
    
    
    380Other assets
    
    
    16,465
    
    
    
    15,222Total assets
    
    $
    809,638
    
    
    $
    791,428LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Deposits
    
    $
    605,144
    
    
    $
    603,416Advances from the FHLB-New York and other borrowed money
    
    
    131,110
    
    
    
    115,017Other liabilities
    
    
    9,005
    
    
    
    8,657Total liabilities
    
    
    745,259
    
    
    
    727,090Stockholders equity:Preferred stock (TARP) (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 June 30, 2009and March 31, 2009)
    
    
    18,980
    
    
    
    18,980Common stock (par value $0.01 per share: 10,000,000 shares authorized; 2,524,691 shares issued;
2,470,072 and 2,475,037 shares outstanding at June 30, 2009 and March 31, 2009, respectively)
    
    
    25
    
    
    
    25Additional paid-in capital
    
    
    24,219
    
    
    
    24,214Retained earnings
    
    
    22,096
    
    
    
    21,898Unamortized awards of common stock under ESOP
Treasury stock, at cost (49,972 and 49,654 shares at June 30, 2009 and March 31, 2009, respectively)
    
    
    (696
    )
    
    
    (760
    )Accumulated other comprehensive loss
    
    
    (245
    )
    
    
    (19
    )Total stockholders equity
    
    
    64,379
    
    
    
    64,338Total liabilities and stockholders equity
    
    $
    809,638
    
    
    $
    791,428
   2




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CARVER BANCORP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
   Three Months EndedJune 30,2009
    
    
    2008Interest Income:Loans
    
    $
    9,100
    
    
    $
    10,453Mortgage-backed securities
    
    
    743
    
    
    
    561Investment securities
    
    
    60
    
    
    
    66Money market investments
    
    
    10
    
    
    
    39Total interest income
    
    
    9,913
    
    
    
    11,119Interest expense:Deposits
    
    
    2,037
    
    
    
    4,139Advances and other borrowed money
    
    
    986
    
    
    
    722Total interest expense
    
    
    3,023
    
    
    
    4,861Net interest income
    
    
    6,890
    
    
    
    6,258Provision for loan losses
    
    
    688
    
    
    
    169Net interest income after provision for loan losses
    
    
    6,202
    
    
    
    6,089Non-interest income:Depository fees and charges
    
    
    717
    
    
    
    668Loan fees and service charges
    
    
    228
    
    
    
    417Gain on loans
    
    
    43
    
    
    
    247Other
    
    
    165
    
    
    
    416Total non-interest income
    
    
    1,153
    
    
    
    1,748Non-interest expense:Employee compensation and benefits
    
    
    3,119
    
    
    
    3,414Net occupancy expense
    
    
    987
    
    
    
    1,016Equipment, net
    
    
    584
    
    
    
    615Consulting fees
    
    
    207
    
    
    
    165Federal deposit insurance premiums
    
    
    793
    
    
    
    31Other
    
    
    1,367
    
    
    
    2,094Total non-interest expense
    
    
    7,057
    
    
    
    7,335Income before income taxes and minority interest
    
    
    298
    
    
    
    502Income tax benefit
    
    
    (396
    )
    
    
    (322
    )Minority interest, net of taxes
    
    
    
    
    
    
    138Net income
    
    $
    694
    
    
    $
    686Earnings per common share:Basic
    
    $
    0.18
    
    
    $
    0.28Diluted
    
    $
    0.18
    
    
    $
    0.27
   3




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CARVER BANCORP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME (LOSS)
 (In thousands)
 AccumulatedTARP
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    Total Stock-Preferred
    
    
    Common
    
    
    Paid-In
    
    
    Treasury
    
    
    Retained
    
    
    Comprehensive
    
    
    HoldersStock
    
    
    Stock
    
    
    Capital
    
    
    Stock
    
    
    Earnings
    
    
    Loss
    
    
    EquityBalanceMarch 31, 2009
    
    
    18,980
    
    
    
    25
    
    
    
    24,214
    
    
    
    (760
    )
    
    
    21,898
    
    
    
    (19
    )
    
    
    64,338Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    694
    
    
    
    
    
    
    
    694Change in net unrealized
loss on available-for-sale
securities, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (226
    )
    
    
    (226
    )Comprehensive income (loss),
net of taxes:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    694
    
    
    
    (226
    )
    
    
    468Common Dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (247
    )
    
    
    
    
    
    
    (247
    )TARP Preferred Dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (237
    )
    
    
    
    
    
    
    (237
    )Treasury stock activity
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    64
    
    
    
    
    
    
    
    
    
    
    
    69Stock based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12
    )
    
    
    
    
    
    
    (12
    )BalanceJune 30, 2009
    
    
    18,980
    
    
    
    25
    
    
    
    24,219
    
    
    
    (696
    )
    
    
    22,096
    
    
    
    (245
    )
    
    
    64,379
   4




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CARVER BANCORP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
   Three Months Ended June 30,2009
    
    
    2008OPERATIONSNet income
    
    $
    694
    
    
    $
    686Adjustments to reconcile net income to net cash from operating activities:Provision for loan losses
    
    
    688
    
    
    
    169Stock based compensation expense
    
    
    12
    
    
    
    35Depreciation and amortization expense
    
    
    483
    
    
    
    454Amortization of premiums and discounts
    
    
    53
    
    
    
    52Loss from sale of real estate owned
    
    
    34
    
    
    
    12Gain on loans
    
    
    (43
    )
    
    
    (247
    )Originations of loans held-for-sale
    
    
    (386
    )
    
    
    (9,097
    )Proceeds from sale of loans held-for-sale
    
    
    386
    
    
    
    9,889Changes in assets and liabilities:Decrease in accrued interest receivable
    
    
    106
    
    
    
    271Decrease in loan premiums and discounts and deferred charges
    
    
    33
    
    
    
    41Increase in premiums and discounts  securities
    
    
    158
    
    
    
    75(Increase) decrease in other assets
    
    
    (1,582
    )
    
    
    7,500Increase (decrease) in other liabilities
    
    
    348
    
    
    
    (749
    )Net cash provided by operating activities
    
    
    984
    
    
    
    9,091INVESTING ACTIVITIESPurchase of available-for-sale securities
    
    
    
    
    
    
    (12,446
    )Proceeds from principal payments, maturities and calls of securities:Available-for-sale
    
    
    4,779
    
    
    
    1,490Held-to-maturity
    
    
    326
    
    
    
    669Originations of loans held-for-investment
    
    
    (36,462
    )
    
    
    (43,225
    )Loans purchased from third parties
    
    
    (3,163
    )
    
    
    Principal collections on loans
    
    
    21,562
    
    
    
    40,675(Purchase) redemption of FHLB-NY stock
    
    
    (771
    )
    
    
    (642
    )Additions to premises and equipment
    
    
    (134
    )
    
    
    (433
    )Proceeds from sale of real estate owned
    
    
    268
    
    
    
    1,061Net cash used in investing activities
    
    
    (13,595
    )
    
    
    (12,851
    )FINANCING ACTIVITIESNet increase (decrease) in deposits
    
    
    1,728
    
    
    
    (21,199
    )Net borrowing of FHLB advances and other borrowings
    
    
    16,078
    
    
    
    13,993Common stock repurchased
    
    
    
    
    
    
    (101
    )Dividends paid
    
    
    (484
    )
    
    
    (248
    )Net cash provided by (used in) financing activities
    
    
    17,322
    
    
    
    (7,555
    )Net increase (decrease) in cash and cash equivalents
    
    
    4,711
    
    
    
    (11,315
    )Cash and cash equivalents at beginning of period
    
    
    13,341
    
    
    
    27,368Cash and cash equivalents at end of period
    
    $
    18,052
    
    
    $
    16,053Supplemental information:Noncash Transfers-Change in unrealized loss on valuation of available-for-sale investments, net
    
    $
    (359
    )
    
    $
    (373
    )Cash paid for-Interest
    
    $
    5,617
    
    
    $
    4,877Income taxes
    
    $
    
    
    
    $
    40
   5




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 (1) Organization
 Nature of operations
       6




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(2) A) Basis of Presentation
    B) Reclassifications
  (3) Earnings Per Share
 , Determining Whether Instruments
Granted In Share-Based Payment Transactions Are Participating Securities.
 (4) Accounting for Stock Based Compensation
 Share-Based
Payment
 (5) Benefit Plans
 Employee Pension Plan
   7




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and Other Post-retirement Plans- an amendment of SFAS Statement Nos.
87, 88, 106 and 132(R)
 (6) Common Stock Dividend
  (7) Investment Securities
   8




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Amortized
    
    
    Gross Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair-ValueAvailable-for-Sale:Mortgage-backed securities:Government National Mortgage Association
    
    $
    36,175
    
    
    $
    21
    
    
    $
    (618
    )
    
    $
    35,578Federal Home Loan Mortgage Corporation
    
    
    12,836
    
    
    
    354
    
    
    
    (5
    )
    
    
    13,185Federal National Mortgage Association
    
    
    5,382
    
    
    
    137
    
    
    
    (1
    )
    
    
    5,518Other
    
    
    473
    
    
    
    3
    
    
    
    (73
    )
    
    
    403Total mortgage-backed securities
    
    
    54,866
    
    
    
    515
    
    
    
    (697
    )
    
    
    54,684U.S. Government Agency Securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total available-for-sale
    
    
    54,866
    
    
    
    515
    
    
    
    (697
    )
    
    
    54,684
 Amortized
    
    
    Gross Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair-ValueHeld-to-Maturity:Mortgage-backed securities:Government National Mortgage Association
    
    
    458
    
    
    
    33
    
    
    
    
    
    
    
    491Federal Home Loan Mortgage Corporation
    
    
    9,675
    
    
    
    15
    
    
    
    (48
    )
    
    
    9,642Federal National Mortgage Association
    
    
    3,801
    
    
    
    42
    
    
    
    (270
    )
    
    
    3,573Total mortgage-backed securities
    
    
    13,934
    
    
    
    90
    
    
    
    (318
    )
    
    
    13,706Other
    
    
    541
    
    
    
    
    
    
    
    (3
    )
    
    
    538Total held-to-maturity
    
    
    14,475
    
    
    
    90
    
    
    
    (321
    )
    
    
    14,244Total securities
    
    $
    69,341
    
    
    $
    605
    
    
    $
    (1,018
    )
    
    $
    68,928
 
 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
    )
    
    
    59,973
 Amortized
    
    
    Gross Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair-ValueHeld-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
  9




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Less than 12 months
    
    
    12 months or longer
    
    
    TotalUnrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    FairLosses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    ValueAvailable-for-Sale:Mortgage-backed securities
    
    $
    (597
    )
    
    $
    27,125
    
    
    $
    (99
    )
    
    $
    1,433
    
    
    $
    (696
    )
    
    $
    28,558Total available-for-sale
    
    
    (597
    )
    
    
    27,125
    
    
    
    (99
    )
    
    
    1,433
    
    
    
    (696
    )
    
    
    28,558Held-to-Maturity:Mortgage-backed securities
    
    
    (269
    )
    
    
    2,049
    
    
    
    (49
    )
    
    
    8,237
    
    
    $
    (318
    )
    
    
    10,286Other
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    150
    
    
    
    (3
    )
    
    
    150Total held-to-maturity
    
    
    (269
    )
    
    
    2,049
    
    
    
    (52
    )
    
    
    8,387
    
    
    
    (321
    )
    
    
    10,436Total securities
    
    $
    (866
    )
    
    $
    29,174
    
    
    $
    (151
    )
    
    $
    9,820
    
    
    $
    (1,017
    )
    
    $
    38,994
 
 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
 (8) Fair Value Measurements
 Fair Value Measurements
 
    
    Level 1 Inputs to the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active markets.
 
    
    Level 2 Inputs to the valuation methodology include quoted prices for similar
assets and liabilities in active markets, and inputs that are observable for the asset
or liability, either directly or indirectly, for substantially the full term of the
financial instrument.
 
    
    Level 3 Inputs to the valuation methodology are unobservable and significant to the
fair value measurement.
   10




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##### Table of Contents



Fair Value Measurements at June 30, 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)
    
    
    ValueMortgage servicing rights
    
    $
    
    
    
    $
    
    
    
    $
    496
    
    
    $
    496Securities available for sale
    
    $
    
    
    
    $
    54,640
    
    
    $
    45
    
    
    $
    54,685Fair
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)
    
    
    ValueMortgage servicing rights
    
    $
    
    
    
    $
    
    
    
    $
    452
    
    
    $
    452Securities available for sale
    
    $
    
    
    
    $
    59,928
    
    
    $
    45
    
    
    $
    59,973
         Mortgage
    
    
    SecuritiesServicing
    
    
    Available for(in thousands)
    
    Rights
    
    
    SaleBeginning balance, April 1, 2009
    
    $
    451
    
    
    $
    45Additions
    
    
    
    
    
    
    Total unrealized gain
    
    
    45
    
    
    
    Ending balance, June 30, 2009
    
    $
    496
    
    
    $
    45
  11




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##### Table of Contents



(9) Fair Value of Financial Instruments
    June 30, 2009
    
    
    March 31, 2009Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    EstimatedAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair ValueFinancial Assets:Cash and cash equivalents
    
    $
    18,052
    
    
    $
    18,052
    
    
    $
    13,341
    
    
    $
    13,341Investment securities available-for-sale
    
    
    
    
    
    
    
    
    
    
    260
    
    
    
    260Mortgage backed securities available-for-sale
    
    
    54,685
    
    
    
    54,685
    
    
    
    59,713
    
    
    
    59,713Mortgage backed securities held-to-maturity
    
    
    14,474
    
    
    
    14,244
    
    
    
    14,808
    
    
    
    14,528Loans receivable
    
    
    651,566
    
    
    
    669,225
    
    
    
    634,010
    
    
    
    649,219Loans held-for-sale
    
    
    21,069
    
    
    
    21,784
    
    
    
    21,105
    
    
    
    22,467Accrued interest receivable
    
    
    3,591
    
    
    
    3,591
    
    
    
    3,697
    
    
    
    3,697Mortgage servicing rights
    
    
    496
    
    
    
    496
    
    
    
    452
    
    
    
    452Financial Liabilities:Deposits
    
    $
    605,144
    
    
    $
    611,841
    
    
    $
    603,416
    
    
    $
    610,455Advances from FHLB of New York
    
    
    87,707
    
    
    
    90,008
    
    
    
    71,614
    
    
    
    71,592Other borrowed money
    
    
    43,403
    
    
    
    44,749
    
    
    
    43,403
    
    
    
    46,179
  12




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##### Table of Contents



Cash and cash equivalents and accrued interest receivable
  Securities
  Loans receivable and loan held-for-sale
  Mortgage servicing rights
  Deposits
  Borrowings
  Limitations
    (10) Variable
Interest Entities
     13




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##### Table of Contents



(11) Impact of Recent Accounting Standards and Interpretations
        (12) Subsequent Events
   14




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##### Table of Contents



ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-Looking Statements
  
    
    the Companys success in implementing its new business initiatives, including expanding
its product line, adding new branches and ATM centers and successfully building its brand
image;
 
    
    increases in competitive pressure among financial institutions or non-financial institutions;
 
    
    legislative or regulatory changes which may adversely affect the Companys business;
 
    
    technological changes which may be more difficult to implement or expensive than anticipated;
 
    
    changes in interest rates which may reduce net interest margin and net interest income;
 
    
    changes in deposit flows, loan demand, real estate values, borrowing facilities,
capital markets and investment opportunities which may adversely affect the business;
 
    
    changes in existing loan portfolio composition and credit quality, and changes in loan loss requirements;
 
    
    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;
 
    
    the ability to realize cost efficiencies; and
 
    
    general economic conditions, either nationally or locally in some or all areas in which
business is conducted, or conditions in the 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.
  Overview
    15




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##### Table of Contents



New Markets Tax Credit Award
   16




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##### Table of Contents



Critical Accounting Policies
  Securities Impairment
  Allowance for Loan Losses
    17




---



##### Table of Contents




    
    Establishment of loan loss allowance amounts for all specifically identified criticized
and classified loans that have been designated as requiring attention by managements internal loan review
process, bank regulatory examinations or Carver Federals external auditors.
 
    
    An average loss factor, giving effect to historical loss experience over several years
and other qualitative factors, is applied to all loans not subject to specific review.
 
    
    Evaluation of any changes in risk profile brought about by business combinations,
customer knowledge, the results of ongoing credit quality monitoring processes and the cyclical
nature of economic and business conditions. An important consideration in performing this
evaluation is the concentration of real estate related loans located in the New York City
metropolitan area.
   
    
    Amount and trend of criticized loans;
 
    
    Actual losses;
 
    
    Peer comparisons with other financial institutions; and
 
    
    Economic data associated with the real estate market in the Companys lending market areas.
 Accounting by Creditors
for Impairment of a Loan
 Stock Repurchase Program
  Liquidity and Capital Resources
   18




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##### Table of Contents



Tangible Equity
    
    
    Core Capital
    
    
    Risk-Based Capital% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofAdj.
    
    
    
    
    
    
    Adj.
    
    
    
    
    
    
    Adj.Amount
    
    
    Assets
    
    
    Amount
    
    
    Assets
    
    
    Amount
    
    
    AssetsCapital level
    
    $
    76,058
    
    
    
    9.39
    %
    
    $
    76,135
    
    
    
    9.39
    %
    
    $
    83,505
    
    
    
    12.50
    %Less required capital level
    
    
    12,155
    
    
    
    1.50
    %
    
    
    32,416
    
    
    
    4.00
    %
    
    
    53,437
    
    
    
    8.00
    %Excess capital
    
    $
    63,903
    
    
    
    7.89
    %
    
    $
    43,719
    
    
    
    5.39
    %
    
    $
    30,068
    
    
    
    4.50
    %
  19




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##### Table of Contents



Comparison of Financial Condition at June 30, 2009 and March 31, 2009
 Assets
       Liabilities and Stockholders Equity
 Liabilities
    Stockholders Equity
   20




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##### Table of Contents



Asset/Liability Management
   Off-Balance Sheet Arrangements and Contractual Obligations
   Commitments to fund construction mortgage loans
    
    $
    31,853Commitments to commercial and consumer loans
    
    
    13,332Lines of credit
    
    
    7,724Letters of credit
    
    
    4,154$
    57,063
 Analysis of Earnings
    21




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##### Table of Contents



CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCES
 For the Three Months Ended June 30,2009
    
    
    2008Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Yield/Cost
    
    
    Balance
    
    
    Interest
    
    
    Yield/CostInterest Earning Assets:Loans (1)
    
    $
    667,230
    
    
    $
    9,100
    
    
    
    5.46
    %
    
    $
    654,501
    
    
    $
    10,453
    
    
    
    6.39
    %Mortgage-backed securities
    
    
    70,159
    
    
    
    743
    
    
    
    4.24
    %
    
    
    43,454
    
    
    
    561
    
    
    
    5.16
    %Investment securities (2)
    
    
    4,874
    
    
    
    60
    
    
    
    4.94
    %
    
    
    4,656
    
    
    
    66
    
    
    
    5.69
    %Other investments and federal funds sold
    
    
    965
    
    
    
    10
    
    
    
    4.16
    %
    
    
    7,501
    
    
    
    39
    
    
    
    2.09
    %Total interest-earning assets
    
    
    743,228
    
    
    
    9,913
    
    
    
    5.34
    %
    
    
    710,112
    
    
    
    11,119
    
    
    
    6.26
    %Non-interest-earning assets
    
    
    52,737
    
    
    
    
    
    
    
    
    
    
    
    78,692Total assets
    
    $
    795,965
    
    
    
    
    
    
    
    
    
    
    $
    788,804Interest Bearing Liabilities:Deposits:Now demand
    
    $
    54,172
    
    
    
    23
    
    
    
    0.17
    %
    
    $
    24,231
    
    
    
    20
    
    
    
    0.33
    %Savings and clubs
    
    
    119,239
    
    
    
    66
    
    
    
    0.22
    %
    
    
    125,496
    
    
    
    166
    
    
    
    0.53
    %Money market
    
    
    43,674
    
    
    
    147
    
    
    
    1.35
    %
    
    
    46,229
    
    
    
    296
    
    
    
    2.57
    %Certificates of deposit
    
    
    325,613
    
    
    
    1,790
    
    
    
    2.20
    %
    
    
    391,008
    
    
    
    3,643
    
    
    
    3.74
    %Mortgagors deposits
    
    
    2,891
    
    
    
    11
    
    
    
    1.53
    %
    
    
    3,314
    
    
    
    14
    
    
    
    1.69
    %Total deposits
    
    
    545,589
    
    
    
    2,037
    
    
    
    1.50
    %
    
    
    590,278
    
    
    
    4,139
    
    
    
    2.81
    %Borrowed money
    
    
    120,276
    
    
    
    986
    
    
    
    3.29
    %
    
    
    62,267
    
    
    
    722
    
    
    
    4.65
    %Total interest-bearing liabilities
    
    
    665,865
    
    
    
    3,023
    
    
    
    1.82
    %
    
    
    652,545
    
    
    
    4,861
    
    
    
    2.99
    %Non-interest-bearing liabilities:Demand
    
    
    58,406
    
    
    
    
    
    
    
    
    
    
    
    53,658Other liabilities
    
    
    7,904
    
    
    
    
    
    
    
    
    
    
    
    9,470Total liabilities
    
    
    733,735
    
    
    
    
    
    
    
    
    
    
    
    715,673Minority Interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,150Stockholders equity
    
    
    63,790
    
    
    
    
    
    
    
    
    
    
    
    53,981Total liabilities & stockholders
equity
    
    $
    795,965
    
    
    
    
    
    
    
    
    
    
    $
    788,804Net interest income
    
    
    
    
    
    $
    6,890
    
    
    
    
    
    
    
    
    
    
    $
    6,258Average interest rate spread
    
    
    
    
    
    
    
    
    
    
    3.52
    %
    
    
    
    
    
    
    
    
    
    
    3.28
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    3.71
    %
    
    
    
    
    
    
    
    
    
    
    3.53
    %
 (1)
    
    Includes non-accrual loans(2)
    
    Includes FHLB-NY stock  22




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##### Table of Contents



Comparison of Operating Results for the Three Months Ended June 30, 2009 and 2008
 Overview
   CARVER BANCORP, INC. AND SUBSIDIARIES
SELECTED KEY RATIOS
 Three Months EndedJune 30,Selected Financial Data:
    
    2009
    
    
    2008Return on average assets (1)
    
    
    0.35
    %
    
    
    0.35
    %Return on average equity (2)
    
    
    4.35
    
    
    
    5.08Net interest margin (3)
    
    
    3.71
    
    
    
    3.53Interest rate spread (4)
    
    
    3.52
    
    
    
    3.28Efficiency ratio (5)
    
    
    87.74
    
    
    
    91.62Operating expenses to average assets (6)
    
    
    3.55
    
    
    
    3.72Average equity to average assets (7)
    
    
    8.01
    
    
    
    6.84Average interest-earning assets to
average interest-bearing liabilities
    
    
    1.12
    x
    
    
    1.09
    x
 (1)
    
    Net income, annualized, divided by average total assets.(2)
    
    Net income, annualized, divided by average total equity.(3)
    
    Net interest income, annualized, divided by average interest-earning assets.(4)
    
    Combined weighted average interest rate earned less combined weighted average interest rate cost.(5)
    
    Operating expenses divided by sum of net interest income plus non-interest income.(6)
    
    Non-interest expenses less loss on real estate owned, annualized, divided by average total assets.(7)
    
    Total average equity divided by total average assets for the period. Interest Income
    23




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##### Table of Contents



Interest Expense
     Net Interest Income Before Provision for Loan Losses
   Provision for Loan Losses and Asset Quality
    24




---



##### Table of Contents



Non-Interest Income
  Non-Interest Expense
  Income Tax Expense
  
 ITEM 3. Quantitative and Qualitative Disclosure about Market Risk
  
 ITEM 4. Controls and Procedures
 (a) Evaluation of Disclosure Controls and Procedures
    25




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##### Table of Contents



(b) Changes in Internal Control over Financial Reporting
  
 PART II. OTHER INFORMATION
 
 ITEM 1. Legal Proceedings
  
 ITEM 1A. Risk Factors
  Any future FDIC special assessments or increases in insurance premiums will adversely
impact the Companys earnings
  A legislative proposal has been introduced that would eliminate our primary federal
regulator, require the Bank to convert to a national bank or state bank, and require the
Company to become a bank holding company.
  
 ITEM 2. Issuer Purchases of Equity Securities
  
 ITEM 3. Defaults Upon Senior Securities
   26




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##### Table of Contents



ITEM 4. Submission of Matters to a Vote of Security Holders
  
 ITEM 5. Other Information
  
 ITEM 6. Exhibits
  Exhibit 11.
    
    Computation of Earnings Per Share.Exhibit 31.1
    
    Certification of Chief Executive Officer.Exhibit 31.2
    
    Certification of Principal Accounting Officer.Exhibit 32.1
    
    Certification of Chief Executive Officer furnished pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.Exhibit 32.2
    
    Certification of Principal Accounting Officer furnished pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
  27




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##### Table of Contents



SIGNATURES
  CARVER BANCORP, INC.Date: August 18, 2009
    /s/ Deborah C.  WrightDeborah C.  WrightChairman and Chief Executive Officer
(Principal Executive Officer)Date: August 18, 2009
    /s/ Naqi A. NaqviNaqi A. NaqviVice President and Assistant Controller
(Principal Accounting Officer)  28




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    DescriptionExhibit 11.
    
    Computation of Earnings Per Share.Exhibit 31.1
    
    Certification of Chief Executive Officer.Exhibit 31.2
    
    Certification of Principal Accounting Officer.Exhibit 32.1
    
    Certification of Chief Executive Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.Exhibit 32.2
    
    Certification of Principal Accounting Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.