UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                        _________________________________

                                    FORM 10-Q

(Mark One)

X        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2003


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: 0-21487

                              CARVER BANCORP, INC.
                              --------------------
             (Exact name of registrant as specified in its charter)


                DELAWARE                                         13-3904174
                --------                                         ----------
     (State or Other Jurisdiction of                          (I.R.S. Employer
     Incorporation or Organization)                          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: (212) 876-4747

         Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                  Yes  X     No
                                      ---       ---

         Indicate by check mark whether the registrant is an accelerated filer
(as defined in rule 12b-2 of the Exchange Act).

                                  Yes        No  X
                                      ---       ---

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.


COMMON STOCK, PAR VALUE $.01                                2,285,267
----------------------------                                ---------
           Class                                 Outstanding at January 31, 2004

<PAGE>

<TABLE>
<CAPTION>
                                                 TABLE OF CONTENTS

                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>
PART I.  FINANCIAL INFORMATION
         ---------------------

         Item 1.  Financial Statements

                           Consolidated Statements of Financial Condition as of
                           December 31, 2003 (unaudited) and March 31, 2003.......................................1

                           Consolidated Statements of Income for the Three and Nine Months
                           Ended December 31, 2003 and 2002 (unaudited)...........................................2

                           Consolidated Statement of Changes in Stockholders' Equity and
                           Comprehensive Income for the Nine Months Ended December 31, 2003 (unaudited)...........3

                           Consolidated Statements of Cash Flows for the Nine Months
                           Ended December 31, 2003 and 2002 (unaudited)...........................................4

                           Notes to Consolidated Financial Statements (unaudited).................................5

         Item 2.  Management's Discussion and Analysis of Financial Condition
                  and Results of Operations.......................................................................7

         Item 3.  Quantitative and Qualitative Disclosures About Market Risk.....................................21

         Item 4.  Controls and Procedures........................................................................21

PART II. OTHER INFORMATION
         -----------------

         Item 1.  Legal Proceedings..............................................................................21

         Item 2.  Changes in Securities and Use of Proceeds......................................................22

         Item 3.  Defaults Upon Senior Securities................................................................22

         Item 4.  Submission of Matters to a Vote of Security Holders............................................22

         Item 5.  Other Information..............................................................................22

         Item 6.  Exhibits and Reports on Form 8-K...............................................................22


SIGNATURES.......................................................................................................24

EXHIBITS........................................................................................................E-1
</TABLE>

<PAGE>

PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                           CARVER BANCORP, INC. AND SUBSIDIARIES
                                       CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                             (IN THOUSANDS, EXCEPT SHARE DATA)

                                                                                             DECEMBER 31,      MARCH 31,
                                                                                                 2003             2003
                                                                                            ---------------   -------------
ASSETS                                                                                       (Unaudited)
<S>                                                                                               <C>             <C>
Cash and cash equivalents:
    Cash and due from banks                                                                       $ 15,413        $ 17,660
    Federal funds sold                                                                               5,900           5,500
                                                                                            ---------------   -------------
         Total cash and cash equivalents                                                            21,313          23,160
                                                                                            ---------------   -------------
Securities:
     Available-for-sale, at fair value (including pledged as collateral of
       $86,600 at December 31, 2003 and $124,139 at March 31, 2003)                                100,918         129,055
     Held-to-maturity, at amortized cost (including pledged as collateral of
       $48,028 at December 31, 2003 and $35,138 at March 31, 2003; fair value
       of $48,657 at December 31, 2003 and $37,543 at March 31, 2003)                               49,267          36,530
                                                                                            ---------------   -------------
          Total securities                                                                         150,185         165,585
                                                                                            ---------------   -------------
Loans receivable:
     Real estate mortgage loans                                                                    335,258         294,710
     Consumer and commercial business loans                                                          6,014           2,186
     Allowance for loan losses                                                                      (4,128)         (4,158)
                                                                                            ---------------   -------------
          Total loans receivable, net                                                              337,144         292,738
                                                                                            ---------------   -------------
Office properties and equipment, net                                                                10,869          10,193
Federal Home Loan Bank of New York ("FHLB-NY") stock, at cost                                        4,876           5,440
Accrued interest receivable                                                                          2,416           3,346
Identifiable intangible assets, net                                                                     18             178
Other assets                                                                                         2,750           9,205
                                                                                            ---------------   -------------
          Total assets                                                                           $ 529,571       $ 509,845
                                                                                            ===============   =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
     Deposits                                                                                    $ 368,276       $ 347,164
     Advances from the FHLB-NY and other borrowed money                                             97,592         108,996
     Other liabilities                                                                               7,676          12,612
                                                                                            ---------------   -------------
          Total liabilities                                                                        473,544         468,772
                                                                                            ---------------   -------------
Guaranteed preferred beneficial interest in junior subordinated debentures                          12,728               -
Stockholders' equity:
     Preferred stock (par value $0.01 per share; 1,000,000
        shares authorized; 100,000 issued and outstanding)                                               1               1
     Common stock (par value $0.01 per share: 5,000,000 shares authorized;
      2,316,358 shares issued; 2,284,390 and 2,296,960 shares outstanding at
      December 31, 2003 and March 31, 2003, respectively)                                               23              23
     Additional paid-in capital                                                                     23,816          23,781
     Retained earnings                                                                              19,921          16,712
     Unamortized awards of common stock under  management recognition plan ("MRP")                     (36)             (4)
     Treasury stock, at cost (31,968 shares at December 31, 2003 and 19,398
      shares at March 31, 2003)                                                                       (401)           (190)
     Accumulated other comprehensive income                                                            (25)            750
                                                                                            ---------------   -------------
          Total stockholders' equity                                                                43,299          41,073
                                                                                            ---------------   -------------
     Total liabilities and stockholders' equity                                                  $ 529,571       $ 509,845
                                                                                            ===============   =============
</TABLE>

See accompanying notes to consolidated financial statements.


                                        1
<PAGE>

<TABLE>
<CAPTION>
                                             CARVER BANCORP, INC. AND SUBSIDIARIES
                                               CONSOLIDATED STATEMENTS OF INCOME
                                             (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                          (UNAUDITED)

                                                                                 THREE MONTHS ENDED       NINE MONTHS ENDED
                                                                                    DECEMBER 31,             DECEMBER 31,
                                                                                  2003         2002        2003        2002
                                                                              ------------- ----------- ----------- -----------
<S>                                                                                <C>         <C>        <C>         <C>
Interest Income: (1)
   Loans                                                                           $ 5,025     $ 5,141    $ 14,952    $ 15,829
   Total securities                                                                  1,396       1,541       4,507       4,193
   Federal funds sold                                                                   62          79         143         266
                                                                              ------------- ----------- ----------- -----------
     Total interest income                                                           6,483       6,761      19,602      20,288
                                                                              ------------- ----------- ----------- -----------

Interest expense:
   Deposits                                                                          1,140       1,372       3,540       4,443
   Advances and other borrowed money                                                   924         846       2,841       2,324
                                                                              ------------- ----------- ----------- -----------
     Total interest expense                                                          2,064       2,218       6,381       6,767
                                                                              ------------- ----------- ----------- -----------
     Net interest income                                                             4,419       4,543      13,221      13,521
Provision for loan losses                                                                -           -           -           -
                                                                              ------------- ----------- ----------- -----------
     Net interest income after provision for loan losses                             4,419       4,543      13,221      13,521
                                                                              ------------- ----------- ----------- -----------

Non-interest income:
   Depository fees and charges                                                         479         483       1,454       1,344
   Loan fees and service charges                                                     1,037         265       2,175       1,069
   Gain on sale of securities                                                            -           -          31           -
   Gain on sale of loans                                                                55           -          55           -
   Other                                                                                 6           2         577           7
                                                                              ------------- ----------- ----------- -----------
      Total non-interest income                                                      1,577         750       4,292       2,420
                                                                              ------------- ----------- ----------- -----------

Non-interest expense: (1)
   Compensation and benefits                                                         1,989       1,542       5,592       4,805
   Net occupancy expense                                                               385         296       1,053         953
   Equipment                                                                           331         403       1,113       1,175
   Capital securities cost                                                             152           -         175           -
   Other                                                                             1,267       1,298       3,885       3,933
                                                                              ------------- ----------- ----------- -----------
      Total non-interest expense                                                     4,124       3,539      11,818      10,866
                                                                              ------------- ----------- ----------- -----------

      Income before income taxes                                                     1,872       1,754       5,695       5,075
Income taxes                                                                           636         807       1,946       2,318
                                                                              ------------- ----------- ----------- -----------
      Net income                                                                   $ 1,236       $ 947     $ 3,749     $ 2,757
                                                                              ============= =========== =========== ===========

Dividends applicable to preferred stock                                               $ 49        $ 49       $ 148       $ 148
                                                                              ------------- ----------- ----------- -----------

      Net income available to common stockholders                                  $ 1,187       $ 898     $ 3,601     $ 2,609
                                                                              ============= =========== =========== ===========

Earnings per common share:
       Basic                                                                        $ 0.52      $ 0.39      $ 1.58      $ 1.14
                                                                              ============= =========== =========== ===========
       Diluted                                                                      $ 0.47      $ 0.38      $ 1.45      $ 1.09
                                                                              ============= =========== =========== ===========
</TABLE>

(1) Reclassifications have been made to prior year periods to conform with
    current periods.


See accompanying notes to consolidated financial statements.


                                        2
<PAGE>

<TABLE>
<CAPTION>
                                             CARVER BANCORP, INC. AND SUBSIDIARIES
                                   CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                                                   AND COMPREHENSIVE INCOME
                                                          (UNAUDITED)
                                                        (IN THOUSANDS)

                                                                                                   ACCUMULATED       COMMON
                                                           ADDITIONAL                                 OTHER          STOCK
                                 PREFERRED      COMMON      PAID-IN      RETAINED    TREASURY     COMPREHENSIVE     ACQUIRED
                                    STOCK        STOCK      CAPITAL      EARNINGS      STOCK          INCOME         BY MRP
                                 ------------- ---------- ------------- ----------- ------------ ----------------- -----------
<S>                                        <C>       <C>       <C>         <C>            <C>                <C>          <C>
Balance-March 31, 2003                     $1        $23       $23,781     $16,712        ($190)             $750         ($4)

Comprehensive income:
    Net Income for the period
    ended June 30, 2003                     -          -             -       1,087            -                 -           -
    Change in net unrealized gain
    on securities, net of taxes             -          -             -           -            -               (36)          -
Dividends paid                              -          -             -        (213)           -                 -           -
Allocation of shares for MRP                -          -            22           -            -                 -         (36)
Treasury stock activity                     -          -             -           -         (233)                -           -
                                 ------------- ---------- ------------- ----------- ------------ ----------------- -----------
Balance-June 30, 2003                      $1        $23       $23,803     $17,586        ($423)             $714        ($40)
                                 ------------- ---------- ------------- ----------- ------------ ----------------- -----------

Comprehensive income:
    Net Income for the period
    ended September 30, 2003                -          -             -       1,426            -                 -           -
    Change in net unrealized gain
    on securities, net of taxes             -          -             -           -            -              (633)          -
Dividends paid                              -          -             -        (114)           -                 -           -
Allocation of shares for MRP                -          -             -           -            -                 -           4
Treasury stock activity                     -          -             8           -           11                 -           -
                                 ------------- ---------- ------------- ----------- ------------ ----------------- -----------
Balance-September 30, 2003                 $1        $23       $23,811     $18,898        ($412)              $81        ($36)
                                 ------------- ---------- ------------- ----------- ------------ ----------------- -----------


Comprehensive income:
    Net Income for the period
    ended December 31, 2003                 -          -             -       1,236            -                 -           -
    Change in net unrealized gain
    on securities, net of taxes             -          -             -           -            -              (106)          -
Dividends paid                              -          -             -        (213)           -                 -           -
Allocation of shares for MRP                -          -             -           -            -                 -           -
Treasury stock activity                     -          -             5           -           11                 -           -
                                 ------------- ---------- ------------- ----------- ------------ ----------------- -----------
Balance-December 31, 2003                  $1        $23       $23,816     $19,921        ($401)             ($25)       ($36)
                                 ============= ========== ============= =========== ============ ================= ===========
</TABLE>

                                   TOTAL
                                  STOCK-
                                 HOLDERS'
                                  EQUITY
                                 ----------
Balance-March 31, 2003             $41,073

Comprehensive income:
    Net Income for the period
    ended June 30, 2003             $1,087
    Change in net unrealized gain
    on securities, net of taxes       ($36)
Dividends paid                       ($213)
Allocation of shares for MRP          ($14)
Treasury stock activity              ($233)
                                 ----------
Balance-June 30, 2003              $41,664
                                 ----------

Comprehensive income:
    Net Income for the period
    ended September 30, 2003         1,426
    Change in net unrealized gain
    on securities, net of taxes       (633)
Dividends paid                        (114)
Allocation of shares for MRP             4
Treasury stock activity                 19
                                 ----------
Balance-September 30, 2003         $42,366
                                 ----------


Comprehensive income:
    Net Income for the period
    ended December 31, 2003          1,236
    Change in net unrealized gain
    on securities, net of taxes       (106)
Dividends paid                        (213)
Allocation of shares for MRP             0
Treasury stock activity                 16
                                 ----------
Balance-December 31, 2003          $43,299
                                 ==========


See accompanying notes to consolidated financial statements.


                                       3
<PAGE>

<TABLE>
<CAPTION>
                                 CARVER BANCORP, INC. AND SUBSIDIARIES
                                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                                              (UNAUDITED)
                                             (IN THOUSANDS)

                                                                          NINE MONTHS ENDED DECEMBER 31,
                                                                                2003             2002
                                                                                ----             ----
<S>                                                                             <C>              <C>
Cash flows from operating activities:
  Net income                                                                    $ 3,749          $ 2,757
  Adjustments to reconcile net income to net cash provided
     by operating activities:
     Provision for loan losses                                                        -                -
     ESOP and MRP expense                                                            18              213
     Depreciation and amortization expense                                          850              904
     Amortization of intangibles                                                    160              160
     Other amortization                                                           1,688              618
   Changes in assets and liabilities:
       Decrease in accrued interest receivable                                      930               41
       Decrease (increase)  in other assets                                       7,200              (26)
       (Decrease) in other liabilities                                           (4,986)          (3,350)
                                                                          --------------   --------------
          Net cash provided by operating activities                               9,609            1,317
                                                                          --------------   --------------
Cash flows from investing activities:
  Purchases of securities:
     Available-for-sale                                                         (58,429)         (64,786)
     Held-to-maturity                                                           (19,860)          (4,152)
  Proceeds from principal payments, maturities and calls of securities:
     Available-for-sale                                                          60,193           19,475
     Held-to-maturity                                                             6,959            3,963
  Proceeds from sale of available-for-sale securities                            23,871                -
  Disbursements for loan originations                                           (69,540)         (37,508)
  Loans purchased from third parties                                            (69,158)         (34,591)
  Principal collections on loans                                                 87,365           72,113
  Redemption (Purchase) of FHLB-NY stock                                            564           (1,239)
  Proceeds from loans sold                                                      $ 6,512            1,913
  Additions to premises and equipment                                            (1,526)            (965)
                                                                          --------------   --------------
          Net cash used in  by investing activities                             (33,049)         (45,777)
                                                                          --------------   --------------
Cash flows from financing activities:
  Net increase in deposits                                                       21,112            9,712
  Advances from FHLB-NY and other borrowed money                                 37,000           40,300
  Repayment of FHLB-NY advances and other borrowed money                        (48,404)         (15,654)
  Issuance of trust preferred securities, net                                    12,728                -
  Purchase of treasury stock                                                       (303)             (99)
  Dividends paid                                                                   (540)            (196)
                                                                          --------------   --------------
          Net cash provided by financing activities                              21,593           34,063
                                                                          --------------   --------------
Net (decrease) increase in cash and cash equivalents                             (1,847)         (10,397)
Cash and cash equivalents at beginning of the period                             23,160           34,851
                                                                          --------------   --------------
Cash and cash equivalents at end of  the period                                $ 21,313         $ 24,454
                                                                          ==============   ==============

Supplemental information:
Noncash Transfers-
  Change in unrealized gain on valuation of available-for-sale
       investments, net                                                          $ (775)           $ 467
                                                                          ==============   ==============

Cash paid for-
  Interest                                                                      $ 6,584          $ 6,538
                                                                          ==============   ==============
  Income taxes                                                                  $ 2,825          $ 2,686
                                                                          ==============   ==============
</TABLE>

See accompanying notes to consolidated financial statements.


                                        4
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) BASIS OF PRESENTATION

         The accompanying unaudited consolidated financial statements of Carver
Bancorp, Inc. (the "Holding Company") have been prepared in accordance with
accounting principles generally accepted in the United States of America
("GAAP") for interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X promulgated by the Securities and Exchange
Commission ("SEC"). Accordingly, they do not include all of the information and
footnotes required by GAAP for complete consolidated financial statements.
Certain information and note disclosures normally included in financial
statements prepared in accordance with GAAP have been condensed or omitted
pursuant to the rules and regulations of the SEC. Certain reclassifications have
been made to prior period amounts to conform to the current period presentation.
In the opinion of management, all adjustments (consisting of normal recurring
adjustments) necessary for fair presentation have been included.

         The unaudited consolidated financial statements presented herein should
be read in conjunction with the consolidated financial statements and notes
thereto included in the Holding Company's Annual Report on Form 10-K for the
year ended March 31, 2003 ("2003 10-K") previously filed with the SEC. The
consolidated results of operations and other data for the three-month period
ended December 31, 2003 are not necessarily indicative of results that may be
expected for the entire fiscal year ending March 31, 2004 ("fiscal 2004").

         The unaudited consolidated financial statements include the accounts of
the Holding Company and its wholly owned subsidiaries, Carver Federal Savings
Bank (the "Bank" or "Carver Federal"), Carver Statutory Trust I, Alhambra
Holding Corp., an inactive Delaware corporation, and the Bank's wholly owned
subsidiaries, CFSB Realty Corp., CFSB Credit Corp. and Carver Asset Corporation.
The Holding Company and its consolidated subsidiaries are referred to herein
collectively as "Carver" or the "Company." All significant inter-company
accounts and transactions have been eliminated in consolidation. We have no
unconsolidated subsidiaries or unconsolidated special purpose entities.


(2) NET INCOME PER COMMON SHARE

         Basic earnings per common share is computed by dividing income
available to common stockholders by the weighted-average number of common shares
outstanding. Diluted earnings per common share include any additional common
shares as if all potentially dilutive common shares were issued (for instance,
convertible preferred stock and stock options with an exercise price that is
less than the average market price of the common shares for the periods stated).
For the purpose of these calculations, unreleased ESOP shares are not considered
to be outstanding. For each of the three-month periods ended December 31, 2003
and 2002, preferred dividends of $49,000 were deducted from net income to arrive
at the amount of net income available to common stockholders. Additionally, for
both the three-month periods ended December 31, 2003 and 2002, 208,333 shares of
common stock potentially issuable from the conversion of preferred stock and
112,358 shares of common stock at December 31, 2003 potentially issuable from
the exercise of stock options with an exercise price that is less than the
average market price of the common shares for the three-months ended December
31, 2003 were considered in determining the diluted net income per common share.


(3) STOCK OPTION PLAN

ACCOUNTING FOR STOCK BASED COMPENSATION


         Since we have elected to apply the intrinsic value method, we are
required to disclose the pro-forma impact on net income and earnings per share
that the fair value-based method would have had if it were applied rather than
the intrinsic value method. Our policy with regards to stock-based compensation
has been to grant stock options and restricted stock awards after fiscal
year-end. Since stock options are typically awarded after fiscal year-end and
contain a nominal vesting period, no pro-forma compensation expense and its
related effect on net income and earnings per share has been reported herein.
Further disclosure is presented in Note 1 - "Summary of Significant



                                       5
<PAGE>

Accounting Policies -- Stock Based Compensation Plans" of our audited
consolidated financial statements in Carver's 2003 10-K.

(4) SUBSEQUENT EVENTS

         On January 13, 2004, the Board of Directors of Carver Bancorp Inc.
declared a quarterly cash dividend of five cents ($0.05) per common share
outstanding. The dividend is payable on February 13, 2004 to stockholders of
record at the close of business on February 6, 2004.

(5) RECENT ACCOUNTING PRONOUNCEMENTS

ACCOUNTING FOR CERTAIN FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF BOTH
LIABILITIES AND EQUITY: RESCISSION OF SFAS NO. 150

         In November 2003, the Financial Accounting Standards Board ("FASB")
rescinded Statement of Financial Accounting Standards ("SFAS") No. 150,
"ACCOUNTING FOR CERTAIN FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF BOTH
LIABILITIES AND EQUITY." Issued in May 2003, SFAS 150 required issuers of
certain financial instruments that fell within the scope of SFAS No. 150, having
characteristics of both liabilities and equity, to be classified and measured as
liabilities. SFAS No. 150 was effective for financial instruments entered into
or modified after May 31, 2003, and otherwise was effective at the beginning of
the first interim period beginning after June 15, 2003. The rescission of SFAS
No. 150 did not have a material impact on our financial condition or results of
operations.

AMENDMENT OF STATEMENT 133 ON DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

         In April 2003, the FASB issued SFAS No. 149, "AMENDMENT OF STATEMENT
133 ON DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES," which amends and
clarifies financial accounting and reporting of derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities under SFAS No. 133, "ACCOUNTING FOR DERIVATIVE INSTRUMENTS
AND HEDGING ACTIVITIES." SFAS No. 149 is generally effective for contracts
entered into or modified after June 30, 2003, and for hedging relationships
designated after June 30, 2003, and should generally be applied prospectively.
The provisions of SFAS No. 149 that relate to SFAS No. 133 Implementation Issues
that have been effective for fiscal quarters that began prior to June 15, 2003,
should continue to be applied in accordance with their respective effective
dates. In addition, the provisions of SFAS No. 149 which relate to forward
purchases or sales of when-issued securities or other securities that do not yet
exist, should be applied to both existing contracts and new contracts entered
into after June 30, 2003. The adoption of SFAS No. 149 did not have a material
impact on our financial condition or results of operations.


GUARANTOR'S ACCOUNTING AND DISCLOSURE REQUIREMENTS FOR GUARANTEES, INCLUDING
INDIRECT GUARANTEES OF INDEBTEDNESS OF OTHERS

         In November 2002, the FASB issued Interpretation No. 45, "GUARANTOR'S
ACCOUNTING AND DISCLOSURE REQUIREMENTS FOR GUARANTEES, INCLUDING INDIRECT
GUARANTEES OF INDEBTEDNESS OF OTHERS" ("FIN 45"), which addresses the disclosure
to be made by a guarantor in its interim and annual financial statements about
its obligations under guarantees. FIN 45 also requires the recognition of a
liability by a guarantor at the inception of certain guarantees.

         FIN 45 requires the guarantor to recognize a liability for the
non-contingent component of the guarantee; this is the obligation to stand ready
to perform in the event that specified triggering events or conditions occur.
The initial measurement of this liability is the fair value of the guarantee at
inception. The recognition of the liability is required even if it is not
probable that payments will be required under the guarantee or if the guarantee
was issued with a premium payment or as part of a transaction with multiple
elements.

         The Company has adopted the disclosure requirements of FIN 45 and has
applied the recognition and measurement provisions for all guarantees entered
into or modified after March 31, 2003. As of December 31, 2003, the Company
maintained one letter of credit in the amount of $1.9 million. The adoption of
this interpretation had no significant effect on the Company's earnings or
financial position.


                                       6
<PAGE>

ACQUISITIONS OF CERTAIN FINANCIAL INSTITUTIONS


         In October 2002, the FASB issued SFAS No. 147, "ACQUISITIONS OF CERTAIN
FINANCIAL INSTITUTIONS." SFAS No. 147 amends SFAS No. 72, "ACCOUNTING FOR
CERTAIN ACQUISITIONS OF BANKING OR THRIFT INSTITUTIONS," SFAS No. 144,
"ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS," and FASB
Interpretation No. 9, "APPLYING APB OPINIONS NOS. 16 AND 17 WHEN A SAVINGS AND
LOAN ASSOCIATION OR A SIMILAR INSTITUTION IS ACQUIRED IN A BUSINESS COMBINATION
ACCOUNTED FOR BY THE PURCHASE METHOD." SFAS No. 147 removes acquisitions of
financial institutions, other than transactions between two or more mutual
enterprises, from the scope of SFAS No. 72 and FASB Interpretation No. 9. SFAS
No. 147 also amends SFAS No. 144 to include long-term customer-relationship
intangible assets such as depositor- and borrower-relationship intangible assets
and credit card holder intangible assets. The provisions of SFAS No. 147 became
effective October 1, 2002. The adoption of this statement had no significant
effect on the Company's earnings or financial position.


ACCOUNTING FOR COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES

         In June 2002, the FASB issued SFAS No. 146, "ACCOUNTING FOR COSTS
ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES." SFAS No. 146 requires companies to
recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
Examples of costs covered by this standard include lease termination costs and
certain employee severance costs that are associated with a restructuring,
discontinued operation, plant closing or other exit or disposal activity.
Previous accounting guidance was provided by Emerging Issues Task Force ("EITF")
Issue No. 94-3, "LIABILITY RECOGNITION FOR CERTAIN EMPLOYEE TERMINATION BENEFITS
AND OTHER COSTS TO EXIT AN ACTIVITY (INCLUDING CERTAIN COSTS INCURRED IN A
RESTRUCTURING)." SFAS No. 146 replaces EITF Issue No. 94-3. SFAS No. 146 is to
be applied prospectively to exit or disposal activities initiated after December
31, 2002. The adoption of this statement had no significant effect on the
Company's earnings or financial position.

RESCISSION OF FASB STATEMENTS NO. 4, 44, AND 64, AMENDMENT OF FASB STATEMENT NO.
13, AND TECHNICAL CORRECTIONS

         In April 2002, the FASB issued SFAS No. 145, "RESCISSION OF FASB
STATEMENTS NO. 4, 44, AND 64, AMENDMENT OF FASB STATEMENT NO. 13, AND TECHNICAL
CORRECTIONS." SFAS No. 145 updates, clarifies and simplifies existing accounting
pronouncements. SFAS No. 145 rescinds SFAS No. 4, "REPORTING GAINS AND LOSSES
FROM EXTINGUISHMENT OF DEBT," which required all gains and losses from
extinguishment of debt to be aggregated and, if material, classified as an
extraordinary item, net of related income tax effect. As a result, the criteria
in Accounting Principles Board Opinion ("APB") No. 30, "REPORTING THE EFFECTS OF
DISPOSAL OF A SEGMENT OF A BUSINESS, AND EXTRAORDINARY, UNUSUAL AND INFREQUENTLY
OCCURRING EVENTS AND TRANSACTIONS," will now be used to classify those gains and
losses. SFAS No. 64, "EXTINGUISHMENTS OF DEBT MADE TO SATISFY SINKING-FUND
REQUIREMENTS," amended SFAS No. 4 and is no longer necessary because SFAS No. 4
has been rescinded. SFAS No. 145 amends SFAS No. 13, "ACCOUNTING FOR LEASES," to
require that certain lease modifications that have economic effects similar to
sale-leaseback transactions be accounted for in the same manner as
sale-leaseback transactions. This amendment is consistent with the FASB's goal
of requiring similar accounting treatment for transactions that have similar
economic effects. SFAS No. 145 also makes technical corrections to existing
pronouncements. While those corrections are not substantive in nature, in some
instances they may change accounting practice. The provisions of SFAS No. 145
are effective for fiscal years beginning after May 15, 2002. The adoption of
this statement had no significant effect on the Company's earnings or financial
position.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

EXPLANATORY NOTE

         This Quarterly Report on Form 10-Q contains "forward-looking
statements" as that term is defined in the Private Securities Litigation Reform
Act of 1995. In addition, senior management may make forward-looking statements
verbally to analysts, investors, the media and others. Such forward-looking
statements may be identified by the use of such words as "believe," "expect,"
"anticipate," "intend," "should," "could," "plan," "estimate," "potential" and
similar terms and phrases, or future or conditional verbs such as "will,"
"would," "should," "could," or "may." Such forward-looking statements are
subject to risks and uncertainties, many of which are beyond our control, which
could cause actual results to differ materially from those currently anticipated
due to a number of



                                       7
<PAGE>

factors. Factors which could result in material variations include, but are not
limited to, the Company's success in implementing its initiatives, including
expanding its product line, successfully opening new ATM centers and Bank
branches, successfully rebranding its image and achieving greater operating
efficiencies; changes in interest rates which could affect net interest margins
and net interest income; competitive factors which could affect net interest
income and non-interest income; general economic conditions which could affect
the volume of loan origination, deposit flows and real estate values; changes in
the quality and composition of the Bank's loan and investment portfolios;
changes in management's business strategy; the levels of non-interest income and
the amount of loan losses as well as other factors discussed in documents filed
by the Company with the SEC from time to time.

         Any forward-looking statements made in this report or incorporated by
reference in this report are made as of the date of this report, and, except as
required by applicable law, we assume no obligation to update the
forward-looking statements or to update the reasons why actual results could
differ from those projected in the forward-looking statements. You should
consider the risks and uncertainties enumerated above in evaluating
forward-looking statements and you should not place undue reliance on these
statements.

         As used in this Form 10-Q, "we," "us" and "our" refer to Carver
Bancorp, Inc. and its consolidated subsidiaries, unless the context otherwise
requires.

CRITICAL ACCOUNTING POLICIES

         Note 1 to our audited Consolidated Financial Statements for fiscal year
ended March 31, 2003 included in our 2003 10-K, as supplemented by this report,
contains a summary of our significant accounting policies. We believe our
policies with respect to the methodology for our determination of the allowance
for loan losses and asset impairment judgments, including the recoverability of
goodwill and other than temporary declines in the value of our securities,
involve a high degree of complexity and require management to make difficult and
subjective judgments which often require assumptions or estimates about highly
uncertain matters. Changes in these judgments, assumptions or estimates could
cause reported results to differ materially. These critical policies and their
application are periodically reviewed with our Finance and Audit Committee and
our Board of Directors.


GENERAL

         The Holding Company, a Delaware corporation, is the holding company for
Carver Federal, a federally chartered savings bank, and, on a parent-only basis,
had minimal results of operations. The Holding Company is headquartered in New
York, New York. At this time, the Holding Company conducts business as a unitary
savings and loan holding company, and the principal business of the Holding
Company consists of the operation of its wholly-owned subsidiary, Carver
Federal, which operates five full-service banking locations in the New York City
boroughs of Brooklyn, Queens and Manhattan.

         The Holding Company is dependent on dividends from the Bank, its own
earnings, capital raised and borrowings for sources of funds. The information
below reflects principally the financial condition and results of operations of
the Bank. The Bank's results of operations are primarily dependent on its net
interest income. The Bank pursues typical thrift activities through originating
and purchasing mortgage loans and funds that activity with the gathering of
deposits. The Bank will supplement these mortgage lending activities with
additional interest-earning assets such as mortgage-backed securities and
funding sources such as advances from the Federal Home Loan Bank of New York
("FHLB-NY'). The Bank has been impacted by the current low interest rate
environment, which has continued through fiscal 2004 to hold steady within
historically low ranges. The low interest rate environment has accelerated the
repayments of our mortgage loans and mortgage-backed securities and has also
lowered the Bank's cost of funds, the net effect of which has resulted in a
decline in our net interest margin. The Bank also generates other income, such
as fee income on deposit and loan accounts and, to a lesser extent, ATM fees,
debit card interchange credit, and, depending on market conditions, net gains on
sales of securities and loans. The level of its expenses, such as salaries and
benefits, occupancy and equipment costs, other general and administrative
expenses, net losses on sales of securities and loans and income tax expense,
further affects the Bank's net income. This discussion and analysis should be
read in conjunction with the audited Consolidated Financial Statements, the
notes thereto and other financial information included in the Company's 2003
10-K.


                                       8
<PAGE>

COMPARISON OF FINANCIAL CONDITION AT
DECEMBER 31, 2003 AND MARCH 31, 2003

ASSETS

         Total assets increased by $19.7 million, or 3.9%, to $529.6 million at
December 31, 2003 compared to $509.8 million at March 31, 2003. The change was
primarily attributable to increases of $44.4 million in total loans receivable,
net, partially offset by decreases of $15.4 million, $1.8 million and $6.5
million in total securities, total cash and cash equivalents and other assets,
respectively.

         Cash and cash equivalents for the nine-month period decreased $1.8
million from March 31, 2003. The reduction was primarily due to the Bank
managing its lower yielding excess liquid assets by investing in mortgage loans
and mortgage-backed securities.

         Total securities decreased $15.4 million, or 9.3%, to $150.2 million
from $165.6 million at March 31, 2003 as repayments, maturities and sales
exceeded new security purchases. The decline is attributed to the low interest
rate environment, which in turn has accelerated mortgage refinancing and
prepayments of the Company's mortgage-backed securities. Additionally, it is
management's intent to continue to use proceeds from security repayments and
sales to fund higher yielding mortgage loan growth. Principal repayments of
investment securities of $42.1 million, maturities of investment securities of
$25.0 million and sales of $23.9 million were partially offset by new purchases
of $78.3 million.

         Total loans receivable, net, increased $44.4 million, or 15.2%, to
$337.1 from $292.7 million at March 31, 2003. The increase resulted from
mortgage loan originations and purchases exceeding loan repayments during the
first nine months of fiscal 2004. During the nine-month period ended December
31, 2003, loan purchases and originations were $69.2 million and $69.5 million,
respectively, offset in part by loan repayments of $87.4 million and loan sales
of $6.5 million. The $138.7 million in total loan originations and purchases for
the period was comprised of $48.5 million in one- to four-family loans, $40.3
million in non-residential real estate mortgage loans, $35.7 million in
multifamily loans, $9.6 million in construction loans and $4.5 million in
consumer and business loans. Management has evaluated yields and loan quality in
the competitive New York metropolitan area market and has made decisions in
certain instances to purchase mortgage-backed securities. Management will
continue to assess yields and economic risk as it determines the balance of
interest-earning assets allocated to loan originations and purchases compared to
additional purchases of mortgage-backed securities.

         Other assets decreased $6.5 million, or 70.1%, to $2.8 million from
$9.2 million at March 31, 2003. The decrease is primarily due to a $4.3 million
reduction in mortgage loans in process and a $2.4 million decline in the Bank's
deferred tax asset.

LIABILITIES AND STOCKHOLDERS' EQUITY

         LIABILITIES

         At December 31, 2003, total liabilities increased by $4.8 million, or
1.0%, to $473.5 million compared to $468.8 million at March 31, 2003. The
increase in liabilities primarily reflects an increase of $21.1 million in
deposits offset by a decrease of $11.4 million in advances from the FHLB-NY and
other borrowed money and a decrease of $4.9 million in other liabilities.

         The $21.1 million increase in deposit balances is primarily
attributable to new relationships with corporate and not-for-profit entities
which contributed to increases of $9.1 million in NOW accounts, $8.0 million in
money market accounts, $3.8 million in certificates of deposit accounts and
$221,000 in savings and club accounts. Other factors contributing to deposit
growth include an emphasis on developing depository relationships with borrowers
and the offer of special promotions to attract new depositors. At December 31,
2003, the Bank had five branches and one stand-alone 24/7 ATM center. We believe
that deposits will continue to grow with the addition of new planned branches
and 24/7 ATM centers in Queens, Brooklyn and Manhattan coupled with our business
development efforts.

         The decrease of $11.4 million in advances from the FHLB-NY and other
borrowed money resulted from a repayment of maturing FHLB-NY borrowings using
cash flow primarily from the repayment of mortgage loans and mortgage-backed
securities. The decrease in other liabilities was primarily the result of a
decline in the liability for income taxes of $3.3 million as tax payments were
remitted to taxing authorities.


                                       9
<PAGE>

         On September 17, 2003, the Holding Company, through a subsidiary
business trust, Carver Statutory Trust I, issued 13,000 shares, liquidation
amount $1,000 per share, of floating rate capital securities. Gross proceeds
from the sale of these trust preferred securities were $13.0 million, and,
together with the proceeds from the sale of the trust's common securities, were
used to purchase approximately $13.4 million aggregate principal amount of the
Holding Company's floating rate junior subordinated debt securities due 2033.
The trust preferred securities are redeemable quarterly at the option of the
Company, beginning on or after July 7, 2007, and have a mandatory redemption
date of September 17, 2033. Cash distributions on the trust preferred securities
are cumulative and payable at a floating rate per annum (reset quarterly) equal
to 3.05% over 3-month LIBOR, with an initial rate of 4.19%. The Holding Company
has guaranteed the obligations of Carver Statutory Trust I to the trust's
capital security holders. The $12.7 million net proceeds of the issuance of
trust preferred securities were contributed to the Bank to enhance regulatory
capital, which will help facilitate the Company's growth strategy.

         STOCKHOLDERS' EQUITY

         Total stockholders' equity increased $2.2 million, or 5.4%, to $43.3
million at December 31, 2003 compared to $41.1 million at March 31, 2003. The
increase in total stockholders' equity was primarily attributable to an increase
in retained earnings year-to-date of $3.2 million, partially offset by a
decrease of $775,000 in accumulated other comprehensive income and a $211,000
decrease related to treasury stock. The $211,000 decrease related to treasury
stock is attributable to repurchases of the Company's stock, partially offset by
payments made from treasury stock for stock-based compensation plans.
Accumulated other comprehensive income decreased as a result of a reduction in
net unrealized gains, net of taxes, relating to certain investment and
mortgage-backed securities. As required by SFAS No. 115 "ACCOUNTING FOR CERTAIN
INVESTMENTS IN DEBT AND EQUITY SECURITIES" investment and mortgage-backed
securities accounted for as held-to-maturity are carried at cost while such
securities designated as available-for-sale are carried at market with an
adjustment directly to stockholders' equity, net of taxes, and does not impact
the Consolidated Statements of Income.

         During the quarter ended December 31, 2003, the Holding Company did not
purchase any additional shares of its common stock. To date, the Holding Company
has purchased 29,100 shares of its common stock in open market transactions at
an average price of $13.84 per share as part of its repurchase program announced
on August 6, 2002. The Holding Company intends to use repurchased shares to fund
its stock-based benefit and compensation plans and for any other purpose the
Board of Directors of the Holding Company deems advisable in compliance with
applicable law.

ASSET/LIABILITY MANAGEMENT

         The Company's primary earnings source is net interest income, which is
affected by changes in the level of interest rates, the relationship between the
rates on interest-earning assets and interest-bearing liabilities, the impact of
interest rate fluctuation on asset prepayments, the level and composition of
deposits and the credit quality of earning assets. Management's asset/liability
objectives are to maintain a strong, stable net interest margin, to utilize its
capital effectively without taking undue risks, to maintain adequate liquidity
and to manage its exposure to changes in interest rates.

         The Company's Asset/Liability and Interest Rate Risk Committee
("ALCO"), comprised of members of the Board of Directors, meets periodically
with senior management to evaluate the impact of changes in market interest
rates on assets and liabilities, net interest margin, capital and liquidity.
Risk assessments are governed by policies and limits established by senior
management that are reviewed and approved by ALCO and the entire Board of
Directors.

         The economic environment continually presents uncertainties as to
future interest rate trends. ALCO regularly monitors the Company's cumulative
gap position, which is the difference between the sensitivity to rate changes on
our interest-earning assets and interest-bearing liabilities. In addition, the
Company uses various tools to monitor and manage interest rate risk, such as a
model that projects net interest income based on increasing or decreasing
interest rates, in order to respond effectively to changes in interest rates.



                                       10
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES


         Liquidity is a measure of the Bank's ability to generate adequate cash
to meet financial obligations. The principal cash requirements of a financial
institution are to cover potential deposit outflows, fund increases in its loan
and investment portfolios and cover its ongoing operating expenses. The
Company's primary sources of funds are deposits, borrowed funds and principal
and interest payments on loans, mortgage-backed securities and investment
securities. While maturities and scheduled amortization of loans,
mortgage-backed securities and investment securities are predictable sources of
funds, deposit flows and loan and mortgage-backed securities prepayments are
strongly influenced by changes in general interest rates, economic conditions
and competition.

         Other sources of liquidity include the ability to borrow under
repurchase agreements, FHLB-NY advances utilizing unpledged mortgage-backed
securities and certain mortgage loans, the sale of available-for-sale securities
and the sale of loans. At December 31, 2003, the Bank had the ability to borrow
from the FHLB-NY an additional $23.6 million on a secured basis, utilizing
mortgage-related loans and securities as collateral.

         The Consolidated Statements of Cash Flows present the change in cash
from operating, investing and financing activities. During the nine months ended
December 31, 2003, total cash and cash equivalents decreased by $1.8 million.
Net cash provided by operating activities during this period was $9.6 million,
primarily representing decreases in other assets and adjustments for the
balances of depreciation and amortization expense and other amortization, offset
by decreases in other liabilities. Net cash used in investing activities was
$33.0 million, primarily representing the purchase of securities, loan purchases
and originations offset in part by principal payments and maturities of
securities, sale of available-for-sale securities and principal collections on
loans. Net cash provided by financing activities was $21.6 million, primarily
representing a net increase in deposits and proceeds from the issuance of trust
preferred securities, partially offset by a decrease in advances from the
FHLB-NY.

         The Bank is required to maintain sufficient liquidity to ensure its
safe and sound operation. Management believes the Bank's short-term assets have
sufficient liquidity to cover loan demand, potential fluctuations in deposit
accounts and to meet other anticipated cash requirements. In addition, as
previously discussed, the Bank has the ability to borrow funds from the FHLB-NY
to further meet any liquidity needs. The Bank monitors its liquidity utilizing
guidelines that are contained in a policy developed by management of the Bank
and approved by the Bank's Board of Directors. The Bank's several liquidity
measurements are evaluated on a frequent basis. The Bank was in compliance with
this policy as of December 31, 2003.

         The levels of the Bank's short-term liquid assets are dependent on the
Bank's operating, financing and investing activities during any given period.
The most significant liquidity challenge the Bank currently faces is the
variability in its cash flows as a result of mortgage refinance activity, which
has resulted in a lag in redeploying lower yielding federal funds into higher
yielding mortgage loans, which has had a negative impact on the Company's net
interest margin and net interest income. As mortgage interest rates decline,
customers' refinance activities tend to accelerate, causing the cash flow from
both the mortgage loan portfolio and the mortgage-backed securities portfolio to
accelerate. In addition, as mortgage interest rates decrease, customers
generally tend to prefer fixed rate mortgage loan products over variable rate
products. Since the Bank generally sells its 15-year and 30-year fixed rate loan
production into the secondary mortgage market, the origination of such products
for sale does not significantly reduce the Bank's liquidity. During the fiscal
year ended March 31, 2002 ("fiscal 2002"), the Federal Open Market Committee
reduced the federal funds rate on eight separate occasions by a total of 325
basis points, resulting in a lower interest rate environment in fiscal 2002
compared to the fiscal year ended March 31, 2001. During the fiscal year ended
March 31, 2003 ("fiscal 2003"), the federal funds rate was again lowered on
three separate occasions a total of 125 basis points. To date during fiscal 2004
the federal funds rate has remained unchanged. The increase in loan and
securities repayments experienced by the Bank over the past two fiscal years was
primarily the result of the increase in mortgage loan refinancing activity
caused by this lower interest rate environment.

         When mortgage interest rates increase, customers' refinance activities
tend to decelerate, causing the cash flow from both the mortgage loan portfolio
and the mortgage-backed securities portfolio to decline.

         The Office of Thrift Supervision (the "OTS"), the Bank's primary
federal regulator, requires that the Bank



                                       11
<PAGE>

meet minimum capital requirements. Capital adequacy is one of the most important
factors used to determine the safety and soundness of individual banks and the
banking system. At December 31, 2003, the Bank exceeded all regulatory minimum
capital requirements and qualified, under OTS regulations, as a well-capitalized
institution. The table below presents certain information relating to the Bank's
capital compliance at December 31, 2003.

<TABLE>
<CAPTION>
                                     REGULATORY CAPITAL
                                    AT DECEMBER 31, 2003

                                                                 Amount        % of Assets
                                                                 ------        -----------
<S>                                                                <C>              <C>
Total capital (to risk-weighted assets):
Capital level                                                      $60,974          18.14 %
Less requirement                                                    26,894           8.00
                                                               ------------
Excess                                                             $34,080          10.14
                                                               ============

Tier 1 capital (to risk-weighted assets):
Capital level                                                      $56,846          10.67 %
Less requirement                                                    21,306           4.00
                                                               ------------
Excess                                                             $35,540           6.67
                                                               ============

Tier 1 Leverage capital (to adjusted total assets):
Capital level                                                      $56,846          16.91 %
Less requirement                                                    13,447           4.00
                                                               ------------
Excess                                                             $43,399          12.91 %
                                                               ============
</TABLE>


         On January 13, 2004, the Board of Directors declared a quarterly
dividend of $0.05 per common share. The dividend will be payable on February 13,
2004 to stockholders of record at the close of business on February 6, 2004.

ANALYSIS OF EARNINGS

        The Company's profitability is primarily dependent upon net interest
income, which mainly represents the difference between income on
interest-earning assets and expense on interest-bearing liabilities. Net
interest income is dependent on the difference between the average balances and
rates earned on interest-earning assets and the average balances and rates paid
on interest-bearing liabilities. Provisions for loan losses, non-interest
income, non-interest expense and income taxes further affect net income. The
earnings of the Company are significantly affected by general economic and
competitive conditions, particularly changes in market interest rates, and to a
lesser extent by government policies and actions of regulatory authorities.

        The following tables set forth, for the periods indicated, certain
information relating to Carver's average interest-earning assets, average
interest-bearing liabilities, net interest income, interest rate spread and
interest rate margin. It reflects the average yield on assets and the average
cost of liabilities. Such yields and costs are derived by dividing annualized
income or expense by the average balances of assets or liabilities,
respectively, for the periods shown. Average balances are derived from daily or
month-end balances as available. Management does not believe that the use of
average monthly balances instead of average daily balances has caused any
material difference in information presented. The average balance of loans
includes loans on which the Company has discontinued accruing interest. The
yield and cost include fees, which are considered adjustments to yields.


                                       12
<PAGE>

<TABLE>
<CAPTION>
                                                                      THREE MONTHS ENDED DECEMBER 31,
                                         -----------------------------------------------------------------------------------
                                                            2003                                      2002
                                         --------------------------------------------- --------------------------------------
                                            Average                   Annualized Avg.    Average              Annualized Avg.
                                            Balance      Interest       Yield/Cost       Balance    Interest   Yield/Cost
                                         -------------- ------------  ---------------  ------------ --------- --------------
                                                                         (Dollars in thousands)
<S>                                           <C>            <C>               <C>        <C>          <C>            <C>
Loans receivable (1)                          $313,293       $5,025            6.36%      $278,626     $5,141         7.32%
Investment securities (2)                      156,186        1,396            3.54%       140,204      1,541         4.36%
Federal funds                                   27,114           62            0.91%        22,598         79         1.38%
                                         -------------- ------------                   ------------ ----------
Total interest-earning assets                  496,593        6,483            5.18%       441,428      6,761         6.08%
Non-interest-earning assets                     27,797                                      29,823
                                         --------------                                ------------
Total assets                                  $524,390                                    $471,251
                                         ==============                                ============

Liabilities and Equity
----------------------
Deposits:
NOW accounts                                   $23,400          $20            0.33%       $17,019        $24         0.56%
Savings and club accounts                      129,796          240            0.73%       125,655        331         1.04%
Money market accounts                           28,324           59            0.82%        16,357         45         1.10%
Certificates of deposit                        162,690          816            1.99%       157,972        972         2.44%
                                         -------------- ------------                   ------------ ----------
Total deposits                                 344,210        1,135            1.31%       317,003      1,372         1.72%
Mortgagor's deposits                             1,736            5            1.17%         2,206          1         0.18%
Borrowed money                                  97,638          924            3.76%        90,763        845         3.69%
                                         -------------- ------------                   ------------ ----------
Total interest-bearing liabilities             443,584        2,064            1.85%       409,972      2,218         2.15%
Non-interest-bearing DDA accounts               19,073                                      15,304
Other non-interest-bearing liabilities           5,818                                       6,819
                                         --------------                                ------------
Total liabilities                              468,475                                     432,095
Guaranteed beneficial interest in junior
subordinated debentures                         12,735                                          -
Stockholders' equity                            43,180                                      39,156
                                         --------------                                ------------
Total liabilities and stockholders'
equity                                        $524,390                                    $471,251
                                         ============== ------------                   ============ ----------
Net interest income                                          $4,419                                    $4,543
                                                        ============                                ==========
Interest rate spread                                                           3.33%                                  3.93%
                                                                      ===============                         ==============

Net interest margin                                                            3.53%                                  4.08%
                                                                      ===============                         ==============

Ratio of average interest-earning assets to
deposits and interest-bearing liabilities                                        1.12x                  1.08x
                                                                      =================             ==========
</TABLE>


                                       13
<PAGE>

<TABLE>
<CAPTION>
                                                                      NINE MONTHS ENDED DECEMBER 31,
                                         -----------------------------------------------------------------------------------
                                                          2003                                       2002
                                         ------------------------------------------------------------------------------------
                                            Average                   Annualized Avg.    Average              Annualized Avg.
                                            Balance      Interest       Yield/Cost       Balance    Interest   Yield/Cost
                                         -------------- ------------  ---------------  ------------ --------- --------------
                                                                         (Dollars in thousands)
<S>                                           <C>           <C>                <C>        <C>         <C>             <C>
Loans receivable (1)                          $304,967      $14,952            6.51%      $280,695    $15,829         7.48%
Investment securities (2)                      165,382        4,507            3.62%       118,538      4,193         4.69%
Federal funds                                   19,245          143            0.98%        22,322        266         1.58%
                                         -------------- ------------                   ------------ ----------
Total interest-earning assets                  489,594       19,602            5.31%       421,555     20,288         6.39%
Non-interest-earning assets                     29,444                                      30,259
                                         --------------                                ------------
Total assets                                  $519,038                                    $451,814
                                         ==============                                ============

Liabilities and Equity
Deposits:
NOW accounts                                   $23,549          $68            0.38%       $18,213       $105         0.76%
Savings and club accounts                      130,724          803            0.82%       127,032      1,146         1.20%
Money market accounts                           27,057          174            0.86%        15,607        141         1.20%
Certificates of deposit                        161,969        2,495            2.04%       154,122      3,051         2.63%
                                         -------------- ------------                   ------------ ----------
Total deposits                                 343,299        3,540            1.37%       314,974      4,443         1.87%
Mortgagor's deposits                             1,719           20            1.54%         2,141          4         0.25%
Borrowed money                                 101,027        2,821            3.71%        74,360      2,320         4.14%
                                         -------------- ------------                   ------------ ----------
Total interest-bearing liabilities             446,045        6,381            1.90%       391,475      6,767         2.29%
Non-interest-bearing DDA accounts               19,225                                      14,462
Other non-interest-bearing liabilities           6,703                                       7,810
                                         --------------                                ------------
Total liabilities                              471,973                                     413,747
Guaranteed beneficial interest in junior
subordinated debentures                          4,909                                          -
Stockholders' equity                            42,156                                      38,067
                                         --------------                                ------------
Total liabilities and stockholders'
equity                                        $519,038                                    $451,814
                                         ============== ------------                   ============ ----------
Net interest income                                         $13,221                                   $13,521
                                                        ============                                ==========
Interest rate spread                                                           3.41%                                  4.10%
                                                                      ===============                         ==============

Net interest margin                                                            3.58%                                  4.26%
                                                                      ===============                         ==============

Ratio of average interest-earning assets to
deposits and interest-bearing liabilities                                        1.10x                  1.08x
                                                                      =================             ==========
</TABLE>


                                       14
<PAGE>

COMPARISON OF OPERATING RESULTS FOR THE
THREE MONTHS ENDED DECEMBER 31, 2003 AND 2002

         OVERVIEW. Net income for the three-month period ended December 31, 2003
was $1.2 million compared to $947,000 for the corresponding prior year period,
an increase of $289,000 primarily due to an increase in non-interest income of
$827,000, partially offset by an increase in non-interest expense of $585,000.
Net income available to common stockholders (after adjustment for dividends
payable on the Company's preferred stock) was $1.2 million, or $0.47 per diluted
common share, compared to $898,000, or $0.38 per diluted common share, for the
corresponding prior year period. Selected operating ratios for the three months
ended December 31, 2003 and 2002 are set forth in the table below. The following
analysis discusses the changes in components of operating results giving rise to
net income.

                                                        THREE MONTHS ENDED
SELECTED OPERATING RATIOS:                                 DECEMBER 31,
                                                       2003            2002
                                                  ---------------  -------------

Return on average assets(1)                             0.94 %         0.80 %
Return on average equity(1)                            11.45           9.67
Interest rate spread(1)                                 3.33           3.93
Net interest margin(1)                                  3.53           4.08
Operating expenses to average assets(1)                 3.15           3.00
Equity-to-assets                                        8.18           8.23
Efficiency ratio                                       68.78          66.86
Average interest-earning assets to
  interest-bearing liabilities                         1.12x          1.08x

(1)  Annualized


         INTEREST INCOME. Interest income decreased by $278,000, or 4.1%, to
$6.5 million for the three months ended December 31, 2003 compared to $6.8
million in the prior year period. Interest income decreased primarily as a
result of the lower interest rate environment compared to the prior year period.
The change in total interest income was attributable to a 90 basis point
decrease in the annualized average yield on interest-earning assets to 5.18% for
the three months ended December 31, 2003 compared to 6.08% for the prior year
period. This was partially offset by an increase in the average balance of
interest-earning assets of $55.2 million, or 12.5%, to $496.6 million for the
three months ended December 31, 2003 compared to $441.4 million for the prior
year period. Net interest margin declined 55 basis points to 3.53% for the three
months ended December 31, 2003 compared to 4.08% for the prior year period
resulting from lower interest rates.

         Interest income on loans decreased by $116,000, or 2.3%, to $5.0
million for the three months ended December 31, 2003 compared to $5.1 million
for the prior year period. The change was primarily due to lower interest rates,
which resulted in decreased yields in the loan portfolio. The annualized average
yield on loans for the three months ended December 31, 2003 declined 96 basis
points to 6.36% compared to 7.32% for the prior year period. The decline in
interest income on loans was partially offset by an increase in average mortgage
loan balances of $34.7 million to $313.3 million compared to $278.6 million for
the prior year period.

         Interest income on total securities decreased by $145,000, or 9.4%, to
$1.4 million for the three months ended December 31, 2003 compared to $1.5
million for the prior year period. The change was primarily due to an 82 basis
point decrease in the annualized average yield on securities to 3.54% from 4.36%
in the prior year period, partially offset by an increase of $16.0 million, or
11.4%, in the average balance of securities to $156.2 million compared to $140.2
million in the prior year period. The growth in the average balance of
securities, primarily mortgage-backed securities, reflects the execution of our
strategy to invest available liquid funds in excess of expected mortgage loan
closings into securities. Portfolio yields and interest income declined as new
purchases and



                                       15
<PAGE>

the reinvestment of portfolio cash flows were at yields significantly below
existing portfolio yields. To mitigate interest rate risk, we have purchased
short duration securities that by their nature have lower yields. Additionally,
yields and income were impacted by prepayment activity, which has shortened the
anticipated life of mortgage-backed securities and accelerated premium
amortization.

         Interest income on federal funds sold decreased by $17,000, or 21.5%,
to $62,000 for the three months ended December 31, 2003 compared to $79,000 for
the prior year period. The decline was primarily attributable to a decrease of
47 basis points in the annualized yield on federal funds sold, which was 0.91%
for the three months ended December 31, 2003 compared to 1.38% in the prior year
period due to lower short-term interest rates. Partially offsetting the decline
in interest income was an increase in the average balance of federal funds of
$4.5 million, or 19.9%, to $27.1 million from $22.6 million in the prior year
period.

         INTEREST EXPENSE. Total interest expense decreased by $155,000, or
7.0%, to $2.1 million for the three months ended December 31, 2003 compared to
$2.2 million for the prior year period. The change in interest expense is
primarily due to the lower interest rate environment cited above. The annualized
average cost of interest-bearing liabilities decreased 30 basis points to 1.85%
from 2.15% for the prior year period. The decrease in interest expense was
partially offset by an increase in the average balance of interest-bearing
liabilities of $33.6 million, or 8.2%, to $443.6 million from $410.0 million
during the prior year period.

         Interest expense on deposits decreased $233,000, or 17.0%, to $1.1
million for the three months ended December 31, 2003 compared to $1.4 million
for the prior year period. The decrease in interest expense on deposits was due
primarily to a 41 basis point decline in the rate paid on deposits to 1.31%
compared to 1.72% for the prior year period, partially offset by a $27.2 million
increase in the average balance of interest-bearing deposits to $344.2 million
for the three months ended December 31, 2003 from $317.0 million for the prior
year period. Customer deposits have historically provided Carver with a
relatively low cost funding source from which its net interest income and net
interest margin have benefited. The Bank has achieved success in growing core
deposits, thereby benefiting net interest income and net interest margin.

         Interest expense on advances and other borrowed money increased
$78,000, or 9.2%, to $924,000 for the three months ended December 31, 2003
compared to $846,000 for the prior year period. This was primarily due to an
increase of $6.9 million in the average balance of borrowed money to $97.6
million from $90.8 million for the corresponding prior year period and an
increase of 7 basis points in the cost of borrowings to 3.76% from 3.69% for the
prior year period.

         NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES. Net interest
income before the provision for loan losses decreased $124,000, or 2.7%, to $4.4
million for the three months ended December 31, 2003 compared to $4.5 million
for the prior year period as interest rates declined and deposits and short term
borrowings repriced faster than our longer term interest-earning assets. The
Company's annualized average interest rate spread decreased by 60 basis points
to 3.33% for the three months ended December 31, 2003 compared to 3.93% for the
corresponding prior year period. Our net interest margin, represented by
annualized net interest income divided by average total interest-earning assets,
decreased 55 basis points to 3.53% for the three months ended December 31, 2003
from 4.08% for the corresponding prior year period.

         These decreases are a result of the greater decline in the annualized
yield on interest-earning assets compared to the decline in the annualized cost
of interest-bearing liabilities, as long-term market interest rates continued
their decline during fiscal 2003 and the first nine months of fiscal 2004. The
decrease also reflected the increased amortization of the net premium on our
purchased mortgage loans and our mortgage-backed securities due to the high
level of prepayment activity on these mortgage-related assets. The high level of
repayments resulted in higher average balances of liquid assets, predominantly
federal funds, which had an adverse effect on both the interest rate spread and
net interest margin as these liquid assets were redeployed primarily into real
estate mortgage loans late in the quarter.

         PROVISION FOR LOAN LOSSES AND ASSET QUALITY. The Company did not
provide for additional loan loss reserves for the three months ended December
31, 2003 or 2002 as the Company considers the overall allowance for loan losses
to be adequate. During the third quarter of fiscal 2004, the Company recorded
net recoveries of $15,000 compared to net loan charge-offs of $39,000 for the
prior year period. At December 31, 2003,



                                       16
<PAGE>

the Bank's allowance for loan losses was $4.1 million compared to $4.2 million
at March 31, 2003.

         At December 31, 2003, non-performing assets totaled $1.2 million, or
0.37% of total loans, compared to $1.8 million, or 0.61% of total loans
receivable, at March 31, 2003. Non-performing assets include loans 90 days past
due, non-accrual loans and other real estate owned. Other real estate owned
consists of property acquired through foreclosure or deed in lieu of
foreclosure. The Bank had no foreclosed real estate as of December 31, 2003.
Future levels of non-performing assets will be influenced by economic
conditions, including the impact of those conditions on our customers, interest
rates and other internal and external factors existing at the time.

         The ratio of the allowance for loan losses to non-performing loans was
330.6% at December 31, 2003 compared to 230.7% at March 31, 2003. The ratio of
the allowance for loan losses to total loans was 1.21% at December 31, 2003
compared to 1.40% at March 31, 2003.

         Management's judgment in determining the adequacy of the allowance for
loan losses is based on an evaluation of certain individual loans, the risk
characteristics and size of the loan portfolio, an assessment of current
economic and real estate market conditions, estimates of the current value of
underlying collateral, past loan loss experience, review of regulatory authority
examination reports and other relevant factors. Based on the process employed,
management believes that the allowance for loan losses is adequate under
prevailing economic conditions to absorb losses on existing loans that may
become uncollectible. While management estimates loan losses using the best
available information, no assurance can be made that future adjustments to the
allowance will not be necessary based on changes in economic and real estate
market conditions, further information obtained regarding known problem loans,
identification of additional problem loans, results of regulatory examinations
and other factors, both within and outside of management's control.

         NON-INTEREST INCOME. Total non-interest income in the third quarter of
fiscal 2004 increased $826,000, or 110.0%, to $1.6 million compared to $751,000
for the prior year period. The increase was primarily attributable to an
increase in loan fees and service charges of $772,000, all of which was related
to increased mortgage prepayment penalties from refinancing activity including
two loans whose prepayment penalties of $496,000 were based on the yield
maintenance method compared to a flat declining rate method usually used by the
Bank. The yield maintenance method is calculated by using a stated contractual
interest rate for the remaining term of the loan multiplied by the current
outstanding balance. A gain on the sale of securities of $55,000 was recognized
as a result of the sale of certain fixed rate one- to four-family loans in the
third quarter of fiscal 2004. Non-interest income represented 19.6% of revenue
(interest income plus non-interest income) for the third quarter of fiscal 2004
compared to 10.0% for the corresponding prior year period.

         NON-INTEREST EXPENSE. For the quarter ended December 31, 2003, total
non-interest expense increased $585,000, or 16.5%, to $4.1 million compared to
$3.5 million for the prior year period. The increase in non-interest expense was
primarily due to a rise of $447,000 in employee compensation and benefit expense
resulting from salary increases effective as of September 1, 2003, new hires at
higher average salaries, an increase in the costs to provide employee benefits
and the timing of accruals for employee bonus expense. It is the Bank's policy
that projected employee bonuses are expensed in each quarter when the
performance of the Bank indicates that they will likely be earned by year-end.
In fiscal 2003 the application of this policy resulted in the majority of
employee bonuses being both earned and expensed in the fourth quarter, whereas
in fiscal 2004, due to the performance of the Bank, projected employee bonuses
have been expensed earlier in the fiscal year. Additionally, net occupancy
expense increased $89,000 primarily as a result of new and upgraded 24/7 ATM
centers. Capital securities cost of $152,000 for debt service related to the
issuance of $13 million in subordinated debentures raised by the Company through
an issuance of trust preferred securities in September 2003 also contributed to
the increase in non-interest expense. These increases in non-interest expense
were partially offset by a decrease in equipment expense of $72,000 compared to
the prior year period, which primarily resulted from a decline in depreciation
expense on computer equipment as these short-lived assets have been fully
depreciated.

         INCOME TAX EXPENSE. For the three-month period ended December 31, 2002,
the Company accrued for Federal, New York State and New York City income tax
expense at a combined total tax rate of 46%. For the three-month period ended
December 31, 2003, the Company experienced a decrease in its tax rate following
the establishment of a real estate investment trust.



                                       17
<PAGE>

         For the three-month period ended December 31, 2003, income before taxes
increased $118,000, or 6.7%, to $1.9 million compared to $1.8 million for the
prior year period. Income tax expense decreased $171,000, or 21.2%, to $636,000
compared to $807,000 for the prior year period.


COMPARISON OF OPERATING RESULTS FOR THE
NINE MONTHS ENDED DECEMBER 31, 2003 AND 2002

         OVERVIEW. The Company reported net income for the nine-month period
ended December 31, 2003 of $3.7 million compared to net income of $2.8 million
for the corresponding prior year period. Net income available to common
stockholders (after adjustment for dividends payable on the Company's preferred
stock) was $3.6 million, or $1.45 per diluted common share, compared to $2.6
million, or $1.09 per diluted common share, for the corresponding prior year
period. Income for the nine months ended December 31, 2003 includes a recovery
of $558,000 related to previously unrecognized income from prior fiscal year
periods from mortgage loans. This recovery was recorded in the second quarter of
fiscal 2004 in other non-interest income. Net income available to common
stockholders increased $992,000 primarily due to a rise in non-interest income
of $1.9 million, partially offset by an increase in non-interest expense of
$952,000. Selected operating ratios for the nine months ended December 31, 2003
and 2002 are set forth in the table below. The following analysis discusses the
changes in components of operating results giving rise to net income.

                                                       NINE MONTHS ENDED
SELECTED OPERATING RATIOS:                                DECEMBER 31,
                                                      2003            2002
                                                 ---------------  -------------

Return on average assets(1)                           0.96 %         0.81 %
Return on average equity(1)                          11.86           9.66
Interest rate spread(1)                               3.41           4.10
Net interest margin(1)                                3.58           4.26
Operating expenses to average assets(1)               3.04           3.21
Equity-to-assets                                      8.18           8.23
Efficiency ratio                                     67.48          68.16
Average interest-earning assets to
  interest-bearing liabilities                       1.10x          1.08x

(1)  Annualized


         INTEREST INCOME. Interest income decreased by $686,000, or 3.4%, to
$19.6 million for the nine months ended December 31, 2003 compared to $20.3
million in the corresponding prior year period. The decrease in interest income
was due to a lower interest rate environment during the nine-month period ended
December 31, 2003 compared to the corresponding prior year period. The change in
total interest income was attributable to a decrease of 108 basis points in the
annualized average yield on interest-earning assets to 5.31% for the nine months
ended December 31, 2003 compared to 6.39% for the corresponding prior year
period. This was partially offset by an increase in the average balance of
interest-earning assets of $68.0 million, or 16.1%, to $489.6 million for the
nine months ended December 31, 2003 compared with $421.6 million for the
corresponding prior year period.

         Interest income on loans decreased by $877,000, or 5.5%, to $15.0
million for the nine months ended December 31, 2003 compared to $15.8 million
for the corresponding prior year period. The decline in interest income was due
primarily to a decrease in the annualized average yield on mortgage loans to
6.51% compared to 7.48% for the nine months ended December 31, 2002.
Additionally, the decrease in interest income was due to the inclusion of an
acceleration in the recognition of deferred loan fees of $212,000 resulting from
higher than anticipated mortgage loan prepayments in the income of the prior
fiscal year. The decrease in interest income on loans was offset by an increase
in average mortgage loan balances of $24.3 million, or 8.7%, to $305.0 million
for the nine months ending December 31, 2003 compared to $280.7 million for the
corresponding prior year period.



                                       18
<PAGE>

         Interest income on total securities increased by $314,000, or 7.5%, to
$4.5 million for the nine months ended December 31, 2003 compared to $4.2
million for the corresponding prior year period. The change was primarily due to
an increase in the average balance of total securities of $46.8 million, or
39.5%, to $165.4 million for the nine months ended December 31, 2003 compared to
$118.5 million for the corresponding prior year period, partially offset by a
107 basis point decrease in the annualized average yield on mortgage-backed
securities to 3.62% from 4.69% during the same period.

         Interest income on federal funds sold decreased by $123,000, or 46.2%,
to $143,000 for the nine months ended December 31, 2003 compared to $266,000 for
the corresponding prior year period. The annualized yield on federal funds sold
declined 60 basis points to 0.98% for the nine months ended December 31, 2003
compared to 1.58% for the corresponding prior year period due to a lower
short-term interest rate environment. In addition, the average balance of
federal funds decreased $3.1 million, or 13.9%, to $19.2 million from $22.3
million for the corresponding prior year period. It is the Company's strategy to
replace excess lower yielding federal funds with higher yielding mortgages
and/or securities while maintaining adequate liquidity.

         INTEREST EXPENSE. Total interest expense decreased by $386,000, or
5.7%, to $6.4 million for the nine months ended December 31, 2003 compared to
$6.8 million for the corresponding prior year period. The reduction in interest
expense is primarily due to the lower interest rate environment partially offset
by higher average borrowings year over year to fund the growth of the balance
sheet. The annualized average cost of interest-bearing liabilities decreased 39
basis points to 1.90% from 2.29% for the corresponding prior year period. The
decrease in the average cost of interest-bearing liabilities was partially
offset by an increase in the average balance of interest-bearing liabilities of
$54.6 million, or 13.9%, to $446.0 million from $391.5 million compared to the
corresponding prior year period.

         Interest expense on deposits decreased $883,000, or 19.9%, to $3.6
million for the nine months ended December 31, 2003 compared to $4.4 million for
the corresponding prior year period. The decrease in interest expense on
deposits was due primarily to a 50 basis point decline in the rate paid on
deposits to 1.37% for the nine months ended December 31, 2003 compared to 1.87%
for the corresponding prior year period. This was partially offset by a $28.3
million increase in the average balance of interest-bearing deposits to $343.3
million from $315.0 million for the corresponding prior year period.

         Interest expense on advances and other borrowed money increased
$497,000, or 21.4%, to $2.8 million for the nine months ended December 31, 2003
compared to $2.3 million for the corresponding prior year period. This increase
in interest expense was primarily due to a $26.7 million, or 35.9%, increase in
the average balance of borrowed money to $101.0 million from $74.4 million for
the corresponding prior year period, partially offset by a decrease of 43 basis
points in the cost of borrowings to 3.71% from 4.14% for the corresponding prior
year period.

         NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES. Net interest
income before the provision for loan losses decreased by $300,000, or 2.2%, to
$13.2 million for the nine months ended December 31, 2003 compared to $13.5
million for the corresponding prior year period. Total interest income decreased
by $686,000 while total interest expense decreased by $386,000 for the nine
months ended December 31, 2003. The Company's annualized average interest rate
spread decreased by 69 basis points to 3.41% for the nine months ended December
31, 2003 compared to 4.10% for the corresponding prior year period. Our net
interest margin, represented by annualized net interest income divided by
average total interest-earning assets, decreased 68 basis points to 3.58% for
the first nine months of fiscal 2004 from 4.26% for the corresponding prior year
period.

         These decreases are a result of the greater decline in the annualized
yield on interest-earning assets compared to the decline in the annualized cost
of interest-bearing liabilities, as long-term market interest rates continued
their decline during fiscal 2003 and the first nine months of fiscal 2004. The
decrease also reflected the increased amortization of the net premium on our
purchased mortgage loans and our mortgage-backed securities due to the high
level of prepayment activity on these mortgage-related assets. The high level of
repayments resulted in higher average balances of liquid assets, predominantly
federal funds, which had an adverse effect on both the interest rate spread and
net interest margin as these liquid assets were redeployed into higher yielding
assets, primarily real estate mortgage loans and mortgage-backed securities
later in the year.



                                       19
<PAGE>

         PROVISION FOR LOAN LOSSES AND ASSET QUALITY. The Company did not
provide for additional loan losses for each nine-month period ended December 31,
2003 and 2002. The Company believed the total loan loss allowance to be adequate
due to the credit quality of the loan portfolio at period end. During the first
nine months of fiscal 2004, Carver recorded net loan charge-offs of $30,000 to
the allowance for loan losses compared to net recoveries of $5,000 for the
corresponding prior year period. At December 31, 2003, the Bank's allowance for
loan losses at $4.1 million compared to $4.2 million at March 31, 2003.

         At December 31, 2003, non-performing loans totaled $1.2 million, or
0.37% of total loans, compared to non-performing loans of $1.8 million, or 0.61%
of total loans, at March 31, 2003, a decrease of $553,000 or 30.7%. The decrease
in non-performing loans increased the ratio of the allowance for loan losses to
non-performing loans to 330.6% at December 31, 2003 compared to 230.7% at March
31, 2003. The ratio of the allowance for loan losses to total loans at December
31, 2003 was 1.21% compared to 1.40% March 31, 2003.

         Management's judgment in determining the adequacy of the allowance for
loan losses is based on an evaluation of certain individual loans, the risk
characteristics and size of the loan portfolio, an assessment of current
economic and real estate market conditions, estimates of the current value of
underlying collateral, past loan loss experience, review of regulatory authority
examination reports and other relevant factors. Based on the process employed,
management believes that the allowance for loan losses is adequate under
prevailing economic conditions to absorb losses on existing loans that may
become uncollectible. While management estimates loan losses using the best
available information, no assurance can be made that future adjustments to the
allowance will not be necessary based on changes in economic and real estate
market conditions, further information obtained regarding known problem loans,
identification of additional problem loans and other factors, both within and
outside of management's control.

         NON-INTEREST INCOME. Total non-interest income increased $1.9 million,
or 77.4%, to $4.3 million for the nine-month period ended December 31, 2003
compared to $2.4 million for the corresponding prior year period. The increase
in non-interest income resulted from increases in loan fees and service charges,
depository fees and charges, other non-interest income and gains on the sale of
loans and securities. The increases in loan fees and service charges were
primarily due to higher mortgage prepayment penalties resulting from the
repayment of several loans whose prepayment penalties were based on the yield
maintenance method. The increase in depository fees and charges can be primarily
attributed to increases in ATM usage over the corresponding prior year period
and growth in debit card income. Other non-interest income increased as a result
of a recovery of $558,000 of which $411,000 was related to the recognition of
previously unrecognized mortgage loan income from one problem loan that had been
held in escrow pending the resolution of certain mechanics' liens. The remaining
recovery of $147,000 was from previously unrecognized prepaid mortgage loan
income. During fiscal 2004, in an effort to manage its interest rate risk, the
Company sold fixed rate one- to four-family mortgage loans and investment
securities that generated a net gain on sale of loans of $55,000 and a net gain
on sale of securities of $31,000.

         NON-INTEREST EXPENSE. Total non-interest expense increased $952,000, or
8.8%, to $11.8 million for the nine months ended December 31, 2003 compared to
$10.9 million for the corresponding prior year period. The increase in
non-interest expense was primarily due to an increase of $787,000 in employee
compensation and benefits expense resulting from salary increases, new hires,
increased cost of benefits plans and the timing for accruals of employee bonus
expense. Net occupancy expenses increased $100,000 primarily from new and
upgraded 24/7 ATM centers. Also contributing to the increase in non-interest
expense was an expense for capital securities costs of $175,000 for debt service
on the recent $13 million in subordinated debt raised by the Company through an
issuance of trust preferred securities in September 2003. These increases were
offset by decreases of $62,000 in equipment expenses and $48,000 in other
non-interest expense. The decrease in other non-interest expense is
predominantly attributable to lower advertising expense of $195,000 due to
timing of expenditures, loan expenses of $95,000 and security services of
$68,000. Partially offsetting these decreases in other non-interest expense was
a $262,000 increase in consulting expenses primarily related to establishing the
Bank's real estate investment trust and complying with certification
requirements in the new regulatory environment, a $47,000 increase in stationery
and supplies as the Bank updated its privacy disclosure statements to comply
with regulatory requirements and a $29,000 increase in insurance and surety
expense.

         INCOME TAX EXPENSE. For the nine-month period ended December 31, 2002,
the Company accrued for Federal, New York State and New York City income tax
expense at a combined total tax rate of 46%. For the nine-



                                       20
<PAGE>

month period ended December 31, 2003, the Company experienced a decrease in its
tax rate following the establishment of a real estate investment trust.

         For the nine-month period ended December 31, 2003, income before taxes
increased $620,000, or 12.2%, to $5.7 million compared to $5.1 million for the
prior year period. Income tax expense decreased $372,000, or 16.0%, to $1.9
million compared $2.3 million for the prior year period.


ITEM 3.           QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         Quantitative and qualitative disclosure about market risk is presented
at March 31, 2003 in Item 7 of the Company's 2003 10-K. The Company believes
that there have been no material changes in the Company's market risk at
December 31, 2003 compared to March 31, 2003.

ITEM 4.           CONTROLS AND PROCEDURES

           The Company maintains controls and procedures designed to ensure that
information required to be disclosed in the reports that the Company files or
submits under the Securities Exchange Act of 1934 ("Exchange Act") is recorded,
processed, summarized and reported within the time periods specified in the
rules and forms of the SEC. As of December 31, 2003, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the Company's disclosure controls and
procedures pursuant to Exchange Act Rule 13a-15. Based on that evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that the Company's
disclosure controls and procedures are effective and timely in alerting them to
material information relating to the Company (including its consolidated
subsidiaries) required to be included in the Company's periodic SEC filings.

         There were no changes in our internal control over financial reporting
that occurred during the period covered by this report that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.

PART II.          OTHER INFORMATION

ITEM 1.           LEGAL PROCEEDINGS


         Disclosure regarding legal proceedings that the Company is a party to
is presented in Note 13 to our audited Consolidated Financial Statements in the
2003 10-K. Except as set forth below, there have been no material changes with
regard to such legal proceedings since the filing of the 2003 10-K and the
Company's quarterly report on Form 10-Q for the three-month period ended
September 30, 2003.

         On or about April 29, 1999, plaintiff Reginald St. Rose ("St. Rose"), a
former Carver Federal employee, filed suit against Carver Federal in the Supreme
Court of the State of New York, County of New York (the "St. Rose Action"),
alleging the following causes of action relating to a January 12, 1999 agreement
between the parties concerning St. Rose's separation from Carver Federal: (1)
breach of contract; (2) promissory estoppel, and (3) fraudulent
misrepresentation. St. Rose sought damages in an amount not less than $50,000
with respect to the breach of contract cause of action and sought undisclosed
damages with respect to the promissory estoppel claim. Carver Federal has
unasserted counterclaims against St. Rose for, among other claims, payment of
certain financial obligations to Carver Federal, which obligations remain
outstanding as of the date of this Form 10-Q. The parties have reached a
preliminary settlement, which is expected to be finalized by March 31, 2004. If
the parties do not reach a final settlement, Carver Federal intends to continue
to defend the St. Rose Action vigorously.

         Carver Federal is also a defendant in two actions brought by Ralph
Williams ("Williams Action I" and "Williams Action II") and an action brought by
Janice Pressley (the "Pressley Action") all of which arise out of events
concerning the Northeastern Conference Federal Credit Union ("Northeastern"), a
federal credit union that maintained accounts with Carver Federal and certain
other banks in the New York metropolitan area (the "Bank


                                       21
<PAGE>

Defendants"). Plaintiff Williams is a former member of the Board of Directors of
Northeastern and plaintiff Pressley is a former treasurer of Northeastern.
Plaintiffs allege that the National Credit Union Administration (the "NCUA")
acted improperly when it placed Northeastern into conservatorship and subsequent
liquidation. In or about July 1998, Williams commenced Williams Action I in the
United States District Court, District of Columbia, seeking to restrain the NCUA
from executing on the conservatorship order and an order directing the Bank
Defendants to "restore [their] accounts to their original status." The Bank
Defendants were not served with the pleadings in Williams Action I, and the
Court entered judgment against them on default. After the Bank Defendants
learned of this case, they made a motion in September 2001 to vacate the default
judgment. In January 2004, Williams Action I was dismissed without prejudice.

         On or about November 22, 2000, Williams filed Williams Action II in the
United States District Court, District of Columbia, against the NCUA and the
Bank Defendants seeking damages in the amount of $1 million plus certain
additional unspecified amounts for the allegedly "unauthorized" or "invalid"
actions of the NCUA Board of Directors in taking control of Northeastern as well
as damages for discrimination and civil rights violations. Plaintiff Pressley
filed the Pressley Action in the same court against the same defendants seeking
unspecified compensatory and punitive damages based on identical allegations as
Williams, except that she also alleged certain claims of employment
discrimination. The Bank Defendants filed a joint motion to dismiss Williams
Action II, which motion was granted by the District Court. Williams filed a
notice of appeal on August 24, 2003. The Bank Defendants collectively filed a
motion for summary affirmance of the District Court's decision on October 9,
2003, which is opposed by Williams. The court has not yet ruled on the motion.

         The Bank Defendants also made a joint motion to dismiss the Pressley
Action. After grant of the motion and appeal by Pressley, the Court of Appeals
dismissed the appeal in August 2003 and, in October 2003 with the consent of
Pressley's counsel, the District Court ordered the dismissal of Pressley's case
against the Bank Defendants, resolving the Pressley Action in its entirety.

         In or about November 2001, Monique Barrow filed an action against
Carver Federal in the United States District Court for the Southern District of
New York alleging that Carver Federal's termination of her employment
constituted a violation of the federal Family and Medical Leave Act and each of
the New York State and City Human Rights Laws. Ms. Barrow sought back pay, front
pay and benefits with interest in an amount not less than $5 million, and
punitive, liquidated and other compensatory damages in an amount not less than
$10 million. On August 5, 2003, Carver Federal filed a motion for summary
judgment to dismiss the complaint in its entirety. During the third quarter,
Carver Federal and Ms. Barrow reached a settlement of this matter, which
settlement did not have a material impact on our financial condition or results
of operations.

         In or about January 2004, Michael Lee & Company ("Michael Lee") filed
an action against Carver Federal in New York County Supreme Court, asserting a
single claim for contribution against Carver Federal. The complaint alleges that
Carver Federal should be liable to Michael Lee in the event that Michael Lee is
found liable to non-parties Hale House Center, Inc. and its affiliated
corporations ("Hale House plaintiffs") in a separate action that the Hale House
plaintiffs have filed against Michael Lee. The Hale House plaintiffs have
asserted claims of professional malpractice and breach of contract against
Michael Lee for providing deficient accounting services to Hale House. The basis
of Michael Lee's contribution claim against Carver Federal is that Carver
Federal allegedly breached a legal duty it owed Hale House by improperly opening
and maintaining a checking account on behalf of one of the Hale House
affiliates. Michael Lee seeks contribution from Carver Federal in the amount of
at least $8.5 million or the amount of any money judgment entered against
Michael Lee in favor of the Hale House plaintiffs. On February 4, 2004 Carver
Federal filed a motion to dismiss the complaint in its entirety and, on February
11, 2004, Michael Lee served a cross-motion for summary judgment against Carver
Federal. Both motions are pending. In the event this case is not dismissed with
prejudice, Carver intends to defend it vigorously.

ITEM 2.           CHANGES IN SECURITIES AND USE OF PROCEEDS

         Not applicable.

ITEM 3.           DEFAULTS UPON SENIOR SECURITIES

         Not applicable.

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

         Not applicable.

ITEM 5.           OTHER INFORMATION

         Not applicable.

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K

(a) The following exhibits are submitted with this report:


                                       22
<PAGE>

                  Exhibit 11.       Computation of Net Income Per Share.

                  Exhibit 31.1      Certification of Chief Executive Officer.

                  Exhibit 31.2      Certification of Chief Financial Officer.

                  Exhibit 32.1(*)   Written Statement of Chief Executive Officer
                                    furnished pursuant to Section 906 of the
                                    Sarbanes-Oxley Act of 2002, 18 U.S.C.
                                    Section 1350.

                  Exhibit 32.2(*)   Written Statement of Chief Financial Officer
                                    furnished pursuant to Section 906 of the
                                    Sarbanes-Oxley Act of 2002, 18 U.S.C.
                                    Section 1350.

     * Pursuant to SEC rules, this exhibit will not be deemed filed for purposes
     of Section 18 of the Exchange Act or be otherwise subject to the liability
     of that section.

(b) Current Reports on Form 8-K.

We furnished the following Current Reports on Form 8-K during the quarter ended
December 31, 2003:

         1.       Current report on Form 8-K, dated October 24, 2003, which
                  includes information being filed pursuant to Item 12 but was
                  filed under Item 9, an announcement of our financial results
                  for the second quarter ended September 30, 2003.




                                       23
<PAGE>



                                   SIGNATURES


         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                          CARVER BANCORP, INC.


Date: February 13, 2004                   /s/ Deborah C. Wright
                                          -------------------------------------
                                          Deborah C. Wright
                                          President and Chief Executive Officer





Date: February 13, 2004                   /s/ William C. Gray
                                          -------------------------------------
                                          William C. Gray
                                          Senior Vice President and
                                          Chief Financial Officer





                                       24