##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 1-13007
 CARVER BANCORP, INC.
 (Exact name of registrant as specified in its charter)
 Delaware
(State or Other Jurisdiction of Incorporation or Organization)
    
    13-3904174
(I.R.S. Employer Identification No.)75 West 125th Street, New York, New York
(Address of Principal Executive Offices)
    
    10027
(Zip Code)
 Registrants telephone number, including area code: (718) 230-2900
  þ o
  o o
  o Large accelerated filer
o Accelerated filer
o Non-accelerated filer (Do not check if a smaller reporting company)
þ Smaller reporting company o þ
  Common Stock, par value $0.01
    
    2,474,719Class
    
    Outstanding at November 13, 2009




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##### 



TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsConsolidated Statements of Financial Condition as of September 30, 2009 (unaudited) and March 31, 2009
    
    
    2Consolidated Statements of Income for the Three and Six Months Ended September 30, 2009 and 2008 (unaudited)
    
    
    3Consolidated Statement of Changes in Stockholders Equity and Comprehensive Income for the Six Months Ended September 30, 2009 (unaudited)
    
    
    4Consolidated Statements of Cash Flows for the Six Months Ended September 30, 2009 and 2008 (unaudited)
    
    
    5Notes to Consolidated Financial Statements (unaudited)
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    18Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    35Item 4.
    
    Controls and Procedures
    
    
    35PART II. OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    36Item 1A.
    
    Risk Factors
    
    
    36Item 2.
    
    Issuer Purchases of Equity Securities
    
    
    37Item 3.
    
    Defaults Upon Senior Securities
    
    
    37Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    37Item 5.
    
    Other Information
    
    
    37Item 6.
    
    Exhibits
    
    
    37SIGNATURES
    
    
    38EXHIBITS
    
    
    39Exhibit 11.Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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##### Table of Contents



CARVER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED
STATEMENTS OF FINANCIAL CONDITION
 September 30,
    
    
    March 31,2009
    
    
    2009(unaudited)ASSETSCash and cash equivalents:Cash and due from banks
    
    $
    13,574
    
    
    $
    8,251Money market investments
    
    
    852
    
    
    
    5,090Total cash and cash equivalents
    
    
    14,426
    
    
    
    13,341Investment securities:Available-for-sale, at fair value
    
    
    52,120
    
    
    
    59,973Held-to-maturity, at amortized cost (fair value of $13,012 and
$14,528 at September 30, 2009 and March 31, 2009, respectively)
    
    
    12,803
    
    
    
    14,808Total securities
    
    
    64,923
    
    
    
    74,781Loans held-for-sale
    
    
    19,557
    
    
    
    21,105Loans receivable:Real estate mortgage loans
    
    
    594,917
    
    
    
    581,987Commercial business loans
    
    
    70,162
    
    
    
    57,398Consumer loans
    
    
    1,507
    
    
    
    1,674Loans, net of unearned income
    
    
    666,586
    
    
    
    641,059Allowance for loan losses
    
    
    (8,123
    )
    
    
    (7,049
    )Total loans receivable, net
    
    
    658,463
    
    
    
    634,010Premises and equipment, net
    
    
    14,449
    
    
    
    15,237Federal Home Loan Bank of New York stock, at cost
    
    
    4,670
    
    
    
    4,174Bank owned life insurance
    
    
    9,645
    
    
    
    9,481Accrued interest receivable
    
    
    3,505
    
    
    
    3,697Core deposit intangibles, net
    
    
    304
    
    
    
    380Other assets
    
    
    18,707
    
    
    
    15,222Total assets
    
    $
    808,649
    
    
    $
    791,428LIABILITIES AND STOCKHOLDERS EQUITYLIABILITIES:Deposits:Savings
    
    $
    116,229
    
    
    $
    117,438Non-Interest Bearing Checking
    
    
    55,038
    
    
    
    56,505NOW
    
    
    49,274
    
    
    
    48,371Money Market
    
    
    45,967
    
    
    
    43,190Certificates of Deposit
    
    
    338,173
    
    
    
    337,912Total Deposits
    
    
    604,681
    
    
    
    603,416Advances from the FHLB-New York and other borrowed money
    
    
    130,003
    
    
    
    115,017Other liabilities
    
    
    8,618
    
    
    
    8,657Total liabilities
    
    
    743,302
    
    
    
    727,090Stockholders equity:Preferred stock (TARP) (par value $0.01 per share, 2,000,000 shares
authorized; 18,980 shares,
with a liquidation preference of $1,000.00 per share, issued and outstanding
as of September 30, 2009 and March 31, 2009)
    
    
    18,980
    
    
    
    18,980Common stock (par value $0.01 per share: 10,000,000 shares authorized;
2,524,691 shares issued;
2,474,719 and 2,475,037 shares outstanding at September 30, 2009 and March
31, 2009, respectively
    
    
    25
    
    
    
    25Additional paid-in capital
    
    
    24,226
    
    
    
    24,214Retained earnings
    
    
    22,430
    
    
    
    21,898Treasury stock, at cost (49,972 and 49,654 shares at September 30, 2009
and March 31, 2009, respectively)
    
    
    (697
    )
    
    
    (760
    )Accumulated other comprehensive income (loss)
    
    
    383
    
    
    
    (19
    )Total stockholders equity
    
    
    65,347
    
    
    
    64,338Total liabilities and stockholders equity
    
    $
    808,649
    
    
    $
    791,428
   2




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CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
 Three Months Ended
    
    
    Six Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Interest Income:Loans
    
    $
    9,688
    
    
    $
    9,840
    
    
    $
    18,788
    
    
    $
    20,293Mortgage-backed securities
    
    
    688
    
    
    
    603
    
    
    
    1,431
    
    
    
    1,165Investment securities
    
    
    126
    
    
    
    98
    
    
    
    186
    
    
    
    170Money market investments
    
    
    5
    
    
    
    2
    
    
    
    15
    
    
    
    40Total interest income
    
    
    10,507
    
    
    
    10,543
    
    
    
    20,420
    
    
    
    21,668Interest expense:Deposits
    
    
    1,777
    
    
    
    3,361
    
    
    
    3,815
    
    
    
    7,500Advances and other borrowed money
    
    
    951
    
    
    
    981
    
    
    
    1,936
    
    
    
    1,709Total interest expense
    
    
    2,728
    
    
    
    4,342
    
    
    
    5,751
    
    
    
    9,209Net interest income
    
    
    7,779
    
    
    
    6,201
    
    
    
    14,669
    
    
    
    12,459Provision for loan losses
    
    
    1,315
    
    
    
    170
    
    
    
    2,003
    
    
    
    339Net interest income after
provision for loan losses
    
    
    6,464
    
    
    
    6,031
    
    
    
    12,666
    
    
    
    12,120Non-interest income:Depository fees and charges
    
    
    782
    
    
    
    713
    
    
    
    1,499
    
    
    
    1,381Loan fees and service charges
    
    
    339
    
    
    
    389
    
    
    
    567
    
    
    
    806Loss on sale of real estate owned
    
    
    
    
    
    
    
    
    
    
    (34
    )
    
    
    Other
    
    
    32
    
    
    
    469
    
    
    
    274
    
    
    
    1,132Total non-interest income
    
    
    1,153
    
    
    
    1,571
    
    
    
    2,306
    
    
    
    3,319Non-interest expense:Employee compensation and benefits
    
    
    3,194
    
    
    
    3,616
    
    
    
    6,313
    
    
    
    7,030Net occupancy expense
    
    
    1,155
    
    
    
    903
    
    
    
    2,142
    
    
    
    1,919Equipment, net
    
    
    416
    
    
    
    694
    
    
    
    1,000
    
    
    
    1,309Consulting fees
    
    
    162
    
    
    
    265
    
    
    
    369
    
    
    
    430Federal deposit insurance premiums
    
    
    255
    
    
    
    125
    
    
    
    1,048
    
    
    
    156Other
    
    
    1,756
    
    
    
    1,702
    
    
    
    3,123
    
    
    
    3,796Total non-interest expense
    
    
    6,938
    
    
    
    7,305
    
    
    
    13,995
    
    
    
    14,640Income before income taxes and
minority interest
    
    
    679
    
    
    
    297
    
    
    
    977
    
    
    
    799Income tax benefit
    
    
    (140
    )
    
    
    (422
    )
    
    
    (536
    )
    
    
    (745
    )Minority interest, net of taxes
    
    
    
    
    
    
    98
    
    
    
    
    
    
    
    237Net income
    
    $
    819
    
    
    $
    621
    
    
    $
    1,513
    
    
    $
    1,307Earnings per common share:Basic
    
    $
    0.23
    
    
    $
    0.25
    
    
    $
    0.42
    
    
    $
    0.53Diluted
    
    $
    0.23
    
    
    $
    0.25
    
    
    $
    0.41
    
    
    $
    0.52
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CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME (LOSS)
For the Six months ended September 30, 2009
(In thousands)
(Unaudited)
 AccumulatedPreferred
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    TotalStock
    
    
    Common
    
    
    Paid-In
    
    
    Treasury
    
    
    Retained
    
    
    Comprehensive
    
    
    Stockholders(TARP)
    
    
    Stock
    
    
    Capital
    
    
    Stock
    
    
    Earnings
    
    

Income
(Loss)
    
    
    EquityBalance March 31, 2009
    
    $
    18,980
    
    
    $
    25
    
    
    $
    24,214
    
    
    $
    (760
    )
    
    $
    21,898
    
    
    $
    (19
    )
    
    $
    64,338Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,513
    
    
    
    
    
    
    
    1,513Change in net unrealized loss on
available-
for-sale securities, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    402
    
    
    
    402Comprehensive income (loss),
net of taxes :
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,513
    
    
    
    402
    
    
    
    1,915Common Dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (494
    )
    
    
    
    
    
    
    (494
    )TARP Preferred Dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (474
    )
    
    
    
    
    
    
    (474
    )Treasury stock activity
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    63
    
    
    
    
    
    
    
    
    
    
    
    68Stock based compensation
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    (12
    )
    
    
    
    
    
    
    (5
    )Balance September 30, 2009
    
    $
    18,980
    
    
    $
    25
    
    
    $
    24,226
    
    
    $
    (697
    )
    
    $
    22,430
    
    
    $
    3 83
    
    
    $
    65,347
   4




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CARVER BANCORP, INC, AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six Months Ended September 30,2009
    
    
    2008OPERATING ACTIVITIESNet income
    
    $
    1,513
    
    
    $
    1,307Adjustments to reconcile net income to net cash from operating activities:Provision for loan losses
    
    
    2,003
    
    
    
    339Provision for REO losses
    
    
    
    
    
    
    28Stock based compensation expense
    
    
    5
    
    
    
    (9
    )Depreciation and amortization expense
    
    
    943
    
    
    
    939Amortization of premiums and discounts
    
    
    295
    
    
    
    102Loss from sale of real estate owned
    
    
    34
    
    
    
    Gain on sale of loans
    
    
    (4
    )
    
    
    (246
    )Originations of loans held-for-sale
    
    
    (647
    )
    
    
    (9,097
    )Proceeds from sale of loans held-for-sale
    
    
    818
    
    
    
    9,889Changes in assets and liabilities:Decrease in accrued interest receivable
    
    
    192
    
    
    
    271Decrease in loan premiums and discounts and deferred charges
    
    
    294
    
    
    
    43Increase in premiums and discounts  securities
    
    
    
    
    
    
    66(Increase) decrease in other assets
    
    
    (5,682
    )
    
    
    5,981Increase (decrease) in other liabilities
    
    
    (39
    )
    
    
    (2,154
    )Net cash (used in) provided by operating activities
    
    
    (275
    )
    
    
    7,459INVESTING AC TIVITIESPurchase of available-for-sale securites
    
    
    
    
    
    
    (12,446
    )Proceeds from principal payments, maturities and calls of securities:Available-for-sale
    
    
    7,607
    
    
    
    2,628Held-to-maturity
    
    
    1,968
    
    
    
    901Originations of loans held-for-investment
    
    
    (66,138
    )
    
    
    (70,248
    )Loans purchased from third parties
    
    
    (6,726
    )
    
    
    Principal collections on loans
    
    
    49,496
    
    
    
    66,887Purchase of FHLB-NY stock
    
    
    (496
    )
    
    
    (2,298
    )Additions to premises and equipment
    
    
    (155
    )
    
    
    (990
    )Proceeds from sale of real estate owned
    
    
    522
    
    
    
    949Net cash used in investing activities
    
    
    (13,922
    )
    
    
    (14,617
    )FINANCING ACTIVITIESNet increase (decrease) in deposits
    
    
    1,265
    
    
    
    (54,845
    )Net borrowing of FHLB advances and other borrowings
    
    
    14,986
    
    
    
    50,813Common stock repurchased
    
    
    
    
    
    
    (159
    )Dividends paid
    
    
    (969
    )
    
    
    (494
    )Net cash provided by (used in) financing activities
    
    
    15,282
    
    
    
    (4,685
    )Net increase (decrease) in cash and cash equivalents
    
    
    1,085
    
    
    
    (11,843
    )Cash and cash equivalents at beginning of period
    
    
    13,341
    
    
    
    27,368Cash and cash equivalents at end of period
    
    $
    14,426
    
    
    $
    15,525Supplemental information:Noncash Transfers-Change in unrealized loss on valuation of available-for-sale investments, net
    
    $
    402
    
    
    $
    (201
    )Cash paid for-Interest
    
    $
    8,214
    
    
    $
    9,482Income taxes
    
    $
    88
    
    
    $
    80
   5




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CARVER
BANCORP, INC AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
 1. Organization
 Nature
of operations
     2. Basis of Presentation
   6




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TM
  Immaterial
Corrections
   Reclassifications
  3. Earnings per Share
   7




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4. Accounting for Stock Based Compensation
  5. Benefit Plans
 Employee Pension Plan
   6. Common Stock Dividend
  7. Investment Securities
   8




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Amortized
    
    
    Gross Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair-ValueAvailable-for-Sale:Mortgage-backed securities:Government National Mortgage Association
    
    $
    33,740
    
    
    $
    200
    
    
    $
    (91
    )
    
    $
    33,849Federal Home Loan Mortgage Corporation
    
    
    5,121
    
    
    
    214
    
    
    
    (1
    )
    
    
    5,334Federal National Mortgage Association
    
    
    11,899
    
    
    
    568
    
    
    
    (3
    )
    
    
    12,464Other
    
    
    513
    
    
    
    7
    
    
    
    (47
    )
    
    
    473Total mortgage-backed securities
    
    
    51,273
    
    
    
    989
    
    
    
    (142
    )
    
    
    52,120U.S. Government Agency Securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total available-for-sale
    
    $
    51,273
    
    
    $
    989
    
    
    $
    (142
    )
    
    $
    52,120
 Amortized
    
    
    Gross Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair-ValueHeld-to-Maturity:Mortgage-backed securities:Government National Mortgage Association
    
    $
    449
    
    
    $
    35
    
    
    $
    
    
    
    $
    484Federal Home Loan Mortgage Corporation
    
    
    9,070
    
    
    
    38
    
    
    
    (21
    )
    
    
    9,087Federal National Mortgage Association
    
    
    3,135
    
    
    
    160
    
    
    
    (0
    )
    
    
    3,295Total mortgage-backed securities
    
    
    12,654
    
    
    
    233
    
    
    
    (21
    )
    
    
    12,866Other
    
    
    149
    
    
    
    
    
    
    
    (3
    )
    
    
    146Total held-to-maturity
    
    
    12,803
    
    
    
    233
    
    
    
    (24
    )
    
    
    13,012Total securities
    
    $
    64,076
    
    
    $
    1,222
    
    
    $
    (166
    )
    
    $
    65,132
  9




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Amortized
    
    
    Gross Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair-ValueAvailable-for-Sale:Mortgage-backed securities:Government National Mortgage Association
    
    $
    39,252
    
    
    $
    26
    
    
    $
    (486
    )
    
    $
    38,792Federal Home Loan Mortgage Corporation
    
    
    5,847
    
    
    
    185
    
    
    
    (2
    )
    
    
    6,030Federal National Mortgage Association
    
    
    13,872
    
    
    
    493
    
    
    
    (8
    )
    
    
    14,357Other
    
    
    571
    
    
    
    
    
    
    
    (37
    )
    
    
    534Total mortgage-backed securities
    
    
    59,542
    
    
    
    704
    
    
    
    (533
    )
    
    
    59,713U.S. Government Agency Securities
    
    
    254
    
    
    
    6
    
    
    
    
    
    
    
    260Total available-for-sale
    
    $
    59,796
    
    
    $
    710
    
    
    $
    (533
    )
    
    $
    59,973
 Amortized
    
    
    Gross Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair-ValueHeld-to-Maturity:Mortgage-backed securities:Government National Mortgage Association
    
    $
    488
    
    
    $
    27
    
    
    $
    
    
    
    $
    515Federal Home Loan Mortgage Corporation
    
    
    10,292
    
    
    
    17
    
    
    
    (153
    )
    
    
    10,156Federal National Mortgage Association
    
    
    3,870
    
    
    
    80
    
    
    
    (248
    )
    
    
    3,702Total mortgage-backed securities
    
    
    14,650
    
    
    
    124
    
    
    
    (401
    )
    
    
    14,373Other
    
    
    158
    
    
    
    
    
    
    
    (3
    )
    
    
    155Total held-to-maturity
    
    
    14,808
    
    
    
    124
    
    
    
    (404
    )
    
    
    14,528Total securities
    
    $
    74,604
    
    
    $
    834
    
    
    $
    (937
    )
    
    $
    74,501
  Less than 12 months
    
    
    12 months or longer
    
    
    TotalUnrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    FairLosses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    ValueAvailable -for-Sale :Mortgage-backed securities
    
    $
    (68
    )
    
    $
    10,868
    
    
    $
    (74
    )
    
    $
    1,297
    
    
    $
    (142
    )
    
    $
    12,165Total available-for-sale
    
    $
    (68
    )
    
    $
    10,868
    
    
    $
    (74
    )
    
    $
    1,297
    
    
    $
    (142
    )
    
    $
    12,165Held-to-Maturity:Mortgage-backed securities
    
    $
    
    
    
    $
    
    
    
    $
    (21
    )
    
    $
    7,304
    
    
    $
    (21
    )
    
    $
    7,304Other
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    146
    
    
    
    (3
    )
    
    
    146Total held-to-maturity
    
    
    
    
    
    
    
    
    
    
    (24
    )
    
    
    7,450
    
    
    
    (24
    )
    
    
    7,450Total securities
    
    $
    (68
    )
    
    $
    10,868
    
    
    $
    (98
    )
    
    $
    8,747
    
    
    $
    (166
    )
    
    $
    19,615
   10




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##### Table of Contents



Less than 12 months
    
    
    12 months or longer
    
    
    TotalUnrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    FairLosses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    ValueAvailable -for-Sale :Mortgage-backed securities
    
    $
    (441
    )
    
    $
    30,008
    
    
    $
    (92
    )
    
    $
    2,938
    
    
    $
    (533
    )
    
    $
    32,946Total available-for-sale
    
    $
    (441
    )
    
    $
    30,008
    
    
    $
    (92
    )
    
    $
    2,938
    
    
    $
    (533
    )
    
    $
    32,946Held-to-Maturity:Mortgage-backed securities
    
    $
    (246
    )
    
    $
    2,119
    
    
    $
    (155
    )
    
    $
    8,682
    
    
    $
    (401
    )
    
    $
    10,801Other
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    155
    
    
    
    (3
    )
    
    
    155Total held-to-maturity
    
    
    (246
    )
    
    
    2,119
    
    
    
    (158
    )
    
    
    8,837
    
    
    
    (404
    )
    
    
    10,956Total securities
    
    $
    (687
    )
    
    $
    32,127
    
    
    $
    (250
    )
    
    $
    11,775
    
    
    $
    (937
    )
    
    $
    43,902
 8. Fair Value Measurements
   
    
    Level 1 Inputs to the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active markets.
    
    Level 2 Inputs to the valuation methodology include quoted prices for similar
assets and liabilities in active markets, and inputs that are observable for the asset
or liability, either directly or indirectly, for substantially the full term of the
financial instrument.
    
    Level 3 Inputs to the valuation methodology are unobservable and significant to the
fair value measurement.
   Fair Value Measurements at September 30, 2009, UsingQuoted Prices in Active
    
    
    Significant Other
    
    
    SignificantMarkets for Identical
    
    
    Observable Inputs
    
    
    Unobservable
    
    
    Total Fair(in thousands)
    
    Assets (Level 1)
    
    
    (Level 2)
    
    
    Inputs (Level 3)
    
    
    ValueMortgage servicing rights
    
    $
    
    
    
    $
    
    
    
    $
    633
    
    
    $
    633Securities available for sale
    
    $
    
    
    
    $
    52,075
    
    
    $
    45
    
    
    $
    52,120
 11




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##### Table of Contents



Fair Value Measurements at March 31, 2009, UsingQuoted Prices in Active
    
    
    Significant Other
    
    
    SignificantMarkets for Identical
    
    
    Observable Inputs
    
    
    Unobservable
    
    
    Total Fair(in thousands)
    
    Assets (Level 1)
    
    
    (Level 2)
    
    
    Inputs (Level 3)
    
    
    ValueMortgage servicing rights
    
    $
    
    
    
    $
    
    
    
    $
    452
    
    
    $
    452Securities available for sale
    
    $
    
    
    
    $
    59,928
    
    
    $
    45
    
    
    $
    59,973
         Mortgage
    
    
    SecuritiesServicing
    
    
    Available for(in thousands)
    
    Rights
    
    
    SaleBeginning balance, April 1, 2009
    
    $
    451
    
    
    $
    45Additions
    
    
    137
    
    
    
    Total unrealized gain
    
    
    45
    
    
    
    Ending balance, September 30, 2009
    
    $
    633
    
    
    $
    45
 9. Fair Value of Financial Instruments
   12




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##### Table of Contents



September 30, 2009
    
    
    March 31, 2009Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    EstimatedAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair ValueFinancial Assets:Cash and cash equivalents
    
    $
    14,426
    
    
    $
    14,426
    
    
    $
    13,341
    
    
    $
    13,341Investment securities available-for-sale
    
    
    
    
    
    
    
    
    
    
    260
    
    
    
    260Mortgage backed securities available-for-sale
    
    
    52,120
    
    
    
    52,120
    
    
    
    59,713
    
    
    
    59,713Mortgage backed securities held-to-maturity
    
    
    12,803
    
    
    
    13,012
    
    
    
    14,808
    
    
    
    14,528Loans receivable
    
    
    658,463
    
    
    
    660,611
    
    
    
    634,010
    
    
    
    649,219Loans held-for-sale
    
    
    19,557
    
    
    
    19,557
    
    
    
    21,105
    
    
    
    22,467Accrued interest receivable
    
    
    3,505
    
    
    
    3,505
    
    
    
    3,697
    
    
    
    3,697Mortgage servicing rights
    
    
    633
    
    
    
    633
    
    
    
    452
    
    
    
    452Financial Liabilities:Deposits
    
    $
    604,681
    
    
    $
    579,246
    
    
    $
    603,416
    
    
    $
    610,455Advances from FHLB of New York
    
    
    81,600
    
    
    
    84,387
    
    
    
    71,614
    
    
    
    71,592Other borrowed money
    
    
    48,403
    
    
    
    43,403
    
    
    
    43,403
    
    
    
    46,179
 Cash and cash equivalents and accrued interest receivable
  Securities
  Loans receivable and loan held-for-sale
  Mortgage servicing rights
   13




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Deposits
  Borrowings
  Limitations
    10. Variable Interest Entities
     14




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##### Table of Contents



11. Impact of Accounting Standards and Interpretations
        15




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##### Table of Contents



12. Regulatory Capital
  GAAP
    
    
    Tangible
    
    
    Leverage
    
    
    Risk-BasedCapital
    
    
    Equity
    
    
    Capital
    
    
    CapitalStockholders Equity at September 30, 2009(1)
    
    $
    78,093
    
    
    $
    78,093
    
    
    $
    78,093
    
    
    $
    78,093Add:General valuation allowances
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,123Other
    
    
    
    
    
    
    218
    
    
    
    218
    
    
    
    218Deduct:Disallowed deferred tax assets
    
    
    
    
    
    
    9,051
    
    
    
    9,051
    
    
    
    9,051Unrealized gains on securities available-for-sale, net
    
    
    
    
    
    
    601
    
    
    
    601
    
    
    
    601Goodwill and qualifying intangible assets, net
    
    
    
    
    
    
    304
    
    
    
    304
    
    
    
    304Regulatory Capital
    
    
    
    
    
    
    68,355
    
    
    
    68,355
    
    
    
    76,478Minimum Capital requirement
    
    
    
    
    
    
    11,988
    
    
    
    31,969
    
    
    
    53,425Regulatory Capital Excess
    
    
    
    
    
    $
    56,367
    
    
    $
    36,386
    
    
    $
    23,053Capital Ratios
    
    
    
    
    
    
    8.54
    %
    
    
    8.55
    %
    
    
    11.45
    %
  16




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##### Table of Contents



GAAP
    
    
    Tangible
    
    
    Leverage
    
    
    Risk-BasedCapital
    
    
    Equity
    
    
    Capital
    
    
    CapitalStockholders Equity at March 31, 2009
    
    $
    77,634
    
    
    $
    77,634
    
    
    $
    77,634
    
    
    $
    77,634Add:General valuation allowances
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,049Other
    
    
    
    
    
    
    218
    
    
    
    218
    
    
    
    218Deduct:Disallowed deferred tax assets
    
    
    
    
    
    
    9,426
    
    
    
    9,426
    
    
    
    9,426Unrealized gains on securities available-for-sale, net
    
    
    
    
    
    
    200
    
    
    
    200
    
    
    
    200Goodwill and qualifying intangible assets, net
    
    
    
    
    
    
    380
    
    
    
    380
    
    
    
    380Regulatory Capital
    
    
    
    
    
    
    67,846
    
    
    
    67,846
    
    
    
    74,895Minimum Capital requirement
    
    
    
    
    
    
    12,038
    
    
    
    32,103
    
    
    
    52,023Regulatory Capital Excess
    
    
    
    
    
    $
    55,808
    
    
    $
    35,743
    
    
    $
    22,872Capital Ratios
    
    
    
    
    
    
    8.44
    %
    
    
    8.45
    %
    
    
    11.52
    %
 13. Subsequent Events
   17




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##### Table of Contents



ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-Looking Statements
  
    
    the Companys success in implementing its new business initiatives, including expanding
its product line, adding new branches and ATM centers and successfully building its brand
image;
    
    increases in competitive pressure among financial institutions or non-financial institutions;
    
    legislative or regulatory changes which may adversely affect the Companys business;
    
    technological changes which may be more difficult to implement or expensive than anticipated;
    
    changes in interest rates which may reduce net interest margin and net interest income;
    
    changes in deposit flows, loan demand, real estate values, borrowing facilities,
capital markets and investment opportunities which may adversely affect the business;
    
    changes in existing loan portfolio composition and credit quality, and changes in loan loss requirements;
    
    changes in accounting principles, policies or guidelines which may cause conditions to be perceived differently;
    
    litigation or other matters before regulatory agencies, whether currently existing or
commencing in the future, which may delay the occurrence or non-occurrence of events
longer than anticipated;
    
    the ability to originate and purchase loans with attractive terms and acceptable credit quality;
    
    the ability to attract and retain key members of management;
    
    the ability to realize cost efficiencies; and
    
    general economic conditions, either nationally or locally in some or all areas in which
business is conducted, or conditions in the real estate or securities markets or the
banking industry which could affect liquidity in the capital markets, the volume of loan
origination, deposit flows, real estate values, the levels of non-interest income and the
amount of loan losses.
  Overview
    18




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19




---



##### Table of Contents



New Markets Tax Credit Award
    Critical Accounting Policies
  Allowance for Loan Losses
    
    
    Establishment of loan loss allowance amounts for all specifically
identified criticized and classified loans that have been designated as requiring
attention by managements internal loan review process, bank regulatory
examinations or the Banks external auditors.
    
    An average loss factor, giving effect to historical loss experience
over several years and other qualitative
factors, is applied to all loans not subject to specific review.
  20




---



##### Table of Contents




    
    Evaluation of any changes in risk profile brought about by business
combinations, customer knowledge, the results of ongoing credit quality
monitoring processes and the cyclical nature of economic and business conditions.
An important consideration in performing this evaluation is the concentration of
real estate related loans located in the New York City metropolitan
area.
   
    
    Amount and trend of criticized loans;
    
    Actual losses;
    
    Peer comparisons with other financial institutions; and
    
    Economic data associated with the real estate market in the
Companys lending market areas.
  Securities Impairment
   21




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##### Table of Contents



Deferred Income Taxes
   Stock Repurchase Program
  Liquidity and Capital Resources
         22




---



##### Table of Contents



GAAP
    
    
    Tangible
    
    
    Leverage
    
    
    Risk-BasedCapital
    
    
    Equity
    
    
    Capital
    
    
    CapitalStockholders Equity at September 30, 2009(1)
    
    $
    78,093
    
    
    $
    78,093
    
    
    $
    78,093
    
    
    $
    78,093Add:General valuation allowances
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,123Other
    
    
    
    
    
    
    218
    
    
    
    218
    
    
    
    218Deduct:Disallowed deferred tax assets
    
    
    
    
    
    
    9,051
    
    
    
    9,051
    
    
    
    9,051Unrealized gains on securities available-for-sale, net
    
    
    
    
    
    
    601
    
    
    
    601
    
    
    
    601Goodwill and qualifying intangible assets, net
    
    
    
    
    
    
    304
    
    
    
    304
    
    
    
    304Regulatory Capital
    
    
    
    
    
    
    68,355
    
    
    
    68,355
    
    
    
    76,478Minimum Capital requirement
    
    
    
    
    
    
    11,988
    
    
    
    31,969
    
    
    
    53,425Regulatory Capital Excess
    
    
    
    
    
    $
    56,367
    
    
    $
    36,386
    
    
    $
    23,053Capital Ratios
    
    
    
    
    
    
    8.54
    %
    
    
    8.55
    %
    
    
    11.45
    %
  GAAP
    
    
    Tangible
    
    
    Leverage
    
    
    Risk-BasedCapital
    
    
    Equity
    
    
    Capital
    
    
    CapitalStockholders Equity at March 31, 2009
    
    $
    77,634
    
    
    $
    77,634
    
    
    $
    77,634
    
    
    $
    77,634Add:General valuation allowances
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,049Other
    
    
    
    
    
    
    218
    
    
    
    218
    
    
    
    218Deduct:Disallowed deferred tax assets
    
    
    
    
    
    
    9,426
    
    
    
    9,426
    
    
    
    9,426Unrealized gains on securities available-for-sale, net
    
    
    
    
    
    
    200
    
    
    
    200
    
    
    
    200Goodwill and qualifying intangible assets, net
    
    
    
    
    
    
    380
    
    
    
    380
    
    
    
    380Regulatory Capital
    
    
    
    
    
    
    67,846
    
    
    
    67,846
    
    
    
    74,895Minimum Capital requirement
    
    
    
    
    
    
    12,038
    
    
    
    32,103
    
    
    
    52,023Regulatory Capital Excess
    
    
    
    
    
    $
    55,808
    
    
    $
    35,743
    
    
    $
    22,872Capital Ratios
    
    
    
    
    
    
    8.44
    %
    
    
    8.45
    %
    
    
    11.52
    %
  23




---



##### Table of Contents



Comparison of Financial Condition at September 30, 2009 and March 31, 2009
 Assets
        Liabilities and Stockholders Equity
     24




---



##### Table of Contents



Asset/Liability Management
   Off-Balance Sheet Arrangements and Contractual Obligations
   Commitments to fund construction mortgage loans
    
    $
    38,380Commitments to fund commercial and consumer loans
    
    
    6,150Lines of credit
    
    
    7,660Letters of credit
    
    
    4,154$
    56,344
  25




---



##### Table of Contents



Comparison of Operating Results for the Three and Six Months Ended September 30, 2009 and 2008
 Overview
   CARVER BANCORP, INC. AND SUBSIDIARIES
SELECTED KEY RATIOS
 Three Months Ended
    
    
    Six Months EndedSelected Financial Data:
    
    
    September 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Return on average assets (1)
    
    
    0.41
    %
    
    
    0.31
    %
    
    
    0.38
    %
    
    
    0.33
    %Return on average equity (2)
    
    
    5.02
    
    
    
    4.56
    
    
    
    4.74
    
    
    
    4.82Net interest margin (3)
    
    
    4.12
    
    
    
    3.48
    
    
    
    3.91
    
    
    
    3.50Interest rate spread (4)
    
    
    3.96
    
    
    
    3.29
    
    
    
    3.73
    
    
    
    3.29Efficiency ratio (5)
    
    
    77.67
    
    
    
    94.00
    
    
    
    82.44
    
    
    
    92.79Operating expenses to average assets (6)
    
    
    3.44
    
    
    
    3.69
    
    
    
    3.49
    
    
    
    3.71Average equity to average assets (7)
    
    
    8.09
    
    
    
    6.89
    
    
    
    7.96
    
    
    
    6.86Average interest-earning assets to
average interest-bearing liabilities
    
    
    1.12
    x
    
    
    1.08
    x
    
    
    1.12
    x
    
    
    1.09
    x
 (1)
    
    Net income, annualized,
divided by average total assets.(2)
    
    Net income, annualized,
divided by average total equity.(3)
    
    Net interest income,
annualized, divided by average interest-earning assets.(4)
    
    Combined weighted average interest rate earned less combined weighted average interest
rate cost.(5)
    
    Operating expenses divided
by sum of net interest income plus non-interest income.(6)
    
    Non-interest expenses less loss on real estate owned, annualized, divided by average
total assets.(7)
    
    Total average equity divided
by total average assets for the period.  26




---



##### Table of Contents



Analysis of Net Interest Income
      27




---



##### Table of Contents



CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCES
 For the Three Months Ended September 30,2009
    
    
    2008Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Yield/Cost
    
    
    Balance
    
    
    Interest
    
    
    Yield/CostInterest Earning Assets:Loans (1)
    
    $
    683,208
    
    
    $
    9,689
    
    
    
    5.67
    %
    
    $
    660,058
    
    
    $
    9,840
    
    
    
    5.96
    %Mortgage-backed securities
    
    
    66,689
    
    
    
    688
    
    
    
    4.12
    %
    
    
    46,013
    
    
    
    603
    
    
    
    5.24
    %Investment securities (2)
    
    
    5,008
    
    
    
    129
    
    
    
    10.21
    %
    
    
    6,190
    
    
    
    98
    
    
    
    6.28
    %Other investments and federal funds sold
    
    
    1,017
    
    
    
    2
    
    
    
    0.73
    %
    
    
    691
    
    
    
    2
    
    
    
    0.92
    %Total interest-earning assets
    
    
    755,922
    
    
    
    10,507
    
    
    
    5.56
    %
    
    
    712,952
    
    
    
    10,543
    
    
    
    5.91
    %Non-interest-earning assets
    
    
    50,920
    
    
    
    
    
    
    
    
    
    
    
    78,219Total assets
    
    $
    806,843
    
    
    
    
    
    
    
    
    
    
    $
    791,171Interest Bearing Liabilities:Deposits:Now demand
    
    $
    49,900
    
    
    
    19
    
    
    
    0.15
    %
    
    $
    23,326
    
    
    
    16
    
    
    
    0.27
    %Savings and clubs
    
    
    117,820
    
    
    
    65
    
    
    
    0.22
    %
    
    
    121,800
    
    
    
    163
    
    
    
    0.53
    %Money market
    
    
    46,697
    
    
    
    155
    
    
    
    1.32
    %
    
    
    44,732
    
    
    
    223
    
    
    
    1.98
    %Certificates of deposit
    
    
    332,723
    
    
    
    1,529
    
    
    
    1.82
    %
    
    
    368,883
    
    
    
    2,949
    
    
    
    3.17
    %Mortgagors deposits
    
    
    2,286
    
    
    
    9
    
    
    
    1.60
    %
    
    
    2,386
    
    
    
    10
    
    
    
    1.66
    %Total deposits
    
    
    549,426
    
    
    
    1,777
    
    
    
    1.28
    %
    
    
    561,127
    
    
    
    3,361
    
    
    
    2.38
    %Borrowed money
    
    
    125,114
    
    
    
    951
    
    
    
    3.01
    %
    
    
    97,248
    
    
    
    981
    
    
    
    4.00
    %Total interest-bearing liabilities
    
    
    674,540
    
    
    
    2,728
    
    
    
    1.60
    %
    
    
    658,375
    
    
    
    4,342
    
    
    
    2.62
    %Non-interest-bearing liabilities:Demand
    
    
    58,517
    
    
    
    
    
    
    
    
    
    
    
    52,777Other liabilities
    
    
    8,551
    
    
    
    
    
    
    
    
    
    
    
    6,339Total liabilities
    
    
    741,608
    
    
    
    
    
    
    
    
    
    
    
    717,491Minority Interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,150Stockholders equity
    
    
    65,235
    
    
    
    
    
    
    
    
    
    
    
    54,530Total liabilities & stockholders equity
    
    $
    806,843
    
    
    
    
    
    
    
    
    
    
    $
    791,171Net interest income
    
    
    
    
    
    $
    7,779
    
    
    
    
    
    
    
    
    
    
    $
    6,201Average interest rate spread
    
    
    
    
    
    
    
    
    
    
    3.96
    %
    
    
    
    
    
    
    
    
    
    
    3.29
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    4.12
    %
    
    
    
    
    
    
    
    
    
    
    3.48
    %
 (1)
    
    Includes non-accrual loans(2)
    
    Includes FHLB-NY stock  28




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##### Table of Contents



CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCES
 Six months ended September 30,2009
    
    
    2008Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Yield/Cost
    
    
    Balance
    
    
    Interest
    
    
    Yield/CostInterest Earning Assets:Loans (1)
    
    $
    675,263
    
    
    $
    18,789
    
    
    
    5.56
    %
    
    $
    657,295
    
    
    $
    20,293
    
    
    
    6.17
    %Mortgage-backed securities
    
    
    69,262
    
    
    
    1,431
    
    
    
    4.13
    %
    
    
    44,740
    
    
    
    1,165
    
    
    
    5.21
    %Investment securities (2)
    
    
    4,901
    
    
    
    194
    
    
    
    7.89
    %
    
    
    5,427
    
    
    
    170
    
    
    
    6.25
    %Other investments and federal
funds sold
    
    
    1,023
    
    
    
    7
    
    
    
    1.36
    %
    
    
    4,077
    
    
    
    40
    
    
    
    1.96
    %Total interest-earning assets
    
    
    750,449
    
    
    
    20,420
    
    
    
    5.44
    %
    
    
    711,539
    
    
    
    21,668
    
    
    
    6.09
    %Non-interest-earning assets
    
    
    50,986
    
    
    
    
    
    
    
    
    
    
    
    78,406Total assets
    
    $
    801,434
    
    
    
    
    
    
    
    
    
    
    $
    789,945Interest Bearing Liabilities:Deposits:Now demand
    
    $
    52,025
    
    
    
    41
    
    
    
    0.16
    %
    
    $
    23,776
    
    
    
    35
    
    
    
    0.29
    %Savings and clubs
    
    
    118,526
    
    
    
    131
    
    
    
    0.22
    %
    
    
    123,638
    
    
    
    330
    
    
    
    0.53
    %Money market
    
    
    45,194
    
    
    
    302
    
    
    
    1.33
    %
    
    
    45,477
    
    
    
    519
    
    
    
    2.28
    %Certificates of deposit
    
    
    329,187
    
    
    
    3,320
    
    
    
    2.01
    %
    
    
    379,885
    
    
    
    6,592
    
    
    
    3.46
    %Mortgagors deposits
    
    
    2,587
    
    
    
    21
    
    
    
    1.60
    %
    
    
    2,847
    
    
    
    24
    
    
    
    1.68
    %Total deposits
    
    
    547,519
    
    
    
    3,815
    
    
    
    1.39
    %
    
    
    575,623
    
    
    
    7,500
    
    
    
    2.60
    %Borrowed money
    
    
    122,708
    
    
    
    1,936
    
    
    
    3.15
    %
    
    
    79,853
    
    
    
    1,709
    
    
    
    4.27
    %Total interest-bearing
liabilities
    
    
    670,227
    
    
    
    5,751
    
    
    
    1.71
    %
    
    
    655,476
    
    
    
    9,209
    
    
    
    2.80
    %Non-interest-bearing liabilities:Demand
    
    
    59,237
    
    
    
    
    
    
    
    
    
    
    
    53,215Other liabilities
    
    
    8,184
    
    
    
    
    
    
    
    
    
    
    
    7,892Total liabilities
    
    
    737,648
    
    
    
    
    
    
    
    
    
    
    
    716,583Minority Interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,150Stockholders equity
    
    
    63,786
    
    
    
    
    
    
    
    
    
    
    
    54,212Total liabilities & stockholders
equity
    
    $
    801,434
    
    
    
    
    
    
    
    
    
    
    $
    789,945Net interest income
    
    
    
    
    
    $
    14,669
    
    
    
    
    
    
    
    
    
    
    $
    12,459Average interest rate spread
    
    
    
    
    
    
    
    
    
    
    3.73
    %
    
    
    
    
    
    
    
    
    
    
    3.29
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    3.91
    %
    
    
    
    
    
    
    
    
    
    
    3.50
    %
 (1)
    
    Includes non-accrual loans(2)
    
    Includes FHLB-NY stock  29




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##### Table of Contents



Interest Income
     Interest Expense
     30




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##### Table of Contents



Provision for Loan Losses and Asset Quality
    Six MonthsEndedSeptember 30,
    
    
    Fiscal Year-End2009
    
    
    March 31, 2009Beginning Balance
    
    $
    7,049
    
    
    $
    4,878Less charge-offs:Business
    
    
    (510
    )
    
    
    (501
    )Consumer and other
    
    
    (453
    )
    
    
    (83
    )Total Charge- Offs:
    
    
    (963
    )
    
    
    (584
    )Add Recoveries:Business
    
    
    4
    
    
    
    10Consumer and other
    
    
    30
    
    
    
    43Total Recoveries:
    
    
    34
    
    
    
    53Provision for Loan Losses
    
    
    2,003
    
    
    
    2,702Ending Balance
    
    $
    8,123
    
    
    $
    7,049Ratios:Net charge-offs to average loans outstanding
    
    
    0.14
    %
    
    
    0.08
    %Allowance to total loans
    
    
    1.22
    %
    
    
    1.06
    %Allowance to non-performing loans (1)
    
    
    29.22
    %
    
    
    27.40
    %
 (1)
    
    Non-performing loans consist of non-accrual loans and accruing loans 90 days or more
past due in settlement of loans.    31




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##### Table of Contents



Non-performing Assets.
     32




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##### Table of Contents



September
    
    
    June
    
    
    March
    
    
    December
    
    
    September2009
    
    
    2009
    
    
    2009
    
    
    2008
    
    
    2008Loans accounted for on a non-accrual basis (1):Gross loans receivable:One- to four-family
    
    $
    3,297
    
    
    $
    6,598
    
    
    $
    4,396
    
    
    $
    3,185
    
    
    $
    1,671Multifamily
    
    
    5,988
    
    
    
    3,978
    
    
    
    3,569
    
    
    
    
    
    
    
    Non-residential
    
    
    4,933
    
    
    
    7,963
    
    
    
    11,375
    
    
    
    6,550
    
    
    
    10,424Construction
    
    
    9,808
    
    
    
    3,750
    
    
    
    3,286
    
    
    
    
    
    
    
    3,157Business
    
    
    2,760
    
    
    
    2,801
    
    
    
    3,079
    
    
    
    3,907
    
    
    
    2,185Consumer
    
    
    31
    
    
    
    3
    
    
    
    22
    
    
    
    46
    
    
    
    20Total non-accrual loans
    
    
    26,817
    
    
    
    25,093
    
    
    
    25,727
    
    
    
    13,688
    
    
    
    17,457Accruing loans contractually past due > 90 days (2)
    
    
    987
    
    
    
    1,388
    
    
    
    894
    
    
    
    25
    
    
    
    9,349Total non-performing loans (non-accrual & accruing
loans past due > 90 days)
    
    
    27,804
    
    
    
    26,481
    
    
    
    26,621
    
    
    
    13,713
    
    
    
    26,806Other non-performing assets (3):Real estate owned
    
    
    67
    
    
    
    162
    
    
    
    465
    
    
    
    610
    
    
    
    635Total other non-performing assets
    
    
    67
    
    
    
    162
    
    
    
    465
    
    
    
    610
    
    
    
    635Total non-performing assets (4)
    
    $
    27,871
    
    
    $
    26,643
    
    
    $
    27,086
    
    
    $
    14,323
    
    
    $
    27,441Non-performing loans to total loans
    
    
    4.17
    %
    
    
    4.02
    %
    
    
    4.15
    %
    
    
    2.15
    %
    
    
    4.22
    %Non-performing assets to total assets
    
    
    3.45
    %
    
    
    3.29
    %
    
    
    3.42
    %
    
    
    1.81
    %
    
    
    3.47
    %
 (1)
    
    Non-accrual status denotes any loan where the delinquency exceeds 90 days past due and in the
opinion of management the collection of additional interest is doubtful. Payments received on a
non-accrual loan are either applied to the outstanding principal balance or recorded as interest
income, depending on assessment of the ability to collect on the loan(2)
    
    This category represent loans that are 90 days or more past maturity that are current with
respect to principal and interest payments.(3)
    
    Other non-performing assets generally represent property acquired by the Bank in settlement of
loans (i.e., through foreclosure, repossession or as an in-substance foreclosure). These assets
are recorded at the lower of their fair value or the cost to acquire.(4)
    
    Total non-performing assets consist of non-accrual loans, accruing loans 90 days or more past
due and property acquired in settlement of loans. Subprime Loans
  
    
    Low initial payments based on a fixed introductory rate that expires after a
short period and then adjusts to a variable index rate plus a margin for the
remaining term of the loan;
    
    Very high or no limits on how much the payment amount or the interest rate may
increase (payment or rate caps) on reset dates;
    
    Limited or no documentation of borrowers income;
    
    Product features likely to result in frequent refinancing to maintain an
affordable monthly payment; and/or
    
    Substantial prepayment penalties and/or prepayment penalties that extend
beyond the initial fixed interest rate period.
  33




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##### Table of Contents




    
    Two or more 30-day delinquencies in the last 12 months, or one or more 60-day
delinquencies in the last 24 months;
    
    Judgment, foreclosure, repossession, or charge-off in the prior 24 months;
    
    Bankruptcy in the last 5 years;
    
    Relatively high default probability as evidenced by, for example, a credit
bureau risk score (FICO) of 660 or below (depending on the product/collateral),
or other bureau or proprietary scores with an equivalent default probability
likelihood; and/or
    
    Debt service-to-income ratio of 50% or greater, or otherwise limited ability
to cover family living expenses after deducting total monthly debt-service
requirements from monthly income.
  Non-Interest Income
   Non-Interest Expense
  .
 Income Tax Benefit
   34




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##### Table of Contents



ITEM 3. Quantitative and Qualitative Disclosure about Market Risk
  
 ITEM 4. Controls and Procedures
       35




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1. Legal Proceedings
  
 ITEM 1A. Risk Factors
  Any future FDIC special assessments or increases in insurance premiums will adversely impact the
Companys earnings
   A legislative proposal has been introduced that would eliminate our primary federal regulator,
require the Bank to convert to a national bank or state bank, and require the Company to become
a bank holding company.
   36




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##### Table of Contents



ITEM 2. Issuer Purchases of Equity Securities
  
 ITEM 3. Defaults Upon Senior Securities
  
 ITEM 4. Submission of Matters to a Vote of Security Holders
  
 ITEM 5. Other Information
  
 ITEM 6. Exhibits
  Exhibit 11.
    
    Computation of Earnings Per Share.Exhibit 31.1
    
    Certification of Chief Executive Officer.Exhibit 31.2
    
    Certification of Chief Accounting Officer.Exhibit 32.1
    
    Certification of Chief Executive Officer furnished pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.Exhibit 32.2
    
    Certification of Chief Accounting Officer furnished pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
  37




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##### Table of Contents



SIGNATURES
  CARVER BANCORP, INC.Date: November 16, 2009
    /s/ Deborah C.  WrightDeborah C.  WrightChairman and Chief Executive Officer
(Principal Executive Officer)Date: November 16, 2009
    /s/ Chris A. McFaddenChris A. McFaddenExecutive Vice President & Chief Financial Officer
(Principal Accounting Officer)  38