<PAGE> 1
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 September 30, 1997.
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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 ninety days. Yes X No
<TABLE>
<CAPTION>
Class Outstanding at November 14, 1997
----- --------------------------------
<S> <C> <C>
Common Stock, par value $.01 2,314,275
</TABLE>
1
<PAGE> 2
CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Financial Condition as of
September 30, and March 31, 1997 (unaudited)........................ 3
Consolidated Statements of Income for the Six
Months Ended September 30, 1997 and 1996 (unaudited)................ 4
Consolidated Statements of Cash Flows for the Six Months
Ended September 30, 1997 and 1996 (unaudited)....................... 5
Notes to Consolidated Financial Statements (unaudited).............. 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................... 7
Item 3 Quantitative and Qualitative Disclosures
About Market Risk........................................... 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.................................................. 10
Item 2. Changes in Securities and Use of Proceeds.......................... 11
Item 3. Defaults upon Senior Securities.................................... 11
Item 4. Submission of Matters to a Vote of Security Holders................ 11
Item 5. Other Information.................................................. 11
Item 6. Exhibits and Reports on Form 8-K................................... 11
SIGNATURES
</TABLE>
2
<PAGE> 3
CARVER BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
<TABLE>
<CAPTION>
AS OF AS OF
SEPTEMBER 30, MARCH 31,
ASSETS 1997 1997
- ------ ---- ----
<S> <C> <C>
Cash and amounts due from depository institutions ........... $ 5,294,632 $ 4,230,757
Federal funds sold .......................................... 500,000 0
------------- -------------
Total cash and cash equivalents ......................... 5,794,632 4,230,757
Securities available for sale ............................... 35,548,998 83,892,617
Investment securities held to maturity, net
(estimated fair values of $8,578,000 and $1,673,000 at
September 30, 1997 and March 31, 1997) ................... 8,577,943 1,675,181
Mortgage-backed securities held to maturity, net
(estimated fair values of $100,310,000 and $107,719,000 at
September 30, 1997 and March 31, 1997) ................... 101,714,971 110,852,668
Loans receivable, net ....................................... 238,874,632 197,917,673
Real estate owned, net ...................................... 82,198 82,198
Property and equipment, net ................................. 11,586,725 11,342,678
Federal Home Loan Bank of New York stock, at cost ........... 5,387,500 5,535,000
Accrued interest receivable, net ............................ 3,019,972 2,978,365
Excess of cost over net assets acquired, net ................ 1,349,462 1,456,000
Other assets ................................................ 3,624,291 3,650,366
------------- -------------
Total assets ............................................ $ 415,561,325 $ 423,613,503
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits .................................................. $ 269,834,851 $ 266,471,487
Securities sold under agreement to repurchase ............. 71,035,000 74,335,000
Advances from Federal Home Loan Bank of New York .......... 35,400,000 45,400,000
Other borrowed money ...................................... 1,274,924 1,365,990
Advance payments by borrowers for taxes and insurance ..... 670,502 670,502
Other liabilities ......................................... 2,436,291 1,386,802
------------- -------------
Total liabilities ...................................... 380,651,568 389,629,781
------------- -------------
Stockholders' Equity:
Preferred stock, $0.01 par value per share;
1,000,000 shares authorized; none issued ................ -- --
Common stock, $0.01 par value per share; 5,000,000 shares
authorized; 2,314,275 shares issued and outstanding ..... 23,144 23,144
Additional paid-in capital ................................ 21,422,704 21,410,167
Retained earnings-substantially restricted ................ 14,998,902 14,359,060
Dividends declared and paid ............................... (115,714) 0
Common stock acquired by Employee Stock Ownership Plan .... (1,274,924) (1,365,990)
Unrealized (loss) net, on securities available for sale, .. (144,356) (442,659)
------------- -------------
Total stockholders' equity .............................. 34,909,757 33,983,722
------------- -------------
Total liabilities and stockholders' equity ........ $ 415,561,325 $ 423,613,503
============= =============
</TABLE>
3
<PAGE> 4
CARVER BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income:
Loans receivable ................................ $4,532,374 $ 1,823,247 $ 8,902,151 $ 3,540,116
Mortgage-backed securities ...................... 2,190,048 2,472,529 4,415,676 5,210,692
Debt and equity securities ...................... 401,074 1,149,935 535,666 2,319,554
Other interest-earning assets ................... 22,877 163,028 89,753 349,786
---------- ----------- ----------- ------------
Total interest income ........................ 7,146,372 5,608,739 13,943,247 11,420,148
---------- ----------- ----------- ------------
Interest expense:
Deposits ........................................ 2,171,630 2,108,632 4,294,289 4,181,932
Advances and other borrowed money ............... 1,655,906 1,023,995 3,353,483 2,082,921
---------- ----------- ----------- ------------
Total interest expense ........................ 3,827,536 3,132,627 7,647,773 6,264,853
---------- ----------- ----------- ------------
Net interest income ............................... 3,318,836 2,476,112 6,295,474 5,155,295
Provision for loan losses ......................... 170,837 32,779 338,193 84,641
---------- ----------- ----------- ------------
Net interest income after
provision for loan losses ....................... 3,147,999 2,443,333 5,957,280 5,070,654
---------- ----------- ----------- ------------
Non-interest income:
Loan fees and service charges ................... 28,970 62,910 66,186 101,329
Other ........................................... 323,781 219,060 602,927 508,708
---------- ----------- ----------- ------------
Total non-interest income ................... 352,752 281,970 669,113 610,037
---------- ----------- ----------- ------------
Non-interest expenses:
Salaries and employee benefits .................. 1,169,043 1,076,824 2,277,038 2,044,433
Net occupancy expenses .......................... 289,986 260,415 542,425 569,803
Equipment ....................................... 303,200 250,539 542,350 503,336
Loss on foreclosed real estate .................. 6,584 2,450 10,748 8,500
Advertising ..................................... 59,375 34,049 118,750 79,221
Federal insurance premium ....................... 41,503 146,009 41,503 290,658
Amortization of intangibles ..................... 53,268 53,268 106,536 106,536
Legal expenses .................................. 60,000 18,341 115,000 73,341
Bank charges .................................... 68,747 101,937 195,339 179,066
Security service ................................ 87,543 81,939 142,118 155,801
SAIF Capitalization ............................. 0 1,632,290 0 1,632,290
Other ........................................... 762,983 499,677 1,371,783 978,521
---------- ----------- ----------- ------------
Total non-interest expenses ................. 2,902,232 4,157,738 5,463,591 6,621,506
---------- ----------- ----------- ------------
Income (Loss) before income taxes ................. 598,516 (1,432,435) 1,162,802 (940,815)
Income taxes (Benefit) ............................ 269,100 (648,742) 523,261 (420,607)
---------- ----------- ----------- ------------
Net income (Loss) ................................ $ 329,416 $ (783,693) $ 639,541 $ (520,209)
========== =========== =========== ============
Net income (Loss) per common share ................ $ 0.15 $ (0.36) $ 0.29 $ (0.24)
========== =========== =========== ============
Weighted average number of common share outstanding 2,185,348 2,167,135 2,183,092 2,164,879
========== =========== =========== ============
</TABLE>
4
<PAGE> 5
CARVER BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30,
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income .............................................................. $ 639,541 $ (520,209)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization of premises and equipment ............... 280,694 310,661
Amortization of intangibles ........................................... 106,536 106,536
Other amortization and accretion, net ................................. 549,929 539,906
Provision for loan losses ............................................ 338,193 84,641
Deferred income taxes ................................................. (476,662) 0
Allocation of ESOP .................................................... 103,604 74,382
Changes in:
Accrued interest receivable, net ...................................... (41,607) 3,340
Refundable income taxes ............................................... 0 0
Other assets .......................................................... 26,075 1,967,314
Other liabilities ..................................................... 1,049,489 0
------------ ------------
Net cash provided by operating activities ........................... 2,575,792 3,524,924
------------ ------------
Cash flows from investing activities:
Purchase of securities available for sale ............................. (5,000,000) (8,500,000)
Principal repayments on securities available for sale ................. 2,771,597 3,214,458
Proceeds from sale of securities available for sale ................... 51,008,308 3,614,321
Gain from sale of securities available for sale ........................ 0 91,713
Purchase of investment securities held to maturity .................... (7,000,000) (50,000)
Proceeds from maturities and calls of investment
securities held to maturity ......................................... 97,238 174,099
Principal repayment on mortgage-backed securities
held to maturity .................................................... 8,977,335 10,884,181
Net change in loans receivable ........................................ 1,126,600 (8,674,772)
Purchase of mortgage loans ............................................ (42,472,741) 0
Proceeds from sale of real estate owned ............................... 0 252,292
Loss from sale of real estate owned ................................... 0 20,292
Additions to premises and equipment .................................. (525,052) (1,379,397)
Redemption of Federal Home Loan Bank stock ........................... 147,500 685,000
------------ ------------
Net cash (used in) provided by investing activities ................. 9,130,785 332,187
------------ ------------
Cash flows from financing activities:
Net increase (decrease) in deposits ................................... 3,363,364 5,939,295
Decrease in short term borrowings ...................................... (3,300,000) (41,000,000)
Repayment of advances from Federal Home Loan Bank
of New York ......................................................... (47,000,000) 0
Advances from Federal Home Loan Bank of New York ..................... 37,000,000 31,000,000
Repayment of other borrowed money .................................... (91,066) (91,066)
Net increase (decrease) in advance payments by borrowers
for taxes and insurance ............................................. 0 66,596
Cash dividends paid ................................................. (115,000) 0
------------ ------------
Net cash provided by (used in) financing activities .................. (10,142,702) (4,085,175)
------------ ------------
Net increase (decrease) in cash and cash equivalents .................... 1,563,875 (228,064)
Cash and cash equivalents -- beginning .................................. 4,230,757 10,025,950
------------ ------------
Cash and cash equivalents -- ending ..................................... $ 5,794,632 $ 9,797,886
============ ============
Supplemental disclosure of non-cash activities: Unrealized Gain (loss) on
securities available for sale:
Unrealized Gain (loss) .............................................. 272,370 $ 552,263
Deferred income taxes ............................................... 128,014 259,564
------------ ------------
$ 144,356 $ 292,699
============ ============
Loans receivable transferred to real estate owned ..................... $ 0 $ 32,729
============ ============
Supplemental disclosure of cash flow information: Cash paid for:
Interest ............................................................ $ 7,650,000 $ 6,321,685
============ ============
Federal, state and city income taxes ................................ $ -- $ 286,000
============ ============
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) REORGANIZATION IN TO A HOLDING COMPANY
On October 17, 1996, Carver Federal Savings Bank (the "Bank")
completed its reorganization into a holding company structure (the
"Reorganization") and became the wholly owned subsidiary of Carver
Bancorp. Inc., (the "Holding Company" or "Bancorp") a Delaware
corporation. Pursuant to an Agreement and Plan of Reorganization, dated
May 21, 1996, each share of Carver Federal Savings Bank's outstanding
common stock was exchanged for one share of Bancorp common stock. At
this time, Bancorp conducts business as a unitary savings and loan
holding Company and the principal business of Bancorp consists of the
operation of the Bank. The Company's common stock is listed on the
American Stock Exchange under the symbol CNY (Carver New York).
(2) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements
of Carver Bancorp, Inc., have been prepared in accordance with
generally accepted accounting principles ("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.
Accordingly, they do not include all of the information and footnotes
required by GAAP for complete consolidated financial statements. In the
opinion of management, all adjustments (consisting of only normal
recurring adjustments) necessary for fair presentation have been
included. The consolidated results of operations and other data for the
three or six month period ended September 30, 1997 are not necessarily
indicative of results that may be expected for the entire fiscal year
ending March 31, 1998. The unaudited consolidated financial statements
include the accounts of the Company and its wholly owned subsidiary
Carver Federal Savings Bank and the Bank's wholly owned subsidiaries,
C.F.S.B. Realty Corp. and C.F.S.B. Credit Corp. All significant
intercompany accounts and transactions have been eliminated in
consolidation.
(3) EARNINGS PER SHARE CALCULATION
Net income per share for the three and six month periods ended
September 30, 1996 and 1997 are calculated based on weighted average
number of shares outstanding during the period.
(4) RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board ("
FASB") issued SFAS No. 128, "Earnings per Share," which provides for
the computation, presentation and disclosure requirements for earnings
per share. SFAS No. 128 simplifies the computation of earnings per
share for common stock and potential common stock. The adoption of SFAS
Nos.128 is not expected to have a material effect on Carver Bancorp's
future financial condition, results of operations or reported results
of operations.
In June 1997, the FASB released SFAS No. 130 "Reporting
Comprehensive Income." This SFAS requires disclosure of all changes in
equity during a period except those resulting from investment by owners
distributions to owners. SFAS 130 is effective for fiscal years
beginning after December 15, 1997.
June 1997, FASB issued SFAS No. 131, "Disclosures About
Segments of Enterprise and Related Information."This SFAS requires the
disclosures regarding reportable segments of an enterprise. Information
required to be disclosed includes among other factors used to identify
segments, selected financial data; profit and loss, revenues and other
operating and non-operating expenses. Its effective date is for fiscal
years ending after December 15, 1997. The adoption of SFAS No. 130 and
131 is not expected to have a material effect on Bancorp's future
financial condition, results of operation or reported results of
operations.
6
<PAGE> 7
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
consisting of estimates with respect to the financial condition, results of
operations and business of the Company that are subject to various factors which
could cause the actual results to differ materially from these estimates. These
factors include, without limitation, changes in general, economic and market,
legislative and regulatory conditions and the development of an adverse interest
rate environment that adversely affects the interest rate spread or other income
anticipated from the Company's operations and investments.
GENERAL
Carver Bancorp, Inc. (the "Holding Company" or "Bancorp"), a Delaware
corporation, is the holding company for Carver Federal Savings Bank (the "Bank"
or "Carver Federal"), a federally chartered savings bank. Collectively, the
Holding Company and the Bank are referred to herein as the "Company" or
"Carver." On October 17, 1996, the Bank completed its reorganization into a
holding company structure (the "Reorganization") and became the wholly owned
subsidiary of the Holding Company. 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; the Bank, which operates seven full service branches in the New York
City boroughs of: Brooklyn, Queens, Manhattan, and in Nassau County, New York.
FINANCIAL CONDITION
ASSETS
Total assets at September 30, 1997 decreased approximately $8.1
million, or 1.90%, to $415.6 million from $423.6 million at March 31, 1997. The
decrease was primarily attributable to the decrease in the Company's portfolio
of mortgage-backed securities held to maturity and securities available for
sale, offset in part by increases in federal funds sold, investment securities
held to maturity and loans receivable. These changes are consistent the
Company's strategy to shift assets out of securities and in to loans.
The Company's portfolio of mortgage-backed securities held to maturity
decreased by $9.1 million, or 8.24%, to $101.7 million at September 30, 1997
from $110.9 million at March 31, 1997, reflecting the receipt of principal
repayments on such securities. Total cash and equivalents increased by $1.6
million or 36.96% to $5.8 million at September 30, 1997 from $4.2 million at
March 31, 1997. Securities available for sale decreased $48.3 million or 57.63%
to $35.5 million at September 30, 1997 from $83.9 million at March 31, 1997, due
to the sale of $49.0 million of mutual funds and principal repayments which were
partially offset by the purchase of $5.0 million of a mutual fund classified as
available for sale which is expected to provide certain tax benefits to the
Company and a decrease in unrealized loss of $298,000. The Company used these
repayments of mortgage backed securities, proceeds from sale of mutual funds and
increased deposits to purchase $32.0 million of mortgage loans ,originate loans,
repurchase securities previously sold under agreement to repurchase and repay
advances from the Federal Home Loan Bank. The Company's loans receivable
increased $41.0 million or 20.69% to $238.9 million at September 30, 1997 as
compared to $197.9 million at March 31, 1997. The increase was due to the
purchase of $42.5 million of one-to-four family adjustable rate mortgage loans,
$32 million of which were purchased in April of 1997, with the balance purchased
over the six month period coupled with increases in loan originations of
multi-family loans which were partly offset by principal repayments.
LIABILITIES AND STOCKHOLDERS' EQUITY
The Company's total liabilities decreased by $9.0 million, or 2.30%, to
$380.7 million at September 30, 1997 from $389.6 million at March 31, 1997, as
the result of decreased advances from the Federal Home Loan Bank ("FHLB
advances") and securities sold under repurchase agreements ("other borrowings").
The Company's FHLB advances decreased by $10.0 million or 22.03% to $35.4
million at September 30, 1997 compared to $45.4 million at March 31, 1997, and
other borrowings decreased by $3.3 million or 4.44% to $71.0 million compared to
$74.3 million for the same period. The FHLB advances and other borrowings were
retired with a portion of the proceeds generated from the sale of the mutual
funds. These decreases were partially offset by an increase in deposits of $3.4
million, or 1.26%, to $269.8 million at September 30, 1997 from $266.5 million
at March 31, 1997. The overall decline in liabilities, and in particular,
borrowed funds is consistent with the balance sheet restructuring discussed
above.
Stockholders' equity increased by $ 926,000, or 2.72%, to $34.9 million
at September 30, 1997 from $34.0 million at March 31, 1997 due to an increase in
retained earnings and a decrease in the unrealized net loss on securities
available for sale, offset in part, by the allocation of shares under the
Employee Stock Ownership Plan and dividends paid. Retained earnings of the
7
<PAGE> 8
Company at September 30, 1997 increased $640,000, or 4.46%, to $15.0 million at
September 30, 1997 from $14.4 million at March 31, 1997, as a result of earnings
during the six months ended September 30, 1997. Under Statement of Financial
Accounting Standards ("SFAS") No. 115, unrealized losses on securities available
for sale are recorded net of deferred income tax as a reduction to stockholders'
equity. At September 30, 1997, such unrealized losses were approximately
$144,000, a decrease of $298,000, or 67.39%, as compared to $443,000 at March
31, 1997. The decrease in unrealized loss is attributable primarily to the
reduction of the securities held in the available for sale portfolio by the sale
of mutual funds during the last two quarters, and the lower interest rate
environment, which increased the value of the Company's portfolio of securities
available for sale. In accordance with SFAS No. 115, such losses will not be
reflected as a charge to earnings until the underlying securities are sold, and
then only to the extent of the amount of loss, if any, actually realized at the
time of sale.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of funds are deposits 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.
The primary investment activity of the Company is the origination and
purchase of loans and, to a lesser extent, the purchase of investment securities
and mortgage-backed securities. During the six month period ended September 30,
1997, the Company purchased $42.5 million of mortgage loans, $12.0 million of
investment securities, and sold no investment securities. During the six month
period ended September 30, 1996, the Company purchased $8.5 million of
investment securities, and sold $3.6 million in investment securities.
The Company's most liquid assets are federal funds sold, and cash and
due from banks. In addition to the liquidity provided by federal funds sold and
cash and due from banks, the Company derives liquidity from its line of credit
with the FHLB, which equals 30% of total assets. The levels of the Company's
cash and cash equivalents are dependent on the Company's operating, financing,
lending and investing activities during any given period. At September 30, 1997,
the Company's cash and cash equivalents totaled $5.8 million compared to $4.2
million at March 31, 1997. The increase in cash and cash equivalents reflects
proceeds from the sale of mutual fund shares.
The Office of Thrift Supervision, the Bank's primary federal regulator,
requires that the Bank meet minimum tangible, core and risk-based capital
requirements. At September 30, 1997, the Bank exceeded all fully phased-in
regulatory capital requirements. The table below presents certain information
relating to the Bank's capital compliance at September 30, 1997 and March 31,
1997.
At September 30, 1997, the Company exceeded all fully phased-in
regulatory capital requirements. The table below presents certain information
relating to the Company's capital compliance at September 30, 1997 and March 31,
1997.
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1997 AT MARCH 31, 1997
% OF % OF
AMOUNT ASSETS AMOUNT ASSETS
------ ------ ------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Tangible Capital.......................... $30,867 7.41% $30,050 7.18%
Core Capital.............................. 30,867 7.41 30,527 6.97
Risk Based Capital........................ 32,487 14.78 30,527 17.94
</TABLE>
8
<PAGE> 9
ANALYSIS OF CORE EARNINGS
The Company's profitability is primarily dependent upon net interest
income, which represents the difference between interest and fees earned on
loans, mortgage-backed securities and investments, and the cost of deposits and
borrowings. 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. Net income is further
affected by provisions for loan losses, non-interest income, non-interest
income, non-interest expense and income taxes. 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.
In April of 1997, Carver completed a restructuring of its balance sheet
and the Company is now placing primary emphasis on its whole loan portfolio
through the origination of loans, as well as the purchase of whole loans. As a
result of this effort, the loan portfolio has substantially increased as a
percentage of total assets. Therefore, it is expected that the Company's future
earnings will be derived primarily from direct lending and purchase activities
rather than investing in securities.
The following table sets forth certain information relating to Carver's
average interest-earning assets and average interest-bearing liabilities and
reflects the average yield on assets and the average cost of liabilities for the
quarters indicated. 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 average
month-end balances, except for federal funds which are derived from daily
balances. Management does not believe that the use of average monthly balances
instead of average daily balances on all other accounts 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.
9
<PAGE> 10
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
1997 1996
ANNUALIZED ANNUALIZED
AVERAGE QUARTERLY AVERAGE AVERAGE QUARTERLY AVERAGE
BALANCE INTEREST YIELD/COST BALANCE INTEREST YIELD/COST
------- -------- ---------- ------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
(Dollars in thousands)
ASSETS
Loan (1) ............................... $235,772 $ 4,532 7.69% $ 88,463 $1,823 8.24%
Investment Securities (2) .............. 15,311 304 7.94% 94,988 1,260 5.31%
Mortgage-backed Securities (3) ......... 133,814 2,190 6.55% 156,035 2,473 6.34%
Federal Funds Sold ..................... 5,500 120 8.73% 3,684 53 5.75%
-------- -------- ------- -------- ------ -------
Total Interest-earning Assets .......... 390,397 7,146 7.32% 343,170 5,609 6.54%
-------- -------- ------- -------- ------ -------
Non Interest Earning Assets ............ 24,375 21,254
-------- --------
Total Assets ........................... $414,772 $364,424
======== ========
INTEREST-BEARING LIABILITIES
Deposits
DDA .................................... $ 8,285 $ 0 0.00% $ 6,850 $ 0 0.00%
NOW .................................... 18,636 91 1.95% 17,555 83 1.89%
Savings and clubs ...................... 145, 217 905 2.49% 143,345 893 2.49%
Money market accounts .................. 21, 852 175 3.20% 20,471 170 3.32%
Certificates of deposits ............... 76,656 1,001 5.22% 73,700 963 5.23%
-------- -------- ------- -------- ------ -------
Total deposits ......................... 270,646 2,172 3.21% 261,921 2,109 3.22%
-------- -------- ------- -------- ------ -------
Borrowed money ......................... 107,830 1,656 6.14% 64,891 1,024 6.31%
Total interest-bearing liabilities ..... 378,476 3,828 4.05% 326,812 3,133 3.83%
Non-interest bearing liabilities ....... 1,568 2,760
-------- --------
Total liabilities ...................... 380,044 329,572
Stockholders' equity ................... 34,728 34,852
-------- --------
Total liabilities & stockholders' equity $414,772 $364,424
======== ========
Net interest income .................... $ 3,318 $2,476
======== ======
Interest Rate Spread ................... 3.27% 2.70%
==== ====
Net interest margin .................... 3.40% 2.89%
==== ====
Ratio to average interest-
earning assets to average
Interest-bearing liabilities ........... 102.72% 104.13%
====== ======
</TABLE>
(1) INCLUDES NON-ACCRUAL LOANS.
(2) INCLUDES FHLB STOCK AND FAIR VALUE OF INVESTMENTS AVAILABLE FOR SALE OF
$2.1 MILLION AT SEPTEMBER 30, 1997.
(3) INCLUDES FAIR VALUE OF MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE OF
$32.8 MILLION AT SEPTEMBER 30, 1997.
10
<PAGE> 11
<TABLE>
<CAPTION>
SIX MONTHS ENDED SEPTEMBER 30,
---------------------------------------------------------------------------------
1997 1996
----------------------------------- ----------------------------------------
ANNUALIZED ANNUALIZED
AVERAGE QUARTERLY AVERAGE AVERAGE QUARTERLY AVERAGE
BALANCE INTEREST YIELD/COST BALANCE INTEREST YIELD/COST
------- -------- ---------- ------- -------- ----------
ASSETS (Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Loan (1) $236,104 $ 8,902 7.54% $ 85,996 $ 3,540 8.23%
Investment Securities (2) 13,941 505 7.24% 90,544 2,469 5.45%
Mortgage-backed Securities (3) 137,300 4,416 6.43% 162,063 5,211 6.43%
Federal Funds Sold 4,450 120 5.39% 6,755 200 5.92%
-------- ------- ------ -------- ------- -----------
Total Interest-earning Assets 391,795 13,943 7.12% 345,358 11,420 6.61%
------- -----------
Non Interest Earning Assets 23,273 20,317
-------- --------
Total Assets $415,068 $365,675
======== ========
INTEREST-BEARING LIABILITIES
Deposits
DDA $ 8,197 $ 0 0.00% $ 6,603 $ -- 0.00%
NOW 18,525 178 1.92% 17,561 0 0.00%
Savings and clubs 144,951 1,805 2.49% 143,109 0 0.00%
Money market accounts 21,627 347 3.21% 20,228 0 0.00%
Certificates of deposits 76,468 1,964 5.14% 73,352 0 0.00%
-------- ------- ------ -------- ------- -----------
Total deposits 269,768 4,294 3.18% 260,853 4,182 3.21%
-------
Borrowed money 108,803 3,353 6.16% 67,350 2,083 6.19%
-------- ------- ------ -------- ------- -----------
Total interest-bearing liabilities 378,571 7,647 4.04% 328,203 6,265 3.82%
------- -------
Non-interest bearing liabilities 1,914 2,648
-------- --------
Total liabilities 380,485 330,851
Stockholders' equity 34,583 34,824
-------- --------
Total liabilities & stockholders' equity $415,068 $ 365,675
======== ===========
Net interest income $ 6,295 $ 5,155
======= =======
Interest Rate Spread 3.08% 2.79%
====== ===========
Net interest margin 3.21% 2.99%
====== ===========
Ratio to average interest-
earning assets to average
Interest-bearing liabilities 102.97% 104.38%
====== ===========
</TABLE>
- ------------------
(1) INCLUDES NON-ACCRUAL LOANS.
(2) INCLUDES FHLB STOCK AND FAIR VALUE OF INVESTMENTS AVAILABLE FOR SALE OF
$2.1 MILLION AT SEPTEMBER 30, 1997.
(3) INCLUDES FAIR VALUE OF MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE OF
$32.8 MILLION AT SEPTEMBER 30, 1997.
11
<PAGE> 12
COMPARISON OF OPERATING RESULTS FOR THE
THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
GENERAL
The Company reported net income for the three months ended
September 30, 1997 of $329,000, compared to a loss of $784,000 for the three
months ended September 30, 1996. The net loss for the three months ended
September 30, 1996 reflected a one time pre-tax assessment of $1.6 million for
the recapitalization of the Savings Association Insurance Fund ("SAIF"). Net
income for the three month period ended September 30, 1996, before posting the
SAIF assessment was $109,000. The increase in net income for the three months
ended September 30, 1997, as compared to operating results for the three months
ended September 30, 1996 before posting the SAIF assessment, was due primarily
to increased interest income, which was partially offset by increased interest
expense, provision for loan losses and non-interest expense.
INTEREST INCOME
Interest income increased by $1.5 million or 27.41% to $7.1
million for the three months ended September 30, 1997 compared to 5.6 million
for the three months ended September 30, 1996. The increase was primarily due to
an increase in the average balance of interest earning assets of $47.2 million
and a 78 basis point increase in the average yield on interest-earning assets
from 6.54% to 7.32%, which is the result of the shift in assets from investment
securities to loans.
Interest income from loans receivable increased by $2.7 million,
or 148.59%, to $4.5 million for the three months ended September 30, 1997
compared to $1.8 million for the three months ended September 30, 1996. This
results from an increase of $147.3 million or 166.52`% in the average balance of
loan receivables to $235.8 million for the three month period ended September
30, 1997 compared to $88.4 million for the three month period ended September
30, 1996, partly offset by a decrease of 55 basis points in the average yield on
the loan portfolio. The increase in the average loan portfolio balances
primarily reflects the impact of loan purchases made during the fourth quarter
of fiscal 1997 and the beginning of the current fiscal year. The decline in the
average yield on the loan portfolio reflects the purchase and origination of
lower yielding one-to-four family adjustable rate loans.
Interest income from mortgage-backed securities decreased
$282,000, or 11.42%, to $2.2 million for three months ended September 30, 1997
compared to $2.5 million for the three months ended September 30, 1996. This
decrease is primarily attributable to a decrease of $22.2 million or 14.24% in
the average balance of mortgage-backed securities to $133.8 million offset in
part by a 21 basis point increase in yield on the same securities. Income from
debt and equity securities (investment securities) and other interest-earning
assets decreased by $749,000, or 65.12%, to $401,000 for the three months ended
September 30, 1997 compared to $1.1 million for the same period last year. The
decrease in income is primarily attributable to a $79.7 million or 83.98%
decrease in the average balance of investment securities to $15.3 million for
the three months ended September 30, 1997 compared to $95.0 million for the
three months ended September 30, 1996, offset in part by an increase in the
average yield of 3.68% on the remaining investment securities and an increase in
the average balance of Federal Funds. The increase in the average yield on
investment securities is primarily due to the sale of approximately $72.0 of
lower yielding investment securities in April of 1997.
INTEREST EXPENSE
Interest expense increased by $695,000 or 22.18% to $3.8 million
for the three months ended September 30, 1997 compared to $3.1 million for the
same period in 1996. Interest expense on deposits increased by $63,000 or 2.98%
to $2.2 million for the three months ended September 30, 1997 compared to $2.1
million for the three months ended September 30, 1996. The increase was
primarily due to an increase in the average deposit balances of $8.7 million to
$270.6 million offset by a decrease in cost of deposits of 1 basis point.
Interest expense on FHLB advances and other borrowings increased by $632,000 or
61.71% to $1.7 million for the quarter ended September 30, 1997 from $1.0
million, for the same period in 1996. The increase resulted from an increase in
the average balance of other borrowings off $42.9 million or 66.17% to $107.8
million offset in part by a decrease in the average cost of other borrowings of
17 basis points to 6.14%. The additional borrowings were primarily used to fund
a portion of the loan purchases completed in March and April, as well as, loan
originations for the three months ended September 30, 1997.
12
<PAGE> 13
NET INTEREST INCOME BEFORE PROVISIONS FOR LOAN LOSSES
Net interest income increased $843,000 or 34.03%, to $3.3 million
for the three months ended September 30, 1997 compared to $2.5 million for the
three months ended September 30, 1996. The increase in net interest income is
attributable to a $1.5 million, or 27.41%, increase in interest income which was
partially offset by a $695,000, or 22.18% increase in interest expense.
The Company's interest rate spread increased by 57 basis points to
3.27% for the three months ended September 30, 1997 compared to 2.70% for the
three months ended September 30, 1996. The Company's net interest margin
increased by 51 basis point to 3.40% for the three months ended September 30,
1997 compared to 2.89% for the three months ended September 30, 1996. The
increase in interest rate spread and net interest margin is attributable to an
increase in the average yield on interest earning assets due to a substantial
increase in the average balance of loans, offset in part by an increase in the
cost of interest bearing liabilities due to an increase in the average balance
of borrowed money. The Company's ratio of average interest-earning assets to
average interest-bearing liabilities decreased to 102.72% for the three months
ended September 30, 1997 from 104.13% for the three months ended September 30,
1996.
PROVISION FOR LOAN LOSSES
The Bank provided $171,000 for loans losses for the three months
ended September 30, 1997, compared to $33,000 for the three months ended
September 30, 1996. The provision was increased in part to reflect the growth in
the loan portfolio during the quarter and in part to maintain the allowance for
loan losses at an adequate level consistent with the Company's policies taking
into account the Bank's loan growth .
As part of the Bank's determination of the adequacy of the allowance for
possible loan losses, the Bank monitors its loan portfolio through its Audit
Committee and Asset/Liability Management Committee. Both Committees meet monthly
and the Audit Committee reviews individual loans and assesses risk relating to
collectibility of these loans. The Audit Committee determines the adequacy of
allowance for possible loan losses through ongoing analysis of historical loss
experience, the composition of the loan portfolio, delinquency levels,
underlying collateral values and cash flow values.
Carver serves as the lead lender for a construction loan for the development of
22 2-family units of affordable housing. The project is being developed under a
New York City new homes program. The total development cost of the project is
$4.8 million. The project has received a substantial subsidy from state and
local housing agencies. The construction loan for the project is $2.9 million.
The Bank holds a participation interest in the construction loan of $1.7 million
(60%), of which $1.4 million has been disbursed, and has sold a non-recourse
participation interest in the loan of $1.2 million (40%) to another New York
area lender. At March 31, 1997, the loan was classified as an accruing loan
contractually 90 days past due reflecting certain construction delays in
connection with the completion of the project. At September 30, 1997, the loan
was reclassified as substandard and the Bank established a specific reserve in
the amount of 15% of its participation interest due to continuing delays during
the summer in completing the project. At September 30, 1997, construction on the
project was approximately 97% complete and the general contractor had applied
for certificates of occupancy for the project. In addition, Carver, the
participating lender and a city agency are working closely with the general
contractor to complete the project and deliver the 17 homes which were under
contract to purchase.
At September 30, 1997, non performing loans totaled $5.3 million or 2.24% of
total loans compared to $6.4 million or 3.23% of total loans at March 31,1997.
At September 30, 1997, Carver's allowance for loan losses was $2.6 million
compared to $2.2 million at March 31, 1997, resulting in a ratio of allowance
for loan losses to non-performing assets of 48.33% at September 30, 1997 as
compared to 35.06% at March 31, 1997 and a ratio of allowance for loan losses to
total loans of 1.08% and 1.11% respectively.
NON-INTEREST INCOME
Non-interest income increased by $71,000, or 25.10%, to $352,000
for the three months ended September 30, 1997 compared to $282,000 for the three
months ended September 30, 1996. The increase was attributable to a $105,000
increase in fees from bank services fee offset by a $34,000 reduction in loan
fees and service charges.
NON-INTEREST EXPENSES
Non interest expenses for the three months ended September 30,
1996 was $4.2 million and reflected a one time pre-tax assessment of $1.6
million for the recapitalization SAIF. Non-interest expenses increased by
$377,000 or 14.92%, to$2.9 million for the three months ended September 30,
1997, compared to $2.5 million for the three months ended September 30, 1996
excluding the SAIF assessment. The increase in non-interest expenses for the
three months ended September 30, 1997 reflects an increase of: $92,000, or 8.56%
in salaries and employee benefits and the funding of management incentive plans,
$53,000 or 21.02% in
13
<PAGE> 14
equipment expense, $25,000 or 74.38% in advertising expense and $42,000 or
227.14% in legal expense. Non-interest expenses also reflect an increase of
$263,000, or 52.70% in other expenses reflecting increased expenses for: loan
origination staff, service fees, telephone service, and contributions, offset in
part by a decrease of $105,000 or 71.58% in federal deposit insurance premiums
("FDIC premiums") and a $33,000 or 32.56% reduction in bank charges.
INCOME TAX EXPENSE
Income tax expense for the three months ended September 30, 1997
was $269,000 compared to a recovery of $649,000 for the three months ended
September 30, 1996. The Company's effective tax rate for the three months ended
September 30, 1997 was 44.96%, the Company recovered taxes at a rate of 45.29%
for the three months ended September 30, 1996.
COMPARISON OF OPERATING RESULTS FOR THE
SIX MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
GENERAL
The Company reported net income for the six months ended September
30, 1997 of $640,000, compared to a loss of $520,000 for the six months ended
September 30, 1996. The loss for the six months ended September 30, 1996
reflected a one time pre-tax assessment of $1.6 million for the recapitalization
of the Savings Association Insurance Fund ("SAIF"). Net income for the six month
period ended September 30, 1996, before posting the SAIF assessment was
$382,000. The increase in net income for the six months ended September 30,
1997, as compared to operating results for the six months ended September 30,
1996 before posting the SAIF assessment, was due primarily to increased interest
income, which was partially offset by increased interest expense, provision for
loan losses and non-interest expense.
INTEREST INCOME
Interest income increased by $2.5 million or 22.09% to $13.9
million for the six months ended September 30, 1997 compared to $11.4 million
for the six months ended September 30, 1996. The increase was primarily due to a
$46.4 million increase in the average balance of interest earning assets to
$391.8 million and a 51 basis point increase in the average yield to 7.12%,
which is the result of the shift in assets from investment securities to loans.
Interest income from loans receivable increased by $5.4 million,
or 151.46%, to $13.9 million for the six months ended September 30, 1997
compared to $11.4 million for the six months ended September 30, 1996. This
increase results from an $150.0 million or 174.55`% increase in the average
balance of loan receivables to $235.8 million for the six month period ended
September 30, 1997 compared to $86.0 million for the three month period ended
September 30, 1996, partly offset by a decrease of 69 basis points in the
average yield on the loan portfolio. The increase in the average loan portfolio
balances primarily reflects the impact of loan purchases made over the six month
period. The decline in the average yield on the loan portfolio reflects the
purchase and origination of lower yielding one-to-four family adjustable rate
loans.
Interest income from mortgage-backed securities decreased
$795,000, or 15.26%, to $4.4 million for the six months ended September 30, 1997
compared to $5.2 million for the six months ended September 30, 1996. This
decrease is primarily attributable to a decrease of $24.8 million or 15.27% in
the average balance of mortgage-backed securities to $137.3 million during the
quarter ended September 30, 1997. Income from debt and equity securities
(investment securities) and other interest-earning assets decreased by $1.8
million, or 76.91%, to $536,000 during the six months ended September 30, 1997
compared to $2.3 million for the six months ended September 30, 1996. The
decrease in income is primarily attributable to a $76.6 million or 84.60%
decrease in the average balance of investment securities to $13.9 million for
the six months ended September 30, 1997 compared to $90.5 million for the six
months ended September 30, 1996, offset in part by an 1.80% increase in the
average yield of the remaining investment securities. The increase in the
average yield is primarily due to the sale of approximately $72.0 of lower
yielding investment securities in April of 1997.
INTEREST EXPENSE
Interest expense increased by $1.4 million or 22.07% to $7.6
million for the six months ended September 30, 1997 compared to $6.3 million for
the six months ended September 30, 1996. Interest expense on deposits increased
by $112,000 or 2.69% to $4.3 million for the six months ended September 30, 1997
compared to $4.2 million for the six months ended September 30, 1996. The
increase in interest on deposits was primarily due to an increase in the average
deposit balance of $8.9 million to $269.8 million offset by a decrease in cost
of deposits of 3 basis point. Interest expense on FHLB advances and other
borrowings increased by $1.3 million or 61.00% to $3.4 million for the quarter
ended September 30, 1997 compared to $2.1 million, for the same period in 1996.
The increases are due to the an increase in the average balance of other
borrowings of $41.4 million or 61.55% to $108.8 million
14
<PAGE> 15
offset in part by a decrease in the average cost of other borrowings of 3 basis
points to 6.16. The additional borrowings were primarily used to fund a portion
of loan purchases for the six months ended September 30, 1997.
NET INTEREST INCOME BEFORE PROVISIONS FOR LOAN LOSSES
Net interest income increased $1.1 million or 22.12%, to $6.3
million for the six months ended September 30, 1997 compared to $5.2 million for
the six months ended September 30, 1996. The increase in net interest income is
attributable to a $2.5 million, or 22.09%, increase in interest income which was
partially offset by a $1.3 million, or 22.07% increase in interest expense.
The Company's interest rate spread increased by 29 basis points to
3.08% for the six months ended September 30, 1997 compared to 2.79% for the six
months ended September 30, 1996. The Company's net interest margin increased by
22 basis point to 3.21% for the six months ended September 30, 1997 compared to
2.99% for the six months ended September 30, 1996. The increase in interest rate
spread and net interest margin is attributable to an increase in the average
yield on interest earning assets due to a substantial increase in the average
balance of loans, offset in part by an increase in the cost of interest bearing
liabilities due to an increase in the average balance of borrowed money. The
Company's ratio of average interest-earning assets to average interest-bearing
liabilities decreased to 102.97% for the six months ended September 30, 1997
from 104.38% for the six months ended September 30, 1996.
PROVISION FOR LOAN LOSSES
The Bank provided $338,000 for loans losses for the six months
ended September 30, 1997, compared to $85,000 for the six months ended September
30, 1996. The provision was increased in part to reflect the growth in the loan
portfolio during the quarter and in part to maintain the allowance for loan
losses at an adequate level consistent with the Company's policies. At September
30, 1997, non performing loans totaled $5.3 million or 2.24% of total loans
compared to $6.4 million or 3.23% of total loans at March 31,1997. Carver's
allowance for loan losses at September 30, 1997 was $2.6 million compared to
$2.2 million at March 31, 1997, resulting in a ratio of allowance for loan
losses to non-performing assets of 48.33% at September 30, 1997 as compared to
35.06% at March 31, 1997 and a ratio of allowance for loan losses to total loans
of 1.08% and 1.11% respectively.
NON-INTEREST INCOME
Non-interest income increased by $59,000, or 9.68%, to $669,000
for the six months ended September 30, 1997 as compared to $610,000 for the six
months ended September 30, 1996. The increase was attributable to a $94,000
increase in fees from bank services fee offset by a $35,000 reduction in loan
fees and service charges.
NON-INTEREST EXPENSES
Non interest expenses for the six months ended September 30, 1996
was $6.6 million and reflected a one time pre-tax assessment of $1.6 million for
the recapitalization SAIF. Non-interest expenses increased by $474,000 or 9.51%,
to $5.5 million for the six months ended September 30, 1997, compared to $5.0
million for the six months ended September 30, 1996 excluding the SAIF
assessment.
The $474,000 or 9.51% increase in non-interest expenses for the six months ended
September 30, 1997, compared to same period last year before posting the SAIF
assessment, was due primarily to an increase of: $233,000, or 11.386% in
salaries and employee benefits and the funding of management incentive plans,
$39,000 or 7.75% in equipment expense, $40,000 or 49.90% in advertising expense
and $42,000 or 56.80% legal expense. Non-interest expenses also reflect an
increase of $393,000, or 40.19% in other expenses reflecting increased expenses
for: loan originations, service fees, telephone service, and contributions,
offset in part by a decrease of $249,000 or 85.72% in federal deposit insurance
premiums ("FDIC premiums") and a $27,000 or 4.80% reduction in occupancy
expense.
INCOME TAX EXPENSE
Income tax expense for the six months ended September 30, 1997 was
$523,000 compared to a recovery of $420,000 for the six months ended September
30, 1996. The Company's effective tax rate for the six months ended September
30, 1997 was 44.99%, the Company recovered taxes at a rate of 44.71% for the six
months ended September 30, 1996.
YEAR 2000 COMPLIANCE
Many existing computer programs use only two digits to identify a
year in the date field. These programs were designed and developed without
considering the impact of the upcoming change in the century. If not corrected,
many computer applications could fail or create erroneous results by or at the
Year 2000. The Year 2000 issue affects virtually all companies and
organizations.
15
<PAGE> 16
The Company, working with its outside service providers, has initiated a project
to ensure that its computer systems are year 2000 compliant. The Company
believes that the cost associated with ensuring year 2000 compliance will not
materially affect the Company's future operating results or financial
condition..
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Not Applicable
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company is a party to various legal proceedings
incident to its business. At September 30, 1997, except as set forth below,
there were no legal proceedings to which the Company or its subsidiaries was a
party, or to which any of their property was subject, which were expected by
management to result in a material loss.
On January 2, 1996, the United States District Court for the Southern
District of New York dismissed the class action encaptioned Dougherty v. Carver
Federal Savings Bank for lack of subject matter jurisdiction. The class action
alleged that the offering circular, used by Carver to sell its stock in its
public offering, contained material misstatements and omissions. Further, the
complaint alleged that the Bank's shares were not appraised by an independent
appraiser. By separate order on the same date, the court made its ruling
applicable to Gomberg v. Carver Federal Savings Bank and Uminer v. Carver
Federal Savings Bank, two other class actions filed in the Southern District of
New York which asserted claims essentially identical to those asserted in the
Dougherty suit.
The plaintiffs filed a consolidated notice of appeal on January 29,
1996 with the United States Court of Appeals for the Second Circuit. In April
1997 the Circuit Court concluded that the District Court had subject matter
jurisdiction over the plaintiffs' complaint, the Circuit Court reversed and
remanded the case back to the District Court. Carver believes that the
allegations made in this action are without merit and intend to aggressively
defend its interest with respect to such matter. On July 10, 1997, upon request
of all counsel, the trial judge directed that discovery be completed by March
31,1998 and that the case be ready for trial in May of 1998.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's held its Annual Meeting, (the"Meeting") on
August 21, 1997. The purpose of the meeting was to vote on the
following proposals:
1. The election of two directors for terms of three years
each;
2. The ratification of the appointment of Mitchell & Titus,
LLP as independent auditors of the Company for the fiscal
year ending March 31, 1998; and
3. The consideration of a stockholder proposal, opposed by
the Board of Directors.
With respect to Proposal 1, all of the directors nominated by
the Company were elected at the Meeting. In addition, Proposal
2 was approved at the Meeting. However, Proposal 3 was not
approved. The voting results for the Proposals were as
follows:
16
<PAGE> 17
<TABLE>
<S> <C> <C> <C> <C>
Proposal 1: Linda Dunham For 2,063,663
Withheld 101,600
Robert Franz For 2,063,863
Withheld 101,200
Proposal 2: For 2,034,012
Against 111,245
Abstain 20,006
Proposal 3: For 325,844
Against 990,601
Abstain 38,269
No Votes 810,549
</TABLE>
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 11 - Computation of Earnings Per
Share Not applicable Exhibit 27 - Financial
Data Schedule
(b) Reports on Form 8-K None
17
<PAGE> 18
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.
Date: 11/14/ 1997 CARVER BANCORP, INC.
/s/ Thomas L. Clark, Jr.
---------------------------------------
Thomas L. Clark, Jr.
President and Chief Executive Officer
Date: 11/14/ 1997 /s/ Walter T. Bond
--------------------------------------
Walter T. Bond
Vice President and
Acting Chief Financial Officer
18
<PAGE> 1
EXHIBIT 11
COMPUTATION OF NET INCOME PER SHARE
AS OF QUARTER ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30,1996
------------------ -----------------
<S> <C> <C>
Net income / (Loss) 329,416 (783,693)
Weighted average shares outstanding 2,185,348 2,167,135
Earning / (Loss) per shares outstanding 0.15 (0.36)
</TABLE>
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30,1996
------------------ -----------------
<S> <C> <C>
Net income / (Loss) 639,541 (520,209)
Weighted average shares outstanding 2,183,092 2,164,879
Earning / (Loss) per shares outstanding 0.29 (0.24)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 5,294,632
<INT-BEARING-DEPOSITS> 390,104,044
<FED-FUNDS-SOLD> 500,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 35,548,998
<INVESTMENTS-CARRYING> 110,292,914
<INVESTMENTS-MARKET> 106,888,000
<LOANS> 238,674,632
<ALLOWANCE> 2,582,535
<TOTAL-ASSETS> 415,569,399
<DEPOSITS> 269,834,651
<SHORT-TERM> 106,035,000
<LIABILITIES-OTHER> 2,436,291
<LONG-TERM> 1,674,924
0
0
<COMMON> 23,144
<OTHER-SE> 34,909,757
<TOTAL-LIABILITIES-AND-EQUITY> 415,569,399
<INTEREST-LOAN> 4,532,374
<INTEREST-INVEST> 2,591,122
<INTEREST-OTHER> 22,877
<INTEREST-TOTAL> 7,146,372
<INTEREST-DEPOSIT> 2,171,630
<INTEREST-EXPENSE> 3,827,536
<INTEREST-INCOME-NET> 3,318,836
<LOAN-LOSSES> 170,837
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,902,232
<INCOME-PRETAX> 598,516
<INCOME-PRE-EXTRAORDINARY> 598,516
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 329,416
<EPS-PRIMARY> 0.15
<EPS-DILUTED> 0.15
<YIELD-ACTUAL> 7.33
<LOANS-NON> 4,048,022
<LOANS-PAST> 1,297,687
<LOANS-TROUBLED> 412,500
<LOANS-PROBLEM> 412,500
<ALLOWANCE-OPEN> 2,413,102
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 2,582,535
<ALLOWANCE-DOMESTIC> 2,582,535
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
