<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, 1998.
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 thirty days. Yes X No
--- ---
Class Outstanding at November 13, 1998
----- --------------------------------
Common Stock, par value $.01 2,314,275
1
<PAGE> 2
CONTENTS
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Financial Condition as of
September 30, 1998 and March 31, 1998 (unaudited)................. 3
Consolidated Statements of Income for the Three and Six Months
Ended September 30, 1998 and 1997 (unaudited)..................... 4
Consolidated Statements of Cash Flows for the Six Months
Ended September 30, 1998 and 1997 (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................................................. 16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings........................................... 16
Item 2. Changes in Securities and Use of Proceeds................... 16
Item 3. Defaults upon Senior Securities............................. 16
Item 4. Submission of Matters to a Vote of Security Holders......... 16
Item 5. Other Information........................................... 17
Item 6. Exhibits and Reports on Form 8-K............................ 17
SIGNATURES
2
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CARVER BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
<TABLE>
<CAPTION>
AS OF AS OF
SEPTEMBER 30, MARCH 31,
1998 1998
------------- ----------
<S> <C> <C>
ASSETS
Cash and due from banks........................ $ 8,403,535 $ 12,120,071
Federal funds sold............................. 14,800,000 3,000,000
------------ ------------
Total cash and cash equivalents.............. 23,203,535 15,120,071
------------ ------------
Securities available for sale.................. 41,045,211 28,407,505
MBS securities held to maturity, net
(estimated fair values of $77,685,943 and
$90,197,873 at September 30, 1998 and
March 31, 1998)............................... 78,274,561 91,115,861
Loans receivable, net: 257,620,195 274,954,337
REO............................................ 82,198 82,198
Property & Equipment........................... 12,197,359 11,545,627
FHLB stock..................................... 5,754,600 5,754,600
Accrued interest............................... 2,078,153 2,762,843
Excess of cost over net assets acquired........ 1,143,397 1,246,116
Other assets................................... 8,775,484 6,469,053
------------ ------------
Total assets................................. $430,174,693 $437,458,211
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits....................................... $277,796,144 $274,894,232
Repos.......................................... 54,970,000 87,020,000
Advances....................................... 51,723,062 36,741,686
Other borrowings............................... 1,092,792 1,183,858
------------ ------------
Total Borrowings............................. 107,785,854 124,945,544
------------ ------------
Advance payments for taxes..................... 659,995 659,995
Other liabilities.............................. 7,755,866 1,424,096
------------ ------------
Total liabilities............................ 393,997,859 401,923,867
------------ ------------
Stockholders' Equity:
Preferred stock, $0.01 par value per share;
1,000,000 shares authorized; none issued...... 0 0
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..................... 21,439,783 21,418,897
Retained Earnings.............................. 15,916,594 15,289,631
Dividends declared and paid.................... (115,714) 0
ESOP stock..................................... (1,092,792) (1,183,858)
Unrealized gain (loss) on securities AFS....... 5,819 (13,470)
------------ ------------
Total stockholders' equity................... 36,176,834 35,534,344
------------ ------------
Total liabilities & stockholders' equity..... $430,174,693 $437,458,211
============ ============
</TABLE>
3
<PAGE> 4
CARVER BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Interest Income
Loan receivable...................................... $5,205,367 $4,532,374 $10,559,623 $ 8,902,151
Mortgage-backed securities........................... 1,338,548 2,190,048 3,185,114 4,415,676
Debt and equity securities........................... 0 401,073 0 535,666
Other interest earning assets........................ 457,149 22,877 841,210 89,753
---------- ---------- ----------- -----------
Total interest income........................... 7,001,064 7,146,372 14,585,947 13,943,246
---------- ---------- ----------- -----------
Interest expense
Deposits............................................. 2,070,885 2,171,630 4,212,653 4,294,289
Advances and other borrowed money.................... 1,562,363 1,655,906 3,307,768 3,353,483
---------- ---------- ----------- -----------
Total interest expense.......................... 3,633,248 3,827,536 7,520,421 7,647,772
---------- ---------- ----------- -----------
Net interest income....................................... 3,367,816 3,318,836 7,065,526 6,295,474
---------- ---------- ----------- -----------
Provisions for loan losses................................ 299,985 170,837 750,000 338,193
---------- ---------- ----------- -----------
Net int. income after provision for loan loss............. 3,067,831 3,147,999 6,315,526 5,957,281
---------- ---------- ----------- -----------
Non-interest income
Loan fees and service charges........................ 60,916 28,970 109,111 66,186
Gain or (loss) on sale of securities................. 4,941 0 4,941 0
Other income......................................... 506,509 323,781 1,032,982 602,927
---------- ---------- ----------- -----------
Total non-interest income....................... 572,366 352,751 1,147,034 669,113
---------- ---------- ----------- -----------
Non-interest expense
Salaries and benefits................................ 1,363,524 1,169,043 2,603,768 2,277,038
Net Occupancy........................................ 305,986 289,986 593,962 542,425
Equipment............................................ 322,415 303,200 596,247 542,350
Loss on foreclosure RE............................... 6,584 0 10,748
Advertising.......................................... 40,911 59,375 77,149 118,750
FDIC................................................. 42,133 41,503 107,441 41,503
Amortization of intangibles.......................... 51,357 53,268 99,570 106,536
Legal expense........................................ 40,825 60,000 100,875 115,000
Bank charges......................................... 95,705 68,747 184,532 195,339
Security service..................................... 127,142 87,543 191,338 142,118
Other................................................ 946,777 762,983 2,050,739 1,371,783
---------- ---------- ----------- -----------
Total non-interest expense...................... 3,336,775 2,902,232 6,605,621 5,463,590
---------- ---------- ----------- -----------
Income (Loss) before taxes................................ 303,422 598,518 856,939 1,162,804
---------- ---------- ----------- -----------
Income taxes (Benefit).................................... 110,211 269,100 345,676 523,261
---------- ---------- ----------- -----------
Net income (Loss)......................................... $ 193,211 $ 329,418 $ 511,263 $ 639,543
========== ========== =========== ===========
Net income (Loss) per common share........................ $ 0.09 $ 0.15 $ 0.23 $ 0.29
========== ========== =========== ===========
Weighted average number of common share outstanding....... 2,203,562 2,185,348 2,201,306 2,183,092
========== ========== =========== ===========
</TABLE>
4
<PAGE> 5
CARVER BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
September 30,
----------------------------
1998 1997
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 511,263 $ 639,542
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization of premises and equipment 574,199 280,694
Amortization of intangibles 102,720 106,536
Other amortization and accretion, net 474,546 549,929
Provision for loan losses 750,000 338,193
Deferred income taxes 125,714 (476,662)
Allocation of ESOP 91,065 103,604
Changes in:
Accrued interest receivable, net (684,690) (41,607)
(Increase)Decrease in other assets (2,306,431) 26,075
(Increase)Decrease in other liabilities 6,331,770 1,049,489
------------ ------------
Net cash provided by operating activities 5,970,156 2,575,793
------------ ------------
Cash flows from investing activities:
Principal repayments of investment held to maturity 0 (7,000,000)
Principal repayments on available for sale 3,693,066 2,771,597
Purchases of discount notes (74,615,222) (5,000,000)
Proceeds from matured discount notes 35,000,000 0
Proceeds from sale/call securities held for sale 23,841,581 51,008,308
Proceeds from maturities and calls of investment
securities held to maturity 1,125,021 97,238
Principal repayment on mortgage-backed securities
held to maturity 11,606,467 8,977,335
Purchase of loans (6,297,813) (42,472,741)
Net change in loans receivable 23,359,631 1,126,600
Additions to premises and equipment (1,225,931) (525,052)
------------ ------------
Net cash (used in) provided by investing activities 16,486,800 9,130,785
------------ ------------
Cash flows from financing activities:
Net increase (decrease) in deposits 2,901,912 3,363,364
Increase (Decrease) in short term borrowings (32,050,000) (3,300,000)
Repayment of advances from Federal Home Loan Bank
of New York 0 (47,000,000)
Repayment of long term borrowings 0 0
Advances from Federal Home Loan Bank of New York 14,981,376 37,000,000
Repayment of other borrowed money (91,066) (91,066)
Dividends paid (115,714) (115,000)
------------ ------------
Net cash provided by (used in) financing activities (14,373,492) (10,142,702)
------------ ------------
Net increase (decrease) in cash and cash equivalents 8,083,464 1,563,876
Cash and cash equivalents -- beginning 15,120,071 4,230,757
------------ ------------
Cash and cash equivalents -- ending $ 23,203,535 $ 5,794,632
============ ============
Supplemental disclosure of non-cash activities:
Unrealized Gain (loss) on securities available for sale:
Unrealized Gain (loss) $ 10,979 $ 272,370
Deferred income taxes 5,160 128,014
------------ ------------
$ 5,819 $ 144,356
============ ============
Supplemental disclosure of cash flow information:
Cash paid for:
Interest $ 7,520,421 $ 7,650,000
============ ============
Federal, state and city income taxes $ 123,100 $ 0
============ ============
</TABLE>
5
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of
Carver Bancorp, Inc. (the "holding Company or Bancorp), 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 and
six month periods ended September 30, 1998 are not necessarily indicative
of results that may be expected for the entire fiscal year ending March
31, 1999. The unaudited consolidated financial statements include the
accounts of the Holding Company and its wholly owned subsidiary Carver
Federal Savings Bank (the "Bank" or "Carver Federal") 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.
(2) EARNINGS PER SHARE CALCULATION
Net income per share for the three and six month periods ended
September 30, 1998 and 1997 are calculated based on weighted average
number of shares outstanding during the period.
(3) RECENT ACCOUNTING PRONOUNCEMENTS
In February 1998, the FASB issued SFAS No. 132, "Employers'
Disclosures about Pensions and Other Post-retirement Benefits," which
provides improved disclosures about pensions and other post-retirement
benefits. The disclosures will provide information that is more
comparable, understandable and concise, and that would better serve users'
needs. This statement is effective for fiscal years beginning after
December 15, 1997. The adoption of this statement is not anticipated to
have a material impact on Carver's financial position or results of
operations.
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement establishes
accounting and reporting standards for derivative instruments and for
hedging activities." This statement also requires that an entity recognize
all derivatives as either assets or liabilities in the statement of
financial position and those instruments at fair value. This statement is
effective for all fiscal quarters of fiscal years beginning after June 15,
1999. The adoption of this statement is not anticipated to have a material
impact on the financial position or results of operations.
(4) BRANCH SALE AGREEMENT
On January 28, 1998, the Holding Company announced that the Bank had
entered into a definitive agreement to sell its branch office located in
Roosevelt, New York, to City National Bank of New Jersey. The Roosevelt Office
is located in Nassau County, New York and has deposits of approximately $10.0
million. Due to certain regulatory issues, it is unlikely that the transaction,
which was expected to close by March 31, 1998, will be consummated.
6
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
ITEM 2
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.
See Branch Sale Agreement.
FINANCIAL CONDITION
ASSETS
At September 30, 1998, total assets decreased $7.3 million or 1.66% to
$430.2 million compared to $437.5 million at March 31, 1998. The decrease in
total assets was primarily attributable to decreases in mortgage-backed
securities ("MBSs") held to maturity and loans receivable net, offset in part by
increases in securities held as available for sale and cash and equivalents.
Total cash and equivalents increased by $8.1 million or 53.46% to $23.2
million at September 30, 1998 compared to $15.1 million at March 31, 1998. The
increase in cash and equivalents primarily reflects receipts on MBSs and loans
which the Company invested in federal funds sold.
The Company's portfolio of MBSs held to maturity decreased by $12.8
million or 14.09% to $78.3 million and loans receivable decreased by $17.3
million or 6.30% to $257.6 million at September 30, 1998. The decrease primarily
reflects principal repayments on MBSs held to maturity and loans receivable.
Securities held as available for sale increased by $12.6 million or 44.49% to
$41.0 million at September 30, 1998. The increase primarily reflects the
purchase of approximately $40.0 million in money market securities funded
primarily with proceeds from the sale of approximately $23.8 million of MBSs
held as available for sale in addition to repayments on MBSs and loans.
The Company's loans receivable decreased $17.3 million or 6.30% to $257.6
million at September 30, 1998 compared to $275.0 million at March 31, 1998. The
decrease primarily reflects the receipt of principal repayments on mortgage
loans, including the repayment of the Bank's largest commercial mortgage loan of
$4.5 million, offset in part by loan originations and purchases.
LIABILITIES AND STOCKHOLDERS' EQUITY
At September 30, 1998, total deposits increased by $2.9 million or 1.06%
to $277.8 million compared to $274.9 million at March 31, 1998. The increase in
total deposits was attributable to an increase of $5.2 million in certificates
of deposit primarily due to a $3.7 million deposit by a corporation and $1.1
million increase in money market accounts offset in part by decreased savings
and NOW accounts.
At September 30, 1998, total borrowings decreased by $17.2 million or
13.73% to $107.8 million compared to $125.0 million at March 31, 1998. The
decrease in total borrowings reflects a decrease in reverse repurchase
agreements ("repos") of $32.1 million or 36.83% to $55.0 million offset in part
by an increase in Federal Home Loan Bank of New York, ("FHLB") advances of $15.0
million, or 40.77%, to $51.7 million. The Company decreased its borrowings under
repos to take
7
<PAGE> 8
advantage of the longer borrowing terms available on FHLB advances as compared
to repos. The decrease in total borrowings primarily reflects a reduction in the
need for borrowed funds due to repayments on MBSs and loans coupled with an
increase in deposits.
At September 30, 1998, stockholders' equity increased by $642,000 or
1.78%, to $36.2 million compared to $35.5 million at March 31, 1998. The
increase in stockholders' equity was primarily attributable to an increase in
retained earnings offset in part by dividends declared and paid.
Under Statement of Financial Accounting Standards ("SFAS") No. 115,
unrealized gains or losses on securities available for sale are recorded net of
deferred income tax as a reduction to stockholders' equity. At September 30,
1998, such unrealized gains were approximately $5,819 compared to an unrealized
loss of approximately $13,400 at March 31, 1998. 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.
ITEM 3
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of funds are deposits and principal and
interest payments on loans, MBSs and investment securities. While maturities and
scheduled amortization of loans, MBSs 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 MBSs. During the three month period ended September 30, 1998, the Company
purchased $6.3 million of mortgage loans, $40.0 million of investment
securities, and sold $23.8 million in MBSs.
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, 1998, the
Company's cash and cash equivalents totaled $23.2 million compared to $15.1
million at March 31, 1997.
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, 1998, 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, 1998 and March 31,
1998.
At September 30, 1998, 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, 1998 and March 31, 1998.
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1998 AT MARCH 31, 1998
--------------------- ------------------
% OF % OF
AMOUNT ASSETS AMOUNT ASSETS
------ ------ ------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Tangible Capital................... $ 30,929 7.17% $ 30,201 6.90%
Core Capital....................... 30,976 7.18 30,249 6.93
Risk Based Capital................. 32,699 15.28 31,731 16.00
</TABLE>
ANALYSIS OF CORE EARNINGS
The Company's profitability is primarily dependent upon net interest
income, which represents the difference between income on interest-earning
assets and expense on interest-bearing liabilities. Net interest income is
dependent on the difference between the average balances and rates earned on
interest-earning assets and the average balances and interest rates
8
<PAGE> 9
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 whole loans, as well as the purchase of whole loans.
The Company continued to pursue this strategy for the three month period ended
September 30, 1998. As a result of this effort since April 1997, 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.
During the second quarter of the fiscal year ending March 31, 1998
("fiscal 1999") the Company began an evaluation of all lines of business and is
utilizing an outside consultant to assist management in analyzing the impact of
each business line on earnings. Further, in response to the Board of Directors,
management is placing a moratorium on expansion into new areas and refocusing on
the Company's core business, which is deposit gathering and mortgage lending.
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.
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<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
-------------------------------------------------------------------------------------
1998 1997
------------------------------------------ ---------------------------------------
AVERAGE QUARTERLY ANNUALIZED AVERAGE QUARTERLY ANNUALIZED
ASSETS BALANCE INTEREST AVG. YIELD/COST BALANCE INTEREST AVG. YIELD/COST
--------- --------- --------------- --------- --------- ---------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest Earning Assets
Loan(1) $ 268,317 $ 5,205 7.76% $ 235,772 $ 4,532 7.69%
Investment Securities(2) 24,895 329 5.29% 15,311 304 7.94%
Mortgage-backed Securities(3) 83,373 1,339 6.42% 133,814 2,190 6.55%
Other Interest Earning Assets 6,425 128 7.97% 5,500 120 8.73%
--------- --------- --------------- --------- --------- ---------------
Total Interest Earning Assets 383,010 7,001 7.31% 390,397 7,146 7.32%
--------- ---------
Non-interest Earning Assets 35,589 24,375
--------- ---------
Total Assets $ 418,599 $ 414,772
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest Bearing Liabilities
Deposits
DDA $ 10,693 $ 0 0.00% $ 8,285 $ 0 0.00%
NOW 17,556 73 1.66% 18,636 91 1.05%
Savings and club 145,917 885 2.43% 145,217 905 2.49%
Money market accounts 22,332 171 3.06% 21,852 175 3.20%
Certificates of deposits 76,768 941 4.90% 76,656 1,001 5.22%
--------- --------- --------------- --------- --------- ---------------
Total Deposits 273,266 2,070 3.03% 270,646 2,172 3.21%
Borrowed Money 102,140 1,562 6.12% 107,830 1,656 6.14%
--------- --------- --------------- --------- --------- ---------------
Total Interest Bearing Liabilities 375,406 3,632 3.87% 378,476 3,828 4.05%
Non-interest Bearing Liabilities 7,150 --------- 1,568 ---------
--------- ---------
Total Liabilities 382,556 380,044
Stockholders' Equity 36,043 34,728
--------- ---------
Total Liabilities and Stockholders' Equity $ 418,599 $ 414,772
========= =========
Net Interest Income $ 3,369 $ 3,318
========= =========
Interest Rate Spread 3.44% 3.27%
=============== ===============
Net Interest Margin 3.52% 3.40%
=============== ===============
Ratio of average interest
earning assets to average
interest bearing liabilities 100.12% 102.72%
=============== ===============
</TABLE>
(1) Includes non-accrual loans.
(2) Includes FHLB stock and fair value of investments available for sale of
$5.7 million at September 30, 1998.
(3) Includes fair value of mortgage-backed securities available for sale of
approximately $600,000 at September 30, 1998.
10
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<TABLE>
<CAPTION>
SIX MONTHS ENDED SEPTEMBER 30,
----------------------------------------------------------------------------------------------
1998 1997
-------------------------------------------- -------------------------------------------
AVERAGE QUARTERLY ANNUALIZED AVERAGE QUARTERLY ANNUALIZED
ASSETS BALANCE INTEREST AVG. YIELD/COST BALANCE INTEREST AVG. YIELD/COST
- ------ ------- --------- --------------- ------- -------- ---------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest Earning Assets
Loan (1) $270,919 $10,559 7.79% $236,104 $ 8,902 7.54%
Investment Securities (2) 16,709 450 5.39% 13,941 505 7.24%
Mortgage-backed Securities (3) 97,961 3,185 6.50% 137,300 4,416 6.43%
Other Interest Earning Assets 9,943 391 7.86% 4,450 120 5.39%
-------- ------ ------ -------- ------- ------
Total Interest Earning Assets 395,532 14,585 7.37% 391,795 13,943 7.12%
------ -------
Non-interest Earning Assets 31,510 23,273
-------- --------
Total Assets $427,042 $415,068
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Interest Bearing Liabilities
Deposits
DDA $ 10,706 $ 0 0.00% $ 8,197 $ 0 0.00%
NOW 18,149 160 1.76% 18,525 178 1.92%
Savings and club 146,092 1,811 2.48% 144,951 1,805 2.49%
Money market accounts 22,021 323 2.93% 21,627 347 3.21%
Certificates of deposits 81,604 1,918 4.70% 76,468 1,964 5.14%
-------- ------ ------ -------- ------ ------
Total Deposits 278,572 4,212 3.02% 269,768 4,294 3.18%
------ ------
Borrowed Money 106,540 3,307 6.21% 108,803 3,353 6.16%
-------- ------ ------ -------- ------ ------
Total Interest Bearing
Liabilities 385,112 7,519 3.90% 378,571 7,647 4.04%
------ ------
Non-interest Bearing Liabilities 6,049 1,914
-------- --------
Total Liabilities 391,161 380,485
Stockholders' Equity 35,881 34,583
-------- --------
Total Liabilities and
Stockholders' Equity $427,042 $415,068
======== ========
Net Interest Income $7,065 $6,295
====== ======
Interest Rate Spread 3.47% 3.08%
====== ======
Net Interest Margin 3.57% 3.21%
====== ======
Ratio of average interest
earning assets to average
interest bearing liabilities 101.12% 102.97%
====== ======
</TABLE>
(1) Includes non-accrual loans.
(2) Includes FHLB stock and fair value of investments available for sale of
$5.8 million at September 30, 1998.
(3) Includes fair value of mortgage-backed securities available for sale of
approximately $600,000 at September 30, 1998.
11
<PAGE> 12
COMPARISON OF OPERATING RESULTS FOR THE
THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
GENERAL
The Company reported net income for the second quarter of fiscal 1999 of
$193,000, compared to $330,000, for the same period last year. The decrease in
net income was due to increases in the provision for loan losses and
non-interest expense offset in part by an increase in non-interest income.
INTEREST INCOME
Interest income decreased by $145,000, or 2.03%, to $7.0 million for the
three months ended September 30, 1998 compared to $7.1 million for the three
months ended September 30, 1997. The decrease in interest income was primarily
attributable to a $7.4 million or 1.89% decrease in the average balance of
interest earning assets to $383.0 million for the three months ended September
30, 1998 compared to $390.4 million for the three month period ended September
30, 1997.
Interest income from loans receivable increased by $673,000 or 14.85% to $5.2
million for the three months ended September 30, 1998 compared to $4.5 million
for the three months ended September 30, 1997. This primarily resulted from an
increase of $32.5 million or 13.80% in the average balance of loans receivable
to $268.3 million for the three month period ended September 30, 1998 compared
to $253.8 million for the three month period ended September 30, 1997 coupled
with a seven basis point increase in the average yield on the loan portfolio.
The increase in the average loan portfolio balances primarily reflects the
originations and loan purchases made subsequent to the second quarter of the
fiscal year ended March 31, 1998 ("fiscal 1998"). The increase in the average
yield on the loan portfolio was primarily reflects an increase in the average
balance of multi-family loans which generally have higher yields than the
Company's other loans.
Interest income from MBSs decreased $852,000, or 38.88%, to $1.3 million for
three months ended September 30, 1998 compared to $2.2 million for the three
months ended September 30, 1997. This decrease is primarily attributable to a
decrease of approximately $50.4 million or 37.69% in the average balance of MBSs
to $83.4 million compared to $133.8 million coupled with a 13 basis point
decrease in the average yield on such securities. During the second quarter of
fiscal 1999, the Company sold approximately $23.8 million of MBSs and reinvested
the proceeds into money market securities.
Interest income from investment securities and other interest-earning assets
increased by $33,000 or 7.83%, to $457,000 for the three months ended September
30, 1998 compared to $424,000 for the same period last year. The increase in
such income is primarily attributable to a $9.6 million or 62.60% increase in
the average balance of such securities (primarily consisting of money market
securities), to $31.3 million for the three months ended September 30, 1998
compared to $20.8 million for the three months ended September 30, 1997.
INTEREST EXPENSE
Interest expense decreased by $127,000 or 1.67% to $7.5 million for the three
month period ended September 30, 1998 compared to $7.5 million for the same
period last year. The decrease in interest expense was primarily attributable to
a $3.1 million or 0.81% decrease in the average balance of interest bearing
liabilities to $375.4 the three months ended September 30, 1998 compared to
$378.5 million for the three month period ended September 30, 1997 coupled with
an 18 basis point decrease in the average cost of interest-bearing liabilities
to 3.87%.
Interest expense on deposits decreased by $101,000 or 4.64% to $2.1 million
and interest expense on borrowings decreased by $94,000 or 5.65% to $1.6 million
for the three months ended September 30, 1998 compared to $2.2 and $1.7 million
respectively for the corresponding period last year. The decrease in the
interest expense on deposits was primarily attributable to an 18 basis point
decrease in the average cost of deposits to 3.03% offset in part by a $2.6
million or 0.97% increase in the average balance of deposits to $273.3 the three
month period ended September 30, 1998 compared to $270.6 million for the three
month period ended September 30, 1997. The decrease in the average cost of
deposits reflects an increase in the average balance of non-interest bearing DDA
accounts coupled with a decrease in the average balance of higher cost NOW
accounts offset in part by an increase the average balance of higher cost CDs.
NET INTEREST INCOME BEFORE PROVISIONS FOR LOAN LOSSES
Net interest income increased $49,000 or 1.48%, to $3.4 million for the three
months ended September 30, 1998 compared to $3.3 million for the three months
ended September 30, 1997. The increase in net interest income is primarily
attributable to an
12
<PAGE> 13
18 basis point decrease in the average cost of interest bearing liabilities
offset in part by a decrease in the average balance and average yield of
interest earning assets.
The Company's interest rate spread increased by 17 basis points to 3.44% for
the three months ended September 30, 1998 compared to 3.27% for the three months
ended September 30, 1997. The Company's net interest margin increased by 12
basis point to 3.52% for the three months ended September 30, 1998 compared to
3.40% for the three months ended September 30, 1997. The increases in interest
rate spread and net interest margin are primarily attributable to a decrease in
the cost of interest bearing liabilities due to a decrease average cost of
borrowed funds, coupled with an increase in the average yield on interest
earning assets due to an increase in the average balance of loans receivable.
The decrease in the average cost of borrowed funds primarily reflects the
decline in market interest rates. The Company's ratio of average
interest-earning assets to average interest-bearing liabilities was 100.12% for
the three months ended September 30, 1998 compared to 102.72% for the same
period last year.
PROVISION FOR LOAN LOSSES
The Company added $300,000 to its provision for loans losses for the three
month period ended September 30, 1998, compared to $171,000 for the same period
last year. The increase in the provision for the second quarter ending March
31, 1999 ("fiscal 1999") reflects an increase during the quarter in non-
performing mortgage loans and consumer loans which consist of automobile
loans, credit card receivables, along with unsecured and secured personal loans.
During the second quarter of fiscal 1999, the Bank charged off approximately
$268,000 in non-performing consumer loans. At September 30, 1998, non performing
assets acquired by the Company in settlement of such loans increased by
approximately $410,000 to $492,000 compared to $82,000 at March 31, 1998. The
increase is attributable to repossession of automobiles recorded at the lower of
their market value or unpaid principal balance. At September 30, 1998,
non-performing loans totaled $9.5 million or 3.69% of total loans compared to
$5.3 million or 2.24% at September 30, 1997. At September 30, 1998, Carver's
allowance for loan losses was $3.3 million compared to $2.6 million at September
30, 1997, resulting in a ratio of allowance for loan losses to non-performing
loans of 33.68% at September 30, 1998 compared to 48.33% at September 30, 1997
and a ratio of allowances for loan losses to total loans of 1.26% and 1.08%
respectively.
NON-INTEREST INCOME
Non-interest income increased by $220,000 or 62.26% to $572,000 for the
second quarter of fiscal 1999 compared to $353,000 for the corresponding period
last year. The increase in non-interest income for the second quarter of fiscal
1999 was primarily attributable to early prepayment fees on loans and increases
in fees from bank service charges.
NON-INTEREST EXPENSE
Non-interest expense increased by approximately $435,000 or 14.97% to $3.3
million for the three month period ended September 30, 1998 compared to $2.9
million for the three month period ended September 30, 1997. The increase was in
large part attributable to increases of $195,000 in salary and benefits expense
and $19,000 or 6.34% in equipment expense incurred in connection with the
creation of new data processing and loan servicing departments. Non-interest
expense also reflects increases of $40,000 in security service due to
improvements in surveillance equipment, $27,000 or 39.21% in bank charges and
$184,000 or 24.09% in other expenses, offset in part by reductions in
advertising, and legal expenses. In addition, the increase in non-interest
expense reflects a $250,000 charge that was incurred in connection with a
prospective settlement of a litigation. See Legal Proceedings, Part II, Item 1.
INCOME TAX EXPENSE
Income tax expense for the three months ended September 30, 1998 was $110,000
compared to $329,000 for the three months ended September 30, 1997. The
Company's effective tax rate for the three months ended September 30, 1998 was
36.32% compared to 44.96% for the three months ended September 30, 1997.
COMPARISON OF OPERATING RESULTS FOR THE
SIX MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
GENERAL
The Company reported net income for the six month period ended September 30,
1998 of $511,000, compared to $640,000, for the same period last year. The
decrease in net income was primarily due to an increase in non-interest expense
and in the provision for loan losses offset in part by increases in net interest
income and non-interest income.
13
<PAGE> 14
INTEREST INCOME
Interest income increased by approximately $643,000 or 4.61% to $14.6 million
for the six month period ended September 30, 1998 compared to $13.9 million for
the six month period ended September 30, 1997. The increase in interest income
was primarily attributable to a $3.7 million or 0.95% increase in the average
balance of interest earning assets to $395.5 the three months ended September
30, 1998 compared to $391.8 million for the six month period ended September 30,
1997 coupled with a 26 basis point increase in the average yield on
interest-earning assets to 7.37%. The increase in interest income for the six
month period compared to the corresponding period last year was primarily
attributable to a shift in assets from investment securities to higher yielding
loans and other investments.
Interest income from loans receivable increased by $1.7 million, or 18.62%,
to $10.6 million for the six months ended September 30, 1998 compared to $8.9
million for the six months ended September 30, 1997. The increase was primarily
attributable to a $34.8 million or 14.75% increase in the average balance of
loans receivable to $270.9 million for the six month period ended September 30,
1998 compared to $236.1 million for the six month period ended September 30,
1997, coupled with an increase of 25 basis points in the average yield on the
loan portfolio. The increase in the average loan portfolio balances primarily
reflects the impact of loan originations and purchases. The increase in the
average yield on the loan portfolio was primarily attributable to an increase in
the average balance of multi-family loans which generally has higher yields
than the Company's other loans.
Interest income from MBSs decreased $1.2 million, or 27.87%, to $3.2 million
for the six months ended September 30, 1998 compared to $4.4 million for the six
months ended September 30, 1997. This decrease is primarily attributable to a
decrease of $39.0 million or 28.65% in the average balance of MBSs to $98.0
million for the three month period ended September 30, 1998 compared to $137.3
million for the corresponding period last year offset in part by a 7 basis
point increase in the average yield on MBSs.
Interest income from investment securities and other interest-earning assets
increased by $216,000 or 34.50%, to $841,000 for the six months ended September
30, 1998 compared to $625,000 for the six months ended September 30, 1997. The
increase in income is primarily attributable to a $8.3 million or 44.56%
increase in the average balance of investment securities to $26.6 million for
the six months ended September 30, 1998 compared to $18.4 million for the six
months ended September 30, 1997, offset in part by an 1.50% decrease in the
average yield of investment securities. The decrease in the average yield on
investment securities (primarily consisting of money market securities) is
primarily attributable to the sale of MBSs carried as available for sale and
reinvestment of such proceeds in lower yielding money market securities.
INTEREST EXPENSE
Interest expense increased by $127,000 or 1.67% to $7.5 million for the six
months ended September 30, 1998 compared to $7.6 million for the six months
ended September 30, 1997. Interest expense on deposits decreased by $82,000 or
1.90% to $4.2 million for the six month period ended September 30, 1998 compared
to $4.3 million for the six month period ended September 30, 1997. The decrease
in interest expense was primarily attributable to a 14 basis point decrease in
the average cost of interest-bearing liabilities to 3.90% offset in part by a
$6.5 million or 1.73% increase in the average balance of interest bearing
liabilities to $385.1 the six month period ended September 30, 1998 compared to
$378.6 million for the six month period ended September 30, 1997.
Interest expense on deposits decreased by $82,000 or 1.90% to $4.2 million
and interest expense on borrowings decreased by $46,000 or 1.36% to $3.3 million
for the six month period ended September 30, 1998 compared to $2.2 million and
$1.7 million respectively for the same period last year.
NET INTEREST INCOME BEFORE PROVISIONS FOR LOAN LOSSES
Net interest income increased $770,000 or 12.23%, to $7.1 million for the six
month period ended September 30, 1998 compared to $6.3 million for the six month
period ended September 30, 1997. The increase in net interest income is
attributable to a $642,000, or 4.61%, increase in interest income offset in part
by a $127,000 or 1.67% decrease in interest expense.
The Company's interest rate spread increased by 39.0 basis points to 3.47%
for the six month period ended September 30, 1998 compared to 3.08% for the six
month period ended September 30, 1997. The Company's net interest margin
increased by 33 basis point to 3.54% for the six month period ended September
30, 1998 compared to 3.21% for the six month period ended September 30, 1997.
The increase in interest rate spread and net interest margin is primarily
attributable to an increase in the average balance and average yield on interest
earning assets coupled with a decrease in the average cost on interest bearing
liabilities. The Company's ratio of average interest-earning assets to average
interest-bearing liabilities
14
<PAGE> 15
decreased to 101.12% for the six month period ended September 30, 1998 from
102.97% for the six month period ended September 30, 1997.
PROVISION FOR LOAN LOSSES
The Company added $750,000 to its provision for loan losses for the six-month
period ended September 30, 1998, compared to $338,000 for the same period last
year. The increase in the provision for the six month period reflects an
increase in non-performing mortgage and consumer loans which consist of
automobile loans, credit card receivables, along with unsecured and secured
personal loans. During the six month period, the Bank charged off approximately
$521,000 in non-performing consumer loans. At September 30, 1998, non-performing
loans totaled $9.5 million or 3.69% of total loans compared to $6.8 million or
2.51% at March 31, 1998. At September 30, 1998, Carver's allowance for loan
losses was $3.3 million compared to $3.1 million at March 31, 1998, resulting in
a ratio of allowance to non-performing loans of 33.68% at September 30, 1998
compared to 45.30% at March 31, 1998, and a ratio of allowances for loan losses
to total loans of 1.26% and 1.11% respectively.
NON-INTEREST INCOME
Non-interest income increased by approximately $478,000 or 71.43% to $1.1
million for the six month period ended September 30, 1998 compared to $669,000
for the same period last year. The increase in non-interest income reflects
early prepayment fees on loans and increases in fees from bank service charges.
NON-INTEREST EXPENSES
Non-interest expense increased by approximately $1.1 million to $6.6
million for the six month period ended September 30, 1998 compared to $5.5
million for the six month period ended September 30, 1997. The increase was in
large part attributable to increases of $327,000 or 14.35% in salary and
benefits expense and 189,000 or 19.62% in equipment incurred in connection with
the creation of new data processing and loan servicing departments. Non-interest
expense for the six month period ended September 30, 1998 reflects an increase
of $69,000 or 158.88% in FDIC expense to $107,000. The Bank did not incur an
expense for quarterly FDIC premium during the first quarter of fiscal 1998.
Non-interest expense also reflects increases of $49,000 or 34.63% in security
service and $533,000 or 55.44% in other expenses, offset in part by reductions
in advertising expense, and legal expense. In addition, the increase in
non-interest expense reflects a $250,000 charge that was incurred in connection
with a prospective settlement of a litigation. See Legal Proceedings, Part II,
Item 1.
INCOME TAX EXPENSE
Income tax expense for the six month period ended September 30, 1998 was
$346,000 compared to $523,000 for the six month period ended September 30, 1997.
The Company's effective tax rate for the six month period ended September 30,
1998 was 40.34% compared to 44.99% for the six month period ended September 30,
1997.
YEAR 2000 COMPLIANCE
The Year 2000 Problem centers on the inability of computer systems to
recognize the year 2000. Many existing computer programs and systems were
originally programmed with six digit dates that provided only two digits to
identify the calendar year in the date field, without considering the upcoming
change in the century. With the impending millennium, these programs and
computers will recognize "00" as the year 1900 rather than the year 2000. Like
most financial providers, the Company and its operations may be significantly
affected by the Year 2000 Problem due to the nature of financial information.
Software, hardware, and equipment both within and outside the Company's direct
control and with whom the Company electronically or operationally interfaces
(e.g. third party vendors providing data processing, information system
management, maintenance of computer systems and credit bureau information) are
likely to be affected. Furthermore, if computer systems are not adequately
changed to identify the year 2000, many computer applications could fail or
create erroneous results. As a result, many calculations which rely on the date
field information, such as interest, payment or due dates and other operating
functions, will generate results which could be significantly misstated, and the
Company could experience a temporary inability to process transactions, send
invoices or engage in similar normal business activities. In addition, under
certain circumstances, failure to adequately address the Year 2000 Problem could
adversely affect the viability of the Company's suppliers and creditors and the
creditworthiness of its borrowers. Thus, if not adequately addressed, the Year
2000 Problem could result in a significant adverse impact on the Company's
products, services and competitive condition.
The OTS and the other federal banking regulators have issued guidelines to
be followed by insured depository institutions, such as the Bank, to assure
resolution of any Year 2000 problems. Any institution's failure to address
appropriately the Year 2000 Problem could result in supervisory action.
The Company converted its deposits and a portion of its loan portfolio to a
Year 2000 Complaint System in April of 1998. At September 30, 1998, the Company
continued to test these systems and obtain software modifications deemed
necessary for compliance in all other Systems. The Company has initiated formal
communications with all of its significant suppliers to determine the extent to
which the Company is vulnerable to those third parties' failure to resolve
their own Year 2000 Problem. The Company presently believes that with
modifications to existing software and conversions to new software, the Year
2000 Problem will be mitigated without causing a material adverse effect on the
operations of the Company. However, if such modifications and conversions are
not made, or are not completed timely, the Year 2000 Problem could have an
impact on the Company's operations. At this time, management believes that any
such impact and any resulting costs will not be material.
Monitoring and managing the Year 2000 Problem will result in additional
direct and indirect costs to the Company. Direct costs include potential
charges by third party software vendors for product enhancements, costs
involved in testing software products for Year 2000 compliance and any
resulting costs for developing and implementing contingency plans for critical
software products which are not enhanced. Indirect costs will principally
consist of the time devoted by existing employees in monitoring software vendor
progress, testing enhanced software products and implementing any necessary
contingency plans. Such costs have not been material to date. The Company
believes that any such costs to be incurred in the future will not have a
material effect on its results of operations. Both direct and indirect costs of
addressing the Year 2000 Problem will be charged to earnings as incurred.
REGULATORY CAPITAL POSITION
The Bank must satisfy three minimum capital standards established by the
OTS. For a description of the OTS capital regulation, see "Regulation and
Supervision -- Regulation of Savings Associations -- Capital Requirements."
The Bank presently exceeds all capital requirements as currently
promulgated. At September 30, 1998, the Bank had tangible, core, and Tier 1 to
risk-weighted assets, and risk-based capital ratios of 7.17%, 7.18%, 7.18% and
15.28% respectively.
15
<PAGE> 16
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Quantitative and qualitative disclosure about market risk is presented at
March 31, 1998 in Item 7A to the Company's Annual Report on Form 10-K, filed
with the Securities and Exchange Commission ("SEC") on July 14, 1998, as amended
on Form 10-K/A filed with the SEC on August 13, 1998. There have been no
material changes in the Company's market risk at September 30, 1998 compared to
March 31, 1998.
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.
The parties to the Class Action, encaptioned DOUGHERTY VS. CARVER FEDERAL
SAVINGS BANK, previously reported in earlier Form 10-Qs, have entered into an
agreement to settle the suit. The proposed settlement agreement awaits final
approval of the United States District Court for the Southern District of New
York (Honorable Michael B. Mukasey) which will hold a hearing regarding the
settlement on February 16, 1999.
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 held its Annual Meeting, (the"Meeting") on August 14,
1998. The purpose of the Meeting was to vote on the following
proposals:
1. The election of three 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, 1999; 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
Proposal 1: Thomas L. Clark, Jr. For 1,806,893
Withheld 120,179
Pazel G. Jackson For 1,805,538
Withheld 121,534
Herman Johnson For 1,805,938
Withheld 121,134
Proposal 2: For 1,827,554
Against 69,988
Abstain 29,530
Proposal 3: For 304,062
Against 735,416
Abstain 30,650
Broker
Non-Votes 856,944
In addition to the nominees elected at the Meeting, the following
persons' terms of office as directors continued after the Meeting:
David R. Jones, Linda H. Dunham, David N. Dinkins, and Robert J.
Franz.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 11 - Computation of Earnings Per Share
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: November 20, 1998 CARVER BANCORP, INC.
/s/ Thomas L. Clark, Jr.
-------------------------------------
Thomas L. Clark, Jr.
President and Chief Executive Officer
Date: November 20, 1998 /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, 1998
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
------------------ ------------------
<S> <C> <C>
Net income/(Loss) $ 318,054 $ 329,419
Weighted average shares outstanding 2,203,562 2,185,348
Earning/(Loss) per shares outstanding $ 0.09 $ 0.15
</TABLE>
<TABLE>
<CAPTION>
FOR THE SIX MONTH PERIOD ENDED
SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
------------------ ------------------
<S> <C> <C>
Net income/(Loss) $ 511,263 $ 639,543
Weighted average shares outstanding 2,201,306 2,183,092
Earning/(Loss) per shares outstanding $ 0.23 $ 0.29
</TABLE>
19
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND THE STATEMENT OF EARNINGS OF CARVER BANCORP, INC. FOR THE SIX MONTH
PERIOD AT AND ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> SEP-30-1998
<CASH> 23,203,535
<INT-BEARING-DEPOSITS> 267,132,144
<FED-FUNDS-SOLD> 14,800,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 41,045,211
<INVESTMENTS-CARRYING> 78,274,561
<INVESTMENTS-MARKET> 77,685,943
<LOANS> 257,620,195
<ALLOWANCE> 3,280,985
<TOTAL-ASSETS> 430,174,693
<DEPOSITS> 277,796,144
<SHORT-TERM> 106,693,062
<LIABILITIES-OTHER> 7,755,866
<LONG-TERM> 1,092,792
0
0
<COMMON> 23,144
<OTHER-SE> 36,153,690
<TOTAL-LIABILITIES-AND-EQUITY> 430,174,693
<INTEREST-LOAN> 10,559,623
<INTEREST-INVEST> 3,185,114
<INTEREST-OTHER> 841,210
<INTEREST-TOTAL> 14,585,947
<INTEREST-DEPOSIT> 4,212,653
<INTEREST-EXPENSE> 7,520,421
<INTEREST-INCOME-NET> 7,065,526
<LOAN-LOSSES> 750,000
<SECURITIES-GAINS> 5,819
<EXPENSE-OTHER> 6,605,621
<INCOME-PRETAX> 856,939
<INCOME-PRE-EXTRAORDINARY> 856,939
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 511,263
<EPS-PRIMARY> .23
<EPS-DILUTED> .23
<YIELD-ACTUAL> 7.37
<LOANS-NON> 3,304,252
<LOANS-PAST> 5,720,985
<LOANS-TROUBLED> 142,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,242,000
<CHARGE-OFFS> 521,000
<RECOVERIES> 7,000
<ALLOWANCE-CLOSE> 3,880,985
<ALLOWANCE-DOMESTIC> 3,880,985
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
