<PAGE> 1
Final Draft 2/16/98 SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/x / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 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
Class Outstanding at February 17, 1998
----- --------------------------------
Common Stock, par value $.01 2,314,275
1
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CONTENTS
PAGE
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Consolidated Statements of Financial Condition as of
December 31, and March 31, 1997 (unaudited).......................3
Consolidated Statements of Income for the Three and Nine
Months Ended December 31, 1997 and 1996 (unaudited)...............4
Consolidated Statements of Cash Flows for the Nine Months
Ended December 31, 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.................................................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
</TABLE>
2
<PAGE> 3
CARVER BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
<TABLE>
<CAPTION>
AS OF AS OF
DECEMBER 31, MARCH 31,
ASSETS 1997 1997
- ------ --------------- --------------
<S> <C> <C>
Cash and due from banks ....................................... $ 1,693,952 $ 4,230,757
Federal funds sold ............................................ 3,050,000 0
------------- -------------
Total cash and cash equivalents ........................... 4,743,952 4,230,757
Securities available for sale ................................. 40,754,203 83,892,617
Investment securities held to maturity, net
(estimated fair values of $1,673,000 at
March 31, 1997) ........................................... 0 1,675,181
Mortgage-backed securities held to maturity, net
(estimated fair values of $93,812,000 and $107,719,000 at
December 31, 1997 and March 31, 1997) ...................... 96,188,230 110,852,668
Loans receivable, net ......................................... 244,940,083 197,917,673
Real estate owned, net ........................................ 82,198 82,198
Property and equipment, net ................................... 11,609,345 11,342,678
Federal Home Loan Bank of New York stock, at cost ............. 5,387,500 5,535,000
Accrued interest receivable, net .............................. 3,191,321 2,978,365
Excess of cost over net assets acquired, net .................. 1,331,707 1,456,000
Other assets .................................................. 7,538,854 3,650,366
------------- -------------
Total assets .............................................. $ 415,767,393 $ 423,613,503
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits .................................................... $ 269,106,203 $ 266,471,487
Securities sold under agreement to repurchase ............... 73,392,596 74,335,000
Advances from Federal Home Loan Bank of New York ............ 35,000,000 45,400,000
Other borrowed money ........................................ 1,229,391 1,365,990
Advance payments by borrowers for taxes and insurance ....... 670,501 670,502
Other liabilities ........................................... 1,114,145 1,386,802
------------- -------------
Total liabilities ........................................ 380,512,836 389,629,781
------------- -------------
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 .................................. 21,447,094 21,410,167
Retained earnings-substantially restricted .................. 15,343,376 14,359,060
Dividends declared and paid ................................. (115,714) 0
Common stock acquired by Employee Stock Ownership Plan ...... (1,229,391) (1,365,990)
Unrealized (loss) net, on securities available for sale, .... (213,952) (442,659)
------------- -------------
Total stockholders' equity ................................ 35,254,557 33,983,722
------------- -------------
Total liabilities and stockholders' equity .......... $ 415,767,393 $ 423,613,503
============= =============
</TABLE>
3
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CARVER BANCORP INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
---------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Interest income:
Loans receivable ............................. $4,588,062 $2,017,551 $13,490,213 $ 5,557,667
Mortgage-backed securities ................... 2,073,948 2,448,720 6,489,624 7,659,413
Debt and equity securities ................... 238,109 1,175,444 773,775 3,494,998
Other interest-earning assets ................ 30,788 128,242 120,542 478,027
---------- ---------- ----------- ------------
Total interest income ..................... 6,930,907 5,769,957 20,874,154 17,190,105
---------- ---------- ----------- ------------
Interest expense:
Deposits ..................................... 2,162,459 2,100,702 6,456,748 6,282,634
Advances and other borrowed money ............ 1,531,824 1,034,650 4,885,308 3,117,571
---------- ---------- ----------- ------------
Total interest expense ..................... 3,694,283 3,135,352 11,342,056 9,400,205
---------- ---------- ----------- ------------
Net interest income ............................ 3,236,624 2,634,605 9,532,098 7,789,900
Provision for loan losses ...................... 279,920 51,254 681,113 135,895
---------- ---------- ----------- ------------
Net interest income after
provision for loan losses .................... 2,956,704 2,583,351 8,913,985 7,654,005
---------- ---------- ----------- ------------
Non-interest income:
Loan fees and service charges ................ 33,829 52,946 100,015 154,275
Gain or (Loss) on Sale of Securities 188,483 0 188,483 0
Other ........................................ 378,055 184,912 930,979 693,620
---------- ---------- ----------- ------------
Total non-interest income ................ 550,365 237,858 1,219,477 847,895
---------- ---------- ----------- ------------
Non-interest expenses:
Salaries and employee benefits ............... 1,240,081 917,143 3,517,119 2,961,576
Net occupancy expenses ....................... 261,644 317,327 804,069 853,130
Equipment .................................... 363,002 301,261 905,352 804,597
Loss on foreclosed real estate ............... 11,974 1,188 11,974 9,688
Advertising .................................. 75,716 54,308 194,466 133,530
Federal insurance premium .................... 42,119 148,663 83,622 439,320
Amortization of intangibles .................. 17,756 53,268 124,293 159,805
Legal expenses ............................... 105,000 41,841 220,000 115,182
Bank charges ................................. 113,084 81,715 308,423 260,781
Security service ............................. 96,004 77,032 238,122 232,833
SAIF Capitalization .......................... 0 0 0 1,632,290
Other ........................................ 611,959 564,868 1,994,489 1,577,388
---------- ---------- ----------- ------------
Total non-interest expenses .............. 2,938,339 2,558,614 8,401,929 9,180,120
---------- ---------- ----------- ------------
Income (Loss) before income taxes .............. 568,729 262,595 1,731,531 (678,220)
Income taxes (Benefit) ......................... 268,049 111,066 791,310 (309,541)
---------- ---------- ----------- ------------
Net income (Loss) ............................. $ 300,680 $ 151,529 $ 940,221 $ (368,679)
========== ========== =========== ============
Net income (Loss) per common share ............. $ 0.14 $ 0.07 $ 0.43 $ (0.17)
========== ========== =========== ============
Weighted average number of common shares
outstanding .................................. 2,189,918 2,171,194 2,185,376 2,166,992
========== ========== =========== ============
</TABLE>
4
<PAGE> 5
CARVER FEDERAL SAVINGS BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income ............................................................. $ 940,221 $ (368,679)
Adjustments to reconcile net income to net cash .......................
provided by operating activities:
Depreciation and amortization of premises and equipment ............. 492,535 497,776
Amortization of intangibles ......................................... 124,293 159,805
Other amortization and accretion, net ............................... 784,666 948,582
Provision for loan losses .......................................... 681,113 135,895
Deferred income taxes ............................................... (476,662) 292,471
Allocation of ESOP .................................................. 173,526 111,383
Changes in:
Accrued interest receivable, net .................................... 212,956 87,261
Refundable income taxes ............................................. 0 0
Other assets ........................................................ 9,710,160 1,675,994
Other liabilities ................................................... (272,656) 0
------------ ------------
Net cash provided by operating activities ......................... (2,050,168) 3,540,488
------------ ------------
Cash flows from investing activities:
Purchase of securities available for sale ........................... (17,000,000) (8,500,000)
Principal repayments on securities available for sale ............... 4,419.045 4,264,055
Proceeds from sale of securities available for sale ................. 55,819,825 12,114,321
Gain from sale of securities available for sale ...................... 188,483 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 ....................................... 8,480,705 2,311,894
Principal repayment on mortgage-backed securities
held to maturity .................................................. 14,414,131 15,049,089
Principal repayment on investment
held to maturity .................................................. 194,476 0
Net change in loans receivable ...................................... 6,163,779 (21,199,581)
Purchase of mortgage loans .......................................... (53,544,828) 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 ................................ (760,466) (1,766,080)
Redemption of Federal Home Loan Bank stock ......................... 147,500 685,000
------------ ------------
Net cash (used in) provided by investing activities ............... 11,522,650 3,272,995
------------ ------------
Cash flows from financing activities:
Net increase (decrease) in deposits ................................. 2,634,716 6,424,090
Decrease in short term borrowings .................................. (942.404) 0
Repayment of securities sold under agreements to repurchase ......... (67,000,000)
Repayment of advances from Federal Home Loan Bank
of New York ....................................................... (52,400,000) 0
Advances from Federal Home Loan Bank of New York ................... 42,000,000 63,335,000
Repayment of other borrowed money .................................. (136,599) (136,599)
Net increase (decrease) in advance payments by borrowers
for taxes and insurance ........................................... 0 187,447
Cash dividends paid ............................................... (115,000) 0
------------ ------------
Net cash provided by (used in) financing activities ................ (8,959,287) (2,809,938)
------------ ------------
Net increase (decrease) in cash and cash equivalents .................. 513,195 (9,623,421)
Cash and cash equivalents -- beginning ................................ 4,230,757 10,025,950
------------ ------------
Cash and cash equivalents -- ending ................................... $ 4,743,952 $ 19,649,371
============ ============
Supplemental disclosure of non-cash activities:
Unrealized Gain (loss) on securities available for sale:
Unrealized Gain (loss) ............................................ 403,683 $ 927,875
Deferred income taxes ............................................. 189,731 491,774
------------ ------------
$ 213,952 $ 436,101
============ ============
Loans receivable transferred to real estate owned ................... $ 0 $ 32,729
============ ============
Supplemental disclosure of cash flow information:
Cash paid for:
Interest .......................................................... $ 11,367,056 $ 11,595,424
============ ============
Federal, state and city income taxes .............................. $ 0 $ 286,000
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
5
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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 or
nine month period ended December 31, 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 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 nine month periods
ended December 31, 1996 and 1997 are calculated based on weighted
average number of shares outstanding during the period.
(3) 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 No. 128 is not expected to have a material effect on
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.
(4) RECENT DEVELOPMENTS
On January 28, 1998, the Holding Company announced that the
Bank had entered into a definitve agreement to sell its branch office
located in Roosevelt, New York, to City National Bank of New Jersey.
The Roosevelt Office is Carver Federal's only branch office located
in Nassau County, New York.
6
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ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
EXPLANATORY NOTE
This Quarterly Report on Form 10-Q contains forward-looking
statements 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 "Recent Developments".
FINANCIAL CONDITION
ASSETS
Total assets at December 31, 1997 decreased approximately $7.8
million, or 1.85%, to $415.8 million from $423.6 million at March 31, 1997,
however, they were essentially unchanged from $415.6 million at September 30,
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 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 $14.7 million, or 13.23%, to $96.2 million at December 31,
1997 from $110.9 million at March 31, 1997, reflecting the receipt of principal
repayments on such securities. Total cash and equivalents increased by $500,000
or 12.13% to $4.7 million at September 30, 1997 from $4.2 million at March 31,
1997. Securities available for sale decreased $43.1 million or 51.42% to $40.8
million at December 31, 1997 from $83.9 million at March 31, 1997, due to the
sale of $55.8 million of mutual funds and principal repayments which were
partially offset by the purchase of $12.0 million of short term government
agency securities classified as available for sale and a decrease in unrealized
loss of $229,000. The Company used these repayments of mortgage backed
securities, proceeds from sale of mutual funds and increased deposits to
purchase $53.5 million of mortgage loans, originate loans, repurchase securities
previously sold under agreement to repurchase and repay advances from the
Federal Home Loan Bank ("FHLB Advances").
The Company's loans receivable increased $47.0 million or 23.76% to $244.9
million at December 31, 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 nine month period coupled with
increased loan originations of multi-family loans which were partly offset by
principal repayments.
LIABILITIES AND STOCKHOLDERS' EQUITY
The Company's total liabilities decreased by $9.1 million, or 2.34%,
to $380.5 million at December 31, 1997 from $389.6 million at March 31, 1997, as
the result of decreased FHLB advances and securities sold under repurchase
agreements ("other borrowings"). The Company's FHLB advances decreased by $10.4
million or 22.91% to $35.0 million at December 31, 1997 compared to $45.4
million at March 31, 1997, and other borrowings decreased by $900,000 or 1.27%
to $73.4 million compared to $74.3 million for the same period. The FHLB
advances and other borrowings were retired with a portion
7
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of the proceeds generated from the sale of the mutual funds. These decreases
were partially offset by an increase in deposits of $2.6 million, or 1.00%, to
$269.1 million at December 31, 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 $1.3 million or 3.74%, to $35.3
million at December 31, 1997 from $34.0 million at March 31, 1997 due to an
increase in retained earnings of $984,000 offset by the declaration and payment
of a cash dividend, the exercise of stock, a decrease in the unrealized net
loss on securities available for sale, and the allocation of shares under the
Employee Stock Ownership Plan. Retained earnings of the Company at December 31,
1997 increased $984,000, or 6.86%, to $15.3 million at December 31, 1997 from
$14.4 million at March 31, 1997, as a result of earnings during the nine Months
Ended December 31, 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 December 31, 1997, such unrealized losses were approximately $214,000, a
decrease of $229,000, or 51.67%, 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 fourth quarter of the fiscal year ended March 31, 1997 ("fiscal
1997") and the first quarter of the fiscal year ending March 31, 1998 ("fiscal
1998"), 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.
ITEM 3 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 nine month period ended December 31,
1997, the Company purchased $53.5 million of mortgage loans, $17.0 million of
investment securities, and sold $51.0 million of investment securities. During
the nine month period ended December 31, 1996, the Company purchased $8.6
million of investment securities, and sold $12.1 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 December 31, 1997,
the Company's cash and cash equivalents totaled $4.7 million compared to $4.2
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 December 31, 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 December 31, 1997 and
March 31, 1997.
At December 31, 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 December 31, 1997 and March 31,
1997.
<TABLE>
<CAPTION>
AT DECEMBER 31, 1997 AT MARCH 31, 1997
-------------------- -----------------
% OF % OF
AMOUNT ASSETS AMOUNT ASSETS
------ ------ ------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Tangible Capital ........... $32,747 7.90% $30,050 7.18%
Core Capital ............... 31,628 7.63 30,527 6.97
Risk Based Capital ........ 31,878 18.01 30,527 17.94
</TABLE>
8
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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 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. The Company pursued this strategy for the nine month period ended
December 31, 1997. 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
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THREE MONTHS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
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) ................................. $238,810 $ 4,588 7.68% $ 96,428 $2,018 8.37%
Investment Securities (2) ................ 16,013 204 5.10% 91,718 1,235 5.39%
Mortgage-backed Securities (3) ........... 126,895 2,074 6.54% 149,902 2,449 6.53%
Federal Funds Sold ....................... 4,613 65 5.64% 4,850 68 5.61%
-------- -------- ----- -------- ------ -----
Total Interest-earning Assets ............ 386,330 6,931 7.18% 342,898 5,770 6.73%
-------- ------
Non Interest Earning Assets .............. 23,250 24,161
-------- --------
Total Assets ............................. $409,580 $367,059
======== ========
INTEREST-BEARING LIABILITIES
Deposits
DDA ...................................... $ 8,620 $ 0 0.00% $ 7,152 $ 0 0.00%
NOW ...................................... 18,449 87 1.89% 17,718 84 1.90%
Savings and clubs ........................ 143,875 924 2.57% 142,344 905 2.54%
Money market accounts .................... 21,441 173 3.23% 20,121 160 3.18%
Certificates of deposits ................. 77,027 978 5.08% 75,158 951 5.06%
-------- -------- ----- -------- ------ -----
Total deposits ........................... 269,412 2,162 3.21% 262,493 2,101 3.20%
Borrowed money ........................... 104,439 1,532 5.87% 65,400 1,035 6.33%
-------- -------- ----- -------- ------ -----
Total interest-bearing liabilities ....... 373,851 3,694 3.95% 327,893 3,136 3.83%
-------- ------
Non-interest bearing liabilities ......... 671 4,365
-------- --------
Total liabilities ........................ 374,522 332,258
Stockholders' equity ..................... 35,058 34,801
-------- --------
Total liabilities & stockholders' equity . $409,580 $367,059
======== ========
Net interest income ...................... $ 3,237 $2,634
======== ======
Interest Rate Spread ..................... 3.23% 2.90%
==== ====
Net interest margin ...................... 3.35% 3.07%
==== ====
Ratio to average interest-
earning assets to average ...............
Interest-bearing liabilities ............. 103.15% 103.20%
====== ======
</TABLE>
(1) INCLUDES NON-ACCRUAL LOANS.
(2) INCLUDES FHLB STOCK AND FAIR VALUE OF INVESTMENTS AVAILABLE FOR SALE OF $2.1
MILLION AT DECEMBER 31, 1997.
(3) INCLUDES FAIR VALUE OF MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE OF
$32.8 MILLION AT DECEMBER 31, 1997.
10
<PAGE> 11
<TABLE>
<CAPTION>
NINE MONTHS ENDED DECEMBER 31,
--------------------------------------------------------------------------------
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) .................................. $236,903 $ 13,490 7.59% $ 89,641 $ 5,558 8.27%
Investment Securities (2) ................. 14,086 699 6.62% 90,540 3,714 5.47%
Mortgage-backed Securities (3) ............ 133,822 6,490 6.47% 158,157 7,659 6.46%
Federal Funds Sold ........................ 4,910 196 5.32% 6,308 259 5.47%
-------- -------- ------ -------- ------- -----
Total Interest-earning Assets ............. 389,721 20,875 7.14% 344,646 17,190 6.65%
-------- -------
Non Interest Earning Assets ............... 23,102 21,644
-------- --------
Total Assets .............................. $412,823 $366,290
======== ========
INTEREST-BEARING LIABILITIES
Deposits ..................................
DDA ....................................... $ 8,364 $ 0 0.00% $ 6,790 $ 0 0.00%
NOW ....................................... 18,521 265 1.91% 17,622 249 1.88%
Savings and clubs ......................... 144,576 2,709 2.50% 142,765 2,666 2.49%
Money market accounts ..................... 21,525 521 3.23% 20,173 490 3.24%
Certificates of deposits .................. 76,626 2,962 6.08% 73,938 2,877 5.19%
-------- -------- ------ -------- ------- -----
Total deposits ............................ 269,612 6,457 3.19% 261,288 6,283 3.21%
Borrowed money ............................ 107,162 4,885 6.08% 73,310 3,118 5.67%
-------- -------- ------ -------- ------- -----
Total interest-bearing liabilities ........ 376,774 11,342 4.01% 334,598 9,401 3.75%
-------- -------
Non-interest bearing liabilities .......... 1,301 3,247
-------- --------
Total liabilities ......................... 378,075 331,454
Stockholders' equity ...................... 34,748 34,836
-------- --------
Total liabilities & stockholders' equity .. $412,823 $366,290
======== ========
Net interest income ....................... $ 9,533 $ 7,789
======== ========
Interest Rate Spread ...................... 3.13% 2.90%
====== =====
Net interest margin ....................... 3.26% 3.01%
====== =====
Ratio to average interest-
earning assets to average ................
Interest-bearing liabilities .............. 103.44% 103.00%
====== ======
</TABLE>
(1)INCLUDES NON-ACCRUAL LOANS.
(2)INCLUDES FHLB STOCK AND FAIR VALUE OF INVESTMENTS AVAILABLE FOR SALE OF $2.1
MILLION AT DECEMBER 31, 1997.
(3)INCLUDES FAIR VALUE OF MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE OF $32.8
MILLION AT DECEMBER 31, 1997.
11
<PAGE> 12
COMPARISON OF OPERATING RESULTS FOR THE
THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996
GENERAL
The Company reported net income for the three months ended December 31,
1997 of $301,000, compared to net income of $152,000 for the three months ended
December 31, 1996. The increase in net income was due to increases in net
interest income and non-interest income, offset by an increase in interest
expense, the provision for loan losses, and non-interest expense.
INTEREST INCOME
Interest income increased by $1.1 million or 20.12% to $6.9 million for
the three months ended December 31, 1997 compared to $5.8 million for the three
months ended December 31, 1996. The increase was primarily due to an increase in
the average balance of interest earning assets of $43.4 million and a 45 basis
point increase in the average yield on interest-earning assets to 7.18%, which
is the result of the shift in assets from investment securities to loans.
Interest income from loans receivable increased by $2.5 million, or
127.41%, to $4.6 million for the three months ended December 31, 1997 compared
to $2.0 million for the three months ended December 31, 1996. This resulted from
an increase of $142.1 million or 147.41`% in the average balance of loan
receivables to $238.8 million for the three month period ended December 31, 1997
compared to $96.4 million for the three month period ended December 31, 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 during the fourth quarter of fiscal
1997, combined with additional purchases made during fiscal 1998. 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 $375,000, or
15.30%, to $2.1 million for three months ended December 31, 1997 compared to
$2.4 million for the three months ended December 31, 1996. This decrease is
primarily attributable to a decrease of $23.0 million or 15.34% in the average
balance of mortgage-backed securities to $126.9 million. Income from debt and
equity securities (investment securities) and other interest-earning assets
decreased by $1.0 million, or 79.37%, to $269,000 for the three months ended
December 31, 1997 compared to $1.3 million for the same period last year. The
decrease in income is attributable to a $75.7 million or 85.55% decrease in the
average balance of investment securities to $16.0 million for the three months
ended December 31, 1997 compared to $91.7 million for the three months ended
December 31, 1996, and a decrease in the average yield of 29 basis points on the
remaining investment securities.
INTEREST EXPENSE
Interest expense increased by $559,000 or 17.93% to $3.7 million for the
three months ended December 31, 1997 compared to $3.1 million for the same
period in 1996. Interest expense on deposits increased by $62,000 or 2.94% to
$2.2 million for the three months ended December 31, 1997 compared to $2.1
million for the three months ended December 31, 1996. The increase was primarily
due to an increase in the average deposit balances of $6.9 million or 2.63% to
$269.4 million from 262.5 million and an increase in the cost of deposits of 1
basis point. Interest expense on FHLB advances and other borrowings increased by
$497,000 or 48.05% to $1.5 million for the quarter ended December 31, 1997
compared to $1.0 million, for the same period last year. The increase resulted
from an increase in the average balance of other borrowings of $39.0 million or
59.79% to $104.4 million compared to $65.4 million for the same period last
year, offset in part by a decrease in the average cost of other borrowings of 46
basis points to 5.87%. The additional borrowings were primarily used to fund a
portion of the loan purchases completed in fiscal 1998, as well as, loan
originations for the three months ended December 31, 1997.
NET INTEREST INCOME BEFORE PROVISIONS FOR LOAN LOSSES
Net interest income increased $602,000 or 22.85%, to $3.2 million for the
three months ended December 31, 1997 compared to $2.6 million for the three
months ended December 31, 1996. The increase in net interest income is
attributable to a $1.2 million, or 20.12%, increase in interest income which was
partially offset by a $559,000, or 17.83% increase in interest expense.
The Company's interest rate spread increased by 32 basis points to 3.22%
for the three months ended December 31, 1997 compared to 2.90% for the three
months ended December 31, 1996. The Company's net interest margin increased by
28 basis point to 3.35% for the three months ended December 31, 1997 compared to
3.07% for the three months ended December 31, 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
12
<PAGE> 13
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 103.15% for the three months ended
December 31, 1997 from 103.20% for the three months ended December 31, 1996.
PROVISION FOR LOAN LOSSES
The Bank provided $281,000 for loans losses for the three months ended
December 31, 1997, compared to $51,000 for the three months ended December 31,
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.
As part of the Bank's determination of the adequacy of the allowance for
possible loan losses, the Bank monitors its loan portfolio through two
sub-committees of the Board of Directors, the Audit Committee and the
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 December 31, 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 in
completing the project. At December 31, 1997, construction on the project was
complete and the general contractor had applied for certificates of occupancy
for the project. Carver, the participating lender, and a city agency are working
closely with the general contractor to expedite receipt of the certificate of
occupancy for the project and to deliver the homes which were under contract to
purchase. At December 31, 1997 the Bank had committed to provide mortgage
financing to ten (10) purchasers, and the developer jointly with the city
agency had retained an established real estate professional to sell the
remaining houses.
At December 31, 1997, non performing loans totaled $7.0 million or 2.86% of
total loans compared to $5.3 million at September 30, 1997 or 2.24% of total
loans and $6.4 million or 3.23% of total loans at March 31,1997. The increase in
non performing loans for the three month period reflects an increases of $1.6
million in non performing one-to-four family residential loans and $561,000 in
non performing consumer loans, offset in part by a reduction of $523,000 in the
aggregate balance of non performing multi-family/non residential loans. At
December 31, 1997, Carver's allowance for loan losses was $2.9 million compared
to $2.6 million at September 30, 1997 and $2.2 million at March 31, 1997,
resulting in a ratio of allowance for loan losses to non-performing assets of
41.13% at December 31, 1997, compared to 48.33% at September 30, 1997 and 35.06%
at March 31, 1997, and a ratio of allowance for loan losses to total loans of
1.18%, 1.08% and 1.11% respectively.
NON-INTEREST INCOME
Non-interest income increased by $313,000, or 131.38%, to $550,000 for the
three months ended December 31, 1997 compared to $238,000 for the three months
ended December 31, 1996. The increase was primarily to 188,000 gain on sale of
securities combined with increased fees from bank services charges and
prepayment fees from the early repayment of mortgage loans.
NON-INTEREST EXPENSE
Non-interest expense increased to $2.9 million for the three months ended
December 31, 1997 compared to $2.6 million for the three months ended December
31, 1996. The increase in non-interest expense for the three months ended
December 31, 1997 reflects an increase of: $323,000, or 35.21% in salaries and
employee benefits and the funding of management incentive plans, $62,000 or
20.49% in equipment expense, $21,000 or 39.42% in advertising expense and
$63,000 or 150.95% in legal expense. Non-interest expenses also reflect an
increase of $74,000, or 8.34% in other expenses reflecting increased expenses
for; loan origination staff of the Bank, service fees, telephone service, and
contributions, offset in part by a decrease of $107,000 or 71.67% in federal
deposit insurance premiums ("FDIC premiums") and $36,000 or 66.67% in the
amortization of intangibles.
13
<PAGE> 14
INCOME TAX EXPENSE
Income tax expense for the three months ended December 31, 1997 was
$268,000 compared to a $111,000 for the three months ended December 31, 1996.
The Company's effective tax rate for the three months ended December 31, 1997
was 47.13%, the Company recovered taxes at a rate of 42.30% for the three months
ended December 31, 1996.
COMPARISON OF OPERATING RESULTS FOR THE
NINE MONTHS ENDED DECEMBER 31, 1997 AND 1996
GENERAL
The Company reported net income for the nine months ended December 31,
1997 of $940,000, compared to a loss of $520,000 for the nine months ended
December 31, 1996. The loss for the nine months ended December 31, 1996
reflected a one time pre-tax assessment of $1.6 million for the recapitalization
of the Savings Association Insurance Fund ("SAIF Assessment"). Net income for
the nine month period ended December 31, 1996, before posting the SAIF
assessment was $505,000. The increase in net income for the nine months ended
December 31, 1997, as compared to net income for the nine months ended December
31, 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 $3.7 million or 21.43% to $20.9 million for
the nine months ended December 31, 1997 compared to $17.2 million for the nine
months ended December 31, 1996. The increase was primarily due to a $45.1
million increase in the average balance of interest earning assets to $389.7
million and a 49 basis point increase in the average yield to 7.14%, which is
the result of the shift in assets from investment securities to loans.
Interest income from loans receivable increased by $7.9 million, or
142.73%, to $13.5 million for the nine months ended December 31, 1997 compared
to $5.6 million for the nine months ended December 31, 1996. This increase
resulted from an $147.2 million or 1.64% increase in the average balance of
loans receivable to $236.9 million for the nine month period ended December 31,
1997 compared to $89.6 million for the three month period ended December 31,
1996, partly offset by a decrease of 68 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 nine 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 $1.2 million, or
15.27%, to $6.5 million for the nine months ended December 31, 1997 compared to
$7.7 million for the nine months ended December 31, 1996. This decrease is
primarily attributable to a decrease of $24.3 million or 15.38% in the average
balance of mortgage-backed securities to $133.8 million for the nine months
ended December 31, 1997 compared to $158.2 million for the same period last
year. Income from debt and equity securities (investment securities) and other
interest-earning assets decreased by $3.1 million, or 77.49%, to $894,000 during
the nine months ended December 31, 1997 compared to $4.0 million for the same
period last year. The decrease in income is primarily attributable to a $76.5
million or 84.44% decrease in the average balance of investment securities to
$14.1 million for the nine months ended December 31, 1997 compared to $90.5
million for the nine months ended December 31, 1996, offset in part by an 1.15%
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 $1.9 million or 20.66% to $11.3 million for
the nine months ended December 31, 1997 compared to $9.4 million for the nine
months ended December 31, 1996. Interest expense on deposits increased by
$174,000 or 2.77% to $6.5 million for the nine months ended December 31, 1997
compared to $6.3 million for the nine months ended December 31, 1996. The
increase in interest on deposits was primarily due to an increase in the average
deposit balance of $8.3 million to $269.6 million offset by a decrease in the
cost of deposits of 2 basis points. Interest expense on FHLB advances and other
borrowings increased by $1.7 million or 56.70% to $4.9 million for the quarter
ended December 31, 1997 compared to $3.1 million, for the same period in 1996.
The increases are due to an increase in the average balance of other borrowings
of $33.9 million or 46.23% to $107.2 million and an increase in the average cost
of other borrowings of 41 basis points to 6.08 The additional borrowings were
primarily used to fund a portion of loan purchases for the nine months ended
December 31, 1997.
14
<PAGE> 15
NET INTEREST INCOME BEFORE PROVISIONS FOR LOAN LOSSES
Net interest income increased $1.7 million or 22.36%, to $9.5 million for
the nine months ended December 31, 1997 compared to $7.8 million for the nine
months ended December 31, 1996. The increase in net interest income is
attributable to a $3.7 million, or 21.43%, increase in interest income which was
partially offset by a $1.9 million, or 20.66% increase in interest expense.
The Company's interest rate spread increased by 23 basis points to 3.13%
for the nine months ended December 31, 1997 compared to 2.90% for the nine
months ended December 31, 1996. The Company's net interest margin increased by
25 basis point to 3.26% for the nine months ended December 31, 1997 compared to
3.01% for the nine months ended December 31, 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 receivable, 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 increased to 103.44% for the nine months
ended December 31, 1997 from 103.00% for the nine months ended December 31,
1996.
PROVISION FOR LOAN LOSSES
The Bank provided $618,000 for loans losses for the nine months ended
December 31, 1997, compared to $136,000 for the nine months ended December 31,
1996. The provision was increased in part to reflect the growth in the loan
portfolio during the nine month period and in part to maintain the allowance for
loan losses at an adequate level consistent with the Company's policies.
At December 31, 1997, non performing loans totaled $7.0 million or 2.86% of
total loans compared to $5.3 million at September 30, 1997 or 2.24% of total
loans and $6.4 million or 3.23% of total loans at March 31,1997. The increase in
non performing loans for the nine month period reflects an increase in non
performing consumer loans of $500,000 and an increase in non performing
one-to-four family residential loans of $540,000 offset in part by a reduction
of $523,000 in the aggregate balance of non performing multi-family and non
residential loans. At December 31, 1997, Carver's allowance for loan losses was
$2.9 million compared to $2.6 million at September 30, 1997 and $2.2 million at
March 31, 1997, resulting in a ratio of allowance for loan losses to
non-performing assets of 41.13% at December 31, 1997, compared to 48.33% at
September 30, 1997 and 35.06% at March 31, 1997, resulting in a ratio of
allowance for loan losses to total loans of 1.18%, 1.08% and 1.11% respectively.
NON-INTEREST INCOME
Non-interest income increased by $372,000, or 43.82%, to $1.2 million for
the nine months ended December 31, 1997 as compared to $848,000 for the nine
months ended December 31, 1996. The increase was primarily due to gain on sale
of securities combined with increased fees from bank services charges and
prepayment fees from the early repayment of mortgage loans.
NON-INTEREST EXPENSE
Non interest expense for the nine months ended December 31, 1997 was $8.4
million. Non interest expenses for the nine months ended December 31, 1996 was
$9.2 million and reflected the one time pre-tax assessment of $1.6 million for
the SAIF assessment. Non interest expense for the nine months ended December 31,
1996 before posting the SAIF assessment was $7.5 million.
The $854,00 or 11.32% increase in non-interest expenses for the nine months
ended December 31, 1997, compared to same period last year before posting the
SAIF assessment, was due primarily to an increase of: $556,000, or 18.76% in
salaries and employee benefits and the funding of management incentive plans,
$101,000 or 12.52% in equipment expense, $61,000 or 45.63% in advertising
expense and $105,000 or 91.00% legal expense. Non-interest expenses also reflect
an increase of $417,000, or 26.44% in other expenses reflecting increased
expenses for: loan originations, service fees, telephone service, and
contributions, offset in part by a decrease of $356,000 or 80.97% in federal
deposit insurance premiums ("FDIC premiums"), $35,000 in the amortization of
intangibles, and $49,000 or 5.75% reduction in occupancy expense.
INCOME TAX EXPENSE
Income tax expense for the nine months ended December 31, 1997 was
$791,000 compared to a recovery of $310,000 for the nine months ended December
31, 1996. The Company's effective tax rate for the nine months ended December
31, 1997 was 45.70%, the Company recovered taxes at a rate of 45.64% for the
nine months ended December 31, 1996.
15
<PAGE> 16
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.
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 December 31, 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 intends 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.
16
<PAGE> 17
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:
<TABLE>
<S> <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 8K
(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: February 17, 1998 CARVER BANCORP, INC.
/s/ Thomas L. Clark, Jr.
________________________
Thomas L. Clark, Jr.
President and Chief Executive Officer
Date: February 17, 1998 /s/ Walter T. Bond
________________________
Vice President and
Acting Chief Financial Officer
18
<PAGE> 19
EXHIBIT INDEX
Exhibit 11 - Computation of Earnings Per Share
Exhibit 27 - Financial Data Schedule
<PAGE> 1
EXHIBIT 11
COMPUTATION OF NET INCOME PER SHARE
AS OF QUARTER ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
DECEMBER 31, 1997 DECEMBER 31,1996
----------------- ----------------
<S> <C> <C>
Net income / (Loss) $ 300,680 $ 111,066
Weighted average shares outstanding 2,189,918 2,171,194
Earning / (Loss) per shares outstanding $ 0.14 $ 0.07
</TABLE>
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
DECEMBER 31, 1997 DECEMBER 31,1996
----------------- ----------------
<S> <C> <C>
Net income / (Loss) $ 940,221 ($368,679)
Weighted average shares outstanding 2,185,376 2,166,992
Earning / (Loss) per shares outstanding $ 0.43 ($0.17)
</TABLE>
19
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> DEC-31-1997
<CASH> 1,693,952
<INT-BEARING-DEPOSITS> 390,320,016
<FED-FUNDS-SOLD> 3,050,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 28,915,398
<INVESTMENTS-CARRYING> 96,518,638
<INVESTMENTS-MARKET> 93,812,000
<LOANS> 244,940,083
<ALLOWANCE> 2,862,455
<TOTAL-ASSETS> 415,767,393
<DEPOSITS> 269,106,203
<SHORT-TERM> 108,020,000
<LIABILITIES-OTHER> 1,784,648
<LONG-TERM> 1,601,987
0
0
<COMMON> 23,144
<OTHER-SE> 35,231,413
<TOTAL-LIABILITIES-AND-EQUITY> 415,767,393
<INTEREST-LOAN> 4,588,062
<INTEREST-INVEST> 2,312,057
<INTEREST-OTHER> 30,788
<INTEREST-TOTAL> 6,930,907
<INTEREST-DEPOSIT> 2,162,459
<INTEREST-EXPENSE> 1,531,824
<INTEREST-INCOME-NET> 3,236,624
<LOAN-LOSSES> 279,920
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,938,339
<INCOME-PRETAX> 568,729
<INCOME-PRE-EXTRAORDINARY> 568,729
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 300,680
<EPS-PRIMARY> 0.14
<EPS-DILUTED> 0.14
<YIELD-ACTUAL> 7.10
<LOANS-NON> 4,276,407
<LOANS-PAST> 2,602,883
<LOANS-TROUBLED> 412,500
<LOANS-PROBLEM> 412,500
<ALLOWANCE-OPEN> 2,423,102
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 2,862,455
<ALLOWANCE-DOMESTIC> 2,862,455
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
