Registration No. 333-89443
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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PRE-EFFECTIVE AMENDMENT NO. 1 TO FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CARVER BANCORP, INC.
(Exact name of registrant as specified in its charter)
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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
(212) 876-4747
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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DEBORAH C. WRIGHT
PRESIDENT AND CHIEF EXECUTIVE OFFICER
75 WEST 125TH STREET
NEW YORK, NEW YORK 10027
(212) 876-4747
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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With a copy to:
KOFI APPENTENG
THACHER PROFFITT & WOOD
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048-0087
(212) 912-7418
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: from
time to time after the effective date of this Registration Statement.
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If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |X|
If the registrant elects to deliver its latest annual report to
security holders, or a complete and legible facsimile thereof, pursuant to Item
11 (a) (1) of this form, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
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<CAPTION>
CALCULATION OF REGISTRATION FEE
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Title of Each Class of Securities Amount to be Proposed Maximum Proposed Maximum Amount of
to be Registered Registered Offering Price Per Share Aggregate Offering Price Registration Fee
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<S> <C> <C> <C> <C>
Common Stock, par value $.01 per share 462,000 Shares N/A $3,696,000 $1,030
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</TABLE>
<TABLE>
<CAPTION>
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Total Registration Fee Amount Previously Paid Amount Due with Filing
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<S> <C> <C>
$1,030 $1,030 $0.00
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee;
based on the average of the high and low prices of the Common Stock on
October 15, 1999, as reported on the American Stock Exchange
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON
SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS
EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER
AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE
AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
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PROSPECTUS
[LOGO - CARVER BANCORP, INC.]
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SHARES PROGRAM
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Carver Bancorp, Inc. is pleased to offer you the opportunity to participate
in the Carver Shares Program, a direct stock purchase program that provides
a convenient way to invest in our common stock. The shares of our common
stock offered in this prospectus will be sold at the prevailing market
price at the time of purchase.
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This prospectus relates to 462,000 shares of Carver common stock, par value
$0.01 per share, to be offered for purchase under the Shares Program.
The shares of common stock are not savings accounts or savings deposits, are not
guaranteed or insured by the Federal Deposit Insurance Corporation or any other
government agency, are not guaranteed by Carver Bancorp Inc. or Carver Federal
Savings Bank and are subject to investment risk.
Our shares are traded on the American Stock Exchange. Our ticker symbol is
"CNY." On November 19, 1999, the closing price of our common stock on the
American Stock Exchange was $10 3/4.
Carver will pay the costs of mailings and other administration costs of the
Shares Program. Program participants will pay commissions and related service
charges related to shares purchased or sold through the Shares Program.
This Prospectus is not an offer to sell securities and it is not soliciting an
offer to buy securities in any state or country where the offer or sale is not
permitted. To the extent required by applicable law in certain jurisdictions,
shares offered through the Shares Program are offered only through a registered
broker-dealer in those jurisdictions.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATORS HAS APPROVED THE COMMON STOCK DISCUSSED IN THIS PROSPECTUS, NOR HAVE
THEY DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR ADEQUATE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is November 19, 1999
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TABLE OF CONTENTS
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A Summary of the Shares Program................................................1
Information about Carver Bancorp, Inc..........................................3
Information About The Shares Program...........................................3
Federal Income Tax Consequences...............................................11
Description of Carver's Common Stock..........................................11
Use of Proceeds...............................................................13
Legal Matters.................................................................13
Experts .....................................................................13
Indemnification...............................................................13
Factors That May Affect Future Results........................................14
Documents Incorporated by Reference...........................................14
Where You Can Find Additional Information.....................................15
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A SUMMARY OF THE SHARES PROGRAM
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ENROLLMENT
Anyone may apply for enrollment in the Shares Program by completing,
signing and returning an enrollment form, together with a check or money order
of not less than $200 or more than $10,000. You may enroll by mail, by calling
the Program Administrator at 1-800-278-4353 or 1-718-921-8283 to obtain an
enrollment form or by downloading an enrollment form at the www.investpower.com
internet site. Investors are responsible for the fees described in this
prospectus.
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Participation in the Shares Program is entirely voluntary and we give
no advice regarding your decision to join the Program.
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PROGRAM ACCOUNT
When enrolled in the Shares Program, an account will be opened in your
name and shares purchased will be held by the Program Administrator in
book-entry form, which means the Program Administrator will maintain an account
in which the number of shares you hold will be allocated to you. You will
receive periodic statements instead of receiving stock certificates. You may
request stock certificates for shares held by the Program Administrator in your
account at any time, upon request and without charge.
ADDITIONAL PURCHASES
You may purchase additional shares of our common stock through the
Shares Program. You may buy from $100 to $10,000 worth of common stock per
transaction, as often as once per week. There will be a $2.50 fee for each
purchase made by mailing a check or money order to the Program Administrator.
You are also allowed to make automatic monthly purchases for a constant dollar
value by instructing the Program Administrator to electronically debit and
transfer funds from your bank, for a fee of $1.00 per transaction. You will also
be responsible for a $.10 fee for each share purchased.
SELLING SHARES FROM YOUR ACCOUNT
You may instruct the Program Administrator to sell shares held by the
Program Administrator in your account on the open market at the prevailing
market price on the stock exchange. You will be charged a fee of $7.50 plus $.10
per share for each transaction.
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SAFEKEEPING OF CERTIFICATES
You may mail any stock certificates you have for our common stock to
the Program Administrator at any time. The shares represented by the
certificates will be maintained in book-entry form and held in your Shares
Program account. You may request stock certificates at any time for the shares
held in your account. There is a one-time fee of $7.50 for depositing your
certificates, unless you instruct the Program Administrator to sell the shares
represented by the certificates, in which case only the sales fee and
commissions will be applied.
TRANSFERRING SHARES
You may at any time transfer or provide a gift to another person of
your shares in the Shares Program without charge.
STATEMENTS AND FORMS
Each program account will receive a quarterly statement that reflects
all investment account activity. Each time a purchase is made for you, you will
also receive a confirmation advisory reflecting your purchase price and your new
share balance. Each form you receive will contain a tear-off stub form that can
be used for any future Shares Program transactions you may desire. In addition,
you can conveniently submit your transaction instruction through the Program
Administrator's automated telephone system and internet site.
CONTACTING THE PROGRAM ADMINISTRATOR FOR INFORMATION
Our Transfer Agent and Program Administrator is American Stock Transfer
& Trust Company. You can contact them in the following ways:
TELEPHONE: 1-800-278-4353 or 1-718-921-8283
AUTOMATED TELEPHONE SYSTEM: 1-877-253-6846
INTERNET: www.investpower.com
MAIL: American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, NY 10005
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Please read this prospectus, including the documents incorporated by
reference into this prospectus, before making a decision about investing in
our common stock through the Shares Program. If you do invest, please keep
this prospectus with your permanent investment records, since it contains
important information about the Shares Program.
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INFORMATION ABOUT CARVER BANCORP, INC.
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Carver Bancorp, Inc., with over $400 million in assets, is the holding
company for Carver Federal Savings Bank, a federally chartered savings bank. We
refer to Carver Bancorp, Inc. as "Carver" and Carver Federal Savings Bank as
"Carver Federal." The term "we" refers to Carver. Carver Federal was founded in
1948 to provide an African-American-operated institution where residents of
under-served communities could invest their savings and obtain credit. Our
principal business, conducted through our principal subsidiary Carver Federal,
consists of attracting passbook and other savings accounts through branch
offices and investing the funds deposited in these accounts in mortgage loans
and other investments permitted to federal savings banks. Carver Federal
operates seven full service branches in predominantly African-American
neighborhoods in the New York City boroughs of: Brooklyn, Queens, Manhattan and
in Nassau County, New York. Based on asset size as of September 30, 1999, Carver
Federal is the largest African-American-operated financial institution in the
United States.
Our principal executive offices are located at 75 West 125th Street,
New York, New York 10027 and our telephone number is (212) 876-4747.
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INFORMATION ABOUT THE SHARES PROGRAM
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The following questions and answers explain and set forth the terms of the
Shares Program.
1. WHAT IS THE CARVER SHARES PROGRAM AND WHO CAN PARTICIPATE?
o The Carver Shares Program is a convenient purchase program available
for new investors that want to make an initial investment in our
common stock and for existing investors that want to increase their
holdings of our common stock. Our shareholders, employees, customers
and members of the communities we serve, along with any other
interested persons, can participate in the Shares Program.
Participation is voluntary.
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2. HOW DO I ENROLL?
o If you already own at least one share of our common stock, and it is
registered in your name, simply fill out and sign the enclosed
enrollment form and mail it to the Program Administrator using the
pre-paid postage envelope.
o If you do not currently own our common stock and are investing for the
first time, fill out an enrollment form by calling 1-800-278-4353 or
1-718-921-8283, or download the application and enrollment form at
www.investpower.com, the Program Administrator's internet site. The
minimum initial purchase is $200 and the registration fee is $2.50.
o If you own our common stock and it is held in a broker, bank, trust or
other name than yours, request that that entity transfer at least one
share of stock into your name. If you do not wish to transfer shares
into your name, you can still enroll and buy shares as instructed
above but you will have to pay the $2.50 initial registration fee.
3. HOW DO I PURCHASE ADDITIONAL SHARES?
o You can easily purchase additional shares of our common stock at any
time. Your payments, less applicable service charges and fees, are
used to purchase shares of our common stock for your account. The
Program Administrator will make purchases at least once every week.
You will become the owner of the shares purchased for your account on
the date the purchase is made. No interest will be paid to you on cash
held by the Program Administrator pending the purchase of stock.
o You can make an investment when joining the Shares Program by
enclosing a check or money order with your enrollment form.
Thereafter, payments should be mailed to the Program Administrator
with the tear-off portion of either your quarterly account statement
or the purchase transaction advisory mailed to you to confirm a
purchase.
o For first-time investors, the minimum initial investment is $200. For
existing investors who have shares already registered in their name
the minimum investment is $100. The maximum weekly investment for
existing or new investors is $10,000 per week. The maximum annual
investment is $100,000 per year.
o You may authorize the Program Administrator to make automatic monthly
purchases of a specified dollar amount of our common stock, paid for
by automatic withdrawal from your bank account. You may sign up for
this service when filling out the enrollment form or by accessing the
Program Administrator's internet site, www.investpower.com, and
following the simple instructions. Funds will generally be withdrawn
from your bank account on the 10th day of
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each month (or the next following business day if the 10th is not a
business day). To terminate monthly purchases by automatic withdrawal,
you must send the Program Administrator written, signed instructions.
o If a check you send to the Program Administrator for share purchases
is returned to the Administrator as "unpaid," the Program
Administrator will resell any shares purchased and liquidate
additional shares, if necessary, to reimburse the Program
Administrator for any fees or loss incurred when reselling the shares.
4. HOW ARE MY SHARES PURCHASED?
o The Program Administrator will consolidate payments from all
participants and apply them to purchase shares on the American Stock
Exchange or directly from Carver. All share purchases will be made at
the prevailing market price. If the purchase is made directly from
Carver Bancorp, the prevailing price shall be the average of the
closing price of our common stock for the five (5) trading days
preceding the purchase date. The Program Administrator may also
purchase shares on another stock exchange, in the over-the-counter
market or in negotiated transactions at prevailing prices. The Program
Administrator will first purchase shares on the stock exchange, in the
over-the-counter market or in negotiated transactions. If the number
of shares available through these sources is insufficient to satisfy
the number of shares to be purchased for participants, then the
Program Administrator shall purchase shares from Carver. The price per
share cannot be determined prior to purchase. Purchases are made at
least once a week and, depending on investment volume, may be made
more frequently.
5. WHAT IS THE PRICE I WILL PAY FOR SHARES?
o Since the Program Administrator aggregates purchases, the share price
you pay for any purchase will be the average price paid for all shares
purchased by the Program Administrator for plan participants whose
payments were aggregated into a single purchase by the Program
Administrator. The share price is calculated in the same way for
initial investors and current investors who send payments.
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You should be aware that the price of shares of the common stock may
rise during the period between your request for purchase, its receipt
by the Program Administrator and the ultimate purchase.
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Purchase Fee Summary
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Initial registration fee for new investors .....$2.50 plus $.10 per share
Purchases by check or money order ..............$2.50 plus $.10 per share
Monthly purchase by automatic withdrawal .......$1.00 plus $.10 per share
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o The Program Administrator may not increase the fees charged under the
Shares Program without mailing a notice of the increase to
participants at least thirty (30) days before the increases go into
effect.
6. HOW DO I KEEP TRACK OF TRANSACTIONS IN MY ACCOUNT?
o The Program Administrator will mail you quarterly statements
reflecting your account balance and all activity for the year to date.
In addition, whenever there is a purchase for your account an advisory
will be mailed to serve as confirmation of the purchase.
o You can reach the Program Administrator by dialing 1-877-253-6846 and
following the instructions of the automated telephone system. You can
also speak to a customer service representative by calling the same
number during normal business hours, eastern standard time. Be sure to
keep your program statement for your permanent records.
7. WHAT IS SAFEKEEPING OF CERTIFICATES?
o If you already have certificates for our common stock and wish to make
sure they do not get lost or stolen, you may elect to deposit the
certificates into your Shares Program account for safekeeping with the
Program Administrator. The Program Administrator will credit these
shares to your Shares Program account in book-entry form. You may
request issuance of a certificate from the Program Administrator at
any time.
o If you are not already participating in the Shares Program, you must
complete and sign an enrollment form to accompany certificates sent in
for safekeeping in the Shares Program.
o To deposit certificates with the Program Administrator, insure the
certificates for 2% of their total value to protect against loss in
transit and send them via registered mail to the Program
Administrator.
o The usual fee of $7.50 for this service will be waived if you choose
to deposit your certificates and sell them at the same time through
the Shares Program.
8. HOW DO I WITHDRAW STOCK THAT IS IN MY SHARES PROGRAM ACCOUNT?
o You may request that the Program Administrator issue a certificate(s)
for some or all of the shares held in your Shares Program account. You
may make this request by using the form enclosed in your Shares
Program statement, through the Program Administrator's automated
telephone system, or through the Program Administrator's internet
site. The Program Administrator will issue a certificate in the exact
amount shown on your program statement unless otherwise instructed in
writing. Certificates will be sent by first class mail, generally
within a few days
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after receiving your request, and there is no charge for this service
if you are still participating in the Program.
9. HOW DO I TRANSFER SHARES TO ANOTHER PERSON?
o Transfers can be made in book-entry form or certificates can be issued
and sent to the new owner by first class mail. You can transfer shares
to a person who already has a Shares Program account, or you can set
up a new account if the person does not have one. To complete a
transfer you should:
(i) call the Program Administrator to request a Shares Program
brochure and enrollment form. Complete the form providing the
full registration name, address and social security number of the
new participant; and
(ii) send the completed enrollment form along with a written request
indicating the number of shares (full and fractional, if any)
which should be transferred to the new participant to the Program
Administrator. The owners of the Shares Program account must sign
the instructions and their signatures must be guaranteed by a
bank, broker or financial institution that is a member of the
Signature Guarantee Medallion Program. You can check with your
financial institution to see if it is a member of the Medallion
Program.
10. CAN I SELL SHARES IN MY ACCOUNT?
o You may instruct the Program Administrator to sell any or all the
shares held in your Shares Program account by calling the toll-free
telephone number supplied in this prospectus and accessing the Program
Administrator's automated telephone system with your instructions. You
may also complete and sign the tear-off portion of your account
statement and mail the instructions to the Program Administrator. If
there is more than one individual owner of the Shares Program account,
all the owners must sign the tear-off portion of the account
statement.
o As with purchases, the Program Administrator aggregates all requests
to sell shares and then sells the total number of shares on the open
market through a broker. Sales will be made no less than once a week
and may be made daily or as soon as practicable depending on
participant demand. The selling price will not be known until the sale
is completed. The proceeds of the sale, less an administrative fee of
$7.50 plus $.10 per share, will be sent to you by check three business
days following the sale.
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o You may not rescind sale instructions sent to the Program
Administrator.
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You should be aware that the price for your shares may fall during the
period between a request for sale, its receipt by the Program Administrator
and the ultimate sale on the open market.
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11. HOW DO I CLOSE MY ACCOUNT?
o You may withdraw from the Shares Program at any time using the
tear-off stub at the bottom of your statement. Upon termination, a
certificate for the full number of shares held in your Shares Program
account will be issued and any fractional shares held in the Shares
Program account will be sold. You will receive a check for the net
proceeds, less a fee of $7.50 plus $.10 per share. If the stock sold
is insufficient to cover the processing fee of $7.50, a check will not
be issued nor will you be billed for any additional fees.
o Alternatively, you may direct the Program Administrator to sell any or
all of the shares in your account in accordance with the instructions
outlined in the answer to Question 10 above.
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OTHER TERMS
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The following additional terms also govern the Shares Program.
STOCK DISTRIBUTIONS
If Carver declares a stock split or stock dividend, the Program
Administrator will credit your account with the appropriate number of shares on
the payment date. In the event of a stock subscription or other offering of
rights to shareholders, you will be entitled to such rights based on the number
of shares credited to your account.
VOTING
For any shareholder meeting, you will receive a proxy that covers all
the shares you hold in your Shares Program account. The proxy allows you to
indicate how you want your shares to be voted. Your shares will be voted as you
indicate. If no instructions are indicated on a properly completed, signed and
returned proxy card, all shares credited to your account will be voted in
accordance with the recommendations of our management. If you do not return the
properly completed and signed proxy card, none of your shares will be voted
unless you vote in person at the applicable shareholder meeting.
RESPONSIBILITIES OF THE PROGRAM ADMINISTRATOR
By participating in the Shares Program, you agree that the Program
Administrator will not be liable for any act performed in good faith or for any
good faith omission to act, including, without limitations, any claim of
liability arising out of (1) failure to terminate a participant's account, sell
common stock in the Shares Program, or invest optional payments without receipt
of proper documentation and instructions; or (2) with respect to the prices at
which Carver common stock is purchased or sold for the participant's account and
the time such purchases or sales are made, including price fluctuations in
market value after purchases or sales.
OUR RESPONSIBILITIES
By participating in the Shares Program, you agree that we will not be
liable for any act we perform in good faith, for any good faith omission to act
or for any act of the Program Administrator, including, without limitations, any
claim of liability arising out of (1) the Program Administrator's failure to
terminate a participant's account, sell common stock in the Shares Program, or
invest optional payments without receipt of proper documentation and
instructions; or (2) with respect to the prices at which our common stock is
purchased or sold for the participant's account and the time such purchases or
sales are made, including price fluctuations in market value after purchases or
sales.
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Participants should recognize that neither Carver, Carver Federal nor the
Program Administrator can guarantee a profit or protect against a loss on
common stock purchased under the Shares Program.
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CHANGES IN THE SHARES PROGRAM
We may change the terms of the Shares Program, including applicable
fees, or terminate the Shares Program at any time. We may also suspend or
terminate the right of any person to participate in the Shares Program at any
time for any reason including, but not limited to, arbitrage-related activities,
transactional profit activities and excessive re-enrollments. You will receive a
notice before any material changes are made to the Shares Program.
PLEDGE OR ASSIGNMENT OF SHARES
Shares credited to your account under the Shares Program may not be
pledged or assigned and any such purported pledge or assignment will be void.
ADDITIONAL TERMS
We will reimburse the Program Administrator for the mailing of this
prospectus and enrollment forms as well as telephone expenses associated with
inquiries about the Shares Program. Carver will also pay fees and expenses
normally associated with transfer agent functions.
If the total number of shares in a participant's account is less than
one (1) share, any remaining fractions will be sold and the account closed. The
proceeds of the sale, less applicable fees, will be sent to the participant.
The Program Administrator reserves the right to modify the Shares
Program with our consent, including the right to terminate the Shares Program
upon notice to Shares Program participants. In addition, the Program
Administrator reserves the right to interpret and regulate the Shares Program as
it deems necessary or desirable in connection with its operation.
The Shares Program shall be governed by and construed in accordance
with the laws of the State of New York. The signing and mailing of the
enrollment form shall constitute an offer by the participant to establish an
agency relationship with American Stock Transfer & Trust Company to be governed
by the terms and conditions of the Shares Program.
We may terminate the Program Administrator's services under the Shares
Program and substitute another agent as Program Administrator upon thirty (30)
days prior written notice to you and the Program Administrator. The Program
Administrator may resign upon giving us ninety (90) days prior written notice.
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FEDERAL INCOME TAX CONSEQUENCES
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All commissions/fees that you pay when you buy shares through the
Shares Program become part of your "cost basis," which you will use in
determining your taxable gain or loss at the time you sell your shares. The
total amount of dividends will be reported to you and to the Internal Revenue
Service shortly after the close of each year. You will generally realize gain or
loss upon the receipt of cash for fractional shares held in the Shares Program.
You will also realize gain or loss when shares are sold. The amount of gain or
loss will be the difference between the amount that you receive for the shares
of common stock sold and your tax basis in the shares (generally, the amount you
paid for the shares). In order to determine the tax basis for shares in your
account, you should retain all account transaction statements.
As required by law, all shares of common stock that are sold through
the Program Administrator will be reported to the Internal Revenue Service. Any
gain or loss, whether you sell through the Program Administrator or through a
broker of your own choosing, should be reported when you file your income tax
return.
Be sure to keep your account statements for income tax purposes. If you
have questions about the tax basis of any transactions, please consult your tax
advisor.
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DESCRIPTION OF CARVER'S COMMON STOCK
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GENERAL
Carver is authorized to issue ten million (10,000,000) shares of common
stock having a par value of $0.01 per share and two million (2,000,000) shares
of preferred stock having a par value of $0.01 per share. Each share of Carver's
common stock has the same relative rights and is identical in all respects with
every other share of common stock.
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The shares of common stock:
o are not deposit accounts and are subject to investment risk;
o are not insured or guaranteed by the FDIC, or any other government
agency; and
o are not guaranteed by Carver or Carver Federal.
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VOTING RIGHTS
Each shareholder is entitled to one vote for each share of common stock
held. There are no cumulative voting rights. Shareholders are entitled to vote
on all matters requiring shareholder approval under Delaware law and our
Certificate of Incorporation and Bylaws, including the election of members of
the Board of Directors. Directors are divided into three equal (or nearly equal)
groups. At each annual meeting of our shareholders, only one of the group of
directors are up for election by the shareholders. Elected directors serve for
three (3) years.
DIVIDENDS
We can pay dividends out of statutory surplus or from net profits if,
as and when declared by our Board of Directors. Payment of dividends is subject
to limitations which are imposed by law. If we issue preferred stock, the
holders of the preferred stock may have a priority over the holders of the
common stock with respect to dividends.
LIQUIDATION
If we are liquidated or dissolved, shareholders of common stock are
entitled to receive all of our assets which remain after our debts and
liabilities are paid, subject to the rights of depositors to the liquidation
account created in connection with Carver Federal's initial public offering. If
we issue preferred stock, the holders of our preferred stock may have a priority
over the holders of common stock in the event of our liquidation or dissolution.
As of the date of this prospectus, we have not issued any preferred stock.
PREEMPTIVE RIGHTS; REDEMPTION; NON-ASSESSABILITY
Our common stock has no preemptive rights. This means that our
shareholders do not have a right to buy their proportional share of any
additional shares we issue. There are no provisions for redemption, conversion
rights, sinking funds, or liability for further calls or assessments on the
common stock. This means that we cannot ask you for more money for your shares,
we cannot force you to sell your shares back to us and your shares cannot be
exchanged for a different security. It also means that we do not set aside any
money to buy your shares from you.
OUR CERTIFICATE OF INCORPORATION AND BYLAWS
Our Certificate of Incorporation and Bylaws contain a number of
provisions, relating to corporate governance and certain rights of stockholders,
that might discourage future takeover attempts. As a result, stockholders who
might desire to participate in such transactions may not have an opportunity to
do so. In addition, such provisions will also render the removal of our Board of
Directors or management more difficult. These provisions include: limitations on
voting rights, staggered terms for members of our Board of Directors,
limitations on the removal of directors and on business combinations with
principal shareholders, and certain procedural requirements for nomination of
directors by shareholders and shareholder proposals. See "Where You Can Find
Additional Information" to find out how to obtain a copy of our Certificate of
Incorporation and Bylaws.
-12-
<PAGE>
============================================
USE OF PROCEEDS
============================================
Carver will not know the number of shares of our common stock that will
ultimately be purchased through the Shares Program, the extent to which the
shares will be purchased directly from us rather than in the open market, or the
prices at which the shares will be purchased. The proceeds from purchases
directly from Carver, if any, under the Shares Program will be used for general
corporate purposes. We are unable to estimate the amount of the proceeds that
will be devoted to any specific purpose.
============================================
LEGAL MATTERS
============================================
Thacher Proffitt & Wood, New York, New York, has passed upon the
validity of the issuance of the common stock being offered under the Shares
Program.
============================================
EXPERTS
============================================
We have incorporated our consolidated financial statements in this
prospectus by reference to our Annual Report on Form 10-K for the fiscal year
ended March 31, 1999, as amended, in reliance on the report of Mitchell & Titus
LLP, independent accountants. Mitchell & Titus, LLP gave this report on its
authority as experts in auditing and accounting.
============================================
INDEMNIFICATION
============================================
The General Corporation Law of Delaware contains provisions permitting
indemnification of our officers and directors which may be sufficiently broad to
indemnify them for liabilities arising under the Securities Act of 1933, as
amended. Moreover, our Certificate of Incorporation contains provisions on
indemnification of officers and directors. We also have a directors' and
officers' liability and corporate reimbursement insurance policy protecting our
directors and officers against liability arising from any claim for breach of
duty, neglect, error, misstatement, misleading statement, omission or any other
wrongful act (subject to certain
-13-
<PAGE>
exceptions) committed by reason of the director or officer acting in such
capacity. In addition, the Program Administrator has agreed to indemnify Carver
(including its officers, directors and employees) for any liability arising from
the Program Administrator's failure in its administration
of the Shares Program in accordance with this prospectus.
============================================
FACTORS THAT MAY AFFECT FUTURE RESULTS
============================================
Please keep in mind that the information delivered to you with this
prospectus, as well as the annual, quarterly and special reports and other
information filed by us with the Securities and Exchange Commission, contain
forward-looking statements which involve various uncertainties. These
uncertainties could cause our actual results to be materially different from the
forward-looking statements. When reading any of these documents, you should
consider all of the risks and uncertainties that are discussed, and you should
not rely solely on forward-looking statements made by us.
Factors that could cause actual results to be materially different from
forward-looking statements include: (1) interest rate, market and monetary
fluctuations, (2) monetary and fiscal policies and laws, (3) inflation, (4)
default rates on loans, (5) changes in regulation affecting our business, (6)
actions taken by the regulatory bodies that regulate Carver Federal, (7) general
and local economic conditions, (8) increasing competition, (9) new products
innovations, and (10) our ability to manage these and other risks.
============================================
DOCUMENTS INCORPORATED BY REFERENCE
============================================
The SEC allows us to "incorporate by reference" in this prospectus
other information we file with them, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is an important part of this prospectus; however, to
the extent that there are any inconsistencies between information presented in
this prospectus and the information contained in incorporated documents filed
with the SEC before the date of this prospectus, the information in this
prospectus shall be deemed to supersede the earlier information. Specifically we
incorporate by reference the following documents: our Annual Report on Form
10-K, as amended, for the fiscal year ended March 31, 1999, and our Quarterly
Reports on Form 10-Q for the quarters ended June 30, 1999 and September 30,
1999.
We are delivering, with this prospectus, a copy of our latest Annual
Report on Form 10-K (without exhibits) and our Quarterly Report on Form 10-Q for
the latest quarter after the date of the Form 10-K (without exhibits).
-14-
<PAGE>
- --------------------------------------------------------------------------------
You should rely only on the information contained in this prospectus or the
documents incorporated by reference. We have not authorized anyone to provide
you with information that is different.
Neither the delivery of this prospectus nor any sale made through this
prospectus shall, under any circumstances, create any implication that there has
been no change in our affairs since the date of this prospectus, or that the
information contained or incorporated by reference in this prospectus is correct
as of any time subsequent to the date of this prospectus.
- --------------------------------------------------------------------------------
============================================
WHERE YOU CAN FIND ADDITIONAL INFORMATION
============================================
We have filed a registration statement on Form S-2 regarding this
offering with the Securities Exchange Commission ("SEC"). This prospectus, which
is a part of the registration statement, does not contain all of the information
included in the registration statement, and you should refer to the registration
statement and its exhibits to read the information. You may read and copy the
registration statement, the related exhibits and the other materials we file
with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549, and at the SEC's New York Regional Office, 7 World
Trade Center, Suite 1300, New York, New York 10048. You can also request copies
of those documents, upon payment of a duplicating fee, by writing to the SEC.
Please call the SEC at 1-800-SEC-0330 for further information on the operation
of the public reference rooms. The SEC also maintains an Internet site that
contains reports, proxy and information statements and other information
regarding issuers that file with the SEC; the site's address is www.sec.gov. You
may also request a copy of these filings at no cost, by writing or telephoning
as follows: American Stock Transfer & Trust Company, Attention: Carver Shares
Program, 40 Wall Street - 46th Floor, New York, NY 10005, 1-800-278-4353 or
1-718-921-8283.
-15-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
SEC registration fee(1)....................................... $ 1,030
Printing, postage and mailing................................. $ 15,000
Legal fees and expenses....................................... $ 40,000
Blue sky fees and expenses (including fees of counsel)........ $ 12,500
Accounting fees and expenses ................................. $ 1,000
Miscellaneous................................................. $ 2,000
---------------
TOTAL......................................................... $ 71,530
===============
- ---------------------------
(1) Actual expenses based upon the registration of 462,000 shares at
average of high and low prices on October 15, 1999 of $8 per share. All
other expenses are estimated.
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law ("DGCL") INTER
ALIA, empowers a Delaware corporation to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (other than an action by or in the right of
the corporation) by reason of the fact that such person is or was a director,
officer, employee or agent of another corporation or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Similar indemnity is
authorized for such person against expenses (including attorneys' fees) actually
and reasonably incurred in connection with the defense or settlement of any such
threatened, pending or completed action or suit if such person acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and provided further that (unless a court of
competent jurisdiction otherwise provides) such person shall not have been
adjudged liable to the corporation. Any such indemnification may be made only as
authorized in each specific case upon a determination by the shareholders or
disinterested directors or by independent legal counsel in a written opinion
that indemnification is proper because the indemnitee has met the applicable
standard of conduct.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him, and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would otherwise have the power to indemnify him under Section 145.
Article IX of the Company's Certificate of Incorporation provides that
a director shall not be personally liable to the Company or its stockholders for
damages for breach of his fiduciary duty as a director, except to the extent
such exemption from liability or limitation thereof is expressly prohibited by
the DGCL. Article X of the Company's Certificate of Incorporation requires the
Company, among other things, to indemnify to the fullest extent permitted by the
DGCL, any person who is or was or has agreed to become a director or officer of
the
II-1
<PAGE>
Company, who was or is made a party to, or is threatened to be made a party to,
or has become a witness in, any threatened, pending or completed action, suit or
proceeding, including actions or suits by or in the right of the Company, by
reason of such agreement or service or the fact that such person is, was or has
agreed to serve as a director, officer, employee or agent of another corporation
or organization at the written request of the Company.
Article X also empowers the Company to purchase and maintain insurance
to protect itself and its directors and officers, and those who were or have
agreed to become directors or officers, against any liability, regardless of
whether or not the Company would have the power to indemnify those persons
against such liability under the law or the provisions set forth in the
Certificate of Incorporation. The Company is also authorized by its Certificate
of Incorporation to enter into individual indemnification contracts with
directors and officers. The Company currently maintains directors' and officers'
liability insurance consistent with the provisions of the Certificate of
Incorporation. The Company has and expects to continue to enter into employment
agreements that require the Company to maintain a directors' and officer's
liability policy for the benefit of such persons or that the Company will
indemnify such officers to the fullest extent provided by law.
Item 16. Exhibits.
The exhibits filed as a part of this Registration Statement are as
follows:
LIST OF EXHIBITS.
4.1 Specimen Stock Certificate of Carver Bancorp, Inc. (1)
5.1* Opinion of Thacher Proffitt & Wood regarding: legality
13.1* Carver Bancorp, Inc.'s Annual Report on Form 10-K for the Year
Ended March 31, 1999
13.2* Carver Bancorp, Inc.'s Annual Report on Form 10-K/A for the Year
Ended March 31, 1999
13.3 Carver Bancorp, Inc.'s Quarterly Report on Form 10-Q for the
Period Ended September 30, 1999
23.1 Consent of Independent Auditors
23.2* Consent of Thacher Proffitt & Wood (included in Exhibit 5.1)
99.1 Form of Enrollment Application
99.2* Form of Cover Letter
---------------------------
(1) Incorporated herein by reference to Registration Statement No.
333-0559 on Form S-4 (the "Form S-4") of Carver Bancorp, Inc.,
filed with the Securities and Exchange Commission during July
1997, as amended.
* Previously filed.
II-2
<PAGE>
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, present a fundamental change in the
information set forth in the registration statement;
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in
the registration statement or any material changes to
such information in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities
offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
(4) To deliver or cause to be delivered with the
prospectus, to each person to whom the prospectus is
sent or given, the latest annual report to security
holders that is incorporated by reference in the
prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the
Securities Exchange Act of
1934;
and, where interim financial information required to
be presented by Article 3 of Regulation S-X are not
set forth in the prospectus, to deliver, or cause to
be delivered to each person to whom the prospectus is
sent or given, the latest quarterly report that is
specifically incorporated by reference in the
prospectus to provide such interim financial
information.
(5) That, for purposes of determining any liability under
the Securities Act of 1933, the information omitted
from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b) (1) or (4) or
497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it
was declared effective.
(6) That, for the purposes of determining any liability
under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated
by reference in this Registration Statement shall be
deemed to be a new registration statement relating to
the securities offered therein, and the offering of
such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
II-3
<PAGE>
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-2 and has duly caused this Amendment
No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on November 19, 1999.
CARVER BANCORP, INC.
By: /s/ Deborah C. Wright
-------------------------------------
Deborah C. Wright
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
/s/ Deborah C. Wright President, Chief Executive Officer and November 19, 1999
- ----------------------------------------- Director
Deborah C. Wright
/s/ Walter T. Bond Acting Chief Financial Officer and November 19, 1999
- ----------------------------------------- Chief Investment Officer
Walter T. Bond
* Director November 19, 1999
- -----------------------------------------
David N. Dinkins
* Director November 19, 1999
- -----------------------------------------
Linda H. Dunham
* Director November 19, 1999
- -----------------------------------------
Herman Johnson
* Director November 19, 1999
- -----------------------------------------
David R. Jones
* Director November 19, 1999
- -----------------------------------------
Pazel G. Jackson
* Director November 19, 1999
- -----------------------------------------
Robert J. Franz
</TABLE>
* By:/s/ Walter T. Bond
---------------------
Attorney in Fact (power of attorney filed on October 20, 1999).
EXHIBIT NO. 13.3 QUARTERLY REPORT ON FORM 10-Q FOR PERIOD ENDED
SEPTEMBER 30, 1999
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
/ / 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 / /
COMMON STOCK, PAR VALUE $.01 2,314,275
- ---------------------------------------- ----------------------------------
CLASS OUTSTANDING AT NOVEMBER 15, 1999
<PAGE>
<TABLE>
<CAPTION>
CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<S> <C> <C>
Consolidated Statements of Financial Condition as of
September 30, 1999 and March 31, 1999 (unaudited)......................................1
Consolidated Statements of Income for the Three and Six Month
Periods Ended September 30, 1999 and 1998 (unaudited)..................................2
Consolidated Statements of Cash Flows for the Three and Six Month
Periods Ended September 30, 1999 and 1998 (unaudited)..................................3
Notes to Consolidated Financial Statements (unaudited).................................4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................................................5
Item 3. Quantitative and Qualitative Disclosures About Market Risk.....................................18
</TABLE>
<TABLE>
<CAPTION>
PART II. OTHER INFORMATION
<S> <C> <C>
Item 1. Legal Proceedings..............................................................................19
Item 2. Changes in Securities and Use of Proceeds......................................................19
Item 3. Defaults upon Senior Securities................................................................19
Item 4. Submission of Matters to a Vote of Security Holders............................................19
Item 5. Other Information..............................................................................19
Item 6. Exhibits and Reports on Form 8-K...............................................................20
SIGNATURES.......................................................................................................21
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CARVER BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
As of As of
September 30, March 31,
1999 1999
------------------- ----------------
ASSETS
<S> <C> <C>
Cash and due from banks................................................ $ 8,025,414 $ 11,120,748
Other interest earning assets.......................................... 11,900,000 10,200,000
------------- -------------
Total cash and cash equivalents...................................... 19,925,414 21,320,748
------------- -------------
Investment securities held to maturity................................. 24,995,563 -
Securities available for sale.......................................... 29,825,053 29,918,137
Mortgage-backed securities held to maturity, net (estimated fair values
of
56,453,619 and $65,693,568 at September 30, 1999 and March 31, 1999). 58,434,643 66,584,447
Loans receivable....................................................... 256,236,208 274,541,950
Less allowance for loan losses....................................... (3,552,826) (4,020,099)
------------- -------------
Loans receivable, net................................................ 252,683,382 270,521,851
------------- -------------
Real estate owned, net................................................. 468,400 184,599
Property and equipment, net............................................ 11,602,921 11,844,983
-------------
Federal Home Loan Bank of New York stock, at cost...................... 5,754,600 5,754,600
Accrued interest receivable, net....................................... 2,764,738 2,860,693
Excess of cost over net assets acquired, net........................... 923,316 1,029,853
Other assets........................................................... 5,853,865 6,422,933
------------- -------------
Total assets......................................................... $ 413,231,895 $ 416,482,844
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits............................................................. $ 279,022,695 $ 276,999,074
Securities sold under agreement to repurchase........................ 31,337,000 35,337,000
Advances from Federal Home Loan Bank of New York..................... 65,698,549 65,708,466
Other borrowed money................................................. 896,234 992,619
Other liabilities.................................................... 3,553,388 6,270,419
------------- -------------
Total liabilities................................................. 380,507,866 385,307,578
------------- -------------
Stockholders' Equity:
Preferred stock, $0.01 par value per share; 2,000,000 shares
authorized; none issued........................................... - -
Common stock, $0.01 par value per share; 10,000,000 shares
authorized; 2,314,275 shares issued and outstanding............... 23,144 23,144
Additional paid-in capital........................................... 21,414,390 21,423,574
Retained earnings-substantially restricted........................... 12,182,730 10,721,168
Common stock acquired by Employee Stock Ownership Plan............... (896,235) (992,620)
Comprehensive Income, net of income tax.............................. - -
Total stockholders' equity........................................ 32,724,029 31,175,266
------------- -------------
Total liabilities and stockholders' equity...................... $ 413,231,895 $ 416,482,844
============= =============
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
CARVER BANCORP INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Six Months Ended
September 30, September 30,
----------------------------------- -------------------------
1999 1998 1999 1998
---------------- ---------------- ----------------- --------------
<S> <C> <C> <C> <C>
Interest Income:
Loans receivable, net................. $ 4,678,078 $ 5,205,367 $ 9,738,605 $ 10,559,623
Mortgage-backed securities............ 921,569 1,338,548 1,902,783 3,185,114
Investment securities................. 910,150 329,398 1,591,116 495,422
Other interest earning assets......... 184,643 127,751 327,058 345,788
-------------- -------------- -------------- ------------
Total interest income.............. 6,694,440 7,001,064 13,559,562 14,585,947
-------------- -------------- -------------- ------------
Interest expense:
Deposits.............................. 2,175,181 2,070,885 4,352,742 4,212,653
Advances and other borrowed money..... 1,387,651 1,562,363 2,790,612 3,307,768
-------------- -------------- -------------- --------------
Total interest expense............. 3,562,832 3,633,248 7,143,354 7,520,421
-------------- -------------- -------------- --------------
Net interest income..................... 3,131,608 3,367,816 6,416,208 7,065,526
Provision for loan losses............... 230,000 299,885 380,000 750,000
-------------- -------------- -------------- --------------
Net interest income after provision
for loan losses....................... 2,901,608 3,067,831 6,036,208 6,315,526
-------------- -------------- -------------- --------------
Non interest income:
Loan fees and service charges......... 6,461 60,916 17,246 109,111
Other income.......................... 506,256 511,450 970,603 1,037,923
-------------- -------------- -------------- --------------
Total non-interest income.......... 512,717 572,366 987,849 1,147,034
-------------- -------------- -------------- --------------
Non-interest expense:
Salaries and employee benefits........ 1,180,296 1,363,524 2,484,436 2,603,768
Net occupancy expenses................ 318,028 305,986 664,577 593,962
Equipment............................. 378,364 322,415 773,842 769,426
Other................................. 862,972 1,344,850 1,639,641 2,638,465
-------------- -------------- -------------- --------------
Total non-interest expenses........ 2,739,660 3,336,775 5,562,496 6,605,621
-------------- -------------- -------------- --------------
Income before income taxes.............. 674,665 303,422 1,461,561 856,939
Income taxes............................ 314,934 110,211 686,934 345,676
Income taxes (benefit).................. (314,934) - (686,934) -
------------ ------------ ------------ ------------
Net income.............................. $ 674,665 $ 193,211 $ 1,461,561 $ 511,263
============ ============ ============ ============
Net income per common share............. $ 0.30 $ 0.09 $ 0.66 $ 0.23
============ ============ ============ ============
Weighted average number of
common shares outstanding............. 2,223,218 2,203,562 2,220,784 2,201,306
============ ============ ============ ============
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
CARVER BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
September 30,
Cash flows from operating activities: 1999 1998
------------------- -----------
<S> <C> <C>
Net income............................................................. $ 1,461,561 $ 511,263
Adjustments:
Depreciation and amortization of premises and equipment................ 502,895 574,199
Amortization of intangibles............................................ 106,536 102,720
Other amortization and accretion, net.................................. 365,526 474,546
Provision for loan losses.............................................. 380,000 750,000
Deferred income taxes.................................................. 123,000 125,714
Allocation of ESOP stock............................................... 81,775 91,085
Changes in accrued interest receivable, net............................ 167,049 (684,690)
(Increase) decrease in other assets.................................... 569,068 (2,306,431)
Increase (decrease) in other liabilities............................... (2,717,031) 6,331,770
------------- -------------
Net cash provided by operating activities.............................. 1,040,379 5,970,156
------------- -------------
Cash flows from investing activities:
Principal repayments on available for sale securities.................. - 3,693,066
Purchases of discount notes............................................ (299,065,655) (74,615,222)
Proceeds from matured discount notes................................... 300,000,000 35,000,000
Purchase of investment securities held to maturity..................... (25,000,000) -
Proceeds from sale/call of securities held for sale.................... - 23,841,581
Proceeds from maturities and calls of investment securities held to
maturity............................................................... - 305,986
Principal repayment of mortgage backed securities held to maturity..... 8,125,990 11,606,467
Net change in loans receivable......................................... 15,807,465 17,061,818
Additions to premises and equipment.................................... (220,832) (1,225,931)
------------- -------------
Net cash (used in) provided by investing activities.................... (353,032) 16,486,800
------------- -------------
Cash flows from financing activities:
Net increase (decrease) in deposits.................................... 2,023,621 2,901,912
Net increase (decrease) in short term borrowing (repos)................ (4,000,000) (32,050,000)
Repayment of FHLB advances............................................. (9,917) -
Advances from Federal Home Loan Bank of New York....................... - 14,981,376
Repayment of other borrowed money...................................... (96,385) (91,066)
Dividends paid......................................................... - (115,714)
------------- -------------
Net cash provided by (used in) financing activities.................... (2,082,681) (14,373,492)
------------- -------------
Net increase (decrease) in cash and equivalents........................ (1,395,334) 8,083,464
Cash and equivalents - beginning....................................... 21,320,748 15,120,071
------------- -------------
Cash and equivalents - ending.......................................... $ 19,925,414 $ 23,203,535
============= =============
Unrealized gain (loss) on securities available for sale................ - 10,979
Deferred income taxes.................................................. - 5,160
============= =============
Supplemental disclosure of cash flow information: Cash paid for:
Interest............................................................... $ 7,143,353 $ 7,520,421
============= =============
Federal, state and city income taxes................................... - 123,100
</TABLE>
3
<PAGE>
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 normal recurring adjustments)
necessary for fair presentation have been included. The consolidated results of
operations and other data for the three month and six month periods ended
September 30, 1999 are not necessarily indicative of results that may be
expected for the entire fiscal year ending March 31, 2000 ("fiscal year 2000").
The unaudited consolidated financial statements include the accounts of the
Holding Company and its wholly owned subsidiaries Carver Federal Savings Bank
(the "Bank" or "Carver Federal") and Alhambra Holding Corp., a Delaware
corporation ("Alhambra Holding") and the Bank's wholly owned subsidiaries,
C.F.S.B. Realty Corp. and C.F.S.B. Credit Corp. Carver Federal and the Holding
Company are referred to herein collectively as "Carver" or the "Company". All
significant inter company accounts and transactions have been eliminated in
consolidation.
(2) EARNINGS PER SHARE CALCULATION
Net income per share for the three month and six month periods ended
September 30, 1999 and 1998 are calculated based on the weighted average number
of shares outstanding during the period.
(3) ALHAMBRA HOLDING CORP.
Other assets in the Unaudited Consolidated Statements of Financial
Condition includes an investment of $1.4 million in Alhambra Holding. During the
third quarter of the fiscal year ended March 31, 1999 ("fiscal year 1999"),
Carver established Alhambra Holding to hold 80% of the common stock and 100% of
the preferred stock of Alhambra Realty Corp. ("Alhambra Realty"). Alhambra
Realty was established to hold title to a certain piece of commercial real
property located in the City of New York, borough of Manhattan.
Carver acquired a majority interest in Alhambra Realty through Alhambra
Holding in connection with a workout with an existing borrower of the Bank whose
loan was secured by partially occupied commercial real property. Carver is
currently examining its options with respect to Alhambra Realty and the property
it owns, which include, but are not limited to, conducting a sale of the
property or developing the property and leasing the unoccupied space.
4
<PAGE>
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, the Company's ability to improve both its
loan operations, including the origination and purchase of loans which meet its
underwriting guidelines, and deposit gathering capabilities, 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." 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 and Manhattan, and in Nassau County, New York.
On January 28, 1998, the 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 ("City National"). The Roosevelt
Office is located in Nassau County, New York and had deposits of approximately
$8.6 million at September 30, 1999. Due to certain regulatory issues, the
transaction, which was expected to close by March 31, 1999, has not yet been
consummated. During May, 1999, the Company and City National held a meeting to
discuss the issues preventing the transaction from closing and mutually agreed
to pursue the consummation of the transaction under similar terms and conditions
as the original agreement. At September 30, 1999, the Company and City National
were actively working to complete the details required to close the transaction.
MANAGEMENT RESTRUCTURING
On November 4, 1999, the Company announced a management restructuring
with the arrival of key members of a new senior management team from major money
center banks. The new officers are:
o Benny A. Joseph, II, Senior Vice President and Chief Lending Officer, is
charged with boosting loan volume, strengthening credit policy, and
restructuring the Bank's lending department; he comes to Carver from Fleet
Financial Corporation.
o Margaret D. Peterson, who assumes a newly-created role, Senior Vice
President and Chief Administrative Officer, integrating Human Resources,
Information Technology, Facilities and Vendor Management, is charged with
enhancing the Bank's control over expenses. Ms. Peterson comes to Carver
from Deutsche Bank.
o Daphne E. Heslop, Senior Vice President and Chief Auditor, is charged with
enhancing the Bank's management by reinforcing a rigorous control
environment. Ms. Heslop joins Carver from Roosevelt Savings Bank.
o Judith Taylor, formerly of Chemical Bank and the Resolution Trust
Corporation, has been selected as Acting Senior Vice President and Chief of
Retail Banking. She brings over 30 years of experience to Carver and is
charged with strengthening branch operations and improving customer
service. Her permanent replacement is expected to be identified by
year-end.
5
<PAGE>
The Company also announced that searches are underway for other members of
the Bank's senior management team, including Chief Financial Officer and General
Counsel.
DIRECT STOCK PURCHASE PLAN
On October 20, 1999, the Holding Company filed a registration statement
on Form S-2 with the SEC for the purpose of registering shares to be sold under
the Holding Company's Shares Program, whereby customers, employees, investors
and members of the communities served by Carver Federal may invest in the
Holding Company's Common Stock without going through a broker. The program is
structured to offer Carver shares through a plan administrator, which will
execute orders by purchasing the Company's shares in the open market. If shares
are not available in the open market the plan administrator may purchase shares
from the Holding Company.
FINANCIAL CONDITION
ASSETS. Total assets decreased $3.3 million, or 0.78% to $413.2 million
at September 30, 1999, compared to $416.5 million at March 31, 1999. The
decrease in total assets primarily reflects decreases in loans receivable net,
mortgage-backed securities ("MBSs") held to maturity, and cash and cash
equivalents, offset in part by an increase in investment securities held to
maturity ("HTM").
Total cash and cash equivalents decreased by $1.4 million, or 6.54%
to $19.9 million at September 30, 1999, compared to $21.3 million at March 31,
1999.
Investment securities HTM were $25.0 million at September 30, 1999,
whereas at March 31, 1999 the Company did not carry any investment securities as
HTM. The increase in investment securities HTM reflects the reinvestment of
principal and interest received during the first quarter on MBSs and loans
receivable. At September 30, 1999, securities held as available for sale ("AFS")
totaled $29.8 million compared to $29.9 million at March 31, 1999.
MBSs HTM decreased by $8.1 million, or 12.24% to $58.4 million at
September 30, 1999, compared to $66.6 million at March 31, 1999. The decrease in
MBSs HTM primarily reflects principal repayments. Loans receivable net decreased
by $17.8 million, or 6.59% to $252.7 million at September 30, 1999, compared to
$270.5 million at March 31, 1999. The decrease in loans receivable net primarily
reflects increased loan prepayments. The prepayments primarily reflect the
refinancing of loans due to lower market interest rates. During the second
quarter, the Company purchased approximately $22.5 million in multi-family loans
secured by properties located in the New York Metropolitan area to augment loan
originations and began to rebuild its loan department. During the second
quarter, the Company started the rebuilding process by hiring a new chief
lending officer. The Company expects to enhance origination, processing,
underwriting, and loan portfolio management capabilities to complete the
rebuilding process. The Company also expects to continue the purchase of loans
during the rebuilding period.
LIABILITIES AND STOCKHOLDERS' EQUITY
Total deposits increased by $2.0 million, or 0.73% to $279.0 million at
September 30, 1999, compared to $277.0 million at March 31, 1999. The increase
in total deposits was primarily attributable to increases of: $1.4 million in
NOW accounts, $795,000 in certificates of deposit, and $837,000 in regular
savings and club accounts, offset in part by a decrease of $1.1 million in money
market accounts. These increases primarily reflect interest credited. The
Company plans to modernize its retail banking services by introducing telephone
banking and gathering more detailed information regarding its customer base in
order to improve customer service. The Company believes that these steps will
strengthen its deposit gathering capabilities.
Total borrowings decreased by $4.1 million, or 4.02% to $97.9 million
at September 30, 1999, compared to $102.0 million at March 31, 1999. The
decrease in total borrowings primarily reflects a decrease in reverse repurchase
agreements ("repos") of $4.0 million, or 11.32% to $31.3 million. The decrease
reflects the Company's ability to fund loan originations and loan purchases with
repayments on MBSs and loans receivable together with the increase in deposits.
6
<PAGE>
Stockholders' equity increased by $1.5 million, or 4.97% to $32.7
million at September 30, 1999, compared to $31.2 million at March 31, 1999. The
increase in stockholders' equity primarily reflects an increase in retained
earnings for the six month period.
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 prepayments on MBSs are strongly
influenced by changes in general interest rates, economic conditions and
competition.
For the six month period ended September 30, 1999 the primary
investment activity of the Company is the purchase of loans and the purchase of
investment securities and mortgage-backed securities. During the six month
period ended September 30, 1999, the Company purchased approximately $22.5
million of mortgage loans and $25.0 million of investment securities. During the
six month period ended September 30, 1999, the Company sold no investment
securities, mortgage loans or 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, 1999,
the Company's cash and cash equivalents totaled $19.9 million compared to $21.3
million at March 31, 1999. This reduction in cash and cash equivalents is not
expected to have a material impact on our operations.
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, 1999, 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, 1999 and March 31,
1999.
The Office of Thrift Supervision (the "OTS") requires that the Bank
meet minimum tangible, leverage (core) and risk-based capital requirements. As
of September 30, 1999, the Bank exceeded all of its regulatory capital
requirements. The Bank's required, actual and excess capital levels as of
September 30, 1999 are as follows:
Amount % of Assets
--------- ------------
(dollars in thousands)
Tangible capital:
Capital level................ $ 27,861 6.77%
Less requirement............. 6,170 1.50
--------- ---------
Excess....................... $ 21,691 5.27%
========= =========
Core capital:
Capital level................ $ 27,895 6.78%
Less requirement............. 16,452 4.00
--------- ---------
Excess....................... $ 11,443 2.78%
========= =========
Risk-based capital:
Capital level................ $ 30,265 15.41%
Less requirement............. 15,710 8.00
Excess....................... $ 14,555 7.41%
========= =========
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
7
<PAGE>
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 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.
During the three and six month periods ended September 30, 1999 the
Company placed primary emphasis on its whole loan portfolio through the purchase
of whole loans. 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 tables set 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.
8
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended September 30,
------------------------------------------------------------------------------------
1999 1998
----------------------------------------- -----------------------------------------
Average Quarterly Annualized Average Quarterly Annualized
Balance Interest Avg. Yield/Cost Balance Interest Avg. Yield/Cost
------- -------- --------------- ------- -------- ---------------
(Dollars in thousands)
ASSETS
INTEREST EARNING ASSETS
<S> <C> <C> <C> <C> <C> <C>
Loans (1)................................... $ 249,412 $ 4,678 7.50% $ 268,317 $ 5,205 7.76%
Investment securities (2)................... 65,644 910 5.55 24,895 329 5.29
Mortgage-backed securities.................. 60,088 921 6.13 83,373 1,339 6.42
Other interest earning assets............... 9,600 185 7.71 6,425 128 7.97
------------ -------- ----- ---------- -------- -------
Total interest earning assets............ 384,744 6,694 6.96% 383,010 7,001 7.31%
-------- --------
Non-interest earning assets................. 33,255 35,589
------------ ----------
Total Assets............................. $ 417,999 $ 418,599
============ ==========
LIABILITIES
INTEREST BEARING LIABILITIES
Deposits
DDA......................................... $ 11,702 $ - -% $ 10,693 $ - -%
NOW......................................... 16,603 76 1.83 17,556 73 1.66
Savings and clubs........................... 145,762 919 2.52 145,917 885 2.43
Money market accounts....................... 20,646 158 3.06 22,332 171 3.06
Certificates of deposit..................... 86,396 1,022 4.73 76,768 941 4.90
------------ -------- ----- ---------- -------- -------
Total Deposits........................... 281,109 2,175 3.09 273,266 2,070 3.03
Borrowed money................................. 99,969 1,388 5.55 102,140 1,562 6.12
------------ -------- ----- ---------- -------- -------
Total interest-bearing liabilities............. 381,078 3,563 3.74% 375,406 3,632 3.87%
-------- --------
Non-interest-bearing liabilities............... 4,605 7,150
------------ ----------
Total liabilities.............................. 385,683 382,556
Stockholders' equity........................... 32,316 36,043
------------ ----------
Total liabilities and stockholders' equity..... $ 417,999 $ 418,599
============ ==========
Net interest income............................ $ 3,131 $ 3,369
======== ========
Interest rate spread........................... 3.22% 3.44%
===== =======
Net interest margin............................ 3.26% 3.52%
===== =======
Ratio of average interest earning assets to
interest-bearing liabilities................... 101.0x 100.1x
===== =======
</TABLE>
- --------------------
(1) Includes non-accrual loans.
(2) Includes FHLB stock and fair value of investments available for sale of
$29.8 million at September 30, 1999.
9
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended September 30,
-----------------------------------------------------------------------------------
1999 1998
--------------------------------------------------- ------------------------------
Average Annualized Average Annualized
Balance Interest Yield/Cost Balance Interest Yield/Cost
------------- ----------- ----------- ---------- ------------ ----------------
(Dollars in thousands)
ASSETS
INTEREST EARNING ASSETS
<S> <C> <C> <C> <C> <C> <C>
Loans (1).................................... $ 255,246 $ 9,739 7.63% $ 270,919 $ 10,559 7.79%
Investment securities (2).................... 58,769 1,591 5.41 16,709 495 5.92
Mortgage-backed securities................... 62,148 1,902 6.12 97,691 3,185 6.50
Other interest earning assets................ 10,613 327 6.16 9,943 346 6.96
--------- ------- ------ ---------- -------- -------
Total interest earning assets.............. 386,776 $13,559 7.01% 395,532 $ 14,585 7.37%
------- --------
Non-interest earning assets.................. 32,050 31,510
--------- ----------
Total Assets............................... $ 418,826 $ 427,042
========= ==========
LIABILITIES
INTEREST BEARING LIABILITIES:
Deposits
DDA $ 11,688 $ - -% $ 10,706 $ - -%
NOW 16,753 154 1.84 18,149 160 1.76
Savings and clubs............................ 146,285 1,844 2.52 146,092 1,811 2.48
Money market accounts........................ 21,123 318 3.01 22,021 323 2.93
Certificates of deposit...................... 86,180 2,037 4.73 81,604 1,918 4.70
--------- ------- ------ ---------- -------- -------
Total Deposits............................. 282,029 4,353 3.09 278,572 4,212 3.02
Borrowed money................................. 100,995 2,791 5.53 106,540 3,307 6.21
---------- ------- ------ ---------- -------- -------
Total interest-bearing liabilities............. 383,024 7,144 3.73% 385,112 7,519 3.90%
------- --------
Non-interest-bearing liabilities............... 3,825 6,049
---------- ----------
Total liabilities.............................. 386,849 391,161
Stockholders' equity........................... 31,977 35,881
---------- ----------
Total liabilities and stockholders' equity..... $ 418,826 $ 427,042
========== ==========
Net interest income............................ $ 6,415 $ 7,056
======= ========
Interest rate spread........................... 3.28% 3.47%
====== =======
Net interest margin............................ 3.32% 3.57%
====== =======
Ratio of average interest earning assets to
interest-bearing liabilities................ 101.0x 101.1x
====== =======
</TABLE>
________________________
(1) Includes non-accrual loans.
(2) Includes FHLB stock and fair value of investments available for sale of
$29.8 million at September 30, 1999.
10
<PAGE>
COMPARISON OF OPERATING RESULTS FOR THE
THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
GENERAL
The Company reported net income for the three month period ended
September 30, 1999 of $675,000 compared to net income of $193,000, for the same
period last year. Net income reflects a tax loss carry forward benefit.
Excluding the effect of the tax benefit, the Company had net income of $360,000.
The increase in net income primarily reflects decreases in non-interest expense,
the provision for loan losses and income taxes, offset in part by decreases in
net interest income and non-interest income.
INTEREST INCOME
Interest income decreased by $307,000, or 4.38% to $6.7 million for the
three month period ended September 30, 1999 compared to $7.0 million for the
same period last year. The decrease in interest income primarily reflects a 35
basis point decrease in the average yield on interest-earning assets to 6.96%
compared to 7.31% for the same period last year, offset in part by a $1.7
million increase in the average balance of interest earning assets to $384.7
million. The decrease in the average yield for three month period is primarily
attributable to a shift in assets from loans and MBSs to lower yielding
investment securities and lower market interest rates.
Interest income on loans receivable net decreased by $527,000, or 10.13%
to $4.7 million for the three month period ended September 30, 1999 compared to
$5.2 million for the same period last year. The decrease in interest income on
loans receivable net primarily reflects an $18.9 million, or 7.05% decrease in
the average balance of loans receivable net to $249.4 million for the three
month period ended September 30, 1999 compared to $268.3 million for the same
period last year coupled with a 26 basis point decrease in the average yield on
the loan portfolio to 7.50%. The decrease in the average balance of the loan
portfolio primarily reflects an increase in loan prepayments and to a lesser
extent, a decrease in loan originations. The decrease in the average yield on
loans receivable net primarily reflects the prepayment of higher yielding loans
and lower market interest rates.
Interest income on MBSs decreased $417,000, or 31.15%, to $922,000 for
three month period ended September 30, 1999 compared to $1.3 million for the
same period last year. The decrease in interest income on MBSs primarily
reflects a decrease of approximately $23.3 million or 27.93% in the average
balance of mortgage-backed securities to $60.1 million compared to $83.4 million
for the same period last year coupled with a 29 basis point decrease in the
average yield to 6.13%. The decrease in the average balance of MBSs primarily
reflects a shift during the second quarter of fiscal 1999 of approximately $24.0
million from MBSs to loans and to a lesser extent principal repayments on MBSs.
Interest income on investment securities increased by $581,000, or
176.31%, to $910,000 for the three month period ended September 30, 1999
compared to $329,000 for the same period last year. The increase in interest
income on investment securities consisting of short and intermediate term agency
securities primarily reflects a $40.7 million or 163.68% increase in the average
balance of such securities to $65.6 million for the three month period ended
September 30, 1999 compared to $24.9 million for the same period last year
coupled with a 26 basis point increase in the average yield to 5.55%. The
increase in the average balance of investment securities reflects an investment
of approximately $25.0 million of loan repayments into intermediate term
securities during the first quarter of fiscal year 2000. The increase in the
average yield on investment securities primarily reflects the higher yield
earned by shifting assets from short term securities to intermediate term
securities.
Interest income on other interest-earning assets increased by $57,000,
or 44.53%, to $185,000 for the three month period ended September 30, 1999
compared to $128,000 for the same period last year. The increase in interest
income on other interest earning assets primarily reflects a $3.2 million or
49.42% increase in the average balance of such securities to $9.6 million for
the three month period ended September 30, 1999 compared to $6.4 million for the
same period last year, offset in part by a 26 basis point decrease the average
yield to 7.71%. The increase in the average balance of other interest earning
assets primarily reflects an increase in short term investments held during the
second quarter of fiscal 2000. The decrease in the average yield on other
interest earning assets primarily reflects a decrease in the yield on short term
investments.
11
<PAGE>
INTEREST EXPENSE
Interest expense decreased by $70,000, or 1.94% to $3.6 million for the
three month period ended September 30, 1999 compared to $3.6 million for the
same period last year. The decrease in interest expense primarily reflects a 13
basis point decrease in the average cost of interest-bearing liabilities to
3.74% for the three month period ended September 30, 1999 compared to 3.87% for
the same period, offset in part by a $5.7 million increase in the average
balance of interest bearing liabilities to $381.1 million.
Interest expense on deposits increased by $104,000 or 5.04% to $2.2
million for the three month period ended September 30, 1999 compared to $2.1
million for the same period last year. The increase in the cost of deposits
primarily reflects $7.8 million increase in the average balance of deposits to
$281.1 million compared to $273.3 million for the same period last year coupled
with a 6 basis point increase in the cost of deposits to 3.09%. The increase in
the cost of deposits also reflects an increase of $9.6 million or 12.54% to
$86.4 million in the average balance of certificates of deposits, which
typically are higher in cost relative to other deposit types and a 9 basis point
increase in the average cost of savings and club accounts to 2.52%. The increase
in the cost of savings and club accounts reflects a decrease in interest
forfeited by account holders of these deposits.
Interest expense on borrowings decreased by $175,000 or 11.18% to $1.4
million for the three month period ended September 30, 1999 compared to $1.6 for
the same period last year. The decrease primarily reflects a 57 basis point
decrease in the average cost of borrowings to 5.55% compared to 6.12% for the
same period last year coupled with a $2.2 million decrease in the average
balance of borrowings to $100.0 million. The decrease in the average balance of
borrowings primarily reflects the Company's ability to fund investments and loan
purchases with deposits and principal and interest receipts. The decrease in the
cost of borrowings primarily reflects the replacement of higher cost borrowings
with lower cost borrowings during fiscal year 1999.
NET INTEREST INCOME BEFORE PROVISIONS FOR LOAN LOSSES
Net interest income decreased $236,000 or 7.01%, to $3.1 million for the
three month period ended September 30, 1999 compared to $3.4 million for the
three month period ended September 30, 1998. The decrease in net interest income
is primarily attributable to a decrease in the average yield of average interest
earning assets, offset in part by a decrease in the average cost of average
interest bearing liabilities.
The Company's interest rate spread decreased by 22 basis points to 3.22%
for the three month period ended September 30, 1999 compared to 3.44% for the
three month period ended September 30, 1998. The Company's net interest margin
decreased by 26 basis point to 3.26% for the three month period ended September
30, 1999 compared to 3.52% for the same period last year. The decrease in
interest rate spread and net interest margin primarily reflects a 35 basis point
decrease in the average yield on interest earning assets to 6.96%, offset in
part by a 13 basis point decrease in the average cost of interest bearing
liabilities to 3.74%. The decrease in interest rate spread and net interest
margin is primarily attributable to a decrease in the average yield on loans,
MBSs and other interest earning assets, offset in part by a decrease in the cost
of borrowed money. The Company's ratio of average interest-earning assets to
average interest-bearing liabilities was 101.0x for the three month period ended
September 30, 1999 compared to 100.1x for the same period last year.
PROVISION FOR LOAN LOSSES
The Company provided $230,000 for loan losses for the three month period
ended September 30, 1999 compared to $300,000 for the same period last year. The
decrease in the provision for loan losses for the three month period ended
September 30, 1999 reflects a decrease in non-performing assets. During the
second quarter, the Bank charged off approximately $268,000 in previously
reserved non-performing consumer loans and $392,000 in previously reserved
uncollected interest. At September 30, 1999, non-performing loans totaled $4.1
million, or 1.63% of total loans compared to $4.4 million or 1.77% at June 30,
1999. At September 30, 1999, the Bank's allowance for loan losses was $3.6
million compared to $3.8 million at June 30, 1999, resulting in a ratio of
allowance to non-performing loans of 82.26% at September 30, 1999 compared to
85.63% at June 30, 1999 and a ratio of allowances for loan losses to total loans
of 1.41% and 1.50%, respectively.
12
<PAGE>
Management believes that the allowance for loan losses is adequate.
While management estimates loan losses using the best available information, no
assurance can be made that future adjustments to the allowance will not be
necessary based on changes in economic and real estate market conditions,
further information obtained regarding known problem loans, identification of
additional problem loans, and other factors, both within and outside of
management's control.
NON-INTEREST INCOME
Non-interest income decreased $60,000 or 10.42% to $513,000 for the
three month period ended September 30, 1999 compared to $572,000 for the same
period last year. The decrease in non-interest income primarily reflects a
$54,000 or 89.39% decreases in loan origination fees. The decrease in loan
origination fees primarily reflects a decrease in loan originations for the
three month period.
NON-INTEREST EXPENSE
Non-interest expense decreased by $597,000, or 17.89% to $2.7 million
for the three month period ended September 30, 1999 compared to $3.3 million for
the same period last year. The decrease in non-interest expense primarily
reflects decreases of $183,000 or 13.44% in salaries and employee benefits
expense, $15,000 or 37.59% in advertising expense, $56,000 or 17.35% in
equipment expense and $482,000 or 35.83% in other variable expenses. Other
expenses for the three month period ended September 30, 1998 reflected a one
time charge of $250,000 incurred in connection with the settlement of
litigation.
INCOME TAX EXPENSE
In connection with a loss from operations incurred during the three
month period ended December 31, 1998, the Company has reflected a tax benefit
reflecting the carry forward of the loss for the income taxes paid. The Company
utilized a net operating loss deduction to offset income tax expense for the
three month period ended September 30, 1999 compared to an expense of $110,000
for the three month period ended September 30, 1998. The Company's effective tax
rate for the three month period ended September 30, 1999 was 0.0% compared to
36.32% for the three month period ended September 30, 1998.
13
<PAGE>
COMPARISON OF OPERATING RESULTS FOR THE
SIX MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
GENERAL
The Company reported net income for the six month period ended September
30, 1999 of $1.5 million compared to net income of $511,000, for the same period
last year. Net income reflects a tax loss carry forward benefit. Excluding the
effect of the tax benefit, the Company had net income of $775,000. The increase
in net income primarily reflects decreases in non-interest expense, provision
for loan losses, and income taxes, offset in part by decreases in net interest
income and non-interest income.
INTEREST INCOME
Interest income decreased by $1.0 million, or 7.04% to $13.6 million for
the six month period ended September 30, 1999 compared to $14.6 million for the
six month period ended September 30, 1998. The decrease in interest income for
the six month period ended September 30, 1999 primarily reflects a 36 basis
point decrease in the average yield of interest earning assets to 7.01% compared
to 7.37% for the same period last year and an $8.8 million or 2.21% decrease in
the average balance of interest earning assets to $386.8 million compared to
$395.5 million. The decrease in the average yield for six month period is
primarily attributable to a shift in assets from loans and MBSs to lower
yielding investment securities.
Interest income on loans receivable net decreased by $821,000 or 7.78%
to $9.7 million for the six month period ended September 30, 1999 compared to
$10.6 million for the same period last year. The decrease in interest income on
loans receivable net primarily reflects a $15.7 million or 5.78% decrease in the
average balance of loan receivables to $255.2 million for the six month period
ended September 30, 1999 compared to $270.9 million for the same period last
year, coupled with a decrease of 16 basis points in the average yield on the
loan portfolio. The decrease in the average balances of the loan portfolio
primarily reflects the impact of increased loan prepayments and to a lesser
extent, a decrease in loan originations. The decrease in the average yield
primarily reflects prepayment of higher yielding loans and lower market interest
rates.
Interest income on MBSs decreased $1.3 million, or 40.26%, to $1.9
million for the six month period ended September 30, 1999 compared to $3.2
million for the same period last year. The decrease in interest income on MBSs
primarily reflects a decrease of $35.8 million or 36.56% in the average balance
of mortgage-backed securities to $62.1 million for the six month period ended
September 30, 1999 compared to $98.0 million for the same period last year
coupled with a decrease of 38 basis points in the average yield on MBSs to 6.12%
compared to 6.50%. The decrease in the average balance of MBSs reflects in
significant part the shift of approximately $24.0 million from MBSs to loans and
to a lesser extent principal repayments on MBSs.
Interest income on investment securities increased by $1.1 million or
221.16%, to $1.6 million for the six month period ended September 30, 1999
compared to $495,000 for the same period last year. The increase in interest
income on investment securities consisting of short term and intermediate term
agency securities primarily reflects a $42.0 million or 251.72% increase in the
average balance of investment securities to $58.8 million for the six month
period ended September 30, 1999 compared to $16.7 million for the same period
last year, offset in part by a 51 basis point decrease in the average yield. The
increase in the average balance of investment securities reflects an investment
of approximately $25.0 million of loan repayments into intermediate term
securities during the first quarter of fiscal year 2000. The decrease in the
average yield primarily reflects lower market interest rates.
Interest income on other interest-earning assets decreased by $19,000 or
5.42%, to $327,000 for the six month period ended September 30, 1999 compared to
$346,000 for the same period last year. The decrease in interest income on other
interest earning assets primarily reflects an 80 basis point decrease in the
average yield to 6.16%. The decrease in the average yield primarily reflects
lower market interest rates.
14
<PAGE>
INTEREST EXPENSE
Interest expense decreased by $377,000, or 5.01% to $7.1 million for the
six month period ended September 30, 1999 compared to $7.5 million for the same
period last year. The decrease in interest expense primarily reflects a 17 basis
point decrease in the cost of interest bearing liabilities to 3.73% coupled with
a $2.1 million decrease in the average balance of interest bearing liabilities
to $383.0 million.
Interest expense on deposits increased by $140,000 or 3.33% to $4.4
million for the six month period ended September 30, 1999 compared to $4.2
million for the same period last year. The increase in interest expense on
deposits primarily reflects a 7 basis point increase in the average cost of
interest-bearing liabilities to 3.09% coupled with a $3.5 million or 1.24%
increase in the average balance of deposits to $282.0 million.
Interest expense on borrowings decreased by $517,000 or 15.63% to $2.8
million for the six month period ended September 30, 1999 compared to $3.3
million. The decrease in interest expense in borrowings primarily reflects a 68
basis point decrease in the average cost of borrowings to 5.53% coupled with a
$5.5 million or 5.20% decrease in the average balance of borrowings to $101.0
million. The decrease in the average balance of borrowings primarily reflects
the Company's ability to fund investments and loans with deposits and principal
and interest receipts. The decrease in the cost of borrowings primarily reflects
the replacement of higher cost borrowings with lower cost borrowings during
fiscal year 1999.
NET INTEREST INCOME BEFORE PROVISIONS FOR LOAN LOSSES
Net interest income before provision for loan losses decreased by
$649,000, or 9.19% to $6.4 million for the six month period ended September 30,
1999 compared to $7.1 million for the same period last year.
The Company's interest rate spread decreased by 19 basis points to 3.28%
for the six month period ended September 30, 1999 compared to 3.47% for the six
month period ended September 30, 1998. The Company's net interest margin
decreased by 25 basis point to 3.32% for the six month period ended September
30, 1999 compared to 3.57% for the same period last year. The decrease in
interest rate spread and net interest margin primarily reflects a 36 basis point
decrease in the average yield on interest earning assets to 7.01%, offset in
part by a decrease of 17 basis points in the average cost on interest bearing
liabilities to 3.73%.
The decrease in interest rate spread and net interest margin is
primarily attributable to a decrease in the average yield on loans, MBSs and
other interest earning assets, offset in part by a decrease in the average cost
of borrowed money. The Company's ratio of average interest-earning assets to
average interest-bearing liabilities was 101.0x for the six month period ended
September 30, 1999 compared to 101.1x for the same period last year.
PROVISION FOR LOAN LOSSES
The Company provided $380,000 for loan losses for the six month period
ended September 30, 1999, compared to $750,000 for the same period last year.
The Company establishes provisions for loan losses, which are charged to
operations, in order to maintain the allowance for loan losses at a level which
is deemed to be appropriate based upon an assessment of prior loss experience,
the Bank's underwriting standards regulatory guidelines, industry standards,
past due loans, economic conditions, the volume and type of loans in the Bank's
portfolio, a significant amount of which are purchased and are collateralized by
properties located outside of the Bank's market area, and other factors related
to the collectibility of the Bank's loan portfolio. The provision for loan
losses for the six month period ended September 30, 1998 reflected increased
non-performing mortgage and consumer loans consisting of automobile loans,
credit card receivables, along with unsecured and secured personal loans. The
Bank no longer makes unsecured personal loans or automobile loans. The decrease
in the provision for loan losses for the six month period reflects a decrease in
non-performing assets. At September 30, 1998, non-performing loans totalled
$9.65 million or 3.69% of total loans. During the six month period, the Bank
charged off approximately $578,000 in previously reserved non-performing
consumer loans and $392,000 in previously reserved uncollected interest. At
September 30, 1999, non-performing loans totaled $4.1 million or 1.63% of total
loans compared to $4.8 million, or 1.66% at March 31, 1999. At September 30,
1999, the Bank's allowance for loan losses was $3.6 million compared to $4.0
million at March 31, 1999, resulting in a ratio of allowance to non-performing
loans of 86.26% at September 30, 1999 compared to 85.60% at March 31, 1999, and
a ratio of allowances for loan losses to total loans of 1.41% and 1.48%,
respectively.
Management believes that the allowance for loan losses is adequate.
While management estimates loan losses using the best available information, no
assurance can be made that future adjustments to the allowance will not be
necessary based on changes in economic and real estate market conditions,
further information obtained regarding known problem loans, identification of
additional problem loans, and other factors, both within and outside of
management's control.
15
<PAGE>
NON-INTEREST INCOME
Non-interest income decreased by $159,000 or 13.88% to $988,000 for the
six month period ended September 30, 1999 compared to $1.1 million for the same
period last year. The decrease in non-interest income reflects a decrease of
$92,000 or 84.19% to $17,000 in loan origination fees and a decrease of $67,000
or 6.49% to $971,000 in other income. The decrease in loan origination fees
primarily reflects a decrease in loan originations during the six month period.
The decrease in other income primarily reflects a decrease in prepayment fees
reflecting the prepayment of mortgage loans which did not contain prepayment
penalties.
NON-INTEREST EXPENSES
Non-interest expense decreased by approximately $1.0 million, or 15.79%
to $5.6 million for the six month period ended September 30, 1999 compared to
$6.6 million for the same period last year. The decrease in non-interest expense
primarily reflects decreases of $119,000 or 4.58% in salaries and employee
benefits expense, $21,000 or 44.89% in advertising expense, $106,000 or 53.72%
in equipment expense and $999,000 or 37.86% in other variable expenses, offset
in part by a $71,000 or 11.89% increase in occupancy expense. Other expenses for
the three month period ended September 30, 1998 reflected a one time charge of
$250,000 incurred in connection with the settlement of litigation.
INCOME TAX EXPENSE
In connection with the loss from operations incurred during the three
month period ended December 31, 1998, the Company has reflected a tax benefit
reflecting the carry forward of the loss for the income taxes paid. The Company
utilized a net operating loss deduction to offset income tax expense for the six
month period ended September 30, 1999 compared to an expense of $346,000 for the
six month period ended September 30, 1998. The Company's effective tax rate for
the six month period ended September 30, 1999 was 0.0% compared to 40.34% for
the six month period ended September 30, 1998.
THE YEAR 2000 ISSUE
The "Year 2000 Issue" centers on the inability of some 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 may recognize "00" as the year 1900 rather than the year 2000. Like
most financial service providers, the Company and its operations may be
significantly and adversely affected by the Year 2000 Issue due to the nature of
financial information. Software, hardware, and equipment both within and outside
the Company's direct control and with which the Company electronically or
operationally interfaces (e.g. including, but not limited to, 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 date field information, such as
interest, payment due dates and other operating functions, may generate results
which could be significantly misstated, and the Company could experience an
inability for a temporary, but unknown duration, to process transactions, send
invoices or engage in similar normal business activities. In addition, under
certain circumstances, failure to adequately address the Year 2000 Issue 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 Issue could result in a material adverse impact on the Company's products,
services and competitive condition and therefore, its results of operations and
could be deemed to imperil the safety and soundness of the Bank. There has been
litigation filed against corporations regarding the Year 2000 Issue and their
compliance efforts the law in this area will likely continue to develop
well into the new millennium. Should the Company experience a Year 2000 failure,
exposure of the Company could be significant and material. Legislation has been
introduced in several jurisdictions regarding the Year 2000 Issue. However, no
assurance can be given that legislation will be enacted in jurisdictions where
the Company does business that will have the effect of limiting any potential
liability.
16
<PAGE>
The OTS, the Company's primary federal bank regulatory agency, along
with the other federal bank regulatory agencies has published substantive
guidance on the Year 2000 Issue and had included Year 2000 compliance as a
substantive area of examination for both regularly scheduled and special
examinations. These publications, in addition to providing guidance as to
examination criteria, have outlined requirements for creation and implementation
of a compliance plan and target dates for testing and implementation of
corrective action, as discussed below. As a result of the oversight by and
authority vested in the federal bank regulatory agencies, a financial
institution that does not become Year 2000 compliant could become subject to
administrative remedies similar to those imposed on financial institutions
otherwise found not to be operating in a safe and sound manner, including
remedies available under prompt corrective action regulation.
The Company has developed and is implementing a Year 2000 Project Plan
(the "Plan") to address the Year 2000 Issue and its effects on the Company. The
Plan includes five components which address issues involving awareness,
assessment, renovation, validation and implementation. The Company has completed
the awareness, assessment and renovation phases of the Plan. During the
awareness, assessment and renovation phases of the Plan, the Company inventoried
all material information systems and reviewed them for Year 2000 readiness.
Among the systems reviewed were computer hardware and systems software,
applications software and communications hardware and software as well as
embedded or automated devices. As noted below, this review included both
internal systems and those of third party vendors which provide systems such as
retail deposit processing, loan origination processing, loan servicing and
general ledger and accounting systems and software. Following awareness and
assessment, the Company then renovated or replaced the systems that may have
posed a Year 2000 related problem. Following renovation, the functionality of
new systems were validated. At March 31, 1999, the validation phase and the
implementation phase were complete, and the testing, contingency planning and
the customer awareness program was completed by August 6, 1999.
The Company believes that it is in compliance with federal banking
regulatory guidelines, completing testing of its mission critical systems prior
to September 1, 1998 and its customer systems prior to September 30, 1998. The
Company has met federal banking regulatory guidelines stating that the Company
must substantially complete testing of core mission critical internal systems by
December 31, 1998. The Company completed testing of both internally and
externally supplied systems by August 6, 1999. The Company has arranged to
establish end-to-end Year 2000 tests with its business partners allowing the
Company an additional opportunity to test and stress such systems.
As part of the Plan, the Company has had formal communications with all
of its significant suppliers to determine the extent to which the Company is
vulnerable to those third parties' failure to remediate their own Year 2000
issues and has been following the progress of those vendors with their Year 2000
compliance status. The Company presently believes that with modifications to
existing software and conversions to new software and hardware where necessary,
the Year 2000 Issue will be mitigated without causing a material adverse impact
on the operations of the Company. At this time, the Company believes that all of
its hardware and software systems are Year 2000 compliant, tested and
operational.
Despite its best efforts to ensure Year 2000 compliance, it is possible
that one or more of the Company's internal or external systems may fail to
operate. At this time, while the Company believes that its systems are Year 2000
compliant, the probability of such likelihood cannot be determined. As a result,
the Company expects to formulate contingency plans for its mission critical
systems where possible. These systems included retail deposit processing, check
clearing and wire transfer capabilities, loan origination processing, loan
servicing, investment monitoring and accounting, general ledger and accounting
systems and payroll processing. The Company maintains a disaster recovery
program designed to deal with similar failures on an ongoing basis. All business
units have completed their update and review of their existing recovery plans in
addition to developing contingency plans to address the possible failure of one
or more mission critical systems. These plans will be vigorously tested during
the next 60 to 90 days.
The Company has reviewed its customer base to determine whether they
pose significant Year 2000 risks. The Company's customer base consists primarily
of individuals who utilize the Company's services for personal, household or
consumer uses. Individually such customers are not likely to pose significant
Year 2000 risks directly. It is not possible at this time to gauge the indirect
risks which could be faced if the employers of such customers encounter
unresolved Year 2000 issues.
17
<PAGE>
Monitoring and managing the Year 2000 Project Plan 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 for Year 2000 compliance, and costs for developing and
implementing contingency plans for critical systems which fail. Indirect costs
will principally consist of the time devoted by existing employees in monitoring
software vendor progress, testing and developing and implementing any necessary
contingency plans. Both direct and indirect costs of addressing the Year 2000
Issue will be charged to earnings as incurred. Such costs have not been material
to date. The Company does not believe that such costs will have a material
effect on results of operations, although there can be no assurance that such
costs would not become material in the future.
IMPACT OF NEW BANKING LEGISLATION
New legislation intended to modernize the financial services industry by
establishing a comprehensive framework to permit affiliations among commercial
banks, insurance companies and other financial service providers was signed into
law on November 12, 1999. Generally, this legislation (i) repeals the historical
restrictions and eliminates many federal and state law barriers to affiliations
among banks, securities firms, insurance companies and other financial service
providers, (ii) provides a uniform framework for the activities of banks,
savings institutions and their holding companies, (iii) broadens the activities
that may be conducted by national banks and banking subsidiaries of bank holding
companies, (iv) provides an enhanced framework for protecting the privacy of
consumer information, (v) adopts a number of provisions related to the
capitalization, membership, corporate governance and other measures designed to
modernize the Federal Home Loan Bank System, (vi) modifies the laws governing
the implementation of the Community Reinvestment Act and (vii) addresses a
variety of other legal and regulatory issues affecting both day-to-day
operations and long-term activities of financial institutions, including the
functional regulation of bank securities activities.
In particular, this legislation limits the activities that new unitary
savings and loan association holding companies may engage in. Unitary savings
and loan holding companies that are "grandfathered," I.E., became unitary
savings and loan holding companies pursuant to applications filed with the OTS
before May 4, 1999, will retain their authority under current law to engage in
nonfinancial activities. All other savings and loan holding companies will be
limited to financially related activities permissible for bank holding
companies, as defined under the new law. In addition, this legislation prohibits
non-financial companies from acquiring savings and loan association holding
companies.
Bank holding companies will be permitted to engage in a wider variety of
financial activities than are permitted under current law, particularly with
respect to insurance and securities activities. In addition, in a change from
current law, bank holding companies will be in a position to be owned,
controlled or acquired by any company engaged in financially related activities.
We do not believe that this legislation will have a material adverse
affect on our operations in the near term. However, to the extent that the
legislation permits banks, securities firms and insurance companies to
affiliate, the financial services industry may experience further consolidation.
This could result in a growing number of larger financial institutions that
offer a wider variety of financial services than the Company currently offers
and that can aggressively compete in the markets the Company currently serves.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Quantitative and qualitative disclosure about market risk is presented
at March 31, 1999 in Item 7A to the Company's Annual Report of Form 10-K, filed
with the Securities and Exchange Commission ("SEC") on June 29, 1999, as amended
on Form 10-K/A filed with the SEC, on July 29, 1999. The Company believes that
there have been no material changes in the Company's market risk at September
30, 1999 compared to March 31, 1999.
18
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, Carver Federal is a party to various legal
proceedings incident to its business. At March 31, 1999, except as set forth
below, there were no legal proceedings to which the Bank 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.
Currently, the Bank is defending actions brought by three unrelated
individuals who are alleging that the Bank and others were responsible for the
injuries they suffered during the construction of the Bank's headquarters
building in 1995. The three actions were previously described in the Company's
Form 10-Q for the period ended June 30, 1999. The Bank believes that each of
these cases is without merit. An insurance company has accepted the defense and
indemnification of all three claims on behalf of the Bank.
In addition, on November 9, 1999, a shareholder of the Company, BBC,
Capital Markets, Inc., filed a suit in the Court of Chancery of Delaware against
the Holding Company to require the Holding Company to hold an annual meeting of
stockholders. The action is encaptioned BBC CAPITAL MARKETS, INC. V. CARVER
BANCORP, INC. The Holding Company has scheduled the stockholders meeting for
Thursday, February 24, 2000. The Company believes that this case is without
merit and intends to vigorously defend its interests.
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
None
ITEM 5. OTHER INFORMATION
ANNUAL MEETING.
The Company announced that the annual meeting for the fiscal year ended
March 31, 2000 will be held on February 24, 2000 (the "Annual Meeting"). The
record date for the Annual Meeting will be January 11, 2000.
PROPOSALS FOR THE ANNUAL MEETING.
Any stockholder wishing to have a proposal considered for inclusion in
the Company's proxy statement and form of proxy relating to the Annual Meeting
of Stockholders must, in addition to other applicable requirements, set forth
such proposal in writing and file it with the Corporate Secretary of the Company
on or before November 24, 1999.
19
<PAGE>
NOTICE OF BUSINESS TO BE CONDUCTED AT ANNUAL MEETING.
The Bylaws of the Company provide an advance notice procedure for a
stockholder to properly bring business before an annual meeting or to nominate
any person for election to the Company's Board of Directors. The stockholder
must be a stockholder of record and have given timely notice thereof in writing
to the Secretary of the Company. To be timely, with respect to an annual meeting
of stockholders, a stockholder's notice must be delivered to or received by the
Secretary not later ninety (90) days in advance of the annual meeting since such
meeting is to be held on or after the anniversary of the previous year's annual
meeting. A stockholder's notice to the Corporate Secretary shall set forth such
information as required by the Bylaws of the Company. Nothing in this paragraph
shall be deemed to require the Company to include in its proxy statement and
proxy card relating to an annual meeting any shareholder proposal or nomination
which does not meet all of the requirements for inclusion established by the SEC
in effect at the time such proposal or nomination is received. See above,
"Proposals For The Annual Meeting."
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit 11. Net income per share
Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K.
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CARVER BANCORP, INC.
Date: November 16, 1999 /s/ Deborah C. Wright
----------------------------------------
Deborah C. Wright
President and Chief Executive Officer
Date: November 16, 1999 /s/ Walter T. Bond
----------------------------------------
Walter T. Bond
Acting Chief Financial Officer and Chief
Investment Officer
EXHIBIT 11
COMPUTATION OF NET INCOME PER SHARE
FOR THREE AND SIX MONTHS ENDED SEPTEMBER 30, 1999
For the Three Month Period
----------------------------------------
September 30, 1999 September 30, 1998
------------------ -------------------
Net income............................. $ 674,665 $ 193,211
Weighted average shares outstanding.... 2,223,218 2,203,562
Earning per shares outstanding......... $ 0.30 $ 0.09
For the Three Month Period
----------------------------------------
September 30, 1999 September 30, 1998
------------------ -------------------
Net income............................. $1,461,561 $ 511,263
Weighted average shares outstanding.... 2,220,784 2,201,306
Earning per shares outstanding......... $ 0.66 $ 0.23
<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, 1999 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0001016178
<NAME> CARVER BANCORP, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 19,925,414
<INT-BEARING-DEPOSITS> 268,001,033
<FED-FUNDS-SOLD> 11,900,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 29,825,053
<INVESTMENTS-CARRYING> 83,430,206
<INVESTMENTS-MARKET> 81,490,309
<LOANS> 252,683,382
<ALLOWANCE> 3,552,826
<TOTAL-ASSETS> 413,231,895
<DEPOSITS> 279,022,695
<SHORT-TERM> 97,035,549
<LIABILITIES-OTHER> 3,553,388
<LONG-TERM> 896,234
0
0
<COMMON> 23,144
<OTHER-SE> 32,724,029
<TOTAL-LIABILITIES-AND-EQUITY> 413,231,895
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<INTEREST-INCOME-NET> 6,416,208
<LOAN-LOSSES> 380,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 5,562,496
<INCOME-PRETAX> 1,461,561
<INCOME-PRE-EXTRAORDINARY> 1,461,561
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,461,561
<EPS-BASIC> .66
<EPS-DILUTED> .66
<YIELD-ACTUAL> 7.01
<LOANS-NON> 1,682
<LOANS-PAST> 1,802
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<CHARGE-OFFS> 970
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</TABLE>
EXHIBIT NO. 23.1 CONSENT OF INDEPENDENT AUDITORS
[Letterhead of Mitchell & Titus, LLP]
Carver Bancorp, Inc.
75 West 125th Street
New York, New York 10027
We hereby consent to incorporation by reference in the Registration Statement,
dated October 20, 1999, on Form S-2 of Carver Bancorp, Inc., of our report dated
June 29, 1999 relating to the consolidated financial condition of Carver
Bancorp, Inc. and subsidiaries as of March 31, 1999, and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for the year ended March 31, 1999, which report is incorporated by
reference in the March 31, 1999 Annual Report on Form 10-K of Carver Bancorp,
Inc. and subsidiaries.
/s/ Mitchell & Titus, LLP
New York, New York
October 20, 1999
EXHIBIT NO. 99.1 FORM OF ENROLLMENT APPLICATION
A DIRECT PURCHASE PROGRAM FOR THE COMMON STOCK OF
CARVER BANCORP, INC.
ENROLLMENT APPLICATION
I (We) hereby appoint American Stock Transfer & Trust Company as my (our) Agent
under the terms and conditions of the Shares Program, as described in the
Prospectus of the Program which accompanied this form, to receive cash payments
and apply them to the purchase of shares of Carver Bancorp, Inc. Common Stock as
indicated below.
NO INTEREST WILL BE PAID ON THE FUNDS HELD PENDING INVESTMENT.
ACCOUNT INFORMATION
- -------------------
1. SINGLE/JOINT: Joint account will be presumed to be joint tenants with right
of survivorship unless restricted by applicable state law or otherwise
indicated. The Social Security Number of the first-named tenant.
2 CUSTODIAL: A minor is the beneficial owner of the account with an adult
custodian managing the account until the minor becomes of age, as specified in
the Uniform Gift Transfer to Minors Act in the minor's state of residence. The
minor's Social Security Number is required.
3 TRUST: Account is established in accordance with the provisions of a
trust agreement.
THIS FORM, WHEN COMPLETED AND SIGNED, SHOULD BE MAILED WITH YOUR CHECK IN THE
ENVELOPE PROVIDED. IF YOU DO NOT HAVE THE ENVELOPE, MAIL YOUR CHECK AND THE FORM
TO:
CARVER BANCORP, INC.
C/O AMERICAN STOCK TRANSFER & TRUST COMPANY
ATTN: CARVER SHARES PROGRAM
40 WALL STREET, NEW YORK, NEW YORK 10005
Your preprinted name and address above is for mailing purposes only. Please
complete one of the boxes below for the exact account registration.
ACCOUNT LEGAL REGISTRATION (CHOOSE ONE):
----------------------------------------
SOCIAL SECURITY OR TAXPAYER IDENTIFICATION NUMBER ______________________________
I hereby warrant, under penalty of perjury, that the number provided above is
correct.
- --------------------------------------------------------------------------------
|_| SINGLE/JOINT ACCOUNT |_| CUSTODIAL ACCOUNT
_________________________ _______________________________
Name Custodian's Name
_________________________ _______________________________
Joint Owner (if any) Minor's Name
_________________________ _______________________________
Joint Owner (if any) Minor's State of Residence
|_| TRUST ACCOUNT
_________________________
Trust Name or Beneficiary
_________________________
Trustee Name
_________________________
Date of Trust
- --------------------------------------------------------------------------------
ACCOUNT ADDRESS_________________________________________________________________
STREET CITY STATE ZIP CODE
I acknowledge that the shares of Carver Bancorp, Inc. that I
purchase through the shares program are not savings deposits
or savings accounts, are not federally insured, and is not
guaranteed by Carver Bancorp, Carver Federal Savings Bank of
the federal government. If anyone asserts that investments
through the Shares Program is federally insured or guaranteed,
or is as safe as an insured deposit, I should call the Office
of Thrift Supervision's Regional Director at (201) 413-7302.
SIGNATURE(S)____________________________________________________________________
All Joint Owners Must Sign
ATTACHED IS A CHECK FOR $________________ MINIMUM INITIAL INVESTMENT IS $200
MINIMUM INVESTMENT IS $100 FOR
STOCKHOLDER OF RECORD AND CURRENT
PLAN PARTICIPANTS
MAXIMUM INITIAL INVESTMENT IS $10,000
(FOR AUTOMATIC MONTHLY DEDUCTIONS, SEE REVERSE)
<PAGE>
COMPLETE THIS PART ONLY IF YOU WANT AUTOMATIC MONTHLY DEDUCTIONS
I(We) hereby authorize American Stock Transfer & Trust Company to make monthly
automatic transfers of funds from the checking or savings account in the amount
stated below. This monthly deductions will be used to purchase shares of Carver
Bancorp, Inc. Common Stock for deposit into my (our) Carver Bancorp, Inc.
account.
Signature(s)_______________________________________
_______________________________________
Daytime
Date____________ Phone Number ____________________
1. Indicate the Type of Account: Checking or Savings.
2. Print the complete Bank Account Number.
3. Print the name on Bank Account as it appears on your statement.
4. Print the complete name of your financial institution, including the branch
name and address.
5. Print the ABA Number (Bank Number) from your check or savings deposit slip.
6. Amount of automatic monthly deduction: indicate the monthly amount
authorized to be transferred from your account. The minimum is $100 per
payment and the maximum is $100,000 per calendar year from your checking
savings account to purchase Carver Bancorp, Inc. Common Stock.
PLEASE ENCLOSE A COPY OF A VOIDED check or savings deposit slip to verify
banking information.
FILL IN THE INFORMATION BELOW FOR STOCK PURCHASES
USING AUTOMATIC MONTHLY DEDUCTIONS.
Please Print All items
1. type of Account checking |_| savings |_|
2. __________________________________________________________________
bank account number
3. __________________________________________________________________
name of bank account
4. __________________________________________________________________
financial institution
__________________________________________________________________
branch name
__________________________________________________________________
branch street address
__________________________________________________________________
branch city, state and zip code
5. _____________________________
ABA number (must be 9 digits)
6. $____________________________
Amount of automatic monthly deduction.
--------------------------------------------------------------
Name on JOHN A. DOE __________19______
Bank Account MARY B. DOE
123 YOUR STREET
ANYWHERE, U.S.A. 12345
PAY TO THE
ORDER OF $
----------------------------------------------- ------------
-------------------------------------------------------DOLLARS
FIRST NATIONAL BANK
Financial OF ANYWHERE
Institution and 123 MAIN STREET
Branch ANYWHERE, USA 12345
information
FOR SAMPLE (NON NEGOTIABLE)
----------------------------- ----------------------------
:071000013: 123456789"
--------------------------------------------------------------
