Carver Bancorp, Inc. Reports Third Quarter Fiscal Year 2014 Results

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| Source: Carver Bancorp, Inc.

NEW YORK, Feb. 12, 2014 (GLOBE NEWSWIRE) -- Carver Bancorp, Inc. (the "Company") (Nasdaq:CARV), the holding company for Carver Federal Savings Bank ("Carver" or the "Bank"), today announced financial results for its third fiscal quarter of 2014 ended December 31, 2013.

The Company reported a net loss of $107 thousand or basic and diluted loss per share of $0.03 for the third quarter of its fiscal year ending March 31, 2014, compared to net income of $474 thousand or a basic and diluted earnings per share of $0.13, for the prior year period. For the nine months ended December 31, 2013, the Company reported net income of $647 thousand or basic and diluted earnings per share of $0.18, compared to a net loss of $26 thousand or a loss per share of $0.01 for the comparative prior year period.  

Deborah C. Wright, Carver Bancorp Chairman and CEO said, "Management remains focused on positioning Carver for long-term, profitable growth, by taking steps to strengthen our balance sheet and grow our franchise. We were pleased with loan portfolio improvement, reduction of non-performing assets, increased interest income and decreased interest expense achieved during the quarter. Non-performing assets declined 11% from the prior quarter and 58% year-over-year, and delinquencies declined 20% over the prior quarter to their lowest level since the economic downturn began. Net interest margin remained strong at 3.39%, funding costs were stable and the Tier I leverage ratio is essentially flat at 10.51%. Over the next few quarters interest margins may be impacted by further volatility in interest rates, but our disciplined approach to lending and improved loan pipeline should positively impact our balance sheet.

"During the quarter, we terminated our discontinued pension plan and began the process of reinstating a company match on our 401-K plan. These are important strategic actions that eliminate risks to future earnings in a rising interest rate environment and better position us to attract and retain talent in a very competitive marketplace.

"Our Carver Community Cash product line continues to be a promising avenue for growth. Over the coming quarters, we expect to expand our product line visibility and penetration in geographic market that have a disproportionately high level of unbanked and underbanked consumers."

Statement of Operations Highlights

Third Quarter Results

The Company reported a net loss for the three months ended December 31, 2013 of $107 thousand compared to net income of $474 thousand in the prior year period. The primary drivers of the change were higher gains on sales of loans in the prior year period, partially offset by a higher loan loss provision release and higher non-interest expenses in the current quarter. 

Net Interest Income

Interest income increased $77 thousand, or 1.3%, to $6.0 million compared to $5.9 million for the prior year quarter, primarily attributable to an increase in average yields on loans and mortgage-backed securities during the quarter. The average yield on loans increased 13 basis points to 5.39% from 5.26%. The average yield on mortgage-backed securities increased 48 basis points to 2.34% from 1.86% as higher yielding securities were added to the portfolio in the current fiscal year.

Interest expense decreased $231 thousand, or 19.1%, to $979 thousand compared to $1.2 million in the prior year quarter, following lower rates paid on money market accounts and certificates of deposits, and restructuring of certain long-term borrowings in the first quarter of the current fiscal year. The average rate on interest-bearing liabilities decreased 17 basis points to 0.82% for the quarter ended December 31, 2013.

Provision for Loan Losses

The Company recorded a $1.1 million negative provision for loan losses compared to a $398 thousand negative provision for the prior year quarter. Net recoveries of $68 thousand were recognized compared to net charge-offs of $1.5 million in the prior year period. Recoveries and charge-offs in both periods were primarily related to impaired loans and loans moved to held-for-sale ("HFS").

Non-interest Income

Non-interest income decreased $1.3 million, or 52.4%, to $1.2 million in the third quarter, compared to $2.5 million for the prior year quarter. Most of the decrease was due to $1.0 million higher in net gains on sales of loans in the prior year period, and lower depository fees in the current period. 

Non-interest Expense

Non-interest expense increased $231 thousand to $7.5 million, compared to $7.3 million in the prior year quarter. The increase was due to higher employee compensation and benefit expense of $498 thousand primarily due to termination of the Company's pension plan, partially offset by lower data processing expense as we consolidate vendor contracts.

Income Taxes

The income tax expense was $6 thousand for the third quarter compared to $68 thousand in the prior year period.

Nine Month Results

The Company reported net income of $647 thousand for the nine months ended December 31, 2013, compared to a net loss of $26 thousand for the prior year period. This improvement was primarily driven by lower non-interest expenses over the prior year period and a negative loan loss provision in the current period, partially offset by lower non-interest income. 

Net Interest Income

Interest income decreased $678 thousand, or 3.7%, to $17.5 million for the nine month period, compared to $18.2 million for the prior year period, primarily attributed to a $36.5 million, or 8.8%, decrease in average loans. The average yield on loans increased 22 basis points to 5.47% from 5.25%, which was directly related to a reduction in non-performing loans. The decline in average loan balances did, however, decrease total interest income on loans. The average yield on mortgage-backed securities was essentially flat.

Interest expense decreased $817 thousand, or 21.6%, to $3.0 million, compared to $3.8 million for the prior year period, due to lower rates paid on money market accounts and certificates of deposits and restructuring of certain long-term borrowings in the first quarter. The average yield on interest-bearing liabilities decreased 20 basis points to 0.82% for the nine months ended December 31, 2013.

Provision for Loan Losses

The Company recorded a $726 thousand negative loan loss provision for the nine month period, compared to a $386 thousand increase in the provision for loan losses for the prior year period. For the nine months ended December 31, 2013, net charge-offs of $1.9 million were recognized compared to $5.7 million in the prior year period. Charge-offs in both periods were primarily related to impaired loans and loans that were moved to HFS.

Non-interest Income

Non-interest income decreased $1.0 million, or 16.9%, to $4.9 million for the nine month period, compared to $5.9 million for the prior year period. The decrease is attributable to $946 thousand higher gains on sale of loans and a $625 thousand one-time new markets tax credits ("NMTC") fee in the prior year period, offset by $447 thousand higher gains on sale of securities in the current year period. 

Non-interest Expense

Non-interest expense decreased $1.4 million, or 6.8%, to $19.4 million, compared to $20.8 million in the prior year period. The decrease is attributed to lower expenses in most categories including a reduction of $665 thousand in reserves for losses associated with the repurchase of mortgage loans sold by the Bank to Fannie Mae, and a $207 thousand decrease in net equipment expenses. 

Income Taxes

The income tax expense was $94 thousand for the nine month period compared to $264 thousand in the prior year period.

Financial Condition Highlights

At December 31, 2013, total assets increased $367 thousand, or 0.1% to $638.6 million, compared to $638.3 million at March 31, 2013. The overall change was due to increases in the loan portfolio, net of the allowance for loan losses, of $25.6 million, and cash and cash equivalents of $13.7 million offset by a decrease of $28.4 million in the investment portfolio.

Total investment securities decreased $28.4 million, or 22.7%, to $96.7 million at December 31, 2013, compared to $125.1 million at March 31, 2013. This change reflects a decrease of $31.4 million in available-for-sale securities, as the Company sold its lowest yielding securities to fund loan growth.

Net loans receivable increased $23.0 million, or 6.2%, to $393.1 million at December 31, 2013, compared to $370.1 million at March 31, 2013. The majority of the increase resulted from loan purchases, originations, and advances of $105.2 million, offset by $71.6 million of principal repayments and loan payoffs across all loan classifications. An additional $9.0 million in loans were transferred from held-for-investment to HFS and $1.3 million represented principal charge-offs associated with the move in loans to HFS. 

HFS loans decreased $5.4 million, or 41.4%, to $7.7 million at December 31, 2013, as the Company continued to take aggressive steps to resolve troubled loans. For the first nine months of fiscal 2014, $9.0 million in loans, net of charge-offs, were transferred into the HFS portfolio from the held-for-investment portfolio. This increase was offset by $14.0 million in sales and paydowns.

Total liabilities increased $6.7 million, or 1.1%, to $588.2 million at December 31, 2013, compared to $581.5 million at March 31, 2013, due to an increase in borrowings of $19.0 million, offset by reductions in deposits of $11.7 million.

Deposits decreased $11.7 million, or 2.4%, to $484.0 million at December 31, 2013, compared to $495.7 million at March 31, 2013, due primarily to decreases in certificates of deposit as the low interest rate environment led depositors to seek alternative investment opportunities for maturing deposits.

Advances from the Federal Home Loan Bank of New York ("FHLB-NY") and other borrowed money increased $19.0 million, or 24.9%, to $95.4 million at December 31, 2013, compared to $76.4 million at March 31, 2013, as the Company increased short-term borrowings during the nine month period to offset reductions in deposits.

Total equity decreased $6.3 million, or 11.1%, to $50.4 million at December 31, 2013, compared to $56.7 million at March 31, 2013. The majority of the decrease was due to $7.5 million in unrealized losses on investments caused by the spike in interest rates during the nine month period, offset by a $502 thousand change in unrealized loss on pension liability from closeout of the Company's pension fund and net income earned for the nine month period.  

Asset Quality

At December 31, 2013, non-performing assets totaled $24.0 million, or 3.8% of total assets, compared to $46.1 million or 7.2% of total assets at March 31, 2013, and $57.6 million or 9.0% of total assets at December 31, 2012. Non-performing assets at December 31, 2013 were comprised of $9.6 million of loans 90 days or more past due and non-accruing, $3.3 million of loans classified as troubled debt restructuring, $2.0 million of loans that were either performing or less than 90 days past due that have been classified as impaired, $1.4 million of Real Estate Owned, and $7.7 million of loans classified as HFS.

The allowance for loan losses was $8.4 million at December 31, 2013, which represents a ratio of the allowance for loan losses to non-performing loans of 56.4% compared to 35.9% at March 31, 2013. The ratio of the allowance for loan losses to total loans was 2.1% at December 31, 2013, a decrease from 3.0% at March 31, 2013.

About Carver Bancorp, Inc.

Carver Bancorp, Inc. is the holding company for Carver Federal Savings Bank, a federally chartered stock savings bank, founded in 1948 to serve African-American communities whose residents, businesses, and institutions had limited access to mainstream financial services. Carver, the largest African- and Caribbean-American run bank in the United States, operates ten full-service branches in the New York City boroughs of Brooklyn, Manhattan, and Queens. For further information, please visit the Company's website at www.carverbank.com.

Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in these statements due to a variety of factors, risks and uncertainties. More information about these factors, risks and uncertainties is contained in our filings with the Securities and Exchange Commission.   

CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
     
  December 31, March 31,
$ in thousands except per share data 2013 2013
ASSETS    
Cash and cash equivalents:    
Cash and due from banks  $ 109,238  $ 98,083
Money market investments  9,059  6,563
Total cash and cash equivalents  118,297  104,646
Restricted cash  6,556  10,666
Investment securities:    
Available-for-sale, at fair value  84,602  116,051
Held-to-maturity, at amortized cost (fair value of $12,092 and $9,629 at December 31, 2013 and March 31, 2013, respectively)  12,089  9,043
Total investments  96,691  125,094
     
Loans held-for-sale ("HFS")  7,678  13,107
     
Loans receivable:    
Real estate mortgage loans  364,820  334,594
Commercial business loans  28,188  35,281
Consumer loans  155  247
Loans, net  393,163  370,122
Allowance for loan losses  (8,415)  (10,989)
Total loans receivable, net  384,748  359,133
Premises and equipment, net  8,016  8,597
Federal Home Loan Bank of New York ("FHLB-NY") stock, at cost  4,226  3,503
Accrued interest receivable  2,620  2,247
Other assets  9,812  11,284
Total assets  $ 638,644  $ 638,277
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
LIABILITIES    
Deposits:    
Savings  $ 94,648  $ 98,066
Non-interest bearing checking  58,186  58,239
NOW  24,883  25,927
Money market  115,820  113,259
Certificates of deposit  190,446  200,225
Total deposits  483,983  495,716
Advances from the FHLB-New York and other borrowed money  95,403  76,403
Other liabilities  8,830  9,423
Total liabilities  588,216  581,542
     
STOCKHOLDERS' EQUITY    
Preferred stock (par value $0.01 per share: 45,118 Series D shares, with a liquidation preference of $1,000 per share, issued and outstanding)  45,118  45,118
Common stock (par value $0.01 per share: 10,000,000 shares authorized; 3,697,836 and 3,697,364 issued; 3,695,892 and 3,695,420 shares outstanding at December 31, 2013 and March 31, 2013, respectively)  61  61
Additional paid-in capital  56,114  55,708
Accumulated deficit  (43,803)  (44,439)
Non-controlling interest  (223)  141
Treasury stock, at cost (1,944 shares at December 31, 2013 and March 31, 2013)  (417)  (417)
Accumulated other comprehensive (loss) income  (6,422)  563
Total stockholders' equity  50,428  56,735
Total liabilities and stockholders' equity  $ 638,644  $ 638,277
     
CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
         
  Three Months Ended Nine Months Ended
  December 31 December 31
$ in thousands except per share data 2013 2012 2013 2012
Interest Income:        
Loans  $ 5,412  $ 5,325  $ 15,590  $ 16,398
Mortgage-backed securities  247  215  796  783
Investment securities  313  349  1,009  857
Money market investments  32  38  121  156
Total interest income  6,004  5,927  17,516  18,194
         
Interest expense:        
Deposits  694  868  2,078  2,750
Advances and other borrowed money  285  342  888  1,033
Total interest expense  979  1,210  2,966  3,783
         
Net interest income  5,025  4,717  14,550  14,411
Provision for (recovery of) loan losses  (1,052)  (398)  (726)  386
Net interest income after provision for loan losses  6,077  5,115  15,276  14,025
         
Non-interest income:        
Depository fees and charges  852  964  2,642  2,652
Loan fees and service charges  133  170  736  565
Gain on sale of securities  21  60  507  60
Gain on sale of loans, net  98  1,109  768  1,714
Loss on sale of real estate owned  (149)  --   (280)  (288)
New Market Tax Credit ("NMTC") fees  --   --   --   625
Lower of cost or market adjustment on loans held-for-sale  --   --   (232)  -- 
Other  255  238  775  587
Total non-interest income  1,210  2,541  4,916  5,915
         
Non-interest expense:        
Employee compensation and benefits  3,317  2,819  8,331  8,243
Net occupancy expense  887  910  2,634  2,684
Equipment, net  298  314  682  889
Data processing  244  326  826  842
Consulting fees  119  63  331  243
Federal deposit insurance premiums  313  320  929  994
Other  2,357  2,552  5,682  6,933
Total non-interest expense  7,535  7,304  19,415  20,828
         
(Loss) / income before income taxes  (248)  352  777  (888)
Income tax expense  6  68  94  264
Consolidated net (loss) / income  (254)  284  683  (1,152)
Less: Net (loss) / income attributable to non-controlling interest  (147)  (190)  36  (1,126)
Net (loss) / income attributable to Carver Bancorp, Inc.  $ (107)  $ 474  $ 647  $ (26)
         
(Loss) / Earnings per common share:        
Basic  $ (0.03)  $ 0.13  $ 0.18  $ (0.01)
Diluted  $ (0.03)  $ 0.13  $ 0.18  $ (0.01)
         
CARVER BANCORP, INC. AND SUBSIDIARIES
Non Performing Asset Table
           
$ in thousands December 2013 September 2013 June 2013 March 2013 December 2012
Loans accounted for on a non-accrual basis (1):          
Gross loans receivable:          
One-to-four family  $ 3,736  $ 4,343  $ 6,666  $ 7,642  $ 7,249
Multi-family  1,363  758  659  423  483
Commercial real estate  8,702  10,503  8,091  14,788  18,872
Construction  --   75  693  1,230  1,230
Business  1,120  2,457  3,350  6,505  7,718
Consumer  1  4  --   38  14
Total non-performing loans  $ 14,922  $ 18,140  $ 19,459  $ 30,626  $ 35,566
           
Other non-performing assets (2):          
Real estate owned  1,423  970  946  2,386  2,996
Loans held-for-sale  7,678  7,854  9,709  13,107  18,991
Total other non-performing assets  9,101  8,824  10,655  15,493  21,987
Total non-performing assets (3):  $ 24,023  $ 26,964  $ 30,114  $ 46,119  $ 57,553
           
Non-performing loans to total loans 3.80 % 4.55 % 5.47 % 8.27 % 9.76 %
Non-performing assets to total assets 3.76 % 4.25 % 4.75 % 7.23 % 8.98 %
           
(1) Non-accrual status denotes any loan where the delinquency exceeds 90 days past due and in the opinion of management, the collection of contractual interest and/or principal is doubtful. Payments received on a non-accrual loan are either applied to the outstanding principal balance or recorded as interest income, depending on assessment of the ability to collect on the loan.
(2) Other non-performing assets generally represent loans that the Bank is in the process of selling and has designated held-for-sale or property acquired by the Bank in settlement of loans less costs to sell (i.e., through foreclosure, repossession or as an in-substance foreclosure). These assets are recorded at the lower of their cost or fair value.
(3) Troubled debt restructured loans performing in accordance with their modified terms for less than six months and those not performing in accordance with their modified terms are considered non-accrual and are included in the non-accrual category in the table above. At December 31, 2013, there were $11.0 million TDR loans that have performed in accordance with their modified terms for a period of at least six months. These loans are generally considered performing loans and are not presented in the table above.
           
CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCES
             
  For the Three Months Ended December 31,
  2013 2012
  Average   Average Average   Average
$ in thousands Balance Interest Yield/Cost Balance Interest Yield/Cost
Interest-Earning Assets:            
Loans (1)  $ 401,843  $ 5,412 5.39 %  $ 404,613  $ 5,325 5.26 %
Mortgage-backed securities  42,275  247 2.34 %  46,251  215 1.86 %
Investment securities  46,789  236 2.02 %  64,025  267 1.67 %
Restricted cash deposit  6,556  1 0.03 %  6,415  --  0.03 %
Equity securities (2)  2,323  23 3.93 %  2,545  23 3.59 %
Other investments and federal funds sold  67,281  85 0.50 %  76,270  97 0.50 %
Total interest-earning assets  567,067  6,004 4.24 %  600,119  5,927 3.95 %
Non-interest-earning assets  18,192      9,269    
Total assets  $ 585,259      $ 609,388    
             
Interest-Bearing Liabilities:            
Deposits:            
NOW demand  $ 24,632  $ 10 0.16 %  $ 25,054  $ 10 0.16 %
Savings and clubs  94,963  63 0.26 %  97,391  64 0.26 %
Money market  116,067  134 0.46 %  112,044  201 0.71 %
Certificates of deposit  185,147  478 1.02 %  204,609  582 1.13 %
Mortgagors deposits  1,938  9 1.84 %  2,282  11 1.91 %
Total deposits  422,747  694 0.65 %  441,380  868 0.78 %
Borrowed money  53,120  285 2.13 %  43,737  342 3.10 %
Total interest-bearing liabilities  475,867  979 0.82 %  485,117  1,210 0.99 %
Non-interest-bearing liabilities:            
Demand  55,548      60,117    
Other liabilities  2,484      9,324    
Total liabilities  533,899      554,558    
Non-controlling interest  (78)      (252)    
Stockholders' equity  51,438      55,082    
Total liabilities & stockholders' equity  $ 585,259      $ 609,388    
Net interest income    $ 5,025      $ 4,717  
             
Average interest rate spread     3.42 %     2.96 %
             
Net interest margin     3.54 %     3.14 %
             
(1) Includes non-accrual loans          
(2) Includes FHLB-NY stock            
             
CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCES
 
  For the Nine Months Ended December 31,
   2013  2012
  Average   Average Average   Average
$ in thousands Balance Interest Yield/Cost Balance Interest Yield/Cost
Interest-Earning Assets:            
Loans (1)  $ 379,759  $ 15,590 5.47 %  $ 416,306  $ 16,398 5.25 %
Mortgage-backed securities  52,804  796 2.01 %  51,418  783 2.03 %
Investment securities  56,841  777 1.82 %  50,100  599 1.59 %
Restricted cash deposit  7,452  1 0.03 %  6,415  1 0.03 %
Equity securities (2)  2,334  69 3.92 %  2,545  70 3.65 %
Other investments and federal funds sold  73,301  283 0.51 %  85,119  343 0.53 %
Total interest-earning assets  572,491  17,516 4.08 %  611,903  18,194 3.96 %
Non-interest-earning assets  26,596      8,134    
Total assets  $ 599,087      $ 620,037    
             
Interest-Bearing Liabilities:            
Deposits:            
NOW demand  $ 25,534  $ 30 0.16 %  $ 26,016  $ 31 0.16 %
Savings and clubs  96,503  192 0.26 %  99,495  197 0.26 %
Money market  115,431  400 0.46 %  110,241  598 0.72 %
Certificates of deposit  189,248  1,429 1.00 %  212,432  1,894 1.18 %
Mortgagors deposits  2,012  27 1.78 %  2,193  30 1.82 %
Total deposits  428,728  2,078 0.64 %  450,377  2,750 0.81 %
Borrowed money  53,361  888 2.21 %  43,857  1,033 3.13 %
Total interest-bearing liabilities  482,089  2,966 0.82 %  494,234  3,783 1.02 %
Non-interest-bearing liabilities:            
Demand  55,753      62,057    
Other liabilities  6,306      8,159    
Total liabilities  544,148      564,450    
Non-controlling interest  (166)      69    
Stockholders' equity  55,105      55,518    
Total liabilities & stockholders' equity  $ 599,087      $ 620,037    
Net interest income    $ 14,550      $ 14,411  
             
Average interest rate spread     3.26 %     2.95 %
             
Net interest margin     3.39 %     3.14 %
             
(1) Includes non-accrual loans
(2) Includes FHLB-NY stock
             
CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED SELECTED KEY RATIOS
         
  Three Months Ended Nine Months Ended
  December 31, December 31,
Selected Statistical Data: 2013 2012 2013 2012
Return on average assets (1) (0.07)% 0.31 % 0.32 % (0.01)%
Return on average stockholders' equity (2) (0.75)% 3.41 % 3.38 % (0.14)%
Net interest margin (3) 3.54 % 3.14 % 3.39 % 3.14 %
Interest rate spread (4) 3.42 % 2.96 % 3.26 % 2.95 %
Efficiency ratio (5)(10) 120.85 % 100.63 % 99.74 % 102.47 %
Operating expenses to average assets (6) 5.15 % 4.79 % 9.72 % 10.08 %
Average equity to average assets (7) 8.79 % 9.04 % 9.20 % 8.95 %
         
Average interest-earning assets to average interest-bearing liabilities 1.19 x 1.24 x 1.19 x 1.24 x
         
Basic earnings (loss) per share  $ (0.03)  $ 0.13  $ 0.18  $ (0.01)
Average shares outstanding  3,696,225  3,695,653  3,696,123  3,695,616
         
  December 31    
  2013 2012    
Capital Ratios:        
Tier 1 leverage ratio (8) 10.51 % 10.06 %    
Tier 1 risk-based capital ratio (8) 17.60 % 16.56 %    
Total risk-based capital ratio (8) 20.17 % 19.13 %    
         
Asset Quality Ratios:        
Non-performing assets to total assets (9) 3.76 % 8.98 %    
Non-performing loans to total loans receivable (9) 3.80 % 9.76 %    
Allowance for loan losses to total loans receivable 2.14 % 3.97 %    
Allowance for loan losses to non-performing loans 56.39 % 40.72 %    
         
(1) Net income/(loss), annualized, divided by average total assets.
(2) Net income/(loss), annualized, divided by average total stockholders' equity.
(3) Net interest income, annualized, divided by average interest-earning assets.
(4) Combined weighted average interest rate earned less combined weighted average interest rate cost.
(5) Operating expenses divided by sum of net interest income plus non-interest income.
(6) Non-interest expenses, annualized, divided by average total assets.
(7) Average equity divided by average assets for the period ended.
(8) These ratios reflect consolidated bank only.
(9) Non-performing assets consist of non-accrual loans, and real estate owned.
(10) Non-GAAP Financial Measures: In addition to evaluating Carver Bancorp's results of operations in accordance with U.S. generally accepted accounting principles ("GAAP"), management routinely supplements their evaluation with an analysis of certain non-GAAP financial measures, such as the efficiency ratios. Management believes this non-GAAP financial measure provides information useful to investors in understanding the Company's underlying operating performance and trends, and facilities comparisons with the performance of other banks and thrifts. Further, the efficiency ratio is used by management in its assessment of financial performance, including non-interest expense control.
         
Ruth Pachman/Michael Herley
Kekst and Company
(212) 521-4800

David L. Toner
Carver Bancorp, Inc.
(718) 676-8936