Unassociated Document

New York, New York, May 31, 2007- Carver Bancorp, Inc. (the “Company” or “Carver”) (AMEX: CNY), the holding company for Carver Federal Savings Bank (the “Bank”), today announced its results of operations for its fourth quarter and fiscal year ended March 31, 2007 (“fiscal 2007”).The Company reported net income of $1.3 million and diluted earnings per share of $0.50 for the fourth quarter of fiscal 2007 compared to net income of $1.0 million and diluted earnings per share of $0.41, for the same period last year. For fiscal 2007, net income was $2.6 million and diluted earnings per share was $1.01 compared to $3.8 million and $1.47, respectively, for the prior fiscal year. The fiscal 2007 results include the previously reported second quarter 2007 one-time merger related charges in connection with completion of the Bank’s acquisition of Community Capital Bank (“CCB”) in the amount of $1.3 million (approximately $779,000 after taxes) and one-time charges related to its balance sheet repositioning in the amount of $1.3 million (approximately $835,000 after taxes). Excluding the one-time charges, on a non-GAAP basis the Company’s adjusted net income for fiscal 2007 would have been approximately $4.2 million, or $1.63 per diluted share for the fiscal year.

Deborah C. Wright, Chairman and CEO of Carver, noted: “Fiscal 2007 was marked by significant accomplishments at Carver including the successful acquisition of CCB and the receipt of a $59 million New Markets Tax Credit (“NMTC”) award. Because of the hard work of many dedicated employees, we completed the systems integration of CCB on schedule during the fourth quarter. In addition, we are very excited about our retail and lending operations which were recently bolstered by opportunistic recruitment of additional seasoned professionals seeking a growth platform in urban markets. These additions should accelerate our ability to capitalize on our new commercial banking platform and our recently announced alliance with Merrill Lynch. Our focus on active asset-liability management, including the balance sheet repositioning implemented during the second quarter, contributed to an increase in Carver’s net interest margin of 33 basis points to 3.56% for the fourth quarter of fiscal 2007, compared to 3.23% for the same period last year.

Net income for the quarter increased $245,000, or 23.5%, to $1.3 million compared to $1.0 million for the same period last year. The rise in quarterly results was primarily due to an increase in net interest income before provision for loan losses of $1.2 million and a reduction of tax expense of $1.1 million due to a tax benefit of $493,000, compared to a tax provision of $595,000 for the same period last year. This favorable change was partially offset by an increase in non-interest expense of $1.4 million, a decrease in non-interest income of $493,000 and a $156,000 provision for loan losses.Net interest income before provision for loan losses for the quarter increased $1.2 million, or 25.5%, to $6.1 million compared to $4.9 million for the same period last year. This result is primarily due to the Bank’s strategy to reduce lower yielding securities and replace them with higher yielding loans, and additional income from the CCB loan and investment portfolios acquired at the end of the second quarter. Interest income increased $2.8 million, or 32.2%, partially offset by an increase in interest expense of $1.5 million, or 40.8%, compared to the same period last year. This was due to increases in yields of 65 basis points and average balances in the loan portfolio of $132.8 million. Of the 65 basis point increase, the effect of purchase accounting associated with the acquisition of CCB contributed 12 basis points. Interest expense increased as a result of an increase in average balances in deposits of $117.0 million, primarily acquired from CCB.

Non-interest income decreased $493,000, or 27.6%, to $1.3 million compared to $1.8 million for the same period last year. Non-interest income declined primarily as a result of a decrease of $343,000 in loan fees and service charges and a decrease of $198,000 in the gain on sale of loans. The decline in loan fees and service charges resulted primarily from lower prepayment penalties collected this quarter as compared to the same period a year ago, due in part to the slower refinancing market as the yield curve remained flat to slightly inverted. The decrease in the gain on sale of loans resulted from a gain on the bulk sale of $10.7 million of residential one-to-four family mortgage loans during the fourth quarter of fiscal 2006.

Net interest income after provision for loan losses increased by $3.3 million, or 17.7%, to $22.2 million, compared to $18.9 million for the prior fiscal year. Interest income increased $9.4 million, or 28.9%, to $41.7 million compared to $32.4 million for the prior fiscal year primarily as a result of increased real estate mortgage loan balances, higher yields and the addition of the CCB investment and loan portfolios. The rise in interest income was partially offset by additional interest expense of $5.7 million, or 42.5%, to $19.2 million compared to $13.5 million for the prior fiscal year, primarily due to increased costs of deposits including the addition of CCB deposits. The Company also provided $276,000 in provisions for loan losses compared to the prior fiscal year in which the Company did not make a provision for loan losses.

Non-interest income decreased $2.5 million, or 46.3%, to $2.9 million, compared to $5.3 million for the prior fiscal year. Loan fees and service charges declined $1.0 million, or 44.5%, to $1.2 million, primarily as a result of decreased mortgage prepayment penalties associated with the decline in mortgage refinancing activity. As previously reported in its earnings release for fourth quarter 2006 and fiscal 2006, the Bank’s non-interest income in fiscal 2006 was higher than anticipated due to increased prepayment penalty income resulting from greater than anticipated mortgage refinance activity, increased late charge fee income resulting from a large delinquent loan refinancing and increased gain on sale of mortgage loans related to a bulk sale of $10.7 million of residential one-to-four family mortgage loans, none of which was expected to continue in fiscal year 2007. In addition, the Bank recognized one-time charges of $1.3 million in the second quarter of this fiscal year as part of the Bank’s balance sheet repositioning, resulting in a $702,000 write-down taken on held-for-sale loans and a $624,000 loss on the sale of certain investment securities.

At March 31, 2007, total assets increased by $74.6 million, or 11.3%, to $735.6 million compared to $661.0 million at March 31, 2006. The asset growth primarily reflects $165.4 million in total assets acquired from CCB, partially offset by sales of certain investment securities and loans. The Bank’s total loan portfolio increased by $111.7 million primarily as a result of the $98.8 million portfolio acquired from CCB and $170.6 million in loan originations and purchases, offset by loan repayments and loan sales of $153.2 million, a write-down of held-for-sale loans of $702,000 and a net change in mortgage loan premiums and discounts resulting in a $3.8 million decrease to the loan portfolio. The increase in total assets was partially offset by a decrease of $41.2 million in total securities, primarily as a result of a $47.1 million sale of certain investment securities as part of the Bank’s balance sheet repositioning.

At March 31, 2007, total liabilities increased by $71.6 million, or 11.7%, to $683.9 million from $612.3 million at March 31, 2006. The increase in liabilities results primarily from the acquisition of $159.3 million in liabilities from CCB partially offset by a $33.1 million net repayment of borrowings. The Bank’s deposits increased $106.5 million primarily as a result of the acquisition of $144.1 million in deposits from CCB. Excluding deposits acquired from CCB, the Bank’s deposits declined by $37.6 million as a result of reduced certificates of deposit, interest-bearing checking, savings and money market balances. The reduction in certificates of deposit primarily results from the Bank’s decision not to renew approximately $27.0 million in relatively high cost maturing deposits. Borrowings declined $33.1 million as the Bank had net repayments of $34.7 million in relatively higher cost borrowings, partially offset by an increase of $12.5 million in borrowings acquired with CCB of which $11.0 million matured and were repaid.

At March 31, 2007, total stockholders’ equity increased $2.9 million, or 6.0%, to $51.6 million compared to $48.7 million at March 31, 2006. The increase in total stockholders’ equity was primarily attributable to fiscal year 2007 net income of $2.6 million. Also contributing to the increase in total stockholders’ equity was the increase of $1.1 million in accumulated other comprehensive income related to mark-to-market of the Bank’s available-for-sale securities and employee pension accounting of $765,000 and $360,000, respectively. The increase on the available-for-sale securities resulted from the sale of securities as part of the balance sheet repositioning. Partially offsetting these increases was the payment of quarterly dividends totaling $879,000.

At March 31, 2007, non-performing assets totaled $4.5 million, or 0.62% of total assets, compared to $2.8 million, or 0.42% of total assets, at March 31, 2006. This increase is due to a group of loans to one borrower totaling $3.8 million, offset by a reduction in other non performing loans that were paid down. Non-performing assets consist of loans secured by real estate. Management has reviewed the value of the underlying real estate and believes it adequate to secure these loans. At March 31, 2007, the allowance for loan losses was $5.4 million compared to $4.0 million at March 31, 2006. This change reflects the additional allowance for loan losses of $1.2 million resulting from the CCB acquisition and an additional provision of $276,000 during the fiscal year. At March 31, 2007, the ratio of the allowance for loan losses to non-performing loans was 119.9% compared to 147.1% at March 31, 2006. At March 31, 2007, the ratio of the allowance for loan losses to total loans receivable was 0.89% compared to 0.81% at March 31, 2006.

During March 2007, the Company filed Form 10-K/A for the fiscal year ended March 31, 2006, to restate the Consolidated Statements of Cash Flows for Fiscal Years 2006, 2005 and 2004, and the Company’s quarterly report on Form 10-Q for the quarter ended December 31, 2006, contained a restated Consolidated Statements of Cash Flows for the quarter ended June 30, 2006. The Company previously reported its intent to make these restatements in its earnings release for fiscal third quarter 2007. The restatements did not affect the Company’s Consolidated Statements of Financial Condition, Consolidated Statements of Operations and Consolidated Statements of Changes in Stockholders Equity for the affected periods. Accordingly, the Company’s historical net income, earnings per share, total assets and regulatory capital remain unchanged.

CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except share data)
(Unaudited)

	March 31,			March 31,
	2007			2006
	(Unaudited)
ASSETS
Cash and cash equivalents:
Cash and due from banks	$	14,619		$	13,604
Federal funds sold		1,300			8,700
Interest earning deposits		1,431			600
Total cash and cash equivalents		17,350			22,904
Securities:
Available-for-sale, at fair value (including pledged as collateral
of $34,649 and $79,211 at March 31, 2007 and 2006, respectively)		47,980			81,882
Held-to-maturity, at amortized cost (including pledged as collateral
of $18,581 and $26,039 at March 31, 2007 and 2006, respectively;
fair value of $18,672 and $25,880 at March 31,2007 and 2006, respectively)		19,137			26,404
Total securities		67,117			108,286

Loans held-for-sale		23,226			--

Loans receivable:
Real estate mortgage loans		533,667			495,994
Consumer and commercial business loans		52,293			1,453
Allowance for loan losses		(5,409	)		(4,015	)
Total loans receivable, net		580,551			493,432

Office properties and equipment, net		14,626			13,194
Federal Home Loan Bank of New York stock, at cost		3,239			4,627
Bank owned life insurance		8,795			8,479
Accrued interest receivable		4,335			2,970
Goodwill		5,716			--
Core deposit intangibles, net		684			--
Other assets		9,926			7,101
Total assets	$	735,565		$	660,993

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits	$	611,138		$	504,638
Advances from the FHLB-NY and other borrowed money		60,690			93,792
Other liabilities		12,110			13,866
Total liabilities		683,938			612,296
Stockholders' equity:
Common stock (par value $0.01 per share: 10,000,000 shares;
authorized; 2,524,691 shares issued; 2,507,985 and 2,506,822
outstanding at March 31, 2007 and 2006, respectively)		25			25
Additional paid-in capital		23,996			23,935
Retained earnings		27,436			25,736
Unamortized awards of common stock under ESOP and MRP		(4	)		(22	)
Treasury stock, at cost (16,706 and 17,869 shares at
March 31, 2007 and 2006, respectively)		(277	)		(303	)
Accumulated other comprehensive income (loss)		451			(674	)
Total stockholders' equity		51,627			48,697
Total liabilities and stockholders' equity	$	735,565		$	660,993

CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share data)
(Unaudited)

	Three Months Ended March 31,					Twelve Months Ended March 31,

	2007			2006		2007			2006

Interest Income:
Loans	$	10,385		$	7,360	$	37,277		$	26,563
Mortgage-backed securities		547			1,055		2,877			4,439
Investment securities		500			186		1,325			971
Federal funds sold		38			75		261			412
Total interest income		11,470			8,676		41,740			32,385

Interest expense:
Deposits		4,568			2,678		15,227			8,921
Advances and other borrowed money		769			1,113		4,007			4,572
Total interest expense		5,337			3,791		19,234			13,493

Net interest income before provision for loan losses		6,133			4,885		22,506			18,892

Provision for loan losses		156			--		276			--
Net interest income after provision for loan losses		5,977			4,885		22,230			18,892

Non-interest income:
Depository fees and charges		585			577		2,476			2,458
Loan fees and service charges		542			885		1,238			2,231
Write-down of loans held for sale		--			--		(702	)		--
Loss on sale of securities		--			--		(624	)		--
Gain on sale of loans		51			249		192			351
Loss on sale of real estate owned		--			--		(108	)		--
Other		117			77		397			301
Total non-interest income		1,295			1,788		2,869			5,341

Non-interest expense:
Employee compensation and benefits		3,043			2,453		10,470			9,512
Net occupancy expense		759			614		2,667			2,284
Equipment, net		550			464		2,071			1,939
Merger related expenses		--			--		1,258			--
Other		2,127			1,506		6,873			5,399
Total non-interest expense		6,479			5,037		23,339			19,134

Income before income taxes		793			1,636		1,760			5,099
Income tax (benefit) provision		(493	)		595		(823	)		1,329
Net income	$	1,286		$	1,041	$	2,583		$	3,770

Earnings per common share:
Basic	$	0.51		$	0.42	$	1.03		$	1.50
Diluted	$	0.50		$	0.41	$	1.01		$	1.47

CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCES
(In thousands)
(Unaudited)

	Three Months Ended March 31, 2007							Three Months Ended March 31, 2006
	Average				Average			Average				Average
Interest Earning Assets:	Balance		Interest		Yield/Cost			Balance		Interest		Yield/Cost

Loans⁽¹⁾
Mortgage Loans	$	422,270	$	6,446		6.11	%	$	393,780	$	5,576		5.66	%
Construction		133,470		2,726		8.28	%		82,126		1,759		8.69	%
Subtotal Mortgage loans		555,740		9,172		6.63	%		475,906		7,335		6.19	%
Consumer		847		24		11.49	%		1,013		18		7.30	%
Small Business		53,530		1,189		9.01	%		427		6		5.86	%
Total Loans		610,117		10,385		6.84	%		477,346		7,360		6.19	%

Available for sale & investment securities:
Available for sale
MBS securities		22,413		276		4.93	%		74,695		683		3.66	%
Agency securities		28,527		407		5.79	%		13,208		120		3.67	%
Other		699		21		12.19	%		--		--		--
Subtotal available for sale		51,639		704		5.50	%		87,903		803		3.66	%
Held-for-investment:
MBS securities		19,281		271		5.62	%		26,595		372		5.60	%
Other		217		--		0.00	%		301		6		7.42	%
Subtotal held-for-investment		19,498		271		5.56	%		26,896		378		5.62	%
Total available for sale & investment securities		71,137		975		5.52	%		114,799		1,181		4.12	%

FHLB		3,138		67		8.54	%		5,477		61		4.42	%
Fed funds sold		2,989		38		5.16	%		6,916		75		4.40	%
Other		1,581		5		1.28	%		--		--		--
Total interest earning assets	$	688,962	$	11,470		6.69	%		604,538	$	8,676		5.76	%
Non-interest earning assets		48,373							34,580
Total assets	$	737,335						$	639,118


Interest Bearing Liabilities:
Deposits:
Checking	$	26,600	$	29		0.44	%	$	24,898		19		0.30	%
Savings and clubs		136,315		250		0.74	%		137,233		230		0.68	%
Money market accounts		49,461		349		2.86	%		34,898		165		1.92	%
Certificates of deposit		356,068		3,932		4.48	%		254,984		2,259		3.59	%
Mortgagors deposits		2,012		8		1.61	%		1,494		5		1.39	%
Total deposits		570,456		4,568		3.25	%		453,505		2,678		2.39	%

Advances & borrowed money		58,430		769		5.34	%		99,355		1,113		4.54	%
Total interest bearing liabilities		628,886		5,337		3.44	%		552,861		3,791		2.78	%

Non-interest-bearing liabilities:
Demand		48,540							31,615
Other Liabilities		11,351							5,881
Total liabilities		688,777							590,356
Stockholders' equity		48,558							48,762
Total liabilities and stockholders' equity	$	737,335						$	639,118
Net interest income			$	6,133						$	4,885

Average interest rate spread						3.25	%						2.98	%

Net interest margin						3.56	%						3.23	%

⁽¹⁾ Includes non-accrual loans

CARVER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCES
(In thousands)
(Unaudited)

	Twelve Months Ended March 31, 2007							Twelve Months Ended March 31, 2006
	Average				Average			Average				Average
Interest Earning Assets:	Balance		Interest		Yield/Cost			Balance		Interest		Yield/Cost

Loans⁽¹⁾
Mortgage Loans	$	409,121	$	24,495		5.99	%	$	397,707	$	22,286		5.60	%
Construction		116,967		9,823		8.40	%		44,219		4,201		9.50	%
Subtotal Mortgage loans		526,088		34,318		6.52	%		441,926		26,487		5.99	%
Consumer		925		99		10.71	%		1,078		66		6.17	%
Small Business		31,045		2,860		9.21	%		457		10		2.11	%
Total Loans		558,058		37,277		6.68	%		443,461		26,563		5.99	%

Available for sale & investment securities:
Available for sale
MBS securities		43,090		1,749		4.06	%		85,711		2,871		3.35	%
Agency securities		20,427		973		4.76	%		19,688		677		3.44	%
Other		1,328		52		3.91	%		173		--		--
Subtotal available for sale		64,845		2,774		4.28	%		105,571		3,548		3.36	%
Held-for-investment:
MBS securities		21,592		1,128		5.22	%		27,863		1,567		5.63	%
Other		233		1		0.43	%		316		1		0.25	%
Subtotal held-for-investment		21,825		1,129		5.17	%		28,179		1,568		5.57	%
Total available for sale & investment securities		86,670		3,903		4.50	%		133,750		5,116		3.83	%

FHLB		4,001		284		7.10	%		5,522		291		5.27	%
Fed funds sold		5,145		261		5.07	%		12,166		412		3.39	%
Other		1,172		15		1.28	%		--		3		--
Total interest earning assets	$	655,046	$	41,740		6.37	%	$	594,899	$	32,385		5.44	%
Non-interest earning assets		44,140							35,198
Total assets	$	699,186						$	630,097


Interest Bearing Liabilities:
Deposits:
Checking	$	25,313	$	97		0.38	%	$	24,397	$	74		0.30	%
Savings and clubs		136,785		931		0.68	%		137,934		919		0.67	%
Money market accounts		43,303		1,133		2.62	%		36,583		601		1.64	%
Certificates of deposit		312,452		13,036		4.17	%		237,992		7,296		3.07	%
Mortgagors deposits		2,154		30		1.39	%		2,044		30		1.47	%
Total deposits		520,007		15,227		2.93	%		438,950		8,921		2.03	%

Advances & borrowed money		78,450		4,007		5.11	%		107,551		4,572		4.25	%
Total interest bearing liabilities		598,457		19,234		3.21	%		546,501		13,493		2.47	%

Non-interest-bearing liabilities:
Demand		40,677							29,078
Other Liabilities		10,738							6,980
Total liabilities		649,872							582,560
Stockholders' equity		49,314							47,537
Total liabilities and stockholders' equity	$	699,186						$	630,097
Net interest income			$	22,506						$	18,892

Average interest rate spread						3.16	%						2.97	%

Net interest margin						3.44	%						3.18	%


⁽¹⁾ Includes non-accrual loans

CARVER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED SELECTED KEY RATIOS

(Unaudited)

	Three Months Ended						Twelve Months Ended
Selected Statistical Data:	March 31,						March 31,
	2007			2006			2007			2006
Return on average assets (1)		0.70	%		0.65	%		0.37	%		0.60	%
Return on average equity (2)		10.59			8.54			5.24			7.93
Interest rate spread (3)		3.25			2.98			3.16			2.97
Net interest margin (4)		3.56			3.23			3.44			3.18
Operating expenses to average assets (5)		3.51			3.15			3.34			3.04
Efficiency ratio (6)		87.22			75.48			91.98			78.96

Average interest-earning assets to interest-bearing liabilities		1.10	x		1.09	x		1.09	x		1.09	x

Net income per share - basic	$	0.51		$	0.42		$	1.03		$	1.50
Net income per share - diluted	$	0.50		$	0.41		$	1.01		$	1.47
Average shares outstanding - basic		2,511,978			2,504,099			2,511,226			2,506,029
Average shares outstanding - diluted		2,566,107			2,560,299			2,567,928			2,564,950
Cash dividends	$	0.09		$	0.08		$	0.35		$	0.31
Dividend payout ratio (9)		17.59	%		19.26	%		34.04	%		20.63	%

Capital Ratios:	March 31,
	2007		2006
Equity-to-assets (7)	7.02	%	7.37	%
Tier I leverage capital ratio (8)	7.97		9.40
Tier I risk-based capital ratio (8)	9.51		12.42
Total risk-based capital ratio (8)	10.39		13.22

Asset Quality Ratios:

Non performing assets to total assets (10)	0.62	%	0.42	%
Non performing assets to total loans receivable (10)	0.74		0.55
Allowance for loan losses to total loans receivable	0.89		0.81
Allowance for loan losses to non-performing loans	119.93		147.06

(1) Net income divided by average total assets, annualized.
(2) Net income divided by average total equity, annualized.
(3) Combined weighted average interest rate earned less combined weighted average interest rate cost.
(4) Net interest income divided by average interest-earning assets, annualized.
(5) Non-interest expenses divided by average total assets, annualized.
(6) Operating expenses divided by sum of net interest income plus non-interest income.
(7) Total equity divided by assets at period end.
(8) These ratios reflect consolidated bank only.
(9) Dividend paid on common stock during the period divided by net income available to common stockholders for the period.
(10) Non performing assets consist of non-accrual loans, loans accruing 90 days or more past due and real estate owned.


Contact: David Lilly / Joseph Kuo Kekst and Company (212) 521-4800	Roy Swan Carver Bancorp, Inc. (212) 360-8820