-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VCRIR1YwZbIofpEO3a1SQXb12Siw7x1/MYdTYRTQ4b0S/LFJRG/ZecX8E/i5WBcK Hk6IIbkzMtFH79/zCE5s2A== 0000950123-98-001616.txt : 19980219 0000950123-98-001616.hdr.sgml : 19980219 ACCESSION NUMBER: 0000950123-98-001616 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980217 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CARVER BANCORP INC CENTRAL INDEX KEY: 0001016178 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 133904174 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13007 FILM NUMBER: 98544001 BUSINESS ADDRESS: STREET 1: 75 W 125TH ST CITY: NEW YORK STATE: NY ZIP: 10027-4512 BUSINESS PHONE: 2128764747 MAIL ADDRESS: STREET 1: 75 W 125TH ST CITY: NEW YORK STATE: NY ZIP: 10027-4512 10-Q 1 FORM 10-Q 1 Final Draft 2/16/98 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) /x / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1997. OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 0-21487 CARVER BANCORP, INC. (Exact name of registrant as specified in its charter) DELAWARE 13-3904174 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 75 WEST 125TH STREET, NEW YORK, NEW YORK 10027 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (212) 876-4747 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety days. Yes X No Class Outstanding at February 17, 1998 ----- -------------------------------- Common Stock, par value $.01 2,314,275 1 2 CONTENTS PAGE
PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Statements of Financial Condition as of December 31, and March 31, 1997 (unaudited).......................3 Consolidated Statements of Income for the Three and Nine Months Ended December 31, 1997 and 1996 (unaudited)...............4 Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 1997 and 1996 (unaudited)......................5 Notes to Consolidated Financial Statements (unaudited)............6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...............................7 Item 3. Quantitative and Qualitative Disclosures About Market Risk.................................................8 PART II. OTHER INFORMATION Item 1. Legal Proceedings.................................................16 Item 2. Changes in Securities and Use of Proceeds.........................16 Item 3. Defaults upon Senior Securities...................................16 Item 4. Submission of Matters to a Vote of Security Holders...............16 Item 5. Other Information.................................................17 Item 6. Exhibits and Reports on Form 8-K..................................17 SIGNATURES
2 3 CARVER BANCORP, INC. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
AS OF AS OF DECEMBER 31, MARCH 31, ASSETS 1997 1997 - ------ --------------- -------------- Cash and due from banks ....................................... $ 1,693,952 $ 4,230,757 Federal funds sold ............................................ 3,050,000 0 ------------- ------------- Total cash and cash equivalents ........................... 4,743,952 4,230,757 Securities available for sale ................................. 40,754,203 83,892,617 Investment securities held to maturity, net (estimated fair values of $1,673,000 at March 31, 1997) ........................................... 0 1,675,181 Mortgage-backed securities held to maturity, net (estimated fair values of $93,812,000 and $107,719,000 at December 31, 1997 and March 31, 1997) ...................... 96,188,230 110,852,668 Loans receivable, net ......................................... 244,940,083 197,917,673 Real estate owned, net ........................................ 82,198 82,198 Property and equipment, net ................................... 11,609,345 11,342,678 Federal Home Loan Bank of New York stock, at cost ............. 5,387,500 5,535,000 Accrued interest receivable, net .............................. 3,191,321 2,978,365 Excess of cost over net assets acquired, net .................. 1,331,707 1,456,000 Other assets .................................................. 7,538,854 3,650,366 ------------- ------------- Total assets .............................................. $ 415,767,393 $ 423,613,503 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits .................................................... $ 269,106,203 $ 266,471,487 Securities sold under agreement to repurchase ............... 73,392,596 74,335,000 Advances from Federal Home Loan Bank of New York ............ 35,000,000 45,400,000 Other borrowed money ........................................ 1,229,391 1,365,990 Advance payments by borrowers for taxes and insurance ....... 670,501 670,502 Other liabilities ........................................... 1,114,145 1,386,802 ------------- ------------- Total liabilities ........................................ 380,512,836 389,629,781 ------------- ------------- Stockholders' Equity: Preferred stock, $0.01 par value per share; 1,000,000 shares authorized; none issued .................. -- -- Common stock, $0.01 par value per share; 5,000,000 shares authorized; 2,314,275 shares issued and outstanding ....... 23,144 23,144 Additional paid-in capital .................................. 21,447,094 21,410,167 Retained earnings-substantially restricted .................. 15,343,376 14,359,060 Dividends declared and paid ................................. (115,714) 0 Common stock acquired by Employee Stock Ownership Plan ...... (1,229,391) (1,365,990) Unrealized (loss) net, on securities available for sale, .... (213,952) (442,659) ------------- ------------- Total stockholders' equity ................................ 35,254,557 33,983,722 ------------- ------------- Total liabilities and stockholders' equity .......... $ 415,767,393 $ 423,613,503 ============= =============
3 4 CARVER BANCORP INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED DECEMBER 31, DECEMBER 31, 1997 1996 1997 1996 ---------- ---------- ----------- ------------ Interest income: Loans receivable ............................. $4,588,062 $2,017,551 $13,490,213 $ 5,557,667 Mortgage-backed securities ................... 2,073,948 2,448,720 6,489,624 7,659,413 Debt and equity securities ................... 238,109 1,175,444 773,775 3,494,998 Other interest-earning assets ................ 30,788 128,242 120,542 478,027 ---------- ---------- ----------- ------------ Total interest income ..................... 6,930,907 5,769,957 20,874,154 17,190,105 ---------- ---------- ----------- ------------ Interest expense: Deposits ..................................... 2,162,459 2,100,702 6,456,748 6,282,634 Advances and other borrowed money ............ 1,531,824 1,034,650 4,885,308 3,117,571 ---------- ---------- ----------- ------------ Total interest expense ..................... 3,694,283 3,135,352 11,342,056 9,400,205 ---------- ---------- ----------- ------------ Net interest income ............................ 3,236,624 2,634,605 9,532,098 7,789,900 Provision for loan losses ...................... 279,920 51,254 681,113 135,895 ---------- ---------- ----------- ------------ Net interest income after provision for loan losses .................... 2,956,704 2,583,351 8,913,985 7,654,005 ---------- ---------- ----------- ------------ Non-interest income: Loan fees and service charges ................ 33,829 52,946 100,015 154,275 Gain or (Loss) on Sale of Securities 188,483 0 188,483 0 Other ........................................ 378,055 184,912 930,979 693,620 ---------- ---------- ----------- ------------ Total non-interest income ................ 550,365 237,858 1,219,477 847,895 ---------- ---------- ----------- ------------ Non-interest expenses: Salaries and employee benefits ............... 1,240,081 917,143 3,517,119 2,961,576 Net occupancy expenses ....................... 261,644 317,327 804,069 853,130 Equipment .................................... 363,002 301,261 905,352 804,597 Loss on foreclosed real estate ............... 11,974 1,188 11,974 9,688 Advertising .................................. 75,716 54,308 194,466 133,530 Federal insurance premium .................... 42,119 148,663 83,622 439,320 Amortization of intangibles .................. 17,756 53,268 124,293 159,805 Legal expenses ............................... 105,000 41,841 220,000 115,182 Bank charges ................................. 113,084 81,715 308,423 260,781 Security service ............................. 96,004 77,032 238,122 232,833 SAIF Capitalization .......................... 0 0 0 1,632,290 Other ........................................ 611,959 564,868 1,994,489 1,577,388 ---------- ---------- ----------- ------------ Total non-interest expenses .............. 2,938,339 2,558,614 8,401,929 9,180,120 ---------- ---------- ----------- ------------ Income (Loss) before income taxes .............. 568,729 262,595 1,731,531 (678,220) Income taxes (Benefit) ......................... 268,049 111,066 791,310 (309,541) ---------- ---------- ----------- ------------ Net income (Loss) ............................. $ 300,680 $ 151,529 $ 940,221 $ (368,679) ========== ========== =========== ============ Net income (Loss) per common share ............. $ 0.14 $ 0.07 $ 0.43 $ (0.17) ========== ========== =========== ============ Weighted average number of common shares outstanding .................................. 2,189,918 2,171,194 2,185,376 2,166,992 ========== ========== =========== ============
4 5 CARVER FEDERAL SAVINGS BANK AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED DECEMBER 31, 1997 1996 ------------ ------------ Cash flows from operating activities: Net income ............................................................. $ 940,221 $ (368,679) Adjustments to reconcile net income to net cash ....................... provided by operating activities: Depreciation and amortization of premises and equipment ............. 492,535 497,776 Amortization of intangibles ......................................... 124,293 159,805 Other amortization and accretion, net ............................... 784,666 948,582 Provision for loan losses .......................................... 681,113 135,895 Deferred income taxes ............................................... (476,662) 292,471 Allocation of ESOP .................................................. 173,526 111,383 Changes in: Accrued interest receivable, net .................................... 212,956 87,261 Refundable income taxes ............................................. 0 0 Other assets ........................................................ 9,710,160 1,675,994 Other liabilities ................................................... (272,656) 0 ------------ ------------ Net cash provided by operating activities ......................... (2,050,168) 3,540,488 ------------ ------------ Cash flows from investing activities: Purchase of securities available for sale ........................... (17,000,000) (8,500,000) Principal repayments on securities available for sale ............... 4,419.045 4,264,055 Proceeds from sale of securities available for sale ................. 55,819,825 12,114,321 Gain from sale of securities available for sale ...................... 188,483 91,713 Purchase of investment securities held to maturity .................. (7,000,000) (50,000) Proceeds from maturities and calls of investment securities held to maturity ....................................... 8,480,705 2,311,894 Principal repayment on mortgage-backed securities held to maturity .................................................. 14,414,131 15,049,089 Principal repayment on investment held to maturity .................................................. 194,476 0 Net change in loans receivable ...................................... 6,163,779 (21,199,581) Purchase of mortgage loans .......................................... (53,544,828) 0 Proceeds from sale of real estate owned ............................. 0 252,292 Loss from sale of real estate owned ................................. 0 20,292 Additions to premises and equipment ................................ (760,466) (1,766,080) Redemption of Federal Home Loan Bank stock ......................... 147,500 685,000 ------------ ------------ Net cash (used in) provided by investing activities ............... 11,522,650 3,272,995 ------------ ------------ Cash flows from financing activities: Net increase (decrease) in deposits ................................. 2,634,716 6,424,090 Decrease in short term borrowings .................................. (942.404) 0 Repayment of securities sold under agreements to repurchase ......... (67,000,000) Repayment of advances from Federal Home Loan Bank of New York ....................................................... (52,400,000) 0 Advances from Federal Home Loan Bank of New York ................... 42,000,000 63,335,000 Repayment of other borrowed money .................................. (136,599) (136,599) Net increase (decrease) in advance payments by borrowers for taxes and insurance ........................................... 0 187,447 Cash dividends paid ............................................... (115,000) 0 ------------ ------------ Net cash provided by (used in) financing activities ................ (8,959,287) (2,809,938) ------------ ------------ Net increase (decrease) in cash and cash equivalents .................. 513,195 (9,623,421) Cash and cash equivalents -- beginning ................................ 4,230,757 10,025,950 ------------ ------------ Cash and cash equivalents -- ending ................................... $ 4,743,952 $ 19,649,371 ============ ============ Supplemental disclosure of non-cash activities: Unrealized Gain (loss) on securities available for sale: Unrealized Gain (loss) ............................................ 403,683 $ 927,875 Deferred income taxes ............................................. 189,731 491,774 ------------ ------------ $ 213,952 $ 436,101 ============ ============ Loans receivable transferred to real estate owned ................... $ 0 $ 32,729 ============ ============ Supplemental disclosure of cash flow information: Cash paid for: Interest .......................................................... $ 11,367,056 $ 11,595,424 ============ ============ Federal, state and city income taxes .............................. $ 0 $ 286,000 ============ ============
See Notes to Consolidated Financial Statements. 5 6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of Carver Bancorp, Inc. (the "Holding Company" or "Bancorp"), have been prepared in accordance with generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated by the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, all adjustments (consisting of only normal recurring adjustments) necessary for fair presentation have been included. The consolidated results of operations and other data for the three or nine month period ended December 31, 1997 are not necessarily indicative of results that may be expected for the entire fiscal year ending March 31, 1998. The unaudited consolidated financial statements include the accounts of the Holding Company and its wholly owned subsidiary Carver Federal Savings Bank (the "Bank" or "Carver Federal") and the Bank's wholly owned subsidiaries, C.F.S.B. Realty Corp. and C.F.S.B. Credit Corp. All significant intercompany accounts and transactions have been eliminated in consolidation. (2) EARNINGS PER SHARE CALCULATION Net income per share for the three and nine month periods ended December 31, 1996 and 1997 are calculated based on weighted average number of shares outstanding during the period. (3) RECENT ACCOUNTING PRONOUNCEMENTS In February 1997, the Financial Accounting Standards Board ("FASB") issued SFAS No. 128, "Earnings per Share," which provides for the computation, presentation and disclosure requirements for earnings per share. SFAS No. 128 simplifies the computation of earnings per share for common stock and potential common stock. The adoption of SFAS No. 128 is not expected to have a material effect on Bancorp's future financial condition, results of operations or reported results of operations. In June 1997, the FASB released SFAS No. 130 "Reporting Comprehensive Income." This SFAS requires disclosure of all changes in equity during a period except those resulting from investment by owners distributions to owners. SFAS 130 is effective for fiscal years beginning after December 15, 1997. June 1997, FASB issued SFAS No. 131, "Disclosures About Segments of Enterprise and Related Information. "This SFAS requires the disclosures regarding reportable segments of an enterprise. Information required to be disclosed includes among other factors used to identify segments, selected financial data; profit and loss, revenues and other operating and non-operating expenses. Its effective date is for fiscal years ending after December 15, 1997. The adoption of SFAS No. 130 and 131 is not expected to have a material effect on Bancorp's future financial condition, results of operation or reported results of operations. (4) RECENT DEVELOPMENTS On January 28, 1998, the Holding Company announced that the Bank had entered into a definitve agreement to sell its branch office located in Roosevelt, New York, to City National Bank of New Jersey. The Roosevelt Office is Carver Federal's only branch office located in Nassau County, New York. 6 7 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS EXPLANATORY NOTE This Quarterly Report on Form 10-Q contains forward-looking statements consisting of estimates with respect to the financial condition, results of operations and business of the Company that are subject to various factors which could cause the actual results to differ materially from these estimates. These factors include, without limitation, changes in general, economic and market, legislative and regulatory conditions and the development of an adverse interest rate environment that adversely affects the interest rate spread or other income anticipated from the Company's operations and investments. GENERAL Carver Bancorp, Inc. (the "Holding Company" or "Bancorp"), a Delaware corporation, is the holding company for Carver Federal Savings Bank (the "Bank" or "Carver Federal"), a federally chartered savings bank. Collectively, the Holding Company and the Bank are referred to herein as the "Company" or "Carver." On October 17, 1996, the Bank completed its reorganization into a holding company structure (the "Reorganization") and became the wholly owned subsidiary of the Holding Company. At this time, the Holding Company conducts business as a unitary savings and loan holding company and the principal business of the Holding Company consists of the operation of its wholly-owned subsidiary; the Bank, which operates seven full service branches in the New York City boroughs of: Brooklyn, Queens, Manhattan, and in Nassau County, New York. See "Recent Developments". FINANCIAL CONDITION ASSETS Total assets at December 31, 1997 decreased approximately $7.8 million, or 1.85%, to $415.8 million from $423.6 million at March 31, 1997, however, they were essentially unchanged from $415.6 million at September 30, 1997. The decrease was primarily attributable to the decrease in the Company's portfolio of mortgage-backed securities held to maturity and securities available for sale, offset in part by increases in federal funds sold and loans receivable. These changes are consistent the Company's strategy to shift assets out of securities and in to loans. The Company's portfolio of mortgage-backed securities held to maturity decreased by $14.7 million, or 13.23%, to $96.2 million at December 31, 1997 from $110.9 million at March 31, 1997, reflecting the receipt of principal repayments on such securities. Total cash and equivalents increased by $500,000 or 12.13% to $4.7 million at September 30, 1997 from $4.2 million at March 31, 1997. Securities available for sale decreased $43.1 million or 51.42% to $40.8 million at December 31, 1997 from $83.9 million at March 31, 1997, due to the sale of $55.8 million of mutual funds and principal repayments which were partially offset by the purchase of $12.0 million of short term government agency securities classified as available for sale and a decrease in unrealized loss of $229,000. The Company used these repayments of mortgage backed securities, proceeds from sale of mutual funds and increased deposits to purchase $53.5 million of mortgage loans, originate loans, repurchase securities previously sold under agreement to repurchase and repay advances from the Federal Home Loan Bank ("FHLB Advances"). The Company's loans receivable increased $47.0 million or 23.76% to $244.9 million at December 31, 1997 as compared to $197.9 million at March 31, 1997. The increase was due to the purchase of $42.5 million of one-to-four family adjustable rate mortgage loans, $32 million of which were purchased in April of 1997, with the balance purchased over the nine month period coupled with increased loan originations of multi-family loans which were partly offset by principal repayments. LIABILITIES AND STOCKHOLDERS' EQUITY The Company's total liabilities decreased by $9.1 million, or 2.34%, to $380.5 million at December 31, 1997 from $389.6 million at March 31, 1997, as the result of decreased FHLB advances and securities sold under repurchase agreements ("other borrowings"). The Company's FHLB advances decreased by $10.4 million or 22.91% to $35.0 million at December 31, 1997 compared to $45.4 million at March 31, 1997, and other borrowings decreased by $900,000 or 1.27% to $73.4 million compared to $74.3 million for the same period. The FHLB advances and other borrowings were retired with a portion 7 8 of the proceeds generated from the sale of the mutual funds. These decreases were partially offset by an increase in deposits of $2.6 million, or 1.00%, to $269.1 million at December 31, 1997 from $266.5 million at March 31, 1997. The overall decline in liabilities, and in particular, borrowed funds is consistent with the balance sheet restructuring discussed above. Stockholders' equity increased by $1.3 million or 3.74%, to $35.3 million at December 31, 1997 from $34.0 million at March 31, 1997 due to an increase in retained earnings of $984,000 offset by the declaration and payment of a cash dividend, the exercise of stock, a decrease in the unrealized net loss on securities available for sale, and the allocation of shares under the Employee Stock Ownership Plan. Retained earnings of the Company at December 31, 1997 increased $984,000, or 6.86%, to $15.3 million at December 31, 1997 from $14.4 million at March 31, 1997, as a result of earnings during the nine Months Ended December 31, 1997. Under Statement of Financial Accounting Standards("SFAS") No. 115, unrealized losses on securities available for sale are recorded net of deferred income tax as a reduction to stockholders' equity. At December 31, 1997, such unrealized losses were approximately $214,000, a decrease of $229,000, or 51.67%, as compared to $443,000 at March 31, 1997. The decrease in unrealized loss is attributable primarily to the reduction of the securities held in the available for sale portfolio by the sale of mutual funds during the fourth quarter of the fiscal year ended March 31, 1997 ("fiscal 1997") and the first quarter of the fiscal year ending March 31, 1998 ("fiscal 1998"), and the lower interest rate environment, which increased the value of the Company's portfolio of securities available for sale. In accordance with SFAS No. 115, such losses will not be reflected as a charge to earnings until the underlying securities are sold, and then only to the extent of the amount of loss, if any, actually realized at the time of sale. ITEM 3 LIQUIDITY AND CAPITAL RESOURCES The Company's primary sources of funds are deposits and principal and interest payments on loans, mortgage-backed securities and investment securities. While maturities and scheduled amortization of loans, mortgage-backed securities and investment securities are predictable sources of funds, deposit flows and loan and mortgage-backed securities prepayments are strongly influenced by changes in general interest rates, economic conditions and competition. The primary investment activity of the Company is the origination and purchase of loans and, to a lesser extent, the purchase of investment securities and mortgage-backed securities. During the nine month period ended December 31, 1997, the Company purchased $53.5 million of mortgage loans, $17.0 million of investment securities, and sold $51.0 million of investment securities. During the nine month period ended December 31, 1996, the Company purchased $8.6 million of investment securities, and sold $12.1 million in investment securities. The Company's most liquid assets are federal funds sold and cash and due from banks. In addition to the liquidity provided by federal funds sold and cash and due from banks, the Company derives liquidity from its line of credit with the FHLB, which equals 30% of total assets. The levels of the Company's cash and cash equivalents are dependent on the Company's operating, financing, lending and investing activities during any given period. At December 31, 1997, the Company's cash and cash equivalents totaled $4.7 million compared to $4.2 million at March 31, 1997. The Office of Thrift Supervision, the Bank's primary federal regulator, requires that the Bank meet minimum tangible, core and risk-based capital requirements. At December 31, 1997, the Bank exceeded all fully phased-in regulatory capital requirements. The table below presents certain information relating to the Bank's capital compliance at December 31, 1997 and March 31, 1997. At December 31, 1997, the Company exceeded all fully phased-in regulatory capital requirements. The table below presents certain information relating to the Company's capital compliance at December 31, 1997 and March 31, 1997.
AT DECEMBER 31, 1997 AT MARCH 31, 1997 -------------------- ----------------- % OF % OF AMOUNT ASSETS AMOUNT ASSETS ------ ------ ------ ------ (DOLLARS IN THOUSANDS) Tangible Capital ........... $32,747 7.90% $30,050 7.18% Core Capital ............... 31,628 7.63 30,527 6.97 Risk Based Capital ........ 31,878 18.01 30,527 17.94
8 9 ANALYSIS OF CORE EARNINGS The Company's profitability is primarily dependent upon net interest income, which represents the difference between income on interest-earning assets and expense on interest-bearing liabilities. Net interest income is dependent on the difference between the average balances and rates earned on interest-earning assets and the average balances and rates paid on interest-bearing liabilities. Net income is further affected by provisions for loan losses, non-interest income, non-interest income, non-interest expense and income taxes. The earnings of the Company are significantly affected by general economic and competitive conditions, particularly changes in market interest rates, and to a lesser extent by government policies and actions of regulatory authorities. In April of 1997, Carver completed a restructuring of its balance sheet and the Company is now placing primary emphasis on its whole loan portfolio through the origination of loans, as well as the purchase of whole loans. The Company pursued this strategy for the nine month period ended December 31, 1997. As a result of this effort, the loan portfolio has substantially increased as a percentage of total assets. Therefore, it is expected that the Company's future earnings will be derived primarily from direct lending and purchase activities rather than investing in securities. The following table sets forth certain information relating to Carver's average interest-earning assets and average interest-bearing liabilities and reflects the average yield on assets and the average cost of liabilities for the quarters indicated. Such yields and costs are derived by dividing annualized income or expense by the average balances of assets or liabilities, respectively, for the periods shown. Average balances are derived from average month-end balances, except for federal funds which are derived from daily balances. Management does not believe that the use of average monthly balances instead of average daily balances on all other accounts has caused any material difference in information presented. The average balance of loans includes loans on which the Company has discontinued accruing interest. The yield and cost include fees which are considered adjustments to yields. 9 10 THREE MONTHS ENDED DECEMBER 31,
---------------------------------------------------------------------------- 1997 1996 ------------------------------------- ------------------------------------ ANNUALIZED ANNUALIZED AVERAGE QUARTERLY AVERAGE AVERAGE QUARTERLY AVERAGE BALANCE INTEREST YIELD/COST BALANCE INTEREST YIELD/COST ------- -------- ---------- ------- -------- ---------- ASSETS (Dollars in thousands) Loan (1) ................................. $238,810 $ 4,588 7.68% $ 96,428 $2,018 8.37% Investment Securities (2) ................ 16,013 204 5.10% 91,718 1,235 5.39% Mortgage-backed Securities (3) ........... 126,895 2,074 6.54% 149,902 2,449 6.53% Federal Funds Sold ....................... 4,613 65 5.64% 4,850 68 5.61% -------- -------- ----- -------- ------ ----- Total Interest-earning Assets ............ 386,330 6,931 7.18% 342,898 5,770 6.73% -------- ------ Non Interest Earning Assets .............. 23,250 24,161 -------- -------- Total Assets ............................. $409,580 $367,059 ======== ======== INTEREST-BEARING LIABILITIES Deposits DDA ...................................... $ 8,620 $ 0 0.00% $ 7,152 $ 0 0.00% NOW ...................................... 18,449 87 1.89% 17,718 84 1.90% Savings and clubs ........................ 143,875 924 2.57% 142,344 905 2.54% Money market accounts .................... 21,441 173 3.23% 20,121 160 3.18% Certificates of deposits ................. 77,027 978 5.08% 75,158 951 5.06% -------- -------- ----- -------- ------ ----- Total deposits ........................... 269,412 2,162 3.21% 262,493 2,101 3.20% Borrowed money ........................... 104,439 1,532 5.87% 65,400 1,035 6.33% -------- -------- ----- -------- ------ ----- Total interest-bearing liabilities ....... 373,851 3,694 3.95% 327,893 3,136 3.83% -------- ------ Non-interest bearing liabilities ......... 671 4,365 -------- -------- Total liabilities ........................ 374,522 332,258 Stockholders' equity ..................... 35,058 34,801 -------- -------- Total liabilities & stockholders' equity . $409,580 $367,059 ======== ======== Net interest income ...................... $ 3,237 $2,634 ======== ====== Interest Rate Spread ..................... 3.23% 2.90% ==== ==== Net interest margin ...................... 3.35% 3.07% ==== ==== Ratio to average interest- earning assets to average ............... Interest-bearing liabilities ............. 103.15% 103.20% ====== ======
(1) INCLUDES NON-ACCRUAL LOANS. (2) INCLUDES FHLB STOCK AND FAIR VALUE OF INVESTMENTS AVAILABLE FOR SALE OF $2.1 MILLION AT DECEMBER 31, 1997. (3) INCLUDES FAIR VALUE OF MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE OF $32.8 MILLION AT DECEMBER 31, 1997. 10 11
NINE MONTHS ENDED DECEMBER 31, -------------------------------------------------------------------------------- 1997 1996 -------------------------------------------------------------------------------- ANNUALIZED ANNUALIZED AVERAGE QUARTERLY AVERAGE AVERAGE QUARTERLY AVERAGE BALANCE INTEREST YIELD/COST BALANCE INTEREST YIELD/COST ASSETS (Dollars in thousands) Loan (1) .................................. $236,903 $ 13,490 7.59% $ 89,641 $ 5,558 8.27% Investment Securities (2) ................. 14,086 699 6.62% 90,540 3,714 5.47% Mortgage-backed Securities (3) ............ 133,822 6,490 6.47% 158,157 7,659 6.46% Federal Funds Sold ........................ 4,910 196 5.32% 6,308 259 5.47% -------- -------- ------ -------- ------- ----- Total Interest-earning Assets ............. 389,721 20,875 7.14% 344,646 17,190 6.65% -------- ------- Non Interest Earning Assets ............... 23,102 21,644 -------- -------- Total Assets .............................. $412,823 $366,290 ======== ======== INTEREST-BEARING LIABILITIES Deposits .................................. DDA ....................................... $ 8,364 $ 0 0.00% $ 6,790 $ 0 0.00% NOW ....................................... 18,521 265 1.91% 17,622 249 1.88% Savings and clubs ......................... 144,576 2,709 2.50% 142,765 2,666 2.49% Money market accounts ..................... 21,525 521 3.23% 20,173 490 3.24% Certificates of deposits .................. 76,626 2,962 6.08% 73,938 2,877 5.19% -------- -------- ------ -------- ------- ----- Total deposits ............................ 269,612 6,457 3.19% 261,288 6,283 3.21% Borrowed money ............................ 107,162 4,885 6.08% 73,310 3,118 5.67% -------- -------- ------ -------- ------- ----- Total interest-bearing liabilities ........ 376,774 11,342 4.01% 334,598 9,401 3.75% -------- ------- Non-interest bearing liabilities .......... 1,301 3,247 -------- -------- Total liabilities ......................... 378,075 331,454 Stockholders' equity ...................... 34,748 34,836 -------- -------- Total liabilities & stockholders' equity .. $412,823 $366,290 ======== ======== Net interest income ....................... $ 9,533 $ 7,789 ======== ======== Interest Rate Spread ...................... 3.13% 2.90% ====== ===== Net interest margin ....................... 3.26% 3.01% ====== ===== Ratio to average interest- earning assets to average ................ Interest-bearing liabilities .............. 103.44% 103.00% ====== ======
(1)INCLUDES NON-ACCRUAL LOANS. (2)INCLUDES FHLB STOCK AND FAIR VALUE OF INVESTMENTS AVAILABLE FOR SALE OF $2.1 MILLION AT DECEMBER 31, 1997. (3)INCLUDES FAIR VALUE OF MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE OF $32.8 MILLION AT DECEMBER 31, 1997. 11 12 COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996 GENERAL The Company reported net income for the three months ended December 31, 1997 of $301,000, compared to net income of $152,000 for the three months ended December 31, 1996. The increase in net income was due to increases in net interest income and non-interest income, offset by an increase in interest expense, the provision for loan losses, and non-interest expense. INTEREST INCOME Interest income increased by $1.1 million or 20.12% to $6.9 million for the three months ended December 31, 1997 compared to $5.8 million for the three months ended December 31, 1996. The increase was primarily due to an increase in the average balance of interest earning assets of $43.4 million and a 45 basis point increase in the average yield on interest-earning assets to 7.18%, which is the result of the shift in assets from investment securities to loans. Interest income from loans receivable increased by $2.5 million, or 127.41%, to $4.6 million for the three months ended December 31, 1997 compared to $2.0 million for the three months ended December 31, 1996. This resulted from an increase of $142.1 million or 147.41`% in the average balance of loan receivables to $238.8 million for the three month period ended December 31, 1997 compared to $96.4 million for the three month period ended December 31, 1996, partly offset by a decrease of 69 basis points in the average yield on the loan portfolio. The increase in the average loan portfolio balances primarily reflects the impact of loan purchases made during the fourth quarter of fiscal 1997, combined with additional purchases made during fiscal 1998. The decline in the average yield on the loan portfolio reflects the purchase and origination of lower yielding one-to-four family adjustable rate loans. Interest income from mortgage-backed securities decreased $375,000, or 15.30%, to $2.1 million for three months ended December 31, 1997 compared to $2.4 million for the three months ended December 31, 1996. This decrease is primarily attributable to a decrease of $23.0 million or 15.34% in the average balance of mortgage-backed securities to $126.9 million. Income from debt and equity securities (investment securities) and other interest-earning assets decreased by $1.0 million, or 79.37%, to $269,000 for the three months ended December 31, 1997 compared to $1.3 million for the same period last year. The decrease in income is attributable to a $75.7 million or 85.55% decrease in the average balance of investment securities to $16.0 million for the three months ended December 31, 1997 compared to $91.7 million for the three months ended December 31, 1996, and a decrease in the average yield of 29 basis points on the remaining investment securities. INTEREST EXPENSE Interest expense increased by $559,000 or 17.93% to $3.7 million for the three months ended December 31, 1997 compared to $3.1 million for the same period in 1996. Interest expense on deposits increased by $62,000 or 2.94% to $2.2 million for the three months ended December 31, 1997 compared to $2.1 million for the three months ended December 31, 1996. The increase was primarily due to an increase in the average deposit balances of $6.9 million or 2.63% to $269.4 million from 262.5 million and an increase in the cost of deposits of 1 basis point. Interest expense on FHLB advances and other borrowings increased by $497,000 or 48.05% to $1.5 million for the quarter ended December 31, 1997 compared to $1.0 million, for the same period last year. The increase resulted from an increase in the average balance of other borrowings of $39.0 million or 59.79% to $104.4 million compared to $65.4 million for the same period last year, offset in part by a decrease in the average cost of other borrowings of 46 basis points to 5.87%. The additional borrowings were primarily used to fund a portion of the loan purchases completed in fiscal 1998, as well as, loan originations for the three months ended December 31, 1997. NET INTEREST INCOME BEFORE PROVISIONS FOR LOAN LOSSES Net interest income increased $602,000 or 22.85%, to $3.2 million for the three months ended December 31, 1997 compared to $2.6 million for the three months ended December 31, 1996. The increase in net interest income is attributable to a $1.2 million, or 20.12%, increase in interest income which was partially offset by a $559,000, or 17.83% increase in interest expense. The Company's interest rate spread increased by 32 basis points to 3.22% for the three months ended December 31, 1997 compared to 2.90% for the three months ended December 31, 1996. The Company's net interest margin increased by 28 basis point to 3.35% for the three months ended December 31, 1997 compared to 3.07% for the three months ended December 31, 1996. The increase in interest rate spread and net interest margin is attributable to an increase in the average yield on interest earning assets due to a substantial increase in the average balance of loans, offset in part by an increase in the cost of interest 12 13 bearing liabilities due to an increase in the average balance of borrowed money. The Company's ratio of average interest-earning assets to average interest-bearing liabilities decreased to 103.15% for the three months ended December 31, 1997 from 103.20% for the three months ended December 31, 1996. PROVISION FOR LOAN LOSSES The Bank provided $281,000 for loans losses for the three months ended December 31, 1997, compared to $51,000 for the three months ended December 31, 1996. The provision was increased in part to reflect the growth in the loan portfolio during the quarter and in part to maintain the allowance for loan losses at an adequate level consistent with the Company's policies. As part of the Bank's determination of the adequacy of the allowance for possible loan losses, the Bank monitors its loan portfolio through two sub-committees of the Board of Directors, the Audit Committee and the Asset/Liability Management Committee. Both Committees meet monthly and the Audit Committee reviews individual loans and assesses risk relating to collectibility of these loans. The Audit Committee determines the adequacy of allowance for possible loan losses through ongoing analysis of historical loss experience, the composition of the loan portfolio, delinquency levels, underlying collateral values and cash flow values. Carver serves as the lead lender for a construction loan for the development of 22 2-family units of affordable housing. The project is being developed under a New York City new homes program. The total development cost of the project is $4.8 million. The project has received a substantial subsidy from state and local housing agencies. The construction loan for the project is $2.9 million. The Bank holds a participation interest in the construction loan of $1.7 million (60%), of which $1.4 million has been disbursed, and has sold a non-recourse participation interest in the loan of $1.2 million (40%) to another New York area lender. At March 31, 1997, the loan was classified as an accruing loan contractually 90 days past due reflecting certain construction delays in connection with the completion of the project. At December 31, 1997, the loan was reclassified as substandard and the Bank established a specific reserve in the amount of 15% of its participation interest due to continuing delays in completing the project. At December 31, 1997, construction on the project was complete and the general contractor had applied for certificates of occupancy for the project. Carver, the participating lender, and a city agency are working closely with the general contractor to expedite receipt of the certificate of occupancy for the project and to deliver the homes which were under contract to purchase. At December 31, 1997 the Bank had committed to provide mortgage financing to ten (10) purchasers, and the developer jointly with the city agency had retained an established real estate professional to sell the remaining houses. At December 31, 1997, non performing loans totaled $7.0 million or 2.86% of total loans compared to $5.3 million at September 30, 1997 or 2.24% of total loans and $6.4 million or 3.23% of total loans at March 31,1997. The increase in non performing loans for the three month period reflects an increases of $1.6 million in non performing one-to-four family residential loans and $561,000 in non performing consumer loans, offset in part by a reduction of $523,000 in the aggregate balance of non performing multi-family/non residential loans. At December 31, 1997, Carver's allowance for loan losses was $2.9 million compared to $2.6 million at September 30, 1997 and $2.2 million at March 31, 1997, resulting in a ratio of allowance for loan losses to non-performing assets of 41.13% at December 31, 1997, compared to 48.33% at September 30, 1997 and 35.06% at March 31, 1997, and a ratio of allowance for loan losses to total loans of 1.18%, 1.08% and 1.11% respectively. NON-INTEREST INCOME Non-interest income increased by $313,000, or 131.38%, to $550,000 for the three months ended December 31, 1997 compared to $238,000 for the three months ended December 31, 1996. The increase was primarily to 188,000 gain on sale of securities combined with increased fees from bank services charges and prepayment fees from the early repayment of mortgage loans. NON-INTEREST EXPENSE Non-interest expense increased to $2.9 million for the three months ended December 31, 1997 compared to $2.6 million for the three months ended December 31, 1996. The increase in non-interest expense for the three months ended December 31, 1997 reflects an increase of: $323,000, or 35.21% in salaries and employee benefits and the funding of management incentive plans, $62,000 or 20.49% in equipment expense, $21,000 or 39.42% in advertising expense and $63,000 or 150.95% in legal expense. Non-interest expenses also reflect an increase of $74,000, or 8.34% in other expenses reflecting increased expenses for; loan origination staff of the Bank, service fees, telephone service, and contributions, offset in part by a decrease of $107,000 or 71.67% in federal deposit insurance premiums ("FDIC premiums") and $36,000 or 66.67% in the amortization of intangibles. 13 14 INCOME TAX EXPENSE Income tax expense for the three months ended December 31, 1997 was $268,000 compared to a $111,000 for the three months ended December 31, 1996. The Company's effective tax rate for the three months ended December 31, 1997 was 47.13%, the Company recovered taxes at a rate of 42.30% for the three months ended December 31, 1996. COMPARISON OF OPERATING RESULTS FOR THE NINE MONTHS ENDED DECEMBER 31, 1997 AND 1996 GENERAL The Company reported net income for the nine months ended December 31, 1997 of $940,000, compared to a loss of $520,000 for the nine months ended December 31, 1996. The loss for the nine months ended December 31, 1996 reflected a one time pre-tax assessment of $1.6 million for the recapitalization of the Savings Association Insurance Fund ("SAIF Assessment"). Net income for the nine month period ended December 31, 1996, before posting the SAIF assessment was $505,000. The increase in net income for the nine months ended December 31, 1997, as compared to net income for the nine months ended December 31, 1996 before posting the SAIF assessment, was due primarily to increased interest income, which was partially offset by increased interest expense, provision for loan losses, and non-interest expense. INTEREST INCOME Interest income increased by $3.7 million or 21.43% to $20.9 million for the nine months ended December 31, 1997 compared to $17.2 million for the nine months ended December 31, 1996. The increase was primarily due to a $45.1 million increase in the average balance of interest earning assets to $389.7 million and a 49 basis point increase in the average yield to 7.14%, which is the result of the shift in assets from investment securities to loans. Interest income from loans receivable increased by $7.9 million, or 142.73%, to $13.5 million for the nine months ended December 31, 1997 compared to $5.6 million for the nine months ended December 31, 1996. This increase resulted from an $147.2 million or 1.64% increase in the average balance of loans receivable to $236.9 million for the nine month period ended December 31, 1997 compared to $89.6 million for the three month period ended December 31, 1996, partly offset by a decrease of 68 basis points in the average yield on the loan portfolio. The increase in the average loan portfolio balances primarily reflects the impact of loan purchases made over the nine month period. The decline in the average yield on the loan portfolio reflects the purchase and origination of lower yielding one-to-four family adjustable rate loans. Interest income from mortgage-backed securities decreased $1.2 million, or 15.27%, to $6.5 million for the nine months ended December 31, 1997 compared to $7.7 million for the nine months ended December 31, 1996. This decrease is primarily attributable to a decrease of $24.3 million or 15.38% in the average balance of mortgage-backed securities to $133.8 million for the nine months ended December 31, 1997 compared to $158.2 million for the same period last year. Income from debt and equity securities (investment securities) and other interest-earning assets decreased by $3.1 million, or 77.49%, to $894,000 during the nine months ended December 31, 1997 compared to $4.0 million for the same period last year. The decrease in income is primarily attributable to a $76.5 million or 84.44% decrease in the average balance of investment securities to $14.1 million for the nine months ended December 31, 1997 compared to $90.5 million for the nine months ended December 31, 1996, offset in part by an 1.15% increase in the average yield of the remaining investment securities. The increase in the average yield is primarily due to the sale of approximately $72.0 of lower yielding investment securities in April of 1997. INTEREST EXPENSE Interest expense increased by $1.9 million or 20.66% to $11.3 million for the nine months ended December 31, 1997 compared to $9.4 million for the nine months ended December 31, 1996. Interest expense on deposits increased by $174,000 or 2.77% to $6.5 million for the nine months ended December 31, 1997 compared to $6.3 million for the nine months ended December 31, 1996. The increase in interest on deposits was primarily due to an increase in the average deposit balance of $8.3 million to $269.6 million offset by a decrease in the cost of deposits of 2 basis points. Interest expense on FHLB advances and other borrowings increased by $1.7 million or 56.70% to $4.9 million for the quarter ended December 31, 1997 compared to $3.1 million, for the same period in 1996. The increases are due to an increase in the average balance of other borrowings of $33.9 million or 46.23% to $107.2 million and an increase in the average cost of other borrowings of 41 basis points to 6.08 The additional borrowings were primarily used to fund a portion of loan purchases for the nine months ended December 31, 1997. 14 15 NET INTEREST INCOME BEFORE PROVISIONS FOR LOAN LOSSES Net interest income increased $1.7 million or 22.36%, to $9.5 million for the nine months ended December 31, 1997 compared to $7.8 million for the nine months ended December 31, 1996. The increase in net interest income is attributable to a $3.7 million, or 21.43%, increase in interest income which was partially offset by a $1.9 million, or 20.66% increase in interest expense. The Company's interest rate spread increased by 23 basis points to 3.13% for the nine months ended December 31, 1997 compared to 2.90% for the nine months ended December 31, 1996. The Company's net interest margin increased by 25 basis point to 3.26% for the nine months ended December 31, 1997 compared to 3.01% for the nine months ended December 31, 1996. The increase in interest rate spread and net interest margin is attributable to an increase in the average yield on interest earning assets due to a substantial increase in the average balance of loans receivable, offset in part by an increase in the cost of interest bearing liabilities due to an increase in the average balance of borrowed money. The Company's ratio of average interest-earning assets to average interest-bearing liabilities increased to 103.44% for the nine months ended December 31, 1997 from 103.00% for the nine months ended December 31, 1996. PROVISION FOR LOAN LOSSES The Bank provided $618,000 for loans losses for the nine months ended December 31, 1997, compared to $136,000 for the nine months ended December 31, 1996. The provision was increased in part to reflect the growth in the loan portfolio during the nine month period and in part to maintain the allowance for loan losses at an adequate level consistent with the Company's policies. At December 31, 1997, non performing loans totaled $7.0 million or 2.86% of total loans compared to $5.3 million at September 30, 1997 or 2.24% of total loans and $6.4 million or 3.23% of total loans at March 31,1997. The increase in non performing loans for the nine month period reflects an increase in non performing consumer loans of $500,000 and an increase in non performing one-to-four family residential loans of $540,000 offset in part by a reduction of $523,000 in the aggregate balance of non performing multi-family and non residential loans. At December 31, 1997, Carver's allowance for loan losses was $2.9 million compared to $2.6 million at September 30, 1997 and $2.2 million at March 31, 1997, resulting in a ratio of allowance for loan losses to non-performing assets of 41.13% at December 31, 1997, compared to 48.33% at September 30, 1997 and 35.06% at March 31, 1997, resulting in a ratio of allowance for loan losses to total loans of 1.18%, 1.08% and 1.11% respectively. NON-INTEREST INCOME Non-interest income increased by $372,000, or 43.82%, to $1.2 million for the nine months ended December 31, 1997 as compared to $848,000 for the nine months ended December 31, 1996. The increase was primarily due to gain on sale of securities combined with increased fees from bank services charges and prepayment fees from the early repayment of mortgage loans. NON-INTEREST EXPENSE Non interest expense for the nine months ended December 31, 1997 was $8.4 million. Non interest expenses for the nine months ended December 31, 1996 was $9.2 million and reflected the one time pre-tax assessment of $1.6 million for the SAIF assessment. Non interest expense for the nine months ended December 31, 1996 before posting the SAIF assessment was $7.5 million. The $854,00 or 11.32% increase in non-interest expenses for the nine months ended December 31, 1997, compared to same period last year before posting the SAIF assessment, was due primarily to an increase of: $556,000, or 18.76% in salaries and employee benefits and the funding of management incentive plans, $101,000 or 12.52% in equipment expense, $61,000 or 45.63% in advertising expense and $105,000 or 91.00% legal expense. Non-interest expenses also reflect an increase of $417,000, or 26.44% in other expenses reflecting increased expenses for: loan originations, service fees, telephone service, and contributions, offset in part by a decrease of $356,000 or 80.97% in federal deposit insurance premiums ("FDIC premiums"), $35,000 in the amortization of intangibles, and $49,000 or 5.75% reduction in occupancy expense. INCOME TAX EXPENSE Income tax expense for the nine months ended December 31, 1997 was $791,000 compared to a recovery of $310,000 for the nine months ended December 31, 1996. The Company's effective tax rate for the nine months ended December 31, 1997 was 45.70%, the Company recovered taxes at a rate of 45.64% for the nine months ended December 31, 1996. 15 16 YEAR 2000 COMPLIANCE Many existing computer programs use only two digits to identify a year in the date field. These programs were designed and developed without considering the impact of the upcoming change in the century. If not corrected, many computer applications could fail or create erroneous results by or at the Year 2000. The Year 2000 issue affects virtually all companies and organizations. The Company, working with its outside service providers, has initiated a project to ensure that its computer systems are year 2000 compliant. The Company believes that the cost associated with ensuring year 2000 compliance will not materially affect the Company's future operating results or financial condition. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK Not Applicable PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS From time to time, the Company is a party to various legal proceedings incident to its business. At December 31, 1997, except as set forth below, there were no legal proceedings to which the Company or its subsidiaries was a party, or to which any of their property was subject, which were expected by management to result in a material loss. On January 2, 1996, the United States District Court for the Southern District of New York dismissed the class action encaptioned Dougherty v. Carver Federal Savings Bank for lack of subject matter jurisdiction. The class action alleged that the offering circular, used by Carver to sell its stock in its public offering, contained material misstatements and omissions. Further, the complaint alleged that the Bank's shares were not appraised by an independent appraiser. By separate order on the same date, the court made its ruling applicable to Gomberg v. Carver Federal Savings Bank and Uminer v. Carver Federal Savings Bank, two other class actions filed in the Southern District of New York which asserted claims essentially identical to those asserted in the Dougherty suit. The plaintiffs filed a consolidated notice of appeal on January 29, 1996 with the United States Court of Appeals for the Second Circuit. In April 1997 the Circuit Court concluded that the District Court had subject matter jurisdiction over the plaintiffs' complaint, the Circuit Court reversed and remanded the case back to the District Court. Carver believes that the allegations made in this action are without merit and intends to aggressively defend its interest with respect to such matter. On July 10, 1997, upon request of all counsel, the trial judge directed that discovery be completed by March 31,1998 and that the case be ready for trial in May of 1998. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company's held its Annual Meeting, (the "Meeting") on August 21, 1997. The purpose of the meeting was to vote on the following proposals: 1. The election of two directors for terms of three years each; 2. The ratification of the appointment of Mitchell & Titus, LLP as independent auditors of the Company for the fiscal year ending March 31, 1998; and 3. The consideration of a stockholder proposal, opposed by the Board of Directors. 16 17 With respect to Proposal 1, all of the directors nominated by the Company were elected at the Meeting. In addition, Proposal 2 was approved at the Meeting. However, Proposal 3 was not approved. The voting results for the Proposals were as follows: Proposal 1: Linda Dunham For 2,063,663 Withheld 101,600 Robert Franz For 2,063,863 Withheld 101,200 Proposal 2: For 2,034,012 Against 111,245 Abstain 20,006 Proposal 3: For 325,844 Against 990,601 Abstain 38,269 No Votes 810,549
ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8K (a) Exhibit 11 - Computation of Earnings Per Share Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K None 17 18 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: February 17, 1998 CARVER BANCORP, INC. /s/ Thomas L. Clark, Jr. ________________________ Thomas L. Clark, Jr. President and Chief Executive Officer Date: February 17, 1998 /s/ Walter T. Bond ________________________ Vice President and Acting Chief Financial Officer 18 19 EXHIBIT INDEX Exhibit 11 - Computation of Earnings Per Share Exhibit 27 - Financial Data Schedule EX-11 2 COMPUTATION OF NET INCOME PER SHARE 1 EXHIBIT 11 COMPUTATION OF NET INCOME PER SHARE AS OF QUARTER ENDED DECEMBER 31, 1997
FOR THE THREE MONTHS ENDED DECEMBER 31, 1997 DECEMBER 31,1996 ----------------- ---------------- Net income / (Loss) $ 300,680 $ 111,066 Weighted average shares outstanding 2,189,918 2,171,194 Earning / (Loss) per shares outstanding $ 0.14 $ 0.07
FOR THE NINE MONTHS ENDED DECEMBER 31, 1997 DECEMBER 31,1996 ----------------- ---------------- Net income / (Loss) $ 940,221 ($368,679) Weighted average shares outstanding 2,185,376 2,166,992 Earning / (Loss) per shares outstanding $ 0.43 ($0.17)
19 EX-27 3 FINANCIAL DATA SCHEDULE
9 9-MOS MAR-31-1998 DEC-31-1997 1,693,952 390,320,016 3,050,000 0 28,915,398 96,518,638 93,812,000 244,940,083 2,862,455 415,767,393 269,106,203 108,020,000 1,784,648 1,601,987 0 0 23,144 35,231,413 415,767,393 4,588,062 2,312,057 30,788 6,930,907 2,162,459 1,531,824 3,236,624 279,920 0 2,938,339 568,729 568,729 0 0 300,680 0.14 0.14 7.10 4,276,407 2,602,883 412,500 412,500 2,423,102 0 0 2,862,455 2,862,455 0 0
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