LOANS RECEIVABLE, NET

The following is a summary of loans receivable, net of allowance for loan losses, and loans held for sale at March 31:



$ in thousands	March 31, 2012					March 31, 2011
	Amount			%		Amount			%
Gross loans receivable:
One- to four-family	$	66,313		16	%	$	82,061		15	%
Multifamily	78,859			19	%	114,586			20	%
Non-residential	207,505			50	%	252,991			43	%
Construction	16,471			4	%	78,055			13	%
Business	44,424			11	%	53,248			9	%
Consumer and other ⁽¹⁾	1,258			—	%	1,349			—	%
Total loans receivable	414,830			100	%	582,290			100	%

Add:
Premium on loans	137					120
Less:
Deferred fees and loan discounts	(2,109		)			(2,107		)
Allowance for loan losses	(19,821		)			(23,147		)
Total loans receivable, net	$	393,037				$	557,156

Loans held-for-sale	$	29,626				$	9,205


⁽¹⁾	Includes personal loans

Substantially all of the Bank's real estate loans receivable are principally secured by properties located in New York City. Accordingly, as with most financial institutions in the market area, the ultimate collectability of a substantial portion of the Company's loan portfolio is susceptible to changes in market conditions in this area. See note 14 for further discussion of concentration of credit risk.

Mortgage loan portfolios serviced for Federal National Mortgage Association (“FNMA”) and other third parties are not included in the accompanying consolidated financial statements. The unpaid principal balances of these loans aggregated $44.4 million, $47.6 million and $52.0 million at March 31, 2012, 2011, and 2010, respectively.

At March 31, 2012 the Bank pledged $155.1 million in total mortgage loans as collateral for advances from the FHLB-NY.

The following is an analysis of the allowance for loan losses based upon the method of evaluating loan impairment for the fiscal year ended March 31, 2012:



$ in thousands
	One-to-four family Residential		Multi-Family Mortgage		Commercial Real Estate		Construction			Business			Consumer and Other			Unallocated		Total
Allowance for loan losses:

Beginning Balance	$	2,923	$	6,223	$	3,999	$	6,944		$	2,965		$	93		$	—	$	23,147
Charge-offs:	3,730		6,250		5,111		5,961			875			8			—		21,935
Recoveries:	469		6		2		1,677			113			—					2,267
Provision for Loan Losses	4,643		5,430		7,819		(1,128		)	(417		)	(5		)	—		16,342

Ending Balance	$	4,305	$	5,409	$	6,709	$	1,532		$	1,786		$	80		—		$	19,821


Ending Balance: collectively evaluated for impairment	4,098		5,348		6,177		1,484			1,685			80			—		18,872
Ending Balance: individually evaluated for impairment	207		61		532		48			101			—			—		949

The following is an analysis of the loan receivable balances showing the methods of evaluating the loan portfolio for impairment for the fiscal year ended March 31, 2012:

$ in thousands
Financing Receivables Ending Balance :	66,172		78,984		206,022		16,433			43,982			1,265			—		412,858

Ending Balance: collectively evaluated for impairment	63,866		77,976		185,249		10,346			38,124			1,265			—		376,826
Ending Balance: individually evaluated for impairment	2,306		1,008		20,773		6,087			5,858			—			—		36,032

The following is an analysis of the allowance for loan losses based upon the method of evaluating loan impairment for the fiscal year ended March 31, 2011:



$ in thousands
	One-to-four family Residential		Multi-Family Mortgage		Commercial Real Estate		Construction		Business		Consumer and Other			Unallocated			Total
Allowance for loan losses:

Beginning Balance	$	1,094	$	1,566	$	2,613	$	4,059	$	2,208	$	60		$	400		$	12,000
Charge-offs:	827		5,821		813		5,607		2,958		(7		)	—			16,019
Recoveries:	2				2		4		27		17						52
Provision for Loan Losses	2,654		10,478		2,197		8,488		3,688		9			(400		)	27,114

Ending Balance	$	2,923	$	6,223	$	3,999	$	6,944	$	2,965	$	93		—			$	23,147

Ending Balance: collectively evaluated for impairment	$	2,316	$	5,510	$	3,840	$	4,379	$	2,832	$	93		$	—		$	18,970
Ending Balance: individually evaluated for impairment	$	607	$	713	$	159	$	2,565	$	133	$	—		$	—		$	4,177

The following is an analysis of the loan receivable balances showing the methods of evaluating the loan portfolio for impairment for the fiscal year ended March 31, 2011:

$ in thousands
Financing Receivables Ending Balance :	$	81,988	$	123,571	$	242,317	$	78,017	$	53,060	$	1,350		$	—		$	580,303

Ending Balance: collectively evaluated for impairment	$	70,679	$	116,064	$	233,697	$	41,454	$	46,789	$	1,350		$	—		$	510,033
Ending Balance: individually evaluated for impairment	$	11,309	$	7,507	$	8,620	$	36,563	$	6,271	$	—		$	—		$	70,270

The following is an analysis of the allowance for loan losses for the years ended March 31:



$ in thousands	2012			2011			2010
Balance at beginning of the year	$	23,147		$	12,000		$	7,049
Provision for loan losses	16,342			27,114			7,845
Recoveries of amounts previously charged-off	2,267			52			64
Charge-offs of loans	(21,935		)	(16,019		)	(2,958		)
Balance at end of the year	$	19,821		$	23,147		$	12,000

At March 31, 2012, 2011 and 2010, the recorded investment in impaired loans was $36.0 million, $69.6 million and $47.6 million, respectively. The related allowance for loan losses for these impaired loans was approximately $0.9 million, $4.2 million and $3.5 million at March 31, 2012, 2011 and 2010, respectively. The impaired loans at March 31, 2012, were comprised of $15.7 of non-accrual loans and $21 million of non performing TDRs. The impaired loan portfolio is collateral dependent with the exception of the residential TDRs. Interest income of $8.4 million, $7.5 million, and $3.3 million for fiscal year 2012, 2011 and 2010, respectively, would have been recorded on impaired loans had they performed in accordance with their original terms. At March 31, 2012, and 2011, there were no loans that were past due 90 days or more and still accruing. At March 31, 2010 there were $1.4 million loans that were past due 90 days or more and still accruing.

The following is a summary of non-performing loans at March 31, 2012 and 2011.



$ in thousands	March 31, 2012		March 31, 2011
Loans accounted for on a non-accrual basis:
Gross loans receivable:
One-to-four family	$	6,988	$	15,993
Multifamily	2,923		6,786
Commercial real estate	24,467		10,078
Construction	11,325		37,218
Business	8,862		7,289
Consumer	23		42
Total non-accrual loans	$	54,588	$	77,406

Non-performing loans consist of loans for which the accrual of interest has been discontinued as a result of such loans becoming 90 days or more delinquent as to principal and/or interest payments. Interest income on non-performing loans is recorded when received based upon the collectability of the loan. Total non-performing loans amounted to $54.6 million and $77.4 million at March 31, 2012 and 2011, respectively. During the current fiscal year 67 non-performing loans with a fair value of $63.6 million were moved to held for sale. Sales of held for sale loans during the fiscal year ended March 31, 2012 totaled $32.4 million. TDR loans consist of loans where borrowers have been granted concessions in regards to the terms of their loans due to financial or other difficulties, which rendered them unable to repay their loans under the original contractual terms. Total TDR loans at March 31, 2012 were $24.5 million, $21.0 million of which were non-performing as they had not been performing in accordance with the restructured terms for a period of at least 6 months.

At March 31, 2012, other non-performing assets totaled $31.8 million which consists of other real estate owned properties and held-for-sale loans. Other real estate owned of $2.2 million reflects two foreclosed properties.

The Bank utilizes an internal loan classification system as a means of reporting problem loans within its loans categories. Loans may be classified as "Pass," “Special Mention,” “Substandard,” “Doubtful,” and “Loss.” Loans rated Pass have demonstrated satisfactory asset quality, earning history, liquidity, and other adequate margins of creditor protection. They represent a moderate credit risk and some degree of financial stability. Loans are considered collectible in full, but perhaps require greater than average amount of loan officer attention. Borrowers are capable of absorbing normal setbacks without failure. Loans rated Special Mention have potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Bank's credit position at some future date. Loans rated Substandard are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Loans rated Doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, based on currently existing facts, conditions and values, highly questionable and improbable. Loans classified as Loss are those considered uncollectible with insignificant value and are charged-off immediately to the allowance for loan losses.

One-to-four family residential loans and consumer and other loans are rated non-performing if they are delinquent in payments ninety or more days, a troubled debt restructuring with less than six months contractual performance or past maturity. All other one- to-four family residential loans and consumer and other loans are performing loans.

As of March 31, 2012, and based on the most recent analysis performed, the risk category by class of loans is as follows:



$ in thousands	Multi-Family Mortgage		Commercial Real Estate		Construction		Business
Credit Risk Profile by Internally Assigned Grade:
Pass	$	74,900	$	167,606	$	201	$	25,963
Special Mention	381		1,456		6,108		4,954
Substandard	3,703		36,959		10,124		12,551
Doubtful	—		—		—		514
Loss	—		—		—		—
Total	78,984		206,021		16,433		43,982



	One-to-four family Residential		Consumer and Other
Credit Risk Profile Based on Payment Activity:
Performing	$	59,185	$	1,242
Non-Performing	6,987		23
Total	$	66,172	$	1,265

As of March 31, 2011, and based on the most recent analysis performed, the risk category by class of loans is as follows:



$ in thousands	Multi-Family Mortgage		Commercial Real Estate		Construction			Business
Credit Risk Profile by Internally Assigned Grade:
Pass	$	110,837	$	199,581	$	—		$	39,017
Special Mention	2,126		8,726		25,105			3,857
Substandard ⁽¹⁾	10,608		33,719		52,912			10,058
Doubtful	—		291		—			128
Loss	—		—		—		—	—
Total	123,571		242,317		78,017			53,060



	One-to-four family Residential		Consumer and Other
Credit Risk Profile Based on Payment Activity:
Performing	$	66,068	$	1,307
Non-Performing	15,993		42
Total	$	82,061	$	1,349

The following table presents an aging analysis of the recorded investment of past due financing receivable as of March 31, 2012.



$ in thousands	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Impaired ⁽¹⁾		TDR ⁽²⁾		^(3),(4) Current		Total Financing Receivables
One-to-four family residential	$	2,381	$	—	$	4,681	$	7,062	$	—	$	2,306	$	56,804	$	66,172
Multi-family mortgage	3,220		427		1,915		5,562		—		1,008		72,414		78,984
Commercial real estate	11,455		—		9,406		20,861		2,000		13,061		170,099		206,021
Construction	—		—		11,086		11,086		—		239		5,108		16,433
Business	3,937		954		4,353		9,244		81		4,428		30,229		43,982
Consumer and other	37		1		23		61		—		—		1,204		1,265
Total	21,030		1,382		31,464		53,876		2,081		21,042		335,858		412,857


⁽¹⁾ Consists of loans which are less than 90 days past due but impaired due to other risk characteristics.
⁽²⁾ $21.0 million have not performed in accordance with their modified terms for more than six months and are considered non performing.
⁽³⁾ Includes $3.5 million TDR loans that have performed in accordance with their modified terms for at least six months and is considered performing.
⁽⁴⁾ There were no loans that are 90 days or more past due as to interest and principal and still accruing at March 31, 2012

The following table presents an aging analysis of the recorded investment of past due financing receivable as of March 31, 2011.



$ in thousands	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Impaired ⁽¹⁾		TDR ⁽²⁾		Current		Total Financing Receivables
One-to-four family residential	$	4,852	$	601	$	4,859	$	10,312	$	—	$	11,134	$	60,615	$	82,061
Multi-family mortgage	6,866		—		5,452		12,318		1,135		200		110,138		123,791
Commercial real estate	12,360		5,457		3,095		20,912		442		6,541		215,891		243,786
Construction	19,509		—		32,158		51,667		923		4,137		21,328		78,055
Business	7,981		117		3,175		11,273		2,362		1,752		37,861		53,248
Consumer and other	15		37		42		94		—		—		1,255		1,349
Total	51,583		6,212		48,781		106,576		4,862		23,764		447,088		582,290


⁽¹⁾ Consists of loans which are less than 90 days past due but impaired due to other risk characteristics.
⁽²⁾ $0.4 million are TDR loans that have performed in accordance with their modified terms for at least six months and are considered performing.
$23.9 million have not performed in accordance with their modified terms for more than six months and are considered non performing. Currently they are represented in the following TDR categories:
$17.7 million loans are non accrual as they are not performing in accordance with their modified terms
$5.8 million are 30-59 days past due.
$0.5 million loans are 60-89 days past due.

The following table presents the recorded investment and unpaid principal balances for impaired loans and non performing TDR loans ($21 million) with the associated allowance amount, if applicable. Management determined the specific allowance based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, except when the remaining source of repayment for the loan is the operation or liquidation of the collateral. In those cases, the current fair value of the collateral, less selling costs was used to determine the specific allowance recorded. When the ultimate collectability of the total principal of an impaired loan is in doubt and the loan is on nonaccrual status, all payments are applied to principal, under the cost recovery method. When the ultimate collectability of the total principal of an impaired loan is not in doubt and the loan is on nonaccrual status, contractual interest is credited to interest income when received, under the cash basis method.



Impaired Loans by Class
As of and for the year ended March 31, 2012
$ in thousands

	Recorded Investment	Unpaid Principal Balance	Associated Allowance	Average Balance	Interest income recognized
With no specific allowance recorded:
One-to-four family residential	628	628		1,404	78
Multi-family mortgage	194	194		195	21
Commercial real estate	6,304	6,304		7,375	89
Construction	5,406	5,670		4,603	859
Business	4,983	5,417		5,242	203
Consumer and other	—	—		—	—
Total	17,515	18,213		18,819	1,250

With an allowance recorded:
One-to-four family residential	1,679	1,760	207	4,343	103
Multi-family mortgage	814	879	61	1,391	70
Commercial real estate	14,469	15,068	532	15,453	340
Construction	681	1,613	48	896	—
Business	1,089	1,776	101	1,336	110
Consumer and other	—	—		—	—
Total	18,732	21,096	949	23,419	623

One-to-four family residential	2,307	2,388	207	5,746	181
Multi-family mortgage	1,008	1,073	61	1,586	91
Commercial real estate	20,773	21,372	532	22,828	429
Construction	6,087	7,283	48	5,499	859
Business	6,072	7,193	101	6,470	313
Consumer and other	—	—		—	—
Total	36,247	39,309	949	42,129	1,873



Impaired Loans by Class
As of and for the year ended March 31, 2011
$ in thousands

	Recorded Investment	Unpaid Principal Balance	Associated Allowance
With no specific allowance recorded:
One-to-four family residential	3,752	3,869
Multi-family mortgage	814	844
Commercial real estate	5,266	5,266
Construction	12,567	14,602
Business	4,651	4,651
Consumer and other	—	—
Total	27,050	29,232

With an allowance recorded:
One-to-four family residential	7,557	8,209	607
Multi-family mortgage	6,693	7,108	713
Commercial real estate	3,354	3,800	159
Construction	23,996	27,486	2,565
Business	1,620	1,830	133
Consumer and other	—	—
Total	43,220	48,433	4,177

One-to-four family residential	11,309	12,078	607
Multi-family mortgage	7,507	7,922	713
Commercial real estate	8,620	9,066	159
Construction	36,563	42,088	2,565
Business	6,271	6,481	133
Consumer and other	—	—
Total	70,270	77,635	4,177

In certain circumstances, loan modifications involve a troubled borrower to whom the Bank may grant a modification. Situations around modifications involving troubled borrowers may include extension of maturity date, reduction in the stated interest rate, rescheduling of future cash flows, reduction in the face amount of the debt or reduction of past accrued interest. In cases where the Bank grants any such concession to a troubled borrower, the Bank accounts for the modification as a TDR under ASC 310-40 and the related allowance under ASC 310-10-35. Loans modified in TDRs are placed on non-accrual status until the Company determines that future collection of principal and interest is reasonably assured, which generally requires that the borrower demonstrate performance according to the restructured terms for a period of at least six months.

The following table presents an analysis of those loan modifications that were classified as non performing TDRs during the twelve month periods ended March 31, 2012 :



Modifications to loans during the 12 month period ended
March 31, 2012
$ in thousands
	Number of loans	Pre- modification outstanding recorded investment	Recorded investment at March 31, 2012
One-to-four family residential	2	2,513	2,510
Multi-family mortgage	2	1,495	1,430
Commercial real estate	6	8,862	8,840
Business	5	3,447	3,315
Total	15	16,317	16,095

In an effort to proactively manage delinquent loans, Carver has selectively extended to certain borrowers concessions such as rate reductions or forbearance agreements. For the fiscal year ended March 31, 2012, loan on which concessions were made with respect to rate reductions were $3.4 million and those loans which reached forbearance agreements totaled $12.9 million.

For the fiscal year ended March 31, 2012, Carver had one multi family loan with an outstanding balance of $0.9 million that had been modified and subsequently defaulted.

TDRs are factored into the determination of the allowance for loan losses. The Company has allocated approximately $81 thousand of the loan loss allowance at March 31, 2012 for those TDRs modified within the last fiscal year.

At March 31, 2012 and 2011, there were no loans to officers or directors of the Company.