BORROWED MONEY

Federal Home Loan Bank Advances, Repurchase agreements and Guaranteed Debt Securities. FHLB-NY advances and repurchase agreements weighted average interest rates by remaining period to maturity at March 31 are as follows:



$ in thousands
Maturing	2012		2011
Year Ended March 31,	Weighted Average Rate	Amount	Weighted Average Rate	Amount
2011	—%	—	1.84%	29,181
2012	3.5%	26	4.64%	30,057
2013	—%	—	2.54%	10,000
2014	3.19%	25,000	3.19%	25,000
	3.19%	$25,026	3.17%	$94,238

Federal Home Loan Bank Advances. As a member of the FHLB-NY, the Bank may have outstanding FHLB-NY borrowings in a combination of term advances and overnight funds of up to 25% of its total assets, or approximately $160.4 million at March 31, 2012. Borrowings are secured by the Bank's investment in FHLB-NY stock and by a blanket security agreement. This agreement requires the Bank to maintain as collateral certain qualifying assets (principally mortgage loans and securities) not otherwise pledged. At March 31, 2012, advances were secured by pledges of the Bank's investment in the capital stock of the FHLB-NY totaling $2.2 million and a blanket assignment of the Bank's pledged qualifying mortgage loans of $155.1 million and mortgage-backed and investment securities with a market value of $22.2 million. The Bank has sufficient collateral at the FHLB-NY to be able to borrow an additional $91.0 million from the FHLB-NY at March 31, 2012. The accrued interest on FHLB advances amounted to $0.1 million and the interest expense was $1.5 million for the year ended March 31, 2012. At March 31, 2011, the accrued interest on FHLB advances amounted to $0.1 million and the interest expense was $1.5 million for the year ended March 31, 2011.

Repurchase agreements. Repurchase agreements (“REPO”) are contracts for the sale of securities owned or borrowed by the Bank with an agreement to repurchase those securities at an agreed-upon price and date. The Bank terminated its REPOs prior to March 31, 2012, and totaled $30 million at March 31, 2011. The interest expense on REPOs was $1.8 million for the year ended March 31, 2012 ($353 thousand of which was a prepayment penalty). The accrued interest on REPOs amounted to $0.2 million and the interest expense was $1.7 million for the year ended March 31, 2011.

Guaranteed Debt Securities. In October 2009, the Bank raised $14.1 million in a private placement of Senior Notes bearing an interest rate of 1.69%, which matured in October 2011. This debt was guaranteed under the Federal Deposit Insurance Corporation's (the “FDIC”) Temporary Liquidity Guarantee Program (TLGP). For this guarantee, the Bank was assessed a fee by the FDIC in the amount of 1.25%. The interest expense for the year ended March 31, 2012 was $0.1 million.

Subordinated Debt Securities. On September 17, 2003, Carver Statutory Trust I, issued 13,000 shares, liquidation amount $1,000 per share, of floating rate capital securities. Gross proceeds from the sale of these trust preferred debt securities of $13.0 million, and proceeds from the sale of the trust's common securities of $0.4 million, were used to purchase approximately $13.4 million aggregate principal amount of the Company's floating rate junior subordinated debt securities due 2033. The trust preferred debt securities are redeemable at par quarterly at the option of the Company beginning on or after September 17, 2008 and have a mandatory redemption date of September 17, 2033. Cash distributions on the trust preferred debt securities are cumulative and payable at a floating rate per annum resetting quarterly with a margin of 3.05% over the three-month LIBOR. Under the Orders, the Company is prohibited from paying dividends without prior regulatory approval. Therefore the Company has deferred the debenture interest payments.

On September 30, 2009, the Bank raised $5.0 million in a private placement of subordinated debt maturing December 30, 2018. The maximum contractual interest rate for the debt is 12.00% per annum, however, for the first seven years, and so long as Carver maintains its certification as a Community Development Entity (“CDE”) and remains in compliance with all of the NMTC requirements, the interest rate shall be reduced by 500 basis points to 7.00% per annum. During the 2nd quarter of fiscal year 2012, the interest rate was reduced to 2%. This subordinated debt has been approved by the regulators to qualify as Tier II capital for the Bank's regulatory capital calculations.

The accrued interest on subordinated debt securities amounted to $25 thousand and the interest expense was $0.2 million for the year ended March 31, 2012. The accrued interest on subordinated debt securities amounted to $88 thousand and the interest expense was $0.4 million for the year ended March 31, 2011.

The following table sets forth certain information regarding Carver Federal's borrowings as of and for the years ended March 31:



$ in thousands	2012			2011			2010
Amounts outstanding at the end of year:
FHLB advances	$	25,026		$	50,057		$	69,086
Guaranteed debt securities	$	—		$	14,068		$	14,068
Subordinated debt securities	$	18,403		$	18,403		$	18,403

Rate paid at year end:
FHLB advances	3.19		%	2.70		%	2.62		%
Guaranteed debt securities	—		%	1.69		%	1.69		%
Subordinated debt securities	2.99		%	4.35		%	4.31		%

Maximum amount of borrowing outstanding at any month end:
FHLB advances	$	65,034		$	69,086		$	91,093
Guaranteed debt securities	$	14,068		$	14,068		$	14,068
Subordinated debt securities	$	18,403		$	18,403		$	18,403

Approximate average amounts outstanding for year:
FHLB advances	$	39,305		$	53,454		$	79,651
Guaranteed debt securities	$	8,206		$	14,068		$	6,018
Subordinated debt securities	$	18,403		$	18,403		$	15,924

Approximate weighted average rate paid during year:
FHLB advances	2.89		%	2.72		%	2.39		%
Guaranteed debt securities	1.69		%	1.69		%	1.69		%
Subordinated debt securities	3.43		%	4.45		%	4.21		%