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, 2013					March 31, 2012
	Amount			%		Amount			%
Gross loans receivable:
One- to four-family	$	73,625		20	%	$	66,313		16	%
Multifamily	56,427			15	%	78,859			19	%
Non-residential	203,813			55	%	207,505			50	%
Construction	1,228			—	%	16,471			4	%
Business	35,795			10	%	44,424			11	%
Consumer and other ⁽¹⁾	247			—	%	1,258			—	%
Total loans receivable	371,135			100	%	414,830			100	%

Add:
Premium on loans	686					137
Less:
Deferred fees and loan discounts, net	(1,699		)			(2,109		)
Allowance for loan losses	(10,989		)			(19,821		)
Total loans receivable, net	$	359,133				$	393,037

Loans held-for-sale	$	13,107				$	29,626


⁽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.

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 $37.4 million, $44.4 million and $47.6 million at March 31, 2013, 2012, and 2011, respectively.

At March 31, 2013 the Bank pledged $113.6 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, 2013:



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

Beginning Balance	$	4,305	$	5,409		$	6,709		$	1,532		$	1,786	$	80		$	19,821
Charge-offs	2,103		226			1,148			151			2,274		1			5,903
Recoveries	15		91			—			22			265		5			398
Provision for Loan Losses	1,279		(4,866		)	(2,263		)	(1,403		)	3,982		(56		)	(3,327		)

Ending Balance	$	3,496	$	408		$	3,298		$	—		$	3,759	$	28		$	10,989

Allowance for Loan Losses Ending Balance: collectively evaluated for impairment	3,179		409			3,103			—			1,959		28			8,678
Allowance for Loan Losses Ending Balance: individually evaluated for impairment	317		—			194			—			1,800		—			2,311

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, 2013:

$ in thousands
Loan Receivables Ending Balance	$	73,987	$	56,607		$	202,771		$	1,230		$	35,277	$	250		$	370,122

Ending Balance: collectively evaluated for impairment	67,619		55,991			186,336			—			28,904		250			339,100
Ending Balance: individually evaluated for impairment	6,368		616			16,435			1,230			6,373		—			31,022

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			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

Allowance for Loan Losses Ending Balance: collectively evaluated for impairment	4,098		5,348		6,177		1,484			1,685			80			18,872
Allowance for Loan Losses 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
Loan 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 for the years ended March 31:



$ in thousands	2013			2012			2011
Balance at beginning of the year	$	19,821		$	23,147		$	12,000
Provision for loan losses	(3,327		)	16,342			27,114
Recoveries of amounts previously charged-off	398			2,267			52
Charge-offs of loans	(5,903		)	(21,935		)	(16,019		)
Balance at end of the year	$	10,989		$	19,821		$	23,147

At March 31, 2013, 2012 and 2011, the recorded investment in impaired loans was $31.02 million, $36.0 million and $69.6 million respectively. The related allowance for loan losses for these impaired loans was approximately $2.3 million, $0.9 million and $4.2 million at March 31, 2013, 2012 and 2011, respectively. The impaired loans at March 31, 2013, were comprised of $14.3 million of non-accrual loans and $16.7 million of non performing TDRs. The impaired loan portfolio is collateral dependent with the exception of the residential TDRs. Interest income of $3.2 million, $8.4 million and $7.5 million for fiscal year 2013, 2012 and 2011, respectively, would have been recorded on impaired loans had they performed in accordance with their original terms. At March 31, 2013, 2012 and 2011, there were no loans that were past due 90 days or more and still accruing.

The following is a summary of non-accrual loans at March 31, 2013 and 2012.



$ in thousands	March 31, 2013		March 31, 2012
Loans accounted for on a non-accrual basis:
Gross loans receivable:
One-to-four family	$	7,642	$	6,988
Multifamily	423		2,923
Commercial real estate	14,788		24,467
Construction	1,230		11,325
Business	6,505		8,862
Consumer	38		23
Total non-accrual loans	$	30,626	$	54,588

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. Non-performing loans decreased to $30.6 million at March 31, 2013 from $54.6 million at March 31, 2012. During the current fiscal year, 11 non-performing loans with a fair value of $10.5 million were transferred to held-for-sale. Sales of held-for-sale loans during the fiscal year ended March 31, 2013 totaled $25.6 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, 2013 were $21.7 million, $16.7 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, 2013, other non-performing assets totaled $15.5 million which consists of other real estate owned ("OREO") properties and held-for-sale loans. Other real estate owned of $2.4 million reflects nine foreclosed properties.

The Bank utilizes an internal loan classification system as a means of reporting problem loans within its loan 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, 2013, and based on the most recent analysis performed in the current quarter, 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	$	53,419	$	165,965	$	—	$	23,651
Special Mention	—		3,400		—		2,922
Substandard	3,188		33,406		1,230		8,704
Doubtful	—		—		—		—
Loss	—		—		—		—
Total	$	56,607	$	202,771	$	1,230	$	35,277

	One-to-four family Residential		Consumer and Other
Credit Risk Profile Based on Payment Activity:
Performing	$	66,344	$	212
Non-Performing	7,643		38
Total	$	73,987	$	250

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	$	167,607	$	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	$	206,022	$	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

The following table presents an aging analysis of the recorded investment of past due financing receivable as of March 31, 2013.



$ in thousands	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Non-performing TDR		Performing TDR ⁽¹⁾		Impaired⁽²⁾		Current		Total Financing Receivables
One-to-four family residential	$	348	$	28	$	4,501	$	4,877	$	3,141	$	2,670	$	—	$	63,299	$	73,987
Multi-family mortgage	238		1,142		423		1,803		—		616		—		54,188		56,607
Commercial real estate	220		846		2,671		3,737		9,097		1,290		3,020		185,627		202,771
Construction	—		—		—		—		—		—		1,230		—		1,230
Business	261		148		1,439		1,848		4,447		464		619		27,899		35,277
Consumer and other	6		1		38		45		—		—		—		205		250
Total	$	1,073	$	2,165	$	9,072	$	12,310	$	16,685	$	5,040	$	4,869	$	331,218	$	370,122


⁽¹⁾	The performing TDR category details those loans that the Company has determined that the future collection of principal and interest is reasonably assured. This generally represents those borrowers who have performed according to the restructured terms for a period of at least six months.


⁽²⁾	Consists of loans which are less than 90 days past due but impaired due to other risk characteristics.

The following table presents an aging analysis of the recorded investment of past due financing receivable as of March 31, 2012. Also included are loans that are 90 days or more past due as to interest and principal and still accruing because they are well secured and in the process of collection.



$ in thousands	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Non-performing TDR		Performing TDR ⁽¹⁾		Impaired⁽²⁾		Current		Total Financing Receivables
One-to-four family residential	$	2,381	$	—	$	4,681	$	7,062	$	2,306	$	2,690	—		$	54,114	$	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		13,061		430		2,000		169,669		206,022
Construction	—		—		11,086		11,086		239		—		—		5,108		16,433
Business	3,937		954		4,353		9,244		4,428		341		81		29,888		43,982
Consumer and other	37		1		23		61		—		—		—		1,204		1,265
Total	$	21,030	$	1,382	$	31,464	$	53,876	$	21,042	$	3,461	$	2,081	$	332,397	$	412,858


⁽¹⁾	The performing TDR category details those loans that the Company has determined that the future collection of principal and interest is reasonably assured. This generally represents those borrowers who have performed according to the restructured terms for a period of at least six months.


⁽²⁾	Consists of loans which are less than 90 days past due but impaired due to other risk characteristics.

The following tables present information on impaired loans with the associated allowance amount, if applicable, and the interest income recognized during the years ended March 31, 2013 and 2012. 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, 2013
$ in thousands

	Recorded Investment		Unpaid Principal Balance		Associated Allowance		Average Balance		Interest income recognized
With no specific allowance recorded:
One-to-four family residential	$	1,319	$	1,460	—		$	1,215	$	47
Multi-family mortgage	616		616		—		308		5
Commercial real estate	11,070		11,270		—		9,865		235
Construction	1,230		1,492		—		1,230		53
Business	1,080		2,002		—		1,136		41
Consumer and other	—		—		—		—		—
Total	$	15,315	$	16,840	$	—	$	13,754	$	381

With an allowance recorded:
One-to-four family residential	$	5,049	$	5,244	$	317	$	5,363	$	57
Multi-family mortgage	—		—		—		—		—
Commercial real estate	5,365		5,913		194		6,302		133
Construction	—		—		—		—		—
Business	5,293		5,293		1,800		4,932		254
Consumer and other	—		—		—		—		—
Total	$	15,707	$	16,450	$	2,311	$	16,597	$	444

One-to-four family residential	$	6,368	$	6,704	$	317	$	6,578	$	104
Multi-family mortgage	616		616		—		308		5
Commercial real estate	16,435		17,183		194		16,167		368
Construction	1,230		1,492		—		1,230		53
Business	6,373		7,295		1,800		6,068		295
Consumer and other	—		—		—		—		—
Total	$	31,022	$	33,290	$	2,311	$	30,351	$	825



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

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 significant concessions 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 nonaccrual 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 tables presents an analysis of those loan modifications that were classified as TDRs during the twelve month period ended March 31, 2013 and March 31, 2012 :



Modifications to loans during the 12 month period ended
March 31, 2013
$ in thousands
	Number of loans	Pre-modification outstanding recorded investment		Post-Modification Recorded investment		Average Pre-Modification rate		Average Post-Modification rate		Allowance recorded
One-to-four family residential	2	1,414		535		7.66	%	4.00	%	37
Commercial real estate	3	1,890		1,418		6.54	%	6.38	%	26
Business	4	2,242		2,210		7.23	%	7.21	%	264
Total	9	$	5,546	$	4,163					$	327



Modifications to loans during the 12 month period ended
March 31, 2012
$ in thousands
	Number of loans	Pre-modification outstanding recorded investment		Post-Modification Recorded investment		Average Pre-Modification rate		Average Post-Modification rate		Allowance recorded
One-to-four family residential	2	2,513		2,510		6.86	%	4.21	%	18
Commercial real estate	2	1,495		1,430		5.47	%	5.42	%	61
Construction	6	8,862		8,840		6.81	%	6.80	%	2
Business	5	3,447		3,315		5.86	%	5.87	%	—
Total	15	$	16,317	$	16,095					$	81

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, 2013, loan on which concessions were made with respect to rate reductions were $0.5 million and those loans which reached forbearance agreements totaled $1.9 million. 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.

There were no loans at March 31, 2013 that had been modified and subsequently defaulted. 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.

For the fiscal year ended March 31, 2013, there were nine loans in the TDR portfolio totaling $5.0 million that were on accrual status as they had performed within their modified terms for a consecutive six-month period.

At March 31, 2013 and 2012, there were no loans to officers or directors of the Company.