VARIABLE INTEREST ENTITIES

The Company's subsidiary, Carver Statutory Trust I, is not consolidated with Carver Bancorp, Inc. for financial reporting purposes. Carver Statutory Trust I was formed in 2003 for the purpose of issuing $13 million aggregate liquidation amount of floating rate Capital Securities due September 17, 2033 (“Capital Securities”) and $0.4 million of common securities (which are the only voting securities of Carver Statutory Trust I), which are 100% owned by Carver Bancorp, Inc., and using the proceeds to acquire Junior Subordinated Debentures issued by Carver Bancorp, Inc. Carver Bancorp, Inc. has fully and unconditionally guaranteed the Capital Securities along with all obligations of Carver Statutory Trust I under the trust agreement relating to the Capital Securities.

The Bank's subsidiary, Carver Community Development Corporation (“CCDC”), was formed to facilitate its participation in local economic development and other community-based initiatives. Per the NMTC Award's Allocation Agreement between the CDFI Fund and CCDC, CCDC is permitted to form and sub-allocate credits to subsidiary Community Development Entities (“CDEs”) to facilitate investments in separate development projects.

The variable interest entities (“VIEs”) such as the CDEs and Carver Statutory Trust I are consolidated, as required, where Carver has controlling financial interest in these entities and is deemed to be the primary beneficiary. Carver is normally deemed to have a controlling financial interest and be the primary beneficiary if it has both of the following characteristics:

(a) the power to direct activities of a VIE that most significantly impact the entities economic performance; and

(b) the obligation to absorb losses of the entity that could benefit from the activities that could potentially be significant to the VIE.

As none of the Bank's VIEs meet the above criteria, there are no consolidated VIEs at March 31, 2017.

The Bank's VIEs, in which the Company holds significant variable interests or has continuing involvement through servicing a majority of assets in a VIE at March 31, 2017 are presented below:



	Involvement with SPE (000's)								Funded Exposure				Unfunded Exposure				Total
	Recognized Gain (Loss) (000's)		Total Rights transferred		Significant unconsolidated VIE assets		Total Involvement with SPE asset		Debt Investments		Equity Investments		Funding Commitments		Maximum exposure to loss
Carver Statutory Trust 1	$	—	$	—	$	13,400	$	13,400	$	13,000	$	400	$	—	$	—	$	13,400
CDE 13	500		10,500		—		—		—		—		—		4,095		4,095
CDE 14	400		10,000		10,034		10,034		—		1		—		3,900		3,901
CDE 15, CDE 16, CDE 17	900		20,500		20,613		20,613		—		2		—		7,995		7,997
CDE 18	600		13,254		13,282		13,282		—		1		—		5,169		5,170
CDE 19	500		10,746		10,980		10,980		—		1		—		4,191		4,192
CDE 20	625		12,500		12,040		12,040		—		1		—		4,875		4,876
CDE 21	625		12,500		12,092		12,092		—		1		—		4,875		4,876
Total	$	4,150	$	90,000	$	92,441	$	92,441	$	13,000	$	407	$	—	$	35,100	$	48,507

In June 2006, CCDC received a NMTC award of $59 million. In fiscal 2008, CCDC transferred $19 million of rights to an investor in a NMTC project (entity CDE 10). The NMTC compliance period was completed and the entity was dissolved in May 2015. With respect to the remaining $40 million of the original NMTC award, CCDC established various special purpose entities (CDEs 1-9,11-12) through which its investments in NMTC eligible activities are conducted. As the Bank is exposed to all of the expected losses and residual returns from these investments under ASC Topic 810, the Bank has determined it has a controlling financial interest and is the primary beneficiary of these entities. During December 2010, Carver divested its interest in the remaining $7.8 million NMTC tax credits that it would have received through the period ending March 31, 2014, by transferring its equity ownership in the CDEs and the associated rights to an investor in exchange for $6.7 million in cash. In March 2015, the investor exercised its option to sell the equity interest in the CDEs back to Carver. The Bank has a contingent obligation to reimburse the investor for any loss or shortfall incurred as a result of the NMTC projects not being in compliance with certain regulations that would void the investor's ability to otherwise utilize tax credits stemming from the award. The NMTC compliance period was completed and CDEs 2-9, 11 and 12 were dissolved in 2016.

In May 2009, CCDC received a second NMTC award of $65 million. During the period from December 2009 to December 2010, CCDC transferred rights to investors in NMTC projects (entities CDEs 13-19). In August 2011, CCDC received a third NMTC award of $25 million. In January 2012 and September 2012, CCDC transferred rights to investors in NMTC projects (CDEs 20 and 21). CCDC has a contingent obligation to reimburse the investors for any losses or shortfalls incurred as a result of the NMTC projects not being in compliance with certain regulations that would void the investors' ability to otherwise utilize tax credits stemming from the award.

CCDC established various special purpose entities (CDEs 22-25) through which its investments in NMTC eligible activities will be conducted. As of March 31, 2017, there have been no activities in these entities.