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”) 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, 2019.

The Bank's unconsolidated 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, 2019 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⁽¹⁾	$	—	$	—	$	13,400	$	13,400	$	14,733	$	400	$	—	$	—	$	15,133
CDE 18*	600		13,254		—		—		—		—		—		5,169		5,169
CDE 19	500		10,746		11,054		11,054		—		1		—		4,191		4,192
CDE 20*	625		12,500		—		—		—		—		—		4,875		4,875
CDE 21	625		12,500		12,014		12,014		—		1		—		4,875		4,876
Total	$	3,250	$	69,500	$	36,468	$	36,468	$	14,733	$	402	$	—	$	27,105	$	42,240

* Entities exited the NMTC projects during fiscal years 2018 and 2019 and remain on the above table pending final dissolution.

¹ Carver Statutory Trust debt investment includes deferred interest of $1.7 million.

In June 2006, CCDC received a NMTC award of $59 million. CCDC 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 2-12 have been dissolved.

CCDC received a second NMTC award of $65 million in May 2009, and a third award of $25 million in August 2011. During the period from December 2009 to September 2012, CCDC transferred rights to investors in NMTC projects (entities CDEs 13-21). The NMTC compliance period was completed for CDEs 13-17, and these entities have been dissolved. The NMTC compliance period was completed for CDEs 18 and 20, and these entities will be dissolved. 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, 2019, there have been no activities in these entities.