What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2023-06-29 compared with 2022-07-14 · 134 added, 128 removed, 728 unchanged (26% of the section changed)

67 unchanged sentences

On December 16, 2021, the Company paid the interest deferred from September 16, 2021 and the regular quarterly interest payment due on December 17, 2021.

Subsequently, the Company made the regular quarterly interest payment on its outstanding debentures due on March 17, 2022 and June 17, 2022.

The Company relies primarily on dividends from Carver Federal to pay cash dividends to its stockholders and to engage in share repurchase programs.

The OCC regulates all capital distributions, including dividend payments, by Carver Federal to the Company, and the Board of Governors of the Federal Reserve (the "FRB") regulates dividends paid by the Company.

All quarterly interest payments subsequent to the June 2021 payment up to and including the June 2023 payment have been made.

The Company may rely on dividends from Carver Federal to pay cash dividends to its stockholders and to engage in share repurchase programs.

In recent years, Carver has been successful in obtaining cash independently through its capital raising efforts, which may include cash from government grants or below market-rate loans.

Under the prior Formal Agreement, the OCC regulated all capital distributions, including dividend payments, by Carver Federal to the Company.

The Board of Governors of the Federal Reserve (the "FRB") regulates dividends paid by the Company.

As the subsidiary of a savings and loan association holding company, Carver Federal must file a notice or an application (depending on the proposed dividend amount) with the OCC (and a notice with the FRB) prior to the declaration of each capital distribution.

The OCC will disallow any proposed dividend, for among other reasons, that would result in Carver Federal’s failure to meet the OCC minimum capital requirements.

In accordance with the Agreement, Carver Federal is currently prohibited from paying any dividends without prior OCC approval, and, as such, has suspended its regular quarterly cash dividend to the Company.

There are no assurances that dividend payments to the Company will resume.

Carver has suspended its regular quarterly cash dividend on its common stock.

At the Market Offering

In 2021, we entered into a sales agreement with an agent to sell, from time to time, our common stock having an aggregate offering price of up to $20.0 million, in an “at the market offering.” As of March 31, 2022, we have sold an aggregate of 397,367 shares of our common stock pursuant to the terms of such sales agreement, for aggregate gross proceeds of approximately $3.1 million.

During fiscal year 2022, the Company entered into a sales agreement with an agent to sell, from time to time, our common stock having an aggregate offering price of up to $20.0 million, in an “at the market offering.” As of March 31, 2022, we had sold an aggregate of 397,367 shares of our common stock pursuant to the terms of such sales agreement, for aggregate gross proceeds of approximately $3.1 million.

Aggregate net proceeds received were approximately $3.0 million, after deducting expenses and commissions paid to the placement agent.

There were no additional offerings during the twelve months ended March 31, 2023.

Formal Agreement

On January 18, 2023, the OCC notified the Bank that the Formal Agreement between the Bank and the OCC dated May 24, 2016 (the "Formal Agreement") was terminated, effective immediately.

The formal agreement required the Bank to reduce its concentration of commercial real estate and required that the Bank undertake several actions to improve compliance matters and overall profitability.

As a result of active participation and cooperation of management and the Board of Directors of the Bank and the Company, the issues that led to the formal agreement were successfully resolved, resulting in the OCC's termination of the agreement.

The Individual Minimum Capital Ratio letter issued by the OCC, which requires the Bank to maintain minimum regulatory capital levels of 9% for its Tier 1 leverage ratio and 12% for its total risk-based capital ratio, remains in effect, as do the Company's resolutions requiring, among other things, written approval from the Federal Reserve Bank of Philadelphia prior to the declaration or payment of dividends, any increase in debt by the Company, or the redemption of Company common stock.

Human Capital Resources

5 unchanged sentences

None of the Company's employees are a member of a collective bargaining agreement and we consider our relations with our employees to be good.

In response to the COVID-19 pandemic, we implemented significant operating environmental changes that we determined were in the best interest of our employees, as well as the communities in which we operate, and which comply with health and safety standards as required by federal, state and local government agencies, taking into consideration guidelines of the Centers for Disease Control and Prevention and other public health authorities.

We have implemented significant operating environmental changes that we determined were in the best interest of our employees, as well as the communities in which we operate, and which comply with health and safety standards as required by federal, state and local government agencies, taking into consideration guidelines of the Centers for Disease Control and Prevention and other public health authorities.

This includes implementing a hybrid working model where our employees work in the office 2 to 3 times a week, simultaneously, continuing to implement safety measures for employees while on-site.

12 unchanged sentences

Substantially all of the Bank's mortgage loans are secured by properties located within the Bank's market area.

From time to time, the Bank may participate or purchase loans that comply with the Bank's underwriting standards from other financial institutions or in contiguous market geographies to achieve loan growth objectives, as well as asset and geographical diversification.

From time to time, the Bank may participate or purchase loans that comply with the Bank's underwriting standards from other financial institutions or in contiguous market geographies to achieve loan growth and strategic objectives, as well as asset and geographical diversification.

In recent years, Carver Federal has focused on the origination of commercial real estate loans extended primarily to multifamily, as well as owner-occupied and mixed-use commercial loans.

4 unchanged sentences

During fiscal year 2021, Carver increased its qualitative factors and assessment criteria due to the ongoing pandemic.

In fiscal year 2022, the Bank adjusted its qualitative factors and assessment criteria from high to medium based on improving economic factors, such as unemployment, stable interest rates and overall increased activity due to less pandemic related restrictions.

In fiscal year 2022, the Bank adjusted its qualitative factors and assessment criteria from high to medium based on improving economic factors, such as unemployment and overall increased activity due to less pandemic related restrictions.

The increase in the qualitative reserves was related to the overall increase in our loan portfolio, partially offset by decreases in our quantitative reserve analysis as the rolling 20 quarter historical loss look back period improved for most of our loan categories.

The Bank could be required to maintain an allowance for loan losses as a percentage of total loans in excess of the allowance currently maintained.

During fiscal year 2023, the Bank strengthened its qualitative factors and assessment criteria due to the economic climate in general and its impact on the New York City ("NYC") metropolitan area in which the Company operates.

In spite of the strict analysis applied to our qualitative reserves, the Company's overall allowance declined moderately as the rolling 20 quarter loss look back period revealed little in recorded losses.

Additionally, Carver Federal continually reviews the composition of its mortgage loan portfolio and underwriting standards to manage the risk in the portfolio.

Per the requirements of the Formal Agreement, the Bank has reduced its commercial real estate loan concentration as a percentage of risk-based capital to a level well below that mandated by its regulators.

Loan Portfolio Composition .

21 unchanged sentences

One-to-four Family Residential Lending .

Carver Federal purchases first mortgage loans secured by one-to-four family properties that serve generally as the primary residence of the owner.

Carver Federal occasionally purchases first mortgage loans secured by one-to-four family properties that serve generally as the primary residence of the owner.

The Bank purchased $4.0 million and $11.3 million of one-to-four family residential loans during fiscal years 2023 and 2022, respectively.

2 unchanged sentences

Carver Federal's fixed-rate, one-to-four family residential mortgage loans are underwritten in accordance with applicable secondary market underwriting guidelines and requirements for sale.

From time to time, the Bank has sold such loans to Fannie Mae, the State of New York Mortgage Agency (“SONYMA”) and other third parties.

Loans are generally sold with limited recourse on a servicing retained basis except to SONYMA where the sale is made with servicing released.

From time to time in the past, the Bank has sold such loans to Fannie Mae, the State of New York Mortgage Agency (“SONYMA”) and other third parties.

These loans are generally sold with limited recourse on a servicing retained basis except to SONYMA where the sale is made with servicing released.

Carver Federal uses a servicing firm to sub-service mortgage loans, whether held in portfolio or sold with servicing retained.

6 unchanged sentences

Accordingly, there can be no assurance that yields on the Bank's adjustable-rate loans will fully adjust to compensate for increases in the Bank's cost of funds.

Adjustable-rate loans increase the Bank's exposure to decreases in prevailing market interest rates, although decreases in the Bank's cost of funds would tend to offset this effect to an extent as well.

The Bank previously originated or purchased a limited amount of subprime loans (which are defined by the Bank as those loans where the borrowers have FICO scores of 660 or less at origination).

At March 31, 2022, the Bank had $3.3 million in subprime loans, or 0.6% of its total loan portfolio, of which $1.0 million are non-performing loans.

At March 31, 2023, the Bank had $2.8 million in subprime loans, or 0.5% of its total loan portfolio, of which $698 thousand are non-performing loans.

No subprime loans were purchased during fiscal year 2023.

1 unchanged sentence

Traditionally, Carver Federal originates and purchases multifamily loans.

The Bank purchased $15.1 million, $6.9 million and $7.0 million of multifamily loans during fiscal years 2022, 2021 and 2020, respectively.

There were no multifamily loan purchases during fiscal year 2023.

The Bank purchased $15.1 million and $6.9 million of multifamily loans during fiscal years 2022 and 2021, respectively.

Multifamily property lending entails additional risks compared to one-to-four family residential lending.

2 unchanged sentences

In making multifamily real estate loans, the Bank primarily considers the property's ability to generate net operating income sufficient to support the debt service, the financial resources, income level and managerial expertise of the borrower, the marketability of the property and the Bank's lending experience with the borrower, when applicable.

Carver Federal's multifamily real estate product guidelines generally require that the maximum loan-to-value ("LTV") at origination not exceed 75% based on the appraised value of the mortgaged property on all such loans.

Carver Federal's

multifamily real estate product guidelines generally require that the maximum loan-to-value ("LTV") at origination not exceed 75% based on the appraised value of the mortgaged property on all such loans.

The Bank generally requires a debt service coverage ratio at origination of at least 1.20 on multifamily real estate loans, which requires the properties to generate cash flow after expenses and allowances in excess of the principal and interest payment.

Carver Federal originates and purchases multifamily real estate loans, which are predominantly adjustable rate loans that generally amortize on the basis of a 15-, 20-, 25-, or 30-year period and require a balloon payment after the first five years, or the borrower may have an option to extend the loan for additional periods.

Carver Federal originates and purchases multifamily real estate loans, which are predominantly fixed rate for the first five years, then adjusts for the second five years, if applicable.

These loans generally amortize on the basis of a 15-, 20-, 25-, or 30-year period and require a balloon payment after the first five years, or the borrower may have an option to extend the loan for additional periods.

The Bank occasionally originates fixed rate loans with greater than five year terms on a limited basis.

Personal guarantees may be obtained for additional comfort and support to these borrowers.

Personal guarantees may be obtained for additional comfort and support to these transactions.

To help ensure continued collateral protection and asset quality for the term of multifamily real estate loans, Carver Federal employs a risk rating system for its loans.

1 unchanged sentence

Management continually monitors all commercial loans in order to update risk ratings when necessary (see "Asset Classification and Allowance for Loan and Lease Losses" for additional information on asset classification and risk ratings).

In addition, to assist the Bank in evaluating changes in the credit profile of the borrower and the underlying collateral, an independent consulting firm reviews and prepares a written report for a sample of our commercial loan relationships.

In addition, to assist with ensuring that the Bank remains consistent with its established procedures and practices, and is effectively evaluating and monitoring changes in the credit profile of the borrower and the underlying collateral, an independent consulting firm reviews, evaluates and prepares a written report for a sample of our commercial loan relationships.

Accordingly, on a triannual basis, the independent loan review company i) reviews 70% to 75% of the average commercial loan portfolio, ii) this includes all new and renewed loans greater than $100,000, and iii) all criticized and classified loans.

1 unchanged sentence

Commercial Real Estate Lending .

Commercial real estate lending consists predominantly of originating loans for the purpose of purchasing or refinancing office, mixed-use (properties used for both commercial and residential purposes but predominantly commercial), retail and church buildings in the Bank's market area.

Commercial real estate lending consists predominantly of originating loans for the purpose of purchasing or refinancing office, mixed-use (properties used for both commercial and residential purposes), retail and church buildings in the Bank's market area.

Mixed-use loans are secured by properties that are intended for both residential and business use and are classified as commercial real estate ("CRE").

purchased $18.2 million, $6.3 million and $12.6 million of commercial real estate loans during fiscal years 2022, 2021 and 2020, respectively.

Although Carver Federal has experienced favorable loss history associated with commercial real estate loans, these loans may entail additional risks compared with one-to-four family residential and multifamily lending.

For example, such loans typically involve larger loan balances to single borrowers or groups of related borrowers and the payment experience on such loans typically is dependent on the successful operation of the commercial property.

The Bank purchased $5.8 million, $18.2 million and $6.3 million of commercial real estate loans during fiscal years 2023, 2022 and 2021, respectively.

Although Carver Federal has had a favorable loss track record associated with commercial real estate loans, these loans may entail additional risks compared with one-to-four family residential and multifamily lending.

In originating CRE loans, the Bank primarily considers the ability of the net operating income generated by the real estate to support the debt service, the financial resources, income level and managerial expertise of the borrower, the marketability of the property and the Bank's lending experience with the borrower.

1 unchanged sentence

The Bank generally requires a debt service coverage ratio at origination of at least 1.20 on commercial real estate loans.

The Bank also requires the assignment of rents associated with all tenant leases in the mortgaged property and personal guarantees may be obtained for additional security from these borrowers.

The Bank also requires the assignment of rents associated with all tenant leases in the mortgaged property and personal guarantees may be obtained for additional security in connection with these transactions.

At March 31, 2023, commercial real estate mortgage loans totaled $177.7 million, or 29.9% of the total loan portfolio.

7 unchanged sentences

These loans generally have five-, seven-, or ten-year terms with 15-, 20- or 25-year amortization periods, a balloon payment due at the end of the term and generally have no greater than a 70% LTV ratio at origination.

The Bank has also provided construction financing for churches and generally provides permanent financing upon completion of construction.

There are currently 21 church loans in the Bank's loan portfolio.

The Bank has also provided construction financing for churches in the past, and would have generally provided permanent financing upon completion of construction.

There are currently 32 church loans in the Bank's loan portfolio and no new construction financing provided in 2023.

Loans secured by real estate owned by faith-based organizations generally are larger and involve greater risks than one-to-four family residential mortgage loans and standard commercial real estate transactions.

Because payments on loans secured by such properties are often dependent on voluntary contributions by members of the church's congregation, repayment of such loans may be subject to a greater extent to adverse conditions in the economy.

Because payments on loans secured by such properties are often dependent on voluntary contributions by members of the church's congregation, repayment

of such loans may be subject to a greater extent to adverse conditions in the economy.

The Bank seeks to minimize these risks in a variety of ways, including reviewing the organization's financial condition, limiting the size of such loans and establishing the quality of the collateral securing such loans.

6 unchanged sentences

Carver Federal's small business (Commercial and Industrial, or "C&I") lending portfolio increased $3.6 million to $166.9 million, comprising 28.0% of the Bank's gross loan portfolio in fiscal 2023.

This includes $17.9 million of PPP loans at March 31, 2022.

This includes $568 thousand of PPP loans at March 31, 2023.

The Bank purchased $0.6 million and $5.6 million business loans during fiscal years 2023 and 2022, respectively.

In a strategic attempt to diversify the Bank's loan portfolio, Carver Federal demonstrated an emphasis on C&I lending, placing particular focus on organic loan growth through the financing of local entrepreneurs beginning in fiscal year 2018.

Carver Federal provides revolving credit, working capital and term loan facilities to small businesses with annual sales of approximately $1 million to $25 million in educational, health care, personal services, light industrial and wholesale segments.

In a strategic attempt to diversify the Bank's loan portfolio, Carver Federal continues to make efforts towards increased C&I lending activity, placing particular focus on organic loan growth through the financing of local entrepreneurs and organizations throughout its marketplace.

Carver Federal provides revolving credit, working capital and term loan facilities to small businesses with annual sales of approximately $1 million to $25 million in various business segments, including educational, health care, personal services, light industrial, wholesale and trade contractors generally through select programs.

Business loans are typically personally guaranteed by the owners and may also be secured by additional collateral, including real estate, equipment, accounts receivable and inventory.

Consumer and Other Loans .

At March 31, 2022, the Bank had $1.6 million in consumer and other loans, or 0.3%, of the Bank's gross loan portfolio, primarily comprised of $1.5 million of guaranteed graduate medical student loans purchased in fiscal 2017.

At March 31, 2023, the Bank had $7.5 million in consumer and other loans, or 1.3%, of the Bank's gross loan portfolio.

This includes $1.1 million of graduate medical student loans purchased in fiscal 2017.

During fiscal year 2023, the Bank purchased $3.9 million consumer loans through strategic partnerships with Bankers Healthcare Group, LLC and Upstart Holdings, Inc.

Consumer loans are not typically secured by collateral and therefore involve more risk than first mortgage loans and all other transactions.

1 unchanged sentence

Further, the application of various federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount that can be recovered.

These loans may also give rise to claims and defenses by a borrower against Carver Federal, including claims and defenses that the borrower has against the seller of the underlying collateral, if applicable.

These loans may also give rise to claims and defenses by a borrower against Carver Federal, including defenses against any applicable underlying collateral.

In underwriting unsecured consumer loans other than secured credit cards, Carver Federal considers the borrower's credit history, an analysis of the borrower's income, expenses and ability to repay the loan.

The underwriting for secured credit cards only takes into consideration the value of the underlying collateral.

In the instances of underwriting for secured credit cards, the Bank generally only takes the value of the underlying collateral into consideration.

See “Asset Quality-Non-performing Assets.”

Loan Processing .

Carver Federal's loan originations are derived from a number of sources, including referrals by realtors, builders, depositors, borrowers and mortgage brokers, as well as walk-in and telephone customers.

Loans are originated by the Bank's personnel who receive a base salary, commissions and other incentive compensation.

1 unchanged sentence

The underwriting and loan processing for residential one-to-four family loans are performed by an outsourced third party loan originator using lending standards established by the Bank.

A commercial real estate loan application is completed for all multifamily and non-residential properties that the Bank finances.

A commercial real estate loan application is completed for all multifamily and non-residential income producing properties that the Bank finances.

Prior to loan approval, the property is inspected by a loan officer.

As part of the loan approval process, consideration is given to an independent appraisal, location, accessibility, stability of the neighborhood, environmental assessment, personal credit history and the financial capacity of the applicant(s).

Business loan applications are completed for all business loans.

Most business loans are secured by real estate, personal guarantees, and/or guarantees by the United States Small Business Administration (“SBA”), as applicable, along with Uniform Commercial Code (“UCC”) lien filings.

The loan approval process considers the credit history of the applicant, collateral, cash flow and purpose and stability of the business.

Upon receipt of a completed loan application from a prospective borrower, a credit report and other verifications are ordered to confirm specific information relating to the loan applicant's income and credit standing.

1 unchanged sentence

It is Carver Federal's policy to record a lien on the real estate securing the loan and to obtain a title insurance policy that insures that the property is free of prior encumbrances.

Borrowers must also obtain hazard insurance policies prior to closing and, when the property is in a flood zone or plain as designated by the Department of Housing and Urban Development, obtain flood insurance.

Most borrowers are also required to advance funds on a monthly basis, together with each payment of principal and interest, for mortgage payment escrows from which the Bank makes disbursements for items such as real estate taxes and hazard insurance.

Written confirmation of the guarantee for SBA loans and evidence of the UCC filing is also required, as applicable.

Borrowers must also obtain hazard insurance policies prior to

closing and, when the property is in a flood zone or plain as designated by the Department of Housing and Urban Development, obtain flood insurance.

Most borrowers are also required to make payments on a monthly basis, which can include principal and interest, along with mortgage payment escrows from which the Bank makes disbursements for items such as real estate taxes and hazard insurance.

Written confirmation of the guarantee, as applicable, for SBA loans and evidence of the UCC filing is also required.

Business loan applications are completed for all business loans.

Most business loans are secured by Uniform Commercial Code ("UCC") lien filings and in some cases, other collateral enhancements that can include real estate, marketable securities, along with personal guarantees, and/or guarantees by the United States Small Business Administration ("SBA"), as applicable.

The loan approval process considers the credit history of the applicant, collateral, cash flow and purpose and stability of the business.

Loan Approval .

28 unchanged sentences

(1) Comprised of personal loans.

(2) Comprised of $11.3 million one-to-four family, $15.1 million multifamily, $18.2 million commercial real estate and $5.6 million business loans.

(3) Comprised of primarily multifamily and commercial real estate loans.

(2) Comprised of $4.0 million one-to-four family, $5.8 million commercial real estate, $0.6 million business and $3.9 million consumer loans.

(3) Comprised of commercial real estate loans.

Loans purchased by the Bank entail certain risks not necessarily associated with loans the Bank originates.

3 unchanged sentences

However, the Bank may purchase loans secured by property outside its market area to meet its financial objectives.

The market areas in which the properties that secure the purchased loans are located may differ from Carver Federal's market area and may be subject to economic and real estate market conditions that may significantly differ from those experienced in Carver Federal's market area.

The market areas in which the properties that secure the purchased loans are located may differ from Carver Federal's market area and may be

subject to economic and real estate market conditions that may significantly differ from those experienced in Carver Federal's market area.

There can be no assurance that economic conditions in these out-of-state markets will not deteriorate in the future, resulting in increased loan delinquencies and loan losses among the loans secured by property in these areas.

18 unchanged sentences

The following table sets forth as of March 31, 2023, amounts in each loan category that are contractually due after March 31, 2024 and whether such loans have fixed or adjustable interest rates.

Scheduled contractual principal repayments of

loans do not necessarily reflect the actual lives of such assets.

Scheduled contractual principal repayments of loans do not necessarily reflect the actual lives of such assets.

The average life of long-term loans is substantially less than their contractual terms due to prepayments.

15 unchanged sentences

For non-owner occupied non-residential real estate and multifamily real estate loans, the borrower's ability to pay typically is dependent on rental income, which can be impacted primarily by vacancies and general market conditions.

For owner-occupied one-to-four family loans, a borrowers' ability to pay typically is dependent primarily on employment and other sources of income.

For owner-occupied one-to-four family loans, a borrowers' ability to pay typically is dependent primarily on

employment and other sources of income.

For owner occupied non-residential real estate, a borrower's ability to pay typically is dependent primarily on the success of the borrower's business.

1 unchanged sentence

Collateral values, particularly real estate values, are also impacted by a variety of factors, including general economic conditions, demographics, maintenance and collection or foreclosure delays.

The COVID-19 pandemic has placed additional strains on the economy.

The Company has made provisions in its allowance for loans and lease reserves to mitigate any future charge-offs that may be needed.

Non-performing Assets .

36 unchanged sentences

Performing TDR loans were $6.0 million at 2023, $5.2 million at 2022, $5.8 million at 2021, $1.7 million at 2020, and $2.2 million at 2019.

At March 31, 2022, total non-performing assets increased by $4.2 million, or 57.5%, to $11.5 million, compared to $7.3 million at March 31, 2021, as a result of a $4.3 million increase in nonaccrual loans, year over year.

Nonaccrual loans at March 31, 2022 consisted of fifteen one-to-four family, one multifamily, two commercial real estate, eight small business and SBA loans, and five consumer loans.

Management believes that there may be losses associated with certain delinquent loans in the future, but also notes that the amount of losses may be reduced by the value of properties securing these delinquent loans and the Bank's loan loss reserves.

At March 31, 2023, total non-performing assets increased by $780 thousand, or 6.8%, to $12.3 million, compared to $11.5 million at March 31, 2022, as a result of a $780 thousand increase in nonaccrual loans, year over year.

Nonaccrual loans at March 31, 2023 consisted of twelve one-to-four family, one multifamily, four commercial real estate, five business, and two consumer loans.

loss reserves.

Other non-performing assets at year-end 2023 includes real estate owned assets consisting of one foreclosed residential property.

At March 31, 2023, Carver had 9 loans secured by one-to-four family residential real estate properties in the process of foreclosure with a total outstanding balance of $3.2 million.

Although we believe that substantially all risk elements at March 31, 2022 have been disclosed, other factors, including economic conditions and the conditions related to COVID-19, may cause borrowers to be unable to comply with the contractual repayment terms on certain real estate and commercial loans.

Although we believe that substantially all risk elements at March 31, 2023 have been disclosed, other factors, including economic conditions, may cause borrowers to be unable to comply with the contractual repayment terms on certain real estate and commercial loans.

For additional information about certain factors that may affect the future performance of the Company's loan portfolio, please see "Item 1A - Risk Factors" and "Forward Looking Statements."

5 unchanged sentences

The regulations also provide for a “special mention” designation, described as assets that do not currently expose a savings institution to a sufficient degree of risk to warrant substandard classification but do possess credit deficiencies or potential weaknesses deserving management's close attention.

Assets classified as substandard or doubtful result in a higher level of allowances for loan losses recorded in accordance with ASC Subtopic 450-20 “Loss Contingencies.” If an asset or portion thereof is classified as a loss, a savings institution must charge off any amount exceeding the fair value of collateral pursuant to loan impairment guidance in ASC

Section 310-10-35.

If a savings institution does not agree with an examiner's classification of an asset, it may appeal this determination to the OCC Regional Director.

17 unchanged sentences

In addition, considerable uncertainty exists as to the future improvement or deterioration of the real estate market.

See “Lending Activities-Loan Purchases and Originations.” Carver Federal increases its allowance for loan losses by charging provisions for possible losses against the Bank's income.

See “Lending Activities-Loan

Purchases and Originations.” Carver Federal increases its allowance for loan losses by charging provisions for possible losses against the Bank's income.

General allowances are established by management on at least a quarterly basis based on an assessment of risk in the Bank's loans, taking into consideration the composition and quality of the portfolio, delinquency trends, current charge-off and loss experience, the state of the real estate market and economic conditions generally.

6 unchanged sentences

Fair value is defined as the amount in cash or cash-equivalent value of other consideration that a real estate parcel would yield in a current sale between a willing buyer and a willing seller.

Any amount of cost in excess of fair value is charged off against the allowance for loan losses prior

to the transfer of the property into OREO.

Any amount of cost in excess of fair value is charged off against the allowance for loan losses prior to the transfer of the property into OREO.

Carver Federal records an allowance for estimated selling costs of the property immediately after foreclosure.

3 unchanged sentences

$ in thousands 2023

Balance at beginning of year $ 5,140 $ 4,946 $ 4,646 $ 5,126 $ 5,060

Beginning Balance $ 5,624 $ 5,140 $ 4,946 $ 4,646 $ 5,126

Less Charge-offs:

1 unchanged sentence

Multifamily — — — — (164)

Commercial real estate (586) — — — —

Business — — (24) (69) (964)

8 unchanged sentences

Total Recoveries $ 232 $ 138 $ 372 $ 464 $ 1,088

Net loans charged off (119) 294 281 (210) (69)

Net recoveries (charge-offs) (495) (119) 294 281 (210)

Provision for (recovery of) losses

Balance at end of year $ 5,624 $ 5,140 $ 4,946 $ 4,646 $ 5,126

Net (charge-off) recovery to average loans outstanding:

One-to-four family (105) (340) (85) (509) 25

1 unchanged sentence

Commercial real estate 1,233 250 95 46 (286)

Construction — — — — —

Business (1,485) 540 34 146 586

Consumer and other 462 192 1 158 120

Unallocated — (273) (14) 52 213

Total provision for (recovery of) losses 100 603 (100) 19 (270)

Ending balance $ 5,229 $ 5,624 $ 5,140 $ 4,946 $ 4,646

Net recoveries (charge-offs) to average loans outstanding:

One-to-four family 0.13 % 0.02 % 0.10 % 0.26 % 0.03 %

Multifamily — % — % — % — % (0.01) %

Commercial real estate (0.33) % — % — % — % — %

Business 0.08 % 0.06 % 0.23 % 0.10 % (0.26) %

Consumer and other (5.60) % (11.55) % (1.62) % (2.68) % 0.34 %

Total loans (0.09) % (0.02) % 0.06 % 0.07 % (0.05) %

14 unchanged sentences

Total Allowance $ 5,229 100.0 % $ 5,624 100.0 % $ 5,140 100.0 % $ 4,946 100.0 % $ 4,646 100.0 %

The changes in the ALLL by loan category was primarily due to the increase in commercial real estate and consumer loans and decrease in business loans during fiscal year 2023.

The allocation of the allowance to each category is not necessarily indicative of future losses and does not restrict the use of the allowance to absorb losses in any category.

12 unchanged sentences

The following table sets forth the amortized cost, fair value and weighted average yields of the Bank's investment portfolio at March 31, 2023, categorized by remaining period to contractual maturity:

Due < 1 Year Due 1 - 5 Years Due 5 - 10 Years Due after 10 Years

$ in thousands Amortized Cost Fair Value Weighted Average Yield Amortized Cost Fair Value Weighted Average Yield Amortized Cost Fair Value Weighted Average Yield Amortized Cost Fair Value Weighted Average Yield

Due 1 - 5 Years Due 5 - 10 Years Due after 10 Years

$ in thousands Amortized Cost Fair Value Weighted Average Yield Amortized Cost Fair Value Weighted Average Yield Amortized Cost Fair Value Weighted Average Yield

Available-for-Sale:

7 unchanged sentences

Muni securities — — 2,676 2,345 2.67 % 15,043 11,637 2.25 %

Asset-backed securities 347 343 1.06 % — — — % — — — % — — — %

Total available-for-sale $ — $ — — % $ 5,680 $ 5,331 4.34 % $ 60,378 $ 48,512 2.37 %

6 unchanged sentences

The Bank has invested in mortgage-backed securities to help achieve its asset/liability management goals and collateral needs.

Although mortgage-backed securities generally yield less than whole loans, they present substantially lower credit risk, are more liquid than individual mortgage loans and may be used to collateralize

obligations of the Bank.

Because Carver Federal receives regular payments of principal and interest from its mortgage-backed securities, these investments provide more consistent cash flows than investments in other debt securities, which generally only pay principal at maturity.

2 unchanged sentences

Mortgage-backed securities constituted 4.1% of total assets at March 31, 2023, compared to 5.3% at March 31, 2022.

Carver Federal maintains a portfolio of mortgage-backed securities in the form of Government National Mortgage Association (“GNMA”) pass-through certificates, FNMA mortgage-backed securities and FHLMC mortgage-backed securities.

Carver Federal maintains a portfolio of mortgage-backed securities in the form of Government National Mortgage Association

(“GNMA”) pass-through certificates, FNMA mortgage-backed securities and FHLMC mortgage-backed securities.

GNMA pass-through certificates are guaranteed as to the payment of principal and interest by the full faith and credit of the United States Government, while FNMA and FHLMC securities are each guaranteed by their respective agencies as to principal and interest.

45 unchanged sentences

As of March 31, 2023, Carver had a total of $17.6 million in brokered deposits, compared to $64.2 million as of March 31, 2022.

Brokered deposits as of March 31, 2022 included $46.4 million CDARS deposits.

As of March 31, 2023, the Bank has $84.4 million of reciprocal deposits acquired through its participation in the Certificate of Deposit Account Registry Service (“CDARS”).

22 unchanged sentences

Such payments were made in September 2016.

Interest on the debentures had been deferred beginning with the December 2016 payment, per the terms of the agreement, which permit such deferral for up to twenty consecutive quarters, as the Company is prohibited from making payments without prior regulatory approval.

Interest on the debentures had been deferred beginning with the December 2016

payment, per the terms of the agreement, which permit such deferral for up to twenty consecutive quarters, as the Company is prohibited from making payments without prior regulatory approval.

During the fourth quarter of fiscal year 2021, the Company applied for and was granted regulatory approval to settle all outstanding debenture interest payments through June 2021.

3 unchanged sentences

On December 16, 2021, the Company paid the interest deferred from September 17, 2021 and the regular quarterly interest payment due on December 17, 2021.

Subsequently, the Company made the regular quarterly interest payments on its outstanding debentures due on March 17, 2022.

The interest rate was 4.0% at March 31, 2022 and June 17, 2022.

Carver relies primarily on dividends from Carver Federal to pay cash dividends to its stockholders and to engage in share repurchase programs.

The OCC regulates all capital distributions, including dividend payments, by Carver Federal to the Company, and the FRB regulates dividends paid by the Company.

Subsequently, the Company made the regular quarterly interest payments on its outstanding debentures due on March 17, 2022, June 17, 2022, September 17, 2022, December 19, 2022 and March 17, 2023.

The interest rate was 8.0% at March 31, 2023.

Carver relies, in part, on dividends from Carver Federal to pay cash dividends to its stockholders and to engage in share repurchase programs.

In recent years, Carver has been successful in obtaining cash independently through its capital raising efforts.

Under the prior Formal Agreement, the OCC regulated all capital distributions, including dividend payments, by Carver Federal to the Company, and the FRB regulates dividends paid by the Company.

The OCC will disallow any proposed dividend, for among other reasons, that would result in Carver Federal’s failure to meet the OCC minimum capital requirements.

In accordance with the Formal Agreement defined directly below, Carver Federal is currently prohibited from paying any dividends without prior OCC approval, and, as such, has suspended its regular quarterly cash dividend to the Company.

There are no assurances that dividend payments to Carver will resume.

Carver has suspended its regular quarterly cash dividend on its common stock.

REGULATION AND SUPERVISION

Enforcement Actions

On May 24, 2016, the Bank entered into a formal agreement (the "Formal Agreement") with the OCC to undertake certain compliance-related and other actions as further described in the Company’s Current Report on Form 8-K as filed with the SEC on May 27, 2016.

As a result of the Formal Agreement, the Bank must obtain the approval of the OCC prior to effecting any change in its directors or senior executive officers.

The Bank may not declare or pay dividends or make any other capital distributions, including to the Company, without first filing an application with the OCC and receiving the prior approval of the OCC.

Furthermore, the Bank must seek the OCC's written approval and the FDIC's written concurrence before entering into any "golden parachute payments" as that term is defined under 12 U.S.C.

§ 1828(k) and 12 C.F.R.

As a result of the Formal Agreement, the OCC established higher minimum capital requirements for the Bank.

On May 24, 2016, the Bank entered into a formal agreement (the "Formal Agreement") with the OCC to undertake certain compliance-related and other actions as further described in the Company’s Report on Form 8-K as filed with the SEC on May 27, 2016.

On January 18, 2023, the Bank was released from the Formal Agreement by the OCC as further described in the Company's Current Report on Form 8-K as filed with the SEC on January 23, 2023.

The OCC has established higher minimum capital requirements for the Bank.

For further information with respect to the Individual Minimum Capital Ratios (“IMCR”), effective June 29, 2016, refer to “Capital and Liquidity - Carver Federal’s Capital Position.”

The Company is subject to similar requirements as the Bank.

The Company continues to be subject to certain requirements pursuant to the Memorandum of Understanding dated October, 20, 2016 with the FRB.

The Company must provide notice to the FRB prior to affecting any change in its directors or senior executive officers.

2 unchanged sentences

(1) the declaration or payment of dividends by the Company to its stockholders, (2) the declaration or payment of dividends by the Bank to the Company, (3) any distributions of interest or principal by the Company on subordinated debentures or trust preferred securities, (4) any purchases or redemptions of the Company’s stock and (5) the Company incurring, increasing or guaranteeing certain long-term debt outside the ordinary course of business.

These limitations could affect our operations and financial performance.

These limitations may affect our operations and financial performance.

The Bank is subject to extensive regulation, examination and supervision by its primary regulator, the OCC.

1 unchanged sentence

The Bank is a member of the FHLB-NY.

The Bank must file reports with the OCC concerning its activities and financial condition, and it

must obtain regulatory approvals prior to entering into certain transactions, such as mergers with, or acquisitions of, other depository institutions.

The Bank must file reports with the OCC concerning its activities and financial condition, and it must obtain regulatory approvals prior to entering into certain transactions, such as mergers with, or acquisitions of, other depository institutions.

The Company, as a unitary savings and loan holding company, is subject to regulation, examination and supervision by the FRB and is required to file certain reports with, and otherwise comply with, the rules and regulations of the FRB and of the SEC under the federal securities laws.

2 unchanged sentences

In addition, the FDIC has the authority to recommend to the Director of the OCC that enforcement action be taken with respect to a particular federally chartered savings bank and, if action is not taken by the Director, the FDIC has authority to take such action under certain circumstances.

The description of statutory provisions and regulations applicable to federally chartered savings banks and their holding companies and of tax matters set forth in this document does not purport to be a complete description of all such statutes and regulations and their effects on the Bank and the Company.

regulations and their effects on the Bank and the Company.

Any change in such laws and regulations whether by the OCC, the FDIC, the FRB or through legislation could have a material adverse impact on the Bank and the Company and their operations and stockholders.

21 unchanged sentences

Unrealized gains and losses on certain “available-for-sale” securities holdings are required to be included for purposes of calculating regulatory capital unless a one-time opt-out is exercised.

Carver Federal has

chosen to opt-out and, therefore, does not include accumulated other comprehensive income (AOCI) in its regulatory capital determinations.

Carver Federal has chosen to opt-out and, therefore, does not include accumulated other comprehensive income (AOCI) in its regulatory capital determinations.

Additional constraints are also imposed on the inclusion in regulatory capital of certain mortgage-servicing assets, deferred tax assets and minority interests.

13 unchanged sentences

The IMCR established by the OCC on June 29, 2016, as a result of the previously described Formal Agreement, requires the Bank to maintain minimum regulatory capital levels of 9% for its Tier 1 leverage ratio and 12% for its total risk-based capital ratio.

While the Formal Agreement was terminated on January 18, 2023, the IMCR remains in effect.

At March 31, 2023, Carver Federal exceeded the capital regulatory requirements and its IMCR requirements with a common equity Tier 1 ratio of 12.47%, Tier 1 leverage ratio of 10.61%, total risk-based capital ratio of 13.37% and a Tier 1 risk-based capital ratio of 12.47%.

18 unchanged sentences

If, after being so notified, an institution fails to submit an acceptable compliance plan, or fails in any material respect to implement an accepted compliance plan, the OCC must issue an order directing action to correct the deficiency and may issue an order directing other actions of the types to which an undercapitalized association is subject under the “prompt corrective action” provisions of federal law.

If an institution fails to comply with such an order, the OCC may seek to enforce such order in judicial proceedings and to impose civil money penalties.

an institution fails to comply with such an order, the OCC may seek to enforce such order in judicial proceedings and to impose civil money penalties.

The OCC has primary enforcement responsibility over the Bank.

21 unchanged sentences

The Bank's authority to invest in certain types of loans or other investments is limited by federal law.

These investment powers are subject to various limitations, including (1) a prohibition against the acquisition of any corporate debt security that is not rated in one of the four highest rating categories, (2) a limit of 400% of an association's capital on the aggregate amount of loans secured by non-residential real estate property, (3) a limit of 20% of an association's assets on commercial loans, with the amount of commercial loans in excess of 10% of assets being limited to small business loans, (4) a limit of 35% of an association's assets on the aggregate amount of consumer loans and acquisitions of certain debt securities, (5) a limit of 5% of assets on non-conforming loans (certain loans in excess of the specific limitations of HOLA), and (6) a limit of the greater of 5% of assets or

an association's capital on certain construction loans made for the purpose of financing what is or is expected to become residential property.

Loans-to-One Borrower Limitations.

6 unchanged sentences

Under this test, the Bank is required to maintain at least 65% of its “portfolio assets” in certain “qualified thrift investments” on a monthly basis in at least nine months of the most recent twelve-month period.

“Portfolio assets” means, in general, an association's total assets less the sum of (a) specified liquid assets up to 20% of total assets, (b) goodwill and other intangible assets and (c) the value of property used to conduct the Bank's business.

“Portfolio assets” means, in

general, an association's total assets less the sum of (a) specified liquid assets up to 20% of total assets, (b) goodwill and other intangible assets and (c) the value of property used to conduct the Bank's business.

“Qualified thrift investments” include various types of loans made for residential and housing purposes, investments related to such purposes, including certain mortgage-backed and related securities and consumer loans.

6 unchanged sentences

This authority under federal law and regulations preempts any state law purporting to regulate branching by federal savings associations.

Community Reinvestment.

Under the CRA, as amended, as implemented by OCC regulations, the Bank has a continuing and affirmative obligation to help meet the credit needs of its entire community, including low and moderate income neighborhoods.

Community Reinvestment Act ("CRA") Under the CRA, as amended, and implemented by OCC regulations, the Bank has a continuing and affirmative obligation to help meet the credit needs of its entire community, including those in low and moderate income neighborhoods.

The CRA does not establish specific lending requirements or programs for the Bank nor does it limit the Bank's discretion to develop the types of products and services that it believes are best suited to its particular community.

The CRA does, however, require the OCC, in connection with its examination of the Bank, to assess the Bank's record of meeting the credit needs of its community and to take such record into account in its evaluation of certain applications by the Bank.

In particular, the system focuses on three tests:

The CRA does, however, require the primary regulator, in connection with its examination of the Bank, to assess the Bank's record of meeting the credit needs of its community and to take such record into account in its evaluation of certain applications by the Bank.

While CRA modernization is underway, the current evaluation system focuses on three tests:

(1) a lending test, to evaluate the institution's record of making loans in its assessment areas;

4 unchanged sentences

Regulations require that Carver Federal publicly disclose certain agreements that are in fulfillment of the CRA.

The Company has no such agreements in place at this time.

In June 2020, the OCC issued amendments to its CRA regulations.

The final rule clarifies and expands the activities that qualify for CRA credit, updates where activities count for such credit and, according to the agency, seeks to create a more consistent and objective method for evaluating CRA performance.

The final rule was effective October 1, 2020 but compliance with the certain of the revised requirements is not mandatory for the Association until January 1, 2023.

The Bank has no such agreements in place at this time.

In June 2020, the OCC issued amendments to its CRA evaluations.

The final rule clarified and expanded the activities that qualify for CRA credit, updated where activities count for such credit and, according to the agency, sought to create a more consistent and objective method for evaluating CRA performance.

The final rule was issued effective October 1, 2020 with compliance of some key changes earmarked for implementation by January 1, 2023.

However, small banks were not expected to be impacted by the 2020 Rule.

Subsequently, in May 2022, based on substantial industry feedback, the OCC rescinded its 2020 Rule in favor of a more comprehensive, realistic, and interagency approach to CRA modernization with Notice of Proposed Rulemaking comments ending as of August 2022.

Implementation of new rules and evaluation methodology has been delayed to 2024.

CRA modernization endeavors to address inequities in access to credit for low- and moderate-income individuals and communities by strengthening the legacy legislation, while also adapting to changes in the banking industry specifically acknowledging the use of mobile and digital banking in regulatory evaluations.

Transactions with Related Parties.

3 unchanged sentences

Collateral in specified amounts must usually be provided by affiliates to receive loans from the Bank.

In addition, OCC regulations prohibit a savings bank from lending to any

affiliate that is engaged in activities that are not permissible for bank holding companies and from purchasing the securities of any affiliate other than a subsidiary.

In addition, OCC regulations prohibit a savings bank from lending to any affiliate that is engaged in activities that are not permissible for bank holding companies and from purchasing the securities of any affiliate other than a subsidiary.

The Bank's authority to extend credit to its directors, executive officers, and 10% shareholders ("insiders"), as well as to entities controlled by such persons, is currently governed by the requirements of Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O of the Federal Reserve Board.

Among other things, these provisions require that all loans or extensions of credit to insiders (a) be made on terms that are substantially the same as and follow credit underwriting procedures that are not less stringent than those prevailing for comparable transactions with unaffiliated persons and that do not involve more than the normal risk of repayment or present other unfavorable features and (b) not exceed certain limitations, individually and in the aggregate, which limits are based, in part, on the amount of the Bank's capital.

Among other things, these provisions require that all loans or

extensions of credit to insiders (a) be made on terms that are substantially the same as and follow credit underwriting procedures that are not less stringent than those prevailing for comparable transactions with unaffiliated persons and that do not involve more than the normal risk of repayment or present other unfavorable features and (b) not exceed certain limitations, individually and in the aggregate, which limits are based, in part, on the amount of the Bank's capital.

In addition, extensions of credit in excess of certain limits must be approved by the Bank's Board.

The aggregate amount of related party deposits were $432 thousand and there was one related party loan totaling $30 thousand at March 31, 2022.

The aggregate amount of related party deposits were $4.9 million and there was one related party loan totaling $30 thousand at March 31, 2023.

The OCC charges assessments to recover the cost of examining savings associations and their affiliates.

30 unchanged sentences

The Bank, as a FHLB-NY member, is required to acquire and hold shares of capital stock in the FHLB-NY in specified amounts.

The Bank was in compliance with this requirement with an investment in the capital stock of the FHLB-NY at March 31, 2022 of $584 thousand.

The Bank was in compliance with this requirement with an investment in the capital stock of the FHLB-NY at March 31, 2023 of $2.3 million.

Any advances from the FHLB-NY must be secured by specified types of collateral, and all long-term advances may be obtained only for the purpose of providing funds for residential housing finance.

21 unchanged sentences

Unitary savings and loan holding companies that are “grandfathered,” i.e., unitary savings and loan holding companies in existence or with applications filed with the regulator on or before May 4, 1999, such as the Company, retain their authority under the prior law.

All other unitary savings and loan holding companies are limited to financially related activities permissible for financial holding companies and

certain other activities specified by FRB regulations.

All other unitary savings and loan holding companies are limited to financially related activities permissible for financial holding companies and certain other activities specified by FRB regulations.

GLB also prohibits nonfinancial companies from acquiring grandfathered unitary savings and loan holding companies.

23 unchanged sentences

Thus, it is subject to regulation by the State of Delaware and the rights of its shareholders are governed by the General Corporation Law of the State of Delaware.

The Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”)

The CARES Act, which became law on March 27, 2020, provided over $2 trillion to combat the coronavirus (COVID-19) and stimulate the economy.

The law had several provisions relevant to financial institutions, including:

• Allowing institutions not to characterize loan modifications relating to the COVID-19 pandemic as a troubled debt restructurings and also allowing them to suspend the corresponding impairment determination for accounting purposes.

• The ability of a borrower of a federally backed mortgage loan (VA, FHA, USDA, Freddie Mac and Fannie Mae) experiencing financial hardship due, directly or indirectly, to the COVID-19 pandemic to request forbearance from paying their mortgage by submitting a request to the borrower’s servicer affirming their financial hardship during the COVID-19 emergency.

Such a forbearance could be granted for up to 180 days, with an extension for an additional 180-day period upon the request of the borrower.

During that time, no fees, penalties or interest beyond the amounts scheduled or calculated as if the borrower made all contractual payments on time and in full under the mortgage contract would accrue on the borrower’s account.

Except for vacant or abandoned property, the servicer of a federally backed mortgage was prohibited from taking any foreclosure action, including any eviction or sale action, for not less than the 60-day period beginning March 18, 2020, which period was subsequently extended several times by administrative action..

• The ability of a borrower of a multi-family federally backed mortgage loan that was current as of February 1, 2020, to submit a request for forbearance to the borrower’s servicer affirming that the borrower is experiencing financial hardship during the COVID-19 emergency.

A forbearance could be granted for up to 30 days, with an extension for up to two additional 30-day periods upon the request of the borrower.

During the time of the forbearance, the multifamily borrower cannot evict or initiate the eviction of a tenant or charge any late fees, penalties or other charges to a tenant for late payment of rent.

Additionally, a multifamily borrower that receives a forbearance may not require a tenant to vacate a dwelling unit before a date that is 30 days after the date on which the borrower provides the tenant notice to vacate and may not issue a notice to vacate until after the expiration of the forbearance.

Federal mortgage backing agencies have extended this program.

The Paycheck Protection Program

The Paycheck Protection Program (“PPP”), established as part of the CARES Act, provided 100% federally guaranteed loans to eligible small businesses through the Small Business Administration’s (“SBA”) 7(a) loan guaranty program for amounts up to 2.5 times the average monthly “payroll costs” of the business.

The entire principal amount of the borrower’s PPP loan, including any accrued interest, is eligible for PPP loan forgiveness so long as employee and compensation levels of the business are maintained and 60% of the loan proceeds are used for payroll expenses, with the remaining 40% of the loan proceeds used for other qualifying expenses, including, but not limited to, mortgage interest, rent and utilities.

In May 2021, the SBA announced that PPP funding has been exhausted and the SBA stopped accepting new PPP loan applications.

FEDERAL AND STATE TAXATION

1 unchanged sentence

The Company and the Bank currently file a consolidated federal income tax return on the basis of a taxable year ending March 31 using the accrual method of accounting, and are subject to federal income taxation in the same manner as other corporations with some exceptions, including in particular the Bank's tax reserve for bad debts.

The Bank has a subsidiary which files a REIT tax return which reports its income for tax purposes on the basis of a taxable year ending

The Bank has a subsidiary which files a REIT tax return which reports its income for tax purposes on the basis of a taxable year ending December 31.

The REIT does not join in the consolidated return and it pays tax on its undistributed taxable income.

12 unchanged sentences

The Company recorded a benefit of $0.3 million for alternative minimum tax credits which, under the new tax law, are refundable.

As of March 31, 2022, the Company has a pending AMT credit refund of $143 thousand, related to the AMT credits, from its filed fiscal year 2020 federal tax return.

As of March 31, 2022, the Company had a pending AMT credit refund of $143 thousand, related to the AMT credits, from its filed fiscal year 2020 federal tax return.

The refund was received during fiscal year 2023.

State and Local Taxation

12 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business