7 unchanged sentences
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at March 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended March 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
+Added: Change in Accounting Principle
+Added: As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for the recognition and measurement of credit losses as of April 1, 2023, due to the adoption of Accounting Standards Codification Topic 326, Financial Instruments – Credit Losses.
Basis for Opinion
15 unchanged sentences
(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.
−Removed: The communication of critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.
−Removed: Allowance for loan losses
−Removed: As described in Notes 2 and 4 to the Company’s consolidated financial statements, the Company has a gross loan portfolio of $597.9 million and related allowance for loan losses of $5.2 million as of March 31, 2023.
−Removed: The allowance for loan losses includes a general reserve of $4.9 million and a specific reserve of $0.3 million.
−Removed: In calculating the general reserve component of the allowance for loan losses, the Company segregates the loan portfolio by loan pools and utilizes nine qualitative factors in addition to quantitative factors (historical loss experience).
−Removed: We identified the qualitative factors used by management to estimate the general reserve portion of the allowance for loan losses, specifically the economic factor, as a critical audit matter.
−Removed: Significant management judgment is required in the
−Removed: evaluation of the economic factor, which include consideration of local and national economic trends.
−Removed: Auditing these complex judgments and assumptions involves especially challenging auditor judgment due to the nature and extent of audit evidence and effort required to address these matters.
+Added: The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.
+Added: Allowance for Credit Losses
+Added: As described in Notes 2 and 4 to the Company’s consolidated financial statements, the Company had a gross loan portfolio of $622.9 million and related allowance for credit losses (“allowance”) of $5.9 million as of March 31, 2024.
+Added: The allowance includes a reserve on the pooled loans of $5.8 million and a reserve on the individually analyzed loans of $0.008 million.
+Added: The allowance consists of quantitative and qualitative components.
+Added: The Company considers historical loss experience, forecasted business conditions, as well as reasonable and supportable forecasts to develop the quantitative component.
+Added: The quantitative
+Added: component is then adjusted for qualitative risk factors.
+Added: The economic forecast uncertainty qualitative factor involves significant assumptions that require a high degree of management’s judgment.
+Added: We identified the economic forecast uncertainty qualitative factor used by management to determine the allowance for credit losses as a critical audit matter.
+Added: The inherent uncertainty in estimating forecasts requires management to make significant judgements and assumptions with respect to the economic forecast uncertainty qualitative factor.
+Added: Auditing such assumptions required a high degree of auditor judgment and an increased auditor effort.
The primary procedures we performed to address this critical audit matter included:
−Removed: • Evaluating the reasonableness of assumptions used by management in forming the economic factor, by assessing whether the assumptions reflected relevant considerations and were reasonable and reliable for the purpose used.
−Removed: • Evaluating the appropriateness of the data used by management in developing the economic factor by comparing it to third-party data and evaluating any contradictory evidence identified.
−Removed: /s/ BDO USA, LLP
+Added: • Testing the appropriateness of the data used by management in determining the economic forecast uncertainty qualitative factor by agreeing it back to third-party source data.
+Added: • Evaluating the reasonableness of the economic forecast uncertainty factor used by management by independently evaluating the market information and historical trends.
+Added: /s/ BDO USA, P.C.
We have served as the Company's auditor since 2016.
−Removed: June 29, 2023
+Added: July 16, 2024
CARVER BANCORP, INC.
8 unchanged sentences
Available-for-sale, at fair value 48,030 53,843
−Removed: Held-to-maturity, at amortized cost (fair value of $ 2,221 and $ 5,276 at March 31, 2023 and March 31, 2022, respectively)
+Added: Held-to-maturity, at amortized cost (fair value of $ 1,905 and $ 2,221 , respectively)
Total investment securities 50,038 56,161
4 unchanged sentences
Loans, net of deferred fees and costs 622,878 597,896
−Removed: Allowance for loan losses ( 5,229 ) ( 5,624 )
+Added: Allowance for credit losses ( 5,871 ) ( 5,229 )
Total loans receivable, net 617,007 592,667
19 unchanged sentences
Total liabilities 714,487 678,000
+Added: Commitments and contingencies (Note 15) — —
Preferred stock (par value $ 0.01 per share:
−Removed: 13,201 and 13,751 Series D shares, with a liquidation preference of $ 1,000 per share, issued and outstanding at March 31, 2023 and 2022, respectively)
−Removed: 13,201 13,751
+Added: 9,557 and 13,201 Series D shares, with a liquidation preference of $ 1,000 per share, issued and outstanding, respectively)
Preferred stock (par value $ 0.01 per share:
−Removed: 3,177 Series E shares, with a liquidation preference of $ 1,000 per share, issued and outstanding at March 31, 2023 and 2022)
+Added: 3,177 Series E shares, with a liquidation preference of $ 1,000 per share, issued and outstanding, respectively)
Preferred stock (par value $ 0.01 per share:
−Removed: 9,000 Series F shares, with a liquidation preference of $ 1,000 per share, issued and outstanding at March 31, 2023 and 2022, respectively)
+Added: 9,000 Series F shares, with a liquidation preference of $ 1,000 per share, issued and outstanding, respectively)
Common stock (par value $ 0.01 per share:
1 unchanged sentence
7,644,675 and 6,799,410 issued;
−Removed: 4,295,607 and 4,216,815 shares outstanding at March 31, 2023 and 2022, respectively)
+Added: 5,140,872 and 4,295,607 shares outstanding, respectively)
Additional paid-in capital 87,660 82,805
Accumulated deficit ( 51,549 ) ( 47,904 )
−Removed: Treasury stock, at cost ( 2,503,803 shares at March 31, 2023 and 2022)
+Added: Treasury stock, at cost ( 2,503,803 shares, respectively)
( 2,908 ) ( 2,908 )
19 unchanged sentences
Net interest income 22,561 22,789
−Removed: Provision for loan losses 100 603
−Removed: Net interest income after provision for loan losses 22,689 19,863
+Added: Provision for credit losses 83 100
+Added: Net interest income after provision for credit losses 22,478 22,689
Non-interest income:
30 unchanged sentences
( 490 ) ( 5,553 )
−Removed: Reclassification adjustment for realized gains on sales of available-for-sale securities, net of income tax expense of $ 0 (due to full valuation allowance)
Total other comprehensive loss, net of tax ( 490 ) ( 5,553 )
10 unchanged sentences
Conversion of Series D preferred stock to common stock ( 550 ) 1 549 — — — —
−Removed: Issuance of common stock, net of issuance costs 4 2,994 — — — 2,998
−Removed: Issuance of Series F preferred stock 4,000 — — — — — 4,000
Stock based compensation expense — 91 — 91
1 unchanged sentence
25,378 68 82,805 ( 47,904 ) ( 2,908 ) ( 12,215 ) 45,224
+Added: Cumulative effect adjustment for adoption of ASU 2016-13 — — — ( 668 ) — — ( 668 )
Net loss — — — ( 2,977 ) — — ( 2,977 )
1 unchanged sentence
Conversion of Series D preferred stock to common stock ( 3,644 ) 5 3,639 — — — —
+Added: Issuance of common stock — 4 996 — — — 1,000
Stock based compensation expense — — 220 — — — 220
10 unchanged sentences
Adjustments to reconcile net loss to net cash used in operating activities:
−Removed: Provision for loan losses 100 603
+Added: Provision for credit losses 83 100
Stock based compensation expense 220 91
3 unchanged sentences
Amortization and accretion of premiums and discounts - securities 298 397
−Removed: Decrease in accrued interest receivable 503 226
−Removed: Decrease (increase) in other assets 480 ( 1,301 )
−Removed: (Decrease) increase in other liabilities ( 8,432 ) 7,046
−Removed: Net cash (used in) provided by operating activities ( 10,513 ) 7,152
+Added: (Increase) decrease in accrued interest receivable ( 1,751 ) 503
+Added: (Increase) decrease in other assets ( 541 ) 480
+Added: Decrease in other liabilities ( 3,054 ) ( 8,432 )
+Added: Net cash used in operating activities ( 6,571 ) ( 10,513 )
CASH FLOWS FROM INVESTING ACTIVITIES
5 unchanged sentences
Loans held-for-investment, net of (originations) and repayments/payoffs and maturities 6,275 ( 9,934 )
+Added: Purchase of equity investment ( 603 ) —
Loans purchased from third parties ( 31,526 ) ( 14,289 )
1 unchanged sentence
Proceeds from sale of loans 563 1,129
−Removed: Purchase of FHLB-NY stock ( 1,682 ) ( 32 )
+Added: Redemption (purchase) of FHLB-NY stock 262 ( 1,682 )
Purchase of premises and equipment ( 360 ) ( 225 )
1 unchanged sentence
CASH FLOWS FROM FINANCING ACTIVITIES
−Removed: Net (decrease) increase in deposits ( 27,688 ) 71,558
−Removed: Increase in short-term borrowings 10,000 —
−Removed: Increase in long-term borrowings 25,000 2,500
+Added: Net increase (decrease) in deposits 46,570 ( 27,688 )
+Added: Proceeds from short-term borrowings — 10,000
+Added: Repayment of short-term borrowings ( 10,000 ) —
+Added: Proceeds from long-term borrowings 5,527 25,000
Repayment of long-term borrowings — ( 3 )
Issuance of common stock 1,000 —
−Removed: Issuance of preferred stock — 4,000
Net cash provided by financing activities 43,097 7,309
−Removed: Net decrease in cash and cash equivalents ( 18,466 ) ( 14,573 )
+Added: Net increase (decrease) in cash and cash equivalents 16,473 ( 18,466 )
Cash and cash equivalents at beginning of period 42,552 61,018
41 unchanged sentences
All quarterly interest payments subsequent to the June 2021 payment up to and including the June 2024 payment have been made.
−Removed: The interest rate was 7.96 % and the total amount of deferred interest was $ 44 thousand at March 31, 2023.
−Removed: Carver may rely on dividends from Carver Federal to pay cash dividends to its stockholders and to engage in share repurchase programs.
+Added: The interest rate was 8.64 % and the accrued interest was $ 45 thousand at March 31, 2024.
+Added: While Carver has suspended its regular quarterly cash dividend on its common stock, in the future, Carver 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.
−Removed: Under the prior Formal Agreement, the OCC regulated all capital distributions, including dividend payments, by Carver Federal to Carver, and the FRB regulates dividends paid by Carver.
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 that, among other reasons, would result in Carver Federal’s failure to meet the OCC minimum capital requirements.
−Removed: Carver has suspended Carver’s regular quarterly cash dividend on its common stock.
−Removed: On October 23, 2015, the Board of Directors of the Company adopted 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.
On May 24, 2016, the Bank entered into a Formal Agreement ("the Agreement") with the OCC to undertake certain compliance-related and other actions.
1 unchanged sentence
§ 1828(k) and 12 C.F.R.
−Removed: As a result of the Formal Agreement, Carver was issued an Individual Minimum Capital Ratio ("IMCR") letter 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.
+Added: As a result of the Agreement, Carver was issued an Individual Minimum Capital Ratio ("IMCR") letter 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.
The Agreement was terminated on January 18, 2023.
14 unchanged sentences
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.
−Removed: Variable interest entities (“VIEs”) are consolidated, as required, when Carver has controlling financial interest in these entities and is deemed to be the primary beneficiary.
−Removed: Carver is normally deemed to have a controlling financial interest and be the primary beneficiary if it has both (a) the power to direct activities of a VIE that most significantly impact the entities economic performance;
+Added: The Company does not consolidate the accounts and related activity of Carver Statutory Trust I because it is not the primary beneficiary of the entity.
+Added: Variable interest entities (“VIEs”) are consolidated, as required, when Carver has a controlling financial interest in these entities and is deemed to be the primary beneficiary.
+Added: Carver is normally deemed to have a controlling financial interest and be the primary beneficiary if it has both (a) the power to direct activities of a VIE that most significantly impact the entity's 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.
2 unchanged sentences
In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated statement of financial condition and revenues and expenses for the period then ended.
−Removed: Amounts subject to significant estimates and assumptions are items such as the allowance for loan losses, realization of deferred tax assets, assessment of other-than-temporary impairment of securities, and the fair value of financial instruments.
−Removed: While management uses available information to recognize losses on loans, future additions to the allowance for loan losses or future write-downs of real estate owned may be necessary based on changes in economic conditions in the areas where Carver Federal has extended mortgages and other credit instruments.
+Added: Amounts subject to significant estimates and assumptions are items such as the allowance for credit losses, realization of deferred tax assets, and the fair value of financial instruments.
+Added: While management uses available information to recognize losses on loans, future additions to the allowance for credit loss or future writedowns of real estate owned may be necessary based on changes in economic conditions in the areas where Carver Federal has extended mortgages and other credit instruments.
Actual results could differ significantly from those assumptions.
Current market conditions increase the risk and complexity of the judgments in these estimates.
+Added: Certain comparative amounts for the prior period have been reclassified to conform to current period presentations.
+Added: Such reclassifications had no effect on net income or shareholders' equity.
Recent Events
The business climate continues to present significant challenges as banks continue to absorb heightened regulatory costs and compete for limited loan demand.
−Removed: Significant increases in food and energy prices resulted from swift increases in the rate of inflation.
−Removed: Additionally, the Federal Reserve has increased the federal funds rate at each of its meetings since March 2022, and while the rate was held steady at the most recent meeting in June 2023, it has indicated that it will likely increase again later this year.
+Added: Significant increases in food and energy prices resulted from swift increases in the
+Added: rate of inflation.
+Added: The Federal Reserve began increasing the federal funds rate at the March 2022 meeting, and is currently maintaining a target interest rate range between 5.25% and 5.5%.
For Carver, the economic climate of New York City (“the City”), in particular, impacts our business as the City lags behind the rest of New York State and the nation both in restoring pandemic job losses and in rebounding to pre-pandemic levels of unemployment.
The City's unemployment rate remains high at 4.9%, exceeding the national average, as employment in the arts and entertainment, food and hospitality sectors continue to remain below their pre-pandemic highs.
−Removed: In March 2023, the FDIC was appointed as receiver for Silicon Valley Bank and Signature Bank after they experienced runs on deposits and other liquidity constraints.
−Removed: At the time, Silicon Valley Bank and Signature Bank were the 16th and 29th largest banks in the United States, respectively, as measured by total assets as of December 31, 2022.
−Removed: Following the failures of Silicon Valley Bank and Signature Bank, on May 1, 2023, First Republic Bank was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver.
−Removed: The closures of those banks led to industry-wide concerns related to liquidity, deposit outflows, unrealized securities losses and eroding confidence in the banking system.
−Removed: In response to these recent developments, the Company took a number of preemptive actions, which included proactive outreach to clients and steps to maximize its funding sources.
+Added: The closure of five banks in 2023 led to industry-wide concerns related to liquidity, deposit outflows, unrealized securities losses and eroding confidence in the banking system from the general public.
+Added: In response to these developments, the Company took a number of preemptive actions, which included proactive outreach to clients and steps to maximize its funding sources.
As a result, the Company's liquidity position remains adequate.
1 unchanged sentence
The Company is closely monitoring its asset quality, liquidity, and capital positions, as well as the credit risk in its loan portfolio.
−Removed: Management is actively working to minimize the current and future impact of this unusual situation, and is continuing to make adjustments to operations where appropriate or necessary to mitigate risk.
+Added: Management is actively working to minimize the current and future impact of the current business and industry environment, and is continuing to make adjustments to operations where appropriate or necessary to mitigate risk.
However, these factors and events may have negative effects on the business, financial condition, and results of operations of the Company and its customers.
7 unchanged sentences
Securities held-to-maturity are carried at cost, adjusted for the amortization of premiums and the accretion of discounts using the level-yield method over the remaining period until maturity.
−Removed: If not classified as held-to-maturity or trading, securities are classified as available-for-sale based upon management's ability to sell in response to actual or anticipated changes in interest rates, resulting prepayment risk or any other factors.
+Added: The Bank's held-to-maturity portfolio consists of mortgage-backed securities that are either fully guaranteed or issued by a government sponsored enterprise, which has a credit rating and perceived credit risk comparable to the U.S.
+Added: As such, no allowance for credit losses was recorded on securities held-to-maturity as of March 31, 2024.
+Added: Securities are classified as available-for-sale based upon management's ability to sell in response to actual or anticipated changes in interest rates, resulting prepayment risk or any other factors.
Available-for-sale securities are reported at fair value.
1 unchanged sentence
If quoted or dealer prices are not available, fair value is estimated using quoted or dealer prices for similar securities.
−Removed: Securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and are reported at fair value with unrealized gains and losses included in earnings.
−Removed: The Company conducts periodic reviews to identify and evaluate each investment that has an unrealized holding loss.
+Added: The Bank conducts periodic reviews to identify and evaluate each investment that has an unrealized holding loss.
Unrealized holding gains or losses for securities available-for-sale are excluded from earnings and reported net of deferred income taxes in accumulated other comprehensive loss, a component of Stockholders' Equity.
−Removed: The amount of an other-than-temporary impairment when there are credit and non-credit losses on a debt security that management does not intend to sell, and for which it is more likely than not that the Bank will not be required to sell the security prior to the recovery of the non-credit impairment, the portion of the total impairment that is attributable to the credit loss would be recognized in earnings.
−Removed: The remaining difference between the debt security's amortized cost basis and its fair value would be included in other
−Removed: comprehensive income (loss).
−Removed: There were no other-than-temporary impairment charges recorded during the fiscal year ended March 31, 2023.
+Added: For available-for-sale securities in an unrealized loss position, management determines whether the Company has the intent to sell the security, or will more likely than not be required to sell the security before the recovery of its amortized cost basis.
+Added: If either of the criteria regarding intent or requirement to sell is met, the allowance for credit loss ("ACL") is written off and the amortized cost adjusted for that amount.
+Added: If any incremental credit loss occurs, the amortized cost is adjusted further by the credit loss and recorded in earnings.
+Added: For AFS securities that do not meet the above criteria, management evaluates whether the decline in fair value has resulted from credit losses or other factors.
+Added: In making this assessment, management may consider various factors including downgrades in the rating of the security by rating agencies, failure of the issuer to make scheduled interest or principal payments or adverse conditions specifically related to the security.
+Added: If the decline in fair value is due to credit loss, the credit loss is recorded through ACL, limited by the amount that the fair value is less than the amortized cost basis.
+Added: Losses related to non-credit related factors will be recorded in other comprehensive income.
+Added: Changes in the ACL are recorded as provision for (or reversal of) credit loss expense.
+Added: Losses are charged against the ACL when management believes the uncollectibility of an available-for-sale security is confirmed, or when either of the criteria regarding intent or requirement to sell is met.
Gains or losses on sales of securities of all classifications are recognized based on the specific identification method.
+Added: For periods prior to the Company's April 1, 2023 adoption of ASC 326, management conducted periodic reviews on at least a quarterly basis to evaluate securities for other-than-temporary impairment ("OTTI").
+Added: The amount of OTTI when there were credit and non-credit losses on a debt security that the Bank did not intend to sell, and was more likely than not would not be required to sell prior to the recovery of the non-credit impairment, the portion of the total impairment that was attributable to the credit loss was recognized in earnings.
+Added: The remaining difference between the debt security's amortized cost basis and its fair value would be included in other comprehensive income (loss).
+Added: There were no OTTI charges recorded during the fiscal year ended March 31, 2023.
+Added: Securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and are reported at fair value with unrealized gains and losses included in earnings.
Loans Held-for-Sale
1 unchanged sentence
Held-for-sale loans are carried at the lower of cost or fair value.
−Removed: The initial charge-off, if any is required, will be taken upon the transfer to held-for-sale and absorbed through Carver's loan loss reserve.
+Added: If a loan is transferred to held-for sale, any previously recorded allowance for credit loss is reversed into earnings and a valuation allowance would be recognized.
Subsequent changes in fair value are recognized in earnings as a valuation allowance.
2 unchanged sentences
Loans Receivable
−Removed: Loans receivable are carried at unpaid principal balances plus unamortized premiums, certain deferred direct loan origination costs and deferred loan origination fees and discounts, less the allowance for loan losses and charge-offs.
+Added: Loans receivable are carried at unpaid principal balances plus unamortized premiums, certain deferred direct loan origination costs and deferred loan origination fees and discounts, less the allowance for credit losses and charge-offs.
The Bank defers loan origination fees and certain direct loan origination costs and amortizes or accretes such amounts as an adjustment of yield over the contractual lives of the related loans using methodologies which approximate the interest method.
1 unchanged sentence
Loans are placed on nonaccrual status when they are past due 90 days or more as to contractual obligations or when other circumstances indicate that collection is not probable.
−Removed: When a loan is placed on nonaccrual status, any interest accrued but not received is reversed against interest income.
+Added: When a loan is placed on nonaccrual status, any accrued but uncollected interest is reversed from current interest income.
Payments received on a nonaccrual loan are either applied to protective advances, the outstanding principal balance or recorded as interest income, depending on an assessment of the ability to collect the loan.
A nonaccrual loan may be restored to accrual status when principal and interest payments have been brought current and the loan has performed in accordance with its contractual terms for a reasonable period (generally six months).
−Removed: If the Bank determines, after considering factors such as payment status and collateral value, that a loan is impaired, the Bank next determines the amount of the impairment.
−Removed: The amount of impairment on collateral dependent loans is charged off within the given fiscal quarter.
−Removed: Generally the amount of the loan and negative escrow in excess of the appraised value less estimated selling costs, for the fair value of collateral valuation method, is charged off.
−Removed: For all other loans, impairment is measured as described below in Allowance for Loan and Lease Losses.
−Removed: Allowance for Loan and Lease Losses ("ALLL")
−Removed: The adequacy of the Bank's ALLL is determined in accordance with ASC Subtopics 450-20 "Loss Contingencies" and 310-10 "Accounting by Creditors for Impairment of a Loan." Management reviews the Bank's loan portfolio to identify and review individual problem situations that may affect a borrower's ability to repay.
−Removed: In addition, management reviews the overall portfolio quality through an analysis of delinquency and non-performing loan data, estimates of the value of underlying collateral, current charge-offs and other factors that may affect the portfolio, including an assessment of current and expected economic conditions and changes in the size and composition of the loan portfolio.
−Removed: The ALLL reflects management's evaluation of the loans presenting identified loss potential, as well as the risk inherent in various components of the portfolio.
−Removed: There is significant judgment applied in estimating the ALLL.
−Removed: These assumptions and estimates are susceptible to significant changes based on the current environment.
−Removed: Further, any change in the size of the loan portfolio or any of its components could necessitate an increase in the ALLL even though there may not be a decline in credit quality or an increase in potential problem loans.
−Removed: The Bank utilizes an internal loan classification system as a means of reporting problem loans within its loan categories.
−Removed: 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.
−Removed: They represent a moderate credit risk and some degree of financial stability.
−Removed: Loans are considered collectible in full, but perhaps require greater than average amount of loan officer attention.
−Removed: Borrowers are capable of absorbing normal setbacks without failure.
−Removed: Loans rated Special Mention have potential weaknesses that deserve management's close attention.
−Removed: If left uncorrected,
−Removed: 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.
−Removed: Loans rated Substandard are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any.
−Removed: Assets so classified must have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt.
−Removed: They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.
−Removed: 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.
−Removed: Loans classified as Loss are those considered uncollectible with insignificant value and are charged off immediately to the allowance for loan losses.
−Removed: 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.
−Removed: All other one-to-four family residential loans and consumer and other loans are performing loans.
−Removed: General Reserve Allowance
−Removed: Carver's maintenance of a general reserve allowance includes the Bank's evaluation of the risk to potential loss on homogeneous pools of loans based upon historical loss factors and a review of nine different environmental factors that are then applied to each pool.
−Removed: The pools of loans (“Loan Type”) are:
−Removed: • One-to-four family
−Removed: • Multifamily
−Removed: • Commercial Real Estate
−Removed: • Business Loans
−Removed: • Consumer (including Overdraft Accounts)
−Removed: The Bank next applies to each pool a risk factor that determines the level of general reserves for that specific pool.
−Removed: The Bank estimates its historical charge-offs via a lookback analysis.
−Removed: The actual historical loss experience by major loan category is expressed as a percentage of the outstanding balance of all loans within the category.
−Removed: As the loss experience for a particular loan category increases or decreases, the level of reserves required for that particular loan category also increases or decreases.
−Removed: The Bank’s historical charge-off rate reflects the period over which the charge-offs were confirmed and recognized, not the period over which the earlier losses occurred.
−Removed: That is, the charge-off rate measures the confirmation of losses over a period that occurs after the earlier actual losses.
−Removed: During the period between the loss-causing events and the eventual confirmations of losses, conditions may have changed.
−Removed: There is always a time lag between the period over which average charge-off rates are calculated and the date of the financial statements.
−Removed: During that period, conditions may have changed.
−Removed: Another factor influencing the General Reserve is the Bank’s loss emergence period ("LEP") assumptions which represent the Bank’s estimate of the average amount of time from the point at which a loss is incurred to the point at which the loss is confirmed, either through the identification of the loss or a charge-off.
−Removed: Based upon adequate management information systems and effective methodologies for estimating losses, management has established a LEP floor of one year on all pools.
−Removed: In some pools, such as Commercial Real Estate, Multifamily and Business pools, the Bank demonstrates a LEP in excess of 12 months.
−Removed: Because actual loss experience may not adequately predict the level of losses inherent in a portfolio, the Bank reviews nine qualitative factors to determine if reserves should be adjusted based upon any of those factors.
−Removed: As the risk ratings worsen, some of the qualitative factors tend to increase.
−Removed: The nine qualitative factors the Bank considers and may utilize are:
−Removed: Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses ( Policy & Procedures ).
−Removed: Changes in relevant economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments ( Economy ).
−Removed: Changes in the nature or volume of the loan portfolio and in the terms of loans ( Nature & Volume ).
−Removed: Changes in the experience, ability, and depth of lending management and other relevant staff ( Management ).
−Removed: Changes in the volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified loans ( Problem Assets ).
−Removed: Changes in the quality of the loan review system ( Loan Review ).
−Removed: Changes in the value of underlying collateral for collateral dependent loans ( Collateral Values ).
−Removed: The existence and effect of any concentrations of credit and changes in the level of such concentrations ( Concentrations ).
−Removed: The effect of other external forces such as competition and legal and regulatory requirements on the level of estimated credit losses in the existing portfolio ( External Forces ).
−Removed: The following discussion describes the general risks associated with the Bank’s lending activities:
−Removed: • One-to-four family - Carver Federal purchases first mortgage loans secured by one-to-four family properties that serve as the primary residence of the owner.
+Added: Allowance for Credit Losses ("ACL")
+Added: For periods prior to the Company's April 1, 2023 adoption of ASC 326, the Bank utilized an impairment model based on incurred losses in estimating the allowance for loan and lease losses ("ALLL").
+Added: Under this approach, the Bank maintained a general reserve allowance for homogeneous pools of loans based upon historical loss factors and applied a risk factor to each pool that determined the level of general reserves for that specific pool and the Bank's loss emergence period ("LEP") assumptions, which represented the Bank's estimate of the average amount of time from the point at which a loss is incurred to the point at which the loss is confirmed.
+Added: Because actual loss experience may not adequately predict the level of losses inherent in a portfolio, the Bank reviewed qualitative factors to determine if reserves should be adjusted based upon any of those factors.
+Added: Carver also maintained a specific reserve allowance for criticized and classified loans individually reviewed for impairment.
+Added: The amount assigned to the specific reserve allowance was individually determined based upon (1) the present value of expected future cash flows discounted at the loan's effective interest rate, (2) the loan's observable market price, or (3) the fair value of the collateral if the loan was collateral dependent.
+Added: The ALLL was replaced by the ACL upon adoption of the current expected credit loss model ("CECL") under ASC 326.
+Added: The ACL is a valuation account that is deducted from the loan portfolio's amortized cost basis to present the net amount expected to be collected on the loans.
+Added: Additions to the allowance are recognized through the provision for credit losses.
+Added: Loan losses are charged off against the allowance when management believes a loan balance is deemed as uncollectible.
+Added: Management continues its collection efforts on previously charged-off balances and applies recoveries as additions to the ACL.
+Added: The measurement of expected credit losses is based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount and a reversion to historical after the reasonable and supportable period.
+Added: Expected credit losses were estimated using a regression model based on historical data from the Company and peer institutions.
+Added: Adjustments to modeled loss estimates may be made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level or term, as well as for changes in environmental conditions, such as changes in economic conditions, property values or other relevant factors.
+Added: The discounted cash flow ("DCF") methodology is used for substantially all pools, applied with a 4-quarter reasonable and supportable forecast period and the loss rate reverts back to the long-term historical loss average with a 12-quarter straight-line reversion period where the ACL reflects the difference between the amortized cost and the present value of the expected cash flows (including prepayments and defaults).
+Added: The expected cash flows are discounted at the effective interest rate and the entire change in present value is reported as a provision for credit loss (or reversal of credit loss).
+Added: On a quarterly basis, management considers probability of default utilizing economic forecasts including civilian unemployment rates and CPI index, and loss given default assumptions using Frye-Jacobs estimations.
+Added: The Company has elected to exclude accrued interest from the amortized cost basis in determining credit losses.
+Added: Accrued interest receivable on loans is included in a separate line item on the Consolidated Statements of Financial Condition.
+Added: Accrual of interest on loans is discontinued when the payment of principal or interest is considered to be in doubt, or when a loan becomes contractually past due by 90 days or more with respect to principal or interest, except for loans that are well-secured and in the process of collection.
+Added: When a loan is placed on nonaccrual status, any accrued but uncollected interest is reversed from current income.
+Added: Interest income on nonaccrual loans is recorded when received based upon the collectability of the loan.
+Added: Expected credit losses are measured on a collective pool basis when similar risk characteristics exist.
+Added: Loans with similar risk characteristics are grouped into homogeneous segments, or pools, for allowance calculation.
+Added: The following discussion describes the general risks associated with the Bank's loan portfolio segments:
+Added: • One-to-four Family - Carver Federal purchases first mortgage loans secured by one-to-four family properties that serve as the primary residence of the owner and non-qualified mortgages for one-to-four family residential loans.
The loans are underwritten in accordance with applicable secondary market underwriting guidelines and requirements for sale.
These loans present a moderate level of risk due primarily to general economic conditions.
−Removed: During fiscal year 2021, the Bank also started purchasing non-qualified mortgages for one-to-four family residential loans.
−Removed: The Bank has approved guidelines for these loans.
• Multifamily - Carver Federal originates and purchases recourse and non-recourse multifamily loans.
−Removed: These loans can be affected by economic conditions and the value of the underlying properties.
+Added: The Bank generally requires a debt service coverage ratio at origination of at least 1.30x, and that the maximum loan-to-value ("LTV") at origination not exceed 70% based on the appraised value of the mortgaged property.
+Added: Multifamily property lending entails additional risks compared to one-to-four family lending.
+Added: These loans are dependent on the successful operation of such buildings and can be significantly impacted by economic conditions, industry concentration, valuation of the underlying properties, lease terms, occupancy/vacancy rates, and changes in market demand for multifamily units.
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 owner/guarantor.
−Removed: • Commercial - Commercial real estate ("CRE") lending consists predominantly of originating loans for the purpose of purchasing or refinancing office, mixed-use properties, retail and church buildings in the Bank's market area.
+Added: • Commercial Real Estate ("CRE") - CRE lending consists predominantly of originating loans for the purpose of purchasing or refinancing office, mixed-use properties, retail and church buildings in the Bank's market area.
Mixed-use loans are secured by properties that are intended for both commercial and residential use, but predominantly commercial, and are classified as CRE.
−Removed: 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 owner/guarantor.
+Added: 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 owner/guarantor.
+Added: The maximum LTV ratio on CRE loans at origination is generally 70% based on the latest appraised fair market value of the mortgaged property and the Bank generally requires a debt service coverage ratio at origination of at least 1.30x.
The Bank also requires the assignment of rents of all tenants' leases in the mortgaged property and personal guarantees may be obtained for additional security from these borrowers.
CRE loans generally present a higher level of risk than other types of loans due primarily to the effect of general economic conditions and the complexities involved in valuing the underlying collateral.
−Removed: • Business - The Bank originates and purchases business and SBA loans primarily to businesses located in its primary market area and surrounding areas.
+Added: • Construction - Carver Federal historically originated or participated in construction loans for new construction and renovation of multifamily buildings, residential developments, community service facilities, churches, and affordable housing programs.
+Added: The loans provide for disbursement in stages as construction is completed.
+Added: Borrowers must satisfy
+Added: all credit requirements that apply to the Bank’s permanent mortgage loan financing for the mortgaged property.
+Added: The Bank has additional criteria for construction loans, including an engineer’s plan and periodic cost reviews on all construction budgets for loans.
+Added: Construction loans present an increased level of risk from the effect of general economic conditions and uncertainties surrounding construction costs.
+Added: • Business - Carver Federal originates and purchases business and SBA loans primarily to businesses located in its primary market area and surrounding areas.
Business loans are typically personally guaranteed by the owners and may also be secured by additional collateral, including real estate, equipment and inventory.
−Removed: Business loans are also subject to increased risk from the effect of general economic conditions.
+Added: Business loans are subject to increased risk from the effect of general economic conditions.
SBA loans are guaranteed by the U.S.
government based on the percentage of each individual program.
−Removed: • Consumer - The Consumer portfolio includes student loans to medical students enrolled in several Caribbean schools, as well as unsecured consumer loans purchased from or originated through strategic partnerships with Bankers Healthcare Group, LLC and Upstart Holdings, Inc..
−Removed: Specific Reserve Allowance
−Removed: Carver also maintains a specific reserve allowance for criticized and classified loans individually reviewed for impairment.
−Removed: The amount assigned to the specific reserve allowance is individually determined based upon the loan.
−Removed: Carver uses one of three methods to estimate the amount to be reserved and/or charged off for such credits.
−Removed: The three methods are as follows:
−Removed: The present value of expected future cash flows discounted at the loan's effective interest rate;
−Removed: The loan's observable market price;
−Removed: The fair value of the collateral if the loan is collateral dependent.
−Removed: The Bank may choose the appropriate method on a loan-by-loan basis for an individually impaired loan, except for an impaired collateral dependent loan.
−Removed: Impairment of a collateral dependent loan is measured using the fair value of collateral method.
−Removed: A loan is considered "collateral dependent" when the repayment of the debt will be provided solely by the underlying collateral, and there are no other available and reliable sources of repayment.
−Removed: All substandard and doubtful loans and any other loans that the Chief Credit Officer deems appropriate for review, are identified and reviewed for individual evaluation for impairment.
−Removed: Carver also performs impairment analysis for all troubled debt restructurings (“TDRs”).
−Removed: All TDRs are classified as impaired.
−Removed: For non-TDRs, if it is determined that it is probable the Bank will be unable to collect all amounts due according with the contractual terms of the loan agreement, the loan is categorized as impaired.
−Removed: Loans determined to be impaired are evaluated to determine the amount of impairment based on one of the three measurement methods noted above.
−Removed: In accordance with guidance, if there is no impairment amount, no reserve is established for the loan.
−Removed: An unallocated loan loss allowance is appropriate when it reflects an estimate of probable loss, determined in accordance with GAAP, and is properly supported.
−Removed: Troubled Debt Restructured Loans
−Removed: TDRs are those loans where the borrower is experiencing financial difficulty and a concession is made.
−Removed: A concession could include extension of the terms of the loan, reduced interest rates, capitalization of interest, a significant delay in payment terms and forgiveness of accrued interest and/or principal.
−Removed: Once an obligation has been restructured because of such credit problems, it continues to be considered a TDR until paid in full.
−Removed: For a collateral dependent loan, the Bank records an impairment charge when the current estimated fair value (less estimated costs of disposal) of the property that collateralizes the impaired loan, if any, is less than the recorded investment in the loan.
−Removed: For all other TDRs, the Bank records a specific valuation allowance reserve equal to the difference between the present value of estimated future cash flows under the restructured terms discounted at the loan's original effective interest rate, and the loan's recorded investment.
−Removed: TDR loans remain on nonaccrual status until they have performed in accordance with the restructured terms for a period of at least six months.
+Added: • Consumer (including Overdraft accounts) - The Consumer portfolio includes student loans to medical students enrolled in several medical schools throughout the United States and Caribbean, as well as unsecured consumer loans purchased from or originated through strategic partnerships with Bankers Healthcare Group, LLC and Upstart Holdings, Inc.
+Added: Consumer loans are typically unsecured and more susceptible to declining economic conditions.
+Added: Because expected loss predictions may not adequately project the level of losses inherent in a portfolio, the Bank reviews a number of qualitative factors on a quarterly basis to determine if reserves should be adjusted based upon any of those factors.
+Added: As the risk ratings deteriorate, some of the qualitative factors tend to increase.
+Added: A number of qualitative factors are considered including economic forecast uncertainty, credit quality trends, valuation trends, concentration risk, quality of loan review, changes in personnel, impact of rising rates, external factors and other considerations.
+Added: Although the quantitative calculation includes a measurement of statistical economic conditions based on national averages, an additional analysis is performed at the qualitative level that applies specifically to the Company's geographic area and the banking industry that includes reasonable and supportable forecasts.
Representation and Warranty Reserve
15 unchanged sentences
Accordingly, the ultimate collectability of a substantial portion of the Company's loan portfolio is susceptible to changes in New York's real estate market conditions.
−Removed: Qualitative factors in the ALLL calculation considers the Bank's concentration risk.
+Added: Qualitative factors in the ACL calculation considers the Bank's concentration risk.
Premises and Equipment
14 unchanged sentences
Such shares are redeemed by FHLB-NY at par with reductions in the Bank's borrowing levels.
−Removed: FHLB stock does not have a readily determinable fair value and we do not consider these shares to be other-than-temporarily impaired at March 31, 2023.
+Added: FHLB stock does not have a readily determinable fair value and we do not consider these shares to be impaired at March 31, 2024 and 2023.
The Bank carries this investment at historical cost.
1 unchanged sentence
All separately recognized servicing assets totaled $ 140 thousand and $ 152 thousand, respectively, at March 31, 2024 and 2023, and are included in Other Assets in the consolidated statements of financial condition and measured at fair value.
−Removed: Changes in fair value is included in Non-Interest Income in the consolidated statements of operations.
+Added: Changes in fair value are included in Non-Interest Income in the consolidated statements of operations.
Servicing fee income of $ 44 thousand and $ 41 thousand, respectively, was recognized during the years ended March 31, 2024 and 2023, and is included in Non-Interest Income in the consolidated statements of operations.
Other Real Estate Owned
−Removed: Real estate acquired by foreclosure or deed-in-lieu of foreclosure is recorded at fair value at the date of acquisition less estimated selling costs.
+Added: Real estate acquired by foreclosure or deed-in-lieu of foreclosure is recorded at fair value, less estimated selling costs, at the date of acquisition.
Any subsequent adjustments will be to the lower of cost or fair value and included in Non-Interest Expense in the consolidated statements of operations.
13 unchanged sentences
This valuation allowance would subsequently be adjusted by a charge or credit to income tax expense as changes in facts and circumstances warrant.
−Removed: A tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur.
+Added: A tax position is recognized as a benefit only if it is "more likely
+Added: than not" that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur.
The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination.
4 unchanged sentences
Basic earnings (loss) per share (“EPS”) is computed using the two class method.
−Removed: This calculation divides net income (loss) available to common stockholders after the allocation of undistributed
−Removed: earnings to the participating securities by the weighted average number of shares of common stock outstanding during the period.
+Added: This calculation divides net income (loss) available to common stockholders after the allocation of undistributed earnings to the participating securities by the weighted average number of shares of common stock outstanding during the period.
Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock.
13 unchanged sentences
The Black-Scholes model is used to estimate the fair value of stock options, while the market price of the Company's common stock at the date of grant is used for restricted stock awards.
−Removed: Off-Balance Sheet Financial Instruments
+Added: Reserve for Off-Balance Sheet Credit Exposure
In the ordinary course of business, the Bank has entered into off-balance sheet financial instruments consisting of commitments to extend credit and letters of credit.
Such financial instruments are recorded in the consolidated statements of condition when they are funded.
−Removed: Reserves for unfunded lending commitments are included in Other Liabilities in the consolidated statements of financial condition.
+Added: The Company estimates a reserve for expected credit losses on loan commitments over the contractual period in which it is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company.
+Added: The Bank does not record any reserve for unconditionally cancellable unfunded lending commitment since the exposure may be canceled to prevent future credit loss.
+Added: Reserves for unfunded lending commitments that are not unconditionally cancellable are included in Other Liabilities in the consolidated statements of financial condition and Non-Interest Expense in the consolidated statements of operations.
+Added: Management will consider the likelihood that funding will occur and use the discount rate based on the associated pooled loan analysis loss rate to calculate the estimated expected credit losses.
+Added: The Company recorded a provision for credit loss for off-balance sheet credit exposures of $ 1 thousand for the fiscal year ended March 31, 2024, The ACL on off-balance sheet credit exposures was $ 9 thousand as of March 31, 2024.
Designated as a Community Development Financial Institution ("CDFI") by the U.S.
7 unchanged sentences
Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.
+Added: If the criteria for sales accounting is not met, the Company will continue to recognize the financial asset and recognize an associated secured borrowing.
Recent Accounting Standards
Accounting Standards Recently Adopted
+Added: On April 1, 2023, the Company adopted ASC 326, which replaces the guidance on recognition and measurement of credit losses for financial assets.
+Added: The new requirements, known as the current expected credit loss model ("CECL") will require entities to adopt an impairment model based on expected losses rather than incurred losses.
+Added: Under the CECL model, the allowance for credit losses ("ACL") is a valuation allowance tat is deducted from the amortized cost basis of certain financial assets, including loans, held-to-maturity securities, and other receivables, to present the net carrying value at the amount expected to be collected.
+Added: The measurement of expected credit losses is based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount.
+Added: This differs from the incurred loss model, which delays recognition of credit losses until it is probable a loss has been incurred.
+Added: The Company applied the new guidance with a cumulative-effect adjustment to retained earnings as of April 1, 2023, using the modified-retrospective approach.
+Added: Results for reporting periods beginning after April 1, 2023 are presented under CECL.
+Added: Prior period amounts have not been restated and are reported in accordance with the incurred loss method.
+Added: The adoption of ASC 326 resulted in an increase of $0.7 million to the allowance for credit losses related to loans and to the opening balance of accumulated deficit for the year ended March 31, 2024.
+Added: There was no material impact for other assets within the scope of the new CECL guidance, such as held-to-maturity debt securities and other receivables.
On April 1, 2023, the Company adopted ASU No.
−Removed: 2019-12 "Income Taxes (Topic 740):
−Removed: Simplifying the Accounting for Income Taxes," which was part of the FASB's simplification initiative to reduce complexity, while maintaining or improving the usefulness of information provided to users of financial statements.
−Removed: The amendments in this update simplified the accounting for income taxes and improved consistent application of GAAP by removing certain exceptions and clarifying
−Removed: and amending existing guidance for areas of Topic 740.
−Removed: The adoption of the standard did not have a material impact on the Company's financial statements.
−Removed: In November 2021, the FASB issued ASU No.
+Added: 2022-02, "Financial Instruments - Credit Losses (ASC 326):
+Added: Troubled Debt Restructurings (TDRs) and Vintage Disclosures," which eliminates the accounting guidance for TDRs, and replaced it with guidance and disclosure requirements for certain loan refinancing and restructuring activities to borrowers experiencing financial difficulty.
+Added: The amendments also require disclosure of current period gross writeoffs by year of origination.
+Added: The adoption of the standard did not have a material impact on the Company's consolidated statements of financial condition and results of operations.
+Added: On April 1, 2023, the Company adopted ASU No.
2021-10 "Government Assistance (Topic 832):
−Removed: Disclosures by Business Entities about Government Assistance," to improve the financial reporting of government assistance received by business entities by requiring the disclosure of (1) the types of assistance received, (2) an entity’s accounting for the assistance, and (3) the effect of the assistance on an entity’s financial statements.
−Removed: ASU 2021-10 is effective for all entities for financial statements issued for annual periods beginning after December 15, 2021 (for the Company, the fiscal year ending March 31, 2023).
−Removed: Early application of the guidance is permitted.
−Removed: The adoption of the standard did not have a material impact on the Company's financial statements.
+Added: Disclosures by Business Entities about Government Assistance," which was issued to improve the financial reporting of government assistance received by business entities by requiring the disclosure of (1) the types of assistance received, (2) an entity’s accounting for the assistance, and (3) the effect of the assistance on an entity’s financial statements.
+Added: The adoption of the standard did not have a material impact on the Company's consolidated statements of financial condition and results of operations.
Accounting Standards Not Yet Adopted
−Removed: In June 2016, the FASB issued ASU No.
−Removed: 2016-13, "Financial Instruments - Credit Loss," which replaces the guidance on recognition and measurement of credit losses for financial assets.
−Removed: The new requirements, known as the current expected credit loss model ("CECL") will require entities to adopt an impairment model based on expected losses rather than incurred losses.
−Removed: 2016-13 is effective for fiscal years beginning after December 15, 2019 (for the Company, the fiscal year ending March 31, 2021), including interim periods within those fiscal years.
−Removed: In May 2019, the FASB issued ASU No.
−Removed: 2019-05, "Financial Instruments - Credit Losses (Topic 326):
−Removed: Target Transition Relief," to provide transition relief by giving entities an option to irrevocably elect the fair value option for certain financial assets measured at amortized cost upon adoption of ASU 2016-13.
−Removed: In November 2019, the FASB issued ASU No.
−Removed: 2019-10, which extended the CECL implementation date for smaller reporting companies, as defined by the SEC.
−Removed: The new effective date is for fiscal years beginning after December 15, 2022 (for the Company, the fiscal year ending March 31, 2024), including interim periods within those fiscal years.
+Added: In December 2023, the FASB issued ASU No.
+Added: 2023-09 "Income Taxes (Topic 740):
+Added: Improvements to Income Tax Disclosures" to enhance income tax disclosures to help investors better assess how a company's operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows.
+Added: The amendments in this update will require further disaggregated information about a reporting entity's effective tax rate reconciliation and information on income taxes paid.
+Added: 2023-09 is effective for fiscal years beginning after December 15, 2024 (for the Company, the fiscal year ending March 31, 2026), and interim periods within those fiscal years.
+Added: Early adoption is permitted.
+Added: The amendments in this update should be applied on a prospective basis with an option for retrospective application.
+Added: ASU 2023-09 is not expected to have a material impact on the Company's financial statements.
In November 2023, the FASB issued ASU No.
−Removed: 2019-11, "Codification Improvements to Topic 326, Financial Instruments - Credit Losses," to amend or clarify guidance regarding expected recoveries for purchased financial assets with credit deterioration, transition relief for troubled debt restructurings, disclosures related to accrued interest receivables, and financial assets secured by collateral maintenance provisions.
−Removed: The Company has conducted testing of the ASU 2016-13 method utilizing historical financial analysis and has engaged a vendor as an additional resource to examine and reaffirm the models as it relates to the implementation of the new methodology utilizing the current expected credit loss model, which will replace our current incurred loss approach.
−Removed: Based on the Company's current CECL model results that it has performed alongside the current process, the adoption of the new guidance will result in an increase of approximately $0.7 million to the allowance for credit loss, including the reserve for off-balance sheet credit exposure recorded in other liabilities.
−Removed: There is no material impact for other assets within the scope of the new CECL guidance, such as held-to-maturity debt securities and other receivables.
−Removed: The Company will adopt ASU 2016-13 effective April 1, 2023.
−Removed: As the Company finalizes the CECL implementation, final decisions made by management may result in a different impact than that stated above for financial statement disclosure purposes.
−Removed: In March 2022, the FASB issued ASU No.
−Removed: 2022-02, "Financial Instruments - Credit Losses (ASC 326):
−Removed: Troubled Debt Restructurings (TDRs) and Vintage Disclosures," which eliminates the accounting guidance for TDRs by creditors, while enhancing disclosure requirements for certain loan refinancing and restructuring activities by creditors when a borrower is experiencing financial difficulty.
−Removed: The amendments also require disclosure of current period gross writeoffs by year of origination.
−Removed: The effective dates for the amendments in ASU 2022-02 are the same as the effective dates in ASU 2016-13.
−Removed: The Company does not expect the adoption of this ASU to have a material impact on the consolidated financial statements.
+Added: 2023-07 "Segment Report (Topic 280):
+Added: Improvements to Reportable Segment Disclosures" to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.
+Added: 2023-07 is effective for fiscal years beginning after December 15, 2023 (for the
+Added: Company, the fiscal year ending March 31, 2025), and interim periods within fiscal years beginning after December 15, 2024.
+Added: Early adoption is permitted.
+Added: The amendments in this update should be applied retrospectively to all prior periods presented in the financial statements.
+Added: Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption.
+Added: The Company does not expect the adoption of this ASU to have a material impact on the Company's financial statements.
In March 2020, the FASB issued ASU No.
7 unchanged sentences
2022-06 "Reference Rate Reform (Topic 848):
−Removed: Deferral of the Sunset Date of Topic 848," which defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply for
−Removed: relief in Topic 848.
+Added: Deferral of the Sunset Date of Topic 848," which defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply for relief in Topic 848.
We anticipate this ASU will simplify any modifications we execute between the selected start date (yet to be determined) and December 31, 2024 that are directly related to LIBOR transition by allowing prospective recognition of the continuation of the contract, rather than extinguishment of the old contract resulting in writing off unamortized fees/costs.
−Removed: The Company is evaluating the impacts of this ASU and has not yet determined whether LIBOR transition and this ASU will have a material impact on the Company's consolidated statements of financial condition and results of operations.
+Added: The amended guidance under Topic 848 and our ability to elect its optional expedients and exceptions are effective for us through December 31, 2024.
+Added: The Company has adopted the LIBOR transition relief allowed under this standard.
INVESTMENT SECURITIES
−Removed: The Bank utilizes mortgage-backed and other investment securities in its asset/liability management strategy.
−Removed: In making investment decisions, the Bank considers, among other things, its yield and interest rate objectives, its interest rate and credit risk position, and its liquidity and cash flow.
Generally, the investment policy of the Bank is to invest funds among categories of investments and maturities based upon the Bank’s asset/liability management policies, investment quality, loan and deposit volume and collateral requirements, liquidity needs and performance objectives.
3 unchanged sentences
The Bank had no securities classified as trading at March 31, 2024 and March 31, 2023.
−Removed: Other investments as of March 31, 2023 primarily consists of the Bank's investment in a limited partnership Community Capital Fund and a $ 5.1 million bank-owned life insurance policy ("BOLI") that was purchased during the first quarter of fiscal year 2023 as a channel to add to the Company's non-interest income revenue by means of an investment considered safe and sound by the Company's regulators.
−Removed: The investment in the limited partnership is measured using the equity method.
+Added: Other investments as of March 31, 2024 primarily consists of the Company and Bank's investments in limited partnership Community Capital Funds and a $ 5.3 million bank-owned life insurance policy ("BOLI") that was purchased during the first quarter of fiscal year 2023 as a channel to add to the Company's non-interest income revenue by means of an investment considered safe and sound by the Company's regulators.
+Added: The investments in the limited partnerships are measured using the equity method.
The BOLI is carried at the cash surrender value of the underlying policies.
−Removed: Income generated from the investment and the increase in the cash surrender value of the BOLI is included in other non-interest income on the Statements of Operations.
+Added: Income generated from the investments and the increase in the cash surrender value of the BOLI is included in other non-interest income on the Statements of Operations.
Other investments totaled $ 6.9 million at March 31, 2024 and are included in Other Assets on the Statements of Financial Condition.
30 unchanged sentences
Muni Securities 17,719 — ( 3,737 ) 13,982
−Removed: Asset-backed Securities 347 — 4 343
Total available-for-sale $ 66,058 $ 1 $ ( 12,216 ) $ 53,843
8 unchanged sentences
Based on the high quality of the Bank's investment portfolio, current market conditions have not significantly impacted the pricing of the portfolio or the Bank's ability to obtain reliable prices.
−Removed: At March 31, 2023, the Bank pledged mortgage-backed and asset-backed securities of $ 2.5 million as collateral for advances from the FHLB-NY.
+Added: At March 31, 2024, the Bank pledged mortgage-backed securities of $ 0.3 million and $ 2.2 million as collateral for public funds deposits and advances from the FHLB-NY, respectively.
The following tables set forth the unrealized losses and fair value of securities in an unrealized loss position at March 31, 2024 and March 31, 2023 for less than 12 months and 12 months or longer:
23 unchanged sentences
Muni securities — — ( 3,737 ) 13,982 ( 3,737 ) 13,982
−Removed: Asset-backed securities 4 343 — — 4 343
Total available-for-sale securities $ ( 13 ) $ 4,075 $ ( 12,203 ) $ 49,471 $ ( 12,216 ) $ 53,546
2 unchanged sentences
Total held-to-maturity securities $ ( 3 ) $ 363 $ ( 94 ) $ 1,822 $ ( 97 ) $ 2,185
−Removed: A total of 24 securities had an unrealized loss at March 31, 2023, compared to 23 at March 31, 2022.
+Added: A total of 24 securities had an unrealized loss at March 31, 2024 and March 31, 2023.
Mortgage-backed securities, U.S.
2 unchanged sentences
government agency securities, one corporate bond and six municipal securities that had an unrealized loss position for more than 12 months at March 31, 2024.
−Removed: The cause of the temporary impairment is directly related to changes in interest rates.
−Removed: In general, as interest rates decline, the fair value of securities will rise, and conversely as interest rates rise, the fair value of securities will decline.
−Removed: Management considers fluctuations in fair value as a result of interest rate changes to be temporary, which is consistent with the Bank's experience.
−Removed: The impairments are deemed temporary based on the direct relationship of the change in fair value to movements in interest rates, the life of the investments and their high credit quality.
−Removed: Given the high credit quality of the mortgage-backed securities which are backed by the U.S.
−Removed: government's guarantees, the high credit quality and strong financial performance of the U.S.
+Added: Management has evaluated available-for-sale securities that are in an unrealized loss position and determined that the declines in fair value are attributable to market volatility, and not credit quality or other factors.
+Added: Given the high credit quality of the mortgage-backed securities which are backed by explicit U.S.
+Added: government guarantees, or guarantees by government sponsored enterprises that have credit ratings and perceived credit risk comparable to the U.S.
+Added: government, the high credit quality and strong financial performance of the U.S.
government agency and the results of the individual analyses performed for and continuous surveillance on the municipal securities, as well as the corporate security that is a reputable institution in good financial standing, the risk of credit loss is minimal.
−Removed: Management believes that these unrealized losses are a direct result of the current rate environment and the Company has the ability and intent to hold the securities until maturity or the valuation recovers.
−Removed: The Bank did not have any securities that were classified as having other-than-temporary impairment in its investment portfolio at March 31, 2023.
+Added: Management believes that these unrealized losses are a direct result of the current rate environment and the Company has the ability and intent to hold the securities until maturity or the valuations recover.
+Added: The Bank's held-to-maturity portfolio consists of mortgage-backed securities that are either fully guaranteed or issued by a government sponsored enterprise, which has a credit rating and perceived credit risk comparable to the U.S.
+Added: As such, no allowance for credit losses on securities available-for-sale or held-to-maturity have been established as of March 31, 2024.
The following is a summary of the amortized cost and fair value of debt securities at March 31, 2024, by remaining period to contractual maturity (ignoring earlier call dates, if any).
4 unchanged sentences
Available-for-Sale:
+Added: One through five years 1,850 1,838 6.50 %
Five through ten years 4,684 3,961 2.44 %
4 unchanged sentences
Mortgage-backed securities $ 2,008 $ 1,905 2.82 %
−Removed: LOANS RECEIVABLE, NET
−Removed: The following is a summary of loans receivable, net of allowance for loan losses at March 31:
+Added: LOANS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES
+Added: The following is a summary of loans receivable, net of allowance for credit losses at March 31:
March 31, 2024
1 unchanged sentence
$ in thousands Amount % Amount %
−Removed: Gross loans receivable:
One-to-four family $ 82,787 13.3 % $ 65,808 11.0 %
1 unchanged sentence
Commercial real estate 175,384 28.2 % 178,424 29.8 %
+Added: Construction 2,203 0.4 % — — %
169,602 27.2 % 166,908 27.9 %
1 unchanged sentence
Total loans receivable 622,878 100.0 % 597,896 100.0 %
−Removed: Unamortized premiums, deferred costs and fees, net 2,763 3,017
−Removed: Allowance for loan losses ( 5,229 ) ( 5,624 )
+Added: Allowance for credit losses ( 5,871 ) ( 5,229 )
Total loans receivable, net $ 617,007 $ 592,667
1 unchanged sentence
(2) Includes consumer overdrafts of $ 15 thousand and $ 19 thousand as of March 31, 2024 and 2023, respectively
−Removed: During fiscal year 2023, the Bank purchased $ 14.3 million loans at par, comprised of $ 4.0 million one-to-four family, $ 5.8 million commercial real estate, $ 613 thousand business and $ 3.9 million consumer loans.
−Removed: The Bank purchased $ 50.1 million loans at par during fiscal year 2022, 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.
+Added: The totals above are shown net of deferred loan fees and costs.
+Added: Net deferred loan fees totaled $2.9 million and $2.8 million at March 31, 2024 and 2023, respectively.
+Added: During fiscal year 2024, the Bank purchased $ 31.5 million loans at par, comprised of $ 20.0 million one-to-four family, $0.2 million business and $ 11.3 million consumer loans.
+Added: The Bank purchased $ 14.3 million loans at par during fiscal year 2023, 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.
Substantially all of the Bank's real estate loans receivable are principally secured by properties located in New York City.
6 unchanged sentences
Under the PPP, small businesses and other entities and individuals could apply for loans from existing SBA lenders and other approved regulated lenders that enroll in the program, subject to numerous limitations and eligibility criteria.
−Removed: Since the PPP loans are fully guaranteed by the SBA, there are no additional ALLL reserves required.
+Added: Since the PPP loans are fully guaranteed by the SBA, there are no additional ACL reserves required.
As of March 31, 2024, the Bank had approved and funded approximately 420 applications totaling $ 57.1 million of loans under the PPP.
3 unchanged sentences
As the loans are paid off, the remaining net deferred origination fees are accelerated into income.
−Removed: Consistent with regulatory guidance and the provisions of the CARES Act, loans less than 30 days past due at December 31, 2019 that were granted COVID-19 related payment deferrals continued to be considered current and not reported as TDRs.
−Removed: For the fiscal year ended March 31, 2021, the Bank received 83 applications for payment deferrals on approximately $ 90.4 million of loans.
−Removed: The Bank has been working with the borrowers to determine if there is a risk of any losses associated with repayment and if any additional reserves would have to be allocated to this portfolio.
−Removed: At March 31, 2023, no loans were on COVID-related deferrals as the remaining 90-day loan deferments expired and borrowers became current.
−Removed: 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, 2023:
−Removed: $ in thousands One-to-four family Multifamily Commercial Real Estate Business Consumer Unallocated Total
−Removed: Allowance for loan losses:
+Added: The following is an analysis of the allowance for credit losses based upon the method of evaluating loan reserves for the fiscal year ended March 31, 2024 under the expected loss methodology:
+Added: $ in thousands One-to-four family Multifamily Commercial Real Estate Construction Business Consumer Unallocated Total
+Added: Allowance for credit losses:
Beginning Balance $ 716 $ 1,109 $ 1,814 $ — $ 1,139 $ 449 $ 2 $ 5,229
+Added: Impact of CECL adoption 1,220 ( 392 ) ( 497 ) 505 ( 166 ) ( 2 ) 668
Charge-offs — — — — ( 10 ) ( 160 ) — ( 170 )
Recoveries — — — — 55 6 — 61
−Removed: Provision for (Recovery of) Loan Losses ( 105 ) ( 5 ) 1,233 ( 1,485 ) 462 — 100
+Added: Provision for (Recovery of) Credit Losses 69 3 ( 95 ) 1 ( 274 ) 321 58 83
Ending Balance $ 2,005 $ 720 $ 1,222 $ 1 $ 1,415 $ 450 $ 58 $ 5,871
−Removed: Allowance for Loan Losses Ending Balance:
+Added: Allowance for Credit Losses Ending Balance:
collectively evaluated for impairment $ 2,005 $ 720 $ 1,222 1 $ 1,408 $ 449 $ 58 $ 5,863
−Removed: Allowance for Loan Losses Ending Balance:
+Added: Allowance for Credit Losses Ending Balance:
individually evaluated for impairment — — — — 7 1 — 8
4 unchanged sentences
individually evaluated for impairment 4,151 2,485 4,522 — 13,262 45 — 24,465
−Removed: 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, 2022:
+Added: The following is an analysis of the allowance for loan losses as of the fiscal year ended March 31, 2023 based upon the incurred loss impairment model:
$ in thousands One-to-four family Multifamily Commercial Real Estate Business Consumer Unallocated Total
14 unchanged sentences
individually evaluated for impairment 5,003 71 7,190 5,923 1 — 18,188
−Removed: The following is a summary of nonaccrual loans at March 31, 2023 and 2022.
−Removed: $ in thousands March 31, 2023
+Added: The following is a summary of nonaccrual loans, at amortized cost, at March 31, 2024 and 2023.
March 31, 2024
−Removed: Loans accounted for on a nonaccrual basis:
+Added: March 31, 2023
+Added: $ in thousands Nonaccrual Loans with No Allowance Nonaccrual Loans with an Allowance Total
+Added: Nonaccrual Loans Nonaccrual Loans
Gross loans receivable:
6 unchanged sentences
Nonaccrual loans generally 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.
+Added: Accrual of interest on loans is discontinued when the payment of principal or interest is considered to be in doubt, or when a loan becomes contractually past due by 90 days or more with respect to principal or interest, except for loans that are well-secured and in the process of collection.
Interest income on nonaccrual loans is recorded when received based upon the collectability of the loan.
−Removed: TDR loans consist of modified 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.
−Removed: At March 31, 2023 and March 31, 2022, other non-performing assets totaled $ 60 thousand, which consisted of other real estate owned comprised of one foreclosed residential property.
−Removed: Other real estate loans are included in other assets in the consolidated statements of financial condition.
+Added: There was no interest income recognized on nonaccrual loans during the twelve months ended March 31, 2024.
+Added: At March 31, 2024 and March 31, 2023, other non-performing assets totaled $ 52 thousand and $ 60 thousand, respectively, which consisted of other real estate owned comprised of one foreclosed residential property.
+Added: Other real estate owned is included in other assets in the consolidated statements of financial condition.
There were no held-for-sale loans at March 31, 2024 and March 31, 2023.
−Removed: 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.
−Removed: All other one-to-four family residential loans and consumer and other loans are performing loans.
−Removed: At March 31, 2023, and based on the most recent analysis performed in the current quarter, the risk category by class of loans is as follows:
−Removed: $ in thousands Multifamily Commercial Real Estate Business
+Added: The Bank utilizes an internal loan classification system as a means of reporting problem loans within its loan categories:
+Added: Pass - Loans have demonstrated satisfactory asset quality, earning history, liquidity, and other adequate margins of creditor protection.
+Added: These loans represent a moderate credit risk and some degree of financial stability, and are considered collectible in full.
+Added: Special Mention - Loans have potential weaknesses that deserve management's close attention.
+Added: If 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.
+Added: Substandard - Loans are inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any.
+Added: These loans have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt.
+Added: They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.
+Added: Doubtful - Loans have all the weaknesses inherent in those classified as Substandard, with the added characteristic that collection or liquidation in full, based on current facts, conditions and values, is highly questionable and improbable.
+Added: Loss - Loans are considered uncollectible with insignificant value and are charged off immediately to the allowance for credit losses.
+Added: One-to-four family residential loans and consumer loans are rated non-performing if they are delinquent in payments ninety or more days, or past maturity.
+Added: All other one-to-four family residential loans and consumer loans are performing loans.
+Added: The following table presents the amortized cost of loans by year of origination and risk category by class of loans b ased on the most recent analysis performed in the current quarter as of March 31, 2024:
+Added: $ in thousands 2024 2023 2022 2021 2020 2019 and earlier Revolving Loans Total
Credit Risk Profile by Internally Assigned Grade:
2 unchanged sentences
Substandard — — — 1,451 754 280 — 2,485
+Added: Doubtful — — — — — — — —
+Added: Loss — — — — — — — —
Total 980 6,587 53,516 52,229 29,237 34,654 — 177,203
−Removed: One-to-four family Consumer
+Added: Commercial Real Estate
+Added: Pass $ 2,450 $ 29,064 $ 31,313 $ 27,635 $ 16,951 $ 62,775 $ — 170,188
+Added: Special Mention — — — — — 674 — 674
+Added: Substandard — — — — — 4,522 — 4,522
+Added: Doubtful — — — — — — — —
+Added: Loss — — — — — — — —
+Added: Total 2,450 29,064 31,313 27,635 16,951 67,971 — 175,384
+Added: Pass $ — $ 2,203 $ — $ — $ — $ — $ — 2,203
+Added: Special Mention — — — — — — — —
+Added: Substandard — — — — — — — —
+Added: Doubtful — — — — — — — —
+Added: Loss — — — — — — — —
+Added: Total — 2,203 — — — — — 2,203
+Added: Pass $ 7,050 $ 21,315 $ 32,675 $ 52,839 $ 10,845 $ 32,587 $ — 157,311
+Added: Special Mention — — — — — — — —
+Added: Substandard — — 7,939 3,987 — 365 — 12,291
+Added: Doubtful — — — — — — — —
+Added: Loss — — — — — — — —
+Added: Total 7,050 21,315 40,614 56,826 10,845 32,952 — 169,602
+Added: Gross charge-offs — — — — — 10 — 10
Credit Risk Profile Based on Payment Activity:
+Added: One-to-four Family
Performing $ — $ 22,247 $ 3,830 $ 13,422 $ 1,424 $ 39,002 $ — 79,925
1 unchanged sentence
Total — 22,247 3,830 13,422 1,424 41,864 — 82,787
+Added: Performing $ 2,003 $ — $ 11,891 $ — $ 570 $ — $ 4 $ 16 $ 1,172 $ — 15,656
+Added: Non-Performing — 42 1 — — — — 43
+Added: Total 2,003 11,933 571 4 16 1,172 — 15,699
+Added: Gross charge-offs — 18 1 — — 141 — 160
+Added: Total Loans (excluding gross charge-offs) $ 12,483 $ 93,349 $ 129,844 $ 150,116 $ 58,473 $ 178,613 $ — $ 622,878
At March 31, 2023, the risk category by class of loans was as follows:
10 unchanged sentences
Total $ 65,808 $ 7,639
−Removed: The following tables present an aging analysis of the recorded investment of past due loans receivable at March 31, 2023 and 2022.
+Added: Loans are considered past due if required principal and interest payments have not been received as of the date such payments were contractually due.
+Added: The following tables present an aging analysis of the amortized cost of past due loans receivable at March 31, 2024 and 2023.
March 31, 2024
3 unchanged sentences
Commercial real estate — — 4,660 4,660 170,724 175,384
+Added: Construction — — — — 2,203 2,203
Business 1,959 214 12,071 14,244 155,358 169,602
9 unchanged sentences
Total $ 15,140 $ 211 $ 7,594 $ 22,945 $ 574,951 $ 597,896
−Removed: At March 31, 2023 and 2022, there were no loans 90 or more days past due and accruing interest.
−Removed: The following tables present information on impaired loans with the associated allowance amount, if applicable, at March 31, 2023 and 2022.
−Removed: 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.
−Removed: In those cases, the current fair value of the collateral, less selling costs was used to determine the specific allowance recorded.
−Removed: 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.
−Removed: 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.
−Removed: Interest income of $ 189 thousand and $ 266 thousand for fiscal years 2023 and 2022 respectively, would have been recorded on impaired loans had they performed in accordance with their original terms.
−Removed: Impaired Loans by Class
−Removed: $ in thousands Recorded Investment Unpaid Principal Balance Associated Allowance Recorded Investment Unpaid Principal Balance Associated Allowance
−Removed: With no specific allowance recorded:
+Added: At March 31, 2023, there were no loans 90 or more days past due and accruing interest.
+Added: Collateral dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the underlying collateral and the borrower is experiencing financial difficulty.
+Added: All substandard and doubtful loans and any other loans that the Chief Credit Officer deems appropriate for review, are identified and reviewed for individual analysis.
+Added: The following table presents the amortized cost of collateral dependent loans with the associated allowance amount, if applicable, as of March 31, 2024:
+Added: Collateral Type
+Added: $ in thousands Real Estate Other Allowance Allocated
One-to-four family $ 4,151 $ — $ —
3 unchanged sentences
Consumer — 45 1
−Removed: With an allowance recorded:
−Removed: One-to-four family 1,031 1,031 109 — — —
−Removed: Business 4,809 4,820 202 5,203 5,203 69
−Removed: Total $ 18,188 $ 19,014 $ 311 $ 11,447 $ 12,203 $ 69
−Removed: The following table presents information on average balances on impaired loans and the interest income recognized for the years ended March 31, 2023 and 2022.
−Removed: For the years ended March 31,
−Removed: $ in thousands Average Balance Interest Income recognized Average Balance Interest Income recognized
+Added: $ 23,354 $ 1,111 $ 8
+Added: Real estate collateral includes one-to-four family, multifamily and commercial properties.
+Added: Collateral types securing business loans include accounts receivable.
+Added: There have been no significant changes to the types of collateral securing the Bank's collateral dependent loans.
+Added: The following table presents information on impaired loans with the associated allowance amount and interest income recognized on a cash basis, if applicable, at March 31, 2023.
+Added: Impaired Loans by Class
+Added: At March 31, 2023
+Added: $ in thousands Recorded Investment Unpaid Principal Balance Associated Allowance Average Balance Interest Income Recognized
With no specific allowance recorded:
3 unchanged sentences
Business 1,114 1,146 — 1,723 —
+Added: Consumer 1 1 — — —
With an allowance recorded:
2 unchanged sentences
Total $ 18,188 $ 19,014 $ 311 $ 15,528 $ 504
−Removed: In certain circumstances, loan modifications involve a troubled borrower to whom the Bank may grant a concession.
−Removed: In cases where the Bank grants any significant concessions to a troubled borrower, the Bank accounts for the modification as a TDR.
+Added: In certain circumstances, the Bank will modify the terms of a loan by granting a concession.
Situations around these modifications 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.
−Removed: 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.
−Removed: There were three loan modifications made during the twelve months ended March 31, 2023.
−Removed: There was no loan modification made during the twelve months ended March 31, 2022.
−Removed: The following table presents an analysis of the loan modifications that were classified as TDRs during the twelve months ended March 31, 2023,
−Removed: Loan Modifications for the year ended
−Removed: March 31, 2023
−Removed: $ in thousands Number of loans Recorded Investment
−Removed: at time of modification
−Removed: One-to-four family 3 $ 1,357
−Removed: In an effort to proactively resolve delinquent loans, Carver has selectively extended to certain borrowers concessions such as extensions, rate reductions or forbearance agreements.
−Removed: For the fiscal years ended March 31, 2023 and 2022, there were no modified loans that defaulted within the last 12 months of modification.
−Removed: Total TDR loans at March 31, 2023 were $ 7.6 million, $ 1.6 million of which were non-performing as they were either not consistently performing in accordance with their modified terms or not performing in accordance with their modified terms for at least six months.
+Added: Loans modified 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.
+Added: There were no loan modifications to borrowers experiencing financial difficulty made during the twelve months ended March 31, 2024.
+Added: There were three one-to-four family loans totaling $1.4 million modified during the twelve months ended March 31, 2023.
+Added: At March 31, 2024, loans modified to borrowers experiencing financial difficulty totaled $ 6.8 million, $ 1.1 million of which were non-performing as they were either not consistently performing in accordance with their modified terms or not performing in accordance with their modified terms for at least six months.
+Added: There were three modified loans totaling $ 5.7 million that were on accrual status as the Company has determined that future collection of the principal and interest is reasonably assured.
+Added: These have generally performed according to the restructured terms for a period of at least six months.
At March 31, 2023, total TDR loans were $ 7.6 million, of which $ 1.6 million were non-performing.
+Added: In an effort to proactively resolve delinquent loans, Carver had selectively extended to certain borrowers concessions such as extensions, rate reductions or forbearance agreements during the twelve months ended March 31, 2023.
+Added: For the fiscal years ended March 31, 2024 and 2023, there were no modified loans that defaulted within 12 months of modification.
Transactions With Certain Related Persons
Federal law requires that all loans or extensions of credit to executive officers and directors must be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with the general public and must not involve more than the normal risk of repayment or present other unfavorable features.
−Removed: The aggregate amount of loans outstanding to related parties was $ 30 thousand at March 31, 2023 and March 31, 2022.
−Removed: There were no advances and principal repayments during the twelve months ended March 31, 2023.
Furthermore, loans above the greater of $25,000, or 5% of Carver Federal’s capital and surplus (up to $500,000), to Carver Federal’s directors and executive officers must be approved in advance by a majority of the disinterested members of Carver Federal’s Board of Directors.
+Added: There were no loans outstanding to related parties at March 31, 2024.
PREMISES AND EQUIPMENT, NET
8 unchanged sentences
The Company applies Accounting Standards Codification ("ASC") Topic 842, Leases ( " ASC 842") to its leases.
−Removed: The Company has operating leases related to its administrative offices, seven retail branches and four ATM centers.
+Added: The Company has operating leases related to its administrative offices, seven retail branches and three ATM centers.
Two of the operating leases are for branch locations where the Company had entered into a sale and leaseback transaction.
26 unchanged sentences
2026 2,687 42
−Removed: 2026 2,687 42
Thereafter 186 —
47 unchanged sentences
Federal Home Loan Bank Advances.
−Removed: At March 31, 2023, the Bank had a $ 10.0 million overnight borrowing with a fixed rate of 4.99 % and a $ 25.0 million advance with a fixed rate of 4.5 % maturing in March 2025 outstanding from the FHLB-NY.
+Added: At March 31, 2024, the Bank had $ 28.0 million outstanding advances from the FHLB-NY.
+Added: During fiscal year 2024, the Bank secured a $ 3.0 million 18-month advance from the new FHLB-NY 0% Development Advance (ZDA) Program.
As a member of the FHLB-NY, the Bank may have outstanding FHLB-NY borrowings in a combination of term advances and overnight funds of up to 30 % of its total assets, or approximately $ 227.0 million at March 31, 2024.
3 unchanged sentences
The Bank has sufficient collateral at the FHLB-NY to be able to borrow $ 7.8 million from the FHLB-NY at March 31, 2024.
−Removed: The accrued interest payable on FHLB advances was $14 thousand and interest expense was $ 359 thousand for the year ended March 31, 2023.
+Added: The accrued interest payable on FHLB advances was $109 thousand and interest expense was $ 1.1 million for the year ended March 31, 2024.
+Added: FHLB-NY advances weighted average interest rates by remaining period to maturity are as follows:
+Added: $ in thousands Amount Weighted Average Rate Amount Weighted Average Rate
+Added: Maturing Year Ending March 31,
+Added: 2024 $ — — % $ 10,000 4.99 %
+Added: 2025 28,027 4.61 % 25,000 4.50 %
+Added: $ 28,027 $ 35,000
Subordinated Debt Securities.
10 unchanged sentences
A streamlined process has been developed for the Company to request regulatory approval to make debenture interest payments.
−Removed: All quarterly interest payments subsequent to the June 2021 payment up to and including the March 2023 payment have been made.
−Removed: The accrued interest payable on subordinated debt securities was $ 44 thousand and the interest expense was $ 814 thousand for the year ended March 31, 2023.
+Added: All quarterly interest payments subsequent to the June 2021 payment up to and including the June 2024 payment have been made.
+Added: The accrued interest payable on subordinated debt securities was $ 45 thousand and the interest expense was $ 1.2 million for the year ended March 31, 2024.
The accrued interest payable on subordinated debt securities was $ 44 thousand and the interest expense was $ 814 thousand for the year ended March 31, 2023.
3 unchanged sentences
During the twelve months ended March 31, 2023, the Bank repaid its remaining $3 thousand outstanding advance under its PPPLF.
−Removed: Interest expense on PPPLF advances was zero and $ 27 thousand for the years ended March 31, 2023 and 2022, respectively.
+Added: There was no interest expense on PPLF advances for the years ended March 31, 2024 and 2023.
Other Borrowings.
−Removed: During fiscal year 2022, the Company entered into two 5-year long-term unsecured low interest loans totaling $ 2.5 million provided by third parties.
−Removed: The $1.5 million and $1.0 million notes have a fixed interest rate of 1.0 %, payable annually, and will mature in 2026.
−Removed: Based on the covenants of these notes, the proceeds will be used to finance eligible loans offered through the Bank's community investment initiatives loan program.
+Added: During fiscal year 2024, the Company entered into a 5-year unsecured long-term, below-market-rate loan in the amount of $2.5 million provided by a third party.
+Added: At March 31, 2024, the Company had $ 5.0 million in these fixed rate, low interest loans outstanding.
+Added: Based on the covenants of these notes, the proceeds will be used to finance eligible loans offered through the Bank's community investment initiatives and loan programs.
The accrued interest payable and interest expense on these notes was $ 7 thousand and $ 74 thousand, respectively, for the year ended March 31, 2024.
−Removed: The accrued interest payable and interest expense was $19 thousand for the year ended March 31, 2022.
+Added: The accrued interest payable and interest expense was $ 3 thousand and $ 25 thousand, respectively, for the year ended March 31, 2023.
The following table presents expected maturities of the Company's long-term borrowings at March 31, 2024:
1 unchanged sentence
Year ending March 31,
+Added: 2025 $ 28,027
Thereafter 13,403
9 unchanged sentences
Subordinated debt securities 8.64 % 7.96 %
−Removed: PPPLF — % 0.35 %
Other 1.50 % 1.00 %
2 unchanged sentences
Subordinated debt securities 13,403 13,403
−Removed: PPPLF 3 23,705
Other 2,500 2,500
2 unchanged sentences
Subordinated debt securities 13,403 13,403
−Removed: PPPLF — 7,647
Other 4,813 2,500
7 unchanged sentences
Statutory Federal income tax expense (benefit) $ ( 625 ) 21.0 % $ ( 924 ) 21.0 %
−Removed: State and local income tax, net of Federal tax benefit — — — —
−Removed: Impact of income tax rate changes — — — —
+Added: Federal deferred tax adjustments 4 ( 0.2 ) — —
Change in valuation allowance 713 ( 23.9 ) 953 ( 21.7 )
+Added: Bank owned life insurance ( 96 ) 3.2 — —
Other 4 ( 0.1 ) ( 29 ) 0.7
3 unchanged sentences
Deferred Tax Assets:
−Removed: Allowance for loan losses $ 1,742 $ 1,874
+Added: Allowance for credit losses $ 1,987 $ 1,742
Compensation and benefits 39 39
58 unchanged sentences
As of March 31, 2024, there were 9,557 shares of Series D Preferred Stock outstanding.
+Added: During fiscal year 2023, Prudential Insurance Company of America ("Prudential"), an institutional investor, donated a total of 550 shares of its holdings of Series D Preferred Stock to third parties.
+Added: The third parties notified the Company of their intention to cancel the shares and convert them into 67,265 shares of Common Stock.
+Added: During the twelve months ended March 31, 2024, Prudential donated a total of 3,644 shares of its holdings of Series D Preferred Stock to third parties.
+Added: The third parties notified the Company of their intention to cancel the shares and convert them into 445,661 shares of Common Stock.
+Added: The conversions had no impact on the Company's total capital.
On August 6, 2002, the Company announced a stock repurchase program to repurchase up to 15,442 shares of its outstanding common stock.
9 unchanged sentences
In connection with the repurchase, Morgan Stanley provided a grant of $ 2.5 million that was considered contributed capital to the Company to fund the repurchase transaction.
−Removed: In June 2020, The Goldman Sachs Group, Inc., an institutional investor, notified the Company of their intention to effect a series of transfers of up to all its holdings of Series D Preferred Stock.
−Removed: The conversion and subsequent sale of shares were completed on July 2, 2020:
−Removed: 13,519 Series D Preferred Stock shares were converted into 1,653,397 shares of Common Stock, which were subsequently sold in the open market.
−Removed: The conversion and sale had no impact on the Company's total capital.
−Removed: On July 9, 2020, the Company received notice that Morgan Stanley International Holdings Inc., an institutional investor, relinquished its ownership of 180,573 shares of Company common stock and 13,523 shares of Company Preferred Series D Stock to the Company at no cost to the Company.
−Removed: On October 15, 2020, the Company entered into an agreement with Banc of America Strategic Investments Corporation, under which it issued and sold 147,227 shares of its common stock, par value $0.01, at a price of $ 6.62 per share.
−Removed: The shares were issued on October 15, 2020, in a private placement exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, and Regulation D of the rules and regulations promulgated thereunder.
−Removed: On January 22, 2021, Prudential Insurance Company of America ("Prudential"), an institutional investor, notified the Company of its intention to cancel 475 of its holdings of Series D Preferred Stock and convert them into 58,093 shares of Common Stock.
−Removed: During fiscal year 2022, Prudential donated a total of 3,850 shares of its holdings of Series D Preferred Stock to third parties.
−Removed: The third parties notified the Company of their intention to cancel the shares and convert them into 470,855 shares of Common Stock.
−Removed: During the twelve months ended March 31, 2023, Prudential donated a total of 550 shares of its holdings of Series D Preferred Stock to third parties.
−Removed: The third parties notified the Company of their intention to cancel the shares and convert them into 67,265 shares of Common Stock.
−Removed: The conversions had no impact on the Company's total capital.
−Removed: On February 1, 2021, the Company entered into an agreement with Wells Fargo Central Pacific Holdings, Inc., under which it sold:
−Removed: (i) 157,806 shares of its common stock, par value $0.01 per share, at a purchase price of $ 7.75 per share, and (ii) 3,177 shares of a new series of preferred stock, Series E non-cumulative non-voting participating preferred stock, par value $0.01 per share, at a purchase price of $ 1,000 per share, in a private placement for gross proceeds of approximately $ 4.4 million.
−Removed: Upon the completion of certain eligible transfers of the Series E preferred stock by Wells Fargo Central Pacific Holdings, Inc., the Series E preferred stock would be convertible into common stock at a conversion price of $7.96 per share.
−Removed: The issuance of the shares is exempt from registration pursuant to the exemption provided under Rule 506 of Regulation D promulgated under the Securities Act of 1933, as amended.
−Removed: The offering was made only to accredited investors as that term is defined in Rule 501(a) of Regulation D under the Act.
Series E Preferred Stock is perpetual and has no maturity date.
18 unchanged sentences
The holders of Series F Preferred Stock will be entitled to receive, if declared by the Company's board of directors, noncumulative cash dividends on each date that dividends or other distributions are payable.
−Removed: The holders of the Series F Preferred Stock will not have voting rights except for any vote required by law or by the Company's Certificate of Incorporation, or for effecting or validating:
+Added: The holders of the Series F Preferred Stock will not have voting rights except for any vote required by law or by the Company's Certificate of Incorporation, or for effecting or
(i) any amendment, alteration or repeal of any provision of the Certificate of Incorporation or Bylaws of the Company that would significantly and adversely affect the voting powers, preferences, privileges or special rights of the Series F Preferred Stock;
7 unchanged sentences
During fiscal year 2022, the Company sold an aggregate of 397,367 shares of common stock under the ATM offering program, resulting in gross proceeds of $3.1 million and net proceeds to the Company of $ 3.0 million after deducting commissions and expenses.
−Removed: There were no additional offerings during the twelve months ended March 31, 2023.
+Added: There were no additional offerings in fiscal year 2023 and during the twelve months ended March 31, 2024.
+Added: On July 19, 2023, the Company entered into an agreement with National Community Investment Fund, under which it sold 378,788 shares of its common stock, par value $0.01 per share, at a purchase price of $ 2.64 per share in a private placement for gross proceeds of approximately $ 1.0 million.
+Added: The Company intends to use the net proceeds of the private placement for general corporate purposes.
+Added: The issuance of the shares is exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, and Regulation D of the rules and regulations promulgated thereunder.
Regulatory Capital .
The operations and profitability of the Bank are significantly affected by legislation and the policies of the various regulatory agencies.
−Removed: In July 2013, the FDIC and the other federal bank regulatory agencies issued a final rule that revised their leverage and risk-based capital requirements and the method for calculating risk-weighted assets to make them consistent with agreements that were reached by the Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Act.
−Removed: The final rule, which became effective for the Bank on January 1, 2015, established a minimum Common Equity Tier 1 (CET1) ratio, a minimum leverage ratio and increases in the Tier 1 and Total risk-based capital ratios.
−Removed: The rule also limits a banking organization's capital distributions and certain discretionary bonus payments if the banking organization does not hold a "capital conservation buffer" consisting of 2.5% of CET1 capital to risk-weighted assets in addition to the amount necessary to meet its minimum risk-based capital requirements.
−Removed: The capital conservation buffer requirement was phased in annually beginning January 1, 2016.
−Removed: On January 1, 2019, the full capital conservation buffer requirement of 2.5% became effective, making its minimum CET1 plus buffer 7%, its minimum Tier 1 capital plus buffer 8.5% and its minimum total capital plus buffer 10.5%.
−Removed: In accordance with the recently enacted Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies have adopted, effective January 1, 2020, a final rule whereby financial institutions and financial institution holding companies that have less than $10 billion in total consolidated assets and meet other qualifying criteria, including a leverage ratio of greater than 9%, will be eligible to opt into a “Community Bank Leverage Ratio” framework.
−Removed: Qualifying community banking organizations that elect to use the community bank leverage ratio framework and that maintain a leverage ratio of greater than 9% will be considered to have satisfied the generally applicable risk-based and leverage capital requirements in the agencies’ capital rules and will be considered to have met the “well capitalized” ratio requirements under
−Removed: the Prompt Corrective Action statutes.
−Removed: The CARES Act and implementing rules temporarily reduced the Community Bank Leverage Ratio to 8%, to be gradually increased back to 9% by 2022.
−Removed: The CARES Act also provides that, during the same time period, if a qualifying community banking organization falls no more than 1% below the community bank leverage ratio, it will have a two quarter grace period to satisfy the community bank leverage ratio.
+Added: In accordance with the Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies have adopted, effective January 1, 2020, a final rule whereby financial institutions and financial institution holding companies that have less than $10 billion in total consolidated assets and meet other qualifying criteria, including a leverage ratio of greater than 9%, will be eligible to opt into a “Community Bank Leverage Ratio” framework.
+Added: Qualifying community banking organizations that elect to use the community bank leverage ratio framework and that maintain a leverage ratio of greater than 9% will be considered to have satisfied the generally applicable risk-based and leverage capital requirements in the agencies’ capital rules and will be considered to have met the “well capitalized” ratio requirements under the Prompt Corrective Action statutes.
The agencies reserved the authority to disallow the use of the Community Bank Leverage Ratio by a financial institution or holding company based on the risk profile of the organization.
25 unchanged sentences
Excess 15,132 2.48 % 17,080 2.87 %
−Removed: OTHER COMPREHENSIVE INCOME (LOSS)
−Removed: The following tables set forth changes in each component of accumulated other comprehensive income (loss), net of tax for the years ended March 31, 2023 and 2022:
+Added: ACCUMULATED OTHER COMPREHENSIVE LOSS
+Added: The following tables set forth changes in each component of accumulated other comprehensive loss, net of tax for the years ended March 31, 2024 and 2023:
$ in thousands At
March 31, 2023
−Removed: Other Comprehensive Income At
+Added: Other Comprehensive Loss At
March 31, 2024
2 unchanged sentences
March 31, 2022
−Removed: Other Comprehensive Income At
+Added: Other Comprehensive Loss At
March 31, 2023
3 unchanged sentences
Comprehensive income (loss) represents net income (loss) and certain amounts reported directly in stockholders' equity, such as net unrealized gain or loss on securities available-for-sale.
−Removed: The balance at March 31, 2023 included $ 5.6 million change in unrealized losses for the year ended March 31, 2023.
+Added: The balance at March 31, 2024 included $ 490 thousand change in unrealized losses for the year ended March 31, 2024.
The balance at March 31, 2023 included $ 5.6 million change in unrealized losses for the year ended March 31, 2023.
8 unchanged sentences
In September 2006, Carver stockholders approved the 2006 Stock Incentive Plan (the "2006 Incentive Plan") which provides for the grant of stock options, stock appreciation rights and restricted stock to employees and directors who are selected to receive awards by the Committee.
−Removed: The 2006 Incentive Plan authorizes Carver to grant awards with respect to 20,000 shares, but no more than 10,000 shares of restricted stock may be granted.
+Added: The 2006 Incentive Plan authorizes Carver to grant awards
+Added: with respect to 20,000 shares, but no more than 10,000 shares of restricted stock may be granted.
Options are granted at a price not less than fair market value of Carver common stock at the time of the grant for a period not to exceed 10 years.
10 unchanged sentences
During fiscal year 2024, 83,000 restricted stock awards were issued.
−Removed: There were no restricted stock awards issued in fiscal 2022.
+Added: There were 44,500 restricted stock awards issued in fiscal year 2023.
At March 31, 2024, there were 2,667 options outstanding under the 2014 Incentive Plan and 2,667 were exercisable.
31 unchanged sentences
Total 6,267 6,267
−Removed: As of March 31, 2023, unrecognized compensation expense on unvested stock options totaled $ 1 thousand.
−Removed: This amount will be recognized over the remaining vesting period of 0.33 years (weighted average).
+Added: As of March 31, 2024, there was no unrecognized compensation expense on unvested stock options.
There were no stock options awarded to employees or directors during the year ended March 31, 2024.
At March 31, 2024, all outstanding options had no intrinsic value.
−Removed: The Company recorded stock compensation expense of $ 2 thousand and $ 3 thousand in fiscal 2023 and 2022, respectively.
+Added: The Company recorded stock compensation expense of $ 2 thousand in fiscal 2023.
COMMITMENTS AND CONTINGENCIES
8 unchanged sentences
$ in thousands 2024
−Removed: Commitments to fund mortgage loans $ — $ 12,135
Lines of credit $ 4,268 $ 3,837
38 unchanged sentences
The Company is unable at this time to determine the ultimate outcome of each proceeding, but believes, after discussions with legal counsel representing the Company and the Bank or the subsidiary in these proceedings, that it has meritorious defenses to each proceeding and appropriate measures have been taken to defend the interests of the Company, Bank or subsidiary.
−Removed: There were no legal proceedings pending or known to be contemplated against us that in the opinion of management, would be expected to have a material adverse effect on the financial condition or results of operations of the Company or the Bank.
+Added: As of March 31, 2024, we are not involved in any pending legal proceeding as a plaintiff or a defendant other than routine legal proceedings occurring in the ordinary course of business, and are not involved in any legal proceeding, the outcome of which management believes would be material to the financial condition or results of operations of the Company or the Bank.
FAIR VALUE MEASUREMENTS
Fair value is an “exit” price, representing the amount that would be received when selling an asset, or paid when transferring a liability, in an orderly transaction between market participants.
−Removed: Fair value is thus a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.
+Added: Fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.
Fair value measurements are categorized in a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
16 unchanged sentences
Muni securities — 14,056 — 14,056
−Removed: Asset-backed securities — — — —
Total available-for-sale securities — 48,030 — 48,030
12 unchanged sentences
Muni securities — 13,982 — 13,982
−Removed: Asset-backed securities — 343 — 343
Total available-for-sale securities — 53,843 — 53,843
7 unchanged sentences
If quoted market prices are not available for the specific security, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows.
−Removed: These pricing models primarily use market-based or independently sourced market parameters as inputs, including, but not limited to, yield curves, interest rates, equity or debt prices, and credit spreads.
+Added: These pricing models primarily use market-based or independently sourced market parameters as inputs, including, but not limited to, yield curves, interest rates,
+Added: equity or debt prices, and credit spreads.
In addition to market information, models also incorporate transaction details, such as maturity and cash flow assumptions.
26 unchanged sentences
Mortgage Servicing Rights 140 Discounted Cash Flow Weighted Average Constant Prepayment Rate (1)
+Added: Range of Inputs 3.0% to 7.1%
Option Adjusted Spread ("OAS") applied to Treasury curve 1000 basis points
2 unchanged sentences
Mortgage Servicing Rights 152 Discounted Cash Flow Weighted Average Constant Prepayment Rate (1)
+Added: Range of inputs 3.1% to 9.5%
Option Adjusted Spread ("OAS") applied to Treasury curve 1000 basis points
6 unchanged sentences
$ in thousands Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value
−Removed: Impaired loans $ — $ — $ 5,529 $ 5,529
Other real estate owned $ — $ — $ 52 $ 52
6 unchanged sentences
Valuation Technique Significant Unobservable Inputs Significant Unobservable Input Value
−Removed: Impaired loans $ 5,529 Appraisal of collateral Appraisal adjustments 7.5% cost to sell
Other real estate owned 52 Appraisal of collateral Appraisal adjustments 7.5% cost to sell
11 unchanged sentences
Disclosures regarding the fair value of financial instruments are required to include, in addition to the carrying value, the fair value of certain financial instruments, both assets and liabilities recorded on and off-balance sheet, for which it is practicable to estimate fair value.
−Removed: Accounting guidance defines financial instruments as cash, evidence of ownership of an
−Removed: entity, or a contract that conveys or imposes on an entity the contractual right or obligation to either receive or deliver cash or another financial instrument.
+Added: Accounting guidance defines financial instruments as cash, evidence of ownership of an entity, or a contract that conveys or imposes on an entity the contractual right or obligation to either receive or deliver cash or another financial instrument.
The fair value of a financial instrument is discussed below.
33 unchanged sentences
Deposits $ 600,429 $ 594,736 $ 418,432 $ 176,304 $ —
+Added: Advances from FHLB of New York 35,000 35,238 — 35,238 —
Other borrowed money 15,903 14,575 — 14,575 —
7 unchanged sentences
has fully and unconditionally guaranteed the Capital Securities along with all obligations of the Trust under the trust agreement relating to the Capital Securities.
−Removed: The Company does not consolidate the accounts and related activity of Carver Statutory Trust I because it is not the primary beneficiary of the entity.
+Added: The Company does not consolidate the accounts and related activity of Carver Statutory Trust
+Added: I because it is not the primary beneficiary of the entity.
At March 31, 2024, the Company's maximum exposure to the Trust is $ 13.4 million, which is the Company's liability to the Trust and includes the Company's investment in the Trust.
6 unchanged sentences
ASC Topic 606, Revenue from Contracts with Customers ("Topic 606") does not apply to revenue associated with financial instruments, including revenue from loans and securities.
−Removed: In addition, certain non-interest income streams such as gains on sales of residential mortgage and SBA loans, income associated with servicing assets, and loan fees, including residential mortgage originations to be sold and prepayment and late fees charged across all loan categories are also not in scope of the new guidance.
+Added: In addition, certain non-interest income streams such as gains on sales of residential mortgage and SBA loans, income associated with servicing assets, and loan fees, including residential mortgage originations to be sold and prepayment and late fees charged across all loan categories are not in scope of the guidance.
Topic 606 is applicable to non-interest revenue streams, such as depository fees, service charges and commission revenues.
However, the recognition of these revenue streams did not change significantly upon adoption of Topic 606.
+Added: The Company generally satisfies its performance obligations on contracts with customers as services are rendered, and the transaction prices are typically fixed and charged either on a periodic basis or based on activity.
+Added: Because performance obligations are satisfied as services are rendered and the transaction prices are fixed, there is little judgment involved in applying Topic 606 that significantly affects the determination of the amount and timing of revenue from contracts with customers.
Non-interest revenue streams in-scope of Topic 606 are discussed below.
2 unchanged sentences
Service fees on deposit accounts consist of ATM fees, NSF fees, account maintenance charges and other deposit related fees.
−Removed: The revenue is recognized monthly when the Bank's performance obligations are complete, or as incurred for transaction-based fees in accordance with the fee schedules for the Bank's deposit products and services.
+Added: The fees are recognized as revenue over the period the related service is provided, or as incurred for transaction-based fees in accordance with the fee schedules for the Bank's deposit products and services.
Loan fees and service charges
Loan fees and service charges primarily relate to program management fees and fees earned in accordance with the Bank's standard lending fees (such as inspection and late charges).
−Removed: These standard lending fees are earned on a monthly basis upon receipt.
+Added: These standard lending fees are recognized as revenue over the period the related service is provided.
Other non-interest income
−Removed: Other non-interest income includes correspondent banking fees, and income associated with an advertising services agreement covering marketing and use of the Bank's office space with a third party.
−Removed: The revenue is recognized on a monthly basis.
+Added: Other non-interest income includes correspondent banking fees, revenue from the Bank's participation in JPMorgan Chase's Empowering Change program, and income associated with an advertising services agreement covering marketing and use of the Bank's office space with a third party.
+Added: The revenue is recognized over the period the related service is provided.
Interchange income
16 unchanged sentences
Other non-interest income:
−Removed: Correspondent banking fees $ 147 $ 2,574
+Added: BOLI income $ 459 $ 144
Other 483 228
7 unchanged sentences
Retail expenses 1,151 933
+Added: Operating chargeoffs and other losses 497 132
Director's fees 402 373
39 unchanged sentences
Restricted stock vesting 219 91
−Removed: Decrease in accounts receivable from subsidiaries — 205
−Removed: (Increase) decrease in other assets ( 57 ) 92
−Removed: Increase (decrease) in accounts payable to subsidiaries 976 ( 1,212 )
+Added: Increase in other assets ( 59 ) ( 57 )
+Added: Increase in accounts payable to subsidiaries 1,825 976
Decrease in other liabilities ( 488 ) ( 14 )
1 unchanged sentence
Cash Flows From Investing Activities
−Removed: Capital contribution — ( 15,500 )
+Added: Purchase of equity investment ( 658 ) —
Net cash used in investing activities ( 658 ) —
2 unchanged sentences
Issuance of common stock 1,000 —
−Removed: Issuance of preferred stock — 4,000
Net cash provided by financing activities 3,500 —
−Removed: Net decrease in cash ( 765 ) ( 10,941 )
+Added: Net increase (decrease) in cash 1,819 ( 765 )
Cash and cash equivalents – beginning 668 1,433
1 unchanged sentence
SUBSEQUENT EVENTS
−Removed: On April 12, 2023, the Company entered into an agreement with a third party, in which the third party would provide the Company with an unsecured long-term, below-market-rate loan in the amount of $ 2.5 million to finance eligible loans offered through the Bank's community investment initiatives and loan programs focused on Minority and Women-owned Business Enterprises and consumers across the greater New York City region.
−Removed: In April 2023, the Bank was awarded a $2.5 million grant as part of the U.S.
−Removed: Department of the Treasury's Community Development Financial Institutions Fund's Equitable Recovery Program ("CDFI ERP").
−Removed: The funds will be used towards financing programs and activities to help low- and moderate income communities recover from the COVID-19 pandemic in accordance with the terms and requirements of the CDFI ERP.
−Removed: On April 1, 2023, the Company adopted ASU No.
−Removed: 2016-13, "Financial Instruments - Credit Loss (Topic 326)" and its subsequent amendments, which replaces the guidance on recognition and measurement of credit losses for financial assets.
−Removed: The new requirements, known as the current expected credit loss model ("CECL") will require entities to adopt an impairment model based on expected losses rather than incurred losses.
−Removed: Based on the Company's CECL model results that it has performed alongside the incurred loss approach, the adoption of ASU 2016-13 will result in an increase of approximately $0.7 million to the allowance for credit losses for loans, including the reserve for off-balance sheet credit exposure recorded in other liabilities.
−Removed: There is no material impact for other assets within the scope of the new CECL guidance, such as held-to-maturity debt securities and other receivables.
−Removed: The Company will apply the new guidance as a cumulative-effect adjustment to retained earnings as of April 1, 2023, using the modified-retrospective approach.
−Removed: As the Company finalizes the CECL implementation, final decisions made by management may result in a different impact than that stated above for financial statement disclosure purposes.
+Added: On April 30, 2024, the Company entered into an agreement with a third party, in which the third party would provide the Company with a $ 25.0 million revolving unsecured long-term, below-market-rate loan to support the Bank in financing initiatives that reduce greenhouse gas emissions and promote energy efficiency in building projects, fleet upgrades to electric vehicles, and electric vehicle charging station infrastructure.
+Added: The loan facility will also support the working capital and asset-specific financing needs of Minority and Women-owned Business Enterprises working on green energy projects, weatherization, electrification, and green technology.
+Added: On May 24, 2024, the Bank secured a $ 1.8 million 12-month fixed-rate advance through the second round of the FHLB-NY 0% Development Advance (ZDA) Program, which provides members with subsidized funding in the form of interest rate credits to assist in originating or purchasing loans that meet an eligibility criteria.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
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.