What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-06-24 compared with 2024-07-16 · 249 added, 320 removed, 1277 unchanged (31% of the section changed)

5 unchanged sentences

We have audited the accompanying consolidated statements of financial condition of Carver Bancorp, Inc.

(the “Company”) as of March 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, changes in equity, and cash flows for each of the two years in the period ended March 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

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.

Change in Accounting Principle

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.

(the “Company”) as of March 31, 2025, and 2024, the related consolidated statements of operations, comprehensive loss, changes in equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at March 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

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.

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 a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Credit Losses

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.

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.

The allowance consists of quantitative and qualitative components.

The Company considers historical loss experience, forecasted business conditions, as well as reasonable and supportable forecasts to develop the quantitative component.

The quantitative

component is then adjusted for qualitative risk factors.

The economic forecast uncertainty qualitative factor involves significant assumptions that require a high degree of management’s judgment.

We identified the economic forecast uncertainty qualitative factor used by management to determine the allowance for credit losses as a critical audit matter.

The inherent uncertainty in estimating forecasts requires management to make significant judgements and assumptions with respect to the economic forecast uncertainty qualitative factor.

Auditing such assumptions required a high degree of auditor judgment and an increased auditor effort.

As described in Note 4 to the Company’s consolidated financial statements, the Company reported an allowance for credit losses (“ACL”) of $6.3 million as of March 31, 2025.

As described in Note 2 to the Company’s consolidated financial statements, the ACL is a valuation account that consists of quantitative and qualitative components.

The Company considers historical loss experience, forecasted business conditions, as well as reasonable and supportable forecasts and reversion to the historical loss amounts to develop the quantitative component.

The quantitative component is then adjusted for qualitative risk factors.

Management makes significant judgments and assumptions regarding the economic condition factor used in the qualitative component of the ACL.

We identified the economic condition factor used by management to determine the ACL as a critical audit matter.

The inherent uncertainty in determining the economic condition factor requires management to make significant

judgements and assumptions with respect to the underlying economic data.

Auditing such judgments and 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:

• 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.

• Evaluating the reasonableness of the economic forecast uncertainty factor used by management by independently evaluating the market information and historical trends.

• Testing the accuracy of the economic data used by management in determining the economic condition factor by agreeing it back to third-party source data.

• Assessing the reasonableness of management’s judgments in determining the economic condition factor based on economic data used by management by evaluating other independently obtained economic data.

/s/ BDO USA, P.C.

We have served as the Company's auditor since 2016.

July 16, 2024

June 24, 2025

CARVER BANCORP, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

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Investment securities:

Available-for-sale, at fair value 48,030 53,843

Available-for-sale, at fair value (amortized cost of $ 56,475 and $ 60,735 , respectively)

44,522 48,030

Held-to-maturity, at amortized cost (fair value of $ 1,698 and $ 1,905 , respectively)

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Preferred stock (par value $ 0.01 per share:

9,557 and 13,201 Series D shares, with a liquidation preference of $ 1,000 per share, issued and outstanding, respectively)

9,557 Series D shares, with a liquidation preference of $ 1,000 per share, issued and outstanding, respectively)

Preferred stock (par value $ 0.01 per share:

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CARVER BANCORP, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

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Loan fees and service charges 238 493

Gain on sale of loans, net 30 107

(Loss) gain on sale of loans, net ( 191 ) 30

Grant income 80 3,050

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CARVER BANCORP, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

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Other comprehensive loss, net of tax:

Change in unrealized loss of securities available-for-sale, net of income tax expense of $ 0 (due to full valuation allowance)

( 490 ) ( 5,553 )

Total other comprehensive loss, net of tax ( 490 ) ( 5,553 )

Change in unrealized gain (loss) of securities available-for-sale, net of income tax expense of $ 0 (due to full valuation allowance)

Total other comprehensive income (loss), net of tax 752 ( 490 )

Total comprehensive loss, net of tax $ ( 12,992 ) $ ( 3,467 )

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CARVER BANCORP, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

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25,378 68 82,805 ( 47,904 ) ( 2,908 ) ( 12,215 ) 45,224

Cumulative effect adjustment for adoption of ASC 326 — — — ( 668 ) — — ( 668 )

Net loss — — — ( 2,977 ) — — ( 2,977 )

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Conversion of Series D preferred stock to common stock ( 3,644 ) 5 3,639 — — — —

Issuance of common stock — 4 996 — — — 1,000

Stock based compensation expense — 220 — 220

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21,734 77 87,660 ( 51,549 ) ( 2,908 ) ( 12,705 ) 42,309

Cumulative effect adjustment for adoption of ASU 2016-13 — — — ( 668 ) — — ( 668 )

Net loss — — — ( 13,744 ) — — ( 13,744 )

Other comprehensive loss, net of tax — — — — — ( 490 ) ( 490 )

Conversion of Series D preferred stock to common stock ( 3,644 ) 5 3,639 — — — —

Other comprehensive income, net of tax — — — — — 752 752

Issuance of common stock — 1 194 — — — 195

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CARVER BANCORP, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

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Depreciation and amortization expense 813 965

Gain on sale of loans, net ( 30 ) ( 107 )

Loss (gain) on sale of loans, net 191 ( 30 )

Income from bank owned life insurance ( 179 ) ( 459 )

Amortization and accretion of loan premiums and discounts and deferred charges 214 216

Amortization and accretion of premiums and discounts - securities 203 298

(Increase) decrease in accrued interest receivable ( 1,751 ) 503

Decrease (increase) in accrued interest receivable 682 ( 1,751 )

(Increase) decrease in other assets ( 1,094 ) ( 82 )

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Held-to-maturity 253 304

Purchase of bank-owned life insurance — ( 5,000 )

Loans held-for-investment, net of (originations) and repayments/payoffs and maturities 6,275 ( 9,934 )

Proceeds from bank-owned life insurance 753 —

Loans held-for-investment, net of repayments/payoffs and maturities 24,227 6,275

Purchase of equity investment — ( 603 )

Loans purchased from third parties ( 15,369 ) ( 31,526 )

Proceeds from participation loans sold — 4,000

Proceeds from sale of loans 335 563

Redemption (purchase) of FHLB-NY stock 262 ( 1,682 )

Redemption of FHLB-NY stock 1,151 262

Purchase of premises and equipment ( 331 ) ( 360 )

Net cash used in investing activities ( 20,053 ) ( 15,262 )

Net cash provided by (used in) investing activities 15,079 ( 20,053 )

CASH FLOWS FROM FINANCING ACTIVITIES

Net increase (decrease) in deposits 46,570 ( 27,688 )

Proceeds from short-term borrowings — 10,000

Net increase in deposits 14,838 46,570

Repayment of short-term borrowings — ( 10,000 )

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Issuance of common stock 195 1,000

Net cash provided by financing activities 43,097 7,309

Net increase (decrease) in cash and cash equivalents 16,473 ( 18,466 )

Net cash (used in) provided by financing activities ( 11,180 ) 43,097

Net (decrease) increase in cash and cash equivalents ( 8,710 ) 16,473

Cash and cash equivalents at beginning of period 59,025 42,552

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Noncash financing and investing activities

Recognition of right-of-use asset $ — $ 1,103

Recognition of operating lease liability — 1,103

Recognition of finance lease asset — 183

Recognition of finance lease liability — 183

Conversion of preferred stock to common stock — 3,644

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CARVER BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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The Bank has seven branches located throughout the City of New York that primarily serve the communities in which they operate.

In September 2003, the Company formed Carver Statutory Trust I (the “Trust”) for the sole purpose of issuing trust preferred securities and investing the proceeds in an equivalent amount of floating rate junior subordinated debentures of the Company.

In accordance with Accounting Standards Codification (“ASC”) 810, “Consolidation,” Carver Statutory Trust I is unconsolidated for financial reporting purposes.

On September 17, 2003, Carver Statutory Trust I issued 13,000 shares, liquidation amount $ 1,000 per share, of floating rate capital securities.

Gross proceeds from the sale of these trust preferred debt securities of $ 13.0 million, and proceeds from the sale of the trust's common securities of $ 0.4 million, were used to purchase approximately $ 13.4 million aggregate principal amount of the Company's floating rate junior subordinated debt securities due 2033.

The trust preferred debt securities are redeemable at par quarterly at the option of the Company beginning on or after September 17, 2008, and have a mandatory redemption date of September 17, 2033.

Cash distributions on the trust preferred debt securities are cumulative and payable at a floating rate per annum resetting quarterly with a margin of 3.05 % over the three-month LIBOR.

During the second quarter of fiscal year 2017, the Company applied for and was granted regulatory approval to settle all outstanding debenture interest payments through September 2016.

Such payments were made in September 2016.

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

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

Full payment was made on June 16, 2021.

The Company deferred the September 17, 2021 interest payment, but has since had discussions with the Federal Reserve Bank of Philadelphia regarding future quarterly payments.

A streamlined process has been developed for the Company to request regulatory approval to make debenture interest payments.

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

All quarterly interest payments subsequent to the June 2021 payment up to and including the June 2024 payment have been made.

The interest rate was 8.64 % and the accrued interest was $ 45 thousand at March 31, 2024.

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.

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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.

On May 24, 2016, the Bank entered into a Formal Agreement ("the Agreement") with the OCC to undertake certain compliance-related and other actions.

As a result of the Agreement, the Bank was required to obtain the approval of the OCC prior to effecting any change in its directors or senior executive officers, paying dividends and entering into any "golden parachute payments" as that term is defined under 12 U.S.C.

On May 14, 2025, the Bank entered into the Formal Agreement with the OCC.

As a result of the Formal Agreement, the Bank is required to obtain the approval of the OCC prior to effecting any change in its directors or senior executive officers, paying dividends and entering into any "golden parachute payments" as that term is defined under 12 U.S.C.

§ 1828(k) and 12 C.F.R.

As a result of the 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.

The IMCR remains in effect.

The Company continues to be subject to similar requirements that the Bank was subject to under the Agreement.

In addition, Carver was previously 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 Company must provide notice to the FRB prior to effecting any change in its directors or senior executive officers.

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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.

Significant increases in food and energy prices resulted from swift increases in the

rate of inflation.

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.

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.

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.

The impact of market volatility from the adverse developments in the banking industry along with continued high inflation and rising interest rates, will depend on future developments, which are highly uncertain and difficult to predict.

The Company is closely monitoring its asset quality, liquidity, and capital positions, as well as the credit risk in its loan portfolio.

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.

Cash and cash equivalents

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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.

As such, no allowance for credit losses was recorded on securities held-to-maturity as of March 31, 2024.

As such, no allowance for credit losses was recorded on securities held-to-maturity as of March 31, 2025 and 2024.

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.

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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.

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.

If either of the criteria regarding intent or requirement to sell is met, any previously recognized allowance for credit loss ("ACL") is written off and the amortized cost is adjusted to fair value.

If any incremental credit loss occurs, the amortized cost is adjusted further by the credit loss and recorded in earnings.

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.

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.

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.

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.

Losses related to non-credit related factors will be recorded in other comprehensive income.

If the decline in fair value is due to credit loss, the loss is recorded through ACL, limited by the amount that the fair value is less than the amortized cost basis.

Non-credit losses are recorded in other comprehensive income.

Changes in the ACL are recorded as provision for (or reversal of) credit loss expense.

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Gains or losses on sales of securities of all classifications are recognized based on the specific identification method.

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").

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.

The remaining difference between the debt security's amortized cost basis and its fair value would be included in other comprehensive income (loss).

There were no OTTI charges recorded during the fiscal year ended March 31, 2023.

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.

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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.

Subsequent changes in fair value are included in Non-Interest Income in the consolidated statements of operations.

The valuation methodology for loans held-for-sale varies based upon the circumstances.

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Allowance for Credit Losses ("ACL")

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").

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.

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.

Carver also maintained a specific reserve allowance for criticized and classified loans individually reviewed for impairment.

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.

The ALLL was replaced by the ACL upon adoption of the current expected credit loss model ("CECL") under ASC 326.

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.

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Management continues its collection efforts on previously charged-off balances and applies recoveries as additions to the ACL.

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.

Expected credit losses were estimated using a regression model based on historical data from the Company and peer institutions.

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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).

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).

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

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.

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• Multifamily - Carver Federal originates and purchases recourse and non-recourse multifamily loans.

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.

The Bank generally requires a debt service coverage ratio at origination of at least 1.20x (with personal guarantees), and that the maximum loan-to-value ("LTV") at origination not exceed 75% based on the appraised value of the mortgaged property.

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

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.

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 owner/guarantor, the marketability of the property and the Bank's lending experience with the owner/guarantor.

• 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.

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.

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 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 owner/guarantor, the marketability of the property and the Bank's lending experience with the owner/guarantor.

The maximum LTV ratio on CRE loans at origination is generally 75% 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 1.20x (with guarantor recourse).

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.

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The loans provide for disbursement in stages as construction is completed.

Borrowers must satisfy

all credit requirements that apply to the Bank’s permanent mortgage loan financing for the mortgaged property.

Borrowers must satisfy all credit requirements that apply to the Bank’s permanent mortgage loan financing for the mortgaged property.

The Bank has additional criteria for construction loans, including an engineer’s plan and periodic cost reviews on all construction budgets for loans.

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Segment Reporting

The Company has determined that all of its activities constitute one reportable operating segment.

The Company has determined that all of its activities constitute one reportable operating segment, with operations primarily focused on community banking.

The Company's chief operating decision maker ("CODM") is the senior executive committee that includes the chief executive officer, chief financial officer, and chief administrative officer.

The primary measure of segment performance is consolidated net income (loss).

The CODM reviews the Company's financial information presented on a consolidated basis for purposes of making operating decisions and allocating resources, and evaluates financial performance by monitoring the revenue streams of its products and services, significant expenses, and budget to actual results.

The Company's segment assets are total assets as presented in the consolidated statements of financial condition and the measure of segment performance and significant segment expenses are presented in the consolidated statements of operations.

Concentration of Risk

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Other Real Estate Owned

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.

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, and is included in Other Assets in the consolidated statements of financial condition.

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.

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Preferred and Common Dividends

The Company is prohibited from paying any dividends without prior regulatory approval pursuant to the terms of the Formal Agreement and Resolution to which it is subject, and is generally subject to regulations governing the payment of dividends.

There are no assurances that the payments of common stock dividends will resume.

While Carver has suspended its regular quarterly cash dividend on its common stock, in the future, the Company may rely on dividends from Carver Federal to pay cash dividends to its stockholders and to engage in share repurchase programs.

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

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

The FRB regulates dividends paid by the Company.

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

Treasury Stock

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The compensation cost related to share-based payment transactions is included in Employee Compensation and Benefits in the consolidated statements of operations.

Compensation cost for all stock awards is calculated and recognized over a defined vesting period.

Compensation cost for all stock awards is calculated on the date of grant and recognized over a defined vesting period.

Forfeitures are accounted for as they occur.

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The Bank does not record any reserve for unconditionally cancellable unfunded lending commitment since the exposure may be canceled to prevent future credit loss.

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.

Reserves for unfunded lending commitments that are not unconditionally cancellable are included in Other Liabilities in the consolidated statements of financial condition and Provision for Credit Loss in the consolidated statements of operations.

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.

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.

The Company recorded a provision for credit loss for off-balance sheet credit exposures of $ 2 thousand and $ 1 thousand for the fiscal years ended March 31, 2025 and 2024, respectively.

The ACL on off-balance sheet credit exposures was $ 11 thousand and $ 9 thousand as of March 31, 2025 and 2024, respectively.

Designated as a Community Development Financial Institution ("CDFI") by the U.S.

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Accounting Standards Recently Adopted

On April 1, 2023, the Company adopted ASC 326, which replaces the guidance on recognition and measurement of credit losses for financial assets.

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.

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.

This differs from the incurred loss model, which delays recognition of credit losses until it is probable a loss has been incurred.

The Company applied the new guidance with a cumulative-effect adjustment to retained earnings as of April 1, 2023, using the modified-retrospective approach.

Results for reporting periods beginning after April 1, 2023 are presented under CECL.

Prior period amounts have not been restated and are reported in accordance with the incurred loss method.

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.

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.

2022-02, "Financial Instruments - Credit Losses (ASC 326):

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.

The amendments also require disclosure of current period gross writeoffs by year of origination.

The adoption of the standard did not have a material impact on the Company's consolidated statements of financial condition and results of operations.

On April 1, 2023, the Company adopted ASU No.

2021-10 "Government Assistance (Topic 832):

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.

The adoption of the standard did not have a material impact on the Company's consolidated statements of financial condition and results of operations.

On March 31, 2025, the Company adopted ASU No.

2023-07 "Segment Report (Topic 280):

Improvements to Reportable Segment Disclosures," which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The amendments in this update should be applied retrospectively to all prior periods presented in the financial statements.

The Company has determined that all of its activities constitute one reportable operating segment and there was no material impact on the consolidated financial statements upon adoption.

Accounting Standards Not Yet Adopted

In November 2024, the FASB issued ASU No.

2024-03 "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)" to improve the disclosures about a public business entity's expenses and address investor requests for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions.

2024-03 is effective for fiscal years beginning after December 15, 2026 (for the Company, the fiscal year ending March 31, 2028), and interim periods beginning after December 15, 2027.

Early adoption is permitted.

The amendments in this update should be applied either prospectively to financial statements issued for reporting periods after the effective date of this update, or retrospectively to any or all prior periods presented in the financial statements.

ASU 2024-03 is not expected to have a material impact on the Company's financial statements.

In January 2025, the FASB issued ASU No.

2025-01 to clarify the effective date of ASU No.

The amendment requires all public business entities to adopt the guidance in annual reporting periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027.

In December 2023, the FASB issued ASU No.

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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.

2023-07 "Segment Report (Topic 280):

Improvements to Reportable Segment Disclosures" to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

2023-07 is effective for fiscal years beginning after December 15, 2023 (for the

Company, the fiscal year ending March 31, 2025), and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The amendments in this update should be applied retrospectively to all prior periods presented in the financial statements.

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.

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.

2020-04 "Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting," which provides optional expedients and exceptions for applying GAAP to loan and lease agreements, derivative contracts, and other transactions affected by the anticipated transition away from LIBOR toward new interest rate benchmarks.

For transactions that are modified because of reference rate reform and that meet certain scope guidance (i) modifications of loan agreements should be accounted for by prospectively adjusting the effective interest rate and the modification will be considered "minor" so that any existing unamortized origination fees/costs would carry forward and continue to be amortized and (ii) modifications of lease agreements should be accounted for as a continuation of the existing agreement with no reassessments of the lease classification and the discount rate or remeasurements of lease payments that otherwise would be required for modifications not accounted for as separate contracts.

ASU 2020-04 is effective March 12, 2020 through December 31, 2022.

An entity may elect to apply ASU 2020-04 for contract modifications as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued.

Once elected for a Topic or an Industry Subtopic, the amendments in this ASU must be applied prospectively for all eligible contract modifications for that Topic or Industry Subtopic.

In December 2022, the FASB issued ASU No.

2022-06 "Reference Rate Reform (Topic 848):

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.

The amended guidance under Topic 848 and our ability to elect its optional expedients and exceptions are effective for us through December 31, 2024.

The Company has adopted the LIBOR transition relief allowed under this standard.

INVESTMENT SECURITIES

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.

Debt securities are classified into three categories:

trading, held-to-maturity, and available-for-sale.

At March 31, 2024, securities with fair value of $ 48.0 million, or 96.0 %, of the Bank’s total securities were classified as available-for-sale, and the remaining securities with amortized cost of $ 2.0 million, or 4.0 %, were classified as held-to-maturity, compared to $ 53.8 million and $ 2.3 million at March 31, 2023, respectively.

At March 31, 2025, securities with fair value of $ 44.5 million, or 96.2 %, of the Bank’s total securities were classified as available-for-sale, and the remaining securities with amortized cost of $ 1.8 million, or 3.8 %, were classified as held-to-maturity, compared to

$ 48.0 million and $ 2.0 million at March 31, 2024, respectively.

The Bank had no securities classified as trading at March 31, 2025 and March 31, 2024.

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.

Other investments as of March 31, 2025 primarily consisted of the Company and Bank's investments in limited partnership Community Capital Funds and a $ 5.0 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.

The investments in the limited partnerships are measured using the equity method.

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Total held-to-maturity $ 2,008 $ — $ ( 103 ) $ 1,905

There were no sales of available-for-sale securities and held-to-maturity securities for the year ended March 31, 2024 and March 31, 2023.

There were no sales of available-for-sale securities and held-to-maturity securities for the years ended March 31, 2025 and March 31, 2024.

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

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Total held-to-maturity securities $ — $ — $ ( 103 ) $ 1,872 $ ( 103 ) $ 1,872

A total of 24 securities had an unrealized loss at March 31, 2024 and March 31, 2023.

Management reviews the investment portfolio on a quarterly basis to identify and evaluate each investment that has an unrealized holding loss.

A total of 22 available-for-sale and held-to-maturity securities had an unrealized loss at March 31, 2025, compared to 24 at March 31, 2024.

Mortgage-backed securities, U.S.

government agency securities, municipal securities and a corporate bond security represented 51.6 %, 9.7 %, 32.3 % and 6.4 %, respectively, of total available-for-sale securities in an unrealized loss position at March 31, 2025.

There were eight mortgage-backed securities, two U.S.

There were seven mortgage-backed securities, three U.S.

government agency securities, one corporate bond and six municipal securities that had an unrealized loss position for more than 12 months at March 31, 2025.

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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.

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.

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.

The Bank's held-to-maturity portfolio consists of five mortgage-backed securities that were in an unrealized loss position for more than 12 months at March 31, 2025.

These securities 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.

As such, no allowance for credit losses on securities available-for-sale or held-to-maturity have been established as of March 31, 2025.

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Net deferred loan fees totaled $ 2.6 million and $ 2.9 million at March 31, 2025 and 2024, respectively.

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.

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.

During fiscal year 2025, the Bank purchased $ 15.4 million consumer loans at par.

The Bank purchased $ 31.5 million loans at par during fiscal year 2024, comprised of $ 20.0 million one-to-four family, $0.2 million business and $ 11.3 million consumer loans.

Substantially all of the Bank's real estate loans receivable are principally secured by properties located in New York City.

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At March 31, 2025 the Bank pledged $ 50.4 million in total real estate mortgage loans as collateral for advances from the FHLB-NY.

The Bank participated as a lender in the Paycheck Protection Program ("PPP"), which opened on April 3, 2020.

As part of the CARES Act, the Small Business Administration ("SBA") was authorized to temporarily guarantee loans under this new 7(a) loan program.

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.

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.

Business loans included PPP loans outstanding totaling $268 thousand as of March 31, 2024.

The net loan origination fees on these loans totaled approximately $3 thousand and are being recognized into interest income on loans over the 2-year and 5-year stated maturity terms of the PPP loans using the straight-line deferral method.

The Bank continues to receive debt forgiveness payments on PPP loans closed during the first and second rounds of the program.

As the loans are paid off, the remaining net deferred origination fees are accelerated into income.

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:

$ in thousands One-to-four family Multifamily Commercial Real Estate Construction Business Consumer Unallocated Total

The allowance for credit losses totaled $ 6.3 million and $ 5.9 million as of March 31, 2025 and 2024, respectively.

The increase was primarily attributed to a series of qualitative factor adjustments and an increase in individually analyzed loan reserv

es during fiscal year 2025.

The following is an analysis of the allowance for credit losses based upon the method of evaluating loan reserves under the expected loss methodology for the fiscal years ended March 31, 2025 and 2024:

At March 31, 2025

$ in thousands One-to-four family Multifamily Commercial Real Estate Construction Business Consumer Other Total

Allowance for credit losses:

Beginning Balance $ 2,005 $ 720 $ 1,222 $ 1 $ 1,415 $ 450 $ 58 $ 5,871

Impact of CECL adoption 1,220 ( 392 ) ( 497 ) 505 ( 166 ) ( 2 ) 668

Charge-offs — — — — ( 289 ) ( 581 ) — ( 870 )

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individually evaluated for impairment 1,499 3,933 8,322 — 13,079 33 — 26,866

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

At March 31, 2024

$ in thousands One-to-four family Multifamily Commercial Real Estate Construction Business Consumer Other Total

Allowance for loan losses:

Beginning Balance $ 716 $ 1,109 $ 1,814 $ — $ 1,139 $ 449 $ 2 $ 5,229

Impact of CECL adoption 1,220 ( 392 ) ( 497 ) 505 ( 166 ) ( 2 ) 668

Charge-offs — — — — ( 10 ) ( 160 ) — ( 170 )

Recoveries — — — — 55 6 — 61

Provision for (Recovery of) Loan Losses ( 105 ) ( 5 ) 1,233 ( 1,485 ) 462 — 100

Provision for (Recovery of) Loan Losses 69 3 ( 95 ) 1 ( 274 ) g 321 58 83

Ending Balance $ 2,005 $ 720 $ 1,222 $ 1 $ 1,415 $ 450 $ 58 $ 5,871

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March 31, 2025

$ in thousands Nonaccrual Loans with No Allowance Nonaccrual Loans with an Allowance Total

Nonaccrual Loans

Gross loans receivable:

One-to-four family $ 1,519 $ — $ 1,519

Multifamily 3,937 — 3,937

Commercial real estate 4,545 2,202 6,747

Business 12,255 104 12,359

Consumer — 33 33

Total nonaccrual loans $ 22,256 $ 2,339 $ 24,595

March 31, 2024

$ in thousands Nonaccrual Loans with No Allowance Nonaccrual Loans with an Allowance Total

Nonaccrual Loans Nonaccrual Loans

Nonaccrual Loans

Gross loans receivable:

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Total nonaccrual loans $ 11,631 $ 144 $ 11,775

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.

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.

There was no interest income recognized on nonaccrual loans during the twelve months ended March 31, 2025.

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.

At March 31, 2025 and March 31, 2024, other non-performing assets totaled $ 52 thousand, respectively, which consisted of other real estate owned comprised of one foreclosed residential property.

Other real estate owned is included in other assets in the consolidated statements of financial condition.

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Loss - Loans are considered uncollectible with insignificant value and are charged off immediately to the allowance for credit losses.

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.

One-to-four family residential loans and consumer loans are rated non-performing if they are delinquent in payments 90 or more days, or past maturity.

All other one-to-four family residential loans and consumer loans are performing loans.

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:

The following tables present 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, 2025 and 2024:

At March 31, 2025

$ in thousands 2025 2024 2023 2022 2021 2020 and earlier Revolving Loans Total

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Total Loans (excluding gross charge-offs) $ 15,763 $ 43,535 $ 88,074 $ 121,635 $ 132,727 $ 211,950 $ — $ 613,684

At March 31, 2023, the risk category by class of loans was as follows:

$ in thousands Multifamily Commercial Real Estate Business

At March 31, 2024

$ in thousands 2024 2023 2022 2021 2020 2019 and earlier Revolving Loans Total

Credit Risk Profile by Internally Assigned Grade:

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Substandard — — — 1,451 754 280 — 2,485

Doubtful — — — — — — — —

Loss — — — — — — — —

Total 980 6,587 53,516 52,229 29,237 34,654 — 177,203

One-to-four family Consumer

Commercial Real Estate

Pass $ 2,450 $ 29,064 $ 31,313 $ 27,635 $ 16,951 $ 62,775 $ — $ 170,188

Special Mention — — — — — 674 — 674

Substandard — — — — — 4,522 — 4,522

Doubtful — — — — — — — —

Loss — — — — — — — —

Total 2,450 29,064 31,313 27,635 16,951 67,971 — 175,384

Pass $ — $ 2,203 $ — $ — $ — $ — $ — $ 2,203

Special Mention — — — — — — — —

Substandard — — — — — — — —

Doubtful — — — — — — — —

Loss — — — — — — — —

Total — 2,203 — — — — — 2,203

Pass $ 7,050 $ 21,315 $ 32,675 $ 52,839 $ 10,845 $ 32,587 $ — 157,311

Special Mention — — — — — — — —

Substandard — — 7,939 3,987 — 365 — 12,291

Doubtful — — — — — — — —

Loss — — — — — — — —

Total 7,050 21,315 40,614 56,826 10,845 32,952 — 169,602

Gross charge-offs — — — — — 10 — 10

Credit Risk Profile Based on Payment Activity:

One-to-four Family

Performing $ — $ 22,247 $ 3,830 $ 13,422 $ 1,424 $ 39,002 $ — $ 79,925

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Total — 22,247 3,830 13,422 1,424 41,864 — 82,787

Loans are considered past due if required principal and interest payments have not been received as of the date such payments were contractually due.

Performing $ 2,003 $ — $ 11,891 $ — $ 570 $ — $ 4 $ 16 $ 1,172 $ — $ 15,656

Non-Performing — 42 1 — — — — 43

Total 2,003 11,933 571 4 16 1,172 — 15,699

Gross charge-offs — 18 1 — — 141 — 160

Total Loans (excluding gross charge-offs) $ 12,483 $ 93,349 $ 129,844 $ 150,116 $ 58,473 $ 178,613 $ — $ 622,878

L oans are considered past due if required principal and interest payments have not been received as of the date such payments were contractually due.

The following tables present an aging analysis of the amortized cost of past due loans receivable at March 31, 2025 and 2024.

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Commercial real estate — — 4,660 4,660 170,724 175,384

Construction — — — — 2,203 2,203

Business 1,959 214 12,071 14,244 155,358 169,602

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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.

The following table presents the amortized cost of collateral dependent loans with the associated allowance amount, if applicable, as of March 31, 2024:

Collateral Type

$ in thousands Real Estate Other Allowance Allocated

The following table presents the amortized cost of collateral dependent loans with the associated allowance amount, if applicable, as of March 31, 2025 and 2024:

At March 31, 2025

At March 31, 2024

Collateral Type Collateral Type

$ in thousands Real Estate Other Allowance Allocated Real Estate Other Allowance Allocated

One-to-four family $ 1,012 $ 487 $ — $ 4,151 $ — $ —

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There have been no significant changes to the types of collateral securing the Bank's collateral dependent loans.

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.

Impaired Loans by Class

At March 31, 2023

$ in thousands Recorded Investment Unpaid Principal Balance Associated Allowance Average Balance Interest Income Recognized

With no specific allowance recorded:

One-to-four family $ 3,972 $ 4,567 $ — $ 3,861 $ 111

Multifamily 71 71 — 220 —

Commercial real estate 7,190 7,378 — 4,054 36

Business 1,114 1,146 — 1,723 —

Consumer 1 1 — — —

With an allowance recorded:

One-to-four family 1,031 1,031 109 554 41

Business 4,809 4,820 202 5,116 316

Total $ 18,188 $ 19,014 $ 311 $ 15,528 $ 504

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.

In certain circumstances, the Bank will modify the terms of a loan, including 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.

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.

There were no loan modifications to borrowers experiencing financial difficulty made during the twelve months ended March 31, 2024.

There were three one-to-four family loans totaling $1.4 million modified during the twelve months ended March 31, 2023.

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.

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.

There were no loan modifications to borrowers experiencing financial difficulty made during the twelve months ended March 31, 2025 and 2024.

At March 31, 2025, loans modified to borrowers experiencing financial difficulty totaled $ 6.0 million, $ 389 thousand 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.

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 re

asonably assured.

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.

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.

For the fiscal years ended March 31, 2025 and 2024, there were no modified loans that defaulted within 12 months of modification.

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Premises and equipment, net $ 2,010 $ 2,567

Depreciation and amortization charged to operations was $ 1.0 million and $ 1.1 million for fiscal years 2024 and 2023, respectively.

The Company applies Accounting Standards Codification ("ASC") Topic 842, Leases ( " ASC 842") to its leases.

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.

The gain had been calculated utilizing the profit on sale in excess of the present value of the minimum lease payments, and the profit on the sale was deferred from gain recognition to be amortized into income over the terms of the leases in accordance with ASC Topic 840, Leases ("ASC 840").

ASC 842 does not require previous sale and leaseback transactions accounted for under ASC 840 to be reassessed.

As the implicit rates of the Company's existing leases are not readily determinable, the incremental borrowing rate used in determining the lease liability obligation for each individual lease was the FHLB-NY fixed-rate advance rates based on the remaining lease terms as of April 1, 2019.

Depreciation and amortization charged to operations was $ 813 thousand and $ 965 thousand for fiscal years 2025 and 2024, respectively.

As of March 31, 2025, operating right-of-use ("ROU") lease assets and related lease liabilities totaled $ 8.2 million and $ 8.9 million, respectively.

As of March 31, 2024, operating ROU lease assets and related lease liabilities totaled $ 9.8 million and $ 10.6 million, respectively.

As of March 31, 2025, the Company had $ 24 thousand and $ 26 thousand of ROU asset and lease liability, respectively, for finance leases related to equipment.

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The following tables present information about the Company's leases and the related lease costs as of and for the year ended March 31, 2025:

March 31, 2024

March 31, 2025 March 31, 2024

Weighted-average remaining lease term

Operating leases 4.3 years

Finance lease 2.6 years

Operating leases 3.5 years 4.3 years

Finance lease 1.3 years 2.6 years

Weighted-average discount rate

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2026 $ 2,893 $ 26

2026 2,687 42

Thereafter 80 —

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Federal Home Loan Bank Advances.

At March 31, 2024, the Bank had $ 28.0 million outstanding advances from the FHLB-NY.

During fiscal year 2024, the Bank secured a $ 3.0 million 18-month advance from the new FHLB-NY 0% Development Advance (ZDA) Program.

At March 31, 2025, the Bank had a $ 1.8 million outstanding advance from the FHLB-NY.

During fiscal year 2025, the Bank secured the $ 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.

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 $ 219.0 million at March 31, 2025.

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At March 31, 2025, advances were all fixed-rate and secured by pledges of the Bank's investment in FHLB-NY capital stock totaling $ 0.9 million, and a blanket assignment of pledged qualifying mortgage loans of $ 50.4 million and mortgage-backed and investment securities with a market value of $ 1.9 million.

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.

The accrued interest payable on FHLB advances was $109 thousand and interest expense was $ 1.1 million for the year ended March 31, 2024.

Bank has sufficient collateral at the FHLB-NY to be able to borrow $ 30.4 million from the FHLB-NY at March 31, 2025.

The accrued interest payable on FHLB-NY advances was $8 thousand and interest expense was $ 892 thousand for the year ended March 31, 2025.

The accrued interest payable on FHLB-NY advances was $109 thousand and the interest expense was $ 1.1 million for the year ended March 31, 2024.

FHLB-NY advances weighted average interest rates by remaining period to maturity are as follows:

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The trust preferred debt securities are redeemable at par quarterly at the option of the Company beginning on or after September 17, 2008, and have a mandatory redemption date of September 17, 2033.

Cash distributions on the trust preferred debt securities are cumulative and payable at a floating rate per annum resetting quarterly with a margin of 3.05 % over the three-month LIBOR.

During the second quarter of fiscal year 2017, the Company applied for and was granted regulatory approval to settle all outstanding debenture interest payments through September 2016.

Such payments totaling $ 2.5 million were made in September 2016.

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

Full payment was made on June 16, 2021.

The Company has since had discussions with the Federal Reserve Bank of Philadelphia regarding future quarterly payments.

A streamlined process has been developed for the Company to request regulatory approval to make debenture interest payments.

All quarterly interest payments subsequent to the June 2021 payment up to and including the June 2024 payment have been made.

Cash distributions on the trust preferred debt securities are cumulative and payable at a floating rate per annum resetting quarterly with a margin of 3.05 % over the three-month SOFR.

Debenture interest payments are subject to prior approval from the Federal Reserve Bank.

A streamlined process has been developed for the Company to request regulatory approval to make debenture interest payments, although there is no assurance that the Federal Reserve Bank will continue to approve such quarterly payments.

All quarterly interest payments up to and including the March 2025 payment were made.

The Company deferred the interest payment due June 17, 2025 in order to manage liquidity.

Debenture interest payments may be deferred for up to twenty consecutive quarters under the terms of the Indenture.

The accrued interest payable on subordinated debt securities was $ 43 thousand and the interest expense was $ 1.1 million for the year ended March 31, 2025.

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.

Paycheck Protection Program Liquidity Facility (PPPLF) .

The Federal Reserve established the PPPLF to support the PPP program by extending credit to eligible financial institutions that originate PPP loans, taking the loans as collateral at face value.

The interest rate on PPPLF advances is fixed at 0.35% and the maturity date is equal to the maturity date of the PPP loans pledged to secure the extension of credit.

During the twelve months ended March 31, 2023, the Bank repaid its remaining $3 thousand outstanding advance under its PPPLF.

There was no interest expense on PPLF advances for the years ended March 31, 2024 and 2023.

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.

Other Borrowings.

7 unchanged sentences

Year ending March 31,

2025 $ 28,027

Thereafter 13,403

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Subordinated debt securities 8.38 % 8.65 %

PPPLF — % 0.14 %

Other 1.51 % 1.54 %

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LOSS PER COMMON SHARE

The following table reconciles the loss available to common shareholders (numerator) and the weighted average common stock outstanding (denominator) for both basic and diluted loss per share for the years ended March 31:

The following table reconciles the loss attributable to common shareholders (numerator) and the weighted average common stock outstanding (denominator) for both basic and diluted loss per share for the years ended March 31:

$ in thousands except per share data 2025

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The conversions had no impact on the Company's total capital.

There were no conversions during the twelve months ended March 31, 2025.

On August 6, 2002, the Company announced a stock repurchase program to repurchase up to 15,442 shares of its outstanding common stock.

As of March 31, 2025, 11,744 shares of its common stock have been repurchased in open market transactions.

As a result of the Company's participation in the TARP CDCI, the United States Department of the Treasury's (the "U.S.

As a result of the Company's participation in the TARP CDCI, the United States Department of the Tre

asury's (the "U.S.

Treasury") prior approval was required to make further repurchases.

On August 6, 2020, the Company entered into a Securities Purchase Agreement with the U.S.

On August 6, 2020, the Company entered into a Securities Purchase Agreement (the "Agreement") with the U.S.

Treasury to repurchase 2,321,286 shares of the common stock of the Company, par value $0.01 per share, owned by the U.S.

Treasury for an aggregate purchase price of $ 2.5 million.

The stock repurchase provided for in the Securities Purchase Agreement was completed on August 6, 2020.

Upon completion of the repurchase pursuant to the Securities Purchase Agreement, the U.S.

The stock repurchase provided for in the Agreement was completed on August 6, 2020.

Upon completion of the repurchase pursuant to the Agreement, the U.S.

Treasury was no longer a stockholder in the Company.

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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.

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

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:

(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;

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On December 14, 2021, the Company entered into a Sales Agreement (the "Sales Agreement") with Piper Sandler & Co.

(“Piper Sandler”), as sales agent, pursuant to which the Company may offer and sell shares of our common stock, par value $0.01 per share, having an aggregate gross sales price of up to $20.0 million (the “ATM Shares”) from time to time.

(“Piper Sandler”), as sales agent, pursuant to which the Company may offer and sell shares of its common stock, par value $0.01 per share, having an aggregate gross sales price of up to $20.0 million (the “ATM Shares”) from time to time.

Any sales made under the Sales Agreement will be sales deemed to be "at-the-market (ATM) offerings," as defined in Rule 415 under the Securities Act of 1933, as amended.

These sales will be made through ordinary broker transactions on the NASDAQ Capital Market stock exchange at market prices prevailing at the time, at prices related to the prevailing market prices, or at negotiated prices.

The Company intends to use the net proceeds of these offerings for general corporate purposes, including support for organic loan growth and repayment of all or a portion of the outstanding principal amount of our outstanding subordinated debt securities.

The net proceeds of these offerings were used for general corporate purposes, including support for organic loan growth.

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.

There were no additional offerings in fiscal year 2023 and during the twelve months ended March 31, 2024.

There have been no subsequent offerings.

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.

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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.

On November 25, 2024, the Company entered into investment purchase agreements with certain Company directors under which it issued and sold 116,766 shares of its common stock, par value $0.01, at a price of $ 1.67 per share.

The shares were issued on November 25, 2024, in a private placement exempt from registration under Section 4(2) of the Securities Act of 1933, as amended.

The offering resulted in gross proceeds of $ 0.2 million.

There were no underwriting discounts or commissions.

Regulatory Capital .

The operations and profitability of the Bank are significantly affected by legislation and the policies of the various regulatory agencies.

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.

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.

Effective January 1, 2020, the federal banking agencies adopted a rule to establish for institutions with assets of less than $10 billion that meet other specified criteria a "community bank leverage ratio" (the ratio of a bank's tangible equity capital to average total consolidated assets) of 9% that such institutions may elect to utilize in lieu of the generally applicable leverage and risk-based capital requirements.

A "qualifying community bank" with capital exceeding 9% will be considered compliant with all applicable regulatory capital and leverage requirements, including the requirement to be “well capitalized.” For the current period, the Bank has elected to continue to utilize the generally applicable leverage and risk-based requirements and not apply the community bank leverage ratio.

Carver Federal, as a matter of prudent management, targets as its goal the maintenance of capital ratios which exceed these minimum requirements and that are consistent with Carver Federal's risk profile.

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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.

At March 31, 2024, the Bank's capital level exceeded the regulatory requirements and its IMCR requirements with a Tier 1 leverage ratio of 9.56 %, Common Equity Tier 1 capital ratio of 12.00 %, Tier 1 risk-based capital ratio of 12.00 %, and a total risk-based capital ratio of 12.98 %.

At March 31, 2025, the Bank's capital level exceeded the regulatory requirements to be considered "well capitalized" but did not meet its IMCR requirements.

The Tier 1 leverage ratio was 8.70 %, below the 9% IMCR requirement, and the total risk-based capital ratio was 11.56 %, below the 12% IMCR requirement.

The Bank is working on taking appropriate actions with the goal of achieving the IMCR targets.

The table below presents the Bank's regulatory capital ratios at March 31, 2025 and 2024.

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March 31, 2024

Other Comprehensive Loss At

Other Comprehensive Income, net of tax At

March 31, 2025

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March 31, 2023

Other Comprehensive Loss At

Other Comprehensive Loss, net of tax At

March 31, 2024

Net unrealized loss on securities available-for-sale $ ( 12,215 ) $ ( 490 ) $ ( 12,705 )

There were no reclassifications out of accumulated other comprehensive loss to the consolidated statement of operations for the twelve months ended March 31, 2024 and 2023.

Comprehensive Income (Loss).

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.

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.

There were no reclassifications out of accumulated other comprehensive income (loss) to the consolidated statement of operations for the twelve months ended March 31, 2025 and 2024.

EMPLOYEE BENEFIT AND STOCK COMPENSATION PLANS

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All such matching contributions are fully vested and non-forfeitable at all times regardless of the years of service with the Bank.

The Bank reinstated the 401(k) match in January 2022, which had been suspended since October 2020.

Compensation expense recognized for the 401(k) matching contributions was $ 305 thousand and $ 330 thousand, respectively, for fiscal 2025 and 2024.

Stock Option Plans.

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.

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.

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.

Shares generally vest in 20% increments over 5 years, however, the Committee may specify a different vesting schedule.

At March 31, 2024, there were 3,600 options outstanding under the 2006 Incentive Plan and 3,600 were exercisable.

All options are exercisable immediately upon a participant's disability, death or a change in control, as defined in the 2006 Incentive Plan, if the person is employed on that date.

If the person is terminated (voluntary or involuntarily) from the Bank, all unvested shares are forfeited.

Pursuant to the plan, the Bank recognized no expense for fiscal years 2024 and 2023.

In September 2014, Carver stockholders approved the Carver Bancorp, Inc.

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Unless the Committee determines otherwise, the award agreements will specify that no award will vest more rapidly than 25% per year over a four-year period, with the first installment vesting one year after the date of grant, subject to acceleration upon the occurrence of specific events.

During fiscal year 2024, 83,000 restricted stock awards were issued.

There were 83,000 restricted stock awards issued in fiscal year 2024.

At March 31, 2025, there were 6,267 options outstanding under the 2014 Incentive Plan and 6,267 were exercisable.

All options are exercisable immediately upon a participant's disability, death or change in control, as defined in the 2014 Incentive Plan, if the person is employed on that date.

All options are exercisable i

mmediately upon a participant's disability, death or change in control, as defined in the 2014 Incentive Plan, if the person is employed on that date.

If the person is terminated (voluntary or involuntarily) from the Bank, all unvested shares are forfeited.

Pursuant to the plan, the Bank recognized $ 26 thousand as expense for fiscal year 2025 and $ 68 thousand in fiscal year 2024.

In December 2024, Carver stockholders approved the Carver Bancorp, Inc.

2024 Equity Incentive Plan (the "2024 Incentive Plan") which provides for discretionary option grants, stock appreciation rights and restricted stock to executive officers, employees and directors who are selected to receive awards by the Committee.

The 2024 Incentive Plan authorizes Carver to grant awards with respect to 350,000 shares.

During fiscal year 2025, 58,139 restricted stock awards were issued and the Bank recognized $ 8 thousand as expense pursuant to the plan.

Information regarding nonvested shares of restricted stock awards outstanding for the years ended March 31 is as follows:

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At March 31, 2025, all outstanding options had no intrinsic value.

The Company recorded stock compensation expense of $ 2 thousand in fiscal 2023.

COMMITMENTS AND CONTINGENCIES

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Lines of credit $ 3,208 $ 4,268

Letters of credit 412 —

Commitment to fund private equity investment 763 650

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The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on management's credit evaluation of the counterparty.

The Company records an allowance for credit losses on off-balance sheet credit exposures, unless such commitments are unconditionally cancellable, through the provision for credit losses expense using CECL expected loss methodology.

The allowance for credit losses on off-balance sheet credit exposures was $ 11 thousand and $ 9 thousand as of March 31, 2025 and 2024, respectively, and is included in Other Liabilities in the consolidated statements of financial condition.

Mortgage Representation & Warranty Liabilities

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$ in thousands Fair Value at March 31, 2025

Valuation Technique Significant Unobservable Inputs Significant Unobservable Input Value

Mortgage Servicing Rights 140 Discounted Cash Flow Weighted Average Constant Prepayment Rate (1)

Range of Inputs 3.0% to 7.1%

Option Adjusted Spread ("OAS") applied to Treasury curve 1000 basis points

Valuation Technique Significant Unobservable Inputs Range Weighted Average

Mortgage Servicing Rights $ 130 Discounted Cash Flow Constant Prepayment Rate (1)

3.0% to 9.8% 6.4 %

Option Adjusted Spread ("OAS") N/A 1000 basis points

$ in thousands Fair Value at March 31, 2024

Valuation Technique Significant Unobservable Inputs Significant Unobservable Input Value

Mortgage Servicing Rights 152 Discounted Cash Flow Weighted Average Constant Prepayment Rate (1)

Range of inputs 3.1% to 9.5%

Option Adjusted Spread ("OAS") applied to Treasury curve 1000 basis points

(1) Represents annualized loan repayment rate assumptions

Valuation Technique Significant Unobservable Inputs Range Weighted Average

Mortgage Servicing Rights $ 140 Discounted Cash Flow Constant Prepayment Rate (1)

3.0% to 7.1% 6.4 %

Option Adjusted Spread ("OAS") N/A 1000 basis points

(1) Represents annualized loan repayment rate assumptions (ZMUPT model)

Certain assets are measured at fair value on a non-recurring basis.

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$ 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

Impaired loans $ — $ — $ 5,529 $ 5,529

Other real estate owned $ — $ — $ 52 $ 52

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Valuation Technique Significant Unobservable Inputs Significant Unobservable Input Value

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

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Any subsequent adjustments will be to the lower of cost or fair value.

As of March 31, 2024 and 2023, we had loans with a carrying value of $15.2 million and $5.6 million, respectively, for which formal foreclosure proceedings were in process.

As of March 31, 2025 and 2024, the Company had loans with a carrying value of $16.1 million and $15.2 million, respectively, for which formal foreclosure proceedings were in process.

FAIR VALUE OF FINANCIAL INSTRUMENTS

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VARIABLE INTEREST ENTITIES

Variable interest entities (“VIEs”) are consolidated, as required, where Carver has a controlling financial interest in these entities and is deemed to be the primary beneficiary.

Carver is normally deemed to have a controlling financial interest and be the primary beneficiary if it has both (a) the power to direct activities of a VIE that most significantly impact the entities economic performance;

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.

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

The Company's subsidiary, Carver Statutory Trust I (the "Trust"), was formed in 2003 for the purpose of issuing $ 13 million aggregate liquidation amount of floating rate Capital Securities due September 17, 2033 (“Capital Securities”) and $ 0.4 million of common securities (which are the only voting securities of the Trust), which are 100 % owned by Carver Bancorp, Inc., and using the proceeds to acquire Junior Subordinated Debentures issued by Carver Bancorp, Inc.

The Company's subsidiary, Carver Statutory Trust I (the "Trust"), is not consolidated with Carver Bancorp, Inc.

for financial reporting purposes.

The Trust was formed in 2003 for the purpose of issuing $ 13 million aggregate liquidation amount of floating rate Capital Securities due September 17, 2033 (“Capital Securities”) and $ 0.4 million of common securities (which are the only voting securities of the Trust), which are 100 % owned by Carver Bancorp, Inc., and using the proceeds to acquire Junior Subordinated Debentures issued by Carver Bancorp, Inc.

Carver Bancorp, Inc.

has fully and unconditionally guaranteed the Capital Securities along with all obligations of the Trust under the trust agreement relating to the Capital Securities.

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.

The Company does not consolidate the accounts and related activity of Carver Statutory Trust I because it is not the primar

y beneficiary of the entity.

At March 31, 2025, 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.

The Bank's subsidiary, Carver Community Development Corporation (“CCDC”), was formed to facilitate its participation in local economic development and other community-based initiatives.

Per the NMTC Award's Allocation Agreement between the CDFI Fund and CCDC, CCDC is permitted to form and sub-allocate credits to subsidiary Community Development Entities (“CDEs”) to facilitate investments in separate development projects.

CCDC established various special purpose entities (CDEs 22-25) through which its investments in NMTC eligible activities will be conducted.

As of March 31, 2024, there have been no activities in these entities.

The Company had no consolidated VIEs at March 31, 2025.

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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.

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.

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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.

The payment for these services are received at the time the services are provided or when customer transactions take place.

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).

These standard lending fees are recognized as revenue over the period the related service is provided.

The payments are received when such services are provided and these standard lending fees are recognized as revenue over the period the related service is provided.

Other non-interest income

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.

The revenue is recognized over the period the related service is provided.

Other non-interest income includes 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.

The payments are typically received monthly and the revenue is recognized over the period the related service is provided and collected in accordance with the agreements.

Interchange income

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Other non-interest income:

Empowering Change program fees $ 394 $ 328

BOLI income 179 459

Other 483 228

Total non-interest income $ 576 $ 942

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Data lines / internet 427 417

Security services 506 44

Retail expenses 999 1,151

Operating chargeoffs and other losses 46 497

Director's fees 402 373

Other 3,336 3,025

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$ in thousands 2025

Equity in net loss/income from subsidiaries $ ( 457 ) $ ( 2,640 )

Equity in net loss from subsidiaries $ ( 9,888 ) $ ( 457 )

Other income 91 135

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Adjustments to reconcile net loss to net cash from operating activities:

Equity in net loss/income from subsidiaries 457 2,640

Equity in net loss from subsidiaries 9,888 457

Restricted stock vesting 66 219

Increase in other assets ( 59 ) ( 57 )

Decrease (increase) in other assets 96 ( 59 )

Increase in accounts payable to subsidiaries 2,431 1,825

Decrease in other liabilities ( 488 ) ( 14 )

Increase (decrease) in other liabilities 229 ( 488 )

Net cash used in operating activities ( 1,034 ) ( 1,023 )

Cash Flows From Investing Activities

Purchase of equity investment ( 658 ) —

Capital contribution ( 1,000 ) —

Decrease (increase) in equity investment 189 ( 658 )

Net cash used in investing activities ( 811 ) ( 658 )

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Net cash provided by financing activities 195 3,500

Net increase (decrease) in cash 1,819 ( 765 )

Net (decrease) increase in cash ( 1,650 ) 1,819

Cash and cash equivalents – beginning 2,487 668

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SUBSEQUENT EVENTS

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.

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.

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.

On May 14, 2025, the Bank entered into the Formal Agreement between the Bank and the OCC.

The Formal Agreement specifically provides that the Bank will take the following actions within the time frames specified:

• Establish a Compliance Committee of its Board of Directors to specifically monitor and oversee the Bank's compliance with the Formal Agreement.

This Committee has already been established and is actively underway;

• Prepare a three-year strategic plan for the OCC's review, with such strategic plan to establish objectives specifically focusing on the Bank's earnings performance that will include measures for growth, capital, liquidity and balance sheet mix;

• Prepare an earnings program for the OCC's review designed to improve and sustain the earnings of the Bank.

The Formal Agreement specifically addresses the items referenced above through a new three-year strategic plan.

The Bank's board of directors and management will address these provisions within the required time frames.

Further, the Bank's board of directors and management are fully committed to, as expeditiously as possible, achieving sustainable earnings through a more robust and viable strategic plan, which are part of the Bank's new ongoing operations and actions under the leadership of its new Chief Executive Officer.

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.

What changed 10-K

Item 8. Financial Statements and Supplementary Data