Carver Bancorp(CARV) - 2019 Q3 - Quarterly Report

Financial Performance - The Company reported a net loss of $1.3 million for the three months ended December 31, 2018, compared to a net loss of $944 thousand for the same period in the prior year [205]. - Return on average assets for the three months ended December 31, 2018, was (0.91)%, compared to (0.58)% in 2017 [206]. - Net interest income decreased by $0.6 million, or 12.6%, to $4.1 million for the three months ended December 31, 2018, compared to $4.7 million for the same quarter last year [214]. - Efficiency ratio increased to 130.37% for the three months ended December 31, 2018, from 115.03% in 2017 [206]. - Return on average stockholders' equity was (11.13)% for the three months ended December 31, 2018, compared to (8.08)% in 2017 [213]. - Net interest income for the nine months ended December 31, 2018, decreased by $1.8 million, or 12.3%, to $12.9 million compared to $14.7 million for the prior year period [214]. - Non-interest income decreased by $19 thousand, or 1.4%, for the three months ended December 31, 2018, compared to the prior year [234]. - Non-interest expense increased by $0.1 million, or 1.8%, to $7.1 million for the three months ended December 31, 2018 [235]. Asset and Liability Management - Carver Bancorp, Inc. had approximately $590.4 million in assets as of December 31, 2018 [141]. - Total assets decreased by $103.5 million, or 14.9%, from $693.9 million at March 31, 2018, to $590.4 million at December 31, 2018 [192]. - Total liabilities decreased by $99.4 million, or 15.5%, to $542.5 million at December 31, 2018, compared to $641.9 million at March 31, 2018 [196]. - Total cash and cash equivalents decreased by $94.5 million to $40.1 million at December 31, 2018, from $134.6 million at March 31, 2018 [177]. - Gross portfolio loans decreased by $50.3 million, or 10.5%, to $427.4 million at December 31, 2018, primarily due to attrition and payoffs of non-owner occupied commercial real estate mortgage loans [195]. - Deposits decreased by $73.9 million, or 12.6%, to $513.0 million at December 31, 2018, due primarily to declines in brokered certificate of deposit accounts [197]. Capital and Reserves - The Company has fully reserved all but $212 thousand of its deferred tax asset, indicating minimal impact on financial statements [169]. - The capital raise on June 29, 2011, resulted in a $51.4 million increase in equity after expenses [170]. - As of December 31, 2018, the Bank's Tier 1 leverage capital ratio was 10.79%, exceeding the Individual Minimum Capital Requirement (IMCR) of 9% [184]. - The Bank's Common Equity Tier 1 capital ratio stood at 16.00%, significantly above the minimum capital requirement of 4.50% [181]. - The allowance for loan losses (ALLL) was $4.8 million at December 31, 2018, representing a ratio of the ALLL to nonaccrual loans of 48.4% [226]. - The ratio of allowance to total loans was 1.12% at December 31, 2018, compared to 1.07% at March 31, 2018 [226]. Loan Performance and Risk - Nonaccrual loans totaled $9.9 million, or 1.7% of total assets, at December 31, 2018, compared to $6.7 million, or 1.0% of total assets at March 31, 2018 [226]. - The total non-performing loans amounted to $9.9 million, representing 2.32% of total loans, an increase from 1.39% at March 31, 2018 [230]. - Subprime loans accounted for $5.4 million, or 1.3% of the total loan portfolio, with $1.6 million classified as non-performing [232]. - The provision for loan losses recorded a recovery of $332 thousand for the three months ended December 31, 2018, compared to a $6 thousand provision for loan loss for the prior year quarter [225]. - The allowance to non-performing loans ratio was 48.43% as of December 31, 2018, down from 76.94% at March 31, 2018 [230]. Community Engagement and Development - Approximately 75% of originated and purchased loans were within Carver's assessment area, demonstrating excellent responsiveness to community needs [141]. - The Bank's community development initiatives are overseen by Carver Community Development Corporation, which coordinates local economic development and financial literacy activities [146]. - Carver Federal offers a suite of products for unbanked and underbanked consumers, branded as Carver Community Cash [142]. - The Bank's community involvement and targeted services help it compete effectively in its market despite intense competition [145]. Economic and Regulatory Environment - The Bank's financial results may be impacted by changes in economic conditions, regulatory requirements, and interest rates [137]. - The Bank's competition for deposits comes from commercial banks, savings institutions, credit unions, and financial intermediaries, which have greater resources [144]. - The Bank's primary market area includes low- to moderate-income neighborhoods in Brooklyn, Manhattan, and Queens, facing significant competition from larger financial institutions [144].