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Carver Bancorp Inc. Reports Operating Results (10-Q)

August 16, 2010 | About:

Carver Bancorp Inc. (NASDAQ:CARV) filed Quarterly Report for the period ended 2010-06-30.

Carver Bancorp Inc. has a market cap of $16.09 million; its shares were traded at around $6.5 with and P/S ratio of 0.35. The dividend yield of Carver Bancorp Inc. stocks is 1.54%.CARV is in the portfolios of Third Avenue Management, Martin Whitman of Third Avenue Value Fund.

Highlight of Business Operations:

Recognition of the Banks $59.0 million NMTC award began in December 2006 when the Bank invested $29.5 million, one-half of its $59 million award. In December 2008, the Bank invested an additional $10.5 million and transferred rights to $19.2 million to an investor in a NMTC project. The Banks NMTC allocation was fully invested as of December 31, 2008. During the seven year period beginning December 2006, assuming the Bank meets compliance requirements, the Bank will receive 39% of the $40.0 million invested award amount in tax benefits (5% over each of the first three years, and 6% over each of the next four years). The Company expects to receive the remaining NMTC tax benefits of approximately $7.2 million from its $40.0 million investment over the next four years.

In March 2010, the Bank transferred rights to investors in NMTC projects totaling $44.5 million and recognized a gain on the transfer of rights of $0.4 million. The Bank and CCDC have involvements with special purpose entities that were created to facilitate the ultimate investments to be made by the investors. The Bank also recorded deferred income of $0.6 million related to the transfer that is expected to be recognized into income in future periods after the ultimate investments are made. In June 2010, the investors made qualifying investments of $8.7 million of the $44.5 million noted above. The Bank released into earnings $0.2 million of the deferred income and also recognized additional income of $0.2 million related to these investments. In addition, CCDC has retained a 0.01% interest in three other entities created to facilitate the investments with the investor owning the remaining 99.99%. CCDC also provides certain administrative services to these special purpose entities. The Bank has determined that its and CCDCs involvement with these special purpose entities does not expose it to the majority of expected loss or residual returns and therefore it is not the primary beneficiary of these entities.

Net cash provided by financing activities was $0.6 million, primarily resulting from increased core deposits of $11.9 million, offset partially by a maturity of a fix rate borrowing of $11.0 million. Net cash provided by operating activities during this period was $0.7 million and was primarily the result of an increase in provision for loan losses of $6.2 million, a decrease in cash flow from other assets of $3.3 million and changes in other non-cash charges. Net cash provided by investing activities was $11.4 million, primarily the result of large loan paydowns and payoffs during the quarter.

At June 30, 2010, total assets decreased $1.6 million, or 0.2%, to $803.9 million compared to $805.5 million at March 31, 2010. The decline in total assets is primarily due to a decrease in loans receivable of $26.4 million offset by an increase in cash of $12.8 million, investment securities of $9.3 million, deferred tax asset of $2.4 million and other assets of $0.4 million.

Loans receivable, decreased $26.4 million, or 4.0%, to $631.6 million at June 30, 2010 compared to $658 million at March 31, 2010. Principal repayments net of advances and originations across all loan classifications contributed to the majority of the decrease (Construction ($4.9 million), Commercial ($5.8 million) and Business ($5.4 million)) coupled with an increase in the allowance in loan loss of $3.6 million. The Bank continues to utilize prudent pricing and underwriting standards in originating new loans. This ongoing commitment demonstrates Carvers belief in the stability of its local communities during these difficult economic times and its commitment to making credit available to qualified homeowners and business owners.

Deposits increased $11.9 million, or 1.97%, to $615.0 million at June 30, 2010 compared to $603.2 million at March 31, 2010. The increase is primarily due to $12.0 million in transaction accounts opened in June 2010 related to a new customer affiliated with our NMTC activities and are expected to be disbursed over a 12 month period.. Core deposits grew by $10.0 million which replaced a $10.0 million institutional deposit.

Read the The complete Report

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Charlie Tian, Ph.D. - Founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

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