Stockholders' Equity

12 Months Ended

Mar. 31, 2012

Stockholders' Equity Attributable to Parent [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

STOCKHOLDERS' EQUITY

Conversion and Stock Offering. On October 24, 1994, the Bank issued in an initial public offering 2,314,375 shares of common stock, par value $0.01 (the “Common Stock”), at a price of $10 per share resulting in net proceeds of $21.5 million.  As part of the initial public offering, the Bank established a liquidation account at the time of conversion, in an amount equal to the surplus and reserves of the Bank at September 30, 1994.  In the unlikely event of a complete liquidation of the Bank (and only in such event), eligible depositors who continue to maintain accounts shall be entitled to receive a distribution from the liquidation account.  The total amount of the liquidation account may be decreased if the balances of eligible deposits decreased as measured on the annual determination dates.  The Bank is not permitted to pay dividends to the Company on its capital stock if the effect thereof would cause its net worth to be reduced below either: (i) the amount required for the liquidation account, or (ii) the amount required for the Bank to comply with applicable minimum regulatory capital requirements.

Regulatory Capital.  The operations and profitability of the Bank are significantly affected by legislation and the policies of the various regulatory agencies.  The OCC has promulgated capital requirements for financial institutions consisting of minimum tangible and core capital ratios of 1.5% and 3.0%, respectively, of the institution's adjusted total assets and a minimum risk-based capital ratio of 8.0% of the institution's risk weighted assets.  Although the minimum core capital ratio is 3.0%, the Federal Deposit Insurance Corporation Improvement Act (“FDICIA”), as amended, stipulates that an institution with less than 4.0% core capital is deemed undercapitalized. In assessing an institution's capital adequacy, the OCC takes into consideration not only these numeric factors but also qualitative factors as well, and has the authority to establish higher capital requirements for individual institutions where necessary.  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. The previously described Cease and Desist Order Carver Federal entered into with the OCC includes a capital directive requiring the Bank to achieve and maintain regulatory capital levels of a Tier I core capital ratio of 9% and a total risk-based capital ratio of 13% by April 30, 2011. At March 31, 2012, Carver Federal exceeded the capital directives with a tangible capital ratio of 9.83% total risk-based capital ratio of 16.94% and a leverage capital ratio of 14.50%.

On June 29, 2011 the Company raised $55 million of capital. The $55 million resulted in a $52 million increase in liquidity due to the effect of various expenses associated with the capital raise. In addition, the Company has downstreamed $37 million to Carver Federal Savings Bank, the Company's wholly owned bank subsidiary. In December 2011 another $7 million capital injection was made in the Bank. The remainder of the net capital raised is retained by the Company for future strategic purposes. No assurances can be given that the amount of capital raised is sufficient to absorb the expected losses in the Bank's loan portfolio. Should the losses be greater than expected, additional capital may be necessary in the future.

At March 31, 2012 the increase in the Company and Bank's capital position results in the Company and the Bank meeting the capital directives within the Orders.

In addition, no assurances can be given that the Bank and the Company will continue to comply with all provisions of the Order. Failure to comply with these provisions could result in further regulatory actions to be taken by the regulators.

The capital raise triggered a change in control under Section 382 of the Internal Revenue Code.  Generally,  Section 382 limits the utilization of an entity's net operating loss carry forwards and general business credits upon a change in control.  If the change in control is triggered, it could  result in a loss of deductibility of a portion of the Company's deferred tax asset. The Company has a net deferred tax asset (“DTA”) of approximately $27.7 million.  Based on Management's calculations the Section 382 limitation has resulted in a reduction of the deferred tax asset of $6.1 million.  A full valuation allowance for the remaining net deferred tax asset of $21.6 million has been recorded.

The following is a summary of the Bank's actual capital amounts as of March 31, 2012. As a result of the Order to Cease and Desist the Bank is deemed adequately capitalized.

($ in thousands)	GAAP Capital		Tangible Equity			Leverage Capital			Risk-Based Capital
Stockholders' Equity at March 31, 2012	$	63,182	$	63,182		$	63,182		$	63,182
Add:
General valuation allowances			—			—			5,605
Qualifying subordinated debt			—			—			5,000
Other			—			—			—
Deduct:			—			—			—
Unrealized gains on securities available-for-sale, net			235			235			235
Goodwill and qualifying intangible assets, net			—			—			—
Regulatory Capital			62,947			62,947			73,552
Minimum Capital requirement			57,650			56,445			56,445
Regulatory Capital Excess			$	5,297		$	6,502		$	17,107
Capital Ratios			9.83		%	14.50		%	16.94		%

Comprehensive Income (Loss). Comprehensive income (loss) represents net income (loss) and certain amounts reported directly in stockholders' equity, such as the net unrealized gain or loss on securities available for sale and loss on pension liability.  The Company has reported its comprehensive income (loss) for fiscal 2012, 2011 and 2010 in the Consolidated Statements of Changes in Stockholders' Equity and Comprehensive Income/(Loss).  Carver Federal's accumulated other comprehensive income (loss) included net unrealized gains on securities at March 31, 2012 of $0.4 million and net unrealized losses on securities of 2011 of $0.1 million, respectively.   Also included in accumulated other comprehensive income (loss) was a loss on the Bank's pension plan liabilities of $0.2 million and $0.3 million at March 31, 2012 and 2011, respectively.