Breaking Down Carver Bancorp, Inc. (CARV) Financial Health: Key Insights for Investors

You're looking at Carver Bancorp, Inc. (CARV) and trying to figure out if the community mission outweighs the financial headwinds, and honestly, the numbers from the Q3 2025 earnings report, released mid-November, demand a clear-eyed view.

The headline is tough: the company posted a net loss of $(2.4) million for the quarter, continuing a trend that saw a $(3.6) million net loss for the first six months of the fiscal year, and that translates to a loss per share of $(0.46) for the quarter. Total assets are shrinking, too, dropping by 4.4% to $697.9 million as of September 30, 2025, while the efficiency ratio-a measure of expense against revenue-is elevated at a defintely high 138.3% for the quarter, meaning they're spending significantly more than they are bringing in. Plus, nonaccrual loans (loans not currently generating interest) stand at $26.7 million, representing 4.5% of the total loan portfolio, which is a key risk indicator you can't ignore. We need to unpack what these metrics mean for a bank that's also navigating a Formal Agreement with the OCC (Office of the Comptroller of the Currency) and planning to voluntarily delist from Nasdaq for the OTCQX market in December.

Revenue Analysis

You need to know where the money is coming from at Carver Bancorp, Inc. (CARV) to gauge its sustainability, and the short answer is: the core engine is sputtering, but fee-based income is trying to pick up the slack. For the fiscal year ending March 31, 2025, the company's Net Interest Income (NII)-the profit from lending after paying depositors-fell by a significant 15.0% to $19.2 million from the prior year. This drop is a clear signal of margin pressure.

The primary revenue streams for Carver Bancorp, Inc. are typical for a community bank, revolving around two main components: Net Interest Income and Non-Interest Income. This is a bank, so the lending side is defintely the most important. The bank operates primarily through its subsidiary, Carver Federal Savings Bank, serving the New York metropolitan area.

The Core: Net Interest Income Contraction

Net Interest Income is the lifeblood of any bank. While Carver Bancorp, Inc.'s Total Interest Income for the 2025 fiscal year was $34.3 million, a slight 0.9% increase, the Net Interest Income was severely eroded. The core problem wasn't a lack of interest earned, but the cost of funding it.

• Net Interest Income (FY 2025): $19.2 million
• Year-over-Year Change: -15.0%
• Primary Cause: A $3.6 million increase in interest expense.

Here's the quick math: higher interest rates mean the bank pays more to keep deposits, squeezing the profit margin on the loans they make. This is a common near-term risk for smaller, regional banks right now.

The Secondary Engine: Non-Interest Income

Non-Interest Income, which comes from fees and other services, is a smaller but increasingly important part of the revenue mix. This is where you see the bank's efforts to diversify beyond pure lending. In the most recent quarterly report (Q3 2025, calendar), Non-Interest Income rose to $1.2 million.

This segment's contribution to the total core operating revenue (NII plus Non-Interest Income) for that quarter was roughly 19% ($\frac{\$1.2M}{\$5.13M + \$1.2M}$). This is a segment to watch, as growth here can offset some of the NII pressure.

Significant Revenue Shifts and Opportunities

The most significant change is the reduction in interest-earning assets. The Interest Income for the quarter ended September 30, 2025, was $8.6 million, which was down $1.3 million year-over-year. This was largely due to lower loan balances and yield, meaning the bank is either lending less or the loans it has are generating less interest than before. Total assets also decreased by 4.4% from March 31, 2025, to $697.9 million as of September 30, 2025.

Still, there are green shoots. The bank secured a $25 million revolving unsecured long-term loan facility to support green energy projects and minority and women-owned business enterprises, a strategic move that could boost future interest income, though no funds had been drawn as of March 31, 2025. This aligns with their community-focused Mission Statement, Vision, & Core Values of Carver Bancorp, Inc. (CARV).

The immediate action for investors is to track the Net Interest Margin (NIM); it decreased to 2.97% for the Q3 2025 quarter, down from 3.27% in the prior year quarter. This tells you the profit margin on their lending is shrinking. Finance: monitor NIM alongside Non-Interest Income growth to see if the core business can stabilize.

Profitability Metrics

You're looking for a clear-eyed assessment of Carver Bancorp, Inc.'s (CARV) profitability, and the short answer is that the bank is facing significant headwinds. The core takeaway is a deeply negative net margin that is far out of step with the community banking industry, signaling a struggle with cost management and interest rate spread.

For the 2025 fiscal year, Carver Bancorp, Inc. reported a substantial Net Loss of $13.7 million, driven by increased interest and non-interest expenses. This is a critical figure, as consistent losses erode shareholder equity and limit growth potential. Here's the quick math on the key profitability ratios, using TTM (Trailing Twelve Months) data as of late 2025 for the most current picture:

• Gross Profit Margin (Net Interest Income Margin): 55.98% (FY 2025)
• Operating Profit Margin: -52.81% (TTM)
• Net Profit Margin: -54.97% (TTM)

Margins and Industry Comparison

In banking, the closest proxy for gross profit is Net Interest Income (NII), which is the difference between interest earned on loans and interest paid on deposits. Carver Bancorp, Inc.'s NII as a percentage of its total interest income for FY 2025 was 55.98% ($19.2 million / $34.3 million). That spread looks decent, but it's not the whole story.

The real issue emerges when you look further down the income statement. The TTM Net Profit Margin sits at a staggering -54.97%. To be fair, most profitable regional banks were posting net margins around 24.89% as of Q2 2024, and the average community bank Net Interest Margin (NIM) was 3.62% in Q2 2025. Carver Bancorp, Inc.'s deep negative margin shows that its core interest income is nowhere near enough to cover its operating costs and other expenses. That's a huge gap.

Operational Efficiency and Trend Analysis

The profitability trend is defintely concerning. The company is unprofitable, and losses have increased over the past five years at an average annual rate of 30.4%. This isn't a one-off bad quarter; it's a sustained operational challenge.

The largest drag on efficiency is cost management. In the second quarter of 2025 alone, non-interest expense totaled $8.827 million. When you compare this to the Net Interest Income of $5.132 million for the same period, you see the problem: operating costs are roughly 1.72x the core revenue stream. This high expense base, covering things like compensation and occupancy, is simply too heavy for the revenue the bank generates. The bank must dramatically cut costs or find a way to scale revenue quickly, or both. This operational inefficiency is the single biggest risk factor I see right now. You can learn more about the institutional view in Exploring Carver Bancorp, Inc. (CARV) Investor Profile: Who's Buying and Why?

Debt vs. Equity Structure

You need to understand how Carver Bancorp, Inc. (CARV) is funding its operations, and the quick answer is they lean more heavily on debt relative to their peers, a position that carries both risk and a high cost of capital. For a bank, the Debt-to-Equity (D/E) ratio is a crucial measure of financial leverage, and Carver Bancorp, Inc.'s is currently at 1.03 as of November 2025.

To be fair, banks naturally have a higher D/E ratio than most other industries because deposits and other borrowings are considered liabilities, which is the core of their business model. Still, when you compare Carver Bancorp, Inc.'s ratio of 1.03 to the average for US Regional Banks, which sits closer to 0.5 as of November 2025, the company is using significantly more debt financing than the industry standard. Here's the quick math: for every dollar of shareholder equity, Carver Bancorp, Inc. has about a dollar and three cents in debt, which is twice the leverage of the average regional bank.

• Total Debt (Last 12 Months): Approximately $35.08 million.
• Equity (Sept 30, 2025): Fell to $26.9 million.

The company's reliance on debt has been increasing recently, largely driven by the need to cover operational losses. Total equity decreased by $12.7 million during the 2025 fiscal year, primarily due to a net loss of $13.7 million. This loss erodes the equity base, which automatically pushes the D/E ratio higher, even if the absolute debt level remains stable. That's a serious headwind.

Drilling into the debt composition for Carver Bancorp, Inc. shows a mix of long-term and short-term liabilities. As of September 30, 2025, net borrowings-which are often short-term advances from the Federal Home Loan Bank of New York (FHLB-NY) and the Federal Reserve Bank of New York (FRBNY)-increased to $27.5 million. This short-term funding is more sensitive to interest rate fluctuations, which is a key market risk for the bank.

Their longer-term structure includes $13.4 million in subordinated debt securities as of March 31, 2025. The company has also shown signs of liquidity strain by deferring interest payments on its trust preferred securities starting in June 2025, with $567 thousand in deferred interest by the end of the September 30, 2025, quarter. This move is a clear red flag for liquidity conservation.

On the flip side, Carver Bancorp, Inc. is trying to balance this with new, strategic financing. They secured a $25 million revolving senior unsecured term loan facility with NY Green Bank to support building decarbonization projects, though no funds were drawn as of March 2025. This facility represents a potential, non-dilutive source of capital for future growth initiatives, but it doesn't solve the immediate capital adequacy concerns.

The regulatory environment is also tight. Carver Bancorp, Inc. is currently operating under a Formal Agreement with the OCC and, as of June 2025, did not meet its Individual Minimum Capital Ratio (IMCR) requirements, even though it exceeded the minimums to be considered 'well capitalized' under standard rules. This means the OCC is watching their capital structure defintely close. Your action item is to monitor the next quarterly filing for a reversal in the equity trend and any drawdowns on the $25 million facility, as these will signal a shift in their financing strategy.

For a deeper dive into the bank's overall health, check out the full report: Breaking Down Carver Bancorp, Inc. (CARV) Financial Health: Key Insights for Investors

Liquidity and Solvency

You're looking at Carver Bancorp, Inc. (CARV) and asking a fundamental question: can this bank meet its short-term obligations? The quick answer is that while the bank remains technically 'well-capitalized' by regulatory standards, the margins are tight, and a deeper look at their cash flow reveals a clear need for capital conservation and strategic improvement.

Traditional metrics like the current ratio (current assets divided by current liabilities) are less useful for a bank, as their core business is essentially built on a mismatch-funding long-term loans with short-term deposits. Still, one data point puts the Current Ratio at around 0.16 for the fiscal year ending March 31, 2025, which is a red flag for any non-financial firm, but for a bank, we look at liquid assets and capital ratios.

Assessing Carver Bancorp, Inc.'s Liquidity Position

The real story lies in the bank's available cash and its regulatory capital buffers. At the end of the 2025 fiscal year (March 31, 2025), Carver Bancorp, Inc.'s cash and equivalents stood at $50.3 million. This is the most immediate source of liquidity. However, that figure dropped to $40.7 million by the end of the second quarter on September 30, 2025. This near-term trend shows liquidity assets are being drawn down.

The working capital trend is negative. Total assets declined by 3.5% to $730 million and total equity fell sharply by 30% to $29.6 million in FY 2025, primarily due to a net loss of $13.7 million. This dramatic equity decline is a major solvency concern, even if the bank's capital ratios still exceed the minimums required to be considered 'well capitalized.'

• Total Assets: Down 3.5% to $730 million (FY 2025).
• Total Equity: Down 30% to $29.6 million (FY 2025).
• Net Loss: $13.7 million (FY 2025), significantly higher than the prior year.

Cash Flow Statements Overview

Looking at the cash flow statement for the full fiscal year ended March 31, 2025, total cash and cash equivalents decreased by $8.7 million. Here's the quick math on where the cash went:

The fact that core operations used $12.6 million in cash is defintely a worry. It means the bank is not generating enough cash from its primary business to cover its costs. The positive cash from investing activities, $15.1 million, was a necessary counterbalance, but it often comes from slowing new loan originations or selling assets, which can hurt future growth.

Near-Term Liquidity Concerns and Strengths

The biggest near-term risk is the regulatory environment. While the bank is 'well-capitalized,' it did not meet its Individual Minimum Capital Ratio (IMCR) requirements set by the OCC. Specifically, the Tier 1 leverage ratio of 8.70% fell below the 9% IMCR requirement at March 31, 2025. This led to a Formal Agreement with the OCC in May 2025, which increases regulatory scrutiny and requires a plan for sustained earnings improvement.

On the strength side, the bank does have significant, untapped borrowing capacity to manage short-term needs. As of September 30, 2025, Carver Bancorp, Inc. had access to an additional $16.6 million in collateralized borrowing at the Federal Home Loan Bank of New York (FHLB-NY) and $23.3 million at the Federal Reserve Bank (FRB) discount window. This capacity acts as a strong liquidity backstop. Plus, the bank has been actively conserving cash, evidenced by the suspension of its quarterly dividend and the deferral of interest payments on its trust preferred securities starting in June 2025.

For a deeper dive into the strategic implications of these numbers, you can read our full post: Breaking Down Carver Bancorp, Inc. (CARV) Financial Health: Key Insights for Investors.

Valuation Analysis

Is Carver Bancorp, Inc. (CARV) overvalued or undervalued? The quick answer is that traditional valuation metrics are flashing mixed, and often unhelpful, signals. Given the company's recent performance and the nature of a community development financial institution (CDFI), you have to look past the standard P/E ratio and focus on book value and market momentum.

The stock has seen a massive run, increasing by 107.69% over the last 12 months, with a recent close near $3.51 as of November 2025. This surge is defintely a market opportunity, but it also raises a red flag regarding valuation, especially when the company is not profitable.

Here's the quick math on the key multiples:

• Price-to-Earnings (P/E) Ratio: Not meaningful. Carver Bancorp, Inc. (CARV) had losses of approximately -$13.03 million over the last 12 months, which makes the P/E ratio negative or undefined. You can't value a loss-making company on earnings.
• Enterprise Value-to-EBITDA (EV/EBITDA): Also not a useful metric. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is rarely a primary valuation tool for banks, and the data is generally not available, or near zero, for Carver Bancorp, Inc. (CARV).
• Price-to-Book (P/B) Ratio: This is your most critical metric. The P/B ratio stands at approximately 3.37 as of November 2025, with the Price-to-Tangible Book Value (P/TBV) at about 3.23. For a bank, a P/B over 1.0 suggests the market values the company's future earnings power above its current net asset value. A P/B of 3.37 is quite high for a regional bank, suggesting the market is pricing in a significant turnaround or acquisition premium.

What this estimate hides is the context. The stock is trading at a high multiple of its book value because of speculation and the huge price appreciation, not necessarily because of a fundamental shift in profitability yet. The 52-week price range, from a low of $1.30 to a high of $3.85, shows extreme volatility. This is a momentum play, not a deep-value investment.

You also need to know that Carver Bancorp, Inc. (CARV) is not a dividend stock. The trailing twelve months (TTM) dividend yield is 0.00%, and the company has not paid a dividend in many years. Any investment here is purely for capital appreciation. Also, there is no widely published analyst consensus (buy, hold, or sell) or price target available for Carver Bancorp, Inc. (CARV), so you are flying solo on your valuation call.

To be fair, the market capitalization is small, around $16.80 million, which means the stock price can move wildly on low volume. If you are interested in the drivers behind this volatility, you should read Exploring Carver Bancorp, Inc. (CARV) Investor Profile: Who's Buying and Why?

Here's a snapshot of the key valuation data:

So, your action is clear: treat this as a speculative opportunity based on momentum and potential future events, not a fundamentally undervalued asset based on current earnings or book value alone.

Risk Factors

You're looking at Carver Bancorp, Inc. (CARV) and the first thing to understand is that the risk profile is elevated, especially when you look at the financials for the 2025 fiscal year. The core challenge is a combination of regulatory pressure, sustained losses, and a difficult operating environment in New York City. This isn't a growth story right now; it's a turnaround story with significant hurdles.

The most immediate and critical risk is the regulatory environment. Carver Bancorp, Inc. is operating under a Formal Agreement with the Office of the Comptroller of the Currency (OCC). While the bank's capital level exceeded the regulatory requirement to be considered 'well capitalized,' it did not meet the OCC's Individual Minimum Capital Ratio (IMCR) requirements. The OCC has mandated specific minimum capital ratios: a 9% Tier 1 leverage ratio and a 12% total risk-based capital ratio. Failure to meet these targets and adhere to the formal agreement could lead to severe restrictions on operations and capital distributions. That's a huge operational anchor.

Operational & Financial Stress Points

The financial results for the fiscal year ending March 31, 2025, clearly show the strain. The company reported a net loss of $13.7 million, a significant widening from the $3.0 million net loss in the prior fiscal year. This resulted in a basic loss per common share of $(2.65). Here's the quick math: the net loss caused a $12.7 million decrease in total equity. This sustained unprofitability erodes the capital base needed to absorb unexpected losses.

Furthermore, the quality of the loan portfolio is a growing concern. In the second quarter of the 2026 fiscal year (ended September 30, 2025), nonaccrual loans-those where interest is no longer being recognized-rose to $26.68 million. This signals a higher risk of future charge-offs. Also, deposits declined to $625.6 million in the same quarter, which pressures liquidity and increases funding costs, especially since Net Interest Income was already down 15.0% to $19.2 million in FY 2025 due to higher interest expense. For a deeper look at who is still investing despite these risks, you may want to read Exploring Carver Bancorp, Inc. (CARV) Investor Profile: Who's Buying and Why?.

• Net Loss (FY 2025): $13.7 million.
• Nonaccrual Loans (Q2 2026): $26.68 million.
• Equity (Q2 2026): $26.9 million.

External Risks and Strategic Shifts

The bank operates in the highly competitive New York metropolitan market, facing institutions with vastly greater resources. This competition makes deposit retention and loan origination defintely challenging. Plus, the bank is considered 'liability sensitive,' meaning its funding costs (liabilities) re-price faster than its loan income (assets) in a rising interest rate environment. This dynamic is what's squeezing their net interest margin.

A major strategic change introduces its own set of risks: the voluntary delisting from Nasdaq and transition to the OTCQX Market, expected around December 8, 2025. While the company cites cost reduction and flexibility as benefits, this move also means they will deregister with the SEC and suspend periodic reporting (Forms 10-K, 10-Q). This reduces public reporting transparency, which can affect investor confidence and liquidity.

Mitigation Strategies: A Turnaround Plan

Management is actively trying to address these issues. They are implementing a three-year strategic plan focused on earnings performance and compliance, as required by the OCC. Key actions include:

• Governance Overhaul: Initiating a board modernization plan, including a 75% board refresh over the next 12 quarters.
• Risk Expertise: Appointing a former OCC Assistant Deputy Comptroller as a Senior Enterprise Risk Management Advisor.
• Asset-Liability Management: Adjusting strategies to better align with current market conditions and mitigate interest rate risk.

These are necessary steps, but the success of the turnaround hinges on their ability to execute this plan quickly and sustainably reverse the trend of widening losses and declining capital.

Growth Opportunities

You're looking at Carver Bancorp, Inc. (CARV) and seeing a lot of near-term risk, which is fair, but you also need to map the concrete steps management is taking now to pivot toward a sustainable future. The direct takeaway is this: Carver Bancorp, Inc. (CARV)'s growth hinges on executing a difficult, regulatorily-mandated strategic shift that leverages its unique Community Development Financial Institution (CDFI) status to drive higher-margin business and cut costs.

The company is operating under heightened regulatory oversight, which is a significant headwind, but it's also the catalyst for a much-needed overhaul. For the three months ended September 30, 2025, the bank reported a net loss of $(2.4) million, and its Efficiency Ratio was an elevated 138.3% for the quarter, meaning expenses far outpace core revenue. That's the reality. So, the growth strategy is less about massive market expansion right now and more about fixing the foundation to achieve profitability.

Analysis of Key Growth Drivers: Strategic Pivot and Cost Control

The primary growth drivers are internal and strategic, largely stemming from a formal agreement with the Office of the Comptroller of the Currency (OCC) in May 2025. This isn't a voluntary initiative; it's a requirement for survival, but it forces a clear action plan. The focus is on three areas: product, technology, and niche market penetration.

• Product Innovations: Develop a new product line to attract customers and diversify revenue streams.
• Internet Strategy: Devise an effective internet strategy to generate revenue beyond the current seven-branch network.
• Niche Market Focus: Identify and penetrate specific, profitable niche markets that align with its mission.

Plus, the recent board modernization initiative, announced in November 2025, aims for a 75% director turnover over the next three years. This is a clear signal that the board is defintely serious about aligning governance with a modern urban community bank model, which is necessary for long-term value creation. Good governance is a growth driver, too.

Future Revenue Projections and Earnings Estimates

There are no consensus analyst revenue forecasts for Carver Bancorp, Inc. (CARV) due to its size and current financial state, so we have to look at the internal levers. The near-term financial picture is challenging, with a year-to-date net loss of $(3.6) million through September 30, 2025. The immediate focus is on reversing the trend of asset and loan declines-total assets were $697.9 million at quarter-end, a 4.4% drop from March 31, 2025. Here's the quick math on the challenge: the Net Interest Margin (NIM) for Q3 2025 was only 2.97%, reflecting the high cost of deposits and lower loan balances.

The key to a positive earnings estimate is the successful execution of two cost-saving measures:

1. Delisting to OTCQX: The company's voluntary move to delist from Nasdaq and trade on the OTCQX Market, effective around December 8, 2025, is primarily a cost-cutting measure. It reduces recurring operating expenses and provides greater flexibility with capital.
2. Board Compensation Restructuring: A 50% reduction in cash director compensation, replacing it with an equity retainer, preserves capital and aligns director interests with long-term stock performance.

If these cost controls stabilize the expense base, and the new product line can drive an increase in non-interest income (which rose to $1.2 million in Q3 2025, boosted by fees from the Empowering Change program), a path to positive earnings becomes visible, but it's a multi-year journey, not a 2025 event.

Competitive Advantages Positioned for Growth

Carver Bancorp, Inc. (CARV) holds a powerful, non-replicable competitive advantage: its dual designation as a certified Community Development Financial Institution (CDFI) and a designated Minority Depository Institution (MDI). This status is not just a title; it unlocks access to specialized government programs, grants, and lower-cost funding, such as the $1.8 million advance secured through the FHLB-NY 0% Development Advance Program for loan origination.

These designations, coupled with its long-standing focus on African-American communities in New York City, give it a unique, mission-driven brand equity. This is a substantial moat against larger, more resource-rich banks. The strategic plan's success will be measured by how effectively management can translate this social capital and specialized funding access into profitable, scalable financial products.

For a deeper dive into the current financial condition that underpins these strategic moves, you should read the full analysis: Breaking Down Carver Bancorp, Inc. (CARV) Financial Health: Key Insights for Investors.

Next step: Management needs to provide clear milestones on the new product line development by the end of Q4 2025.