The following discussion and analysis should be read in conjunction with the
Company's Consolidated Financial Statements and Notes to Consolidated Financial
Statements presented elsewhere in this report.
Executive Summary
Carver concluded fiscal 2022 with a net loss of $0.8 million compared to net
loss of $3.9 million for the prior year period. The change in our results of
operations was primarily driven by increases in net interest income and
non-interest income, partially offset by an increase in non-interest expense.
The business climate continues to present significant challenges as banks
continue to absorb heightened regulatory costs and compete for limited loan
demand. Goods and services saw rapid growth in May and there was a large rise in
food and energy prices. Additionally, the Federal Reserve has increased the
federal funds rate, and will likely continue to increase the federal funds rate
in order to bring down inflation that is at a 40-year high.
COVID-19 has impacted businesses in New York more severely than in the rest of
the nation, according to a report from the Office of the New York State
Comptroller. Since the U.S. Census Bureau began collecting and reporting data
through the Small Business Pulse Survey, New York's small businesses have
consistently reported experiencing a negative effect from the pandemic at rates
that exceed the national average. Despite the fact that one in five New York
small businesses reported a return to normal operations in October 2021, the
negative impacts on small businesses with less than 500 employees persist. Small
businesses account for the overwhelming majority of firms in most industry
sectors in New York. They also employ the majority of workers in industry
sectors such as accommodation and food services; wholesale trade; real estate;
construction; professional, scientific and technical services; and arts,
entertainment and recreation. Carver continues to focus on diversifying its loan
portfolio with C&I lending to local small businesses and strives to generate new
loan production and to purchase loans at suitable prices.
The prolonged pandemic, or any other epidemic of this sort that ultimately harms
the global economy, the U.S. economy or the markets in which we operate could
adversely affect Carver's operations. The long-term effects of COVID-19 on the
Company's business cannot be ascertained as there remains significant
uncertainty regarding the breadth and duration of business disruptions related
to the virus. In addition, new information may emerge regarding the severity of
COVID-19 or the effectiveness of the vaccines developed, causing federal, state
and local governments to take additional actions to contain COVID-19 or to treat
its impact. Even after formal restrictions have been lifted, changes in the
behavior of customers, businesses and their employees - including social
distancing - as a result of the pandemic, are unknown. The Company is closely
monitoring its asset quality, liquidity, and capital positions. Management is
actively working to minimize the current and future impact of this unprecedented
situation, and is continuing to make adjustments to operations where appropriate
or necessary to help slow the spread of the virus. In addition, as a result of
further actions that may be taken to contain or reduce the impact of the
COVID-19 pandemic, the Company may experience changes in the value of collateral
securing outstanding loans, reductions in the credit quality of borrowers and
the inability of borrowers to repay loans in accordance with their terms. The
Company is actively managing the credit risk in its loan portfolio. These and
similar factors and events may have substantial negative effects on the
business, financial condition, and results of operations of the Company and its
customers.
At the Market Offering
In 2021, we entered into a sales agreement with an agent to sell, from time to
time, our common stock having an aggregate offering price of up to $20.0
million, in an "at the market offering." As of March 31, 2022, we have sold an
aggregate of 397,367 shares of our common stock pursuant to the terms of such
sales agreement, for aggregate gross proceeds of approximately $3.1 million.
Aggregate net proceeds received were approximately $3.0 million, after deducting
expenses and commissions paid to the placement agent.
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