NEW YORK ( TheStreet) -- Shares of Carver Bancorp ( CARV) recovered 6% early Friday, trading for $1.88 in heavy volume, after dropping 18% Thursday following an annoucement it had entered into two cease and desist orders with the Office of Thrift Supervision.

Under the first order, main subsidiary Carver Federal Savings Bank was required to achieve and maintain a Tier 1 leverage ratio of at least 9% and a total risk-based capital ratio of at least 13% by April 30. These ratios need to be at least 5% and 10% for most banks and thrifts to be considered well-capitalized by regulators.

According to preliminary fourth-quarter regulatory data, the thrift's Tier 1 leverage ratio was 6.36% and its total risk-based capital ratio was 10.82% as of December 31. Carver Federal had $744 million in total assets as of year-end and posted a net loss of $7.8 million during the fourth quarter.

The thrift's nonperforming assets - including nonaccrual loans, less government-guaranteed balances) totaled $83.9 million, or 11.28% of total assets as of December 31. The thrift didn't report any repossessed assets.

Carver Federal was also required to submit a capital plan, along with a contingency plan to eventually merge with another institution or undergo a voluntary dissolution with regulatory approval, if it is unable to raise the required capital.

The first order also requires the thrift to improve its credit quality, credit administration and internal auditing functions, as well as cease commercial real estate lending and entering into third-party contracts without OTS approval. Carver Federal also agreed restrictions on making "any golden parachute payment" to employees and not enter into any new contracts with executives without OTS approval.

Carver Federal's personnel expenses declined to $2.6 million during the fourth quarter, from $2.9 the previous quarter and $3.1 million a year earlier, according to its Thrift Financial Reports filed with the OTS..

The second C&D requires the holding company to improve its oversight of the thrift, submit a plan to raise capital and stop making any dividend payments or capital distributions including share repurchases without OTS approval. As in the first order to the thrift, the holding company is barred from making golden parachute payments or entering into new contracts with executives without approval from the regulator.

Carver Bancorp owes the government $19 million received from the government through the Community Development Capital Initiative, which is part of the Troubled Assets Relief Program, or TARP.

Carver Bancorp's CEO Deborah Wright said in a statement Thursday that although Carver FSB continued "to meet the regulatory definition of a well capitalized bank, the Orders formalize the additional work we need to do and establish the timeframe for doing so." She added that the thrift was "grappling, as are many small banks across the country, with higher delinquencies and downward valuations in real estate assets."

Wright also said the holding company was "working with an independent advisor to bring in additional capital" and was making progress, and continuing "to rebalance our loan portfolio and have aggressively reduced our level of real estate loans."

-- Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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