Carver Bancorp, Inc. (OTCQB: CARV) announced March 16 that it reached an agreement with institutional holders of its Trust Preferred Securities to cancel more than $1 million in interest obligations in exchange for 524,826 shares of common stock.

The New York-based holding company for Carver Federal Savings Bank said the transaction will reduce its debt load and improve its capital position. The exchange remains subject to customary approvals.

"Removing such a significant debt overhang immediately increases our flexibility to take steps toward growth and profitability," said Donald Felix, president and CEO of Carver Bancorp. "The Exchange also represents an important vote of confidence in our direction and potential."

Performance Trust Capital Partners, LLC served as financial advisor to the company for the transaction.

Carver Federal Savings Bank, founded in 1948, is designated as a Community Development Financial Institution by the U.S. Treasury Department. The bank serves historically underserved communities in New York and operates online banking services across nine states from Massachusetts to Virginia and Washington, D.C.

The company described the agreement as part of its turnaround strategy to strengthen the bank's capital position and position it for future growth and profitability.