updated 1/26/2011 3:48:12 PM ET 2011-01-26T20:48:12

  • Significant progress in problem asset resolution. Nonperforming assets decline $11.0 million, or 14.12%, to $67.0 million.
  • Delinquent loans under 90 days past due decline $3.6 million and improve to 1.14% of loans outstanding from 1.81%.
  • Strong mortgage banking activities resulting in mortgage banking income of $2.6 million, including $719,000 recovery of mortgage servicing asset valuation allowance.
  • Credit costs remain elevated with provision for loan losses of $4.5 million and loss on real estate owned of $536,000.
  • Deferred tax asset valuation allowance of $1.9 million recognized in period.
  • Continued progress towards achieving regulatory targeted adversely classified assets ratio.
  • Bank capital ratios remain strong.

SOLON, Ohio, Jan. 26, 2011 (GLOBE NEWSWIRE) -- PVF Capital Corp. (Nasdaq:PVFC), the parent company of Park View Federal Savings Bank, announced a net loss of $3,709,928, or $0.14 basic and diluted loss per share for the quarter ended December 31, 2010.

The Company continued to experience an elevated level of mortgage lending activity during the quarter, as borrowers took advantage of the low mortgage interest rates during much of the period. This mortgage volume resulted in mortgage loan sale income of $2.5 million, which was a decrease of $1.2 million from the linked quarter of September 30, 2010, and an increase of $1.2 million over the prior year quarter. Offsetting the revenues associated with the elevated levels of refinance activity was an increase in the amortization of the mortgage servicing asset, resulting in a net servicing loss of $677,000 for the period, compared with a net servicing loss of $150,000 for the linked quarter and servicing income of $107,000 for the prior year quarter. The back-up in mortgage rates during the second half of the quarter resulted in a slow down of refinancing activities and corresponding prepayment speeds from the prior quarter and resulted in a partial recovery in the estimated fair value of certain tranches of the Company's mortgage servicing rights, which had a valuation allowance of $1.2 million. The Company recognized a recovery of $719,000 during the period, leaving a valuation allowance of $465,000. The estimated value of the Company's mortgage servicing rights portfolio, as a whole, continues to exceed its carrying value.

Robert J. King, Jr., President and Chief Executive Officer commented, "We are pleased with the level of mortgage lending activity for the quarter, which was primarily attributable to lower interest rates and our significant local presence."

The Company continued to execute its turnaround strategy of reducing the risk profile of its balance sheet and to reposition the Company to return to its core profitability. During the quarter, the Company made significant progress in reducing its level of nonperforming assets, the key element of this strategy. Nonperforming loans declined $12.9 million, or 18.1%, and was partially offset by a $1.9 million increase in other real estate owned, resulting in a net decrease of nonperforming assets of $11.0 million. The Company continued to reduce its level of classified assets to core capital plus general valuation allowance ratio to 73.4% at December 31, 2010, compared with 120.0% at December 31, 2009. The Company also reduced its level of classified assets plus special mention assets to core capital ratio plus general valuation allowance to 95.9%, compared with 130.5% a year ago.

During the current period, total assets declined $6.1 million, or 0.7%, while the loan portfolio shrunk $10.9 million, or 1.8%, as the Company reduces its problem loans and positions itself for growth and balance sheet transition during the second half of the year.

Mr. King added, "This is the most significant progress to date in our efforts to clean up the balance sheet and reduce our nonperforming assets. This success is critical to our goal of achieving full compliance with the regulatory orders entered into with the Office of Thrift Supervision."

Net interest income for the period declined $169,000 and $35,000, as compared with the periods ending September 30, 2010 and December 31, 2009, respectively, due to the smaller balance sheet. The Company continues to maintain a relatively high level of liquidity as part of its turnaround strategy and positioning for balance diversification. The net interest margin was 2.56% for the period and was lower than the 2.62% reported for the linked period and higher than the 2.49% for the year ago period.

The provision for loan losses totaled $4.5 million, reflecting the continued difficult economic operating environment, along with costs associated with problem asset disposition during the quarter. The provision for loan losses totaled $2.8 million in the previous period and $2.3 million in the prior year period.

The allowance for loan losses at December 31, 2010 was $31.5 million, or 5.3%, of total loans outstanding. This compares to $32.6 million and 5.4%, respectively, for the prior period and $29.9 million and 4.6%, respectively, for the prior year period. The allowance's coverage of nonperforming loans improved significantly during the quarter to 54.1% at December 31, 2010, compared with 45.9% and 40.8% at September 30, 2010 and December 31, 2009, respectively.

The Company recognized a valuation allowance on its deferred tax asset in the amount of $1.9 million, as a result of its net operating losses.

Park View Federal is a wholly-owned subsidiary of PVF Capital Corp. and operates 17 full-service offices located throughout the Greater Cleveland area. For additional information, visit our web site at www.myparkview.com .

This press release contains statements that are forward-looking, as that term is defined by the Private Securities Litigation Act of 1995 or the Securities and Exchange Commission in its rules, regulations and releases. The Company intends that such forward-looking statements be subject to the safe harbors created thereby. All forward-looking statements are based on current expectation regarding important risk factors including, but not limited to, real estate values and the impact of interest rates on financing. Accordingly, actual results may differ from those expressed in the forward-looking statements, and the making of such statements should not be regarded as a representation by the Company or any other person that results expressed therein will be achieved.

PVF Capital Corp.'s common shares trade on the NASDAQ Capital Market under the symbol PVFC.

         
         
PVF CAPITAL CORP.        
      30000 Aurora Rd.
      Solon, OH 44139
      440-248-7171
SUMMARY OF FINANCIAL HIGHLIGHTS        
         
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION    
(Unaudited)        
         
 (Dollars in thousands)

 
December 31,

2010
June 30,

2010
   
ASSETS        
Cash and cash equivalents $130,961 $130,043    
Securities 16,958 20,149    
Loans receivable 561,676 587,406    
Loans receivable held for sale 11,278 8,718    
Mortgage-backed securities 43,022 47,146    
Other assets 66,742 66,123    
         
Total Assets $830,637 $859,585    
         
LIABILITIES        
Deposits $628,995 $667,546    
Borrowed money 86,206 86,259    
Other liabilities 37,782 22,537    
         
Total Liabilities 752,983 776,342    
         
Total Stockholders' Equity 77,654 83,243    
         
Total Liabilities and Stockholders' Equity $830,637 $859,585    
 
 
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
         
 (Dollars in thousands except per share data) Three Months Ended

December 31,
Six Months Ended

December 31,
  2010 2009 2010 2009
         
Loans $7,656 $9,139 $15,788 $18,296
Mortgage-backed securities 466 694 928 1,357
Investments 236 180 495 357
Interest income 8,358 10,013 17,211 20,010
         
Deposits 2,347 3,764 5,013 8,122
Borrowings 904 1,107 1,815 2,269
Interest expense 3,251 4,871 6,828 10,391
         
Net interest income 5,107 5,142 10,383 9,619
         
Provision for loan losses 4,500 2,250 7,300 4,010
         
Net interest income after provision for loan losses 607 2,892 3,083 5,609
         
Mortgage-banking activities 2,560 1,451 4,974 2,506
Impairment of securities 0 0 0 0
Gain on cancellation of subordinated debt 0 0 0 8,561
Gain (loss) on real estate owned (536) (571) (948) (661)
Gain on the sale of securities 0 0 0 0
Increase in cash surrender value of bank owned life insurance 68 78 143 98
Other, net 518 371 929 689
Total noninterest income 2,610 1,329 5,098 11,193
         
Compensation and benefits 2,450 2,372 4,887 4,614
Office occupancy and equipment 654 647 1,361 1,325
Federal deposit insurance premium 621 738 1,227 1,304
Outside services 711 493 1,262 1,345
Real estate owned expense 623 666 1,359 1,448
Other 915 1,111 1,806 2,227
Total noninterest expense 5,974 6,027 11,902 12,263
         
Income (loss) before federal income tax provision (2,757) (1,806) (3,721) 4,539
         
Federal income tax provision (benefit) 953 (525) 607 1,620
         
Net income (loss) $(3,710) $(1,281) $(4,328) $2,919
         
Basic earnings (loss) per share $(0.14) $(0.16) $(0.17) $0.37
         
Diluted earnings (loss) per share $(0.14) $(0.16) $(0.17) $0.37
 
 
PVF CAPITAL CORP.
FINANCIAL HIGHLIGHTS
           
  At or for the three months ended
(dollars in thousands except per share data)

Balance Sheet Data:
December 31,

2010
September 30,

2010
June 30,

2010
March 31,

2010
December 31,

2009
Total assets  $ 830,637  $ 836,746  $ 859,585  $ 889,184  $ 869,297
Loans receivable 593,169  604,038  618,925 636,243 656,351
Allowance for loan losses  31,493  32,629  31,519 30,272 29,913
Loans receivable held for sale, net 11,278  15,151  8,718 9,017 7,181
Mortgage-backed securities available for sale 43,022  41,772  47,146 52,217 57,433
Cash and cash equivalents  130,961  130,706 130,043 137,369 42,662
Securities held to maturity  --  --  -- 5,000 55,000
Securities available for sale 16,958  15,112  20,149 9,978 87
Deposits  628,995 644,635  667,546 689,562 682,891
Borrowings 86,206  86,233  86,259 86,286 96,313
Stockholders' equity 77,654  82,233  83,243 85,304 53,578
Nonperforming loans  58,216  71,100  69,090 69,983 73,343
Other nonperforming assets  8,764  6,891  8,174 10,991 12,090
Tangible common equity ratio 9.35% 9.83% 9.68% 9.59% 6.16%
Book value per share $3.03 $3.21 $3.25 $3.36 $6.71
Common shares outstanding at period end  25,669,718  25,642,218  25,642,218 25,402,218 7,979,120
           
Operating Data:          
Interest income  $ 8,358  $ 8,853  $ 9,177  $ 9,380  $ 10,013
Interest expense  3,251  3,577  3,907  4,248  4,871
           
Net interest income before provision for loan losses  5,107 5,276 5,270 5,132 5,142
Provision for loan losses  4,500  2,800  3,918  7,000  2,250
           
Net interest income after provision for loan losses  607 2,476 1,352 (1,868) 2,892
Noninterest income 2,610 2,488  388 9,955(1) 1,329
Noninterest expense  5,974  5,928  6,069  6,124  6,027
           
Income (loss) before federal income taxes  (2,757) (964) (4,329) 1,963 (1,806)
Federal income tax expense (benefit)  953  (346)  (1,582)  694  (525)
           
Net income (loss)  $ (3,710)  $ (618)  $ (2,747)  $ 1,269  $ (1,281)
           
Basic earnings (loss) per share  $ (0.14)  $ (0.02)  $ (0.11)  $ 0.14  $ (0.16)
Diluted earnings (loss) per share  $ (0.14)  $ (0.02)  $ (0.11)  $ 0.13  $ (0.16)
           
(1) Includes $9.1 million gain related to exchange of PVF Capital Trust II trust preferred securities.
           
           
Performance Ratios:          
Return on average assets (1.78) (0.29) (1.24) (0.58) (0.58)
Return on average equity (18.56) (2.97) (12.96) 7.27 (9.45)
Net interest margin 2.56 2.62 2.55 2.55 2.49
Interest rate spread 2.41 2.48 2.44 2.48 2.38
Efficiency ratio 79.29 63.33 87.17 97.83 85.59
Stockholders' equity to total assets (all tangible) 9.35 9.83 9.68 9.59 6.16
           
Asset Quality Ratios:          
Nonperforming assets to total assets 8.06 9.32 8.99  9.11  9.83
Nonperforming loans to total loans 9.81 11.77 11.16  11.00  11.17
Allowance for loan losses to total loans 5.31 5.40 5.09  4.76 4.56
Allowance for loan losses to nonperforming loans 54.10 45.89 45.62  43.26 40.79
Net charge-offs to average loans, annualized 3.64 1.08 1.68  4.05 2.54
           
Park View Federal Regulatory Capital Ratios:          
Ratio of tangible capital to adjusted total assets 8.84 8.71 8.63 8.23 7.15
Ratio of tier one (core) capital to adjusted total assets 8.84 8.71 8.63 8.23 7.15
Ratio of tier one risk-based capital to risk-weighted assets 12.16 11.65 11.56 10.93 9.48
Ratio of total risk-based capital to risk-weighted assets 13.42 12.92 12.83 12.19 10.74
CONTACT: James H. Nicholson
         Chief Financial Officer
         440-248-7171

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