updated 4/27/2011 6:18:34 PM ET 2011-04-27T22:18:34

  • Continued progress in problem asset resolution. Nonperforming assets decline $6.2 million, or 9.32%, to $60.7 million.
  • Over past 12 months, nonperforming assets have declined $20.2 million or 25.0%.
  • Maturity of $50 million repurchase agreement funded with overnight funds; reduces total assets, improves tier one capital ratio, improves net interest margin.
  • Mortgage banking activities weaker during the period resulting in mortgage banking income of $0.8 million, including $127,000 recovery of mortgage servicing asset valuation allowance.
  • Credit costs lower during period but remain elevated with provision for loan losses of $2.1 million and loss on real estate owned of $339,000.
  • Continued progress towards achieving regulatory targeted adversely classified assets ratio.
  • Bank capital ratios remain strong.

SOLON, Ohio, April 27, 2011 (GLOBE NEWSWIRE) -- PVF Capital Corp. (Nasdaq:PVFC), the parent company of Park View Federal Savings Bank, announced a net loss of $2,793,536, or $0.11 basic and diluted loss per share for the quarter ended March 31, 2011. This compares with net income of $1,269,065 for the prior year period which included a nonrecurring pretax gain of $9,065,908 on the cancellation of debt. Absent the gain, a net loss of $4,714,434 would have been recorded in the prior period.

As previously announced, the $50 million repurchase borrowing agreement matured in late March 2011. This borrowing which carried an interest rate of 4.99% was settled using a portion of the Bank's short-term cash and cash equivalents position. This had the result of further deleveraging the Bank's balance sheet, improving the tier I core capital ratio and will reduce annual borrowing costs related to this debt by approximately $2.5 million. The underlying investment securities were retained in the portfolio and had a net unrealized market gain of approximately $722,000 at March 31, 2011.

Mortgage banking revenue experienced a sharp decline as higher mortgage rates resulted in a slow down of residential mortgage refinancing activities. The lower mortgage volume resulted in mortgage loan sale income of $378,000 which was a decrease of $2.1 million from the linked quarter of December 31, 2010, and a decrease of $234,000 from the prior year quarter. Net servicing income during the quarter was $299,000. The slow down of refinancing activities and corresponding prepayment speeds 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 $465,000. The Company recognized a recovery of $127,000 during the period, leaving a valuation allowance of $338,000. 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, "This was another significant quarter for the Company as we continued to successfully resolve a number of problem assets, deleveraged the balance sheet as a result of the matured repurchase agreement, and continued to strengthen its liquidity position, all key components in positioning the Company for future profitability."

During the quarter, the Company made significant progress in reducing its level of nonperforming assets. Nonperforming loans declined $5.6 million, or 9.6%, in addition to a decrease of $0.6 million in other real estate owned, resulting in a net decrease in nonperforming assets of $6.2 million. The Company continued to reduce its level of classified assets to core capital plus general valuation allowance ratio to 69.7% at March 31, 2011, compared with 97.4% at March 31, 2010. The Company also reduced its level of classified assets plus special mention assets to core capital ratio plus general valuation allowance to 91.9%, compared with 102.9% a year ago.

During the current period, total assets declined $53.5 million, or 6.4%, while the loan portfolio shrunk $1.4 million, or 0.2%, as the Company reduces its problem loans. Net of problem loan disposition, the Company experienced growth in the loan portfolio of $4.2 million, an important first step in the strategy to return to profitability. The decline in total assets was primarily the result of the maturity of a $50 million repurchase agreement borrowing as previously discussed.

Net interest income for the period declined $98,000 and $123,000, as compared with the periods ending December 31, 2010 and March 31, 2010, 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. Although the balance sheet is smaller, the net interest margin was 2.58% for the period and was higher than the 2.56% reported for the linked period and higher than the 2.55% for the year ago period. 

The provision for loan losses totaled $2.1 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 $4.5 million in the previous period and $7.0 million in the prior year period.

The allowance for loan losses at March 31, 2011 was $29.9 million, or 5.0%, of total loans outstanding. This compares to $31.5 million and 5.3%, respectively, at December 31, 2010 and $30.3 million and 4.8%, respectively, at March 31, 2010. The allowance's coverage of nonperforming loans continued to improve during the quarter to 56.8% at March 31, 2011, compared with 54.1% and 43.3% at December 31, 2010 and March 31, 2010, respectively.

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.
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
     
     
  March 31, June 30,
  2011 2010
  (unaudited)  
     
ASSETS    
Cash and amounts due from depository institutions $24,721,575 $18,283,620
Interest-bearing deposits 54,803,920 111,759,326
Federal funds sold 10,000,000  -- 
Total cash and cash equivalents 89,525,495 130,042,946
Securities available for sale 15,872,390 20,149,149
Mortgage-backed securities available for sale 38,965,491 47,145,878
Loans receivable held for sale, net 5,848,380 8,717,592
Loans receivable, net of allowance of $29,686,242 and $31,519,466, respectively 561,923,818 587,405,644
Office properties and equipment, net 7,664,780 7,876,320
Real estate owned, net 8,082,863 8,173,741
Federal Home Loan Bank stock 12,811,100 12,811,100
Bank-owned life insurance 23,353,428 23,144,033
Prepaid expenses and other assets 13,125,640 14,118,127
Total assets $777,173,385 $859,584,530
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Liabilities    
Deposits $647,250,571 $667,546,477
Note payable 1,179,445 1,259,444
Long-term advances from the Federal Home Loan Bank 35,000,000 35,000,000
Repurchase agreement  --  50,000,000
Advances from borrowers for taxes and insurance 7,405,240 4,930,327
Accrued expenses and other liabilities 11,857,625 17,605,257
Total liabilities $702,692,881 $776,341,505
     
Stockholders' equity    
Serial preferred stock, none issued  --   -- 
Common stock, $.01 par value, 65,000,000 shares authorized;    
26,142,443 and 26,114,943 shares issued, respectively 261,424 261,149
Additional paid-in capital 100,483,297 100,260,665
Retained earnings (accumulated deficit) (22,219,53) (15,097,658)
Accumulated other comprehensive income (loss) (207,537) 1,656,016
Treasury stock at cost, 472,725 shares, respectively (3,837,147) (3,837,147)
Total stockholders' equity 74,480,504 83,243,025
Total liabilities and stockholders' equity $777,173,385 $859,584,530
 
PVF CAPITAL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
         
  Three Months Ended Nine Months Ended
  March 31, March 31,
  2011 2010 2011 2010
Interest and dividends income        
Loans  $ 7,328,247  $ 8,571,176  $ 23,116,620  $ 26,867,466
Mortgage-backed securities  419,470  606,234  1,347,261  1,962,861
Federal Home Loan Bank stock dividends  145,309  145,310  418,203  450,319
Securities  43,033  52,396  183,955  93,707
Fed funds sold and interest-bearing deposits  72,288  4,349  153,404  14,748
Total interest and dividends income  8,008,347  9,379,465  25,219,443  29,389,101
         
Interest expense        
Deposits  2,171,129  3,226,333  7,184,421  11,348,323
Short-term borrowings  --  --  --  50
Long-term borrowings  828,394  891,767  2,643,346  2,715,699
Subordinated debt  --  129,760  --  574,499
Total interest expense  2,999,523  4,247,860  9,827,767  14,638,571
         
Net interest income  5,008,824  5,131,605  15,391,676  14,750,530
Provision for loan losses  2,090,000  7,000,000  9,390,000  11,010,000
Net interest income after provision for loan losses  2,918,824  (1,868,395)  6,001,676  3,740,530
         
Non-interest income        
Service charges and other fees  131,252  160,652  491,947  507,735
Mortgage banking activities, net  803,656  769,798  5,778,162  3,276,002
Increase in cash surrender value of bank-owned life insurance  65,773  75,312  209,395  173,554
Gain on sale of equity securities  --  23,871  --  23,871
Gain (loss) on real estate owned  (59,560)  6,028  (282,690)  (153,505)
Provision for real estate owned losses  (279,160)  (244,647)  (1,004,470)  (746,420)
Gain on the cancellation of subordinated debt  --  9,065,908  --  17,627,438
Other, net  174,453  98,188  742,181  439,150
Total non-interest income  836,414  9,955,110  5,934,525  21,147,825
         
Non-interest expense        
Compensation and benefits  2,867,152  2,316,795  7,753,597  6,930,606
Office occupancy and equipment  656,002  645,445  2,016,648  1,970,600
Outside services  678,471  535,085  1,940,005  1,880,354
Federal deposit insurance premium  480,057  584,440  1,707,741  1,887,985
Real estate owned expense  846,864  948,914  2,206,173  2,396,599
Other  1,089,129  1,093,522  2,895,182  3,321,001
Total non-interest expense  6,617,675  6,124,201  18,519,346  18,387,145
         
Income (loss) before federal income taxes  (2,862,437)  1,962,514  (6,583,145)  6,501,210
Federal income tax provision   (68,901)  693,449  688,732  2,313,249
Net income (loss)  $ (2,793,536)  $ 1,269,065  $ (7,271,877)  $ 4,187,961
         
Basic earnings (loss) per share  $ (0.11)  $ 0.14  $ (0.28)  $ 0.50
Diluted earnings (loss) per share  $ (0.11)  $ 0.13  $ (0.28)  $ 0.50
   
FINANCIAL HIGHLIGHTS  
             
  At or for the three months ended  
(dollars in thousands except per share data) March 31, December 31, September 30, June 30, March 31,  
Balance Sheet Data: 2011 2010 2010 2010 2010  
Total assets  $ 777,363  $ 826,701  $ 836,746  $ 859,585  $ 889,184  
Loans receivable  591,800 593,169  604,038  618,925 636,243  
Allowance for loan losses  29,876  31,493  32,629  31,519 30,272  
Loans receivable held for sale, net  5,848 11,278  15,151  8,718 9,017  
Mortgage-backed securities available for sale  38,966 43,022  41,772  47,146 52,217  
Cash and cash equivalents  89,481  130,961  130,706 130,043 137,369  
Securities held to maturity  --  --  --  -- 5,000  
Securities available for sale  15,872 16,958  15,112  20,149 9,978  
Deposits  647,251  628,995 644,635  667,546 689,562  
Borrowings  36,179 86,206  86,233  86,259 86,286  
Stockholders' equity  74,671 77,654  82,233  83,243 85,304  
Nonperforming loans  52,564  58,216  71,100  69,090 69,983  
Other nonperforming assets  8,083  8,764  6,891  8,174 10,991  
Tangible common equity ratio 9.61% 9.39% 9.83% 9.68% 9.59%  
Book value per share $2.91 $3.03 $3.21 $3.25 $3.36  
Common shares outstanding at period end  25,669,718  25,669,718  25,642,218  25,642,218 25,402,218  
             
Operating Data:            
Interest income  $ 8,008 8,358  $ 8,853  $ 9,177  $ 9,380  
Interest expense  2,999  3,251  3,577  3,907  4,248  
             
Net interest income before provision for loan losses  5,009  5,107 5,276 5,270 5,132  
Provision for loan losses  2,090  4,500  2,800  3,918  7,000  
             
Net interest income (loss) after provision for loan losses  2,919  607 2,476 1,352 (1,868)  
Noninterest income  836 2,610 2,488  388 9,955 (1)
Noninterest expense  6,618  5,974  5,928  6,069  6,124  
             
Income (loss) before federal income taxes  (2,863)  (2,757) (964) (4,329) 1,963  
Federal income tax expense (benefit)  (69)  953  (346)  (1,582)  694  
             
Net income (loss)  $ (2,794)  $ (3,710)  $ (618)  $ (2,747)  $ 1,269  
             
Basic earnings (loss) per share  $ (0.11)  $ (0.14)  $ (0.02)  $ (0.11)  $ 0.14  
Diluted earnings (loss) per share  $ (0.11)  $ (0.14)  $ (0.02)  $ (0.11)  $ 0.13  
             
(1) Includes $9.1 million gain related to exchange of PVF Capital Trust II trust preferred securities.      
             
             
Performance Ratios:            
Return on average assets (1.35%) (1.78%) (0.29%) (1.24%) 0.58%  
Return on average equity (14.67%) (18.29%) (2.97%) (12.96%) 7.27%  
Net interest margin 2.58% 2.56% 2.62% 2.55% 2.55%  
Interest rate spread 2.48% 2.41% 2.48% 2.44% 2.48%  
Efficiency ratio 110.01% 79.29% 63.33% 87.17% 97.83%  
Stockholders' equity to total assets (all tangible) 9.61% 9.39% 9.83% 9.68% 9.59%  
             
Asset Quality Ratios:            
Nonperforming assets to total assets 7.80% 8.10% 9.32% 8.99% 9.11%  
Nonperforming loans to total loans 8.88% 9.81% 11.77% 11.16% 11.00%  
Allowance for loan losses to total loans 5.05% 5.31% 5.40% 5.09% 4.76%  
Allowance for loan losses to nonperforming loans 56.84% 54.10% 45.89% 45.62% 43.26%  
Net charge-offs to average loans, annualized 2.47% 3.64% 1.08% 1.68% 4.05%  
             
Park View Federal Regulatory Capital Ratios:            
Ratio of tangible capital to adjusted total assets 9.09% 8.84% 8.71% 8.63% 8.23%  
Ratio of tier one (core) capital to adjusted total assets 9.09% 8.84% 8.71% 8.63% 8.23%  
Ratio of tier one risk-based capital to risk-weighted assets 11.83% 12.16% 11.65% 11.56% 10.93%  
Ratio of total risk-based capital to risk-weighted assets 13.10% 13.42% 12.92% 12.83% 12.19%  
CONTACT:  James H. Nicholson
          Chief Financial Officer
          440-248-7171

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