SOLON, Ohio, Oct. 26, 2010 (GLOBE NEWSWIRE) -- PVF Capital Corp. (Nasdaq:PVFC), the parent company of Park View Federal Savings Bank, announced a net loss of $618,000 or $0.02 basic and diluted loss per share for the quarter ended September 30, 2010.
During the quarter, the Company experienced a significant increase in mortgage banking activities as a result of the elevated levels of refinancing activities from the drop in mortgage interest rates. The increased mortgage volume resulted in mortgage origination income of $3.7 million, an increase of $1.2 million over the linked quarter of June 30, 2010, and an increase of $2.8 million over the same period of the prior year. The elevated levels of refinance activity also resulted in an increase in the amortization of the mortgage servicing asset, resulting in a net servicing loss of $150,000 for the period, compared with net servicing revenue of $122,000 and $143,000 for the linked quarter and prior year quarter, respectively. The accelerated prepayment speeds also resulted in a decline in the estimated fair value of certain tranches of the Company's mortgage servicing rights resulting in the establishment of a valuation allowance of $1.2 million. However, the estimated value of the Company's entire mortgage servicing rights portfolio continues to exceed its carrying value.
Robert J. King, Jr., President and Chief Executive Officer commented, "The continued low interest rate environment throughout the quarter has generated a strong volume of mortgage refinancing activity and a corresponding high level of mortgage banking activity and income. We are encouraged with these results despite the offsetting net servicing loss and the establishment of the valuation allowance."
During the current quarter, the Company continued its strategy to reduce the risk profile of its balance sheet to move towards achieving full compliance with the Orders entered into with its primary regulator, the Office of Thrift Supervision, and to reposition the Company to return to its core profitability. As part of its strategy to reduce its risk profile, the Company continued to shrink its balance sheet and loan portfolio. During the current period, total assets declined $22.8 million, or 2.7%, while the loan portfolio shrunk $14.9 million, or 2.4%. Total nonperforming assets remained stable with the linked quarter at $78.0 million at September 30, 2010. The Company continued to reduce its level of classified assets to core capital plus general valuation allowance ratio to 86.5% at September 30, 2010 compared with 135.1% at September 30, 2009. The Company also reduced its level of classified assets plus special mention assets to core capital ratio plus general valuation allowance to 109.6% compared with 168.4% a year ago.
Also, as part of improving its risk profile, the Company continued to increase its liquidity position maintaining a very high level of cash and cash equivalents, which totaled $130.7 million at the end of the most recent quarter.
Mr. King added, "We are pleased with the underlying core performance of the organization as we continue to manage the balance sheet to reduce the Company's overall risk profile, generate revenue, reduce expenses and improve net interest margin. We are seeing a decline in the level of nonperforming and adversely classified assets, although not as quickly as we would like."
Despite a smaller balance sheet, net interest income for the period increased $7,000 and $799,000 as compared with the periods ending June 30, 2010 and September 30, 2009, respectively. The net interest margin was 2.62% for the period and was higher than the 2.55% reported for the linked period and 2.14% for the year ago period.
The provision for loan losses totaled $2.8 million reflecting the continued difficult economic operating environment. The provision was $3.9 million the previous period and $1.8 million the prior year period.
The allowance for loan losses increased to $32.6 million or 5.4% of total loans outstanding. This compares to $31.5 million and 5.1%, respectively, for the prior period and $31.8 million and 4.7%, respectively, for the prior year period.
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.
CONTACT: PVF Capital Corp. James H. Nicholson, Chief Financial Officer 440-248-7171