PVF Capital Corp. Announces Increased Earnings For Fiscal 2013 Second Quarter
The Company recognized an adjustment in the current quarter to correct the amount of interest income recognized in the month of origination on residential loans originated and sold in the secondary market. In conjunction therewith, the Company revised its fiscal 2012 financial results which reduced capital at June 30, 2012 by $0.6 million, increased other liabilities by $0.6 million and reduced quarterly net income and net interest income by $0.1 million, $0.1 million, $0.2 million and $0.2 million for the first through fourth quarters of fiscal 2012, respectively. Additionally, the Company revised its fiscal 2013 first quarter results to reduce net interest income and net income by $153,000 and correspondingly reduced retained earnings and increased other liabilities by such amount. The Company has concluded that such adjustments to the periods discussed did not have a material impact on its financial statements.
In this low interest rate environment, the Company has improved its net interest margin to 3.16% for the period ended December 31, 2012, compared with 3.12% and 2.89% for the quarters ended September 30, 2012 and December 31, 2011, respectively. The Company's balance sheet strategy of improving the mix of earning assets is driving the improving margin.
Mortgage Banking Revenues Increase, Improving Non-interest Income
Non-interest income totaled $4.2 million for the quarter ended December 31, 2012, an increase of $3.1 million or 273.5% from the linked quarter ended December 31, 2011. This increase is the result of growth in net revenue from mortgage banking activities which totaled $3.8 million for the quarter, an increase of $2.0 million from the year-ago quarter. The Company continued to capitalize on its significant residential mortgage origination capabilities in the lower interest rate environment, resulting in an increase in the gain on sale of mortgages income. Included in the mortgage banking results and partially offsetting the strong gain on sale revenue is a $0.2 million charge to the impairment valuation allowance recognized against the carrying value of the Company's capitalized mortgage servicing rights. The majority of mortgage lending activities in the current environment involves refinance and is highly correlated to interest rate movements and levels, and negatively impacts the fair value of mortgage servicing rights. Also contributing to the increase in non-interest income over the prior-year period is the reduction in the credit-related costs associated with other real estate owned, which declined $0.9 million from a year ago and totaled $0.3 million. The credit-related costs resulted from updated valuations on other real estate owned and losses on property dispositions whose values have shown signs of stabilizing as compared to a year ago. Service charges and other fees increased $0.3 million due to electronic banking related fees and improving fees related to transaction accounts.
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