• Strong mortgage banking activities resulting in mortgage origination income of $3.7 million.
  • Lower rate environment and increasing prepayment speeds result in impairment of $1.2 million in mortgage servicing rights.
  • Continued improvement in net interest margin to 2.62%.
  • Credit costs remain elevated with provision for loan losses of $2.8 million and loss on real estate owned of $412,000.
  • Continued progress towards achieving regulatory targeted adversely classified assets ratio.
  • Improving noninterest expense levels.
  • Bank capital ratios remain strong.

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.
PVF CAPITAL CORP.    
    30000 Aurora Road
    Solon, OH 44139
    440-248-7171
     
SUMMARY OF FINANCIAL HIGHLIGHTS
     
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
     
(Dollars in thousands) September 30, June 30,
  2010 2010
ASSETS    
Cash and cash equivalents $130,706 $130,043
Securities 15,112 20,149
Loans receivable 571,409 587,406
Loans receivable held for sale 15,151 8,718
Mortgage-backed securities 41,772 47,146
Other assets 62,597 66,123
     
Total Assets $836,747 $859,585
     
LIABILITIES    
Deposits $644,635 $667,546
Borrowed money 86,233 86,259
Other liabilities 23,646 22,537
     
Total Liabilities 754,514 776,342
     
Total Stockholders' Equity 82,233 83,243
     
Total Liabilities and Stockholders' Equity $836,747 $859,585
     
     
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
     
  Three Months Ended
(Dollars in thousands except per share data) September 30,
  2010 2010
     
Loans $8,132 $9,157
Mortgage-backed securities 461 663
Investments 260 177
Interest income 8,853 9,997
     
Deposits 2,666 4,359
Borrowings 911 1,162
Interest expense 3,577 5,521
     
Net interest income 5,276 4,476
     
Provision for loan losses 2,800 1,760
     
Net interest income after provision for loan losses 2,476 2,716
     
Mortgage-banking activities 2,414 1,055
Impairment of securities 0 0
Gain on cancellation of subordinated debt 0 8,561
Gain (loss) on real estate owned (412) (90)
Gain on the sale of securities 0 0
Increase in cash surrender value of bank owned life insurance 75 20
Other, net 411 318
Total noninterest income 2,488 9,864
     
Compensation and benefits 2,436 2,242
Office occupancy and equipment 707 678
Federal deposit insurance premium 606 566
Outside services 551 852
Real estate owned expense 737 782
Other 891 1,116
Total noninterest expense 5,928 6,236
     
Income (loss) before federal income tax provision (964) 6,344
     
Federal income tax provision (benefit) (346) 2,144
     
Net income (loss) ($618) $4,200
     
Basic earnings (loss) per share ($0.02) $0.54
     
Diluted earnings (loss) per share ($0.02) $0.54
 
FINANCIAL HIGHLIGHTS
           
  At or for the three months ended
(dollars in thousands except per share data) September 30, June 30, March 31, December 31, September 30,
Balance Sheet Data: 2010 2010 2010 2009 2009
Total assets  $ 836,747  $ 859,585  $ 889,184  $ 869,297  $ 887,081
Loans receivable  604,038  618,925 636,243 656,351 685,048
Allowance for loan losses  32,629  31,519 30,272 29,913 31,824
Loans receivable held for sale, net  15,151  8,718 9,017 7,181 6,428
Mortgage-backed securities available for sale  41,772  47,146 52,217 57,433 60,630
Cash and cash equivalents  130,706 130,043 137,369 42,662 29,004
Securities held to maturity 0 0 5,000 55,000 57,000
Securities available for sale  15,112  20,149 9,978 87 137
Deposits 644,635  667,546 689,562 682,891 696,931
Borrowings  86,233  86,259 86,286 96,313 106,339
Stockholders' equity  82,233  83,243 85,304 53,578 54,894
Nonperforming loans  71,100  69,090 69,983 73,343 75,249
Other nonperforming assets  6,891  8,174 10,991 12,090 11,569
Tangible common equity ratio 9.83% 9.68% 9.59% 6.16% 6.19%
Book value per share $3.21 $3.25 $3.36 $6.71 $6.88
Common shares outstanding at period end  25,642,218  25,642,218 25,402,218 7,979,120 7,979,120
           
Operating Data:          
Loans $8,132 $8,325 $8,571 $9,139 $9,157
Mortgage-backed securities 461 575 606 694 663
Investments 260 277 203 180 177
 Interest income 8,853 9,177 9,380 10,013 9,997
           
Deposits 2,666 3,005 3,226 3,764 4,359
Borrowings 911 902 1,022 1,107 1,162
 Interest expense 3,577 3,907 4,248 4,871 5,521
           
Net interest income 5,276 5,270 5,132 5,142 4,476
           
 Provision for loan losses 2,800 3,918 7,000 2,250 1,760
           
Net interest income after provision for loan losses 2,476 1,352 (1,868) 2,892 2,716
           
Mortgage-banking activities 2,414 1,327 770 1,451 1,055
Gain on cancellation of subordinated debt 0 0 9,066 0 8,561
Gain (loss) on real estate owned (412) (1,305) (239) (571) (90)
Gain on the sale of securities 0 0 24 0 0
Increase in cash surrender value of bank owned life insurance 75 76 75 78 20
Other, net 411 290 259 371 318
 Total noninterest income 2,488 388 9,955 1,329 9,864
           
Compensation and benefits 2,436 2,430 2,317 2,372 2,242
Office occupancy and equipment 707 607 645 647 678
Federal deposit insurance premium 606 781 584 738 566
Outside services 551 759 655 508 907
Real estate owned expense 737 691 949 666 782
Other 891 801 974 1,096 1,061
 Total noninterest expense 5,928 6,069 6,124 6,027 6,236
           
Income (loss) before federal income tax provision (964) (4,329) 1,963 (1,806) 6,344
           
 Federal income tax provision (benefit) (346) (1,582) 694 (525) 2,144
           
Net income (loss) ($618) ($2,747) $1,269 ($1,281) $4,200
           
Basic earnings (loss) per share ($0.02) ($0.11) $0.14 ($0.16) $0.54
           
Diluted earnings (loss) per share ($0.02) ($0.11) $0.13 ($0.16) $0.54
           
(1) Includes $9.1 million gain related to exchange of PVF Capital Trust II trust preferred securities.        
(2) Includes $8.6 million gain related to exchange of PVF Capital Trust I trust preferred securities.        
           
Performance Ratios:          
Return on average assets (0.29) (1.24) 0.58 (0.58) 1.87
Return on average equity (2.99) (12.96) 7.27 (9.45) 32.18
Net interest margin 2.62 2.55 2.55 2.49 2.14
Interest rate spread 2.48 2.44 2.48 2.38 2.26
Efficiency ratio 63.33 87.17 97.83 85.59 106.25
Stockholders' equity to total assets (all tangible) 9.83 9.68 9.59 6.16 6.19
           
Asset Quality Ratios:          
Nonperforming assets to total assets 9.32 8.99 9.11 9.83 9.79
Nonperforming loans to total loans 11.77 11.16 11.00 11.17 10.98
Allowance for loan losses to total loans 5.40 5.09 4.76 4.56 4.65
Allowance for loan losses to nonperforming loans 45.89 45.62 43.26 40.79 42.29
Net charge-offs to average loans, annualized 1.08 1.68 4.05 2.54 0.84
           
Park View Federal Regulatory Capital Ratios:          
Ratio of tangible capital to adjusted total assets 8.70 8.63 8.23 7.15 6.70
Ratio of tier one (core) capital to adjusted total assets 8.70 8.63 8.23 7.15 6.70
Ratio of tier one risk-based capital to risk-weighted assets 11.65 11.56 10.93 9.48 8.77
Ratio of total risk-based capital to risk-weighted assets 12.92 12.83 12.19 10.74 10.03
Adversely classified assets to core capital plus general valuation allowance 86.50 88.60 98.60 119.90 135.10
Adversely classified assets plus special mention assets to core capital plus general valuation allowance 109.60 117.30 104.20 130.50 168.40
CONTACT:  PVF Capital Corp.          James H. Nicholson, Chief Financial Officer          440-248-7171