PVF Capital (PVFC) 10-Q 2011 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2011.

¨ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from            to            

Commission File Number 0-24948

PVF Capital Corp.

(Exact name of registrant as specified in its charter)

Ohio	34-1659805
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

30000 Aurora Road, Solon, Ohio	44139
(Address of principal executive offices)	(Zip Code)

(440) 248-7171

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report.)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES  x    NO  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES  x    NO  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller Reporting Company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES  ¨    NO  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, $0.01 Par Value	25,669,718
(Class)	(Outstanding at November 11, 2011)

PVF CAPITAL CORP.

INDEX

		Page
PART I FINANCIAL INFORMATION
Item 1.	Financial Statements.
	Consolidated Statements of Financial Condition, September 30, 2011 (unaudited) and June 30, 2011.		1
	Consolidated Statements of Operations for the three months ended September 30, 2011 and 2010 (unaudited).		2
	Consolidated Statements of Cash Flows for the three months ended September 30, 2011 and 2010 (unaudited).		3
	Notes to Consolidated Financial Statements (unaudited).		4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.		36
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.		45
Item 4.	Controls and Procedures.		46
PART II OTHER INFORMATION
Item 1.	Legal Proceedings.		47
Item 1A.	Risk Factors.		47
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds.		47
Item 3.	Defaults Upon Senior Securities.		47
Item 4.	(Removed and Reserved).		47
Item 5.	Other Information.		47
Item 6.	Exhibits.		47
SIGNATURES

PART I — FINANCIAL INFORMATION

PVF CAPITAL CORP.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

	September 30, 2011			June 30, 2011
ASSETS
Cash and amounts due from depository institutions	$	22,423,338		$	19,138,325
Interest-bearing deposits		121,849,012			130,153,080
Federal funds sold		6,000,000			—
Total cash and cash equivalents		150,272,350			149,291,405
Securities available for sale		2,985,210			8,946,674
Mortgage-backed securities available for sale		4,820,249			4,972,121
Loans receivable held for sale, net		12,856,959			9,392,389
Loans receivable, net of allowance of $29,553,164 and $29,996,893, respectively		542,409,278			547,282,037
Office properties and equipment, net		7,526,063			7,556,764
Real estate owned, net		7,925,179			7,972,753
Federal Home Loan Bank stock		12,811,100			12,811,100
Bank-owned life insurance		23,482,789			23,420,089
Prepaid expenses and other assets		14,924,253			15,409,502
Total assets	$	780,013,430		$	787,054,834
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Non-interest bearing deposits	$	26,939,572		$	28,947,373
Interest-bearing deposits		621,582,653			623,624,462
Total deposits		648,522,225			652,571,835
Note payable		1,126,111			1,152,778
Long-term advances from the Federal Home Loan Bank		35,000,000			35,000,000
Advances from borrowers for taxes and insurance		7,507,090			11,212,923
Accrued expenses and other liabilities		17,286,740			15,835,317
Total liabilities	$	709,442,166		$	715,772,853
Stockholders' equity
Serial preferred stock, none issued		—			—
Common stock, $.01 par value, 65,000,000 shares authorized; 26,142,443 shares issued		261,424			261,424
Additional paid-in capital		100,604,722			100,543,717
Retained earnings (accumulated deficit)		(25,609,374	)		(24,788,778	)
Accumulated other comprehensive loss		(848,361	)		(897,235	)
Treasury stock at cost, 472,725 shares		(3,837,147	)		(3,837,147	)
Total stockholders' equity		70,571,264			71,281,981
Total liabilities and stockholders' equity	$	780,013,430		$	787,054,834

See Notes to the Consolidated Financial Statements

1

PART I — FINANCIAL INFORMATION

PVF CAPITAL CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended September 30,
	2011			2010
Interest and dividends income
Loans	$	7,104,267		$	8,132,310
Mortgage-backed securities		49,721			461,328
Federal Home Loan Bank stock dividends		127,760			143,730
Securities		24,217			95,403
Fed funds sold and interest-bearing deposits		92,498			20,326
Total interest and dividends income		7,398,463			8,853,097
Interest expense
Deposits		1,949,047			2,666,458
Long-term borrowings		272,440			911,069
Total interest expense		2,221,487			3,577,527
Net interest income		5,176,976			5,275,570
Provision for loan losses		1,500,000			2,800,000
Net interest income after provision for loan losses		3,676,976			2,475,570
Non-interest income
Service charges and other fees		178,818			172,466
Gain on sale of mortgage loans		1,827,435			3,747,992
Income (loss) from mortgage servicing fees		(817,270	)		(1,333,697	)
Gain on sale of SBA loans		221,218			—
Increase in cash surrender value of bank-owned life insurance		62,699			75,367
Gain (loss) on real estate owned		140,112			(165,576	)
Provision for real estate owned losses		(69,400	)		(246,000	)
Other, net		127,507			238,203
Total non-interest income		1,671,119			2,488,755
Non-interest expense
Compensation and benefits		2,894,698			2,435,991
Office occupancy and equipment		598,910			706,973
FDIC Insurance		428,699			606,277
Professional and legal		115,000			119,903
Outside services		495,667			417,283
Maintenance contracts		196,334			133,542
Franchise tax		225,428			181,524
Real estate owned and collection expense		613,859			736,565
Other		625,275			589,873
Total non-interest expense		6,193,870			5,927,931
Income (loss) before federal income taxes		(845,775	)		(963,606	)
Federal income tax provision (benefit)		(25,178	)		(345,192	)
Net income (loss)	$	(820,597	)	$	(618,414	)
Basic earnings (loss) per share	$	(0.03	)	$	(0.02	)
Diluted earnings (loss) per share	$	(0.03	)	$	(0.02	)
Dividend declared per common share	$	—		$	—

See Notes to the Consolidated Financial Statements

2

PART I — FINANCIAL INFORMATION

PVF CAPITAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended September 30,
	2011			2010
Operating activities:
Net income (loss)	$	(820,597	)	$	(618,414	)
Adjustments to reconcile net income to net cash flow from operating activities
Amortization of premium on mortgage-backed securities		(8,940	)		85,665
Depreciation and amortization		177,621			193,100
Provision for loan losses		1,500,000			2,800,000
Gain on the sale of loans receivable held for sale		(847,607	)		(3,691,269	)
Gain on the sale of SBA loans		(221,218	)		—
Impairment of mortgage loan servicing rights		698,468			1,183,799
Provision for real estate owned losses		69,400			246,000
Accretion of deferred loan origination fees, net		(65,436	)		(152,275	)
(Gain) loss on disposal of real estate owned, net		(140,112	)		165,576
Market adjustment for loans held for sale		(231,052	)		(42,382	)
Change in fair value of mortgage banking derivatives		(748,776	)		864,761
Stock compensation		61,005			108,783
Change in accrued interest on securities, loans, and borrowings, net		58,103			(316,618	)
Proceeds from loans receivable held for sale		44,937,267			106,092,368
Origination of loans receivable held for sale, net		(47,622,223	)		(108,776,656	)
Earnings on cash surrender value of bank-owned life insurance		(62,700	)		(75,366	)
Net change in other assets and other liabilities		2,423,964			(743,449	)
Net cash from operating activities		(842,833	)		(2,676,377	)
Investing activities:
Loan repayments and originations, net		2,899,216			13,077,714
Principal repayments on mortgage-backed securities available for sale		246,328			4,566,227
Purchase of securities available for sale		(3,000,000	)		(5,000,000	)
Calls of securities available for sale		8,950,000			10,000,000
Additions to office properties and equipment, net		(146,920	)		(64,295	)
Proceeds from sale of real estate owned		657,264			1,142,583
Net cash from investing activities		9,605,888			23,722,229
Financing activities:
Net increase (decrease) in demand deposits, NOW, and passbook savings		(1,518,884	)		2,888,902
Net increase (decrease) in time deposits		(2,530,726	)		(25,800,441	)
Repayment of note payable		(26,667	)		(26,666	)
Net increase (decrease) in advances from borrowers for taxes and insurance		(3,705,833	)		2,555,529
Net cash from financing activities		(7,782,110	)		(20,382,676	)
Net increase in cash and cash equivalents		980,945			663,176
Cash and cash equivalents at beginning of period		149,291,405			130,042,946
Cash and cash equivalents at end of period	$	150,272,350		$	130,706,122
Supplemental disclosures of cash flow information:
Cash payments of interest	$	2,221,594		$	3,747,465
Supplemental noncash investing activity:
Transfer of loans to real estate owned	$	538,978		$	271,642

See Notes to the Consolidated Financial Statements

3

PART I — FINANCIAL INFORMATION

PVF CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended

September 30, 2011 and 2010

(Unaudited)

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED MATTERS

The accounting and reporting policies of PVF Capital Corp. (“the Company”) conform to U.S. generally accepted accounting principles and general (U.S. GAAP”) industry practice. The Company’s principal subsidiary, Park View Federal Savings Bank (“the Bank”) is principally engaged in the business of offering deposits through the issuance of savings accounts, money market accounts, and certificates of deposit and lending funds primarily for the purchase, construction, and improvement of real estate in Cuyahoga, Summit, Geauga, Lake, Medina, Lorain and Portage Counties, Ohio. The deposit accounts of the Bank are insured up to applicable limits by the Federal Deposit Insurance Corporation (the “FDIC”). The following is a description of the significant policies, which the Company follows in preparing and presenting its consolidated financial statements.

Principles of Consolidation: The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, the Bank, PVF Service Corporation (“PVFSC”), Mid Pines Land Company, PVF Holdings, Inc., PVF Mortgage Corp. and PVF Community Development Corp. PVFSC owns certain premises and leases them to the Bank. Mid Pines Land Company, PVF Holdings, Inc., PVF Mortgage Corp. and PVF Community Development Corp. did not have any significant assets or activity as of or for the periods presented. The Company also created PVF Capital Trust (“Trust I”) and PVF Capital Trust II (“Trust II”) for the sole purpose of issuing trust preferred securities. All significant intercompany transactions and balances are eliminated in consolidation.

PVFSC and the Bank have entered into various nonconsolidated joint ventures that own real estate, including properties leased to the Bank. The Bank has created a limited liability company, Crock, LLC that has taken title to property acquired through or in lieu of foreclosure.

Use of Estimates: The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The allowance for loan losses, valuation of mortgage servicing rights, fair value of mortgage banking derivatives, valuation of loans held for sale, fair value of securities, valuation of real estate owned, and the realizability of deferred tax assets and are particularly susceptible to change.

Loans: Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of deferred loan fees and costs, and an allowance for loan losses. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level-yield method without anticipating prepayments.

4

PART I — FINANCIAL INFORMATION

Interest income on mortgage and commercial loans is discontinued at the time the loan is greater than 90 days delinquent unless the loan is well-secured with a loan to value ratio of 60% or less and in process of collection. Interest income on consumer loans is discontinued at the time the loan is greater than 90 days delinquent. Consumer loans that become 180 days or more past due will be classified as loss and fully reserved. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. Nonaccrual loans and loans past due greater than 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. A loan is moved to non-accrual status in accordance with the Company’s policy, typically after 90 days of non-payment.

All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Allowance for Loan Losses: The allowance for loan losses is maintained at a level to absorb probable incurred losses in the portfolio as of the balance sheet date. The adequacy of the allowance for loan losses is periodically evaluated by the Bank based upon the overall portfolio composition and general market conditions as well as information about specific borrower situations and estimated collateral values. While management uses the best information available to make these evaluations, future adjustments to the allowance may be necessary if economic conditions change substantially from the assumptions used in making the evaluations.

Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged off. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance for loan losses.

The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired. The general component covers non-impaired loans and is based on historical loss experience adjusted for current factors. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company over the most recent 18 months. During the period ended December 31, 2010, the Company changed the loss history period to 18 months from 12 months. This change was made to capture more appropriately over a longer period of time the Company’s recent loss experience under the current adverse economic conditions. If the 12 month historical loss experience factor was used instead of 18 months, periods with larger losses would have been excluded from this experience factor resulting in a significant downward fluctuation in the required general reserves, which management did not feel was either prudent or representative of probable losses. This actual loss experience is supplemented with other economic factors based on the risks present for each portfolio segment. These economic factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations.

5

PART I — FINANCIAL INFORMATION

The portfolio segments include one-to-four family, one-to-four family construction, multi-family, commercial real estate, land, commercial and industrial, Small Business Administration (“SBA”), and consumer loans. One-to-four family, one-to-four family construction, and consumer loans rely on the historic cash flows of individual borrowers and on the real estate securing the loan. Multi-family, commercial real estate, land, SBA, and the commercial and industrial segments are comprised of loans with a reliance on historic cash flows of small business borrowers and of small scale investors, as well as of the underlying real estate projects or of land. The underwriting criteria across all segments consider the risk attributes associated with weak local economic conditions and a weak real estate market.

A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal and interest according to the contractual terms of the loan agreement. Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

Since the Bank’s loans are primarily collateral dependent, measurement of impairment is based on the fair value of the collateral. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment and accordingly, they are not separately identified for impairment disclosure purposes. Troubled debt restructurings are separately identified for impairment disclosures and are measured at the present value of estimated future cash flows using the respective loan’s effective rate at inception. If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is reported net, at the fair value of collateral. For troubled debt restructurings that subsequently default, the Bank determines the amount of reserve in accordance with the accounting policy for the allowance for loan losses.

The Bank’s loan portfolio is primarily secured by real estate. Collection of real estate secured loans in the portfolio is dependent on court proceedings, and as a result, loans may remain past due for an extended period before being collected, transferred to real estate owned, or charged off. Charge-offs are recorded after the foreclosure process is complete for any deficiency between the Bank’s recorded investment in the loan and the fair value of the real estate acquired or sold, to the extent that such a deficiency exists.

6

PART I — FINANCIAL INFORMATION

NOTE 2 — SECURITIES

As of September 30, and June 30, 2011, the amortized cost and fair value of securities available for sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows:

	September 30, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
FHLMC structured notes	$	3,000,000	$	—	$	(14,790	)	$	2,985,210
Total	$	3,000,000	$	—	$	(14,790	)	$	2,985,210
	June 30, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
FHLMC structured notes	$	3,000,000	$	—	$	(6,000	)	$	2,994,000
FNMA structured notes		5,950,000		2,674		—			5,952,674
Total	$	8,950,000	$	2,674	$	(6,000	)	$	8,946,674

The amortized cost and fair value of securities available-for-sale, by contractual maturity, are shown below:

	September 30, 2011
	Amortized Cost		Fair Value
One to five years	$	3,000,000	$	2,985,210
Total	$	3,000,000	$	2,985,210
	June 30, 2011
	Amortized Cost		Fair Value
Five to ten years	$	8,950,000	$	8,946,674
Total	$	8,950,000	$	8,946,674

The Federal Home Loan Mortgage Corporation (“FHLMC”) structured note held at September 30, 2011 is callable on March 29, 2012 and quarterly thereafter, has multiple coupon resets and matures on September 29, 2016. At September 30, 2011, gross unrealized losses have been in a loss position for less than 12 months. No impairment has been recognized since the investments are issued by U.S. government sponsored entities and are believed to be of high credit quality, with the decline in fair value largely due to changes in market interest rates.

7

PART I — FINANCIAL INFORMATION

The fair value of mortgage-backed securities available for sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) at September 30, and June 30, 2011 are summarized as follows:

	September 30, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
FHLMC mortgage-backed securities	$	4,775,539	$	44,710	$	—		$	4,820,249
Total	$	4,775,539	$	44,710	$	—		$	4,820,249
	June 30, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
FHLMC mortgage-backed securities	$	5,012,927	$	4,537	$	(45,343	)	$	4,972,121
Total	$	5,012,927	$	4,537	$	(45,343	)	$	4,972,121

These mortgage-backed securities are backed by residential mortgage loans and do not mature on a single maturity date.

There are no mortgage-backed securities with unrealized losses at September 30, 2011. At June 30, 2011 gross unrealized losses on mortgage-backed securities have been in a loss position for less than 12 months. All of the Company’s holdings of mortgage-backed securities were issued by U.S. government sponsored enterprises. Unrealized losses on mortgage-backed securities have not been recognized into income, because the decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality, and because the Company does not have the intent to sell these mortgage-backed securities and it is likely that it will not be required to sell the securities before their anticipated recovery. The Company does not consider these securities to be other than temporarily impaired at September 30, 2011.

8

PART I — FINANCIAL INFORMATION

NOTE 3 — LOANS RECEIVABLE

Loans receivable at September 30, and June 30, 2011 consisted of the following:

	September 30, 2011			June 30, 2011
One-to-Four Family Loans:
1-4 Family Owner Occupied	$	64,623,280		$	65,501,675
1-4 Family Non-Owner Occupied		36,701,000			37,596,000
1-4 Family Second Mortgage		31,663,478			32,897,907
Home Equity Lines of Credit		65,884,803			71,947,078
Home Equity Investment Lines of Credit		7,708,460			8,031,953
One-to-Four Family Construction Loans:
1-4 Family Construction		756,868			1,135,786
1-4 Family Construction Models/Speculative		7,034,906			5,140,560
Multi-Family Loans:
Multi-Family		48,125,159			48,234,229
Multi-Family Second Mortgage		414,869			421,489
Multi-Family Construction		—			1,593,981
Commercial Real Estate Loans:
Commercial		175,349,543			183,921,525
Commercial Second Mortgage		6,883,781			8,187,212
Commercial Lines of Credit		14,646,787			17,020,580
Commercial Construction		3,636,148			4,236,607
Commercial and Industrial Loans		73,202,765			53,204,176
Land Loans:
Lot Loans		15,111,786			16,831,964
Acquisition and Development Loans		20,784,062			22,198,079
Consumer Loans		372,163			162,265
Total loans receivable		572,899,858			578,263,066
Net deferred loan origination fees		(937,417	)		(984,136	)
Allowance for loan losses		(29,553,164	)		(29,996,893	)
Total loans receivable, net	$	542,409,277		$	547,282,037

A summary of the changes in the allowance for loan losses for the three months ended September 30, 2011, and 2010, respectively, is as follows:

	September 30, 2011			September 30, 2010
Beginning balance	$	29,996,893		$	31,519,466
Provision for loan losses		1,500,000			2,800,000
Loans charged-off		(1,969,520	)		(1,690,041	)
Recoveries		25,791			—
Ending balance	$	29,553,164		$	32,629,425

9

PART I — FINANCIAL INFORMATION

The following table presents activity in the allowance for loan losses by portfolio segment for the three months ended September 30, 2011:

	One-to-Four Family			One-to-Four Family Construction			Multi- Family			Commercial Real Estate			Commercial and Industrial			Land			Consumer		Total
Beginning balance at June 30, 2011	$	8,841,454		$	1,266,740		$	1,767,335		$	8,458,943		$	1,663,894		$	7,891,305		$	107,222	$	29,996,893
Provision for loan losses		(511,394	)		39,566			(360,444	)		949,896			493,657			728,029			160,690		1,500,000
Charge-offs		(476,158	)		(109,322	)		(236,663	)		(1,089,347	)		(29,609	)		(28,421	)		—		(1,969,520	)
Recoveries		4,765			—			—			19,271			1,755			—			—		25,791
Ending balance at September 30, 2011	$	7,858,667		$	1,196,984		$	1,170,228		$	8,338,763		$	2,129,697		$	8,590,913		$	267,912	$	29,553,164

The following table presents the allowance for loan losses and the recorded investment in loans by portfolio segment and based on the impairment method as of September 30, 2011. The recorded investment in loans includes the unpaid principal balance and unamortized loan origination fees, but excludes accrued interest receivable which is not considered to be material.

	One-to-Four Family		One-to-Four Family Construction		Multi- Family		Commercial Real Estate		Commercial and Industrial		Land		Consumer		Total
Allowance for loan losses
Ending allowance balance attributable to loans
Individually evaluated for impairment	$	3,644,190	$	862,554	$	226,067	$	1,684,539	$	1,041,066	$	6,101,719	$	—	$	13,560,135
Collectively evaluated for impairment		4,214,477		334,430		944,161		6,654,224		1,088,631		2,489,194		267,912		15,993,029
Total ending allowance balance	$	7,858,667	$	1,196,984	$	1,170,228	$	8,338,763	$	2,129,697	$	8,590,913	$	267,912	$	29,553,164
Loans
Loans individually evaluated for impairment	$	20,925,658	$	2,857,609	$	673,628	$	20,165,699	$	5,830,177	$	14,237,115	$	—	$	64,689,886
Loans collectively evaluated for impairment		185,317,342		4,921,416		47,786,975		180,022,462		67,252,808		21,599,998		371,554		507,272,555
Total ending loans balance	$	206,243,000	$	7,779,025	$	48,460,603	$	200,188,161	$	73,082,985	$	35,837,113	$	371,554	$	571,962,441

10

PART I — FINANCIAL INFORMATION

The following table presents the allowance for loan losses and the recorded investment in loans by portfolio segment and based on the impairment method as of June 30, 2011. The recorded investment in loans includes the unpaid principal balance and unamortized loan origination fees, but excludes accrued interest receivable which is not considered to be material.

	One-to-Four Family		One-to-Four Family Construction		Multi- Family		Commercial Real Estate		Commercial and Industrial		Land		Consumer		Total
Allowance for loan losses
Ending allowance balance attributable to loans
Individually evaluated for impairment	$	3,493,542	$	935,146	$	117,896	$	2,418,681	$	768,973	$	5,300,754	$	—	$	13,034,992
Collectively evaluated for impairment		5,347,912		331,594		1,649,439		6,040,262		894,921		2,590,551		107,222		16,961,901
Total ending allowance balance	$	8,841,454	$	1,266,740	$	1,767,335	$	8,458,943	$	1,663,894	$	7,891,305	$	107,222	$	29,996,893
Loans
Loans individually evaluated for impairment	$	18,840,326	$	3,172,208	$	2,512,380	$	22,317,320	$	3,196,592	$	14,439,251	$	—	$	64,478,077
Loans collectively evaluated for impairment		196,766,434		3,093,452		47,651,729		190,685,198		49,917,720		24,524,331		161,989		512,800,853
Total ending loans balance	$	215,606,760	$	6,265,660	$	50,164,109	$	213,002,518	$	53,114,312	$	38,963,582	$	161,989	$	577,278,930

11

PART I — FINANCIAL INFORMATION

The following table presents loans individually evaluated for impairment by class of loans as of September 30, 2011 and the average recorded investment and interest income recognized by class for the three months ended September 30, 2011:

	September 30, 2011
	Unpaid Principal Balance(1)		Recorded Investment		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized
With no related allowance recorded
One-to-Four Family Loans:
1-4 Family Owner Occupied	$	6,101,095	$	6,091,111	$	—	$	6,605,736	$	47,473	$	47,473
1-4 Family Non-Owner Occupied		2,845,537		2,840,881		—		1,998,029		7,295		7,295
1-4 Family Second Mortgage		1,517,563		1,515,080		—		1,279,294		107		107
Home Equity Lines of Credit		796,506		795,203		—		867,519		582		582
Home Equity Investment Lines of Credit		310,121		309,614		—		221,646		317		317
One-to-Four Family Construction Loans:
1-4 Family Construction		—		—		—		—		—		—
1-4 Family Construction Models/Speculative		176,887		176,598		—		176,753		1,322		1,322
Multi-Family Loans:
Multi-Family		305,904		305,404		—		1,224,791		—		—
Multi-Family Second Mortgage		—		—		—		—		—		—
Multi-Family Construction		—		—		—		—		—		—
Commercial Real Estate Loans:
Commercial		7,266,866		7,254,974		—		6,842,586		25,577		25,577
Commercial Second Mortgage		571,473		570,538		—		570,519		—		—
Commercial Lines of Credit		2,623,140		2,618,848		—		2,758,567		2,186		2,186
Commercial Construction		370,000		369,395		—		369,382		—		—
Commercial and Industrial Loans		2,559,945		2,555,755		—		2,057,142		—		—
Land Loans:
Lot Loans		1,344,192		1,341,993		—		1,153,055		807		807
Acquisition and Development Loans		109,818		109,638		—		274,431		—		—
Consumer Loans		—		—		—				—		—
Total with no related allowance recorded	$	26,899,047	$	26,855,032	$	—	$	26,399,450	$	85,666	$	85,666
With an allowance recorded
One-to-Four Family Loans:
1-4 Family Owner Occupied	$	1,631,018	$	1,628,349	$	405,552	$	1,158,082	$	719	$	719
1-4 Family Non-Owner Occupied		4,625,921		4,618,352		1,924,308		4,747,990		3,565		3,565
1-4 Family Second Mortgage		457,261		456,513		224,653		361,465		—		—
Home Equity Lines of Credit		2,329,197		2,325,385		987,669		2,298,073		—		—
Home Equity Investment Lines of Credit		345,735		345,170		102,008		345,158		1,286		1,286
One-to-Four Family Construction Loans:
1-4 Family Construction		—		—		—		—		—		—
1-4 Family Construction Models/Speculative		2,685,405		2,681,011		862,554		2,838,155		—		—
Multi-Family Loans:
Multi-Family		368,828		368,224		226,067		368,212		—		—
Multi-Family Second Mortgage		—		—		—		—		1,660		1,660
Multi-Family Construction		—		—		—		—		—		—
Commercial Real Estate Loans:
Commercial		6,378,282		6,367,846		929,808		7,485,402		6,936		6,936
Commercial Second Mortgage		137,105		136,881		3,553		68,440		—		—
Commercial Lines of Credit		—		—		—		—		—		—
Commercial Construction		2,851,883		2,847,217		751,178		3,146,613		—		—
Commercial and Industrial Loans		3,279,788		3,274,422		1,041,066		2,456,243		2,920		2,920
Land Loans:
Lot Loans		3,202,019		3,196,779		1,291,302		3,084,307		6,742		6,742
Acquisition and Development Loans		9,604,420		9,588,705		4,810,417		9,826,391		24,176		24,176
Consumer Loans		—		—		—		—		—		—
Total with an allowance recorded	$	37,896,862	$	37,834,854	$	13,560,135	$	38,184,531	$	48,004	$	48,004
Total loans evaluated for impairment	$	64,795,909	$	64,689,886	$	13,560,135	$	64,583,981	$	133,670	$	133,670

(1) There are $17.0 million of loans individually identified for impairment accruing interest.

12

PART I — FINANCIAL INFORMATION

The following table presents loans individually evaluated for impairment by class of loans as of June 30, 2011:

	June 30, 2011
	Balance(1)		Investment		Allocated
With no related allowance recorded
One-to-Four Family Loans:
1-4 Family Owner Occupied	$	7,132,500	$	7,120,361	$	—
1-4 Family Non-Owner Occupied		1,157,145		1,155,176		—
1-4 Family Second Mortgage		1,045,287		1,043,508		—
Home Equity Lines of Credit		941,437		939,835		—
Home Equity Investment Lines of Credit		133,906		133,678		—
One-to-Four Family Construction Loans:
1-4 Family Construction		—		—		—
1-4 Family Construction Models/Speculative		177,211		176,909		—
Multi-Family Loans:
Multi-Family		2,147,835		2,144,180		—
Multi-Family Second Mortgage		—		—		—
Multi-Family Construction		—		—		—
Commercial Real Estate Loans:
Commercial		6,441,158		6,430,196		—
Commercial Second Mortgage		571,473		570,500		—
Commercial Lines of Credit		2,903,227		2,898,286		—
Commercial Construction		370,000		369,370		—
Commercial and Industrial Loans		1,561,184		1,558,527		—
Land Loans:
Lot Loans		965,760		964,116		—
Acquisition and Development Loans		439,972		439,224		—
Consumer Loans		—		—		—
Total with no related allowance recorded	$	25,988,095	$	25,943,866	$	—
With an allowance recorded
One-to-Four Family Loans:
1-4 Family Owner Occupied	$	688,987	$	687,815	$	198,181
1-4 Family Non-Owner Occupied		4,885,942		4,877,627		2,024,076
1-4 Family Second Mortgage		266,872		266,418		266,872
Home Equity Lines of Credit		2,274,632		2,270,761		954,907
Home Equity Investment Lines of Credit		345,735		345,147		49,506
One-to-Four Family Construction Loans:
1-4 Family Construction		—		—		—
1-4 Family Construction Models/Speculative		3,000,405		2,995,299		935,146
Multi-Family Loans:
Multi-Family		368,828		368,200		117,896
Multi-Family Second Mortgage		—		—		—
Multi-Family Construction		—		—		—
Commercial Real Estate Loans:
Commercial		8,617,625		8,602,959		1,367,503
Commercial Second Mortgage		—		—		—
Commercial Lines of Credit		—		—		—
Commercial Construction		3,451,883		3,446,009		1,051,178
Commercial and Industrial Loans		1,640,858		1,638,065		768,973
Land Loans:
Lot Loans		2,976,902		2,971,835		867,189
Acquisition and Development Loans		10,081,233		10,064,076		4,433,565
Consumer Loans		—		—		—
Total with an allowance recorded	$	38,599,902	$	38,534,211	$	13,034,992
Total loans evaluated for impairment	$	64,587,997	$	64,478,077	$	13,034,992

(1) There are $14.2 million of loans individually identified for impairment accruing interest.

13

PART I — FINANCIAL INFORMATION

The average recorded investment in impaired loans for the quarter ended September 30, 2010 amounted to $70,332,198. Interest recognized on impaired loans, while considered impaired in the period, was not material.

Past Due and Non-Accrued Loans

The following table presents the recorded investment in nonaccrual loans and loans past due over 90 days still on accrual by class of loans as of September 30, and June 30, 2011. Nonaccrual loans and loans past due over 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

	September 30, 2011				June 30, 2011
	Nonaccrual(1)		Loans Past Due Over 90 Days Still Accruing(2)		Nonaccrual(1)		Loans Past Due Over 90 Days Still Accruing
One-to-Four Family Loans:
1-4 Family Owner Occupied	$	4,463,019	$	—	$	4,456,920	$	—
1-4 Family Non-Owner Occupied		7,459,233		—		5,497,907		—
1-4 Family Second Mortgage		643,992		—		225,705		—
Home Equity Lines of Credit		3,120,588		—		3,061,315		—
Home Equity Investment Lines of Credit		654,783		—		478,825		—
One-to-Four Family Construction Loans:
1-4 Family Construction		—		—		—		—
1-4 Family Construction Models/Speculative		2,332,107		—		2,646,740		—
Multi-Family Loans:
Multi-Family		368,224		—		2,204,456		—
Multi-Family Second Mortgage		—		—		—		—
Multi-Family Construction		—		—		—		—
Commercial Real Estate Loans:
Commercial		6,239,828		—		9,902,065		—
Commercial Second Mortgage		707,419		—		570,500		—
Commercial Lines of Credit		1,337,465		—		1,616,987		—
Commercial Construction		3,216,612		—		3,815,379		—
Commercial and Industrial Loans		3,129,144		—		1,522,402		—
Land Loans:
Lot Loans		4,363,103		—		3,758,906		—
Acquisition and Development Loans		9,698,342		159,723		10,503,299		—
Consumer Loans
Total	$	47,733,859	$	159,723	$	50,261,406	$	—

(1) Nonaccrual status denotes loans on which, in the opinion of management, the collection of additional interest is unlikely, or loans that meet the nonaccrual criteria established by regulatory authorities. Payments received on a nonaccrual loan are either applied to the outstanding principal balance or recorded as interest income, depending on an assessment of the collectibility of the principal balance of the loan.

(2) At September 30, and June 30, 2011, the Company had balances of approximately $5.0 million and $2.3 million, respectively, in loans contractually past maturity but not considered past due as a result of their payment status being current.

14

PART I — FINANCIAL INFORMATION

The following table presents the aging of the recorded investment in past due loans as of September 30, 2011 by class of loan. Performing loans are accruing loans less than 90 days past due. Nonperforming loans are all loans not accruing. At September 30, 2011, the Company had a balance of approximately $5.0 million in loans that were contractually past maturity but were not considered past due as a result of the payment status being current.

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Loans Not Past Due		Total
Performing Loans
One-to-Four Family Loans:
1-4 Family Owner Occupied	$	378,878	$	741,141	$	—	$	1,120,019	$	58,934,502	$	60,054,521
1-4 Family Non-Owner Occupied		256,665		153		—		256,818		28,924,896		29,181,714
1-4 Family Second Mortgage		179,441		82,488		—		261,929		30,705,746		30,967,675
Home Equity Lines of Credit		596,016		119,847		—		715,863		61,940,548		62,656,411
Home Equity Investment Lines of Credit		124,160		—		—		124,160		6,916,904		7,041,064
One-to-Four Family Construction Loans:
1-4 Family Construction		—		—		—		—		755,629		755,629
1-4 Family Construction Models/Speculative		—		449,264		—		449,264		4,242,025		4,691,289
Multi-Family Loans:
Multi-Family		—		—		—		—		47,678,189		47,678,189
Multi-Family Second Mortgage		—		—		—		—		414,190		414,190
Multi-Family Construction		—		—		—		—		—		—
Commercial Real Estate Loans:
Commercial		542,527		—		—		542,527		168,280,269		168,822,796
Commercial Second Mortgage		—		—		—		—		6,165,098		6,165,098
Commercial Lines of Credit		1,470,466		1,397,343		—		2,867,809		10,417,548		13,285,357
Commercial Construction		—		—		—		—		413,587		413,587
Commercial and Industrial Loans		86,522		74,368		—		160,890		69,792,952		69,953,842
Land Loans:												—
Lot Loans		—		175,668		—		175,668		10,548,287		10,723,955
Acquisition and Development Loans		—		387,134		159,723		546,857		10,504,854		11,051,711
Consumer Loans		—						—		371,554		371,554
Total Performing Loans	$	3,634,675	$	3,427,406	$	159,723	$	7,221,804	$	517,006,778	$	524,228,582
Nonperforming Loans
One-to-Four Family Loans:
1-4 Family Owner Occupied	$	90,904	$	392,975	$	3,379,758	$	3,863,637	$	599,382	$	4,463,019
1-4 Family Non-Owner Occupied		—		229,207		6,468,775		6,697,982		761,251		7,459,233
1-4 Family Second Mortgage		—		42,544		601,448		643,992		—		643,992
Home Equity Lines of Credit		—		—		2,976,284		2,976,284		144,304		3,120,588
Home Equity Investment Lines of Credit		92,648		93,845		468,290		654,783		—		654,783
One-to-Four Family Construction Loans:
1-4 Family Construction		—		—		—		—		—		—
1-4 Family Construction Models/Speculative		—		—		2,210,780		2,210,780		121,327		2,332,107
Multi-Family Loans:
Multi-Family		—		—		368,224		368,224		—		368,224
Multi-Family Second Mortgage		—		—		—		—		—		—
Multi-Family Construction		—		—		—		—		—		—
Commercial Real Estate Loans:
Commercial		—		185,128		4,390,812		4,575,940		1,663,888		6,239,828
Commercial Second Mortgage		—		—		570,538		570,538		136,881		707,419
Commercial Lines of Credit		—		—		1,211,297		1,211,297		126,168		1,337,465
Commercial Construction		—		—		3,216,612		3,216,612		—		3,216,612
Commercial and Industrial Loans		—		—		1,198,542		1,198,542		1,930,602		3,129,144
Land Loans:
Lot Loans		—		34,464		4,191,129		4,225,593		137,510		4,363,103
Acquisition and Development Loans		—		—		7,643,862		7,643,862		2,054,480		9,698,342
Consumer Loans
Total Nonperforming Loans		183,552		978,163		38,896,351		40,058,066		7,675,793		47,733,859
Total Loans	$	3,818,227	$	4,405,569	$	39,056,074	$	47,279,870	$	524,682,571	$	571,962,441

15

PART I — FINANCIAL INFORMATION

The following table presents the aging of the recorded investment in past due loans as of June 30, 2011 by class of loan. Performing loans are accruing loans less than 90 days past due. Nonperforming loans are all loans not accruing. At June 30, 2011, the Company had a balance of approximately $2.3 million in loans that were contractually past maturity but were not considered past due as a result of the payment status being current.

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Loans Not Past Due		Total
Performing Loans
One-to-Four Family Loans:
1-4 Family Owner Occupied	$	542,399	$	288,485	$	—	$	830,884	$	60,102,395	$	60,933,279
1-4 Family Non-Owner Occupied		1,435,901		491,638		—		1,927,539		30,106,570		32,034,109
1-4 Family Second Mortgage		223,182		492,543		—		715,725		31,900,488		32,616,213
Home Equity Lines of Credit		88,971		98,347		—		187,318		68,576,001		68,763,319
Home Equity Investment Lines of Credit		82,077		—		—		82,077		7,457,381		7,539,458
One-to-Four Family Construction Loans:
1-4 Family Construction		—		—		—		—		1,133,853		1,133,853
1-4 Family Construction Models/Speculative		—		525,467		—		525,467		1,959,604		2,485,071
Multi-Family Loans:
Multi-Family		—		—		—		—		45,947,684		45,947,684
Multi-Family Second Mortgage		—		—		—		—		420,772		420,772
Multi-Family Construction		—		—		—		—		1,591,268		1,591,268
Commercial Real Estate Loans:
Commercial		1,602,314		270,619		—		1,872,933		171,833,514		173,706,447
Commercial Second Mortgage		—		—		—		—		7,602,778		7,602,778
Commercial Lines of Credit		1,699,973		—		—		1,699,973		13,674,653		15,374,626
Commercial Construction		—		—		—		—		414,018		414,018
Commercial and Industrial Loans		422,568		—		—		422,568		51,168,658		51,591,226
Land Loans:
Lot Loans		1,160,748		135,812		—		1,296,560		11,747,852		13,044,412
Acquisition and Development Loans		658,166		159,713		—		817,879		10,839,123		11,657,002
Consumer Loans										161,989		161,989
Total Performing Loans	$	7,916,299	$	2,462,624	$	—	$	10,378,923	$	516,638,601	$	527,017,524
Nonperforming Loans
One-to-Four Family Loans:
1-4 Family Owner Occupied	$	—	$	93,565	$	4,012,589	$	4,106,154	$	350,766	$	4,456,920
1-4 Family Non-Owner Occupied		435,800		627,040		4,141,259		5,204,099		293,809		5,497,908
1-4 Family Second Mortgage		—		—		141,746		141,746		83,958		225,704
Home Equity Lines of Credit		—		195,424		2,721,596		2,917,020		144,295		3,061,315
Home Equity Investment Lines of Credit		—		—		386,183		386,183		92,642		478,825
One-to-Four Family Construction Loans:
1-4 Family Construction		—		—		—		—		—		—
1-4 Family Construction Models/Speculative		—		—		2,525,098		2,525,098		121,642		2,646,740
Multi-Family Loans:
Multi-Family		—		—		2,204,456		2,204,456		—		2,204,456
Multi-Family Second Mortgage		—		—		—		—		—		—
Multi-Family Construction		—		—		—		—		—		—
Commercial Real Estate Loans:
Commercial		708,806		1,043,705		7,311,487		9,063,998		838,067		9,902,065
Commercial Second Mortgage		—		—		570,500		570,500		—		570,500
Commercial Lines of Credit		—		—		1,489,641		1,489,641		127,346		1,616,987
Commercial Construction		—		—		3,815,379		3,815,379		—		3,815,379
Commercial and Industrial Loans		998,298		—		200,418		1,198,716		323,686		1,522,402
Land Loans:
Lot Loans		357,415		—		3,401,491		3,758,906		—		3,758,906
Acquisition and Development Loans				—		8,383,675		8,383,675		2,119,624		10,503,299
Consumer Loans
Total Nonperforming Loans		2,500,319		1,959,734		41,305,518		45,765,571		4,495,835		50,261,406
Total Loans	$	10,416,618	$	4,422,358	$	41,305,518	$	56,144,494	$	521,134,436	$	577,278,930

16

PART I — FINANCIAL INFORMATION

Troubled Debt Restructurings:

Included in loans individually impaired are loans with recorded investment of $14,883,948 and $15,883,869 for which the Company has allocated $738,491 and $443,705 of specific reserves to customers whose terms have been modified in troubled debt restructurings as of September 30, and June 30, 2011, respectively. Included in troubled debt restructurings above are $2,842,001 and $3,041,051 of restructured loans on nonaccrual at September 30, and June 30, 2011, respectively. The restructured loans, both performing and those on nonaccrual, are performing in accordance with their modified terms. There are no commitments to lend additional amounts at September 30, and June 30, 2011.

During the period ending September 30, 2011, the terms of certain loans to borrowers experiencing financial difficulty were modified as troubled debt restructurings. The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy.

Modifications involving a reduction of the stated interest rate of the loan were for periods ranging from 12 months to 24 months. No maturity dates were extended in these modifications.

The following table presents loans by class modified as troubled debt restructurings that occurred during the three month period ending September 30, 2011:

	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
Commercial		1	$	295,362	$	295,362
Commercial and industrial		1		44,149		44,149
Total		2	$	339,511	$	339,511

The troubled debt restructurings described above increased the allowance for loan losses by $36,395 and did not result in charge offs during the period ended September 30, 2011.

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PART I — FINANCIAL INFORMATION

The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification during the period ended September 30, 2011:

	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
1-4 Family Non-Owner Occupied		13	$	1,050,206	$	1,050,206
Home Equity Lines of Credit		1		63,782		63,782
Total		14	$	1,113,988	$	1,113,988

For the purpose of this disclosure, a loan is considered to be in payment default once it is 90 days contractually past due under the modified terms.

The troubled debt restructurings that subsequently defaulted described above did not result in increasing the allowance for loan losses or result in charge offs during the period ending September 30, 2011.

Credit Quality Indicators:

The Bank categorizes loans into risk strata based on relevant borrower information about the ability to service debt. This information includes a review of current financial information, historic payment experience, credit documentation, relevant public information and other factors, as determined by credit underwriting guidelines. Through its analysis of individual borrowers, the Bank classifies each loan as to credit risk. All loans considered non-homogeneous, specifically those that are deemed commercial and industrial or commercial real estate loans, are subject to review annually by the Bank, regardless of loan size. These loans are reviewed continually and changes to the risk rating, if necessary, occur on a quarterly basis. Loans that are considered homogeneous, or those which fall into the categories of one-to-four family loans or into consumer loans, are not individually rated annually. The payment performance of the homogeneous loans serves as the clear credit indicator of classification into the categories of pass-rated loans or into substandard, nonaccrual loans. Homogeneous loans that are less than 90 days past due are generally reported as pass-rated loans, unless related to a rated commercial and industrial or commercial real estate loan. Homogeneous loans which are greater than 90 days past due are placed on nonaccrual and rated substandard. Payment performance indicators are based on performance through September 30, 2011. The Bank uses the following definitions for adverse risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that requires close attention. If left unattended, the potential weaknesses may result in further deterioration in the repayment prospects of the loan or of the institution’s credit position at a future date.

Substandard. Loans classified as substandard are protected inadequately by the current financial means of the borrower or through the liquidation of collateral pledged. Loans classified as substandard have a well-defined weakness and without substantial intervention, there is a distinct possibility that the institution may incur a loss. As a matter of practice, if the Bank feels that a total loss is imminent, it designates nearly all of these loans to charge off. Accordingly, the Bank uses the loan classification of doubtful, as defined below, sparingly.

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PART I — FINANCIAL INFORMATION

Doubtful. Loans classified as doubtful have all of the inherent weaknesses of those loans classified as substandard with the added structural weakness rendering the collection in full highly unlikely. As such, this category is used sparingly by the Bank.

As of September 30, 2011, and based on the most recent analysis performed by the Company, the risk category of loans by class of loans is as follows:

	Pass(1)		Special Mention		Substandard		Doubtful		Total
One-to-Four Family Loans:
1-4 Family Owner Occupied	$	58,881,834	$	—	$	5,635,706	$	—	$	64,517,540
1-4 Family Non-Owner Occupied		28,369,863		1,296,196		6,974,888		—		36,640,947
1-4 Family Second Mortgage		30,303,406		458,252		850,009		—		31,611,667
Home Equity Lines of Credit		62,229,397		421,899		3,125,703		—		65,776,999
Home Equity Investment Lines of Credit		6,591,310		403,494		701,043		—		7,695,847
One-to-Four Family Construction Loans:
1-4 Family Construction		755,629		—		—		—		755,629
1-4 Family Construction Models/Speculative		3,911,103		250,000		2,862,293		—		7,023,396
Multi-Family Loans:
Multi-Family		46,177,364		1,163,146		705,903		—		48,046,413
Multi-Family Second Mortgage		414,190		—		—		—		414,190
Multi-Family Construction		—		—		—		—		—
Commercial Real Estate Loans:
Commercial		157,387,159		6,803,287		10,872,177		—		175,062,623
Commercial Second Mortgage		6,163,939		—		708,578		—		6,872,517
Commercial Lines of Credit		9,124,339		467,173		5,031,310		—		14,622,822
Commercial Construction		408,316		—		3,221,883		—		3,630,199
Commercial and Industrial Loans		65,490,808		2,583,528		5,008,649		—		73,082,985
Land Loans:
Lot Loans		10,499,374		41,473		4,546,211		—		15,087,058
Acquisition and Development Loans		7,969,376		2,133,251		10,647,428		—		20,750,055
Consumer Loans		371,554		—		—		—		371,554
Total	$	495,048,961	$	16,021,699	$	60,891,781	$	—	$	571,962,441

(1) There are $8.2 million in non-homogeneous loans which are subject to individual review for risk rating included in the pass risk category based on payment status as they have not yet been individually reviewed.

19

PART I — FINANCIAL INFORMATION

As of June 30, 2011, and based on the most recent analysis performed by the Company, the risk category of loans by class of loans is as follows:

	Pass(1)		Special Mention		Substandard		Doubtful		Total
One-to-Four Family Loans:
1-4 Family Owner Occupied	$	59,361,176	$	949,387	$	5,079,636	$	—	$	65,390,199
1-4 Family Non-Owner Occupied		31,216,191		78,019		6,237,807		—		37,532,017
1-4 Family Second Mortgage		31,936,613		458,096		447,208		—		32,841,917
Home Equity Lines of Credit		68,342,138		421,182		3,061,314		—		71,824,634
Home Equity Investment Lines of Credit		7,099,224		395,066		523,993		—		8,018,283
One-to-Four Family Construction Loans:
1-4 Family Construction		1,133,853		—		—		—		1,133,853
1-4 Family Construction Models/Speculative		1,684,267		249,575		3,197,969		—		5,131,811
Multi-Family Loans:
Multi-Family		44,436,625		1,511,059		2,204,456		—		48,152,140
Multi-Family Second Mortgage		420,772		—		—		—		420,772
Multi-Family Construction		1,591,268		—		—		—		1,591,268
Commercial Real Estate Loans:
Commercial		160,341,045		7,150,951		16,116,516		—		183,608,512
Commercial Second Mortgage		7,602,778		—		570,500		—		8,173,278
Commercial Lines of Credit		12,683,879		402,588		3,905,146		—		16,991,613
Commercial Construction		414,018		—		3,815,379		—		4,229,397
Commercial and Industrial Loans		47,909,261		2,634,968		2,569,399		—		53,113,628
Land Loans:
Lot Loans		17,366,990		42,077		4,751,234		—		22,160,301
Acquisition and Development Loans		3,238,797		2,129,619		11,434,902		—		16,803,318
Consumer Loans		161,989		—		—		—		161,989
Total	$	496,940,884	$	16,422,587	$	63,915,459	$	—	$	577,278,930

(1) There are $9.1 million in non-homogeneous loans which are subject to individual review for risk rating included in the pass risk category based on payment status as they have not yet been individually reviewed.

NOTE 4 — MORTGAGE BANKING ACTIVITIES

Loans held for sale at September 30, 2011 and June 30, 2011 were $12,856,959 and $9,392,389, respectively.

The Bank adopted the fair value option for accounting for its loans held for sale effective July 1, 2008. The fair value of loans held for sale exceeded the unpaid principal balance of these loans by $413,016 and $181,964 as of September 30, 2011 and June 30, 2011, respectively. The gain on loans held for sale as of September 30, 2011 was reported as gain on sale of mortgage loans on the consolidated statement of operations. Interest on loans held for sale was reported in interest income.

The Bank services real estate loans for investors that are not included in the accompanying consolidated financial statements. Mortgage servicing rights are established based on the fair value of servicing rights retained on loans originated by the Bank and subsequently sold in the secondary market. Mortgage servicing rights are included in the consolidated statements of financial condition under the caption “Prepaid expenses and other assets.” At September 30, 2011, the mortgage loan servicing portfolio was approximately $1.0 billion.

20

PART I — FINANCIAL INFORMATION

Originated mortgage servicing rights capitalized and amortized during the three months ended September 30, 2011 and 2010 were as follows:

	Three Months Ended September 30,
	2011			2010
Servicing rights:
Beginning of period	$	7,519,287		$	6,960,969
Additions		520,263			1,168,798
Amortized to expense		(773,379	)		(792,253	)
Valuation allowance for impairment		(698,468	)		(1,183,799	)
End of period	$	6,567,703		$	6,153,715

Activity in the valuation allowance for mortgage servicing rights over the three months ended September 30, 2011, as compared with the same periods during 2010, was as follows:

	Three months ended September  30, 2011			Three months ended September 30, 2010
Balance, beginning of period	$	(304,001	)	$	—
Impairment charges		(698,468	)		(1,183,799	)
Impairment recoveries		—			—
Balance, end of period	$	(1,002,469	)	$	(1,183,799	)

Mortgage banking activities, net consisted of the following:

	Three months ended September 30, 2011			Three months ended September 30, 2010
Mortgage loan servicing fees	$	654,577		$	642,355
Amortization of mortgage loan servicing rights		(773,379	)		(792,253	)
Impairment of mortgage loan servicing rights		(698,468	)		(1,183,799	)
Mortgage loan servicing loss, net		(817,270	)		(1,333,697	)
Changes in fair value of mortgage banking derivatives		979,828			1,214,076
Realized gains on sale of loans		847,607			2,533,916
Gain on the sale of mortgage loans		1,827,435			3,747,992
Mortgage banking activities, net	$	1,010,165		$	2,414,295

The above amounts do not include non-interest expense related to mortgage banking activities.

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PART I — FINANCIAL INFORMATION

At September 30, 2011 and June 30, 2011, the Bank had interest rate-lock commitments on $47,760,075 and $17,625,864, respectively, of loans intended for sale in the secondary market. These commitments are considered to be free-standing derivatives and the change in fair value is recorded in the financial statements. The fair value of these commitments as of September 30, 2011 and June 30, 2011 was estimated to be $1,116,725 and $231,031, respectively, which is included in accrued expenses and other liabilities in the consolidated statements of financial position. To mitigate the interest rate risk represented by these interest rate-lock commitments, the Bank entered into contracts to sell mortgage loans of $35,764,050 and $21,679,521 as of September 30, 2011 and June 30, 2011, respectively. These contracts are also considered to be free-standing derivatives and the change in fair value also is recorded in the financial statements. The fair value of these contracts at September 30, 2011 and June 30, 2011 was estimated to be $(83,010) and $53,908 respectively. These amounts are added to (netted against) the fair value of interest rate-lock commitments recorded in prepaid and other assets. Changes in fair value for both types of derivatives are reported in mortgage banking activities in the consolidated statements of operations.

NOTE 5 — STOCK BASED COMPENSATION

The 2010 Equity Incentive Plan (the “2010 Plan”) replaced the 2008 Equity Incentive Plan and all remaining available shares from the 2008 Equity Incentive Plan were available for distribution under the 2010 Plan. Generally, the Company can issue incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock and other stock-based compensation under the 2010 Plan; however, as detailed in Note 10 – Regulatory Matters, the Company currently cannot issue awards under the 2010 Plan without receiving prior approval from the Office of the Comptroller of the Currency (the “OCC”). Generally, for incentive stock options, a percentage of the options awarded become exercisable on the date of grant and on each anniversary date of grant. The option period expires ten years from the date of grant, except for awards to individuals who own more than 10% of the Company’s outstanding stock. Incentive stock options award to individuals owning more than 10% of the Company’s outstanding common shares may only be granted if the exercise price of such incentive stock options is at least 110% of the fair market value on the date of grant and the term of such options must expire not later than five years from the date of grant.

Previously, nonqualified stock options have been granted to directors, which vest immediately. The option period expires ten years from the date of grant and the exercise price is the market price at the date of grant.

For the quarters ended September 30, 2011, and 2010, compensation expense of $61,005 and $18,543, respectively, was recognized in the income statement related to the vesting of awards.

As of September 30, 2011, there was $237,064 of compensation expense related to unvested awards not yet recognized in the financial statements. The weighted-average period over which this expense is to be recognized is 1.7 years.

The aggregate intrinsic value of all options outstanding at September 30, 2011 was $0. The aggregate intrinsic value of all options that were exercisable at September 30, 2011 was $0. The Company has not issued any stock option awards to directors of the Company since the institution of the regulatory orders.

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PART I — FINANCIAL INFORMATION

Options outstanding at September 30, 2011 were as follows:

	Outstanding				Exercisable
Range of Exercise Price	Number		Weighted Average Remaining Life		Number		Weighted Average Exercise Price
$1.79 to $4.42		410,000		8.55		204,670		2.40
$6.75 to $7.76		18,006		0.12		18,006		7.13
$8.32 to $13.64		195,332		3.22		164,999		10.74
Total		623,338		6.64		387,675		6.17

A summary of stock-based compensation activity for the current fiscal year is as follows:

	Three Months Ended September 30, 2011 Total options outstanding
	Shares		Weighted- Average Exercise Price
Options outstanding at July 1, 2011		613,338	$	5.07
Forfeited		—		—
Expired		—		—
Exercised		—		—
Granted		10,000		1.52
Options outstanding at September 30, 2011		623,338	$	5.01
Options exercisable, end of year		387,675	$	6.17

The weighted-average remaining contractual life of options outstanding as of September 30, 2011 was 6.6 years. The weighted-average remaining contractual life of vested options outstanding as of September 30, 2011 was 5.7 years.

No options were exercised in the three-month periods ended September 30, 2011 and 2010, respectively.

The fair value for stock options granted during the three months ended September 30, 2011, which consisted of individual grants in July and August 2011, was determined at the date of grant using a Black-Scholes options-pricing model and the following assumptions:

	September 30, 2011
Expected weighted average risk-free interest rate		2.71	%
Expected weighted average life (in years)		6.00
Expected volatility		34.00	%
Expected dividend yield		0.00	%

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PART I — FINANCIAL INFORMATION

The weighted-average fair value of these grants was $0.98 per option. The expected average risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the life of the option. The expected average life represents the weighted-average period of time that options granted are expected to be outstanding giving consideration to vesting schedules, historical exercise and forfeiture patterns. Expected volatility is based on historical volatilities of the Company’s common shares. The expected dividend yield is based on historical information.

There were 267,500 restricted shares issued to executive officers and certain other employees with a weighted average fair value of $1.87 per share at September 30, 2011. The total fair value of restricted shares issued at June 30, 2011 was $500,425. As of September 30, 2011, there was $410,185 of compensation expense related to unvested awards not yet recognized in the financial statements. The weighted-average period of time over which this expense is to be recognized is 3.5 years at September 30, 2011.

A summary of changes in the Company’s restricted shares for the three months ended September 30, 2011 is as follows:

Nonvested Shares	Shares			Weighted- Average Grant-Date Fair Value
Nonvested at July 1, 2011		219,500		$	410,185
Granted		—			—
Vested		(48,000	)		(90,240	)
Forfeited		—			—
Nonvested at September 30, 2011		171,500		$	319,945

There were 2,556,000 shares available for future issuance under the existing stock plan at September 30, 2011.

NOTE 6 — EARNINGS PER SHARE

The following table discloses loss per share for the three months ended September 30, 2011 and September 30, 2010, respectively:

	Three months ended September 30,
	2011								2010
	Income (Loss) (Numerator)			Shares (Denominator)		Per Share Amount			Income (Loss) (Numerator)			Shares (Denominator)		Per Share Amount
Basic EPS
Net Income (loss)	$	(820,597	)		25,669,718	$	(0.03	)	$	(618,414	)		25,642,218	$	(0.02	)
Effect of dilutive securities - stock options and warrants		—			—	$	0.00			—			—		0
Diluted EPS
Net Income (loss)	$	(820,597	)		25,669,718	$	(0.03	)	$	(618,414	)		25,642,218	$	(0.02	)

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PART I — FINANCIAL INFORMATION

There was no dilution attributable to stock options since the Company was in a net loss position for the period. There were 618,338 and 458,035 options at September 30, 2011 and 2010, respectively, with an exercise price higher than the average stock price for the periods.

Also included for consideration in the diluted earnings per share calculation for the three-month period ended September 30, 2011 and 2010 were warrants to acquire common shares issued as part of two separate exchanges more fully described in Note 8 – Note Payable and Common Stock Warrants. The warrants issued on September 3, 2009 include warrants to purchase 797,347 common shares, which expired on September 3, 2011. The warrants issued on March 16, 2010 include warrants to purchase 1,246,179 shares of common stock and are exercisable at any time before March 16, 2015 at a price of $1.75 per share. The warrants were considered for potential dilution for the period ended September 30, 2011 because the exercise price of the warrants, $1.75 per warrant, was less than the average market price of the Company’s common shares for the period; however, since the Company was in a net loss position for the period, the warrants were not dilutive.

NOTE 7 — FAIR VALUE

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted market prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use to price an asset or liability.

The Company used the following methods and significant assumptions to estimate fair value.

Securities and mortgage-backed securities. The fair value of securities available for sale is determined by obtaining quoted market prices on nationally recognized securities exchanges, if available (Level 1 inputs). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities. The fair value of mortgage-backed securities is determined through matrix pricing. This is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

Loans held for sale. The fair value of loans held for sale, which consist of single-family residential loans, is determined using quoted secondary market prices (Level 2 inputs).

Mortgage banking pipeline derivatives. The fair value of loan commitments is measured using current market rates for the associated mortgage loans (Level 2 inputs). The fair value of mandatory forward sales contracts is measured using secondary market pricing (Level 2 inputs).

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PART I — FINANCIAL INFORMATION

Impaired loans. The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Real Estate Owned. Nonrecurring adjustments to certain commercial and residential real estate properties classified as other real estate owned (OREO) are measured at fair value, less costs to sell. Fair values are based on recent real estate appraisals. These appraisals may use a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data approach. Such adjustments are usually significant and typically result in a level 3 classification of the inputs for determining fair value.

Loan Servicing Rights.Fair Value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively based on a valuation model that calculates the present value of estimated future net servicing income (Level 3 inputs).

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PART I — FINANCIAL INFORMATION

Assets and liabilities measured at fair value on a recurring basis at September 30, and June 30, 2011 are summarized below:

	September 30, 2011			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets:
Securities available for sale:
FHLB structured note	$	2,985,210		$	—	$	2,985,210		$	—
Loans held-for-sale		12,856,959			—		12,856,959			—
Mortgage-backed securities available for sale:
FHLMC mortgage-backed securities		4,820,249			—		4,820,249			—
Interest rate-lock commitments		1,116,725			—		1,116,725			—
Liabilities:
Mandatory forward sales contracts		(83,010	)		—		(83,010	)		—
	June 30, 2011			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets:
Securities available for sale:
FHLMC structured note	$	2,994,000		$	—	$	2,994,000		$	—
FNMA structured note		5,952,674			—		5,952,674			—
Loans held-for-sale		9,392,389			—		9,392,389			—
Mortgage-backed securities available for sale:
FHLMC mortgage-backed securities		4,972,121			—		4,972,121			—
Interest rate-lock commitments		231,031			—		231,031			—
Mandatory forward sales contracts		53,908			—		53,908			—

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PART I — FINANCIAL INFORMATION

Assets measured at fair value on a nonrecurring basis at September 30, 2011 and June 30, 2011, respectively are summarized below:

	September 30, 2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans
1-4 Family	$	5,744,942	$		$		$	5,744,942
1-4 Family Construction		1,822,851						1,822,851
Multi-Family		142,761						142,761
Commercial Real Estate		7,682,731						7,682,731
Commercial Non-Real Estate		2,238,722						2,238,722
Land		6,704,720						6,704,720
Real estate owned
1-4 Family		779,260						779,260
Commercial Real Estate		988,327						988,327
Land		2,508,464						2,508,464
Impaired mortgage servicing rights		5,681,328						5,681,328
	June 30, 2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans
1-4 Family	$	4,968,626	$	—	$	—	$	4,968,626
1-4 Family Construction		2,065,259		—		—		2,065,259
Multi-Family		250,932		—		—		250,932
Commercial Real Estate		9,650,827		—		—		9,650,827
Commercial Non-Real Estate		871,885						871,885
Land		7,757,380		—		—		7,757,380
Real estate owned
1-4 Family		411,518		—		—		411,518
Commercial Real Estate		763,033		—		—		763,033
Land		2,558,795		—		—		2,558,795
Impaired mortgage servicing rights		6,487,574		—		—		6,487,574

Impaired loans that are measured for impairment using the fair value of the collateral for collateral dependent loans had a principal balance of $37.9 million, with a specific valuation allowance of $13.6 million at September 30, 2011. At June 30, 2011, impaired loans had a principal balance of $38.6 million, with a specific valuation allowance of $13.0 million. The provision for loan losses related to changes in the fair value of impaired loans was $2.5 million and $2.8 million for the three months ended September 30, 2011 and 2010, respectively.

Tranches of mortgage servicing rights carried at fair value had a carrying amount of $6.7 million, with a valuation allowance of $1.0 million at September 30, 2011. During the three month period ended September 30, 2011, the Bank recognized an impairment charge of $0.7 million. Tranches of mortgage servicing rights carried at fair value had a carrying amount of $6.8 million, with a valuation allowance of

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PART I — FINANCIAL INFORMATION

$0.3 million at June 30, 2011. Mortgage servicing rights are valued by an independent third party that is active in purchasing and selling these instruments. The value reflects the characteristics of the underlying loans discounted at a market multiple.

Real estate owned which is maintained at fair value less costs to sell, had a net carrying amount of $7,925,179 and $7,972,753 at September 30, and June 30, 2011, respectively. The carrying amount of real estate owned is not re-measured to fair value on a recurring basis, but is subject to fair value adjustments when the carrying amount exceeds the fair value, less estimated selling costs. For the three months ended September 30, 2011, the Bank recognized a net gain of $140,112 on the disposal of real estate owned and recorded a provision for real estate owned losses of $69,400. Additionally, the expense of servicing real estate owned for this three month period totaled $613,859.

The carrying amount and estimated fair values of financial instruments at June 30, 2011 and 2010, respectively, were as follows:

	September 30, 2011						June 30, 2011
	Carrying Amount			Estimated Fair Value			Carrying Amount			Estimated Fair Value
	(In thousands)
Assets:
Cash and amounts due from financial institutions	$	22,423		$	22,423		$	19,138		$	19,138
Interest-bearing deposits		121,849			121,849			130,153			130,153
Federal funds sold		6,000			6,000			—			—
Securities available for sale		2,985			2,985			8,947			8,947
Mortgage-backed securities available for sale		4,820			4,820			4,972			4,972
Loans receivable, net		538,259			552,224			547,282			551,858
Loans receivable held for sale, net		12,857			12,857			9,392			9,392
Federal Home Loan Bank stock		12,811			NA			12,811			NA
Accrued interest receivable		2,145			2,145			2,204			2,204
Commitments to make loans intended to be sold		1,117			1,117			231			231
Mandatory forward sales contracts					—			54			54
Liabilities:
Demand deposits and passbook savings		(231,018	)		(231,018	)		(232,537	)		(232,537	)
Time deposits		(417,504	)		(423,505	)		(420,035	)		(425,844	)
Notes payable		(1,126	)		(1,126	)		(1,153	)		(1,153	)
Advances from the Federal Home Loan Bank of Cincinnati		(35,000	)		(37,625	)		(35,000	)		(37,189	)
Mandatory forward sale contract		(83	)		(83	)		—			—
Accrued interest payable		(119	)		(119	)		(119	)		(119	)

The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is involved in interpreting market data so as to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

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PART I — FINANCIAL INFORMATION

The Company used the following methods and assumptions to estimate fair value for items not described above:

Cash and amounts due from financial institutions, interest-bearing deposits, and federal funds sold. The carrying amount is a reasonable estimate of fair value because of the short maturity of these instruments.

Loans receivable. For performing loans receivable, fair value is estimated by discounting contractual cash flows adjusted for prepayment estimates using discount rates based on secondary market sources adjusted to reflect differences in servicing and credit costs.

Federal Home Loan Bank stock. It was not practical to determine the fair value of FHLB stock due to restrictions placed on its transferability.

Accrued interest receivable and accrued interest payable. The carrying amount is a reasonable estimate of the fair value.

Demand deposits and time deposits.The fair value of demand deposits, savings accounts, and certain money market deposits is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit is estimated using discounted cash flows and rates currently offered for deposits of similar remaining maturities.

Note payable. The carrying amount is a reasonable estimate of the fair value.

Federal Home Loan Bank Advance:. The fair value of the Bank’s FHLB debt is estimated based on the current rates offered to the Bank for debt of the same remaining maturities.

NOTE 8 — NOTE PAYABLE AND COMMON STOCK WARRANTS

Subordinated Debt: In June 2004, the Company formed Trust I, a special purpose entity formed for the sole purpose of issuing $10.0 million of variable-rate trust preferred securities. The Company issued variable-rate Subordinated Deferrable Interest Debentures due June 29, 2034 (the “Trust I Debentures”) to Trust I in exchange for the proceeds of the offering of the trust preferred securities. The trust preferred securities offered by Trust I had a variable interest rate that adjusted to the three-month LIBOR rate plus 260 basis points. The Trust I Debentures were the sole asset of Trust I.

In July 2006, the Company formed Trust II, a special purpose entity formed for the sole purpose of issuing $10.0 million of variable-rate trust preferred securities. The Company issued variable-rate Subordinated Deferrable Interest Debentures due July 6, 2036 (the “Trust II Debentures”) the Trust II Debentures to Trust II in exchange for the proceeds of the offering of the trust preferred securities. The trust preferred securities issued by Trust II carried a fixed rate of 7.462% until September 15, 2011 and thereafter a variable interest rate that adjusted to the three-month LIBOR rate plus 175 basis points. The Trust II Debentures were the sole asset of Trust II.

On September 1, 2009, the Company entered into an exchange agreement (“Exchange Agreement I”) with the holder and collateral manager of the $10.0 million principal amount trust preferred securities issued by Trust I in 2004. Under Exchange Agreement I, on September 3, 2009, the securities holder exchanged its $10.0 million of trust preferred securities for the following consideration paid by the Company: (i) a cash payment of $500,000; (ii) a number of the Company’s common shares equal to $500,000 divided by the average daily closing price of the Company’s common shares for the 20 business days prior to September 1,

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PART I — FINANCIAL INFORMATION

2009, equating to 205,297 shares; (iii) a warrant to purchase 769,608 shares of the Company’s common shares (the “Trust I Warrant A”); and (iv) a warrant to purchase 27,739 shares of Company common shares (the “Trust I Warrant B”) as a result of the issuance of common shares in connection with the second trust preferred exchange as described below. The exercise price for all warrants is $1.75, the price at which the Company completed a rights offering and an offering to a standby investor, which is more fully described in Note 11 — Common Stock Issuance. The warrants were exercisable for two years following the closing and expired on September 3, 2011.

As a result of the repurchase of the trust preferred securities issued by Trust I, the Company recorded a gain of $8,561,530, which was included in non-interest income for the year ended June 30, 2010. The estimated fair values of the Trust I Warrant A and Trust I Warrant B were estimated to be $808,088 and $29,126, respectively, and were recorded in paid-in capital.

On October 9, 2009, the Company entered into an exchange agreement (“Exchange Agreement II”) with investors, including principally directors and officers of the Company and the Bank as well as certain individuals not affiliated with the Company (collectively, the “Investors”), who held trust preferred securities with an aggregate liquidation amount of $10.0 million issued by Trust II in 2006. Under the terms of Exchange Agreement II, on March 16, 2010, the Investors exchanged the $10.0 million of trust preferred securities for aggregate consideration consisting of: (i) $400,000 in cash, (ii) common shares valued at $600,000 based on the average daily closing price of the common shares over the 20 trading days prior to October 9, 2009, equating to 280,241 shares; (iii) warrants to purchase 797,347 of the Company’s common shares (the “Trust II A Warrants”); and (iv) warrants to purchase 448,832 of the Company’s common shares (the “Trust II B Warrants”) that were issued as a result of the Company completing a rights offering and an offering to a standby investor, which is more fully described in Note 11 — Common Stock Issuance. The exercise price for the warrants is $1.75, the price of the shareholder rights offering. The warrants are exercisable for five years following the closing and expire on March 16, 2015.

As a result of the repurchase of the trust preferred securities issued by Trust II, the Company recorded a gain of $9,065,908, which was included in non-interest income for the year ended June 30, 2010. The estimated fair values of the Trust II A Warrants and Trust II B Warrants were estimated to be $669,771 and $377,019, respectively, and were recorded as paid-in capital.

Note Payable: On November 24, 2008, one of PVF’s subsidiaries obtained a $1.4 million dollar loan from another financial institution with a principal balance of $1,126,111 as of September 30, 2011. The loan was a refinance of a line of credit loan and is collateralized by PVF’s Solon headquarters building. The note carries a variable interest rate that adjusts to The Wall Street Journal published prime lending rate plus 50 basis points. The loan required the payment of interest only for six months and then converted to an amortizing loan for a term of 15 years. At June 30, 2011, the interest rate was 3.75%.

NOTE 9 — REPURCHASE AGREEMENT

In March 2006, the Bank entered into a $50 million repurchase agreement with another institution (Citigroup) collateralized by mortgage-backed securities and securities. The repurchase was for a five-year term and matured in March 2011. Interest was adjustable quarterly during the first year based on the three-month LIBOR rate minus 100 basis points. After year one, the rate adjusted to 4.99% and the repurchase agreement became callable quarterly at the option of the issuer.

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PART I — FINANCIAL INFORMATION

On March 21, 2011, the repurchase agreement matured and the Bank repurchased the securities for $50 million utilizing cash on deposit at the Federal Reserve Bank of Cleveland.

NOTE 10 — REGULATORY MATTERS

The Bank is subject to various regulatory capital requirements, which are now administered by the OCC. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by banking regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Prompt corrective action regulations provide five classifications: well capitalized; adequately capitalized; undercapitalized; significantly undercapitalized; and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At year end 2011 and 2010, the most recent regulatory notifications categorized the Bank as adequately capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution’s category.

Federal regulations require savings institutions to maintain certain minimum levels of regulatory capital. An institution that fails to comply with its regulatory capital requirements must obtain approval of a capital plan and can be subject to a capital directive and certain restrictions on its operations. At September 30, 2011, the adjusted total minimum regulatory capital regulations require institutions to have a minimum tangible capital to adjusted total assets ratio of 1.5%; a minimum leverage ratio of core (Tier 1) capital to adjusted total assets of 4.0%; a minimum ratio of core (Tier 1) capital to risk-weighted assets of 4.0%; and a minimum ratio of total capital to risk-weighted assets of 8.0%. At September 30, 2011 and 2010, respectively, the Bank exceeded all of the aforementioned regulatory capital requirements. For more information, please see Item 1, Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.

On October 19, 2009, the Company and the Bank each entered into a Stipulation and Consent to the Issuance of Order to Cease and Desist with the Office of Thrift Supervision (the “OTS”), whereby the Company and the Bank each consented to the issuance of a Order to Cease and Desist (the “Company Order” and the “Bank Order”) without admitting or denying that grounds existed for the OTS to initiate an administrative proceeding against the Company or the Bank.

The Bank Order requires the Bank to take several actions, including but not limited to: (i) by December 31, 2009, meet and maintain (1) a Tier 1 (core) capital ratio of at least 8.0% and (2) a total risk-based capital ratio of at least 12.0% after the funding of an adequate allowance for loan and lease losses and submit a detailed plan to accomplish this; (ii) if the Bank fails to meet these capital requirements at any time after December 31, 2009, within 15 days thereafter, prepare a written contingency plan detailing actions to be taken, with specific time frames, providing for (a) a merger with another federally insured depository institution or holding company thereof, or (b) voluntary liquidation; (iii) adopt revisions to the Bank’s liquidity policy to, among other things, increase the Bank’s minimum liquidity ratio; (iv) reduce the level of adversely classified assets to no more than 50% of core capital plus allowance for loan and

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PART I — FINANCIAL INFORMATION

lease losses by December 31, 2010 and to reduce the level of adversely classified assets and assets designated as special mention to no more than 65% of core capital plus allowance for loan and lease losses by December 31, 2010; (v) submit for OTS approval a new business plan that includes the requirements contained in the Bank Order and that also includes well supported and realistic strategies to achieve consistent profitability by September 30, 2010; (vi) restrict quarterly asset growth to an amount not to exceed net interest credited on deposit liabilities until the OTS approves of the new business plan; (vii) cease to accept, renew or roll over any brokered deposit or act as a deposit broker, without the prior written waiver of the FDIC and (viii) not declare or pay dividends or make any other capital distributions from the Bank without receiving prior OTS approval

The Company Order requires the Company to take several actions, including, but not limited to: (i) submit a capital plan that includes, among other things, (1) the establishment of a minimum tangible capital ratio of tangible equity capital to total tangible assets commensurate with the Company’s consolidated risk profile, and (2) specific plans to reduce the risks to the Company from its current debt levels and debt servicing requirements; (ii) not declare, make or pay any cash dividends or other capital distributions or purchase, repurchase or redeem or commit to purchase, repurchase or redeem Company equity stock without the prior non-objection of the OTS, except that this provision does not apply to immaterial capital stock redemptions that arise in the normal course of the Company’s business in connection with its stock-based compensation plans; and (iii) not incur, issue, renew, roll over or increase any debt or commit to do so without the prior non-objection of the OTS (debt includes loans, bonds, cumulative preferred stock, hybrid capital instruments such as subordinated debt or trust preferred securities, and guarantees of debt).

The Bank Order and the Company Order also impose certain on-going reporting obligations and additional restrictions on severance and indemnification payments, changes in directors and management, employment agreements and compensation arrangements that the Company and the Bank may enter into, third-party service contracts and transactions with affiliates.

At September 30, 2011, Company and the Bank believe they are in compliance with all requirements of the Bank Order and the Company Order that are required to date, with the exception of the level of adversely classified assets and achieving the return to profitability. At September 30, 2011, the Bank’s level of adversely classified assets to core capital plus the allowance for loan and lease losses was 65.7%, and its level of adversely classified assets and assets designated as special mention was 84.8%. The requirements under the Bank Order are 50% and 65%, respectively. Although the Bank did not meet the reduced adversely classified asset levels required by September 30, 2011, and has not yet returned to profitability, it will continue to work to comply with all such requirements in the future.

The Bank Order and the Company Order will remain in effect until terminated, modified, or suspended in writing. Effective July 21, 2011, the OCC and the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) succeeded to all powers, authorities, rights, and duties of the OTS relating to the enforcement of the Bank and Company Orders, respectively, as a result of the regulatory transition under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”).

Regulations limit capital distributions by savings institutions. Generally, capital distributions are limited to undistributed net income for the current and prior two years. At September 30, 2011, the Bank was not allowed to make any capital distributions without regulatory approval.

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PART I — FINANCIAL INFORMATION

At September 30, 2011 the Bank was in compliance with regulatory capital requirements as set forth below (dollars in thousands):

	Actual				Required For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Regulations					Required Under Regulatory Bank Order
	Amount		Ratio		Amount		Ratio			Amount		Ratio			Amount		Ratio
September 30, 2011
Total Capital to risk weighted assets	$	75,474		12.95	$	46,615		8.00	%	$	58,269		10.00	%	$	69,922		12.00	%
Tier 1 (Core) Capital to risk weighted assets		68,083		11.68		23,307		4.00	%		34,961		6.00	%		*		*
Tier 1 (Core) Capital to adjusted total assets		68,083		8.62		31,575		4.00	%		39,469		5.00	%		63,150		8.00	%
Tangible Capital to adjusted total assets		68,083		8.62		11,841		1.50	%		N/A		N/A			*		*

At June 30, 2011 the Bank was in compliance with regulatory capital requirements as set forth below (dollars in thousands):

	Actual					Required For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Regulations					Required Under Regulatory Bank Order
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
June 30, 2011
Total Capital to risk weighted assets	$	76,475		12.87	%	$	47,548		8.00	%	$	59,435		10.00	%	$	71,322		12.00	%
Tier 1 (Core) Capital to risk weighted assets		68,928		11.60	%		23,774		4.00	%		35,661		6.00	%		*		*
Tier 1 (Core) Capital to adjusted total assets		68,928		8.63	%		31,958		4.00	%		39,947		5.00	%		63,916		8.00	%
Tangible Capital to adjusted total assets		68,928		8.63	%		11,984		1.50	%		N/A		N/A			*		*

* Target levels for these categories are not specified within the Bank Order.

Until the Bank Order is terminated, the Bank cannot be classified as well capitalized under prompt corrective action provisions.

NOTE 11 — OTHER COMPREHENSIVE INCOME

Other comprehensive income (loss) components and related tax effects were as follows at September 30, 2011:

	Three months ended September 30,
	2011			2010
Unrealized holding gains (losses) on available for sale securities	$	74,052		$	(758,758	)
Tax effect of holding gains and losses on available for sale securities		25,178			257,978
Tax effect of deferred tax asset valuation allowance		—			—
Other comprehensive income (loss)		48,874			(500,780	)
Net income (loss)		(820,597	)		(618,414	)
Total comprehensive income (loss)	$	(771,723	)	$	(1,119,194	)

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PART I — FINANCIAL INFORMATION

NOTE 12 — ADOPTION OF NEW ACCOUNTING STANDARDS

In April 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2011-02, “A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring” (“ASU 2011-02”). ASU 2011-02 provides additional guidance to creditors for evaluating whether a modification or restructuring of a receivable is a troubled debt restructuring. The new guidance requires creditors to evaluate modifications and restructurings of receivables using a more principles-based approach, which may result in more modifications and restructurings being considered troubled debt restructuring. Additionally, creditors will be required to provide additional disclosures about their troubled debt restructuring activities in accordance with the requirements of ASU 2010-20, “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses” which was deferred by ASU 2011-01 “Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20” (ASU 2011-01). The new guidance will be effective for the first interim or annual period beginning on or after June 15, 2011, with retrospective application required to the beginning of the annual period of adoption. Disclosure requirements are effective for the first interim and annual period beginning on or after June 15, 2011. The Company adopted the new guidance and included these disclosures within its interim statement s beginning with the period ended September 30, 2011 and did not have an impact on the Company’s consolidated financial statements.

In May 2011, the FASB issued Accounting Standards Updated No. ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs,” (“ASU 2011-04”). The amendments in ASU 2011-04 generally represent clarifications of Topic 820, but also include some instances where a particular principle of requirement for measuring fair value or disclosing information about fair value measurement has changed. ASU 2011-04 results in common principles and requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and International Financial Reporting Standards. The amendments are effective during interim and annual periods beginning after December 15, 2011. The adoption of ASU 2011-04 is not expected to have material impact on the Company’s consolidated financial statements.

In June 2011, the FASB issued Accounting Standards Update No. 2011-05 “Comprehensive Income (Topic 220): Presentation of Comprehensive Income,” (“ASU 2011-5”). Under ASU 2011-05, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in shareholders’ equity. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The amendments in ASU 2011-05 do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income.

NOTE 13 — FEDERAL INCOME TAXES

Management recorded deferred tax assets at September 30, 2011 of $4.7 million. A valuation allowance is established to reduce the deferred tax asset if it is more likely than not that the related tax benefits will not be realized. In management’s opinion, it is more likely than not that the tax benefits will not be realized; consequently, a valuation allowance has been established as of September 30, 2011. When determining the amount of deferred tax assets that are more-likely-than-not to be realized, and therefore recorded as a benefit, the Company conducts a regular assessment of all available information. This information includes, but is not limited to, taxable income in prior periods, projected future income, and projected future reversals of deferred tax items. Based on these criteria, the Company determined that it was necessary to establish a valuation allowance against deferred tax assets of $4.7 million at September 30, 2011 to reduce the carrying amount of the Company’s net deferred tax asset to zero.

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PART I — FINANCIAL INFORMATION

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following analysis discusses changes in financial condition and results of operations at and for the three-month period ended September 30, 2011 for the Company, the Bank, its principal and wholly-owned subsidiary, PVFSC, a wholly-owned real estate subsidiary, MPCC, a wholly-owned real estate subsidiary, PVF Holdings, Inc., PVF Community Development and PVF Mortgage Corporation, three wholly-owned and currently inactive subsidiaries.

Under the Dodd-Frank Act of, the OTS merged into the OCC in July 2011. Thereafter, the OCC assumed responsibility for regulating the Bank. All orders, resolutions, determinations, agreements, interpretations, guidelines, procedures and advisory materials issued by the OTS remain in effect and are enforceable by or against the OCC, until modified, terminated or superseded. The Federal Reserve Board assumed responsibility for regulating savings and loan holding companies and thus, became the primary federal regulator of the Company. The powers, rulemaking authorities, and duties of the OTS related to savings and loan holding companies and their non-depository institution subsidiaries are enforceable by or against the Federal Reserve Board, until modified, terminated or superseded. Additionally, under the Dodd-Frank Act, the Federal Reserve Board has the authority to set capital standards for all savings and loan holding companies.

Forward-Looking Statements

When used in this Quarterly Report on Form 10-Q, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties including changes in economic conditions in the Company’s market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Company’s market area, and competition that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. Additional factors that may affect the Company’s results are discussed below under “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2011. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company wishes to advise readers that the factors listed above could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.

The Company does not undertake, and specifically disclaims any obligation, to publicly release the results of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as and required by law.

Financial Condition

Consolidated assets of the Company were $780.0 million as of September 30, 2011, a decrease of approximately $7.0 million, or 0.9%, as compared to June 30, 2011. The Bank’s regulatory capital ratios for Tier 1 (core) capital, Tier 1 risk-based capital, and total risk-based capital were 8.62%, 11.68% and 12.95%, respectively, at September 30, 2011.

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PART I — FINANCIAL INFORMATION

At September 30, 2011, the Company’s cash and cash equivalents, which consist of cash, interest-bearing deposits and federal funds, sold totaled $150.3 million, an increase of $1.0 million, or 0.7%, as compared to June 30, 2011. The change in the Company’s cash, cash equivalents and federal funds sold consisted of an increase in cash of $3.3 million and federal funds sold of $6.0 million, which was substantially offset by a decrease in interest-bearing deposits of $8.3 million.

The Bank continued the origination of fixed-rate single-family loans in its marketplace, with most originated for sale in the secondary market as opposed for its portfolio. The origination and sale of fixed-rate loans has historically generated gains on sale and allowed the Bank to increase its investment in loans serviced, without assuming the interest-rate risk associated with holding long-term fixed-rate assets and which facilitates the maintenance of stronger liquidity levels. Mortgage application volume has increased in the current quarter, due to a decline in interest rates, and consists predominantly of loan refinancing highly correlated to interest rate movements and levels. New home sales continue to remain weak in the current economic environment, limiting new home financing opportunities.

During the three months ended September 30, 2011, mortgage-backed securities available for sale decreased by $0.2 million primarily as a result of principal repayments and amortization of book premium. There were no purchases of mortgage-backed securities during the quarter due to historical low yields offered by these securities.

Securities available for sale decreased by $6.0 million during the three-month period ended September 30, 2011 as a result of calls exercised on agency securities totaling $9.0 million, which was offset by the purchase of $3.0 million in agency securities available for sale.

Loans receivable, net, decreased by $4.9 million, or 0.9%, during the three months ended September 30, 2011. The decrease in loans receivable included decreases in one-to-four family, one-to-four family construction, commercial real estate, multi-family, and land loan categories, partially offset by increases in the commercial and industrial loan categories. This decline was primarily due to portfolio paydowns and amortization combined with the results of problem loan disposition and limited new loan production as the Bank executes its multi-year plan to diversify its balance sheet and improve its risk profile. The Bank continued its strategic focus of the origination of high quality commercial and industrial loans and select commercial real estate loans, experiencing growth of $20.0 million, or 37.6%, in the commercial and industrial loan portfolio during the quarter ended September 30, 2011. Additionally, almost all new residential loan production is being sold in the secondary market in this interest rate environment, as the Bank manages its interest rate and liquidity risk along with its capital ratios. As the Bank continues to make meaningful progress in its problem asset resolution, the Bank intends to continue to accelerate the origination of commercial and industrial loans for its portfolio as part of its plan to diversify the balance sheet.

The Bank does not originate sub-prime loans and only originates Alt A loans for sale, without recourse, in the secondary market. All one-to-four family loans are underwritten according to agency underwriting standards. Exceptions, if any, are submitted to the Bank’s board loan committee for approval. Any exposure the Bank may have to these types of loans is immaterial.

The increase of $3.5 million in loans receivable held for sale as of September 30, 2011 was the result of increased new loan originations and timing differences between the origination and the sale of loans. One-to-four family mortgage application volume has accelerated in the current period as a result of lower interest rates resulting in higher refinancing activity and related revenue.

For the most recent three-month period ended September 30, 2011, real estate owned declined $0.1 million. The activity for the period consisted of the addition of 3 single-family properties, 1 land loan

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PART I — FINANCIAL INFORMATION

and 1 nonresidential real estate property totaling approximately $0.5 million, offset by the disposal of 4 single-family properties totaling $0.5 million. The Bank realized a net gain of approximately $0.1 million on the disposition of these properties. The Bank also recorded an impairment charge of $0.1 million on the carrying amount of real estate still in inventory at September 30, 2011, based on updated valuations and market conditions. At September 30, 2011, the Bank held 41 properties totaling $7.9 million in real estate owned. The real estate owned included 16 single-family properties, 17 land properties, and 8 commercial properties.

The Bank generally seeks to fund loan activity and liquidity by generating deposits through its branch network and through the use of various borrowing facilities. During the three-month period ending September 30, 2011, the Bank’s funding needs declined as a result of the decline in loans receivable and investment securities. Accordingly, the Bank saw a decrease in its total deposit levels. Deposits decreased by $4.0 million, or 0.6%, which was a result of a decrease of $2.5 million in retail certificates of deposit and a decrease of $1.5 million in non-maturing deposits. The decline in retail certificates of deposit was strategically directed as part of management’s relationship pricing initiative which targeted rate sensitive non-relationship deposits for reduction. Management will continue to modify its noncore deposit strategies to support the funding needs of the Bank’s loan activities, while maintaining appropriate liquidity levels, as it executes its strategies to diversify its funding mix by expanding core deposit relationships and building business deposits. During the quarter ended September 30, 2011, the Bank introduced its new suite of deposit products, including enhanced business deposit products and services.

The decrease in advances from borrowers for taxes and insurance of $3.7 million for the period ended September 30, 2011 is attributable to timing differences between the collection and payment of taxes and insurance. The increase of $1.5 million in accrued expenses and other liabilities is primarily the result of timing differences between the collection and remittance of funds received on loans serviced for investors.

Results of Operations: Three months ended September 30, 2011, compared to three months ended September 30, 2010.

The Company’s net income is dependent primarily on its net interest income, which is the difference between interest earned on its loans and investments and interest paid on interest-bearing liabilities. Net interest income is determined by: (i) the difference between yields earned on interest-earning assets and rates paid on interest-bearing liabilities (“interest-rate spread”); and (ii) the relative amounts of interest-earning assets and interest-bearing liabilities. The Company’s interest-rate spread is affected by regulatory, economic and competitive factors that influence interest rates, loan demand, the collectibility of loans, and deposit flows. Net interest income also includes amortization of loan origination fees, net of origination costs.

The Company’s net income is also affected by the generation of non-interest income, which primarily consists of loan servicing income, service fees on deposit accounts, and gains on the sale of loans held for sale. In addition, net income is affected by the level of operating expenses, loan loss provisions, and costs associated with the acquisition, maintenance and disposal of real estate.

The Company recognized a net loss for the three month period ended September 30, 2011 of $0.8 million, or $.03 per basic and diluted share, as compared to a net loss of $0.6 million, or $.02 per basic and diluted share, for the prior year comparable period. This represents an increase in the loss recognized of $0.2 million, or $.01 per basic and diluted share, when compared with the prior year comparable period. The primary cause of the change was a slightly lower level of net interest income, lower noninterest income and slightly higher operating expenses, offset by a lower provision for loan losses. Also, the results of the prior year period recognized a benefit for federal income taxes.

38

PART I — FINANCIAL INFORMATION

Net Interest Income

Net interest income for the three months ended September 30, 2011 decreased by $0.1 million, or 1.9%, as compared to the prior year comparable period. Both interest income and interest expense decreased in the current period, with a larger decline realized in interest income. Total interest income decrease $1.5 million during the current period compared with the same period in the prior year, as a result of a decrease of $40.8 million in the average balance of loans outstanding along with a $40.9 million decrease in the average balance of mortgage-backed securities. Total interest expense declined $1.4 million from a year ago primarily due to a $50.0 million decline in borrowing related to the maturity of the repurchase agreement borrowing in March 2011. The slight decrease in net interest income was attributable to an increase of 23 basis points in the interest-rate spread due to the change in the funding sources to a more favorable funding mix which lowered overall funding costs, partially offset by a less favorable mix of interest-earning assets. This overall mix improvement was more than offset by a lower volume of interest-sensitive assets and liabilities for the quarter ended September 30, 2011, as compared to the prior year comparable period.

Total average interest-earning assets for the quarter ended September 30, 2011 were $65.0 million lower, compared to the comparable quarter in 2010. Average loan balances continued to be impacted by loan payments and payoffs, which are not being totally replaced by new portfolio loan production, as well as loan charge-offs and problem loan disposition contributing to the overall decline. Also contributing to the lower level of average interest-earning assets was the $40.9 million decline in the average balance of mortgage-backed securities which were substantially sold during the period ended June 30, 2011 as part of the balance sheet repositioning. The impact of lower loan balances was partially offset by higher average investments and cash and cash equivalents, but funds were reinvested at substantially lower yields.

For the quarter ended September 30, 2011, total average interest-bearing liabilities were $58.5 million lower than the comparable quarter in 2010. This resulted primarily from the deleveraging that occurred as part of the maturity in March 2011 of a $50.0 million repurchase agreement which was funded from the Bank’s overnight liquidity position. Additionally, as part of management’s strategy to reduce the Company’s risk profile and improve the Company’s capital ratios, as well as a result of a lack of attractive long-term investments, average deposit balances were lower by $8.4 million in the current year period compared with the three month period ended September 30, 2010.

39

PART I — FINANCIAL INFORMATION

The following table presents comparative information for the three months ended September 30, 2011 and 2010, respectively, with respect to average balances and average yields and costs for interest-earning assets and interest-bearing liabilities:

	September 30, 2011								September 30, 2010
	Average Balance			Interest		Average Yield/Cost			Average Balance			Interest		Average Yield/Cost
	(dollars in thousands)
Interest-earning assets
Loans(1)	$	584,752		$	7,104		4.86	%	$	625,564		$	8,132		5.20	%
Mortgage-backed securities		4,911			50		4.07	%		45,805			461		4.03	%
Investments and other		151,019			244		0.65	%		134,325			260		0.77	%
Total interest-earning assets		740,682			7,398		4.00	%		805,694			8,853		4.40	%
Non-interest-earning assets		42,853								42,472
Total assets	$	783,535							$	848,166
Interest-bearing liabilities
Deposits	$	651,711		$	1,949		1.20	%	$	660,119		$	2,666		1.62	%
Borrowings		35,000			261		2.98	%		85,000			899		4.23	%
Subordinated debt		1,135			11		3.88	%		1,246			12		3.85	%
Total interest-bearing liabilities		687,846			2,221		1.29	%		746,365			3,577		1.92	%
Non-interest-bearing liabilities		24,809								19,063
Total liabilities		712,655								765,428
Stockholders’ equity		70,880								82,738
Total liabilities and stockholders’ equity	$	783,535							$	848,166
Net interest income				$	5,177							$	5,276
Interest-rate spread							2.71	%							2.48	%
Yield on interest-earning assets							2.80	%							2.62	%
Interest-earning assets to interest-bearing liabilities		107.68	%							107.95	%

(1) Non-accruing loans are included in the average loan balances for the periods presented.

40

PART I — FINANCIAL INFORMATION

Provision for Loan Losses and Asset Quality

For the three months ended September 30, 2011, a provision for loan losses of $1.5 million was recorded to bring the total allowance for loan losses to a level considered by management to be appropriate, based on management’s evaluation of relevant factors, including the risk characteristics and trends of the loan portfolio, historic and current loss experience, current economic conditions and underlying collateral valuations. The provision for loan losses decreased by $1.3 million compared with the same period of the prior year. The decrease in the provision for the current period reflects declines in classified and nonperforming assets as compared to the prior period. During the period, the Bank disposed of $8.3 million in nonperforming assets and charged off an additional $0.2 million in nonperforming assets, utilizing $2.1 million and $0.2 million in specific allowances, respectively.

The provision for loan losses for the current period reflects management’s judgments about the credit quality of the Bank’s loan portfolio. The allowance for loan losses consists of a specific component and a general component.

The following is a breakdown of the valuation allowances:

	September 30, 2011		June 30, 2011
General valuation allowance	$	15,993,029	$	16,961,901
Specific valuation allowance		13,560,135		13,034,992
Total valuation allowance	$	29,553,164	$	29,996,893

The allowance for loan losses was 5.20% of loans outstanding at September 30, 2011, compared with 5.19% at June 30, 2011. The ratio of the allowance for loan losses to nonperforming loans was 61.81% at September 30, 2011, compared with 59.58% at June 30, 2011. The general valuation portion of the allowance was 3.07% and 3.20% of performing loans at September 30, 2011 and June 30, 2011, respectively.

Management’s approach includes establishing a specific valuation allowance by evaluating individual nonperforming loans for probable losses based on a systematic approach involving estimating the realizable value of the underlying collateral. Additionally, management establishes a general valuation allowance for pools of performing loans segregated by collateral type. For the general valuation allowance, management is applying a prudent loss factor based on historical loss experience, trends based on changes to nonperforming loans and foreclosure activity, and a subjective evaluation of the local population and economic environment. The loan portfolio is segregated into categories based on collateral type and a loss factor is applied to each category. The initial basis for each loss factor is the Bank’s loss experience for each category. Historical loss percentages are calculated based on transfers from the general reserve to the specific reserve, indicating a loss has been incurred, for each risk category during the historical period and dividing the total by the average balance of each category. Presently, historical loss percentages are updated on a monthly basis using an 18-month rolling average. Subjective adjustments are made to the Bank’s historical experience including consideration of trends in delinquencies and classified loans, portfolio growth, national and local economic and business conditions including unemployment, bankruptcy and foreclosures and effectiveness of credit administration, as appropriate.

A provision for loan losses is recorded when necessary to bring the allowance to a level consistent with this analysis. Management believes it uses the best information available to make a determination as to the adequacy of the allowance for loan losses. The current provision for loan losses is allocated by loan portfolio segment and lower historical loss factors resulted in recoveries in certain loan portfolio segments in the current period and are illustrated as a negative provision in Note 3 — Loans Receivable. The current period provision for loan losses reflects the continued level of elevated charge-offs during the period.

41

PART I — FINANCIAL INFORMATION

The total allowance for loan losses decreased slightly during the three months ended September 30, 2011, which was directionally consistent with the reduction in nonperforming loans and a smaller total loan portfolio. The general portion of the allowance declined $1.0 million, while the specific allowance increased by $0.5 million during the quarter as a result of the reduction and disposition of impaired loans. Based on recent portfolio trends, historical loss experience and management’s factors, the Bank has experienced an increase to the general valuation allowance allocation to the one-to-four family loan pools, multi-family loan pools, commercial non real estate loan pools, and land loan pools, while commercial real estate loan pools, one-to-four family construction loan pools, and consumer loan pools experienced a decreased allocation. The change in the specific valuation allowance fiscal year-to-date was the result of the ongoing review of the individual loans for impairment and updates to valuations. Almost all of these loans are real estate related and considered collateral dependent. Real estate valuations in the Bank’s marketplace have declined and updated valuations have resulted in increased impairment valuation allowances. These additional specific allowances have been more than offset through utilization associated with impaired loan dispositions, resulting in a decline in the specific allowance during the quarter and year to date.

The Bank continues to aggressively review and monitor its loan portfolio. This review involves analyzing all large borrowing relationships, delinquency trends, and loan collateral valuation in order to identify impaired loans. This analysis is performed so that management can identify all troubled loans and loan relationships as well as deteriorating loans and loan relationships. As a result of this review, detailed action plans are developed to either resolve or liquidate the loan and end the borrowing relationship.

Nonperforming assets at September 30, 2011 and June 30, 2011 were as follows:

	September 30, 2011			June 30, 2011
Total nonperforming loans(2)	$	47,972,078		$	50,347,090
Other nonperforming assets(1)		7,925,179			7,972,757
Total nonperforming assets	$	55,897,257		$	58,319,847
Ratio of nonperforming loans to total loans		8.45	%		8.72	%
Total nonperforming assets to total assets		7.16	%		7.45	%

(1) Other nonperforming assets represent property acquired by the Bank through foreclosure or repossession.

(2) Unpaid principal balance

The elevated levels of nonperforming loans at September 30, 2011 and June 30, 2011 were attributable to poor current local economic conditions. Residential markets nationally and locally have been adversely impacted by a significant increase in foreclosures, as a result of the problems faced by sub-prime borrowers and the resulting contraction of residential credit available to all but the most credit worthy borrowers. Land development projects nationally and locally have experienced slow sales and price decreases. The Bank has significant exposure to the residential market in the Greater Cleveland, Ohio area. As a result, the Bank continues to experience an elevated level of nonperforming loans. Due to an increase in foreclosure activity in the area, the foreclosure process in Cuyahoga County, the Bank’s primary market, has become elongated. As such, loans have remained past due for considerable periods prior to being collected, transferred to real estate owned, or charged off. The Bank experienced a decrease in nonperforming loans in the one-to-four family, construction, land, and commercial real estate loan portfolios during the three months ended September 30, 2011.

42

PART I — FINANCIAL INFORMATION

Of the $47.7 million and $50.3 million in non-accruing loans at September 30, 2011 and June 30, 2011, $31.4 million and $36.6 million, respectively, were individually identified as impaired. All of these loans are collateralized by various forms of non-residential real estate or residential construction. These loans were reviewed for the likelihood of full collection based primarily on the value of the underlying collateral and, to the extent collection of loan principal was in doubt, specific loss reserves were established. The evaluation of the underlying collateral included a consideration of the potential impact of erosion in real estate values due to poor local economic conditions and a potentially long foreclosure process. This consideration involves obtaining an updated valuation of the underlying real estate collateral and estimating carrying and disposition costs to arrive at an estimate of the net realizable value of the collateral. Included in the impaired amount at September 30, 2011 and June 30, 2011 were $24.1 million and $26.7 million, respectively, related to loans with a corresponding valuation allowance of $9.3 million and $9.0 million, respectively. At September 30, 2011 and June 30, 2011, respectively, $7.3 million and $9.9 of impaired loans had no allowance for loan losses allocated. The remaining balance of nonperforming loans represents homogeneous one-to-four family loans. These loans are also subject to the rigorous process for evaluating and accruing for specific loan loss situations described above. Through this process, specific loan loss reserves of $3.2 million, or 23.4%, and $3.5 million, or 21.2%, were established for these loans as of September 30, 2011 and June 30, 2011, respectively.

There are $4.9 million and $4.2 million in performing loans for which the Bank has established specific loan loss reserves as of September 30, 2011 and June 30, 2011, respectively. These loans are collateralized by various forms of one-to-four family real estate, non-residential real estate or residential construction. These loans are also subject to the rigorous process for evaluating and accruing for specific loan loss situations described above. Through this process, specific loan loss reserves of $0.8 million and $0.8 million were established for these loans as of September 30, 2011 and June 30, 2011, respectively. The Bank was accruing interest on $13.2 million and $13.6 million of adversely classified loans at September 30, 2011 and June 30, 2011, respectively.

Non-Interest Income

For the three months ended September 30, 2011, non-interest income decreased by $0.8 million from the prior year comparable period. The decline in the current period was primarily attributed to lower income from net mortgage banking activities of approximately $1.4 million. This was partially offset by the recognition of $0.2 million in the gain on the sale of SBA loans, as the Company builds this new business line and revenue source.

The Bank pursues a strategy of originating long-term fixed-rate loans pursuant to FHLMC and FNMA guidelines and selling such loans to the FHLMC or the FNMA, while retaining the servicing rights of such loans. In the current period, income from net mortgage banking activities decreased by $1.4 million as a result of lower gains on loan origination and sales activity of $1.8 million. Although mortgage activity was stronger in the current quarter than in the fiscal 2011 fourth quarter due to lower rates, it was weaker than the prior-year comparable period, which also experienced a low rate environment. The majority of the mortgage lending activities in the current environment continues to involve refinancing and is highly correlated to interest rate movements and levels. The gains on loan origination and sales activities totaled $1.8 million for the current period, which represents a decrease of $1.9 million compared with the prior year period. The low market rates in the respective periods resulted in a loss of $0.1 million in the current period and $0.2 million in the prior year comparable period from mortgage servicing activities due to accelerated amortization of mortgage loan servicing rights. Additionally, the Company recorded a valuation impairment charge of $0.7 million and $1.2 million in the quarters ended September 30, 2011 and 2010, respectively, against the book value of the mortgage loan servicing rights.

43

PART I — FINANCIAL INFORMATION

In the current period, other, net decreased by $0.1 million primarily due to decreased income generated by the Company’s partnership interest in a title company, as the result of lower loan refinancing activity compared with a year ago. The title company earnings are directly correlated to loan origination activity of the Bank.

Gains and losses on the sale of real estate owned, including write-downs, is recorded in non-interest income and was a net gain of $0.1 million for the quarter ended September 30, 2011 compared with a loss of $0.4 million in the prior year period.

During the quarter ended September 30, 2011, the Company originated SBA loans which it retained the unguaranteed balance thereof and sold the guaranteed portion in the secondary market recognizing a gain of $0.2 million. There was no corresponding gain during the 2010 period.

Non-Interest Expense

Non-interest expense for the three months ended September 30, 2011 increased by $0.3 million, or 4.5%, from the prior year comparable period. This resulted from increases in compensation and benefits of $0.5 million, and outside services of $0.2 million, which was partially offset by decreases to FDIC insurance of $0.2 million, office occupancy and equipment of $0.1 million, and real estate owned expense of $0.1 million.

The increase to compensation and benefits is due to higher incentive compensation associated with retail banking results, including the higher mortgage banking revenues year to date, along with staffing and other related compensation benefits associated with positioning the Company for growth and transition. The increase in outside services is primarily due to increased cost associated with the migration to an outside service provider for information technology. The decrease to real estate owned expense for the period is attributable to a decline in the acquisition and maintenance of properties acquired through foreclosure as compared with last year, but is elevated during the current period as well due to the activity levels associated with problem asset disposition. The decrease in the cost of FDIC insurance is due to a change in the assessment base for calculating FDIC insurance from a deposit based assessment to an assessment based on total company assets.

Income Tax Expense (Benefit)

The federal income tax provision (benefit) for the three month period ended September 30, 2011 represented an effective benefit rate of 3.0% on the loss for the current period, compared to 35.8% for the prior year comparable period. The Company recorded a valuation allowance against deferred tax assets of $2.4 million, resulting in a net deferred tax asset of $0 at December 31, 2010. An ongoing analysis of the Company’s deferred tax asset has resulted in recognizing a valuation allowance of $4.7 million, resulting in a net deferred tax asset of $0 at September 30, 2011. Accordingly, no tax benefit was recognized during the quarter related to the Company’s reported loss.

Liquidity and Capital Resources

The Company’s liquidity measures its ability to generate adequate amounts of funds to meet its cash needs. Adequate liquidity guarantees that sufficient funds are available to meet deposit withdrawals, fund loan commitments, purchase securities, maintain adequate reserve requirements, pay operating expenses, provide funds for debt service, pay dividends to stockholders and meet other general commitments in a cost-effective manner. The primary sources of funds are deposits, principal and interest payments on loans, proceeds from the sale of loans, repurchase agreements, and advances from the FHLB. While maturities and scheduled amortization of loans are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and local

44

competition. The Company’s most liquid assets are cash and cash equivalents. The levels of these assets are dependent on the Company’s operating, financing, lending and investing activities during any given period. Additional sources of funds include collateralized lines of credit available from the FHLB and FRB.

During the current period, the Company changed its overall liquidity position by using payments received on loans, mortgage-backed securities and securities along with its cash and cash equivalents position to redeem brokered and retail certificates of deposits along with the funding of the matured $50 million repurchase agreement. This resulted in a lower on balance sheet liquidity position and higher off balance sheet liquidity due to higher secured borrowing capacity with the FHLB.

Management believes the Company maintains sufficient liquidity to meet current operational needs. Cash at the Company level totaled $22.4 million at September 30, 2011.

The Bank’s primary regulator, the OCC, has implemented a statutory framework for capital requirements which establishes five categories of capital strength ranging from “well capitalized” to “critically undercapitalized.” An institution’s category depends upon its capital level in relation to relevant capital measures, including two risk-based capital measures, a tangible capital measure and a core/leverage capital measure. At September 30, 2011, the Bank was in compliance with all of the current applicable regulatory capital measurements to meet the definition of a well-capitalized institution, as demonstrated in the following table:

(In thousands)	Park View Federal Capital		Percent of Assets (1)			Requirement for Well-Capitalized Institution
Tangible capital	$	68,083		8.62	%		N/A
Tier-1 core capital		68,083		8.62	%		5.00	%
Tier-1 risk-based capital		68,083		11.68	%		6.00	%
Total risk-based capital		75,474		12.95	%		10.00	%

(1) Tangible and core capital levels are shown as a percentage of total adjusted assets; risk-based capital levels are shown as a percentage of risk-weighted assets.

Pursuant to the Bank Order, the OTS directed the Bank to raise its Tier 1 (core) capital and total risk-based capital ratios to 8% and 12%, respectively, by December 31, 2009. At September 30, 2011, the Bank continued to meet these capital requirements. During the quarter ended December 31, 2010, the Company invested an additional $4.0 million in the capital of the Bank. With the addition of capital invested in the Bank, the Bank exceeded the required capital ratios under the Bank Order. However, until the Bank Order is terminated, the Bank cannot be classified as well-capitalized under prompt corrective action provisions.

Under the Bank and Company Orders, the Bank may not declare or pay dividends or make any other capital distributions from the Bank without receiving prior OCC approval. In addition, the Company shall not declare, make or pay any cash dividends or other capital distributions or purchase, repurchase or redeem or commit to purchase, repurchase or redeem any Company equity stock without the prior non-objection of the OCC.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market risk is the risk of loss arising from adverse changes in the fair value of financial instruments due to changes in interest rates, exchange rates and equity prices. The Bank’s market risk is generally composed of interest rate risk.

45

PART I — FINANCIAL INFORMATION

Asset/Liability Management: The Bank’s asset and liability committee (“ALCO”), which includes senior management representatives, monitors and considers methods of managing the rate sensitivity and repricing characteristics of the balance sheet components consistent with maintaining acceptable levels of changes in net portfolio value (“NPV”) and net interest income. The Bank’s asset and liability management program is designed to minimize the impact of sudden and sustained changes in interest rates on NPV and net interest income.

The Bank’s exposure to interest rate risk is reviewed on a quarterly basis by the ALCO and the Bank’s Board of Directors. Exposure to interest rate risk is measured with the use of interest rate sensitivity analysis to determine the Bank’s change in NPV in the event of hypothetical changes in interest rates, while interest rate sensitivity gap analysis is used to determine the repricing characteristics of the Bank’s assets and liabilities. If estimated changes to NPV and net interest income are not within the limits established by the Board, the Board may direct management to adjust its asset and liability mix to bring interest rate risk within Board-approved limits.

In order to reduce the exposure to interest rate fluctuations, the Bank has developed strategies to manage its liquidity, shorten the effective maturity and increase the interest rate sensitivity of its asset base. Management has sought to decrease the average maturity of its assets by emphasizing the origination of adjustable-rate loans and loans with shorter balloon maturities which are retained by the Bank for its portfolio. In addition, all long-term, fixed-rate mortgages are underwritten according to guidelines of the Freddie Mac and the Fannie Mae, which are then sold directly for cash in the secondary market. The Bank carefully monitors the maturity and repricing of its interest earning assets and interest-bearing liabilities to minimize the effect of changing interest rates on its NPV. The Bank’s interest rate risk position is the result of the repricing characteristics of assets and liabilities. The balance sheet is primarily comprised of interest-earning assets having a maturity and repricing period of one month to five years. These assets were funded primarily utilizing interest-bearing liabilities having a final maturity of two years or less and a repurchase agreement.

Item 4. Controls and Procedures.

As of the end of the period covered by this Quarterly Report on Form 10-Q, management of the Company carried out an evaluation, under the supervision and with the participation of the Company’s principal executive officer and principal financial officer, of the effectiveness of the Company’s disclosure controls and procedures. Based on this evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures are effective in ensuring that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934, as amended: (i) is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms; and (ii) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers or persons performing similar functions, as appropriate to allow timely decisions regarding disclosure. It should be noted that the design of the Company’s disclosure controls and procedures is based in part upon certain reasonable assumptions about the likelihood of future events, and there can be no reasonable assurance that any design of disclosure controls and procedures will succeed in achieving its stated goals under all potential future conditions, regardless of how remote, but the Company’s principal executive and financial officers have concluded that the Company’s disclosure controls and procedures are, in fact, effective at a reasonable assurance level. During the period covered by this Quarterly Report on Form 10-Q, there was no change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

46

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

There have been no material changes to the Company’s risk factors from those disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2011.

Item 2. Unregistered Sale of Equity Securities and Use of Proceeds.

(a) N/A

(b) N/A

(c) The Company did not repurchase its equity securities during the period ended September 30, 2011.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. (Removed and Reserved).

Item 5. Other Information.

None.

Item 6. Exhibits.

3.11	First Amended and Restated Articles of Incorporation, as amended
3.22	Code of Regulations, as amended and restated
31.13	Rule 13a-14(a) Certification of Chief Executive Officer
31.23	Rule 13a-14(a) Certification of Chief Financial Officer
323	Section 1350 Certifications
101(4)	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Financial Condition; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements of Cash Flows; and (iv) Notes to Consolidated Financial Statements, tagged as blocks of text.

(1) Incorporated by reference to the Company’s Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on February 10, 2010 (Commission File No. 333-163037).

(2) Incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on February 6, 2008 (Commission File No. 0-24948).

(3) Filed herewith.

(4) As provided in Rule 406T of Regulation S-T, this information shall not be deemed “filed” for purposes of Section 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934 or otherwise subject to liability under those sections.

47

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	PVF Capital Corp.
	(Registrant)
Date:November 14, 2011	/s/ Robert J. King, Jr.
	Robert J. King, Jr.
	President and Chief Executive Officer
	(Duly authorized officer)
	/s/ James H. Nicholson
	James H. Nicholson
	Chief Financial Officer
	(Principal financial officer)
	/s/ Edward B. Debevec
	Edward B. Debevec
	Treasurer and Principal Accounting Officer
	(Principal accounting officer)