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[PVF CAPITAL CORP. LOGO]
PRESS ANNOUNCEMENT
Date: January 20, 2010
Contact: James H. Nicholson
Chief Financial Officer
440-248-7171
PVF CAPITAL CORP. ANNOUNCES QUARTERLY OPERATING RESULTS.
o Linked quarter decline in nonperforming assets of $1.4 million.
o Managed cost of deposits resulting in a 35 basis point expansion of net
interest margin to 2.58% from 2.23% in the September 2009 quarter.
o Park View Federal Savings Bank regulatory capital ratios improved to
7.15% tier one (core) and 10.74% total risk based.
o Net loss for the second quarter of fiscal 2010 of $1.3 million primarily
driven by credit costs, partially offset by higher net interest income and
net mortgage banking activities.
o Provision for Loan Losses of $2.3 million during the quarter resulting in
an allowance for loan losses of $29.9 million or 4.55% of loans.
PVF Capital Corp., the parent company of Park View Federal Savings Bank,
announced a net loss of $1.3 million or $0.16 basic and diluted loss per share
for the quarter ended December 31, 2009, as compared to a loss of $2.7 million
or $0.35 basic and diluted loss per share for the prior year comparable period.
The net loss for the quarter was primarily due to the provision for loan losses
which totaled $2.3 million. Total assets at December 31, 2009 were $869.3
million compared with $912.2 at June 30, 2009, representing a decrease of 4.71%
Robert J. King, Jr., President and Chief Executive Officer commented, "This
quarter's results reflect another step forward in our progress to reposition the
Company by restoring its core profitability, asset quality and capital
position."
NET INTEREST MARGIN
Net interest income was $5.14 million for the quarter ended December 31, 2009,
an increase of $689,000 or 15.5% compared to $4.45 million for the same period
of 2008, and was also $665,000 or 14.9% higher than the quarter ended September
30, 2009. The improvement was reflective of a smaller but more profitable
balance sheet. The net interest margin improved 45 basis points for the quarter
to 2.58% compared with 2.13% for the prior year comparable period and improved
35 basis points compared with the prior quarter. The improvement of the margin
compared with the prior year period was the result of the cost of
interest-bearing liabilities declining 129 basis points while the yield on
interest-bearing assets declined only 70 basis points in this lower interest
rate environment. The decline in the cost of interest bearing liabilities was
driven by lower deposit costs as the result of the re-pricing of maturing
certificates of deposit into lower rate products. The improvement of the margin
compared with the linked period was also the result of improving the spread
pricing on maturing loans which improved the loan portfolio yield by 12 basis
points. Additionally, the cost of deposits declined 29 basis points from
proactive management and pricing of the non-maturity deposit products and the
re-pricing of maturing certificates of deposit.
30000 AURORA ROAD, SOLON, OHIO 44139 TEL: (440) 248-7171 FAX: (440)914-3658
www.pvfsb.com
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Mr. King noted, "We are pleased with the substantial margin improvement and are
optimistic as we move into the second half of the fiscal year and more fully
realize the benefit of the rate reductions on liabilities as well as wider loan
spreads. As we proceed with our efforts to improve our capital position we are
strategically shrinking our balance sheet into a more profitable one."
ASSET QUALITY
The provision for loan losses of $2.3 million reflected a decrease of $1.4
million from the prior year comparable period and an increase of $490,000 from
the quarter ended September 30, 2009, and was driven largely by economic
conditions in the markets in which the Company conducts its business and the
ongoing review and evaluation of its loan portfolio. The Company is continuing
to thoroughly review its loan portfolio. This review involves analyzing all
large borrowing relationships, delinquency trends, and loan collateral valuation
in light of the weak economic conditions. The Company performs an ongoing
assessment of the overall credit risk within the portfolio. This assessment
provides an analysis of the estimated probable credit losses that could be
incurred in the portfolio. This assessment resulted in the Bank establishing a
total allowance for loan losses of $29.9 million or 4.55% of loans at December
31, 2009, compared with $11.0 million or 1.50% of loans and $31.8 million or
4.65% of loans at December 31, 2008 and September 30, 2009, respectively.
Nonperforming loans totaled $73.3 million at December 31, 2009, down slightly
from $75.2 million at September 30, 2009 and significantly higher than
nonperforming loans of $35.8 million reported at December 31, 2008. The Company
also had real estate owned of $12.1 million at December 31, 2009 compared with
$11.6 million and $9.5 million for September 30, 2009 and December 31, 2008,
respectively.
Mr. King added, "We continue to devote significant resources to the monitoring
and early recognition of any weaknesses in the portfolio. While we remain aware
of the overall economic environment we are operating in, we are pleased that we
did not see any material new specific loan problems arise in the portfolio. We
continue to seek opportunities to accelerate the resolution of problem credits
while maintaining a strong allowance which is a key objective for the return to
profitability by the Company."
NONINTEREST INCOME
Noninterest income increased by $149,000 for the quarter ended December 31, 2009
as compared to the prior year comparable period. The increase was attributable
to an increase of $1.0 million in net mortgage banking activities as a result of
the low interest rate environment and higher refinancing activity and an
increase of $134,000 in earnings on bank-owned life insurance. These increases
were partially offset by the loss on sale and write-downs of real estate owned
which were $498,000 higher during the current quarter. Additionally, the prior
year quarter included a realized a gain of $666,000 on the sale of
mortgage-backed securities. There was no corresponding gain in the current
quarter.
For the linked quarter ended September 30, 2009, noninterest income totaled $9.9
million and resulted primarily from PVF Capital Corp. entering into an exchange
agreement whereby the Company paid $500,000 in cash, and issued $500,000 in
common stock and warrants valued at $800,000 in exchange for the cancellation of
$10.0 million of subordinated debt. This transaction resulted in a pre-tax gain
of $8.6 million, including the elimination of $400,000 in accrued interest due
on this debt.
30000 AURORA ROAD, SOLON, OHIO 44139 TEL: (440) 248-7171 FAX: (440)914-3658
www.pvfsb.com
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NONINTEREST EXPENSE
Noninterest expense for the current quarter was $6.0 million, essentially flat
with the same period a year ago. Lower compensation and benefits expense of
$643,000 was offset by higher FDIC insurance premiums which increased by
$597,000 and higher expenses associated with real estate owned of $128,000.
Noninterest expense compared with the linked quarter ended September 30, 2009
was $209,000 lower. Outside services and fees paid to consultants were $359,000
lower as many of these activities have been completed or are being managed
internally and expenses associated with real estate owned were $116,000 lower.
These lower costs were partially offset by higher compensation and benefit
expenses of $130,000 associated with the addition of new management and higher
FDIC expenses of $172,000 from higher assessment rates.
BALANCE SHEET
As of December 31, 2009, PVF Capital Corp. reported assets of $869.3 million, a
decrease of $42.9 million, or 4.7%, from the prior year end period of June 30,
2009. The decline in assets was primarily attributable to lower net loans
receivable which totaled $626.4 million and was $42.0 million or 6.3% lower than
the prior year end, along with fewer loans held for sale which declined $19.9
million or 73.5% due to timing differences between the funding and settlement of
the warehouse mortgage portfolio. Very little new portfolio lending has occurred
as the Company addresses its asset quality issues and works to reposition its
balance sheet and strengthen its capital ratios.
Total deposits at December 31, 2009 were $682.9 million which was $42.0 million
or 5.8% and $14.0 million or 2.0% lower compared with June 30, 2009 and
September 30, 2009, respectively, as the Company is not replacing its maturing
brokered deposits.
Total stockholders' equity of PVF Capital Corp. was $53.6 million at the end of
the quarter and was $4.0 million higher than the prior year end primarily as a
result of earnings associated with the cancellation of debt.
In addition, Park View Federal's regulatory capital ratios improved during the
quarter. Under newly passed legislation, the Company elected to carry back its
2009 net operating loss. As part of the Worker, Home Ownership, and Business
Assistance Act of 2009, taxpayers with net operating losses were permitted to
elect to offset these losses against income earned in up to five prior years.
Typically, a net operating loss can be carried back for only two years. As a
result of this change in the income tax laws, PVF Capital Corp. and its
subsidiaries were able to offset all their net operating losses against
historical income. Under Office of Thrift Supervision regulations, a portion of
Park View Federal's deferred tax asset, amounting to $4.25 million at September
30, 2009, was required to be excluded from Park View Federal's tier one (core)
and risk-based capital. The effect of this change in tax laws and the related
election by the Company was to increase Park View Federal's capital ratios since
this portion of its deferred tax asset is no longer required to be excluded.
Park View Federal's tier-one (core) and risk-based capital ratios at December
31, 2009 were 7.15% and 10.74%, respectively.
YEAR-TO-DATE RESULTS
For the six month period ended December 31, 2009, net income totaled $2.9
million or $0.37 basic and diluted earnings per share compared with a loss of
$3.6 million for the same period of the prior year. The increase in earnings was
primarily attributable to the previously discussed gain on the cancellation of
debt.
Net interest income was slightly lower by $138,000 in the current year period
due to a substantially smaller balance sheet in the current period combined with
a lower level of nonperforming assets during the prior year period. The net
interest margin was 2.40% for the six month period ended December 31, 2009, four
basis points higher than the prior year comparable period.
30000 AURORA ROAD, SOLON, OHIO 44139 TEL: (440) 248-7171 FAX: (440)914-3658
www.pvfsb.com
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The provision for loan losses totaled $4.0 million in the 2009 period, $322,000
less than the provision of $4.3 million recorded for the six month period ended
December 31, 2008.
In addition to the gain on the cancellation of debt noted earlier, net mortgage
banking income was $1.6 million or 185% higher in 2009 versus 2008 as a result
of the lower interest rate environment and higher refinancing activity. The 2008
results were negatively impacted from the inclusion of a $1.8 million charge
relative to the Company's investments in preferred stock issued by FHLMC and
FNMA after these organizations were placed under conservatorship. The 2009
results included an increase of $574,000 related to losses on the sale or direct
write-down of real estate owned compared to the prior year period, while the
2008 period included a $666,000 gain on the sale of securities.
Noninterest expense totaled $12.3 million for the 2009 period compared with
$11.0 million for the six months of the 2008 period. Lower compensation and
benefits expense of $960,000 was more than offset by higher costs related to the
utilization of outside services, FDIC insurance premiums and expenses associated
with the carry of real estate owned which increased $488,000, $972,000 and
$720,000, respectively.
The Company's Annual Meeting of Stockholders is scheduled to be held Friday,
January 29, 2010. The Company also recently announced it has set January 27,
2010 as the new record date for its planned rights offering.
A registration statement relating to these securities has been filed with the
Securities and Exchange Commission but has not yet become effective. The
securities may not be sold nor may offers to buy be accepted prior to the time
the registration statement becomes effective. You may obtain a written
prospectus, when available, for the proposed rights offering meeting the
requirements of Section 10 of the Securities Act of 1933, as amended, by writing
to the Company, 30000 Aurora Road, Solon, Ohio 44139, Attention: Jeffrey N.
Male, Corporate Secretary. This press release shall not constitute an offer to
sell or the solicitation of an offer to buy any securities. Securities may not
be sold nor may offers to buy be accepted prior to the effectiveness of a
registration statement, nor shall there be any sale of the securities in any
state in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any state.
Park View Federal is a wholly-owned subsidiary of PVF Capital Corp and operates
17 full-service offices located throughout the Greater Cleveland area. For
additional information, visit our web site at www.myparkview.com.
This press release contains statements that are forward-looking, as that term is
defined by the Private Securities Litigation Act of 1995 or the Securities and
Exchange Commission in its rules, regulations and releases. The Company intends
that such forward-looking statements be subject to the safe harbors created
thereby. All forward-looking statements are based on current expectation
regarding important risk factors including, but not limited to, real estate
values and the impact of interest rates on financing. Accordingly, actual
results may differ from those expressed in the forward-looking statements, and
the making of such statements should not be regarded as a representation by the
Company or any other person that results expressed therein will be achieved.
PVF Capital Corp.'s common stock trades on the NASDAQ Capital Market under the
symbol PVFC.
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PVF CAPITAL CORP.
30000 Aurora Road
Solon, Ohio 44139
440-248-7171
SUMMARY OF FINANCIAL HIGHLIGHTS
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
(Dollars in thousands) December 31, June 30,
2009 2009
------------ --------
ASSETS
Cash and cash equivalents $ 42,662 $ 21,213
Securities 55,087 50,102
Loans receivable 626,438 668,460
Loans receivable held for sale 7,181 27,078
Mortgage-backed securities 57,433 64,178
Other assets 80,496 81,178
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Total Assets $869,297 $912,209
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LIABILITIES
Deposits $682,891 $724,932
Borrowed money 96,313 106,366
Other liabilities 36,515 31,406
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Total Liabilities 815,719 862,704
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Total Stockholders' Equity 53,578 49,505
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Total Liabilities and Stockholders Equity $869,297 $912,209
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CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
(Dollars in thousands except per share data) December 31, December 31,
2009 2008 2009 2008
------- ------- ------- -------
Loans $ 9,139 $10,928 $18,296 $22,341
Mortgage-backed securities 694 687 1,357 1,388
Investments 180 348 357 725
------- ------- ------- -------
Interest income 10,013 11,963 20,010 24,454
Deposits 3,764 6,250 8,122 12,192
Borrowings 1,107 1,260 2,269 2,505
------- ------- ------- -------
Interest expense 4,871 7,510 10,391 14,697
------- ------- ------- -------
Net interest income 5,142 4,453 9,619 9,757
Provision for loan losses 2,250 3,641 4,010 4,332
------- ------- ------- -------
Net interest income after provision for loan losses 2,892 812 5,609 5,425
Mortgage-banking activities 1,451 420 2,506 878
Impairment of securities 0 (102) 0 (1,841)
Gain on cancellation of subordinated debt 0 0 8,561 0
Gain (loss) on real estate owned (571) (73) (661) (87)
Gain on the sale of securities 0 666 0 666
Increase (decrease) in cash surrender value
bank owned life insurance 78 (56) 98 (3)
Other, net 371 325 689 525
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Total noninterest income 1,329 1,180 11,193 138
Compensation and benefits 2,372 3,016 4,614 5,574
Office occupancy and equipment 647 699 1,325 1,406
Federal deposit insurance premium 738 141 1,304 332
Outside services 493 470 1,345 857
Real estate owned expense 666 538 1,448 727
Other 1,111 1,151 2,227 2,055
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Total noninterest expense 6,027 6,015 12,263 10,951
Income (loss) before federal income tax provision (1,806) (4,023) 4,539 (5,388)
Federal income tax provision (benefit) (525) (1,301) 1,620 (1,765)
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Net income (loss) ($1,281) ($2,722) $2,919 ($3,623)
======== ======== ======= ========
BASIC EARNINGS (LOSS) PER SHARE ($0.16) ($0.35) $0.37 ($0.47)
======== ======== ======= ========
DILUTED EARNINGS (LOSS) PER SHARE ($0.16) ($0.35) $0.37 ($0.47)
======== ======== ======= ========
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FINANCIAL HIGHLIGHTS
At or for the three months ended
(dollars in thousands except per share data) December 31, September 30, June 30, March 31, December 31,
Balance Sheet Data: 2009 2009 2009 2009 2008
----------- ------------ --------- --------- ------------
Total assets $869,297 $887,081 $912,209 $897,687 $903,061
Loans receivable 656,351 685,048 699,943 723,301 733,056
Allowance for loan losses 29,913 31,824 31,483 25,803 11,000
Loans receivable held for sale, net 7,181 6,428 27,078 16,163 4,283
Mortgage-backed securities available for sale 57,433 60,630 64,178 67,259 57,441
Cash and cash equivalents 42,662 29,004 21,213 41,517 33,340
Securities held to maturity 55,000 57,000 50,000 0 10,000
Securities available for sale 87 137 102 48 49
Deposits 682,891 696,931 724,932 706,996 696,450
Borrowings 96,313 106,339 106,366 106,375 106,375
Stockholders' equity 53,578 54,894 49,505 57,908 65,954
Nonperforming loans 73,343 75,249 70,491 69,555 35,823
Other nonperforming assets 12,090 11,569 11,608 12,327 9,502
Book value per share $6.71 $6.88 $6.37 $7.45 $8.48
Operating Data:
Interest income $ 10,013 $ 9,997 $ 11,271 $ 10,967 $ 11,963
Interest expense 4,871 5,521 6,070 6,580 7,510
-------- -------- -------- -------- --------
Net interest income before provision for losses 5,142 4,477 5,201 4,357 4,453
Provision for loan losses 2,250 1,760 11,250 15,691 3,641
-------- -------- -------- -------- --------
Net interest income after provision for loases 2,892 2,717 (6,049) (11,334) 812
Noninterest income 1,329 9,864(1) 874 3,787 1,180
Noninterest expense 6,027 6,236 6,621 5,430 6,015
-------- -------- -------- -------- --------
Income (loss) before federal income taxes (1,806) 6,344 (11,796) (12,977) (4,023)
Federal income tax expense (benefit) (525) 2,144 (3,884) (4,396) (1,301)
-------- -------- -------- -------- --------
Net income (loss) ($1,281) $4,200 ($7,912) ($8,581) ($2,722)
======== ======== ======== ======== ========
Basic earnings (loss) per share ($0.16) $0.54 ($1.02) ($1.10) ($0.35)
Diluted earnings (loss) per share ($0.16) $0.54 ($1.02) ($1.10) ($0.35)
(1) Includes $8.6 million gain related to exchange of PVF Capital Trust I trust
preferred securities.
Performance Ratios:
Return on average assets (0.58) 1.87 (3.50) (3.81) (1.20)
Return on average equity (9.45) 32.18 (58.93) (55.42) (16.25)
Net interest margin 2.58 2.23 2.46 2.08 2.13
Interest rate spread 2.57 2.26 2.40 1.99 1.98
Efficiency ratio 85.59 106.25 75.99 60.20 118.66
Stockholders' equity to total assets (all tangible) 6.16 6.19 5.43 6.45 7.30
Asset Quality Ratios:
Nonperforming assets to total assets 9.83 9.79 9.00 9.12 5.02
Nonperforming loans to total loans 11.17 10.98 10.07 9.62 4.89
Allowance for loan losses to total loans 4.55 4.65 4.50 3.57 1.50
Allowance for loan losses to nonperforming loans 40.79 42.29 44.66 37.10 30.71
Net charge-offs to average loans, annualized 2.54 0.84 3.08 0.47 0.82
Park View Federal Regulatory Capital Ratios:
Ratio of tangible capital to adjusted total assets 7.15 6.70 6.54 7.83 8.98
Ratio of tier one (core) capital to adjusted total assets 7.15 6.70 6.54 7.86 8.98
Ratio of tier one risk-based capital to risk-weighted assets 9.48 8.77 8.77 10.14 11.51
Ratio of total risk-based capital to risk-weighted assets 10.74 10.03 10.03 11.39 12.61