- Continued progress in problem asset resolution. Nonperforming assets decline $6.2 million, or 9.32%, to $60.7 million.
- Over past 12 months, nonperforming assets have declined $20.2 million or 25.0%.
- Maturity of $50 million repurchase agreement funded with overnight funds; reduces total assets, improves tier one capital ratio, improves net interest margin.
- Mortgage banking activities weaker during the period resulting in mortgage banking income of $0.8 million, including $127,000 recovery of mortgage servicing asset valuation allowance.
- Credit costs lower during period but remain elevated with provision for loan losses of $2.1 million and loss on real estate owned of $339,000.
- Continued progress towards achieving regulatory targeted adversely classified assets ratio.
- Bank capital ratios remain strong.
SOLON, Ohio, April 27, 2011 (GLOBE NEWSWIRE) -- PVF Capital Corp. (Nasdaq:PVFC), the parent company of Park View Federal Savings Bank, announced a net loss of $2,793,536, or $0.11 basic and diluted loss per share for the quarter ended March 31, 2011. This compares with net income of $1,269,065 for the prior year period which included a nonrecurring pretax gain of $9,065,908 on the cancellation of debt. Absent the gain, a net loss of $4,714,434 would have been recorded in the prior period.
As previously announced, the $50 million repurchase borrowing agreement matured in late March 2011. This borrowing which carried an interest rate of 4.99% was settled using a portion of the Bank's short-term cash and cash equivalents position. This had the result of further deleveraging the Bank's balance sheet, improving the tier I core capital ratio and will reduce annual borrowing costs related to this debt by approximately $2.5 million. The underlying investment securities were retained in the portfolio and had a net unrealized market gain of approximately $722,000 at March 31, 2011.
Mortgage banking revenue experienced a sharp decline as higher mortgage rates resulted in a slow down of residential mortgage refinancing activities. The lower mortgage volume resulted in mortgage loan sale income of $378,000 which was a decrease of $2.1 million from the linked quarter of December 31, 2010, and a decrease of $234,000 from the prior year quarter. Net servicing income during the quarter was $299,000. The slow down of refinancing activities and corresponding prepayment speeds resulted in a partial recovery in the estimated fair value of certain tranches of the Company's mortgage servicing rights, which had a valuation allowance of $465,000. The Company recognized a recovery of $127,000 during the period, leaving a valuation allowance of $338,000. The estimated value of the Company's mortgage servicing rights portfolio, as a whole, continues to exceed its carrying value.
Robert J. King, Jr., President and Chief Executive Officer, commented, "This was another significant quarter for the Company as we continued to successfully resolve a number of problem assets, deleveraged the balance sheet as a result of the matured repurchase agreement, and continued to strengthen its liquidity position, all key components in positioning the Company for future profitability."
During the quarter, the Company made significant progress in reducing its level of nonperforming assets. Nonperforming loans declined $5.6 million, or 9.6%, in addition to a decrease of $0.6 million in other real estate owned, resulting in a net decrease in nonperforming assets of $6.2 million. The Company continued to reduce its level of classified assets to core capital plus general valuation allowance ratio to 69.7% at March 31, 2011, compared with 97.4% at March 31, 2010. The Company also reduced its level of classified assets plus special mention assets to core capital ratio plus general valuation allowance to 91.9%, compared with 102.9% a year ago.
During the current period, total assets declined $53.5 million, or 6.4%, while the loan portfolio shrunk $1.4 million, or 0.2%, as the Company reduces its problem loans. Net of problem loan disposition, the Company experienced growth in the loan portfolio of $4.2 million, an important first step in the strategy to return to profitability. The decline in total assets was primarily the result of the maturity of a $50 million repurchase agreement borrowing as previously discussed.
Net interest income for the period declined $98,000 and $123,000, as compared with the periods ending December 31, 2010 and March 31, 2010, respectively, due to the smaller balance sheet. The Company continues to maintain a relatively high level of liquidity as part of its turnaround strategy and positioning for balance diversification. Although the balance sheet is smaller, the net interest margin was 2.58% for the period and was higher than the 2.56% reported for the linked period and higher than the 2.55% for the year ago period.
The provision for loan losses totaled $2.1 million, reflecting the continued difficult economic operating environment, along with costs associated with problem asset disposition during the quarter. The provision for loan losses totaled $4.5 million in the previous period and $7.0 million in the prior year period.
The allowance for loan losses at March 31, 2011 was $29.9 million, or 5.0%, of total loans outstanding. This compares to $31.5 million and 5.3%, respectively, at December 31, 2010 and $30.3 million and 4.8%, respectively, at March 31, 2010. The allowance's coverage of nonperforming loans continued to improve during the quarter to 56.8% at March 31, 2011, compared with 54.1% and 43.3% at December 31, 2010 and March 31, 2010, respectively.
Park View Federal is a wholly-owned subsidiary of PVF Capital Corp. and operates 17 full-service offices located throughout the Greater Cleveland area. For additional information, visit our web site at www.myparkview.com.
This press release contains statements that are forward-looking, as that term is defined by the Private Securities Litigation Act of 1995 or the Securities and Exchange Commission in its rules, regulations and releases. The Company intends that such forward-looking statements be subject to the safe harbors created thereby. All forward-looking statements are based on current expectation regarding important risk factors including, but not limited to, real estate values and the impact of interest rates on financing. Accordingly, actual results may differ from those expressed in the forward-looking statements, and the making of such statements should not be regarded as a representation by the Company or any other person that results expressed therein will be achieved.
PVF Capital Corp.'s common shares trade on the NASDAQ Capital Market under the symbol PVFC.
| PVF CAPITAL CORP. | ||
| CONSOLIDATED STATEMENT OF FINANCIAL CONDITION | ||
| March 31, | June 30, | |
| 2011 | 2010 | |
| (unaudited) | ||
| ASSETS | ||
| Cash and amounts due from depository institutions | $24,721,575 | $18,283,620 |
| Interest-bearing deposits | 54,803,920 | 111,759,326 |
| Federal funds sold | 10,000,000 | -- |
| Total cash and cash equivalents | 89,525,495 | 130,042,946 |
| Securities available for sale | 15,872,390 | 20,149,149 |
| Mortgage-backed securities available for sale | 38,965,491 | 47,145,878 |
| Loans receivable held for sale, net | 5,848,380 | 8,717,592 |
| Loans receivable, net of allowance of $29,686,242 and $31,519,466, respectively | 561,923,818 | 587,405,644 |
| Office properties and equipment, net | 7,664,780 | 7,876,320 |
| Real estate owned, net | 8,082,863 | 8,173,741 |
| Federal Home Loan Bank stock | 12,811,100 | 12,811,100 |
| Bank-owned life insurance | 23,353,428 | 23,144,033 |
| Prepaid expenses and other assets | 13,125,640 | 14,118,127 |
| Total assets | $777,173,385 | $859,584,530 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Liabilities | ||
| Deposits | $647,250,571 | $667,546,477 |
| Note payable | 1,179,445 | 1,259,444 |
| Long-term advances from the Federal Home Loan Bank | 35,000,000 | 35,000,000 |
| Repurchase agreement | -- | 50,000,000 |
| Advances from borrowers for taxes and insurance | 7,405,240 | 4,930,327 |
| Accrued expenses and other liabilities | 11,857,625 | 17,605,257 |
| Total liabilities | $702,692,881 | $776,341,505 |
| Stockholders' equity | ||
| Serial preferred stock, none issued | -- | -- |
| Common stock, $.01 par value, 65,000,000 shares authorized; | ||
| 26,142,443 and 26,114,943 shares issued, respectively | 261,424 | 261,149 |
| Additional paid-in capital | 100,483,297 | 100,260,665 |
| Retained earnings (accumulated deficit) | (22,219,53) | (15,097,658) |
| Accumulated other comprehensive income (loss) | (207,537) | 1,656,016 |
| Treasury stock at cost, 472,725 shares, respectively | (3,837,147) | (3,837,147) |
| Total stockholders' equity | 74,480,504 | 83,243,025 |
| Total liabilities and stockholders' equity | $777,173,385 | $859,584,530 |
| PVF CAPITAL CORP. | ||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| (Unaudited) | ||||
| Three Months Ended | Nine Months Ended | |||
| March 31, | March 31, | |||
| 2011 | 2010 | 2011 | 2010 | |
| Interest and dividends income | ||||
| Loans | $ 7,328,247 | $ 8,571,176 | $ 23,116,620 | $ 26,867,466 |
| Mortgage-backed securities | 419,470 | 606,234 | 1,347,261 | 1,962,861 |
| Federal Home Loan Bank stock dividends | 145,309 | 145,310 | 418,203 | 450,319 |
| Securities | 43,033 | 52,396 | 183,955 | 93,707 |
| Fed funds sold and interest-bearing deposits | 72,288 | 4,349 | 153,404 | 14,748 |
| Total interest and dividends income | 8,008,347 | 9,379,465 | 25,219,443 | 29,389,101 |
| Interest expense | ||||
| Deposits | 2,171,129 | 3,226,333 | 7,184,421 | 11,348,323 |
| Short-term borrowings | -- | -- | -- | 50 |
| Long-term borrowings | 828,394 | 891,767 | 2,643,346 | 2,715,699 |
| Subordinated debt | -- | 129,760 | -- | 574,499 |
| Total interest expense | 2,999,523 | 4,247,860 | 9,827,767 | 14,638,571 |
| Net interest income | 5,008,824 | 5,131,605 | 15,391,676 | 14,750,530 |
| Provision for loan losses | 2,090,000 | 7,000,000 | 9,390,000 | 11,010,000 |
| Net interest income after provision for loan losses | 2,918,824 | (1,868,395) | 6,001,676 | 3,740,530 |
| Non-interest income | ||||
| Service charges and other fees | 131,252 | 160,652 | 491,947 | 507,735 |
| Mortgage banking activities, net | 803,656 | 769,798 | 5,778,162 | 3,276,002 |
| Increase in cash surrender value of bank-owned life insurance | 65,773 | 75,312 | 209,395 | 173,554 |
| Gain on sale of equity securities | -- | 23,871 | -- | 23,871 |
| Gain (loss) on real estate owned | (59,560) | 6,028 | (282,690) | (153,505) |
| Provision for real estate owned losses | (279,160) | (244,647) | (1,004,470) | (746,420) |
| Gain on the cancellation of subordinated debt | -- | 9,065,908 | -- | 17,627,438 |
| Other, net | 174,453 | 98,188 | 742,181 | 439,150 |
| Total non-interest income | 836,414 | 9,955,110 | 5,934,525 | 21,147,825 |
| Non-interest expense | ||||
| Compensation and benefits | 2,867,152 | 2,316,795 | 7,753,597 | 6,930,606 |
| Office occupancy and equipment | 656,002 | 645,445 | 2,016,648 | 1,970,600 |
| Outside services | 678,471 | 535,085 | 1,940,005 | 1,880,354 |
| Federal deposit insurance premium | 480,057 | 584,440 | 1,707,741 | 1,887,985 |
| Real estate owned expense | 846,864 | 948,914 | 2,206,173 | 2,396,599 |
| Other | 1,089,129 | 1,093,522 | 2,895,182 | 3,321,001 |
| Total non-interest expense | 6,617,675 | 6,124,201 | 18,519,346 | 18,387,145 |
| Income (loss) before federal income taxes | (2,862,437) | 1,962,514 | (6,583,145) | 6,501,210 |
| Federal income tax provision | (68,901) | 693,449 | 688,732 | 2,313,249 |
| Net income (loss) | $ (2,793,536) | $ 1,269,065 | $ (7,271,877) | $ 4,187,961 |
| Basic earnings (loss) per share | $ (0.11) | $ 0.14 | $ (0.28) | $ 0.50 |
| Diluted earnings (loss) per share | $ (0.11) | $ 0.13 | $ (0.28) | $ 0.50 |
| FINANCIAL HIGHLIGHTS | ||||||
| At or for the three months ended | ||||||
| (dollars in thousands except per share data) | March 31, | December 31, | September 30, | June 30, | March 31, | |
| Balance Sheet Data: | 2011 | 2010 | 2010 | 2010 | 2010 | |
| Total assets | $ 777,363 | $ 826,701 | $ 836,746 | $ 859,585 | $ 889,184 | |
| Loans receivable | 591,800 | 593,169 | 604,038 | 618,925 | 636,243 | |
| Allowance for loan losses | 29,876 | 31,493 | 32,629 | 31,519 | 30,272 | |
| Loans receivable held for sale, net | 5,848 | 11,278 | 15,151 | 8,718 | 9,017 | |
| Mortgage-backed securities available for sale | 38,966 | 43,022 | 41,772 | 47,146 | 52,217 | |
| Cash and cash equivalents | 89,481 | 130,961 | 130,706 | 130,043 | 137,369 | |
| Securities held to maturity | -- | -- | -- | -- | 5,000 | |
| Securities available for sale | 15,872 | 16,958 | 15,112 | 20,149 | 9,978 | |
| Deposits | 647,251 | 628,995 | 644,635 | 667,546 | 689,562 | |
| Borrowings | 36,179 | 86,206 | 86,233 | 86,259 | 86,286 | |
| Stockholders' equity | 74,671 | 77,654 | 82,233 | 83,243 | 85,304 | |
| Nonperforming loans | 52,564 | 58,216 | 71,100 | 69,090 | 69,983 | |
| Other nonperforming assets | 8,083 | 8,764 | 6,891 | 8,174 | 10,991 | |
| Tangible common equity ratio | 9.61% | 9.39% | 9.83% | 9.68% | 9.59% | |
| Book value per share | $2.91 | $3.03 | $3.21 | $3.25 | $3.36 | |
| Common shares outstanding at period end | 25,669,718 | 25,669,718 | 25,642,218 | 25,642,218 | 25,402,218 | |
| Operating Data: | ||||||
| Interest income | $ 8,008 | 8,358 | $ 8,853 | $ 9,177 | $ 9,380 | |
| Interest expense | 2,999 | 3,251 | 3,577 | 3,907 | 4,248 | |
| Net interest income before provision for loan losses | 5,009 | 5,107 | 5,276 | 5,270 | 5,132 | |
| Provision for loan losses | 2,090 | 4,500 | 2,800 | 3,918 | 7,000 | |
| Net interest income (loss) after provision for loan losses | 2,919 | 607 | 2,476 | 1,352 | (1,868) | |
| Noninterest income | 836 | 2,610 | 2,488 | 388 | 9,955 | (1) |
| Noninterest expense | 6,618 | 5,974 | 5,928 | 6,069 | 6,124 | |
| Income (loss) before federal income taxes | (2,863) | (2,757) | (964) | (4,329) | 1,963 | |
| Federal income tax expense (benefit) | (69) | 953 | (346) | (1,582) | 694 | |
| Net income (loss) | $ (2,794) | $ (3,710) | $ (618) | $ (2,747) | $ 1,269 | |
| Basic earnings (loss) per share | $ (0.11) | $ (0.14) | $ (0.02) | $ (0.11) | $ 0.14 | |
| Diluted earnings (loss) per share | $ (0.11) | $ (0.14) | $ (0.02) | $ (0.11) | $ 0.13 | |
| (1) Includes $9.1 million gain related to exchange of PVF Capital Trust II trust preferred securities. | ||||||
| Performance Ratios: | ||||||
| Return on average assets | (1.35%) | (1.78%) | (0.29%) | (1.24%) | 0.58% | |
| Return on average equity | (14.67%) | (18.29%) | (2.97%) | (12.96%) | 7.27% | |
| Net interest margin | 2.58% | 2.56% | 2.62% | 2.55% | 2.55% | |
| Interest rate spread | 2.48% | 2.41% | 2.48% | 2.44% | 2.48% | |
| Efficiency ratio | 110.01% | 79.29% | 63.33% | 87.17% | 97.83% | |
| Stockholders' equity to total assets (all tangible) | 9.61% | 9.39% | 9.83% | 9.68% | 9.59% | |
| Asset Quality Ratios: | ||||||
| Nonperforming assets to total assets | 7.80% | 8.10% | 9.32% | 8.99% | 9.11% | |
| Nonperforming loans to total loans | 8.88% | 9.81% | 11.77% | 11.16% | 11.00% | |
| Allowance for loan losses to total loans | 5.05% | 5.31% | 5.40% | 5.09% | 4.76% | |
| Allowance for loan losses to nonperforming loans | 56.84% | 54.10% | 45.89% | 45.62% | 43.26% | |
| Net charge-offs to average loans, annualized | 2.47% | 3.64% | 1.08% | 1.68% | 4.05% | |
| Park View Federal Regulatory Capital Ratios: | ||||||
| Ratio of tangible capital to adjusted total assets | 9.09% | 8.84% | 8.71% | 8.63% | 8.23% | |
| Ratio of tier one (core) capital to adjusted total assets | 9.09% | 8.84% | 8.71% | 8.63% | 8.23% | |
| Ratio of tier one risk-based capital to risk-weighted assets | 11.83% | 12.16% | 11.65% | 11.56% | 10.93% | |
| Ratio of total risk-based capital to risk-weighted assets | 13.10% | 13.42% | 12.92% | 12.83% | 12.19% | |