SOLON, Ohio, Jan. 26, 2011 (GLOBE NEWSWIRE) -- PVF Capital Corp. (Nasdaq:PVFC), the parent company of Park View Federal Savings Bank, announced a net loss of $3,709,928, or $0.14 basic and diluted loss per share for the quarter ended December 31, 2010.
The Company continued to experience an elevated level of mortgage lending activity during the quarter, as borrowers took advantage of the low mortgage interest rates during much of the period. This mortgage volume resulted in mortgage loan sale income of $2.5 million, which was a decrease of $1.2 million from the linked quarter of September 30, 2010, and an increase of $1.2 million over the prior year quarter. Offsetting the revenues associated with the elevated levels of refinance activity was an increase in the amortization of the mortgage servicing asset, resulting in a net servicing loss of $677,000 for the period, compared with a net servicing loss of $150,000 for the linked quarter and servicing income of $107,000 for the prior year quarter. The back-up in mortgage rates during the second half of the quarter resulted in a slow down of refinancing activities and corresponding prepayment speeds from the prior quarter and 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 $1.2 million. The Company recognized a recovery of $719,000 during the period, leaving a valuation allowance of $465,000. 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, "We are pleased with the level of mortgage lending activity for the quarter, which was primarily attributable to lower interest rates and our significant local presence."
The Company continued to execute its turnaround strategy of reducing the risk profile of its balance sheet and to reposition the Company to return to its core profitability. During the quarter, the Company made significant progress in reducing its level of nonperforming assets, the key element of this strategy. Nonperforming loans declined $12.9 million, or 18.1%, and was partially offset by a $1.9 million increase in other real estate owned, resulting in a net decrease of nonperforming assets of $11.0 million. The Company continued to reduce its level of classified assets to core capital plus general valuation allowance ratio to 73.4% at December 31, 2010, compared with 120.0% at December 31, 2009. The Company also reduced its level of classified assets plus special mention assets to core capital ratio plus general valuation allowance to 95.9%, compared with 130.5% a year ago.
During the current period, total assets declined $6.1 million, or 0.7%, while the loan portfolio shrunk $10.9 million, or 1.8%, as the Company reduces its problem loans and positions itself for growth and balance sheet transition during the second half of the year.
Mr. King added, "This is the most significant progress to date in our efforts to clean up the balance sheet and reduce our nonperforming assets. This success is critical to our goal of achieving full compliance with the regulatory orders entered into with the Office of Thrift Supervision."
Net interest income for the period declined $169,000 and $35,000, as compared with the periods ending September 30, 2010 and December 31, 2009, 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. The net interest margin was 2.56% for the period and was lower than the 2.62% reported for the linked period and higher than the 2.49% for the year ago period.
The provision for loan losses totaled $4.5 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 $2.8 million in the previous period and $2.3 million in the prior year period.
The allowance for loan losses at December 31, 2010 was $31.5 million, or 5.3%, of total loans outstanding. This compares to $32.6 million and 5.4%, respectively, for the prior period and $29.9 million and 4.6%, respectively, for the prior year period. The allowance's coverage of nonperforming loans improved significantly during the quarter to 54.1% at December 31, 2010, compared with 45.9% and 40.8% at September 30, 2010 and December 31, 2009, respectively.
The Company recognized a valuation allowance on its deferred tax asset in the amount of $1.9 million, as a result of its net operating losses.
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 .
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.
CONTACT: James H. Nicholson Chief Financial Officer 440-248-7171
