-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CqMeddjSizWd6HhQdGJrcTgPuhCKANTdOtJyxrNHc1P5xRDkkTkxjLv69k/SdchI ttwDBajXyfnYcuJSqmRn2Q== 0000904280-03-000287.txt : 20031114 0000904280-03-000287.hdr.sgml : 20031114 20031114113305 ACCESSION NUMBER: 0000904280-03-000287 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20030930 FILED AS OF DATE: 20031114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PVF CAPITAL CORP CENTRAL INDEX KEY: 0000928592 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 341659805 STATE OF INCORPORATION: OH FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-24948 FILM NUMBER: 031001456 BUSINESS ADDRESS: STREET 1: 30000 AURORA ROAD CITY: SOLON STATE: OH ZIP: 44139 BUSINESS PHONE: 4402487171 MAIL ADDRESS: STREET 1: 30000 AURORA ROAD CITY: SOLON STATE: OH ZIP: 44139 10-Q 1 pvf-f10qnov.txt FORM 10-Q 9/30/03 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, 2003. [ ] 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 (I.R.S. Employer incorporation or organization) 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 is an accelerated filer (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 6,379,934 - -------------------------------------------------------------------------------- (Class) (Outstanding at November 12, 2003) PVF CAPITAL CORP. INDEX Page Part I Financial Information Item 1 Financial Statements Consolidated Statements of Financial Condition, September 30, 2003 (unaudited) and June 30, 2003. 1 Consolidated Statements of Operations for the three months ended September 30, 2003 and 2002 (unaudited). 2 Consolidated Statements of Cash Flows for the three months ended September 30, 2003 and 2002 (unaudited). 3 Notes to Consolidated Financial Statements (unaudited). 4 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 6 Item 3 Quantitative and Qualitative Disclosures About Market Risk 11 Item 4 Controls and Procedures 11 Part II Other Information 12 PART I FINANCIAL INFORMATION ITEM 1 FINANCIAL STATEMENTS PVF CAPITAL CORP. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
September 30, June 30, ASSETS 2003 2003 ------ unaudited ------------- ---------- Cash and cash equivalents: Cash and amounts due from depository institutions $10,663,684 $9,755,224 Interest bearing deposits 1,599,038 3,946,019 Federal funds sold 10,050,000 83,050,000 ----------- ----------- Total cash and cash equivalents 22,312,722 96,751,243 Securities held to maturity 0 33,252 Mortgage-backed securities held to maturity 41,704,862 2,964,798 Loans receivable held for sale, net 18,460,848 33,603,895 Loans receivable, net of allowance of $3,982,839 and $3,882,839 571,825,335 579,670,681 Office properties and equipment, net 12,080,994 11,555,919 Real estate owned, net 0 448,865 Federal Home Loan Bank stock 10,501,128 10,396,399 Prepaid expenses and other assets 10,189,640 7,978,751 ------------ ------------ Total Assets $687,075,529 $743,403,803 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Liabilities Deposits $479,146,382 $526,428,927 Advances from the Federal Home Loan Bank of Cincinnati 120,112,843 120,123,220 Notes payable 5,295,695 5,815,150 Advances from borrowers for taxes and insurance 4,661,014 7,964,653 Accrued expenses and other liabilities 16,751,545 24,468,717 ------------ ------------ Total Liabilities 625,967,479 684,800,667 Stockholders' Equity Serial preferred stock, none issued -- -- Common stock, $0.01 par value, 15,000,000 shares authorized; 6,718,008 and 6,717,283 shares issued, respectively 67,180 67,173 Additional paid-in-capital 47,181,176 47,176,696 Retained earnings 16,986,887 14,486,460 Treasury Stock, at cost 343,519 shares (3,127,193) (3,127,193) ------------ ------------ Total Stockholders' Equity 61,108,050 58,603,136 ------------ ------------ Total Liabilities and Stockholders' Equity $687,075,529 $743,403,803 ============ ============
Page 1 PART I FINANCIAL INFORMATION ITEM 1 FINANCIAL STATEMENTS PVF CAPITAL CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended September 30, ---------------------------------------------- 2003 2002 Interest income Loans $ 9,463,528 $10,434,466 Mortgage-backed securities 443,442 100,332 Cash and securities 151,391 869,688 ----------- ----------- Total interest income 10,058,361 11,404,486 ----------- ----------- Interest expense Deposits 2,930,179 4,430,307 Borrowings 1,380,711 1,395,004 ----------- ----------- Total interest expense 4,310,890 5,825,311 ----------- ----------- Net interest income 5,747,471 5,579,175 Provision for loan losses 100,000 0 ----------- ----------- Net interest income after provision for loan losses 5,647,471 5,579,175 ----------- ----------- Noninterest income Service and other fees 146,646 129,424 Mortgage banking activities, net 2,673,247 596,314 Other, net 491,463 24,090 ----------- ----------- Total noninterest income 3,311,356 749,828 ----------- ----------- Noninterest expense Compensation and benefits 2,506,396 2,103,560 Office properties and equipment 797,724 747,170 Other 1,233,925 950,712 ----------- ----------- Total noninterest expense 4,538,045 3,801,442 ----------- ----------- Income before federal income tax provision 4,420,782 2,527,561 Federal income tax provision 1,488,700 840,475 ----------- ----------- Net income $ 2,932,082 $ 1,687,086 =========== =========== Basic earnings per share $0.46 $0.26 ===== ===== Diluted earnings per share $0.45 $0.26 ===== ===== Dividends declared per common share $0.074 $0.067 ====== ======
See accompanying notes to consolidated financial statements Page 2 PART I FINANCIAL INFORMATION ITEM 1 FINANCIAL STATEMENTS PVF CAPITAL CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended September 30, -------------------------------------- 2003 2002 OPERATING ACTIVITIES Net Income $ 2,932,082 $ 1,687,086 Adjustments to reconcile net income to net cash from operating activities Depreciation 378,393 316,820 Provision for loan losses 100,000 0 Accretion of unearned discount and deferred loan origination fees, net (311,349) (291,047) Gain on sale of loans, net (3,116,285) (647,999) Gain on sale of real estate owned, net (438,928) 0 Federal Home Loan Bank stock dividends (104,729) (131,415) Change in accrued interest on investments, loans, and borrowings, net (82,674) 24,778 Origination of loans receivable held for sale, net (138,941,988) (74,105,651) Sale of loans receivable held for sale, net 157,201,320 64,544,110 Net change in other assets and other liabilities, net (13,682,643) 1,500,868 ------------ ------------ Net cash from operating activities 3,933,199 (7,102,450) ------------ ------------ INVESTING ACTIVITIES Loan and mortgage-backed securities repayments and originations, net 9,702,416 (16,112,815) Purchase of mortgage-backed securities held for investment (39,853,303) 0 Disposals of real estate owned 888,928 22,779 Securities maturities 33,252 5,023,492 Additions to office properties and equipment, net (903,468) (958,826) ------------ ------------ Net cash from investing activities (30,132,175) (12,025,370) ------------ ------------ FINANCING ACTIVITIES Net increase in demand deposits, NOW, and passbook savings 1,956,879 5,453,684 Net decrease in time deposits (49,239,424) (591,787) Net increase (decrease) in Federal Home Loan Bank advances (10,377) 9,985,652 Net decrease in notes payable (519,455) (517,970) Purchase of treasury stock 0 (22,054) Proceeds from exercise of stock options 4,488 31,211 Cash dividend paid (431,656) (396,029) ------------ ------------ Net cash from financing activities (48,239,545) 13,942,707 ------------ ------------ Net decrease in cash and cash equivalents (74,438,521) (5,185,113) Cash and cash equivalents at beginning of period 96,751,243 14,313,688 ------------ ------------ Cash and cash equivalents at end of period $ 22,312,722 $ 9,128,575 ============ ============ Supplemental disclosures of cash flow information: Cash payments of interest expense $ 4,309,947 $ 5,842,819 Cash payments of income taxes $ 3,070,000 $ 230,000
Page 3 Part I Financial Information Item 1 PVF CAPITAL CORP. Notes to Consolidated Financial Statements September 30, 2003 and 2002 (Unaudited) 1. The accompanying consolidated interim financial statements were prepared in accordance with regulations of the Securities and Exchange Commission for Form 10-Q. All information in the consolidated interim financial statements is unaudited except for the June 30, 2003 consolidated statement of financial condition which was derived from the Corporation's audited financial statements. Certain information required for a complete presentation in accordance with generally accepted accounting principles has been condensed or omitted. However, in the opinion of management, these interim financial statements contain all adjustments, consisting only of normal recurring accruals, necessary to fairly present the interim financial information. The results of operations for the three months ended September 30, 2003 are not necessarily indicative of the results to be expected for the entire year ending June 30, 2004. PVF Capital Corp.'s common stock is traded on the NASDAQ SMALL-CAP ISSUES under the symbol PVFC. 2. Stock Compensation: Employee compensation expense under stock is reported using the intrinsic valuation method. No stock-based compensation cost is reflected in net income, as all options granted had an exercise price equal to or greater than the market price of the underlying common stock at the date of grant. The following table illustrates the effect on net income and earnings per share if expense was measured using the fair value recognition provisions of FASB Statement No. 123, "Accounting for Stock Based Compensation."
Three Months Ended September 30, 2003 2002 ------------------- ------------------- Net Income as reported $2,932,082 $1,687,086 Less: Pro forma compensation expense, net of tax $ 26,130 $ 31,034 ---------- ---------- Pro forma net income $2,905,952 $1,656,052 ========== ========== Basic earnings per share $ 0.46 $ 0.26 Pro forma basic earnings per share $ 0.46 $ 0.26 Diluted earnings per share $ 0.45 $ 0.26 Pro forma diluted earnings per share $ 0.45 $ 0.26
Page 4 Part I Financial Information Item 1 3. The following table discloses earnings per share for the three months ended September 30, 2003 and September 30, 2002.
Three months ended September 30, 2003 2002 ------------------------------------- -------------------------------------- Income Shares Per-Share Income Shares Per-Share (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount ----------- ------------- --------- ----------- ------------- ---------- BASIC EPS Income available to common stockholders $2,932,082 6,374,180 $ 0.46 $1,687,086 6,371,131 $ 0.26 EFFECT OF STOCK OPTIONS 151,706 0.01 67,167 0.00 DILUTED EPS Income available to common stockholders $2,932,082 6,525,886 $ 0.45 $1,687,086 6,438,298 $ 0.26
4. Mortgage Banking Activities: The Company services real estate loans for investors that are not included in the accompanying condensed consolidated financial statements. Mortgage servicing rights are established based on the allocated 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 statement of financial condition under the caption "Prepaid expenses and other assets."
2003 2002 ---- ---- Servicing rights: Beginning of period $4,655,182 $3,255,147 Additions 2,144,654 556,247 Valuation allowance credited to expense (670,000) 0 Amortized to expense (850,923) (392,698) ---------- ---------- End or period $5,278,913 $3,418,696 ========== ========== Valuation allowance: Beginning of period $ 670,000 $ 0 Reductions credited to expense 670,000 0 ---------- ---------- End of period $ 0 $ 0 ========== ==========
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, 2003 for PVF Capital Corp. ("PVF" or the "Company"), Park View Federal Savings Bank (the "Bank"), its principal and wholly-owned subsidiary, PVF Service Corporation, a wholly-owned real estate subsidiary, Mid Pines Land Co., a wholly-owned real estate subsidiary, and three other wholly-owned subsidiaries which are currently inactive. FORWARD-LOOKING STATEMENTS - -------------------------- When used in this 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. 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. FINANCIAL CONDITION - ------------------- Consolidated assets of PVF were $687.1 million as of September 30, 2003, a decrease of approximately $56.3 million, or 7.6%, as compared to June 30, 2003. The Bank remained in regulatory capital compliance for tangible, core, and risk-based capital on a fully phased-in basis with capital levels of 8.68%, 8.68% and 12.24% respectively at September 30, 2003. During the three months ended September 30, 2003, the Company's cash and cash equivalents, which consist of cash, interest-bearing deposits and federal funds sold, decreased $74.4 million, or 76.9%, as compared to June 30, 2003. The change in the Company's cash and cash equivalents consisted of an increase in cash of $0.9 million and decreases in interest bearing deposits and federal funds sold of $75.3 million. Page 6 Part I Financial Information Item 2 FINANCIAL CONDITION continued - ----------------------------- The net $15.8 million, or 2.6%, increase in loans receivable and mortgage-backed securities during the three months ended September 30, 2003, resulted from a decrease in loans receivable (including loans held for sale) of $22.9 million and an increase in mortgage-backed securities of $38.7 million. The decrease of $22.9 million in loans receivable included decreases of $15.2 million in single-family loans, $12.7 million in land loans, $2.8 million in construction loans and $0.6 million in multi-family loans, partially offset by increases of $6.5 million in commercial real estate loans, $1.5 million in home equity line of credit loans and $0.4 million in consumer loans. The increase in mortgage-backed securities resulted from the purchase of $39.9 million in mortgage-backed securities less payments received of $1.2 million. The decrease of the loan portfolio was primarily the result of a decrease of $15.2 million in single-family loans receivable held for sale along with stagnant economic conditions. The loan activity for the quarter ended September 30, 2003 resulted in no material change to the overall composition of the portfolio. As a result of management's decision not to match market certificate of deposit rates, management allowed deposits to decrease by $47.3 million, or 9.0%, in order to reduce balances held in federal funds sold. The decrease in notes payable of $0.5 million, or 8.9%, is the result of payments made on notes payable. The increase in prepaid and other assets of $2.2 million is primarily the result of an increase of $1.3 million in the mortgage servicing asset. The increase of $0.5 million in office properties and equipment is the result of capital improvements to our corporate center office and the purchase of computer equipment. The decrease of $0.5 million in real estate owned is attributable to the sale of real estate owned. The decrease in accrued expenses and other liabilities of $7.7 million, or 31.5%, is primarily the result of timing differences between the collection and remittance of payments received on loans serviced for investors. The decrease in advances from borrowers for taxes and insurance of $3.3 million, or 41.5%, is due to timing differences between the collection and payment of escrow funds. The decrease in cash and cash equivalents of $74.4 million, proceeds from the sale and repayment of loans receivable of $22.9 million, earnings of $2.9 million, and proceeds of $0.5 million from the sale of real estate owned were used to repay maturing deposits of $47.3 million, fund the net increase of $38.7 million in mortgage-backed securities, fund the decreases in accrued expenses and other liabilities of $7.7 million and advances from borrowers for taxes and insurance of $3.3 million, fund the increases of $2.2 million in prepaid expenses and other assets and $0.5 million in office properties and equipment, repay $0.5 million in notes payable, and pay a cash dividend of $0.5 million. Page 7 Part I Financial Information Item 2 RESULTS OF OPERATIONS Three months ended - --------------------- September 30, 2003 compared to the three months ended September 30, 2002. PVF'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 also includes amortization of loan origination fees, net of origination costs. 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 and deposit flows. PVF'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 and mortgage-backed securities available for sale. In addition, net income is affected by the level of operating expenses, loan loss provisions and market valuation write-down of mortgage loan servicing rights. The Company's net income for the three months ended September 30, 2003 was $2,932,100. This represents a $1,245,000, or 73.8%, increase when compared with the prior year comparable period. Net interest income for the three months ended September 30, 2003 increased by $168,300, or 3.0%, as compared to the prior year comparable period, due to a decrease of $1,346,100, or 11.8%, in total interest income and a decrease in total interest expense of $1,514,400, or 26.0%, from the prior year comparable period. The decrease in total interest income of $1,346,100 in the current period resulted from a decrease in the return on interest-earning assets of 102 basis points partially offset by an increase of $23.1 million in the average balance of interest-earning assets from the prior year comparable period. The decrease in total interest expense of $1,514,400 in the current period resulted from a decrease of 103 basis points in the average cost of funds on interest-bearing liabilities partially offset by an increase in the average balances of interest bearing liabilities of $14.8 million from the prior year comparable period. The Company's net interest income increased primarily because of balance sheet growth in both interest-earning assets and interest- bearing liabilities along with a slight increase in the Company's interest-rate spread during the current period as compared to the prior year comparable period. Page 8 Part I Financial Information Item 2 RESULTS OF OPERATIONS CONTINUED - ------------------------------- For the three months ended September 30, 2003, a provision for loan losses of $100,000 was recorded, while no provision for loan losses was recorded in the prior year comparable period. The Company uses a systematic approach to determine the adequacy of its loan loss allowance and the necessary provision for loan losses. The loan portfolio is reviewed and delinquent loan accounts are analyzed individually on a monthly basis, with respect to payment history, ability to repay, probability of repayment, and loan-to-value percentage. Consideration is given to the types of loans in the portfolio and the overall risk inherent in the portfolio. After reviewing current economic conditions, changes to the size and composition of the loan portfolio, changes in delinquency status, levels of non-accruing loans, non-performing assets, impaired loans, and actual loan losses incurred by the Company, management establishes an appropriate reserve percentage applicable to each category of loans, and 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. During the three months ended September 30, 2003, the Company experienced decreases in the level of impaired loans and classified assets of $0.4 million and $0.7 million, respectively. Despite a decrease in the loan portfolio of $23.0 million and decreases to impaired loans and classified assets, management determined it was necessary to record a provision for loan losses of $100,000 in the current period due to an increase in the recognition of specific loan losses in the current period. At September 30, 2003, the allowance for loan losses was $4.0 million, which represented 56.4% of non-performing loans and 0.67% of net loans. During the three months ended September 30, 2002, the Company experienced an increase in the loan portfolio of $28.0 million and an increase in the level of classified assets of $2.5 million. In addition, the level of impaired loans decreased by $0.2 million. Management determined it was not necessary to record a provision for loan losses in the prior period due to the application of revised reserve percentages to certain loan categories and a decrease in impaired loans. At September 30, 2002, the allowance for loan losses was $3.9 million, which represented 51.4% of non-performing loans and 0.65% of net loans. Page 9 Part I Financial Information Item 2 RESULTS OF OPERATIONS CONTINUED - -------------------------------
AT SEPTEMBER 30, JUNE 30, 2003 2003 ---- ---- (DOLLARS IN THOUSANDS) Non-accruing loans (1): Real estate.................................... $ 7,063 $ 7,437 --------- --------- Accruing loans which are contractually past due 90 days or more: Real estate.................................... $ 82 $ 275 --------- --------- Total nonaccrual and 90 days past due loans.............................. $ 7,145 $ 7,712 ========= ========= Ratio of non-performing loans to total loans and mortgage-backed securities..................... 1.13% 1.26% ======== ======== Other non-performing assets (2)...................... $ 0 $ 449 ======== ======== Total non-performing assets.......................... $ 7,145 $ 8,161 ======== ======== Total non-performing assets to total assets....................................... 1.04% 1.10% ======== ========
- ---------- (1) Non-accrual status denotes loans on which, in the opinion of management, the collection of additional interest is unlikely, or loans that meet the non-accrual criteria established by regulatory authorities. Non-accrual loans include all loans classified as doubtful or loss, loans in foreclosure, and all loans greater than 90-days past due with a loan-to-value ratio greater than 65%. Payments received on a non-accrual 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) Other non-performing assets represent property acquired by the Bank through foreclosure or repossession. For the three months ended September 30, 2003, noninterest income increased by $2,561,500, or 341.6%, from the prior year comparable period. The increase was primarily the result of an increase of $2,076,900, or 348.3%, in income from mortgage-banking activities resulting from an increase of $2,468,300 in profit on loan sales in the current period offset by a decrease of $391,400 in loan servicing income. The decrease in loan servicing income is attributable to the amortization of mortgage loan servicing rights that resulted from historically low market interest rates and increased prepayment speed on loans serviced for others. During these periods, PVF pursued a strategy of originating long-term, fixed-rate loans pursuant to Federal Home Loan Mortgage Corporation ("FHLMC") and Federal National Mortgage Association ("FNMA") guidelines and selling such loans to the FHLMC or the FNMA, while retaining the servicing. In addition, other income, net increased by $467,400 in the current period, primarily due to a gain of $439,000 recorded on the sale of real estate owned. Service and other fees increased by $17,200, or 13.3%, from the prior year comparable period, primarily due to increases in loan service fee income in the current period. Page 10 Part I Financial Information Item 2 RESULTS OF OPERATIONS CONTINUED - ------------------------------- Noninterest expense for the three months ended September 30, 2003 increased by $736,600, or 19.4%, from the prior year comparable period. This was primarily the result of a $402,800, or 19.2%, increase in compensation and benefits attributable to increased staffing, employee 401(k) benefits, incentive bonuses paid, and salary and wage adjustments. In addition, office properties and equipment increased by $50,500, or 6.8%, primarily due to the opening of two new branch offices along with increases in office rental expense. Other noninterest expense increased by $283,200, or 29.8%, due primarily to increases in advertising expense, costs for outside services, telephone, charitable contributions, postage and special mail, and state franchise tax. The federal income tax provision for the three-month periods ended September 30, 2003 and September 30, 2002 was at an effective rate of 33.7% and 33.2%, respectively. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Company's liquidity measures its ability to fund loans and meet withdrawals of deposits and other cash outflows in a cost-effective manner. Management believes the Company maintains sufficient liquidity to meet its operational needs. Part I Financial Information Item 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK - ---------------------------------------------------------- There have been no significant changes to the Company's interest rate risk position or any changes to how the Company manages its Asset/Liability position since June 30, 2003. This is attributable to the Company's Asset/Liability Management policy of monitoring and matching the maturity and re-pricing characteristics of its interest-earning assets and interest-bearing liabilities, while remaining short-term with the weighted average maturity and re-pricing periods. Part I Financial Information Item 4 CONTROLS AND PROCEDURES - ----------------------- As of the end of the period covered by this report, 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 Page 11 Part I Financial Information Item 4 CONTROLS AND PROCEDURES (CONTINUED) - ----------------------------------- 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, is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. 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. There have been no changes in the Company's internal control over financial reporting (to the extent that elements of internal control over financial reporting are subsumed within disclosure controls and procedures) identified in connection with the evaluation described in the above paragraph that occurred during the Company's last fiscal quarter, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. Part II OTHER INFORMATION - ------------------------- Item 1. Legal Proceedings. N/A Item 2. Changes in Securities and Use of Proceeds. N/A Item 3. Defaults Upon Senior Securities. N/A Item 4. Submission of Matters to a Vote of Security Holders. N/A Item 5. Other Information. N/A Item 6. (a) Exhibits -------- The following exhibits are filed herewith: 31.1 Rule 13a-14(a) Certification of Chief Executive Officer 31.2 Rule 13a-14(a) Certification of Chief Financial Officer 32 Section 1350 Certification (b) Reports on Form 8-K ------------------- The Registrant filed the following Current Reports on Form 8-K during the quarter ended September 30, 2003:
Date of Report Item(s) Reported Financial Statements Filed -------------- ---------------- -------------------------- July 17, 2003 7, 12 N/A July 24, 2003 5, 7 N/A
Page 12 Signature Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant had duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PVF Capital Corp. (Registrant) Date: November 13, 2003 /s/ C. Keith Swaney ------------------- --------------------------------------- C. Keith Swaney President, Chief Operating Officer and Treasurer (Only authorized officer and Principal Financial Officer) EX-31 3 pvf31f10qnov.txt CERTIFICATION EXHIBIT 31.1 Certification I, John R. Male, Chairman of the Board and Chief Executive Officer of PVF Capital Corp., certify that: 1. I have reviewed this annual report on Form 10-Q of PVF Capital Corp.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions); (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 13, 2003 /s/ John R. Male --------------------------------------- John R. Male Chairman of the Board and Chief Executive Officer (Principal Executive Officer) EX-31 4 pvf312f10qnov.txt CERTIFICATION EXHIBIT 31.2 Certification I, C. Keith Swaney, President and Chief Operating Officer and Treasurer of PVF Capital Corp., certify that: 1. I have reviewed this annual report on Form 10-Q of PVF Capital Corp.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions); (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 13, 2003 /s/ C. Keith Swaney ----------------------------------------------- C. Keith Swaney President and Chief Operating Officer and Treasurer (Principal Financial Officer) EX-32 5 pvf32f10qnov.txt CERTIFICATION Exhibit 32 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 The undersigned executive officers of the Registrant hereby certify that this Quarterly Report on Form 10-Q for the quarter ended September 30, 2003 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. By:/s/ John R. Male -------------------------------------------------------- Name: John R. Male Title: Chairman of the Board and Chief Executive Officer By:/s/ C. Keith Swaney ------------------------------------------------------- Name: C. Keith Swaney Title: President, Chief Operating Officer and Treasurer Date: November 13, 2003 -----END PRIVACY-ENHANCED MESSAGE-----