-----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, FT0auC37ikRU9X4ow/0raul/BCf5v124n8ZbJMB9/OmbyJ/TD+P5YGx9cSqzKm5S mdg8t/QoGlykcMeO1xdOpw== 0000909654-06-000692.txt : 20061107 0000909654-06-000692.hdr.sgml : 20061107 20060306172146 ACCESSION NUMBER: 0000909654-06-000692 CONFORMED SUBMISSION TYPE: CORRESP PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20060306 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: CORRESP 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 CORRESP 1 filename1.txt [PVF CAPITAL CORP. LETTERHEAD] March 6, 2006 United States Securities and Exchange Commission 100 F Street, N.E. Washington, DC 20549 Joyce Sweeney, Accounting Branch Chief Re: PVF Capital Corp. Form 10-K for the Fiscal Year Ended June 30, 2005 Form 10-Q for the Fiscal Quarter Ended December 31, 2005 File No. 0-24948 Dear Ms. Sweeney: Following is our response and additional information requested in your comment letter dated February 23, 2006. 10-K for the Fiscal Year Ended June 30, 2005 - -------------------------------------------- Item 1. Business - ---------------- Nonperforming Loans and Other Problem Assets, page 6 - ---------------------------------------------------- 1. Comment/question: Please tell us the length of time that your non-accrual loans have been contractually past due as of June 30, 2005 and June 30, 2004. Tell us the composition of non-accrual loans as of June 30, 2004. Response: Following is a schedule detailing the length of time our non-accrual loans have been contractually past due as of June 30, 2005 and 2004. We have also included detail as to the composition of nonaccrual loans as of June 30, 2005 and 2004. United States Securities and Exchange Commission March 6, 2006 Page 2
AT JUNE 30, 2005 90 days 91 to More than or less 365 days 365 days Total ------- -------- -------- ----- One-to-four family residential 2,408,691 1,687,997 1,594,611 5,691,298 Home equity line of credit 124,363 1,644,100 1,768,462 Multi-family residential - - 21,300 21,300 Commercial real estate 332,042 1,454,275 1,732,167 3,518,484 Land 58,224 276,427 334,651 Residential construction - 256,000 160,000 416,000 Commercial construction - - - - ----------- ---------- ----------- ----------- 2,923,319 3,398,272 5,428,605 11,750,195 =========== ========== =========== =========== AT JUNE 30, 2004 90 days 91 to More than ------- ------ --------- or less 365 days 365 days Total ------- -------- -------- ----- One-to-four family residential - 2,271,400 1,425,471 3,696,871 Home equity line of credit - 787,551 223,006 1,010,557 Multi-family residential - Commercial real estate - 2,865,442 1,590,087 4,455,529 Land - 1,161,627 52,126 1,213,754 Residential construction - 256,000 256,000 Commercial construction - - - - ----------- ---------- ----------- ----------- - 7,342,020 3,290,691 10,632,711 =========== ========== =========== ===========
2. Comment/question: Please tell us and in future filings disclose the underlying reasons for the significant increase in non-accrual loans and accruing loans which are contractually past due 90 days at June 30, 2005 and June 30, 2004. Response: The increase in non-accrual loans and accruing loans which are contractually past due 90 days at June 30, 2005 and June 30, 2004 is attributable to poor current local and economic conditions. Increasing interest rates have also negatively impacted our borrowers' ability to make scheduled loan payments. Due to an increase in foreclosure activity in the area, the foreclosure process in Cuyahoga County, our 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. United States Securities and Exchange Commission March 6, 2006 Page 3 We will include similar discussion in Management's Discussion and Analysis in future filings of Form 10-Q and Form 10-K. Exhibit 13 - 2005 Annual Report - ------------------------------- Management Discussion and Analysis of Financial Condition and Results of - ------------------------------------------------------------------------ Operations - ---------- Provision for Loan Losses, page 16 - ---------------------------------- 3. Comment/question: We note your disclosure on page 17 that the level of classified assets decreased from $14.0 million in 2004 to $12.4 million in 2005. Please tell us and in future filings define classified assets and reconcile with your disclosure on pages 7 and 9 of your Form 10-K. Response: Classified assets are loans identified with an inherent weakness and serve as an early warning tool in identifying the risk of loss. Classification categories include Substandard, Doubtful and Loss. Loans in the substandard classification are inadequately protected by the current net worth and payment capacity of the obligor, or of the value of the collateral pledged. Substandard assets have a well defined weakness based upon objective evidence and contain a distinct possibility of loss if deficiencies are not corrected. Loans in the doubtful classification have all weaknesses inherent in those of substandard classification and these weaknesses make collection or liquidation in full on the basis of current existing facts, conditions and values, highly questionable and improbable. Loans in the loss classification are considered uncollectible and of such little value that their continuance as assets is not warranted. Substantially all loans reported as classified assets as of June 30, 2005 and June 30, 2004 were classified as substandard. United States Securities and Exchange Commission March 6, 2006 Page 4 Following is a schedule detailing the performing status of our reported classified assets as of June 30, 2005 and June 30, 2004.
AT JUNE 30, 2005 More than 90 days Performing past due and accruing Nonaccrual Total ---------- --------------------- ---------- ----- One-to-four family residential 923,355 150,577 3,169,450 4,243,382 Home equity line of credit 541,189 - 1,768,462 2,309,652 Multi-family residential 319,393 - - 319,393 Commercial real estate 1,210,406 167,520 3,186,442 4,564,368 Land 141,651 - 276,427 418,078 Residential construction - - 526,000 526,000 Commercial construction - - - - ---------- ---------- ---------- ------------ Total classified real estate loans 3,135,994 318,097 8,926,782 12,380,873 ---------- ---------- ---------- ------------ Non real estate loans - - - - ---------- ---------- ---------- ------------ 3,135,994 318,097 8,926,782 12,380,873 ========== ========== ========== ============ AT JUNE 30, 2004 More than 90 days Performing past due and accruing Nonaccrual Total ---------- --------------------- ---------- ----- One-to-four family residential 1,017,948 69,703 3,696,872 4,784,522 Home equity line of credit 313,541 - 1,010,557 1,324,098 Multi-family residential - Commercial real estate 778,410 52,982 4,455,529 5,286,920 Land 1,108,000 - 1,213,754 2,321,754 Residential construction - - 256,000 256,000 Commercial construction - - - - ---------- ---------- ---------- ------------ Total classified real estate loans 3,217,899 122,685 10,632,711 13,973,295 Non real estate loans - - - - ---------- ---------- ---------- ------------ 3,217,899 122,685 10,632,711 13,973,295 ========== ========== ========== ============
United States Securities and Exchange Commission March 6, 2006 Page 5 We will include similar discussion and a similar table in Management's Discussion and Analysis in future filings of Form 10-Q and Form 10-K. Consolidated Financial Statements - --------------------------------- Note 1 - Summary of Significant Accounting Policies and Related Matters, page 30 - -------------------------------------------------------------------------------- 4. Comment/question: We note your disclosure on page 8 of your Form 10-K that you charge off loans against the allowance for loan losses when appropriate. Please tell us and in future filings clearly disclose your charge-off policy. Refer to paragraph 13(c) of SOP 01-6. Response: The Bank's loan portfolio consists primarily of loans secured by real estate. Collection of real estate-secured loans in our portfolio are 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. We will include a description of this policy in Note 1 to the Consolidated Financial Statements included in future filings of our Annual Report on Form 10-K. Note 9 - Subordinated Debentures and Notes Payable, page 46 - ----------------------------------------------------------- 5. Comment/question: Please provide us with your proposed future disclosure you will use to meet the requirements of Rule 3-10(b) of Regulation S-X. Response: The subordinated debentures represent an obligation of the Company to a Trust established for the purpose of issuing Trust Preferred Securities. In addition, as set forth in Rule 3-10(b), the Company has given a full and unconditional guarantee of the Trust's securities, no other subsidiary of the Company guarantees the trust preferred securities and the Company has provided the financial statements required by Rule 3-10(b)(4). Accordingly, based on the exception set forth in Rule 3-10(b), we do not believe the disclosure requirements of Rule 3-10 apply. United States Securities and Exchange Commission March 6, 2006 Page 6 10-Q for the Quarterly Period Ended December 31, 2005 - ----------------------------------------------------- Consolidated Financial Statements - --------------------------------- Note 3. - Mortgage Banking Activities, page 7 - --------------------------------------------- 6. Comment/question: We note you recorded a mortgage banking provision for unrealized losses on sales of loans for the six months ended December 31, 2005. Please tell us why you recorded the provision, the loans and transactions that the provision specifically relates to, and your basis for this treatment; including the specific accounting literature upon which you relied. Response: The Company recorded a mortgage banking provision for unrealized losses on sales of loans for the six months ended December 31, 2005 to comply with the provisions of SEC Staff Accounting Bulletin 105, APPLICATION OF ACCOUNTING PRINCIPLES TO LOAN COMMITMENTS and Statement of Financial Accounting Standards (SFAS) No. 149, AMENDMENT OF STATEMENT 133 ON DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. This provision represents the recorded fair value of rate-locked commitments to make loans that were ultimately held for sale and mandatory forward sales commitments entered into to sell loans. Specifically, the Company had $16.6 million of rate-locked commitments to originate loans intended for sale with a fair value as of December 31, 2005 of ($184,374) and mandatory forward sales commitments to sell loans of $10.7 million with a fair value as of December 31, 2005 of ($29,599). The total fair value of these commitments at December 31, 2005 was ($213,973), and the $199,000 provision recorded was the change in fair value during the six months ended December 31, 2005. * * * * * In addition, on behalf of the Company, the undersigned acknowledges that: o the Company is responsible for the adequacy and accuracy of the disclosure in the filings reviewed by the Commission staff; o staff comments or changes to disclosure in response to staff comments in the filings reviewed by the staff do not foreclose the Commission from taking any action with respect to the filing; and o the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. United States Securities and Exchange Commission March 6, 2006 Page 7 If you have any questions please feel free to contact the undersigned. Sincerely, PVF Capital Corp. /s/ John R. Male John R. Male Chairman of the Board and Chief Executive Officer -----END PRIVACY-ENHANCED MESSAGE-----