-----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, Mwr6bsUhmW1Lw1oYP0iIdBIJ19nYE/+9v86nGF0xiUY6PNMjCEwyqD5sC0GhaG6s dMQW2QZOIaWkbVL5fqyEtQ== 0000909654-06-000861.txt : 20061107 0000909654-06-000861.hdr.sgml : 20061107 20060412161105 ACCESSION NUMBER: 0000909654-06-000861 CONFORMED SUBMISSION TYPE: CORRESP PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20060412 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] April 12, 2006 United States Securities and Exchange Commission 100 F Street N.W. Washington, D.C. 20549 Joyce Sweeney, Accounting Branch Chief Re: PVF Capital Corp. Form 10-K for the Fiscal Year Ended June 30, 2005 File No. 0-24948 Dear Ms. Sweeney: Following is our response and additional information requested in your comment letter dated April 4, 2006. 10-K for the Fiscal Year Ended June 30, 2005, page 1 ---------------------------------------------------- Item 1. Business ---------------- Non-Performing Loans and Other Problem Assets, page 6 ----------------------------------------------------- 1. Comment question: We note your response to comments 1 and 2 of our --------------------------------------------------------------------------- letter dated February 23, 2006. Please tell us and in future filings --------------------------------------------------------------------------- disclose how you determined that the allowance for loan losses is adequate --------------------------------------------------------------------------- to absorb probable losses on these loans. In your analysis, describe your --------------------------------------------------------------------------- process for evaluating the underlying collateral, including how you --------------------------------------------------------------------------- consider the impact of the elongated foreclosure process, potentially --------------------------------------------------------------------------- vacant and not well maintained real estate, and poor local economic --------------------------------------------------------------------------- conditions. Please show us in your supplemental response what the revisions --------------------------------------------------------------------------- will look like in future filing. -------------------------------- Response: Our analysis of the allowance for loan losses considers changes in non-accrual loans and the potential that probable loan losses will increase as economic conditions deteriorate and the underlying collateral is subjected to an elongated foreclosure process. Of the $11,750,195 in non-accrual loans as of June 30, 2005, $4,290,435 were individually identified as impaired. All of these loans are collateralized by various forms of nonresidential real estate or residential construction loans. These loans were reviewed for the likelihood of full collection based primarily on the value of the underlying collateral, and, to the extent we believed collection of loan principal was in doubt, we established specific loss reserves. Our evaluation of the underlying collateral included a consideration of the potential impact of erosion in real estate values due to poor local economic conditions and a potentially long foreclosure process. This consideration involves discounting the original appraised values of the real estate to arrive at an estimate of the net realizable value of the collateral. Through our evaluation of the underlying collateral, which includes an inspection of the property, we determined that despite difficult conditions, these loans are generally well-secured. Through this process, we established specific loss reserves related to these loans as of June 30, 2005 of $245,030. In addition, given the inherent risk related to estimating probable losses on these loans, we established reserves of 10% of the remaining balance, or $404,541. United States Securities and Exchange Commission Joyce Sweeney, Accounting Branch Chief April 12, 2006 Page 2 The remaining non-accrual loans with a balance totaling $7,459,760, represents homogeneous one-to-four family loans. These loans are subject to the classification process described in pages 7 - 8 of our Annual Report on Form 10-K. The loss allocations applied to adversely classified loans are based on our historical loss experience, adjusted for environmental factors such as local economic conditions and changes in interest rates. Additionally, the loss allocations consider the potential that the value of this collateral may erode during the foreclosure process. Through this process, we established general loss reserves for these loans of $730,976. We also establish specific reserves for these loans to the extent such losses are identifiable. As of June 30, 2005, we established specific reserves of $150,000 related to these loans. We will add this disclosure in the format presented above to future filings. 2. Comment Question: In light of the significant amount of loans more than --------------------------------------------------------------------------- 365 days past due, please tell us and in future filings please disclose the --------------------------------------------------------------------------- following: ---------- o the duration (e.g. weighted average length of time past due) ------------------------------------------------------------------ of past due status for the significant categories of impaired ------------------------------------------------------------------ loans; ------ o the extent to which the foreclosure process has been initiated for ------------------------------------------------------------------ these loans; and ---------------- o the expected amount of time between the initiation of the ------------------------------------------------------------------ foreclosure process or other court proceedings and the point at ------------------------------------------------------------------ which loans are collected, transferred to Real Estate Owned, or ------------------------------------------------------------------ charged off. ------------ Response: Impaired loans represent non-accrual loans plus accruing loans ninety or more days past due in the nonresidential real estate and residential construction loan categories. Of these 82%, or $3,518,484, are commercial real estate loans. As of June 30, 2005, foreclosure proceedings had been initiated on loans in this category with principal balances of $3,020,137. As of June 30, 2005, impaired commercial real estate loans have been past due, on average, 600 days. Foreclosure proceedings for these loans are subject to external factors, such as bankruptcy and other legal proceedings that may delay the disposition of the loan, but generally occur within a period of time ranging from 12 to 60 months from the time they are initiated until the loan is ultimately collected, transferred to Real Estate Owned, or charged-off. We will add this disclosure in the format presented above to future filings. 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 United States Securities and Exchange Commission Joyce Sweeney, Accounting Branch Chief April 12, 2006 Page 3 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 State. If you have any questions please feel free to contact the undersigned. Sincerely, PVF Capital Corp. /s/ C. Keith Swaney C. Keith Swaney President, Chief Operating Officer and Treasurer -----END PRIVACY-ENHANCED MESSAGE-----