-----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, WKoaePLlBIi6P/92cFjDb4nb3j/pY8ZsM/QvxyBQyCCrIq6lOQZBt/WR46gsBUzG G0Kk7BgR5xAozer+ykaEIA== 0000909654-09-000905.txt : 20091023 0000909654-09-000905.hdr.sgml : 20091023 20091023172708 ACCESSION NUMBER: 0000909654-09-000905 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20091019 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20091023 DATE AS OF CHANGE: 20091023 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: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-24948 FILM NUMBER: 091135205 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 8-K 1 pvfcapital8koct23-09.txt 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): October 19, 2009 PVF Capital Corp. -------------------------------------------------- (Exact Name of Registrant as Specified in Charter) Ohio 0-24948 34-1659805 - ---------------------------- ---------------------- --------------------- (State or Other Jurisdiction Commission File Number (I.R.S. Employer of Incorporation) Identification No.) 30000 Aurora Road, Solon, Ohio 44139 --------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code: (440) 248-7171 -------------- Not Applicable ------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) 2 ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT ------------------------------------------ On October 19, 2009, PVF Capital Corp. (the "Company") and its wholly owned subsidiary, Park View Federal Savings Bank (the "Bank"), each entered into a Stipulation and Consent to the Issuance of Order to Cease and Desist with the Office of Thrift Supervision (the "OTS"), whereby the Company and the Bank each consented to the issuance of an Order to Cease and Desist promulgated by the OTS without admitting or denying that grounds exist for the OTS to initiate an administrative proceeding against the Company or the Bank. The description of the Stipulation and Consent to the Issuance of Order to Cease and Desist between the Bank and the OTS and the Order to Cease and Desist for the Bank (the "Bank Order") set forth below is qualified in its entirety by reference to such Stipulation and Consent and the Bank Order, copies of which are attached hereto as Exhibits 10.1 and 10.2, respectively, and are incorporated herein by reference. The description of the Stipulation and Consent to the Issuance of Order to Cease and Desist between the Company and the OTS and the Order to Cease and Desist for the Company (the "Company Order") set forth below is qualified in its entirety by reference to such Stipulation and Consent and the Company Order, copies of which are attached hereto as Exhibits 10.3 and 10.4, respectively, and are incorporated herein by reference. The Bank Order requires the Bank to take the following actions: o by December 31, 2009, meet and maintain (i) a tier one (core) capital ratio of at least 8.0% and (ii) a total risk-based capital ratio of at least 12.0% after the funding of an adequate allowance for loan and lease losses and submit a detailed plan to accomplish this; as a result of this requirement the Bank may not be deemed to be "well-capitalized" under applicable regulations; o if the Bank fails to meet this requirement at any time after December 31, 2009, within 15 days thereafter prepare a written contingency plan detailing actions to be taken, with specific time frames, providing for (i) a merger with another federally insured depository institution or holding company thereof, or (ii) voluntary liquidation; o adopt revisions to the Bank's liquidity policy to, among other things, increase the Bank's minimum liquidity ratio; o reduce the level of adversely classified assets to no more than 50% of core capital plus allowance for loan and lease losses by December 31, 2010 and to reduce the level of adversely classified assets and assets designated as special mention to no more than 65% of core capital plus allowance for loan and lease losses by December 31, 2010; o prepare a new business plan that will include the requirements contained in the Bank Order and that also will include well supported and realistic strategies to achieve consistent profitability by September 30, 2010; 3 o restrict quarterly asset growth to an amount not to exceed net interest credited on deposit liabilities until the OTS approves of the new business plan; o cease to accept, renew or roll over any brokered deposit or act as a deposit broker, without the prior written waiver of the Federal Deposit Insurance Corporation; o not declare or pay dividends or make any other capital distributions from the Bank without receiving prior OTS approval; o not make any severance or indemnification payments without complying with regulatory requirements regarding such payments; o comply with prior regulatory notification requirements for any changes in directors or senior executive officers; o not enter into, renew, extend or revise any contractual arrangement relating to compensation or benefits for any senior executive officer or director of the Bank, without first providing 30 days prior written regulatory notice of the proposed transaction; o not increase any salaries, bonuses or director's fees to directors or senior executive officers without the prior written consent of the OTS; o not increase any salaries, bonuses or director's fees or make any other similar payments to directors or senior executive officers without the prior written non-objection of the OTS; o not enter into any arrangement or contract with a third party service provider that is significant to the overall operation or financial condition of the Bank or outside the Bank's normal course of business without prior OTS non-objection (a contract will be considered significant where the annual contract amount equals or exceeds 2% of the Bank's total capital); and o ensure compliance with regulatory requirements for affiliate and insider transactions. The Company Order contains the following requirements: o The Company must submit a capital plan that includes, among other things, (i) the establishment of a minimum tangible capital ratio of tangible equity capital to total tangible assets commensurate with the Company's consolidated risk profile, and (ii) specific plans to reduce the risks to the Company from its current debt levels and debt servicing requirements. o The Company shall not declare, make or pay any cash dividends or other capital distributions or purchase, repurchase or redeem or commit to purchase, repurchase or redeem any Company equity stock without the 4 prior non-objection of the OTS, except that this provision does not apply to immaterial capital stock redemptions that arise in the normal course of the Company's business in connection with its stock-based compensation plans. o The Company shall not incur, issue, renew, roll over or increase any debt or commit to do so without the prior non-objection of the OTS (debt includes loans, bonds, cumulative preferred stock, hybrid capital instruments such as subordinated debt or trust preferred securities, and guarantees of debt). o The Company may not engage in transactions with any subsidiary or affiliate without the prior non-objection of the OTS except certain transactions exempt under applicable regulations and intercompany cost-sharing transactions. o The Company must comply with similar restrictions on the payment of severance and indemnification payments, prior OTS approval of directorate and management changes and prior OTS approval of employment contracts and compensation arrangements contained in the Bank Order. The Bank Order and the Company Order will remain in effect until terminated, modified, or suspended in writing by the OTS. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. --------------------------------- (d) Exhibits Number Description 10.1 Stipulation and Consent to the Issuance of an Order to Cease and Desist between Park View Federal Savings Bank and the Office of Thrift Supervision 10.2 Order to Cease and Desist issued by the Office of Thrift Supervision for Park View Federal Savings Bank 10.3 Stipulation and Consent to the Issuance of an Order to Cease and Desist between PVF Capital Corp. and the Office of Thrift Supervision 10.4 Order to Cease and Desist issued by the Office of Thrift Supervision for PVF Capital Corp. 5 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. PVF CAPITAL CORP. Date: October 23, 2009 By: /s/ Robert J. King, Jr. -------------------------------------- Robert J. King, Jr. President and Chief Executive Officer EX-10.1 2 pvfexb101oct23-09.txt 1 EXHIBIT 10.1 UNITED STATES OF AMERICA BEFORE THE OFFICE OF THRIFT SUPERVISION - ------------------------------ ) In the Matter of ) Order No.: CN 09-34 ) ) PARK VIEW FEDERAL ) Effective Date: October 19, 2009 SAVINGS BANK ) ) Solon, Ohio ) OTS Docket No. 01195 ) ) - ------------------------------ STIPULATION AND CONSENT TO ISSUANCE OF ORDER TO CEASE AND DESIST ---------------------------------------------------------------- WHEREAS, the Office of Thrift Supervision (OTS), acting by and through its Regional Director for the Central Region (Regional Director), and based upon information derived from the exercise of its regulatory and supervisory responsibilities, has informed Park View Federal Savings Bank, Solon, Ohio, OTS Docket No. 01195 (Association), that the OTS is of the opinion that grounds exist to initiate an administrative proceeding against the Association pursuant to 12 U.S.C. ss. 1818(b); WHEREAS, the Regional Director, pursuant to delegated authority, is authorized to issue Orders to Cease and Desist where a savings association has consented to the issuance of an order; and WHEREAS, the Association desires to cooperate with the OTS to avoid the time and expense of such administrative cease and desist proceeding by entering into this Stipulation and Consent to the Issuance of Order to Cease and Desist (Stipulation) and, without admitting or denying that such grounds exist, but only admitting the statements and conclusions in Paragraphs 1 and 2 below concerning Jurisdiction, hereby stipulates and agrees to the following terms: Park View Federal Savings Bank Stipulation and Consent to Issuance of Order to Cease and Desist Page 1 of 6 2 JURISDICTION. - ------------- 1. The Association is a "savings association" within the meaning of 12 U.S.C. ss. 1813(b) and 12 U.S.C. ss. 1462(4). Accordingly, the Association is "an insured depository institution" as that term is defined in 12 U.S.C. ss. 1813(c). 2. Pursuant to 12 U.S.C. ss. 1813(q), the Director of OTS is the "appropriate Federal banking agency" with jurisdiction to maintain an administrative enforcement proceeding against a savings association. Therefore, the Association is subject to the authority of the OTS to initiate and maintain an administrative cease and desist proceeding against it pursuant to 12 U.S.C. ss. 1818(b). OTS FINDINGS OF FACT. - -------------------- 3. Based on its May 4, 2009 examination of the Association, the OTS finds that the Association has engaged in unsafe or unsound banking practices that resulted in operating the Association with an excessive level of adversely classified assets; an inadequate allowance for loan and lease losses (ALLL) for the volume, type, and quality of loans held; and an inadequate level of capital protection for the volume, type, and quality of assets held by the Association. CONSENT. - -------- 4. The Association consents to the issuance by the OTS of the accompanying Order to Cease and Desist (Order). The Association further agrees to comply with the terms of the Order upon the Effective Date of the Order and stipulates that the Order complies with all requirements of law. FINALITY. - --------- 5. The Order is issued by the OTS under 12 U.S.C. ss. 1818(b). Upon the Effective Date, the Order shall be a final order, effective, and fully enforceable by the OTS under the provisions of 12 U.S.C. ss. 1818(i). Park View Federal Savings Bank Stipulation and Consent to Issuance of Order to Cease and Desist Page 2 of 6 3 WAIVERS. - ------- 6. The Association waives the following: (a) the right to be served with a notice of the OTS's charges against it as provided by 12 U.S.C. ss. 1818(b) and 12 C.F.R. Part 509; (b) the right to an administrative hearing of the OTS's charges as provided by 12 U.S.C. ss. 1818(b) and 12 C.F.R. Part 509; (c) the right to seek judicial review of the Order, including, without limitation, any such right provided by 12 U.S.C. ss. 1818(h), or otherwise to the validity of the Order; and (d) any and all claims against the OTS, including its employees and agents, and any other governmental entity for the award of fees, costs, or expenses related to this OTS enforcement matter and/or the Order, whether arising under common law, federal statutes, or otherwise. OTS AUTHORITY NOT AFFECTED. - -------------------------- 7. Nothing in this Stipulation or accompanying Order shall inhibit, estop, bar, or otherwise prevent the OTS from taking any other action affecting the Association if at any time the OTS deems it appropriate to do so to fulfill the responsibilities placed upon the OTS by law. OTHER GOVERNMENTAL ACTIONS NOT AFFECTED. - --------------------------------------- 8. The Association acknowledges and agrees its consent to the issuance of the Order is solely for the purpose of resolving the matters addressed herein, consistent with Paragraph 7 above, and does not otherwise release, discharge, compromise, settle, dismiss, resolve, or in any way affect any actions, charges against, or liability of the Association that arise pursuant to this action or otherwise, and that may be or have been brought by any governmental entity other than the OTS. Park View Federal Savings Bank Stipulation and Consent to Issuance of Order to Cease and Desist Page 3 of 6 4 MISCELLANEOUS. - -------------- 9. The laws of the United States of America shall govern the construction and validity of this Stipulation and of the Order. 10 If any provision of this Stipulation and/or the Order is ruled to be invalid, illegal, or unenforceable by the decision of any Court of competent jurisdiction, the validity, legality, and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby, unless the Regional Director in his or her sole discretion determines otherwise. 11. All references to the OTS in this Stipulation and the Order shall also mean any of the OTS's predecessors, successors, and assigns. 12. The section and paragraph headings in this and the Order are for convenience only and shall not affect the interpretation of this Stipulation or the Order. 13. The terms of this Stipulation and of the Order represent the final agreement of the parties with respect to the subject matters thereof, and constitute the sole agreement of the parties with respect to such subject matters. 14. The Stipulation and Order shall remain in effect until terminated, modified, or suspended in writing by the OTS, acting through its Regional Director. SIGNATURE OF DIRECTORS/BOARD RESOLUTION. - --------------------------------------- 15. Each Director signing this Stipulation attests that he or she voted in favor of a Board Resolution authorizing the consent of the Association to the issuance of the Order and the execution of the Stipulation. This Stipulation may be executed in counterparts by the directors after approval of execution of the Stipulation at a duly called board meeting. Park View Federal Savings Bank Stipulation and Consent to Issuance of Order to Cease and Desist Page 4 of 6 5 WHEREFORE, the Association, by its directors, executes this Stipulation. Accepted by: PARK VIEW FEDERAL SAVINGS BANK OFFICE OF THRIFT SUPERVISION SOLON, OHIO By: /s/ Mark D. Grossi By: /s/ Daniel T. McKee -------------------------------- ----------------------------------- Mark D. Grossi, Chairman Daniel T. McKee Regional Director, Central Region /s/ Marty E. Adams Date: See Effective Date on page 1 -------------------------------- Marty E. Adams, Director /s/ Steven A. Calabrese -------------------------------- Steven A. Calabrese, Director /s/ Umberto P. Fedeli -------------------------------- Umberto P. Fedeli, Director /s/ Robert K. Healey -------------------------------- Robert K. Healey, Director /s/ Ronald D. Holman -------------------------------- Ronald D. Holman, II, Director /s/ Stanley T. Jaros -------------------------------- Stanley T. Jaros, Director /s/ Robert J. King -------------------------------- Robert J. King, Jr., Director Park View Federal Savings Bank Stipulation and Consent to Issuance of Order to Cease and Desist Page 5 of 6 6 /s/ John R. Male -------------------------------- John R. Male, Director /s/ Raymond J. Negrelli -------------------------------- Raymond J. Negrelli, Director /s/ Stuart D. Neidus -------------------------------- Stuart D. Neidus, Director /s/ C. Keith Swaney -------------------------------- C. Keith Swaney, Director Park View Federal Savings Bank Stipulation and Consent to Issuance of Order to Cease and Desist Page 6 of 6 EX-10.2 3 pvfexb102oct23-09.txt 1 EXHIBIT 10.2 UNITED STATES OF AMERICA BEFORE THE OFFICE OF THRIFT SUPERVISION - ----------------------------- ) In the Matter of ) Order No.: CN 09-34 ) ) PARK VIEW FEDERAL ) Effective Date: October 19, 2009 SAVINGS BANK ) ) Solon, Ohio ) OTS Docket No. 01195 ) ) - ----------------------------- ORDER TO CEASE AND DESIST ------------------------- WHEREAS, Park View Federal Savings Bank, Solon, Ohio, OTS Docket No. 01195 (Association), by and through its Board of Directors (Board), has executed a Stipulation and Consent to Issuance of an Order to Cease and Desist (Stipulation); and WHEREAS, the Association, by executing the Stipulation, has consented and agreed to the issuance of this Order to Cease and Desist (Order) by the Office of Thrift Supervision (OTS) pursuant to 12 U.S.C. ss. 1818(b); and WHEREAS, pursuant to delegated authority, the OTS Regional Director for the Central Region (Regional Director) is authorized to issue Orders to Cease and Desist where a savings association has consented to the issuance of an order. NOW, THEREFORE, IT IS ORDERED THAT: CEASE AND DESIST. 1. The Association and its directors, officers, and employees shall cease and desist from any action (alone or with others) for or toward, causing, bringing about, participating in, counseling, or aiding and Park View Federal Savings Bank Order to Cease and Desist Page 1 of 14 2 abetting all unsafe or unsound practices that resulted in the Association operating with an excessive level of adversely classified assets; an inadequate allowance for loan and lease losses (ALLL) for the volume, type, and quality of loans held; and an inadequate level of capital protection for the volume, type, and quality of assets held by the Association. CAPITAL. - -------- 2. (a) By December 31, 2009, the Association shall meet and maintain: (i) a Tier 1 (Core) Capital Ratio of at least eight percent (8%) and (ii) a Total Risk-Based Capital Ratio of at least twelve percent (12%) after the funding of an adequate ALLL. (b) The requirement in Subparagraph (a) above to meet and maintain a specific capital level means that the Association may not be deemed to be "well-capitalized" for purposes of 12 U.S.C. ss. 1831o and 12 C.F.R. Part 565, pursuant to 12 C.F.R. ss. 565.4(b) (1) (iv). 3. (a) By October 31, 2009, the Board shall adopt and submit to the Regional Director for review and comment a written plan to achieve and maintain the Association's capital levels prescribed in Paragraph 2 of this Order (Capital Plan). The Capital Plan shall cover the period beginning with the quarter ending September 31, 2009 through the quarter ending December 31, 2011. At a minimum, the Capital Plan shall: (i) address the requirements and restrictions imposed by this Order; (ii) detail capital enhancement strategies with specific narrative goals, which shall result in new equity and a capital infusion; (iii) consider and address the amount of additional capital that would be necessary to meet the capital requirements of Paragraph 2 of this Order under different forward-looking Park View Federal Savings Bank Order to Cease and Desist Page 2 of 14 3 scenarios involving progressively stressed economic environments; (iv) identify the specific sources of additional capital; (v) detail timeframes by which the additional capital will be raised and provide specific target month-end capital levels; and (vi) provide for alternative methods to strengthen capital, should the primary sources identified under Paragraph 3(a) (iv) of this Order not be available. (b) Within thirty (30) days after receiving any written comments from the Regional Director, the Board shall revise and adopt the Capital Plan based on such comments. The Board shall ensure that the Association implements and adheres to the Capital Plan. A copy of the Capital Plan shall be provided to the Regional Director within five (5) days after the Board meeting. (c) Once the Capital Plan is implemented, the Association shall operatewithin the parameters of its Capital Plan. Any proposed material deviations from or changes to the Capital Plan must be submitted for the prior, written non-objection of the Regional Director. Requests for any material deviations or changes must be submitted at least sixty (60) days before a proposed change is implemented. (d) The Association shall notify the Regional Director regarding any material event affecting or that may affect the capital or capital projections of the Association within five (5) days after such event. 4. (a) On a monthly basis, beginning with the month ending December 31, 2009, the Board shall review by the last day of each month, a written report that compares projected operating results contained within the Capital Plan to actual results for the previous month (Capital Plan Park View Federal Savings Bank Order to Cease and Desist Page 3 of 14 4 Variance Report). The Board's review of the Capital Plan Variance Report and assessment of the Association's compliance with the Capital Plan shall be fully documented in the appropriate Board meeting minutes. (b) On a monthly basis, beginning with December 31, 2009, the Board shall provide to the Regional Director, by the 30th day of each succeeding month, a copy of the Capital Plan Variance Report. 5. Within fifteen (15) days after: (a) the Association fails to meet the capital requirements prescribed in Paragraph 2 beginning December 31, 2009; (b) the Association fails to comply with the Capital Plan prescribed in Paragraph 3; or (c) any written request from the Regional Director, the Board shall prepare and submit a written Contingency Plan that is acceptable to the Regional Director. The Contingency Plan shall detail the actions to be taken, with specific time frames, to achieve one of the following results by the later of the date of receipt of all required regulatory approvals or sixty (60) days after the implementation of the Contingency Plan: (i) merger with, or acquisition by another federally insured depository institution or holding company thereof; or (ii) voluntary liquidation by filing an appropriate application with OTS in conformity with federal laws and regulations. 6. Upon receipt of written notification from the Regional Director, the Association shall implement the Contingency Plan immediately. The Board shall provide the Regional Director with written status reports detailing the Association's progress in implementing the Contingency Plan by no later than the 1st and 15th of each calendar month following implementation of the Contingency Plan (Contingency Status Reports). Park View Federal Savings Bank Order to Cease and Desist Page 4 of 14 5 LIQUIDITY. - ---------- 7. (a) Within sixty (60) days, the Board shall adopt revisions to the Association's Liquidity Policy, which, at a minimum, shall include: (i) separate ratios and target limits for on-balance sheet liquid assets; (ii) an increase in the Association's minimum liquidity ratio; (iii) management of liquidity in accordance with OTS Thrift Bulletin 77 and OTS Examination Handbook ss. 530; (iv) periodic stress testing of the availability of all funding sources under specific scenarios and various market conditions; (v) compliance with Paragraph 16 of this Order regarding the restrictions on brokered deposits, including, but not limited to the monitoring of interest rates paid on deposits for compliance with 12 C.F.R. ss. 337.6; and (vi) Board oversight of the Association's liquidity needs and available sources of liquidity, including a requirement that the Regional Director be notified immediately of any event that would limit the Association's funding sources or available liquidityamounts. (b) The Association shall provide a copy of the Liquidity Policy to the Regional Director within five (5) days of Board approval. ASSET QUALITY. - ------------- 8. (a) Within forty-five (45) days, the Board shall adopt a schedule of quarterly reduction targets which: (i) reduces the level of adversely classified assets at the Association to no more than 50% of core capital plus ALLL by December 31, 2010; and (ii) reduces the level of adversely Park View Federal Savings Bank Order to Cease and Desist Page 5 of 14 6 classified assets and assets designated as special mention at the Association (Criticized Assets) to no more than sixty-five percent (65%) of core capital plus ALLL by December 31, 2010. The Board shall send a copy of the reduction targets implemented by the Board to the Regional Director within seven (7) days of Board approval. (b) On a quarterly basis, beginning with the quarter ending December 31, 2009, the Board shall review a written report comparing the projected reduction targets to actual results (Problem Assets Variance Report). If the Board determines that a material deviation exists between a quarterly reduction target and actual results, it shall approve a Board resolution directing specific remediation steps to achieve compliance with the reduction targets by the following quarter. The Board's review of the quarterly Problem Assets Variance Report shall be fully documented in the Board minutes. (c) Within sixty (60) days of the close of each quarter, the Board shall provide the Regional Director with a copy of the Problem Assets Variance Report. 9. Withinthirty (30) days, the Board shall revise the Association's ALLL methodologies and policies taking into account the methodology revisions contained in the Matters Requiring Board Attention section of the OTS Report of Examination dated May 4, 2009. BUSINESS PLAN. - ------------- 10. (a) Within sixty (60) days, the Board shall adopt and submit to the Regional Director for review and comment a comprehensive business plan for the period beginning with the quarter ending September 30, 2009 through the quarter ending December 31, 2011 (Business Plan). At a minimum, the Business Plan shall include the requirements contained within this Order and shall include: (i) well supported and realistic strategies to achieve consistent profitability by September 30, 2010; Park View Federal Savings Bank Order to Cease and Desist Page 6 of 14 7 (ii) the maintenance of capital levels required by Paragraph 2 of this Order; (iii) the Liquidity Policy revisions provided for in Paragraph 7 of this Order; (iv) strategies to stress-test and adjust earnings forecasts based on continuing operating results, economic conditions and credit quality of the loan portfolio; and (vi) quarterly pro forma balance sheets and income statements for the period beginning with the quarter ending September 30, 2009 through the quarter ending December 31, 2011. (b) The Business Plan shall include all assumptions used in the pro formas, such as: (i) the assumed interest rate scenarios; (ii) assumptions used for noninterest income and noninterest expense; (iii) assumptions used to determine the ALLL; (iv) assumptions for loan origination rates, using recent experience and taking into consideration current national and regional economic conditions; and (v) assumptions supporting the cost of funds projections. (c) Within thirty (30) days after receiving the Regional Director's written comments, the Board shall revise and adopt the Business Plan based on such comments. Thereafter, the Association shall implement and comply with the Business Plan. Within five (5) days of Board approval of the Business Plan, the Association shall provide a copy of the adopted Business Plan to the Regional Director. (d) Once the Business Plan is implemented, the Association shall operate within the parameters of its Business Plan. Any proposed material deviations from or changes to the Business Plan must be submitted for the prior, written non-objection of the Regional Director. Requests for Park View Federal Savings Bank Order to Cease and Desist Page 7 of 14 8 any material deviations or changes must be submitted at least sixty (60) days before a proposed change is implemented. (e) The Association shall notify the Regional Director regarding any material event affecting or that may affect the balance sheet, capital, or the cash flow of the Association within five (5) business days after such event. 11. (a) On a quarterly basis, beginning with the quarter ending December 31, 2009, the Association shall prepare and submit to the Board a report that compares projected operating results contained within the Business Plan to actual results (Business Plan Variance Report). The Board shall review each Business Plan Variance Report and address external and internal risks that may affect the Association's ability to successfully implement the Business Plan. This review shall include, but not be limited to, adverse scenarios relating to asset or liability mixes, interest rates, staffing levels and expertise, operating expenses, marketing costs, and economic conditions in the markets in which the Association is operating. The Board shall discuss and approve corrective actions, if needed, to ensure the Association's adherence to its Business Plan. The Board's review of the Business Plan Variance Report and assessment of the Association's compliance with the Business Plan shall be fully documented in the appropriate Board meeting minutes. (b) Within sixty (60) days after the close of each quarter beginning with the quarter ending December 31, 2009, the Board shall provide the Regional Director with a copy of each Business Plan Variance Report. Park View Federal Savings Bank Order to Cease and Desist Page 8 of 14 9 COMPLIANCE COMMITTEE AND PROGRESS REPORTS. - ----------------------------------------- 12. Within thirty (30) days, the Board shall appoint a committee of three (3) or more directors to monitor and coordinate the Association's compliance with the Order (Compliance Committee). The Compliance Committee may be an existing Board Committee that meets the criteria of this provision. The Committee shall be comprised of independent(1) directors. 13. Within forty-five (45) days of the end of each quarter, beginning with the quarter ending December 31, 2009, the Compliance Committee shall provide a written progress report to the Board, describing the actions taken by the Association to comply with each provision of this Order and the results of those actions. The Board's consideration of the Compliance Committee's progress report for the period, including comments and questions concerning the progress report and additional actions taken or directed by the Board, shall be reflected in the minutes of the Board's meetings. 14. Within sixty (60) days of the end of each quarter beginning with the quarter ending December 31, 2009, a copy of the progress report for the period with any revisions or comments by the Board shall be provided to the Regional Director. GROWTH. - ------- 15. Effective immediately, the Association is subject to and shall comply with the requirements and provisions of OTS Regulatory Bulletin 3b. Without the prior written approval of the Regional Director, the Association shall not increase its total assets during any quarter beginning with the quarter ending December 31, 2009 in excess of an amount equal to net interest credited on - ------------- (1) For this purpose the term "independent" means that the director is not: (1) a current or former officer or employee of the Association or of an affiliate or service provider of the Association; (2) a member of the immediate family (defined in 12 C.F.R. ss. 561.24) of a director, officer or employee of the Association or its affiliates; (3) a controlling person of the Association as defined in 12 C.F.R. ss. 561.14; (4) a borrower or obligor on any outstanding extension of credit from the Association except for loans secured by a lien on the borrower's primary residence, and (5) and has not served as a consultant, advisor, underwriter, or legal counsel to the Association or its affiliates. Park View Federal Savings Bank Order to Cease and Desist Page 9 of 14 10 deposit liabilities during the quarter. The growth restrictions imposed by this Paragraph shall remain in effect until the Regional Director reviews and approves the Association's Business Plan as required under Paragraph 10 of this Order. Any growth in assets, including any growth proposed in the Business Plan, should consider: (a) the source, volatility and use of the funds that support asset growth; (b) any increase in credit risk or interest rate risk as a result of growth; and (c) the effect of such growth on the Association's capital. BROKERED DEPOSITS AND INTEREST RATE RESTRICTION. - ----------------------------------------------- 16. Effective immediately, the Association shall comply with the requirements of 12 C.F.R. ss. 337.6(b) and shall not, without obtaining the prior written waiver of the Federal Deposit Insurance Corporation (FDIC) pursuant to 12 C.F.R. ss. 337.6(c): (a) accept, renew or roll over any brokered deposit, as that term is defined at 12 C.F.R. ss. 337.6(a)(2); or (b) act as a deposit broker, as that term is defined at 12 C.F.R. ss. 337.6(a)(5). DIVIDENDS. - --------- 17. Effective immediately, the Board shall not declare or pay dividends or make any other capital distributions, as that term is defined in 12 C.F.R. ss. 563.141, without receiving the prior written approval of the Regional Director. The Association's written request for written approval should be submitted to the Regional Director at least sixty (60) days prior to the anticipated date of the proposed dividend or distribution of capital. Park View Federal Savings Bank Order to Cease and Desist Page 10 of 14 11 SEVERANCE AND INDEMNIFICATION PAYMENTS. - -------------------------------------- 18. Effective immediately, the Association shall not make any golden parachute payment(2) or any prohibited indemnification payment(3) unless, with respect to each such payment, the Association has complied with the requirements of 12 C.F.R. Part 359 and, as to indemnification payments, 12 C.F.R. ss. 545.121. DIRECTORATE AND MANAGEMENT CHANGES. - ---------------------------------- 19. Effective immediately, the Association shall comply with the prior notification requirements for changes in directors and Senior Executive Officers(4) set forth in 12 C.F.R. Part 563, Subpart H. EMPLOYMENT CONTRACTS AND COMPENSATION ARRANGEMENTS. - -------------------------------------------------- 20. (a) Effective immediately, the Association shall not enter into, renew, extend, or revise any contractual arrangement relating to compensation or benefits for any Senior Executive Officer or director of the Association, unless it first provides the Regional Director with not less than thirty (30) days prior written notice of the proposed transaction. The notice to the Regional Director shall include a copy of the proposed employment contract or compensation arrangement or a detailed, written description of the compensation arrangement to be offered to such officer or director, including all benefits and perquisites. The Board shall ensure that any contract, agreement, or arrangement submitted to the Regional Director fully complies with the requirements of 12 C.F.R. Part 359, 12 C.F.R. ss.ss. 563.39 and 563.161(b), and 12 C.F.R. Part 570 - Appendix A. - ----------------- (2) The term "golden parachute payment" is defined at 12 CFR ss. 359.1(f). (3) The term "prohibited indemnification payment" is defined at 12 CFR ss. 359.1 (l). (4) The term "Senior Executive Officer" is defined at 12 C.F.R. ss. 563.555. Park View Federal Savings Bank Order to Cease and Desist Page 11 of 14 12 (b) Effective immediately, the Association shall not increase any salaries, bonuses, or director's fees or make any other similar payments, directly or indirectly, to the Association's directors or Senior Executive Officers without prior written non-objection from the Regional Director. THIRD PARTY CONTRACTS. - --------------------- 21. Effective immediately, the Association shall not enter into any arrangement or contract with a third party service provider that is significant to the overall operation or financial condition of the Association(5) or outside the Association's normal course of business unless, with respect to each such contract, the Association has: (a) provided the Regional Director with a minimum of thirty (30) days prior written notice of such arrangement or contract; (b) determined that the arrangement or contract complies with the standards and guidelines set forth in OTS Thrift Bulletin 82a; and (c) received written notice of non-objection from the Regional Director. TRANSACTIONS WITH AFFILIATES. - ---------------------------- 22. Effective immediately, the Association shall not engage in any transaction with an affiliate unless, with respect to each such transaction, the Association has complied with the notice requirements set forth in 12 C.F.R. ss. 563.41(c)(4), which shall include the information set forth in 12 C.F.R. ss. 563.41(c)(3). The Board shall ensure that all transactions with an affiliate for which a notice is submitted pursuant to this Paragraph of the Order shall comply with the requirements of 12 C.F.R. ss. 563.41 and 12 C.F.R. Part 223. EFFECTIVE DATE, INCORPORATION OF STIPULATION. - -------------------------------------------- 23. This Order is effective on the Effective Date as shown on the first page. The Stipulation is made a part hereof and is incorporated herein by this reference. - ----------------------- (5) A contract will be considered significant to the overall operation or financial condition of the Association where the annual contract amount equals or exceeds two percent (2%) of the Association's total capital. Park View Federal Savings Bank Order to Cease and Desist Page 12 of 14 13 DURATION. - -------- 24. This Order shall remain in effect until terminated, modified, or suspended, by written notice of such action by the OTS, acting by and through its authorized representatives. TIME CALCULATIONS. - ----------------- 25. Calculation of time limitations for compliance with the terms of this Order run from the Effective Date and shall be based on calendar days, unless otherwise noted. 26. The Regional Director may extend any of the deadlines set forth in the provisions of this Order upon written request by the Association that includes reasons in support for any such extension. Any OTS extension shall be made in writing. SUBMISSIONS AND NOTICES. - ----------------------- 27. All submissions, including any reports, to the OTS that are required by or contemplated by this Order shall be submitted within the specified timeframes. 28. Except as otherwise provided herein, all submissions, requests, communications, consents, or other documents relating to this Order shall be in writing and sent by first class U.S. mail (or by reputable overnight carrier, electronic facsimile transmission, or hand delivery by messenger) addressed as follows: (a) TO THE OTS: Regional Director Office of Thrift Supervision One South Wacker Drive, Suite 2000 Chicago, Illinois 60606 Facsimile: (312) 917-5001 Park View Federal Savings Bank Order to Cease and Desist Page 13 of 14 14 (b) TO THE ASSOCIATION: Chairman of the Board Park View Federal Savings Bank 30000 Aurora Road Solon, Ohio 44139-2728 Facsimile: (440) 914-3916 NO VIOLATIONS AUTHORIZED. - ------------------------ 29. Nothing in this Order or the Stipulation shall be construed as allowing the Association, its Board, officers, or employees to violate any law, rule, or regulation. IT IS SO ORDERED. OFFICE OF THRIFT SUPERVISION By: /s/ Daniel T. McKee ------------------------------------ Daniel T. McKee Regional Director, Central Region Date: See Effective Date on page 1 Park View Federal Savings Bank Order to Cease and Desist Page 14 of 14 EX-10.3 4 pvfexb103oct23-09.txt 1 EXHIBIT 10.3 UNITED STATES OF AMERICA BEFORE THE OFFICE OF THRIFT SUPERVISION - ------------------------------------ ) In the Matter of ) Order No.: CN 09-35 ) ) PVF CAPITAL CORP. ) Effective Date: October 19, 2009 ) Solon, Ohio ) OTS Docket No. H1810 ) ) - ------------------------------------ STIPULATION AND CONSENT TO ISSUANCE OF ORDER TO CEASE AND DESIST ----------------------------------------------------------------- WHEREAS, the Office of Thrift Supervision (OTS), acting by and through its Regional Director for the Central Region (Regional Director), and based upon information derived from the exercise of its regulatory and supervisory responsibilities, has informed PVF Capital Corp., Solon, Ohio, OTS Docket No. H1810 (Holding Company) that the OTS is of the opinion that grounds exist to initiate an administrative proceeding against the Holding Company pursuant to 12 U.S.C. ss. 1818(b); WHEREAS, the Regional Director, pursuant to delegated authority, is authorized to issue Orders to Cease and Desist where a savings and loan holding company has consented to the issuance of an order; and WHEREAS, the Holding Company desires to cooperate with the OTS to avoid the time and expense of such administrative cease and desist proceeding by entering into this Stipulation and Consent to the Issuance of Order to Cease and Desist (Stipulation) and, without admitting or denying that such grounds exist, but only admitting the statements and conclusions in Paragraphs 1 - 3 below concerning Jurisdiction, hereby stipulates and agrees to the following terms: PVF Capital Corp. Stipulation and Consent to Issuance of Order to Cease and Desist Page 1 of 6 JURISDICTION. - ------------- 1. The Holding Company is a "savings and loan holding company" within the meaning of 12 U.S.C. ss. 1813(w)(3) and 12 U.S.C. ss. 1467a. Accordingly, the Holding Company is a "depository institution holding company" as that term is defined in 12 U.S.C. ss. 1813(w)(1). 2. Pursuant to 12 U.S.C. ss. 1818(b)(9), the "appropriate Federal banking agency" may initiate a cease and desist proceeding against a savings and loan holding company in the same manner and to the same extent as a savings association for regulatory violations and unsafe or unsound acts or practices. 3. Pursuant to 12 U.S.C. ss. 1813(q), the Director of OTS is the "appropriate Federal banking agency" with jurisdiction to maintain an administrative enforcement proceeding against a savings and loan holding company. Therefore, the Holding Company is subject to the authority of the OTS to initiate and maintain an administrative cease and desist proceeding against it pursuant to 12 U.S.C. ss. 1818(b). OTS FINDINGS OF FACT. - -------------------- 4. Based on its May 12, 2009 examination of the Holding Company, the OTS finds that the Holding Company engaged in unsafe or unsound practices that resulted in operating the Holding Company with an inadequate level of capital protection for the volume, type, and quality of assets held by the consolidated Holding Company. CONSENT. - ------- 5. The Holding Company consents to the issuance by the OTS of the accompanying Order to Cease and Desist (Order). The Holding Company further agrees to comply with the terms of the Order upon the Effective Date of the Order and stipulates that the Order complies with all requirements of law. PVF Capital Corp. Stipulation and Consent to Issuance of Order to Cease and Desist Page 2 of 6 FINALITY. - --------- 6. The Order is issued by the OTS under 12 U.S.C. ss. 1818(b). Upon the Effective Date, the Order shall be a final order, effective, and fully enforceable by the OTS under the provisions of 12 U.S.C. ss. 1818(i). WAIVERS. - ------- 7. The Holding Company waives the following: (a) the right to be served with a written notice of the OTS's charges against it as provided by 12 U.S.C. ss. 1818(b) and 12 C.F.R. Part 509; (b) the right to an administrative hearing of the OTS's charges as provided by 12 U.S.C. ss. 1818(b) and 12 C.F.R. Part 509; (c) the right to seek judicial review of the Order, including, without limitation, any such right provided by 12 U.S.C. ss. 1818(h), or otherwise to challenge the validity of the Order; and (d) any and all claims against the OTS, including its employees and agents, and any other governmental entity for the award of fees, costs, or expenses related to this OTS enforcement matter and/or the Order, whether arising under common law, federal statutes, or otherwise. OTS AUTHORITY NOT AFFECTED. 8. Nothing in this Stipulation or accompanying Order shall inhibit, estop, bar, or otherwise prevent the OTS from taking any other action affecting the Holding Company if, at any time, the OTS deems it appropriate to do so to fulfill the responsibilities placed upon the OTS by law. PVF Capital Corp. Stipulation and Consent to Issuance of Order to Cease and Desist Page 3 of 6 OTHER GOVERNMENTAL ACTIONS NOT AFFECTED. - --------------------------------------- 9. The Holding Company acknowledges and agrees that its consent to the issuance of the Order is solely for the purpose of resolving the matters addressed herein, consistent with Paragraph 8 above, and does not otherwise release, discharge, compromise, settle, dismiss, resolve, or in any way affect any actions, charges against, or liability of the Holding Company that arise pursuant to this action or otherwise, and that may be or have been brought by any governmental entity other than the OTS. MISCELLANEOUS. - -------------- 10. The laws of the United States of America shall govern the construction and validity of this Stipulation and of the Order. 11. If any provision of this Stipulation and/or the Order is ruled to be invalid, illegal, or unenforceable by the decision of any Court of competent jurisdiction, the validity, legality, and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby, unless the Regional Director in his or her sole discretion determines otherwise. 12. All references to the OTS in this Stipulation and the Order shall also mean any of the OTS's predecessors, successors, and assigns. 13. The section and paragraph headings in this Stipulation and the Order are for convenience only and shall not affect the interpretation of this Stipulation or the Order. 14. The terms of this Stipulation and of the Order represent the final agreement of the parties with respect to the subject matters thereof, and constitute the sole agreement of the parties with respect to such subject matters. 15. The Stipulation and Order shall remain in effect until terminated, modified, or suspended in writing by the OTS, acting through its Regional Director or other authorized representative. PVF Capital Corp. Stipulation and Consent to Issuance of Order to Cease and Desist Page 4 of 6 SIGNATURE OF DIRECTORS/BOARD RESOLUTION. - --------------------------------------- 16. Each Director signing this Stipulation attests that he or she voted in favor of a Board Resolution authorizing the consent of the Holding Company to the issuance of the Order and the execution of the Stipulation. This Stipulation may be executed in counterparts by the directors after approval of the execution of the Stipulation at a duly called board meeting. WHEREFORE, the Holding Company, by its directors, executes this Stipulation. Accepted by: PVF CAPITAL CORP. OFFICE OF THRIFT SUPERVISION SOLON, OHIO By: /s/ Mark D. Grossi By: /s/ Daniel T. McKee -------------------------------- ----------------------------------- Mark D. Grossi, Chairman Daniel T. McKee Regional Director, Central Region /s/ Marty E. Adams Date: See Effective Date on page 1 -------------------------------- Marty E. Adams, Director /s/ Steven A. Calabrese -------------------------------- Steven A. Calabrese, Director /s/ Umberto P. Fedeli -------------------------------- Umberto P. Fedeli, Director /s/ Robert K. Healey -------------------------------- Robert K. Healey, Director /s/ Ronald D. Holman -------------------------------- Ronald D. Holman, II, Director /s/ Stanley T. Jaros -------------------------------- Stanley T. Jaros, Director PVF Capital Corp. Stipulation and Consent to Issuance of Order to Cease and Desist Page 5 of 6 6 /s/ Robert J. King -------------------------------- Robert J. King, Jr., Director /s/ John R. Male -------------------------------- John R. Male, Director /s/ Raymond J. Negrelli -------------------------------- Raymond J. Negrelli, Director /s/ Stuart D. Neidus -------------------------------- Stuart D. Neidus, Director /s/ C. Keith Swaney -------------------------------- C. Keith Swaney, Director PVF Capital Corp. Stipulation and Consent to Issuance of Order to Cease and Desist Page 6 of 6 EX-10.4 5 pvfexb104oct23-09.txt 1 EXHIBIT 10.4 UNITED STATES OF AMERICA BEFORE THE OFFICE OF THRIFT SUPERVISION - ------------------------------------ ) In the Matter of ) Order No.: CN 09-35 ) ) PVF CAPITAL CORP. ) Effective Date: October 19, 2009 ) Solon, Ohio ) OTS Docket No. H1810 ) ) - ------------------------------------ ORDER TO CEASE AND DESIST ------------------------- WHEREAS, PVF Capital Corp., Solon, Ohio, OTS Docket No. H1810 (Holding Company), by and through its Board of Directors (Board), has executed a Stipulation and Consent to Issuance of an Order to Cease and Desist (Stipulation); and WHEREAS, the Holding Company, by executing the Stipulation, has consented and agreed to the issuance of this Order to Cease and Desist (Order) by the Office of Thrift Supervision (OTS) pursuant to 12 U.S.C. ss. 1818(b); and WHEREAS, pursuant to delegated authority, the OTS Regional Director for the Central Region (Regional Director) is authorized to issue Orders to Cease and Desist where a savings and loan holding company has consented to the issuance of an order. NOW, THEREFORE, IT IS ORDERED THAT: CEASE AND DESIST. - ---------------- 1. The Holding Company and its directors, officers, employees, and agents shall cease and desist from any action (alone or with another or others) for or PVF Capital Corp. Order to Cease and Desist Page 1 of 9 2 toward causing, bringing about, participating in, counseling or the aiding and abetting in the unsafe or unsound practices that resulted in operating the Holding Company with an inadequate level of capital protection for the volume, type, and quality of assets held by the consolidated Holding Company. CAPITAL PLAN. - ------------ 2. (a) By October 31, 2009, the Board shall adopt and submit to the Regional Director, for review and comment, a detailed written plan for enhancing the consolidated capital and earnings of the Holding Company (Capital Plan). The Capital Plan shall cover the period beginning with the quarter ending September 30, 2009 through the quarter ending December 31, 2011. At a minimum, the Capital Plan shall include: (i) establishment of a minimum tangible capital ratio of tangible equity capital to total tangible assets commensurate with the Holding Company's consolidated risk profile; (ii) specific plans to reduce the risks to the Holding Company from its current debt levels and debt servicing requirements; (iii) operating strategies to achieve net income levels that will result in profitability and adequate debt service throughout the term of the Capital Plan; (iv) quarterly cash flow projections for the Holding Company on a stand alone basis through calendar year-end December 31, 2011 that identify both the sources of funds and the expected uses of funds ithout reliance on dividends from the Holding Company's wholly-owned savings association; (v) detailed quarterly pro forma consolidated and unconsolidated Holding Company balance sheets and income statements for the period beginning with the quarter ending September 30, 2009 through the quarter ending December 31, 2011 that reflect maintenance throughout PVF Capital Corp. Order to Cease and Desist Page 2 of 9 3 the period of the Board established minimum tangible equity capital ratio; (vi) detailed scenarios to stress-test the consolidated minimum capital targets based on continuing operating results, economic conditions and risk profile of consolidated assets; and (vii) detailed descriptions of all relevant assumptions and projections and the supporting documentation for all relevant assumptions and projections. (b) Within thirty (30) days after receiving written comments, if any, from the Regional Director, the Board shall revise and adopt the Capital Plan based upon such comments. Immediately thereafter, the Holding Company shall implement and comply with the Capital Plan. Within five (5) days of Board approval of the Capital Plan, the Holding Company shall send a copy of the Capital Plan to the Regional Director. (c) Once the Capital Plan is implemented, the Holding Company shall operate within the parameters of its Capital Plan. Any proposed material deviations from or changes to the Capital Plan shall be submitted for the prior, written non-objection of the Regional Director. Requests for any material deviations or changes must be submitted at least thirty (30) days before a proposed deviation or change is implemented. (d) The Holding Company shall notify the Regional Director regarding any material event affecting or that may affect the balance sheet, capital, or the cash flow of the Holding Company within five (5) business days after such event. 3. (a) On a quarterly basis, beginning with the quarter ending December 31, 2009, the Board shall review a written report that compares projected operating results contained within the Capital Plan to actual results (Capital Plan Variance Report). The Board shall review each PVF Capital Corp. Order to Cease and Desist Page 3 of 9 4 Capital Plan Variance Report and address external and internal risks that may affect the Holding Company's ability to successfully implement the Capital Plan. This review shall include, but not be limited to, adverse scenarios relating to asset or liability mixes, interest rates, staffing levels and expertise, operating expenses, marketing costs, and economic conditions in the markets where the Holding Company is operating. The Board's review of each Capital Plan Variance Report and assessment of the Holding Company's compliance with the Capital Plan shall be fully documented in the appropriate Board meeting minutes. (b) Within sixty (60) days after the close of each quarter beginning with the quarter ending December 31, 2009, the Board shall provide the Regional Director with a copy of each Capital Plan Variance Report. DIVIDENDS. - --------- 4. Effective immediately, the Holding Company shall not declare, make, or pay any cash dividends or other capital distributions or purchase, repurchase or redeem or commit to purchase, repurchase, or redeem any Holding Company equity stock without the prior written non-objection of the Regional Director. This provision shall not apply to immaterial capital stock redemptions that arise in the normal course of the Holding Company's business in connection with its stock-based compensation plans. The Holding Company shall submit its written request for non-objection to the Regional Director at least forty-five (45) days prior to the anticipated date of the proposed dividend, capital distribution, or stock transaction. The written request for such notice of non-objection shall: (a) contain current and pro forma projections regarding the Holding Company's capital, asset quality, and earnings; and (b) address compliance with the Capital Plan required by Paragraph 2 of this Order. PVF Capital Corp. Order to Cease and Desist Page 4 of 9 5 DEBT RESTRICTIONS. - ----------------- 5. Effective immediately, the Holding Company shall not, directly or indirectly, incur, issue, renew, roll over, or increase any debt or commit to do so without the prior written non-objection of the Regional Director. The Holding Company shall submit its written request for non-objection to the Regional Director at least forty-five (45) days prior to the anticipated date of the proposed debt transaction. The Holding Company's written requests for Regional Director non-objection to engage in such debt transactions, at a minimum, shall: (a) describe the purpose of the proposed debt; (b) set forth and analyze the terms of the proposed debt and covenants; (c) analyze the Holding Company's current cash flow resources available to satisfy such debt repayment; and (d) set forth the anticipated source(s) of repayment of the proposed debt. For purposes of this Paragraph of the Order, the term "debt" includes, but is not limited to loans, bonds, cumulative preferred stock, hybrid capital instruments such as subordinated debt or trust preferred securities, and guarantees of debt. For purposes of this Paragraph of the Order, the term "debt" does not include liabilities incurred in the ordinary course of business to acquire goods and services and that are normally recorded as accounts payable under generally accepted accounting principles. TRANSACTIONS WITH AFFILIATES. - ---------------------------- 6. Effective immediately, the Holding Company shall not engage in transactions with any subsidiary or affiliate without the prior written non-objection of the Regional Director, except: (a) exempt transactions under 12 C.F.R. Part 223; and (b) intercompany cost-sharing transactions identified in executed written agreements between the parties. The Holding Company shall provide thirty (30) days advance written notice to the Regional Director of any proposed affiliate transaction and shall include a full description of the transaction. PVF Capital Corp. Order to Cease and Desist Page 5 of 9 6 SEVERANCE AND INDEMNIFICATION PAYMENTS. - -------------------------------------- 7. Effective immediately, the Holding Company shall not make any golden parachute payment(1) or any prohibited indemnification payment(2) unless, with respect to each such payment, the Holding Company has complied with the requirements of 12 C.F.R. Part 359. DIRECTORATE AND MANAGEMENT CHANGES. - ---------------------------------- 8. Effective immediately, the Holding Company shall comply with the prior notification requirements for changes in directors and Senior Executive Officers(3) set forth in 12 C.F.R. Part 563, Subpart H. EMPLOYMENT CONTRACTS AND COMPENSATION ARRANGEMENTS. - -------------------------------------------------- 9. Effective immediately, the Holding Company shall not enter into, renew, extend, or revise any contractual arrangement related to compensation or benefits with any director or Senior Executive Officer of the Holding Company, unless it first provides the Regional Director with not less than thirty (30) days prior written notice of the proposed transaction. The notice to the Regional Director shall include a copy of the proposed employment contract or compensation arrangement, or a detailed written description of the compensation arrangement to be offered to such director or officer, including all benefits and perquisites. The Board shall ensure that any contract, agreement, or arrangement submitted to the Regional Director fully complies with the requirements of 12 C.F.R. Part 359. COMPLIANCE COMMITTEE AND PROGRESS REPORTS. - ----------------------------------------- 10. Within thirty (30) days, the Board shall appoint a committee of three (3) or more directors to monitor and coordinate the Holding Company's compliance with the Order (Compliance Committee). The Compliance Committee may be an existing - ----------------------- (1) The term "golden parachute payment" is defined at 12 C.F.R. ss. 359.1(f). (2) The term "prohibited indemnification payment" is defined at 12 C.F.R. ss. 359.1(l). (3) The term "Senior Executive Officer" is defined at 12 C.F.R. ss. 563.555. PVF Capital Corp. Order to Cease and Desist Page 6 of 9 7 Board Committee that meets the criteria of this provision. The Committee shall be comprised of independent(4) directors. 11. Within forty-five (45) days of the end of each quarter beginning with the quarter ending December 31, 2009, the Compliance Committee shall provide a written progress report to the Board, describing the actions taken by the Holding Company to comply with each provision of this Order and the results of those actions. The Board's consideration of the Compliance Committee's progress report for the period, including comments and questions concerning the progress report and additional actions taken or directed by the Board, shall be reflected in the minutes of the Board's meetings. 12. Within sixty (60) days of the end of each quarter, beginning with the quarter ending December 31, 2009, a copy of the progress report for the period with any revisions or comments by the Board shall be provided to the Regional Director. EFFECTIVE DATE, INCORPORATION OF STIPULATION. - -------------------------------------------- 13. This Order is effective on the Effective Date as shown on the first page. The Stipulation is made a part hereof and is incorporated herein by this reference. DURATION. - -------- 14. This Order shall remain in effect until terminated, modified, or suspended by written notice of such action by the OTS, acting by and through its authorized representatives. - -------------------- (4) For this purpose the term "independent" means that the director is not: (1) a current or former officer or employee of the Holding Company or of an affiliate or service provider of the Holding Company; (2) a member of the immediate family (defined in 12 C.F.R. ss. 561.24) of a director, officer or employee of the Holding Company or its affiliates; (3) a controlling person of the Holding Company as defined in 12 C.F.R. ss. 561.14; (4) does not have outstanding extensions of credit from the Holding Company or its affiliates except for loans secured by a lien on the borrower's primary residence, and (5) and has not served as a consultant, advisor, service provider, underwriter, or legal counsel to the Holding Company or its affiliates. PVF Capital Corp. Order to Cease and Desist Page 7 of 9 8 TIME CALCULATIONS. - ----------------- 15. Calculation of time limitations for compliance with the terms of this Order run from the Effective Date and shall be based on calendar days, unless otherwise noted. 16. The Regional Director, or an OTS authorized representative, may extend any of the deadlines set forth in the provisions of this Order upon written request by the Holding Company that includes reasons in support for any such extension. Any OTS extension shall be made in writing. SUBMISSIONS AND NOTICES. - ----------------------- 17. All submissions, including any reports, to the OTS that are required by or contemplated by this Order shall be submitted within the specified timeframes. 18. Except as otherwise provided herein, all submissions, requests, communications, consents, or other documents relating to this Order shall be in writing and sent by first class U.S. mail (or by reputable overnight carrier, electronic facsimile transmission, or hand delivery by messenger) addressed as follows: (a) TO THE OTS: Regional Director Office of Thrift Supervision One South Wacker Drive, Suite 2000 Chicago, Illinois 60606 Facsimile: (312) 917-5001 (b) TO THE HOLDING COMPANY: Chairman of the Board PVF Capital Corp. 30000 Aurora Road Solon, Ohio 44139-2728 Facsimile: (440) 914-3916 PVF Capital Corp. Order to Cease and Desist Page 8 of 9 9 NO VIOLATIONS AUTHORIZED. - ------------------------ 19. Nothing in this Order or the Stipulation shall be construed as allowing the Holding Company, its Board, officers, or employees to violate any law, rule, or regulation. IT IS SO ORDERED. OFFICE OF THRIFT SUPERVISION By: /s/ Daniel T. McKee ------------------------------------ Daniel T. McKee Regional Director, Central Region Date: See Effective Date on page 1 -----END PRIVACY-ENHANCED MESSAGE-----