UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

þ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended December 31, 2009.

o 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 þ                      NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES o                      NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer o	Accelerated filer o	Non-accelerated filer o	Smaller Reporting Company þ
	(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES o                      NO þ

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	7,979,120
(Class)	(Outstanding at January 27, 2010)

PVF CAPITAL CORP.

INDEX

	Page
Part I Financial Information
Item 1 Financial Statements
Consolidated Statements of Financial Condition, December 31, 2009 (unaudited) and June 30, 2009		1
Consolidated Statements of Operations for the three and six months ended December 31, 2009 and 2008 (unaudited)		2
Consolidated Statements of Cash Flows for the six months ended December 31, 2009 and 2008 (unaudited)		3
Notes to Consolidated Financial Statements (unaudited)		4
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations		21
Item 3 Quantitative and Qualitative Disclosures About Market Risk		33
Item 4 Controls and Procedures		34
Part II Other Information		34
Item 1 Legal Proceedings		34
Item 1A Risk Factors		34
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds		43
Item 3 Defaults Upon Senior Securities		43
Item 4 Submission of Matters to a Vote of Security Holders		43
Item 5 Other Information		43
Item 6 Exhibits		43
SIGNATURES
EX-10.6
EX-31.1
EX-31.2
EX-32

Part I Financial Information
Item 1 Financial Statements

PVF CAPITAL CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

	December 31,
	2009			June 30,
	unaudited			2009
ASSETS
Cash and cash equivalents:
Cash and amounts due from depository institutions	$	17,580,652		$	8,464,544
Interest bearing deposits		20,080,664			1,939,514
Federal funds sold		5,000,000			10,809,000
Total cash and cash equivalents		42,661,316			21,213,058
Securities available for sale		86,800			102,800
Securities held to maturity (fair values of $55,019,235 and $49,999,939, respectively)		55,000,000			49,999,939
Mortgage-backed securities available for sale		57,432,775			64,177,633
Loans receivable held for sale, net		7,181,067			27,078,472
Loans receivable, net of allowance of $29,912,830 and $31,483,205, respectively		626,438,196			668,460,029
Office properties and equipment, net		8,207,998			8,624,496
Real estate owned, net		12,089,581			11,607,758
Federal Home Loan Bank stock		12,811,100			12,811,100
Bank owned life insurance		22,992,255			22,894,013
Prepaid expenses and other assets		24,396,289			25,239,535
Total Assets	$	869,297,377		$	912,208,833
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Deposits	$	682,891,213		$	724,931,569
Note Payable		1,312,778			1,366,111
Long-term advances from the Federal Home Loan Bank		35,000,000			35,000,000
Repurchase agreement		50,000,000			50,000,000
Subordinated debentures		10,000,000			20,000,000
Advances from borrowers for taxes and insurance		12,828,249			9,555,137
Accrued expenses and other liabilities		23,687,421			21,850,819
Total Liabilities		815,719,661			862,703,636
Stockholders’ Equity
Serial preferred stock, none issued		—			—
Common stock, $0.01 par value, 15,000,000 shares authorized; 8,451,845 and 8,246,548 shares issued, respectively		84,518			82,465
Additional paid-in-capital		69,967,939			69,377,852
Retained earnings (accumulated deficit)		(13,619,619	)		(16,538,515	)
Accumulated other comprehensive income		982,025			420,542
Treasury stock, at cost 472,725 shares		(3,837,147	)		(3,837,147	)
Total Stockholders’ Equity		53,577,716			49,505,197
Total Liabilities and Stockholders’ Equity	$	869,297,377		$	912,208,833

See accompanying notes to consolidated financial statements

Page 1

Part I Financial Informaton
Item 1 Financial Statements

PVF CAPITAL CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2009			2008			2009			2008
Interest and dividends income
Loans	$	9,139,271		$	10,928,594		$	18,296,290		$	22,340,835
Mortgage-backed securities		693,222			687,260			1,356,627			1,387,533
Federal Home Loan Bank stock dividends		145,309			158,871			305,009			329,428
Securities		31,417			162,911			41,311			283,970
Federal funds sold and interest bearing deposits		3,006			25,791			10,399			112,584
Total interest and dividends income		10,012,225			11,963,427			20,009,636			24,454,350
Interest expense
Deposits		3,763,458			6,249,819			8,121,990			12,192,372
Short-term borrowings		50			700			50			9,799
Long-term borrowings		911,835			912,877			1,823,932			1,823,591
Subordinated debt		194,640			346,109			444,739			671,554
Total interest expense		4,869,983			7,509,505			10,390,711			14,697,316
Net interest income		5,142,242			4,453,922			9,618,925			9,757,034
Provision for loan losses		2,250,000			3,641,000			4,010,000			4,332,000
Net interest income after provision for loan losses		2,892,242			812,922			5,608,925			5,425,034
Noninterest income, net
Service and other fees		181,499			177,546			347,083			355,800
Mortgage banking activities, net		1,451,477			420,478			2,506,204			878,177
Increase (decrease) in cash surrender value of bank owned life insurance		77,849			(56,215	)		98,242			(3,289	)
Impairment of securities		—			(102,400	)		0			(1,841,200	)
Gain (loss) on real estate owned		(140,420	)		(73,078	)		(159,533	)		(86,486	)
Provision for real estate owned losses		(430,773	)		—			(501,773	)		—
Gain on sale of mortgage-backed securities available for sale		—			665,929			0			665,929
Gain on the cancelation of subordinated debt		—			—			8,561,530			0
Other, net		189,239			147,296			340,962			169,261
Total noninterest income, net		1,328,871			1,179,556			11,192,715			138,192
Noninterest expense
Compensation and benefits		2,372,132			3,015,544			4,613,811			5,573,559
Office occupancy and equipment		646,888			698,928			1,325,155			1,405,678
Outside services		492,911			469,900			1,345,269			856,732
Federal deposit insurance premium		737,812			140,696			1,303,545			332,099
Real estate owned expense		665,496			538,396			1,447,685			727,311
Other		1,111,605			1,151,551			2,227,479			2,055,253
Total noninterest expense		6,026,844			6,015,015			12,262,944			10,950,632
Income (loss) before federal income tax provision		(1,805,731	)		(4,022,537	)		4,538,696			(5,387,406	)
Federal income tax provision (benefit)		(524,700	)		(1,301,000	)		1,619,800			(1,764,612	)
Net income (loss)		(1,281,031	)		(2,721,537	)		2,918,896			(3,622,794	)
Basic earnings (loss) per share	$	(0.16	)	$	(0.35	)	$	0.37		$	(0.47	)
Diluted earnings (loss) per share	$	(0.16	)	$	(0.35	)	$	0.37		$	(0.47	)
Dividends declared per common share	$	0.000		$	0.000		$	0.000		$	0.010

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)

	Six Months Ended
	December 31,
	2009			2008
Operating Activities
Net income (loss)	$	2,918,897			($3,622,794	)
Adjustments to reconcile net income to net cash from operating activities
Amortization of premium on mortgage-backed securities		174,533			16,497
Depreciation and amortization		467,449			606,009
Provision for loan losses		4,010,000			4,332,000
Provision for real estate owned losses		501,773			0
Impairment of securites		0			1,841,200
Accretion of deferred loan origination fees, net		(602,134	)		(307,506	)
Gain on cancellation of subordinated debt		(8,561,530	)		0
(Gain) loss on sale of loans receivable held for sale, net		(2,955,167	)		(171,878	)
(Gain) loss on sale of mortgage-backed securities held for sale, net		0			(665,929	)
Loss on disposal of real estate owned, net		159,533			86,486
Market adjustment for loans held for sale		59,052			(160,320	)
Change in fair value of mortgage banking derivatives		639,594			(237,995	)
Stock compensation		92,140			152,009
Federal Home Loan Bank stock dividends		0			(170,500	)
Change in accrued interest on securities, loans, and borrowings, net		296,336			1,052,708
Origination of loans receivable held for sale, net		(114,467,163	)		(20,265,561	)
Sale of loans receivable held for sale, net		135,391,742			23,901,504
(Increase) decrease in cash surrender value of bank owned life insurance		(98,242	)		3,289
Net change in other assets and other liabilities		2,885,136			(306,949	)
Net cash from operating activities		20,911,949			6,082,270
Investing Activities
Loan repayments and originations, net		35,023,718			(22,381,391	)
Principal repayments on mortgage-backed securities available for sale		8,938,773			1,912,965
Purchase of mortgage-backed securities available for sale		(1,501,775	)		(67,967,811	)
Sale of mortgage-backed securities		0			65,090,007
Purchase of securities held to maturity		(112,000,000	)		(10,000,000	)
Maturities of securities held to maturity		107,000,000			7,580,000
Proceeds from sale of real estate owned		2,447,120			5,269,654
Additions to office properties and equipment, net		(50,951	)		(410,824	)
Net cash from investing activities		39,856,885			(20,907,400	)
Financing activities
Net increase (decrease) in demand deposits, NOW, and passbook savings		7,888,905			(3,708,706	)
Net increase (decrease) in time deposits		(49,929,261	)		40,763,751
Net increase in advances from borrowers for taxes and insurance		3,273,112			1,977,540
Net increase (decrease) in short-term Federal Home Loan Bank advances		0			(9,000,000	)
Repayment of note payable		(53,333	)		0
Net proceeds from line of credit		0			425,000
Payment in exchange for cancellation of subordinated debt		(500,000	)		0
Cash dividend paid		0			(97,173	)
Net cash from financing activities		(39,320,577	)		30,360,412
Net increase in cash and cash equivalents		21,448,258			15,535,282
Cash and cash equivalents at beginning of period		21,213,058			17,804,394
Cash and cash equivalents at end of period	$	42,661,316		$	33,339,676
Supplemental disclosures of cash flow information:
Cash payments of interest expense	$	10,553,661		$	13,767,342
Cash payments of income taxes	$	0		$	0
Supplemental noncash investing activity:
Transfer of loans to real estate owned	$	3,088,476		$	10,793,213
Supplemental noncash financing activity:
Common stock and warrants exchanged for cancellation of debt	$	1,329,328		$	0

See accompanying notes to consolidated financial statements

Page 3

Part I Financial Information

Item 1

PVF CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended
December 31, 2009 and 2008
(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, 2009 consolidated statement of financial condition, which was derived from the Corporation’s audited financial statements. For reasons more fully described in Note 10 to these interim financial statements, the Company’s auditors added an explanatory paragraph to its opinion on the Company’s June 30, 2009 consolidated financial statements expressing substantial doubt about the ability of the Company to continue as a going concern. Certain information required for a complete presentation in accordance with U.S. 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 and six months ended December 31, 2009 are not necessarily indicative of the results to be expected for the entire year ending June 30, 2010. The results of operations for PVF Capital Corp. (“PVF” or the “Company”) for the periods being reported have been derived primarily from the results of operations of Park View Federal Savings Bank (the “Bank”). The Company’s common stock is traded on the NASDAQ CAPITAL MARKET under the symbol PVFC.

2. Securities available for sale: The Company’s securities available-for-sale consists of floating rate preferred stock issued by the Federal Home Loan Mortgage Corporation (FHLMC) and Federal National Mortgage Association (FNMA). For the three and six months ended December 31, 2008, the Company recognized a respective $102,400 and $1,841,200 pre-tax charge for the other-than-temporary decline in fair value of this stock.

On September 7, 2008, the U.S. Treasury Department and the Federal Housing Finance Agency announced that FNMA and FHLMC had been placed into conservatorship. Dividends on the preferred shares of the entities have been suspended.

The fair value of the Company’s holdings of these securities was $86,800 at December 31, 2009 and $102,800 at June 30, 2009. The Company’s written-down cost basis in these securities was $47,600.

4

Part I Financial Information
Item 1

As of December 31, 2009, the fair value of mortgage-backed securities available for sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
FNMA mortgage-backed securities	$	31,084,760	$	761,507	$	(17,390	)	$	31,828,877
FHLMC mortgage-backed securities		21,254,568		605,743		—			21,860,311
GNMA mortgage-backed securities		3,644,728		98,859		—			3,743,587
Total	$	55,984,056	$	1,466,109	$	(17,390	)	$	57,432,775

The carrying amount, unrealized gains and losses, and fair value of mortgage-backed securities available for sale at June 30, 2009 were as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
FNMA mortgage-backed securities	$	32,999,418	$	262,310	$	(17,721	)	$	33,244,007
FHLMC mortgage-backed securities		26,029,802		256,223		—			26,286,025
GNMA mortgage-backed securities		4,566,428		81,173		—			4,647,601
Total	$	63,595,648	$	599,706	$	(17,721	)	$	64,177,633

None of the Company’s securities available for sale mature at a single maturity date.

Securities held to maturity: As of December 31, 2009, the amortized cost, the related gross unrecognized gains and losses, and fair value of securities held to maturity were as follows:

			Gross		Gross
	Amortized		Unrecognized		Unrecognized		Fair
	Cost		Gains		Losses		Value
U.S Treasury	$	50,000,000	$	—	$	—	$	50,000,000
FNMA debenture		5,000,000		19,235		—		5,019,235
Total	$	55,000,000	$	19,235	$	—	$	55,019,235

5

Part I Financial Information
Item 1

The Company’s U.S. Treasury security matured on January 14, 2009. The FNMA debenture is callable quarterly beginning June 28, 2010 and matures in 2014.

Securities held to maturity at June 30, 2009 were as follows:

			Gross		Gross		Estimated
	Amortized		Unrecognized		Unrecognized		Fair
	Cost		Gain		Loss		Value
U.S. government treasury securities	$	49,999,939	$	—	$	—	$	49,999,939

Securities held to maturity are represented by two securities, each with a maturity date of July 2, 2009.

3. Loans Receivable:

Loans receivable at December 31, 2009 and June 30, 2009 consist of the following:

	December 31,			June 30,
	2009			2009
Real estate mortgages:
One-to-four family residential	$	157,205,143		$	158,260,119
Home equity line of credit		87,337,153			88,538,739
Multi-family residential		55,503,164			58,291,094
Commercial		204,989,577			191,099,881
Commercial equity line of credit		35,025,323			46,276,418
Land		58,129,539			60,818,227
Construction — residential		20,805,950			39,070,316
Construction — multi-family		3,747,334			5,200,155
Construction — commercial		9,030,364			20,233,229
Total real estate mortgages		631,773,547			667,788,178
Non-real estate loans		24,577,479			32,155,056
Total loans receivable		656,351,026			699,943,234
Allowance for loan losses		(29,912,830	)		(31,483,205	)
Loans receivable, net	$	626,438,196		$	668,460,029

A summary of the changes in the allowance for loan losses for the three and six months ended December 31, 2009 and 2008 is as follows:

	Three months			Three months			Six months			Six months
	ended			ended			ended			ended
	Dec. 31,2009			Dec. 31, 2008			Dec. 31, 2009			Dec. 31, 2008
Beginning balance	$	31,823,982		$	8,843,278		$	31,483,205		$	9,653,972
Provision for loan losses		2,250,000			3,641,000			4,010,000			4,332,000
Charge-offs		(4,161,152	)		(1,484,270	)		(5,580,375	)		(2,985,964	)
Recoveries		—			—			—			—
Ending balance	$	29,912,830		$	11,000,008		$	29,912,830		$	11,000,008

6

Part I Financial Information
Item 1

The following table provides statistical measures of non-performing assets:

	December 31,		June 30,
	2009		2009
	(Dollars in thousands)
Loans on non-accruing status (1):
Real estate mortgages:
One-to-four family residential	$	18,669	$	15,551
Commercial		16,463		13,140
Multi-family residential (2)		—		371
Construction and land (2)		36,295		39,757
Non real estate		584		943
Total loans on non-accrual status:		72,011		69,762
Loans past due 90 days, still on accrual status:
Real estate mortgages:
Commercial		152		—
Construction and land		1,180		729
Total non-performing loans	$	73,343	$	70,491

(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. 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)

Two loans totaling $3,308,500 were reclassified from multi-family residential to construction and land for the period ended June 30, 2009.

At December 31, 2009 and June 30, 2009, the recorded investment in loans, which have individually been identified as being impaired, totaled $53,341,840 and $54,211,000, respectively. Included in the impaired amount at December 31, 2009 and June 30, 2009 is $28,164,944 and $40,535,752, respectively, related to loans with a corresponding valuation allowance of $10,801,127 and $12,684,241, respectively. At December 31, 2009 and June 30, 2009, $25,176,896 and $18,047,807 of impaired loans had no allowance for loan losses allocated.

4. Mortgage Banking Activities: The Company services real estate loans for investors that are not included in the accompanying consolidated financial statements. Mortgage servicing rights are established based on the 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 statements of financial condition under the caption “Prepaid expenses and other assets.”

	Six Months Ended
	December 31,
	2009			2008
Servicing rights:
Beginning of period	$	6,097,861		$	4,398,783
Additions		1,868,939			244,521
Amortized to expense		(1,026,105	)		(712,478	)
End of period	$	6,940,695		$	3,930,826

7

Part I Financial Information
Item 1

	Three Months Ended
	December 31,
	2009			2008
Servicing rights:
Beginning of period	$	6,619,595		$	4,210,419
Additions		856,137			72,462
Amortized to expense		(535,037	)		(352,055	)
End of period	$	6,940,695		$	3,930,826

Mortgage banking activities, net as presented in the consolidated statements of operations consist of the following. These amounts do not include non-interest expense related to mortgage banking activities.

	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2009			2008			2009			2008
Mortgage loan servicing fees	$	641,584		$	507,783		$	1,275,788		$	1,020,463
Amortization and impairment of mortgage loan servicing rights		(535,037	)		(352,056	)		(1,026,105	)		(712,479	)
Loan origination and sales activity		1,344,930			264,751			2,256,521			570,193
Mortgage banking activities, net	$	1,451,477		$	420,478		$	2,506,204		$	878,177

At December 31, 2009 and June 30, 2009, the Bank had interest rate-lock commitments on $30,265,073 and $48,161,785 of loans intended for sale in the secondary market. These commitments are considered to be free-standing derivatives and the change in fair value is recorded in the financial statements. The fair value of these commitments as of December 31, 2009 and June 30, 2009 was estimated to be $521,272 and $505,810, respectively, which is included in prepaid expenses and other assets in the consolidated statements of financial position. To mitigate the interest rate risk represented by these interest rate-lock commitments the Bank entered into contracts to sell mortgage loans of $24,950,000 and $42,620,000 as of December 31, 2009 and June 30, 2009. These contracts are also considered to be free-standing derivatives and the change in fair value also is recorded in the financial statements. The fair value of these contracts at December 31, 2009 and June 30, 2009 was estimated to be $43,909 and $698,965, respectively. These amounts are (netted against) added to the fair value of interest rate lock commitments recorded in prepaid and other assets. Changes in fair value for both types of derivatives are reported in mortgage banking activities in the consolidated statements of operations.

5. Stock Compensation: Employee compensation expense under stock options is reported using the fair value recognition provisions under ASC 718, “Share Based Payment.” The Company has adopted ASC 718 using the modified prospective method. Under this method, compensation expense is being recognized for the unvested portion of previously issued awards that remained outstanding as of July 1, 2005 and for any granted since that date. Prior interim periods and fiscal year results were not restated. For the quarters ended December 31, 2009 and 2008, compensation expense of

8

Part I Financial Information
Item 1

$73,763 and $125,739, respectively, was recognized in the income statement related to the vesting of previously issued awards plus vesting of new awards. For the six months ended December 31, 2009 and 2008, compensation expense of $92,140 and $152,009, respectively, was recognized in the income statement related to the vesting of previously issued awards plus vesting of new awards. For the six months ended December 31, 2009 and 2008 income tax benefits of $8,575 and $21,954 respectively, were recognized related to these expenses.

As of December 31, 2009, there was $240,234 of compensation expense related to unvested awards not yet recognized in the financial statements. The weighted-average period over which this expense is to be recognized is 2.7 years.

The Company can issue incentive stock options and nonqualified stock options under the 2000 Plan and the 2008 Plan. Generally, for incentive stock options, one-fifth of the options awarded become exercisable on the date of grant and on each of the first four anniversaries of the date of grant. The option period expires ten years from the date of grant, except for awards to individuals who own more than 10% of the Company’s outstanding stock. Awards to these individuals expire after five years from the date of grant and are exercisable at 110 percent of the market price at the date of grant.

Nonqualified stock options are granted periodically to directors and vest immediately. The option period expires ten years from the date of grant and the exercise price is the market price at the date of grant.

The aggregate intrinsic value of all options outstanding at December 31, 2009 was $3,600. The aggregate intrinsic value of all options that were exercisable at December 31, 2009 was $2,300.

A summary of the activity in the plan is as follows:

	Six months ended
	December 31, 2009
	Total options outstanding
				Weighted
				Average
				Exercise
	Shares			Price
Options outstanding, beginning of period		582,792		$	8.54
Forfeited		(94,669	)		8.79
Expired		(35,431	)		7.76
Exercised		—			—
Granted		115,000			1.91
Options outstanding, end of period		567,692		$	7.20
Options exercisable, end of period		428,572		$	7.46

The weighted average remaining contractual life of options outstanding as of December 31, 2009 was 5.7 years. The weighted average remaining contractual life of vested options outstanding as of December 31, 2009 was 5.0 years.

No options were exercised in the three month periods ended December 31, 2009 and 2008.

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The fair value for stock options granted during the six months ended December 31, 2009, which consisted of individual grants in October, November and December 2009, was determined at the date of grant using a Black-Scholes options-pricing model and the following assumptions:

	2008
Expected average risk-free interest rate		3.40	%
Expected average life (in years)		10.00
Expected volatility		34.13	%
Expected dividend yield		0	%

The weighted average fair value of these grants was $0.97 per option. The expected average risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the life of the option. The expected average life represents the weighted average period of time that options granted are expected to be outstanding giving consideration to vesting schedules, historical exercise and forfeiture patterns. Expected volatility is based on historical volatilities of the Company’s common stock. The expected dividend yield is based on historical information.

6. The following table discloses earnings (loss) per Share for the three and six months ended December 31, 2009 and December 31, 2008.

						Three months ended December 31,
	2009								2008
	Income								Income
	(loss)			Shares		Per Share			(loss)			Shares		Per Share
	(Numerator)			(Denominator)		Amount			(Numerator)			(Denominator)		Amount
Basic EPS Net Income (loss)		($1,281,031	)		7,979,120		($0.16	)		($2,721,538	)		7,773,823		($0.35	)
Effect of Stock Options					4,293		0.00						—		0.00
Diluted EPS Net Income (loss)		($1,281,031	)		7,983,413		($0.16	)		($2,721,538	)		7,773,823		($0.35	)

					Six months ended December 31,
	2009						2008
	Income						Income
	(loss)		Shares		Per Share		(loss)			Shares		Per Share
	(Numerator)		(Denominator)		Amount		(Numerator)			(Denominator)		Amount
Basic EPS Net Income (loss)	$	2,918,896		7,891,136	$	0.37		($3,622,794	)		7,773,823		($0.47	)
Effect of Stock Options				2,147		0.00					0		0.00
Diluted EPS Net Income (loss)	$	2,918,896		7,893,283	$	0.37		($3,622,794	)		7,773,823		($0.47	)

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There were 452,692 options not considered in the diluted earnings per share calculation for the three and six-month periods ended December 31, 2009, because they were not dilutive. There were 589,762 options not considered in the diluted earnings per share calculation for the three- and six-month periods ended December 31, 2008, because they were not dilutive.

Also not included in the diluted earnings per share calculation for the three- and six-month period ended December 31, 2009 were warrants to acquire the Company’s shares of common stock issued as part of an exchange more fully described in Note 8. These warrants include a warrant to purchase 769,608 shares of common stock. This warrant is exercisable at any time before September 30, 2011 at a price equal to the lesser of (i) $4.00 per share, (ii) the offering price for shares of the Company’s common stock in any subsequent public offering or private placement, or (iii) the price of the Company’s shares in a subsequent exchange of the Company’s common stock for trust preferred debt.

These warrants also include a warrant to purchase a number of shares equal to 9.9% of any of the Company’s common stock issued in a subsequent exchange of the Company’s common stock for trust preferred debt. This warrant is exercisable at the price of the Company’s shares issued in such an exchange. The warrants are not considered to be dilutive for the periods presented because the exercise price of the warrants was more than the average market price during the period.

7. Fair Value: U.S. generally accepted accounting principles (U.S. GAAP) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. U.S. GAAP also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted market prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use to price an asset or liability.

The Company used the following methods and significant assumptions to estimate fair value.

Securities and Mortgage-backed Securities (MBS). The fair values of securities available for sale are determined by obtaining quoted market prices on nationally recognized securities exchanges (Level 1 inputs). The fair values of mortgage-backed securities are determined through matrix pricing. This is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

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Loans held for sale. The fair value of loans held for sale is determined using quoted secondary market prices.

Mortgage banking pipeline derivatives. The fair value of loan commitments is measured using current market rates for the associated mortgage loans. The fair value of mandatory forward sales contracts is measured using secondary market pricing.

Warrants. Warrants to acquire the Company’s common stock are valued using a closed form option valuation model (Black-Scholes) that uses various assumptions regarding expected volatility, the expected term of the warrants, and expected dividends on the Company’s common stock.

Assets and liabilities measured at fair value on a recurring basis at December 31, 2009 are summarized below:

				Quoted
				Prices in
				Active
				Markets		Significant
				for		Other		Significant
				Identical		Observable		Unobservable
	December 31,			Assets		Inputs		Inputs
	2009			(Level 1)		(Level 2)		(Level 3)
Assets:
Securities available for sale	$	86,800		$	86,800	$	—		—
Loans held for sale		7,181,067			—		7,181,067
Mortgage-backed securities available for sale:
FNMA MBS		31,828,877			—		31,828,877		—
FHLMC MBS		21,860,311			—		21,860,311		—
GNMA MBS		3,743,587			—		3,743,587		—
Interest rate lock Commitments		521,272			—		521,272
Mandatory forward sales Contracts		43,909			—		43,909		—
Liabilities:
Warrants		(829,645	)		—		—		(829,645	)

Assets and liabilities measured at fair value on a nonrecurring basis at December 31, 2009 are summarized below:

			Quoted
			Prices in
			Active
			Markets		Significant
			for		Other		Significant
			Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
	2009		(Level 1)		(Level 2)		(Level 3)
Assets:
Impaired loans	$	17,363,817		—		—	$	17,363,817
Real estate owned		12,089,581		—		—		12,089,581

Impaired loans, which are usually measured for impairment using the fair value of the collateral, had an unpaid principal of $53,341,840. Of these, $28,164,943 were carried at a fair value of $17,363,817 as a result of a specific valuation allowance

12

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of $10,801,127. The fair value of collateral is usually estimated by third-party or internal appraisals of the collateral. The present value of estimated cash flows is based on internal models of expected borrower activity. The provision for loan losses related to changes in the fair value of impaired loans was $3.5 million during the six months ended December 31, 2009.

Real estate owned is recorded at fair value based on property appraisals, less estimated selling costs, at the date of transfer. The carrying amount of real estate owned is not re-measured to fair value on a recurring basis, but is subject to fair value adjustments when the carrying amount exceeds the fair value, less estimated selling costs.

The carrying amount and estimated fair values of financial instruments at year end were as follows:

	December 31, 2009						June 30, 2009
	Carrying			Estimated			Carrying			Estimated
	Amount			Fair Value			Amount			Fair Value
				(in thousands)
Assets:
Cash and amounts due from depository institutions	$	17,581		$	17,581		$	8,465		$	8,465
Interest-bearing deposits		20,081			20,081			1,940			1,940
Federal funds sold		5,000			5,000			10,809			10,809
Securities held to maturity		55,000			55,019			50,000			50,000
Equity securities		87			87			103			103
Mortgage-backed securities available for sale		57,433			57,433			64,178			64,178
Loans receivable, net		626,438			629,326			668,460			667,697
Loans receivable held for sale, net		7,181			7,181			27,078			27,078
Federal Home Loan Bank stock		12,811			NA			12,811			NA
Accrued interest receivable		3,016			3,016			3,475			3,475
Mandatory forward sales contracts		44			44			699			699
Commitments to make loans intended to be sold		521			521			506			506
Warrants issued
Liabilities:
Demand deposits and passbook savings		(196,086	)		(196,086	)		(188,198	)		(188,198	)
Time deposits		(486,805	)		(496,868	)		(536,734	)		(547,620	)
Note payable		(1,313	)		(1,313	)		(1,366	)		(1,366	)
Advances from the Federal Home Loan Bank of Cincinnati		(35,000	)		(36,562	)		(35,000	)		(36,517	)
Repurchase agreement		(50,000	)		(53,524	)		(50,000	)		(53,900	)
Subordinated debentures		(10,000	)		(1,900	)		(20,000	)		(3,800	)
Accrued interest payable		(1,213	)		(1,156	)		(1,379	)		(1,379	)
Warrants		(830	)		(830	)		—			—

The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is necessary to interpret market data to develop the estimates of fair

13

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value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

The Company used the following methods and assumptions to estimate fair value for items not described above.

Cash and amounts due from depository institutions, interest bearing deposits, and federal funds sold. The carrying amount is a reasonable estimate of fair value because of the short maturity of these instruments.

Loans receivable. For performing loans receivable, fair value is estimated by discounting contractual cash flows adjusted for prepayment estimates using discount rates based on secondary market sources adjusted to reflect differences in servicing and credit costs.

Federal Home Loan Bank stock. It was not practical to determine fair value of FHLB stock due to restrictions placed on its transferability.

Demand deposits and time deposits. The fair value of demand deposits, savings accounts, and certain money market deposits is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit is estimated using discounted cash flows and rates currently offered for deposits of similar remaining maturities.

Note payable. The carrying amount is a reasonable estimate of the fair value.

Advances from the Federal Home Loan Bank of Cincinnati. The fair value of the Bank’s FHLB debt is estimated based on the current rates offered to the Bank for debt of the same remaining maturities.

Notes payable and subordinated debentures. The carrying value of the Company’s variable-rate note payable and the Company’s subordinated debt is a reasonable estimate of fair value based on the current incremental borrowing rate for similar types of borrowing arrangements adjusted for the Company’s credit risk profile.

Accrued interest receivable and accrued interest payable. The carrying amount is a reasonable estimate of the fair value.

8. Subordinated debt: On September 1, 2009, the Company entered into an Exchange Agreement (the “Exchange Agreement”) with Alesco Preferred Funding IV, Ltd. (the “Alesco CDO”) and Cohen & Company Financial Management, LLC (“Cohen”). The Alesco CDO was the holder of $10.0 million principal amount trust preferred securities issued by PVF Capital Trust I (the “Trust”), and Cohen was the collateral manager for the Alesco CDO. In June 2004, the Company formed the Trust as a special purpose entity for the sole purpose of issuing $10.0 million of variable-rate trust preferred securities (the “Capital Securities”). The Company issued subordinated debentures to the Trust in exchange for the proceeds of the offering of the trust preferred securities. The trust preferred securities carried a variable interest rate that adjusted to the three month LIBOR rate plus 260 basis points. The subordinated debentures were the sole asset of the Trust.

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Under the Exchange Agreement, on September 3, 2009, the Alesco CDO exchanged its $10.0 million of trust preferred securities for consideration paid by the Company. The consideration paid by the Company consisted of (i) a cash payment of $500,000; (ii) a number of shares of Company common stock equal to $500,000 divided by the average daily closing price of the Company’s common stock for the twenty (20) business days prior to September 1, 2009 (the “Initial Shares”), equating to 205,297 shares; (iii) a warrant (“Warrant A”) to purchase 769,608 shares of Company common stock; and (iv) a warrant (“Warrant B” and together with Warrant A, the “Warrants”) to purchase a number of shares of Company common stock equal to 9.9% of any shares of Company common stock issued, exclusive of any warrant or warrant shares, in exchange for capital securities of PVF Capital Trust II (“Trust II”) in the event the Company in the future issues shares of its common stock in exchange for Trust II capital securities (see Note 12 for more information on Trust II).

The number of shares of Company common stock issuable pursuant to each of Warrant A and Warrant B may not exceed certain limits. Specifically, the number shares issuable upon the exercise of Warrant A or Warrant B may not exceed the maximum number of shares of the Company’s common stock such that the Alesco CDO, upon its exercise of the applicable Warrant, shall own 9.9% of the Company’s common stock then issued and outstanding, except that in the event the Alesco CDO receives comfort from the Office of Thrift Supervision (the “OTS”) that allows it to rebut the presumption that its holdings of the Company’s common stock constitute control of the Company for the purpose of the applicable OTS regulations, this limitation shall have no effect. In addition, the number of shares of Company common stock issuable upon the exercise of Warrant B may not exceed a number of shares equal to 1,546,991 shares minus the sum of the Initial Shares and 769,608 shares.

As a result of this transaction, the Company recorded a gain of $8,561,530 included in non-interest income for the six-month period ended December 31, 2009. The estimated fair values of Warrant A and Warrant B were estimated to be $807,780 and $21,548, respectively and are recorded in accrued expenses and other liabilities. Warrant A and Warrant B are considered to be derivatives that are not indexed to the Company’s stock and so are not recorded to equity.

On October 9, 2009, the Company entered into an Exchange Agreement (the “Exchange Agreement”) with investors, including principally directors and officers of the Company and the Bank and certain individuals not affiliated with the Company (collectively, the “Investors”).

The Investors hold trust preferred securities with an aggregate liquidation amount of $10.0 million issued by PVF Capital Trust II (the “Trust”). In July 2006, the Company formed the Trust as a special purpose entity for the sole purpose of issuing $10.0 million of trust preferred securities (the “Capital Securities”). The Company issued subordinated debentures to the Trust in exchange for the proceeds of the offering of the trust preferred securities. The trust preferred securities carry a fixed rate of 7.462% until September 15, 2011 and thereafter a variable interest rate that adjusts to the three month LIBOR rate plus 175 basis points. The subordinated debentures are the sole asset of the Trust.

The Exchange Agreement provides that on the closing date, the Investors will exchange the $10.0 million of trust preferred securities for aggregate consideration consisting of (i) $400,000 in cash, (ii) shares of common stock valued at $600,000 based on the average daily closing price of the common stock over the 20 trading

15

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days prior to the closing of the transaction (the “20-Day Average Closing Price”) and (iii) warrants to purchase 769,608 shares of common stock plus a number of shares of common stock equal to 9.9% of the shares to be issued to the investors as described in clause (ii) above. In addition, the Investors will receive additional warrants that become exercisable in the event the Company completes one or more public or private offerings of its common stock within a year. The additional warrants will give the Investors the right to acquire additional shares of common stock so that the total number of shares they could acquire under all warrants would entitle them to purchase an aggregate of 4.9% of the Company’s common stock outstanding following the offering or offerings completed during that one-year period. The exercise price for the warrants is the lesser of (i) $4.00 per share, (ii) the 20-Day Average Closing Price, or (iii) if during the term of the warrants the Company sells shares of common stock in a public or private offering, the price at which shares are sold in that offering. The Warrants are exercisable for five years following the closing.

Upon consummation of the transaction, the Company anticipates that the Capital Securities, common securities issued by the Trust and the Subordinated Debentures will be cancelled and will no longer be outstanding.

Consummation of the Exchange is subject to the approval of the Exchange by the shareholders of the Company pursuant to the rules and regulations of The Nasdaq Stock Market, Inc. The Company has submitted a proposal for the approval of the Exchange to its shareholders at the Company’s upcoming 2009 annual meeting of stockholders to be held January 29, 2010. The directors of the Company have executed voting agreements agreeing to vote shares of Common Stock they hold in favor of the Exchange. Consummation of the Exchange also is subject to other customary closing conditions.

The shares of stock, warrants and stock issuable upon the exercise of warrants to be issued in the Exchange have not been registered under the Securities Act of 1933, as amended and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements.

9. Repurchase Agreement: On October 29, 2009, the Company received notice from the counter-party to its repurchase agreement stating that due to the regulatory capital requirements included in the Cease and Desist Orders, more fully described in Note 10, that the counterparty is entitled to declare that an event of Default had occurred and pursue all its remedies under the repurchase agreement. The counter-party did not indicate its intention to declare the Company in default. Among its remedies, the counter-party could unwind the trade at market value. This would result in a pre-tax charge to the earnings of the Company of approximately $3,524,000.

10. Regulatory Matters and Management’s Plans: On October 19, 2009, the Company and 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 Bank Order requires the Bank to take certain actions including: (i) by December 31, 2009, meet and maintain a tier one (core) capital ratio of at least 8.0% and a total risk-based capital ratio of at least 12.0% after the funding of an adequate

16

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allowance for loan and lease losses and submit a detailed plan to accomplish this; (ii) adopt revisions to the Bank’s liquidity policy to, among other things, increase the Bank’s minimum liquidity ratio; (iii) 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; (iv) 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; (v) 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; (vi) 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; (vii) not declare or pay dividends or make any other capital distributions from the Bank without receiving prior OTS approval; (viii) not make any severance or indemnification payments without complying with regulatory requirements regarding such payments; (ix) comply with prior regulatory notification requirements for any changes in directors or senior executive officers; (x) 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; (xi) not increase any salaries, bonuses or director’s fees to directors or senior executive officers without the prior written consent of the OTS; and (xii) ensure compliance with regulatory requirements for affiliate and insider transactions.

The Company Order contains the following requirements: (i) the Company must submit a capital plan that includes, among other things, 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 specific plans to reduce the risks to the Company from its current debt levels and debt servicing requirements; (ii) 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 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; (iii) 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); (iv) 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 inter-company cost-sharing transaction; and (v) 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.

At December 31, 2009, the Bank’s tier one (core) capital ratio was 7.15% and its total risk-based capital ratio was 10.74%. The Company has established a Capital Committee to put action plans in place to raise the Bank’s capital to the threshold specified in the Bank Order.

17

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The Company believes it has complied with all of the reporting and submission requirements of the Cease and Desist Orders, but not the higher capital ratio requirements discussed below, and will continue to work to comply with all such requirements in the future. The Company has developed and submitted a capital plan and a business plan which plans contemplate a proposed rights offering of common stock and a first calendar quarter 2010 closing date and which is being reviewed by the Office of Thrift Supervision. A registration statement has been filed with the Securities Exchange Commission relating to the proposed rights offering of common stock, but has not yet become effective. Although the Company did not comply with the higher capital ratio requirements by the December 31, 2009 required date, based on informal discussions with the Office of Thrift Supervision and due to the pendency of the proposed rights offering of common stock, management does not expect that any additional material restrictions or penalties will be imposed by the Office of Thrift Supervision as a result of not complying with the December 31, 2009 deadline, assuming the Company is able to raise sufficient capital in the proposed rights offering. A registration statement relating to these securities to be sold in the proposed rights offering has been filed with the Securities and Exchange Commission but has not yet become effective. The securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective.

11. Other comprehensive income: Other comprehensive income (loss) components and related tax effects were as follows at December 31, 2009 and 2008:

	Three months ended						Six months ended
	December 31,						December 31,
	2009			2008			2009		2008
Unrealized holding gains (losses) on available for sale securities	$	(165,496	)	$	1,239,521		$	850,734	$	(499,279	)
Reclassification adjustment for losses (gains)realized in income		—			(563,529	)		—		1,175,271
Net unrealized gains (losses)		(165,496	)		675,992			850,734		675,992
Tax effect		(56,268	)		229,837			289,251		229,837
Other comprehensive income (loss)	$	(109,228	)	$	446,155		$	561,483	$	446,155

Total comprehensive income (loss), which includes net income (loss) plus other comprehensive income, was $3,480,379 and $(3,176,639) for the six months ended December 31, 2009 and 2008.

12. Adoption of New Accounting Standards: On December 4, 2007, the Financial Accounting Standards Board (“FASB”) issued new guidance impacting Accounting Standards Codification (ASC) 805, Business Combinations, with the objective to improve the comparability of information that a company provides in its financial statements related to a business combination. This new guidance establishes principles and requirements for how the acquirer: (i) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; (ii) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and (iii) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. The statement does not apply to combinations between entities under common control. This statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The impact of adoption of this standard on the Company’s financial statements was not material.

18

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In December 2007, the FASB issued guidance impacting ASC 810-10, Consolidation, establishing the accounting for noncontrolling interests. A noncontrolling interest, also known as a “minority interest”, is the portion of equity in a subsidiary not attributable to a parent. The objective of this statement is to improve upon the consistency of financial information that a company provides in its consolidated financial statements. Consistent with SFAS No. 141(R), SFAS No. 160 is effective for fiscal years beginning on or after December 15, 2008. The impact of adoption of this standard on the Company’s financial statements was not material.

In June 2008, the FASB issued FASB Staff Position EITF 03-6-1—Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities (ASC 260-10). This FASB Staff Position (FSP) addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, included in the earnings allocation in computing earnings per share (EPS) under the two-class method. ASC 260-10 provides that unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of EPS pursuant to the two-class method. This FSP was effective for financial statements issued by the Company in this fiscal year and interim periods within this year. The effect of adopting this new guidance was not material as the Company’s unvested share-based payment awards do not contain non-forfeitable rights to dividends or dividend equivalents.

In August 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-05, Measuring Liabilities at Fair Value. This Update provides amendments to ASC 820 for the fair value measurement of liabilities by clarifying that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using a valuation technique that uses the quoted price of the identical liability when traded as an asset, quoted prices for similar liabilities or similar liabilities when traded as assets, or that is consistent with the principles of ASC 820. The amendments in this guidance also clarify that both a quoted price for the identical liability at the measurement date and the quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 fair value measurements. The guidance was effective for the first reporting period (including interim periods) beginning after issuance. The impact of adoption of this new guidance was not material as the Company does not carry any liabilities at fair value.

Effect of Newly Issued but not yet Effective Accounting Standards

In June 2009, the FASB issued Statement of Financial Accounting Standards No. 166, Accounting for Transfers of Financial Assets, an Amendment of FASB Statement No. 140 (ASC 810). The new accounting requirement amends previous guidance relating to the transfers of financial assets and eliminates the concept of a qualifying special purpose entity. This Statement must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. This Statement must be applied to transfers occurring on or after the effective date. Additionally, on and after the effective date, the concept of a qualifying special-purpose entity is no longer relevant for accounting purposes. Therefore, formerly qualifying special-purpose entities should be evaluated for consolidation by reporting entities on and after the effective date in

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accordance with the applicable consolidation guidance. Additionally, the disclosure provisions of this Statement were also amended and apply to transfers that occurred both before and after the effective date of this Statement. The effect of adopting this new guidance is not expected to be material as the Company does not have any qualifying special purpose entities and the other provisions of the new guidance are to be applied prospectively.

Also in June 2009, the FASB issued Statement of Financial Accounting Standards No. 167, Amendments to FASB Interpretation No. 46(R), which amended guidance for consolidation of variable interest entities by replacing the quantitative-based risks and rewards calculation for determining which enterprise, if any, has a controlling financial interest in a variable interest entity with an approach focused on identifying which enterprise has the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance and (1) the obligation to absorb losses of the entity or (2) the right to receive benefits from the entity. This Statement also requires additional disclosures about an enterprise’s involvement in variable interest entities. This Statement will be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Early adoption is prohibited. The effect of adopting this new guidance is not expected to be material.

13. Subsequent events: Management has evaluated events occurring subsequent to the balance sheet date through January 29, 2010 (the date on which the financial statements were issued) and determined no other items require adjustment in or additional disclosure to the financial statements.

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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 December 31, 2009 for PVF Capital Corp. (“PVF” or the “Company”), Park View Federal Savings Bank (the “Bank”), its principal and wholly-owned subsidiary, PVF Service Corporation (“PVFSC”), a wholly-owned real estate subsidiary, Mid Pines Land Co., a wholly-owned real estate subsidiary, PVF Holdings, Inc., PVF Community Development and PVF Mortgage Corporation, three wholly-owned and currently inactive subsidiaries.

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. Additional factors that may affect the Company’s results are discussed below under “Item 1A. Risk Factors,” in the Company’s Annual Report on Form 10-K under “Item 1A. Risk Factors” and in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 under “Item 1A. Risk Factors.” 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

The Company generally seeks to fund loan activity and liquidity by generating deposits through its branch network and through the use of various borrowing facilities. During the period, the Company funded a decrease in deposits and an increase in cash and cash equivalents with the repayments of loans. Additionally, the Company exchanged cash, common stock and warrants to acquire common stock in exchange for the cancellation of $10 million of subordinated debt.

The Company continued the origination of fixed-rate single-family loans for sale in the secondary market. The origination and sale of fixed-rate loans has historically generated gains on sale and allowed the Company to increase its investment in loans serviced. Consolidated assets of PVF were $869.3 million as of December 31, 2009, a decrease of approximately $42.9 million, or 4.7%, as compared to June 30, 2009. The Bank’s regulatory capital ratios for tier one core capital, tier one risk-based

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capital, and total risk-based capital were 7.15%, 9.48% and 10.74%, respectively, at December 31, 2009.

During the six months ended December 31, 2009, the Company’s cash and cash equivalents, which consist of cash, interest-bearing deposits and federal funds sold, increased $21.4 million, or 101.1%, as compared to June 30, 2009. The change in the Company’s cash, cash equivalents and federal funds sold consisted of increases to cash and interest bearing deposits offset by a decrease to federal funds sold. The increase in cash and cash equivalents resulted from the repayment of loans receivable, the sale of loans receivable held for sale, and the repayment of mortgage-backed securities available for sale in the current period and was partially offset by a decline in deposits and an increase in securities held to maturity. The increase to cash and cash equivalents is in accordance with the Bank’s decision to maintain higher cash balances in order to bolster the Company’s liquidity.

Mortgage-backed securities available for sale decreased by $6.7 million as the result of the purchase of $1.5 million in mortgage-backed securities, the principal repayment of $8.9 million, and a positive market valuation adjustment of $0.9 million for securities held for sale.

Securities held to maturity increased by $5.0 million during the six months ended December 31, 2009 as a result of the Bank purchasing agency securities for investment and to pledge as collateral against the repurchase agreement.

Loans receivable, net, decreased by $42.0 million, or 6.3%, during the six months ended December 31, 2009. The decrease in loans receivable included decreases in all loan categories except for an increase to commercial real estate loans. The increase to commercial real estate loans was the result of commercial construction loans and commercial equity line of credit loans being converted to permanent financing. There has been very little new loan portfolio origination as the Company addresses its asset quality issues and works to reposition its balance sheet and strengthen its capital ratios.

Park View Federal Savings Bank does not originate sub-prime loans and only originates Alt A loans for sale, without recourse, in the secondary market. All one-to-four family loans are underwritten according to agency underwriting standards. Exceptions, if any, are submitted to the loan committee for approval. Any exposure the Bank may have to these types of loans is immaterial and insignificant.

The decrease of $19.9 million in loans receivable held for sale is the result of timing differences between the origination and the sale of loans.

Real estate owned activity for the current six month period consisted of the addition of 10 single-family properties, one parcel of land and one commercial property totaling approximately $3.6 million offset by the disposal of 15 single-family properties, 3 parcels of land, and 2 commercial properties that had a carrying amount totaling $2.6 million. The Bank incurred a loss of approximately $159,500 on the disposition of these properties. The Bank also recorded impairment of $502,000 on the carrying amount of real estate still in inventory at December 31, 2009. At December 31, 2009, the Bank had 39 properties totaling $12.1 million in real estate owned. The real estate owned included 21 single-family properties, 12 parcels of land, and 6 commercial properties.

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Deposits decreased by $42.0 million, or 5.8%, primarily as a result of the maturity of $35.0 million in brokered deposits coupled with modest decreases to retail certificates of deposit and other transactional accounts.

The decrease in subordinated debentures is the result of the previously mentioned transaction in which the Company entered into an exchange agreement whereby the Company paid $500,000 in cash, and issued $500,000 in common stock and warrants valued at $830,000 in exchange for the cancellation of $10.0 million of the Trust Preferred Obligation of PVF Capital Trust I. This transaction resulted in a pretax gain of $8.6 million.

The increase in advances from borrowers for taxes and insurance of $3.3 million is attributable to timing differences between the collection and payment of taxes and insurance. The increase of $1.8 million in accrued expenses and other liabilities is the result of timing differences between the collection and remittance of funds received on loan serviced for investors.

Park View Federal’s regulatory capital ratios improved during the quarter. Under newly passed legislation, the Company elected to carry back its 2009 net operating loss. As part of the Worker, Home Ownership, and Business Assistance Act of 2009, taxpayers with net operating losses were permitted to elect to offset these losses against income earned in up to five prior years. Typically, a net operating loss can be carried back for only two years. As a result of this change in the income tax laws, PVF Capital Corp. and its subsidiaries were able to offset all their net operating losses against historical income. Under Office of Thrift Supervision regulations, a portion of Park View Federal’s deferred tax asset, amounting to $4.25 million at September 30, 2009, was required to be excluded from Park View Federal’s tier one (core) and risk-based capital. The effect of this change in tax laws and its election by the Company was to increase Park View Federal’s capital ratios since this portion of its deferred tax asset is no longer required to be excluded. Park View Federal’s tier one (core) and total risk-based capital ratios at December 31, 2009 were 7.15% and 10.74%, respectively.

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RESULTS OF OPERATIONS

Three months ended December 31, 2009,
compared to three months ended
December 31, 2008.

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 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, the collectibility of loans, and deposit flows. Net interest income also includes amortization of loan origination fees, net of origination costs.

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. In addition, net income is affected by the level of operating expenses, loan loss provisions and costs associated with the acquisition, maintenance and disposal of real estate.

The Company’s net loss for the three months ended December 31, 2009 was $1,281,000 as compared to a loss of $2,721,537 for the prior year comparable period.

Net interest income for the three months ended December 31, 2009 increased by $688,300, or 15.5%, as compared to the prior year comparable period. This resulted from a decrease of $1,951,200, or 16.3%, in interest income which was more than offset by a decrease of $2,639,500, or 35.15%, in interest expense. The increase in net interest income was attributable to an increase of 46 basis points in the interest-rate spread for the quarter ended December 31, 2009 as compared to the prior year comparable period. The increase in interest-rate spread resulted primarily from a decrease of 142 basis points in rates paid on deposits in the current period. This decrease resulted in an overall decline of 128 basis points on the cost of interest bearing liabilities and more that offset the decrease of 82 basis points on interest earning assets.

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RESULTS OF OPERATIONS continued

The following table presents comparative information for the three months ended December 31, 2009 and 2008 about average balances and average yields and costs for interest-earning assets and interest-bearing liabilities (dollars in thousands).

	December 31, 2009								December 31, 2008
	Average					Average			Average					Average
	Balance			Interest		Yield/Cost			Balance			Interest		Yield/Cost
Interest-earning assets
Loans(1)	$	687,658		$	9,139		5.32	%	$	736,767		$	10,929		5.93	%
Mortgage-backed securities		59,724			693		4.64	%		57,190			687		4.81	%
Investments and other		79,764			180		0.90	%		51,277			347		2.71	%
Total interest-earning assets		827,146			10,012		4.84	%		845,234			11,963		5.66	%
Non-interest-earning assets		51,043								58,912
Total Assets	$	878,189							$	904,146
Interest-bearing liabilities
Deposits	$	694,234		$	3,763		2.17	%	$	697,093		$	6,249		3.59	%
Borrowings		86,436			912		4.22	%		86,375			913		4.23	%
Subordinated debt		10,000			195		7.80	%		20,000			347		6.94	%
Total interest-bearing liabilities		790,670			4,870		2.46	%		803,468			7,509		3.74	%
Non-interest-bearing liabilities		33,283								33,679
Total liabilities		823,953								837,147
Stockholders’ Equity		54,236								66,999
Total liabilities and stockholders’ equity	$	878,189							$	904,146
Net interest income				$	5,142							$	4,454
Interest-rate spread							2.38	%							1.92	%
Yield on interest-earning assets							2.49	%							2.11	%
Interest-earning assets to interest-bearing liabilities		104.61	%							105.20	%

(1) Non-accruing loans are included in the average loan balances for the periods presented.

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RESULTS OF OPERATIONS continued

For the three months ended December 31, 2009, a provision for loan losses of $2,250,000 was recorded, while a provision for loan losses of $3,641,000 was recorded in the prior year comparable period. The provision for loan losses for the current period reflects management’s judgments about the credit quality of the Bank’s loan portfolio. The allowance for loan losses consists of a specific component and a general component.

Following is a breakdown of the valuation allowances:

	December 31, 2009		June 30, 2009
General valuation allowance	$	15,584,765	$	15,071,653
Specific valuation allowance		14,328,065		16,411,552
Total valuation allowance	$	29,912,830	$	31,483,205

The allowance for loan losses was 4.56% of loans outstanding at December 31, 2009 compared with 4.50% at June 30, 2009. The general valuation portion of the allowance was 2.67% and 2.61% of performing loans at December 31, 2009 and June 30, 2009, respectively.

Management’s approach includes establishing a specific valuation allowance by evaluating individual non-performing loans for probable losses based on a systematic approach involving estimating the realizable value of the underlying collateral. Additionally, management established a general valuation allowance for pools of performing loans segregated by collateral type. For the general valuation allowance, management is applying a prudent loss factor based on historical loss experience, trends based on changes to non-performing loans and foreclosure activity, and a subjective evaluation of the local population and economic environment. The loan portfolio is segregated into categories based on collateral type and a loss factor is applied to each category. The initial basis for each loss factor is the Company’s loss experience for each category. Historical loss percentages are calculated based on transfers from the general reserve to the specific reserve, indicating a loss has been incurred, for each risk category during the past 6 months and dividing the total by the average balance of each category. Presently, historical loss percentages are updated on a monthly basis using a 6-month rolling average. Subjective adjustments are made to the Bank’s historical experience including consideration of trends in delinquencies and classified loans, portfolio growth, national and local economic and business conditions including unemployment, bankruptcy and foreclosures and effectiveness of credit administration as appropriate.

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. The current period provision for loan losses reflects the continued level of elevated charge-offs during the period.

Based on recent trends and management’s factors, the Company has experienced an increase to the general valuation allowance allocation to the 1-4 family loan pools and commercial real estate pools and a decline to the allocation to the land loan pool as compared with June 30, 2009.

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RESULTS OF OPERATIONS continued

The Company continues to aggressively review and monitor its loan portfolio. This review involves analyzing all large borrowing relationships, delinquency trends, and loan collateral valuation in order to identify impaired loans. This analysis is performed so that management can identify all troubled loans and loan relationships as well as deteriorating loans and loan relationships. As a result of this review detailed action plans are developed to either resolve or liquidate the loan and end the borrowing relationship.

Non-performing assets at December 31, 2009 and June 30, 2009 were as follows:

	Dec. 31, 2009			June 30, 2009
Total non-performing loans	$	73,343		$	70,491
Other non-performing assets (1)		12,090			11,608
Total non-performing assets	$	85,433		$	82,099
Ratio of non-performing loans to total loans		11.17	%		10.07	%
Total non-performing assets to total assets		9.83	%		9.00	%

(1) Other non-performing assets represent property acquired by the Bank through foreclosure or repossession.

The levels of non-performing loans at December 31, 2009 and June 30, 2009 are attributable to poor current local and economic conditions. Residential markets nationally and locally have been adversely impacted by a significant increase in foreclosures as a result of the problems faced by sub-prime borrowers and the resulting contraction of residential credit available to all but the most credit worthy borrowers. Land development projects nationally and locally have seen slow sales and price decreases. The Company has significant exposure to the residential market in the Greater Cleveland, Ohio area. As a result, the Company has seen a significant increase in non-performing loans. Due to an increase in foreclosure activity in the area, the foreclosure process in Cuyahoga County, the Company’s 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.

Of the $72.0 million and $69.8 million in non-accruing loans at December 31, 2009 and June 30, 2009, $53.3 million and $54.2 million, respectively, were individually identified as impaired. All of these loans are collateralized by various forms of non-residential real estate or residential construction. These loans were reviewed for the likelihood of full collection based primarily on the value of the underlying collateral, and, to the extent collection of loan principal was in doubt, specific loss reserves were established. The 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 obtaining an updated valuation of the underlying real estate collateral and estimating carrying and disposition costs to arrive at an estimate of the net realizable value of the collateral. Through this process, specific loss reserves were established related to these loans outstanding at December 31, 2009 and June 30, 2009 of $10,801,127 or 20.3% and $12,684,241 or 21.6%, respectively.

27

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RESULTS OF OPERATIONS continued

The remaining balance of non-performing loans represents homogeneous one-to-four family loans. These loans are also subject to the rigorous process for evaluating and accruing for specific loan loss situations described above. Through this process, specific loan loss reserves of $3.2 million or 17.1% and $2.1 million or 13.5% were established for these loans as of December 31, 2009 and June 30, 2009, respectively.

There are $2.1 million and $4.4 million in performing loans for which the Company has established specific loan loss reserves as of December 31, 2009 and June 30, 2009. These loans are collateralized by various forms of one-to-four family real estate, non-residential real estate or residential construction. These loans are also subject to the rigorous process for evaluating and accruing for specific loan loss situations described above. Through this process, specific loan loss reserves of $0.3 million and $1.6 million were established for these loans as of December 31, 2009 and June 30, 2009, respectively. The Company was accruing interest on $23.5 million and $47.1 million of adversely classified loans at December 31, 2009 and June 30, 2009, respectively.

For the three months ended December 31, 2009, non-interest income increased by $149,300 from the prior year comparable period. This resulted primarily from an increase in income from mortgage banking activities of $1,031,000 attributable to increased loan refinance activity resulting from cyclically low market rates in the current period. During these periods, the Company pursued a strategy of originating long-term fixed-rate loans pursuant to FHLMC and FNMA guidelines and selling such loans to the FHLMC or the FNMA, while retaining the servicing. Additionally, income on bank-owned life insurance (“BOLI”) increased by $134,100 and service and other fees increased by $4,000. Other, net increased by $41,900 primarily due to income generated by the Company’s partnership interest in a Title Company. In the three month period ended December 31, 2008, the Company recorded an impairment loss on FHLMC and FNMA preferred stock totaling $102,400. These increases were partially offset by increases to losses on real estate owned of $498,100. In the three month period ended December 31, 2008, the Company recorded a gain on the sale of mortgage-backed securities available for sale of $665,900.

In quarter ended September 30, 2009, the Bank was able to restructure its investment in BOLI, transferring the balances from money market accounts into separate accounts generating earnings in excess of the cost of insurance. The Bank realized the full benefit of this restructuring in the current period. In the prior period, the earnings of the money market account were insufficient to offset the cost of the insurance.

Non-interest expense for the three months ended December 31, 2009 increased by $11,800, or 0.2%, from the prior year comparable period. This resulted from an increase in federal deposit insurance of $597,100, an increase in real estate owned expense of $127,100, and an increase in outside services of $23,000, that was partially offset by decreases in compensation and benefits of $643,400, office occupancy and equipment of $52,000 and other, net of $40,000.

The increase in the cost of FDIC insurance is due to a change in risk rating for the Bank and higher assessment rates charged on deposits, while the increase to real estate owned expense is attributable to the acquisition and maintenance of properties acquired through foreclosure.

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RESULTS OF OPERATIONS continued

The federal income tax provision for the three-month period ended December 31, 2009 represented a negative effective rate of 29.0% for the current period compared to a negative effective rate of 32.3% for the prior year comparable period. The effective rate in the current period was reduced due to the increased proportion of pre-tax income consisting of an increase in the cash surrender value of BOLI.

RESULTS OF OPERATIONS	Six months ended December 31, 2009,
	compared to six months ended
	December 31, 2008.

The Company’s net income for the six months ended December 31, 2009 was $2,918,900 as compared to a loss of $3,622,800 for the prior year comparable period. This represents an increase of $6,541,700 when compared with the prior year comparable period. The primary reason the Company was profitable for the period was the $8,561,350 gain on an exchange the Company entered into during the period, resulting in the cancellation of $10 million of subordinated debt.

Net interest income for the six months ended December 31, 2009 decreased by $138,100, or 1.4%, as compared to the prior year comparable period. This resulted from a decrease of $4,444,700, or 18.2%, in interest income partially offset by a decrease of $4,306,600, or 29.3%, in interest expense. The decrease in net interest income was attributable to a decrease in the average balance of interest earning assets partially offset by a 6 basis point increase in the interest-rate spread for the quarter ended December 31, 2009 as compared to the prior year comparable period. The increase in interest-rate spread resulted primarily from a decrease of 124 basis points in rates paid on deposits in the current period. This decrease resulted in an overall decline of 111 basis points on the cost of interest bearing liabilities and more that offset the decrease of 105 basis points on interest earning assets.

The following table presents comparative information for the six months ended December 31, 2009 and 2008 about average balances and average yields and costs for interest-earning assets and interest-bearing liabilities. Net interest income is affected by the interest-rate spread and by the relative amounts of interest-earning assets and interest-bearing liabilities (dollars in thousands).

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RESULTS OF OPERATIONS continued

	December 31, 2009								December 31, 2008
	Average					Average			Average					Average
	Balance			Interest		Yield/Cost			Balance			Interest		Yield/Cost
Interest-earning assets
Loans (1)	$	695,698		$	18,296		5.26	%	$	733,792		$	22,341		6.09	%
Mortgage-backed securities		61,278			1,357		4.43	%		56,092			1,387		4.95	%
Investments and other		74,389			357		0.96	%		45,217			726		3.21	%
Total interest-earning assets		831,365			20,010		4.81	%		835,101			24,454		5.86	%
Non-interest-earning assets		58,164								56,797
Total Assets	$	889,529							$	891,898
Interest-bearing liabilities
Deposits	$	703,001		$	8,122		2.31	%	$	686,640		$	12,192		3.55	%
Borrowings		86,450			1,824		4.22	%		87,079			1,833		4.28	%
Subordinated debt		13,478			445		6.60	%		20,000			672		6.72	%
Total interest-bearing liabilities		802,929			10,391		2.59	%		793,719			14,697		3.70	%
Non-interest-bearing liabilities		33,941								30,488
Total liabilities		836,870								824,207
Stockholders’ Equity		52,659								67,691
Total liabilities and stockholders’ equity	$	889,529							$	891,898
Net interest income				$	9,619							$	9,757
Interest-rate spread							2.22	%							2.16	%
Yield on interest-earning assets							2.31	%							2.34	%
Interest-earning assets to interest-bearing liabilities		103.54	%							105.21	%

(1) Non-accruing loans are included in the average loan balances for the periods presented.

For the six months ended December 31, 2008, a provision for loan losses of $4,010,000 was recorded, while a provision for loan losses of $4,332,000 was recorded in the prior year comparable period. The current period provision for loan losses reflects increases to specific loan loss reserves, adjustments to historical loan loss percentages based upon the methodology described previously and the elevated level of charge-offs during the current period. For the six-month period ended December 31, 2008, the Bank increased loss factors by collateral type in order to reflect recent increases in historical losses.

30

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RESULTS OF OPERATIONS continued

For the six months ended December 31, 2009, non-interest income increased by $11,054,500 from the prior year comparable period. This resulted primarily from the Company entering into an exchange agreement whereby the Company paid $500,000 in cash, and issued $500,000 in common stock and warrants valued at $830,000 in exchange for the cancellation of $10.0 million of the Trust Preferred Obligation of PVF Capital Trust I. This transaction resulted in a pretax gain of $8,561,500. In addition, income from mortgage banking activities increased by $1,628,000 as a result of increased loan refinance activity resulting from cyclically low market rates in the current period. Other, net increased by $171,700 primarily due to income generated by the Company’s partnership interest in a Title Company. Additionally, income on bank-owned life insurance (“BOLI”) increased by $101,500. These increases were partially offset by increases to provision for losses and losses on real estate owned of $574,800 and a decline in service and other fees of $8,700. In the six month period ended December 31, 2008, the Company recorded an impairment loss on FHLMC and FNMA preferred stock totaling $1,841,200. In the six month period ended December 31, 2008, the Company recorded a gain on the sale of mortgage-backed securities available for sale of $665,900.

The gain on the sale of mortgage-backed securities in the prior period is the result of sharply declining market rates that resulted in an opportunity for the Bank to sell mortgage-backed securities at an attractive market premium. During the prior period the Bank reclassified its mortgage-backed securities portfolio from held to maturity to available for sale.

In the current six month period, the Bank was able to restructure its investment in BOLI, transferring the balances from money market accounts into separate accounts generating earnings in excess of the cost of insurance. In the prior period, the earnings of the money market account were insufficient to offset the cost of the insurance.

Non-interest expense for the six months ended December 31, 2009 increased by $1,312,300, or 12.0%, from the prior year comparable period. This resulted from an increase in federal deposit insurance of $971,400, an increase in real estate owned expense of $720,400, an increase in outside services of $488,500, and an increase in other, net of $172,200, that was partially offset by decreases in compensation and benefits of $959,700, and office occupancy and equipment of $80,500.

The increase in the cost of FDIC insurance is due to a change in risk rating for the Bank and higher assessment rates charged on deposits, while the increase to real estate owned expense is attributable to the acquisition and maintenance of properties acquired through foreclosure.

The federal income tax provision for the six-month period ended December 31, 2009 represented an effective rate of 35.7% for the current period compared to an effective rate of a negative 32.8% for the prior year comparable period. The effective rate in the current period was higher due to permanent federal income tax differences resulting from expenses recorded to compensation expense on vesting stock options.

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Part I Financial Information
Item 2

LIQUIDITY AND CAPITAL RESOURCES

The Company’s liquidity measures its ability to generate adequate amounts of funds to meet its cash needs. Adequate liquidity guarantees that sufficient funds are available to meet deposit withdrawals, fund loan commitments, purchase securities, maintain adequate reserve requirements, pay operating expenses, provide funds for debt service, pay dividends to stockholders and meet other general commitments in a cost-effective manner. The primary sources of funds are deposits, principal and interest payments on loans, proceeds from the sale of loans, repurchase agreements, and advances from the FHLB. While maturities and scheduled amortization of loans are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and local competition. The Company’s most liquid assets are cash and cash equivalents. The levels of these assets are dependent on the Company’s operating, financing, lending and investing activities during any given period. Additional sources of funds include lines of credit available from the FHLB.

During the current period the Company enhanced its liquidity position by using payments received on loans and mortgage-backed securities to redeem brokered certificates of deposit and increase cash and cash equivalents. Management believes the Company maintains sufficient liquidity to meet current operational needs.

The holding company, PVF Capital Corp., has certain ongoing cash needs primarily related to trust preferred securities and the payment of dividends to stockholders. During the December 2008 quarter, the Company elected to defer interest payments on the trust preferred securities and suspend the payment of cash dividends to stockholders. As previously stated, the Company completed its exchange agreement whereby the Company paid $500,000 in cash, and issued $500,000 in common stock and warrants valued at $830,000 in exchange for the cancellation of $10.0 million of the Trust Preferred Obligation of PVF Capital Trust I. Additionally, the Company has entered into an agreement to exchange cash, common shares and warrants to acquire common shares for the $10.0 million Trust Preferred Obligation of PVF Capital Trust II. The Company anticipates that the securities issued by the Trust and the Subordinated Debentures will be cancelled and will no longer be outstanding. This transaction is pending shareholder approval at the annual shareholders meeting on January 29, 2010. If approved, this transaction is expected to be completed in February 2010 and result in a pretax gain of approximately $8.7 million. The completion of both transactions will result in an annual reduction in cash paid for interest expense of approximately $1.1 million. Cash dividends to stockholders totaled $97,173 for the six months ended December 31, 2008. Cash at the holding company totaled $420,900 at December 31, 2009.

On October 19, 2009, the Company and 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”). Under the Order, the Bank may not declare or pay dividends or make any other capital distributions from the Bank without receiving prior OTS approval. 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 prior non-objection of the OTS. The Company has withdrawn its application to participate in the U.S. Treasury’s Capital Purchase Program.

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Part I Financial Information
Item 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss arising from adverse changes in the fair value of financial instruments due to changes in interest rates, exchange rates and equity prices. The Bank’s market risk is composed of interest rate risk.

Asset/Liability Management: The Bank’s asset and liability committee (“ALCO”), which includes senior management representatives and two outside directors, monitors and considers methods of managing the rate sensitivity and repricing characteristics of the balance sheet components consistent with maintaining acceptable levels of changes in net portfolio value (“NPV”) and net interest income. Park View Federal’s asset and liability management program is designed to minimize the impact of sudden and sustained changes in interest rates on NPV and net interest income.

The Bank’s exposure to interest rate risk is reviewed on a quarterly basis by the ALCO and the Board of Directors. Exposure to interest rate risk is measured with the use of interest rate sensitivity analysis to determine the Bank’s change in NPV in the event of hypothetical changes in interest rates, while interest rate sensitivity gap analysis is used to determine the repricing characteristics of the Bank’s assets and liabilities. If estimated changes to NPV and net interest income are not within the limits established by the Board, the Board may direct management to adjust its asset and liability mix to bring interest rate risk within Board-approved limits.

In order to reduce the exposure to interest rate fluctuations, the Bank has developed strategies to manage its liquidity, shorten the effective maturity and increase the interest rate sensitivity of its asset base. Management has sought to decrease the average maturity of its assets by emphasizing the origination of adjustable-rate residential mortgage loans and adjustable-rate mortgage loans for the acquisition, development and construction of residential and commercial real estate, all of which are retained by the Bank for its portfolio. In addition, all long-term, fixed-rate mortgages are underwritten according to guidelines of the Federal Home Loan Mortgage Corporation (“FHLMC”) and the Federal National Mortgage Association (“FNMA”) which are then sold directly for cash in the secondary market. The Bank carefully monitors the maturity and repricing of its interest-earning assets and interest-bearing liabilities to minimize the effect of changing interest rates on its NPV. The Bank’s interest rate risk position is the result of the repricing characteristics of assets and liabilities. The balance sheet is primarily comprised of interest-earning assets having a maturity and repricing period of one month to five years. These assets were funded primarily utilizing interest-bearing liabilities having a final maturity of two years or less and a repurchase agreement.

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Part I Financial Information
Item 4

CONTROLS AND PROCEDURES

As of the end of the period covered by this Quarterly Report on Form 10-Q, 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 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: (i) is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms; and (ii) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers or persons performing similar functions, as appropriate to allow timely decisions regarding disclosure. 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 identified in connection with the evaluation required by paragraph (d) of Securities and Exchange Commission Rule 13a-15 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 except as set forth in its Annual Report on Form 10-K for the year ended June 30, 2009.

Part II Other Information

Item 1. Legal Proceedings. N/A

Item 1A. Risk Factors

For information regarding the Company’s risk factors see “Risk Factors,” in the Company’s Form 10-K for the fiscal year ended June 30, 2009 and Risk Factors in the Company’s Form 10-Q for the quarter ended September 30, 2009. As of December 31, 2009, the risk factors of the Company have not changed materially from those reported in the Form 10-K and previously filed Form 10-Q except as set forth below.

We are subject to restrictions and conditions of Cease and Desist Orders issued by the Office of Thrift Supervision. We have incurred and expect to continue to incur significant additional regulatory compliance expense in connection with the Cease and Desist Orders. Failure to comply with the Cease and Desist Orders could result in additional enforcement action against us.

The Office of Thrift Supervision has issued Cease and Desist Orders against PVF and Park View Federal. The Cease and Desist Orders contain a number of significant directives, including higher capital requirements, requirements to reduce the level of our classified and criticized assets, growth and operating restrictions, restrictions on brokered deposits, and restrictions on dividend payments. These restrictions may impede our ability to operate our own business and to effectively compete in our markets. If we fail to comply with the terms and conditions of the

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Part II Other Information continued

Cease and Desist Orders, the Office of Thrift Supervision could take additional enforcement action against us, including the imposition of further operating restrictions, directing us to seek a merger partner or to liquidate Park View Federal. With exception to the higher capital ratio requirement, we have complied to date with all requirements of the Cease and Desist Orders and we will continue to work to comply with all such requirements in the future. As of the date of this prospectus, we have submitted a capital plan and a business plan which plans contemplate the Company’s proposed rights offering and a first calendar quarter 2010 closing date and which is being reviewed by the Office of Thrift Supervision. We have also submitted to the Office of Thrift Supervision our reduction targets for our adversely classified assets.

We have incurred and expect to continue to incur significant additional regulatory compliance expense in connection with the Cease and Desist Orders, and we will incur ongoing expenses attributable to compliance with the terms of the orders. It is possible regulatory compliance expenses related to the Cease and Desist Orders could have a material adverse impact on us in the future.

In addition, the Office of Thrift Supervision must approve any deviation from our business plan, which could limit our ability to make any changes to our business, which could negatively impact the scope and flexibility of our business activities. Further, the imposition of the Cease and Desist Orders, including certain restrictions on severance and indemnification payments and employment and compensation arrangements, may make it more difficult to attract and retain qualified employees. While we plan to take appropriate actions and intend to seek to have the Cease and Desist Orders terminated in the future, such actions may not result in the Office of Thrift Supervision terminating the Cease and Desist Orders.

Our capital levels were not sufficient to achieve compliance with the higher capital requirements by December 31, 2009 and any capital cushion in the future may not be sufficient to absorb additional loan or other losses and maintain compliance with these higher capital requirements.

The Office of Thrift Supervision has directed Park View Federal to raise its tier one (core) capital and total risk-based capital ratios to 8% and 12%, respectively, by December 31, 2009. We have submitted a capital plan and a business plan which plans contemplate the Company’s proposed rights offering and a first calendar quarter 2010 closing date and which is being reviewed by the Office of Thrift Supervision. Although we did not comply with the higher capital ratio requirements by the December 31, 2009 required date, based on informal discussions with the Office of Thrift Supervision and due to the pendency of the rights offering, management does not expect that any additional material restrictions or penalties will be imposed by the Office of Thrift Supervision as a result of not complying with the December 31, 2009 deadline, assuming we are able to raise sufficient capital in the rights offering.

Our classified asset levels currently are not sufficient to achieve compliance with the classified asset levels we must meet by December 31, 2010.

The Office of Thrift Supervision has directed Park View Federal to 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. At December 31, 2009, we did not meet these requirements and our levels of adversely classified assets and adversely classified assets and assets designated as special

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Part II Other Information continued

mention to core capital plus allowance for loan and lease losses were 119.9% and 130.5% , respectively. We do not expect to achieve compliance with these classified asset ratios prior to December 31, 2010. If we fail to meet the required classified asset ratios by December 31, 2010, the Office of Thrift Supervision could take additional enforcement action against us, including the imposition of further operating restrictions. The Office of Thrift Supervision could also direct us to seek a merger partner or liquidate Park View Federal.

Higher loan losses could require us to increase our allowance for loan losses through a charge to earnings.

When we loan money we incur the risk that our borrowers do not repay their loans. We reserve for loan losses by establishing an allowance through a charge to earnings. The amount of this allowance is based on our assessment of loan losses inherent in our loan portfolio. The process for determining the amount of the allowance is critical to our financial results and condition. It requires subjective and complex judgments about the future, including forecasts of economic or market conditions that might impair the ability of our borrowers to repay their loans. We might underestimate the loan losses inherent in our loan portfolio and have loan losses in excess of the amount reserved. We might increase the allowance because of changing economic conditions. For example, in a rising interest rate environment, borrowers with adjustable-rate loans could see their payments increase. There may be a significant increase in the number of borrowers who are unable or unwilling to repay their loans, resulting in our charging off more loans and increasing our allowance. In addition, when real estate values decline, the potential severity of loss on a real estate-secured loan can increase significantly, especially in the case of loans with high combined loan-to-value ratios. The recent decline in the national economy and the local economies of the areas in which the loans are concentrated could result in an increase in loan delinquencies, foreclosures or repossessions resulting in increased charge-off amounts and the need for additional loan loss allowances in future periods. In addition, our determination as to the amount of our allowance for loan losses is subject to review by our primary regulator, the Office of Thrift Supervision, as part of its examination process, which may result in the establishment of an additional allowance based upon the judgment of the Office of Thrift Supervision after a review of the information available at the time of its examination. Our allowance for loan losses amounted to $29.9 million, or 4.56% of total loans outstanding and 40.8% of nonperforming loans, at December 31, 2009. Our allowance for loan losses at December 31, 2009 may not be sufficient to cover future loan losses. A large loss could deplete the allowance and require increased provisions to replenish the allowance, which would decrease our earnings. In addition, at December 31, 2009, we had 29 loan relationships that were performing according to their original terms with outstanding balances that exceeded $3.0 million. However, the deterioration of one or more of these loans could result in a significant increase in our nonperforming loans and our provision for loan losses, which would negatively impact our results of operations.

A continuation of recent turmoil in the financial markets could have an adverse effect on our financial position or results of operations.

Since 2008, United States and global financial markets have experienced severe disruption and volatility, and general economic conditions have declined significantly. Adverse developments in credit quality, asset values and revenue opportunities throughout the financial services industry, as well as general uncertainty regarding the economic, industry and regulatory environment, have had a marked negative impact on the industry. Dramatic declines in the U.S. housing market over the past two years, with falling home prices, increasing foreclosures and

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Part II Other Information continued

increasing unemployment, have negatively affected the credit performance of mortgage loans and resulted in significant write-downs of asset values by many financial institutions. The United States and the governments of 21 other countries have taken steps to try to stabilize the financial system, including investing in financial institutions, and have also been working to design and implement programs to improve general economic conditions. Notwithstanding the actions of the United States and other governments, these efforts may not succeed in restoring industry, economic or market conditions and may result in adverse unintended consequences. Factors that could continue to pressure financial services companies, including PVF, are numerous and include (i) worsening credit quality, leading among other things to increases in loan losses and reserves, (ii) continued or worsening disruption and volatility in financial markets, leading to, among other things, continuing reductions in asset values, (iii) capital and liquidity concerns regarding financial institutions generally, (iv) limitations resulting from or imposed in connection with governmental actions intended to stabilize or provide additional regulation of the financial system, or (v) recessionary conditions that are deeper or last longer than currently anticipated.

The current economic recession could result in increases in our level of non-performing loans and/or reduce demand for our products and services, which would lead to lower revenue, higher loan losses and lower earnings.

Our business activities and earnings are affected by general business conditions in the United States and in our local market area. These conditions include short-term and long-term interest rates, inflation, unemployment levels, monetary supply, consumer confidence and spending, fluctuations in both debt and equity capital markets and the strength of the economy in the United States generally and in our market area in particular. In the current recession, the national economy has experienced a general economic downturn, with rising unemployment levels, declines in real estate values and an erosion in consumer confidence. Our primary market area has also been negatively impacted by the current economic recession. From November 2008 to November 2009, unemployment rates in the Cleveland-Elyria-Mentor metropolitan statistical area increased from 6.6% to 9.0%. In addition, our primary market area has also experienced a softening of the local real estate market, a reduction in local property values and a decline in the local manufacturing industry, which employs many of our borrowers. A prolonged or more severe economic downturn, continued elevated levels of unemployment, further declines in the values of real estate, or other events that affect household and/or corporate incomes could impair the ability of our borrowers to repay their loans in accordance with their terms. Nearly all of our loans are secured by real estate or made to businesses in our primary market area, the greater Cleveland metropolitan area and the surrounding areas. As a result of this concentration, a prolonged or more severe downturn in the local economy could result in significant increases in nonperforming loans, which would negatively impact our interest income and result in higher provisions for loan losses, which would decrease our earnings and further increase the capital required to comply with the Cease and Desist Orders. The economic downturn could also result in reduced demand for credit or fee-based products and services, which also would decrease our revenues.

Our emphasis on construction and commercial real estate lending and land loans may expose us to increased lending risks.

At December 31, 2009, we had $205.0 million in loans secured by commercial real estate, $33.6 million in real estate construction loans, which included $20.8 million in residential construction loans, $3.8 million in loans for the

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Part II Other Information continued

construction of multi-family properties and $9.0 million for the construction of commercial properties and $58.1 million in loans secured by land. Commercial real estate loans, construction loans and land loans represented 31.2%, 5.1% and 8.9%, respectively, of our loan portfolio. At December 31, 2009, we had $15.1 million of reserves specifically allocated to these loan types. While commercial real estate, construction and land loans are generally more interest rate sensitive and carry higher yields than do residential mortgage loans, these types of loans generally expose a lender to greater risk of non-payment and loss than single-family residential mortgage loans because repayment of the loans often depends on the successful operation of the property, the income stream of the borrowers and, for construction loans, the accuracy of the estimate of the property’s value at completion of construction and the estimated cost of construction. Such loans typically involve larger loan balances to single borrowers or groups of related borrowers compared to single-family residential mortgage loans.

Our adjustable-rate mortgage loans may expose us to increased lending risks.

At December 31, 2009, we had $574.7 million in adjustable-rate mortgage loans, or 86.2% of our total loan portfolio. In addition, $327.5 million, or 57.0% of our adjustable-rate mortgage loans will have interest rate adjustments on or prior to December 31, 2010. While adjustable-rate loans better offset the adverse effects of an increase in interest rates as compared to fixed-rate mortgages, the increased mortgage payments required of adjustable-rate loan borrowers upon an interest rate adjustment in a rising interest rate environment could cause an increase in delinquencies and defaults. The marketability of the underlying property also may be adversely affected in a high interest rate environment. In addition, although adjustable-rate mortgage loans help make our asset base more responsive to changes in interest rates, the extent of this interest sensitivity is limited by the annual and lifetime interest rate adjustment limits.

PVF’s financial condition and results of operations are dependent on the economy in Park View Federal’s market area.

Park View Federal’s market area consists of Portage, Lake, Geauga, Cuyahoga, Summit, Medina and Lorain Counties in Ohio. As of December 31, 2009, management estimates that more than 90% of deposits and 90% of loans came from its market area. Because of Park View Federal’s concentration of business activities in its market area, PVF’s financial condition and results of operations depend upon economic conditions in its market area. Adverse economic conditions in our market area could reduce our growth rate, affect the ability of our customers to repay their loans and generally affect our financial condition and results of operations. Conditions such as inflation, recession, unemployment, high interest rates, short money supply, scarce natural resources, international disorders, terrorism and other factors beyond our control may adversely affect our profitability. We are less able than a larger institution to spread the risks of unfavorable local economic conditions across a large number of diversified economies. Any sustained period of increased payment delinquencies, foreclosures or losses caused by adverse market or economic conditions in the State of Ohio could adversely affect the value of our assets, revenues, results of operations and financial condition. Moreover, we cannot give any assurance we will benefit from any market growth or favorable economic conditions in our primary market areas if they do occur.

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Part II Other Information continued

Increased and/or special Federal Deposit Insurance Corporation assessments will hurt our earnings.

Beginning in late 2008, the economic environment caused higher levels of bank failures, which dramatically increased Federal Deposit Insurance Corporation resolution costs and led to a significant reduction in the Deposit Insurance Fund. As a result, the Federal Deposit Insurance Corporation has significantly increased the initial base assessment rates paid by financial institutions for deposit insurance. These increases in the base assessment rate have increased our deposit insurance costs and negatively impacted our earnings. In addition, in May 2009, the Federal Deposit Insurance Corporation imposed a special assessment on all insured institutions due to recent bank and savings association failures. The emergency assessment amounted to 5 basis points on each institution’s assets minus tier one (core) capital as of June 30, 2009, subject to a maximum equal to 10 basis points times the institution’s assessment base. Any further increased and/or special Federal Deposit Insurance Corporation assessment will further negatively impact our earnings.

Park View Federal has been notified by the counterparty to a repurchase agreement that the counterparty is entitled to declare that an event of default has occurred under the repurchase agreement.

If the counterparty were to declare a default and pursue its remedies, Park View Federal could incur an expense of approximately $3.5 million related to the early termination of the repurchase transaction.

Park View Federal is a party to a repurchase agreement, pursuant to which it has sold $50.0 million in securities to a counterparty with an obligation to repurchase such securities at a later date. Park View Federal’s obligation to repurchase securities is fully collateralized by the securities sold to the counterparty under obligation to repurchase. This transaction provides additional liquidity to Park View Federal at an imputed interest rate to Park View Federal of 4.99%. Park View Federal has been notified by the counterparty that as a result of Park View Federal’s failure to remain “well capitalized,” as described in the repurchase agreement, the counterparty is entitled to declare that an event of default has occurred under the agreement. While the counterparty has not at this time declared that an event of default has occurred, if it were to elect to do so and pursue its remedies under the repurchase agreement, it would be entitled to seize and sell the collateral it holds and use the proceeds from such sale to satisfy amounts owed it under the repurchase agreement. In such event, because market interest rates are below the imputed interest rate in the repurchase transaction, Park View Federal estimates based on current market rates that it could incur an expense of approximately $3.5 million related to the early termination of the repurchase transaction.

Changing interest rates may decrease our earnings and asset values.

Our net interest income is the interest we earn on loans and investments less the interest we pay on our deposits and borrowings. Our net interest margin is the difference between the yield we earn on our assets and the interest rate we pay for deposits and our other sources of funding. Changes in interest rates—up or down—could adversely affect our net interest margin and, as a result, our net interest income. Although the yield we earn on our assets and our funding costs tend to move in the same direction in response to changes in interest rates, one can rise or fall faster than the other, causing our net interest margin to expand or contract. Our

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Part II Other Information continued

liabilities tend to be shorter in duration than our assets, so they may adjust faster in response to changes in interest rates. As a result, when interest rates rise, our funding costs may rise faster than the yield we earn on our assets, causing our net interest margin to contract until the yield catches up. Changes in the slope of the “yield curve”—or the spread between short-term and long-term interest rates—could also reduce our net interest margin. Normally, the yield curve is upward sloping, meaning short-term rates are lower than long-term rates. Because our liabilities tend to be shorter in duration than our assets, when the yield curve flattens or even inverts, we could experience pressure on our net interest margin as our cost of funds increases relative to the yield we can earn on our assets.

Changes in interest rates also affect the value of Park View Federal’s interest-earning assets, and in particular Park View Federal’s securities portfolio. Generally, the value of fixed-rate securities fluctuates inversely with changes in interest rates. Unrealized gains and losses on securities available for sale are reported as a separate component of equity, net of tax. Decreases in the fair value of securities available for sale resulting from increases in interest rates could have an adverse effect on shareholders’ equity.

PVF and Park View Federal operate in a highly regulated environment and may be adversely affected by changes in laws and regulations.

Park View Federal is subject to extensive regulation, supervision and examination by the Office of Thrift Supervision, our primary federal regulator, and by the Federal Deposit Insurance Corporation, as insurer of its deposits. PVF also is subject to regulation and supervision by the Office of Thrift Supervision. Such regulation and supervision govern the activities in which an institution and its holding company may engage, and are intended primarily for the protection of the insurance fund and for the depositors and borrowers of Park View Federal. The regulation and supervision by the Office of Thrift Supervision and the Federal Deposit Insurance Corporation are not intended to protect the interests of investors in PVF common stock. Regulatory authorities have extensive discretion in their supervisory and enforcement activities, including the imposition of restrictions on our operations, the classification of our assets and determination of the level of our allowance for loan losses. Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, legislation or supervisory action, may have a material impact on our operations.

Proposed regulatory reform may have a material impact on our operations.

The Obama Administration has published a comprehensive regulatory reform plan that is intended to modernize and protect the integrity of the United States financial system and has offered, and the House of Representatives and Senate are currently considering, proposed legislation to accomplish these reforms. The President’s plan contains several elements that would have a direct effect on PVF and Park View Federal. Under the proposed legislation, the federal thrift charter and the Office of Thrift Supervision would be eliminated and all companies that control an insured depository institution must register as a bank holding company. Existing federal thrifts, such as Park View Federal, would become a national bank or could choose to adopt a state charter. Registration as a bank holding company would represent a significant change, as there currently exist significant differences between savings and loan holding company and bank holding company supervision and regulation. For example, the Federal Reserve imposes leverage and risk-based capital requirements on bank holding companies whereas the Office of Thrift Supervision does not impose any capital requirements on savings and loan holding companies. The Administration has

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Part II Other Information continued

also proposed the creation of a new federal agency, the Consumer Financial Protection Agency, which would be dedicated to protecting consumers in the financial products and services market. The creation of this agency could result in new regulatory requirements and raise the cost of regulatory compliance. In addition, legislation stemming from the reform plan could require changes in regulatory capital requirements, loan loss provisioning practices, and compensation practices. If implemented, the foregoing regulatory reforms may have a material impact on our operations. However, because the final legislation may differ significantly from the reform plan proposed by the President, we cannot determine the specific impact of any regulatory reform at this time.

Strong competition within Park View Federal’s market area could hurt profits and slow growth.

Park View Federal faces intense competition both in making loans and attracting deposits. This competition has made it more difficult for Park View Federal to make new loans and at times has forced Park View Federal to offer higher deposit rates. Price competition for loans and deposits might result in Park View Federal earning less on loans and paying more on deposits, which would reduce net interest income. Competition also makes it more difficult to increase loans and deposits. As of June 30, 2009, which is the most recent date for which information is available, we held 1.0% of the deposits in Cleveland-Elyria-Mentor, Ohio metropolitan statistical area, which was the 14th largest share of deposits out of 40 financial institutions with offices in the area, and 0.8% of the deposits in Akron, Ohio metropolitan statistical area, which was the 16th largest share of deposits out of 28 financial institutions with offices in this area. Competition also makes it more difficult to hire and retain experienced employees. Some of the institutions with which Park View Federal competes have substantially greater resources and lending limits than Park View Federal has and may offer services that Park View Federal does not provide. Management expects competition to increase in the future as a result of legislative, regulatory and technological changes and the continuing trend of consolidation in the financial services industry. Park View Federal’s profitability depends upon its continued ability to compete successfully in its market area.

Stockholders will face significant dilution as a result of a contemplated stock offering and warrants issued or to be issued in exchange for trust preferred securities.

We have filed a Registration Statement on Form S-1 with the Securities and Exchange Commission relating to (i) an offering to current shareholders of the Company of non-transferable subscription rights to purchase shares of the Company’s common stock and (ii) a concurrent offering of shares of common stock to standby purchasers comprised of certain institutional investors and high net worth individuals (the “Rights Offering Registration Statement”). If the offering described in the Rights Offering Registration Statement is completed, the Company’s existing stockholders will incur substantial dilution of their voting interests and will own a significantly smaller percentage of the Company’s outstanding common stock following such offering. The dilutive effect of that offering may have a significant impact on the market price of the Company’s common stock.

In addition, pursuant to the exchange agreement relating to the completed trust preferred exchange, we issued warrants to acquire a number of shares of common stock equal to 769,608 shares plus 9.9% of the shares to be issued in the second trust preferred exchange (exclusive of shares issuable upon the exercise of warrants). In addition, pursuant to the second trust preferred exchange, the Investors will tender

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Part II Other Information continued

$10.0 million aggregate liquidation amount of trust preferred securities to the Company in exchange for an aggregate of $400,000 in cash, shares of common stock valued at $600,000 based on the average daily closing price of the common stock over the 20 trading days prior to the closing of the transaction (the “Initial Shares”) and warrants to acquire 769,608 shares of common stock plus 9.9% of the Initial Shares. Further, we will issue additional warrants that become exercisable in the event we complete one or more public offerings or private placements of our common stock (including the stock offering contemplated by the Rights Offering Registration Statement) within a year. The second group of warrants will give the holders the right to acquire additional shares of common stock so that the total number of shares they could acquire under all warrants would be an aggregate of 4.9% of the common stock to be outstanding following the public offering or offerings completed during that one-year period. The dilutive effect of this second group of warrants may also have a significant impact on the market price of the Company’s common stock.

We could, as a result of our stock offering or future investments in our common stock by 5% holders, experience an “ownership change” for tax purposes that could cause us to permanently lose a portion of our U.S. federal deferred tax assets.

The completion of our proposed rights offering could cause the Company to experience an “ownership change” as defined for U.S. federal income tax purposes. Even if these transactions do not cause the Company to experience an “ownership change,” these transactions materially increase the risk that PVF could experience an “ownership change” in the future. As a result, issuances or sales of common stock or other securities in the future (including common stock issued in the stock offering), or certain other direct or indirect changes in ownership, could result in an “ownership change” under Section 382 of the Internal Revenue Code of 1986, as amended. In the event an “ownership change” were to occur, the Company could realize a permanent loss on a portion of its U.S. federal deferred tax assets as a result of certain limitations on certain built-in losses that have not been recognized for tax purposes, including, for example, losses on existing nonperforming assets. The amount of the permanent loss would depend on the size of the annual limitation (which is in part a function of the Company’s market capitalization at the time of an ownership change) and the applicable carryforward period for losses that have been limited (U.S. federal net operating losses generally may be carried forward for a period of 20 years). Any permanent loss could have a material adverse effect on the Company’s results of operations and financial condition.

The Company has not established a valuation allowance against its U.S. federal deferred tax assets of December 31, 2009, as the Company believed, based on its analysis as of that date, that it was more likely than not that all of these assets would be realized. Section 382 of the Internal Revenue Code imposes restrictions on the use of a corporation’s net operating losses, certain recognized built-in losses and other carryovers after an “ownership change” occurs. An “ownership change” is generally a greater than 50 percentage point increase by certain “5% shareholders” during the testing period, which is generally the three year-period ending on the transaction date. Upon an “ownership change,” a corporation generally is subject to an annual limitation on its pre-change losses and certain recognized built-in losses equal to the value of the corporation’s market capitalization immediately before the “ownership change” multiplied by the long-term tax-exempt rate (subject to certain adjustments). The annual limitation is increased each year to the extent that there is an unused limitation in a prior year. Since U.S. federal net operating losses generally may be carried forward for up to 20 years, the annual limitation also effectively provides a cap on the cumulative amount of pre-change losses and certain

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Part II Other Information continued

recognized built-in losses that may be utilized. Pre-change losses and certain recognized built-in losses in excess of the cap are effectively lost. Thus, if an “ownership change” were to occur, it is possible that the limitations imposed could cause a net increase in our U.S. Federal income tax liability and cause U.S. Federal income taxes to be paid earlier than if such limitations were not in effect.

The relevant calculations under Section 382 of the Internal Revenue Code are technical and highly complex. The rights offering, combined with other ownership changes in recent years, could cause the Company to experience an “ownership change.” If an “ownership change” were to occur, the Company believes it could permanently lose the ability to realize a portion of its deferred tax asset, resulting in reduction to the Company’s total shareholders’ equity. This could also decrease Park View Federal Savings Bank’s regulatory capital. The Company does not believe, however, that any such decrease in regulatory capital would be material.

Item 2. Unregistered Sale of Equity Securities and Use of Proceeds.
(a) N/A
(b) N/A
(c) The Company did not repurchase its equity securities during the period ended December 31, 2009:

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

3.1¹ Articles of Incorporation, as amended and restated

3.2² Code of Regulations, as amended and restated

3.3⁵ Bylaws, as amended and restated

4.1³ Specimen Common Stock Certificate

4.2⁴ Form of Common Stock Warrant issued to Alesco Preferred Funding IV, Ltd.

4.3⁴ Form of Common Stock Warrant issued to Alesco Preferred Funding IV, Ltd.

10.1⁴ Exchange Agreement between PVF Capital Corp., Marty E. Adams, Umberto P. Fedeli, Robert J. King, Jr., James B. Pastore, John S. Loeber, Lee Burdman, Jonathan A. Levy, Richard R. Hollington Jr. and Richard R. Hollington, III, dated October 9, 2009

10.2⁶ 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

10.3⁶ Order to Cease and Desist issued by the Office of Thrift Supervision for Park View Federal Savings Bank

10.4⁶ Stipulation and Consent to the Issuance of an Order to Cease and Desist between PVF Capital Corp. and the Office of Thrift Supervision

10.5⁶ Order to Cease and Desist issued by the Office of Thrift Supervision for PVF Capital Corp.

10.6 Letter Agreement between PVF Capital Corp. and Thomas J. Smith, dated November 24, 2009

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Part II Other Information continued

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

(1)	Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended June 30, 2002 (Commission File No. 0-24948).
(2)	Incorporated by reference to the Registrant’s Current Report on Form 8-K filed on February 6, 2008 (Commission File No. 0-24948).
(3)	Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended June 30, 1996 (Commission File No. 0-24948).
(4)	Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 (Commission File No. 0-24948).
(5)	Incorporated by reference to the Registrant’s Registration Statement on Form S-1 filed on November 12, 2009 (Commission File No. 333-163037).
(6)	Incorporated by reference to the Registrant’s Current Report on Form 8-K filed on October 23, 2009 (Commission File No. 0-24948).

44

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. (Registrant)
Date: January 29, 2010	/s/ Robert J. King, Jr.
	Robert J. King, Jr.
	President and Chief Executive Officer (Duly authorized officer)
	/s/ James H. Nicholson
	James H. Nicholson
	Chief Financial Officer (Principal financial officer)
	/s/ Edward B. Debevec
	Edward B. Debevec
	Treasurer and Principal Accounting Officer (Principal accounting officer)