10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

(Mark One)

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2006

OR

o TRANSITIONAL 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 Incorporation or Organization)	(I.R.S. Employer Identification No.)

30000 Aurora Road, Solon, Ohio	44139
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (440) 248-7171

Securities registered pursuant to Section 12(b) of the Act

Title of each class
Common Stock (par value $.01 per share) Name of each exchange on which registered
NASDAQ Capital Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes o   No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes o   No þ

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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
Large accelerated filer   o      Accelerated filer   þ      Non-accelerated filer   o      

Indicate by check mark whether the registrant is a shell company. Yes o   No þ

The registrant’s voting stock is listed on the Nasdaq Capital Market under the symbol “PVFC.” The aggregate market value of voting stock held by nonaffiliates of the registrant was approximately $64,864,258 based on the closing sale price of the registrant’s Common Stock as listed on the Nasdaq Small Cap Market^SM as of December 31, 2005 ($10.59 per share). Solely for purposes of this calculation, directors, executive officers and greater than 5% stockholders are treated as affiliates.

As of September 1, 2006, the Registrant had 7,717,448 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

     1. Portions of Annual Report to Stockholders for the Fiscal Year Ended June 30, 2006. (Parts II and IV)

     2. Portions of Proxy Statement for the 2006 Annual Meeting of Stockholders. (Part III)

PART I

Item 1. Business

General

     PVF Capital Corp. (“PVF” or the “Company”) is the holding company for Park View Federal Savings Bank (“Park View Federal” or the “Bank”). PVF owns and operates Park View Federal Savings Bank, PVF Service Corporation (“PVFSC”), a real estate subsidiary, and Mid Pines Land Company (“MPLC”), a real estate subsidiary. In addition, PVF owns PVF Holdings, Inc., a financial services subsidiary, currently inactive, and two other subsidiaries chartered for future operation, but which are also currently inactive. Park View Federal is a federal stock savings bank operating through seventeen offices located in Cleveland and surrounding communities. PVF also created PVF Capital Trust I for the sole purpose of issuing trust preferred securities. Park View Federal has operated continuously for 86 years, having been founded as an Ohio chartered savings and loan association in 1920. PVF Capital Corp’s main office is located at 30000 Aurora Road, Solon, Ohio 44139 and its telephone number is (440) 248-7171.

     The Bank’s principal business consists of attracting deposits from the general public and investing these funds primarily in loans secured by first mortgages on real estate located in the Bank’s market area, which consists of Portage, Lake, Geauga, Cuyahoga, Summit, Stark, Medina and Lorain Counties in Ohio. Park View Federal emphasizes the origination of loans for the purchase or construction of residential real estate, commercial real estate and multi-family residential property and land loans. To a lesser extent, the Bank originates loans secured by second mortgages, including home equity lines of credit and loans secured by savings deposits.

     The Bank derives its income principally from interest earned on loans and, to a lesser extent, loan servicing and other fees, gains on the sale of loans and interest earned on investments. The Bank’s principal expenses are interest expense on deposits and borrowings and noninterest expense such as compensation and employee benefits, office occupancy expenses and other miscellaneous expenses. Funds for these activities are provided principally by deposits, Federal Home Loan Bank advances and other borrowings, repayments of outstanding loans, sales of loans and operating revenues. The business of PVF consists primarily of the business of the Bank.

     Park View Federal is subject to examination and comprehensive regulation by the Office of Thrift Supervision (the “OTS”) and the Bank’s savings deposits are insured up to applicable limits by the Deposit Insurance Fund (the “DIF”), which is administered by the Federal Deposit Insurance Corporation (the “FDIC”). The Bank is a member of and owns capital stock in the Federal Home Loan Bank (the “FHLB”) of Cincinnati, which is one of 12 regional banks in the FHLB System. The Bank is further subject to regulations of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) governing reserves to be maintained and certain other matters. See “— Regulation of the Bank.”

Market Area

     The Bank conducts its business through seventeen offices located in Cuyahoga, Summit, Medina, Lorain, Lake, Portage and Geauga Counties in Ohio, and its market area consists of Portage, Lake, Geauga, Cuyahoga, Summit, Stark, Medina and Lorain Counties in Ohio. At June 30, 2006, over 90% of the Bank’s net loan portfolio and over 90% of the Bank’s deposits were in the Bank’s market area. Park View Federal has targeted business development efforts in suburban sectors of its market area, such as Lake, Geauga, Medina and Summit Counties, where demographic growth has been stronger.

     The economy in the Company’s market area has been based on the manufacture of durable goods. Though manufacturing continues to remain an important sector of the economy, diversification has occurred in recent years with the growth of service, financial and wholesale and retail trade industries.

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Lending Activities

Loan Portfolio Composition

     The Company’s loans receivable and loans receivable held for sale totaled $746.8 million at June 30, 2006, representing 82% of total assets at such date. It is the Company’s policy to concentrate its lending in its market area.

     Set forth below is certain data relating to the composition of the Company’s loan portfolio by type of loan on the dates indicated. As of June 30, 2006, the Company had no concentrations of loans exceeding 10% of total loans other than as disclosed below.

	At June 30,
	2006						2005						2004						2003						2002
	Amount			Percent			Amount			Percent			Amount			Percent			Amount			Percent			Amount			Percent
	(Dollars in thousands)
Real estate loans receivable held for investment:
One-to-four family residential	$	174,575			23.72	%	$	148,956			22.55	%	$	128,210			20.99	%	$	139,774			24.22	%	$	158,334			28.24	%
Home equity line of credit		94,450			12.83			97,692			14.79			83,505			13.67			67,822			11.75			53,349			9.52
Multifamily residential		45,716			6.21			33,505			5.07			38,777			6.35			40,942			7.10			43,439			7.75
Commercial		170,392			23.15			171,331			25.94			175,323			28.71			146,686			25.42			133,081			23.74
Commercial equity line of credit		34,064			4.63			31,875			4.83			38,113			6.24			34,081			5.91			22,872			4.08
Land		77,242			10.49			68,165			10.32			54,047			8.85			52,963			9.18			53,434			9.53
Construction — residential		84,146			11.43			75,460			11.42			70,833			11.60			73,160			12.68			64,960			11.59
Construction — multi-family		7,955			1.08			0			0.00			0			0.00			217			0.04			823			0.15
Construction — commercial		33,757			4.59			24,355			3.69			15,679			2.57			16,496			2.86			28,520			5.09
Non-real estate		21,824			2.96			17,300			2.62			13,951			2.29			11,761			2.04			8,460			1.50
		744,121			101.09			668,639			101.23			618,438			101.27			583,902			101.20			567,272			101.19
Deferred loan fees		(3,381	)		(0.46	)		(3,833	)		(0.58	)		(3,380	)		(0.55	)		(3,034	)		(0.53	)		(2,793	)		(0.50	)
Allowance for loan losses		(4,675	)		(0.63	)		(4,312	)		(0.65	)		(4,377	)		(0.72	)		(3,883	)		(0.67	)		(3,902	)		(0.69	)
Total other items		(8,056	)		(1.09	)		(8,145	)		(1.23	)		(7,757	)		(1.27	)		(6,917	)		(1.20	)		(6,695	)		(1.19	)
Total loans receivable, net	$	736,065			100.00	%	$	660,494			100.00	%	$	610,681			100.00	%	$	576,985			100.00	%	$	560,577			100.00	%
Loans receivable held for sale, net	$	10,698					$	9,060					$	11,871					$	33,604					$	11,680

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     The following table presents at June 30, 2006 the amounts of loan principal repayments scheduled to be received by the Company during the periods shown based upon the time remaining before contractual maturity. Loans with adjustable rates are reported as due in the year in which they reprice. Demand loans, loans having no schedule of repayments and no stated maturity and overdrafts are reported as due in one year or less. The table below does not include any estimate of prepayments and may cause the Bank’s actual repayment experience to differ from that shown below.

	Due During		Due After One
	the Year		Through Five		Due Five Years
	Ending		Years After		or More After
	June 30,		June 30,		June 30,
	2007		2006		2006
	(In thousands)
Real estate construction loans		125,858		0		0
Non-real estate loans		13,290		6,053		2,481
Total	$	139,148	$	6,053	$	2,481

     All loans with maturities greater than one year have predetermined interest rates. Scheduled contractual principal repayments of loans do not reflect the actual life of such assets. The average life of loans may be substantially less than their contractual terms because of prepayments.

Origination, Purchase and Sale of Loans

     The Bank generally has authority to originate and purchase loans secured by real estate located throughout the United States. Consistent with its emphasis on being a community-oriented financial institution, the Bank concentrates its lending activities in its market area.

     The Bank originates all fixed-rate, single-family mortgage loans in conformity with the Federal Home Loan Mortgage Corporation (the “FHLMC”) and Federal National Mortgage Association (the “FNMA”) guidelines so as to permit their being swapped with the FHLMC or the FNMA in exchange for mortgage-backed securities secured by such loans or their sale in the secondary market. All such loans are sold or swapped, as the case may be, with servicing retained, and are sold in furtherance of the Bank’s goal of better matching the maturities and interest rate sensitivity of its assets and liabilities. The Bank generally retains responsibility for collecting and remitting loan payments, inspecting the properties, making certain insurance and tax payments on behalf of borrowers and otherwise servicing the loans it sells or converts into mortgage-backed securities, and receives a fee for performing these services. Sales of loans also provide funds for additional lending and other purposes.

Loan Underwriting Policies

     The Bank’s lending activities are subject to the Bank’s written, nondiscriminatory underwriting standards and to loan origination procedures prescribed by the Bank’s Board of Directors and its management. Detailed loan applications are obtained to determine the borrower’s ability to repay, and the more significant items on these applications are verified through the use of credit reports, financial statements and confirmations. Property valuations are generally performed by an internal staff appraiser or by independent outside appraisers approved by the Bank’s Board of Directors. The Bank’s Loan Underwriter has authority to approve all fixed-rate single-family residential mortgage loans which meet FHLMC and FNMA underwriting guidelines and those adjustable-rate single-family residential mortgage loans which meet the Bank’s underwriting standards and are in amounts of less than $700,000. The Board of Directors has established a Loan Committee comprised of the Chairman of the Board and other officers and management of the Bank. This committee reviews all loans approved by the underwriter and has the authority to approve single-family residential loans, construction, multi-family and commercial real estate loans up to $2.5 million, and commercial non-real estate loans up to $1.0 million. All loans in excess of the above amounts must be approved by the Board of Directors. All loans secured by savings deposits can be approved by lending officers based in the Bank’s branch offices.

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     It is the Bank’s policy to have a mortgage creating a valid lien on real estate and to generally obtain a title insurance policy which insures that the property is free of prior encumbrances. When a title insurance policy is not obtained, a lien verification is received. Borrowers must also obtain hazard insurance policies prior to closing and, when the property is in a flood plain as designated by the Department of Housing and Urban Development, paid flood insurance policies. Most borrowers are also required to advance funds on a monthly basis together with each payment of principal and interest to a mortgage escrow account from which the Bank makes disbursements for items such as real estate taxes and homeowners insurance.

     The Bank is permitted to lend up to 100% of the appraised value of the real property securing a mortgage loan. The Bank will make a single-family residential mortgage loan with up to a 100% loan-to-value ratio if the required private mortgage insurance is obtained. The Bank generally limits the loan-to-value ratio on multi-family loans to 80% and commercial real estate mortgages to 80%.

     Interest rates charged by the Bank on loans are affected principally by competitive factors, the demand for such loans and the supply of funds available for lending purposes and, in the case of fixed-rate single-family residential loans, rates established by the FHLMC and the FNMA. These factors are, in turn, affected by general economic conditions, monetary policies of the federal government, including the Federal Reserve Board, legislative tax policies and government budgetary matters.

     Residential Real Estate Lending. The Bank historically has been and continues to be an originator of single-family residential real estate loans in its market area. The Bank currently originates fixed-rate residential mortgage loans in accordance with underwriting guidelines promulgated by the FHLMC and the FNMA and adjustable-rate mortgage loans for terms of up to 30 years. In addition, in accordance with FHLMC and FNMA guidelines, the Bank offers 30-year loans with interest rates that reset after five or seven years, at which point the rate is fixed over the remaining 25 or 23 years of the loan, respectively. At June 30, 2006, $174.6 million, or 23.7%, of the Bank’s net loan portfolio consisted of single-family conventional mortgage loans, of which approximately $138.7 million, or 79.4%, carried adjustable interest rates. Included in this amount are $47.9 million in second mortgage loans. In addition, the Bank had $10.7 million in loans held for sale. These loans carry fixed rates and are loans originated by the Bank to be swapped with the FHLMC and the FNMA in exchange for mortgage-backed securities or sold for cash in the secondary market.

     The Bank offers adjustable-rate residential mortgage loans with interest rates which adjust based upon changes in an index based on the weekly average yield on United States Treasury securities adjusted to a constant maturity of one year, as made available by the Federal Reserve Board (the “Treasury Rate”), plus a margin of 2.50% to 3.50%. The amount of any increase or decrease in the interest rate is usually limited to 2% per year, with a limit of 6% over the life of the loan. The date of the first rate adjustment may range from one to ten years from the original date of the loan.

     Commercial and Multi-Family Residential Real Estate Lending. The commercial real estate loans originated by the Bank are primarily secured by office buildings, shopping centers, warehouses and other income producing commercial property. The Bank’s multi-family residential loans are primarily secured by apartment buildings. These loans are generally for a term of from 10 to 25 years with interest rates that adjust either annually or every three to five years based upon changes in the Treasury Rate Index or Federal Home Loan Bank advance rate, plus a negotiated margin. In addition, the Bank makes revolving line of credit loans secured by mortgages on commercial and multi-family property. Said loans are adjustable-rate loans based on the prime interest rate and are made for terms of up to two years. These loans are underwritten using the same guidelines as for first mortgage, commercial and multi-family loans. Commercial real estate loans, including commercial equity lines of credit, and multi-family residential real estate loans amounted to $250.2 million, or 34.0%, of the Bank’s net loan portfolio at June 30, 2006.

     Commercial real estate lending entails significant additional risks as compared with residential property lending. Commercial real estate loans typically involve large loan balances to single borrowers or groups of related borrowers. The payment experience on such loans typically is dependent on the successful operation of the real estate project. These risks can be significantly impacted by supply and demand conditions in the market for office and retail space, and, as such, may be subject to a greater extent to adverse conditions in the economy. To minimize these risks, Park View Federal generally limits itself to its market area and to borrowers with which it has substantial experience or

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who are otherwise well known to the Bank. The Bank obtains financial statements and, in most cases, the personal guarantees from all principals obtaining commercial real estate loans.

     Construction Loans. The Bank also offers residential and commercial construction loans, with a substantial portion of such loans originated to date being for the construction of owner-occupied single-family dwellings in the Bank’s market area. Residential construction loans are offered to selected local developers to build single-family dwellings and to individuals building their primary or secondary residence. Generally, loans for the construction of owner-occupied, single-family residential properties are originated in connection with the permanent loan on the property and have a construction term of six to 18 months. Interest rates on residential construction loans made to the eventual occupant are set at competitive rates, and are usually fixed for the construction term. Interest rates on residential construction loans to builders are set at a variable rate based on the prime rate, and adjust quarterly. Interest rates on commercial construction loans float with a specified index, with construction terms generally not exceeding 24 months. Advances are generally paid directly to subcontractors and suppliers and are made on a percentage of completion basis. At June 30, 2006, $125.9 million, or 17.10%, of the Bank’s net loan portfolio consisted of construction loans.

     Prior to making a commitment to fund a loan, the Bank requires an appraisal of the property by an appraiser approved by the Board of Directors. The Bank also reviews and inspects each project at the commencement of construction and prior to disbursement of funds during the term of the construction loan.

     Construction financing is generally considered to involve a higher degree of risk of loss than long-term financing on improved, occupied real estate. Risk of loss on a construction loan is dependent largely upon the accuracy of the initial estimate of the property’s value at completion of construction or development and the estimated cost (including interest) of construction. During the construction phase, a number of factors could result in delays and cost overruns. If the estimate of construction costs proves to be inaccurate, the Bank may be required to advance funds beyond the amount originally committed to permit completion of the development. If the estimate of value proves to be inaccurate, the Bank may be confronted, at or prior to the maturity of the loan, with a project having a value which is insufficient to assure full repayment.

     Land Loans. The Bank originates loans to builders and developers for the acquisition and/or development of vacant land. The proceeds of the loan are used to acquire the land and/or to make site improvements necessary to develop the land into saleable lots. The Bank will not originate land loans to borrowers wishing to speculate in the value of land, and limits such loans to borrowers who expect to begin development of the property within two years of the date of the loan. The term of the loans are generally limited to two years. Repayments are made on the loans as the developed lots are sold.

     Land development and acquisition loans involve significant additional risks when compared with loans on existing residential properties. These loans typically involve large loan balances to single borrowers, and the payment experience is dependent on the successful development of the land and the sale of the lots. These risks can be significantly impacted by supply and demand conditions. To minimize these risks, Park View Federal generally limits the loans to builders and developers with whom it has substantial experience or who are otherwise well known to the Bank, secures financial statements and generally obtains personal guarantees of such builders and developers. The Bank may also require feasibility studies and market analyses to be performed with respect to the project. The amount of the loan is limited to 80% of the appraised value. If land is being acquired, the amount of the loan to be used for such purposes is usually limited to 80% of the cost of the land. All of these loans originated are within the Bank’s market area. The Bank had $77.2 million, or 10.5%, of its net loan portfolio in land loans at June 30, 2006.

     Equity Line of Credit Loans. The Bank originates loans secured by mortgages on residential real estate. Such loans are for terms of 5 years with one 5-year review and renewal option on owner occupied properties. In addition, such loans on non-owner occupied properties are for a term of 2 years, followed by a balloon payment. The rate adjusts monthly to a rate generally ranging from the prime lending rate to prime plus 2.0%. At June 30, 2006, the Bank had $94.5 million, or 12.8% of its net loan portfolio held for investment in home equity lines of credit.

     Commercial Non Real Estate Business Loans. The Bank will make commercial business loans secured by non-real estate assets such as accounts receivables, inventory, furniture and fixtures, equipment and certain intangible assets. Such loans are made on a limited basis (up to 5% of assets) to credit worthy customers of the Bank. The loans

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are made for up to 75% of the collateral value not to exceed $3.0 million for terms up to 10 years. The Bank generally requires the personal guarantee of all borrowers for such loans. At June 30, 2006, the Bank had $21.8 million, or 3.0%, of its net loan portfolio in commercial non real estate business loans.

Mortgage Banking Activity

     In addition to interest earned on loans, Park View Federal receives fees for servicing loans which it had sold or swapped for mortgage-backed securities. During the year ended June 30, 2006, the Bank reported net loan servicing income of $0.6 million and at June 30, 2006 was servicing $776.4 million of loans for others. The Bank has been able to keep delinquencies on loans serviced for others to a relatively low level of below 1% of the aggregate outstanding balance of loans serviced as a result of its policy to limit servicing to loans it originated and subsequently sold to the FHLMC and the FNMA. Because of the success the Bank has experienced in this area and because it has data processing equipment that will allow it to expand its portfolio of serviced loans without incurring significant incremental expenses, the Bank intends in the future to augment its portfolio of loans serviced by continuing to originate and either swap such fixed-rate single-family residential mortgage loans with the FHLMC and the FNMA in exchange for mortgage-backed securities or sell such loans for cash, while retaining servicing.

     In addition to loan servicing fees, the Bank receives fees in connection with loan commitments and originations, loan modifications, late payments and changes of property ownership and for miscellaneous services related to its loans. Loan origination fees are calculated as a percentage of the amount loaned. The Bank typically receives fees in connection with the origination of fixed-rate and adjustable-rate residential mortgage loans. All loan origination fees are deferred and accreted into income over the contractual life of the loan according to the interest method of recognizing income. If a loan is prepaid, refinanced or sold, all remaining deferred fees with respect to such loan are taken into income at such time.

     Income from these activities varies from period to period with the volume and type of loans originated, sold and purchased, which in turn is dependent on prevailing mortgage interest rates and their effect on the demand for loans in the Bank’s market area.

     At June 30, 2006 and 2005, the Bank had $10.7 million and $9.1 million, respectively, of fixed-rate single-family mortgage loans available for sale.

Non-Performing Loans and Other Problem Assets

     It is management’s policy to continually monitor its loan portfolio to anticipate and address potential and actual delinquencies. When a borrower fails to make a payment on a loan, the Bank takes immediate steps to have the delinquency cured and the loan restored to current status. Loans which are delinquent 15 days incur a late fee of 5% of the scheduled principal and interest payment. As a matter of policy, the Bank will contact the borrower after the loan has been delinquent 20 days. The Bank orders a property inspection after a loan payment becomes 45 days past due. If a delinquency exceeds 90 days in the case of a residential mortgage loan, 60 days in the case of a construction loan or 60 days for a loan on commercial real estate, the Bank will institute additional measures to enforce its remedies resulting from the loan’s default, including, commencing foreclosure action. Loans which are delinquent 90 days or more generally are placed on nonaccrual status, and formal legal proceedings are commenced to collect amounts owed. Loans may be placed on non-accrual if the borrower is bankrupt or if the loan is in foreclosure.

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     The following table sets forth information with respect to the Bank’s nonperforming loans and other problem assets at the dates indicated.

	At June 30,
	2006			2005			2004			2003			2002
	(Dollars in thousands)
Non-accruing loans (1):
Real estate	$	15,456		$	11,750		$	10,633		$	7,437		$	7,805
Total	$	15,456		$	11,750		$	10,633		$	7,437		$	7,805
Accruing loans which are contractually past due 90 days or more:
Real estate	$	—		$	608		$	503		$	275		$	—
Total	$	—		$	608		$	503		$	275		$	—
Total nonaccrual and 90 days past due loans	$	15,456		$	12,358		$	11,136		$	7,712		$	7,805
Ratio of non-performing loans to total loans		2.08	%		1.85	%		1.80	%		1.32	%		1.38	%
Other non-performing assets (2)	$	817		$	1,319		$	70		$	449$			564
Total non-performing assets	$	16,273		$	13,677		$	11,206		$	8,161		$	8,369
Total non-performing assets to total assets		1.80	%		1.66	%		1.48	%		1.10	%		1.23	%

(1)	Non-accrual status denotes loans on which, in the opinion of management, the collection of additional interest is unlikely, or loans that meet the non-accrual criteria established by regulatory authorities. Non-accrual loans include all loans classified as doubtful or loss, loans in foreclosure, and all loans greater than 90-days past due with a loan-to-value ratio greater than 65%.
(2)	Other non-performing assets represent property acquired by the Bank through foreclosure or repossession.

     Following is a schedule detailing the length of time our non-accrual loans have been contractually past due along with detail as to the composition of non-accrual loans at June 30, 2006 and 2005.

	At June 30,
	2006								2005
	(Dollars in thousands)
	90 days		91 to		More than				90 days		91 to		More than
	or less		365 days		365 days		Total		or less		365 days		365 days		Total
One-to-four- residential		—		2,639		2,295		4,934		2,409		1,688		1,595		5,69
Home equity line of credit		22		1,560		1,071		2,653		124		—		1,644		1,768
Multi-family residential		—		—		21		21		—		—		21		21
Commercial real estate		—		1,289		1,684		2,973		332		1,454		1,732		3,518
Land		—		1,137		52		1,189		58		—		277		335
Residential construction		—		3,687		—		3,687		—		256		160		416
		22		10,311		5,123		15,456		2,923		3,398		5,429		11,750

     The increase in non-accrual loans and accruing loans which are contractually past due more than 90 days at June 30, 2006 and June 30, 2005 is attributable to poor current local and economic conditions. Increasing interest rates have also negatively impacted our borrowers’ ability to make scheduled loan payments. Due to an increase in foreclosure activity in the area, the foreclosure process in Cuyahoga County, our primary market, has become elongated. As such, loans have remained past due for considerable periods prior to being collected, transferred to Real Estate Owned, or charged-off.

     Of the $15,456,000 in non-accrual loans at June 30, 2006, $7,869,000 were individually identified as impaired. All of these loans are collaterized by various forms of non-residential real estate or residential construction

7

loans. These loans were reviewed for the likelihood of full collection based primarily on the value of the underlying collateral, and, to the extent we believed collection of loan principal was in doubt, we established specific loss reserves. Our evaluations of the underlying collateral include a consideration of the potential impact of erosion in real estate values due to poor local economic conditions and a potentially long foreclosure process. The consideration involves discounting the original appraised values of the real estate to arrive at an estimate of the net realizable value of the collateral. Through our evaluation of the underlying collateral, which includes an inspection of the property, we determined that despite difficult conditions, these loans are generally well-secured. Through this process, we established specific loss reserves related to these loans as of June 30, 2006 of $180,000. In addition, given the inherent risk related to estimating probable losses on these loans, we established additional reserves of $722,267.

     The remaining non-accrual loans with a balance totaling $7,587,000, represents homogeneous one-to-four family loans. The loss allocations applied to adversely classified loans are based on our historical loss experience, adjusted for environmental factors such as local economic conditions and changes in interest rates. Additionally, the loss allocations consider the potential that the value of this collateral may erode during the foreclosure process. Through this process, we established general loss reserves for these loans of $750,800. We also established specific reserves for these loans to the extent such losses are identifiable. At June 30, 2006 we established specific reserves of $78,900 related to these loans.

     Impaired loans represent non-accrual loans plus accruing loans ninety or more days past due in the nonresidential real estate and residential construction loan categories. Of these $2,972,100, are commercial real estate loans, and $4,876,000 are construction and land loans. At June 30, 2006, foreclosure proceedings had been initiated on loans in these categories with principal balances of $1,470,600 and $3,695,300 respectively. At June 30, 2006, impaired commercial real estate and construction and land loans have been past due on average 754 and 249 days, respectively. Foreclosure proceedings for these loans are subject to external factors, such as bankruptcy and other legal proceedings that may delay the disposition of the loan, but generally occur within a period of time ranging from 12 to 60 months from the time they are initiated until the loan is ultimately collected, transferred to Real Estate Owned, or charged-off.

     It is the Bank’s policy to not record into income partial interest payments. During the year ended June 30, 2006, gross interest income of $1,571,000 would have been recorded on loans accounted for on a non-accrual basis if such loans had been current throughout the period. No interest on non-accruing loans was included in income.

     At June 30, 2006, non-accruing loans consisted of 81 loans totaling $15.5 million, and included 54 conventional mortgage loans aggregating $7.6 million, 5 land loans in the amount of $1.2 million, 9 construction loans in the amount of $3.7 million, 12 commercial loans in the amount of $3.0 million and 1 multifamily residential loan in the amount of $21,300. Management has reviewed its non-accruing loans and believes that the allowance for loan losses is adequate to absorb probable losses on these loans.

     At June 30, 2006, the Company had no loans not disclosed on the preceding table, where known information about possible credit problems of borrowers caused management to have serious doubts as to the ability of such borrowers to comply with the present loan repayment terms and which may result in disclosure of such loans as non-accruing loans, accruing loans contractually past due 90 days or more or restructured loans.

     Real estate acquired by the Bank as a result of foreclosure is classified as real estate owned until such time as it is sold. At June 30, 2006, the Bank had 6 real estate owned properties totaling $817,279.

8

     Asset Classification and Allowance for Loan Losses. Federal regulations require savings institutions to review their assets on a regular basis and to classify them as “substandard,” “doubtful”, or “loss,” if warranted. Assets classified as substandard or doubtful require the institution to establish additional general allowances for loan losses. If an asset or portion thereof is classified loss, the insured institution must either establish specific allowances for loan losses in the amount of 100% of the portion of the asset classified loss, or charge off such amount. An asset which does not currently warrant classification, but which possesses weaknesses or deficiencies deserving close attention is required to be designated as “special mention.” The Bank has established an Asset Classification Committee, which is comprised of senior employees of the Bank and two outside Board members. The Asset Classification Committee meets quarterly to review the Bank’s loan portfolio and determine which loans should be placed on a “watch-list” of potential problem loans which are considered to have more than normal credit risk. Currently, general loss allowances (up to 1.25% of risk-based assets) established to cover losses related to assets classified substandard or doubtful may be included in determining an institution’s regulatory capital, while specific valuation allowances for loan losses do not qualify as regulatory capital. See “Regulation of the Bank — Regulatory Capital Requirements.” OTS examiners may disagree with the insured institution’s classifications and amounts reserved. If an institution does not agree with an examiner’s classification of an asset, it may appeal this determination to the OTS. At June 30, 2006, total non-accrual and 90 days past due loans and other non-performing assets were $16.3 million, of which amount approximately $15.5 million were classified as substandard. For additional information, see “— Non-Performing Loans and Other Problem Assets” and Note 4 of Notes to Consolidated Financial Statements.

     In originating loans, the Bank recognizes that credit losses will be experienced and that the risk of loss will vary with, among other things, the type of loan being made, the creditworthiness of the borrower over the term of the loan, general economic conditions and, in the case of a secured loan, the quality of the security for the loan. It is management’s policy to maintain an adequate allowance for loan losses based on, among other things, the Bank’s and the industry’s historical loan loss experience, evaluation of economic conditions and regular reviews of delinquencies and loan portfolio quality. The Bank increases its allowance for loan losses by charging provisions for loan losses against the Bank’s income.

     General allowances are made pursuant to management’s assessment of risk in the Bank’s loan portfolio as a whole. Specific allowances are provided for individual loans when ultimate collection is considered questionable by management after reviewing the current status of loans which are contractually past due and considering the net realizable value of the security for the loan. Management continues to actively monitor the Bank’s asset quality and to charge off loans against the allowance for loan losses when appropriate or to provide specific loss reserves when necessary. Although management believes it uses the best information available to make determinations with respect to the allowance for loan losses, future adjustments may be necessary if economic conditions differ substantially from the economic conditions in the assumptions used in making the initial determinations.

     Our analysis of the allowance for loan losses considers changes in non-accrual loans and changes in probable loan losses as economic conditions deteriorate and the underlying collateral is subjected to an elongated foreclosure process.

9

     The following table summarizes the activity in the allowance for loan losses for the periods indicated.

	Year Ended June 30,
	2006			2005			2004			2003			2002
	(Dollars in thousands)
Balance at beginning of year	$	4,312		$	4,377		$	3,883		$	3,902		$	3,520
Charge-offs:
Mortgage loans		462			176			113			19			204
Non-real estate (1)		1			0			19			—			2
Total charge-offs		463			176			132			19			206
Recoveries:
Mortgage loans		0			0			29			—			30
Non-real estate (1)		0			0			—			—			—
Total recoveries		0			0			29			—			30
Net charge-offs		463			176			103			19			176
Provision charged to income		826			111			597			—			558
Balance at end of year	$	4,675		$	4,312		$	4,377		$	3,883		$	3,902
Ratio of net charge-offs during the year to average loans outstanding during the year		0.1	%		0.0	%		0.0	%		0.0	%		0.0	%

(1) Consists primarily of line of credit loans.

10

     The following table sets forth the breakdown of the allowance for loan losses by loan category at the dates indicated. The allocation of the allowance to each category is not necessarily indicative of future losses and does not restrict the use of the allowance to absorb losses in any category.

	At June 30,
	2006					2005					2004					2003					2002
			% of Loans in					% of Loans in					% of Loans in					% of Loans in					% of Loans in
			Category to					Category to					Category to					Category to					Category to
			Total Loans					Total Loans					Total Loans					Total Loans					Total Loans
	Amount		Outstanding			Amount		Outstanding			Amount		Outstanding			Amount		Outstanding			Amount		Outstanding
	(Dollars in thousands)
Mortgage Loans:
One-to-four family residential (1)	$	2,005		47.25	%	$	1,570		47.84	%	$	1,481		45.68	%	$	1,335		48.09	%	$	1,005		48.77	%
Multi-family residential		271		7.22			207		5.07			195		6.27			269		7.05			261		7.80
Commercial		1,892		32.07			1,827		34.15			1,994		37.05			1,949		33.78			2,187		32.52
Land		436		10.50			360		10.32			474		8.74			294		9.07			366		9.42
Unallocated		—		0.00			164		0.00			—		0.00			19		—			—		—
Total mortgage loans		4,604		97.04	%		4,128		97.38	%		4,144		97.74			3,866		97.99			3,819		98.51
Non-real estate		71		2.96	%		184		2.62	%		233		2.26			17		2.01			83		1.49
Total allowance for loan losses	$	4,675		100.00	%	$	4,312		100.00	%	$	4,377		100.00	%	$	3,883		100.00	%	$	3,902		100.00	%

(1)	Consists of one-to-four family residential and home equity line of credit.
(2)	Construction loans are included with their respective property type.

11

Investment Activities

     Park View Federal’s investment policy currently allows for investment in various types of liquid assets, including United States Government and United States Government Sponsored Enterprise securities, time deposits at the FHLB of Cincinnati, certificates of deposit or bankers’ acceptances at other federally insured depository institutions and mortgage-backed securities. The general objective of Park View Federal’s investment policy is to maximize returns without compromising liquidity or creating undue credit or interest rate risk. In accordance with the investment policy, at June 30, 2006 Park View Federal had investments in notes issued by the FHLB, mortgage-backed securities and FHLB of Cincinnati stock.

     The Bank reports its investments, other than marketable equity securities and securities available for sale, at cost as adjusted for discounts and unamortized premiums. The Bank has the intent and ability and generally holds all securities until maturity. For additional information see Notes 2 of Notes to Consolidated Financial Statements.

     At present, management is not aware of any conditions or circumstances which could impair its ability to hold its remaining securities to maturity.

     The following table sets forth the carrying value of the Bank’s securities portfolio and FHLB of Cincinnati stock at the dates indicated. At June 30, 2006, the fair market value of the Bank’s securities portfolio was $83.1 million. All securities are held to maturity, but are callable prior to maturity.

	At June 30,
	2006		2005		2004
	(In thousands)
Investment securities:
U. S. Government Sponsored Enterprise Securities		58,000		57,500		27,500
Mortgage-backed securities		27,578		31,720		36,779
Total securities		85,578		89,220		64,279
FHLB of Cincinnati stock		11,955		11,316		10,819
Total investments		97,533	$	100,536	$	75,098

12

     The following table sets forth the scheduled maturities, carrying values, market values and average yields for the Bank’s securities at June 30, 2006.

	At June 30, 2006
	One Year					One to Five					Five to Ten					More than
	or Less					Years					Years					Ten Years					Total Securities
	Carrying		Average			Carrying		Average			Carrying		Average			Carrying		Average			Carrying		Market		Average
	Value		Yield			Value		Yield			Value		Yield			Value		Yield			Value		Value		Yield
	(Dollars in thousands)
U.S. Government Sponsored Enterprise Securities	$	0		0.00	%	$	58,000		4.03	%	$	0		0.00	%	$	0		0.00	%	$	58,000	$	57,257		4.03	%
Mortgage-backed securities		554		6.00	%		0		0.00	%		0		0.00	%		27,024		4.80	%		27,578		25,762		4.82	%
Total	$	554		6.00	%	$	58,000		4.03	%	$	0		0.00	%	$	27,024		4.80	%	$	85,578	$	83.019		4.29	%

13

Deposit Activity and Other Sources of Funds

     General. Deposits are the primary source of the Bank’s funds for lending, investment activities and general operational purposes. In addition to deposits, Park View Federal derives funds from loan principal and interest repayments, maturities of securities and interest payments thereon. Although loan repayments are a relatively stable source of funds, deposit inflows and outflows are significantly influenced by general interest rates and money market conditions. Borrowings may be used on a short-term basis to compensate for reductions in the availability of funds, or on a longer term basis for general operational purposes.

     Deposits. The Bank attracts deposits principally from within its primary market area by offering a variety of deposit instruments, including checking accounts, money market accounts, regular savings accounts and certificates of deposit which generally range in maturity from seven days to five years. Deposit terms vary according to the minimum balance required, the length of time the funds must remain on deposit and the interest rate. Maturities, terms, service fees and withdrawal penalties for its deposit accounts are established by the Bank on a periodic basis. Park View Federal generally reviews its deposit mix and pricing on a weekly basis. In determining the characteristics of its deposit accounts, Park View Federal considers the rates offered by competing institutions, funds acquisition and liquidity requirements, growth goals and federal regulations. The Bank does not accept brokered deposits due to the volatility and rate sensitivity of such deposits.

     Park View Federal competes for deposits with other institutions in its market area by offering deposit instruments that are competitively priced and providing customer service through convenient and attractive offices, knowledgeable and efficient staff and hours of service that meet customers’ needs. To provide additional convenience, Park View Federal participates in STAR and Master Money debit card Automated Teller Machine networks at locations throughout Ohio and other participating states, through which customers can gain access to their accounts at any time.

     The Bank’s deposits increased by $65.6 million for the fiscal year ended June 30, 2006 as compared to the fiscal year ended June 30, 2005. Deposit balances totaled $656.9 million, $591.2 million and $526.5 million at the fiscal years ended June 30, 2006, 2005, and 2004, respectively.

     Deposits in the Bank as of June 30, 2006 were represented by the various programs described below.

Weighted
Average						Percentage
Interest		Minimum		Balance		of Total
Rate	Category	Balance		(in thousands)		Deposits
2.25%	NOW accounts	$	50	$	39,565		6.02	%
0.55%	Passbook statement accounts		5		35,194		5.36
4.55%	Money market accounts		1,000		60,900		9.27
0.00%	Non-interest-earning demand accounts		50		17,069		2.60
				$	152,728		23.25
	Certificates of Deposit
4.59%	3 months or less		500	$	239,180		36.41
4.41%	3 - 6 months		500		78,965		12.02
4.74%	6 - 12 months		500		123,580		18.81
4.30%	1 - 3 years		500		46,934		7.15
4.48%	More than three years		500		15,477		2.36
4.57%	Total certificates of deposit			$	504,136		76.75
4.09%	Total deposits			$	656,864		100.00	%

14

     The following table sets forth the average balances and average interest rates based on month-end balances for interest-bearing demand deposits and time deposits during the periods indicated.

	For the Year Ended June 30,
	2006									2005									2004
	Interest-									Interest-									Interest-
	Bearing									Bearing									Bearing
	Demand			Savings			Time			Demand			Savings			Time			Demand			Savings			Time
	Deposits			Deposits			Deposits			Deposits			Deposits			Deposits			Deposits			Deposits			Deposits
	(Dollars in thousands)
Average balance	$	71,791		$	39,857		$	485,755		$	58,437		$	45,513		$	421,209		$	61,930		$	45,608		$	373,575
Average rate paid		2.94	%		0.51	%		3.80	%		1.03	%		0.50	%		2.92	%		0.45	%		0.50	%		2.90	%

15

     The rates currently paid on certificates maturing within one year or less are lower than the rates currently being paid on similar certificates of deposit maturing thereafter. The Bank will seek to retain these deposits to the extent consistent with its long-term objective of maintaining positive interest rate spreads. Depending upon interest rates existing at the time such certificates mature, the Bank’s cost of funds may be significantly affected by the rollover of these funds. A decrease in such cost of funds, if any, may have a material impact on the Bank’s operations. To the extent such deposits do not rollover, the Bank may, if necessary, use other sources of funds, including borrowings from the FHLB of Cincinnati, to replace such deposits. See "— Borrowings.”

     The following table indicates the amount of the Bank’s certificates of deposit of $100,000 or more by time remaining until maturity as of June 30, 2006.

	Certificates
Maturity Period	of Deposit
	(In thousands)
Three months or less	$	38,761
Three through six months		36,791
Six through 12 months		64,759
Over 12 months		24,134
Total	$	164,445

     Borrowings. Savings deposits historically have been the primary source of funds for the Bank’s lending, investments and general operating activities. The Bank is authorized, however, to use advances from the FHLB of Cincinnati to supplement its supply of lendable funds and to meet deposit withdrawal requirements. The FHLB of Cincinnati functions as a central reserve bank providing credit for savings institutions and certain other member financial institutions. As a member of the FHLB System, Park View Federal is required to own stock in the FHLB of Cincinnati and is authorized to apply for advances. Advances are pursuant to several different programs, each of which has its own interest rate and range of maturities. Park View Federal has a Blanket Agreement for advances with the FHLB under which the Bank may borrow up to 50% of assets subject to normal collateral and underwriting requirements. The Bank currently has two commitments with the Federal Home Loan Bank of Cincinnati for flexible lines of credit, referred to as a cash management advance and a REPO advance, in the amounts of $30 million and $200 million respectively. The REPO advance was drawn down $75.0 million at June 30, 2006, while the CMA was not drawn down at June 30, 2006. Advances from the FHLB of Cincinnati are secured by the Bank’s stock in the FHLB of Cincinnati and other eligible assets. For additional information please refer to Note 8 of Notes to Consolidated Financial Statements.

     The following table sets forth certain information regarding the Bank’s advances from the FHLB of Cincinnati for the periods indicated:

	At June 30,
	2006			2005			2004
	(In thousands)
Amounts outstanding at end of period	$	95,000		$	135,012		$	135,040
Weighted average rate		4.95	%		4.16	%		3.96	%
Maximum amount outstanding at any month end	$	170,001		$	180,033		$	146,084
Approximate average outstanding balance	$	154,215		$	161,492		$	127,020
Weighted average rate		4.45	%		3.77	%		4.12	%

     In March 2006, Park View Federal entered into a $50 million repurchase agreement collaterized by $57.5 million in securities. At June 30, 2004, PVFCC formed a trust that issued $10.0 million of subordinated debentures. At June 30, 2006 PVFSC had a line of credit with an outstanding balance of $1.8 million, collateralized by real estate. See Note 9 of Notes to Consolidated Financial Statement for the terms of these borrowings.

16

Subsidiary Activities

     The Bank is required to give the FDIC and the Director of OTS 30 days prior notice before establishing or acquiring a new subsidiary or commencing a new activity through an existing subsidiary. Both the FDIC and the Director of OTS have the authority to prohibit the initiation or to order the termination of subsidiary activities determined to pose a risk to the safety or soundness of the institution.

     As a federally chartered savings bank, Park View Federal is permitted to invest an amount equal to 2% of its assets in subsidiaries, with an additional investment of 1% of assets where such investment serves primarily community, inner-city and community development purposes. Under such limitations, as of June 30, 2006, Park View Federal was authorized to invest up to approximately $27.0 million in the stock of or loans to subsidiaries, including the additional 1% investment for community, inner-city and community development purposes. Institutions meeting their applicable minimum regulatory capital requirements may invest up to 50% of their regulatory capital in conforming first mortgage loans to subsidiaries in which they own 10% or more of the capital stock. Park View Federal currently exceeds its regulatory capital requirements.

     PVF has three active subsidiaries, Park View Federal, PVFSC and MPLC. PVFSC is engaged in the activities of land acquisition and real estate investment. PVF has three nonactive subsidiaries, PVF Community Development Corp., PVF Mortgage Corp. and PVF Holdings, Inc., which have been chartered for future activity.

     PVF Service Corporation. At June 30, 2006, PVFSC had a $0.25 million investment in a joint venture that owns real estate leased to the Bank for use as a branch office in Avon, Ohio. Also, at June 30, 2006, PVFSC had a $0.33 million investment in a joint venture for a new branch office location for our Mayfield office in Mayfield, Ohio. PVFSC also has an interest in Park View Plaza, a joint venture, which is a strip center in Cleveland, Ohio that includes our Lakewood branch office. PVFSC also has an interest in a joint venture containing a Title Company, PVF Title Services, LLC. In addition, PVFSC had a $4.9 million investment in office properties used by the Bank that includes the Corporate Center in Solon, Ohio, and branch offices in Bainbridge, Ohio and Chardon, Ohio. In March 2006, PVFSC obtained a Line of Credit loan for $4.0 million, with a drawn down balance at June 30, 2006 of $1.8 million, secured by its Corporate Center in Solon, Ohio.

     Mid Pines Land Company. At June 30, 2006, MPLC had an investment of $0.6 million in land adjacent to the Company’s Corporate Center in Solon, Ohio.

Competition

     The Bank faces strong competition both in originating real estate and other loans and in attracting deposits. The Bank competes for real estate and other loans principally on the basis of interest rates and the loan fees it charges, the type of loans it originates and the quality of services it provides to borrowers. Its competition in originating real estate loans comes primarily from other savings institutions, commercial banks and mortgage bankers making loans secured by real estate located in the Bank’s market area.

     The Bank attracts all its deposits through its branch offices primarily from the communities in which those branch offices are located. Consequently, competition for deposits is principally from other savings institutions, commercial banks, credit unions and brokers in these communities. Park View Federal competes for deposits and loans by offering a variety of deposit accounts at competitive rates, a wide array of loan products, convenient business hours and branch locations, a commitment to outstanding customer service and a well-trained staff. In addition, the Bank believes it has developed strong relationships with local businesses, realtors, builders and the public in general, giving it an excellent image in the community.

Employees

     As of June 30, 2006, PVF and its subsidiaries had 197 full-time employees and 33 part-time employees, none of whom was represented by a collective bargaining agreement. The Company believes it enjoys a good relationship with its personnel.

17

Regulation of the Bank

     General. As a savings institution, Park View Federal is subject to extensive regulation by the OTS, and its deposits are insured by the Depositor Insurance Fund, which is administered by the FDIC. The lending activities and other investments of the Bank must comply with various federal regulatory requirements. The OTS periodically examines the Bank for compliance with various regulatory requirements. The FDIC also has the authority to conduct special examinations of DIF-insured savings institutions. The Bank must file reports with OTS describing its activities and financial condition. The Bank is also subject to certain reserve requirements promulgated by the Federal Reserve Board. This supervision and regulation is intended primarily for the protection of depositors. Certain of these regulatory requirements are referred to below or elsewhere herein. The discussion is qualified in its entirety by reference to the actual statutes and regulations involved.

     Regulatory Capital Requirements. Under OTS regulations, savings institutions must maintain “tangible” capital equal to at least 1.5% of adjusted total assets, “core” (also referred to as “Tier 1”) capital equal to at least 4.0% (or 3.0% if the institution is the highest rated under the OTS examination rating system) of adjusted total assets and “total capital,” a combination of core and “supplementary” capital, equal to at least 8.0% of “risk-weighted” assets. In addition, the OTS has adopted regulations which impose certain restrictions on savings associations that have a total risk-based capital ratio that is less than 8.0%, a ratio of Tier 1 capital to risk-weighted assets of less than 4.0% or a ratio of Tier 1 capital to adjusted total assets of less than 4.0% (or 3.0% if the institution is the highest rated). For purposes of these regulations, Tier 1 capital has the same definition as core capital and generally consists of common stockholders’ equity (including retained earnings), certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries, less intangibles other than certain mortgage servicing rights and credit card relationships. See “— Prompt Corrective Regulatory Action.” Investments in subsidiaries that are engaged as principal in activities not permissible for national banks must also be deducted from Tier 1 capital. The Bank is in compliance with all applicable regulatory capital requirements.

     In determining compliance with the risk-based capital requirement, a savings institution calculates its total capital, which may include both core capital and supplementary capital, provided the amount of supplementary capital used does not exceed the savings institution’s core capital. Supplementary capital is defined to include certain preferred stock issues, nonwithdrawable accounts and pledged deposits that do not qualify as core capital, certain approved subordinated debt, certain other capital instruments, a portion of the savings institution’s allowances for loan and lease losses allowances, and up to 45% of unrealized net gains on equity securities. Total core and supplementary capital are reduced by the amount of capital instruments held by other depository institutions pursuant to reciprocal arrangements and equity investments other than those deducted from core and tangible capital. At June 30, 2006, Park View Federal had no equity investments for which OTS regulations require a deduction from total capital.

     The risk-based capital requirement is measured against risk-weighted assets, which equal the sum of each asset and the credit-equivalent amount of each off-balance sheet item after being multiplied by an assigned risk weight. Under the OTS risk-weighting system, single-family first mortgages not more than 90 days past due with loan-to-value ratios under 80% and multi-family mortgages (maximum 36 dwelling units) with loan-to-value ratios under 80% and average annual occupancy rates over 80%, are assigned a risk weight of 50%. Consumer, home equity and land loans, residential and nonresidential construction loans and commercial real estate loans are assigned a risk weight of 100%. Mortgage-backed securities issued, or fully guaranteed as to principal and interest, by the FNMA or FHLMC are assigned a 20% risk weight. Cash and United States Government securities backed by the full faith and credit of the United States Government are given a 0% risk weight. At June 30, 2006, the Bank’s risk-weighted assets were $780.2 million, and its total risk-based capital was $80.2 million, or 10.28% of risk-weighted assets.

18

     The table below presents the Bank’s capital position at June 30, 2006, relative to its various minimum regulatory capital requirements.

	At June 30, 2006
			Percent of
	Amount		Assets (1)
	(Dollars in Thousands)
Tangible Capital	$	75,827		8.33	%
Tangible Capital Requirement		13,662		1.50
Excess		62,165		6.83	%
Tier 1/Core Capital	$	75,827		8.33	%
Tier 1/Core Capital Requirement		36,431		4.00
Excess		39,396		4.33	%
Tier 1 Risk-Based Capital	$	75,827		9.72	%
Tier 1 Risk-Based Capital Requirement		31,208		4.00
Excess		44,619		5.72	%
Risk-Based Capital	$	80,241		10.28	%
Risk-Based Capital Requirement		62,416		8.00
Excess		17,825		2.28	%

(1) Based upon adjusted total assets for purposes of the tangible, core and Tier 1 capital requirements, and risk-weighted assets for purposes of the Tier 1 risk-based and risk-based capital requirements.

     In addition to requiring generally applicable capital standards for savings institutions, the Director of OTS may establish the minimum level of capital for a savings institution at such amount or at such ratio of capital-to-assets as the Director determines to be necessary or appropriate for such institution in light of the particular circumstances of the institution. The Director of OTS may treat the failure of any savings institution to maintain capital at or above such level as an unsafe or unsound practice and may issue a directive requiring any savings institution which fails to maintain capital at or above the minimum level required by the Director to submit and adhere to a plan for increasing capital.

     Prompt Corrective Regulatory Action. Under the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”), the federal banking regulators are required to take prompt corrective action if an insured depository institution fails to satisfy certain minimum capital requirements. All institutions, regardless of their capital levels, are restricted from making any capital distribution or paying any management fees if the institution would thereafter fail to satisfy the minimum levels for any of its capital requirements. An institution that fails to meet the minimum level for any relevant capital measure (an “undercapitalized institution”) is: (i) subject to increased monitoring by the appropriate federal banking regulator; (ii) required to submit an acceptable capital restoration plan within 45 days; (iii) subject to asset growth limits; and (iv) required to obtain prior regulatory approval for acquisitions, branching and new lines of businesses. The capital restoration plan must include a guarantee by the institution’s holding company that the institution will comply with the plan until it has been adequately capitalized on average for four consecutive quarters, under which the holding company would be liable up to the lesser of 5% of the institution’s total assets or the amount necessary to bring the institution into capital compliance as of the date it failed to comply with its capital restoration plan. A “significantly undercapitalized” institution, as well as any undercapitalized institution that did not submit an acceptable capital restoration plan, may be subject to regulatory demands for recapitalization, broader application of restrictions on transactions with affiliates, limitations on interest rates paid on deposits, asset growth and other activities, possible replacement of directors and officers, and restrictions on capital distributions by any bank holding company controlling the institution. Any company controlling the institution could also be required to divest the institution or the institution could be required to divest subsidiaries. The senior executive officers of a significantly undercapitalized institution may not receive bonuses or increases in compensation without prior approval and the institution is prohibited from

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making payments of principal or interest on its subordinated debt. In their discretion, the federal banking regulators may also impose the foregoing sanctions on an undercapitalized institution if the regulators determine that such actions are necessary to carry out the purposes of the prompt corrective action provisions. If an institution’s ratio of tangible capital to total assets falls below a “critical capital level,” the institution will be subject to conservatorship or receivership within specified time periods.

     Under regulations jointly adopted by the federal banking regulators, a savings institution’s capital adequacy for purposes of the FDICIA prompt corrective action rules is determined on the basis of the institution’s total risk-based capital ratio (the ratio of its total capital to risk-weighted assets), Tier 1 risk-based capital ratio (the ratio of its core capital to risk-weighted assets) and leverage ratio (the ratio of its Tier 1 or core capital to adjusted total assets).

     The following table shows the capital ratio requirements for each prompt corrective action category:

		Adequately		Significantly
	Well Capitalized	Capitalized	Undercapitalized	Undercapitalized
Total risk-based capital ratio	10.0% or more	8.0% or more	Less than 8.0%	Less than 6.0%
Tier 1 risk-based capital ratio	6.0% or more	4.0% or more	Less than 4.0%	Less than 3.0%
Leverage ratio	5.0% or more	4.0% or more*	Less than 4.0%*	Less than 3.0%

* 3.0% if the institution has the highest examination rating.

A “critically undercapitalized” savings institution is defined as a savings institution that has a ratio of “tangible equity” to total assets of less than 2.0%. Tangible equity is defined as core capital plus cumulative perpetual preferred stock (and related surplus) less all intangibles other than qualifying supervisory goodwill and certain servicing rights. The OTS may reclassify a well capitalized savings association as adequately capitalized and may require an adequately capitalized or undercapitalized institution to comply with the supervisory actions applicable to institutions in the next lower capital category (but may not reclassify a significantly undercapitalized institution as critically undercapitalized) if the OTS determines, after notice and an opportunity for a hearing, that the savings institution is in an unsafe or unsound condition or that the institution has received and not corrected a less-than-satisfactory rating for any examination rating category. For information regarding the position of the Bank with respect to the FDICIA prompt corrective action rules, see Note 13 of Notes to Consolidated Financial Statements.

     Safety and Soundness Standards. Interagency Guidelines Establishing Standards for Safety and Soundness require savings institutions to maintain internal controls and information systems and internal audit systems that are appropriate for the size, nature and scope of the institution’s business. The guidelines also establish certain basic standards for loan documentation, credit underwriting, interest rate risk exposure, and asset growth. The guidelines further provide that savings institutions should maintain safeguards to prevent the payment of compensation, fees and benefits that are excessive or that could lead to material financial loss, and should take into account factors such as comparable compensation practices at comparable institutions. If the OTS determines that a savings institution is not in compliance with the safety and soundness guidelines, it may require the institution to submit an acceptable plan to achieve compliance with the guidelines. A savings institution must submit an acceptable compliance plan to the OTS within 30 days of receipt of a request for such a plan. Failure to submit or implement a compliance plan may subject the institution to regulatory sanctions. Additionally, a savings institution should maintain systems, commensurate with its size and the nature and scope of its operations, to identify problem assets and prevent deterioration in those assets as well as to evaluate and monitor earnings and ensure that earnings are sufficient to maintain adequate capital and reserves. Management believes that the Bank meets substantially all the standards adopted in the interagency guidelines.

     Federal Home Loan Bank System. Park View Federal is a member of the FHLB System, which consists of 12 regional FHLBs subject to supervision and regulation by the Federal Housing Finance Board (“FHFB”). The FHLBs provide a central credit facility primarily for member institutions. As a member of the FHLB System, the Bank is required to acquire and hold specified amounts of capital stock in the FHLB of Cincinnati. The Bank was in compliance with this requirement with an investment in FHLB of Cincinnati stock at June 30, 2006 of $12.0 million.

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     The FHLB of Cincinnati serves as a reserve or central bank for its member institutions within its assigned region. It is funded primarily from proceeds derived from the sale of consolidated obligations of the FHLB System. It makes advances to members in accordance with policies and procedures established by the FHFB and the Board of Directors of the FHLB of Cincinnati. Long-term advances may be made only for the purpose of providing funds for residential housing finance, small business loans, small farm loans and small agri-business loans. At June 30, 2006, the Bank had $95.0 million in advances outstanding from the FHLB of Cincinnati. See “— Deposit Activity and Other Sources of Funds — Borrowings.”

     Qualified Thrift Lender Test. A savings association that does not meet the Qualified Thrift Lender test (“QTL Test”) must either convert to a bank charter or comply with the following restrictions on its operations: (i) the institution may not engage in any new activity or make any new investment, directly or indirectly, unless such activity or investment is permissible for a national bank; (ii) the branching powers of the institution shall be restricted to those of a national bank; and (iii) payment of dividends by the institution shall be subject to the rules regarding payment of dividends by a national bank. Upon the expiration of three years from the date the institution ceases to be a Qualified Thrift Lender, it must cease any activity, and not retain any investment not permissible for a national bank and savings association.

     To meet the QTL test, the institution must qualify as a domestic building and loan association under the Internal Revenue Code or the institution’s “Qualified Thrift Investments” must total at least 65% of “portfolio assets.” Under OTS regulations, portfolio assets are defined as total assets less intangibles, property used by a savings institution in its business and liquidity investments in an amount not exceeding 20% of assets. Qualified Thrift Investments consist of (i) loans, equity positions or securities related to domestic, residential real estate or manufactured housing, and educational, small business and credit card loans, (ii) 50% of the dollar amount of residential mortgage loans originated and sold within 90 days of origination, and (iii) stock in an FHLB or the FHLMC or FNMA. In addition, subject to a 20% of portfolio assets limit, savings institutions are able to treat as Qualified Thrift Investments 200% of their investments in loans to finance “starter homes” and loans for construction, development or improvement of housing and community service facilities or for financing small businesses in “credit-needy” areas. In order to maintain QTL status, the savings institution must maintain a weekly average percentage of Qualified Thrift Investments to portfolio assets equal to 65% on a monthly average basis in nine out of 12 months. A savings institution that fails to maintain QTL status will be permitted to requalify once, and if it fails the QTL test a second time, it will become immediately subject to all penalties as if all time limits on such penalties had expired. Failure to qualify as a QTL results in a number of sanctions, including the imposition of certain operating restrictions imposed on national banks. At June 30, 2006, the Bank qualified as a QTL.

     Uniform Lending Standards. Under OTS regulations, savings institutions must adopt and maintain written policies that establish appropriate limits and standards for extensions of credit that are secured by liens or interests in real estate or are made for the purpose of financing permanent improvements to real estate. These policies must establish loan portfolio diversification standards, prudent underwriting standards, including loan-to-value limits that are clear and measurable, loan administration procedures and documentation, approval and reporting requirements. The real estate lending policies must reflect consideration of the Interagency Guidelines for Real Estate Lending Policies (the “Interagency Guidelines”) that have been adopted by the federal bank regulators.

     The Interagency Guidelines, among other things, call upon depository institutions to establish internal loan-to-value limits for real estate loans that are not in excess of the following supervisory limits; (i) for loans secured by raw land, the supervisory loan-to-value limit is 65% of the value of the collateral; (ii) for land development loans (i.e., loans for the purpose of improving unimproved property prior to the erection of structures), the supervisory limit is 75%; (iii) for loans for the construction of commercial, multifamily or other nonresidential property, the supervisory limit is 80%; (iv) for loans for the construction of one-to-four family properties, the supervisory limit is 85%; and (v) for loans secured by other improved property (e.g., farmland, completed commercial property and other income-producing property including non-owner-occupied, one-to-four family property), the limit is 85%. Although no supervisory loan-to-value limit has been established for owner-occupied, one-to-four family and home equity loans, the Interagency Guidelines state that for any such loan with a loan-to-value ratio that equals or exceeds 90% at origination, an institution should require appropriate credit enhancement in the form of either mortgage insurance or readily marketable collateral.

     The Interagency Guidelines state that it may be appropriate in individual cases to originate or purchase loans with loan-to-value ratios in excess of the supervisory loan-to-value limits, based on the support provided by

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other credit factors. The aggregate amount of loans in excess of the supervisory loan-to-value limits, however, should not exceed 100% of total capital and the total of such loans secured by commercial, agricultural, multi-family and other non-one-to-four family residential properties should not exceed 30% of total capital. The supervisory loan-to-value limits do not apply to certain categories of loans including loans insured or guaranteed by the U.S. government and its agencies or by financially capable state, local or municipal governments or agencies, loans backed by the full faith and credit of a state government, loans that are to be sold promptly after origination without recourse to a financially responsible party, loans that are renewed, refinanced or restructured without the advancement of new funds, loans that are renewed, refinanced or restructured in connection with a workout, loans to facilitate sales of real estate acquired by the institution in the ordinary course of collecting a debt previously contracted and loans where the real estate is not the primary collateral.

     The Bank believes that its current lending policies conform to the Interagency Guidelines.

     Insurance of Deposit Accounts. The Bank’s deposits are insured up to applicable limits by the Deposit Insurance Fund of the Federal Deposit Insurance Corporation (the “DIF”). The Federal Deposit Insurance Corporation maintains a risk-based assessment system by which institutions are assigned to one of three categories based on their capitalization and one of three subcategories based on examination ratings and other supervisory information. An institution’s assessment rate depends upon the categories to which it is assigned. Assessment rates are determined semi-annually by the Federal Deposit Insurance Corporation and currently range from zero basis points for the healthiest institutions to 27 basis points of assessable deposits for the riskiest.

     In addition to the assessment for deposit insurance, institutions are required to make payments on bonds issued in the late 1980s by the Financing Corporation to recapitalize a predecessor deposit insurance fund.

     The Bank’s total assessment paid for fiscal 2006 (including the Financing Corporation assessment) was $78,351. The Federal Deposit Insurance Corporation has authority to increase insurance assessments. A significant increase in insurance premiums would likely have an adverse effect on the operating expenses and results of operations of the Bank. Management cannot predict what insurance assessment rates will be in the future.

     Insurance of deposits may be terminated by the Federal Deposit Insurance Corporation upon a finding that the institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the Federal Deposit Insurance Corporation or the Office of Thrift Supervision. The management of the Bank does not know of any practice, condition or violation that might lead to termination of deposit insurance.

     Federal Deposit Insurance Reform Act of 2005. The Federal Deposit Insurance Reform Act of 2005 (the “Act”), signed by the President on February 8, 2006, revised the laws governing the federal deposit insurance system. The Act provided for the consolidation of the Bank and Savings Association Insurance Funds into a combined “Deposit Insurance Fund.”

     Under the Act, insurance premiums are to be determined by the Federal Deposit Insurance Corporation based on a number of factors, primarily the risk of loss that insured institutions pose to the Deposit Insurance Fund. The legislation eliminates the current minimum 1.25% reserve ratio for the insurance funds, the mandatory assessments when the ratio falls below 1.25% and the prohibition on assessing the highest quality banks when the ratio is above 1.25%. The Act provides the Federal Deposit Insurance Corporation with flexibility to adjust the new insurance fund’s reserve ratio between 1.15% and 1.5%, depending on projected losses, economic changes and assessment rates at the end of a calendar year.

     The Act increased deposit insurance coverage limits from $100,000 to $250,000 for certain types of Individual Retirement Accounts, 401(k) plans and other retirement savings accounts. While it preserved the $100,000 coverage limit for individual accounts and municipal deposits, the Federal Deposit Insurance Corporation was furnished with the discretion to adjust all coverage levels to keep pace with inflation beginning in 2010. Also, institutions that become undercapitalized will be prohibited from accepting certain employee benefit plan deposits.

     The consolidation of the Bank and Savings Association Insurance Funds into the Deposit Insurance Fund pursuant to the Act occurred on March 31, 2006. The Act also states that the Federal Deposit Insurance Corporation

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must promulgate final regulations implementing the remainder of its provisions not later than 270 days after its enactment.

     At this time, management cannot predict the effect, if any, that the Act will have on insurance premiums paid by the Bank.

     Dividend Limitations. Under OTS regulations, the Bank may not pay dividends on its capital stock if its regulatory capital would thereby be reduced below the amount then required for the liquidation account established for the benefit of certain depositors of the Bank at the time of the Bank’s conversion from the mutual to stock form.

     OTS regulations require that savings institutions submit notice to the OTS prior to making a capital distribution (which includes dividends, stock repurchases and amounts paid to stockholders of another institution in a cash merger) if (a) they would not be well capitalized after the distribution, (b) the distribution would result in the retirement of any of the institution’s common or preferred stock or debt counted as its regulatory capital, or (c) the institution is a subsidiary of a holding company. A savings institution must make application to the OTS to pay a capital distribution if (x) the institution would not be adequately capitalized following the distribution, (y) the institution’s total distributions for the calendar year exceeds the institution’s net income for the calendar year to date plus its net income (less distributions) for the preceding two years, or (z) the distribution would otherwise violate applicable law or regulation or an agreement with or conditions imposed by the OTS. If neither the savings institution nor the proposed capital distribution meet any of the foregoing criteria, then no notice or application is required to be filed with the OTS before making a capital distribution. As a subsidiary of a savings and loan holding company, Park View Federal must, at a minimum, provide prior notice to the OTS of capital distributions. The OTS may disapprove or deny a capital distribution if in the view of the OTS, the capital distribution would constitute an unsafe or unsound practice.

     The Bank is prohibited from making any capital distributions if, after making the distribution, it would be undercapitalized as defined in the OTS’ prompt corrective action regulations. After consultation with the FDIC, the OTS may permit a savings institution to repurchase, redeem, retire or otherwise acquire shares or ownership interests if the repurchase, redemption, retirement or other acquisition: (i) is made in connection with the issuance of additional shares or other obligations of the institution in at least an equivalent amount; and (ii) will reduce the institution’s financial obligations or otherwise improve the institution’s financial condition.

     In addition to the foregoing, earnings of the Bank appropriated to bad debt reserves and deducted for federal income tax purposes are not available for payment of cash dividends without payment of taxes at the then current tax rate by the Bank on the amount of earnings removed from the reserves for such distributions. See “Taxation.” The Bank intends to make full use of this favorable tax treatment afforded to the Bank and does not contemplate use of any earnings of the Bank in a manner which would limit the Bank’s bad debt deduction or create Federal tax liabilities.

     Federal Reserve System. Pursuant to regulations of the Federal Reserve Board, a savings institution must maintain average daily reserves equal to 3% on transaction accounts of between $7.8 million and $48.3 million, plus 10% on the remainder. The first $7.8 million of transaction accounts are exempt. These percentages are subject to adjustment by the Federal Reserve Board. Because required reserves must be maintained in the form of vault cash or in a noninterest-bearing account at a Federal Reserve Bank, the effect of the reserve requirement is to reduce the amount of the institution’s interest-earning assets. At June 30, 2006, Park View Federal met its reserve requirements.

     Interstate and Interindustry Acquisitions. OTS regulations permit federal savings institutions to branch in any state or states of the United States and its territories. Except in supervisory cases or when interstate branching is otherwise permitted by state law or other statutory provision, an institution may not establish an out-of-state branch unless (i) the institution qualifies as a “domestic building and loan association” under §7701(a)(19) of the Internal Revenue Code or meets the QTL Test and the total assets attributable to all branches of the association in the state would qualify such branches taken as a whole for treatment as a domestic building and loan association or as a QTL, and (ii) such branch would not result in (a) formation of a prohibited multi-state multiple savings and loan holding company, or (b) a violation of certain statutory restrictions on branching by savings institution subsidiaries of bank holding companies. Federal savings institutions generally may not establish new branches unless the institution meets or exceeds minimum regulatory capital requirements. The OTS will also consider the institution’s record of compliance with the Community Reinvestment Act in connection with any branch application.

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     The Federal Reserve Board may permit the acquisition of a savings institution by a bank holding company. In approving an application by a bank holding company to acquire a savings institution, the Federal Reserve Board is prohibited from imposing restrictions on tandem operations of the subsidiary savings institution and its holding company affiliates except as required under Sections 23A and 23B of the Federal Reserve Act, as amended.

     A bank holding company that controls a savings institution may merge or consolidate the assets and liabilities of the savings institution with, or transfer assets and liabilities to, any subsidiary bank which is a BIF member with the approval of the appropriate federal banking agency and the Federal Reserve Board. The resulting bank will be required to continue to pay assessments to the DIF at the rates prescribed for DIF members on the deposits attributable to the merged savings institution plus an annual growth increment. In addition, the transaction must comply with the restrictions on interstate acquisitions of commercial banks under the Bank Holding Company Act.

     Loans-to-One-Borrower Limitations. Under federal law, loans and extensions of credit, to a borrower may not exceed 15% of the unimpaired capital and surplus of the savings institution. Loans and extensions of credit fully secured by certain readily marketable collateral may represent an additional 10% of unimpaired capital and surplus. Applicable regulations permit certain exceptions to the above general limitations. Specifically, savings associations may make loans to one borrower, by order of the Director of OTS, in an amount not to exceed the lesser of $30,000,000 or 30% of unimpaired capital and surplus to develop residential housing, provided: (i) the purchase price of each single-family dwelling in the development does not exceed $500,000; (ii) the savings institution is in compliance with regulatory capital requirements; (iii) the loans comply with applicable loan-to-value requirements; and (iv) the aggregate amount of loans made under this authority does not exceed 150% of unimpaired capital and surplus. A savings institution is authorized to make loans to one borrower to finance the sale of real property acquired in satisfaction of debts in an amount up to 50% of unimpaired capital and surplus.

     Enforcement. The OTS has primary enforcement responsibility over savings institutions and has the authority to bring actions against the institution and all institution-affiliated parties, including stockholders, and any attorneys, appraisers and accountants, who knowingly or recklessly participate in wrongful action likely to have an adverse effect on an insured institution. Formal enforcement action may range from the issuance of a capital directive or cease and desist order to removal of officers and/or directors to institution of receivership, conservatorship or termination of deposit insurance. Civil penalties cover a wide range of violations and can amount to $25,000 per day, or even $1 million per day in especially egregious cases. The FDIC has the authority to recommend to the Director of the OTS that enforcement action to be taken with respect to a particular savings institution. If action is not taken by the Director, the FDIC has authority to take such action under certain circumstances. Federal law also establishes criminal penalties for certain violations.

     Transactions with Affiliates. Transactions between savings institutions and any affiliate are governed by Sections 23A and 23B of the Federal Reserve Act. An affiliate of a savings institution is any company or entity which controls, is controlled by or is under common control with the savings institution. In a holding company context, the parent holding company of a savings institution (such as the Company) and any companies which are controlled by such parent holding company are affiliates of the savings institution. Generally, Sections 23A and 23B (i) limit the extent to which the savings institution or its subsidiaries may engage in “covered transactions” with any one affiliate to an amount equal to 10% of such institution’s capital stock and surplus, and contain an aggregate limit on all such transactions with all affiliates to an amount equal to 20% of such capital stock and surplus, (ii) specify certain collateral requirements for particular transactions with affiliates, and (iii) require that all such transactions be on terms substantially the same, or at least as favorable, to the institution or subsidiary as those provided to a nonaffiliated. The term “covered transaction” includes the making of loans, purchase of assets, issuance of a guarantee and similar other types of transactions. In addition to the restrictions imposed by Sections 23A and 23B, no savings institution may (i) loan or otherwise extend credit to an affiliate, except for any affiliate which engages only in activities which are permissible for bank holding companies, or (ii) purchase or invest in any stocks, bonds, debentures, notes or similar obligations of any affiliate, except for affiliates which are subsidiaries of the savings institution. Section 106 of the Bank Holding Company Act of 1956, as amended (“BHCA”) which also applies to the Bank, prohibits the Bank from extending credit to or offering any other services, or fixing or varying the consideration for such extension of credit or service, on condition that the customer obtain some additional services from the institution or certain of its affiliates or not obtain services of a competitor of the institution, subject to certain exceptions.

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     Savings institutions are also subject to the restrictions contained in Section 22(h) and Section 22(g) of the Federal Reserve Act on loans to executive officers, directors and principal stockholders. Under Section 22(h), loans to a director, executive officer or to a greater than 10% stockholder of a savings institution, and certain affiliated entities of the foregoing, may not exceed, together with all other outstanding loans to such person and affiliated entities the institution’s loan to one borrower limit (generally equal to 15% of the institution’s unimpaired capital and surplus and an additional 10% of such capital and surplus for loans fully secured by certain readily marketable collateral). Section 22(h) also prohibits loans, above amounts prescribed by the appropriate federal banking agency, to directors, executive officers and greater than 10% stockholders of a savings institution, and their respective affiliates, unless such loan is approved in advance by a majority of the board of directors of the institution with any “interested” director not participating in the voting. The Federal Reserve Board has prescribed the loan amount (which includes all other outstanding loans to such person), as to which such prior board of director approval is required, as being the greater of $25,000 or 5% of capital and surplus (up to $500,000). Further, the Federal Reserve Board pursuant to Section 22(h) requires that loans to directors, executive officers and principal stockholders be made on terms substantially the same as offered in comparable transactions to other persons. There is an exception to this requirement were such loans are made pursuant to a benefit or compensation program that is widely available to employees of the institution and the program does not give preference to directors or executive officers over other employees. Section 22(h) also generally prohibits a depository institution from paying the overdrafts of any of its executive officers or directors.

     Section 22(g) of the Federal Reserve Act requires that loans to executive officers of depository institutions not be made on terms more favorable than those afforded to other borrowers, requires approval for such extensions of credit by the board of directors of the institution, and imposes reporting requirements for and additional restrictions on the type, amount and terms of credits to such officers. In addition, Section 106 of the BHCA extensions of credit to executive officers, directors, and greater than 10% stockholders of a depository institution by any other institution which has a correspondent banking relationship with the institution, unless such extension of credit is on substantially the same terms as those prevailing at the time for comparable transactions with other persons and does not involve more than the normal risk of repayment or present other unfavorable features.

Regulation of the Company

     General. The company is a savings and loan holding company as defined by the Home Owners’ Loan Act. As such, the Company is registered with the OTS and is subject to OTS regulation, examination, supervision and reporting requirements. As a subsidiary of a savings and loan holding company, the Bank is subject to certain restrictions in its dealings with the Company and affiliates thereof.

     Activities Restrictions. The Board of Directors of the Company presently intends to operate the Company as a unitary savings and loan holding company. Since the Company became a unitary savings and loan holding company before May 4, 1999, there are generally no restrictions on the activities of the Company. However, if the Director of the OTS determines that there is reasonable cause to believe that the continuation by a savings and loan holding company of an activity constitutes a serious risk to the financial safety, soundness or stability of its subsidiary savings institution, the Director of the OTS may impose such restrictions as deemed necessary to address such risk including limiting: (i) payment of dividends by the savings institution; (ii) transactions between the savings institution and its affiliates; and (iii) any activities of the savings institution that might create a serious risk that the liabilities of the holding company and its affiliates may be imposed on the savings institution. Notwithstanding the above rules as to permissible business activities of unitary savings and loan holding companies, if the savings institution subsidiary of such a holding company fails to meet the QTL Test, then such unitary holding company shall also presently become subject to the activities restrictions applicable to multiple holding companies and, unless the savings institution requalifies as a QTL within one year thereafter, register as, and become subject to the restrictions applicable to a bank holding company. See “— Regulation of the Bank — Qualified Thrift Lender Test.”

     If the Company were to acquire control of another savings institution to be held as a separate subsidiary, the Company would thereupon become a multiple savings and loan holding company. Except where such acquisition is pursuant to the authority to approve emergency thrift acquisitions and each subsidiary savings institution meets the QTL Test, the activities of the Company and any of its subsidiaries (other than the Bank or other subsidiary savings institutions) would thereafter be subject to further restrictions. Among other things, no multiple savings and loan holding company or subsidiary thereof which is not a savings institution shall commence or continue after becoming a multiple savings and loan holding company or subsidiary thereof, any business activity, other than: (i) furnishing or

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performing management services for a subsidiary savings institution; (ii) conducting an insurance agency or escrow business; (iii) holding, managing, or liquidating assets owned by or acquired from a subsidiary savings institution; (iv) holding or managing properties used or occupied by a subsidiary savings institution; (v) acting as trustee under deeds of trust; (vi) those activities authorized by regulation as of March 5, 1987 to be engaged in by multiple holding companies; or (vii) unless the Director of the OTS by regulation prohibits or limits such activities for savings and loan holding companies, those activities authorized by the Federal Reserve Board as permissible for bank holding companies. Those activities described in (vii) above must be approved by the Director of the OTS prior to being engaged in by a multiple holding company. The OTS has issued an interpretation indicating that multiple holding companies may also engage in activities permissible for financial holding companies.

     Restrictions on Acquisitions. Savings and loan holding companies are prohibited from acquiring, without prior approval of the Director of OTS, (i) control of any other savings institution or savings and loan holding company or substantially all the assets thereof, or (ii) more than 5% of the voting shares of a savings institution or holding company thereof which is not a subsidiary. Under certain circumstances, a registered savings and loan holding company is permitted to acquire, with the approval of the Director of the OTS, up to 15% of the voting shares of an undercapitalized savings institution pursuant to a “qualified stock issuance” without that savings institution being deemed controlled by the holding company. In order for the shares acquired to constitute a “qualified stock issuance,” the shares must consist of previously unissued stock or treasury shares, the shares must be acquired for cash, the savings and loan holding company’s other subsidiaries must have tangible capital of at least 6 1/2% of total assets, there must not be more than one common director or officer between the savings and loan holding company and the issuing savings institution, and transactions between the savings institution and the savings and loan holding company and any of its affiliates must conform to Sections 23A and 23B of the Federal Reserve Act. Except with the prior approval of the Director of the OTS, no director or officer of a savings and loan holding company or person owning or controlling by proxy or otherwise more than 25% of such company’s stock, may also acquire control of any savings institution, other than a subsidiary savings institution, or of any other savings and loan holding company.

     The Director of the OTS may only approve acquisitions resulting in the formation of a multiple savings and loan holding company which controls savings institutions in more than one state if: (i) the multiple savings and loan holding company involved controls a savings institution which operated a home or branch office in the state of the institution to be acquired as of March 5, 1987; (ii) the acquirer is authorized to acquire control of the savings institution pursuant to the emergency acquisition provisions of the Federal Deposit Insurance Act; or (iii) the statutes of the state in which the institution to be acquired is located specifically permit institutions to be acquired by state chartered institutions or savings and loan holding companies located in the state where the acquiring entity is located (or by a holding company that controls such state-chartered savings institutions).

     Acquisition of the Company. Under the Federal Change in Bank Control Act (“CIBCA”), a notice must be submitted to the Office of Thrift Supervision if any person (including a company), or group acting in concert, seeks to acquire control of a savings and loan holding company or savings institution. Under certain circumstances, a change of control may occur, and prior notice is required, upon the acquisition of 10% or more of the outstanding voting stock of the company or institution, unless the OTS has found that the acquisition will not result in a change of control of the Company. Under the CIBCA, the OTS has 60 days from the filing of a complete notice to act, taking into consideration certain factors, including the financial and managerial resources of the acquirer and the anti-trust effects of the acquisition. Any company that acquires control would then be subject to regulation as a savings and loan holding company.

     Sarbanes-Oxley Act of 2002. On July 30, 2002, the Sarbanes-Oxley Act of 2002 (“SOX”) was signed into law which mandated a variety of reforms intended to address corporate and accounting fraud. SOX contained provisions which amend the Securities Exchange Act of 1934, as amended (the “Act”) and provisions which directed the SEC to promulgate rules. The resultant law and regulations under the Act as of the time of this annual report is set forth in the following paragraphs. SOX provides for the establishment of a new Public Company Accounting Oversight Board (“PCAOB”), which enforces auditing, quality control and independence standards for firms that audit Securities and Exchange Commission (“SEC”)-reporting companies and is funded by fees from all SEC-reporting companies. SOX imposes higher standards for auditor independence and restricts the provision of consulting services by auditing firms to companies they audit. Any non-audit services being provided to an audit client must be preapproved by the Company’s audit committee members. In addition, certain audit partners must be rotated periodically. SOX requires chief executive officers and chief financial officers, or their equivalent, to certify to the accuracy of periodic reports filed with the SEC, subject to civil and criminal penalties if they knowingly or

26

willfully violate this certification requirement. In addition, under SOX, legal counsel is required to report evidence of a material violation of the securities laws or a breach of fiduciary duty by a company to its chief executive officer or its chief legal officer, and, if such officer does not appropriately respond, to report such evidence to the audit committee or other similar committee of the board of directors or the board itself.

     Longer prison terms apply to corporate executives who violate federal securities laws, the period during which certain types of suits can be brought against a company or its officers was extended, and bonuses issued to top executives prior to restatement of a company’s financial statements are now subject to disgorgement if such restatement was due to corporate misconduct. Executives are also prohibited from trading during retirement plan “blackout” periods, and loans to company executives are restricted. Directors and executive officers must also report most changes in their ownership of a company’s securities within two business days of the change, and all ownership reports must be electronically filed.

     SOX also increased the oversight and authority of audit committees of publicly traded companies. Audit committee members must be independent and are barred from accepting consulting, advisory or other compensatory fees from the issuer. Audit committees of publicly traded companies must have authority to retain their own counsel and other advisors funded by the company. Audit committees must establish procedures for the receipt, retention and treatment of complaints regarding accounting and auditing matters and procedures for confidential, anonymous submission of employee concerns regarding questionable accounting or auditing matters. It is the responsibility of the audit committee to hire, oversee and work on disagreements with the Company’s independent auditor.

     Beginning six months after the SEC determined that the PCAOB was able to carry out its functions, it became unlawful for any person that is not a registered public accounting firm (“RPAF”) to audit an SEC-reporting company. Under the Act, a RPAF is prohibited from performing statutorily mandated audit services for a company if such company’s chief executive officer, chief financial officer, comptroller, chief accounting officer or any person serving in equivalent positions has been employed by such firm and participated in the audit of such company during the one-year period preceding the audit initiation date. SOX also prohibits any officer or director of a company or any other person acting under their direction from taking any action to fraudulently influence, coerce, manipulate or mislead any independent public or certified accountant engaged in the audit of the Company’s financial statements for the purpose of rendering the financial statement’s materially misleading. The SEC has prescribed rules requiring inclusion of an internal control report and assessment by management in the annual report to shareholders, with which the Company is required to comply beginning with the Annual Report on Form 10-K for the fiscal year ending June 30, 2005. SOX requires the RPAF that issues the audit report to attest to and report on management’s assessment of the Company’s internal control over financial reporting. In addition, SOX requires that each financial report required to be prepared in accordance with (or reconciled to) generally accepted accounting principles and filed with the SEC reflect all material correcting adjustments that are identified by a RPAF in accordance with generally accepted accounting principles and the rules and regulations of the SEC.

     Although the Company anticipates it will incur additional expense in complying with the provisions of the Act and the related rules, management does not expect that such compliance will have a material impact on the Company’s financial condition or results of operations.

     USA Patriot Act. The USA Patriot Act is intended to strengthen U.S. law enforcement’s and the intelligence communities’ abilities to work cohesively to combat terrorism on a variety of fronts. The potential impact of the USA Patriot Act on financial institutions of all kinds is significant and wide ranging. The USA Patriot Act contains sweeping anti-money laundering and financial transparency laws and imposes various regulations including standards for verifying client identification at account opening, and rules to promote cooperation among financial institutions, regulators and law enforcement entities in identifying parties that may be involved in terrorism or money laundering.

Taxation

     General. The Company and its subsidiaries currently file a consolidated federal income tax return based on a fiscal year ending June 30. Consolidated returns have the effect of eliminating intercompany distributions, including dividends, from the computation of consolidated taxable income for the taxable year in which the distributions occur.

27

     Federal Income Taxation. Savings institutions are subject to the provisions of the Internal Revenue Code of 1986, as amended (the “Code”) in the same general manner as other corporations. Prior to legislation in 1996, institutions such as the Bank which met certain definitional tests and other conditions prescribed by the Code benefited from certain favorable provisions regarding their deductions from taxable income for annual additions to their bad debt reserve. Legislation that is effective for tax years beginning after December 31, 1995 repealed the reserve method available to thrifts and required institutions to recapture into taxable income over a six taxable year period the portion of the tax loan loss reserve that exceeds the pre-1988 tax loan loss reserve. The Bank had no such excess reserve. The Bank will no longer be allowed to use the percentage of taxable income method for tax loan loss provisions, but was allowed to use the experience method of accounting for bad debts as long as it was not considered a large thrift. Beginning with June 30, 1997 taxable year, the Bank was treated the same as a small commercial bank. Institutions with less than $500 million in assets were still permitted to make deductible bad debt additions to reserves, using the experience method. Beginning with the June 30, 2000 taxable year, the Bank began being taxed as a large thrift and is only able to take a tax deduction when a loan is actually charged off.

     Earnings appropriated to the Bank’s bad debt reserve and claimed as a tax deduction are not available for the payment of cash dividends or for distribution to stockholders (including distributions made on dissolution or liquidation), unless the Bank includes the amount in taxable income, along with the amount deemed necessary to pay the resulting federal income tax.

     In addition to the regular income tax, corporations generally are subject to a minimum tax. An alternative minimum tax is imposed at a minimum tax rate of 20% on alternative minimum taxable income, which is the sum of a corporation’s regular taxable income (with certain adjustments) and tax preference items, less any available exemption. Net operating losses can offset no more than 90% of alternative minimum taxable income. The alternative minimum tax is imposed to the extent it exceeds the corporation’s regular income tax.

     The Bank’s federal income tax returns through June 30, 1999 were audited by the IRS. The years June 30, 2000 through June 30, 2005 are open to audit.

     For further information regarding federal income taxes, see Note 10 of Notes to Consolidated Financial Statements.

     State Income Taxation. The Bank is subject to an Ohio franchise tax based on its equity capital plus certain reserve amounts. Total equity capital for this purpose is reduced by certain exempted assets. The resulting net taxable value of capital is taxed at a rate of 1.3%. The Company generally elects to be taxed as a qualifying holding company and pay Ohio tax based on its net income only. The other subsidiaries of the Company are taxed on the greater of a tax based on net income or net worth.

Executive Officers of the Registrant

     The following sets forth information with respect to the executive officers of the Company.

	Age as of
Name	September 3, 2006		Title
John R. Male		58	Chairman of the Board and Chief Executive Officer of the Company and the Bank
C. Keith Swaney		63	President and Chief Operating Officer of the Company and the Bank, Treasurer of the Company and Chief Financial Officer of the Bank
Jeffrey N. Male		57	Vice President and Secretary of the Company and Executive Vice President and Chief Lending Officer of the Bank

     John R. Male. Mr. Male has been with the Bank since 1971, where he has held various positions including branch manager, mortgage loan officer, manager of construction lending, savings department administrator and

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chief lending officer. Mr. Male was named President and Chief Executive Officer of the Bank in 1986 and was named President of the Company upon its organization in 1994. Mr. Male was named Chairman of the Board of Directors and Chief Executive Officer of the Company and the Bank in October 2000. Mr. Male serves in various public service and charitable organizations. He currently serves on the Board of Trustees for Heather Hill, a long-term care hospital in Chardon, Ohio. He has an undergraduate degree from Tufts University and holds an MBA from Case Western Reserve University.

     C. Keith Swaney. Mr. Swaney joined the Bank in 1962 and was named Executive Vice President and Chief Financial Officer in 1986. He was named Vice President and Treasurer of the Company upon its organization in 1994. Mr. Swaney was named President and Chief Operating Officer of the Company and the Bank in October 2000. He continues to serve as Treasurer of the Company and as Chief Financial Officer of the Bank. He is responsible for all internal operations of the Company and the Bank. Over the years, he has participated in various charitable organizations and currently serves on the Board of Trustees for Hiram House Camp. Mr. Swaney attended Youngstown State University and California University in Pennsylvania.

     Jeffrey N. Male. Mr. Male has been with the Bank since 1973. He has served in various capacities, including supervisor of the construction loan department, personnel director and manager of the collection, foreclosure and REO departments. Mr. Male was named Executive Vice President of the Bank in 2000. In 1986 Mr. Male was named Senior Vice President in charge of residential lending operations. He was named Vice President and Secretary of the Company upon its organization in 1994 and continues to serve in that position. Mr. Male has served in various capacities with public service and charitable organizations, including the Chagrin Valley Jaycees, the Chagrin Falls Chamber of Commerce and the Neighborhood Housing Services Corporate Loan Committee. Mr. Male is a graduate of Denison University.

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Item 1A. Risk Factors

     Certain interest rate movements may hurt earnings and asset value.

     Interest rates have recently been at historically low levels. However, since June 30, 2004, the U.S. Federal Reserve has increased its target for the federal funds rate from 1.00% to 5.25%. While these short-term market interest rates (which are used as a guide to price the Bank’s deposits) have increased, longer-term market interest rates (which are used as a guide to price the Bank’s longer-term loans) have not. Although this “flattening” of the market yield curve has not had a negative impact on our interest rate spread and net interest margin to date, if short-term interest rates continue to rise, and if rates on our deposits and borrowings continue to reprice upwards faster than the rates on our loans and investments, we would experience compression of our interest rate spread and net interest margin, which would have a negative effect on our profitability. Conversely, if short-term interest rates decline and if rates on our loans and investments reprice downward faster than our rates on deposits, then we would also experience compression of our interest rate spread and net interest margin, which would have a negative effect on our profitability.

     Changes in interest rates also affect the value of the Bank’s interest-earning assets, and in particular the Bank’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 stockholders’ equity.

     Strong competition within the Bank’s market area could hurt profits and slow growth.

     The Bank faces intense competition both in making loans and attracting deposits. This competition has made it more difficult for the Bank to make new loans and at times has forced the Bank to offer higher deposit rates. Price competition for loans and deposits might result in the Bank 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. Competition also makes it more difficult to hire and retain experienced employees. Some of the institutions with which the Bank competes have substantially greater resources and lending limits than the Bank has and may offer services that the Bank 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. The Bank’s profitability depends upon its continued ability to compete successfully in its market area.

     The Company and the Bank 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. The Company 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 the Bank. 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 Company 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.

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

     At June 30, 2006, we had $170.4 million in loans secured by commercial real estate, $125.9 million in real estate construction loans, which included $84.1 million in residential construction loans, $8.0 million in loans for the construction of multi-family properties and $33.8 million for the construction of commercial properties, and $77.2 million in loans secured by land. Commercial real estate loans, construction loans and land loans represented 23.2%, 17.1% and 10.5%, respectively, of our net loan portfolio. 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.

     The Company’s financial condition and results of operations are dependant on the economy in the Bank’s market area.

     The Bank’s market area consists of Portage, Lake, Geauga, Cuyahoga, Summit, Stark, Medina and Lorain Counties in Ohio. As of June 30, 2006, management estimates that more than 90% of deposits and 90% of loans came from its market area. Because of the Bank’s concentration of business activities in its market area, the Company’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.

     Provisions in the Company’s certificate of incorporation and bylaws and statutory provisions could discourage a hostile acquisition of control.

     The Company’s Certificate of Incorporation and Bylaws contain certain provisions that could discourage nonnegotiated takeover attempts that certain stockholders might deem to be in their interests or through which stockholders might otherwise receive a premium for their shares over the then current market price and that may tend to perpetuate existing management. These provisions include: the classification of the terms of the members of the Board of Directors; supermajority provisions for the approval of certain business combinations; elimination of cumulative voting by stockholders in the election of directors; certain provisions relating to meetings of stockholders; and provisions allowing the Board of Directors to consider nonmonetary factors in evaluating a business combination or a tender or exchange offer. The provisions in the Company’s Certificate of Incorporation requiring a supermajority vote for the approval of certain business combinations and containing restrictions on acquisitions of the Company’s equity securities provide that the supermajority voting requirements or acquisition restrictions do not apply to business combinations or acquisitions meeting specified Board of Directors approval requirements. The Certificate of Incorporation also authorizes the issuance of 1,000,000 shares of preferred stock as well as additional shares of Common Stock up to a total of 15,000,000 outstanding shares. These shares could be issued without stockholder approval on terms or in circumstances that could deter a future takeover attempt.

     In addition, Ohio law provides for certain restrictions an acquisition of the Company, and federal banking laws contain various restrictions on acquisitions of control of savings associations and their holding companies.

     The Certificate of Incorporation, Bylaw and statutory provisions, as well as certain other provisions of state and federal law and certain provisions in the Company’s and the Bank’s employee benefit plans are employment agreements and change in control severance agreements, may have the effect of discouraging or preventing a future

31

takeover attempt in which stockholders of the Company otherwise might receive a substantial premium for their shares over then current market prices.

Item 1B. Unresolved Staff Comments

     Not Applicable.

Item 2. Properties

     The following table sets forth the location and certain additional information regarding the Company’s offices at June 30, 2006.

	Year			Net Book		Owned or	Approximate
	Opened/	Total		Value at		Leased/	Square
Location	Acquired	Deposits		June 30, 2006		Expiration	Footage
	(Dollars in thousands)
Main Office:
30000 Aurora Road	2000	$	31,533	$	5,517	Owned		51,635
Solon, Ohio
Branch Offices:
2111 Richmond Road	1967		78,811		6	Lease		2,750
Beachwood, Ohio						3/31/09
413 Northfield Road	2002		47,714		227	Lease		3,084
Bedford, Ohio						10/31/12
11010 Clifton Boulevard	1974		26,324		37	Lease		1,550
Cleveland, Ohio						8/1/05
13901 Ridge Road	1999		61,931		0	Lease		3,278
North Royalton, Ohio						8/31/09
6990 Heisley Road	1994		44,200		14	Lease		2,400
Mentor, Ohio						10/25/08
1244 SOM Center Road	2004		44,960		123	Lease		2,200
Mayfield Heights, Ohio						6/30/14
497 East Aurora Road	1994		46,374		10	Lease		2,400
Macedonia, Ohio						9/30/09
8500 Washington Street	1995		43,386		623	Owned		2,700
Chagrin Falls, Ohio
408 Water Street	1998		29,541		489	Owned		2,800
Chardon, Ohio
3613 Medina Road	2000		26,522		0	Lease		2,440
Medina, Ohio						2/28/08
34400 Aurora Road	2000		30,398		41	Lease		3,000
Solon, Ohio						4/30/10
16909 Chagrin Boulevard	2000		32,906		71	Lease		2,904
Shaker Heights, Ohio						6/30/10
36311 Detroit Road	2002		43,298		182	Lease		3,375
Avon, Ohio						10/02/12

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17780 Pearl Road	2002	38,467	116	Lease	3,500
Strongsville, Ohio				8/31/12
9305 Market Square Drive	2003	17,751	1,039	Owned	3,700
Streetsboro, Ohio
215 West Garfield Road	2005	12,748	63	Lease	4,700
Aurora, Ohio				8/31/10

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     At June 30, 2006, the net book value of the Company’s premises, furniture, fixtures and equipment was $12.0 million. See Note 6 of Notes to Consolidated Financial Statements for further information.

     The Company also owns real estate in Solon, Ohio. See “Item 1. Business — Subsidiary Activities” for further information.

Item 3. Legal Proceedings

     From time to time, the Company and/or the Bank is a party to various legal proceedings incident to its business. There are no material legal proceedings to which the Bank or PVF is a party or to which any of their property is subject.

Item 4. Submission of Matters to a Vote of Security Holders

     No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year ended June 30, 2006.

PART II

Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Securities

     The information contained under the section captioned “Market Information” in the Company’s Annual Report to Stockholders for the Fiscal Year Ended June 30, 2006 (the “Annual Report”) is incorporated herein by reference. For information regarding restrictions on the payment of dividends see “Item 1. Business — Regulation of the Bank — Dividend Limitations.”

     The Company repurchased the following equity securities registered under the Securities Exchange Act of 1934, as amended, during the fourth quarter of the fiscal year ended June 30, 2006.

			(c)		(d)
			Total Number of		Maximum
	(a)		Shares Purchased		Number of Shares
	Total	(b)	as Part of		That May Yet Be
	Number of	Average	Publicly		Purchased Under
	Shares	Price Paid	Announced Plans		the Plans or
Period	Purchased	per Share	or Programs		Programs
April 2006
Beginning date: April 1	—	—		472,725		265,602
Ending date: April 30
May 2006
Beginning date: May 1	—	—		472,725		265,602
Ending date: May 31
June 2006
Beginning date: June 1	—	—		472,725		265,602
Ending date: June 30
Total	—	—		472,725		265,602

The shares were repurchased to a repurchase program renewed on July 25, 2005, pursuant to which the Board of Directors authorized the repurchase of up to 287,239 shares. The repurchase program was due to expire on July 30, 2006, but the Board of Directors extended the program through July 30, 2007 and authorized the repurchase of up to 265,602 shares.

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Item 6. Selected Financial Data

     The information contained in the table captioned “Selected Consolidated Financial and Other Data” in the Annual Report is incorporated herein by reference.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     The information contained in the section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Annual Report is incorporated herein by reference.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

     The information contained in the section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Asset/Liability Management” in the Annual Report incorporated herein by reference.

Item 8. Financial Statements and Supplementary Data

     The consolidated financial statements contained in the Annual Report which are listed under Item 15 herein are incorporated herein by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

     Not applicable.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

     As of the end of the period covered by this report, management of the Company carried out an evaluation, under the supervision and with the participation of the Company’s principal executive officer and principal financial officer, of the effectiveness of the Company’s disclosure controls and procedures. Based on this evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures are effective in ensuring that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. It should be noted that the design of the Company’s disclosure controls and procedures is based in part upon certain reasonable assumptions about the likelihood of future events, and there can be no reasonable assurance that any design of disclosure controls and procedures will succeed in achieving its stated goals under all potential future conditions, regardless of how remote, but the Company’s principal executive and financial officers have concluded that the Company’s disclosure controls and procedures are, in fact, effective at a reasonable assurance level.

Management’s Annual Report on Internal Control Over Financial Reporting

The management of PVF Capital Corp. is responsible for establishing and maintaining adequate internal control over financial reporting. PVF Capital Corp’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with United States generally accepted accounting principles.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Accordingly, even an effective system of internal control over financial reporting will provide only reasonable assurance with respect to financial statement preparation.

With the supervision and participation of our Chief Executive Officer and Chief Financial Officer, management assessed the effectiveness of the Company’s internal control over financial reporting as of June 30, 2006. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on management’s assessment and those criteria, management believes that PVF Capital Corp. maintained effective internal control over financial reporting as of June 30, 2006.

The Company’s independent registered public accounting firm, Crowe Chizek and Company LLC, has issued their report on management’s assessment of the company’s internal control over financial reporting. That report is included in the Annual Report incorporated herein by reference.

/s/ John R. Male
Chairman of the Board
and Chief Executive Officer /s/ C. Keith Swaney
President, Chief Operating
Officer and Treasurer

Changes in Internal Control Over Financial Reporting

     There have been no changes in the Company’s internal control over financial reporting 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.

Item 9B. Other Information

     Not applicable.

PART III

Item 10. Directors and Executive Officers of the Registrant

     The information contained under the sections captioned “Proposal I — Election of Directors” and Section 16(a) Beneficial Ownership Reporting Compliance in the Company’s definitive proxy statement for the Company’s 2006 Annual Meeting of Stockholders (the “Proxy Statement”) is incorporated herein by reference.

     The Company has adopted a Code of Ethics that applies to the Company’s directors, officers and employees.

Item 11. Executive Compensation

     The information contained under the section captioned “Proposal I — Election of Directors — Executive Compensation” and “— Directors’ Compensation” in the Proxy Statement is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

(a) and (b)	The information required by this item is incorporated herein by reference to the sections captioned “Proposal I — Election of Directors” and “Voting Securities and Principal Holders Thereof” of the Proxy Statement.
(c)	Management knows of no arrangements, including any pledge by any person of securities of the Bank, the operation of which may at a subsequent date result in a change in control of the registrant.

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(d) The following table sets forth certain information with respect to the Company’s equity compensation plans as of June 30, 2006.

	(a)		(b)		(c)
					Number of securities remaining
	Number of securities to				available for future issuance
	be issued upon exercise		Weighted-average exercise		under equity compensation
	of outstanding options,		price of outstanding		plans (excluding securities
	warrants & rights(1)		options, warrants and rights		reflected in column (a))(1)
Equity compensation plans   approved by security holders		558,474		8.77		183,228
Equity compensation plans not   approved by security holders		—		—	—
Total		558,474		8.77		183,228

(1) Adjusted for a 10% stock dividend paid on the Common Stock on September 1, 1997, a 50% stock dividend paid on the Common Stock on August 17, 1998, a 10% stock dividend paid on the Common Stock on September 7, 1999, a 10% stock dividend paid on the Company’s Common Stock on September 1, 2000, a 10% stock dividend paid on the Common Stock on August 31, 2001, a 10% stock dividend paid on the Common Stock on August 30, 2002, a 10% dividend paid on the Common Stock on August 29, 2003, a 10% dividend paid on the Common Stock on August 31, 2004 and a 10% dividend paid on the Common Stock on August 31, 2005.

Item 13. Certain Relationships and Related Transactions

     The information required by this item is incorporated herein by reference to the section captioned “Proposal I — Election of Directors” of the Proxy Statement.

Item 14. Principal Accountant Fees and Services

     Information required by this item is incorporated herein by reference to the section captioned “Independent Auditors” in the Proxy Statement.

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)	1.	Report of Independent Registered Public Accounting Firm (incorporated by reference to the Annual Report)
		Consolidated Financial Statements (incorporated by reference to the Annual Report)
		(a)	Consolidated Statements of Financial Condition, at June 30, 2006 and 2005
		(b)	Consolidated Statements of Operations for the Years Ended June 30, 2006, 2005 and 2004
		(c)	Consolidated Statements of Stockholders’ Equity for the Years Ended June 30, 2006, 2005 and 2004
		(d)	Consolidated Statements of Cash Flows for the Years Ended June 30, 2006, 2005 and 2004
		(e)	Notes to Consolidated Financial Statements.

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2.	All schedules have been omitted as the required information is either inapplicable or included in the Notes to Consolidated Financial Statements.
3.	Exhibits and Index to Exhibits
	The following exhibits are either attached to or incorporated by reference in this Annual Report on Form 10-K.

No.	Description
3.1	Articles of Incorporation, as amended and restated	**
3.2	Code of Regulations, as amended and restated	*
3.3	Bylaws, as amended and restated	****
4	Specimen Common Stock Certificate	*
10.1	Park View Federal Savings Bank Conversion Stock Option Plan †	*
10.2	PVF Capital Corp. 1996 Incentive Stock Option Plan †	*
10.3	Form of Severance Agreement between PVF Capital Corporation and each of John R. Male, C. Keith Swaney and Jeffrey N. Male †	**
10.4	Park View Federal Savings Bank Supplemental Executive Retirement Plan as amended and restated
10.5	PVF Capital Corp. 2000 Incentive Stock Option Plan and Deferred Compensation Plan†	***
13	PVF Capital Corp. Annual Report to Stockholders for the year ended June 30, 2006
14	Code of Ethics	****
21	Subsidiaries of the Registrant
23.1	Consent of Crowe Chizek and Company LLC
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 Certifications

*	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).
**	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).
***	Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended June 30, 2003 (Commission File No. 0-24948).
***	Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended June 30, 2004 (Commission File No. 0-24948).
****	Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended June 30, 2005 (Commission File No. 0-24948).
†	Management contract or compensory plan or arrangement.
(b)	Exhibits. The exhibits required by Item 601 of Regulation S-K are either filed as part of this Annual Report on Form 10-K or incorporated herein by reference.
(c)	Financial Statements and Schedules Excluded from Annual Report. There are no other financial statements and financial statement schedules which were excluded from the Annual Report to Stockholders pursuant to Rule 14a-3(b) which are required to be included herein.

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SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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.
September 8, 2006	By:	/s/ John R. Male
		John R. Male Chairman of the Board of Directors and Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ John R. Male	September 8, 2006
John R. Male Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer)
/s/ C. Keith Swaney	September 8, 2006
C. Keith Swaney President, Chief Operating Officer and Treasurer (Principal Financial and Accounting Officer)
/s/ Robert K. Healey	September 8, 2006
Robert K. Healey Director
/s/ Stanley T. Jaros	September 8, 2006
Stanley T. Jaros Director
/s/ Stuart D. Neidus	September 8, 2006
Stuart D. Neidus Director
/s/ Gerald A. Fallon	September 8, 2006
Gerald A. Fallon Director
/s/ Raymond J. Negrelli	September 8, 2006
Raymond J. Negrelli Director
/s/ Ronald D. Holman	September 8, 2006
Ronald D. Holman, II Director

EX-10.4

EXHIBIT 10.4

PARK VIEW FEDERAL SAVINGS BANK
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Amended and Restated February 2006

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PARK VIEW FEDERAL SAVINGS BANK
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Article 1

Definitions

Section 1.1	Administrator. The Administrator of the Plan shall be the Compensation Committee.
Section 1.2	Actuarial Equivalent. At any date, with respect to any Plan Benefit hereunder, a payment or payments equal in the aggregate to the value at such date of such. Plan Benefit determined actuarially on the basis of the current Pension Benefit Guarantee Corporation (“PBGC”) interest rate and the mortality table currently used by the PBGC at such date.
Section 1.3	Bank. Park View Federal Savings Bank, a federally chartered savings association, or any successor thereto as provided in Section 10.12 herein.
Section 1.4	Board. The Board of Directors of Park View Federal Savings Bank.
Section 1.5	Compensation Committee. The Compensation Committee of the Board of Directors of Park View Federal Savings Bank.
Section 1.6	Code. The Internal Revenue Code of 1986, as amended, or as it may be amended from time to time.
Section 1.7	Company. PVF Capital Corporation, an Ohio corporation, or any successor thereto as provided in Section 10.12 herein, or any subsidiary thereof.
Section 1.8	Effective Date. The effective date of the Plan shall be July 1, 1998,
Section 1.9	Plan. The Park View Federal Savings Bank Supplemental Executive Retirement Plan.
Section 1.10	Plan Benefit. Retirement benefits payable under the Park View Federal Savings Bank Supplemental Executive Retirement Plan.
Section 1.11	Participant. An employee who is eligible to participate in the Park View Federal Savings Bank Supplemental Executive Retirement Plan.
Section 1.12	Retirement Date. The first day of any calendar month following the Participant’s sixty fifth (65th) birthday on which the Participant elects to retire, or such earlier date as the Board, by resolution, may agree to grant the Participant early retirement.

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Article 2

Purpose of Plan

Section 2.1 Purpose. The Plan is designed to provide retirement benefits payable out of the general assets of the Bank as provided in Article 4.

Article 3

Eligibility

Section 3.1 Eligibility. Eligibility to participate in the Plan is limited to Employees of the Bank who are designated by the Compensation Committee of the Board of Directors of the Bank.

Article 4

Benefits

Section 4.1	Amount of Benefits. The annual amount of benefits payable to each Participant under the Plan shall be equal to sixty percent (60%) of the Participant’s Final Pay, reduced by the Actuarial Equivalent of the annual benefits payable to the Participant under the Bank’s Qualified Retirement Plans consistent with the form of benefits paid under Section 4.2. For purposes of this Section, the reduction for benefits payable under Qualified Retirement Plans shall not include elective deferrals made by the employee and earnings thereon. For purposes of this Section, Final Pay shall be defined as the highest year’s combined salary and target bonus (as defined in the Bank’s Management Incentive Compensation Plan established July 1, 1997) during the last five years of the Participant’s employment with the Bank. The determination of combined salary and target bonus shall include any amounts electively deferred by the Participant to any of the Bank’s qualified or nonqualified employee benefit plans.
Section 4.2	Form of Benefit Payments. The benefits payable to or on behalf of a Participant as determined under Section 4.1 shall be paid in the form of a lump sum distribution, single life annuity or converted to the Actuarial Equivalent joint and survivor annuity.
Section 4.3	Time of Benefit Payments. Payment of benefits (annuity payments or the lump sum equivalent of the annuity payments) due under the Plan to the Participant shall commence on the Participant’s Normal Retirement Date or, such earlier date as otherwise provided in this Agreement or as the Compensation Committee of the Board may, by resolution, otherwise

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determine. Subsequent annual payments of benefits shall be paid to the Participant each year, thereafter, on the anniversary date of the initial payment described in the previous sentence. Annuity payments shall continue for the lifetime of the Participant, or for the joint lives of the Participant and his or her spouse if actuarially converted pursuant to Section 4.2. In the event the Participant dies prior to commencement of benefit payments, the benefits payable shall be paid in a lump sum Actuarial Equivalent to the named beneficiary under Article 7 herein within one year from the date of death of the Participant.

Section 4.4

Distribution Election. Each Participant shall elect on a Distribution Election Form (in the form attached hereto) the distribution form for Benefit Amount described in Section 4.1. If any Participant fails to make an election on a Distribution Election Form with respect to the Plan the distribution form shall be a single life annuity or converted to the Actuarial Equivalent joint and survivor annuity. Payment of the Benefit within 30 days upon the occurrence of normal retirement, disability, death, early retirement or change of control, as described in Article 5 .

Article 5

Vesting

Section 5.1

Pro Rata Vesting. Provided that the Participant has remained continuously in the employ of the Bank (except for normal vacation time and such other leaves of absence as may be approved by the Board), the Participant shall vest in the Plan Benefits described in Article 4 of this Agreement each year, on a pro rata basis, beginning with the one year anniversary date of the effective date that the Participant becomes eligible to participate in the Plan and continuing with each succeeding annual anniversary date thereafter until the Participant’s attainment of age sixty-five (65). Upon the Participant’s attainment of age sixty-five (65) and provided the Participant has remained continuously in the employ of the Bank, the Participant shall be fully vested in the Plan Benefits described in Article 4 of this Agreement.

Section 5.2

Example. A Participant is age forty-five (45) at the effective date of this Agreement. Assuming the Participant remains in the employ of the Bank for another fifteen (15) years until he is age sixty (60), he will be entitled to an annual benefit under Article 4 and Section 5.1 of this Agreement that is equal to forty-five percent (45%) of the Participant’s highest combined salary and target bonus during the last five years of his employment determined as follows:

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	15 years Credited service x 60% Final Pay = 45% Final Pay at 20 year vesting period age sixty-five (65)1
	1 If payments begin earlier than age sixty-five (65), the benefit will be actuarially reduced. If requested by the Participant and approved by the Compensation Committee, the actuarially reduced lump sum equivalent may be paid in lieu of annual benefits.
	Years of credited service shall be equal to the number of years the Participant remains in the employ of the Bank after becoming an eligible Participant of the Plan as determined by the Board
	Vesting period shall be equal to the difference between sixty-five (65) and the Participant’s age at the time he becomes a Participant in the Plan.
Section 5.3	Death or Disability. In the event that the Participant dies or becomes permanently and totally disabled while in the employ of the Bank and prior to age sixty-five (65), the Participant shall become fully vested in the Plan Benefits described in Article 4 of this Agreement.
	For purposes of this Agreement, disability shall mean a condition in which the Participant is: (a) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death, or last for a continuous period of not less than twelve (12) months; or (b) by reason of any medically determinable physical or mental impairment that can be expected to result in death, or last for a continuous period of not less than twelve (12) months, is receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering participants of Bank.
Section 5.4	Early Retirement. In the event the Participant wishes to retire prior to age sixty-five (65), the Compensation Committee of the Board may agree, by resolution, to fully vest the Participant in the entire Plan Benefit described in Article 4. The Compensation Committee of the Board may also agree, by resolution, and with the approval of the Participant, to begin payment of the Participant’s Plan Benefits prior to the Participant’s attainment of age sixty-five (65), Benefits commencing earlier than the Participant’s age 65 will be actuarially reduced for the Participant’s age at commencement.

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Section 5.5 Change in Control.

(a)	In the event of a change in control of the Company, the entire Plan Benefit described in Article 4 shall become fully vested and be immediately payable to the Participant in full.
(b)	For purposes of this Agreement, a change in control shall mean:

(i)	The acquisition by a person or persons acting in concert of the power to vote twenty-five percent (25%) or more of a class of the Company’s voting securities, or the acquisition by a person of the power to direct the Company’s management or policies, if the Board of Directors or the Office of Thrift Supervision (the “OTS”) or successor regulatory agency has made a determination that such acquisition constitutes or will constitute an acquisition of control of the Company for the purposes of the Savings and Loan Holding Company Act or the Change in Bank Cant-Tot Act and the regulations thereunder (12 CFR Part 574 or any successor provision);
(ii)	during the period of two (2) consecutive years during the term of this Agreement, individuals who at the beginning of such period constitute the Board of Directors of the Company cease for any reason to constitute at least a majority thereof, unless the election of each director who was not a director at the beginning of such period has been approved in advance by directors representing at least two thirds (2/3) of the directors then in office who were directors in office at the beginning of the period;
(iii)	the Company shall have merged into or consolidated with another company, or merged another company into the Company, on a basis whereby less than fifty percent (50%) of the total voting power of the surviving company is represented by shares held by former shareholders of the Company prior to such merger or consolidation; or
(iv)	The Company shall have sold (i) substantially all of its assets; or, (ii) the Bank, to another person. The term “person” refers to an individual, corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or other entity.

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Article 6

Termination for Cause

Section 6.1

In the event of the termination of the Participant for Cause, the Bank shall have no further obligations under this Agreement other than payment to the Participant at the Retirement Date of any vested portion of the Plan Benefit. For purposes of this Agreement, Cause shall be defined as termination as a result of the Participant’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order or material breach of any provision of this Agreement.

Sections 6.2

If any events specified in Section 563.39(b) (2) through (5) of the OTS Regulations (or any successor provision thereto) shall occur, the Participant’s rights under this Agreement shall be determined in accordance with the provisions of such Sections.

Article 7

Beneficiary Designation

Section 7.1	Beneficiary Designation. Each Participant shall have the right, at any time, to designate any person or persons as his Beneficiary or Beneficiaries (both primary and contingent) to whom payment under this Plan shall be paid in the event of death prior to complete distribution of the Participant’s Plan Benefits under the Plan. Each Beneficiary Designation shall be in a written form prescribed by the Administrator and will be effective only when filed with the Administrator during the Participant’s lifetime.
Section 7.2	Amendments. Any Beneficiary Designation may be changed by a Participant without the consent of any designated Beneficiary by the filing of a new Beneficiary Designation with the Administrator. The filing of a new Beneficiary Designation form will cancel all Beneficiary Designations previously filed,
Section 7.3	No Beneficiary Designation. If any Participant fails to designate a Beneficiary in the manner provided above, or if the Beneficiary designated by a deceased Participant predeceases the Participant, the Administrator shall direct the Bank to distribute such Participant’s remaining benefits under the Plan as follows:

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a.	To the Participant’s surviving spouse, if any; or
b.	If the Participant has no surviving spouse, then to the Participant’s children in equal shares by right of representation; or
c.	If the Participant shall have no surviving spouse or children, then to the Participant’s estate; or
d.	In the absence of a will, in accordance with the intestate statute of the Participant’s domicile.

Section 7.4	Effect of Payment. Payment to the Beneficiary or as provided in Section 4.3 above shall completely discharge the Bank’s obligations under this Plan.
Section 7.5	Death of Beneficiary. Following commencement of payment of benefits under the Plan, if the Beneficiary designated by the deceased Participant dies before receiving complete distribution of such benefits any remaining benefits shall be paid:

a.	As designated by the Beneficiary in a written form prescribed by the Administrator which is effective only when fled with the Administrator during the Beneficiary’s lifetime; or
b.	If the Beneficiary shall not have made such designation, then to the Beneficiary’s estate.

Article 8

Claims Procedure

Section 8.1	Claim. Any person claiming a benefit under the Plan, requesting an interpretation or ruling under the Plan, or requesting information under the Plan shall present the request in writing to the Administrator who shall respond in writing as soon as practicable, and in no event later than ninety (90) days after the date of the written request.
Section 8.2	Denial of Claim. If the claim or request is denied, the written notice of denial shall be made within ninety (90) days of the date of receipt of such claim or request by the Administrator and shall state:

a.	The reason for denial, with specific reference to the Plan provision on which the denial is based.
b.	A description of any additional material or information required and an explanation of why it is necessary.

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c. An explanation of the Plan’s claim review procedure.

Section 8.3

Review of Claim. Any person whose claim or request is denied or who has not received a response within ninety (90) days may request review by notice given in writing to the Administrator within (60) days of receiving a response or one hundred fifty (150) days from the date the claim was received by the Administrator. The claim or request shall be reviewed by the Administrator who may, but shall not be required to, grant the claimant a hearing. On review, the claimant may have representation, examine pertinent documents, and submit issues and comments in writing.

Section 8.4

Final Decision. The decision on review shall normally be made within sixty (60) days after the Administrator’s receipt of a request for review. If an extension of time is required for a hearing or other special circumstances, the claimant shall be notified and the time limit shall be one hundred twenty (120) days after the Administrator’s receipt of a request for review. The decision shall be in writing and shall state the reasons and relevant Plan provision. All decisions on review shall be final and bind all parties concerned.

Article 9

Amendment of Plan

Section 9.1 Amendment of Plan. The Board may, at any time, amend the Plan in whole or in part, provided, however, that no amendment shall be effective to decrease or restrict any vested Plan Benefits accrued under the Plan.

Article 10

Miscellaneous

Section 10.1	Benefits Unfunded. The benefits payable under the Plan shall be paid by the Bank each year out of its general assets.
Section 10.2	Unsecured General Creditor. Participants have the status of unsecured general creditors of the Bank. The Bank’s obligation under the Plan shall be merely that of an unfunded and unsecured promise of the Bank to make benefit payments in the future.
Section 10.3	Nonassignability. Neither a Participant nor any other person shall have any right to alienate, commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in

9

	advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights which are, expressly declared to be unassignable and nontransferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or separation for the payment of any other person, nor be transferable by operation of law in the event of a Participant’s or another person’s bankruptcy or insolvency.
Section 10.4	Payment of Taxes. The Bank shall have the right to deduct from all benefits paid hereunder any Federal, state or local taxes required to be withheld with respect to such benefit payments.
Section 10.5	Not a Contract of Employment. The terms and conditions of this Plan shall not be deemed to constitute a contract of employment between the Bank and the Participant, except as may otherwise be specifically provided herein. Moreover, nothing in this Plan shall be deemed to give the Participant the right to be retained in the service of the Bank or to interfere with the right of the Bank to discipline or discharge the Participant at any time
Section 10.6	Participant Cooperation. A Participant will cooperate with the Bank by furnishing any and all information requested by the Bank in order to facilitate the payment of benefits hereunder and such other action as may be requested by the Bank.
Section 10.7	Terms. Whenever any words are used herein in the masculine, they shall be construed as though they were used in the feminine in all cases where they would so apply; and wherever any words are used herein in the singular or in the plural, they shall be construed as though they were used in the plural or the singular, as the case may be, in all cases where they would so apply.
Section 10.8	Caption. The captions of articles, sections, and paragraphs of the Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions.
Section 10.9	Governing Law. This agreement shall, except to the extent that Federal Laws (including a law, rule or regulation of the OTS or Federal Deposit Insurance Corporation (FDIC)) shall be deemed to apply, be governed by and construed and enforced in accordance with the laws of Ohio.
Section 10.10	Validity. In case any provision of this Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal and invalid provision had never been inserted herein.

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Section 10.11	Notice. All notices or other communications under this Plan shall be made in writing and either hand delivered or sent by registered or certified mail to the Administrator.
Section 10.12	Successors, All obligations of the Company and the Bank, respectively, under the Plan shall be binding on any successor to the Company and the Bank, respectively, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the business and/or assets of the Company or the Bank.

IN WITNESS WHEREOF, and pursuant to resolution of the Board of Directors of the undersigned, the Bank has caused this instrument to be executed by its duly authorized officer this _______________ day of _________, 2006.

PVF CAPITAL CORPORATION		PARK VIEW FEDERAL SAVINGS BANK
By:		By:
	John R. Male Chairman of the Board of Directors		Gerald A. Fallon Chairman of Compensation Committee
PARK VIEW FEDERAL SAVINGS BANK
By:
	John R. Male Chairman of the Board of Directors

STATE OF OHIO CUYAHOGA COUNTY	) ) )
Sworn to before my by the aforesaid John R. Male and Gerald A. Fallon and subscribed in my presence this ______ day of ____________, 2006.
	________________________
	NOTARY PUBLIC

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PARK VIEW FEDERAL SAVINGS BANK
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

DISTRIBUTION ELECTION FORM

I, ____________, a Participant pursuant to the Park View Federal Savings Bank Supplemental Executive Retirement Plan, hereby elect that, upon the occurrence of normal retirement, disability, death, early retirement or change of control, as described in Article 5, the amount of benefits payable, described in Article 4, shall be distributed to me as follows:

___  Lump-sum payment within 30 days of event entitling me to such distribution.

___  Payment of Benefit annually as a straight life annuity or converted to the Actuarial Equivalent joint and survivor annuity, commencing 30 days after event entitling me to such distribution.

______________________________
[Participant Signature]

Date: __________________________

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BENEFICIARY DESIGNATION

I direct that all amounts payable at my death under the terms of the Park View Federal Savings Bank Supplemental Executive Retirement be paid as provided below. As used below “survive me” means “survive me by more than 30 days.” (Fill in the blank(s) of only one of the following)

1.	To _________, if such person survives me, otherwise in equal shares to my children who survive me; but if any child of mine does not survive me and leaves a child or children, then such child’s share equally to his or her children, who survive me. At this time, my children are ___________________________________________________________________________ ______________________________________________________________________________________________.
2.	To my children who survive me in equal shares but if any child of mine does not survive me and leaves a child or children, then such child’s share equally to his or her children who survive me. At this time my children are ___________________ _____________________________________________________________________________________________.
3.	To _________, trustee (or any successor trustee) of a trust agreement of which I am the grantor dated _______________.
4.	To:________________________________________________________________________________________________
	___________________________________________________________________________________________________
	___________________________________________________________________________________________________
	___________________________________________________________________________________________________
	DATED this __________________ day of _______________.
	______________________________                      (signature)

13

EX-13

Exhibit 13

A n n u a l R e p o r t J u n e 3 0 , 2 0 0 6

2006

               B o a r d   o f   D i r e c t o r s

John R. Male
Chairman of the Board and
Chief Executive Officer

C. Keith Swaney
President, Chief Operating Officer
and Chief Financial Officer

Gerald A. Fallon
Retired

Robert K. Healey
Retired

Ronald D. Holman, II
Partner
Cavitch, Familo, Durkin & Frutkin

Stanley T. Jaros
Partner
Moriarty & Jaros, P.L.L.

Raymond J. Negrelli
President
Raymond J. Negrelli, Inc.

Stuart D. Neidus
Chairman and
Chief Executive Officer
Anthony & Sylvan Pools Corporation

               O f f i c e r s

John R. Male
Chairman of the Board and
Chief Executive Officer

C. Keith Swaney
President, Chief Operating Officer
and Chief Financial Officer

Jeffrey N. Male
Executive Vice President

William J. Harr, Jr.
Senior Vice President
Lending

Anne M. Johnson
Senior Vice President
Operations

Carol S. Porter
Corporate Secretary and
Marketing Director

Edward B. Debevec
Treasurer

Mark E. Fosnaught
Vice President
Retail Banking

Robert L. Katitus
Vice President
Commercial Real Estate Lending

Adeline Novak
Vice President
Human Resources

Robert J. Papa
Vice President
Construction Lending

J. Thomas Peyton
Vice President
Information Systems

John E. Schimmelmann
Vice President
Deposit Operations

Kennaird H. Stewart
Vice President
Commercial Real Estate Lending

Table of Contents
Letter to Shareholders	2
Full Service Locations	4
Selected Consolidated Financial and Other Data	6
Management’s Discussion and Analysis of Financial Condition and Results of Operations	8
Management’s Annual Report on Internal Control over Financial Reporting	21
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting	22
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements	24

2006

     

                    To   O u r   S h a r e h o l d e r s

We are pleased to report on the progress of our strategic initiatives and the results of operations for PVF Capital Corp., the parent of Park View Federal Savings Bank, for the fiscal year ended June 30, 2006.

The Company’s strategic initiatives focus on community lending, controlling interest rate risk, growth of core deposits, expense control and internet banking. We are currently in the process of reorganizing and expanding our lending area to produce quality growth and service in all areas of residential lending. The loan portfolio for the year had measured growth in one-to-four family, multi-family, acquisition and development and construction loans. The Bank has been able to control its interest rate risk by originating short-term, adjustable-rate loans for investment while selling long-term, fixed-rate loans and retaining the servicing. The Bank has introduced new products and services and has focused much of its advertising budget and cross-selling efforts on increasing the Company’s deposit base, with the emphasis on growth in core deposits. The implementation of PVF Online Banking and PVF Bill Pay has enhanced both the visibility and product offerings of Park View Federal Savings Bank.

Earnings for the fiscal year ended June 30, 2006 decreased by $0.7 million to $4.8 million, or $0.63 basic earnings per share and $0.62 diluted earnings per share. The return on average assets was 0.56 percent and return on average common equity was 7.15 percent for the year. The decline in earnings for the year is attributable to an increase in the provision for loan losses, a decrease in non-interest income, an increase in non-interest expense and an increase in net interest income. Non-interest income decreased as a result of declines in mortgage banking activities, gains on the sale of real estate owned and real estate activity. Non-interest expense increased primarily as a result of increases to compensation and benefits and office occupancy and equipment. The increase to net interest income was attributable to balance sheet growth in both interest-earning assets and interest-bearing liabilities in addition to an increase in the Company’s interest rate spread. The details of our financial performance are contained in the Management’s Discussion and Analysis of Financial Condition and Results of Operations portion of this report.

While the Company’s investment in technology along with enhanced products and services has resulted in higher staffing levels, increased administrative costs and reduced earnings in the short run, we believe the Company is now well positioned for future growth.

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2006

Consolidated assets of the Company increased $82.2 million to $906.1 million, while total stockholders’ equity of PVF Capital Corp. increased to $69.0 million at June 30, 2006. Loans receivable increased by $75.6 million, mortgage-backed securities held to maturity decreased by $4.1 million, and loans receivable held for sale increased by $1.6 million. The increases in deposits and borrowings of $64.7 million and $10.4 million, respectively, were used to fund asset growth.

Our stock repurchase program was renewed for an additional 12 months in July 2006. Pursuant to this plan and our cash dividend policy, the Company repurchased a total of 472,725 shares, or 5.8 percent, of its common stock through June 30, 2006 and paid a $0.296 per share cash dividend for the year.

Visit our web site at www.pvfsb.com. The site provides information about our products and services, and provides access to current loan and deposit account rates, terms and other information.

We invite all shareholders to attend the Annual Meeting of Stockholders of PVF Capital Corp. on Monday, October 23, 2006 at 10:00 a.m., at PVF Capital Corp.’s Corporate Center, 30000 Aurora Road, Solon, Ohio. We look forward to another successful year of service and dedication to the community, its members, our shareholders and our customers.

Sincerely,
John R. Male	C. Keith Swaney
Chairman of the Board and Chief Executive Officer	President, Chief Operating Officer and Treasurer

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F U L L S E R V I C E L O C A T I O N S

Bainbridge Office 8500 Washington St. Chagrin Falls, OH 44023 Tel: 440-543-8889 Avon Office 36311 Detroit Rd. Avon, OH 44011 Tel: 440-934-3580 Aurora Office 215 W. Garfield Rd. Aurora, OH 44202 Tel: 330-562-0620 Beachwood Office La Place 2111 Richmond Rd. Beachwood, OH 44122 Tel: 216-831-6373 Bedford Office 413 Northfield Rd. Bedford, OH 44146 Tel: 440-439-2200 Chardon Office 408 Water St. Chardon, OH 44024 Tel: 440-285-2343 Lakewood-Cleveland Office 11010 Clifton Blvd. Cleveland, OH 44102 Tel: 216-631-8900 Macedonia Office 497 East Aurora Rd. Macedonia, OH 44056 Tel: 330-468-0055 Corporate Center Office 30000 Aurora Rd. Solon, OH 44139 Tel: 440-914-3900 CLEVELAND Lakewood Mentor 90 90 480 480 77 71 80 80 306 Chardon Beachwood Shaker Hts. Mayfield Hts. Bainbridge Bedford North Royalton Strongsville Macedonia Corporate Ctr. Solon Medina 44 91 82 322 422 Streetsboro Aurora 4 Avon 480 43 271

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Mentor Office Heisley Corners 6990 Heisley Rd. Mentor, OH 44060 Tel: 440-944-0276 North Royalton Office 13901 Ridge Rd. North Royalton, OH 44133 Tel: 440-582-7417 Shaker Heights Office Shaker Towne Centre 16909 Chagrin Blvd. Shaker Hts., OH 44120 Tel: 216-283-4003 Solon Office Solar Shopping Center 34400 Aurora Rd. Solon, OH 44139 Tel: 440-542-6070 Streetsboro Office 9305 Market Square Dr. Streetsboro, OH 44241 Tel: 330-626-9444 Strongsville Office 17780 Pearl Rd. Strongsville, OH 44136 Tel: 440-878-6010 Mayfield Heights Office 1244 SOM Center Rd. Mayfield Hts., OH 44124 Tel: 440-449-8597 Medina Office Reserve Square 3613 Medina Rd. Medina, OH 44256 Tel: 330-721-7484 Park View Federal’s conveniently located full service branch offices, with ample parking facilities immediately adjacent to each office, are equipped with state-of-the-art technology to process any transaction quickly and efficiently. Our loan officers and account representatives are available to answer any questions about our financial products and services. We pride ourselves on providing our customers with the best in financial assistance

5

Selected Consolidated Financial and Other Data

Financial Condition Data:

	At June 30,
(dollars in thousands)	2006		2005		2004		2003		2002
Total assets	$	906,081	$	823,899	$	755,687	$	743,404	$	679,620
Loans receivable, net		736,065		660,494		610,681		576,985		560,577
Loans receivable held for sale, net		10,698		9,060		11,871		33,604		11,680
Mortgage-backed securities held to maturity		27,578		31,720		36,779		2,931		7,211
Cash and cash equivalents		19,738		11,090		17,470		96,751		14,314
Securities		58,000		57,500		27,500		33		55,121
Deposits		656,864		591,226		526,493		526,429		479,672
Borrowings		156,773		146,413		147,526		125,938		129,028
Stockholders’ equity		68,973		66,453		63,361		58,603		52,299

Operating Data:

	Year Ended June 30,
(dollars in thousands except for earnings per share)	2006		2005		2004		2003		2002
Interest income	$	55,179	$	43,595	$	39,109	$	43,482	$	48,814
Interest expense		28,408		19,801		16,739		20,646		27,060
Net interest income before provision for loan losses		26,771		23,794		22,370		22,836		21,754
Provision for loan losses		826		111		597		0		558
Net interest income after provision for loan losses		25,945		23,683		21,773		22,836		21,196
Non-interest income		2,500		3,374		6,130		5,893		3,751
Non-interest expense		21,549		18,942		17,571		16,509		14,139
Income before federal income taxes		6,896		8,115		10,332		12,220		10,808
Federal income taxes		2,053		2,531		3,422		4,124		3,635
Net income	$	4,843	$	5,584	$	6,910	$	8,096	$	7,173
Basic earnings per share (1)	$	0.63	$	0.72	$	0.89	$	1.05	$	0.93
Diluted earnings per share (1)	$	0.62	$	0.71	$	0.87	$	1.03	$	0.91

⁽¹⁾ Adjusted for stock dividends.

6

Other Data:

	At or For the Year Ended June 30,
	2006			2005			2004			2003			2002
Return on average assets		0.56	%		0.70	%		0.96	%		1.15	%		1.03	%
Return on average equity		7.15	%		8.62	%		11.26	%		14.60	%		14.19	%
Interest rate spread		3.09	%		3.07	%		3.12	%		3.13	%		2.95	%
Net interest margin		3.28	%		3.19	%		3.31	%		3.37	%		3.26	%
Average interest-earning assets to average interest-bearing liabilities		105.38	%		104.81	%		107.62	%		108.10	%		107.64	%
Non-accruing loans and repossessed assets to total assets		1.80	%		1.59	%		1.42	%		1.06	%		1.23	%
Stockholders’ equity to total assets		7.61	%		8.07	%		8.38	%		7.88	%		7.70	%
Ratio of average equity to average assets		7.78	%		8.16	%		8.49	%		7.86	%		7.24	%
Dividend payout ratio (cash dividends declared divided by net income)		47.13	%		37.37	%		33.71	%		21.21	%		21.76	%

Bank Regulatory Capital Ratios:

Ratio of tangible capital to adjusted total assets	8.33	%	8.77	%	7.97	%	7.73	%	7.88	%
Ratio of Tier-1 core capital to adjusted total assets	8.33	%	8.77	%	7.97	%	7.73	%	7.88	%
Ratio of Tier-1 risk-based capital to risk-weighted assets	9.72	%	10.41	%	9.54	%	9.92	%	10.84	%
Ratio of Total risk-based capital to risk-weighted assets	10.28	%	10.97	%	10.19	%	10.55	%	11.63	%

7

Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

PVF Capital Corp. (“PVF” or the “Company”) is the holding company for Park View Federal Savings Bank (“Park View Federal” or the “Bank”), its principal and wholly-owned subsidiary and a federally chartered savings bank headquartered in Solon, Ohio. Park View Federal has 17 branch offices located in Cleveland and surrounding communities. The Bank’s principal business consists of attracting deposits from the general public through its branch offices and investing these funds in loans secured by first mortgages on real estate located in its market area, which consists of Cuyahoga, Lake, Geauga, Portage, Summit, Stark, Medina and Lorain Counties in Ohio. The Bank has concentrated its activities on serving the borrowing needs of local homeowners and builders in its market area by originating both fixed-rate and adjustable-rate single-family mortgage loans, as well as construction loans, commercial real estate loans and multi-family residential real estate loans. In addition, the Bank originates loans secured by second mortgages, including equity line of credit loans and non real estate loans. Lending activities are influenced by the demand for and supply of housing, competition among lenders, the level of interest rates and the availability of funds. Deposit flows and cost of funds are influenced by prevailing market rates of interest, primarily on competing investments, account maturities, and the level of personal income and savings in the market area.

Forward-Looking Statements

When used in this Annual Report, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties including changes in economic conditions in the Company’s market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Company’s market area, and competition that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company wishes to advise readers that the factors listed above could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.

The Company does not undertake, and specifically disclaims any obligation, to publicly release the result 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.

Overview of Financial Condition at June 30, 2006, 2005 and 2004

PVF had total assets of $906.1 million, $823.9 million and $755.7 million at June 30, 2006, 2005 and 2004, respectively. The primary source of the Bank’s total assets has been its loan portfolio. Net loans receivable, loans receivable held for sale and mortgage-backed securities totaled $774.3 million, $701.3 million and $659.3 million at June 30, 2006, 2005 and 2004, respectively.

8

The following table provides a breakdown of the composition of loans receivable, loans receivable held for sale and mortgage-backed securities for these periods.

(dollars in thousands)	2006			2005			2004
One-to-four family residential	$	174,575		$	148,956		$	128,210
Home equity line of credit		94,450			97,692			83,505
Multi-family residential		45,716			33,504			38,777
Commercial		170,392			171,331			175,323
Commercial equity line of credit		34,064			31,875			38,113
Land		77,242			68,165			54,047
Construction — residential		84,146			75,460			70,833
Construction — multi-family		7,956			0			0
Construction — commercial		33,756			24,355			15,679
Total real estate mortgages		722,297			651,339			604,487
Non real estate mortgages		21,824			17,300			13,951
Total loans receivable		744,121			668,639			618,438
Net deferred loan origination fees		(3,382	)		(3,833	)		(3,380	)
Allowance for loan losses		(4,675	)		(4,312	)		(4,377	)
Total loans receivable, net	$	736,065		$	660,494		$	610,681
Loans receivable held for sale, net	$	10,698		$	9,060		$	11,871
Mortgage-backed securities held to maturity	$	27,578		$	31,720		$	36,779

The decrease in mortgage-backed securities in 2006 resulted from the purchase of $1.1 million in mortgage-backed securities less payments received of $5.2 million. Securities totaled $58.0 million, $57.5 million and $27.5 million, and cash and cash equivalents totaled $19.7 million, $11.1 million and $17.5 million at June 30, 2006, 2005 and 2004, respectively.

The securities portfolio has been and will continue to be used primarily to meet the liquidity requirements of the Bank in its deposit taking and lending activities. These securities are pledged as collateral to secure the Bank’s repurchase agreement.

The Bank has adopted a policy that permits investment only in U.S. government and U.S. government-sponsored enterprises securities or Triple-A-rated securities. The Bank invests primarily in securities having a final maturity of five years or less, federal funds sold and deposits at the Federal Home Loan Bank (“FHLB”) of Cincinnati. The entire portfolio matures within five years or less, and the Bank has no plans to change the short-term nature of its securities portfolio.

The Bank’s deposit liabilities totaled $656.9 million, $591.2 million and $526.5 million at June 30, 2006, 2005 and 2004, respectively. Management’s decision to continue to pay attractive market savings rates and promote the growth of core accounts resulted in an increase in savings deposits of $65.6 million for the year ended June 30, 2006. Following is a breakdown of deposits by category for these periods.

(dollars in thousands)	2006		2005		2004
Now accounts	$	39,565	$	38,319	$	38,578
Passbook savings		35,194		43,415		46,726
Money market accounts		60,900		22,952		20,477
Non-interest bearing		17,069		16,958		16,429
Certificates of deposit		504,316		469,582		404,283
Total deposits	$	656,864	$	591,226	$	526,493

FHLB advances and other borrowings amounted to $156.8 million, $146.4 million and $147.5 million at June 30, 2006, 2005 and 2004, respectively. In March 2006, the Bank entered into a $50 million repurchase agreement with another institution. The proceeds were used to repay FHLB advances.

9

Capital

PVF’s stockholders’ equity totaled $69.0 million, $66.5 million and $63.4 million at the years ended June 30, 2006, 2005 and 2004, respectively. The increases were the result of the retention of net earnings, less cash dividends paid and purchased treasury stock.

The Bank’s primary regulator, The Office of Thrift Supervision (“OTS”) has implemented a statutory framework for capital requirements which establishes five categories of capital strength ranging from “well capitalized” to “critically undercapitalized.” An institution’s category depends upon its capital level in relation to relevant capital measures, including two risk-based capital measures, a tangible capital measure and a core/leverage capital measure. At June 30, 2006, the Bank was in compliance with all of the current applicable regulatory capital measurements to meet the definition of a well-capitalized institution, as demonstrated in the following table:

	Park View					Requirement for
	Federal		Percent of			Well-Capitalized
(dollars in thousands)	Capital		Assets (1)			Institution
Tangible capital	$	75,827		8.33	%		N/A
Tier-1 core capital	$	75,827		8.33	%		5.00	%
Tier-1 risk-based capital	$	75,827		9.72	%		6.00	%
Total risk-based capital	$	80,241		10.28	%		10.00	%

⁽¹⁾ Tangible and core capital levels are shown as a percentage of total adjusted assets; risk-based capital levels are shown as a percentage of risk-weighted assets.

Common Stock and Dividends

The Company’s common stock trades under the symbol “PVFC” on the NASDAQ Small-Cap Market. A 10 percent stock dividend was issued in August 2005 and 2004. As adjusted to reflect all stock dividends and purchases of treasury stock, the Company had 7,717,448 shares of common stock outstanding and approximately 210 holders of record of the common stock at September 12, 2006. OTS regulations applicable to all Federal Savings Banks such as Park View Federal limit the dividends that may be paid by the Bank to PVF. Any dividends paid may not reduce the Bank’s capital below minimum regulatory requirements.

Our stock repurchase program was renewed for a 12-month period in July 2006 and authorizes the purchase of an additional 265,602 shares of the Company’s common stock. At June 30, 2006, as adjusted to reflect all stock dividends, the Company had acquired a total of 472,725 shares, or 5.8 percent, of the Company’s common stock. The stock repurchase program is dependent on market conditions with no guarantee as to the exact number of shares to be repurchased. The cash dividend policy remains dependent upon the Company’s financial condition, earnings, capital needs, regulatory requirements and economic conditions. A quarterly cash dividend of $0.074 per share was paid on the Company’s outstanding common stock in fiscal 2006. A quarterly cash dividend of $0.067 per share was paid on the Company’s outstanding common stock in fiscal 2005. All amounts have been adjusted for stock dividends.

The following table sets forth certain information as to the range of the high and low bid prices for the Company’s common stock for the calendar quarters indicated. ⁽¹⁾

	Fiscal 2006				Fiscal 2005
	High Bid		Low Bid		High Bid		Low Bid
Fourth Quarter	$	10.22	$	9.00	$	14.33	$	10.11
Third Quarter		11.30		9.73		12.73		10.91
Second Quarter		11.56		10.38		13.22		11.43
First Quarter		13.33		10.54		14.47		12.50

⁽¹⁾ Quotations reflect inter-dealer prices without retail mark-up, mark-down or commission, and may not represent actual transactions. Bid prices have been adjusted to reflect the previously described stock dividends.

Liquidity and Capital Resources

The Company’s liquidity measures its ability to fund loans and meet withdrawals of deposits and other cash outflows in a cost-effective manner. The Company’s primary sources of funds for operations are deposits from its primary market area, principal and interest payments on loans and mortgage-backed securities, sales of loans, proceeds from maturing securities, and advances from the FHLB of Cincinnati. While loan and mortgage-backed securities payments and maturing securities are relatively stable sources of funds, deposit flows and loan and mortgage-backed securities prepayments are greatly influenced by prevailing interest rates, economic conditions and competition. FHLB advances may be used on a short-term basis to compensate for deposit outflows or on a long-term basis to support expanded lending and investment activities.

The Bank uses its capital resources principally to meet its ongoing commitment to fund existing and continuing loan commitments, fund maturing certificates of deposit and deposit withdrawals, repay borrowings, maintain its liquidity and meet operating expenses. At June 30, 2006, the Bank had commitments to originate loans totaling $79.8 million,

10

Profile of Interest Earning Assets

Profile of Interest Earning Assets 1.8% Fixed-rate other mortgage loans 3.1% Fixed-rate mortgage-backed securities 37.2% Adjustable-rate single-family mortgage loans 10.2% Other interest-earning assets 41.7% Adjustable-rate other mortgage loans 3.9% Fixed-rate single-family mortgage loans 2.1% Non real estate loans

of which $31.5 million is intended to be sold, commitments to fund equity lines of credit totaling $92.9 million and $66.7 million of undisbursed loans in process. Scheduled maturities of certificates of deposit during the 12 months following June 30, 2006 total $441.7 million. Management believes that a significant portion of the amounts maturing during fiscal 2007 will be reinvested with the Bank because they are retail deposits, however, no assurances can be made that this will occur.

Park View Federal maintains liquid assets sufficient to meet operational needs. The Bank’s most liquid assets are cash and cash equivalents, which are short-term, highly-liquid investments that are readily convertible to known amounts of cash. The levels of such assets are dependent upon the Bank’s operating, financing and investment activities at any given time. Management believes that the liquidity levels maintained are more than adequate to meet potential deposit outflows, repay maturing FHLB advances, fund new loan demand and cover normal operations.

Market Risk Management

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 Board of Directors and the ALCO. 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,

Profile of Interest Bearing Liabilities

Profile of Interest Bearing Liabilities 1.9% CDs over 36 months 55.5% CDs 12 months or less 1.0% CDs 25 to 36 months 4.9% CDs 13 to 24 months 12.6% Transaction accounts 10.0% FHLB advances and other borrowings greater than 3 months 9.7% FHLB advances and other borrowings 3 months or less 4.4% Passbook accounts

11

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”) and are either swapped with the FHLMC and the FNMA in exchange for mortgage-backed securities secured by such loans, which are then sold in the market or sold directly for cash in the secondary market.

Interest rate sensitivity analysis is used to measure the Bank’s interest rate risk by computing estimated changes in NPV of its cash flows from assets, liabilities and off-balance sheet items in the event of a range of assumed changes in market interest rates. NPV represents the market value of portfolio equity and is equal to the market value of assets minus the market value of liabilities, with adjustments made for of-balance sheet items. This analysis assesses the risk of loss in market risk sensitive instruments in the event of an immediate and sustained 1 and 2 percent increase or decrease in market interest rates. The Bank’s Board of Directors has adopted an interest rate risk policy which establishes maximum decreases in the NPV ratio (ratio of market value of portfolio equity to the market value of portfolio assets) of 0.5 and 1.0 percent in the event of an immediate and sustained 1 and 2 percent increase or decrease in market interest rates.

The following table presents the Bank’s projected change in NPV for the various rate shock levels at June 30, 2006 and 2005. All market risk sensitive instruments presented in this table are held to maturity or available for sale. The Bank has no trading securities.

(dollars in thousands)	June 30, 2006								June 30, 2005
Change in	Market Value of		Dollar			NPV			Market Value of		Dollar			NPV
Interest Rates	Portfolio Equity		Change			Ratio			Portfolio Equity		Change			Ratio
+2%	$	85,142	$	(10,181	)		9.37	%	$	87,343	$	(5,011	)		10.44	%
+1%		90,340		( 4,983	)		9.85			91,084		(1,270	)		10.79
0		95,323					10.29			92,354					10.85
-1%		98,892		3,569			10.59			88,401		(3,953	)		10.34
-2%		98,438		3,115			10.50			80,987		(11,367	)		9.45

The table illustrates that for June 30, 2006, in the event of an immediate and sustained increase in prevailing market interest rates, the Bank’s NPV ratio would be expected to decrease, while in the event of an immediate and sustained decrease in market interest rates, the Bank’s NPV ratio would be expected to increase. 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. At June 30, 2006, the Bank’s estimated changes in NPV ratio were within the targets established by the Board of Directors in the event of an immediate and sustained increase in prevailing market interest rates, but outside of the established targets in the event of an immediate and sustained decrease in prevailing market interest rates. 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 utilizing interest-bearing liabilities having a final maturity of two years or less, advances convertible at the option of the FHLB of Cincinnati and a repurchase agreement.

Management carefully monitors its interest rate risk position and will make the necessary adjustments to its asset and liability mix to bring the Bank’s NPV ratio to within target levels established by the Board of Directors.

NPV is calculated by the OTS using information provided by the Bank. The calculation is based on the net present value of discounted cash flows utilizing market prepayment assumptions and market rates of interest provided by Bloomberg quotations and surveys performed during the quarters ended June 30, 2006 and 2005, with adjustments made to reflect the shift in the Treasury yield curve between the survey date and the quarter-end date.

Computation of prospective effects of hypothetical interest rate changes are based on numerous assumptions, including relative levels of market interest rates, loan prepayments and deposit decay, and should not be relied upon as indicative of actual results. Further, the computations do not contemplate any actions the Bank may undertake in response to changes in interest rates.

12

Certain shortcomings are inherent in the method of analysis presented in the computation of NPV. Actual values may differ from those projections set forth in the table, should market conditions vary from assumptions used in the preparation of the table. Certain assets such as adjustable-rate loans, which represent the Bank’s primary loan product, have features which restrict changes in interest rates on a short-term basis and over the life of the asset. In addition, the proportion of adjustable-rate loans in the Bank’s portfolio could decrease in future periods if market interest rates remain at or decrease below current levels due to refinance activity. Further, in the event of a change in interest rates, prepayment and early withdrawal levels would likely deviate significantly from those assumed in the table. Finally, the ability of many borrowers to repay their adjustable-rate debt may decrease in the event of an interest rate increase.

The Company uses interest rate sensitivity gap analysis to monitor the relationship between the maturity and repricing of its interest-earning assets and interest-bearing liabilities, while maintaining an acceptable interest rate spread. Interest rate sensitivity gap is defined as the difference between the amount of interest-earning assets maturing or repricing within a specific time period and the amount of interest-bearing liabilities maturing or repricing within that time period. A gap is considered positive when the amount of interest-rate-sensitive assets exceeds the amount of interest-rate-sensitive liabilities and is considered negative when the amount of interest-rate-sensitive liabilities exceeds the amount of interest-rate-sensitive assets. Generally, during a period of rising interest rates, a negative gap would adversely affect net interest income, while a positive gap would result in an increase in net interest income. Conversely, during a period of falling interest rates, a negative gap would result in an increase in net interest income, while a positive gap would negatively affect net interest income. Management’s goal is to maintain a reasonable balance between exposure to interest rate fluctuations and earnings.

The following table summarizes the Company’s interest rate sensitivity gap analysis at June 30, 2006. The table indicates that the Company’s one year and under ratio of cumulative gap to total assets is negative 11.1 percent, one-to-three year ratio of cumulative gap to total assets is negative 8.0 percent, and three-to-five year ratio of cumulative gap to total assets is positive 2.6 percent.

	Within			1-3			3-5			>5
(dollars in thousands)	1 Year			Years			Years			Years			Total
Total interest-rate-sensitive assets	$	428,101		$	176,262		$	188,175		$	69,266		$	861,804
Total interest-rate-sensitive liabilities		528,499			148,328			92,454			27,287			796,568
Periodic GAP		(100,398	)		27,934			95,721			41,979			65,236
Cumulative GAP		(100,398	)		(72,464	)		23,257			65,236
Ratio of cumulative GAP to total assets		(11.1	%)		(8.0	%)		2.6	%		7.2	%

Commitments, Contingencies and Off-Balance Sheet Risk

The Company is a party to financial instruments with off-balance sheet risk including commitments to originate new loans, commitments to extend credit under existing lines of credit and commitments to sell loans. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheet.

Off-balance sheet financial instruments whose contract amounts represent credit risk are summarized as follows:

	June 30,
(dollars in thousands)	2006		2005
Commitments to originate:
Mortgage loans intended for sale	$	31,524	$	43,912
Mortgage loans held for investment		48,287		29,798
Unfunded home equity and commercial real estate lines of credit		92,901		79,452
Undisbursed portion of loan proceeds		66,749		69,715
Commitments to sell loans held for sale		13,250		17,881
Standby letters of credit		3,547		8,903

13

Commitments to originate new loans or to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Loan commitments generally expire within 30 to 60 days. Most home equity line of credit commitments are for a term of five years and commercial real estate lines of credit are generally renewable every two years. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the borrower.

Commitments to sell loans intended for sale are agreements to sell loans to a third party at an agreed-upon price. The fair value of commitments to originate mortgage loans intended for sale at June 30, 2006 was negative $321,000 and commitments to sell loans intended for sale was $67,000. The Company recorded a net provision for loss on mortgage banking derivatives of $254,000 at June 30, 2006.

The following table presents as of June 30, 2006, PVF Capital Corp.’s significant fixed and determinable contractual obligations by payment date. The payment amounts represent those amounts contractually due to the recipient and do not include any unamortized premiums or discounts or other similar carrying value adjustments. Further discussion of the nature of each obligation is included in the referenced note to the consolidated financial statements.

Contractual Obligations:

	Note		Within		1-3		3-5		>5
(dollars in thousands)	Reference		1 Year		Years		Years		Years		Total
Deposits without a stated maturity		—	$	152,728		—		—		—	$	152,728
Certificates of deposit		7		441,726		46,933		15,477		—		504,136
Long-term advances from the FHLB of Cincinnati		8		—		20,000		—		—		20,000
Repurchase agreement		9		—		—		50,000		—		50,000
Subordinated debt		9		—		—		—		10,000		10,000
Operating leases		11		884		1,612		1,003		527		4,026

Results of Operations

General

PVF Capital Corp.’s net income for the year ended June 30, 2006 was $4.8 million, or $0.63 basic earnings per share and $0.62 diluted earnings per share as compared to $5.6 million, or $0.72 basic earnings per share and $0.71 diluted earnings per share for fiscal 2005, and $6.9 million, or $0.89 basic earnings per share and $0.87 diluted earnings per share for fiscal 2004. All per share amounts have been adjusted for stock dividends.

Net income for the current year decreased by $0.7 million from the prior fiscal year and $2.1 million from fiscal 2004. The decrease in net income from 2005 is due to an increase in provision for loan losses, a decrease in non-interest income that resulted from declining gains on the sale of loans and an increase in non-interest expense that was attributable to an increase in compensation and benefits
along with an increase in office occupancy and equipment, and outside services. This was offset by an increase in net interest income.

Net Interest Income

Net interest income amounted to $26.8 million for the year ended June 30, 2006, as compared to $23.8 million and $22.4 million for the years ended June 30, 2005 and 2004, respectively. Changes in the level of net interest income reflect changes in interest rates and changes in volume of interest-earning assets and interest-bearing liabilities. Tables 1 and 2 provide information as to changes in the Company’s net interest income.

Table 1 sets forth certain information relating to the Company’s average interest-earning assets (loans and

14

securities) and interest-bearing liabilities (deposits and borrowings) and reflects the average yield on assets and average cost of liabilities for the periods and at the dates indicated. Such yields and costs are derived by dividing interest income or interest expense by the average daily balance of assets or liabilities, respectively, for the periods presented. During the periods indicated, non-accruing loans are included in the loan category.

Table 1 also presents information for the periods indicated with respect to the difference between the weighted-average yield earned on interest-earning assets and weighted-average rate paid on interest-bearing liabilities, or “interest rate spread,” which savings institutions have traditionally used as an indicator of profitability. Another indicator of an institution’s net interest income is its “net interest margin” or “net yield on interest-earning assets,” which is its net interest income divided by the average balance of net interest-earning assets. Net interest income is affected by the interest rate spread and by the relative amounts of interest-earning assets and interest-bearing liabilities.

Table 1	Average Balances, Interest, and Average Yields and Rates
	For the Year Ended June 30,
	2006								2005								2004
	Average					Yield/			Average					Yield/			Average					Yield/
(dollars in thousands)	Balance			Interest		Cost			Balance			Interest		Cost			Balance			Interest		Cost
Interest-earning assets:
Loans	$	709,789		$	50,514		7.12	%	$	649,305		$	39,825		6.13	%	$	610,081		$	36,605		6.00	%
Mortgage-backed securities		29,013			1,386		4.78			34,199			1,655		4.84			39,180			1,860		4.75
Securities and other interest-earning assets		77,989			3,279		4.20			61,747			2,115		3.43			27,538			645		2.34
Total interest-earning assets		816,791			55,179		6.75			745,251			43,595		5.85			676,799			39,110		5.78
Non-interest-earning assets		53,338								48,343								46,232
Total assets	$	870,129							$	793,594							$	723,031
Interest-bearing liabilities:
Deposits	$	609,685		$	20,777		3.41	%	$	537,874		$	13,133		2.44	%	$	497,803		$	11,351		2.28	%
Borrowings		165,441			7,631		4.61			173,205			6,668		3.85			131,069			5,389		4.11
Total interest-bearing liabilities		775,126			28,408		3.66			711,079			19,801		2.78			628,872			16,740		2.66
Non-interest-bearing liabilities		27,296								17,723								32,780
Total liabilities		802,422								728,802								661,652
Stockholders’ equity		67,707								64,792								61,379
Total liabilities and stockholders’ equity	$	870,129							$	793,594							$	723,031
Net interest income				$	26,771							$	23,794							$	22,370
Interest rate spread							3.09	%							3.07	%							3.12	%
Net yield on interest-earning assets							3.28	%							3.19	%							3.31	%
Ratio of average interest-earning assets to average interest-bearing liabilities		105.38	%							104.81	%							107.62	%

15

Table 2 illustrates the extent to which changes in interest rates and shifts in the volume of interest-related assets and liabilities have affected the Bank’s interest income and expense during the years indicated. The table shows the changes by major component, distinguishing between changes relating to volume (changes in average volume multiplied by average old rate) and changes relating to rate (changes in average rate multiplied by average old volume). Changes not solely attributable to volume or rate have been allocated in proportion to the changes due to volume and rate.

Table 2	Year Ended June 30,
	2006			vs.			2005			2005			vs.			2004
	Increase (Decrease)									Increase (Decrease)
	Due to									Due to
(dollars in thousands)	Volume			Rate			Total			Volume			Rate			Total
Interest income:
Loans	$	3,930		$	6,759		$	10,689		$	2,392		$	829		$	3,220
Mortgage-backed securities		(248	)		(21	)		(269	)		(241	)		35			(205	)
Securities and other interest-earning assets		624			540			1,164			1,071			399			1,470
Total interest-earning assets		4,306			7,278			11,584			3,222			1,263			4,485
Interest expense:
Deposits		1,927			5,717			7,644			949			833			1,782
Borrowings		(309	)		1,272			963			1,695			(416	)		1,279
Total interest-bearing liabilities		1,618			6,989			8,607			2,644			417			3,061
Net interest income	$	2,688		$	289		$	2,977		$	578		$	846		$	1,424

As is evidenced by these tables, interest rate changes had a positive effect on the Bank’s net interest income for the year ended June 30, 2006. Due to the repricing characteristics of the Bank’s loan portfolio and short-term nature of its deposit portfolio, along with changing interest rates during the years ended June 30, 2006 and 2005, the Bank’s interest rate spread performed consistently at 3.09 percent for fiscal year 2006, 3.07 percent for fiscal 2005, and 3.12 percent for fiscal 2004. Changes in interest rates contributed to an increase of $0.3 million in net interest income for the year ended June 30, 2006 and an increase of $0.8 million in net interest income for the year ended June 30, 2005.

Net interest income was favorably affected by volume changes during the years ended June 30, 2006 and 2005. Accordingly, net interest income grew by $2.7 million and $0.6 million due to volume changes for the years ended June 30, 2006 and 2005, respectively.

The rate/volume analysis illustrates the effect that volatile interest rate environments can have on a financial institution.

Provision for Loan Losses

The Bank carefully monitors its loan portfolio and establishes levels of general and specific reserves for loan losses. Provisions for loan losses are charged to earnings to bring the total allowance for loan losses to a level considered adequate by management to provide for probable incurred loan losses inherent in the loan portfolio as of each balance sheet date, based on prior loss experience, volume and type of lending conducted by the Bank, industry standards and past due loans in the Bank’s loan portfolio.

The Bank uses a systematic approach in determining the adequacy of its loan loss allowance and the necessary provision for loan losses, whereby the loan portfolio is reviewed generally and delinquent loan accounts are analyzed individually, on a monthly basis. Consideration is given primarily to the types of loans in the portfolio and the overall risk inherent in the portfolio as well as, with respect to individual loans, account status, payment history, ability to repay and probability of repayment, and loan-to-value percentages. After reviewing current economic conditions, changes in delinquency status and actual loan losses incurred

16

by the Bank, management establishes an appropriate reserve percentage applicable to each category of loans, and a provision for loan losses is recorded when necessary to bring the allowance to a level consistent with this analysis. Management believes it uses the best information available to make a determination with respect to the allowance for loan losses, recognizing that future adjustments may be necessary depending upon a change in economic conditions.

The Bank’s policies require the review of assets on a regular basis, and the Bank appropriately classifies loans as well as other assets if warranted. The Bank establishes specific provisions for loan losses when a loss of principal is probable. A loan that is classified as either substandard or doubtful is assigned an allowance based upon the specific circumstances on a loan-by-loan basis after consideration of the underlying collateral and other pertinent economic and market conditions. In addition, the Bank maintains general allowances based upon the establishment of a risk category for each type of loan in the Bank’s portfolio.

Classified assets are loans identified with an inherent weakness and serve as an early warning tool in identifying the risk of loss. Classification categories include substandard, doubtful and loss.

Loans in the substandard classification are inadequately protected by the current net worth and payment capacity of the obligor, or by the value of the collateral pledged. Substandard assets have a well-defined weakness based upon objective evidence and contain a distinct possibility of loss if deficiencies are not corrected.

Loans in the doubtful classification have all weaknesses inherent in those of substandard classification and these weaknesses make collection or liquidation in full, on the basis of current existing facts, conditions and values, highly questionable and improbable.

Loans in the loss classification are considered uncollectible and of such little value that their continuance as assets is not warranted.

Substantially all loans reported as classified assets as of June 30, 2006 and June 30, 2005 were classified as substandard.

Following is a schedule detailing the performing status of our reported classified assets as of June 30, 2006 and June 30, 2005.

	2006								2005
			More than								More than
			90 days and								90 days and
	Performing		accruing		Non-accruing		Total		Performing		accruing		Non-accruing		Total
One-to-four family residential	$	124,401	$	—	$	4,732,215	$	4,856,616	$	1,086,330	$	—	$	3,157,053	$	4,243,383
Home equity line of credit		124,363		—		2,593,797		2,718,160		378,214		162,975		1,768,462		2,309,651
Multi-family residential		—		—		21,300		21,300		319,393		—		—		319,393
Commercial real estate		—		—		2,480,794		2,480,794		1,210,406		—		3,353,962		4,564,368
Land		—		—		1,188,659		1,188,659		141,651		—		276,427		418,078
Residential construction		175,000		—		3,687,350		3,862,350		—		270,000		256,000		526,000
Total classified real estate loans		423,764		—		14,704,115		15,127,879		3,135,994		432,975		8,811,904		12,380,873
Non real estate loans		59,810		—		—		59,810		—		—		—		—
Total classified loans	$	483,574	$	—	$	14,704,115	$	15,187,689	$	3,135,994	$	432,975	$	8,811,904	$	12,380,873

During 2006, the Bank experienced growth in the loan portfolio of $75.6 million, or 11.4 percent, while substantially maintaining the composition of the loan portfolio. The level of classified assets increased from $12.4 million in 2005 to $15.2 million in 2006. The level of non-accruing loans increased from $11.7 million in 2005 to $15.5 million in 2006. Net charge-offs increased from $175,000 in 2005 to $464,000 in 2006. Therefore, taking into consideration the growth of the portfolio, the level of non-accruing loans and classified assets, as well as net charge-offs and the overall performance of the loan portfolio, the Bank provided $826,000 of additional provision to increase the allowance to a level deemed appropriate of $4.7 million.

17

During 2005, the Bank experienced growth in the loan portfolio of $49.8 million, or 8.1 percent, while substantially maintaining the composition of the loan portfolio. The level of classified assets decreased from $14.0 million in 2004 to $12.4 million in 2005. The level of non-accruing loans increased from $10.6 million in 2004 to $11.7 million in 2005, however, the level of non-accruing loans in the loan categories other than 1-4 family loans decreased. Given the decrease in classified assets and the shift in non-accruing loans, the Bank provided $111,000 for loan losses in 2005, resulting in an allowance for loan losses of $4.3 million.

Non-interest Income

Non-interest income amounted to $2.5 million, $3.4 million and $6.1 million for the years ended June 30, 2006, 2005 and 2004, respectively. The fluctuations in non-interest income are due primarily to fluctuations in income derived from mortgage banking activities, fee income on deposit accounts, gains on the sale of real estate owned and the increase in the cash surrender value of Bank Owned Life Insurance (“BOLI”). Income attributable to mortgage banking activities consists of loan servicing income, gains and losses on the sale of loans, and market valuation provisions and recoveries. Income from mortgage banking activities amounted to $0.8 million, $1.3 million and $4.6 million for the years ended June 30, 2006, 2005 and 2004, respectively. The income from mortgage banking activities is primarily due to net profit realized on the sale of loans. In 2004, income from mortgage banking activity was attributable in large part to historically low market interest rates and is not representative of typical mortgage banking volume. Other non-interest income amounted to $1.7 million, $2.1 million and $1.5 million for the years ended June 30, 2006, 2005 and 2004, respectively. The decrease in other non-interest income of $0.4 million from the year ended June 30, 2005 to June 30, 2006 is attributable primarily to a single item of other income being reported in 2005 that did not reoccur in 2006. In 2005, the Company reported income from a successful real estate venture that was completed in that year. Changes in other non-interest income are typically the result of service and other miscellaneous fee income, rental income, insurance proceeds, income realized on the sale of assets and investments, and the disposal of real estate owned properties.

Non-interest Expense

Non-interest expense amounted to $21.5 million, $18.9 million and $17.6 million for the years ended June 30, 2006, 2005 and 2004, respectively. The principal component of non-interest expense is compensation and related benefits which amounted to $12.1 million, $10.8 million and $9.6 million for the years ended June 30, 2006, 2005 and 2004, respectively. The increase in compensation for the years ended June 30, 2006 and 2005 is due primarily to an increase in the cost of employee benefits, salary and wage adjustments to employees, a compensation incentive plan for employees, and stock option expenses resulting from the adoption of Financial Accounting Standards Bulletin No. 123R. Office occupancy totaled $3.8 million, $3.7 million and $3.4 million for the years ended June 30, 2006, 2005 and 2004, respectively. Other non-interest expense totaled $5.7 million, $4.4 million and $4.6 million for the years ended June 30, 2006, 2005 and 2004, respectively. Changes in other non-interest expense are primarily the result of advertising, professional and legal services, insurance expenses, outside services and franchise tax expense.

Federal Income Taxes

The Company’s federal income tax expense was $2.1 million, $2.5 million and $3.4 million for the years ended June 30, 2006, 2005 and 2004, respectively. Due to the availability of tax credits for the years ended June 30, 2006, 2005 and 2004, the tax advantaged treatment of BOLI and other miscellaneous deductions, the Company’s effective federal income tax rate was below the expected tax rate of 35 percent with an effective rate of 30 percent for the year ended June 30, 2006, an effective rate of 31 percent for the year ended June 30, 2005, and 33 percent for the year ended June 30, 2004.

Impact of Inflation and Changing Prices

The consolidated financial statements and related data presented herein have been prepared in accordance with U.S. generally accepted accounting principles, which require the measurement of financial position and operating results in terms of historical dollars, without considering changes in the relative purchasing power of money over time due to inflation. Unlike most industrial companies, substantially all of the assets and liabilities of the Company are monetary in nature. As a result, interest rates have a more significant impact on the Company’s performance than the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or in the same magnitude as the prices of goods and services, since such prices are affected by inflation to a larger extent than interest rates. For further information regarding the effect of interest rate fluctuations on the Company, see “Market Risk Management.”

18

Critical Accounting Policies and Estimates

The accounting and reporting policies of PVF Capital Corp. are in accordance with U.S. generally accepted accounting principles and conform to general practices within the banking industry. Application of these principles requires management to make estimates, assumptions and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions and judgments are based on information available as of the date of the financial statements. Accordingly, as this information changes, the financial statements could reflect different estimates, assumptions and judgments.

The most significant accounting policies followed by PVF Capital Corp. are presented in Note 1 to the consolidated financial statements. Accounting and reporting policies for the allowance for loan losses and mortgage servicing rights are deemed critical since they involve the use of estimates and require significant management judgments. PVF Capital Corp. provides further detail on the methodology and reporting of the allowance for loan losses in Note 4 and mortgage servicing rights in Note 5.

19

O f f i c e    L o c a t i o n s

a n d    H o u r s

Aurora Office
215 W. Garfield Road
Aurora, Ohio 44202
330-562-0620

Avon Office
36311 Detroit Road
Avon, Ohio 44011
440-934-3580

Bainbridge Office
8500 Washington Street
Chagrin Falls, Ohio 44023
440-543-8889

Beachwood Office
La Place
2111 Richmond Road
Beachwood, Ohio 44122
216-831-6373

Bedford Office
413 Northfield Road
Bedford, Ohio 44146
440-439-2200

Chardon Office
408 Water Street
Chardon, Ohio 44024
440-285-2343

Lakewood-Cleveland Office
11010 Clifton Blvd.
Cleveland, Ohio 44102
216-631-8900

Macedonia Office
497 East Aurora Road
Macedonia, Ohio 44056
330-468-0055

Mayfield Heights Office
1244 SOM Center Road
Mayfield Hts., Ohio 44124
440-449-8597

Medina Office
Reserve Square
3613 Medina Road
Medina, Ohio 44256
330-721-7484

Mentor Office
Heisley Corners
6990 Heisley Road
Mentor, Ohio 44060
440-944-0276

North Royalton Office
13901 Ridge Road
North Royalton, Ohio 44133
440-582-7417

Solon Office
Solar Shopping Center
34400 Aurora Road
Solon, Ohio 44139
440-542-6070

Streetsboro Office
9305 Market Square Drive
P.O. Box 2130
Streetsboro, Ohio 44241
330-626-9444

Strongsville Office
17780 Pearl Road
Strongsville, Ohio 44136
440-878-6010

LOBBY
Mon., Tues., Wed., Thurs.:
9:00 am — 4:30 pm
Friday: 9:00 am — 5:30 pm
Saturday: 9:00 am — 1:00 pm

AUTO TELLER
Mon., Tues., Wed., Thurs.:
9:00 am — 5:00 pm
Friday: 9:00 am — 6:00 pm
Saturday: 9:00 am — 1:00 pm

Shaker Heights Office
Shaker Towne Centre
16909 Chagrin Blvd.
Shaker Hts., Ohio 44120
216-283-4003

LOBBY
Mon., Tues., Wed., Thurs.:
9:00 am — 5:00 pm
Friday : 9:00 am — 6:00 pm
Saturday: 9:00 am — 1:00 pm

Corporate Center Office
30000 Aurora Road
Solon, Ohio 44139
440-914-3900

LOBBY & AUTO TELLER
Monday — Friday:
9:00 am — 5:00 pm
Closed Saturday

20

MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING

The management of PVF Capital Corp. is responsible for establishing and maintaining adequate internal control over financial reporting. PVF Capital Corp.’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with United States generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Accordingly, even an effective system of internal control over financial reporting will provide only reasonable assurance with respect to financial statement preparation.

With the supervision and participation of our Chief Executive Officer and Chief Financial Officer, management assessed the effectiveness of the Company’s internal control over financial reporting as of June 30, 2006. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on management’s assessment and those criteria, management believes that PVF Capital Corp. maintained effective internal control over financial reporting as of June 30, 2006.

The Company’s independent registered public accounting firm, Crowe Chizek and Company LLC, has issued their report on management’s assessment of the Company’s internal control over financial reporting. That report is included in this Annual Report.

John R. Male	C. Keith Swaney
Chairman of the Board	President, Chief Operating Officer
and Chief Executive Officer	and Treasurer

21

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON
INTERNAL CONTROL OVER FINANCIAL REPORTING

Board of Directors and Shareholders
PVF Capital Corp.
Solon, Ohio

We have audited management’s assessment, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting, that PVF Capital Corp. (“Company”) maintained effective internal control over financial reporting as of June 30, 2006, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). PVF Capital Corp.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

22

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, management’s assessment that PVF Capital Corp. maintained effective internal control over financial reporting as of June 30, 2006, is fairly stated, in all material respects, based on the COSO criteria. Also in our opinion, PVF Capital Corp. maintained, in all material respects, effective internal control over financial reporting as of June 30, 2006, based on the COSO criteria.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated statements of condition of PVF Capital Corp. as of June 30, 2006 and 2005, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the three years in the period ended June 30, 2006, and our report dated August 15, 2006 expressed an unqualified opinion on those consolidated financial statements.

Cleveland, Ohio
August 15, 2006

23

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON
CONSOLIDATED FINANCIAL STATEMENTS

The Board of Directors and Shareholders
PVF Capital Corp.
Solon, Ohio

We have audited the accompanying consolidated statements of financial condition of PVF Capital Corp. (“Company”) as of June 30, 2006 and 2005, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the three years in the period ended June 30, 2006. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2006 and 2005, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2006, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of PVF Capital Corp.’s internal control over financial reporting as of June 30, 2006, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated August 15, 2006 expressed an unqualified opinion thereon.

Cleveland, Ohio
August 15, 2006

24

PVF CAPITAL CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
Years ended June 30, 2006 and 2005

	2006			2005
ASSETS
Cash and amounts due from depository institutions	$	6,614,171		$	4,034,353
Interest bearing deposits		1,804,098			2,180,723
Federal funds sold		11,320,000			4,875,000
Cash and cash equivalents		19,738,269			11,090,076
Securities held to maturity (fair values of $57,256,642 and $57,345,425, respectively)		58,000,000			57,500,000
Mortgage-backed securities held to maturity (fair values of $25,761,813 and $31,487,772, respectively)		27,577,923			31,720,033
Loans receivable held for sale, net		10,698,064			9,059,647
Loans receivable, net of allowance of $4,674,681 and $4,312,274		736,064,995			660,494,144
Office properties and equipment, net		12,032,692			13,413,231
Real estate owned		817,279			1,319,251
Federal Home Loan Bank stock		11,955,000			11,316,400
Prepaid expenses and other assets		29,197,159			27,985,916
Total assets	$	906,081,381		$	823,898,698
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits	$	656,864,201		$	591,226,478
Short-term advances from the FHLB		75,000,000			15,000,000
Line of credit		1,772,871			—
Long-term advances from the FHLB		20,000,000			120,012,018
Repurchase agreement		50,000,000			—
Notes payable		—			1,400,780
Subordinated debentures		10,000,000			10,000,000
Advances from borrowers for taxes and insurance		8,102,098			3,184,981
Accrued expenses and other liabilities		15,369,071			16,621,262
Total liabilities		837,108,241			757,445,519
Commitments and contingencies
Stockholders’ equity
Serial preferred stock, $.01 par value, 1,000,000 shares authorized; none issued		—			—
Common stock, $.01 par value, 15,000,000 shares authorized; 8,188,867 and 8,175,779 shares issued, respectively		81,889			81,758
Additional paid-in capital		68,507,097			68,288,834
Retained earnings		4,221,301			1,663,992
Treasury stock, at cost, 472,725 and 451,088 shares, respectively		(3,837,147	)		(3,581,405	)
Total stockholders’ equity		68,973,140			66,453,179
Total liabilities and stockholders’ equity	$	906,081,381		$	823,898,698

See accompanying notes to consolidated financial statements.

25

PVF CAPITAL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended June 30, 2006, 2005 and 2004

	2006			2005		2004
Interest and dividends income
Loans	$	50,513,550		$	39,825,656	$	36,604,621
Mortgage-backed securities		1,385,572			1,654,537		1,860,224
Federal Home Loan Bank stock dividends		638,807			491,125		429,402
Securities		2,273,566			1,493,167		111,443
Fed funds sold and interest-bearing deposits		367,080			130,354		103,951
Total interest income		55,178,575			43,594,839		39,109,641
Interest expense
Deposits		20,776,397			13,133,468		11,351,365
Short-term borrowings		2,816,260			934,738		124,651
Long-term borrowings		4,121,641			5,229,070		5,260,897
Subordinated debt		693,292			503,190		2,301
Total interest expense		28,407,590			19,800,466		16,739,214
Net interest income		26,770,985			23,794,373		22,370,427
Provision for loan losses		826,300			111,000		597,300
Net interest income after provision for loan losses		25,944,685			23,683,373		21,773,127
Noninterest income
Service charges and other fees		1,081,021			838,470		660,646
Mortgage banking activities, net		834,471			1,311,235		4,632,561
Gain (loss) on disposal of real estate owned		(35,330	)		165,575		488,839
Increase in cash surrender value of bank-owned life insurance		597,447			554,405		187,533
Other, net		22,606			504,558		160,177
Total noninterest income		2,500,215			3,374,243		6,129,756
Noninterest expense
Compensation and benefits		12,060,345			10,835,446		9,590,924
Office, occupancy, and equipment		3,815,592			3,670,437		3,394,285
Insurance		295,724			235,692		232,926
Professional and legal		492,061			339,050		397,179
Advertising		572,477			382,689		373,702
Outside services		1,430,915			776,801		876,799
Franchise tax		881,691			773,308		728,400
Other		2,000,595			1,929,080		1,977,065
Total noninterest expense		21,549,400			18,942,503		17,571,280
Income before federal income taxes		6,895,500			8,115,113		10,331,603
Federal income taxes
Current		2,323,692			2,413,291		2,287,524
Deferred		(271,193	)		117,701		1,134,025
		2,052,499			2,530,992		3,421,549
Net income	$	4,843,001		$	5,584,121	$	6,910,054
Basic earnings per share	$	0.63		$	0.72	$	0.89
Diluted earnings per share	$	0.62		$	0.71	$	0.87

See accompanying notes to consolidated financial statements.

26

PVF CAPITAL CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Years ended June 30, 2006, 2005 and 2004

				Additional
	Common			paid-in			Retained			Treasury
	stock			capital			earnings			stock			Total
Balance at June 30, 2003		67,173			47,176,696			14,486,460			(3,127,193	)		58,603,136
Net income		—			—			6,910,054			—			6,910,054
Stock options exercised, 34,580 shares		346			256,447			—			—			256,793
Stock purchased and retired, 6,373 shares		(64	)		(94,147	)		—			—			(94,211	)
Cash paid in lieu of fractional shares								(2,814	)		—			(2,814	)
Stock dividend issued, 674,555 shares		6,745			11,039,093			(11,045,838	)		—			—
Cash dividend, $0.300 per share		—			—			(2,312,015	)		—			(2,312,015	)
Balance at June 30, 2004		74,200			58,378,089			8,035,847			(3,127,193	)		63,360,943
Net income		—			—			5,584,121			—			5,584,121
Stock options exercised, 21,712 shares		217			166,029			—						166,246
Stock purchased and retired, 9,024 shares		(90	)		(122,934	)		—			—			(123,024	)
Cash paid in lieu of fractional shares		—			—			(3,488	)		—			(3,488	)
Stock dividend issued, 743,046 shares		7,431			9,867,650			(9,875,081	)		—			—
Cash dividend, $0.269 per share		—			—			(2,077,407	)		—			(2,077,407	)
Purchase of 32,210 shares of treasury stock		—			—			—			(454,212	)		(454,212	)
Balance at June 30, 2005	$	81,758		$	68,288,834		$	1,663,992		$	(3,581,405	)	$	66,453,179
Net income		—			—			4,843,001			—			4,843,001
Stock options exercised, 26,038 shares		260			144,477			—			—			144,737
Stock purchased and retired, 12,950 shares		(129	)		(140,975	)		—			—			(141,104	)
Cash paid in lieu of fractional shares		—			—			(3,022	)		—			(3,022	)
Cash dividend, $0.296 per share		—			—			(2,282,670	)		—			(2,282,670	)
Purchase of 21,637 shares of treasury stock		—			—			—			(255,742	)		(255,742	)
Paid in capital related to stock based compensation		—			214,761			—			—			214,761
Balance at June 30, 2006	$	81,889		$	68,507,097		$	4,221,301		$	(3,837,147	)	$	68,973,140

See accompanying notes to consolidated financial statements.

27

PVF CAPITAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended June 30, 2006, 2005 and 2004

	2006			2005			2004
Operating activities:
Net income	$	4,843,001		$	5,584,121		$	6,910,054
Adjustments required to reconcile net income to net cash from operating activities
Amortization of premium on mortgage-backed securities		46,883			26,471			72,548
Depreciation		1,816,028			1,863,375			1,658,958
Provision for loan losses		826,300			111,000			597,300
Accretion of deferred loan origination fees, net		(2,072,972	)		(1,007,937	)		(1,108,263	)
(Gain)/loss on disposal of real estate owned		35,330			(165,575	)		(488,839	)
Market adjustments for loans held for sale		156,000			—			—
Change in fair value of mortgage banking derivatives		239,000			15,000			—
Stock compensation		214,761			—			—
FHLB stock dividends		(638,600	)		(490,800	)		(429,201	)
Deferred income tax provision		(271,193	)		117,701			1,134,025
Proceeds from loans held for sale		104,648,344			118,420,611			301,018,063
Originations of loans held for sale		(107,212,344	)		(115,813,850	)		(277,787,331	)
Gain on the sale of loans, net		(633,782	)		(1,095,039	)		(5,260,163	)
Net change in other assets and other liabilities		(946,126	)		433,489			(7,841,279	)
Net cash from operating activities		1,050,630			7,998,567			18,475,872
Investing activities:
Loans originated		(243,702,577	)		(216,290,237	)		(137,580,380	)
Principal repayments on loans		168,059,591			164,871,379			104,195,639
Principal repayments on mortgage-backed securities held to maturity		5,201,834			6,085,195			5,932,009
Purchase of mortgage-backed securities held to maturity		(1,106,607	)		(1,052,410	)		(39,853,303	)
Purchase of securities held to maturity		(500,000	)		(35,000,000	)		(27,500,000	)
Maturities and calls of securities held to maturity		—			5,000,000			33,252
Additions to office properties and Equipment		(435,489	)		(1,388,214	)		(3,991,431	)
Acquisition of bank-owned life insurance					—			(15,000,000	)
Proceeds from disposals of real estate owned		1,785,449			1,418,796			1,166,703
Acquisition of real estate owned		—			—			(70,000	)
Investments in nonconsolidated affiliates		(131,750	)		—			525,000
Net cash from investing activities		(70,829,549	)		(76,355,491	)		(112,142,511	)

See accompanying notes to consolidated financial statements.

28

PVF CAPITAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended June 30, 2006, 2005 and 2004

	2006			2005			2004
Financing Activities:
Payments on long-term FHLB advances		(100,012,018	)		(27,813	)		(83,389	)
Net increase in short-term FHLB advances		60,000,000			—			15,000,000
Proceeds from repurchase agreement		50,000,000			—			—
Net proceeds from line of credit		1,772,871			—			—
Repayment of note payable		(1,400,780	)		(1,085,470	)		(3,328,900	)
Net change in NOW and passbook savings		31,083,809			(565,469	)		(2,052,829	)
Proceeds from issuance of certificates of deposit		130,717,293			163,111,432			107,020,928
Payments on maturing certificates of deposit		(96,163,379	)		(97,812,199	)		(104,904,312	)
Proceeds from issuance of subordinated Debentures		—			—			10,000,000
Net increase (decrease) in advances from borrowers		4,917,117			808,109			(5,587,781	)
Payment of cash dividend		(2,235,692	)		(2,034,595	)		(1,841,130	)
Purchase of treasury stock		(255,742	)		(454,212	)		—
Proceeds from exercise of stock options		144,737			160,468			256,793
Stock repurchased and retired		(141,104	)		(123,024	)		(94,211	)
Net cash from financing activities		78,427,112			61,977,227			14,385,169
Net increase (decrease) in cash and cash equivalents		8,648,193			(6,379,697	)		(79,281,470	)
Cash and cash equivalents at beginning of year		11,090,076			17,469,773			96,751,243
Cash and cash equivalents at end of year	$	19,738,269		$	11,090,076		$	17,469,773
Supplemental disclosures of cash flow information:
Cash payments of interest	$	28,546,235		$	19,766,150		$	16,740,542
Cash payments of income taxes		2,316,000			2,069,000			2,760,000
Supplemental schedule of noncash investing and financing activities:
Transfers to real estate owned	$	1,318,807		$	2,502,472		$	200,000
Income tax benefit from exercise of stock options	$	—		$	5,778		$	—

See accompanying notes to consolidated financial statements

29

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED MATTERS

The accounting and reporting policies of PVF Capital Corp. and its subsidiaries (“Company”) conform to U.S. generally accepted accounting principles and general industry practice. The Company’s principal subsidiary, Park View Federal Savings Bank (“Bank”), is principally engaged in the business of offering savings deposits through the issuance of savings accounts, money market accounts, and certificates of deposit and lending funds primarily for the purchase, construction, and improvement of real estate in Cuyahoga, Summit, Geauga, Lake, Medina, Lorain and Portage Counties, Ohio. The deposit accounts of the Bank are insured up to applicable limits under the Federal Deposit Insurance Corporation (“FDIC”) and are backed by the full faith and credit of the United States government. The following is a description of the significant policies, which the Company follows in preparing and presenting its consolidated financial statements.

Principles of Consolidation: The consolidated financial statements include the accounts of PVF Capital Corp. and its wholly-owned subsidiaries, Park View Federal Savings Bank, PVF Service Corporation (“PVFSC”), PVF Holdings, Inc., and Mid-Pines Land Co. PVFSC owns some Bank premises and leases them to the Bank. PVF Holdings, Inc. and Mid-Pines Land Co. did not have any significant assets or activity as of or for the years ended June 30, 2006, 2005, or 2004. All significant intercompany transactions and balances are eliminated in consolidation.

PVFSC and the Bank have entered into various nonconsolidated joint ventures that consolidated own real estate including properties leased to the Bank. The Bank has created certain limited liability companies, Crock, LLC and CADR, LLC, that have taken title to property acquired through or in lieu of foreclosure.

PVF Capital Trust I (“Trust”) was created for the sole purpose of issuing trust preferred securities. The Trust is not consolidated into the financial statements.

Use of Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The allowance for loan losses, valuation of mortgage servicing rights, fair value of mortgage banking derivatives, valuation of loans held for sale, and supplemental employee retirement plan accrual are particularly subject to change.

Securities: The Company classifies all securities as held to maturity. Securities held to maturity are limited to debt securities that the Company has the positive intent and the ability to hold to maturity; these securities are reported at amortized cost. Securities that could be sold in the future because of changes in interest rates or other factors are not to be classified as held to maturity.

(Continued)

30

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED MATTERS (Continued)

Interest income includes amortization of purchase premium or accretion of purchase discount. Premiums and discounts are amortized or accreted over the life of the related security as an adjustment to yield. Prepayment is assumed for mortgage-backed securities.

A decline in fair value of any held to maturity security below cost that is deemed other than temporary is charged to earnings resulting in establishment of a new cost basis for the security. Management’s consideration as to whether a decline in fair value is other-than-temporary is based on (1) the length of time and extent that fair value has been less than cost, (2) the financial condition of the issuer and (3) the Company’s ability and intent to hold the security for a period sufficient to allow for any anticipated recovery in fair value.

Loans Receivable: Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of deferred loan fees and costs, and an allowance for loan losses. Interest income is accrued on the unpaid principal balance and includes amortization of net deferred loan fees and costs over the loan term.

Uncollectible interest on loans that are contractually 90 days or more past due is charged off against interest income. In all cases, loans are placed on non-accrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. Income is subsequently recognized only to the extent cash payments are received until the loan is determined to be performing in accordance with the applicable loan terms in which case the loan is returned to accrual status. Past due status is based on the contractual terms of the loan.

Allowance for Loan Losses: The allowance for loan losses is maintained at a level to absorb probable incurred losses in the portfolio as of the balance sheet date. The adequacy of the allowance for loan losses is periodically evaluated by the Bank based upon the overall portfolio composition and general market conditions as well as information about specific borrower situations and estimated collateral values. While management uses the best information available to make these evaluations, future adjustments to the allowance may be necessary if economic conditions change substantially from the assumptions used in making the evaluations. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged off. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance for loan losses.

A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal and interest according to the contractual terms of the loan agreement. Since the Bank’s loans are primarily

(Continued)

31

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED MATTERS (Continued)

collateral dependent, measurement of impairment is based on the fair value of the collateral. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment and accordingly, they are not separately identified for impairment disclosures.

The Bank’s loan portfolio is primarily secured by real estate. Collection of real estate secured loans in the portfolio is dependant on court proceedings, and as a result, loans may remain past due for an extended period before being collected, transferred to real estate owned, or charged off. Charge-off’s are recorded after the foreclosure process is complete for any deficiency between the Bank’s recorded investment in the loan and the fair value of the real estate acquired or sold, to the extent that such a deficiency exists.

Mortgage Banking Activities: Mortgage loans originated and intended for sale in the secondary market include deferred origination fees and costs and are carried at the lower of cost or fair value, determined on an aggregate basis. The fair value of mortgage loans held for sale is based on market prices and yields at period end in normal market outlets used by the Company. Net unrealized losses, if any, are recorded as valuation allowance and charged to earnings.

The Company sells the loans on either a servicing retained or servicing released basis. Servicing rights are recognized as assets for the allocated value of retained servicing rights on loans sold. The capitalized cost of loan servicing rights is amortized in proportion to and over the period of estimated net future servicing revenue. The expected period of the estimated net servicing income is based in part on the expected prepayment of the underlying mortgages.

Mortgage servicing rights are periodically evaluated for impairment. Impairment represents the excess of amortized cost over its estimated fair value. Fair value is determined using prices for similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions. Impairment is determined by stratifying rights into tranches based on predominant risk characteristics, such as interest rate and original time to maturity. Any impairment is reported as a valuation allowance for an individual tranche. If the Company later determines that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance will be recorded as an increase to income. The impairment charge reversed during the period ended June 30, 2004 as disclosed in Note 5 was a result of this process and the change in fair values during that period.

Servicing fee income is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of outstanding principal and are recorded as income when earned.

(Continued)

32

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED MATTERS (Continued)

The Company is exposed to interest rate risk on loans held for sale and rate-locked loan commitments. As market interest rates increase or decrease, the fair value of loans held for sale and rate-lock commitments will decline or increase. The Company enters into derivative transactions principally to protect against the risk of adverse interest movements affecting the value of the Company’s committed loan sales pipeline. In order to mitigate the risk that a change in interest rates will result in a decline in value of the Company’s interest rate lock commitments (“IRLCs”) in the committed mortgage pipeline or its loans held for sale, the Company enters into mandatory forward loan sales contracts with secondary market participants.

Mandatory forward sales contracts and committed loans intended to be held for sale are considered free-standing derivative instruments and changes in fair value are recorded in current period earnings. For committed loans, fair value is measured using current market rates for the associated mortgage loans. For mandatory forward sales contracts, fair value is measured using secondary market pricing.

Office Properties and Equipment: Land is carried at cost. Buildings and equipment are stated at cost less accumulated depreciation. Depreciation and amortization are computed using the straight-line method at rates expected to amortize the cost of the assets over their estimated useful lives or, with respect to leasehold improvements, the term of the lease, if shorter. Estimated lives for buildings are 40 years. Estimated lives for equipment range from 1 to 10 years.

Bank-Owned Life Insurance: The Company has purchased life insurance policies on certain key executives. Bank-owned life insurance is recorded at its cash surrender value, or the amount that can be realized.

Income Taxes: Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.

Real Estate Owned: Assets acquired through or instead of loan foreclosure are initially recorded at the lower of cost or fair value less estimated selling costs, establishing a new cost basis. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense. Costs after acquisition are expensed.

(Continued)

33

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED MATTERS (Continued)

Federal Home Loan Bank (FHLB) Stock: The Bank is a member of the FHLB system. Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. FHLB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value. Stock dividends are reported as income.

Long-Term Assets: Office properties and equipment and other long-term assets are reviewed for impairment when events indicate their carrying amount may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value.

Statements of Cash Flows: For purposes of the consolidated statements of cash flows, the Company considers cash and amounts due from depository institutions, interest bearing deposits, and federal funds sold with original maturities of less than three months to be cash equivalents. Net cash flows are reported for NOW and passbook savings accounts, short-term borrowings, and advances from borrowers.

Stock Compensation: Employee compensation expense under stock option plans is reported using the fair value recognition provisions under FASB Statement 123 (revised 2004) (FAS 123R), “Share Based Payment.” The Company has adopted FAS 123R using the modified prospective method. Under this method, compensation expense will be recognized for the unvested portion of previously issued awards that remained outstanding as of July 1, 2005 and for any future awards. Prior interim periods and fiscal year results will not be restated.

Comprehensive Income: Comprehensive income consists of net income and other comprehensive income. The Company had no other comprehensive income in 2006, 2005, or 2004; therefore comprehensive income was equal to net income.

Earnings Per Share: Basic earnings per share is calculated by dividing net income for the period by the weighted average number of shares of common stock outstanding during the period. The additional potential common shares issuable under stock options are included in the calculation of diluted earnings per share.

The per share data for 2005 and 2004 is adjusted to reflect the 10% stock dividends declared June 2005, and 2004.

Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there now are such matters that will have a material effect on the financial statements.

(Continued)

34

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED MATTERS (Continued)

Loan Commitments and Related Financial Instruments: Financial instruments include off-balance-sheet credit instruments, such as commitments to make loans issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded.

Restrictions on Cash: Cash on deposit with another institution of $662,000 and $402,000 was required to meet regulatory reserve requirements at June 30, 2006 and 2005 respectively. These balances do not earn interest.

Stockholders’ Equity: Stock dividends in excess of 20% are reported by transferring the par value of the stock issued from retained earnings to common stock. Stock dividends for 20% or less are reported by transferring the fair value, as of the ex-dividend date, of the stock issued from retained earnings to common stock and additional paid in capital. Fractional share amounts are paid in cash with a reduction in retained earnings.

Dividend Restriction: Banking regulations require maintaining certain capital levels and may limit the dividend paid by the Bank to the Company or by the Company to shareholders. These restrictions pose no practical limit on the ability of the Bank or Company to pay dividends at historical levels. See Note 13 for more specific disclosure related to federal savings banks.

Fair Value of Financial Instruments: Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in a separate note. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates.

Operating Segments: While the Company’s chief decision-makers monitor the revenue streams of the various Company products and services, the identifiable segments are not material and operations are managed and financial performance is evaluated on a Company-wide basis. Accordingly, all of the Company’s financial service operations are considered by management to be aggregated in one reportable operating segment.

Reclassifications: Certain reclassifications have been made to the prior year amounts to conform to the current year presentation.

(Continued)

35

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED MATTERS (Continued)

New Accounting Standards: In July 2006, the Financial Accounting Standards Board (“FASB”) issued Financial Accounting Standards Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes”. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprises’ financial statements in accordance with FSAB Statement No. 109, “Accounting for Income Taxes”. FIN 48 prescribes a recognition threshold and measurement attributable for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 is effective for fiscal years beginning after December 15, 2006. Management does not expect that the adoption of this standard will have a material impact on the Company’s financial statements.

In March 2006, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 156, “Accounting for Servicing of Financial Assets”, an amendment of SFAS No. 140, which changes the accounting for all loan servicing rights which are recorded as the result of selling a loan where the seller undertakes an obligation to service the loan, usually in exchange for compensation. SFAS No. 156 amends current accounting guidance by permitting the servicing right to be recorded initially at fair value and also permits the subsequent reporting of these assets at fair value. SFAS No. 156 is effective beginning January 1, 2007. Management does not expect that the adoption of this standard will have a material impact on the Company’s financial statements.

In February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments”, an amendment of SFAS No. 133 and 140. This Statement changes the accounting for various derivatives and securitized financial assets. This Statement will be effective for all financial instruments acquired, issued, or subject to a remeasurement (new basis) event occurring after the beginning of 2007. Management does not expect that the adoption of this standard will have a material impact on the Company’s financial statements.

(Continued)

36

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 2 — SECURITIES

Securities held to maturity at June 30, 2006 and 2005 are summarized as follows:

	2006
			Gross		Gross			Estimated
	Carrying		Unrecognized		Unrecognized			Fair
	Amount		Gain		Loss			Value
U.S. government-sponsored enterprise securities	$	58,000,000	$	—	$	(743,358	)	$	57,256,642
Due after one year through five years	$	58,000,000	$	—	$	(743,358	)	$	57,256,642

	2005
			Gross		Gross			Estimated
	Carrying		Unrecognized		Unrecognized			Fair
	Amount		Gain		Loss			Value
U.S. government-sponsored enterprise securities	$	57,500,000	$	43,750	$	(198,325	)	$	57,345,425
Due after one year through five years	$	57,500,000	$	43,750	$	(198,325	)	$	57,345,425

There were no sales of securities for the years ended June 30, 2006, 2005 or 2004.

At year end 2006 and 2005, the Company held $43,000,000 and $42,500,000 respectively, of secured debentures of the FHLB, $10,000,000 of unsecured debentures of the Federal Home Loan Mortgage Corporation (FHLMC), and $5,000,000 of unsecured debentures of the Federal National Mortgage Association (FNMA). At June 30, 2006, $500,000 of securities were pledged to the Department of Energy to serve as collateral for deposits.

(Continued)

37

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 2 — SECURITIES (Continued)

Securities with continuous unrecognized losses at year-end 2006 and 2005 not recognized in income aggregated by length of time that individual securities have been in a continuous unrealized loss position are as follows:

2006	Less than 12 Months					More than 12 Months					Total
			Gross					Gross					Gross
	Fair		Unrecognized			Fair		Unrecognized			Fair		Unrecognized
Description of Securities	Value		Loss			Value		Loss			Value		Loss
U.S. government-sponsored enterprise securities	$	5,398,720	$	(101,280	)	$	51,857,922	$	(642,078	)	$	57,256,642	$	(743,358	)

Securities with unrealized losses at year end 2005 not recognized in income are as follows:

2005	Less than 12 Months					More than 12 Months					Total
			Gross					Gross					Gross
	Fair		Unrecognized			Fair		Unrecognized			Fair		Unrecognized
Description of Securities	Value		Loss			Value		Loss			Value		Loss
U.S. government-sponsored enterprise securities	$	34,843,100		(156,900	)	$	17,458,575	$	(41,425	)	$	52,301,675	$	(198,325	)

At June 30, 2006, $52,500,000 of U.S. government-sponsored enterprise securities were in a continuous unrecognized loss for more than one year. Management considered whether these unrecognized losses represented other-than-temporary impairment of these securities, which are unsecured debentures issued by these entities. Management determined that the issuers maintained investment-grade bond ratings and that declines in fair value have been driven primarily by increases in market interest rates. As such, management concluded that the unrecognized losses do not represent other-than-temporary impairment as of June 30, 2006.

(Continued)

38

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 3 — MORTGAGE-BACKED SECURITIES

Mortgage-backed securities held to maturity at June 30, 2006 and 2005 are summarized as follows:

	2006
			Gross		Gross
	Carrying		Unrecognized		Unrecognized			Estimated
	Amount		Gain		Loss			Fair Value
FNMA mortgage-backed securities	$	27,023,693	$	—	$	(1,823,784	)		25,199,909
FHLMC mortgage-backed securities		554,230		7,674		—			561,904
	$	27,577,923	$	7,674	$	(1,823,784	)	$	25,761,813

	2005
			Gross		Gross
	Carrying		Unrecognized		Unrecognized			Estimated
	Amount		Gain		Loss			Fair Value
FNMA mortgage-backed securities	$	30,964,609	$	16,375	$	(266,192	)	$	30,714,792
FHLMC mortgage-backed securities		755,424		17,556		—			772,980
	$	31,720,033	$	33,931	$	(266,192	)	$	31,487,772

There were no sales of mortgage-backed securities for the years ended June 30, 2006, 2005 or 2004.

(Continued)

39

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 3 — MORTGAGE-BACKED SECURITIES (Continued)

Mortgage-backed securities with unrecognized losses at year end 2006 and 2005 not recognized in income aggregated by the length of time that the individual securities have been in a continuous unrealized loss position are as follows:

2006	Less than 12 Months					More than 12 Months					Total
Description of			Gross					Gross					Gross
Mortgage-backed	Fair		Unrecognized			Fair		Unrecognized			Fair		Unrecognized
Securities	Value		Loss			Value		Loss			Value		Loss
FNMA mortgage-backed securities	$	1,985,731		(84,232	)	$	23,214,178	$	(1,739,552	)	$	25,199,909	$	(1,823,784	)

2005	Less than 12 Months				More than 12 Months					Total
Description of			Gross				Gross					Gross
Mortgage-backed	Fair		Unrecognized		Fair		Unrecognized			Fair		Unrecognized
Securities	Value		Loss		Value		Loss			Value		Loss
FNMA mortgage-backed securities	$	—	$	—	$	23,234,790	$	(266,192	)	$	23,234,790	$	(266,192	)

At June 30, 2006, a FNMA mortgage-backed security with a carrying amount of $24,714,338 was in a continuous unrecognized loss for more than one year. Management considered whether this unrecognized loss represented other-than-temporary impairment of this security. Management determined that the security was backed by performing assets and that timely repayment of principal and interest is guaranteed by FNMA. The decline in fair value is largely driven by increases in market interest rates. As such, management concluded that the unrecognized loss did not represent other-than-temporary impairment of the security as of June 30, 2006.

(Continued)

40

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 4 — LOANS RECEIVABLE

Loans receivable at June 30, 2006 and 2005, consist of the following:

	2006			2005
Real estate mortgages:
One-to-four family residential	$	174,574,861		$	148,955,669
Home equity line of credit		94,449,845			97,691,917
Multi-family residential		45,715,780			33,504,667
Commercial		170,392,400			171,331,117
Commercial equity line of credit		34,063,990			31,875,316
Land		77,242,222			68,164,662
Construction — residential		84,146,125			75,459,676
Construction — commercial		41,712,042			24,355,272
Total real estate mortgages		722,297,265			651,338,296
Non real estate loans		21,824,041			17,300,500
Total loans receivable		744,121,306			668,638,796
Net deferred loan origination fees		(3,381,630	)		(3,832,378	)
Allowance for loan losses		(4,674,681	)		(4,312,274	)
Loans receivable, net	$	736,064,995		$	660,494,144

A summary of the changes in the allowance for loan losses for the years ended June 30, 2006, 2005, and 2004, is as follows:

	2006			2005			2004
Beginning balance	$	4,312,274		$	4,376,704		$	3,882,839
Provision for loan losses		826,300			111,000			597,300
Charge-offs		(463,893	)		(175,430	)		(132,435	)
Recoveries		—			—			29,000
Ending balance	$	4,674,681		$	4,312,274		$	4,376,704

(Continued)

41

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 4 — LOANS RECEIVABLE (Continued)

The following is a summary of the principal balances of nonperforming loans at June 30:

	2006		2005
Loans on non-accrual status:
Real estate mortgages:
One-to-four family residential	$	7,586,930	$	7,459,761
Commercial		2,972,146		3,518,484
Multi-family residential		21,300		21,300
Construction and land		4,876,009		750,650
Total loans on non-accrual status		15,456,385		11,750,195
Loans past due 90 days, still on accrual status:
Real estate mortgages:
One-to-four family residential		—		162,975
Construction and land		—		445,000
Total non-accrual and past due loans	$	15,456,385	$	12,358,170

At June 30, 2006 and 2005, the recorded investment in loans, which have individually been identified as being impaired, totaled $7,869,455 and $4,290,434, respectively. Included in the impaired amount at June 30, 2006 and 2005, is $7,869,455 and $4,290,430, respectively, related to loans with a corresponding valuation allowance of $902,267 and $599,459, respectively.

Average impaired loans for the years ended June 30, 2006, 2005 and 2004 amounted to $5,675,718, $5,521,063, and $4,985,439, respectively. Interest recognized on impaired loans in 2006, 2005, and 2004 was not material.

(Continued)

42

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 5 — MORTGAGE BANKING ACTIVITIES

Mortgage banking activities, net, including gains and losses on sales of loans, for each of the years in the three-year period ended June 30, 2006, consist of the following:

	2006			2005			2004
Mortgage loan servicing fees	$	1,954,692		$	1,872,974		$	1,761,286
Amortization and changes in valuation allowance for mortgage servicing rights		(1,359,003	)		(1,641,778	)		(2,388,888	)
Market adjustment for loans held for sale		(156,000	)		—			—
Change in fair value of mortgage banking derivatives		(239,000	)		(15,000	)		—
Gross realized:
Gains on sales of loans		1,830,073			2,222,305			6,930,590
Losses on sales of loans		(1,196,291	)		(1,127,266	)		(1,670,427	)
	$	834,471		$	1,311,235		$	4,632,561

At June 30, 2006 and 2005, the Company was servicing whole and participation mortgage loans for others aggregating $776,423,332 and $764,871,107, respectively. These loans are not reported as assets. The Company had $7,625,993 and $9,247,978, at June 30, 2006 and 2005, respectively, of funds collected on mortgage loans serviced for others which is included in accrued expenses and other liabilities.

Originated mortgage servicing rights capitalized and amortized during the years ended June 30, 2006, 2005 and 2004 were as follows:

	2006			2005			2004
Beginning balance	$	5,001,474		$	5,358,845		$	4,655,182
Originated		1,164,365			1,284,407			3,762,551
Amortized		(1,359,003	)		(1,641,778	)		(3,058,888	)
Ending balance	$	4,806,836		$	5,001,474		$	5,358,845
Valuation Allowance
Beginning balance	$	—		$	—		$	670,000
Additions expensed		—			—			—
Reductions credited to expense		—			—			(670,000	)
Ending balance	$	—		$	—		$	—

The fair value of capitalized mortgage servicing rights was $8,928,868 and $7,495,736 at June 30, 2006 and 2005. Fair value was determined using discount rates ranging from 9.0% to 11.0% and prepayment speeds ranging from 6.3% to 57.6%, depending on the stratification of the specific rights. The preponderance of the servicing rights was determined using prepayment speeds ranging from 6.3% to 20.7%.

(Continued)

43

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 6 — OFFICE PROPERTIES AND EQUIPMENT

Office properties and equipment at cost, less accumulated depreciation and amortization at June 30, 2006 and 2005 are summarized as follows:

	2006			2005
Land and land improvements	$	1,034,892		$	1,034,892
Building and building improvements		5,553,076			5,563,598
Leasehold improvements		5,943,807			5,862,620
Furniture and equipment		12,124,539			11,758,159
		24,656,314			24,219,269
Less accumulated depreciation and amortization		(12,623,622	)		(10,806,038	)
	$	12,032,692		$	13,413,231

NOTE 7 — DEPOSITS

Scheduled maturities of time deposits were as follows:

	2006					2005
	Amount		%			Amount		%
12 months or less	$	441,726,006		87.6	%	$	371,245,515		79.1	%
13 to 24 months		38,845,591		7.7			56,248,773		12.0
25 to 36 months		8,087,568		1.6			24,524,716		5.2
37 to 48 months		15,476,643		3.1			17,562,890		3.7
	$	504,135,808		100.0	%	$	469,581,894		100.0	%
Weighted average rate on certificates of deposit				4.57	%				3.33	%

Time deposits in amounts of $100,000 or more totaled approximately $164,445,000 and $146,802,000 at June 30, 2006 and 2005, respectively.

Deposits of related parties totaled $2,888,506 and $381,394 at June 30, 2006 and June 30, 2005.

(Continued)

44

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 8 — ADVANCES FROM THE FEDERAL HOME LOAN BANK OF CINCINNATI

Short-Term Advances: The Bank maintains two lines of credit totaling $230,000,000 with the FHLB. The $200,000,000 repurchase line matures in February 2007. At June 30, 2006 and 2005, $75,000,000 and $15,000,000 was drawn on the repurchase line of credit, respectively. The Bank has chosen to take daily advances from this line, with the interest rate set daily. The interest rate as of June 30, 2006 and June 30, 2005 was 5.31% and 3.38%. The $30,000,000 cash management line matures in October 2006. No borrowings were outstanding on the cash management line as of June 30, 2006 or 2005.

In order to secure these advances, the Bank has pledged mortgage loans with unpaid principal balances aggregating approximately $326,862,000 and $296,254,000 at June 30, 2006 and 2005, respectively, and mortgage-backed securities aggregating approximately $27,577,923 and $31,720,033 at June 30, 2006 and 2005, respectively, plus FHLB stock. The Bank also pledged $57,500,000 of securities as of June 30, 2005 but these securities were released from the pledge in 2006.

Long-Term Advances: Long-term advances from the Federal Home Loan Bank of Cincinnati (“FHLB”), with maturities and interest rates thereon at June 30, 2006 and 2005, were as follows:

Maturity	Interest rate			2006			2005
February 2006		6.05	%	$	—		$	12,018
February 2008		5.37			10,000,000			10,000,000
March 2008		5.64			10,000,000			10,000,000
March 2011		3.94			—			50,000,000
May 2011		4.16			—			50,000,000
				$	20,000,000		$	120,012,018
Weighted average interest rate					5.51	%		4.29	%

In 2006, the FHLB exercised their option to convert the two advances with maturity dates in 2011 to LIBOR. The Bank repaid the advances at that time without penalty. Each of the remaining advances is a convertible fixed-rate advance. Each of these is convertible at the option of the FHLB to LIBOR. Alternatively, if the conversion option is exercised, the Bank could repay these advances without prepayment penalty.

(Continued)

45

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 9 — SUBORDINATED DEBENTURES, NOTES PAYABLE AND OTHER BORROWINGS

Line of Credit: On February 23, 2006, one of the Company’s subsidiaries obtained a $4.0 million dollar line of credit from another financial institution with a drawn principal balance of $1,772,871 as of June 30, 2006. The line is collateralized by the Company’s Solon headquarters building. The note carries a variable interest rate that adjusts to The Wall Street Journal published prime lending rate minus 75 basis points. The loan is due on demand. At June 30, 2006, the interest rate was 7.25%. Proceeds from this line of credit were used to repay the note payable formerly secured by the Company’s headquarters building.

Subordinated Debt: In June 2004, the Company formed a special purpose entity, PVF Capital Trust I (“Trust”), for the sole purpose of issuing $10,000,000 of variable-rate trust preferred securities. The Company issued Subordinated Deferrable Interest Debentures (“subordinated debentures”) to the Trust in exchange for the proceeds of the offering of the trust preferred securities. The trust preferred security carries a variable interest rate that adjusts to three month LIBOR plus 260 basis points. At June 30, 2006 and 2005 the interest rate was 7.69% and 6.25%.

The subordinated debentures are the sole asset of the trust. The trust preferred securities will mature June 29, 2034 but may be redeemed by the Trust at par, at its option, starting June 29, 2009.

Repurchase Agreement: In March 2006, the Bank entered into a $50 million repurchase agreement (“Repo”) with another institution (Citigroup) collateralized by $57.5 million in securities. The Repo is for a five year term and interest is adjustable quarterly during the first year based on the 3 month LIBOR rate minus 100 basis points. After year one, the rate will adjust to 4.99% and the Repo will become callable quarterly at the option of the issuer. The interest rate as of June 30, 2006 was 4.42%.

(Continued)

46

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 10 — FEDERAL INCOME TAXES

The provision for federal income taxes differs from the amounts computed by applying the U.S. federal income tax statutory rate to income before federal income taxes. These differences are reconciled as follows:

	2006						2005						2004
	Amount			%			Amount			%			Amount			%
Computed expected tax	$	2,413,425			35.0		$	2,840,290			35.0	%	$	3,616,061			35.0	%
Increase (decrease) in tax resulting from:
Benefit of graduated rates		(68,955	)		(1.0	)		(81,151	)		(1.0	)		(103,316	)		(1.0	)
Affordable housing tax credit		(111,645	)		(1.6	)		(111,645	)		(1.4	)		(111,646	)		(1.1	)
Bank-owned life insurance		(203,132	)		(2.9	)		(188,498	)		(2.3	)		(63,761	)		(0.6	)
Stock compensation		51,757			0.8			0			0.0			0			0.0
Other, net		(28,951	)		(0.5	)		71,996			0.9			84,211			0.8
	$	2,052,499			29.8	%	$	2,530,992			31.2	%	$	3,421,549			33.1	%

The net tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at June 30, 2006 and 2005 are:

	2006			2005
Deferred tax assets:
Loan loss reserves	$	1,500,803		$	1,331,863
Deferred compensation		836,743			716,310
Unrealized gains on loans held for sale		—			26,208
Mortgage banking reserves		139,400			5,100
Other		135,847			61,310
Total gross deferred tax assets		2,612,793			2,140,791
Deferred tax liabilities:
Deferred loan fees, net		(337,289	)		(364,432	)
FHLB stock dividend		(1,750,269	)		(1,533,145	)
Originated mortgage servicing asset		(1,634,324	)		(1,700,501	)
Fixed assets		(1,184,677	)		(1,245,855	)
Prepaid franchise tax		(163,549	)		(133,400	)
Unrealized losses on loans held for sale		(75,971	)		—
Other		(142,608	)		(110,545	)
Total gross deferred tax liabilities		(5,288,687	)		(5,087,878	)
Net deferred tax liability	$	(2,675,894	)	$	(2,947,087	)

A valuation allowance is established to reduce the deferred tax asset if it is more likely than not that the related tax benefits will not be realized. In management’s opinion, it is more likely than not that the tax benefits will be realized; consequently, no valuation allowance has been established as of June 30, 2006 or 2005.

(Continued)

47

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 10 — FEDERAL INCOME TAXES (Continued)

Retained earnings at June 30, 2006 and 2005 include approximately $4,516,000 for which no provision for federal income tax has been made. The related unrealized deferred tax liability was approximately $1,535,000 at June 30, 2006 and 2005. This amount represents allocations of income during years prior to 1988 to bad debt deductions for tax purposes only. These qualifying and non-qualifying base year reserves and supplemental reserves will be recaptured into income in the event of certain distributions and redemptions. Such recapture would create income expense for tax purposes only, which would be subject to the then current corporate income tax rate. Recapture would not occur upon the reorganization, merger, or acquisition of the Bank, nor if the Bank is merged or liquidated tax-free into a bank or undergoes a charter change. If the Bank fails to qualify as a bank or merges into a nonbank entity, these reserves will be recaptured into income.

NOTE 11 — LEASES

The Company leases certain premises from unrelated and related parties. Future minimum payments under noncancelable operating leases with initial or remaining terms of one year or more consisted of the following at June 30, 2006:

	Leases With		Leases With
	Unrelated		Related		Total
Year ending June 30,	Parties		Parties		Leases
2007	$	715,464	$	168,145	$	883,609
2008		695,496		147,592		843,088
2009		621,458		147,592		769,050
2010		500,993		147,592		648,585
2011		206,380		147,592		353,972
Thereafter		202,884		324,656		527,540
Total minimum lease payments	$	2,942,675	$	1,083,169	$	4,025,844

During the years ended June 30, 2006, 2005, and 2004, rental expense was $898,448, $799,725, and $695,307, respectively. Rental expense related to related party leases was $204,031, $134,034, and $85,941 for the years ended June 30, 2006, 2005, and 2004, respectively.

(Continued)

48

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 12 — LOAN COMMITMENTS AND OTHER RELATED ACTIVITIES

In the normal course of business, the Bank enters into commitments with off-balance-sheet risk to meet the financing needs of its customers. Commitments to extend credit involve elements of credit risk and interest rate risk in excess of the amount recognized in the consolidated statements of financial condition. The Bank’s exposure to credit loss in the event of nonperformance by the other party to the commitment is represented by the contractual amount of the commitment. The Bank uses the same credit policies in making commitments as it does for on-balance-sheet instruments. Interest rate risk on commitments to extend credit results from the possibility that interest rates may have moved unfavorably from the position of the Bank since the time the commitment was made.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates of 60 to 120 days or other termination clauses and may require payment of a fee. Since some of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained by the Bank upon extension of credit is based on management’s credit evaluation of the applicant. Collateral held is generally residential and commercial real estate.

The Bank’s lending is concentrated in Northeastern Ohio, and as a result, the economic conditions and market for real estate in Northeastern Ohio could have a significant impact on the Bank.

At June 30, 2006 and 2005, the Bank had the following commitments to originate loans intended to be held in the portfolio:

	2006		2005
Commitments to fund variable-rate mortgage loans	$	48,287,000	$	10,130,000
Commitments to fund equity lines of credit		92,901,000		79,452,000
Undisbursed portion of loan proceeds		66,749,000		69,715,000

The Bank has a program to reduce interest rate risk associated with the interest rate-lock commitment made to borrowers for mortgage loans intended to be sold in the secondary market. The Bank enters into commitments to sell loans to limit exposure to potential movements in market interest rates. At June 30, 2006 and 2005, the Bank had interest rate-lock commitments on $31,524,000 and $43,293,000 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

(Continued)

49

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 12 — LOAN COMMITMENTS AND OTHER RELATED ACTIVITIES (Continued)

recorded in the financial statements. The fair value of these commitments as of June 30, 2006 and 2005 was estimated to be ($321,000) and $19,000, respectively. The Bank entered into contracts to sell mortgage loans of $13,250,000 and $17,881,000 as of June 30, 2006 and 2005. These contracts are 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 June 30, 206 and 2005 was estimated to be $67,000 and ($34,000), respectively.

NOTE 13 — REGULATORY CAPITAL

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Office of Thrift Supervision (“OTS”) regulations requires savings institutions to maintain certain minimum levels of regulatory capital. An institution that fails to comply with its regulatory capital requirements must obtain OTS approval of a capital plan and can be subject to a capital directive and certain restrictions on its operations. At June 30, 2006, the adjusted total minimum regulatory capital regulations require institutions to have tangible capital to adjusted total assets of 1.5%; a minimum leverage ratio of core (Tier 1) capital to adjusted total assets of 4.0%; and a minimum ratio of total capital to risk weighted assets of 8.0%. At June 30, 2006 and 2005, the Bank exceeded all of the aforementioned regulatory capital requirements.

Regulations limit capital distributions by savings institutions. Generally, capital distributions are limited to undistributed net income for the current and prior two years. At June 30, 2006, this limitation was $10,947,373. This limitation on the Bank is not expected to prevent the Company from paying its normal cash dividends.

The most recent notification from the OTS categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Bank must maintain minimum Total risk-based and Tier 1 risk-based ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the institution’s category.

(Continued)

50

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 13 — REGULATORY CAPITAL (Continued)

At June 30, 2006 and 2005, the Bank was in compliance with regulatory capital requirements as set forth below (dollars in thousands):

				Tier-1			Tier-1			Total
	Tangible			Core			Risk-Based			Risk-Based
	Capital			Capital			Capital			Capital
June 30, 2006
GAAP capital	$	75,827		$	75,827		$	75,827		$	75,827
General loan valuation allowances		—			—			—			4,414
Regulatory capital	$	75,827		$	75,827		$	75,827		$	80,241
Total assets	$	910,776		$	910,776		$	910,776		$	910,776
Adjusted total assets		910,776			910,776			—			—
Risk-weighted assets		—			—			780,203			780,203
Actual capital ratio		8.33	%		8.33	%		9.72	%		10.28	%
Regulatory requirement for capital adequacy purposes		1.50	%		4.00	%		4.00	%		8.00	%
Regulatory capital category —well-capitalized — equal to or greater than		N/A			5.00	%		6.00	%		10.00	%

				Tier-1			Tier-1			Total
	Tangible			Core			Risk-Based			Risk-Based
	Capital			Capital			Capital			Capital
June 30, 2005
GAAP capital	$	72,751		$	72,751		$	72,751		$	72,751
Nonallowable component		(7	)		(7	)		(7	)		(7	)
General loan valuation allowances		—			—			—			3,917
Regulatory capital	$	72,744		$	72,744		$	72,744		$	76,661
Total assets	$	829,818		$	829,818		$	829,818		$	829,818
Adjusted total assets		829,811			829,811			—			—
Risk-weighted assets		—			—			698,777			698,777
Actual capital ratio		8.77	%		8.77	%		10.41	%		10.97	%
Regulatory requirement for capital adequacy purposes		1.50	%		4.00	%		4.00	%		8.00	%
Regulatory capital category — well-capitalized — equal to or greater than		N/A			5.00	%		6.00	%		10.00	%

(Continued)

51

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 14 — RELATED PARTY TRANSACTIONS

Loans to principal officers, directors, and their affiliates in 2006 were as follows.

Beginning balance	$	7,018,000
New Loans		2,500,000
Repayments		(895,000	)
Ending balance	$	8,623,000

NOTE 15 — STOCK OPTIONS

The Company offered stock options to the directors and officers of the Bank under various option plans.

All of the options authorized under the 1992 plan have been granted and exercised. The options granted under the 1996 plan are exercisable over a ten-year period, with vesting ranging from zero to five years as stated in the individual option agreements. Incentive stock options granted under the 2000 plan are exercisable over a ten-year period, with vesting ranging from four to nine years as stated in the individual option agreements.

Nonqualified stock options are granted to directors and typically 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.

Options outstanding at June 30, 2006 were as follows:

	Outstanding				Exercisable
			Weighted Average				Weighted
Range of			Remaining				Average
Exercise			Contractual				Exercise
Price	Number		Life		Number		Price
$4.65 - $6.10		101,089		3.38		101,089	$	5.65
$6.72 - $7.77		190,531		3.55		190,531	$	7.26
$8.32 - $13.64		266,854		7.52		132,709	$	10.65
Total		558,474		5.41		424,329	$	7.94

There were 183,228 shares available for future issuance under existing stock option plans.

(Continued)

52

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 15 — STOCK OPTIONS (Continued)

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

	2006					2005					2004
				Weighted					Weighted					Weighted
				Average					Average					Average
				Exercise					Exercise					Exercise
	Shares			Price		Shares			Price		Shares			Price
Outstanding beginning of year		470,312		$	8.01		451,530		$	7.50		444,579		$	6.83
Forfeited		(12,250	)		11.10		(293	)		7.59		—			—
Exercised		(26,038	)		5.55		(24,045	)		6.58		(40,965	)		6.07
Granted		126,450			11.16		43,120			12.62		47,916			12.53
Outstanding end of year		558,474		$	8.77		470,312		$	8.01		451,530		$	7.50
Exercisable end of year		424,329		$	7.94		388,446		$	7.41		352,108		$	7.06

As discussed in Note 1, compensation expense will be recognized for the vested portion of previously issued awards that remained outstanding as of July 1, 2005 and for any future awards under the fair value recognition provisions of FAS 123R. For the year ended June 30, 2006, compensation expense of $214,761 was recognized in the income statement related to the vesting of previously issued awards plus vesting of new awards. An income tax benefit of $21,262 was recognized related to this expense.

Prior to the adoption of FAS 123R, employee compensation expense under stock option plans was reported using the intrinsic value method. No stock-based compensation cost was reflected in net income, as all options granted had an exercise price equal to or greater than the market price of the underlying stock on the date of grant. The following table illustrates the effect on net income and earnings per share if expense was measured using the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation.

	2005			2004
Net income as reported	$	5,584,121		$	6,910,054
Stock-based compensation expense determined under fair value based method		147,160			115,581
Income tax effect		(8,160	)		(15,446	)
		139,000			100,135
Pro forma net income	$	5,445,121		$	6,809,919
Basic earnings per share as reported	$	0.72		$	0.89
Pro forma basic earnings per share	$	0.70		$	0.88
Diluted earnings per share as reported	$	0.71		$	0.87
Pro forma diluted earnings per share	$	0.69		$	0.86

(Continued)

53

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 15 — STOCK OPTIONS (Continued)

As of June 30, 2006, there was $396,010 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 3.9 years. All outstanding and unvested options are expected to vest.

The aggregate intrinsic value of all options outstanding at June 30, 2006 was $1,084,845. The aggregate intrinsic value of all options that were exercisable at June 30, 2006 was $1,071,837.

The fair value of each option grant was estimated on the date of grant using the Black Scholes option pricing model. The following weighted-average assumptions were used for grants in each of the respective years.

	2006			2005			2004
Risk-free interest rate		4.57	%		3.75	%		3.76	%
Dividend yield		2.67	%		2.21	%		1.99	%
Expected volatility		31.56			29.29			29.78
Expected life in years		9.72			7.00			7.00

The weighted average fair value of options granted in each of the past three years was as follows:

2006	2005	2004
$3.69	$3.57	$3.35

(Continued)

54

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 16 — EARNINGS PER SHARE

The following is a reconciliation of basic earnings per share to diluted earnings per share for the years ended June 30:

			2006		Per-Share
	Net Income		Shares		Amount
Basic EPS:
Income available to common shareholders	$	4,843,001		7,716,770	$	0.63
Dilutive effect of assumed exercises of stock options		—		129,199		(0.01	)
Diluted EPS:
Income available to common shareholders	$	4,843,001		7,845,969	$	0.62

			2005		Per-Share
	Net Income		Shares		Amount
Basic EPS:
Income available to common shareholders	$	5,584,121		7,734,136	$	0.72
Dilutive effect of assumed exercises of stock options		—		172,610		(0.01	)
Diluted EPS:
Income available to common shareholders	$	5,584,121		7,906,746	$	0.71

			2004		Per-Share
	Net Income		Shares		Amount
Basic EPS:
Income available to common shareholders	$	6,910,054		7,723,543	$	0.89
Dilutive effect of assumed exercises of stock options				187,006		(0.02	)
Diluted EPS:
Income available to common shareholders	$	6,910,054		7,910,549	$	0.87

There were 205,236, 43,120, and 47,916 options not considered in the diluted earnings per share calculation for the years ended June 30, 2006, 2005, and 2004 respectively because they were not dilutive.

(Continued)

55

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 17 — FAIR VALUE OF FINANCIAL INSTRUMENTS

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

	June 30, 2006						June 30, 2005
	Carrying			Estimated			Carrying			Estimated
	Amount			Fair Value			Amount			Fair Value
	(in thousands)
Assets:
Cash and amounts due from depository institutions	$	6,614		$	6,614		$	4,034		$	4,034
Interest-bearing deposits		1,804			1,804			2,181			2,181
Federal funds sold		11,320			11,320			4,875			4,875
Securities held to maturity		58,000			57,257			57,500			57,345
Mortgage-backed securities held to maturity		27,578			25,762			31,720			31,488
Loans receivable		731,997			725,155			660,494			671,554
Loans receivable held for sale, net		10,698			10,698			9,060			9,165
Federal Home Loan Bank stock		11,955			11,955			11,316			11,316
Accrued interest receivable		4,068			4,068			3,682			3,682
Mandatory forward sales contracts		67			67			(34	)		(34	)
Liabilities:
Demand deposits and passbook savings		(152,728	)		(152,728	)		(121,644	)		(121,644	)
Time deposits		(504,136	)		(500,537	)		(469,582	)		(468,816	)
Line of credit		(1,773	)		(1,773	)		—			—
Advances from the Federal Home Loan Bank of Cincinnati		(95,000	)		(95,021	)		(135,012	)		(137,719	)
Repurchase agreement		(50,000	)		(50,000	)		—			—
Subordinated debentures		(10,000	)		(10,000	)		(10,000	)		(10,000	)
Notes payable		—			—			(1,401	)		(1,401	)
Accrued interest payable		(350	)		(350	)		(489	)		(489	)
Commitments to make loans Intended to be sold		(321	)		(321	)		19			19

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 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.

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.

(Continued)

56

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 17 — FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Securities and mortgage-backed securities. Estimated fair value for securities and mortgage-backed securities is based on quoted market prices.

Loans receivable and loans receivable held for sale. For loans receivable held for sale, fair value is estimated using the quoted market prices for similar loans, adjusted for differences in loan characteristics. 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.

Fair value for significant nonperforming loans is based on recent external appraisals of underlying collateral. If appraisals are not available, estimated cash flows are discounted using a rate commensurate with the risk associated with the estimated cash flows. Assumptions regarding credit risk, cash flows, and discount rates are judgmentally determined using available market information and specific borrower information.

Federal Home Loan Bank stock. This item is valued at cost, which represents redemption value and approximates fair value.

Mandatory forward sales contracts. These contracts are valued by reference to Secondary Market indicators of pair-off fees receivable or payable to terminate the contracts.

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.

Line of credit. 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 is a reasonable estimate of fair value based on the current incremental borrowing rate for similar types of borrowing arrangements.

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

(Continued)

57

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 17 — FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Commitments to make loans intended for sale. These commitments are valued according to changes in secondary market pricing for similar loans with similar delivery dates fro the date of interest rate lock until the balance sheet date.

Off-balance-sheet instruments. The fair value of commitments is estimated using the fees currently charged to enter similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair value of undisbursed lines of credit is based on fees currently charged for similar agreements or on estimated cost to terminate them or otherwise settle the obligations with the counterparties at the reporting date. The carrying amount and fair value of off-balance-sheet instruments is not significant as of June 30, 2006 and 2005.

(Continued)

58

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 18 — PARENT COMPANY

The following are condensed statements of financial condition as of June 30, 2006 and 2005 and related condensed statements of operations and cash flows for the years ended June 30, 2006, 2005 and 2004 for PVF Capital Corp.

CONDENSED STATEMENTS OF FINANCIAL CONDITION

	2006		2005
Cash and amounts due from depository institutions	$	55,404	$	221,263
Prepaid expenses and other assets		1,823,057		1,564,558
Investment in Bank subsidiary		75,827,227		72,750,959
Investment in non-Bank subsidiaries		2,887,345		2,713,536
Total assets	$	80,593,033	$	77,250,316
Accrued expenses and other liabilities	$	1,619,893	$	797,137
Subordinated debentures		10,000,000		10,000,000
Stockholders’ equity		68,973,140		66,453,179
Total liabilities and stockholders’ equity	$	80,593,033	$	77,250,316

CONDENSED STATEMENTS OF OPERATIONS

	2006		2005		2004
Income:
Mortgage banking activities	$	9,055	$	11,811	$	16,210
Dividends from Bank subsidiary		2,400,000		1,000,000		3,500,000
Interest Income		—		432		—
		2,409,055		1,012,243		3,516,210
Expenses:
Interest expense		693,292		503,190		46,847
General and administrative		213,035		195,570		278,931
		906,327		698,760		325,778
Income before federal income taxes and equity in undistributed net income of subsidiaries		1,502,728		313,483		3,190,432
Federal income tax benefit		304,956		233,018		105,204
Income before equity in undistributed net income of subsidiaries		1,807,684		546,501		3,295,636
Equity in undistributed net income of subsidiaries		3,035,317		5,037,620		3,614,418
Net income	$	4,843,001	$	5,584,121	$	6,910,054

(Continued)

59

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 18 — PARENT COMPANY (Continued)

CONDENSED STATEMENTS OF CASH FLOWS

	2006			2005			2004
Operating activities:
Net income	$	4,843,001		$	5,584,121		$	6,910,054
Equity in undistributed net income of subsidiaries		(3,035,317	)		(5,037,620	)		(3,614,418	)
Other, net		(285,743	)		(194,216	)		(149,706	)
Net cash from (used in) operating activities		1,521,941			352,3285			3,145,930
Investing activities:
Advance to subsidiary		800,000			(805,500	)		1,140,000
Investment in subsidiary		—			(7,001,000	)		—
Net decrease in cash from investing activities		800,000			(7,806,500	)		1,140,000
Financing activities:
Repayment on note payable		—			—			(2,500,000	)
Proceeds from subordinated debentures		—			—			10,000,000
Proceeds from exercise of stock options		144,737			160,468			256,793
Stock purchased and retired		(141,104	)		(123,024	)		(94,211	)
Dividends paid		(2,235,692	)		(2,034,595	)		(1,841,130	)
Purchase of treasury stock		(255,742	)		(454,212	)		—
Net cash from (used in) financing activities		(2,487,800	)		(2,451,363	)		5,821,452
Net increase (decrease) in cash and cash-equivalents		(165,859	)		(9,905,578	)		10,107,382
Cash and cash equivalents at beginning of year		221,263			10,126,841			19,459
Cash and cash equivalents at end of year	$	55,404		$	221,263		$	10,126,841
Supplemental schedule of non-cash financing activities:
Income tax benefit from exercise of options	$	—		$	5,778		$	—

(Continued)

60

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 19 — EMPLOYEE BENEFIT PLANS

401(k) Savings Plan: Employees who have reached age 18 and have completed one year of eligibility service are eligible to participate in the Company’s 401(k) Savings Plan. The plan allows eligible employees to contribute up to 50% of their compensation with the Company matching up to 50% of the first 4% contributed by the employee, as determined by the Company for the contribution period. The plan also permits the Company to make a profit sharing contribution at its discretion up to 4% of the employee’s compensation. Participants vest in the Company’s contributions ratably over six years.

The total of the Company’s matching and profit sharing contribution cost related to the plan for the years ended June 30, 2006, 2005, and 2004 was $127,093, $122,750, and $120,722, respectively.

Supplemental Executive Retirement Plan: During fiscal year 2000, the Company established a Supplemental Executive Retirement Plan (“SERP”) to provide additional retirement benefits to participating executive officers. The SERP was adopted in order to provide benefits to such executives whose benefits are reduced under the Company’s tax-qualified benefit plans pursuant to limitations under the Internal Revenue Code. The SERP is subject to certain vesting provisions, and provides that the executives shall receive a supplemental retirement benefit if the executive’s employment is terminated after reaching the normal retirement. For the years ended June 30, 2006, 2005, and 2004, the Company recognized expense under the SERP of $450,000, $395,500, and $445,775, respectively. The accrued SERP liability at June 30, 2006 and 2005 included in accrued expenses and other liabilities totaled $2,507,475 and $2,057,475.

(Continued)

61

PVF CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2006, 2005 and 2004

NOTE 20 — SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following is a summary of the unaudited consolidated quarterly results of operations for 2006 and 2005 (in thousands of dollars, except per share data): ⁽¹⁾

	Quarters for the year ended June 30, 2006
	First		Second		Third		Fourth
Interest income	$	12,583	$	13,283	$	14,328	$	14,986
Interest expense		6,048		6,676		7,392		8,292
Net interest income		6,535		6,607		6,936		6,694
Provision for loan losses		37		257		352		180
Non-interest income		779		561		535		625
Non-interest expense		5,374		5,443		5,297		5,436
Income before Federal income taxes		1,903		1,468		1,822		1,703
Federal income taxes		551		441		555		506
Net income	$	1,352	$	1,027	$	1,267	$	1,197
Basic earnings per share	$	0.18	$	0.13	$	0.16	$	0.16
Diluted earnings per share	$	0.17	$	0.13	$	0.16	$	0.16

	Quarters for the year ended June 30, 2005
	First		Second		Third		Fourth
Interest income	$	10,034	$	10,519	$	10,941	$	12,101
Interest expense		4,424		4,737		5,103		5,537
Net interest income		5,610		5,782		5,838		6,564
Provision for loan losses		136		—		75		(100	)
Non-interest income		685		859		939		891
Non-interest expense		4,324		4,577		4,787		5,254
Income before Federal income taxes		1,835		2,064		1,915		2,301
Federal income taxes		568		642		602		719
Net Income	$	1,267	$	1,422	$	1,313	$	1,582
Basic earnings per share	$	0.16	$	0.18	$	0.17	$	0.20
Diluted earnings per share	$	0.16	$	0.18	$	0.17	$	0.20

⁽¹⁾ The total of the four quarterly amounts may not equal the full year amount due to rounding.

62

B o a r d   o f   D i r e c t o r s

John R. Male
Chairman of the Board and
Chief Executive Officer

C. Keith Swaney
President, Chief Operating
Officer and Treasurer

Gerald A. Fallon
Retired

Robert K. Healey
Retired

Ronald D. Holman, II
Partner
Cavitch, Familo, Durkin & Frutkin

Stanley T. Jaros
Partner
Moriarty & Jaros, P.L.L.

Raymond J. Negrelli
President
Raymond J. Negrelli, Inc.

Stuart D. Neidus
Chairman and
Chief Executive Officer
Anthony & Sylvan Pools Corporation

E x e c u t i v e   O f f i c e r s

John R. Male
Chairman of the Board and
Chief Executive Officer

C. Keith Swaney
President, Chief Operating
Officer and Treasurer

Jeffrey N. Male
Vice President and Secretary

G e n e r a l   I n f o r m a t i o n

Independent
Certified Accountants
Crowe Chizek and Company LLC
Landerbrook Corporate Center One
5900 Landerbrook Drive
Suite 205
Cleveland, Ohio 44124

General Counsel
Moriarty & Jaros, P.L.L.
30000 Chagrin Boulevard
Suite 200
Pepper Pike, Ohio 44124

Transfer Agent and Registrar
National City Bank, Dept. 5352
Corporate Trust Operations
P.O. Box 92301
Cleveland, Ohio 44193-0900

Special Counsel
Muldoon Murphy & Aguggia LLP
5101 Wisconsin Avenue, N.W.
Washington, D.C. 20016

Stock Listing
NASDAQ Small-Cap Market
Symbol: PVFC

Annual Meeting
The 2006 Annual Meeting of Stockholders will be held on October 23, 2006 at 10:00 a.m. at the Company’s Corporate Center, 30000 Aurora Road, Solon, Ohio.

Annual Report on Form 10-K
A copy of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2006 as filed with the Securities and Exchange Commission will be furnished without charge to stockholders upon written request to the Corporate Secretary, PVF Capital Corp., 30000 Aurora Road, Solon, Ohio 44139.

EX-21

EXHIBIT 21

SUBSIDIARIES OF THE REGISTRANT

Parent

PVF Capital Corp.

	State or Other
	Jurisdiction of	Percentage
Subsidiaries (1)	Incorporation	Ownership
Park View Federal Savings Bank	United States		100	%
PVF Service Corporation	Ohio		100	%
PVF Mortgage Corp.	Ohio		100	%
PVF Community Development Corp.	Ohio		100	%
Mid Pines Land Co.	Ohio		100	%
PVF Holdings Inc.	Ohio		100	%

(1) The assets, liabilities and operations of the subsidiaries are included in the consolidated financial statements contained in the Annual Report to Stockholders included as Exhibit 13 in this Form 10-K.

EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to incorporation by reference in the registration statements (No. 33-97450, No. 33-86116, 333-14601 and No. 333-48446) on Form S-8 of PVF Capital Corp. of our report dated August 15, 2006, relating to the consolidated statement of financial condition of PVF Capital Corp. and subsidiaries as of June 30, 2006 and 2005, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years ended June 30, 2006, 2005 and 2004 which report appears in the June 30, 2006 Annual Report on Form 10-K of PVF Capital Corp.

Crowe Chizek and Company LLC

Cleveland, Ohio
September 8, 2006

EX-31.1

EXHIBIT 31.1

Certification

I, John R. Male, certify that:

1. I have reviewed this Annual Report on Form 10-K of PVF Capital Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 8, 2006	/s/ John R. Male
	John R. Male
	Chairman of the Board and Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

Certification

I, C. Keith Swaney, certify that:

1.	I have reviewed this Annual Report on Form 10-K of PVF Capital Corp.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 8, 2006	/s/ C. Keith Swaney
	C. Keith Swaney President, Chief Operating Officer and Treasurer (Principal Financial Officer)

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

     The undersigned executive officers of PVF Capital Corp. (the “Registrant”) hereby certify that this Annual Report on Form 10-K for the year ended June 30, 2006 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

By:	/s/ John R. Male
	Name: John R. Male
	Title: Chairman of the Board and Chief Executive Officer
By:	/s/ C. Keith Swaney
	Name: C. Keith Swaney Title: President, Chief Operating Officer and Treasurer

Date: September 8, 2006