-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Jq/5AukMYYdsznsNvfH7NEj0v4glym9vDnHrRtbUOqsOXCxUjIVJkqO31ZIkTX8E hwHrJCp160hQdF7/PGLmjg== 0001047469-98-003887.txt : 19980209 0001047469-98-003887.hdr.sgml : 19980209 ACCESSION NUMBER: 0001047469-98-003887 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980206 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: PVF CAPITAL CORP CENTRAL INDEX KEY: 0000928592 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 341659805 STATE OF INCORPORATION: OH FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-24948 FILM NUMBER: 98523037 BUSINESS ADDRESS: STREET 1: 2618 N MORELAND BLVD CITY: CLEVELAND HEIGHTS STATE: OH ZIP: 44120 BUSINESS PHONE: 2164396790 MAIL ADDRESS: STREET 1: 25350 ROCKSIDE ROAD CITY: BEDFORD HEIGHTS STATE: OH ZIP: 44146 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20552 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended December 31, 1997. [ ] Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _________________ to __________________ Commission File Number 0-24948 --------------------------------------------------- PVF Capital Corp. - -------------------------------------------------------------------------- ( Exact name of registrant as specified in its charter) United States 34-1659805 - -------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 25350 Rockside Road, Bedford Heights, Ohio 44146 - -------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (216) 439-2200 - -------------------------------------------------------------------------- (Registrant's telephone number, including area code) Not Applicable - -------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, $0.01 Par Value 2,659,077 - ------------------------------------- --------------------------------- (Class) (Outstanding at January 31, 1998) PVF CAPITAL CORP. INDEX Page Part I Financial Information Item 1 Financial Statements Consolidated Statements of Financial Condition, December 31, 1997 (unaudited) and June 30, 1997. 1 Consolidated Statements of Operations for the three and six months ended December 31, 1997 and 1996 (unaudited). 2 Consolidated Statements of Cash Flows for the six months ended December 31, 1997 and 1996 (unaudited). 3 Notes to Consolidated Financial Statements (unaudited). 4 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 6 Part II Other Information 11 PART I FINANCIAL INFORMATION ITEM 1 PVF CAPITAL CORP. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
DECEMBER 31, JUNE 30, ASSETS 1997 1997 ------ ----------- ----------- Cash and amounts due from depository institutions $3,248,252 $7,760,029 Interest bearing deposits 348,840 445,401 Federal funds sold 2,875,000 1,375,000 Investment securities held to maturity, at cost 10,995,974 13,995,350 Loans receivable, net 363,917,506 341,402,566 Loans receivable held for sale, net 1,582,704 709,604 Mortgage-backed securities held to maturity, net 3,390,177 511,530 Office properties and equipment, net 1,760,283 1,882,390 Real estate owned, net 1,101,186 0 Real estate in development 917,262 909,758 Investment required by law Stock in the Federal Home Loan Bank of Cincinnati 2,867,313 2,762,314 Prepaid expenses and other assets 3,209,636 1,327,358 ------------ ------------ Total Assets $396,214,133 $373,081,300 ------------ ------------ ------------ ------------ LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Liabilities Deposits $316,006,253 $288,269,674 Advances from the Federal Home Loan Bank of Cincinnati 39,865,551 47,405,424 Notes payable 1,710,000 2,310,000 Advances from borrowers for taxes and insurance 4,772,528 4,511,595 Accrued expenses and other liabilities 5,021,402 4,311,191 ------------ ------------ Total Liabilities 367,375,734 346,807,884 Stockholders' Equity Serial preferred stock, none issued 0 0 Common stock 26,591 25,556 Paid in capital 14,525,448 14,522,275 Retained earnings-substantially restricted 14,286,360 11,725,585 ------------ ------------ Total Stockholders' Equity 28,838,399 26,273,416 ------------ ------------ Total Liabilities and Stockholders' Equity $396,214,133 $373,081,300 ------------ ------------ ------------ ------------
See accompanying notes to consolidated financial statements PAGE 1 PART I FINANCIAL INFORMATION ITEM 1 PVF CAPITAL CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED DECEMBER 31, DECEMBER 31, ------------------------- -------------------------- 1997 1996 1997 1996 Interest income Loans $8,227,571 $7,272,036 $16,101,911 $14,302,570 Mortgage-backed securities 43,656 85,084 53,429 265,467 Cash and investment securities 298,193 305,281 609,924 630,603 ---------- ---------- ----------- ----------- Total interest income 8,569,420 7,662,401 16,765,264 15,198,640 ---------- ---------- ----------- ----------- ---------- ---------- ----------- ----------- Interest expense Deposits 4,184,766 3,529,625 8,345,511 6,985,822 Borrowings 597,609 569,867 1,119,921 1,129,238 ---------- ---------- ----------- ----------- Total interest expense 4,782,375 4,099,492 9,465,432 8,115,060 ---------- ---------- ----------- ----------- Net interest income 3,787,045 3,562,909 7,299,832 7,083,580 Provisions for loan losses 50,000 0 95,000 0 ---------- ---------- ----------- ----------- Net interest income after provision for loan losses 3,737,045 3,562,909 7,204,832 7,083,580 ---------- ---------- ----------- ----------- ---------- ---------- ----------- ----------- Noninterest income, net Service and other fees 127,413 119,879 264,548 241,592 Mortgage banking activities, net 198,541 151,931 387,256 188,313 Other, net 41,071 23,042 140,657 98,940 ---------- ---------- ----------- ----------- Total noninterest income, net 367,025 294,852 792,461 528,845 ---------- ---------- ----------- ----------- Noninterest expense Compensation and benefits 1,147,110 1,081,052 2,252,432 2,166,089 Office, occupancy, and equipment 388,328 414,010 787,545 791,285 Federal deposit insurance special assessment 0 0 0 1,707,867 Other 568,316 572,504 1,069,711 1,157,845 ---------- ---------- ----------- ----------- Total noninterest expense 2,103,754 2,067,566 4,109,688 5,823,086 ---------- ---------- ----------- ----------- Income before federal income tax provision 2,000,316 1,790,195 3,887,605 1,789,339 Federal income tax provision 699,000 609,000 1,325,000 619,000 ---------- ---------- ----------- ----------- Net income $1,301,316 $1,181,195 $ 2,562,605 $ 1,170,339 Basic earnings per share $ 0.50 $ 0.45 $ 0.99 $ 0.45 ---------- ---------- ----------- ----------- ---------- ---------- ----------- ----------- Diluted earnings per share $ 0.47 $ 0.43 $ 0.93 $ 0.42 ---------- ---------- ----------- ----------- ---------- ---------- ----------- -----------
See accompanying notes to consolidated financial statements PAGE 2 PART I FINANCIAL INFORMATION ITEM 1 PVF CAPITAL CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED DECEMBER 31ST ------------------------- 1997 1996 ---- ---- OPERATING ACTIVITIES Net Income $2,562,605 $1,170,339 Adjustments to reconcile net income to net cash provided by operating activities Accretion of discount on securities (624) (625) Depreciation and amortization 228,088 237,230 Provision for losses on loans 95,000 0 Provision for lower of cost or market adjustment on loans held for sale 0 81,930 Accretion of unearned discount and deferred loan origination fees, net (601,011) (726,397) Change in loans receivable held for sale, net (692,529) 9,594,212 Gain on sale of loans, net (180,571) (152,748) Loss on mortgage-backed securities available for sale, net 0 65,086 Gain on disposal of real estate owned, net (13,009) 0 Change in accrued interest on investments, loans, and borrowings, net (186,627) (216,931) Change in other assets and other liabilities, net (1,155,940) (317,822) ---------- ---------- Net cash provided by operating activities 55,382 9,734,274 ---------- ---------- INVESTING ACTIVITIES Loan and mortgage-backed securities repayments and originations, net (22,870,170) (44,753,626) Proceeds from mortgage-backed securities available for sale 0 12,738,470 Mortgage-backed securities held to maturity purchases, net (3,017,178) 0 Investment securities held to maturity purchases (3,000,000) 0 Investment securities maturities 6,000,000 100,000 Disposal of real-estate owned properties 257,815 FHLB stock purchases dividends, net (105,981) (261,121) Office properties and equipment (purchases) sales, net (104,999) 319,000 Change in real estate in development, net (7,504) (34,551) ---------- ---------- Net cash used in investing activities (22,848,017) (31,891,828) ---------- ---------- FINANCING ACTIVITIES Net increase in demand deposits, NOW, and passbook savings 2,791,855 488,286 Net increase in time deposits 25,029,937 6,562,589 Net increase (decrease) in FHLB advances (7,539,873) 7,462,462 Repayment of notes payable (600,000) (200,000) Proceeds from exercise of stock options 4,519 0 Cash paid in lieu of fractional shares (2,141) (1,349) ---------- ---------- Net cash provided by financing activities 19,684,297 14,311,988 ---------- ---------- Net decrease in cash and cash equivalents (3,108,338) (7,845,566) Cash and cash equivalents at beginning of period 9,580,430 13,790,216 ---------- ---------- Cash and cash equivalents at end of period $6,472,092 $5,944,650 ---------- ---------- ---------- ----------
See accompanying notes to consolidated financial statements PAGE 3 Part I Financial Information Item 1 PVF CAPITAL CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1997 AND 1996 (UNAUDITED) 1. The accompanying consolidated interim financial statements were prepared in accordance with regulations of the Securities and Exchange Commission for Form 10-Q. All information in the consolidated interim financial statements is unaudited except for the June 30, 1997 consolidated statement of financial condition which was derived from the Corporation's audited financial statements. Certain information required for a complete presentation in accordance with generally accepted accounting principles has been condensed or omitted. However, in the opinion of management, these interim financial statements contain all adjustments, consisting only of normal recurring accruals, necessary to fairly present the interim financial information. The results of operations for the three and six months ended December 31, 1997 are not necessarily indicative of the results to be expected for the entire year ending June 30, 1998. The results of operations for PVF Capital Corp. ("PVF" or the "Company") for the periods being reported have been derived primarily from the results of operation of Park View Federal Savings Bank (the "Bank"). PVF Capital Corp.'s common stock is traded on the NASDAQ SMALL-CAP ISSUES under the symbol PVFC. 2. Legislation was signed into law on September 30, 1996 to recapitalize the Savings Association Insurance Fund ("SAIF") that required SAIF-insured savings institutions to pay a one-time special assessment of 65.7 cents for every $100 of deposits. This assessment was charged against earnings for the quarter ended September 30, 1996 and resulted in a pre-tax charge to the Company of approximately $1,708,000 and is reflected in the Statement of Operation for the six-month period ended December 31, 1996. 3. PVF Holdings Inc., a newly formed subsidiary of PVF Capital Corp., made an investment in a company that will provide professional financial planning services to both individuals and small businesses throughout the Park View Federal branch system. 4. Cash and cash equivalents consist of the following: December 31, 1997 June 30, 1997 ----------------- ------------- Cash and amounts due from depository institutions $ 3,248,252 $ 7,760,029 Interest-bearing deposits 348,840 445,401 Federal funds sold 2,875,000 1,375,000 ----------- ----------- $ 6,472,092 $ 9,580,430 ----------- ----------- ----------- ----------- Page 4 Part I Financial Information Item 1 5. Recently Issued Accounting Standards In February 1997, the FASB issued SFAS No. 128, Earnings per Share, which supersedes Accounting Principles Board (APB) No. 15, Earnings per Share, and replaces the presentation of primary and fully diluted earnings per share with basic and diluted earnings per share. SFAS No. 128 was issued to simplify the computation of earnings per share and make the U.S. Standard more compatible with the earnings per share standards of other countries and that of the International Accounting Standards Committee (ISAC). SFAS No. 128 is effective for financial statements for both interim and annual periods ending after December 15, 1997. SFAS No. 130, "Reporting Comprehensive Income" was issued in June, 1997 and is effective for fiscal years beginning after December 15, 1997. The Statement requires additional reporting of items that affect comprehensive income but not net income. Examples of these items relevant to the Company include unrealized gains and losses on securities. Upon its adoption, this statement will result in additional financial statement disclosures. SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information" was issued in June, 1997 and is effective for fiscal years beginning after December 15, 1997. The statement requires financial disclosure and descriptive information about reportable operating segments. Upon its adoption, this statement will result in additional financial statement disclosures. Page 5 Part I Financial Information Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following analysis discusses changes in financial condition and results of operations at and for the three-month and six-month periods ended December 31, 1997 for PVF Capital Corp ("PVF" or the "Company") and Park View Federal Savings Bank (the "Bank"), its principal and wholly-owned subsidiary. FINANCIAL CONDITION Consolidated assets of PVF were $396.2 million as of December 31, 1997, an increase of approximately $23.1 million or 6.2% as compared to June 30, 1997. The Bank remained in regulatory capital compliance for tangible, core, and risk-based capital on a fully phased-in basis with capital levels of 7.32%, 7.32% and 10.53% respectively at December 31, 1997. During the six months ended December 31, 1997, the Company's cash and cash equivalents, which consist of cash, interest-bearing deposits and federal funds sold, decreased $3.1 million or 32.4% as compared to June 30, 1997. The change in the Company's cash and cash equivalents consisted of a decrease in interest-bearing deposits of $0.1 million, a decrease in cash of $4.5 million and an increase in federal funds sold of $1.5 million. The net $26.3 million or 7.7% increase in loans receivable and mortgage-backed securities, during the six months ended December 31, 1997, resulted from an increase in loans receivable of $23.4 million and an increase in mortgage-backed securities of $2.9 million. The increase of $23.4 million in loans receivable included increases of $9.4 million in single family mortgage loans, $5.8 million in construction loans, $4.8 million in commercial loans, $1.7 million in home equity loans, $1.2 million in land loans, and a net increase of $0.5 million in all other mortgage and installment loans. The increase in mortgage-backed securities held to maturity of $2.9 million was the result of the purchase of a $3.0 million security less payments received of $0.1 million. The increase of $1.1 million in real estate owned ("REO")is the result of the foreclosure on two loans made to one borrower and the subsequent acquisition into REO of the fully developed building lots securing these loans. The increase in prepaid expenses and other assets of 1.9 million is primarily the result of the Bank's investment of $1.3 million in a low income affordable housing partnership along with a $0.3 million increase Page 6 Part I Financial Information Item 2 FINANCIAL CONDITION CONTINUED in Federal Reserve Bank adjustments and returned checks relating to NOW accounts. During the six months ended December 31, 1997, management decision to compete aggressively with market savings rates for additional deposits resulted in an increase of $27.7 million, or 9.6% in deposits. This $27.7 million increase in deposits along with the maturity of $6.0 million in agency investment securities and the decrease of $3.1 million in cash and cash equivalents were used to purchase $3.0 million in agency investment securities and $3.0 million in mortgage-backed securities available for sale, to repay $7.5 million in advances from the Federal Home Loan Bank of Cincinnati and $0.6 million in notes payable, and fund the net growth of $23.4 million in the loan portfolio. The increase in advances from borrowers for taxes and insurance of $0.3 million is attributable to timing differences between the collection and payment of escrow funds. The increase of $0.7 million in accrued expenses and other liabilities is the result of an obligation by the Bank to make future installment payments on its investment in the low income affordable housing limited partnership. RESULTS OF OPERATIONS Three months ended December 31, 1997, compared to three months ended December 31, 1996. PVF's net income is dependent primarily on its net interest income, which is the difference between interest earned on its loans and investments and interest paid on interest-bearing liabilities. Net interest income also includes amortization of loan origination fees, net of origination costs. PVF's net income is also affected by the generation of non-interest income, which primarily consists of loan servicing income, service fees on deposit accounts, and gains on the sale of loans held for sale and mortgage-backed securities available for sale. Net interest income is determined by (i) the difference between yields earned on interest-earning assets and rates paid on interest-bearing liabilities ("interest-rate spread") and (ii) the relative amounts of interest-earning assets and interest-bearing liabilities. The Company's interest-rate spread is affected by regulatory, economic and competitive factors that influence interest rates, loan demand and deposit flows. In addition, net income is affected by the level of operating expenses and loan loss provisions. The Company's net income for the three months ended December 31, Page 7 Part I Financial Information Item 2 RESULTS OF OPERATION CONTINUED 1997 was $1,301,300 as compared to $1,181,200 for the prior year comparable period. This represents an increase of $120,100, or 10.2%, when compared with the prior year comparable period. Net interest income for the three months ended December 31, 1997 increased by $224,100 or 6.3%, as compared to the prior year comparable period, primarily due to an increase of $907,000 or 11.8% in interest income that resulted from an increase of $46.9 million in the average balance of the loan and mortgage-backed securities portfolios and an increase in the average balance of the investment portfolio of $0.3 million. This increased balance was offset partially by a 17 basis point decrease in the average return on interest-earning assets from the prior year comparable period. The average balance on deposits and advances increased by $43.5 million from the prior year comparable period. This increased balance, along with a 14 basis point increase in the average cost of funds for the current period, resulted in an overall increase in interest expense of $682,900 or 16.7%. The Company's net interest income increased despite a decrease of 31 basis points in the Company's interest-rate spread during the current period as compared to the prior year comparable period due to balance sheet growth in both interest-earning assets and interest-bearing liabilities. For the three months ended December 31, 1997, a provision for loan losses of $50,000 was recorded, while no provision was necessary for the three months ended December 31, 1996. Provisions are based on management's analysis of the various factors which affect the loan portfolio and management's desire to maintain the allowance for loan losses at a level considered adequate to provide for probable future loan losses. During the three months ended December 31, 1997, management increased its unallocated reserves for loan losses, based primarily on growth of the loan portfolio, along with prevailing economic conditions and other factors deemed relevant. At December 31, 1997, the allowance for loan losses was $2.6 million, which represented 85.0% of nonperforming loans and 0.7% of net loans. For the three months ended December 31, 1997, noninterest income increased $72,200 or 24.5% from the prior year comparable period. This was primarily attributable to an increase of $46,600 or 30.7% in income from mortgage-banking activities that resulted from an increase in gains on the sale of loans held for sale and mortgage-backed securities available for sale of $55,500 from the prior year comparable period and a decrease in net servicing income in the current period attributable to the amortization of the servicing asset resulting from the application of FASB 125, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. During these periods, PVF Page 8 Part I Financial Information Item 2 RESULTS OF OPERATIONS CONTINUED pursued a strategy of originating long-term, fixed-rate loans pursuant to Federal Home Loan Mortgage Corporation ("FHLMC") and Federal National Mortgage Association ("FNMA") guidelines and selling such loans to the FHLMC or the FNMA, while retaining the servicing. Other noninterest income, net, increased by $18,000 or 78.2% from the previous year's comparable period primarily due to an increase in rental income in the current period. Noninterest expense for the three months ended December 31, 1997 increased by $36,200 or 1.8% from the prior year comparable period. This was primarily the result of a $66,100, or 6.1% increase in compensation and benefits attributable to increased staffing, employee 401K benefits, incentive bonuses paid, and salary and wage adjustments. The federal income tax provision for the three month period ended December 31, 1997 increased to an effective rate of 34.9% for the current period from an effective rate of 34.00% for the prior year comparable period. RESULTS OF OPERATIONS Six months ended December 31, 1997, compared to six months ended December 31, 1996. PVF's net income is dependent primarily on its net interest income, which is the difference between interest earned on its loans and investments and interest paid on interest-bearing liabilities. Net interest income also includes amortization of loan origination fees, net of origination costs. PVF's net income is also affected by the generation of non-interest income, which primarily consists of loan servicing income, service fees on deposit accounts, and gains on the sale of loans held for sale and mortgage-backed securities available for sale. Net interest income is determined by (i) the difference between yields earned on interest-earning assets and rates paid on interest-bearing liabilities ("interest-rate spread") and (ii) the relative amounts of interest-earning assets and interest-bearing liabilities. The Company's interest-rate spread is affected by regulatory, economic and competitive factors that influence interest rates, loan demand and deposit flows. In addition, net income is affected by the level of operating expenses and loan loss provisions. The Company's net income for the six months ended December 31, 1997 was $2,562,600 as compared to $1,170,300 for the prior year comparable period. This represents an increase of $1,392,300, or 119.0%, when compared with the prior year comparable period. The Page 9 Part I Financial Information Item 2 RESULTS OF OPERATION CONTINUED increase in the current period is primarily due to a one-time charge in the prior period of approximately $1,708,000 or $1,127,000 after tax, representing a special assessment of 65.7 basis points on the Bank's deposits held as of March 31, 1995, as a result of the recently enacted legislation to recapitalize the Savings Association Insurance Fund. The Company's income excluding this assessment for the six-month period ended December 31, 1996 was $2,297,300. Comparing this amount to earnings from operations for the six month period ended December 31, 1997 resulted in an increase of $265,300, or 11.5%, for the current year comparable period. Net interest income for the six months ended December 31, 1997 increased by $216,300 or 3.0%, primarily due to an increase of $1,566,600 or 10.3% in interest income that resulted from an increase of $44.4 million in the average balance of interest earning assets. This increased balance was offset partially by a 24 basis point decrease in the average return on interest-earning assets from the prior year comparable period. The average balance on deposits and advances increased by $40.2 million from the prior year comparable period. This increased balance along with an 18 basis point increase in the average cost of funds for the current period resulted in an overall increase in interest expense of $1,350,300 or 16.6%. Despite a decrease of 42 basis points in the Bank's interest-rate spread during the current period, as compared to the prior year comparable period, the Bank's net interest income increased due to balance sheet growth in both interest-earning assets and interest-bearing liabilities. For the six months ended December 31, 1997, a provision for loan losses of $95,000 was recorded, while no provision was necessary for the six months ended December 31, 1996. Provisions are based on management's analysis of the various factors which affect the loan portfolio and management's desire to maintain the allowance for loan losses at a level considered adequate to provide for probable future loan losses. During the six months ended December 31, 1997, management increased its unallocated reserves for loan losses based primarily on growth of the loan portfolio, along with prevailing economic conditions and other factors deemed relevant. At December 31, 1997, the allowance for loan losses was $2.6 million, which represented 85.0% of nonperforming loans and 0.7% of net loans. For the six months ended December 31, 1997 noninterest income increased $263,600 or 49.9% from the prior year comparable period. This was primarily attributable to an increase of $199,000 or 105.6% in income from mortgage-banking activities that resulted from an increase in gains on the sale of loans held for sale and mortgage-backed securities available for sale of Page 10 Part I Financial Information Item 2 RESULTS OF OPERATIONS CONTINUED $174,800 from the prior year comparable period and an increase in net servicing income in the current period. During these periods, PVF pursued a strategy of originating long-term, fixed-rate loans pursuant to Federal Home Loan Mortgage Corporation ("FHLMC") and Federal National Mortgage Association ("FNMA") guidelines and selling such loans to the FHLMC or the FNMA, while retaining the servicing. Other noninterest income, net, increased by $41,700 or 42.2% from the previous year's comparable period primarily due to an increase in rental income in the current period. Noninterest expense for the six months ended December 31, 1997 decreased by $1.7 million or 29.4% from the prior year comparable period. This was the result of the previously noted federal deposit insurance special assessment of $1,708,000. In addition, an $86,300 or 4.0% increase in compensation and benefits was attributable to increased staffing, employee 401K benefits, incentive bonuses paid, and salary and wage adjustments. The federal income tax provision for the six-month period ended December 31, 1997 was at an effective rate of 34.1% for the current period as compared to an effective rate of 34.6% for the prior year comparable period. LIQUIDITY AND CAPITAL RESOURCES The Bank is required by federal regulations to maintain specific levels of "liquid" assets consisting of cash and other eligible investments. The current level of liquidity required by the Office of Thrift Supervision is 4% of the sum of net withdrawable savings and borrowings due within one year. The Bank's liquidity at December 31, 1997 was 5.2%. Management believes the Bank has sufficient liquidity to meet its operational needs. Part II. Other Information Item 6. Exhibits and Reports on Form 8-K (a) PVF did not file any reports on Form 8-K during the quarter ended December 31, 1997. Page 11 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant had duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PVF Capital Corp. ----------------- (Registrant) Date: February 6, 1998 /s/ C. Keith Swaney ------------------ --------------------------------- C. Keith Swaney Vice President and Treasurer EX-27 2 EX-27 FDS
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE STATEMENT OF CONDITION AND THE STATEMENT OF OPERATION FOR THE PERIOD ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATMENTS. 1,000 6-MOS JUN-30-1998 JUL-01-1997 DEC-31-1997 3,248 349 2,875 0 0 10,996 10,984 365,500 2,767 396,214 316,006 18,500 9,795 23,075 0 0 27 28,811 396,214 16,155 610 0 16,765 8,346 9,465 7,300 95 0 4,100 3,888 0 0 0 2,563 0.99 0.93 3.520 2,689 417 0 0 2,682 17 7 2,767 2,767 0 2,538
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