- Net income of $1.6 million, boosted by strong mortgage
banking results
- Net interest margin expands 14 basis points to 3.21%
compared with the fiscal 2012 fourth quarter
- Mortgage banking revenue remains strong in lower
interest rate environment
- Company achieves its 12th consecutive quarterly
improvement in key asset quality metrics
- Core operating results continue to improve and reflect
the impact of the business transformation
- Capital ratios improve and continue to exceed
prescribed regulatory levels
PVF Capital Corp. (Nasdaq:PVFC), the parent company of Park View
Federal Savings Bank, announced net income of $1.6 million, or
$0.06 basic and diluted earnings per share, for the fiscal 2013
first quarter ended September 30, 2012. This improvement compares
with a net loss of $0.8 million, or $0.03 basic and diluted loss
per share, for the prior-year quarter and net income of $0.8
million, or $0.03 basic and diluted loss per share, for the fiscal
2012 fourth quarter ended June 30, 2012.
Robert J. King, Jr., President and Chief Executive Officer,
commented, "We continue to make progress across the board with our
mortgage banking activities, asset quality improvement and
transformation to a stronger commercial, small-business and
relationship-oriented bank. The improvement in our balance sheet
and our continued compliance with the prescribed capital levels
will enable us to remain on track to deliver long-term profitable
growth."
Net Interest Income Continues to Improve
Net interest income improved during the quarter ended September
30, 2012, totaling $5.8 million and increasing $0.1 million, or
2.2%, from the fiscal 2012 fourth quarter ended June 30, 2012. This
improvement over the prior quarter is attributable to the continued
strategic improvement in the mix of average earning assets which
resulted in a higher earning asset yield, while the Company was
able to continue to lower its funding costs in this low interest
rate environment.
Compared with the year-ago quarter ended September 30, 2011, net
interest income for the current quarter increased $0.6 million, or
12.3%. This was accomplished with a smaller but more efficient
balance sheet as compared to a year ago, reflecting the Company's
successful multi-year strategic plan to strengthen and diversify
its balance sheet and improve its risk profile.
Despite the impact of low interest rates on earning asset
yields, the Company's strategy allowed it to improve its net
interest margin for the period ended September 30, 2012 to 3.21%,
compared with 3.07% and 2.80% for the quarters ended June 30, 2012
and September 30, 2011, respectively.
Mortgage Banking Revenues Increase, Improving
Non-interest Income
Non-interest income totaled $3.3 million for the quarter ended
September 30, 2012, an increase of $1.6 million, or 96.9%, from the
quarter ended September 30, 2011. This improvement is the result of
growth in net revenue from mortgage banking activities, which
totaled $3.1 million, an increase of $2.1 million from the year-ago
quarter. Under the lower interest rate environment, the Company
capitalized upon its significant residential mortgage origination
capabilities, resulting in an increase of $2.2 million from the
prior-year period in the gain on sale of mortgages. Included in the
mortgage banking results, and partially offsetting the strong gain
on sale revenue, is a $0.6 million charge to the impairment
valuation allowance recognized against the carrying value of the
Company's capitalized mortgage servicing rights. This charge
results from the fact that the majority of mortgage lending
activities in the current environment continues to involve
refinancing, which is highly correlated to interest rate movements
and levels, and negatively impacts the fair value of mortgage
servicing rights. Partially offsetting the higher mortgage banking
revenues are higher credit-related costs associated with other real
estate owned, which increased $0.3 million from a year ago and
totaled $0.3 million. The credit-related costs resulted from
updated valuations on other real estate owned and losses on
property dispositions. Also, the Company did not sell the
guaranteed portions on its Small Business Administration ("SBA")
loan originations during the quarter. This compares with SBA gains
of $0.2 million in the year-ago quarter. As of September 30, 2012,
the Company has $3.1 million of SBA loans which are closed and
fully funded, as the Company continues to build and grow this
business.
In comparison with the fourth quarter of fiscal 2012,
non-interest income increased $0.2 million, primarily due to higher
mortgage banking revenues of $0.1 million, offset by lower SBA
gains of $0.2 million, and lower credit-related costs of $0.5
million in the current period.
Asset Quality Steadily Improves
For the 12th consecutive quarter, the Company continued to make
progress with respect to its multi-year strategic plan to improve
the Bank's balance sheet and reduce problem assets. During the
quarter, nonperforming loans decreased $2.0 million, or 10.2%, to
$17.9 million, compared with the fourth quarter of fiscal 2012,
while other real estate owned decreased $0.5 million to $7.2
million, resulting in total nonperforming assets of $25.1 million.
This was a decrease of $2.5 million, or 9.2%, compared with total
nonperforming assets of $27.6 million at June 30, 2012, and a
decline of $30.8 million, or 55.1%, compared with a year ago.
As was previously announced during the quarter, the Office of
the Comptroller of the Currency terminated Park View Federal
Savings Bank's regulatory order which had been in place since
October 2009. The Company continues to exceed the asset quality
metrics established by the terminated regulatory order. The
classified assets to core capital plus general valuation allowance
ratio improved to 44.7% at September 30, 2012, compared with 63.5%
at the end of the prior-year quarter. The Company also reduced its
level of classified assets plus special mention assets to core
capital plus general valuation allowance ratio to 51.7% at
September 30, 2012, versus 81.9% a year ago.
The provision for loan losses totaled $1.1 million for the
current quarter compared with $1.5 million for each of the quarters
ended June 30, 2012 and September 30, 2011. The lower provision
level in the current quarter reflects the continued progress in
improving overall asset quality and reducing the level of problem
loans.
The allowance for loan losses at September 30, 2012 is $16.1
million, or 2.9% of total loans. This compares with an allowance of
$16.1 million, or 2.9% of total loans, at June 30, 2012, and $29.6
million, or 5.2% of total loans, at September 30, 2011. The
allowance's coverage of nonperforming loans improved to 90.3% at
September 30, 2012, compared with 80.7% at June 30, 2012, and 61.6%
at September 30, 2011.
Non-interest Expense Stable
Non-interest expense totaled $6.5 million for the current
quarter, compared with $6.6 million for the fiscal 2012 fourth
quarter and $6.2 million for the year-ago quarter. The Company
continues to manage its expense level while improving the quality
of its balance sheet and developing the infrastructure and
personnel necessary to transform the business and operations.
Pre-tax, Pre-credit Provision Income Improves
Sequentially
One metric that management believes is useful in analyzing
performance is pre-tax, pre-credit provision income, which adjusts
earnings to exclude provision expense, credit-related charges
involving the valuation and disposition of other real estate owned,
and securities gains or losses. In addition, earnings are adjusted
for items identified by management to be outside of ordinary
banking activities and/or by items that, while they may be
associated with ordinary banking activities, are so unusually large
that their outsized impact is believed by management at the time to
be infrequent or short-term in nature, which management believes
may distort the Company's underlying performance trends. The
pre-tax, pre-credit provision income for the quarter ended
September 30, 2012 was $3.0 million, compared with income of $2.8
million for the quarter ended June 30, 2012, and income of $0.6
million for the prior-year quarter.
A reconciliation of net earnings reported under generally
accepted accounting principles ("GAAP") to pre-tax, pre-credit
provision income (a non-GAAP metric) for the current and trailing
four quarters ended September 30, 2012, is as follows (dollars in
millions):
|
|
|
|
|
|
|
Sept. 30, 2012 |
June 30, 2012 |
March 31, 2012 |
Dec. 31, 2011 |
Sept. 30, 2011 |
|
|
|
|
|
|
Net income (loss) |
$ 1.6 |
$ 0.8 |
$ 0.4 |
$ (1.8) |
$ (0.8) |
Federal income tax provision (benefit) |
0.0 |
(0.2) |
0.0 |
0.0 |
0.0 |
Pre-tax income (loss) |
1.6 |
0.6 |
0.4 |
(1.8) |
(0.8) |
Provision for loan losses |
1.1 |
1.5 |
2.0 |
2.0 |
1.5 |
Loss/write-down (gain) on real estate
owned |
0.3 |
0.7 |
0.6 |
1.2 |
(0.1) |
|
|
|
|
|
|
Pre-tax, pre-credit provision income |
$ 3.0 |
$ 2.8 |
$ 3.0 |
$ 1.4 |
$ 0.6 |
Pre-tax, pre-credit provision income improved by approximately
$0.2 million compared with the June 30, 2012 period, as a result of
higher net interest income of $0.1 million, lower non-interest
expense of $0.1 million and higher mortgage banking revenue of $0.1
million, partially offset by lower SBA gains of $0.2 million.
Bank Capital Ratios Strengthen
The Bank's capital ratios have continued to exceed the
requirements prescribed under the recently terminated regulatory
order. As of September 30, 2012, the ratio of tier one (core)
capital to adjusted total assets stood at 9.16% and total
risk-based capital to risk-weighted assets was 13.34%. The
requirements under the recently terminated regulatory order were
8.00% and 12.00%, respectively.
About PVF Capital Corp.
Park View Federal is a wholly-owned subsidiary of PVF Capital
Corp. and operates 16 full-service offices located throughout the
Greater Cleveland area. For additional information, visit our web
site at parkviewfederal.com. PVF Capital Corp.'s common
shares trade on the NASDAQ Capital Market under the symbol
PVFC.
Use of Non-GAAP Financial Measures
This release includes certain financial information determined
by methods other than in accordance with GAAP. One non-GAAP
performance metric that management believes is useful in analyzing
underlying performance trends is pre-tax, pre-credit provision
income. This is the level of earnings adjusted to exclude the
impact of:
- provision expense and credit related charges involving the
valuation and disposition of other real estate owned, which are
excluded because its absolute level is elevated and volatile in
times of economic stress;
- available-for-sale and other securities gains/losses, which are
excluded because in times of economic stress securities market
valuations may also become particularly volatile; and
- certain items identified by management to be outside of
ordinary banking activities, and/or by items that, while they may
be associated with ordinary banking activities, are so unusually
large that their outsized impact is believed by management at the
time to be infrequent or short-term in nature, which management
believes may distort the Company's underlying performance
trends.
Non-GAAP measures are not in accordance with, nor are they a
substitute for, GAAP measures. The Company's non-GAAP financial
measures are not meant to be considered in isolation or as a
substitute for the comparable GAAP financial measures, and should
be read only in conjunction with the Company's consolidated
financial statements prepared in accordance with GAAP. While the
Company believes that non-GAAP financial measures provide useful
supplemental information to investors, there are very significant
limitations associated with their use. Non-GAAP financial measures
are not prepared in accordance with GAAP, may not be reported by
all of the Company's competitors and may not be directly comparable
to similarly titled measures of the Company's competitors due to
potential differences in the exact methods of calculation. The
Company compensates for these limitations by using these non-GAAP
financial measures as supplements to GAAP financial measures and by
reviewing the reconciliations of the non-GAAP financial measures to
their most comparable GAAP financial measures.
Cautionary Note on Forward-Looking
Statements
This press release contains statements that are forward-looking,
as that term is defined by the Private Securities Litigation Act of
1995 or the Securities and Exchange Commission in its rules,
regulations and releases. The Company intends that such
forward-looking statements be subject to the safe harbors created
thereby. All forward-looking statements are based on current
expectation regarding important risk factors including, but not
limited to, interest rate changes, real estate values, continued
softening in the economy, which could materially impact credit
quality trends and the ability to generate loans, changes in the
mix of the Company's business, competitive pressures, changes in
accounting, tax or regulatory practices or requirements and those
risk factors detailed in the Company's periodic reports and
registration statements filed with the Securities and Exchange
Commission. Accordingly, actual results may differ from those
expressed in the forward-looking statements, and the making of such
statements should not be regarded as a representation by the
Company or any other person that results expressed therein will be
achieved. This press release contains time-sensitive information
that reflects management's best analysis only as of the date of
this document. The Company does not undertake an obligation to
publicly update or revise any forward-looking statements to reflect
new events, information or circumstances, or otherwise. Further
information concerning issues that could materially affect
financial performance related to forward-looking statements can be
found in the Company's periodic filings with the Securities and
Exchange Commission.
|
|
|
|
|
|
PVF CAPITAL
CORP. |
CONSOLIDATED STATEMENTS
OF FINANCIAL CONDITION |
(Unaudited) |
|
|
|
|
September 30, |
June 30, |
|
2012 |
2012 |
|
|
|
ASSETS |
|
|
Cash and amounts due from financial
institutions |
$ 16,903,187 |
$ 5,840,608 |
Interest-bearing deposits |
97,672,255 |
114,269,532 |
Total cash and cash equivalents |
114,575,442 |
120,110,140 |
Securities available for sale |
38,280,551 |
38,658,044 |
Loans receivable held for sale, net |
19,765,946 |
25,062,786 |
Loans receivable, net of allowance of
$16,135,640 and $16,052,865, respectively |
543,186,276 |
541,627,515 |
Office properties and equipment, net |
7,286,062 |
7,237,165 |
Real estate owned, net |
7,232,119 |
7,733,578 |
Federal Home Loan Bank stock |
12,811,100 |
12,811,100 |
Bank-owned life insurance |
23,696,129 |
23,648,663 |
Prepaid expenses and other assets |
12,289,670 |
14,560,882 |
Total assets |
$ 779,123,295 |
$ 791,449,873 |
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
Liabilities |
|
|
Non-interest-bearing deposits |
$ 57,769,225 |
$ 51,786,588 |
Interest-bearing deposits |
588,381,234 |
604,192,552 |
Total deposits |
646,150,459 |
655,979,140 |
Note payable |
1,019,445 |
1,046,111 |
Long-term advances from the Federal Home
Loan Bank |
35,000,000 |
35,000,000 |
Advances from borrowers for taxes and
insurance |
6,955,246 |
4,469,292 |
Accrued expenses and other
liabilities |
17,167,777 |
24,224,709 |
Total liabilities |
706,292,926 |
720,719,252 |
|
|
|
Stockholders' equity |
|
|
Serial preferred stock, $.01 par value,
1,000,000 shares authorized; none issued |
-- |
-- |
Common stock, $.01 par value, 65,000,000
shares authorized; 26,392,195 and 26,217,796 shares issued |
263,922 |
262,178 |
Additional paid-in capital |
101,297,166 |
100,897,560 |
Retained earnings (accumulated
deficit) |
(24,568,768) |
(26,119,855) |
Accumulated other comprehensive income
(loss) |
(324,804) |
(472,116) |
Treasury stock at cost, 472,725 shares,
respectively |
(3,837,147) |
(3,837,147) |
Total stockholders' equity |
72,830,369 |
70,730,621 |
Total liabilities and stockholders'
equity |
$ 779,123,295 |
$ 791,449,873 |
|
|
|
|
|
|
PVF CAPITAL
CORP. |
CONSOLIDATED STATEMENT
OF OPERATIONS |
(Unaudited) |
|
|
|
|
Three Months Ended |
|
September 30, |
|
2012 |
2011 |
Interest and dividends income |
|
|
Loans |
$ 6,986,437 |
$ 7,104,267 |
Mortgage-backed securities |
80,231 |
49,721 |
Federal Home Loan Bank stock
dividends |
135,374 |
127,760 |
Securities |
141,238 |
24,217 |
Federal funds sold and interest-bearing
deposits |
68,295 |
92,498 |
Total interest and dividends income |
7,411,575 |
7,398,463 |
|
|
|
Interest expense |
|
|
Deposits |
1,325,728 |
1,949,047 |
Long-term borrowings |
270,706 |
272,440 |
Total interest expense |
1,596,434 |
2,221,487 |
|
|
|
Net interest income |
5,815,141 |
5,176,976 |
Provision for loan losses |
1,050,000 |
1,500,000 |
Net interest income after provision for
loan losses |
4,765,141 |
3,676,976 |
|
|
|
Non-interest income |
|
|
Service charges and other fees |
180,392 |
178,818 |
Gain on sale of mortgage loans |
4,031,121 |
1,827,435 |
Income (loss) from mortgage servicing
fees |
(904,874) |
(817,270) |
Gain (loss) on sale of SBA loans |
(3,686) |
221,218 |
Increase in cash surrender value of
bank-owned life insurance |
47,466 |
62,699 |
Gain (loss) on real estate owned |
(17,881) |
140,112 |
Provision for real estate owned
losses |
(233,719) |
(69,400) |
Other, net |
192,200 |
127,507 |
Total non-interest income |
3,291,019 |
1,671,119 |
|
|
|
Non-interest expense |
|
|
Compensation and benefits |
3,109,759 |
2,894,698 |
Office occupancy and equipment |
569,589 |
598,910 |
FDIC insurance |
432,239 |
428,699 |
Professional and legal |
120,000 |
115,000 |
Outside services |
774,845 |
495,667 |
Maintenance contracts |
174,840 |
196,334 |
Franchise tax |
196,707 |
225,428 |
Real estate owned and collection
expense |
385,504 |
613,859 |
Other |
741,590 |
625,275 |
Total non-interest expense |
6,505,073 |
6,193,870 |
|
|
|
Income (loss) before federal income
taxes |
1,551,087 |
(845,775) |
Federal income tax provision (benefit) |
-- |
(25,178) |
Net income (loss) |
$ 1,551,087 |
$ (820,597) |
|
|
|
Basic earnings (loss) per share |
$ 0.06 |
$ (0.03) |
Diluted earnings (loss) per share |
$ 0.06 |
$ (0.03) |
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL
HIGHLIGHTS |
|
|
|
|
|
|
|
At or for the
three months ended |
(dollars in thousands except per
share data) |
September 30, |
June 30, |
March 31, |
December 31, |
September 30, |
Balance Sheet Data: |
2012 |
2012 |
2012 |
2011 |
2011 |
Total assets |
$ 779,123 |
$ 791,450 |
$ 806,472 |
$ 794,823 |
$ 780,013 |
Loans receivable |
559,322 |
557,680 |
563,557 |
564,036 |
567,812 |
Allowance for loan losses |
16,136 |
16,053 |
16,914 |
17,515 |
29,553 |
Loans receivable held for sale, net |
19,766 |
25,063 |
16,386 |
8,221 |
12,857 |
Cash and cash equivalents |
114,575 |
120,110 |
134,496 |
151,850 |
150,272 |
Securities available for sale |
38,281 |
38,658 |
40,908 |
22,595 |
7,805 |
Deposits |
646,150 |
655,979 |
667,198 |
658,632 |
648,522 |
Borrowings |
36,019 |
36,046 |
36,073 |
36,099 |
36,126 |
Stockholders' equity |
72,830 |
70,731 |
69,768 |
68,949 |
70,571 |
Nonperforming loans |
17,864 |
19,900 |
23,542 |
30,313 |
47,972 |
Other nonperforming assets |
7,232 |
7,734 |
9,552 |
9,995 |
7,925 |
Tangible common equity ratio |
9.35% |
8.94% |
8.65% |
8.67% |
9.05% |
Book value per share |
$2.81 |
$2.74 |
$2.70 |
$2.69 |
$2.75 |
Common shares outstanding at period end |
25,919,470 |
25,820,424 |
25,820,424 |
25,669,718 |
25,669,718 |
|
|
|
|
|
|
Operating Data: |
|
|
|
|
|
Interest income |
$ 7,412 |
$ 7,428 |
$ 7,540 |
$ 7,481 |
$ 7,399 |
Interest expense |
1,596 |
1,737 |
1,861 |
2,055 |
2,222 |
|
|
|
|
|
|
Net interest income before provision for loan
losses |
5,815 |
5,691 |
5,679 |
5,426 |
5,177 |
Provision for loan losses |
1,050 |
1,500 |
2,016 |
1,966 |
1,500 |
|
|
|
|
|
|
Net interest income after provision for loan
losses |
4,765 |
4,191 |
3,663 |
3,460 |
3,677 |
Non-interest income |
3,291 |
3,043 |
3,275 |
1,126 |
1,671 |
Non-interest expense |
6,505 |
6,602 |
6,518 |
6,343 |
6,194 |
|
|
|
|
|
|
Income (loss) before federal income
taxes |
1,551 |
632 |
420 |
(1,757) |
(846) |
Federal income tax expense (benefit) |
-- |
(194) |
-- |
-- |
(25) |
|
|
|
|
|
|
Net income (loss) |
$ 1,551 |
$ 826 |
$ 420 |
$ (1,757) |
$ (821) |
|
|
|
|
|
|
Basic earnings (loss) per share |
$ 0.06 |
$ 0.03 |
$ 0.02 |
$ (0.07) |
$ (0.03) |
Diluted earnings (loss) per share |
$ 0.06 |
$ 0.03 |
$ 0.02 |
$ (0.07) |
$ (0.03) |
|
|
|
|
|
|
Performance Ratios: |
|
|
|
|
|
Return on average assets |
0.78% |
0.41% |
0.21% |
(0.89%) |
(0.42%) |
Return on average equity |
8.79% |
4.71% |
2.42% |
(10.07%) |
(4.63%) |
Net interest margin |
3.21% |
3.07% |
3.10% |
2.97% |
2.80% |
Interest rate spread |
3.15% |
2.99% |
3.04% |
2.90% |
2.70% |
Efficiency ratio |
68.10% |
70.69% |
68.14% |
82.10% |
83.62% |
Stockholders' equity to total assets (all
tangible) |
9.35% |
8.94% |
8.65% |
8.67% |
9.05% |
|
|
|
|
|
|
Asset Quality Ratios: |
|
|
|
|
|
Nonperforming assets to total assets |
3.22% |
3.49% |
4.10% |
5.07% |
7.17% |
Nonperforming loans to total loans |
3.19% |
3.57% |
4.18% |
5.37% |
8.45% |
Allowance for loan losses to total loans |
2.88% |
2.88% |
3.00% |
3.11% |
5.20% |
Allowance for loan losses to nonperforming
loans |
90.32% |
80.67% |
71.85% |
57.78% |
61.60% |
Net charge-offs to average loans,
annualized |
0.67% |
1.64% |
1.86% |
9.90% |
1.33% |
|
|
|
|
|
|
Park View Federal Regulatory Capital
Ratios: |
|
|
|
|
|
Ratio of tangible capital to adjusted total
assets |
9.16% |
8.74% |
8.55% |
8.23% |
8.62% |
Ratio of tier one (core) capital to
adjusted total assets |
9.16% |
8.74% |
8.55% |
8.23% |
8.62% |
Ratio of tier one risk-based capital to
risk-weighted assets |
12.08% |
11.83% |
11.66% |
11.25% |
11.68% |
Ratio of total risk-based capital to
risk-weighted assets |
13.34% |
13.10% |
12.93% |
12.52% |
12.95% |
|
|
|
|
|
|
CONTACT: James H. Nicholson
Chief Financial Officer
440-248-7171
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