##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D. C. 20549
 FORM 10-Q
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended September 30, 2007.
 o
    
    Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 Commission File Number 0-24948
 PVF Capital Corp.
 (Exact name of registrant as specified in its charter)
 Ohio
    
    34  1659805(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)30000 Aurora Road, Solon, Ohio
    
    44139(Address of principal executive offices)
    
    (Zip Code)
 
  
   þ o
  o þ o
  o þ
  Common Stock, $0.01 Par Value
    
    7,772,292(Class)
    
    (Outstanding at November 7, 2007)




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##### 



PVF CAPITAL CORP.
  PagePart I
    
    Financial InformationItem 1
    
    Financial StatementsConsolidated Statements of Financial
Condition, September 30, 2007 (unaudited)
and June 30, 2007.
    
    
    1Consolidated Statements of Operations
for the three months ended
September 30, 2007 and 2006 (unaudited).
    
    
    2Consolidated Statements of Cash Flows
for the three months ended September 30,
2007 and 2006 (unaudited).
    
    
    3Notes to Consolidated Financial
Statements (unaudited).
    
    
    4Item 2
    
    Managements Discussion and Analysis of
Financial Condition and Results of
Operations
    
    
    9Liquidity and Capital Resources
    
    
    16Item 3
    
    Quantitative and Qualitative Disclosures
about Market Risk
    
    
    17Item 4
    
    Controls and Procedures
    
    
    17Part II
    
    Other Information
    
    
    18EX-31.1EX-31.2EX-32




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PVF CAPITAL CORP.
 
 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 September 30,
    
    
    June 30,2007
    
    
    2007unauditedASSETSCash and cash equivalents:Cash and amounts due from depository institutions
    
    $
    3,965,731
    
    
    $
    20,293,042Interest bearing deposits
    
    
    1,174,613
    
    
    
    622,537Federal funds sold
    
    
    8,434,000
    
    
    
    7,542,000Total cash and cash equivalents
    
    
    13,574,344
    
    
    
    28,457,579Securities held to maturity (fair values of $58,436,323 and
$58,068,865, respectively)
    
    
    58,000,000
    
    
    
    58,000,000Mortgage-backed securities held to maturity (fair values of
$24,309,350 and $24,302,048, respectively)
    
    
    25,225,229
    
    
    
    25,879,520Loans receivable held for sale, net
    
    
    7,842,999
    
    
    
    14,993,380Loans receivable, net of allowance of
$4,799,927 and $4,580,549, respectively
    
    
    721,738,582
    
    
    
    713,328,818Office properties and equipment, net
    
    
    10,210,633
    
    
    
    10,588,375Real estate owned, net
    
    
    3,077,208
    
    
    
    2,621,555Federal Home Loan Bank stock
    
    
    12,311,600
    
    
    
    12,311,600Bank owned life insurance
    
    
    22,463,433
    
    
    
    22,210,217Prepaid expenses and other assets
    
    
    13,368,707
    
    
    
    12,425,315Total Assets
    
    $
    887,812,735
    
    
    $
    900,816,359LIABILITIES AND STOCKHOLDERS EQUITYLiabilitiesDeposits
    
    $
    636,218,325
    
    
    $
    658,052,649Short-term advances from the Federal Home Loan Bank
    
    
    75,000,000
    
    
    
    65,000,000Line of credit
    
    
    2,110,000
    
    
    
    1,260,000Long-term advances from the Federal Home Loan Bank
    
    
    10,000,000
    
    
    
    10,000,000Repurchase agreement
    
    
    50,000,000
    
    
    
    50,000,000Subordinated debentures
    
    
    20,000,000
    
    
    
    20,000,000Advances from borrowers for taxes and insurance
    
    
    5,846,547
    
    
    
    8,546,669Accrued expenses and other liabilities
    
    
    16,891,055
    
    
    
    16,467,200Total Liabilities
    
    
    816,065,927
    
    
    
    829,326,518Stockholders EquitySerial preferred stock, none issued
    
    
    
    
    
    
    Common stock, $0.01 par value, 15,000,000 shares authorized;
8,236,249 and 8,204,536 shares issued, respectively
    
    
    82,362
    
    
    
    82,045Additional paid-in-capital
    
    
    68,961,793
    
    
    
    68,743,626Retained earnings
    
    
    6,539,800
    
    
    
    6,501,317Treasury Stock, at cost 472,725 shares
    
    
    (3,837,147
    )
    
    
    (3,837,147
    )Total Stockholders Equity
    
    
    71,746,808
    
    
    
    71,489,841Total Liabilities and Stockholders Equity
    
    $
    887,812,735
    
    
    $
    900,816,359
  Page 1




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PVF CAPITAL CORP.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 Three Months EndedSeptember 30,2007
    
    
    2006Interest and dividends incomeLoans
    
    $
    13,927,505
    
    
    $
    14,473,430Mortgage-backed securities
    
    
    318,688
    
    
    
    331,737Federal Home Loan Bank stock dividends
    
    
    201,708
    
    
    
    175,672Securities
    
    
    687,112
    
    
    
    605,863Fed funds sold and interest bearing deposits
    
    
    156,955
    
    
    
    123,216Total interest and dividend income
    
    
    15,291,968
    
    
    
    15,709,918Interest expenseDeposits
    
    
    7,315,879
    
    
    
    6,870,088Short-term borrowings
    
    
    937,102
    
    
    
    825,366Long-term borrowings
    
    
    791,939
    
    
    
    842,021Subordinated debt
    
    
    390,012
    
    
    
    379,350Total interest expense
    
    
    9,434,932
    
    
    
    8,916,825Net interest income
    
    
    5,857,036
    
    
    
    6,793,093Provision for loan losses
    
    
    593,400
    
    
    
    (160,000
    )Net interest income after provision for loan losses
    
    
    5,263,636
    
    
    
    6,953,093Noninterest income, netService and other fees
    
    
    222,898
    
    
    
    181,873Mortgage banking activities, net
    
    
    400,381
    
    
    
    449,388Increase in cash surrender value of bank owned life insurance
    
    
    253,216
    
    
    
    146,421Other, net
    
    
    (78,218
    )
    
    
    17,228Total noninterest income, net
    
    
    798,277
    
    
    
    794,910Noninterest expenseCompensation and benefits
    
    
    2,964,431
    
    
    
    3,124,712Office occupancy and equipment
    
    
    801,853
    
    
    
    861,790Other
    
    
    1,519,963
    
    
    
    1,484,258Total noninterest expense
    
    
    5,286,247
    
    
    
    5,470,760Income before federal income tax provision
    
    
    775,666
    
    
    
    2,277,243Federal income tax provision
    
    
    164,600
    
    
    
    714,148Net income
    
    $
    611,066
    
    
    $
    1,563,095Basic earnings per share
    
    $
    0.08
    
    
    $
    0.20Diluted earnings per share
    
    $
    0.08
    
    
    $
    0.20Dividends declared per common share
    
    $
    0.074
    
    
    $
    0.074
  Page 2




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PVF CAPITAL CORP.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 ThreeMonthsEndedSeptember30,2007
    
    
    2006Operating ActivitiesNet income
    
    $
    611,066
    
    
    $
    1,563,095Adjustments to reconcile net income to net cash from operating activitiesAmortization of premium on mortgage-backed securities
    
    
    6,330
    
    
    
    7,943Depreciation and amortization
    
    
    403,910
    
    
    
    449,637Provision for losses on loans
    
    
    593,400
    
    
    
    (160,000
    )Accretion of deferred loan origination fees, net
    
    
    (271,847
    )
    
    
    (413,028
    )(Gain) loss on sale of loans receivable held for sale, net
    
    
    (182,121
    )
    
    
    (22,025
    )(Gain) loss on disposal of real estate owned, net
    
    
    86,079
    
    
    
    (1,174
    )Market adjustment for loans held for sale
    
    
    (50,400
    )
    
    
    (156,000
    )Change in fair value of mortgage banking derivatives
    
    
    3,700
    
    
    
    (92,000
    )Stock compensation
    
    
    32,036
    
    
    
    31,067Federal Home Loan Bank stock dividends
    
    
    0
    
    
    
    (173,200
    )Change in accrued interest on securities, loans, and borrowings, net
    
    
    (447,718
    )
    
    
    (462,771
    )Origination of loans receivable held for sale, net
    
    
    (21,392,250
    )
    
    
    (20,642,366
    )Sale of loans receivable held for sale, net
    
    
    28,440,657
    
    
    
    20,310,254Increase in cash surrender value of bank owned life insurance
    
    
    (253,216
    )
    
    
    (146,421
    )Net change in other assets and other liabilities
    
    
    (2,441,146
    )
    
    
    (1,739,755
    )Net cash from operating activities
    
    
    5,138,480
    
    
    
    (1,646,744
    )Investing ActivitiesLoan repayments and originations, net
    
    
    (9,722,627
    )
    
    
    (2,291,534
    )Principal repayments on mortgage-backed securities held to maturity
    
    
    647,961
    
    
    
    820,873Mortgage-backed securities purchased
    
    
    0
    
    
    
    0Acquisition of bank owned life insurance
    
    
    0
    
    
    
    0Proceeds from sale of real estate owned
    
    
    449,578
    
    
    
    378,805Additions to office properties and equipment, net
    
    
    (26,168
    )
    
    
    (23,291
    )Net cash from investing activities
    
    
    (8,651,256
    )
    
    
    (1,115,147
    )Financing activitiesNet increase (decrease) in demand deposits, NOW, and passbook savings
    
    
    (9,924,711
    )
    
    
    (2,426,338
    )Net increase (decrease) in time deposits
    
    
    (11,909,613
    )
    
    
    12,353,722Repayment of long-term Federal Home Loan Bank advances
    
    
    0
    
    
    
    0Net increase (decrease) in short-term Federal Home Loan Bank advances
    
    
    10,000,000
    
    
    
    (11,000,000
    )Repurchase agreement
    
    
    0
    
    
    
    0Proceeds from issuance of subordinated debentures
    
    
    0
    
    
    
    10,000,000Net proceeds from (repayment of) line of credit
    
    
    850,000
    
    
    
    0Repayment of notes payable
    
    
    0
    
    
    
    (1,772,871
    )Purchase of treasury stock
    
    
    0
    
    
    
    0Proceeds from exercise of stock options
    
    
    253,254
    
    
    
    11,284Stock repurchased and retired
    
    
    (66,806
    )
    
    
    (11,282
    )Cash dividend paid
    
    
    (572,583
    )
    
    
    (570,995
    )Net cash from financing activities
    
    
    (11,370,459
    )
    
    
    6,583,520Net increase in cash and cash equivalents
    
    
    (14,883,235
    )
    
    
    3,821,629Cash and cash equivalents at beginning of period
    
    
    28,457,579
    
    
    
    19,738,269Cash and cash equivalents at end of period
    
    $
    13,574,344
    
    
    $
    23,559,898Supplemental disclosures of cash flow information:Cash payments of interest expense
    
    $
    9,445,388
    
    
    $
    8,866,778Cash payments of income taxes
    
    $
    0
    
    
    $
    0Supplemental noncash investing activity:Transfer of loans to real estate owned
    
    $
    991,310
    
    
    $
    0
  Page 3




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PVF CAPITAL CORP.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the Three Months Ended
September 30, 2007 and 2006
(Unaudited)
     Page 4




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Three months endedSeptember 30, 2007Total options outstandingWeightedAverageExerciseShares
    
    
    PriceOptions outstanding, beginning of period
    
    
    582,150
    
    
    $
    9.12Forfeited
    
    
    0
    
    
    
    0Exercised
    
    
    (36,149
    )
    
    
    7.01Granted
    
    
    0
    
    
    
    0Options outstanding, end of period
    
    
    546,001
    
    
    $
    9.26Options exercisable, end of period
    
    
    401,832
    
    
    $
    8.53
   Three months endedSeptember 30,2007
    
    2006Proceeds from options exercised
    
    $
    253,254
    
    
    $
    11,284Related tax benefit recognized
    
    
    0
    
    
    
    0Intrinsic value of options exercised
    
    $
    283,397
    
    
    $
    13,405
  Page 5




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Three months ended September 30,2007
    
    2006Income
    
    Shares
    
    Per Share
    
    Income
    
    Shares
    
    Per Share(Numerator)
    
    (Denominator)
    
    Amount
    
    (Numerator)
    
    (Denominator)
    
    AmountBasic EPS
Net Income
    
    $
    611,066
    
    
    
    7,747,683
    
    
    $
    0.08
    
    
    $
    1,563,095
    
    
    
    7,716,795
    
    
    $
    0.20Effect of Stock
Options
    
    
    
    
    
    
    218,054
    
    
    
    0.00
    
    
    
    
    
    
    
    107,020
    
    
    
    0.00Diluted EPS
Net Income
    
    $
    611,066
    
    
    
    7,965,737
    
    
    $
    0.08
    
    
    $
    1,563,095
    
    
    
    7,823,815
    
    
    $
    0.20
    September 30,
    
    
    June 30,2007
    
    
    2007Loans held for sale
    
    $
    7,842,999
    
    
    $
    15,043,780Less: Allowance to adjust to lower of cost or market
    
    
    
    
    
    
    (50,400
    )Loans held for sale, net
    
    $
    7,842,899
    
    
    $
    14,993,380
  Three Months EndedSeptember 30,2007
    
    
    2006Servicing rights:Beginning of period
    
    $
    4,426,296
    
    
    $
    4,806,836Additions
    
    
    334,495
    
    
    
    200,804Amortized to expense
    
    
    (330,444
    )
    
    
    (314,215
    )End of period
    
    $
    4,430,347
    
    
    $
    4,693,425
 Page 6




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Three Months EndedSeptember 30,2007
    
    
    2006Mortgage loan servicing fees
    
    $
    502,004
    
    
    $
    493,578Amortization and impairment of mortgage
loan servicing rights
    
    $
    (330,444
    )
    
    $
    (314,215
    )Market adjustments for loans held for sale
    
    
    50,400
    
    
    
    156,000Change in fair value of mortgage banking
derivatives
    
    
    (3,700
    )
    
    
    92,000Gain (loss) on sales of loans
    
    
    182,121
    
    
    
    22,025Mortgage banking activities, net
    
    $
    400,381
    
    
    $
    449,388
 5.
    
    Uncertain Income Tax Positions:
  6.
    
    Adoption of New Accounting Standards:
   Page 7




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##### Table of Contents



7.
    
    Effect of Newly Issued but Not Yet Effective Accounting Standards:
   Page 8




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MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  FORWARD-LOOKING STATEMENTS
   PENDING MERGER AGREEMENT
   Page 9




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PENDING MERGER AGREEMENT continued
  FINANCIAL CONDITION
     Page 10




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##### Table of Contents



FINANCIAL CONDITION continued
  September 30,
    
    
    June 30,2007
    
    
    2007Real estate mortgages:One-to-four family residential
    
    $
    162,129,664
    
    
    $
    163,297,830Home equity line of credit
    
    
    85,560,151
    
    
    
    85,092,530Multi-family residential
    
    
    47,547,601
    
    
    
    48,100,726Commercial
    
    
    183,696,017
    
    
    
    184,849,852Commercial equity line of credit
    
    
    34,939,923
    
    
    
    33,207,626Land
    
    
    75,086,511
    
    
    
    74,414,426Construction  residential
    
    
    66,808,070
    
    
    
    63,315,868Construction  multi-family
    
    
    5,884,695
    
    
    
    6,397,318Construction  commercial
    
    
    36,719,470
    
    
    
    31,610,187Total real estate mortgages
    
    
    698,372,102
    
    
    
    690,286,363Non-real estate loans
    
    
    30,916,597
    
    
    
    30,454,898Total loans receivable
    
    
    729,288,699
    
    
    
    720,741,261Net deferred loan origination fees
    
    
    (2,750,190
    )
    
    
    (2,831,894
    )Allowance for loan losses
    
    
    (4,799,927
    )
    
    
    (4,580,549
    )Loans receivable, net
    
    $
    721,738,582
    
    
    $
    713,328,818
    Page 11




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RESULTS OF OPERATIONS
    
    Three months ended September 30, 2007,
compared to three months ended
September 30, 2006.
     Page 12




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RESULTS OF OPERATIONS continued
  September 30, 2007
    
    
    September 30, 2006Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Yield/Cost
    
    
    Balance
    
    
    Interest
    
    
    Yield/CostInterest-earning assetsLoans (1)
    
    $
    725,558
    
    
    $
    13,927
    
    
    
    7.68
    %
    
    $
    741,484
    
    
    $
    14,473
    
    
    
    7.81
    %Mortgage-backed securities
    
    
    25,613
    
    
    
    319
    
    
    
    4.98
    %
    
    
    27,281
    
    
    
    332
    
    
    
    4.87
    %Investments and other
    
    
    82,139
    
    
    
    1,046
    
    
    
    5.09
    %
    
    
    79,014
    
    
    
    905
    
    
    
    4.58
    %Total interest-earning
assets
    
    
    833,310
    
    
    
    15,242
    
    
    
    7.34
    %
    
    
    847,779
    
    
    
    15,710
    
    
    
    7.41
    %Non-interest-earning assets
    
    
    52,293
    
    
    
    
    
    
    
    
    
    
    
    61,451Total Assets
    
    $
    885,603
    
    
    
    
    
    
    
    
    
    
    $
    909,230Interest-bearing liabilitiesDeposits
    
    $
    643,257
    
    
    $
    7,316
    
    
    
    4.55
    %
    
    $
    660,766
    
    
    $
    6,870
    
    
    
    4.16
    %Borrowings
    
    
    133,081
    
    
    
    1,729
    
    
    
    5.20
    %
    
    
    131,113
    
    
    
    1,667
    
    
    
    5.09
    %Subordinated debt
    
    
    20,000
    
    
    
    390
    
    
    
    7.80
    %
    
    
    20,000
    
    
    
    380
    
    
    
    7.60
    %Total interest-bearing
liabilities
    
    
    796,338
    
    
    
    9,435
    
    
    
    4.74
    %
    
    
    811,879
    
    
    
    8,917
    
    
    
    4.39
    %Non-interest-bearing
liabilities
    
    
    19,028
    
    
    
    
    
    
    
    
    
    
    
    27,867Total liabilities
    
    $
    815,366
    
    
    
    
    
    
    
    
    
    
    $
    839,746Retained earnings
    
    
    70,237
    
    
    
    
    
    
    
    
    
    
    
    69,484Total liabilities and R.E.
    
    $
    885,603
    
    
    
    
    
    
    
    
    
    
    $
    909,230Net interest income
    
    
    
    
    
    $
    5,883
    
    
    
    
    
    
    
    
    
    
    $
    6,793Interest-rate spread
    
    
    
    
    
    
    
    
    
    
    2.60
    %
    
    
    
    
    
    
    
    
    
    
    3.02
    %Yield on interest-earning
assets
    
    
    
    
    
    
    
    
    
    
    2.81
    %
    
    
    
    
    
    
    
    
    
    
    3.21
    %Interest-earning assets to
interest-bearing
liabilities
    
    
    104.64
    %
    
    
    
    
    
    
    
    
    
    
    104.42
    %
 
 (1)
    
    Non-accruing loans are included in the average loan balances for the periods presented. Page 13




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RESULTS OF OPERATIONS continued
   September 30,
    
    
    June 30,2007
    
    
    2007(Dollars in thousands)Loans on non-accruing status (1):Real estate mortgages:One-to-four family residential
    
    $
    7,489
    
    
    $
    5,265Commercial
    
    
    3,982
    
    
    
    3,725Multi-family residential
    
    
    
    
    
    
    Land
    
    
    1,332
    
    
    
    715Construction
    
    
    4,074
    
    
    
    3,948Total loans on non-accrual status:
    
    $
    16,877
    
    
    $
    13,653Ratio of non-performing loans to total loans
    
    
    2.31
    %
    
    
    1.89
    %Other non-performing assets (2)
    
    $
    3,077
    
    
    $
    2,622Total non-performing assets
    
    $
    19,954
    
    
    $
    16,275Total non-performing assets to total assets
    
    
    2.25
    %
    
    
    1.81
    %
 
 (1)
    
    Non-accrual status denotes loans on which, in the opinion of management, the collection of
additional interest is unlikely, or loans that meet the non-accrual criteria established by
regulatory authorities. Payments received on a non-accrual loan are either applied to the
outstanding principal balance or recorded as interest income, depending on an assessment of
the collectibility of the principal balance of the loan.(2)
    
    Other non-performing assets represent property acquired by the Bank through foreclosure or
repossession. Page 14




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RESULTS OF OPERATIONS continued
       Page 15




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RESULTS OF OPERATIONS continued
   
 
 LIQUIDITY AND CAPITAL RESOURCES
    Page 16




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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
 
 CONTROLS AND PROCEDURES
  Page 17




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CONTROLS AND PROCEDURES continued
       (a)
    
    N/A(b)
    
    N/A(c)
    
    The following table illustrates the repurchase of the Companys
common stock during the period ended September 30, 2007:
 (c) TotalNumber ofSharesPurchased as(a) Total
    
    
    
    
    
    
    Part of
    
    
    (d) Maximum Number ofNumber of
    
    
    (b) Average
    
    
    Publicly
    
    
    Shares that May YetShares
    
    
    Price Paid
    
    
    Announced Plans
    
    
    Be Purchased UnderPeriod
    
    Purchased
    
    
    per Share
    
    
    or Programs
    
    
    the Plans or ProgramsJuly 1 throughJuly 31, 2007
    
    
    0
    
    
    $
    0.00
    
    
    
    0
    
    
    
    265,602August 1 throughAugust 31, 2007
    
    
    4,436
    
    
    $
    15.06
    
    
    
    0
    
    
    
    265,602September 1 throughSeptember 30,2007
    
    
    0
    
    
    $
    0.00
    
    
    
    0
    
    
    
    265,602Total
    
    
    4,436
    
    
    $
    15.06
    
    
    
    0
    
    
    
    265,602
 Page 18




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Page 19




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Item 3.
    
    Defaults Upon Senior Securities. N/AItem 4.
    
    Submission of Matters to a Vote of Security Holders. N/AItem 5.
    
    Other Information. N/AItem 6.
    
    (a)                     Exhibits
  31.1
    
    Rule 13a-14(a) Certification of Chief Executive Officer31.2
    
    Rule 13a-14(a) Certification of Chief Financial Officer32
    
    Section 1350 Certification
 Page 20




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Signature
  PVF Capital Corp.
(Registrant)Date: November 7, 2007
    /s/ C. Keith SwaneyC. Keith SwaneyPresident, Chief Operating
Officer and Treasurer
(Only authorized officer and
Principal Financial Officer)