##### 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 December 31, 2005
 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.
  Ohio
    
    34-1659805(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
  
   
   
   þ o
  o þ o
  o þ
  Common Stock, $0.01 Par Value
    
    7,715,000(Class)
    
    (Outstanding at February 3, 2006




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##### 



PVF CAPITAL CORP.
  PagePart I Financial InformationItem 1 Financial StatementsConsolidated Statements of Financial Condition, December 31, 2005(unaudited) and June 30, 2005
    
    
    1Consolidated Statements of Operations for the three and six months ended December 31, 2005 and 2004 (unaudited)
    
    
    2Consolidated Statements of Cash Flows For the six months ended December 31, 2005 and 2004 (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
    
    
    15Item 3 Quantitative and Qualitative Disclosures about Market Risk
    
    
    15Item 4 Controls and Procedures
    
    
    16Part II Other Information
    
    
    17EX-31.1 CertificationEX-31.2 CertificationEX-32 Certification




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##### Table of Contents



PVF CAPITAL CORP.
 
 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 December 31,2005
    
    
    June 30,unaudited
    
    
    2005ASSETSCash and cash equivalents:Cash and amounts due from depository institutions
    
    $
    11,402,596
    
    
    $
    4,034,353Interest bearing deposits
    
    
    1,317,935
    
    
    
    2,180,723Federal funds sold
    
    
    11,765,000
    
    
    
    4,875,000Total cash and cash equivalents
    
    
    24,485,531
    
    
    
    11,090,076Securities held to maturity (fair values of $56,778,400
and $57,345,425, respectively)
    
    
    57,500,000
    
    
    
    57,500,000Mortgage-backed securities held to maturity (fair values of
$27,726,884 and $31,487,772, respectively)
    
    
    28,443,239
    
    
    
    31,720,033Loans receivable held for sale, net
    
    
    10,855,234
    
    
    
    9,059,647Loans receivable, net of allowance of
$4,342,133 and $4,312,274
    
    
    700,927,444
    
    
    
    660,494,144Office properties and equipment, net
    
    
    12,777,208
    
    
    
    13,413,231Real estate owned, net
    
    
    1,845,986
    
    
    
    1,319,251Federal Home Loan Bank stock
    
    
    11,621,400
    
    
    
    11,316,400Prepaid expenses and other assets
    
    
    28,313,400
    
    
    
    27,985,916Total Assets
    
    $
    876,769,442
    
    
    $
    823,898,698LIABILITIES AND STOCKHOLDERS EQUITYLiabilitiesDeposits
    
    $
    605,193,034
    
    
    $
    591,226,478Short-term advances from the Federal Home Loan Bank
    
    
    97,000,000
    
    
    
    15,000,000Long-term advances from the Federal Home Loan Bank
    
    
    70,004,067
    
    
    
    120,012,018Notes payable
    
    
    957,871
    
    
    
    1,400,780Subordinated debentures
    
    
    10,000,000
    
    
    
    10,000,000Advances from borrowers for taxes and insurance
    
    
    9,599,772
    
    
    
    3,184,981Accrued expenses and other liabilities
    
    
    16,370,908
    
    
    
    16,621,262Total Liabilities
    
    
    809,125,652
    
    
    
    757,445,519Stockholders EquitySerial preferred stock, none issued
    
    
    
    
    
    
    Common stock, $0.01 par value, 15,000,000 shares authorized;
8,182,499 and 8,175,779 shares issued, respectively
    
    
    81,825
    
    
    
    81,758Additional paid-in-capital
    
    
    68,443,957
    
    
    
    68,288,834Retained earnings
    
    
    2,899,046
    
    
    
    1,663,992Treasury Stock, at cost 467,499 and 451,088 shares, respectively
    
    
    (3,781,038
    )
    
    
    (3,581,405
    )Total Stockholders Equity
    
    
    67,643,790
    
    
    
    66,453,179Total Liabilities and Stockholders Equity
    
    $
    876,769,442
    
    
    $
    823,898,698
  Page 1




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##### Table of Contents



PVF CAPITAL CORP.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004Interest incomeLoans
    
    $
    12,131,020
    
    
    $
    9,668,561
    
    
    $
    23,618,586
    
    
    $
    18,965,543Mortgage-backed securities
    
    
    346,087
    
    
    
    408,450
    
    
    
    705,098
    
    
    
    828,210Federal Home Loan Bank stock dividends
    
    
    166,025
    
    
    
    116,885
    
    
    
    305,077
    
    
    
    232,536Securities
    
    
    569,368
    
    
    
    297,509
    
    
    
    1,087,556
    
    
    
    486,960Fed funds sold and interest-bearing deposits
    
    
    70,052
    
    
    
    27,404
    
    
    
    148,782
    
    
    
    39,990Total interest income
    
    
    13,282,552
    
    
    
    10,518,809
    
    
    
    25,865,099
    
    
    
    20,553,239Interest expenseDeposits
    
    
    4,823,211
    
    
    
    3,085,540
    
    
    
    9,207,289
    
    
    
    5,971,090Short-term borrowings
    
    
    390,229
    
    
    
    244,116
    
    
    
    601,668
    
    
    
    374,502Long-term borrowings
    
    
    1,293,161
    
    
    
    1,291,704
    
    
    
    2,591,495
    
    
    
    2,590,586Subordinated debt
    
    
    169,284
    
    
    
    115,295
    
    
    
    323,160
    
    
    
    224,564Total interest expense
    
    
    6,675,885
    
    
    
    4,736,655
    
    
    
    12,723,612
    
    
    
    9,160,742Net interest income
    
    
    6,606,667
    
    
    
    5,782,154
    
    
    
    13,141,487
    
    
    
    11,392,497Provision for loan losses
    
    
    257,000
    
    
    
    0
    
    
    
    294,300
    
    
    
    136,000Net interest income after provision for loan losses
    
    
    6,349,667
    
    
    
    5,782,154
    
    
    
    12,847,187
    
    
    
    11,256,497Noninterest income, netService and other fees
    
    
    255,217
    
    
    
    170,770
    
    
    
    510,748
    
    
    
    367,984Mortgage banking activities, net
    
    
    141,628
    
    
    
    344,505
    
    
    
    462,782
    
    
    
    663,295Increase in cash surrender value of bank-owned life insurance
    
    
    145,440
    
    
    
    152,128
    
    
    
    312,576
    
    
    
    269,828Other, net
    
    
    19,211
    
    
    
    191,819
    
    
    
    54,567
    
    
    
    243,340Total noninterest income, net
    
    
    561,496
    
    
    
    859,222
    
    
    
    1,340,673
    
    
    
    1,544,447Noninterest expenseCompensation and benefits
    
    
    3,078,325
    
    
    
    2,616,568
    
    
    
    6,220,206
    
    
    
    5,057,600Office occupancy and equipment
    
    
    961,179
    
    
    
    869,502
    
    
    
    1,997,404
    
    
    
    1,735,482Other
    
    
    1,403,320
    
    
    
    1,091,282
    
    
    
    2,599,410
    
    
    
    2,108,310Total noninterest expense
    
    
    5,442,824
    
    
    
    4,577,352
    
    
    
    10,817,020
    
    
    
    8,901,392Income before federal income tax provision
    
    
    1,468,339
    
    
    
    2,064,024
    
    
    
    3,370,840
    
    
    
    3,899,552Federal income tax provision
    
    
    441,100
    
    
    
    642,000
    
    
    
    992,000
    
    
    
    1,209,900Net income
    
    $
    1,027,239
    
    
    $
    1,422,024
    
    
    $
    2,378,840
    
    
    $
    2,689,652Basic earnings per share
    
    $
    0.13
    
    
    $
    0.18
    
    
    $
    0.31
    
    
    $
    0.35Diluted earnings per share
    
    $
    0.13
    
    
    $
    0.18
    
    
    $
    0.30
    
    
    $
    0.34Dividends declared per common share
    
    $
    0.074
    
    
    $
    0.067
    
    
    $
    0.148
    
    
    $
    0.135
  Page 2




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##### Table of Contents



PVF CAPITAL CORP.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 Six Months EndedDecember 31,2005
    
    
    2004Operating ActivitiesNet income
    
    $
    2,378,840
    
    
    $
    2,689,652Adjustments to reconcile net income to net cash provided by operating activitiesAmortization of premium on mortgage-backed securities
    
    
    34,575
    
    
    
    39,490Depreciation
    
    
    912,207
    
    
    
    917,732Provision for losses on loans
    
    
    294,300
    
    
    
    136,000Accretion of deferred loan origination fees, net
    
    
    (788,187
    )
    
    
    (526,539
    )Gain on sale of loans receivable held for sale, net
    
    
    (413,865
    )
    
    
    (600,070
    )Gain on disposal of real estate owned, net
    
    
    0
    
    
    
    (165,575
    )Mortgage banking provision
    
    
    199,000
    
    
    
    0Stock compensation
    
    
    151,560
    
    
    
    0Federal Home Loan Bank stock dividends
    
    
    (305,000
    )
    
    
    (232,400
    )Change in accrued interest on investments, loans, and borrowings, net
    
    
    (341,150
    )
    
    
    (264,450
    )Origination of loans receivable held for sale, net
    
    
    (62,196,767
    )
    
    
    (61,926,713
    )Sale of loans receivable held for sale, net
    
    
    59,944,171
    
    
    
    63,296,360Net change in other assets and other liabilities
    
    
    6,799,976
    
    
    
    6,378,141Net cash from operating activities
    
    
    6,669,660
    
    
    
    9,741,628Investing ActivitiesLoan repayments and originations, net
    
    
    (40,616,148
    )
    
    
    (30,953,740
    )Repayment of mortgage-backed securities
    
    
    3,242,218
    
    
    
    3,108,954Proceeds from sale of real estate owned
    
    
    150,000
    
    
    
    734,861Securities purchased
    
    
    0
    
    
    
    (25,000,000
    )Maturities of securities held to maturity
    
    
    0
    
    
    
    5,000,000Additions to office properties and equipment, net
    
    
    (276,184
    )
    
    
    (1,102,974
    )Net cash used in investing activities
    
    
    (37,500,114
    )
    
    
    (48,212,899
    )Financing activitiesNet increase (decrease) in demand deposits, NOW, and passbook savings
    
    
    4,032,856
    
    
    
    (3,252,239
    )Net increase (decrease) in time deposits
    
    
    9,933,701
    
    
    
    25,989,394Repayment of long-term Federal Home Loan Bank advances
    
    
    (50,007,951
    )
    
    
    (10,954
    )Net increase in short-term Federal Home Loan Bank advances
    
    
    82,000,000
    
    
    
    18,000,000Proceeds from note payable
    
    
    957,871
    
    
    
    0Repayment of note payable
    
    
    (1,400,780
    )
    
    
    (1,042,150
    )Purchase of treasury stock
    
    
    (199,633
    )
    
    
    (274,188
    )Proceeds from exercise of stock options
    
    
    90,639
    
    
    
    160,251Stock repurchased and retired
    
    
    (87,009
    )
    
    
    (123,024
    )Cash dividend paid
    
    
    (1,093,785
    )
    
    
    (997,973
    )Net cash from financing activities
    
    
    44,225,909
    
    
    
    38,449,117Net increase (decrease) in cash and cash equivalents
    
    
    13,395,455
    
    
    
    (22,154
    )Cash and cash equivalents at beginning of period
    
    
    11,090,076
    
    
    
    17,469,773Cash and cash equivalents at end of period
    
    $
    24,485,531
    
    
    $
    17,447,619Supplemental disclosures of cash flow information:Cash payments of interest expense
    
    $
    12,678,924
    
    
    $
    9,140,556Cash payments of income taxes
    
    $
    1,257,000
    
    
    $
    995,000Supplemental disclosures of noncash investing activities:Transfer to real estate owned
    
    $
    676,735
    
    
    $
    810,899
  Page 3




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PVF CAPITAL CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2005 and 2004
(Unaudited)
    Page 4




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
    Six months endedDecember 31, 2005Total unvested optionsWeightedAverageFairShares
    
    
    ValueUnvested options, beginning of period
    
    
    107,509
    
    
    $
    3.83Vested
    
    
    (63,161
    )
    
    $
    3.75Granted
    
    
    126,450
    
    
    $
    3.69Unvested options, end of period
    
    
    170,798
    
    
    $
    3.76
  Six months endedDecember 31,2005
    
    
    2004Proceeds of options exercised
    
    $
    90,639
    
    
    $
    160,251Related tax benefit recognized
    
    
    0
    
    
    
    5,778Intrinsic value of options exercised
    
    $
    71,737
    
    
    $
    114,975
   Expected average risk-free interest rate
    
    
    4.57
    %Expected average life (in years)
    
    
    9.72Expected volatility
    
    
    31.56
    %Expected dividend yield
    
    
    2.67
    %
 Page 5




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##### Table of Contents



NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS continued
  Expected average risk-free interest rate
    
    
    3.75
    %Expected average life (in years)
    
    
    7.00Expected volatility
    
    
    29.29
    %Expected dividend yield
    
    
    2.21
    %Weighted
average fair value
    
    $
    3.93
    Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2004
    
    
    2004Net income as reported
    
    $
    1,422,024
    
    
    $
    2,689,652Less: Pro forma compensation
expense, net of tax
    
    $
    36,210
    
    
    $
    64,197Pro forma net income
    
    $
    1,385,814
    
    
    $
    2,625,455Basic earnings per share
    
    $
    0.18
    
    
    $
    0.35Pro forma basic earnings per share
    
    $
    0.18
    
    
    $
    0.34Diluted earnings per share
    
    $
    0.18
    
    
    $
    0.34Pro forma diluted earnings per share
    
    $
    0.18
    
    
    $
    0.33
 Page 6




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
  Three months ended December 31,2005
    
    2004Income
    
    Shares
    
    Per Share
    
    Income
    
    Shares
    
    Per Share(Numerator)
    
    (Denominator)
    
    Amount
    
    (Numerator)
    
    (Denominator)
    
    AmountBasic EPSNet Income
    
    $
    1,027,239
    
    
    
    7,716,090
    
    
    $
    0.13
    
    
    $
    1,422,024
    
    
    
    7,737,453
    
    
    $
    0.18Effect of Stock
Options
    
    
    
    
    
    
    131,820
    
    
    
    0.00
    
    
    
    
    
    
    
    174,989
    
    
    
    0.00Diluted EPSNet Income
    
    $
    1,027,239
    
    
    
    7,847,910
    
    
    $
    0.13
    
    
    $
    1,422,024
    
    
    
    7,912,442
    
    
    $
    0.18
 Six months ended December 31,2005
    
    2004Income
    
    Shares
    
    Per Share
    
    Income
    
    Shares
    
    Per Share(Numerator)
    
    (Denominator)
    
    Amount
    
    (Numerator)
    
    (Denominator)
    
    AmountBasic EPSNet Income
    
    $
    2,378,840
    
    
    
    7,717,843
    
    
    $
    0.31
    
    
    $
    2,689,652
    
    
    
    7,739,381
    
    
    $
    0.35Effect of Stock
Options
    
    
    
    
    
    
    147,857
    
    
    
    (0.01
    )
    
    
    
    
    
    
    185,103
    
    
    
    (0.01
    )Diluted EPSNet Income
    
    $
    2,378,840
    
    
    
    7,865,700
    
    
    $
    0.30
    
    
    $
    2,689,652
    
    
    
    7,924,484
    
    
    $
    0.34
   Six
months endedDecember 31,2005
    
    
    2004Servicing rights:Beginning of period
    
    $
    5,001,474
    
    
    $
    5,358,845Additions
    
    
    671,874
    
    
    
    682,892Amortized to expense
    
    
    (729,695
    )
    
    
    (869,745
    )End of period
    
    $
    4,943,653
    
    
    $
    5,171,992
 Page 7




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
  Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004Mortgage loan servicing fees
    
    $
    491,132
    
    
    $
    474,132
    
    
    $
    977,612
    
    
    $
    932,970Amortization and impairment of
mortgage loan servicing fees
    
    $
    (332,151
    )
    
    $
    (432,396
    )
    
    $
    (729,695
    )
    
    $
    (869,745
    )Unrealized losses on sales of
loans
    
    
    (132,000
    )
    
    
    
    
    
    
    (199,000
    )
    
    
    Gain on sales of loans
    
    $
    114,647
    
    
    $
    302,769
    
    
    $
    413,865
    
    
    $
    600,070Mortgage banking activities,
net
    
    $
    141,628
    
    
    $
    344,505
    
    
    $
    462,782
    
    
    $
    663,295
 Page 8




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##### Table of Contents



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




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##### Table of Contents



FINANCIAL CONDITION continued
         Page 10




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##### Table of Contents



RESULTS OF OPERATIONS
      Page 11




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##### Table of Contents



RESULTS OF OPERATIONS continued
       Page 12




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##### Table of Contents



RESULTS OF OPERATIONS continued
  RESULTS OF OPERATIONS
    Page 13




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##### Table of Contents



RESULTS OF OPERATIONS continued
 December 31,
    
    
    June 30,2005
    
    
    2005(Dollars in thousands)Non-accruing
loans (1):Real estate
    
    $
    11,747
    
    
    $
    11,750Accruing loans which are contractually past due
90 days or more:Real estate
    
    $
    1,372
    
    
    $
    608Total non-accrual and 90 days
past due loans
    
    $
    13,119
    
    
    $
    12,358Ratio of non-performing loans to total loans
    
    
    1.84
    %
    
    
    1.85
    %Other
non-performing assets (2)
    
    $
    1,846
    
    
    $
    1,319Total non-performing assets
    
    $
    14,965
    
    
    $
    13,677Total non-performing assets to
total assets
    
    
    1.71
    %
    
    
    1.66
    %
 
 (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. 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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##### Table of Contents



RESULTS OF OPERATIONS continued
   
 LIQUIDITY AND CAPITAL RESOURCES
     
  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
 Page 15




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##### Table of Contents



CONTROLS AND PROCEDURES
  
 Page 16




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##### Table of Contents



(a)
    
    N/A(b)
    
    N/A(c)
    
    The following table illustrates the repurchase of the Companys
common stock during the period ended December 31, 2004:
 (c) TotalNumber ofSharesPurchased as
    
    (d) Maximum Number(a) Total
    
    
    
    
    
    Part of
    
    of Shares that MayNumber of
    
    (b) Average
    
    Publicly
    
    Yet Be PurchasedShares
    
    Price Paid
    
    Announced Plans
    
    Under the Plans orPeriod
    
    Purchased
    
    per Share
    
    or Programs
    
    ProgramsOctober 1 through
October 31, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    278,109November 1 through
November 30, 2005
    
    
    6,481
    
    
    
    $11.04
    
    
    
    6,481
    
    
    
    271,628December 1 through
December 31, 2005
    
    
    800
    
    
    
    $10.80
    
    
    
    800
    
    
    
    270,828Total
    
    
    7,281
    
    
    
    $11.01
    
    
    
    7,281
      Votes in FavorNominee
    
    of election
    
    Votes WithheldJohn R. Male
    
    
    7,194,948
    
    
    
    105,155Stanley T. Jaros
    
    
    7,140,937
    
    
    
    159,166Raymond J. Negrelli
    
    
    7,191,751
    
    
    
    108,352Ronald D. Holman, II
    
    
    7,164,204
    
    
    
    135,899
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##### Table of Contents



Votes For
    
    Votes against
    
    Abstain
    
    Not Voting7,248,455
    
    
    4,835
    
    
    
    46,813
    
    
    
    -0-
  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
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Signature
  PVF Capital Corp.(Registrant)Date: February 8, 2006
    
    /s/ C. Keith SwaneyC. Keith SwaneyPresident, Chief Operating Officerand Treasurer(Only authorized officer andPrincipal Financial Officer)