Vesting:
All participants are 100% vested in elective deferrals, qualified non-elective contributions and rollover contributions made to the Plan. Participants are vested in Company contributions and Company
profit sharing contributions according to the following schedule:
|
|
|
|
|
|
|
Years of Service
|
|
%
|
|
|
Less than 2
|
|
|
0
|
%
|
|
2 years
|
|
|
20
|
%
|
|
3 years
|
|
|
40
|
%
|
|
4 years
|
|
|
60
|
%
|
|
5 years
|
|
|
80
|
%
|
|
6 years
|
|
|
100
|
%
|
A participant is entitled to 100% of his or her account balance upon retirement, death or disability.
Forfeitures:
Forfeitures of $2,489 and $4,971 were utilized in 2012 and 2011, respectively. Forfeitures outstanding at December 31, 2012 and 2011 were $0 and $2,342, respectively.
5
NOTES TO FINANCIAL STATEMENTS
Park View Federal Savings Bank
401(K) Plan
|
1.
|
Description of Plan, Continued
|
Notes Receivable from Participants:
Loans are permitted under certain circumstances and are subject to limitations. Participants may borrow from their fund accounts up to
maximum equal to the lesser of $50,000 or 50% of their account balance. Loans are repaid over a period not to exceed 5 years with exceptions for the purchase of a primary residence. Loans are valued at unpaid principal plus accrued interest.
The loans are secured by the balance in the participant’s account and bear interest at rates established by Ascensus.
Principal and interest are paid ratably through payroll deductions.
Other Plan Provisions:
Normal retirement age is 65, however, a participant may elect early retirement on or after age 60 with six years of completed service. The
Plan also provides for early payment of benefits after reaching age 59-1/2.
Payment of Benefits:
Upon termination of service by reason of retirement, death or total and permanent disability, a participant may elect to receive a
lump-sum amount equal to the value of the vested interest in his or her account or annual installments. For termination of service for other reasons, a participant may receive a lump-sum distribution. Benefits are recorded when paid.
Hardship Withdrawals:
Hardship withdrawals are permitted in accordance with Internal Revenue Service guidelines.
Basis of Accounting:
The Plan’s transactions are reported on
the accrual basis of accounting. Marketable securities are reported at fair market value as of the balance sheet date. Fair market values represent quoted market prices or, if quoted market prices are not available, estimated fair values as
determined by the Plan’s investment broker. Money market funds are stated at cost which approximates market value. Common shares of the Company’s parent, PVF Capital Corp., are stated at fair value as measured by quoted market prices.
Reclassification:
Certain prior year amounts have been reclassified to conform with the current year’s presentation.
6
NOTES TO FINANCIAL STATEMENTS
Park View Federal Savings Bank
401(K) Plan
|
2.
|
Summary of Significant Accounting Policies
|
Use of Estimates:
The preparation of financial statements in
conformity with generally accepted accounting principles (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Reporting of Fully Benefit-Responsive Investment Contracts:
As
described in current accounting guidance, investment contracts held by a defined-contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available
for benefits of a defined-contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan.
As required by U.S. GAAP, the Statement of Net Assets Available for Benefits presents the fair value of the investment
contracts as well as the adjustment of the fully benefit-responsive investment contracts from fair value to contract value. The Statement of Changes in Net Assets Available for Benefits is prepared on a contract value basis. The fair value is based
on various valuation approaches dependent on the underlying investments on the contracts.
Administrative Fees:
Certain professional fees of the Plan were paid on behalf of the Plan by the Company. Forfeitures were utilized to pay
Plan expenses in 2012 and 2011.
Plan Termination:
The Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions
of ERISA. In the event of Plan termination, participants will become 100% vested in their accounts.
Subsequent Events:
The Plan evaluates events occurring subsequent to the date of the financial statements in determining the accounting
for and disclosure of transactions and events that affect the financial statements.
7
NOTES TO FINANCIAL STATEMENTS
Park View Federal Savings Bank
401(K) Plan
|
2.
|
Summary of Significant Accounting Policies, Continued
|
Risks and Uncertainties:
The Plan’s investments include investments in mutual funds, common collective trusts and common stock with varying degrees of risk,
such as interest rate, credit and overall market volatility risks. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and
such changes could materially affect the amounts reported in the Statement of Net Assets Available for Plan Benefits.
On
March 31, 2008, the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code. Since that time, the Plan has been amended; however, the Plan administrator
believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, the Plan administrator believes that the Plan was qualified and the related trust was tax-exempt
as of the financial statement date.
Accounting principles generally accepted in the United States of America require Plan
management to evaluate tax positions taken by the Plan and recognize a tax liability if the Plan has taken uncertain tax positions that, more-likely-than-not, would not be sustained upon examination by applicable taxing authorities. The Plan
administrator has analyzed tax positions taken by the Plan and has concluded that, as of December 31, 2012, there were no uncertain tax positions taken, or expected to be taken, that would require recognition of a liability or that would
require disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions and are currently under audit by the Department of Labor. Results of the audit are not known as of the date of these financial statements.
The Plan administrator believes that the Plan is no longer subject to income tax examinations for years prior to December 31, 2009.
Investments
which constitute more than 5% of the Plan’s net assets are:
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
2011
|
|
|
Federated Capital Preservation Fund
|
|
$
|
561,333
|
|
|
$
|
597,264
|
|
|
BlackRock S&P 500 Index Class A
|
|
$
|
199,490
|
|
|
|
N/A
|
|
|
GM BlackRock Equity Dividend Fund
|
|
$
|
212,361
|
|
|
$
|
189,974
|
|
|
PVF Capital Corp. Stock
|
|
$
|
478,148
|
|
|
$
|
425,810
|
|
8
NOTES TO FINANCIAL STATEMENTS
Park View Federal Savings Bank
401(K) Plan
|
4.
|
Investments, Continued
|
Net realized/unrealized gain (loss) in the fair value of investments for the years ended
December 31, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
2011
|
|
|
Mutual Funds
|
|
$
|
224,368
|
|
|
$
|
(56,602
|
)
|
|
Common Stock-financial
|
|
|
232,893
|
|
|
|
(109,169
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net realized/unrealized gain (loss)
|
|
$
|
457,261
|
|
|
$
|
(165,771
|
)
|
|
|
|
|
|
|
|
|
|
|
|
5.
|
Party-in-Interest Transactions
|
The Plan invests in common shares of PVF Capital Corp., therefore, these transactions qualify as party-in-interest.
Certain Plan investments are shares of mutual funds managed by Frontier Trust, the Trustee as defined by the Plan, and therefore these transactions qualify as party-in-interest. Usual and customary fees
were paid by the mutual fund for the investment management services.
|
6.
|
Collective Investment Fund
|
Effective February 2, 2011, the Plan entered into a collective investment fund for which Federated Investors Trust Company is the
trustee. The Fund holds guaranteed investment contracts, separate account guaranteed investment contracts and synthetic guaranteed investment contracts. The account is credited with earnings on the underlying investments and charged for participant
withdrawals and administrative expenses. The guaranteed investment contract issuer is contractually obligated to repay the principal and a specified interest rate that is guaranteed to the Plan.
As described in Note 2, because the fund is fully benefit-responsive, contract value is the relevant measurement attribute for that
portion of the net assets available for benefits attributable to the guaranteed investment contract. Contract value represents contributions made under the contract, plus earnings, less participant withdrawals and administrative expenses.
Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value.
There
are no reserves against contract value for credit risk of the contract issuer or otherwise. The crediting interest rate is based on a formula agreed upon with the issuer. Such interest rates are reset monthly or quarterly according to each GIC.
Certain events limit the ability of the Plan to transact at contract value with the issuer. Such events include the following:
(1) mergers, (2) mass layoffs, (3) Plan termination, (4) implementation of early retirement incentive programs.
9
NOTES TO FINANCIAL STATEMENTS
Park View Federal Savings Bank
401(K) Plan
|
6.
|
Collective Investment Fund, Continued
|
The guaranteed investment contract does not permit the Trustee to terminate the
agreement prior to the scheduled maturity date.
|
|
|
|
|
|
|
|
|
|
|
Average yields:
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
Based on actual earnings
|
|
|
1.59
|
%
|
|
|
2.09
|
%
|
|
|
|
|
|
Based on interest rate credited to participants
|
|
|
1.95
|
%
|
|
|
2.33
|
%
|
|
7.
|
Fair Value Measurements
|
As defined in FASB ASC 820, “Fair Value Measurements”, fair value is the price that would be received to sell an asset, or paid
to transfer a liability, in an orderly transaction between market participants at the measurement date. In determining fair value, the Company utilizes certain assumptions that market participants would use in pricing the asset or liability,
including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable firm inputs. The Company utilizes valuation techniques that
maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the examination of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value
hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:
|
|
|
|
|
|
|
|
|
*
|
|
Level 1
|
|
|
|
Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access.
|
|
|
|
|
|
|
*
|
|
Level 2
|
|
|
|
Inputs to the valuation methodology include:
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Quoted prices for similar assets or liabilities in active markets;
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Quoted prices for identical or similar assets or liabilities in inactive markets;
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Inputs other than quoted prices that are observable for the asset or liability;
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
|
|
|
|
|
|
|
|
|
If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or
liability.
|
|
|
|
|
|
|
*
|
|
Level 3
|
|
|
|
Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
|
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level
of input that is significant to the fair value measurement.
10
NOTES TO FINANCIAL STATEMENTS
Park View Federal Savings Bank
401(K) Plan
|
7.
|
Fair Value Measurements, Continued
|
Following is a description of the valuation methodologies used for instruments measured
at fair value, including the general classification of such instruments pursuant to the valuation hierarchy.
Common
Stock:
The fair value of the common stock is based on quoted market prices.
Mutual Funds:
The fair value of the mutual funds are based on quoted market prices.
Guaranteed Investment Contract:
All investment contracts are reset at least quarterly, although under certain circumstances such as a large deposit or withdrawal, they may be reset more frequently. As interest rates rise, the market
value of the underlying securities declines and when interest rates fall, the market value of the underlying securities rises. The relationship to future interest crediting rates based on a change in interest rates up or down will generally have
minimal impact on the crediting rate since the change in rates will generally be offset by the change in market value, except when there is a change in duration. Duration is a measure of average life of all cash flows in the portfolio on a present
value basis. A change in duration when market values decline (interest rates rise) will reduce the crediting rate if duration shortens and increase the crediting rate if duration lengthens. A change in duration when market values rise (interest
rates fall) will increase the crediting rate when duration falls and decrease the crediting rate when duration rises. Any deposit or withdrawal to the investment contract will impact the crediting rate based on the relative size of the deposit or
withdrawal. Finally, when a security is no longer covered by a wrap contract, there may be an increase or decrease to the interest crediting rate, depending on the principal amount of the security and its market value relative to its book value.
The methods described above may produce a fair value calculation that may not be indicative of net realizable value or
reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain
financial instruments could result in a different fair value measurement at the reporting date.
11
NOTES TO FINANCIAL STATEMENTS
Park View Federal Savings Bank
401(K) Plan
|
7.
|
Fair Value Measurements, Continued
|
The following table presents the financial instruments carried at fair value, on a
recurring basis, as of December 31, 2012, by ASC 820-10 valuation hierarchy (as described above). There were no assets that fell within Level 3 of the valuation hierarchy.