PVF Capital Corporation (NDAQ:PVFC) shares moved up $0.56, or 4.98%, to $11.81 today after Ancora Capital and The Fedeli Group expressed concern over the company's recent operating results in Schedule 13D and Schedule 13D/A filings with the SEC. The activist hedge funds believe that while the company has a loyal customer base, established branch network, dedicated group of employees, and tremendous potential, several recent trends have created reason for concern. These trends include the drop in the company's return on equity and return on assets, the decline in the company's efficiency ratio, and the increase in general administration expenses - all key measures of a banks performance. Moreover, the hedge funds expressed concern over the aggregate level of loan loss reserves (which have decreased lately) and the overall weakness of the traditional real estate, commercial, and home mortgages markets. Combined, these factors have substantially lowered profitability and increased business risk.

Fedeli had made several attempts to meet with management to discuss ways to expand the business, reduce risk, and increase profitability; however, the company has failed to act on any of these recommendations. Consequently, The Fedeli Group has officially requested to examine a list of the company's shareholders so that they can reach other shareholders who may be interested in enforcing change. This is commonly the first step in a proxy solicitation aimed at replacing members of the board and taking over the company. Combined, these two hedge funds control approximately 13% of the company's outstanding shares, which gives them significant power in any such move. Whether or not a change in control will take place remains uncertain; however, this is definitely a stock to watch over the next few months!

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