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Camco Financial Announces Third Quarter 2012 Earnings

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CAMBRIDGE, Ohio, Oct. 25, 2012 (GLOBE NEWSWIRE) -- Camco Financial Corporation (Nasdaq: CAFI), the bank holding company for Advantage Bank, today announced third quarter financial results for 2012, reporting net earnings of $484,000 or $0.07 per share for the quarter ended September 30, 2012. These results represent an increase of $321,000 or $0.05 per share over results from the comparable quarter a year ago. Year-to-date results reflect net earnings of $1.4 million or $0.19 per share for the nine months ended September 30, 2012 representing an increase of $2.0 million or $.28 per share over the same nine month period last year.

"Progress in restoring solid profitability has continued over this past quarter," said James E. Huston, President and CEO. "Our efforts to reduce classified assets and grow core deposits continue to show favorable results."

Classified loans decreased by $4.6 million in the third quarter of 2012, while core deposits increased by $4.9 million over the same period. These efforts, along with increases in Net Interest Income and Noninterest Income, along with decreases in Noninterest Expenses have resulted in increased net earnings.

"We are also currently executing a rights offering of common shares of up to $10 million for existing shareholders that was launched on September 24," said Huston. "This rights offering to existing shareholders will expire on October 31, with the possibility of a public phase after that time that could extend to December 31, 2012." Additional details regarding the rights offering can be found in the prospectus filed on September 26, 2012 with the Securities and Exchange Commission.

Review of Financial Performance

Overview:

The following items summarize key activities of the Company during the quarter ended September 30, 2012:

  • Total assets decreased $12.7 million, or 1.7%, during the quarter, which reflects increased liquid assets from loan pay downs being used to reduce higher cost, single-service CD deposits and borrowed funds.
  • Core deposits (defined as checking, savings and money market deposits) increased $4.9 million, or 1.6%, when compared to June 30, 2012.
  • Net Interest Income increased by $72,000, or 1.2% compared to the linked quarter, driven by a reduction in funding costs.
  • Noninterest income increased $172,000, or 10.2%, from the previous quarter, driven by higher gain on sale of residential mortgage loans and related revenue.
  • Noninterest expense decreased $87,000, or 1.2%, compared to the linked quarter, driven by lower staffing and data processing costs, offset somewhat by higher professional fees related to the rights offering.
  • Classified loans (which includes substandard, doubtful, and loss) decreased by $4.6 million, or 12.4%, in the third quarter.

Net Interest Margin:

Net interest margin increased to 3.49% in the current quarter compared to 3.33% for the quarter ended June 30, 2012, driven by lower cost of funds. The margin has decreased from 3.73% for the same period a year ago, driven by a reduction in the bank's yield on earning assets in this low rate environment. Management expects the Company's net interest margin to decrease slightly as we continue to be in an environment of low interest rates and slow economic growth. We will continue to look for pricing opportunities, further improvement in credit quality, and other balance sheet changes to maintain our margin going forward.

Net Interest Income:

Net interest income before the provision for loan losses increased $72,000, or 1.2%, compared to the prior quarter, to $6.0 million for the quarter ended September 30, 2012. The increase was attributable to reductions in the cost of deposits and borrowed funds.

The Company's yield on earning assets increased slightly to 4.52% in the current quarter from 4.47% in the linked quarter. The overall revenue decreased, however, due to declining loan portfolio and total earning asset balances. Planned continued runoff in certificates of deposits and borrowings combined with growth in core deposits resulted in a reduced cost of funds. The cost of funds for the quarter ended September 30, 2012 was 1.12% compared to 1.25% for the quarter ended June 30, 2012. The Company anticipates continued declines in certificates of deposit balances over the next few quarters as maturities of single relationship accounts are not renewed. 

Provision for Loan Losses:

A provision for loan losses of $457,000 was recorded for the quarter ended September 30, 2012, compared to $228,000 for the same period of the prior year and $137,000 for the linked quarter. The Company continues to maintain a strong allowance for loan and lease losses while improving the quality of the loan portfolio. Classified loans (which includes substandard, doubtful, and loss) decreased $4.6 million, or 12.4%, since June 30, 2012 to $32.6 million. The classified loans balance also decreased $14.5 million, or 30.8%, from the year-ago quarter ended September 30, 2011.

Noninterest Income:

Noninterest income was $1.9 million for the third quarter of 2012, which represents an increase of $710,000 when compared to the quarter ended September 30, 2011 and an increase of $172,000 when compared to the linked quarter. This increased income was driven primarily by an increase in gain on sale of residential mortgage loans and related revenue. 

Noninterest Expense:

Noninterest expense for the quarter ended September 30, 2012, decreased $263,000, or 3.6%, to $6.9 million from the comparable period a year earlier and decreased by $87,000, or 1.2%, when compared to the linked quarter. Noninterest expense was lower during the current quarter 2012 compared to the previous 2011 quarter primarily as a result of expenses related to classified assets and real estate owned. The decrease compared to the linked quarter was the result of lower staffing and data processing costs, offset somewhat by higher professional fees related to the rights offering and write-down of REO properties.

Balance Sheet:

Total assets were $754.2 million, which is a decrease of $12.7 million, or 1.7% compared to $766.9 million in the linked quarter, and a decrease of $37.8 million or 4.8% compared to $792.0 million in the same quarter a year ago.

This decrease was primarily attributable to the use of increased liquid assets from loan pay downs to reduce single-service CD deposits and borrowed funds as we continue to restructure our balance sheet to rely less on non-core funding. We continue to focus on profitable lending opportunities and investments as a means of employing our excess cash, as well. 

Loan Quality:

The allowance for loan and lease losses was $14.5 million at September 30, 2012, compared to $14.2 million at June 30, 2012. The Company has maintained this strong reserve while loan quality continues to improve and has resulted in a steady reduction in classified assets and non-performing loans. 

A summary of certain key factors follows:

       
(in thousands) 9/30/2012 6/30/2012 3/31/2012
Classified Loans* $32,649 $37,275 $40,444
Non-Performing Loans 22,787 23,653 24,354
Loan Loss Reserve 14,508 14,185 14,954
Loan Loss Reserve / Total Loans 2.44% 2.31% 2.37%
       
*Includes substandard, doubtful and loss (including homogeneous loans).

Deposits and Borrowings:

Core deposits (defined as checking, savings, and money market deposits) increased by $4.9 million, or 1.6% compared to June 30, 2012. Total deposits decreased $8.2 million, or 1.3% during this period. The decrease was due to a reduction in certificates of deposit of $13.1 million, or 4.0%. Contraction in these balances was planned as the Company works to reduce the level of non-core deposits, particularly higher single product certificates of deposits related to rate sensitive shoppers.

FHLB advances and other borrowings decreased $4.7 million, or 6.8%, compared to the linked quarter, and have decreased by $47.4 million, or 42.4% from September 30, 2011. This planned decrease resulted mostly from continued repayment of FHLB advances with excess liquidity.

Equity:

Stockholders' equity increased $646,000, or 1.4%, to $47.4 million at September 30, 2012, compared to $46.8 million at June 30, 2012. Net earnings of $484,000 for the quarter were the main driver of the increase. 

About Camco Financial Corporation: Camco Financial Corporation, holding company for Advantage Bank, is a multi-state bank holding company headquartered in Cambridge, Ohio. Advantage Bank and its affiliates offer community banking that includes commercial, business and consumer financial services and internet banking from 22 offices. Additional information about Camco Financial may be found on the Company's web sites:www.camcofinancial.com or www.advantagebank.com.

The Camco Financial Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4639

This press release shall not constitute an offer to sell or a solicitation of an offer to buy the securities, nor shall there be any offer, solicitation or sale of the securities in any state in which such offer, solicitation or sale would be unlawful prior to the registration or qualification of the securities under the securities laws of such state. The rights offering will be made only by means of a prospectus, copies of which were to all record date stockholders. You may obtain a copy of the prospectus for free by visiting EDGAR on the SEC Website at www.sec.gov. Alternatively, Camco Financial or ParaCap Group, LLC, financial advisor and information agent, will arrange to send to you the prospectus if you request by calling (866) 404-2951.

The words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project" or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties including changes in economic conditions in the Company's market area, changes in policies by regulatory agencies, fluctuations in interest rates, demands for loans in the Company's market area and competition, that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Camco Financial Corporation
Condensed Consolidated Statements of Financial Condition
(In thousands, except for per share data and shares outstanding)
           
  (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
  9/30/12 6/30/12 3/31/12 12/31/11 9/30/11
Assets          
Cash and Cash Equivalents  26,920  28,160  40,431  38,374  69,707
Investments  80,648  75,347  62,834  20,928  14,489
           
Loans Held for Sale  6,341  2,532  5,583  8,090  10,445
           
Loans Receivable  594,030  613,790  630,124  653,709  652,403
Allowance for Loan Loss (14,508) (14,185) (14,954) (14,532) (17,615)
Loans Receivable, Net  579,522  599,605  615,170  639,177  634,788
           
Other Assets  60,811 61,272 62,149 60,449 62,577
           
Total Assets  $ 754,242  $ 766,916  $ 786,167  $ 767,018  $ 792,006
           
Liabilities          
Deposits  630,304  638,516  650,853  629,259  624,327
Borrowed Funds  64,466  69,200  77,929  80,285  111,858
Other Liabilities 12,050 12,424 11,276 11,869 11,117
           
Total Liabilities  706,820  720,140  740,058  721,413  747,302
           
Stockholders' Equity  47,422 46,776 46,109 45,605 44,704
           
Total Liabilities and Stockholders' Equity  $ 754,242  $ 766,916  $ 786,167  $ 767,018  $ 792,006
           
           
Stockholders' Equity to Total Assets 6.29% 6.10% 5.87% 5.95% 5.64%
           
Total Shares Outstanding  7,465,563  7,468,087  7,468,087  7,205,595  7,205,595
           
Book Value Per Share $6.35 $6.26 $6.17 $6.33 $6.20
 
Camco Financial Corporation
Condensed Consolidated Statements of Earnings
Year to Date Information
(In thousands, except for per share data and shares outstanding)
     
  9 Months 9 Months
  Ended Ended
  9/30/12 9/30/11
  (Unaudited) (Unaudited)
Interest Income:    
Loans  23,434  26,455
Mortgage-backed securities  48  359
Investment securities  302  152
Interest-bearing deposits and other  330  602
Total Interest Income  24,114  27,568
     
Interest Expense:    
Deposits  4,191  5,841
Borrowings  1,836  2,215
Total Interest Expense  6,027 8,056
Net Interest Income  18,087 19,512
     
Provision for Losses on Loans  1,599  3,038
Net Interest Income After Provision for Loan Losses  16,488 16,474
     
Noninterest Income:    
Late charges, rent and other  872  901
Loan servicing fees  849  905
Service charges and other fees on deposits  1,513  1,580
Gain on sale of loans  1,714  (26)
Mortgage servicing rights  (78)  (213)
Gain (loss) on sale of investment, mbs & fixed assets  (2)  1,282
Income on cash surrender value life insurance  642  659
Total noninterest income  5,510 5,088
     
Noninterest expense:    
Employee compensation and benefits  9,392  9,565
Occupancy and equipment  2,192  2,219
FDIC premium and other insurances  1,380  1,541
Data processing  821  834
Advertising  296  277
Franchise taxes  583  514
Other operating  6,033  6,718
Total noninterest expense  20,697 21,668
     
Earnings (loss) before provision for income taxes  1,301 (106)
     
Provision for income taxes  (78)  542
Reported Net Income  1,379 (648)
     
     
Net Earnings (Loss)  1,379 (648)
     
Earnings (Loss) Per Share:    
Basic  $0.19 ($0.09)
Diluted  $0.19 ($0.09)
Earnings Per Share Operations:    
Basic  $0.19 ($0.09)
Diluted  $0.19 ($0.09)
     
Basic Weighted Number of    
Shares Outstanding  7,385,423  7,205,595
Diluted Weighted Number of    
Shares Outstanding  7,387,589  7,205,595
           
Camco Financial Corporation
Condensed Consolidated Statements of Operations
Quarterly Information
(In thousands, except for per share data and shares outstanding)
           
           
  3 Months 3 Months 3 Months 3 Months 3 Months
  Ended Ended Ended Ended Ended
  9/30/12 6/30/12 3/31/12 12/31/11 9/30/11
  (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Interest Income:          
Loans  7,522  7,699  8,213  8,501  8,715
Mortgage-backed securities  15  17  16  17  19
Investment securities  116  115  71  50  53
Interest-bearing deposits and other  112  105  113  101  99
Total Interest Income  7,765  7,936  8,413  8,669  8,886
           
Interest Expense:          
Deposits  1,235  1,405  1,551  1,640  1,734
Borrowings  545  618  673  678  686
Total Interest Expense  1,780 2,023 2,224 2,318 2,420
Net Interest Income  5,985 5,913 6,189 6,351 6,466
           
Provision for Losses on Loans  457  137  1,005  (759)  228
Net Interest Income After Provision for Loan Losses  5,528 5,776 5,184 7,110 6,238
           
Noninterest Income:          
Rent and other  321  223  328  202  336
Loan servicing fees  283  285  281  290  300
Service charges and other fees on deposits  515  508  490  530  548
Gain on sale of loans  633  517  564  377  85
Mortgage servicing rights  (117)  (63)  102  (365)  (352)
Gain (loss) on sale of investment, mbs & fixed assets  --   1  (3)  --   2
Income on CSVL (BOLI)  216  208  218  221  222
Total noninterest income  1,851 1,679 1,980 1,255 1,141
           
Noninterest expense:          
Employee compensation and benefits  2,996  3,249  3,147  2,772  3,034
Occupancy and equipment  725  756  711  721  767
Data processing  250  285  286  277  273
Advertising  101  108  87  86  95
Franchise taxes  199  201  183  154  166
Other operating  2,677  2,436  2,300  3,491  2,876
Total noninterest expense  6,948 7,035 6,714 7,501 7,211
           
Earnings (loss) before provision for income taxes  431 420 450 864 168
           
Provision for income taxes  (53)  (62)  37  2  5
Net Earnings (loss)  484 482 413 862 163
           
Earnings (Loss) Per Share:          
Basic  $0.07 $0.06 $0.06 $0.12 $0.02
Diluted  $0.07 $0.06 $0.06 $0.12 $0.02
           
Basic Weighted Number of          
Shares Outstanding  7,467,255  7,468,090  7,220,018  7,205,595  7,205,595
Diluted Weighted Number of           
Shares Outstanding  7,473,123  7,481,854  7,220,130  7,205,595  7,205,595
 
Camco Financial Corporation
Selected Ratios and Statistics
(In thousands, except for per share data and shares outstanding)
         
  3 Months 3 Months 9 Months 9 Months
  Ended Ended Ended Ended
  9/30/12 9/30/11 9/30/12 9/30/11
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
         
Return on average equity 4.12% 1.46% 3.96% -1.90%
         
Return on average assets 0.25% 0.08% 0.24% -0.11%
         
Interest rate spread 3.40% 3.66% 3.34% 3.59%
         
Net interest margin 3.49% 3.73% 3.45% 3.66%
         
Yield on earning assets 4.52% 5.12% 4.59% 5.17%
         
Cost of deposits 0.87% 1.21% 0.98% 1.32%
         
Cost of borrowings 3.16% 3.07% 3.32% 3.26%
         
Total cost of interest bearing liabilities 1.12% 1.46% 1.25% 1.58%
         
Noninterest expense to average assets 3.64% 3.76% 3.58% 3.69%
         
Efficiency ratio 88.67% 94.82% 87.71% 88.16%
         
Nonperforming assets to total assets 4.60% 4.84% 4.60% 4.84%
         
Non performing loans to total net loans including loans held for sale 3.80% 3.89% 3.80% 3.89%
         
Allowance for loan losses to total loans including loans held for sale 2.42% 2.66% 2.42% 2.66%
         
Ratios are based upon the mathematical average of the balances at the end of each month for the quarter and were annualized where appropriate
             
Camco Financial Corporation
Averages for Quarters Ended
(In thousands, except for per share data and shares outstanding)
             
     
  September 30, 2012 September 30, 2011
  Average   Yield/ Average   Yield/
  Balance Interest Rate Balance Interest Rate
Interest - Earning Assets:            
Loans receivable - net (1)  583,587  7,522 5.16%  635,662  8,715 5.48%
Securities (2)  78,729  131 0.67%  15,216  72 1.89%
FHLB Stock  9,888  104 4.21%  9,888  98 3.96%
Other interest bearing accounts  14,605  8 0.22%  33,218  1 0.01%
Total interest earning assets  686,809  7,765 4.52%  693,984  8,886 5.12%
             
Noninterest-earning assets  75,685      77,419    
Total Average Assets  762,494      771,403    
             
             
Interest-Bearing Liabilities:            
Deposits  565,020  1,235 0.87%  574,338  1,734 1.21%
Advances & Borrowings  68,908  545 3.16%  89,295  686 3.07%
Total interest-bearing liabilities  633,928  1,780 1.12%  663,633  2,420 1.46%
             
Noninterest-bearing sources:            
Noninterest-bearing liabilities  81,527      63,155    
Shareholders' equity  47,039      44,615    
Total Liabilities and Shareholders' Equity  762,494      771,403    
             
Net Interest margin     3.49%     3.73%
             
Net Interest Income & Spread    5,985 3.40%    6,466 3.66%
             
(1) Includes LHFS but does not include ALLL and Non-Accrual Loans
(2) Includes securities designated as available for sale and held to maturity
CONTACT: James E. Huston, CEO John E. Kirksey, CFO Phone: 740-435-2020

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