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Camco Financial Announces Third Quarter Results, Adjusted Second Quarter Financials

(October 29, 2010)

CAMBRIDGE, Ohio, Oct. 29, 2010 (GLOBE NEWSWIRE) -- Camco Financial Corporation (Nasdaq:CAFI), the financial services holding company for Advantage Bank, announced third quarter financial results and adjusted second quarter financial results. Third quarter results ($11.6 million loss), and the revised second quarter results ($4.1 million loss) reflect a deterioration in the underlying collateral value of certain commercial and residential credits driven by the weak real estate market. The Company's year-to-date loss through September 30, 2010 is $15.6 million ($2.16 per share). The Company previously disclosed that it would be restating its second quarter financials in a Form 8-K that was filed with the Securities and Exchange Commission on October 27, 2010.



"While it is difficult to share this news, it is important to realize that we are not immune to the continued tough economic conditions and we are being upfront about the challenges we are facing," said James E. Huston, President and CEO. "This is part of the process of weathering the financial storms that we have all experienced over the last several years. We believe this difficult step will provide the necessary and critical foundation going forward."



"For example, our loan volume during third quarter 2010 was among the best quarters we have experienced since the beginning of the recession. We had $32 million in residential originations as of the end of third quarter, representing a 60 percent increase over second quarter and a 79 percent increase over the same quarter 2009," stated Mr. Huston.


Huston continued, "Lower mortgage rates have led to strong mortgage origination volume and increased gain on sale margins. In addition to traditional refinances, we have seen growth in this category based on specialty Fannie Mae and Freddie Mac refinance programs that assist borrowers who have experienced a decrease in their home equity."




"The Commercial Banking Division continues to be a key revenue driver in 2010 with approximately $102 million in new loan facilities, $550,000 in new origination fees and a significant amount of new commercial deposit relationships. We believe that some of the key attributes of the new commercial business include the opportunity to provide financial services to high net worth individuals, lower leverage real estate projects and high credit quality operating companies. The Commercial Banking Division continues to be focused on relationship banking, credit quality and the interest rate margin," Huston said.



"Like every individual and organization across the country, we have been impacted by the continuing tepid growth in the economy. We are disappointed by the results this quarter – and the need to restate last quarter. We know that this impacts not only our bottom line, but those of our shareholders as well. We are taking the necessary steps so that we are poised for profitability going forward," Huston said.



Review of Financial Performance



Overview:



The third quarter 2010 net loss of $(11.6) million compares to net income of $355,000 in the third quarter of 2009. Earnings per share were $(1.61), compared with $.05 in the third quarter of 2009. Third quarter results compare to a net loss of $(4.1) million in the restated second quarter of 2010. The losses in the second and third quarter of 2010 are driven principally by the provision for loan losses of $5.2 million and $11.4 million, respectively.



Asset Quality:



Loan quality has been impacted by the sluggish economic recovery within our market areas which has caused declines in the underlying value of collateral both in commercial and residential real estate and deterioration in the financial condition of some of our borrowers. These factors have made it difficult to sustain a steady reduction in classified assets and non performing loans. The second quarter 2010 adjustment to the provision reflects management's decision to better match the directional trends in classified assets and non performing loans to the reserve as of June 30, 2010. The bulk of the third quarter provision is driven by recent appraisal information on less than ten large commercial credits and the write down of properties brought in through foreclosure.



A summary of certain key factors follows:






















































(in thousands)

9/30/2010

6/30/2010

12/31/2009

Criticized Assets *

63,716

71,554

71,673

Non Performing Loans

39,073

42,643

36,449

Delinquent 60+ days

28,017

34,407

32,296

Loan Loss Reserve

16,854

15,676

16,099

Loan Loss Reserve / Total Loans

2.39%

2.26%

2.38%

 

 

 

 

*Includes special mention, substandard, doubtful and loss.

** As restated 


Net Interest Income:



Net interest income was $6.8 million, up 9.2 percent compared with the prior year and up 5.9 percent compared with the prior quarter. Net interest margin was 3.59 percent, compared to 3.07 percent with the prior year and 3.40 percent compared with the prior quarter.



Improved margins are being driven by lower cost of deposits and non-core funding sources coupled with a greater mix of new commercial loan originations.



Non-Interest Income (NII):



Non-interest income was $1.4 million, down 10.6 percent compared with the prior year and down 10.0 percent compared to the prior quarter. The decrease in the third quarter, in part, reflects the impact on the valuation of mortgage servicing rights of faster prepayment assumptions related to the low rate environment. However, mortgage loan sales to Freddie Mac and Fannie Mae have been strong. Residential originations in the third quarter were $32 million, up 79 percent over the prior year, and up 60 percent over the prior quarter. Margins have also widened; gains on sale of loans were $332,000 compared to $207,000 in the prior year, and up $71,000 compared to the prior quarter.



Non-Interest Expense (NIE):



NIE was $7.8 million, compared with $7.2 million in the prior year and $7.0 million in the prior quarter. The increase in the third quarter relates to higher loan production, operating expenses associated with real estate owned, and legal expenses relating to the resolution of problem assets.



Balance Sheet Review:



Total assets were $849.3 million at September 30, 2010, compared with $891.4 million in the prior year and $840.1 million at June 30, 2010.



Total loans were $693.4 million at September 30, 2010, compared with $696.9 million in the prior year and $691.6 million at June 30, 2010. The total loan portfolio mix has changed with a greater percentage representing commercial loans, the growth of which has been a strategic initiative for the Bank. Commercial loan balances at September 30, 2010, were $320.0 million, compared with $261.1 million at September 30, 2009 and $302.5 million at June 30, 2010.



Deposit balances were $647.9 million, compared with $670.4 million in the prior year and $652.9 million at June 30, 2010. Excluding the planned runoff of public fund and brokered deposits, our deposit base has increased from $596.8 million to $626.8 million, or 5.03 percent since September 30, 2009. Deposits in the Greater Cincinnati market have been particularly strong increasing by more than $10.8 million since September 30, 2009. 



Provision of Deferred Taxes:



The third quarter tax provision of $572,000 reflects a 100 percent valuation allowance on the Company's deferred tax asset. As the Company executes plans to return to profitability, future earnings will benefit from operating loss carry-forwards. 



About Camco Financial Corporation: Camco Financial Corporation, holding company for Advantage Bank, is a multi-state financial holding company headquartered in Cambridge, Ohio. Advantage Bank and its affiliates offer community banking that includes commercial, business and consumer financial services, internet banking and title insurance services from 26 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



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)

 

9/30/10

6/30/10

3/31/10

12/31/09

9/30/09

Assets

 

 

 

 

 

 Cash and Cash Equivalents

 35,328

 33,567

 28,294

 38,153

 58,244

 Investments 

 39,074

 41,138

 49,935

 58,063

 63,100

 

 

 

 

 

 

 Loans Held for Sale

 12,143

 1,669

 1,600

 475

 2,186

 

 

 

 

 

 

 Loans Receivable

 693,387

 691,596

 699,766

 675,121

 696,931

 Allowance for Loan Loss 

(16,854)

(15,676)

(15,821)

(16,099)

(12,505)

 Loans Receivable, Net

 676,533

 675,920

 683,945

 659,022

 684,426

 

 

 

 

 

 

 Other Assets

86,172

87,768

87,705

86,942

83,466

 

 

 

 

 

 

Total Assets

 $ 849,250

 $ 840,062

 $ 851,479

 $ 842,655

 $ 891,422

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 Deposits

 647,937

 652,872

 649,354

 659,902

 670,391

 Borrowed Funds

 143,665

 119,990

 130,243

 109,232

 133,880

 Other Liabilities

12,436

10,294

11,002

13,007

14,552

 

 

 

 

 

 

Total Liabilities

 804,038

 783,156

 790,599

 782,141

 818,823

 

 

 

 

 

 

Stockholders' Equity

45,212

56,906

60,880

60,514

72,599

 

 

 

 

 

 

Total Liabilities and Stockholders' Equity

 $ 849,250

 $ 840,062

 $ 851,479

 $ 842,655

 $ 891,422

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity to Total Assets

5.32%

6.77%

7.15%

7.18%

8.14%

 

 

 

 

 

 

Total Shares Outstanding

 7,205,595

 7,205,595

 7,205,595

 7,205,595

 7,205,595

 

 

 

 

 

 

Book Value Per Share

$6.27

$7.90

$8.45

$8.40

$10.08











































































































































































































































































































 

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

 

9/30/10

9/30/09

 

(Unaudited)

(Unaudited)

Interest Income:

 

 

 Loans

 28,074

 30,560

 Mortgage-backed securities

 1,291

 1,821

 Investment securities

 224

 660

 Interest-bearing deposits and other

 1,010

 1,067

 Total Interest Income

 30,599

 34,108

 

 

 

Interest Expense:

 

 

 Deposits 

 8,259

 12,039

 Borrowings

 2,961

 4,161

 Total Interest Expense

11,220

16,200

Net Interest Income

19,379

17,908

 

 

 

Provision for Losses on Loans

 17,524

 1,877

Net Interest Income After Provision for Loan Losses

1,855

16,031

 

 

 

Noninterest Income:

 

 

 Late charges, rent and other

 1,234

 1,274

 Loan servicing fees

 952

 948

 Service charges and other fees on deposits

 1,719

 1,684

 Gain on sale of loans

 822

 980

 Mortgage servicing rights 

 (622)

 84

 Gain (loss) on sale of investment, mbs & fixed assets

 1

 156

 Income on cash surrender value life insurance

 656

 710

 Total noninterest income

4,762

5,836

 

 

 

Noninterest expense:

 

 

 Employee compensation and benefits

 10,121

 9,587

 Occupancy and equipment

 2,219

 2,423

 Federal deposit insurance premium

 1,574

 1,771

 Data processing

 842

 908

 Advertising 

 275

 415

 Franchise taxes

 814

 803

 Other operating 

 5,883

 5,238

 Total noninterest expense

21,728

21,145

 

 

 

Earnings (loss) before provision for income taxes

(15,111)

722

 

 

 

 Provision for income taxes

 457

 131

Reported Net Income

(15,568)

591

 

 

 

 

 

 

Net Earnings (Loss)

(15,568)

591

 

 

 

Earnings (Loss) Per Share Reported:

 

Basic 

($2.16)

$0.08

Diluted 

($2.16)

$0.08

 

 

 

Shares Outstanding

 7,205,595

 7,201,383

Diluted Weighted Number of 

 

 

Shares Outstanding

 7,205,595

 7,202,220




































































































































































































































































































































































































































































 

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

 

9/30/10

6/30/10

3/31/10

12/31/09

9/30/09

 

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Interest Income:

 

 

 

 

 

 Loans

 9,513

 9,281

 9,280

 9,670

 9,948

 Mortgage-backed securities

 388

 428

 475

 517

 551

 Investment securities

 54

 67

 103

 88

 110

 Interest-bearing deposits and other

 337

 333

 340

 341

 378

 Total Interest Income

 10,292

 10,109

 10,198

 10,616

 10,987

 

 

 

 

 

 

Interest Expense:

 

 

 

 

 

 Deposits 

 2,570

 2,744

 2,945

 3,309

 3,619

 Borrowings

 972

 992

 997

 1,085

 1,189

 Total Interest Expense

3,542

3,736

3,942

4,394

4,808

Net Interest Income

6,750

6,373

6,256

6,222

6,179

 

 

 

 

 

 

Provision for Losses on Loans

 11,407

 5,212

 905

 19,914

 440

Net Interest Income After Provision for Loan Losses

(4,657)

1,161

5,351

(13,692)

5,739

 

 

 

 

 

 

Noninterest Income:

 

 

 

 

 

 Rent and other

 497

 328

 409

 419

 292

 Loan servicing fees

 315

 320

 317

 316

 316

 Service charges and other fees on deposits

 603

 598

 518

 593

 613

 Gain on sale of loans

 332

 261

 229

 291

 207

 Mortgage servicing rights 

 (528)

 (124)

 30

 619

 (185)

 Gain (loss) on sale of investment, mbs & fixed assets

 2

 (1)

 -- 

 (30)

 153

 Income on CSVL (BOLI)

 221

 220

 215

 216

 216

 Total noninterest income

1,442

1,602

1,718

2,424

1,612

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 Employee compensation and benefits

 3,467

 3,269

 3,385

 2,866

 3,047

 Occupancy and equipment

 734

 743

 742

 824

 880

 Data processing

 276

 286

 280

 281

 295

 Advertising 

 105

 89

 81

 110

 118

 Franchise taxes

 280

 269

 265

 215

 221

 Other operating 

 2,949

 2,319

 2,189

 2,672

 2,688

 Total noninterest expense

7,811

6,975

6,942

6,968

7,249

 

 

 

 

 

 

Earnings (loss) before provision for income taxes

(11,026)

(4,212)

127

(18,236)

102

 

 

 

 

 

 

 Provision for income taxes

 572

 (113)

 (2)

 (6,427)

 (253)

Net Earnings (loss)

(11,598)

(4,099)

129

(11,809)

355

 

 

 

 

 

 

Earnings (Loss) Per Share:

 

 

 

 

 

Basic 

($1.61)

($0.57)

$0.02

($1.64)

$0.05

Diluted 

($1.61)

($0.56)

$0.02

($1.64)

$0.05

 

 

 

 

 

 

Basic Weighted Number of

 

 

 

 

 

Shares Outstanding

 7,205,595

 7,205,595

 7,205,595

 7,205,595

 7,205,595

Diluted Weighted Number of 

 

 

 

 

 

Shares Outstanding

 7,205,595

 7,205,595

 7,239,067

 7,205,595

 7,206,474


































































































































































































































































 

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

 

9/30/10

9/30/09

9/30/10

9/30/09

 

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

 

 

 

 

 

Return on average equity

-85.94%

1.97%

-36.75%

1.09%

 

 

 

 

 

Return on average assets

-5.48%

0.16%

-2.44%

0.08%

 

 

 

 

 

Interest rate spread

3.55%

2.78%

3.35%

2.68%

 

 

 

 

 

Net interest margin

3.59%

3.07%

3.41%

2.82%

 

 

 

 

 

Yield on earning assets

5.47%

5.46%

5.38%

5.38%

 

 

 

 

 

Cost of deposits

1.69%

2.51%

1.80%

2.50%

 

 

 

 

 

Cost of borrowings

3.00%

3.40%

3.11%

3.51%

 

 

 

 

 

Total cost of interest bearing liabilities

1.92%

2.68%

2.03%

2.70%

 

 

 

 

 

Noninterest expense to average assets

3.69%

3.17%

3.40%

2.96%

 

 

 

 

 

Efficiency ratio

95.35%

93.04%

90.00%

89.05%

 

 

 

 

 

Nonperforming assets to total assets

5.25%

6.82%

5.25%

6.82%

 

 

 

 

 

Non performing loans to total net loans including 

 

 

 

 

 loans held for sale

4.94%

7.47%

4.94%

7.47%

 

 

 

 

 

Allowance for loan losses to total loans

2.39%

1.79%

2.39%

1.79%

 

 

 

 

 

 

 

 

 

 

Ratios are based upon the mathematical average of the balances at the end of each month for the quarter and were annualized where appropriate






















































































































































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Camco Financial Corporation

Averages for Quarters Ended

(In thousands, except for per share data and shares outstanding)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2010

September 30, 2009

 

Average

 

Yield/

Average

 

Yield/

 

Balance

Interest

Rate

Balance

Interest

Rate

Interest - Earning Assets:

 

 

 

 

 

 

 Loans receivable - net (1)

 661,778

 9,513

5.75%

 651,796

 9,948

6.10%

 Securities (2)

 40,154

 442

4.40%

 68,825

 661

3.84%

 FHLB Stock

 29,888

 335

4.48%

 29,888

 373

4.99%

 Other interest bearing accounts

 21,301

 2

0.04%

 54,206

 5

0.04%

 Total interest earning assets

 753,121

 10,292

5.47%

 804,715

 10,987

5.46%

 

 

 

 

 

 

 

Noninterest-earning assets

 94,118

 

 

 110,207

 

 

Total Average Assets

 847,239

 

 

 914,922

 

 

 

 

 

 

 

 

 

 

 
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