CAMBRIDGE, Ohio, Feb. 4, 2008 (PRIME NEWSWIRE) -- Camco Financial Corporation (Nasdaq:CAFI) reported net earnings for the quarter ended December 31, 2007, of $807,000, or $0.11 per share, compared to net earnings of $1.26 million, or $0.17 per share, for the fourth quarter of 2006. Net earnings for the full year of fiscal 2007 totaled $4.50 million, or $0.61 per share, compared to $5.87 million, or $0.78 per share, in 2006. Assets totaled $1.02 billion at December 31, 2007.
President and Chief Executive Officer Richard C. Baylor commented, "Deteriorating credit quality continues to take its toll as Ohio struggles with higher than average unemployment and escalating bankruptcy and foreclosure filings. We recorded an appropriate and prudent provision for loan losses of $980,000 during the fourth quarter of 2007 as our nonperforming assets rose to 2.84% of assets from 2.32% at September 30, 2007. However, we believe that our conservative underwriting guidelines have helped to shelter us from the very large loan losses currently being reported by some our peers in Ohio. For the full year, net charge offs were a manageable 25 basis points of average loans. We continue to dedicate personnel to our workout and collection teams and expect improvement in nonperforming asset levels in 2008."
Review of Financial Performance
Net Interest Margin: During the fourth quarter of 2007, the net interest margin increased to 2.94% from 2.85% in the third quarter of 2007 but lower than the 3.16% margin realized during the fourth quarter of 2006. The third quarter of 2007 included a cumulative negative adjustment of $225,000 to loan fee income, which reduced the net interest margin that quarter. The reduction of Federal Home Loan Bank borrowings during the fourth quarter of 2007 helped to reduce the total cost of funds by 7 basis points. The cost of interest-bearing deposits fell 3 basis points during the fourth quarter of 2007 from the previous quarter as management reduced rates paid on high-yield money market accounts and certificates of deposit. These actions were in response to the multiple reductions in the Prime rate during the second half of 2007.
The Company continues to experience strong competition for deposits in its market areas, which is limiting management's ability to quickly reduce the marginal cost of deposits. Continued decreases in the Prime rate will likely compress the net interest margin as loans may reprice quicker than deposits. The Company anticipates the use of brokered deposits in 2008 in order to improve liquidity and reduce reliance on borrowed funds that require collateral. For fiscal 2007, total deposits increased $7.40 million, despite the reduction of $10.00 million of auctioned public funds that were not renewed during the year due to collateral requirements.
During the fourth quarter of 2007, the yield on loans was at 7.04%. The loan portfolio mix continues to shift to higher yielding consumer and commercial loans, which is helping to offset lower effective rates in the loan portfolio during the second half of 2007. Loan portfolio balances fell $22.19 million during the fourth quarter. Conventional mortgage loans comprised 51% of this decrease. The total loan portfolio decreased $6.57 million for the full year of 2007 as management tightened credit standards and became more selective in underwriting new loans in the second half of the year, which reduced new loan production. Additionally, some commercial loans were not renewed due to concerns about the future performance of the loan, which resulted in those loans being refinanced at other institutions.
Mr. Baylor added, "While we have every intention of growing the balance sheet through loan originations, we took the opportunity during what is seasonally a lower loan production quarter, to re-examine credit standards and thoroughly review our loan portfolio. Although we continuously review our loan relationships, we asked our lenders to look even deeper this quarter. The loss of potential new relationships is a result of this internal focus, compounding the effects of a weak economic environment in the Midwest. Our lenders will continue to assist with reducing our nonperforming loan levels throughout the new year, but we expect them to build their portfolios during 2008 and fund that growth with commercial and small business deposit accounts."
Noninterest Income: For the quarter ended December 31, 2007, total noninterest income increased $708,000 to $1.72 million compared to $1.02 million in the fourth quarter of 2006. The fourth quarter of 2006 included a $655,000 reduction in the value of mortgage servicing rights. Lower gains on the sale of loans were offset by an increase in commercial loan prepayment penalties during the fourth quarter of 2007 compared to the third quarter of 2007.
Noninterest Expense: For the quarter ended December 31, 2007, noninterest expense totaled $6.76 million, a reduction of $460,000 from the third quarter of 2007, but an increase of $468,000 from the fourth quarter of 2006. During the third and fourth quarters of 2007, management combined the Company's four retail banking divisions into two regions and closed two residential loan production offices. Severance and other personnel expenses related to these activities totaled $181,000 during the third quarter of 2007. Several commercial lenders and collectors in the Credit Administration department have been hired in 2007. The Company has also launched two branches since the third quarter of 2006, which increased compensation expense in 2007. Compensation expense in the fourth quarter of 2007 was positively impacted through the reduction of bonus accruals by $225,000. Volatile end-of-year deposit balances and lower net income during the fourth quarter reduced the incentive compensation earned by employees and senior management will not receive the cash portion of incentive compensation earned under the Company's key executive incentive plan during 2007. Additional information on the Company's executive compensation was disclosed in a Form 8-K that was filed with the Securities and Exchange Commission on January 28, 2008.
During the fourth quarter of 2007, all other operating expenses decreased $111,000 compared to the third quarter of 2007, but increased $368,000 compared to the fourth quarter of 2006. Most of the increases in other expense can be attributed to a reduction in the value of other real estate owned of $245,000 during the fourth quarter of 2007.
Provision for Income Taxes: The effective tax rate fell to 23.22% during the fourth quarter of 2007, compared to 29.73% in 2006, due to income tax credits earned through the Company's investment in affordable housing projects.
Asset Quality: Net charge-offs totaled $610,000 during the fourth quarter of 2007. Loans secured by 1-4 family and commercial real estate comprised $366,000 and $174,000 of net charge-offs, respectively.Net charge-offs totaled $2.02 million for the full year of 2007.
Nonperforming loans increased to $24.00 million and other real estate owned increased to $5.03 million at December 31, 2007 from $20.45 million and $3.8 million, respectively, at September 30, 2007. Loans secured by 1-4 family properties, commercial real estate and land development projects comprised 36%, 25%, and 22% of nonperforming loans, respectively. While home equity lines of credit comprised approximately 14% of the Company's loan portfolio at December 31, 2007, they comprised only 3.86%, or $925,000, of total nonperforming loans. Approximately 1.46% of the Company's home equity lines of credit were delinquent or on nonaccrual status, which was the lowest delinquency level of any of the Company's loan segments. Land development loans totaled $16.23 million at December 31, 2007, with $5.17 million of that portfolio classified as impaired and on nonaccrual status. Specific reserves on land development loans totaled $642,000. The remaining $11.06 million of land development loans were performing as contractually-agreed and were current as of December 31, 2007.
Strategic Vision:
Balance Sheet Transformation: Camco continues to execute and manage its long-term strategic plan of transforming the balance sheet primarily through increasing the commercial and consumer loan components of its loan portfolio and aggregating core deposits. Management continues to assess organizational alignment and the skills of individuals in key positions. The Company has nearly completed the realignment of its Retail Banking line of business, which included the creation of business development officers who are primarily charged with outside sales of deposit and loan products. Internal and cross-sell initiatives will be driven by personal bankers and office managers. Management believes this alignment, coupled with a new sales incentive program and new deposit products will allow the organization to improve its funding structure through core deposit growth.
Share Repurchase Plan: In April 2007, Camco announced the renewal of a share repurchase plan that authorized the buyback of up to 5% of Camco's common stock. During 2007, Camco repurchased 309,888 shares of common stock, of which 46,500 was repurchased during the fourth quarter.
Branch Optimization and Profitability Improvement Initiatives: During 2007, Camco initiated an internal and external review of its branch network and sales delivery channels and processes. The review focused on operational process efficiency, noninterest income enhancement and branch delivery of products and services. Camco began implementing the results of this initiative in the third quarter of 2007. The disclosure of a new fee structure, the announcement that the Company will close a banking office in its Greater Cincinnati market in January 2008, the closure of two mortgage loan production offices in the fourth quarter of 2007 and the consolidation of two of the Company's regions were part of this plan. Management continues to assess the performance of each branch in the Company's footprint.
Management has dispatched a project team to address, plan and implement the operational and communicative tasks necessary to improve fee collection and address pricing of deposit and loan services. Additional improvement in earnings is expected to come from several noninterest expense reduction and operational efficiency projects. Camco expects to see the benefits of this noninterest income initiative throughout 2008.
About Camco Financial Corporation:
Camco Financial Corporation, Holding Company of Advantage Bank, is a multi-state financial services Holding Company headquartered in Cambridge, Ohio. Advantage Bank and its affiliate, Camco Title Agency, offer relationship banking that includes commercial, small business and consumer financial services, internet banking and title insurance services from 28 offices in Ohio, Kentucky and West Virginia. Additional information about Camco Financial Corporation may be found on the Company's web sites: www.camcofinancial.com and www.advantagebank.com.
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)
12/31/07 9/30/07 6/30/07 3/31/07 12/31/06
---------- ---------- ---------- ---------- ----------
Assets
Cash and
Cash
Equivalents 23,004 16,950 21,596 24,099 26,542
Investments 91,688 100,671 102,275 108,602 110,955
Loans Held
for Sale 3,169 2,733 3,134 3,415 3,664
Loans
Receivable
(1) 818,725 840,920 837,291 832,266 825,298
Allowance
for Loan
Loss (6,623) (6,253) (7,020) (7,126) (7,144)
---------- ---------- ---------- ---------- ----------
Loans
Receivable,
Net 812,102 834,667 830,271 825,140 818,154
Goodwill 6,683 6,683 6,683 6,683 6,683
Other Assets 86,615 85,956 80,702 81,451 82,218
---------- ---------- ---------- ---------- ----------
Total Assets $1,023,261 $1,047,660 $1,044,661 $1,049,390 $1,048,216
========== ========== ========== ========== ==========
Liabilities
Deposits 692,184 694,016 682,011 685,341 684,782
Borrowed
Funds 220,981 245,850 259,750 258,285 257,139
Other
Liabilities 21,462 18,955 12,752 14,533 15,203
---------- ---------- ---------- ---------- ----------
Total
Liabilities 934,627 958,821 954,513 958,159 957,124
Stockholders'
Equity 88,634 88,839 90,148 91,231 91,092
---------- ---------- ---------- ---------- ----------
Total
Liabilities
and
Stockholders'
Equity $1,023,261 $1,047,660 $1,044,661 $1,049,390 $1,048,216
========== ========== ========== ========== ==========
Stockholders'
Equity to
Total Assets 8.66% 8.48% 8.63% 8.69% 8.69%
Total Shares
Outstanding 7,155,595 7,202,095 7,327,835 7,419,546 7,463,056
Book Value
Per Share $12.39 $12.34 $12.30 $12.30 $12.21
(1) - Excludes capitalized mortgage servicing rights, which are
reported in Other Assets. Prior-period financial statements were
reclassified to conform to the current period's presentation.
Camco Financial Corporation
Condensed Consolidated Statements of Earnings
Year to Date Information
(In thousands, except for per share data and shares outstanding)
12 Months 12 Months
Ended Ended
12/31/07 12/31/06
(Unaudited) (Unaudited)
--------- ---------
Interest Income:
Loans 57,448 54,764
Mortgage-backed securities 2,247 2,428
Investment securities 2,338 2,212
Interest-bearing deposits
and other 3,284 3,285
------- ------
Total Interest Income 65,317 62,689
------- ------
Interest Expense:
Deposits 25,429 21,248
Borrowings 10,992 11,523
------- ------
Total Interest Expense 36,421 32,771
------- ------
Net Interest Income 28,896 29,918
Provision for Losses on Loans 1,495 1,440
------- ------
Net Interest Income After
Provision for Loan Losses 27,401 28,478
------- ------
Noninterest Income:
Late charges, rent and other 2,070 1,869
Loan servicing fees 1,375 1,412
Service charges and other
fees on deposits 2,441 2,056
Gain on sale of loans 353 295
Mortgage servicing rights (68) (549)
Gain (loss) on sale of
investment, mbs & fixed assets (24) 22
Gain (loss) on sale of real
estate acq'd through foreclosure (297) (72)
------- ------
Total noninterest income 5,850 5,033
------- ------
Noninterest expense:
Employee compensation and
benefits 13,012 12,410
Occupancy and equipment 3,464 3,182
Data processing 1,186 1,344
Advertising 1,299 1,158
Franchise taxes 1,103 1,027
Other operating 6,921 5,789
------- ------
Total noninterest expense 26,985 24,910
------- ------
Earnings before provision for
income taxes 6,266 8,601
Provision for income taxes 1,765 2,727
------- ------
Reported Net Income 4,501 5,874
------- ------
Net Earnings 4,501 5,874
======= =======
Earnings Per Share Reported:
Basic $0.61 $0.78
Diluted $0.61 $0.78
Basic Weighted Number of
Shares Outstanding 7,326,907 7,508,006
Diluted Weighted Number of
Shares Outstanding 7,328,494 7,505,720
Camco Financial Corporation
Condensed Consolidated Statements of Earnings
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
12/31/07 9/30/07 6/30/07 3/31/07 12/31/06
(Unaudited)(Unaudited)(Unaudited)(Unaudited)(Unaudited)
--------- --------- --------- --------- ---------
Interest
Income:
Loans 14,230 14,490 14,577 14,151 14,164
Mortgage-
backed
securities 601 553 533 560 585
Investment
securities 508 590 600 640 603
Interest-
bearing
deposits and
other 820 801 825 838 822
-----------------------------------------------------
Total
Interest
Income 16,159 16,434 16,535 16,189 16,174
-----------------------------------------------------
Interest Expense:
Deposits 6,558 6,537 6,330 6,004 5,972
Borrowings 2,531 2,908 2,755 2,798 2,770
-----------------------------------------------------
Total
Interest
Expense 9,089 9,445 9,085 8,802 8,742
-----------------------------------------------------
Net Interest
Income 7,070 6,989 7,450 7,387 7,432
Provision for
Losses on
Loans 980 200 120 195 360
-----------------------------------------------------
Net Interest
Income After
Provision for
Loan Losses 6,090 6,789 7,330 7,192 7,072
-----------------------------------------------------
Noninterest
Income:
Late charges,
rent and
other 506 458 517 589 450
Loan servicing
fees 345 335 343 352 345
Service
charges and
other fees
on deposits 634 642 598 567 537
Gain on sale
of loans 89 107 71 86 60
Mortgage
servicing
rights 134 (22) (127) (53) (368)
Gain (loss)
on sale of
investment,
mbs & fixed
assets 1 (29) -- 10 (3)
Gain (loss)
on sale of
real estate
acq'd through
foreclosure 15 4 (339) 17 (5)
-----------------------------------------------------
Total
noninterest
income 1,724 1,495 1,063 1,568 1,016
-----------------------------------------------------
Noninterest
expense:
Employee
compensation
and benefits 3,128 3,477 3,066 3,341 3,028
Occupancy and
equipment 829 891 875 869 797
Data
processing 299 317 285 285 302
Advertising 280 358 339 322 316
Franchise
taxes 273 276 286 268 268
Other
operating 1,954 1,904 1,585 1,478 1,584
-----------------------------------------------------
Total
noninterest
expense 6,763 7,223 6,436 6,563 6,295
-----------------------------------------------------
Earnings before
provision for
income taxes 1,051 1,061 1,957 2,197 1,793
Provision
for income
taxes 244 218 610 693 533
-----------------------------------------------------
Net earnings 807 843 1,347 1,504 1,260
=====================================================
Earnings Per
Share
Reported:
Basic $0.11 $0.12 $0.18 $0.20 $0.17
Diluted $0.11 $0.12 $0.18 $0.20 $0.17
Basic
Weighted
Number of
Shares
Outstanding 7,183,709 7,278,187 7,392,499 7,457,583 7,462,642
Diluted
Weighted
Number of
Shares
Outstanding 7,184,277 7,281,087 7,393,779 7,458,931 7,464,547
Camco Financial Corporation
Selected Ratios and Statistics
Periods Ended December 31, 2007 and 2006
(In thousands, except for per share data and shares outstanding)
3 Months 3 Months 12 Months 12 Months
Ended Ended Ended Ended
12/31/07 12/31/06 12/31/07 12/31/06
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
--------- --------- --------- ---------
Return on average
equity 3.63% 5.53% 4.98% 6.46%
Return on average
assets 0.31% 0.48% 0.43% 0.55%
Interest rate
spread 2.62% 2.71% 2.64% 2.73%
Net interest
margin 2.94% 3.16% 2.90% 3.14%
Yield on earning
assets 6.72% 6.54% 6.68% 6.26%
Cost of deposits 3.99% 3.67% 3.90% 3.29%
Cost of borrowings 4.41% 4.24% 4.40% 4.08%
Total cost of
interest bearing
liabilities 4.10% 3.83% 4.04% 3.53%
Noninterest expense
to average assets 2.61% 2.40% 2.58% 2.35%
Efficiency ratio 76.90% 74.51% 77.66% 71.27%
Nonperforming
assets to total
assets 2.84% 2.06% 2.84% 2.06%
Non performing
loans to total net
loans including
loans held for
sale 2.94% 2.13% 2.94% 2.13%
Allowance for loan
losses to total
loans 0.82% 0.87% 0.82% 0.87%
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
December, September and June 2007
(In thousands, except for per share data and shares outstanding)
--------------------------------
December 31, 2007
--------------------------------
Average Yield/
Balance Interest Rate
--------------------------------
Interest - Earning Assets:
Loans held for sale 3,017
Loans receivable - net (2) 805,847 14,230 7.04%
Mortgage-backed securities 53,670 601 4.48%
Investment securities 44,621 508 4.55%
Interest-bearing deposits
and other 54,639 820 6.00%
--------------------------------
Total interest earning
assets 961,794 16,159 6.72%
--------------------------------
Noninterest-earning assets 74,946
---------
Total Assets 1,036,740
=========
Interest-Bearing Liabilities:
Deposits 657,862 6,558 3.99%
Advances & Borrowings 229,380 2,531 4.41%
--------------------------------
Total interest-bearing
liabilities 887,242 9,089 4.10%
--------------------------------
Noninterest-bearing sources:
Noninterest-bearing
liabilities 60,503
Shareholders' equity 88,995
---------
Total Liabilities and
Shareholders' Equity 1,036,740
=========
---------------------
Net Interest Income & Margin 7,070 2.94%
=====================
--------------------------------
September 30, 2007
--------------------------------
Average Yield/
Balance Interest Rate
--------------------------------
Interest - Earning Assets:
Loans held for sale 2,934 --
Loans receivable - net (2) 822,339 14,490 7.02%
Mortgage-backed securities 51,225 553 4.32%
Investment securities 50,539 590 4.67%
Interest-bearing deposits
and other 55,006 801 5.82%
--------------------------------
Total interest earning
assets 982,043 16,434 6.69%
---------------------------------
Noninterest-earning assets 66,593
----------
Total Assets 1,048,636
==========
Interest-Bearing Liabilities:
Deposits 650,830 6,537 4.02%
Advances & Borrowings 256,078 2,908 4.54%
--------------------------------
Total interest-bearing
liabilities 906,908 9,445 4.17%
--------------------------------
Noninterest-bearing sources:
Noninterest-bearing
liabilities 51,784
Shareholders' equity 89,944
---------
Total Liabilities and
Shareholders' Equity 1,048,636
=========
-----------------------
Net Interest Income & Margin 6,989 2.85%
=======================
--------------------------------
June 30, 2007
--------------------------------
Average Yield/
Balance Interest Rate
--------------------------------
Interest - Earning Assets:
Loans held for sale 4,190 --
Loans receivable - net (2) 816,934 14,577 7.10%
Mortgage-backed securities 50,479 533 4.22%
Investment securities 54,313 600 4.42%
Interest-bearing deposits
and other 57,725 825 5.72%
--------------------------------
Total interest earning
assets 983,641 16,535 6.72%
--------------------------------
Noninterest-earning assets 64,075
---------
Total Assets 1,047,716
=========
Interest-Bearing Liabilities:
Deposits 651,792 6,330 3.88%
Advances & Borrowings 255,830 2,755 4.31%
--------------------------------
Total interest-bearing
liabilities 907,622 9,085 4.00%
--------------------------------
Noninterest-bearing sources:
Noninterest-bearing
liabilities 48,890
Shareholders' equity 91,204
---------
Total Liabilities and
Shareholders' Equity 1,047,716
=========
---------------------
Net Interest Income & Margin 7,450 3.03%
=====================
(2) - Does not include allowance for loan and lease losses, capitalized
mortgage servicing rights or loans on nonaccrual status.
Prior-period financial statements were reclassified to conform to
the current period's presentation.