Camco Financial Announces Second Quarter 2004 Earnings.CAMBRIDGE, Ohio Cambridge is a city in the U.S. state of Ohio and the county seat of Guernsey CountyGR6. The municipality is located in southeastern Ohio and is in the Appalachian Plateau of the Appalachian Mountains. -- (Nasdaq:CAFI CAFI Canadian Agriculture and Food International CAFI Conférence des Alpes franco-italiennes (French) CAFI Computer-Aided Fault Isolation CAFI Commanders Annual Facility Inspection ) - Camco Financial Corporation reported net earnings for the quarter ended June June: see month. 30, 2004 of $1.5 million compared to $2.2 million of net earnings reported for the same quarter in 2003. Basic earnings per share for the second quarter of 2004 were $.21 compared to $.30 for the same quarter in 2003. Basic earnings per share for the second quarter 2004 were $.21 compared to $.14 for the first quarter of 2004, or a 48% increase. For the 6 months ended June 30, 2004 Camco (or "the Company") reported net earnings of $2.6 million compared to $4.7 million of net earnings reported for the same 6 month period in 2003. Basic earnings per share for the 6 months ended June 30, 2004 were $.35 compared to $.62 for the same 6 month period in 2003. Camco paid a quarterly dividend of $.145 per share on July July: see month. 16, 2004, representing an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. yield of 4.14% based on Camco's quarter end market value. Camco Financial Corporation President & CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Richard Ri·chard , Joseph Henri Maurice Known as "Rocket." 1921-2000. Canadian hockey player. A right wing for the Montreal Canadiens (1942-1960), he led his team to eight Stanley Cup championships and was the first player to score 50 goals in a C. Baylor Bay·lor , Elgin Born 1934. American basketball player. He was a forward for the Minneapolis and Los Angeles Lakers from 1958 to 1971 and ranks among the all-time National Basketball Association leaders in points and per-game scoring average. said, "We are encouraged by our progress in evolving our sources of income from strong reliance on secondary market gains to earnings driven mostly by activities that produce core earnings, such as net interest income, deposit and loan service fees. Moreover, our continuing strategic shift in asset composition has positioned the Company to benefit from the long anticipated increases in the overall level of interest rates. Management's internal analysis projects an improvement of over 10% in net interest income will likely result if interest rates incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. an instantaneous in·stan·ta·ne·ous adj. 1. Occurring or completed without perceptible delay: Relief was instantaneous. 2. and parallel increase of 200 basis points. This trend would be expected to translate into a higher net interest margin and a $.24 annual increase in basic earnings per share." Baylor continued, "Though overall residential loan production is lower than 2003, we are excited to see the significant pickup Pickup A gain in yield made by selling one bond and buying another. Also referred to as "yield pickup." Notes: When the present yield is relatively low compared to the longer-term yields, pickups will be done by investors trying to increase the yield and duration of their in our commercial real estate production which stands at $73.4 million through June 30, 2004, versus $23.27 million for the same six month period of 2003. For the six months ended June 30, 2004, commercial real estate and consumer loan production amounted to 56% of our total year to date production." Review of significant areas: Net Interest Margin - Management believes the net interest margin will continue to improve as Camco emphasizes the growth of the commercial real estate and consumer loan portfolios while at the same time effectively managing the cost of the company's funding sources. Through continual efforts to meet the needs of the customer base, management is actively managing a deposit structure that is anticipated to grow over the coming months, which will provide low cost funding for loans. As an example, management recently launched a new checking product line called Advantage Platinum platinum (plăt`ənəm), metallic chemical element; symbol Pt; at. no. 78; at. wt. 195.08; m.p. 1,772°C;; b.p. 3,827±100°C;; sp. gr. 21.45 at 20°C;; valence +2 or +4. that allows the customer to participate in local and national merchant discounts as well as reduce service charges when the customer maintains required balances in their account or total deposit relationship. They may also receive discounts on other AdvantageBank products. Non-Interest Income - For the 6 months ended June 30, 2004 non-interest income was $3.2 million versus $6.8 million for the same period last year. This decrease is primarily due to reductions in 3 major sources of revenue. First, the gain-on-sale of loans sold into the secondary market has decreased from $2.7 million for the 6 months ended June 30, 2003 to $490,000 for the 6 months ended June 30, 2004. This reduction in the gain-on-sale of loans is directly attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to lower production volumes of fixed rate home loans. Management expects the gain-on-sale of residential loans into the secondary market to continue at current levels. However, our anticipated increased production of adjustable rate Adjustable rate Applies mainly to convertible securities. Refers to interest rate or dividend that is adjusted periodically, usually according to a standard market rate outside the control of the bank or savings institution, such as that prevailing on Treasury bonds or notes. residential loans will add to Camco's portfolio growth of interest rate sensitive and lower risk assets. Secondly, non-interest income from Camco Title Agency, a subsidiary of Camco, has decreased. Camco Title's services are driven directly by loan production through the selling of title insurance to our customers. Camco Title's contribution to Camco's non-interest income has decreased from $957,000 for the first six months ended June 30, 2003 to $446,000 for the 6 months ended June 30, 2004. Management anticipates a modest growth of title agency net income as Camco Title expands its services throughout the Bank's franchise. The third major area driving the decrease in non-interest income was mortgage servicing Mortgage servicing The collection of monthly payments and penalties, record keeping, payment of insurance and taxes, and possible settlement of default , involved with a mortgage loan. rights. Prepayments Prepayments Payments made in excess of scheduled mortgage principal repayments. of the underlying sold portfolios occurred at the same time Camco experienced lower sales of current loan production into the secondary market. The net impact for the 6 months ended June 30, 2004 compared to the same period in 2003 was a decrease of $663,000. Management expects the impact of mortgage servicing rights on earnings to improve as interest rates increase. An increase in rates is expected to reduce prepayments from the levels that had been experienced over the past several years. Operating Expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. - For the six months ended June 30, 2004 operating expenses were down 2.4%, from $11.6 million for the first six months of 2003 to $11.4 million for the first six months of 2004. Management continues to contain personnel costs through operating efficiencies created by the consolidation of charters in 2001 while at the same time expending resources to build and develop the current sales culture. For the six months ended 2004 personnel costs were down 8.45% when compared to the first six months of 2003. The offset to compensation expense related to FAS 91 has decreased substantially due to the drop in residential loan production, as this expense decreased from $1.8 million to $1.2 million, or approximately 33%. Occupancy and equipment expenses have decreased from $1.9 million to $1.7 million for the first six months of 2004, or a decrease of almost 8.32% as management utilizes current infrastructure more efficiently and capitalizes on past investments in technology. Asset Quality - At the end of the second quarter of 2004, non-performing loans A non-performing loan is a loan that is in default or close to being in default. Many loans become non-performing after being in default for 3 months, but this can depend on the contract terms. as a percent of loans decreased from 1.5% at June 30, 2003 to 1.39% at June 30, 2004. Correspondingly, as the portfolio continues to be managed, the allowance for loan loss allowance as a percent of loans has decreased from 77 basis points at June 30, 2003 to 66 basis points at June 30, 2004. Significant resources have been devoted to continue reducing the level of non-performing assets over the coming months and the collections effort has been intensified in·ten·si·fy v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies v.tr. 1. To make intense or more intense: . At June 30, 2004, approximately 76% of the non-performing loans are single family home loans. Strategic Vision - Camco Financial continues to actively execute and manage its long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. strategic plan. This plan encompasses the diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. of the balance sheet primarily through increasing the commercial real estate and consumer loan portfolios as well as transaction-based deposits. Critical to this strategy is the growth of the balance sheet and the corresponding increase in net interest margin. Complimentary revenue sources to enhance the net interest margin are being actively pursued while management remains vigilant to contain operating expenses in this transitional period. Camco's announced acquisition of London London, city, Canada London, city (1991 pop. 303,165), SE Ont., Canada, on the Thames River. The site was chosen in 1792 by Governor Simcoe to be the capital of Upper Canada, but York was made capital instead. London was settled in 1826. Financial Corporation, London, Ohio London is a city in Madison County, Ohio, United States. It was established in 1810 to serve as the county seat of Madison County. As of the 2000 census, the city population was 8,771, an increase from 7,807 in 1990. is expected to close in August 2004. This acquisition is projected to be accretive to earnings by approximately 9 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. in the first year. Camco Financial Corporation, holding company for Advantage Bank, is a multi-state thrift thrift: see leadwort. holding company headquartered in Cambridge, Ohio with assets of $1.1 billion. Advantage Bank and its affiliates offer community banking, mortgage banking, internet banking and title services from 32 offices in 23 communities in Ohio, Kentucky Kentucky, state, United States Kentucky (kəntŭk`ē, kĭn–), one of the so-called border states of the S central United States. It is bordered by West Virginia and Virginia (E); Tennessee (S); the Mississippi R. and West Virginia West Virginia, E central state of the United States. It is bordered by Pennsylvania and Maryland (N), Virginia (E and S), and Kentucky and, across the Ohio R., Ohio (W). Facts and Figures Area, 24,181 sq mi (62,629 sq km). Pop. . Additional information about Camco Financial may be found on Camco's web site: 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 forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 regulatory agency Independent government commission charged by the legislature with setting and enforcing standards for specific industries in the private sector. The concept was invented by the U.S. , 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 CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. Financials Attached.
Camco Financial Corporation
Condensed Consolidated Statements of Earnings
Periods Ended June 30, 2004 and 2003
(In thousands, except for per share data and shares outstanding)
6 Months 6 Months 3 Months 3 Months
Ended Ended Ended Ended
6/30/04 6/30/03 6/30/04 6/30/03
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
Total Interest Income $25,714 $28,611 $12,985 $13,918
Total Interest Expense 13,367 16,300 6,709 7,973
----------- ----------- ----------- -----------
Net Interest Income 12,347 12,311 6,276 5,945
Provision for Losses
on Loans 510 675 255 255
----------- ----------- ----------- -----------
Net Interest Income
After Provision for
Loan Losses 11,837 11,636 6,021 5,690
Other Income 3,239 6,803 1,703 3,348
General, Administrative,
and Other Expense 11,364 11,639 5,494 5,860
----------- ----------- ----------- -----------
Net Income - Before
Income Tax 3,712 6,800 2,230 3,178
----------- ----------- ----------- -----------
Income Tax Expense 1,146 2,118 698 950
----------- ----------- ----------- -----------
Reported Net Earnings $2,566 $4,682 1,532 2,228
=========== =========== =========== ===========
Earnings Per Share
Reported:
Basic $0.35 $0.62 $0.21 $0.30
Diluted $0.35 $0.61 $0.21 $0.29
Basic Weighted Number
of Shares Outstanding 7,351,487 7,599,184 7,357,635 7,524,761
Diluted Weighted Number
of Shares Outstanding 7,406,756 7,684,116 7,403,929 7,609,534
Selected Financial Ratios
Net Interest Margin 2.47% 2.41% 2.47% 2.34%
Reported:
Return on Average Equity 5.52% 9.56% 6.59% 9.19%
Return on Average Assets 0.49% 0.87% 0.58% 0.83%
Camco Financial Corporation
Condensed Consolidated Statements of Financial Condition
(In thousands, except for per share data and shares outstanding)
(Unaudited) Audited (Unaudited)
6/30/04 12/31/03 6/30/03
------------ -------- -----------
Assets
------
Cash and Cash Equivalents $38,192 $53,711 $55,888
Investments 124,694 113,758 183,633
Loans Held for Sale 4,805 5,457 14,385
Loans Receivable 838,699 805,266 753,059
Allowance for Loan Loss (5,528) (5,641) (5,769)
----------- ---------- ----------
Loans Receivable, Net 833,171 799,625 747,290
Goodwill 2,953 2,953 2,953
Other Assets 64,902 63,647 63,182
----------- ---------- ----------
Total Assets $1,068,717 $1,039,151 $1,067,331
========== ========== ===========
Liabilities
-----------
Deposits $677,567 $671,274 $685,183
Borrowed Funds 289,789 262,735 273,800
Other Liabilities 9,638 12,599 11,834
----------- ---------- ----------
Total Liabilities 976,994 946,608 970,817
Stockholders Equity 91,723 92,543 96,514
----------- ---------- ----------
Total Liabilities and
Stockholders' Equity $1,068,717 $1,039,151 $1,067,331
========== ========== ===========
Stockholders' Equity to Total Assets 8.58% 8.91% 9.04%
Total Shares Outstanding 7,358,888 7,332,423 7,475,224
Book Value Per Share $12.46 $12.62 $12.91
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