Camco Financial Announces Third Quarter 2006 Earnings.

CAMBRIDGE, Ohio -- (Nasdaq:CAFI) - Camco Financial Corporation (Camco) reported net earnings for the quarter ended September 30, 2006 of $1.12 million or $.15 per share as compared with net earnings of $2.04 million or $.27 per share for the same quarter in 2005.

For the nine months ended September 30, 2006 Camco reported net earnings of $4.61 million compared to $6.30 million of net earnings reported for the same nine month period in 2005. Basic earnings per share for the nine months ended September 30, 2006 were $.61 compared to $.82 for the same nine month period in 2005.

Camco recently announced a quarterly dividend of $.15 per share which was payable October 20, 2006. This dividend represents an annualized yield of 4.54% on Camco's September 30th quarter-end market value.

President & CEO Richard C. Baylor commented, "Our decreased earnings in the third quarter are due primarily to the interest rate environment in which we find ourselves. The resulting net interest margin reduction, coupled with lower loan production than previous periods has placed continued downward pressure on our earnings. However, we remain focused on the diversification of our balance sheet, managing asset quality, as well as relationship building and continued vigilance on operational efficiency."

Mr. Baylor continued, "We are pleased to announce the opening of our 23rd full service banking center in the northern Cincinnati suburb of Mason, Ohio. And we anticipate opening our 24th banking center in London, Ohio, just west of Columbus, in the first quarter of 2007."

"The new branch developments are the result of the growth initiative undertaken in 2005 which consists of directing efforts to fill in the bank's existing footprint as the market for acquisition growth diminished," Baylor noted.

Strategic Vision: Camco continues to execute and manage its long-term strategic plan. This plan, which encompasses the diversification of the balance sheet, primarily through: increasing commercial, commercial real estate and consumer loan portfolios as well as transaction-based deposits. Critical to this strategy is the future growth of the balance sheet and the corresponding increase in net interest income. Complementary revenue sources to enhance net interest income are being actively pursued while management remains vigilant to contain operating expenses in this transitional period. Growth is being developed by opening new branch offices in existing or adjacent markets versus acquisitions.

Review of Significant Areas:

Net Interest Margin: During the third quarter of 2006, the yield on earning assets was unable to keep pace with the increasing cost of interest-bearing liabilities, when compared with the second quarter of 2006. The yield on earning assets increased to 6.22% in the third quarter 2006 from 6.04% in the second quarter 2006, or 18 basis points. Conversely, the cost of interest-bearing liabilities increased to 3.70% in the third quarter 2006 from 3.41% in the second quarter 2006, or 29 basis points. This tightening of the net interest margin can be attributable to the current inverted yield curve. Camco continues to place emphasis on growing the commercial, commercial real estate and consumer loan portfolios and the ability to effectively manage overall cost of funds. A reduction of wholesale funding through the Federal Home Loan Bank of Cincinnati occurred in the third quarter as a result of lower loan production.

Non-Interest Income: For the quarter ended September 30, 2006, total non-interest income decreased 19.3% to $1.25 million from $1.54 million for the same period last year. This decrease of $297,000 was primarily related to a decrease in the amount of gain on loans sold into the secondary market of $159,000, and a decrease in late charges, rent and other of $176,000. A slow down in housing sales attributable to the region's slowing economy continues to negatively impact our loan production efforts.

Mortgage servicing rights had a net reduction in the quarter ended September 30, 2006 of $113,000 compared to a net reduction of $276,000 in the quarter ended September 30, 2005. Loan sales were down 43.2% to $9.6 million versus $16.9 million while the overall value of mortgage servicing rights increased from 1.22% to 1.32% as a percent of loans serviced.

Operating Expenses: For the quarter ended September 30, 2006, operating expenses were $6.41 million compared to $5.73 million for the comparable period in 2005, or an increase of 11.8%. The $675,000 increase can be mainly attributable to employee compensation and benefits increasing $210,000 due to the hiring of key management positions and increased benefits costs. Franchise taxes increased $214,000 and other operating expenses increased $233,000 due primarily to increased transaction processing costs. As a percentage of average assets, operating expenses increased to 2.33% from 2.13%.

Asset Quality: Non-performing loans as a percentage of loans increased from 1.52% at September 30, 2005 to 1.97% at September 30, 2006. The allowance for loan losses as a percentage of loans was .85% at September 30, 2006. At September 30, 2006, total non-performing loans were $16.6 million, of which 64.4% were single family residential loans.

The majority of the increase in non-performing loans was commercial real estate which was primarily related to investment property lending and multi-family loans that have experienced higher levels of delinquency in 2006.

It is management's belief that these higher levels of delinquency can be attributable to general economic conditions including Ohio's unemployment rate of 5.7%, which is above the national rate of 4.7% seasonably adjusted. The allowance for loan losses is maintained at a level believed adequate by management to absorb probable losses inherent in the loan portfolio.

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 relationship banking that includes commercial, business and consumer financial services, internet banking and title insurance services from 30 offices in 23 communities in Ohio, Kentucky and West Virginia.

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" 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.

Financials Attached.

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