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<SEC-DOCUMENT>0000950152-96-004126.txt : 19960816
<SEC-HEADER>0000950152-96-004126.hdr.sgml : 19960816
ACCESSION NUMBER: 0000950152-96-004126
CONFORMED SUBMISSION TYPE: 10QSB
PUBLIC DOCUMENT COUNT: 2
CONFORMED PERIOD OF REPORT: 19960630
FILED AS OF DATE: 19960814
SROS: NONE
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: CAMCO FINANCIAL CORP
CENTRAL INDEX KEY: 0000016614
STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED [6036]
IRS NUMBER: 510110823
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10QSB
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-25196
FILM NUMBER: 96612160
BUSINESS ADDRESS:
STREET 1: 814 WHEELING AVENUE
CITY: CAMBRIDGE
STATE: OH
ZIP: 43725
BUSINESS PHONE: 6144325641
</SEC-HEADER>
<DOCUMENT>
<TYPE>10QSB
<SEQUENCE>1
<DESCRIPTION>CAMCO FINANCIAL CORPORATION QUARTERLY REPORT
<TEXT>
<PAGE> 1
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
--------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _______________
Commission File Number 2-47541
CAMCO FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 51-0110823
- ----------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
814 Wheeling Avenue
Cambridge, Ohio 43725
- ------------------------------------ ---------
(Address of principal (Zip Code)
executive office)
Registrant's telephone number, including area code: (614) 432-5641
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports) and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
----- -----
As of August 7, 1996, the latest practicable date, 2,075,641.1 shares of the
registrant's common stock, $1.00 par value, were issued and outstanding.
<PAGE> 2
Camco Financial Corporation
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
Consolidated Statements of Financial Condition 3
Consolidated Statements of Earnings 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9
PART II - OTHER INFORMATION 15
SIGNATURES 16
</TABLE>
2
<PAGE> 3
CAMCO FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except share data)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
ASSETS 1996 1995
<S> <C> <C>
Cash and amounts due from depository institutions $ 10,079 $ 11,325
Short-term interest bearing deposits in other banks 100 2,122
-------- --------
Cash and cash equivalents 10,179 13,447
Interest-bearing deposits in other banks 1,303 1,881
Investment securities available for sale - at market 3,136 3,131
Investment securities - market value of $18,664 and $19,123
as of June 30, 1996 and December 31, 1995 18,987 19,283
Mortgage-backed securities available for sale - at market 802 985
Mortgage-backed securities - market value of $4,419 and $5,045
as of June 30, 1996 and December 31, 1995 4,449 5,002
Loans held for sale - at lower of cost or market 4,399 1,518
Loans receivable - net 295,544 291,233
Federal Home Loan Bank stock - at cost 3,134 2,832
Real estate acquired through foreclosure 64 28
Premises and equipment - net 4,554 4,153
Accrued interest receivable 2,265 2,129
Prepaid expenses and other assets 3,133 699
Prepaid federal income taxes 627 148
-------- --------
Total assets $352,576 $346,469
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $291,288 $286,574
Advances from the Federal Home Loan Bank 27,960 26,078
Taxes and insurance prepaid by borrowers 1,195 2,964
Accounts payable and accrued liabilities 1,292 1,797
Dividends payable 227 207
Deferred federal income taxes 1,277 1,156
-------- --------
Total liabilities 323,239 318,776
Stockholders' equity
Preferred stock - $1 par value; authorized 100,000 shares;
no shares outstanding -- --
Common stock - $1 par value; 2,500,000 shares authorized;
outstanding, 2,075,646 shares at June 30, 1996 and 1,971,482
shares at December 31, 1995 2,076 1,971
Additional paid-in capital 7,435 5,735
Retained earnings - substantially restricted 19,799 19,936
Unrealized gains on securities designated as available for sale 27 51
-------- --------
Total stockholders' equity 29,337 27,693
-------- --------
Total liabilities and stockholders' equity $352,576 $346,469
======== ========
</TABLE>
3
<PAGE> 4
CAMCO FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except share data)
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Interest income
Loans $ 12,233 $ 10,885 $ 6,154 $ 5,649
Mortgage-backed securities 187 216 89 108
Investment securities 612 914 299 441
Interest-bearing deposits and other 295 253 142 102
---------- ----------- ---------- -----------
Total interest income 13,327 12,268 6,684 6,300
Interest expense
Deposits 6,492 5,997 3,255 3,162
Borrowings 695 886 330 431
---------- ----------- ---------- -----------
Total interest expense 7,187 6,883 3,585 3,593
---------- ----------- ---------- -----------
Net interest income 6,140 5,385 3,099 2,707
Provision for loan losses 42 89 21 54
---------- ----------- ---------- -----------
Net interest income after provision
for loan losses 6,098 5,296 3,078 2,653
Other income
Late charges, rent and other 581 399 334 235
Loan servicing fees 363 382 177 195
Service charges and other fees on deposits 196 217 101 109
Gain on sale of loans 622 330 206 287
---------- ----------- ---------- -----------
Total other income 1,762 1,328 818 826
General, administrative and other expense
Salaries and employee benefits 2,093 1,985 1,079 961
Occupancy of premises 555 456 295 231
Federal deposit insurance premiums 327 304 164 152
Data processing 202 184 102 94
Advertising 197 226 111 119
State franchise tax 211 182 105 92
Other 1,113 956 634 443
---------- ----------- ---------- -----------
Total general, administrative and other expense 4,698 4,293 2,490 2,092
---------- ----------- ---------- -----------
Earnings before federal income taxes 3,162 2,331 1,406 1,387
Federal income taxes
Current 954 801 431 473
Deferred 121 (8) 47 (1)
---------- ----------- ---------- -----------
Total federal income taxes 1,075 793 478 472
---------- ----------- ---------- -----------
NET EARNINGS $ 2,087 $ 1,538 $ 928 $ 915
========== =========== ========== ===========
EARNINGS PER SHARE $ 1.01 $ .74 $ .45 $ .44
========== =========== ========== ===========
Weighted average number of common shares outstanding 2,068,488 2,067,926 2,069,198 2,068,073
========== =========== ========== ===========
</TABLE>
4
<PAGE> 5
CAMCO FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30,
(In thousands)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net earnings for the period $ 2,087 $ 1,538
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Depreciation and amortization 263 269
Provision for loan losses 42 89
Federal Home Loan Bank stock dividends (102) (81)
Gain on sale of loans (309) (155)
Loans originated for sale in the secondary market (39,105) (17,044)
Proceeds from sale of mortgage loans in the
secondary market 36,533 15,628
Current federal income taxes (479) 160
Deferred federal income taxes 121 (8)
Other - net (2,952) (806)
-------- --------
Net cash used in operating activities (3,901) (410)
Cash flows provided by (used in) investing activities:
Proceeds from maturities of investment securities 4,275 5,500
Purchases of investment securities designated as held
to maturity (4,000) (1,025)
Purchase of investment securities designated as available
for sale (20) --
Loan disbursements (50,406) (53,161)
Principal repayments on loans 45,863 31,906
Principal collected on mortgage-backed securities 753 294
Decrease in interest-bearing deposits in other banks 578 3,589
Purchase of office property and equipment (643) (116)
Purchase of Federal Home Loan Bank stock (200) (356)
-------- --------
Net cash used in investing activities (3,800) (13,369)
-------- --------
Net cash used in operating and investing activities
(subtotal carried forward) (7,701) (13,779)
-------- --------
</TABLE>
5
<PAGE> 6
CAMCO FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
For the six months ended June 30,
(In thousands)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Net cash used in operating and investing activities
(subtotal brought forward) $ (7,701) $(13,779)
Cash flows provided by (used in) financing activities:
Net increase in deposits 4,714 16,033
Advances from the Federal Home Loan Bank 29,500 32,400
Repayment of Federal Home Loan Bank advances (27,618) (30,618)
Dividends paid on common stock (424) (474)
Proceeds from exercise of stock options 30 10
Reduction in taxes and insurance prepaid
by borrowers (1,769) (1,896)
-------- --------
Net cash provided by financing activities 4,433 15,455
-------- --------
Increase (decrease) in cash and cash equivalents (3,268) 1,676
Cash and cash equivalents at beginning of period 13,447 9,279
-------- --------
Cash and cash equivalents at end of period $ 10,179 $ 10,955
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest on deposits and borrowings $ 7,169 $ 6,792
======== ========
Income taxes $ 1,068 $ 709
======== ========
Supplemental disclosure of noncash investing activities:
Unrealized gains on investment and mortgage-backed
securities designated as available for sale $ 24 $ 81
======== ========
Recognition of gains on sale of loans in accordance with
SFAS No. 122 $ 1,092 $ --
======== ========
</TABLE>
6
<PAGE> 7
CAMCO FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
---------------------
The accompanying unaudited consolidated financial statements were
prepared in accordance with instructions for Form 10-QSB and,
therefore, do not include information or footnotes necessary for a
complete presentation of financial position, results of operations and
cash flows in conformity with generally accepted accounting principles.
Accordingly, these financial statements should be read in conjunction
with the consolidated financial statements and notes thereto of Camco
Financial Corporation ("Camco" or "the Company") included in Camco's
Annual Report on Form 10-KSB for the year ended December 31, 1995.
However, all adjustments (consisting only of normal recurring accruals)
which, in the opinion of management, are necessary for a fair
presentation of the consolidated financial statements have been
included. The results of operations for the three and six month periods
ended June 30, 1996 and 1995, are not necessarily indicative of the
results which may be expected for the entire year.
2. Principles of Consolidation
---------------------------
Camco has four wholly-owned subsidiaries: Cambridge Savings Bank
("Cambridge Savings"), Marietta Savings Bank ("Marietta Savings"),
First Federal Savings Bank of Washington Court House ("First Federal")
(collectively hereinafter "the Banks") and East Ohio Land Title Agency,
Inc., as well as two second tier subsidiaries, Camco Mortgage
Corporation and WestMar Mortgage Company.
The Company's consolidated financial statements include the accounts of
Camco and its wholly-owned and second tier subsidiaries. All
significant intercompany balances and transactions have been
eliminated.
3. Effects of Recent Accounting Pronouncements
-------------------------------------------
In October 1995, the Financial Accounting Standards Board (the "FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 123
entitled "Accounting for Stock-Based Compensation". SFAS No. 123
establishes a fair value based method of accounting for stock-based
compensation paid to employees. SFAS No. 123 recognizes the fair value
of an award of stock or stock options on the grant date. Camco adopted
the disclosure provisions of the Statement on January 1, 1996.
4. Reclassifications
-----------------
Certain reclassifications have been made to the June 30, 1995
consolidated financial statements to conform to the June 30, 1996
presentation.
7
<PAGE> 8
CAMCO FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. Pending Legislative Changes
---------------------------
The deposit accounts of the Banks, as well as other savings
associations are insured by the Federal Deposit Insurance Corporation
("FDIC") in the Savings Association Insurance Fund ("SAIF"). The
reserves of the SAIF are below the level required by law, because a
significant portion of the assessments paid into the fund are used to
pay the cost of prior thrift failures. The deposit accounts of
commercial banks are insured by the FDIC in the Bank Insurance Fund
("BIF"), except to the extent such banks have acquired SAIF deposits.
The reserves of the BIF met the level required by law in May 1995. As a
result of the respective reserve levels of the funds, deposit insurance
assessments paid by healthy savings associations exceeded those paid by
healthy commercial banks by approximately $.19 per $100 in deposits in
late 1995, and are expected to exceed them by $.23 per $100 in deposits
in 1996. This premium disparity could have a negative competitive
impact on the Banks and other institutions with SAIF deposits.
Congress is considering legislation to recapitalize the SAIF and
eliminate the significant premium disparity. That recapitalization plan
provides for a special assessment of up to $.85 per $100 of SAIF
deposits held at March 31, 1995, in order to increase SAIF reserves to
the level required by law. Certain banks holding SAIF deposits would
pay a lower special assessment. In addition, the cost of prior thrift
failures would be shared by both the SAIF and the BIF. Such cost
sharing might increase BIF assessments. SAIF assessments for healthy
institutions would be reduced significantly below current levels, but
could never be reduced below the level for healthy BIF institutions.
A component of the recapitalization plan provides for the merger of the
SAIF and the BIF on January 1, 1998. However, legislative proposals
contemplate an elimination of the federal thrift charter and of the
separate federal regulation of thrifts prior to the merger of the
deposit insurance funds. Cambridge Savings and Marietta Savings are
state savings banks, which are not considered thrifts for these
purposes. However, First Federal is a federal thrift and would have to
convert to a different charter and would become subject to federal
regulations as a bank. Such regulation would subject First Federal to
the more restrictive activity limits imposed on national banks. In a
separate legislative proposal, tax legislation would require the Banks
to recapture post-1987 additions to their bad debt reserves and the
Banks would not be able to utilize the percentage of taxable income
method to compute their reserves in the future. Under such legislation
the Banks may be required to recapture, as taxable income,
approximately $2.7 million of their bad debt reserves, which represents
post-1987 additions to the reserves. In addition, Camco would become a
bank holding company, which would subject it to more restrictive
activity limits and to capital requirements similar to those imposed on
First Federal.
The Banks had $277.3 million in deposits at March 31, 1995. If the
special assessment is $.85 per $100 in deposits, those three
institutions will pay an aggregate additional assessment of $2.4
million. This assessment should be tax deductible, but it will reduce
earnings and capital for the quarter in which it is recorded. It is
expected that quarterly SAIF assessments would be reduced significantly
after such special assessment is paid.
No assurances can be given that the SAIF recapitalization plan will be
enacted into law or in what form it may be enacted. In addition, Camco
can give no assurances that the disparity between BIF and SAIF
assessments will be eliminated and cannot be certain of the impact of
the SAIF recapitalization and related proposals until the appropriate
legislation has been enacted.
8
<PAGE> 9
CAMCO FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
For the three and six month periods ended June 30, 1996 and 1995
General
- -------
Camco's profitability depends primarily on the level of its net interest income,
which is the difference between interest income on interest-earning assets,
principally loans, mortgage-backed securities and investment securities, and
interest expense on deposit accounts and borrowings. In recent years, Camco's
net earnings has also been heavily influenced by the level of other income,
including gains on sale of loans, loan servicing fees, and other fees. Finally,
Camco's operations are also influenced by the level of general, administrative
and other expenses, including salaries and employee benefits, occupancy, federal
deposit insurance premiums, as well as various other operating expense
categories, including federal income tax expense.
Since its incorporation in 1970, Camco has evolved into a full service provider
of financial products to the communities served by its banking subsidiaries.
Utilizing a common marketing theme committed to personalized customer service,
Camco and its affiliates have grown from $22.4 million in consolidated assets in
1970 to $352.6 million of consolidated assets at June 30, 1996. Camco's level of
growth is largely attributable to the acquisitions of Marietta Savings and First
Federal and the continued expansion of product lines from the previously limited
deposit and loan offerings of a heavily regulated 1970's savings and loan
association, to the full array of financial service products that were the
previous domain of commercial banks. Additionally, Camco's operational growth
has been enhanced by vertical integration of the residential lending function
through establishing mortgage banking operations in the Banks' primary market
areas and, to a lesser extent, by chartering a title insurance agency.
Management believes that continued success in the financial services industry
will be achieved by those institutions with a rigorous dedication to bringing
value-added services to their customers. Toward this end, each of the Banks'
operations are decentralized, with a separate Board of Directors and management
team focusing on consumer preferences for financial products in the respective
communities served. Based on such consumer preferences, Camco's management
designs financial service products with a view towards differentiating each of
the constituent Banks from the competition. It is management's opinion that the
Banks' abilities to rapidly adapt to consumer needs and preferences is essential
to community-based financial institutions in order to compete against the larger
regional and money-center bank holding companies.
Asset and Liability Management
- ------------------------------
Net interest income, the difference between asset yields and the cost of
interest-bearing liabilities is the principal component of Camco's net earnings.
The ability to maximize net interest income is largely dependent upon the
achievement of a positive interest rate spread that can be sustained during
fluctuations in the prevailing level of interest rates. Interest rate
sensitivity is a measure of the difference between amounts of interest-earning
assets and interest-bearing liabilities which either reprice or mature within a
given period of time. The difference, or the interest rate
9
<PAGE> 10
CAMCO FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
For the three and six month periods ended June 30, 1996 and 1995
Asset and Liability Management (continued)
- ------------------------------
repricing "gap", provides an indication of the extent to which a financial
institution's interest rate spread will be affected by changes in interest
rates. A gap is considered positive when the amount of interest-rate sensitive
assets exceeds the amount of interest-rate sensitive liabilities, and is
considered negative when the amount of interest-rate sensitive liabilities
exceeds the amount of interest-rate sensitive assets. Generally, during a period
of rising interest rates, a negative gap within shorter maturities would
adversely affect net interest income, while a positive gap within shorter
maturities would result in an increase in net interest income, and during a
period of falling interest rates, a negative gap within shorter maturities would
result in an increase in net interest income while a positive gap within shorter
maturities would have the opposite effect.
In recognition of the foregoing factors, Camco's Board of Directors has
implemented an asset/liability management strategy directed toward improving the
Banks' interest rate sensitivity. Specifically, the elements of this strategy
include 1) meeting the consumer preference for fixed-rate loans over the past
several years by selling such loans into the secondary market, 2) emphasizing
the origination and retention of adjustable-rate mortgage loans, as well as
intermediate term fixed-rate mortgage loans, short-term consumer loans and
adjustable-rate home equity loans, and 3) utilizing Federal Home Loan Bank
advances and longer term certificates of deposit as funding sources when
available.
Financial Condition
- -------------------
At June 30, 1996, Camco's consolidated assets totaled $352.6 million, an
increase of $6.1 million, or 1.8%, over the December 31, 1995 total of $346.5
million. The growth in the current six month period follows asset growth of
$21.8 million, or 6.7%, in calendar 1995. During the 1996 period, management
added growth of $7.2 million, or 2.5%, to the loan portfolio, comprised
primarily of adjustable-rate loans and loans with maturities of ten to fifteen
years. As stated previously, management strives to tailor its financial products
to consumer preferences. Given the upturn in interest rates during 1995 and
early 1996, consumer preference has shifted back to adjustable-rate loans and
loans with shortened terms to maturity, e.g. ten year loan products. The growth
in the loan portfolio during 1996 was primarily funded by deposit growth of $4.7
million, $1.9 million in advances from the Federal Home Loan Bank, and
undistributed net earnings of $1.6 million.
10
<PAGE> 11
CAMCO FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
For the three and six month periods ended June 30, 1996 and 1995
Financial Condition (continued)
- -------------------
Nonperforming loans (90 days or more delinquent plus nonaccrual loans), totaled
$1.4 million and $1.1 million and at June 30, 1996 and December 31, 1995,
constituting .44% and .37% of the loan portfolio at those dates. The
consolidated allowance for loan losses totaled $1.1 million and $1.0 million at
June 30, 1996 and December 31, 1995, representing 76.4% and 95.4% of
nonperforming loans at the respective dates.
Deposits totaled $291.3 million at June 30, 1996, an increase of $4.7 million,
or 1.6%, over December 31, 1995 levels. The increase resulted primarily from
management's continuing efforts to achieve a moderate growth rate through
advertising and pricing strategies. The proceeds from deposit growth and excess
liquidity were used to finance the loan originations.
On May 28, 1996, a 5% stock dividend was declared for stockholders of record as
of the close of business on July 10, 1996, payable on July 19, 1996.
The Banks are required to maintain minimum regulatory capital pursuant to
federal regulations. At June 30, 1996, the Banks' regulatory capital exceeded
all regulatory capital requirements.
11
<PAGE> 12
CAMCO FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
For the three and six month periods ended June 30, 1996 and 1995
Comparison of Results of Operations for the Six Months Ended
- -------------------------------------------------------------
June 30, 1996 and 1995
- ----------------------
General
- -------
Camco's net earnings for the six months ended June 30, 1996 totaled $2.1
million, an increase of $549,000, or 35.7%, over the $1.5 million of net
earnings reported in the comparable 1995 period. The increase in earnings is
primarily attributable to an increase in net interest income of $755,000, an
increase in other income of $434,000 and a decrease in the provision for loan
losses of $47,000, which were partially offset by an increase in general,
administrative and other expense of $405,000, and an increase in the provision
for federal income taxes of $282,000.
Net Interest Income
- -------------------
Total interest income for the six months ended June 30, 1996, increased by $1.1
million, or 8.6%, generally reflecting the effects of $10.9 million of growth in
average interest-earning assets outstanding, coupled with an increase of 39
basis points in the yield year-to-year, from 7.72% in 1995 to 8.11% in 1996.
Interest income on loans and mortgage-backed securities totaled $12.4 million
for the six months ended June 30, 1996, an increase of $1.3 million, or 11.9%,
over the comparable 1995 period. The increase resulted primarily from a $19.5
million, or 7.0%, increase in the average balance outstanding year-to-year.
Interest income on investments and interest-bearing deposits declined by
$260,000, or 22.3%, due to a decrease in average outstanding balances of $6.5
million. Interest expense on deposits increased by $495,000, or 8.3%, to a total
of $6.5 million for the six months ended June 30, 1996, due primarily to an
increase of $13.7 million in the average balance of deposits outstanding.
Provision for Losses on Loans
- -----------------------------
The provision for losses on loans totaled $42,000 for the six months ended June
30, 1996, a decrease of $47,000 from the comparable period in 1995. The current
period provision generally reflects the effects of loan portfolio growth
integrated with a stable level of nonperforming loans.
Other Income
- ------------
Other income increased for the six months ended June 30, 1996, by $434,000, or
32.7%, from the comparable 1995 period. The increase in other income is
primarily attributable to a $292,000 increase in gains on sale of loans and an
increase of $182,000, or 45.6%, in late charges, rent and other, which was
partially offset by a $19,000 decrease in loan servicing fees and a $21,000
decrease in service charges and other fees on deposits. The increase in gains on
sale of loans reflects an increase in sales volume year-to-year, coupled with
the recognition of mortgage servicing rights, totaling $1.1 million in
accordance with SFAS No. 122. The increase in late charges, rent and other was
primarily attributable to a $168,000 increase in fee volume at Camco's title
agency subsidiary and an increase in fees on loans and deposit accounts as a
result of the growth in the respective portfolios.
12
<PAGE> 13
CAMCO FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
For the three and six month periods ended June 30, 1996 and 1995
Comparison of Results of Operations for the Six Months Ended
- -------------------------------------------------------------
June 30, 1996 and 1995 (continued)
- ----------------------
General, Administrative and Other Expense
- -----------------------------------------
General, administrative and other expense increased for the six months ended
June 30, 1996 by $405,000, or 9.4%. The increase is due to a $108,000, or 5.4%,
increase in employee compensation and benefits, a $99,000, or 21.7%, increase in
occupancy of premises, a $18,000, or 9.8%, increase in data processing, a
$23,000, or 7.6%, increase in federal deposit insurance premiums, a $157,000, or
16.4%, increase in other operating costs and a $29,000, or 15.9%, increase in
franchise taxes, which were partially offset by a $29,000, or 12.8%, decrease in
advertising. The increase in employee compensation and benefits is attributable
to normal merit salary increases, while the increase in occupancy of premises is
attributable to depreciation expense on office equipment purchased in 1995 and
general repairs of office buildings. The increase in other operating costs
generally reflects the effects of the Corporation's growth year-to-year.
Federal Income Taxes
- --------------------
The provision for federal income taxes increased in the six months ended June
30, 1996 by $282,000, or 35.6%. This increase is solely attributable to an
$831,000, or 35.6%, increase in pre-tax earnings, as the effective tax rate
remained unchanged at 34% for both periods.
Comparison of Results of Operations for the Three Months Ended June 30, 1996 and
- --------------------------------------------------------------------------------
1995
- ----
General
- -------
Net earnings for the three months ended June 30, 1996 totaled $928,000, an
increase of $13,000, or 1.4%, from the $915,000 in net earnings reported in the
comparable 1995 period. The increase in net earnings is primarily attributable
to a $392,000 increase in net interest income and a $33,000 decrease in the
provision for loan losses, which were partially offset by a $398,000 increase in
general, administrative and other expense.
Net Interest Income
- -------------------
Total interest income for the three months ended June 30, 1996, increased by
$384,000, or 6.1%, as compared to the 1995 quarter. Interest income on loans
increased by $505,000, or 8.9%, due primarily to a $15.4 million increase in the
average balance outstanding year-to-year, coupled with a 26 basis point increase
in yield, from 8.07% in 1995, to 8.33% in 1996. Interest income on investment
securities and interest-bearing deposits declined by $102,000, or 18.8%, due
primarily to a $7.0 million decline in the average balance outstanding, as
excess liquidity was redeployed into funding loan growth. Total interest expense
decreased by $8,000, or .2%, for the three months ended June 30, 1996. Interest
expense on deposits increased by $93,000, or 2.9%, due primarily to a $10.7
million increase in the average balance outstanding year-to-year. Interest
expense on borrowings declined by $101,000, or 23.4%, due primarily to a $3.4
million decline in the average outstanding balance.
13
<PAGE> 14
CAMCO FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
For the three and six month periods ended June 30, 1996 and 1995
Comparison of Results of Operations for the Three Months Ended June 30, 1996 and
- --------------------------------------------------------------------------------
1995 (continued)
- ----
Provision for Losses on Loans
- -----------------------------
The provision for losses on loans decreased during the three months ended June
30, 1996, by $33,000. The current period provision generally reflects the
effects of loan portfolio growth year-to-year as integrated with a stable level
of nonperforming loans.
Other Income
- ------------
Other income decreased for the quarter ended June 30, 1996 by $8,000, or 1.0%,
as compared to the 1995 quarter. The decrease is primarily attributable to an
$18,000 decrease in loan servicing fees, and an $81,000 decrease in gain on sale
of loans, which were partially offset by a $99,000 increase in late charges,
rent and other. The decrease in the gain on sale of loans is due primarily to
decreased volume of fixed rate loans originated for sale.
General, Administrative and Other Expense
- -----------------------------------------
General, administrative and other expense increased by $398,000, or 19.0%,
during the three months ended June 30, 1996. The increase is primarily
attributable to a $118,000, or 12.3%, increase in salaries and employee
benefits, a $64,000, or 27.7%, increase in occupancy of premises and a $191,000,
or 43.1%, increase in other operating expense. The increase in employee
compensation and benefits resulted primarily from normal merit increases, as
well as an increase due to the hiring of additional personnel. The increase in
occupancy of premises related primarily to increased depreciation and building
maintenance costs. The increase in other operating expense generally reflects
increased costs attendant to the Corporation's growth year-to-year.
Federal Income Taxes
- --------------------
Camco's provision for federal income taxes increased for the three months ended
June 30, 1996, by $6,000, or 1.3%, generally reflecting the $19,000, or 1.4%,
increase in pre-tax earnings year-to-year.
14
<PAGE> 15
Camco Financial Corporation
PART II
ITEM 1. Legal Proceedings
-----------------
Not applicable
ITEM 2. Changes in Securities
---------------------
None
ITEM 3. Defaults Upon Senior Securities
-------------------------------
Not applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
On May 28, 1996, Camco held its Annual Meeting of Stockholders. In
connection therewith, three matters were submitted to the stockholders
for a vote. First, the stockholders elected three directors, Larry A.
Caldwell, Samuel W. Speck and Jeffrey T. Tucker for a three year term
by a vote of 1,412,225, or 71.6% of the eligible votes in favor
of the election of each of the three directors, and zero votes cast
against or withheld. In addition, there were no abstentions or broker
non-votes. The following directors continued to serve after the Annual
Meeting: Robert C. Dix, Jr., John H. Heiby, James R. Hanawalt and
Anthony J. Popp. Additionally, the stockholders also approved the
Camco Financial Corporation 1995 Stock Option and Incentive Plan and
the ratification of the selection of Grant Thornton LLP of
Cincinnati, Ohio as independent auditors of Camco for the current
fiscal year. A total of 1,412,225 votes were cast in favor of
each proposal and zero votes were cast against the proposals and no
votes were withheld. There were no abstentions or broker non-votes in
connection with the two proposals.
ITEM 5. Other Materially Important Events
---------------------------------
None
ITEM 6. Exhibits and Reports on Form 8-K
--------------------------------
The Registrant filed a Form 8-K dated March 26, 1996 to report
the execution of an acquisition agreement to acquire First
Ashland Financial Corporation in Item 5.
15
<PAGE> 16
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 12, 1996 By: /s/Larry A. Caldwell
---------------------- --------------------
Larry A. Caldwell
President and Chief Executive Officer
Date: August 12, 1996 By: /s/Anthony J. Popp
---------------------- ------------------
Anthony J. Popp
Chief Financial Officer
16
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27
<SEQUENCE>2
<DESCRIPTION>EXHIBIT 27
<TEXT>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 10,079
<INT-BEARING-DEPOSITS> 1,403
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 3,938
<INVESTMENTS-CARRYING> 23,436
<INVESTMENTS-MARKET> 23,083
<LOANS> 299,943
<ALLOWANCE> 1,070
<TOTAL-ASSETS> 352,576
<DEPOSITS> 291,288
<SHORT-TERM> 0
<LIABILITIES-OTHER> 3,991
<LONG-TERM> 27,960
<COMMON> 2,076
<PREFERRED-MANDATORY> 0
<PREFERRED> 0
<OTHER-SE> 27,261
<TOTAL-LIABILITIES-AND-EQUITY> 352,576
<INTEREST-LOAN> 12,233
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<INTEREST-TOTAL> 13,327
<INTEREST-DEPOSIT> 6,492
<INTEREST-EXPENSE> 7,187
<INTEREST-INCOME-NET> 6,140
<LOAN-LOSSES> 42
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 4,698
<INCOME-PRETAX> 3,162
<INCOME-PRE-EXTRAORDINARY> 2,087
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,087
<EPS-PRIMARY> 1.01
<EPS-DILUTED> 1.01
<YIELD-ACTUAL> 8.11
<LOANS-NON> 820
<LOANS-PAST> 589
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<ALLOWANCE-OPEN> 1,032
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<ALLOWANCE-CLOSE> 1,070
<ALLOWANCE-DOMESTIC> 82
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