EX-99 2 l10181aexv99.txt EXHIBIT 99 EXHIBIT 99 CAMCO FINANCIAL ANNOUNCES THIRD QUARTER 2004 EARNINGS Friday October 22, 4:35 pm ET CAMBRIDGE, Ohio--(BUSINESS WIRE)--Oct. 22, 2004--(Nasdaq:CAFI - News) - Camco Financial Corporation ("Camco") reported net earnings for the quarter ended September 30, 2004 of $1.5 million compared to $1.6 million of net earnings reported for the same quarter in 2003. Basic earnings per share for the third quarter of 2004 were $.20 compared to $.21 for the same quarter in 2003. For the nine months ended September 30, 2004, Camco reported net earnings of $4.0 million compared to $6.3 million of net earnings reported for the same nine month period in 2003. Basic earnings per share for the nine months ended September 30, 2004 were $.54 compared to $.83 for the same nine month period in 2003. Camco paid a quarterly dividend of $.145 per share on October 15, 2004, representing an annualized yield of 4.14% based on Camco's quarter end market value. Camco President & CEO Richard C. Baylor said, "We are encouraged by our progress in evolving our sources of income from strong reliance on the sale of fixed rate residential loans 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 7% in net interest income will likely result if interest rates incur an instantaneous and parallel increase of 200 basis points. This trend would be expected to translate into a higher net interest margin and a $.15 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 in our commercial real estate production which stands at $93.9 million through September 30, 2004, versus $44.1 million for the same nine month period of 2003. For the nine months ended September 30, 2004, commercial real estate and consumer loan production amounted to 50% of our total year to date production. We are also very pleased that we have been able to grow deposits, primarily money market checking and long-term certificates of deposit, exclusive of our recent purchase of London Financial Corporation." 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 its funding sources. Net interest margin increased from 2.36% for the nine months ended September 30, 2003 to 2.45% for the nine months ended September 30, 2004. Quarter on quarter the margin dropped from 2.47% for the second quarter of 2004 to 2.44% for the third quarter of 2004. This drop was due primarily to the increase in funding costs associated with Camco's transaction accounts in highly competitive markets. Camco did not receive the full beneficial impact of the prime rate increases that occurred in the third quarter, which will ultimately offset the increase in funding costs. Through continual efforts to meet the needs of the customer base, management is actively administering a deposit structure that is anticipated to grow over the coming months, which will provide low cost funding for loans. As an example, in 2004 management launched a new checking product line called Advantage Platinum that allows customers to receive local and national merchant discounts as well as reduce service charges when a minimum balance is maintained in their account or total deposit relationship. They may also receive discounts on other AdvantageBank products. As of September 30, 2004, Advantage Platinum has already grown to $46 million since the introduction of the product in the spring of 2004. Non-Interest Income - For the nine months ended September 30, 2004 non-interest income was $5.2 million versus $9.2 million for the same period last year. This decrease is primarily due to reductions in three major sources of revenue. First, the gain-on-sale of loans sold into the secondary market has decreased from $3.3 million for the nine months ended September 30, 2003 to $679,000 for the nine months ended September 30, 2004. This reduction in the gain-on-sale of loans is directly attributable to lower production volumes of fixed-rate residential 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 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 Camco's customers. Camco Title's contribution to Camco's non-interest income has decreased from $1.5 million for the first nine months ended September 30, 2003 to $733,000 for the nine months ended September 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 rights. Prepayments of the underlying sold portfolios slowed at the same time Camco experienced lower loan sales into the secondary market. The resulting impact for the nine months ended September 30, 2004 compared to the same period in 2003 was $133,000 versus $188,000, or a decrease of $55,000. 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 have been experienced over the past several years. Operating Expenses - For the nine months ended September 30, 2004 operating expenses were up .6%, from $17.2 million for the first nine months of 2003 to $17.3 million for the first nine months of 2004. The slight increase is primarily from expenses incurred due to the London acquisition in August 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 nine months ended 2004, personnel costs were down 8.7% when compared to the first nine months of 2003. The reduction to compensation expense related to direct loan origination costs has decreased substantially due to the drop in residential loan production, as this offset to expense decreased from $3.0 million to $1.7 million, or approximately 41.4%. Occupancy and equipment expenses have decreased from $2.8 million to $2.6 million for the first nine months of 2004, or a decrease of approximately 8.0% as management utilizes current infrastructure more efficiently and capitalizes on past investments in technology. Asset Quality - At the end of the third quarter of 2004, non-performing loans as a percentage of loans (including loans held for sale) decreased from 1.53% at September 30, 2003 to 1.13% at September 30, 2004. The allowance for loan losses as a percentage of loans has increased from 67 basis points at September 30, 2003 to 72 basis points at September 30, 2004. Significant resources have been devoted to a continuing reduction of non-performing assets. At September 30, 2004, approximately 70% of all non-performing loans were single family home loans. Strategic Vision - Camco continues to actively execute and manage its long-term strategic plan. This plan encompasses the diversification 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 acquisition of London Financial Corporation, London, Ohio closed in August 2004. Camco's announced sale of its Ashland, Kentucky and Summit, Kentucky branches is expected to close in the fourth quarter 2004. The announced transaction involved the sale of approximately $65 million in deposits, an agreed upon amount of associated loans, as well as the Ashland & Summit, Kentucky facilities. Camco Financial Corporation, holding company for Advantage Bank, is a multi-state financial 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 25 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. Camco Financial Corporation Condensed Consolidated Statements of Financial Condition (In thousands, except for per share data and shares outstanding)
(Unaudited) (Unaudited) (Unaudited) Audited (Unaudited) 9/30/04 6/30/04 3/31/04 12/31/03 9/30/03 ----------- ----------- ----------- ----------- ----------- Assets Cash and Cash Equivalents $ 45,291 $ 38,192 $ 38,761 $ 53,711 $ 45,090 Investments 117,370 124,694 129,573 113,758 132,069 Loans Held for Sale 4,386 4,805 8,908 5,457 7,934 Loans Receivable 898,355 838,699 817,252 805,266 798,193 Allowance for Loan Loss (6,398) (5,528) (5,460) (5,641) (5,329) ----------- ----------- ----------- ----------- ----------- Loans Receivable, Net 891,957 833,171 811,792 799,625 792,864 Goodwill 7,023 2,953 2,953 2,953 2,953 Other Assets 68,078 64,902 65,036 63,647 63,796 ----------- ----------- ----------- ----------- ----------- Total Assets $ 1,134,105 $ 1,068,717 $ 1,057,023 $ 1,039,151 $ 1,044,706 =========== =========== =========== =========== =========== Liabilities Deposits $ 728,918 $ 677,567 $ 669,046 $ 671,274 $ 661,520 Borrowed Funds 291,719 289,712 283,280 262,735 277,794 Other Liabilities 16,440 9,715 11,704 12,599 11,642 ----------- ----------- ----------- ----------- ----------- Total Liabilities 1,037,077 976,994 964,030 946,608 950,956 Stockholders Equity 97,028 91,723 92,993 92,543 93,750 ----------- ----------- ----------- ----------- ----------- Total Liabilities and Stockholders' Equity $ 1,134,105 $ 1,068,717 $ 1,057,023 $ 1,039,151 $ 1,044,706 =========== =========== =========== =========== =========== Stockholders' Equity to Total Assets 8.56% 8.58% 8.80% 8.91% 8.97% Total Shares Outstanding 7,640,505 7,358,888 7,352,151 7,332,423 7,377,737 Book Value Per Share $ 12.70 $ 12.46 $ 12.65 $ 12.62 $ 12.71
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 9/30/04 6/30/04 3/31/04 12/31/03 9/30/03 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) ---------- ----------- ----------- ----------- ----------- Interest Income: Loans $ 11,860 $ 11,469 $ 11,415 $ 11,485 $ 11,795 Mortgage- backed securities $ 833 $ 791 $ 607 $ 664 $ 736 Investment securities $ 209 $ 203 $ 182 $ 251 $ 305 Interest- bearing deposits and other $ 571 $ 522 $ 525 $ 522 $ 506 ----------- ----------- ----------- ----------- ----------- Total Interest Income 13,473 12,985 12,729 12,922 13,342 ----------- ----------- ----------- ----------- ----------- Interest Expense: Deposits 3,570 3,303 3,349 3,577 3,827 Borrowings 3,497 3,406 3,309 3,705 3,828 ----------- ----------- ----------- ----------- ----------- Total Interest Expense 7,067 6,709 6,658 7,282 7,655 ----------- ----------- ----------- ----------- ----------- Net Interest Income 6,406 6,276 6,071 5,640 5,687 Provision for Losses on Loans 255 255 255 516 255 ----------- ----------- ----------- ----------- ----------- Net Interest Income After Provision for Loan Losses 6,151 6,021 5,816 5,124 5,432 ----------- ----------- ----------- ----------- ----------- Noninterest Income Late charges, rent and other 623 600 640 620 944 Loan servicing fees 373 379 386 392 412 Service charges and other fees on deposits 407 327 272 279 309 Gain on sale of loans 189 29 276 350 547 Valuation of mortgage servicing rights - net 206 214 (102) 355 (402) Gain on sale of investment, mbs & fixed assets 106 134 (13) 66 531 Gain on sale of real estate acq'd through foreclosure 10 20 77 123 82 ----------- ----------- ----------- ----------- ----------- Total noninterest income 1,914 1,703 1,536 2,185 2,423 ----------- ----------- ----------- ----------- ----------- Non interest expense Employee compensation and benefits 2,763 2,672 2,996 2,338 2,461 Occupancy and equipment 867 828 874 991 936 Data processing 320 325 342 337 318 Advertising 387 181 254 209 190 Franchise taxes 283 294 214 211 362 Other operating (1) 1,307 1,194 1,190 2,420 1,284 ----------- ----------- ----------- ----------- ----------- Total noninterest expense 5,927 5,494 5,870 6,506 5,551 ----------- ----------- ----------- ----------- ----------- Net Income - Before Income Tax 2,138 2,230 1,482 803 2,304 Provision for income taxes 670 698 448 215 718 ----------- ----------- ----------- ----------- ----------- Net Income 1,468 1,532 1,034 588 1,586 =========== =========== =========== =========== =========== Earnings Per Share Reported: Basic $ 0.20 $ 0.21 $ 0.14 $ 0.09 $ 0.21 Diluted $ 0.19 $ 0.21 $ 0.14 $ 0.09 $ 0.21 Basic Weighted Number of Shares Outstanding 7,513,890 7,357,635 7,345,340 7,355,576 7,417,459 Diluted Weighted Number of Shares Outstanding 7,559,916 7,403,929 7,414,616 7,440,603 7,500,180
(1) December 2003 includes FHLB prepayment fees of 1,292 Camco Financial Corporation Selected Ratios and Statistics Periods Ended September 30, 2004 and 2003 (In thousands, except for per share data and shares outstanding)
9 Months 9 Months 3 Months 3 Months Ended Ended Ended Ended 9/30/04 9/30/03 9/30/04 9/30/03 (Unaudited) (Unaudited) (Unaudited) (Unaudited) ----------- ----------- ----------- ----------- Reported: Return on Average Equity 4.71% 8.60% 4.45% 6.50% Return on Average Assets 0.50% 0.78% 0.53% 0.59% Interest Rate Spread 2.23% 2.07% 2.22% 1.99% Net Interest Margin 2.45% 2.36% 2.44% 2.26% Yield on earning assets 5.13% 5.50% 5.12% 5.31% Cost of deposits 2.63% 2.53% 2.09% 2.37% Cost of funds 4.89% 5.56% 4.79% 5.53% Noninterest expense/average assets 2.16% 2.14% 2.15% 2.10% Efficiency Ratio 72.33% 63.14% 71.24% 68.45% Non performing assets to total assets 1.11% 1.30% 1.11% 1.30% Non performing loans to total net loans including lhfs 1.13% 1.53% 1.13% 1.53% Allowance for loan losses to total loans 0.72% 0.66% 0.72% 0.66%
Camco Financial Corporation Averages for Quarters Ended September and June 2004 (In thousands, except for per share data and shares outstanding)
Average Table - Quarter Ended --------------------------------------------------------------------------------- Sept 30, 2004 June 30, 2004 ------------------------------------ -------------------------------------- Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate --------- -------- ------ --------- -------- ------ Interest - Earning Assets: Loans held for sale 5,150 7,039 Loans receivable - net 863,595 11,860 5.46% 821,887 11,469 5.53% Mortgage-backed securities 93,121 833 3.58% 98,153 791 3.22% Investment securities 27,358 209 3.06% 29,299 203 2.77% Interest-bearing deposits and other 62,477 571 3.66% 59,170 522 3.53% --------- -------- ------ --------- -------- ------ Total interest earning assets 1,051,701 13,473 5.12% 1,015,548 12,985 5.11% --------- -------- ------ --------- -------- ------ Noninterest-earning assets 82,404 47,107 --------- --------- Total Assets 1,134,105 1,062,655 ========= ========= Interest-Bearing Liabilities: Deposits 681,633 3,570 2.09% 650,700 3,303 2.03% Advances 291,898 3,497 4.79% 283,401 3,406 4.81% --------- -------- ------ --------- -------- ------ Total interest- bearing liabilities 973,531 7,067 2.90% 934,101 6,709 2.87% --------- -------- ------ --------- -------- ------ Noninterest-bearing sources: Noninterest-bearing liabilities 63,546 35,513 Shareholders' equity 97,028 93,041 --------- --------- Total Liabilities and Shareholders' Equity 1,134,105 1,062,655 ========= ========= Net Interest Income & Margin 6,406 2.44% 6,276 2.47% ======== ====== ======== ======
------------------- Contact: Camco Financial Corporation, Cambridge Richard C. Baylor, 740-435-2040 Mark A. Severson, 740-435-2055 Fax: 740-432-2743 (Private Fax)