-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, THUALbReboGaKMoisgYZZeEtfYyu/5wOSgYsz1HKmRBkMsSdT68nfhfBbjckbMI0 eXdCgxmSSI180QBz2WGZTA== 0001046386-00-000082.txt : 20000516 0001046386-00-000082.hdr.sgml : 20000516 ACCESSION NUMBER: 0001046386-00-000082 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 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: 10-Q SEC ACT: SEC FILE NUMBER: 000-25196 FILM NUMBER: 634168 BUSINESS ADDRESS: STREET 1: 814 WHEELING AVE CITY: CAMBRIDGE STATE: OH ZIP: 43725 BUSINESS PHONE: 7404325641 10-Q 1 QUARTERLY FINANCIAL STATEMENTS FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 ---------------------------------------------- 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 0-25196 CAMCO FINANCIAL CORPORATION - ----------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 51-0110823 - ------------------------------- ------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) 6901 Glenn Highway, Cambridge, Ohio 43725 - ----------------------------------------------------------------------------- (Address of principal executive office) Registrant's telephone number, including area code: (740) 435-2020 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 May 12, 2000, the latest practicable date, 6,931,898.2 shares of the registrant's common stock, $1.00 par value, were issued and outstanding. Page 1 of 15 pages Camco Financial Corporation INDEX Page PART I - FINANCIAL INFORMATION Consolidated Statements of Financial Condition 3 Consolidated Statements of Earnings 4 Consolidated Statements of Comprehensive Income 5 Consolidated Statements of Cash Flows 6 Notes to Consolidated Financial Statements 8 Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Quantitative and Qualitative Disclosures about Market Risk 13 PART II - OTHER INFORMATION 14 SIGNATURES 15 2 Camco Financial Corporation
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (In thousands, except share data) March 31, December 31, ASSETS 2000 1999 Cash and due from banks $ 13,081 $ 16,707 Interest-bearing deposits in other financial institutions 5,796 247 --------- ------- Cash and cash equivalents 18,877 16,954 Investment securities available for sale - at market 240 273 Investment securities held to maturity - at cost, approximate market value of $17,148 and $16,452 as of March 31, 2000 and December 31, 1999 17,615 16,864 Mortgage-backed securities available for sale - at market 11,176 6,475 Mortgage-backed securities held to maturity - at cost, approximate market value of $5,705 and $5,818 as of March 31, 2000 and December 31, 1999 5,804 5,944 Loans held for sale - at lower of cost or market 4,787 3,183 Loans receivable - net 896,585 723,042 Office premises and equipment - net 13,776 11,706 Real estate acquired through foreclosure 311 419 Federal Home Loan Bank stock - at cost 17,588 14,605 Accrued interest receivable on loans 4,961 3,890 Accrued interest receivable on mortgage-backed securities 121 78 Accrued interest receivable on investment securities and interest-bearing deposits 259 252 Prepaid expenses and other assets 2,527 888 Cash surrender value of life insurance 5,723 5,657 Goodwill and other intangible assets 3,425 3,252 --------- ------- Total assets $1,003,775 $813,482 ========= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Deposits $ 582,095 $461,787 Advances from the Federal Home Loan Bank 337,119 279,125 Advances by borrowers for taxes and insurance 2,817 3,360 Accounts payable and accrued liabilities 3,655 3,006 Dividends payable 832 832 Accrued federal income taxes 740 133 Deferred federal income taxes 1,331 2,630 --------- ------- Total liabilities 928,589 750,873 Stockholders' equity Preferred stock - $1 par value; authorized 100,000 shares; no shares outstanding - - Common stock - $1 par value; authorized, 14,900,000 shares, 7,057,917 and 5,752,310 shares issued at March 31, 2000 and December 31, 1999, respectively 7,058 5,752 Additional paid-in capital 41,551 30,351 Retained earnings - substantially restricted 28,130 27,205 Less 126,019 and 41,888 shares of treasury stock - at cost (1,416) (575) Accumulated comprehensive loss, unrealized losses on securities designated as available for sale, net of related tax effects (137) (124) --------- ------- Total stockholders' equity 75,186 62,609 --------- ------- Total liabilities and stockholders' equity $1,003,775 $813,482 ========= =======
3 Camco Financial Corporation
CONSOLIDATED STATEMENTS OF EARNINGS For the three months ended March 31, (In thousands, except per share data) 2000 1999 Interest income Loans $16,669 $10,638 Mortgage-backed securities 289 137 Investment securities 276 196 Interest-bearing deposits and other 424 435 ------ ------ Total interest income 17,658 11,406 Interest expense Deposits 6,402 4,701 Borrowings 4,692 1,799 ------ ------ Total interest expense 11,094 6,500 ------ ------ Net interest income 6,564 4,906 Provision for losses on loans 137 54 ------ ------ Net interest income after provision for losses on loans 6,427 4,852 Other income Late charges, rent and other 469 615 Loan servicing fees 294 59 Service charges and other fees on deposits 162 112 Gain on sale of loans 157 782 Gain on sale of office premises and equipment 5 1 Gain (loss) on sale of real estate acquired through foreclosure 33 (4) ------ ------ Total other income 1,120 1,565 General, administrative and other expense Employee compensation and benefits 2,457 1,824 Occupancy and equipment 732 586 Federal deposit insurance premiums 29 74 Data processing 282 230 Advertising 189 143 Franchise taxes 291 216 Amortization of goodwill 40 37 Other operating 911 938 ------ ------ Total general, administrative and other expense 4,931 4,048 ------ ------ Earnings before federal income taxes 2,616 2,369 Federal income taxes Current 570 687 Deferred 312 112 ------ ------ Total federal income taxes 882 799 ------ ------ NET EARNINGS $ 1,734 $ 1,570 ====== ====== BASIC EARNINGS PER SHARE $.25 $.27 === === DILUTED EARNINGS PER SHARE $.25 $.27 === ===
4 Camco Financial Corporation
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the three months ended March 31, (In thousands) 2000 1999 Net earnings $1,734 $1,570 Other comprehensive loss, net of tax: Unrealized holding losses during the period, net of tax of $(5) and $(15) in 2000 and 1999, respectively (13) (30) ----- ----- Comprehensive income $1,721 $1,540 ===== ===== Accumulated comprehensive income (loss) $ (137) $ 66 ===== =====
5 Camco Financial Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS For the three months ended March 31, (In thousands) 2000 1999 Cash flows from operating activities: Net earnings for the period $ 1,734 $ 1,570 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Amortization of deferred loan origination fees (73) (88) Amortization of premiums and discounts on investment and mortgage-backed securities - net 5 (3) Amortization of goodwill 40 37 Depreciation and amortization 288 83 Amortization of purchase accounting adjustments, net 10 9 Provision for losses on loans 137 54 (Gain) loss on sale of real estate acquired through foreclosure (33) 4 Gain on sale of office premises and equipment (5) - Federal Home Loan Bank stock dividends (289) (147) Gain on sale of loans (64) (113) Loans originated for sale in the secondary market (14,397) (26,664) Proceeds from sale of loans in the secondary market 12,857 28,337 Increase (decrease) in cash, net of acquisition of Westwood Homestead Financial Corporation, due to changes in: Accrued interest receivable - loans (331) 62 Accrued interest receivable - mortgage-backed securities 3 (20) Accrued interest receivable - investments (7) (71) Prepaid expenses and other assets (1,524) (306) Accrued interest and other liabilities 556 576 Federal income taxes Current 196 293 Deferred 312 112 ------ ------ Net cash provided by (used in) operating activities (585) 3,725 Cash flows provided by (used in) investing activities: Proceeds from maturities of investment securities and interest-bearing deposits - 2,500 Principal repayments on mortgage-backed securities 660 1,221 Purchases of investment securities (750) (4,521) Purchases of mortgage-backed securities - (5,080) Loan principal repayments 31,153 68,559 Loan disbursements (66,380) (101,836) Purchases of loans - (1,077) Additions to office premises and equipment (259) (142) Additions to real estate acquired through foreclosure (2) (13) Proceeds from sale of real estate acquired through foreclosure 464 74 Purchase of Federal Home Loan Bank stock (853) (827) Net increase in cash surrender value of life insurance (66) (62) Purchase of life insurance - (100) Purchase of Westwood Homestead Financial Corporation - net (1,879) - ------ ------ Net cash used in investing activities (37,912) (41,304) ------ ------ Net cash used in operating and investing activities (balance carried forward) (38,497) (37,579) ------ ------
6 Camco Financial Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) For the three months ended March 31, (In thousands) 2000 1999 Net cash used in operating and investing activities (balance brought forward) $(38,497) $(37,579) Cash flows provided by (used in) financing activities: Net increase in deposits 19,992 2,814 Proceeds from advances from the Federal Home Loan Bank and other borrowings 54,800 31,842 Repayment of Federal Home Loan Bank advances and other borrowings (32,045) (5,876) Dividends paid on common stock (832) (616) Proceeds from exercise of stock options 8 - Decrease in advances by borrowers for taxes and insurance (1,503) (351) ------- ------- Net cash provided by financing activities 40,420 27,813 ------- ------- Increase (decrease) in cash and cash equivalents 1,923 (9,766) Cash and cash equivalents at beginning of period 16,954 35,815 ------- ------- Cash and cash equivalents at end of period $ 18,877 $ 26,049 ======= ======= Supplemental disclosure of cash flow information: Cash paid during the period for: Interest on deposits and borrowings $ 10,962 $ 5,726 ======= ======= Income taxes $ 175 $ 250 ======= ======= Supplemental disclosure of noncash investing activities: Unrealized losses on securities designated as available for sale, net of related tax effects $ (13) $ (30) ======= ======= Recognition of mortgage servicing rights in accordance with SFAS No. 125 $ 93 $ 669 ======= ======= Transfers from mortgage loans to real estate acquired through foreclosure $ 321 $ 95 ======= ======= Liabilities assumed, stock and cash paid in acquisition of Westwood Homestead Financial Corporation $159,698 $ - Less: fair value of assets received 159,486 - ------- ------- Amount assigned to goodwill $ 212 $ - ======= =======
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-Q 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 the Corporation included in Camco's Annual Report on Form 10-K for the year ended December 31, 1999. 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 month period ended March 31, 2000, are not necessarily indicative of the results which may be expected for the entire year. In January 2000, Camco Financial Corporation ("Camco", or the "Corporation") acquired Westwood Homestead Financial Corporation ("Westwood") utilizing the purchase method of accounting (the "Merger"). Westwood was dissolved upon consummation of the Merger and Westwood's banking subsidiary, Westwood Homestead Savings Bank, continued operations as a wholly-owned subsidiary of the Corporation. Camco paid $11.1 million in cash and issued 1,304,875 of its common shares in connection with the Merger. 2. Principles of Consolidation The accompanying consolidated financial statements include the accounts of Camco and its six wholly-owned subsidiaries: Cambridge Savings Bank ("Cambridge Savings"), Marietta Savings Bank ("Marietta Savings"), First Federal Savings Bank of Washington Court House ("First Federal"), First Federal Bank for Savings ("First Savings"), Westwood Homestead Savings Bank ("Westwood") (collectively hereinafter "the Banks") and Camco Title Insurance Agency, Inc., as well as two second tier subsidiaries, Camco Mortgage Corporation and WestMar Mortgage Company. All significant intercompany balances and transactions have been eliminated. 3. Earnings Per Share Basic earnings per share for the three month periods ended March 31, 2000 and 1999, is computed based on 6,864,553 and 5,742,235 weighted-average shares outstanding, respectively. Diluted earnings per share is computed taking into consideration common shares outstanding and dilutive potential common shares to be issued under the Corporation's stock option plans. Weighted-average common shares deemed outstanding for purposes of computing diluted earnings per share totaled 6,905,051 and 5,868,679 for the three month periods ended March 31, 2000 and 1999, respectively. 8 Camco Financial Corporation NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 3. Earnings Per Share (continued) There were 40,498 and 126,444 incremental shares related to the assumed exercise of stock options included in the computation of diluted earnings per share for the three month periods ended March 31, 2000 and 1999, respectively. Options to purchase 176,059 shares of common stock with a weighted-average exercise price of $11.67 were outstanding at March 31, 2000, but were excluded from the computation of common share equivalents because the exercise prices were greater than the average market price of the common shares. 4. Effects of Recent Accounting Pronouncements In June 1998, the Financial Accounting Standards Board (the "FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities," which requires entities to recognize all derivatives in their financial statements as either assets or liabilities measured at fair value. SFAS No. 133 also specifies new methods of accounting for hedging transactions, prescribes the items and transactions that may be hedged, and specifies detailed criteria to be met to qualify for hedge accounting. The definition of a derivative financial instrument is complex, but in general, it is an instrument with one or more underlyings, such as an interest rate or foreign exchange rate, that is applied to a notional amount, such as an amount of currency, to determine the settlement amount(s). It generally requires no significant initial investment and can be settled net or by delivery of an asset that is readily convertible to cash. SFAS No. 133 applies to derivatives embedded in other contracts, unless the underlying of the embedded derivative is clearly and closely related to the host contract. SFAS No. 133, as amended by SFAS No. 137, is effective for fiscal years beginning after June 15, 2000. On adoption, entities are permitted to transfer held-to-maturity debt securities to the available-for-sale or trading category without calling into question their intent to hold other debt securities to maturity in the future. SFAS No. 133 is not expected to have a material impact on the Corporation's financial statements. 9 Camco Financial Corporation MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For the three month periods ended March 31, 2000 and 1999 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 have been heavily influenced by the level of other income, including gains on sale of loans, loan servicing fees, and other fees. Camco's operations are also influenced by the level of general, administrative and other expenses, including employee compensation and benefits, occupancy and equipment, federal deposit insurance premiums, as well as various other operating expense categories, including federal income tax expense. Discussion of Financial Condition Changes from December 31, 1999 to March 31, 2000 At March 31, 2000, Camco's consolidated assets totaled $1.0 billion, an increase of $190.3 million, or 23.4%, over the December 31, 1999 total. The increase during the current three month period was primarily due to the acquisition of Westwood which resulted in net asset growth of approximately $159.5 million. The additional increase in total assets was through internal growth primarily in loans receivable, and was funded by deposit growth of $20.0 million and an increase of $22.8 million in advances from the Federal Home Loan Bank ("FHLB"). Cash and interest-bearing deposits in other financial institutions totaled $18.9 million at March 31, 2000, an increase of $1.9 million, or 11.3%, from December 31, 1999 levels. The increase was attributable to the $3.1 million of cash and other interest-bearing deposits acquired through the Merger. Investment securities totaled $17.9 million at March 31, 2000, an increase of $718,000, or 4.2%, over the total at December 31, 1999. Investment securities purchases of $750,000 were offset by a market valuation adjustment and premium amortization of $33,000. Mortgage-backed securities totaled $17.0 million at March 31, 2000, an increase of $4.6 million, or 36.7%, over December 31, 1999, due primarily to the mortgage-backed securities acquired through the Merger totaling $5.2 million, which was partially offset by principal repayments totaling $660,000 and a market valuation adjustment of $10,000. Loans receivable and loans held for sale increased by $175.1 million, or 24.1%, during the three months ended March 31, 2000, to a total of $901.4 million. The increase resulted primarily from loans acquired through the Merger totaling $142.0 million and loan disbursements totaling $80.8 million, which were partially offset by principal repayments of $31.2 million and loan sales of $12.8 million. The volume of loans originated and purchased during the 2000 three month period was exceeded by that of the 1999 period by $48.8 million, or 37.7%, while the volume of loan sales decreased by $15.5 million year to year. Loans held for sale totaled $4.8 million at March 31, 2000, compared to $3.2 million at December 31, 1999. During the first quarter of 2000, continued rising interest rates have shifted consumer preference from fixed-rate mortgages to adjustable-rate mortgages (ARMs). The majority of loans originated in 2000 have been ARMs and, consistent with its past practice, Camco has retained most of the ARMs in its portfolio. 10 Camco Financial Corporation MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) For the three month periods ended March 31, 2000 and 1999 Discussion of Financial Condition Changes from December 31, 1999 to March 31, 2000 (continued) Nonperforming loans (90 days or more delinquent plus nonaccrual loans) totaled $4.2 million and $4.0 million at March 31, 2000 and December 31, 1999, respectively, constituting .47% and .55% of total net loans, including loans held for sale, at those dates. Nonperforming loans consist primarily of one- to four-family residential properties which management believes are adequately collateralized. The consolidated allowance for loan losses totaled $2.6 million and $1.9 million at March 31, 2000 and December 31, 1999, respectively, representing 62.1% and 46.9% of nonperforming loans, respectively, at those dates. The allowance for loan losses was increased as a result of the Merger by $641,000 which represents the allowance maintained by Westwood prior to the Merger. Although management believes that its allowance for loan losses at March 31, 2000, is adequate based upon the available facts and circumstances, there can be no assurance that additions to such allowance will not be necessary in future periods, which could adversely affect Camco's results of operations. Deposits totaled $582.1 million at March 31, 2000, an increase of $120.3 million, or 26.1%, over December 31, 1999 levels. The increase resulted primarily from deposits of $100.3 million acquired in the Merger coupled with deposit portfolio growth of $20.0 million, or 4.3%, which resulted primarily from management's continuing efforts to achieve a moderate rate of growth through advertising and pricing strategies. Advances from the FHLB increased by $58.0 million, or 20.8%, to a total of $337.1 million at March 31, 2000. The increase was due primarily to net current period borrowings totaling $22.8 million, coupled with advances of $35.2 million acquired through the Merger. The proceeds from deposit growth and FHLB advances were primarily used to fund loan originations during the three month period. The Banks are required to maintain minimum regulatory capital pursuant to federal regulations. At March 31, 2000, the Banks' regulatory capital exceeded all regulatory capital requirements. Comparison of Results of Operations for the Three Months Ended March 31, 2000 and 1999 General The inclusion of the accounts of Westwood, which Camco acquired in January 2000 in a transaction accounted for using the purchase method of accounting, significantly contributed to the increases in the level of income and expenses during the three months ended March 31, 2000, compared to the three months ended March 31, 1999. Accordingly, the statement of earnings for the period ended March 31, 1999, was not restated for the Merger. Camco's net earnings for the three months ended March 31, 2000 totaled $1.7 million, an increase of $164,000, or 10.4%, over the $1.6 million of net earnings reported in the comparable 1999 period. The increase in earnings was primarily attributable to a $1.7 million increase in net interest income, which was partially offset by a decrease in other income of $445,000, an $883,000 increase in general, administrative and other expense, an $83,000 increase in the provision for federal income taxes and an $83,000 increase in the provision for loan losses. 11 Camco Financial Corporation MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) For the three month periods ended March 31, 2000 and 1999 Comparison of Results of Operations for the Three Months Ended March 31, 2000 and 1999 (continued) Net Interest Income Total interest income for the three months ended March 31, 2000, increased by $6.3 million, or 54.8%, over the three month period ended March 31, 1999, generally reflecting the effects of growth in average interest-earning assets outstanding of approximately $286.5 million. Interest income on loans and mortgage-backed securities totaled $17.0 million for the three months ended March 31, 2000, an increase of $6.2 million, or 57.4%, over the comparable 1999 period. The increase resulted primarily from a $301.3 million, or 53.5%, increase in the average balance outstanding year to year, and a 44 basis point increase in the average yield. Interest income on investments and other interest-bearing assets increased by $69,000, or 10.9%, due primarily to an increase of 142 basis points in the weighted-average yield, which was partially offset by a $5.8 million, or 12.4%, decrease in the average balance outstanding year to year. Interest expense on deposits increased by $1.7 million, or 36.2%, to a total of $6.4 million for the three months ended March 31, 2000, due primarily to a $120.3 million, or 26.1%, increase in deposits over the prior year and an increase of 40 basis points in the weighted-average interest rates paid. Interest expense on borrowings totaled $4.7 million for the three months ended March 31, 2000, an increase of $2.9 million, or 160.8%, over the 1999 three month period. The increase resulted primarily from a $174.9 million increase in the average balance outstanding year to year and an increase of 42 basis points in the weighted-average interest rates paid. As a result of the foregoing changes in interest income and interest expense, net interest income increased by $1.7 million, or 33.8%, to a total of $6.6 million for the three months ended March 31, 2000. The interest rate spread decreased to approximately 2.65% for the three months ended March 31, 2000, from 2.89% for the 1999 period, while the net interest margin decreased to approximately 2.90% in 2000, as compared to 3.17% in the first quarter of 1999. Provision for Losses on Loans A provision for losses on loans is charged to earnings to bring the total allowance for loan losses to a level considered appropriate by management based on historical experience, the volume and type of lending conducted by Camco, the status of past due principal and interest payments, general economic conditions, particularly as such conditions relate to Camco's market area, and other factors related to the collectibility of Camco's loan portfolio. The provision for losses on loans totaled $137,000 for the three months ended March 31, 2000, an increase of $83,000, or 153.7%, from the comparable period in 1999. The current period provision generally reflects the effects of loan portfolio growth. There can be no assurance that the allowance for loan losses will be adequate to cover losses on nonperforming loans in the future. 12 Camco Financial Corporation MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) For the three month periods ended March 31, 2000 and 1999 Comparison of Results of Operations for the Three Months Ended March 31, 2000 and 1999 (continued) Other Income Other income totaled $1.1 million for the three months ended March 31, 2000, a decrease of $445,000, or 28.4%, from the comparable 1999 period. The decrease in other income was primarily attributable to a $625,000, or 79.9%, decrease in gains on sale of loans and a decrease of $146,000, or 23.7%, in late charges, rent and other. The decrease in gains on sale of loans primarily reflects a reduction in sales volume year to year. The decrease in late charges, rent and other was primarily attributable to a $141,000 decrease in title company fees compared to the same quarter in 1999. General, Administrative and Other Expense General, administrative and other expense totaled $4.9 million for the three months ended March 31, 2000, an increase of $883,000, or 21.8%, over the comparable period in 1999. This increase was due primarily to a $633,000, or 34.7%, increase in employee compensation and benefits, a $146,000, or 24.9%, increase in occupancy and equipment and a $75,000, or 34.7%, increase in franchise taxes, which were partially offset by a decrease in federal deposit insurance premiums of $45,000, or 60.8%. The acquisition of Westwood accounted for $638,000, or 72.3%, of the total increase in general, administrative and other expenses. Exclusive of the effects of the Merger, the increase in employee compensation and benefits resulted primarily from normal merit increased coupled with increased staffing levels due to Camco's overall growth year to year, the increase in office occupancy and equipment expense increased due to increased depreciation and increased building maintenance costs and franchise taxes increased due primarily to the Corporation's equity growth year to year. Federal Income Taxes The provision for federal income taxes totaled $882,000 for the three months ended March 31, 2000, an increase of $83,000, or 10.4%, from the three months ended March 31, 1999. This increase is attributable to a $247,000, or 10.4%, increase in pre-tax earnings. The Corporation's effective tax rate amounted to 33.7% for each of the three months ended March 31, 2000 and 1999. Quantitative and Qualitative Disclosures about Market Risk There has been no material change in the Corporation's market risk since the Corporation's Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 1999. 13 Camco Financial Corporation PART II ITEM 1. Legal Proceedings Not applicable ITEM 2. Changes in Securities and Use of Proceeds None ITEM 3. Defaults Upon Senior Securities Not applicable ITEM 4. Submission of Matters to a Vote of Security Holders None ITEM 5. Other Information Not applicable ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibits: 15 Independent Accountants' Report 27.1 Financial data schedule for the three months ended March 31, 2000. 27.2 Restated financial data schedule for the three months ended March 31, 1999. (b) Reports on Form 8-K: On January 21, 2000, Camco filed a Form 8-K reporting the closing of its acquisition of Westwood in Item 2. On March 21, 2000, Camco filed a Form 8-K/A which included the audited financial statements of Westwood. 14 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: May 12, 2000 By: /s/Larry A. Caldwell ---------------------------- -------------------- Larry A. Caldwell Chief Executive Officer Date: May 12, 2000 By: /s/Gary Crane ----------------------------- -------------------- Gary Crane Chief Financial Officer 15 EX-15 2 INDEPENDENT ACCOUNTANTS' REPORT Independent Accountants' Report Board of Directors Camco Financial Corporation We have reviewed the accompanying consolidated statement of financial condition of Camco Financial Corporation as of March 31, 2000, and the related consolidated statements of earnings, comprehensive income, and cash flows for the three-month period then ended. The financial statements are the responsibility of the Corporation's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated statement of financial condition as of December 31, 1999, and the related consolidated statements of earnings, stockholders' equity, and cash flows for the year then ended (not presented herein) and in our report dated February 18, 2000, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated statement of financial condition as of December 31, 1999, is fairly stated, in all material respects, in relation to the consolidated statement of financial condition from which it has been derived. /s/GRANT THORNTON LLP Cincinnati, Ohio May 12, 2000 EX-27.1 3 FINANCIAL DATA SCHEDULE
9 1,000 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 13,081 5,796 0 0 11,416 23,419 22,853 901,372 2,605 1,003,775 582,095 337,119 9,375 0 0 0 7,058 68,128 1,003,775 16,669 565 424 17,658 6,402 11,094 6,564 137 0 4,931 2,616 2,616 0 0 2,616 .25 .25 2.90 2,768 1,429 0 0 1,863 39 2 2,605 2,605 0 0
EX-27.2 4 RESTATED FINANCIAL DATA SCHEDULE
9 1,000 3-MOS DEC-31-1999 JAN-01-1998 MAR-31-1999 11,625 14,424 0 0 8,117 18,485 18,488 581,392 1,826 667,453 446,041 0 8,901 151,448 0 0 0 61,063 667,453 10,638 333 435 11,406 4,701 6,500 4,906 54 0 4,048 2,369 1,570 0 0 1,570 .27 .27 3.52 1,975 3,441 0 0 1,783 12 1 1,826 0 0 1,826
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