Benefit Plans

12 Months Ended

Dec. 31, 2012

Benefit Plans [Abstract]

BENEFIT PLANS

NOTE M—BENEFIT PLANS

The Corporation has several non-qualified executive benefit plans for key employees as follows:

• Salary Continuation Plans

• Split Dollar Post Retirement Plan

• Deferred Compensation Plan (100% employee contributions)

The Salary continuation plans provide fixed post-retirement benefits to certain key executives for 15 years.

The split dollar retirement plan includes future benefits that will be provided for in part by single premium key man life insurance of which the corporation is the beneficiary. During the current year, the board of directors modified the eligibility requirements of the plan; the net effect reduced expense by $213,000.

The deferred compensation plan does not require employer contributions. During the employment period, interest on this plan is credited annually at the rate of 75% of the Corporation’s return on equity for the previous year. Interest paid during the payout phase is the lesser of the effective federal funds rate on the first business day of each installment period or 75% of the Corporation’s return on equity for the previous year.

The accrued liability for these plans was $4.1 million and $4.0 million at the end of 2012 and 2011 respectively.

Combined plan expenses for these plans were $204,000, $254,000 and $313,000 during the years ended December 31, 2012, 2011 and 2010, respectively.

Payments to participants under these plans were $151,000 and $143,000 during the years ended December 31, 2012 and 2011, respectively.

Future payments to participants are as follows:

(in thousands)
2013	$	227
2014		223
2015		222
2016		216
2017		216
2018 and thereafter		5,590
Total	$	6,694

The Corporation also has a 401(k) Salary Savings Plan covering substantially all employees. Contributions by the employees are voluntary and are subject to matching contributions by the employer under a fixed percentage, which may be increased at the discretion of the Board of Directors. Total expense under this plan was $283,000, $286,000 and $304,000 for the years ended December 31, 2012, 2011 and 2010, respectively.

Stock Option Plans

The Corporation follows a fair-value based method for valuing stock-based compensation that measures compensation cost at the grant date based on the fair value of the award.

In 2012, no options were granted as the Corporation awarded restricted shares in lieu of options for the goals achieved within the 2011 officer incentive plan.

The fair value of each option grant is estimated on the date of grant using the modified Black-Scholes options-pricing model. The following table details the fair value and assumptions used to value stock options as of the grant date that were granted in 2011 and 2010:

	2011			2010
Fair value, calculated	$	1.49		$	1.65
Exercise Price	$	2.14		$	2.51
Risk-free interest rate		3.58	%		3.61	%
Expected stock price volatility		57.30	%		51.62	%
Expected dividend yield		0			0
Expected Life		10 years			10 years

A summary of the status of the Corporation’s stock option plans as of December 31, and changes during the periods ending on those dates is presented below:

	Year ended December 31, 2012					Year ended December 31, 2011
	Shares			Weighted- average exercise price		Shares			Weighted- average exercise price
Outstanding at beginning of period		587,342		$	4.68		463,642		$	5.84
Granted		0			0		161,538			2.14
Exercised		0			0		0			0
Forfeited		(5,454	)		10.63		(29,338	)		7.03
Expired		0			0		(8,500	)		11.93
Outstanding at end of period		581,888		$	4.62		587,342		$	4.68
Options exercisable at period end		395,233		$	5.70		317,467		$	6.58
Weighted-average fair value of options granted during the period				$	N/A				$	1.49

The following information applies to options outstanding at December 31, 2012:

	Options outstanding						Options Exercisable
Range of Exercise Prices	Number Outstanding		Weighted- Average Remaining Contractual Life (Years)		Weighted- Average Exercise Price		Number Exercisable		Weighted- Average Exercise Price
$1.90—$2.51		470,687		7.3	$	2.38		284,032	$	2.42
$8.92		18,877		5.0		8.92		18,877		8.92
$11.36—$14.16		43,473		3.3		13.69		43,473		13.69
$16.13—$17.17		48,851		1.3		16.44		48,851		16.44
		581,888		6.4	$	4.62		395,233	$	5.70

A summary of unvested options as of, and changes during the year ended, December 31, 2012, were as follows:

	Number
Unvested options:
Beginning of period		269,875
Granted		0
Forfeited		(888	)
Vested during the period		(82,332	)
Unvested options at December 31, 2012		186,655

The total intrinsic value of options exercised during the years ended December 31, 2012, 2011, and 2010, was $0 as no options were exercised.

As of December 31, 2012, there was $170,000 of total unrecognized compensation cost related to non-vested stock options. The unrecognized compensation cost is expected to be recognized over a weighted-average period of 2.0 years.

In 2009, Camco granted 50,000 restricted shares of stock out of the current authorized common stock related to an employment agreement. The issuance of restricted stock vested in four equal annual increments beginning in 2010.

In March 2012, Camco granted 262,492 shares of restricted stock with an impact to unearned/deferred compensation of $625,000. The stock was granted under the Camco Financial Corporation 2010 Equity Plan to officers based on 2011 performance. The issuance of the restricted stock vests over three years, 20% on the date of the award, 20% on the date that the Compensation Committee certifies Camco’s 2012 financial results and 60% on the date that the Compensation Committee certifies Camco’s 2013 financial results (such results are expected to be certified in the first quarter of 2013 and 2014, respectively). However, if Camco’s pre-tax earnings for the fiscal year ending December 31, 2012 or 2013 are not equal to or greater than the budgeted pre-tax earnings for the fiscal year ending December 31, 2011; the participant will forfeit 25% of the equity award that is to vest on such date. Additionally, the shares may not be transferred for one year after vesting. The grant date fair value per share of restricted stock is the stock price at close on grant date, which is being expensed on a straight-line basis during the vesting period.

In October 2012, Camco granted 53,187 shares of restricted stock awards with an impact to unearned / deferred compensation of $94,150. The stock was granted under the Camco Financial Corporation 2010 Equity Plan to James E. Huston based on 2012 performance. The issuance of the restricted stock vested immediately.

The shares represented by restricted stock awards are considered outstanding at the grant date, as the recipients are entitled to voting rights and dividends if declared. A summary of restricted stock award activity for the period is presented below:

	Non-vested Number of Shares			Weighted Average Grant Date Fair Value
Non-vested balance at January 1, 2011		37,500		$	2.50
Vested		(12,500	)		2.50
Non-vested balance at December 31, 2011		25,000		$	2.50
Granted		315,679			2.28
Vested		(118,166	)		2.12
Forfeit		(2,524	)		2.38
Non-vested balance at December 31, 2012		219,989		$	2.39

At December 31, 2012, there was approximately $370,000 of compensation cost that has not yet been recognized related to restricted stock awards. That cost is expected to be recognized over the twelve months in 2013.