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Camco Financial Announces Third Quarter 2013 Earnings

Camco Financial Announces Third Quarter 2013 Earnings  CAMBRIDGE, Ohio, Oct. 29, 2013 (GLOBE NEWSWIRE) -- Camco Financial Corporation (Nasdaq:CAFI), the bank holding company for Advantage Bank, today announced financial results for the three months ended September 30, 2013.  Net earnings increased to $0.7 million for the third quarter 2013 from $0.5 million for the same period in 2012. For the three months ended September 30, 2013, earnings per fully diluted share were $0.05 versus $0.07 a year ago. The third quarter 2013 results included recognition of mortgage servicing rights ($0.4 million) and release of a portion ($0.6 million) of the allowance for loan losses. There were 15,027,666 diluted weighted shares outstanding for the third quarter 2013 compared with 7,473,123 diluted weighted shares outstanding for the same period in 2012. The year-over-year increase in the number of diluted shares outstanding is principally due to common shares issued in the Company's stock offering completed in the fourth quarter 2012.  James E. Huston, President and CEO, stated, "As a result of the solid year-over-year third quarter performance, we were able to further strengthen our balance sheet and continue to improve credit quality. Stockholders' equity to total assets increased to 8.85% of total assets at September, 30, 2013, from 6.29% on the same date last year. Classified loans and non-performing loans at quarter-end were 31% and 35%, respectively, below levels at the same date in 2012. We are continuing to implement multiple initiatives related to growth opportunities and are also focused on adapting to the continuing sluggish economy while maintaining strong liquidity. The sequential quarter improvement in the third quarter 2013 net interest margin to 3.27% is a positive sign of these efforts."  Mr. Huston continued, "On October 10, 2013, we announced a definitive agreement with Huntington Bancshares Incorporated under which they will acquire Camco Financial Corporation in a cash and stock transaction. Under the terms of the agreement, which was unanimously approved by the boards of both companies, shareholders of Camco Financial may elect to receive 0.7264 shares of Huntington common stock, or $6.00 in cash, for each share of Camco Financial common stock, subject to proration provisions specified in the merger agreement that provide for a targeted aggregate split of total consideration of 80% common stock and 20% cash. Previously issued warrants and options may be exercised according to their original terms up until closing and will convert to rights to acquire shares of Huntington common stock after the consummation of the merger. We are excited to be joining a financial institution that, like Camco Financial, has a longstanding commitment to customer service, innovative products and investing in the communities it serves.This transaction is expected to close in the first half of 2014, subject to the satisfaction of customary closing conditions, including regulatory approvals and the approval of the Camco Financial stockholders."  Review of Financial Performance  Overview:  The following items summarize key aspects of the Company's performance during the quarter ended September 30, 2013 compared to the same period in 2012:    *Total deposit balances decreased $21.3 million, or 3%, to $609.0 million     driven by the anticipated reduction of higher-cost, single-product     certificates of deposit.   *Net interest income declined $0.3 million to $5.7 million. This decrease     was attributable to a reduction in loan balances, especially related to     early loan payoffs in the fourth quarter of 2012, coupled with lower loan     yields.The anticipated reduction in certificates of deposit balances     during this same period reduced the cost of funds and partially offset the     impact of the lower earning asset yield.   *Noninterest income increased to $1.9 million driven by a higher value for     mortgage servicing rights as a result of mortgage originations and lower     prepayments of mortgages, partially offset by lower spreads on gain on     sale of residential mortgage loans.   *Noninterest expense was $7.3 million for the third quarter of 2013.The     increase from the same period in 2012 was principally due to growth     initiatives, which was partially offset by lower REO and classified assets     expenses attributable to credit quality improvements.   *Classified assets (which include substandard, doubtful, loss, and real     estate owned) were $27.1 million at September 30, 2013, representing a     decrease of 38% compared to the same date in 2012.  Net Interest Margin:  Net interest margin was 3.27% for the third quarter of 2013 compared to 3.49% for the same period last year due to the lower yield on earning assets.Net interest margin is expected to be under pressure during the remainder of 2013 due to low interest rates and slow economic growth.The Company continues to pursue favorable risk-adjusted pricing opportunities, further improvement in credit quality, and other balance sheet changes to enhance net interest margin in future periods.  Net Interest Income:  Net interest income before the provision for loan losses was $5.7 million for the third quarter of 2013 compared to $6.0 million for the same period a year ago.The decline was attributable to a reduction in the yield on the earning assets, partially offset by a decrease in the cost of funds.  The yield on earning assets declined to 4.06% in the third quarter of 2013 from 4.52% a year ago.This decrease was due to lower loan balances in the higher earning asset mix, which resulted from early loan payoffs in late-2012 as well as lower loan yields attributable to the current interest rate environment.The planned runoff of higher-yielding certificates of deposit, along with the restructuring of $25 million of FHLB advances, contributed to a reduction in the cost of funds and helped to mitigate the impact of the yield on earning assets.Cost of funds for the quarter ended September 30, 2013, declined to 0.91% from 1.12% for the third quarter of 2012.  Provision Expense, Credit Quality, and Allowance for Loan Losses:  The allowance for loan and lease losses was $9.7 million at September 30, 2013, compared to $14.5 million on the same date a year ago.This decrease was due to further improvement in asset quality and, therefore, a ($0.6) million provision for loan losses was recorded for the third quarter of 2013 compared to $0.5 million for the same period in 2012.The Company maintains a strong allowance for loan and lease losses and remains committed to further improvement in asset quality.    *Total delinquent loans were $12.7 million at September 30, 2013, a 24%     decrease since the same date last year.   *Classified loans (which include substandard, doubtful, and loss) were     $22.5 million at September 30, 2013, or 31% below the same date in 2012.   *Non-performing loans were $14.9 million at September 30, 2013 or 35% below     the September 30, 2012 amount.   *Non-performing loans as a percentage of total loans (including loans held     for sale) were 2.53% at September 30, 2013, compared to 3.80% on the same     date of the prior year.   *The allowance for loan and lease losses, expressed as a percentage of     non-performing loans, was 65.1% at September 30, 2013 compared to 63.7% on     the same date a year ago.  Noninterest Income:  Noninterest income increased 2% to $1.9 million for the third quarter of 2013.This was primarily attributable to higher value of mortgage servicing rights versus the same period last year as a result of mortgage originations and lower prepayment of mortgages, partially offset by lower spreads on gain on sale of residential mortgage loans.  Noninterest Expense:  Noninterest expense was $7.3 million for the third quarter of 2013 compared to $6.9 million for the same quarter a year ago.The increase was principally due to growth initiatives, which was partially offset by lower REO and classified assets expenses attributable to credit quality improvements.  Balance Sheet:  Total assets were $760.6 million at September 30, 2013, compared to $754.2 million on the same date last year.This increase was principally due to the increase in stockholder equity, which more than offset the anticipated runoff of higher cost, single product certificates of deposit, being used to fund additional earning assets.The increased stockholder equity resulted from the $10 million stock offering, the recognition of the deferred tax asset, and normal earnings. We continue to focus on profitable lending opportunities and investments as a means of employing our cash efficiently.  Asset Quality:  Loan quality continued to improve during the third quarter of 2013 resulting in steady progress concerning classified loans and non-performing loans over the past twelve months.  The following table provides a comparison of changes in key factors for the third quarter of 2013, year-end 2012 and the third quarter of 2012:  (Dollars in thousands)        9/30/2013 12/31/2012 9/30/2012 Classified Loans*             $22,492   $29,184    $32,649 Non-Performing Loans          $14,860   $19,594    $22,787 Loan Loss Reserve             $9,671    $12,147    $14,508 Loan Loss Reserve/Total Loans 1.64%     2.12%      2.42%  *Includes substandard, doubtful and loss (including homogenous loans)  Deposits and Borrowings:  Total deposits at the end of the third quarter of 2013 were $21.3 million below September 30, 2012.The decrease is mostly due to a planned reduction in certain categories of certificates of deposit, which declined $19.1 million since September 30, 2012.The Company is focused on continuing to reduce the level of non-core deposits, particularly higher-yielding, single-product certificates of deposit related to rate sensitive depositors.  FHLB advances and other borrowings were $71.4 million at September 30, 2013, an increase of 11%, compared to the same date last year.This increase was due to an increase in customer repurchase agreements and an increase in borrowing on the FHLB cash advance line to fund earning assets on a short-term basis.  Equity:  Stockholders' equity was $67.3 million at September 30, 2013, compared to $47.4 million at September 30, 2012.Key factors that contributed to this 42% increase included completion of the Company's $10.0 million stock offering in November 2012, recognitionof a $5.9 million deferred tax assetin the second quarter of2013,net earnings during the past twelve months, and proceeds from the exercise of warrants related to the rights offering.Stockholders' equity at September 30, 2013 was 8.85% of total assets compared to 6.29% on the same date last year.  About Camco Financial Corporation: Camco Financial Corporation, holding company for Advantage Bank, is a multi-state bank holding company headquartered in Cambridge, Ohio.Advantage Bank offers community banking that includes commercial, business and consumer financial services and internet banking from 22 offices.Additional information about Camco Financial may be found on the Company's web sites: www.camcofinancial.com or www.advantagebank.com.  Forward Looking Statements  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.  Important Information for Investors and Shareholders  In connection with the proposed merger transaction, Huntington will file with the Securities and Exchange Commission a Registration Statement on Form S-4 that will include a Proxy Statement of the Company, and a Prospectus of Huntington, as well as other relevant documents concerning the proposed transaction. Shareholders are urged to read the Registration Statement and the Proxy Statement/Prospectus regarding the proposed merger when it becomes available and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information. A free copy of the Proxy Statement/Prospectus, as well as other filings containing information about Huntington and Camco Financial, may be obtained at the SEC's Internet site (http://www.sec.gov). You will also be able to obtain these documents, free of charge, from Huntington at www.Huntington.com under the tab "Investor Relations" and then under the heading "Publications and Filings", from Huntington Investor Relations at 800-576-5007, and from the Company by accessing Camco Financial's website at https://www.advantagebankonline.com under the tab "Investor Relations" and then under the heading "SEC Filings", or from Camco Financial Investor Relations at 740-435-2020.  Huntington and the Company and certain of their directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of Camco Financial in connection with the proposed merger. Information about the directors and executive officers of Huntington is set forth in the proxy statement for Huntington's 2013 annual meeting of shareholders, as filed with the SEC on Schedule 14A on March 7, 2013. Information about the directors and executive officers of Camco Financial is set forth in the proxy statement for the Company's 2013 annual meeting of stockholders, as filed with the SEC on a Schedule 14A on April 19, 2013. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the Proxy Statement/Prospectus regarding the proposed merger when it becomes available. Free copies of this document may be obtained as described in the preceding paragraph.  Camco Financial Corporation Condensed Consolidated Statements of Financial Condition (In thousands, except for per share data and shares outstanding)                                                                                  (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)                   9/30/13     6/30/13     3/31/13     12/31/12    9/30/12 Assets                                                          Cash and Cash      $17,185   $27,125   $118,212  $58,379   $26,920 Equivalents Investments       101,936    103,529    39,432     86,201     80,648                                                                Loans Held for     1,831      2,697      3,824      6,544      6,341 Sale                                                                Loans Receivable   586,674    571,470    555,180    566,722    594,030 Allowance for Loan (9,671)    (10,556)   (11,532)   (12,147)   (14,508) Loss Loans Receivable,  577,003    560,914    543,648    554,575    579,522 Net                                                                Other Assets       62,644     62,514     58,246     58,560     60,811                                                                Total Assets       $760,599  $756,779  $763,362  $764,259  $754,242                                                                Liabilities                                                     Deposits           $609,012  $614,623  $626,741  $627,224  $630,304 Borrowed Funds     71,408     65,788     63,981     64,219     64,466 Other Liabilities  12,899     10,432     11,929     13,089     12,050                                                                Total Liabilities  $693,319  $690,843  $702,651  $704,532  $706,820                                                                Stockholders'      $67,280   $65,936   $60,711   $59,727   $47,422 Equity                                                                Total Liabilities and Stockholders'  $760,599  $756,779  $763,362  $764,259  $754,242 Equity                                                                                                                               Stockholders' Equity to Total    8.85%       8.71%       7.95%       7.82%       6.29% Assets                                                                Total Shares       13,603,438 13,549,082 13,529,287 13,233,036 7,465,563 Outstanding                                                                Book Value Per     $4.95     $4.87     $4.49     $4.51     $6.35 Share   Camco Financial Corporation Condensed Consolidated Statements of Earnings Year to Date Information (In thousands, except for per share data and shares outstanding)                                                                                                                       9 Months    9 Months                                                      Ended       Ended                                                      9/30/13     9/30/12                                                      (Unaudited) (Unaudited) Interest Income:                                                  Loans                                                 $19,905   $23,434 Mortgage-backed securities                            27         48 Investment securities                                 456        302 Interest-bearing deposits and other                   379        330 Total Interest Income                                 $20,767   $24,114                                                                  Interest Expense:                                                 Deposits                                             $3,012    $4,191 Borrowings                                            1,241      1,836 Total Interest Expense                                4,253      6,027 Net Interest Income                                   $16,514   $18,087                                                                  Provision for Losses on Loans                         $(509)    $1,599 Net Interest Income After Provision for Loan Losses   $17,023   $16,488                                                                  Noninterest Income:                                               Late charges, rent and other                          $692      $872 Loan servicing fees                                   836        849 Service charges and other fees on deposits            1,480      1,513 Gain on sale of loans                                 1,486      1,714 Mortgage servicing rights                            861        (78) Gain (loss) on sale of investment, mbs & fixed assets 54         (2) Income on cash surrender value life insurance         633        642 Total noninterest income                              $6,042    $5,510                                                                  Noninterest expense:                                              Employee compensation and benefits                    $10,804   $9,392 Occupancy and equipment                               2,182      2,192 FDIC premium and other insurances                     1,310      1,380 Data processing                                       821        821 Advertising                                          405        296 Franchise taxes                                       675        583 Other operating                                      5,191      6,033 Total noninterest expense                             $21,388   $20,697                                                                  Earnings (loss) before provision for income taxes     1,677      1,301                                                                  Provision for income taxes                            $(5,703)  $(78) Net Earnings (Loss)                                   $7,380    $1,379                                                                  Earnings (Loss) Per Share:                                        Basic                                                $0.55     $0.19 Diluted                                              $0.50     $0.19                                                                  Basic Weighted Number of                                          Shares Outstanding                                    13,506,120 7,385,423 Diluted Weighted Number of                                       Shares Outstanding                                    14,718,138 7,387,589   Camco Financial Corporation Condensed Consolidated Statements of Operations 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                   9/30/13     6/30/13     3/31/13     12/31/12    9/30/12                   (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) Interest Income:                                                Loans              $6,724    $6,591    $6,590    $7,240    $7,522 Mortgage-backed    7          7          13         15         15 securities Investment         187        163        106        119        116 securities Interest-bearing   108        122        149        135        112 deposits and other Total Interest     $7,026    $6,883    $6,858    $7,509    $7,765 Income                                                                Interest Expense:                                               Deposits          $979      $1,000    $1,033    $1,128    $1,235 Borrowings         386        429        426        577        545 Total Interest     1,365      1,429      1,459      1,705      1,780 Expense Net Interest       $5,661    $5,454    $5,399    $5,804    $5,985 Income                                                                Provision for      (609)      --        100        (1,455)    457 Losses on Loans Net Interest Income After       $6,270    $5,454    $5,299    $7,259    $5,528 Provision for Loan Losses                                                                Noninterest                                                     Income: Rent and other     $223      $168      $301      $484      $321 Loan servicing     287        273        276        284        283 fees Service charges and other fees on  501        517        462        528        515 deposits Gain on sale of    251        546        689        770        633 loans Mortgage servicing 405        351        105        60         (117) rights Gain (loss) on sale of            --        (7)        61         126        -- investment, mbs & fixed assets Income on CSVL     214        211        208        237        216 (BOLI) Total noninterest  $1,881    $2,059    $2,102    $2,489    $1,851 income                                                                Noninterest                                                     expense: Employee compensation and   $3,777    $3,518    $3,509    $3,208    $2,996 benefits Occupancy and      718        719        745        772        725 equipment FDIC premium and   428        441        441        436        457 other insurances Data processing    261        277        283        326        250 Advertising       133        128        144        77         101 Franchise taxes    218        227        230        182        199 Other operating   1,718      1,978      1,495      1,943      2,220 Total noninterest  $7,253    $7,288    $6,847    $6,944    $6,948 expense                                                                Earnings (loss) before provision   $898      $225      $554      $2,804    $431 for income taxes                                                                Provision for      $171      $(5,929)  $55       $20       $(53) income taxes Net Earnings       $727      $6,154    $499      $2,784    $484 (loss)                                                                Earnings (Loss)                                                 Per Share: Basic             $0.05     $0.45     $0.04     $0.26     $0.07 Diluted           $0.05     $0.42     $0.03     $0.26     $0.07                                                                Basic Weighted                                                  Number of Shares Outstanding 13,583,511 13,545,861 13,386,828 10,806,051 7,467,255 Diluted Weighted                                                Number of Shares Outstanding 15,027,666 14,718,045 14,392,077 10,806,269 7,473,123   Camco Financial Corporation Selected Ratios and Statistics (In thousands, except for per share data and shares outstanding)                                                                                         3 Months      3 Months     9 Months     9 Months                          Ended         Ended        Ended        Ended                          9/30/13       9/30/12      9/30/13      9/30/12                          (Unaudited)   (Unaudited)  (Unaudited)  (Unaudited)                                                                Return on average equity  4.38%         4.12%        14.81%       3.96%                                                                Return on average assets  0.38%         0.25%        1.30%        0.24%                                                                Interest rate spread      3.15%         3.40%        3.04%        3.34%                                                                Net interest margin       3.27%         3.49%        3.16%        3.45%                                                                Yield on earning assets   4.06%         4.52%        3.97%        4.59%                                                                Cost of deposits          0.73%         0.87%        0.74%        0.98%                                                                Cost of borrowings        2.27%         3.16%        2.52%        3.32%                                                                Total cost of interest    0.91%         1.12%        0.93%        1.25% bearing liabilities                                                                Noninterest expense to    3.83%         3.64%        3.76%        3.58% average assets                                                                Efficiency ratio          96.17%        88.67%       94.82%       87.71%                                                                Nonperforming assets to   2.69%         4.60%        2.69%        4.60% total assets                                                                Non performing loans to total net loans           2.53%         3.80%        2.53%        3.80% includingloans held for sale                                                                Allowance for loan losses to total loans including  1.64%         2.42%        1.64%        2.42% loans held for sale                                                                Ratios are based upon the mathematical average of the balances at the end of each month for the quarter and were annualized where appropriate                                               Camco Financial Corporation                       Averages for Quarters Ended                       (In thousands, except for per share data and shares                        outstanding)                                                                          September 30, 2013           September 30, 2012                       Average              Yield/ Average            Yield/                       Balance     Interest  Rate   Balance    Interest Rate Interest - Earning                                                  Assets: Loans receivable - net $565,448  $6,724  4.76%  $583,587 $7,522 5.16% (1) Securities (2)         102,610    194      0.76%  78,729    131     0.67% FHLB Stock             9,888      105      4.25%  9,888     104     4.21% Other interest bearing 15,069     3        0.08%  14,605    8       0.22% accounts Total interest earning $693,015  $7,026  4.06%  $686,809 $7,765 4.52% assets                                                                    Noninterest-earning    $64,827                  $75,685           assets Total Average Assets   $757,842                 $762,494                                                                                                                                                Interest-Bearing                                                    Liabilities: Deposits               $535,153  $979    0.73%  $565,020 1,235   0.87% Advances & Borrowings  67,873     386      2.27%  68,908    545     3.16% Total interest-bearing $603,026  $1,365  0.91%  $633,928 $1,780 1.12% liabilities                                                                    Noninterest-bearing                                                 sources: Noninterest-bearing    88,406                    81,527             liabilities Shareholders' equity   66,410                    47,039             Total Liabilities and  $757,842                 $762,494          Shareholders' Equity                                                                    Net Interest margin                        3.27%                    3.49%                                                                    Net Interest Income &             $5,661  3.15%            $5,985 3.40% Spread                                                                    (1) Includes LHFS but does not include ALLL and Non-Accrual Loans (2) Includes securities designated as available for sale and held to maturity  CONTACT: James E. Huston, CEO          John E. Kirksey, CFO          Phone:  740-435-2020  company logo