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Camco Financial Announces Fourth Quarter and Full-Year 2012 Earnings

CAMBRIDGE, Ohio, Jan. 31, 2013 (GLOBE NEWSWIRE) -- Camco Financial Corporation (Nasdaq:CAFI), the bank holding company for Advantage Bank, today announced financial results for the three months and twelve months ended December 31, 2012. Net earnings increased to $2.8 million or $0.26 per diluted share for the fourth quarter 2012 from $0.9 million or $.12 per diluted share for the same period of the prior year. For the full-year 2012, net earnings were $4.2 million or $0.50 per diluted share compared with $0.2 million or $0.03 per diluted share for 2011.

Jim Huston, President and CEO, commented, "Our fourth quarter and full-year 2012 financial statements reflect solid achievements in key areas that further strengthened our balance sheet. In addition to our solid operating results, we successfully completed a $10.0 million rights and public offering in November, 2012. Those two factors enabled us to end the year 2012 with approximately $60.0 million in stockholders' equity. This represents Tier 1 equity of 8.42% of total assets compared to 6.56% at December 31, 2011. We continue to implement plans to improve our long-term performance through rigorous attention to net interest margin coupled with opportunities to increase noninterest income while also reducing noninterest expense. We exited 2012 stronger than we entered the year and anticipate attaining further progress in 2013."

Review of Financial Performance

Overview:

The following items summarize key achievements of the Company during the fourth quarter and fiscal year 2012:

Fourth Quarter 2012

  • The Company successfully raised $10.0 million of capital through a shareholder rights and public offering in November 2012, which resulted in the issuance of 5.7 million shares of common stock.
  • Net interest margin decreased 0.04% from the linked quarter, principally due to lower yield on earning assets.
  • Noninterest income increased $0.6 million from the linked quarter and $1.2 million from the fourth quarter 2011, driven by higher gain on sale of loans and higher loan fee income, along with improvement in the value of mortgage servicing rights, offset partially by decreased gain on sale of investments.
  • Noninterest expense decreased $0.6 million compared to the same quarter ended December 31, 2011, primarily due to lower expenses related to real estate owned.
  • Classified loans (which includes substandard, doubtful, and loss) at December 31, 2012 were $3.4 million below the linked quarter.
  • A charge-off of $0.6 million for Other Real Estate Owned was recorded due to deterioration of real estate values.

Full-Year 2012

  • Core deposits (defined as checking, savings, and money market deposits) increased $39.1 million, or 13.8%, in 2012 compared to the same date of the prior year.
  • Net interest margin decreased 0.25% to 3.41% for the full-year 2012 compared to a year ago, primarily due to lower yield on earning assets. Cost of funds for the full-year 2012 was 33 basis points below 2011.
  • Classified loans at December 31, 2012 were $11.6 million below the same date of the prior year.
  • Tier 1 equity at December 31, 2012 was 8.42% compared to 6.56% at December 31, 2011, an increase of 186 basis points.
  • Noninterest income increased $1.5 million compared to a year ago, driven by higher gain on sale of loans and higher loan fee income, along with improvement in the value of mortgage servicing rights, offset partially by decreased gain on sale of investments.
  • Noninterest expense decreased $1.7 million compared to 2011, primarily due to lower expenses related to real estate owned.

Net Interest Margin:

Net interest margin decreased to 3.36% for the fourth quarter 2012 compared to 3.49% for the third quarter 2012. For the full-year 2012, net interest margin decreased 0.25% from 3.66% for 2011, driven by a reduction in the bank's yield on earning assets in this low rate environment. Management expects the Company's net interest margin to remain relatively stable during this period of low interest rates and slow economic growth, but will continue to seek opportunities for more favorable pricing, further improvement in credit quality, and other ways to maintain net interest margin going forward.

Net Interest Income:

Net interest income before the provision for loan losses decreased $0.2 million, or 3.0%, to $5.8 million for the fourth quarter 2012 compared to the linked quarter. The decrease was attributable to reductions in yield on earning assets in this low rate environment.

The Company's yield on earning assets decreased to 4.35% in the fourth quarter 2012 compared to 4.52% in the linked quarter. The cost of funds was similar for the quarter ended December 31, 2012 at 1.10% compared to 1.12% for the linked quarter 2012 and 1.42% for the fourth quarter 2011. Favorable growth in core deposits partially offset planned run-off in certificates of deposits and borrowings.

Provision Expense and Allowance for Loan Losses:

The allowance for loan and lease losses was $12.1 million at December 31, 2012, compared to $14.5 million at December 31, 2011. Factors contributing to this year-over-year improvement included lower classified and non-performing loans, and overall improvement in credit quality. Classified loans (which includes substandard, doubtful, and loss) decreased $3.4 million, or 11%, from the linked quarter in 2012 and $11.6 million, or 28.7%, compared to December 31, 2011. Non-performing loans of $19.6 million at December 31, 2012 were $3.2 million, or 14.0%, below September 30, 2012 and $5.3 million, or 21.3%, lower than December 31, 2011. Non-performing loans as a percentage of total loans (including loans held for sale) has decreased to 3.42% at December 21, 2012, compared to 3.77% on the same date of the prior year. The allowance for loan and lease losses as a percentage of non-performing loans was 62.0% at December 31, 2012 compared to 58.3% at December 31, 2011.

Noninterest Income:

Noninterest income was $2.5 million for the fourth quarter 2012, an increase of $0.6 million, or 34.5%, compared to the linked quarter. Noninterest income for the full-year 2012 was $8.0 million, an increase of $1.5 million, or 23.1%, above the full-year 2011. The increase in noninterest income in the fourth quarter 2012 over the linked quarter and full-year year 2011 was primarily driven by higher gain on sale of residential mortgage loan production and improvement in the value of mortgage servicing rights.

Noninterest Expense:

Noninterest expense for the quarter ended December 31, 2012, decreased $0.6 million, or 7.4%, to $6.9 million from the same period of 2011 and was similar compared to the linked quarter. The decrease in noninterest expense compared to the fourth quarter 2011was driven by lower expenses related to real estate owned.

Balance Sheet:

Total assets were $764.3 million at December 31, 2012, compared to $767.0 million on the same date in 2011. The quality of the balance sheet continued to improve during 2012 as the Company increased equity capital by $14.1 million and core deposits by $39.1 million, while reducing higher-cost certificates of deposit and borrowings by $57.2 million. These achievements resulted from the Company's focus on strengthening the balance sheet, including a reduction in non-core funding.

Asset Quality:

Loan quality improved throughout 2012 even though the economic recovery within the Company's markets continues to be sluggish, contributing to declines in the underlying value of collateral of commercial and residential real estate plus deterioration in the financial condition of some borrowers.

A summary of certain key factors follows:

(in thousands) 12/31/2012 9/30/2012 12/31/2011
Classified Loans* $ 28,995 $ 32,413 $ 40,641
Non-Performing Loans $ 19,594 $ 22,787 $ 24,918
Loan Loss Reserve $ 12,147 $ 14,508 $ 14,532
Loan Loss Reserve / Total Loans 2.12% 2.44% 2.20%
*Includes substandard, doubtful and loss (including homogeneous loans).

Deposits and Borrowings:

Core deposits (defined as checking, savings, and money market deposits) were $39.1 million, or 13.8%, higher on December 31, 2012, compared to the same date of the prior year. Total deposits were $627.2 million at December 31, 2012, which is slightly lower compared to the same date in 2011. This slight year-over-year decrease in total deposits was due to a reduction in certificates of deposit of $41.1 million. The Company plans to continue to reduce non-core deposits, particularly higher single product certificates of deposit related to rate-sensitive customers.

FHLB advances and other borrowings were $16.1 million, or 20.0%, lower at December 31, 2012 compared to December 31, 2011. This planned decrease resulted from further repayment and restructuring of FHLB advances with excess liquidity, as well as a reduction in the amount of repurchase agreements.

Equity:

Stockholders' equity increased $14.1 million, or 31.0%, during 2012 to $59.7 million at December 31, 2012, compared to $45.6 million at December 31, 2011. This was due to the improvement in net earnings throughout 2012 and the successful completion of a shareholder rights offering and public offering in November 2012 that resulted in $10.0 million of additional equity capital. Camco's Tier 1 leverage capital ratio was 8.42% at December 31, 2012 compared to 6.56% on the same date in 2011.

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 and its affiliates offer 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.

The Camco Financial Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4639

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.

Camco Financial Corporation
Condensed Consolidated Statements of Financial Condition
(In thousands, except for per share data and shares outstanding)
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
12/31/12 9/30/12 6/30/12 3/31/12 12/31/11
Assets
Cash and Cash Equivalents 58,379 26,920 28,160 40,431 38,374
Investments 86,201 80,648 75,347 62,834 20,928
Loans Held for Sale 6,544 6,341 2,532 5,583 8,090
Loans Receivable 566,722 594,030 613,790 630,124 653,709
Allowance for Loan Loss (12,147) (14,508) (14,185) (14,954) (14,532)
Loans Receivable, Net 554,575 579,522 599,605 615,170 639,177
Other Assets 58,560 60,811 61,272 62,149 60,449
Total Assets $ 764,259 $ 754,242 $ 766,916 $ 786,167 $ 767,018
Liabilities
Deposits 627,224 630,304 638,516 650,853 629,259
Borrowed Funds 64,219 64,466 69,200 77,929 80,285
Other Liabilities 13,089 12,050 12,424 11,276 11,869
Total Liabilities 704,532 706,820 720,140 740,058 721,413
Stockholders' Equity 59,727 47,422 46,776 46,109 45,605
Total Liabilities and Stockholders' Equity $ 764,259 $ 754,242 $ 766,916 $ 786,167 $ 767,018
Stockholders' Equity to Total Assets 7.82% 6.29% 6.10% 5.87% 5.95%
Total Shares Outstanding 13,233,036 7,465,563 7,468,087 7,468,087 7,205,595
Book Value Per Share $ 4.51 $ 6.35 $ 6.26 $ 6.17 $ 6.33
Camco Financial Corporation
Condensed Consolidated Statements of Earnings
Year to Date Information
(In thousands, except for per share data and shares outstanding)
12 Months 12 Months
Ended Ended
12/31/12 12/31/11
(Unaudited) (Unaudited)
Interest Income:
Loans 30,674 34,956
Mortgage-backed securities 63 376
Investment securities 421 202
Interest-bearing deposits and other 465 703
Total Interest Income 31,623 36,237
Interest Expense:
Deposits 5,319 7,481
Borrowings 2,413 2,893
Total Interest Expense 7,732 10,374
Net Interest Income 23,891 25,863
Provision for Losses on Loans 144 2,279
Net Interest Income After Provision for Loan Losses 23,747 23,584
Noninterest Income:
Late charges, rent and other 1,356 1,103
Loan servicing fees 1,133 1,195
Service charges and other fees on deposits 2,041 2,110
Gain on sale of loans 2,484 506
Mortgage servicing rights (18) (578)
Gain (loss) on sale of investment, mbs & fixed assets 124 1,282
Income on cash surrender value life insurance 879 880
Total noninterest income 7,999 6,498
Noninterest expense:
Employee compensation and benefits 12,600 12,337
Occupancy and equipment 2,964 2,940
FDIC premium and other insurances 1,816 1,986
Data processing 1,147 1,111
Advertising 373 363
Franchise taxes 765 668
Other operating 7,976 9,919
Total noninterest expense 27,641 29,324
Earnings (loss) before provision for income taxes 4,105 758
Provision for income taxes (58) 544
Reported Net Income 4,163 214
Net Earnings (Loss) 4,163 214
Earnings (Loss) Per Share:
Basic $ 0.50 $ 0.03
Diluted $ 0.50 $ 0.03
Earnings Per Share Operations:
Basic $ 0.50 $ 0.03
Diluted $ 0.50 $ 0.03
Basic Weighted Number of Shares Outstanding 8,260,865 7,205,595
Diluted Weighted Number of Shares Outstanding 8,261,396 7,205,595
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
12/31/12 9/30/12 6/30/12 3/31/12 12/31/11
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Interest Income:
Loans 7,240 7,522 7,699 8,213 8,501
Mortgage-backed securities 15 15 17 16 17
Investment securities 119 116 115 71 50
Interest-bearing deposits and other 135 112 105 113 101
Total Interest Income 7,509 7,765 7,936 8,413 8,669
Interest Expense:
Deposits 1,128 1,235 1,405 1,551 1,640
Borrowings 577 545 618 673 678
Total Interest Expense 1,705 1,780 2,023 2,224 2,318
Net Interest Income 5,804 5,985 5,913 6,189 6,351
Provision for Losses on Loans (1,455) 457 137 1,005 (759)
Net Interest Income After Provision for Loan Losses 7,259 5,528 5,776 5,184 7,110
Noninterest Income:
Rent and other 484 321 223 328 202
Loan servicing fees 284 283 285 281 290
Service charges and other fees on deposits 528 515 508 490 530
Gain on sale of loans 770 633 517 564 377
Mortgage servicing rights 60 (117) (63) 102 (365)
Gain (loss) on sale of investment, mbs & fixed assets 126 -- 1 (3) --
Income on CSVL (BOLI) 237 216 208 218 221
Total noninterest income 2,489 1,851 1,679 1,980 1,255
Noninterest expense:
Employee compensation and benefits 3,208 2,996 3,249 3,147 2,772
Occupancy and equipment 772 725 756 711 721
Data processing 326 250 285 286 277
Advertising 77 101 108 87 86
Franchise taxes 182 199 201 183 154
Other operating 2,379 2,677 2,436 2,300 3,491
Total noninterest expense 6,944 6,948 7,035 6,714 7,501
Earnings (loss) before provision for income taxes 2,804 431 420 450 864
Provision for income taxes 20 (53) (62) 37 2
Net Earnings (loss) 2,784 484 482 413 862
Earnings (Loss) Per Share:
Basic $ 0.26 $ 0.07 $ 0.06 $ 0.06 $ 0.12
Diluted $ 0.26 $ 0.07 $ 0.06 $ 0.06 $ 0.12
Basic Weighted Number of Shares Outstanding 10,806,051 7,467,255 7,468,090 7,220,018 7,205,595
Diluted Weighted Number of Shares Outstanding 10,806,269 7,473,123 7,481,854 7,220,130 7,205,595
Camco Financial Corporation
Selected Ratios and Statistics
(In thousands, except for per share data and shares outstanding)
3 Months 3 Months 12 Months 12 Months
Ended Ended Ended Ended
12/31/12 12/31/11 12/31/12 12/31/11
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Return on average equity 20.61% 7.67% 8.56% 0.47%
Return on average assets 1.46% 0.45% 0.54% 0.03%
Interest rate spread 3.25% 3.59% 3.30% 3.58%
Net interest margin 3.36% 3.67% 3.41% 3.66%
Yield on earning assets 4.35% 5.01% 4.51% 5.12%
Cost of deposits 0.81% 1.16% 0.94% 1.28%
Cost of borrowings 3.58% 3.12% 3.37% 3.30%
Total cost of interest bearing liabilities 1.10% 1.42% 1.21% 1.54%
Noninterest expense to average assets 3.64% 3.90% 3.59% 3.75%
Efficiency ratio 83.73% 98.62% 86.68% 90.62%
Nonperforming assets to total assets 3.95% 4.67% 3.95% 4.67%
Non performing loans to total net loans including loans held for sale 3.42% 3.77% 3.42% 3.77%
Allowance for loan losses to total loans including loans held for sale 2.12% 2.20% 2.12% 2.20%
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)
December 31, 2012 December 31, 2011
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
Interest - Earning Assets:
Loans receivable - net (1) 566,769 7,240 5.11% 635,582 8,501 5.35%
Securities (2) 81,900 134 0.65% 17,789 67 1.51%
FHLB Stock 9,888 118 4.77% 9,888 99 4.00%
Other interest bearing accounts 32,604 17 0.21% 29,552 2 0.03%
Total interest earning assets 691,161 7,509 4.35% 692,811 8,669 5.01%
Noninterest-earning assets 71,508 77,343
Total Average Assets 762,669 770,154
Interest-Bearing Liabilities:
Deposits 557,585 1,128 0.81% 565,477 1,640 1.16%
Advances & Borrowings 64,503 577 3.58% 86,817 678 3.12%
Total interest-bearing liabilities 622,088 1,705 1.10% 652,294 2,318 1.42%
Noninterest-bearing sources:
Noninterest-bearing liabilities 86,556 72,912
Shareholders' equity 54,025 44,948
Total Liabilities and Shareholders' Equity 762,669 770,154
Net Interest margin 3.36% 3.67%
Net Interest Income & Spread 5,804 3.25% 6,351 3.59%
(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

Source:Camco Financial Corporation