EXHIBIT 99
NEWS RELEASE
RELEASE DATE: JANUARY 21, 2005
RELEASE TIME: 4:30 P.M.
CAMCO FINANCIAL ANNOUNCES FOURTH QUARTER 2004 RESULTS
CAMBRIDGE, OHIO (NASDAQ: CAFI) - The net cost of restructuring certain
borrowings resulted in Camco Financial Corporation ("Camco") reporting a net
loss for the quarter ended December 31, 2004 of $6.6 million or a loss of $.86
per share as compared with net earnings of $588,000 or $.09 per share for the
same quarter in 2003. The quarter ended December 31, 2004 included the
restructuring of a significant portion of Camco's Federal Home Loan Bank (FHLB)
borrowings amounting to a net loss of $1.63 per share. In addition, the quarter
ended December 31, 2004 included the sale of the Ashland, Kentucky division
amounting to a net gain of $.53 per share. Similar to the fourth quarter of
2004, the quarter ended December 31, 2003 included expenses associated with the
restructuring of a portion of Camco's FHLB borrowings amounting to $.11 per
share.
Excluding the impact of these extraordinary items, net earnings from operations
for the quarter ended December 31, 2004 were $1.9 million or $.24 per share as
compared with $1.4 million or $.20 per share for the same quarter in 2003, or an
increase of 29%. When comparing the fourth quarter 2004 with the third quarter
of 2004, net income from operations increased 27% from $1.5 million, or $.20 per
share, as compared to $1.9 million or $.24 per share.
For the year ended December 31, 2004, Camco reported a net loss of $2.5 million
compared with net earnings of $6.9 million for the year ended 2003. The loss per
share for 2004 was $.34 versus earnings per share of $.92 for 2003. Excluding
the impact of the restructuring of FHLB borrowings in 2004 and 2003 and the sale
of the Ashland division in 2004, Camco's net earnings for the year ended
December 31, 2004 were $5.9 million or $.79 per diluted share as compared with
$7.7 million or $1.03 per share for 2003.
Camco's President & CEO, Richard C. Baylor commented, "2004 was a major
transition year for Camco. The year brought significant change to the structure
of our balance sheet through the acquisition of London Financial in August,
which included the adoption of a State of Ohio commercial bank charter for
Advantage Bank. We also completed the sale of our Ashland division in December
and a major restructuring of our FHLB advances near the end of the year. In
addition, the composition of our loan portfolio continues to change dramatically
as we transition to more commercial and consumer lending production. We saw our
percentage of commercial and consumer lending production as a percent of our
total loan production increase from 26% in 2003 to 51% in 2004. We have also
seen our commercial real estate production increase to $120 million in 2004,
which is a substantial increase over last year. Our focus continues on this line
of business through the recruiting of seasoned commercial lenders in the markets
we serve. For the first time, our production of commercial and consumer lending
exceeded our production of residential mortgage loans. We produced a total of
$208 million in commercial and consumer loans while at the same time we produced
$201 million in residential mortgage loans in 2004. The effect of this
transition has been an improvement in the net interest margin. Our short-term
goal is to transition our loan portfolio to 30% commercial and commercial real
estate and 20% consumer with the
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remaining 50% being residential. Currently, our loan portfolio is 28% commercial
and commercial real estate, 14% consumer and 58% residential. At the end of
2003, these ratios were 19%, 14% and 67%, respectively."
Mr. Baylor continued, "We continue to execute our strategic plan to effectively
transition our balance sheet composition through the funding of higher yielding
commercial, commercial real estate, and consumer loans with lower cost
transaction-based deposit accounts, thereby producing higher net interest
margins. With rates moving upward in 2004, we were pleased to maintain our
certificates of deposit as a percentage of total deposits at 54%, which was the
same ratio at the end of 2003. At the same time we were able to maintain our
total cost of deposits at 2.10% in 2004."
REVIEW OF SIGNIFICANT AREAS:
NET INTEREST MARGIN - In 2005 as short-term interest rates appear poised to
increase, management expects the net interest margin to continue improving. This
improvement is predicated on Camco's continued emphasis on growth in the
commercial, commercial real estate and consumer loan portfolios; effective cost
of funds management, emphasizing lower cost, transaction - based, deposit
accounts; and the beneficial effects of the significant restructuring of FHLB
borrowings that occurred at the end of 2004. For fiscal 2004, the net interest
margin increased to 2.49% from 2.34% for 2003. On a linked quarter basis, the
net interest margin increased from 2.44% for the third quarter 2004 to 2.55% for
the fourth quarter 2004. This increase was due primarily to the beneficial
impact of our asset sensitive balance sheet in a rising rate environment, the
transition in the loan portfolio composition, and the diligent management of our
cost of funding.
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In December of 2004, $144 million in FHLB borrowings having a weighted average
rate of 6.25% and weighted average term of 5.61 years were restructured. The
prepayment penalty net of related tax benefit was $12.5 million. The FHLB
borrowings were replaced with a structured FHLB borrowing, having maturities
extending to 5 years with a weighted average cost of 3.59%. Management
anticipates the impact from the FHLB restructuring to increase the net interest
margin in 2005 by approximately 31 basis points.
NON-INTEREST INCOME - For the year ended December 31, 2004, non-interest income
was $13.7 million versus $11.4 million for the same period last year.
Non-interest income for 2004 included the sale of our Ashland, Kentucky banking
division which resulted in a pretax gain of $6.1 million. Excluding the sale of
the Ashland banking division, non-interest income would have decreased from
$11.4 million in 2003 to $7.6 million in 2004. This decrease of $3.8 million was
primarily attributable to a smaller gain on the sale of loans, as a result of
fewer loans being sold into the secondary market, as well as a reduction in
title agency revenue, all due to lower residential loan production levels. $118
million in loans were sold in the secondary market in 2004 versus $279 million
in loans sold in 2003, with the gain on these sales being $819,000 versus $3.6
million, respectively. Due to lower production levels, the title agency revenue
was down approximately $818,000 in 2004.
The value of mortgage servicing rights increased $402,000 in 2004 versus an
increase of $543,000 in 2003. At year-end 2004, Camco serviced $576 million of
residential loans for others, slightly more than the $570 million serviced at
the end of 2003.
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OPERATING EXPENSES - For the year ended December 31, 2004, operating expenses
were $41.7 million versus $23.7 million for 2003. If expenses were adjusted in
2004 and 2003 for FHLB restructuring prepayment fees, operating expenses would
be $22.8 million and $22.4 million, respectively, which represents a 2%
increase. The primary reason for this small increase in core operating expenses
was a reduction in employee compensation and benefits from $14 million to $13
million. The reduction in employee compensation and benefits was primarily due
to lower incentives and commissions on reduced loan production from prior year
levels. 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 $3.5 million in 2003 to
$2.2 million in 2004 or approximately 37%. Occupancy and equipment expenses have
decreased from $3.8 million in 2003 to $3.4 million in 2004, a decrease of
approximately 10% as management utilized current infrastructure more efficiently
and continued to capitalize on past investments in technology.
ASSET QUALITY - Non-performing loans as a percentage of loans decreased from
1.69% at December 31, 2003 to 1.17% at December 31, 2004. The allowance for loan
losses as a percentage of loans has increased from 71 basis points at December
31, 2003 to 78 basis points at December 31, 2004. Significant resources have
been devoted to a continuing reduction of non-performing assets. At December 31,
2004, approximately 66% of all non-performing loans were single family home
loans.
STRATEGIC VISION - Camco continues to actively execute and manage it's long-term
strategic plan. This plan encompasses the diversification of the balance sheet
primarily through increasing commercial, commercial real estate, and consumer
loan portfolios as well as transaction-based deposits. Critical to the strategy
is the growth
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of the balance sheet and the corresponding increase in net interest margin.
Complementary 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 Financial Corporation, holding company for Advantage Bank, is a
multi-state financial holding company headquartered in Cambridge, Ohio with
assets of $1.07 billion. Advantage Bank and its affiliates offer community
banking, mortgage banking, internet banking and title services from 30 offices
in 23 communities in Ohio, Kentucky and West Virginia.
NASDAQ: CAFI - EMAIL: camco@camco.cc - www.camcofinancial.com
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) (Unaudited) Audited
12/31/04 9/30/04 6/30/04 3/31/04 12/31/03
----------- ----------- ----------- ----------- -----------
Assets
Cash and Cash
Equivalents $ 42,894 $ 45,291 $ 38,192 $ 38,761 $ 53,711
Investments 108,429 117,370 124,694 129,573 113,758
Loans Held for
Sale 2,837 4,386 4,805 8,908 5,457
Loans
Receivable 840,305 898,355 838,699 817,252 805,266
Allowance for
Loan Loss (6,476) (6,398) (5,528) (5,460) (5,641)
----------- ----------- ----------- ----------- -----------
Loans
Receivable,
Net 833,829 891,957 833,171 811,792 799,625
Goodwill 6,736 7,023 2,953 2,953 2,953
Other Assets 71,039 68,078 64,902 65,036 63,647
----------- ----------- ----------- ----------- -----------
Total Assets $ 1,065,764 $ 1,134,105 $ 1,068,717 $ 1,057,023 $ 1,039,151
=========== =========== =========== =========== ===========
Liabilities
Deposits $ 667,778 $ 728,918 $ 677,567 $ 669,046 $ 671,274
Borrowed Funds 295,310 291,719 289,712 283,280 262,735
Other
Liabilities 13,355 16,440 9,715 11,704 12,599
----------- ----------- ----------- ----------- -----------
Total
Liabilities 976,443 1,037,077 976,994 964,030 946,608
Stockholders
Equity 89,321 97,028 91,723 92,993 92,543
----------- ----------- ----------- ----------- -----------
Total
Liabilities
and
Stockholders'
Equity $ 1,065,764 $ 1,134,105 $ 1,068,717 $ 1,057,023 $ 1,039,151
=========== =========== =========== =========== ===========
Stockholders'
Equity to
Total Assets 8.38% 8.56% 8.58% 8.80% 8.91%
Total Shares
Outstanding 7,663,153 7,640,505 7,358,888 7,352,151 7,332,423
Book Value Per
Share $ 11.66 $ 12.70 $ 12.46 $ 12.65 $ 12.62
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
12/31/04 9/30/04 6/30/04 3/31/04 12/31/03
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- ----------- -----------
Interest
Income:
Loans $12,188 $11,860 $11,469 $ 11,415 $11,485
Mortgage-
backed
securities $ 785 $ 833 $ 791 $ 607 $ 664
Investment
securities $ 178 $ 209 $ 203 $ 182 $ 251
Interest-
bearing
deposits and
other $ 610 $ 571 $ 522 $ 525 $ 522
------- ------- ------- -------- -------
Total
Interest
Income 13,761 13,473 12,985 12,729 12,922
------- ------- ------- -------- -------
Interest
Expense:
Deposits 3,723 3,570 3,303 3,349 3,577
Borrowings 3,355 3,497 3,406 3,309 3,705
------- ------- ------- -------- -------
Total
Interest
Expense 7,078 7,067 6,709 6,658 7,282
------- ------- ------- -------- -------
Net Interest
Income 6,683 6,406 6,276 6,071 5,640
Provision for
Losses on
Loans 855 255 255 255 516
------- ------- ------- -------- -------
Net Interest
Income After
Provision for
Loan Losses 5,828 6,151 6,021 5,816 5,124
------- ------- ------- -------- -------
Noninterest
Income
Late charges,
rent and
other 585 623 600 640 620
Loan
servicing
fees 381 373 379 386 392
Service
charges and
other fees
on deposits 404 407 327 272 279
Gain on sale
of loans 140 189 29 276 350
Valuation of
mortgage
servicing
rights - net 269 206 214 (102) 355
Gain on sale
of
investment,
mbs & fixed
assets 6,653 106 134 (13) 66
Gain on sale
of real
estate acq'd
through
foreclosure 123 10 20 77 123
------- ------- ------- -------- -------
Total
noninterest
income 8,555 1,914 1,703 1,536 2,185
------- ------- ------- -------- -------
Non interest
expense
Employee
compensation
and benefits 2,655 2,763 2,672 2,996 2,338
Occupancy and
equipment 821 867 828 874 991
Data
processing 331 320 325 342 337
Advertising 225 387 181 254 209
Franchise
taxes 201 283 294 214 211
Other
operating(1) 1,317 1,307 1,194 1,190 1,128
FHLB
prepayment
penalty 18,879 0 0 0 1,292
------- ------- ------- -------- -------
Total
noninterest
expense 24,429 5,927 5,494 5,870 6,506
------- ------- ------- -------- -------
Net Income -
Before Income
Tax (10,046) 2,138 2,230 1,482 803
Provision for
income taxes (3,476) 670 698 448 215
------- ------- ------- -------- -------
Reported Net
Income (6,570) 1,468 1,532 1,034 588
------- ------- ------- -------- -------
Adjusted for
non-recurring
items
Sale of
branches and (4,024)
Prepayment
costs (net
of tax) 12,460 0 0 0 853
------- ------- ------- -------- -------
Net Earnings
from
Operations 1,866 1,468 1,532 1,034 1,441
======= ======= ======= ======== =======
Earnings Per
Share
Reported:
Basic ($0.86) $0.20 $0.21 $0.14 $0.09
Diluted ($0.85) $0.19 $0.21 $0.14 $0.09
Earnings Per
Share
Operations:
Basic $0.24 $0.20 $0.21 $0.14 $0.20
Diluted $0.24 $0.19 $0.21 $0.14 $0.19
Basic
Weighted
Number of
Shares
Outstanding 7,645,005 7,513,890 7,357,635 7,345,340 7,355,576
Diluted
Weighted
Number of
Shares
Outstanding 7,684,500 7,559,916 7,403,929 7,414,616 7,440,603
(1) December 2004 and 2003 includes FHLB prepayment fees of $18,879 and $1,292
respectively
Camco Financial Corporation
Selected Ratios and Statistics
Periods Ended December 31, 2004 and 2003
(In thousands, except for per share data and shares outstanding)
12 Months 12 Months 3 Months 3 Months
Ended Ended Ended Ended
12/31/04 12/31/03 12/31/04 12/31/03
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
--------- --------- --------- ---------
Reported:
Return on Average Equity -2.70% 7.17% -6.86% 2.52%
Return on Average Assets -0.24% 0.65% -0.60% 0.23%
Interest Rate Spread 2.26% 2.06% 2.33% 2.04%
Net Interest Margin 2.49% 2.34% 2.55% 2.30%
Yield on earning assets 5.17% 5.43% 5.25% 5.24%
Cost of deposits 2.09% 2.46% 2.16% 2.23%
Cost of funds 4.89% 5.56% 4.81% 5.53%
Noninterest
expense/average assets 3.89% 2.23% 8.83% 2.51%
Efficiency Ratio 111.18% 67.61% 160.32% 83.14%
Non performing assets to
total assets 1.14% 1.45% 1.14% 1.45%
Non performing loans to
total net loans including
lhfs 1.17% 1.69% 1.17% 1.69%
Allowance for loan losses
to total loans 0.78% 0.71% 0.78% 0.71%
Operations:
Return on Average Equity 6.23% 7.38% 7.63% 5.93%
Return on Average Assets 0.55% 0.65% 0.68% 0.53%
Camco Financial Corporation
Averages for Quarters Ended
December and September 2004
(In thousands, except for per share data and shares outstanding)
Average Table - Quarter Ended
--------------------------------------------------------
Dec 31, 2004 Sept 30, 2004
--------------------------------------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
--------- -------- ------ ------- -------- ------
Interest - Earning
Assets:
Loans held for sale 4,326 5,150
Loans receivable -
net 869,716 12,188 5.58% 863,595 11,860 5.46%
Mortgage-backed
securities 87,825 785 3.58% 93,121 833 3.58%
Investment
securities 24,655 178 2.89% 27,358 209 3.06%
Interest-bearing
deposits and other 61,389 610 3.97% 62,477 571 3.66%
--------- ------ ---- --------- ------ ----
Total interest
earning assets 1,047,911 13,761 5.25% 1,051,701 13,473 5.12%
--------- ------ ---- --------- ------ ----
Noninterest-earning
assets 55,825 51,629
--------- ---------
Total Assets 1,103,736 1,103,330
========= =========
Interest-Bearing
Liabilities:
Deposits 690,919 3,723 2.16% 681,633 3,570 2.09%
Advances 278,873 3,355 4.81% 291,898 3,497 4.79%
--------- ------ ---- --------- ------ ----
Total interest-
bearing
liabilities 969,792 7,078 2.92% 973,531 7,067 2.90%
--------- ------ ---- --------- ------ ----
Noninterest-bearing
sources:
Noninterest-bearing
liabilities 38,163 32,771
Shareholders' equity 95,781 97,028
--------- ---------
Total Liabilities and
Shareholders' Equity 1,103,736 1,103,330
========= =========
Net Interest Income &
Margin 6,683 2.55% 6,406 2.44%
===== ==== ===== ====
Contact:
Camco Financial Corporation
Richard C. Baylor, 740-435-2040
Mark A. Severson, 740-435-2055