Camco Financial Announces Fourth Quarter 2013 Earnings

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| Source: Camco Financial Corporation

CAMBRIDGE, Ohio, Jan. 29, 2014 (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, 2013.

Net earnings were $7.8 million or $0.53 per diluted share, for the twelve months ended December 31, 2013, compared to $4.2 million, or $0.50 per diluted share, the prior year. There were 14.7 million and 8.3 million diluted weighted shares outstanding for 2013 and 2012, respectively. Net interest income after provision for losses on loans was $23.5 million for the full-year 2013 versus $23.7 million the prior year. The 2013 results primarily benefited from recognition of deferred tax assets and to a lesser extent the valuation of mortgage servicing rights, which were partially offset by expenses related to growth initiatives and lower gain on sale of residential mortgage loans compared to 2012.

Net earnings were $0.5 million, or $0.03 per diluted share, for the three months ended December 31, 2013, versus $2.8 million, or $0.26 per diluted share, for the same period in 2012. Net interest income after provision for losses on loans was $6.5 million for the fourth quarter of 2013 compared to $7.3 million the prior year. The remaining year-over-year difference in net earnings was primarily attributable to the higher provision for income taxes and lower gain on sales of loans. Additionally, there were $0.6 million of merger expenses in the fourth quarter 2013 versus zero merger expenses the prior year.

James E. Huston, President and CEO, said, "Our full-year 2013 financial results represent the highest amount of net earnings since 2005 and also reflect the progress we have achieved during the past several years to return Advantage Bank to a sound financial position. During this period credit quality has significantly improved, noninterest income is more diversified and our balance sheet is much stronger. Underscoring these achievements, on November 1, 2013, we announced the termination of the consent order by federal and state regulators related to Advantage Bank."

Mr. Huston continued, "The decline in net earnings for the fourth quarter of 2013 compared to a year ago was primarily due to the lower reduction of loan loss reserve, market conditions that adversely impacted gain on sale of loans and valuation of mortgage servicing rights, and a higher provision for income taxes. Our operating results included an increase in net interest income for the fourth quarter of 2013 versus the linked quarter and the fourth quarter of 2012. Our credit quality continued to improve during the fourth quarter compared to those same periods as reflected in the further decline in classified assets and nonperforming loans. Looking forward, we are working diligently to complete our merger with Huntington Bancshares, Inc., which is expected to close in the 1st Quarter of 2014."

Review of Financial Performance

Overview:

The following items summarize key aspects of the Company's performance during the fourth quarter ended December 31, 2013, compared to the same period in 2012:

  • Total deposits were $602.5 million at December 31, 2013 compared to $627.2 million at year-end 2012 due to a decline in certificates of deposit, especially for single product customers.
  • Net interest income increased slightly to $5.9 million due to higher loan balances and lower cost of funds.
  • Noninterest income was $1.4 million versus $2.5 million principally due to lower spreads related to gain on sale of residential mortgage loans and a decline in the valuation of mortgage servicing rights.
  • Noninterest expense declined slightly to $6.7 million from $6.9 million primarily due to lower REO and classified assets expenses attributable to improved credit quality and lower FDIC premiums and other insurance expense, partially offset by expenses related to growth initiatives and other operating expenses, including merger expenses.
  • Classified assets (which include substandard, doubtful, loss, and real estate owned) were $23.9 million at December 31, 2013, compared to $38.8 on the same date in 2012.

Net Interest Margin:

Net interest margin was 3.33% for the fourth quarter of 2013 compared to 3.36% for the same period in 2012. The slight decrease was principally due to the lower yield on earning assets related to the low interest rate environment. The Company continues to pursue favorable risk-adjusted pricing opportunities, maintain strong credit quality, and other balance sheet actions to enhance net interest margin.

Net Interest Income:

Net interest income before the provision for loan losses was $5.9 million for the fourth quarter of 2013 compared to $5.8 million for the same period a year ago. The increase was primarily due to an increase in loans receivable and lower cost of funds compared to the same period last year.

The yield on earning assets was 4.04% for the fourth quarter of 2013 compared to 4.35% a year ago. This decrease was primarily attributable to the low interest rate environment. The restructuring of $25 million of FHLB advances in the third quarter of 2013 resulted in a reduction in the cost of funds and also helped to mitigate the impact of lower yield on earning assets. Total cost of interest bearing liabilities, expressed as a percentage, was 0.83% versus 1.10% for the same period the prior year.

Provision Expense, Credit Quality, and Allowance for Loan Losses:

The allowance for loan and lease losses was $8.3 million at December 31, 2013, compared to $12.1 million on the same date in 2012. This year-over-year decrease was due to further improvement in asset quality throughout 2013 that resulted in a recovery of provision of $0.6 million for loan losses in the fourth quarter of 2013 compared to a recovery of $1.5 million for the fourth quarter of 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 $12.4 million at December 31, 2013, a 33% decrease compared to the same date last year. Classified loans (which include substandard, doubtful, and loss) were $19.6 million at year-end 2013, or 32% below the amount at December 31, 2012. Non-performing loans were $13.3 million at December 31, 2013, or 32% below the amount on the same date of the prior year. Non-performing loans as a percentage of total loans (including loans held for sale) were 2.12% at December 31, 2013, compared to 3.42% at December 31, 2012.

The allowance for loan and lease losses, expressed as a percentage of non-performing loans, was 62.0% at December 31, 2013 and 2012.

Noninterest Income:

Noninterest income was $1.4 million for the fourth quarter of 2013 versus $2.5 million for the same period of the prior year. This decrease was principally due to lower volume and spreads related to gain on sale of residential mortgage loans ($0.5 million) and a decline in the value of mortgage servicing rights ($0.2 million) compared to the fourth quarter of 2012.

Noninterest Expense:

Noninterest expense decreased to $6.7 million for the fourth quarter of 2013 from $6.9 million for the same period a year ago. This decline was primarily due to lower REO and classified asset expenses ($0.7 million) attributable to improved credit quality, lower FDIC premiums and other insurance expense ($0.2 million), partially offset by expenses related to growth initiatives and other operating expenses, including merger expenses.

Balance Sheet:

Total assets were $774.4 million at December 31, 2013, compared to $764.3 million on the same date last year, principally due to the increase in stockholders' equity that resulted from $7.8 million of net earnings for the full-year 2013, the exercise of common stock warrants from the November 2012 rights offering ($2.2 million) and stock options. The Company continues to focus on pursuing lending opportunities and investments that employ cash efficiently and profitably.

Asset Quality:

There was further improvement in asset quality during the fourth quarter of 2013 compared to the same period in 2012. Classified loans were $19.6 million and nonperforming assets were $23.9 million at December 31, 2013, which represented a decline of 32% and 38%, respectively, versus the same date in 2012.

Nonperforming assets to total assets were 2.38% at December 31, 2013, versus 3.95% on the same date in 2012. The allowance for loan losses to total loans including loans held for sale was 1.32% at year-end 2013 compared to 2.12% at December 31, 2012.

The following table provides a comparison of changes in key factors for the fourth quarter of 2013 compared to the same period in 2012:

           
(Dollars in thousands) 12/31/2013 9/30/2013 6/30/2013 3/31/2013 12/31/2012
Classified Loans* $ 19,645 $ 22,492 $ 25,063 $ 27,160 $ 29,184
Non-Performing Loans $ 13,342 $ 14,860 $ 15,695 $ 18,647 $ 19,594
Loan Loss Reserve $ 8,276 $ 9,671 $ 10,556 $ 11,532 $ 12,147
Loan Loss Reserve/Total Loans 1.32% 1.64% 1.84% 2.06% 2.12%
*Includes substandard, doubtful and loss (including homogenous loans)

Deposits and Borrowings:

Total deposits were $602.5 million at December 31, 2013, versus $627.2 million on the same date in 2012. The decrease was primarily due to a decline in certificates of deposit ($27.6 million), especially for single product customers. The Company remains committed to reducing the level of historically rate sensitive higher yielding single product certificates of deposit.

FHLB advances and other borrowings were $88.8 million at December 31, 2013, compared to $64.2 million on the same date of the prior year. This increase was principally due to higher customer repurchase agreements and borrowings on the FHLB cash advance line to fund earning assets on a short-term basis.

Equity:

Stockholders' equity was $70.2 million at December 31, 2013, compared to $59.7 million at year-end 2012. The increase was attributable to net earnings during the past year, proceeds from the exercise of warrants related to the November 2012 rights offering and stock options. Stockholders' equity at December 31, 2013 was 9.07% of total assets compared to 7.82% 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.

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 Stockholders

In connection with the proposed merger transaction, Huntington filed with the Securities and Exchange Commission a Registration Statement on Form S-4 that included a Proxy Statement of the Company, and a Prospectus of Huntington, as well as other relevant documents concerning the proposed transaction. Stockholders are urged to read the Registration Statement and the Proxy Statement/Prospectus regarding the proposed merger and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they 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. 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)
  12/31/13 9/30/13 6/30/13 3/31/13 12/31/12
Assets          
Cash and Cash Equivalents  $ 8,451  $ 17,185  $ 27,125  $ 118,212  $ 58,379
Investments  84,856  101,936  103,529  39,432  86,201
           
Loans Held for Sale  592  1,831  2,697  3,824  6,544
           
Loans Receivable  627,876  586,674  571,470  555,180  566,722
Allowance for Loan Loss  (8,276)  (9,671)  (10,556)  (11,532)  (12,147)
Loans Receivable, Net  619,600  577,003  560,914  543,648  554,575
           
Other Assets  60,887  62,644  62,514  58,246  58,560
           
Total Assets  $ 774,386  $ 760,599  $ 756,779  $ 763,362  $ 764,259
           
Liabilities          
Deposits  $ 602,494  $ 609,012  $ 614,623  $ 626,741  $ 627,224
Borrowed Funds  88,773  71,408  65,788  63,981  64,219
Other Liabilities  12,871  12,899  10,432  11,929  13,089
           
Total Liabilities  $ 704,138  $ 693,319  $ 690,843  $ 702,651  $ 704,532
           
Stockholders' Equity  $ 70,248  $ 67,280  $ 65,936  $ 60,711  $ 59,727
           
Total Liabilities and Stockholders' Equity  $ 774,386  $ 760,599  $ 756,779  $ 763,362  $ 764,259
           
           
Stockholders' Equity to Total Assets 9.07% 8.85% 8.71% 7.95% 7.82%
           
Total Shares Outstanding (at period end)  14,691,428  13,603,438  13,549,082  13,529,287  13,233,036
           
Book Value Per Share  $ 4.78  $ 4.95  $ 4.87  $ 4.49  $ 4.51
 
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
  12/31/2013 12/31/12
  (Unaudited) (Unaudited)
Interest Income:    
Loans  $ 26,769  $ 30,674
Investment securities  662  484
Interest-bearing deposits and other  480  465
Total Interest Income  $ 27,911  $ 31,623
     
Interest Expense:    
Deposits  $ 3,888  $ 5,319
Borrowings  1,624  2,413
Total Interest Expense  $ 5,512  $ 7,732
     
Net Interest Income  $ 22,399  $ 23,891
     
Provision for Losses on Loans  $ (1,109)  $ 144
Net Interest Income After Provision for Loan Losses  $ 23,508  $ 23,747
     
Noninterest Income:    
Late charges, rent and other  $ 942  $ 1,356
Loan servicing fees  1,122  1,133
Service charges and other fees on deposits  1,989  2,041
Gain on sale of loans  1,764  2,484
Mortgage servicing rights  720  (18)
Gain on sale of investments & fixed assets  46  124
Income on cash surrender value life insurance  847  879
Total noninterest income  $ 7,430  $ 7,999
     
Noninterest expense:    
Employee compensation and benefits  $ 14,189  $ 12,600
Occupancy and equipment  2,897  2,964
FDIC premium and other insurances  1,501  1,816
Data processing  1,824  1,975
Advertising  515  373
Franchise taxes  872  765
Other operating  6,275  7,148
Total noninterest expense  $ 28,073  $ 27,641
     
Earnings before provision for inome taxes  2,865  4,105
     
Provision for income taxes  $ (4,974)  $ (58)
Net Earnings  $ 7,839  $ 4,163
     
Earnings Per Share:    
Basic  $ 0.57  $ 0.50
Diluted  $ 0.53  $ 0.50
     
Basic Weighted Number of Shares Outstanding  13,701,884  8,260,865
Diluted Weighted Number of Shares Outstanding  14,686,223  8,261,396
 
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
  12/31/13 9/30/13 6/30/13 3/31/13 12/31/12
  (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Interest Income:          
Loans  $ 6,864  $ 6,724  $ 6,591  $ 6,590  $ 7,240
Investment securities  179  194  170  119  134
Interest-bearing deposits and other  101  108  122  149  135
Total Interest Income  $ 7,144  $ 7,026  $ 6,883  $ 6,858  $ 7,509
           
Interest Expense:          
Deposits  $ 876  $ 979  $ 1,000  $ 1,033  $ 1,128
Borrowings  383  386  429  426  577
Total Interest Expense  1,259  1,365  1,429  1,459  1,705
           
Net Interest Income  $ 5,885  $ 5,661  $ 5,454  $ 5,399  $ 5,804
           
Provision for Losses on Loans  (600)  (609)  --   100  (1,455)
Net Interest Income After Provision for Loan Losses  $ 6,485  $ 6,270  $ 5,454  $ 5,299  $ 7,259
           
Noninterest Income:          
Late charges, rent and other  $ 250  $ 223  $ 168  $ 301  $ 484
Loan servicing fees  286  287  273  276  284
Service charges and other fees on deposits  509  501  517  462  528
Gain on sale of loans  278  251  546  689  770
Mortgage servicing rights  (141)  405  351  105  60
Gain on sale of investments & fixed assets  (8)  --   (7)  61  126
Income on CSVL (BOLI)  214  214  211  208  237
Total noninterest income  $ 1,388  $ 1,881  $ 2,059  $ 2,102  $ 2,489
           
Noninterest expense:          
Employee compensation and benefits  $ 3,385  $ 3,777  $ 3,518  $ 3,509  $ 3,208
Occupancy and equipment  715  718  719  745  772
FDIC premium and other insurances  191  428  441  441  436
Data processing  288  261  277  283  326
Advertising  110  133  128  144  77
Franchise taxes  197  218  227  230  182
Other operating  1,799  1,718  1,978  1,495  1,943
Total noninterest expense  $ 6,685  $ 7,253  $ 7,288  $ 6,847  $ 6,944
           
Earnings before provision for income taxes  $ 1,188  $ 898  $ 225  $ 554  $ 2,804
           
Provision for income taxes  $ 729  $ 171  $ (5,929)  $ 55  $ 20
Net Earnings  $ 459  $ 727  $ 6,154  $ 499  $ 2,784
           
Earnings Per Share:          
Basic  $ 0.03  $ 0.05  $ 0.45  $ 0.04  $ 0.26
Diluted  $ 0.03  $ 0.05  $ 0.42  $ 0.03  $ 0.26
           
Basic Weighted Number of Shares Outstanding  14,282,790  13,583,511  13,545,861  13,386,828  10,806,051
Diluted Weighted Number of Shares Outstanding  15,580,837  15,027,666  14,718,045  14,392,077  10,806,269
 
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
  12/31/2013 12/31/2012 12/31/13 12/31/12
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
         
Return on average equity 2.66% 20.61% 12.19% 8.56%
         
Return on average assets 0.24% 1.46% 1.03% 0.54%
         
Interest rate spread 3.21% 3.25% 3.08% 3.30%
         
Net interest margin 3.33% 3.36% 3.20% 3.41%
         
Yield on earning assets 4.04% 4.35% 3.99% 4.51%
         
Cost of deposits 0.67% 0.81% 0.72% 0.94%
         
Cost of borrowings 1.97% 3.58% 2.35% 3.37%
         
Total cost of interest bearing liabilities 0.83% 1.10% 0.91% 1.21%
         
Noninterest expense to average assets 3.48% 3.64% 3.68% 3.59%
         
Efficiency ratio 91.92% 83.73% 94.11% 86.68%
         
Nonperforming assets to total assets 2.38% 3.95% 2.38% 3.95%
         
Non performing loans to total net loans including loans held for sale 2.12% 3.42% 2.12% 3.42%
         
Allowance for loan losses to total loans including loans held for sale 1.32% 2.12% 1.32% 2.12%
         
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, 2013 December 31, 2012
  Average   Yield/ Average   Yield/
  Balance Interest Rate Balance Interest Rate
Interest - Earning Assets:            
Loans receivable - net (1)  $ 599,290  $ 6,864 4.58%  $ 566,769  $ 7,240 5.11%
Securities (2)  91,309  179 0.78%  81,900  134 0.65%
FHLB Stock  9,888  100 4.05%  9,888  118 4.77%
Other interest bearing accounts  6,841  1 0.06%  32,604  17 0.21%
Total interest earning assets  $ 707,328  $ 7,144 4.04%  $ 691,161  $ 7,509 4.35%
             
Noninterest-earning assets  $ 60,583      $ 71,508    
Total Average Assets  $ 767,911      $ 762,669    
             
             
Interest-Bearing Liabilities:            
Deposits  $ 525,780  $ 876 0.67%  $ 557,585  1,128 0.81%
Advances & Borrowings  77,902  383 1.97%  64,503  577 3.58%
Total interest-bearing liabilities  $ 603,682  $ 1,259 0.83%  $ 622,088  $ 1,705 1.10%
             
Noninterest-bearing sources:            
Noninterest-bearing liabilities  95,296      86,556    
Shareholders' equity  68,933      54,025    
Total Liabilities and Shareholders' Equity  $ 767,911      $ 762,669    
             
Net Interest margin     3.33%     3.36%
             
Net Interest Income & Spread    $ 5,885 3.21%    $ 5,804 3.25%
             
(1) Includes LHFS but does not include ALLL and Non-Accrual Loans
(2) Includes securities designated as available for sale and held to maturity
James E. Huston, CEO
John E. Kirksey, CFO
Phone: 740-435-2020