FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
----------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _______________
Commission File Number 0-25196
CAMCO FINANCIAL CORPORATION
- -----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 51-0110823
- ------------------------------- ------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
6901 Glenn Highway, Cambridge, Ohio 43725
- -----------------------------------------------------------------------------
(Address of principal executive office)
Registrant's telephone number, including area code: (740) 435-2020
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports) and (2) has been subject to such filing requirements for the past 90
days.
Yes [X] No [ ]
As of May 12, 2000, the latest practicable date, 6,931,898.2 shares of the
registrant's common stock, $1.00 par value, were issued and outstanding.
Page 1 of 15 pages
<PAGE>
Camco Financial Corporation
INDEX
Page
PART I - FINANCIAL INFORMATION
Consolidated Statements of Financial Condition 3
Consolidated Statements of Earnings 4
Consolidated Statements of Comprehensive Income 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 8
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10
Quantitative and Qualitative Disclosures about
Market Risk 13
PART II - OTHER INFORMATION 14
SIGNATURES 15
2
<PAGE>
Camco Financial Corporation
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except share data)
March 31, December 31,
ASSETS 2000 1999
<S> <C> <C>
Cash and due from banks $ 13,081 $ 16,707
Interest-bearing deposits in other financial institutions 5,796 247
--------- -------
Cash and cash equivalents 18,877 16,954
Investment securities available for sale - at market 240 273
Investment securities held to maturity - at cost, approximate market value of $17,148
and $16,452 as of March 31, 2000 and December 31, 1999 17,615 16,864
Mortgage-backed securities available for sale - at market 11,176 6,475
Mortgage-backed securities held to maturity - at cost, approximate market value of
$5,705 and $5,818 as of March 31, 2000 and December 31, 1999 5,804 5,944
Loans held for sale - at lower of cost or market 4,787 3,183
Loans receivable - net 896,585 723,042
Office premises and equipment - net 13,776 11,706
Real estate acquired through foreclosure 311 419
Federal Home Loan Bank stock - at cost 17,588 14,605
Accrued interest receivable on loans 4,961 3,890
Accrued interest receivable on mortgage-backed securities 121 78
Accrued interest receivable on investment securities and interest-bearing deposits 259 252
Prepaid expenses and other assets 2,527 888
Cash surrender value of life insurance 5,723 5,657
Goodwill and other intangible assets 3,425 3,252
--------- -------
Total assets $1,003,775 $813,482
========= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 582,095 $461,787
Advances from the Federal Home Loan Bank 337,119 279,125
Advances by borrowers for taxes and insurance 2,817 3,360
Accounts payable and accrued liabilities 3,655 3,006
Dividends payable 832 832
Accrued federal income taxes 740 133
Deferred federal income taxes 1,331 2,630
--------- -------
Total liabilities 928,589 750,873
Stockholders' equity
Preferred stock - $1 par value; authorized 100,000 shares;
no shares outstanding - -
Common stock - $1 par value; authorized, 14,900,000 shares, 7,057,917 and
5,752,310 shares issued at March 31, 2000 and December 31, 1999, respectively 7,058 5,752
Additional paid-in capital 41,551 30,351
Retained earnings - substantially restricted 28,130 27,205
Less 126,019 and 41,888 shares of treasury stock - at cost (1,416) (575)
Accumulated comprehensive loss, unrealized losses on securities designated
as available for sale, net of related tax effects (137) (124)
--------- -------
Total stockholders' equity 75,186 62,609
--------- -------
Total liabilities and stockholders' equity $1,003,775 $813,482
========= =======
</TABLE>
3
<PAGE>
Camco Financial Corporation
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF EARNINGS
For the three months ended March 31,
(In thousands, except per share data)
2000 1999
<S> <C> <C>
Interest income
Loans $16,669 $10,638
Mortgage-backed securities 289 137
Investment securities 276 196
Interest-bearing deposits and other 424 435
------ ------
Total interest income 17,658 11,406
Interest expense
Deposits 6,402 4,701
Borrowings 4,692 1,799
------ ------
Total interest expense 11,094 6,500
------ ------
Net interest income 6,564 4,906
Provision for losses on loans 137 54
------ ------
Net interest income after provision for losses on loans 6,427 4,852
Other income
Late charges, rent and other 469 615
Loan servicing fees 294 59
Service charges and other fees on deposits 162 112
Gain on sale of loans 157 782
Gain on sale of office premises and equipment 5 1
Gain (loss) on sale of real estate acquired through foreclosure 33 (4)
------ ------
Total other income 1,120 1,565
General, administrative and other expense
Employee compensation and benefits 2,457 1,824
Occupancy and equipment 732 586
Federal deposit insurance premiums 29 74
Data processing 282 230
Advertising 189 143
Franchise taxes 291 216
Amortization of goodwill 40 37
Other operating 911 938
------ ------
Total general, administrative and other expense 4,931 4,048
------ ------
Earnings before federal income taxes 2,616 2,369
Federal income taxes
Current 570 687
Deferred 312 112
------ ------
Total federal income taxes 882 799
------ ------
NET EARNINGS $ 1,734 $ 1,570
====== ======
BASIC EARNINGS PER SHARE $.25 $.27
=== ===
DILUTED EARNINGS PER SHARE $.25 $.27
=== ===
</TABLE>
4
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Camco Financial Corporation
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the three months ended March 31,
(In thousands)
2000 1999
<S> <C> <C>
Net earnings $1,734 $1,570
Other comprehensive loss, net of tax:
Unrealized holding losses during the period, net of tax of
$(5) and $(15) in 2000 and 1999, respectively (13) (30)
----- -----
Comprehensive income $1,721 $1,540
===== =====
Accumulated comprehensive income (loss) $ (137) $ 66
===== =====
</TABLE>
5
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Camco Financial Corporation
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended March 31,
(In thousands)
2000 1999
<S> <C> <C>
Cash flows from operating activities:
Net earnings for the period $ 1,734 $ 1,570
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Amortization of deferred loan origination fees (73) (88)
Amortization of premiums and discounts on investment and
mortgage-backed securities - net 5 (3)
Amortization of goodwill 40 37
Depreciation and amortization 288 83
Amortization of purchase accounting adjustments, net 10 9
Provision for losses on loans 137 54
(Gain) loss on sale of real estate acquired through foreclosure (33) 4
Gain on sale of office premises and equipment (5) -
Federal Home Loan Bank stock dividends (289) (147)
Gain on sale of loans (64) (113)
Loans originated for sale in the secondary market (14,397) (26,664)
Proceeds from sale of loans in the secondary market 12,857 28,337
Increase (decrease) in cash, net of acquisition of Westwood Homestead
Financial Corporation, due to changes in:
Accrued interest receivable - loans (331) 62
Accrued interest receivable - mortgage-backed securities 3 (20)
Accrued interest receivable - investments (7) (71)
Prepaid expenses and other assets (1,524) (306)
Accrued interest and other liabilities 556 576
Federal income taxes
Current 196 293
Deferred 312 112
------ ------
Net cash provided by (used in) operating activities (585) 3,725
Cash flows provided by (used in) investing activities:
Proceeds from maturities of investment securities
and interest-bearing deposits - 2,500
Principal repayments on mortgage-backed securities 660 1,221
Purchases of investment securities (750) (4,521)
Purchases of mortgage-backed securities - (5,080)
Loan principal repayments 31,153 68,559
Loan disbursements (66,380) (101,836)
Purchases of loans - (1,077)
Additions to office premises and equipment (259) (142)
Additions to real estate acquired through foreclosure (2) (13)
Proceeds from sale of real estate acquired through foreclosure 464 74
Purchase of Federal Home Loan Bank stock (853) (827)
Net increase in cash surrender value of life insurance (66) (62)
Purchase of life insurance - (100)
Purchase of Westwood Homestead Financial Corporation - net (1,879) -
------ ------
Net cash used in investing activities (37,912) (41,304)
------ ------
Net cash used in operating and investing
activities (balance carried forward) (38,497) (37,579)
------ ------
</TABLE>
6
<PAGE>
Camco Financial Corporation
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
For the three months ended March 31,
(In thousands)
2000 1999
<S> <C> <C>
Net cash used in operating and investing
activities (balance brought forward) $(38,497) $(37,579)
Cash flows provided by (used in) financing activities:
Net increase in deposits 19,992 2,814
Proceeds from advances from the Federal Home Loan Bank
and other borrowings 54,800 31,842
Repayment of Federal Home Loan Bank advances
and other borrowings (32,045) (5,876)
Dividends paid on common stock (832) (616)
Proceeds from exercise of stock options 8 -
Decrease in advances by borrowers for taxes and insurance (1,503) (351)
------- -------
Net cash provided by financing activities 40,420 27,813
------- -------
Increase (decrease) in cash and cash equivalents 1,923 (9,766)
Cash and cash equivalents at beginning of period 16,954 35,815
------- -------
Cash and cash equivalents at end of period $ 18,877 $ 26,049
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest on deposits and borrowings $ 10,962 $ 5,726
======= =======
Income taxes $ 175 $ 250
======= =======
Supplemental disclosure of noncash investing activities:
Unrealized losses on securities designated as available
for sale, net of related tax effects $ (13) $ (30)
======= =======
Recognition of mortgage servicing rights in accordance with
SFAS No. 125 $ 93 $ 669
======= =======
Transfers from mortgage loans to real estate acquired through foreclosure $ 321 $ 95
======= =======
Liabilities assumed, stock and cash paid in acquisition of Westwood
Homestead Financial Corporation $159,698 $ -
Less: fair value of assets received 159,486 -
------- -------
Amount assigned to goodwill $ 212 $ -
======= =======
</TABLE>
7
<PAGE>
Camco Financial Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited consolidated financial statements were
prepared in accordance with instructions for Form 10-Q and, therefore,
do not include information or footnotes necessary for a complete
presentation of financial position, results of operations and cash
flows in conformity with generally accepted accounting principles.
Accordingly, these financial statements should be read in conjunction
with the consolidated financial statements and notes thereto of the
Corporation included in Camco's Annual Report on Form 10-K for the year
ended December 31, 1999. However, all adjustments (consisting only of
normal recurring accruals) which, in the opinion of management, are
necessary for a fair presentation of the consolidated financial
statements have been included. The results of operations for the three
month period ended March 31, 2000, are not necessarily indicative of
the results which may be expected for the entire year.
In January 2000, Camco Financial Corporation ("Camco", or the
"Corporation") acquired Westwood Homestead Financial Corporation
("Westwood") utilizing the purchase method of accounting (the
"Merger"). Westwood was dissolved upon consummation of the Merger and
Westwood's banking subsidiary, Westwood Homestead Savings Bank,
continued operations as a wholly-owned subsidiary of the Corporation.
Camco paid $11.1 million in cash and issued 1,304,875 of its common
shares in connection with the Merger.
2. Principles of Consolidation
The accompanying consolidated financial statements include the accounts
of Camco and its six wholly-owned subsidiaries: Cambridge Savings Bank
("Cambridge Savings"), Marietta Savings Bank ("Marietta Savings"),
First Federal Savings Bank of Washington Court House ("First Federal"),
First Federal Bank for Savings ("First Savings"), Westwood Homestead
Savings Bank ("Westwood") (collectively hereinafter "the Banks") and
Camco Title Insurance Agency, Inc., as well as two second tier
subsidiaries, Camco Mortgage Corporation and WestMar Mortgage Company.
All significant intercompany balances and transactions have been
eliminated.
3. Earnings Per Share
Basic earnings per share for the three month periods ended March 31,
2000 and 1999, is computed based on 6,864,553 and 5,742,235
weighted-average shares outstanding, respectively.
Diluted earnings per share is computed taking into consideration common
shares outstanding and dilutive potential common shares to be issued
under the Corporation's stock option plans. Weighted-average common
shares deemed outstanding for purposes of computing diluted earnings
per share totaled 6,905,051 and 5,868,679 for the three month periods
ended March 31, 2000 and 1999, respectively.
8
<PAGE>
Camco Financial Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. Earnings Per Share (continued)
There were 40,498 and 126,444 incremental shares related to the assumed
exercise of stock options included in the computation of diluted
earnings per share for the three month periods ended March 31, 2000 and
1999, respectively.
Options to purchase 176,059 shares of common stock with a
weighted-average exercise price of $11.67 were outstanding at March 31,
2000, but were excluded from the computation of common share
equivalents because the exercise prices were greater than the average
market price of the common shares.
4. Effects of Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (the "FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which
requires entities to recognize all derivatives in their financial
statements as either assets or liabilities measured at fair value. SFAS
No. 133 also specifies new methods of accounting for hedging
transactions, prescribes the items and transactions that may be hedged,
and specifies detailed criteria to be met to qualify for hedge
accounting.
The definition of a derivative financial instrument is complex, but in
general, it is an instrument with one or more underlyings, such as an
interest rate or foreign exchange rate, that is applied to a notional
amount, such as an amount of currency, to determine the settlement
amount(s). It generally requires no significant initial investment and
can be settled net or by delivery of an asset that is readily
convertible to cash. SFAS No. 133 applies to derivatives embedded in
other contracts, unless the underlying of the embedded derivative is
clearly and closely related to the host contract.
SFAS No. 133, as amended by SFAS No. 137, is effective for fiscal years
beginning after June 15, 2000. On adoption, entities are permitted to
transfer held-to-maturity debt securities to the available-for-sale or
trading category without calling into question their intent to hold
other debt securities to maturity in the future. SFAS No. 133 is not
expected to have a material impact on the Corporation's financial
statements.
9
<PAGE>
Camco Financial Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
For the three month periods ended March 31, 2000 and 1999
General
Camco's profitability depends primarily on the level of its net interest income,
which is the difference between interest income on interest-earning assets,
principally loans, mortgage-backed securities and investment securities, and
interest expense on deposit accounts and borrowings. In recent years, Camco's
net earnings have been heavily influenced by the level of other income,
including gains on sale of loans, loan servicing fees, and other fees. Camco's
operations are also influenced by the level of general, administrative and other
expenses, including employee compensation and benefits, occupancy and equipment,
federal deposit insurance premiums, as well as various other operating expense
categories, including federal income tax expense.
Discussion of Financial Condition Changes from December 31, 1999 to March 31,
2000
At March 31, 2000, Camco's consolidated assets totaled $1.0 billion, an increase
of $190.3 million, or 23.4%, over the December 31, 1999 total. The increase
during the current three month period was primarily due to the acquisition of
Westwood which resulted in net asset growth of approximately $159.5 million. The
additional increase in total assets was through internal growth primarily in
loans receivable, and was funded by deposit growth of $20.0 million and an
increase of $22.8 million in advances from the Federal Home Loan Bank ("FHLB").
Cash and interest-bearing deposits in other financial institutions totaled $18.9
million at March 31, 2000, an increase of $1.9 million, or 11.3%, from December
31, 1999 levels. The increase was attributable to the $3.1 million of cash and
other interest-bearing deposits acquired through the Merger.
Investment securities totaled $17.9 million at March 31, 2000, an increase of
$718,000, or 4.2%, over the total at December 31, 1999. Investment securities
purchases of $750,000 were offset by a market valuation adjustment and premium
amortization of $33,000.
Mortgage-backed securities totaled $17.0 million at March 31, 2000, an increase
of $4.6 million, or 36.7%, over December 31, 1999, due primarily to the
mortgage-backed securities acquired through the Merger totaling $5.2 million,
which was partially offset by principal repayments totaling $660,000 and a
market valuation adjustment of $10,000.
Loans receivable and loans held for sale increased by $175.1 million, or 24.1%,
during the three months ended March 31, 2000, to a total of $901.4 million. The
increase resulted primarily from loans acquired through the Merger totaling
$142.0 million and loan disbursements totaling $80.8 million, which were
partially offset by principal repayments of $31.2 million and loan sales of
$12.8 million. The volume of loans originated and purchased during the 2000
three month period was exceeded by that of the 1999 period by $48.8 million, or
37.7%, while the volume of loan sales decreased by $15.5 million year to year.
Loans held for sale totaled $4.8 million at March 31, 2000, compared to $3.2
million at December 31, 1999.
During the first quarter of 2000, continued rising interest rates have shifted
consumer preference from fixed-rate mortgages to adjustable-rate mortgages
(ARMs). The majority of loans originated in 2000 have been ARMs and, consistent
with its past practice, Camco has retained most of the ARMs in its portfolio.
10
<PAGE>
Camco Financial Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
For the three month periods ended March 31, 2000 and 1999
Discussion of Financial Condition Changes from December 31, 1999 to March 31,
2000 (continued)
Nonperforming loans (90 days or more delinquent plus nonaccrual loans) totaled
$4.2 million and $4.0 million at March 31, 2000 and December 31, 1999,
respectively, constituting .47% and .55% of total net loans, including loans
held for sale, at those dates. Nonperforming loans consist primarily of one- to
four-family residential properties which management believes are adequately
collateralized. The consolidated allowance for loan losses totaled $2.6 million
and $1.9 million at March 31, 2000 and December 31, 1999, respectively,
representing 62.1% and 46.9% of nonperforming loans, respectively, at those
dates. The allowance for loan losses was increased as a result of the Merger by
$641,000 which represents the allowance maintained by Westwood prior to the
Merger. Although management believes that its allowance for loan losses at March
31, 2000, is adequate based upon the available facts and circumstances, there
can be no assurance that additions to such allowance will not be necessary in
future periods, which could adversely affect Camco's results of operations.
Deposits totaled $582.1 million at March 31, 2000, an increase of $120.3
million, or 26.1%, over December 31, 1999 levels. The increase resulted
primarily from deposits of $100.3 million acquired in the Merger coupled with
deposit portfolio growth of $20.0 million, or 4.3%, which resulted primarily
from management's continuing efforts to achieve a moderate rate of growth
through advertising and pricing strategies. Advances from the FHLB increased by
$58.0 million, or 20.8%, to a total of $337.1 million at March 31, 2000. The
increase was due primarily to net current period borrowings totaling $22.8
million, coupled with advances of $35.2 million acquired through the Merger. The
proceeds from deposit growth and FHLB advances were primarily used to fund loan
originations during the three month period.
The Banks are required to maintain minimum regulatory capital pursuant to
federal regulations. At March 31, 2000, the Banks' regulatory capital exceeded
all regulatory capital requirements.
Comparison of Results of Operations for the Three Months Ended March 31, 2000
and 1999
General
The inclusion of the accounts of Westwood, which Camco acquired in January 2000
in a transaction accounted for using the purchase method of accounting,
significantly contributed to the increases in the level of income and expenses
during the three months ended March 31, 2000, compared to the three months ended
March 31, 1999. Accordingly, the statement of earnings for the period ended
March 31, 1999, was not restated for the Merger.
Camco's net earnings for the three months ended March 31, 2000 totaled $1.7
million, an increase of $164,000, or 10.4%, over the $1.6 million of net
earnings reported in the comparable 1999 period. The increase in earnings was
primarily attributable to a $1.7 million increase in net interest income, which
was partially offset by a decrease in other income of $445,000, an $883,000
increase in general, administrative and other expense, an $83,000 increase in
the provision for federal income taxes and an $83,000 increase in the provision
for loan losses.
11
<PAGE>
Camco Financial Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
For the three month periods ended March 31, 2000 and 1999
Comparison of Results of Operations for the Three Months Ended March 31, 2000
and 1999 (continued)
Net Interest Income
Total interest income for the three months ended March 31, 2000, increased by
$6.3 million, or 54.8%, over the three month period ended March 31, 1999,
generally reflecting the effects of growth in average interest-earning assets
outstanding of approximately $286.5 million.
Interest income on loans and mortgage-backed securities totaled $17.0 million
for the three months ended March 31, 2000, an increase of $6.2 million, or
57.4%, over the comparable 1999 period. The increase resulted primarily from a
$301.3 million, or 53.5%, increase in the average balance outstanding year to
year, and a 44 basis point increase in the average yield. Interest income on
investments and other interest-bearing assets increased by $69,000, or 10.9%,
due primarily to an increase of 142 basis points in the weighted-average yield,
which was partially offset by a $5.8 million, or 12.4%, decrease in the average
balance outstanding year to year.
Interest expense on deposits increased by $1.7 million, or 36.2%, to a total of
$6.4 million for the three months ended March 31, 2000, due primarily to a
$120.3 million, or 26.1%, increase in deposits over the prior year and an
increase of 40 basis points in the weighted-average interest rates paid.
Interest expense on borrowings totaled $4.7 million for the three months ended
March 31, 2000, an increase of $2.9 million, or 160.8%, over the 1999 three
month period. The increase resulted primarily from a $174.9 million increase in
the average balance outstanding year to year and an increase of 42 basis points
in the weighted-average interest rates paid.
As a result of the foregoing changes in interest income and interest expense,
net interest income increased by $1.7 million, or 33.8%, to a total of $6.6
million for the three months ended March 31, 2000. The interest rate spread
decreased to approximately 2.65% for the three months ended March 31, 2000, from
2.89% for the 1999 period, while the net interest margin decreased to
approximately 2.90% in 2000, as compared to 3.17% in the first quarter of 1999.
Provision for Losses on Loans
A provision for losses on loans is charged to earnings to bring the total
allowance for loan losses to a level considered appropriate by management based
on historical experience, the volume and type of lending conducted by Camco, the
status of past due principal and interest payments, general economic conditions,
particularly as such conditions relate to Camco's market area, and other factors
related to the collectibility of Camco's loan portfolio. The provision for
losses on loans totaled $137,000 for the three months ended March 31, 2000, an
increase of $83,000, or 153.7%, from the comparable period in 1999. The current
period provision generally reflects the effects of loan portfolio growth. There
can be no assurance that the allowance for loan losses will be adequate to cover
losses on nonperforming loans in the future.
12
<PAGE>
Camco Financial Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
For the three month periods ended March 31, 2000 and 1999
Comparison of Results of Operations for the Three Months Ended March 31, 2000
and 1999 (continued)
Other Income
Other income totaled $1.1 million for the three months ended March 31, 2000, a
decrease of $445,000, or 28.4%, from the comparable 1999 period. The decrease in
other income was primarily attributable to a $625,000, or 79.9%, decrease in
gains on sale of loans and a decrease of $146,000, or 23.7%, in late charges,
rent and other. The decrease in gains on sale of loans primarily reflects a
reduction in sales volume year to year. The decrease in late charges, rent and
other was primarily attributable to a $141,000 decrease in title company fees
compared to the same quarter in 1999.
General, Administrative and Other Expense
General, administrative and other expense totaled $4.9 million for the three
months ended March 31, 2000, an increase of $883,000, or 21.8%, over the
comparable period in 1999. This increase was due primarily to a $633,000, or
34.7%, increase in employee compensation and benefits, a $146,000, or 24.9%,
increase in occupancy and equipment and a $75,000, or 34.7%, increase in
franchise taxes, which were partially offset by a decrease in federal deposit
insurance premiums of $45,000, or 60.8%.
The acquisition of Westwood accounted for $638,000, or 72.3%, of the total
increase in general, administrative and other expenses. Exclusive of the effects
of the Merger, the increase in employee compensation and benefits resulted
primarily from normal merit increased coupled with increased staffing levels due
to Camco's overall growth year to year, the increase in office occupancy and
equipment expense increased due to increased depreciation and increased building
maintenance costs and franchise taxes increased due primarily to the
Corporation's equity growth year to year.
Federal Income Taxes
The provision for federal income taxes totaled $882,000 for the three months
ended March 31, 2000, an increase of $83,000, or 10.4%, from the three months
ended March 31, 1999. This increase is attributable to a $247,000, or 10.4%,
increase in pre-tax earnings. The Corporation's effective tax rate amounted to
33.7% for each of the three months ended March 31, 2000 and 1999.
Quantitative and Qualitative Disclosures about Market Risk
There has been no material change in the Corporation's market risk since the
Corporation's Form 10-K filed with the Securities and Exchange Commission for
the year ended December 31, 1999.
13
<PAGE>
Camco Financial Corporation
PART II
ITEM 1. Legal Proceedings
Not applicable
ITEM 2. Changes in Securities and Use of Proceeds
None
ITEM 3. Defaults Upon Senior Securities
Not applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
None
ITEM 5. Other Information
Not applicable
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
15 Independent Accountants' Report
27.1 Financial data schedule for the three
months ended March 31, 2000.
27.2 Restated financial data schedule for
the three months ended March 31, 1999.
(b) Reports on Form 8-K:
On January 21, 2000, Camco filed a
Form 8-K reporting the closing of its
acquisition of Westwood in Item 2.
On March 21, 2000, Camco filed a
Form 8-K/A which included the audited
financial statements of Westwood.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 12, 2000 By: /s/Larry A. Caldwell
---------------------------- --------------------
Larry A. Caldwell
Chief Executive Officer
Date: May 12, 2000 By: /s/Gary Crane
----------------------------- --------------------
Gary Crane
Chief Financial Officer
15
Independent Accountants' Report
Board of Directors
Camco Financial Corporation
We have reviewed the accompanying consolidated statement of financial condition
of Camco Financial Corporation as of March 31, 2000, and the related
consolidated statements of earnings, comprehensive income, and cash flows for
the three-month period then ended. The financial statements are the
responsibility of the Corporation's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated statement of financial condition as of December 31,
1999, and the related consolidated statements of earnings, stockholders' equity,
and cash flows for the year then ended (not presented herein) and in our report
dated February 18, 2000, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth in
the accompanying consolidated statement of financial condition as of December
31, 1999, is fairly stated, in all material respects, in relation to the
consolidated statement of financial condition from which it has been derived.
/s/GRANT THORNTON LLP
Cincinnati, Ohio
May 12, 2000
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