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Camco Financial Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 15, 2010 03:41PM
Camco Financial Corp. (CAFI) filed Quarterly Report for the period ended 2010-09-30.
Highlight of Business Operations:
Cash and interest-bearing deposits in other financial institutions totaled $35.3 million at September 30, 2010, a decrease of $2.8 million, or 7.4%, from December 31, 2009. Securities totaled $39.1 million at September 30, 2010, a decrease of $19.0 million, or 32.7%, from December 31, 2009. The decrease was attributable to principal repayments totaling $20.8 million offset partially by the purchases of $1.6 million of securities and a $148,000 decrease in the fair market value of securities available for sale for the nine-month period ended September 30, 2010. The yield on agencies purchased during the nine month period was 4.26%. The current lack of investment options and low rate environment have affected purchases. As a result, cash from repayments are currently being deployed into loans and paying down borrowings when possible.
Loans receivable net, including loans held for sale, totaled $688.7 million at September 30, 2010, an increase of $29.2 million, or 4.4%, from December 31, 2009. The increase resulted primarily from loan disbursements and purchases totaling $195.2 million offset partially by principal repayments of $94.5 million, loan sales of $48.7 million, provision of $17.5 million and transfers to real estate owned of $4.0 million. The volume of loans originated and purchased during the first nine months of 2010 increased compared to the same 2009 period by $10.9 million, or 5.9%, while the volume of loan sales decreased by $43.2 million, or 47.0%, period to period. The total loan portfolio mix has changed with a greater percentage representing commercial loans. While we have seen slight increases in prepayments on residential mortgage loans, we continue to produce new portfolio residential mortgage loans related to the low rate environment with customers preference toward fixed rate loans which we have historically sold and serviced.
Loan originations during the nine-month period ended September 30, 2010, were comprised primarily of $101.0 million in commercial loans, $75.6 million of loans secured by one- to four-family residential real estate and $18.5 million in consumer and other loans. Our intent is to continue to service our communities with their residential needs while also expanding consumer and commercial real estate lending in future periods as a means of increasing the yield on our loan portfolio.
The allowance for loan losses totaled $16.9 million and $16.1 million at September 30, 2010 and December 31, 2009, respectively, representing 49.6% and 44.2% of nonperforming loans, respectively, at those dates. Nonperforming loans (90 days or more delinquent plus nonaccrual loans) totaled $34.0 million and $36.4 million at September 30, 2010 and December 31, 2009, respectively, constituting 4.82% and 5.40% of total net loans, including loans held for sale, at those dates. Net charge-offs totaled $16.8 million during the nine months of 2010.
Federal Home Loan Bank (FHLB) advances and other borrowings totaled $143.7 million at September 30, 2010, an increase of $34.4 million, or 31.5%, from the total at December 31, 2009. The increase in borrowings was primarily due to the increases in loans receivable and loans held for sale. Loans for sale increased $11.7 million which will be funded in the near future and help reduce overnight borrowings as funding occurs. See Liquidity and Capital Resources for further discussion on our borrowings position.
Camcos net loss for the nine months ended September 30, 2010, totaled $15.6 million, a decrease of $16.2 million, from the $591,000 of net earnings reported in the comparable 2009 period. The decrease in earnings was primarily attributable to an increase in the provision for losses on loans of $15.6 million, a $622.000 impairment in mortgage servicing rights and a $583,000 increase of expenses relating to higher loan production, operating expenses associated with real estate owned and legal expenses relating to the resolution of problem assets. The increases were offset partially by an increase in net interest income of $1.5 million.
Stocks Discussed: CAFI,