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Camco Financial Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 15, 2011 04:58PM

Camco Financial Corp. (CAFI) filed Quarterly Report for the period ended 2011-06-30. Camco Financial Corp. has a market cap of $11.89 million; its shares were traded at around $1.25 with and P/S ratio of 0.25.

Highlight of Business Operations:

At June 30, 2011, Camco’s consolidated assets totaled $767.5 million, a decrease of $47.4 million, or 5.8%, from December 31, 2010. The decrease in total assets resulted primarily from decreases in investment securities and loans receivable and the redemption of FHLB stock, which were offset partially by increases in cash and cash equivalents. Further deterioration of the residential loan market and fewer new purchases may continue to shift the loan portfolio toward commercial loans. The current loan rates may continue to slow residential lending and the sale of fixed rate loans, therefore it is likely that the gain on sale will continue to be less in 2011 than was previously experienced in 2010. Additionally, in the second quarter of 2011 we sold three portfolio loans at a loss of $433,000 which was offset by our current year to date gain on the sale of mortgage loans of $433,000. When comparing the six months ended June 2011 versus 2010 the gain on sale of mortgage loans decreased $57,000. Any growth in deposits would most likely be used to reduce outstanding borrowings and brokered deposits or fund commercial loan volume. Loan volume increased in June and we have a larger pipeline going into the second half of 2011. Management’s overall focus at the Bank has been on managing credit, reducing risk within the loan portfolio and enhancing liquidity and capital in a distressed economic environment. Continuous progress is being made on addressing these issues, but we expect the distressed economic environment to continue through 2011.

As of June 30, 2011 securities totaled $14.6 million, a decrease of $20.1 million, or 58.0%, from December 31, 2010, due to the sale of $27.2 million in securities, principal repayments and maturities of $5.3 million and the change in the fair value of securities available for sale of $1.6 million for the six-month period ended June 30, 2011. These were offset partially by purchases of $12.6 million which were primarily investment securities at a weighted rate of 1.28%. Additionally, $20.0 million of FHLB stock was redeemed during the first quarter 2011.

Loans receivable, including loans held for sale, totaled $645.0 million at June 30, 2011, a decrease of $25.1 million, or 3.7%, from December 31, 2010. The decrease resulted primarily from principal repayments of $108.2 million and loan sales of $33.1 million offset partially by loan disbursements totaling $125.1 million. Principal repayments are slightly higher than 2010 on loans and our ability to originate new loans has not been as strong as 2010 in the first half of 2011. The reduction in residential real estate loan balances was intensified by the secondary market offering historically low long-term fixed rates during most of 2010.

The allowance for loan losses totaled $16.8 million and $16.9 million at June 30, 2011, and December 31, 2010, representing 64.3% and 49.9% of nonperforming loans, respectively, at those dates. Nonperforming loans (loans with three payments delinquent plus nonaccrual loans) totaled $26.1 million and $33.8 million at June 30, 2011 and December 31, 2010, respectively, constituting 3.9% and 4.9% of total net loans, including loans held for sale. The decrease in non-accrual loan balances is due to credit quality efforts that are discussed above. During 2011 provision for loan losses decreased slightly while the balance in the allowance was comparative to the December balance. See the Allowance for loan losses footnote above for additional information related to change in allowance, delinquency and etc. Net charge-offs totaled $1.3 million for the six months ended June 30, 2011.

Advances from the FHLB and other borrowings totaled $68.8 million at June 30, 2011, a decrease of $24.2 million, or 26.0%, from the total at December 31, 2010. The decrease in borrowings was primarily due to early payoff of $21.0 million of borrowings that had a prepayment penalty of $216,000. The sale of investments provided the cash to pay off such borrowings and decrease reliance on this non core funding.

Camco’s net earnings for the six months ended June 30, 2011, totaled $789,000, an increase of $4.8 million, from the net loss of $4.0 million reported in the comparable 2010 period. On a per share basis, the net earnings during the first half of 2011 were $0.11, compared to $(0.55) per share in the first half of 2010. The increase in earnings was primarily attributable to decreased provision for losses on loans, increased gain on sale of investments which was offset partially by increased general, administrative and other expenses.

Read the The complete Report

Stocks Discussed: CAFI,
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