##### Table of Contents



FORM 10-Q
 SECURITIES AND EXCHANGE COMMISSION
 Washington, D. C. 20549
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2007
 OR
 o
    
    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
  Delaware
    
    51-0110823(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer Identification Number)
 
    þ o
  o þ o
  o þ




---



##### 



PagePART I
    
    FINANCIAL INFORMATIONConsolidated Statements of Financial Condition
    
    
    3Consolidated Statements of Earnings
    
    
    4Consolidated Statements of Comprehensive Income (Loss)
    
    
    5Consolidated Statements of Cash Flows
    
    
    6Notes to Consolidated Financial Statements
    
    
    8Managements Discussion and Analysis of
Financial Condition and Results of
Operations
    
    
    13Quantitative and Qualitative Disclosures about
Market Risk
    
    
    26Controls and Procedures
    
    
    28PART II
    
    OTHER INFORMATION
    
    29SIGNATURES
    
    32EX-10.17EX-31.1EX-31.2EX-32.1EX-32.2
  2




---



##### Table of Contents



Camco Financial Corporation
 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
  June 30,
    
    
    December 31,2007
    
    
    2006ASSETSCash and due from banks
    
    $
    14,542
    
    
    $
    13,869Interest-bearing deposits in other financial institution
    
    
    7,054
    
    
    
    12,673Cash and cash equivalents
    
    
    21,596
    
    
    
    26,542Investment securities available for sale  at fair value
    
    
    51,760
    
    
    
    56,053Investment securities held to maturity  at cost, approximate fair
value of $726 and $736 as of June 30, 2007 and December 31,
2006, respectively
    
    
    709
    
    
    
    710Mortgage-backed securities available for sale  at fair value
    
    
    47,354
    
    
    
    51,453Mortgage-backed securities held to maturity  at cost, approximate fair
value of $2,396 and $2,734 as of June 30, 2007 and December 31,
2006, respectively
    
    
    2,452
    
    
    
    2,739Loans held for sale  at lower of cost or market
    
    
    3,134
    
    
    
    3,664Loans receivable  net
    
    
    836,515
    
    
    
    824,578Office premises and equipment  net
    
    
    13,123
    
    
    
    13,200Real estate acquired through foreclosure
    
    
    3,077
    
    
    
    3,956Federal Home Loan Bank stock  at cost
    
    
    28,722
    
    
    
    28,722Accrued interest receivable
    
    
    6,173
    
    
    
    6,502Prepaid expenses and other assets
    
    
    1,591
    
    
    
    1,537Cash surrender value of life insurance
    
    
    21,310
    
    
    
    20,921Goodwill
    
    
    6,683
    
    
    
    6,683Prepaid federal income taxes
    
    
    462
    
    
    
    956Total assets
    
    $
    1,044,661
    
    
    $
    1,048,216LIABILITIES AND STOCKHOLDERS EQUITYDeposits
    
    $
    682,011
    
    
    $
    684,782Advances from the Federal Home Loan Bank
    
    
    259,750
    
    
    
    257,139Advances by borrowers for taxes and insurance
    
    
    1,040
    
    
    
    3,484Accounts payable and accrued liabilities
    
    
    6,000
    
    
    
    6,350Dividends payable
    
    
    1,101
    
    
    
    1,120Deferred federal income taxes, net
    
    
    4,611
    
    
    
    4,249Total liabilities
    
    
    954,513
    
    
    
    957,124Stockholders equityPreferred stock  $1 par value; authorized 100,000 shares; no shares outstanding
    
    
    
    
    
    
    Common stock  $1 par value; authorized 14,900,000 shares; 8,832,082
shares issued at June 30, 2007 and December 31, 2006
    
    
    8,832
    
    
    
    8,832Additional paid-in capital
    
    
    59,768
    
    
    
    59,722Retained earnings  substantially restricted
    
    
    44,591
    
    
    
    43,954Accumulated other comprehensive loss  unrealized gains (losses) on
securities designated as available for sale, net of related tax effects
    
    
    (1,170
    )
    
    
    (1,225
    )Less 1,504,246 and 1,369,025 shares of treasury stock at June 30, 2007
and December 31, 2006, respectively  at cost
    
    
    (21,873
    )
    
    
    (20,191
    )Total stockholders equity
    
    
    90,148
    
    
    
    91,092Total liabilities and stockholders equity
    
    $
    1,044,661
    
    
    $
    1,048,216
 3




---



##### Table of Contents



Camco Financial Corporation
 CONSOLIDATED STATEMENTS OF EARNINGS
  Six months ended
    
    
    Three months endedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Interest incomeLoans
    
    $
    28,728
    
    
    $
    26,740
    
    
    $
    14,577
    
    
    $
    13,491Mortgage-backed securities
    
    
    1,093
    
    
    
    1,241
    
    
    
    533
    
    
    
    608Investment securities
    
    
    1,240
    
    
    
    1,019
    
    
    
    600
    
    
    
    539Interest-bearing deposits and other
    
    
    1,663
    
    
    
    1,615
    
    
    
    825
    
    
    
    825Total interest income
    
    
    32,724
    
    
    
    30,615
    
    
    
    16,535
    
    
    
    15,463Interest expenseDeposits
    
    
    12,334
    
    
    
    9,532
    
    
    
    6,330
    
    
    
    5,108Borrowings
    
    
    5,553
    
    
    
    5,849
    
    
    
    2,755
    
    
    
    2,900Total interest expense
    
    
    17,887
    
    
    
    15,381
    
    
    
    9,085
    
    
    
    8,008Net interest income
    
    
    14,837
    
    
    
    15,234
    
    
    
    7,450
    
    
    
    7,455Provision for losses on loans
    
    
    315
    
    
    
    720
    
    
    
    120
    
    
    
    360Net interest income after provision
for losses on loans
    
    
    14,522
    
    
    
    14,514
    
    
    
    7,330
    
    
    
    7,095Other incomeLate charges, rent and other
    
    
    1,461
    
    
    
    1,188
    
    
    
    685
    
    
    
    726Loan servicing fees
    
    
    695
    
    
    
    713
    
    
    
    343
    
    
    
    353Service charges and other fees on deposits
    
    
    810
    
    
    
    783
    
    
    
    430
    
    
    
    431Mortgage servicing rights  net
    
    
    (180
    )
    
    
    (68
    )
    
    
    (127
    )
    
    
    (46
    )Gain on sale of loans
    
    
    157
    
    
    
    179
    
    
    
    71
    
    
    
    80Loss on sale of real estate acquired through foreclosure
    
    
    (322
    )
    
    
    (25
    )
    
    
    (339
    )
    
    
    (80
    )Gain on sale of office premises and equipment
    
    
    10
    
    
    
    1
    
    
    
    
    
    
    
    1Total other income
    
    
    2,631
    
    
    
    2,771
    
    
    
    1,063
    
    
    
    1,465General, administrative and other expenseEmployee compensation and benefits
    
    
    7,494
    
    
    
    7,295
    
    
    
    3,669
    
    
    
    3,559Deferred compensation and benefits
    
    
    (1,057
    )
    
    
    (1,030
    )
    
    
    (577
    )
    
    
    (543
    )Occupancy and equipment
    
    
    1,743
    
    
    
    1,560
    
    
    
    875
    
    
    
    780Data processing
    
    
    570
    
    
    
    726
    
    
    
    285
    
    
    
    333Marketing and advertising
    
    
    661
    
    
    
    524
    
    
    
    339
    
    
    
    220State franchise taxes and other taxes
    
    
    554
    
    
    
    473
    
    
    
    286
    
    
    
    228Postage, supplies and office expenses
    
    
    703
    
    
    
    667
    
    
    
    366
    
    
    
    337Travel, training and insurance
    
    
    387
    
    
    
    377
    
    
    
    197
    
    
    
    195Professional services
    
    
    559
    
    
    
    595
    
    
    
    276
    
    
    
    265Transaction processing
    
    
    391
    
    
    
    316
    
    
    
    210
    
    
    
    152Real estate owned and other expenses
    
    
    247
    
    
    
    106
    
    
    
    122
    
    
    
    90Loan and deposit expenses
    
    
    747
    
    
    
    596
    
    
    
    388
    
    
    
    327Total general, administrative and other expense
    
    
    12,999
    
    
    
    12,205
    
    
    
    6,436
    
    
    
    5,943Earnings before federal income taxes
    
    
    4,154
    
    
    
    5,080
    
    
    
    1,957
    
    
    
    2,617Federal income taxes
    
    
    1,303
    
    
    
    1,586
    
    
    
    610
    
    
    
    802NET EARNINGS
    
    $
    2,851
    
    
    $
    3,494
    
    
    $
    1,347
    
    
    $
    1,815EARNINGS PER SHAREBasic
    
    $
    .38
    
    
    $
    .46
    
    
    $
    .18
    
    
    $
    .24Diluted
    
    $
    .38
    
    
    $
    .46
    
    
    $
    .18
    
    
    $
    .24
 4




---



##### Table of Contents



Camco Financial Corporation
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
  Six months ended
    
    
    Three months endedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net earnings
    
    $
    2,851
    
    
    $
    3,494
    
    
    $
    1,347
    
    
    $
    1,815Other comprehensive income (loss), net of related tax effects:Unrealized holding gains (losses) during the period,
net of tax benefits of $28, $(359), $(107) and $(91)
for the respective periods
    
    
    55
    
    
    
    (697
    )
    
    
    (208
    )
    
    
    (177
    )Comprehensive income
    
    $
    2,906
    
    
    $
    2,797
    
    
    $
    1,139
    
    
    $
    1,638
 5




---



##### Table of Contents



Camco Financial Corporation
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 2007
    
    
    2006Cash flows from operating activities:Net earnings for the period
    
    $
    2,851
    
    
    $
    3,494Adjustments to reconcile net earnings to net cash
provided by operating activities:Amortization of deferred loan origination fees
    
    
    (140
    )
    
    
    85Amortization of premiums and discounts on investment and
mortgage-backed securities  net
    
    
    56
    
    
    
    132Amortization of mortgage servicing rights  net
    
    
    465
    
    
    
    462Accretion of loan purchase accounting adjustments  net
    
    
    
    
    
    
    (44
    )Depreciation and amortization
    
    
    650
    
    
    
    613Stock option expense
    
    
    46
    
    
    
    69Provision for losses on loans
    
    
    315
    
    
    
    720Federal Home Loan Bank stock dividends
    
    
    
    
    
    
    (778
    )Loss on sale of real estate acquired through foreclosure
    
    
    322
    
    
    
    25Gain on sale of office premises and equipment
    
    
    (10
    )
    
    
    (1
    )Gain on sale of loans
    
    
    (157
    )
    
    
    (179
    )Loans originated for sale in the secondary market
    
    
    (20,790
    )
    
    
    (27,603
    )Proceeds from sale of loans in the secondary market
    
    
    21,477
    
    
    
    27,614Increase (decrease) in cash due to changes in:Accrued interest receivable
    
    
    329
    
    
    
    (656
    )Prepaid expenses and other assets
    
    
    (60
    )
    
    
    (274
    )Accrued interest payable and other liabilities
    
    
    (765
    )
    
    
    (300
    )Federal income taxes:Current
    
    
    494
    
    
    
    (242
    )Deferred
    
    
    334
    
    
    
    (1
    )Net cash provided by operating activities
    
    
    5,417
    
    
    
    3,136Cash flows provided by (used in) investing activities:Proceeds from maturities and calls of investment securities
    
    
    14,999
    
    
    
    Purchase of investment securities designated as available for sale
    
    
    (10,497
    )
    
    
    (7,916
    )Purchase of mortgage-backed securities designated as available for sale
    
    
    (1,501
    )
    
    
    (938
    )Principal repayments on mortgage-backed securities
    
    
    5,706
    
    
    
    6,769Loan principal repayments
    
    
    142,333
    
    
    
    124,465Loan disbursements
    
    
    (152,555
    )
    
    
    (122,619
    )Purchase of loans
    
    
    (2,164
    )
    
    
    (1,501
    )Additions to office premises and equipment
    
    
    (616
    )
    
    
    (2,136
    )Additions to real estate acquired through foreclosure
    
    
    
    
    
    
    (29
    )Proceeds from sale of real estate acquired through foreclosure
    
    
    786
    
    
    
    523Proceeds from sale of office premises and equipment
    
    
    53
    
    
    
    1Net increase in cash surrender value of life insurance
    
    
    (389
    )
    
    
    (382
    )Proceeds from redemption of life insurance
    
    
    
    
    
    
    260Net cash used in investing activities
    
    
    (3,845
    )
    
    
    (3,503
    )Net cash provided by (used in) operating and investing activities
(balance carried forward)
    
    
    1,572
    
    
    
    (367
    )
 6




---



##### Table of Contents



Camco Financial Corporation
 CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
 
 2007
    
    
    2006Net cash provided by (used in) operating and investing activities
(balance brought forward)
    
    $
    1,572
    
    
    $
    (367
    )Cash flows provided by (used in) financing activities:Net increase (decrease) in deposits
    
    
    (2,771
    )
    
    
    21,663Proceeds from Federal Home Loan Bank advances
    
    
    42,413
    
    
    
    42,139Repayment of Federal Home Loan Bank advance
    
    
    (39,802
    )
    
    
    (58,921
    )Dividends paid on common stock
    
    
    (2,233
    )
    
    
    (2,230
    )Purchase of treasury stock
    
    
    (1,681
    )
    
    
    (1,271
    )Decrease in advances by borrowers for taxes and insurance
    
    
    (2,444
    )
    
    
    (1,160
    )Net cash provided by (used in) financing activities
    
    
    (6,518
    )
    
    
    220Net decrease in cash and cash equivalents
    
    
    (4,946
    )
    
    
    (147
    )Cash and cash equivalents at beginning of period
    
    
    26,542
    
    
    
    33,085Cash and cash equivalents at end of period
    
    $
    21,596
    
    
    $
    32,938Supplemental disclosure of cash flow information:Cash paid during the period for:Interest on deposits and borrowings
    
    $
    18,265
    
    
    $
    15,303Taxes
    
    $
    475
    
    
    $
    1,829Supplemental disclosure of noncash investing activities:Unrealized gains (losses) on securities designated as available
for sale, net of related tax benefits
    
    $
    55
    
    
    $
    (697
    )Recognition of mortgage servicing rights in accordance with
SFAS No. 140
    
    $
    286
    
    
    $
    394Transfers from loans to real estate acquired through foreclosure
    
    $
    1,685
    
    
    $
    1,134Dividends declared but unpaid
    
    $
    1,101
    
    
    $
    1,127
 7




---



##### Table of Contents



Camco Financial Corporation
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  1.
    
    Basis of PresentationThe 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 accounting principles generally accepted in the United States of
America (US GAAP). Accordingly, these financial statements should be read in conjunction
with the consolidated financial statements and notes thereto of Camco Financial Corporation
(Camco or the Corporation) included in Camcos Annual Report on Form 10-K for the year
ended December 31, 2006. 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
six- and three-month periods ended June 30, 2007, are not necessarily indicative of the
results which may be expected for the entire year.2.
    
    Principles of ConsolidationThe accompanying consolidated financial statements include the accounts of Camco and its two
wholly-owned subsidiaries: Advantage Bank (Advantage or the Bank) and Camco Title
Agency, Inc.3.
    
    Critical Accounting PoliciesManagements Discussion and Analysis of Financial Condition and Results of Operations, as
well as disclosures found elsewhere in this quarterly report, are based upon Camcos
consolidated financial statements, which are prepared in accordance with US GAAP. The
preparation of these financial statements requires Camco to make estimates and judgments
that affect the reported amounts of assets, liabilities, revenues and expenses. Several
factors are considered in determining whether or not a policy is critical in the preparation
of financial statements. These factors include, among other things, whether the estimates
are significant to the financial statements, the nature of the estimates, the ability to
readily validate the estimates with other information including third parties or available
prices, and sensitivity of the estimates to changes in economic conditions and whether
alternative accounting methods may be utilized under US GAAP.Material estimates that are particularly susceptible to significant change in the near term
relate to the determination of the allowance for loan losses, the valuation of mortgage
servicing rights and goodwill impairment. Actual results could differ from those estimates.Allowance for Loan LossesThe procedures for assessing the adequacy of the allowance for loan losses reflect our
evaluation of credit risk after careful consideration of all information available to us.
In developing this assessment, we must rely on estimates and exercise judgment regarding
matters where the ultimate outcome is unknown such as economic factors, developments
affecting companies in specific industries and issues with respect to single borrowers.
Depending on changes in circumstances, future assessments of credit risk may yield
materially different results, which may require an increase or a decrease in the allowance
for loan losses.
 8




---



##### Table of Contents



Camco Financial Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  3.
    
    Critical Accounting Policies (continued)Allowance for Loan Losses(continued)The allowance is regularly reviewed by management to determine whether the amount is
considered adequate to absorb probable, incurred losses. This evaluation includes specific
loss estimates on certain individually reviewed loans, statistical loss estimates for loan
pools that are based on historical loss experience, and general loss estimates that are
based upon the size, quality, and concentration characteristics of the various loan
portfolios, adverse situations that may affect a borrowers ability to repay, and current
economic and industry conditions. Also considered as part of that judgment is a review of
the Banks trends in delinquencies and loan losses, as well as trends in delinquencies and
losses for the region and nationally, and economic factors.The allowance for loan losses is maintained at a level believed adequate by management to
absorb probable, incurred losses inherent in the loan portfolio. Managements evaluation of
the adequacy of the allowance is an estimate based on managements current judgment about
the credit quality of the loan portfolio. While the Corporation strives to reflect all
known risk factors in its evaluations, there can be no assurance that increased provisions
will not be necessary in future periods, which could adversely affect Camcos results of
operation.Mortgage Servicing RightsTo determine the fair value of its mortgage servicing rights (MSRs) each reporting
quarter, the Corporation uses a third party provider. Camco transmits information
representing individual loan information in each pooling period accompanied by escrow
amounts to the third party which then evaluates the possible impairment of MSRs as described
below.MSRs are recognized as separate assets when loans are sold with servicing retained. A
pooling methodology in which loans with similar characteristics are pooled together is
applied for valuation purposes. Once pooled, each grouping of loans is evaluated on a
discounted earnings basis to determine the present value of future earnings that a purchaser
could expect to realize from the portfolio. Earnings are projected from a variety of
sources including loan service fees, interest earned on float, net interest earned on escrow
balances, miscellaneous income and costs to service the loans. The present value of future
earnings is the estimated fair value for the pool, calculated using consensus assumptions
that a third party purchaser would utilize in evaluating a potential acquisition of the
servicing.Events that may significantly affect the estimates used are changes in interest rates and
the related impact on mortgage loan prepayment speeds and the payment performance of the
underlying loans. The interest rate for float, which is supplied by management, takes into
consideration the investment portfolio average yield as well as current short duration
investment yields. Management believes this methodology provides a reasonable estimate.
Mortgage loan prepayment speeds are calculated by the third party provider utilizing the
Economic Outlook as published by the Office of Chief Economist of Freddie Mac in estimating
prepayment speeds and provides a specific scenario with each evaluation. Based on the
assumptions discussed, pre-tax projections are prepared for each pool of loans serviced.
These earning figures approximate the cash flow that could be received from the servicing
portfolio. Valuation results are presented quarterly to management. At that time,
management reviews the information and MSRs are marked to lower of amortized cost or fair
value for the current quarter.
 9




---



##### Table of Contents



Camco Financial Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  3.
    
    Critical Accounting Policies (continued)GoodwillWe have developed procedures to test goodwill for impairment on an annual basis using June
30 financial information. This testing procedure is outsourced to a third party that
evaluates possible impairment based on the following:The test involves assigning tangible assets and liabilities, identified intangible assets
and goodwill to reporting units and comparing the fair value of each reporting unit to its
carrying value including goodwill. The value is determined assuming a freely negotiated
transaction between a willing buyer and a willing seller, neither being under any compulsion
to buy or sell and both having reasonable knowledge of relevant facts. Accordingly, to
derive the fair value of the reporting unit, the following common approaches to valuing
business combination transactions involving financial institutions are utilized by a third
party selected by Camco: (1) the comparable transactions approach  specifically based on
earnings, book, assets and deposit premium multiples received in recent sales of comparable
thrift franchises; and (2) the discounted cash flow approach. The application of the
valuation techniques take into account the reporting units operating history, the current
market environment and future prospects. As of the most recent quarter, the only reporting
unit carrying goodwill is the Bank.If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting
unit is considered not impaired and no second step is required. If not, a second test is
required to measure the amount of goodwill impairment. The second test of the overall
goodwill impairment compares the implied fair value of the reporting unit goodwill with the
carrying amount of the goodwill. The impairment loss shall equal the excess of carrying
value over fair value.After each testing period, the third party compiles a summary of the test that is then
provided to the Audit and Risk Management Committee for review.SummaryManagement believes the accounting estimates related to the allowance for loan losses, the
capitalization, amortization, and valuation of mortgage servicing rights and the goodwill
impairment test are critical accounting estimates because: (1) the estimates are highly
susceptible to change from period to period because they require management to make
assumptions concerning the changes in the types and volumes of the portfolios, rates of
future prepayments, and anticipated economic conditions, and (2) the impact of recognizing
an impairment or loan loss could have a material effect on Camcos assets reported on the
balance sheet as well as its net earnings. Management has discussed the development and
selection of these critical accounting estimates with the Enterprise Risk and Audit
Committee of the Board of Directors and the Audit and Risk Management Committee has reviewed
Camcos disclosures relating to such matters in the quarterly Managements Discussion and
Analysis.
 10




---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  4.
    
    Earnings Per ShareBasic earnings per common share are computed based upon the weighted-average number of common shares outstanding
during the period. Diluted earnings per common share include the dilutive effect of additional potential common shares
issuable under the Corporations stock option plans. The computations are as follows:
 For the six months ended
    
    
    For the three months endedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006BASIC:Net Earnings
    
    $
    2,851
    
    
    $
    3,494
    
    
    $
    1,347
    
    
    $
    1,815Weighted average common shares outstanding
    
    
    7,425
    
    
    
    7,542
    
    
    
    7,392
    
    
    
    7,522Basic earnings per share
    
    $
    0.38
    
    
    $
    0.46
    
    
    $
    0.18
    
    
    $
    0.24DILUTED:Net Earnings
    
    $
    2 ,851
    
    
    $
    3,494
    
    
    $
    1,347
    
    
    $
    1,815Weighted average common shares outstanding
    
    
    7,425
    
    
    
    7,542
    
    
    
    7,392
    
    
    
    7,522Dilutive effect of stock options
    
    
    1
    
    
    
    4
    
    
    
    2
    
    
    
    3Total common shares and dilutive potential common shares
    
    
    7,426
    
    
    
    7,546
    
    
    
    7,394
    
    
    
    7,525Diluted earnings per share
    
    $
    0.38
    
    
    $
    0.46
    
    
    $
    0.18
    
    
    $
    0.24
  5.
    
    Stock Option PlansEffective January 1, 2006, the Corporation adopted SFAS No. 123R, Accounting for
Stock-Based Compensation, which contains a fair-value based method for valuing stock-based
compensation that measures compensation cost at the grant date based on the fair value of
the award. Compensation is then recognized over the service period, which is usually the
vesting period.The fair value of each option grant is estimated on the date of grant using the modified
Black-Scholes options-pricing model with the following assumptions used for grants during
2007 and 2006: dividend yield of 4.8% and 4.0%, respectively; expected volatility of 11.98%
and 15.16% respectively; a risk-free interest rate of 4.81% and 4.57% respectively, and an
expected life of ten years for all grants.
 11




---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  5.
    
    Stock Option Plans (continued)A summary of the status of the Corporations stock option plans as of June 30, 2007 and
December 31, 2006, and changes during the periods ending on those dates is presented below:
 Six months ended
    
    
    Year endedJune 30, 2007
    
    
    December 31, 2006Weighted-
    
    
    
    
    
    
    Weighted-average
    
    
    
    
    
    
    averageexercise
    
    
    
    
    
    
    exerciseShares
    
    
    price
    
    
    Shares
    
    
    priceOutstanding at beginning of period
    
    
    304,874
    
    
    $
    15.20
    
    
    
    224,636
    
    
    $
    15.71Granted
    
    
    26,920
    
    
    
    12.34
    
    
    
    87,013
    
    
    
    14.08Exercised
    
    
    
    
    
    
    
    
    
    
    (2,243
    )
    
    
    8.92Forfeited
    
    
    (6,079
    )
    
    
    14.82
    
    
    
    (4,532
    )
    
    
    15.23Outstanding at end of period
    
    
    325,715
    
    
    $
    15.07
    
    
    
    304,874
    
    
    $
    15.20Options exercisable at end of period
    
    
    257,944
    
    
    $
    15.19
    
    
    
    222,333
    
    
    $
    15.37Weighted-average fair value of
options granted during the period
    
    
    
    
    
    $
    1.19
    
    
    
    
    
    
    $
    2.09
  Number outstanding
    
    
    2,884Range of exercise prices
    
    
    $8.92  9.75Number outstanding
    
    
    122,618Range of exercise prices
    
    
    $11.36  14.16Number outstanding
    
    
    200,213Range of exercise prices
    
    
    $14.55  17.17Weighted-average exercise price
    
    
    $15.07Weighted-average remaining contractual life
    
    6.90 years
 6.
    
    Forward Looking StatementsCertain statements contained in this report that are not historical facts are forward
looking statements that are subject to certain risks and uncertainties. When used herein,
the terms anticipates, plans, expects, believes, and similar expressions as they
relate to Camco or its management are intended to identify such forward looking statements.
Camcos actual results, performance or achievements may materially differ from those
expressed or implied in the forward-looking statements. Risks and uncertainties that could
cause or contribute to such material differences include, but are not limited to, general
economic conditions, interest rate environment, competitive conditions in the financial
services industry, changes in law, governmental policies and regulations, and rapidly
changing technology affecting financial services.
 12




---



##### Table of Contents



Camco Financial Corporation
 
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
  Item 2. Managements Discussion and Analysis
 Overview:
    
    
    Loans receivable increased $4.9 million;
    
    While total deposits decreased $3.3 million, retail deposits increased by $1.7 million;
    
    Nonperforming assets increased $904,000 but remained at 2.04% of assets
    
    Net losses on REO totaled $339,000 primarily due to the sale of a single property;
    
    Net interest income increased as net interest margin improved;
    
    A new banking office was launched in London, Ohio;
    
    Camco committed to issuing $5.0 million of trust preferred securities to support its
previously announced share repurchase program and general corporate purposes; and
    
    A quarterly dividend of $0.15 per share was declared.
   :
  13




---



##### Table of Contents



Camco Financial Corporation
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
  Item 2. Managements Discussion and Analysis (continued)
 ©
 Discussion of Financial Condition Changes from December 31, 2006 to June 30, 2007
    1
 14




---



##### Table of Contents



Camco Financial Corporation
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
  Discussion of Financial Condition Changes from December 31, 2006 to June 30, 2007
       15




---



##### Table of Contents



Camco Financial Corporation
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  Discussion of Financial Condition Changes from December 31, 2006 to June 30, 2007
   Comparison of Results of Operations for the Six Months Ended June 30, 2007 and 2006
 General
  Interest Income
    16




---



##### Table of Contents



Camco Financial Corporation
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  Comparison of Results of Operations for the Six Months Ended June 30, 2007 and 2006
(continued)
 Interest Income (continued)
   Interest Expense
  Net Interest Income
   17




---



##### Table of Contents



Camco Financial Corporation
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  Comparison of Results of Operations for the Six Months Ended June 30, 2007 and 2006
(continued)
 AVERAGE BALANCE, YIELD, RATE AND VOLUME DATA
  For six months ended June 30,2007
    
    
    
    
    
    
    
    
    
    
    2006Average
    
    
    Interest
    
    
    Average
    
    
    Average
    
    
    Interest
    
    
    Averageoutstanding
    
    
    earned/
    
    
    yield/
    
    
    outstanding
    
    
    earned/
    
    
    yield/balance
    
    
    paid
    
    
    rate
    
    
    balance
    
    
    paid
    
    
    rate(Dollars in thousands)Interest-earning assets:Loans receivable (1)
    
    $
    835,076
    
    
    
    28,728
    
    
    
    6.88
    %
    
    $
    846,501
    
    
    $
    26,740
    
    
    
    6.32
    %Mortgage-backed securities (2)
    
    
    51,668
    
    
    
    1,093
    
    
    
    4.23
    
    
    
    61,136
    
    
    
    1,241
    
    
    
    4.06Investment securities (2)
    
    
    56,079
    
    
    
    1,240
    
    
    
    4.42
    
    
    
    51,285
    
    
    
    1,019
    
    
    
    3.97Interest-bearing deposits and other
interest-earning assets
    
    
    59,615
    
    
    
    1,663
    
    
    
    5.58
    
    
    
    63,114
    
    
    
    1,615
    
    
    
    5.12Total interest-earning assets
    
    $
    1,002,438
    
    
    
    32,724
    
    
    
    6.53
    
    
    $
    1,022,036
    
    
    
    30,615
    
    
    
    5.99Interest-bearing liabilities:Deposits
    
    $
    650,638
    
    
    
    12,334
    
    
    
    3.79
    
    
    $
    639,589
    
    
    
    9,532
    
    
    
    2.98FHLB advances
    
    
    258,725
    
    
    
    5,553
    
    
    
    4.29
    
    
    
    296,448
    
    
    
    5,849
    
    
    
    3.95Total interest-bearing liabilities
    
    $
    909,363
    
    
    
    17,887
    
    
    
    3.93
    
    
    $
    936,037
    
    
    
    15,381
    
    
    
    3.29Net interest income/Interest rate spread
    
    
    
    
    
    $
    14,837
    
    
    
    2.60
    %
    
    
    
    
    
    $
    15,234
    
    
    
    2.70
    %Net interest margin(3)
    
    
    
    
    
    
    
    
    
    
    2.96
    %
    
    
    
    
    
    
    
    
    
    
    2.98
    %Average interest-earning assets to average
interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    110.2
    %
    
    
    
    
    
    
    
    
    
    
    109.2
    %
 
 (1)
    
    Includes nonaccrual loans and loans held for sale.(2)
    
    Includes securities designated as available for sale.(3)
    
    Net interest income as a percent of average interest-earning assets. 18




---



##### Table of Contents



Camco Financial Corporation
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  Comparison of Results of Operations for the Six Months Ended June 30, 2007 and 2006
 Provision for Losses on Loans
  Other Income
    General, Administrative and Other Expense
   19




---



##### Table of Contents



Camco Financial Corporation
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  Comparison of Results of Operations for the Six Months Ended June 30, 2007 and 2006
 General, Administrative and Other Expense (continued)
   Federal Income Taxes
 3
 Comparison of Results of Operations for the Three Months Ended June 30, 2007 and 2006
 General
  20




---



##### Table of Contents



Camco Financial Corporation
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  Comparison of Results of Operations for the Three Months Ended June 30, 2007 and 2006
(continued)
 Interest Income
   Interest Expense
  Net Interest Income
  21




---



##### Table of Contents



Camco Financial Corporation
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  Comparison of Results of Operations for the Three Months Ended June 30, 2007 and 2006
 Provision for Losses on Loans
  Other Income
  General, Administrative and Other Expense
    22




---



##### Table of Contents



Camco Financial Corporation
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  Comparison of Results of Operations for the Three Months Ended June 30, 2007 and 2006
 Federal Income Taxes
  Liquidity and Capital Resources
      23




---



##### Table of Contents



Camco Financial Corporation
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 Liquidity and Capital Resources (continued)




Payments due by periodLess
    
    
    
    
    
    
    
    
    
    
    MoreThan
    
    
    1-3
    
    
    3-5
    
    
    Than1 year
    
    
    years
    
    
    years
    
    
    5 years
    
    
    Total(In thousands)Contractual obligations:Operating lease obligations
    
    $
    160
    
    
    $
    545
    
    
    $
    382
    
    
    $
    576
    
    
    $
    1,663Advances from the Federal Home Loan Bank
    
    
    95,437
    
    
    
    91,938
    
    
    
    13,666
    
    
    
    44,445
    
    
    
    245,486Certificates of deposit
    
    
    268,269
    
    
    
    134,633
    
    
    
    5,362
    
    
    
    895
    
    
    
    409,159Repurchase agreements
    
    
    13,168
    
    
    
    1,096
    
    
    
    
    
    
    
    
    
    
    
    14,264Ohio Equity Funds for Housing
    
    
    
    
    
    
    3,528
    
    
    
    785
    
    
    
    520
    
    
    
    4,833Amount of commitments expiration per periodCommitments to originate loans:Overdraft lines of credit
    
    $
    838
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    838Home equity lines of credit
    
    
    81,674
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    81,674Commercial lines of credit/loans in process
    
    
    27,890
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,890One- to four-family and multi-family loans
    
    
    18,962
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,962Non-residential real estate and land loans
    
    
    1,690
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,690Total contractual obligations
    
    $
    508,088
    
    
    $
    231,740
    
    
    $
    20,195
    
    
    $
    46,436
    
    
    $
    806,459


24



---



##### Table of Contents



Camco Financial Corporation
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  Liquidity and Capital Resources (continued)
   At June 30, 2007To be well-capitalized underFor capital
    
    prompt correctiveActual
    
    adequacy purposes
    
    action provisionsCamco:
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio(Dollars in thousands)Total capital
(to risk-weighted assets)
    
    $
    90,149
    
    
    
    12.07
    %
    
    
    3$60,341
    
    
    
    38.0
    %
    
    
    3$75,426
    
    
    
    310.0
    %Tier I capital
(to risk-weighted assets)
    
    $
    84,012
    
    
    
    11.14
    %
    
    
    3$30,170
    
    
    
    34.0
    %
    
    
    3$45,255
    
    
    
    3 6.0
    %Tier I leverage
    
    $
    84,012
    
    
    
    8.05
    %
    
    
    3$41,742
    
    
    
    34.0
    %
    
    
    3$52,177
    
    
    
    3 5.0
    %
 At June 30, 2007To be well-capitalized underFor capital
    
    prompt correctiveActual
    
    adequacy purposes
    
    action provisionsAdvantage:
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio(Dollars in thousands)Total capital
(to risk-weighted assets)
    
    $
    85,437
    
    
    
    11.47
    %
    
    
    3$60,235
    
    
    
    38.0
    %
    
    
    3$75,294
    
    
    
    310.0
    %Tier I capital
(to risk-weighted assets)
    
    $
    79,315
    
    
    
    10.53
    %
    
    
    3$30,118
    
    
    
    34.0
    %
    
    
    3$45,176
    
    
    
    3  6.0
    %Tier I leverage
    
    $
    79,315
    
    
    
    7.65
    %
    
    
    3$41,459
    
    
    
    34.0
    %
    
    
    3$51,824
    
    
    
    3  5.0
    %
  25




---



##### Table of Contents



Camco Financial Corporation
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  Liquidity and Capital Resources (continued)
  
 Quantitative and Qualitative Disclosures About Market Risk
     26




---



##### Table of Contents

\

Camco Financial Corporation
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  Quantitative and Qualitative Disclosures About Market Risk (continued)
   Change in
    
    Percentage Change inInterest Rates
    
    Net Interest Income(basis points)
    
    12 Months+200
    
    
    -11.42
    %+100
    
    
    -5.34
    %-100
    
    
    0.12
    %-200
    
    
    -0.50
    %
   Change inInterest Rates
    
    Percentage(basis points)
    
    change in EVE+200
    
    
    -5.44
    %+100
    
    
    -2.08
    %-100
    
    
    4.85
    %-200
    
    
    11.64
    %
 27




---



##### Table of Contents



Camco Financial Corporation
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  
 Controls and Procedures
   28




---



##### Table of Contents



ITEM 1.
    
    Legal Proceedings
  ITEM 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
   Total number ofshares purchased as
    
    
    Maximum Number ofpart of publicly
    
    
    Shares that May yetTotal number of
    
    
    Average price paid
    
    
    announced plans or
    
    
    be Purchased UnderPeriod of Repurchase
    
    
    shares purchased
    
    
    per share
    
    
    programs
    
    
    the ProgramApril 1  April 30
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,500
    
    
    
    
    362,902May 1  May 31
    
    
    
    38,061
    
    
    
    
    $12.46
    
    
    
    
    46,561
    
    
    
    
    324,841June 1  June 30
    
    
    
    53,650
    
    
    
    
    $12.48
    
    
    
    
    100,211
    
    
    
    
    271,191Total
    
    
    
    91,711
    
    
    
    
    $12.47
    
    
    
    
    100,211
    
    
    
    
    271,191
  ITEM 3.
    
    Defaults Upon Senior Securities
  ITEM 4.
    
    Submission of Matters to a Vote of Security Holders
  For
    
    WithheldTerry A. Feick
    
    
    5,347,880
    
    
    
    765,068Susan J. Insley
    
    
    5,356,291
    
    
    
    756,657Edward D. Goodyear
    
    
    5,359,195
    
    
    
    753,753J. Timothy Young
    
    
    5,345,798
    
    
    
    767,150
  ITEM 5.
    
    Other Information
  ITEM 6.
    
    Exhibits
 Exhibit 3(i)
    
    Third Restated Certificate of
Incorporation of Camco Financial
Corporation, as amended
    
    Incorporated by reference to Camcos
Annual Report on Form 10-K for the
fiscal year ended December 31, 1999,
Film no. 585779 (1999 Form 10-K),
Exhibit 3(i)Exhibit 3(ii)
    
    2003 Amended and Restated
By-Laws of Camco Financial
Corporation
    
    Incorporated by reference to Camcos
Annual Report on Form 10-K for the
fiscal year ended December 31, 2006,
Exhibit 3(ii)
 29




---



##### Table of Contents



Exhibit 10(i)
    
    Employment Agreement dated
January 1, 2001, by and between
Camco Financial Corporation and
Richard C. Baylor
    
    Incorporated by reference to Camcos
Annual Report on Form 10-K for the
fiscal year ended December 31, 2001,
Exhibit 10(i)Exhibit 10(ii)
    
    Line of Credit Agreement with
Key Bank
    
    Incorporated by reference to Camcos
form 10-Q for the quarters ended
9/30/06, Exhibit 10.(i)Exhibit 10(iii)
    
    Form of 2002 Salary Continuation
Agreement, including individualized
Schedule As for each participant
    
    Incorporated by reference to Camcos
 Annual Report on Form 10-K for the
fiscal year ended December 31, 2003
(2003 Form 10-K), Exhibit 10(iv)Exhibit 10(iv)
    
    Form of 1996 Salary Continuation
Agreement, including Schedule As
for D. Edward Rugg and Edward A.
Wright
    
    Incorporated by reference to Camcos
Annual Report on Form 10-K for the
fiscal year ended December 31, 2004
(2004 Form 10-K), Exhibit 10(iv)Exhibit 10(v)
    
    Form of Executive Deferred
Compensation Agreement
    
    Incorporated by reference to Camcos
2003 Form 10-K, Exhibit 10(vi)Exhibit 10(vi)
    
    First Ashland Financial Corporation
1995 Stock Option and Incentive Plan
    
    Incorporated by reference to Camcos
Form S-8 filed on June 10, 2002,
File Number 333-90142, Exhibit 4.01Exhibit 10(vii)
    
    Incentive Stock Option Award
Agreement Pursuant to the First
Ashland Financial Corporation
1995 Stock Option and Incentive
Plan
    
    Incorporated by reference to Camcos
Annual Report on Form 10-K for the
fiscal year ended December 31, 2004
(2004 Form 10-K), Exhibit 10(vii)Exhibit 10(viii)
    
    Non-Qualified Stock Option Award
Agreement Pursuant to the First
Ashland Financial Corporation
1995 Stock Option and Incentive
Plan
    
    Incorporated by reference to Camcos
Annual Report on Form 10-K for the
fiscal year ended Decmber 31, 2004
(2004 Form 10-K), Exhibit 10(viii)Exhibit 10(ix)
    
    Camco Financial Corporation 2002 Equity Incentive Plan
    
    Incorporated by reference to Camcos
Form S-8 filed on June 10, 2002, File
Number 333-90152, Exhibit 4.01Exhibit 10(x)
    
    Incentive Stock Option Award
Agreement Pursuant to the Camco
Financial Corporation 2002 Equity
and Incentive Plan
    
    Incorporated by reference to Camcos
Form 8K filed on February 2, 2005,
film no. 05570393 (2005 8-K),
Exhibit 10.5Exhibit 10(xi)
    
    Non-Qualified Stock Option Award
Agreement Pursuant to the Camco
Financial Corporation 2002 Equity
and Incentive Plan
    
    Incorporated by reference to Camcos
Annual Report on Form 10-K for the
fiscal year ended December 31, 2004
(2004 Form 10-K), Exhibit 10(xi)Exhibit 10(xii)
    
    Camco Financial Corporation 1995
Stock Option and Incentive Plan
    
    Incorporated by reference to Camcos
Form S-8 filed on June 10, 2002, File
Number 333-90166, Exhibit 4.01Exhibit 10(xiii)
    
    Westwood Homestead Financial
Corporation 1997 Stock Option Plan
    
    Incorporated by reference to Camcos
Form S-8 filed on January 5, 2000,
File Number 333-94113, Exhibit 4.01Exhibit 10(xiv)
    
    Incentive Stock Option Award
Agreement Pursuant to the Westwood
Homestead Financial Corporation
    
    Incorporated by reference to the 2005
8K, Exhibit 10.4
 30




---



##### Table of Contents



1997 Stock Option PlanExhibit 10(xv)
    
    Non-Qualified Stock Option Award
Agreement Pursuant to the Westwood
Homestead Financial Corporation
1997 Stock Option Plan
    
    Incorporated by reference to the 2005
8K, Exhibit 10.3Exhibit 10(xvi)
    
    Summary of Bonus Plan
    
    Incorporated by reference to Camcos
Annual Report on Form 10-K for the
Fiscal year ended 12/31/05, Exhibit
10(xvi)Exhibit 10(xvii)
    
    Change of Control Agreement
including Attachment A listing
participants
    
    Filed herewithExhibit 11
    
    Statement regarding computation of per share earnings (incorporated by reference to
Note 4 on pages 11 of this form 10-Q)Exhibit 31(i)
    
    Section 302 Certification by Chief Executive OfficerExhibit 31(ii)
    
    Section 302 Certification by Chief Financial OfficerExhibit 32(i)
    
    Section 1350 Certification by Chief Executive OfficerExhibit 32(ii)
    
    Section 1350 Certification by Chief Financial Officer
 31




---



##### Table of Contents



SIGNATURES
  CAMCO FINANCIAL CORPORATION
(Registrant)Date: August 6, 2007
    By:
    /s/ Richard C. BaylorRichard C. BaylorChief Executive OfficerDate: August 6, 2007
    By:
    /s/ Eric S. NadeauEric S. NadeauChief Financial Officer 32