##### 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 September 30, 2005
 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
    
    (I.R.S. Employer Identification Number)incorporation or organization)
  
    þ o
  þ o
  o þ




---



PagePART I    FINANCIAL INFORMATIONConsolidated Statements of Financial Condition
    
    
    3Consolidated Statements of Earnings
    
    
    4Consolidated Statements of Comprehensive Income
    
    
    5Consolidated Statements of Cash Flows
    
    
    6Notes to Consolidated Financial Statements
    
    
    8Managements Discussion and Analysis of
Financial Condition and Results of
Operations
    
    
    14Quantitative and Qualitative Disclosures about
Market Risk
    
    
    22Controls and Procedures
    
    
    24PART II   OTHER INFORMATION
    
    
    25SIGNATURES
    
    
    26EX-31.1EX-31.2EX-32.1EX-32.2
  2




---



##### Table of Contents



Camco Financial Corporation
 
 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
  September 30,
    
    
    December 31,2005
    
    
    2004ASSETSCash and due from banks
    
    $
    21,963
    
    
    $
    25,849Interest-bearing deposits in other financial institutions
    
    
    12,311
    
    
    
    17,045Cash and cash equivalents
    
    
    34,274
    
    
    
    42,894Investment securities available for sale  at market
    
    
    42,350
    
    
    
    19,839Investment securities held to maturity  at cost, approximate market
value of $1,155 and $4,174 as of September 30, 2005 and December 31,
2004, respectively
    
    
    1,120
    
    
    
    4,123Mortgage-backed securities available for sale  at market
    
    
    66,252
    
    
    
    80,321Mortgage-backed securities held to maturity  at cost, approximate market
value of $3,440 and $4,188 as of September 30, 2005 and December 31,
2004, respectively
    
    
    3,484
    
    
    
    4,416Loans held for sale  at lower of cost or market
    
    
    5,317
    
    
    
    2,837Loans receivable  net
    
    
    849,826
    
    
    
    833,829Office premises and equipment  net
    
    
    11,459
    
    
    
    11,647Real estate acquired through foreclosure
    
    
    2,061
    
    
    
    2,280Federal Home Loan Bank stock  at cost
    
    
    26,724
    
    
    
    25,797Accrued interest receivable
    
    
    4,889
    
    
    
    4,503Prepaid expenses and other assets
    
    
    1,760
    
    
    
    1,530Cash surrender value of life insurance
    
    
    20,605
    
    
    
    20,042Goodwill  net of accumulated amortization
    
    
    6,683
    
    
    
    6,736Prepaid federal income taxes
    
    
    516
    
    
    
    5,299Total assets
    
    $
    1,077,320
    
    
    $
    1,065,823LIABILITIES AND STOCKHOLDERS EQUITYDeposits
    
    $
    669,908
    
    
    $
    667,778Advances from the Federal Home Loan Bank and other borrowings
    
    
    305,211
    
    
    
    295,310Advances by borrowers for taxes and insurance
    
    
    2,152
    
    
    
    3,030Accounts payable and accrued liabilities
    
    
    5,356
    
    
    
    5,391Dividends payable
    
    
    1,105
    
    
    
    1,109Deferred federal income taxes
    
    
    3,222
    
    
    
    3,884Total liabilities
    
    
    986,954
    
    
    
    976,502Stockholders equityPreferred stock  $1 par value; authorized 100,000 shares; no shares outstanding
    
    
    
    
    
    
    Common stock  $1 par value; authorized 14,900,000 shares; 8,824,811 and
8,759,676 shares issued at September 30, 2005 and December 31, 2004, respectively
    
    
    8,825
    
    
    
    8,760Additional paid-in capital
    
    
    59,523
    
    
    
    58,935Retained earnings  substantially restricted
    
    
    41,201
    
    
    
    38,234Accumulated other comprehensive income  unrealized gains on
securities designated as available for sale, net of related tax effects
    
    
    (1,326
    )
    
    
    (263
    )Less 1,203,425 and 1,096,523 shares of treasury stock at September 30, 2005
and December 31, 2004, respectively  at cost
    
    
    (17,857
    )
    
    
    (16,345
    )Total stockholders equity
    
    
    90,366
    
    
    
    89,321Total liabilities and stockholders equity
    
    $
    1,077,320
    
    
    $
    1,065,823
 3




---



##### Table of Contents



Camco Financial Corporation
 
 CONSOLIDATED STATEMENTS OF EARNINGS
  Nine months ended
    
    
    Three months endedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Interest incomeLoans
    
    $
    37,002
    
    
    $
    34,744
    
    
    $
    12,729
    
    
    $
    11,860Mortgage-backed securities
    
    
    2,172
    
    
    
    2,231
    
    
    
    679
    
    
    
    833Investment securities
    
    
    800
    
    
    
    594
    
    
    
    358
    
    
    
    209Interest-bearing deposits and other
    
    
    1,947
    
    
    
    1,618
    
    
    
    689
    
    
    
    571Total interest income
    
    
    41,921
    
    
    
    39,187
    
    
    
    14,455
    
    
    
    13,473Interest expenseDeposits
    
    
    11,298
    
    
    
    10,222
    
    
    
    4,009
    
    
    
    3,570Borrowings
    
    
    8,173
    
    
    
    10,212
    
    
    
    2,893
    
    
    
    3,497Total interest expense
    
    
    19,471
    
    
    
    20,434
    
    
    
    6,902
    
    
    
    7,067Net interest income
    
    
    22,450
    
    
    
    18,753
    
    
    
    7,553
    
    
    
    6,406Provision for losses on loans
    
    
    960
    
    
    
    765
    
    
    
    360
    
    
    
    255Net interest income after provision
for losses on loans
    
    
    21,490
    
    
    
    17,988
    
    
    
    7,193
    
    
    
    6,151Other incomeLate charges, rent and other
    
    
    2,278
    
    
    
    1,863
    
    
    
    818
    
    
    
    623Loan servicing fees
    
    
    1,117
    
    
    
    1,138
    
    
    
    368
    
    
    
    373Service charges and other fees on deposits
    
    
    1,098
    
    
    
    1,006
    
    
    
    370
    
    
    
    407Gain on sale of loans
    
    
    564
    
    
    
    679
    
    
    
    215
    
    
    
    189Mortgage servicing rights  net
    
    
    (267
    )
    
    
    133
    
    
    
    (276
    )
    
    
    206Gain on sale of investment, mortgage-backed securities and fixed assets
    
    
    85
    
    
    
    110
    
    
    
    66
    
    
    
    10Gain (loss) on sale of real estate acquired through foreclosure
    
    
    16
    
    
    
    224
    
    
    
    (18
    )
    
    
    106Total other income
    
    
    4,883
    
    
    
    5,153
    
    
    
    1,543
    
    
    
    1,914General, administrative and other expenseEmployee compensation and benefits
    
    
    10,461
    
    
    
    10,162
    
    
    
    3,588
    
    
    
    3,308Deferred compensation (FAS 91)
    
    
    (1,678
    )
    
    
    (1,731
    )
    
    
    (580
    )
    
    
    (545
    )Occupancy and equipment
    
    
    2,340
    
    
    
    2,569
    
    
    
    780
    
    
    
    867Data processing
    
    
    995
    
    
    
    987
    
    
    
    317
    
    
    
    320Advertising
    
    
    877
    
    
    
    822
    
    
    
    345
    
    
    
    387Franchise taxes
    
    
    217
    
    
    
    791
    
    
    
    71
    
    
    
    283Other operating
    
    
    3,898
    
    
    
    3,691
    
    
    
    1,214
    
    
    
    1,307Total general, administrative and other expense
    
    
    17,110
    
    
    
    17,291
    
    
    
    5,735
    
    
    
    5,927Earnings before federal income taxes
    
    
    9,263
    
    
    
    5,850
    
    
    
    3,001
    
    
    
    2,138Federal income taxesCurrent
    
    
    3,081
    
    
    
    2,430
    
    
    
    1,028
    
    
    
    1,214Deferred
    
    
    (114
    )
    
    
    (614
    )
    
    
    (65
    )
    
    
    (544
    )Total federal income taxes
    
    
    2,967
    
    
    
    1,816
    
    
    
    963
    
    
    
    670NET EARNINGS
    
    $
    6,296
    
    
    $
    4,034
    
    
    $
    2,038
    
    
    $
    1,468EARNINGS PER SHAREBasic
    
    $
    0.82
    
    
    $
    0.54
    
    
    $
    0.27
    
    
    $
    0.20Diluted
    
    $
    0.82
    
    
    $
    0.54
    
    
    $
    0.27
    
    
    $
    0.19
 4




---



##### Table of Contents



Camco Financial Corporation
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
  Nine months ended
    
    
    Three months endedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net earnings
    
    $
    6,296
    
    
    $
    4,034
    
    
    $
    2,038
    
    
    $
    1,468Other comprehensive income, net of tax:Unrealized holding gains (losses) during the period, net of
related taxes (benefits) of $(521), $(54), $(356)and $707
for the nine and three months ended September 30,
2005 and 2004, respectively
    
    
    (1,012
    )
    
    
    (104
    )
    
    
    (691
    )
    
    
    1,367Reclassification adjustment for realized gains included in
net earnings, net of taxes of $27, $36, $22 and $3 for the
respective periods
    
    
    (51
    )
    
    
    (71
    )
    
    
    (44
    )
    
    
    (7
    )Comprehensive income
    
    $
    5,233
    
    
    $
    3,859
    
    
    $
    1,303
    
    
    $
    2,828
 5




---



##### Table of Contents



Camco Financial Corporation
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 2005
    
    
    2004Cash flows from operating activities:Net earnings for the period
    
    $
    6,296
    
    
    $
    4,034Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:Amortization of deferred loan origination fees
    
    
    57
    
    
    
    (56
    )Amortization of premiums and discounts on investment
and mortgage-backed securities  net
    
    
    374
    
    
    
    821Amortization of mortgage servicing rights  net
    
    
    973
    
    
    
    897Amortization of purchase accounting adjustments  net
    
    
    66
    
    
    
    67Depreciation and amortization
    
    
    911
    
    
    
    1,085Provision for losses on loans
    
    
    960
    
    
    
    765Gain on sale of real estate acquired through foreclosure
    
    
    (16
    )
    
    
    (224
    )Federal Home Loan Bank stock dividends
    
    
    (927
    )
    
    
    (759
    )Net increase in cash surrender value of life insurance
    
    
    (563
    )
    
    
    (521
    )Gain on sale of investment mortgage-backed securities and fixed assets
    
    
    (85
    )
    
    
    (110
    )Gain on sale of loans
    
    
    (564
    )
    
    
    (679
    )Loans originated for sale in the secondary market
    
    
    (52,577
    )
    
    
    (76,262
    )Proceeds from sale of loans in the secondary market
    
    
    50,661
    
    
    
    78,012Increase (decrease) in cash, net of London Financial acquisition, due to changes in:Accrued interest receivable
    
    
    (386
    )
    
    
    (138
    )Prepaid expenses and other assets
    
    
    (177
    )
    
    
    (231
    )Accrued interest and other liabilities
    
    
    61
    
    
    
    4,706Federal income taxes:Current
    
    
    4,783
    
    
    
    1,340Deferred
    
    
    (114
    )
    
    
    (614
    )Net cash provided by operating activities
    
    
    9,733
    
    
    
    12,133Cash flows provided by (used in) investing activities:Proceeds from maturities of investment securities
    
    
    10,014
    
    
    
    14,000Proceeds from sale of investment securities designated as available for sale
    
    
    174
    
    
    
    1,557Proceeds from sale of mortgage-backed securities designated as available for sale
    
    
    
    
    
    
    13,060Purchase of investment securities designated as available for sale
    
    
    (30,105
    )
    
    
    (13,997
    )Purchase of mortgage-backed securities designated as available for sale
    
    
    (3,349
    )
    
    
    (43,301
    )Purchase of loans
    
    
    (7,174
    )
    
    
    (26,712
    )Loan disbursements
    
    
    (243,132
    )
    
    
    (110,369
    )Principal repayments on loans
    
    
    230,585
    
    
    
    87,585Principal repayments on mortgage-backed securities
    
    
    16,589
    
    
    
    24,442Purchase of office premises and equipment
    
    
    (724
    )
    
    
    (530
    )Proceeds from sales of real estate acquired through foreclosure
    
    
    1,922
    
    
    
    3,750Additions to real estate acquired through foreclosure
    
    
    (19
    )
    
    
    (29
    )Purchase of cash surrender value of life insurance
    
    
    
    
    
    
    (1,539
    )Net cash paid for London Financial acquisition
    
    
    
    
    
    
    (1,769
    )Net cash used in investing activities
    
    
    (25,219
    )
    
    
    (53,852
    )Net cash provided by (used in) operating and investing activities
(subtotal carried forward)
    
    
    (15,486
    )
    
    
    (41,719
    )
 6




---



##### Table of Contents



Camco Financial Corporation
 CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
 
 2005
    
    
    2004Net cash
provided by (used in) operating and investing activities (subtotal brought forward)
    
    $
    (15,486
    )
    
    $
    (41,719
    )Cash flows provided by (used in) financing activities:Net increase (decrease) in deposits
    
    
    2,130
    
    
    
    12,412Proceeds from Federal Home Loan Bank advances
    
    
    41,204
    
    
    
    36,650Repayment of Federal Home Loan Bank advances and other borrowings
    
    
    (31,303
    )
    
    
    (11,666
    )Dividends paid on common stock
    
    
    (3,329
    )
    
    
    (3,198
    )Purchase of treasury stock
    
    
    (1,512
    )
    
    
    Proceeds from exercise of stock options
    
    
    554
    
    
    
    317Advances by borrowers for taxes and insurance
    
    
    (878
    )
    
    
    (1,216
    )Net cash used in financing activities
    
    
    6,866
    
    
    
    33,299Net decrease in cash and cash equivalents
    
    
    (8,620
    )
    
    
    (8,420
    )Cash and cash equivalents at beginning of period
    
    
    42,894
    
    
    
    53,711Cash and cash equivalents at end of period
    
    $
    34,274
    
    
    $
    45,291Supplemental disclosure of cash flow information:Cash paid during the period for:Interest on deposits and borrowings
    
    $
    19,502
    
    
    $
    20,508Income taxes
    
    $
    (1,802
    )
    
    $
    1,712Supplemental disclosure of noncash investing activities:Transfers from mortgage loans to real estate acquired
through foreclosure
    
    $
    2,743
    
    
    $
    5,594Unrealized losses on securities designated as available for sale
    
    $
    (1,357
    )
    
    $
    (175
    )Recognition of mortgage servicing rights in
accordance with SFAS No. 140
    
    $
    706
    
    
    $
    1,030Issuance of loans upon sale of real estate acquired through foreclosure
    
    $
    1,075
    
    
    $
    1,053Dividends
declared but unpaid  see balance sheet
    
    $
    1,105
    
    
    $
    1,108Fair value of assets acquired in London Financial transaction
    
    
    
    
    
    $
    54,441Less fair value of liabilities assumed
    
    
    
    
    
    
    (50,371
    )Goodwill assigned in acquisition
    
    $
    
    
    
    $
    4,070Supplemental noncash financing activities:Common stock issued in acquisition of London Financial
    
    $
    
    
    
    $
    3,551
 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, 2004. 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
nine- and three-month periods ended September 30, 2005, 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 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 judgement 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 losses inherent in the loan portfolio. Managements evaluation of the
adequacy of the allowance is an estimate based on managements current judgement about the
credit quality of the loan portfolio. While the Corporation strives to reflect all known
risk factors in its evaluations, judgment errors may occur.Mortgage Servicing RightsTo determine the fair value of its mortgage servicing rights (MSRs) each reporting
quarter, the Corporation transmits information to a third party provider, representing
individual loan information in each pooling period accompanied by escrow amounts. The
poolings are totaled by year through 2001 and quarterly thereafter. The third party then
evaluates the possible impairment of MSRs as described below.Servicing assets are recognized as separate assets when loans are sold with servicing
retained. A pooling methodology to the servicing valuation, 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, net interest earned on
escrow balances, miscellaneous income and costs to service the loans. The present value of
future earnings is the estimated market 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 net interest earned on escrow
balances, 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
mortgage servicing rights are marked to lower of amortized cost or market 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 these
valuation techniques takes 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 Committee for review. As of the most recent testing date, June 30,
2005, the fair value of the reporting unit exceeded its carrying amount.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 Audit Committee of the Board of
Directors and the Audit Committee has reviewed Camcos disclosures relating to such matters
in the quarterly Managements Discussion and Analysis.
 10




---



##### Table of Contents



Camco Financial Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  4.
    
    Earnings Per ShareBasic earnings per common share is 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 nine months ended
    
    For the three months endedSeptember 30,
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    2004Weighted-average common shares
outstanding (basic)
    
    
    7,656,515
    
    
    
    7,406,017
    
    
    
    7,632,132
    
    
    
    7,513,890Dilutive effect of assumed exercise
of stock options
    
    
    6,311
    
    
    
    51,472
    
    
    
    6,977
    
    
    
    46,026Weighted-average common shares
outstanding (diluted)
    
    
    7,662,826
    
    
    
    7,457,489
    
    
    
    7,639,109
    
    
    
    7,559,916
 Options to purchase 207,771 and 80,789 shares of common stock with respective
weighted-average exercise prices of $16.08 and $16.40 were outstanding at September 30, 2005
and 2004, respectively, but were excluded from the computation of common share equivalents
for the nine and three month periods then ended, because the exercise prices were greater
than the average market price of the common shares.5.
    
    Stock Option PlansThe Corporation accounts for its stock option plans in accordance with SFAS No. 123,
Accounting for Stock-Based Compensation, which contains a fair-value based method for
valuing stock-based compensation that entities may use, 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. Alternatively, SFAS No. 123
permits entities to continue to account for stock options and similar equity instruments
under Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to
Employees. Entities that continue to account for stock options using APB Opinion No. 25
are required to make pro forma disclosures of net earnings and earnings per share, as if the
fair-value based method of accounting defined in SFAS No. 123 had been applied.
 11




---



##### Table of Contents



Camco Financial Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  5.
    
    Stock Option Plans (continued)The Corporation utilizes APB Opinion No. 25 and related Interpretations in accounting for
its stock option plans. Accordingly, no compensation cost has been recognized for the
plans. Had compensation cost for the Corporations stock option plans been determined based
on the fair value at the grant dates for awards under the plans consistent with the
accounting method utilized in SFAS No. 123, the Corporations net earnings and earnings per
share for the nine and three-month periods ended September 30, 2005 and 2004, would have
been reported as the pro forma amounts indicated below:
 Nine months ended
    
    
    Three months endedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net earnings (In thousands)
    
    As reported
    
    $
    6,296
    
    
    $
    4,034
    
    
    $
    2,038
    
    
    $
    1,468Stock-based compensation, net of tax
    
    
    (64
    )
    
    
    (21
    )
    
    
    (21
    )
    
    
    (7
    )Pro-forma
    
    $
    6,232
    
    
    $
    4,013
    
    
    $
    2,017
    
    
    $
    1,461Earnings per shareBasic
    
    As reported
    
    $
    .82
    
    
    $
    .54
    
    
    $
    .27
    
    
    $
    .20Stock-based compensation, net of tax
    
    
    (.01
    )
    
    
    
    
    
    
    (.01
    )
    
    
    (.01
    )Pro-forma
    
    $
    .81
    
    
    $
    .54
    
    
    $
    .26
    
    
    $
    .19Diluted
    
    As reported
    
    $
    .82
    
    
    $
    .54
    
    
    $
    .27
    
    
    $
    .19Stock-based compensation, net of tax
    
    
    (.01
    )
    
    
    
    
    
    
    (.01
    )
    
    
    Pro-forma
    
    $
    .81
    
    
    $
    .54
    
    
    $
    .26
    
    
    $
    .19
 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 2005 and 2004: dividend yield of 3.80% and 3.40%, respectively; expected volatility
of 18.76% and 21.44% respectively; a risk-free interest rate of 4.22% and 4.11%
respectively; and an expected life of ten years for all grants.
 12




---



##### Table of Contents



Camco Financial Corporation
 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 September 30, 2005 and
December 31, 2004, and changes during the periods ending on those dates is presented below:
 Nine months ended
    
    
    Year endedSeptember 30,
    
    
    December 31,2005
    
    
    2004Weighted-
    
    
    
    
    
    
    Weighted-average
    
    
    
    
    
    
    averageexercise
    
    
    
    
    
    
    exerciseShares
    
    
    price
    
    
    Shares
    
    
    priceOutstanding at beginning of year
    
    
    218,324
    
    
    $
    12.91
    
    
    
    257,072
    
    
    $
    12.11Granted
    
    
    87,240
    
    
    
    16.51
    
    
    
    17,705
    
    
    
    17.17Exercised
    
    
    (65,134
    )
    
    
    8.51
    
    
    
    (52,911
    )
    
    
    8.83Forfeited
    
    
    (10,766
    )
    
    
    12.85
    
    
    
    (3,542
    )
    
    
    15.03Outstanding at end of period
    
    
    229,664
    
    
    $
    15.53
    
    
    
    218,324
    
    
    $
    12.91Options exercisable at period end
    
    
    143,333
    
    
    $
    14.97
    
    
    
    175,542
    
    
    $
    12.05Weighted-average fair value of
options granted during the period
    
    
    
    
    
    $
    2.89
    
    
    
    
    
    
    $
    3.59The following information applies to options outstanding at September 30, 2005:Number outstanding
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,783Range of exercise prices
    
    
    
    
    
    
    
    
    
    
    
    
    

    $
    7.40  8.94Number outstanding
    
    
    
    
    
    
    
    
   
    
   
    
    
    
    8,000Range of exercise prices
    
    
    
    
    
    
    
    
    
    
    
   
    

    $
    9.75  11.36Number outstanding
    
    
    
    
    
    
    
    
   
    
   
    
    
    
    49,356Range of exercise prices

    
    
    
    
    
    
    
    
   
    
   
    
    
    $
    12.50  14.65Number outstanding
    
    
    
    
    
    
    
    
    
    
   
    
   
    
    164,525Range of exercise prices
    
    
    
    
    
    
    
    
   
    
   
    
    
    $
    16.13  17.17Weighted-average exercise price
    
    
    
    
    
    
    
    
   
    
   
   
    
    $
    15.53Weighted-average remaining contractual life
    
    
    
    
    
    
    
    
   
    
   
   
    
    6.9 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.
 13




---



##### 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, 2004 to September 30, 2005
      14




---



##### 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, 2004 to September 30, 2005
     At September 30, 2005Camco:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    To be well-capitalized underFor capital
    
    
    prompt correctiveActual
    
    
    adequacy purposes
    
    
    action provisionsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio(Dollars in thousands)Total capital
(to risk-weighted assets)
    
    $
    90,982
    
    
    
    12.37
    %
    
    
    3$58,842
    
    
    
    38.0
    %
    
    Not ApplicableTier I capital
(to risk-weighted assets)
    
    $
    84,340
    
    
    
    11.47
    %
    
    
    3$29,421
    
    
    
    34.0
    %
    
    Not ApplicableTier I leverage
    
    $
    84,340
    
    
    
    7.85
    %
    
    
    3$42,976
    
    
    
    34.0
    %
    
    Not Applicable
 Advantage:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    To be well-capitalized underFor capital
    
    
    prompt correctiveActual
    
    
    adequacy purposes
    
    
    action provisionsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio(Dollars in
thousands)Total capital
(to risk-weighted assets)
    
    $
    81,721
    
    
    
    11.13
    %
    
    
    3$58,725
    
    
    
    38.0
    %
    
    
    3$73,407
    
    
    
    310.0
    %Tier I capital
(to risk-weighted assets)
    
    $
    75,079
    
    
    
    10.23
    %
    
    
    3$29,363
    
    
    
    34.0
    %
    
    
    3$44,044
    
    
    
    3  6.0
    %Tier I leverage
    
    $
    75,079
    
    
    
    7.06
    %
    
    
    3$42,556
    
    
    
    34.0
    %
    
    
    3$53,196
    
    
    
    3  5.0
    %
 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, 2004 to September 30, 2005
  Comparison of Results of Operations for the Nine Months Ended September 30, 2005 and 2004
 General
  Net Interest Income
  AVERAGE BALANCE, YIELD, RATE AND VOLUME DATA
  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 Nine Months Ended September 30, 2005 and 2004
(continued)
 For nine months ended September 30,2005
    
    
    
    
    
    
    
    
    
    
    2004Average
    
    
    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)
    
    $
    846,438
    
    
    $
    37,002
    
    
    
    5.83
    %
    
    $
    838,075
    
    
    $
    34,744
    
    
    
    5.53
    %Mortgage-backed securities (2)
    
    
    77,962
    
    
    
    2,172
    
    
    
    3.71
    
    
    
    90,804
    
    
    
    2,231
    
    
    
    3.28Investment securities (2)
    
    
    31,402
    
    
    
    800
    
    
    
    3.40
    
    
    
    27,846
    
    
    
    594
    
    
    
    2.84Interest-bearing deposits and other
interest-earning assets
    
    
    59,546
    
    
    
    1,947
    
    
    
    4.36
    
    
    
    62,519
    
    
    
    1,618
    
    
    
    3.45Total interest-earning assets
    
    $
    1,015,348
    
    
    
    41,921
    
    
    
    5.50
    
    
    $
    1,019,244
    
    
    
    39,187
    
    
    
    5.13Interest-bearing liabilities:Deposits
    
    $
    643,639
    
    
    
    11,298
    
    
    
    2.34
    
    
    $
    660,720
    
    
    
    10,222
    
    
    
    2.06FHLB advances
    
    
    295,692
    
    
    
    8,173
    
    
    
    3.69
    
    
    
    278,471
    
    
    
    10,212
    
    
    
    4.89Total interest-bearing liabilities
    
    $
    939,331
    
    
    
    19,471
    
    
    
    2.76
    
    
    $
    939,191
    
    
    
    20,434
    
    
    
    2.90Net interest income/Interest rate spread
    
    
    
    
    
    $
    22,450
    
    
    
    2.74
    %
    
    
    
    
    
    $
    18,753
    
    
    
    2.23
    %Net interest margin(3)
    
    
    
    
    
    
    
    
    
    
    2.95
    %
    
    
    
    
    
    
    
    
    
    
    2.45
    %Average interest-earning assets to average
interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    108.1
    %
    
    
    
    
    
    
    
    
    
    
    108.5
    %
 
 (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  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 Nine Months Ended September 30, 2005 and
2004
   Provision for Losses on Loans
  Other Income
  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 Nine Months Ended September 30,
2005 and 2004
 General,
Administrative and Other Expense
  Federal Income Taxes
  Comparison of Results of Operations for the Three Months Ended September 30, 2005 and 2004
 General
  Net Interest Income
  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 Three Months Ended September 30, 2005 and 2004
 Net Interest Income
    Provision for Losses on Loans
  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 September 30, 2005 and 2004
 Other Income
  General, Administrative and Other Expense
  Federal Income Taxes
  21




---



##### Table of Contents



Camco Financial Corporation
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  Liquidity and Capital Resources
    Payments due by periodLess
    
    
    
    
    
    
    
    
    
    
    Morethan
    
    
    1-3
    
    
    3-5
    
    
    than1 year
    
    
    years
    
    
    years
    
    
    5 years
    
    
    Total(In thousands)Contractual obligations:Operating lease obligations
    
    $
    197
    
    
    $
    303
    
    
    $
    150
    
    
    $
    332
    
    
    $
    982Advances from the
Federal Home Loan
    
    
    83,000
    
    
    
    76,939
    
    
    
    63,713
    
    
    
    80,355
    
    
    
    304,007Certificates of deposit
    
    
    228,817
    
    
    
    122,702
    
    
    
    37,708
    
    
    
    1,162
    
    
    
    390,389Amount of commitments expiring per periodCommitments to originate loans:Overdraft lines of credit
    
    
    704
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    704Home equity lines of credit
    
    
    70,227
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    70,227Commercial lines of credit
    
    
    16,593
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,593One- to four-family and multi-family loans
    
    
    9,634
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,634Non-residential real estate and land loans
    
    
    98
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    98Total contractual obligations
    
    $
    409,270
    
    
    $
    199,944
    
    
    $
    101,571
    
    
    $
    81,849
    
    
    $
    792,634
 
 Quantitative and Qualitative Disclosures about Market Risk
   22




---



##### Table of Contents



Camco Financial Corporation
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
      Change in
    
    Percentage Change inInterest Rates
    
    Net Interest Income(basis points)
    
    12 Months+200
    
    
    - 2.0
    %-200
    
    
    -11.3
    %
   Change inInterest Rates(basis points)
    
    EVE Ratio+200
    
    
    6.49
    %0
    
    
    7.92
    %-200
    
    
    8.07
    %
 23




---



##### Table of Contents



Camco Financial Corporation
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
   
 Controls and Procedures
   24




---



##### Table of Contents



ITEM 1.
    
    Legal ProceedingsNot applicableITEM 2.
    
    Unregistered Sales of Equity
Securities and Use of ProceedsAll purchases of shares during the quarter related to the 5% stock repurchase program
announced April 26, 2005.
 Maximum Numberof Shares that MayNumber of shares
    
    Average price paid
    
    yet be PurchasedPeriod of Repurchase
    
    purchased
    
    per share
    
    Under the ProgramJuly 1  31
    
    
    5,000
    
    
    $
    14.07
    
    
    
    333,937August 1  31
    
    
    37,000
    
    
    $
    14.49
    
    
    
    296,937September 1  30
    
    
    19,900
    
    
    $
    14.24
    
    
    
    277,037Total
    
    
    61,900
    
    
    $
    14.37
    
    
    
    277,037
 ITEM 3.
    
    Defaults Upon Senior SecuritiesNot applicableITEM 4.
    
    Submission of Matters to a Vote of Security HoldersNot applicableITEM 5.
    
    Other InformationNot applicableITEM 6.
    
    ExhibitsExhibits:
 Exhibit 31.1
    
    Rule 13a-14(a)/15d-14(a) Certification by Chief Executive OfficerExhibit 31.2
    
    Rule 13a-14(a)/15d-14(a) Certification by Chief Financial OfficerExhibit 32.1
    
    Section 1350 certification by Chief Executive OfficerExhibit 32.2
    
    Section 1350 certification by Chief Financial Officer
 25




---



##### Table of Contents



SIGNATURES
  Date: November 5, 2005
    
    By:
    
    /s/Richard C. BaylorRichard C. BaylorChief Executive OfficerDate: November 5, 2005
    
    By:
    
    /s/Mark A. SeversonMark A. SeversonChief Financial Officer
 26