##### Table of Contents



FORM 10-Q/A
 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, 2010
 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 o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o
 o þ




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##### 



PageExplanatory Note
    
    
    3PART I    FINANCIAL INFORMATIONConsolidated Statements of Financial Condition
    
    
    5Consolidated Statements of Earnings
    
    
    6Consolidated Statements of Comprehensive Income (Loss)
    
    
    7Consolidated Statements of Cash Flows
    
    
    8Notes to Consolidated Financial Statements
    
    
    10Managements Discussion and Analysis of
Financial Condition and Results of
Operations
    
    
    19Quantitative and Qualitative Disclosures about
Market Risk
    
    
    35Controls and Procedures
    
    
    36PART II   OTHER INFORMATION
    
    
    37SIGNATURES
    
    
    41Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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##### Table of Contents



Camco Financial Corporation
 Quarterly Report on Form 10-Q/A for the period ended June 30, 2010
 
     
    
    The Companys net loss after tax for the three months ended June 30, 2010, is $4.1
million compared to earnings of $219,000. Loss per basic share for the second quarter of
2010 is $(.57), compared to the originally reported earnings per share of $.03. Due to the
adjustments to the financial results for the second quarter of 2010, the Companys after
tax net loss for the six months ended June 30, 2010, is $4.0 million compared to net
earnings of $348,000. Loss per basic share for the six months ended 2010 is $(.55),
compared to the originally reported basic earnings per share of $.05.
    
    The provision for losses on loans for the second quarter of 2010 increased from $894,000
to $5.2 million. As a result of the increased provision for loan losses, the allowance for
loan losses as of June 30, 2010 increased to $15.7 million, or 36.8% of non performing
loans, compared to the originally reported amount of $11.4 million, or 26.6% of non
performing loans.
    
    Loans receivable net declined to $675.9 million from the previously reported level of
$680.2 million and total assets declined to $840.1 million from the previously reported
level of $844.4 million.
    
    Total stockholders equity at June 30, 2010 declined $4.3 million to $56.9 million from
$61.2 million.
  See
  3




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Camco Financial Corporation
 Quarterly Report on Form 10-Q/A for the period ended June 30, 2010
     4




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##### Table of Contents



Camco Financial Corporation
 
 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 June 30,
    
    
    December 31,2010
    
    
    2009(unaudited)(As Restated)ASSETSCash and due from banks
    
    $
    18,033
    
    
    $
    20,490Interest-bearing deposits in other financial institutions
    
    
    15,534
    
    
    
    17,663Cash and cash equivalents
    
    
    33,567
    
    
    
    38,153Securities available for sale, at fair value
    
    
    38,396
    
    
    
    55,950Securities held to maturity, at cost, approximate fair value of $2,828 and
$2,200 as of June 30, 2010 and December 31, 2009, respectively
    
    
    2,742
    
    
    
    2,113Loans held for sale  at lower of cost or fair value
    
    
    1,669
    
    
    
    475Loans receivable  net
    
    
    675,920
    
    
    
    659,022Office premises and equipment  net
    
    
    10,450
    
    
    
    10,870Real estate acquired through foreclosure
    
    
    10,599
    
    
    
    9,660Federal Home Loan Bank stock  at cost
    
    
    29,888
    
    
    
    29,888Accrued interest receivable
    
    
    3,659
    
    
    
    3,979Mortgage servicing rights  at lower of cost or fair value
    
    
    4,339
    
    
    
    4,433Prepaid expenses and other assets
    
    
    5,420
    
    
    
    5,712Cash surrender value of life insurance
    
    
    19,029
    
    
    
    18,838Prepaid and refundable federal income taxes
    
    
    4,384
    
    
    
    3,562Total assets
    
    $
    840,062
    
    
    $
    842,655LIABILITIES AND STOCKHOLDERS EQUITYDeposits
    
    $
    652,872
    
    
    $
    659,902Other Borrowings
    
    
    11,879
    
    
    
    11,941Advances from the Federal Home Loan Bank and other borrowings
    
    
    108,111
    
    
    
    97,291Advances by borrowers for taxes and insurance
    
    
    145
    
    
    
    1,909Accounts payable and accrued liabilities
    
    
    10,149
    
    
    
    11,098Total liabilities
    
    
    783,156
    
    
    
    782,141Commitments
    
    
    
    
    
    
    Stockholders equity:Preferred stock  $1 par value; authorized 100,000 shares; no shares outstanding
    
    
    
    
    
    
    Common stock  $1 par value; authorized 14,900,000 shares; 8,884,509 shares
issued at June 30, 2010 and December 31, 2009
    
    
    8,885
    
    
    
    8,885Additional paid-in capital
    
    
    60,262
    
    
    
    60,124Retained earnings
    
    
    10,725
    
    
    
    14,695Accumulated other comprehensive income net of related tax effects
    
    
    1,242
    
    
    
    1,049Unearned compensation; 50,000 shares
    
    
    (94
    )
    
    
    (125
    )Treasury stock  1,678,913 shares at June 30, 2010 and December 31, 2009, at cost
    
    
    (24,114
    )
    
    
    (24,114
    )Total stockholders equity
    
    
    56,906
    
    
    
    60,514Total liabilities and stockholders equity
    
    $
    840,062
    
    
    $
    842,655
  5




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Camco Financial Corporation
 
 CONSOLIDATED STATEMENTS OF EARNINGS
  Six months ended
    
    
    Three months endedJune 30,
    
    
    June 30,(unaudited)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009(As Restated)
    
    
    
    
    
    (As Restated)Interest incomeLoans
    
    $
    18,561
    
    
    $
    20,613
    
    
    $
    9,281
    
    
    $
    10,046Investment securities
    
    
    1,073
    
    
    
    1,819
    
    
    
    495
    
    
    
    844Other interest-earning accounts and dividends
    
    
    673
    
    
    
    689
    
    
    
    333
    
    
    
    344Total interest and dividend income
    
    
    20,307
    
    
    
    23,121
    
    
    
    10,109
    
    
    
    11,234Interest expenseDeposits
    
    
    5,689
    
    
    
    8,420
    
    
    
    2,744
    
    
    
    3,948Borrowings
    
    
    1,989
    
    
    
    2,971
    
    
    
    992
    
    
    
    1,402Total interest expense
    
    
    7,678
    
    
    
    11,391
    
    
    
    3,736
    
    
    
    5,350Net interest income
    
    
    12,629
    
    
    
    11,730
    
    
    
    6,373
    
    
    
    5,884Provision for losses on loans
    
    
    6,117
    
    
    
    1,438
    
    
    
    5,212
    
    
    
    790Net interest income after provision for losses on loans
    
    
    6,512
    
    
    
    10,292
    
    
    
    1,161
    
    
    
    5,094Other incomeRent and other
    
    
    737
    
    
    
    982
    
    
    
    328
    
    
    
    521Loan servicing fees
    
    
    637
    
    
    
    632
    
    
    
    320
    
    
    
    316Service charges and other fees on deposits
    
    
    1,116
    
    
    
    1,071
    
    
    
    598
    
    
    
    570Gain on sale of loans
    
    
    490
    
    
    
    773
    
    
    
    261
    
    
    
    404Mortgage servicing rights  Net
    
    
    (94
    )
    
    
    269
    
    
    
    (124
    )
    
    
    209Income on cash surrender value life insurance
    
    
    435
    
    
    
    494
    
    
    
    220
    
    
    
    238Gain on sale of mortgage-backed securities and fixed assets
    
    
    (1
    )
    
    
    4
    
    
    
    (1
    )
    
    
    4Total other income
    
    
    3,320
    
    
    
    4,225
    
    
    
    1,602
    
    
    
    2,262General, administrative and other expenseEmployee compensation and benefits
    
    
    6,654
    
    
    
    6,540
    
    
    
    3,269
    
    
    
    3,064Occupancy and equipment
    
    
    1,485
    
    
    
    1,543
    
    
    
    743
    
    
    
    761Federal deposit insurance premium
    
    
    1,036
    
    
    
    1,061
    
    
    
    558
    
    
    
    779Data processing
    
    
    566
    
    
    
    614
    
    
    
    286
    
    
    
    307Advertising
    
    
    170
    
    
    
    297
    
    
    
    89
    
    
    
    125Franchise taxes
    
    
    534
    
    
    
    582
    
    
    
    269
    
    
    
    314Postage, supplies and office expenses
    
    
    567
    
    
    
    687
    
    
    
    274
    
    
    
    327Travel, training and insurance
    
    
    176
    
    
    
    138
    
    
    
    98
    
    
    
    73Professional services
    
    
    1,171
    
    
    
    858
    
    
    
    596
    
    
    
    414Real estate owned and other expenses
    
    
    831
    
    
    
    829
    
    
    
    409
    
    
    
    555Loan and deposit expenses
    
    
    727
    
    
    
    748
    
    
    
    384
    
    
    
    174Total general, administrative and other expenses
    
    
    13,917
    
    
    
    13,897
    
    
    
    6,975
    
    
    
    6,893Earnings (loss) before federal income tax expense
(benefit)
    
    
    (4,085
    )
    
    
    620
    
    
    
    (4,212
    )
    
    
    463Total federal income tax expense (benefit)
    
    
    (115
    )
    
    
    383
    
    
    
    (113
    )
    
    
    461NET EARNINGS (LOSS)
    
    $
    (3,970
    )
    
    $
    237
    
    
    $
    (4,099
    )
    
    $
    2EARNINGS (LOSS) PER SHAREBasic
    
    $
    (.55
    )
    
    $
    .03
    
    
    $
    (.57
    )
    
    $
    .00Diluted
    
    $
    (.55
    )
    
    $
    .03
    
    
    $
    .(.56
    )
    
    $
    .00Dividends declared per share
    
    
    .00
    
    
    
    .02
    
    
    
    .00
    
    
    
    .01
  6




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Camco Financial Corporation
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
  Six months ended
    
    
    Three months endedJune 30,
    
    
    June 30,(unaudited)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009(As Restated)
    
    
    
    
    
    (As Restated)Net earnings (loss)
    
    $
    (3,970
    )
    
    $
    237
    
    
    $
    (4,099
    )
    
    $
    2Other comprehensive income, net of tax:Unrealized holding gains (losses) during the period,
net of tax effects $99 and$(8), $64 and $(122)
for the respective periods
    
    
    193
    
    
    
    (16
    )
    
    
    125
    
    
    
    (237
    )Comprehensive income (loss)
    
    $
    (3,777
    )
    
    $
    221
    
    
    $
    (3,974
    )
    
    $
    (235
    )
  7




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##### Table of Contents



Camco Financial Corporation
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 (unaudited)
    
    2010
    
    
    2009(As Restated)Cash flows from operating activities:Net earnings (loss) for the period
    
    $
    (3,970
    )
    
    $
    237Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities:Amortization of deferred loan origination fees
    
    
    67
    
    
    
    242Amortization of premiums and discounts on investment and
mortgage-backed securities  net
    
    
    8
    
    
    
    (30
    )Amortization of mortgage servicing rights  net
    
    
    546
    
    
    
    459Depreciation and amortization
    
    
    628
    
    
    
    546Provision for losses on loans
    
    
    6,117
    
    
    
    1,438Stock option expense
    
    
    138
    
    
    
    228Provision for losses on REO
    
    
    192
    
    
    
    321Loss on sale of real estate acquired through foreclosure
    
    
    30
    
    
    
    15Restricted stock / unearned compensation
    
    
    31
    
    
    
    31(Gain) loss on sale of investments and fixed assets
    
    
    1
    
    
    
    (4
    )Gain on sale of loans
    
    
    (490
    )
    
    
    (773
    )Loans originated for sale in the secondary market
    
    
    (29,293
    )
    
    
    (71,732
    )Proceeds from sale of loans in the secondary market
    
    
    28,589
    
    
    
    69,320Net increase in cash surrender value of life insurance
    
    
    (351
    )
    
    
    (411
    )Increase (decrease) in cash due to changes in:Accrued interest receivable
    
    
    320
    
    
    
    412Prepaid expenses and other assets
    
    
    (629
    )
    
    
    (229
    )Accrued interest and other liabilities
    
    
    (949
    )
    
    
    (943
    )Net cash provided by (used in) operating activities
    
    
    985
    
    
    
    (873
    )Cash flows provided by (used in) investing activities:Principal repayments, maturities on securities held to maturity
    
    
    195
    
    
    
    11,224Principal repayments, maturities on securities available for sale
    
    
    17,842
    
    
    
    33,396Purchase of investment securities designated as available for sale
    
    
    
    
    
    
    (24,019
    )Purchase of investment securities designated as held to maturity
    
    
    (828
    )
    
    
    Loan principal repayments
    
    
    73,863
    
    
    
    111,338Loan disbursements and purchased loans
    
    
    (100,079
    )
    
    
    (55,964
    )Proceeds from sale of office premises and equipment
    
    
    10
    
    
    
    4Proceeds from surrender of bank owned life insurance
    
    
    160
    
    
    
    4,460Additions to office premises and equipment
    
    
    (219
    )
    
    
    (106
    )Proceeds from sale of real estate acquired through foreclosure
    
    
    1,521
    
    
    
    2,514Net cash provided by (used in) investing activities
    
    
    (7,535
    )
    
    
    82,847Net cash provided by (used in) operating and investing activities
(balance carried forward)
    
    
    (6,550
    )
    
    
    81,974
  8




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##### Table of Contents



Camco Financial Corporation
 CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
 
 (unaudited)
    
    2010
    
    
    2009(As Restated)Net cash provided by (used in) operating and investing activities
(balance brought forward)
    
    $
    (6,550
    )
    
    $
    81,974Cash flows used in financing activities:Net increase (decrease) in deposits
    
    
    (7,030
    )
    
    
    (12,353
    )Proceeds from Federal Home Loan Bank advances and other borrowings
    
    
    87,606
    
    
    
    22,000Repayment of Federal Home Loan Bank advances and other borrowings
    
    
    (76,848
    )
    
    
    (59,397
    )Dividends paid on common stock
    
    
    
    
    
    
    (144
    )Decrease in advances by borrowers for taxes and insurance
    
    
    (1,764
    )
    
    
    (2,239
    )Net cash provided by (used in) financing activities
    
    
    1,964
    
    
    
    (52,133
    )Increase (decrease) in cash and cash equivalents
    
    
    (4,586
    )
    
    
    29,841Cash and cash equivalents at beginning of period
    
    
    38,153
    
    
    
    52,285Cash and cash equivalents at end of period
    
    $
    33,567
    
    
    $
    82,126Supplemental disclosure of cash flow information:Cash paid during the period for interest on deposits and borrowings
    
    $
    7,690
    
    
    $
    11,509Cash received for income taxes
    
    $
    
    
    
    $
    806Supplemental disclosure of noncash investing activities:Recognition of mortgage-servicing rights
    
    $
    358
    
    
    $
    728Transfer of loans to real estate acquired through foreclosure
    
    $
    2,682
    
    
    $
    3,289
  9




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##### Table of Contents



Camco Financial Corporation
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  1.
    
    Basis of Presentation
  2.
    
    Loans and Related Allowance for Loan Losses:
   3.
    
    Principles of Consolidation
  Critical Accounting Policies
 Material estimates that are particularly susceptible to significant change in the near term
relate to the determination of the allowance for loan losses and the valuation of mortgage
servicing rights. 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 and interpretation of relevant
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.The allowance is regularly reviewed by management to determine whether the amount is
considered adequate to absorb probable, incurred losses inherent in the loan portfolio at
the balance sheet dates presented. Our evaluation of the adequacy of the allowance for loan
losses is an estimate based on managements current judgment about the credit
  10




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##### Table of Contents



Camco Financial Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Allowance for Loan Losses (continued)
  Mortgage Servicing Rights
    Deferred Income Taxes
   11




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##### Table of Contents



Camco Financial Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  4.
    
    Earnings Per Share
  For the six months ended
    
    
    For the three months endedJune 30,
    
    
    June 30,In thousands, except per share data
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009As Restated
    
    
    
    
    
    RestatedBASIC:Net Earnings (loss)
    
    $
    (3,970
    )
    
    $
    237
    
    
    $
    (4,099
    )
    
    $
    2Weighted average common shares outstanding
    
    
    7,206
    
    
    
    7,199
    
    
    
    7,206
    
    
    
    7,206Basic earnings (loss) per share
    
    $
    (.55
    )
    
    $
    .03
    
    
    $
    (.57
    )
    
    $
    .00DILUTED:Net Earnings (loss)
    
    $
    (3,970
    )
    
    $
    237
    
    
    $
    (4,099
    )
    
    $
    2Weighted average common shares outstanding
    
    
    7,206
    
    
    
    7,199
    
    
    
    7,206
    
    
    
    7,206Dilutive effect of stock options
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    6Total common shares and dilutive potential
common shares
    
    
    7,206
    
    
    
    7,200
    
    
    
    7,206
    
    
    
    7,212Earnings (loss) per share  Diluted
    
    $
    (.55
    )
    
    $
    .03
    
    
    $
    (.56
    )
    
    $
    .00
   5.
    
    Stock Option Plans
   2010
    
    
    2009Fair value, calculated
    
    $
    1.65
    
    
    $
    1.43Exercise Price
    
    $
    2.51
    
    
    $
    2.46Risk-free interest rate
    
    
    3.61
    %
    
    
    2.66
    %Expected stock price volatility
    
    
    51.62
    %
    
    
    61.00
    %Expected dividend yield
    
    
    
    
    
    
    1.63
    %Expected Life
    
    10 years
    
    
    10 years
  12




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Camco Financial Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  5.
    
    Stock Option Plans (continued)
  Six months ended
    
    
    Year endedJune 30,
    
    
    December 31,2010
    
    
    2009Weighted-
    
    
    
    
    
    
    Weighted-average
    
    
    
    
    
    
    averageexercise
    
    
    
    
    
    
    exerciseShares
    
    
    price
    
    
    Shares
    
    
    priceOutstanding at beginning of period
    
    
    260,833
    
    
    $
    10.59
    
    
    
    260,703
    
    
    $
    14.11Granted
    
    
    260,729
    
    
    
    2.51
    
    
    
    80,000
    
    
    
    2.46Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited or Expired
    
    
    (41,470
    )
    
    
    15.27
    
    
    
    (79,870
    )
    
    
    13.96Outstanding at end of period
    
    
    480,092
    
    
    $
    5.80
    
    
    
    260,833
    
    
    $
    10.59Options exercisable at end of period
    
    
    259,029
    
    
    $
    8.24
    
    
    
    235,451
    
    
    $
    10.54Weighted-average fair value of
options granted during the period
    
    
    
    
    
    $
    1.65
    
    
    
    
    
    
    $
    1.43
  Options Outstanding
    
    
    Options ExercisableWeighted-Average
    
    
    Weighted-
    
    
    
    
    
    
    Weighted-Remaining
    
    
    Average
    
    
    
    
    
    
    AverageRange of Exercise
    
    
    Number
    
    
    Contractual
    
    
    Exercise
    
    
    Number
    
    
    ExercisePrices
    
    
    Outstanding
    
    
    Life (Years)
    
    
    Price
    
    
    Exercisable
    
    
    Price$1.89 - $2.51
    
    
    
    340,729
    
    
    
    9.4
    
    
    
    2.50
    
    
    
    132,117
    
    
    
    2.48$8.92 - $9.75
    
    
    
    24,014
    
    
    
    6.8
    
    
    
    9.00
    
    
    
    15,394
    
    
    
    9.05$11.36 - $14.16
    
    
    
    59,474
    
    
    
    5.3
    
    
    
    13.37
    
    
    
    55,643
    
    
    
    13.45$14.55 - $17.17
    
    
    
    55,875
    
    
    
    3.9
    
    
    
    16.45
    
    
    
    55,875
    
    
    
    16.45480,092
    
    
    
    8.1
    
    
    
    5.80
    
    
    
    259,029
    
    
    
    8.24
 6.
    
    Fair Value of Financial Instruments   13




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##### Table of Contents



Camco Financial Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  6.
    
    Fair Value of Financial Instruments (continued)
  Cash and Cash Equivalents
 Investment Securities
 Loans Held for Sale:
 Loans Receivable
 Federal Home Loan Bank stock
 Accrued Interest Receivable and Payable:
 Deposits
 Advances from the Federal Home Loan Bank
 Repurchase Agreements:
 Subordinated debentures:
 Advances by Borrowers for Taxes and Insurance
 Commitments to Extend Credit
  14




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##### Table of Contents



Camco Financial Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  6.
    
    Fair Value of Financial Instruments (continued)
  June 30, 2010
    
    
    December 31, 2009Carrying
    
    
    
    
    
    
    Carrying
    
    
    Fairvalue
    
    
    Fair value
    
    
    value
    
    
    value(As Restated)
    
    
    (As Restated)(In thousands)Financial assetsCash and cash equivalents
    
    $
    33,567
    
    
    $
    33,567
    
    
    $
    38,153
    
    
    $
    38,153Investment securities available for sale
    
    
    38,396
    
    
    
    38,396
    
    
    
    55,950
    
    
    
    55,950Investment securities held to maturity
    
    
    2,742
    
    
    
    2,828
    
    
    
    2,113
    
    
    
    2,200Loans held for sale
    
    
    1,669
    
    
    
    1,698
    
    
    
    475
    
    
    
    485Loans receivable
    
    
    675,920
    
    
    
    657,637
    
    
    
    659,022
    
    
    
    646,990Federal Home Loan Bank stock
    
    
    29,888
    
    
    
    29,888
    
    
    
    29,888
    
    
    
    29,888Accrued interest receivable
    
    
    3,659
    
    
    
    3,659
    
    
    
    3,979
    
    
    
    3,979Financial liabilitiesDeposits
    
    
    652,872
    
    
    
    638,722
    
    
    
    659,902
    
    
    
    647,149Advances from the Federal Home Loan Bank
    
    
    108,111
    
    
    
    113,458
    
    
    
    97,291
    
    
    
    101,924Repurchase agreements
    
    
    6,879
    
    
    
    6,879
    
    
    
    6,941
    
    
    
    6,941Subordinated debentures
    
    
    5,000
    
    
    
    4,799
    
    
    
    5,000
    
    
    
    4,768Advances by borrowers for taxes and insurance
    
    
    145
    
    
    
    145
    
    
    
    1,909
    
    
    
    1,909Accrued interest payable
    
    
    1,646
    
    
    
    1,646
    
    
    
    1,669
    
    
    
    1,669
       15




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##### Table of Contents



Camco Financial Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  6.
    
    Fair Value of Financial Instruments (continued)
  Fair Value Measurements at Reporting DateUsing(in thousands)
    
    June 30, 2010
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Securities available for sale:U.S. government sponsored enterprises
    
    $
    4,083
    
    
    $
    
    
    
    $
    4,083
    
    
    $
    Corporate equity securities
    
    
    96
    
    
    
    
    
    
    
    96
    
    
    
    Mortgage-backed securities
    
    
    34,217
    
    
    
    
    
    
    
    34,217
    
    
    
    
  Fair Value Measurements at Reporting Date UsingChange in fair valueBalance @
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    for the period(in thousands)
    
    June 30, 2010
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    endedImpaired loans
    
    $
    30,236
    
    
    
    
    
    
    
    
    
    
    $
    30,236
    
    
    $
    1,820Real estate acquired through foreclosure
    
    
    10,599
    
    
    
    
    
    
    
    
    
    
    
    10,599
    
    
    
    122Balance @December 31, 2009Impaired loans
    
    $
    25,982
    
    
    
    
    
    
    
    
    
    
    $
    25,982
    
    
    $
    13,081Real estate acquired through foreclosure
    
    
    9,660
    
    
    
    
    
    
    
    
    
    
    
    9,660
    
    
    
    945
      16




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##### Table of Contents



Camco Financial Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  7.
    
    Recent Accounting Pronouncements
  8.
    
    Restatement of Previously Issued Financial Statement
  Previously
    
    
    Effect ofAs a result of the restatement, the following line items were adjusted:
    
    Restated
    
    
    Reported
    
    
    ChangeConsolidated Balance Sheet at June 30, 2010 (unaudited):Loans receivable  net
    
    $
    675,920
    
    
    $
    680,238
    
    
    $
    (4,318
    )Total assets
    
    
    840,062
    
    
    
    844,380
    
    
    
    (4,318
    )Retained earnings
    
    
    10,725
    
    
    
    15,043
    
    
    
    (4,318
    )Total stockholders equity
    
    
    56,906
    
    
    
    61,224
    
    
    
    (4,318
    )Total liabilities and stockholders equity
    
    
    840,062
    
    
    
    844,380
    
    
    
    (4,318
    )Consolidated Statements of Operations (unaudited)
Three Months ended June 30, 2010Provision for losses on loans
    
    $
    5,212
    
    
    $
    894
    
    
    $
    4,318Net interest income after provision for losses on loans
    
    
    1,161
    
    
    
    5,479
    
    
    
    4,318Earnings (Loss) before federal income tax expenses (benefit)
    
    
    (4,212
    )
    
    
    106
    
    
    
    (4,318
    )Net earnings (loss)
    
    
    (4,099
    )
    
    
    219
    
    
    
    (4,318
    )Comprehensive income (loss)
    
    
    (3,974
    )
    
    
    344
    
    
    
    (4,318
    )Earnings (loss) per shareBasic
    
    
    (.57
    )
    
    
    .03
    
    
    
    (.60
    )Diluted
    
    
    (.57
    )
    
    
    .03
    
    
    
    (.60
    )Consolidated Statements of Operations (unaudited)
Six Months ended June 30, 2010Provision for losses on loans
    
    $
    6,117
    
    
    $
    1,799
    
    
    $
    4,318Net interest income after provision for losses on loans
    
    
    6,512
    
    
    
    10,830
    
    
    
    4,318Earnings (loss) before federal income tax expenses (benefit)
    
    
    (4,085
    )
    
    
    233
    
    
    
    (4,318
    )Net earrings (loss)
    
    
    (3,970
    )
    
    
    348
    
    
    
    (4,318
    )Comprehensive income (loss)
    
    
    (3,777
    )
    
    
    541
    
    
    
    (4,318
    )Earnings (loss) per shareBasic
    
    
    (.55
    )
    
    
    .05
    
    
    
    (.58
    )Diluted
    
    
    (.55
    )
    
    
    .05
    
    
    
    (.58
    )Consolidated Statements of Cash Flows (unaudited)
Six Months Ended June 30, 2010Net earnings (loss) for the period
    
    $
    (3,970
    )
    
    $
    348
    
    
    $
    (4,318
    )Provision for losses on loans
    
    
    6,117
    
    
    
    1,799
    
    
    
    4,318
  17




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##### Table of Contents



Camco Financial Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  8.
    
    Restatement of Previously Issued Financial Statement (continued)
 Previously
    
    
    Effect ofAs a result of the restatement, the following line items were adjusted:
    
    Restated
    
    
    Reported
    
    
    ChangeNonaccrual and delinquent loansAllowance for loan losses
    
    $
    15,676
    
    
    $
    11,358
    
    
    $
    4,318Non performing assets to total assets
    
    
    6.34
    %
    
    
    6.31
    %
    
    
    .03
    %ALLL as a percent of nonperforming loans
    
    
    36.8
    %
    
    
    26.6
    %
    
    
    10.2
    %Fair Value of Financial InstrumentsCarrying amount
    
    $
    675,920
    
    
    $
    680,238
    
    
    $
    (4,318
    )Fair value
    
    
    657,637
    
    
    
    662,238
    
    
    
    (4,601
    )Regulatory Capital  Camco Financial CorporationTotal capital to risk-weighted assets
    
    
    10.46
    %
    
    
    11.05
    %
    
    
    (.59
    )%Tier 1 capital to risk-weighted assets
    
    
    9.20
    %
    
    
    9.80
    %
    
    
    (.60
    )%Tier 1 leverage to average assets
    
    
    7.05
    %
    
    
    7.56
    %
    
    
    (.51
    )%Regulatory Capital  Advantage BankTotal capital to risk-weighted assets
    
    
    9.80
    %
    
    
    10.39
    %
    
    
    (.59
    )%Tier 1 capital to risk-weighted assets
    
    
    8.54
    %
    
    
    9.14
    %
    
    
    (.60
    )%Tier 1 leverage to average assets
    
    
    6.56
    %
    
    
    7.07
    %
    
    
    (.51
    )%Average Balances, Yield, Rate and Volume Data
Three Months Ended June 30, 2010Noninterest-earning assets
    
    $
    98,182
    
    
    $
    99,262
    
    
    $
    (1,080
    )Total average assets
    
    
    849,729
    
    
    
    850,809
    
    
    
    (1,080
    )Total average shareholders equity
    
    
    59,946
    
    
    
    61,026
    
    
    
    (1,080
    )Total liabilities and shareholders equity
    
    
    849,729
    
    
    
    850,809
    
    
    
    (1,080
    )Average Balances, Yield, Rate and Volume Data
Six Months Ended June 30, 2010Noninterest-earning assets
    
    $
    90,781
    
    
    $
    91,398
    
    
    $
    (617
    )Total average assets
    
    
    851,362
    
    
    
    851,979
    
    
    
    (617
    )Total average shareholders equity
    
    
    60,223
    
    
    
    60,840
    
    
    
    (617
    )Total liabilities and shareholders equity
    
    
    851,362
    
    
    
    851,979
    
    
    
    (617
    )
   18




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operation
 Forward Looking Statements
  
    
    anticipated changes in industry conditions created by state and federal legislation and
regulations;
    
    anticipated changes in general interest rates and the impact of future interest rate
changes on our profitability, capital adequacy and the fair value of our financial assets
and liabilities;
    
    retention of our existing customer base and our ability to attract new customers;
    
    the development of new products and services and their success in the marketplace;
    
    the adequacy of the allowance for loan losses; and
    
    statements regarding our anticipated loan and deposit account growth, expense levels,
liquidity and capital resources and projections of earnings.
  
    
    competition in the industry and markets in which we operate;
    
    levels of nonperforming assets;
    
    changes in general interest rates;
    
    loan demand;
    
    rapid changes in technology affecting the financial services industry;
    
    real estate values;
    
    changes in government regulation; and
    
    general economic and business conditions.
 Overview
    
    
    Loans receivable increased $16.9 million as a result of strong commercial lending
efforts
    
    Total delinquencies have decreased $2.1 million
    
    Net Interest Margin increased to 3.32% from 2.91% at December 31, 2009
    
    Total deposits decreased $7.0 million, primarily due to the decrease in wholesale
certificates of deposit
  19




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##### Table of Contents



Discussion of Financial Condition Changes from December 31, 2009 to June 30, 2010
        20




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##### Table of Contents



Discussion of Financial Condition Changes from December 31, 2009 to June 30, 2010
(continued)
   June 30,
    
    
    December 31,2010
    
    
    200930  89 days
    
    
    30  89 daysdelinquent
    
    
    delinquentResidential
    
    $
    3,893
    
    
    $
    4,818Multifamily
    
    
    1,539
    
    
    
    79Non Residential
    
    
    273
    
    
    
    2,693Construction / development
    
    
    5
    
    
    
    534Commercial
    
    
    261
    
    
    
    92HELOC and second mortgage
    
    
    1,962
    
    
    
    2,020Consumer and other
    
    
    147
    
    
    
    77Total
    
    $
    8,080
    
    
    $
    10,313
       21




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##### Table of Contents



Discussion of Financial Condition Changes from December 31, 2009 to June 30, 2010
(continued)
   June 30,
    
    
    March 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,(As Restated)
    
    2010
    
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007(Dollars in thousands)Loans accounted for on nonaccrual basis:Real estate:Residential(1)
    
    $
    25,282
    
    
    
    21,287
    
    
    $
    19,190
    
    
    $
    20,616
    
    
    $
    8,411Multi-family
    
    
    2,133
    
    
    
    2,430
    
    
    
    2,341
    
    
    
    3,139
    
    
    
    871Nonresidential
    
    
    7,994
    
    
    
    7,747
    
    
    
    3,857
    
    
    
    18,057
    
    
    
    6,908Construction
    
    
    4,175
    
    
    
    4,587
    
    
    
    4,382
    
    
    
    8,603
    
    
    
    5,568Commercial
    
    
    542
    
    
    
    3,297
    
    
    
    515
    
    
    
    1,393
    
    
    
    455Home equity lines of credit
    
    
    2,384
    
    
    
    2,624
    
    
    
    2,415
    
    
    
    1,549
    
    
    
    925Consumer and other
    
    
    133
    
    
    
    145
    
    
    
    148
    
    
    
    127
    
    
    
    857Total nonaccrual loans
    
    
    42,643
    
    
    
    42,117
    
    
    
    32,848
    
    
    
    53,484
    
    
    
    23,995Accruing loans delinquent three months or moreReal estate:Residential
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44
    
    
    
    1,520Multi-family
    
    
    
    
    
    
    155
    
    
    
    
    
    
    
    
    
    
    
    Nonresidential
    
    
    
    
    
    
    192
    
    
    
    2,853
    
    
    
    
    
    
    
    Construction
    
    
    
    
    
    
    745
    
    
    
    638
    
    
    
    
    
    
    
    Commercial
    
    
    
    
    
    
    110
    
    
    
    110
    
    
    
    
    
    
    
    Total loans 90 days past due and accruing
    
    
    
    
    
    
    1,202
    
    
    
    3,601
    
    
    
    44
    
    
    
    1,520Total nonperforming loans
    
    
    42,643
    
    
    
    43,319
    
    
    
    36,449
    
    
    
    53,528
    
    
    
    25,515Other real estate owned
    
    
    10,599
    
    
    
    10,373
    
    
    
    9,660
    
    
    
    5,841
    
    
    
    5,034Total nonperforming assets
    
    $
    53,242
    
    
    
    53,692
    
    
    $
    46,109
    
    
    $
    59,369
    
    
    $
    30,549Allowance for loan losses
    
    $
    15,676
    
    
    
    15,821
    
    
    $
    16,099
    
    
    $
    15,747
    
    
    $
    6,623Nonperforming loans as a percent of total net loans (2)
    
    
    6.15
    %
    
    
    6.18
    %
    
    
    5.40
    %
    
    
    6.91
    %
    
    
    3.13
    %Nonperforming assets to total assets
    
    
    6.34
    %
    
    
    6.16
    %
    
    
    5.19
    %
    
    
    5.93
    %
    
    
    2.99
    %Allowances for loan losses as a percent of nonperforming loans
    
    
    36.8
    %
    
    
    36.5
    %
    
    
    44.2
    %
    
    
    29.4
    %
    
    
    26.0
    %Memo section:Troubled debt restructuringsLoans and leases restructured and in compliance with modified terms
    
    $
    3,721
    
    
    
    17,894
    
    
    $
    16,645
    
    
    
    11,440
    
    
    
    Loans and leases restructured and not in compliance with modified terms (included in non-accrual)
    
    $
    16,792
    
    
    
    9,978
    
    
    $
    4,783
    
    
    
    12,882
    
    
    
    
 (1)
    
    Includes loans secured by first and junior liens(2)
    
    Includes loans held for sale.   22




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##### Table of Contents



Discussion of Financial Condition Changes from December 31, 2009 to June 30, 2010
   June 30,
    
    
    December 31,(As Restated)
    
    2010
    
    
    2009(Dollars in thousands)Balance at beginning of year
    
    $
    16,099
    
    
    $
    15,747Charge-offs:1-4 family residential real estate (1)
    
    
    2,740
    
    
    
    8,267Multifamily & nonresidential real estate
    
    
    706
    
    
    
    9,664Other Construction and Land
    
    
    400
    
    
    
    2,484Consumer
    
    
    9
    
    
    
    20Commercial
    
    
    3,059
    
    
    
    2,052Agriculture Loans
    
    
    
    
    
    
    41Overdraft Protection
    
    
    4
    
    
    
    18Total charge-offs
    
    
    6,918
    
    
    
    22,546Recoveries:1-4 family residential real estate (1)
    
    
    170
    
    
    
    445Multifamily & nonresidential real estate
    
    
    97
    
    
    
    621Other Construction and Land
    
    
    3
    
    
    
    Consumer
    
    
    
    
    
    
    Commercial
    
    
    102
    
    
    
    22Agriculture Loans
    
    
    2
    
    
    
    Overdraft Protection
    
    
    4
    
    
    
    18Total recoveries
    
    
    378
    
    
    
    1,106Net (charge-offs) recoveries
    
    
    6,540
    
    
    
    21,440Provision for losses on loans
    
    
    6,117
    
    
    
    21,792Balance at end of period
    
    $
    15,676
    
    
    $
    16,099
 (1)
    
    Includes home equity lines of credit    23




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##### Table of Contents



Discussion of Financial Condition Changes from December 31, 2009 to June 30, 2010
  June 30, 2010
    
    
    December 31, 2009
    
    
    ChangeBalance
    
    
    Rate
    
    
    Balance
    
    
    Rate
    
    
    Balance
    
    
    RateNoninterest-bearing demand
    
    $
    42,095
    
    
    
    0.00
    %
    
    $
    38,911
    
    
    
    0.00
    %
    
    $
    3,184
    
    
    
    0.00
    %Interest-bearing demand
    
    
    61,983
    
    
    
    0.32
    
    
    
    70,564
    
    
    
    0.43
    
    
    
    (8,581
    )
    
    
    (0.11
    )Money market
    
    
    94,934
    
    
    
    0.68
    
    
    
    96,172
    
    
    
    0.68
    
    
    
    (1,238
    )
    
    
    0.00Savings
    
    
    39,117
    
    
    
    0.25
    
    
    
    36,638
    
    
    
    0.25
    
    
    
    2,479
    
    
    
    0.00Certificates of deposit  retail
    
    
    393,944
    
    
    
    2.28
    
    
    
    385,622
    
    
    
    2.70
    
    
    
    8,322
    
    
    
    (0.42
    )Certificates of deposit  brokered
    
    
    20,799
    
    
    
    3.34
    
    
    
    31,995
    
    
    
    3.19
    
    
    
    (11,196
    )
    
    
    0.15Total deposits
    
    $
    652,872
    
    
    
    1.62
    %
    
    $
    659,902
    
    
    
    1.89
    %
    
    $
    (7,030
    )
    
    
    (0.27
    )%
     Comparison of Results of Operations for the Six Months Ended June 30, 2010 and 2009
  Net Interest Income
   24




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##### Table of Contents



Comparison of Results of Operations for the Six Months Ended June 30, 2010 and 2009
(continued)
 AVERAGE BALANCE, YIELD, RATE AND VOLUME DATA
  2010
    
    
    2009Six Months Ended June 30,
    
    Average
    
    
    Interest
    
    
    Average
    
    
    Average
    
    
    Interest
    
    
    Average(Dollars in thousands)
    
    outstanding
    
    
    earned
    
    
    yield/
    
    
    outstanding
    
    
    earned
    
    
    yield/(As Restated)
    
    balance
    
    
    / paid
    
    
    rate
    
    
    balance
    
    
    / paid
    
    
    rateInterest-earning assets:Loans receivable (1)
    
    $
    653,612
    
    
    $
    18,561
    
    
    
    5.67
    %
    
    $
    688,140
    
    
    $
    20,613
    
    
    
    5.99
    %Securities
    
    
    50,149
    
    
    
    1,073
    
    
    
    4.28
    %
    
    
    89,560
    
    
    
    1,819
    
    
    
    4.06
    %FHLB stock
    
    
    29,888
    
    
    
    671
    
    
    
    4.49
    %
    
    
    29,888
    
    
    
    670
    
    
    
    4.48
    %Other Interest-bearing
accounts
    
    
    26,932
    
    
    
    2
    
    
    
    0.01
    %
    
    
    58,579
    
    
    
    19
    
    
    
    0.06
    %Total interest-earning assets
    
    
    760,581
    
    
    
    20,307
    
    
    
    5.34
    %
    
    
    866,167
    
    
    
    23,121
    
    
    
    5.34
    %Noninterest-earning assets (2)
    
    
    90,781
    
    
    
    
    
    
    
    
    
    
    
    107,011Total average assets
    
    $
    851,362
    
    
    
    
    
    
    
    
    
    
    $
    973,178Interest-bearing liabilities:Deposits
    
    $
    611,745
    
    
    
    5,689
    
    
    
    1.86
    %
    
    $
    683,191
    
    
    
    8,420
    
    
    
    2.46
    %FHLB advances and other
    
    
    124,813
    
    
    
    1,989
    
    
    
    3.19
    %
    
    
    166,656
    
    
    
    2,971
    
    
    
    3.57
    %Total interest-bearing liabilities
    
    
    736,558
    
    
    
    7,678
    
    
    
    2.08
    %
    
    
    849,847
    
    
    
    11,391
    
    
    
    2.68
    %Noninterest-bearing deposits
    
    
    41,399
    
    
    
    
    
    
    
    
    
    
    
    37,975Noninterest-bearing liabilities
    
    
    13,182
    
    
    
    
    
    
    
    
    
    
    
    13,30151,276Total average liabilities
    
    
    791,139
    
    
    
    
    
    
    
    
    
    
    
    901,123Total average shareholders equity
    
    
    60,223
    
    
    
    
    
    
    
    
    
    
    
    72,055Total liabilities and shareholders equity
    
    $
    851,362
    
    
    
    
    
    
    
    
    
    
    $
    973,178Net interest income/Interest rate spread
    
    
    
    
    
    $
    12,629
    
    
    
    3.26
    %
    
    
    
    
    
    $
    11,730
    
    
    
    2.66
    %Net interest margin (3)
    
    
    
    
    
    
    
    
    
    
    3.32
    %
    
    
    
    
    
    
    
    
    
    
    2.71
    %Average interest-earning assets to average interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    103.3
    %
    
    
    
    
    
    
    
    
    
    
    101.9
    %
 (1)
    
    Includes loans held for sale. Loan fees are immaterial.(2)
    
    Includes nonaccrual loans, mortgage servicing rights and allowance for loan losses(3)
    
    Net interest income as a percent of average interest-earning assets  25




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##### Table of Contents



Comparison of Results of Operations for the Six Months Ended June 30, 2010 and 2009
(continued)
      Provision for Losses on Loans
     26




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##### Table of Contents



Comparison of Results of Operations for the Six Months Ended June 30, 2010 and 2009 (continued)
    
    
    Based on policy, a loan is typically deemed nonperforming once it has gone over 90 days
delinquent. A review process is completed to determine whether the loan is impaired. Our
management of the troubled credit will vary as will the timing of valuations, loan loss
provision and charge offs based on a multitude of factors such as, cash flow of the
business/borrower, responsiveness of the borrower, communication with the commercial banker,
property inspections, property deterioration, and delinquency. Typically, a nonperforming,
non-homogeneous collateral dependent loan will be valued and adjusted (if needed) within a 90
day period after determination of impairment. If impaired, the collateral is then evaluated
and an updated appraisal is most typically ordered. Upon receipt of an appraisal or other
valuation, we complete an analysis to determine if the impaired loan requires a specific
reserve.
 
    
    Camcos credit risk management process consistently monitors key performance metrics across
both the performing and non performing assets to identify any further degradation of credit
quality. Additionally, impaired credits are monitored in weekly loan committee asset quality
discussions, monthly Asset Classification Committee meetings and quarterly loan loss reserve
reviews. Exposure projections are completed on a monthly basis to ensure that the current
status of the troubled asset is understood and reported to the Board of Directors.
 
    
    The Asset Classification Committee oversees the management of all impaired loans and any
subsequent loss provision or charge off that is considered. When a loan is deemed impaired,
the valuation is obtained to determine any loss that may be present as of the valuation date.
Policy dictates that any differences from fair market value, less costs to sell, are to be
recognized as loss during the current period (loan loss provision or charge off). Any
deviations from this policy will be identified by amount and contributing reasons for the
policy departure during our quarterly reporting process.
 
    
    Camcos policies dictate that an impaired loan subject to partial charge off will remain in
a nonperforming status until it is brought current. Typically, this occurs when a loan is
paid current and completes a period of on-time payments that demonstrate that the loan can
perform. Camco monitors through various system reports loans for which terms have been
modified, identifying troubled debt restructures, modifications, and renewals.
 
    
    When circumstances do not allow for an updated appraisal or Camco determines that an
appraisal is not needed, the underlying collaterals fair market value is estimated in the
following ways:
 
    
    Camco personnel property inspections combined with original
appraisal review
    
    Auditor values
    
    Broker price opinions
    
    Various on-line fair market value estimations programs (i.e.
Freddie Mac, Fannie Mae, Zillow, etc).
   27




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##### Table of Contents



Comparison of Results of Operations for the Six Months Ended June 30, 2010 and 2009
(continued)
 Other Income
    General, Administrative and Other Expense
    Federal Income Taxes
  Comparison of Results of Operations for the Three Months Ended June 30, 2010 and 2009
  Net Interest Income
   28




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##### Table of Contents



Net Interest Income (continued)
  AVERAGE BALANCE, YIELD, RATE AND VOLUME DATA
 2010
    
    
    2009Three Months Ended June 30,
    
    Average
    
    
    Interest
    
    
    Average
    
    
    Average
    
    
    Interest
    
    
    Average(Dollars in thousands)
    
    outstanding
    
    
    earned
    
    
    yield/
    
    
    outstanding
    
    
    earned
    
    
    yield/(As Restated)
    
    balance
    
    
    / paid
    
    
    rate
    
    
    balance
    
    
    / paid
    
    
    rateInterest-earning assets:Loans receivable (1)
    
    $
    651,552
    
    
    $
    9,281
    
    
    
    5.70
    %
    
    $
    671,688
    
    
    $
    10,046
    
    
    
    5.98
    %Securities
    
    
    44,952
    
    
    
    495
    
    
    
    4.40
    %
    
    
    86,386
    
    
    
    844
    
    
    
    3.91
    %FHLB stock
    
    
    29,888
    
    
    
    332
    
    
    
    4.44
    %
    
    
    29,888
    
    
    
    332
    
    
    
    4.44
    %Other Interest-bearing accounts
    
    
    25,155
    
    
    
    1
    
    
    
    0.02
    %
    
    
    47,217
    
    
    
    12
    
    
    
    0.10
    %Total interest-earning assets
    
    
    751,547
    
    
    
    10,109
    
    
    
    5.38
    %
    
    
    835,179
    
    
    
    11,234
    
    
    
    5.38
    %Noninterest-earning assets (2)
    
    
    98,182
    
    
    
    
    
    
    
    
    
    
    
    124,573Total average assets
    
    $
    849,729
    
    
    
    
    
    
    
    
    
    
    $
    959,752Interest-bearing liabilities:Deposits
    
    $
    610,144
    
    
    
    2,744
    
    
    
    1.80
    %
    
    $
    680,782
    
    
    
    3,948
    
    
    
    2.32
    %FHLB advances and other
    
    
    126,367
    
    
    
    992
    
    
    
    3.14
    %
    
    
    154,066
    
    
    
    1,402
    
    
    
    3.64
    %Total interest-bearing liabilities
    
    
    736,511
    
    
    
    3,736
    
    
    
    2.03
    %
    
    
    842,348
    
    
    
    5,350
    
    
    
    2.56
    %Noninterest-bearing deposits
    
    
    42,124
    
    
    
    
    
    
    
    
    
    
    
    37,391Noninterest-bearing liabilities
    
    
    11,148
    
    
    
    
    
    
    
    
    
    
    
    15,280Total average liabilities
    
    
    789,783
    
    
    
    
    
    
    
    
    
    
    
    887,519Total average shareholders equity
    
    
    59,946
    
    
    
    
    
    
    
    
    
    
    
    72,233Total liabilities and shareholders equity
    
    $
    849,729
    
    
    
    
    
    
    
    
    
    
    $
    959,752Net interest income/Interest rate spread
    
    
    
    
    
    $
    6,373
    
    
    
    3.35
    %
    
    
    
    
    
    $
    5,884
    
    
    
    2.82
    %Net interest margin (3)
    
    
    
    
    
    
    
    
    
    
    3.39
    %
    
    
    
    
    
    
    
    
    
    
    2.82
    %Average interest-earning assets to average interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    102.0
    %
    
    
    
    
    
    
    
    
    
    
    108.1
    %
 (1)
    
    Includes loans held for sale. Loan fees are immaterial.(2)
    
    Includes nonaccrual loans, mortgage servicing rights and allowance for loan losses.(3)
    
    Net interest income as a percent of average interest-earning assets.  29




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##### Table of Contents



Comparison of Results of Operations for the Three Months Ended June 30, 2010 and 2009
(continued)
     Provision for Losses on Loans
    Other Income
    30




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##### Table of Contents



Comparison of Results of Operations for the Three Months Ended June 30, 2010 and 2009
(continued)
 General, Administrative and Other Expense
    Federal Income Taxes
  Liquidity and Capital Resources
  see below
  31




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##### Table of Contents



Liquidity and Capital Resources (continued)
        32




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##### Table of Contents



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
    
    $
    179
    
    
    
    571
    
    
    
    362
    
    
    
    175
    
    
    
    1,287Advances from the Federal Home Loan Bank
    
    
    18,000
    
    
    
    53,000
    
    
    
    10,450
    
    
    
    26,661
    
    
    
    108,111Certificates of deposit
    
    
    247,871
    
    
    
    121,524
    
    
    
    45,348
    
    
    
    
    
    
    
    414,743Repurchase agreements
    
    
    6,879
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,879Subordinated debentures (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,000
    
    
    
    5,000Ohio Equity Funds for Housing
    
    
    781
    
    
    
    205
    
    
    
    289
    
    
    
    137
    
    
    
    1,412Amount of commitments expiration per periodCommitments to originate loans:Revolving, open-end lines
    
    $
    50,775
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,775Not secured by real estate
    
    
    14,759
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,7591-4 family residential construction
    
    
    13,401
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,401Commercial real estate, other construction loan and land development loans
    
    
    13,628
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,628Other unused commitments
    
    
    10,807
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,807Stand by letters of credit
    
    
    397
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    397Total contractual obligations
    
    $
    377,477
    
    
    
    175,300
    
    
    
    56,449
    
    
    
    31,973
    
    
    
    641,199
 (1)
    
    The subordinated debentures are redeemable, at Camcos option, as of September 15, 2009. The
debentures mature on September 15, 2037.    33




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##### Table of Contents



Liquidity and Capital Resources (continued)
  To be well-capitalizedunder promptFor capital
    
    
    corrective actionActual
    
    
    Adequacy purposes
    
    
    provisions(As Restated)
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio(Dollars in thousands)Total capital to risk-weighted assets:Camco Financial Corporation
    
    $
    68,485
    
    
    
    10.46
    %
    
    
    ≥$52,356
    
    
    
    ≥8.0
    %
    
    
    ≥$65,445
    
    
    
    10.0
    %Advantage Bank
    
    $
    63,997
    
    
    
    9.80
    %
    
    
    ≥$52,239
    
    
    
    ≥8.0
    %
    
    
    ≥$65,299
    
    
    
    10.0
    %Tier I capital to risk-weighted assets:Camco Financial Corporation
    
    $
    60,230
    
    
    
    9.20
    %
    
    
    ≥$26,178
    
    
    
    ≥4.0
    %
    
    
    ≥$39,267
    
    
    
    6.0
    %Advantage Bank
    
    $
    55,742
    
    
    
    8.54
    %
    
    
    ≥$26,120
    
    
    
    ≥4.0
    %
    
    
    ≥$39,179
    
    
    
    6.0
    %Tier I leverage to average assets:Camco Financial Corporation
    
    $
    60,230
    
    
    
    7.05
    %
    
    
    ≥$34,164
    
    
    
    ≥4.0
    %
    
    
    ≥$42,705
    
    
    
    5.0
    %Advantage Bank
    
    $
    55,742
    
    
    
    6.56
    %
    
    
    ≥$33,988
    
    
    
    ≥4.0
    %
    
    
    ≥$42,485
    
    
    
    5.0
    %
      34




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##### Table of Contents



Liquidity and Capital Resources (continued)
   
 Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
        35




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##### Table of Contents



ITEM 4:
    
    Controls and Procedures
 Disclosure Controls
  Internal Controls
 nd
  
    
    Established an interdepartmental committee, which is a subgroup of the
Asset Classification Committee, amongst credit administration,
enterprise risk management and finance department to review the
overall loan loss provision process by assessing the historical risk
factors, the recent trends, and economic forecasts, as appropriate.
This enhanced collaborative process will help identify trends that
should be recognized in the overall loan loss provision process while
permitting the use of professional judgment necessary to interpret the
complex data. The jointly compiled loan loss provision will be
reported to and approved by the executive management including the CEO
and the Board of Directors on a quarterly basis.
    
    Performed more frequent loan loss provision analysis than current quarterly analysis until otherwise decided in the future. Complete analysis as of the month-end prior to the quarter-end will be performed and reviewed by the aforementioned committee.
  Reevaluation
   36




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##### Table of Contents



ITEM 1.
    
    Legal Proceedings
  ITEM 1A.
    
    Risk Factors
 The recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 may
adversely affect our business, financial condition and results of operations.
   
    
    the Dodd-Frank Act creates a Consumer Financial Protection Bureau with broad powers to
adopt and enforce consumer protection regulations;
    
    new capital regulations for bank holding companies will be adopted, which may impose
stricter requirements, and any new trust preferred securities will no longer count toward
Tier I capital;
    
    the federal law prohibition on the payment of interest on commercial demand deposit
accounts will be eliminated effective in July 2011;
    
    the standard maximum amount of deposit insurance per customer is permanently increased
to $250,000, and non-interest bearing transaction accounts will have unlimited insurance
through December 31, 2012;
    
    the assessment base for determining deposit insurance premiums will be expanded to
include liabilities other than just deposits; and
    
    new corporate governance requirements applicable generally to all public companies in
all industries will require new compensation practices, including requiring companies to
claw back incentive compensation under certain circumstances, to provide shareholders
the opportunity to cast a non-binding vote on executive compensation, and to consider the
independence of compensation advisers, and new executive compensation disclosure
requirements.
    37




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##### Table of Contents



ITEM 1A.
    
    Risk Factors (continued)
 We are subject to examination and challenges by bank regulators that may materially adversely
affect our financial condition and results of operations.
   ITEM 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
 
 ITEM 3.
    
    Defaults Upon Senior Securities
 
 (Removed and Reserved)
  38




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##### Table of Contents



ITEM 5.
    
    Other Information
 Item 5.02
    
    Departure of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain Officers.
       39




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##### Table of Contents



ITEM 6.
    
    Exhibits
 Exhibit 10
    
    Camco 2010 Equity Plan
    
    Incorporated by reference to Camcos
2010 S-8 filed, Exhibit 4.1Exhibit 31(i)
    
    Section 302 certification by
Chief Executive OfficerExhibit 31(ii)
    
    Section 302 Certification by Principal Financial Accounting OfficerExhibit 32(i)
    
    Section 1350 certification by Chief Executive OfficerExhibit 32(ii)
    
    Section 1350 certification by Principal Financial Accounting Officer
  40




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##### Table of Contents



SIGNATURES
  CAMCO FINANCIAL CORPORATION(Registrant)Date: November 5, 2010
    
    By:
    
    /s/ James E. Huston

James E. HustonChief Executive OfficerDate: November 5, 2010
    
    By:
    
    /s/ Kristina K. Tipton

Kristina K. TiptonPrincipal Financial Accounting Officer
  41