##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D. C. 20549
 FORM
10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2008
 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)
 (Address of principal executive offices) (Zip Code)
   þ o
  Large accelerated filer
o
    
    Accelerated filer
þ
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
  o þ




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##### 



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
    
    
    16Quantitative and Qualitative Disclosures about
Market Risk
    
    
    31Controls and Procedures
    
    
    31PART II -
    
    OTHER INFORMATION
    
    
    32SIGNATURES
    
    
    34EX-31.1EX-31.2EX-32.1EX-32.2
  2




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Camco Financial Corporation
 
 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
  September 30,
    
    
    December 31,2008
    
    
    2007(unaudited)ASSETSCash and due from banks
    
    $
    16,995
    
    
    $
    17,572Interest-bearing deposits in other financial institutions
    
    
    27,212
    
    
    
    5,432Cash and cash equivalents
    
    
    44,207
    
    
    
    23,004Securities available for sale, at fair value
    
    
    88,648
    
    
    
    88,919Securities held to maturity, at cost, approximate fair value of $11,715 and $2,793 as
of September 30, 2008 and December 31, 2007, respectively
    
    
    11,705
    
    
    
    2,769Loans held for sale  at lower of cost or fair value
    
    
    2,828
    
    
    
    3,169Loans receivable  net
    
    
    781,648
    
    
    
    812,102Office premises and equipment  net
    
    
    12,160
    
    
    
    12,856Real estate acquired through foreclosure
    
    
    6,850
    
    
    
    5,034Federal Home Loan Bank stock  at cost
    
    
    29,888
    
    
    
    28,722Accrued interest receivable
    
    
    5,357
    
    
    
    6,034Mortgage servicing rights  at lower of cost or fair value
    
    
    6,471
    
    
    
    6,356Prepaid expenses and other assets
    
    
    6,183
    
    
    
    5,231Cash surrender value of life insurance
    
    
    22,323
    
    
    
    21,707Goodwill
    
    
    6,683
    
    
    
    6,683Prepaid and refundable federal income taxes
    
    
    1,034
    
    
    
    675Total assets
    
    $
    1,025,985
    
    
    $
    1,023,261LIABILITIES AND STOCKHOLDERS EQUITYDeposits
    
    $
    730,590
    
    
    $
    692,184Advances from the Federal Home Loan Bank and other borrowings
    
    
    189,866
    
    
    
    220,981Advances by borrowers for taxes and insurance
    
    
    1,962
    
    
    
    3,627Accounts payable and accrued liabilities
    
    
    11,968
    
    
    
    11,331Dividends payable
    
    
    
    
    
    
    1,081Deferred federal income taxes  net
    
    
    5,020
    
    
    
    5,423Total liabilities
    
    
    939,406
    
    
    
    934,627Commitments
    
    
    
    
    
    
    Stockholders equity:Preferred stock  $1 par value; authorized 100,000 shares; no shares outstanding
    
    
    
    
    
    
    Common stock  $1 par value; authorized 14,900,000 shares; 8,834,509 shares issued at
September 30, 2008 and December 31, 2007
    
    
    8,835
    
    
    
    8,835Additional paid-in capital
    
    
    59,896
    
    
    
    59,842Retained earnings
    
    
    42,087
    
    
    
    44,083Accumulated other comprehensive (loss) net of related tax effects
    
    
    (125
    )
    
    
    (12
    )Treasury
stock  1,678,913 shares at September 30, 2008 and December 31, 2007, at cost
    
    
    (24,114
    )
    
    
    (24,114
    )Total stockholders equity
    
    
    86,579
    
    
    
    88,634Total liabilities and stockholders equity
    
    $
    1,025,985
    
    
    $
    1,023,261
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##### Table of Contents



Camco Financial Corporation
 
 CONSOLIDATED STATEMENTS OF EARNINGS
  Nine months ended
    
    
    Three months endedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Interest incomeLoans
    
    $
    38,694
    
    
    $
    43,597
    
    
    $
    12,503
    
    
    $
    14,595Mortgage-backed securities
    
    
    2,038
    
    
    
    1,646
    
    
    
    703
    
    
    
    552Investment securities
    
    
    1,201
    
    
    
    1,834
    
    
    
    391
    
    
    
    592Interest-bearing deposits and other
    
    
    1,573
    
    
    
    1,752
    
    
    
    510
    
    
    
    559Total interest income
    
    
    43,506
    
    
    
    48,829
    
    
    
    14,107
    
    
    
    16,298Interest expenseDeposits
    
    
    17,539
    
    
    
    18,871
    
    
    
    5,419
    
    
    
    6,537Borrowings
    
    
    6,355
    
    
    
    8,461
    
    
    
    2,022
    
    
    
    2,907Total interest expense
    
    
    23,894
    
    
    
    27,332
    
    
    
    7,441
    
    
    
    9,444Net interest income
    
    
    19,612
    
    
    
    21,497
    
    
    
    6,666
    
    
    
    6,854Provision for losses on loans
    
    
    3,762
    
    
    
    515
    
    
    
    590
    
    
    
    200Net interest income after provision for losses on loans
    
    
    15,850
    
    
    
    20,982
    
    
    
    6,076
    
    
    
    6,654Other incomeRent and other
    
    
    990
    
    
    
    1,185
    
    
    
    310
    
    
    
    353Loan servicing fees
    
    
    984
    
    
    
    1,030
    
    
    
    332
    
    
    
    335Service charges and other fees on deposits
    
    
    1,797
    
    
    
    1,807
    
    
    
    618
    
    
    
    642Gain on sale of loans
    
    
    302
    
    
    
    264
    
    
    
    127
    
    
    
    107Increases (decreases) in mortgage servicing rights  net
    
    
    115
    
    
    
    (202
    )
    
    
    163
    
    
    
    (22
    )Gain (loss) on sale of fixed assets and investments
    
    
    3
    
    
    
    (25
    )
    
    
    
    
    
    
    (29
    )Income on cash surrender value life
    
    
    746
    
    
    
    708
    
    
    
    254
    
    
    
    239Total other income
    
    
    4,937
    
    
    
    4,767
    
    
    
    1,804
    
    
    
    1,625General, administrative and other expenseEmployee compensation and benefits
    
    
    9,990
    
    
    
    10,031
    
    
    
    3,150
    
    
    
    3,527Occupancy and equipment
    
    
    2,546
    
    
    
    2,634
    
    
    
    827
    
    
    
    891Data processing
    
    
    820
    
    
    
    887
    
    
    
    293
    
    
    
    317Advertising
    
    
    719
    
    
    
    1,019
    
    
    
    229
    
    
    
    358Franchise taxes
    
    
    905
    
    
    
    830
    
    
    
    285
    
    
    
    276Postage, supplies and office expenses
    
    
    971
    
    
    
    1,025
    
    
    
    290
    
    
    
    322Travel, training and insurance
    
    
    639
    
    
    
    452
    
    
    
    186
    
    
    
    162Professional services
    
    
    1,011
    
    
    
    1,053
    
    
    
    323
    
    
    
    463Transaction processing
    
    
    767
    
    
    
    710
    
    
    
    262
    
    
    
    233Real estate owned and other expenses
    
    
    800
    
    
    
    779
    
    
    
    212
    
    
    
    215Loan expenses
    
    
    979
    
    
    
    1,114
    
    
    
    332
    
    
    
    454Merger expenses
    
    
    465
    
    
    
    
    
    
    
    197
    
    
    
    Total general, administrative and other expense
    
    
    20,612
    
    
    
    20,534
    
    
    
    6,586
    
    
    
    7,218Earnings before federal income taxes
    
    
    175
    
    
    
    5,215
    
    
    
    1,294
    
    
    
    1,061Total federal income taxes
    
    
    (264
    )
    
    
    1,521
    
    
    
    225
    
    
    
    218NET EARNINGS
    
    $
    439
    
    
    $
    3,694
    
    
    $
    1,069
    
    
    $
    843EARNINGS PER SHAREBasic
    
    $
    0.06
    
    
    $
    0.50
    
    
    $
    0.15
    
    
    $
    0.12Diluted
    
    $
    0.06
    
    
    $
    0.50
    
    
    $
    0.15
    
    
    $
    0.12Dividends declared per share
    
    
    .225
    
    
    
    .450
    
    
    
    .075
    
    
    
    .150
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Camco Financial Corporation
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
  Nine months ended
    
    
    Three months endedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net earnings
    
    $
    439
    
    
    $
    3,694
    
    
    $
    1,069
    
    
    $
    843Other comprehensive income, net of tax:Unrealized holding gains (losses)
during the period, net of taxes
$(58), $316, $82 and $287 for the
respective periods
    
    
    (113
    )
    
    
    613
    
    
    
    160
    
    
    
    558Reclassification adjustment for
realized gains included in net in
earnings, net of taxes of $1 and $0
for the respective nine month periods
and $0 and $0 for each of the three
month periods ended September 30, 2008
and 2007, respectively
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    Comprehensive income
    
    $
    328
    
    
    $
    4,307
    
    
    $
    1,229
    
    
    $
    1,401
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Camco Financial Corporation
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 2008
    
    
    2007Cash flows from operating activities:Net earnings
for the periodAdjustments to reconcile net earnings to net cash provided by operating activities:
    
    $
    439
    
    
    $
    3,694Amortization of deferred loan origination fees
    
    
    233
    
    
    
    139Amortization of premiums and discounts on investment and
mortgage-backed securities  net
    
    
    63
    
    
    
    81Amortization of mortgage servicing rights  net
    
    
    370
    
    
    
    664Depreciation and amortization
    
    
    1,020
    
    
    
    1,052Stock option expense
    
    
    54
    
    
    
    69Provision for losses on loans
    
    
    3,762
    
    
    
    515Loss on sale of real estate acquired through foreclosure
    
    
    213
    
    
    
    312(Gain) loss on sale of investments and fixed assets
    
    
    (3
    )
    
    
    25Federal Home Loan Bank stock dividends
    
    
    (1,166
    )
    
    
    Net increase in cash surrender value of life insurance
    
    
    (616
    )
    
    
    (588
    )Gain on sale of loans
    
    
    (302
    )
    
    
    (264
    )Loans originated for sale in the secondary market
    
    
    (36,442
    )
    
    
    (32,794
    )Proceeds from sale of loans in the secondary market
    
    
    37,085
    
    
    
    33,989Increase (decrease) in cash, due to changes in:Accrued interest receivable
    
    
    677
    
    
    
    14Prepaid expenses and other assets
    
    
    (952
    )
    
    
    248Accounts Payable and other liabilities
    
    
    (310
    )
    
    
    61Federal income taxes:Current
    
    
    (359
    )
    
    
    447Deferred
    
    
    (345
    )
    
    
    (51
    )Net cash provided by operating activities
    
    
    3,421
    
    
    
    7,613Cash flows provided by (used in) investing activities:Purchase of securities designated as available for sale
    
    
    (46,175
    )
    
    
    (19,519
    )Purchase of securities designated as held to maturity
    
    
    (19,154
    )
    
    
    (8,292
    )Purchase of loans
    
    
    (249
    )
    
    
    (4,291
    )Loan disbursements
    
    
    (158,237
    )
    
    
    (209,713
    )Principal repayments on loans
    
    
    179,362
    
    
    
    195,226Principal repayments, maturities on securities
    
    
    52,177
    
    
    
    38,942Purchase of office premises and equipment
    
    
    (324
    )
    
    
    (899
    )Proceeds from sale of securities designated as available for sale
    
    
    4,254
    
    
    
    Proceeds from sale of office premises and equipment
    
    
    2
    
    
    
    15Proceeds from sales of real estate acquired through foreclosure
    
    
    3,184
    
    
    
    1,379Net cash provided by (used in) investing activities
    
    
    148,401
    
    
    
    (7,152
    )Net cash provided by operating and investing activities
(subtotal carried forward)
    
    
    18,261
    
    
    
    461
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Camco Financial Corporation
 CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
 
 2008
    
    
    2007Net cash provided by operating and investing activities
(subtotal carried forward)
    
    $
    18,261
    
    
    $
    461Cash flows provided by financing activities:Net increase in deposits
    
    
    38,406
    
    
    
    9,234Proceeds from Federal Home Loan Bank advances
    
    
    154,687
    
    
    
    81,066Proceeds from subordinated debentures
    
    
    
    
    
    
    5,000Repayment of Federal Home Loan Bank advances and other borrowings
    
    
    (185,802
    )
    
    
    (97,355
    )Dividends paid on common stock
    
    
    (2,684
    )
    
    
    (3,332
    )Purchase of treasury stock
    
    
    
    
    
    
    (3,363
    )Proceeds from exercise of stock options
    
    
    
    
    
    
    31Decrease in advances by borrowers for taxes and insurance
    
    
    (1,665
    )
    
    
    (1,334
    )Net cash provided by (used in) financing activities
    
    
    2,942
    
    
    
    (10,053
    )Net increase (decrease) in cash and cash equivalents
    
    
    21,203
    
    
    
    (9,592
    )Cash and cash equivalents at beginning of period
    
    
    23,004
    
    
    
    26,542Cash and cash equivalents at end of period
    
    $
    44,207
    
    
    $
    16,950Supplemental disclosure of cash flow information:Cash paid during the period for:Interest on deposits and borrowings
    
    $
    23,656
    
    
    $
    27,713Dividends declared but unpaid
    
    $
    
    
    
    $
    1,085Supplemental disclosure of noncash investing activities:Recognition of mortgage-servicing rights in
accordance with SFAS
No. 140
    
    $
    485
    
    
    $
    446Transfer of loans to real estate acquired through foreclosure
    
    $
    5,709
    
    
    
    3,050
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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, 2007. 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, 2008, 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
managements evaluation of credit risk after careful consideration of all information
available to management. In developing this assessment, management 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.
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Camco Financial Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  3.
    
    Critical Accounting Policies (continued)Allowance for Loan Losses(continued)The allowance is regularly reviewed by management to determine whether the amount is
considered adequate to absorb probable, incurred losses. This evaluation includes specific
loss estimates on certain individually reviewed loans, statistical loss estimates for loan
pools that are based on historical loss experience, and general loss estimates that are
based upon the size, quality, and concentration characteristics of the various loan
portfolios, adverse situations that may affect a borrowers ability to repay, and current
economic and industry conditions. Also considered as part of that judgment is a review of
the Banks trends in delinquencies and loan losses, as well as trends in delinquencies and
losses for the region and nationally, and economic factors.The allowance for loan losses is maintained at a level believed adequate by management to
absorb probable, incurred losses inherent in the loan portfolio. Managements evaluation of
the adequacy of the allowance is an estimate based on managements current judgment about
the credit quality of the loan portfolio. While the Corporation strives to reflect all
known risk factors in its evaluations, judgment errors may occur.Mortgage Servicing RightsTo determine the fair value of its mortgage servicing rights (MSRs) each reporting
quarter, the Corporation provides information to a third party valuation firm, representing
loan information in each pooling period accompanied by escrow amounts. The third party then
evaluates the possible impairment of MSRs as described below.MSRs are recognized as separate assets or liabilities when loans are sold with servicing
retained. A pooling methodology, in which loans with similar characteristics are pooled
together, is applied for valuation purposes. Once pooled, each grouping of loans is
evaluated on a discounted earnings basis to determine the present value of future earnings
that the Bank 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 fair value for the pool, calculated using consensus assumptions that a
third party purchaser would utilize in evaluating a potential acquisition of the MSRs.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 earnings 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 MSRs are marked to lower
of amortized cost or fair value for the current quarter.
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Camco Financial Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  3.
    
    Critical Accounting Policies (continued)GoodwillOn May 7, 2008, Camco signed a definitive agreement with First Place Financial Corp. which
was a negotiated transaction between buyer and seller. The company received a third party
opinion to the effect that as of May 7, 2008, the merger consideration to be paid to
stockholders in connection with the merger was fair to stockholders, from a financial point
of view.The value of the transaction exceeds its carrying amount of goodwill, therefore, the
reporting unit is not impaired.ReclassificationsSome items in the prior year financial statements were reclassified to conform to the
current presentation.
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Camco Financial Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  4.
    
    Earnings Per ShareBasic earnings per common share are computed based upon the weighted-average number of
common shares outstanding during the period. Diluted earnings per common share include the
dilutive effect of additional potential common shares issuable under the Corporations stock
option plans. The computations are as follows:
 For the nine months ended
    
    
    For the three months endedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007BASIC:Net Earnings
    
    $
    439
    
    
    $
    3,694
    
    
    $
    1,069
    
    
    $
    843Weighted average common shares outstanding
    
    
    7,156
    
    
    
    7,375
    
    
    
    7,156
    
    
    
    7,278Basic earnings per share
    
    $
    0.06
    
    
    $
    0.50
    
    
    $
    0.15
    
    
    $
    0.12DILUTED:Net Earnings
    
    $
    439
    
    
    $
    3,694
    
    
    $
    1,069
    
    
    $
    843Weighted average common shares outstanding
    
    
    7,156
    
    
    
    7,375
    
    
    
    7,156
    
    
    
    7,278Dilutive effect of stock options
    
    
    7
    
    
    
    2
    
    
    
    7
    
    
    
    3Total common shares and dilutive potential common shares
    
    
    7,163
    
    
    
    7,377
    
    
    
    7,163
    
    
    
    7,281Diluted earnings per share
    
    $
    0.06
    
    
    $
    0.50
    
    
    $
    0.15
    
    
    $
    0.12
 5.
    
    Stock Option PlansEffective January 1, 2006, the Corporation adopted SFAS No. 123R, Accounting for
Stock-Based Compensation, which contains a fair-value based method for valuing stock-based
compensation that measures compensation cost at the grant date based on the fair value of
the award.The fair value of each option grant is estimated on the date of grant using the modified
Black-Scholes options-pricing model. The following table details the fair value and
assumptions used to value stock options as of the grant date that were granted in 2008 and
2007:
 2008
    
    2007Fair value, calculated
    
    $
    0.74
    
    
    $
    1.22Exercise Price
    
    $
    9.07
    
    
    $
    12.34Risk-free interest rate
    
    
    3.52
    %
    
    
    4.81
    %Expected stock price volatility
    
    
    15.75
    %
    
    
    11.98
    %Expected dividend yield
    
    
    6.00
    %
    
    
    4.80
    %Expected Life
    
    
    10
    years
    
    
    10
    years
 11




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##### 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, 2008 and
December 31, 2007, and changes during the periods ending on those dates is presented below:
 Nine months ended
    
    
    Year endedSeptember 30,
    
    
    December 31,2008
    
    
    2007Weighted-
    
    
    
    
    
    
    Weighted-average
    
    
    
    
    
    
    averageexercise
    
    
    
    
    
    
    exerciseShares
    
    
    price
    
    
    Shares
    
    
    priceOutstanding at beginning of period
    
    
    318,238
    
    
    $
    15.10
    
    
    
    304,874
    
    
    $
    15.20Granted
    
    
    47,167
    
    
    
    9.07
    
    
    
    26,920
    
    
    
    12.34Exercised
    
    
    
    
    
    
    
    
    
    
    (2,427
    )
    
    
    12.50Forfeited
    
    
    (62,753
    )
    
    
    14.93
    
    
    
    (11,129
    )
    
    
    14.67Outstanding at end of period
    
    
    302,652
    
    
    $
    14.19
    
    
    
    318,238
    
    
    $
    15.10Options exercisable at end of period
    
    
    237,688
    
    
    $
    14.95
    
    
    
    254,717
    
    
    $
    15.32Weighted-average fair value of
options granted during the period
    
    
    
    
    
    $
    0.74
    
    
    
    
    
    
    $
    1.22
  Options outstandingWeighted-Average
    
    
    Weighted-Remaining
    
    
    AverageRange of Exercise
    
    
    
    
    
    Number
    
    
    Contractual
    
    
    ExercisePrices
    
    
    
    
    
    Outstanding
    
    
    Life (Years)
    
    
    Price$8.92 - $9.75
    
    
    
    
    
    
    44,475
    
    
    
    8.5
    
    
    $
    8.97$11.36 - $14.16
    
    
    
    
    
    
    100,017
    
    
    
    7.4
    
    
    
    13.56$14.55 - $17.17
    
    
    
    
    
    
    158,160
    
    
    
    4.2
    
    
    
    16.02302,652
    
    
    
    6.3
    
    
    $
    14.19
 12




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##### Table of Contents



Camco Financial Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  6.
    
    Fair ValueSFAS No. 157 establishes a fair value hierarchy which requires an entity to maximize the use
of observable inputs and minimize the use of unobservable inputs when measuring fair value.
SFAS No. 157 describes three levels of inputs that Camco uses to measure fair value:
 Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active
markets that the entity has the ability to access as of the measurement date.Level 2: Level 1 inputs for assets or liabilities that are not actively traded. Also
consists of an observable market price for a similar asset or liability. This
includes the use of matrix pricing used to value debt securities absent the
exclusive use of quoted prices.Level 3: Consists of unobservable inputs that are used to measure fair value when
observable market inputs are not available. This could include the use of internally
developed models, financial forecasting, etc.
 Fair value is defined as the price that would be received to sell an asset or transfer a
liability between market participants at the balance sheet date. When possible, the
Corporation looks to active and observable markets to price identical assets or liabilities.
When identical assets and liabilities are not traded in active markets, the Corporation
looks to observable market data for similar assets and liabilities. However, certain assets
and liabilities are not traded in observable markets and Camco must use other valuation
methods to develop a fair value. The fair value of impaired loans is based on the fair value
of the underlying collateral, which is estimated through third party appraisals or internal
estimates of collateral values.The following table presents financial assets and liabilities measured on a recurring basis:
 Fair Value Measurements at Reporting Date UsingSept. 30,(in thousands)
    
    2008
    
    Level 1
    
    Level 2
    
    Level 3Securities available for sale
    
    $
    88,648
    
    
    $
    
    
    
    $
    88,648
    
    
    $
    
  Fair Value Measurements at Reporting Date UsingSept. 30,(in thousands)
    
    2008
    
    Level 1
    
    Level 2
    
    Level 3Impaired loans
    
    $
    12,579
    
    
    $
    
    
    
    $
    
    
    
    $
    12,579Loans held for sale
    
    
    2,828
    
    
    
    
    
    
    
    
    
    
    
    2,828Mortgage servicing rights
    
    
    6,471
    
    
    
    
    
    
    
    
    
    
    
    6,471Real estate acquired
through foreclosure
    
    
    6,850
    
    
    
    
    
    
    
    
    
    
    
    6,850
 13




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##### Table of Contents



Camco Financial Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  Impaired loans, which are measured for impairment using the fair value of the collateral at
September 30, 2008, had a carrying amount of $15.2 million, with a valuation allowance of
$2.6 million, resulting in an additional provision for loan losses of $2.1 million during
the nine months ended September 2008.Loans held for sale are originated on forward commitment contracts and are reported at the
lower of cost or fair value. All loans held for sale at September 30, 2008, are secured by
liens on 1-4 family residential properties.Mortgage servicing rights are recognized as separate assets or liabilities 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 the bank could expect to realize from
the portfolio. Earnings are projected from a variety of sources including loan service
fees, interest earned on float, net interest earned on escrow balances, miscellaneous income
and costs to service the loans. The present value of future earnings is the estimated fair
value for the pool, calculated using consensus assumptions that a third party purchaser
would utilize in evaluating a potential acquisition of the servicing.Fair value for real estate acquired through foreclosure is determined by obtaining recent
appraisals on the properties. The fair value under such appraisals is determined by using
one of the following valuation techniques: income, cost or comparable sales. The fair value
is then reduced by managements estimate for the direct costs expected to be incurred in
order to sell the property. Holding costs or maintenance expenses are recorded as period
costs when occurred and are not included in the fair value estimate.7.
    
    Recent DevelopmentsThere have been historical disruptions in the financial system during the past year and
many lenders and financial institutions have reduced or ceased to provide funding to
borrowers, including other financial institutions. The availability of credit and
confidence in the entire financial sector has been adversely affected. These disruptions
have had a significant impact on the Company. The Federal Reserve Bank has been
providing vast amounts of liquidity into the banking system to compensate for weaknesses
in short-term borrowing markets and other capital markets. A reduction in the Federal
Reserves activities or capacity could reduce liquidity in the markets, thereby
increasing funding costs to the Bank or reducing the availability of funds to the Bank to
finance its existing operations.In response to the financial crises affecting the overall banking system and financial
markets, on October 3, 2008, the Emergency Economic Stabilization Act of 2008 (EESA)
was enacted. Under that act, the United States Treasury Department (Treasury) will have
authority, among other things, to purchase mortgages, mortgage backed securities and
certain other financial instruments from financial institutions for the purpose of
stabilizing and providing liquidity to the U.S. financial markets.Also on October 3, 2008, the Troubled Asset Relief Program (TARP) was signed into law.
TARP gave the Treasury authority to deploy up to $750 billion into the financial system
with an objective of improving liquidity in capital markets. On October 24, 2008,
Treasury announced plans to direct $250 billion of this authority into preferred stock
investments in banks. The general terms of this preferred stock program including the
following for a participating bank holding company: pay 5% dividends on the Treasurys
preferred stock for the first five years and 9% thereafter; do not increase common stock
dividends for three years while the Treasury is an investor; receive Treasurys consent
before repurchasing holding companys own stock; issue warrants to Treasury entitling it
to buy holding companys common stock
 14




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##### Table of Contents



Camco Financial Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  7.
    
    Recent Developments (continued)equal to 15% of Treasurys total investment in the
participating holding company; and institute certain compensations restrictions on
executives. The term of this Treasury preferred stock program could reduce investment
returns to participating holding companies stockholders by restricting dividends to common stockholders, diluting existing stockholders interests,
and restricting capital management practices. Although both the Company and the Bank meet
all applicable regulatory capital requirements and remain well capitalized, the Company
is considering participation in the TARP capital purchase program.The actions described above, together with additional actions announced by the Treasury
and other regulatory agencies continue to develop. It is not clear at this time what
impact, EESA, TARP, other liquidity and funding initiatives of the Treasury and other
bank regulatory agencies that have been previously announced, and any additional programs
that may be initiated in the future will have on the financial markets and the financial
services industry. The extreme levels of volatility and limited credit availability
currently being experienced could continue to effect the U.S. banking industry and the
broader U.S. and global economies, which will have an effect on all financial
institutions, including the Company.8.
    
    Subsequent EventCamco declared a quarterly cash divided of $0.0375 per share. The cash dividend was
declared October 13, 2008 for shareholders of record on October 23, 2008 and is payable
October 31, 2008.
 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.
 15




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##### Table of Contents



Camco Financial Corporation
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
   
    
    competition in the industry and markets in which we operate;
    
    changes in general interest rates;
    
    rapid changes in technology affecting the financial services industry;
    
    changes in government regulation; and
    
    general economic and business conditions.
  Overview:
   Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operation
(continued)
 Discussion of Financial Condition Changes from December 31, 2007 to September 30, 2008
  st
 16




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##### 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, 2007 to September 30, 2008
      September 30, 2008
    
    
    December 31, 2007In thousands
    
    
    In thousands90+ days
    
    
    
    
    
    
    
    
    
    
    90+ days30  89 days
    
    
    delinquent,
    
    
    
    
    
    
    30  89 days
    
    
    delinquent,delinquent
    
    
    accruing
    
    
    Nonaccrual
    
    
    delinquent
    
    
    accruing
    
    
    NonaccrualConstruction/Development
    
    $
    672
    
    
    $
    
    
    
    $
    560
    
    
    $
    11
    
    
    $
    
    
    
    $
    5,568HELOC and second mortgage
    
    
    1,972
    
    
    
    
    
    
    
    3,759
    
    
    
    2,504
    
    
    
    
    
    
    
    1,0261-4 Family
    
    
    4,768
    
    
    
    
    
    
    
    15,521
    
    
    
    6,652
    
    
    
    1,520
    
    
    
    8,310Multifamily
    
    
    471
    
    
    
    500
    
    
    
    1,614
    
    
    
    
    
    
    
    
    
    
    
    871Commercial
    
    
    445
    
    
    
    213
    
    
    
    5,342
    
    
    
    2,036
    
    
    
    
    
    
    
    7,603Consumer and other
    
    
    74
    
    
    
    
    
    
    
    108
    
    
    
    1,209
    
    
    
    
    
    
    
    617Total
    
    $
    8,402
    
    
    $
    713
    
    
    $
    26,904
    
    
    $
    12,412
    
    
    $
    1,520
    
    
    $
    23,995
 17




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##### Table of Contents



Camco Financial Corporation
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  Discussion of Financial Condition Changes from December 31, 2006 to September 30, 2007
   Septeamber 30, 2008
    
    
    December 31, 2007
    
    
    ChangeBalance
    
    
    Rate
    
    
    Balance
    
    
    Rate
    
    
    Balance
    
    
    RateNoninterest-bearing demand
    
    $
    37,076
    
    
    
    0.00
    %
    
    $
    35,755
    
    
    
    0.00
    %
    
    $
    1,321
    
    
    
    0.00
    %Interest-bearing demand
    
    
    90,229
    
    
    
    1.16
    
    
    
    91,132
    
    
    
    1.57
    
    
    
    (903
    )
    
    
    (0.41
    )Money market
    
    
    120,018
    
    
    
    2.22
    
    
    
    111,740
    
    
    
    3.57
    
    
    
    8,278
    
    
    
    (1.35
    )Savings
    
    
    35,162
    
    
    
    .28
    
    
    
    36,963
    
    
    
    0.27
    
    
    
    (1,801
    )
    
    
    0.01Certificates of deposit  retail
    
    
    406,711
    
    
    
    3.92
    
    
    
    395,016
    
    
    
    4.78
    
    
    
    11,695
    
    
    
    (0.86
    )Certificates of deposit  brokered
    
    
    41,394
    
    
    
    4.37
    
    
    
    21,578
    
    
    
    5.09
    
    
    
    19,816
    
    
    
    (0.72
    )Total deposits
    
    $
    730,590
    
    
    
    2.95
    %
    
    $
    692,184
    
    
    
    3.52
    %
    
    $
    38,406
    
    
    
    (0.57
    )%
   18




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##### 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, 2007 to September 30, 2008
  Comparison of Results of Operations for the Nine Months Ended September 30, 2008 and 2007
  Interest Income
   19




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##### 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, 2007 to September 30, 2008
 AVERAGE BALANCE, YIELD, RATE AND VOLUME DATA
  2008
    
    
    2007Nine Months Ended
    
    Average
    
    
    Interest
    
    
    Average
    
    
    Average
    
    
    Interest
    
    
    AverageSeptember 30,
    
    outstanding
    
    
    earned/
    
    
    yield/
    
    
    outstanding
    
    
    earned /
    
    
    yield/(Dollars in thousands)
    
    balance
    
    
    paid
    
    
    rate
    
    
    balance
    
    
    paid
    
    
    rateInterest-earning assets:Loans receivable (1)
    
    $
    776,096
    
    
    
    38,694
    
    
    
    6.65
    %
    
    $
    820,425
    
    
    
    43,597
    
    
    
    7.09
    %Securities
    
    
    96,543
    
    
    
    3,239
    
    
    
    4.25
    %
    
    
    105,901
    
    
    
    3,480
    
    
    
    4.38
    %FHLB stock
    
    
    29,182
    
    
    
    1,166
    
    
    
    5.33
    %
    
    
    28,722
    
    
    
    1,388
    
    
    
    6.44
    %Other Interest-bearing accts
    
    
    29,619
    
    
    
    407
    
    
    
    1.83
    %
    
    
    9,039
    
    
    
    364
    
    
    
    5.37
    %Total interest-earning assets
    
    
    931,440
    
    
    
    43,506
    
    
    
    6.23
    %
    
    
    964,087
    
    
    
    48,829
    
    
    
    6.75
    %Noninterest-earning assets (2)
    
    
    96,659
    
    
    
    
    
    
    
    
    
    
    
    84,887Total average assets
    
    $
    1,028,099
    
    
    
    
    
    
    
    
    
    
    $
    1,048,974Interest-bearing liabilities:Deposits
    
    
    686,086
    
    
    
    17,539
    
    
    
    3.41
    %
    
    
    650,890
    
    
    
    18,871
    
    
    
    3.87
    %FHLB advances and other
    
    
    196,817
    
    
    
    6,355
    
    
    
    4.31
    %
    
    
    257,564
    
    
    
    8,461
    
    
    
    4.38
    %Total interest-bearing liabilities
    
    
    882,903
    
    
    
    23,894
    
    
    
    3.61
    %
    
    
    908,454
    
    
    
    27,332
    
    
    
    4.01
    %Noninterest-bearing deposits
    
    
    37,707
    
    
    
    
    
    
    
    
    
    
    
    34,793Noninterest-bearing liabilities
    
    
    20,688
    
    
    
    
    
    
    
    
    
    
    
    14,805Total average liabilities
    
    
    941,298
    
    
    
    
    
    
    
    
    
    
    
    958,052Total average shareholders equity
    
    
    86,801
    
    
    
    
    
    
    
    
    
    
    
    90,922Total liabilities and shareholders
equity
    
    $
    1,028,099
    
    
    
    
    
    
    
    
    
    
    $
    1,048,974Net interest income/Interest rate spread
    
    
    
    
    
    $
    19,612
    
    
    
    2.62
    %
    
    
    
    
    
    $
    21,497
    
    
    
    2.74
    %Net interest margin (3)
    
    
    
    
    
    
    
    
    
    
    2.81
    %
    
    
    
    
    
    
    
    
    
    
    2.97
    %Average interest-earning assets to
average interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    105.5
    %
    
    
    
    
    
    
    
    
    
    
    106.12
    %
 
 (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 20




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##### 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, 2008 and 2007
(continued)
   Interest Expense
   Provision for Losses on Loans
  21




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##### 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, 2008 and 2007
(continued)
 Other Income
    General, Administrative and Other Expense
 
 Federal Income Taxes
  22




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##### 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, 2008 and 2007
 General
  Interest Income
     23




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24




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##### 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, 2008 and 2007
 Interest Expense
   Net Interest Income
 
 25




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##### 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, 2008 and 2007
 AVERAGE BALANCE, YIELD, RATE AND VOLUME DATA
  2008
    
    
    2007Three Months Ended
    
    Average
    
    
    Interest
    
    
    Average
    
    
    Average
    
    
    Interest
    
    
    AverageSeptember 30,
    
    outstanding
    
    
    earned /
    
    
    yield/
    
    
    outstanding
    
    
    earned /
    
    
    yield/(Dollars in thousands)
    
    balance
    
    
    paid
    
    
    rate
    
    
    balance
    
    
    paid
    
    
    rateInterest-earning assets:Loans receivable (1)
    
    $
    769,406
    
    
    
    12,503
    
    
    
    6.50
    %
    
    $
    825,273
    
    
    
    14,595
    
    
    
    7.07
    %Securities
    
    
    98,880
    
    
    
    1,094
    
    
    
    4.43
    %
    
    
    101,764
    
    
    
    1,144
    
    
    
    4.50
    %FHLB stock
    
    
    29,590
    
    
    
    398
    
    
    
    5.38
    %
    
    
    28,722
    
    
    
    471
    
    
    
    6.56
    %Other Interest-bearing accts
    
    
    47,129
    
    
    
    112
    
    
    
    0.95
    %
    
    
    6,841
    
    
    
    88
    
    
    
    5.15
    %Total interest-earning assets
    
    
    945,005
    
    
    
    14,107
    
    
    
    5.97
    %
    
    
    962,600
    
    
    
    16,298
    
    
    
    6.77
    %Noninterest-earning assets (2)
    
    
    82,359
    
    
    
    
    
    
    
    
    
    
    
    85,972Total average assets
    
    $
    1,027,364
    
    
    
    
    
    
    
    
    
    
    $
    1,048,572Interest-bearing liabilities:Deposits
    
    
    694,240
    
    
    
    5,419
    
    
    
    3.12
    %
    
    
    650,690
    
    
    
    6,537
    
    
    
    4.02
    %FHLB advances and other
    
    
    191,592
    
    
    
    2,022
    
    
    
    4.22
    %
    
    
    256,078
    
    
    
    2,907
    
    
    
    4.54
    %Total interest-bearing liabilities
    
    
    885,832
    
    
    
    7,441
    
    
    
    3.36
    %
    
    
    906,768
    
    
    
    9,444
    
    
    
    4.17
    %Noninterest-bearing deposits
    
    
    36,568
    
    
    
    
    
    
    
    
    
    
    
    36,857Noninterest-bearing liabilities
    
    
    19,094
    
    
    
    
    
    
    
    
    
    
    
    15,003Total average liabilitiesTotal average shareholders equity
    
    
    85,870
    
    
    
    
    
    
    
    
    
    
    
    89,944Total liabilities and shareholders
equity
    
    $
    1,027,364
    
    
    
    
    
    
    
    
    
    
    $
    1,048,572Net interest income/Interest rate spread
    
    
    
    
    
    $
    6,666
    
    
    
    2.61
    %
    
    
    
    
    
    $
    6,854
    
    
    
    2.60
    %Net interest margin (3)
    
    
    
    
    
    
    
    
    
    
    2.82
    %
    
    
    
    
    
    
    
    
    
    
    2.85
    %Average interest-earning assets to
average interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    106.7
    %
    
    
    
    
    
    
    
    
    
    
    106.2
    %
 
 (1)
    
    Includes nonaccrual loans and loans held for sale.(2)
    
    Includes securities designated as available for sale.(3)
    
    Net interest income as a percent of average interest-earning assets. 26




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##### 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, 2008 and 2007
 Provision for Losses on Loans
  Other Income
  General, Administrative and Other Expense
    Federal Income Taxes
  Liquidity and Capital Resources
  27




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##### Table of Contents



Camco Financial Corporation
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  Liquidity and Capital Resources  (continued)
      28




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##### Table of Contents



Camco Financial Corporation
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 Liquidity and Capital Resources (continued)
  Payments due by periodLess
    
    
    
    
    
    
    
    
    
    
    MoreThan
    
    
    1-3
    
    
    3-5
    
    
    Than1 year
    
    
    years
    
    
    years
    
    
    5 years
    
    
    Total(In thousands)Contractual obligations:Operating lease obligations
    
    $
    91
    
    
    $
    540
    
    
    $
    314
    
    
    $
    448
    
    
    $
    1,393Advances from the Federal
Home Loan Bank
    
    
    81,558
    
    
    
    38,000
    
    
    
    15,083
    
    
    
    37,728
    
    
    
    172,369Certificates of deposit
    
    
    326,532
    
    
    
    106,558
    
    
    
    14,101
    
    
    
    914
    
    
    
    448,105Repurchase agreements
    
    
    11,807
    
    
    
    690
    
    
    
    
    
    
    
    
    
    
    
    12,497Subordinated debentures (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,000
    
    
    
    5,000Ohio Equity Funds for Housing
    
    
    1,342
    
    
    
    2,047
    
    
    
    304
    
    
    
    325
    
    
    
    4,018Amount of commitments expiration per period
Commitments to originate loans:Revolving, open-end lines
    
    $
    75,181
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    75,1811-4 family residential construction
    
    
    2,347
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,347Commercial real estate, other
construction loan and land
development loans
    
    
    28,018
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,018Other unused commitments
    
    
    2,333
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,333Stand by letters of credit
    
    
    617
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    617Total contractual obligations
    
    $
    529,826
    
    
    $
    147,835
    
    
    $
    29,802
    
    
    $
    44,415
    
    
    $
    751,878
 
 (1)
    
    The subordinated debentures are redeemable, at Camcos option, commencing September 15, 2008.
The debentures mature on September 15, 2037. 29




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##### Table of Contents



Camco Financial Corporation
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 Liquidity and Capital Resources (continued)
   To be well-capitalizedunder promptFor capital
    
    corrective actionActual
    
    Adequacy purposes
    
    provisionsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio(Dollars in thousands)Total capital to risk-weighted
assets:Camco Financial Corporation
    
    $
    91,958
    
    
    
    13.15
    %
    
    
    3 $55,965
    
    
    
    3 8.0
    %
    
    
    3 $69,956
    
    
    
    10.0
    %Advantage Bank
    
    $
    87,923
    
    
    
    12.59
    %
    
    
    3 $55,856
    
    
    
    3 8.0
    %
    
    
    3 $68,820
    
    
    
    10.0
    %Tier I capital to risk-weighted
assets:Camco Financial Corporation
    
    $
    84,493
    
    
    
    12.08
    %
    
    
    3 $27,982
    
    
    
    3 4.0
    %
    
    
    3 $41,973
    
    
    
    6.0
    %Advantage Bank
    
    $
    80,458
    
    
    
    11.52
    %
    
    
    3 $27,928
    
    
    
    3 4.0
    %
    
    
    3 $41,892
    
    
    
    6.0
    %Tier I leverage to average assets:Camco Financial Corporation
    
    $
    84,493
    
    
    
    8.27
    %
    
    
    3 $40,884
    
    
    
    3 4.0
    %
    
    
    3 $51,104
    
    
    
    5.0
    %Advantage Bank
    
    $
    80,458
    
    
    
    7.90
    %
    
    
    3 $40,736
    
    
    
    3 4.0
    %
    
    
    3 $50,919
    
    
    
    5.0
    %
  30




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##### Table of Contents



Camco Financial Corporation
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 Quantitative and Qualitative Disclosures about Market Risk
       Controls and Procedures
   31




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##### Table of Contents



Camco Financial Corporation
 
  Legal Proceedings
  Risk Factors
 Camcos announced agreement to merge with First Place Financial Corp.
  Difficult conditions in the financial markets may adversely affect Camcos business and results of
operations.
  Federal and state governments could adopt laws responsive to the current credit conditions that
would adversely affect Advantages ability to collect on loans.
  FDIC insurance premiums may increase materially.
   32




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##### Table of Contents



ITEM 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
 
 ITEM 3.
    
    Defaults Upon Senior Securities
  ITEM 4.
    
    Submission of Matters to a Vote of Security Holders
  ITEM 5.
    
    Other Information
   ITEM 6.
    
    Exhibits
 Exhibit 11
    
    Statement regarding computation of per share earnings (incorporated by reference to
Note 4 on pages 11 of this Form 10-Q)Exhibit 31.1
    
    Section 302 Certification by Chief Executive OfficerExhibit 31.2
    
    Section 302 Certification by Principal Accounting OfficerExhibit 32.1
    
    Section 1350 certification by Chief Executive OfficerExhibit 32.2
    
    Section 1350 certification by Principal Accounting Officer
 33




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##### Table of Contents



SIGNATURES
  Date:  November 4, 2008
    By:

/s/ Richard C. BaylorRichard C. BaylorChief Executive OfficerDate:  November 4, 2008
    By:

/s/ Kristina K. TiptonKristina K. TiptonPrincipal Accounting Officer 34