##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D. C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2009
 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 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
    
    
    7Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    16Quantitative and Qualitative Disclosures about Market Risk
    
    
    34Controls and Procedures
    
    
    35PART II 
    
    OTHER INFORMATION
    
    
    35SIGNATURES
    
    
    
    
    38EX-31.1EX-31.2EX-32.1EX-32.2
  2




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Camco Financial Corporation
 
 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
  September 30,
    
    
    December 31,2009
    
    
    2008(unaudited)ASSETSCash and due from banks
    
    $
    20,313
    
    
    $
    17,013Interest-bearing deposits in other financial institutions
    
    
    37,931
    
    
    
    35,272Cash and cash equivalents
    
    
    58,244
    
    
    
    52,285Securities available for sale, at fair value
    
    
    60,940
    
    
    
    85,352Securities held to maturity, at cost, approximate fair value of $2,222 and
$13,530 as of September 30, 2009 and December 31, 2008, respectively
    
    
    2,160
    
    
    
    13,406Loans held for sale  at lower of cost or fair value
    
    
    2,186
    
    
    
    2,185Loans receivable  net
    
    
    684,426
    
    
    
    756,641Office premises and equipment  net
    
    
    11,121
    
    
    
    11,868Real estate acquired through foreclosure
    
    
    8,937
    
    
    
    5,841Federal Home Loan Bank stock  at cost
    
    
    29,888
    
    
    
    29,888Accrued interest receivable
    
    
    4,206
    
    
    
    4,118Mortgage servicing rights  at lower of cost or fair value
    
    
    3,813
    
    
    
    3,731Prepaid expenses and other assets
    
    
    5,941
    
    
    
    10,785Cash surrender value of life insurance
    
    
    18,658
    
    
    
    22,532Prepaid and refundable federal income taxes
    
    
    902
    
    
    
    1,814Total assets
    
    $
    891,422
    
    
    $
    1,000,446LIABILITIES AND STOCKHOLDERS EQUITYDeposits
    
    $
    670,391
    
    
    $
    723,956Advances from the Federal Home Loan Bank and other borrowings
    
    
    133,880
    
    
    
    183,833Advances by borrowers for taxes and insurance
    
    
    620
    
    
    
    2,458Accounts payable and accrued liabilities
    
    
    11,052
    
    
    
    16,942Deferred federal income taxes  net
    
    
    2,880
    
    
    
    1,557Total liabilities
    
    
    818,823
    
    
    
    928,746Commitments
    
    
    
    
    
    
    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 September 30, 2009 and 8,834,509 at December 31, 2008
    
    
    8,885
    
    
    
    8,835Additional paid-in capital
    
    
    60,124
    
    
    
    59,896Retained earnings
    
    
    26,503
    
    
    
    26,055Accumulated other comprehensive income net of related tax effects
    
    
    1,326
    
    
    
    1,028Unearned compensation; 50,000 shares
    
    
    (125
    )
    
    
    Treasury stock  1,678,913 shares at Sept. 30, 2009 and Dec. 31, 2008, at cost
    
    
    (24,114
    )
    
    
    (24,114
    )Total stockholders equity
    
    
    72,599
    
    
    
    71,700Total liabilities and stockholders equity
    
    $
    891,422
    
    
    $
    1,000,446
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Camco Financial Corporation
 
 CONSOLIDATED STATEMENTS OF EARNINGS
  Nine months ended
    
    
    Three months endedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Interest incomeLoans
    
    $
    30,560
    
    
    $
    38,694
    
    
    $
    9,948
    
    
    $
    12,503Mortgage-backed securities
    
    
    1,821
    
    
    
    2,038
    
    
    
    551
    
    
    
    703Investment securities
    
    
    660
    
    
    
    1,201
    
    
    
    110
    
    
    
    391Interest-bearing deposits and other
    
    
    1,067
    
    
    
    1,573
    
    
    
    378
    
    
    
    510Total interest income
    
    
    34,108
    
    
    
    43,506
    
    
    
    10,987
    
    
    
    14,107Interest expenseDeposits
    
    
    12,039
    
    
    
    17,539
    
    
    
    3,619
    
    
    
    5,419Borrowings
    
    
    4,161
    
    
    
    6,355
    
    
    
    1,189
    
    
    
    2,022Total interest expense
    
    
    16,200
    
    
    
    23,894
    
    
    
    4,808
    
    
    
    7,441Net interest income
    
    
    17,908
    
    
    
    19,612
    
    
    
    6,179
    
    
    
    6,666Provision for losses on loans
    
    
    1,877
    
    
    
    3,762
    
    
    
    440
    
    
    
    590Net interest income after provision
for losses on loans
    
    
    16,031
    
    
    
    15,850
    
    
    
    5,739
    
    
    
    6,076Other incomeRent and other
    
    
    1,274
    
    
    
    990
    
    
    
    292
    
    
    
    310Loan servicing fees
    
    
    948
    
    
    
    984
    
    
    
    316
    
    
    
    332Service charges and other fees on deposits
    
    
    1,684
    
    
    
    1,797
    
    
    
    613
    
    
    
    618Gain on sale of loans
    
    
    980
    
    
    
    302
    
    
    
    207
    
    
    
    127Increases (decreases) in mortgage servicing rights  net
    
    
    84
    
    
    
    115
    
    
    
    (185
    )
    
    
    163Gain (loss) on sale of fixed assets and investments
    
    
    156
    
    
    
    3
    
    
    
    153
    
    
    
    Income on cash surrender value life
    
    
    710
    
    
    
    746
    
    
    
    216
    
    
    
    254Total other income
    
    
    5,836
    
    
    
    4,937
    
    
    
    1,612
    
    
    
    1,804General, administrative and other expenseEmployee compensation and benefits
    
    
    9,587
    
    
    
    9,990
    
    
    
    3,047
    
    
    
    3,150Occupancy and equipment
    
    
    2,423
    
    
    
    2,546
    
    
    
    880
    
    
    
    827Data processing
    
    
    908
    
    
    
    820
    
    
    
    295
    
    
    
    293Advertising
    
    
    415
    
    
    
    719
    
    
    
    118
    
    
    
    229Franchise taxes
    
    
    803
    
    
    
    905
    
    
    
    221
    
    
    
    285Postage, supplies and office expenses
    
    
    1,041
    
    
    
    971
    
    
    
    354
    
    
    
    290Travel, training and insurance
    
    
    1,987
    
    
    
    639
    
    
    
    788
    
    
    
    186Professional services
    
    
    1,310
    
    
    
    1,011
    
    
    
    453
    
    
    
    323Transaction processing
    
    
    661
    
    
    
    767
    
    
    
    222
    
    
    
    262Real estate owned and other expenses
    
    
    1,490
    
    
    
    800
    
    
    
    661
    
    
    
    212Loan expenses
    
    
    516
    
    
    
    979
    
    
    
    210
    
    
    
    332Merger expenses
    
    
    4
    
    
    
    465
    
    
    
    
    
    
    
    197Total general, administrative and other expense
    
    
    21,145
    
    
    
    20,612
    
    
    
    7,249
    
    
    
    6,586Earnings before federal income taxes
    
    
    722
    
    
    
    175
    
    
    
    102
    
    
    
    1,294Total federal income taxes
    
    
    131
    
    
    
    (264
    )
    
    
    (253
    )
    
    
    225NET EARNINGS
    
    $
    591
    
    
    $
    439
    
    
    $
    355
    
    
    $
    1,069EARNINGS PER SHAREBasic
    
    $
    0.08
    
    
    $
    0.06
    
    
    $
    0.05
    
    
    $
    0.15Diluted
    
    $
    0.08
    
    
    $
    0.06
    
    
    $
    0.05
    
    
    $
    0.15Dividends declared per share
    
    
    0.020
    
    
    
    0.225
    
    
    
    0.000
    
    
    
    0.075
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Camco Financial Corporation
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
  Nine months ended
    
    Three months endedSeptember 30,
    
    September 30,2009
    
    2008
    
    2009
    
    2008Net earnings
    
    $
    591
    
    
    $
    439
    
    
    $
    355
    
    
    $
    1,069Other comprehensive income, net of tax:Unrealized holding gains (losses) during the period, net of
taxes $154, $(58), $162 and $82
for the respective periods
    
    
    298
    
    
    
    (113
    )
    
    
    314
    
    
    
    160Reclassification adjustment for realized gains included in net
in earnings, net of taxes of $0 and $1 for the respective nine
month periods and $0 for each of the three month
periods ended September 30, 2009 and 2008, respectively
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    Comprehensive income
    
    $
    889
    
    
    $
    328
    
    
    $
    669
    
    
    $
    1,229
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Camco Financial Corporation
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 2009
    
    
    2008Cash flows from operating activities:Net earnings for the periodAdjustments to reconcile net earnings to net cash
    
    $
    591
    
    
    $
    439provided by operating activities:Amortization of deferred loan origination fees
    
    
    337
    
    
    
    233Amortization of premiums and discounts on investment
and mortgage-backed securities  net
    
    
    (22
    )
    
    
    63Amortization of mortgage servicing rights  net
    
    
    888
    
    
    
    370Depreciation and amortization
    
    
    1,007
    
    
    
    1,020Stock option expense
    
    
    228
    
    
    
    54Deferred federal income taxes
    
    
    1,170
    
    
    
    (345
    )Restricted stock / unearned compensation
    
    
    (75
    )
    
    
    Provision for losses on loans
    
    
    1,877
    
    
    
    3,762Loss on sale of real estate acquired through foreclosure
    
    
    469
    
    
    
    213(Gain) loss on sale of investments and fixed assets
    
    
    (156
    )
    
    
    (3
    )Federal Home Loan Bank stock dividends
    
    
    
    
    
    
    (1,166
    )Net increase in cash surrender value of life insurance
    
    
    (586
    )
    
    
    (616
    )Gain on sale of loans
    
    
    (980
    )
    
    
    (302
    )Loans originated for sale in the secondary market
    
    
    (91,855
    )
    
    
    (36,442
    )Proceeds from sale of loans in the secondary market
    
    
    92,834
    
    
    
    37,085Increase (decrease) in cash, due to changes in:Accrued interest receivable
    
    
    383
    
    
    
    677Prepaid expenses and other assets
    
    
    4,291
    
    
    
    (952
    )Accounts Payable and other liabilities
    
    
    (5,890
    )
    
    
    (310
    )Federal income taxes:Current
    
    
    912
    
    
    
    (359
    )Net cash provided by operating activities
    
    
    5,423
    
    
    
    3,421Cash flows provided by (used in) investing activities:Purchase of securities designated as available for sale
    
    
    (24,019
    )
    
    
    (46,175
    )Purchase of securities designated as held to maturity
    
    
    
    
    
    
    (19,154
    )Purchase of loans
    
    
    (7,035
    )
    
    
    (249
    )Loan disbursements
    
    
    (85,314
    )
    
    
    (158,237
    )Principal repayments on loans
    
    
    154,727
    
    
    
    179,362Principal repayments, maturities on securities
    
    
    60,150
    
    
    
    52,177Purchase of office premises and equipment
    
    
    (284
    )
    
    
    (324
    )Proceeds from sale of securities designated as available for sale
    
    
    
    
    
    
    4,254Proceeds from sale of office premises and equipment
    
    
    180
    
    
    
    2Proceeds from surrender of bank owned life insurance
    
    
    4,460
    
    
    
    Proceeds from sales of real estate acquired through foreclosure
    
    
    3,170
    
    
    
    3,184Net cash provided by (used in) investing activities
    
    
    106,035
    
    
    
    14,840Net cash provided by operating and investing activities
(subtotal carried forward)
    
    
    111,458
    
    
    
    18,261
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Camco Financial Corporation
 CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
 
 2009
    
    
    2008Net cash provided by operating and investing activities
(subtotal carried forward)
    
    $
    111,458
    
    
    $
    18,261Cash flows provided by financing activities:Net increase(decrease) in deposits
    
    
    (53,565
    )
    
    
    38,406Proceeds from Federal Home Loan Bank advances
    
    
    44,000
    
    
    
    154,687Repayment of Federal Home Loan Bank advances and other borrowings
    
    
    (93,953
    )
    
    
    (185,802
    )Dividends paid on common stock
    
    
    (143
    )
    
    
    (2,684
    )Decrease in advances by borrowers for taxes and insurance
    
    
    (1,838
    )
    
    
    (1,665
    )Net cash provided by (used in) financing activities
    
    
    (105,499
    )
    
    
    2,942Net increase (decrease) in cash and cash equivalents
    
    
    5,959
    
    
    
    21,203Cash and cash equivalents at beginning of period
    
    
    52,285
    
    
    
    23,004Cash and cash equivalents at end of period
    
    $
    58,244
    
    
    $
    44,207Supplemental disclosure of cash flow information:Cash paid during the period for:Interest on deposits and borrowings
    
    $
    16,343
    
    
    $
    23,656Income Taxes
    
    $
    238
    
    
    $
    250Dividends declared but unpaid
    
    $
    
    
    
    $
    Supplemental disclosure of noncash investing activities:Recognition of mortgage-servicing rights in accordance with SFAS No. 140
    
    $
    973
    
    
    $
    485Transfer of loans to real estate acquired through foreclosure
    
    $
    7,453
    
    
    
    5,709
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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, 2008. 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, 2009, are not necessarily indicative of
the results which may be expected for the entire year.
 Critical Accounting Policies
 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 and the valuation of mortgage
servicing rights. Actual results could differ from those estimates.
 Allowance for Loan Losses
 The 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.Each quarter management analyzes the adequacy of the allowance for loan losses based on
review of the loans in the portfolio along with an analysis of external factors (including
current housing price depreciation, homeowners loss of equity, etc) and historical
delinquency and loss trends. The allowance is developed through specific components; 1) the
specific allowance for loans subject to individual analysis (FAS 114), 2) the allowance for
classified loans not otherwise subject to individual analysis and 3) the allowance for
non-classified loans (primarily homogenous).Classified loans with indication or acknowledgment of deterioration in specific industries
are subject to individual analysis. Loan classifications are those used by regulators
consisting of Special Mention, Substandard, Doubtful and Loss. In evaluating these loans
for impairment, the measure of expected loss is based on the present value of the expected
future cash flows discounted at the loans effective interest rate, a loans observable
market price or the fair value of the collateral if the loan is collateral dependent. All
other classified assets and non-classified assets are combined with the homogenous loan
pools and segregated into loan segments. The segmentation is based on grouping loans with
similar risk characteristics (one-to-four family, home equity, etc.). Loss rate factors are
developed for each loan segment which are used to estimate
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Camco Financial Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  3.
    
    Critical Accounting Policies (continued)
 Allowance for Loan Losses
 losses and determine an allowance. The loss factors for each segment are derived from
historical delinquency, classification, and charge-off rates and adjusted for economic
factors and an estimated loss scenario.The allowance is reviewed by management to determine whether the amount is considered
adequate 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. 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. While the Corporation strives to
reflect all known risk factors in its evaluations, judgment errors may occur.
 Mortgage Servicing Rights
 To 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)
  Reclassifications
 Some items in the prior year financial statements were reclassified to conform to the
current presentation.
 4.
    
    Earnings Per Share
 Basic earnings per common share is computed based upon the weighted-average number of common
 shares outstanding during the year. Diluted earnings per common share is computed including
the dilutive effect of additional potential common shares issuable under outstanding stock
options. Diluted earnings per share is not computed for periods in which an operating loss
is sustained. The computations were as follows for the nine months ended September 30, 2009
and 2008:
 For the nine months ended
    
    
    For the three months endedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(In thousands, except per share information)BASIC:Net Earnings
    
    $
    591
    
    
    $
    439
    
    
    $
    355
    
    
    $
    1,069Weighted average common shares outstanding
    
    
    7,201
    
    
    
    7,156
    
    
    
    7,206
    
    
    
    7,156Basic earnings per share
    
    $
    0.08
    
    
    $
    0.06
    
    
    $
    0.05
    
    
    $
    0.15DILUTED:Net Earnings
    
    $
    591
    
    
    $
    439
    
    
    $
    355
    
    
    $
    1,069Weighted average common shares outstanding
    
    
    7,201
    
    
    
    7,156
    
    
    
    7,206
    
    
    
    7,156Dilutive effect of stock options
    
    
    1
    
    
    
    7
    
    
    
    
    
    
    
    7Total common shares and dilutive potential common shares
    
    
    7,202
    
    
    
    7,163
    
    
    
    7,206
    
    
    
    7,163Diluted earnings per share
    
    $
    0.08
    
    
    $
    0.06
    
    
    $
    0.05
    
    
    $
    0.15
 5.
    
    Stock Option Plans
 The Corporation follows 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 2009 and
2008:
 2009
    
    2008Fair value, calculated
    
    $
    1.43
    
    
    $
    0.74Exercise Price
    
    $
    2.46
    
    
    $
    9.07Risk-free interest rate
    
    
    2.66
    %
    
    
    3.52
    %Expected stock price volatility
    
    
    61.00
    %
    
    
    15.75
    %Expected dividend yield
    
    
    1.63
    %
    
    
    6.00
    %Expected Life
    
    10 years
    
    10 years
 10




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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, 2009 and
December 31, 2008, and changes during the periods ending on those dates is presented below:
 Nine months ended
    
    
    Year endedSeptember 30,
    
    
    December 31,2009
    
    
    2008Weighted-
    
    
    
    
    
    
    Weighted-average
    
    
    
    
    
    
    averageexercise
    
    
    
    
    
    
    exerciseShares
    
    
    price
    
    
    Shares
    
    
    priceOutstanding at beginning of period
    
    
    260,703
    
    
    $
    14.11
    
    
    
    318,238
    
    
    $
    15.10Granted
    
    
    80,000
    
    
    
    2.46
    
    
    
    47,167
    
    
    
    9.07Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    
    
    
    
    (39,429
    )
    
    
    14.88Forfeited
    
    
    (79,282
    )
    
    
    13.99
    
    
    
    (65,273
    )
    
    
    14.82Outstanding at end of period
    
    
    261,421
    
    
    $
    10.58
    
    
    
    260,703
    
    
    $
    14.11Options exercisable at end of period
    
    
    235,102
    
    
    $
    10.53
    
    
    
    195,717
    
    
    $
    15.01Weighted-average fair value of
options granted during the period
    
    
    
    
    
    $
    1.43
    
    
    
    
    
    
    $
    0.74
  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  $2.50
    
    
    80,000
    
    
    
    9.3
    
    
    
    $   2.46
    
    
    
    80,000
    
    
    
    $   2.46$8.92  $9.75
    
    
    25,263
    
    
    
    7.9
    
    
    
    9.00
    
    
    
    11,588
    
    
    
    9.10$11.36  $14.16
    
    
    77,831
    
    
    
    6.4
    
    
    
    13.18
    
    
    
    65,187
    
    
    
    13.61$14.55  $17.17
    
    
    78,327
    
    
    
    4.5
    
    
    
    16.80
    
    
    
    78,327
    
    
    
    16.43261,421
    
    
    
    6.0
    
    
    
    $ 10.58
    
    
    
    235,102
    
    
    
    $ 10.53
 11




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##### Table of Contents



Camco Financial Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  6.
    
    Fair ValueSFAS No. 107, Disclosures about Fair Value of Financial Instruments, requires disclosure
of fair value information about financial instruments, whether or not recognized in the
consolidated statement of financial condition, for which it is practicable to estimate that
value. In cases where quoted market prices are not available, fair values are based on
estimates using present value or other valuation techniques. Those techniques are
significantly affected by the assumptions used, including the discount rate and estimates
of future cash flows. In that regard, the derived fair value estimates cannot be
substantiated by comparison to independent markets and, in many cases, could not be
realized in immediate settlement of the instrument. SFAS No. 107 excludes certain
financial instruments and all non-financial instruments from its disclosure requirements.
Accordingly, the aggregate fair value amounts presented do not represent the underlying
value of the Corporation.The following methods and assumptions were used by the Corporation in estimating its fair
value disclosures for financial instruments. The use of different market assumptions
and/or estimation methodologies may have a material effect on the estimated fair value
amounts.
 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
 12




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##### Table of Contents



Camco Financial Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   Advances by Borrowers for Taxes and Insurance
 Commitments to Extend Credit
  September 30, 2009
    
    
    December 31, 2008Carrying
    
    
    Fair
    
    
    Carrying
    
    
    Fairvalue
    
    
    value
    
    
    value
    
    
    value(In thousands)Financial assetsCash and cash equivalents
    
    
    58,244
    
    
    
    58,244
    
    
    $
    52,285
    
    
    $
    52,285Investment securities available for sale
    
    
    60,940
    
    
    
    60,940
    
    
    
    85,352
    
    
    
    85,352Investment securities held to maturity
    
    
    2,160
    
    
    
    2,222
    
    
    
    13,406
    
    
    
    13,530Loans held for sale
    
    
    2,186
    
    
    
    2,225
    
    
    
    2,185
    
    
    
    2,205Loans receivable
    
    
    684,426
    
    
    
    678,923
    
    
    
    756,641
    
    
    
    713,447Federal Home Loan Bank stock
    
    
    29,888
    
    
    
    29,888
    
    
    
    29,888
    
    
    
    29,888Accrued interest receivable
    
    
    4,206
    
    
    
    4,206
    
    
    
    4,118
    
    
    
    4,118Financial liabilitiesDeposits
    
    
    670,391
    
    
    
    647,790
    
    
    $
    723,956
    
    
    $
    733,322Advances from the Federal Home Loan Bank
    
    
    122,401
    
    
    
    127,894
    
    
    
    167,106
    
    
    
    175,246Repurchase agreements
    
    
    6,479
    
    
    
    6,479
    
    
    
    11,727
    
    
    
    11,727Subordinated debentures
    
    
    5,000
    
    
    
    5,388
    
    
    
    5,000
    
    
    
    4,997Advances by borrowers for taxes and
insurance
    
    
    620
    
    
    
    620
    
    
    
    2,458
    
    
    
    2,458Accrued interest payable
    
    
    1,650
    
    
    
    1,650
    
    
    
    1,801
    
    
    
    1,801
     13




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##### Table of Contents



Camco Financial Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  6. Fair Value of Financial Instruments (continued)Repurchase Agreements (continued)
    Fair Value Measurements at Reporting Date Using(in thousands)
    
    Sept. 30, 2009
    
    Level 1
    
    Level 2
    
    Level 3Securities available for sale
    
    $
    60,940
    
    
    $
    
    
    
    $
    60,940
    
    
    $
    
  Fair Value Measurements at Reporting Date Using(in thousands)
    
    Sept. 30, 2009
    
    Level 1
    
    Level 2
    
    Level 3Impaired loans
    
    $
    31,550
    
    
    $
    
    
    
    $
    
    
    
    $
    31,550Loans held for sale
    
    
    2,186
    
    
    
    
    
    
    
    
    
    
    
    2,186Mortgage servicing rights
    
    
    3,813
    
    
    
    
    
    
    
    
    
    
    
    3,183Real estate acquired
through foreclosure
    
    
    8,937
    
    
    
    
    
    
    
    
    
    
    
    8,937
    
 14




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##### Table of Contents



Camco Financial Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  6. Fair Value of Financial Instruments (continued)Repurchase Agreements (continued
   
    
    The percentage of impaired loans on which we relied on third party appraisals
that had a date greater than 12 months was approximately 25%. The remaining 75%
had appraisals with a date of less than or equal to 12 months.
    
    Based on policy, a loan is typically deemed impaired (nonperforming) once it
has gone over 90 days delinquent. Our management of the trouble
(d) credit will
vary as will the timing of valuations, loan loss provision and chargeoffs 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. When a loan meets the
definition of substandard, it is evaluated for impairment. If impaired, the
collateral is then evaluated and an appraisal is most typically ordered. Upon
receipt of a value, we complete a FAS114 analysis to determine if the impaired
loan requires a specific reserve. The time frame may be as short as 30 days or
as much as 180 days, when an appraisal is ordered. We have not had any
significant time lapses.
    
    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 committees and quarterly loan loss reserve reviews. Strategy
documents and exposure projections are completed on a monthly basis to ensure
that the current status of the troubled asset is clearly understood and
reported.
    
    The Asset Classification Committee oversees the management of all impaired
loans and any subsequent loss provision or chargeoff that is considered. When a
loan is deemed impaired, the valuation is obtained to determine any existing
loss that may present as of the valuation date consistent with FAS 114. 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
chargeoff). 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 chargeoff
will remain in a nonperforming status until it is brought current. Typically,
this occurs when a loan is paid current and completes a payment period necessary
to show that the loan can perform. Camco monitors through various system
reports any loan whose terms have been modified. These reports identify
troubled debt restructures, modification, and renewals.
    
    When circumstances do not allow for updated values 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
    
    Various on-line fair market value estimations programs
(i.e. Freddie Mac, Fannie Mae, Zillow, etc).
  15




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##### Table of Contents



Camco Financial Corporation
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
  Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operation
(continued)
   
    
    The Companys total assets declined and maturing borrowings were repaid with excess
cash;
    
    Total loans declined reflecting a decrease in lending opportunities relating to the
economic conditions in our market areas
    
    Additional foreclosed asset valuations resulted in increased operating expenses through
additional valuation allowances and maintenance and property tax expense
    
    Additional expenses related to special assessment levied by the Federal Deposit
Insurance Corporation (FDIC) was paid in September
    
    Interest expense continues to decrease as current rates paid on deposits are lower than
in prior periods as management has cautiously priced deposits. Balances of high-cost
certificates of deposit and FHLB advances have been lower through the first nine months of
fiscal 2009, and most of the advances that have matured during the first nine months of
this fiscal year have been repaid with excess liquidity
    
    Net charge-offs totaled $3.6 million for the quarter and
$5.1 million for the nine
months ended September 30, 2009.
    
    Real estate owned increased $3.1 million during the current nine months, which is
reflective of prior identified loans evolving through the collection cycle.
 Subsequent Event
 Subsequent
Events,
 
 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;
 16




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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, 2008 to September 30, 2009
 Forward Looking Statements (continued)
 
    
    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 non-performing 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.
  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, 2008 to September 30, 2009
 Overview:
 Discussion of Financial Condition Changes from December 31, 2008 to September 30, 2009
 Camco offers diversified financial products and services through 23 financial service locations
in Ohio, West Virginia and Kentucky through its financial unit, Advantage Bank and a subsidiary,
Camco Title Agency, Inc. Products and services include traditional banking products, such as
deposit accounts and lending products through traditional offices, ATMs and telephone and
internet-based banking. Additionally we offer title insurance which is provided Camco Title.
      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, 2008 to September 30, 2009
    September 30, 2009
    
    
    December 31, 2008(In thousands)90+ days
    
    
    
    
    
    
    
    
    
    
    90+ days30 - 89 days
    
    
    delinquent,
    
    
    
    
    
    
    30 - 89 days
    
    
    delinquent,delinquent
    
    
    accruing
    
    
    Nonaccrual
    
    
    delinquent
    
    
    accruing
    
    
    NonaccrualResidential
    
    $
    5,074
    
    
    $
    
    
    
    $
    20,328
    
    
    $
    6,419
    
    
    $
    44
    
    
    $
    17,203Multifamily
    
    
    1,126
    
    
    
    
    
    
    
    2,874
    
    
    
    30
    
    
    
    
    
    
    
    3,139Non Residential
    
    
    2,291
    
    
    
    375
    
    
    
    13,351
    
    
    
    306
    
    
    
    
    
    
    
    18,057Construction and development
    
    
    637
    
    
    
    
    
    
    
    6,945
    
    
    
    253
    
    
    
    
    
    
    
    8,603Commercial
    
    
    757
    
    
    
    
    
    
    
    1,534
    
    
    
    453
    
    
    
    
    
    
    
    1,434HELOC and second mortgage
    
    
    1,598
    
    
    
    
    
    
    
    6,750
    
    
    
    2,434
    
    
    
    
    
    
    
    4,962Consumer and other
    
    
    169
    
    
    
    
    
    
    
    80
    
    
    
    89
    
    
    
    
    
    
    
    86Total
    
    $
    11,652
    
    
    $
    375
    
    
    $
    51,862
    
    
    $
    9,984
    
    
    $
    44
    
    
    $
    53,484
  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, 2008 to September 30, 2009
  Three Months Ended

    
    Nine Months Ended(In Thousands)
    
    Sept 30, 2009
    
    June 30, 2009
    
    Sept 30, 2009
    
    Sept 30, 2008Average Loans
    
    
    675,016
    
    
    
    692,546
    
    
    
    697,737
    
    
    
    786,669Allowance for Loan Losses:Beginning Balance
    
    
    15,466
    
    
    
    15,860
    
    
    
    15,747
    
    
    
    6,623Charge-Offs:Commercial, Financial and Agricultural
    
    
    903
    
    
    
    135
    
    
    
    1,079
    
    
    
    814Real Estate  Construction
    
    
    323
    
    
    
    10
    
    
    
    333
    
    
    
    Real Estate  Residential
    
    
    1,719
    
    
    
    1,680
    
    
    
    3,940
    
    
    
    2,309Real Estate  Commercial
    
    
    637
    
    
    
    
    
    
    
    637
    
    
    
    354Consumer
    
    
    6
    
    
    
    1
    
    
    
    16
    
    
    
    16Total Charge  Offs
    
    
    3,588
    
    
    
    1,826
    
    
    
    6,005
    
    
    
    3,493Recoveries:Commercial, Financial and Agricultural
    
    
    1
    
    
    
    
    
    
    
    1
    
    
    
    51Real Estate  Construction
    
    
    0
    
    
    
    
    
    
    
    
    
    
    
    1Real Estate  Residential
    
    
    186
    
    
    
    636
    
    
    
    873
    
    
    
    233Real Estate  Commercial
    
    
    0
    
    
    
    
    
    
    
    2
    
    
    
    243Consumer
    
    
    1
    
    
    
    6
    
    
    
    10
    
    
    
    45Total Recoveries
    
    
    188
    
    
    
    642
    
    
    
    886
    
    
    
    573Net Charge  Offs
    
    
    3,400
    
    
    
    1,184
    
    
    
    5,119
    
    
    
    2,920Provision for Loan Losses
    
    
    439
    
    
    
    790
    
    
    
    1,877
    
    
    
    3,762Allowance for loan losses, end of period
    
    
    12,505
    
    
    
    15,466
    
    
    
    12,505
    
    
    
    7,465Ratio of net charge offs to average loans:
    
    
    2.01
    %
    
    
    0.68
    %
    
    
    0.98
    %
    
    
    0.49
    %
   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, 2009 and 2008
(continued)
  September 30, 2009
    
    
    December 31, 2008
    
    
    ChangeBalance
    
    
    Rate
    
    
    Balance
    
    
    Rate
    
    
    Balance
    
    
    RateNoninterest-bearing demand
    
    $
    33,310
    
    
    
    0.00
    %
    
    $
    37,526
    
    
    
    0.00
    %
    
    
    (4,216
    )
    
    
    0.00
    %Interest-bearing demand
    
    
    73,614
    
    
    
    0.62
    
    
    
    87,199
    
    
    
    0.91
    
    
    
    (13,585
    )
    
    
    (0.29
    )Money market
    
    
    100,254
    
    
    
    0.68
    
    
    
    112,749
    
    
    
    1.35
    
    
    
    (12,495
    )
    
    
    (0.67
    )Savings
    
    
    37,432
    
    
    
    0.25
    
    
    
    33,838
    
    
    
    0.26
    
    
    
    3,594
    
    
    
    (0.01
    )Certificates of deposit  retail
    
    
    382,633
    
    
    
    2.88
    
    
    
    413,134
    
    
    
    3.75
    
    
    
    (30,501
    )
    
    
    (0.87
    )Certificates of deposit  brokered
    
    
    43,148
    
    
    
    3.32
    
    
    
    39,510
    
    
    
    4.23
    
    
    
    3,638
    
    
    
    (0.91
    )Total deposits
    
    $
    670,391
    
    
    
    2.04
    %
    
    $
    723,956
    
    
    
    2.71
    %
    
    
    (53,565
    )
    
    
    (0.67
    )%
     Comparison of Results of Operations for the Nine Months Ended September 30, 2009 and 2008
  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, 2009 and 2008
(continued)
 Interest Income
   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 Nine Months Ended September 30, 2009 and 2008
(continued)
 AVERAGE BALANCE, YIELD, RATE AND VOLUME DATA
  2009
    
    
    2008Average
    
    
    Interest
    
    
    Average
    
    
    Average
    
    
    Interest
    
    
    AverageNine Months Ended September 30,
    
    outstanding
    
    
    earned
    
    
    yield/
    
    
    outstanding
    
    
    earned /
    
    
    yield/(Dollars in thousands)
    
    balance
    
    
    / paid
    
    
    rate
    
    
    balance
    
    
    paid
    
    
    rateInterest-earning assets:Loans receivable (1)
    
    
    676,494
    
    
    
    30,560
    
    
    
    6.02
    %
    
    $
    776,096
    
    
    
    38,694
    
    
    
    6.65
    %Securities
    
    
    82,405
    
    
    
    2,481
    
    
    
    4.01
    %
    
    
    96,543
    
    
    
    3,239
    
    
    
    4.25
    %FHLB stock
    
    
    29,888
    
    
    
    1,042
    
    
    
    4.65
    %
    
    
    29,182
    
    
    
    1,166
    
    
    
    5.33
    %Other Interest-bearing accts
    
    
    57,301
    
    
    
    25
    
    
    
    0.06
    %
    
    
    29,619
    
    
    
    407
    
    
    
    1.83
    %Total interest-earning assets
    
    
    846,088
    
    
    
    34,108
    
    
    
    5.38
    %
    
    
    931,440
    
    
    
    43,506
    
    
    
    6.23
    %Noninterest-earning assets (2)
    
    
    106,790
    
    
    
    
    
    
    
    
    
    
    
    96,659Total average assets
    
    $
    952,878
    
    
    
    
    
    
    
    
    
    
    $
    1,028,099Interest-bearing liabilities:Deposits
    
    
    641,929
    
    
    
    12,039
    
    
    
    2.50
    %
    
    
    686,086
    
    
    
    17,539
    
    
    
    3.41
    %FHLB advances and other
    
    
    157,968
    
    
    
    4,161
    
    
    
    3.51
    %
    
    
    196,817
    
    
    
    6,355
    
    
    
    4.31
    %Total interest-bearing liabilities
    
    
    799,897
    
    
    
    16,200
    
    
    
    2.70
    %
    
    
    882,903
    
    
    
    23,894
    
    
    
    3.61
    %Noninterest-bearing deposits
    
    
    37,183
    
    
    
    
    
    
    
    
    
    
    
    37,707Noninterest-bearing liabilities
    
    
    43,681
    
    
    
    
    
    
    
    
    
    
    
    20,688Total average liabilities
    
    
    880,761
    
    
    
    
    
    
    
    
    
    
    
    941,298Total average shareholders equity
    
    
    72,117
    
    
    
    
    
    
    
    
    
    
    
    86,801Total liabilities and shareholders
equity
    
    $
    952,878
    
    
    
    
    
    
    
    
    
    
    $
    1,028,099Net interest income/Interest rate spread
    
    
    
    
    
    $
    17,908
    
    
    
    2.67
    %
    
    
    
    
    
    $
    19,612
    
    
    
    2.62
    %Net interest margin (3)
    
    
    
    
    
    
    
    
    
    
    2.82
    %
    
    
    
    
    
    
    
    
    
    
    2.81
    %Average interest-earning assets to
average interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    105.8
    %
    
    
    
    
    
    
    
    
    
    
    105.5
    %
 
 (1)
    
    Includes Loans Held for Sale but does not include ALLL and Non-Accrual Loans(2)
    
    Includes nonaccrual loans, mortgage servicing rights and allowance for loan losses(3)
    
    Net interest income as a percent of average interest-earning assets 23




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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, 2009 and 2008
(continued)
    Interest Expense
   Provision for Losses on Loans
  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 Nine Months Ended September 30, 2009 and 2008
(continued)
 Provision for Losses on Loans (continued)
   Other Income
   General, Administrative and Other Expense
     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, 2009 and 2008
 Federal Income Taxes
  General
  Interest Income
      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, 2009 and 2008
 Interest Expense
   Net Interest Income
 
 27




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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, 2009 and 2008
 AVERAGE BALANCE, YIELD, RATE AND VOLUME DATA
  2009
    
    
    2008Average
    
    
    Interest
    
    
    Average
    
    
    Average
    
    
    Interest
    
    
    AverageThree Months Ended September 30,
    
    outstanding
    
    
    earned
    
    
    yield/
    
    
    outstanding
    
    
    earned /
    
    
    yield/(Dollars in thousands)
    
    balance
    
    
    / paid
    
    
    rate
    
    
    balance
    
    
    paid
    
    
    rateInterest-earning assets:Loans receivable (1)
    
    
    651,796
    
    
    
    9,948
    
    
    
    6.10
    %
    
    $
    769,406
    
    
    
    12,503
    
    
    
    6.50
    %Securities
    
    
    68,825
    
    
    
    661
    
    
    
    3.84
    %
    
    
    98,880
    
    
    
    1,094
    
    
    
    4.43
    %FHLB stock
    
    
    29,888
    
    
    
    373
    
    
    
    4.99
    %
    
    
    29,590
    
    
    
    398
    
    
    
    5.38
    %Other Interest-bearing accts
    
    
    54,206
    
    
    
    5
    
    
    
    0.04
    %
    
    
    47,129
    
    
    
    112
    
    
    
    0.95
    %Total interest-earning assets
    
    
    804,714
    
    
    
    10,987
    
    
    
    5.46
    %
    
    
    945,005
    
    
    
    14,107
    
    
    
    5.97
    %Noninterest-earning assets (2)
    
    
    110,207
    
    
    
    
    
    
    
    
    
    
    
    82,359Total average assets
    
    $
    914,922
    
    
    
    
    
    
    
    
    
    
    $
    1,027,364Interest-bearing liabilities:Deposits
    
    
    577,546
    
    
    
    3,619
    
    
    
    2.51
    %
    
    
    694,240
    
    
    
    5,419
    
    
    
    3.12
    %FHLB advances and other
    
    
    139,882
    
    
    
    1,189
    
    
    
    3.40
    %
    
    
    191,592
    
    
    
    2,022
    
    
    
    4.22
    %Total interest-bearing liabilities
    
    
    717,428
    
    
    
    4,808
    
    
    
    2.68
    %
    
    
    885,832
    
    
    
    7,441
    
    
    
    3.36
    %Noninterest-bearing deposits
    
    
    36,094
    
    
    
    
    
    
    
    
    
    
    
    36,568Noninterest-bearing liabilities
    
    
    89,221
    
    
    
    
    
    
    
    
    
    
    
    19,094Total average liabilitiesTotal average shareholders equity
    
    
    72,179
    
    
    
    
    
    
    
    
    
    
    
    85,870Total liabilities and shareholders
equity
    
    $
    914,922
    
    
    
    
    
    
    
    
    
    
    $
    1,027,364Net interest income/Interest rate spread
    
    
    
    
    
    $
    6,179
    
    
    
    2.78
    %
    
    
    
    
    
    $
    6,666
    
    
    
    2.61
    %Net interest margin (3)
    
    
    
    
    
    
    
    
    
    
    3.07
    %
    
    
    
    
    
    
    
    
    
    
    2.82
    %Average interest-earning assets to
average interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    112.17
    %
    
    
    
    
    
    
    
    
    
    
    106.7
    %
 
 (1)
    
    Includes Loans Held for Sale but does not include ALLL and Non-Accrual Loans(2)
    
    Includes securities designated as available for sale.(3)
    
    Net interest income as a percent of average interest-earning assets. 28




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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, 2009 and 2008
 Provision for Losses on Loans
  Other Income
 rd
 General, Administrative and Other Expense
     Federal Income Taxes
  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
      30




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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)
   31




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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 (1)
    
    $
    200
    
    
    
    419
    
    
    
    284
    
    
    
    312
    
    
    
    1,215Advances from the Federal Home Loan Bank
    
    
    57,000
    
    
    
    23,000
    
    
    
    15,586
    
    
    
    26,815
    
    
    
    122,401Certificates of deposit
    
    
    272,309
    
    
    
    144,326
    
    
    
    8,789
    
    
    
    358
    
    
    
    425,782Repurchase agreements
    
    
    6,479
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,479Subordinated debentures (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,000
    
    
    
    5.000Ohio Equity Funds for Housing
    
    
    1,189
    
    
    
    959
    
    
    
    301
    
    
    
    227
    
    
    
    2,676Amount of commitments expiration per periodCommitments to originate loans:Revolving, open-end lines
    
    $
    54,799
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54,7991-4 family residential construction
    
    
    3,773
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,773Commercial real estate, other
construction land development
    
    
    9,043
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,043Commitments to fund commercial
real estate, construction and land
development loans not secured by
real estate
    
    
    8,327
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,327Other unused commitments
    
    
    8,398
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,398Stand by letters of credit
    
    
    538
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    538Total contractual obligations
    
    $
    422,055
    
    
    
    168,704
    
    
    
    24,960
    
    
    
    32,712
    
    
    
    648,341
 
 (1)
    
    An additional lease was signed by Advantage on October 15, 2009 that has total contractual
obligation of $528,675 which begins November 16, 2009 and ends August 31, 2012. Advantage
will have the right to use the existing furniture during the term of the lease and at the end
of the term it has the right to buy the furniture for an amount of $1.00.(2)
    
    The subordinated debentures are redeemable, at Camcos option, commencing September 15, 2008.
The debentures mature on September 15, 2037. 32




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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
    
    $
    83,516
    
    
    
    13.77
    %
    
    ≥ $
    48,524
    
    
    ≥
    8.0
    %
    
    ≥ $
    60,655
    
    
    
    10.0
    %Advantage Bank
    
    $
    78,696
    
    
    
    13.01
    %
    
    ≥ $
    48,405
    
    
    ≥
    8.0
    %
    
    ≥ $
    60,506
    
    
    
    10.0
    %Tier I capital to risk-weighted
assets:Camco Financial Corporation
    
    $
    75,892
    
    
    
    12.51
    %
    
    ≥ $
    24,262
    
    
    ≥
    4.0
    %
    
    ≥ $
    36,3933
    
    
    
    6.0
    %Advantage Bank
    
    $
    71,072
    
    
    
    11.75
    %
    
    ≥ $
    24,202
    
    
    ≥
    4.0
    %
    
    ≥ $
    36,303
    
    
    
    6.0
    %Tier I leverage to average assets:Camco Financial Corporation
    
    $
    75,892
    
    
    
    8.29
    %
    
    ≥ $
    36,637
    
    
    ≥
    4.0
    %
    
    ≥ $
    45,796
    
    
    
    5.0
    %Advantage Bank (1)
    
    $
    71,072
    
    
    
    7.79
    %
    
    ≥ $
    36,476
    
    
    ≥
    4.0
    %
    
    ≥ $
    45,595
    
    
    
    5.0
    %
 
 (1)
    
    Due to the consent order Advantage cannont be considered well capitalized until such order is
lifted by the FDIC and the Ohio Division.    33




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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)
    
 Quantitative and Qualitative Disclosures about Market Risk
      34




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##### Table of Contents



Camco Financial Corporation
 Quantitative and Qualitative Disclosures about Market Risk (continued)
   
 Controls and Procedures
      
  Legal Proceedings
  Risk Factors
  35




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##### Table of Contents



Unregistered Sales of Equity Securities and Use of Proceeds
 (a)
    
    Not applicable(b)
    
    Not applicable(c)
    
    Not applicable
 Defaults Upon Senior Securities
 Not applicable
 Submission of Matters to a Vote of Security Holders
 Not applicable
 Other Information
 Not applicable
 36




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##### Table of Contents



Exhibits
 Exhibit 11
    
    Statement regarding computation of per share earnings (incorporated by reference to
Note 4 on page 10 of this Form 10-Q)Exhibit 31.1
    
    Section 302 Certification by Chief Executive OfficerExhibit 31.2
    
    Section 302 Certification by Principal Financial OfficerExhibit 32.1
    
    Section 1350 certification by Chief Executive OfficerExhibit 32.2
    
    Section 1350 certification by Principal Financial Officer
 37




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##### Table of Contents



SIGNATURES
  Date:  November 4, 2009
    By:
    /s/ James E. HustonJames E. HustonChief Executive Officer
(Principal Executive Officer)Date:  November 4, 2009
    By:
    /s/ James E. BrooksJames E. BrooksChief Financial Officer
(Principal Financial Officer) 38