##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 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)
 814 Wheeling Avenue, Cambridge, Ohio 43725
 
 Common Stock, $1 par value per share
    
    NASDAQ Global Market(Title of Each Class)
    
    (Name of exchange on which registered)
 Securities registered pursuant to Section 12(g) of the Act:
  o þ
 o þ
 þ o
 o o
 o
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated filer o(Do not check if a smaller reporting company)

    
    Smaller reporting company þ
 o þ




---



TABLE OF CONTENTS  PART IItem 1. BusinessItem 1A. Risk FactorsItem 1B. Unresolved Staff CommentsItem 2. PropertiesItem 3. Legal ProceedingsItem 4. Submission of Matters to a Vote of Security HoldersPART IIItem 5. Stock InformationItem 6. Selected Consolidated Financial DataItem 7. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 7A. Quantitative and Qualitative Disclosures About Market RiskItem 8. Financial Statements and Supplementary DataItem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A. Controls and ProceduresItem 9B. Other InformationPART IIIItem 10. Directors, Executive Officers and Corporate GovernanceItem 11. Executive CompensationItem 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersItem 13. Certain Relationships and Related Transactions, and Director IndependenceItem 14. Principal Accountant Fees and ServicesPART IVItem 15. Exhibits and Financial Statement SchedulesSIGNATURESINDEX TO EXHIBITSEX-4EX-10.XXIVEX-23EX-31.IEX-31.IIEX-32.IEX-32.II    Table of Contents  
 PART I
 
 Item 1. Business.
 General
      http://www.camcofinancial.com
 Lending Activities
 General
 2




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##### Table of Contents



Loan Portfolio Composition
 At December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Percent
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    Percentof
    
    
    
    
    
    
    of
    
    
    
    
    
    
    of
    
    
    
    
    
    
    of
    
    
    
    
    
    
    ofTotal
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    TotalAmount
    
    
    Loans
    
    
    Amount
    
    
    Loans
    
    
    Amount
    
    
    Loans
    
    
    Amount
    
    
    Loans
    
    
    Amount
    
    
    Loans(Dollars in thousands)Type of loan:Residential properties
    
    $
    332,323
    
    
    
    50.4
    %
    
    $
    402,736
    
    
    
    53.2
    %
    
    $
    435,431
    
    
    
    53.6
    %
    
    $
    474,110
    
    
    
    58.0
    %
    
    $
    474,401
    
    
    
    56.5
    %Multi-family
    
    
    39,027
    
    
    
    5.9
    
    
    
    38,633
    
    
    
    5.1
    
    
    
    40,589
    
    
    
    5.0
    
    
    
    43,392
    
    
    
    5.3
    
    
    
    51,475
    
    
    
    6.1Nonresidential real estate
    
    
    124,245
    
    
    
    18.8
    
    
    
    129,334
    
    
    
    17.1
    
    
    
    126,437
    
    
    
    15.6
    
    
    
    105,577
    
    
    
    12.9
    
    
    
    105,380
    
    
    
    12.5Construction
    
    
    16,384
    
    
    
    2.5
    
    
    
    31,097
    
    
    
    4.1
    
    
    
    45,677
    
    
    
    5.6
    
    
    
    42,654
    
    
    
    5.2
    
    
    
    64,601
    
    
    
    7.7Commercial & development
    
    
    36,392
    
    
    
    5.5
    
    
    
    40,616
    
    
    
    5.4
    
    
    
    41,551
    
    
    
    5.1
    
    
    
    35,287
    
    
    
    4.3
    
    
    
    20,958
    
    
    
    2.5Home equity lines of credit
    
    
    109,163
    
    
    
    16.6
    
    
    
    125,442
    
    
    
    16.6
    
    
    
    121,619
    
    
    
    15.0
    
    
    
    116,436
    
    
    
    14.2
    
    
    
    108,086
    
    
    
    12.9Consumer & other loans
    
    
    17,743
    
    
    
    2.7
    
    
    
    4,176
    
    
    
    .6
    
    
    
    7,255
    
    
    
    .9
    
    
    
    7,851
    
    
    
    1.0
    
    
    
    22,114
    
    
    
    2.6Total
    
    $
    675,277
    
    
    
    102.4
    
    
    $
    772,034
    
    
    
    102.1
    
    
    $
    818,559
    
    
    
    100.8
    
    
    $
    825,307
    
    
    
    100.9
    
    
    $
    847,015
    
    
    
    100.8Less:Unamortized yield adjustments
    
    
    (156
    )
    
    
    (0.0
    )
    
    
    354
    
    
    
    0.0
    
    
    
    166
    
    
    
    (0.0
    )
    
    
    (8
    )
    
    
    (0.0
    )
    
    
    (266
    )
    
    
    (0.0
    )Allowance for loan losses
    
    
    (16,099
    )
    
    
    (2.4
    )
    
    
    (15,747
    )
    
    
    (2.1
    )
    
    
    (6,623
    )
    
    
    (0.8
    )
    
    
    (7,144
    )
    
    
    (0.9
    )
    
    
    (6,959
    )
    
    
    (0.8
    )Total loans, net
    
    $
    659,022
    
    
    
    100.0
    %
    
    $
    756,641
    
    
    
    100.0
    %
    
    $
    812,102
    
    
    
    100.0
    %
    
    $
    818,154
    
    
    
    100.0
    %
    
    $
    839,790
    
    
    
    100.0
    %
 Loan Maturity Schedule.
 Due afterDue in one year
    
    
    one through
    
    
    Due after fiveor less
    
    
    five years
    
    
    years
    
    
    Total(In thousands)Loans:Residential properties
    
    $
    16,662
    
    
    $
    45,495
    
    
    $
    270,166
    
    
    $
    332,323Multifamily
    
    
    843
    
    
    
    22,805
    
    
    
    15,379
    
    
    
    39,027Nonresidential real estate
    
    
    5,467
    
    
    
    42,809
    
    
    
    75,969
    
    
    
    124,245Construction
    
    
    3,602
    
    
    
    9,065
    
    
    
    3,717
    
    
    
    16,384Commercial and development
    
    
    10,789
    
    
    
    15,494
    
    
    
    10,109
    
    
    
    36,392Home equity lines of credit
    
    
    11,664
    
    
    
    62,349
    
    
    
    35,150
    
    
    
    109,163Consumer and other loans
    
    
    7,054
    
    
    
    4,946
    
    
    
    5,743
    
    
    
    17,743Total
    
    $
    56,081
    
    
    $
    202,963
    
    
    $
    416,233
    
    
    $
    675,277
 Due afterDecember 31, 2010(In thousands)Fixed rate of interest
    
    $
    183,526Adjustable rate of interest
    
    
    435,670Total
    
    $
    619,196
  Residential Loans.
 3




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##### Table of Contents



Construction and Development Loans.
   Nonresidential Real Estate Loans
  4




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##### Table of Contents



Consumer and Other Loans
  Loan Solicitation and Processing
    Loan Originations, Purchases and Sales
    5




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##### Table of Contents



Year ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(In thousands)Loans originated:Construction (purchased and originated)
    
    $
    2,310
    
    
    $
    7,774
    
    
    $
    41,323
    
    
    $
    23,752
    
    
    $
    45,066Permanent
    
    
    190,662
    
    
    
    107,776
    
    
    
    80,900
    
    
    
    86,613
    
    
    
    121,033Consumer and other
    
    
    55,243
    
    
    
    127,604
    
    
    
    173,070
    
    
    
    172,403
    
    
    
    234,214Total loans originated
    
    
    245,905
    
    
    
    243,154
    
    
    
    295,293
    
    
    
    282,768
    
    
    
    400,313Loans purchased
    
    
    7,035
    
    
    
    249
    
    
    
    3,021
    
    
    
    3,698
    
    
    
    11,141Reductions:Principal repayments
    
    
    204,502
    
    
    
    229,330
    
    
    
    249,922
    
    
    
    250,409
    
    
    
    323,314Loans sold
    
    
    108,481
    
    
    
    45,330
    
    
    
    49,953
    
    
    
    50,924
    
    
    
    69,734Transfers from loans to real estate owned
    
    
    9,631
    
    
    
    6,574
    
    
    
    5,490
    
    
    
    4,092
    
    
    
    3,725Total reductions
    
    
    (322,614
    )
    
    
    (281,234
    )
    
    
    (305,365
    )
    
    
    (305,425
    )
    
    
    (396,773
    )Increase (decrease) in other items, net (1)
    
    
    (29,655
    )
    
    
    (18,614
    )
    
    
    505
    
    
    
    (959
    )
    
    
    (2,656
    )Net increase (decrease)
    
    $
    (99,329
    )
    
    $
    (56,445
    )
    
    $
    (6,546
    )
    
    $
    (19,918
    )
    
    $
    12,025
 
 (1)
    
    Other items primarily consist of amortization of deferred loan origination fees and the
provision for losses on loans. Lending Limit
  Loan Concentrations.
  Loan Origination and Other Fees.
 Delinquent Loans, Nonperforming Assets and Classified Assets
  6




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##### Table of Contents



At December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(Dollars in thousands)Loans delinquent for:one  two payments
    
    $
    12,590
    
    
    $
    13,338
    
    
    $
    18,210
    
    
    $
    13,833
    
    
    $
    9,490three or more payments
    
    
    29,543
    
    
    
    25,202
    
    
    
    19,070
    
    
    
    18,536
    
    
    
    13,922Total delinquent loans
    
    $
    42,133
    
    
    $
    38,540
    
    
    $
    37,280
    
    
    $
    32,369
    
    
    $
    23,412Ratio of total
delinquent loans to
total net loans
(1)
    
    
    6.39
    %
    
    
    5.09
    %
    
    
    4.59
    %
    
    
    3.91
    %
    
    
    2.76
    %
 
 (1)
    
    Total net loans include loans held for sale.   At December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(Dollars in thousands)Loans accounted for on nonaccrual basis:Real estate:Residential(1)
    
    $
    19,190
    
    
    $
    20,616
    
    
    $
    8,411
    
    
    $
    9,618
    
    
    $
    7,576Multi-family
    
    
    2,341
    
    
    
    3,139
    
    
    
    871
    
    
    
    4,682
    
    
    
    2,300Nonresidential
    
    
    3,857
    
    
    
    18,057
    
    
    
    6,908
    
    
    
    1,989
    
    
    
    3,109Construction
    
    
    4,382
    
    
    
    8,603
    
    
    
    5,568
    
    
    
    92
    
    
    
    Commercial
    
    
    515
    
    
    
    1,393
    
    
    
    455
    
    
    
    398
    
    
    
    387Home equity lines of credit
    
    
    2,415
    
    
    
    1,549
    
    
    
    925
    
    
    
    750
    
    
    
    391Consumer and other
    
    
    148
    
    
    
    127
    
    
    
    857
    
    
    
    136
    
    
    
    159Total nonaccrual loans
    
    
    32,848
    
    
    
    53,484
    
    
    
    23,995
    
    
    
    17,665
    
    
    
    13,922Accruing loans delinquent three months or moreReal estate:Residential
    
    
    
    
    
    
    44
    
    
    
    1,520
    
    
    
    728
    
    
    
    Multi-family
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    143
    
    
    
    Nonresidential
    
    
    2,853
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Construction
    
    
    638
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial
    
    
    110
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total loans 90 days past due and accruing
    
    
    3,601
    
    
    
    44
    
    
    
    1,520
    
    
    
    871
    
    
    
    Total nonperforming loans
    
    
    36,449
    
    
    
    53,528
    
    
    
    25,515
    
    
    
    18,536
    
    
    
    13,922Other real estate owned
    
    
    9,660
    
    
    
    5,841
    
    
    
    5,034
    
    
    
    3,956
    
    
    
    2,581Total nonperforming assets
    
    $
    46,109
    
    
    $
    59,369
    
    
    $
    30,549
    
    
    $
    22,492
    
    
    $
    16,503Allowance for loan losses
    
    $
    16,099
    
    
    $
    15,747
    
    
    $
    6,623
    
    
    $
    7,144
    
    
    $
    6,959Nonperforming loans as a percent of total net loans (2)
    
    
    5.40
    %
    
    
    6.91
    %
    
    
    3.13
    %
    
    
    2.23
    %
    
    
    1.64
    %Nonperforming assets to total assets
    
    
    5.47
    %
    
    
    5.93
    %
    
    
    2.99
    %
    
    
    2.15
    %
    
    
    1.54
    %Allowances for loan losses as a percent of nonperforming loans
    
    
    44.2
    %
    
    
    29.4
    %
    
    
    26.0
    %
    
    
    38.5
    %
    
    
    50.0
    %Memo section:Troubled debt restructuringsLoans and
leases restructured and in compliance with modified
terms
    
    $
    16,645
    
    
    $
    11,440
    
    
    
    
    
    
    
    
    
    
    
    Loans and leases restructured and not in compliance with modified
terms
    
    $
    4,783
    
    
    $
    12,882
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    Includes loans secured by first and junior liens(2)
    
    Includes loans held for sale. 7




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##### Table of Contents



December 31, 2009(In thousands)Classified loans:Substandard
    
    $
    48,231Doubtful
    
    
    735Loss
    
    
    117Total classified assets
    
    $
    49,083
  Allowance for Loan Losses
     8




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##### Table of Contents



December 31,
    
    December 31,2009
    
    2008(Dollars
in thousands)General allowance
    
    $
    11,700
    
    
    $
    10,138Specific allowance
    
    
    4,399
    
    
    
    5,609Total allowance
    
    $
    16,099
    
    
    $
    15,747
   Year ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(Dollars in thousands)Balance at beginning of year
    
    $
    15,747
    
    
    $
    6,623
    
    
    $
    7,144
    
    
    $
    6,959
    
    
    $
    6,476Charge-offs:1-4 family
residential real estate (1)
    
    
    8,267
    
    
    
    3,568
    
    
    
    1,049
    
    
    
    646
    
    
    
    702Multifamily and nonresidential real estate
    
    
    2,548
    
    
    
    836
    
    
    
    743
    
    
    
    562
    
    
    
    133Nonresidential real estate
    
    
    7,116
    
    
    
    354
    
    
    
    173
    
    
    
    
    
    
    
    Other Construction and Land
    
    
    2,484
    
    
    
    703
    
    
    
    
    
    
    
    
    
    
    
    Consumer
    
    
    20
    
    
    
    21
    
    
    
    76
    
    
    
    212
    
    
    
    117Commercial
    
    
    2,052
    
    
    
    964
    
    
    
    25
    
    
    
    
    
    
    
    321Agriculture Loans
    
    
    41
    
    
    
    112
    
    
    
    27
    
    
    
    11
    
    
    
    Overdraft Protection
    
    
    18
    
    
    
    9
    
    
    
    134
    
    
    
    8
    
    
    
    7Total charge-offs
    
    
    22,546
    
    
    
    6,567
    
    
    
    2,097
    
    
    
    1,439
    
    
    
    1,280Recoveries:1-4 family
residential real estate (1)
    
    
    445
    
    
    
    373
    
    
    
    27
    
    
    
    25
    
    
    
    265Multifamily and nonresidential real estate
    
    
    608
    
    
    
    19
    
    
    
    3
    
    
    
    25
    
    
    
    Nonresidential real estate
    
    
    13
    
    
    
    235
    
    
    
    4
    
    
    
    2
    
    
    
    Other Construction and Land
    
    
    
    
    
    
    1
    
    
    
    2
    
    
    
    
    
    
    
    Consumer
    
    
    
    
    
    
    46
    
    
    
    19
    
    
    
    102
    
    
    
    17Commercial
    
    
    22
    
    
    
    223
    
    
    
    1
    
    
    
    30
    
    
    
    Agriculture Loans
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    Overdraft Protection
    
    
    18
    
    
    
    1
    
    
    
    3
    
    
    
    
    
    
    
    1Total recoveries
    
    
    1,106
    
    
    
    898
    
    
    
    81
    
    
    
    184
    
    
    
    283Net (charge-offs) recoveries
    
    
    (21,440
    )
    
    
    (5,669
    )
    
    
    (2,016
    )
    
    
    (1,255
    )
    
    
    (997
    )Provision for losses on loans
    
    
    21,792
    
    
    
    14,793
    
    
    
    1,495
    
    
    
    1,440
    
    
    
    1,480Balance at end of year
    
    $
    16,099
    
    
    $
    15,747
    
    
    $
    6,623
    
    
    $
    7,144
    
    
    $
    6,959Net (charge-offs) recoveries to average loans
    
    
    (3.21
    )%
    
    
    (.74
    )%
    
    
    (.25
    )%
    
    
    (.15
    )%
    
    
    (.12
    )%
 
  9




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##### Table of Contents



At December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Percent
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    PercentOf loans
    
    
    
    
    
    
    Of  loans
    
    
    
    
    
    
    Of  loans
    
    
    
    
    
    
    Of  loans
    
    
    
    
    
    
    Of  loansIn each
    
    
    
    
    
    
    In each
    
    
    
    
    
    
    In each
    
    
    
    
    
    
    In each
    
    
    
    
    
    
    In eachCategory
    
    
    
    
    
    
    Category
    
    
    
    
    
    
    Category
    
    
    
    
    
    
    Category
    
    
    
    
    
    
    CategoryTo total
    
    
    
    
    
    
    To total
    
    
    
    
    
    
    To total
    
    
    
    
    
    
    To total
    
    
    
    
    
    
    To totalAmount
    
    
    Loans
    
    
    Amount
    
    
    Loans
    
    
    Amount
    
    
    Loans
    
    
    Amount
    
    
    Loans
    
    
    Amount
    
    
    Loans(Dollars in thousands)Real estate:Residential
    
    $
    4,912
    
    
    
    49.2
    %
    
    $
    3,842
    
    
    
    52.2
    %
    
    $
    2,723
    
    
    
    53.2
    %
    
    $
    2,367
    
    
    
    57.4
    %
    
    $
    2,470
    
    
    
    56.0
    %Multi-family
    
    
    1,527
    
    
    
    5.8
    
    
    
    1,725
    
    
    
    5.0
    
    
    
    1,413
    
    
    
    5.0
    
    
    
    1,168
    
    
    
    5.3
    
    
    
    512
    
    
    
    6.1Nonresidential
    
    
    4,066
    
    
    
    18.4
    
    
    
    2,783
    
    
    
    16.8
    
    
    
    791
    
    
    
    15.4
    
    
    
    1,883
    
    
    
    12.8
    
    
    
    1,970
    
    
    
    12.4Construction
    
    
    863
    
    
    
    2.4
    
    
    
    1,306
    
    
    
    4.0
    
    
    
    665
    
    
    
    5.6
    
    
    
    239
    
    
    
    5.2
    
    
    
    276
    
    
    
    7.6Commercial & development
    
    
    2,906
    
    
    
    5.4
    
    
    
    3,170
    
    
    
    5.3
    
    
    
    268
    
    
    
    5.1
    
    
    
    952
    
    
    
    4.3
    
    
    
    1,035
    
    
    
    2.5Home equity lines of credit
    
    
    1,185
    
    
    
    16.2
    
    
    
    983
    
    
    
    16.2
    
    
    
    690
    
    
    
    14.9
    
    
    
    252
    
    
    
    14.1
    
    
    
    232
    
    
    
    12.8Consumer & other
    
    
    640
    
    
    
    2.6
    
    
    
    1,938
    
    
    
    0.5
    
    
    
    73
    
    
    
    .8
    
    
    
    283
    
    
    
    0.9
    
    
    
    464
    
    
    
    2.6Total
    
    $
    16,099
    
    
    
    100.0
    %
    
    $
    15,747
    
    
    
    100.0
    %
    
    $
    6,623
    
    
    
    100.0
    %
    
    $
    7,144
    
    
    
    100.0
    %
    
    $
    6,959
    
    
    
    100.0
    %
 Investment and Mortgage-Backed Securities Activities
   At December 31,2009
    
    
    2008
    
    
    2007Amortized
    
    
    % of
    
    
    Fair
    
    
    % of
    
    
    Amortized
    
    
    % of
    
    
    Fair
    
    
    % of
    
    
    Amortized
    
    
    % of
    
    
    Fair
    
    
    % ofCost
    
    
    Total
    
    
    Value
    
    
    total
    
    
    Cost
    
    
    Total
    
    
    Value
    
    
    total
    
    
    Cost
    
    
    Total
    
    
    Value
    
    
    total(Dollars in thousands)Held to maturity:U.S. Government
sponsored
enterprises
    
    $
    
    
    
    
    0.0
    %
    
    $
    
    
    
    
    0.0
    %
    
    $
    10,955
    
    
    
    11.3
    %
    
    $
    11,044
    
    
    
    11.2
    %
    
    $
    
    
    
    
    0.0
    %
    
    $
    
    
    
    
    0.0
    %Municipal bonds
    
    
    501
    
    
    
    .9
    
    
    
    558
    
    
    
    1.0
    
    
    
    541
    
    
    
    0.6
    
    
    
    574
    
    
    
    0.6
    
    
    $
    567
    
    
    
    0.6
    
    
    $
    591
    
    
    
    0.6Mortgage-backed
Securities
    
    
    1,612
    
    
    
    2.8
    
    
    
    1,642
    
    
    
    2.8
    
    
    
    1,910
    
    
    
    1.9
    
    
    
    1,912
    
    
    
    1.9
    
    
    
    2,202
    
    
    
    2.4
    
    
    
    2,202
    
    
    
    2.4Total
    
    
    2,113
    
    
    
    3.7
    
    
    
    2,200
    
    
    
    3.8
    
    
    
    13,406
    
    
    
    13.8
    
    
    
    13,530
    
    
    
    13.7
    
    
    
    2,769
    
    
    
    3.0
    
    
    
    2,793
    
    
    
    3.0Available for sale:U.S. Government
sponsored
enterprises
    
    
    14,514
    
    
    
    25.7
    
    
    
    14,564
    
    
    
    25.0
    
    
    
    28,318
    
    
    
    29.1
    
    
    
    28,639
    
    
    
    29.0
    
    
    
    37,519
    
    
    
    40.9
    
    
    
    37,782
    
    
    
    41.2Municipal bonds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100
    
    
    
    0.1
    
    
    
    101
    
    
    
    1.2
    
    
    
    210
    
    
    
    0.2
    
    
    
    212
    
    
    
    0.2Corporate equity
securities
    
    
    157
    
    
    
    .3
    
    
    
    88
    
    
    
    .2
    
    
    
    157
    
    
    
    0.2
    
    
    
    143
    
    
    
    0.1
    
    
    
    157
    
    
    
    0.2
    
    
    
    164
    
    
    
    0.2Mortgage-backed
securities
    
    
    39,690
    
    
    
    70.3
    
    
    
    41,298
    
    
    
    71.0
    
    
    
    55,218
    
    
    
    56.8
    
    
    
    56,469
    
    
    
    57.1
    
    
    
    51,051
    
    
    
    55.7
    
    
    
    50,761
    
    
    
    55.4Total
    
    
    54,361
    
    
    
    96.3
    
    
    
    55,950
    
    
    
    96.2
    
    
    
    83,793
    
    
    
    86.2
    
    
    
    85,352
    
    
    
    86.3
    
    
    
    88,937
    
    
    
    97.0
    
    
    
    88,919
    
    
    
    97.0Total investments
and mortgage-backed
securities
    
    $
    56,474
    
    
    
    100.0
    %
    
    $
    58,150
    
    
    
    100.0
    %
    
    $
    97,199
    
    
    
    100.0
    %
    
    $
    98,882
    
    
    
    100.0
    %
    
    $
    91,706
    
    
    
    100.0
    %
    
    $
    91,712
    
    
    
    100.0
    %
 10




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##### Table of Contents



At December 31, 2009After one
    
    
    After fiveOne year or less
    
    
    through five years
    
    
    through ten years
    
    
    After ten years
    
    
    TotalWeighted-Amortized
    
    
    Average
    
    
    Amortized
    
    
    Average
    
    
    Amortized
    
    
    Average
    
    
    Amortized
    
    
    Average
    
    
    Amortized
    
    
    Fair
    
    
    AverageCost
    
    
    Yield
    
    
    Cost
    
    
    Yield
    
    
    Cost
    
    
    Yield
    
    
    Cost
    
    
    Yield
    
    
    cost
    
    
    Value
    
    
    yield(Dollars in thousands)U.S. Government
Sponsored
enterprises
    
    $
    11,514
    
    
    
    2.58
    %
    
    $
    
    
    
    
    
    %
    
    $
    3,000
    
    
    
    3.00
    %
    
    $
    
    
    
    
    
    %
    
    $
    14,514
    
    
    $
    14,564
    
    
    
    2.67
    %Municipal bonds
    
    
    
    
    
    
    
    
    
    
    411
    
    
    
    4.20
    
    
    
    
    
    
    
    
    
    
    
    90
    
    
    
    6.66
    
    
    
    501
    
    
    
    558
    
    
    
    4.64Mortgage-backed
Securities
    
    
    953
    
    
    
    4.48
    
    
    
    7,731
    
    
    
    4.13
    
    
    
    7,488
    
    
    
    4.79
    
    
    
    25,130
    
    
    
    5.25
    
    
    
    41,302
    
    
    
    42,940
    
    
    
    4.88Total
    
    $
    12,467
    
    
    
    2.73
    %
    
    $
    8,142
    
    
    
    4.13
    %
    
    $
    10,488
    
    
    
    4.28
    %
    
    $
    25,220
    
    
    
    5.26
    %
    
    $
    56,317
    
    
    $
    58
    
    
    
    4.30
    %
 Deposits and Borrowings
 General.
 Deposits
 See
  At December 31,2009
    
    
    2008
    
    
    2007Weighted-
    
    
    
    
    
    
    Weighted-
    
    
    
    
    
    
    Weighted-Amount
    
    
    average rate
    
    
    Amount
    
    
    average rate
    
    
    Amount
    
    
    average rate(Dollars in thousands)Non-interest bearing demand
    
    $
    38,911
    
    
    
    
    %
    
    $
    37,526
    
    
    
    
    %
    
    $
    35,755
    
    
    
    
    %Interest-bearing demand
    
    
    70,564
    
    
    
    0.43
    
    
    
    87,199
    
    
    
    0.91
    
    
    
    91,132
    
    
    
    1.57Money market demand accounts
    
    
    96,172
    
    
    
    0.68
    
    
    
    112,749
    
    
    
    1.35
    
    
    
    111,740
    
    
    
    3.57Passbook and statement savings accounts
    
    
    36,638
    
    
    
    0.25
    
    
    
    33,838
    
    
    
    0.26
    
    
    
    36,963
    
    
    
    0.27Total certificate accounts
    
    
    417,617
    
    
    
    2.73
    
    
    
    452,644
    
    
    
    3.79
    
    
    
    416,594
    
    
    
    4.80Total deposits
    
    $
    659,902
    
    
    
    1.89
    %
    
    $
    723,956
    
    
    
    2.71
    %
    
    $
    692,184
    
    
    
    3.68
    %
 11




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##### Table of Contents



(In thousands)Three months or less
    
    $
    26,444Over three to six months
    
    
    18,369Over six to twelve months
    
    
    45,787Over twelve months
    
    
    45,716Total
    
    $
    136,316
 Borrowings.
  Competition
  Service Corporation Activities
  Employees
  REGULATION
 General
  Ohio Regulation
  12




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##### Table of Contents



Federal Deposit Insurance Corporation
 Supervision and Examination.
  State Chartered Bank Activities.
 Liquidity.
 Regulatory Capital Requirements.
  Regulatory Agreements.
      13




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##### Table of Contents



Transactions with Affiliates and Insiders
  Change in Control
 Federal Law
 Ohio Law
 Holding Company Regulation
  Federal Reserve Requirements
  14




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##### Table of Contents



Item 1A. Risk Factors.
  We expect to continue to be subject to restrictions and conditions of Consent Order issued by
the Federal Deposit Insurance Corporation and the Ohio Division of Financial Institutions. We have
incurred and expect to continue to incur significant additional regulatory compliance expense in
connection with the Consent Order. Failure to comply with the expected Consent Order could result
in additional enforcement action against us, including the imposition of monetary penalties.
  Our capital levels currently are not sufficient to achieve compliance with the higher capital
requirements we must meet as defined in the Consent Order.
  We have a relatively high percentage of non-performing loans and classified assets relative to
our total assets. If our allowance for loan losses is not sufficient to cover our actual loan
losses, our ability to become profitable will be adversely affected.
   15




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##### Table of Contents



The Corporation and the Bank operate in a highly regulated environment and may be adversely
affected by changes in laws and regulations.
  The enactment of recent legislation may significantly affect our financial condition, results
of operation, liquidity or stock price.
    Difficult economic conditions and market volatility have adversely impacted the banking
industry and financial markets generally and may significantly affect our business, financial
condition, or results of operation.
  16




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##### Table of Contents




    
    Inability of borrowers to make timely repayments of their loans, or decreases in value
of real estate collateral securing the payment of such loans resulting in significant
credit losses, which could result in increased delinquencies, foreclosures and customer
bankruptcies, any of which could have a material adverse effect on our operating results.
    
    Increased regulation of the financial services industry, including heightened legal
standards and regulatory requirements or expectations. Compliance with such regulation will
likely increase costs and may limit Camcos ability to pursue business opportunities.
    
    Further disruptions in the capital markets or other events, including actions by rating
agencies and deteriorating investor expectations, may result in an inability to borrow on
favorable terms or at all from other financial institutions.
    
    Increased competition among financial services companies due to the recent
consolidation of certain competing financial institutions and the conversion of certain
investment banks to bank holding companies, which may adversely affect the Camcos ability
to market our products and services.
 Volatility in the economy may negatively impact the fair value of our stock.
  
    
    announcements of developments related to our business;
    
    fluctuations in our results of operations;
    
    sales of substantial amounts of our securities into the marketplace;
    
    general conditions in our markets or the worldwide economy;
    
    a shortfall in revenues or earnings compared to securities analysts expectations;
    
    our inability to pay cash dividends
    
    changes in analysts recommendations or projections; and
    
    our announcement of new acquisitions or other projects.
 Changes in interest rates could adversely affect our financial condition and results of operations .
   17




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##### Table of Contents



The Corporation relies, in part, on external financing to fund its operations and the availability
of such funds in the future could adversely impact its growth strategy and prospects.
  Credit risks could adversely affect our results of operations.
  We operate in an extremely competitive market, and our business will suffer if we are unable to
compete effectively.
  Our ability to pay cash dividends is subject to prior FRB approval.
  The preparation of financial statements requires management to make estimates about matters that
are inherently uncertain.
  18




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##### Table of Contents



Our organizational documents may have the effect of discouraging a third party from acquiring us.
  Consumers may decide not to use banks to complete their financial transactions.
  Camco may be named as a defendant from time to time in a variety of litigation and other actions.
  The Corporations allowance for loan losses may not be adequate to cover actual losses.
  A material breach in Camcos security systems may have a significant effect on Camcos business and
reputation.
  19




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##### Table of Contents



Item 1B. Unresolved Staff Comments.
  
 Item 2. Properties.
  Year facility
    
    Leased
    
    Netcommenced
    
    or
    
    bookOffice Location
    
    operations
    
    owned
    
    value (1)134 E. Court Street
Washington Court House, Ohio
    
    
    1963
    
    
    Owned (2)
    
    $
    532.11050 Washington Ave.
Washington Court House, Ohio
    
    
    1996
    
    
    Owned
    
    
    476.71 N. Plum Street
Germantown, Ohio
    
    
    1998
    
    
    Owned
    
    
    450.2687 West Main Street 
New Lebanon, Ohio
    
    
    1998
    
    
    Owned
    
    
    56.92 East High Street 
London, Ohio
    
    
    2004
    
    
    Owned
    
    
    530.93002 Harrison Avenue 
Cincinnati, Ohio
    
    
    2000
    
    
    Owned
    
    
    1,040.51111 St. Gregory Street
Cincinnati, Ohio
    
    
    2000
    
    
    Leased (3)
    
    
    12.75071 Glencrossing Way 
Cincinnati, Ohio
    
    
    2000
    
    
    Leased (4)
    
    
    7.3126 S. 9th Street
Cambridge, Ohio
    
    
    1998
    
    
    Owned
    
    
    74.2226 Third Street 
Marietta, Ohio
    
    
    1976
    
    
    Owned (5)
    
    
    521.61925 Washington Boulevard 
Belpre, Ohio
    
    
    1979
    
    
    Owned
    
    
    214.5478 Pike Street 
Marietta, Ohio
    
    
    1998
    
    
    Leased (6)
    
    
    495.5814 Wheeling Avenue 
Cambridge, Ohio
    
    
    1963
    
    
    Owned
    
    
    1,026.0327 E. 3rd Street 
Uhrichsville, Ohio
    
    
    1975
    
    
    Owned
    
    
    59.8175 N. 11th Street 
Cambridge, Ohio
    
    
    1981
    
    
    Owned
    
    
    301.4209 Seneca Avenue 
Byesville, Ohio
    
    
    1978
    
    
    Leased (7)
    
    
    2.0547 S. James Street 
Dover, Ohio
    
    
    2002
    
    
    Owned(8)
    
    
    361.7
 20




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##### Table of Contents



Year facility
    
    Leased
    
    Netcommenced
    
    or
    
    bookOffice Location
    
    operations
    
    owned
    
    value (1)2497 Dixie Highway
Ft. Mitchell, Kentucky
    
    
    2001
    
    
    Owned
    
    
    
    529.6401-7 Pike Street
Covington, Kentucky
    
    
    2001
    
    
    Owned
    
    
    
    81.07550 Dixie Highway
Florence, Kentucky
    
    
    2001
    
    
    Owned
    
    
    
    409.06901 Glenn Highway
Cambridge, Ohio
    
    
    1999
    
    
    Owned
    (9)
    
    
    1,126.51500 Grand Central
Ave.- Suite #102
Vienna, West Virginia
    
    
    2004
    
    
    Leased
    (10)
    
    
    149.0123 Southgate Parkway
Cambridge, Ohio
    
    
    2005
    
    
    Leased
    (11)
    
    
    50.96360 Tylersville Road
Mason, Ohio
    
    
    2006
    
    
    Leased
    (12)
    
    
    131.51104 Eagleton Blvd.
London, Ohio
    
    
    2006
    
    
    Leased
    (13)
    
    
    255.0828 Wheeling Avenue
Cambridge, Ohio
    
    
    2007
    
    
    Leased
    (14)
    
    
    12.5440 Polaris Parkway
Westerville, OH 43082
    
    
    2009
    
    
    Leased
    (15)
    
    
    0.0
 
 (1)
    
    Net book value amounts are for land, buildings, improvements and construction in progress.(2)
    
    The 134 E. Court Street facility also serves as the Camco Title  Washington Court House
office.(3)
    
    The lease expires in October 2010.(4)
    
    The lease expires in November 2010.(5)
    
    The 226 Third Street facility also serves as the Camco Title  Marietta office.(6)
    
    The lease expires in November 2017. Advantage has the option to renew for two five-year
terms. The lease is for land only.(7)
    
    The lease expires in September 2010. Advantage has the option to renew the lease for a
five-year term.(8)
    
    The 547 S. James Street facility also serves as the Camco Title  Dover office.(9)
    
    The Camco Financial Corporation staff re-located to 814 Wheeling Avenue, Cambridge. Building
is currently vacant and listed with a local realtor and under contract.(10)
    
    The lease expires in October 2013. Advantage has the option to renew for three five-year
terms.(11)
    
    The lease expires in June 2012. Advantage has the option to purchase at a cost of $120,000.(12)
    
    The lease expires in October 2016. Advantage has the option to renew the lease for two
five-year terms.(13)
    
    The lease expires in May 2011. Advantage has the option to renew for three five-year terms.(14)
    
    The lease expires in June 2010. Advantage has the option to renew for two one-year terms.
Advantage has the option to purchase at a cost of $185,000 with a 3% escalation.(15)
    
    The lease expires in August 2012.  21




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##### Table of Contents



Item 3. Legal Proceedings.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  
 PART II
 
 Item 5. Stock Information
  CashDividendsYear ended December 31, 2009
    
    High
    
    Low
    
    DeclaredQuarter ending:December 31, 2009 (1)
    
    $
    2.17
    
    
    $
    1.51
    
    
    $
    0.0000September 30, 2009 (1)
    
    
    2.60
    
    
    
    2.00
    
    
    
    0.0000June 30, 2009
    
    
    3.66
    
    
    
    1.56
    
    
    
    0.0100March 31, 2009
    
    
    3.70
    
    
    
    0.85
    
    
    
    0.0100Year ended December 31, 2008Quarter ending:December 31, 2008
    
    $
    9.88
    
    
    $
    2.17
    
    
    $
    0.0375
    *September 30, 2008
    
    
    11.75
    
    
    
    9.12
    
    
    
    0.0000
    *June 30, 2008
    
    
    12.20
    
    
    
    9.85
    
    
    
    0.0750March 31, 2008
    
    
    11.26
    
    
    
    8.93
    
    
    
    0.1500
 
 *
    
    Beginning in the third quarter of 2008 the timing of dividends was modified to incorporate
actual quarter end results prior to the declaration of dividends.The Board of Directors declared the cash dividend for third quarter on October 13, 2008 and the
dividend was paid on October 31, 2008. The fourth quarter dividend was declared on January 20,
2009.(1)
    
    See Liquidity and Capital Resources in Item 7 of this Form 10-K for discussion of
restrictions that materially limit Camcos ability to pay dividends. 22




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##### Table of Contents



Performance Graph
   
 Period EndingIndex

    
    12/31/04
    

    
    12/31/05
    

    
    12/31/06
    

    
    12/31/07
    

    
    12/31/08
    

    
    12/31/09Camco Financial Corporation
    
    
    
    100.00
    
    
    
    
    96.41
    
    
    
    
    89.13
    
    
    
    
    80.94
    
    
    
    
    24.24
    
    
    
    
    15.23NASDAQ Composite
    
    
    
    100.00
    
    
    
    
    101.37
    
    
    
    
    111.03
    
    
    
    
    121.92
    
    
    
    
    72.49
    
    
    
    
    104.31SNL Bank and Thrift
    
    
    
    100.00
    
    
    
    
    101.57
    
    
    
    
    118.68
    
    
    
    
    90.50
    
    
    
    
    52.05
    
    
    
    
    51.35
   23




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##### Table of Contents



Item 6. Selected Consolidated Financial Data.
  SELECTED
CONSOLIDATED FINANCIAL DATA: (1)
 As of December 31:
    
    2009
    
    2008
    
    2007
    
    2006
    
    2005(In thousands)Total amount of:Assets
    
    $
    842,655
    
    
    $
    1,000,446
    
    
    $
    1,023,261
    
    
    $
    1,048,216
    
    
    $
    1,071,248Interest-bearing deposits in other financial institutions
    
    
    17,663
    
    
    
    35,272
    
    
    
    5,432
    
    
    
    12,673
    
    
    
    11,299Securities available for sale  at market
    
    
    55,950
    
    
    
    85,352
    
    
    
    88,919
    
    
    
    107,506
    
    
    
    109,514Securities held to maturity
    
    
    2,113
    
    
    
    13,406
    
    
    
    2,769
    
    
    
    3,449
    
    
    
    4,176Loans receivable  net (1)
    
    
    659,497
    
    
    
    758,826
    
    
    
    815,271
    
    
    
    821,818
    
    
    
    841,737Deposits
    
    
    659,902
    
    
    
    723,956
    
    
    
    692,184
    
    
    
    684,782
    
    
    
    660,242FHLB advances and other borrowings
    
    
    109,232
    
    
    
    183,833
    
    
    
    220,981
    
    
    
    257,139
    
    
    
    307,223Stockholders equity
    
    
    60,514
    
    
    
    71,700
    
    
    
    88,634
    
    
    
    91,092
    
    
    
    90,763SELECTED CONSOLIDATED OPERATING DATA:(1)For the year ended December 31:
    
    2009
    
    2008
    
    2007
    
    2006
    
    2005(In thousands, except per share data)Total interest income
    
    $
    44,724
    
    
    $
    56,783
    
    
    $
    64,877
    
    
    $
    62,689
    
    
    $
    57,078Total interest expense
    
    
    20,594
    
    
    
    30,974
    
    
    
    36,421
    
    
    
    32,771
    
    
    
    26,529Net interest income
    
    
    24,130
    
    
    
    25,809
    
    
    
    28,456
    
    
    
    29,918
    
    
    
    30,549Provision for losses on loans
    
    
    21,792
    
    
    
    14,793
    
    
    
    1,495
    
    
    
    1,440
    
    
    
    1,480Net interest income after
provision for losses on loans
    
    
    2,338
    
    
    
    11,016
    
    
    
    26,961
    
    
    
    28,478
    
    
    
    29,069Other income
    
    
    8,261
    
    
    
    3,708
    
    
    
    6,588
    
    
    
    5,033
    
    
    
    6,592General, administrative and other expense
    
    
    28,113
    
    
    
    28,481
    
    
    
    26,985
    
    
    
    24,910
    
    
    
    22,754Goodwill Impairment
    
    
    
    
    
    
    6,683
    
    
    
    
    
    
    
    
    
    
    
    Earnings (loss) before federal
income taxes (credits)
    
    
    (17,514
    )
    
    
    (20,440
    )
    
    
    6,266
    
    
    
    8,601
    
    
    
    12,907Federal income taxes (credits)
    
    
    (6,297
    )
    
    
    (5,116
    )
    
    
    1,765
    
    
    
    2,727
    
    
    
    4,141Net earnings (loss)
    
    $
    (11,217
    )
    
    $
    (15,324
    )
    
    $
    4,501
    
    
    $
    5,874
    
    
    $
    8,766Earnings (loss) per share:Basic
    
    $
    (1.56
    )
    
    $
    (2.14
    )
    
    $
    .61
    
    
    $
    .78
    
    
    $
    1.15Diluted (2)
    
    $
    (1.56
    )
    
    $
    (2.14
    )
    
    $
    .61
    
    
    $
    .78
    
    
    $
    1.15Dividends declared per share
    
    $
    0.0200
    
    
    $
    0.2625
    
    
    $
    0.6000
    
    
    $
    0.6000
    
    
    $
    0.5800Return on average assets (3)
    
    
    (1.20
    )%
    
    
    (1.50
    )%
    
    
    0.43
    %
    
    
    0.55
    %
    
    
    0.82
    %Return on average equity (3)
    
    
    (15.73
    )
    
    
    (17.93
    )
    
    
    4.98
    
    
    
    6.46
    
    
    
    9.73Average equity to average assets (3)
    
    
    7.63
    
    
    
    8.34
    
    
    
    8.67
    
    
    
    8.58
    
    
    
    8.43Dividend payout ratio (4)
    
    
    N/A
    (5)
    
    
    N/A
    (5)
    
    
    98.36
    
    
    
    76.92
    
    
    
    50.43
 
 (1)
    
    Includes loans held for sale.(2)
    
    Represents a pro-forma presentation based upon net earnings from operations divided
by weighted-average basic and diluted shares outstanding.(3)
    
    Ratios are based upon the mathematical average of the balances at the end of each
month.(4)
    
    Represents dividends per share divided by basic earnings per share.(5)
    
    Not meaningful. 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations.
 General
  24




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Overview
      Forward-Looking Statements
  25




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##### Table of Contents




    
    anticipated changes in industry conditions created by state and federal legislation and
regulations;
    
    anticipated changes in general interest rates and the impact of future interest rate
changes on our profitability, capital adequacy and the fair value of our financial assets
and liabilities;
    
    retention of our existing customer base and our ability to attract new customers;
    
    the development of new products and services and their success in the marketplace;
    
    the adequacy of the allowance for loan losses; and,
    
    statements regarding our anticipated loan and deposit account growth, expense levels,
liquidity and capital resources and projections of earnings.
  
    
    competition in the industry and markets in which we operate;
    
    levels of 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.
  Critical Accounting Policies
  26




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##### Table of Contents



Allowance for Loan Losses
     Mortgage Servicing Rights
   27




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##### Table of Contents



Summary
 Discussion of Financial Condition Changes from December 31, 2009 to December 31, 2008
      28




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##### Table of Contents



December 31, 2009
    
    
    December 31, 2008(In thousands)30 - 89
    
    
    90+ days
    
    
    
    
    
    
    
    
    
    
    90+ daysdays
    
    
    delinquent,
    
    
    
    
    
    
    30 - 89 days
    
    
    delinquent,delinquent
    
    
    accruing
    
    
    Nonaccrual
    
    
    delinquent
    
    
    accruing
    
    
    NonaccrualResidential
    
    $
    4,818
    
    
    $
    
    
    
    $
    16,354
    
    
    $
    6,419
    
    
    $
    44
    
    
    $
    17,203Multifamily
    
    
    79
    
    
    
    
    
    
    
    2,047
    
    
    
    30
    
    
    
    
    
    
    
    3,139Non Residential
    
    
    2,693
    
    
    
    2,853
    
    
    
    4,151
    
    
    
    306
    
    
    
    
    
    
    
    18,057Construction / development
    
    
    534
    
    
    
    638
    
    
    
    4,383
    
    
    
    253
    
    
    
    
    
    
    
    8,603Commercial
    
    
    92
    
    
    
    110
    
    
    
    515
    
    
    
    453
    
    
    
    
    
    
    
    1,434HELOC and second mortgage
    
    
    2,020
    
    
    
    
    
    
    
    5,250
    
    
    
    2,434
    
    
    
    
    
    
    
    4,962Consumer and other
    
    
    77
    
    
    
    
    
    
    
    148
    
    
    
    89
    
    
    
    
    
    
    
    86Total
    
    $
    10,313
    
    
    $
    3,601
    
    
    $
    32,848
    
    
    $
    9,984
    
    
    $
    44
    
    
    $
    53,484
   29




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##### Table of Contents



December 31, 2009
    
    
    December 31, 2008
    
    
    Change(In thousands)Balance
    
    
    Rate
    
    
    Balance
    
    
    Rate
    
    
    Balance
    
    
    RateNoninterest-bearing demand
    
    $
    38,911
    
    
    
    0.00
    %
    
    $
    37,526
    
    
    
    0.00
    %
    
    $
    1,388
    
    
    
    0.00
    %Interest-bearing demand
    
    
    70,564
    
    
    
    0.43
    
    
    
    87,199
    
    
    
    0.91
    
    
    
    (16,635
    )
    
    
    (0.48
    )Money market
    
    
    96,172
    
    
    
    0.68
    
    
    
    112,749
    
    
    
    1.35
    
    
    
    (16,577
    )
    
    
    (0.67
    )Savings
    
    
    36,638
    
    
    
    0.25
    
    
    
    33,838
    
    
    
    0.26
    
    
    
    2,800
    
    
    
    (0.01
    )Certificates of deposit  retail
    
    
    385,622
    
    
    
    2.70
    
    
    
    413,134
    
    
    
    3.75
    
    
    
    (27,512
    )
    
    
    (1.05
    )Certificates of deposit  brokered
    
    
    31,995
    
    
    
    3.19
    
    
    
    39,510
    
    
    
    4.23
    
    
    
    (7,515
    )
    
    
    (1.04
    )Total deposits
    
    $
    659,902
    
    
    
    1.89
    %
    
    $
    723,956
    
    
    
    2.71
    %
    
    $
    (64,051
    )
    
    
    (0.82
    )%
      30




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##### Table of Contents



Comparison of Results of Operations for the Years Ended December 31, 2009 and December 31, 2008
 General.
 Net Interest Income.
     31




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##### Table of Contents



Provision for Losses on Loans.
   
    
    The percentage of impaired loans on which we relied on a current third party appraisal for
valuation exceeded 90% as of December 31, 2009.
    
    Based on policy, a loan is typically deemed impaired (nonperforming) once it has gone over
90 days delinquent. Our management of the troubled credit will vary as will the timing of
valuations, loan loss provision and charge offs based on a multitude of factors such as, cash
flow of the business/borrower, responsiveness of the borrower, communication with the
commercial banker, property inspections, property deterioration, and delinquency. Typically,
a nonperforming, non-homogeneous collateral dependent loan will be valued and adjusted (if
needed) within a 90 day period after determination of impairment. If impaired, the collateral
is then evaluated and an updated appraisal is most typically ordered. Upon receipt of an appraisal or
other valuation, we complete an impairment 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.
    
    Camcos credit risk management process consistently monitors key performance metrics across
both the performing and non performing assets to identify any further degradation of credit
quality. Additionally, impaired credits are monitored in weekly loan committee asset quality
discussions, monthly Asset Classification Committee meetings and quarterly loan loss reserve
reviews. 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 be present as of the
valuation date. Policy dictates that any differences from fair market
value, less costs to sell, are to be recognized as loss during the current period (loan
 32




---



##### Table of Contents



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 period on on-time payments that demonstrate 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 collateral or Camco determines that an
appraisal is not needed, the underlying collaterals fair market value is estimated in the
following ways:
 §
    
    Camco personnel property inspections combined with original
appraisal review§
    
    Auditor values§
    
    Broker price opinions§
    
    Various on-line fair market value estimations programs (i.e. Freddie Mac, Fannie Mae,
Zillow, etc).
 Other Income.
   General, Administrative and Other Expense.
  Federal Income Taxes.
 Comparison of Results of Operations for the Years Ended December 31, 2008 and December 31, 2007
 General.
 33




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##### Table of Contents



Net Interest Income.
     Provision for Losses on Loans.
 Other Income.
 34




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##### Table of Contents



General, Administrative and Other Expense.
     Federal Income Taxes.
 35




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##### Table of Contents



AVERAGE BALANCE, YIELD, RATE AND VOLUME DATA
  Year ended December 31,2009
    
    
    2008
    
    
    2007Average
    
    
    Interest
    
    
    Avg
    
    
    Average
    
    
    Interest
    
    
    Avg
    
    
    Average
    
    
    Interest
    
    
    Averageoutstanding
    
    
    earned /
    
    
    yield/
    
    
    outstanding
    
    
    earned /
    
    
    yield/
    
    
    outstanding
    
    
    earned /
    
    
    yield/balance
    
    
    paid
    
    
    rate
    
    
    balance
    
    
    paid
    
    
    rate
    
    
    balance
    
    
    paid
    
    
    Rate(Dollars in thousands)Interest-earning assets:Loans receivable (1)
    
    $
    667,746
    
    
    $
    40,231
    
    
    
    6.02
    %
    
    $
    767,202
    
    
    $
    50,446
    
    
    
    6.58
    %
    
    $
    816,637
    
    
    $
    57,955
    
    
    
    7.10
    %Securities (2)
    
    
    76,886
    
    
    
    3,085
    
    
    
    4.01
    %
    
    
    98,212
    
    
    
    4,369
    
    
    
    4.45
    %
    
    
    103,962
    
    
    
    4,595
    
    
    
    4.42
    %FHLB Stock
    
    
    29,888
    
    
    
    1,381
    
    
    
    4.62
    %
    
    
    29,345
    
    
    
    1,536
    
    
    
    5.23
    %
    
    
    28,722
    
    
    
    1,895
    
    
    
    6.60
    %Interest-bearing deposits and other
    
    
    55,074
    
    
    
    27
    
    
    
    0.05
    %
    
    
    35,610
    
    
    
    432
    
    
    
    1.21
    %
    
    
    8,041
    
    
    
    432
    
    
    
    5.36
    %Total interest-earning assets
    
    
    829,594
    
    
    
    44,724
    
    
    
    5.39
    %
    
    
    930,369
    
    
    
    56,783
    
    
    
    6.10
    %
    
    
    957,362
    
    
    
    64,877
    
    
    
    6.78
    %Noninterest-earning assets (3)
    
    
    105,626
    
    
    
    
    
    
    
    
    
    
    
    94,220
    
    
    
    
    
    
    
    
    
    
    
    87,949Total Average Assets
    
    $
    935,220
    
    
    
    
    
    
    
    
    
    
    $
    1,024,597
    
    
    
    
    
    
    
    
    
    
    $
    1,045,311Interest-bearing liabilities:Deposits
    
    $
    661,806
    
    
    $
    15,349
    
    
    
    2.32
    %
    
    $
    686,116
    
    
    $
    22,728
    
    
    
    3.31
    %
    
    $
    652,711
    
    
    $
    25,429
    
    
    
    3.90
    %FHLB advances and other
    
    
    148,223
    
    
    
    5,245
    
    
    
    3.54
    %
    
    
    194,458
    
    
    
    8,246
    
    
    
    4.24
    %
    
    
    249,793
    
    
    
    10,992
    
    
    
    4.40
    %Total interest-bearing liabilities
    
    
    810,029
    
    
    
    20,594
    
    
    
    2.54
    %
    
    
    880,574
    
    
    
    30,974
    
    
    
    3.52
    %
    
    
    902,504
    
    
    
    36,421
    
    
    
    4.04
    %Noninterest-bearing deposits
    
    
    37,256
    
    
    
    
    
    
    
    
    
    
    
    37,918
    
    
    
    
    
    
    
    
    
    
    
    35,919Noninterest-bearing liabilities
    
    
    16,606
    
    
    
    
    
    
    
    
    
    
    
    20,619
    
    
    
    
    
    
    
    
    
    
    
    16,418Total Average Liabilities
    
    
    863,891
    
    
    
    
    
    
    
    
    
    
    
    939,111
    
    
    
    
    
    
    
    
    
    
    
    954,841Total Average Shareholders equity
    
    
    71,329
    
    
    
    
    
    
    
    
    
    
    
    85,486
    
    
    
    
    
    
    
    
    
    
    
    90,470Net interest income/Interest rate spread
    
    $
    935,220
    
    
    $
    24,130
    
    
    
    2.85
    %
    
    $
    1,024,597
    
    
    $
    25,809
    
    
    
    2.58
    %
    
    $
    1,045,311
    
    
    $
    28,456
    
    
    
    2.74
    %Net interest margin (4)
    
    
    
    
    
    
    
    
    
    
    2.91
    %
    
    
    
    
    
    
    
    
    
    
    2.77
    %
    
    
    
    
    
    
    
    
    
    
    2.97
    %Average interest-earning assets to
average interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    105.42
    %
    
    
    
    
    
    
    
    
    
    
    105.65
    %
    
    
    
    
    
    
    
    
    
    
    106.08
    %
 
 (1)
    
    Includes loans held for sale. Loan fees are immaterial.(2)
    
    Includes securities designated as available for sale and held to maturity(3)
    
    Includes nonaccrual loans, mortgage servicing rights and allowance for loan losses(4)
    
    Net interest income as a percent of average interest-earning assets 36




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Rate/Volume Table
  2009
    
    
    2008Increase/(decrease) due to
    
    
    Increase/(decrease) due toYear ended December 31
    
    Volume
    
    
    Rate
    
    
    Total
    
    
    Volume
    
    
    Rate
    
    
    Total(In thousands)Interest income attributable to:Loans receivable (1)
    
    $
    (6,207
    )
    
    $
    (4,008
    )
    
    $
    (10,215
    )
    
    $
    (3,391
    )
    
    $
    (4,118
    )
    
    $
    (7,509
    )Securities
    
    
    (885
    )
    
    
    (399
    )
    
    
    (1,284
    )
    
    
    (257
    )
    
    
    31
    
    
    
    (226
    )Interest-bearing deposits and other
    
    
    565
    
    
    
    (1,125
    )
    
    
    (560
    )
    
    
    42
    
    
    
    (401
    )
    
    
    (359
    )Total interest income
    
    
    (6,527
    )
    
    
    (5,532
    )
    
    
    (12,059
    )
    
    
    (3,606
    )
    
    
    (4,488
    )
    
    
    (8,094
    )Interest expense attributable to:Deposits
    
    
    (780
    )
    
    
    (6,599
    )
    
    
    (7,379
    )
    
    
    1,403
    
    
    
    (4,104
    )
    
    
    (2,701
    )Borrowings
    
    
    (1,769
    )
    
    
    (1,232
    )
    
    
    (3,001
    )
    
    
    (2,359
    )
    
    
    (387
    )
    
    
    (2,746
    )Total Interest expense
    
    
    (2,549
    )
    
    
    (7,831
    )
    
    
    (10,380
    )
    
    
    (956
    )
    
    
    (4,491
    )
    
    
    (5,447
    )Increase (decrease) in net interest income
    
    $
    (3,978
    )
    
    $
    2,299
    
    
    $
    (1,679
    )
    
    $
    (2,650
    )
    
    $
    3
    
    
    $
    (2,647
    )
 
 (1)
    
    Includes loans held for sale. Yields Earned and Rates Paid
  At December 31,2009
    
    
    2008Weighted-average yield on:Loan portfolio (1)
    
    
    5.88
    %
    
    
    6.47
    %Investment portfolio (2)
    
    
    4.34
    
    
    
    4.05Total interest-earning assets
    
    
    5.71
    
    
    
    5.66Weighted-average rate paid on:Deposits
    
    
    1.89
    
    
    
    2.71FHLB advances
    
    
    3.61
    
    
    
    3.65Total interest-bearing liabilities
    
    
    2.11
    
    
    
    2.89Interest rate spread
    
    
    3.60
    %
    
    
    2.77
    %
 
 (1)
    
    Includes loans held for sale and excludes the allowance for loan losses.(2)
    
    Includes earnings on FHLB stock and investment securities. Taxable
equivalent yield used. 37




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##### Table of Contents



Liquidity and Capital Resources
      38




---



##### Table of Contents



39




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##### Table of Contents



Payments due by periodLess
    
    
    
    
    
    
    
    
    
    Morethan 1
    
    1-3
    
    3-5
    
    than 5year
    
    years
    
    years
    
    years
    
    Total(In thousands)Contractual obligations:Operating lease obligations
    
    $
    393
    
    
    $
    553
    
    
    $
    362
    
    
    $
    149
    
    
    $
    1,457Advances from the Federal Home Loan Bank
    
    
    32,263
    
    
    
    23,658
    
    
    
    15,510
    
    
    
    25,860
    
    
    
    97,291Repurchase agreements
    
    
    6,941
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,941Certificates of deposit
    
    
    278,450
    
    
    
    116,359
    
    
    
    22,808
    
    
    
    
    
    
    
    417,617Subordinated debentures(1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,000
    
    
    
    5,000Ohio Equity Funds for Affordable Housing
    
    
    1,189
    
    
    
    958
    
    
    
    301
    
    
    
    228
    
    
    
    2,676Amount of commitments per periodCommitments to originate loans:Revolving, open-end lines
    
    
    53,290
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    53,2901-4 family residential construction
    
    
    8,378
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,378Commercial real estate, other
construction loan and land
development loans
    
    
    26,090
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,090Commercial real estate,
construction, and land
development loans not secured by
real estate
    
    
    6,753
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,753Other unused commitments
    
    
    9,590
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,590Stand-by letters of credit
    
    
    493
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    493Total contractual obligations
    
    $
    423,830
    
    
    $
    141,528
    
    
    $
    38,981
    
    
    $
    31,237
    
    
    $
    635,576
 
 (1)
    
    The subordinated debentures are redeemable at par, at Camcos option, commencing September 15, 2012. The debentures
mature on September 15, 2037.   40




---



##### Table of Contents



Off-Balance Sheet Arrangements
  
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
       41




---



##### Table of Contents



Change inInterest Rates(basis points)
    
    NII % Change
    
    EVE % Change+200
    
    
    5.90
    %
    
    
    -9.44
    %+100
    
    
    2.50
    %
    
    
    -3.78
    %-100
    
    
    -5.10
    %
    
    
    0.84
    %-200
    
    
    -11.77
    %
    
    
    -0.49
    %
   42




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##### Table of Contents



Item 8. Financial Statements and Supplementary Data.
 Managements Report on Internal Control over Financial Reporting
     43




---



##### Table of Contents



Plans for Remediation of Material Weakness
  
    
    Establishing an interdepartmental committee, which will be a subgroup
of the Asset Classification Committee, amongst credit administration,
enterprise risk management and finance department to review the
overall loan loss provision process by assessing the historical risk
factors, the recent trends, and economic forecasts, as appropriate.
This enhanced collaborative process will help identify trends that
should be recognized in the overall loan loss provision process while
permitting the use of professional judgment necessary to interpret the
complex data. The jointly compiled loan loss provision will be
reported to and approved by the executive management including CEO and
the Board of Directors on a quarterly basis.
    
    Performing more frequent loan loss provision analysis than current
quarterly analysis until otherwise decided in the future. Complete
analysis as of the month-end prior to the quarter-end will be
performed and reviewed by the aforementioned committee.
  44




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
    Internal Control  Integrated Framework
  
 45




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 Internal Control  Integrated Framework
        
 46




---



##### Table of Contents



CAMCO FINANCIAL CORPORATION
 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 
 2009
    
    
2008ASSETSCash and due from banks
    
    $
    20,490
    
    
    $
    17,013Interest-bearing deposits in other financial institutions
    
    
    17,663
    
    
    
    35,272Cash and cash equivalents
    
    
    38,153
    
    
    
    52,285Securities available-for-sale, at market
    
    
    55,950
    
    
    
    85,352Securities held-to-maturity, at cost
    
    
    2,113
    
    
    
    13,406Loans held for sale  at lower of cost or market
    
    
    475
    
    
    
    2,185Loans receivable  net
    
    
    659,022
    
    
    
    756,641Office premises and equipment  net
    
    
    10,870
    
    
    
    11,868Real estate acquired through foreclosure
    
    
    9,660
    
    
    
    5,841Federal Home Loan Bank stock  at cost
    
    
    29,888
    
    
    
    29,888Accrued interest receivable
    
    
    3,979
    
    
    
    4,118Mortgage servicing rights  at lower of cost or market
    
    
    4,433
    
    
    
    3,731Prepaid expenses and other assets
    
    
    5,712
    
    
    
    10,785Cash surrender value of life insurance
    
    
    18,838
    
    
    
    22,532Prepaid and refundable federal income taxes
    
    
    3,562
    
    
    
    1,814Total assets
    
    $
    842,655
    
    
    $
    1,000,446LIABILITIES AND STOCKHOLDERS EQUITYDeposits
    
    $
    659,902
    
    
    $
    723,956Other borrowings
    
    
    11,941
    
    
    
    16,727Advances from the Federal Home Loan Bank
    
    
    97,291
    
    
    
    167,106Advances by borrowers for taxes and insurance
    
    
    1,909
    
    
    
    2,458Accounts payable and accrued liabilities
    
    
    11,098
    
    
    
    18,499Total liabilities
    
    
    782,141
    
    
    
    928,746Commitments
    
    
    
    
    
    
    Stockholders equityPreferred stock  $1 par value; authorized 100,000 shares; no shares outstanding
    
    
    
    
    
    
    Common stock  $1 par value; authorized 14,900,000 shares; 8,884,508 shares
issued at December 31, 2009 and 8,834,508 shares issued at December 31, 2008
    
    $
    8,885
    
    
    $
    8,835Additional paid-in capital
    
    
    60,124
    
    
    
    59,896Retained earnings
    
    
    14,695
    
    
    
    26,055Accumulated other comprehensive income
    
    
    1,049
    
    
    
    1,028Unearned compensation
    
    
    (125
    )
    
    
    Treasury stock - 1,678,913 shares at December 31, 2009 and 2008, at cost
    
    
    (24,114
    )
    
    
    (24,114
    )Total stockholders equity
    
    
    60,514
    
    
    
    71,700Total liabilities and stockholders equity
    
    $
    842,655
    
    
    $
    1,000,446
 47




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##### Table of Contents



CAMCO FINANCIAL CORPORATION
 CONSOLIDATED STATEMENTS OF OPERATIONS
 
 2009
    
    
2008
    
    
2007Interest and dividend incomeLoans
    
    $
    40,231
    
    
    $
    50,446
    
    
    $
    57,955Investment securities
    
    
    3,085
    
    
    
    4,369
    
    
    
    4,595Other interest-bearing accounts
    
    
    1,408
    
    
    
    1,968
    
    
    
    2,327Total interest income
    
    
    44,724
    
    
    
    56,783
    
    
    
    64,877Interest expenseDeposits
    
    
    15,349
    
    
    
    22,728
    
    
    
    25,429Borrowings
    
    
    5,245
    
    
    
    8,246
    
    
    
    10,992Total interest expense
    
    
    20,594
    
    
    
    30,974
    
    
    
    36,421Net interest income
    
    
    24,130
    
    
    
    25,809
    
    
    
    28,456Provision for losses on loans
    
    
    21,792
    
    
    
    14,793
    
    
    
    1,495Net interest income after provision for losses on loans
    
    
    2,338
    
    
    
    11,016
    
    
    
    26,961Other incomeRent and other
    
    
    970
    
    
    
    792
    
    
    
    911Title fees
    
    
    723
    
    
    
    479
    
    
    
    652Loan servicing fees
    
    
    1,264
    
    
    
    1,308
    
    
    
    1,375Gain on sale of loans
    
    
    1,271
    
    
    
    364
    
    
    
    353Mortgage servicing rights  net
    
    
    703
    
    
    
    (2,625
    )
    
    
    (68
    )Service charges and other fees on deposits
    
    
    2,277
    
    
    
    2,387
    
    
    
    2,441Gain on sale of investment securities
    
    
    
    
    
    
    2
    
    
    
    1Gain (loss) on sale of premises and equipment
    
    
    127
    
    
    
    1
    
    
    
    (25
    )Income on cash surrender value life insurance
    
    
    926
    
    
    
    1,000
    
    
    
    948Total other income
    
    
    8,261
    
    
    
    3,708
    
    
    
    6,588General, administrative and other expenseEmployee compensation and benefits
    
    
    12,453
    
    
    
    13,279
    
    
    
    13,216Occupancy and equipment
    
    
    3,247
    
    
    
    3,374
    
    
    
    3,464Federal deposit insurance premiums
    
    
    2,471
    
    
    
    406
    
    
    
    81Data processing
    
    
    1,190
    
    
    
    1,152
    
    
    
    1,186Advertising
    
    
    525
    
    
    
    938
    
    
    
    1,299Franchise taxes
    
    
    1,018
    
    
    
    1,202
    
    
    
    1,104Postage, supplies and office expenses
    
    
    1,394
    
    
    
    1,341
    
    
    
    1,421Travel, training and insurance
    
    
    315
    
    
    
    404
    
    
    
    518Professional services
    
    
    1,692
    
    
    
    1,355
    
    
    
    1,452Transaction processing
    
    
    895
    
    
    
    1,009
    
    
    
    947Real estate owned and other expenses
    
    
    2,312
    
    
    
    2,074
    
    
    
    1,148Loan expenses
    
    
    597
    
    
    
    1,319
    
    
    
    1,447Goodwill Impairment
    
    
    
    
    
    
    6,683
    
    
    
    Merger expenses
    
    
    4
    
    
    
    628
    
    
    
    Total general, administrative and other expense
    
    
    28,113
    
    
    
    35,164
    
    
    
    27,283Earnings (loss) before federal income taxes
    
    
    (17,514
    )
    
    
    (20,440
    )
    
    
    6,266Federal income taxesCurrent
    
    
    (3,924
    )
    
    
    (713
    )
    
    
    1,216Deferred
    
    
    (2,373
    )
    
    
    (4,403
    )
    
    
    549Total federal income taxes
    
    
    (6,297
    )
    
    
    (5,116
    )
    
    
    1,765NET EARNINGS (LOSS)
    
    $
    (11,217
    )
    
    $
    (15,324
    )
    
    $
    4,501EARNINGS (LOSS) PER SHAREBasic
    
    $
    (1.56
    )
    
    $
    (2.14
    )
    
    $
    0.61Diluted
    
    $
    (1.56
    )
    
    $
    (2.14
    )
    
    $
    0.61
 48




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##### Table of Contents



CAMCO FINANCIAL CORPORATION
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 
 2009
    
    
2008
    
    
2007Net earnings (loss)
    
    $
    (11,217
    )
    
    $
    (15,324
    )
    
    $
    4,501Other comprehensive income net of tax effects:Unrealized holding on securities during the period,
net of taxes of $11, $536 and $625 in 2009, 2008
and 2007, respectively
    
    
    21
    
    
    
    1,040
    
    
    
    1,213Reclassification adjustment for realized gains included in operations,
net of taxes of $0, $1 and $1 for the years ended December 31,
2009, 2008 and 2007, respectively
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )Comprehensive income (loss)
    
    $
    (11,196
    )
    
    $
    (14,285
    )
    
    $
    5,713
 49




---



##### Table of Contents



CAMCO FINANCIAL CORPORATION
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 
 AccumulatedAdditional
    
    
    
    
    
    
    other
    
    
    
    
    
    
    
    
    
    
    TotalShares
    
    
    Common
    
    
    paid-in
    
    
    Retained
    
    
    comprehensive
    
    
    Unearned
    
    
    Treasury
    
    
    stockholdersoutstanding
    
    
stock
    
    
capital
    
    
earnings
    
    
income (loss)
    
    
compensation
    
    
stock
    
    
equityBalance at January 1, 2007
    
    
    7,155,595
    
    
    $
    8,832
    
    
    $
    59,722
    
    
    $
    43,954
    
    
    $
    (1,225
    )
    
    $
    
    
    
    $
    (20,191
    )
    
    $
    91,092Stock options exercised
    
    
    2,427
    
    
    
    3
    
    
    
    28
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31Cash dividends declared  $0.60 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,372
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,372
    )Stock Option Expense
    
    
    
    
    
    
    
    
    
    
    92
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    92Net earnings for the year ended December 31, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,501
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,501Purchase of treasury shares
    
    
    (309,888
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,923
    )
    
    
    (3,923
    )Unrealized losses on securities designated as
available for sale, net of related tax benefits
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,213
    
    
    
    
    
    
    
    
    
    
    
    1,213Balance at December 31, 2007
    
    
    7,155,595
    
    
    $
    8,835
    
    
    $
    59,842
    
    
    $
    44,083
    
    
    $
    (12
    )
    
    $
    
    
    
    $
    (24,114
    )
    
    $
    88,634Stock options exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash dividends declared  $0.2625 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,872
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,872
    )Stock Option Expense
    
    
    
    
    
    
    
    
    
    
    54
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54Net loss for the year ended December 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,324
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,324
    )Change in accounting  split dollar life insurance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (832
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (832
    )Unrealized gains on securities designated as
available for sale, net of related tax benefits
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,040
    
    
    
    
    
    
    
    
    
    
    
    1,040Balance at December 31, 2008
    
    
    7,155,595
    
    
    $
    8,835
    
    
    $
    59,896
    
    
    $
    26,055
    
    
    $
    1,028
    
    
    $
    
    
    
    $
    (24,114
    )
    
    $
    71,700Stock options exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash dividends declared  $0.02 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (143
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (143
    )Stock Option Expense
    
    
    
    
    
    
    
    
    
    
    153
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    153Net loss for the year ended December 31, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,217
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,217
    )Restricted shares granted
    
    
    50,000
    
    
    
    50
    
    
    
    75
    
    
    
    
    
    
    
    
    
    
    
    (125
    )
    
    
    
    
    
    
    Unrealized gains of securities designated as
available for sale, net of related tax benefits
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21
    
    
    
    
    
    
    
    
    
    
    
    21Balance at December 31, 2009
    
    
    7,205,595
    
    
    $
    8,885
    
    
    $
    60,124
    
    
    $
    14,695
    
    
    $
    1,049
    
    
    $
    (125
    )
    
    $
    (24,114
    )
    
    $
    60,514
 50




---



##### Table of Contents



CAMCO FINANCIAL CORPORATION
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 2009
    
    
    2008
    
    
    2007Cash flows from operating activities:Net earnings (loss) for the year
    
    $
    (11,217
    )
    
    $
    (15,324
    )
    
    $
    4,501Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities:Amortization of premiums and discounts on investment and
mortgage-backed securities  net
    
    
    (20
    )
    
    
    58
    
    
    
    115Amortization of mortgage servicing rights  net
    
    
    360
    
    
    
    3,229
    
    
    
    747Depreciation and amortization
    
    
    1,413
    
    
    
    1,352
    
    
    
    1,434Stock option expense
    
    
    153
    
    
    
    54
    
    
    
    92Deferred federal income taxes
    
    
    2,373
    
    
    
    (4,403
    )
    
    
    549Provision for losses on loans
    
    
    21,792
    
    
    
    14,793
    
    
    
    1,495Amortization of deferred loan origination fees
    
    
    468
    
    
    
    343
    
    
    
    84Loss on sale of real estate acquired through foreclosure
    
    
    1,069
    
    
    
    1,364
    
    
    
    297Gain on sale of investment securities
    
    
    
    
    
    
    (2
    )
    
    
    (1
    )(Gain) loss on sale of premises and equipment, net
    
    
    (127
    )
    
    
    (1
    )
    
    
    25Federal Home Loan Bank stock dividends
    
    
    
    
    
    
    (1,166
    )
    
    
    Net increase in cash surrender value of life insurance
    
    
    (766
    )
    
    
    (825
    )
    
    
    (786
    )Gain on sale of loans
    
    
    (1,271
    )
    
    
    (364
    )
    
    
    (353
    )Loans originated for sale in the secondary market
    
    
    (106,771
    )
    
    
    (44,346
    )
    
    
    (49,458
    )Proceeds from sale of mortgage loans in the secondary market
    
    
    109,752
    
    
    
    45,694
    
    
    
    50,306Impairment of Goodwill
    
    
    
    
    
    
    6,683
    
    
    
    Increase (decrease) in cash, due to changes in:Accrued interest receivable
    
    
    139
    
    
    
    3,988
    
    
    
    468Prepaid expenses and other assets
    
    
    (1,431
    )
    
    
    (1,388
    )
    
    
    (4,283
    )Accounts payable and other liabilities
    
    
    (5,731
    )
    
    
    29
    
    
    
    (250
    )Net cash provided by operating activities
    
    
    10,185
    
    
    
    9,768
    
    
    
    4,982Cash flows provided by (used in) investing activities:Proceeds from sale of investment securities designated as available for sale
    
    
    
    
    
    
    4,254
    
    
    
    3Purchase of securities designated as available for sale
    
    
    (27,019
    )
    
    
    (50,175
    )
    
    
    (43,729
    )Purchase of securities designated as held to maturity
    
    
    
    
    
    
    (24,104
    )
    
    
    Principal repayments and maturities of investment-securities held to maturity
    
    
    11,333
    
    
    
    13,513
    
    
    
    667Principal repayments and maturities of investment securities available for sale
    
    
    56,432
    
    
    
    50,962
    
    
    
    64,050Loan disbursements
    
    
    (131,381
    )
    
    
    (197,981
    )
    
    
    (245,835
    )Purchases of loans
    
    
    (7,035
    )
    
    
    (249
    )
    
    
    (3,021
    )Principal repayments on loans
    
    
    204,502
    
    
    
    229,330
    
    
    
    249,922Purchase of premises and equipment
    
    
    (476
    )
    
    
    (366
    )
    
    
    (1,131
    )Proceeds from sale of office premises and equipment
    
    
    189
    
    
    
    2
    
    
    
    16Proceeds from sale of real estate acquired through foreclosure
    
    
    4,025
    
    
    
    3,825
    
    
    
    2,454Proceeds from surrender of life insurance
    
    
    4,460
    
    
    
    
    
    
    
    Net cash provided by investing activities
    
    
    115,030
    
    
    
    29,011
    
    
    
    23,396Net cash provided by operating and investing
activities (balance carried forward)
    
    
    125,215
    
    
    
    38,779
    
    
    
    28,378
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CAMCO FINANCIAL CORPORATION
 CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
 
 2009
    
    
2008
    
    
2007Net cash provided by operating and investing
activities (balance brought forward)
    
    $
    125,215
    
    
    $
    38,779
    
    
    $
    28,378Cash flows provided by financing activities:Net increase(decrease) in deposits
    
    
    (64,054
    )
    
    
    31,772
    
    
    
    7,402Proceeds from Federal Home Loan Bank advances
    
    
    44,000
    
    
    
    79,600
    
    
    
    79,000Proceeds from subordinated debentures
    
    
    
    
    
    
    
    
    
    
    5,000Repayment of Federal Home Loan Bank advances
    
    
    (113,815
    )
    
    
    (111,558
    )
    
    
    (125,224
    )Net change in repurchase agreements
    
    
    (4,786
    )
    
    
    (5,190
    )
    
    
    10,066Dividends paid on common stock
    
    
    (143
    )
    
    
    (2,953
    )
    
    
    (4,411
    )Proceeds from exercise of stock options
    
    
    
    
    
    
    
    
    
    
    31Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    (3,923
    )Net increase (decrease) in advances by borrowers for taxes and insurance
    
    
    (549
    )
    
    
    (1,169
    )
    
    
    143Net cash used in financing activities
    
    
    (139,347
    )
    
    
    (9,498
    )
    
    
    (31,916
    )Net increase (decrease) in cash and cash equivalents
    
    
    (14,132
    )
    
    
    29,281
    
    
    
    (3,538
    )Cash and cash equivalents at beginning of year
    
    
    52,285
    
    
    
    23,004
    
    
    
    26,542Cash and cash equivalents at end of year
    
    $
    38,153
    
    
    $
    52,285
    
    
    $
    23,004Supplemental disclosure of cash flow information:Cash paid during the year for:Interest on deposits and borrowings
    
    $
    20,726
    
    
    $
    30,396
    
    
    $
    36,687Income taxes
    
    $
    144
    
    
    $
    250
    
    
    $
    1,125Transfers from loans to real estate acquired through foreclosure
    
    $
    9,631
    
    
    $
    6,574
    
    
    $
    5,490
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CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE A  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Camco Financial Corporation (Camco or the Corporation) is a financial holding company whose
business activities are limited primarily to holding the common stock of Advantage Bank
(Advantage or the Bank) and Camco Title Agency (Camco Title). Advantage conducts a general
banking business within Ohio, West Virginia and northern Kentucky which consists of attracting
deposits from the general public and applying those funds to the origination of loans for
residential, consumer and nonresidential purposes. Advantages profitability is significantly
dependent on net interest income, which is the difference between interest income generated from
interest-earning assets (i.e. loans and investments) and the interest expense paid on
interest-bearing liabilities (i.e. customer deposits and borrowed funds). Net interest income is
affected by the relative amounts of interest-earning assets and interest-bearing liabilities and
the interest received or paid on these balances. The level of interest rates paid or received by
Advantage can be significantly influenced by a number of factors, such as governmental monetary
policy, that are outside of managements control.
 The consolidated financial information presented herein has been prepared in accordance with
accounting principles generally accepted in the United States of America (U.S. GAAP) and
general accounting practices within the financial services industry. In preparing financial
statements in accordance with U.S. GAAP, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and revenues and expenses during
the reporting period. Actual results could differ from such estimates.
 The following is a summary of the Corporations significant accounting policies which have been
consistently applied in the preparation of the accompanying consolidated financial
statements. Some items in the prior-year financial statements were reclassified to
conform to the current years presentation.
 1. Principles of Consolidation
 The consolidated financial statements include the accounts of the Corporation and its
wholly-owned subsidiaries. All significant intercompany balances and transactions have been
eliminated.
 2. Investment Securities
 Investment securities are classified as held to maturity or available for sale upon acquisition.
Securities classified as held to maturity are carried at cost only if the Corporation has the
positive intent and ability to hold these securities to maturity. Securities designated as
available for sale are carried at fair value with resulting unrealized gains or losses recorded
to stockholders equity. Realized gains and losses on sales of securities are recognized on the
trade date using the specific identification method. In estimating other-than-temporary
impairment losses, management considers (1) the length of time and the extent to which the fair
value has been less than cost, (2) the financial condition and near-term prospects of the issuer,
and (3) the intent and ability of the Corporation to retain its investment in the issuer for a
period of time sufficient to allow for any anticipated recovery in fair value.
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CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE A  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 3. Loans Receivable
 Loans held in the portfolio are stated at the principal amount outstanding, adjusted for deferred
loan origination fees and costs and the allowance for loan losses.
 The accrual of interest on loans is discontinued at the time the loan is three monthly payments
delinquent unless the credit is well secured and in the process of collection. In all cases,
loans are placed on nonaccrual or charged off at an earlier date if collection of principal or
interest is considered doubtful. Uncollectible interest on loans that are contractually past due
is charged off, or an allowance is established based on managements periodic evaluation. The
allowance is established by a charge to interest income equal to all interest previously accrued
and not received, and income is not recognized until, in managements judgment, the borrowers
ability to make periodic interest and principal payments has returned to normal, in which case
the loan is returned to accrual status.
 Loans held for sale are carried at the lower of cost (less principal payments received) or fair
value (market value), calculated on an aggregate basis. At December 31, 2009 and 2008, loans
held for sale were carried at cost.
 4. Loan Origination and Commitment Fees
 Currently, the Corporation accounts for loan origination fees and costs by deferring all loan
origination fees received, net of certain direct origination costs, on a loan-by-loan basis and
amortizing the interest income using the interest method, giving effect to actual loan
prepayments. Fees received for loan commitments are deferred and amortized over the life of the
related loan using the interest method.
 5. Allowance for Loan Losses
 It is the Corporations policy to provide valuation allowances for estimated losses on loans
based upon past loss experience, current trends in the level of delinquent and problem loans,
adverse situations that may affect the borrowers ability to repay, the estimated value of any
underlying collateral and current economic conditions in the Banks primary market areas. When
the collection of a loan becomes doubtful, or otherwise troubled, the Corporation records a
charge-off or an allowance equal to the difference between the fair value of the property
securing the loan and the loans carrying value. Such provision is based on managements
estimate of the fair value of the underlying collateral, taking into consideration the current
and currently anticipated future operating or sales conditions. As a result, such estimates are
particularly susceptible to changes that could result in a material adjustment to results of
operations in the near term. Recovery of the carrying value of such loans is dependent to a
great extent on economic, operating, and other conditions that may be beyond the Corporations
control.
 The Corporation accounts for impaired loans by measurements based upon the present value of
expected future cash flows discounted at the loans effective interest rate or, as an
alternative, at the loans observable market price or fair value of the collateral.
 A loan is defined as impaired when, based on current information and events, it is probable that
a creditor will be unable to collect all amounts due according to the contractual terms of the
loan agreement. In applying the provisions, the Corporation considers its investment in
owner-occupied one- to four-family residential loans, home equity lines of credit and consumer
installment loans to be homogeneous and therefore excluded from separate identification for
evaluation of impairment. With respect to the Corporations investment in multi-family,
commercial and nonresidential loans, and its evaluation of any impairment thereon, such loans are
generally
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CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTEA  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 5. Allowance for Loan Losses (continued)
 collateral-dependent and as a result are carried as a practical expedient at the lower of cost or
fair value. It is the Corporations policy to charge off unsecured credits that are more than
ninety days delinquent.
 The allowance for impaired loans is included in the Banks overall allowance for credit losses.
The provision necessary to increase this allowance is included in the Banks overall provision
for losses on loans.
 6. Real Estate Acquired Through Foreclosure
 Real estate acquired through foreclosure is carried at the lower of the loans unpaid principal
balance (cost) or fair value less estimated selling expenses at the date of acquisition. Real
estate loss provisions are recorded if the fair value of the property subsequently declines below
the amount determined at the recording date. In determining the lower of cost or fair value at
acquisition, costs relating to development and improvement of property are capitalized. Costs
relating to holding real estate acquired through foreclosure, net of rental income, are charged
against earnings as incurred.
 7. Office Premises and Equipment
 Office premises and equipment are carried at cost and include expenditures which extend the
useful lives of existing assets. Maintenance, repairs and minor renewals are expensed as
incurred. For financial reporting, depreciation and amortization are provided on the
straight-line method over the useful lives of the assets, estimated to be ten to fifty years for
buildings and improvements and three to twenty-five years for furniture, fixtures and equipment.
An accelerated depreciation method is used for tax reporting purposes.
 8. Mortgage Servicing Rights
 The Corporation accounts for mortgage servicing rights (MSRs) as separate assets. Mortgage
servicing rights are acquired through either the purchase or origination of mortgage loans and
the subsequent sale of those loans with servicing rights retained. At that time, an allocation
of the cost of the loan is considered the mortgage servicing right asset.
 The Corporation assesses the rights for impairment quarterly. Impairment is measured based on
fair value. The mortgage servicing rights recorded by the Bank are segregated into pools for
valuation purposes, using as pooling criteria the loan term and coupon rate.
 To determine the fair value of the MSRs each reporting quarter, information is transmitted to a
third party provider who assists in determining the fair value of MSRs, as described below.
 Servicing assets are recognized as separate assets when loans are sold with servicing retained.
A pooling methodology to the servicing valuation, in which loans with similar characteristics are
pooled together, is applied for valuation purposes. Once pooled, each grouping of loans is
evaluated on a discounted earnings basis to determine the present value of future earnings that a
purchaser could expect to realize from the portfolio. Earnings are projected from a variety of
sources including loan service fees, 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 market value for the pool, calculated using consensus assumptions that
a third party purchaser would utilize in evaluating a potential acquisition of the servicing.
Events that may significantly affect the estimates used are changes in interest rates and the
related impact on mortgage loan prepayment speeds and
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CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTEA  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 8. Mortgage Servicing Rights (continued)
 the payment performance of the underlying loans. The interest rate for float is also calculated
utilizing the current period fed funds rate. Mortgage loan prepayment speeds are calculated by
taking into consideration Advantage Banks historical trends when estimating prepayment speeds
and helped provide scenarios with each evaluation. Based on the assumptions, pre-tax projections
are prepared for each pool of loans serviced. These earning figures approximate the cash flow
that could be received from the servicing portfolio. Valuation results are presented quarterly
to management. At that time, the information is reviewed and MSRs are marked to the lower of
amortized cost or fair value for the current quarter.
 The Corporation recorded capitalization related to mortgage servicing rights totaling approximately
$1.2 million, $604,000, and $679,000, for the years ended
December 31, 2009, 2008 and 2007,
respectively.
 The Corporation recorded amortization related to mortgage servicing rights totaling approximately
$360,000, $3.3 million and $747,000, for the years ended December 31, 2009, 2008 and 2007,
respectively. The carrying value of the Corporations mortgage servicing rights, which
approximated their fair value, totaled approximately $4.4 million and $3.7 million at December
31, 2009 and 2008 respectively. Fair value was determined using discount rates ranging from 7.5%
to 9.0% in 2009 and 8.0% to 12.0% in 2008, and prepayment speeds ranging from 6.0% to 31.4% in
2009 and from 9.6% to 30.0% in 2008.
 At December 31, 2009 and 2008, the Bank was servicing mortgage loans of approximately $497.0
million and $497.4 million, respectively, which were sold to the Federal Home Loan Mortgage
Corporation, Federal National Mortgage Association and other investors.
 9. Goodwill
 In prior years, the Corporation has grown through mergers and acquisitions accounted for under
the purchase method of accounting. Under the purchase method, the Corporation is required to
allocate the cost of an acquired company to the assets acquired, including identified intangible
assets, and liabilities assumed based on their estimated fair values at the date of acquisition.
The excess cost over the net assets acquired represents goodwill, which is not subject to
amortization.
 Goodwill arising from business combinations represents the value attributable to unidentifiable
intangible elements in the business acquired. Goodwill recorded by the Corporation in connection
with its acquisitions relates to the inherent value in the businesses acquired and this value is
dependent upon the Corporations ability to provide quality, cost-effective services in a
competitive market place. As such, goodwill value is supported ultimately by revenue that is
driven by the volume of business transacted. A decline in earnings as a result of a lack of
growth or the inability to deliver cost-effective services over sustained periods can lead to
impairment of goodwill that could adversely impact earnings in future periods.
 Goodwill is not amortized but is tested for impairment when indicators of impairment exist, or at
least annually. Potential goodwill impairment exists when the fair value of the reporting unit
(as defined by US GAAP) is less than its carrying value. An impairment loss is recognized in
earnings only when the carrying amount of goodwill is less than its implied fair value. The 2008
evaluation showed impairment and the total goodwill was written off per the fair value appraisal
in December 2008.
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CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTEA  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 10. Federal Income Taxes
 Income taxes are provided based on the liability method of accounting, which includes the
recognition of deferred tax assets and liabilities for the temporary differences between carrying
amounts and tax bases of assets and liabilities, computed using enacted tax rates. In general,
Camco records deferred tax assets when the event giving rise to the tax benefit has been
recognized in the Consolidated Financial Statements.
 A valuation allowance is recognized to reduce any deferred tax assets that, based upon available
information, it is more-likely-than-not all, or any portion, of the deferred tax asset will not
be realized. Assessing the need for, and amount of, a valuation allowance for deferred tax
assets requires significant judgment and analysis of evidence regarding realization of the
deferred tax assets. In most cases, the realization of deferred tax assets is dependent upon
Camco generating a sufficient level of taxable income in future periods, which can be difficult
to predict. Given the nature of Camcos deferred tax assets, management determined no valuation
allowances were needed at either December 31, 2009 or 2008.
 The calculation of tax liabilities is complex and requires the use of estimates and judgment
since it involves the application of complex tax laws that are subject to different
interpretations by Camco and the various tax authorities. These interpretations are subject to
challenge by the tax authorities upon audit or to reinterpretation based on managements ongoing
assessment of facts and evolving case law.
 From time-to-time and in the ordinary course of business, Camco is involved in inquiries and
reviews by tax authorities that normally require management to provide supplemental information
to support certain tax positions taken in the tax returns. Uncertain tax positions are
initially recognized in the financial statements when it is more likely than not the position
will be sustained upon examination by the tax authorities. Management believes it has taken
appropriate positions on its tax returns, although the ultimate outcome of any tax review cannot
be predicted with certainty. Still, no assurance can be given that the final outcome of these
matters will not be different than what is reflected in the current and historical financial
statements.
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CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTEA  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 11. 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 years ended December 31:
 For the years ended
(in thousands, except per share information)
    
    2009
    
    
    2008
    
    
    2007BASIC:Net earnings (loss)
    
    $
    (11,217
    )
    
    $
    (15,324
    )
    
    $
    4,501Weighted average common shares outstanding
    
    
    7,202
    
    
    
    7,156
    
    
    
    7,327Earnings (loss) per share  Basic
    
    $
    (1.56
    )
    
    $
    (2.14
    )
    
    $
    0.61DILUTED:Net earnings (loss)
    
    $
    (11,217
    )
    
    $
    (15,324
    )
    
    $
    4,501Weighted average common shares outstanding
    
    
    7,202
    
    
    
    7,156
    
    
    
    7,327Dilutive effect of stock options
    
    
    0
    
    
    
    0
    
    
    
    1Total common shares and dilutive potential common shares
    
    
    7,202
    
    
    
    7,156
    
    
    
    7,328Diluted earnings (loss) per share
    
    $
    (1.56
    )
    
    $
    (2.14
    )
    
    $
    0.61
 Options to purchase 255,833, 219,990 and 283,557 shares of common stock at December 31, 2009,
2008 and 2007, respectively, were excluded from the computation of diluted earnings per share
for those years because of the loss incurred and anti-dilutive impact of the options.
 12. Cash and Cash Equivalents
 Cash and cash equivalents consist of cash and due from banks and interest-bearing deposits in
other financial institutions with original maturities of three months or less.
 13. Advertising
 Advertising costs are expensed when incurred.
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CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTEA  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 14. New Accounting Pronouncements
  ASC Topic 820, Fair Value Measurement and Disclosure.
 ASC Topic 320, Investments  Debt and Equity Securities.
 ASC Topic 855, Subsequent Events.
 ASC Topic 860, Transfers and Servicing.
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CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTEA  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 14. New Accounting Pronouncements (continued)
 ASC Topic 810, Consolidation.
 15. Reclassifications
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CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE B  INVESTMENT SECURITIES
 The amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of
investment securities at December 31, 2009 and 2008 are as follows:
 2009Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    unrealized
    
    
    unrealized
    
    
    faircost
    
    
    gains
    
    
    losses
    
    
    value(In thousands)Available for sale:U.S. Government sponsored enterprises
    
    $
    14,514
    
    
    $
    88
    
    
    $
    38
    
    
    $
    14,564Corporate equity securities
    
    
    157
    
    
    
    
    
    
    
    69
    
    
    
    88Mortgage-backed securities
    
    
    39,690
    
    
    
    1,609
    
    
    
    1
    
    
    
    41,298Total investment securities available for sale
    
    $
    54,361
    
    
    $
    1,697
    
    
    $
    108
    
    
    $
    55,950Held to maturity:Municipal bonds
    
    $
    501
    
    
    $
    57
    
    
    $
    
    
    
    $
    558Mortgage-backed securities
    
    
    1,612
    
    
    
    36
    
    
    
    6
    
    
    
    1,642Total investment securities held to maturity
    
    $
    2,113
    
    
    $
    93
    
    
    $
    6
    
    
    $
    2,200
 2008Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    unrealized
    
    
    unrealized
    
    
    faircost
    
    
    gains
    
    
    losses
    
    
    value(In thousands)Available for sale:U.S. Government sponsored enterprises
    
    $
    28,318
    
    
    $
    321
    
    
    $
    
    
    
    $
    28,639Municipal bonds
    
    
    100
    
    
    
    1
    
    
    
    
    
    
    
    101Corporate equity securities
    
    
    157
    
    
    
    
    
    
    
    14
    
    
    
    143Mortgage-backed securities
    
    
    55,218
    
    
    
    1,252
    
    
    
    1
    
    
    
    56,469Total investment securities available for sale
    
    $
    83,793
    
    
    $
    1,574
    
    
    $
    15
    
    
    $
    85,352Held to maturity:U.S. Government sponsored enterprises
    
    $
    10,955
    
    
    $
    89
    
    
    $
    
    
    
    $
    11,044Municipal bonds
    
    
    541
    
    
    
    33
    
    
    
    
    
    
    
    574Mortgage-backed securities
    
    
    1,910
    
    
    
    28
    
    
    
    26
    
    
    
    1,912Total investment securities held to maturity
    
    $
    13,406
    
    
    $
    150
    
    
    $
    26
    
    
    $
    13,530
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CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTEB  INVESTMENT SECURITIES
 The amortized cost and estimated fair value of investment securities at December 31, 2009 by
contractual term to maturity are shown below.
 Available for Sale
    
    
    Held to MaturityEstimated
    
    
    
    
    
    
    EstimatedAmortized
    
    
    fair
    
    
    Amortized
    
    
    faircost
    
    
    value
    
    
    Cost
    
    
    value(In thousands)Due in one year or less
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Due after one year through five years
    
    $
    11,514
    
    
    $
    11,602
    
    
    $
    411
    
    
    $
    448Due after five years through ten years
    
    
    3,000
    
    
    
    2,962
    
    
    
    
    
    
    
    Due after ten years
    
    
    
    
    
    
    
    
    
    
    90
    
    
    
    110Total investment securities
    
    
    14,514
    
    
    
    14,564
    
    
    
    501
    
    
    
    558Due in one year or less
    
    
    951
    
    
    
    971
    
    
    
    2
    
    
    
    2Due after one year through five years
    
    
    7,730
    
    
    
    7,931
    
    
    
    1
    
    
    
    1Due after five years through ten years
    
    
    7,048
    
    
    
    7,366
    
    
    
    440
    
    
    
    448Due after ten years
    
    
    23,961
    
    
    
    25,030
    
    
    
    1,169
    
    
    
    1,191Total Mortgage-backed securities
    
    
    39,690
    
    
    
    41,298
    
    
    
    1,612
    
    
    
    1,642Corporate equity securities
    
    
    157
    
    
    
    88
    
    
    
    
    
    
    
    Total
    
    $
    54,361
    
    
    $
    55,950
    
    
    $
    2,113
    
    
    $
    2,200
 Proceeds from sales of investment securities during the years ended December 31, 2009, 2008 and
2007, totaled $-, $4.3 million and $3,000 respectively, resulting in gross realized
gains of $-, $2,000 and $1,000 in those respective years.
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CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTEB  INVESTMENT SECURITIES
  2009Less than 12 months
    
    
    More than 12 monthsFair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedDescription of securities:
    
    value
    
    
    losses
    
    
    value
    
    
    losses(In thousands)Available for sale:Corporate equity securities
    
    $
    43
    
    
    $
    55
    
    
    $
    45
    
    
    $
    14U.S. Government sponsored enterprises
    
    
    4,976
    
    
    
    38
    
    
    
    
    
    
    
    Mortgage-backed securities
    
    
    45
    
    
    
    1
    
    
    
    
    
    
    
    Held to maturityMortgage-backed securities
    
    
    25
    
    
    
    1
    
    
    
    522
    
    
    
    5Total temporarily impaired securities
    
    $
    5,089
    
    
    $
    95
    
    
    $
    567
    
    
    $
    19
  2008Less than 12 months
    
    
    More than 12 monthsFair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedDescription of securities:
    
    value
    
    
    losses
    
    
    value
    
    
    losses(In thousands)Available for sale:Corporate equity securities
    
    $
    143
    
    
    $
    14
    
    
    $
    
    
    
    $
    Mortgage-backed securities
    
    
    2,495
    
    
    
    1
    
    
    
    
    
    
    
    Held to maturityMortgage-backed securities
    
    
    599
    
    
    
    22
    
    
    
    254
    
    
    
    4Total temporarily impaired securities
    
    $
    3,237
    
    
    $
    37
    
    
    $
    254
    
    
    $
    4
   63




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CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTEC  LOANS RECEIVABLE
 2009
    
    
    2008(In thousands)Conventional real estate loans:Residential properties
    
    $
    332,323
    
    
    $
    402,736Multi-family
    
    
    39,027
    
    
    
    38,633Nonresidential real estate
    
    
    124,245
    
    
    
    129,334Construction
    
    
    16,384
    
    
    
    31,097Commercial
& development
    
    
    36,392
    
    
    
    40,616Home equity lines of credit
    
    
    109,163
    
    
    
    125,442Consumer, education and other loans
    
    
    17,743
    
    
    
    4,176Total
    
    
    675,277
    
    
    
    772,034Increase (decrease) due to:Unamortized yield adjustments
    
    
    (156
    )
    
    
    354Allowance for loan losses
    
    
    (16,099
    )
    
    
    (15,747
    )Loans receivable  net
    
    $
    659,022
    
    
    $
    756,641
  64




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##### Table of Contents



CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTED  ALLOWANCE FOR LOAN LOSSES
  2009
    
    
    2008
    
    
    2007(In thousands)Balance at beginning of year
    
    $
    15,747
    
    
    $
    6,623
    
    
    $
    7,144Provision for losses on loans
    
    
    21,792
    
    
    
    14,793
    
    
    
    1,495Charge-offs of loans
    
    
    (22,546
    )
    
    
    (6,567
    )
    
    
    (2,097
    )Recoveries
    
    
    1,106
    
    
    
    898
    
    
    
    81Balance at end of year
    
    $
    16,099
    
    
    $
    15,747
    
    
    $
    6,623
 Nonaccrual and nonperforming loans totaled approximately $36.4 million, $53.5 million and $25.5
million at December 31, 2009, 2008 and 2007, respectively. Interest income that would have been
recognized had such nonaccrual loans performed pursuant to contractual terms totaled
approximately $2.1 million, $2.0 million and $1.5 million for the years ended December 31, 2009, 2008 and
2007, respectively.
 The Banks impaired loan information is as follows:
 At December 31:
    
2009
    
    
2008(In thousands)Impaired loans with related allowance
    
    $
    7,509
    
    
    $
    25,012Impaired loans with no related allowance
    
    
    18,473
    
    
    
    24,370Total impaired loans
    
    $
    25,982
    
    
    $
    49,382Allowance on impaired loans
    
    $
    4,399
    
    
    $
    5,609
 For the year ended December 31:
    
2009
    
2008
    
2007(In thousands)Average balance of impaired loans
    
    $
    40,544
    
    
    $
    25,936
    
    
    $
    11,467Cash basis interest income recognized on impaired loans
    
    $
    1,044
    
    
    $
    267
    
    
    $
    674
 NOTEE  OFFICE PREMISES AND EQUIPMENT
  2009
    
    
    2008(In thousands)Land
    
    $
    2,120
    
    
    $
    2,120Buildings and improvements
    
    
    13,134
    
    
    
    13,368Furniture, fixtures and equipment
    
    
    9,325
    
    
    
    9,61924,579
    
    
    
    25,107Less accumulated depreciation and amortization
    
    
    13,709
    
    
    
    13,239$
    10,870
    
    
    $
    11,868
  65




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CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTEF  DEPOSITS
  2009
    
    
    2008Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate(Dollars in thousands)Noninterest-bearing checking accounts
    
    $
    38,911
    
    
    
    
    %
    
    $
    37,526
    
    
    
    
    %NOW accounts
    
    
    70,564
    
    
    
    0.43
    
    
    
    87,199
    
    
    
    0.91Money market demand accounts
    
    
    96,172
    
    
    
    0.68
    
    
    
    112,749
    
    
    
    1.35Passbook and statement savings accounts
    
    
    36,638
    
    
    
    0.25
    
    
    
    33,838
    
    
    
    0.26Certificates of deposit
    
    
    417,617
    
    
    
    2.73
    
    
    
    452,644
    
    
    
    3.79Total deposits
    
    $
    659,902
    
    
    
    1.89
    %
    
    $
    723,956
    
    
    
    2.71
    %
   Year ending December 31:
    
    (In thousands)2010
    
    $
    278,4502011
    
    
    105,4662012
    
    
    10,8922013
    
    
    16,9272014
    
    
    5,882Thereafter
    
    
    Total certificate of deposit accounts
    
    $
    417,617
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##### Table of Contents



CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTEG  ADVANCES FROM THE FEDERAL HOME LOAN BANK
  2009
 Weighted-
    
    
    Weighted-Average
    
    
    Average
    
    
    BalanceRate
    
    
Maturity (years)
    
    
(in thousands)Overnight repurchase-based
    
    
    3.25
    %
    
    
    0.01
    
    
    $
    234Fixed-rate, interest only
    
    
    2.52
    
    
    
    1.17
    
    
    
    32,000Fixed-rate, amortizing
    
    
    6.02
    
    
    
    7.89
    
    
    
    2,057Fixed-rate, interest only, convertible
    
    
    3.88
    
    
    
    3.62
    
    
    
    38,000Fixed-rate, interest only, putable
    
    
    4.39
    
    
    
    3.43
    
    
    
    25,000Total
    
    
    3.61
    %
    
    
    2.86
    
    
    $
    97,291
 2008
 Weighted-
    
    
    Weighted-Average
    
    
    Average
    
    
    BalanceRate
    
    
Maturity (years)
    
    
(in thousands)Overnight repurchase-based
    
    
    0.55
    %
    
    
    0.01
    
    
    $
    15,000Fixed-rate, interest only
    
    
    3.80
    
    
    
    1.04
    
    
    
    78,000Fixed-rate, amortizing
    
    
    5.72
    
    
    
    7.42
    
    
    
    3,106Fixed-rate, interest only, convertible
    
    
    3.85
    
    
    
    3.85
    
    
    
    46,000Fixed-rate, interest only, putable
    
    
    4.39
    
    
    
    4.43
    
    
    
    25,000Total
    
    
    3.65
    %
    
    
    2.35
    
    
    $
    167,106
  67




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CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTEG  ADVANCES FROM THE FEDERAL HOME LOAN BANK AND OTHER BORROWINGS
  Maturing yearEnding December 31,
    
Interest rate range
    
(Dollars in thousands)2010
    
    0.49%-5.01%
    
    $
    37,0002011
    
    3.85%-4.93%
    
    
    8,0002012
    
    4.45%-4.70%
    
    
    10,0002013
    
    2.66%-6.05%
    
    
    10,1962014
    
    4.26%-6.10%
    
    
    5,326Thereafter
    
    3.25%-7.00%
    
    
    26,769$
    97,291
 NOTEH  OTHER BORROWINGS
  Call Date
    
    Terms9/15/2010
    
    
    Callable at 101.570% of par9/15/2011
    
    
    Callable at 100.785% of par9/15/2012
    
    
    Callable until Due Date at par
   68




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CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTEI  FEDERAL INCOME TAXES
  2009
    
    
    2008
    
    
    2007(In thousands)Federal income taxes computed at the
expected statutory rate
    
    $
    (5,955
    )
    
    $
    (6,950
    )
    
    $
    2,130Increase (decrease) in taxes resulting from:Nontaxable dividend and interest income
    
    
    (10
    )
    
    
    (13
    )
    
    
    (13
    )Increase in cash surrender value of life insurance  net
    
    
    (258
    )
    
    
    (265
    )
    
    
    (267
    )Goodwill impairment
    
    
    
    
    
    
    2,272
    
    
    
    Surrender of bank owned life insurance & penalty
    
    
    452
    
    
    
    
    
    
    
    Other
    
    
    (526
    )
    
    
    (160
    )
    
    
    (85
    )Federal income tax provision per consolidated
financial statements
    
    $
    (6,297
    )
    
    $
    (5,116
    )
    
    $
    1,765
  Taxes (payable) refundable on temporarydifferences at statutory rate:
    
    2009
    
    
    2008(In thousands)Deferred tax assets:General loan loss allowance
    
    $
    5,495
    
    
    $
    5,354Deferred income
    
    
    185
    
    
    
    72Deferred compensation
    
    
    1,111
    
    
    
    1,069Other assets
    
    
    526
    
    
    
    681Deferred loan fees and non accrual interest
    
    
    56
    
    
    
    Tax credits and low income housing credits
    
    
    1,202
    
    
    
    NOL carryforward
    
    
    1,035
    
    
    
    Total deferred tax assets
    
    
    9,610
    
    
    
    7,176Deferred tax
liabilities:FHLB stock dividends
    
    $
    (5,017
    )
    
    $
    (5,017
    )Mortgage servicing rights
    
    
    (1,507
    )
    
    
    (1,268
    )Book versus tax depreciation
    
    
    (976
    )
    
    
    (1,093
    )Original issue discount
    
    
    (525
    )
    
    
    (516
    )Unrealized gains on securities designated as available for sale
    
    
    (540
    )
    
    
    (531
    )Purchase price adjustments
    
    
    (162
    )
    
    
    (162
    )Other liabilities, net
    
    
    (76
    )
    
    
    (29
    )Deferred loan fees
    
    
    
    
    
    
    (117
    )Total deferred tax liabilities
    
    
    (8,803
    )
    
    
    (8,733
    )Net deferred tax asset (liability)
    
    $
    807
    
    
    $
    (1,557
    )
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CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE I  FEDERAL INCOME TAXES
 At December 31, 2009, the Corporation has a $3.0 million net operating loss carry forward
available to reduce future income taxes through 2029.
 For years prior to 1996, the Bank was allowed a special bad debt deduction generally limited to
8% of otherwise taxable income, subject to certain limitations based on aggregate loans and
savings account balances at the end of the year. If the amounts that qualified as deductions for
federal income taxes are later used for purposes other than for bad debt losses, including
distributions in liquidation, such distributions will be subject to federal income taxes at the
then current corporate income tax rate. The percentage of earnings bad debt deduction had
accumulated to approximately $12.1 million as of December 31, 2009. The amount of the
unrecognized deferred tax liability relating to the cumulative bad debt deduction was
approximately $4.1 million at December 31, 2009.
 NOTE J  COMMITMENTS
 The Bank is a party to financial instruments with off-balance-sheet risk in the normal course of
business to meet the financing needs of its customers, including commitments to extend credit.
Such commitments involve, to varying degrees, elements of credit and interest-rate risk in excess
of the amount recognized in the consolidated statement of financial condition. The contract or
notional amounts of the commitments reflect the extent of the Banks involvement in such
financial instruments.
 The Banks exposure to credit loss in the event of nonperformance by the other party to the
financial instrument for commitments to extend credit is represented by the contractual notional
amount of those instruments. The Bank uses the same credit policies in making commitments and
conditional obligations as those utilized for on-balance-sheet instruments.
 The following table summarizes the Banks outstanding commitments to originate adjustable and
fixed-rate loans at December 31:
 Unused lines ofFixed Rate
    
    Adjustable
    
    Credit  HELOC
    
    Stand by(in thousands)
    
Loans
    
Rate Loans
    
& Other
    
letters of credit2009
    
    $4,984
    
    $44,831
    
    $54,286
    
    $4932008
    
    $5,000
    
    $21,000
    
    $73,400
    
    $575
 Management believes that all loan commitments are able to be funded through cash flow from
operations and existing liquidity. Fees received in connection with these commitments have not
been recognized in earnings.
 Commitments to extend credit are agreements to lend to a customer as long as there is no
violation of any condition established in the contract. Commitments generally have fixed
expiration dates or other termination clauses and may require payment of a fee. Since many of
the commitments may expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. The Bank evaluates each customers
creditworthiness on a case-by-case basis. The amount of collateral obtained, if it is deemed
necessary by the Bank upon extension of credit, is based on managements credit evaluation of the
counterparty. Collateral on loans may vary but the preponderance of loans granted generally
include a mortgage interest in real estate as security.
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##### Table of Contents



CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE J  COMMITMENTS
 The Corporation has entered into lease agreements for office premises and equipment under
operating leases which expire at various dates through the year ended December 31, 2017. The
following table summarizes minimum payments due under lease agreements by year:
 Year endingDecember 31,
    
    (In thousands)2010
    
    $
    3932011
    
    
    3062012
    
    
    2472013
    
    
    1542014
    
    
    1042015 and thereafter
    
    
    253$
    1,457
 Rental expense under operating leases totaled approximately $395,000, $395,000 and $423,000 for
the years ended December 31, 2009, 2008 and 2007, respectively.
 NOTE K  REGULATORY CAPITAL
 Camco and Advantage are subject to the regulatory capital requirements of the Federal Reserve
Board (the FRB) and Advantage is subject to the requirements of the Federal Deposit Insurance
Corporation (the FDIC). Failure to meet minimum capital requirements can initiate certain
mandatory  and possibly additional discretionary  actions by regulators that, if undertaken,
could have a direct material effect on the Corporations consolidated financial statements.
Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the
Corporation and the Bank must meet specific capital guidelines that involve quantitative measures
of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory
accounting practices. The Corporation and Banks capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk weightings, and other
factors.
 The FRB and FDIC have adopted risk-based capital ratio guidelines to which the Corporation is
subject. The guidelines establish a systematic analytical framework that makes regulatory
capital requirements more sensitive to differences in risk profiles among banking organizations.
Risk-based capital ratios are determined by allocating assets and specified off-balance sheet
commitments to four risk-weighting categories, with higher levels of capital being required for
the categories perceived as representing greater risk.
 71




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CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE K  REGULATORY CAPITAL
 These guidelines divide the capital into two tiers. The first tier (Tier I) includes common
equity, certain non-cumulative perpetual preferred stock (excluding auction rate issues) and
minority interests in equity accounts of consolidated subsidiaries, less goodwill and certain
other intangible assets (except mortgage servicing rights and purchased credit card
relationships, subject to certain limitations). Supplementary (Tier II) capital includes,
among other items, cumulative perpetual and long-term limited-life preferred stock, mandatory
convertible securities, certain hybrid capital instruments, term subordinated debt and the
allowance for loan losses, subject to certain limitations, less required deductions. Banks and
financial holding companies are required to maintain a total risk-based capital ratio of 8%, of
which 4% must be Tier I capital. The regulatory agencies may, however, set higher capital
requirements when particular circumstances warrant. Banks experiencing or anticipating
significant growth are expected to maintain capital ratios, including tangible capital positions,
well above the minimum levels.
 During 2009, management was notified by the FDIC that for Advantage to be categorized as
well-capitalized under the regulatory framework the Bank must have a Tier 1 leverage to average assets equating to 8.00%.
To be categorized as well-capitalized Camco and Advantage must maintain this minimum capital
ratio per the FDIC.
 The following tables present certain information regarding compliance by Camco and Advantage with
applicable regulatory capital requirements at December 31, 2009:
 To be well-capitalizedunder promptFor capital
    
    correctiveAdequacy
    
    actionActual
    
    purposes

    
    provisionsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio(Dollars in thousands)Total capital to
risk-weighted assets:Camco Financial
Corporation
    
    $
    71,979
    
    
    
    11.42
    %
    
    ≥$
    50,439
    
    
    ≥
    8.0
    %
    
    ≥$
    63,048
    
    
    
    10.0
    %Advantage Bank(1)
    
    $
    67,293
    
    
    
    10.71
    %
    
    ≥$
    50,274
    
    
    ≥
    8.0
    %
    
    ≥$
    62,842
    
    
    
    10.0
    %Tier I capital to
risk-weighted assets:Camco Financial
Corporation
    
    $
    64,022
    
    
    
    10.15
    %
    
    ≥$
    25,219
    
    
    ≥
    4.0
    %
    
    ≥$
    37,829
    
    
    
    6.0
    %Advantage Bank(1)
    
    $
    59,336
    
    
    
    9.44
    %
    
    ≥$
    25,137
    
    
    ≥
    4.0
    %
    
    ≥$
    37,705
    
    
    
    6.0
    %Tier I leverage to
average assets:Camco Financial
Corporation
    
    $
    64,022
    
    
    
    7.33
    %
    
    ≥$
    34,945
    
    
    ≥
    4.0
    %
    
    ≥$
    43,681
    
    
    
    5.0
    %Advantage Bank (1)
    
    $
    59,336
    
    
    
    6.82
    %
    
    ≥$
    34,784
    
    
    ≥
    4.0
    %
    
    ≥$
    43,479
    
    
    
    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 72




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CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE K  REGULATORY CAPITAL
 The following tables present certain information regarding compliance by Camco and Advantage with
applicable regulatory capital requirements at December 31, 2008:
 To be well-capitalizedunder promptFor capital
    
    correctiveAdequacy
    
    actionActual
    
    purposes
    
    provisionsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio(Dollars in thousands)Total capital to
risk-weighted
assets:Camco Financial
Corporation
    
    $
    83,710
    
    
    
    12.55
    %
    
    ≥$
    53,351
    
    
    ≥
    8.0
    %
    
    ≥$
    66,689
    
    
    
    10.0
    %Advantage Bank
    
    $
    78,372
    
    
    
    11.78
    %
    
    ≥$
    53,242
    
    
    ≥
    8.0
    %
    
    ≥$
    66,552
    
    
    
    10.0
    %Tier I capital to
risk-weighted
assets:Camco Financial
Corporation
    
    $
    75,299
    
    
    
    11.29
    %
    
    ≥$
    26,676
    
    
    ≥
    4.0
    %
    
    ≥$
    40,013
    
    
    
    6.0
    %Advantage Bank
    
    $
    69,961
    
    
    
    10.51
    %
    
    ≥$
    26,621
    
    
    ≥
    4.0
    %
    
    ≥$
    39,931
    
    
    
    6.0
    %Tier I leverage to
average assets:Camco Financial
Corporation
    
    $
    75,299
    
    
    
    7.39
    %
    
    ≥$
    40,754
    
    
    ≥
    4.0
    %
    
    ≥$
    50,943
    
    
    
    5.0
    %Advantage Bank
    
    $
    69,961
    
    
    
    6.89
    %
    
    ≥$
    40,608
    
    
    ≥
    4.0
    %
    
    ≥$
    50,760
    
    
    
    5.0
    %
 Federal law prohibits a financial institution from making a capital distribution to anyone or
paying management fees to any person having control of the institution if, after such distribution
or payment, the institution would be undercapitalized. Additionally, the payment of dividends by
Advantage Bank to its parent and by Camco Financial Corporation to shareholders is subject to
restriction by regulatory agencies. These restrictions normally limit dividends from the Bank to
the sum of the Banks current and prior two years earnings, as defined by the agencies.On March 4, 2009, Camco Financial Corporation (Camco) entered into a Memorandum of Understanding
(the MOU) with the FRB. The MOU prohibits
Camco from engaging in certain activities while the MOU is in effect, including, without the prior
written approval of the FRB, (1) the declaration or payment of dividends to
stockholders or (2) the repurchase of Camcos stock.On April 30, 2009, Camco Financial Corporation (Camco) was notified by The FRB that it had conducted a surveillance review as of December 31, 2008. Based on that
review, the FRB notified Camco that it must (i) eliminate shareholder dividends and
(ii) defer interest payments on its 30-year junior subordinated deferrable interest notes that
were issued to its wholly-owned subsidiary, Camco Statutory Trust I, in its trust preferred
financing that was completed in July 2007. These prohibitions
were memorialized in a written agreement with the FRB entered into on
August 5, 2009. Seebelow Camco and Camco Statutory Trust I are permitted to
defer interest and dividend payments, respectively, for up to five consecutive years without
resulting in a default. Camco may not resume these dividend or interest payments until it
receives approval from the Federal Reserve.As a result of the surveillance review, Camco entered into a Written Agreement (the Camco
Agreement) with the FRB on August 5, 2009. The
Camco Agreement memorializes the requirements imposed on April 30, 2009 and requires Camco to
obtain FRB approval prior to: (i) declaring or paying any dividends; (ii) receiving
dividends or any other form of payment representing a reduction in capital
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CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE K  REGULATORY CAPITAL
 from Advantage; (iii) making any distributions of interest, principal or other sums on
subordinated debentures or trust preferred securities; (iv) incurring, increasing or guaranteeing
any debt; or (v) repurchasing any Camco stock.
 Advantage entered into a consent agreement with the FDIC and the State of Ohio, Division of
Financial Institutions (Ohio Division) that provided for the issuance of an order by the FDIC
and the Ohio Division, which order was executed by the FDIC and Ohio Division on July 31, 2009
(the Bank Agreement). The Bank Agreement requires Advantage to, among other things, (i)
increase its Tier 1 risk based capital to 8%; and (ii) seek regulatory approval prior to declaring
or paying any cash dividend. As a result of the Bank Agreement, Advantage is disqualified as a
public depository under Ohio law and will incur higher premiums for FDIC insurance of its
accounts.
  NOTE L  FAIR VALUE
 As a financial services Corporation, the carrying value of certain financial assets and
liabilities is impacted by the application of fair value measurements, either directly or
indirectly. In certain cases, an asset or liability is measured and reported at fair value on a
recurring basis, such as available-for-sale investment securities. In other cases, management
must rely on estimates or judgments to determine if an asset or liability not measured at fair
value warrants an impairment write-down or whether a valuation reserve should be established.
Given the inherent volatility, the use of fair value measurements may have a significant impact
on the carrying value of assets or liabilities, or result in material changes to the financial
statements, from period to period.
 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: The carrying amount reported in the consolidated
statements of financial condition for cash and cash equivalents is deemed to
approximate fair value.Investment Securities: Fair values for investment securities are based on
quoted market prices and dealer quotes.Loans Held for Sale: Fair value for loans held for sale is the contracted
sales price of loans committed for delivery, which is determined on the date of sale
commitment.Loans Receivable: The loan portfolio has been segregated into categories
with similar characteristics, such as one- to four-family residential real estate,
multi-family residential real estate, installment and other. These loan categories
were further delineated into fixed-rate and adjustable-rate loans. The fair values
for the resultant loan categories were computed via discounted cash flow analysis,
using current interest rates offered for loans with similar terms to borrowers of
similar credit quality.Federal Home Loan Bank stock: The carrying amount presented in the
consolidated statements of financial condition is deemed to approximate fair value.Accrued Interest Receivable and Payable: The carrying value for accrued interest
approximates fair value.
 74




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CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE L FAIR VALUE (continued).
 Deposits: The fair values of deposits with no stated maturity, such as money
market demand deposits, savings and NOW accounts have been analyzed by management and
assigned estimated maturities and cash flows which are then discounted to derive a
value. The fair value of fixed-rate certificates of deposit is based on the
discounted value of contractual cash flows. The discount rate is estimated using the
rates currently offered for deposits of similar remaining maturities.Advances from the Federal Home Loan Bank: The fair value of these advances
is estimated using the rates currently offered for similar advances of similar
remaining maturities or, when available, quoted market prices.Repurchase Agreements: The fair value of repurchase agreements is based on
the discounted value of contractual cash flows using rates currently offered for
similar maturities.Subordinated debentures:  The fair value of subordinated debenture is based on the
discounted value of contractual cash flows using rates currently
offered for smaller maturities.Advances by Borrowers for Taxes and Insurance: The carrying amount of
advances by borrowers for taxes and insurance is deemed to approximate fair value.Commitments to Extend Credit: For fixed-rate and adjustable-rate loan
commitments, the fair value estimate considers the difference between current levels
of interest rates and committed rates. At December 31, 2009 and 2008, the fair value
of loan commitments was not material.
  December 31,2009
    
    2008Carrying
    
    Fair
    
    Carrying
    
    Fairvalue
    
    value
    
    value
    
    value(In thousands)Financial assetsCash and cash equivalents
    
    $
    38,153
    
    
    $
    38,153
    
    
    $
    52,285
    
    
    $
    52,285Investment securities available for sale
    
    
    55,950
    
    
    
    55,950
    
    
    
    85,352
    
    
    
    85,352Investment securities held to maturity
    
    
    2,113
    
    
    
    2,200
    
    
    
    13,406
    
    
    
    13,530Loans held for sale
    
    
    475
    
    
    
    485
    
    
    
    2,185
    
    
    
    2,205Loans receivable
    
    
    659,022
    
    
    
    646,990
    
    
    
    756,641
    
    
    
    713,447Federal Home Loan Bank stock
    
    
    29,888
    
    
    
    29,888
    
    
    
    29,888
    
    
    
    29,888Accrued interest receivable
    
    
    3,979
    
    
    
    3,979
    
    
    
    4,118
    
    
    
    4,118Financial liabilitiesDeposits
    
    $
    659,902
    
    
    $
    647,149
    
    
    $
    723,956
    
    
    $
    733,322Advances from the Federal Home Loan Bank
    
    
    97,291
    
    
    
    101,924
    
    
    
    167,106
    
    
    
    175,246Repurchase agreements
    
    
    6,941
    
    
    
    6,941
    
    
    
    11,727
    
    
    
    11,727Subordinated debentures
    
    
    5,000
    
    
    
    4,768
    
    
    
    5,000
    
    
    
    4,997Advances by borrowers for taxes and insurance
    
    
    1,909
    
    
    
    1,909
    
    
    
    2,458
    
    
    
    2,458Accrued interest payable
    
    
    1,669
    
    
    
    1,669
    
    
    
    1,801
    
    
    
    1,801
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CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE L  FAIR VALUE (continued).
  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
for balances at December 31, 2009 and 2008:
 Balance at
    
    Fair Value Measurements at Reporting Date Using(in thousands)
    
    December 31,
    
    Level 1
    
    Level 2
    
    Level 32009Securities available for sale
    
    $
    55,950
    
    
    
    
    
    
    $
    55,9502008Securities available for sale
    
    $
    85,352
    
    
    
    
    
    
    $
    85,352
 76




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CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE L  FAIR VALUE (continued).
 The following table presents financial assets and liabilities measured on a non-recurring
basis:
 Fair Value Measurements at Reporting Date UsingBalance at,
    
    
    
    
    
    
    
    
    
    
    
    
    
    Change in fair valuefor the year ended(in thousands)
    
    December 31,
    
    Level 1
    
    Level 2
    
    Level 3
    
    December 31,2009Impaired loans
    
    $
    25,982
    
    
    
    
    
    
    
    
    
    
    $
    25,982
    
    
    $
    13,081Real estate acquired
through foreclosure
    
    
    9,660
    
    
    
    
    
    
    
    
    
    
    
    9,660
    
    
    
    9452008Impaired loans
    
    $
    49,382
    
    
    
    
    
    
    
    
    
    
    $
    49,382
    
    
    $
    5,423Real estate acquired
through foreclosure
    
    
    5,841
    
    
    
    
    
    
    
    
    
    
    
    5,841
    
    
    
    1,054
 Impaired loans, which are measured for impairment using the fair value of the collateral at
December 31, 2009, had a carrying amount of $26.0 million, with a valuation allowance of $4.4
million, resulting in an additional provision for loan losses of $13.1 million during the year
ended December 2009.
 Fair value for real estate acquired through foreclosure is generally determined by obtaining
recent appraisals on the properties. Other types of valuing include broker price opinions and
valuations pertaining to the current and anticipated deterioration in the regional
economy and real estate market, as evidenced by, among other things, a net out migration of the
local population, unemployment rates, increasing vacancy rates, borrower delinquencies,
declining property values and rental prices, differences between foreclosure appraisals and
real estate owned sales prices, and an increase in concessions and other forms of
discounting or other items approved by our asset classification committee. 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.
 77




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CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE M  BENEFIT PLANS
 The Corporation has a non-contributory retirement plan which provides benefits to certain key
officers. The Corporations future obligations under the plan have been provided for via the
purchase of single premium key man life insurance of which the Corporation is the beneficiary.
The Corporation recorded expense related to the plan totaling approximately $62,000, $21,000 and
$101,000 during the years ended December 31, 2009, 2008 and 2007, respectively.
 The Corporation also has a 401(k) Salary Savings Plan covering substantially all employees.
Contributions by the employees are voluntary and are subject to matching contributions by the
employer under a fixed percentage, which may be increased at the discretion of the Board of
Directors. Total expense under this plan was $267,000, $330,000 and $360,000 for the
years ended December 31, 2009, 2008 and 2007, respectively.
 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
 The following information applies to options outstanding at December 31, 2009:
 Options outstanding
    
    
    Options ExercisableWeighted-Average
    
    
    Weighted-
    
    
    
    
    
    
    Weighted-Remaining
    
    
    Average
    
    
    
    
    
    
    AverageRange of
    
    Number
    
    
    Contractual
    
    
    Exercise
    
    
    Number
    
    
    ExerciseExercise Prices
    
    Outstanding
    
    
    Life (Years)
    
    
    Price
    
    
    Exercisable
    
    
    Price$1.89 - $2.50
    
    
    80,000
    
    
    
    9.0
    
    
    $
    2.46
    
    
    
    80,000
    
    
    $
    2.46$8.92 - $9.75
    
    
    24,675
    
    
    
    7.3
    
    
    
    9.00
    
    
    
    11,437
    
    
    
    9.10$11.36 - $14.16
    
    
    77,831
    
    
    
    4.5
    
    
    
    13.55
    
    
    
    65,687
    
    
    
    13.60$14.55 - $17.17
    
    
    78,327
    
    
    
    3.5
    
    
    
    16.43
    
    
    
    78,327
    
    
    
    16.43260,833
    
    
    
    5.8
    
    
    $
    10.59
    
    
    
    235,451
    
    
    $
    10.54
 78




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CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE M  BENEFIT PLANS
 Stock Option Plans
  NumberUnvested options:Beginning of period
    
    
    64,986Granted
    
    
    80,000Forfeited
    
    
    (17,597
    )Vested during the period
    
    
    (102,007
    )Unvested options at December 31
    
    
    25,382
    2009
    
    
    2008
    
    
    2007Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    average
    
    
    
    
    
    
    averageexercise
    
    
    
    
    
    
    exercise
    
    
    
    
    
    
    exerciseShares
    
    
price
    
    
    Shares
    
    
price
    
    
    Shares
    
    
priceOutstanding at beginning of year
    
    
    260,703
    
    
    $
    14.11
    
    
    
    318,238
    
    
    $
    15.10
    
    
    
    304,874
    
    
    $
    15.20Granted
    
    
    80,000
    
    
    
    2.46
    
    
    
    47,167
    
    
    
    9.07
    
    
    
    26,920
    
    
    
    12.34Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,427
    )
    
    
    12.50Forfeited  and Expired
    
    
    (79,870
    )
    
    
    13.96
    
    
    
    (104,702
    )
    
    
    14.84
    
    
    
    (11,129
    )
    
    
    14.67Outstanding at end of year
    
    
    260,833
    
    
    $
    10.59
    
    
    
    260,703
    
    
    $
    14.11
    
    
    
    318,238
    
    
    $
    15.10Options exercisable at year-end
    
    
    235,451
    
    
    $
    10.54
    
    
    
    195,717
    
    
    $
    15.01
    
    
    
    254,717
    
    
    $
    15.32Weighted-average fair value of
options granted during the year
    
    
    
    
    
    $
    1.43
    
    
    
    
    
    
    $
    0.74
    
    
    
    
    
    
    $
    1.22
  79




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CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE N  CAMCO FINANCIAL CORPORATION CONDENSED FINANCIAL INFORMATION
 The following condensed financial statements summarize the financial position of the Corporation
as of December 31, 2009 and 2008, and the results of its operations and its cash flows for each
of the years ended December 31, 2009, 2008 and 2007:
 CAMCO FINANCIAL CORPORATION
STATEMENTS OF FINANCIAL CONDITION
 2009
    
    
2008ASSETSCash in Advantage
    
    $
    796
    
    
    $
    1,878Interest-bearing deposits in other financial institutions
    
    
    395
    
    
    
    213Investment securities designated as available for sale
    
    
    88
    
    
    
    143Investment in Advantage
    
    
    60,874
    
    
    
    71,372Investment in Camco Title
    
    
    857
    
    
    
    632Office premises and equipment  net
    
    
    1,145
    
    
    
    1,159Cash surrender value of life insurance
    
    
    1,247
    
    
    
    1,209Prepaid expenses and other assets
    
    
    559
    
    
    
    332Deferred federal income taxes
    
    
    6
    
    
    
    Prepaid and refundable federal income taxes
    
    
    478
    
    
    
    350Total assets
    
    $
    66,445
    
    
    $
    77,288LIABILITIES AND STOCKHOLDERS EQUITYAccounts payable and other accrued liabilities
    
    $
    931
    
    
    $
    573Borrowings
    
    
    5,000
    
    
    
    5,000Deferred federal income taxes
    
    
    
    
    
    
    15Total liabilities
    
    
    5,931
    
    
    
    5,588Stockholders equityCommon stock
    
    
    8,885
    
    
    
    8,835Additional paid-in capital
    
    
    60,124
    
    
    
    59,896Retained earnings
    
    
    14,695
    
    
    
    26,055Accumulated other comprehensive income (loss)
    
    
    1,049
    
    
    
    1,028Unearned compensation
    
    
    (125
    )
    
    
    Treasury stock, at cost
    
    
    (24,114
    )
    
    
    (24,114
    )Total stockholders equity
    
    
    60,514
    
    
    
    71,700Total liabilities and stockholders equity
    
    $
    66,445
    
    
    $
    77,288
 80




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##### Table of Contents



CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE N  CAMCO FINANCIAL CORPORATION CONDENSED FINANCIAL
INFORMATION
 CAMCO FINANCIAL CORPORATION
STATEMENTS OF OPERATIONS
 2009
    
    
2008
    
    
2007IncomeDividends from Advantage
    
    $
    
    
    
    $
    2,000
    
    
    $
    3,000Dividends from Camco Title
    
    
    
    
    
    
    250
    
    
    
    350Interest and other income
    
    
    61
    
    
    
    68
    
    
    
    157Gain on sale of investments
    
    
    
    
    
    
    
    
    
    
    1(Excess distributions from) undistributed earnings
of Advantage
    
    
    (10,555
    )
    
    
    (16,168
    )
    
    
    2,069(Excess distribution from) undistributed earnings
of Camco Title
    
    
    225
    
    
    
    (179
    )
    
    
    (204
    )Total income
    
    
    (10,269
    )
    
    
    (14,029
    )
    
    
    5,373Interest Expense
    
    
    343
    
    
    
    343
    
    
    
    139General, administrative and other expense
    
    
    1,073
    
    
    
    1,601
    
    
    
    1,107Earnings (loss) before federal income tax credits
    
    
    (11,685
    )
    
    
    (15,973
    )
    
    
    4,127Federal income tax credits
    
    
    (468
    )
    
    
    (649
    )
    
    
    (374
    )Net earnings (loss)
    
    $
    (11,217
    )
    
    $
    (15,324
    )
    
    $
    4,501
 81




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##### Table of Contents



CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE N  CAMCO FINANCIAL CORPORATION CONDENSED FINANCIAL
INFORMATION
 CAMCO FINANCIAL CORPORATION
STATEMENTS OF CASH FLOWS
 2009
    
    
2008
    
    
2007Cash flows from operating activities:Net earnings (loss) for the year
    
    $
    (11,217
    )
    
    $
    (15,324
    )
    
    $
    4,501Adjustments to reconcile net earnings (loss) to net cash
flows provided by operating activities:(undistributed earnings) distribution in excess of earnings of Advantage
    
    
    10,555
    
    
    
    16,168
    
    
    
    (2,069
    )Excess distribution from (undistributed net earnings of)
Camco Title
    
    
    (225
    )
    
    
    179
    
    
    
    204Gain on sale of investments
    
    
    
    
    
    
    
    
    
    
    (1
    )Depreciation and amortization
    
    
    14
    
    
    
    48
    
    
    
    41Increase (decrease) in cash due to changes in:Prepaid expenses and other assets
    
    
    1
    
    
    
    40
    
    
    
    54Accounts payable and other liabilities
    
    
    283
    
    
    
    51
    
    
    
    (47
    )Accrued federal income taxes
    
    
    (128
    )
    
    
    (611
    )
    
    
    (145
    )Deferred federal income taxes
    
    
    (2
    )
    
    
    27
    
    
    
    6Net cash provided by operating activities
    
    
    (719
    )
    
    
    578
    
    
    
    2,544Cash flows from investing activities:Proceeds from redemption of available for sale securities
    
    
    
    
    
    
    
    
    
    
    3Net increase in cash surrender value of life insurance
    
    
    (38
    )
    
    
    (37
    )
    
    
    (36
    )(Increase) decrease in interest-bearing deposits in other
financial institutions
    
    
    (182
    )
    
    
    (113
    )
    
    
    5,072Net cash provided by (used in) investing activities
    
    
    (220
    )
    
    
    (150
    )
    
    
    5,039Cash flows from financing activities:Proceeds from exercise of stock options
    
    
    
    
    
    
    
    
    
    
    31Proceeds from subordinated debentures
    
    
    
    
    
    
    
    
    
    
    5,000Dividends paid
    
    
    (143
    )
    
    
    (2,953
    )
    
    
    (4,411
    )Purchase of treasury shares
    
    
    
    
    
    
    
    
    
    
    (3,923
    )Net cash used in financing activities
    
    
    (143
    )
    
    
    (2,953
    )
    
    
    (3,303
    )Net increase (decrease) in cash and cash equivalents
    
    
    (1,082
    )
    
    
    (2,525
    )
    
    
    4,280Cash and cash equivalents at beginning of year
    
    
    1,878
    
    
    
    4,403
    
    
    
    123Cash and cash equivalents at end of year
    
    $
    796
    
    
    $
    1,878
    
    
    $
    4,403
 82




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##### Table of Contents



CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE O  QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
 The following table summarizes the Corporations quarterly results for the years ended December
31, 2009 and 2008.
 Three Months EndedDecember 31,
    
    
    September 30,
    
    
    June 30,
    
    
    March 31,(In thousands, except per share data)2009:Total interest income
    
    $
    10,616
    
    
    $
    10,987
    
    
    $
    11,234
    
    
    $
    11,887Total interest expense
    
    
    4,394
    
    
    
    4,808
    
    
    
    5,350
    
    
    
    6,042Net interest income
    
    
    6,222
    
    
    
    6,179
    
    
    
    5,884
    
    
    
    5,845Provision for losses on loans (2)
    
    
    19,914
    
    
    
    440
    
    
    
    790
    
    
    
    648Other income
    
    
    2,424
    
    
    
    1,612
    
    
    
    2,262
    
    
    
    1,963General, administrative and other expenses
    
    
    6,968
    
    
    
    7,249
    
    
    
    6,893
    
    
    
    7,003Earnings (loss) before income taxes (credits)
    
    
    (18,236
    )
    
    
    102
    
    
    
    463
    
    
    
    157Federal income taxes (credits) (1)
    
    
    (6,427
    )
    
    
    (253
    )
    
    
    461
    
    
    
    (78
    )Net earnings (loss)
    
    $
    (11,809
    )
    
    $
    355
    
    
    $
    2
    
    
    $
    235Earnings (loss) per share:Basic
    
    $
    (1.64
    )
    
    $
    0.05
    
    
    $
    0.00
    
    
    $
    0.03Diluted
    
    $
    (1.64
    )
    
    $
    0.05
    
    
    $
    0.00
    
    
    $
    0.03
 
 (1)
    
    The change in 2nd quarter federal income taxes is related to the surrender of
bank owned life insurance.(2)
    
    The fourth quarter results were significantly affected by sizeable loan charge offs that were
taken and the subsequent need to replenish the allowance for loan and lease losses through a
provision of $19.9 million. The Credit Administration unit received substantial information
related to several larger commercial credits that resulted in partial and full writedowns based on
impairment and collateral dependency that was not received during prior quarters of 2009.
Additionally consistent with accounting standards the company was required to consider events
subsequent to December 31, 2009 to determine the end of year loss position. Specifically, during
the fourth quarter and early 2010 we received information on three significant commercial
relationships that required a total writedown or full specific loss reserve totaling $10.1 million.
(included is a previously reported $2.6 million fraudulent loan). Additionally, we received
specific fourth quarter information relating to our identified concentration in non owner occupied
investors. A total of $1.8 million was required to be written off on four investors during the
fourth quarter of 2009. Additionally, during the first two months of 2010 we received several
property valuations on troubled credits that resulted in several smaller dollar writedowns. 83




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##### Table of Contents



CAMCO FINANCIAL CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE O  QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (continued).
 Three Months EndedDecember 31,
    
    
    September 30,
    
    
    June 30,
    
    
    March 31,(In thousands, except per share data)2008:Total interest income
    
    $
    13,277
    
    
    $
    14,107
    
    
    $
    14,315
    
    
    $
    15,084Total interest expense
    
    
    7,080
    
    
    
    7,441
    
    
    
    7,849
    
    
    
    8,604Net interest income
    
    
    6,197
    
    
    
    6,666
    
    
    
    6,466
    
    
    
    6,480Provision for losses on loans (1)
    
    
    11,031
    
    
    
    590
    
    
    
    850
    
    
    
    2,322Other income
    
    
    (1,228
    )
    
    
    1,804
    
    
    
    1,813
    
    
    
    1,319General, administrative and other expenses
    
    
    14,553
    
    
    
    6,586
    
    
    
    6,886
    
    
    
    7,139Earnings before income taxes
    
    
    (20,615
    )
    
    
    1,294
    
    
    
    543
    
    
    
    (1,662
    )Federal income taxes
    
    
    (4,852
    )
    
    
    225
    
    
    
    170
    
    
    
    (659
    )Net earnings (loss)
    
    $
    (15,763
    )
    
    $
    1,069
    
    
    $
    373
    
    
    $
    (1,003
    )Earnings (loss) per share:Basic
    
    $
    (2.20
    )
    
    $
    .15
    
    
    $
    .05
    
    
    $
    (.14
    )Diluted
    
    $
    (2.20
    )
    
    $
    .15
    
    
    $
    .05
    
    
    $
    (.14
    )
 
 (1)
    
    Comparing the 2009 fourth quarter provisions to that of 2008, the company experienced similar
timing on large end of year provision, however we have determined that the causes are not the
same. During the fourth quarter 2008 the Companys
internal monitoring of portfolio credit risk indicated an increasing negative trend in the
Commercial loan portfolios in addition to declining economic indicators. Based on these trends management
began to take a more conservative approach to its loan risk grading process and the factors that influence
the banks allowance for loan loss. Specifically, this more conservative approach increased the
consideration given to qualitative factors (e.g. delinquency, non-performing loans, economic indicators, etc.)
in the companys loan loss assumption and the resulting need for higher provisions for loan loss. 
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
  
 Item 9A. Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures
    
 Item 9B. Other Information.
  84




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PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance.
   
 Item 11. Executive Compensation.
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
    Equity Compensation Plan Information
 Number of securitiesremaining available forNumber of securities
    
    
    
    
    
    future issuance underto be issued upon
    
    Weighted-average
    
    equity compensation plansexercise of
    
    exercise price of
    
    (excluding securitiesPlan Category
    
    outstanding options
    
    outstanding options
    
    reflected in column (a))Equity compensation plans approved by security holders
    
    
    260,833
    
    
    $
    10.59
    
    
    
    291,938
 
 Item 13. Certain Relationships and Related Transactions, and Director Independence
  
 Item 14. Principal Accountant Fees and Services.
  85




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##### Table of Contents



PART IV
 
 Item 15. Exhibits and Financial Statement Schedules.
  3(i)
    
    Certificate of Incorporation3(ii)
    
    Bylaws4
    
    Letter of Agreement to Furnish Copies of Long-term Debt Instruments and Agreements10(i)
    
    Employment Agreement between Camco and James E. Huston10(iii)
    
    Form of 2002 Salary Continuation Agreement10(iv)
    
    Form of 1996 Salary Continuation Agreement10(v)
    
    Form of Executive Deferred Compensation Agreement10(vi)
    
    First Ashland Financial Corporation 1995 Stock Option and Incentive Plan10(vii)
    
    Incentive Stock Option Award Agreement Pursuant to the First Ashland Financial
Corporation 1995 Stock Option and Incentive Plan10(viii)
    
    Non-Qualified Stock Option Award Agreement Pursuant to the First Ashland
Financial Corporation 1995 Stock Option and Incentive Plan10(ix)
    
    Camco Financial Corporation 2002 Equity Incentive Plan10(x)
    
    Incentive Stock Option Award Agreement Pursuant to the Camco
Financial Corporation 2002 Equity and Incentive Plan10(xi)
    
    Non-Qualified Stock Option Award Agreement Pursuant to the Camco Financial
Corporation 2002 Equity and Incentive Plan10(xii)
    
    Camco Financial Corporation 1995 Stock Option and Incentive Plan10(xiii)
    
    Westwood Homestead Financial Corporation 1997 Stock Option Plan10(xiv)
    
    Incentive Stock Option Award Agreement Pursuant to the Westwood Homestead
Financial Corporation 1997 Stock Option Plan10(xv)
    
    Non-Qualified Stock Option Award Agreement Pursuant to the Westwood Homestead
Financial Corporation 1997 Stock Option Plan10(xvi)
    
    Summary of Cash Bonus Plan10(xvii)
    
    Change of Control Agreement including Attachment A listing participants10(xviii)
    
    Restricted Stock Award Agreement of James E. Huston10(xix)
    
    Stock Option Award Agreement of James E. Huston10(xx)
    
    Amendment to 1997 Stock Option Plan10(xxi)
    
    Amendment to 2002 Stock Option Plan10 (xxii)
    
    Amendment to Change of Control Agreements10 (xxiii)
    
    Amendment to Salary Continuation Agreements10 (xxiv)
    
    Cease and Desist11
    
    Statement regarding computation of per share earnings14
    
    Code of Ethics21
    
    Subsidiaries of Camco23
    
    Consent of Plante & Moran PLLC regarding Camcos Consolidated Financial
Statements and Form S-831(i)
    
    Certification of Chief Executive Officer31(ii)
    
    Certification of Chief Financial Officer32(i)
    
    Certification of Chief Executive Officer32(ii)
    
    Certification of Chief Financial Officer
 86




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##### Table of Contents



SIGNATURES
  Camco Financial CorporationBy
    /s/ James E. HustonJames E. Huston,Chairman, President, Chief Executive Officer  By
    
    /s/ Jeffrey T. Tucker
    
    By
    
    /s/ Paul D. LeakeJeffrey T. Tucker,
    
    
    
    Paul D. Leake,Lead Director
    
    
    
    DirectorDate:
    
    March 29, 2010
    
    Date:
    
    March 29, 2010By
    
    /s/ Carson K. Miller
    
    By
    
    /s/ Terry A. FeickCarson K. Miller
    
    
    
    Terry A. Feick,Director
    
    
    
    DirectorDate:
    
    March 29, 2010
    
    Date:
    
    March 29, 2010By
    
    /s/ Edward D. Goodyear
    
    By
    
    /s/ Andrew S. DixEdward D. Goodyear,
    
    
    
    Andrew S. DixDirector
    
    
    
    DirectorDate:
    
    March 29, 2010
    
    Date:
    
    March 29, 2010By
    
    /s/ J. Timothy Young
    
    By
    
    /s/ Douglas F MockJ. Timothy Young
    
    
    
    Douglas F. MockDirector
    
    
    
    DirectorDate:
    
    March 29 , 2010
    
    Date:
    
    March 29, 2010By
    
    /s/ James E. Brooks
    
    By
    
    /s/ Kristina K. TiptonJames E. Brooks
    
    
    
    Kristina K. TiptonChief Financial Officer,
Principal Financial Officer
    
    
    
    Principal Accounting OfficerDate:
    
    March 29, 2010
    
    Date:
    
    March 29, 2010




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##### Table of Contents



INDEX TO EXHIBITS
 ITEM
    
    DESCRIPTION
    
    DOCUMENT REFERENCEExhibit 3(i)
    
    Third Restated Certificate of
Incorporation of Camco Financial
Corporation, as amended
    
    Incorporated by reference to Camcos
Annual Report on Form 10-K for the
fiscal year ended December 31, 2003,
Film no. 04668873 (2003 Form 10-K),
Exhibit 3(i)Exhibit 3(ii)
    
    2003 Amended and Restated
By-Laws of Camco Financial
Corporation
    
    Incorporated by reference to Camcos Annual
Annual Report on Form 10-K for the fiscal
year ended December 31, 2006, Exhibit 3(ii)Exhibit 4
    
    Letter of Agreement to Furnish Copies of
Long-term Debt Instruments and
Agreements
    
    Filed herewithExhibit 10(i)
    
    Employment Agreement dated
January 1, 2001, by and between
Camco Financial Corporation and
James E. Huston
    
    Incorporated by reference to Camcos
8-K filed on January 7, 2009, film no.
09512081 (2009 8-K), Exhibit 10Exhibit 10(iii)
    
    Form of 2002 Salary Continuation
Agreement, including individualized
Schedule As for each participant
    
    Incorporated by reference to Camcos
2003 Form 10-K, Exhibit 10(iv)Exhibit 10(iv)
    
    Form of 1996 Salary Continuation
Agreement, including Schedule As
for D. Edward Rugg and Edward A.
Wright
    
    Incorporated by reference to Camcos
Annual Report on Form 10-K for the
fiscal year ended December 31, 2004
(2004 Form 10-K), Exhibit 10(iv)Exhibit 10(v)
    
    Form of Executive Deferred
Compensation Agreement
    
    Incorporated by reference to Camcos
2003 Form 10-K, Exhibit 10(vi)Exhibit 10(vi)
    
    First Ashland Financial Corporation
1995 Stock Option and Incentive Plan
    
    Incorporated by reference to Camcos
Form S-8
filed on June 10, 2002, File Number 333-90142, Exhibit 4.01Exhibit 10(vii)
    
    Incentive Stock Option Award
Agreement Pursuant to the First
Ashland Financial Corporation
1995 Stock Option and Incentive
Plan
    
    Incorporated by reference to Camcos
Annual Report on Form 10-K for the
fiscal year ended December 31, 2004
(2004 Form 10-K), Exhibit 10(vii)Exhibit 10(viii)
    
    Non-Qualified Stock Option Award
Agreement Pursuant to the First
Ashland Financial Corporation
1995 Stock Option and Incentive
Plan
    
    Incorporated by reference to Camcos
Annual Report on Form 10-K for the
fiscal year ended December 31, 2004
(2004 Form 10-K), Exhibit 10(viii)Exhibit 10(ix)
    
    Camco Financial Corporation 2002
Equity Incentive Plan
    
    Incorporated by reference to Camcos
Form S-8 filed on June 10, 2002, File
Number 333-90152, Exhibit 4.01Exhibit 10(x)
    
    Incentive Stock Option Award
Agreement Pursuant to the Camco
Financial Corporation 2002 Equity
and Incentive Plan
    
    Incorporated by reference to Camcos
Form 8-K filed on February 2, 2005,
film no. 05570393 (2005 8-K),
Exhibit 10.5




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##### Table of Contents



INDEX TO EXHIBITS (continued)
 ITEM
    
    DESCRIPTION
    
    DOCUMENT REFERENCEExhibit 10(xi)
    
    Non-Qualified Stock Option Award
Agreement Pursuant to the Camco
Financial Corporation 2002 Equity
and Incentive Plan
    
    Incorporated by reference to Camcos
Annual Report on Form 10-K for the
fiscal year ended December 31, 2004
(2004 Form 10-K), Exhibit 10(xi)Exhibit 10(xii)
    
    Camco Financial Corporation 1995
Stock Option and Incentive Plan
    
    Incorporated by reference to Camcos
Form S-8 filed on June 10, 2002, File
Number 333-90166, Exhibit 4.01Exhibit 10(xiii)
    
    Westwood Homestead Financial
Corporation 1997 Stock Option Plan
    
    Incorporated by reference to Camcos
Form S-8 filed on January 5, 2000,
File Number 333-94113, Exhibit 4.01Exhibit 10(xiv)
    
    Incentive Stock Option Award
Agreement Pursuant to the Westwood
Homestead Financial Corporation
1997 Stock Option Plan
    
    Incorporated by reference to the 2005
8-K, Exhibit 10.4Exhibit 10(xv)
    
    Non-Qualified Stock Option Award
Agreement Pursuant to the Westwood
Homestead Financial Corporation
1997 Stock Option Plan
    
    Incorporated by reference to the 2005
8-K, Exhibit 10.3Exhibit 10(xvi)
    
    Summary of Bonus Plan
    
    Incorporated by reference to the 2008
10-k, Exhibit 10(xvi)Exhibit 10(xvii)
    
    Change of Control Agreement
including Attachment A listing
participants
    
    Incorporated by reference to the 2008
10-k, Exhibit 10(xvii)Exhibit 10(xviii)
    
    Restricted Stock Award Agreement of
James E. Huston
    
    Incorporated by reference to the 2008
10-k, Exhibit 10(xviii)Exhibit 10(xix)
    
    Stock Option Award Agreement of
James E. Huston
    
    Incorporated by reference to the 2008
10-k, Exhibit 10(xix)Exhibit 10 (xx)
    
    Amendment to 1997 Stock Option
Plan
    
    Incorporated by reference to the 2008
10-k, Exhibit 10(xx)Exhibit 10 (xxi)
    
    Amendment to 2002 Stock Option
Plan
    
    Incorporated by reference to the 2008
10-k, Exhibit 10(xxi)Exhibit 10 (xxii)
    
    Amendment to Change of Control
Agreements
    
    Incorporated by reference to the 2008
10-k, Exhibit 10(xxii)Exhibit 10 (xxiii)
    
    Amendment to Salary Continuation
Agreements
    
    Incorporated by reference to the 2008
10-k, Exhibit 10(xxiii)Exhibit 10 (xxiv)
    
    Cease and Desist
    
    Filed herewithExhibit 11
    
    Statement regarding computation of per
share earnings
    
    Incorporated by reference to Camcos
2009 Annual Report to Stockholders,
filed herewith as Exhibit 11Exhibit 14
    
    Code of Ethics
    
    Camco elects to satisfy Regulation S-K
§229.406(c) by posting its Code of Ethics on
its website at www.camcofinancial.comExhibit 21
    
    Subsidiaries of Camco
    
    Incorporated by reference to Camcos
2003 Form 10-K, Exhibit 21




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##### Table of Contents



ITEM
    
    DESCRIPTION
    
    DOCUMENT REFERENCEExhibit 23
    
    Consent of Plante & Moran PLLC
regarding Camcos Consolidated
Financial Statements and Form S-8
    
    Filed herewithExhibit 31(i)
    
    Section 302 Certification by
Chief Executive Officer
    
    Filed herewithExhibit 31(ii)
    
    Section 302 Certification by
Chief Financial Officer
    
    Filed herewithExhibit 32(i)
    
    Section 1350 Certification by
Chief Executive Officer
    
    Filed herewithExhibit 32(ii)
    
    Section 1350 Certification by
Chief Financial Officer
    
    Filed herewith