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, 2005

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                                          to                                         

CAMCO FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Delaware		51-0110823
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

6901 Glenn Highway, Cambridge, Ohio 43725
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (740) 435-2020

Securities registered pursuant to Section 12(b) of the Act:

None		None
(Title of Each Class)		(Name of exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $1 par value per share
(Title of Class)

     Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

     Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

     Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K ($229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

                         Large accelerated filer þ            Accelerated filer o            Non-accelerated filer o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ

     The aggregate market value of the voting stock held by non-affiliates of the registrant, computed by reference to the last sale reported as of June 30, 2005, was $104.0 million. (The exclusion from such amount of the market value of the shares owned by any person shall not be deemed an admission by the registrant that such person is an affiliate of the registrant.)

          There were 7,578,713 shares of the registrant’s common stock outstanding on February 6, 2006.

 

 

DOCUMENTS INCORPORATED BY REFERENCE:

Part III of Form 10-K: Portions of the Proxy Statement for the 2006 Annual Meeting of Stockholders

PART I

Item 1. Business.

General

     Camco Financial Corporation (“Camco”) is a financial holding company which was organized under Delaware law in 1970. Camco is engaged in the financial services business in Ohio, Kentucky and West Virginia, through its wholly-owned subsidiaries, Advantage Bank and Camco Title Agency, Inc. In June 2001, Camco completed a reorganization in which it combined its banking activities under one Ohio savings bank charter known as Advantage Bank (“Advantage” or the “Bank”). Prior to the reorganization, Camco operated five separate banking subsidiaries (Cambridge Savings Bank, Marietta Savings Bank, First Savings Bank, First Bank for Savings and Westwood Homestead Savings Bank) serving distinct geographic areas. The branch office groups in each of the regions previously served by the five subsidiary banks now operate as divisions of Advantage. In 2003, Camco dissolved its second tier subsidiary, Camco Mortgage Corporation, and converted its offices into branch offices of the Bank. In August 2004, Camco completed a business combination with London Financial Corporation (“London”) of London, Ohio, and its wholly-owned subsidiary, The Citizens Bank of London. The acquisition was accounted for using the purchase method of accounting and, therefore, the financial statements for prior periods have not been restated. At the time of the merger, Advantage Bank merged into The Citizens Bank of London and changed the name of the resulting institution to Advantage Bank. As a result, Camco’s subsidiary financial institution is now an Ohio-chartered commercial bank instead of an Ohio savings bank. Further, Camco converted from an OTS regulated thrift holding company to a financial holding company regulated by the Federal Reserve Board.

     During the last five years, Camco completed two business combinations in addition to the London transaction, each of which was accounted for using the purchase method of accounting and, therefore, the financial information for prior periods have not been restated. During 2000, Camco completed a business combination with Westwood Homestead Financial Corporation (“WHFC”) and its wholly-owned subsidiary, Westwood Homestead Savings Bank and, in November 2001, Camco completed a business combination with Columbia Financial of Kentucky, Inc. (“Columbia Financial”), and its wholly-owned subsidiary, Columbia Federal Savings Bank.

     In December 2004, Advantage sold its Ashland, Kentucky division, consisting of two branches.

     Advantage is primarily regulated by the State of Ohio Department of Commerce, Division of Financial Institutions (the “Division”), and the Federal Deposit Insurance Corporation (the “FDIC”). Advantage is a member of the Federal Home Loan Bank (the “FHLB”) of Cincinnati, and its deposit accounts are insured up to applicable limits by the Savings Association Insurance Fund (the “SAIF”) administered by the FDIC. Camco is regulated by the Federal Reserve Board.

     Advantage’s lending activities include the origination of commercial real estate and business loans, consumer, and residential conventional fixed-rate and variable-rate mortgage loans for the acquisition, construction or refinancing of single-family homes located in Camco’s primary market areas. Camco also originates construction and permanent mortgage loans on condominiums, two- to four-family, multi-family (over four units) and nonresidential properties. Camco continues to diversify the balance sheet through increasing commercial, commercial real estate, and consumer loan portfolios as well as transaction-based deposits.

     The financial statements for Camco and its subsidiaries are prepared on a consolidated basis. The principal source of revenue for Camco on an unconsolidated basis has historically been dividends from the Bank. Payment of dividends to Camco by the Bank is subject to various regulatory restrictions and tax considerations.

     References in this report to various aspects of the business, operations and financial condition of Camco may be limited to Advantage, as the context requires.

     Camco’s Internet site, http://www.camcofinancial.com, contains a hyperlink to the Securities and Exchange Commission’s EDGAR website where Camco’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge as soon as reasonably practicable after Camco has filed the report with the SEC.

Lending Activities

     General. Camco’s lending activities include the origination of commercial real estate and business loans, consumer loans, residential conventional fixed-rate and variable-rate mortgage loans for the construction, acquisition or refinancing of single-family homes located in Advantage’s primary market areas. Construction and permanent mortgage loans on condominiums, multifamily (over four units) and nonresidential properties are also offered by Camco.

     Loan Portfolio Composition. The following table presents certain information regarding the composition of Camco’s loan portfolio, including loans held for sale, at the dates indicated:

		At December 31,
		2005								2004								2003								2002								2001
						Percent								Percent								Percent								Percent								Percent
						of total								of total								of total								of total								of total
		Amount				loans				Amount				loans				Amount				loans				Amount				loans				Amount				loans
		(Dollars in thousands)
Type of loan:
Existing residential properties(1)		$	591,407				69.7	%		$	603,722				72.1	%		$	652,953				81.1	%		$	641,464				80.5	%		$	705,056				80.9	%
Construction			74,601				8.8				75,055				9.0				44,189				5.5				33,122				4.1				42,666				4.9
Nonresidential real estate			105,380				12.4				105,247				12.6				51,533				6.4				74,094				9.3				70,239				8.1
Developed building lots			23,262				2.7				15,854				1.9				1,725				0.2				535				0.1				5,908				0.7
Consumer and other loans(2)			94,547				11.1				84,550				10.1				78,155				9.7				67,712				8.5				69,116				7.9
Total			889,197				104.7				884,428				105.7				828,555				102.9				816,927				102.5				892,985				102.5
Less:
Undisbursed loans in process			(33,262	)			(3.9	)			(40,349	)			(4.8	)			(17,022	)			(2.1	)			(13,089	)			(1.6	)			(15,343	)			(1.8	)
Unamortized yield adjustments			(266	)			(0.0	)			(937	)			(0.1	)			(810	)			(0.1	)			(1,390	)			(0.2	)			(1,940	)			(0.2	)
Allowance for loan losses			(6,959	)			(0.8	)			(6,476	)			(0.8	)			(5,641	)			(0.7	)			(5,490	)			(0.7	)			(4,256	)			(0.5	)
Total loans, net		$	848,710				100.0	%		$	836,666				100.0	%		$	805,082				100.0	%		$	796,958				100.0	%		$	871,446				100.0	%

Loan Maturity Schedule. The following table sets forth certain information as of December 31, 2005, regarding the dollar amount of loans maturing in Camco’s portfolio based on the contractual terms to maturity of the loans. Demand loans, loans having no stated schedule of repayments and loans having no stated maturity, are reported as due in one year or less.

		Due during the
		year ending								Due in
		December 31,				Due in years				years after
		2006				2007—2011				2011				Total
		(In thousands)
Real estate loans (1):
One- to four-family			10,812				80,544				521,800				613,156
Multifamily			4,402				1,463				46,588				52,453
Nonresidential			9,463				16,448				97,788				123,699
Commercial			6,227				6,201				8,530				20,958
Consumer and other loans (2)			14,739				14,563				7,447				36,749
Total		$	45,643			$	119,219			$	682,153			$	847,015

     The following table sets forth at December 31, 2005, the dollar amount of all loans due after one year from December 31, 2005, which have fixed or adjustable interest rates:

		Due after
		December 31, 2006
		(In thousands)
Fixed rate of interest		$	227,119
Adjustable rate of interest			574,253
Total		$	801,372

     Generally, loans originated by Advantage are on a fully amortized basis. Advantage has no rollover provisions in its loan documents and anticipates that loans will be paid in full by the maturity date.

     Residential Loans. A significant lending activity of Advantage is the origination of fixed-rate and adjustable-rate conventional loans for the acquisition, refinancing or construction of single-family residences. At December 31, 2005, 69.7% of the total outstanding loans consisted of loans secured by mortgages on one- to four-family residential.

     Federal regulations and Ohio law limit the amount which Advantage may lend in relationship to the appraised value of the underlying real estate at the time of loan origination (the “Loan-to-Value Ratio” or “LTV”). In accordance with such regulations and law, Advantage generally makes loans on single-family residences up to 95% of the value of the real estate and improvements. Advantage generally requires the borrower on each loan which has an LTV in excess of 80% to obtain private mortgage insurance or a guarantee by a federal agency. Advantage does allow, on an exception basis, borrowers to exceed LTV of 80% without private mortgage insurance or a guarantee by a federal agency.

     The interest rate adjustment periods on adjustable-rate mortgage loans (“ARMs”) offered by Advantage are generally one, three and five years. The interest rates initially charged on ARMs and the new rates at each adjustment date are determined by adding a stated margin to a designated interest rate index. Advantage has generally used the one-year and three-year United States Treasury bill rates, adjusted to a constant maturity, as the index for their one-year and three-year adjustable-rate loans, respectively. Advantage has used LIBOR as an additional index on certain loan programs to

begin to diversify its concentrations of indices that may prove beneficial during repricing of loans throughout changing economic cycles. The initial interest rates for three-year and five-year ARMs are set slightly higher than for the one-year ARM to compensate for the reduced interest rate sensitivity. The maximum adjustment at each adjustment date for ARMs is usually 2%, with a maximum adjustment of 6% over the term of the loan.

     From time to time, Advantage originates ARMs which have an initial interest rate that is lower than the sum of the specified index plus the margin. Such loans are subject to increased risk of delinquency or default due to increasing monthly payments as the interest rates on such loans increase to the fully indexed level. Advantage attempts to reduce the risk by underwriting one–year ARMS at the fully indexed rate and three-year and five-year ARMS utilizing the note rates. None of Advantage’s ARMs have negative amortization features.

     Residential mortgage loans offered by Advantage are usually for terms of up to 30 years, which could have an adverse effect upon earnings if the loans do not reprice as quickly as the cost of funds. To minimize such effect, Advantage emphasizes the origination of ARMs and generally sells fixed-rate loans when conditions favor such a sale. Furthermore, experience reveals that, as a result of prepayments in connection with refinancings and sales of the underlying properties, residential loans generally remain outstanding for periods which are substantially shorter than the maturity of such loans.

     Of the total mortgage loans originated by Advantage during the year ended December 31, 2005, 59.3% were ARMS and 40.7% were fixed-rate loans. Adjustable-rate loans comprised 71.6% of Advantage’s total loans outstanding l at December 31, 2005.

     Construction Loans. Advantage offers residential construction loans both to owner-occupants and to builders for homes being built under contract with owner-occupants. Advantage also makes loans to persons constructing projects for investment purposes. At December 31, 2005, a total of $74.6 million, or approximately 8.8% of Advantage’s total loans, consisted of construction loans, primarily for one- to four-family properties.

     Construction loans to owner-occupants are 30-year fixed rate, 15-year fixed rate, or seven-year balloon loans or adjustable-rate long-term loans on which the borrower pays only interest on the disbursed portion during the construction period. Some construction loans to builders, however, have terms of up to 24 months at fixed or adjustable rates of interest.

     Construction loans for investment properties involve greater underwriting and default risks to Advantage than loans secured by mortgages on existing properties or construction loans for single-family residences. Loan funds are advanced upon the security of the project under construction, which is more difficult to value in the case of investment properties before the completion of construction. Moreover, because of the uncertainties inherent in estimating construction costs, it is relatively difficult to evaluate precisely the total loan funds required to complete a project and the related Loan-to-Value Ratios. In the event a default on a construction loan occurs and foreclosure follows, Advantage could be adversely affected in that it would have to take control of the project and attempt either to arrange for completion of construction or dispose of the unfinished project. At December 31, 2005, Advantage had six construction loans in the total amount of $811,000 on investment properties.

     Nonresidential Real Estate Loans. Advantage originates loans secured by mortgages on nonresidential real estate, including retail, office and other types of business facilities. Nonresidential real estate loans are generally made on an adjustable-rate basis for terms of up to 25 years. Nonresidential real estate loans originated by Advantage generally have an LTV of 80% or less. The largest nonresidential real estate loan outstanding at December 31, 2005, was a $5.8 million loan secured by a health care facility. Nonresidential real estate loans comprised $105.4 million, or 12.4% of total loans at December 31, 2005.

     Nonresidential real estate lending is generally considered to involve a higher degree of risk than residential lending due to the relatively larger loan amounts and the effects of general economic conditions on the successful operation of income-producing properties. Advantage has endeavored to reduce this risk by carefully evaluating the credit history and past performance of the borrower, the location of the real estate, the quality of the management operating the property, the debt service ratio and cash flow analysis, the quality and characteristics of the income stream generated by the property and appraisals supporting the property’s valuation.

     Consumer and Other Loans. Advantage makes various types of consumer loans, including loans made to depositors on the security of their savings deposits, automobile loans, home improvement loans, home equity line of credit loans and unsecured personal loans. Home equity loans are generally made at a variable rate of interest for terms of up to 10 years. Most other consumer loans are generally made at fixed rates of interest for terms of up to 10 years. The risk of default on consumer loans during an economic recession is greater than for residential mortgage loans. Included in consumer and other loans is approximately $51.5 million of multifamily loans of which the largest is $3.0 million secured by an apartment building. At December 31, 2005, education, consumer and other loans constituted $22.1 million of Camco’s total loans.

     Developed Building Lots. Advantage originates loans secured by developed building lots. These loans generally are made on an adjustable-rate basis for terms of up to five years. Developed building lots generally have an LTV of 75% or less.

     Loan Solicitation and Processing. Loan originations are developed from a number of sources, including: solicitations by Advantage’s lending staff; referrals from real estate brokers, loan brokers and builders; participations with other banks; continuing business with depositors, other borrowers and real estate developers; and walk-in customers. Advantage’s management stresses the importance of individualized attention to the financial needs of its customers.

     The loan origination process is decentralized, with each of Advantage’s divisions having autonomy in loan processing and approval for its respective market area. Mortgage loan applications from potential borrowers are taken by one of the loan officers of the division originating the loan, after which they are forwarded to the division’s loan department for processing. On new loans, the Bank typically obtains a credit report, verification of employment and other documentation concerning the borrower and orders an appraisal of the fair market value of the collateral which will secure the loan, if any. The collateral is thereafter physically inspected and appraised by a staff appraiser or by a designated fee appraiser approved by the Board of Directors of Advantage. Upon the completion of the appraisal and the receipt of all necessary information regarding the borrower, the loan is approved by the loan officer up to such officer’s maximum loan approval authority. Loans above an individual’s authority receive additional approval by officers with higher loan approval authority. If the loan is approved, an attorney’s opinion of title or title insurance is obtained on the real estate which will secure the loan. Borrowers are required to carry satisfactory fire and casualty insurance and, if applicable, flood and private mortgage insurance, and to name Advantage as an insured mortgagee.

     The procedure for approval of construction loans is the same as for residential mortgage loans, except that the appraiser evaluates the building plans, construction specifications and construction cost estimates. Advantage also evaluates the feasibility of the proposed construction project.

     Consumer loans are underwritten on the basis of the borrower’s credit history and an analysis of the borrower’s income and expenses, ability to repay the loan and the value of the collateral, if any.

     Loan Originations, Purchases and Sales. Advantage has been actively originating new 30-year, 15-year, 10-year fixed-rate and seven-year balloon real estate loans as well as adjustable-rate real estate loans, consumer loans and commercial loans. Generally all residential fixed-rate loans made by Advantage are originated with documentation which will permit a possible sale of such loans to secondary mortgage market investors. When a mortgage loan is sold to the investor, Advantage generally services the loan by collecting monthly payments of principal and interest and forwarding such payments to the investor, net of a servicing fee. During the year ended December 31, 2005, Advantage also sold loans with servicing released. Fixed-rate loans not sold and generally all of the ARMs originated by Advantage are held in Advantage’s loan portfolio. During the year ended December 31, 2005, Advantage sold approximately $69.7 million in loans. Advantage recognized a gain of $1.0 million in mortgage servicing rights during 2005, while amortization of mortgage servicing rights totaled $972,000 for the year ended December 31, 2005.

     From time to time, Advantage sells participation interests in mortgage loans originated by it and purchases whole loans or participation interests in loans originated by other lenders. Advantage held whole loans and participations in loans originated by other lenders of approximately $40.4 million at December 31, 2005. Loans which Advantage purchases must meet or exceed the underwriting standards for loans originated by Advantage.

     In recent years, Advantage has purchased mortgage-backed securities insured or guaranteed by U.S. Government agencies in order to improve Camco’s asset yield by profitably investing excess funds. Advantage intends to continue to purchase such mortgage-backed securities when conditions favor such an investment. See “Investment Activities.”

     The following table presents Advantage’s mortgage loan origination, purchase, sale and principal repayment activity for the periods indicated:

		Year ended December 31,
		2005				2004				2003				2002				2001
		(In thousands)
Loans originated:
Construction		$	45,066			$	45,826			$	37,791			$	54,114			$	35,330
Permanent			121,033				164,540				422,021				447,379				240,625
Consumer and other			234,214				126,168				147,668				70,772				83,126
Total loans originated			400,313				336,534				607,480				572,265				359,081
Loans purchased (1)			14,490				70,602				126,006				116,306				17,755
Reduction
Principal repayments (1)			344,344				243,074				407,521				441,419				273,212
Loans sold (1)			69,734				130,801				337,376				239,636				215,289
Transfers from loans to real estate owned			3,725				6,591				4,010				1,270				3,208
Total reductions			(417,803	)			(380,466	)			(748,907	)			(682,325	)			(491,709	)
Increase (decrease) in other items, net (2)			(1,559	)			(2,655	)			(8,167	)			(1,142	)			(3,162	)
Decrease due to sales (3)			—				(42,634	)			—				—				—
Increase due to mergers (4)			—				49,050				—				—				81,426
Net increase (decrease)		$	(4,559	)		$	30,431			$	(23,588	)		$	5,104			$	(36,609	)

     Lending Limit. Federal regulations and Ohio law generally impose a lending limit on the aggregate amount that a depository institution can lend to one borrower to an amount equal to 15% of the institution’s total capital for risk-based capital purposes plus any loan reserves not already included in total capital (the “Lending Limit Capital”). A depository institution may loan to one borrower an additional amount not to exceed 10% of the institution’s Lending Limit Capital, if the additional amount is fully secured by certain forms of “readily marketable collateral.” Real estate is not considered “readily marketable collateral.” In applying this limit, the regulations require that loans to certain related or affiliated borrowers be aggregated.

     The largest amount which Advantage could have loaned to one borrower at December 31, 2005, was approximately $12.5 million. The largest amount Advantage had outstanding to one borrower and related persons or entities at December 31, 2005, was $8.1 million, which consisted of 9 loans secured by various types of commercial real estate, including commercial real estate in development and building lots.

     Loan Origination and Other Fees. In addition to interest earned on loans, Advantage may receive loan origination fees or “points” of generally up to 2.0% of the loan amount, depending on the type of loan, plus reimbursement of certain other expenses. Loan origination fees and other fees are a volatile source of income, varying with the volume of lending and economic conditions. All nonrefundable loan origination fees and certain direct loan origination costs are deferred and recognized as an adjustment to yield over the life of the related loan in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 91.

     Delinquent Loans, Nonperforming Assets and Classified Assets. Advantage attempts to minimize loan delinquencies through the assessment of late charges and adherence to established collection procedures. Generally, after a loan payment is 15 days delinquent, a late charge of 5% of the amount of the payment is assessed and a collection officer contacts the borrower to request payment. In certain limited instances, Advantage may modify the loan or grant a limited moratorium on loan payments to enable the borrower to reorganize his or her financial affairs. Advantage generally initiates foreclosure proceedings, in accordance with applicable laws, when it appears that a modification or moratorium would not be productive.

     Real estate which has been acquired by Advantage as a result of foreclosure or by deed in lieu of foreclosure is classified as “real estate owned” until it is sold. “Real estate owned” is recorded at the lower of the book value of the loan or the fair value of the property less estimated selling expenses at the date of acquisition. Periodically, “real estate owned” is reviewed to ensure that fair value is not less than carrying value, and any write-down resulting therefrom is charged to earnings as a provision for losses on real estate acquired through foreclosure. All costs incurred from the date of acquisition are expensed in the period paid.

     The following table reflects the amount of loans in a delinquent status as of the dates indicated:

		At December 31,
		2005				2004				2003				2002				2001
		(Dollars in thousands)
Loans delinquent for:
30 to 89 days		$	9,490			$	12,302			$	8,682			$	10,524			$	14,238
90 or more days			13,922				9,794				13,608				13,625				7,885
Total delinquent loans		$	23,412			$	22,096			$	22,290			$	24,149			$	22,123
Ratio of total delinquent loans to total net loans (1)			2.76	%			2.64	%			2.77	%			3.03	%			2.54	%

     Nonaccrual status denotes loans greater than 90 days past due for which, in the opinion of management, the collection of additional interest is unlikely, or loans that meet nonaccrual criteria as established by regulatory authorities. Payments received on a nonaccrual loan are either applied to the outstanding principal balance or recorded as interest income, depending on management’s assessment of the collectibility of the loan. The following table sets forth information with respect to Advantage’s nonaccrual and delinquent loans for the periods indicated.

		At December 31,
		2005				2004				2003				2002				2001
		(Dollars in thousands)
Loans accounted for on nonaccrual basis:
Real estate:
Residential		$	10,267			$	7,922			$	12,135			$	11,021			$	3,677
Nonresidential			3,109				463				357				1,726				367
Commercial			387				—				—				—				—
Consumer and other			159				1,409				1,116				878				393
Total nonaccrual loans			13,922				9,794				13,608				13,625				4,437
Accruing loans delinquent 90 days or more:
Real estate:
Residential			—				—				—				—				2,564
Nonresidential			—				—				—				—				206
Consumer and other			—				—				—				—				678
Total loans 90 days past due			—				—				—				—				3,448
Total nonperforming loans		$	13,922			$	9,794			$	13,608			$	13,625			$	7,885
Allowance for loan losses		$	6,959			$	6,476			$	5,641			$	5,490			$	4,256
Nonperforming loans as a percent of total net loans (1)			1.64	%			1.17	%			1.69	%			1.71	%			.90	%
Allowance for loan losses as a percent of nonperforming loans			50.0	%			66.1	%			41.5	%			40.3	%			54.0	%

     The amount of interest income that would have been recorded had nonaccrual loans performed in accordance with contractual terms totaled approximately $685,000 for the year ended December 31, 2005. Interest collected on such loans and included in net earnings was $189,000.

     At December 31, 2005, there were no loans which were not classified as nonaccrual, 90 days past due or restructured which management considered classifying in the near future due to concerns as to the ability of the borrowers to comply with repayment terms. Management changed the policy for designating loans as nonaccrual during 2002 to include all loans greater than 90 days past due.

     Federal regulations require the Bank to classify its assets on a regular basis. Problem assets are to be classified as either (i) “substandard,” (ii) “doubtful” or (iii) “loss.” Substandard assets have one or more defined weaknesses and are characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies are not corrected. Doubtful assets have the same weaknesses as substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable on the basis of existing facts, conditions and value. Assets classified as “loss” are considered uncollectible and of such little value that their treatment as assets without the establishment of a specific reserve is unwarranted. Federal regulations provide for the reclassification of real estate assets by federal examiners.

               At December 31, 2005, the aggregate amounts of Camco’s classified assets excluding impaired loans were as follows:

		At December 31, 2005
		(In thousands)
Classified assets:
Substandard		$	8,120
Doubtful			3
Loss			17
Total classified assets		$	8,140

     The interpretive guidance of the regulations also includes a “special mention” category, consisting of assets which do not currently expose an insured institution to a sufficient degree of risk to warrant classification, but which possess credit deficiencies or potential weaknesses deserving management’s close attention. Advantage had assets in the amount of $3.1 million designated as “special mention” at December 31, 2005.

     Allowance for Loan Losses. The allowance for loan losses is maintained at a level considered appropriate by management based on historical experience, the volume and type of lending conducted by the Bank, the status of past due principal and interest payments, general economic conditions, particularly as such conditions relate to the Bank’s market areas, and other factors related to the collectibility of the Bank’s loan portfolio. The following table sets forth an analysis of Advantage’s allowance for loan losses:

		Year ended December 31,
		2005				2004				2003				2002				2001
						(Dollars in thousands)
Balance at beginning of year		$	6,476			$	5,641			$	5,490			$	4,256			$	2,906
Charge-offs:
1-4 family residential real estate			877				1,142				509				134				66
Multifamily and nonresidential real estate			146				25				418				—				12
Consumer and other			257				430				392				73				657
Total charge-offs			1,280				1,597				1,319				207				735
Recoveries:
1-4 family residential real estate			265				180				17				23				3
Consumer and other			18				9				7				249				23
Total recoveries			283				189				24				272				26
Net (charge-offs) recoveries			(997	)			(1,408	)			(1,295	)			65				(709	)
Provision for losses on loans			1,480				1,620				1,446				1,169				759
Increase attributable to mergers (1)			—				623				—				—				1,300
Balance at end of year		$	6,959			$	6,476			$	5,641			$	5,490			$	4,256
Net (charge-offs) recoveries to average loans			(.12	)%			(.17	)%			(.17	)%			.01	%			(.08	)%

     The following table sets forth the allocation of Advantage’s allowance for loan losses by type of loan at the dates indicated:

		At December 31,
		2005								2004								2003								2002								2001
						Percent								Percent								Percent								Percent								Percent
						of loans								of loans								of loans								of loans								of loans
						in each								in each								in each								in each								in each
						category								category								category								category								category
						to total								to total								to total								to total								to total
		Amount				loans				Amount				loans				Amount				loans				Amount				loans				Amount				loans
																		(Dollars in thousands)
Balance at year end applicable to:
Secured loans		$	5,262				95.8	%		$	4,915				94.9	%		$	4,452				90.3	%		$	4,910				91.5	%		$	3,418				92.1	%
Unsecured loans			1,697				4.2				1,561				5.1				1,189				9.7				580				8.5				838				7.9
Total		$	6,959				100.0	%		$	6,476				100.0	%		$	5,641				100.0	%		$	5,490				100.0	%		$	4,256				100.0	%

Investment and Mortgage-Backed Securities Activities

     Federal regulations require that Advantage maintain a minimum amount of liquid assets, which may be invested in United States Treasury obligations, securities of various agencies of the federal government, certificates of deposit at insured banks, bankers’ acceptances and federal funds sold. Advantage is also permitted to make limited investments in commercial paper, corporate debt securities and certain mutual funds, as well as other investments permitted by federal laws and regulations.

     The following table sets forth the composition of Camco’s investment and mortgage-backed securities portfolio, except its stock in the FHLB of Cincinnati, at the dates indicated:

		At December 31,
		2005																2004																2003
		Amortized				% of				Fair				% of				Amortized				% of				Fair				% of				Amortized				% of				Fair				% of
		cost				total				value				total				cost				total				value				total				cost				total				value				total
																						(Dollars in thousands)
Held to maturity:
U.S. Government agency obligations		$	—				—	%		$	—				—	%		$	2,999				2.8	%		$	2,997				2.7	%		$	—				—	%		$	—				—	%
Municipal bonds			919				0 .8				947				0.8				1,124				1.0				1,177				1.1				1,130				1.0				1,204				1.0
Mortgage-backed securities			3,257				2.8				3,251				2.9				4,146				3.8				4,188				3.9				7,704				6.8				7,839				6.9
Total			4,176				3.6				4,198				3.7				8,269				7.6				8,362				7.7				8,834				7.8				9,043				7.9
Available for sale:
U.S. Government agency obligations			47,993				41.3				47,374				41.7				18,007				16.6				17,921				16.5				25,640				22.6				25,881				22.7
Municipal bonds			346				0.3				348				0.3				523				0.5				536				0.5				625				.05				651				0.6
Corporate equity securities			159				0.1				185				0.1				247				0.2				387				0.4				330				0.3				476				0.4
Treasury			—				—				—				—				999				0.9				995				0.9				—				—				—				—
Mortgage-backed securities			63,536				54.7				61,607				54.2				80,782				74.2				80,321				74.0				78,017				68.8				77,916				68.4
Total			112,034				96.4				109,514				96.3				100,558				92.4				100,160				92.3				104,612				92.2				104,924				92.1
Total investments and mortgage-backed securities		$	116,210				100.0	%		$	113,712				100.0	%		$	108,827				100.0	%		$	108,522				100.0	%		$	113,446				100.0	%		$	113,967				100.0	%

     The following table presents the contractual maturities or terms to repricing of Camco’s investment securities, except its stock in the FHLB of Cincinnati and corporate equity securities, and the weighted-average yields at December 31, 2005:

		At December 31, 2005
										After one								After five
		One year or less								through five years								through ten years								After ten years								Total
																																										Weighted-
		Amortized				Average				Amortized				Average				Amortized				Average				Amortized				Average				Amortized				Fair				average
		cost				yield				cost				yield				cost				yield				cost				yield				cost				value				yield
																		(Dollars in thousands)
U.S. Government Agency obligations		$	4,000				3.08	%		$	43,993				3.97	%		$	—				—	%		$	—				—	%		$	47,993			$	47,374				3.90	%
Municipal bonds			262				4.74				661				5.39				252				6.15				90				9.89				1,265				1,295				5.73
Mortgage-backed securities			7				8.00				19,936				4.08				29,620				3.88				17,230				4.44				66,793				64,858				4.08
Total		$	4,269				3.19	%		$	64,590				4.02	%		$	29,872				3.90	%		$	17,320				4.47	%		$	116,051			$	113,527				4.02	%

Deposits and Borrowings

     General. Deposits have traditionally been the primary source of Advantage’s funds for use in lending and other investment activities. In addition to deposits, Advantage derives funds from interest payments and principal repayments on loans, advances from the FHLB of Cincinnati and income on earning assets. Loan payments are a relatively stable source of funds, while deposit inflows and outflows fluctuate more in response to general interest rate and money market conditions. As part of Advantage’s asset and liability management strategy, FHLB advances and other borrowings are used to fund loan originations and for general business purposes. FHLB advances are also used on a short-term basis to compensate for reductions in the availability of funds from other sources.

     Deposits. Deposits are attracted principally from within Advantage’s primary market area through the offering of a broad selection of deposit instruments, including interest-bearing and non-interest bearing checking accounts, money market deposit accounts, regular savings accounts, term certificate accounts and retirement savings plans. Interest rates paid, maturity terms, service fees and withdrawal penalties for the various types of accounts are established periodically by management of Advantage based on its liquidity requirements, growth goals and interest rates paid by competitors. Interest rates paid by Advantage on deposits are not limited by federal or state law or regulation. Advantage generally does not offer premiums to attract deposits. Advantage does not have a significant amount of savings accounts from outside its primary market areas.

     The following table sets forth the dollar amount of deposits in the various types of savings programs offered by Advantage at the dates indicated:

						At December 31,
						2005								2004								2003
		Weighted-																Percent								Percent
		average rate at								Percent								of total								of total
		12/31/05				Amount				of total deposits				Amount				deposits				Amount				deposits
						(Dollars in thousands)
Withdrawable accounts:
Interest-bearing and non-interest bearing checking accounts			0.87	%		$	149,557				22.7	%		$	151,847				22.8	%		$	105,469				15.7	%
Money market demand accounts			2.07				58,995				8.9				83,063				12.4				128,938				19.2
Passbook and statement savings accounts			0.25				61,356				9.3				70,959				10.6				74,274				11.1
Total withdrawable accounts			0.89				269,908				40.9				305,869				45.8				308,681				46.0
Certificate accounts:
Term:
Six months to one year			3.50				26,039				3.9				19,115				2.9				18,966				2.8
One to two years			3.49				141,567				21.4				77,913				11.7				61,186				9.1
Two to eight years			3.88				120,227				18.2				148,351				22.2				174,487				26.0
Negotiated rate certificates			3.83				41,224				6.3				55,845				8.3				40,670				6.1
Individual retirement accounts			3.88				61,277				9.3				60,685				9.1				67,284				10.0
Total certificate accounts			3.71				390,334				59.1				361,909				54.2				362,593				54.0
Total deposits			2.55	%		$	660,242				100.0	%		$	667,778				100.0	%		$	671,274				100.0	%

     The following table presents the amount and contractual maturities of Camco’s time deposits at December 31, 2005:

		Amount Due
		Up to												Over
		one year				1-3 years				3-5 years				5 years				Total
		(Dollars in thousands)
Amount maturing		$	239,435			$	120,748			$	29,081			$	1,070			$	390,334
Average rate			3.48	%			4.03	%			4.22	%			4.79	%			3.71	%

     The following table sets forth the amount and maturities of Advantage’s time deposits in excess of $100,000 at December 31, 2005:

		At December 31, 2005
Maturity		(In thousands)
Three months or less		$	24,386
Over three to six months			32,487
Over six to twelve months			17,056
Over twelve months			24,688
Total		$	98,617

     Borrowings. The twelve regional FHLBs function as central reserve banks, providing credit for their member institutions. As a member in good standing of the FHLB of Cincinnati, Advantage is authorized to apply for advances from the FHLB of Cincinnati, provided certain standards of creditworthiness have been met. Advances are made pursuant to several different programs, each having its own interest rate and range of maturities. Depending on the program, limitations on the amount of advances are based either on a fixed percentage of an institution’s regulatory capital or on the FHLB’s assessment of the institution’s creditworthiness. Under current regulations, a member institution must meet certain qualifications to be eligible for FHLB advances.

     The following table sets forth the maximum amount of Camco’s FHLB advances outstanding at any month end during the periods shown and the average aggregate balances of FHLB advances for such periods:

		Year ended December 31,
		2005				2004				2003
		(Dollars in thousands)
Maximum amount outstanding		$	306,887			$	295,310			$	280,298
Average amount outstanding		$	294,397			$	277,576			$	273,147
Weighted-average interest cost of FHLB advances based on month end balances			3.74	%			4.89	%			5.56	%

     The following table sets forth certain information with respect to Camco’s FHLB advances at the dates indicated:

		At December 31,
		2005				2004				2003
		(Dollars in thousands)
Amount outstanding		$	294,357			$	295,310			$	262,735
Weighted-average interest rate			3.94	%			3.63	%			5.13	%

Competition

     Advantage competes for deposits with other commercial banks, savings associations, savings banks, insurance companies and credit unions and with the issuers of commercial paper and other securities, such as shares in money market mutual funds. The primary factors in competing for deposits are interest rates and convenience of office location. In making loans, Advantage competes with other commercial banks, savings banks, savings associations, consumer finance companies, credit unions and other lenders. Advantage competes for loan originations primarily through the interest rates and loan fees it charges and through the efficiency and quality of the services it provides to borrowers. Competition is affected by, among other things, the general availability of lendable funds, general and local economic conditions, current interest rate levels and other factors which are not readily predictable.

Service Corporation Activities

     Advantage has no operating subsidiaries. First S&L Corporation, a subsidiary of Advantage, is inactive and was capitalized on a nominal basis at December 31, 2005.

Employees

     As of December 31, 2005, Camco had 275 full-time employees and 33 part-time employees. Camco believes that relations with its employees are good. Camco offers health and disability benefits and a 401(k) salary savings plan. None of the employees of Camco are represented by a collective bargaining unit.

REGULATION

General

     As a financial holding company registered under the Bank Holding Company Act of 1956, as amended (the “BHC Act”), Camco is subject to regulation, examination and oversight by the Board of Governors of the Federal Reserve System (“FRB”). Although Camco is recognized as a financial holding company, most regulations pertaining to bank holding companies also apply to it. Advantage is a non-member of the FRB and is subject to regulation by the Division and the FDIC. Camco and Advantage must file periodic reports with these governmental agencies, as applicable, concerning their activities and financial condition. Examinations are conducted periodically by the applicable regulators to determine whether Camco and Advantage are in compliance with various regulatory requirements and are operating in a safe and sound manner. Advantage is also subject to certain regulations promulgated by the FRB.

Ohio Regulation

     Regulation by the Division affects the internal organization of Advantage, as well as its savings, mortgage lending and other investment activities. Periodic examinations by the Division are usually conducted on a joint basis with the federal examiners. Ohio law requires that Advantage maintain federal deposit insurance as a condition of doing business. The ability of Ohio banks to engage in certain state-authorized investments is subject to oversight and approval by the FDIC. See “Federal Deposit Insurance Corporation — State Chartered Bank Activities.”

     Any mergers involving, or acquisitions of control of, Ohio banks must be approved by the Division. The Division may initiate certain supervisory measures or formal enforcement actions against Ohio savings banks. Ultimately, if the grounds provided by law exist, the Division may place an Ohio bank in conservatorship or receivership.

     In addition to being governed by the laws of Ohio specifically governing banks, Advantage is also governed by Ohio corporate law, to the extent such law does not conflict with the laws specifically governing banks.

Federal Deposit Insurance Corporation

     Supervision and Examination. The FDIC is responsible for the regulation and supervision of all commercial banks that are not members of the Federal Reserve System (“Non-member Banks”). The FDIC is an independent federal agency that insures the deposits, up to prescribed statutory limits, of federally insured banks and thrifts and safeguards the safety and soundness of the banking and thrift industries. The FDIC administers two separate insurance funds, the Bank Insurance Fund (“BIF”) for commercial banks and certain state savings banks and the Savings Association Insurance Fund (“SAIF”) for savings associations and savings banks which were formerly organized as savings associations. As a former savings association, Advantage is a member of the SAIF and its deposit accounts are insured by the FDIC, up to the prescribed limits. In February 2006, the Deposit Insurance Reform Conforming Amendments Act of 2005 was signed into law. This act will, among other things, merge the BIF and SAIF.

     Non-member Banks are subject to regulatory oversight under various consumer protection and fair lending laws. These laws govern, among other things, truth-in-lending disclosure, equal credit opportunity, fair credit reporting and community reinvestment. Failure to abide by federal laws and regulations governing community reinvestment could limit the ability of an institution to open a new branch or engage in a merger transaction.

     State Chartered Bank Activities. The ability of Advantage to engage in any state-authorized activities or make any state-authorized investments, as principal, is limited if such activity is conducted or investment is made in a manner different than that permitted for, or subject to different terms and conditions than those imposed on, national banks. Engaging as a principal in any such activity or investment not permissible for a national bank is subject to approval by the FDIC. Such approval will not be granted unless certain capital requirements are met and there is not a significant risk to the FDIC insurance fund. Most equity and real estate investments (excluding office space and other real estate owned) authorized by state law are not permitted for national banks. Certain exceptions are granted for activities deemed by the FRB to be closely related to banking and for FDIC-approved subsidiary activities.

     Liquidity. Advantage is not required to maintain a specific level of liquidity; however, the FDIC expects it to maintain adequate liquidity to protect safety and soundness.

     Regulatory Capital Requirements. Camco and Advantage are required by applicable law and regulations to meet certain minimum capital requirements. The capital standards include a leverage limit, or core capital requirement, a tangible capital requirement and a risk-based capital requirement.

     The leverage capital requirement is a minimum level of Tier 1 capital to average total consolidated assets of 4%. “Tier 1” capital includes common stockholders equity, noncumulative perpetual preferred stock and minority interest in the equity accounts of consolidated subsidiaries, less all intangibles, other than includable purchased mortgage servicing rights and credit card relationships.

     The risk-based capital requirement specifies total capital, which consists of core or Tier 1 capital and certain general valuation reserves, as a minimum of 8% of risk-weighted assets. For purposes of computing risk-based capital, assets and certain off-balance sheet items are weighted at percentage levels ranging from 0% to 100%, depending on their relative risk.

     The following tables present certain information regarding compliance by Camco and Advantage with applicable regulatory capital requirements at December 31, 2005:

Camco:

At December 31, 2005

To be “well-

capitalized” under

For capital

prompt corrective

Actual

adequacy purposes

action provisions

Amount

Ratio

Amount

Ratio

Amount

Ratio

(Dollars in thousands)

Total capital

(to risk-weighted assets)

$

92,005

12.39

%

³$59,391

³8.0

%

N/A

N/A

Tier I capital

(to risk-weighted assets)

$

85,046

11.46

%

³$29,696

³4.0

%

N/A

N/A

Tier I leverage

$

85,046

8.00

%

³$42,549

³4.0

%

N/A

N/A

Advantage:

At December 31, 2005

To be “well-

capitalized” under

For capital

prompt corrective

Actual

adequacy purposes

action provisions

Amount

Ratio

Amount

Ratio

Amount

Ratio

(Dollars in thousands)

Total capital

(to risk-weighted assets)

$

83,052

11.21

%

³$59,280

³8.0

%

³$74,100

³10.0

%

Tier I capital

(to risk-weighted assets)

$

76,093

10.27

%

³$29,640

³4.0

%

³$44,460

³ 6.0

%

Tier I leverage

$

76,093

7.23

%

³$42,126

³4.0

%

³$52,657

³5.0

%

     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. In addition, each company controlling an undercapitalized institution must guarantee that the institution will comply with its capital restoration plan until the institution has been adequately capitalized on average during each of the four preceding calendar quarters and must provide adequate assurances of performance.

Transactions with Affiliates and Insiders

     All transactions between banks and their affiliates must comply with Sections 23A and 23B of the Federal Reserve Act (the “FRA”) and the FRB’s Regulation W. An affiliate is any company or entity which controls, is controlled by or is

under common control with the financial institution. In a holding company context, the parent holding company of a bank and any companies that are controlled by such parent holding company are affiliates of the institution. Generally, Sections 23A and 23B of the FRA (i) limit the extent to which a financial institution or its subsidiaries may engage in “covered transactions” with any one affiliate up to an amount equal to 10% of such institution’s capital stock and surplus for any one affiliate and 20% of such capital stock and surplus for the aggregate of such transactions with all affiliates, and (ii) require that all such transactions be on terms substantially the same, or at least as favorable to the institution or the subsidiary, as those provided to a non-affiliate. The term “covered transaction” includes the making of loans, purchase of assets, issuance of a guarantee and similar types of transactions. Exemptions from Sections 23A or 23B of the FRA may be granted only by the FRB. Advantage was in compliance with these requirements at December 31, 2005.

Change in Control

     Federal Law. The Federal Deposit Insurance Act (the “FDIA”) provides that no person, acting directly or indirectly or in concert with one or more persons, shall acquire control of any insured depository institution or holding company, unless 60-days prior written notice has been given to the primary federal regulator for that institution and such regulator has not issued a notice disapproving the proposed acquisition. Control, for purposes of the FDIA, means the power, directly or indirectly, alone or acting in concert, to direct the management or policies of an insured institution or to vote 25% or more of any class of securities of such institution. Control exists in situations in which the acquiring party has direct or indirect voting control of at least 25% of the institution’s voting shares, controls in any manner the election of a majority of the directors of such institution or is determined to exercise a controlling influence over the management or policies of such institution. In addition, control is presumed to exist, under certain circumstances where the acquiring party (which includes a group “acting in concert”) has voting control of at least 10% of the institution’s voting stock. These restrictions do not apply to holding company acquisitions. See “Holding Company Regulation”.

     Ohio Law. A statutory limitation on the acquisition of control of an Ohio bank requires the written approval of the Division prior to the acquisition by any person or entity of a controlling interest. Control exists, for purposes of Ohio law, when any person or entity which, either directly or indirectly, or acting in concert with one or more other persons or entities, owns, controls, holds with power to vote, or holds proxies representing, 15% or more of the voting shares or rights of an association, or controls in any manner the election or appointment of a majority of the directors. Ohio law also requires that certain acquisitions of voting securities that would result in the acquiring shareholder owning 20%, 33-1/3% or 50% of the outstanding voting securities of Camco must be approved in advance by the holders of at least a majority of the outstanding voting shares represented at a meeting at which a quorum is present and a majority of the portion of the outstanding voting shares represented at such a meeting, excluding the voting shares by the acquiring shareholder. This statute was intended, in part, to protect shareholders of Ohio corporations from coercive tender offers.

Holding Company Regulation

     As a financial holding company, Camco has registered with the FRB and is subject to FRB regulations, examination, supervision and reporting requirements. Because Camco is a bank holding company that has elected to become a financial holding company, some of the restrictions on its activities are reduced. Camco’s financial holding company status allows Advantage to associate or have management interlocks with business organizations engaged in securities activities. In order to maintain status as a financial holding company, Advantage must be well capitalized and well managed, and must meet Community Reinvestment Act obligations. Failure to maintain such standards may ultimately permit the FRB to take certain enforcement actions against Camco.

Federal Reserve Requirements

     FRB regulations currently require banks to maintain reserves of 3% of net transaction accounts (primarily NOW accounts) up to $48.3 million (subject to an exemption of up to $7.8 million), and of 10% of net transaction accounts in excess of $48.3 million. At December 31, 2005, Advantage was in compliance with its reserve requirements.

Item 1A. Risk Factors.

     Like all financial companies, Camco’s business and results of operations are subject to a number of risks, many of which are outside of our control. In addition to the other information in this report, readers should carefully consider that the following important factors, among others, could materially impact our business and future results of operations.

Changes in interest rates could adversely affect our financial condition and results of operations.

     Our results of operations depend substantially on our net interest income, which is the difference between (i) interest income on interest-earning assets, principally loans, mortgage-backed securities and investment securities, and (ii) interest expense on deposit accounts and borrowings. These rates are highly sensitive to many factors beyond our control, including general economic conditions, inflation, recession, unemployment, money supply and the policies of various governmental and regulatory authorities. While we have taken measures intended to manage the risks of operating in a changing interest rate environment, there can be no assurance that these measures will be effective in avoiding undue interest rate risk.

     Increases in interest rates can affect the value of loans and other assets, including our ability to realize gains on the sale of assets. We originate loans for sale and for our portfolio. Increasing interest rates may reduce the origination of loans for sale and consequently the fee income we earn on such sales. Further, increasing interest rates may adversely affect the ability of borrowers to pay the principal or interest on loans and leases, resulting in an increase in non-performing assets and a reduction of income recognized.

     In contrast, decreasing interest rates have the effect of causing clients to refinance mortgage loans faster than anticipated. This causes the value of assets related to the servicing rights on loans sold to be lower than originally anticipated. If this happens, we may need to write down our servicing assets faster, which would accelerate our expense and lower our earnings.

Credit risks could adversely affect our results of operations.

     There are inherent risks associated with our lending activities, including credit risk, which is the risk that borrowers may not repay outstanding loans or that the value of the collateral securing loans will decrease. We extend credit to a variety of customers based on internally set standards and judgment. We attempt to manage credit risk through a program of underwriting standards, the review of certain credit decisions and an on-going process of assessment of the quality of the credit already extended. However, conditions such as inflation, recession, unemployment, changes in interest rates, money supply and other factors beyond our control may increase our credit risk. Such adverse changes in the economy may have a negative impact on the ability of borrowers to repay their loans. Because we have a significant amount of real estate loans, decreases in real estate values could adversely affect the value of property used as collateral. In addition, substantially all of our loans are to individuals and businesses in Ohio. Consequently, any decline in the economy of this market area could have a materially adverse effect on our financial condition and results of operations.

We operate in an extremely competitive market, and our business will suffer if we are unable to compete effectively.

     In our market area, we encounter significant competition from other commercial banks, savings associations, savings banks, insurance companies, consumer finance companies, credit unions, other lenders and with the issuers of commercial paper and other securities, such as shares in money market mutual funds. The increasingly competitive environment is a result primarily of changes in regulation and the accelerating pace of consolidation among financial service providers. Many of our competitors have substantially greater resources and lending limits than we do and may offer services that we do not or cannot provide.

Legislative or regulatory changes or actions could adversely impact the financial services industry.

     The financial services industry is extensively regulated. Federal and state banking laws and regulations are primarily intended for the protection of consumers, depositors and the deposit insurance funds, not to benefit our stockholders. Changes to laws and regulations or other actions by regulatory agencies may negatively impact us.

Regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the imposition of restrictions on the operation of an institution, the classification of assets by the institution and the adequacy of an institution’s allowance for loan losses. The significant federal and state banking regulations that affect us are described in this 10-K under the heading “Regulation.”

Our ability to pay cash dividends is limited.

     We are dependent primarily upon the earnings of our operating subsidiaries for funds to pay dividends on our common shares. The payment of dividends by our subsidiaries is subject to certain regulatory restrictions. As a result, any payment of dividends in the future by Camco will be dependent, in large part, on our subsidiaries’ ability to satisfy these regulatory restrictions and our subsidiaries’ earnings, capital requirements, financial condition and other factors. Although our financial earnings and financial condition have allowed us to declare and pay periodic cash dividends to our stockholders, there can be no assurance that our dividend policy or size of dividend distribution will continue in the future.

The preparation of financial statements requires management to make estimates about matters that are inherently uncertain.

     Management’s accounting policies and methods are fundamental to how we record and report our financial condition and results of operations. Our management must exercise judgment in selecting and applying many of these accounting policies and methods in order to ensure that they comply with generally accepted accounting principles and reflect management’s judgment as to the most appropriate manner in which to record and report our financial condition and results of operations. Two of the most critical estimates are the level of the allowance of loan losses and the valuation of mortgage servicing rights. Due to the inherent nature of these estimates, we cannot provide absolute assurance that we will not significantly increase the allowance for loan losses or sustain loan losses that are significantly higher than the provided allowance, nor that we will not recognize a significant provision for the impairment of mortgage servicing rights.

Our organizational documents may have the effect of discouraging a third party from acquiring us.

     Our certificate of incorporation and bylaws contain provisions that make it more difficult for a third party to gain control or acquire us. These provisions also could discourage proxy contests and may make it more difficult for dissident stockholders to elect representatives as directors and take other corporate actions. These provisions of our governing documents may have the effect of delaying, deferring or preventing a transaction or a change in control that might be in the best interest of our stockholders.

We face risks with respect to future expansion.

     We may acquire other financial institutions in the future and we may engage in de novo branch expansion. We may also consider and enter into new lines of business or offer new products or services. We may incur substantial costs to expand, and we can give no assurance such expansion will result in the levels of profits we seek. Also, we may issue equity securities in connection with future acquisitions, which would dilute current stockholders’ ownership interests.

Item 1B. Unresolved Staff Comments.

     None.

Item 2. Properties.

     The following table provides the location of, and certain other information pertaining to, Camco’s office premises as of December 31, 2005:

		Year facility				Leased
		commenced				or					Net book
Office Location		operations				owned					value (1)
134 E. Court Street
Washington Court House, Ohio			1963			Owned			(2)		$	702,032
1050 Washington Ave.
Washington Court House, Ohio			1996			Owned						509,217
1 N. Plum Street
Germantown, Ohio			1998			Owned						506,897
687 West Main Street
New Lebanon, Ohio			1998			Owned						70,784
2 East High Street
London, Ohio			2004			Owned						618,613
3002 Harrison Avenue
Cincinnati, Ohio			2000			Owned						1,413,273
1101 St. Gregory Street
Cincinnati, Ohio			2000			Leased			(3)
5071 Glencrossing Way
Cincinnati, Ohio			2000			Leased			(4)
126 S. 9th Street Cambridge, Ohio			1998			Owned						86,637
226 Third Street Marietta, Ohio			1976			Owned			(5)			626,783
1925 Washington Boulevard Belpre, Ohio			1979			Owned						71,426
478 Pike Street Marietta, Ohio			1998			Leased			(6)			559,279
814 Wheeling Avenue Cambridge, Ohio			1963			Owned						839,769
327 E. 3rd Street Uhrichsville, Ohio			1975			Owned						72,906
175 N. 11th Street Cambridge, Ohio			1981			Owned						376,015