CFS Bancorp, Inc. 707 Ridge Road Munster, Indiana 46321 |
July 26, 2007
FOR IMMEDIATE RELEASE
CONTACT: Thomas F. Prisby, Chairman of the Board and Chief Executive Officer
219-836-5500
CFS Bancorp, Inc. Announces Improved Second Quarter 2007 Financial Results
MUNSTER, IN – July 26, 2007 – CFS Bancorp, Inc. (NASDAQ: CITZ) (the Company), the parent of Citizens Financial Bank (the Bank), today reported a 74% increase in its net income to $2.3 million for the second quarter of 2007 from $1.3 million for the first quarter of 2007, an increase of 41% when compared to $1.6 million for the second quarter of 2006. Diluted earnings per share increased 75% to $0.21 for the second quarter of 2007 from $0.12 per diluted share for the first quarter of 2007 and increased 50% from $0.14 per diluted share for the second quarter of 2006.
The Company’s net income for the six months ended June 30, 2007 increased 23% to $3.6 million from $2.9 million for the 2006 period. Diluted earnings per share increased 32% to $0.33 for the six months ended June 30, 2007 from $0.25 for the 2006 period.
Highlights for the quarter include:
| · | net interest margin expanded to 3.01% |
| · | core efficiency ratio improved to 64% |
| · | loan balances stabilized through increased fundings and slower loan repayments |
| · | $35.0 million of maturing Federal Home Loan Bank debt was repaid |
| · | 173,788 shares of common stock were repurchased |
| · | the number of FTEs was reduced by 11% from December 2006 |
“This quarter has been excellent in executing our financial objectives in the current operating environment. The strategic initiatives related to controlling costs that we completed during the first quarter of 2007 have had a positive effect on our second quarter earnings and efficiency ratio,” said Thomas F. Prisby, Chairman and CEO. “While many of our peers continue to see margin compression, we are pleased that our net interest margin continues to expand.”
Mr. Prisby continued, “Although the competition for commercial loans and commercial lenders remains strong in our markets, our year to date loan fundings and purchases exceed $180.0 million, an increase of over 6% from fundings during the comparable 2006 period. We continue to focus on asset quality as stagnant housing sales continue to impact residential construction and land development loans. As we aggressively manage this portfolio, efforts are being directed to other more stable segments of the market.”
CFS Bancorp, Inc. - Page 2 of 11
The Company’s net interest margin increased eight basis points, or 2.7%, to 3.01% for the second quarter of 2007 from 2.93% for the first quarter of 2007 and the second quarter of 2006. The Company’s net interest income increased $114,000, or 1.3%, to $8.6 million for the second quarter of 2007 from $8.5 million for the first quarter of 2007 and decreased $94,000, or 1.1%, from $8.7 million for the second quarter of 2006.
Interest income was $18.5 million for the second quarter of 2007 compared to $18.7 million for the first quarter of 2007 and $19.0 million for the second quarter of 2006. Interest income for the second quarter of 2007 was positively impacted by higher rates earned on interest-earning assets which were partially offset by decreases in the average balances of interest-earning assets. The increases in rates earned were primarily a result of the reinvestment of loan and securities repayments into additional securities yielding higher interest rates.
Interest expense totaled $9.8 million for the second quarter of 2007 compared to $10.1 million for the first quarter of 2007 and $10.2 million for the second quarter of 2006. Interest expense decreased $281,000, or 2.8%, from the first quarter of 2007 primarily due to a $206,000 decrease in borrowing costs. Interest expense decreased $384,000, or 3.8%, from the second quarter of 2006 as a result of decreased borrowing costs which were partially offset by increased market rates paid on money market accounts and certificates of deposit.
The Company’s cost of borrowings was relatively stable at 6.73% for the second quarter of 2007 compared to 6.71% for the first quarter of 2007 and decreased from 7.76% for the second quarter of 2006. The decrease from the second quarter of 2006 was primarily the result of lower average balances of the Company’s Federal Home Loan Bank (FHLB) debt and decreases in the amortization of the deferred premium that is included in the Company’s total interest expense on borrowings. The premium amortization adversely impacted the Company’s net interest margin by 44 basis points, 47 basis points and 86 basis points, respectively, for the second quarter of 2007, the first quarter of 2007 and the second quarter of 2006. The Company’s interest expense on borrowings is detailed in the tables below for the periods indicated.
| | | | | | | | | | | | Change from | |
| | | Three Months Ended | | | June 30, 2006 | |
| | | June 30, | | | March 31, | | | June 30, | | | to June 30, 2007 | |
| | | 2007 | | | 2007 | | | 2006 | | | $ | | % | |
| | | (Dollars in thousands) |
Interest expense on short-term borrowings at contractual rates | | $ | 197 | | | $ | 258 | | | $ | 92 | | | $ | 105 | | NM |
Interest expense on FHLB borrowings at contractual rates | | | 1,754 | | | | 1,823 | | | | 2,574 | | | | (820 | ) | (31.9 | )% |
| Amortization of deferred premium | | | 1,276 | | | | 1,352 | | | | 2,555 | | | | (1,279 | ) | (50.1 | ) |
| Total interest expense on borrowings | | $ | 3,227 | | | $ | 3,433 | | | $ | 5,221 | | | $ | (1,994 | ) | (38.2 | ) |
CFS Bancorp, Inc. - Page 3 of 11
| | | Six Months Ended | | | | |
| | | June 30, | | | | | | | |
| | | 2007 | | | 2006 | | | $ change | | | % change | |
| | | (Dollars in thousands) | |
Interest expense on short-term borrowings at contractual rates | | $ | 455 | | | $ | 130 | | | $ | 325 | | | NM | |
Interest expense on FHLB borrowings at contractual rates | | | 3,578 | | | | 5,141 | | | | (1,563 | ) | | | (30.4 | )% |
| Amortization of deferred premium | | | 2,627 | | | | 5,123 | | | | (2,496 | ) | | | (48.7 | ) |
| Total interest expense on borrowings | | $ | 6,660 | | | $ | 10,394 | | | $ | (3,734 | ) | | | (35.9 | ) |
The interest expense related to the premium amortization on the early extinguishment of debt is expected to be $1.1 million, $851,000, $527,000 and $449,000 before taxes in the quarters ending September 30, 2007, December 31, 2007, March 31, 2008 and June 30, 2008, respectively.
Non-Interest Income
The Company’s non-interest income for the second quarter of 2007 was $2.7 million compared to $2.6 million for the first quarter of 2007 and $2.8 million for the second quarter of 2006. The increase from the first quarter of 2007 was primarily a result of an increase of $101,000 in service charges and other fees. The decrease from the second quarter of 2006 was primarily the result of decreases in service charges and other fees of $40,000 and realized gains on the sales of other real estate owned of $48,000.
Non-Interest Expense
Non-interest expense for the second quarter of 2007 was $8.1 million compared to $9.3 million for the first quarter of 2007 and $9.2 million for the second quarter of 2006. The decreases in non-interest expense were primarily related to compensation and employee benefits and professional fees.
The Company’s compensation and employee benefits decreased $848,000 from the first quarter of 2007 and $789,000 from the second quarter of 2006. These decreases were primarily a result of the Company’s first quarter 2007 review and reduction of staffing levels and its first quarter 2007 Employee Stock Ownership Program (ESOP) loan modification. The Company’s pension expense increased $130,000 during the second quarter of 2007 from the first quarter of 2007; however, pension expense decreased $230,000 from the 2006 period.
Professional fees decreased $180,000 to $390,000 from the first quarter of 2007 and $23,000 from the second quarter of 2006. The decrease from the first quarter of 2007 was a result of the absence of consulting fees related to the Company’s customer-centric relationship management program and legal fees associated with the modification of the Company’s ESOP loan and 401(k) benefit plan, the reduction in the workforce and new SEC proxy disclosure requirements.
The Company’s efficiency ratio for the second quarter of 2007 was 71.2% compared to 83.2% for the first quarter of 2007 and 79.9% for the second quarter of 2006. The Company’s core efficiency ratios were 64.0%, 74.4% and 65.7%, respectively. These ratios for the second quarter of 2007 were primarily impacted by the reductions in the Company’s non-interest expense as discussed above. The
CFS Bancorp, Inc. - Page 4 of 11
efficiency ratio and the core efficiency ratio calculations are presented in the last table of this press release.
Management has historically used an efficiency ratio that is a non-GAAP financial measure of operating expense control and operating efficiency. The efficiency ratio is typically defined as the ratio of non-interest expense to the sum of non-interest income and net interest income. Many financial institutions, in calculating the efficiency ratio, adjust non-interest income (as calculated under GAAP) to exclude certain component elements, such as gains or losses on sales of securities and assets. Management follows this practice to calculate its core efficiency ratio and utilizes this non-GAAP measure in its analysis of the Company’s performance. The core efficiency ratio is different from the GAAP-based efficiency ratio. The GAAP-based measure is calculated using non-interest expense, net interest income and non-interest income as presented on the consolidated statements of income.
The Company’s core efficiency ratio is calculated as non-interest expense, excluding any prepayment penalties incurred as a result of the early extinguishment of debt, divided by the sum of net interest income, excluding the deferred premium amortization related to the early extinguishment of debt, and non-interest income, adjusted for gains or losses on the sale of securities and other assets. Management believes that the core efficiency ratio enhances investors’ understanding of the Company’s business and performance. The measure is also believed to be useful in understanding the Company’s performance trends and to facilitate comparisons with the performance of others in the financial services industry. Management further believes the presentation of the core efficiency ratio provides useful supplemental information, a clearer understanding of the Company’s financial performance, and better reflects the Company’s core operating activities.
The risks associated with utilizing operating measures (such as the efficiency ratio) are that various persons might disagree as to the appropriateness of items included or excluded in these measures and that other companies might calculate these measures differently. Management of the Company compensates for these limitations by providing detailed reconciliations between GAAP information and its core efficiency ratio within the last table of this press release; however, these disclosures should not be considered as an alternative to GAAP.
Income Taxes
The Company’s income tax expense for the second quarter of 2007 was $855,000 compared to $366,000 for the first quarter of 2007 and $526,000 for the second quarter of 2006. The increase in the income tax expense was primarily related to the increase in pre-tax income during the second quarter of 2007. Permanent tax differences, primarily related to the Company’s investment in bank-owned life insurance, and the application of available tax credits, continue to have a favorable impact on income tax expense.
Asset Quality
The Company’s provision for losses on loans was $126,000 for the second quarter of 2007 compared to $187,000 for the first quarter of 2007 and $173,000 for the comparable 2006 period. Although the Company’s provision for losses on loans remained relatively stable when compared with the previous periods, its realized net charge-offs through the allowance for losses on loans for the second quarter of 2007 totaled $902,000 as a result of partial charge-offs related to two of its impaired construction and land development loans. One of the loans had a previous impairment allocation of
CFS Bancorp, Inc. - Page 5 of 11
$500,000 with the remainder of the charge-offs being offset by a decrease of $804,000 in the impairment allocation of an impaired commercial real estate lending relationship partially as a result of a payoff of one of the loans within the relationship.
The Company’s non-performing assets totaled $29.8 million at June 30, 2007, $27.8 million at December 31, 2006 and $24.5 million at June 30, 2006 with the non-performing assets to total assets ratios being 2.48%, 2.22% and 1.91%, respectively. The increase in the non-performing assets was primarily due to the addition of one construction and land development participation loan.
The Company’s allowance for losses on loans was $10.6 million at June 30, 2007, $11.2 million at December 31, 2006 and $11.7 million at June 30, 2006 with the ratio of the allowance for losses on loans to total loans being 1.31%, 1.39% and 1.39%, respectively. The Company maintains the allowance for losses on loans at a level that management believes is sufficient to absorb credit losses inherent in the loan portfolio. The allowance for losses on loans represents the Company’s estimate of inherent losses existing in the loan portfolio that are both probable and reasonable to estimate at each balance sheet date and is based on its review of available and relevant information. The Company believes that at June 30, 2007 the allowance for losses on loans was adequate.
Balance Sheet
At June 30, 2007, the Company’s total assets were $1.20 billion compared to $1.25 billion at December 31, 2006 and $1.28 billion at June 30, 2006.
The Company’s loans receivables were relatively stable at $808.1 million at June 30, 2007 compared to $802.4 million at December 31, 2006 and $842.8 million at June 30, 2006. During the first six months of 2007, the Company had total loan fundings and purchases of $181.2 million which were offset by $173.9 million of loan repayments and sales. The amount of loan repayments and sales for the first six months of 2007 has decreased from the higher level of repayments experienced during the first six months of 2006 totaling $238.0 million. At June 30, 2007, the Company had $34.6 million of commercial and construction loans approved but not yet closed.
Securities available-for-sale were $270.4 million at June 30, 2007 compared to $298.9 million at December 31, 2006 and $300.7 million at June 30, 2006. The decrease in securities from the 2006 level was primarily due to the repayment of $35.0 million of FHLB borrowings that matured during the second quarter of 2007.
Total deposits were $887.8 million at June 30, 2007 compared to $907.1 million at December 31, 2006 and $838.5 million at June 30, 2006. The Company’s non-interest bearing core deposits increased $6.6 million from December 31, 2006 as a result of management’s focus on increasing business deposits. This increase was more than offset by a decrease in money market accounts totaling $12.9 million as a result of the cyclical nature of municipal money market accounts and a decrease in certificates of deposit totaling $9.5 million due to the managed run-off of single-service high-rate promotional certificates during the first quarter of 2007.
The Company’s borrowed money decreased to $171.0 million at June 30, 2007 from $202.3 million at December 31, 2006 and $281.0 million at June 30, 2006. The Company’s borrowed money consisted of the following as of the dates indicated:
CFS Bancorp, Inc. - Page 6 of 11
| | | June 30, 2007 | | | December 31, 2006 | | | June 30, 2006 | |
| | | (Dollars in thousands) | |
Short-term variable-rate borrowings and repurchase agreements | | $ | 24,238 | | | $ | 23,117 | | | $ | 29,139 | |
| Gross FHLB borrowings | | | 150,254 | | | | 185,325 | | | | 262,495 | |
| Unamortized deferred premium | | | (3,540 | ) | | | (6,167 | ) | | | (10,668 | ) |
| Total borrowings | | $ | 170,952 | | | $ | 202,275 | | | $ | 280,966 | |
Stockholders’ equity at June 30, 2007 was $128.3 million compared to $131.8 million at December 31, 2006. The decrease during the first six months of 2007 was primarily due to:
| · | repurchases of shares of the Company’s common stock during 2007 totaling $6.5 million; |
| · | cash dividends declared during 2007 totaling $2.6 million; and |
| · | increase in accumulated other comprehensive losses of $610,000. |
The following increases in stockholders’ equity during 2007 partially offset the aforementioned decreases:
| · | net income of $3.6 million; and |
| · | proceeds from stock option exercises totaling $1.7 million. |
During the second quarter of 2007, the Company repurchased 173,788 shares of its common stock at an average price of $14.93 per share pursuant to the plan approved in February 2007. At June 30, 2007, the Company had 350,967 shares remaining to be repurchased under this plan. Since its initial public offering, the Company has repurchased an aggregate of 13,621,805 shares of its common stock at an average price of $12.16 per share.
The regulatory capital ratios of the Bank continued to exceed all regulatory requirements. At June 30, 2007, the Bank remained “well-capitalized” under the Office of Thrift Supervision’s regulatory capital guidelines.
CFS Bancorp, Inc. is the parent of Citizens Financial Bank, a $1.2 billion asset federal savings bank. Citizens Financial Bank is an independent bank that provides community banking services and currently operates 22 offices throughout adjoining markets in Chicago’s Southland and Northwest Indiana. The Company maintains a website at www.cfsbancorp.com.
# # #
This press release contains certain forward-looking statements and information relating to the Company that is based on the beliefs of management as well as assumptions made by and information currently available to management. These forward-looking statements include but are not limited to statements regarding cost control, earnings and efficiency ratio levels, loan and deposit growth, growth in commercial lenders, interest on loans, business and banking strategies, planned office locations, asset yields and cost of funds, net interest income, net interest margin, expected effect of amortization of deferred premium on the FHLB debt, and the impact of tax credits and permanent tax differences. In addition, the words “anticipate,” “believe,” “estimate,” “expect,” “indicate,” “intend,” “should,” and similar expressions, or the negative thereof, as they relate to the Company or the Company’s management, are intended to identify forward-looking statements. Such statements reflect the current
CFS Bancorp, Inc. - Page 7 of 11
views of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions. One or more of these risks may vary materially from those described herein as anticipated, believed, estimated, expected or intended. The Company does not intend to update these forward-looking statements.
# # #
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA FOLLOW
CFS Bancorp, Inc. - Page 8 of 11
CFS BANCORP, INC. | |
Highlights (Unaudited) | |
(Dollars in thousands, except per share data) | |
| | | | | | | | | | | | | | | | | |
EARNINGS HIGHLIGHTS AND PERFORMANCE | | Three Months Ended | | | | | | Six Months Ended | |
| RATIOS (1) | | | June 30, 2007 | | | March 31, 2007 | | | June 30, 2006 | | | June 30, 2007 | | | June 30, 2006 | |
| Net income | | | $ | 2,281 | | | $ | 1,313 | | | $ | 1,621 | | | $ | 3,594 | | | $ | 2,930 | |
| Basic earnings per share | | | | 0.22 | | | | 0.12 | | | | 0.15 | | | | 0.34 | | | | 0.26 | |
| Diluted earnings per share | | | | 0.21 | | | | 0.12 | | | | 0.14 | | | | 0.33 | | | | 0.25 | |
| Cash dividends declared per share | | | | 0.12 | | | | 0.12 | | | | 0.12 | | | | 0.24 | | | | 0.24 | |
| Return on average assets | | | | 0.74 | % | | | 0.42 | % | | | 0.51 | % | | | 0.58 | % | | | 0.47 | % |
| Return on average equity | | | | 7.05 | | | | 4.06 | | | | 4.80 | | | | 5.55 | | | | 4.29 | |
| Average yield on interest-earning assets | | | 6.44 | | | | 6.41 | | | | 6.37 | | | | 6.43 | | | | 6.26 | |
| Average cost on interest-bearing liabilities | | | 3.88 | | | | 3.91 | | | | 3.90 | | | | 3.89 | | | | 3.86 | |
| Interest rate spread | | | | 2.56 | | | | 2.50 | | | | 2.47 | | | | 2.54 | | | | 2.40 | |
| Net interest margin | | | | 3.01 | | | | 2.93 | | | | 2.93 | | | | 2.97 | | | | 2.88 | |
| Average equity to average assets (2) | | | | 10.56 | | | | 10.43 | | | | 10.70 | | | | 10.50 | | | | 10.93 | |
| Average interest-earning assets | | | | | | | | | | | | | | | | | | | | | |
| to average interest-bearing liabilities (2) | | | | 113.01 | | | | 112.30 | | | | 113.56 | | | | 112.66 | | | | 113.93 | |
| Non-interest expense to average assets | | | | 2.63 | | | | 2.99 | | | | 2.93 | | | | 2.81 | | | | 2.88 | |
| Efficiency ratio (3) | | | | 71.21 | | | | 83.24 | | | | 79.93 | | | | 77.17 | | | | 80.81 | |
| Market price per share of common stock | | | | | | | | | | | | | | | | | | | | |
| for the period ended: | Closing | | $ | 14.55 | | | $ | 14.94 | | | $ | 14.84 | | | $ | 14.55 | | | $ | 14.84 | |
| | High | | | 15.12 | | | | 15.00 | | | | 14.90 | | | | 15.12 | | | | 14.98 | |
| | Low | | | 14.53 | | | | 14.48 | | | | 14.10 | | | | 14.48 | | | | 14.10 | |
| | | | | | | | | | | | | | | | | | | | | | |
STATEMENT OF CONDITION HIGHLIGHTS | | June 30, | | | March 31, | | | December 31, | | June 30, | |
| (at period end) | | | | | | | | 2007 | | | | 2007 | | | | 2006 | | | | 2006 | |
| Total assets | | | | | | | $ | 1,202,892 | | | $ | 1,237,410 | | | $ | 1,254,390 | | | $ | 1,281,959 | |
| Loans receivable, net of unearned fees | | | | | | | | 808,132 | | | | 804,242 | | | | 802,383 | | | | 842,830 | |
| Total deposits | | | | | | | | 887,814 | | | | 894,421 | | | | 907,095 | | | | 838,516 | |
| Total stockholders' equity | | | | | | | | 128,290 | | | | 130,413 | | | | 131,806 | | | | 131,942 | |
| Book value per common share | | | | | | | | 11.83 | | | | 11.88 | | | | 11.84 | | | | 11.60 | |
| Non-performing loans | | | | | | | | 29,172 | | | | 27,537 | | | | 27,517 | | | | 18,833 | |
| Non-performing assets | | | | | | | | 29,804 | | | | 28,216 | | | | 27,838 | | | | 24,450 | |
| Allowance for losses on loans | | | | | | | | 10,624 | | | | 11,400 | | | | 11,184 | | | | 11,690 | |
| Non-performing loans to total loans | | | | | | | | 3.61 | % | | | 3.42 | % | | | 3.43 | % | | | 2.23 | % |
| Non-performing assets to total assets | | | | | | | | 2.48 | | | | 2.28 | | | | 2.22 | | | | 1.91 | |
| Allowance for losses on loans to non-performing loans | | | | 36.42 | | | | 41.40 | | | | 40.64 | | | | 62.07 | |
| Allowance for losses on loans to total loans | | | | | | | 1.31 | | | | 1.42 | | | | 1.39 | | | | 1.39 | |
| | | | | | | | | | | | | | | | | | | | | | |
| Employees (FTE) | | | | | | | | 322 | | | | 334 | | | | 360 | | | | 348 | |
| Branches and offices | | | | | | | | 22 | | | | 22 | | | | 21 | | | | 21 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | Three Months Ended | | | | | | | Six Months Ended | |
AVERAGE BALANCE DATA | | | June 30, 2007 | | | March 31, 2007 | | | June 30, 2006 | | | June 30, 2007 | | | June 30, 2006 | |
| Total assets | | | $ | 1,230,115 | | | $ | 1,256,320 | | | $ | 1,266,328 | | | $ | 1,243,160 | | | $ | 1,259,845 | |
| Loans receivable, net of unearned fees | | | 808,331 | | | | 793,852 | | | | 861,407 | | | | 801,132 | | | | 877,860 | |
| Total interest-earning assets | | | | 1,151,726 | | | | 1,179,376 | | | | 1,193,321 | | | | 1,165,475 | | | | 1,188,585 | |
| Total liabilities | | | | 1,100,252 | | | | 1,125,247 | | | | 1,130,886 | | | | 1,112,681 | | | | 1,122,085 | |
| Total deposits | | | | 894,184 | | | | 905,021 | | | | 848,088 | | | | 899,572 | | | | 841,431 | |
| Interest-bearing deposits | | | | 829,467 | | | | 845,538 | | | | 784,731 | | | | 837,458 | | | | 779,224 | |
| Non-interest bearing deposits | | | | 64,717 | | | | 59,483 | | | | 63,357 | | | | 62,114 | | | | 62,207 | |
| Total interest-bearing liabilities | | | | 1,019,112 | | | | 1,050,155 | | | | 1,050,851 | | | | 1,034,549 | | | | 1,043,239 | |
| Stockholders' equity | | | | 129,863 | | | | 131,073 | | | | 135,442 | | | | 130,479 | | | | 137,760 | |
| (1) Ratios are annualized where appropriate. | | | | | | | | | | | | | | | | | |
| (2) Ratios calculated on average balances for the periods presented. | | | | | | | | | | | | | | | | | |
| (3) See calculations in the last table of this press release. | | | | | | | | | | | | | | | | | |
CFS Bancorp, Inc. - Page 9 of 11
CFS BANCORP, INC. | |
Consolidated Statements of Income (Unaudited) | |
(Dollars in thousands, except per share data) | |
| | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | | | For the Six Months Ended | |
| | | June 30, 2007 | | | March 31, 2007 | | | June 30, 2006 | | | June 30, 2007 | | | June 30, 2006 | |
| Interest income: | | | | | | | | | | | | | | | |
| Loans | | $ | 14,404 | | | $ | 14,052 | | | $ | 15,326 | | | $ | 28,456 | | | $ | 30,229 | |
| Securities | | | 3,475 | | | | 3,523 | | | | 3,150 | | | | 6,998 | | | | 5,641 | |
| Other | | | 605 | | | | 1,076 | | | | 486 | | | | 1,681 | | | | 1,049 | |
| Total interest income | | | 18,484 | | | | 18,651 | | | | 18,962 | | | | 37,135 | | | | 36,919 | |
| | | | | | | | | | | | | | | | | | | | | |
| Interest expense: | | | | | | | | | | | | | | | | | | | | |
| Deposits | | | 6,619 | | | | 6,694 | | | | 5,009 | | | | 13,313 | | | | 9,557 | |
| Borrowed money | | | 3,227 | | | | 3,433 | | | | 5,221 | | | | 6,660 | | | | 10,394 | |
| Total interest expense | | | 9,846 | | | | 10,127 | | | | 10,230 | | | | 19,973 | | | | 19,951 | |
| Net interest income | | | 8,638 | | | | 8,524 | | | | 8,732 | | | | 17,162 | | | | 16,968 | |
| Provision for losses on loans | | | 126 | | | | 187 | | | | 173 | | | | 313 | | | | 558 | |
| Net interest income after provision for losses on loans | | | 8,512 | | | | 8,337 | | | | 8,559 | | | | 16,849 | | | | 16,410 | |
| | | | | | | | | | | | | | | | | | | | | |
| Non-interest income: | | | | | | | | | | | | | | | | | | | | |
| Service charges and other fees | | | 1,670 | | | | 1,569 | | | | 1,710 | | | | 3,239 | | | | 3,312 | |
| Card-based fees | | | 380 | | | | 341 | | | | 335 | | | | 722 | | | | 653 | |
| Commission income | | | 36 | | | | 31 | | | | 55 | | | | 67 | | | | 117 | |
| Net realized gains (losses) on sales of securities | | | (1 | ) | | | 11 | | | | - | | | | 10 | | | | (127 | ) |
| Net gains (losses) on sales of assets | | | (1 | ) | | | 11 | | | | 47 | | | | 10 | | | | 48 | |
| Income from bank-owned life insurance | | | 403 | | | | 405 | | | | 396 | | | | 808 | | | | 788 | |
| Other income | | | 206 | | | | 241 | | | | 286 | | | | 446 | | | | 475 | |
| Total non-interest income | | | 2,693 | | | | 2,609 | | | | 2,829 | | | | 5,302 | | | | 5,266 | |
| | | | | | | | | | | | | | | | | | | | | |
| Non-interest expense: | | | | | | | | | | | | | | | | | | | | |
| Compensation and employee benefits | | | 4,407 | | | | 5,255 | | | | 5,196 | | | | 9,662 | | | | 10,219 | |
| Net occupancy expense | | | 694 | | | | 753 | | | | 652 | | | | 1,447 | | | | 1,314 | |
| Professional fees | | | 390 | | | | 570 | | | | 413 | | | | 960 | | | | 764 | |
| Data processing | | | 566 | | | | 563 | | | | 678 | | | | 1,129 | | | | 1,351 | |
| Furniture and equipment expense | | | 566 | | | | 534 | | | | 541 | | | | 1,100 | | | | 968 | |
| Marketing | | | 190 | | | | 211 | | | | 391 | | | | 401 | | | | 589 | |
| Other general and administrative expenses | | | 1,256 | | | | 1,381 | | | | 1,370 | | | | 2,637 | | | | 2,763 | |
| Total non-interest expense | | | 8,069 | | | | 9,267 | | | | 9,241 | | | | 17,336 | | | | 17,968 | |
| | | | | | | | | | | | | | | | | | | | | |
| Income before income taxes | | | 3,136 | | | | 1,679 | | | | 2,147 | | | | 4,815 | | | | 3,708 | |
| Income tax expense | | | 855 | | | | 366 | | | | 526 | | | | 1,221 | | | | 778 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net income | | $ | 2,281 | | | $ | 1,313 | | | $ | 1,621 | | | $ | 3,594 | | | $ | 2,930 | |
| | | | | | | | | | | | | | | | | | | | | |
| Per share data: | | | | | | | | | | | | | | | | | | | | |
| Basic earnings per share | | $ | 0.22 | | | $ | 0.12 | | | $ | 0.15 | | | $ | 0.34 | | | $ | 0.26 | |
| Diluted earnings per share | | $ | 0.21 | | | $ | 0.12 | | | $ | 0.14 | | | $ | 0.33 | | | $ | 0.25 | |
| Cash dividends declared per share | | $ | 0.12 | | | $ | 0.12 | | | $ | 0.12 | | | $ | 0.24 | | | $ | 0.24 | |
| | | | | | | | | | | | | | | | | | | | | |
| Weighted-average shares outstanding | | | 10,591,194 | | | | 10,726,506 | | | | 11,128,443 | | | | 10,658,477 | | | | 11,254,182 | |
| Weighted-average diluted shares outstanding | | | 10,903,740 | | | | 11,036,978 | | | | 11,482,560 | | | | 10,969,991 | | | | 11,615,231 | |
CFS Bancorp, Inc. - Page 10 of 11
CFS BANCORP, INC. | |
Consolidated Statements of Condition (Unaudited) | |
(Dollars in thousands) | |
| | | | | | | | | | | | | |
| | | June 30, 2007 | | | March 31, 2007 | | | December 31, 2006 | | | June 30, 2006 | |
| | | | | | | | | | | | | |
ASSETS | | | | | | | | | | | | |
| Cash and amounts due from depository institutions | | $ | 19,614 | | | $ | 14,963 | | | $ | 33,194 | | | $ | 30,200 | |
| Interest-bearing deposits | | | 8,617 | | | | 20,111 | | | | 20,607 | | | | 1,760 | |
| Federal funds sold | | | 8,796 | | | | 9,141 | | | | 13,366 | | | | 14,285 | |
| Cash and cash equivalents | | | 37,027 | | | | 44,215 | | | | 67,167 | | | | 46,245 | |
| | | | | | | | | | | | | | | | | |
| Securities, available-for-sale | | | 270,404 | | | | 301,248 | | | | 298,925 | | | | 300,651 | |
| Investment in Federal Home Loan Bank stock, at cost | | | 23,944 | | | | 23,944 | | | | 23,944 | | | | 28,252 | |
| | | | | | | | | | | | | | | | | |
| Loans receivable, net of unearned fees | | | 808,132 | | | | 804,242 | | | | 802,383 | | | | 842,830 | |
| Allowance for losses on loans | | | (10,624 | ) | | | (11,400 | ) | | | (11,184 | ) | | | (11,690 | ) |
| Net loans | | | 797,508 | | | | 792,842 | | | | 791,199 | | | | 831,140 | |
| | | | | | | | | | | | | | | | | |
| Accrued interest receivable | | | 7,106 | | | | 7,350 | | | | 7,523 | | | | 6,678 | |
| Other real estate owned | | | 632 | | | | 679 | | | | 321 | | | | 5,617 | |
| Office properties and equipment | | | 19,008 | | | | 18,776 | | | | 17,797 | | | | 15,552 | |
| Investment in bank-owned life insurance | | | 35,652 | | | | 36,281 | | | | 35,876 | | | | 35,676 | |
| Prepaid expenses and other assets | | | 11,611 | | | | 12,075 | | | | 11,638 | | | | 12,148 | |
| Total assets | | $ | 1,202,892 | | | $ | 1,237,410 | | | $ | 1,254,390 | | | $ | 1,281,959 | |
| | | | | | | | | | | | | | | | | |
LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | | | | | | | | | |
| Deposits | | $ | 887,814 | | | $ | 894,421 | | | $ | 907,095 | | | $ | 838,516 | |
| Borrowed money | | | 170,952 | | | | 198,019 | | | | 202,275 | | | | 280,966 | |
| Advance payments by borrowers for taxes and insurance | | | 6,619 | | | | 5,149 | | | | 4,194 | | | | 6,187 | |
| Other liabilities | | | 9,217 | | | | 9,408 | | | | 9,020 | | | | 24,348 | |
| Total liabilities | | | 1,074,602 | | | | 1,106,997 | | | | 1,122,584 | | | | 1,150,017 | |
| | | | | | | | | | | | | | | | | |
| Stockholders' Equity: | | | | | | | | | | | | | | | | |
| Preferred stock, $0.01 par value; 15,000,000 shares authorized | | | – | | | | – | | | | – | | | | – | |
| Common stock, $0.01 par value; 85,000,000 shares authorized; | | | | | | | | | | | | | | | | |
| 23,423,306 shares issued; 10,845,740, 10,979,948, 11,134,331 and | | | | | | | | | | | | | | | | |
| 11,376,681 shares outstanding | | | 234 | | | | 234 | | | | 234 | | | | 234 | |
| Additional paid-in capital | | | 191,054 | | | | 190,931 | | | | 190,825 | | | | 190,522 | |
| Retained earnings | | | 95,616 | | | | 94,608 | | | | 94,344 | | | | 94,523 | |
| Treasury stock, at cost; 12,450,364, 12,318,733, 12,164,754 and | | | | | | | | | | | | | | | | |
| 11,920,530 shares | | | (152,752 | ) | | | (150,672 | ) | | | (148,108 | ) | | | (144,159 | ) |
| Treasury stock, Rabbi Trust, at cost; 127,202, 124,625, 124,221 and | | | | | | | | | | | | | | | | |
| 126,095 shares | | | (1,672 | ) | | | (1,634 | ) | | | (1,627 | ) | | | (1,655 | ) |
| Unallocated common stock held by Employee Stock Ownership Plan | | | (3,282 | ) | | | (3,360 | ) | | | (3,564 | ) | | | (4,163 | ) |
| Accumulated other comprehensive income/(loss), net of tax | | | (908 | ) | | | 306 | | | | (298 | ) | | | (3,360 | ) |
| Total stockholders' equity | | | 128,290 | | | | 130,413 | | | | 131,806 | | | | 131,942 | |
| | | | | | | | | | | | | | | | | |
| Total liabilities and stockholders' equity | | $ | 1,202,892 | | | $ | 1,237,410 | | | $ | 1,254,390 | | | $ | 1,281,959 | |
CFS Bancorp, Inc. - Page 11 of 11
CFS BANCORP, INC. | |
Efficieny Ratio Calculations (Unaudited) | |
| (Dollars in thousands) | |
| | | | | | | | | | |
| | | Three Months Ended | |
| | | June 30, 2007 | | | March 31, 2007 | | | June 30, 2006 | |
| | | | | | | | | | |
Efficiency Ratio: | | | | | | | | | |
| Non-interest expense | | $ | 8,069 | | | $ | 9,267 | | | $ | 9,241 | |
| | | | | | | | | | | | | |
| Net interest income before the provision for losses on loans | | | | | | | | | | | | |
| plus non-interest income | | $ | 11,331 | | | $ | 11,133 | | | $ | 11,561 | |
| | | | | | | | | | | | | |
| Efficiency ratio | | | 71.21 | % | | | 83.24 | % | | | 79.93 | % |
| | | | | | | | | | | | | |
Core Efficiency Ratio: | | | | | | | | | | | | |
| Non-interest expense | | $ | 8,069 | | | $ | 9,267 | | | $ | 9,241 | |
| | | | | | | | | | | | | |
| Net interest income before the provision for losses on | | | | | | | | | | | | |
| loans plus non-interest income | | $ | 11,331 | | | $ | 11,133 | | | $ | 11,561 | |
| | | | | | | | | | | | | |
| Adjustments: | | | | | | | | | | | | |
| Net realized (gains)/losses on sales of securities available-for-sale | | | 1 | | | | (11 | ) | | | - | |
| Net realized (gains)/losses on sales of assets | | | 1 | | | | (11 | ) | | | (47 | ) |
| Amortization of deferred premium | | | 1,276 | | | | 1,352 | | | | 2,555 | |
| Net interest income before the provision for losses on | | | | | | | | | | | | |
| loans plus non-interest income - as adjusted | | $ | 12,609 | | | $ | 12,463 | | | $ | 14,069 | |
| | | | | | | | | | | | | |
| Core efficiency ratio | | | 63.99 | % | | | 74.36 | % | | | 65.68 | % |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | Six Months Ended | |
| | | | | | | June 30, 2007 | | | June 30, 2006 | |
| | | | | | | | | | | | | |
Efficiency Ratio: | | | | | | | | | | | | |
| Non-interest expense | | | | | | $ | 17,336 | | | $ | 17,968 | |
| | | | | | | | | | | | | |
| Net interest income before the provision for losses on loans | | | | | | | | | | | | |
| plus non-interest income | | | | | | $ | 22,464 | | | $ | 22,234 | |
| | | | | | | | | | | | | |
| Efficiency ratio | | | | | | | 77.17 | % | | | 80.81 | % |
| | | | | | | | | | | | | |
Core Efficiency Ratio: | | | | | | | | | | | | |
| Non-interest expense | | | | | | $ | 17,336 | | | $ | 17,968 | |
| | | | | | | | | | | | | |
| Net interest income before the provision for losses on | | | | | | | | | | | | |
| loans plus non-interest income | | | | | | $ | 22,464 | | | $ | 22,234 | |
| | | | | | | | | | | | | |
| Adjustments: | | | | | | | | | | | | |
| Net realized (gains)/losses on sales of securities available-for-sale | | | | | | | (10 | ) | | | 127 | |
| Net realized gains on sales of assets | | | | | | | (10 | ) | | | (48 | ) |
| Amortization of deferred premium | | | | | | | 2,627 | | | | 5,123 | |
| Net interest income before the provision for losses on | | | | | | | | | | | | |
| loans plus non-interest income - as adjusted | | | | | | $ | 25,071 | | | $ | 27,436 | |
| | | | | | | | | | | | | |
| Core efficiency ratio | | | | | | | 69.15 | % | | | 65.49 | % |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
