Glen Ellyn, Illinois Contact: Scott Hamer
October 31, 2007 President/CEO
Company Release 630-545-0900
COMMUNITY FINANCIAL SHARES, INC.
ANNOUNCES THIRD QUARTER 2007 OPERATING RESULTS
Scott W. Hamer, Chief Executive Officer of Community Financial Shares,
Inc. (OTCBB: CFIS) (the "Company"), the holding company for Community Bank of
Wheaton/Glen Ellyn (the "Bank"), reported net income (unaudited) for the Company
for the three and nine months ended September 30, 2007 of $358,000 and $1.7
million, respectively. This compares to $572,000 and $1.6 million for the
comparable prior year periods. For the three months ended September 30, 2007
basic and diluted earnings per share both totaled $0.26. This represents a
decrease of 38.1%, from $0.42 for basic and 36.6% from $0.41 for diluted
earnings per share for the comparable prior year period, respectively. In
addition, for the nine months ended September 30, 2007 basic and diluted
earnings per share both totaled $1.20, an increase of 4.3% as compared to $1.15
earnings per share basic and diluted for the nine months ended September 30,
2006. Earnings per share information for 2006 were adjusted to reflect the
2-for-1 stock split effective December 27, 2006.
Total assets at September 30, 2007 were $286.9 million, which
represents an increase of $15.2 million, or 5.6%, compared to $271.7 million at
December 31, 2006. The increase in total assets was the result of increases in
loans receivable of $13.0 million, or 6.5% to $212.8 million at September 30,
2007 from $199.8 million at December 31, 2006, in investment securities
available-for-sale of $1.3 million, or 3.6%, to $36.2 million at September 30,
2007 from $34.9 million at December 31, 2006, and in premises and equipment,
which increased $1.7 million, or 12.5%, to $15.2 million at September 30, 2007
from $13.5 million at December 31, 2006.
The increase in loans is due to continued strong business relationships
maintained by our loan staff. The increase in premises and equipment is
primarily due to the Company's construction costs associated with its fourth
full-service location in Wheaton, Illinois. This facility in north Wheaton is
anticipated to open in November 2007. These increases were partially offset by
decreases in cash and cash equivalents of $1.6 million, or 15.5%, to $9.0
million at September 30, 2007 from $10.6 million at December 31, 2006 and cash
value of life insurance of $265,000, or 4.8%, to $5.2 million at September 30,
2007 from $5.5 million at December 31, 2006. The decrease in cash value of life
insurance was primarily due to the receipt of a $478,000 claim. Deposits
increased by $7.2 million, or 3.1%, to $241.9 million at September 30, 2007 from
$234.7 million at December 31, 2006. Deposits increased primarily due to the
success of recent promotions to attract additional deposits. Borrowed money
represented by FHLB advances increased $7.0 million to $17.5 million at
September 30, 2007 from $10.5 million at December 31, 2006 as advances
represented a cost effective means of funding loan growth.
Shareholders' equity increased $1.2 million, or 5.8%, to $21.8 million
at September 30, 2007 from $20.6 million at December 31, 2006. The increase in
shareholders' equity was primarily the result of the Company's net income for
the nine months ended September 30, 2007 and was partially offset by dividends
paid of $248,000 and a decrease of $220,000 in the Company's accumulated other
comprehensive income relating to the change in fair value of its
available-for-sale investment portfolio. As of September 30, 2007 there were
1,375,278 shares of common stock outstanding, resulting in a book value of
$15.85 per share.
Net interest income before provision for loan losses decreased
$143,000, or 5.8%, to $2.3 million for the three months ended September 30, 2007
and $295,000, or 4.0%, to $7.1 million for the nine months ended September 30,
2007 as compared to the comparable prior year periods. These decreases are
primarily due to increases in the average cost of interest-bearing liabilities
of 55 and 62 basis points for the three and nine months ended September 30,
2007, respectively. The average cost of interest-bearing liabilities increased
to 3.58% and 3.48% for the three and nine months ended September 30, 2007,
respectively, from 3.03% and 2.86% for the comparable prior year periods. The
effect of this increased cost was partially offset by increases in the average
yield on interest-earning assets of 3 and 32 basis points for the three and nine
months ended September 30, 2007, respectively. The average yield on
interest-earning assets increased to 6.81% and 6.91% for the three and nine
months ended September 30, 2007, respectively, from 6.78% and 6.59% for the
comparable prior year periods. The net interest margin, expressed as a
percentage of average earning assets, decreased 49 basis points to 3.59% for the
three months ended September 30, 2007 from 4.08% for the three months ended
September 30, 2006 and decreased 27 basis points to 3.77% for the nine months
ended September 30, 2007 from 4.04% for the nine months ended September 30,
2006. The increase in interest rates in our local competitive market contributed
to the increase in the overall cost of average interest-bearing liabilities.
The provision for loan losses decreased $35,000 to $10,000 for the
three months ended September 30, 2007 and $305,000 to $10,000 for the nine
months ended September 30, 2007 as compared to the comparable prior year
periods. Loan portfolio quality remained strong as nonperforming loans decreased
to $156,000 at September 30, 2007 from $669,000 at December 31, 2006 and from
$308,000 at September 30, 2006. The ratio of the allowance for loan losses to
nonperforming loans totaled 995.7%, 231.5% and 557.1% at September 30, 2007,
December 31, 2006 and September 30, 2006, respectively.
Noninterest income increased $77,000, or 25.5% to $377,000 for the
three months ended September 30, 2007 as compared to the comparable prior year
period. This increase is primarily due to increases in mortgage origination
income of $44,000, gain on sale of securities of $13,000 and service charges on
deposit accounts of $8,000. In addition, noninterest income increased $797,000,
or 90.4%, to $1.7 million for the nine months ended September 30, 2007 as
compared to the comparable prior year period. This increase is primarily due to
increases in life insurance death benefit of $478,000, $168,000 in mortgage
origination fees, $47,000 in gain on sale of securities and $50,000 in service
charges on deposit accounts. The increase in mortgage origination income is due
to a greater emphasis placed on this area which included an expansion of the
mortgage department.
Noninterest expense increased by $326,000, or 17.1%, to $2.2 million
for the three months ended September 30, 2007 over the comparable prior year
period. Of this increase, $122,000 was directly related to compensation and
benefits, $34,000 was related to building and equipment expense, $20,000 was
related to data processing expense and $17,000 was related to advertising and
marketing. In addition, the Company incurred expenses for the three months ended
September 30, 2007 totaling $46,000 relating to the self-tender offer to
purchase shares, which was announced August 14, 2007. Noninterest expense
increased $979,000, or 17.2%, to $6.7 million for the nine months ended
September 30, 2007 over the comparable prior year period. Of this increase,
$434,000 was directly related to compensation and benefits, $82,000 was related
to data processing expense, $73,000 was related to building and equipment
expense, $51,000 was related to advertising and marketing and $22,600 was
related to professional fees associated with compliance with Section 404 of the
Sarbanes-Oxley Act of 2002. In addition to the $46,000 in expenses associated
with the self-tender offer mentioned earlier, the Company incurred an
unamortized placement fee totaling $79,000 in connection with its redemption of
trust preferred securities issued by its subsidiary Community Financial Shares
Statutory Trust I, which was expensed in the nine months ended September 30,
2007. The increase in compensation and benefits expense was the result of annual
merit increases and the addition of staff. The additional staff expenses are
partially due to the expansion of the mortgage department.
On August 14, 2007, the Company commenced a self-tender offer to
purchase up to 200,000 shares of its common stock. Company shareholders were
given the opportunity to sell part or all of their shares to the Company at a
price of $26.00 per share. The offer to purchase shares expired on September 28,
2007. On October 1, 2007, the Company announced that it accepted for purchase
125,698 shares of its common stock representing 9.1% of the outstanding shares
of common stock, at a purchase price of $26.00 for a total cost of $3.3 million,
excluding fees and expenses relating to the offer.
On September 24, 2007, the Company's board of directors approved a
$0.06 per share dividend. The cash dividend will be paid on October 31, 2007 to
shareholders of record on October 17, 2007.
Community Financial Shares, Inc. is a bank holding company
headquartered in Glen Ellyn, Illinois with $286.9 million in assets. Its primary
subsidiary, Community Bank of Wheaton/Glen Ellyn, maintains three full service
offices in Glen Ellyn and Wheaton. A new Community Bank office is planned for
November 2007 on the north side of Wheaton, Illinois,
For further information about the Company and the Bank visit them on
the world wide web at www.commbank-wge.com. In addition, information on the
Company's stock can be found at www.otcbb.com under the symbol CFIS.
Statements contained in this news release which are not historical
facts, are forward-looking statements as that term is defined in the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements are
subject to risk and uncertainties which could cause actual results to differ
materially from those currently anticipated due to a number of factors, which
include, but are not limited to, factors discussed in documents filed by the
Company with the Securities and Exchange Commission from time to time.
The Company does not undertake, and specifically disclaims any
obligation, to publicly release the result of any revisions which may be made to
any forward-looking statements to reflect events or circumstances after the date
of such statements or to reflect the occurrence of anticipated or unanticipated
events.
COMMUNITY FINANCIAL SHARES, INC.
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SELECTED CONSOLIDATED FINANCIAL DATA: (UNAUDITED) September 30, June 30, March 31, December 31,
(IN THOUSANDS) 2007 2007 2007 2006
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Total assets $ 286,938 277,240 273,078 271,741
Loans receivable, net 212,798 199,844 195,313 199,820
Investment securities available-for-sale 36,171 42,295 35,093 34,924
Deposits 241,888 230,775 235,281 234,725
FHLB Advances 17,500 15,500 10,500 10,500
Stockholders' equity 21,803 21,356 21,404 20,601
Nonperforming assets 156 152 168 669
Nonperforming loans 156 152 168 669
Allowance for loan losses 1,554 1,553 1,552 1,549
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SELECTED RATIOS:
Total equity to total assets 7.60% 7.70% 7.84% 7.58%
Allowance for loan losses as a % of nonperforming assets 995.7% 1021.7% 923.8% 231.5%
Allowance for loan losses as a % of loans, net 0.73% 0.77% 0.79% 0.77%
Book value per share $ 15.85 15.53 15.56 14.98
Market value per share 25.60 22.75 23.00 23.70
Dividends per share (for the quarter ended) 0.06 0.06 0.06 0.06
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Nine months ended Three months ended
September 30, September 30,
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SELECTED OPERATING DATA: (UNAUDITED) 2007 2006 2007 2006
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(IN THOUSANDS, EXCEPT PER SHARE DATA)
Interest income $ 12,911 11,984 4,404 4,095
Interest expense 5,856 4,634 2,083 1,631
Net interest income 7,055 7,350 2,321 2,464
Provision for loan losses 10 315 10 45
Net interest income after provision for loan losses 7,045 7,035 2,311 2,419
Noninterest income 1,679 882 377 300
Noninterest expense 6,685 5,705 2,232 1,906
Income before income tax 2,039 2,212 456 813
Income tax expense 383 631 98 241
Net income $ 1,656 1,581 358 572
Earnings per share - basic $ 1.20 1.15 0.26 0.42
Earnings per share - diluted 1.20 1.15 0.26 0.41
SELECTED PERFORMANCE RATIOS:
Return on average assets (1) 0.80% 0.79% 0.50% 0.85%
Return on average equity (1) 10.36% 11.02% 6.56% 11.51%
Noninterest expense to average total assets (1) 3.23% 2.85% 3.13% 2.85%
Net interest margin (1) 3.77% 4.04% 3.59% 4.08%
Average total assets $ 276,293 267,893 283,177 265,429
Average total equity 21,368 19,190 21,636 19,724
(1) Annualized.