Glen Ellyn, Illinois Contact: Scott W. Hamer
January 31, 2008 President/CEO
Company Release 630-545-0900
COMMUNITY FINANCIAL SHARES, INC.
ANNOUNCES FOURTH QUARTER AND YEAR END 2007 OPERATING RESULTS
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 three months and year ended December 31, 2007 of
$11,000 and $1.7 million, respectively. This compares to $605,000 and $2.2
million for the comparable prior year periods. For the three months ended
December 31, 2007, basic and diluted earnings per share both totaled $0.01. This
represents a decrease of 97.7% from $0.44 for the comparable prior year period.
The decrease in net income for the quarter ended December 31, 2007 is primarily
the result of the net effect of a $560,000 increase in the provision for loan
losses, a $291,000 increase in non-interest expense and a $408,000 increase in
interest expense, partially offset by a $139,000 increase in non-interest
income, a $140,000 increase in interest income and a credit for income tax of
$99,000 as opposed to an $287,000 expense for the comparable prior year period.
In addition, for the year ended December 31, 2007 basic and diluted earnings per
share both totaled $1.24, a decrease of 22.0% as compared to $1.59 earnings per
share basic and diluted for the year ended December 31, 2006. Earnings per share
information for 2006 were adjusted to reflect the 2-for-1 stock split effective
December 27, 2006.
Total assets at December 31, 2007 were $298.3 million, which represents
an increase of $26.6 million, or 9.8%, compared to $271.7 million at December
31, 2006. The increase in total assets was the result of increases in loans
receivable of $27.9 million, or 14.0%, to $227.7 million at December 31, 2007
from $199.8 million at December 31, 2006, and in premises and equipment, which
increased $3.0 million, or 21.9%, to $16.5 million at December 31, 2007 from
$13.5 million at December 31, 2006. The increase in loans is primarily due to
growth in our commercial real estate portfolio which increased from $111.3
million to $125.6 million and our home equity lines of credit which increased
from $35.2 million to $47.8 million year-over-year. The growth in loans is
primarily due to continued strong business relationships within our community
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
opened November 21, 2007. These increases were partially offset by decreases in
cash and cash equivalents of $2.8 million, or 26.7%, to $7.8 million at December
31, 2007 from $10.6 million at December 31, 2006 and cash value of life
insurance of $215,000, or 3.9%, to $5.2 million at December 31, 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 $14.3
million, or 6.1%, to $249.0 million at December 31, 2007 from $234.7 million at
December 31, 2006. Deposits increased primarily due to the success of recent
promotions and the opening of the Bank's newest facility in north Wheaton.
Borrowed money, consisting of FHLB advances and overnight borrowings, increased
$14.5 million to $25.0 million at December 31, 2007 from $10.5 million at
December 31, 2006 as these borrowings represented a cost effective means of
funding loan growth.
Stockholders' equity decreased $2.0 million, or 9.8%, to $18.6 million
at December 31, 2007 from $20.6 million at December 31, 2006. The decrease in
stockholders' equity was primarily the result of the successful completion of
the Company's tender offer announced on August 14, 2007 and completed on October
1, 2007. The tender offer resulted in the Company purchasing 125,698 shares of
common stock at a price of $26.00 for a total of $3,268,148. Also contributing
to the decrease was dividends paid of $323,000 and a decrease of $134,000 in the
Company's accumulated other comprehensive income relating to the change in fair
value of its available-for-sale investment portfolio. These decreases were
partially offset by the Company's net income for the year ended December 31,
2007. As of December 31, 2007 there were 1,250,880 shares of common stock
outstanding, resulting in a book value of $14.85 per share.
Net interest income before provision for loan losses decreased
$268,000, or 11.3%, to $2.1 million for the three months ended December 31, 2007
and $564,000, or 5.8%, to $9.2 million for the year ended December 31, 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 35 and 56
basis points for the three months and year ended December 31, 2007,
respectively, from prior year periods. The average cost of interest-bearing
liabilities increased to 3.61% and 3.52% for the three months and year ended
December 31, 2007, respectively, from 3.26% and 2.96% for the comparable prior
year periods. The average yield on interest-earning assets decreased to 6.52%
for the three months ended December 31, 2007 from 6.77% for the prior year
period and increased to 6.81% for the year ended December 31, 2007 from 6.63%
for the prior year end period. The net interest margin, expressed as a
percentage of average earning assets, decreased 68 basis points to 3.20% for the
three months ended December 31, 2007 from 3.88% for the three months ended
December 31, 2006 and decreased 37 basis points to 3.63% for the year ended
December 31, 2007 from 4.00% for the year ended December 31, 2006. The decreases
in yield and net interest margin were primarily attributable to the decreases in
the federal funds interest rate, which occurred in September, October and
December, and which had a negative impact on the adjustable rate portion of our
loan portfolio. In addition, the bank did not experience a similar decrease in
deposit interest rates in our local competitive market, which contributed to the
increase in the overall cost of average interest-bearing liabilities.
The provision for loan losses totaled $410,000 and $420,000 for the
three months and year ended December 31, 2007, respectively. These amounts
represent increases of $560,000 and $255,000 for the comparable prior year
periods. The increase in the provision was the result of the Bank's loan growth
during the year as well as management's quarterly analysis of the allowance for
loan loss. Loan portfolio quality remained strong as nonperforming loans
increased slightly to $697,000 at December 31, 2007 from $669,000 at December
31, 2006. The ratio of the allowance for loan losses to nonperforming loans
totaled 282.7% and 231.5% at December 31, 2007 and December 31, 2006,
respectively.
Noninterest income increased $139,000, or 34.2%, to $547,000 for the
three months ended December 31, 2007 as compared to the comparable prior year
period. The increase is partially due to increases in mortgage origination
income of $46,000 and service charges on deposit accounts of $20,000.
Noninterest income increased $937,000, or 72.6% to $2.2 million for the year
ended December 31, 2007 as compared to the comparable prior year period
primarily due to increases in life insurance death benefit of $478,000, mortgage
origination fee income of $215,000, gain on sale of securities of $50,000 and an
increase of $69,000 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 $291,000, or 14.2%, to $2.3 million for
the three months ended December 31, 2007 as compared to the comparable prior
year period. This increase is primarily due to increases in compensation and
benefits of $140,000, building and equipment expense of $77,000 and advertising
and marketing of $25,000. Noninterest expense increased $1.2 million, or 16.4%,
to $9.0 million for the year ended December 31, 2007 from $7.8 million from the
prior year period. This increase is primarily due to increases in compensation
and benefits of $574,000, building and equipment expense of $150,000, data
processing expense of $78,000, advertising and marketing of $76,000 and $21,000
was related to professional fees associated with compliance with Section 404 of
the Sarbanes-Oxley Act of 2002. In addition, noninterest expense for the year
ended December 31, 2007 includes $46,000 associated with the self-tender offer
mentioned earlier and an unamortized placement fee totaling $79,000 in
connection with a redemption of trust preferred securities issued by its
subsidiary Community Financial Shares Statutory Trust I. The increase in
compensation and benefits expense is the result of annual merit increases and
the addition of staff. The additional staff expenses are primarily due to the
expansion of the mortgage department and the new facility, which opened November
21, 2007. The increase in building and equipment expense are due to higher real
estate taxes as well as a higher level of depreciation expense directly related
to the new facility.
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 December 21, 2007, the Company's board of directors approved a $0.06
per share dividend. The cash dividend will be paid on January 31, 2008 to
shareholders of record on January 16, 2008.
Community Financial Shares, Inc. is a bank holding company
headquartered in Glen Ellyn, Illinois with $298.3 million in assets. Its primary
subsidiary, Community Bank of Wheaton/Glen Ellyn, maintains four full service
offices in Glen Ellyn and Wheaton.
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) December 31, September 30, December 31,
(IN THOUSANDS) 2007 2007 2006
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Total assets $ 298,311 $ 286,938 $ 271,741
Loans receivable, net 227,736 212,798 199,820
Investment securities available-for-sale 33,163 36,171 34,924
Deposits 249,033 241,888 234,725
FHLB Advances 17,500 17,500 10,500
Stockholders' equity 18,580 21,803 20,601
Nonperforming assets 697 156 669
Nonperforming loans 697 156 669
Allowance for loan losses 1,970 1,554 1,549
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SELECTED RATIOS:
Total equity to total assets 6.23% 7.60% 7.58%
Allowance for loan losses as a % of nonperforming assets 282.7% 995.7% 231.5%
Allowance for loan losses as a % of loans, net 0.86% 0.73% 0.77%
Book value per share $ 14.85 $ 15.85 $ 14.98
Market value per share 25.60 25.60 23.70
Dividends per share (for the quarter ended) 0.06 0.06 0.06
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12 months ended Three months ended
December 31, December 31,
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SELECTED OPERATING DATA: (UNAUDITED) 2007 2006 2007 2006
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(IN THOUSANDS, EXCEPT PER SHARE DATA)
Interest income $ 17,212 $ 16,147 $ 4,302 $ 4,162
Interest expense 8,043 6,414 2,187 1,779
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Net interest income 9,169 9,733 2,115 2,383
Provision for loan losses 420 165 410 (150)
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Net interest income after provision for loan losses 8,749 9,568 1,705 2,533
Noninterest income 2,227 1,290 547 408
Noninterest expense 9,025 7,754 2,340 2,049
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Income (loss) before income tax 1,951 3,104 (88) 892
Income tax expense (benefit) 284 918 (99) 287
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Net income $ 1,667 $ 2,186 $ 11 $ 605
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Earnings per share - basic $ 1.24 $ 1.59 $ 0.01 $ 0.44
Earnings per share - diluted 1.24 1.59 0.01 0.44
SELECTED PERFORMANCE RATIOS:
Return on average assets (1) 0.60% 0.81% 0.02% 0.89%
Return on average equity (1) 8.05% 11.23% 0.23% 11.82%
Noninterest expense to average total assets (1) 3.23% 2.89% 3.20% 3.01%
Net interest margin (1) 3.63% 4.00% 3.20% 3.88%
Average total assets $ 279,719 $ 268,379 $ 289,867 $ 269,828
Average total equity 20,701 19,471 18,702 20,312
(1) Annualized.