Exhibit 99.1
Glen Ellyn, Illinois Contact: Scott W. Hamer
October 31, 2008 President/CEO
Company Release 630-545-0900
COMMUNITY FINANCIAL SHARES, INC.
ANNOUNCES OPERATING RESULTS FOR THE THREE AND NINE MONTHS
ENDED SEPTEMBER 30, 2008
Community Financial Shares, Inc. (OTCBB: CFIS) (the "Company"), the
holding company for Community Bank-Wheaton/Glen Ellyn (the "Bank"), reported a
net loss (unaudited) for the three and nine months ended September 30, 2008 of
$800,000 and $1.0 million, respectively. This compares to net income of $358,000
and $1.7 million for the comparable prior year periods. For the three months
ended September 30, 2008, basic and diluted loss per share both totaled $0.64.
This represents a decrease of 346.2% from $0.26 for both basic and diluted
earnings per share for the comparable prior year period. In addition, for the
nine months ended September 30, 2008 basic and diluted loss per share both
totaled $0.84. This represents a decrease of 170.0% from $1.20 for both basic
and diluted earnings per share for the nine months ended September 30, 2007. The
decrease in net income for the three months ended September 30, 2008 is
primarily the result of the net effect of a $785,000 increase in provision for
loan losses, an other-than-temporary impairment charge of $485,000 related to
the Company's investment in Freddie Mac ("FHLMC") preferred stock, a $163,000
decrease in net interest income and a $210,000 increase in noninterest expense,
partially offset by a credit for income tax of $308,000 as opposed to a $98,000
expense for the comparable prior year period. Similarly, the decrease in net
income for the nine months ended September 30, 2008 is primarily the result of
the net effect of a $1.6 million increase in provision for loan losses, a
non-cash charge of $485,000 related to the impairment of FHLMC preferred stock,
a $773,000 decrease in net interest income, a $654,000 increase in noninterest
expense, partially offset by a credit for income tax of $682,000 as opposed to a
$383,000 expense for the comparable prior year period.
Total assets at September 30, 2008 were $285.1 million, which
represents a decrease of $13.2 million, or 4.4%, compared to $298.3 million at
December 31, 2007. The decrease in total assets was the result of a decrease in
cash and cash equivalents of $2.4 million , or 30.8%, to $5.4 million at
September 30, 2008 from $7.8 million from December 31, 2007, a decrease in loans
receivable of $6.4 million, or 2.8%, to $221.3 million at September 30, 2008
from $227.7 million at December 31, 2007, a decrease in investment securities of
$5.4 million, or 16.2%, to $27.8 million at September 30, 2008 from $33.2
million at December 31, 2007. The decrease in loans is primarily due to the sale
of $6.6 million of commercial real estate loans in March 2008. Net of loans
sold, loans receivable increased $200,000. The net growth in loans during the
nine months ended September 30, 2008 is primarily due to continued strong
relationships within our community maintained by our loan staff. The decreases
in total loans were partially offset by an increase in premises and equipment of
$386,000, or 2.3%, to $16.9 million at September 30, 2008 from $16.5 million at
December 31, 2007. The increase in premises and equipment is primarily due to
the Company's final construction costs associated with its fourth full-service
location in north Wheaton, Illinois, which opened November 21, 2007. Deposits
decreased $6.1 million, or 2.4%, to $242.9 million at September 30, 2008 from
$249.0 million at December 31, 2007. Deposits decreased primarily due to strong
local competition for certificates of deposit. As a result, the percentage of
certificates of deposit to total deposits decreased from 47.0% at December 31,
2007 to 42.1% at September 30, 2008 and the percentage of interest bearing
demand deposit accounts increased to 19.3% at September 30, 2008 from 15.9% at
December 31, 2007. Borrowed money, consisting of Federal Home Loan Bank advances
and other borrowings, decreased $4.0 million to $21.0 million at September 30,
2008 from $25.0 million at December 31, 2007.
Stockholders' equity decreased $1.8 million, or 9.6%, to $16.7 million
at September 30, 2008 from $18.5 million at December 31, 2007. The decrease in
stockholders' equity for the nine months ended September 30, 2008 was primarily
the result of stock repurchases by the Company of 6,333 shares of its
outstanding common stock totaling $165,000, dividends paid of $149,000, a
decrease of $438,000 in the Company's accumulated other comprehensive income
relating to the change in fair value of its available-for-sale investment
portfolio and the Company's net loss for the nine months ended September 30,
2008. As of September 30, 2008 there were 1,245,267 shares of Company common
stock outstanding, resulting in a book value of $13.44 per share.
Net interest income before provision for loan losses decreased
$163,000, or 7.0%, to $2.2 million for the three months ended September 30, 2008
and $773,000, or 11.0%, to $6.3 million for the nine months ended September 30,
2008 as compared to the comparable prior year periods. These decreases are
primarily due to decreases in the average yield on interest-earning assets of
121 and 107 basis points for the three and nine months ended September 30, 2008,
respectively. The average yield on interest-earning assets decreased to 5.60%
and 5.84% for the three and nine months ended September 30, 2008, respectively,
from 6.81% and 6.91% for the comparable prior year periods. The effect of this
decrease in average yield was partially offset by decreases in the average cost
of interest bearing liabilities of 105 and 56 basis points for the three and
nine months ended September 30, 2008, respectively. The average cost of
interest-bearing liabilities decreased to 2.53% and 2.92% for the three and nine
months ended September 30, 2008, respectively, from 3.58% and 3.48% for the
comparable prior year periods. The net interest margin, expressed as a
percentage of average earning assets, decreased 32 basis points to 3.27% for the
three months ended September 30, 2008 from 3.59% for the three months ended
September 30, 2007; however it increased 11 basis points from the three months
ended June 30, 2008, and decreased 62 basis points to 3.15% for the nine months
ended September 30, 2008 from 3.77% for the nine months ended September 30,
2007. The average yield on loans decreased 146 and 133 basis points for the
three and nine months ended September 30, 2008 compared to the comparable prior
year periods. This decrease is partially due to approximately one-half of the
Bank's loan portfolio being adjustable rate. The average yield on loans
decreased to 5.85% and 6.12% for the three and nine months ended September 30,
2008, respectively, from 7.31% and 7.45% for the comparable prior year periods.
The provision for loan losses increased $785,000 and $1.6 million for
the three and nine months ended September 30, 2008 compared to the prior year
period. The increase in the provision was the result of regulatory
considerations as well as management's quarterly analysis of the allowance for
loan loss. Nonperforming loans totaled $5.0 million, or 1.75% of total assets,
at September 30, 2008 and $156,000 or 0.05% of total assets, at September 30,
2007. The increase in nonperforming loans was primarily the result of the
addition of a $1.8 million condominium construction loan located in the western
suburbs of Chicago, Illinois and a $2.2 million commercial and industrial loan.
Both of these credits are being closely monitored by senior management. These
credits represent approximately 80% of total nonperforming loans at September
30, 2008. The ratio of the allowance for loan losses to nonperforming loans
totaled 69.8% and 995.7% at September 30, 2008 and September 30, 2007,
respectively.
Noninterest income was significantly impacted by the
other-than-temporary impairment charge related to an investment in FHLMC
preferred stock. As a result of this $485,000 write-down, noninterest income
decreased $405,000 or 107.2%, to a loss of $27,000 for the three months ended
September 30, 2008 as compared to the comparable prior year period. The FHLMC
write-down was offset by increases in gain on sale of loans of $49,000 and
service charges on deposit accounts of $47,000. Including the $485,000
write-down mentioned above, noninterest income decreased $726,000, or 43.2%, to
$954,000 for the nine months ended September 30, 2008 as compared to the
comparable prior year period. This decrease is due to a decrease in life
insurance death benefit of $478,000. Partially offsetting this decrease are
increases in gain on sale of loans of $158,000, gain on sale of securities of
$17,000 and an increase in service charges on deposit accounts of $85,000.
Noninterest expense increased $210,000, or 9.4%, to $2.4 million for
the three months ended September 30, 2008 as compared to the comparable prior
year period. This increase is primarily due to increases in compensation and
benefits of $69,000, building and equipment expense of $89,000 and data
processing expense of $46,000. The increase in compensation and benefits expense
is the result of annual merit increases and additional staff expenses primarily
relating to the opening of our new facility on November 21, 2007. The increase
in building and equipment expense are due to higher real estate taxes and a
higher level of depreciation expense directly related to our new north Wheaton
facility. The increases were partially offset by decreases in advertising and
marketing of $28,000 and professional fees of $25,000. Noninterest expenses
increased $654,000, or 9.8%, to $7.3 million for the nine months ended September
30, 2008 as compared to the comparable prior year period. This increase is
primarily due to increases in compensation and benefits of $249,000, building
and equipment expense of $247,000, data processing expense of $122,000 and FDIC
insurance premiums of $147,000 primarily due to the depletion of the one-time
credit. Partially offsetting these increases was a decrease in advertising and
marketing expense of $59,000. Management continues to emphasize the importance
of expense management and control in order to continue to provide expanded
banking services to a growing market base.
Community Financial Shares, Inc. is a bank holding company
headquartered in Glen Ellyn, Illinois with $285.1 million in assets at September
30, 2008. Its primary subsidiary, Community Bank-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) September 30, June 30, March 31, December 31,
(In thousands) 2008 2008 2008 2007
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Total assets $ 285,109 $ 289,836 $ 300,515 $ 298,311
Loans receivable, net 221,334 223,457 229,929 227,736
Investment securities available-for-sale 27,784 30,996 28,036 33,163
Deposits 242,949 245,795 255,100 249,032
FHLB Advances 17,000 17,000 19,500 17,500
Stockholders' equity 16,736 17,728 18,263 18,505
Nonperforming assets 4,982 3,145 454 697
Nonperforming loans 4,982 3,145 454 697
Allowance for loan losses 3,479 2,805 2,002 1,970
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Selected ratios:
Total equity to total assets 5.87% 6.12% 6.08% 6.20%
Allowance for loan losses as a % of nonperforming assets 69.8% 89.2% 441.3% 282.7%
Allowance for loan losses as a % of loans 1.55% 1.24% 0.86% 0.86%
Book value per share $ 13.44 $ 14.24 $ 14.67 $ 14.85
Market value per share 17.50 20.00 25.00 25.60
Dividends per share (for the quarter ended) -- 0.06 0.06 0.06
Quarterly net interest margin (1) 3.27% 3.16% 3.01% 3.20%
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Three months ended Nine months ended
September 30, September 30,
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Selected operating data: (Unaudited) 2008 2007 2008 2007
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(In thousands, except per share data)
Interest income $ 3,688 $ 4,404 $ 11,657 $ 12,911
Interest expense 1,531 2,083 5,376 5,856
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Net interest income 2,157 2,321 6,281 7,055
Provision for loan losses 795 10 1,625 10
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Net interest income after provision for loan losses 1,362 2,311 4,656 7,045
Noninterest income (27) 377 954 1,680
Noninterest expense 2,443 2,232 7,339 6,685
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Income (loss) before income tax (1,108) 456 (1,728) 2,040
Income tax expense (benefit) (308) 98 (682) 383
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Net income (loss) $ (800) $ 358 $ (1,046) $ 1,656
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Earnings (loss) per share - basic $ (0.64) $ 0.26 $ (0.84) $ 1.20
Earnings (loss) per share - diluted (0.64) 0.26 (0.84) 1.20
Selected performance ratios:
Return (loss) on average assets (1) (1.10%) 0.50% (0.47%) 0.80%
Return (loss) on average equity (1) (17.92%) 6.56% (7.64%) 10.33%
Noninterest expense to average total assets (1) 3.36% 3.13% 3.32% 3.22%
Net interest margin (1) 3.27% 3.59% 3.15% 3.77%
Average total assets $ 288,040 $ 283,177 $ 294,370 $ 276,293
Average total equity 17,706 21,636 18,234 21,368
(1) Annualized.