Glen Ellyn, Illinois Contact: Scott W. Hamer
January 30, 2009 President/CEO
Company Release 630-545-0900
COMMUNITY FINANCIAL SHARES, INC.
ANNOUNCES OPERATING RESULTS FOR THE THREE MONTHS AND
YEAR ENDED DECEMBER 31, 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 months and year ended December 31, 2008 of
$143,000 and $1.2 million, respectively. This compares to net income of $11,000
and $1.7 million for the comparable prior year periods. For the three months
ended December 31, 2008, basic and diluted loss per share both totaled $0.11.
This compares to basic and diluted earnings per share of $0.01 each for the
comparable prior year period. In addition, for the year ended December 31, 2008
basic and diluted loss per share both totaled $0.95. This represents a decrease
of 176.6% from $1.24 for both basic and diluted earnings per share for the year
ended December 31, 2007. The decrease in net income for the three months ended
December 31, 2008 is primarily the result of the net effect of a $180,000
increase in provision for loan losses, a $122,000 decrease in net interest
income, a $143,000 decrease in noninterest income, and a $113,000 increase in
noninterest expense, partially offset by a credit for income tax of $504,000 as
opposed to a $99,000 expense for the comparable prior year period. Similarly,
the decrease in net income for the year ended December 31, 2008 is primarily the
result of the net effect of a $1.8 million increase in provision for loan
losses, a non-cash charge of $485,000 related to the impairment of Federal Home
Loan Mortgage Corporation ("FHLMC") preferred stock, an $895,000 decrease in net
interest income, a $768,000 increase in noninterest expense, partially offset by
a credit for income tax of $1.2 million as opposed to a $284,000 expense for the
comparable prior year period.
Total assets at December 31, 2008 were $293.4 million, which represents
a decrease of $4.9 million, or 1.7%, compared to $298.3 million at December 31,
2007. The decrease in total assets was the result of a decrease in loans
receivable of $8.1 million, or 3.6%, to $219.6 million at December 31, 2008 from
$227.7 million at December 31, 2007 and a decrease in investment securities of
$6.2 million, or 18.7%, to $27.0 million at December 31, 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 decreased $1.5 million during the year ended December 31, 2008. The
decreases in total loans were partially offset by an increase in cash and cash
equivalents of $8.0 million, or 103.2%, to $15.8 million at December 31, 2008
from $7.8 million at December 31, 2007, and an increase in premises and
equipment of $312,000, or 1.9%, to $16.8 million at December 31, 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 increased $4.5 million, or 1.8%, to $253.5 million at
December 31, 2008 from $249.0 million at December 31, 2007. Deposits increased
primarily due to the opening of our new North Wheaton facility. The percentage
of certificates of deposit to total deposits decreased from 47.0% at December
31, 2007 to 42.8% at December 31, 2008 and the percentage of interest bearing
demand deposit accounts increased to 22.0% at December 31, 2008 from 15.9% at
December 31, 2007. Borrowed money, consisting of Federal Home Loan Bank advances
and other borrowings, decreased $6.0 million to $19.0 million at December 31,
2008 from $25.0 million at December 31, 2007.
Stockholders' equity decreased $1.8 million, or 9.7%, to $16.7 million
at December 31, 2008 from $18.5 million at December 31, 2007. The decrease in
stockholders' equity for the year ended December 31, 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
$330,000 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 year ended December 31, 2008. As of December 31, 2008
there were 1,245,267 shares of Company common stock outstanding, resulting in a
book value of $13.41 per share.
Net interest income before provision for loan losses decreased
$122,000, or 5.8%, to $2.0 million for the three months ended December 31, 2008
and $895,000, or 9.8%, to $8.3 million for the year ended December 31, 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 112 and 107
basis points for the three months and year ended December 31, 2008,
respectively. The average yield on interest-earning assets decreased to 5.40%
and 5.74% for the three months and year ended December 31, 2008, respectively,
from 6.52% and 6.81% 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 110 and 70 basis points for the three months
and year ended December 31, 2008, respectively. The average cost of
interest-bearing liabilities decreased to 2.51% and 2.82% for the three months
and year ended December 31, 2008, respectively, from 3.61% and 3.52% for the
comparable prior year periods. The net interest margin, expressed as a
percentage of average earning assets, decreased 15 basis points to 3.05% for the
three months ended December 31, 2008 from 3.20% for the three months ended
December 31, 2007 and decreased 50 basis points to 3.13% for the year ended
December 31, 2008 from 3.63% for the year ended December 31, 2007. The average
yield on loans decreased 135 and 131 basis points for the three months and year
ended December 31, 2008, respectively, 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
5.66% and 6.02% for the three months and year ended December 31, 2008,
respectively, from 7.01% and 7.33% for the comparable prior year periods.
The provision for loan losses increased $180,000 and $1.8 million for
the three months and year ended December 31, 2008, respectively, compared to the
prior year periods. The increase in the provision was the result of management's
quarterly analysis of the allowance for loan loss. Nonperforming loans totaled
$2.8 million, or 0.94% of total assets, at December 31, 2008. This represents a
decrease of $2.2 million, or 44.7% from September 30, 2008 when nonperforming
loans totaled $5.0 million, or 1.75% of total assets and an increase of $2.1
million from December 31, 2007 when nonperforming loans totaled $697,000, or
0.23% of total assets. The increase in nonperforming loans from December 31,
2007 was primarily the result of the addition of a $1.6 million condominium
construction loan located in the western suburbs of Chicago, Illinois. This
credit is being closely monitored by senior management and represents
approximately 59% of total nonperforming loans at December 31, 2008. The ratio
of the allowance for loan losses to nonperforming loans totaled 119.7%, 69.8%
and 282.6% at December 31, 2008, September 30, 2008 and December 31, 2007,
respectively.
Noninterest income decreased $143,000, or 26.2%, to $404,000 for the
three months ended December 31, 2008 as compared to the comparable prior year
period. The decrease is partially due to a decrease in gain on sale of loans of
$30,000, which was partially offset by an increase of $17,000 in service charges
on deposit accounts. Noninterest income decreased $869,000, or 39.0%, to $1.4
million for the year ended December 31, 2008 as compared to the comparable prior
year period. This decrease is primarily due to a $485,000 other-than-temporary
impairment charge related to an investment in FHLMC preferred stock and a
decrease in life insurance death benefit of $478,000. These items were partially
offset by increases in gain on sale of loans of $127,000 and service charges on
deposit accounts of $102,000 during the year ended December 31, 2008.
Noninterest expense increased $113,000, or 4.8%, to $2.5 million for
the three months ended December 31, 2008 as compared to the comparable prior
year period. This increase is primarily due to increases in building and
equipment expense of $27,000, professional fees of $86,000 and data processing
expense of $41,000. 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 $43,000 and compensation and
benefits of $15,000. Noninterest expenses increased $768,000, or 8.5%, to $9.8
million for the year ended December 31, 2008 as compared to the comparable prior
year period. This increase is primarily due to increases in compensation and
benefits of $234,000, building and equipment expense of $274,000, data
processing expense of $163,000 and FDIC insurance premiums of $181,000 primarily
due to the depletion of the Bank's one-time FDIC insurance premium credit. The
increase in compensation and benefits and building expense is partially due to
the opening of the North Wheaton facility. Partially offsetting these increases
was a decrease in advertising and marketing expense of $102,000. This decrease
is partially due to cost containment measures and the elimination of previously
planned marketing campaigns. 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 $293.4 million in assets at December
31, 2008. Its primary subsidiary, Community Bank-Wheaton/Glen Ellyn, maintains
four full service offices in Glen Ellyn and 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) December 31, September 30, December 31,
(IN THOUSANDS) 2008 2008 2007
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Total assets $ 293,354 $ 285,109 $ 298,311
Loans receivable, net 219,615 221,334 227,736
Investment securities available-for-sale 26,964 27,784 33,163
Deposits 253,514 242,949 249,032
FHLB Advances 17,000 17,000 17,500
Stockholders' equity 16,704 16,736 18,505
Nonperforming assets 2,954 4,982 697
Nonperforming loans 2,756 4,982 697
Allowance for loan losses 3,300 3,479 1,970
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SELECTED RATIOS:
Total equity to total assets 5.69% 5.87% 6.20%
Allowance for loan losses as a % of nonperforming assets 111.7% 69.8% 282.7%
Allowance for loan losses as a % of loans 1.48% 1.55% 0.86%
Book value per share $ 13.41 $ 13.44 $ 14.85
Market value per share 17.50 17.50 25.60
Dividends per share (for the quarter ended) - - 0.06
Quarterly net interest margin (1) 3.05% 3.27% 3.20%
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Three months ended Year ended
December 31, December 31,
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SELECTED OPERATING DATA: (UNAUDITED) 2008 2007 2008 2007
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(IN THOUSANDS, EXCEPT PER SHARE DATA)
Interest income $ 3,527 $ 4,301 $ 15,184 $ 17,212
Interest expense 1,534 2,187 6,910 8,043
--------- --------- --------- ---------
Net interest income 1,993 2,115 8,274 9,169
Provision for loan losses 590 410 2,215 420
--------- --------- --------- ---------
Net interest income after provision for loan losses 1,403 1,705 6,059 8,749
Noninterest income 404 547 1,358 2,227
Noninterest expense 2,454 2,340 9,792 9,025
--------- --------- --------- ---------
Income (loss) before income tax (647) (88) (2,375) 1,951
Income tax expense (benefit) (504) (99) (1,187) 284
--------- --------- --------- ---------
Net income (loss) $ (143) $ 11 $ (1,188) $ 1,667
========= ========= ========= =========
Earnings (loss) per share - basic $ (0.11) $ 0.01 $ (0.95) $ 1.24
Earnings (loss) per share - diluted (0.11) 0.01 (0.95) 1.24
SELECTED PERFORMANCE RATIOS:
Return (loss) on average assets (1) (0.20%) 0.01% (0.41%) 0.60%
Return (loss) on average equity (1) (3.37%) 0.23% (6.52%) 8.05%
Noninterest expense to average total assets (1) 3.39% 3.20% 3.34% 3.23%
Net interest margin (1) 3.05% 3.20% 3.13% 3.63%
Average total assets $ 288,351 $ 289,867 $ 293,218 $ 279,719
Average total equity 16,850 18,702 18,234 20,701
(1) Annualized.