EXHIBIT 99.1
[CFS Bancorp, Inc. Letterhead]
January 30, 2003
FOR IMMEDIATE RELEASE
CONTACT: Thomas F. Prisby, Chairman of the Board and Chief Executive Officer
219-836-5500
CFS BANCORP, INC. ANNOUNCES FOURTH QUARTER AND YEAR-END RESULTS
MUNSTER, IN - January 30, 2003 - CFS Bancorp, Inc. (NASDAQ:
CITZ) ("Company") today reported fourth quarter net income of
$1.8 million or $0.15 per diluted share outstanding. Net income
for the year ended December 31, 2002 was $7.2 million or $0.58
per diluted share outstanding. This compares to net income for
the fourth quarter of 2001 of $1.5 million or $0.12 per diluted
share and net income of $11.2 million or $0.77 per diluted share
for the year ended December 31, 2001.
Net interest income for the fourth quarter of both 2002 and
2001was $7.6 million while net interest income for the year ended
December 31, 2002 was $33.5 million compared to $37.8 million
reported for the year ended December 31, 2001. The reduction in
the Company's net interest income for the full year of 2002
compared to 2001 resulted primarily from compression of the net
interest margin. The Company's net interest margin for both the
three months ended December 31, 2002 and 2001 was 1.99 percent.
The net interest margin for the year ended December 31, 2002 was
2.20 percent compared to 2.36 percent for the same period in
2001. The primary reason for the reduction in net interest
margin was the continual reduction of interest rates throughout
2001 and 2002 and the accelerated rate of prepayments on the
Company's residential mortgage loans and mortgage-backed
securities. The net interest margin for the year ended December
31, 2002 also was affected by the utilization of approximately
$14.4 million of cash to repurchase 1,050,854 shares of the
Company's common stock.
The Company's interest income was $20.4 million and $23.3
million for the three months ended December 31, 2002 and 2001,
respectively, and $86.6 million and $108.1 million for the years
ended December 31, 2002 and 2001, respectively. The primary
reason for the decrease in interest income during 2002 was the
decrease in average yields on all interest-earning assets. The
decrease in average yields was also the primary reason for the
decrease in interest income when comparing the fourth quarter of
2002 with the fourth quarter of 2001. During the fourth quarter
of 2002, the Company's mortgage-backed securities portfolio
experienced particularly high levels of prepayments, resulting in
increased amortization of premiums and a reduction of
approximately $500,000 in interest income.
Interest expense was $12.8 million and $15.6 million for the
three months ended December 31, 2002 and 2001, respectively, and
$53.1 million and $70.3 million for the years ended December 31,
2002 and 2001, respectively. The primary reason for the decrease
in interest expense in the quarter and year ended December 31,
2002 compared to the same periods in 2001 was a reduction in the
rates paid on deposit accounts throughout 2002.
-More-
CFS Bancorp, Inc. - Page 2 of 7
Deposits decreased $34.1 million during the fourth quarter
of 2002 to $954.2 million at December 31, 2002. Deposits
increased by $8.3 million during the year ended December 31,
2002. The decrease in deposit levels during the fourth quarter
of 2002 resulted primarily from the withdrawal of a portion of
the $80.0 million received in the third quarter of 2002 in
response to a promotion for above market rate 90 day certificates
in connection with the opening of two branch offices. These two
offices retained combined balances in excess of $47.0 million at
December 31, 2002.
The Company's borrowings, which consist primarily of Federal
Home Loan Bank advances, were $449.4 million at December 31, 2002
compared to $462.7 million at December 31, 2001. The Company
repaid borrowings as they came due in 2002.
The Company recorded a provision for loan losses for the
three months ended December 31, 2002 of $906,000 compared to no
provision for the same period in 2001. For the year ended
December 31, 2002, the Company's provision for loan losses
amounted to $2.0 million compared to $1.2 million for the year
ended December 31, 2001. The Company has increased its emphasis
in recent years on originating, for portfolio, construction and
land development loans, multi-family residential real estate
loans, and commercial and commercial real estate loans (all of
which involve more risk than single-family residential real
estate loans) and has increased its loss provisions accordingly.
Non-performing assets declined by $13.5 million in the current
quarter. Non-performing assets amounted to $15.3 million at
December 31, 2002 with the reduction being primarily as the
result of an $11.4 million construction loan being returned to
accrual status due to the loan being brought current and the
resumption of loan payments by the borrower. The loss provision
for the fourth quarter of 2002 includes $126,000 related to a new
deposit overdraft protection program which began during the
second half of 2002.
Non-interest income for the three months ended December 31,
2002 was $3.9 million compared to $2.4 million for the same
period in 2001. For the year ended December 31, 2002, non-
interest income was $11.3 million compared to $10.7 million for
the same period in 2001. The $1.5 million increase for the
fourth quarter of 2002 compared to the same period in 2001 is the
result primarily of a $1.1 million gain on the sale of the
insurance agency in December 2002, a $672,000 increase in deposit
fees due to the full implementation of the changes instituted as
a result of our process improvements program conducted in 2001,
and the implementation of the new deposit overdraft protection
program as previously mentioned. These increases were partially
offset by a reduction in insurance commissions due to the sale of
the insurance agency in December 2002 and from a change in the
delivery method of investment products in the third quarter of
2002. The $585,000 increase for the twelve months ended December
31, 2002 compared to the same period in 2001 was due primarily to
the increase of deposit fees of $1.5 million and the profit on
the sale of the insurance agency of $1.1 million. These
increases were partially offset by the absence of $2.0 million in
gain recognized on the sale of two branches in 2001 and net
profit on the sale of investment securities in 2001 compared to
2002.
Non-interest expense was $8.1 million for both the fourth
quarter of 2002 and 2001 and was $32.7 million for the year ended
December 31, 2002 compared to $31.4 million for the prior year.
Compensation and employee benefits for the three months ended
December 31, 2002 was $4.9 million compared to $4.8 million for
the same period in 2001. This expense for the year ended
December 31, 2002 was $20.1 million compared to $19.0 million for
the year ended December 31, 2001. Reductions in compensation
expense were offset by increases in employee
CFS Bancorp, Inc. - Page 3 of 7
benefit costs for the Company's pension plan and ESOP plan.
After being fully funded for several years, it was necessary for
the Company to resume funding for its pension plan year beginning
July 1, 2001 resulting in pension expense of $889,000 in 2002 and
$134,000 in 2001 or an increase of $755,000 in 2002 compared to
2001. ESOP expense is required to be recorded based on the
shares to be allocated for the year to participants in the plan
multiplied by the average share price for the year. The average
share price for the year increased to $14.07, and as a result,
$177,000 of additional ESOP expense was recorded in 2002 compared
to 2001. Other general and administrative expenses were $1.5
million for the three months ended December 31, 2002 compared to
$1.3 million for the same period in 2001 and $5.5 million for the
year ended December 31, 2002 compared to $5.4 million for the
year ended December 31, 2001. Decreases in other professional
fees during 2002 of $570,000 when compared to 2001 were offset
mainly by increases in fraud losses of $151,000, increases in
expense of new loan programs of $113,000, and an increase in ATM
costs of $196,000.
Income tax expense for the three months ended December 31,
2002 was $696,000 or 27.4 percent of pre-tax income compared to
$413,000 or 21.2 percent of pre-tax income for the
same period in 2001. Income tax expense for the year ended
December 31, 2002 was $3.0 million or 29.2 percent of pre-tax
income compared to $4.8 million or 30.0 percent of pre-tax
income for the year ended December 31, 2001. The Company has
implemented several tax strategies resulting in the reduction of
its effective tax rate by approximately 25.0 percent compared to
only two years ago.
Chairman Prisby stated, "The last quarter of 2002 completed
a year of critical improvement in Citizens' operations. With
commercial loan production of $370.6 million, home equity loan
production of $36.8 million, new deposit product development, two
strategically located new offices in Illinois communities, one
office relocation, and another office closure, Citizens has made
significant strides in its balance sheet reconfiguration and its
ongoing geographic evaluations. We believe this transformation
will effectively increase long-term shareholder value."
Prisby also stated, "Despite the struggling economy and
persistent low interest rate environment, our stock performance
was relatively stable this past year. Over ten million shares
have been repurchased since our initial public offering in July
of 1998."
CFS Bancorp, Inc. is the parent of Citizens Financial
Services, FSB. Citizens Financial Services, provides community
banking services and currently operates 24 offices throughout
adjoining markets in Chicago's Southland and Northwest Indiana.
The Company's common stock trades on The Nasdaq Stock Market
under the symbol "CITZ."
This press release contains certain forward-looking
statements and information relating to the Company that are 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 the anticipated positive net earnings effect of the
reconfiguration of the balance sheet and loan portfolio, reduced
borrowings, tax strategies, overdraft protection program, new
office locations, divestiture of the insurance agency, change in
delivery method of investment products, general economic
conditions, interest rate levels, marketing, branding, image and
sales initiatives, and the process improvement program. In
addition, the words "anticipate," "believe," "estimate,"
"expect," "intend," "should" and similar
CFS Bancorp, Inc. - Page 4 of 7
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
views of the Company with respect to future events and are
subject to certain risks, uncertainties and assumptions. Should
one or more of these risks or uncertainties materialize or should
underlying assumptions prove incorrect, actual results 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 DATA FOLLOWS.
CFS Bancorp, Inc. - Page 5 of 7
CFS BANCORP, INC.
Consolidated Statements of Financial Condition
(Dollars in thousands)
December 31,
------------
2002 2001
------ ----
(Unaudited)
ASSETS
Cash and amounts due from depository institutions $30,312 $28,250
Interest-bearing deposits 105,479 137,978
Federal funds sold 74,350 105,839
------- -------
Cash and cash equivalents 210,141 272,067
Investment securities available-for-sale 39,064 47,225
Mortgage-related securities available-for-sale 296,638 276,158
Mortgage-related securities held-to-maturity
(fair value 2002-$21,977; 2001-$37,744) 21,402 37,034
Loans receivable, net 930,348 883,352
Investment in Federal Home Loan Bank stock, at cost 25,780 26,165
Office properties and equipment 13,835 14,983
Accrued interest receivable 6,597 6,887
Real estate owned 893 1,128
Investment in Bank-owned life insurance 31,009 30,052
Prepaid expenses and other assets 9,055 9,083
--------- ---------
Total assets $1,584,762 $1,604,134
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $954,222 $945,948
Borrowed money 449,431 462,658
Advance payments by borrowers for taxes and insurance 4,410 4,497
Other liabilities 16,037 19,747
--------- ---------
Total liabilities 1,424,100 1,432,850
--------- ---------
Stockholders' Equity:
Preferred stock, $.01 par value:
Authorized shares - 15,000,000
Issued and outstanding shares - 0
at December 31, 2002 and 2001
Common stock, $.01 par value:
Authorized shares - 85,000,000
Issued shares - 23,423,306 at
December 31, 2002 and 2001
Outstanding shares - 12,674,597 and 13,626,146
at December 31, 2002 and 2001, respectively 234 234
Additional paid-in capital 189,786 189,547
Retained earnings, substantially restricted 107,598 105,064
Treasury stock, at cost: 10,748,709 and 9,797,160
shares at December 31, 2002 and 2001,
respectively (125,650) (112,167)
Unearned common stock acquired by ESOP (8,356) (9,570)
Unearned common stock acquired by RRP (2,827) (4,543)
Accumulated other comprehensive income (loss),
net of tax (123) 2,719
------- -------
Total stockholders' equity 160,662 171,284
------- -------
Total liabilities and stockholders' equity $1,584,762 $1,604,134
========= =========
CFS Bancorp, Inc. - Page 6 of 7
CFS BANCORP, INC.
Consolidated Statements of Income
(Dollars in thousands, except per share data)
(Unaudited, except for the twelve months ended December 31, 2001)
For Three Months Ended For Twelve Months Ended
---------------------- -----------------------
December 31, December 31,
------------ ------------
2002 2001 2002 2001
---- ---- ---- ----
<s> <c> <c> <c> <c>
Interest income:
Loans $15,563 $16,357 $62,719 $71,063
Mortgage-related securities 3,438 4,613 17,491 21,270
Other investment securities 458 621 1,720 8,169
Other 949 1,686 4,631 7,605
------ ------ ------ -------
Total interest income 20,408 23,277 86,561 108,107
Interest expense:
Deposits 6,018 8,686 25,717 40,847
Borrowings 6,768 6,953 27,351 29,441
------ ------ ------ ------
Total interest expense 12,786 15,639 53,068 70,288
Net interest income before ------ ------ ------ ------
provision for losses on loans 7,622 7,638 33,493 37,819
Provision for losses on loans 906 -- 1,956 1,150
Net interest income after ------ ----- ------ ------
provision for losses on loans 6,716 7,638 31,537 36,669
Non-interest income:
Loan fees 371 387 1,393 1,319
Deposit fees 1,435 763 4,112 2,563
Insurance commissions 252 323 1,210 1,067
Investment commissions 38 227 770 873
Net gain on sale of investment securities 18 6 299 599
Gain on sale of branches -- -- -- 2,014
Gain on sale of insurance agency 1,084 -- 1,084 --
Income from Bank-owned life insurance 390 402 1,524 1,500
Other income 346 290 921 793
----- ----- ------ ------
Total non-interest income 3,934 2,398 11,313 10,728
Non-interest expense:
Compensation and employee benefits 4,925 4,842 20,070 19,028
Net occupancy expense 501 584 2,362 2,471
Furniture and equipment expense 485 525 1,925 2,037
Data processing 410 483 1,743 1,448
Federal insurance premiums 38 46 164 183
Marketing 277 305 904 853
Other general and administrative expenses 1,476 1,299 5,506 5,413
----- ----- ------ ------
Total non-interest expense 8,112 8,084 32,674 31,433
----- ----- ------ ------
Income before income taxes 2,538 1,952 10,176 15,964
Income tax expense 696 413 2,971 4,791
----- ----- ------ ------
Net income $1,842 $1,539 $7,205 $11,173
===== ===== ===== ======
Per share data:
Basic earnings per share $0.16 $0.13 $0.60 $0.80
Diluted earnings per share 0.15 0.12 0.58 0.77
Cash dividends declared per share 0.10 0.09 0.40 0.36
Weighted average shares outstanding 11,728,289 12,271,429 12,000,589 14,038,096
Weighted average diluted shares outstanding 12,199,647 12,773,600 12,492,149 14,453,344
CFS Bancorp, Inc. - Page 7 of 7
CFS BANCORP, INC.
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
(Unaudited)
At At
December 31, 2002 December 31, 2001
----------------- -----------------
SELECTED FINANCIAL CONDITION DATA
<s> <c> <c>
Common shares outstanding 12,674,597 13,626,146
Stockholders' equity per outstanding share $12.68 $12.57
Stockholders' equity to total assets 10.14 % 10.68 %
Regulatory capital ratios (Bank only):
Tangible capital 8.42 8.48
Core capital 8.42 8.48
Risk-based capital 13.97 15.40
Non-performing loans $15,325 $13,874
Non-performing assets 16,218 15,002
Allowance for losses on loans 8,674 7,662
Non-performing loans to total loans 1.63 % 1.56 %
Non-performing assets to total assets 1.02 0.94
Allowance for losses on loans to non-performing loans 56.60 55.23
Allowance for losses on loans to total loans 0.92 0.86
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------ -------------------
SELECTED OPERATIONS DATA 2002 2001 2002 2001
-------- ------ ------ ------
<s> <c> <c> <c> <c>
Average balance data:
Total assets $1,615,497 $1,619,715 $1,601,112 $1,687,575
Loans receivable 931,313 900,706 916,553 942,576
Interest-earning assets 1,534,372 1,536,776 1,520,484 1,604,935
Deposits 934,608 921,375 911,391 937,193
Interest-bearing liabilities 1,386,449 1,384,143 1,370,255 1,431,830
Stockholders' equity 163,595 171,397 167,657 191,876
Ratios (annualized where appropriate):
Return on average assets 0.46 % 0.38 % 0.45 % 0.66 %
Return on average equity 4.50 3.59 4.30 5.82
Average yield on interest-earning assets 5.32 6.06 5.69 6.74
Average cost on interest-bearing liabilities 3.69 4.52 3.87 4.91
Interest rate spread 1.63 1.54 1.82 1.83
Net interest margin 1.99 1.99 2.20 2.36
Average interest-earning assets to
average interest-bearing liabilities 110.67 111.03 110.96 112.09
Non-interest expense to average assets 2.01 2.00 2.04 1.86
Efficiency ratio 77.60 80.60 75.25 68.43