Exhibit 99.1
[CFS BANCORP, INC. LETTERHEAD]
April 28, 2003
FOR IMMEDIATE RELEASE
CONTACT: Thomas F. Prisby, Chairman of the Board and Chief Executive Officer
2l9-836-5500
CFS Bancorp, Inc. Announces First Quarter Results
MUNSTER, IN - April 28, 2003 - CFS Bancorp, Inc. (NASDAQ: CITZ)
(Company), the parent holding company for Citizens Financial Services,
FSB (Bank), today reported first quarter net income of $654,000 or
$0.06 per share. This compares to net income for the first quarter of
2002 of $1.6 million or $0.12 per share.
Net interest income for the first quarter of 2003 was $6.8
million compared to $8.0 million reported for the same period in 2002.
This decrease in net interest income reflects the compression of
interest rate spreads and net interest margins between the first
quarter of 2002 and the first quarter of 2003 reflecting in large part
the effects of the declining interest rate environment experienced
during the past two years. Also contributing to the decrease in net
interest income, when comparing the first quarter of 2003 to the first
quarter of 2002, was the acceleration of prepayments of mortgage loans
underlying mortgage-backed securities. Many of these securities were
purchased at a premium to par. These premiums were amortized against
income based on an assumed level yield. As prepayments and repayments
of the underlying mortgages accelerated, the rate of amortization of
these premiums was accelerated, resulting in approximately $550,000 of
additional premiums being amortized against income over and above
scheduled amounts during the first quarter of 2003.
The Company's interest income was $18.6 million and $22.0 million
for the three months ended March 31, 2003 and 2002, respectively. The
average balances of both loans receivable and securities increased
while the average balance of other interest-earning assets decreased
when comparing the first quarter of 2003 to the first quarter of 2002.
Increased interest income resulting from the increases in average
balances was more than offset by the reduction in average yields on
all interest-earning categories in the first quarter of 2003 when
compared to the first quarter of 2002.
Interest expense was $11.8 million and $14.0 million for the
three months ended March 31, 2003 and 2002, respectively. Average
balances of checking and savings accounts increased during the three
months ended March 31, 2003 compared to the three months ended March
31, 2002, while the average balances of certificates of deposit and
borrowings decreased when comparing these same periods. The resultant
net increase in average balances was more than offset by the reduction
in average costs paid on all interest-bearing liabilities during the
first quarter of 2003 when compared to the first quarter of 2002.
The Company's provision for loan losses for the three months
ended March 31, 2003 was $478,000 compared to $200,000 for the same
period in 2002. The Company continued to increase its allowance for
losses on loans as a percentage of total loans. The Company believes
this to be prudent based on the present economy and the Company's
strategy of increasing the ratio of multi-family and commercial real
estate mortgage loans and commercial loans to total loans. Included
in the 2003 provision is $28,000 relating to overdrafts of deposit
products from a new program which began in the third quarter of 2002.
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CFS Bancorp, Inc - Page 2 of 6
Non-interest income for the three months ended March 31, 2002 was
$2.3 million compared to $2.2 million for the same period in 2002.
There was no income from insurance commissions during the first
quarter of 2003 compared to $288,000 during the first quarter of 2002
as a result of the sale of the insurance agency's assets during the
fourth quarter of 2002. Income from investment commissions was
$126,000 during the three months ended March 31, 2003 compared to
$262,000 for the three months ended March 31, 2002. This change
reflects the Company's decision to outsource the sale of non-deposit
products beginning in August 2002. Although the commission income
during the first quarter of 2003 was less than 2002, due to changing
operations in the area of non-deposit products, the Company was able
to eliminate most expenses related to insurance and investment
commissions. Non-interest expense related to insurance commissions in
the three months ended March 31, 2003 was $0 compared to $321,000 for
the three months ended March 31, 2002. Non-interest expense for the
three months ended March 31, 2003 pertaining to investment commissions
was $13,000 compared to $267,000 for the same period in 2002. There
were no gains on the sale of investment securities during the first
quarter of 2003 compared to $247,000 during the first quarter of 2002.
These reductions of income during the first quarter of 2003 when
compared to the first quarter of 2002 were offset by increased fees on
deposit accounts. Income from these fees during the three months
ended March 31, 2003 was $1.1 million compared to $538,000 for the
three months ended March 31, 2002.
Non-interest expense for the three months ended March 31, 2003
was $7.6 million compared to $7.8 million for the same period in 2002.
Compensation and employee benefits were $4.4 million for the first
quarter of 2003 compared to $5.0 million for the same period in 2002.
The primary reason for the reduction in compensation and benefit
expense was the efficiency realized by the Company upon the
restructuring of its non-depository product functions as described in
the preceding paragraph. This reduction was partially offset by
increases in other areas.
Income tax expense was $313,000 for the three months ended March
31, 2003 compared to $661,000 for the same period in 2002. This
decrease is primarily due to reduced income in the first quarter of
2003 compared to the first quarter of 2002. The effective tax rate
for all of 2003 is expected to approximate that of 2002.
Chairman Thomas F. Prisby stated, "The current rate environment
continues to have a significant effect on our earnings. As rates
rebound, we expect net interest income and most other financial ratios
to improve; we also anticipate we will then reap the benefits of our
current investment and lending strategies.
"High levels of liquidity and high-rate Federal Home Loan Bank
borrowings continue to have the greatest negative impact on current
earnings. We will continue our efforts to improve the asset
composition with additional investments in quality loans and
securities. As residential loan repayments continue to slow from the
35% level of 2002 and the first quarter of 2003, excess liquidity is
expected to be absorbed through normal operations."
CFS Bancorp, Inc. is the parent of Citizens Financial Services,
FSB. Citizens Financial Services provides community banking services
and operates 20 offices throughout adjoining markets in Chicago's
Southland and Northwest Indiana. The Company's stock trades on the
Nasdaq National Stock Market under the symbol "CITZ."
The 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
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CFS Bancorp, Inc. - Page 3 of 6
currently available to management. These forward-looking statements
include but are not limited to statements regarding the positive net
earnings effect of a change in interest rate environment, the
anticipated tax rate for 2003, and the anticipated rate of loan
repayments. In addition, the words "anticipate," "believe," "estimate,"
"expect," "indicate" "intent," "should," and similar 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. One or
more of these risks 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 4 of 6
CFS BANCORP, INC.
Consolidated Statements of Financial Condition
(Dollars in thousands)
March 31, 2003 December 31, 2002
-------------- -----------------
(Unaudited)
ASSETS
<s> <c> <c>
Cash and amounts due from depository institutions $14,272 $30,312
Interest-bearing deposits 114,104 105,479
Federal funds sold 86,585 74,350
------- -------
Cash and cash equivalents 214,961 210,141
Investment securities available-for-sale 66,492 39,064
Mortgage-backed securities available-for-sale 260,493 296,638
Mortgage-backed securities held-to-maturity
(fair value 2003 - $21,156; 2002 - $21,977) 20,577 21,402
Loans receivable, net 947,321 930,348
Investment in Federal Home Loan Bank stock, at cost 25,780 25,780
Office properties and equipment 13,494 13,835
Accrued interest receivable 6,899 6,597
Real estate owned 204 893
Investment in Bank-owned life insurance 31,371 31,009
Prepaid expenses and other assets 9,235 9,055
------ ------
Total assets $1,596,827 $1,584,762
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $968,284 $954,222
Borrowed money 449,401 449,431
Advance payments by borrowers for taxes and insurance 6,547 4,410
Other liabilities 17,505 16,037
------ ------
Total liabilities 1,441,737 1,424,100
--------- ---------
Stockholders' Equity:
Preferred stock, $.01 par value:
Authorized shares - 15,000,000
Issued and outstanding shares - 0
at March 31, 2003 and December 31, 2002
Common stock, $.01 par value:
Authorized shares - 85,000,000
Issued shares - 23,423,306
at March 31, 2003 and December 31, 2002
Outstanding shares - 12,267,197 and 12,674,597
at March 31, 2003 and December 31, 2002, respectively 234 234
Additional paid-in capital 189,699 189,786
Retained earnings, substantially restricted 107,058 107,598
Treasury stock, at cost: 11,156,109 and 10,748,709 shares
at March 31, 2003, and December 31, 2002, respectively (131,508) (125,650)
Unearned common stock acquired by ESOP (8,356) (8,356)
Unearned common stock acquired by RRP (2,827) (2,827)
Accumulated other comprehensive income (loss), net of tax 790 (123)
------- -------
Total stockholders' equity 155,090 160,662
------- -------
Total liabilities and stockholders' equity $1,596,827 $1,584,762
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CFS Bancorp, Inc. - Page 5 of 6
CFS BANCORP, INC.
Consolidated Statements of Income
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended March 31,
----------------------------
2003 2002
Interest income: ---- ----
Loans $15,240 $15,588
Mortgage-backed securities 2,047 4,666
Other investment securities 469 333
Other 847 1,391
------ ------
Total interest income 18,603 21,978
Interest expense:
Deposits 5,225 7,215
Borrowings 6,600 6,798
----- -----
Total interest expense 11,825 14,013
------ ------
Net interest income before
provision for losses on loans 6,778 7,965
Provision for losses on loans 478 200
------ ------
Net interest income after
provision for losses on loans 6,300 7,765
Non-interest income:
Loan fees 361 405
Fees on deposit accounts 1,117 538
Insurance commissions -- 288
Investment commissions 126 262
Net gain on sale of investment securities -- 247
Income from Bank-owned life insurance 362 348
Other income 284 158
----- -----
Total non-interest income 2,250 2,246
Non-interest expense:
Compensation and employee benefits 4,439 4,996
Net occupancy expense 622 595
Furniture and equipment expense 477 462
Data processing 429 352
Federal insurance premiums 42 44
Marketing 199 158
Other general and administrative expenses 1,375 1,179
----- -----
Total non-interest expense 7,583 7,786
----- -----
Income before income taxes 967 2,225
Income tax expense 313 661
---- -----
Net income $654 $1,564
=== =====
Per share data:
Basic earnings per share $0.06 $0.13
Diluted earnings per share 0.06 0.12
Cash dividends declared per share 0.11 0.10
Weighted average shares outstanding 11,348,576 12,175,537
Weighted average diluted shares outstanding 11,815,045 12,670,862
CFS Bancorp, Inc. - Page 6 of 6
CFS BANCORP, INC.
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended March 31,
----------------------------
2003 2002
SELECTED FINANCIAL CONDITION DATA ---- ----
Common shares outstanding 12,267,197 13,401,696
Stockholders' equity per outstanding share $12.64 $12.48
Stockholders' equity to total assets 9.71 % 10.57 %
Capital ratios (Bank only):
Tangible capital 8.36 8.51
Core capital 8.36 8.51
Risk-based capital 13.46 15.30
Non-performing loans $16,859 $13,571
Non-performing assets 17,063 14,987
Allowance for losses on loans 9,154 7,874
Non-performing loans to total loans 1.76 % 1.48 %
Non-performing assets to total assets 1.07 0.95
Allowance for losses on loans to non-performing loans 54.30 58.02
Allowance for losses on loans to total loans 0.96 0.86
Three Months Ended March 31,
----------------------------
2003 2002
Average balance data: ---- ----
Total assets $1,596,827 $1,604,746
Loans receivable 944,634 890,218
Interest-earning assets 1,517,942 1,514,998
Deposits 925,130 908,019
Interest-bearing liabilities 1,374,536 1,370,654
Stockholders' equity 155,089 170,749
Ratios (annualized):
Return on average assets 0.16 % 0.39 %
Return on average equity 1.69 3.66
Average yield on interest-earning assets 4.90 5.80
Average cost on interest-bearing liabilities 3.44 4.09
Interest rate spread 1.46 1.71
Net interest margin 1.79 2.10
Average interest-earning asset to
average interest-bearing liabilities 110.43 110.53
Non-interest expense to average assets 1.90 1.94
Efficiency ratio 84.01 78.13