UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
FORM 11-K
(Mark One):
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to ___________
Commission file number: 0-24611
A. Full title of the plan and address of the plan, if different
from that of the issuer named below:
Citizens Financial Services, FSB Employees' Savings & Profit
Sharing Plan and Trust
B. Name of issuer of the securities held pursuant to the plan
and the address of its principal executive office:
CFS Bancorp, Inc.
707 Ridge Road
Munster, Indiana 46371
REQUIRED INFORMATION
Financial Statements. The following financial statements
and schedule are filed as part of this annual report for the
Citizens Financial Services, FSB Employees' Savings & Profit
Sharing Plan and Trust (the "Plan"):
Page No.
--------
Report of Independent Registered Public Accounting Firm..............1
Financial Statements
Statements of Net Assets Available for Benefits.................2
Statements of Changes in Net Assets Available for Benefits......3
Notes to Financial Statements...................................4
Supplemental Schedule
Schedule H, Line 4 - Schedule of Assets (Held at End of Year)...9
Report of Independent Registered Public Accounting Firm
Plan Administrators
Citizens Financial Services, FSB Employees'
Savings & Profit Sharing Plan and Trust
We have audited the accompanying statements of net assets available for
benefits of Citizens Financial Services, FSB Employees' Savings & Profit
Sharing Plan and Trust (the Plan) as of December 31, 2003 and 2002, and the
related statements of changes in net assets available for benefits for the
years then ended. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatements. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 2003 and 2002, and the changes in its net assets available for
benefits for the years then ended, in conformity with U.S. generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the
financial statements taken as a whole. The accompanying supplemental schedule
of assets (held at end of year) as of December 31, 2003, is presented for
purposes of additional analysis and is not a required part of the financial
statements but is supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in our audits of the financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Ernst & Young LLP
May 25, 2004
1
Citizens Financial Services, FSB
Employees' Savings & Profit Sharing Plan and Trust
Statements of Net Assets Available for Benefits
December 31
2003 2002
------------------------
Assets
Investments, at fair value:
CFS Bancorp, Inc. common stock $4,174,946 $4,591,630
Collective investment funds 5,606,826 3,977,353
Short-term investment fund 193,515 136,016
Participant loans 205,574 263,633
-------------------------
Total investments 10,180,861 8,968,632
Receivables:
Employer's contribution 5,706 13,115
Participants' contributions 15,675 38,129
Dividends 31,030 32,109
Other 3,331 55,721
-------------------------
Total receivables 55,742 139,074
-------------------------
Total assets 10,236,603 9,107,706
Liabilities
Accounts payable 4,795 42,158
-------------------------
Net assets available for benefits $10,231,808 $9,065,548
=========================
See notes to financial statements.
2
Citizens Financial Services, FSB
Employees' Savings & Profit Sharing Plan and Trust
Statements of Changes in Net Assets Available for Benefits
Year ended December 31,
2003 2002
-----------------------
<s> <c> <c>
Additions
Contributions:
Participants $ 742,352 $ 783,522
Employer 223,053 260,707
----------------------
Total contributions 965,405 1,044,229
Investment income (loss):
Dividend and interest income 145,411 158,885
Net realized and unrealized appreciation (depreciation)
in fair value of investments 1,099,204 (550,735)
----------------------
Total investment income (loss) 1,244,615 (391,850)
----------------------
Total additions 2,210,020 652,379
Deductions
Distributions to participants 992,760 855,105
Administrative expenses 51,000 48,308
----------------------
Total deductions 1,043,760 903,413
----------------------
Net increase (decrease) in assets available for benefits 1,166,260 (251,034)
Net assets available for benefits at beginning of year 9,065,548 9,316,582
-----------------------
Net assets available for benefits at end of year $10,231,808 $9,065,548
=======================
See notes to financial statements.
3
Citizens Financial Services, FSB
Employees' Savings & Profit Sharing Plan and Trust
Notes to Financial Statements
December 31, 2003 and 2002
1. Description of the Plan
The following description of the Citizens Financial Services, FSB Employees'
Savings & Profit Sharing Plan and Trust (the Plan) is provided for general
information purposes only. Participants should refer to the Plan document for
more complete information.
General
The Plan, adopted by Citizens Financial Services, FSB (the Bank) on April 30,
1998, and effective on May 1, 1998, is a single employer defined-contribution
plan. Effective March 1, 2000, the Suburban Federal Savings 401(k) Plan was
merged into the Plan. Eligible participants of Suburban Federal Savings, FSB
became participants in the Plan and were granted credit for certain prior
service under the terms of the Plan for purposes of eligibility and vesting.
The Plan allows all employees of the Bank and its subsidiaries to participate
after meeting certain age and service requirements. To be eligible to
participate in the Plan, an employee must have attained the age of 21 and
completed 1,000 hours of service during a 12 consecutive month period. The
Plan is subject to certain provisions of the Employee Retirement Income
Security Act of 1974 (ERISA) and is intended to qualify as a salary reduction
plan under Section 401(k) of the Internal Revenue Code, as amended by the Tax
Reform Act of 1986 (the Code).
Contributions
The Bank contributes and allocates to each participant's account the amount
withheld from each participant's compensation (employee contributions)
pursuant to his or her elective deferral agreement and within a range
specified by the Plan. The Bank matches 50% of each participant's
contributions to the Plan up to the first 6% of each participant's
compensation. The Employer may make discretionary contributions to the Plan.
Upon enrollment, participants may direct their contributions, and related
matching contributions, in any of the Plan's investment options.
4
Citizens Financial Services, FSB
Employees' Savings & Profit Sharing Plan and Trust
Notes to Financial Statements (continued)
1. Description of the Plan (continued)
Participant Accounts
Each participant's account is credited with the participant's contribution,
the Bank's matching contribution, and an allocation of Plan earnings and is
charged with an allocation of administrative expenses. Plan earnings from each
investment fund option are allocated to participants based on their
proportionate share of total assets in that investment fund option.
Vesting
Participants immediately vest in both their employee contributions and the
Bank's matching contributions and any related earnings thereon.
Payment of Benefits
Payment of benefits to a participant who terminates employment or becomes
disabled may be made in a lump sum, in annual installments over a specified
period, or rolled into another qualified plan. A participant also may elect
to defer distribution of his or her account until attaining age 70 1/2.
Payment of benefits to the beneficiary of a deceased participant may also be
made in the form of a lump-sum payment, annual installments over a specified
period, or rolled into another qualified plan.
Participant Loans
Under the Plan, participants may borrow up to one-half of their account
balance in any amount between $1,000 and $50,000. The rate of interest for
the term of the loan will be established as of the loan date and shall be a
reasonable rate of interest generally comparable to the rates of interest
then in effect at a major banking institution. The repayment period is
between 1 and 15 years for loans used exclusively for the purchase of a
primary residence or 1 and 5 years for all other loans, at the participant's
option. Repayments are made through payroll deductions. When a loan is made,
the amount borrowed is transferred from the participant's deposit account to
the participant's loan account. An origination fee of $50.00, plus an annual
administrative fee of $40.00 is deducted from the participant's account at
the time the loan is originated. Subsequent annual administrative fees will
be deducted from the participant's account each year on or about the
anniversary of the loan origination. Loan repayments, including interest, are
immediately invested in the participant's deposit account.
5
Citizens Financial Services, FSB
Employees' Savings & Profit Sharing Plan and Trust
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires the plan administrator to make
estimates that affect amounts reported in the financial statements and
accompanying notes. Actual results may differ from those estimates.
Reclassifications
Certain reclassifications have been made to the 2002 financial statements to
conform to the 2003 presentation.
Investment Valuation and Income Recognition
The Plan's investments are stated at fair value. Collective investment funds
are valued at quoted market prices, which represent the net asset value of
shares held by the Plan at year-end. The common stock is valued at its quoted
market price. Participant notes receivable are valued at cost, which
approximates fair value.
Purchases and sales of investments are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are recorded on
the declaration date.
Payment of Benefits
Benefits are recorded when paid.
3. Investments
In conjunction with the Bank's conversion from a mutual to a stock form of
ownership, the Plan utilized existing funds to purchase common stock of CFS
Bancorp, Inc., the Bank's Holding Company (the Company). At the date of
conversion, the Plan purchased 307,232 shares of stock at $10.00 per share
for participants indicating a desire to purchase stock in the Company.
Additional employee and Bank contributions and cash dividends are utilized to
purchase additional shares on a regular basis.
At December 31, 2003 and 2002, the Plan was the beneficial owner of 282,091
shares and 321,093 shares of Company common stock, respectively. The fair
value of this stock at December 31, 2003 and 2002 was $14.80 per share and
$14.30 per share, respectively.
6
Citizens Financial Services, FSB
Employees' Savings & Profit Sharing Plan and Trust
Notes to Financial Statements (continued)
3. Investments (continued)
During 2003 and 2002, the Plan's investments (including investments purchased,
sold as well as held during the year) appreciated (depreciated) in fair value
as determined by quoted market prices as follows:
Year ended December 31,
2003 2002
-----------------------
CFS Bancorp, Inc. common stock $ 122,331 $ (28,126)
Collective investment funds 976,873 (522,609)
-----------------------
$ 1,099,204 $ (550,735)
=======================
The fair value of individual investments that represent 5% or more of the
Plan's net assets is as follows:
2003 2002
---------------------
CFS Bancorp, Inc. common stock $4,174,946 $4,591,630
Pentegra S&P 500 Stock Fund 1,632,813 1,190,989
Pentegra S&P Midcap Stock Fund 1,271,230 869,433
Pentegra Stable Value Fund 954,207 822,408
4. Plan Termination
Although it has not expressed any intent to do so, the Bank has the right
under the Plan to discontinue its contribution at any time and to terminate
the Plan, subject to the provisions of ERISA.
5. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service
(IRS) dated December 2, 2003, stating that the Plan is qualified under Section
401 (a) of the Code, and, therefore, the related trust is exempt from
taxation. The Plan was amended subsequent to the IRS determination letter.
Once qualified, the Plan is required to operate in conformity with the Code
to maintain its qualification. The Plan administrator believes the Plan is
being operated in compliance with the applicable requirements of the Code,
and therefore believes that the Plan, as amended, is qualified and the related
trust is tax-exempt.
7
Citizens Financial Services, FSB
Employees' Savings & Profit Sharing Plan and Trust
Notes to Financial Statements (continued)
6. Subsequent Event
Effective January 1, 2004, the Bank amended the eligibility requirements of
the Plan. An employee may contribute to the Plan after completing 250 hours
of service during a three consecutive month period. An employer match begins
after completing 1,000 hours of service during a 12 consecutive month period.
The employee still must have attained the age of 21 to be eligible to
participate.
8
Supplemental Schedule
EIN 13-3381592
Plan #002
Citizens Financial Services, FSB
Employees' Savings & Profit Sharing Plan and Trust
Schedule H, Line 4i - Schedule of Assets
(Held at End of Year)
December 31, 2003
Identity of Issue, Borrower, Current
or Similar Party Description Value
- ------------------------------------------------------------------------------
CFS Bancorp, Inc. common stock* 282,091 Shares $ 4,174,946
Pentegra S&P 500 Stock Fund 106,303 Units 1,632,813
Pentegra S&P Midcap Stock Fund 58,744 Units 1,271,230
Pentegra Stable Value Fund 64,801 Units 954,207
Pentegra Money Market Fund 358,308 Units 358,308
Pentegra Russell 2000 Stock Fund 24,763 Units 338,259
Pentegra Government Bond Fund 12,572 Units 220,258
Collective Short Term Investment Fund 193,515 Units 193,515
Pentegra 500 Growth Stock Fund 22,687 Units 186,259
Pentegra International Stock Fund 9,772 Units 172,867
Pentegra Growth Asset Allocation Fund 11,480 Units 152,686
Pentegra Growth & Income Asset Allocation Fund 9,908 Units 140,792
Pentegra 500 Value Stock Fund 12,248 Units 128,356
Pentegra Income Plus Asset Allocation Fund 3,496 Units 50,791
Participant loans (interest rates of 5.0% to 10.5%) 205,574
----------
$10,180,861
==========
*Denotes party in interest.
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees for the Plan have duly caused this annual report to be
signed by the undersigned hereunto duly authorized.
CITIZENS FINANCIAL SERVICES,
FSB EMPLOYEES' SAVINGS &
PROFIT SHARING PLAN AND TRUST
June 24, 2004 By: /s/ Thomas F. Prisby
----------------------------------
Thomas F. Prisby
Plan Administrator
INDEX TO EXHIBITS
Number Description
------ --------------------------------------------------------
23 Consent of Independent Registered Public Accounting Firm