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, 2004
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
Citizens Financial Services, FSB Employees' Savings
& Profit Sharing Plan and Trust
December 31, 2004 and 2003
Contents
Report of Independent Registered Public Accounting Firm...................1
Report of Independent Registered Public Accounting Firm...................2
Financial Statements
Statements of Net Assets Available for Benefits........................3
Statements of Changes in Net Assets Available for Benefits.............4
Notes to Financial Statements..........................................5
Supplemental Schedule
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)........10
Report of Independent Registered Public Accounting Firm
Plan Administrator
Citizens Financial Services, FSB Employees' Savings & Profit Sharing Plan and
Trust
Munster, Indiana
We have audited the accompanying statement of net assets
available for benefits of Citizens Financial Services, FSB
Employees' Savings & Profit Sharing Plan and Trust (the "Plan")
as of December 31, 2004 and the related statement of changes in
net assets available for benefits for the year 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 audit. The financial statements
of Citizens Financial Services, FSB Employees' Savings & Profit
Sharing Plan and Trust as of and for the year ended December 31,
2003, were audited by other accountants whose report dated May
25, 2004, expressed an unqualified opinion on those statements.
We conducted our audit 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 misstatement. 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 audit provides 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 as of December 31, 2004, and
the changes in its net assets available for benefits for the year
ended December 31, 2004 in conformity with U.S. generally
accepted accounting principles.
Our audit of the Plan's financial statements as of and for the
year ended December 31, 2004, was made for the purpose of forming
an opinion on the financial statements taken as a whole. The
accompanying supplemental schedule is presented for the purpose
of additional analysis and is not a required part of the basic
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 the audits of the basic
financial statements and, in our opinion, is fairly stated, in
all material respects, in relation to the basic financial
statements taken as a whole.
/s/ BKD, LLP
Merrillville, Indiana
June 13, 2005
Federal Employer Identification Number: 44-0160260
1
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 as of December
31, 2003, and the related statements of changes in net assets
available for benefits for the year 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 audit 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 misstatement. We were not engaged to perform an
audit of the Plan's internal control over financial reporting.
Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures
that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the
Plan's internal control over financial reporting. Accordingly,
we express no such opinion. An audit also includes examining, on
a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating
the overall financial statement presentation. We believe that
our audit provides 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 the
changes in its net assets available for benefits for the year
then ended, in conformity with U.S. generally accepted accounting
principles.
/s/ Ernst & Young LLP
Chicago, Illinois
May 25, 2004
2
Citizens Financial Services, FSB Employees' Savings
& Profit Sharing Plan and Trust
Statements of Net Assets Available for Benefits
December 31, 2004 and 2003
2004 2003
-----------------------------
Assets
Investments, at fair value:
CFS Bancorp, Inc. common stock $ 3,045,361 $ 4,174,946
Collective investment funds 7,818,539 5,606,826
Short-term investment fund 171,350 193,515
Participant loans 272,433 205,574
---------- ----------
Total investments 11,307,683 10,180,861
Receivables
Employer contributions receivable - 5,706
Employee contributions receivable - 15,675
Dividends 23,475 31,030
Amount receivable for securities sold 7,071 3,331
---------- ----------
Total receivables 30,546 55,742
---------- ----------
Total assets 11,338,229 10,236,603
Liabilities
Amount payable for securities purchased 11,530 4,795
---------- ----------
Net Assets Available for Benefits $ 11,326,699 $ 10,231,808
========== ==========
See Notes to Financial Statements
3
Citizens Financial Services, FSB Employees' Savings
& Profit Sharing Plan and Trust
Statements of Changes in Net Assets Available for Benefits
Years Ended December 31, 2004 and 2003
2004 2003
----------------------
Investment income
Net appreciation in fair value of investments $ 560,814 $ 1,099,204
Interest and dividend income 126,796 145,411
---------- ----------
Net investment income 687,610 1,244,615
Contributions
Employee 762,866 742,352
Employer 232,967 223,053
Rollovers 7,841 -
---------- ----------
1,003,674 965,405
---------- ----------
Total additions 1,691,284 2,210,020
Deductions
Benefits paid to participants 534,949 992,760
Administrative expenses 61,444 51,000
---------- ----------
Total deductions 596,393 1,043,760
Net Increase 1,094,891 1,166,260
Net Assets Available for Benefits, Beginning of Year 10,231,808 9,065,548
---------- ----------
Net Assets Available for Benefits, End of Year $ 11,326,699 $ 10,231,808
========== ==========
See Notes to Financial Statements
4
Citizens Financial Services, FSB Employees' Savings
& Profit Sharing Plan and Trust
Notes to Financial Statements
December 31, 2004 and 2003
Note 1: Description of Plan
The following description of Citizens Financial Services, FSB
Employees' Savings & Profit Sharing Plan and Trust (the Plan)
provides only general information. Participants should refer
to the Plan Document for a more complete description of the
Plan's provisions.
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. Prior to
January 1, 2004, 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.
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. 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). The Bank of New York
serves as Plan trustee.
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 of 1 to 12%
as 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. Upon enrollment,
participants may direct their contributions, and related
matching contributions, in any of the Plan's investment
options.
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.
5
Citizens Financial Services, FSB Employees' Savings
& Profit Sharing Plan and Trust
Notes to Financial Statements
December 31, 2004 and 2003
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.
Note 2: Summary of Significant Accounting Policies
Valuation of Investments 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.
6
Citizens Financial Services, FSB Savings & Profit Sharing
Plan and Trust
Notes to Financial Statements
December 31, 2004 and 2003
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.
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.
Plan 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.
Payment of Benefits
Benefits are recorded when paid.
Note 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, 2004 and 2003, the Plan was the beneficial
owner of 213,410 shares and 282,091 shares of Company common
stock, respectively. The fair value of this stock at December
31, 2004 and 2003 was $14.27 per share and $14.80 per share,
respectively.
7
Citizens Financial Services, FSB Employees' Savings & Profit
Sharing Plan and Trust
Notes to Financial Statements
December 31, 2004 and 2003
During 2004 and 2003, 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:
2004 2003
__________________________
Investments at Fair Value as Determined by
Quoted Market Price
CFS Bancorp, Inc. common stock $(147,972) $ 122,331
Collective investment funds 708,786 976,873
________ _________
$ 560,814 $1,099,204
======== =========
The fair value of individual investments that represent 5% or more of the
Plan's net assets is as follows:
2004 2003
___________________________
CFS Bancorp, Inc. common stock $3,045,361 $4,174,946
Pentegra S&P 500 Stock Fund 2,062,356 1,632,813
Pentegra S&P Midcap Stock Fund 1,592,347 1,271,230
Pentegra Stable Value Fund (contract value) 1,271,516 954,207
Information on the Plan's investment in the Pentegra Stable Value Fund,
which invests in fully benefit-responsive guaranteed investment contract
is carried at contract value is as follows:
2004
_____________
Average yield 4.2%
Crediting interest at December 31 4.2%
Approximate fair value $ 1,287,000
Note 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.
8
Citizens Financial Services, FSB Employees' Savings & Profit
Sharing Plan and Trust
Notes to Financial Statements
December 31, 2004 and 2003
Note 5: Subsequent Event
Effective January 1, 2005, the Bank amended the employer
matching contributions and the available investment
directions of the Plan. The Bank will no longer make an
employer match contribution to the Plan. The Bank will
instead make an annual distribution equal to the amount the
eligible employees would have received as an employer match
under the Plan through the Bank's Employee Stock Ownership
Plan. The Bank also amended the Plan to exclude the CFS
Bancorp, Inc. common stock fund as an investment choice.
Eligible employees will no longer be able to make
contributions to or transfers into the Company's common
stock fund. Current investments held in the Company's
common stock fund do not have to be transferred.
9
Supplemental Schedule
Citizens Financial Services, FSB Employees' Savings & Profit
Sharing Plan and Trust
Plan Number 002
EIN 35-0227439
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2004
(a) (b) (c)
Identity of Issue, Description Current
Borrower, or of Value
Similar Party Investment
______________________________________________________________________________
Employer Common Stock
*CFS Bancorp, Inc. 213,410 shares $3,045,361
_________
Collective Investment Funds
Pentegra S&P 500 Stock Fund 121,101 Units 2,062,356
Pentegra S&P Midcap Stock Fund 63,063 Units 1,592,347
Pentegra Stable Value Fund 82,863 Units 1,271,516
Pentegra Growth & Income Asset Allocation Fund 33,830 Units 532,827
Pentegra Russell 2000 Stock Fund 29,667 Units 479,718
Pentegra Government Bond Fund 22,892 Units 437,458
Pentegra Growth Asset Allocation Fund 21,428 Units 324,204
Pentegra 500 Growth Stock Fund 33,653 Units 293,114
Pentegra International Stock Fund 13,708 Units 292,121
Pentegra 500 Value Stock Fund 20,466 Units 248,258
Pentegra Money Market Fund 162,878 Units 162,878
Pentegra Income Plus Asset Allocation Fund 7,789 Units 121,738
Pentegra NASDAQ 100 Index Fund 1 Unit 4
__________
7,818,539
Short Term Investment Fund
Collective Short Term Investment Fund 171,350 Units 171,350
Participant loans (interest rates of 5.0% to 10.5%) 272,433
__________
$11,307,683
==========
*Party in interest
10
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 29, 2005 By: /s/ Thomas F. Prisby
________________________________
Thomas F. Prisby
Plan Administrator
INDEX TO EXHIBITS
Number Description
___________ ________________________________________________________
23.1 Consent of Independent Registered Public Accounting Firm
23.2 Consent of Independent Registered Public Accounting Firm