SOURCE: CFS Bancorp, Inc.

February 08, 2010 16:00 ET

CFS Bancorp, Inc. Announces Net Income for the Fourth Quarter

MUNSTER, IN--(Marketwire - February 8, 2010) - CFS Bancorp, Inc. (NASDAQ: CITZ) (the Company), the parent of Citizens Financial Bank (the Bank), today reported net income of $2.0 million, or $0.19 per diluted share for the fourth quarter of 2009, compared to a net loss of $9.7 million, or $(0.95) per share for the fourth quarter of 2008. The results for the fourth quarter of 2009 were positively impacted by a lower provision for losses on loans, higher net interest income, and an increase in bank owned life insurance income when compared to the fourth quarter of 2008.

For the year ended December 31, 2009, the Company reported a net loss of $0.5 million, or $(0.05) per share, compared to a net loss of $11.3 million or $(1.10) per share for the year ended December 31, 2008.

Chairman's Comments

"While our overall level of earnings did not meet our expectations for the year, we are pleased to end the year with a profitable quarter. Increasing net interest income and a lower provision for loan losses were augmented by higher non-interest income and lower non-interest expense -- all significant positives as we enter 2010," said Thomas F. Prisby, Chairman & CEO. "With varying forecasts on the health of the economy, credit quality remains a major concern and our number one priority in 2010. Nonetheless, given the unprecedented challenges the entire banking industry faced in 2009, we are cautiously optimistic as we look to 2010," added Prisby. "The uncertainty over future economic conditions and industry-wide concerns over capital levels necessitates prudent capital management. As such, the Company elected to make a $1.75 million capital infusion into the Bank during the fourth quarter of 2009 in order to maintain internal capital ratio targets. Our capital ratios remain strong and we continue to be well-capitalized by all current regulatory capital standards."

"Progress on our Strategic Growth and Diversification Plan has continued at a consistent pace, although a little slower than we would otherwise have preferred as a result of the present economic conditions," added Prisby. "Looking back over the course of 2009, we have made significant progress in diversifying our loan portfolio by growing targeted segments and reducing loans not meeting our current defined risk tolerance. In addition, our renewed efforts to grow core deposits is improving and moving in the right direction. We continue to make solid strides in managing controllable costs which have been largely offset by increasing nondiscretionary costs."

Progress on Strategic Growth and Diversification Plan

The Company's Strategic Growth and Diversification Plan is built around four core objectives: decreasing non-performing loans; ensuring costs are appropriate given the Company's targeted future asset base; growing while diversifying by targeting small and mid-sized business owners for relationship-based banking opportunities; and expanding and deepening the Company's relationships with its clients by meeting a higher percentage of the clients' financial service needs.

The Company has continued to progress in attracting new business banking clients and deepening relationships with current clients. While the Company is doing a better job of controlling discretionary costs, higher nondiscretionary costs, including increased Federal Deposit Insurance Corporation (FDIC) assessments, credit collection related costs, costs related to shareholder matters, and professional fees have negated the overall financial impact of these controls. Growth remains a strategic priority, but in the current environment, the Company is willing to accept a slower rate of loan growth by focusing on high credit-quality borrowers and depositors.

Net Interest Income

Net interest margin increased ten basis points to 3.84% for the fourth quarter of 2009 from 3.74% for the third quarter of 2009 and 50 basis points from 3.34% for the fourth quarter of 2008. Net interest income for the fourth quarter of 2009 increased to $9.7 million compared to $9.4 million for the third quarter of 2009 and $8.7 million for the fourth quarter of 2008. Net interest income continues to be positively affected by lower interest rates on interest-bearing deposits and borrowed money due to lower market rates coupled with lower amortization of the premium on the early extinguishment of Federal Home Loan Bank (FHLB) debt.

Interest income decreased slightly to $12.5 million for the fourth quarter of 2009 compared to $12.6 million for the third quarter of 2009 and 9.4% from $13.8 million for the fourth quarter of 2008. Interest income was negatively affected during the fourth quarter of 2009 by an increase in non-performing assets. The decrease from the fourth quarter of 2008 was due to lower market rates of interest during the fourth quarter of 2009 coupled with a $10.3 million increase in non-performing assets since December 31, 2008.

Interest expense decreased 10.9% to $2.8 million for the fourth quarter of 2009 from $3.2 million for the third quarter of 2009 and 44.5% from $5.1 million for the fourth quarter of 2008. Interest expense on deposits was positively affected by disciplined pricing on deposits, including certificates of deposit, as current market interest rates remain lower than 2008. In addition, the amortization of the premium on the early extinguishment of FHLB debt decreased $0.2 million from the fourth quarter of 2008 and was fully amortized at December 31, 2009.

Non-Interest Income and Non-Interest Expense

Excluding available-for-sale securities gains and losses, non-interest income increased $1.5 million or 64.3% from the third quarter of 2009 and $1.5 million or 64.4% from the fourth quarter of 2008 primarily as a result of an increase in bank owned life insurance income of $1.4 million due to the death of an insured.

Non-interest expense for the fourth quarter of 2009 decreased $0.6 million or 5.7% to $9.7 million compared to $10.2 million for the third quarter of 2009. Compensation and employee benefits expense decreased due to lower pension expense totaling $0.7 million based on information the Company received from its plan administrator with respect to its annual funding requirements. Professional fees for the fourth quarter of 2009 decreased $0.2 million primarily due to lower fees with the conclusion of certain matters related to the shareholder derivative demand, which was partially offset by increases in professional fees related to various corporate matters. The Company incurred $0.1 million of professional fees during the fourth quarter of 2009 related to the shareholder derivative demand compared to $0.6 million during the third quarter of 2009.

Non-interest expense for the fourth quarter of 2009 decreased $0.1 million or 1.1% to $9.7 million from $9.8 million for the fourth quarter of 2008. The decrease from the 2008 period was primarily due to a decrease in compensation and employee benefits expense due to the lower pension expense described above combined with the absence of a $1.2 million goodwill impairment recognized in the fourth quarter of 2008. Partially offsetting these decreases was an increase in other real estate owned expenses totaling $1.2 million and other nondiscretionary expense items including increased FDIC insurance premiums of $0.5 million due to the industry-wide increase in assessment rates for 2009.

Asset Quality

The provision for losses on loans for the fourth quarter of 2009 decreased to $1.8 million from $9.4 million for the third quarter of 2009 and from $16.9 million for the fourth quarter of 2008. Net charge-offs for the fourth quarter of 2009 totaled $3.2 million compared to $3.6 million for the third quarter of 2009 and $10.0 million for the fourth quarter of 2008. Net charge-offs during the fourth quarter of 2009 included partial charge-offs totaling $1.4 million on collateral dependent participation construction and land development loans, $1.1 million on commercial and industrial loans, and $0.5 million on home equity lines of credit. The provision for losses on loans during the fourth quarter of 2009 was also lower as a result of the absence of increased impairment reserves during the third quarter of 2009 and the fourth quarter of 2008 totaling $5.3 million and $5.5 million, respectively.

The allowance for losses on loans totaled $19.5 million at December 31, 2009 compared to $15.6 million at December 31, 2008. The ratio of allowance for losses on loans to total loans increased to 2.55% at December 31, 2009 compared to 2.07% at December 31, 2008. When management determines a non-performing collateral dependent loan has a collateral shortfall, management will immediately charge off the collateral shortfall. As a result, the Company is not required to maintain an allowance for losses on loans on these loans as the loan balance has already been written down to its net realizable value (fair value less estimated costs to sell the collateral).

Balance Sheet

At December 31, 2009, the Company's total assets were $1.08 billion compared to $1.12 billion at December 31, 2008. Securities available-for-sale totaled $188.8 million at December 31, 2009 compared to $251.3 million at December 31, 2008. The decrease in securities is primarily due to maturities and pay downs coupled with sales activity during 2009. With market conditions demanding strong capital positions throughout the year, management elected to utilize excess liquidity to further de-leverage the balance sheet as opposed to reinvesting in the securities portfolio.

The Company's loans receivable increased to $762.4 million at December 31, 2009 compared to $750.0 million at December 31, 2008 as the Company continued its focus on diversified growth in its loan portfolio. Since December 31, 2008, the Company has increased its portfolio of commercial and industrial, owner-occupied commercial real estate and multifamily loans by $51.0 million. These categories represent 47% of the commercial loan portfolio at December 31, 2009 compared to 39% a year ago. This growth was partially offset by decreases in commercial construction and land development, non-owner occupied commercial real estate and one-to-four family residential loans totaling $37.3 million.

Deposits increased $25.7 million to $849.8 million at December 31, 2009 from $824.1 million at December 31, 2008 resulting from a $36.4 million increase in non-municipal core deposits. Investments in the Company's branch network, technological infrastructure, human capital, and brand have enhanced its ability to translate existing and new client relationships into deposit growth. Included in the Company's non-municipal core deposits is $29.3 million related to a single deposit relationship cultivated during the latter half of 2009. Partially offsetting the increase in core deposits was a $1.8 million decrease in non-municipal time deposits. Total municipal deposits decreased $8.9 million since December 31, 2008. While the Company maintains strong relationships with its municipal clients, and municipal deposits continue to comprise an important funding source, management is lowering its reliance on such funds in anticipation that municipal deposit levels could decrease as a result of the recession's impact on municipalities and other government-related entities. The Company's deposits consisted of the following as of the dates indicated:

                                              December 31,    December 31,
                                                 2009            2008
                                            --------------- ---------------
                                                (Dollars in thousands)
Core deposits                               $       445,550 $       409,184
Certificates of deposit                             354,401         356,227
                                            --------------- ---------------
  Subtotal non-municipal deposits                   799,951         765,411
                                            --------------- ---------------
Municipal core deposits                              38,993          39,221
Municipal certificates of deposit                    10,814          19,465
                                            --------------- ---------------
  Subtotal municipal deposits                        49,807          58,686
                                            --------------- ---------------
  Total deposits                            $       849,758 $       824,097
                                            =============== ===============

The Company's borrowed money decreased to $111.8 million at December 31, 2009 from $172.9 million at December 31, 2008 as the Company continues to strengthen its balance sheet and enhance its liquidity position. The Company's borrowed money consisted of the following as of the dates indicated:

                                              December 31,    December 31,
                                                 2009            2008
                                            --------------- --------------
                                                (Dollars in thousands)
Short-term variable-rate borrowed money and
 repurchase agreements                      $        24,299 $       28,312
Gross FHLB borrowed money                            87,509        144,800
Unamortized deferred premium                             --           (175)
                                            --------------- -------------- 
Total borrowed money                        $       111,808 $      172,937
                                            =============== ==============

Shareholders' equity at December 31, 2009 decreased to $110.4 million from $111.8 million at December 31, 2008 as a result of an increase in the Company's unrealized losses on securities available-for-sale.

At December 31, 2009, the Company's tangible common equity was $110.4 million, or 10.31% of tangible assets. The Bank's total capital to risk-weighted assets was 12.35%, exceeding the regulatory requirement of 10% to be considered "well capitalized" by $20.1 million. At December 31, 2009, the Bank was deemed to be "well capitalized" and in excess of all regulatory capital requirements set by the OTS.

CFS Bancorp, Inc. is the parent of Citizens Financial Bank, a $1.1 billion asset federal savings bank. Citizens Financial Bank is an independent bank focusing its people, products and services on helping individuals, businesses and communities be successful. The Bank has 23 offices throughout adjoining markets in Chicago's Southland and Northwest Indiana. The Company's website can be found at www.citz.com.

This press release contains certain forward-looking statements and information relating to the Company that is based on the current 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 current regulatory capital and equity ratios, general economic conditions, state of the banking industry, successful execution of the Company's strategy and its Strategic Growth and Diversification Plan, levels of provision for the allowance for losses on loans and charge-offs, loan and deposit growth, diversification of the loan portfolio, non-performing asset levels, interest on loans, asset yields and cost of funds, net interest income, net interest margin, non-interest income, non-interest expense, interest rate environment, realization of deferred tax assets, and other risk factors identified in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2008, as amended, and other filings with the Securities and Exchange Commission. In addition, the words "anticipate," "believe," "estimate," "expect," "indicate," "intend," "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, assumptions and changes in circumstances. Forward-looking statements are not guarantees of future performance or outcomes, and actual results or events may differ materially from those included in these statements. The Company does not intend to update these forward-looking statements.

SELECTED CONSOLIDATED FINANCIALS AND OTHER DATA FOLLOW

                            CFS BANCORP, INC.
                          Highlights (Unaudited)
              (Dollars in thousands, except per share data)


EARNINGS
 HIGHLIGHTS
 AND
 PERFORMANCE
 RATIOS (1)          Three Months Ended                  Year Ended
             -----------------------------------  -----------------------
             December    September     December     December    December
                31,         30,          31,          31,          31,
               2009        2009         2008         2009         2008
             ---------  ----------   ----------   ----------   ----------
Net
 income/ 
 (loss)      $   1,997  $   (4,671)  $   (9,740)  $     (543)  $  (11,295)
Basic
 earnings/ 
 (loss) per
 share            0.19       (0.44)       (0.95)       (0.05)       (1.10)
Diluted
 earnings/ 
 (loss) per
 share            0.19       (0.44)       (0.95)       (0.05)       (1.10)
Cash
 dividends
 declared
 per share        0.01        0.01         0.04         0.04         0.40
Return on
 average
 assets           0.73%      (1.70)%      (3.45)%      (0.05)%      (0.99)%
Return on
 average
 equity           7.20      (16.06)      (32.17)       (0.48)       (8.93)
Average
 yield on
 interest-
 earning
 assets           4.97        5.01         5.30         5.08         5.67
Average cost
 on
 interest-
 bearing
 liabilities      1.30        1.43         2.21         1.53         2.65
Interest
 rate spread      3.67        3.58         3.09         3.55         3.02
Net interest
 margin           3.84        3.74         3.34         3.72         3.32
Average
 equity to
 average
 assets (2)      10.12       10.60        10.72        10.24        11.14
Average
 interest-
 earning
 assets
 to average
 interest-
 bearing
 liabilities (2)115.22      112.26       112.89       112.56       113.07
Non-interest
 expense to
 average
 assets           3.53        3.73         3.46         3.58         3.01
Efficiency
 ratio (3)       71.67       85.43        91.26        80.06        84.38
Market price
 per share
 of common
 stock
 for the
  period
  ended:
     Closing $    3.23  $     4.68   $     3.90   $     3.23   $     3.90
     High         4.73        4.68        10.31         4.80        14.93
     Low          3.23        3.75         3.50         1.75         3.50


STATEMENT OF
 CONDITION                             December   September     December
 HIGHLIGHTS                               31,         30,          31,
(at period end)                          2009        2009         2008
                                     ----------   ----------   ----------
Total assets                         $1,081,515   $1,078,420   $1,121,855
Loans
 receivable,
 net of
 unearned
 fees                                   762,386      748,464      749,973
Total
 deposits                               849,758      847,178      824,097
Total
 shareholders'
 equity                                 110,373      109,499      111,809
Book value
 per common
 share                                    10.25        10.16        10.47
Non-perform-
 ing loans                               59,009       55,980       54,701
Non-perform-
 ing assets                              68,251       63,401       57,943
Allowance
 for losses
 on loans                                19,461       20,799       15,558
Non-perform-
 ing loans
 to total
 loans                                     7.74%        7.48%        7.29%
Non-perform-
 ing assets
 to total
 assets                                    6.31         5.88         5.16
Allowance
 for losses
 on loans to
 non-perfor-
 ming loans                               32.98        37.15        28.44
Allowance
 for losses
 on loans to
 total loans                               2.55         2.78         2.07

Employees
 (FTE)                                      312          308          322
Banking
 centers and
 offices                                     23           23           22


                    Three Months Ended                  Year Ended
             -----------------------------------  -----------------------
AVERAGE      December    September    December     December     December
 BALANCE        31,         30,          31,          31,          31,
 DATA          2009        2009         2008         2009         2008
             ---------  ----------   ----------   ----------   ----------
Total
 assets     $1,087,068  $1,089,110   $1,123,477   $1,097,511   $1,135,793
Loans
 receivable,
 net of
 unearned
 fees          761,320     747,491      755,960      752,906      753,500
Total
 interest-
 earning
 assets      1,000,120     996,045    1,038,235    1,009,699    1,050,615
Total
 liabilities   977,075     973,699    1,003,037      985,153    1,009,254
Total
 deposits      860,374     840,417      828,053      842,568      847,363
Interest-
 bearing
 deposits      766,491     771,076      762,037      769,600      784,087
Non-interest
 bearing
 deposits       93,883      69,341       66,016       72,968       63,276
Total
 interest-
 bearing
 liabilities   868,022     887,298      919,698      897,016      929,199
Shareholders'
 equity        109,993     115,411      120,440      112,358      126,539

(1)  Ratios are annualized where appropriate.
(2)  Ratios calculated on average balances for the periods presented.
(3)  See calculations in the last table of this press release.





                            CFS BANCORP, INC.
          Condensed Consolidated Statements of Income (Unaudited)
              (Dollars in thousands, except per share data)


                    For the Three Months Ended            Year Ended
                ----------------------------------- ----------------------
                            
                 December   September    December    December    December
                 31, 2009   30, 2009     31, 2008    31, 2009    31, 2008
                ----------- ----------  ----------  ----------  ----------
Interest
 income:
 Loans          $     9,877 $    9,648  $   10,390  $   39,277  $   45,213
 Securities           2,529      2,742       3,144      11,334      12,673
 Other                  122        195         295         697       1,653
                ----------- ----------  ----------  ----------  ----------

  Total
   interest
   income            12,528     12,585      13,829      51,308      59,539
Interest
 expense:
 Deposits             2,171      2,431       3,799      10,447      18,099
 Borrowings             670        758       1,316       3,268       6,557
                ----------- ----------  ----------  ----------  ----------
  Total
   interest
   expense            2,841      3,189       5,115      13,715      24,656
                ----------- ----------  ----------  ----------  ----------
Net interest
 income               9,687      9,396       8,714      37,593      34,883
Provision for
 losses on
 loans                1,821      9,430      16,941      12,588      26,296
                ----------- ----------  ----------  ----------  ----------
Net interest
 income (loss)
 after
 provision for
 losses on
 loans                7,866        (34)     (8,227)     25,005       8,587

Non-interest
 income:
 Service
  charges and
  other fees          1,552      1,479       1,507       5,706       6,051
 Card-based
  fees                  415        429         397       1,664       1,600
 Commission
  income                 49         56          60         246         341
 Available-for-
  sale security
  gains (losses),
  net                    51        321        (282)      1,092      (4,265)
 Other asset
  gains
  (losses), net          12        (15)         22          (9)         30
 Income from
  bank-owned
  life
  insurance           1,631        218         171       2,183       1,300
 Other income            86        112         121         590         566
                ----------- ----------  ----------  ----------  ----------
  Total
   non-interest
   income             3,796      2,600       1,996      11,472       5,623

Non-interest
 expense:
 Compensation
  and employee
  benefits            4,140      4,505       4,473      18,898      17,498
 Net occupancy
  expense               612        763         769       3,022       3,175
 Professional
  fees                  565        754         476       2,273       1,341
 FDIC insurance
  premiums              502        471          39       2,240         159
 Furniture and
  equipment
  expense               548        526         706       2,129       2,362
 Data
  processing            424        407         420       1,670       1,749
 Marketing              261        155         327         832       1,002
 OREO related
  expenses            1,224      1,343         (16)      2,978         263
 Loan
  collection
  expenses              259        290         251       1,077         655
 Goodwill
  impairment              -          -       1,185           -       1,185
 Other general
  and
  administrative
  expenses            1,128      1,034       1,144       4,163       4,789
                ----------- ----------  ----------  ----------  ----------
  Total
   non-interest
   expense            9,663     10,248       9,774      39,282      34,178
                ----------- ----------  ----------  ----------  ----------

Income (loss)
 before income
 taxes                1,999     (7,682)    (16,005)     (2,805)    (19,968)
Income tax
 expense
 (benefit)                2     (3,011)     (6,265)     (2,262)     (8,673)
                ----------- ----------  ----------  ----------  ----------

Net income
 (loss)         $     1,997 $   (4,671) $   (9,740) $     (543) $  (11,295)
                =========== ==========  ==========  ==========  ==========

Per share data:
 Basic earnings
  (loss) per
  share         $      0.19 $    (0.44) $    (0.95) $    (0.05) $    (1.10)
 Diluted
  earnings
  (loss) per
  share         $      0.19 $    (0.44) $    (0.95) $    (0.05) $    (1.10)
 Cash dividends
  declared per
  share         $      0.01 $     0.01  $     0.04  $     0.04  $     0.40

Weighted-
 average shares
 outstanding     10,606,698 10,603,828  10,282,416  10,574,623  10,307,879
Weighted-
 average diluted
 shares
 outstanding     10,697,410 10,695,719  10,414,617  10,680,085  10,508,306




                            CFS BANCORP, INC.
        Condensed Consolidated Statements of Condition (Unaudited)
                          (Dollars in thousands)


                                       December    September     December
                                       31, 2009     30, 2009     31, 2008
                                     -----------  -----------  -----------
ASSETS
Cash and amounts due from depository
 institutions                        $    24,041  $    22,040  $    15,714
Interest-bearing deposits                    387          261        3,133
Federal funds sold                             -            -          259
                                     -----------  -----------  -----------
  Cash and cash equivalents               24,428       22,301       19,106

Securities available-for-sale, at
 fair value                              188,781      205,877      251,270
Securities held-to-maturity, at cost       5,000        6,000        6,940
Investment in Federal Home Loan Bank
 stock, at cost                           23,944       23,944       23,944

Loans receivable, net of unearned
 fees                                    762,386      748,464      749,973
  Allowance for losses on loans          (19,461)     (20,799)     (15,558)
                                     -----------  -----------  -----------
    Net loans                            742,925      727,665      734,415

Interest receivable                        3,469        3,614        4,325
Other real estate owned                    9,242        7,421        3,242
Office properties and equipment           20,382       20,612       19,790
Investment in bank-owned life
 insurance                                34,575       36,662       36,606
Net deferred tax assets                   18,036       16,997       15,494
Other assets                              10,733        7,327        6,723
                                     -----------  -----------  -----------
     Total assets                    $ 1,081,515  $ 1,078,420  $ 1,121,855
                                     ===========  ===========  ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits                             $   849,758  $   847,178  $   824,097
Borrowed money                           111,808      105,357      172,937
Advance payments by borrowers for
 taxes and insurance                       4,322        7,349        4,320
Other liabilities                          5,254        9,037        8,692
                                     -----------  -----------  -----------
  Total liabilities                      971,142      968,921    1,010,046

Shareholders' Equity:
  Preferred stock, $0.01 par value;
   15,000,000 shares authorized                -            -            -
  Common stock, $0.01 par value;
   85,000,000 shares authorized;
   23,423,306 shares issued;
   10,771,061, 10,773,173 and
   10,674,511 shares outstanding             234          234          234
  Additional paid-in capital             188,930      188,930      189,211
  Retained earnings                       80,564       78,675       81,525
  Treasury stock, at cost;
  12,652,245, 12,650,133 and
  12,748,795 shares                     (157,041)    (157,041)    (157,466)
  Unallocated common stock held by
  Employee Stock Ownership Plan                -            -         (832)
  Accumulated other comprehensive
  loss, net of tax                        (2,314)      (1,299)        (863)
                                     -----------  -----------  -----------
   Total shareholders' equity            110,373      109,499      111,809
                                     -----------  -----------  -----------

     Total liabilities and
      shareholders' equity           $ 1,081,515  $ 1,078,420  $ 1,121,855
                                     ===========  ===========  ===========




 
                            CFS BANCORP, INC.
                 Efficiency Ratio Calculations (Unaudited)
                          (Dollars in thousands)


                                                Three Months Ended
                                        ----------------------------------
                                         December   September    December
                                            31,         30,         31,
                                           2009        2009        2008
                                        ----------  ----------  ----------
Efficiency Ratio:
Non-interest expense                    $    9,663  $   10,248  $    9,774
                                        ==========  ==========  ==========
Net interest income plus non-interest
 income                                 $   13,483  $   11,996  $   10,710
                                        ==========  ==========  ==========
Efficiency ratio                             71.67%      85.43%      91.26%

Core Efficiency Ratio:
Non-interest expense                    $    9,663  $   10,248  $    9,774
Adjustment for goodwill impairment               -           -      (1,185)
                                        ----------  ----------  ----------
  Non-interest expense - as adjusted    $    9,663  $   10,248  $    8,589
                                        ==========  ==========  ==========
Net interest income plus non-interest
 income                                 $   13,483  $   11,996  $   10,710

Adjustments:
  Net realized (gains)/losses on
   securities available-for-sale               (51)       (321)        282
  Net realized (gains)/losses on sales
   of assets                                   (12)         15         (22)
  Amortization of deferred premium              17         270         206
                                        ----------  ----------  ----------
    Net interest income plus
     non-interest income - as adjusted  $   13,437  $   11,960  $   11,176
                                        ==========  ==========  ==========
Core efficiency ratio                        71.91%      85.69%      76.85%


                                                          Year Ended
                                                    ----------------------
                                                     December     December
                                                        31,          31,
                                                       2009         2008
                                                    ----------  ----------
Efficiency Ratio:
Non-interest expense                                $   39,282  $   34,178
                                                    ==========  ==========
Net interest income plus non-interest
 income                                             $   49,065  $   40,506
                                                    ==========  ==========
Efficiency ratio                                         80.06%      84.38%

Core Efficiency Ratio:
Non-interest expense                                $   39,282  $   34,178
Special assessment - FDIC insurance                       (495)          -
Adjustment for goodwill impairment                           -      (1,185)
                                                    ----------  ----------
  Non-interest expense - as adjusted                $   38,787  $   32,993
                                                    ==========  ==========
Net interest income plus non-interest
 income                                             $   49,065  $   40,506

Adjustments:
  Net realized (gains)/losses on
   securities available-for-sale                        (1,092)      4,265
  Net realized (gains)/losses on sales
   of assets                                                 9         (30)
  Amortization of deferred premium                         175       1,452
                                                    ----------  ----------
    Net interest income plus non-interest
     income - as adjusted                           $   48,157  $   46,193
                                                    ==========  ==========
Core efficiency ratio                                    80.54%      71.42%