SOURCE: CFS Bancorp, Inc.

October 25, 2007 16:00 ET

CFS Bancorp, Inc. Announces Third Quarter 2007 Financial Results

MUNSTER, IN--(Marketwire - October 25, 2007) - CFS Bancorp, Inc. (NASDAQ: CITZ) (the Company), the parent of Citizens Financial Bank (the Bank), today reported a 143% increase in its net income to $1.9 million for the third quarter of 2007 from $780,000 for the third quarter of 2006. Diluted earnings per share increased 157% to $0.18 for the third quarter of 2007 from $0.07 per diluted share for the third quarter of 2006. The Company's net income for the nine months ended September 30, 2007 increased 48% to $5.5 million from $3.7 million for the 2006 period. Diluted earnings per share increased 56% to $0.50 for the nine months ended September 30, 2007 from $0.32 for the 2006 period.

Financial highlights include:

--  net interest margin expanded for the fourth straight quarter to 3.07%
--  loan balances increased 2.3% from December 31, 2006 due to increased
    fundings and slower loan repayments
--  core efficiency ratio remained stable at 64%
--  93,777 shares of common stock were repurchased
    

Chairman's Comments

"Our third quarter results include positive trends related to our net interest margin, loan growth and cost management. Each of these positive trends was a direct result of executing our strategic initiatives for this year," said Thomas F. Prisby, Chairman and CEO. "We are currently building on our 2007 initiatives to position the Company for a successful year in 2008."

Mr. Prisby continued, "Management continues to explore ways to reduce our credit risk related to our non-performing assets through various alternatives, including the potential sale of certain of these assets as we enter the last quarter of 2007. We recognize the current economic uncertainties and potential for credit deterioration relating to housing and speculative real estate. We are shifting our focus from large commercial real estate loans toward commercial and industrial loans and smaller commercial real estate loans which will diversify the risk within the portfolio. While this shift may reduce our loan balances in the near future, we believe it complements our strategy of being a relationship driven community bank."

Net Interest Income

The Company's net interest margin increased for the fourth straight quarter as outlined in the table below.

                                     Three Months Ended
                                     ------------------
                     September 30,   June 30,   March 31,  December 31,
                         2007          2007       2007         2006
                     ------------    --------   ---------  ------------
Net Interest Margin          3.07%       3.01%       2.93%         2.58%

The net interest margin increased six basis points to 3.07% for the third quarter of 2007 from 3.01% for the second quarter of 2007 and 48 basis points from 2.59% for the third quarter of 2006. The Company's net interest income decreased 1.0% to $8.6 million for the third quarter of 2007 compared to $8.6 million for the second quarter of 2007 and increased 8.9% from $7.9 million for the third quarter of 2006.

Interest income was $17.9 million for the third quarter of 2007 compared to $18.5 million for the second quarter of 2007 and $18.9 million for the third quarter of 2006. The decrease from the second quarter of 2007 was primarily related to a 3.9% decrease in the average balance of interest-earning assets. Interest income decreased from the 2006 period due to an 8.0% decrease in the average balances of interest-earning assets which was partially offset by a 17 basis point increase in the weighted-average yields earned on interest-earning assets. The increase in yields was primarily a result of the reinvestment of securities sales and maturities into higher yielding securities.

Interest expense decreased 5.4% to $9.3 million for the third quarter of 2007 from $9.8 million for the second quarter of 2007 and 15.7% from $11.1 million for the third quarter of 2006. The decrease from the second quarter of 2007 was primarily related to a 4.7% decrease in the average balances of interest-bearing liabilities and a 14 basis point decrease in the Company's borrowing costs. The decrease from the third quarter of 2006 was the result of a 9.0% decrease in the average balances of interest-bearing liabilities and an 88 basis point decrease in the Company's borrowing costs. Partially offsetting these decreases was a 32 basis point increase in the cost of deposits due to increased rates paid on money market accounts and certificates of deposit.

The Company's cost of borrowings decreased to 6.59% for the third quarter of 2007 compared to 6.73% for the second quarter of 2007 and 7.47% for the third quarter of 2006. The decreases were primarily the result of lower average balances of the Company's Federal Home Loan Bank (FHLB) debt and decreases in the amortization of the deferred premium that is included in the Company's total interest expense on borrowings. The premium amortization adversely impacted the Company's net interest margin by 38 basis points, 44 basis points and 82 basis points, respectively, for the third quarter of 2007, the second quarter of 2007 and the third quarter of 2006. The Company's interest expense on borrowings is detailed in the tables below for the periods indicated.

                                                           Change from
                               Three Months Ended       September 30, 2006
                          -----------------------------   to September 30,
                          September   June    September        2007
                             30,       30,       30,    ------------------
                            2007      2007      2006        $         %
                          --------- --------- --------- --------  -------
                                       (Dollars in thousands)
Interest expense on
 short-term borrowings
 at contractual rates     $     200 $     197 $     294 $    (94)   (32.0)%
Interest expense on FHLB
 borrowings at
 contractual rates            1,538     1,754     2,541   (1,003)   (39.5)
Amortization of deferred
 premium                      1,062     1,276     2,465   (1,403)   (56.9)
                          --------- --------- --------- --------
Total interest expense on
 borrowings               $   2,800 $   3,227 $   5,300 $ (2,500)   (47.2)
                          ========= ========= ========= ========



                                    Nine Months Ended
                                    -----------------
                                      September 30,
                                      2007      2006    $ change  % change
                                    --------- --------- --------  --------
                                            (Dollars in thousands)
Interest expense on short-term
 borrowings at contractual rates    $     655 $     424 $    231      54.5%
Interest expense on FHLB borrowings
 at contractual rates                   5,116     7,683   (2,567)    (33.4)
Amortization of deferred premium        3,689     7,587   (3,898)    (51.4)
                                    --------- --------- --------
Total interest expense on
 borrowings                         $   9,460 $  15,694 $ (6,234)    (39.7)
                                    ========= ========= ========

The interest expense related to the premium amortization on the early extinguishment of debt is expected to be $851,000, $527,000, $449,000 and $270,000 before taxes in the quarters ending December 31, 2007, March 31, 2008, June 30, 2008 and September 30, 2008, respectively.

Non-Interest Income

The Company's non-interest income for the third quarter of 2007 increased to $2.8 million from $2.7 million for the second quarter of 2007 and $2.3 million for the third quarter of 2006. The increase from the second quarter of 2007 was primarily a result of an increase of $116,000 in service charges and other fees. The increase from the third quarter of 2006 was primarily the result of increases in service charges and other fees of $56,000 and card-based fees of $55,000 combined with a decrease in net losses from securities and asset sales totaling $464,000 in the aggregate.

Non-Interest Expense

Non-interest expense for the third quarter of 2007 decreased to $8.0 million compared to $8.1 million for the second quarter of 2007 and $8.9 million for the third quarter of 2006. The decreases were primarily related to compensation and employee benefits, marketing and professional fees.

The Company's compensation and employee benefits for the third quarter of 2007 decreased to $4.3 million from $4.4 million for the second quarter of 2007 and $5.0 million for the third quarter of 2006. These decreases were primarily a result of the Company's first quarter 2007 review and reduction of staffing levels and its first quarter 2007 Employee Stock Ownership Program (ESOP) loan modification.

Professional fees for the third quarter of 2007 decreased to $240,000 from $390,000 for the second quarter of 2007 and $319,000 for the third quarter of 2006. The decrease from the second quarter of 2007 was a result of the absence of consulting fees related to the Company's customer-centric relationship management program and legal fees associated with the modification of the Company's ESOP loan and 401(k) benefit plan, and the reduction in the workforce.

Marketing expense totaled $214,000 for the third quarter of 2007, an increase from $190,000 for the second quarter of 2007 as the Company increased its brand advertising and increased promotion of its enhanced checking products during the third quarter of 2007. Marketing expense for the third quarter of 2007 decreased 51.6% from $442,000 for the third quarter of 2006 primarily due to a change in marketing strategies.

The Company's efficiency ratio for the third quarter of 2007 was 70.4% compared to 71.2% for the second quarter of 2007 and 88.2% for the third quarter of 2006. The Company's core efficiency ratios were 64.5%, 64.0% and 68.4%, respectively. The ratios for the third quarter of 2007 were primarily impacted by the reductions in the Company's non-interest expense as discussed above. The increase from the second quarter of 2007 in the core efficiency ratio was negatively impacted by the lower amortization of the deferred premium on the early extinguishment of debt. The efficiency ratio and the core efficiency ratio calculations are presented in the last table of this press release.

Management has historically used an efficiency ratio that is a non-GAAP financial measure of operating expense control and operating efficiency. The efficiency ratio is typically defined as the ratio of non-interest expense to the sum of non-interest income and net interest income. Many financial institutions, in calculating the efficiency ratio, adjust non-interest income (as calculated under GAAP) to exclude certain component elements, such as gains or losses on sales of securities and assets. Management follows this practice to calculate its core efficiency ratio and utilizes this non-GAAP measure in its analysis of the Company's performance. The core efficiency ratio is different from the GAAP-based efficiency ratio. The GAAP-based measure is calculated using non-interest expense, net interest income and non-interest income as presented on the consolidated statements of income.

The Company's core efficiency ratio is calculated as non-interest expense divided by the sum of net interest income, excluding the deferred premium amortization related to the early extinguishment of debt, and non-interest income, adjusted for gains or losses on the sale of securities and other assets. Management believes that the core efficiency ratio enhances investors' understanding of the Company's business and performance. The measure is also believed to be useful in understanding the Company's performance trends and to facilitate comparisons with the performance of others in the financial services industry. Management further believes the presentation of the core efficiency ratio provides useful supplemental information, a clearer understanding of the Company's financial performance, and better reflects the Company's core operating activities.

The risks associated with utilizing operating measures (such as the efficiency ratio) are that various persons might disagree as to the appropriateness of items included or excluded in these measures and that other companies might calculate these measures differently. Management of the Company compensates for these limitations by providing detailed reconciliations between GAAP information and its core efficiency ratio within the last table of this press release; however, these disclosures should not be considered as an alternative to GAAP.

Income Taxes

The Company's income tax expense for the third quarter of 2007 was $587,000 compared to $855,000 for the second quarter of 2007 and $1,000 for the third quarter of 2006. The changes from the second quarter of 2007 and the third quarter of 2006 were primarily related to the changes in pre-tax income during the same reporting periods. Permanent tax differences, primarily related to the Company's investment in bank-owned life insurance, and the application of available tax credits, continue to have a favorable impact on income tax expense.

Asset Quality

The Company's provision for losses on loans was $884,000 for the third quarter of 2007 compared to $126,000 for the second quarter of 2007 and $413,000 for the comparable 2006 period. The increase in the provision during the third quarter is the result of an increase in non-performing loans combined with a $425,000 increase in impairment reserves related to commercial real estate loans.

The Company's non-performing assets totaled $33.8 million at September 30, 2007, $27.8 million at December 31, 2006 and $22.4 million at September 30, 2006. Non-performing assets increased during the third quarter of 2007 primarily due to the addition of two commercial real estate loans totaling $4.4 million. The ratio of total non-performing assets to total assets was 2.89%, 2.22% and 1.73%, respectively at September 30, 2007, December 31, 2006 and September 30, 2006. The ratios were impacted by the increases in non-performing assets combined with decreases in total assets of $85.1 million and $123.2 million, respectively, from the 2006 periods.

The Company's allowance for losses on loans was $11.3 million at September 30, 2007, $11.2 million at December 31, 2006 and $10.7 million at September 30, 2006 with the allowance for losses on loans to total loans ratios of 1.37%, 1.39% and 1.28%, respectively. The Company maintains the allowance for losses on loans at a level that management believes is sufficient to absorb credit losses inherent in the loan portfolio. The allowance for losses on loans represents the Company's estimate of inherent losses existing in the loan portfolio that are both probable and reasonable to estimate at each balance sheet date and is based on its review of available and relevant information. The Company believes that at September 30, 2007 the allowance for losses on loans was adequate.

Balance Sheet

At September 30, 2007, the Company's total assets were $1.17 billion compared to $1.25 billion at December 31, 2006 and $1.29 billion at September 30, 2006.

The Company's loans receivables increased 2.3% to $820.8 million at September 30, 2007 from $802.4 million at December 31, 2006 and decreased 1.5% from $833.0 million at September 30, 2006. During the first nine months of 2007, the Company had total loan fundings and purchases of $279.4 million which were offset by $258.7 million of loan repayments and sales. The amount of loan repayments and sales for the first nine months of 2007 has decreased from the higher level of repayments experienced during the first nine months of 2006 which totaled $337.1 million.

Securities available-for-sale were $232.6 million at September 30, 2007 compared to $298.9 million at December 31, 2006 and $322.8 million at September 30, 2006. The decrease in securities from the 2006 levels was primarily due to sales and maturities proceeds that were used to repay $35.0 million of maturing FHLB borrowings.

Deposits totaled $859.9 million at September 30, 2007 compared to $907.1 million at December 31, 2006 and $870.8 million at September 30, 2006. The Company's non-interest bearing core deposits increased $9.1 million from December 31, 2006 as a result of management's focus on increasing business deposits. This increase was more than offset by a decrease in money market accounts totaling $18.8 million as a result of the cyclical nature of municipal money market accounts and a decrease in certificates of deposit totaling $17.5 million due to the managed run-off of single-service high-rate promotional certificates.

The Company's borrowed money decreased to $161.2 million at September 30, 2007 from $202.3 million at December 31, 2006 and $275.1 million at September 30, 2006. The Company's borrowed money consisted of the following as of the dates indicated:

                               September 30,  December 31,   September 30,
                                   2007           2006           2006
                               -------------  -------------  -------------
                                         (Dollars in thousands)
Short-term variable-rate
 borrowings and repurchase
 agreements                    $      13,558  $      23,117  $      20,876
Gross FHLB borrowings                150,128        185,325        262,378
Unamortized deferred premium          (2,478)        (6,167)        (8,203)
                               -------------  -------------  -------------
Total borrowings               $     161,208  $     202,275  $     275,051
                               =============  =============  =============

Stockholders' equity at September 30, 2007 was $129.6 million compared to $131.8 million at December 31, 2006. The decrease during the first nine months of 2007 was primarily due to:

--  repurchases of shares of the Company's common stock during 2007
    totaling $7.8 million; and
--  cash dividends declared during 2007 totaling $3.8 million.
    

The following increases in stockholders' equity during 2007 partially offset the aforementioned decreases:

--  net income of $5.5 million;
--  proceeds from stock option exercises totaling $1.7 million; and
--  an increase in accumulated other comprehensive income of $1.2 million.
    

During the third quarter of 2007, the Company repurchased 93,777 shares of its common stock at an average price of $14.33 per share pursuant to the repurchase plan approved in February 2007. At September 30, 2007, the Company had 257,190 shares remaining to be repurchased under this plan. Since its initial public offering, the Company has repurchased an aggregate of 13,715,582 shares of its common stock at an average price of $12.18 per share.

The regulatory capital ratios of the Bank continued to exceed all regulatory requirements. At September 30, 2007, the Bank remained "well-capitalized" under the Office of Thrift Supervision's regulatory capital guidelines.

CFS Bancorp, Inc. is the parent of Citizens Financial Bank, a $1.2 billion asset federal savings bank. Citizens Financial Bank is an independent bank that provides community banking services and currently operates 22 offices throughout adjoining markets in Chicago's Southland and Northwest Indiana. The Company maintains a website at www.cfsbancorp.com.

This press release contains certain forward-looking statements and information relating to the Company that is 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 cost control, earnings and efficiency ratio levels, loan and deposit growth, growth in commercial lenders, interest on loans, business and banking strategies, planned office locations, asset yields and cost of funds, net interest income, net interest margin, expected effect of amortization of deferred premium on the FHLB debt, and the impact of tax credits and permanent tax differences. 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 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 AND OTHER DATA FOLLOW


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



                               Three Months Ended       Nine Months Ended
                          ----------------------------  ------------------
EARNINGS HIGHLIGHTS AND   Sept. 30, June 30,  Sept. 30, Sept. 30, Sept.30,
 PERFORMANCE RATIOS (1)     2007      2007      2006      2007      2006
                          --------  --------  --------  --------  --------
Net income                $  1,896  $  2,281  $    780  $  5,490  $  3,710
Basic earnings per share      0.18      0.22      0.07      0.52      0.33
Diluted earnings per
 share                        0.18      0.21      0.07      0.50      0.32
Cash dividends declared
 per share                    0.12      0.12      0.12      0.36      0.36
Return on average assets      0.64%     0.74%     0.24%     0.60%     0.39%
Return on average equity      5.84      7.05      2.33      5.65      3.65
Average yield on
 interest-earning assets      6.41      6.44      6.24      6.42      6.26
Average cost on
 interest-bearing
 liabilities                  3.80      3.88      4.11      3.86      3.94
Interest rate spread          2.61      2.56      2.13      2.56      2.32
Net interest margin           3.07      3.01      2.59      3.00      2.78
Average equity to average
 assets (2)                  10.88     10.56     10.36     10.62     10.74
Average interest-earning
 assets to average
 interest-bearing
 liabilities (2)            113.87    113.01    112.62    113.05    113.48
Non-interest expense to
 average assets               2.69      2.63      2.77      2.77      2.84
Efficiency ratio (3)         70.44     71.21     88.20     74.91     83.13
Market price per share of
 common stock
 for the period ended:
                 Closing  $  14.10  $  14.55  $  14.79  $  14.10  $  14.79
                    High     14.65     15.12     15.04     15.12     15.04
                     Low     13.93     14.53     14.58     13.93     14.10



STATEMENT OF CONDITION
 HIGHLIGHTS            September 30,   June 30,  December 31, September 30,
 (at period end)           2007          2007        2006          2006
                        -----------  -----------  -----------  -----------
Total assets            $ 1,169,300  $ 1,202,892  $ 1,254,390  $ 1,292,491
Loans receivable, net
 of unearned fees           820,832      808,132      802,383      833,010
Total deposits              859,856      887,814      907,095      870,830
Total stockholders'
 equity                     129,602      128,290      131,806      131,310
Book value per common
 share                        12.05        11.83        11.84        11.76
Non-performing loans         32,684       29,172       27,517       21,779
Non-performing assets        33,824       29,804       27,838       22,358
Allowance for losses on
 loans                       11,277       10,624       11,184       10,692
Non-performing loans to
 total loans                   3.98%        3.61%        3.43%        2.61%
Non-performing assets
 to total assets               2.89         2.48         2.22         1.73
Allowance for losses on
 loans to
 non-performing loans         34.50        36.42        40.64        49.09
Allowance for losses on
 loans to total loans          1.37         1.31         1.39         1.28

Employees (FTE)                 316          322          360          349
Banking centers and
 offices                         22           22           21           21



                        Three Months Ended            Nine Months Ended
                ----------------------------------- -----------------------
AVERAGE BALANCE  Sept. 30,    June 30,   Sept. 30,   Sept. 30,   Sept. 30,
 DATA              2007         2007       2006        2007        2006
                ----------- ----------- ----------- ----------- -----------
Total assets    $ 1,184,548 $ 1,230,115 $ 1,279,627 $ 1,223,407 $ 1,266,513
Loans
 receivable,
 net of
 unearned fees      815,081     808,331     836,357     805,831     863,874
Total
 interest-
 earning assets   1,106,235   1,151,726   1,201,990   1,145,510   1,193,102
Total
 liabilities      1,055,680   1,100,252   1,147,045   1,093,471   1,130,497
Total deposits      871,276     894,184     850,976     890,037     844,648
Interest-bearing
 deposits           805,233     829,467     789,803     826,599     782,789
Non-interest
 bearing
 deposits            66,043      64,717      61,173      63,438      61,859
Total
 interest-bearing
 liabilities        971,525   1,019,112   1,067,344   1,013,310   1,051,362
Stockholders'
 equity             128,868     129,863     132,582     129,936     136,016

(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 Nine Months
                     For the Three Months Ended              Ended
                 ----------------------------------  ----------------------
                 September    June 30,   September   September  September
                  30, 2007      2007      30, 2006   30, 2007    30, 2006
                 ----------  ----------  ----------  ---------- ----------
Interest income:
  Loans          $   14,362  $   14,404  $   14,798  $   42,818 $   45,027
  Securities          3,036       3,475       3,482      10,034      9,123
  Other                 468         605         625       2,149      1,674
                 ----------  ----------  ----------  ---------- ----------
    Total
     interest
     income          17,866      18,484      18,905      55,001     55,824

Interest
 expense:
  Deposits            6,516       6,619       5,752      19,829     15,309
  Borrowed Money      2,800       3,227       5,300       9,460     15,694
                 ----------  ----------  ----------  ---------- ----------
    Total
     interest
     expense          9,316       9,846      11,052      29,289     31,003
                 ----------  ----------  ----------  ---------- ----------
Net interest
 income               8,550       8,638       7,853      25,712     24,821
Provision for
 losses on loans        884         126         413       1,197        971
                 ----------  ----------  ----------  ---------- ----------
Net interest
 income after
 provision for
 losses on loans      7,666       8,512       7,440      24,515     23,850

Non-interest
 income:
  Service
   charges and
   other fees         1,786       1,670       1,730       5,025      5,042
  Card-based
   fees                 382         380         327       1,104        980
  Commission
   income                40          36          32         107        149
  Security gains
   (losses), net         (1)         (1)        877           9        750
  Other asset
   gains
   (losses), net          3          (1)     (1,339)         13     (1,291)
  Income from
   bank-owned
   life
   insurance            404         403         401       1,212      1,189
  Other income          228         206         241         674        716
                 ----------  ----------  ----------  ---------- ----------
    Total
     non-interest
     income           2,842       2,693       2,269       8,144      7,535

Non-interest
 expense:
  Compensation
   and employee
   benefits           4,343       4,407       5,027      14,005     15,246
  Net occupancy
   expense              766         694         609       2,213      1,923
  Data
   processing           540         566         559       1,669      1,910
  Furniture and
   equipment
   expense              557         566         548       1,657      1,516
  Professional
   fees                 240         390         319       1,200      1,083
  Marketing             214         190         442         615      1,031
  Other general
   and
   administrative
   expenses           1,365       1,256       1,424       4,002      4,187
                 ----------  ----------  ----------  ---------- ----------
    Total
     non-interest
     expense          8,025       8,069       8,928      25,361     26,896
                 ----------  ----------  ----------  ---------- ----------

Income before
 income taxes         2,483       3,136         781       7,298      4,489
Income tax
 expense                587         855           1       1,808        779

                 ----------  ----------  ----------  ---------- ----------
Net income       $    1,896  $    2,281  $      780  $    5,490 $    3,710
                 ==========  ==========  ==========  ========== ==========
Per share data:
  Basic earnings
   per share     $     0.18  $     0.22  $     0.07  $     0.52 $     0.33
  Diluted
   earnings per
   share         $     0.18  $     0.21  $     0.07  $     0.50 $     0.32
  Cash dividends
   declared per
   share         $     0.12  $     0.12  $     0.12  $     0.36 $     0.36

Weighted-average
 shares
 outstanding     10,460,716  10,591,194  10,899,012  10,591,832 11,134,491
Weighted-average
 diluted shares
 outstanding     10,741,093  10,903,740  11,248,382  10,892,853 11,491,604






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


                            September    June 30,    December   September
                             30, 2007      2007      31, 2006    30, 2006
                            ----------  ----------  ----------  ----------
ASSETS
Cash and amounts due from
 depository institutions    $   15,934  $   19,614  $   33,194  $   16,399
Interest-bearing deposits        9,772       8,617      20,607      15,853
Federal funds sold               2,942       8,796      13,366      18,102
                            ----------  ----------  ----------  ----------
  Cash and cash equivalents     28,648      37,027      67,167      50,354

Securities
 available-for-sale, at
 fair value                    232,580     270,404     298,925     322,770
Investment in Federal Home
 Loan Bank stock, at cost       23,944      23,944      23,944      25,455

Loans receivable, net of
 unearned fees                 820,832     808,132     802,383     833,010
  Allowance for losses on
   loans                       (11,277)    (10,624)    (11,184)    (10,692)
                            ----------  ----------  ----------  ----------
    Net loans                  809,555     797,508     791,199     822,318

Interest receivable              6,654       7,106       7,523       7,922
Other real estate owned          1,140         632         321         579
Office properties and
 equipment                      19,177      19,008      17,797      16,454
Investment in bank-owned
 life insurance                 36,052      35,652      35,876      35,474
Prepaid expenses and other
 assets                         11,550      11,611      11,638      11,165
                            ----------  ----------  ----------  ----------
      Total assets          $1,169,300  $1,202,892  $1,254,390  $1,292,491
                            ==========  ==========  ==========  ==========

LIABILITIES AND
 STOCKHOLDERS' EQUITY
Deposits                    $  859,856  $  887,814  $  907,095  $  870,830
Borrowed money                 161,208     170,952     202,275     275,051
Advance payments by
 borrowers for taxes and
 insurance                       7,639       6,619       4,194       4,393
Other liabilities               10,995       9,217       9,020      10,907
                            ----------  ----------  ----------  ----------
  Total liabilities          1,039,698   1,074,602   1,122,584   1,161,181

Stockholders' 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;
   10,756,189, 10,845,740,
   11,134,331 and
   11,169,423 shares
   outstanding                     234         234         234         234
  Additional paid-in capital   191,086     191,054     190,825     190,692
  Retained earnings             96,250      95,616      94,344      94,009
  Treasury stock, at cost;
   12,542,341, 12,450,364,
   12,164,754 and
   12,130,136 shares          (154,074)   (152,752)   (148,108)   (147,517)
  Treasury stock held in
   Rabbi Trust, at cost;
   124,776, 127,202, 124,221
   and 123,747 shares           (1,636)     (1,672)     (1,627)     (1,620)
  Unallocated common stock
   held by Employee Stock
   Ownership Plan               (3,204)     (3,282)     (3,564)     (3,864)
  Accumulated other
   comprehensive income
   (loss), net of tax              946        (908)       (298)       (624)
                            ----------  ----------  ----------  ----------
    Total stockholders'
     equity                    129,602     128,290     131,806     131,310
                            ----------  ----------  ----------  ----------
      Total liabilities and
       stockholders'
       equity               $1,169,300  $1,202,892  $1,254,390  $1,292,491
                            ==========  ==========  ==========  ==========







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


                                                 Three Months Ended
                                           -------------------------------
                                           September             September
                                              30,     June 30,      30,
                                             2007       2007       2006
                                           ---------  ---------  ---------
Efficiency Ratio:
Non-interest expense                       $   8,025  $   8,069  $   8,928
                                           =========  =========  =========
Net interest income plus non-interest
 income                                    $  11,392  $  11,331  $  10,122
                                           =========  =========  =========
Efficiency ratio                               70.44%     71.21%     88.20%

Core Efficiency Ratio:
Non-interest expense                       $   8,025  $   8,069  $   8,928
                                           =========  =========  =========
Net interest income plus non-interest
 income                                    $  11,392  $  11,331  $  10,122

Adjustments:
  Net realized (gains) losses on sales of
   securities available-for-sale                   1          1       (877)
  Net realized (gains) losses on sales of
   assets                                         (3)         1      1,339
  Amortization of deferred premium on the
   early extinguishment of debt                1,062      1,276      2,465
                                           ---------  ---------  ---------
    Net interest income plus non-interest
     income - as adjusted                  $  12,452  $  12,609  $  13,049
                                           =========  =========  =========
Core efficiency ratio                          64.45%     63.99%     68.42%


                                                    Nine Months Ended
                                                --------------------------
                                                September 30, September 30,
                                                    2007          2006
                                                ------------  ------------
Efficiency Ratio:
Non-interest expense                            $     25,361  $     26,896
                                                ============  ============
Net interest income plus non-interest income    $     33,856  $     32,356
                                                ============  ============
Efficiency ratio                                       74.91%        83.13%

Core Efficiency Ratio:
Non-interest expense                            $     25,361  $     26,896
                                                ============  ============
Net interest income plus non-interest income    $     33,856  $     32,356

Adjustments:
  Net realized (gains) on sales of securities
   available-for-sale                                     (9)         (750)
  Net realized (gains) losses on sales of
   assets                                                (13)        1,291
  Amortization of deferred premium on the early
   extinguishment of debt                              3,689         7,587
                                                ------------  ------------
    Net interest income plus non-interest
     income - as adjusted                       $     37,523  $     40,484
                                                ============  ============
Core efficiency ratio                                  67.59%        66.44%

Contact Information

  • CONTACT:
    Thomas F. Prisby
    Chairman of the Board and Chief Executive Officer
    219-836-5500