SOURCE: CFS Bancorp, Inc.

July 28, 2005 16:00 ET

CFS Bancorp, Inc. Announces Second Quarter 2005 Financial Results

MUNSTER, IN -- (MARKET WIRE) -- July 28, 2005 -- CFS Bancorp, Inc. (NASDAQ: CITZ) (the Company), the parent of Citizens Financial Services, FSB (the Bank), today reported net income for the second quarter of 2005 of $1.0 million as compared to a $357,000 net loss reported for the second quarter of 2004. Diluted earnings per share were $0.08 for the second quarter of 2005 compared to a loss per share of $0.03 for the comparable prior year period. The Company’s net income for the second quarter of 2005 was adversely affected by a pre-tax charge of $4.0 million ($2.4 million net of tax or $0.21 per diluted share) to interest expense related to amortization of the deferred premium on the early extinguishment of debt relating to the Company’s restructuring during the fourth quarter of 2004 of Federal Home Loan Bank (FHLB) borrowings. This pre-tax charge in the second quarter of 2005 was largely offset by a $3.3 million ($2.0 million net of tax or $0.17 per diluted share) decrease in interest expense as a result of the lower contractual interest rates on the restructured borrowings and the reduction in the average balance of borrowings outstanding.

For the six months ended June 30, 2005, the Company’s net income was $1.3 million, an increase from $887,000 for the six months ended June 30, 2004. Diluted earnings per share were $0.11 for the six months ended June 30, 2005, an increase from $0.07 for six months ended June 30, 2004. The Company’s year to date earnings were negatively impacted by a pre-tax charge of $8.7 million ($5.3 million net of tax or $0.44 per diluted share) to interest expense related to the amortization of the deferred premium on the early extinguishment of debt discussed above. This pre-tax charge in the first six months of 2005 was largely offset by a $6.7 million ($4.1 million net of tax or $0.34 per diluted share) decrease in interest expense as a result of the lower contractual interest rates on the restructured borrowings and the reduction in the average balance of borrowings outstanding.

Chairman’s Comments

“As we expected, our efforts to reposition the Company's balance sheet to take advantage of a rising interest rate environment have resulted in expansion of our net interest margin as our earning assets repriced at a faster rate than our paying liabilities,” said Thomas F. Prisby, Chairman and CEO.

Mr. Prisby continued, “Loan and deposit balance management has been on-going during the first six months of 2005. We continue to implement a regional banking strategy that focuses on developing business within our immediate markets, cultivating relationships by offering personalized service and preferential pricing to those customers who deepen their relationships with us, and exceeding the service expectations of our customers. From a commercial lending perspective, this strategy targets small business owners with loan needs up to $3.0 million. We also expect to have greater opportunities for selling other products and generating high balance core deposits. On an overall basis, by offering higher rates of interest to those customers who choose to utilize more of the Bank’s products and services, we expect deposit relationships to improve.”

Net Interest Income

The Company’s net interest income before provision for losses on loans was $7.2 million for the second quarter of 2005, a decrease of $184,000 from the second quarter of 2004. The Company’s net interest margin was 2.37% for the second quarter of 2005 compared to 2.06% for the second quarter of 2004. The weighted average yield on the Company’s interest-earning assets improved to 5.71% for the second quarter 2005 and represented a 101 basis point increase from the comparable 2004 period. The increase in the weighted average yield primarily was the result of the upward repricing of adjustable-rate loans reflecting higher market rates of interest coupled with the reduction in low yielding interest-earning assets. Mitigating this positive impact on interest income, the Company’s average interest-earning assets decreased 15.4% for the second quarter of 2005 as compared to the second quarter of 2004 primarily as a result of the repayment of borrowings and managed runoff of higher rate certificates of deposit.

The increase in the Company’s interest expense for the second quarter of 2005 from the comparable 2004 period was primarily a result of the $4.0 million premium amortization expense related to the early extinguishment of debt that is recorded as a charge to interest expense. The non-cash amortization was partially offset by a $3.3 million decrease in interest expense related to the Company’s lower contractual interest rates on its restructured FHLB borrowings and the reduction in the average balance of borrowings outstanding. The weighted average cost of deposits increased to 1.64% for the second quarter of 2005 as compared to 1.47% for the second quarter of 2004. The average balance of interest-bearing liabilities decreased 16.6% in the second quarter of 2005 from the comparable 2004 period as a result of the lower average balances on interest-bearing deposits combined with the reduction in the average balance of borrowings resulting from the repayment in the fourth quarter of 2004 of $75.0 million of FHLB borrowings together with the average balance of the unamortized premium on the early extinguishment of debt. The stated amount of the Company’s total average outstanding borrowings is reduced by the average amount of unamortized premium on the early extinguishment of debt in any period. For the second quarter of 2005, the Company’s average unamortized premium on the early extinguishment of debt totaled $23.8 million. During the comparable 2004 period, the Company did not have any unamortized premium on the early extinguishment of debt. The unamortized premium and the related quarterly amortization adversely impacted the Company’s net interest margin by 131 basis points for the second quarter of 2005. The average cost of interest-bearing liabilities increased 83 basis points for the second quarter of 2005 compared to the second quarter of 2004. The increase in the weighted average cost of interest-bearing liabilities was primarily a result of the premium amortization expense recognized during the second quarter of 2005. The interest expense related to the premium amortization on the early extinguishment of debt is expected to be $2.9 million, $2.8 million, $2.6 million and $2.6 million before taxes in the quarters ended September 30, 2005, December 31, 2005, March 31, 2006 and June 30, 2006, respectively.

For the six months ended June 30, 2005, the Company’s net interest income before provision for losses on loans was $13.3 million compared to $14.7 million for the six months ended June 30, 2004. The Company’s net interest margin was 2.19% for the first six months of 2005 compared to 2.03% for the comparable prior year period. The Company’s net interest income and margin were both negatively impacted during the first six months of 2005 by the premium amortization on the early extinguishment of debt. For the six months ended June 30, 2005, the Company’s interest expense included $8.7 million of premium amortization. The unamortized premium and the related year-to-date amortization adversely impacted the Company’s net interest margin by 144 basis points for the six months ended June 30, 2005.

Non-Interest Income

The Company’s second quarter of 2005 non-interest income was $2.9 million, an increase of $352,000 from the second quarter of 2004. The increase was mainly a result of the absence in the 2005 period of the $343,000 impairment charge on an available-for-sale security that was recognized during the second quarter of 2004.

Non-Interest Expense

Non-interest expense for the second quarter of 2005 was $8.4 million, a decrease of $900,000 from $9.3 million for the comparable period in 2004. The Company’s professional fees decreased by $794,000 during the second quarter of 2005 compared to the second quarter of 2004 primarily due to the legal expenses incurred in 2004 related to the Company’s goodwill litigation that went to trial during the second quarter of 2004. Contributing to the decreased non-interest expense during the second quarter of 2005 was a reduction of data processing charges of $125,000 from the second quarter of 2004 when the Company converted to a new core processor. The Company’s marketing expense also decreased $90,000 during the second quarter of 2005 compared to the second quarter of 2004 due to a decrease in the use of newspaper advertising and direct mail campaigns. The above mentioned decreases were partially offset by increases in net occupancy expense related to the Bank’s new branch offices that opened during the second and third quarter of 2004.

The Company’s efficiency ratio for the second quarter of 2005 was 83% as compared to 93% for the second quarter of 2004. The Company’s core efficiency ratio was 59% for the second quarter of 2005 as compared to 90% for the second quarter of 2004. The calculations of the efficiency ratio and the core efficiency ratio are presented in a table on page 10 of this press release.

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

Management also computes a core efficiency ratio that is calculated as non-interest expense, excluding any prepayment penalties on early extinguishment of debt, divided by the sum of net interest income before the provision for losses on loans, excluding the deferred premium amortization, and non-interest income, adjusted for gains or losses on the sale of securities and other assets and other-than-temporary impairments. Management believes that the non-GAAP core efficiency ratio enhances investors’ understanding of its 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 different persons might disagree as to the appropriateness of items comprising 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. These disclosures should not be considered as an alternative to GAAP.

Income Taxes

The Company’s income tax expense for the second quarter of 2005 was $199,000 compared to an income tax benefit of $906,000 for the comparable period in 2004. The increase in tax expense was mainly a result of higher pre-tax earnings in the 2005 period. 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 $512,000 for the second quarter of 2005, a decrease of $1.4 million from the comparable 2004 period. During the second quarter of 2004, the Company increased its provision due to a non-performing commercial real estate loan secured by a motel. During the second quarter of 2004, this loan was transferred to other real estate owned and sold. Also during the second quarter of 2004, the Company downgraded a commercial real estate loan secured by a hotel in Michigan which negatively impacted the provision for losses on loans by $660,000 during the second quarter of 2004.

As of June 30, 2005, the Company had nine impaired loans totaling $27.3 million with an impairment allocation related to these loans of $7.3 million. Eight of the impaired loans are commercial real estate loans, of which four are secured by hotels and total $20.8 million with aggregate impairment allocations of $5.2 million. Three other impaired commercial real estate loans are outstanding to the same borrower and certain related parties and are secured by a golf course and total $3.4 million with an impairment allocation of $1.4 million. The remaining impaired commercial real estate loan is a loan participation that is secured by a nursing home in Illinois. The Company’s portion of this participation totals $2.5 million with an impairment allocation of $360,000. The remaining impaired loan is a commercial loan totaling $710,000 and is secured by general business assets. This loan has an aggregate impairment allocation of $352,000.

The Company’s non-performing assets totaled $27.1 million as of June 30, 2005 compared to $28.2 million as of December 31, 2004. The ratio of non-performing assets to total assets was 2.11% at June 30, 2005 compared to 2.14% at December 31, 2004.

The Company’s allowance for losses on loans was $13.9 million at June 30, 2005 and $13.4 million at December 31, 2004. The ratio of the allowance for losses on loans to total loans was 1.43% and 1.35% at June 30, 2005 and December 31, 2004, 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, as of June 30, 2005, the allowance for losses on loans was adequate.

Balance Sheet

As of June 30, 2005, the Company’s net loans receivable totaled $968.7 million as compared to $988.1 million at December 31, 2004. The Company originated over $62.1 million in new loans and lines of credit during the second quarter of 2005. Total fundings during the first six months of 2005 were $110.3 million and total loan purchases were $54.4 million. These increases in loans receivable were more than offset by loan repayments and loan sales. As of June 30, 2005, the Company had commitments to originate commercial and retail loans and lines of credit totaling $43.6 million.

Securities available-for-sale totaled $205.7 million at June 30, 2005, a $3.5 million increase from December 31, 2004, resulting from $66.3 million in purchases that were partially offset by sales, maturities and paydowns during the six months ended June 30, 2005.

Total deposits were $823.0 million at June 30, 2005, down $40.2 million from $863.2 million at December 31, 2004. The decrease was largely caused by a reduction of $32.8 million in certificates of deposit combined with a decrease in core deposits of $7.3 million at June 30, 2005. The decrease in certificates of deposit was primarily due to the managed runoff of certificates resulting from rising short term interest rates and pricing competition amongst banks and other financial institutions, money market and mutual funds. The decrease in the core deposits is mainly a result of decreases in money market deposit accounts that were offset by increases in non-interest bearing and interest bearing checking accounts. The Company continues to focus on increasing its low cost core deposits through continued promotional efforts and incentive programs.

The Company’s borrowed money totaled $297.6 million as of June 30, 2005 compared to $286.6 million at December 31, 2004. The Company’s borrowed money as of June 30, 2005 consisted of $310.8 million of FHLB borrowings, partially offset by the $21.5 million of unamortized premium related to the early extinguishment of FHLB debt, and $8.3 million of overnight borrowings. At December 31, 2004, the Company’s FHLB borrowings totaled $316.8 million and were partially offset by $30.2 million of unamortized premium.

Stockholders’ equity at June 30, 2005 was $146.3 million as compared to $147.9 million at December 31, 2004. The decrease during the first six months of 2005 was primarily due to:

--  cash dividends declared during 2005 totaling $2.8 million;
--  repurchases of the Company’s common stock during 2005 totaling $1.3
    million; and
--  a $220,000 increase in unrealized losses on available-for-sale
    securities, net of tax.
    
The following increases in stockholders’ equity during the first six months of 2005 partially offset the aforementioned decreases:
--  net income of $1.3 million;
--  $823,000 related to shares committed to be released under the
    Company’s Employee Stock Ownership Plan; and
--  proceeds from stock option exercises totaling $399,000.
    
During the first six months of 2005, the Company repurchased 93,223 shares of its common stock at an average price of $13.54 per share pursuant to the share repurchase program announced in March 2003. Since its initial public offering, the Company has repurchased an aggregate of 11,685,839 shares of its common stock at an average price of $11.76 per share. As of June 30, 2005, the Company has 1,086,933 of shares remaining to be repurchased under its current share repurchase program.

As of June 30, 2005, stockholders’ equity per common share was $11.85, as compared to $11.94 at December 31, 2004. The regulatory capital ratios of the Bank continued to be in excess of regulatory requirements. As of June 30, 2005, the Bank was deemed to be “well-capitalized” under the Office of Thrift Supervision’s regulatory capital guidelines.

CFS Bancorp, Inc. is the parent of Citizens Financial Services, FSB, a $1.3 billion asset federal savings bank. Citizens Financial Services provides community banking services and currently operates 23 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 business and banking strategies, the interest rate environment, asset yields and cost of funds, net interest income, loan volume, net interest margin, loan loss reserves and impairment reserves, income levels, expected effect of amortization of deferred premium on the FHLB borrowings, repositioning of the balance sheet, growth of core deposits, earning trends and 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.


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

EARNINGS HIGHLIGHTS AND        Three Months Ended       Six Months Ended
PERFORMANCE RATIOS (1)         June 30,   June 30,     June 30,   June 30,
                                 2005       2004         2005        2004
                               ------      -----       ------      ------
Net income                     $1,012      $(357)      $1,278      $  887
Basic earnings
 (loss) per share                0.09      (0.03)        0.11        0.08
Diluted earnings
 (loss) per share                0.08      (0.03)        0.11        0.07
Cash dividends
 declared per share              0.12       0.11         0.24        0.22
Return on average assets         0.31%     (0.09)%       0.20%       0.12%
Return on average equity         2.77      (0.90)        1.75        1.13
Average yield on
 interest-earning assets         5.71       4.70         5.61        4.71
Average cost on
 interest-bearing liabilities    3.77       2.94         3.86        2.98
Interest rate spread             1.94       1.76         1.75        1.73
Net interest margin              2.37       2.06         2.19        2.03
Non-interest expense
 to average assets               2.60       2.46         2.59        2.33
Efficiency ratio (2)            82.94      93.41        89.28       87.19
Market price per share
 of common stock for
 the period ended:   Closing   $13.30     $13.25       $13.30      $13.25
                        High    13.92      14.84        14.37       15.16
                         Low    13.02      12.99        13.02       12.99

STATEMENT OF CONDITION
HIGHLIGHTS AND PERFORMANCE
RATIOS                                  June 30,   December 31,   June 30,
                                          2005         2004         2004
                                      ----------   ----------  ----------
Total assets                          $1,283,027   $1,314,714  $1,472,144
Loans receivable,
 net of unearned fees                    968,659      988,085   1,008,962
Total deposits                           823,023      863,178     880,680
Total stockholders' equity               146,312      147,911     154,527
Book value per common share                11.85        11.94       12.57
Non-performing loans                      26,439       27,675      23,622
Non-performing assets                     27,097       28,200      24,398
Allowance for losses on loans             13,892       13,353      11,299
Non-performing loans
 to total loans                             2.73%        2.80%       2.34%
Non-performing assets
 to total assets                            2.11         2.14        1.66
Allowance for losses on loans
to non-performing loans                    52.54        48.25       47.83
Allowance for losses on loans
 to total loans                             1.43         1.35        1.12
Average equity to
 average assets (3)                        11.33        10.45       10.53
Average interest-earning
 assets to average
 interest-bearing liabilities (3)         113.02       112.34      111.43
Full-time equivalent
 (FTE) employees                             339          327         344
Branches and offices                          22           24          22


                               Three Months Ended       Six Months Ended
AVERAGE BALANCE DATA           June 30,   June 30,     June 30,   June 30,
                                 2005       2004         2005        2004
                           ---------- ----------   ----------  ----------
Total assets               $1,294,170 $1,515,288   $1,297,710  $1,536,910
Loans receivable,
 net of unearned fees         972,417    999,771      977,822     992,435
Total interest-earning
 assets                     1,218,894  1,440,193    1,222,752   1,463,610
Total liabilities           1,147,560  1,355,712    1,150,789   1,378,683
Total deposits                838,151    918,054      842,453     941,871
Interest-bearing deposits     786,390    874,057      792,295     900,099
Total interest-bearing
 liabilities                1,078,493  1,292,492    1,082,896   1,318,549
Stockholders' equity          146,610    159,576      146,921     158,227

(1)  Ratios are annualized where appropriate.
(2)  See calculations on page 10.
(3)  Ratios calculated on average balances
     for the three month periods presented.



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

                     For the Three Months Ended   For the Six Months Ended
                             June 30,                     June 30,
                     ----------     ----------   ----------    ----------
                        2005           2004         2005          2004
                     ----------     ----------   ----------    ----------

Interest income:
   Loans             $   15,158     $   13,731   $   29,731    $   27,847
   Securities             1,851          2,601        3,572         5,271
   Federal Home Loan
    Bank dividends          290            330          592           660
   Other                     43            170          110           516
                     ----------     ----------   ----------    ----------
     Total interest
      income             17,342         16,832       34,005        34,294

Interest expense:
   Deposits               3,207          3,185        6,212         7,021
   Borrowed money         6,935          6,263       14,539        12,526
                     ----------     ----------   ----------    ----------
     Total interest
      expense            10,142          9,448       20,751        19,547
                     ----------     ----------   ----------    ----------
Net interest income
 before provision for
 losses on loans          7,200          7,384       13,254        14,747
Provision for losses
 on loans                   512          1,918          767         2,657
                     ----------     ----------   ----------    ----------
Net interest income
 after provision for
 losses on loans          6,688          5,466       12,487        12,090

Non-interest income:
   Service charges and
    other fees            1,923          1,875        3,636         3,552
   Commission income        104            171          269           323
   Net realized gains
    (losses) on sales
     of securities          (23)           (23)         (88)          298
   Impairment on
    available-for-sale
    securities                -           (343)        (240)         (343)
   Net gain (loss) on
    sale of assets           20              -           82            (1)
   Income from Bank-owned
    life insurance          367            365          729           723
   Other income             511            505          995         1,130
                     ----------     ----------   ----------    ----------
      Total non-interest
       income             2,902          2,550        5,383         5,682

Non-interest expense:
   Compensation and
    employee benefits     4,533          4,604        9,126         9,463
   Net occupancy expense    704            615        1,427         1,258
   Professional fees        460          1,254          815         1,645
   Data processing          672            797        1,352         1,452
   Furniture and equipment
    expense                 412            456          855           918
   Marketing                198            288          395           583
   Other general and
    administrative
    expenses              1,400          1,265        2,669         2,493
                     ----------     ----------   ----------    ----------
     Total non-interest
      expense             8,379          9,279       16,639        17,812
                     ----------     ----------   ----------    ----------

Income (loss) before
 income taxes             1,211         (1,263)       1,231           (40)
Income tax expense
 (benefit)                  199           (906)         (47)         (927)
                     ----------     ----------   ----------    ----------

Net income (loss)    $    1,012     $     (357)  $    1,278    $      887
                     ==========     ==========   ==========    ==========

Per share data:
   Basic earnings
    (loss) per share $     0.09     $    (0.03)  $     0.11    $     0.08
   Diluted earnings
    (loss) per share $     0.08     $    (0.03)  $     0.11    $     0.07
   Cash dividends
    declared per
    share            $     0.12     $     0.11   $     0.24    $     0.22

Weighted-average
 shares
 outstanding         11,811,476     11,620,390   11,799,220    11,510,467
Weighted-average
 diluted shares
 outstanding         12,027,547     11,887,039   12,039,677    11,846,355




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

                                            June 30,       December 31,
                                              2005            2004
                                           -----------     -----------
ASSETS
Cash and amounts due from depository
 institutions                              $    19,844     $    16,878
Interest-bearing deposits                        2,331          11,217
Federal funds sold                                 590           9,999
                                           -----------     -----------
     Cash and cash equivalents                  22,765          38,094

Securities, available-for-sale                 205,686         202,219
Investment in Federal
 Home Loan Bank stock, at cost                  28,252          27,665
Loans receivable, net of unearned fees         968,659         988,085
   Allowance for losses on loans               (13,892)        (13,353)
                                           -----------     -----------
      Net loans                                954,767         974,732

Accrued interest receivable                      5,719           5,456
Other real estate owned                            658             525
Office properties and equipment                 15,035          15,511
Investment in Bank-owned life insurance         34,090          33,362
Prepaid expenses and other assets               16,055          17,150
                                           -----------     -----------
     Total assets                          $ 1,283,027     $ 1,314,714
                                           ===========     ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits                                   $   823,023     $   863,178
Borrowed money                                 297,565         286,611
Advance payments by borrowers for
 taxes and insurance                             6,531           8,177
Other liabilities                                9,596           8,837
                                           -----------     -----------
    Total liabilities                        1,136,715       1,166,803

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 as of June 30, 2005 and
    December 31, 2004; 12,345,782 and
    12,385,322 shares outstanding
    as of June 30, 2005 and December 31,
    2004, respectively                             234             234
   Additional paid-in capital                  190,114         189,991
   Retained earnings, substantially
    restricted                                  93,393          94,904
   Treasury stock, at cost; 11,077,524
    and 11,037,984 shares as of June 30,
    2005 and December 31, 2004, respectively  (131,315)       (130,689)
   Unallocated common stock held by ESOP        (5,361)         (5,959)
   Unearned common stock acquired by RRP          (111)           (148)
   Accumulated other comprehensive
    (loss) income, net of tax                     (642)           (422)
                                           -----------     -----------
      Total stockholders' equity               146,312         147,911
                                           -----------     -----------

      Total liabilities and stockholders'
       equity                              $ 1,283,027     $ 1,314,714
                                           ===========     ===========



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


                               Three Months Ended       Six Months Ended
                               June 30,   June 30,     June 30,   June 30,
Efficiency Ratio                2005       2004         2005       2004
                              -------    -------      -------     -------
Non-interest expense          $ 8,379    $ 9,279      $16,639     $17,812
                              =======    =======      =======     =======
Net interest income
 before the provision for
 losses on loans plus
 non-interest income          $10,102    $ 9,934      $18,637     $20,429
                              =======    =======      =======     =======

Efficiency ratio                82.94%     93.41%       89.28%      87.19%

Non-interest expense          $ 8,379    $ 9,279      $16,639     $17,812
                              =======    =======      =======     =======
Net interest income
 before the provision for
 losses on loans plus
 non-interest income          $10,102    $ 9,934      $18,637     $20,429
   Adjustments:
     Net (gain) loss on
      securities                   23         23           88        (298)
   Impairment on
    available-for-sale
    securities                      -        343          240         343
   Net (gain) loss on
    asset sales                   (20)         -          (82)          1
   Amortization of
    deferred premium            3,992          -        8,716           -
                              -------    -------      -------     -------
      Net interest income
       before the provision
       for losses on loans
       plus non-interest
     income - as adjusted     $14,097    $10,300      $27,599     $20,475
                              =======    =======      =======     =======

Core efficiency ratio           59.44%     90.09%       60.29%      86.99%


Contact Information

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