8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported)  February 8, 2010

CFS BANCORP, INC.
(Exact Name of Registrant as Specified in Its Charter)
INDIANA
(State or Other Jurisdiction of Incorporation)
000-24611	35-2042093
(Commission File Number)	(IRS Employer Identification No.)
707 Ridge Road, Munster, Indiana	46321
(Address of Principal Executive Offices)	(Zip Code)
(219) 836-5500
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02      Results of Operations and Financial Condition

            On February 8, 2010 CFS Bancorp, Inc. (the "Company") reported its results of operations for the quarter ended December 31, 2009.

            For additional information, reference is made to the Company's press release dated February 8, 2010, which is attached as Exhibit 99.1 and is incorporated herein by reference.  The press release attached hereto is being furnished to the SEC and shall not be deemed to be "filed" for any purpose except otherwise provided herein.

ITEM 9.01      Financial Statements and Exhibits

                        (a)        Not applicable.

                        (b)        Not applicable.

                        (c)        Exhibits

                        The following exhibit is filed herewith.

Exhibit Number	Description
99.1	Press release dated February 8, 2010

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

		CFS BANCORP, INC.
Date: February 9, 2010	By:	/s/ Joyce M. Fabisiak
		Joyce M. Fabisiak
		Vice President

EX-99.1

THOMAS F. PRISBY, CHAIRMAN

CFS Bancorp, Inc.

707 Ridge Road l Munster, Indiana 46321

February 8, 2010

FOR IMMEDIATE RELEASE

CONTACT:    Thomas F. Prisby, Chairman of the Board and Chief Executive Officer

219-836-2960

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

MUNSTER, IN – 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.”

CFS Bancorp, Inc. - - Page 2 of 9

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 an $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.

CFS Bancorp, Inc. - Page 3 of 9

  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.

CFS Bancorp, Inc. - Page 4 of 9

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.

CFS Bancorp, Inc. - Page 5 of 9

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. - Page 6 of 9

CFS BANCORP, INC.
Highlights (Unaudited)
(Dollars in thousands, except per share data)
		Three Months Ended									Year Ended
EARNINGS HIGHLIGHTS AND PERFORMANCE RATIOS (1)		December 31,  2009			September 30,  2009			December 31,  2008			December 31,  2009			December 31,  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 HIGHLIGHTS  (at period end)								December 31,  2009			September 30,  2009			December 31,  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-performing loans									59,009			55,980			54,701
Non-performing assets									68,251			63,401			57,943
Allowance for losses on loans									19,461			20,799			15,558
Non-performing loans to total loans									7.74	%		7.48	%		7.29	%
Non-performing assets to total assets									6.31			5.88			5.16
Allowance for losses on loans to non-performing 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 BALANCE DATA		December 31,  2009			September 30, 2009			December 31,  2008			December 31,  2009			December 31,  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. - Page 7 of 9

CFS BANCORP, INC.
Condensed Consolidated Statements of Income (Unaudited)
(Dollars in thousands, except per share data)
	For the Three Months Ended								Year Ended
		December 31, 2009		September 30, 2009			December 31, 2008			December 31, 2009		December 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. - Page 8 of 9

CFS BANCORP, INC.
Condensed Consolidated Statements of Condition (Unaudited)
(Dollars in thousands)
	December 31, 2009			September 30, 2009			December 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. - Page 9 of 9

CFS BANCORP, INC.
Efficiency Ratio Calculations (Unaudited)
(Dollars in thousands)
	Three Months Ended
		December 31, 2009		September 30, 2009			December 31, 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 31, 2009			December 31, 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	%