EX-99.1 2 exhibit99-1_123109.htm EXHIBIT 99.1 12/31/09 exhibit99-1_123109.htm
 
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
%