Published:
CFS Bancorp, Inc. Announces Revised Fourth Quarter and Year End 2004 Results
CFS BANCORP, INC. (the
"Company") announced today a revision of its accounting with respect to the
Company's previously announced restructuring of $400.0 million of
borrowings. The revision in accounting results from a different
interpretation and application of the accounting guidance of Emerging
Issues Task Force No. 96-19, "Debtor's Accounting for a Modification or
Exchange of Debt Instruments" ("EITF 96-19"). As a result of the revision,
the Company's net losses for the quarter and year ended December 31, 2004
are $4.7 million and $6.6 million, respectively, rather than the net losses
of $23.1 million and $25.0 million previously reported in the Company's
press release dated January 27, 2005. As revised, losses per share for the
quarter and year ended December 31, 2004 are $0.40 and $0.57, respectively,
rather than $1.97 and $2.16, respectively, as previously reported.
As previously announced, the Company's wholly owned subsidiary, Citizens
Financial Services, FSB (the "Bank"), restructured $400.0 million of its
fixed-rate Federal Home Loan Bank ("FHLB") advances (the "Existing
Borrowings") by repaying $75.0 million of such Existing Borrowings and
replacing $325.0 million of the Existing Borrowings with new, lower
costing, FHLB advances (the "New Borrowings"). This transaction resulted in
$42.0 million of prepayment penalties. As previously described, the
Existing Borrowings were callable fixed-rate advances with an average cost
of 5.92% and an average remaining term of 64.2 months. The New Borrowings
include $271.0 million of non-callable, fixed-rate FHLB advances with an
average cost of 3.64% and an average term of 34.3 months in a laddered
portfolio with maturities ranging from 12 to 60 months. The New Borrowings
also include $54.0 million of short-term variable-rate borrowings with a
current cost of 2.79%. On December 31, 2004, the Company repaid $20
million of these variable-rate borrowings.
As previously disclosed, the Company, based on its internal analysis,
communication with and the concurrence received from its independent
registered public accounting firm, recognized a $42.0 million charge to
non-interest expense during the fourth quarter of 2004 as a result of the
prepayment penalties. On February 25, 2005, in conjunction with finalizing
its audit of the Company's financial statements at and for the year ended
December 31, 2004, representatives from the Company's independent
registered public accounting firm notified the Company that, upon further
review, such firm believed the application of EITF 96-19 required a
revision of the accounting treatment previously communicated by the Company
with respect to the fourth quarter debt restructuring. Thereafter,
management continued to research the appropriate application of EITF 96-19.
On March 7, 2005, the Company's Audit Committee and Board of Directors
along with representatives of the Company's independent registered public
accounting firm met to discuss the application of EITF 96-19. On March 10,
2005, management notified the Audit Committee that it would revise the
accounting treatment for the fourth quarter debt restructuring and,
contrary to its initial presentation, would not recognize the entire $42.0
million in prepayment penalties in the quarter ended December 31, 2004.
The Audit Committee agreed with management's decision.
As a result of the revised accounting treatment, the Company will recognize
$9.8 million of prepayment penalties as a charge to non-interest expense in
the fourth quarter of 2004 and $2.1 million of increased interest expense
on borrowings in such period. As revised, the Company's net interest margin
is 2.06% for the fourth quarter of 2004. The remaining $30.1 million of
prepayment penalties resulting from the debt restructuring are deferred and
will be recognized in interest expense as an adjustment to the cost of the
Company's New Borrowings in future periods. The interest expense related to
the amortization of the remaining prepayment penalties is expected to be
$14.4 million, $9.6 million, $4.5 million, $1.5 million, and $200,000 in
the years ended December 31, 2005, 2006, 2007, 2008, and 2009,
respectively.
Thomas F. Prisby, Chairman and Chief Executive Officer of the Company,
said, "We are disappointed that we have had to revise our treatment of the
expenses related to this transaction, yet we believe that the business
reasons for undertaking this restructuring remain sound. We have shortened
the duration of our liabilities significantly and have eliminated the
callable feature of the Existing Borrowings which will improve our
long-term interest rate risk profile. In addition, we have greatly reduced
our repricing risk given the laddered structure of the fixed-rate portion
of the New Borrowings compared to the maturity of the Existing Borrowings
which would have occurred over a five month period in 2010. While not
having the immediate impact on our interest costs that we had originally
anticipated, the economic rationale for the restructuring is unchanged and
we still expect the restructuring to have a positive overall effect in
future periods."
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
operates 24 offices throughout Chicago's Southland and Northwest Indiana.
The Company's stock trades on the NASDAQ National Stock Market under the
symbol "CITZ."
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. The words "anticipate," "believe," "estimate,"
"expect," "indicate," "intend," "should," and similar expressions, or the
negative thereof, as they related to the Company or the Company's
management, are intended to identify forward-looking statements. Such
statements reflect the current views of the Company with respect to future
events and are subject to certain risks, uncertainties and assumptions. One
or more of these risks may vary materially from those described herein as
anticipated, believed, estimated, expected or intended. The Company does
not intend to update these forward-looking statements.
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA FOLLOWS.
CFS BANCORP, INC.
Highlights (Unaudited)
(Dollars in thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31, December 31, December 31,
EARNINGS HIGHLIGHTS AND 2004 2003 2004 2003
PERFORMANCE RATIOS (1) ---------- ---------- ---------- ----------
Net income (loss) $ (4,683) $ 1,219 $ (6,577) $ 3,538
Basic earnings (loss)
per share (0.40) 0.11 (0.57) 0.31
Diluted earnings (loss)
per share (0.40) 0.10 (0.57) 0.30
Cash dividends declared
per share 0.11 0.11 0.44 0.44
Return on average assets (1.32)% 0.32% (0.44)% 0.23%
Return on average equity (11.95) 3.13 (4.19) 2.28
Average yield on
interest-earning assets 5.10 4.90 4.89 4.81
Average cost on
interest-bearing
liabilities 3.42 3.09 3.08 3.25
Interest rate spread 1.68 1.81 1.81 1.56
Net interest margin 2.06 2.10 2.13 1.87
Non-interest expense
to average assets 5.11 2.62 3.14 2.19
Efficiency ratio 182.28 97.08 111.54 87.99
Market price per share
of common stock for
the period ended:
Closing $ 14.27 $ 14.80 $ 14.27 $ 14.80
High 14.85 15.00 15.16 15.00
Low 13.54 13.90 12.90 13.51
STATEMENT OF CONDITION
HIGHLIGHTS AND December 31, September 30, December 31,
PERFORMANCE RATIOS (1) 2004 2004 2003
---------- ---------- ----------
Total assets $1,314,714 $1,429,921 $1,569,270
Loans receivable, net of
unearned fees 988,085 1,000,424 982,579
Total deposits 863,178 847,353 978,440
Total stockholders' equity 147,911 152,402 155,953
Book value per common share 11.94 12.38 12.78
Non-performing loans 27,675 32,976 22,720
Non-performing assets 28,200 33,566 22,926
Allowance for losses
on loans 13,353 16,506 10,453
Non-performing loans
to total loans 2.80% 3.30% 2.31%
Non-performing assets
to total assets 2.14 2.35 1.46
Allowance for losses
on loans to
non-performing loans 48.25 50.05 46.01
Allowance for losses
on loans to total loans 1.35 1.65 1.06
Average equity to
average assets 11.05 10.72 10.08
Average interest-earning
assets to average
interest-bearing liabilities 112.34 112.12 110.27
Employees (FTE) 327 338 330
Branches and offices 24 24 22
Three Months Ended Year Ended
December 31, December 31, December 31, December 31,
AVERAGE BALANCE DATA 2004 2003 2004 2003
---------- ---------- ---------- ----------
Total assets $1,410,000 $1,534,457 $1,483,224 $1,552,750
Loans receivable,
net of unearned fees 1,005,232 986,022 998,706 965,373
Total interest-earning
assets 1,333,616 1,460,961 1,409,578 1,482,715
Total liabilities 1,254,134 1,379,853 1,326,277 1,397,353
Total deposits 854,455 945,470 898,154 937,770
Interest-bearing
deposits 806,715 906,394 853,789 901,203
Total interest-bearing
liabilities 1,187,090 1,324,890 1,263,136 1,342,478
Stockholders' equity 155,866 154,604 156,947 155,397
(1) Ratios are annualized where appropriate.
CFS BANCORP, INC.
Consolidated Statements of Income (Unaudited)
(Dollars in thousands, except per share data)
For the Three Months Ended For the Year Ended
December 31, December 31,
2004 2003 2004 2003
----------- ----------- ----------- -----------
Interest income:
Loans $ 14,522 $ 14,590 $ 56,910 $ 59,408
Securities 2,046 2,793 10,029 8,637
Federal Home Loan
Bank dividends 290 330 1,199 1,348
Other 243 331 848 1,996
----------- ----------- ----------- -----------
Total interest
income 17,101 18,044 68,986 71,389
Interest expense:
Deposits 3,002 3,909 12,841 17,276
Borrowings 7,193 6,400 26,059 26,402
----------- ----------- ----------- -----------
Total interest
expense 10,195 10,309 38,900 43,678
----------- ----------- ----------- -----------
Net interest income
before provision for
losses on loans 6,906 7,735 30,086 27,711
Provision for losses
on loans 56 837 8,885 2,326
----------- ----------- ----------- -----------
Net interest income
after provision for
losses on loans 6,850 6,898 21,201 25,385
Non-interest income:
Service charges and
other fees 2,049 1,701 7,523 6,908
Commission income 139 131 666 651
Net realized gains
(losses) on sales
of securities (380) 1,455 (299) 1,780
Net gain (loss) on
sale of assets 226 11 225 39
Income from Bank-owned
life insurance 361 345 1,439 1,437
Other income 473 524 2,056 1,973
----------- ----------- ----------- -----------
Total non-interest
income 2,868 4,167 11,610 12,788
Non-interest expense:
Compensation and
employee benefits 4,599 6,337 19,834 19,804
Net occupancy expense 681 452 2,440 2,216
Professional fees 377 453 2,797 1,806
Data processing 617 582 2,713 2,236
Furniture and
equipment expense 436 355 1,612 1,771
Marketing 248 470 1,060 1,196
Prepayment penalties 9,813 - 10,298 -
Other general and
administrative
expenses 1,326 1,482 5,838 5,005
----------- ----------- ----------- -----------
Total non-interest
expense 18,097 10,131 46,592 34,034
----------- ----------- ----------- -----------
Income (loss) before
income taxes (8,379) 934 (13,781) 4,139
Income tax
expense (benefit) (3,696) (285) (7,204) 601
----------- ----------- ----------- -----------
Net income (loss) $ (4,683) $ 1,219 $ (6,577) $ 3,538
=========== =========== =========== ===========
Per share data:
Basic earnings (loss)
per share $ (0.40) $ 0.11 $ (0.57) $ 0.31
Diluted earnings
(loss) per share $ (0.40) $ 0.10 $ (0.57) $ 0.30
Cash dividends
declared per share $ 0.11 $ 0.11 $ 0.44 $ 0.44
Weighted-average
shares outstanding 11,731,618 11,300,550 11,599,996 11,289,254
Weighted-average
diluted shares
outstanding 11,990,902 11,692,643 11,897,494 11,702,635
CFS BANCORP, INC.
Consolidated Statements of Financial Condition (Unaudited)
(Dollars in thousands)
December 31, 2004 December 31, 2003
----------------- -----------------
ASSETS
Cash and amounts due from
depository institutions $ 16,878 $ 18,213
Interest-bearing deposits 11,217 149,577
Federal funds sold 9,999 9,961
----------------- -----------------
Cash and cash equivalents 38,094 177,751
Securities, available-for-sale 202,219 326,304
Investment in Federal Home Loan
Bank stock, at cost 27,665 26,766
Loans receivable, net of
unearned fees 988,085 982,579
Allowance for losses on loans (13,353) (10,453)
----------------- -----------------
Net loans 974,732 972,126
Accrued interest receivable 5,456 6,624
Real estate owned 525 206
Office properties and equipment 15,511 13,738
Investment in Bank-owned life
insurance 33,362 31,926
Prepaid expenses and other
assets 17,150 13,829
----------------- -----------------
Total assets $ 1,314,714 $ 1,569,270
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 863,178 $ 978,440
Borrowed money 286,611 418,490
Advance payments by borrowers
for taxes and insurance 8,177 5,595
Other liabilities 8,837 10,792
----------------- -----------------
Total liabilities 1,166,803 1,413,317
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
December 31, 2004 and December
31, 2003; 12,385,322 and
12,200,015 shares outstanding
as of December 31, 2004 and
December 31, 2003, respectively 234 234
Additional paid-in capital 189,991 189,879
Retained earnings, substantially
restricted 94,904 106,354
Treasury stock, at cost;
11,037,984 and 11,223,291 shares
as of December 31, 2004 and
December 31, 2003, respectively (130,689) (132,741)
Unallocated common stock held
by ESOP (5,959) (7,158)
Unearned common stock acquired
by RRP (148) (1,523)
Accumulated other comprehensive
(loss) income, net of tax (422) 908
----------------- -----------------
Total stockholders' equity 147,911 155,953
----------------- -----------------
Total liabilities and
stockholders' equity $ 1,314,714 $ 1,569,270
================= =================
Distributed by Market Wire
Copyright © 2008, MarketWire
Copyright © 2008, NewsBlaze,
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