Community Financial Shares, Inc. Announces Third Quarter 2007 Operating Results

Business Wire, Oct 31, 2007

GLEN ELLYN, Ill. -- Scott W. Hamer, Chief Executive Officer of Community Financial Shares, Inc. (OTCBB:CFIS) (the "Company"), the holding company for Community Bank of Wheaton/Glen Ellyn (the "Bank"), reported net income (unaudited) for the Company for the three and nine months ended September 30, 2007 of $358,000 and $1.7 million, respectively. This compares to $572,000 and $1.6 million for the comparable prior year periods. For the three months ended September 30, 2007 basic and diluted earnings per share both totaled $0.26. This represents a decrease of 38.1%, from $0.42 for basic and 36.6% from $0.41 for diluted earnings per share for the comparable prior year period, respectively. In addition, for the nine months ended September 30, 2007 basic and diluted earnings per share both totaled $1.20, an increase of 4.3% as compared to $1.15 earnings per share basic and diluted for the nine months ended September 30, 2006. Earnings per share information for 2006 were adjusted to reflect the 2-for-1 stock split effective December 27, 2006.

Total assets at September 30, 2007 were $286.9 million, which represents an increase of $15.2 million, or 5.6%, compared to $271.7 million at December 31, 2006. The increase in total assets was the result of increases in loans receivable of $13.0 million, or 6.5% to $212.8 million at September 30, 2007 from $199.8 million at December 31, 2006, in investment securities available-for-sale of $1.3 million, or 3.6%, to $36.2 million at September 30, 2007 from $34.9 million at December 31, 2006, and in premises and equipment, which increased $1.7 million, or 12.5%, to $15.2 million at September 30, 2007 from $13.5 million at December 31, 2006. The increase in loans is due to continued strong business relationships maintained by our loan staff. The increase in premises and equipment is primarily due to the Company's construction costs associated with its fourth full-service location in Wheaton, Illinois. This facility in north Wheaton is anticipated to open in November 2007. These increases were partially offset by decreases in cash and cash equivalents of $1.6 million, or 15.5%, to $9.0 million at September 30, 2007 from $10.6 million at December 31, 2006 and cash value of life insurance of $265,000, or 4.8%, to $5.2 million at September 30, 2007 from $5.5 million at December 31, 2006. The decrease in cash value of life insurance was primarily due to the receipt of a $478,000 claim. Deposits increased by $7.2 million, or 3.1%, to $241.9 million at September 30, 2007 from $234.7 million at December 31, 2006. Deposits increased primarily due to the success of recent promotions to attract additional deposits. Borrowed money represented by FHLB advances increased $7.0 million to $17.5 million at September 30, 2007 from $10.5 million at December 31, 2006 as advances represented a cost effective means of funding loan growth.

Shareholders' equity increased $1.2 million, or 5.8%, to $21.8 million at September 30, 2007 from $20.6 million at December 31, 2006. The increase in shareholders' equity was primarily the result of the Company's net income for the nine months ended September 30, 2007 and was partially offset by dividends paid of $248,000 and a decrease of $220,000 in the Company's accumulated other comprehensive income relating to the change in fair value of its available-for-sale investment portfolio. As of September 30, 2007 there were 1,375,278 shares of common stock outstanding, resulting in a book value of $15.85 per share.

Net interest income before provision for loan losses decreased $143,000, or 5.8%, to $2.3 million for the three months ended September 30, 2007 and $295,000, or 4.0%, to $7.1 million for the nine months ended September 30, 2007 as compared to the comparable prior year periods. These decreases are primarily due to increases in the average cost of interest-bearing liabilities of 55 and 62 basis points for the three and nine months ended September 30, 2007, respectively. The average cost of interest-bearing liabilities increased to 3.58% and 3.48% for the three and nine months ended September 30, 2007, respectively, from 3.03% and 2.86% for the comparable prior year periods. The effect of this increased cost was partially offset by increases in the average yield on interest-earning assets of 3 and 32 basis points for the three and nine months ended September 30, 2007, respectively. The average yield on interest-earning assets increased to 6.81% and 6.91% for the three and nine months ended September 30, 2007, respectively, from 6.78% and 6.59% for the comparable prior year periods. The net interest margin, expressed as a percentage of average earning assets, decreased 49 basis points to 3.59% for the three months ended September 30, 2007 from 4.08% for the three months ended September 30, 2006 and decreased 27 basis points to 3.77% for the nine months ended September 30, 2007 from 4.04% for the nine months ended September 30, 2006. The increase in interest rates in our local competitive market contributed to the increase in the overall cost of average interest-bearing liabilities.