Community Financial Shares, Inc. Announces Second Quarter 2008 Operating Results

GLEN ELLYN, Ill.--(Business Wire)--
Community Financial Shares, Inc. (OTCBB: CFIS) (the "Company"),
the holding company for Community Bank-Wheaton/Glen Ellyn (the
"Bank"), reported net loss (unaudited) for the three and six months
ended June 30, 2008 of $327,000 and $246,000, respectively. This
compares to net income of $405,000 and $1.3 million for the comparable
prior year periods. For the three months ended June 30, 2008, basic
and diluted loss per share both totaled $0.26. This represents a
decrease of 189.7% from $0.29 for both basic and diluted earnings per
share for the comparable prior year period. In addition, for the six
months ended June 30, 2008 basic and diluted earnings loss per share
both totaled $0.20. This represents a decrease of 121.3% from $0.94
for both basic and diluted earnings per share for the six months ended
June 30, 2007. The decrease in net income for the three months ended
June 30, 2008 is primarily the result of the net effect of an $800,000
increase in provision for loan losses, a $291,000 decrease in net
interest income and a $144,000 increase in noninterest expense,
partially offset by a credit for income tax of $322,000 as opposed to
a $123,000 expense for the comparable prior year period. Similarly,
the decrease in net income for the six months ended June 30, 2008 is
primarily the result of the net effect of an $830,000 increase in
provision for loan losses, a $610,000 decrease in net interest income,
a $321,000 decrease in noninterest income and a $444,000 increase in
noninterest expense, partially offset by a credit for income tax of
$374,000 as opposed to a $285,000 expense for the comparable prior
year period.

Total assets at June 30, 2008 were $289.8 million, which
represents a decrease of $8.5 million, or 2.8%, compared to $298.3
million at December 31, 2007. The decrease in total assets was the
result of a decrease in cash and cash equivalents of $2.8 million to
$5.0 million at June 30, 2008 from $7.8 million from December 31,
2007, a decrease in loans receivable of $4.2 million, or 1.9%, to
$223.5 million at June 30, 2008 from $227.7 million at December 31,
2007, a decrease in investment securities of $2.2 million, 6.5%, to
$31.0 million at June 30, 2008 from $33.2 million at December 31,
2007. The decrease in loans is primarily due to the sale of $6.6
million of commercial real estate loans in March 2008. Net of loans
sold, loans receivable increased $2.4 million. The net growth in loans
during the six months ended June 30, 2008 is primarily due to
continued strong relationships within our community maintained by our
loan staff. The decreases in total loans were partially offset by an
increase in premises and equipment of $482,000, or 2.9%, to $17.0
million at June 30, 2008 from $16.5 million at December 31, 2007. The
increase in premises and equipment is primarily due to the Company's
final construction costs associated with its fourth full-service
location in north Wheaton, Illinois, which opened November 21, 2007.
Deposits decreased $3.2 million, or 1.3%, to $245.8 million at June
30, 2008 from $249.0 million at December 31, 2007. Deposits decreased
primarily due to strong local competition for certificates of deposit.
As a result, the percentage of certificates of deposit to total
deposits decreased from 47.0% at December 31, 2007 to 41.3% at June
30, 2008 and the percentage of interest bearing demand deposit
accounts increased to 19.8% at June 30, 2008 from 15.9% at December
31, 2007. Borrowed money, consisting of Federal Home Loan Bank
advances and other borrowings, decreased $3.6 million to $21.4 million
at June 30, 2008 from $25.0 million at December 31, 2007.

Stockholders' equity decreased $777,000, or 4.2%, to $17.7 million
at June 30, 2008 from $18.5 million at December 31, 2007. The decrease
in stockholders' equity for the six months ended June 30, 2008 was
primarily the result of stock repurchases by the Company of 6,333
shares of its outstanding common stock totaling $165,000, dividends
paid of $149,000, a decrease of $244,000 in the Company's accumulated
other comprehensive income relating to the change in fair value of its
available-for-sale investment portfolio and the Company's net loss for
the six months ended June 30, 2008. As of June 30, 2008 there were
1,245,267 shares of Company common stock outstanding, resulting in a
book value of $14.24 per share.

Net interest income before provision for loan losses decreased
$291,000, or 12.2%, to $2.1 million for the three months ended June
30, 2008 and $610,000, or 12.9%, to $4.1 million for the six months
ended June 30, 2008 as compared to the comparable prior year periods.
These decreases are primarily due to decreases in the average yield on
interest-earning assets of 124 and 99 basis points for the three and
six months ended June 30, 2008, respectively. The average yield on
interest-earning assets decreased to 5.76% and 5.95% for the three and
six months ended June 30, 2008, respectively, from 7.00% and 6.94% for
the comparable prior year periods. The effect of this decrease in
average yield was partially offset by decreases in the average cost of
interest bearing liabilities of 66 and 32 basis points for the three
and six months ended June 30, 2008, respectively. The average cost of
interest-bearing liabilities decreased to 2.83% and 3.11% for the
three and six months ended June 30, 2008, respectively, from 3.49% and
3.43% for the comparable prior year periods. The net interest margin,
expressed as a percentage of average earning assets, decreased 71
basis points to 3.16% for the three months ended June 30, 2008 from
3.87% for the three months ended June 30, 2007; however it increased
15 basis points from the linked quarter, and decreased 78 basis points
to 3.08% for the six months ended June 30, 2008 from 3.86% for the six
months ended June 30, 2007. The average yield on loans decreased 155
and 127 basis points for the three and six months ended June 30, 2008
compared to the comparable prior year periods. This decrease is
partially due to approximately one-half of the Bank's loan portfolio
being adjustable rate. The average yield on loans decreased to 6.05%
and 6.25% for the three and six months ended June 30, 2008,
respectively, from 7.60% and 7.52% for the comparable prior year
periods.

The provision for loan losses increased $800,000 and $830,000 for
the three and six months ended June 30, 2008 compared to the prior
year period. The increase in the provision was the result of
regulatory considerations as well as management's quarterly analysis
of the allowance for loan loss. Nonperforming loans totaled $3.1
million, or 1.09% of total assets at June 30, 2008 and $152,000 or
0.06% of total assets at June 30, 2007. The increase in nonperforming
loans was primarily the result of the addition of a $2.0 million
condominium construction loan located in the western suburbs of
Chicago, Illinois. This credit represents approximately 65% of total
nonperforming loans at June 30, 2008 and is closely monitored by
senior management. The ratio of the allowance for loan losses to
nonperforming loans totaled 89.2% and 1,021.7% at June 30, 2008 and
June 30, 2007, respectively.

Noninterest income increased $59,000, or 14.9%, to $454,000 for
the three months ended June 30, 2008 as compared to the comparable
prior year period. The increase is primarily due to increases in gain
on sale of loans of $44,000 and service charges on deposit accounts of
$29,000. Noninterest income decreased $321,000, or 24.7%, to $981,000
for the six months ended June 30, 2008 as compared to the comparable
prior year period. This decrease is primarily due to a decrease in
life insurance death benefit of $478,000. Partially offsetting this
decrease are increases in gain on sale of loans of $109,000, gain on
sale of securities of $42,000 and an increase in service charges on
deposit accounts of $38,000.

Noninterest expense increased $144,000, or 6.4%, to $2.4 million
for the three months ended June 30, 2008 as compared to the comparable
prior year period. This increase is primarily due to increases in
compensation and benefits of $91,000, building and equipment expense
of $62,000 and data processing expense of $32,000. The increase in
compensation and benefits expense is the result of annual merit
increases and the addition of staff. The additional staff expenses are
primarily due to the new facility, which opened November 21, 2007. The
increase in building and equipment expense are due to higher real
estate taxes and a higher level of depreciation expense directly
related to our new north Wheaton facility. Noninterest expenses
increased $444,000, or 10.0%, to $4.9 million for the six months ended
June 30, 2008 as compared to the comparable prior year period. This
increase is primarily due to increases in compensation and benefits of
$180,000, building and equipment expense of $158,000, data processing
expense of $76,000 and FDIC insurance premiums of $103,000 primarily
due to the depletion of the one-time credit. Partially offsetting
these increases was a decrease in advertising and marketing of
$32,000.

On June 18, 2008, the Company's Board of Directors approved a
$0.06 per share dividend. The cash dividend will be paid on or about
July 31, 2008 to shareholders of record on July 16, 2008.

Community Financial Shares, Inc. is a bank holding company
headquartered in Glen Ellyn, Illinois with $289.8 million in assets at
June 30, 2008. Its primary subsidiary, Community Bank-Wheaton/Glen
Ellyn, maintains four full service offices in Glen Ellyn and Wheaton.

For further information about the Company and the Bank visit them
on the world-wide-web at www.commbank-wge.com. In addition,
information on the Company's stock can be found at www.otcbb.com under
the symbol CFIS.

Statements contained in this news release which are not historical
facts, are forward-looking statements as that term is defined in the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements are subject to risk and uncertainties which could cause
actual results to differ materially from those currently anticipated
due to a number of factors, which include, but are not limited to,
factors discussed in documents filed by the Company with the
Securities and Exchange Commission from time to time.

The Company does not undertake, and specifically disclaims any
obligation, to publicly release the result of any revisions which may
be made to any forward-looking statements to reflect events or
circumstances after the date of such statements or to reflect the
occurrence of anticipated or unanticipated events.

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*T

Community Financial Shares, Inc.
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Selected Consolidated Financial Data: June 30, March 31, December
(Unaudited) 31,
(In thousands) 2008 2008 2007
----------------------------------------------------------------------
Total assets $289,836 $300,515 $298,311
Loans receivable, net 223,457 229,929 227,736
Investment securities
available-for-sale 30,996 28,036 33,163
Deposits 245,795 255,100 249,032
FHLB Advances 17,000 19,500 17,500
Stockholders' equity 17,728 18,263 18,505
Nonperforming assets 3,145 454 697
Nonperforming loans 3,145 454 697
Allowance for loan losses 2,805 2,002 1,970
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Selected ratios:
Total equity to total assets 6.12% 6.08% 6.20%
Allowance for loan losses as a
% of nonperforming assets 89.2% 441.3% 282.7%
Allowance for loan losses as a
% of loans, net 1.24% 0.86% 0.86%
Book value per share $14.24 $14.67 $14.85
Market value per share 20.00 25.00 25.60
Dividends per share (for the
quarter ended) 0.06 0.06 0.06
Quarterly net interest margin
(1) 3.16% 3.01% 3.20%

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Three months ended Six months ended
June 30, June 30,
---------------------------------------
Selected operating data:
(Unaudited) 2008 2007 2008 2007
---------------------------------------
(In thousands, except per
share data)
Interest income $3,827 $4,327 $7,969 $8,507
Interest expense 1,727 1,936 3,844 3,773
--------- --------- --------- ---------
Net interest income 2,100 2,391 4,125 4,734
Provision for loan losses 800 - 830 -
--------- --------- --------- ---------
Net interest income after
provision for loan losses 1,300 2,391 3,295 4,734
Noninterest income 454 395 981 1,302
Noninterest expense 2,403 2,258 4,896 4,452
--------- --------- --------- ---------
Income (loss) before income
tax (649) 528 (620) 1,584
Income tax expense (benefit) (322) 123 (374) 285
--------- --------- --------- ---------
Net income (loss) $(327) $405 $(246) $1,299
========= ========= ========= =========

Earnings (loss) per share -
basic $(0.26) $0.29 $(0.20) $0.94
Earnings (loss) per share -
diluted (0.26) 0.29 (0.20) 0.94

Selected performance ratios:
Return (loss) on average
assets (1) -0.44% 0.59% -0.17% 0.96%
Return (loss) on average
equity (1) -7.12% 7.58% -2.67% 12.34%
Noninterest expense to average
total assets (1) 3.27% 3.31% 3.30% 3.29%
Net interest margin (1) 3.16% 3.87% 3.08% 3.86%
Average total assets $294,983 $273,995 $297,469 $272,754
Average total equity 18,413 21,441 18,501 21,234

(1) Annualized.
*T

Community Financial Shares, Inc.
Scott W. Hamer
President/CEO
630-545-0900

Copyright Business Wire 2008