Fewer Expenses, Bad Loans Drove 3Q Profit at CFS in Ind.

CFS Bancorp (CITZ) in Munster, Ind., reported that its third-quarter income climbed from a year ago as it cut noninterest expenses and lowered its nonperforming assets.

The $1.1 billion-asset company's earnings tripled to $1.3 million. Its earnings per share were 12 cents, three times higher than a year earlier, the company said Monday.

Noninterest expense fell more than 2%, to $9 million, year over year. The decline was related to a decrease in compensation and employee benefit costs from a previously announced early-retirement offer, branch closings in March, the outsourcing of certain support activities and lower professional fees. The number of full-time equivalent employees fell to 259 at Sept. 30 from 311 a year earlier.

Nonperforming assets fell 29%, to $54 million, from a year earlier. Net chargeoffs declined roughly 65%, to $863,000. The ratio of nonperforming loans to total loans fell to 5.19% from 7.27% at June 30, primarily thanks to transfers back to accrual status of $9.8 million of commercial real estate loans that were restructured and performing for at least six months. The drop also came from a paydown of a nonperforming commercial participation loan and some CRE loans being transferred to other real estate owned.

Net interest income was relatively stable at $8.8 million from a year earlier. The company's net interest margin rose eight basis points to 3.47% from a year earlier. Net loans fell roughly 2%, to $691,548, from a year earlier.

Noninterest income slid more than 8%, to $3 million, year over year, mostly because of smaller gains on the sale of investment securities and less income from bank-owned life insurance. Those items were partially offset by increases in the gains from the sale of loans held for sale related to expanded residential loan origination and mortgage banking, and gains on the sale of other real estate owned.