<PAGE>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the quarterly period ended June 30, 2002.

                                       OR

[  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the transition period from _________ to __________.

                         Commission file number: 0-24611

                                CFS Bancorp, Inc.
             (Exact name of registrant as specified in its charter)

                  Delaware                                   35-2042093
        (State or other jurisdiction                      (I.R.S. Employer
      of incorporation or organization)                  Identification No.)


                     707 Ridge Road, Munster, Indiana 46321
                    (Address of principal executive offices)

                                 (219) 836-5500
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.

         YES [X]  NO [  ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS:


Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

The Registrant had 13,229,501 shares of Common Stock issued and outstanding as
of July 24, 2002.


<PAGE>


                                CFS BANCORP, INC.

                                      INDEX


                                                                        Page No.
                                                                        --------
PART I   FINANCIAL INFORMATION

         Item 1.    Financial Statements (Unaudited)

                    Consolidated Statements of Financial Condition at
                    June 30, 2002 and December 31, 2001                        3

                    Consolidated Statements of Income for the Three and Six
                    Months Ended June 30, 2002 and 2001                        4

                    Consolidated Statement of Changes in Stockholders' Equity
                    for the Six Months Ended June 30, 2002                     5

                    Consolidated Statements of Cash Flows for the Six Months
                    Ended June 30, 2002 and 2001                               6

                    Notes to Consolidated Financial Statements                 8

         Item 2.    Management's Discussion and Analysis of Financial Condition
                    and Results of Operations                                 14

         Item 3.    Quantitative and Qualitative Disclosures About Market
                    Risk                                                      23


PART II  OTHER INFORMATION

         Item 1.    Legal Proceedings                                         23

         Item 2.    Changes in Securities and Use of Proceeds                 23

         Item 3.    Defaults upon Senior Securities                           23

         Item 4.    Submission of Matters to a Vote of Security Holders       23

         Item 5.    Other Information                                         23

         Item 6.    Exhibits and Reports on Form 8-K                          23

                    Exhibit 99.1 - Certification of Form 10-Q                 25



                                       2
<PAGE>



                                CFS BANCORP, INC.
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                June 30, 2002   December 31, 2001
                                                                                -------------   -----------------
                                                                                 (Unaudited)
<S>                                                                              <C>               <C>
ASSETS
Cash and amounts due from depository institutions                                $    18,736       $    28,250
Interest-bearing deposits                                                             93,479           137,978
Federal funds sold                                                                    27,935           105,839
                                                                                 -----------       -----------
       Cash and cash equivalents                                                     140,150           272,067

Investment securities available-for-sale                                              48,472            47,225
Mortgage-backed securities available-for-sale                                        312,288           276,158
Mortgage-backed securities held-to-maturity
  (fair value 2002 - $31,026; 2001 - $37,744)                                         30,590            37,034
Loans receivable, net                                                                924,339           883,352
Investment in Federal Home Loan Bank stock, at cost                                   26,025            26,165
Office properties and equipment                                                       14,501            14,983
Accrued interest receivable                                                            7,285             6,887
Real estate owned                                                                      1,715             1,128
Investment in bank-owned life insurance                                               30,792            30,052
Prepaid expenses and other assets                                                      9,365             9,083
                                                                                 -----------       -----------
       Total assets                                                              $ 1,545,522       $ 1,604,134
                                                                                 ===========       ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits                                                                         $   894,606       $   945,948
Borrowed money                                                                       459,808           462,658
Advance payments by borrowers for taxes and insurance                                  4,295             4,497
Other liabilities                                                                     17,427            19,747
                                                                                 -----------       -----------
          Total liabilities                                                        1,376,136         1,432,850
                                                                                 -----------       -----------

Stockholders' Equity:
   Preferred stock, $.01 par value:
     Authorized shares - 15,000,000
     Issued and outstanding shares - 0
       at June 30, 2002 and December 31, 2001 Common stock, $.01 par value:
     Authorized shares - 85,000,000
     Issued shares - 23,423,306
       at June 30, 2002 and December 31, 2001
     Outstanding shares - 13,257,348 and 13,626,146
       at June 30, 2002 and December 31, 2001, respectively                              234               234
   Additional paid-in capital                                                        189,440           189,547
   Retained earnings, substantially restricted                                       106,166           105,064
   Treasury stock, at cost: 10,165,958 and 9,797,160 shares
     at June 30, 2002, and December 31, 2001, respectively                          (117,273)         (112,167)
   Unearned common stock acquired by ESOP                                             (9,570)           (9,570)
   Unearned common stock acquired by RRP                                              (2,874)           (4,543)
   Accumulated other comprehensive income, net of tax                                  3,263             2,719
                                                                                 -----------       -----------
     Total stockholders' equity                                                      169,386           171,284
                                                                                 -----------       -----------

          Total liabilities and stockholders' equity                             $ 1,545,522       $ 1,604,134
                                                                                 ===========       ===========
</TABLE>

See accompanying notes.





                                       3
<PAGE>

                                CFS BANCORP, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                  (Dollars in thousands, except per share data)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                   Three Months Ended June 30,   Six Months Ended June 30,
                                                   ---------------------------   -------------------------
                                                       2002           2001          2002         2001
                                                       ----           ----          ----         ----
<S>                                                <C>            <C>            <C>            <C>
Interest income:
  Loans                                            $    15,748    $    18,015    $    31,336    $    37,266
  Mortgage-related securities                            4,696          5,600          9,362         11,570
  Other investment securities                              523          2,608            856          5,902
  Other                                                  1,161          2,070          2,552          3,301
                                                   -----------    -----------    -----------    -----------
               Total interest income                    22,128         28,293         44,106         58,039

Interest expense:
  Deposits                                               6,097         10,961         13,312         21,857
  Borrowings                                             6,881          7,432         13,679         15,099
                                                   -----------    -----------    -----------    -----------
               Total interest expense                   12,978         18,393         26,991         36,956
               Net interest income before
                  provision for losses on loans          9,150          9,900         17,115         21,083
Provision for losses on loans                              350            450            550            900
                                                   -----------    -----------    -----------    -----------
               Net interest income after
                  provision for losses on loans          8,800          9,450         16,565         20,183

Non-interest income:
  Loan fees                                                290            277            695            638
  Fees on deposit accounts                                 909            656          1,447          1,145
  Insurance commissions                                    376            240            664            472
  Investment commissions                                   278            221            540            466
  Gain on sale of available-for-sale
     investment securities - net                            24            451            271            590
  Income from bank-owned life insurance                    392            362            740            750
  Other income                                             225            144            383            301
                                                   -----------    -----------    -----------    -----------
               Total non-interest income                 2,494          2,351          4,740          4,362

Non-interest expense:
  Compensation and employee benefits                     5,094          4,895         10,090          9,676
  Net occupancy expense                                    616            551          1,211          1,255
  Furniture and equipment expense                          476            496            938          1,034
  Federal deposit insurance premiums                        42             45             86             91
  Data processing                                          584            321            936            643
  Marketing                                                253            252            411            399
  Other general and administrative expenses              1,387          1,484          2,566          2,711
                                                   -----------    -----------    -----------    -----------
               Total non-interest expense                8,452          8,044         16,238         15,809

Income before income taxes                               2,842          3,757          5,067          8,736
Income tax expense                                         859          1,094          1,520          2,750
                                                   -----------    -----------    -----------    -----------

               Net income                          $     1,983    $     2,663    $     3,547    $     5,986
                                                   ===========    ===========    ===========    ===========

Per share data:
  Basic earnings per share                         $      0.16    $      0.18    $      0.29    $      0.40
  Diluted earnings per share                              0.16           0.18           0.28           0.40
  Cash dividends declared per share                       0.10           0.09           0.20           0.18
  Weighted average shares outstanding               12,147,733     14,653,346     12,161,635     14,812,600
  Weighted average diluted shares outstanding       12,669,255     15,029,024     12,670,059     15,114,337
</TABLE>

See accompanying notes


                                       4
<PAGE>



                                CFS BANCORP, INC.
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                             (Dollars in thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                           Common    Common   Accumulated
                                                   Additional                               Stock     Stock       Other
                                            Common    Paid-In    Retained    Treasury    Acquired  Acquired  Comprehensive
                                             Stock    Capital    Earnings       Stock     by ESOP    by RRP      Income      Total
                                             -----    -------    --------       -----     -------    ------      ------      -----

<S>                                          <C>    <C>         <C>         <C>         <C>        <C>        <C>        <C>
Balance January 1, 2001                      $ 234  $ 189,547   $ 105,064   ($112,167)  ($  9,570) $  4,543)  $   2,719   $ 171,284

Net income                                      --         --       3,547          --          --         --          --      3,547
Other comprehensive income, net of tax:
Change in unrealized appreciation on
     available-for-sale securities, net
     of reclassification adjustment             --         --          --          --          --         --         544        544
                                                                                                                              ------
Total comprehensive income                                                                                                    4,091

Purchase of treasury stock                      --         --          --      (5,740)         --         --          --     (5,740)

Exercise of stock options                       --       (107)         --         634          --         --          --        527

Amoritization of awards granted under
     Recognition and Retention Plan             --         --         (60)         --          --      1,669          --      1,609

Dividends declared on common stock              --         --      (2,385)         --          --         --          --     (2,385)
                                            ----------------------------------------------------------------------------------------
Balance June 30, 2002                       $  234  $ 189,440   $ 106,166   ($117,273)  ($  9,570)  ($  2,874)  $   3,263  $ 169,386
                                            ======  =========   =========   =========   =========   =========   =========  =========
</TABLE>

See accompanying notes




                                       5
<PAGE>

                                CFS BANCORP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                             Six Months Ended June 30,
                                                                2002          2001
                                                                ----          ----
<S>                                                          <C>           <C>
   Net income                                                $   3,547     $   5,986
   Adjustments to reconcile net income
     to net cash provided by operating activities:
        Provision for losses on loans                              550           900
        Depreciation expense                                       920         1,006
        Deferred income taxes  (benefit)                         1,351          (552)
        Amortization of cost of stock benefit plans              1,609         1,424
        Change in deferred income                                  904           148
        (Increase) decrease in interest receivable                (398)        2,464
        Decrease in accrued interest payable                      (211)         (679)
        Proceeds from sale of loans held for sale                5,246         2,872
        Origination of loans held for sale                      (4,261)       (2,741)
        Net gain on sale of available-for-sale securities         (271)         (590)
        Increase in prepaid expenses and other assets           (2,777)       (1,151)
        Decrease in other liabilities                           (3,449)       (2,275)
                                                             ---------     ---------

Net cash provided by operating activities                        2,760         6,812
                                                             ---------     ---------

Investing activities:
   Available-for-sale investment securities:
        Purchases                                             (169,338)     (107,296)
        Repayments                                             167,183        70,750
        Sales                                                    1,011         8,957
   Held to maturity investment securities:
        Repayments and maturities                                   --       100,000
   Available-for-sale mortgage-related securities:
        Purchases                                              (98,496)      (14,117)
        Repayments                                              63,538        18,413
        Sales                                                       --        14,102
   Held to maturity mortgage-related securities:
        Repayments                                               6,388        13,895
   Purchase of Federal Home Loan Bank stock                        (19)          (56)
   Redemption of Federal Home Loan Bank stock                      159           266
   Loan originations and principal payments on loans, net      (44,939)       67,556
   Additional costs on real estate owned                           (81)         (149)
   Proceeds from sale of real estate owned                       1,008           924
   Purchases of property and equipment                            (874)         (566)
   Disposals of property and equipment                             435           144
                                                             ---------     ---------
Net cash provided by (used in) investing activities            (74,025)      172,823
                                                             ---------     ---------
</TABLE>




                                       6
<PAGE>

                                CFS BANCORP, INC.
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                             (Dollars in thousands)
                                   (Unaudited)

                                                              Six Months
                                                            Ended June 30,
                                                            2002         2001
                                                            ----         ----

Financing activities:
   Proceeds from exercise of stock options                    527          355
   Dividends paid on common stock                          (1,188)      (2,720)
   Purchase of treasury stock                              (5,740)      (8,340)
   Net increase in NOW, passbook and money
     market accounts                                       41,278       16,264
   Net increase (decrease) in certificates of deposit     (92,477)      42,329
   Net decrease in advance payments by
     borrowers for taxes and insurance                       (202)        (341)
   Net decrease in borrowed funds                          (2,850)     (47,173)
                                                        ---------    ---------
   Net cash flows provided by financing activities        (60,652)         374
                                                        ---------    ---------
   Increase (decrease) in cash and cash equivalents      (131,917)     180,009
   Cash and cash equivalents at beginning of period       272,067       59,259
                                                        ---------    ---------
   Cash and cash equivalents at end of period           $ 140,150    $ 239,265
                                                        =========    =========

  Supplemental disclosure of non-cash activities:
     Transfer of loans to real estate owned             $   1,514    $   1,109

See accompanying notes


                                       7
<PAGE>

                                CFS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       BASIS OF FINANCIAL STATEMENTS PRESENTATION

The accompanying consolidated financial statements were prepared in accordance
with instructions to Form 10-Q and therefore do not include all the information
or footnotes necessary for a complete presentation of financial position,
results of operations and cash flows in conformity with generally accepted
accounting principles. However, all normal recurring adjustments which, in the
opinion of management, are necessary for a fair presentation of financial
statements have been included. These financial statements should be read in
conjunction with the audited financial statements and the notes thereto for the
period ended December 31, 2001 contained in the CFS Bancorp, Inc. (the
"Company") annual report to stockholders. The results for the three and six
months ended June 30, 2002 are not necessarily indicative of the results that
may be expected for the year ending December 31, 2002.

2.       LOAN PORTFOLIO

The Company's loan portfolio consisted of the following at the dates indicated:
<TABLE>
<CAPTION>

                                          June 30, 2002       December 31, 2001
                                          -------------       -----------------
                                                (Dollars in thousands)
Mortgage loans:                          Amount          %       Amount          %
                                         ------        ---       ------        ---
<S>                                   <C>           <C>       <C>           <C>
  Single-family residential           $ 469,165     50.31%    $ 535,197     60.07%
  Multi-family residential               70,898      7.60        51,635      5.80
  Commercial real estate                210,871     22.61       142,663     16.01
Construction and land
  development:
    Single-family residential            13,637      1.46        17,208      1.93
    Multi-family residential             55,361      5.94        26,443      2.97
    Commercial and land development      86,129      9.24        76,168      8.55
  Home equity                            45,901      4.92        41,416      4.65
                                      -------------------     -------------------
        Total mortgage loans            951,962    102.08       890,730     99.98

Other loans:
    Commercial                           32,220      3.46        23,996      2.69
    Consumer                              2,268       .24         2,066       .23
    Undisbursed portion of
       loan proceeds                    (51,674)    (5.54)      (24,454)    (2.75)
    Deferred loan fees                   (2,227)     (.24)       (1,324)     (.15)
                                      -------------------     -------------------
        Total loans receivable          932,549    100.00%      891,014    100.00%
                                      -------------------     -------------------

Less:
  Allowance for losses on loans           8,210                   7,662
                                      ---------               ---------
Loans receivable, net                 $ 924,339               $ 883,352
                                      =========               =========
</TABLE>



                                       8
<PAGE>

3.       INVESTMENT SECURITIES

Amortized cost of investment securities and their fair values were as follows
(in thousands):


Available-for-Sale at June 30, 2002:
<TABLE>
<CAPTION>
                                                          Gross        Gross
                                         Amortized   Unrealized   Unrealized         Fair
                                              Cost        Gains       Losses        Value
                                              ----        -----       ------        -----
<S>                                        <C>          <C>          <C>          <C>
Callable agency securities, corporate
    bonds and commercial paper             $37,952      $   167      $     5      $38,114
Trust preferred securities                   4,930           --          480        4,450
Equity securities                            6,169          514          775        5,908
                                           -------      -------      -------      -------
                                           $49,051      $   681      $ 1,260      $48,472
                                           =======      =======      =======      =======
</TABLE>


Available-for-Sale at December 31, 2001:
<TABLE>
<CAPTION>
                                                          Gross        Gross
                                         Amortized   Unrealized   Unrealized         Fair
                                              Cost        Gains       Losses        Value
                                              ----        -----       ------        -----
<S>                                        <C>          <C>          <C>          <C>
Callable agency securities, corporate
     bonds and commercial paper            $33,169      $    12      $    33      $33,148
Trust preferred securities                   4,929           --          534        4,395
Equity securities                            7,489          611          454        7,646
Asset-backed notes                           2,026           10           --        2,036
                                           -------      -------      -------      -------
                                           $47,613      $   633      $ 1,021      $47,225
                                           =======      =======      =======      =======
</TABLE>




                                       9
<PAGE>




4.        MORTGAGE-BACKED SECURITIES

The amortized cost of mortgage-backed securities and their fair values are as
follows (in thousands):
<TABLE>
<CAPTION>
Available-for-Sale at June 30, 2002:
                                                                 Gross         Gross
                                               Amortized    Unrealized    Unrealized          Fair
                                                    Cost         Gains        Losses         Value
                                                    ----         -----        ------         -----
<S>                                             <C>           <C>           <C>           <C>
Participation certificates                      $ 57,546      $  1,729      $     40      $ 59,235
Real estate mortgage investment conduits
   and collateralized mortgage obligations       248,364         4,711            22       253,053
                                                 -------         -----            --       -------
                                                $305,910      $  6,440      $     62      $312,288
                                                ========      ========      ========      ========

Available-for-Sale at December 31, 2001:
                                                                 Gross         Gross
                                               Amortized    Unrealized    Unrealized          Fair
                                                    Cost         Gains        Losses         Value
                                                    ----         -----        ------         -----
Participation certificates                      $ 32,089      $  1,215      $     79      $ 33,225
Real estate mortgage investment conduits
   and collateralized mortgage obligations       239,776         3,439           282       242,933
                                                 -------         -----            --       -------
                                                $271,865      $  4,654      $    361      $276,158
                                                ========      ========      ========      ========


Held-to-Maturity at June 30, 2002:
                                                                 Gross         Gross
                                               Amortized    Unrealized    Unrealized          Fair
                                                    Cost         Gains        Losses         Value
                                                    ----         -----        ------         -----
Participation certificates                      $ 26,974       $   411       $    30      $ 27,355
Real estate mortgage investment conduits
   and collateralized mortgage obligations         3,616            55             -         3,671
                                                 -------         -----            --       -------
                                                $ 30,590       $   466       $    30      $ 31,026
                                                ========      ========      ========      ========


Held-to-Maturity at December 31, 2001:
                                                                 Gross         Gross
                                               Amortized    Unrealized    Unrealized          Fair
                                                    Cost         Gains        Losses         Value
                                                    ----         -----        ------         -----
Participation certificates                      $ 28,644       $   659       $    69       $29,234
Real estate mortgage investment conduits
   and collateralized mortgage obligations         8,390           125             5         8,510
                                                 -------         -----            --       -------
                                                $ 37,034       $   784       $    74       $37,744
                                                ========       =======       =======       =======
</TABLE>




                                       10
<PAGE>

5.       DEPOSITS

The following table sets forth the dollar amount of deposits and the percentage
of total deposits in various types of deposits offered by the Bank at the dates
indicated.
<TABLE>
<CAPTION>

                                                                June 30, 2002                  December 31, 2001
                                                                -------------                  -----------------
                                                            Amount       Percentage           Amount       Percentage
                                                            ------       ----------           ------       ----------
                                                                         (Dollars in thousands)
<S>                                                       <C>               <C>             <C>               <C>
NOW accounts:
  Noninterest-bearing                                      $29,072            3.25%          $26,970            2.85%
  Interest-bearing                                          85,931            9.60            81,217            8.59
Money market accounts                                      109,853           12.29            89,205            9.44
Savings accounts                                           216,979           24.26           203,165           21.49
Certificates of deposit:
  $100,000 or less                                         367,666           41.12           416,675           44.07
  Over $100,000                                             84,744            9.48           128,212           13.56
                                                          --------          ------          --------          ------
      Deposits                                            $894,245          100.00%         $945,444          100.00%
Accrued interest                                               361                               504
                                                          --------                          --------
Total                                                     $894,606                          $945,948
                                                          ========                          ========
</TABLE>


6.        NEW ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, Business Combinations, and No. 142,
Goodwill and Other Intangibles Assets, (collectively the "Statements") effective
for fiscal years beginning after December 15, 2001. Under the new rules,
goodwill (and intangible assets deemed to have indefinite lives) will no longer
be amortized but will be subject to annual impairment tests in accordance with
the Statements. Other identified intangible assets will continue to be amortized
over the useful lives.

The Company applied the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of 2002. Application of the
non-amortization provisions of the Statement did not result in any changes to
reported earnings since the Company currently has no goodwill nor intangible
assets with indefinite lives.

FASB Statement No. 144, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed of," (FAS No. 144) was issued in October
2001 and addresses how and when to measure impairment on long-lived assets and
how to account for long-lived assets that an entity plans to dispose of either
through sale, abandonment, exchange, or distribution to owners. The new
provisions supersede FAS No. 121, which addressed asset impairment, and certain
provisions of APB Opinion 30 related to reporting the effects of the disposal of
a business segment and requires expected future operating losses from
discontinued operations to be recorded in the period in which the losses are
incurred rather than the measurement date. Under FAS No. 144, more dispositions
may qualify for discontinued operations treatment in the income statement. The
provisions of FAS No. 144 became effective for the Company on January 1, 2002,
and did not have an impact on the Company's financial position or results of
operations.


                                       11
<PAGE>

7.       EARNINGS PER SHARE

Set forth below is information with respect to calculation of basic and diluted
earnings per share for the periods indicated.
<TABLE>
<CAPTION>

                                                              Three Months Ended               Six Months Ended
                                                              ------------------               ----------------
                                                                   June 30,                      June 30,
                                                                   --------                      --------
                                                             2002          2001             2002            2001
                                                             ----          ----             ----            ----
                                                                (Dollars in thousands, except per share data)
<S>                                                        <C>             <C>             <C>             <C>
Net income                                               $      1,983    $      2,663    $      3,547    $      5,986

Weighted average number of common shares outstanding       13,333,516      16,117,753      13,441,871      16,362,210
Average ESOP shares not committed to be released             (912,133)     (1,031,757)       (927,086)     (1,046,710)
Average RRP shares not vested                                (273,650)       (432,650)       (353,150)       (502,900)
                                                         ------------    ------------    ------------    ------------
Weighted average number of shares outstanding
   for basic earnings per share computation purposes       12,147,733      14,653,346      12,161,635      14,812,600
Dilutive effects of employee stock options                    521,522         375,678         508,424         301,737
                                                         ------------    ------------    ------------    ------------
Weighted average shares and common share equivalents
   outstanding for diluted earnings per share purposes     12,669,255      15,029,024      12,670,059      15,114,337
                                                         ============    ============    ============    ============

Basic earnings per share                                 $       0.16    $       0.18    $       0.29    $       0.40
Diluted earnings per share                                       0.16            0.18            0.28            0.40
</TABLE>



8.        COMPREHENSIVE INCOME

Comprehensive income is the total of reported net income and all other revenues,
expenses, gains and losses that under generally accepted accounting principles
are not includable in reported net income but are reflected in stockholders'
equity.

The following table presents the Company's comprehensive income:
<TABLE>
<CAPTION>

                                                      Three Months Ended           Six Months Ended
                                                           June 30,                    June 30,
                                                           --------                    --------
                                                          2002          2001         2002           2001
                                                          ----          ----         ----           ----
                                                                  (Dollars in thousands)
<S>                                                     <C>           <C>          <C>            <C>
Net income                                              $1,983        $2,663       $3,547         $5,986
Net change in unrealized gain (loss) on
   securities available-for-sale, net                    1,774         (680)          544          3,468
                                                        ------        ------       ------         ------
Comprehensive income                                    $3,757        $1,983       $4,091         $9,454
                                                        ======        ======       ======         ======
</TABLE>



                                       12
<PAGE>

9.       NON-PERFORMING ASSETS

The following table sets forth information with respect to non-performing assets
at the dates indicated:
<TABLE>
<CAPTION>

                                                         June 30, 2002    December 31, 2001
                                                         -------------    -----------------
                                                                (Dollars in thousands)
<S>                                                        <C>                <C>
Non-accrual loans:
     Mortgage loans:
          Construction and land development                $12,991            $ 1,361
          Single-family residential                          6,711              8,579
          Multi-family residential                              59                 36
          Non-residential                                    1,609              1,798
          Home equity                                          253                692
     Other loans:
          Commercial                                         1,294              1,117
          Consumer                                             662                291
                                                           -------            -------
          Total non-performing loans                        23,579             13,874
          Real estate owned                                  1,715              1,128
                                                           -------            -------
          Total non-performing assets                      $25,294            $15,002
                                                           =======            =======

          Non-performing assets to total assets               1.64%              0.94%
          Non-performing loans to total loans                 2.53               1.56
</TABLE>


The following table is a summary of changes in the allowance for loan losses for
the six months ended June 30, 2002, the year ended December 31, 2001 and the six
months ended June 30, 2001:
<TABLE>
<CAPTION>

                                                        Six Months Ended               Year Ended        Six Months Ended
                                                           June 30, 2002         December 31, 2001          June 30, 2001
                                                           -------------         -----------------          -------------
                                                                             (Dollars in thousands)
<S>                                                               <C>                        <C>                    <C>
     Balance at beginning of period                               $7,662                     $7,187                 $7,187
     Provision for loan losses                                       550                      1,150                    900
     Charge-offs                                                     (86)                      (855)                  (813)
     Recoveries                                                       84                        180                     38
                                                                  ------                     ------                 ------
     Balance at end of period                                     $8,210                     $7,662                 $7,312
                                                                  ======                     ======                 ======

     Allowance for loan losses to total
        non-performing loans at end of period                      34.82%                     55.23%                 58.67%
     Allowance for loan losses to total loans
        at end of period                                            0.88                       0.86                   0.76
</TABLE>

                                       13
<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

FORWARD LOOKING STATEMENTS

This Form 10-Q contains certain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995, and may be identified by
the use of such words as "believe," "expect," "anticipate," "should," "planned,"
"estimated" and "potential." Examples of forward-looking statements include, but
are not limited to, management's intentions, beliefs, or expectations, estimates
with respect to the financial condition, results of operations and business of
the Company that are subject to various factors which could cause actual results
to differ materially from these estimates. These factors include, but are not
limited to, the positive net earnings effects of various tax strategies,
anticipated future opportunities for use of liquidity, restructuring of the loan
portfolio and fixed-income portfolio, increased emphasis on business banking and
commercial lending, Federal Reserve Board interest rate cuts and interest rate
environment, the process improvement program, the consolidation and relocation
of branch offices, the resolution of the large construction loan delinquency,
outsourcing of the investment services function, general economic conditions,
changes in interest rates, deposit flows, loan demand, real estate values and
competition; changes in accounting principles, policies, or guidelines; changes
in legislation or regulation; and other economic, competitive, governmental,
regulatory, and technological factors affecting the Company's operations,
pricing, products, and services. Many of such factors are not subject to the
Company's control. Stockholders are cautioned that any such forward-looking
statements included herein are not guarantees of future performance and involve
risks and uncertainties and that actual results may differ materially from those
contemplated by such forward-looking statements. The Company undertakes no
obligation to update or revise any forward-looking statements to reflect changes
in assumptions, the occurrence of unanticipated events or changes to future
operating results that occur subsequently to the date such forward-looking
statements are made.

CHANGES IN FINANCIAL CONDITION

At June 30, 2002 the Company's total assets amounted to $1.5 billion or
approximately $58.6 million less than at December 31, 2001, while total
liabilities decreased $56.7 million and stockholders' equity decreased $1.9
million over this same period.

Cash and cash equivalents were $140.2 million at June 30, 2002 compared to
$272.1 million at December 31, 2001. The decrease of $131.9 million was used
primarily to fund origination of commercial and multi-family real estate
mortgage loans, purchase mortgage-backed securities and fund certificate
withdrawals as the Company continued implementation of its strategic plan.

Investment securities available-for-sale were $48.5 million at June 30, 2002
compared to $47.2 million at December 31, 2001. Mortgage-backed securities
available-for-sale were $312.3 million at June 30, 2002 compared to $276.2
million at December 31, 2001 while mortgage-backed securities held-to-maturity
were $30.6 million at June 30, 2002 compared to $37.0 million at December 31,
2001. This net increase in investment and mortgage-backed securities of $30.9
million is a result of the Company investing in mortgage-backed securities
available-for-sale with yields greater than were being earned while these funds
were in cash and cash-equivalents. However, the cash flows




                                       14
<PAGE>

from these mortgage-backed securities are anticipated to be received over a
relatively short period of time.

Loans receivable increased to $924.3 million at June 30, 2002 from $883.4
million at December 31, 2001. This net increase of $40.9 million resulted from
using cash and cash equivalents to fund new loan originations. The net reduction
of $69.6 million in single-family residential mortgage and construction loans
reflected the continuing shift in the composition of the Company's loan
portfolio into higher levels of investment in commercial, commercial real
estate, multi-family real estate and home equity loans.

Deposits decreased $51.3 million to $894.6 at June 30, 2002 from $945.9 million
at December 31, 2001. The reduction was the result of a reduction of $92.5
million in certificates of deposit being partially offset by an increase in core
deposits of $41.2 million.

Borrowed money was $459.8 million at June 30, 2002 compared to $462.7 million at
December 31, 2001. Borrowed funds consist of advances from the Federal Home Loan
Banks of Indianapolis and Chicago and Community Investment Program funds from
the Federal Home Loan Bank of Indianapolis.

Stockholders' equity was $169.4 million at June 30, 2002 compared to $171.3
million at December 31, 2001. The $1.9 million net reduction was the result
primarily of the repurchase of $5.8 million of the Company's common stock offset
by $705,000 of options exercised during the first six months of 2002. This net
decrease in stockholders' equity of $5.1 million resulting from the Company's
stock repurchase activity was partially offset by $1.7 million of shares held in
the RRP Trust becoming vested and issued to plan participants, $1.1 million
added to retained earnings from net income less dividends paid to stockholders
and an increase of $544,000 in accumulated other comprehensive income.



                                       15
<PAGE>

AVERAGE BALANCES, NET INTEREST INCOME, YIELDS EARNED AND RATES PAID
The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest income of the Company from
interest-earning assets and the resultant average yields; (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average rate; (iii) net interest income; (iv) interest rate spread; and (v) net
interest margin. Information is based on average daily balances.

<TABLE>
<CAPTION>

                                                                                 Three Months Ended June 30,
                                             --------------------------------------------------------------------------------------
                                                             2002                                          2001
                                             --------------------------------------------------------------------------------------
                                                                                (Dollars in thousands)
                                                   Average                 Average           Average                       Average
                                                   Balance   Interest   Yield/Cost           Balance       Interest     Yield/Cost
                                             --------------------------------------------------------------------------------------
<S>                                                 <C>         <C>          <C>              <C>           <C>              <C>
Interest-earning assets:
  Loans Receivable (1)
     Real estate loans                              $881,066    $15,325      6.96%            $935,611      $17,609          7.53%
     Other loans                                      29,317        423      5.77%              20,065          406          8.09%
                                                ------------------------                 ---------------------------
          Total loans                                910,383     15,748      6.92%             955,676       18,015          7.54%
  Securities (2)                                     378,340      5,219      5.52%             496,639        8,208          6.61%
  Other interest-earning assets (3)                  204,567      1,161      2.27%             180,926        2,070          4.58%
                                                ------------------------                 ---------------------------
      Total interest-earning assets                1,493,290     22,128      5.93%           1,633,241       28,293          6.93%

Non-interest earning assets                           79,037                                    80,264
                                                -------------                            --------------
Total assets                                      $1,572,327                                $1,713,505
                                                =============                            ==============

Interest-bearing liabilities:
  Deposits:
     NOW and money market accounts                  $192,589      $ 655      1.36%            $144,776        $ 885          2.45%
     Passbook accounts                               217,778        694      1.27%             203,312        1,284          2.53%
     Certificates of deposit                         468,350      4,748      4.06%             599,013        8,792          5.87%
                                                ------------------------                 ---------------------------
          Total deposits                             878,717      6,097      2.78%             947,101       10,961          4.63%

  Total borrowings                                   462,180      6,881      5.96%             501,645        7,432          5.93%
                                                ------------------------                 ---------------------------
     Total interest-bearing liabilities            1,340,897     12,978      3.87%           1,448,746       18,393          5.08%

Non-interest bearing liabilities (4)                  62,964                                    64,903
                                                -------------                            --------------
          Total liabilities                        1,403,861                                 1,513,649
Net worth                                            168,466                                   199,856
                                                -------------                            --------------
          Total liabilities and stockholders'
            equity                                $1,572,327                                $1,713,505
                                                =============                            ==============

Net interest-earning assets                         $152,393                                  $184,495
                                                =============                            ==============
Net interest income/interest rate spread                         $9,150      2.06%                           $9,900          1.85%
                                                             ======================                   ============================
Net interest margin                                                          2.45%                                           2.42%
                                                                        ===========                                 ===============
Ratio of average interest-earning assets to
  average interest-bearing liabilities                                     111.37%                                         112.73%
                                                                        ===========                                 ===============
</TABLE>


(1)  The average balance of loans receivable includes non-performing loans,
     interest on which is recognized on a cash basis.
(2)  Average balances of securities available-for-sale are based on historical
     costs.
(3)  Includes money market accounts, federal funds sold and interest-earning
     bank deposits.
(4)  Consists primarily of demand deposit accounts.



                                       16
<PAGE>



<TABLE>
<CAPTION>
                                                                           Six Months Ended June 30,
                                             --------------------------------------------------------------------------------------
                                                                 2002                                        2001
                                             --------------------------------------------------------------------------------------
                                                                                (Dollars in thousands)
                                                     Average                  Average        Average                       Average
                                                     Balance   Interest    Yield/Cost        Balance      Interest      Yield/Cost
                                             --------------------------------------------------------------------------------------
<S>                                                 <C>          <C>          <C>           <C>            <C>               <C>
Interest-earning assets:
  Loans Receivable (1)
     Real estate loans                              $872,021     $30,159      7.00%         $954,349       $36,403           7.63%
     Other loans                                      28,335         817      5.77%           20,345           863           8.48%
                                                -------------------------               ---------------------------
          Total loans                                900,356      31,336      6.96%          974,694        37,266           7.65%
  Securities (2)                                     368,938      10,218      5.54%          518,529        17,472           6.74%
  Other interest-earning assets (3)                  235,273       2,552      2.17%          132,205         3,301           4.99%
                                                -------------------------               ---------------------------
     Total interest-earning assets                 1,504,567      44,106      5.86%        1,625,428        58,039           7.14%

Non-interest earning assets                           83,676                                  81,359
                                                -------------                           -------------
Total assets                                      $1,588,243                              $1,706,787
                                                =============                           =============

Interest-bearing liabilities:
  Deposits:
     NOW and money market accounts                  $185,442      $1,330      1.43%         $137,596        $1,688           2.45%
     Passbook accounts                               214,356       1,469      1.37%          204,809         2,678           2.62%
     Certificates of deposit                         493,489      10,513      4.26%          589,297        17,491           5.94%
                                                -------------------------               ---------------------------
          Total deposits                             893,287      13,312      2.98%          931,702        21,857           4.69%

  Total borrowings                                   462,406      13,679      5.92%          511,253        15,099           5.91%
                                                -------------------------               ---------------------------
     Total interest-bearing liabilities            1,355,693      26,991      3.98%        1,442,955        36,956           5.12%

Non-interest bearing liabilities (4)                  62,949                                  64,065
                                                -------------                           -------------
          Total liabilities                        1,418,642                               1,507,020
Net worth                                            169,601                                 199,767
                                                -------------                           -------------
          Total liabilities and stockholders'
            equity                                $1,588,243                              $1,706,787
                                                =============                           =============

Net interest-earning assets                         $148,874                                $182,473
                                                =============                           =============
Net interest income/interest rate spread                         $17,115      1.88%                        $21,083           2.02%
                                                             =======================                 ==============================
Net interest margin                                                           2.28%                                          2.59%
                                                                         ===========                               ================
Ratio of average interest-earning assets to
  average interest-bearing liabilities                                      110.98%                                        112.65%
                                                                         ===========                               ================
</TABLE>




                                       17
<PAGE>



RATE /VOLUME ANALYSIS
The following table sets forth the effects of changing rates and volumes on net
interest income of the Company for the three months ended June 30, 2002 compared
to 2001. Information is provided with respect to (i) effects on interest income
attributable to changes in volume (changes in volume multiplied by prior rate);
(ii) effects on interest income attributable to changes in rate (changes in rate
multiplied by prior volume); and (iii) changes in rate/volume (changes in rate
multiplied by changes in volume).

<TABLE>
<CAPTION>

                                                                          Three Months Ended June 30,
                                                                             2002 compared to 2001
                                                  -----------------------------------------------------------------
                                                                            (Dollars in thousands)
                                                                           Increase (decrease) due to
                                                  -----------------------------------------------------------------
                                                                                                         Total Net
                                                                                             Rate/        Increase
                                                           Rate             Volume          Volume      (Decrease)
                                                  -------------- ------------------ --------------- ---------------
<S>                                                     <C>               <C>                   <C>        <C>
Interest-earning assets:
  Loans receivable:
     Real estate loans                                  ($1,337)          ($1,027)              $78        ($2,286)
     Other loans                                           (117)              188               (54)            17
                                                    ----------------------------------------------------------------
        Total loans receivable                           (1,454)             (839)               24         (2,269)

  Securities                                             (1,356)           (1,955)              323         (2,988)
  Other interest-earning assets                          (1,043)              270              (136)          (909)
                                                    ----------------------------------------------------------------

Total net change in income on
  interest-earning assets                                (3,853)           (2,524)              211         (6,166)

Interest-bearing liabilities:
  Deposits:
     NOW and money markets accounts                        (393)              293              (130)          (230)
     Passbook accounts                                     (636)               91               (45)          (590)
     Certificates of deposit                             (2,719)           (1,918)              593         (4,044)
                                                    ----------------------------------------------------------------
          Total deposits                                 (3,748)           (1,534)              418         (4,864)

Borrowings                                                   37              (585)               (3)          (551)
                                                    ----------------------------------------------------------------
Total net change in expense on
  interest-bearing liabilities                           (3,711)           (2,119)              415         (5,415)
                                                    ----------------------------------------------------------------

Net change in net interest income                         ($142)            ($405)            ($204)         ($751)
                                                    ================================================================
</TABLE>



                                       18
<PAGE>

RATE /VOLUME ANALYSIS
The following table sets forth the effects of changing rates and volumes on net
interest income of the Company for the six months ended June 30, 2002 compared
to 2001. Information is provided with respect to (i) effects on interest income
attributable to changes in volume (changes in volume multiplied by prior rate);
(ii) effects on interest income attributable to changes in rate (changes in rate
multiplied by prior volume); and (iii) changes in rate/volume (changes in rate
multiplied by changes in volume).

<TABLE>
<CAPTION>

                                                                     Six Months Ended June 30,
                                                                       2002 compared to 2001
                                                  -----------------------------------------------------------------
                                                                      (Dollars in thousands)
                                                                     Increase (decrease) due to
                                                  -----------------------------------------------------------------
                                                                                                         Total Net
                                                                                             Rate/        Increase
                                                           Rate             Volume          Volume      (Decrease)
                                                  -----------------------------------------------------------------
<S>                                                     <C>               <C>                <C>           <C>
Interest-earning assets:
  Loans receivable:
     Real estate loans                                  ($3,003)          ($3,141)            $259         ($5,885)
     Other loans                                           (277)              339             (108)            (46)
                                                    ----------------------------------------------------------------
        Total loans receivable                           (3,280)           (2,802)             151          (5,931)

  Securities                                             (3,110)           (5,040)             897          (7,253)
  Other interest-earning assets                          (1,867)            2,574           (1,456)           (749)
                                                    ----------------------------------------------------------------

Total net change in income on
  interest-earning assets                                (8,257)           (5,268)            (408)        (13,933)

Interest-bearing liabilities:
  Deposits:
     NOW and money markets accounts                        (701)              587             (244)           (358)
     Passbook accounts                                   (1,274)              125              (60)         (1,209)
     Certificates of deposit                             (4,937)           (2,844)             803          (6,978)
                                                    ----------------------------------------------------------------
          Total deposits                                 (6,912)           (2,132)             499         (8,545)

Borrowings                                                   25            (1,442)              (3)         (1,420)
                                                    ----------------------------------------------------------------
Total net change in expense on
  interest-bearing liabilities                           (6,887)           (3,574)             496          (9,965)
                                                    ----------------------------------------------------------------

Net change in net interest income                       ($1,370)          ($1,694)           ($904)        ($3,968)
                                                    ================================================================
</TABLE>




                                       19
<PAGE>



RESULTS OF OPERATIONS

The Company reported net income of $2.0 million or $0.16 per diluted share for
the three months ended June 30, 2002 compared to $2.7 million or $0.18 per
diluted share for the three months ended June 30, 2001. Net income for the six
months ended June 30, 2002 was $3.5 million or $0.28 per diluted share compared
to $6.0 million or $0.40 per diluted share for the same period in 2001.

Net interest income for the second quarter of 2002 was $9.2 million compared to
$9.9 million for the second quarter of 2001. Net interest income for the first
six months of 2002 was $17.1 million compared to $21.1 million for the same
period in 2001. For the six months ended June 30, 2002 compared to the first six
months in 2001 the interest rate spread was 1.88 percent compared to 2.02
percent respectively, while the net interest margin was 2.28 percent compared to
2.59 percent, respectively. For the three months ended June 30, 2002 compared to
the same period in 2001, the interest rate spread was 2.06 percent compared to
1.85 percent, respectively, while the net interest margin was 2.45 percent
compared to 2.42 percent, respectively. Both the interest rate spread and the
interest margin improved in the second quarter of 2002 as the Company redeployed
cash and cash equivalents into higher yielding interest-earning assets.

Interest income for the second quarter of 2002 was $22.1 million compared to
$28.3 million for the second quarter of 2001. Interest income for the first six
months of 2002 was $44.1 million compared to $58.0 million for the first six
months of 2001. The primary reasons for the decreases in the 2002 periods were
the reduction in the average balances of investment securities and loans
combined with an increase in the average balance of cash and cash equivalents
which have a lower yield. In addition, all interest-earning assets realized
lower average yields earned in the three months and six months ended June 30,
2002 compared to the same periods in 2001 as a result of the eleven rate
reductions made during 2001 by the Federal Reserve Board.

Interest expense for the three months ended June 30, 2002 was $13.0 million
compared to $18.4 million for the same period in 2001. Interest expense for the
six months ended June 30, 2002 was $27.0 million compared to $37.0 million for
the six months ended June 30, 2001. The decreases in the three and six months
ended June 30, 2002 compared to the same periods in 2001 were the result of
lower average balances and lower rates of interest paid on deposits.

The Company's provision for loan losses for the three months ended June 30, 2002
was $350,000 compared to $450,000 for the three months ended June 30, 2001. The
provision for loan losses for the six months ended June 30, 2002 was $550,000
compared to $900,000 for the six months ended June 30, 2001. The decreases for
the three and six months ended June 30, 2002 compared to 2001 were mainly due to
the reduction in the overall average balance of loans receivable. Though the
provisions in both periods of 2002 were less than 2001, the loan loss reserve as
a percentage of total loans increased from 0.76 percent to 0.88 percent when
comparing the six months ended June 30, 2001 to June 30, 2002. Management
believes that as of June 30, 2002 the allowance for loan losses was adequate;
however, no assurances can be given that future charge-offs and/or additional
provisions will not be needed. As the Company redeploys cash and cash
equivalents into loans during the remainder of 2002 and anticipate that the
average balance of loans will increase, the provision for loan losses is
expected to increase from the levels of the first six months of the year.

Non-performing loans increased significantly from $13.9 million at December 31,
2001 to $23.6 million at June 30, 2002 due primarily to a $11.4 million
construction loan on an apartment complex becoming 90 days delinquent at the end
of June 2002. This property consists of 14 buildings with 173 units. The complex
is 80.0 percent complete with approximately 60.0 percent of the total units
rented. Absent this loan, the non-performing loans would have decreased





                                       20
<PAGE>

approximately $1.7 million from December 31, 2001 to June 30, 2002. Management
of the Bank has been working with this borrower to resolve the delinquency and
currently does not expect to incur any loss on this loan.

Non-interest income for the three months ended June 30, 2002 was $2.5 million
compared to $2.4 million for the three months ended June 30, 2001 and amounted
to $4.7 million for the six months ended June 30, 2002 compared to $4.4 million
for the same period in 2001. The increases in non-interest income in both the
three and six month periods of 2002 compared to 2001 partially reflects
increases in fee income as a result of the process improvement program the
Company implemented in 2001. This overall improvement in non-interest income was
partially offset by an approximate $300,000 reduction in the net gain on sale of
investment securities available-for-sale during the second three months of 2002
compared to the same period of 2001 and also in the six months ended June 30,
2002 when compared to the six months ended June 30, 2001.

Non-interest expense was $8.5 million for the three months ended June 30, 2002
compared to $8.0 million for three months ended June 30, 2001. Non-interest
expense was $16.2 million for the first six months of 2002 compared to $15.8
million for the same period in 2001. For both the three months and the six
months ended June 30, 2002 compared to the same periods in 2001, increases in
compensation and employee benefits of $280,000 resulting from staff
restructuring within the Bank and the Investment Division, increases in pension
expense of $219,000 and $438,000 for the three and six months ended June 30,
2002, respectively, resulting from the Bank's pension plan no longer being
considered fully funded and increases in data processing expenses related to the
changing of processing to a proof of deposit environment accounted for the
majority of the differences.

Income tax expense for the three months ended June 30, 2002 was $859,000 or 30.2
percent of income before income taxes compared to $1.1 million or 29.1 percent
of income before income taxes for the three months ended June 30, 2001. For the
six months ended June 30, 2002 income tax expense was $1.5 million or 30.0
percent of income before income taxes compared to $2.8 million or 31.5 percent
for the same period in 2001. The decline in the Company's effective tax rate for
the six months ended June 30, 2002 was due to implementation of various tax
strategies over the past few years. The Company estimates that its effective
rate for the remainder of 2002 will be approximately 30.0 percent.

LIQUIDITY AND COMMITMENTS

The Company's liquidity, represented by cash and cash equivalents, is a product
of its operating, investing, and financing activities. The Company's primary
sources of funds are deposits, borrowings, amortization prepayments and
maturities of outstanding loans and mortgage-backed securities, maturities of
investment securities and other short-term investments and funds provided from
operations. While scheduled payments from the amortization of loans and
mortgage-related securities and maturing investment securities and short-term
investments are relatively predictable sources of funds, deposit flows and loan
prepayments are greatly influenced by general interest rates. In addition, the
Company invests excess funds in federal funds sold and other short-term interest
earning assets which provide liquidity to meet lending requirements.

Liquidity management is both a daily and long term function of business
management. Excess liquidity is generally invested in short-term investments
such as federal funds. The Company uses its sources of funds primarily to meet
its ongoing commitments, pay maturing certificates of deposit and savings
withdrawals, fund loan commitments and maintain a portfolio of mortgage-backed
and mortgage-related securities and investment securities. At June 30, 2002 the
total approved investment and loan origination commitments outstanding amounted
to $95.0 million. At the same




                                       21
<PAGE>

date, the unadvanced portion of construction loans amounted to $51.7 million.
Investment securities scheduled to mature in one year or less at June 30, 2002
were $11.3 million.

Based on historical experience, the Company believes that a significant portion
of maturing deposits will remain with the Company. The Company anticipates that
it will continue to have sufficient funds, together with borrowings, to meet its
current commitments.

At June 30, 2002 the Bank's regulatory capital was significantly in excess of
regulatory limits set by the Office of Thrift Supervision. The current
requirements and the Bank's actual levels at June 30, 2002 are set forth below
(dollars in thousands):

<TABLE>
<CAPTION>

                                Required Capital                  Actual Capital                   Excess Capital

                               Amount       Percent             Amount       Percent             Amount       Percent
                               ------       -------             ------       -------             ------       -------
<S>                           <C>              <C>            <C>               <C>            <C>               <C>
Tangible capital              $22,805          1.50%          $133,761          8.80%          $110,956          7.30%

Core capital                   60,813          4.00            133,761          8.80             72,948          4.80

Risk-based capital             76,453          8.00            141,971         14.86             65,518          6.86
</TABLE>




                                       22
<PAGE>




ITEM 3.           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For a discussion of the Company's asset and liability management policies as
well as the potential impact of interest rate changes upon the market value of
the Company's portfolio equity, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the Company's annual report to
stockholders for the year ended December 31, 2001. There has been no material
change in the Company's assets and liability position or the market value of the
Company's portfolio equity since December 31, 2001.

PART II.          OTHER INFORMATION

ITEM 1.           LEGAL PROCEEDINGS

Not applicable

ITEM 2.           CHANGES IN SECURITIES AND USE OF PROCEEDS

Not applicable

ITEM 3.           DEFAULTS UPON SENIOR SECURITIES

Not applicable

ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable

ITEM 5.           OTHER INFORMATION

Not applicable

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K

(a)      List of Exhibits (filed herewith unless otherwise noted)

3.1      Certificate of Incorporation of CFS Bancorp, Inc.*
3.2      Bylaws of CFS Bancorp, Inc.*
4.0      Form of Stock Certificate of CFS Bancorp, Inc.*
10.1     Form of Employment Agreement entered into between Citizens Financial
         Services, FSB and each of Thomas F. Prisby, James W. Prisby and John T.
         Stephens*
10.2     Form of Employment Agreement entered into between CFS Bancorp, Inc. and
         each of Thomas F. Prisby, James W. Prisby and John T. Stephens*
10.5     CFS Bancorp, Inc. Amended and Restated 1998 Stock Option Plan**
10.6     CFS Bancorp, Inc. Amended and Restated 1998 Recognition and Retention
         Plan and Trust Agreement**
99.1     Certification Pursuant to 18 U.S.C. Section 1350 as adapted pursuant to
         Section 906 of Sarbanes-Oxley Act of 2002.

------------

*        Incorporated by Reference from the Company's Registration Statement on
         Form S-1 filed on March 26, 1998, as amended and declared effective on
         May 14, 1998.
**       Incorporated by Reference from the Company's Definitive Proxy Statement
         for the Annual Meeting of Stockholders filed on March 23, 2001.

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<PAGE>

                                   SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

CFS BANCORP, INC.

Date:  August 14, 2002              By:     /s/
                                    --------------------------------------------
                                            Thomas F. Prisby, Chairman and
                                               Chief Executive Officer

Date:  August 14, 2002              By:     /s/
                                    --------------------------------------------
                                            John T. Stephens, Executive Vice
                                                    President and
                                               Chief Financial Officer



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