----

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**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-Q**

| R  | QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE                SECURITIES EXCHANGE ACT OF 1934 |
|---------|-----------------------------------------------------------------------------------------------------------------------|

**OR**

| £ | TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE                SECURITIES EXCHANGE ACT OF 1934 |
|--------|------------------------------------------------------------------------------------------------------------------------|

**CFS      Bancorp, Inc.**

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

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**CFS      BANCORP, INC.**

**TABLE      OF CONTENTS**

|                                                                                                         |                                                                                                                | Page     |
|--------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------|----------|
|                                                                                                         | **PART                I - FINANCIAL INFORMATION**                                                                   |     |
|                                                                                                         |                                                                                                                |     |
| Item                1.                                                                                       | Financial                Statements (Unaudited)                                                                     |     |
|                                                                                                         | Consolidated                Statements of Condition                                                                 | 3        |
|                                                                                                         | Consolidated                Statements of Income                                                                    |  4  |
|                                                                                                         | Consolidated                Statements of Changes in Stockholders’                Equity                      |  5  |
|                                                                                                         | Consolidated                Statements of Cash Flows                                                                |  6  |
|                                                                                                         | Notes                to Consolidated Financial Statements                                                           |  7  |
|                                                                                                         |                                                                                                                |     |
| Item                2.                                                                                       | Management's                Discussion and Analysis of Financial Condition and                Results of Operations |  10 |
|                                                                                                         |                                                                                                                |     |
| Item                3.                                                                                       | Quantitative                and Qualitative Disclosures About Market                Risk                            |  29 |
|                                                                                                         |                                                                                                                |     |
| Item                4.                                                                                       | Controls                and Procedures                                                                              | 32       |
|                                                                                                         |                                                                                                                |     |
|                                                                                                         |                                                                                                                |     |
|                                                                                                         | **PART                II - OTHER INFORMATION**                                                                      |     |
|                                                                                                         |                                                                                                                |     |
| Item                1.                                                                                       | Legal                Proceedings                                                                                    |  32 |
|                                                                                                         |                                                                                                                |     |
| Item                1A.                                                                                      | Risk                Factors                                                                                         |  33 |
|                                                                                                         |                                                                                                                |     |
| Item                2.                                                                                       | Unregistered                Sales of Equity Securities and Use of                Proceeds                           |  33 |
|                                                                                                         |                                                                                                                |     |
| Item                3.                                                                                       | Defaults                upon Senior Securities                                                                      |  33 |
|                                                                                                         |                                                                                                                |     |
| Item                4.                                                                                       | Submission                of Matters to a Vote of Security Holders                                                  |  33 |
|                                                                                                         |                                                                                                                |     |
| Item                5.                                                                                       | Other                Information                                                                                    |  34 |
|                                                                                                         |                                                                                                                |     |
| Item                6.                                                                                       | Exhibits                                                                                                            |  35 |
|                                                                                                         |                                                                                                                |     |
| Signature                Page                                                                                |  36                                                                                                            |
|                                                                                                         |                                                                                                                |     |
| Certifications                for Principal Executive Officer and Principal                Financial Officer |                                                                                                                |

Exhibit      31.1

Exhibit      31.2

Exhibit      32.0

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*Table          of Contents*

**CFS      BANCORP, INC.**

**Consolidated      Statements of Condition**

|                                                                                                                                                                                   |   | **March                31, 2006**     |      | **December                31, 2005** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|-----------|--------------------------------------|--------|
|                                                                                                                                                                                   |   | (Unaudited)                           |      |                                 |   |
|                                                                                                                                                                                   |   | (Dollars                in thousands) |      |
| **Assets**                                                                                                                                                                             |   |                                  |      |                                 |   |   |   |
| Cash                and amounts due from depository institutions                                                                                                                  |   | $                                     | 15,402    |                                 | $      | 17,600 |   |
| Interest-bearing                deposits                                                                                                                                          |   |                                  | 9,757     |                                 |   | 1,785 |   |
| Federal                funds sold                                                                                                                                                 |   |                                  | 9,372     |                                 |   | 4,792 |   |
| Cash                and cash                equivalents                                                                                                                           |   |                                  | 34,531    |                                 |   | 24,177 |   |
|                                                                                                                                                                                   |   |                                  |      |                                 |   |   |   |
| Securities                available-for-sale, at fair value                                                                                                                       |   |                                  | 267,106   |                                 |   | 218,550 |   |
| Investment                in Federal Home Loan Bank stock, at cost                                                                                                                |   |                                  | 28,252    |                                 |   | 28,252 |   |
|                                                                                                                                                                                   |   |                                  |      |                                 |   |   |   |
| Loans                receivable                                                                                                                                                   |   |                                  | 878,161   |                                 |   | 917,405 |   |
| Allowance                for losses on                loans                                                                                                                       |   |                                  | (13,337   | )                                    |   | (12,939 | ) |
| Net                loans                                                                                                                                                          |   |                                  | 864,824   |                                 |   | 904,466 |   |
|                                                                                                                                                                                   |   |                                  |      |                                 |   |   |   |
| Interest                receivable                                                                                                                                                |   |                                  | 7,146     |                                 |   | 6,142 |   |
| Other                real estate owned                                                                                                                                            |   |                                  | 574       |                                 |   | 540 |   |
| Office                properties and equipment                                                                                                                                    |   |                                  | 15,209    |                                 |   | 15,017 |   |
| Investment                in bank-owned life insurance                                                                                                                            |   |                                  | 35,281    |                                 |   | 34,889 |   |
| Prepaid                expenses and other assets                                                                                                                                  |   |                                  | 10,220    |                                 |   | 9,491 |   |
| Goodwill                and intangible assets                                                                                                                                     |   |                                  | 1,348     |                                 |   | 1,364 |   |
| Total                assets                                                                                                                                                       |   | $                                     | 1,264,491 |                                 | $      | 1,242,888 |   |
|                                                                                                                                                                                   |   |                                  |      |                                 |   |   |   |
| **Liabilities                and Stockholders’ Equity**                                                                                                                          |   |                                  |      |                                 |   |   |   |
| Deposits                                                                                                                                                                          |   | $                                     | 846,796   |                                 | $      | 828,635 |   |
| Borrowed                money, net of unamortized deferred premium on early extinguishment                of                debt                                                  |   |                                  | 265,228   |                                 |   | 257,326 |   |
| Advance                payments by borrowers for taxes and insurance                                                                                                              |   |                                  | 5,316     |                                 |   | 6,641 |   |
| Other                liabilities                                                                                                                                                  |   |                                  | 6,978     |                                 |   | 7,919 |   |
| Total                liabilities                                                                                                                                                  |   |                                  | 1,124,318 |                                 |   | 1,100,521 |   |
|                                                                                                                                                                                   |   |                                  |      |                                 |   |   |   |
| Stockholders’                equity:                                                                                                                                             |   |                                  |      |                                 |   |   |   |
| Preferred                stock, $0.01 par value; 15,000,000 shares authorized                                                                                                     |   |                                  | **-**     |                                 |   | **-** |   |
| Common                stock, $0.01 par value; 85,000,000 shares authorized; 23,423,306                shares                issued; 11,903,644 and 12,005,431 shares outstanding  |   |                                  | 234       |                                 |   | 234 |   |
| Additional                paid-in capital                                                                                                                                         |   |                                  | 190,415   |                                 |   | 190,402 |   |
| Retained                earnings                                                                                                                                                  |   |                                  | 94,318    |                                 |   | 94,379 |   |
| Treasury                stock, at cost; 11,519,662 and 11,417,875 shares                                                                                                          |   |                                  | (138,117  | )                                    |   | (136,229 | ) |
| Unallocated                common stock held by ESOP                                                                                                                              |   |                                  | (4,462    | )                                    |   | (4,762 | ) |
| Unearned                common stock acquired by RRP                                                                                                                              |   |                                  | **-**     |                                 |   | (111 | ) |
| Accumulated                other comprehensive loss, net of tax                                                                                                                   |   |                                  | (2,215    | )                                    |   | (1,546 | ) |
| Total                stockholders’                equity                                                                                                                    |   |                                  | 140,173   |                                 |   | 142,367 |   |
| Total                liabilities and stockholders’                equity                                                                                                    |   | $                                     | 1,264,491 |                                 | $      | 1,242,888 |   |

*See      accompanying notes.*

----

*Table            of            Contents*

**CFS      **
**BANCORP, INC.**

**Consolidated      Statements of Income**

|                                                                                         |   |   | **Three                  Months Ended****March                  31,**          |   |
|----------------------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------|--------|
|                                                                                         |   |   | **2006**                                                                  |   |   | **2005**  |   |
|                                                                                         |   |   | (Unaudited)                                                                    |   |
|                                                                                         |   |   | (Dollars                  in thousands, except share and per share data)  |   |
| Interest                  income:                                                            |   |   |                                                                           |   |
| Loans                                                                                   |   | $      | 14,903                                                                         |   | $ | 14,573 |   |
| Securities                                                                              |   |   | 2,491                                                                          |   |   | 1,721 |   |
| Other                                                                                   |   |   | 563                                                                            |   |   | 369 |   |
| Total                  interest                  income                                 |   |   | 17,957                                                                         |   |   | 16,663 |   |
| Interest                  expense:                                                           |   |   |                                                                           |   |   |   |   |
| Deposits                                                                                |   |   | 4,548                                                                          |   |   | 3,005 |   |
| Borrowed                  money                                                         |   |   | 5,173                                                                          |   |   | 7,604 |   |
| Total                  interest                  expense                                |   |   | 9,721                                                                          |   |   | 10,609 |   |
| Net                  interest income before provision for losses on loans               |   |   | 8,236                                                                          |   |   | 6,054 |   |
| Provision                  for losses on loans                                          |   |   | 385                                                                            |   |   | 255 |   |
| Net                  interest income after provision for losses on loans                |   |   | 7,851                                                                          |   |   | 5,799 |   |
| Non-interest                  income:                                                        |   |   |                                                                           |   |   |   |   |
| Service                  charges and other                  fees                        |   |   | 1,602                                                                          |   |   | 1,713 |   |
| Commission                  income                                                      |   |   | 62                                                                             |   |   | 165 |   |
| Net                  realized losses on                  available-for-sale securities  |   |   | (127                                                                           | )      |   | (65 | ) |
| Impairment                  on available-for-sale                  securities           |   |   | —                                                                        |   |   | (240 | ) |
| Net                  realized gains on sales of                  other assets           |   |   | 1                                                                              |   |   | 62 |   |
| Income                  from bank-owned life                  insurance                 |   |   | 392                                                                            |   |   | 362 |   |
| Other                  income                                                           |   |   | 507                                                                            |   |   | 484 |   |
| Total                  non-interest                  income                             |   |   | 2,437                                                                          |   |   | 2,481 |   |
| Non-interest                  expense:                                                       |   |   |                                                                           |   |   |   |   |
| Compensation                  and employee                  benefits                    |   |   | 5,067                                                                          |   |   | 4,593 |   |
| Net                  occupancy                  expense                                 |   |   | 662                                                                            |   |   | 723 |   |
| Professional                  fees                                                      |   |   | 351                                                                            |   |   | 355 |   |
| Data                  processing                                                        |   |   | 673                                                                            |   |   | 680 |   |
| Furniture                  and equipment                  expense                       |   |   | 427                                                                            |   |   | 443 |   |
| Marketing                                                                               |   |   | 198                                                                            |   |   | 197 |   |
| Amortization                  of core deposit                  intangibles              |   |   | 16                                                                             |   |   | 16 |   |
| Other                  general and administrative                  expenses             |   |   | 1,333                                                                          |   |   | 1,253 |   |
| Total                  non-interest                  expense                            |   |   | 8,727                                                                          |   |   | 8,260 |   |
| Income                  before income taxes                                             |   |   | 1,561                                                                          |   |   | 20 |   |
| Income                  tax expense (benefit)                                           |   |   | 252                                                                            |   |   | (246 | ) |
| Net                  income                                                             |   | $      | 1,309                                                                          |   | $ | 266 |   |
|                                                                                         |   |   |                                                                           |   |   |   |   |
| Per                  share data:                                                             |   |   |                                                                           |   |   |   |   |
| Basic                  earnings per                  share                              |   | $      | 0.11                                                                           |   | $ | 0.02 |   |
| Diluted                  earnings per                  share                            |   |   | 0.11                                                                           |   |   | 0.02 |   |
| Cash                  dividends declared per                  share                     |   |   | 0.12                                                                           |   |   | 0.12 |   |
| Weighted-average                  shares outstanding                                    |   |   | 11,504,748                                                                     |   |   | 11,786,828 |   |
| Weighted-average                  diluted shares outstanding                            |   |   | 11,749,377                                                                     |   |   | 12,051,942 |   |

*See      accompanying notes.*

----

*Table            of            Contents*

**CFS      BANCORP, INC.**

**Consolidated      Statement**
**s of Changes in Stockholders'      Equity**

|                                                                                                                                                                                                           |   | **Common****Stock**                                          |    | **Additional                Paid-In****Capital** |   | **Retained****Earnings** |   | **Treasury****Stock** |    | **Unalloc.                Common****Stock                Held****By                ESOP** |   | **Unearned****Common                Stock Acquired****By                RRP** |   | **Accum.                Other Compre-hensive****Loss** |    | **Total** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------|---------|--------------------------------------------------|--------|--------------------------|--------|-----------------------|---------|-------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------|--------|--------------------------------------------------------|---------|-----------|--------|
|                                                                                                                                                                                                           |   | (Unaudited)                                                  |    |
|                                                                                                                                                                                                           |   | (Dollars                in thousands, except per share data) |    |
| Balance                at January 1, 2005                                                                                                                                                                 |   | $                                                            | 234     |                                             | $      | 189,991                  |   | $                     | 94,904  |                                                                                      | $      | (130,689                                                                      | )      | $                                                      | (5,959  | )         | $      | (148 | ) | $ | (422 | ) | $ | 147,911 |   |
| Net                income                                                                                                                                                                                 |   |                                                         | -       |                                             |   | -                        |   |                  | 266     |                                                                                      |   | -                                                                             |   |                                                   | -       |      |   | - |   |   | - |   |   | 266 |   |
| Other                comprehensive loss, net of tax: Change in unrealized appreciation                on                available-for-sale securities, net of reclassification                adjustment  |   |                                                         |    |                                             |   |                     |   |                  |    |                                                                                      |   |                                                                          |   |                                                   |    |      |   |   |   |   | (904 | ) |   | (904 | ) |
| Total                comprehensive loss                                                                                                                                                                   |   |                                                         |    |                                             |   |                     |   |                  |    |                                                                                      |   |                                                                          |   |                                                   |    |      |   |   |   |   |   |   |   | (638 | ) |
| Purchase                of treasury stock                                                                                                                                                                 |   |                                                         | -       |                                             |   | -                        |   |                  | -       |                                                                                      |   | (283                                                                          | )      |                                                   | -       |      |   | - |   |   | - |   |   | (283 | ) |
| Shares                earned under ESOP                                                                                                                                                                   |   |                                                         | -       |                                             |   | 123                      |   |                  | -       |                                                                                      |   | -                                                                             |   |                                                   | 299     |      |   | - |   |   | - |   |   | 422 |   |
| Exercise                of stock options                                                                                                                                                                  |   |                                                         | -       |                                             |   | (10                      | )      |                  | -       |                                                                                      |   | 63                                                                            |   |                                                   | -       |      |   | - |   |   | - |   |   | 53 |   |
| Tax                benefit related to stock options exercised                                                                                                                                             |   |                                                         | -       |                                             |   | 5                        |   |                  | -       |                                                                                      |   | -                                                                             |   |                                                   | -       |      |   | - |   |   | - |   |   | 5 |   |
| Dividends                declared on common stock ($0.12 per share)                                                                                                                                       |   |                                                         | -       |                                             |   | -                        |   |                  | (1,378  | )                                                                                         |   | -                                                                             |   |                                                   | -       |      |   | - |   |   | - |   |   | (1,378 | ) |
| Balance                at March 31, 2005                                                                                                                                                                  |   | $                                                            | 234     |                                             | $      | 190,109                  |   | $                     | 93,792  |                                                                                      | $      | (130,909                                                                      | )      | $                                                      | (5,660  | )         | $      | (148 | ) | $ | (1,326 | ) | $ | 146,092 |   |
|                                                                                                                                                                                                           |   |                                                         |    |                                             |   |                     |   |                  |    |                                                                                      |   |                                                                          |   |                                                   |    |      |   |   |   |   |   |   |   |   |   |
| Balance                at January 1, 2006                                                                                                                                                            |   | $                                                            | 234     |                                             | $      | 190,402                  |   | $                     | 94,379  |                                                                                      | $      | (136,229                                                                      | )      | $                                                      | (4,762  | )         | $      | (111 | ) | $ | (1,546 | ) | $ | 142,367 |   |
| Net                income                                                                                                                                                                                 |   |                                                         | -       |                                             |   | -                        |   |                  | 1,309   |                                                                                      |   | -                                                                             |   |                                                   | -       |      |   | - |   |   | - |   |   | 1,309 |   |
| Other                comprehensive loss, net of tax: Change in unrealized appreciation                on                available-for-sale securities, net of reclassification                adjustment  |   |                                                         |    |                                             |   |                     |   |                  |    |                                                                                      |   |                                                                          |   |                                                   |    |      |   |   |   |   | (669 | ) |   | (669 | ) |
| Total                comprehensive income                                                                                                                                                                 |   |                                                         |    |                                             |   |                     |   |                  |    |                                                                                      |   |                                                                          |   |                                                   |    |      |   |   |   |   |   |   |   | 640 |   |
| Purchase                of treasury stock                                                                                                                                                                 |   |                                                         | -       |                                             |   | -                        |   |                  | -       |                                                                                      |   | (3,788                                                                        | )      |                                                   | -       |      |   | - |   |   | - |   |   | (3,788 | ) |
| Shares                earned under ESOP                                                                                                                                                                   |   |                                                         | -       |                                             |   | 138                      |   |                  | -       |                                                                                      |   | -                                                                             |   |                                                   | 300     |      |   | - |   |   | - |   |   | 438 |   |
| Reclassification of unearned compensation toadditional                paid-in capital upon the adoption of SFAS 123(R)                                                                                         |   |                                                         |  - |                                             |   | (111                     | )      |                  |  - |                                                                                      |   |  -                                                                       |   |                                                   |  - |      |   |  111 |  |   | - |   |   |  - |   |
| Exercise                of stock options                                                                                                                                                                  |   |                                                         | -       |                                             |   | (214                     | )      |                  | -       |                                                                                      |   | 1,900                                                                         |   |                                                   | -       |      |   | - |   |   | - |   |   | 1,686 |   |
| Tax                benefit related to stock options exercised                                                                                                                                             |   |                                                         | -       |                                             |   | 200                      |   |                  | -       |                                                                                      |   | -                                                                             |   |                                                   | -       |      |   | - |   |   | **-** |   |   | 200 |   |
| Dividends                declared on common stock ($0.12 per share)                                                                                                                                       |   |                                                         | -       |                                             |   | -                        |   |                  | (1,370  | )                                                                                         |   | -                                                                             |   |                                                   | -       |      |   | - |   |   | - |   |   | (1,370 | ) |
| Balance                at March 31, 2006                                                                                                                                                                  |   | $                                                            | 234     |                                             | $      | 190,415                  |   | $                     | 94,318  |                                                                                      | $      | (138,117                                                                      | )      | $                                                      | (4,462  | )         | $      | - |   | $ | (2,215 | ) | $ | 140,173 |   |

*See      accompanying notes.*

----

*Table            of            Contents*

**CFS      BANCORP, INC.**

**Consolidated      Statements of Cash Flows**

|                                                                                                                                |   | **Three                Months Ended****March                31,** |    |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|---------|
|                                                                                                                                |   | **2006**                                                          |    | **2005** |   |
|                                                                                                                                |   | (Unaudited)                                                       |    |
|                                                                                                                                |   | (Dollars                in thousands)                             |    |
| Operating                activities:                                                                                                |   |                                                              |    |   |   |   |   |
| Net                income                                                                                                 |   | $                                                                 | 1,309   |   | $ | 266 |   |
| Adjustments                to                reconcile net income to net cash provided by operating                activities:      |   |                                                              |    |   |   |   |   |
| Provision                for losses on                loans                                                                    |   |                                                              | 385     |   |   | 255 |   |
| Depreciation                and                amortization                                                                    |   |                                                              | 366     |   |   | 384 |   |
| Premium                amortization on the early                extinguishment of debt                                         |   |                                                              | 2,568   |   |   | 4,724 |   |
| Net                premium amortization on securities                available-for-sale                                        |   |                                                              | (40     | ) |   | 328 |   |
| Impairment                of securities                available-for-sale                                                      |   |                                                              | -       |   |   | 240 |   |
| Deferred                income tax benefit                                                                                     |   |                                                              | (76     | ) |   | (1,377 | ) |
| Amortization                of cost of stock benefit                plans                                                      |   |                                                              | 438     |   |   | 422 |   |
| Tax                benefit from exercises of nonqualified                stock options                                         |   |                                                              | 200     |   |   | 5 |   |
| Proceeds                from sale of loans                held-for-sale                                                        |   |                                                              | 1,858   |   |   | 5,426 |   |
| Origination                of loans                held-for-sale                                                               |   |                                                              | (2,072  | ) |   | (4,673 | ) |
| Net                loss realized on sale of                securities                                                          |   |                                                              | 127     |   |   | 65 |   |
| Dividends                received on Federal Home Loan                Bank stock                                               |   |                                                              | -       |   |   | (295 | ) |
| Net                gain realized on sale of other                assets                                                        |   |                                                              | (1      | ) |   | (62 | ) |
| Increase                in cash surrender value of                bank-owned life insurance                                    |   |                                                              | (392    | ) |   | (362 | ) |
| (Increase)                decrease in prepaid expenses                and other assets                                         |   |                                                              | (2,014  | ) |   | 1,124 |   |
| Increase                (decrease) in other                liabilities                                                         |   |                                                              | 104     |   |   | (306 | ) |
| Net                cash provided by operating                activities                                                             |   |                                                              | 2,760   |   |   | 6,164 |   |
|                                                                                                                                |   |                                                              |    |   |   |   |   |
| Investing                activities:                                                                                                |   |                                                              |    |   |   |   |   |
| Securities:                                                                                                                         |   |                                                              |    |   |   |   |   |
| Proceeds                from sales                                                                                             |   |                                                              | 21,067  |   |   | 16,754 |   |
| Proceeds                from maturities and                paydowns                                                            |   |                                                              | 4,485   |   |   | 11,822 |   |
| Purchases                                                                                                                      |   |                                                              | (75,265 | ) |   | (43,071 | ) |
| Net                loan fundings                and principal payments received                                                |   |                                                              | 37,684  |   |   | 3,214 |   |
| Proceeds                from                sales of loans and loan participations                                             |   |                                                              | 1,584   |   |   | 5,427 |   |
| Proceeds                from                sale of real estate owned                                                          |   |                                                              | -       |   |   | 241 |   |
| Purchases                of                property and equipment                                                              |   |                                                              | (573    | ) |   | (124 | ) |
| Disposal                of                property and equipment                                                               |   |                                                              | 32      |   |   | 15 |   |
| Net                cash used for investing                activities                                                           |   |                                                              | (10,986 | ) |   | (5,722 | ) |
|                                                                                                                                |   |                                                              |    |   |   |   |   |
| Financing                activities:                                                                                                |   |                                                              |    |   |   |   |   |
| Proceeds                from                exercise of stock options                                                          |   |                                                              | 1,686   |   |   | 52 |   |
| Dividends                paid on                common stock                                                                   |   |                                                              | (1,443  | ) |   | (1,362 | ) |
| Purchase                of                treasury stock                                                                       |   |                                                              | (3,788  | ) |   | (283 | ) |
| Net                increase                (decrease) in deposit accounts                                                      |   |                                                              | 18,116  |   |   | (20,093 | ) |
| Net                (decrease)                increase in advance payments by borrowers for taxes and                insurance  |   |                                                              | (1,325  | ) |   | 1,131 |   |
| Net                increase in                repurchase agreements                                                            |   |                                                              | 5,370   |   |   | - |   |
| Net                decrease in                borrowed funds                                                                   |   |                                                              | (36     | ) |   | (33 | ) |
| Net                cash flows provided by (used for)                financing activities                                       |   |                                                              | 18,580  |   |   | (20,588 | ) |
| Net                increase (decrease) in cash and cash                equivalents                                                  |   |                                                              | 10,354  |   |   | (20,146 | ) |
| Cash                and cash equivalents at beginning of period                                                                |   |                                                              | 24,177  |   |   | 38,094 |   |
| Cash                and cash equivalents at end of period                                                                      |   | $                                                                 | 34,531  |   | $ | 17,948 |   |
|                                                                                                                                |   |                                                              |    |   |   |   |   |
| Supplemental                disclosure of non-cash activities:                                                                      |   |                                                              |    |   |   |   |   |
| Loans                transferred                to real estate owned                                                           |   | $                                                                 | 53      |   | $ | 443 |   |
|                                                                                                                                |   |                                                              |    |   |   |   |   |
| Cash                paid for interest on deposits                                                                              |   | $                                                                 | 4,584   |   | $ | 2,993 |   |
| Cash                paid for interest on borrowings                                                                            |   |                                                              | 5,173   |   |   | 2,872 |   |
| Cash                paid for taxes                                                                                             |   |                                                              | 150     |   |   | - |   |

*See      accompanying notes.*

----

*Table            of            Contents*

**C**
**FS      BANCORP, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

**1.      Basis of Financial Statements Presentation**

*Company*

**2.      Change in Accounting Principle **

*SFAS*
*Share-Based Payment*
*SFAS 123(R)*

*Options*

----

*Table            of            Contents*

*Accounting for Stock      Issued to Employees*
*Accounting for      Stock-Based Compensation *
*SFAS 123*

|                                                                                                          |   | **Three                Months Ended****March                31, 2005**      |   |
|---------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------|--------|
|                                                                                                          |   | (Dollars                in thousands, except                per share data) |   |
| Net                income (as reported)                                                                  |   | $                                                                           | 266    |   |
| Stock-based                compensation expense determined using fair value                method, net of tax |   |                                                                        | 143    |   |
| Pro                forma net income                                                                      |   | $                                                                           | 123    |   |
|                                                                                                          |   |                                                                        |   |   |
| Basic                earnings per share (as reported)                                                    |   | $                                                                           | 0.02   |   |
| Pro                forma basic earnings per share                                                        |   |                                                                        | 0.01   |   |
| Diluted                earnings per share (as reported)                                                  |   |                                                                        | 0.02   |   |
| Pro                forma diluted earnings per share                                                      |   |                                                                        | 0.01   |   |

**3.      Other Comprehensive Loss**

----

*Table            of            Contents*

|                                                                                                             |   | **Three                Months Ended****March                31,** |   |
|------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|--------|
|                                                                                                             |   | **2006**                                                          |   | **2005** |   |
|                                                                                                             |   | (Dollars                in thousands)                             |   |
| Unrealized                holding losses arising during the period:                                              |   |                                                              |   |   |   |   |   |
| Unrealized                net securities                losses                                                   |   | $                                                                 | (1,197 | ) | $ | (1,693 | ) |
| Related                tax                benefit                                                                |   |                                                              | 450    |   |   | 602 |   |
| Net                                                                                                              |   |                                                              | (747   | ) |   | (1,091 | ) |
| Less:                reclassification adjustment for net losses  realized during the                period: |   |                                                              |   |   |   |   |   |
| Realized                net securities                losses                                                     |   |                                                              | (127   | ) |   | (305 | ) |
| Related                tax                benefit                                                                |   |                                                              | 49     |   |   | 118 |   |
| Net                                                                                                              |   |                                                              | (78    | ) |   | (187 | ) |
| Total                other comprehensive loss                                                               |   | $                                                                 | (669   | ) | $ | (904 | ) |

**4.      Earnings Per Share**

|                                                                                                              |   | **Three                Months Ended****March                31,** |       |
|-------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|------------|
|                                                                                                              |   | **2006**                                                          |       | **2005** |   |
|                                                                                                              |   | (Dollars                in thousands, except per share data)      |       |
| Net                income                                                                                    |   | $                                                                 | 1,309      |   | $ | 266 |   |
|                                                                                                              |   |                                                              |       |   |   |   |   |
| Weighted                average common shares outstanding                                                    |   |                                                              | 11,504,748 |   |   | 11,786,828 |   |
| Common                share equivalents (1)                                                                  |   |                                                              | 244,629    |   |   | 265,114 |   |
| Weighted                average common shares and common share                 equivalents outstanding  |   |                                                              | 11,749,377 |   |   | 12,051,942 |   |
|                                                                                                              |   |                                                              |       |   |   |   |   |
| Basic                earnings per share                                                                      |   | $                                                                 | 0.11       |   | $ | 0.02 |   |
| Diluted                earnings per share                                                                    |   |                                                              | 0.11       |   |   | 0.02 |   |

**5.      New Accounting Pronouncements**

*FASB*
*Earnings per Share*

----

*Table            of            Contents*

*Accounting for Transfers and Servicing of      Financial Assets and Extinguishments of Liabilities,*

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

**Forward      Looking Statements**

*Certain      statements contained in      this Form 10-Q, in other filings made by the Company with the U.S. Securities      and Exchange Commission (SEC), and in the Company’s press releases or other      stockholder communications are forward-looking statements, as that term is      defined in*

----

*Table            of            Contents*

*U.S.      federal securities laws. Generally, these statements relate to business plans      or      strategies, projections involving anticipated revenues, earnings, profitability      or other aspects of operating results or other future developments in the      Company’s affairs or the industry in which it conducts business. Forward-looking      statements may be identified by reference to a future period or periods or      by      the use of forward-looking terminology such as “anticipate,” “believe,”“expect,” “intend,” “plan,” “estimate,” “would be,” “will,” “intends to,”“project” or similar expressions or the negative thereof.*

*The      Company wishes to caution      readers not to place undue reliance on any such forward-looking statements,      which speak only as of the date made. The Company also advises readers that      various factors, including regional and national economic conditions, changes      in      levels of market interest rates, credit and other risks which are inherent      in      the Company’s lending and investment activities, legislative changes, changes in      the cost of funds, demand for loan products and financial services, changes      in      accounting principles and competitive and regulatory factors, could affect      the      Company’s financial performance and could cause the Company’s actual results for      future periods to differ materially from those anticipated or projected. For      further discussion of risks and uncertainties that could cause actual results      and events to differ materially from such forward-looking statements see “Part      II. Item 1A. Risk Factors” of this Form 10-Q as well as “Part I. Item 1A. Risk      Factors” of the Company’s Annual Report on Form 10-K for the year ended December      31, 2005. Such forward-looking statements are not guarantees of future      performance. The Company does not undertake, and specifically disclaims any      obligation, to update any forward-looking statements to reflect occurrences      or      unanticipated events or circumstances after the date of such      statements.*

**Overview**

----

*Table            of            Contents*

**Critical      Accounting Policies**

*GAAP*

**Allowance      for Losses on      Loans.**

*SFAS*
*Accounting for      Contingencies.*

----

*Table            of            Contents*

*Accounting by Creditors for Impairment of a Loan.*

**Income      Tax      Accounting.**
* *

**Average      Balances, Net Interest Income, Yields Earned and Rates      Paid**

----

*Table            of            Contents*

|                                                                                                                                            |   | **Three                Months Ended March 31,** |      |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|-----------|
|                                                                                                                                            |   | **2006**                                        |      | **2005** |   |
|                                                                                                                                            |   | **Average****Balance**                          |      | **Interest** |   | **Average** **Yield/Cost** |   | **Average****Balance** |   | **Interest** |   | **Average** **Yield/Cost** |   |
|                                                                                                                                            |   | (Dollars                in thousands)           |      |
| Interest-earning                assets:                                                                                                         |   |                                            |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                receivable                (1)                                                                                         |   | $                                               | 894,496   |   | $ | 14,903 |   |   | 6.76 | % | $ | 983,286 |   | $ | 14,573 |   |   | 6.01 | % |
| Securities                (2)                                                                                                              |   |                                            | 240,746   |   |   | 2,491 |   |   | 4.20 |   |   | 204,167 |   |   | 1,721 |   |   | 3.42 |   |
| Other                interest-earning assets                (3)                                                                            |   |                                            | 48,553    |   |   | 563 |   |   | 4.70 |   |   | 39,197 |   |   | 369 |   |   | 3.82 |   |
| Total                interest-earning                assets                                                                                |   |                                            | 1,183,795 |   |   | 17,957 |   |   | 6.15 |   |   | 1,226,650 |   |   | 16,663 |   |   | 5.51 |   |
|                                                                                                                                            |   |                                            |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest                earning assets                                                                                                 |   |                                            | 69,273    |   |   |   |   |   |   |   |   | 74,641 |   |   |   |   |   |   |   |
| Total                assets                                                                                                                |   | $                                               | 1,253,068 |   |   |   |   |   |   |   | $ | 1,301,291 |   |   |   |   |   |   |   |
|                                                                                                                                            |   |                                            |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                liabilities:                                                                                                    |   |                                            |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                                                                                       |   |                                            |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Checking                accounts                                                                                                           |   | $                                               | 104,815   |   |   | 249 |   |   | 0.96 |   | $ | 97,913 |   |   | 85 |   |   | 0.35 |   |
| Money                market                accounts                                                                                        |   |                                            | 126,884   |   |   | 742 |   |   | 2.37 |   |   | 144,116 |   |   | 388 |   |   | 1.09 |   |
| Savings                accounts                                                                                                            |   |                                            | 167,528   |   |   | 145 |   |   | 0.35 |   |   | 196,406 |   |   | 160 |   |   | 0.33 |   |
| Certificates                of                deposit                                                                                      |   |                                            | 374,428   |   |   | 3,412 |   |   | 3.70 |   |   | 359,828 |   |   | 2,372 |   |   | 2.67 |   |
| Total                deposits                                                                                                              |   |                                            | 773,655   |   |   | 4,548 |   |   | 2.38 |   |   | 798,263 |   |   | 3,005 |   |   | 1.53 |   |
|                                                                                                                                            |   |                                            |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Borrowed                money (4)                (5)                                                                                       |   |                                            | 261,886   |   |   | 5,173 |   |   | 8.01 |   |   | 289,082 |   |   | 7,604 |   |   | 10.67 |   |
| Total                interest-bearing                liabilities                                                                           |   |                                            | 1,035,541 |   |   | 9,721 |   |   | 3.81 |   |   | 1,087,345 |   |   | 10,609 |   |   | 3.96 |   |
| Non-interest                bearing deposits                                                                                               |   |                                            | 61,046    |   |   |   |   |   |   |   |   | 48,538 |   |   |   |   |   |   |   |
| Non-interest                bearing liabilities                                                                                            |   |                                            | 14,760    |   |   |   |   |   |   |   |   | 18,172 |   |   |   |   |   |   |   |
| Total                liabilities                                                                                                           |   |                                            | 1,111,347 |   |   |   |   |   |   |   |   | 1,154,055 |   |   |   |   |   |   |   |
| Stockholders'                equity                                                                                                        |   |                                            | 141,721   |   |   |   |   |   |   |   |   | 147,236 |   |   |   |   |   |   |   |
| Total                liabilities and stockholders'  equity                                                                                 |   | $                                               | 1,253,068 |   |   |   |   |   |   |   | $ | 1,301,291 |   |   |   |   |   |   |   |
| Net                interest-earning assets                                                                                                 |   | $                                               | 148,254   |   |   |   |   |   |   |   | $ | 139,305 |   |   |   |   |   |   |   |
| Net                interest income / interest rate  spread                                                                                 |   |                                            |      |   | $ | 8,236 |   |   | 2.34 | % |   |   |   | $ | 6,054 |   |   | 1.55 | % |
| Net                interest margin                                                                                                         |   |                                            |      |   |   |   |   |   | 2.82 | % |   |   |   |   |   |   |   | 2.00 | % |
| Ratio                of average interest-earning assets   to                average interest-bearing                liabilities  |   |                                            |      |   |   |   |   |   | 114.32 | % |   |   |   |   |   |   |   | 112.81 | % |

| (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 are based on amortized                cost. |
|-----|-------------------------------------------------------------------------------------------|

| (3) | Includes                Federal Home Loan Bank stock, money market                accounts, federal funds sold and interest-earning bank deposits. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------|
| (4) | The                2006 period includes an average of $4.0 million of                repurchase agreements and $272.5 million of contractual FHLB borrowings,                which amount was reduced by an average of $14.7 million of unamortized                deferred premium on the early extinguishment of debt. Interest expense                on                borrowed money includes $2.6 million of amortization of the deferred                premium on the early extinguishment of debt. The amortization of                the                deferred premium increased the average cost of borrowed money as                reported                to 8.01% compared to an average contractual rate of                3.78%.              |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (5) | The 2005 period includes an average of $385,000                of                federal funds purchased and $316.8 million of contractual FHLB borrowings,                which amount was reduced by an average of $9.3 million of unamortized                deferred premium contractual on the early extinguishment of debt.                Interest                expense on borrowed money includes $4.7 million of amortization of                the                deferred premium on the early extinguishment of debt. The amortization                of                the deferred premium increased the average cost of borrowed money                as                reported to 10.67% compared to an average rate of                3.77%. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Table            of            Contents*

**Rate      / Volume Analysis**

|                                                                                                           |   | **Three                Months Ended March 31, 2006 Compared** |   |
|----------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------|--------|
|                                                                                                           |   | **to                Three Months Ended March 31, 2005**       |   |
|                                                                                                           |   | **Increase                (Decrease) Due to**                 |   |
|                                                                                                           |   |  **Rate**                                                |   |  **Volume** |   | **Rate/****Volume** |   | **Total                Net Increase /****(Decrease)** |   |
|                                                                                                           |   | (Dollars                in thousands)                         |   |
| Interest-earning                assets:                                                                        |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |
| Loans                receivable                                                                           |   | $                                                             | 1,809  |   | $ | (1,316 | ) | $ | (163 | ) | $ | 330 |   |
| Securities                                                                                                |   |                                                          | 392    |   |   | 308 |   |   | 70 |   |   | 770 |   |
| Other                interest-earning                assets                                               |   |                                                          | 86     |   |   | 88 |   |   | 20 |   |   | 194 |   |
| Total                net change in income on                interest-earning                assets        |   |                                                          | 2,287  |   |   | (920 | ) |   | (73 | ) |   | 1,294 |   |
| Interest-bearing                liabilities:                                                                   |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                                                      |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |
| Checking                accounts                                                                          |   |                                                          | 148    |   |   | 6 |   |   | 10 |   |   | 164 |   |
| Money                market                accounts                                                       |   |                                                          | 454    |   |   | (46 | ) |   | (54 | ) |   | 354 |   |
| Savings                accounts                                                                           |   |                                                          | 10     |   |   | (24 | ) |   | (1 | ) |   | (15 | ) |
| Certificates                of                deposit                                                     |   |                                                          | 907    |   |   | 96 |   |   | 37 |   |   | 1,040 |   |
| Total                deposits                                                                             |   |                                                          | 1,519  |   |   | 32 |   |   | (8 | ) |   | 1,543 |   |
| Borrowed                money                                                                             |   |                                                          | (1,894 | ) |   | (715 | ) |   | 178 |   |   | (2,431 | ) |
| Total                net change in expense on                interest-bearing                liabilities  |   |                                                          | (375   | ) |   | (683 | ) |   | 170 |   |   | (888 | ) |
| Net                change in net interest income                                                          |   | $                                                             | 2,662  |   | $ | (237 | ) | $ | (243 | ) | $ | 2,182 |   |

**Analysis      of Statements of Income **

*Net      Interest Income. *

----

*Table            of            Contents*

*Interest      Income.*
*Wall Street Journal Prime*

*Interest      Expense.*
*Premium Amortization*

*    Provision      for      losses on loans.*
*Changes in Financial Condition -      Allowance for Losses *

----

*Table            of            Contents*

*on      Loans*
*Management’s Discussion and Analysis of Financial      Condition and Results of Operations*

*Non-interest      income. *

*Non-interest      expense.*

----

*Table            of            Contents*

|                                                                                                                                                   |   | **Three                Months Ended****March                31,** |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|---------|
|                                                                                                                                                   |   | **2006**                                                          |    | **2005** |   |
|                                                                                                                                                   |   | (Dollars                in thousands)                             |    |
| Efficiency                Ratio:                                                                                                                       |   |                                                              |    |   |   |   |   |
| Non-interest                expense                                                                                                          |   | $                                                                 | 8,727   |   | $ | 8,260 |   |
| Net                interest income before the provision for losses on loans plus                non-interest income                          |   | $                                                                 | 10,673  |   | $ | 8,535 |   |
| Efficiency                ratio                                                                                                                   |   |                                                              | 81.77   | % |   | 96.78 | % |
|                                                                                                                                                   |   |                                                              |    |   |   |   |   |
| Core                Efficiency Ratio:                                                                                                                  |   |                                                              |    |   |   |   |   |
| Non-interest                expense                                                                                                               |   | $                                                                 | 8,727   |   | $ | 8,260 |   |
|                                                                                                                                                   |   |                                                              |    |   |   |   |   |
| Net                interest income before the provision for losses on loans plus                non-interest income                          |   | $                                                                 | 10,673  |   | $ | 8,535 |   |
| Adjustments:                                                                                                                                           |   |                                                              |    |   |   |   |   |
| Net                realized losses on sales of securities                available-for-sale                                                       |   |                                                              | 127     |   |   | 65 |   |
| Impairment                of securities available-for-sale                                                                                        |   |                                                              | — |   |   | 240 |   |
| Net                realized gains on sales of assets                                                                                              |   |                                                              | (1      | ) |   | (62 | ) |
| Amortization                of deferred premium                                                                                                   |   |                                                              | 2,568   |   |   | 4,724 |   |
| Net                interest income before the provision for losses on loans plus                non-interest                income - as adjusted  |   | $                                                                 | 13,367  |   | $ | 13,502 |   |
| Core                efficiency ratio                                                                                                              |   |                                                              | 65.29   | % |   | 61.18 | % |

----

*Table            of            Contents*

*Income      Tax Expense.*

**Changes      in Financial Condition**

*Securities.*

|                                                                             |   |  **Amortized****Cost**           |    | **Gross****Unrealized****Gains** |   | **Gross****Unrealized****Losses** |   |  **Fair****Value** |    |
|----------------------------------------------------------------------------------|--------|---------------------------------------|---------|----------------------------------|--------|-----------------------------------|--------|-------------------------|---------|
|                                                                             |   | (Dollars                in thousands) |    |
| At                March 31, 2006:                                                |   |                                  |    |                             |   |                              |   |                    |    |   |   |   |   |
| Government                sponsored entity                (*GSE*) securities (1) |   | $                                     | 221,218 |                             | $      | 1                                 |   | $                       | (2,875  | ) | $ | 218,344 |   |
| Mortgage-backed                securities                                        |   |                                  | 27,974  |                             |   | 5                                 |   |                    | (590    | ) |   | 27,389 |   |
| Collateralized                mortgage                obligations                |   |                                  | 19,962  |                             |   | 5                                 |   |                    | (249    | ) |   | 19,718 |   |
| Trust                preferred                securities                         |   |                                  | 85      |                             |   | 141                               |   |                    | — |   |   | 226 |   |
| Equity                securities                                                 |   |                                  | 1,385   |                             |   | 44                                |   |                    | — |   |   | 1,429 |   |
|                                                                             |   | $                                     | 270,624 |                             | $      | 196                               |   | $                       | (3,714  | ) | $ | 267,106 |   |
|                                                                             |   |                                  |    |                             |   |                              |   |                    |    |   |   |   |   |
| At                December 31, 2005:                                             |   |                                  |    |                             |   |                              |   |                    |    |   |   |   |   |
| Government                sponsored entity                (*GSE*) securities (1) |   | $                                     | 167,047 |                             | $      | 94                                |   | $                       | (1,932  | ) | $ | 165,209 |   |
| Mortgage-backed                securities                                        |   |                                  | 29,927  |                             |   | 29                                |   |                    | (500    | ) |   | 29,456 |   |
| Collateralized                mortgage                obligations                |   |                                  | 22,553  |                             |   | 7                                 |   |                    | (222    | ) |   | 22,338 |   |
| Trust                preferred                securities                         |   |                                  | 85      |                             |   | 51                                |   |                    | — |   |   | 136 |   |
| Equity                securities                                                 |   |                                  | 1,386   |                             |   | 25                                |   |                    | — |   |   | 1,411 |   |
|                                                                             |   | $                                     | 220,998 |                             | $      | 206                               |   | $                       | (2,654  | ) | $ | 218,550 |   |

----

*Table          of Contents*

*The Meaning of Other-Than-Temporary Impairment and Its Application to      Certain Investments*

*Loans.*

|                                                                  |   | **March                31, 2006**     |    | **December                31, 2005** |   |
|-----------------------------------------------------------------------|--------|---------------------------------------|---------|--------------------------------------|--------|
|                                                                  |   | **Amount**                            |    | **Percentage**                       |   | **Amount** |   | **Percentage** |   |
|                                                                  |   | (Dollars                in thousands) |    |
| Commercial                and construction loans:                     |   |                                  |    |                                 |   |   |   |   |   |   |   |   |   |
| Commercial                real                estate             |   | $                                     | 346,958 |                                 |   | 39.5 | % | $ | 381,956 |   |   | 41.6 | % |
| Construction                and land                development  |   |                                  | 148,807 |                                 |   | 17.0 |   |   | 136,558 |   |   | 14.9 |   |
| Commercial                and                industrial          |   |                                  | 54,493  |                                 |   | 6.2 |   |   | 61,956 |   |   | 6.8 |   |
| Total                commercial                loans             |   |                                  | 550,258 |                                 |   | 62.7 |   |   | 580,470 |   |   | 63.3 |   |
|                                                                  |   |                                  |    |                                 |   |   |   |   |   |   |   |   |   |
| Retail                loans:                                          |   |                                  |    |                                 |   |   |   |   |   |   |   |   |   |
| Single-family                residential                         |   |                                  | 231,286 |                                 |   | 26.3 |   |   | 235,359 |   |   | 25.7 |   |
| Home                equity lines of                credit        |   |                                  | 91,618  |                                 |   | 10.4 |   |   | 96,403 |   |   | 10.5 |   |
| Other                                                       |   |                                  | 4,999   |                                 |   | 0.6 |   |   | 5,173 |   |   | 0.5 |   |
| Total                retail                loans                 |   |                                  | 327,903 |                                 |   | 37.3 |   |   | 336,935 |   |   | 36.7 |   |
|                                                                  |   |                                  |    |                                 |   |   |   |   |   |   |   |   |   |
| Total                loans receivable, net of unearned fees      |   | $                                     | 878,161 |                                 |   | 100.0 | % | $ | 917,405 |   |   | 100.0 | % |

*Allowance      for Losses on Loans.*

----

*Table            of            Contents*

|                                          |   | **Three                Months Ended****March                31,** |   |
|-----------------------------------------------|--------|-------------------------------------------------------------------|--------|
|                                          |   | **2006**                                                          |   | **2005** |   |
|                                          |   | (Dollars                in thousands)                             |   |
| Balance                at beginning of period |   | $                                                                 | 12,939 |   | $ | 13,353 |   |
| Provision                for losses on loans  |   |                                                              | 385    |   |   | 255 |   |
| Charge-offs                                   |   |                                                              | (147   | ) |   | (238 | ) |
| Recoveries                                    |   |                                                              | 160    |   |   | 65 |   |
| Balance                at end of period       |   | $                                                                 | 13,337 |   | $ | 13,435 |   |

----

*Table            of            Contents*

*Non-performing      Assets. *

|                                                                        |   | **March                31,****2006**  |   | **December                31,****2005** |   |
|-----------------------------------------------------------------------------|--------|---------------------------------------|--------|-----------------------------------------|--------|
|                                                                        |   | (Dollars                in thousands) |   |
| Non-accrual                loans:                                           |   |                                  |
| Commercial                and construction                loans:            |   |                                  |   |                                    |   |   |   |
| Commercial                real                estate                   |   | $                                     | 21,464 |                                    | $      | 17,492 |   |
| Construction                and land                development        |   |                                  | 76     |                                    |   | 77 |   |
| Commercial                and                industrial                |   |                                  | 426    |                                    |   | 94 |   |
| Total                commercial and construction                loans  |   |                                  | 21,966 |                                    |   | 17,663 |   |
|                                                                        |   |                                  |   |                                    |   |   |   |
| Retail                loans:                                                |   |                                  |   |                                    |   |   |   |
|    Single-family                residential             |   |                                  | 3,009  |                                    |   | 2,929 |   |
| Home                equity lines of                credit              |   |                                  | 532    |                                    |   | 429 |   |
| Other                                                                  |   |                                  | 35     |                                    |   | 20 |   |
| Total                retail loans                                      |   |                                  | 3,576  |                                    |   | 3,378 |   |
| Total                non-accruing                loans                 |   |                                  | 25,542 |                                    |   | 21,041 |   |
| Other                real estate owned, net                            |   |                                  | 574    |                                    |   | 540 |   |
| Total                non-performing                assets              |   | $                                     | 26,116 |                                    | $      | 21,581 |   |
|                                                                        |   |                                  |   |                                    |   |   |   |
| Non-performing                assets to total assets                   |   |                                  | 2.07   | %                                       |   | 1.74 | % |
| Non-performing                loans to total loans                     |   |                                  | 2.91   |                                    |   | 2.29 |   |

----

*Table            of            Contents*

*Deposits      and Borrowed Money.*

|                                                    |   | **March                31, 2006**     |    | **December                31, 2005** |   |
|---------------------------------------------------------|--------|---------------------------------------|---------|--------------------------------------|--------|
|                                                    |   | **Amount**                            |    | **Percentage**                       |   | **Amount** |   | **Percentage** |   |
|                                                    |   | (Dollars                in thousands) |    |
| Checking                accounts:                       |   |                                  |
| Non-interest                bearing                |   | $                                     | 63,784  |                                 |   | 7.5 | % | $ | 66,116 |   |   | 8.0 | % |
| Interest-bearing                                   |   |                                  | 103,521 |                                 |   | 12.2 |   |   | 106,938 |   |   | 12.9 |   |
| Money                market accounts               |   |                                  | 134,800 |                                 |   | 15.9 |   |   | 121,667 |   |   | 14.7 |   |
| Savings                accounts                    |   |                                  | 167,234 |                                 |   | 19.8 |   |   | 170,619 |   |   | 20.6 |   |
| Core                deposits                       |   |                                  | 469,339 |                                 |   | 55.4 |   |   | 465,340 |   |   | 56.2 |   |
| Certificates                of deposit:                 |   |                                  |    |                                 |   |   |   |   |   |   |   |   |   |
| Less                than                $100,000   |   |                                  | 266,055 |                                 |   | 31.4 |   |   | 261,977 |   |   | 31.6 |   |
| $100,000                or                greater  |   |                                  | 111,402 |                                 |   | 13.2 |   |   | 101,318 |   |   | 12.2 |   |
| Time                deposits                       |   |                                  | 377,457 |                                 |   | 44.6 |   |   | 363,295 |   |   | 43.8 |   |
| Total                deposits                      |   | $                                     | 846,796 |                                 |   | 100.0 | % | $ | 828,635 |   |   | 100.0 | % |

----

*Table            of            Contents*

|                                                                                                |   | **March                31, 2006**              |   | **December                31, 2005** |   |
|-----------------------------------------------------------------------------------------------------|--------|------------------------------------------------|--------|--------------------------------------|--------|
|                                                                                                |   | **Weighted****Average****Contractual****Rate** |   |   **Amount**               |   | **Weighted****Average****Contractual****Rate** |   |   **Amount** |   |
|                                                                                                |   | (Dollars                in thousands)          |   |
| Short-term                variable-rate borrowings:                                                 |   |                                           |   |                                 |   |   |   |   |   |   |   |   |   |
| Repurchase                agreements                                                                |   |                                           | 4.18   | %                                    | $      | 5,925 |   |   | 3.70 | % | $ | 555 |   |
|                                                                                                |   |                                           |   |                                 |   |   |   |   |   |   |   |   |   |
| Secured                advances from FHLB - Indianapolis:                                           |   |                                           |   |                                 |   |   |   |   |   |   |   |   |   |
| Maturing                in 2006 -                fixed-rate                                         |   |                                           | 3.41   |                                 |   | 87,000 |   |   | 3.41 |   |   | 87,000 |   |
| Maturing                in 2007 -                fixed-rate                                         |   |                                           | 3.65   |                                 |   | 87,000 |   |   | 3.65 |   |   | 87,000 |   |
| Maturing                in 2008 -                fixed-rate                                         |   |                                           | 3.89   |                                 |   | 72,000 |   |   | 3.89 |   |   | 72,000 |   |
| Maturing                in 2009 -                fixed-rate                                         |   |                                           | 4.09   |                                 |   | 15,000 |   |   | 4.09 |   |   | 15,000 |   |
| Maturing                in 2014 - fixed-rate                (1)                                     |   |                                           | 6.71   |                                 |   | 1,209 |   |   | 6.71 |   |   | 1,209 |   |
| Maturing                in 2018 - fixed-rate                (1)                                     |   |                                           | 5.54   |                                 |   | 2,816 |   |   | 5.54 |   |   | 2,816 |   |
| Maturing                in 2019 - fixed-rate                (1)                                     |   |                                           | 6.32   |                                 |   | 7,501 |   |   | 6.31 |   |   | 7,537 |   |
|                                                                                                |   |                                           |   |                                 |   | 272,526 |   |   |   |   |   | 272,562 |   |
| Less:                deferred premium on early                extinguishment of                debt |   |                                           |   |                                 |   | (13,223 | ) |   |   |   |   | (15,791 | ) |
| Net                FHLB - Indianapolis                advances                                 |   |                                           |   |                                 |   | 259,303 |   |   |   |   |   | 256,771 |   |
|                                                                                                |   |                                           |   |                                 |   |   |   |   |   |   |   |   |   |
| Total                borrowed money                                                            |   |                                           |   |                                 | $      | 265,228 |   |   |   |   | $ | 257,326 |   |
| Weighted-average                contractual interest rate                                      |   |                                           | 3.78   | %                                    |   |   |   |   | 3.77 | % |   |   |   |

*repurchase      agreements*

*LIBOR*

----

*Table            of            Contents*

*Capital      Resources. *

*Part II. Item 2. Unregistered Sales of Equity Securities      and Use of Proceeds.*

*OTS*

|                                    |   | **Actual**                            |    | **For                Capital Adequacy****Purposes** |   | **To                Be Well-Capitalized****Under                Prompt Corrective****Action                Provisions** |   |
|-----------------------------------------|--------|---------------------------------------|---------|-----------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------|--------|
|                                    |   | **Amount**                            |    | **Ratio**                                           |   | **Amount**                                                                                                              |   | **Ratio** |   | **Amount** |   | **Ratio** |   |
|                                    |   | (Dollars                in thousands) |    |
| As                of March 31, 2006:    |   |                                  |    |                                                |   |                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk-based                              |   | $                                     | 139,974 |                                                |   | 13.99                                                                                                                   | %      | $ | 80,051 |   |   | >8.00 | % | $ | 100,064 |   |   | >10.00 | % |
| Tangible                                |   |                                  | 128,343 |                                                |   | 10.17                                                                                                                   |   |   | 18,930 |   |   | >1.50 |   |   | 25,240 |   |   | >2.00 |   |
| Core                                    |   |                                  | 128,343 |                                                |   | 10.17                                                                                                                   |   |   | 50,481 |   |   | >4.00 |   |   | 63,101 |   |   | >5.00 |   |
|                                    |   |                                  |    |                                                |   |                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| As                of December 31, 2005: |   |                                  |    |                                                |   |                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk-based                              |   | $                                     | 140,102 |                                                |   | 13.63                                                                                                                   | %      | $ | 82,244 |   |   | >8.00 | % | $ | 102,806 |   |   | >10.00 | % |
| Tangible                                |   |                                  | 128,884 |                                                |   | 10.38                                                                                                                   |   |   | 18,624 |   |   | >1.50 |   |   | 24,832 |   |   | >2.00 |   |
| Core                                    |   |                                  | 128,884 |                                                |   | 10.38                                                                                                                   |   |   | 49,665 |   |   | >4.00 |   |   | 62,080 |   |   | >5.00 |   |

----

*Table            of            Contents*

**Liquidity      and Commitments **

|   | • | deposits, |
|--------|---------|-----------|

|   | • | scheduled                payments of amortizing loans and mortgage-backed                securities, |
|--------|---------|------------------------------------------------------------------------------------------------------|

|   | • | prepayments                and maturities of outstanding loans and mortgage-backed securities, |
|--------|---------|------------------------------------------------------------------------------------------------|

|   | • | maturities                of investment securities and other short-term                investments, |
|--------|---------|-----------------------------------------------------------------------------------------------------|

|   | • | funds                provided from operations, and |
|--------|---------|----------------------------------------------------|

|   | • | borrowings                from the FHLB. |
|--------|---------|------------------------------------------|

*Contractual      Obligations.*
** **

----

*Table            of            Contents*

|                                                   |   | **Payments                Due By Period**             |   |
|--------------------------------------------------------|--------|-------------------------------------------------------|--------|
|                                                   |   | **One                Year****Or                Less** |   | **Over                One****Through****Three                Years** |   | **Over                Three Through****Five                Years** |   | **Over                Five****Years** |   | **Total** |   |
|                                                   |   | (Dollars                in thousands)                 |   |
| FHLB                advances (1)                  |   | $                                                     | 87,239 |   | $ | 159,531 |   | $ | 15,608 |   | $ | 10,148 |   | $ | 272,526 |   |
| Operating                leases                   |   |                                                  | 489    |   |   | 335 |   |   | 1 |   |   | — |   |   | 825 |   |
| Dividends                payable on common stock  |   |                                                  | 1,428  |   |   | — |   |   | — |   |   | — |   |   | 1,428 |   |
|                                                   |   | $                                                     | 89,156 |   | $ | 159,866 |   | $ | 15,609 |   | $ | 10,148 |   | $ | 274,779 |   |

*Deposits and Borrowed      Money*

*Off-Balance      Sheet Obligations.*

----

*Table            of            Contents*

|                                                               |   | **One                Year****or                Less** |   | **Over                One****Through****Three                Years** |   | **Over                Three Through****Five                Years** |   | **Over                Five****Years** |   | **Total** |   |
|--------------------------------------------------------------------|--------|-------------------------------------------------------|--------|----------------------------------------------------------------------|--------|--------------------------------------------------------------------|--------|---------------------------------------|--------|-----------|--------|
|                                                               |   | (Dollars                in thousands)                 |   |
| Commitments                to extend  credit:                 |   |                                                  |   |                                                                 |   |                                                               |   |                                  |   |      |   |   |   |   |   |   |
| Commercial                                                         |   | $                                                     | 15,656 |                                                                 | $      | 4,124                                                              |   | $                                     | 5      |      | $      | - |   | $ | 19,785 |   |
| Retail                                                             |   |                                                  | 10,908 |                                                                 |   | -                                                                  |   |                                  | -      |      |   | - |   |   | 10,908 |   |
| Commitments                to purchase loans:                      |   |                                                  |   |                                                                 |   |                                                               |   |                                  |   |      |   |   |   |   |   |   |
| Commercial                                                         |   |                                                  | 5,000  |                                                                 |   | -                                                                  |   |                                  | -      |      |   | - |   |   | 5,000 |   |
| Retail                                                             |   |                                                  | -      |                                                                 |   | -                                                                  |   |                                  | -      |      |   | - |   |   | - |   |
| Commitments                to fund unused construction loans  |   |                                                  | 25,600 |                                                                 |   | 12,776                                                             |   |                                  | 3,114  |      |   | 7,256 |   |   | 48,746 |   |
| Commitments                to fund unused lines of credit:         |   |                                                  |   |                                                                 |   |                                                               |   |                                  |   |      |   |   |   |   |   |   |
| Commercial                                                         |   |                                                  | 16,913 |                                                                 |   | 2,920                                                              |   |                                  | 352    |      |   | - |   |   | 20,185 |   |
| Retail                                                             |   |                                                  | 13,621 |                                                                 |   | 751                                                                |   |                                  | 15     |      |   | 66,958 |   |   | 81,345 |   |
| Letters                of credit                              |   |                                                  | 3,429  |                                                                 |   | 3,289                                                              |   |                                  | 681    |      |   | - |   |   | 7,399 |   |
| Credit                enhancements                            |   |                                                  | 7,483  |                                                                 |   | 8,487                                                              |   |                                  | 24,051 |      |   | 8,838 |   |   | 48,859 |   |
|                                                               |   | $                                                     | 98,610 |                                                                 | $      | 32,347                                                             |   | $                                     | 28,218 |      | $      | 83,052 |   | $ | 242,227 |   |

*CRA*

*FHLB-IN*
*IDPLOC*

----

*Table            of            Contents*

**Item      3.  **
**Quantitative and Qualitative Disclosures about Market      Risk**

*IRR*
*NPV*

*ALCO*

----

*Table            of            Contents*

|                                                           |   | **Net                Portfolio Value**    |    |
|----------------------------------------------------------------|--------|-------------------------------------------|---------|
|                                                           |   | **At                March 31, 2006**      |    | **At                December 31, 2005** |   |
|                                                           |   | **$                Amount**               |    | **$                Change** |   | **%                Change** |   | **$                Amount** |   | **$                Change** |   | **%                Change** |   |
|                                                           |   | **(Dollars                in thousands)** |    |
| Assumed                Change in Interest Rates (Basis Points) |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| +300                                                           |   | $                                         | 152,294 |   | $ | (22,372 | ) |   | (12.8 | )% | $ | 156,592 |   | $ | (12,288 | ) |   | (7.3 | )% |
| +200                                                           |   |                                      | 161,330 |   |   | (13,336 | ) |   | (7.6 | ) |   | 162,507 |   |   | (6,373 | ) |   | (3.8 | ) |
| +100                                                           |   |                                      | 169,004 |   |   | (5,662 | ) |   | (3.2 | ) |   | 166,875 |   |   | (2,005 | ) |   | (1.2 | ) |
|                      0                |   |                                      | 174,666 |   |   | — |   |   | — |   |   | 168,880 |   |   | — |   |   | — |   |
|  -100                                                     |   |                                      | 177,929 |   |   | 3,263 |   |   | 1.9 |   |   | 168,938 |   |   | 58 |   |   | (0.0 | ) |
|  -200                                                     |   |                                      | 179,022 |   |   | 4,356 |   |   | 2.5 |   |   | 166,802 |   |   | (2,078 | ) |   | (1.2 | ) |

----

*Table            of            Contents*

|                                                     |   | **Percentage                of Deposits Maturing In First                Year** |   |
|----------------------------------------------------------|--------|---------------------------------------------------------------------------------|--------|
|                                                     |   | **March                31, 2006**                                               |   | **December                31, 2005** |   |
| Deposit                Category:                         |   |                                                                            |   |   |   |   |   |
| Business                checking                accounts |   |                                                                            | 20     | % |   | 20 | % |
| Interest                checking                accounts |   |                                                                            | 20     |   |   | 20 |   |
| High-yield                checking accounts              |   |                                                                            | 95     |   |   | 95 |   |
| Savings                accounts                          |   |                                                                            | 20     |   |   | 20 |   |
| Money                market                accounts      |   |                                                                            | 50     |   |   | 50 |   |

*rate shocks*

|                                                                          |   | **Percentage                Change in****Net                Interest Income****Over                a Twelve Month****Time                Period** |   |
|-------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                          |   | **March                31, 2006**                                                                                                                 |   | **December                31, 2005** |   |
| Assumed                Change in Interest Rates(Basis                Points): |   |                                                                                                                                              |   |   |   |   |   |
| +200                                                                          |   |                                                                                                                                              | 2.2    | % |   | 3.0 | % |
| +100                                                                          |   |                                                                                                                                              | 1.4    |   |   | 2.2 |   |
|  -100                                                                    |   |                                                                                                                                              | (2.0   | ) |   | (6.0 | ) |
|  -200                                                                    |   |                                                                                                                                              | (6.5   | ) |   | (15.5 | ) |

----

*Table            of            Contents*

**Item      4.** 
**Controls and      Procedures**

**Part      II. **
**OTHER INFORMATION**

**Item      1.**
**Legal      Proceedings**

**Legal      Proceedings**

----

*Table            of            Contents*

**Item      1A.**
**  Risk      Factors**

*Management’s Discussion and Analysis of Financial Condition and      Results of Operations - Forward Looking Statements*

**Item      2.**
**  Unregistered Sales of      Equity Securities and Use of      Proceeds**
** **

| **Period**                                        |   | **Total                Number of****Shares****Purchased** |    | **Average                Price****Paid                Per Share** |   | **Total                Number of Shares****Purchased                as Part of****Publicly                Announced****Plans                or Programs** |   | **Maximum                Number of**** Shares                that May Yet Be****Purchased                Under the****Plans                or Programs (1)** |    |
|---------------------------------------------------|--------|-----------------------------------------------------------|---------|-------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|
| January                1-31, 2006                 |   |                                                      | 149,347 |                                                              | $      | 14.36                                                                                                                                                     |   |                                                                                                                                                              | 149,347 |   |   | 506,635 |   |
| February                1-28,                2006 |   |                                                      | 65,150  |                                                              |   | 14.70                                                                                                                                                     |   |                                                                                                                                                              | 65,150  |   |   | 441,485 |   |
| March                1-31, 2006                   |   |                                                      | 46,590  |                                                              |   | 14.71                                                                                                                                                     |   |                                                                                                                                                              | 46,590  |   |   | 394,895 |   |
| Total                                             |   |                                                      | 261,087 |                                                              |   | 14.51                                                                                                                                                     |   |                                                                                                                                                              | 261,087 |   |   | 394,895 |   |

| (1) | The                Company publicly announced on March 17, 2003 a repurchase program                for                1,200,000 shares. Prior to January 1, 2006, a total of 544,018 shares                had                been repurchased under that program. A total of 56,249 shares were                purchased in April 2006 under this                program. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Item      3.**
**  Defaults Upon Senior      Securities**

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

*Annual Meeting*

----

*Table            of            Contents*

**Item      5.**
**Other      Information**

----

*Table            of            Contents*

**Item      6.**
**Exhibits**

|   | (a)    |   | List                of exhibits (filed herewith unless otherwise                noted).                                                         |
|--------|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |                                                                                                                                            |
|   | 3.1    |   | Certificate                of Incorporation of CFS Bancorp, Inc.                (1)                                                             |
|   | 3.2    |   | Bylaws                of CFS Bancorp, Inc. (1)                                                                                                  |
|   | 4.0    |   | Form                of Stock Certificate of CFS Bancorp, Inc. (2)                                                                               |
|   | 10.1   |   | Employment                Agreement entered into between Citizens Financial                Services, FSB and Thomas F. Prisby (3)               |
|   | 10.2   |   | Employment                Agreement entered into between CFS Bancorp, Inc. and                Thomas F. Prisby (3)                              |
|   | 10.3   |   | CFS                Bancorp, Inc. Amended and Restated 1998 Stock Option Plan                (4)                                                 |
|   | 10.4   |   | CFS                Bancorp, Inc. Amended and Restated 1998 Recognition and                Retention Plan and Trust Agreement (4)                |
|   | 10.5   |   | CFS                Bancorp, Inc. 2003 Stock Option Plan (5)                                                                                     |
|   | 10.6   |   | Employment                Agreement entered into between Citizens Financial                Services, FSB and Charles V. Cole (6)                |
|   | 10.7   |   | Employment                Agreement entered into between Citizens Financial                Services, FSB and Thomas L. Darovic (6)              |
|   | 10.8   |   | Employment                Agreement entered into between CFS Bancorp, Inc. and                Charles V. Cole (6)                               |
|   | 10.9   |   | Employment                Agreement entered into between CFS Bancorp, Inc. and                Thomas L. Darovic (6)                             |
|   | 10.10  |   | Employment                Agreement entered into between Citizens Financial                Services, FSB and Zoran Koricanac (7)                |
|   | 10.11  |   | Employment                Agreement entered into between CFS Bancorp, Inc. and                Zoran Koricanac (7)                               |
|   | 10.12  |   | Amended                and Restated Supplemental ESOP Benefit Plan of CFS                Bancorp, Inc. and Citizens Financial Services, FSB (7) |
|   | 10.13  |   | CFS                Bancorp, Inc. Directors’ Deferred Compensation Plan                (7)                                                 |
|   | 31.1   |   | Rule                13a-14(a) Certification of Chief Executive Officer                                                                          |
|   | 31.2   |   | Rule                13a-14(a) Certification of Chief Financial Officer                                                                          |
|   | 32.0   |   | Section                1350 Certifications                                                                                                      |

| (1) | Incorporated                by reference from the Company's Definitive Proxy Statement from the                Annual                Meeting of Stockholders filed with the SEC on March 25, 2005. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Incorporated                by reference from the Company’s Annual Report                on Form 10-K for the year ended December 31,                2005. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Incorporated                by reference from the Company’s Quarterly Report on Form 10-Q for the                quarterly period ended September 30,                2003. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Incorporated                by reference from the Company’s Definitive                Proxy Statement for the Annual Meeting of Stockholders filed with                the SEC                on March 23, 2001. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Incorporated                by reference from the Company’s Definitive Proxy Statement for the Annual                Meeting of Stockholders filed with the SEC on March 31,                2003. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | Incorporated                by reference from the Company’s Annual Report                on Form 10-K for the year ended December 31,                2003. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7) | Incorporated                by reference from the Company’s Annual Report on Form 10-K for the year                ended December 31, 2004. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------|

----

*Table            of            Contents*

**SIGNATURES**

**CFS      BANCORP, INC.**

| Date:                May 10, 2006 | By:    | /s/                Thomas F. Prisby                          |
|-----------------------------------|--------|--------------------------------------------------------------|
|                              |   | Thomas                F. Prisby, Chairman and                |
|                              |   | Chief                Executive Officer                       |
|                              |   |                                                         |
| Date:                May 10, 2006 | By:    | /s/                Charles V. Cole                           |
|                              |   | Charles                V. Cole, Executive Vice President and |
|                              |   | Chief                Financial Officer                       |

----