EX-99.1 3 k76390exv99w1.txt PRESS RELEASE OF COMMUNITY SHORES BANK CORPORATION EXHIBIT 99.1 [COMMUNITY SHORES BANK CORPORATION LOGO] COMMUNITY SHORES REPORTS RECORD FIRST QUARTER EPS MUSKEGON, MI - April 22, 2003 - Community Shores Bank Corporation, ( OTCBB: CSHB), Muskegon's only locally-headquartered independent community banking organization, today reported net income for the quarter ended March 31, 2003 of $509 thousand, an increase of 206.6% over the $166 thousand reported for the prior year first quarter. First quarter 2003 net income included a tax benefit of $327 thousand from prior losses accumulated during the first seven quarters of operation. Pretax income was $182 thousand, an increase of 10.0% over the first quarter of 2002. Diluted per share earnings were $0.38, compared to $0.14 reported last year. First quarter 2003 results reflect a 15.4% increase in the number of average shares outstanding compared to the year-ago quarter, the result of a series of private placements consummated over the past eleven months that increased the number of common shares outstanding by 260,000. Returns on average equity ("ROE") and average assets ("ROA") for the first quarter of 2003 were 17.69% and 1.13%, respectively, compared to 7.24% and 0.40% for the prior year first quarter. Excluding the aforementioned tax benefit, ROE and ROA for the first quarter of 2003 were 6.33% and 0.40%, respectively. Jose A. Infante, President and CEO, stated, "We are pleased to achieve our tenth consecutive quarter of profitability. Our results continue to be driven by strong revenue growth derived from both net interest income and non-interest income sources. Our reputation for unmatched service in the Muskegon marketplace is attracting new business relationships and providing the momentum for future earnings growth. We are especially proud to have achieved strong loan growth despite a weak economy." Total revenue, consisting of net interest income and non-interest income, totaled $1.8 million for the first quarter of 2003, an increase of 21.8% over the prior year's first quarter. Excluding the gain on sale of securities, total revenue rose 17.5%, to $1.7 million. Net interest income increased 16.0% to $1.5 million and reflected 9.0% growth in average earnings assets and a 20 basis point improvement in the net interest margin to 3.33%. First quarter 2003 non-interest income was $299 thousand, a 60.6% increase from the $186 thousand reported in the prior-year quarter. Excluding the gain on sale of securities, non-interest income was $237 thousand for the current quarter, a 26.9% increase over the year-ago quarter. New and expanding business relationships enhanced all sources of fee income; service charges on deposit accounts rose 29.6%, and the opening of Community Shores Mortgage Company in March of last year added an additional fee source. Non-interest expense totaled $1.4 million for the current quarter, an increase of 20.6% over the $1.1 million reported in the prior year period. Salaries and benefits, up 24.1%, accounted for most of the dollar increase and reflected the hiring of six additional employees. The remaining expenses (advertising, data processing, professional services and other) rose 16.5% as a result of general corporate growth. The efficiency ratio was 81.7% compared to 79.6% for the same quarter last year. Mr. Infante commented that the addition of three commercial lenders, while costly in the near term, should have a favorable impact on revenue growth over time, thereby bringing the company's efficiency ratio more into line. At March 31, 2003, assets were $188.8 million, an increase of 8.3% above the year-ago quarter, and were driven by loan growth of 18.2%, or $22.7 million. Loan growth was funded through 7.8% growth in deposits, a 23.1% decline in investment securities, and a 36.3% increase in equity. Mr. Infante noted that asset quality remained sound despite some deterioration from the impact of the weak economy. Past-due and non-accrual loans were 0.63% of total loans at March 31, 2003, up from 0.59% for the fourth quarter and 0.43% a year ago. Annualized net charge-offs were 0.57% of average loans for the first quarter of 2003, compared to 0.33% for the sequential quarter and a recovery of 0.04% for the prior year first quarter. The allowance for loan and lease losses was 1.28% of total loans at March 31, 2003. Shareholders' equity totaled $12.3 million at March 31, 2003, up $3.3 million from twelve months ago. Community Shore is a "well-capitalized" institution; its strong capital position is funded by a combination of earnings growth and the recent private placement of stock. Average equity to assets for the quarter was 6.38%, compared to 5.46% for the prior year quarter. Shares outstanding at period-end were 1,430,000. ABOUT THE COMPANY With $189 million in assets, Community Shores Bank Corporation is the only independent community banking organization headquartered in Muskegon. The Company serves businesses and consumers in the western Michigan counties of Muskegon and Ottawa from three branch offices. Community Shores Bank opened for business in January, 1999, and has achieved ten consecutive quarters of profitability. FORWARD-LOOKING STATEMENTS This news release contains comments or information that constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Actual results may differ materially from the results expressed in forward-looking statements. Factors that might cause such a difference include changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking regulation; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in the national and local economy; and other factors, including risk factors, referred to from time to time in filings made by Community Shores with the Securities and Exchange Commission. Community Shores undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise. Contact: Jose A. Infante President and CEO 231-780-1800 jinfante@communityshores.com Tracey Welsh VP & CFO 231-780-1847 twelsh@communityshores.com Linda Margolin (Media) 216-765-0953 lmm@margolinIR.com COMMUNITY SHORES CORPORATION CONSOLIDATED FINANCIAL HIGHLIGHTS
QUARTERLY ------------------------------------------------------------------------ 2003 2002 2002 2002 2002 (dollars in thousands except per share data) 1ST QTR 4TH QTR 3RD QTR 2ND QTR 1ST QTR ------------- ------------- ------------- ------------- ------------- EARNINGS Net interest income 1,454 1,412 1,408 1,357 1,253 Provision for loan and lease losses 189 183 154 160 128 Noninterest income 299 266 235 215 186 Noninterest expense 1,382 1,245 1,252 1,241 1,146 Net Income 509 251 236 171 166 Basic earnings per share 0.38 0.19 0.19 0.14 0.14 Diluted earnings per share 0.38 0.19 0.19 0.14 0.14 Average shares outstanding 1,350,000 1,327,215 1,269,402 1,207,088 1,170,000 Average diluted shares outstanding 1,350,000 1,327,215 1,269,402 1,207,088 1,170,000 PERFORMANCE RATIOS Return on average assets 1.13% 0.58% 0.57% 0.41% 0.40% Return on average common equity 17.69% 9.28% 9.17% 7.12% 7.24% Net interest margin 3.33% 3.40% 3.51% 3.40% 3.13% Efficiency ratio 81.74% 74.16% 76.24% 78.96% 79.61% Full-time equivalent employees 52 54 51 48 46 CAPITAL Average equity to average assets 6.38% 6.28% 6.18% 5.78% 5.46% Tier 1 capital ratio to average assets 6.68% 6.24% 6.05% 5.88% 5.28% Book value per share $ 8.57 $ 8.32 $ 8.18 $ 7.96 $ 7.69 ASSET QUALITY Gross loan charge-offs 257 136 99 67 11 Net loan charge-offs 206 117 92 64 (12) Net loan charge-offs to avg loans (annualized) 0.57% 0.33% 0.28% 0.20% -0.04% Allowance for loan and lease losses 1,882 1,899 1,833 1,772 1,676 Allowance for losses to total loans 1.28% 1.34% 1.36% 1.34% 1.34% Past due and nonaccrual loans (90 days) 923 838 1,361 707 542 Past due and nonaccrual loans to total loans 0.63% 0.59% 1.00% 0.53% 0.43% Other real estate and repossessed assets 65 39 27 31 0 END OF PERIOD BALANCES Loans 147,389 142,033 135,687 132,224 124,660 Total earning assets 178,366 168,343 164,400 160,191 165,708 Total assets 188,737 173,466 174,797 166,146 174,329 Deposits 148,396 132,725 135,144 130,166 137,611 Shareholders' equity 12,256 11,066 10,418 10,059 8,992 AVERAGE BALANCES Loans 145,030 139,970 133,563 129,167 121,393 Total earning assets 174,635 168,831 160,393 159,821 160,178 Total assets 180,582 172,300 166,342 166,030 167,609 Deposits 137,309 131,677 130,642 131,249 131,660 Shareholders' equity 11,521 10,821 10,280 9,590 9,147
COMMUNITY SHORES BANK CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CONDITION
MARCH 31, DECEMBER 31 MARCH 31, 2003 2002 2002 (UNAUDITED) (AUDITED) (UNAUDITED) ------------------- ------------------- ------------------- ASSETS Cash and due from financial institutions $ 7,614,626 $ 2,722,565 $ 6,091,400 Interest-bearing deposits in other financial institutions 362,300 59,429 70,461 Federal funds sold 4,100,000 0 6,250,000 ------------------- ------------------- ------------------- Total cash and cash equivalents 12,076,926 2,781,994 12,411,861 Securities Available for sale 26,126,728 26,043,017 34,241,824 Held to maturity 252,370 252,567 60,000 ------------------- ------------------- ------------------- Total securities 26,379,098 26,295,584 34,301,824 Loans held for sale 366,000 579,400 0 Loans 147,022,766 141,453,620 124,660,237 Less: Allowance for loan losses 1,881,891 1,898,983 1,675,599 ------------------- ------------------- ------------------- Net loans 145,140,875 139,554,637 122,984,638 Federal Home Loan Bank stock 425,000 425,000 425,000 Premises and equipment,net 2,833,984 2,910,237 3,112,831 Accrued interest receivable 691,220 661,136 694,911 Other assets 860,225 257,956 397,822 ------------------- ------------------- ------------------- Total assets $ 188,773,328 $ 173,465,944 $ 174,328,887 =================== =================== =================== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits Non interest-bearing $ 11,126,718 $ 10,384,627 $ 9,945,750 Interest-bearing 137,269,128 122,340,752 127,665,265 ------------------- ------------------- ------------------- Total deposits 148,395,846 132,725,379 137,611,015 Federal funds purchased and repurchase agreements 19,001,664 19,466,513 17,556,381 Federal Home Loan Bank advances 6,000,000 6,000,000 6,000,000 Notes payable 2,687,232 3,600,000 3,500,000 Accrued expenses and other liabilities 432,788 608,179 669,374 ------------------- ------------------- ------------------- Total liabilities 176,517,530 162,400,071 165,336,770 Shareholders' Equity Preferred Stock, no par value: 1,000,000 shares authorized and none issued 0 0 0 Common Stock, no par value: 9,000,000 shares authorized, March 31, 2003-1,430,000 issued; December 31, 2002- '1,330,000 issued and March 31, 2002-1,170,000 issued 12,923,585 12,123,585 10,871,211 Retained deficit (858,450) (1,367,911) (2,025,261) Accumulated other comprehensive income 190,663 310,199 146,167 ------------------- ------------------- ------------------- Total shareholders' equity 12,255,798 11,065,873 8,992,117 ------------------- ------------------- ------------------- Total liabilities and shareholders' equity $ 188,773,328 $ 173,465,944 $ 174,328,887 =================== =================== ===================
COMMUNITY SHORES BANK CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS THREE MONTHS ENDED ENDED 03/31/03 03/31/02 ------------------- ------------------- INTEREST AND DIVIDEND INCOME Loans, including fees $ 2,295,499 $ 2,159,850 Securities 241,727 326,999 Federal funds sold, FHLB dividends and other income 17,895 67,991 ------------------- ------------------- Total interest income 2,555,121 2,554,840 INTEREST EXPENSE Deposits 887,867 1,078,248 Repurchase agreements and federal funds purchased and other debt 77,920 84,986 Federal Home Loan Bank advances and notes payable 135,670 138,876 ------------------- ------------------- Total interest expense 1,101,457 1,302,110 NET INTEREST INCOME 1,453,664 1,252,730 Provision for loan losses 188,990 127,800 ------------------- ------------------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 1,264,674 1,124,930 Noninterest income Service charges on deposit accounts 129,173 99,673 Mortgage loan referral fees 5,185 44,935 Gain on sale of loans 49,314 0 Gain (loss) on disposition of securities 62,681 0 Other 53,005 41,843 ------------------- ------------------- Total noninterest income 299,358 186,451 Noninterest expense Salaries and employee benefits 768,791 619,423 Occupancy 75,820 71,376 Furniture and equipment 115,277 110,867 Advertising 22,355 14,211 Data Processing 72,094 57,126 Professional services 66,954 42,284 Other 260,464 230,423 ------------------- ------------------- Total noninterest expense 1,381,755 1,145,710 INCOME BEFORE INCOME TAXES 182,277 165,671 Federal income tax benefit (327,184) 0 ------------------- ------------------- NET INCOME $ 509,461 $ 165,671 =================== =================== Weighted average shares outstanding 1,350,000 1,170,000 =================== =================== Basic and diluted income per share $ 0.38 $ 0.14 =================== ===================