EX-99.1 3 k82228exv99w1.txt PRESS RELEASE EXHIBIT 99.1 [COMMUNITY SHORES BANK CORPORATION LOGO] COMMUNITY SHORES REPORTS 2003 EPS OF $0.75, UP 15.4% MUSKEGON, Mich., January 20 -- Community Shores Bank Corporation (OTC Bulletin Board: CSHB), Muskegon's only locally-headquartered independent community banking organization, today reported 2003 net income of $1.06 million, a 29.3% increase over the $0.82 million earned in 2002. Earnings for 2003 included a net tax benefit of $43,000 resulting from a one-time tax credit of $327,000 taken in the first quarter for the effect of prior losses accumulated during the first seven quarters of operation, mostly offset by three quarters of fully-taxable status. Diluted earnings per share were $0.75, compared to $0.65 in 2002, a 15.4 % increase. Per share results were impacted by a series of private placements over the past twelve months that increased average diluted shares outstanding by 8.1% to 1,410,274. For the fourth quarter of 2003, Community Shores reported earnings of $233,000 compared to $251,000 for the prior-year period. Earnings for the fourth quarter of 2003 were impacted by Community Shores' fully taxable status. Pretax income was $351,000, an increase of 39.7% over the fourth quarter of 2002. Diluted earnings per share were $0.16 for the fourth quarter of 2003 compared to $0.19 for the prior-year period, and were affected not only by the Company's aforementioned change in taxable status but also a 13.1% increase in average shares outstanding to 1,435,362. Jose A. Infante, Chairman, President and CEO, stated, "2003 represents our fifth full year of operations, our first quarters of taxability , and the first year we reached $1 million in consolidated net income. We are pleased with our strong performance and double-digit earnings growth, given the weak economy this past year. We have been selective in our growth and resolute in the face of competitive pricing pressures. This has had a positive impact on asset quality and net interest margin." "As we enter 2004, we see signs of a solid recovery in progress. We are experiencing the strongest commercial loan pipeline we've seen in two years. This should more than offset the lower level of mortgage activity we are seeing, although Community Shores was never overly dependent on mortgage fee income. With five commercial lenders in place, our bank is well-positioned to take advantage of growth opportunities." Total revenue, consisting of net interest income and non-interest income was $7.0 million for 2003, an increase of 10.3% over 2002. Net interest income increased 8.6% to $5.9 million, reflecting a 9.0% growth in average earning assets. In spite of prime lending rate differences between the two years of over 50 basis points, the margin only decreased one basis point, to 3.35%. The fourth quarter margin declined only two basis points from both the linked quarter and year-ago quarter, to 3.38%. Mr. Infante noted, "Our net interest margin remained remarkably stable over the last four quarters. Our recent small business deposit campaign contributed low-cost deposits that supported this stability." Non-interest income for 2003 was $1.09 million, a 20.6% increase over the $0.90 million reported for 2002. Excluding 2003 securities gains of $63,000, non-interest income rose 13.7%. Growth in service charges on deposit accounts, up 14.5%, and other fee income, up 26.9%, contributed the majority of the increase. Fee income from mortgage activity was flat year-over-year, and fourth quarter performance reflected a 65% decline relative to the year-ago fourth quarter. As Mr. Infante previously noted, mortgage banking income was never a major contributor to the bottom line. Non-interest expense totaled $5.47 million for 2003, an increase of 12.0% over the $4.88 million reported in 2002. Salaries and benefits, up $290,000 or 10.8%, accounted for the largest single dollar increase, and reflected annual salary adjustments and rising benefits costs. Other expense, up $178,000 or 20.6%, resulted from enhancements to our loan collection process. Growth in the remaining categories represented costs incurred from infrastructure growth as well as additional regulations, and the implementation of a more proactive shareholder relations program. The efficiency ratio was 79.0% for 2003 compared to 77.1% in 2002. At December 31, 2003, assets were $184.1 million, reflecting growth of $10.6 million. The increase of 6.1% above twelve months ago was driven by loan growth of 6.0%, or $8.5 million. Mr. Infante commented, "We are seeing positive signs of economic recovery in the Muskegon market, but we still remain selective, a strategy that has worked well for us this past year." The Company experienced 13.1% growth in deposits, with non-interest bearing deposits up 26.6%. Mr. Infante noted that Community Shores' asset quality is strong. Past-due and non-accrual loans were 0.64% of loans at December 31, 2003, compared to 0.77% of total loans for the linked quarter and 0.59% of loans twelve months ago. Net charge-offs were $466,000, or 0.31% of average loans, for 2003, compared to $262,000, or 0.20% for 2002. Quarterly trends show improvement, with annualized net charge-offs to average loans at 0.11% for the fourth quarter of 2003 compared to 0.45% for the linked quarter and 0.33% for the fourth quarter of 2002. The allowance for loan and lease losses was 1.29% of total loans at December 31, 2003. Shareholders' equity totaled $12.6 million at December 31, 2003, up $1.6 million from twelve months ago. Community Shores remains a "well-capitalized" institution; Tier I capital was 6.58% for the year-end compared to 5.74% twelve months ago. Shares outstanding at period-end were 1,430,000. About the Company With $184 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 thirteen consecutive quarters of profitability. Forward Looking Statement 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, Chairman, President and CEO, +1-231-780-1800, or jinfante@communityshores.com, or Tracey Welsh, Senior Vice President and CFO, +1-231-780-1847, or twelsh@communityshores.com, both of Community Shores Bank Corporation; Media, Linda Margolin of Margolin & Associates, Inc., +1-216-765-0953, or Lmm@margolinIR.com/ COMMUNITY SHORES CORPORATION CONSOLIDATED FINANCIAL HIGHLIGHTS
QUARTERLY YEAR TO DATE -------------------------------------------------------------- ------------------------ (dollars in thousands except per share 2003 2003 2003 2003 2002 data) 4TH QTR 3RD QTR 2ND QTR 1ST QTR 4TH QTR 2003 2002 ---------- ---------- ---------- ---------- ---------- ---------- ---------- EARNINGS Net interest income 1,473 1,505 1,465 1,454 1,412 5,896 5,429 Provision for loan and lease losses 38 94 173 189 183 494 625 Noninterest income 260 246 283 299 266 1,088 902 Noninterest expense 1,344 1,380 1,363 1,382 1,245 5,469 4,883 Pre tax income 351 277 211 182 261 1,021 823 Net Income 233 183 139 509 251 1,064 823 Basic earnings per share $ 0.16 $ 0.13 $ 0.10 $ 0.38 $ 0.19 $ 0.75 $ 0.65 Diluted earnings per share $ 0.16 $ 0.13 $ 0.10 $ 0.38 $ 0.19 $ 0.75 $ 0.65 Average shares outstanding 1,430,000 1,430,000 1,430,000 1,350,000 1,327,215 1,410,274 1,267,301 Average diluted shares outstanding 1,435,362 1,431,804 1,430,000 1,350,000 1,327,215 1,411,282 1,267,301 PERFORMANCE RATIOS Return on average assets 0.51% 0.40% 0.30% 1.13% 0.58% 0.58% 0.49% Return on average common equity 7.43% 5.91% 4.51% 17.69% 9.28% 8.74% 8.27% Net interest margin 3.38% 3.40% 3.27% 3.33% 3.40% 3.35% 3.36% Efficiency ratio 77.58% 78.81% 78.01% 81.74% 74.16% 79.02% 77.13% Full-time equivalent employees 50 50 47 52 54 50 54 CAPITAL Average equity to average assets 6.92% 6.71% 6.64% 6.38% 6.28% 6.65% 5.92% Tier 1 capital to average assets 6.96% 6.71% 6.58% 6.68% 6.24% 6.58% 5.74% Book value per share $ 8.84 $ 8.68 $ 8.68 $ 8.57 $ 8.32 $ 8.84 $ 8.32 ASSET QUALITY Gross loan charge-offs 72 178 174 257 136 681 314 Net loan charge-offs 42 167 51 206 117 466 262 Net loan charge-offs to avg loans (annualized) 0.11% 0.45% 0.14% 0.57% 0.33% 0.31% 0.20% Allowance for loan and lease losses 1,928 1,932 2,004 1,882 1,899 1,928 1,899 Allowance for losses to total loans 1.29% 1.32% 1.33% 1.28% 1.34% 1.29% 1.34% Past due and nonaccrual loans (90 days) 960 1,126 989 923 838 960 838 Past due and nonaccrual loans to total loans 0.64% 0.77% 0.66% 0.63% 0.59% 0.64% 0.59% Other real estate and repossessed assets 473 304 119 65 39 473 39 END OF PERIOD BALANCES Loans 149,950 146,169 150,681 147,389 141,454 149,950 141,454 Total earning assets 176,488 173,794 177,366 178,366 168,343 176,488 168,343 Total assets 184,104 183,185 185,621 188,737 173,466 184,104 173,466 Deposits 150,167 141,797 147,858 148,396 132,725 150,167 132,725 Shareholders' equity 12,636 12,408 12,406 12,256 11,066 12,636 11,066 AVERAGE BALANCES Loans 147,825 149,460 150,357 145,030 139,970 148,179 131,081 Total earning assets 174,172 176,895 178,888 174,635 168,831 176,151 161,643 Total assets 181,304 184,700 185,464 180,582 172,300 183,016 168,136 Deposits 142,310 144,512 147,086 137,309 131,677 142,817 131,314 Shareholders' equity 12,540 12,392 12,316 11,521 10,821 12,177 9,954
COMMUNITY SHORES BANK CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CONDITION
DECEMBER 31, DECEMBER 31, DECEMBER 31, 2003 2002 2001 (UNAUDITED) (AUDITED) (AUDITED) -------------- -------------- -------------- ASSETS Cash and due from financial institutions $ 4,751,416 $ 2,722,565 $ 2,191,280 Interest-bearing deposits in other financial institutions 138,609 59,429 79,641 Federal funds sold 1,700,000 0 0 -------------- -------------- -------------- Total cash and cash equivalents 6,590,025 2,781,994 2,270,921 Securities Available for sale 24,025,008 26,043,017 24,671,925 Held to maturity 249,047 252,567 60,000 -------------- -------------- -------------- Total securities 24,274,055 26,295,584 24,731,925 Loans held for sale - 579,400 Loans 149,950,085 141,453,620 118,115,580 Less: Allowance for loan losses 1,927,756 1,898,983 1,535,543 -------------- -------------- -------------- Net loans 148,022,329 139,554,637 116,580,037 Federal Home Loan Bank stock 425,000 425,000 425,000 Premises and equipment, net 2,653,906 2,910,237 3,173,724 Accrued interest receivable 620,138 661,136 703,433 Other assets 1,518,689 257,956 306,236 -------------- -------------- -------------- Total assets $ 184,104,142 $ 173,465,944 $ 148,191,276 ============== ============== ============== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits Non interest-bearing $ 13,122,112 $ 10,368,525 $ 9,217,298 Interest-bearing 137,045,341 122,356,854 100,931,036 -------------- -------------- -------------- Total deposits 150,167,453 132,725,379 110,148,334 Federal funds purchased and repurchase agreements 11,915,282 19,466,513 18,964,598 Federal Home Loan Bank advances 6,000,000 6,000,000 6,000,000 Notes payable 2,550,000 3,600,000 3,400,000 Accrued expenses and other liabilities 835,706 608,179 544,256 -------------- -------------- -------------- Total liabilities 171,468,441 162,400,071 139,057,188 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, December 31, 2003-1,430,000 issued; December 31, 2002- 1,330,000 issued and December 31, 2001-1,170,000 issued 12,922,314 12,123,585 10,871,211 Retained deficit (303,865) (1,367,911) (2,190,931) Accumulated other comprehensive income 17,252 310,199 453,808 -------------- -------------- -------------- Total shareholders' equity 12,635,701 11,065,873 9,134,088 -------------- -------------- -------------- Total liabilities and shareholders' equity $ 184,104,142 $ 173,465,944 $ 148,191,276 ============== ============== ==============
COMMUNITY SHORES BANK CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS THREE MONTHS TWELVE MONTHS TWELVE MONTHS ENDED ENDED ENDED ENDED 12/31/03 12/31/02 12/31/03 12/31/02 -------------- -------------- --------------- ---------------- INTEREST AND DIVIDEND INCOME Loans, including fees $ 2,208,438 $ 2,339,254 $ 9,101,964 $ 9,110,441 Securities (including FHLB dividends) 198,031 224,725 872,973 1,170,956 Federal funds sold and other interest income 2,513 31,850 22,219 134,930 --------------- -------------- --------------- ---------------- Total interest income 2,408,982 2,595,829 9,997,156 10,416,327 INTEREST EXPENSE Deposits 763,478 962,584 3,355,149 4,111,838 Repurchase agreements and federal funds purchased and other debt 47,849 80,585 228,941 310,795 Federal Home Loan Bank advances and notes payable 124,603 140,757 516,737 564,673 -------------- -------------- --------------- ---------------- Total interest expense 935,930 1,183,926 4,100,827 4,987,306 NET INTEREST INCOME 1,473,052 1,411,903 5,896,329 5,429,021 Provision for loan losses 37,902 182,700 494,239 624,840 -------------- -------------- --------------- ---------------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 1,435,150 1,229,203 5,402,090 4,804,181 Noninterest income Service charges on deposit accounts 161,802 141,396 580,654 507,057 Mortgage loan referral fees 30,513 11,860 56,331 86,379 Gain on sale of loans 6,602 72,236 164,690 132,344 Gain (loss) on disposition of securities 0 0 62,681 0 Other 61,049 40,833 223,913 176,411 -------------- -------------- --------------- ---------------- Total noninterest income 259,966 266,325 1,088,269 902,191 Noninterest expense Salaries and employee benefits 685,743 695,003 2,975,418 2,685,641 Occupancy 74,177 69,376 295,747 281,945 Furniture and equipment 115,986 107,521 455,385 443,686 Advertising 20,696 50,879 75,733 111,227 Data Processing 74,810 69,960 296,682 251,319 Professional services 104,466 50,804 329,375 246,229 Other 268,584 201,048 1,041,113 863,305 -------------- -------------- --------------- ---------------- Total noninterest expense 1,344,462 1,244,591 5,469,453 4,883,352 INCOME BEFORE INCOME TAXES 350,654 250,937 1,020,906 823,020 Federal income tax expense (benefit) 117,825 0 (43,140) 0 -------------- -------------- --------------- ---------------- NET INCOME $ 232,829 $ 250,937 $ 1,064,046 $ 823,020 ============== ============== =============== ================ Weighted average shares outstanding 1,430,000 1,327,215 1,410,274 1,267,301 ============== ============== =============== ================ Diluted average shares outstanding 1,435,362 1,327,215 1,411,282 1,267,301 ============== ============== =============== ================ Basic income per share $ 0.16 $ 0.19 $ 0.75 $ 0.65 ============== ============== =============== ================ Diluted income per share $ 0.16 $ 0.19 $ 0.75 $ 0.65 ============== ============== =============== ================