EX-99.1 2 k09475exv99w1.txt PRESS RELEASE EXHIBIT 99.1 (COMMUNITY SHORES BANK CORPORATION LOGO) FOR FURTHER INFORMATION: AT COMMUNITY SHORES BANK CORPORATION: Heather D. Brolick Tracey Welsh President and CEO Senior Vice President and CFO 1-231-780-1845 1-231-780-1847 hbrolick@communityshores.com twelsh@communityshores.com MEDIA CONTACT: Linda Margolin Margolin & Associates, Inc. 1-216-932-1755 linda@margolinIR.com Community Shores Bank Corp. Reports Third Quarter 2006 Diluted EPS of $0.25 MUSKEGON, Mich., October 27, 2006 (PRIMEZONE) -- Community Shores Bank Corporation (Nasdaq: CSHB), Muskegon's only locally headquartered independent community banking organization, today reported third quarter 2006 earnings of $363,000, or $0.25 per diluted share. This compares with third quarter 2005 net income of $389,000, or $0.26 per diluted share, and $342,000 or $0.23 per diluted share for the second quarter of this year. Results reflect a stable performance year over year; solid loan growth and a steady net interest margin, partially offset by slightly higher expenses, contributed to earnings improvement over second quarter. For the nine-month period, 2006 net income was $1.07 million compared with $1.09 million for the 2005 period, down 2.3 percent; diluted earnings per share were $0.73 compared with $0.75 last year. Heather D. Brolick, President and CEO, commented, "We continue to make progress; substantial loan growth and stronger fee income are contributing to our growing revenue stream. In spite of competitive pricing pressures on both loans and deposits, our margin was unchanged this quarter; I believe we are in the minority of banks that can make this claim for the quarter. We are developing new products to accelerate growth and profitability, and we are pleased with what we see ahead." Total revenue, consisting of net interest income and non-interest income, was $2.62 million for third quarter of 2006, up $194,000, or 8.0 percent, above the $2.43 million reported for the year-ago quarter. Net interest income increased 3.0 percent, to $2.16 million, reflecting a 4.6 percent increase in average earning assets partially offset by a six basis point decline in the net interest margin to 3.94 percent. Compared with the second quarter of 2006, net interest income increased $51,000 or 2.4 percent, primarily from growth in average earning assets; the net interest margin was unchanged at 3.94 percent. Fee income is making an increasing contribution to total revenue. Non-interest income for the third quarter was $461,000 compared with $330,000 for the year-ago quarter, an increase of $131,000, or 39.6 percent, of which $121,000 was derived from gains on the sale of SBA loans. Community Shores recently hired an experienced SBA lender to provide financing to small businesses in its market area; the Bank elected to sell the majority of loans to generate additional fee income. As a percent of average assets, fee income was 0.79 percent for the current quarter compared with 0.58 percent a year ago. For the third quarter of 2006, non-interest expense totaled $1.9 million, up $119,000 or 6.7 percent from the third quarter of 2005, and $131,000 higher than the linked quarter. Advertising and professional services accounted for the majority of expense growth compared to both earlier periods. Salaries and benefits increased $45,000 above the previous quarter, where salary expense was artificially low. The efficiency ratio for the third quarter of 2006 improved to 71.84 percent from 72.57 percent for the year-ago quarter. Assets at September 30, 2006 totaled $238.4 million, up $19.5 million or 8.9 percent compared with $218.9 million reported twelve months ago. Loans held for investment increased $17.8 million, or 9.5 percent, reaching $205.0 million at September 30, 2006. Community Shores Bank continues to be primarily a commercial lender; C&I and CRE loans comprised 81.0 percent of loans outstanding at quarter-end compared to 79.6 percent a year-ago. Deposits were unchanged from the second quarter, at $205.5 million; they increased $19.4 million, or 10.4 percent, from $186.1 million for the year-ago quarter. Ms. Brolick added, "We continue to work through the large commercial loan we identified earlier this year, which has kept our charge-offs elevated for the past three quarters. I am pleased to report that the process is nearing completion, and net loan charge-offs should return to more normal levels." Year-to-date 2006, net charge-offs were $585,000, or 0.30 percent of average loans on an annualized basis, compared with $191,000, or 0.10 percent for the prior-year nine months, which is more in line with historical experience. Non-performing loans plus delinquencies were $1.4 million or 0.68 percent of period-end loans at September 30, 2006, compared with 0.72 percent of loans for the second quarter, and $834,000 or 0.45 percent for the third quarter of 2005. The allowance for loan and lease losses stands at 1.24 percent of total loans at September 30, 2006. Shareholders' equity totaled $15.9 million at September 30, 2006, up $1.4 million from twelve months ago. Tier I capital was 6.74 percent for the third quarter of 2006 compared with 6.66 percent for the prior year's third quarter. Shares outstanding at period-end were 1,466,800. Ms. Brolick concluded, "We are having a good growth year at Community Shores as our bankers continue to develop high quality relationships that fill our pipeline with loans. We have been able to manage interest rates successfully thus far in this challenging environment, and we are hopeful that we will end the year on a strong note." ABOUT THE COMPANY 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 grown to $238 million in assets. The Company's stock is listed on the NASDAQ Capital Market under the symbol 'CSHB.' For further information, please visit the Company's web site at: www.communityshores.com. 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. COMMUNITY SHORES CORPORATION CONSOLIDATED FINANCIAL HIGHLIGHTS
QUARTERLY -------------------------------------------------------------- YEAR TO DATE 2006 2006 2006 2005 2005 ----------------------- 3RD QTR 2ND QTR 1ST QTR 4TH QTR 3RD QTR 2006 2005 ---------- ---------- ---------- ---------- ---------- ---------- ---------- (dollars in thousands except per share data) EARNINGS Net interest income 2,164 2,113 2,075 2,114 2,100 6,352 6,047 Provision for loan and lease losses 217 224 78 508 98 519 346 Noninterest income 461 356 320 339 330 1,137 936 Noninterest expense 1,886 1,755 1,792 1,793 1,767 5,432 5,004 Pre tax income 522 491 525 153 565 1,538 1,632 Net Income 363 342 364 119 389 1,069 1,094 Basic earnings per share $ 0.25 $ 0.24 $ 0.25 $ 0.08 $ 0.27 $ 0.74 $ 0.76 Diluted earnings per share $ 0.25 $ 0.23 $ 0.25 $ 0.08 $ 0.26 $ 0.73 $ 0.75 Average shares outstanding 1,449,191 1,436,800 1,436,800 1,436,800 1,435,757 1,440,976 1,433,304 Average diluted shares outstanding 1,476,876 1,461,201 1,474,279 1,482,431 1,480,317 1,470,930 1,468,214 PERFORMANCE RATIOS Return on average assets 0.62% 0.60% 0.64% 0.22% 0.71% 0.62% 0.69% Return on average common equity 9.33% 9.11% 9.89% 3.28% 10.89% 9.42% 10.50% Net interest margin 3.94% 3.94% 3.85% 4.05% 4.00% 3.91% 3.99% Efficiency ratio 71.84% 71.08% 74.82% 73.09% 72.57% 72.54% 71.66% Full-time equivalent employees 66 63 63 61 60 66 60 CAPITAL End of period equity to assets 6.66% 6.38% 6.57% 6.53% 6.60% 6.66% 6.60% Tier 1 capital to end of period assets 6.74% 6.51% 6.70% 6.62% 6.66% 6.74% 6.66% Book value per share $ 10.82 $ 10.52 $ 10.29 $ 10.09 $ 10.05 $ 10.82 $ 10.05 ASSET QUALITY Gross loan charge-offs 112 120 405 95 62 637 223 Net loan charge-offs 107 94 384 89 59 585 191 Net loan charge-offs to avg loans (annualized) 0.21% 0.19% 0.81% 0.19% 0.13% 0.30% 0.10% Allowance for loan and lease losses 2,547 2,437 2,307 2,613 2,194 2,547 2,194 Allowance for losses to total loans 1.24% 1.22% 1.20% 1.36% 1.17% 1.24% 1.17% Past due and nonaccrual loans (90 days) 1,394 1,428 1,579 1,128 834 1,394 834 Past due and nonaccrual loans to total loans 0.68% 0.72% 0.82% 0.59% 0.45% 0.68% 0.45% Other real estate and repossessed assets 123 58 4 22 6 123 6 END OF PERIOD BALANCES Loans 205,041 199,075 191,916 192,645 187,263 205,041 187,263 Total earning assets 223,902 223,447 215,305 212,262 209,479 223,902 209,479 Total assets 238,377 236,677 225,079 222,166 218,864 238,377 218,864 Deposits 205,456 205,175 194,572 190,451 186,081 205,456 186,081 Shareholders' equity 15,868 15,097 14,791 14,500 14,439 15,868 14,439 AVERAGE BALANCES Loans 202,432 195,783 189,698 191,170 187,909 196,018 182,507 Total earning assets 222,200 216,868 218,397 211,025 212,448 219,169 203,539 Total assets 233,400 226,911 227,725 220,061 220,101 229,368 210,661 Deposits 196,493 192,696 197,173 184,005 168,884 195,451 174,292 Shareholders' equity 15,569 15,034 14,716 14,530 14,290 15,134 13,893
COMMUNITY SHORES BANK CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE THREE MONTHS MONTHS NINE MONTHS NINE MONTHS ENDED ENDED ENDED ENDED 09/30/06 09/30/05 09/30/06 09/30/05 ---------- ---------- ------------ ----------- INTEREST AND DIVIDEND INCOME Loans, including fees $4,098,809 $3,334,559 $11,468,639 $9,255,802 Securities (including FHLB dividends) 181,241 181,576 541,281 512,293 Federal funds sold and other interest income 7,095 39,953 126,834 57,225 ---------- ---------- ----------- ---------- Total interest income 4,287,145 3,556,088 12,136,754 9,825,320 INTEREST EXPENSE Deposits 1,833,631 1,260,477 5,050,865 3,171,853 Repurchase agreements and federal funds purchased and other debt 107,957 43,535 218,640 171,988 Federal Home Loan Bank advances and notes payable 181,588 151,781 515,328 434,889 ---------- ---------- ----------- ---------- Total interest expense 2,123,176 1,455,793 5,784,833 3,778,730 NET INTEREST INCOME 2,163,969 2,100,295 6,351,921 6,046,590 Provision for loan losses 216,873 98,300 518,625 346,057 ---------- ---------- ----------- ---------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 1,947,096 2,001,995 5,833,296 5,700,533 Noninterest income Service charges on deposit accounts 239,155 236,699 733,444 670,202 Mortgage loan referral fees 0 5,752 1,437 7,872 Gain on sale of loans 124,610 3,717 141,013 20,152 Loss on disposal of equipment 0 11,578 (124) 11,925 Other 97,015 72,336 261,250 225,552 ---------- ---------- ----------- ---------- Total noninterest income 460,780 330,082 1,137,020 935,703 Noninterest expense Salaries and employee benefits 992,048 991,226 2,930,124 2,740,725 Occupancy 100,828 83,086 275,902 231,484 Furniture and equipment 113,069 105,501 311,323 285,395 Advertising 90,778 32,058 174,570 118,485 Data Processing 93,185 86,884 289,463 265,622 Professional services 166,603 131,219 424,394 396,528 Other 329,173 336,927 1,026,462 965,572 ---------- ---------- ----------- ---------- Total noninterest expense 1,885,684 1,766,901 5,432,238 5,003,811 INCOME BEFORE INCOME TAXES 522,192 565,176 1,538,078 1,632,425 Federal income tax expense 159,045 175,860 469,347 538,457 ---------- ---------- ----------- ---------- NET INCOME $ 363,147 $ 389,316 $ 1,068,731 $1,093,968 ========== ========== =========== ========== Weighted average shares outstanding 1,449,191 1,435,757 1,440,976 1,433,304 ========== ========== =========== ========== Diluted average shares outstanding 1,476,876 1,480,317 1,470,930 1,468,214 ========== ========== =========== ========== Basic income per share $ 0.25 $ 0.27 $ 0.74 $ 0.76 ========== ========== =========== ========== Diluted income per share $ 0.25 $ 0.26 $ 0.73 $ 0.75 ========== ========== =========== ==========
COMMUNITY SHORES BANK CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CONDITION
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, 2006 2005 2005 (UNAUDITED) (AUDITED) (UNAUDITED) ------------- ------------- ------------- ASSETS Cash and due from financial institutions $ 4,134,507 $ 4,361,277 $ 4,461,764 Interest-bearing deposits in other financial institutions 54,455 90,182 54,718 Federal funds sold 450,000 200,000 3,150,000 ------------ ------------ ------------ Total cash and cash equivalents 4,638,962 4,651,459 7,666,482 Securities Available for sale 13,096,118 13,983,933 14,564,811 Held to maturity 5,261,103 4,918,499 4,445,253 ------------ ------------ ------------ Total securities 18,357,221 18,902,432 19,010,064 Loans 205,040,775 192,644,742 187,262,814 Less: Allowance for loan losses 2,546,827 2,612,581 2,194,122 ------------ ------------ ------------ Net loans 202,493,948 190,032,161 185,068,692 Federal Home Loan Bank stock 411,500 425,000 425,000 Premises and equipment,net 8,431,199 5,922,886 4,617,481 Accrued interest receivable 1,105,749 994,219 828,770 Other assets 2,938,675 1,238,194 1,247,843 ------------ ------------ ------------ Total assets $238,377,254 $222,166,351 $218,864,332 ============ ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Deposits Non interest-bearing $ 17,810,068 $ 16,564,735 $ 17,707,089 Interest-bearing 187,645,924 173,886,366 168,374,204 ------------ ------------ ------------ Total deposits 205,455,992 190,451,101 186,081,293 Federal funds purchased and repurchase agreements 5,026,652 6,065,010 6,895,716 Federal Home Loan Bank advances 6,000,000 6,000,000 6,000,000 Subordinated debentures 4,500,000 4,500,000 4,500,000 Notes payable 400,000 0 0 Accrued expenses and other liabilities 1,126,753 650,329 948,594 ------------ ------------ ------------ Total liabilities 222,509,397 207,666,440 204,425,603 Shareholders' Equity Common Stock, no par value: 9,000,000 shares authorized, 1,466,800 issued at Sept 30, 2006 and 1,436,800 issued at December 31 and September 30, 2005 13,274,098 12,998,670 12,991,918 Retained earnings 2,781,193 1,712,462 1,593,751 Accumulated other comprehensive deficit (187,434) (211,221) (146,940) ------------ ------------ ------------ Total shareholders' equity 15,867,857 14,499,911 14,438,729 ------------ ------------ ------------ Total liabilities and shareholders' equity $238,377,254 $222,166,351 $218,864,332 ============ ============ ============