MUSKEGON, Mich., May 4, 2011 (GLOBE NEWSWIRE) -- Community Shores Bank Corporation ("Community Shores") (OTCBB:CSHB), Muskegon's only locally headquartered independent community banking organization, today reported a first quarter net loss of $734,000, or ($0.50) per diluted share, compared with a net loss of $440,000, or ($0.30) per diluted share for the first quarter of 2010. Heather D. Brolick, president and chief executive officer of Community Shores Bank Corporation, commented, "As expected, we continue to experience losses as we work through the final phase of problem credits. While we do not expect a return to profitability in 2011, we are content with this quarter's outcome when compared to the magnitude of the losses recorded in the last several linked quarters. We anticipate this fiscal year's performance will reflect stabilization and eventually there will be a consistent methodical return to health from an asset quality standpoint as internal and external indicators continue to show improvement."
Operating Results
Total revenue, which consists of net interest income and noninterest income, was $2.39 million for the first quarter of 2011, an improvement of 8.8 percent from the $2.20 million recorded for the year-ago period. Net interest income was $1.87 million, up 9.3 percent from first quarter 2010. The net interest margin was 3.34 percent for the current quarter, an increase of 18 basis points, or 5.7 percent, from the year-ago period due to improved pricing with respect to both loans and deposits as they were renewed or matured. "We expect continued improvement in the net interest margin throughout 2011," Ms. Brolick added, "primarily from the maturity of higher-priced time deposits. For the remainder of 2011 approximately $30 million of brokered time deposits will mature --mostly in the second half of the year--with an average interest rate of approximately 3.77 percent. The beneficial impact of these maturities is typically realized in the quarter following the maturity." Average earning assets grew by $5.2 million compared to the year-ago quarter, and the yield on the loan portfolio increased when comparing the same timeframes.
Noninterest income for the first quarter of 2011 was $520,000, up $35,000, or 7.2 percent, from the $485,000 recorded for first quarter 2010. "Community Shores was successful in selling several SBA loans which resulted in a $124,000 gain. While generating noninterest income for the Bank, Small Business Administration loans are advantageous to business borrowers, providing the funds needed for growth and expansion. Community Shores is pleased to partner with local companies in an effort to spur economic recovery and growth in Muskegon and Ottawa Counties." added Ms. Brolick. There were no SBA gains recorded in the comparable quarter of 2010 however there was a gain on the sale of securities of $80,000.
The 2011 first quarter provision for loan losses was $705,000 compared with $2.64 million for the linked-quarter and $529,000 recorded in the prior-year first quarter. During the past twelve months, Community Shores' provision expense more than offset net charge-offs, allowing the bank to build its loan reserves. At March 31, 2011, the allowance for loan and lease losses was $5.26 million, or 3.18 percent of total loans, compared to $3.32 million, or 1.83 percent of total loans, at March 31, 2010.
Noninterest expense was $2.42 million for the 2011 first quarter, an increase of $312,000, or 14.8 percent from the year-ago first quarter. Operating expenses continue to be well-managed, excluding increased regulatory costs and expenses associated with the management of foreclosed properties. These expenses were $637,000 for the first quarter of 2011; an increase of $357,000 compared to the similar quarter of 2010. As credit quality continues to stabilize and problem assets are sold or otherwise mitigated, these credit related expenses will decline proportionally.
Balance Sheet
Assets at March 31, 2011 were $242.4 million, up $4.5 million from year-end 2010, due to seasonal fluctuations in the balances of several public fund customers, who increased cash equivalents by $12.1 million since year-end 2010. Total loans (held for sale and for investment) declined by $1.4 million, and by $16.1 million, or 8.9 percent, from the year-ago quarter-end, and were $165.1 million at March 31, 2011. "We continue to evaluate good business opportunities; however, loan demand is generally down. Businesses continue to defer capital investment and consumers have increased savings and are wisely paying down debt. Although we are seeing improvement in local economic indicators, rising fuel costs continue to negatively impact public sentiment about our overall economic health," commented Ms. Brolick.
Asset Quality
At March 31, 2011, nonperforming assets, consisting of nonperforming loans (nonaccrual loans plus loans > 90 days past due and still accruing), foreclosed real estate ("OREO") and repossessed assets, totaled $11.9 million, or 4.9 percent of assets. Nonperforming assets have essentially stabilized since year-end 2010. There was a slight uptick of $289,000 since year-end 2010; however, nonperforming assets declined by $3.9 million since the like quarter a year ago. Net charge-offs were $241,000 for first quarter 2011, or .6 percent (annualized) of average loans; this compares with net charge-offs of $2.4 million , or 5.6 percent of average loans, for the linked quarter and $994,000, or 2.2 percent of average loans, for the year-ago period, both on an annualized basis. Over the past twelve months, the Bank has charged-off a net $4.3 million while adding $6.2 million to its allowance for loan and lease losses, which now stands at $5.26 million. "Clearly, we are addressing our problem loans and believe that our reserve levels are appropriate. We are working aggressively to gain possession and dispose of foreclosed real estate. Unfortunately, as circumstances dictate, the duration of the legal process may be as long as 12 to 24 months before possession occurs and properties can be actively marketed," stated Brolick.
Capital
At March 31, 2011, consolidated shareholders' equity totaled $142,000, a decline of $704,000 from December 31, 2010. As of March 31, 2011, the Bank's Tier I leverage was 4.03 percent of total assets, while Tier I Capital and Total Risk-based Capital were at 5.57 percent and 6.84 percent of total risk-weighted assets, respectively.
Ms. Brolick concluded, "The capital markets and investment environment have been tepid to virtually non-existent in Michigan. The Board of Directors is actively working on various scenarios to improve the Company's capital position." She continued, "Certainly, these past several quarters have been difficult for us but the recent traction in the liquidation of foreclosed assets and perceptible drop in early stage delinquency are tangible signs that asset quality has stabilized; however, this is tempered by continued volatility in real property valuations. Until we see consistency and stabilization in the market value of various types of real estate, I expect recovery will continue to be slow."
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 four branch offices. Community Shores Bank opened for business in January 1999, and has grown to $242 million in assets. The Company's stock is listed on the OTC Bulletin Board 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; changes in the local real estate market; 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 BANK CORPORATION | |||||
CONSOLIDATED FINANCIAL HIGHLIGHTS | |||||
Quarterly | |||||
2011 | 2010 | 2010 | 2010 | 2010 | |
(dollars in thousands except per share data) | 1st Qtr | 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr |
EARNINGS | |||||
Net interest income | 1,871 | 1,794 | 1,682 | 1,764 | 1,711 |
Provision for loan and lease losses | 705 | 2,640 | 2,023 | 833 | 529 |
Noninterest income | 520 | 350 | 369 | 366 | 485 |
Noninterest expense | 2,420 | 2,846 | 3,949 | 2,486 | 2,108 |
Pre tax income (expense) | (734) | (3,343) | (3,921) | (1,189) | (440) |
Net loss | (734) | (3,332) | (3,921) | (1,189) | (440) |
Basic loss per share | $ (0.50) | $ (2.27) | $ (2.67) | $ (0.81) | $ (0.30) |
Diluted loss per share | $ (0.50) | $ (2.27) | $ (2.67) | $ (0.81) | $ (0.30) |
Average shares outstanding | 1,468,800 | 1,468,800 | 1,468,800 | 1,468,800 | 1,468,800 |
Average diluted shares outstanding | 1,468,800 | 1,468,800 | 1,468,800 | 1,468,800 | 1,468,800 |
PERFORMANCE RATIOS | |||||
Return on average assets | -1.23% | -5.53% | -6.04% | -1.87% | -0.73% |
Return on average common equity | -374.97% | -302.36% | -195.41% | -51.71% | -16.26% |
Net interest margin | 3.34% | 3.22% | 2.83% | 3.04% | 3.16% |
Efficiency ratio | 101.24% | 132.79% | 192.56% | 116.73% | 95.96% |
Full-time equivalent employees | 70 | 70 | 72 | 71 | 69 |
CAPITAL | |||||
End of period equity to assets | 0.06% | 0.36% | 1.85% | 3.21% | 3.67% |
Tier 1 capital to end of period assets | -0.02% | 0.29% | 1.62% | 3.03% | 3.60% |
Book value per share | $ 0.10 | $ 0.58 | $ 3.12 | $ 5.71 | $ 6.34 |
ASSET QUALITY | |||||
Gross loan charge-offs | 283 | 2,414 | 638 | 1,023 | 1,015 |
Net loan charge-offs | 241 | 2,392 | 617 | 1,012 | 994 |
Net loan charge-offs to avg loans (annualized) | 0.58% | 5.63% | 1.40% | 2.22% | 2.18% |
Allowance for loan and lease losses | 5,256 | 4,792 | 4,544 | 3,138 | 3,318 |
Allowance for losses to total loans | 3.18% | 2.88% | 2.65% | 1.74% | 1.83% |
Past due and nonaccrual loans (90 days) | 8,046 | 8,247 | 8,721 | 7,932 | 8,801 |
Past due and nonaccrual loans to total loans | 4.87% | 4.95% | 5.08% | 4.40% | 4.86% |
Other real estate and repossessed assets | 3,873 | 3,383 | 5,676 | 6,843 | 6,975 |
NPA +90 day past due to total assets | 4.92% | 4.89% | 5.81% | 5.65% | 6.25% |
END OF PERIOD BALANCES | |||||
Loans | 165,130 | 166,507 | 171,673 | 180,146 | 181,219 |
Total earning assets | 229,387 | 225,056 | 230,772 | 240,019 | 232,753 |
Total assets | 242,396 | 237,945 | 247,737 | 261,411 | 253,356 |
Deposits | 223,434 | 219,263 | 222,844 | 229,153 | 220,513 |
Shareholders' equity | 142 | 846 | 4,579 | 8,387 | 9,309 |
AVERAGE BALANCES | |||||
Loans | 165,999 | 170,097 | 175,708 | 182,003 | 182,556 |
Total earning assets | 225,471 | 224,698 | 239,779 | 234,185 | 220,295 |
Total assets | 239,597 | 241,180 | 259,462 | 254,174 | 240,924 |
Deposits | 221,682 | 217,491 | 231,433 | 221,394 | 205,582 |
Shareholders' equity | 783 | 4,408 | 8,026 | 9,198 | 10,824 |
Community Shores Bank Corporation | ||
Condensed Consolidated Statements of Income | ||
(Unaudited) | ||
Three Months | Three Months | |
Ended | Ended | |
03/31/11 | 03/31/10 | |
Interest and dividend income | ||
Loans, including fees | $ 2,565,081 | $ 2,805,607 |
Securities | 214,163 | 211,435 |
FHLB dividends and other interest income | 17,445 | 7,459 |
Total interest income | 2,796,689 | 3,024,501 |
Interest expense | ||
Deposits | 811,595 | 1,107,977 |
Repurchase agreements and federal funds purchased | ||
and other debt | 11,502 | 20,571 |
Federal Home Loan Bank advances and notes payable | 102,890 | 184,532 |
Total interest expense | 925,987 | 1,313,080 |
Net interest Income | 1,870,702 | 1,711,421 |
Provision for loan losses | 704,505 | 529,081 |
Net interest income after provision for loan losses | 1,166,197 | 1,182,340 |
Noninterest income | ||
Service charges on deposit accounts | 176,813 | 174,533 |
Gain on sale of loans | 157,560 | 45,906 |
Gain on sale of securities | 194 | 79,814 |
Gain (loss) on the sale of foreclosed assets | (799) | (8,689) |
Other | 185,742 | 193,271 |
Total noninterest income | 519,510 | 484,835 |
Noninterest expense | ||
Salaries and employee benefits | 1,025,340 | 1,032,156 |
Occupancy | 181,361 | 165,616 |
Furniture and equipment | 132,486 | 159,128 |
Advertising | 9,345 | 18,165 |
Data processing | 132,406 | 122,779 |
Professional services | 94,838 | 124,650 |
Foreclosed asset impairment | 167,866 | 24,655 |
Other | 676,284 | 460,431 |
Total noninterest expense | 2,419,926 | 2,107,580 |
Loss before income taxes | (734,219) | (440,405) |
Federal income tax expense | 0 | 0 |
Net loss | $ (734,219) | $ (440,405) |
Weighted average shares outstanding | 1,468,800 | 1,468,800 |
Diluted average shares outstanding | 1,468,800 | 1,468,800 |
Basic loss per share | $ (0.50) | $ (0.30) |
Diluted loss per share | $ (0.50) | $ (0.30) |
Community Shores Bank Corporation | |||
Condensed Consolidated Statements of Condition | |||
March 31, | December 31, | March 31, | |
2011 | 2010 | 2010 | |
(Unaudited) | (Audited) | (Unaudited) | |
ASSETS | |||
Cash and due from financial institutions | $ 2,266,480 | $ 2,074,301 | $ 3,552,229 |
Interest-bearing deposits in other financial institutions | 28,193,508 | 21,565,572 | 21,151,387 |
Total cash and cash equivalents | 30,459,988 | 23,639,873 | 24,703,616 |
Securities | |||
Available for sale | 35,583,067 | 36,503,903 | 29,978,208 |
Held to maturity | 0 | 0 | 0 |
Total securities | 35,583,067 | 36,503,903 | 29,978,208 |
Loans held for sale | 3,012,189 | 1,263,263 | 611,103 |
Loans | 162,117,482 | 165,243,881 | 180,608,114 |
Less: Allowance for loan losses | 5,255,868 | 4,791,907 | 3,317,566 |
Net loans | 156,861,614 | 160,451,974 | 177,290,548 |
Federal Home Loan Bank stock | 479,800 | 479,800 | 404,100 |
Premises and equipment,net | 10,740,220 | 10,874,176 | 11,216,060 |
Accrued interest receivable | 708,703 | 781,334 | 807,720 |
Foreclosed assets | 3,872,996 | 3,382,594 | 6,827,813 |
Other assets | 677,399 | 568,580 | 1,516,568 |
Total assets | $ 242,395,976 | $ 237,945,497 | $ 253,355,736 |
LIABILITIES AND SHAREHOLDERS' EQUITY | |||
Deposits | |||
Non interest-bearing | $ 42,093,347 | $ 33,326,683 | $ 21,777,790 |
Interest-bearing | 181,341,093 | 185,936,494 | 198,735,690 |
Total deposits | 223,434,440 | 219,263,177 | 220,513,480 |
Federal funds purchased and repurchase agreements | 8,407,631 | 7,460,795 | 8,873,575 |
Federal Home Loan Bank advances | 0 | 0 | 4,500,000 |
Subordinated debentures | 4,500,000 | 4,500,000 | 4,500,000 |
Notes payable | 5,000,000 | 5,000,000 | 5,000,000 |
Accrued expenses and other liabilities | 912,151 | 875,738 | 659,502 |
Total liabilities | 242,254,222 | 237,099,710 | 244,046,557 |
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, | |||
1,468,800 issued | 13,296,691 | 13,296,691 | 13,296,691 |
Retained deficit | (13,351,241) | (12,617,022) | (4,174,700) |
Accumulated other comprehensive income | 196,304 | 166,118 | 187,188 |
Total shareholders' equity | 141,754 | 845,787 | 9,309,179 |
Total liabilities and shareholders' equity | $ 242,395,976 | $ 237,945,497 | $ 253,355,736 |