MUSKEGON, Mich., April 21, 2006 (PRIMEZONE) -- Community Shores Bank Corporation (Nasdaq:CSHB), Muskegon's only locally-headquartered independent community banking organization, today reported first quarter 2006 net income of $363.8 thousand, virtually unchanged from $362.1 thousand earned in the first quarter of 2005. Diluted earnings per share for both quarters was $0.25.
Jose A. Infante, Chairman, President and CEO, commented, "Rising interest rates and flattening yield curves have been an ongoing challenge for the past several quarters, but we have managed to sustain revenue at stable levels through a combination of asset/ liability management and good loan demand, and we continue to be encouraged by our strong loan pipeline."
Total revenue, consisting of net interest income and non-interest income, was $2.4 million for first quarter 2006, an increase of 7.0% above the $2.2 million revenue reported for the prior year's first quarter. Net interest income increased 6.7% to $2.1 million; the 11.5% increase in average earning assets was partially offset by a 14 basis point decline in the net interest margin to 3.85%. Mr. Infante noted, "We anticipated modest margin compression this quarter from repricing deposits. This is a tremendously competitive market, and we are pleased to be holding our margin at its present level."
Non-interest income for the current quarter was $320.4 thousand compared with $294.6 thousand for the first quarter of 2005, an increase of 8.8%. Service charges increased by $30.3 thousand, or 14.6% from a year-ago, partially offset by an $11.1 thousand decline in mortgage banking activities. "Over the last twelve months, the number of demand deposit accounts at Community Shores grew 8%, while savings accounts increased 10% for the same period. Many of these new customers are using our fee-based products such as overdraft privilege and debit cards, contributing to fee income growth," added Infante.
Non-interest expense totaled $1.8 million for the first quarter of 2006, up 14.3% from the first quarter of 2005. Salaries and employee benefits accounted for the majority of the $224.0 thousand increase, up $144.3 thousand or 17.0%, mainly as a result of an increase of seven FTE employees year over year. The efficiency ratio for the quarter was 74.82% in 2006 compared with 70.03% in 2005.
Assets at March 31, 2006 totaled $225.1 million compared with $204.9 million twelve months ago, up $20.2 million or 9.9%. Loans held for investment grew $12.3 million or 6.9%, reaching $191.9 million at March 31, 2006. Deposits increased $22.6 million, or 13.1%, to $194.6 million for the same 12-month period; retail deposits replaced brokered deposits, which declined from 31% of total deposits to 26% this quarter.
Mr. Infante commented, "We continue to manage the loan relationship we identified and allocated for last quarter, and unfortunately, it has had a negative impact on our non-performing and charge-off ratios." Nonperforming assets were 0.82% of period-end assets at March 31, 2006, compared with 0.59% of assets at December 31, 2005 and 0.36% for the year-ago quarter. Net charge-offs were $384 thousand this quarter, or 0.81% annualized, reflecting the partial charge-off of the previously-identified loan. The allowance for loan and lease losses was 1.20% of total loans at March 31, 2006.
Shareholders' equity totaled $14.8 million at March 31, 2006, up $1.2 million from twelve months ago. Tier I capital was 6.62% for the first quarter of 2006 compared with 6.83% for the prior year's first quarter. Shares outstanding at period-end were 1,436,800.
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 $225 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 (dollars in --------------------------------------------------- thousands 2006 2005 2005 2005 2005 except per 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr share data) ------- ------- ------- ------- ------- EARNINGS Net interest income 2,075 2,114 2,100 2,002 1,945 Provision for loan and lease losses 78 508 98 130 117 Noninterest income 320 339 319 311 294 Noninterest expense 1,792 1,793 1,755 1,668 1,568 Pre tax income 525 153 565 514 554 Net Income 364 119 389 343 362 Basic earnings per share $ 0.25 $ 0.08 $ 0.27 $ 0.24 $ 0.25 Diluted earnings per share $ 0.25 $ 0.08 $ 0.26 $ 0.23 $ 0.25 Average shares outstand- ing 1,436,800 1,436,800 1,435,757 1,432,800 1,431,307 Average diluted shares outstand- ing 1,474,279 1,482,431 1,480,317 1,462,813 1,460,589 PERFORMANCE RATIOS Return on average assets 0.64% 0.22% 0.71% 0.65% 0.72% Return on average common equity 9.89% 3.28% 10.89% 9.90% 10.71% Net interest margin 3.85% 4.05% 4.00% 3.99% 3.99% Efficiency ratio 74.82% 73.09% 72.57% 72.15% 70.03% Full-time equivalent employees 63 61 60 59 56 CAPITAL Average equity to average assets 6.46% 6.60% 6.49% 6.61% 6.69% Tier I capital to average assets 6.62% 6.69% 6.63% 6.76% 6.83% Book value per share $ 10.29 $ 10.09 $ 10.05 $ 9.81 $ 9.52 ASSET QUALITY Gross loan charge-offs 405 95 62 80 81 Net loan charge-offs 384 89 59 74 58 Net loan charge-offs to avg loans (annualized) 0.81% 0.19% 0.13% 0.16% 0.05% Allowance for loan and lease losses 2,307 2,613 2,194 2,155 2,098 Allowance for losses to total loans 1.20% 1.36% 1.17% 1.15% 1.17% Past due and nonaccrual loans (90 days) 1,579 1,128 834 1,034 643 Past due and nonaccrual loans to total loans 0.82% 0.59% 0.45% 0.55% 0.36% Other real estate and repossessed assets 4 22 6 6 0 END OF PERIOD BALANCES Loans 191,916 192,645 187,263 186,857 179,604 Total earning assets 215,305 212,262 209,479 212,419 198,114 Total assets 225,079 222,166 218,864 222,751 204,879 Deposits 194,572 190,451 186,081 191,551 171,974 Share- holders' equity 14,791 14,500 14,439 14,057 13,640 AVERAGE BALANCES Loans 189,698 191,170 187,909 182,910 176,578 Total earning assets 218,397 211,025 212,448 202,186 195,800 Total assets 227,725 220,061 220,101 209,545 202,140 Deposits 197,173 184,005 168,884 155,733 164,381 Share- holders' equity 14,716 14,530 14,290 13,855 13,526 Community Shores Bank Corporation Condensed Consolidated Statements of Income (Unaudited) Three Months Three Months Ended Ended 3/31/06 3/31/05 ----------- ----------- Interest and dividend income Loans, including fees $ 3,528,551 $ 2,822,341 Securities (including FHLB dividends) 180,316 157,784 Federal funds sold and other interest income 100,982 15,029 ----------- ----------- Total interest income 3,809,849 2,995,154 Interest expense Deposits 1,538,972 856,329 Repurchase agreements and federal funds purchased and other debt 34,766 56,549 Federal Home Loan Bank advances and notes payable 161,323 137,751 ----------- ----------- Total interest expense 1,735,061 1,050,629 Net interest income 2,074,788 1,944,525 Provision for loan losses 78,153 117,422 ----------- ----------- Net interest income after provision for loan losses 1,996,635 1,827,103 Noninterest income Service charges on deposit accounts 238,113 207,836 Mortgage loan referral fees 0 2,120 Gain on sale of loans 4,735 13,711 Other 77,599 70,972 ----------- ----------- Total noninterest income 320,447 294,639 Noninterest expense Salaries and employee benefits 991,046 846,790 Occupancy 87,298 76,276 Furniture and equipment 96,641 83,667 Advertising 42,857 46,107 Data Processing 93,764 87,560 Professional services 127,272 131,982 Other 353,170 295,846 ----------- ----------- Total noninterest expense 1,792,048 1,568,228 Income before income taxes 525,034 553,514 Federal income tax expense 161,218 191,375 ----------- ----------- Net Income $ 363,816 $ 362,139 =========== =========== Weighted average shares outstanding 1,436,800 1,431,307 =========== =========== Diluted average shares outstanding 1,474,279 1,460,589 =========== =========== Basic income per share $ 0.25 $ 0.25 =========== =========== Diluted income per share $ 0.25 $ 0.25 =========== =========== Community Shores Bank Corporation Condensed Consolidated Statements of Condition March 31, December 31, March 31, 2006 2005 2005 (Unaudited) (Audited) (Unaudited) ------------ ------------ ------------ ASSETS Cash and due from financial institutions $ 3,555,515 $ 4,361,277 $ 3,898,736 Interest-bearing deposits in other financial institutions 76,405 90,182 217,469 Federal funds sold 3,900,000 200,000 600,000 ------------ ------------ ------------ Total cash and cash equivalents 7,531,920 4,651,459 4,716,205 Securities Available for sale 13,535,303 13,983,933 15,830,624 Held to maturity 5,452,700 4,918,499 1,175,029 ------------ ------------ ------------ Total securities 18,988,003 18,902,432 17,005,653 Loans 191,915,548 192,644,742 179,604,481 Less: Allowance for loan losses 2,307,087 2,612,581 2,098,164 ------------ ------------ ------------ Net loans 189,608,461 190,032,161 177,506,317 Federal Home Loan Bank stock 425,000 425,000 425,000 Premises and equipment, net 6,292,954 5,922,886 3,421,722 Accrued interest receivable 939,294 994,219 758,998 Other assets 1,293,587 1,238,194 1,045,343 ------------ ------------ ------------ Total assets $225,079,219 $222,166,351 $204,879,238 ============ ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Deposits Non interest-bearing $ 17,343,816 $ 16,564,735 $ 13,623,243 Interest-bearing 177,228,398 173,886,366 158,350,237 ------------ ------------ ------------ Total deposits 194,572,214 190,451,101 171,973,480 Federal funds purchased and repurchase agreements 4,229,519 6,065,010 7,904,493 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 200,000 0 0 Accrued expenses and other liabilities 785,733 650,329 861,020 ------------ ------------ ------------ Total liabilities 210,287,466 207,666,440 191,238,993 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, 1,436,800 issued at March 31, 2006 and December 31, 2005 and 1,432,800 at March 31, 2005 12,999,334 12,998,670 12,950,998 Retained earnings 2,076,278 1,712,462 861,920 Accumulated other comprehensive deficit (283,859) (211,221) (172,673) ------------ ------------ ------------ Total shareholders' equity 14,791,753 14,499,911 13,640,245 ------------ ------------ ------------ Total liabilities and shareholders' equity $225,079,219 $222,166,351 $204,879,238 ============ ============ ============