MUSKEGON, Mich., July 21, 2006 (PRIMEZONE) -- Community Shores Bank Corporation (Nasdaq:CSHB), Muskegon's only locally headquartered independent community banking organization, today reported second quarter 2006 net income of $342,000 compared with $342,500 reported in the second quarter of 2005, essentially flat. Diluted earnings per share were $0.23 compared with $0.23 for the year-ago quarter.
Heather D. Brolick, President and CEO, commented, "We are pleased with our performance this quarter, and its consistency. Michigan's economy has been a challenge, although Muskegon is one of the brightest corners of our state, and our base of small entrepreneurial businesses is relatively independent of trends in the auto industry. Our margins have been stable over the past five quarters, and our loan pipeline remains healthy, with asset quality restored to its earlier high-performance level. We are positioned well for a strong year, with several opportunities for additional growth and profitability as the year progresses."
Total revenue, consisting of net interest income and non-interest income, was $2.5 million for second quarter of 2006, an increase of 7.0% above the $2.3 million revenue reported for the prior year's second quarter. Net interest income increased 5.6% to $2.1 million, reflecting a 7.3% increase in average earning assets. Although the margin decreased 2 basis points compared to 2005's second quarter, the margin improved 9 basis points compared with 2006's first quarter.
Non-interest income for the current quarter was $355.9 thousand compared with $310.3 thousand for the year-ago quarter, an increase of $46.0 thousand, or 14.7%. Service charges increased by $30.5 thousand, or 13.5%, with gains on mortgage loan sales adding an incremental $8.9 thousand.
Non-interest expense totaled $1.8 million for the second quarter of 2006, up $86.6 thousand or 5.2% from the second quarter of 2005. Salaries and employee benefits, up $44.3 thousand or 4.9%, accounted for the majority of the increase, followed by an additional $15.7 thousand, up 21.7%, for occupancy. The efficiency ratio for the second quarter of 2006 improved to 71.08% from 72.15% for the year-ago quarter. Ms. Brolick noted, "Expense control remains a focus throughout the organization; all of our employees are on board to enhance the efficiency of our Company."
Assets at June 30, 2006 totaled $236.7 million compared with $222.8 million twelve months ago, up $13.9 million or 6.3%. Loans held for investment increased $12.2 million, or 6.5%, reaching $199.1 million at June 30, 2006. Deposits increased $13.6 million, or 7.1%, to $205.2 million for the same 12-month period.
Nonperforming loans and delinquencies were $1.43 million or 0.72% of period-end loans at June 30, 2006, compared with $1.58 million or 0.82% of loans at March 31, 2006 and $1.0 million or 0.55% of loans for the year-ago quarter. Net charge-offs were $94 thousand this quarter, or 0.19% of average loans on an annualized basis, compared with $384 thousand or 0.81% for the previous quarter, and $74 thousand, or 0.16% a year ago. The allowance for loan and lease losses stands at 1.22% of total loans at June 30, 2006.
Shareholders' equity totaled $15.1 million at June 30, 2006, up $1.1 million from twelve months ago. Tier I capital was 6.51% for the second quarter of 2006 compared with 6.35% for the prior year's second quarter. Shares outstanding at period-end were 1,436,800. Ms. Brolick concluded, "We continue to focus on the customer experience as the number one opportunity to enhance the value of our franchise. We believe this is the straightest path to revenue growth, and we plan to safeguard this growth with disciplined spending controls and prudent management of asset quality. These factors are firmly in place, and we look forward to a continuation of our solid performance."
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 $237 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
-----------------------------------------------------
2006 2006 2005 2005 2005
2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr
--------- --------- --------- --------- ---------
(dollars in thousands except per share data)
EARNINGS
Net interest
income 2,113 2,075 2,114 2,100 2,002
Provision for
loan and
lease losses 224 78 508 98 130
Noninterest
income 356 320 339 319 311
Noninterest
expense 1,755 1,792 1,793 1,755 1,668
Pre tax
income 491 525 153 565 514
Net Income 342 364 119 389 343
Basic
earnings
per share $ 0.24 $ 0.25 $ 0.08 $ 0.27 $ 0.24
Diluted
earnings
per share $ 0.23 $ 0.25 $ 0.08 $ 0.26 $ 0.23
Average
shares
outstanding 1,436,800 1,436,800 1,436,800 1,435,757 1,432,800
Average
diluted
shares
outstanding 1,461,201 1,474,279 1,482,431 1,480,317 1,462,813
PERFORMANCE
RATIOS
Return on
average
assets 0.60% 0.64% 0.22% 0.71% 0.65%
Return on
average
common equity 9.11% 9.89% 3.28% 10.89% 9.88%
Net interest
margin 3.94% 3.85% 4.05% 4.00% 3.96%
Efficiency
ratio 71.08% 74.82% 73.09% 72.57% 72.15%
Full-time
equivalent
employees 63 63 61 60 59
CAPITAL
End of period
equity to
assets 6.38% 6.57% 6.53% 6.60% 6.31%
Tier 1
capital to
end of
period assets 6.51% 6.70% 6.62% 6.66% 6.35%
Book value
per share $ 10.52 $ 10.29 $ 10.09 $ 10.05 $ 9.81
ASSET QUALITY
Gross loan
charge-offs 120 405 95 62 80
Net loan
charge-offs 94 384 89 59 74
Net loan
charge-offs
to avg loans
(annualized) 0.19% 0.81% 0.19% 0.13% 0.16%
Allowance for
loan and
lease losses 2,437 2,307 2,613 2,194 2,155
Allowance
for losses
to total
loans 1.22% 1.20% 1.36% 1.17% 1.15%
Past due and
non accrual
loans
(90 days) 1,428 1,579 1,128 834 1,034
Past due and
nonaccrual
loans to
total loans 0.72% 0.82% 0.59% 0.45% 0.55%
Other real
estate and
repossessed
assets 58 4 22 6 6
END OF PERIOD
BALANCES
Loans 199,075 191,916 192,645 187,263 186,857
Total earning
assets 223,447 215,305 212,262 209,479 212,419
Total assets 236,677 225,079 222,166 218,864 222,751
Deposits 205,175 194,572 190,451 186,081 191,551
Shareholders'
equity 15,097 14,791 14,500 14,439 14,057
AVERAGE
BALANCES
Loans 195,783 189,698 191,170 187,909 182,910
Total earning
assets 216,868 218,397 211,025 212,448 202,186
Total assets 226,911 227,725 220,061 220,101 209,545
Deposits 192,696 197,173 184,005 168,884 155,733
Shareholders'
equity 15,034 14,716 14,530 14,290 13,855
Year to date
----------------------
2006 2005
--------- ---------
EARNINGS
Net interest income 4,188 3,946
Provision for loan and lease losses 302 248
Noninterest income 676 604
Noninterest expense 3,547 3,236
Pre tax income 1,044 1,067
Net Income 706 705
Basic earnings per share $ 0.49 $ 0.49
Diluted earnings per share $ 0.48 $ 0.48
Average shares outstanding 1,436,800 1,432,057
Average diluted shares outstanding 1,468,181 1,461,141
PERFORMANCE RATIOS
Return on average assets 0.62% 0.68%
Return on average common equity 9.47% 10.29%
Net interest margin 3.90% 3.97%
Efficiency ratio 72.92% 71.11%
Full-time equivalent employees 63 59
CAPITAL
End of period equity to assets 6.38% 6.31%
Tier 1 capital to end of period assets 6.51% 6.35%
Book value per share $ 10.52 $ 9.81
ASSET QUALITY
Gross loan charge-offs 525 161
Net loan charge-offs 478 132
Net loan charge-offs to avg loans (annualized) 0.25% 0.07%
Allowance for loan and lease losses 2,437 2,155
Allowance for losses to total loans 1.22% 1.15%
Past due and nonaccrual loans (90 days) 1,428 1,034
Past due and nonaccrual loans to total loans 0.72% 0.55%
Other real estate and repossessed assets 58 6
END OF PERIOD BALANCES
Loans 199,075 186,857
Total earning assets 223,447 212,419
Total assets 236,677 222,751
Deposits 205,175 191,551
Shareholders' equity 15,097 14,057
AVERAGE BALANCES
Loans 192,758 179,762
Total earning assets 217,628 199,010
Total assets 227,319 205,863
Deposits 194,922 168,003
Shareholders' equity 14,913 13,691
Community Shores Bank Corporation
Condensed Consolidated Statements of Income
(Unaudited)
Three Months Ended Six Months Ended
---------------------- ----------------------
06/30/06 06/30/05 06/30/06 06/30/05
---------- ---------- ---------- ----------
Interest and dividend
income
Loans, including
fees $3,841,279 $3,098,902 $7,369,830 $5,921,243
Securities
(including FHLB
dividends) 179,724 172,933 360,040 330,717
Federal funds sold
and other
interest income 18,757 2,243 119,739 17,272
---------- ---------- ---------- ----------
Total interest
income 4,039,760 3,274,078 7,849,609 6,269,232
Interest expense
Deposits 1,678,261 1,055,047 3,217,233 1,911,376
Repurchase agreements
and federal funds
purchased and
other debt 75,917 71,904 110,683 128,453
Federal Home Loan
Bank advances and
notes payable 172,417 145,357 333,740 283,108
---------- ---------- ---------- ----------
Total interest
expense 1,926,595 1,272,308 3,661,656 2,322,937
Net interest Income 2,113,165 2,001,770 4,187,953 3,946,295
Provision for loan
losses 223,599 130,335 301,752 247,757
---------- ---------- ---------- ----------
Net interest income
after provision for
loan losses 1,889,566 1,871,435 3,886,201 3,698,538
Noninterest income
Service charges on
deposit accounts 256,176 225,667 494,289 433,503
Mortgage loan
referral fees 1,437 0 1,437 2,120
Gain on sale of loans 11,668 2,724 16,403 16,435
Loss on disposal of
equipment 0 (347) (124) (347)
Other 86,636 82,244 164,235 153,216
---------- ---------- ---------- ----------
Total noninterest
income 355,917 310,288 676,240 604,927
Noninterest expense
Salaries and
employee benefits 947,030 902,709 1,938,076 1,749,499
Occupancy 87,776 72,122 175,074 148,398
Furniture and
equipment 101,737 95,533 198,254 179,200
Advertising 40,935 40,320 83,792 86,427
Data Processing 102,514 91,178 196,278 178,738
Professional services 130,519 133,327 257,791 265,309
Other 344,119 332,799 697,289 628,645
---------- ---------- ---------- ----------
Total noninterest
expense 1,754,630 1,667,988 3,546,554 3,236,216
Income before
income taxes 490,853 513,735 1,043,662 1,067,249
Federal income
tax expense 148,859 171,222 310,303 362,597
---------- ---------- ---------- ----------
Net Income $ 341,994 $ 342,513 $ 705,584 $ 704,652
========== ========== ========== ==========
Weighted average
shares outstanding 1,436,800 1,432,800 1,436,800 1,432,057
========== ========== ========== ==========
Diluted average
shares outstanding 1,461,201 1,462,813 1,468,181 1,461,141
========== ========== ========== ==========
Basic income per
share $ 0.24 $ 0.24 $ 0.49 $ 0.49
========== ========== ========== ==========
Diluted income
per share $ 0.23 $ 0.23 $ 0.48 $ 0.48
========== ========== ========== ==========
Community Shores Bank Corporation
Condensed Consolidated Statements of Condition
June 30, December 31, June 30,
2006 2005 2005
(Unaudited) (Audited) (Unaudited)
------------ ------------ ------------
ASSETS
Cash and due from
financial institutions $ 6,592,357 $ 4,361,277 $ 6,644,959
Interest-bearing deposits
in other financial
institutions 288,517 90,182 278,224
Federal funds sold 5,350,000 200,000 6,650,000
------------ ------------ ------------
Total cash and cash
equivalents 12,230,874 4,651,459 13,573,183
Securities
Available for sale 13,043,976 13,983,933 15,274,110
Held to maturity 5,264,370 4,918,499 3,359,398
------------ ------------ ------------
Total securities 18,308,346 18,902,432 18,633,508
Loans 199,074,571 192,644,742 186,856,712
Less: Allowance for loan
losses 2,436,765 2,612,581 2,154,519
------------ ------------ ------------
Net loans 196,637,806 190,032,161 184,702,193
Federal Home Loan Bank
stock 425,000 425,000 425,000
Premises and equipment,net 6,767,643 5,922,886 3,554,486
Accrued interest receivable 1,002,209 994,219 840,040
Other assets 1,304,890 1,238,194 1,015,031
------------ ------------ ------------
Total assets $236,676,768 $222,166,351 $222,750,733
============ ============ ============
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits
Non interest-bearing $ 18,439,578 $ 16,564,735 $ 18,062,244
Interest-bearing 186,735,865 173,886,366 173,489,212
------------ ------------ ------------
Total deposits 205,175,443 190,451,101 191,551,456
Federal funds purchased
and repurchase agreements 4,902,409 6,065,010 5,775,131
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 601,466 650,329 867,441
------------ ------------ ------------
Total liabilities 221,579,318 207,666,440 208,694,028
Shareholders' Equity
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 12,999,998 12,998,670 12,950,998
Retained earnings 2,418,046 1,712,462 1,204,435
Accumulated other
comprehensive deficit (320,594) (211,221) (98,728)
------------ ------------ ------------
Total shareholders'
equity 15,097,450 14,499,911 14,056,705
------------ ------------ ------------
Total liabilities
and shareholders'
equity $236,676,768 $222,166,351 $222,750,733
============ ============ ============