Exhibit 99.1
Community Shores Reports Third Quarter 2007 Earnings
MUSKEGON, Mich., Oct. 30, 2007 (PRIME NEWSWIRE) -- Community Shores Bank Corporation (Nasdaq:CSHB), Muskegon's only locally-headquartered independent community banking organization, today reported a net loss of $103,000, or $0.07 per diluted share, for the third quarter of 2007 compared with net income of $363,000, or $0.25 per diluted share, for the third quarter of 2006, and $18,000, or $0.01 per diluted share, reported in the second quarter of 2007. Nine months year-to-date, earnings were $143,000, and $0.10 per diluted share, compared with $1.07 million and $0.73 per share for the prior-year nine-month period. Year-over-year results reflect strong loan growth, offset by the impact of margin compression, deteriorating asset quality, and increased noninterest expense due to branch expansion activities.
Heather D. Brolick, president and CEO of Community Shores Bank Corporation, commented, "This has been a challenging banking environment, not only for Community Shores, but also for the industry, and Michigan banks in particular. Margin compression has limited revenue growth, and the decline in asset quality has taken profits from the bottom line. Nonetheless, our organization has grown over the past twelve months - in terms of asset size, number of branches, and more lenders offering more products. The results have been strong loan growth, a growing deposit market share, and an increasingly diversified stream of fee income."
The Company's net interest income remained relatively unchanged at $2.1 million for both the third quarter of 2007 and 2006 in spite of a 12% increase in earning assets over the last twelve months; this resulted from the net interest margin declining 50 basis points between the two period ends. The net interest margin declined only 8 basis points compared to the linked quarter. Ms. Brolick commented, "Decreases to the Company's net interest margin are slowing. The recent 50 basis point rate cut should have a neutral to positive effect on the fourth quarter given the repricing opportunities on the deposit side."
Noninterest income was $417,000 for the third quarter of 2007, a 9.5 percent and 1.7 percent decline from the prior-year and linked quarters, respectively. Ms. Brolick added, "There has been volatility in the Company's noninterest income over the past year mostly related to the Bank's new revenue sources: SBA lending and mortgage banking. Unfortunately these strategies have been somewhat hampered by the soft Michigan economy and real estate climate; however, we remain firmly optimistic about future contributions that will be derived from these areas once the economy recovers."
Noninterest expense totaled $2.3 million for the third quarter of 2007, an increase of $398,000, or 21.1 percent, above the third quarter of 2006. Salaries and benefits accounted for approximately 74 percent of the increase due to the addition of 18 FTE employees, including staffing for the mortgage banking start-up during the second quarter of 2007. Additionally, increased FDIC insurance premium assessments of $34,000 per quarter and branch expansion activities, including the relocation of the Company's Grand Haven branch in September 2007, had an impact on this quarter's results.
Assets at September 30, 2007 totaled $267.3 million, an increase of $20.3 million or 8.2 percent year-to-date (10.9 percent annualized). For the same nine-month period, total loans, excluding loans held for sale, grew $22.5 million, or 10.9 percent (14.5 percent annualized), to $230.9 million. Ms. Brolick commented, "We have been selective in the loans we chose to originate. Most of our growth has been in commercial real estate, and the vast majority of these loans are collateralized by owner-occupied properties."
Nonperforming assets (including 90 days delinquent and OREO) were $4 million, or 1.48 percent of period-end assets, at September 30, 2007, compared with $3.2 million, or 1.21 percent of assets, for the linked quarter, and $1.5 million, or 0.64 percent of assets, for the year-ago quarter. Ms. Brolick stated, "The decline in our asset quality reflects the broader impact of Michigan's economic environment across all sectors. We have been diligent in our effort to identify early signs of weakness in our loan portfolio, and at the present time, we believe that we are adequately reserved." The allowance for loan and lease losses was 1.35 percent of total loans at September 30, 2007, up from 1.26 percent and 1.24 percent from the linked and prior-year quarters, respectively.
Ms. Brolick concluded by saying, "Despite our disappointing third quarter results, we believe we are well positioned for stronger performance going forward. We have completed significant investments in our infrastructure and our personnel, and our expenses are leveling off. Our margin is stabilizing; we have strong loan growth, and we believe we have identified present weaknesses within our loan portfolio. Our fee-based initiatives, especially mortgage banking, are ramping up to provide a more consistent source of revenue for our Company."
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 $267 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 Securi ties 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 (dollars in Quarterly thousands ------------------------------------------------------- except per 2007 2007 2007 2006 2006 share data) 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr ---------- ---------- ---------- ---------- ---------- EARNINGS Net interest income 2,099 2,057 1,988 2,126 2,164 Provision for loan and lease losses 407 268 127 202 217 Noninterest income 417 424 455 380 461 Noninterest expense 2,284 2,209 2,047 1,958 1,886 Pre tax income (expense) (175) 4 269 346 522 Net Income (103) 18 229 247 363 Basic earnings per share $ (0.07) $ 0.01 $ 0.16 $ 0.17 $ 0.25 Diluted earnings per share $ (0.07) $ 0.01 $ 0.15 $ 0.17 $ 0.25 Average shares outstanding 1,468,800 1,468,800 1,468,733 1,466,800 1,449,191 Average diluted shares outstanding 1,474,236 1,481,462 1,488,589 1,489,014 1,476,876 PERFORMANCE RATIOS Return on average assets -0.16% 0.03% 0.37% 0.41% 0.62% Return on average common equity -2.51% 0.44% 5.64% 6.16% 9.33% Net interest margin 3.44% 3.52% 3.48% 3.80% 3.94% Efficiency ratio 90.78% 89.02% 83.85% 78.13% 71.84% Full-time equivalent employees 84 86 82 72 66 CAPITAL End of period equity to assets 6.12% 6.23% 6.52% 6.53% 6.66% Tier 1 capital to end of period assets 6.16% 6.34% 6.58% 6.60% 6.74% Book value per share $ 11.14 $ 11.09 $ 11.17 $ 10.99 $ 10.82 ASSET QUALITY Gross loan charge-offs 101 69 101 205 112 Net loan charge-offs 92 60 88 200 107 Net loan charge-offs to avg loans (annualized) 0.16% 0.11% 0.17% 0.39% 0.21% Allowance for loan and lease losses 3,111 2,796 2,588 2,549 2,547 Allowance for losses to total loans 1.35% 1.26% 1.26% 1.23% 1.24% Past due and nonaccrual loans (90 days) 3,099 2,356 1,942 1,131 1,394 Past due and nonaccrual loans to total loans 1.34% 1.06% 0.94% 0.54% 0.68% Other real estate and repossessed assets 870 810 887 419 123 NPA +90 day past due to total assets 1.48% 1.21% 1.12% 0.63% 0.64% END OF PERIOD BALANCES Loans 230,892 221,921 205,983 207,597 205,041 Total earning assets 249,757 243,643 235,491 231,712 223,902 Total assets 267,284 261,305 251,549 246,981 238,377 Deposits 225,216 228,115 217,602 214,282 205,456 Shareholders' equity 16,363 16,290 16,404 16,119 15,868 AVERAGE BALANCES Loans 227,546 213,402 207,449 206,365 202,432 Total earning assets 247,069 237,008 231,944 226,880 222,200 Total assets 264,112 253,577 247,639 240,486 233,400 Deposits 223,540 216,749 213,807 206,514 196,493 Shareholders' equity 16,411 16,430 16,251 16,035 15,569 Year to date --------------------- (dollars in thousands except per 2007 2006 share data) ---------- ---------- EARNINGS Net interest income 6,144 6,352 Provision for loan and lease losses 802 519 Noninterest income 1,297 1,137 Noninterest expense 6,540 5,432 Pre tax income (expense) 99 1,538 Net Income 143 1,069 Basic earnings per share $ 0.10 $ 0.74 Diluted earnings per share $ 0.10 $ 0.73 Average shares outstanding 1,468,771 1,440,976 Average diluted shares outstanding 1,485,129 1,470,930 PERFORMANCE RATIOS Return on average assets 0.07% 0.62% Return on average common equity 1.17% 9.42% Net interest margin 3.48% 3.91% Efficiency ratio 87.89% 72.54% Full-time equivalent employees 84 66 CAPITAL End of period equity to assets 6.12% 6.66% Tier 1 capital to end of period assets 6.16% 6.74% Book value per share $ 11.14 $ 10.82 ASSET QUALITY Gross loan charge-offs 271 637 Net loan charge-offs 240 585 Net loan charge-offs to avg loans (annualized) 0.22% 0.30% Allowance for loan and lease losses 3,111 2,547 Allowance for losses to total loans 1.35% 1.24% Past due and nonaccrual loans (90 days) 3,099 1,394 Past due and nonaccrual loans to total loans 1.34% 0.68% Other real estate and repossessed assets 870 123 NPA +90 day past due to total assets 1.48% 0.74% END OF PERIOD BALANCES Loans 230,892 205,041 Total earning assets 249,757 223,902 Total assets 267,284 238,377 Deposits 225,216 205,456 Shareholders' equity 16,363 15,868 AVERAGE BALANCES Loans 216,206 196,018 Total earning assets 238,729 219,169 Total assets 255,171 229,368 Deposits 218,068 195,451 Shareholders' equity 16,365 15,134 Community Shores Bank Corporation Condensed Consolidated Statements of Income (Unaudited) Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended 09/30/07 09/30/06 09/30/07 09/30/06 ----------- ----------- ----------- ----------- Interest and dividend income Loans, including fees $ 4,518,411 $ 4,098,809 $12,844,252 $11,468,639 Securities (including FHLB dividends) 213,087 181,241 632,891 541,281 Federal funds sold and other interest income 2,898 7,095 121,238 126,834 ----------- ----------- ----------- ----------- Total interest income 4,734,396 4,287,145 13,598,381 12,136,754 Interest expense Deposits 2,306,697 1,833,631 6,628,072 5,050,865 Repurchase agreements and federal funds purchased and other debt 139,248 107,957 279,755 218,640 Federal Home Loan Bank advances and notes payable 189,736 181,588 546,643 515,328 ----------- ----------- ----------- ----------- Total interest expense 2,635,681 2,123,176 7,454,470 5,784,833 Net interest Income 2,098,715 2,163,969 6,143,911 6,351,921 Provision for loan losses 406,675 216,873 802,006 518,625 ----------- ----------- ----------- ----------- Net interest income after provision for loan losses 1,692,040 1,947,096 5,341,905 5,833,296 Noninterest income Service charges on deposit accounts 253,075 239,155 700,132 733,444 Mortgage loan referral fees 9,995 0 9,995 1,437 Gain on sale of loans 34,427 124,610 239,007 141,013 Gain on sale of securities 0 0 1,986 0 Gain (loss) on disposal of equipment 378 0 458 (124) Other 119,547 97,015 345,120 261,250 ----------- ----------- ----------- ----------- Total noninterest income 417,422 460,780 1,296,698 1,137,020 Noninterest expense Salaries and employee benefits 1,288,097 992,048 3,709,793 2,930,124 Occupancy 146,642 100,828 430,217 275,902 Furniture and equipment 170,928 113,069 480,927 311,323 Advertising 38,037 90,778 128,865 174,570 Data Processing 109,820 93,185 327,216 289,463 Professional services 131,020 166,603 403,602 424,394 Other 399,612 329,173 1,059,198 1,026,462 ----------- ----------- ----------- ----------- Total noninterest expense 2,284,156 1,885,684 6,539,818 5,432,238 Income before income taxes (174,694) 522,192 98,785 1,538,078 Federal income tax expense (71,690) 159,045 (44,616) 469,347 ----------- ----------- ----------- ----------- Net Income $ (103,004) $ 363,147 $ 143,401 $ 1,068,731 =========== =========== =========== =========== Weighted average shares outstanding 1,468,800 1,449,191 1,468,771 1,440,976 =========== =========== =========== =========== Diluted average shares outstanding 1,474,236 1,476,893 1,485,129 1,471,044 =========== =========== =========== =========== Basic income per share $ (0.07) $ 0.25 $ 0.10 $ 0.74 =========== =========== =========== =========== Diluted income per share $ (0.07) $ 0.25 $ 0.10 $ 0.73 =========== =========== =========== =========== Community Shores Bank Corporation Condensed Consolidated Statements of Condition Sept 30, December 31, Sept 30, 2007 2006 2006 (Unaudited) (Audited) (Unaudited) ------------ ------------ ------------ ASSETS Cash and due from financial institutions $ 3,901,052 $ 3,398,155 $ 4,134,507 Interest-bearing deposits in other financial institutions 66,121 72,115 54,455 Federal funds sold 0 5,600,000 450,000 ------------ ------------ ------------ Total cash and cash equivalents 3,967,173 9,070,270 4,638,962 Securities Available for sale 13,550,547 13,184,437 13,096,118 Held to maturity 5,248,034 5,257,835 5,261,103 ------------ ------------ ------------ Total securities 18,798,581 18,442,272 18,357,221 Loans held for sale 921,623 165,070 -- Loans 229,970,365 207,432,376 205,040,775 Less: Allowance for loan losses 3,111,096 2,549,016 2,546,827 ------------ ------------ ------------ Net loans 226,859,269 204,883,360 202,493,948 Federal Home Loan Bank stock 404,100 404,100 411,500 Premises and equipment, net 12,641,544 10,958,821 8,431,199 Accrued interest receivable 1,369,554 1,249,680 1,105,749 Other assets 2,322,197 1,807,258 2,938,675 ------------ ------------ ------------ Total assets $267,284,041 $246,980,831 $238,377,254 ============ ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Deposits Non interest-bearing $ 18,175,949 $ 17,179,082 $ 17,810,068 Interest-bearing 207,040,122 197,103,330 187,645,924 ------------ ------------ ------------ Total deposits 225,216,071 214,282,412 205,455,992 Federal funds purchased and repurchase agreements 13,506,499 4,494,614 5,026,652 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 1,106,043 400,000 400,000 Accrued expenses and other liabilities 592,300 1,185,180 1,126,753 ------------ ------------ ------------ Total liabilities 250,920,913 230,862,206 222,509,397 Shareholders' Equity Common Stock, no par value: 9,000,000 shares authorized, 1,468,800 issued at September 30, 2007 and 1,466,800 issued at December 31, 2006, and September 30, 2006 13,296,462 13,274,098 13,274,098 Retained earnings 3,171,175 3,027,774 2,781,193 Accumulated other comprehensive deficit (104,509) (183,247) (187,434) ------------ ------------ ------------ Total shareholders' equity 16,363,128 16,118,625 15,867,857 ------------ ------------ ------------ Total liabilities and shareholders' equity $267,284,041 $246,980,831 $238,377,254 ============ ============ ============
CONTACT: Community Shores Bank Corporation Heather D. Brolick, President and CEO 1-231-780-1845 hbrolick@communityshores.com Tracey A. Welsh, Senior Vice President and CFO 1-231-780-1847 twelsh@communityshores.com